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iminal Appeal No. 83 of 1961. Appeal from the judgment and order dated June 20, 1960, of the Calcutta High Court in Criminal Revision No. 1525 of 1959. H. R. Khanna, K. L. Hathi and R. N. Sachthey, for the appellant. G. section Pathak, B. Datta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent. April 14, 1964. The judgment of the Court was delivered by RAGHUBAR DAYAL, J. This appeal, on certificate granted by the Calcutta High Court, is directed against an order of the High Court dated June 20, 1960 reversing the Order of the Chief Presidency Magistrate directing return of certain documents to the respondent, and has arisen in the following circumstances: On April 6, 1959, the Chief Presidency Magistrate, Calcutta, ordered the issue of search warrants on the application of the Enforcement Officer, Enforcement Directorate, Ministry of Finance, under sub section (3) of section 19 of the Foreign Ex change Regulation Act, 1947 (Act VII of 1947). The search warrant was issued on May 6, 1959. It required the produc tion of documents seized, before the Magistrate. In execution of the search warrant, a number of documents were seized from the possession of the respondent on May 14, 1959. The 726 Enforcement Officer reported that day that a certain room could not be searched and therefore further action on the search warrant was to be taken. He also noted in his appli cation, for the Chief Presidency Magistrate 's information: "that the seized documents as per enclosed Seizure Memo have been kept with us for scrutiny and those will be retained till the completion of the enquiry or the adjudication proceedings as the case may be and a report will be submitted to Your Honour thereafter." on May 28. 1959, the Enforcement Officer applied to the Chief Presidency Magistrate for permission for the retention of the seized documents for a period of two months for the submission of further report in the matter. The Chief Presidency Magistrate granted the necessary permission. Similar permission was again granted on applications, by the Chief Presidency Magistrate, on July 28 and September 28, 1959. On October 5, 1959, the respondent applied to the Chief Presidency Magistrate for an order of return of the said documents as the statutory period of 4 months during which the Director of Enforcement could keep the documents had expired, and no proceedings had been commenced against him under section 23 of the Act. The claim for the return of the documents was based on the provisions of section 19 A. On Octo ber 20, 1959 the Chief Presidency Magistrate ordered the return of the seized files to the respondent. He, however, modified this order the same day, when his attention was drawn to his earlier order dated September 28, 1959 permit ting the Enforcement Officer to retain the documents till November 28, 1959. He directed the matter to be heard 'on October 26, 1959 and on that day, in view of the Investigat ing Officer being on leave, adjourned the matter for decision to November 10, 1959. in his application presented on November 10, 1959 the Enforcement Officer stated that the Director of Enforcement had started adjudication proceedings against the respondent for alleged violation of section 4(1) of the Act and had issued notice to him to show cause and that in connection with the adjudication proceedings seized files items Nos. 2 and 7 of the Seizure Memo would be required and that he had no objection to the return of the remaining seized files though they might have some distant bearings on those proceedings. The Chief Presidency Magistrate ordered, on November 10, 1959, the return of all the documents except those mentioned at items 2 and 7 of the search list. The respondent went up in revision against this order for the continued retention 727 of the two documents, and the High Court allowed the revision and ordered the return of these documents also to the s respondent. It is against this order that this appeal has been filed. We may first refer to the relevant provisions of sections 19 and 19 A of the Act, and later to certain provisions of the Code of Criminal Procedure, hereinafter called the Code, to appreciate the contention for the parties. "19(1). The Central Government may, at any time by notification in the Official Gazette, direct owners, subject to such exceptions, if any, as nay be specified in the notification, of such foreign exchange or foreign securities as may be so specified, to make a return thereof to the Reserve Batik within such period, and giving such particulars, as may be so specified. Government or the Reserve Bank considers it necessary or expedient to obtain and examine any information, book or other document in the possession of any person or which in the opinion of the Central Government or the Reserve Bank it is possible for such person to 'obtain and furnish, the Central Government or, as the case may be, the Reserve Bank may, by order in writing, require any such person (whose name shall be specified in the order) to furnish, or to obtain and furnish, to the Central Government or the Reserve Bank or any person specified in the 'order with such information, book or other document. (3) If on a representation in writing, made by a person authorised in this behalf by the Central Government or the Reserve Bank, a District Magistrate, Sub Divisional Magistrate, Presidency Magistrate or Magistrate of the first class, has reason to believe that a contravention of any of the provisions of this Act has been, or is being or is about to be, committed in any place, (2) of this section has been or might be addressed, will not or would not produce the information, book or other document, or where such information, book or other document is not known to the Magistrate to be in the possession of any person, or where the Magistrate considers that the purposes of any investigation or proceeding under this Act will be served by a general search or inspection, 728 he may issue a search warrant and the person to whom such warrant is directed may search or inspect in accordance therewith and seize any book or other document, and the provisions of the Code of Criminal Procedure, 1898 relating to searches under that Code shall, so far as the same are applicable, apply to searches under this sub section: Provided that such warrant shall not be issued to any police officer below the rank of sub inspector. Explanation. In this subsection, 'place ' includes a house, building, tent, vehicle, vessel or aircraft. Where in pursuance of an order made tinder sub section (2) of section 19 or of a search warrant issued under sub section (3) of the said section, any book or other document is furnished or seized, and the Director of Enforcement has reasons to believe that the said document would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, and that it would be necessary to retain the document in his custody, he may so retain the said document for a period not exceeding four months or if. before the expiry of the said period of four months, any pro ceedings under section 23: (a) have been commenced before him, until the disposal of those proceedings, including, the proceedings before the Appellate Board, if any, or (b) have been commenced before a Court, until the document has been filed in that Court. " Chapter VII of the Code provides for processes to compel the production of documents etc. Section 94 empowers the Court to issue a summons to a person in possession of the document or whose production is considered necessary or desirable for the purpose of any investigation, inquiry, trial or other proceeding under the Code to produce the same before it. In certain circumstances mentioned in section 96 it may issue a search warrant, for conducting the search for such documents or articles as are mentioned in section 94. The combined effect of the two sections is that the articles seized in execution of the search warrant have to be produced before the Magistrate and the Magistrate thereafter passes suitable orders about the custody or return of those documents. Form 8, Schedule V, of the Code gives the form of the search warrant and contains a direction that the articles seized be produced forthwith before the Court. Sections 98 and 99 A deal with search 729 warrants in special circumstances and sections 101 to 103 come under the general provisions relating to searches. The appellant 's main contentions are: 1.The provisions of section 19 A limit the period for retaining the documents seized in execution of a search warrant issued under section 19 to 4 months by the Director of Enforcement but does not limit the power of the Court issuing the search warrant to pass any orders for the retention of the seized documents or with respect to the disposal 'of those documents. In the absence of any prescribed procedure for the issue of a search warrant under section 19, the provisions of sections 96, 98 and Form 8 of Schedule V of the Code would be applicable to the search warrants issued under section 19. 3.The Court has inherent power to pass proper orders with respect to the retention of the documents seized for the purposes of investigation and proceedings following it. 1.Section 19 and, 19 A are special provisions which provide for special procedure for investigation of the several offences created by the statute and were enacted in order to remove certain difficulties in investigation which led to the keeping of documents of citizens unduly long and thus causing them inconvenience and harassment, and to relieve the Magistrate of his repeatedly dealing with police reports for permission to retain the documents and that therefore when section 19 A fixes the maximum duration for the retention of the documents by the Director of Enforcement at 4 months and thus prohibits further detention except in certain circum stances by the officer concerned, the Magistrate cannot allow the Director of Enforcement to keep the documents beyond four months. 2.There is no provision in the Act empowering the Court to extend the period for the detention of documents and any such power in the Magistrate will defeat the very object of the Act. The provisions of the Code relating to searches under the Code apply so far as the same be applicable to searches under sub section (3) of section 19 of the Act and therefore the provision of the Code giving jurisdiction to the Magistrate over the property seized in execution of a search warrant issued by him will not fully apply to property seized in execution of the search warrant issued under sub section (3) of section 19. The first question to determine is whether Magistrate issuing the search warrant has control over the disposal of the articles seized in execution of the warrant. The provisions of the Code relating to searches apply to search warrants issued under sub section (3) of section 19 but only in so far as they be 730 applicable. The provisions dealing with the circumstances in which, and the authorities by which, search warrants can be issued cannot apply, in view of the specific provision for the issue of a search warrant under the Act in sub section (3) of section 19. Sections 96, 98 and Form 8 of Schedule V, do not therefore operate in connection with searches under sub section 19. It is therefore the provisions which deal with what is done after the issue of a search warrant which have been made applicable to searches under the Act and such provisions therefore would be the provisions relating to the mode of conducting searches. The object of the aforesaid provision in sub section (3) of section 19 is to provide how the searches are to be conducted as it deals with the issue of search warrant in sub section (3) of s.19. It is only with respect to the intervening stage, that is the stage of actual search that no specific Provision is made in the Act. We are therefore of opinion that, the provisions under sub section (3) of section 19 are the provisions relating to the conduct of searches and that these provisions are sections 101, 02 and 103 of the Code. What is to be done with the articles seized does not strictly come within the expression 'searches '. It is dealt with in section 19 A. It is therefore not correct for the appellant to say that the Magistrate can exercise his powers under the Code in connection with property seized tinder sub section (3) of section 19 of the Act. It follows that any further reference to the Magistrate, as made by the Enforcement Officer in this case, for permission to retain the documents seized was not necessary. The Enforcement Officer has a right under section 19 A to retain the articles seized in accordance with its provision. What course is to be adopted by the person aggrieved when the Enforcement Officer contravenes the provisions of section 19 A, is a different matter. The fact that such a contingency may arise does not mean that it is the Magistrate issuing the search warrant who is to be approached and who is competent to deal with the grievance. Any way, such a contingency is insufficient to warrant the finding that the Magistrate issuing the warrant has control and possession over the documents seized and that therefore he can pass any orders with respect to their disposal. He has no such power, in any case, till the period mentioned in section 19 A has expired. There is no provision in the Act which gives him any power to deal with the situation arising after the expiry of that period. One should, however, presume that the Director 'of Enforcement will not by his order act against the provisions of section 19. Section 19 A deals with the custody of documents which come into the possession of the Director 'of Enforcement in two ways. Documents are furnished to the Director of En forcement in pursuance of an order made under sub section (2) of section 19 under the directions of the Central Government or the Reserve Bank. No Magistrate as such has jurisdiction over the disposal of such documents which come into the possession of the Director of Enforcement in pursuance 'of orders under sub section (2) of section 19. The Director of Enforcement also gets possession of documents in execution of search warrants under sub section (3) of section 19. The provisions with respect to his retaining in his posses. ion the documents which come in his possession are the same, whether they conic so one way or the other. It follows that, in the latter case too, the Magistrate issuing the search warrant has nothing to do with the retention or disposal of the documents seized in execution of the search warrant. It was also urged for the apelllant that the provisions of section 5(2) of the Code apply to the present case in matters which are not provided by the Act. This contention too has no basis. Section 5 provides that all offences under any law other than the Indian Penal Code shall be investigated, in quired into, tried and otherwise dealt with according to the provisions contained in the Code of Criminal Procedure, but subject to any enactment for the time being in force regu lating the manner or place of investigating, inquiring into, trvina or otherwise dealing with such offences. The Act is a special Act and it provides under section 19 A for the necessary investigation into the alleged suspected commission of an offence under the Act. by the Director of Enforcement. The provisions of the Code of Criminal Procedure therefore will not apply to such investigation by him, assuming that the expression investigation ' includes the retaining of the documents for the purposes of the investigation. Reliance has also been placed for the appellant on the case reported as Moliammad Serajuddin vs R. C. Mishra(1) in support of the contention that the Magistrate retains con trol over the disposal of the articles seized in connection with the search warrant issued by him. In that case the Court was considering the question of the disposal of the documents seized in execution of a search warrant under section 172 of the Sea Customs Act. The provisions of that section are different from those of sub section (3) of section 19 of the Act. A search warrant issued by a Magistrate under section 172 of the Sea Customs Act has the same effect as a search warrant issued under the Code of Criminal Procedure and thus assumes the character of a search warrant issued under the Code of Criminal Procedure. The same is not the case with respect to the search warrant issued under sub section (3) of section 19. further, there is no section corresponding to section 19 A of the Act in the Sea Customs Act. This case, therefore, is not of help to the appellant. 732 In this view of the matter, the order of the Magistrate with respect to the disposal of the documents was beyond his jurisdiction and the High Court was right in setting aside his order directing the retaining of certain documents by the Director of Enforcement. The question however remains whether the order of the High Court directing the return of the two documents to the respondent is a correct order. It has been urged for the appellant that there is no pro vision under section 19 A or any other section of the Act that the documents be returned to the party from whose custody they were seized, without an order from the Magistrate and that therefore no order for their return can be made by any authority. No such express provision is necessary. Documents seized have to be returned if the law provides that they are not to be retained after a certain period of time. Such a direction under the statute is sufficient Justification and authority for the person in possession of the documents to return them to the person from whose possession they had been seized. Provisions are necessary for retaining documents of others and not for returning them to the persons entitled. Section 19 A authorises the Director of Enforcement to retain a document for a period of not exceeding 4 months, or, if before the expiry of the said period of 4 months, any proceedings under section 23(1) have been commenced before him, until the disposal of those proceedings, including the proceedings before the Appellate Board, if any, or (ii) if such proceedings have been commenced before a Court, until the document has been filed in that Court. This means that the Director of Enforcement can justifiably retain with himself the document seized till the final disposal of the proceedings taken under section 23 of the Act if the proceedings had commenced before the period of 4 months, during which he could keep the documents. In the present case such proceedings had not been commenced within the period of 4 months of the Director of Enforcement getting possession of the documents. He could not have therefore, on his own, retained those documents after the expiry of the fourth month. He ,could have taken legal steps for the retention of those documents. He did not keep those documents with himself on his own. He had been obtaining the permission of the Chief Presidency Magistrate for retaining the documents from the time of their seizure under the impression that the Magistrate could legally order the retention of the documents, presumably as the warrant had directed the production of documents seized, before him. Proceedings under section 23 did start prior to the order for the return of the documents. Considering the real intention 733 of section 19 A to be that the Director of Enforcement can retain the documents seized till the final disposal of proceedings under section 23 of the Act. the Magistrate 's order, even if he had not the authority to pass orders for the retention of the documents by the Director of Enforcement, till the final disposal of the proceedings under section 23, was an order giving effect to the spirit behind the provisions of section 19 A. The order of the High Court directing the return of the documents to the respondent therefore appears to us to be unjustified in the special circumstances of the case. It is not necessary for us to consider in this case what legal steps the Director of Enforcement could take for re taining possession of the documents seized on the expiry of the 4 months ' period in case his investigation in connection with those documents is not complete within that period. One of the methods possibly can be his applying to the Cen tral Government to make an order under sub section (2) 'of section 19 directing the owner of those documents to furnish them to the Director of Enforcement. Such an order will be legal justification for the Director of Enforcement to retain in possession any of the documents which nationally be would be deemed to have returned to the owner on the expiry. of the four months and to have got fresh possession over those documents not by virtue of a search warrant but by virtue ,of an order of the Central Government under sub section (2) of section 19. We therefore hold that the Magistrate has no jurisdiction over the articles seized in execution of the search warrant issued under section 19(3) of the Act and that he cannot permit the retention of such documents by the Director of Enforce ment after the expiry of the period he is entitled to keep them in accordance with the provisions of section 19 A. In the special circumstances of the case, we allow the appeal, set aside the order of the High Court and order that the documents mentioned at items Nos. 2 and , 7 of the Seizure Memo can be retained by the Director of Enforcement till the final conclusion of the proceedings commenced under section 23 of the Act. Appeal allowed.

On May 14,1959 ,a number of documents were seized from the possession of the respondent by the Enforcement Officer in execution of a search warrant. The search warrant was issued by the Chief Presidency Magistrate under sub section (3) of section 19 of the Foreign Exchange Regulation Act, 1947. The Director of Enforcement with the permission of the Chief Presidency Magistrate retained those seized documents for a period exceeding four months. On October 5, 1959, the respondent filed an application before the Chief Presidency Magistrate in which he claimed the return of the seized documents on the basis, of the provision of section 19 A of the Foreign Exchange Regulation Act. On this application the Chief Presidency Magistrate directed the return of all the documents to the respondent except those mentioned at items 2 and 7 of the search list. The respondent went up in revision against this order for the continued retention of the two documents, and the High Court allowed the revision and ordered the return of these documents also to the respondent. Against this order appeal was filed in this Court. Held:(i) The Magistrate has no jurisdiction over the articles seized in execution of the search warrant issued under section 19(3) of the Foreign Exchange Regulation Act and that he cannot permit the retention of such documents by the Director of Enforcement after the expiry of the period he is entitled to keep them in accordance with the provisions of section 19 A of the Act. The Enforcement Officer has a right under section 19 A to retain the articles seized for a period not exceeding four months and it is not necessary for him to obtain permission from the Magistrate for retaining the seized documents within the statutory period. Therefore, the Magistrate issuing the search warrant has nothing to do with the retention or disposal of the documents seized in execution of the search warrant either during the statutory period of four months or after the expiry of that period. Mohammad Serajuddin vs R. C. Mishra, [1962] 1 Supp. S.C.R. 545, distinguished. (ii) In view of the specific provision for the issue of a search warrant under sub section (3) of section 19 of the Foreign Exchange Regulation Act, the provisions of sections 96, 98 and Form No. 8 of Schedule V of the Code would not be applicable to the search warrants issued under sub section (3) of section 19. The provisions of SS. 101, 102, 103 of the Code will apply to searches under sub section (3) of section 19 of the Act as there is no specific provision in the Act with respect to the conduct of the search. 725 (iii) The provisions of section 5(2) of the Code will not apply to an investigation conducted under the Act because the Act is a special Act and it provides under s.19 A for the necessary investigation into the alleged suspected commission of an offence" under the Act, by the Director of Enforcement. (iv) No express provision is necessary in the statute for the return of documents after the expiry of the statutory period. Provisions are necessary for retaining documents of others and not for returning them to persons entitled. Therefore the documents seized have to be returned to the person from whose possession they had been seized after the expiry of the statutory period. (v) Under s.19 A of the Act the Director of Enforcement can justifiably retain with himself the documents seized till the final disposal of the proceedings taken under s.23 of the Act if the proceedings had commenced before the period of four months, during which he could keep the documents. In the present case he could not have retained those documents beyond four months because no such proceeding had been commenced within 4 months. In the present case proceedings under s.23 did start prior to the order for the return of documents. On the facts of this case it was held that the direction of the Magistrate in regard to the retention of documents was an order giving effect to the spirit behind the provision of section 19 A.

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: Criminal Appeal No. 193 of 1971. Appeal by Special Leave from the Judgment and Order dated 11 5 71 of the Orissa High Court in Criminal Appeal No. 14/70. Gobind Das, Mrs. Sunanda Bhandare, ,A. K. Mathur, A. K. Sharma and M.S. Bhandare, for the Appellant. S.C. Agarwal and G.S. Chatterjee, for the Respondent. The Judgment of the Court was delivered FAZAL ALl, J. In this appeal by special leave, the appellant has been convicted for criminal misconduct under s.5(2) read with S.5(1) (c) of the Prevention of Corruption Act, 1947 and sentenced to rigorous imprisonment for three years. He has also been convicted under section 5(1)(d) of the Prevention of Corruption Act but no separate sentence has been passed thereunder. The appellant preferred an .appeal to the High Court of Orissa against the order of the Special Judge which was, however, dismissed, and the convic tions and sentences imposed on him were confirmed by the High Court. Thereafter an application for leave to appeal to this Court was made before the High Court, which having been refused the appellant obtained special leave from this Court, and hence this appeal. After going through the judgments of the Courts below, we are constrained to observe that the High Court as well as the Trial Court have made a wholly wrong approach in apply ing the provisions of the Prevention of Corruption Act in the case of the appellant. Put briefly, the prosecution case was as follows: The appellant was the Additional District Magistrate, Cuttack from September 1964 to June 1966 and in that capaci ty he was in 442 overall charge of the Nizarat and land acquisition sections of the Collectorate. Sayad Allamuddian Ahmed P.W. 8 was the District Land Acquisition Officer and one A. Ballav Pradhan P.W. 9 was the Nizarat Officer, whereas Prahalad Mahapatra P.W. 1 was the Nazir and Rajkishore Das P.W. 2 was the Assistant Nazir under P.W. 1 P.W. 3 Bhakta Charan Mohanti was the Land Acquisition Inspector. It appears that a number of lands had been acquired by the Government for certain public projects in various villages particularly Mauza Balichandrapur with which we are concerned in the present case. A huge compensation amount to be given to land owners had been deposited in the treasury for payment to them. It appears that a sum of Rs. 31,793.85 had been disbursed by July 24, 1964 leaving a balance of Rs. 11,650 61 but no disbursement could be made between July 24, 1964 and January 20, 1965 as the villagers refused to accept the payments and wanted the Land Acquisition proceedings to be withdrawn. The prosecution case further is that the appellant as Addi tional District Magistrate attended a meeting at the Secre tariat in the office of the Secretary of Works Department at Bhubaneswar on September 25, 1964 where certain decisions were taken. There appears to be some divergence of opinion between the appellant and the prosecution on the delibera tions of the aforesaid meeting which we shall consider later. It is further alleged that on January 9, 1965 the appellant directed the Nazir to pay him a sum of Rs. 10,000/from the cash which remained with the Nazir P.W. 1 for the purpose of distributing the amount to the land owners of the village Balichandrapur. As, however, the A.D.M. 's visit to Balichandrapur could not materialise because the Executive Engineer with whom he was to go there was not available, the visit was postponed and the A.D.M. went to some other place. On January 20, 1965 the appellant again took a sum of Rs. 10,000/ from the Nazir and decided to visit the village Balichandrapur along with the Executive Engineer and the Land Acquisition Inspector. It is said that the S.D.O., P.W.D., also accompanied the party to the village Balichandrapur, and the case of the appellant is that the Land Acquisition Inspector also travelled to Bali chandrapur with the appellant, though this fact is disputed by the Land Acquisition Inspector. It is, however, the admitted case of the prosecution that there ,was no dis bursement in village Balichandrapur and thereafter the amount of Rs. 10,000/ was not deposited with the Nazir but remained in the personal custody of the appellant who ap pears to have retained it dishonestly for about six months. This is the gravamen of the charges against the appellant. We may also mention that the amount was paid to the Nazir towards the end of September 1965 when it was deposited in the treasury. On receiving certain applications, the Vigi lance Organisation of the State of Orissa instituted an inquiry against the appellant and after completing the same lodged a formal F.I.R. on May 13, 1966. The appellant thereafter was challaned under various sections of the Prevention of Corruption Act and ultimately convicted as indicated above. The case of the appellant was that he had no doubt withdrawn a sum of Rs. 10,000/ from the Nazir on January 9, 1965 but on his return from tour as he could not disburse the money to the 443 villagers he had returned it to the Nazir at Cuttack on January 13, 1965. When, however, he again decided to go to the village with the Executive Engineer and others on Janu ary 20, 1965 he again directed the Nazir to pay him the amount for disbursement. He went to the village Balichan drapur and tried to persuade the villagers to accept the compensation amount so that the Government project may be started as soon as possible. The villagers wanted some other alignment to be made or the compensatioion to be increased, and the appellant persuaded them to accept part payment and assured them that he will try to get the amount increased. It was also the definite case of the appellant that in the meeting held in the secretariat on September 25, 1964, the appellant was expressly directed to proceed to the spot and persuade the villagers to accept the compensation money and it was in consequence of this mandate from the Secretary of works Department that the A.D.M. proceeded to the village Balichandrapur and made all possible efforts to persuade the tenants to accept compensation even by holding out promises to them. Unfortunately, however, the villagers refused to accept the compensation and the party had to come back to Cuttack disappointed. The appellant further seemed to suggest that although he had failed to persuade the villagers to accept the money he had not com pletely lost all hopes and that there was a possibility of the villagers coming round to his point of view and ulti mately decide to accept the compensation and for this reason the appellant returned the sum of Rs. 10,000/ to the Nazir on his return from the village but directed him not to deposit the same in the treasury or to make any entry in the Cash Register so that if the villagers came to Cuttuck to demand the money they could be given the same immediately without any formality of a fresh withdrawal. The appellant further averred that because of some personal jealousies, a false complaint was made against him which necessitated an inquiry. The Courts below accepted the prosecution case and disbelieved the version of the defence completely. The High Court has found that as the entrustment was proved and admitted by the appellant himself and the explanation given by him was absolutely false, this would lead to the irre sistible inference that the appellant had temporarily misap propriated the money. It was also suggested by the prosecu tion that at the relevant time the appellant was building a house and he had already applied for loans from the Govern ment and it may be that for this purpose he might have been in need of the money to build his house. One of the essential peculiarities of this case is that as many as three witnesses examined by the prosecution to prove its case, namely, P.Ws. 6, 7 and 8, had been declared hostile and the Public Prosecutor sought permission of the Court to cross examine those witnesses which was readily allowed. According to the prosecution these witnesses tried to help the accused and made certain statements which sup ported the case of the appellant and, therefore, had to be crossexamined by the prosecution. Having regard to the stand taken by the parties, the matter lies within a very narrow compass. So far as the entrustment of Rs. 444 10,000/ is concerned that is undoubtedly admitted by the appellant, and the only explanation given by him is that he had returned the money to the Nazir after his return from the village Balichandrapur and he had also directed the Nazir not to deposit the money in the treasury. If once the explanation of the accused is disbelieved, or proved to be absolutely false, then it is quite natural that he must be presumed to have retained the money with himself for a period of six months. Although the Onus lies on the prose cution to prove the charge against the accused, yet where the entrustment is proved or admitted it will be difficult. for the prosecution to prove the actual mode or manner of misappropriation and in such a case the prosecution would have to rely largely on the truth or the falsity of the explanation given by the accused. In Jaikrishnadas Manohar das Desai and Anr. vs State of Bombay(1) this Court observed as follows: "The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure in breach of an obligation to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to an inference of dishonest misappropriation on conversion. Convic tion of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrust ed to him, of over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue, an infer ence of misappropriation with dishonest intent may readily be made. " The Courts below appear to have convicted the appellant on the basis of the decision referred to above and have held that since the explanation given by the appellant was false, an inference of misappropriation could reasonably be drawn against him. This proposition cannot be doubted. But the question is whether the explanation given by the appellant in this case can be said to be absolutely false ? Another question that arises is what are the standards to be em ployed in order to judge the truth or falsity of the version given by the defence ? Should the accused prove his case with the same amount of rigour and certainty, as the prose cution is required, to prove a criminal charge, or it is sufficient if the accused puts forward a probable or reason able explanation which is sufficient to throw doubt on the prosecution case ? In our opinion three cardinal prin ciples of criminal jurisprudence are well settled, namely: (1) that the onus lies affirmatively on the prosecution to prove its case beyond reasonable doubt and it cannot derive any benefit from weak ness or falsity of the defence version while prov ing its case; (1) , 324. 445 (2) that in a criminal trial the accused must be presumed to be innocent unless he is. proved to. be guilty; and (3) that the onus of the prosecution never shifts. It is true that under section 105 of the Evidence Act the onus of proving exceptions mentioned in the Indian Penal Code lies on the accused, but this section does not at all indicate the nature and .standard of proof required. The Evidence Act does not contemplate that the accused should prove his case with the same strictness and rigour as the prosecution is required to prove a criminal charge. In fact, from the cardinal principles referred to above, it follows that, it is sufficient if the accused is able to prove his case by the standard of preponderance of probabil ities as envisaged by section 5 of the Evidence Act as a result of which he succeeds not because he proves his case to the hilt but because probability of the version given by him throws doubt on the prosecution case and, therefore, the prosecution cannot be said to have established .the charge beyond reasonable doubt. In other words, the mode of proof, by standard of benefit of doubt, is not applicable to the accused, where he is called upon to prove his case or to prove the exceptions of the Indian Penal Code on which he seeks to rely. It is sufficient for the defence to give a version which competes in probability with the prosecution version, for that would be sufficient to throw suspicion on the prosecution case entailing its rejection by the Court. This aspect of the matter is no longer res integra but is concluded by several authorities of this Court. In Harbha jan Singh vs State of Punjab (1) this Court observed as follows: "But the question which often arises and has been frequently considered by judicial decisions is whether the nature and extent of the onus of proof placed on an accused person who claims the benefit of an Exception is exactly the same as the nature and extent of the onus placed on the prosecution in a criminal case; and there is consensus of judicial opinion in favour of the view that where the burden of an issue lies upon the accused, he is not re quired to discharge that burden by leading evidence to prove his case beyond a reasonable doubt. That, no doubt, is the test prescribed while deciding whether the prosecution has discharged its onus to prove the guilt of the accused; but that is not a test which can be applied to an accused person who seeks to prove substantially his claim that his case falls under an Exception. Where an accused person is called upon to prove that his case fails under an Exception, law treats the onus as dis charged if the accused person succeeds "in proving a preponderance of probability. " As soon as the preponderance of probability is proved, the burden shifts to. the prosecution which has still to discharge its original onus. It must be remembered that basically, the original onus (1) ; , 241 446 never shifts and the prosecution has, at all stages of the case, to prove the guilt of the accused beyond a reasonable doubt. " The same view was taken in a later case in State of U.P. vs Ram Swarup & Anr.(1) where this Court observed as follows: "That is to say, an accused may fail to establish affirmatively the existence of circum stances which would bring the case within a general exception and yet the facts and circumstances proved by him while discharging the burden under section 105 of the Evidence Act may be enough to cast a reasonable doubt on the case of the prosecu tion, in which event he would be entitled to an acquittal. The burden which rests on the accused to prove the exception is not of the same rigour as the burden of the prosecution to prove the charge beyond a reasonable doubt. It is enough for the accused to show, as in a civil case, that the preponderence of probabilities is in favour of his plea." While the Courts below have enunciated the law correct ly, they seem to have applied it wrongly by overlooking the mode and nature of proof that is required of the appellant. A perusal of the oral and documentary evidence led by the parties goes to show that the Courts not only sought the strictest possible proof from the appellant regarding the explanation given by him, but went to. the extent of mis placing the onus on.the accused to prove even the prosecu tion case by rejecting the admissions made by the prosecu tion witnesses and by not relying on the documents which were in power and possession of the prosecution itself on the speculative assumption that they were brought into existence by the accused through the aid of the officers. Further more, the Courts below have failed to consider that once the appellant gives a reasonable and probable explana tion, it is for the prosecution to prove affirmatively that the explanation is absolutely false. In a criminal trial, it is not at all obligatory on the accused to produce evi dence in support of his defence and for the purpose of proving his version he can rely on the admissions made by the prosecution witnesses or on the documents field by the prosecution. In these circumstances, the Court has to probe and consider the materials relied upon by the de fence instead of raising an adverse inference against the accused, for not producing evidence in support of his defence, because as we have already stated that the prosecu tion can not derive any strength or support from the weak ness of the defence case. The prosecution has to stand on its own legs, and if it fails to prove its case beyond reasonable doubt, the entire edifice of the prosecution would crumble down. Thus it would appear to us that both the Courts below have made an absolutely wrong approach in deciding the truth of the defence version and have not followed principles laid down by this Court in judging the case of the accused. The Courts below have based the conviction of the appel lant on the sole testimony of P.W. 1 the Nazir who has categorically stated (1) [1975] 1.S.C.R. 409, 416 17. 447 in the Court that the appellant had taken a sum of Rs. 10,000/ on January 9, 1965 and thereafter he never returned this amount to the Nazir until September 30, 1965. The Courts below have chosen to place implicit reliance on the evidence of P.W. 1 completely ignoring the important admis sions made in favour of the accused by other prosecution witnesses some of whom were declared hostile and some of whom were not. Before analysing the evidence, it may be necessary to describe the exact allegation made by the prosecution against the accused. The starting point of the case is a meeting which is said to have taken place in the Secretariat on September 25, 1964 in which according to the appellant he was positively directed to visit the villages and persuade the land owners to receive the compensation and this formed the occasion for the A.D.M. to have withdrawn the money to visit the spot with the money. According to the prosecution no such decision was at all taken in the meeting and the visit to the village Balichandrapur might have been for some other purpose and the question of distri bution was only a pretext invented by the accused to shield his guilt. We would, therefore, now take up the evidence regarding the meeting said to have taken place on September 25, 1964. We might also mention that the learned Special Judge has believed the statement of the accused that he did attend the meeting in the Secretariat on September 25, 1964, as would appear from the finding given by him at p. 79 of the Paper Book. What the Special Judge has not accepted is the assertion of the accused that he had been directed to visit the village personally and distribute the amounts to the villagers. The meeting is said to have been called by the Secretary Works Department and therefore the Secretary Works Department was the best person who would have thrown light on the subject and would have clinched the issue. The Secretary, Works Department, was a Government servant and it was not at all difficult for the prosecution to have examined him to settle the controversy on this matter. For the reasons best known to the prosecution, the Secretary, Works Department, was not at all examined and we have to decide this question on the basis of oral and documentary evidence produced by the prosecution. The Special Judge, instead of drawing an adverse inference against the prosecu tion, has placed the onus on the accused for not having summoned the Secretary, Works Department, as a witness in defence forgetting that it was part of the prosecution case itself that no decision to distribute the amount was taken in the meeting and therefore, the money was not taken for distribution to tenants in the village but was misappropri ated. It was not for the defence to prove the prosecution case which formed the bulwark of the charge of misappro priation. Further more, the Secretary, Works Department, was a high Officer of the Government and he could have thrown a flood of light on this question. Now coming first to the oral evidence, P.W. 8 Sayad Allamuddin who was the Land Acquisition Officer Cuttack has testified to the fact that in the meeting held on September 25, 1964 the appellant had been asked to take early action for payment of compensation money by going personally to persuade the tenants. Perhaps, it was because of this statement, that this witness was declared hostile, and the prosecution 448 sought permission to cross examine him. The actual state ment made by him in the Court may be quoted thus: "The accused had been asked to take early action for payment of the compensation money, by going personally and by persuading the tenants. It was the duty of the accused to see that compensa tion amounts were paid for land acquisition. " When the witness was declared hostile, all that was elicited from him was as follows: "It is not a fact that I had not stated to Investigating Officer that the accused and the Executive Engineer persuaded the tenants to receive the compensation amount. It is not a fact that I had stated to the Investigating Officer that while we were returning, some people wanted to take part payments for the lands already acquired, but no payment was made by the accused as we were then leaving. " Thus the prosecution even in cross examination did not give any suggestion that the witness who was present in the meeting held on September 25, 1964 had stated on earlier occasions that no decision was taken in the meeting direct ing the accused to visit the village and persuade the ten ants to receive the compensation amounts. He merely did not state to the police that when the accused and the Executive Engineer visited the spot they did not persuade the tenants to receive the compensation amounts. This was a case of a mere omission of a broad detail and not a case of contra diction. In these circumstances, therefore, the evidence of this witness on the question as to what transpired in the meeting and the nature of the directions given to the appel lant remains unchallenged, and even if he was declared to be a hostile witness, he does not cease to be a reliable witness. if the Court chooses to accept his testimony. Before proceeding further we might like to state the law on the subject at this stage. Section 154 of the Evidence Act is the only provision under which a party calling its own witnesses may claim permission of the Court to cross examine them. The section runs thus: "The Court may in its discretion permit the person who calls a witness to put any question to him which might be put in cross examination by the adverse party. " The section confers a judicial discretion on the Court to permit crossexamination and does not contain any conditions or principles which may govern the exercise of discretion. It is, however, well settled that the discretion must be judiciously and properly exercised in the interests of justice. The law on the subject is well settled that a party will not normally be allowed to cross examine its own witness and declare the same hostile, unless the Court is satisfied that the statement of the witness exhibits an element of hostility or that he has 449 resiled from a material statement which he made before an earlier authority or where the Court is satisfied that the witness is not speaking the truth and it may be necessary to cross examine him to get out the truth. One of the glaring instances in which this Court sustained the order of the Court in allowing cross examination was where the witness resiles from a very material statement regarding the manner in which the accused committed the offence. In Dahyabhai Chaganbhai Thakker vs State of Gujarat(1) this Court made the following observations: "Section 154 does not in terms, or by neces sary implication confine the exercise of the power by the court before the examination in chief is concluded or to any particular stage of the exami nation of the witness. It is wide in scope and the discretion is entirely left to the court to exer cise the power when the circumstances demand. To confine this power to the stage of examination in chief is to make it ineffective in practice. A clever witness in his examination in chief faith fully conforms to what he stated earlier to. the police or in the committing court, but in the cross examination introduces statements. in a subtle way contradicting in effect what he ;stated in the examination in chief. If his design is obvious, we do not see why the court cannot, during the course of his cross examination, permit the person calling him as a witness to put ques tions to him which might be put in cross examina tion by the adverse party." "Broadly stated, the position in the present case is that the witnesses in their statements before the police attributed a clear intention to the accused to commit murder, but before the court they stated that the accused was insane and, therefore, he committed the murder. " A perusal of the above observations will clearly indicate that the permission to cross examination was upheld by this Court because the witnesses had categorically stated before the police that the accused had committed the murder but resiled from that statement and made out a new case in evidence before the Court that the accused was insane. Thus it is clear that before a witness can be declared hostile and the party examining the witness is allowed to cross examine him, there must be some material to show that the witness is not speaking the truth or has exhibited an ele ment of hostility to the party for whom he is deposing. Merely because a witness in an unguarded moment speaks the truth which may not suit the prosecution or which may be favourable to the accused, the discretion allow the party concerned to cross examine its own witnesses cannot be allowed. In other words a witness should be regarded as adverse and liable to be cross examined by the party calling him only when the Court is satisfied that the witness bears hostile animals against the party for whom he is deposing or that he does not appear (1) ; ,368, 369 70. 450 to be willing to tell the truth. In order to ascertain the intention of the witness or his conduct, the Judge concerned may look into the statements made by the witness before the Investigating Officer or the previous authorities to find out as to whether or not there is any indication of the witness making a statement inconsistent on a most mate rial point with the one which he gave before the i previous authorities. The Court must, however, distinguish between a statement made by the witness by way of an unfriendly act and one which lets out the truth without any hostile inten tion. It may be rather difficult to lay down a rule of univer sal application as to when and in what circumstances the Court will be entitled to exercise its discretion under section 154 of the Evidence Act and the matter will largely depend on the facts and circumstances of such case and on the satisfaction of the Court on the basis of those circum stances. Broadly, however, this much is clear that the contingency of cross examining the witness by the party calling him is an extra ordinary phenomenon and permission should be given only in special cases. It seems to us that before a Court exercises discretion in declaring a witness hostile, there must be some material to show that the wit ness has gone back on his earlier statement or is not speaking the truth or has exhibited an element of hostility or has changed sides and transferred his loyalty to the adversary. Further more, it is not merely on the basis of a small or insignificant omission that the witness may have made before the earlier authorities that the party calling the witness can ask the Court to exercise its discretion. The Court, before permitting the party calling the witness to cross examine him, must scan and weigh the circumstances properly and should not exercise its discretion in a casual or routine manner. It is also clearly well settled that the mere fact that a witness is declared hostile by the party calling him and allowed to be crossexamined does not make him an unreliable witness so as to exclude his evidence from consideration altogether. In Bhagwan Singh vs State of Haryana(1), Bhag wati, J., speaking for this Court observed as follows: "The prosecution could have been avoided requesting for permission to cross examine the witness under Section 154 of the Evidence Act. But the fact that the court gave permission to the prosecutor to cross examine his own witness, thus characterising him as, what is described as a hostile witness, does not completely efface his evidence. The evidence remains admissible in the trial and there is no legal bar to base a convic tion upon his testimony if corroborated by other reliabIe evidence. " Applying these principles, we would now examine the position. So far as P.W. Sayad Allamuddin was concerned, he was the Land Acquisition Officer and merely because he happened to be working ; , 391 92. 451 under the accused, there was no reason for him to depose falsely at a time when the appellant had been suspended and was facing a trial before the Special Judge. Further more, on the basic point that the accused had been asked in the meeting to go personally to the village and persuade the tenants to receive compensation money nothing has been elicited from him even in cross examination to show that this statement was an after thought or was in any event incorrect or false. We shall presently show that this statement is supported by documents of an unimpeachable nature which have been produced by the prosecution itself and whose genuineness cannot be doubted. Exhibit 2 which is a note by this witness dated January 9, 1965 long before an inquiry started against the accused contains categorically a statement which runs as follows: "In the last meeting held in the Secretariat the Secretary, Works Department suggested that the A.D.M. and the Executive Engineer (R & B) should .try to persuade the villagers and make payment of the compensation. " This note further shows that the appellant proposed to pay a visit to the area along with the Executive Engineer and he had suggested that the A.D.M. should take an amount of Rs. 10,000/ for disbursement if the villagers agreed to receive compensation. This document, according to P.W. 1, the Nazir, who is the star witness of the prosecution, was received by him as far back as January 9, 1965 along with Ext. 1 the order of the appellant directing the Nazir to pay him Rs. 10,000/ . It would be impossible to suggest that as early as January 9, 1965 the witness Sayad Allamuddin Ahmed P.W. 8 was fabricating this document regarding an event which had taken three or four months ago without any rhyme or reason. Thus Ext. 2 fully corroborates the evidence of P.W. 8 on the point as to what transpired at the meeting held in the Secretariat and demolishes the prosecution case that no instructions were given to the appellant on Septem ber 25, 1964 in the meeting for visiting the spot and per suade the tenants to accept compensation money. In these circumstances, therefore, we feel that the Trial Court was not at all justified in declaring P.W. 8 as a hostile wit ness or in allowing the prosecution to cross examine him. Even if he was cross examined his evidence appears to be fully acceptable and worthy of credence. He is a person of status and responsibility and there is nothing to show why he should depose falsely merely to help the accused knowing full well that being a Government servant he might be harmed if he made a false statement in order to support the appellant. This fact is further supported by another official docu ment which is Ext. 10, namely, the tour diary of the appel lant dated January 7, 1965 to January 31, 1965. In this diary the appellant, as far back as January 7, 1965, made a clear mention of the facts that transpired at the meeting and stated thus: "Discussed with Revenue Secretary regarding various allegations of Kanika Tahasil pending for enquiry. He also wanted that I should visit the spot and enquire into the matter 452 personally and also make a thorough enquiry into the various encroachments in different forest blocks of Kanika Tahasil." This statement which is made in an official document in the discharge of his duties has been made even before the money was sought to be withdrawn from the treasury and at a time when there was no dispute at all regarding the question of misappropriation. This document also fully corroborates the evidence of P.W. 8. Thus from the evidence of the prosecu tion itself, the fact that in the meeting held in the Secre tariat a decision was taken by Which the appellant was directed to visit the village Balichandrapur and persuade the tenants to accept the compensation has been amply proved. The only person who could have contradicted this fact or falsified the same would have been the Secretary, Works Department, in whose presence the meeting took place whom the prosecution did not choose to examine. On the materials produced by the prosecution itself, it is manifest that the prosecution has miserably failed to prove that the visit of the A.D.M. to the village Balichandrapur on Janu ary 9, 1965 was not in connection with the payment of com pensation to the villagers as no such decision was taken in the meeting. The next question that arises is whether the appellant had actually taken the money for disbursement to the vil lage Balichandrapur. On this point also oral and documen tary evidence led by the prosecution clearly proves the version given by the appellant. To begin with, P.W. 7 who was an Executive Engineer at the relevant. time has categor ically stated that he had accompanied the appellant to village Balichandrapur and the appellant did try to persuade the tenants to receive the compensation but they refused to accept the same. In this connection the witness deposed as follows: "The accused thereafter enquired from the parties as to on what terms they were willing to give up possession of their lands which had already been selected for acquisition. The parties stated that if they were paid compen sation at the rate of Rs. 200/ per gunth, they would part with their lands. The accused stated that he did not have sanction for payment of Rs. 200/ per gunth and could not pay them off hand, but if the parties wanted payment at the rate of Rs. 150/ per gunth he was willing to pay them cash at the spot. The parties did not agree. The accused said that they would be paid Rs. 200/ . when that rate would be sanctioned and he was going to write about it. " This witness was also declared hostile and that too not because he had not made the statement referred to above before the police, but because of certain minor omissions in his statement before the police. These omissions consisted of the facts that there is no mention about the previous visit to Balichandrapur or that he had stated that while he was returning to Cuttuck he remained sitting in the car and the accused asked P.W. 3 to follow him with the bag 453 and things like that. It has, however, not been elicited from him in cross examination nor has it been argued that the witness had told the Investigating Officer that the accused had not met or had not talked at all with the ten ants in his presence in order to persuade them to accept the compensation. P.W. 6 Udaynath Parida who is a villager of Balichandra pur has categorically supported the statement of P.W. 7 that the accused had agreed to pay compensation at the rate of Rs. 200/ per gunth and persuaded them to give up possession but the villagers refused. In this connection, the witness stated thus: "On hearing of the arrival of the accused we met him in Balichandrapur near the market place. We demanded payment of compensation money at a rate higher than what was proposed by Government. The accused and his party agreed to pay us compensation at the rate of RS. 200/per gunth and persuaded us to give up possession so that Government may not be forced to take possession forcibly with the help of police. " "The accused had informed the villagers in cluding me that if we would be willing to accept the rate already fixed by Government, at Rs. 150/ per gunth, he would pay us at the spot;" This witness was also declared hostile, merely because of certain facts which he had omitted to state before the police. Thus it would appear that all the prosecution witnesses P.Ws. 6, 7 and 8 had been allowed to be declared hostile without any justification and the Trial Court appear to have exercised its discretion mechanically in readily accepting the prayer of the prosecution without making any probe into the reasons for allowing the cross examination. Indeed if suck a discretion is freely exercised, then the accused will suffer serious prejudice and will be deprived of taking advantage of any damaging admission made by the prosecution witnesses, merely because the prosecution is allowed to cross examine them by declaring them hostile. Such a course of action would have serious repercussion on the fairness of the trial. After going through the evidence of P.Ws. 6 and 7 we see absolutely no reason to distrust their evidence. So far as P.W. 7 is concerned he is a very high officer being an Executive Engineer at the relevant time and in no way subor dinate to the appellant. He has admitted in his cross examination by the prosecution that even his confidential reports are not written by the accused. There is also nothing to show that he was in any way interested in the accused or was his great friend and supporter. In these circumstances, he had no reason to make a false statement that the accused had visited the village and persuaded the tenants to accept the compensation. The evidence of the villager P.W. 6 Udayanath Parida who is an independent wit ness also proves that the accused had taken the money to the village and made efforts to persuade the tenants to accept the money. In fact the evidence of these two witnesses on this point follows as a logical corollary from the decision taken at the meeting held by the Secretary, Works Depart ment, where the appellant was 454 directed to visit the spot and persuade the tenants to accept compensation. The evidence of P.W. 7 is fully cor roborated by Ext. B a letter written by P.W. 7 Executive Engineer dated July 6, 1966, a copy of which was sent to the appellant and other officers. In this letter which is addressed to the Assistant Engineer, Road, Office of the Chief Engineer, Bhubaneswar, P.W. 7 as Executive Engineer had clearly mentioned that he along with the appellant had visited the site at Balichandrapur and persuaded the tenants to accept the money by enhancing the amount to Rs. 200/ per gunth to which the tenants. agreed but for this the sanction had to be taken. It was, however, submitted by counsel for the State that this letter appears to have been brought into existence after the inquiry against the accused was launched in order to help him. This was an official letter and we do not see any reason why such a high officer as the Executive Engineer should have gone to the extent of fabricating an unnecessary letter to help the appellant against whom an inquiry had been ordered. Even if this letter be excluded from consideration, the other evidence both oral and docu mentary clearly show that the appellant had visited the spot in village Balichandrapur on January 20, 1965 with a view to distribute the compensation money and did make an attempt to persuade the tenants to accept the compensation but they refused to accept the same unless the compensation was raised to Rs. 200/ per gunth. As against this the prosecution relied merely on the fact that in the tour diary of the accused Ext. 8 of the even date, viz. January 20, 1965, as also in the office report there is no clear mention that the appellant tried to persuade the tenants to accept the money or that he had taken the money with him to the spot. These documents undoubtedly contain the statement regarding the visit of the appellant to the spot and some other matters. The question of actual distribution or persuasion of the tenants being a matter of detail does not appear to have been mentioned in those documents. It would have been necessary to be men tioned in the documents, if the tenants had agreed to accept the money and if the money was actually disbursed to them. As the proposal suggested by the appellant did not materia lise, there was no occasion for mentioning these facts in those documents. As we have already indicated, it was not for the accused but for the prosecution to prove, before raising an adverse inference against the accused, that the visit of the appel lant to Balichandrapur was merely a hoax. On the materials placed before us, not only the prosecution has miserably failed to prove this fact, but the explanation given by the accused appears to be not only probable but proved by the accused, even applying the standard of benefit of doubt. For these reasons, therefore, we do not agree with the finding of the Courts below that the accused did not take the money with him to Balichandrapur or made any attempt to distribute it to the tenants but has misappropriated and retained it dishonestly. We might mention here that P.W. 3 Bhakta Charan Mohanti is another Witness who has supported the case of the ac cused. But as 455 the witness has made inconsistent statements which sometimes go to support the prosecution and sometimes the accused and is further, contradicted by his own tour diary and T.A. Bills, we do not choose any reliance on the evidence of this witness. The next and the last question that falls for determina tion is as to whether or not the accused after returning from Balichandrapur handed over the money to the Nazir. It may be mentioned that the appellant had made no secret of the fact that after returning the money to the Nazir he had instructed him not to deposit the same in the treasury but to keep it out of cash for the reason which we have already indicated. In this connection we have only the word of P.W. 1 the Nazir as against the word of the appellant. The Nazir also does not appear to be a witness who is completely above suspicion. Crossexamination of this witness clearly re vealed that the manner in which he had kept the accounts was not at all satisfactory and he was in the habit of allowing huge amounts to remain with him without depositing them in the treasury and that he was also building a house for which he had taken some loans. Instead of applying a very strict standard to test the testimony of such a witness, the High Court seems to have explained the irregularities committed by the Nazir P.W. 1 thus: "Heavy cash remaining with the Nazir that Ext. D discloses and the facts of the Nazir having secured housebuilding advance during September 1965 may raise speculations and surmises against the Nazir. " There are, however, important circumstances to indicate that the explanation given by the appellant is both probable and reasonable. P.W. 9 who was the Nizarat Officer and who had not been declared hostile (emphasis ours) has clearly stated that the amount was taken by the appellant for dis bursement. The witness further deposes that in March 1965 he had a discussion with the appellant regarding the amount of Rs. 10,000/ taken by him and the appellant had then told him that the amount could not be disbursed as the tenants did not agree to take the amounts and that he had kept the amount with the Nazir. In this connection his statement is as follows: "In March, 1965, I had a discussion with the accused regarding the amount of Rs. 10,000/ taken by him and the accused then told me that the amount could not be disbursed as the tenants did not agree to take the amounts and that he had kept the amount with the Nazir. I did not make any enquiry from the Nazir regarding this as the balance amount as shown in the cash Book was the same in the cash sheet. The accused had told me that the Nazir had kept the amount of Rs. 10,000/ outside the cash as per his instructions. " It is, therefore, clear from the admission made by this witness that the case of the accused t,hat he had given money to the Nazir is fully supported by him because he has referred to the statement made to him by the appellant as far back as March 1965 when there was absolutely no dispute, no inquiry and no allegation of misappropriation against the appellant. Much was made by the learned counsel for the 13 1104SCI/76 456 State out of the fact that the accused had directed the Nazir to keep the amount outside the cash which betrayed the falsity of his explanation. A careful study of the circum stances in which the accused was placed would show that the accused was very much anxious to disburse the payments to the villagers, he had tried to persuade them to accept the money, but the villagers wanted more compensation and he had already taken steps to move the Government for increasing the amount of compensation to Rs. 200/ per gunth. In these circumstances, therefore, there may be some justification in his thinking that the money should be readily available to be paid as soon as the villagers decided to accept the same. It is possible that he may have made an error of judgment or calculation or he was rather too optimistic but this conduct by itself does not lead to the inference of dishonest inten tion to misappropriate the money. At any rate, in view of the evidence of P.W. 9 the Nizarat Officer that the amount was given to the Nazir by the appellant which fact was disclosed to him as far back as March 1965, it will be difficult to accept the uncorroborated evidence and testimo ny of P.W. 1 the Nazir, that he did not receive the money from the appellant after January 9, 1965. Further more there were other important circumstances why no reliance should be placed on the evidence of the Nazir P.W. 1. It would appear from the evidence of the Nazir himself that on September 15, 1965 the cash in the hands of the Nazir was Rs. 11,16,066.57 out of which Rs. 7,36,810.86 were for land acquisition proceedings. Admit tedly he did not deposit this amount until October 20, 1965. He has given no explanation as to why he had kept such a huge amount with him without depositing the same in the Treasury. This was undoubtedly a grave lapse on the part of the Nazir and should have been taken notice by the Courts below. Exhibit D is the order of the appellant dated Septem ber 27, 1965 by which the Nazir was directed to deposit the amount in the treasury and it was only on October 20, 1965 as would appear from Ext. D/4 that the Nazir deposited this amount in the treasury. The Nazir has given no explanation for this delay. Again it appears that the Nazir was also building a house and he had received advances from the Government which he had not repaid and the possibility that he might have himself misappropriated the money handed over to him by the appellant for the purpose of returning the advances cannot safely be excluded. It would appear that the Nazir had taken a loan of Rs. 4,500/ on September 8, 1965 and another loan of Rs. 4,500/ was taken by him on Septem ber 27, 1965, total being Rs. 9,000/ , and it is quite possible that the Nazir may have paid these amounts of the loans from out of the money given to him by the appellant. Finally even if the accused had not given any money to the Nazir P.W. 1 right from January 9, 1965 he should have at least approached him and should have drawn the attention of the appellant to the fact that the money paid to him for the purpose of disbursement had not so far been deposited with him. No such thing was done by the Nazir. It was suggested by the prosecution that as the appellant was in charge of the Treasury, the Nazir did not think it proper to interrogate him. It was, however, not a question of inter rogation. It was 457 only a question of a subordinate officer pointing out some thing of very great importance to a superior officer which a superior officer would never misunderstand. In view of these circumstances, therefore, we are not in a position to place implicit reliance on P.W. 1. There is yet another very important document which has been brought on record by the appellant which is Ext. A dated December 8, 1965. This is a statement by P.W. 3 which to a very great extent supports the case of the accused, but as we do not propose to rely on the evidence of P.W. 3, we would exclude this document from consideration. Another document Ext. H is a statement of the Accountant Ghansham Das which appears at p. 215 of the Paper Book wherein Mr. Ghansham Das clearly mentions that when he found that Rs. 10,000/ were not traceable, be brought the matter to the notice of the officer in charge and he was told by the Nazir that the amount of Rs. 10,000/ had been left with him by the appellant with instructions not to refund in the treas ury. TIffs statement clinches the issue so far as the defence case is concerned and fully proves that the explana tion given by the appellant was correct. This document would also have falsified the evidence of P.W. 1 who has tried to put the entire blame on the shoulders of the appel lant. Unfortunately, however, the prosecution did not choose to examine Ghansham Das the Accountant who was a very material witness in order to unfold the prosecution narra tive itself, because once a reasonable explanation is given by the appellant that he had entrusted the money to the Nazir on his return from Balichandrapur on January 20, 1965 which is supported by one of the prosecution witnesses, P.W. 9, as referred to above, then it was for the prosecution to have affirmatively disproved the truth of that explanation. If Ghansham Das would have been examined as a witness for the prosecution, he might have thrown a flood of light on the question. In his absence, however, Ext. H cannot be relied upon, because the document is inadmissible. At any rate, the Court is entitled to draw an inference adverse to the prosecution for not examining Ghansham Das Accountant as a result of which the explanation given by the appellant is not only reasonable but stands unrebutted by the prosecution evidence produced before the Trial Court. Having regard to these circumstances. it is not neces sary for us to consider the other documents, like Exts. F, G and E produced by the appellant because they do not throw much light on the question and the facts contained therein have been seriously disputed by the prosecution. Similarly we have not referred to the other documents produced by the prosecution which show the entry of the money received by the appellant and 50 on because these facts are not disputed by the appellant at all. On a consideration of the evidence and the circumstances we are satisfied that the appellant has been able to prove that the explanation given by him was both probable.and reason.able judged by the standard of the preponderance of probabilities This being the position, it was for the prosecution to prove affirmatively m what manner the amount was misappropriated after it had been transferred from the custody of 458 the appellant to the custody of the Nazir. Such proof is wholly lacking in this case. As the accused has given a reasonable explanation, the High Court was in error in drawing an adverse inference against him to the effect that he had misappropriated the money. For these reasons, the appeal is allowed, the judgments of the Courts below are set aside, the convictions and sentences imposed on the appellant are quashed and he is acquitted of the charges framed against him. P.H.P. Appeal allowed.

The appellant ,who was the Additional District Magis trate in overall charge ,of the Nizarat and the Land Acqui sition sections of the Collectorate was charged for criminal misconduct under section 5(2) read with section 5(1)(c) and 5(1 ) (d) of the Prevention of Corruption Act, 1947. The allegation against the appellant was that he withdrew a sum of Rs. 10,000/ on 9 1 1965 on the ground that he wanted to distribute the said amount amongst the villagers whose land was acquired as the compensation; that in fact the appellant never wanted to distribute the said amount and that he retained,the money with him for about 6 months dishonestly and only after that the money was deposited in the Treasury. The defence of the appellant was that the Secretary of the Works Department called a meeting in the Secretariat on 25 9 1964 and that the appellant was expressly directed to proceed to the spot and persuade the villagers to accept the compensation money; that it was pursuant to that mandate that the appellant withdrew the money on 9 1 1965; that he could not go to the village in question in that day because one of the officers who was to accompany him was not avail able; that he, therefore, again deposited the money back with the Nazir and collected the money from him again on 20 1 1975; that he went there along with several officials; that the villagers, however, refused to accept the compensa tion. The appellant was, however, hopeful of getting the compensation increased and to persuade the villagers to accept the increased compensation. He, therefore, on his return handed over the money to the Nazir, however, asked him not to deposit the same in the Treasury so that cash would be readily available as soon as needed. Nazir was examined by the prosecution and he denied having received the money as suggested by the appellant. Secretary of the Works Department was not examined by the prosecution. The Land Acquisition Officer PW 8 deposed that the Secretary directed the appellant to take action for payment of the compensation money to the villagers and that the appellant should personally persuade the villagers to accept the compensation. The said witness was, however, declared hostile on the ground that he did not state to the Police that when the appellant and the Executive Engineer visited the village they did not persuade the villagers to receive the compensation amount. PW 7 the Executive Engi neer deposed that he accompanied the appellant to the vil lage and that the appellant tried to persuade the villagers to receive the compensation but that they refused to accept the same. This witness was also declared hostile because of certain minor omissions in his statement before the Police. PW 6, one of the villagers also deposed that the appellant persuaded them to give up possession but the villagers did not agree. This witness was also declared hostile because he omitted state some facts before the Police. The Trial Court and the High Court relying on the evi dence of Nazir and certain documents convicted the appellant under section 5(1)(c) and 5(1)(d) read with section 5(2)of the Prevention of Corruption Act, 1947. 12 1104SCI/76 440 Allowing the appeal by Special Leave, HELD: 1. In a charge of misappropriation once the en trustment of money is proved and although the onus to prove the entrustment is on the prosecution. if the explanation of the accused is found to be false he must be presumed to have retained the money with himself. [444 A B] Jaikrishnadas Manohardas Desai and Anr. vs State of Bombay, 324; followed. Three principles of criminal jurisprudence which are well settled are as under: (i) that the onus ties affirmatively on the prosecution to prove its case beyond reasonable doubt and it cannot derive any benefit from weak ness or falsity of the defence version while prov ing its case; (ii) that in a criminal trial the accused must be presumed to be innocent until he is proved to be guilty; and (iii) that the onus of the prosecution never shifts. [444 G H, 445 A] 3. Under section 105 of the Evidence Act the onus of proving exceptions mentioned in the Indian Penal Code lies on the accused but the said section does not at all indicate the nature and the standard of proof required. It is suffi cient if the, accused is able to prove his case by the standard of preponderance of probabilities as envisaged by section 5 of the Evidence Act. [445 A B] Harbhajan Singh vs State of Punjab, ; , 241 and State of U.P. vs Ram Swarup & Anr. [1975] 1 S.C.R. 409, 416 17, followed. The accused succeeds if the probability of his version throws doubt on the presecution case. He need not prove his case to the hilt. It is sufficient for the defence to give a version which competes in probability with the prosecution version for that would be sufficient to throw suspicion on the prosecution case entailing its rejection by the court. [445 B C] 4. In a criminal trial it is not at all obligatory on the accused to produce evidence in support of his defence and for the purpose of proving his version he can rely on the admissions made by prosecution witnesses or on the documents filed by the prosecution. The courts below were not justified in drawing adverse inference against the accused for not producing evidence in support his defence. The prosecution cannot derive any strength or support from the weakness of the defence case. [446 E G] 5. The courts below erred in basing conviction of the appellant on the sole testimony of the Nazir completely ignoring the important admissions made in favour of the accused by other prosecution witnesses, some of whom were declared hostile and some were .not. [446 H, 447 A] 6. No explanation is coming forth why the Secretary, Works Department Who was a Government servant, has not been examined. It was a part of the prosecution case that in the said meeting the Secretary did not direct the appellant to go to the village for making payment. The prosecution ought to have examined the Accountant who was a material witness in order to unfold the prosecution narrative itself. The court drew adverse inference for his non examination. [447 D:E] 7. Section 154 of the Evidence Act confers. a discretion on the court to permit a witness to be cross examined by a party calling him. The section confers a judicial discretion and must be exercised judiciously and properly in the inter est of justice. The court will not nor.m. ally allow a party to cross examine his own witness and declare the same hostile unless the court is Satisfied that the statement of the witness exhibits an element of hostility. or that he has resiled from a material statement which he made before an earlier authority. [448 G H, 449 A] 441 Dahyabhai Chhaganbhai Thakker vs State of Gujarat, ; , 368. 69. 70 followed. Merely because a witness in an unguarded moment speaks the truth which may not suit the prosecution or which may be favourable to the accused, the discretion to allow the party concerned to cross examine his own witnesses cannot be allowed. The contingency _of permitting the cross examina tion of the witness by the party calling him is an extra ordinary phenomenon and permission should be given only in special cases. [449 G H, 450 C] 8. On the facts the court found that the Trial Court wrongly exercised its discretion in permitting the prosecu tion to cross examine its own witnesses. [451 F] 9. Merely because a witness is declared hostile it does not make him unreliable so as to exclude his evidence from consideration altogether. [450 E F] Bhagwn Singh vs State of Haryana, ; , 391 92 followed. The court found that the defence version was ren dered probable by the testimony of witnesses as well as documents. [457 A D] 11. The Court found that the Nazir was not a reliable witness and that the courts below ought not to have acted on his sole testimony. [455 C]

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Civil Appeal No. 3400 of 1987. From the Judgment and order dated 23.1.1986 of the Andhra Pradesh High Court in Writ Appeal No. 22 of 1985. M.K. Ramamurthi, Attar Singh and G.N. Rao for the Appellant. T.V.S.N. Chari for the Respondents. The Judgment of the Court was delivered by SHARMA, J. The appellant 's application for appointment as a District Munsif by the State of Andhra Pradesh in the quota reserved for Scheduled Castes was rejected by the Andhra Pradesh Public Service Commission (briefly described as the 'Commission '), respondent No. 1, which the appellant challenged before the Andhra Pradesh High Court by a writ petition. The learned Single Judge allowed the prayer and directed the first respondent to consider the candidature of the appellant for the appointment in question. The respondents challenged the decision under Clause 15 of the Letters Patent in the High Court in Writ Appeal No. 22 of 1985. The appeal was allowed and the writ petition was dismissed. We have granted leave under Article 136 of the Constitution allowing the appellant to appeal against the said decision. The appointment of District Munsifs is regulated by Andhra Pradesh State Judicial Service Rules (hereinafter referred to as the Rules). In response to an advertisement issued by the 'Commission ' for filling up a large number of vacancies of District Munsifs by direct recruitment, the appellant applied. Subsequently a second advertisement was issued on 27.5.1984 with reference to vacancies reserved for Scheduled Castes, and the appellant made a second application. His present claim is with respect to these reserved posts. After passing the Law Examination the appellant got himself enrolled as an Advocate on the rolls of the State Bar Council on 24.2.1977 and practised law till 31.3.1981. On 1.4.1981 he was appointed in the service of Hindustan Shipyard, an undertaking owned by the Government of India, and claims to have remained in charge of the legal cell. As stated earlier, he applied in pursuance of the second advertisement dated 27.5.1984 notified by the 'Commission 38 In the opinion of the 'Commission ' the appellant did not fulfil the necessary qualification fixed under the Rules, and was therefore ineligible for appointment. The Rules have laid down three modes for appointment, namely, by direct recruitment, by promotion and by transfer. Rule 12 requires inter alia as an essential qualification for a candidate for appointment as a District Munsif that he should be in actual practice and should have been so engaged for not less than 3 years in a court of civil or criminal jurisdiction. Since the appellant was not in actual law practice, reliance has been placed on his behalf on the Proviso tc the aforementioned Rule, which is quoted below: "Provided that in the case of a person who is already in Government service and who applied for appointment to the post of District Munsif by direct recruitment, he must have actually practised for a period of not less than 3 years immediately prior to the date of his entering the Government service. It is contended that as the appellant had practised for a requisite period immediately prior to the date of his entering the service of Hindustan shipyard, he must be held to be qualified for appointment. The appellant 's claim is being refuted by the respondents on the ground that he was not in Government service. The stand of the respondents appears to be well founded. The Hindustan Shipyard, although a fully owned undertaking of the Central Government, cannot be equated with the Government or State except for the purposes of Part III of the Constitution. The undertaking has a separate legal entity. The expression "State" does not by reason of Article 12 of the Constitution include the undertaking except for the limited purpose which is not attracted in the present case. Mr. Ramamurthy, the learned counsel for the appellant, appreciating this position, contended that the word "Government '. should be deleted from the Proviso mentioned above, so as to save it from the vice of discrimination. The argument is that no distinction ought to be made between the experience which a candidate acquires in Government service and the experience one acquires in any other service, whether public or private in nature. The learned counsel urged that it is true that the appellant cannot claim to be qualified on the strength of the Proviso as it stands now but to save it from being struck down as illegal, the Court should omit the word 'Government '. There is no doubt that the expression "Government service" mentioned in the Proviso includes service either under the State Government or the Government of India. Sub rule (15)(a) of the definition Rule 2 explains that the expression "recruited direct" would refer to a candidate including a person in the service of Government of India or the Government of a State to be recruited directly subject to certain conditions mentioned therein. The learned counsel for the respondents, therefore, rightly said that a servant under the Government of India must be included within the scope of the Proviso. Mr. Ramamurthy, learned counsel for the appellant, fairly conceded that the appellant who is in the service of Hindustan Shipyard and is not serving directly the Union of India cannot take advantage of the Proviso, if the same as it stands is held to be legally valid. The attack is on its vires on the ground of illegal discrimination. We do not find any merit in this submission. What is forbidden by the Constitution is discrimination between persons who are substantially in similar circumstances or conditions. An equal treatment does not arise as between persons governed by different conditions and different sets of circumstances. It is obviously permissible to classify persons into groups and such groups may be differently treated if there is a reasonable basis for such difference or distinction. Having regard to the difference in the nature of service under the Government and that of the other services, therefore, a classification based on that line cannot be struck down on the ground of illegal discrimination. The Proviso in question must be held to be valid and effective 8. The High Court in the writ appeal while upholding the Proviso has interpreted it differently which does not appear to be correct. However, since the learned counsel for the respondents while defending the decision whereby the appellant 's writ application was rejected, has stated that the interpretation put by the Division Bench was not correct and he does not support it, it is not necessary to consider that aspect in detail. In view of our finding in paragraph 7 above, upholding the validity of the Proviso, as it is, the appellant must fail. Before closing, however, we would like to point out that the appellant cannot succeed even if the enabling provision in the Proviso relaxing the qualification clause of Rule 12 is held to be ultra vires. Besides, we have serious doubt whether a court can reframe a rule and give effect to it as suggested on behalf of the appellant, but we do not consider it necessary to deal with this aspect any further. In the result, the appeal fails and is dismissed but, in the circumstances, without costs. N.P.V. Appeal dismissed.

% The appellant who had enrolled himself as an Advocate on 24.2.77 and practised law till 1.4.81 when he was appointed in the service of the Hindustan Shipyard, an undertaking owned by the Government of India, applied for the post of a District Munsif, in pursuance of an advertisement dated 25.4.84 issued by the respondent No. 1 Andhra Pradesh Public Service Commission for filling up, by direct recruitment, of vacancies reserved for the Scheduled Castes. His application was rejected by the respondent No. I, as in its opinion, he did not fulfil the necessary qualification fixed under Rule 12 of the Andhra Pradesh State Judicial Service Rules and was, therefore, ineligible for appointment. The appellant challenged the aforesaid decision before the High Court. A Single Judge allowed the writ petition and directed the first respondent to consider the appellant 's candidature. The Letters Patent Appeal filed by the respondent was allowed and the writ petition was dismissed. In the appeal by special leave, the appellant contended that as he had practised for a requisite period immediately prior to his entering 36 service of Hindustan Shipyard, an undertaking owned by the Government of India, he must be held to be qualified for appointment, that no distinction ought to be made between experience acquired in Government service and the one in any other service, whether public or private in nature, that this discrimination was illegal and ultra vires and that the word "Government" should be deleted from the proviso to Rule 12 so as to save it from the vice of discrimination. The respondents opposed the appeal on the ground that the appellant was not in Government service. Dismissing the appeal, ^ HELD: 1.1 There is no doubt that the expression "Government service" mentioned in the proviso to Rule 12 of the Andhra Pradesh State Judicial Service Rules includes service either under the State Government or the Government of India. Sub rule (15)(a) of Rule 2 explains that the expression "recruited direct" would refer to a candidate including a person in the service of Government of India or the Government of State to be recruited directly subject to service conditions mentioned therein. [39A B] In the instant case, the Hindustan Shipyard, although a fully owned undertaking of the Central Government cannot be equated with the Government or State except for the purpose of part III of the Constitution. The undertaking has a separate legal entity. The expression "State" does not by reason of Article 12 of the Constitution include the undertaking except for the limited purpose which is not attracted in the present case. The appellant who is in the service of Hindustan Shipyard and is wt serving directly the Union of India cannot take advantage of the proviso. [38E F] 1.2 What is forbidden by the Constitution is discrimination between persons who are substantially in similar circumstances or conditions. An equal treatment does not arise as between persons governed by different conditions and different sets of circumstances. It is obviously permissible to classify persons into groups and such groups may be differently treated if there is a reasonable basis for such difference or distinction. [39C D] Having regard to the 'difference in the nature of service under the Government and that of the other services, therefore, a classification based on that line cannot be struck down on the ground of illegal discrimination. The Proviso to Rule 12 must be held to be valid and effective. [39D E] 37

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ivil Appeal No.678 of 1957. Appeal from the judgment and order dated August 1, 1956 of the Patna High Court, in Misc. Judicial Case No. 188 of 1955. WITH Civil Appeals Nos. 546 of 1958 and 115 of 1959. 333 Appeals from the judgment and order dated March 8, 1957, of the Patna High Court, in Misc. Judicial Cases Nos. 116 and 215 of 1956. Lal Narayan Sinha and section P. Varma, for the appellant. C. K. Daphtary, Solicitor General of India and R. C. Prasad, for respondent No. 1 in C. A. No. 678 of 57. B. C. Ghose and P. K. Chatterjee, for the intervener. H. N. Sanyal, Additional Solicitor General of India and C. P. Lal, for respondent No. 1 in C.A. No. 546 of 58. H. N. Sanyal, Additional Solicitor General of India and P. K. Chatterjee, for respondent No. 1 in C.A. No. 115 of 1959. November 26. The Judgment of the Court was delivered by GAJENDRAGADKAR J. This is a group of three appeals which have been filed in this Court by the State of Bihar (hereinafter called the appellant) against three separate registered dealers with a certificate issued by the Patna High Court Under article 132(1) of of the Constitution that they involve a substantial question of law as to the interpretation of article 20(1) of the Constitution. The facts in each one of the three appeals are similar, though not exactly the same, but they raise a common question of law under the proviso to section 14A of the Bihar Sales Tax Act, 1947 (Act XIX of 1947) (hereinafter called the Act). Orders of forfeiture have been passed against the three registered dealers in the three appeals respectively, and they raise a common question of law in regard to the validity of the said orders. By consent Civil Appeal No. 678 of 1957, has been argued before us as the principal appeal and it has been conceded that our decision in that appeal will govern the two other appeals. We would,, therefore, set out the facts in Civil Appeal No, 678 of 1957 and deal with the merits of the points raised for our decision in that appeal. Rai Bahadur Hurdut Roy Motilal Jute Mills, Katihar (hereinafter called the first respondent) was at the, 43 334 material time registered as a dealer under the Act and was carrying oil business of manufacture and sale of gunny bags, Hessian and other jute products at Katihar in the district of Purnea. During the period April 1, 1950, to March 31, 195 1, the said respondent sold and despatched its ware worth about Rs. 92,24,386 to dealers outside the State of Bihar and realised a sum of Rs. 2,11,222 9 6 as sales tax from such dealers. The said respondent 's assessment to sales tax for the relevant period was taken up by the Superintendent of Sales Tax, Purnea (hereinafter called the second respondent) on May 31, 1953; and in consequence of these proceedings the impugned order of forfeiture came to be passed. Meanwhile article 286 of the Constitution along with other articles was considered by this Court in the State of Bombay & Anr. vs The United Motors (India) Ltd. & Ors. The question which this Court bad to consider in that case was about the vires of the impugned provisions of the Bombay Sales Tax Act, 1952 (Act XXIV of 1952), and for the decision of the said question article 286 fell to be Considered. According to the majority judgment in that case article 286(1)(a) read with the explanation thereto and construed in the light of article 301 and article 304 prohibits the taxation of sales or purchases involving inter State elements by all States except the State in which the goods are delivered for the purpose of consumption therein. The latter State is left free to tax such sales or purchases and it derives this power not by virtue of the explanation to article 286(1) but under article 243(3) read with Entry 54 of List 11. The view that the explanation does not deprive the State in which the property in the goods passed of its taxing power and that consequently both the State in which the property in the goods passes and the State in which the goods are delivered for consumption have the power to tax is not correct. When the first respondent 's assessment was taken up by the second respondent his attention was invited to this Court 's decision in the case of the United Motors (1); he followed the said decision and held that (1) ; 335 the turn over of Rs. 92,24,386 1 6 on account of despatch of manufactured jute products to out of Stat buyers was exempted from the levy of tax; this meant, a deduction of the said amount from the amount of Rai Bahadur the total turnover shown by the first respondent in the return submitted by him according to the provisions of the Act. Subsequently the second respondent proceeded against the first respondent under section 14A of the Act" and issued a notice in that behalf on June 18, 1954. By this notice the first respondent was called upon to show cause why the entire amount of Rs. 2,11,222 9 6 which had been recovered by him as sales tax from the dealers should not be forfeited to Government. The first respondent showed cause but the second respondent was not satisfied with the explanation given by the first respondent, and so he directed the first respondent to deposit the said amount into the Government treasury and produce the proof of payment before him within a month of the receipt of his order. This order was passed on February 10, 1955. It shows that the second respondent thought that the matter raised for his decision was simple; the first respondent had collected the amount in question as tax under the Act from his customers for and on behalf of the appellant, and so he could not retain the said amount ; it must go to the State coffers. He also held that the first respondent had represented to the, purchasers that the amount was chargeable as sales tax under the Act and as such the first respondent had clearly contravened the explicit provisions of section 14A of the Act read with r. 19 of the Bihar Sales Tax Rules (hereinafter called the Rules). It is on these findings that the second respondent passed the impugned order of forfeiture. The first respondent then applied to the Patna High Court, tinder articles 226 and 227 of the Constitution challenging the validity of the said order. It was urged on his behalf that the proviso to section 14A under which the impugned order was purported to have been passed did not apply to the case of the first respondent, and as such the order was Dot justified 336 by the said proviso. It was also contended that if it is held that the said proviso justified the impugned order it was ultra vires the State Legislature inasmuch as it violates article 20(1) and article 31(2) of the Constitution. The High Court did not consider the first contention raised before it; it dealt with the two constitutional points urged by the first respondent and found in his favour on both of them. On these findings the petition filed by the first respondent was allowed, the impugned order of forfeiture was set aside and the proceedings taken against the first respondent under section 14A were quashed. The appellant then applied for and obtained a certificate from the said High Court under article 132(1) of the Constitution. On behalf of the appellant Mr. Lal Narain Sinha has contended that the High Court was in error in holding that the proviso to section 14A violates either article 20(1) or article 31(2) of the Constitution. He has addressed us at length in support of his case that neither of the two articles is violated by the impuged proviso. On the other hand, the learned SolicitorGeneral has sought to support the findings of the High Court on the said two constitutional points; and he has pressed before us as a preliminary point his argument that on a fair and reasonable construction, the proviso cannot be applied to the case of the first respondent. We would, therefore, first deal with this preliminary point. In cases where the vires of statutory provisions are challenged on constitutional grounds, it is essential that the material facts should first be clarified and ascertained with a view to determine whether the impugned statutory provisions are attracted; if they are, the constitutional challenge to their validity must be examined and decided. If, however, the facts admitted or proved do not attract the impugned provisions there is no occasion to decide the issue about the vires of the said provisions. Any decision on the said question would in such a case be purely academic. Courts are and should be reluctant to decide constitutional points merely as matters of academic importance. 337 Before considering the preliminary point raised by the first respondent it is necessary to refer briefly the relevant scheme of the Act. The Act was originally passed in 1947 because the Legislature thought it necessary to make an addition to the revenue of Bihar, and for that purpose to impose a tax on the sale of goods in Bihar. The provisions of the Act as well as the statutory Rules framed under it have been subsequently modified from time to time. In our present discussions we would refer to the provisions and the Rules which were in operation at the material time. The goods the sale of which is taxed under the Act are defined by section 2(d) as meaning all kinds of moveable property other than those specifically excepted. Section 2(g) defines " sale " inter alia as meaning any transfer of property in goods for cash or other considerations and the second proviso to it prescribes that the sale of any goods (1) which are actually in Bihar at the time when, in respect thereof the contract of sale as defined in section 4 of that Act is made, or (2) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall wherever the delivery or contract of sale is made, be deemed for the purposes of this Act to have taken place in Bihar. The tax leviable Linder the Act is defined by section 2(hh) as including a fee fixed in lieu of the tax under 'the ' first proviso to section 5, whereas under section 2(i) " turnover " means the aggregate of the amounts of sale prices received and receivable by a dealer in respect of sale or supply of goods or carrying out of any contract, effected or made during the given period, or, where the amount of turnover is determined in the prescribed manner, the amount so determined. Section 4 which is the charging section provides that every dealer whose gross turnover during the specified period on sales which have taken place both in and outside Bihar exceeds Rs. 10,000 shall be liable to pay tax on sales which have taken place in Bihar oil and from the date of the commencement of the Act. This section shows that the incidence of taxation can be attracted only where the gross turnover of the dealer exceeds Rs. 10,000 and in 338 determining this prescribed minimum. sales which take place both in Bihar and outside are taken into account. Section 5, prescribes the rate of tax at six pies in a rupee on the taxable turnover. The provisos to this section confer specific powers on the State Government; the first proviso which is relevant for our purpose empowers the State Government by notification to fix a higher rate of tax not exceeding one anna in a rupee or any lower rate of tax in respect of sale of any goods or class of goods specified in such notification subject to such conditions as it may impose. The explanation to this section indicates what the taxable turnover for the purpose of the section means. " Taxable turnover " according to this explanation means that part of a dealer 's gross turnover on sales which have taken place in Bihar during any period which remains after deducting therefrom the items specified in cls. (a) and (b) of the explanation. The sale of any goods declared from time to time as tax free goods under section 6 is one of those items. Section 6 empowers the State Government to exempt sale of any goods or class of goods from the levy of tax under this Act subject to the conditions specified in the section, whereas section 7 empowers the Government to exempt dealers from tax, and section 8 authorises the Government to prescribe points at which goods may be taxed or exempted. Section 9 deals with the question of registration of dealers and provides that no dealer who is liable to pay tax under section 4 shall carry on business unless he has been registered under the Act and possesses a registration certificate. Under section 11 a list of registered dealers is published, and by section 12 such registered dealers are required to furnish such returns by such dates and to such authorities as may be prescribed. Section 13 prescribes the procedure for assessment, and section 14 requires that the tax payable under the Act shall be paid in the manner hereinafter provided at such intervals as may be prescribed. Section 14(2) requires the registered dealer to pay into a Government treasury the full amount of tax due from him according to the returns which he has to file and has to 339 furnish along with the said return a receipt from the treasury showing the payment of such amount. Having thus provided for the recovery of the tax charged under section 4, section 14A in effect authorises registered dealers to reimburse their dues by making collections of the tax payable by them in accordance with the restrictions and conditions as may be prescribed. It provides that no dealer who is not a registered dealer shall realise any amount by way of tax on sale of goods from purchasers nor shall any registered dealer make any collection of tax except in accordance with such restrictions and conditions as may be prescribed. That takes us to the proviso to section 14A with which we are directly concerned in the present appeal. It reads thus: " Provided that if any dealer collects any amount by way of tax, in contravention of the provision of this section or the conditions and restrictions prescribed thereunder, the amount so collected shall, without prejudice to any punishment to which the dealer may be liable for an offence under this Act, be forfeited to the State Government and such dealer shall pay such amount into the Government treasury in accordance with a direction issued to him by the Commissioner or any officer appointed under section 3 to assist him and in default of such payment, the amount shall be recovered as an arrear of land revenue. " The effect of this proviso is clear. A dealer is authorised to collect amounts by way of tax from the purchasers only in accordance with the provision of section 14A and the conditions and restrictions prescribed thereunder. The conditions and restrictions referred to in the proviso are to be found in the material Rules framed under the Act. If it is shown that a dealer has collected an amount by way of tax in violation of the conditions and restrictions prescribed by the Rules he incurs the penalty of forfeiture as specified in the proviso. There can be no doubt that before the penalty of forfeiture can be imposed upon the dealer under the proviso it must be shown that he has acted contrary to the conditions and restrictions prescribed 340 by the Rules. It would not be enough to show that the collection of the amounts in question by the dealer is otherwise illegal or improper. The contravention of the statutory provision contained in section 14A or of the Rules prescribing conditions and restrictions in that behalf alone can form the basis of the imposition of the penalty under the proviso. This position is not disputed before us. The appellant contends that the proviso is attracted to the present case because the first respondent has contravened the conditions and restrictions imposed by the proviso to r. 19, whereas the first respondent argues that a proper construction of this latter proviso does not justify the appellant 's plea. It would thus be seen that the decision of the preliminary point raised by the first respondent involves the narrow question of the construction of the proviso to r. 19. Before construing the said proviso it is, however, necessary to refer to section 33 of the Act. This section was enacted on April 4,1951, but it has been expressly made retrospective as from January 26, 1950. Therefore at the material time this section must be deemed to have been in operation. Section33(1)(a)(i)provides that notwithstanding anything contained in the Act a tax on the sale or purchase of goods shall not be imposed under the Act where such a sale or purchase takes place outside the State of Bihar. Section 33(2) makes the explanation to cl. (1) of article 286 of the Constitution applicable for the interpretation of subcl. (i) of cl. (a) of sub section It is common ground that if the relevant provision just cited is construed in the light of the decision of this Court in the case of the United Motors (1) there can be no doubt that the sales which are the subject matter of the present proceedings consist of transactions on which a tax cannot be imposed under the Act. That is why the appellant strongly relies on this provision and contends that in construing the proviso to r. 19 the true legal position in respect of the transactions in question must be borne in mind. Let us now read the proviso to r. 19. Rule 19 itself prescribes the procedure which has to be followed by (1) ; 341 a registered dealer in realising any amount by way of tax on sale of goods from purchasers. This procedure refers to the issue of a cash memo or a bill as prescribed by it. The proviso to this Rule lays down that no such registered dealer shall realise any amount by way of tax at a rate higher than the rate, at which he is liable to pay tax under the Act, or realise any amount by way of tax in respect of such part of his turnover as is allowed to be deducted from his gross turnover for the determination of his taxable turnover under the Act or these Rules. The appellant relies on the latter part of the proviso and argues that the part of the turnover of the first respondent which is in question fell within section 33(1)(a)(1) and as such was not liable to be taxed. That being so there was no justification for the first respondent to collect any amount by way of tax from his purchasers under section 14A. The scheme of section 14A is to permit the registered dealer to collect such amounts of tax from his purchasers as he in his turn is liable to pay to the appellant. Authority to collect such tax amounts given to the registered dealer inevitably postulates his liability to pay a similar amount to the appellant. Therefore the conduct of the first respondent in collecting amounts by way of tax from his purchasers amounts to a breach of section 14A itself. It is also contended that having regard to the provisions of section 33(1)(a)(i) the first respondent was entitled to claim a deduction of the transations in question from his gross turnover under the latter part of the proviso, and that clearly means the first part of the said proviso applies to his case and it prohibited him from realising the said amounts. His conduct in collecting the amounts, therefore, constitutes a breach of the conditions specified in the proviso to r. 19. In appreciating the validity of these arguments it would be relevant to remember that at the material time there was considerable confusion in the minds of the public as well as the State authorities about the true scope and effect of the provisions of article 286(1) of the Constitution. It is not disputed that during the material period and in the years preceding it registered 44 342 dealers used to pay tax in respect of transactions which were really not liable to be taxed under section 33(1)(a)(i) and such tax was being received by the appellant. In fact, as we have already pointed out section 14 of the Act imposes a liability on the registered dealer to furnish along with his return a receipt for the payment of the tax which is payable under the return. Such payments were made by registered dealers in respect of similar transactions and were accepted. It is an accident that the assessment proceedings of the first respondent were actually taken up for decision by the second respondent after the decision of this Court in the case of the United Motors (1). If the question about the first respondent 's liability to pay the tax under the Act had been decided before the date of the said decision there is no doubt that he would have been required to pay the tax for the transactions in question. Indeed it is common ground that the notification issued for the material period levied a tax at three pies on the goods in question " if the sales tax authority is satisfied that the goods have been despatched by or on behalf of the dealer to any person outside the Province of Bihar. " This notification is consistent with the definition of the word " sale " as it then stood. It is thus clear that at the material time the appellant thought that transactions like those in question in the present appeal were liable to pay the tax at the rate of three pies as prescribed by the relevant notification; the registered dealers also had no doubt on the point; and so taxes were collected in respect of such transactions by the appellant from the registered dealers and by the registered dealers in their turn from their purchasers. Nevertheless, after the enactment of section 33 the legal fiction about the retrospective operation of the said section must be given effect to and in construing the proviso to r. 19 it must be assumed that the transactions in question were outside the scope of the Act and no tax could have been imposed in respect of them. Construing the proviso on this assumption, can it be said that in respect of the part of the first respondent 's (1) ; 343 turnover which is in question a deduction was allowable within the meaning of the proviso? In our opinion this question cannot be answered in favour of the appellant. Rule 19 itself was framed in 1949 and has not been amended subsequent to the enactment of section 33. As it was framed its reference to the allowable deductions was clearly based on the provisions of sections 6, 7 and 8 of the Act. This position would be clear beyond all doubt if we read the material words in the proviso in the light of the explanation to section 5 of the Act. The explanation in terms enumerates deductions which have to be made in determining the taxable turnover of the 'registered dealer and it is to these deductions which are allowable under the three sections specified in the explanation to which the latter part of the proviso to r. 19 refers. A claim for the exclusion of a part of the first respondent 's turnover on the strength of section 33(1)(a)(i) cannot, therefore, be said to be an allowable deduction under the proviso. This question can be considered from another point of view. The provisions which allow deductions to be made or grant exemptions in respect of certain transactions obviously postulate that but for them the transactions in question would be liable to. tax under the Act; and so when such transactions are included in the return the registered dealer is allowed to claim appropriate deductions in respect of them. But, the position with regard to section 33 is entirely different ; transactions which attract the provisions of the said section are in substance outside the scope of the Act and no tax can be imposed on them at all. If that be the true position the claim which can be made by the registered dealer in respect of such transactions cannot in law be regarded as a claim for allowable deductions or exemptions properly so called; it is really a claim that the Act itself does not apply to the said transactions. Therefore, in our opinion it would be straining the language of the second part of the proviso to r. 19 to hold that the transactions in question fell within its purview. There is one more point to be considered in this connection. Form VI which has been prescribed for 344 making the returns under section 12 requires the gross turnover to be mentioned at the outset, and then it provides for the different deductions allowable under the Act. This form was prescribed in 1949 and has not been amended after the addition of section 33 to the Act. On looking at this form it seems difficult to entertain the argument that the claim for the total exclusion of the transactions in question can be made under any of the headings prescribed in the form. The appellant, however, contends that the first item of gross turnover means the whole of the gross turnover which must include all sale transactions whether they took place within Bihar or outside it, and in support of this argument reliance is placed on the definition of " turnover " contained in section 2(1). If the whole of the gross turnover has to be mentioned under item 1, it is urged, the claim for the exclusion of the transactions in question can well be adjusted under one or the other of the deduction items prescribed in the form. We are not inclined to accept this argument. The form as it has been prescribed construed in the light of the material provisions contained in sections 6, 7 and 8 does not support the case that in prescribing its several items it was intended that the transactions failing under section 33 should be first shown under item 1 and then excluded under one or the other of the remaining items of deduction. Besides it may be relevant to point out that the heading of Chapter VII which deals with the submission of returns by dealers is " return of taxable turnover " and it is arguable that the gross turnover mentioned in Form VI may mean "gross taxable turnover " and not the gross turnover including the transactions which are outside the scope of the Act. Then as to the argument about the contravention of section 14A itself it is difficult to appreciate how any provision of section 14A can be said to have been contravened. Section 14A consists of two parts both of which are put in a negative form. The second part with which we are concerned in effect means nothing more than this, that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be 345 prescribed. If the argument is that the first respondent was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside section 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of section 14A as such. In fact section 14A itself refers to the restrictions and conditions which may be prescribed and, as we have already seen, these conditions and restrictions are prescribed by the Rules in general and by r. 19 in particular. So the argument urged under section 14A takes us back to the question as to whether the proviso to r. 19 has been contravened. In dealing with this question we cannot ignore the fact that the relevant provisions which fall to be construed in the present appeal impose a serious penalty on the registered dealer, and so, even if the view for which the appellant contends may perhaps be a possible view, we see no reason why the other view for which the first respondent contends and which appears to us to be more reasonable should not be accepted. In the result we hold that the proviso to section 14A cannot be invoked against the first respondent and so the order of forfeiture passed against him by the second respondent is unjustified and illegal. In view of this conclusion it is unnecessary to consider the objections raised by the first respondent against the validity of the proviso on the ground that it contravenes articles 20(1) and 31(2) of the Constitution. We may incidentally add that during the course of the arguments before us we have also heard all the learned counsel on the question as to whether the said proviso contravenes the provisions of article 19(1)(f) as well. The result is the appeal fails and is dismissed with costs. The decision of this appeal governs Civil Appeals Nos. 546 of 1958 and 115 of 1959. They also fail and are dismissed with costs. Appeal dismissed.

The respondent mills, a registered dealer under the Bihar Sales Tax Act, 1947 (Act 111 of 1947), was carrying on business of manufacture and sale of gunny bags, hessian and other jute products at Katihar. During the period April 1, 1950, to March 31, 1951, it sold and despatched its wares worth about Rs. 92,24,386 1 6 to dealers outside the State and realised a sum of Rs. 2,11,222 9 6 as sales tax from them. In assessing the sales tax payable by the said respondent for the relevant period the Superintendent of Sales Tax, Purnea, held that the said amount of sales tax had been realised in contravention of section 14A of the Act read with r. 19 of the Bihar Sales Tax Rules, and directed its forfeiture under the proviso to that section. The respondent challenged the validity of the said order under articles 226 and 227 of the Constitution. The High Court held that the proviso to section 14A of the Act was ultra vires the State Legislature as it violated articles 20(1) and 31(2) of the Constitution and set aside the order of forfeiture and quashed the proceedings under section 14A of the Act. The State of Bihar appealed to this Court. It was urged by way of preliminary objection on behalf of the respondent that since the proviso to section 14A of the Act had no application to the facts of the case, there was no occasion to decide its constitutional validity. The contention of the appellint was that the proviso did apply to the respondent inasmuch 332 as he had contravened the conditions and restrictions imposed by the proviso to r. 19. The question for determination, therefore, was whether the said respondent could be said to have realised any amount by way of tax in respect of such part of its turn over as was allowed to be deducted from his gross turn over for the determination of his taxable turn over under the Act or the rules, as contemplated by the later part of the said proviso. Held, that the preliminary objection must prevail. Held, further, that before the penalty of forfeiture could be imposed upon a dealer under the proviso to section 14A of the Bihar Sales tax Act, 1947, it had to be shown that he had acted contrary to the conditions and restrictions prescribed by the Rules and it was not enough to show that the collection of the sales tax made by him was otherwise illegal or improper. The contravention of the statutory provisions contained in section 14A or of the Rules prescribing conditions and restrictions in that behalf alone could form the basis of the imposition of the penalty of forfeiture prescribed by the said proviso. With the insertion of section 33 into the Act with retrospective operation, prohibiting the imposition of the tax on sales taking place outside the State and in view of the decision of this Court in State of Bombaay vs The United Motors (India) Ltd. ; , the proviso to r. 19 must be construed on the basis that the sales in question were outside the scope of the Act and no tax could be imposed on them. It could not, therefore, be said that that part of the respondent 's turnover which was in question was an allowable deduction within the meaning of the said proviso. Such allowable deductions as are contemplated by the proviso are clearly based on the provisions of sections 6, 7 and 8 of the Act as is quite clear from the Explanation to section 5 of the Act. State of Bombay & Another vs The United Motors (India) Ltd. An allowable deduction under the said proviso was not the same thing as exclusion of a part of the turn over on the basis of section 33(1)(a)(1) of the Act. It stands on an entirely different footing. Transactions which fall within the said section are in substance outside the Act and no tax can be imposed on them. The transaction in question did not, therefore, fall within the proviso to r.19 and the proviso to section 14A was not attracted and the order of forfeiture passed against the respondent was unjustified and illegal.

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Special Leave Petition (Civil) Nos. 6698 6700 of 1979. 867 From the Judgment and Order dated 25 10 1978 of the Rajasthan High Court in D. B. Civil Misc. Appeal Nos. 195, 196 and 197 of 1978. Soli J. Sorabjee Soli. and Sobhagmal Jain for the Petitioner. M. N. Shroff for the Respondent. The Order of the Court was delivered by KRISHNA IYER, J. These three petitions for special leave relate to a road tragedy where many lost their limbs while travelling in a bus belonging to the nationalised transport system of Rajasthan. A flimsy plea was put forward by the operator to escape liability for compensation that the lights of the bus accidentally failed and thus the unfortunate episode occurred. Other embellishments were also set up for the purpose of exoneration. The Accidents Tribunal was not taken in and, having disbelieved the evidence, awarded compensation in sums far lower than were claimed by the victims. Two contentions were raised and rightly over ruled and they have been repeated in the Petition for special leave and we similarly reject them. The nature of the accident and the surrounding circumstances are such that the doctrine res ipsa loquitur was rightly invoked by the court. Indeed, the terrible accidents attributable to reckless driving and escalating year after year make our high ways great hazards. One should have thought that nationalisation of road transport would have produced a better sense of social responsibility on the part of the management and the drivers. In fact, one of the major purposes of socialisation of transport is to inject a sense of safety, accountability and operational responsibility which may be absent in the case of private undertakings, whose motivation is profit making regardless of risk to life; but common experience on Indian high ways discloses callousness and blunted consciousness on the part of public corporations which acquire a monopoly under the in plying buses. It is a thousand pities that our State Road Transport vehicles should become mobile menaces, and we should impress upon them the need to have greater reverence for human life representing, as they do, the value set of the State itself. In the present case, the State Corporation put forward a false plea and contested the application of the principle of res ipsa loquitur to avoid liability. It would have been more humane and just if, instead of indulging in wasteful litigation, the Corporation had hastened compassionately to settle the claims so that goodwill and public credibility could be improved. After all, the State has a paramount duty, apart 868 from liability for tort, to make effective provision for disablement in cases of undeserved want Aritcle 41 of the Constitution states so. It was improper of the Corporation to have tenaciously resisted the claim. It was right on the part of the Tribunal to have raised a rebuttable presumption on the strength of the doctrine of res ipsa loquitur. The State Corporation has contested even the quantum of the claim. Indian life and limb cannot be treated as cheap, at least by State instrumentalities. The heads of claim have been correctly appreciated by the Tribunal and the awards have been moderate. Here again, the State Corporation should have sympathised with the victims of the tragic accident and generously adjusted the claims within a short period. What is needed is not callous litigation but greater attention to the efficiency of service, including insistence on competent, cautious and responsible driving. We have had the advantage of Shri Soli J. Sorabjee, who represented the Corporation with a characteristic sense of fairness, but we are unable to desist from making the above observations which are induced by the hope that nationalised transport service will eventually establish their superiority over the private system and sensitively respond to the comforts of and avoid injury to the travelling public and the pedestrian users of our highways. We dismiss the Special Leave Petitions. N.V.K. Petitions dismissed.

The respondents lost their limbs in a road accident while travelling in a bus belonging to the petitioner, a nationalised transport system. The plea by the operator to escape the liability for compensation was that the lights of the bus accidentally failed, which resulted in the accident. The Accidents Claims Tribunal negatived the plea and awarded compensation in sums far lower than were claimed by the respondents. In the special leave petitions to this Court, the petitioner contested the application of the principle of res ipsa loquitur and the quantum of the claim. Dismissing the petitions, ^ HELD: 1. (i) It was improper of the Corporation to have tenaciously resisted the claim. [868 A] (ii) It was right on the part of the Tribunal to have raised a rebuttable presumption on the strength of the doctrine of res ipsa loquitur. [868 B] 2. The heads of claim have been correctly appreciated by the Tribunal and the awards have been moderate. [868 C] 3. Instead of indulging in wasteful litigation, it would have been more humane and just, if the Corporation had hastened compassionately to settle the claims so that goodwill and public credibility could be improved. [867 H] 4. The State has a paramount duty, apart from liability for tort, to make effective provision for disablement in cases of undeserved want Article 41 of the Constitution states so. [868 A] 5. Nationalisation of road transport should have produced a better sense of social responsibility on the part of the management and drivers. One of the major purposes of socialisation of transport is to inject a sense of safety, accountability and operational responsibility which may be absent in the case of private undertakings whose motivation is profit making regardless of risk to life. [867 E F] 6. Common experience on Indian high ways disclose callousness and blunted consciousness on the part of public corporations which acquire a monopoly under the in plying buses. It is a pity that State Road Transport vehicles should become mobile menaces. [867 G]

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Civil Appeal No. 3787 of 1983. Appeal by Special leave from the Judgment and Order dated the 19th March, 1971 of the Madhya Pradesh High Court in Misc. Petition No. 565 of 1980. S.Q. Hassan, S.K. Mehta, P.N. Puri and M.K. Dua for the Appellant. Rameshwar Nath for the Respondent. The Judgment of the Court was delivered by BHAGWATI, J. This appeal by special leave raises a short but interesting question of law relating to the interpretation of certain provisions of the (hereinafter referred to as the Act). The question is whether section 47 sub section (3) of the Act is attracted when an application is made by the holder of a permit for extension of the route for which the permit has been granted to him. In order to appreciate the question, it is necessary to state a few facts giving rise to the appeal. The appellants are a partnership firm and at all material times they held a stage carriage permit granted to them by the Regional Transport Authority for the route Dabra Karera via Lodi Mata extended upto Gwalior. It appears that on 22nd June 1978 this route for which the permit was held by the appellants was modified at the request of the appellants and the portion of the route from Karera to Shivpuri was deleted. Thereafter by a Notification dated 4th August 1978 certain routes were nationalised under Scheme No. 11 M which came into force with effect from 25th September 1978 and under clause 7 (b) of this Scheme, the portion of the route from Shivpuri to Satanwara was deleted and the permit of the appellants remained operative only for the remaining portion of the route, namely, Satanwara Gwalior via Dabra. This state of affairs conti 292 nued from 25th September 1978 until 18th December 1978 when the State Government by a Notification issued in exercise of the powers conferred under sub section (2) of section 68 F of the Act made the following modifications in the various schemes approved by it under section 68 D sub section (2), including Scheme No. 11 M: "Notwithstanding anything contained in this Scheme, the private operators may be permitted to ply stage carriages for hire or reward subject to the following conditions, namely: (1) Whereas the notified route connects a district Head quarter, the portion thereof covered by the permit shall not exceed 20 kilometers and in other cases it shall not exceed 10 kilometers. (2) The private operators shall ply the stage carriage over the distance, other than the distance of the notified route, which shall not be less than twice the distance of the notified route covered by the permit; (3) The private operators shall not pick up or set down passengers on the notified route. Since this modification permitted plying of stage carriages by private operators even on portion of a nationalised route connecting a district head quarter and not more than 20 kms. in length, the appellants made an application to the Regional Transport Authority for restoring the portion of the route from Shivpuri to Satanwara on the ground that Shivpuri was a district head quarter and the portion of the route between Shivpuri and Satanwara was less than 20 kilometers. The Regional Transport Authority however took the view and in our opinion rightly, that the modification made by the State Government in Scheme No. 11 M under the Notification dated 18th December 1978 did not have any retrospective effect and the appellants were therefore not entitled to automatic restoration of the portion of the route from Shivpuri to Satanwara and in this view, the Regional Transport Authority rejected the application of the appellants. The appellants thereupon filed a regular application in the prescribed form for extension of the route specified in their permit 293 from Satanwara to Shivpuri. The application was published in the Gazette on 11th April 1980 and on coming to know about it, M.P. State Road Transport Corporation which is the 2nd respondent before us filed its objections against the grant of such extension. The application together with the objections was heard by the Regional Transport Authority and by an order dated 11th September 1980 the Regional Transport Authority rejected the application on two grounds. The first ground was that "the specific order of the State Government curtailing the Satanwara Shivpuri portion of applicant 's permit while approving Scheme No. 11 M cannot be treated as having been amended by the general amendment made to the scheme" and the other was that no extension of the route could be granted without following the procedure laid down in Section 47 sub section (3) of the Act. This order made by the Regional Transport Authority was challenged by the appellants in a writ petition filed in the High Court of Madhya Pradesh. There were two grounds of challenge urged on behalf of the appellants in support of the writ petition but we are concerned in this appeal with only one ground and hence we need not refer to the other ground and burden our judgment with a discussion of that ground. The ground which was seriously pressed before the High Court and repeated before us was that Section 47 sub section (3) has no application where what is sought by an applicant is not the grant of a new permit on a specified route under section 48 but merely an extension of the route under an existing permit under sub section (8) of section 57 and the order made by the Regional Transport Authority rejecting the application of the appellants on the ground of non compliance with sub Section (3) of section 47 was therefore plainly wrong. The appellants sought to support this ground by relying on the decision of the Madhya Pradesh High Court in Dewan Chand vs State Transport Authority. But the learned Judge who heard the writ petition observed that the decision in Dewan Chand 's case (supra) was contrary to the view taken by this Court in R. Obliswamy Naidu vs Regional State Transport Appellate Tribunal and Delhi Transport Undertaking vs Zamindar Motor Transport Company and held that by reason of the express language of sub section (8) of section 57 an application for 294 extension of the route specified in an existing permit was tantamount to an application for grant of a new permit and hence it was subject to the provisions of section 47 sub section (3) and it could not be considered without following the procedure prescribed by sub section (3) of section 47. The learned Judge on this view rejected the writ petition of the appellants. The appellants thereupon preferred the present appeal with special leave obtained from this Court. The only question which arises for consideration in this appeal is as whether section 47 sub section (3) is attracted when an application is made by a holder of a permit for extension of the route specified in the permit. The determination of this question depends upon a true interpretation of some of the relevant provisions of the Act. Section 2 is the definition section and clause (28A) of this section defines route to mean "a line of travel which specifies the high way which may be traversed by a motor vehicle between one terminus and another". Chapter IV is the only material chapter for our purpose and as its heading shows, it deals with control of transport vehicles. Section 42 provides that no owner of a transport vehicle shall use or permit the use of the vehicle in any public place save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or the Commission authorising the use of the vehicle in that place in the manner in which the vehicle is being used. Section 43 confers certain powers on the State Government to issue directions to the State Transport Authority and section 44 provides for the constitution of State Transport Authority and Regional Transport Authorities for each State. Section 45 specifies the authority to which an application for a permit must be made and what particulars an application for a permit shall contain is prescribed in section 46. Section 47 sub section (1) lays down what matters shall be taken into account by the Regional Transport Authority in considering an application for a stage carriage permit and various other provisions regarding reservation of certain percentage of stage carriage permits for Scheduled Castes and Scheduled Tribes and persons belonging to economically weaker sections of the community are made in sub section (1A) to sub section (1H) of section 47. Then follows sub section (3) of section 47 which is in the following terms: "47 (3). A Regional Transport Authority may, having regard to the matters mentioned in sub section (1) limit the number of stage carriages generally or of any specified 295 type for which stage carriage permits may be granted in the region or in any specified area or on any specified route within the region. " Section 48 sub section (1) provides that, subject to the provisions of section 47, a Regional Transport Authority may, on an application made to it under section 46, grant a stage carriage permit in accordance with the application or with such modifications as it deems fit or refuse to grant such a permit, provided that no such permission shall be granted in respect of any route or area not specified in the application. Sub section (3) of section 48 empowers the Regional Transport Authority while granting a stage carriage permit to attach to the permit any one or more of the conditions set out in that sub section. One of the conditions which may be attached to the permit is that set out in clause (xxi) and it reads as follows: "48(xxi): that the Regional Transport Authority may, after giving notice of not less than one month (a) vary the conditions of the permit; (b) attach to the permit further conditions; Provided that the conditions specified in pursuance of clause (i) shall not be varied so as to alter the distance covered by the original route by more than 24 kilometres, and any variation within such limits shall be made only after the Regional Transport Authority is satisfied that such variation will serve the public convenience and that it is not expedient to grant a separate permit in respect of the original route as so varied or any part thereof. " Sections 49 to 51 deal with an application for grant of contract carriage permit while sections 52 and 53 deal with an application for grant of private carrier 's permit. We are not concerned with these provisions and hence we need not refer to them. So also we are not concerned with sections 54 to 56 which deal with application for public carrier 's permit. Section 57 is however an important section and in its various provisions it lays down the procedure in applying for and granting permits. Sub section (2) of section 57 296 prescribes the time within which an application for a stage carriage permit should be made and sub Sections (3) to (7) lay down the procedure which must be followed by the Regional Transport Authority while dealing with an application for a stage carriage permit made before it. Sub section (8) of section 57 is the material provision which calls for interpretation and it runs as follows: "57 (8): An application to vary the conditions of any permit, other than a temporary permit, by the inclusion of a new route or routes or a new area or, in, the case of a stage carriage permit, by increasing the (number of trips above the specified maximum or by altering the route covered by it) or in the case of a contract carriage permit or a public carrier 's permit, by increasing the number of vehicles covered by the permit, shall be treated as an application for the grant of a new permit. " The argument of the respondents on these provisions was, and this argument found favour with the High Court, that an application for extension of the route specified in a permit is nothing but an application to vary the conditions of the permit by altering the route covered by it and it is therefore required by sub section (8) of section 57 to be treated as an application for grant of a new permit and hence, by reason of section 48, the grant of such an application for extension must be held to be subject to the provisions of section 47 sub section (3) and no such extension can be granted without following the procedure prescribed by sub section (3) of section 47. The validity of this argument was assailed before us on behalf of the appellants and it was contended that the fulfilment of the condition set out in sub section (3) of section 47 was not a part of the procedure for consideration of an application for extension of the route specified in a permit and when sub section (8) of section 57 provided that such an application shall be treated as an application for grant of a new permit, what was sought to be incorporated was merely the procedure set out in sub section (3) to (7) of Section 57 and not pre condition for consideration of such an application set out in sub section (3) of Section (47). This contention, it was submitted on behalf of the appellants, was supported by Clause (xxi) of sub section (3) of Section 48, because if the condition set out in that clause is attached to a permit, the Regional Transport Authority can suo motu extend the route specified in the permit upto a distance of 297 24 k.ms. for serving the public convenience, without being subject to the provisions of sub section (3) of Section 47 and if the Regional Transport can do so suo motu without being required to follow the procedure of sub section (3) of Section 47, there is no reason why the Regional Transport Authority should not be entitled to do so on an application for extension made by the holder of the permit. These were the rival arguments urged on behalf of the parties and we shall now proceed to consider them. The permit held by the appellants in the present case, after the deletion of the portion of the route from Shivpuri to Satanwara was operative only for the remaining portion of the route namely, Satanwara Gwalior via Dabra and in view of the modification made in Scheme No. 11 M by the notification issued by the State Government under section 68F sub section (2) on 18th December, 1978, the appellants applied for extension of the route from Satanwara to Shivpuri, a distance less than 20 kilometers. The question it whether this application could be considered by the Regional Transport Authority without first determining under section 47 sub section (3) the number of stage carriages for which permits may be granted for the route Shivpuri Satanwara Gwalior via Dabra, because if the extension applied for were granted, that would be the route for which the permit would be operative. Now, it is clear that it was a condition of the permit, after the deletion of the portion of the route from Shivpuri to Satanwara, that the appellants shall use their vehicle or vehicles only on the route Satanwara Gwalior via Dabra. The application of the appellants for extension of this route by including the portion from Shivpuri to Satanwara was, therefore, in effect and substance, an application for varying this condition of the permit by extending the route and it clearly fell within the terms of sub section (8) of section 57. So far there was no dispute between the parties, but at this point the agreement between the parties ended and a controversy arose as to what was the consequence and effect of the applicability of sub section (8) of section 57 to this application made by the appellants. There can be little doubt that under terms of sub section (8) of section 57, this application of the appellants was liable to be "treated as an application for the grant of a new permit". But the question is: for what purpose and which of the provisions of the Act could be said to be attracted to this application by reason of the requirement that it should be treated as an application for the grant a new permit. The argument of the respondents was that no application for grant of a new permit can be entertained by the Regional Transport Authority under section 48, unless the number of stage carriages 298 for which permits may be granted for the particular route is first determined by the Regional Transport Authority under sub section (3) of section 47, and, therefore, the consequence of treating the application of the appellants for extension of the route as an application for grant of a new permit was that no extension could be granted by the Regional Transport Authority unless the requirement of section 47 sub section (3) was first complied with and the number of stage carriages for which permits may be granted on the extended route was determined under that provision. But we do not think this argument is well founded. It is undoubtedly true that having regard to the several decisions of this Court and particularly, the decision in Mohd. Ibrahim vs State Transport Appellate Tribunal, Madras, the law must now be taken to be well settled that an application for grant of a new permit cannot be entertained by the Regional Transport Authority under section 48, unless the limit of the number of stage carriages for which permits may be granted is first determined under section 47 sub section (3). There are two independent steps required to be taken in connection with the grant of a permit, the first being the determination by the Regional Transport Authority under section 47 sub section (3) of the number of stage carriages for which permits may be granted and the second being that "thereafter applications for stage carriage permits can be entertained" and, therefore, it would mean that before an application for grant of a permit can be entertained by the Regional Transport Authority, there would be a determination under section 47 subsection (3). Ray, J., as he then was speaking on behalf of the Court observed in Ibrahim 's case (supra): "In our opinion, the provisions of the Act in regard to stage carriage permits have the following consequences. If the Regional Transport Authority were to appoint a date for the receipt of applications for the grant of stage carriage permits, the Regional Transport Authority should fix the limit of the number of permits which might be granted and then notify the same under section 57 (2) of the Act. If, on the other hand, applications were sent by persons suo motu for the grant of permit the applications would have to be published and the representations would have to be asked for. The proviso of 299 section 57 (3) of the Act furnishes the answer that if the grant of any permit in accordance with the application would have the effect of increasing the number of permits beyond the limit fixed under section 47 (3) of the Act, the Regional Transport Authority might summarily refuse the application without following the procedure laid down in section 57 of the Act. In other cases, the proper stage for fixing the limit under section 47 (3) of the Act would be after applications are received and before the same would be published under section 57 (3) of the Act asking for representations. If however the Regional Transport Authority would not increase or modify the number of permits which already exist, the grant of an application would mean transgressing the limit fixed, and procedure laid down in section 57 (3) of the Act need not than be followed. On the other hand, if the Regional Transport Authority on receipt of applications would decide upon the limit of permits and the grant thereof would be with in the limit prescribed then the procedure laid down in section 57 (3) of the Act would be followed. " There can, therefore, be no doubt that if an application for varying the condition of a permit by extension of the route specified in the permit were equated wholly with an application for grant of a new permit and the permit for the extended route were to be regarded as a new permit, the procedure prescribed in section 47 sub section (3) would have to be followed and the number of stage carriages for which permits may be granted on the extended route would have to be determined before the application could be entertained by the Regional Transport Authority. But we do not think that the prescription in sub section (8) of section 57 that an application for varying the condition of a permit by extension of the route shall be treated as an application for grant of a new permit has effect of equating such an application with an application for grant of a new permit for all purposes so as to attract the applicability of sub section (3) of section 47. Section 57 deals with the procedure in applying for and granting permits and sub section (3) to (7) lay down the procedure which must be followed in considering and deciding, inter alia, an application for grant of a stage carriage permit. Sub section (8) follows upon sub section (3) to (7) and is part of the same section which has a definite object and scheme of providing the procedure for considering and granting an application and therefore, when it 300 provides that an application to vary the conditions of a permit by the inclusion of new route or routes or new area or by increasing the number of trips above the specified maximum or by altering the route covered by it shall be treated as an application for grant of a new stage carriage permit it is obviously intended to incorporate and make applicable the procedure set out in the preceding sub section (3) to (7) to such an application. The context in which sub section (8) occurs and its juxtaposition with sub section (3) to (7) in section 58 clearly indicate that what is sought to be made applicable to an application referred to in sub section (8) by treating it as an application for grant of a new permit, is the procedure set out in sub section (3) to (7) of section 58 and nothing more. The requirement spelt out in sub section (3) of section 47 that the number of stage carriages for which permits may be granted on any particular route must be first determined before an application for grant of a stage carriage permit can be entertained by the Regional Transport Authority under section 48, is obviously not a part of the procedure for considering an application for grant of a permit; it is a condition precedent before an application for grant of a permit can be considered and granted. This condition precedent cannot be said to have been incorporated by reference under sub section (8) of section 57. An application to vary the conditions of a permit as set out is undoubtedly to be treated as an application for grant of a new permit, but that is only for the purpose of applying the procedure set out in sub section (3) to (7) of that section. It is not an application for a new permit and if it is granted, the permit for the extended route does not become a new permit in the hands of the applicant. It is the same permit which now, after the granting of the application, covers the extended route. It may be possible to say that where a totally new route is sought to be included by an application to vary the conditions of a permit or the alteration of the route sought by such an application is of such a drastic character that it becomes substantially a new route, the application, though in form an application to vary the conditions of the permit, would in effect a and substance, be an application for grant of a new permit and in such a case, a view may conceivably be taken with some degree of plausibility that the number of stage carriages for which permits may be granted on such new route should first be determined under section 47 sub section (3) before the application to vary the conditions of the permit can be entertained. An applicant for a permit on a route which is not merely technically, but in truth and reality a different route, distinct from the original route, may not be permitted to defeat the provision enacted in section 47 sub section (3) by 301 labelling his application as one for varying the conditions of the permit and in such a case, the procedure set out in section 47 sub section (3) may have to be complied with before the Regional Transport Authority can consider and grant the application. But where an application merely seeks a short extension of the route specified in the permit as in the present case, it would not be appropriate to say that it is an application for grant of a new permit, though technically the extended route may not be regarded as the same as the original route and where such is the case, it would not be necessary to comply with the procedure set out in sub section (3) of Section 47. We are, therefore, of the view that the High Court was in error in holding that the application made by the appellants for extension of the route specified in their permit from Satanwara to Shivpuri could not be considered by the Regional Transport Authority with out following the procedure prescribed under sub section (3) of Section 47. We accordingly allow the appeal, set aside the judgment of the High Court as also the order made by the Regional Transport Authority and remit the case back to the Regional Transport Authority for considering the application of the appellants in accordance with law in the light of the observations contained in this judgment. There will be no order as to costs of the appeal. S.R. Appeal allowed.

The appellants held stage carriage permit granted to them by the Regional Transport Authority for the route Dabra Karera Via Lodi Mato extended upto Gwalior. On 22 6 1978, this route for which the permit was held by the appellants was modified, at their own request, by deleting the portion of the route from Karera to Shivpuri. By a notification dated 4 8 1978 certain routes were nationalised under Scheme No. 11 M which came into effect from 25 9 1978, including deletion of the portion of the route from Shivpuri to Satanwara, with the result the permit of the appellants remained operative only for the remaining portion of the route namely, Satanwara Gwalior Via Dabra. Effective from 19 12 1978, the State Government issued another Notification making modifications in the route schemes. Since this modification permitted plying of stage carriages by private operators even on a portion of a nationalised route connecting a district headquarters and not more than 20 KMs in length, the appellants made an application to the Regional Transport Authority for restoring the portion of the route from Shivpuri to Satanwara on the ground that Shivpuri was a district headquarter and the portion of the route from Shivpuri and Satanwara was less than 20 KMs. The Regional Transport Authority rejected the said application on the ground that the Notification dated 18 12 1978 did not have any retrospective effect and therefore, the appellants were not entitled to automatic restoration of the portion of the route from Shivpuri to Satanwara. The appellants thereupon filed an application in the prescribed form for extension of the route specified in their permit from Satanwara to Shivpuri. The said application was rejected after hearing the objections on two grounds, namely (i) the specific order of the State Govt. Curtailing the Satanwara Shivpuri portion of the applicants ' permit, while approving Scheme 11 M cannot be treated as having been amended by the General Amendment to the Scheme, and (ii) no extension of the route could be granted without following the procedure laid down in Section 47(3) of the Act. This order of the Regional Transport Authority was challenged by the appellants in a writ petition filed in the High Court of Madhya Pradesh. The High Court rejected the petition holding that by reason of the express language of Sub Section (8) of Section 57, an application for extension of the route specified in an existing permit was tantamount to an application for grant of a new permit and hence 289 it was subject to the provisions of Section 47(3) and it could not be considered without following the procedure prescribed by Section 47(3). Hence the appeal after obtaining special leave of the Court. Allowing the appeal, the Court HELD: 1.1 The application made by the appellants for extension of the route specified in their permit from Satanwara to Shivpuri could be considered by the Regional Transport Authority without following the procedure prescribed under Sub Section (3) of Section 47. [297 E H] 1.2 However, under the terms of Sub Section (8) of Section 57 this application of the appellants was liable to be treated as an application for the grant of a new permit, since in effect and substance, it was an application for varying the condition of the permit by extending the route from Shivpuri to Satanwara. But the question is for what purpose ? [297 G H] 2.1 Having regard to the several decisions of the Supreme Court and particularly the decision in Mohd. Ibrahim vs State Transport Appellate, Tribunal, Madras, , the law is well settled that an application for grant of a new permit cannot be entertained by the Regional Transport Authority under Section 48, unless the limit of the number of stage carriages for which permits may be granted is first determined under section 47(3). There are two independent steps required to be taken in connection with the grant of a permit, the first being the determination by the Regional Transport Authority under Section 47(3) of the number of stage carriages for which permits may be granted and the second being that "thereafter applications for stage carriage permits can be entertained" and, therefore, it would mean that before an application for grant of a permit can be entertained by the Regional Transport Authority, there should be a determination under Section 47(3). Therefore, if an application for varying the condition of a permit by extension of the route specified in the permit were equated wholly with an application for grant of a new permit and the permit for the extended route were to be regarded as a new permit, the procedure prescribed in Section 47(3) would have to be followed and the number of stage carriages for which permits may be granted on the extended route would have to be determined before the application could be entertained by the Regional Transport Authority. [298 C E; 299 E F] 2.2 But, the prescription in Sub Section (8) of Section 57 that an application for varying the condition of a permit by extension of the route shall be treated as an application for grant of a new permit has not the effect of equating of such an application with an application for grant of a new permit for all purposes so as to attract the applicability of Sub Section (3) of Section 47. [299 F G] 3.1 Section 57 deals with the procedure in applying for and granting permits and Sub Sections (3) to (7) lays down the procedure which must be followed in considering and deciding, inter alia, an application for grant of a stage carriage permit. Sub Section (8) follows upon Sub Sections (3) to (7) 290 and is a part of the same Section which has a definite object and Scheme of providing the procedure for considering and granting an application and therefore, when it provides that an application to vary the conditions of a permit by the inclusion of new route or routes or new area or by increasing the number of trips above the specified maximum or by altering the route covered by it shall be treated as an application for grant of a new stage carriage permit, it is obviously intended to incorporate and make applicable the procedure set out in the preceding Sub Sections (3) to (7) to such an application. The context in which Sub Section (8) occurs and its juxtaposition with Sub Section (3) to (7) in Section 58 clearly indicate that what is sought to be made applicable to an application referred to in Sub Section (8) by treating it as an application for grant of a new permit is the procedure set out in Sub Section (3) to (7) of Section 58 and nothing more. [299 G H; 300 A C] 3.2 The requirement spelt out in Sub Section (3) of Section 47 that the number of stage carriages for which permits may be granted on any particular route must be first determined before an application for grant of a stage carriage permit can be entertained by the Regional Transport Authority under Section 48, is obviously not a part of the procedure for considering an application for grant of a permit; it is a condition precedent before an application for grant of a permit can be considered and granted. This condition cannot be said to have been incorporated by reference under Sub Section (8) of Section 57. An application to vary the conditions of a permit as set out in Sub Section (8) of Section 57 is undoubtedly to be treated as an application for grant of a new permit, but that is only for the purpose of applying the procedure set out in Sub Sections (3) to (7) of Section 57. It is not an application for a new permit and if it is granted, the permit for the extended route does not become a new permit in the hands of the applicant. It is the same permit which now after granting of the application covers the extended route. [300 C F] 3.3 Where a totally new route is sought to be included by an application to vary the conditions of a permit or the alteration of the route sought by such an application is of such a drastic character that it becomes substantially a new route, the application, though in form an application to vary the conditions of the permit, would in effect and substance, be an application for grant of a new permit and in such a case, a view may conceivably be taken with some degree of plausibility that the number of stage carriages for which permits may be granted on such new route should first be determined under Sub Section (3) of Section 47 before the application to vary the conditions of the permit can be entertained. [300 F H] An applicant for a permit on a route which is not merely technically, but in truth and reality a different route, distinct from the original route, may not be permitted to defeat the provision, enacted in Sub Section (3) of Section 47, by labelling his application as one for varying the conditions of the permit and in such a case, the procedure set out in Section 47 (3) may have to be complied with before the Regional Transport Authority can consider and grant the application. [300 H; 301 A] 291 But where an application merely seeks a short extension of the route specified in the permit, as in the present case, it would not be appropriate to say that it is an application for grant of a new permit, though technically the extended route may not be regarded as the same as the original route and where such is the case, it would not be necessary to comply with the procedure set out in Sub Section (3) of Section 47 of the Motor Vehicles Act. [301 B C]

4696.txt

Special Leave Petition (Civil) No. 15667 of 1987. 813 From the Judgment and Order dated 11.11.1987 of the Patra High Court in Appellate Decree No. 133 of 1983. G.L. Sanghi, S.K. Mehta, M.K. Dua, S.M. Sarin and Aman Vachher for the Petitioner. Salman Khurshid, Irshad Ahmad, V.D. Phadke and L.R. Singh for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is a petition for leave to appeal against the judgment and order dated 11th November, 1987 of the High Court of Patna. On 16th January, 1958 a lease deed was executed between the lessee Latifur Rehman and lessor Khaja Midhat Noor (hereinafter called the respondent) with permission to sub lease the same. The said Latifur Rehman sub leased the premises to Burmah Shell Oil Distributing Company (the petitioner herein) for running a petrol pump and making necessary constructions thereon. The lease was for a period of ten years which expired on 16th January, 1968. It appears further that after the lease period had expired, the sub lessee, petitioner continued to pay the rent which was being accepted continuously from month to month by the respondent, the lessor. A notice was issued by the respondent to the lessee terminating the lease and for giving vacant possession of the land by the 15th January, 1973 and also requiring the removal of the buildings, plant, etc., by the 16th January, 1973. In the last two paras of the said notice, it was stated that the lessee was to surrender the lease hold land on the expiry of 15th January, 1973. No notice was given separately to the petitioner terminating its lease. A suit for ejectment was filed thereafter. The lessee Latifur Rehman did not contest the suit for ejectment. The petitioner, however, contested that proceeding. The learned Munsiff I, Gaya, by his judgment dated 8th May, 1979 dismissed the suit holding that the notice terminating the lease was necessary and the notice in this case was invalid. The plea of the landlord that the tenancy expired by afflux of time, was rejected. On 22nd February, 1983 the 1st Additional Sub Judge, Gaya allowed the appeal of the landlord and held that the notice terminating the tenancy and asking the petitioner to surrender by the 15th January, 1973 was a valid notice. The main question involved is, whether there was a valid termination of the lease and as such the sub lessee, the petitioner herein was 814 bound to deliver vacant possession. A written statement had been filed by the petitioner, the sub lessee, wherein it was, inter alia, stated that it was holding over the lease hold property after the expiry of the lease by paying rent. No notice terminating tenancy was received by it. The validity of the notice to the lessee was also challenged. The trial Court held that the lease was not extended for a fixed period of five years in absence of any written instrument. The following two questions of law were re formulated by the High Court: (1) In absence of any registered instrument executed by both the parties i.e. the lessor and the lessee after the period stipulated in Ext. 4 i.e. the period of ten years, can it be said that the lease was extended automatically for a period of five years in terms of Ext. 4 or further whether the lessee was holding the suit property as tenancy from month to month? (2) If the first part of question (1) is held in negative and second part in the affirmative, as a consequence of which it must be held that the lease was required to be determined, whether the notice as contained in Ext. 7 validly terminated the lease of the lessee? Indubitably, the lessee came in possession of the property in question on 16th January, 1958. The lease was for a period of ten years with a right of renewal for a further period of five years. After the expiry of ten years, no instrument was executed by the parties and the lessee continued to remain in possession of the suit property. The lessor accepted the rent and allowed the lessee to continue. It is relevant in this connection to refer to the provisions of the (hereinafter called 'the Act '). Section 106 of the Act deals with the duration of certain leases in absence of written contract or local usage and section 107 deals how leases are to be made. These sections read as follows: "106. In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months ' notice expiring with the end of a year of the tenancy; and a lease of immovable property for 815 any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days ' notice expiring with the end of a month of the tenancy. Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants, at his residence, or if such tender or delivery is not practicable affixed to a conspicous part of the property. A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee: Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession. " In view of the paragraph 1 of section 107 of the Act, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. In the absence of registered instrument, the lease shall be deemed to be "lease from month to month". It is clear from the very language of section 107 of the Act which postulates that a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. In the absence of registered instrument, it must be a 816 monthly lease. The lessee and the sub lessee in the facts of this case continued to remain in possession of the property on payment of rent as a tenant from month to month. The High Court so found. We are of the opinion that the High Court was right. Section 116 of the Act which was placed before the High Court deals with the effect of holding over and provides as follows: "116. If a lessee or under lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106. " It was submitted before the High Court that this was not a case of continuing of old tenancy for a period of five years but in view of the clear provisions of section 107 which we have noted hereinbefore and in the absence of a registered instrument, it must be held that it was holding over and not continuation of old tenancy for a further period of five years. That would be the harmonious construction of section 107 read with section 116 in the facts of this case. We are of the opinion that the High Court was right that the tenancy was automatically determined on the expiry of ten years which was stipulated in Ext. Thereafter the lessee continued to hold the property and the lessor accepted the rent. The lease was, therefore, renewed from month to month because it was not the case of any party that it was for agricultural purposes. In that view of the matter, the termination of the lease could only be by giving a valid notice. Such notice was given to the lessee but not to the sub lessee. The respondent 's case is that a notice to sub lessee was not necessary. It was contended on behalf of the appellant that by Ext. 7 the lessee was asked to quit the lease hold premises on the expiry of 15th June, 1973. Admittedly, in this case, the lease was executed on 16th January, 1958 and from that date the lease came into existence. For computing the period of ten years the 16th January, 1958 had to be excluded. The tenancy was, therefore, terminated on the expiry of 16th of the month. The notice in the instant case of the quit which was Ext. 7 before the Court dated 30th November, 1972, 817 was given on behalf of the respondent to Latifur Rehman lessee. In paragraph 4 of Ext. 7 it was stated that the lessee was to deliver the possession of the lease hold property by 16th January, 1973. In paragraph 5 of Ext. 7 the lessee and sub lessee were required to remove the buildings, plants etc. by the 16th January, 1973. In the last but one and the last paragraph of Ext. 7 it was stated that the lessee was to surrender the properties of the lease hold land on the expiry of 15th January, 1973. The question is whether there was a valid notice. The High Court held that in the facts of this case, there was a valid notice of termination and after the valid notice of termination of the lease to the lessee, there was no need to give a fresh notice to the sub lessee. Notice must be read in the context of the facts of each particular case having regard to the situation of the parties to whom it is addressed. In Harihar Banerji and others vs Ramasashi Roy and others, 45 Indian Appeals 222 at page 225, the Judicial Committee observed as follows: ". .that notices to quit, though not strictly accurate or consistent in the statements embodied in them, may still be good and effective in law; that the test of their sufficiency is not what they would mean to a stranger ignorant of all the facts and circumstances touching the holding to which they purport to refer, but what they would mean to tenants presumably conversant with all those facts and circumstances; and, further, that they are to be construed, not with a desire to find faults in them which would render them defective, but to be construed ut res magis valeat quam pereat. " This is how the notices should be literally construed. This decision was relied upon by this Court in Mangilal vs Suganchand Rathi; , There, however, the facts were different. There the defendant was a tenant of the plaintiffs. The defendant was in arrears of rent for one year to the extent of Rs. 1020. On April 11, 1959 the plaintiffs served a notice on the defendant requiring him to remit to them Rs.1020 within one month from the date of service of notice, failing which suit for ejectment would be filed. This notice was received by the defendant on April 16, 1959. On June 25, 1959 the defendant sent a reply to the notice enclosing with it a cheque for Rs.1320. This amount consisted of the rental arrears as well as the rent due right up to June 30, 1959. The plaintiffs accepted the cheque and cashed it and gave a fresh notice on July 9, 1959 requiring the defen 818 dant to vacate the premises by the end of the month of July. The defendant did not vacate the premises. Then the plaintiffs filed a suit to eject the defendant upon the ground that the latter was in arrears of rent for one year and had failed to pay the arrears within one month of the service of the notice dated April 11, 1959 upon him. From the undisputed facts it was clear that the defendant was in fact in arrears of rent and had failed to pay it within the time prescribed by cl.(a) of section 4 of the Madhya Pradesh Accommodation Control Act, 1953. It was held that though the notice dated 11th April, 1959 could be construed to be composite notice under section 4(a) of the Accommodation Act and section 106 of the it was ineffective under section 106 of the because it was not a notice of 15 clear days. In that case, the defendant had only 14 clear days ' notice. Reference was made to the aforesaid decision of Harihar Banerji vs Ramsashi Roy (supra) which was distinguished by this Court. This Court held that notice under section 106 of the Act must be strictly complied with. In so holding this Court relied on a decision of the Calcutta High Court in Subadini vs Durga Charan Law, I.L.R. which was construing a notice contemplated by section 106 of the Act and had held that in calculating the 15 days ' notice the day on which the notice was served was excluded and even if the day on which it expired was taken into account it would be clear that the defendant had only 14 clear days ' notice. This position was again reiterated by the Calcutta High Court in Gobinda Chandra Saha vs Dwarka Nath Patita, A.I.R. This Court affirmed this view that notice must be understood in the light of Harihar Banerji vs Ramsashi Roy (supra). This Court held that the suit was actually based upon the notice dated July 9, 1959 which gave more than 15 days ' clear notice to the defendant to vacate the premises. This notice was a valid notice under section 106 of the Act. In the instant case if all the paragraphs of Ext. 7 which is a notice in the instant case are read together in harmony it would be manifest that the lessee was directed to hand over the lease hold property on 16th January, 1973. In the aforesaid view of the matter, in our opinion, there was a valid notice of termination of the lease of the lessee. In any event the lessee did not dispute this contention. The lessee accepted a valid termination of the lease hold property. In Roop Chand Gupta vs Raghuvanshi (Pvt.) Ltd. and another; , , it was held by this Court that it is quite clear that law does not require that the sub lessee need be made a party, if there was a valid termination of the lease. This Court reiterated that in 819 all cases where the landlord instituted a suit against the lessee for possession of the land on the basis of a valid notice to quit served on the lessee and did not implead the sub lessee as a party to the suit, the object of the landlord is to eject the sub lessee from the land in execution of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub lessee. This Court noted at page 1892 of the report that this might act harshly on the sub lessee; but this was a position well understood by him when he took the sub lease. The law allows this and so the omission cannot be said to be an improper act. In the facts of this case these observations apply more effectively. The termination of the lease was not disputed by the lessee. There is no allegation of any collusion between the lessee and the respondent. In that view of the matter, we are of the opinion that the High Court was right. The suit in question was instituted in May, 1979 and the valid notice to quit was given long after the expiry of the period of lease. The sub lessee had long innings. It is time for him to quit. There is no merit in this petition. The special leave petition fails and is, therefore, dismissed with costs. R.S.S. Petition dismissed.

On 16th January, 1958 a lease deed was executed between the lessee and the lessor respondent in respect of the demised land for a period of ten years, with a right of renewal for a further period of five years, and with permission to sub lease the same. The lessee sub leased the premises to the petitioner for running a petrol pump. After the expiry of the lease period on 16th January, 1968, the lessor continued to accept the rent from month to month. However, no fresh instrument was executed by the parties. The lessor issued on 30th November, 1972 a notice to the lessee terminating the lease and for giving vacant possession of the land on the expiry of 15th January, 1973 after removing the structures by the 16th January, 1973. No notice was given separately to the petitioner. The lessee did not contest the suit filed on the basis of the notice. The petitioner contested the proceedings and contended that it was holding over after the expiry of the lease, that no notice terminating tenancy was received by it, and that the notice was invalid. The trial Court dismissed the suit holding that the notice terminating the lease was necessary and the notice in this case was invalid. The Court also rejected the lessor 's plea that the tenancy expired by afflux of time. The trial Court, however, held that the lease was not extended for a fixed period of five years in absence of any written instrument. The 1st Additional Sub Judge allowed the lessor 's appeal and held the notice valid. The High Court upheld the appellate order. 812 Dismissing the special leave petition, it was, ^ HELD: (1) In view of paragraph 1 of section 107 of the a lease of immovable property from year to year, or for any term exceeding one year, or reserving an yearly rent, can be made only by a registered instrument. In the absence of a registered instrument, it must be a monthly lease. [815G H] (2) The High Court was right in holding that the lessee and the sub lessee, in the facts of this case, continued to remain in possession as a tenant from month to month. [816A B] (3) The High Court was right that the tenancy was automatically determined on the expiry of ten years. The lease was thereafter renewed from month to month which could only be terminated by giving a valid notice. [816E F] (4) The notice of termination must be read in the context of the facts of each particular case having regard to the situation of the parties to whom it is addressed. If all the paragraphs of the notice in the instant case are read together in harmony it would be manifest that the lessee was directed to handover the lease hold property on 16th January, 1973, and hence the notice was a valid notice of termination of the lease under section 106 of the Act. [817C;818F] (5) Law does not require that the sub lessee need be made a party, if there was a valid termination of the lease. In all cases where the landlord instituted a suit against the lessee for possession of the land on the basis of a valid notice to quit served on the lessee and did not implead the sub lessee as a party to the suit, the object of the landlord is to eject the sub lessee from the land in execution of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub lessee. [818H;819A B] Harihar Banerji vs Ramsashi Roy, 45 Indian Appeals 222;Mangilal vs Suganchand Rathi, ; ;Subadini vs Durga Charan Law, I.L.R. ;Gobinda Chandra Saha vs Dwarka Nath Patita, A.I.R. 1915 Cal. 313 and Roop Chand Gupta vs Raghuvanshi (Pvt.) Ltd., ; , referred to.

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ivil Appeal No. 2840 of 1982. From the Judgment and Order dated 5.12. 1979 of the Allahabad High Court in Second Appeal No. 82 of 1972. R.K. Garg and H.K.Puri for the Appellant. Satish Chandra, Pramod Swarup and A.K. Srivastava for the Respondents. The Judgment of the Court was delivered by R.M. SAHAI, J. In this appeal by grant of special leave, directed against judgment of the Allahabad High Court in second appeal arising out of a suit for arrears of rent and ejectment, the question is if the High Court committed any error of law in allowing the second appeal on the ground that the two courts below had erroneously held that finding recorded in an appeal, filed by one of the defendants who was sued as tenant in an earlier suit, could not operate as res judicata between plaintiff and respondents who were defendants nos. 2 and 3 in that suit. Unfortunately for appellant equity may or may not be in his favour as his father too acted shrewdly while purchasing house of daughter in law 's father but law is certainly not in his favour. How dispute arose between parties, who are closely related, is quite interesting. Shiv Charan Das and Har Charan Das (respondents nos. 1 99 and 3 in this appeal) are first cousins. Ravindra Kumar (respondent No. 2) is son of Shiv Charan. His sister was married to son of Ganga Prasad who purchased the only house of Shiv Charan and Ravindra Kumar with condition of repur chase by sellers after five years. He permitted them to remain in possession, but got a rent note executed by Har Charan. Purpose of this became apparent later as immediately after expiry of five years when the house was not repur chased Ganga Prasad (referred hereinafter as plaintiff) filed suit for ejectment and arrears of rent against Har Charan, Shiv Charan and Ravindra (hereinafter referred as defendants nos. 1, 2 and 3) claiming that defendant No. 1 was in arrears of rent and defendant No. 2 and 3 were his sub tenants. The suit was contested by defendants nos. 2 and 3 only. The Trial Court decreed the suit for arrears of rent against defendant No. 1. It was held that defendant No. 2 and 3 were not sub tenants. Therefore suit for ejectment was dismissed. The plaintiff submitted to this finding. Ag grieved by the decree for arrears of rent defendant No. 1 filed appeal which was dismissed. But the appellate court while observing that any evidence led by defendant nos. 2 and 3 could not be read against defendant No. 1 observed that it appeared that they being closely related to defend ant No. 1 were in possession on his behalf. This furnished occasion for plaintiff to file second suit against three defendants with this change that defendants nos. 2 and 3 were claimed to be licensees of defendant No. 1. The Trial Court relying on earlier judgment decreed suit for arrears of rent against defendant No. 1 and for ejectment against defendants nos.2 and 3 as they were licensees. Both defend ant No. 1 separately and defendants nos. 2 and 3 jointly filed two appeals but without any success. Both the sets approached the High Court also by way of separate appeals. The appeal of defendant No. 1 came up for hearing earlier but it was dismissed. The appeal of defendant nos. 2 and 3 came up for hearing before another Hon 'ble Judge who allowed it and held that the finding recorded in appeal arising out of earlier suit that they were licensees did not operate as res judicata and the suit for ejectment was dismissed. It is the correctness of this finding that has been assailed in this Court. Although long arguments were advanced but in our opinion the only question that arises for consideration is if the finding recorded in the appeal filed by defendant No. 1 in which it was held that defendants nos. 2 and 3 were in possession on his behalf was binding on them in the subse quent suit filed by the plaintiff. In that suit issue No. 2 was if 100 defendant No. 2 and defendant No. 3 were sub tenants. And issue No. 5 was if they were liable to be ejected. The Trial Court while discussing these two issues held that there was no question of sub tenancy of these persons as despite sale there was never a break in their possession. It was further held that they were not sub tenants nor they claimed to be in possession through defendant No. 1. Therefore they were not liable to ejectment. Against this finding plaintiff did not file any appeal. The finding therefore between the plaintiff and defendants nos. 2 and 3 became final and binding. The appeal was filed by defendant No. 1 as he was aggrieved by the decree of arrears of rent. In that appeal it was observed that the evidence led by defendant nos. 2 and 3 could not be read against him. But the Court while dismissing his appeal and upholding the decree of Trial Court observed that since they were close relations it appears that even though rent note was executed by defendant No. 1 the possession of defendants nos. 2 and 3 was on his behalf. This finding could not be taken advantage of by the plaintiff for more than one reason. This observation was unnecessary as the appeal was dismissed. One could under stand if the appeal would have been allowed and the liabili ty for payment of rent would have been fastened on defendant No. 2 and 3 as they were in possession. But since appeal was dismissed the order of Trial Court that liability to pay rent was of defendant No. 1 stood affirmed. Therefore it was an observation which was not only off the mark but unneces sary. It could not accordingly operate as res judicata between defendant No. 1 and defendants nos. 2 and 3 as much less between plaintiff and defendant nos. 2 and 3. One of the tests to ascertain if a finding operates as res judicata is if the party aggrieved could challenge it. Since the dismissal of appeal or the, appellate decree was not against defendants nos. 2 and 3 they could not challenge it by way of appeal. Even assuming that defendant No. 1 could chal lenge the finding that liability of rent was of defendants nos. 2 and 3 as they were in possession he did not file any written statement in the Trial Court raising any dispute between himself and defendants nos. 2 and 3. There was thus no occasion for the appellate court to make the observation when there was neither pleading nor evidence. Therefore, from either point of view the finding could not operate against defendants Nos. 2 and 3 as res judicata. Reliance by the appellant on Keshardeo Chamria vs Radha Kissen Chamria, ; , is of no assistance as it only lays down the binding effect of a decision in a subsequent suit. For the reasons stated above this appeal fails and is dismissed. There shall be no order as to costs. T.N.A. Appeal dis missed.

The Appellant 's father purchased the house of respondent Nos. 1 and 2 with condition of repurchase by the sellers after five years. He permitted the respondents to remain in possession but got a rent note executed by Respondent No.3, the first cousin of Respondent No.1. After the expiry of 5 years when the house was not repurchased by the respondents, the appellant 's father (plaintiff) instituted a suit for arrears of rent and ejectment against Respondent Nos. 1, 2 and 3 (Defendant Nos. 2, 3 and 1) claiming that defendant No. 1 was in arrears of rent and defendant Nos. 2 and 3 were his sub tenants. The Trial Court decreed the suit for ar rears of rent against defendant No. 1 but dismissed the suit for ejectment against defendant Nos. 2 and 3 holding that they were not sub tenants. Defendant No. 1 filed an appeal against the decree for arrears of rent. The Appellate Court dismissed the appeal with an observation that though the rent note was executed by Defendant No. 1, the possession of Defendant Nos. 2 and 3 was on behalf of Defendant No. 1 since they were closely related. Relying on these observa tions the plaintiff filed a second suit against the defend ants with a change that defendant Nos. 2 and 3 were licen sees of defendant No.1. The Trial Court decreed the suit for arrears of rent against defendant No. 1 and for ejectment against defendant Nos. 2 and 3. Both defendant No. 1 sepa rately and defendant Nos. 2 and 3 jointly filed two appeals which were dismissed. Separate appeals were filed in the High Court which dismissed the appeal of defendant No. 1 and allowed the appeal of defendant Nos. 2 and 3 holding that the findings recorded in appeal arising out of earlier suit that they were licensees did not operate as res judicata. Accordingly the High Court dismissed the suit for ejectment against defendant Nos. 2 and 3. Hence this appeal. Dismissing the appeal, this Court, 98 HELD: One of the tests to ascertain if a finding oper ates as res judicata is if the party aggrieved could chal lenge it. Since the dismissal of appeal or the appellate decree was not against defendants Nos. 2 and 3 they could not challenge it by way of appeal. Even assuming that de fendant No. 1 could challenge the finding that liability of rent was of defendant Nos. 2 and 3 as they were in posses sion he did not file any written statement in the Trial Court raising any dispute between him. self and defendants Nos. 2 and 3. There was thus no occasion for the appellate court to make the observation when there was neither plead ing nor evidence. Therefore, from either point of view the finding could not operate against defendants Nos. 2 and 3 as res judicata. [100E G] Keshardeo Chamria vs Radha Kissen Chamria, [1953] S.C.R. 154; held in applicable.

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Appeal No. 49 of 1972. Appeal from the Judgment and Order dated 24th December, 1970 of the Madhya Pradesh High Court in Mic. Petition No. 474/68. Panjwani, H.S. Parihar and 1. N. Shroff for the Appel lants. B. Sen, (Mrs.) Leila Seth, T.M. Sen, Praveen Kumar and O.P Khanan for Respondent. The Judgment of the Court was delivered by KRISHNA IYER, J. The State of Madhya Pradesh, blessed with abundant forest wealth, whose exploitation, for reasons best known to that government, was left in part to the private sector, viz., the respondent, Orient Paper Mills, which is the appellant in this appeal by certificate. The subject matter of this litigation, however, is the competen cy to collect sales tax from the respondent for the bamboo and salai wood extracted by it, under a transaction relating to some government forests in Vindhya Pradesh which, on 'states reorganisation ' in 1956, became part of Madhya Pradesh. The transaction itself was dressed up as a lease deed executed by the then State of Vindhya Pradesh on August 4, 1956 in favour of Orient Paper Mills, the respondent herein. At that time no sales tax could be levied under the law from the forest department of the appellant State or the respondent mills. However, on April 1, 1959 the M.P. Gener al Sales Tax Act, 1958, (hereinafter referred to acronymi cally as M.P.G.S.T. Act) came into force. On the footing that the Forest Department was a dealer it got itself regis tered as such, under the sales tax law, on November 3, 1962. The respondent, of course, is a registered dealer under the same law. Subsequently, the Chief Conservator of For ests, representing the appellant, demanded of the respondent that it pay sales tax on the timber extracted under the 'lease deed ', whereupon the claim was repudiated by the respondent. In consequence, 151 the appellant proceeded to. levy the sum representing the sales tax on the value of the timber cut and removed as per the terms of the contract, resorting to revenue recovery proceedings authorised by Sec. 82 of the Indian Forest Act. Thereupon the respondent moved the High Court for the issu ance of a writ under article 226 of the Constitution of India against the State. to forbear from collecting sales tax illegally. Holding that the State Government and its Forest Department were not dealers w;thin the sense of the sales tax law, the writ petition was allowed, notwithstand ing the adverse findings against the petition respondent on some other vital points. The State has challenged this finding in the appeal before us. The validity of the attempted exaction is the gut issue in these proceedings, although the centre of gravity on this forensic stage has shifted from the question of the forest department being a dealer to whether the transaction styled 'lease ' does at all involve sale of goods. From 'no dealer, no sales tax ' to 'no sale no sales tax ' is the shift in the epicentre of the argument caused by an amendment to the sales tax statute legislated after and on account of the very judgment under appeal. Suffice it to say for the present, no sale, no sales tax is a legal tru ism. It may be mentioned right here that the respondent before us is not directly liable to pay sales tax, even assuming that the 'lease deed ' involves sale of goods. The forest department of government is admittedly a registered dealer for the relevant period, and it is claimed by the appellant State that it was liable qua dealer to pay tax on sales of timber, and by virtue of section 64 A of the Sale of Goods Act such sums, which became leviable only after the agreement was entered into in 1956, could be recovered from the purchaser respondent. It is virtually admitted in this appeal, as stated earlier, that both parties are registered dealers under the relevant sales tax Act. Nor is it in dispute that if the appellant forest department were liable to pay sales tax for the sales of timber which were alleged to have taken place, the respondent, in turn, would be liable to make good that sum in view of the plain provision in section 64A of the Sale of Goods Act. But to attract that provision there has to be sale of goods. Was there any sale of wood under the lease deed ? That is the core of the legal quarrel agitated before us. We may straight proceed to consider the questions canvassed before the High Court since both sides have had to challenge one or other of the findings. We may borrow the formulation of the four points set out in the judgment of the High Court. "(i) The transaction is not a sale of goods and no sales tax is payable in respect of bamboos and salai wood extracted thereunder by the petitioner. (ii) No sales tax is payable under the terms of the lease deed dated August 4, 1956 and, therefore, such tax cannot be recovered. (iii) Neither the State Government nor the Forest Department of that Government is or could be a dealer and for this reason also no sales tax is payable or recoverable. 152 (iv) The sales tax, even if payable, is not recoverable as arrears of land revenue, particularly when the revenue recovery certificate was issued by the Divisional Forest Officer. " The time is set true for stating the decisive statutory changes which occurred after the High Court ruled against the State, calculated to undo the disability discovered by that pronouncement. This development deserves attention as the sole point on which the State lost in the High Court, viz. that the Forest Department is not doing business, ceases to have relevance today on account of the amendment to the Madhya Pradesh. General Sales Tax Act by the MPGST (Amendment and Validation) Act 13 of 1971. The definition of 'dealer ' and other related provisions were touched up and redefined in such manner that the finding on point No. 3 formulated by the High Court was effectively nullified. Indeed, the legislation is a sequel to the decision and has squarely undone the impediment in the way of the State collecting sales tax from the respondent. So long as that law holds good the State 's claim cannot be bowled out. Of course, Sri B. Sen, for the respondent, desired to challenge the vires of the Amending Act but the Presidential Proclama tion during the Emergency, suspending the operation of article 14, handcuffs the respondent from seeking to strike down this legislation. When the Presidential Proclamation, sterilising article 14, lapses then it may be time enough to assail ' this law. So far as this appeal is concerned, article 14 is under eclipse and the ground of challenge unavailable. The amendatory provisions must therefore be held impregna ble, on this score, and we proceed on that footing. Its post Emergency validity will be decided, if attacked, at that time, since we leave that aspect untouched. To abbre viate the discussion, thanks to Act 13 of 1971, the Forest Department of the State shall be deemed to be dealer. If it is a dealer, the levy of sales tax from it is legal and the controversy on this score is silenced. The meat of the matter is the judicial determination of the true character of the transaction of 'lease ' from the angle of the MPGST Act and the Sale of Goods Act whose combined operation is pressed into service for making the tax exigible from the Forest Department and, in turn, from the respondent mills. It is the part of judicial prudence to decide an issue arising under a specific statute by confining the focus to that ' statutory compass as far as possible. Diffusion into wider jurisprudential areas is fraught with unwitting conflict or confusion. We, there fore, warn ourselves against venturing into the general law of real property except for minimal illumination thrown by rulings cited. In a large sense, there are no absolutes in legal propositions and human problems and so, in the jural cosmos of relativity, our observations here may not be good currency beyond the factual legal boundaries of sales tax situations under a specific statute. The major plea to bomb the tax demand having been shot down by retroactive legislative missiles, the respondent has sought a manouvre to victory by reliance on the contention covered by formulation No. 1 set out at the beginning. Point 2 hinges on the result of point No. 1 and deserves no separate discussion. 153 The High Court 's holding on these twin points is in favour of the respondent on the basic submission of non exigibility of tax on the score that the transactions in question are not sales at all and the payments not price of goods at all but mere royalty under a lease. A short legal survey will take us to an easy solution of this issue. Section 64A of the Sale of Goods Act enables the seller, under certain circumstances, to recover, as sale price, any sales tax which the vendor has had to pay. So, if in the present case, the Forest Department of the State is liable to pay sales tax on the bamboo. and salai wood cut and removed by the respondent, the claim to recover it from the buyer is good under the said s.64A. The next logical series of questions are whether the Forest Department is liable to sales tax on the timber covered by demise ? Can the timber s0 extracted and the royalty paid at the rates stipulated be called goods and sale price respectively under Sec. 2(0) of the MPGST Act ? Can the levies made by the Forest Department become its turnover of sales under Sec. 2(t) ? Does removal of timber by the lessee constitute sale of goods under section 2(n) of the MPGST Act or section 64A of the Sale of Goods Act ? The ignition point which sets in motion the chain reac tion is the character of the transaction whereby bamboo etc. are cut and removed and money paid, measured by the weight of the timber extracted. If it is a sale the tax is leviable from the Forest Department and the amount, in turn, recoverable from the lessee and vice versa. We must set out parts of the 'lease deed ' so that its basic structure and essential nature may be decoded. Is it really a lease of forest or is it a sale of certain timber with ancilliary licences ? No. doubt, the deed styles itself a lease. But it is argued that a soi disant lease may well be a mere contract of sale of goods. Theoretical ly, this is perfectly possible in law, as in literature: 'What 's in a name ? that which we call a rose/By any other name would smell as sweet '! But what is there in the document to detract from the prima facie validity of the label ? Here the clarity of the reasoning lies in the correct approach t0 the question which is not so much whether the contract is one of lease but whether it works out a sale of goods under the two concerned statutes. Sales tax is payable by a dealer. The Forest Department, by force of the statutory amendment, is admittedly a dealer. Such tax is computed on the turnover as defined in section 2(t) of the MPGST Act, which reads: "2. In this Act, unless there is anything repugnant in the subject or context, X X X X (t) 'turnover ' used in relation to any period means the aggregate of the amount of sale prices received and receivable by a dealer in respect of any sale or supply or distribu 154 tion of goods made during that period, whether or not the whole or any portion of such turnover is liable to tax but after deducting the amount, if any refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period. " The essential ingredients of turnover are thus 'sale of goods ' and 'sale prices '. The latter concept has received definitional expression in s.2(0) and the former in s.2(n). They may be read here: "(o) 'sale price ' means the amount payable to a dealer as valuable consideration for the sale of any goods, less any sum allowed as cash discount according to ' ordinary trade practice but including any sum charged for anything done by the dealer in respect of the goods at the time or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is Separately charged and the expression 'purchase price ' shall be construed accordingly. (n) 'Sale ' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes a transfer of property in goods involved in the supply or distribution of goods by a society or club or any association to its members, but does not include a mortgage, hypothecation charge or pledge, and the word 'purchase ' shall be construed accordingly;" For all these words to apply, the pivotal factor is 'goods ' which is defined in substantially similar manner in both the Sale of Goods Act and in section 2(g) of the MPGST Act which latter reads: "2 (g) "goods" means all kinds of movable property other than actionable claims, newspapers, stocks, shares, securities or Government stamps and includes all materials, articles and commodities whether or not to be used in the construction, fitting out, improvement or repair of movable or immovable property; and also includes all growing crops, grass, trees, plants and things attached to, or forming part of the land which are agreed to be severed before sale or under the ' contract or sale;" The key expressions which unlock the mystique of turn over curesale of goods are the last inclusive limb of the clause 'also includes . trees which are agreed to be severed under the contract of sale '. The crunch issue thus is whether the self styled lease deed is in substance a contract of sale of timber. The true import of the document may be gathered from its terms, not from rulings on other documents. There is a serious limitation on the service of case law in this area. It depends firstly on the actual issue in each case and the angle of vision adopted and secondly on the clauses, pur poses and surrounding circumstances of each tran 155 saction. While, therefore, we may cite some rulings later we bear in mind the limits of their use. Shri Sen rightly stressed the importance of the deliber ate description of the deed as a lease. He drew our atten tion, with emphasis, to annual payments of royalty, not price. Royalty has a slight fedual flavour with a tell tale demise relish, if we may say so, while price is a mercantile concept smacking of commercial relations. By the deed, the forest lands of the lessor are 'hereby demised '. There are frequent references to the 'leased area '. The period of the lease is stated to be a long 20 years, later substituted by 30 years. There is also refer ence to discharge of lease, royalties, compensation and other monies, suggestive of a demise rather than of a sale. The provision for payment of a minimum royalty runs in these terms: lm15 "Provided that the minimum royalty payable by the lessees to the State Government during the first year of this lease shall not be less than 1.5 lakhs of rupees and for the next and subsequent years, shall, during the term of this demise, be not less than two lakhs of rupees per annum. " Whether there is cutting of timber or not, Shri Sen argues, the minimum royalty has to be paid, thus showing that the provision for payment is sometimes de linked from the ex ploitation of the forest or the value of the timber cut. Considerable reliance was placed for taking the document out of the category of mere sale of goods, on clause 5 of the Deed, which reads: "The lessees shall with the previous permission in writing of the State Government be at liberty to make dams, cross streams, cut canals, make water course irrigation works, construct roads, railways and tramways and do any other works useful or necessary for the purposes of the business connected with these presents in or upon the leased area provided that they are in accordance with the plan approved by the State Government and also with the like approval to widen or deepen any existing creeks or channels of waterways for the purposes of the said business and all timbers required for the above purposes shall be allowed half royalty rates in the case of timbers of reserved species and free in case of timbers of unreserved species by the State Government. " There is also provision for renewal of the lease deed which savours, again, of a transaction of real property since renewals cannot obtain for sales. The face value of these features tends to fix the trans action as a lease but, lift the veil and feel the reality behind, Shri Shroff urged us, only to discover that the lease is no more than a simple sale of goods, viz., of bamboo and salai wood. He dismissed tags and labels as of the least consequence when the heart of the matter turned on the crucial terms of the document which were, in his submis sion, loudly 156 obtrusive of the 'sale of goods ' character of the transac tion. Of course, if in essence there is a sale of goods covered by the deed, we have to locate the taxing event which occurs when the title to the goods is transferred. The description of the document as a lease 'deed ', the reference to royalty, the right to construction of buildings etc., cannot hamper a contrary conclusion if there are luminous characterstics of a 'sale of goods ', in what is but a lease deed in name. From this angle Shri Shroff has high lighted certain principal provisions in the deed. There is no doubt, he says, that if one scans the document closely, one finds that possession of the land is not given; which means that parties have slurred over the demise part of it notwithstanding the dubious expressions used. What is authorised under the deed is the 'exclusive liberty ' to enter upon the leased area to fell, cut or extract bamboos and salai wood and to remove, store and utilise the same for meeting the full requirements of the Paper Mill. This reads more like a sale of standing timber coupled with a licence to enter and do certain things on another 's land. Counsel also emphasised that an insightful understanding of cl. 2(g) of the deed would bring out the price fixed for the goods sold viz., 'a fiat rate of Rs. 6/ per ton on air dry bamboo and Rs. 2/ per ton on air dry salai wood . actually extracted and removed from the leased area on the weighment at the weighbridge of the said Paper Mill and in case of export at the weighbridge or weighbridges to be installed at suitable places by the lessees, in which case the royalty shall be Rs. 7/8/0 (rupees seven and eight annas) and Rs. 2/8/0 (rupees two and annas eight) per ton of air dry bamboo and salai wood respectively. In this context supportive strength was sought to be drawn from cl. 2(h) which reads: "(h) The lessees shall keep an account of all bamboos and salai wood cut and removed in the manner as may mutually be settled and such account shah be open to inspection by the Forest Officer authorised in this behalf by the Divisional Officer concerned. " Shri Shroff went to the extent of saying that the real nature of the transaction was disclosed in the deed itself in clause 2(k): "(k) The lessees in conducting their operation on the leased area shall not in any way interfere with the surface of land save and in so far as may be necessary in connection with and for the purposes of this licence." Clause 4 bears on its bosom, in his submission, the imprint of a contract for sale of goods and it may be read: "4. "Without prejudice to the provisions of this lease, the rights, liberties and privileges of the lessees hereinbefore mentioned shall extend only to bamboos and salai wood within the leased area and nothing herein shall in any way be deemed to authorise the lessees to interfere with the working of the forest areas within the leased area or the rights, liberties, privileges of other contractors of the said forest lands. " 157 We are considerably impressed with this analysis. The upshot of the whole transaction is that, for a price fixed, bamboos and salai wood are permitted to be removed from the forest of the appellant by the respondent. For the exercise of the right under this contract, certain necessary licences are conceded. It is made perfectly plain that the posses sion of the land qua land is not given, and there is a fool proof provision that the rights of the 'lessees ' shall extend only to bamboos and salai woods within the leased area and nothing herein shall in any way be deemed to autho rise the lessees to interfere with the working of the forest area . of other contractors of the said forest lands. Can there be a lease without exclusive, possession of the lands ? Can there be a lease to A of lands when the only right is to cut certain species of timber above a certain height and according to. stipulated conditions ? Can there be a lease of lands where similar right to cut timber from the same land co exist in other contractors ? There are mere circumstances than these, but we need not be exhaus tive, especially when we agree with the conclusion reached by the High Court. We are satisfied that despite its description, the deed confers in truth and substance a right to cut and carry timber of specified species. Till the trees are cut, they remain the property of the owner, namely the appellant. Once the trees are severed, the property passes. The 'Royalty ' is a feudalistic euphemism for the 'price ' of the timber. We may also observe that the question before us is not so much as to what nomenclature would aptly describe the deed but as to whether the deed results in sale of trees after they are cut. The answer to that question, as would .appear from the above, has to be in the affirmative. Now to a brief reference to two out of several cases cited at the Bar. Sri Sen relied heavily upon Raja Bahadur Kamakshya Narain Singh(1). That was a case under the Income Tax law. The assessee there received large payments by way of royal ty under various mining leases. The leases purported to be for 999 years and related to the coal mining rights set Out in the Schedule to the lease. The lessees were to pay a sum by way of salami or premium and an annual sum as royalty computed at a certain rate per ton on the amount of coal raised and coke manufactured. It was contended on behalf of the assessee that the sums received as salami and royalty did not constitute 'income ' but were capital receipts, representing the price of the minerals removed. There was also a provision for minimum royalty which was pressed into service by the party. The Judicial Committee held that the royalty payable under the lease was not the price of the actual coal extracted but represented compensation which the lessees paid to the lessor for that species of occupa tion which the contract allowed and it was therefore 'in come ' from other sources ' within the meaning of the relevant Income tax Act. We must point that the legal setting in which a question is considered colours the ratio of the case. The Judicial Committee was considering an issue arising under the Income Tax Act and, interpreting the clauses of a deed with particular terms, to ascertain wheth er the payments made thereunder fell within the meaning of 'income ' understood in its broadest connotation [1943] 11 .T.R. 513. 158 in England and in India. Construing, as we do, a special statute and a differently worded deed and the signification of the words used therein we are unable to draw any legiti mate instructional inferences from a decision contextually different, concerned with a different branch of law; and dealing with different issues although with seeming resem blances in superficial respects. Another decision which, perhaps, has some helpful reasoning, is by this Court in Badri Prasad(1). We need not discuss the details of that case except to point out that it has been recognised, in that ruling, that trees which are to be severed before sale or under the contract of sale are 'goods ' for the purposes of the Sales of Goods Act. On the facts of that case, property in the cut timber could pass to the plaintiff under the contract at the earliest when the trees were felled but before that happened the trees had vested in the state under an agrarian reform measure. The crutches of case law are not always necessary in Court. While direct light on the legal situation present before us is not available from Badri Prasad, or 'Kamakshya Narain Singh, (supra) there is not the slightest doubt that going by the definition of 'sale of goods ' under 8. 2(7) of the Sale of Goods Act and of s.2(g) of the MPGST Act, stand ing timber is 'movable property ' if under the contract of sale they are to be severed. But the severance must take place when the timber still vests in the contracting party. Ultimately, the case before us has to. be decided on the facts and the law which form the backdrop to the deci sion. We have already held that the crucial fact to be found before we can designate the transaction as 'sale of goods ' is to scan and see whether the 'lease deed ' really deals with sale of timber. We are clear that there is sale of bamboo and salai wood under the contract and, in the contemplation of the parties they are to be cut and severed, pursuant to the contract itself. It follows that the find ing of the High Court on this point is correct. The appeal deserves to be allowed on account of the statutory amendment. The Madhya Pradesh Legislature had taken great care and responded with prompt attention to deal with a situation where considerable revenue would be lost to it on account of inadequate expression of its intendment in the MPGST Act. A diligent and considered amendment has fulfilled the legislative purpose. Had the State lost the appeal before Us on another point, that is as to whether royalty was 'price for sale of goods ', the whole amendatory effort would have been an exercise in futility or a legisla tive brutum fulmen. In view of our finding that there is a 'sale of goods ' under the contract, the State is entitled to succeed. Counsel for the respondent, when we briefly indicated our mind, and even otherwise by way of abundant caution,. rightly urged that his client had a good case for reduction of the quantum of tax even if sales tax was payable by the Forest Department which could be shift (1) ; 159 ed to the respondent by virtue of s.64A of the Sale of Goods Act. He prayed for an opportunity to establish that he was being called upon to foot a larger bill than was legally tenable. We regard this a reasonable request and, indeed, Shri Shroff, for the State, has very rightly agreed with this prayer of the respondent. For one thing, the amending Bill whereby the liability was being de novo fastened was enacted into law after the judgment of the High Court. Read with s.82 of the Indian Forests Act, the amount was being recovered as if it were land revenue. This process deprived the respondent of his right to challenge the quantification of the tax. It is fair and the State agrees to be fair that the respondent should be enabled to prove his case that the sum claimed was much higher than could be legitimately recovered. Shri B. Sen brought to our notice that the rate of tax on sales to a registered dealer, if the commodity was to be consumed within the State, in view of Section 8 of Madhya Pradesh General Sales Tax Act for manu facturing purposes was less than the general rates. The appellant, on the other hand was seeking to recover at the higher rate. Moreover, even the lesser rate varied over the years from 1% to 2% and on to 3 %. Thus the arithmetics of the case had also to be gone into before the actual sum due from the Forest Department to the Sales Tax Department was fixed. More could not be exacted from the respondent. These reasons persuade us to allow the appeal and remand the case for consideration of the quantum of tax that the State, in the Forest Department, was legally liable to pay as a dealer, to the Sales Tax Department. Shri Shroff took up a point that when the Forest Depart ment made a demand on the respondent and required him to furnish a declaration necessary to reduce the rate of tax, the latter ignored the request. This, according to him, had an impact on the eventual liability. We do not propose to investigate this aspect at the present stage but leave it to be raised by the State before the High Court. In this view, we allow the appeal and remand the case for disposal after recording a finding on the limited issue/issues above indicated. We may mention that although the High Court has not properly adjudicated upon the recov erability of the Sales Tax as and by way of arrears of land revenue, it is not necessary to go into the matter afresh especially because once the tax amount is settled, the payment by the respondent will follow. However, we are not upsetting the finding of the High Court in this behalf in the present case. The appeal is allowed and remanded, to be disposed of in the light of the directions given above. Parties will bear their costs throughout. P.B.R. Appeal allowed.

Under section 2(g) of the Madhya Pradesh General Sales Tax Act the term 'goods ' means all kinds of movable property and includes all growing crops, trees, plants and things at tached to. or forming part of the land which are agreed to be severed before sale or under the contract of sale. Under el. (n) 'Sale ' means any transfer of property in goods for cash or deferred payment. Clause (0) defines 'sale price ' as the amount payable by a dealer as valuable consideration for the sale of goods and under cl. (t) 'turnover ' means the aggregate of the amount of sale price received and receiva ble by a dealer. The respondent Mills entered into a lease with the Forest Department of the State for the cutting of bamboo and salai wood from the leased forest area in the State. The lease deed provided that the lessee shall pay a minimum royalty every year whether there was cutting of timber or not, the lessee could construct roads, railways etc. for the purposes of business; should pay the price fixed for the wood removed from the leased area; should keep a,n account of all wood cut and removed and that the rights and privi leges of the lessees shall extend only to bamboos and salai wood within the leased area. The appellant (Forest Department) which was a registered dealer under Sates Tax Act demanded front the respondent, (also a registered dealer) sales tax in respect Of timber extracted from the leased area. When the respondent repudi ated the Department 's claim it paid the tax and proceeded to recover the tax under the revenue recovery proceedings under section 82 of the Indian Forests Act. Allowing the respondent 's writ petition under article 226 of the Constitution the High Court held that the State Govern ment and its Forest Departments were not a 'dealer ' within the meaning of the sales tax law and as such were not enti tled to recover the amount from the respondent. Thereupon the definition of the dealer under the Act was altered to undo the effect of the High Court 's decision. In appeal to this Court the appellant contended that though apparently the transaction was a lease, in reality the lease was no more than a simple sale of standing timber, coupled with a licence to enter and do certain things on another 's land and the transaction in essence was a sale of goods within the meaning of the Act. Allowing the appeal to this Court. HELD: Going by the definition of 'sale of goods ' under s.2(7) of the Sale of Goods Act and section 2(g) of the Sales Tax Act standing timber is 'movable property ' if under the contract it is to be severed. But the severence must take place when the timber still vests in the contracting party. [158D] In the instant case there was sale of bamboo and salai wood under the contract and, in the contemplation of the parties they were to be cut and severed pursuant to the contract itself. Raja Bahadur Kamakshya Narain Singh (1943) 11 I.T.R. 513; Badri Prasad [1969] 2 S C R. 380 held inapplicable. 150 1. (a) Despite its description, the deed conferred in truth and substance a right to cut and carry timber of specified species. Till the tress were cut, they remained the property of the appellant. Once the trees were severed, the property passed. Royalty is a euphemism for the price of the timber. [157D] (b) From the terms of the lease it was clear that for a price fixed, bamboo and salai wood were permitted to be removed by the respondent from the forest of the appellant. Possession of the land qua land was not given and there was a provision that the rights of the lessess shall extend only to bamboos and wood within the leased area and nothing therein shall in any way be deemed to authorise the lessees to interfere with the working of the forest area of other contractors of the forest lands. [157A B] (2) The amending bill, whereby the liability was being de novo fastened, was enacted into law ' after the judgment of the High Court. Read with section 82 of the Indian Forests Act, the amount was being recovered as if it were land revenue. This process deprived the respondent of his right to chal lenge the qualification of the tax. The respondent should be enabled to prove his case that the sum claimed was much higher than could be legitimately recovered. [159B] [The case was remanded for consideration of the quantum of tax that the Forest Department was legally liable to pay as a dealer, to the Sales Tax Department. Once the tax is settled the payment by the respondent will follow.]

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Appeal No. 213 of 1967. Appeal from the Judgment and order dated February, 17th 1965 of the Patna High Court in First Appeal No. 113 of 1960. M. C. Chagla, D. P. Singh, section C. Agarwal, V. J. Francis, R. Goburdhun and D. Goburdhun, for the appellant. M. C. Setalvad, Sarjoo Prasad, A. G. Ratnaparkhi and Rajiv Shah, for respondent No. 1. The Judgment of the Court was decided by Hegde, J. In this appeal by certificate we are to consider the effect of the will executed by one Raghunath Prasad Singh, on August 31, 1938. The said testator died very soon after the execution of the will leaving behind him his widow Jageshwar Kuer, 72 his daughter Satrupa Kuer and his two grand daughters Talkeshwari Devi (the appellant herein) and Sheorani. The appellant and Sheorani are the daughters of Sukhdeo Prasad Singh, the son of the testator who had predeceased the testator. Jageshwar Kuer died in November 1948 and Sheorani Devi on November 1, 1949 without leaving any issue. The dispute in this case is as to who is entitled to the properties devolved on Sheorani under the provisions of the will left by the testator. For deciding that question we have to refer to the relevant provisions of the will. the genuineness or validity of which is not in dispute. The will in question provides that after the death of the testator a portion of his properties (detailed in the will) was to devolve on Jageshwar Kuer absolutely and the remaining properties are also to devolve on her but therein she was to have only a life interest. The will further provides that after her death "the entire property will be treated as 16 annas property out of which 5 annas 4 pies(five annas four pies) share constituting proprietary interest will pass to Shrimati Satrupa Kuer alias Nan daughter of me, the executant and her heirs as absolute owners and the remaining 10 annas 8 pies (annas ten and eight pies) share will pass to both the minor grand daughters, (1) Shrimati Talkeshwari Kuer alias Babu and (2) Shrimati Sheorani Kuer alias Bachan in equal shares as absolute proprietary interest" (cf. 4 of the will). Clause 5 of the will says : "That if one of the two grand daughters named above, dies issueless, then under such circumstances the other living grand daughter will enter into possession and occupation of the entire 10 annas 8 pies and become the absolute owner thereof. " At the time of the death of the testator, the appellant as well as Sheorani Kuer were minors. After the death of Jageshwar Kuer, the appellant and her sister Sheorani Kuer divided the ten annas eight pies share of the properties which devolved on them in equal shares and each one came into possession of her share of the properties. Immediately after the death of Sheorani Kuer, the appellant instituted a suit for possession of the properties that fell to the share of Sheorani Kuer purporting to base her claim on clause 5 of the will to which we have earlier made reference. That suit was resisted by the first defendant, the husband of Sheorani. He claimed that he was entitled to those properties as the heir of his wife. The trial court dismissed the plaintiff 's suit and the decision of the trial court was upheld by the High Court. It was contended on behalf of the appellant that in view of clause 5 of the will, the appellant is entitled to the suit properties 73 as Sheorani Kuer had died issueless. This contention, as mentioned earlier, did not find favour either with the trial court or with the appellate court. They have held that on a proper leading of the will as a whole, it is clear that clause 5 ceased to be operative on the death of Jageshwar Kuer, thereafter caluse 4 of the will was the only operative clause so far as the rights of the appellant and Sheorani ware concerned. It is undisputed that the duty of the court is to find out the intention of the testator but that intention has to be gathered from the language of the will read as a whole. I+ is clear from clause 4 of the will that the testator wanted to give to his grant daughters an absolute right in the properties that were to devolve on them after the death of his wife, Jageshwar Kuer. The estate bequeathed under clause 4 of the will is not a conditional estate. Clause 5 of the will relates to devolution and it does not provide for any divestment of an estate which had vested. The estate that vested on Sheorani was an absolute one. The will does not provide for the divestment of that estate. It is plain from the language of clause 5 of the will that it refers to the devolution, which means when the properties devolved on the two sisters on the death of Jageshwar Kuer. We are, unable to accept the contention of Mr. M. C. Chagla, learned Counsel for the appellant that there is an , conflict between clause 4 and clause 5 of the will. Clause 5 in our judgment would have come into force if the contingency mentioned therein had happened before the properties absolutely devoted on the two sisters. Clause 5 cannot be considered as a defeasance clause. If the testator wanted that the bequest made to any of his grand daughters should stand divested on the happening of any contingency, then he would have said so in the will, assuming that he could have made such a provision. But the will nowhere says that the properties bequeathed to the appellant and her sister should cease to be their properties on their dying issueless. Obviously what the testator intended was that if any of his grand daughters dies issueless before the devolution took place then the entire property should go to the other granddaughter. To our mind the intention of the testator is plain from the language of the will. To find out the effect of the will before us we have to look to sections 1 4 and 131 of the . Section 124 says : "Where a legacy is given if a specified uncertain event shall happen and no time is mentioned in the will for be occurrence of that event, the legacy cannot take effect, unless such event happens before the period when the fund bequeathed is payable or distributable." L864 Sup. CI/72 74 Illustration (ii) to that section says "A legacy is bequeathed to A, and in the case of his death without children, to B. If A survives the testator or dies in his lifetime leaving a child, the legacy to B does not take effect. " If section 124 applies to the facts of the case, as we think it does, then it is clear that the legacy claimed by the appellant is unavailable as the contemplated contingency did not occur before the fund bequeathed was payable or distributable. Section 124 deals with devolution. But as we shall presently see section 131 deals with divestment of an estate that had vested. Mr. Chagla contends that the governing provision is section 131. That section says: "A bequest may be made to any person with the condition super added that, in case a specified uncertain event shall happen, the thing bequeathed shall go to another person, or that in case a specified uncertain event shall not happen, the thing bequeathed shall go over to another person." had already vested. It speaks of an estate going over to another person. As seen earlier clause 5 of the will is not a defeasance clause. A case somewhat similar to the one before us came up for consideration before the Judicial Committee of the Privy Council in Norendra Nath Sircar and anr. vs Kamal Basini Dasi(1) Therein a Hindu at his death left three sons, the eldest of full age and the other two minors. In his will were the directions "My three sons shall be entitled to enjoy all the movable and immoveable properties left by me equally. Any one of the sons dying sonless, the surviving son shall be entitled to all the properties equally". Interpreting this clause the Judicial Committee held that those words gave a legacy to the survivors contingently on the happening of a specified uncertain event, which had not happened before the period when the property bequeathed was distributable, that period of distribution being the time of the testator 's death. In arriving at this conclusion, the Judicial Committee relied on section 111 of the Indian Succession Act, 1865. That provision is similar to section 124 of the . For the reasons mentioned above we are in agreement with the courts below that the suit brought by the appellant is un sustainable. This appeal is accordingly dismissed with costs. Appeal dismissed. K.B.N. Appeal dismissed.

By clause 4 of a will the testator bequeathed to his grand daughters T and S an absolute right in the properties that were to devolve on them after the death of his wife. , Clause 5 further provided that if one of the two grand daughters were to die issueless the other living grand daughter was to enter into possession of the entire property as absolute owner. After the death of the testator 's wife T and S divided the properties which devolved on them in equal shares. On S dying issueless T instituted a suit for possession of the properties that fell to the share of S basing her claim on clause 5 of the will. The suit was dismissed. Dismissing the appeal, HELD : Clause 5 of the will relates to devolution, it does not provide for any divestment of an estate which had vested. The estate that vested in S under clause 4 of the will was not a conditional estate, it was an absolute one. The will does not provide for the divestment of that estate. Clause 5 would have come into operation if the contingency mentioned therein had happened before the properties absolutely devolved on T and section What the testator intended was that if any of his grand daughters died issueless before the devolution took place then the entire property should go to another grand daughter. The intention of the testator is plain from the language of the will. [73 E] Section 124 of the applies to the facts of the case and not section 131. The legacy claimed by the appellant is unavailable as the contemplated contingency did not occur before the fund bequeathed was payable or distributable. Section 131 provides for the divestment of an estate which had already vested; it speaks of an estate going over to another person. [74B] Norendra Nath Sircar and anr. vs Kamal Basini Dasi, I.L.R. , referred to.

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Civil APPEAL NOS. 2144 2145 of 1970 From the Judgment and Decree . 13/14/24.3.69 of the High Court of Gujarat in First Appeal Nos. 981/60 & 270/61. M.N. Phadke , Girish Chandra , C. V. Subba Rao and R.N Poddar for the Appellant. Mr. V. Gouri Shankar. K.L. Harhi , M.K. Arora and Ms. II Wahi , for the Respondent. The Judgment of the Court was delivered by , BALAKRISHNA ERADI , J. These two appeals have been filed by the State of Gujarat on the strength of a certificate granted by the High Court of Gujarat under Article 133 (1) (c) of the Constitution of India as it stood prior to the Amendment of 1972. Dhrangadhra was a princely State in Kathiawar region ruled by a Maharaja , until April , 1948 , when pursuant to the covenant entered into by the Maharaja with the Government of India it became merged in the newly formed State of Saurashtra On January 29 , 1937 , an agreement had been entered into between the Dhrangadhra Chemical Works Ltd. , (hereinafter called the 'defendant company ' ) and the Maharaja of Dhrangadhra where under the defendant company purchased from the Government of Maharaja , Shree Shakti Alkali Works in Dhrangadhra and the Salt Works at Kuda with exclusive rights to manufacture salt at the Kuda Works on certain conditions. That agreement was subsequently modified as per the Minutes of the Board of Directors of the defendant company recorded on April 5 , 1953. After the 633 merger of the Dhrangadhra State in the State of Saurashtra , the aforesaid agreement was further modified by an agreement dated January 4 , 1950 entered into between the defendant company and the Government of Saurashtra. It is with that agreement alone that we are concerned with in these appeals. Under that agreement , the defendant company agreed to pay to the Government of Saurashtra royalty at the rate of Rs. 0 2 3 (2 annas , 3 pies) per Bengal Maund on the total quantity of salt sold by them every year. The payment of royalty was to be made as and when delivery was given by the defendant company to the purchaser. Under clause (3) of the said agreement the defendant company agreed to manufacture a minimum quantity of at least 50 , 000 tons of salt every year in addition to the quantity required by the defendant company for consumption if there Alkali factory. Clause (5) of the agreement provided for the payment of a minimum royalty , equivalent to an amount chargeable on the minimum quantity to be manufactured by the defendant company in accordance with clause (3). There was a short fall in the production of salt by the company for the years 1950 53 aggregating to 27300 0 54 tons. The royalty payable in respect of the said quantity of salt calculated at the agreed rate of 2 annas , 3 pies per Bengal Maund amounted to Rs. 1,07, 495 10 0. Differences arose between the Government of Saurashtra and the defendant company with respect to the royalty payable under the agreement. The said dispute mainly centered round two points. According to the Government , irrespective of the quantity of salt actually sold by the company during any year , the company was bound to pay a minimum guarantee royalty in 1 respect of 50,000 tons of salt by virtue of the combined operations of clauses (3) and (5) of the agreement The stand taken by the defendant company that clause (3) of the agreement was void due to vagueness and uncertainty and since clause (5) was dependent for its operation on clause (3) , the said clause (5) was also vide due to vagueness. According to the defendant company their liability to pay royalty was only under clause (2) , whereunder royalty was realizable by the Government only on the total amount of salt actually sold and delivered by the defendant company in each year. In spite of repeated demands made by the Government of Saurashtra , the defendant company persisted in its aforesaid stand. While matters stood thus , that as a result of the State reorganization of 634 1956 , the State of Bombay became the successor state to the State of Saurashtra. The State of Bombay instituted the suit out of which these two appeals have arisen in the Court of Civil Judge , Senior Division , Surendranagar seeking to recover Rs. 506,959 5 0 with interest at 6 per cent per annum from the date of suit by way of royalty claimed to be payable by the defendant company on the terms of the aforesaid agreement of 1950. In defence to the suit , the defendant company reiterated the position it had taken in response to the claims made on it by the Government of Saurashtra namely , that clauses (3) and (5) of the agreement were vague and void and that under clause (2) its liability was to pay royalty only on the actual amount of salt sold by the company during each year: The basis of the claim put forward by the plaintiff was that during the years when there was a short fall in the production , the company was bound to pay royalty on the minimum guaranteed quantity of 50,000 tons of salt and that a sum of Rs. 1,07,495 10 0 was due on this account. It was further urged on behalf of the plaintiff that on a proper construction of clause (2) of the agreement , the liability of the company was to pay royalty not on the quantity of salt sold and delivered by them during the years when more than the minimum quantity stipulated in clause (3) had been manufactured but on the actual quantity manufactured by the company irrespective of whether any portion thereof remained unsold . The Trial Court after a careful and detailed consideration of the terms of the agreement as well as all the relevant aspects of the case to the conclusion that the defendant company is liable to pay royalty on the minimum quantity of 50,000 tons in respect of each year in which the production of salt was less than 50,000 tons after excluding the quantity require(l for consumption in their own factory. For the years during which the production exceeded the stipulated minimum of 50,000 tons, the Trial Court held that royalty was chargeable only on the quantity of salt sold and delivered by the company and not on the total quantity manufactured by it. In this view it passed a decree in the plaintiff favour for a sum of Rs. 2,66,462 0 9 and dismissed the suit in respect of the remaining part of the plaintiff 's claim. 635 While the matter was pending in the Trial Court , the bifurcation of the State of Bombay had taken place and the area in question became the part of the territory of the State of Gujarat and the State of Gujarat bad been substituted as plaintiff the suit. Both the defendant company as well as the State of Gujarat filed appeals in the High Court questioning the correctness of the aforesaid judgment and the decree of the learned Civil Judge. First Appeal No. 981 of 1960 was appeal filed by the defendant company and First Appeal No.270 of 1961 was State 's appeal. Both these appeals were heard together by the Division Bench of the High Court and they were disposed of under the judgment now impugned before us. The High Court on a consideration of clauses (2) , (3) and (5) of the agreement was of opinion that even though clause (5) dealt with a particular contingency namely , the failure of the defendant company to manufacture minimum quantity of salt as specified in clause (3) , it was "introduced by way of abundant caution and not by way of limiting the ambit and scope of the operative part of the agreement namely , clause 2. In the view of the High Court , clause (5) could not be regarded as controlling clause (2) and the liability of the defendant company to pay royalty to Government rested solely upon the terms of clause (2). In this view the High Court held that merely on account of the fact that the defendant company had during certain years failed to manufacture the minimum quantity of salt stipulated in clause (3) , it could not be saddled with liability for payment of royalty during those years since under clause (2) royalty was to be paid only on the quantity of salt actually sold and delivered. The Division Bench of the High Court concerned with the Trial Court in the view taken by it that under clause (2) the charge to royalty would get attracted not by mere manufacture alone but only at the point of sale and delivery of the salt to the purchasers. On the basis of the foregoing conclusions reached by it , the High Court set aside the decree passed by the learned Civil Judge and dismissed a suit except regarding an amount of Rs. 16,631 which had been admitted by the defendant company to be payable by it to the plaintiff Aggrieved by the said decision of the High Court , the State of Gujarat has preferred these two appeals before this Court. 636 After hearing arguments on both sides and scrutinizing the terms of the agreement dated January 4, 1950 , we have unhesitatingly come to the conclusion that the High Court was not right interfering with the decree passed by the learned Civil Judge. Since the points raised in the appeals turn on the interpretation to be placed on the clauses (2) to (5) , we shall reproduce those clauses in full. They read "2. The company shall pay a royalty to the Government at the rate of 0 2 3 per Bengal maund on the total quantity a of salt sold by them every year. The amount of royalty under this clause shall be paid by the company as and when delivery is given by the company to the purchaser , and for the purposes of ascertaining the royalty chargeable under this clause the company shall produce the sale notes , delivery notes and such other documents or records as may be required by an Officer authorized by Government in this behalf. The company shall manufacture at least 50,000 tons of salt in addition to the quantity required for consumption in their works. However , if it become impossible to produce the minimum quantity of salt required to be produced by this clause on account of natural circumstances beyond the control of the company Government may relax this requirement to such extent as may be deemed fit by Government in view of such circumstances. The company shall make all efforts to raise the production of salt above the minimum specified in clause 3 above. In case company fails to manufacture the minimum quantity of salt as specified in clause (3) above and Government do not think it fit to relax the requirements of the said clause in accordance with the pro visions mentioned therein , then notwithstanding any thing contained in clause 2 above the company shall 637 pay the minimum royalty equivalent to an amount chargeable on the minimum quantity to be manufactured in accordance with clause (3) of this agreement. " We do not find possible to agree with the High Court that clause (3) was only 'introduced by way of abundant caution ' and that clause(5) does not create any liability for payment of a minimum royalty. On a combined reading of clauses (2) to (5) , it appears to us to be clear that while clause (2) was intended to operate and govern the rights and liabilities of the parties in respect of payment of royalty during years when the company maintained its normal scale of production , clauses (3) and (5) had been deliberately inserted with the object and purpose of ensuring that even in respect of lean years when the production of salt by the company fell short of the stipulated minimum of 50,000 tons after excluding the quantity required for the consumption in the company 's own factory , the Government was to be paid a minimum guaranteed royalty equivalent to the amount chargeable on 50,000 tons of salt which is stipulated as the minimum quantity to be manufactured under clause (3). The interpretation put on clause (2) by the High Court has the result of completely rendering clauses (3) and (5) otiose and such interpretation does not commend itself to us. We do not also find it possible to agree with the view expressed by the High Court that the liability for payment of royalty emanated only from clause (2). No doubt clause (2) is the principal clause providing for the payment of royalty but it was to be operative in respect of years when the production of salt by the company fell within the normal limits , that is above the stipulated minimum. Clause (S) is a special provision for payment of a minimum guaranteed royalty in respect of periods when the production of salt by the company fell short of the quantity stipulated in clause (3). Hence there is no conflict between clauses (2) and (5); on the contrary , they supplement each other. We are , therefore , constrained to hold that the High Court was in error in its conclusion that in respect of years when the company failed to produce the minimum quantity of salt stipulated in clause (3) , it was under no liability at all to pay any royalty to the Government under clause (5). The Trial Court was , in our opinion , perfectly right in granting a decree to the plaintiff for the amount of royalty payable in respect of the short fall in production during the years 1950 53. There remains only the further question , whether under the 638 terms of clause (2) , the royalty payable thereunder is to be computed on the total amount of salt manufactured by the company or on the quantity sold and delivered. In our opinion , the terms of the clause are absolutely clear and provide for levy and collection of royalty only when the salt is sold and delivered by the company to the purchasers. This obviously means that royalty can be charged only on the quantity actually sold and delivered by the company and not on the total quantity manufactured by it during the particular year. The concurrent findings recorded on this point by the High Court and the learned Civil Judge do not , therefore , call for any interference. In the result , we allow these appeals , set aside the judgment of the High Court and restore the judgment and decree of the learned Civil Judge subject to the modification that the rate of interest payable to the plaintiff on the decree amount shall be 12 per cent from the date of the trial Court. The costs incurred by the appellant in this Court in these appeals will be paid by the respondent. The appellant will also get its full costs from the respondent in the High Court in First Appeal No.981 of 1960. The defendant company will bear its own costs in the Trial Court as well as in the High Court. The plaintiff will get proportionate costs in the Trial Court while the defendant will bear its own costs. S.R. Appeals allowed.

On January 29, 1937 an agreement had been entered into between the Dhangadhra Chemical Works Ltd. and the Maharaja of Dhrangadhra whereunder the company purchased from the Government of Maharaja Shakti Alkali Works in Dhrangadhra and the Salt Works at Kuda with exclusive rights to manufacture salt at the Kuda Works on certain conditions. In April 1948 , the princely State of Dhrangadhra got merged in the newly formed State of Saurashtra. By a further agreement dated January 4 , 1950 entered into between the company and the Government Saurashtra , the company agreed to ply to the Government of Saurashtra royalty at the rate of Rs. 0 2 3 (2 annas , 3 pies) per Bengal Maund on the total quantity of salt sold by them every year. The payment of royalty was to be made as and then delivery was given by the respondent company to the purchaser Under clause 3 of the said agreement the respondent company agreed to manufacture a minimum quantity of at least 50,000 tons of salt every year in addition to the quantity required by the respondent company for consumption in their Alkali factory. Clause 5 of the agreement provided for the payment of a minimum royalty equivalent to an amount chargeable on the minimum quantity to be manufactured by the respondent company in accordance with clause 3. For the years 1950 53 , there was a short fall in the production of salt by the respondent company aggregating to 27300 0 54 tons , and the respondent company made payments of royalty in terms of clause 2 of the agreement and refused to pay the minimum guaranteed royalty on 50,000 tons taking the stand that clause 3 of the agreement was void due to vagueness and uncertainty and since clause 5 was dependent for its operation on clause 3 the said clause 5 was also void due to vagueness. In spite of repeated demands the respondent company persisted in its stand , 631 The State of Bombay , which became the successor State to the State of Saurashtra in 1956 therefore , instituted the suit in the court of Civil Judge , Senior Division , Surendranagar seeking to recover a sum of Rs. 506, 959 5 O with interest at 6 per cent per annum from the date of suit by way of royalty payable by the respondent company. The trial court , after a careful and detailed consideration of the terms of the agreement as well as all the relevant aspects of the case came to the conclusion that the respondent company was liable to pay royalty on the minimum quantity of 50 , 000 tons in respect of each year in which the production of salt was less than 50,000 tons after excluding the quantity required for consumption in their own factory and that for the years during which the production exceeded the stipulated minimum of 50,000 tons, royalty was chargeable only on the quantity of salt sold and delivered by the company and not on the total quantity manufactured by it. In this view it passed a decree in favour of the appellant which during the tendency of the trial became the successor Government to State of Bombay on bifurcation of the State for a sum of Rs. 2,66,462 0 9 and dismissed the appellants ' claim. While , concurring with the trial court the view taken by it that under clause 2 charge to royalty wound get attracted not by mere manufacture alone but only at the point of sale and delivery of the salt to the purchasers , the High Court of Gujarat took the view in the two first and cross Appeals , that clause 5 could not be regarded as controlling clause 2 and the liability of the respondent company to pay royalty to government rested solely upon the terms of clause 2 and had that merely on account of the fact that the respondent company had during certain years failed to manufacture the minimum quantity of salt stipulated in clause 3 , it could not be saddled with liability for payment of royalty during those years since under clause 2 royalty was to be paid only on the quantity of salt actually sold and delivered. The High Court . accordingly set aside the decree passed by the trial court and dismissed the appellant 's suit , except regarding an amount of Rs. 16 , 631 which had been admitted by the respondent company to be payable by it to the appellant. Hence the two State appeals by certificate granted by the High Court under Article 133 (1) (c) of the Constitution , as it stood prior to the Amendment of 1972. Allowing the appeals , the Court F ^ HELD: 1. On a combined reading of clauses 2 to 5 of the Agreement dated 4. 50 it is clear , that while clause 2 was intended to operate and govern the right , and liabilities of the parties in respect of payment of royalty during years when the company maintained its normal scale of production , clauses 3 and 5 had been deliberately inserted with the object and purpose of ensuring that even in respect of lean year when the production of salt by the company fell short of the stipulated minimum of 50,000 tons after excluding the quantity required for the consumption in the company 's own factory, the government was to be paid a minimum guaranteed royalty equivalent to the amount chargeable on 50,000 tons of salt which is stipulated as the minimum quantity to be manufactured under clause 3. The interpretation put on clause 2 by the High Court the result of completely rendering clause 3 and 5 otiose. [637B D] 632 2. No doubt clause 2 is the principal clause providing for the payment of royalty but it was to be operative in respect of years when the production of salt by the company fell within the normal limits , that is above the stipulated minimum Clause 5 is a special provision for payment of a minimum guaranteed royalty in respect of periods when the production of salt by the company fell short of the quantity stipulated in clause 3. Hence there is no conflict between clauses 2 and 5; on the contrary , they supplement each other. [637E F3 3. The terms of clause 2 are absolutely clear and provide for levy and collection of royalty only when the salt is sold and delivered by the company to the purchasers. This obviously means that royalty can be charged thereunder only on the quantity actually sold and delivered by the company and not on the total quantity manufactured by it during the particular years. [638A B]

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Civil Appeal No. 301 of 1984. From the Judgment and order dated 1.2.1983 of the Punjab and Haryana High Court in Letters Patent Appeal No. 1410 of 1982. P.D. Sharrna for the Appellant. 623 Parmod Dayal for the Respondents. The Judgment of the Court was delivered by DUTT, J. This appeal by special leave is directed against the judgment of the Division Bench of the High Court of Punjab & Haryana whereby the High Court dismissed in limine the letters patent appeal preferred by the appellant against the judgment of a learned Single Judge of the High Court dismissing the writ petition of the appellant relating to his seniority. The appellant was appointed an Assistant Engineer II with effect from June 10, 1963 in the Punjab State Electricity Board on probation for two years which ended on June 10, 1965. After the bifurcation of the Punjab State Electricity Board, the service of the appellant was allocated to the Haryana State Electricity Board, hereinafter referred to as 'the Board '. As a result of a disciplinary proceeding held against the appellant, on April 15, 1968. a minor penalty for the stoppage of one increment without any future effect was imposed on the appellant by the Board. After the expiry of one year, the appellant was, however, given the increment. Although the probationary period of the appellant was completed on June 10, 1965, he was not confirmed within a reasonable time thereafter. There is also no material to show that his period of probation was extended. In the meantime, some substantive posts of Assistant Engineers, Class II, fell vacant and by an order dated March 30, 1970 of the Secretary to the Board, the appellant and the respondents Nos. 2 to 19 were confirmed as Assistant Engineers, Class II. It has been specifically stated in the said order that the officers mentioned therein, that is, the appellant and the respondents Nos. 2 to 19, had satisfactorily completed the probationary period of two years. It, however, appears from the said order that respondents Nos.2 to 14 were confirmed in the posts of Assistant Engineers, Class II, with effect from April 1, 1969, while the appellant was confirmed in that post with effect from December 1, 1969. Consequently, the appellant 's name was placed last of all the confirmed officers. In the seniority list also, the name of the appellant was placed against serial No. 63, that is, below the names of the respondents Nos. 2 to 19, although the seniority list appears to have been prepared on the basis of the respective dates of appointments of the officers. As the appellant was appointed on June 10, 1963, his name should have been placed below the name of Pawan Kumar Aggarwal (Serial No. 45) respondent No. 3 624 appointed on June 7, 1963 and above the name of Sudesh Kumar Tuli (Serial No. 46) respondent No. 2 appointed on June 21, 1963, but his name was placed below that of Ved Prakash Lalit (Serial No. 62), who was appointed on April 7, 1964. In other words, the names of the respondents Nos. 2 and 4 to 19, who are all juniors to the appellant, were placed above the name of the appellant in the seniority list without any reason whatsoever. Being aggrieved by the impugned order of the Board dated March 30, 1970 and also the seniority list wherein the appellant 's name has been placed below the names of his juniors, namely, respondents Nos. 2 and 4 to 19, the appellant filed a writ petition before a Single Judge of the Punjab & Haryana High Court. As stated already, the learned Single Judge dismissed the writ petition, and the letters patent appeal preferred by the appellant against. the order of the learned Single Judge was also dismissed. Hence this appeal. It may be stated here that respondent No. 4, S.P. Nlidha, is since dead. The only point that is involved in this appeal is whether the Board was justified in confirming the appointment of the appellant in the post of Assistant Engineer, Class II, with effect from December 1, 1969 and placing him below his juniors, namely respondents Nos. 2 and 4 to 19, in the seniority list. As has been noticed already, there is no material to show why the appellant was confirmed in the post with effect from December 1, 1969, when he had completed his probationary period of two years satisfactorily. It is submitted on behalf of the Board that as the minor penalty was imposed on the appellant by way of stoppage of his increment for one year, he was confirmed with effect from December 1, 1969 and placed below the respondents Nos. 2 and 4 to 19 in the seniority list. We are unable to accept the above contention. The penalty was imposed on April 15, 1968 and, as a result of which, he was deprived of the monetary benefit of one increment for one year only. The penalty by way of stoppage of one increment for one year was without any future effect. In other words, the appellant 's increment for one year was stopped and such stoppage of increment will have no effect whatsoever on his seniority. Accordingly, the Board acted illegally and most arbitrarily in placing the juniors of the appellant above him in the seniority list and/or confirming the appellant in the post with effect from December 1, 1969, that is, long after the date of confirmation of the said respondents Nos. 2 to 19. The question of seniority has nothing to do with the penalty that was imposed upon the appellant. It 625 is apparent that for the same act of misconduct, the appellant has been punished twice, that is, first, by the stoppage of one increment for one year and, second, by placing him below his juniors in the seniority list. The appellant should have been confirmed on June 10, 1965 on which date he had completed two years of his probationary period. As has been stated already, the probationary period was not extended. The Board has not laid down any guideline for confirmation. There is no rule showing when an officer of the Board will be confirmed. While there is some necessity for appointing a person in government service on probation for a particular period, there may not be any need for confirmation of that officer after the completion of the probationary period. If during the period of probation a government servant is found to be unsuitable, his services may be terminated. On the other hand, if he is found to be suitable, he would be allowed to continue in service. The archaic rule of confirmation, still in force, gives a scope to the executive authorities to act arbitrarily or malafide giving rise to unnecessary litigations. It is high time that the Government and other authorities should think over the matter and relieve the government servants of becoming victims of arbitrary actions. In this connection we may refer to the decision in the case of S.B. Patwardhan & others vs State of Maharashtra & Ors. [ ; where Chandrachud, C.J. speaking for the Court observed as follows: "Confirmation is one of the inglorious uncertainties of government service depending neither on efficiency of the incumbent nor on the availability of substantive vacancies. A glaring instance widely known in a part of our country is of a distinguished member of the judiciary who was confirmed as a District Judge years after he was confirmed as a Judge of the High Court. It is on the record of these writ petitions that officiating Deputy Engineers were not confirmed even though substantive vacancies were available in which they could have been confirmed. It shows that confirmation does not have to conform to any set rules and whether an employee should be confirmed or not depends on the sweet will and pleasure of the Government. In the instant case, although the Board found that the appellant had satisfactorily completed his period of probation, yet he was placed below his juniors in the seniority list without any rhyme or reason. There is no explanation why the confirmation of the appellant was deferred till December 1, 1969. It is, however, submitted on behalf of 626 the Board that after some substantive posts had fallen vacant on April 1, 1969, the question of confirmation of the appellant and the respondents Nos. 2 to 19 was taken into consideration. This submission is not supported by any material on record inasmuch as there is nothing to show when these posts had fallen vacant. It is difficult to accept that all these posts had fallen vacant on the same day, that is, on April 1, 1969. We have, therefore, no hesitation in holding that the vacancies had occurred before that day, but the Board did not care to take up the question of confirmation for reasons best known to it. That facts stated hereinabove, disclose that the Board had acted arbitrarily at its sweet will and without any justification whatsoever in making the appellant junior to the respondents Nos. 2 and 4 to 19, who are admittedly juniors in service to the appellant. For the reasons aforesaid, the judgment of the learned Single Judge and that of the Division Bench of the High Court and the impugned seniority list are set aside. We direct that a fresh seniority list shall be prepared by placing the appellant immediately below Pawan Kumar Aggarwal and above Sudesh Kumar Tuli within six weeks from date and maintain the seniority of the appellant, as directed, in the post to which the appellant has been promoted in the meantime . The appeal is allowed with costs quantified at Rs.5,000 G.N. Appeal allowed.

The appellant was appointed an Assistant Engineer on June 10, 1963 in the Punjab State Electricity Board on probation for two years which ended on June 10, 1965. On bifurcation of Punjab Electricity Board, the service of the appellant was allocated to Haryana State Electricity Board. As a result of a disciplinary proceeding held against him in 1968, a minor penalty of stoppage of one increment without any future effect was imposed on the appellant. After expiry of one year, the appellant was, however, given the increment. By virtue of an order dated March 30, 1970, the appellant and respondents 2 to 19 were confirmed as Assistant Engineers, class II on satisfactorily completing the probation period of two years. Though the others were confirmed with effect from April 1, 1969, the appellant was confirmed with effect from December 1, 1969. Consequently, the appellant 's name was placed last of all the confirmed officers. The appellant challenged the said order by way of a writ petition before the High Court which dismissed the petition. This appeal by special leave is against the judgment of the High Court. G Allowing the appeal, ^ HELD: 1. The penalty by way of stoppage of one increment for one year was without any future effect. In other words, the appellant 's increment for one year was stopped and such stoppage of increment will H 622 have no effect whatsoever on his seniority. Accordingly, the Electricity Board acted illegally and most arbitrarily in placing the juniors of the appellant above him in the seniority list and/or confirming the appellant in the post with effect from December 1, 1969 instead of April 1, 1969. The question of seniority has nothing to do with the penalty that was imposed upon the appellant. It is apparent that for the same act of misconduct, the appellant has been punished twice, that is, first, by the stoppage of one increment for one year and, second, by placing him below his juniors in the seniority list. [624G H; 625A] 2. There is no explanation why the confirmation of the appellant was deferred till December 1, 1969. The explanation that after some substantive posts had fallen vacant on April 1, 1969, the question of confirmation was taken into consideration is not supported by. any material on record inasmuch as there is nothing to show when these posts had fallen vacant. It is difficult to accept that all these posts had fallen vacant on the same day, that is, on April 1, 1969. Though the vacancies had occurred before that day, the Board did not care to take up the question of confirmation for reasons best known to it. While there is some necessity for appointing a person in government service on probation for a particular period, there may not be any need for confirmation of that officer after the completion of the probationary period. The archaic rule of confirmation, still in force, gives a scope to the executive authorities to act arbitrarily or malafide giving rise to unnecessary litigations. It is high time that the Government and other authorities should think over the matter and relieve the government servants of becoming victims of arbitrary actions. [625H; 626B; 625C; D] S.B. Patwardhan & others vs State of Maharashtra & others; , , referred to. [Setting aside the High Court judgment and the seniority list, this Court directed that a fresh seniority list be prepared within six months on the basis of this judgment and maintain the appellant 's seniority in the post to which he has been promoted in the meantime.] [626D]

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Appeal No. 136 of 1953. Appeal by Special Leave from the Judgment and Order dated the 4th day of May 1949 of the High Court of Judicature at Patna in Appeal from Appellate Decree No. 1918 of 1947 against the Decree dated the 23rd day of July 1947 of the Subordinate Judge, Arrah in Appeal No. 137 of 1946 arising from the Decree dated the 29th March 1946 of the Court of the 2nd Munsif at Arrah in Suit No. T. section 120 of 1943. R. C. Prasad, for the appellant. section P. Varma, for the respondent. 187 1955. April 7. The Judgment of the Court was delivered by JAGANNADHADAS J. This is an appeal by leave granted under article 136(1) of the Constitution against the second appellate judgment of the High Court of Patna. It relates to the office of Pujari and Panda of a famous temple in the town of Arrah in the State of Bihar, known as the temple of Aranya Devi and Killa Ki Devi. The appellant before us a woman brought this suit claiming joint title to the office along with the defendant and as such entitled to perform the Puja either by herself or through her Karinda and to get a half share in the income of offerings of the said Asthan. It is the admitted case that this office belongs to the family of both the parties and that the duties of the office were being jointly performed by the defendant and his deceased brother, Rambeyas Pande, and that they were enjoy ing the emoluments jointly. The plaintiff the widow of Rambeyas Pande claims to have succeeded to her husband 's share in this property and bases her suit on the said claim. In the written statement the defendant raised three main defences, two out of which are (1) the plaintiff was not the legally wedded wife of his brother, Rambeyas Pande, and (2) during the life time of Rambeyas Pande, there was a division between them with reference to the office of Pujari and Panda belonging to this family in respect of two temples (a) at Arrah and (b) at Gangipul, that the office of pujari at Gangipul was given to the plaintiff 's husband and that the temple of Aran Devi at Arrah was given to the defendant and that since then, i.e., for about 11 years prior to the date of the suit, the plaintiff 's husband had no connection with the office of Pujari in this temple nor with the receipt of any offerings therein. Both these contentions were found against the defendant by the trial court as well as by the first appellate court and they have become conclusive. The further and third defence raised by the defendant was that the property in suit, viz., the office of Pujari and Panda of the templet cannot be inherited by a female, The contention 188 is set out in the following terms in the written statement: "The plaintiff is not at all entitled to the office and the post of Pujari and Panda of Arun Devi and she is not entitled to get 1/2 share or any share in the income and offering of the said Asthan, nor has she got any right to perform Puja as a Panda personally, or through her karinda and to get the income, etc. This is against the custom and usage and practice and also against the Sastras. The property in suit is such as cannot be inherited by a female". It is the question thus raised which has got to be con sidered in this appeal. The trial Court held against this contention in the following terms: "No authority has been cited nor any custom proved to show that, female cannot inherit a property of this nature". The first appellate Court also affirmed this view as follows: "The defendant 's objection that the plaintiff being a female is not authorised to hold the office of a priest of the Aranya Debi temple is not borne out by any evidence or material on the record. There is nothing to show that by reason of her sex she is debarred from holding this office either by religion, custom or usage. Moreover admittedly she holds the office at the Gangi temple". On the findings arrived at by the trial court and the first appellate court, the plaintiff got a decree as prayed, for declaring her right to half share in the office and for recovery of mesne profits on that footing. On second appeal to the High Court, the learned Judges went into the question at some length and were of the opinion that "the plaintiff being a female is not entitled to inherit the priestly office in question and her claim to officiate as a priest in the temple by rotation cannot be sustained. The declaration sought for by her that she is entitled to the office of Pujari cannot, therefore, be granted". They held, however, "that she is not debar red from being entitled to be maintained out of the estate of her, husband which, in 189 the particular case, happens to be no other than the emoluments attached to the priestly office in the shape of offerings made to the deity which office was undoubtedly hereditary". They further held that "she will be entitled to receive from the defendant half the amount of the offerings in lieu of her maintenance" and they varied the decree of the trial court accordingly. The short question that arises, therefore, for consideration in this appeal is whether a Hindu female is entitled to succeed to the hereditary priestly office of a Pujari and Panda held by her husband in a temple and to receive the emoluments thereof. This is a question about which there has been some diff erence of opinion in the decided cases. It requires close examination. That religious offices can be hereditary and that the right to such an office is in the nature of property under the Hindu Law is now well established. A Full Bench of the Calcutta High Court in Manohar vs Bhupendra(1) has laid this down in respect of Shebaitship of a temple and this view has been accepted by the Privy Council in two subsequent cases in Ganesh vs Lal Behary(2) and Bhabatarini vs Ashalata (3). In a recent judgment of this Court reported as The Com missioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar(4) this view has been reiterated and extended to the office of a Mahant. On the view that Shebaiti is property, this Court has also recognised the right of a female to succeed to the religious office of Shebaitship in the case reported as Angurbala vs Debabrata(5), where the question as to the applicability of Hindu Women 's Right to Property Act to the office of Shebaitship came up for consideration. On the same analogy as that of a Shebaiti right, the right of a hereditary priest or Pujari in a temple must also amount to property where emoluments are attached to such an office. Indeed, some of the decisions which have recognised the Shebaiti right as property appear to be cases where the Shebaiti (1) A.I.R. 1932 Calcutta 791. (2) (1936] L.R. 68 I.A. 448. (3) [1943] L.R. 70 I.A. 57. (4) ; (5) 190 right combines the priestly office of a Pujari of the idol with the office of the manager of the temple, who in South India, is known by the name of Dharmakarta. As early as in Mitta Kunth Audhicarry vs Neerunjun Audhicarry(1), it was recognised that hereditary priestly office in a family is property liable to partition. A number of other decisions to be noticed in the later part of this judgment recognise this position. The learned Judges of the High Court in their judgment in the case under appeal, have attempted to distinguish the present case from that of the case of the Shebaitship and have come to the conclusion that while in respect of Shebaiti right a woman may succeed by heirship, she is not entitled to such succession in respect of the right of a Panda and Pujari. But in making this distinction they do not negative the idea that the right to the office of the Pujari itself is property to which a female could succeed, but for her supposed disqualification. The disqualification is said to arise with reference to the duties attached to this office, and it is said that in this respect it differs from the office of a Shebait. Now there can be no doubt that while in one sense the right to such a religious office is property it involves also substantial elements of duty. As has been stated by this Court in Angurbala vs Debabrata(2) and in The Commissioner, H. R. E., Madras vs Sri Lakshmindra Thirtha Swamiar(3) "both the elements of office and property, of duties and personal interest are blended together (in such offices) and neither can be detached from the other". It must also be recognised that in respect of such offices especially where they are attached to public institutions, the duties are to be regarded as primary and that the rights and emoluments are only appurtenant to the duties. See the observations of Justice Page in Nagendra vs Rabindra(4) at pages 495 and 496 and that of Justice Sadasiva Aiyar in Sundarambal vs Yogavanagurukkal(5) at page 564, as also of Mukherjea on 'Endowments (1) [1875] XIV B.L.R. 166. (2) (1951] S.C.R. 1125. (3) ; (4) A.I.R. 1926 Calcutta.490. (5) A.I.R. 1915 Madras 561. 191 (1952 Edn.) page 201. If, therefore, it is found that the recognition of a female 's right to succeed to the hereditary office of Pujari in a temple held by her husband is incompatible with due discharge of the duties of the office, her right to succeed must be negatived. The correct approach to a question of this kind has been laid down by the Privy Council in a case which relates to a Mohammadan religious office but would equally be applicable to a Hindu religious office. In Shahar Bano vs Aga Mahomed Jaffer Bindaneem(1) their Lordships, after noticing the View taken by the learned Judges of the Calcutta High Court, that "there is no legal prohibition against a woman holding a mutwalliship when the trust, by its nature involves no spiritual duties such as a woman could not properly discharge in person or by deputy" approved this view of the High Court and said "it appears to their Lordships that there is ample authority for that proposition". The question, therefore, that requires consideration in the present case is whether the office of the Pujari and Panda in a temple involves such duties as could not be discharged by a female in person and if so, whether she is also incompetent to get the same discharged by a deputy. Now for this purpose it is desirable to have a clear idea of the duties of a Pujari in an ordinary Hindu temple. A Pujari has to perform the prescribed daily worship of the image as well as the special worship of a periodical nature on particular occasions and for prescribed festivals during the year. In Ramabrahma Chatterjee V. Kedar Nath Banerjee Justice Sir Asutosh Mookerjee indicated the daily routine of worship in the following passage: "The normal type of continued worship of a consecrated image consists of the sweeping of a temple, the process of smearing, the removal of the previous day 's offerings of flowers, the presentation of fresh flowers and water, and other like practices. It is sufficient to state that the deity is, in short, conceived as a living being and is treated in the same way as the (1) [1906] L.R. 84 I.A. 46, 53. (2) A.I.R. 1923 Calcutta 60, 62. 192 master of the house would be treated by his humble servant. The daily routine of life is gone through with minute accuracy; the vivified image is regaled with the necessaries and luxuries of life in due succession, even to the changing of clothes, the offering of cooked and uncooked food, and the retirement to rest". In Saraswati 's Hindu Law of Endowments(1) the nature of the daily worship of a consecrated idol in a temple is set out at pages 134 and 135 in detail. It must be recognised that the daily worship differs according to the tenets and usages of the religious sect for which the temple is intended and the idol is consecrated. But whatever may be the details of the worship and the variations therein, there can be no doubt that the ministration of various services involving personal touch of the idol, and, often enough, the recitation of religious hymns inclusive of Vedic hymns are amongst the normal and essential features of a Pujari 's duties, at any rate in temples where the worship is conducted according to the Shastras. It is also undisputed that according to Hindu Shastras the functions of a Pujari can be performed only by certain limited classes and involves special qualifications and that these classes may vary with the nature of the institution. Now, whatever may have been the position in early times, of which there is no clear historical evidence, it appears to have been well established in later times that a female, even of the recognised limited classes, cannot by herself perform the duties of a Pujari. Even at a time when the institution of temple worship had probably not come into general vogue, the incapacity of a woman to recite Vedic texts, to offer sacrificial fire, or to perform sacramental rites, is indicated in certain texts of Manu. (See Sacred Books of the East, Manu, Vol. 25, pages 330 and 437, Chapter 9, section 18 and Chapter 11, section 36). Whether it is on the basis of these texts or for some other reason, her incapacity to discharge, in person, the duties of the Pujari appears to have been well (1) The Hindu Law of Endowments by Pandit Prannath Saraswati, T.L.L., 1892. (1897 Edn.). 193 settled in later times as appears from the following text from Brihan Naradiya Purana quoted in Saraswati 's Hindu Law of Endowments at page 136. "Women, those uninvested with the sacred thread, (i.e. the members of the Dvija class before the initiation ceremony has been performed for them), and Sudras are not competent to touch images of Vishnu or Siva. A Sudra, one uninvested with the sacred thread, a woman or an outcaste, having touched Vishnu or Siva, goes to hell". This passage, in terms, refers to the images of Vishnu and Siva but it may reasonably be assumed, in the absence of any evidence to the contrary, that in practice the incapacity of a female to discharge the duties of a Pujari by herself extended, at any rate, to all public temples where an image of whatever form had been consecrated and installed according to the Shastras. Indeed, all the cases on the subject have assumed this incapacity of the female. The point of controversy has been whether she is also incompetent to get the duties discharged by employing a qualified substitute. If her competence in this behalf is recognised and can be accepted there is no reason why she should not be held entitled to succeed to the office. Thus the really important question for consideration in this case is whether the duties of the Pujari '8 office can be got done by a substitute and if so is there any particular reason or clearly established usage, against a female employing such a substitute and thus becoming entitled to the office. In early Hindu society a priestly office could have relation only to the performance of various kinds of Vedic rituals and sacrifices either of a daily and routine nature or of a periodical and special nature. In theory a Brahmin is to perform such functions for himself by himself, while persons of other classes ,should get them done through qualified Brahmin,s. On principle a, priest in the Hindu concept is chosen as such with reference to his personal qualities and competence. The system of hereditary priesthood however, with the possibility of persons not fully 25 194 competent, succeeding to or occupying such an office, appears to have come into vogue from fairly early times. It appears, however, that from the very nature of the situation, the temporary discharge of the priestly function by a substitute in the place of the hereditary priest was a matter of inevitable necessity since the Hindu Shastras recognised temporary and casual disqualifications like that of butt and death pollution. But there does not appear to be any indication in the early books of any general practice about the functions of priestly office being discharged by proxies. In comparatively later days, however, there is clear indication of such a practice. In Saraswati 's Hindu Law of Endowments at page 56, it is stated that in the Padma Purana and other treatises incapacitated persons are directed to have the worship performed through Brahmins. This statement is with reference to the performance of service of an idol and has presumably reference to the incapacity of persons occupying a priestly office. In Colebrooke 's translation of the Digest of Hindu Law on Contracts and Successions with a commentary by Jagannatha Tercapanchanana (4th Edition, published by Higginbotham & Co., Madras, 1874), Vol. I, Book II, Chapter III, Section 11, pages 360 to 381 deal with the topic of partnership among priests jointly officiating at holy rites. A perusal thereof and particularly of placita 28 to 44 containing citations from various Smrutis with Jagannatha 's commentary thereon, clearly indicate that the institution of hereditary priestship, became established by that date and that the performance of such priestly functions by substitutes had definitely come into vogue. Various rules are propounded as to the sharing of remuneration between the substitute priest and the hereditary priest when the former happens to perform the functions in the place of the latter. It is to be noticed that these passages from Jagannatha 's Digest refer in terms only to priestly office by way of officiating at holy rites, i.e., sacrifices and other Vedic or Shastric functions but do not in terms refer to the discharge of a priest 's duties in relation to the worship of an idol in a temple. 195 This is all the more remarkable because by the date of Jagannatha 's Digest the institution of worship of consecrated idols in temples had become long since fairly established. The probable explanation is that Jagannatha 's Digest is a commentary on selected texts mostly of the various Smrutis from which he quotes and that in the days of the Smrutis the temple worship does not appear to have come sufficiently into vogue. The historical origin and growth of temple worship has been fully dealt with in Saraswati 's Hindu Law of Endowments and has been also noticed in the referring judgment in Annaya Tantri vs Ammaka Hengsu(1). It is pointed out therein that according to Hindu sentiment the performance of the duties of an Archaka or Pujari for an idol has been considered sinful and it required inducements by way of liberal grants of land and promise of substantial perquisites to attract competent persons for the office of Pujari or Archaka. This, in course of time and with the change in social conditions and economic values, rendered the offices of Panda and Pujari in almost all the famous shrines in India, a lucrative affair, and has enabled the hereditary priests to get the functions discharged by paid substitutes and themselves enjoy a substantial margin of income. Here just in the same way as the patronage of the kings or the society may have been a great incentive to the development of the system of discharge of hereditary priestly functions by substitutes in relation to sacrificial and Vedic religious rites, the phenomenal development and worship of idols in temples and the substantial emoluments which in course of time rendered the discharge of priestly office lucrative must have brought into vogue the employment of substitutes for performance of the duties of the priests not only for sacrificial or other religious rites but also for temple worship. Whether and how far this practice is permitted by the Shastras is not the question before us. But it cannot be denied and is indeed a matter of common knowledge, that at the present day, hereditary priestly offices are, as often as not, performed by proxies, (1) A.l. P, 1919 'Madras 598 (F,B.). 196 the choice of proxy being, of course, limited to a small circle permitted by usage. The question for consideration of the courts is, whether, in this state of things, a female is to be excluded from succession to the hereditary office of Pujari on account of her well recognised personal disqualification to officiate as such Pujari for the Shastrically installed and consecrated idols in the temples and whether she is to be denied the capacity to retain the property by getting the priestly duties efficiently discharged through a competent substitute. The only basis for the alleged denial is a passage from Jagannatha 's Digest which is as follows: (Vide Vol. 1, page 379, commentary under placitum 43). "Wives and others, disqualified by sex for the performance of holy rites, cannot appoint a substitute; as defiled person cannot perform a solemn act ordained by the Vedas, therefore wives have no property in the office of priest". Now apart from the question whether this passage can be taken to be sufficiently authoritative, there has been some difference of opinion as to the correct import thereof. In Sundarambal Ammal vs Yogavanagurukkal(1) this passage has been relied upon by Justice Sadasiva Aiyar as showing that women are incompetent to discharge the functions of a priest even through a substitute and that, therefore, they have no right of succession to the office. The learned Judges of the High Court in the present case have also relied on it. In Annaya Tantri vs Ammaka Hengsu(2), Justice Seshagiri Aiyar in his referring judgment has referred to this passage and was of the opinion that it does not express a specific view. In Ganapathi Iyer on Hindu and Mahomedan Endowments (2nd Edn.) the learned author while commenting on this very passage says as follows at page 453 of his book: "Jagannatha there considers the question whether wives and others have a title to the succession to this priestly office. As usual with the discussions of (1) A.I.R. 1915 Mad. (2) A.I.R. 1919 Mad. 598 (F.B.). 197 Jagannatha it is difficult to say what his final opinion is. But we should certainly think that Jagannatha 's opinion is that women can inherit doing the duties through a substitute, but enjoying the emoluments attached to that office". It appears on a careful consideration of the disputed passage with reference to its context, that this view ' of the learned author is correct. In any case the passage cannot be definitely relied upon as an authority for the contrary view. The discussion in connection with which this passage occurs in the commentary is under placitum No. 43 in Section II of Chapter III, Book II, which is a text from Narada relating to hereditary priests. The statement relied on occurs at a place where there is an attempt to reconcile the disqualification of the female to discharge the functions of a hereditary priest, and the recognition of her right to succeed to all property including a hereditary office. The relevant portions of the discussion are herein below set out: "It is doubted whether wives and others have a title to this succession, although the partition founded on the admission of a right vesting in Agraharicas and other officiating priests, ought to be similar to the partition of inheritance in general. As the wife 's title to succession, on failure of heirs in the male line as far as the great grandson, will be declared under the head of Inheritance, what should reverse her title in this instance? It should not be argued, that the wife can have no right to the village, because as a woman, she is disqualified for the performance of holy rites, and because the wives of agraharicas and others are totally incapable of receiving tila delivered as a gift to priests. The tila may be received, and the rites be performed, through the intervention of a substitute. Let it not be argued, that, were it so, a property in the sacrificial fee and regular dues would vest in the substitute. The wife may have the benefit of property acquired by the substitute, as a sacrificer has the benefit of rites per formed by an officiating priest. However, there is this difference: the sacrificer acquires merit from rites 198 performed by an officiating priest, and none is ever acquired by the intermediate performer of the rites; but if the duty of the officiating priest. be performed by a substitute, property in the sacrificial fee is at first vested in the substitute, and through him, in the widow entitled thereto. It is alleged, that there is no authority for this construction. * * * * The text which ordains that "a person unable to act shall appoint another to act for him", is the foundation of this construction: but the property of an outcaste, or other person disqualified for solemn rites, is absolutely lost, in the same manner with his right to the paternal gold, silver, and the like. This will be explained in the fifth book on Inheritance. Wives and others, disqualified by sex for the performance of holy rites, cannot appoint a substitute: as a defiled person cannot perform a solemn act ordained by the Vedas: therefore wives have no property in the office of priest". At the end of the discussion there is the following significant passage: "Therefore the difficulty is thus reconciled; women are entitled to that only for which they are qualified. In regard to the assertion, that women, being disqualified, cannot appoint a substitute, this must be understood: being disqualified for solemn acts ordained by the Vedas, they cannot appoint a substitute for such acts; but, qualified for worldly acts, nothing prevents their appointment of a substitute for temporal affairs: and the right should devolve on the next in succession, under the text quoted in another place (Book 5, vs 477) and because women are dependent on men. Grain and similar property may be consumed by a woman entitled to the succession; but gold, silver, and the like, should be preserved: if she cannot guard it, let it be entrusted to her husband 's heir, as will be mentioned under the title of inheritance. Here, since a woman cannot preserve the office, it should be executed by her husband 's daughter 's son, or other heir: but the produce 199 should be enjoyed by the woman. However, should the daughter 's son be at variance with his maternal grandmother, it may be executed by another person: he is not entitled to his maternal grandfather 's property, if that grandfather leave a wife: and should the maternal grandmother litigate, it must be amicably adjusted". The concluding portion seems rather to indicate that the more categorical passage underlined above and relied upon is in the nature of an objection which is being answered and that the final conclusion is the recognition of a right to succeed by getting the duties of the office performed by the next male in succession. The learned Judges of the High Court have in fact noticed this concluding passage but have missed its correct import. It is desirable now to consider how this question stands with reference to the decided cases in the various High Courts. A fairly substantial number of cases appear in the reports of the Madras High Court. One of the earliest decisions is that of the Madras Sadar Diwani Adalat in Seshu Ammal vs Soundaraja Aiyar(1) wherein it was held, following the opinion of the Sadar Court Pandits, that a woman was disqualified by reason of her sex from inheriting the office of Acharya purusha but the same Pandits ' opinion distinctly recognises that religious offices like those of an Archaka or Pujari can be held by a female, by her getting the duties thereof performed through a competent male substitute. In Tangirala Chiranjivi vs Rama Manikya Rao Rajaya Lakshmamma(2) it was stated that there was no basis for the assumption that a minor, a female, or a person unlearned in the Vedas, will lose the right to service in the temple and that the onus will be on the person who alleges the dis qualification to prove it. The learned Judges categorically asserted (apparently as being a matter within general knowledge and experience) that "service in temples is being performed by proxies". In Ramasundaram Pillai vs Savundaratha Ammal(3) the learned Judges say as follows: (1) [1863] M.S.D.A. 261. (2) A.I.R. 1915 Madras 505(1). (3) A.I.R. 1915 Madras 725. 200 "It is undeniable that this and other High Courts have in numerous cases acted on the assumption (which was not questioned) that women could hold religious offices and get the duties performed by proxy". They further say "It may be that the parties concerned are so accustomed to the idea of female office holders with proxies that it has usually not occurred to them to question the legality of such a state of affairs and that in the absence of contest, the Courts have somewhat too readily assumed it to be legal without requiring proof of a valid custom in support of it". In Rajeswari Ammal vs Subramania Archaka(1) the learned Judges state as follows: "We are of the opinion that a female is not, under Hindu law or custom, disqualified from succeeding to a hereditary religious office and getting such duties as she may be disqualified by reason of her sex from performing, performed by proxy". The only dissentient view against this current of authority in the Madras High Court was that of Justice Sadasiva Aiyar in Sundarambal Ammal vs Yogavanagurukkal (2) . He expressed a strong opinion that the practice of allowing the priestly office to be performed by a substitute excepting for merely temporary occasions or casual purposes, is wholly opposed to public policy and that it should not be recognised. In a later judgment in Annaya Tantri vs Ammaka Hengsu(3) relating to the same topic be (Justice Sadasiva Aiyar) stated as follows: "It is notorious that the deputy is usually chosen on the principle of a Dutch auction. The man who agrees to allow the widow to retain the largest portion of the emoluments of the office and to receive the least as his own remuneration is given the place of the deputy". The learned Judge pointed out that "such a practice was mischievous and that even (1) A.I.R. 1917 Madras 963(2). (2) A.I.R. 1915 Madras 561. (3) A.I.R.1919 Madras 598 (F.B.). 201 if it was sanctioned by usage it ought not to be recognised by courts". There is certainly force in this comment. But in a matter of this kind where there is no express prohibition in the texts for the performance of the duties of the Pujari 's office by the appointment of substitutes and where such an office has developed into a hereditary right of property, the consideration of public policy cannot be insisted to the extent of negativing the right itself. In such a situation what has to be equally emphasised is the duty aspect of the office and to insist, on the superior authorities in charge of the temple exercising vigilantly their responsibility by controlling the then incumbent of the priestly office in the exercise of his rights (or by other persons having interest taking appropriate steps through court), when it is found that the services are not being properly or efficiently performed. In view of the peculiar nature of such offices as combining in them both the element of property and the element of duty, it cannot be doubted that superior authorities in charge of the institutions or other persons interested have this right which may be enforced by appropriate legal means. In Raja Peary Mohan Mukherji vs Manohar Mukherji(1) the Privy Council has recognised that notwithstanding the personal interest of a Shebait in respect of his office, the performance of the duties thereof has got to be safeguarded and that he can be removed where he has put himself in a position in which the obligation of his office can no longer be faithfully discharged. So far as the Madras High Court area is concerned, the controversy has been settled by the Full Bench case in Annaya Tantri vs Ammaka Hengsu(2) where the view taken by Justice Sadasiva Aiyar was specifically overruled on the ground that "there were numerous decisions of the Madras High Court in conformity with the decisions of the other High Courts by which the widow and the daughter and the daughter (1) [1921] L.R. 48 I.A. 258. (2) A.I.R. 1919 Madras 598 (F.B.). 26 202 of the last male Archaka are held entitled in accordance with the established user to succeed to the office of Archaka discharging his duties by deputy and to transmit it to their heirs, who as male heirs are preferred to female, and will generally be competent to perform the duties in person". These decisions of the Madras High Court seem to recognise both the factum and validity of the usage as one that has been accepted by the courts not only within its own jurisdiction but also within the jurisdiction of the other High Courts. It is urged, however, that there is no such usage that can be definitely said to be established with reference to the decisions of the other High Courts. As regards the other High Courts doubtless the actual cases appearing in the reports about this point are not many. In the Bombay High Court one of the earliest decisions is the case in 1866 of Keshavbhat bin Ganeshbhat vs Bhagirhibai kom Narayanbhat(1) where the learned Judges say as follows: "With respect to the objection, that a Hindu female cannot perform the duties which attach to the office for the maintenance of which the allowance was granted, it may be observed that the defendant had not proved the existence of any usage in conformity with his allegations. The claim in question in that case was to an annual allowance paid from the Government Treasury to the members of a family for the maintenance of certain religious services at the temple of Mahadev at Baneshvar near Poona. In Sitarambhat et al vs Sitaram Ganesh(2) the head note shows as follows: "Semble, that an hereditary priestly office descends in default of males through females". This is apparently the assumption on which that judgment appears to have proceeded though the matter does not appear to have been specifically so decided. In Calcutta one of the early cases is Poorun Narain Dutt vs Kasheessuree Dosee(3). There it was recognised that a woman can succeed to a priestly (1) 3 B.H.C.R., A.C.J. 75. (2) 6 B.H.C.R. A.C.J. 250. (3) 203 office and the contention to the contrary was over. ruled on the ground that the lower appellate court found the same as a fact on the evidence and that no one but the defendant had raised the contention. In Joy Deb Surma vs Huroputty Surma(1) the same question was raised, viz., whether according to Hindu law a woman can succeed to the priestly office and reliance appears to have been placed for that contention on the passage from Colebrooke 's Digest already above referred to. In view of this contention the learned Judges remitted the case to the lower court for deter mination of the question whether with reference to any particular custom or rule of Hindu law a woman is entitled to succeed to the priestly office. In that case it was the office of the Dolloi of the temple. It does not appear what the finding received was and how this matter was finally decided. In Radha Mohun Mundul vs Jadoomonee Dossee(2) their Lordships of the Judicial Committee quoted with apparent approval the following passage from the judgment of the trial Court: "They (the members of the family) merely say that as the said properties are of a debuttur character, they are not susceptible of division among the shareholders; and that since the plaintiff is a childless widow, she is not competent to carry on the service of the gods. That the properties in question do not admit of any partition among the co sharers is a fact which must be admitted by me; but I do not see any reason why a widow of the family should be incapacitated from superintending the service of the gods. It is not urged by the defendants that any such rule has been laid down in the family, and that under it the widows have been excluded from the above superintendence. On the other hand, among the Hindoos, persons belonging to no other caste except that of Brahmins can perform the service of a god with his own hands, that is, worship the idol by touching its person. Men of other castes simply superintend the service of the gods and goddesses established by them selves, while they cause their actual worship to be (1) (2) 204 performed by Brahmins. Thus, when persons of the above description can conduct the service of idols in the above mentioned manner, why should not the widows of their family be able to carry on worship in a similar way?. . . . . . Consequently, there is nothing to prevent the Court from finding that the plaintiff has a right to hold possession of the debutter properties enumerated by the defendants in the 12th paragraph of their written statement, and to superintend the service of the gods conjointly with the other co sharers". In Mahamaya Debi vs Haridas Haldar(1) it has been recognised that according to custom the palas of Kalighat shrine in Calcutta are heritable and that it was immaterial whether the heir is a male or a female. This must necessarily have involved the recognition of the capacity of the female to get the worship performed by a male substitute who is to be taken from a limited class. As has been already noticed, the reported cases dealing with this matter outside the Madras High Court do not appear to be many. At any rate, no others have been brought to our notice dealing with this question directly, though there are many cases relating to the question of succession to the office of Shebait and the performance of duties thereof by proxy, which is a matter distinguishable from a case relating to the office of Pujari or Archaka simpliciter. The paucity of decided cases in the reports of the other High Courts may very well be due to what has been pointed out in one of the Madras cases, viz., that the practice of females succeeding to this office and getting the duties thereof performed by a substitute was so common and well recognised that it has not been seriously contested and brought up to the Courts. Further the institution of private family temples and the endowments of large and substantial properties for the Deb seva in such temples though somewhat uncommon in South India is fairly common in Bengal and some other States. In view of the Dayabhaga system of law of succession prevalent in Bengal and the very much larger number (1) A.I.R. 1915 Calcutta 161(2). 205 of occasions for wives and daughters succeeding to a sonless coparcener in Dayabhaga joint families, the practice of females succeeding to the priestly office and of getting the duties performed by other members of the family as proxies in their places must, by the very situation, have been common in these areas. The case reported in Jalandhar Thakur vs Jharula Das(1) is a case relating to Shebait 's (priest 's) office in the Singheswar temple of Bhagalpur and the facts therein show that there was unquestioned female succession to the office. It is a clear indication of the prevalence of the usage of female succession to priestly office in the State of Bihar from which the present case arises. A careful review, therefore, of the reported cases on this matter shows that the usage of a female succeeding to a priestly office and getting the same performed through a competent deputy is one that has been fairly well recognised. There is nothing in the textual Hindu law to the contrary. Nor can it be said that the recognition of such a usage is opposed to public policy, in the Hindu law sense. As already pointed out the consideration of public policy can only be given effect in the present state of the law, to the extent required for enforcing adequate discharge of the duties appurtenant to the office. Subject to the proper and efficient discharge of the duties of the office, there can be no reason either on principle or on authority to refuse to accord to a female the right to succeed to the hereditary office held by her husband and to get the duties of the office performed by a substitute excepting in cases where usage to the contrary is pleaded and established. In the present case such a usage was pleaded by the defendant in his written statement but no evidence of it was given. Indeed as pointed out by the first appellate Court, the plea that there has been a partition of the offices of the two temples and the implied recognition of the plaintiff 's right to the office of the other temple at Gangupal appears to indicate the contrary usage. We are accordingly of the opinion (1) A.I.R. 1914 P.C. 72. 206 that the claim of the plaintiff appellant is made out and that she is entitled to succeed. The discussion above is more germane to the case of a public temple wherein the idol has been Shastrically installed and consecrated and the worship is in accordance with the Shastras. There is nothing on the record to show whether the temple in this case falls within this category. If, however, the temple is a private one or the idol therein is not one Shastrically consecrated, the case in favour of the plaintiff is much stronger and her right cannot be seriously challenged. At this stage, it is desirable to mention one other matter. In the present case the emoluments attached to the office are stated to be the daily and other offerings made to the deity at the worship by the visiting devotees. Both the parties to this case have come up to Court on the common footing that it is this which constitutes the emoluments. Whether and how far such votive offerings can be appropriated by a Pujari for his emoluments if the temple is a public institution, (i.e., not a private family temple) and whether any usage in this behalf is valid is a matter which does not arise before us in this case. In the result, the appeal must be allowed with costs throughout and the decree of the trial court must be restored.

Though a female is personally disqualified from officiating as a Pujari for the Shastrically installed and consecrated idols in the temples, the usage of a Hindu female succeeding to a priestly office and getting the same erformed through a competent deputy has been well recognised and it is not contrary to textual Hindu Law nor opposed to public policy. Subject to the proper and efficient discharge of the duties of the office being safeguarded by appropriate action when necessary, a Hindu female has a right to succeed to the hereditary priestly office of a Pujari and Panda held by her husband and to get the duties of the office performed by a substitute except in cases where usage to the contrary is pleaded and established. Quaere: Whether and how far votive offerings can be appropriated by a Pujari for his emoluments if the temple is a public institution, (i.e., not a private family temple) and whether any usage in this behalf is valid. Case law and the relevant texts reviewed. Judgment of the High Court of Patna reversed.

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ppeals Nos.1367 and 1368 of 1966. Appeals from the judgment and order dated April 19, 1966 of the Assam High Court in Civil Rules Nos. 171 and 236 of 1965. Purshottam Trikamdas, A. K. Sen, Naunit Lal and Vineet Kumar,for the appellant (in both the appeals). Sarjoo Prasad, Vinoo Bhagat and section N. Prasad, for respondent No. 4 (in both the appeals). The Judgment of the Court was delivered by Hidayatullah, J. These are two appeals by certificate against a common judgment of the High Court of Assam & Nagaland at Gauhati, dismissing two writ petitions filed by one Ranga Mahammad against D. N. Deka and B. N. Sarma, District & Sessions Judges respectively of Lower and Upper Assam Districts questioning the transfer of the former from Jorhat to Gauhati and the appointment and posting of the latter at Jorhat. The petitioner had asked that the relevant notifications by the Government be quashed on the ground that the High Court alone could make the transfers and, in any event, the High Court had to be consulted and was not consulted before making the orders. The petitions were heard and disposed of by a Divisional Bench consisting of Chief Justice Mehrotra and Mr. Justice section K. Dutta. 456 The Chief Justice held that there was no consultation with regard to the posting of Deka, that the transfer of Deka to Gauhati was irregular as the High Court alone could have ordered it, and that the transfer of B. N. Sarma was for a like reason also irregular. Holding, however, that none of the District Judges could be said to occupy wrongly the office of District & Sessions Judge the High Court declined the writ of quo warranto. The petitions ,were accordingly dismissed but without cost to the State Government. In a separate but concurring judgment Dutta J. passed some scathing remarks on the action of the Government which he described as mala fide and actuated by some ulterior motive. The High Court on being moved by the State Government granted certificates under article 132 of the Constitution on the ground that the judgment involved the interpretation of articles 233 and 235 of the Constitution. By these appeals the State Government seeks the reversal of the opinion of the High Court on the interpretation of articles 233 and 235 of the Constitution. The main contention is that the High Court was, in fact, consulted and, alternatively, that the power to transfer District Judges lies with the State Government and not with the High Court. The State Government also asks for the expunction of the remarks of Mr. Justice Dutta above mentioned. The State of Assam consists of only three Sessions Divisions. They are : The Upper Assam Districts, the Lower Assam Districts and the Cachar Districts with Jorhat, Gauhati and Silchar respectively as the Headquarters of the three District Judges. The Government of Assam with the concurrence of the High Court has made the Assam Judicial Service (Senior) Rules and rule 5 deals with recruitment. In the Senior Judicial Service of the State there are two grades Senior Grade 1 and Senior Grade 11. Grade I has four posts earmarked for Registrar, and three District Judges, and Grade 11 consists of the Additional District Judges. The other posts are filled up by promotion from Grade II of the cadre or Grade I of the Assam Judicial Service (Junior) respectively. On December 6, 1962 the Chief Justice appointed A. Rahman, District Judge, Gauhati, as Registrar and recommended that D. N. Sarma, Additional District & Sessions Judge be promoted and appointed District Judge, Gauhati, and in B. N. Sarma 's 457 place D. C. Sharma should be appointed as Additional District & Sessions Judge. This proposal was accepted by Government. It appears, however, that one Medhi, District Judge, was retiring and there was a vacancy. It also appears from the correspondence which has been placed in our hands that there was some conversation on the telephone between the Chief Justice and the Finance Minister regarding R. C. Choudhury (Joint Secretary Legal Department) whom the Minister suggested for officiation in that vacancy and the Chief Justice expressed his willingness to receive him. Later by a D. O. letter of January 5, 1963 the Chief Justice pointed out that the Rules did not permit this to be done. He observed that not more than one third of the District Judges could be recruited from the Bar and as Choudhury could only be recruited as a member of the Bar there was no vacancy for direct recruitment. The Minister who had accepted the telephone conversation as final and was about to issue the necessary notification replied that as Sharma was to continue for a year, Sharma 's post could be given to Choudhury and suggested reconsideration of the case. The Chief Justice replied that . the question was not of filling Sharma 's vacancy but Medhi 's and that Choudhury could not be transferred from the Legal Department to the Judicial Service because appointments as District & Sessions Judges must be made in accordance with article 233 of the Constitution. He explained that an appointee had to be either a person in the Judicial Service of the Union or the State or an Advocate of 7 years ' standing and that persons from other services could not be transferred and appointed as District Judges. He ended by saying that he could have taken Choudhury as a member of the Bar if the High Court recommended him, but Rule 5(ii) of the Assam Judicial Service (Senior) Rules, which reserved two out of the three posts for promotees, was in the way. He declined to take Choudhury directly from the Legal Department and recommended D. N. Deka 'section name for promotion as District Judge to hold the charge at Jorhat. This letter apparently nettled the Minister for his letter of the 24th January was worded somewhat strongly. It seems that the Minister thought that the Chief Justice was retreating from a position previously accepted by him. He traced the history of the correspondence and the conversations and expressed his amazement at the change of opinion. He pointed out that the intention was not to transfer Choudhury but to give him judicial experience and observed that the constitutional provisions could not be invoked when Choudhury had put in seven years ' practice at the Bar and was qualified. He concluded by saying "I am sorry, that I have to write all this but you will understand that I have no other alternative in view of the embarrassing situation created by your letter. The Chief Justice wrote on February 7, 1963 observing that there 'was no question of adopting any non cooperating or embarrassing attitude and that all the points raised by the Minister could be ,explained satisfactorily. He, however, saw no point in saying more as Choudhury 's name was to be dropped. He enquired why Rahman was not released although it had no connection with the other matter and the appointment of the Registrar was entirely ,a matter for the Chief Justice.Facts He requested that Ralunan be released soon and recommended the appointment of B. N. Sarma as District Judge in his place. He also suggested section C. Barua 's transfer from Cachar to Gauhati. In the vacancy of Medhi he recommended D. N. Deka 's promotion and recommended his transfer to Jorhat. A notification was issued on June 22, 1963 appointing Deka as District Judge with Headquarters at Jorhat. Nothing was done regarding the other recommendations. On September 7, 1963, this is to say, exactly seven months after the ,last letter of the Chief Justice, the Secretary to the Government of Assam wrote to the Registrar that the State Government after careful consideration could not accept the suggestion about the transfer of Barua and proposed the transfer of B. N. Sarma to Jorhat and of Deka to Gauhati immediately as Jorhat was without a District Judge for months. The Registrar, in reply, wrote back to say that the matter had become stale and the High Court would like to reconsider the matter. Some letters were exchanged but they arc not on the file of this Court. To this a final reply was given by the Government on February 19, 1964 informing the High Court that the recommendations were not acceptable except as to Deka 's transfer from Jorhat to Gauhati. One Ranga Mahammad of Gauhati then filed two petitions in the High Court of Assam under articles 226 and 227 of the Con stitution questioning the jurisdiction of Deka, District & Sessions Judge, Jorhat. He averred that the High Court was not consulted regarding Deka 's appointment and posting at Gauhati. By the second petition he questioned the transfer of B. N. Sarma 459 to Jorhat. On rule being issued in the two petitions, Government put in a detailed return pointing out that it had acted within its powers and had also consulted the High Court. The High Court did not accept the submissions of the State Government. The state Government now appeals. Three questions arise and they are : (a) who is to order transfer of a District Judge the State Government or the High Court;(b) is the provision regarding consultation in articles 233 and 235 mandatory or directory and if the former, whether the High Court was not in fact consulted; and (c) should the remarks of Mr. Justice Dutta about the State Government be expunged ? The answer to the first question depends on a true construc tion of articles 233 and 235 of the Constitution. The text of these articles is set out below. * The question we have posed resolves itself into a question of a very different but somewhat limited form,, namely, whether the power to transfer District Judges is included in the 'control ' exercisable by the High Court over District Courts under article 235, or in the power of "appointment of persons to be and the posting and promotion, of district judges" which is to be exercised by the Governor under article 233, albeit in consultation with the High Court. If the sense of the matter be the former, then the High Court and if the latter, the Governor, would possess. that power. The right approach is, therefore, to enquire what is meant by "posting" and whether the term does not mean the initial posting of a District Judge on appointment or promotion to a vacancy in the cadre, permanent or temporary If this be the meaning, as the High Court holds, then the transfer of District Judges already appointed or promoted and posted in the cadre must necessarily be outside the power of the Governor and fall to be made by the High Court as part of the control vested in it by article 235. "233.Appointment of district Judges. (1) Appointments of persons to be, and the posting and promotion of, district Judges in any State shall be made by the Governor of the State in consultation with the High Court exercising jurisdiction in relation to such State. (2) A person not already in the service of the Union or of the State Shall only be eligible to be appointed a district judge if he has been for not less than seven years an advocate or a pleader and is recommended by the High Court for appointment" "235. Control over subordinate Courts. The control over district courts and courts subordinate thereto including the posting and promotion of, and the grant of leave to, persons belonging to the judicial service of a State and holding any post inferior to the post of district Judge shall be vested in the High Court; but nothing in this Article shall be construed as taking away from any Such person any right of appeal which he may have under the law regulating the conditions of his service or as authorising the High Court to deal with him otherwise than in accordance with the conditions of his service prescribed under such law. " 460 The history of the articles 233 237 in Chapter VI (Subordinate Courts) of Part VI of the Constitution, was considered elaborately in the State of West Bengal & Anr.vs Nripendranath Bagchi(1) and it was pointed out that the articles were intended to make the High ,Court the sole custodian of control over the judiciary except in so far as exclusive jurisdiction was conferred upon the Governor in regard to the appointment and posting and promotion of District ,Judges. Therefore, unless the transfer of a District Judge can be said to be a "posting" of a District Judge the High Court must ,obviously enjoy the exclusive power. In its ordinary dictionary meaning the word 'to post ' may denote either (a) to station some one at a place, or (b) to assign someone to a post, i.e. a position or a job, especially one to which a person is appointed. See Webster 's New Word Dictionary (1962). The dispute in this case has arisen because the State Government applies the first of the two meanings and the High Court the second. In article 233 the word 'posting ' clearly bears the second meaning. This word occurs in association with the words "appointment ' and 'Promotion ' and takes its colour from them. These words indicate the stage when a person first gets a position or job ,and 'posting ' by association means the assignment of an appointee or promotee to a position in the cadre of district Judges. That a special meaning may be given to a word because of the collocation of words in which it figures, is a well recognised canon of construction. Maxwell ("On Interpretation of Statutes" 11th Edn. p. 321 and the following pages) gives numerous examples of the application of this principle, from which one may be given here. The words 'places of public resort ' assume a very different meaning when coupled with 'roads and streets ' from that which the same words would have if they were coupled with 'houses '. In the same way the word 'posting ' cannot be understood in the sense of 'transfer ' when the idea of appointment and promotion is involved in the combination. In fact this meaning is quite out of place because 'transfer ' operates at a stage beyond appointment and promotion. if 'Posting ' was intended to mean 'transfer ' the draftsman would have hardly chosen to place it between "appointment" and "promotion" and could have easily used the word 'transfer ' itself. It follows, therefore, that under article 233, the Governor is only concerned with the appointment, promotion and posting to the cadre of district Judges but not with the transfer of district Judges already ,appointed or promoted and posted to the cadre. The latter is obviously a matter of control of district Judges which is vested in the High Court. The word 'post ' used twice in the article clearly means the position or job and not the station or place and 'posting ' must obviously mean the assignment to a position or job and not placing in charge of a station or Court. The association of words in article 235 is much clearer but as the word 'posting ' in the earlier article deals with the same subject matter, it was most certainly used in the same sense and this conclusion is thus quite apparent. This is, of course, as it should be. The High Court is in the day to day control of courts and knows the capacity for work of individuals and the requirements of a particular station or Court. The High Court is better suited to make transfers than a Minister. For however well meaning a Minister may be he can never possess the same intimate knowledge of the working of the judiciary as a whole and of individual Judges, as the High Court. He must depend on his department for information. The Chief Justice and his colleagues know these matters and deal with them personally. There is less chance of being influenced by secretaries who may withhold some vital information if they are interested themselves. It is also well known that all stations are not similar in climate and education, medical and other facilities. Some are good stations and some are not so good. There is less chance of success for a person seeking advantage for himself if the Chief Justice and his colleagues, with personal information, deal with the matter, than when a Minister deals with it on notes and information supplied by a secretary. The reason of the rule and the sense of the matter combine to suggest the narrow meaning accepted by us. The policy displayed by the Constitution has been in this direction as has been explained in earlier cases of this Court. The High Court was thus right in its conclusion that the powers of the Governor cease after he has appointed or promoted a person to be a district Judge and assigned him to a post in cadre. Thereafter, transfer of incumbents is a matter within the control of District Courts including the control of persons presiding there as explained in the cited case. As the High Court is the authority to make transfers, there was no question of a consultation on this account. The State Government was not the authority to order the transfers. There was, however, need for consultation before D. N. Deka was promoted and posted as a District Judge. That such a consultation is mandatory has been laid down quite definitely in the recent decision of this Court in Chandra Mohan vs U. P.(1) On this part of the case it is sufficient to say that there was consultation. (1) 462 This brings us to the question whether the remarks of Mr. Justice Dutta should be expunged. There is no doubt that the State Government and the High Court were working together till Choudhury 's name was suggested. This is not the first time when cordiality was ruined because a Secretary 's name was suggested by the Minister and was not acceptable to the High Court. The Assam High Court 's stand has been completely vindicated by Chandra Mohan 's case cited above. In such matters the opinion of the High Court is entitled to the highest regard. We have considered very carefully the question of expunging Mr. Justice Dutta 's remarks, The power to expunge is an extraordinary power and can be exercised only when a clear case is made out. That another Judge in Mr. Justice Dutta 's place would not have made those comments is not the right criterion The question is whether Mr. Justice Dutta can be said to have acted with impropriety. Although we think that Mr. Justice Dutta need not have made the remarks we cannot say that in making them he acted with such impropriety that the extraordinary powers should be exercised. The appeals accordingly fail and are dismissed but there will be no order about costs.

The respondent, filed petitions under Am. 226 and 227 in the Assam High Court asking that notifications by the State Government of the transfer of one District & Sessions Judge and the appointment and posting of another be quashed on the ground that the High Court alone could make the transfers and. in any event, the High Court was to be consulted and was not consulted before the impugned orders were made. The High Court held that there was no consultation with regard to the posting of one of the District Judges and that his transfer was irregular as the High Court alone could have ordered it; and furthermore that the transfer of the other. District Judge was for a like reason also irregular. Holding, however, that none of the District Judges could be said to occupy wrongly the office of District & Sessions judge, the High Court declined the writ of quo warranto and dismissed the petition, but without costs to the State Govenment. One of the learned Judges of the High Court who comprised the Division Bench that heard the petitions,, in a separate but concurring judgment, passed some scathing remarks on the action of the Government which he described as mala fide and actuated by some ulterior motive. On being moved by the State Government, the High Court granted certificates under article 132 of the Constitution to appeal to the Supreme Court on the ground that the judgment involved the interpretation of articles 233 and 235 of the Constitution. By these appeals the State Government sought a reversal of the opinion of the High Court on the two Articles. Three questions arose for decision in the appeal: (a) who is to order transfer of a District Judge the State Government or the High Court; (b) is the provision regarding consultation in article 233 mandatory or directory and if the former, whether the High Court was not in fact consulted; and (c) whether the remarks complained of about the State Government made by the learned Judge should be expunged. HELD: (i) Under article 233 the Governor is only concerned with the appointment, promotion and posting to the cadre of district Judges but not with the transfer of District Judges already appointed or promoted and posted to the cadre. The latter is a matter of control of District Judges which is vested in the High Court under article 235. [460 G] The word posting means either to station some one at a place or to assign someone to a post, I.e. a position or a job, especially one to which a person is appointed. In article 233 it bears the second meaning. The word occurs in association with the words 'appointment ' and 'promotion ' and takes its colour from them. These words indicate the stage when 454 455 a person first gets a position or job and 'posting 'by association means the assignment of an appointee or promotee to a position in the cadre of District Judges. The word 'posting ' cannot be understood in the sense of 'transfer ' when the idea of appointment and promotion is involved in the combination. This meaning is quite out of place because 'transfer ' operates at a stage beyond appointment and promotion. Transfer, therefore, falls within the control vested in the High Court. [460 C G] State of West Bengal vs Nripendranath Bagcht,[1966] 1 S.C.R. 771, referred to. (ii) As the High Court acting under article 235 and not the State Government is the authority to make transfers, no question can arise of a consultation on this account. In the present case, however, consultation as required by article 233, was necessary before one of the District Judges was promoted and posted as a District Judge. Chandra Mohan vs U.P. , referred to. (iii) The power to expunge is an extraordinary power and can be exercised only when a clear case is made out. Although the opinion of this Court may be that the learned Judge need not have made the remarks complained of, it could not be said that in making them he acted with such impropriety that the extraordinary powers should be exercised. [462 DIP]

2146.txt

Petition Nos. 623, 1546/84 etc. Under Article 32 of the Constitution of India. Subramanya Poty, T.S. Krishnamurty Iyer, Miss Malini Poduval, B. Kanta Rao, Subodh Markandeya, Mrs. Sheil Sethi, A.K Ganguli, A.K. Charkarvarti, C.S. Vaidyanathan and Prabir Choudhary, G.N. Rao T.C. Gupta. and Attar Singh for the appearing Petitioners. K. Subramanya Reddy, Adv. (AP), E. Manohar, Addl. Genl (AP), T.V.S.N. Chari, Kailash Vasudev Sudash Menon and Miss Vrinda Grover, and B. Parthasarthi for the Respondents. D.K Sen, P.P. Singh and R.N. Poddar. for the U.O.I. K Ram Kumar for the Intervener. The judgment of the Court was delivered by VENKATARAMIAH, J. In the above writ petitions filed under Article 32 of the Constitution the petitioners have questioned the constitutional validity of the Andhra Pradesh Abolition of Posts of Part time Village Officers Ordinance, 1984 (Ordinance No. 1 of 1984) (hereinafter referred to as 'the Ordinance ') promulgated by the Governor of Andhra Pradesh on January 6, 1984 in exercise of his powers under Article 213 of the Constitution by which the posts of part time Village Officers in the State of Andhra Pradesh came to be abolished and provision was made for the appointment of Village Assistants. Some of the petitions which are disposed of by this judgment had been filed before the High Court of Andhra Pradesh under Article 226 of the Constitution for similar reliefs. They were withdrawn to this Court under Article 139A of the Constitution form hearing them along with the petitions filed under Article 32. Section 2(d) of the Ordinance defined the expression 'part time village officer ' as a person who held any of the village offices of headman, munsiff, reddy, monigar, peddakapu, patel, karnam or patwari or triune officer or holder of any such village office by whatever designation it may be locally known including their 514 assistants appointed under (i) the Andhra Pradesh (Andhra Area) Village Offices Service Rules, 1969, (ii) the Andhra Pradesh (Telangana Area) Village Offices Service Rules, 1978 or (iii) any other law. The petitioners were the holders of these posts immediately prior to the date of the promulgation of the Ordinance. It is necessary to set out at this stage a brief history of the posts held by the petitioners. The State of Andhra Pradesh was constituted under the consisting of two areas known as the 'Andhra Area ' and the 'Telangana Area '. There were different laws governing the village administration in the two areas. The village establishment in the Andhra Area which previously formed part of the State of Madras consisted of headmen and karnams who were village officers and talyaris, vettis and neergantis who were village servants. Their appointment and conditions of service were governed by the Madras Hereditary Village Offices Act, 1895 (Madras Act No. III of 1895). They were originally hereditary offices. In Gozula Dasaratha Rama Rao vs The State of Andhra Pradesh & Ors.(l) decided on December 6, 1960 this Court held that section 6(1) of the said Act which provided for appointment of village officers and servants on the hereditary basis was hit by Article 16(2) of the Constitution and was, therefore, void. In the Telangana Area, the village establishment consisted of the posts of patwari, mali patels and police patels who were village officers and sethsindhis and neeradis who were village servants. Their duties and responsibilities were laid down by 'Dastur ulAmal ' 1293 Hijri (Fasli 1285) and 'Dastur e Dehi '. These posts were also hereditary in character. They were also known as watans. After the decision of this Court referred to above, the Government of Andhra Pradesh appointed a Committee called the Village Officers Enquiry Committee under G.O.Ms. No. 1042, Revenue (1) dated June 16, 1961 to propose, among others a scheme for the village establishment of the entire State of Andhra Pradesh under the chairmanship of K.M. Unnithan, I.C.S. since the State Government was of the view that the then existing system of part time officers working at the village level was not conducive to the interests of public administration. The said Committee submitted its report in 1961. It found that taking an overall view of the nature and quantum of work of the village officers in the two areas of the (1) ; 515 State there was not enough work for all village officers and that it was necessary to reorganise the village establishment by appointment of full time officers with larger volume of work. The Committee recommended that steps should be taken to reduce the number of posts by merger of functions and increasing the area over which the village officers could exercise jurisdiction. In course of time, the Governor of Andhra Pradesh promulgated rules under the proviso to Article 309 of the Conitution called the Andhra Pradesh (Andhra Area) Village Offices Service Rules, 1969 providing for the regulation of the recruitment and conditions of service of holders of village offices in the Andhra Area of the State of Andhra Pradesh with effect from May 22, 1969. The Legislature of the State of Andhra Pradesh passed the Andhra Pradesh Watans (Abolition) Act, 1978 which came into force with effect from December 8, 1977 abolishing all the watans (village offices together with the properties appertaining to them) other than sethsindhis and neeradies in the Telangana Area of the State. Simultaneously the Andhra Pradesh (Telangana Area) Village Offices Service Rules, 1978 were promulgated by the Governor with effect from 7th December, 1977 providing for the recruitment and conditions of service of the village officers in the Telangana Area. The village officers in both the areas were, however, still part time officers. Then on January 6, 1984 on the recommendation of the State Government the Governor promulgated the Ordinance which is challenged in these proceedings. Section 3 of the Ordinance declared that the posts of part time village officers in the State of Andhra Pradesh as defined in section 2(d) thereof stood abolished with effect on and from the date of the commencement of the Ordinance which came into force at once and every person who held the post of part time village officer in any part of the State of Andhra Pradesh would with effect on and from that date cease to hold such post. By virtue of the said provision, the posts of part time village officers ceased to be in existence on January 6, 1984 and the incumbents of those posts ceased to be employees of the Government on and from that date. Thus the transaction of abolition of posts became an accomplished fact on January 6, 1984 and there remained nothing more to be done with regard to that event. What remained to be done was perhaps payment of amount, if any, to those who thereby ceased to be the employees of Government as provided by section 5 of the 516 Ordinance and the recruitment of persons as Village Assistants as provided by section 4 of the Ordinance for one or more revenue villages and the framing of rules relating to the conditions of their service as provided by section 6 of the Ordinance. The remaining provisions of the Ordinance were ancillary and incidental to the abolition of posts and the filling up of the new posts of Village Assistants. The abolition of the posts was, however, not dependent upon the filling up of the new posts of Village Assistants. They were two independent transactions. The abolition of the posts of part time village officers became elective on the coming into force of the Ordinance. It may be stated here that the Ordinance has not yet been replaced by an Act of the State Legislature. It is, however, succeeded by four ordinances viz. Ordinance No. 7 of 1984, Ordinance No. 13 of 1984, Ordinance No. 18 of 1984 and Ordinance No. 21 of 1984. These petitions are in line with two cases which have already been decided by this Court viz. B.R. Shankaranarayana & Ors. vs The State of Mysore & Ors.(1) in which the constitutionality of the Mysore Village Offices Abolition Act, 1961 (Act No. 14 of 1961) was upheld and K. Rajendran & Ors. vs State of Tamil Nadu & Ors.(2) in which the validity of the Tamil Nadu Abolition of Posts of Part time Village Officers Ordinance, 1980 (Tamil Nadu Ordinance No. 10 of 1980) and of the Tamil Nadu Abolition of Posts of Part time Village Officers Act, 1981 (Tamil Nadu Act No.3 of 1981) was upheld. Hence the learned counsel for the petitioners very fairly, and we think rightly, did not many of the contentions which has been rejected by this Court in the said decisions. They, however, pressed the following contentions before us in support of the petitions: (i) that the Ordinance is void and ineffective due to lack of application of mind by the Governor to the subject matter of the Ordinance; (ii) that the Ordinance having lapsed as the Legislature did not pass an Act in its place, the posts which were abolished be deemed to have revived and the issue of (1) A.l. R.1966 S.C.1571. (2) 119821 3 S.C.R. 628. 517 successive ordinances the subsequent one replacing the earlier one did not serve any purpose; and (iii)that the abolition of posts and the consequent deprivation of the right of the petitioners to hold the said posts amounted to an infringement of their fundamental right to life and personal liberty guaranteed under Article 21 of the Constitution. Before dealing with the above contentions of the petitioners it is useful to refer to the provisions of the Constitution relating to the power of the Executive to make laws by the issue of ordinances. In the instant cases the Ordinance is issued by the Governor in exercise of the legislative power conferred on him under Article 213 of the Constitution. Article 213 reads thus: "213. (1) If at any time, except when the Legislative Assembly of a State is in session, or where there is a Legislative Council in a State, except when both houses of the Legislature are in session, the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him to require; Provided that the Governor shall not, without instructions from the President, promulgate any such Ordinance if (a) a Bill containing the same provisions would under this Constitution have required the previous sanction of the President for the introduction thereof into the Legislature; or (b) he would have deemed it necessary to reserve a Bill containing the same provisions for the consideration of the President; or (c) an Act of the Legislature of the State containing the same provisions would under this Constitution have been invalid unless, having been reserved for the consideration on the President, it had receive(l the assent of the President. 518 (2) An ordinance promulgated under this article shall have the same force and effect as an Act of the Legislature of the State assented to by the Governor, but every such Ordinance (a) shall be laid before the Legislative Assembly of the State, or where there is a Legislative Council in the State, before both the houses, and shall cease to operate at the expiration of six weeks from the re assembly of the Legislature, or if before the expiration of that period a resolution disapproving it is passed by the Legislative Assembly and agreed to by the Legislative Council, if any, upon the passing of the resolution or, as the case may be, on the resolution being agreed to by the Council; and (b) may be withdrawn at any time by the Governor. Explanation. Where the Houses of the Legislature of a State having a Legislative Council are summoned to re assemble on different dates, the period of six weeks shall be reckoned from the later of those dates for the purposes p, of this clause. (3) If and so far as an Ordinance under this article makes any provision which would not be valid if enacted in an Act of the Legislature of the State assented to by the Governor, it shall be void: Provided that, for the purposes of the provisions of this Constitution relating to the effect of an Act of the Legislature of a State which is repugnant to an Act of Parliament or an existing law with respect to a matter enumerated in the Concurrent List, an Ordinance promulgated under this article in pursuance of instructions from the President shall be deemed to be an Act of the Legislature of the State which has been reserved for the consideration of the President and assented to by him. " Article 213 of the Constitution corresponds to Article 123 of the Constitution which confers similar powers on the president in 519 relation to matters on which Parliament can make laws. Article 123 reads thus: "123. (1) If at any time, except when both Houses of Parliament are in session, the President is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him to require. (2) An ordinance promulgated`under this article shall have the same force and effect as an Act of Parliament, but every such ordinance (a) shall be laid before both Houses of Parliament and shall cease to operate at the expiration of six weeks from the reassembly of Parliament, or, if before the expiration of that period resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions; and (b) may be withdrawn at any time by the President. Explanation. Where the Houses of Parliament are summoned to reassemble on different dates, the period of six weeks shall be reckoned from the later of those dates for the purposes of this clause. (3) If and so far as an Ordinance under this article makes any provision which Parliament would not under this Constitution be competent to enact, it shall be void. " The slight difference that exists between the above two articles arises on account of the need to obtain the assent of the President on certain legislative matters even though they are within the legislative competence of the State Legislature but that does not make any difference regarding the points to be considered in these petitions because they are common to both Article 123 and Article 213 of the Constitution, At the outset the learned counsel for the petitioners questioned the constitutional propriety of the power of the Executive to make laws which would have a lasting effect on the rights of people in a 520 democratic society where peoples ' representatives should ordinarily be entrusted with the duty of making such laws. It is true that while our Constitution has adopted the pattern of separation of powers amongst the three organs of the Government, namely, the Legislature, the Executive and the Judiciary, it has conferred legislative power on the Executive subject to certain conditions by enacting Article 123 and Article 213 of the Constitution. It has also associated the President and the Governor with the making of the laws even when Parliament or the State Legislature, as the case may be, enacts them. Article 79 of the Constitution says that there shall be a Parliament for the Union which shall consist of the President and two Houses to be known respectively as the Council of States (Rajya Sabha) and the House of people (Lok Sabha). The assent of the President to a Bill passed by both the Houses of Parliament is essential for its becoming law under Article 111 of the Constitution. Similarly under Article 168 of the, Constitution it is provided that the State Legislature consists of the Governor and the Legislative Assembly of a State and where there is a Legislative Council, the State Legislature consists of the Governor and the two Houses. The Governor 's assent or the President 's assent when it is reserved for his consideration to a Bill passed by the State Legislature is necessary under Article 200 of the Constitution before it can become law. The powers conferred on the President under Article 123 and on the Governor under Article 213 of the Constitution are, however, Legislative powers which may be exercised without prior approval of the concerned legislature. In India the Governor General had been given the power under section 72 of the Government of India Act, 1915 to make ordinances which read thus: "72. Power to make ordinances in case of emergency. The Governor General may, in cases of emergency, make and promulgate ordinances for the peace and good government of British India or any part thereof, and any ordinance so made shall, for the space of not more than six months from its promulgation, have the like force of law as an Act passed by the Indian legislature but the power of making ordinances under this section is subject to the like restrictions as the power of the Indian Legislature to make laws; and any ordinance made under this 521 section is subject to the like disallowance as and Act passe by the Indian legislature and may be controlled or superseded by any such Act. " It is seen that the above provision stated that an ordinance made under it had the force of law as an Act passed by the Indian legislature but the power of making ordinances under it was subject to like restrictions as the power of the Indian legislature to make laws and any ordinance made under this section was to remain in force for the period of not more than six months from the date of its promulgation unless adopted or superseded earlier by an Act of the Legislature. Chapter IV of Part II of the Government of India Act, 1935 recognised three kinds of legislative powers enjoyed by the Governor General. Section 42 of that Act conferred the power on the Governor General to promulgate ordinances during the recess of Legislature. Section 43 of that Act conferred the power on him to promulgate ordinances at any time with respect to certain subjects and section 44 conferred the power on him in certain circumstances to enact Acts. Chapter IV of Part V of the Government of India Act, 1935 which contained sections 88,89 and 90 conferred similar legislative powers on the Governors of Provinces. Articles 123 and 213 of the Constitution have been enacted on the pattern of sections 42 and 88 of the Government of lndia Act, 1935. The relevant part of section 42 of the Government of India Act, 1935 is given below for ready reference. It read thus: "42. Power of Governor General to promulgate ordinances during recess of Legislature. (1) If at any time when the Federal Legislature is not in session the Governor General is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such ordinances as the circumstances appear to require: (2) An ordinance promulgated under this section shall have the same force and effect as an Act of the Federal Legislature assented to by the Governor General, but every such ordinance (a) shall be laid before the Federal Legislature and shall cease to operate at the expiration of six weeks from 522 the reassembly of the Legislature, or, if before the expiration of that period resolutions disapproving it are passed by both Chambers, upon the passing of the second of those resolutions; (b) shall be subject to the provisions of this Act relating to the power of His Majesty to disallow Acts as if it were an Act of the Federal Legislature assented to by the Governor General; and (c) may be withdrawn at any time by the Governor General. (3) If and so far as an ordinance under this section makes any provision which the Federal Legislature would not under this Act be competent to enact, it shall be void. " Section 88 of the Government of India Act, 1935 which was more or less in similar terms and which conferred power on the Governor of a province to issue an ordinance came up for consideration before the Federal Court of lndia in Lakhi Narayan Das vs The Province of Bihar(1) Mukherjee, J. speaking for the Federal Court observed at pages 699 700 thus: "It is admitted that the Bihar Legislature was not in session when this Ordinance was passed. It was urged, however, in the Court below, and the argument was repeated before us, that no circumstance existed as is contemplated by section 88 (1) which could justify the Governor in promulgating this Ordinance. This obviously is a matter which is not within the competence of court to investigate. The language of the section shows clearly that it is the Governor and the Governor alone who has got to satisfy himself as to the existence of circumstances necessitating the promulgation of an Ordinance. The existence of such necessity is not a justiciable matter which the Courts could be called upon to determine by applying an objective test. It may be noted here that under the Government of India Act the Governor General has powers to make Ordinances in cases of emergency (vide section 42 of the Government of (4) [1949] F.C.R. Vol. Xl 693. 523 India Act and section 72 of Sch. IX which is now omitted); and it was held by the Privy Council in King Emperor vs Benoarilal (1945) 72 I.A. 57, and Bhagat Singh vs The King Emperor (1931 ) 58 I.A. 169, that the emergency which calls for immediate action has to be judged by the Governor General alone. On promulgating an ordinance, the Governor General is not bound as a matter of law to expound reasons therefor, nor is he bound to prove affirmatively in a court of law that a state of emergency did actually exist. The language of section 88 postulates only one condition, namely, the satisfaction of the Governor as to the existence of justifying circumstances, and the preamble to the Ordinance expresses in clear terms that this condition has been fulfilled. The first contention of the appellants must therefore be rejected. " Under Article 123 of the Constitution the President can promulgate an ordinance on the advice of the Council of Ministers to meet the requirements of a situation when either House of Parliament is not in session. Similarly under Article 213 of the Constitution the Governor may issue an ordinance on the advice of his Council of Ministers when the Legislative Assembly or where there are two Houses of the Legislature in a State either of them is not in session. Since under Article 85 of the Constitution it is not permissible to allow a period of six months to intervene in the case of each House of Parliament between its last sitting in one session and the date appointed for its first meeting in the next session and since under clause (2) of Article 123 of the Constitution an ordinance has to be laid before both Houses of Parliament and would cease to operate at the expiration of six weeks from the reassembly of Parliament, it cannot be said that either Houses can be avoided by the President beyond seven and a half months after the passing of an ordinance. It is open to Parliament if it chooses to approve it or not. Having regard to the conditions prevailing in India the Constitution makers a thought that the ordinance making power should be given to the President to deal unforeseen or urgent matters. The position under Article 213 of the Constitution is also the same. Dealing with the criticism that Article 123 was an undemocratic provision, Bhagwati, J. speaking for the majority of the Constitution Bench said in R.K. Garg etc. vs Union of India & Ors. etc.(l) at pages 965 966 thus: (1) ; 524 "Now at first blush it might appear rather unusual and that was the main thrust of the criticism of Mr. R.K. Garg on this point that the power to make laws should have been entrusted by the founding fathers of the Constitution to the executive, because according to the traditional outfit of a democratic political structure, the legislative power must belong exclusively to the elected representatives of the people and vesting it in the executive, though responsible to the legislature, would be undemocratic, as it might enable the executive to abuse this power by securing the passage of an ordinary bill without risking a debate in the legislature. But if we closely analyse this provision and consider it in all its aspects, it does not appear to be so startling, though we may point out even if it were, the Court would have to accept it as the expression of the collective will of the founding fathers. It may be noted, and this was pointed out forcibly by Dr. Ambedkar while replying to the criticism against the introduction of Article 123 in the Constitution Assembly that the legislative power conferred on the President under this Article is not a parallel power of legislation. It is a power exercisable only when both Houses of Parliament are not in session and it has been conferred ex necessitate in order to enable the executive to meet an emergent situation. Moreover, the law made by the President by issuing an Ordinance is of strictly limited duration. It ceases to operate at the expiration of six weeks from the reassembly of Parliament or if before the expiration of this period, resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions. This also affords the clearest indication that the President is invested with this legislative power only in order to enable the executive to tide over an emergent situation which may arise whilst the Houses of Parliament are not in session. Further more, this power to promulgate an Ordinance conferred on the President is co extensive with the power of Parliament to make laws and the President cannot issue an Ordinance which Parliament cannot enact into a law. It will therefore be seen that legislative power has been conferred on the executive by the constitution makers for a necessary purpose and it is hedged in by limitations and conditions. The con 525 ferment of such power may appear to be undemocratic but it is not so, because the executive is clearly answerable to the legislature and if the President, on the aid and advice of the executive, promulgates an Ordinance in mis use or abuse of this power, the legislature cannot only pass a resolution disapproving the Ordinance but can also pass a vote of no confidence in the executive. There is in the theory of constitutional law complete control of the legislature over the executive, because if the executive misbehaves or forfeits the confidence of the legislature, it can be thrown out by the legislature. Of course this safeguard against misuse or abuse of power by the executive would control in efficacy and value according as if the legislative control over the executive diminishes and the executive begins to dominate the legislature. But nonetheless it is a safeguard which protects the vesting of the legislative power in the President from the charge of being an undemocratic provision. " The above view has been approved by another Constitution Bench of this Court in A.K. Roy etc. vs Union of lndia & Anr.(1) Both these decisions have firmly established that an ordinance is a 'law ' and should be approached on that basis. The language of clause (2) of Article 123 and of clause (2) of Article 213 of the Constitution leaves no room for doubt. An ordinance promulgated under either of these two articles has the same force and effect as an Act of Parliament or an Act of the State Legislature, as the case may be. When once the above conclusion is reached the next question which arises for consideration is whether it is permissible to strike down an ordinance on the ground of non application of mind or mala fides or that the prevailing circumstances did not warrant the issue of the Ordinance. In other words, the question is whether the validity of an ordinance can be tested on grounds similar to those on which an executive or judicial action is tested. The legislative action under our Constitution is subject only to the limitations prescribed by the Constitution and to no other. Any law made by their legislature, which it is not competent to pass, which is violative of the provisions in Part III of the Constitution or any other constitutional provision is (1) [1982]2 S.C.R. 272 at page 299. 526 ineffective. It is a settled rule of constitutional law that the question whether a statute is constitutional or not is always a question of power of the legislature concerned, dependent upon the subject matter of the statute. the manner in which it is accomplished and the mode of enacting it. While the courts can declare a statute unconstitutional when it transgresses constitutional limits, they are precluded from inquiring into the propriety of the exercise of the legislative power. It has to be assumed that the legislative discretion is properly exercised. The motives of the legislature in passing a statute is beyond the scrutiny of courts. Nor can the courts examine whether the legislature had applied its mind to the provisions of a statute before passing it. The propriety expediency and necessity of a legislative act are for the determination of the legislative authority and are not for determination by the courts. An ordinance passed either under Article 123 or under Article 213 of the Constitution stands on the same footing. When the Constitution says that the ordinance making power is legislative power and an ordinance shall have the same force as an Act, an ordinance should be clothed with all the attributes of an Act of legislature carrying with it all its incidents, immunities and limitations under the Constitution. It cannot be treated as an executive action or an administrative decision. The true legal position about the justiciability of these issues in relation to an ordinance has been expressed in K. Nagaraj & Ors.etc. vs State of Andhra Pradesh & Anr. etc.(l) at page 50 by one of us (Chandrachud, C.J.) thus: "It is impossible to accept the submission that the Ordinance can be invalidated on the ground of non application of mind. the power to issue an ordinance is not an executive power but is the power of the executive to legislate. The power of the Governor to promulgate an ordinance is contained in Article 213 which occurs in Chapter IV of Part VI of the Constitution. The heading of that Chapter is "Legislative Power of the Governor." This power is plenary within its field like the power of the State Legislature to pass laws and there are no limitations upon that power except those to which the legisla (1) [1985] 1 SCALE 31. 527 tive power of the State Legislature is subject There fore, though an ordinance can be invalidated for contravention of the constitutional limitations which exist upon the power of the State legislature to pass laws it cannot be declared invalid for the reason of non application of mind, any more than any other law can be. An executive act is liable to be struck down on the ground of non application of mind. Not the act of a Legislature. On the question as to the legislative character of the ordinance making power, we may refer to the decisions of this Court in A.K. Roy vs Union of India and R.K. Garg vs Union of India. " The ordinance says that it had been Promulgated on the basis of a policy decision taken by the State Government. The relevant part of the Ordinance reads: "Whereas the State Government are of the opinion that the system of part time village officers is out moded and does not fit in with the modern needs of village administration; And whereas the State Government have, after careful consideration, taken a policy decision to abolish all the posts of part time village officers on grounds of administrative necessity and to introduce a system of whole time officers to be in charge of village administration; And whereas the Legislature of the State is not in session and the Governor of Andhra Pradesh is satisfied that circumstances exist which render it necessary for him to take immediate action; Now, therefore, in exercise of the powers conferred by clause (1) of article 213 of the Constitution of India, the Governor hereby promulgates the following Ordinance. " It is next seen that the State Government introduced a Bill L.A. No. 3 of 1984 before the Legislative Assembly of the State to replace the Ordinance by an Act o n February 24, 1984 within about seven weeks from the date of the Ordinance. The said Bill was referred to a Joint Select Committee and the Bill was not passed 528 till June 7, 1984. In order to keep the effect of the Ordinance alive for purposes of any action that was still to be taken under it the Governor on the advice of the Council of Ministers again issued another ordinance, Ordinance No. 7 of 1984 dated March 21,1984. This was followed by Ordinance No. 13 of 1984 dated April 27, 1984, Ordinance No. 18 of 1984 dated June 7, 1984 and Ordinance No. 21 of 1984 dated July 19, 1984. In order to give effect to section 11 (1) of the Ordinance, the State Government promulgated the Andhra Pradesh Abolition of part time Village Officers (Fixation of amount payable for total service) Rules, 1984 on February 24, 1984 and an Errata to the above Rules on March 27, 1984. In the circumstances of the case we do not, therefore, find any substance in the first contention urged on behalf of the petitioners. The next question is whether the posts of part time village officers revive as the Ordinance is not replaced by an Act of the legislature of the State. This contention of the petitioners is based on clause (2) of Article 213 of the Constitution. It is argued on their behalf that on the failure of the State Legislature to pass an Act in terms of the Ordinance it should be assumed that the Ordinance had never become effective and that it was void ab initio. This contention overlooks two important factors namely the language of clause (2) of Article 213 of the Constitution and the nature of the provisions contained in the Ordinance. Clause (2) of Article 213 says that an ordinance promulgated under that Article shall have the same force and effect as an Act of the Legislature of the State assented to by the Governor but every such ordinance (a) shall be laid before the Legislative Assembly of the State, or, where there is a Legislative Council in the State, before both the Houses and shall cease to operate at the expiration of six weeks from the reassembly of the Legislature or if before the expiration of that period a resolution disapproving it is passed by the Legislative Assembly and agreed to by the Legislative Council, if any, upon the passing of the resolution or, as the case may be, on the resolution being agreed to by the Council and (b) may be withdrawn at any time by the Governor. It is seen that Article 213 of the Constitution does not say that the Ordinance shall be void from the commencement on the State Legislature disapproving it. It says that it shall cease to operate. It only means that it should be treated as being effective till it ceases to operate on the happening of the events mentioned; 529 in clause (2) of Article 213. Secondly the Ordinance deals with two separate matters. By section 3 of the Ordinance it abolishes the posts of part time village officers on the commencement of the Ordinance and it further declares that every person who held the post of a part time village officer would cease to hold that post with effect from that date. By section 4 and other allied provisions the Ordinance has provided regarding the creation of posts of Village Assistants and appointment and conditions of service of Village Assistants who arc full time employees of the Government There is no doubt that a separate provision is made in Section 5 of the Ordinance for payment Or some amount to the ex part time village officers. Now by virtue of section 3 of the Ordinance all the posts of part time village officers stood abolished on January 6,1984 and the petitioners ceased to be employees of the State Government These two matters became accomplished facts on January 6, 1984, irrespective of whether the holders of these posts were paid any amount under section 5 or whether the new posts of Village Assistants were filled up or not. when if the Ordinance is assumed to have ceased to operate from a subsequent date by reason of clause (2) of Article 213, the effect of section 3 of the Ordinance was irreversible except by express Legislation. An analogous question arose for consideration before a Constitution Bench of this Court in State of Orissa vs Bhupendra Kumar Bose.(1) The facts of that case were these. Elections were held for the Cuttack Municipality and twenty seven persons were declared elected as Councillors. One of the defeated candidates filed a writ petition before the High Court of Orissa challenging the elections. The High Court set aside the elections on the ground that the electoral roll had not been prepared in accordance with law. Since the State Government felt that the said decision affected not merely the elections to the Cuttack Municipality but some other municipalities in the State of Orissa where also similar irregularities had been committed in the preparation of the electoral rolls, the Governor promulgated an ordinance on January 15, 1959 which contained provisions validating the electoral rolls and the elections held on their basis notwithstanding any judgment to the contrary. The said ordinance, however, lapsed on April I, 1959. The petitioner when had filed the writ petition earlier again filed another writ petition questioning the continuance of the elected Councillors in office by virtue of the ordinance. The High (1) [1962] 2 Supp. S.C.R. 380. 530 Court allowed the writ petition and issued an injunction to the elected Councillors restraining them from functioning as Councillors. The State Government and the councillors filed the above appeal before this Court. It was contended that the ordinance was a temporary statute which was bound to lapse after the expiration of the prescribed period and so as soon as it lapsed the invalidity in the elections to the Cuttack Municipality stood revived. This Court rejected the contention relying upon the decision in Steavenson vs Oliver.(l) This Court finally observed at pages 401 402 thus: "Now, turning to the facts in the present case, the Ordinance purported to validate the elections to the Cuttack Municipality which had been declared to be invalid by the High Court by its earlier judgment so that as a result of the Ordinance, the elections to the Cuttack Municipality must be held to have been valid. Can it be said that the validation was intended to be temporary in character and was to last only during the life time of the Ordinance ? In our opinion, having regard to the object of the Ordinance and to the rights created by the validating provisions, it would be difficult to accept the contention that as soon as the Ordinance expired the validity of the elections came to an end and their invalidity was revived. The rights created by this Ordinance are, in our opinion, very similar to the rights with which the court was dealing in the case of Steavenson and they must be held to endure and last even after the expiry of the Ordinance. The Ordinance has in terms provided that the Order of Court declaring the elections to the Cuttack Municipality to be l; invalid shall be deemed to be and always to have been of no legal effect whatever and that the said elections are thereby validated. That being so, the said elections must be deemed to have been validly held under the Act and the life of the newly elected Municipality would be governed by the relevant provisions of the Act and would not come to an end as soon as the Ordinance expires. Therefore, we do not think that the preliminary objection raised by Mr. Chetty against the competence of the appeals can be upheld." (1) 151 English Reports 1024. 531 We do not, however, mean to say here that Parliament or the State Legislature is powerless to bring into existence the same state of affairs as they existed before an ordinance was passed even though they may be completed and closed matters under the Ordinance. That can be achieved by passing an express law operating retrospectively to the said effect, of course, subject to tile other constitutional limitations. A mere disapproval by Parliament or the State Legislature of an ordinance cannot, however, revive closed or completed transactions. In the petitions before us also the position is the same as in the decision referred to above. The abolition of the posts and the declaration that the incumbents of those posts would cease to be holders of those posts under section 3 of the Ordinance being completed events, there is no question of their revival or the petitioners continuing to hold those posts any longer. The above contention has, therefore, to be rejected in the circumstances of this case. In view of what has been stated above it is not necessary to consider the contention of the petitioners that it was not open to the Government to issue one ordinance after another to keep alive the effect of the first ordinance as the first ordinance itself brought about the desired effect by section 3 thereof. Even if the other provisions of the Ordinance have ceased to be in force, there can be no constitutional difficulty arising therefrom because it is open to the State Government to create new posts in exercise of its powers under Article 162 of the Constitution as long as the field is not occupied by an Act of the Legislature or a rule made under the proviso to Article 309 of the Constitution. It is next contended that by abolishing the posts of part time village officers and by throwing the petitioners out of the posts held by them, Article 21 of the Constitution had been violated. It is hardly necessary to deal with this point elaborately since the petitioners are not being deprived o f their right to life and liberty by the abolition of the posts of part time village officers or by their ceasing to be holders of those posts. It is lastly urged that the State Government may be asked to consider the cases of those petitioners who possess the prescribed qualifications for appointment as Village Assistants. We are 532 informed that the number of posts of Village Assistants that are going to be created would be about one eighth of the number of posts of part time village officers which are abolished. It is also difficult in law to issue any direction in that behalf in the facts and circumstances of this case. We, however, record that in paragraph 21 of the Counter Affidavit filed by B.V. Janardhan Reddy, Deputy Secretary to Government, Revenue Department, Government of Andhra Pradesh it is stated thus: "In addition, the Government is of the view that such of those village officers who possess the required qualifications as prescribed and otherwise found suitable will also be considered for appointment of Village Assistants subject to the availability of the posts. " We trust that the State Government will give due regard to the above said statement while making appointments. Statements contained in affidavits are meant to be honoured. In the result these petitions fail and are hereby dismissed. We make no order as to costs. N.V.K. Petitions dismissed.

The, State of Andhra Pradesh was constituted under the consisting of two areas known as the 'Andhra Area ', and the 'Telangana Area '. There were different laws governing the village administration in the two areas. The village establishment in the Andhra Area which previously formed part of the State of Madras consisted of headmen and karnams who were village officers and talyaris, vettis and neergantis who were village servants. Their appointment and conditions of service were governed by the Madras Hereditary Village Offices Act, 1895. In the Telangana Area, the village establishment consisted of the posts of patwaris, mali, patels and police patels who were village officers and sethsindhis and neeradis who were village servants The State Government appointed a Committee called the Village Officers Enquiry Committee to review the existing system of part time officers working at the village level. The Committee submitted its report in 1961 that it was necessary to reorganise the village establishment by appointment of full time officers with larger volume of work. It also recommended that steps should be taken to reduce the number of posts by merger of functions and increasing the area over which the village officers could exercise jurisdiction. In course of time, the Governor of Andhra Pradesh promulgated rules under the proviso to Article 309 of the Constitution called the Andhra pradesh 510 (Andhra Area) Village Offices Service Rules, 1969 providing for the regulation of the recruitment and conditions of service of holders of village offices in the Andhra Area of the State of Andhra Pradesh with effect from May 22, 1969, The State Legislature passed the Andhra Pradesh Watans (Abolition) Act, 1978 which came into force with effect from December 8, 1977 abolishing all the watans village offices in the Telangana Area of the State. Simultaneously the Andhra Pradesh (Telangana Area) Village Offices Service Rules, 1978 were promulgated by the Governor with effect from 7th December 1977 providing for the recruitment and conditions of service of the village officers in the Telangana Area. The village officers in both the areas were however still part time officers. On January 6, 1984 on the recommendation of the State Government. the Governor promulgated the Andhra Pradesh Abolition of Posts of part time Village Officers Ordinance, 1984 (Ordinance No. 1 of 1984). Section 2(d) of the Ordinance defined the expression 'part time village officer ' as a person who held any of the village offices of headman, munsiff, reddy, monigar, peddakapu, patel, karnam or patwari or triune officer or holder of any such village office by whatever designation it may be locally known including their assistants. Section 3 of the Ordinance declared that the posts of part time village officers in the State of Andhra Pradesh as defined in section 2(d) thereof stood abolished with effect on and from the date of the commencement of the Ordinance which came into force at once, and every person who held the post of part time village officer in any art of the State would with effect on and from that date cease to hold such posts. By virtue of this provisions the posts of part time village officers ceased to be in existence on January 6, 1984 and the incumbents of those posts ceased to he employees of the Government on and from that date. The Ordinance was not replaced by an Act of the State Legislature but it was succeeded by four ordinances namely Ordinance No. 7 of 1984, 13 of 1984, 18 of 1984 and 21 of 1984. The petitioners who were part time village officers questioned the constitutional validity of this Ordinance by petitions filed both in this Court and in the High Court. The petitions filed in the High Court were withdrawn to this Court under Article 139 A. The Counsel for the Petitioners did not urge the other points in view of these decisions. Gazula Dasaratha Rama Rao vs The State of Andhra Pradesh & Ors., ; , B.R. Sharkaranarayana & Ors. vs The State of Mysore & Ors., (A.l.R. 1966 S.C.C. 1571), K Rajendran & Ors. vs State of Tamil Nadu 511 It was however contended ml behalf of the petitioners (i)that the Ordinance was void and ineffective due to lack of application of mind by the Governor to the subject matter of the Ordinance, (ii) that the Ordinance having lapsed as the Legislature did not pass an Act in its place, the posts which were abolished should be deemed to revived, and the issue of successive ordinances the subsequent one replacing the earlier one did not serve any purpose, and (iii) that the abolition of posts and the consequent deprivation of the right of the petitioners to hold the said posts amounted to an infringement of their fundamental right to life and personal liberty guaranteed under Article 21 of the Constitution . Dismissing the Writ Petitions. ^ HELD: 1. Under Article 123 of the Constitution the President can promulgate an ordinance on the advice of the Council of Ministers to meet the requirement of a situation when either House of Parliament is not in session. Similarly under Article 213 of the Constitution the Governor may issue an ordinance on the advice of this Council of Ministers when the Legislative Assembly or where there are two Houses of the Legislature in a State either of them is not in session. Since under Article 85 of the Constitution it is not permissible to allow a period of six months to intervene in the case of each Mouse of Parliament between its last sitting in one session and the date appointed for its first meeting in the next session and since under clause (2) of Article 123 of the Constitution an ordinance has to be laid before both Houses of Parliament and would cease to operate at the expiration of six weeks from the reassembly of Parliament, it cannot be said that either House can be avoided by the President beyond seven and a half months after the passing of an ordinance. It is open to Parliament if it chooses to approve it or not. Having regard to the conditions prevailing in India the Constitution makers thought that the ordinance making power should be given to the President to deal with unforeseen or urgent matters The position under Article 213 of the Constitution is also the same. [523D G] 2. The Legislative action under our Constitution is subject only to the imitations prescribed by the Constitution and to no other. Any law made by the Legislature, which it is not competent to pass, which is violative of the provisions in Part III of the Constitution or any other constitutional provision is in effective. [525G H] 3. The motives of the legislature in passing a statute is beyond the scrutiny of courts. Nor can the courts examine whether the legislature had applied its mind to the provisions of a statute before passing it. The propriety expediency 'and necessity of a legislative act are for the determination of the legislative authority and are determination by the courts. An ordinance passed either under Article 123 or under Article 213 of the Constitution stands on the same footing. When the Constitution says that the ordinance making power is 512 legislative power and an ordinance shall have the same force as an Act, an ordinance should be clothed with all the attributes of an Act of legislature carrying with it all its incidents, immunities and limitations under the Constitution. It cannot be treated as an executive action or an administrative decision. Gazula Dasaratha Rama Rao vs The State of Andhra Pradesh & Ors" ; B.R. Shankaranarayana & Ors., vs The State of Mysore & Ors, (A.I.R. , K. Rajendran & Ors. vs State of Tamil Nadu & Ors., 11982] 3 S.C.R. 628, Lakhi Narayan Das vs The Province of Bihar, []949) F.C.R. Vol. Xl 693, R.R. Garg etc. vs Union of India & Ors. etc. [19821 I S.C.R. 947 and A.K. Roy etc. vs Union of India & Anr. , ; at page 299. referred to. Article 213 of the Constitution does not say that the Ordinance shall be void from the commencement on the State Legislature disapproving it. It says that it shall cease to operate. It only means that it should be treated as being effective till it ceases to operate on the happening of the events mentioned in clause (2) of Article 213. In the instant case, the Andhra Pradesh Abolition of Posts of Part time Village Officers ordinance 1984 deals with two separate matters. By clause 3 it abolishes the posts of part time village officers on the commencement of the Ordinance and it further declares that every person who held the post of a part time village officer would cease to hold that post with effect from that date. By clause 4 and other allied provisions, the Ordinance has provided for the creation of posts of Village Assistants and appointment and conditions of service of Village Assistants who are full tin e employees of the Government. There is no doubt that a separate provision is made in clause 5 of the Ordinance for payment of some amount to the ex part time village officers [528H; 529A C] 5.A mere disapproval by Parliament or the State Legislature of an ordinance cannot, however, revive closed or completed transactions. The abolition of the posts and the declaration that the incumbents of those posts would cease to be holders of those posts under clause 3 of the Ordinance being completed events. there is no question of their revival or the petitioners continuing to hold those posts any longer. Even if the other provisions of the Ordinance have ceased to be in force, there can be no constitutional difficulty arising therefrom because it is open to the State Government to create new posts in exercise of its powers under Article 162 of the Constitutional as long as the field is not occupied by an Act of the Legislature or a rule made under the proviso to Article 309 of the Constitution.[531 E F] State of Orissa vs Bhupendra Kumar Bose, [1962] 2 Supp. 380, referred to. Steavenson vs Oliver 151 English Reports 1024, referred to.

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it Petition No. 1147 of 1988. (Under Article 32 of the Constitution of India) WITH Civil Appeal No. 1782 of 1990. 330 From the Judgment and Order dated 5.6.1987 of the Punjab and Haryana High Court in C.W.P. No. 13 13 of 1986 R. Venkataramani, Mahabir Singh, M.S. Ganesh and C.M. Nayar for the Appearing Parties. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, CJ. The petitioners are law graduates. They state that they belong to scheduled castes and sched uled tribes segments of the community. They are seeking enforcement of the right to equality of opportunity in the matter of appointment to posts in the subordinate judiciary in the State of Haryana. The State of Haryana has reserved 20% of the posts in the Haryana Civil Service (Judicial Branch) for the scheduled castes and scheduled tribes. It is the case of petitioners that though 20% of the posts in the Haryana Civil Service (Judicial Branch) have been reserved for scheduled castes and scheduled tribes, the strength of the appointments made since 1969 onwards reveals that hardly 8% of the total posts i.e., 40 to 45% only of the cadre strength have been allotted to the scheduled castes and scheduled tribes. The petitioners contend that in other States of India different percentages of marks have been prescribed for scheduled castes, scheduled tribes and gener al candidates for determining their suitability and/or eligibility for appointment. But in Haryana, they contend, minimum marks have been prescribed as 55% for all categories of candidates, namely, scheduled castes, scheduled tribes and general candidates. In this connection, it may be appropriate to refer to the fact that under the Punjab Civil Services (Judicial Branch) Rules framed in exercise of powers conferred by Article 234 read with proviso to Article 309 of the Consti tution of India, rules have been framed and are prevalent. Part 'C ' of the rules deals with the rules and instructions for the examination of the candidates for admission to the judicial branch of the Haryana Civil Service. Part 'C ' of the said rules was brought into force by the Haryana Adapta tion Laws (State and concurrent subjects) Order, 1968. Rules 7 and 8 of the said rules, inter alia, provides as follows: "7. No candidate shall be called for the viva voce test unless he obtains at least 45% of marks in the aggregate in all the written papers and 33% marks in the language paper, Hindi (in Devanagri script). 331 8. No candidate shall be considered to have qualified in the examination unless he obtains at least 55 per cent marks in the aggregate of all papers including the viva voce test. " It is the case of the petitioners that fixation of the ,standard of marks which the petitioners describe as high standard, has resulted in denial of opportunity to the scheduled castes and ' scheduled tribes thus amounting to denial of equality of opportunity in the jobs which, the petitioners contend, the State otherwise sought to achieve and ought to achieve in favour of scheduled castes and scheduled tribes. We are of the opinion that equality of opportunity should be striven for and ensured in public employment. Steps should be taken to see where unequals are competing, conditions must be created by relaxation or otherwise so that unequals compete in terms of equality with others in respect of jobs and employments of the State. Our Constitu tion so enjoins it. Article 38 of the Constitution read with Articles 14, 15 and 16 so mandates it. In order, therefore, to give those who are unequals, and it is accepted that scheduled castes and scheduled tribes for reasons historical or otherwise, are unequal with the general members of the community in respect of ability and qualification for public employment. Hence, in order to make the unequals compete on conditions of equality certain relaxations and other factors ensuring equality are imperative. Those groups or segments of society which are by reasons of history or otherwise unable to compete in terms of absolute equality with the members of other communities or groups in the society, should be ensured and assured chances of competing in terms of equality. They must be helped to compete equally but it is important to emphasise that equality of opportunity is sought to be achieved for the public services or employment. The efficacy and efficiency of that service is of prime consideration. ' Equality must be there for all to compete for the public services. Public services and public employ ment do not exist for providing jobs in terms of equality or otherwise to all. Only public services and public employment must serve public purpose and nothing that hampers or im pairs the efficiency or efficacy of public services cannot and should not be permitted in ensuring conditions of con stitutional equality. These should be done objectively, rationally and reasonably. As is often said, it may be that need to ensure equality for scheduled castes and scheduled tribes should not be surrendered on the facile and value based perception of efficiency. Yet efficiency must be ensured. Real equality must be accorded. 332 As mentioned hereinbefore, the contention of the peti tioners is that 55% marks in aggregate in all papers includ ing viva voce test constitute rather a high standard for qualification and eligibility. They contend that for most of the scheduled caste and scheduled tribe aspirants for the job it is difficult to achieve that standard. It is said that in other parts of this vast land of ours the standard is not as high as that. Sri Venkatramani, advocate for the petitioners, contended that in other States on an all India basis such a high standard of marks is not envisaged. Sri Mahabir Singh, learned advocate appearing for the State of Haryana and Sri C.M. Nayar, learned advocate for the Public Service Commission contend that it must be presumed that the minimum percentage desirable for the purpose of efficiency has been prescribed. It was further submitted by Sri Nayar that in respect of candidates other than scheduled castes and scheduled tribes, normally those obtaining far higher than 55% marks become eligible for consideration. That may or may not be so but what is required is that we must ensure efficiency in administration. We must, therefore, objective ly, rationally and by a conscious process conscious in the sense by application of mind to the relevant factors arrive at a percentage which should be considered to be a minimum one in order to ensure the efficiency of the administration. We are conscious that high efficiency is required because the recruitment is in the judicial branch, that is to say, for prospective judicial officers who will be in charge of administration of justice in the country. But at the same time, if possible, in order to ensure that there is equality of opportunity, a percentage should be fixed which without, in any way, compromising with the efficiency required for the job which will be attainable by backward communities, that is to say, scheduled castes and scheduled tribes. Unless such a percentage is fixed on the aforesaid basis and a percentage is fixed for qualification which would normally be unattainable by the scheduled castes and scheduled tribes determined on an objective basis, it would not be possible to ensure equality of opportunity. Both S/Sri Mahabir Singh and Nayar have urged that the minimum must be presumed to have been so fixed in the Haryana Service. However, that fact is not apparent and there is nothing on record to indicate that this percentage was fixed deliberately on an analysis and careful examination and determination on the lines and the principles indicated above. In that view of the matter, in our opinion, in the interest of justice and our constitutional mandates and in the light of the efficiency of the services and with a view to create a sense of justice, it is necessary for the Gov ernment concerned to consider this question as 333 to what should be the minimum percentage of marks necessary for the administration. We direct that the Government will make a conscious decision objectively before the next selec tions for the post in Haryana Judicial Service take place, and determine a minimum percentage of marks consistent with efficiency and the need for ensuring equality of opportunity to scheduled castes and scheduled tribes. It was also contended by Sri Venkataramani that some of the candidates belonging to the scheduled castes and sched uled tribes have become overaged, therefore, the Government should also consider whether further relaxation in age in favour of scheduled castes and scheduled tribes can be made; and if so, to what extent without hampering efficiency of the administration. This should also be considered before the next selections for appointment to the post are made. In the aforesaid light, special leave is granted in civil appeal No. 15,000/88 and the judgment and order of the High Court of Punjab & Haryana, dated 5th June, 1987 are modified to the extent indicated above. The writ petition and the appeals are disposed of accordingly without any order as to costs. P.S.S. Petition disposed of.

Rule 8 of the Punjab Civil Services (Judicial Branch Rules, 1951, as adapted by the State of Haryana, lays down that no candidate shall be considered to have qualified in the examination unless he obtains at least 55% marks in the aggregate of all papers, including the viva voce test. The petitioners assailed the said provision on the ground that fixation of 55% marks has resulted in denial of equality of opportunity to the scheduled castes and sched uled tribes segments of the community vis a vis general candidates for determining their suitability and/or eligi bility for appointment in the judicial branch of the Haryana Civil Services in the absence of lower percentage having been prescribed for them as in other States. Disposing of the writ petition and the appeal, the Court, HELD: 1. Public services and public employment do not exist for providing jobs in terms of equality or otherwise to all. Only public services and public employment must serve public purpose and nothing that hampers or impairs the efficiency or efficacy of public services should be permit ted in ensuring conditions of constitutional equality. These should be done objectively, rationally and reasonably. 329 2. Scheduled castes and scheduled tribes for reasons historical or otherwise, are unequal with the general mem bers of the community in respect of ability and qualifica tion for public employment. They are unable to compete in terms of absolute equality with the members of other commu nities or groups in the society. Hence, in order to make them compete on conditions of equality with others in re spect of jobs and employments of the State certain relaxa tions and other factors ensuring equality are imperative. Our Constitution so enjoins it. Article 38 of the Constitu tion read with Article 14, 15 and 16 so mandates it. [332D E; C] 3. In the instant case, high efficiency is required because the recruitment is in the judicial branch, that is to say, for prospective judicial officers who will be in charge of administration of justice in the country. But at the same time, if possible, in order to ensure that there is equality of opportunity, a percentage should be fixed which without, in any way, compromising with the efficiency re quired for the job which will be attainable by backward communities, that is to say, scheduled castes and scheduled tribes. Unless such a percentage is fixed on the aforesaid basis and a percentage is fixed for qualification which would normally be unattainable by the scheduled castes and scheduled tribes determined on an objective basis, it would not be possible to ensure equality of opportunity. [333D F] 4.1 The Government is directed to make a conscious decision objectively before the next selections take place, and determine a minimum percentage of marks consistent with efficiency and the need for ensuring equality of opportunity to scheduled castes and scheduled tribes. [334B] 4.2 The Government should also consider whether further relaxation in age in favour of scheduled castes and sched uled tribes can be made; and if so, to what extent without hampering efficiency of the administration. This should also be considered before the next selections for appointment to the post are made. [334C]

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ition No. 3053 of 1980. Under article 32 of the Constitution of India. Dr. L.M. Singhvi, S.K Sinha, S.K Verma, A.M. Singhvi and Laxmi Kant Pandey for the Appellant. D. Goburdhan for the Respondent. The Judgment of the Court was delivered by DESAI, J. A pensioner since 16 years is knocking at the doors of the court of justice and the executive in search of his hard earned pension and is being rebuffed by those who would meet the same fate by the passage of time and yet with his meagre resources, he has been dragged to the apex court for the second time after a lapse of 12 years during which abominably long period the mandamus of this Court has been treated as a scrap of paper. What a pity, and what helplessness ? The facts relevant to the disposal or this petition under article 32 of the Constitution are set out in details in Deokinandan Prasad vs State of Bihar & Ors (1) and therefore, need not be recapitulated here. A Constitution Bench presided over by the then Chief Justice Mr. Sikri issued a mandamus in the writ petition filed by the present petitioner which reads as under: "The order dated August 5, 1966 declaring under r. 76 of the Service Code that the petitioner has ceased to be in government employ is set aside and quashed. The order dated June 12 1968 stating that under r. 46 of the Pension Rules, the Department is unable to grant the petitioner pension is also set aside and quashed. As the petitioner himself claims that he has been retired from service on superannuation, a writ of mandamus will be issued to the respondents directing them to consider the claim of the petitioner for payment of pension according to law. " 923 The opinion of the Court was rendered on May 4, 1971 and since then petitioner is being pushed from pillar to post by various departments of the State of Bihar ultimately compelling him to knock at the door of this Court. It may be mentioned in passing that the petitioner joined service on September 1, 1928 and admittedly he has retired on superannuation on January 10, 1967. He is entitled to pension under the Bihar Pension Rules, 1950. The dispute is whether the petitioner is a member of the Bihar Education Service and what ought to be the method of computation of his pension ? on the first point, the matter is no more res integra because the Constitution Bench held that a reference to r. S of the Pension Rules shows that the officers mentioned therein are entitled to pension. It was further held that there is no controversy that the petitioner is an officer in the Education Department of the Bihar Education Service, and this department is shown at item No. 3 of the Schedule to r. section Therefore, the controversy is concluded by decision between the parties that the petitioner is a member of Bihar Education Service and that under r. 5 of the Pension Rules, he is entitled to pension. After the mandamus was issued by this Court, the petitioner approached amongst others the then Chief Minister of Bihar late Shri Kedar Pandey for implementing and giving effect to the mandamus, issued by the Supreme Court. The Chief Minister directed that even though more than two years have elapsed since the issuance of the mandamus of the Chief Minister himself directed ten months prior to June 25, 1973 for payment of the claim of the petitioner as soon as possible and had insisted upon a weekly progress report on the processing of the file to be submitted to him, yet even the Chief Minister recorded his helplessness that he neither received the weekly report nor the mandamus has been implemented nor even the file was submitted to the Chief Minister for his perusal. If this be plight of the Chief Minister of a popularly elected government what to talk of the lesser fly and what tears can be shed for a man in position of the petitioner who having rendered service for nearly 40 years was chasing the mirage for a paltry pension. The Chief Minister apprehended that it is quite likely that not only the officers responsible for this mess but even the State Government may be called upon by the Supreme Court to explain the disregard of the mandamus. He then made a peremptory order that the file be submitted to him for order. 924 Nothing moved as is the sad experience that nothing moves A unless like the law of inertia some outside force acts upon it and puts the file in motion. What that outside force is we need not dilate. Ultimately, the file reached the Chief Minister in 1974 on being called by him. There is the long preamble setting out the history of litigation, the injustice done to the petitioner, the utter lethargy and aptly of the officers concerned and then the Chief Minister proceeded to dispose of the claim of the petitioner consistent with the mandamus issued by this Court. The material portion which would help us in disposing of the present petition recites that the petitioner shall be treated in Class II posts of Bihar Education Service since his promotion and since 1.1.1952 he should be deemed to belong to Class I post of Selection Grade according to his seniority or from the date of direct appointment which derived the petitioner of equal opportunity, he was fully entitled to. But the note is overgrowing with the courtesy of the Chief Minister in that he proceeded to request the Education Minister that for the ends of justice, a phraseology to which the courts are accustomed, the petitioner should be paid off his claim within a month for which any senior officer of the Education Department he made responsible. Undue delay has been made in the implementation of the direction of the Hon 'ble Supreme Court and I would never like that Shri prasad be compelled again to go to Court. ' What a wishful thinking. In that Mr. Prasad has been forced to come back to this Court and since then the then Chief Minister has left this world. The resume the narration, petitioner received a letter dated February 6, 1976 3 years after the direction given by the Chief Minister that his pension case has been finalised and pension payment order of Rs. 156.55 p.m. and gratuity payment order of Rs. 5,850 are under issue. It would appear at a glance that officers dealing with the pension case appears to have scant regard for the decision of the Supreme Court in that both the promotion to Class II and further promotion to Class I from deemed dates were ignored and pension was computed on the basis as if petitioner retired in Class III. All the representation of the petitioner thereafter failed to evoke both a sympathetic response and a just decision and therefore the petitioner is back to square one. The respondent State and all its officers are bound to compute pension of the petitioner not only on the footing that he is a member 925 Of the Bihar Education Service but also on the footing that he was promoted to Class II by the date mentioned in the earlier judgment A and from 1.1.1952 to Class I as rightly held by the Chief Minister. Nothing was pointed out to us by Mr. Goburdhan to hold to the contrary nor can the State be permitted to play ducks and drakes with a solemn decision of the Constitution Bench of this Court. To give effect to the mandamus of this Court, the respondent State shall proceed to compute the salary payable to the petitioner from the date he was promoted, to Class II Service and on the assumption that he was functioning in Class II in the salary scale then admissible to him equivalent to Class II Grade in Bihar Education Service. This must commence from the date from which he was promoted as set out in the earlier judgment as Deputy Inspector of Schools at Seraikela. In computing the salary for the purpose of computation Class II salary scale then prevalent for the post shall be taken up and the petitioner is deemed to have been put in that scale. Yearly increments are added till 1.1.1952 when he must be deemed to have been promoted as admitted by the Chief Minister to Class I post in Bihar Education Service. Same process is to be repeated by the respondent State in that the then prevalent Class I scale must be held admissible to the petitioner from January 1, 1952. He must be 15 deemed to have been put in the scale and his annual increments to be worked out. If in the process he is entitled to Selection Grade, the same must be worked out and this computation must be brought down to 10.1.1967 when the petitioner retired on superannuation from service. On this computation of salary his pension shall be computed under the relevant rules of the Bihar Pension Rules as liberalised from time to time till 1967 and his pension must be determined as on 10.1.1967 on the aforementioned computation chart. The State and the subordinate officers responsible for this work are directed by a writ of mandamus to complete this computation by July 31, 1983 and by that date pension payment order correct and consistent with the direction herein given shall be issued without fail to the petitioner. The State is also directed by a mandamus of this Court to pay the arrears of pension on the afore mentioned computation within the same period with interest at 6% from 10.1.67. As the officers of the State have harassed the petitioner which we 926 feel is intentional, deliberate and motivated, therefore, we are constrained to award exemplary costs quantified at Rs. 25,000 to be paid to the petitioner before July 31, 1983. We propose to leave no one in doubt that the slightest failure or deviation in the time schedule in carrying out this mandamus will be unquestionably visited with contempt action. H.L.C. Petition allowed.

In Deokinandan Prasad vs State of Bihar & Ors., [1971] Supp. S.C.R. 634 decided on May 4,1971 the Court had, after coming to the conclusion that the petitioner herein was a member of the Bihar Education Service entitled to pension under r. 5 of the Bihar Pension Rules, issued a writ of mandamus directing the State Government to consider the claim of the petitioner for payment of pension according to law. Inspite of the petitioner having approached the Chief Minister for implementation of the mandamus it was not until 1974 that the concerned file reached the Chief Minister and orders were passed by him that the petitioner should be deemed to belong to Class I post of Selection Grade from January 1, 1952 and that his claims should be settled within a month. Three years after this direction of the Chief Minister the petitioner received intimation that his pension had been computed on the basis that he had retired from Class III service. Further representations having failed to evoke any response from the State Government, the petitioner approached the Court once again. Allowing the petition ^ HELD: The respondent State and all its officers are bound to compute pension of the petitioner not only on the footing that he is a member of the Bihar Education Service but also on the footing he was promoted to Class II by the date mentioned in the earlier judgment and from January 1, 1952 to Class I as rightly held by the Chief Minister. Officers dealing with the pension case of the petitioner appear to have scant regard for the decision of tho Supreme Court in that both the promotion to Class II and further promotion to Class I from deemed dates were ignored and pension was computed on the basis that the petitioner retired from Class III service. The State cannot be permitted to play ducks and drakes with a solemn decision of this Court. The State and the subordinate officers responsible for computation of pension of the petitioner are directed to complete this computation by July 31, 1983 and by that date pension payment order correct and consistent with the direction herein given shall be issued without fail. The State is also directed to pay the arrears of pension on the aforesaid computation within the same period with interest at 6 per Cent from January 10, 1967. As the officers of the State have harassed the petitioner which is intentional, deliberate and motivated, exemplary costs quantified at Rs. 25,000 shall be paid. to the petitioner before July 922 31,1983. The slightest failure or deviation from the time schedule in carrying A out this mandamus will be unquestionably visited with contempt action. [924 H: 925 A: 925 C H: 926 A:]

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Civil Appeal No. 1654 of 1979. From the Judgment and order dated 28.3.1979 of the Allahabad High Court in Second Appeal No. 3064 of 1972. J.P. Goyal and S.K. Jain for the Appellant. S.N. Kacker and O.K. Garg for the Respondent. The Judgment of the Court was delivered by RANGANATHAN, J. The question which has come up for consideration in this appeal from judgment of the Allahabad High Court is whether the deposit of rent by a tenant under section 7 C of the Uttar 419 Pradesh (Temporary) Control of Rent and Eviction Act, 1947 (hereinafter called the 'Act ') as such entitles him to resist successfully eviction under the provisions of the Act on the ground of default in payment of rent. The appellant, Ram Sewak, was a tenant of the respondent, Munna Lal in respect of a shop on a rent of Rs.25 per month. The rent upto 30. 11.66 had been paid by the tenant. The landlord, however. claimed that the rent for the period from 1. 12.66 till 28.2.1971, less an amount of Rs.275 which had been received by him by way of money order, was due from the appellant tenant. This remained unpaid despite notices of demand dated 22.3.71 and 12.4.1971, and a notice of termination of the tenancy dated 27.4.1971. On these allegations. The landlord instituted a suit for ejectment of the tenant on the ground of non payment of rent. He also claimed the recovery of arrears of rent. mesne profits and certain taxes, which were alleged to be payable by the tenant. This suit was decreed by the learned Munsif, Jhansi. A first appeal was unsuccessful insorfar as the decree related to the eviction of the petitioner was concerned but the claim for arrears of rent was rejected in part on the ground of limitation. A second appeal was also dismissed by the High Court and hence the present appeal. The defence of the tenant to the suit was that he had tendered the rent to the plaintiff landlord but the latter had refused to accept it. The rent was sent by money order but even then it was refused. It was submitted that the tenant had thereupon made an application on 31.7.1967 under section 7 C of the Act in the court of the learned Munsif, Jhansi, for permission to deposit the rent in the court. The Court issued a notice to the landlord, which was also duly served on him. On the date of hearing there was no appearance on behalf of the landlord. Thereupon the learned Munsif passed an order, on 11.11.1967, permitting the tenant to deposit the arrears of rent as well as future rent in court. It was claimed that the tenant had deposited arrears of rent amounting to Rs.200 for the period from 1. 12.1966 to 31.7.1967 in the court along with application and that he continued to deposit in court the rent thereafter from month to month. It was, therefore, submitted that there were no arrears of rent due from the tenant to the landlord and that, therefore, the suit for eviction was not maintainable. The learned Munsif and, on appeal, the learned Subordinate Judge found as a fact that the plaintiff had failed to prove that he had tendered the rent to the landlord or that the latter that the latter had refused to 420 accept it. This being so, they held, the statutory conditions requisite for a valid deposit under section 7C were not fulfilled. Neither the application made by the plaintiff under section 7C nor the order passed by the learned Munsif on 11.11.67 could therefore, help the plaintiff. In this view of the matter, both the courts held that the default in payment of rent, within the meaning of sec. 3(1)(a) of the Act, stood established and the plaintiff was, therefore, liable to eviction. Before us, as before the courts below, learned counsel for the tenant based his case solely on the order under the provisions of section 7C of the Act. That section reads as follows: "7 C Payment by Deposit of Rental) When a landlord refuses to accept any rent lawfully paid to him by a tenant in respect of any accommodation the tenant may in the prescribed manner deposit such rent and continue to deposit any subsequent rent which becomes due in respect of such accommodation unless the landlord in the mean time signifies by notice in writing to the tenant his willingness to accept. (2) Where any bona fide doubt or dispute has arisen as to the person who is entitled to receive any rent referred to in sub section (I) in respect of any accommodation, the tenant may similarly deposit the rent stating the circumstances under which such deposit is made and may until such doubt has been removed or such dispute has been settled by the decision of any competent court, or by the settlement between the parties, continue to deposit, in like manner, the rent that may subsequently become due in respect of such building. (3) The deposit referred to in sub section (1) or (2) shall be made in the Court of the Munsif having jurisdiction in the area where the accommodation is situate. (4) on any deposit being made under sub section (1) the Court shall cause a notice of the deposit to be served on the landlord, and the amount of deposit may be withdrawn by the landlord on application made by him to the Court in this behalf. (5) When a deposit has been made under sub section (2) the amount of the deposit shall be held by the Court for 421 the benefit of the person who may be entitled to it and the same shall be payable to such person. (6) In any case where a deposit has been made, as aforesaid, it shall be deemed that the rent has been duly paid by the tenant to the landlord. " Learned counsel submitted that, in the event of a landlord 's refusal to accept the rent, the tenant had no other alternative but to deposit the same in the court under the above special provision. It was open to the landlord to have appeared before the learned Munsif at the time of hearing of the application for deposit and put forward any pleas, which he might have had. The landlord not having done this, it was claimed that the order passed by the learned Munsif on 11.11.1967 provides a complete defence to the action under section 3(1)(a) of the Act against the tenant particularly in view of the language of sub section (6) of section 7C. It was contended that the statute should not be constured as requiring that a tenant should prove the fact of his having tendered the rent and the landlord having refused it twice over once while making a deposit under section 7C and, again, in proceedings under section 3(1)(a). If, despite a deposit under section 7 C, an action under section 3(1)(a) were to be permitted, it was urged, section 7 C would be rendered nugatory and otiose. Learned counsel also made a point that though the landlord in this case had knowledge that the rent was being deposited in court since August 1967, he chose to keep quiet for a period of four years before issuing a notice calling upon the appellant to pay the arrears of rent. Prima facie, the arguments of the appellant appear to have some force. However, after hearing learned counsel for the respondent and considering the facts of this case and the relevant statutory provisions, we have come to the conclusion that this appeal must fail both on technicalities as well as on equities. section 7C is no doubt a provision intended to protect the interests of the tenant. But there is the authority of this Court holding that the mere fact of a deposit under this Section, in itself cannot be an answer to an action section 3(1)(a). In Brahmanand vs Kaushalya Devi, ; , the relations between the landlord and tenant were highly strained. The tenant therefore deposited the moneys into court and pleaded this as a defence to an action section 3(1)(a). The High Court rejected this plea on the ground that there was nothing to show that the tenant had tendered the rent physically to the landlord and so the 422 deposit could not be treated as a valid deposit section 7C(I) so attract the deeming effect in section 7C(6). This Court held that the High Court had taken too narrow a view of the words 'paid to ' the landlord. Krishna Iyer J. Observed: "a liberal construction of the expression 'paid to him by a tenant. in section 7 C(l) is necessary. Physically offering payment when the relations between the parties are strained is to ask for trouble and be impractical. But harassing the landlord by straight way depositing the rent in court without fulfilment of the conditions required by section 7 C( l) is also unwarranted. Section 7 C(6) by using the expression 'where the deposit has been made as aforesaid ' takes us back to section 7 C( I). That is to say the deposit is permissible only when the condition in section 7 C(l) is complied with. If the landlord refuses to accept rent paid to him a deposit is permissible. But payment need not be by physical tender, person to person. It can be by money order, or through messenger or by sending a notice to the landlord asking him to nominate a bank into which the rents may be regularly paid to the credit of the landlord. If the landlord refuses under these circumstances, then a court deposit will be the remedy. " In the present case, on account of the bad blood between the parties a physical tender of the rent is ruled out. At the same time the Courts below have not considered whether the circumstances which drove the appellant into depositing the rent in court were such as eliminated the other possibilities of direct payment we have indicated. It is therefore fair to set aside the finding of the Courts below and remand the case to the lower appellate Court (which is the final court of fact under ordinary circumstances) to ascertain whether any of the alternatives we have indicated, or may otherwise be made out by the tenant as equivalent to payment of rent, is present in the case. if no such circumstances is made out by the tenant justifying deposit of rent in court, the decree for eviction will stand. Other wise, the petition for eviction will be dismissed. " It is important to note that this Court did not view the deposit section 7C as conclusive of the issue. On the other hand, it held that if no circumstance was made out by the tenant justifying the deposit in 423 court, the decree for eviction will stand. In other words, this Court the view that, irrespective of the fact of deposit section 7C, the tenant has to show, when a suit is under section 3(1)(a), that the existence of circumstances justifying a deposit under section 7C. In the present case, the Courts have been concurrently found that there was no valid tender of rent by the tenant or refusal thereof by the landlord. There is no ground therefore to interfere with the decision of the Courts below. A careful perusal of section 7C and the rules and forms made thereunder also supports the above conclusion. The application for a deposit under this section has to be made in the form prescribed in Appendix A to the rules framed under the Act. The appellant 's application to the court was filed in this form. Column 6 of the application form is filled in by the tenant may be extracted: (A) (B) 6. Whether deposit is made "the deposit is being under sub section (1)/(2) made under sub section(1) of Section 7 C. In case of of 7 C of the Act. Fact in Sub section(1) briefly brief is that the landlord state the circumstances of has reused to accept the refusal by the owner. in rent. It is being deposited case of sub section(2), under section 7 c of the UP mention circumstances of act 3 of 1947. " doubt or dispute about ownership. The rules framed under the Act also prescribed the form in which notice is to be served on the respondent when an application is made under section 7 C This form reads as follows: XXXX XX "To Whereas . . . has deposited Rs . . as rent for the period . .for the premises . Of which you have been mentioned as the land lord. 424 Notice is hereby given to you under sub section (4) of Section 7 C of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, that the said amount will be paid to you on an application for withdrawal being presented to this Court. Given under my hand seal this day of . . Munsif. " Reading section 7 C, the rules framed thereunder and the above statutory forms together, it would appear that this provision envisages that where a tenant finds that the landlord refuses to accept the rent or there is some dispute regarding the ownership, he can, in order to protect his interests seek the permission of the Court to deposit the arrears of rent as well as future rent in the court instead of running after the landlord. Though the applicant is asked to indicate briefly the circumstances in which he wants to make a deposit, there is no procedure contemplated for an enquiry into those circumstances. The section or rules do not seem to contemplate the transmission of this application to the landlord, the fixing of a date of hearing on which both the tenant and the landlord could be heard or the passing of a considered order by the court after hearing both sides and being satisfied that there was in fact a tender of rent by the tenant and a refusal by the landlord to receive the rent or a dispute regarding the ownership of the property which rendered it difficult or impossible for the tenant to send the money to the landlord straight. The notice which is sent to the landlord merely sets out that money has been deposited in the court and that the landlord is at liberty to withdraw it if he so desires. All that the landlord can do on receipt of the notice is either to withdraw the moneys deposited or stop future deposits by expressing a willingness directly to the tenant to accept direct payment of rent thereafter. On the language of the statutory provisions therefore, it is not possible to say that a deposit section 7C is necessarily a valid one preceded by an enquiry or satisfaction of the court that the condition precedent set out in section 7C( I) is fulfilled. Counsel for the petitioner submits that in Fateh Chand vs Bal Saroop Goel, [ and other cases, the Allahabad High Court has held that a deposit section 7C is not a mere formality and that before directing or permitting a deposit the court has to go into the question whether there has been a tender and a refusal. In fact, the 425 High Court has gone further and held that the Court has to go into that question, at two stages: one, when an application is presented and before issuing notice to the landlord; and the other when the landlord appears before the court and disputes the validity of the procedure sought to be invoked by the tenant. Perhaps these requirements have been read into the section on grounds of equity and natural justice. Whatever that may be, we are constrained to say that such procedure does not appear to have been followed in this case. As we have already mentioned the application in the present case gave no details in the space against column 6. Instead of setting out the circumstances in which it was alleged that the landlord had refused to receive the rent, the application barely asserted that the landlord had refused to accept the rent. There is no information as to the nature of the notice served on the landlord but it must have been only in the form of Appendix already set out. Again, though the application of the appellant under section 7 C appears to have come up before the Munsif on 11.11.1967, and the order mentions that the landlord is "absent though served sufficiently", the order is only that the landlord may withdraw the amount deposited on proper application. It does not indicate any application of mind by the learned Munsif as to whether the conditions precedent for a valid deposit section 7C were satisfied. There is certainly no finding at that stage on this vital requirement. The grant of permission to deposit under section 7C, in the circumstances of the case, cannot therefore be treated as conclusive that a valid deposit had been made under that section. Sri Kackar took up the stand that even if section 7C is interpreted as providing an opportunity to both parties and even if a clear finding is recorded in these proceedings, after hearing both parties, that the preconditions of a valid deposit under that section are satisfied, that will not constitute res judicata or take away the court 's rights in an action section 3(1)(a), of being satisfied on the evidence before it to the same effect. He relied in this context on two decisions of the Allahabad High Court. It is sufficient to refer to extract some portions from the head note of one of them, viz. Hazi Abdul Karim vs Mohd. Ismail. [1978] U.P. Rent Cases 691) P. "A finding merely on a collateral fact of jurisdiction cannot operate as res judicata in later proceedings between the same parties. It has been stated in Halsbury 's Laws of England, Third Edition (Volume XV) paragraph 367 (at page 192). It is a fundamental rule that a judgment is not conclusive to anything but the point decided, or of any matter 426 which came collaterally in question or of any matter incidentally cognizable. The principle behind this rule seems to be that even though in the previous proceedings a decision on a collateral fact about jurisdiction, wrongly given may be binding on the parties for a limited purpose i.e., only so far as those proceedings are concerned, yet it would completely defeat the ends of justice, if such erroneous decision were allowed to become final and perpetuate itself. It would be conducive to the ends of justice that in later regular proceedings the parties should not be thwarded by an earlier wrong . finding and should be afforded full opportunity of demonstrating that the condition precedent to the exercise of jurisdiction were absent. It cannot, therefore, operate as res judicata and the parties must be left free to agitate the same question again in a subsequent suit for ejectment or other appropriate proceedings. The whole scheme of Section 7 C is inconsistent with any adjudication of the rights of the parties. Under this section the learned Munsif is not required to determine the rights and obligations of the landlord and the tenant in these proceedings. All that he has to do on deposit of rent under Section 7 C (1) is to issue a notice to the landlord informing him that such deposit has been made. The deposit, made under section 7 C is by itself a neutral act and it acquires its legal completion only when F. the rights of the parties are later determined in appropriate proceedings. The deposit is thus without prejudice to the rights of the parties which ought to be determined in the appropriate proceedings. X x x x x X . . the entire scheme of Section 7 C leads to the inescapable conclusion that it is merely a tentative or provisional forum provided for the purpose of checkmating any sinister attempt on the part of the landlord for letting it appear that no rent had been actually paid to him and thereby procuring the ejectment of a tenant. It is a legal fiction operating 427 for the benefit of tenant in order to destroy a substerfuge which may unjustly result in the eviction of the tenant. A deposit, therefore, per se does not decide the rights of the parties. Its significance and legal impost actually take shape according to the tenor and upshot of other subsequent proceedings in which such rights any be actually adjudicated. For the purposes of the present case, we need not go into this larger question. In view of our conclusion regarding the scope of section 7C and our finding that, here. there was no enquiry or finding recorded in the proceedings u section 7C which could at all operate as res judicata against the landlord in the suit section 3( l)(a). Learned counsel for the appellant strongly relied on two decisions of this court in support of his contention. The first was Kaloo and others vs GauriShanker, 51. Learned counsel relied on certain passages in paragraphs 13, 19 and 23. In our opinion this decision is not of much help as the court in that case was concerned with a clear case of refusal of rent by the landlord fully justifying the deposit under section 7 C. This is cleary from various passages in the judgment particularly in paragraphs 19 and 20. The other judgment relied upon is that of this court in Kameshwar Singh Srivastava vs IV Addl. District Judge, Lucknow and others; , This was a decision under a later Act of Uttar Pradesh, namely Act 13 of 1972. Section 3() of the said Act is a provision similar to section 7 C of the Act presently in question. In this case also it was found as a fact that there had been a tender of rent to the landlord, who did not accept the same and this was held to be a complete answer in proceedings for eviction. There can be no doubt that, by virtue of section 7 C(6) a deposit properly and justifiably made under section 7 C would be deemed to be a payment of rent to the landlord himself. Once there is a proof of a valid deposit, then there can be no eviction of the tenant under section 3(1)(a) since the section equates such a deposit to a payment to the landlord, thus negativing the existence of any arrears of rent or any wilful default. But, at the same time it is necessary for the courts to ensure that the tenants do not resort to the provisions of section 7 C merely to harass the landlord. The decision in Kameshwar Singh 's case emphasises this aspect in paragraph 7: "7. We should not be understood to have laid down that the tenant should deposit rent in court instead of paying the same to the landlord. Primarily, a tenant is under a legal obligation to pay rent to the landlord as and when due and 428 if he fails to pay the same on demand from the landlord and if he is in arrears for a period of more than four months he would be liable to ejectment. Where there is a bona fide dispute regarding the landlord 's right to receive rent on account of there being several claimants or if the landlord refuses to accept the rent without there being any justification for the same, the tenant would be entitled to take proceedings under section 30 of the Act and deposit the rent in court thereupon he would be deemed to have paid the rent to the landlord, consequently he would be relieved of his liability of eviction. It does not however follow that the tenant is entitled to disregard the landlord or ignore his demand for payment of rent to him. The provisions of the Act safeguard tenants interest but it must be kept in mind that the landlord 's right to receive rent and in the event of the tenant 's being in arrears of rent for a period of more than four months, his right to evict the tenant is preserved, if the tenant makes the deposit in court without there being any justification for the same or it he refuses to pay the rent even on the service of notice of demand by the landlord, he would be liable to eviction. However, the question whether the tenant is justified in depositing the rent in court and whether deeming provision of s; 30(6) would be available to him to relieve him from the liability of eviction would depend upon facts of each case. As noted earlier on the special facts of the instant case we have no doubt in our mind that the appellant had relieved himself from the liability of eviction and he was not in arrears of rent for a period of more than four months. " This decision also, incidentally, proceeds on the basis that, despite an order section 30, it is open to the Court in the proceedings for eviction, to consider whether the deposit was a valid one or not. In the light of the above observations also, were justified, having regard to the facts and circumstances of the present case, in ordering eviction. Learned counsel for the appellant submitted that such an interpretation as we have upheld would completely render section 7 C a dead letter. This is not so. Section 7 C, as we have pointed out earlier, is only intended as a protection to the tenant to tide over a particular genuine difficulty. It enables the tenant to deposit the rent from time to time in the court so that the arrears of rent do not accummulate and he is not constrained to pay large sums of money owing to the landlord on a future date. Secondly, it safeguards the landlord inasmuch as the 429 rent from month to month is being deposited in the court and the landlord is not prejudiced by a huge accummulation of rent which he may find it later on, difficult to recover. Thirdly, it also protects the tenant in this that, if ultimately he is able to show in the eviction proceedings that the deposit was made because of the refusal of the landlord to accept the rent, it provides a complete answer to the plea of eviction under section 3(1)(a). It cannot, therefore, be said that section 7 C loses all its meaning and becomes otiose if it is interpreted in the restrictive manner above discussed. This leaves only the equities of the matter to be considered. The contention of the learned counsel for the appellant that though the landlord was aware that the rent was being deposited in the court ever since August 1967, he waited for a period of four years before issuing a notice of demand for arrears of rent is seen to be without substance. Shri Kacker has pointed out that the appellant had filed a suit (No. 786 of 1968) claiming that he had paid Rs.275 towards rent by money order and claiming refund of the same. This suit was pending till April 197 1. On 19.4.197 1, the suit was dismissed. The Third Additional Munsif, Jhansi found that the sum of Rs.275 had been paid towards rent for the period ending 30.11.1966 and that the appellant was not entitled to the refund thereof. Shri Kacker rightly points out that since the appellant had raised a plea in this suit that the sum of Rs.275 had been paid by him towards the arrears of rent due after November 1966, the landlord was disabled from instituting proceedings for eviction until this issue was decided in the suit. In other words, the delay from August 1967, when the appellant started depositing the rent in court till 1971, when the proceedings for ejectment were started, was not due to any laches on the part of the respondent but was caused on account of the pendency of the litigation instituted by the tenant. Indeed it is rather unbelievable that, after having alleged in the application under 'section 7 C that the landlord had refused to accept the amount tendered and deposited the arrears of rent in court, the tenant would have sent a sum of Rs.275 by money order on 30.11.67, as alleged. In fact the findings in that suit, incidentally, also negative the tenant 's allegation that he had sent several money orders which the landlord had refused to receive. But this aspect need not detain us as all the three courts have concurrently found that in the present case the appellant had not been able to prove that there had been a tender of the rent by him and refusal thereof by the landlord. In the result we have come to the conclusion that both in law and in equity the appellant has no case and that the ejectment suit was 430 properly decreed by the courts below. The appeal, therefore, fails and is dismissed. We, however, make no order as to costs, since the arrears of rent are available to the landlord for being withdrawn from the court P.S.S. Appeal dismissed.

^ % Section 3(1)(a) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 permits eviction of the tenant who 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 a notice of demand. When a landlord refuses to accept any rent lawfully paid to him, section 7C(l) entitles the tenant to deposit such rent in the court. Section 7C(4) requires the court to cause a notice of the deposit to be served on the landlord. Section 7C(6) provides that where a deposit has been made as aforesaid, it shall be deemed that the rent has been duly paid. The appellant tenant was in arrears of rent of the demised shop from December, 1966 to February, 1971. The amount remained unpaid despite notices dated March 22, 1971 and April 12, 1971. In the suit for his ejectment under section 3(1)(a), the tenant took the defence that he had tendered the rent to the plaintiff landlord but the latter had refused to accept it, that even the rent sent by money order was refused, and thereupon he had made the deposit in the court under section 7C(1) of the Act, and there were no arrears of rent due from him. The trial court and the first appellate court held that statutory conditions requisite for a valid deposit were not fulfilled and, therefore, the default in payment of rent within the meaning of section 3(1)(a) stood established and the tenant was liable to eviction. The High Court dismissed the appeal. In the appeal before this Court in addition to the defence taken before the courts below, it was contended that though the landlord was aware that the rent was being deposited in the court ever since August, 1967 he waited for a period of four years before issuing a notice of demand for arrears for rent. 417 Dismissing the appeal, A ^ HELD: 1. Both in law and equity the appellant had no case. The ejectment suit was properly decreed by the Courts below. [429H; 430A] 2.1 The mere fact of a deposit under section 7C.of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 in itself cannot be an answer to an action under section 3(1)(a) for eviction of the tenant for default in payment of rent. Irrespective of the fact of such deposit the tenant has to show the existence of circumstances justifying the deposit. [42tG; 423A] Brahmanand vs Kaushalya Devi, ; , referred to. 2.2 Reading section 7C, the rules framed thereunder and the statutory forms together, it cannot be said that a deposit under section 7C is necessarily a valid one preceded by an enquiry or satisfaction of the Court that the condition precedent set out in section 7C(1) is fulfilled. Though the applicant is asked to indicate briefly the circumstances in which he wants to make a deposit, there is no procedure contemplated for an enquiry into those circumstances. The statutory provisions do not contemplate transmission of the application to the landlord, the fixing of a date of hearing on which both the tenant and the landlord could be heard or the passing of a considered order by the Court thereafter and being satisfied that there was in fact a tender of rent by the tenant and a refusal by the landlord to receive the rent or a dispute regarding the ownership of the property which rendered it difficult or impossible for the tenant to send money to the landlord straight. The notice which is sent to the landlord merely sets out that the landlord is at liberty to withdraw it if he so desires. [424C F] 2.3 In the instant case, the trial court, the first appellate court and the High Court have concurrently found that there was no valid tender of rent by the tenant or refusal thereof by the landlord. The application filed by the tenant under section 7C gave no details in the space against column 6 of the form prescribed in Appendix 'A ' to the Rules framed under the Act, setting out the circumstances in which it was alleged that the landlord had refused to receive the rent. The application barely asserted that the landlord had refused to accept the rent. 'Where was no information as to the nature of notice served on the landlord. [424H; 425B C] There was no enquiry of finding recorded in the proceedings 418 under section 7C which could at all operate as res judicata against the landlord in the suit under section 3(1)(a). Though the order of the Munsif under section 7C mentioned that the landlord was absent though served succinctly, the order was only that the landlord may withdraw the amount deposited on proper application. It does not indicate any application of mind by the Munsif as to whether the conditions precedent for a valid deposit under section 7C were satisfied. There was certainly no finding at that stage on this vital requirement. The grant of permission to deposit under section 7C, in the case cannot, therefore, be treated as conclusive of the fact that a valid deposit had been made under that section. [427B; 425D E] Haji Abdul Karim vs Mohd. Ismail, [1978] U.P. Rent Cases 691, referred to. Fateh Chand, vs Bal Saroop Goel, ; Kaloo and others vs Gauri Shankar, and Kameshwar Singh Srivastava vs IVAddl. District Judge, Lucknow and others, AIR 1987 S . 138 distinguished. The contention of the appellant that though the landlord was aware that the rent was being deposited in the court ever since August, 1967 he waited for a period of four years before issuing a notice of demand for arrears of rent was without substance. The delay was not due to any laches on the part of the respondent but was caused on account of the pendency of the litigation instituted by the tenant claiming refund of a sum of Rs.275 paid towards rent. [429C D]

5579.txt

Appeal No. 131 of 1961. Appeal from the judgment and decree dated September 30, 1957, of the Kerala High Court in Appeal suit No. 19 of 1956 (T). T. N. Subramania lyer, R. Mahalingier and M.R. Krishna Pillai, for the appellant. V. A. Seyid Muhammed for the respondent. September 14. The judgment of the Court was delivered by KAPUR, J. It is not necessary for me to give the facts of this case as they are set out in detail in the 65 judgments of my learned brethern Sarkar & Hidayatullah, JJ. In my opinion this appeal should be dismissed and my reasons are these On the findings of the High Court it appears that the Bank had agreed to allow an overdraft to defendant No. 1 for Rs. 20,000/ , that the appellant gave a surety bond for the repayment of Rs. 25,000/ and when that was pointed out to defendant No. 1, the principal debtor, lie (the latter) made the alteration in the document by reducing the figure of Rs. 25,000/ to Rs. 20,000/ The case of the appellant was not that he never stood surety for defendant No. 1 but that he stood surety for Rs. 25,000/ which was subsequently altered to Rs. 20,000/ and that any change of figure was a material alteration resulting in the avoidance of the contract, even though the alteration might have been advantageous to him, the obliger. It was argued that howsoever innocent the obligee might be or howsoever innocent the alteration might have been made so far as it is material the non accepting obliger the appel lant in this case cannot be held liable on the obligation in the altered form because he never made be consented to such an obligation and he can not be held liable on the obligation in the original form because the obligation was never assented to by the creditor respondent Bank. Now an unauthorised material alteration avoids a contract so that if a promisee after a written contract has been executed materially alters it without the consent of the promisor whether by adding anything to the contract or striking out any part of it or otherwise the contract is avoided as against the person who was otherwise liable upon it (Halsbury 's laws of England, 3rd Edn., Vol. 8, para 301, p. 176). It may also be taken to be the law that even if the alteration is made by a stranger without the knowledge of the promisee the other party is discharged if the contract is in possession of the promisee or his agent. But if the contract is altered 66 by a stranger when the contract was not in the custody of the promisee the promisor is not discharged. (Halsbury 's Laws of England, 3rd Edn., Vol. 8, para 301, p. '176). There is also a further qualification and that is that if a guarantor entrusts a, letter of guarantee to the principal borrower and the principal borrower makes an alteration without the assent of the appellant then the Guarantor is liable because it is due to the act of the guarantor that the letter of guarantee remains with the principal debtor, in this case defendant No. 1, and what the principal debtor did will estop the guarantor from pleading want of authority (Williston on Contract, Vol. para 1914, P.5354). Thus the position in the present case comes to this. The appellant agreed to stand surety for an overdraft allowed by the respondent Bank to the principal debtor, Shankaran. The Bank required a guarantee in the form which was handed over to the principal debtor, Shankaran. Shankaran got it filled by the appellant for a sum of Rs. 25,000/ . The Bank did not accept the guarantee up to that limit but wanted the figure to be corrected i.e. by insertion of Rs. 20 000/ . The document was there upon handed back to the principal debtor who, it is stated, altered the document. At that stage the principal debtor was acting for and on behalf of the appellant because it was at his instance that the appellant was standing surety and the appellant handed over the deed of guarantee to the principal debtor for the pur poses of being given to the balik, the respondent. In these circumstances the avoidance of contract by material alteration is in applicable because the document was not altered while in possession of the promisee or its agent but was altered by the principal debtor who was at the time acting as the agent of the guarantor, the appellant. In these circumstances the plea of material alternation is of no avail to the appellant and the 67 appeal must therefore fail and is dismissed but no order as to costs. SARKAR, J. This appeal arises out of a suit filed by the respondent Bank against the appellant as the guarantor and one Sankaran as the principal debtor, to recover moneys advanced to the latter on an overdraft account. The suit was decreed against Sankaran by the trial Court and he never, appealed from that decree. We will, therefore, be concerned in this appeal only with the claim against the appellant. The suit against the appellant was based on a letter of guarantee dated May 24, 1947. It was stated in the plaint that by this letter of guarantee the appellant had undertaken to repay to the Bank the balance due on the overdraft account opened in favour of Sankaran, up to a maximum of Rs. 20,0001/ which was also the maximum amount for which the overdraft had been arranged. The appellant 's defence to the suit was that he had agreed to guarantee the liability of Sankaran on the overdraft up to Rs. 5,000/ and had signed the letter guaranteeing thereby repayment up to that sum but the letter had been altered .without his consent by substituting Rs. 20,000/ for Rs. 5,000/ . The appellant contended in the courts below that as this was a material alteration of the instrument of ' guarantee. he was absolved of ill liability on it. The trial court found, that the amount guaranteed had originally been mentioned in the letter as Rs. 25,000/ and this had been altered without the consent of the appellant to Rs. 20,000/ . It observed that as it was not disputed that the alteration was material, the suit against the appellant had to be dismissed and passed a decree accordingly, obviously in the view that the alteration had avoided the instrument. The respondent Bank then appealed to the High Court of Kerala, the High Court agreed with the trip 68 court that the letter of guarantee originally mentioned Rs. 25,000/ and this figure was later altered to Rs.20,000/ without the consent of the appellant. It .added that probably the alteration had been made by the principal debtor, Sankaran. It however held that the appellant had mentioned Rs. 25,000/ in the place of Rs. 20,000/ in the letter probably by a mistake and that the alteration had been made in order to carry out the common intention of Sankaran, the appellant and the Bank that for the overdraft accommodation of Rs. 20,000/ allowed to Sankaran the appellant would give a letter of guarantee to the Bank. In this view of the matter the High Court, relying on the principle contained in section 87 of the , passed a decree against the appellant. The appellant has come up to this Court in appeal against the judgment of the High Court. Unfortunately, the Bank, for reasons unknown to us, has not appeared in this appeal. Dr. Seiyid Muhammed argued the case for the Bank at our request and has rendered us great assistance. Now, the provision of the on which the High Court relied in terms applies to a negotiable instrument which a letter of guarantee is not. The principle of that provision may however be of wider application. That principle has been formulated in Halsbury 's Laws of England, 3rd edn., vol. 11, p. 370, in the following words : "An alteration made in a deed, after its execution, in some particular which is not material does not in any way affect the validity of the deed;. . . It appears that an alteration is not material . . . 'Which carries out the intention of the parties already apparent on the face of the deed. It is now well settled that, this principle applies to instruments under hand also : see ibid 69 p. 380, f. n. (c) and Master vs Miller, (1791) 4. Term Rep. 320. The question then is, was the alteration in the letter of guarantee of the kind contemplated by this principle. The learned judges of the High Court thought it was and so held that the letter of guarantee as altered could be enforced. I am unable to accede to that view. It seems to me that the intention to carry out which an alteration is permissible under the rule on which the High Court has relied, is the intention with which the instrument was executed. That is why in formulating the rule it has been stated in Halsbury 's Laws of England that the intention has to be "already apparent on the face of the deed". I need only refer to the observation of Le Blanc, J., in Knill vs Williams(1) in support of this proposition, "If I had thought that there was any evidence on which the jury might have found that the words afterwards added had been originally intended to have have been inserted, and were omitted by mistake, I 'Should certainly have left it to them so to find; the case of Kershaw vs Cox(2) being then fresh in my mind; but. according to my recollection of the evidence, it was impossible for them to draw that conclusion from it. The opinion which I delivered in Karshaw vs Cox can only be supported on the ground that the alteration there made in the bill the day after it was negotiated was merely the correction of a mistake made by the drawer of it, in having omitted the words, 'or order ', which it was intended at the time should be inserted. " The two cases on which the learned judges of the High Court relied are also cases where the mistake was in writing the instrument. In Lachmi Rai vs Srideo Rai(3) it was found that "the omission regarding the payment of interest was accidental" and in Ananda Mohan Saha vs Ananda Chandra Naha(4) where (1) ; (1809) 10 East. 931; (2) 3 Esp. N. Cas. 246. (3) A. I. R. 1939 All. (4) (1916) 1. L. R. 70 the instrument originally provided for interest on 'a loan of Rs. 200/ at Rs. 1/ per mensem and had been altered by the addition of the words "per cent", ' it was said "that it was the intention of the parties, as ' it seems to me to be obvious upon reading the document, that interest was to be paid at the rate of 'one rupee per cent. per mensem". It seems to me that if it were not so and the intention contemplated in the rule could be gathered from a pre existing agreement alone without caring to find out the intention with which the instrument was executed, then there would be no justification for the rule. It would then warrant the alteration of an instrument intentionally written in variance with the pre existing agreement which a person was in law free to do, by the other party to it. That would amount to making a new contract out of a written instrument by unilateral action and in disregard of the intention of the writer. For such a position our laws make no provision. It may be that a person who writes a document in terms which deliberately depart from the agreement pursuant to which it is written, may be liable on that agreement but he cannot be made liable on the document as altered by the other party to the agreement alone even though such alteration makes the document consonant with the agreement. Now there is absolutely no evidence in this case that in writing the letter of guarantee the appellant had intended to mention the maximum amount of guarantee as Rs. 20,400/ and had by mistake written Rs. 25,000/ instead. In holding that there was such a mistake, the High Court proceeded purely on the basis of conjecture which is evident from the language used by it. It said, "probably defendent 2" (the appellant) "made a mistake in Ext. C" (the letter of guarantee). There was not the slightest warranty for; this conjecture. In fact the evidence indicates that Rs. 25,000/ had been mentioned intentionally in the letter of guarantee. That evidence was given by the 71 Banks agents too. , He said that the overdraft arrangement commenced on February 24, 1947, when Sankaran executed a promissory note for Rs. 20,O00/ in favour of the Bank. At that time the appellant was not available to sign the letter of guarantee. The letter was typed by the Bank with blank spaces left for entries to be made by the guarantor regarding the maximum limit of the account, the rate of interest, and the date. Sankaran brought this letter back to the Bank in May 1947. At that time the space for the amount of the limit was filled up with the figure Rs.25,000/ . Sankaran said that he required Rs.25,000/ and would renew the promissory note for that amount. The Bank was not prepared to advance to him more than Rs. 20,000/ and so the letter of guarantee was returned to Sankaran who then took it away and brought it back some time later with the amount of the maximum limit corrected to Rs. 20,000/ . This is all the evidence on the question. I think it right to point out here that the Bank 's agent did not speak to any oral agreement with the appellant, nor indeed to any interview with him concerning the overdraft arrangement or the guarantee. The appellant in his written statement no doubt admitted that he had agreed to guarantee the due repayment of the overdraft up to Rs. 5,000/ . He did not however say that the agreement was verbal but mentioned the letter of guarantee. The appellant 's admission can of course be taken against him but it must be taken as made and not a part of it only. Again, no verbal agreement concerning the guarantee had been pleaded anywhere by the Bank, not even in the application that it filed in answer to the. written statement of the appellant alleging that the letter of guarantee, having been materially altered no suit lay on it. , Lastly, I have to observe that the trial court did not find,that any such oral agreement had been made. If there ' had been any agreement, the letter of guarantee as typed. out would have contained no blanks. 72 In these circumstances it is impossible to hold that there was any prior agreement about the guarantee or its limit, between the appellant and the Bank, and if there was not, the High Court 's view that in the letter of guarantee Rs. 25,000/ had been mentioned by mistake, would lose its foundation. But even assuming a preexisting verbal agreement and in this case the agreement, if any, could only be verbal the fact that Sankaran made a request that the amount of the overdraft should be increased to Rs. 25,000/ would rather indicate that the letter of guarantee had intentionally stated Rs. 25,000/ as the amount of guarantee and this figure had not been written by any mistake. It would be impossible to hold on this evidence that there had been any mistake in writing the letter of guarantee. The evidence does not prove any pre existing agreement and tends to prove that there ha been no mistake in writing the letter of guarantee even if there was an agreement. Therefore it seems to me that the High Court was in error in thinking that the alteration in this case had been made to carry out the intention of the parties. The principle underlying section 87 of the has no application to the facts of this case. Dr. Seiyid Muhammed, however, put the matter from another point of veiw. He said that in order that an alteration in an instrument made without a party 's knowledge might be avoided against him that alteration had to be material and in support of it he referred us to a passage in Halsbury 's Laws of England 3rd Ed., vol. 11, p. 380. He then said that no alteration could be material unless it was to the prejudice of a party. He pointed out that the alteration in the present case had reduced the limit of the appellant 's liability from Rs. 25,000/ to Rs. 20,000/ and it was not therefore a material alteration. Hence he contended that the letter of guarantee had not been avoided by the alteration. I do not think that this contention assists the Bank at all. I will assume that an alteration in an 73 instrument which is not to the prejudice of a party to it is not a material alteration and does not release him from his liability under the instrument. This rule however does not make the instrument as altered binding on that party. If it did, that would amount to changing by unilateral action the terms of a contract made by common consent or to changing the terms of an offer made by one without his consent. As I have earlier said, none of these things can be done under our law. I may add that I have not been able to find any authority laying down that in such a case the altered instrument would be binding. All that we would get in this case if Dr. Seiyid Muhammed is right, is that the alteration might be ignored and, the instrument in its original form might be considered as existing unaffected by the alteration. In the present case, therefore, we would have a letter of guarantee written by the appellant undertaking to repay the balance due by Sankaran on the overdraft account up to a limit of Rs. 25,000/ . What then ? The suit is not on a contract to guarantee up to Rs. 25,000/ . Indeed according to the Bank 's pleading and evidence there never was any agreement for such a guarantee between it and the appellant. The letter, therefore cannot be considered as evidence of such a contract. Further the evidence to which I have already referred proves that as an offer, the letter was not accepted by the Bank. In fact the letter in its original form is of no assistance to the Bank at all in this case, it neither proves a guarantee for Rs. 25,000/ nor for Rs. 20,000/ . But it is said that the letter contained an enforceable contract as it was supported by consideration which had already moved from the Bank, namely, the advance made to Sankaran before the date of the letter and the promise to make further advances. Then it is said that inadequacy of consideration does not avoid a contract as stated in Explanation 2 of section 25 of the Contract Act, 1872, and therefore the Bank 's undertaking 74 to advance upto Rs. 20,000/ could support the appellant 's promise to guarantee up to Rs. 25,000/ . But it is not the Bank 's case that there was such a contract of guarantee. Its case was that the contract of guarantee was for Rs. 20,000/ . That contract is not supported by the letter on which alone the suit is based. If there was no contract as stated in the letter then. no question of consideration to support it can possibly arise. Therefore, it seems to me that the. contention that the alteration was immaterial and did not affect the instrument so far as the appellant is concerned is to no purpose in the present case. The position may then be thus stated. We have, a suit against the appellant based on a written contract to guarantee repayment of Sankaran 's dues to the Bank up to Rs. 20,060/ . There is no evidence of, any verbal contract of guarantee. The appellant ' wrote a letter guaranteeing repayment of those dues up to Rs. 251000/ . Sankaran also signed this letter but that signature is of no consequence to the question of guarantee which alone arises in this appeal for Sankaran could not guarantee his own debit and his signature would therefore only be evidence of his liability for the amount advanced to him by way of overdraft. Such liability, however, he had already undertaken by executing a promissory note for Rs. 20,000/ in favour of the Bank. His signature on the letter of guarantee therefore made no difference in the legal relations that have to be considered in this appeal. Returning now to the letter of guarantee Written by the appellant, the Bank refused to accept that letter and, therefore, on the Bank 's own case no contract on its terms was ever made. That letter was altered without the consent of the appellant probably by Sankaran by substituting Rs. 20,000/ for Rs. 25,600/ . If the alteration was without the appellant 's consent, it could not have been authorised by him; if it had been, consent would be implied. There is further neither evidence, nor pleading nor 75 finding of any such authority. The altered document is not binding on tile appellant, for the alteration had not been made to carry out the intention of the: parties in the alteration is ignored, then the document creates no liability in the appellant, for the Bank refused to accept a guarantee on the terms Contained in the document before it was altered. Further, the contract sued upon is different from the contract which might, have been made by the document as it stood before the alteration. The unaltered document cannot establish the contract sued upon. The conclusion to which I arrive then is that the suit against the appellant as framed must fail. I would, therefore, allow the appeal with costs here and below and dismiss the suit against the appellant. HIDAYATULLAH,J. I have had the advantage of ' reading the judgment prepared by my brother Sarkar. In my opinion, and I say it with great respect, this appeal must fail. I shall give my reasons briefly. The facts of the case are simple. The suit, out of which this appeal arises, was filed by the Thomco 's Bank Ltd, Trivandrum, (to be called in this judgment the 'Bank ') against V. Sankaran (the principal Debtor) and N. section Anirudhan (the surety and appellant before us). The suit was based against V. Sankaran on a promissory note executed by him in favour of the Bank on February 24, 1947, (Exhibit B) and against the present appellant on a letter of guarantee dated May 24, 1947. In so far as Sankaran has not appealed against the decree passed against him we need not mention the facts leading up to the promissory note which was prior in time. Anirudhan in defending himself stated that the letter of guarantee was for Rs. 5,000 and that it had been altered without his knowledge and consent in a sum of Rs. 20,000/ . The letter of guarantee is Exhibit C and the original does show two corrections in the figures as well as the written words mentioning the amount. Figure "5" in the amount of Rs. 25,000/ in figures appears to have been 76 altered to "O"; and in the words "Rupees twenty five thousand" the word "five" has been struck out. The appellant 's case that 5,000 in figures was altered to 20,000/ by the addition of the figure "2" and the alteration of the figure "5" into "O" and the corresponding change in the words by the addition of the words "twenty" and the scoring out of word "five" has not been believed. Thus the case made out by Anirudhan has not been accepted. The correction. however, is patent and the question that has arisen in this case is whether by the alteration of the letter of guarantee the surety is discharged. The finding of the High Court is that there was no prior oral agreement between the Bank and Anirudhan. This letter, as is obvious from the dates, was give after the loan had already been made. The contention of the Bank was that when Sankaran brought this letter and asked for additional loan of Rs. 5,000 the Bank refused to advance any further amount and declined to accept this letter of guarantee for Rs. 25,000 lest the Bank might be compelled to loan a further sum of Rs. 5,000. Sankaran then took back the letter and after some time brought it back with the figure "5" changed into "O" and the word "five" scored out. These corrections were not initialled either by Sankaran or by Anirudhan. The Bank, however, accepted this letter and kept it and sued Anirudhan upon it. The question is whether Anirudhan 's liability is discharged by the alteration in the document which alteration is not proved to have been made either by him or with his knowledge or consent. It is conceded and indeed it is the law that only a material alteration makes a document void. It is also the law that if the custodian of the document makes or allows an alteration to be made while the document is in his custody he cannot sue upon it because it is his duty to preserve the document in the state in which he got it. In the present case, the 77 document was not altered by, Bank nor with the Bank 's consent or connivance while the document was in. its custody. The document was apparently altered either by Anirudhan or by Sankaran or by both. If it was altered by Anirudhan, or by him and Sankaran together, the document still remains the document of Anirudhan and the suit of the Bank based upon it is competent against him. If it was altered by Sankaran the question is whether the alteration was a material alteration to make it void against Anirudhan. The High Court is of the opinion that it was not material. I am inclined to accept the conclusion of the High Court. Anirudhan by the letter to the Bank wished to guarantee an overdraft of Sankaran not exceeding Rs. 25,000/ . His case that it was Rs. 5,000/ and not Rs. 25,000 has been disbelieved. The document was originally written for an amount of Rs. 25,000/ which was reduced to Rs. 20,000/ 1 will assume, by Sankaran and the letter of guarantee was accepted by the Bank. The question is whether by the reduction of the amount of the guarantee Anirudhan can say that the document executed by him has been materially altered and his liability is at an end. In my judgment, in the present case it cannot be said. The document still continues to represent what was intended by Anirudhan. That intention was to guarantee a loan up to Rs. 25,000/ which includes the sum for Rs. 20,000/ for which the guarantee now stands. The question is whether Anirudhan can say that this guarantee is at an end. There are really two defences open to Anirudhan the surety. The first is that he had offered to stand surety on certain terms and as those conditions have been altered he is discharged from any liability. The second also depends on the alteration and it is that a document executed by him has been materially altered and is therefore void. This is a plea of non est factum. Both the arguments rest upon the alteration of the contract into which Anirudhan wished to enter. A surety is considered a "favoured debtor" and his 78 liability is strictissimi juris. Lord Westbury, L.C., in Blest vs Brown (1) stated this liability in the following words: "It must always be recollected in what manner a surety is bound. You bind him to the letter of his engagement. Beyond the proper inter pretation of that engagement you have no hold upon him. He receives no benefit and no consideration. He is bound, therefore, merely according to the proper meaning and effect of the written engagement that he has entered into. If that written engagement is altered in a single line, no matter whether the alteration be innocently made, he has a right to say, " 'The contract is no longer that for which I engaged to be surety; you have put an end to the contract that I guaranteed, and my obligation, therefore, is at ail end. " It is not necessary to go into the fact of that case where the surety guaranteed fulfilment of a contract for the supply of, flour to a banker who in his turn had undertaken to supply bread to Government. The case turned upon stipulations by the Government and their breach and the decision cannot be regarded a ,direct authority, apart from the general observation, in the present case. The statement of the law in Blest vs Brown (1) Was considered by the Court of Appeal in Holme vs Brunskill (2) in an appeal from a judgment of Denman, J. (later Lord Denman). Cotton, L.J., stated the law in these words: "The true rule in my opinion is, that if there is any agreement between the principals with reference to the contract guaranteed, the surety ought to be consulted, and that, if he has not consented to the alteration, although in cases where it is without inquiry evident that the alteration is unsubstantial, or that it cannot be otherwise than beneficial to the surety, the surety may not be discharged; ), Yet, that if it is not self evident that (1) ; (1862) 4 De G. F. & J. 365 ; (2) 79 the alteration is unsubstantial, or one which cannot be prejudicial to the surety, the Court will not, in an action against the suerty, go into an inquiry as to the effect of the alteration. . " To this statement of the law, must be added the 'dissent of Brett, L.J., who stated that the surety in that case was not raleased observing that the doctrine of release of sureties was carried far enough and that lie would not carry it any further. There is noticeable a difference between the strict rule stated by Lord Westbury and that stated by Cotton L. J., and the law now accepts that unsubstantial alteration which are to the benefit of the surety do not discharge the surety from the liability. Of course, if the alteration is to the disadvantage of the surety, or its unsubstantial character is not self evident the surety can claim to be discharged. The Court will not then inquire whether it in fact harmed the surety. That dictum of Cotton L. J., was quoted with approval by the Judicial Committee in ward vs The National Bank of Neu Zealand. Limited (1). Other cases in which a similar liberal view is taken are mentioned in these two decisions. Before I examine the position of Anirudhan with regard to the law applicable to sureties, I wish to refer to the law relating to the alteration of documents. These two matters really go together in this case. Here, again, the strict rule at one time was that the slightest alteration makes the document void. The leading case for a long time was Pigot 's case (2) where Lord Coke stated the doctrine as follows: "These points were resolved: 1. When a lawful deed is raised, whereby it becomes void, the obligor may plead non, est factum, and give the matter in evidence, because at the time of the plea pleaded, it is not his deed." "Secondly, it was resolved, that when any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity (1) , (2) 11 Co.Rep.26 b;77E.R.177. 80 of the obligee, be it by interlineation, addition, raising, or by drawing of a pen through a line, or through the midst of any material word, that the deed thereby becomes void . so if the obligee himself alters the deed by any of the said ways, although it is in words not material, yet the deed ,is void: but if a stranger, without his privity, alters the deed by any of the said ways in any point material, it shall not avoid the deed. " The passage is also to be found in an article "Discharge of Contracts by Alteration" by Williston in 18 Harvard Law Review, p. 105. The strictness of this rule was tempered in subsequent cases and was departed from in Aldous vs Cornwell (1) where Lush, J. (speaking for Cockburn, C. J., Blackburn, J., and himself), after referring to numerous authorities,observed "This being the state of the authorities, we think we are not bound by the doctrine of Pigot 's case or the authority cited for it; and not being bound. We are certainly not disposed to lay it down as a rule of law that the addition of words which cannot possible prejudice any one, destroys the validity of the note. It seems to us repugnant to justice and common sense to hold that the maker of a promissory note is discharged from his obligation to pay it because the holder has put in writing on the note what the law would have supplied if the words had not been written. " What is said here about an addition or alteration of a promissory note was prior to the enactment of the rule in Bills of Exchange Act in England which has altered the law with regard to negotiable instruments but the observations apply forcefully to a document of the type we have where there were. two executants (one being the debtor and the other his surety and the debtor has not increased but reduced the amount of his own liability as well as that of his (1) 81 surety. That immaterial alterations do not matter is borne out by the observation of Swinfen Eady, J., in Bishop of Creditor vs Bishop of Exeter (1) where Pigot 's case(2) and the earlier statement of the law in Sheppard 's Touchstone, 7th ed. (Preston 's), p. 55. , were not accepted. During the course of the argument Swinfen Eady, J., referred to cases in which corrections in the testimonium of documents to accord them with existing facts were held not to be material alterations. The question before me is whether a document jointly executed by two persons creating a liability equal for both is to be regarded as materially altered if the liability is reduced equally for both but the alteration is made only by one of them. In my opinion, such an alteration must be regarded as unsubstantial and not otherwise than beneficial to the surety and it cannot attract the strict rule stated by Lord Coke or that stated by Lord Westbury in the cited cases. me give an example: If A places an order with a trader for supply on credit of ten bags of wheat and B endorsed the order by writing, "I guarantee payment up to ten bags", can it be said that 'the guarantee by B is dissolved when A takes the note and finding that the tradesman has only six bags of wheat in stock, corrects his order as well as the endorsement by altering "ten ' into 'six '? In my opinion, to such a correction neither the one rule nor the other can apply. The strict rule of law which was brought to our notice from the well known Suffell 's Case(3), where a Bank of England note was mutilated and its number destroyed, depended upon its special facts. The number of the Bank of England note was considered its vital part and the alteration a material alteration. Suffell 's Cage(3) was not followed by the Privy Council in a case where a bank note issued by bank which was only a contract and not currency, as in the other case, was destroyed because the owner had forgotten that the note was in the pocket of a garment and the garment had been washed. The (1) (2) ; ; (3) 82 note was reconstructed and showed the contract but not the number. The Privy Council held the bank liable even though the contract had been Altered by eraser (see Hong Kong and Shanghai Banking Corporation vs Lo Lee Khi(1). These cases establish that both the limbs of the argument which Anirudhan can raise are not vali in the circumstances of this case. In my judgment, the particular document in this, case cannot be said to have been materially altered, because. it has not been altered in such a manner as to change its nature. The alteration does not save the surety from liability arising under it. The alteration was made by a co executant who reduced not only his own liability but that of the surety also. indeed, the surety himself under stood the law to be this because he set up the case that the document originally guaranteed an overdraft of Rs. 5,000/ but was altered to guarantee an overdraft of Rs. 20,000/ . This case has been proved false and he never set up the case that the document was void because the amount was reduced from Rs. 25,000/ to Rs. 20,000/ . It does not lie in the mouth of Anirudhan. to say the he meant. to guarantee 25,000/ but. not Rs. 20,000/ because he never went to the Bank and made this a condition of the agreement. Now he cannot say that the document has; become void against him or that the contract which had emerged by the Bank 's acceptance of the document as altered does not bind him. There is no need, in my opinion, to consider whether there was a prior oral agreement or not. I agree there is no proof of such an agreement. The letter of Anirudhan to the Bank was based on a consideration which had already moved to Sankaran and which Anirudhan wished to guarantee. Even if treated as an offer by Anirudhan to the Bank, the Batik accepted the amended offer and Sankaran must be deemed to have had the authority to reduce the amount, (1) ; 83 though not to increase it. The document was altered while in the possession of the very person who, as the agent of Anirudhan, brought it to the Bank on both the occasions. Anirudhan must be deemed to have held out Sarikaran as his agent for this purpose and this creates an estoppel against Anirudhan, because the Bank believed that Sankaran had the authority. The offer thus remains in its amended form an offer of Anirudhan to the Bank and the Bank by accepting it turned it into a contract of guarantee which was backed by the past consideration on which the offer of Anirudhan was originally based. In my opinion, the appeal must fail. I would, therefore, dismiss it. By COURT : In accordance with the opinion of the majority, the appeal is dismissed. There would be no order as to costs. Appeal dismissed.

The appellant agreed to stand surety for an overdraft allowed by the respondent Bank to section A blank form of guarantee was given by the Bank to S, who then had it filled up by the appellant stating the maximum amount which he guaranteed as Rs. 25000/ . When S brought the letter of guarantee duly signed by the appellant and himself to the Bank the latter refused to accept the guarantee up to that limit as it was not prepared to give S accommodation for a larger sum than Rs. 20000/ and wanted it to be limited to Rs. 20000/ . S then made alterations in the letter with the amount of the maximum limit corrected to Rs. 20000/ and gave it to the Bank. In a suit instituted by the Bank against the principal debtor, S, and the appellant on the basis of the contract of guarantee for Rs. 20000/ , the appellant pleaded that as the document was altered without his knowledge or consent, he was discharged from his liability. Held, (per Kapur and Hidayatullah, JJ., Sarkar, J., dissenting), that the appellant was not discharged from his liability under the contract of guarantee. 64 per Kapur, J. S was acting for and on behalf of the appellant since it was at his instance that the appellant was standing surety and the appellant handed over the deed of guarantee to S for the purpose of being given to the Bank. The plea of avoidance of contract by material alteration was of no avail to the appellant because the document was not altered while in possession of the promisee but was altered by S who was at the time acting as the agent of the appellant. per Sarkar, J. The suit against the appellant as framed must fail. The altered document was not binding on the appellant, for the alteration had not been made to carry out the intention of the parties. If the alteration, is ignored as immaterial, then the document creates no liability in the appellant, for the Bank refused to accept a guarantee on the terms contained in it before it was altered and therefore there was no contract made between the parties by the document. Further, the contract sued upon is different from the contract which might have been made by acceptance of the document as it stood before the alteration. The unaltered document cannot establish the contract sued on. per Hidayatullah, J. The document in this case could not be said to have been materially altered because it was not al tered in such a manner as to change its nature. The alteration was made by a co executant who reduced not only his own liability but that of the surety also. The document was altered while in the possession of S, the very person who, as the agent of the surety, brought it to the Bank. The surety must be deemed to have held out S as his agent for this purpose and this created an estoppel against the surety because the Bank believed that S had the authority. Accordingly, the alteration of the document did not save the surety from liability under it.

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Civil Appeal No 1 543 of 1974. Appeal by special leave from the Judgment and order dated the 30th July, 1974 of the Allahabad High Court in Second Appeal No. 2973 of 1972. S.V. Gupte, J. P. Goyal, P. C. Gupta and G. section Chatterjee for the appellant. M.K. Ramamurthi and O.P. Rana for Respondent No. 1. D.P. Mukherjee for Respondents 3 5. 1010 The Judgment of H. R. Khanna and section Murtaza Fazal Ali, JJ. was delivered by Fazal Ali, J., P. N. Bhagwati, J. gave a separate opinion. FAZAL ALI, J. This appeal by special leave is directed against the judgment of the Allahabad High Court affirming the decree of the First Additional Civil & Sessions Judge, Muzaffarnagar by which the plaintiff/respondent 's suit for injunction was decreed. The appeal arises in the following circumstances. The appellant which is the Executive Committee of Vaish Degree College in the District of Muzaffarnagar was registered under the Registration of Cooperative Societies Act as an institution for imparting education. The affairs of the College were managed by the Executive Committee of the Vaish College which is the appellant in this case. In the year the Vaish Degree College was affiliated to the Agra University and as a consequence thereof the College agreed to be governed by the provisions of the Agra University Act and the statutes and ordinances made thereunder. With the establishment of the Meerut University some time in the year 1965 the Vaish Degree College got affiliated to the Meerut University. The plaintiff/respondent was appointed as Principal of the College on permanent basis with effect from July 1, 1964 and his appointment as Principal was formally approved by the Vice Chancellor of the Agra University. Two years later it appears that differences arose between the Executive Committee of the College and the plaintiff/respondent resulting in allegations and counter allegations and culminating in a notice served by the Executive Committee on October 24, 1966 on the plaintiff/respondent directing him not to discharge the duties of the Principal and another letter was sent to defendant No. 4 a member of the staff of the College to officiate as Principal in place of the plaintiff/respondent. This was fol lowed up by a counter notice by the plaintiff/respondent to the Executive Committee that the notice sent to him was illegal and the respondent also asked defendant No. 4 not to assume charge of the Principal. On March 12, 1967, the Executive Committee by a resolution terminated the services of the plaintiff/respondent with effect from October 24, 1966 and this resolution was amended by another resolution on March 29, 1967. Even before the formal resolution terminating the services of the plaintiff/respondent was passed it appears that the plain tiff had filed the present suit on October 28, 1966 before the Court of the First Additional Civil & Sessions Judge, Muzaffarnagar which was transferred for disposal to the Court of the Munsif, Kairana. The plaintiff 's case was that on being affiliated to the Agra University and thereafter to the Meerut University and adopting the provisions of the Acts and the statutes of the said Universities the appellant College became a statutory body and had no jurisdiction to terminate the services of the plaintiff/respondent without seeking the previous approval of the Vice Chancellor. The plaintiff further submitted that after his appointment he entered into an agreement with the Executive Committee in accordance with the statutes of the University and 1 appellant was bound by the terms and provisions of the statutes under 1011 which his services could not be terminated without the previous approval of the Vice Chancellor. The plaintiff therefore contended that his removal from service was without jurisdiction and he must be deemed to have continued in service. He also made some allegations of bias and mala fides against the Executive Committee and some other persons with which we are not concerned in this appeal. The plaintiff accordingly prayed for an injunction restraining the defendants from interfering with his duties as the Principal of the College. It appears, however, from the record that after the notice given to the plaintiff / respondent by the Executive Committee the plaintiff was bereft of all his powers and in spite of his attempts to get into the College and work as Principal he was not allowed to do so which led to some criminal proceedings also. It is, therefore, clear that at least after the resolution of the Executive Committee was passed termination the services of the plaintiff he has not been working as Principal of the College uptil now. This position is not disputed before us by counsel for the parties. The defence was that the Executive Committee was not a statutory body and therefore was not bound by the statutes and the provisions of the University Acts although as a matter of convention it had agreed to follow the same. The defendant/appellant also denied the allegations of the plaintiff/respondent that the Executive Committee had entered into any agreement or contract of service with the plaintiff/respondent. The defendant further alleged that as the plaintiff/respondent remained habitually and perpetually absent from his duties without the permission of the concerned authority the defendant/appellant was compelled to dispense with the services of the plaintiff/respondent. In fact the plea taken by the defendant was that the plaintiff himself by his remaining perpetually absent from duties abandoned the service and had put an end to the contract of service and therefore he could not be heard to say that the contract of service still subsisted. The Trial Court of Munsif, Kairana, framed a number of issues and after considering the evidence and the circumstances, found (i) that the plaintiff had failed to prove that he ever executed any agreement with the defendant/appellant; and (ii) that the defendant/appellant was not a statutory body and therefore was not bound by the provisions of the University Acts or the statutes made thereunder. The learned Munsif therefore found that a case for declaration or injunction had not been made out and he accordingly dismissed the suit of the plaintiff. The plaintiff/respondent went up in appeal against the judgment and decree of the Munsif and the appeal was heard by the First Additional Civil & Sessions Judge, Muzaffarnagar, who by his order dated December 3, 1971, reversed the decision of the Munsif and decreed the plaintiff 's suit and granted the injunction prayed for. lt may be noticed that so far as the plea of the plaintiff/respondent that be had executed an agreement with the Executive Committee of the College which formed the basis of the terms of his contract of service was concerned the learned Additional Civil & Sessions Judge also affirmed the finding of the Munsif on this point and held that there was no such 1012 agreement. Even before us this finding was not disputed by the learned counsel for the plaintiff/respondent who has proceeded on the assumption that there was no agreement executed between the plain tiff and the defendant as alleged by the plaintiff. The defendant/appellant filed a second appeal hl the High Court of Allahabad against the decision of the First Additional Civil & Sessions Judge decreeing the plaintiff 's suit. The matter was heard by a single Judge who, however, referred the case to a Full Bench framing the following issue: "Can the Civil Court grant the relief of injunction in view of the facts and circumstances of the present case ?" Consequently the matter was placed before the Full Bench of the Allahabad High Court which after hearing the arguments decided the following points in favour of the plaintiff/respondent: (1) That the defendant/appellant being a statutory body was bound by the provisions of the University Acts and the statutes made thereunder and therefore the termination of the services of the plaintiff/respondent without obtaining the sanction of the Vice Chancellor was illegal & invalid; and (2) That in the facts and circumstances of the case, the plaintiff/respondent was entitled to the injunction as prayed for. The case then came back before the Single Judge who in view of the decision of the Full Bench affirmed the decree of the First Additional Civil & Sessions Judge decreeing the plaintiff 's suit with the modification that the suit was decreed only against defendants 2, 4, 6 & 7 but dismissed as against defendants 1 & 5. Hence this appeal by special leave before us. Mr. Gupte learned counsel for the appellant submitted before us that it was not necessary to go into the complicated facts of the case, because he adumbrated three propositions of law before us which in his opinion were sufficient to decide the case. In the first place it was contended that the finding of the Full Bench which formed the basis of the judgment of the High Court appealed against that the defendant/appellant was a statutory body was legally erroneous; secondly the counsel submitted that even if the appellant was a statutory body as no agreement was executed between the respondent and the appellant the statutes passed by the University would not apply and the termination of the services of the respondent would be governed by the usual master and servant relationship; and thirdly, it was contended that it is well settled that the courts do not enforce a contract of personal service in the absence of special circumstances as laid by several decisions of this Court, and the case in hand does not fall within any of the exceptions laid down by this Court. Mr. Ramamurthi learned counsel for the respondent rebutted the arguments of Mr. Gupte and supported the judgment of the Full Bench of the Allahabad High Court that the appellant was a statutory body 1013 and therefore the termination of the services of the respondent was legally invalid. It was further contended that in view of the decision of this Court in Sirsi Municipality vs Kom Francis the scope of the exception laid down by this Court in various cases has been extended even to include within its fold non statutory bodies provided they are public or local bodies which the appellant/defendant was undoubtedly one. Lastly it was submitted that once it is established that the termination of the services of the respondent was legally invalid inasmuch as the sanction of the Vice Chancellor was not obtained, the declaration that the plaintiff/respondent continued in service and injunction prayed for must be granted as a matter of law. In the course of the arguments, however, the learned counsel for the appellant also suggested that the relief of injunction or declaration being an equitable relief and in the discretion of this Court this was not a fit case in which this discretion should be exercised in favour of the plaintiff/respondent. We would first deal with the important question, which has been the sheet anchor of the arguments of the learned counsel for the respondent as also the main basis of the judgment of the Full Bench of the Allahabad High Court, as to whether or not the appellant Executive Committee can be said to be a statutory body in the circumstances of the present case. It seems to us that before an institution can be a statutory body it must be created by or under the statute and owe its existence to a statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a statute but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which though not created by or under any statute have adopted certain statutory provisions, but that by itself is not, in our opinion, sufficient to clothe the institution with a statutory character. In Sukhdev Singh & Ors. vs Bhagatram Sardar Singh Raghuvanshi & Others this Court clearly pointed out as to what constitutes a statutory body. In this connection my Lord A. N. Ray, C.J., observed as follows: "A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the statute. It is a body created in accordance with the provisions of the statute. " It is, therefore, clear that there is a well marked distinction between a body which is created by the statute and a body which after having come into existence is governed in accordance with the provisions of the statute. In other words the position seems to be that the institution concerned must owe its very existence to a statute which would be the fountain head of its powers. The question in such cases to be asked is, if there is no statute would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body, but if the institution has a separate existence of its own without any 1014 reference to the statute concerned but is merely governed by the statutory provisions it cannot be said to be a statutory body. The High Court, in our opinion, was in error in holding that merely because the Executive Committee followed certain statutory provisions of the University Act or the statutes made thereunder it must be deemed to be a statutory body. In fact the Full Bench of the High Court relied on three circumstances in order to hold that the Executive Committee was a statutory body, viz., (i) that it was affiliated to the Agra University which was established by the statute; (ii) that there were certain mandatory provisions in the Agra University Act which were binding on the Executive Committee; and (iii) that the Executive Committee was governed by the statutes framed by the Agra University. In our opinion, none of these factors would be sufficient to alter the character and nature of the Executive Committee and convert it into a full fledged statutory body. To begin with the Executive Committee had an independent status having been registered under the Registration of Co operative Societies Act and was a self governed or an autonomous body. It was affiliated to the Agra University merely for the sake of convenience and mainly for the purpose that the courses of studies prevalent in the College may be recognised by the University. Statute 11 A of the Agra University Hand Book (1965 66) runs thus: "Each College already affiliated or when affiliated, which is not maintained exclusively by Government must be under the Management of a regularly constituted Governing body (which term includes Managing Committee) on which the staff of the college shall be represented by the Principal of the college and at least one representative of the teachers of the college to be appointed by rotation in order of seniority determined by length of service in the college, who shall hold office for one academic year. " All that the statute of the Agra University required was that the Managing Committee of the College must co opt the Principal of the College and one representative of the teachers of the college by rotation as members of the Committee. It is manifest that by co opting these members the Managing Committee did not lose its independent status but continued to remain a non statutory and autonomous body. Similarly the mere fact that the statutes of the University were adopted by the Managing Committee and it was as a matter of convention bound to follow the statutory provisions of the Act would not clothe the Managing Committee with a statutory status or character. In fact the adoption of the statutes was agreed to by the appellant Executive Committee for the better governance, administration and extension of the educational activities of the institution. In fact an identical argument which forms the basis of the judgment of the Full Bench of the High Court had been advanced before this Court and rejected outright. For instance in Sabhajit Tewary vs Union of India & ors the question was whether the Council of Scientific and Industrial Research which 1015 was a society registered under the Societies Registration Act, as the present appellant is, was a statutory body. It was urged that because the Council of Scientific and Industrial Research had government nominees as the President of the body and derived guidance and financial aid from the Government, it was a statutory body A. N. Ray, C.J., rebutted these arguments and observed as follows: "The Society does not have a statutory character like the Oil and Natural Gas Commission, or the Life Insurance Corporation or Industrial Finance Corporation. It is a society incorporated in accordance with the provisions of the Societies Registration Act. The fact that the Prime Minister is the President or that the Government appoints nominees to the Governing Body or that the Government may terminate the membership will not establish anything more than the fact that the Government takes special care that the promotion, guidance and co operation of scientific and industrial research, the institution and financing of specific researched establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problems affecting particular industry in a trade, the utilisation of the result of the researches conducted under the auspices of the Council towards the development of industries in the country are carried out in a responsible manner. Similar view was taken by this Court in Kumari Regina vs St. Aloysius Higher Elementary School & Anr. where this Court observed as follows: "But it cannot also be gainsaid that as the Government has the power, to admit schools to recognition and grants in aid, it can, de hors the Act, lay down conditions under which it would grant recognition and aid. To achieve uniformity and certainty in the exercise of such executive power and to avoid discrimination, the Government would have to frame rules which, however, would be in the form of administrative instructions to its officers, dealing with the matters of recognition and aid. If such rules were to lay down conditions, the Government can insist that satisfaction of such conditions would be condition precedent to obtaining recognition and aid and that a breach or non compliance of such conditions would entail either the denial or withdrawal of recognition and aid. The Management of a school, therefore, would commit a breach or non compliance of the conditions laid down in the rules on pain of deprivation of recognition and aid. The rules thus govern the terms on which the Government would grant recognition and aid and the Government can enforce these rules upon the management. But the enforcement of such rules is a matter between the Government and the management, and a third party, Hr such as a teacher aggrieved by some order of the manage 1016 ment, cannot derive from the rules any enforceable right against the management on the ground of a breach or non compliance of any of the rules. " This is a case which is almost on all fours with the facts of the present case because there the case was whether the school after being recognised by the Government for the purpose of grant was bound to observe the rules. In Indian Airlines Corporation vs Sukhdeo Rai, it was observed as follows: "The fact, therefore, that the appellant Corporation was one set up under and was regulated by Act XXVII of 1953 would not take away, without anything more, the relation ship between it and its employees from the category of purely master and servant relationship. " The Full Bench of the Allahabad High Court, however, appears to have placed great reliance on the decisions of this Court in Prabhakar Ramakrishna Jodh vs A.L. Pande & Anr. where this Court held that the Governing Body of the College in that case was a statutory body. In this connection, this Court observed as follows: "On the other hand, we are of opinion that the provisions of Clause 8 of the ordinance relating to security of the tenure of teachers are part and parcel of the teachers ' service conditions and, as we have already pointed out, the provisions of the 'College Code ' in this regard are validly made by the University in exercise of the statutory power and have, therefore, the force and effect of law. It follows, therefore, that the 'College Code ' creates legal rights in favour of teachers of affiliated colleges and the view taken by the High Court is erroneous." This case, however, is clearly distinguishable from the facts of the present case. To begin with, in P.R. Jodh 's case, this Court was dealing with the College Code which was itself a creature of the statute, namely, the University of Saugar Act. Under ordinance No. 20 Para 1 the Governing body was created by an ordinance passed under the University of Saugar Act. It is, therefore, clear that the statutes are the creature of the Act. Thus the distinction is that in P.R. Jodh 's case the Governing Body was the Council of Management established under the Act while here the Managing Committee is not. It is obvious that the Governing Body was created under a statutory provision because the ordinance had undoubtedly a statutory force having been passed under the Act. Para 2(i) (c) of the College Code runs thus: "2. (i) In this ordinance, unless there is anything repugnant in the subject or context: (c) 'Governing Body ' means the Council of Management established under this ordinance for the control and general management of the 'College '. " 1017 The Governing Body was, therefore, established under the ordinance itself and had no independent existence at all. Similarly under Para 3 of the ordinance the constitution of the Governing Body was laid down. It is, therefore, clear that not only was the Governing Body of the College established under the ordinance but even the constitution of the said Governing Body was laid down by the ordinance itself and the functions of the Governing Body were clearly defined by Para 4 of ,, ordinance No. 20. The ordinance itself was called the "College Code" which came into legal existence by virtue of the ordinance. In other words, the position is that before ordinance No. 20 was passed under the University Act, the Governing Body had no existence at all. The same, however, could not be said of the present Managing Committee which had its independent existence long before it was affiliated to the Agra University and had also its own constitution, the only exception being that two members had to be taken ex officio in the Managing Committee. There is, therefore, world of difference between the nature and manner of the establishment of the Governing Body under the University of Saugar Act and the Managing Committee in the instant case. Further more, this case was noticed and discussed by a later judgment of this Court in Vidya Ram Mishra vs Managing Committee, Shri Jai Narain College and was distinguished. Speaking for the Court, Mathew, J., observed as follows: "When once this Court came to the conclusion that the 'College Code ' had the force of law and conferred rights on the teachers of affiliated colleges, the right to challenge the order terminating the services of the appellant, passed in violation of clause 8(vi) (a) of the 'College Code ' in a proceeding under Article 226 followed 'as the night the day` and the fact that the appellant had entered into a contract was considered as immaterial. * * * * On a plain reading of statute 151, it is clear that only provides that the terms and conditions mentioned therein must be incorporated in the contract to be entered into between the college and the teacher concerned. It does not say that the terms and conditions have any legal force, until and unless they are embodied in an agreement. To put it in other words, the terms and conditions of service mentioned in Statute 151 have proprio vigore no force of law. They become terms and conditions of service only by virtue of their being incorporated in the contract. Without the con tract, they have no vitality and can Confer no legal rights. Whereas in the case of Prabhakar Ramakrishna Jodh vs A. L. Pande and another [(1965) 2 S.C.R. 713], the terms and conditions of service embodied in clause 8(vi) (a) of the 'College Code ' had the force of law apart from the contract and conferred rights on the appellant there, here the terms and conditions mentioned in Statute 151 have no efficacy, unless they are incorporated in a contract. " 1018 It is, therefore, clear that in P. R. Jodh 's case the College Code was by itself a statutory Code so that the provisions of the statute operated proprio vigore and did not depend on the execution of the agreement between the employer and the employee in accordance with the statutes of the University. In the instant case, which is very much like the case in Vidya Ram Mishra (supra) the statute merely enjoined that the agreement between the employer and the employee should be incorporated according to the form and conditions prescribed by the statute and until the said agreement is executed the provisions of the Statute would not apply proprio vigore. The Allahabad High Court no doubt tried to distinguish Vidya Ram Mishra 's case, but with due respect, we might observe that the distinction drawn by the High Court is a distinction without any difference. The High Court has not considered the two basic facts which were present in P.R. Jodh 's case but which were not present in the instant case, viz., (1) that the governing body in the case dealt with by this Court in P. R. Jodh 's case was in itself a creature of the statute; and (2) that in the instant case the statute did not apply proprio vigore but only after an agreement was executed between the employer and the employee in accordance with the terms and conditions of the statute. The High Court also failed to consider that there was a concurrent finding of fact by all the Courts below that the plaintiff/respondent never executed any agreement with the Executive Committee of the College in the form prescribed by the statutes of the Agra University Act. Thus in view of the decisions of this Court regarding the circumstances under which the institution can be treated as a statutory body we are unable to agree with the view taken by the Allahabad High Court that the Executive Committee was a statutory body merely be cause it was affiliated to the University or was regulated by the provisions of the University Act or the statutes made thereunder. We accordingly hold that the decision of the Full Bench of the Allahabad High Court on this point is legally erroneous and must be overruled. This brings us to the next point for consideration as to whether or not the plaintiff/respondent 's case fell within the exceptions laid down by this Court to the general rule that the contract of personal service is not specifically enforceable. In this connection as early as 1964, in S.R. Tewari vs District Board, Agra and Anr., this Court observed as follows: "Under the common law the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. But this rule is subject to certain well recognized exceptions. It is open to the Courts in an appropriate case to declare that a public servant who is dismissed from service in contravention of article 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ the servant whom it does not desire to employ. Similarly under the industrial law jurisdiction of the labour and industrial, 1019 tribunals to compel the employer to employ a worker, whom he does not desire to employ, is recognised. The Courts are also invested with the power to declare invalid the act of a statutory body, if by doing the act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something which it does not desire to do. " To the same effect is the decision of this Court in Executive Committee of U.P. State Warehousing Corporation Ltd. vs Chandra Kiran Tyagi, where it was observed as follows: "From the two decisions of this Court, referred to above, the position in law is that no declaration to enforce a con tract of personal service will be normally granted. But there are certain well recognized exceptions to this rule and they are: To grant such a declaration in appropriate cases regarding (1) A public servant, who has been dismissed from service in contravention of article 311. (2) Reinstatement of a dismissed worker under Industrial Law by Labour or Industrial Tribunals. (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute;" In Indian Airlines Corporation vs Sukhdeo Rai (supra) this Court also observed as follows: "It is a well settled principle that when there is a purported termination of a contract of service, a declaration, that the contract of service still subsisted, would not be made in the absence of special circumstances because of the principle that courts do not ordinarily grant specific performance of service. This is so, even in cases where the authority appointing an employee was acting in exercise of statutory authority. The relationship between the person appointed and the employer would in such cases be contractual, i.e. as between a master and servant, and the termination of that relationship would not entitle the servant to a declaration that his employment had not been validly determined. " To the same effect is the decision of this Court in Bank of Baroda v Jewan Lal Mehrotra where this Court observed as follows: "The law as settled by this Court is that no declaration r to enforce a contract of personal service will be normally granted. The well recognised exceptions to this rule are (1) where a public servant has been dismissed from service in contravention of article 311; (2) where reinstatement is sought of a dismissed worker under the industrial law by labour or industrial tribunals; (3) where a statutory body has acted in breach of a mandatory obligation imposed by statute;" 1020 In the Sirsi Municipality 's case the matter was exhaustively reviewed and Ray, J., (as he then was) observed as follows: "The cases of dismissal a servant fall under three broad heads, purely by contract of employment. Any breach of contract in such a case is enforced by a suit for wrongful dismissal and damages. Just as a contract of employment is not capable of specific performance similarly breach of contract of employment is not capable of founding a declaratory judgment of subsistence of employment. A declaration of unlawful termination and restoration to service in such a case of contract of employment would be indirectly an instance of specific performance of contract for personal service. Such a declaration is not permissible under the Law of . The second type of cases of master and servant arises under Industrial Law. Under that branch of law a servant who is wrongfully dismissed may be reinstated. This is a special provision under Industrial Law. This relief is a departure from the reliefs available under the Indian Contract Act and the which do not provide for reinstatement of a servant. The third category of cases of master and servant arises in regard to the servant in the employment of the State or of other public or local authorities or bodies created under statute. " On a consideration of the authorities mentioned above, it is, there fore, clear that a contract of personal service cannot ordinarily be specifically enforced and a Court normally would not give a declaration that the contract subsists and the employee, even after having been removed from service can be deemed to be in service against the will and consent of the employer. This rule, however, is subject to three well recognised exceptions (i) where a public servant is sought to be removed from service in contravention of the provisions of article 311 of the Constitution of India; (ii) where a worker is sought to be reinstated on being dismissed under the Industrial Law, and (iii) where a statutory body acts in breach or violation of the mandatory provisions of the statute. In view of our finding that the Executive Committee of the College in the instant case was not a statutory body, the present case does not fall within any of the excepted categories mentioned above, and hence prima facie, the plaintiff/respondent is not entitled to any declaration or injunction. The learned counsel for the respondent, however, placed great reliance on the decision of this Court in Municipality 's case (supra) in order to contend that this decision had included within the fold of its exceptions a fourth category, namely, an institution which even though was a non statutory body, but was a local 1021 or a public authority. Reliance was placed particularly on the following observations of Ray, J., as he then was, in that case: "The third category of cases of master and servant arises in regard to the servant in the employment of the State or of other public or local authorities or bodies created under statute. In the case of servant of the State or of local authorities or statutory bodies, courts have declared in appropriate cases the dismissal to be invalid if the dismissal is contrary to rules of natural justice or if the dismissal is in violation of the provisions of the statute. " Assuming for the sake of arguments, but not deciding that this decision has extended the scope of the exceptions, so that the appellant Executive Committee though a non statutory body will still be bound by the statutory provisions of law, let us see what is the position. It would appear that under section 25 C (2) of the Agra University Act corresponding to similar provisions in Kanpur and Meerut Universities Act of 1965 which runs thus: "Every decision by the Management of an affiliated college, other than a college maintained by Government, to dismiss or remove from service a teacher shall be reported forthwith to the Vice Chancellor and subject to provisions to be made by the Statutes shall not take effect until it has been approved by the Vice Chancellor. " it was incumbent on the Executive Committee of the College to have taken the previous approval of the Vice Chancellor before terminating the services of the plaintiff/respondent. Reliance was placed by the learned counsel for the respondent on the words "shall not take effect until it has been approved by the Vice Chancellor". It was urged that there has been an infraction of a mandatory provision of the Act itself which is undoubtedly binding on the appellant Executive Committee and the resolution of the Executive Committee terminating the services of the respondent is not only invalid but completely without jurisdiction, and, therefore, the plaintiff/respondent is entitled to the injunction sought for. It is common ground that the procedure enjoined in sub section (2) of section 25 C of the Agra University Act was not at all followed by the Executive Committee and there can be no doubt that the Executive Committee has been guilty of this default. The question remains whether even if there has been a violation of the mandatory provisions of the statute, should we in the exercise of our discretion grant a declaration or an injunction to the plaintiff/respondent in the peculiar facts and circumstances of the present case ? It is well settled that a relief under the is purely discretionary and can be refused where the ends of justice do not require the relief to be granted. Mr. Ramamurthi learned counsel for the plaintiff/respondent submitted that the question of discretion would arise only in case where the High Court or this Court is acting in a writ jurisdiction and not in a suit. We are, however, unable to agree with 1022 this argument because the exercise of discretion is spelt out from the provisions of the and the common law and it applies as much to the writ jurisdiction as to other action at law. In Jerome Francis vs Municipal Councillors of Kuala Lampur(1), Lord Morris observed as follows: "In their Lordships ' view when there has been a purported termination of a contract of service a declaration to the effect that the contract of service still subsists will rarely be made. This is a consequence of the general principle of law that the courts will not grant specific performance of contracts of service. Special circumstances will be required before such a declaration is made and its making will normally be in the discretion of the Court. In their Lordships ' view there are no circumstances in the present case which would make it either just or proper to make such a declaration." Further more under similar circumstances though the dismissal of the employee was by an authority which was not competent to dismiss him, namely, the Municipal Council, their Lordships of the Privy Council refused to grant the declaration in view of the peculiar facts and circumstances of the case which caused hardship. The Privy Council in A. Francis vs Municipal Councillors of Kuala Lampur(1) observed as follows: "Accepting, however, the decision of the Court of Appeal, which, as has been pointed out, has not been the subject of any cross appeal, the position on Oct. 1 was that the removal of the appellant was a removal by the council and not by the president. The council were his employers, but having regard to the provisions of the ordinance their termination of his service constituted wrongful dismissal. Their Lordships consider that it is beyond doubt that on Oct. 1, 1957, there was de facto a dismissal of the appellant by his employers, the respondents. On that date he was excluded from the council 's premises. Since then he has not done any work for the council. In all these circumstances it seems to their Lordships that the appellant must be treated as having been wrongly dismissed on Oct. 1, 1957, and that his remedy lies in a claim for damages. It would be wholly unreal to accede to the contention that since Oct. 1, 1957, he had continued to be and that he still continues to be in the employment of the respondents. " As against this position Mr. Ramamurthi counsel for the plaintiff/ respondent submitted that in Hill vs C. A. Parsons & Co. Ltd. (3) a declaration that the termination was invalid was granted by the Court. In that case, however, it was pointed out that the declaration was 1023 granted under very special circumstances of that case where the employee was said to be removed from service almost at the fag end of his career after serving for 35 years when he was due to retire only two years later. In that case, however, Lord Denning laid down that in the absence of any special circumstances, a declaration should not be granted. It is clear that in the instant case the respondent had worked in the College for only two years. In these circumstances, therefore, this case does not appear to be of any assistance to the respondent. In R. T. Rangachari vs Secretary of State for India in Council(1) the Privy Council observed as follows: "But, although their Lordships differ in this important matter from the reasoning and conclusions of the Courts below, they are not on the whole prepared to direct that a declaration on this point should be made. The questions of fact and law are now decided, and a declaration could have no greater effect than the decision itself. After this lapse of time, and having regard to his health, no one suggests that the appellant can now be restored to his office, and the matter of pension and the responsibility of doing right in that regard rests with the Government. Accordingly, their Lordships agree in the view of the Courts below that no order or declaration should be made in this action. " A Division Bench of the Allahabad High Court in Mahant Indra Narain Das vs Mahant Ganga Ram Das & Anr.(2) observed as follows: "The second thing to be noted is that the court is given a discretion to make the declaration sought and the plaintiff need not ask for any further relief. The relief being discretionary, no person can claim the declaration as of right. " Similarly in Bhairabendra Narayan Bhup vs State of Assam (3), a Division Bench of the Assam High Court observed as follows: "It must be remembered that the declaration claimed under section 42 lies entirely within the judicial discretion of the Court and is to be exercised with caution according to the exigencies of a particular case. A party cannot, as of right claim such a declaration, because such a relief is more in the nature of an equitable relief than a legal remedy. It has been repeatedly held that a Court should be circumspect as to the declaration it makes, and futile declarations should be always avoided. " Apart from these decisions it would appear that section 20(1) of the clearly codifies this principle and may be extracted as follows: "20. (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion 1024 of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. " Similarly section 34 of the also gives a discretion to the Court to give a declaration of the legal character. Section 34 runs thus: "Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief: Provided that no court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so. Explanation. A trustee of property is a "person interested to deny" a title adverse to the title of someone who is not in existence, and for whom, if in existence, he would be a trustee. " It seems to us that neither the First Additional Civil & Sessions Judge nor the High Court, while decreeing the plaintiff 's suit, considered this aspect of the matter whether this was a fit case in which the discretion should have been exercised in favour of the respondent. It is manifestly clear from the authorities discussed above that the relief of declaration and injunction under the provisions of the is purely discretionary and the plaintiff cannot claim it as of right. The relief has to be granted by the Court according to sound legal principles and ex debito justitiae. The Court has to administer justice between the parties and cannot convert itself into an instrument of injustice or an engine of oppression. In these circumstances, while exercising its discretionary powers the Court must keep in mind the well settled principles of justice and fairplay and should exercise the discretion only if the ends of justice require it, for justice is not an object which can be administered in vacuum. The admitted facts in the present case, which will put the Court on its guard, while exercising its discretion to grant a declaration or injunction are as follows: (1) That the plaintiff/respondent served the institution for a short period of two years only i.e. from 1964 to 1966 and thereafter he was bereft of all his powers and did not work in the College for a single day. (2) That if the declaration sought for or the injunction is granted to the plaintiff/respondent the result would be that he would have to be paid his full salary with interest and provident fund for full nine years i.e. from 1966 to 1975, even though he had not worked in the institution for a single day during this period. 1025 (3) That consequent upon the declaration the appellant would have to pay a very huge amount running into a lakh of rupees or perhaps more as a result of which the appellant and the institution would perhaps be completely wiped out and this would undoubtedly work serious injustice to the appellant because it is likely to destroy its very existence. (4) It is true that the plaintiff/respondent is not at fault, but the stark realities, hard facts and extreme hardship of the case speak for themselves. (5) It appears that by virtue of the interlocutory orders passed by this Court, the appellant has already deposited Rs. 9,000/ before the High Court which was to be withdrawn by the respondent after giving security, and a further sum of Rs. 9,100/ being the salary of 13 months has also been deposited by the appellant before the Trial Court under the orders of this Court. It is also stated by counsel for the appellant that the appellant has deposited Rs. 3,000/ more. We feel that in the circumstances the respondent may be permitted to keep these amounts with him and he will not be required to refund the same to the appellant. The amount of deposit in the High Court, if not withdrawn by the respondent may now be withdrawn by him without any security and if he has already withdrawn the amount he will be discharged from the security. This will vindicate the stand of the respondent and compensate him for any hardship that may have been caused to him by the order terminating his services, and will also put a stamp of finality to any further litigation between the parties. In view of these special and peculiar circumstances of this case, we feel that it will not be a proper exercise of discretion to grant a decree for declaration and injunction in favour of the respondent. The appeal is accordingly allowed. We set aside the order passed by the High Court and the First Additional Civil & Sessions Judge, dismiss the plaintiff 's suit and restore the judgment of the Trial Court. In the circumstances of the case the parties will bear their own costs throughout. BHAGWATI, J. I agree with the final order proposed by my learned brother Fazal Ali, J., but I would like to state my own reasons for reaching that conclusion. The facts giving rise to the appeal have been fully set out in the judgment of my learned brother and it would be a futile exercise to restate them. I will straight away proceed to consider the question of law which arises for determination in the appeal. The question is, whether the termination of the service of the first respondent by the appellant was in violation of Statute 30 of the Statutes of the Agra University which applied to the appellant at 1026 the material time, and in any event, the termination was ineffective and inoperative as it was not approved by the Vice Chancellor as required by section 28, sub section (3) of the Kanpur and Meerut Universities Act, 1956, and in either case, whether the first respondent was entitled to a declaration that the termination was null and void so as to warrant a declaration that he continued in the service of the appellant, or, his claim merely lay in damages. It is a question of some importance. I will first take up the first part of the question. On this part, there was no dispute between the parties that the requirements of Statute 30 were not complied with by the appellant in terminating the service of the first respondent. The controversy merely centered round the question whether the termination of service in breach of the requirements of Statute 30 rendered the termination null and void so as to entitle the first respondent to a declaration that he continues in service or it amounted merely to a breach of contract giving rise to a claim for damages. Let me first examine this question on principle before turning to the decided cases. There are two distinct classes of cases which might arise when we are considering the relationship between employer and employee. The relationship may be governed by contract or it may be governed by statute or statutory regulations. When it is governed by contract, the question arises whether the general principles of the Law of Contract are applicable to the contract of employment or the law governing the contract of employment is a separate and sui generis body of rules. The crucial question then is as to what is the effect of repudiation of the contract of employment by the employer. If an employer repudiates the contract of employment by dismissing his employee, can the employee refuse to accept the dismissal as terminating the contract and seek to treat the contract as still subsisting ? The answer to this question given by general contract principles would seem to be that the repudiation is of no effect unless accepted, in other words, the contracting party faced with a wrongful repudiation may opt to refuse to accept the repudiation and may hold the repudiator to a continuance of his contractual obligation. But does this rule apply to wrongful repudiation of the contract of employment ? The trend of the decisions seems to be that it does not. It seems to be generally recognized that wrongful repudiation of the contract of employment by the employer effectively terminates the employment: the termination being wrongful, entitles the employee to claim damages, but the employee cannot refuse to accept the repudiation and seek to treat the contract of employment as continuing. What is the principle behind this departure from the general rule of law of contract ? The reason seems to be that a contract of employment is not ordinarily one which is specifically enforced. If it cannot be specifically enforced, it would be futile to contend that the unaccepted repudiation is of no effect and the contract continues to subsist between the parties. The law in such a case, therefore, adopts a more realistic posture and holds that the repudiation effectively terminates the contract and the employee can only claim damages for wrongful breach of the contract. Now a contract of employment is not specifically enforced because ordinarily it is a contract of personal service and, 1027 as pointed out in the first illustration to clause (b) of section 21 of the , a contract of personal service cannot be specifically enforced. Of course this illustration has now been omitted in the new and what would be the effect of such omission may be a point which may require consideration some day by this Court. But for the purpose of this case, I will proceed on the assumption that even under the new Act, the law is the same and it frowns on specific enforcement of a contract of personal service. Now what is the rationale behind this principle ? That is found stated in the locus classicus of Fry, L.J., in De Francesco vs Barnum(1): "For my own part, I should be very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining continuous personal relations with one another to continue those personal relations. I have a strong impression and a strong feeling that it is not in the interest of making that the rule of specific performance should be extended to such cases. I think the Courts are bound to be jealous, lest they should turn contracts of service into contracts of slavery; and therefore, speaking for myself, I should lean against the extension of the doctrine of specific performance and injunction in such a manner. " This rationale obviously can have application only where the contract of employment is a contract of personal service involving personal relations. It can have little relevance to conditions of employment in modern large scale industry and enterprise or statutory bodies or public authorities where there is professional management of impersonal nature. It is difficult to regard the contract of employment in such cases as a contract of personal service save in exceptional cases. There is no reason why specific performance should be refused in cases of this kind where the contract of employment does not involve relationship of personal character. It must be noted that all these doctrines of contract of service as personal, non assignable, unenforceable, and so on, grew up in an age when the contract of service was still frequently a "personal relation" between the owner of a small workshop or trade or business and his servant. The conditions have now vastly changed and these doctrines have to be adjusted and reformulated in order to suit needs of a changing society. We cannot doggedly hold fast to these doctrines which correspond to the social realities of an earlier generation far removed from ours. We must rid the law of these anachronistic doctrines and bring it in accord "with the felt necessities of the times". It is interesting to note that in Fry 's classic work on Specific Performance, contracts of service appear in a small group under the sub heading "Where enforced performance would be worse than non performance". We may ask ourselves the question: for whom it would be worse and for whom it would be better. Where, in a country like ours, large numbers of people are unemployed and it is extremely difficult to find employment, an employee who is discharged from service may have to remain without means of subsistence for a long period of time. Damages equivalent to one or two months wages 1028 would be poor consolation to him. They would be wholly insufficient to sustain him during the period of unemployment following upon his discharge. The provision for damages for wrongful termination of service was adequate at a time when an employee could without difficulty find other employment within the period of reasonable notice for which damages were given to him. But in conditions prevailing in our country, damages are a poor substitute for reinstatement: they fall far short of the redress which the situation requires. To deny reinstatement to an employee by refusing specific performance in such a case would be to throw him to the mercy of the employer: it would enshrine the power of wealth by recognising the right of the employer to fire an employee by paying him damages which the employer can afford to throw away but which would be no recompense to the employee. It is, therefore, necessary and I venture to suggest, quite possible, within the limits of the doctrine that a contract of personal service cannot be specifically enforced, to take the view that in case of employment under a statutory body or public authority, where there is ordinarily no element of personal relationship, the employee may refuse to accept the repudiation of the contract of employment by the statutory body or public authority and seek reinstatement on the basis that the repudiation is ineffective and the contract is continuing. That is in effect what happened in the case of McClalland vs Northern lreland General Health Service Board(1). The plaintiff 's contract in this case was really one of master and servant, the only special condition being that her post had been advertised as "permanent and pensionable" and it provided specific reasons, such as gross misconduct and inefficiency, for which she might be dismissed. The defendant Board introduced a rule after her appointment that women employees must resign on marriage and since the plaintiff got married, the respondents terminated her service by giving what they thought was a reasonable notice. The plaintiff contended that the defendant Board was not entitled to terminate her service and claimed a declaration that the purported termination was null and void and she continued in service. The House of Lords held that the contract was exhaustive as regards the reasons for which the defendant Board could terminate the service of the plaintiff and since none of those reasons admittedly existed, the termination of service of the petitioner by the defendant Board was nullity and the plaintiff continued in service of the defendant Board. This was a case of a pure contract of master and servant and yet the House of Lords held that the termination of employment of the plaintiff by the defendant Board which was not accepted by the plaintiff was ineffective and the plaintiff was entitled to a declaration that she continued in service. It should thus be possible to hold that even if a statutory body or public authority terminates the service of an employee in breach of a contractual obligation, the employee could disregard the termination as ineffective and claim a declaration that his service is continuing. But this would be a somewhat novel and unorthodox ground which has not been recognised by any decision of this 1029 Court so far and moreover I do not think that, on facts, this is a proper case in which it would really be applicable and hence I do not propose to finally pronounce upon it. The second category of cases are those where the relationship between the employer and the employee is governed by statute or sub ordinate legislation, and where such is the case, the termination, which is the same thing as repudiation, may, in a given situation, be null and void and in that event, it would not have the effect of putting an end to the contract and the employee would be entitled to a declaration that his service is continuing. The doctrine that a contract of personal service cannot be specifically enforced would not stand in the way of the employee, because the termination being null and void, there being no repudiation at all in the eye of the law, there would be no question of enforcing specific performance of the contract of employment. What the employee would be claiming in such a case is not enforcement of a contract of personal service but declaration of statutory invalidity of an act done by the employer. The case would be of a kind similar to that decided by the Judicial Committee of the Privy Council in High Commissioner for India vs I. M. Lail(1) the essential feature of which was aptly and succinctly described by this Court in Dr. section B. Dutt vs University of Delhi(2) in these words: "That was not a case based on a contract of personal service. The declaration did not enforce a contract of personal service but proceeded on the basis that the dismissal could only be effected in terms of the statute and as that had not been done, it was a nullity, from which the result followed that the respondent had continued in service. All that the Judicial Committee did in this case was to make a declaration of a statutory invalidity of an act, which is a thing entirely different from enforcing a contract of personal service. " Where, for example, the termination is outside the powers of a statutory body either because the statutory body has no power to terminate the employment or because the termination is effected in breach of a mandatory obligation imposed by law which prescribes that the termination shall be effected only in a particular manner and no other, it would be a nullity and the employee would be entitled to ignore it and ask for being treated as still in service. such was the case in Life Insurance Corporation of India vs Sunil Kumar Mukherjee(3) where an order of termination of service of certain employee by the Life Insurance Corporation in breach of clauses 10(a) and 10(b) of an order passed by the Central Government under section 11(g) of the , was held to be null and void on the ground that it was not effected in terms of clauses 10(a) and 10(b) of the Statutory Order. So also in Mafatlal Barot vs Divisional Controller, State Transport, Mahsana(4), this Court held that an order of termination of service passed against the petitioner in contravention of 1030 clause 4(b) of Schedule 'A ' to the Regulations made by the State Road Transport Corporation in exercise of powers conferred under section 45 of the was bad in law and it was quashed by issuing a writ of certiorari. This principle was also approved by this Court in B. N. Tewari vs District Board, Agra(1) though it was held there, on facts that the dismissal of the employee was proper and justified. Shah, J., speaking on behalf of this Court in that case recognised this principle and treated it as a third exception to the general rule in the following words: "Under the common law the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. But this rule is subject to certain well recognised exceptions. It is open to the Courts in an appropriate case to declare that a public servant who is dismissed from service in contravention of Article 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ the servant whom it does not desire to employ. Similarly under the industrial law, jurisdiction of the labour and industrial tribunals to compel the employer to employ a worker whom he does not desire to employ, is recognised. The Courts are also invested with the power to declare invalid the act of a statutory body, if by doing the act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something which it does not desire to do. " This position in law was reiterated by this Court in U.P. State Warehousing Corporation vs C. K. Tyagi(2) where, after referring to Dr. Dutt 's case and section R. Tewari 's case, Vaidialingam, J., observed: "From the two decisions of this Court referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. But there are certain well recognised exceptions to this rule and they are: To grant such a declaration in appropriate cases regarding (1) a public servant, who has been dismissed from service in contravention of article 311. (2) Reinstatement of a dismissed worker under Industrial Law or Labour or Industrial Tribunals. (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute. " This statement of law was reaffirmed again by this Court in Indian Airlines Corporation vs Sukhdeo Rai (3) and Bank of Baroda vs Jewan Lal Mehrotra(4). Now, two questions immediately arise for consideration on this statement of law. The first is, what is the 'statutory body ' contemplated in these decisions, and the second is, are the three exceptions formulated by this Court intended to be exhaustive ? When we are trying to understand what is the 'statutory body ' which this Court had in 1031 mind when it laid down this statement of law, it must be remembered that a statement of law enunciated by this Court must be read in the light of the principle which it seeks to effectuate and it should not be construed as if it were a section. The third exception is intended to cover cases where by reason of breach of mandatory obligation imposed by law, as distinct from contract, the termination of service is null and void so that there is in law no repudiation at all. That is the principle on which the third exception is based and it is in the light of this principle that the expression 'statutory body ' used by this Court has to be understood. Now, obviously, a body or authority created by statute would be a statutory body, but even a body or authority which is created under a statute, as for example, the State Road Transport Corporation which is created by the State under the Road Transport Corporation Act, 1950, would also be a statutory body. What other kinds of statutory bodies would be included is a matter not free from difficulty. But in any event it does appear to me that the three exceptions formulated in the statement of law laid down by this Court in the above decisions are not intended to be and cannot be exhaustive. The categories of exceptions to the general rule should not be closed, because any attempt at rigid and exhaustive formulation of legal rules any attempt to put law in a strait jacket formula is bound to stifle the growth of law and seriously cripple its capacity to adapt itself to the changing needs of society. In fact, Ray, J., as he then was, speaking on behalf of this Court in Sirsi Municipality vs Kom Francis(1) pointed out that the third exception applied not only to employees in the service of "bodies created under statutes", but also to those in the employment of "other public or local authorities". It may be a possible view and some day this Court may have to consider it that where law, as distinct from contract, imposes a mandatory obligation prescribing the kind of contract which may be entered into by an employer and the manner in which alone the service of an employee may be terminated, any termination of service effected in breach of such statutory obligation would be invalid and ineffective and in such a case the court may treat it as null and void. But I do not think it necessary to pursue this line of discussion any further and come to a positive conclusion whether the appellant is or is not a statutory body or a public authority nor do I consider it necessary to go into the question whether the Statutes of the Agra University had the force of law and conferred rights on the Principal and teachers of affiliated colleges, as in Prabhakar Ramakrishna Jodh vs A. L. Pande & Anr.(2), or they only set out the terms and conditions which had no validity and conferred no legal rights, unless and until they were embodied in the contract between the principal or teacher on the one hand and the affiliated college on the other as in Vidya Ram Mishra vs Managing Committee, Shri Jai Narain Conege(3). I take the view that on the second part of the question the case of the first respondent is well founded. It was common ground between the parties that at the material time the Statute which was applicable to the appellant was the Kanpur and 1032 Meerut Universities Act, 1965. Section 28, sub section (3) of this Act declares that every decision by the management of an affiliated college to dismiss or remove from service a teacher shall be reported forthwith to the Vice Chancellor and subject to the provisions contained in the Statutes shall not take effect unless it has been approved by the Vice Chancellor. The language of this section is absolute and peremptory and leaves no doubt as to its meaning and effect. It provides in terms clear and unambiguous that the termination of service of a teacher by the management shall not take effect, that is, it shall be ineffective and inoperative unless the Vice Chancellor on being informed has approved of it. When this section, which is a law made by the Legislatures, has enacted that the termination of service shall be ineffective or, in other words, it shall have no validity or force unless it has been approved by the Vice Chancellor, it is difficult to see how it can be regarded as effectively terminating the service. To take such a view would be to refuse to give effect to the law enacted by the Legislature. The law enacted in this section operates, irrespective whether the management is or is not a statutory body. Such a consideration is entirely irrelevant to the applicability of this section. When the section says that the termination of service shall not have any effect, the Court must refuse to recognise the termination as valid and effective, and when the Court does so, it merely enforces the law and there is no question of transgressing the principle that a contract of personal service cannot be enforced. There can, therefore, be no doubt that the termination of service of the first respondent by the appellant was ineffective and void and it did not operate to put an end to the employment, even wrongful, by reason of section 28, sub section (3) of the Kanpur and Meerut Universities Act, 1965. The first respondent, on this view, would ordinarily be entitled to the declaration and injunction prayed for by him, but the relief of declaration and injunction being discretionary, I agree with the view taken in the judgment of my learned brother Fazal Ali, J., that having regard to the peculiar facts and circumstances of the present case as set out in his judgment, this is not a proper case where such relief of declaration or injunction should be granted to the first respondent: instead, the aggregate amount of Rs. 21,100/ deposited by the appellant in the Court would be fair and just compensation to the first respondent. However, I must hasten to make it clear that ordinarily an employee whose termination of service is found to be null and void or ineffective by reason of a statutory provision, and that would include subordinate legislation which has the force of law, should be awarded a declaration that he continues in service and it should be no ground for refusing him such declaration that before his purported termination of service, he was in employment only for a short period. That would be denying him security of tenure which the law seeks to give him in clear and unambiguous terms. But, in the present case, the circumstance which weighs most with me in refusing to exercise my discretion in favour of the first respondent is that if the relief of declaration and injunction is granted to the first respondent, it will involve the appellant in a financial liability of over Rs. One lakh and that would wipe out the educational institution of the appellant or in any 1033 event seriously cripple it and that, in its turn, would prejudicially affect the interests of the student community which is an important consideration which the Court cannot fail to take into account while determining what are the broad considerations of social justice which must guide its exercise of discretion. I accordingly agree with the final order proposed by my learned brother. V.P.S. Appeal allowed.

The appellant is the Executive Committee of an Educational Institution (a college) registered under the Registration of Co operative Societies Act, and the college was affiliated to a University. The provisions of the University Act require that every decision of the management of an affiliated college to remove from service a teacher shall be reported forthwith to the Vice Chancellor and subject to the provisions contained in the Statutes made by the University, shall not take effect unless approved by the Vice Chancellor. The respondent was appointed by the appellant as a Principal of the college but no agreement, as prescribed by the University Act, and the Statutes was executed between the parties. Two years after his appointment. the appellant served a notice on the Principal directing him not to discharge the duties of the Principal and shortly thereafter terminated his services. Thereafter, the respondent did not work as Principal. The respondent filed a suit contending that he must be deemed to be continuing in service, as there was no sanction of the Vice Chancellor for the termination of his services, and prayed for an injunction restraining the appellant from interfering with his duties as Principal of the institution. The trial Court dismissed the suit but the first appellate Court reversed the decision and the High Court affirmed the decision of the first appellate Court. In appeal to this Court, it was contended that: (1) the appellant was not a statutory body; (2) in the absence of an agreement the requirement regarding the approval by the Vice Chancellor would not apply and the termination of the respondent 's services would be governed by the usual master and servant relationship. (3) there are no special circumstances for enforcing the contract of personal service; and (4) the present case was not a fit one for granting the reliefs prayed for, they being equitable reliefs and in the discretion of the Court. Allowing the appeal to this Court, ^ HELD. (Per Khanna and Fazal Ali, JJ.). (1) Merely because the appellant followed certain statutory provisions of the University Act or the Statutes made thereunder, it cannot be held to be a statutory body. [1014 A B] (a) Before an institution can be a statutory body, it must be created by or under the statute and owe its existence to a statute. There is a well marked distinction between a body which is created by the statute and a body which, after having come into existence, is governed in accordance with the provisions of the statute. The question in such cases to be asked is, if there is no statute would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body but if the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory provisions, it cannot be said to be a statutory body. [1013 D 1014 A] 1007 Sukhdev Singh & Ors. vs Bhagatram Sardar Singh Raghuvanshi & Others, ; , followed. (b) Merely because it was affiliated to the University. that there were certain mandatory provisions of the University Act which were binding on the appellant; and the appellant was governed by the Statutes of the University would not be sufficient to alter the character and nature of the appellant and convert it into a statutory body. [1014 B C] (i) The appellant had an independent status having been registered under the Registration of Co operative Societies Act and was a self governed or an autonomous body. It was affiliated to the University merely for the sake of convenience and mainly for the purpose of recognition of its courses of study by the University. [1014 C D] (ii) All that Statute 14A of the University required was that the Managing Committee of the college must co opt the Principal of the college and a representative of the teachers. By co opting them the appellant did not lose its independent status but continued to remain a non statutory and , autonomous body. [1011 F G] (iii) Similarly, the fact that the Statutes of the University were adopted by the appellant and it was, as a matter of convention, bound to follow the provisions of the University Act, would not clothe the appellant with a statutory status or character. The adoption of the Statutes was only for better governance and administration and extension of the educational activities of the institution. [1014 G H] D Sabhajit Tewary vs Union of India & ors. and Kumari Regina vs St. Aloysius Higher Elementary School & Anr. [1971] Supp. S.C.R. 6, followed. (2) The case of P.R. Jodh vs A.L. Pande [1965] 2 S.C.R. 713, on which the High Court relied, is distinguishable. The High Court has not considered the basic facts present in that case, but which are not present in the instant case, namely, (a) the governing body in Jodh 's case was itself a creature of the statute; (b) in the instant case the Statutes did not apply proprio vigore but only after an agreement was executed between the employer and the employee as required by those provisions. and (c) no agreement was ever executed between the parties in the prescribed form. [1018 C D] Vidya Ram Mishra vs Managing Committee, Shri Jai Narain College, ; , 326. followed. (3)(a) A contract of personal service cannot ordinarily be specifically enforced and a Court, normally, would not give a declaration that the contract subsists and that the employee even after having been removed from service, can be deemed to be in service against the will and consent of the employer. This rule is subject to three exceptions, (i) where a public servant is sought to be removed from service in contravention of the provisions of article 311. (ii) Where a worker after dismissal is sought to be reinstated under Industrial Law. and (iii) Where a statutory body acts in breach or violation of the mandatory provisions of the Act. [1020 E G] Sirsi Municipality vs Kom Francis ; Indian Airlines Corporation vs Sukhdeo Rai [1971] Supp. S.C.R. 510, 514. R. Tewari vs District Board, Agra and Anr., ; , 59, Executive Committee of U.P. State Warehousing Corporation Ltd. vs Chandra Kiran Tyagi. ; , 265 and Bank of Baroda vs Jewan Lal Mehrotra , 55, referred to. Since the appellant is not a statutory body, the present case does not fall within any of the excepted categories and the respondent is not entitled to any declaration or injunction. [1020 G H] (b) Assuming that the Sirsi Municipality case has extended the scope of the exceptions to public or local bodies even if they are non statutory bodies so that, the appellant though a non statutory body, will still be bound by the statutory 1008 provisions of law, in view of the special circumstances of this ease, it will not be a proper exercise of discretion to grant a decree for declaration and injunction in favour of the respondent The grant of specific relief is, under sections 20 and 34 of the as well as under the Common Law, purely discretionary and can be refused where the ends of justice do not require the relief to be granted. The exercise of discretion applies as much to a Court exercising writ jurisdiction as well as in suits. The relief has to be granted by the Court according to sound legal principles and ex debito justitiae. The Court has to administer justice between the parties and cannot convert itself into an instrument of injustice or an engine of oppression. The Court must keep in mind the well settled principles of justice and fairplay and should exercise the discretion only if the ends of justice require it. [1021 C D. 1022 A. 1023 H 1024 D, E F; 1025 F] Jerome Francis vs Municipal Councillors of Kuala Lumpur A. Francis vs Municipal Councillors of Kuala Lumpur , 637 and R.T. Rangachari vs Secretary of State for India in Council, L.R. 64 I.A. 40, 53 54, applied. Mahant Indra Narain Das vs Mahant Ganga Ram & Anr., AIR 1965 All. 683, 684 and Bhairabendra Narayn Bhup vs State of Assam, A.I.R. 1953 Assam 162, 165, referred to. Hill vs C.A. Parsons & Co. Ltd. (1971) 3 All. E.R. 1345, distinguished. In the present case, neither the first appellate Court nor the High Court while decreeing the respondent 's suit, considered whether it is a fit case in which the discretion should be exercised in favour of the respondent. [1024 D E] (i) The respondent served the institution only for two rears. If relief as prayed for is granted to him, he would have to be paid salary and interest for nine years which would amount to more than a lakh of rupees, even though he had not done any work for the college during those years. and (ii) though the respondent is not at fault, the payment of such a large sum would undoubtedly work serious injustice to the appellant because it is likely to destroy the very existence of the Institution. [1024 G 1025 B] Therefore, instead of granting the relief to the respondent as prayed for, it he is allowed to withdraw and keep the sum of about Rs. 21,000/ deposited by the appellant by virtue of interlocutory orders towards the salary of the respondent, it will vindicate his stand and compensate him for any hardship caused to him by terminating his services and will put a stamp of finality to any further litigation between them [1025 C F] (Per Bhagwati, J.): This Court has laid down three exceptions to the rule under the Common Law that the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ: (1) In the case of a public servant dismissed from service in contravention of article 311; (2) Under the Industrial Law. and (3) When a statutory body has acted in breach of a mandatory obligation imposed by a statute. [1030 B C, F G] Dr. S.B. Dutta vs University of Delhi A.I.R. 1958 S.C. 1050. Life Insurance Corporation of India vs Sunil Kumar Mukherjee A.I.R. 1961 S.C. 847. Mafatlal Barot vs Divisional Controller, State Transport, Mahsana ; B.N. Tewari vs District Board, Agra, ; U.P. State Warehousing Corporation vs C.K. Tyagi ; Indian Airlines Corporation vs Sukhdeo Rai [1971] Supp. S.C.R. 510 and Bank of Baroda vs Jewan Lal Mehrotra referred to. But, these 3 exceptions formulated in the statement of law laid down by this Court, are not intended to be and cannot be exhaustive. The categories of exceptions to the general rule should not be closed, because, any attempt at rigid and exhaustive formulation of legal rules is bound to stifle the growth of law and cripple its capacity to adapt itself to the changing needs of society. In fact, in the Sirsi Municipality vs Kom Francis ; , this Court 1009 pointed out that the third exception applied not only to employees in the service of "bodies created under statutes" but also to those in the employment of "other public or local authorities. This exception is really intended to cover cases where by reason of breach of mandatory obligation imposed by law, as distinct from contract, the termination of service is null and void so that there in law no repudiation at all. [1031 C F] Where the relationship between the employer and his employee is governed by statute or statutory regulations the termination of the service of the employee may, in a given situation, be null and void, and in that event, it would not have the effect of putting an end to the contract and the employee would be entitled to a declaration that his service is continuing. What the employee would be claiming in such a case is not enforcement of contract of personal service but declaration of statutory invalidity of an act done by the employer. [1029 A D] In the present case, it is not necessary to decide whether the appellant is or is not statutory body or a public authority or whether the Statutes of the University had the force of law conferring rights on the respondent as in the case of P. R. Jodh vs A. L. Pande [1965] 2 S.C.R. 713, or that they only set out the terms and conditions which conferred no legal rights unless and until they were embodied in a contract between the appellant and the respondent, as in the case of V. R. Mishra vs Managing Committee, Shri Lal Narain College ; , 326, because, the termination of the respondent 's services was ineffective and inoperative as it was not approved by the Vice Chancellor as required by the University Act. The language of the section of the University Act is absolute and peremptory and provides in unambiguous terms that the termination shall be ineffective and inoperative unless approved by the Vice Chancellor; and this rule of law, enacted by the Legislature, operates irrespective of whether the management is or is not a statutory body. When the Court refuses to recognise the termination as valid, it only enforces the law and there is no question of transgressing the principle that a contract of personal service cannot be enforced. [1031F, 1032 D] Therefore, the termination of the services of the respondent by the appellant was ineffective and void and did not operative to put an end to the employment. Hence, ordinarily the respondent, whose termination of service is thus null and void or ineffective by reason of a statutory provision or subordinate legislation which has the force of law, should be awarded a declaration that he continues; in service and the fact that he was in employment only for a short period of two years should be no ground for refusing him the declaration. [1032 D F] But in view of the Peculiar facts and circumstances this case, and since the grant of tho relief is in the discretion of the Court, it must be held that this is not a proper case for the grant of such relief. If the relief of declaration and injunction is granted to the respondent, it will involve the appellant in a financial liability of mere than a lakh of rupees and that would wipe out the educational institution of the appellant or in any event seriously cripple it and that, in its turn, would prejudicially affect the interests of the student community. That is an important consideration which the Court cannot fail to take into account in exercising its discretion. Moreover, the aggregate amount of about Rs. 21,000/ deposited by the appellant in Court would be a fair and just compensation to the respondent. [1032 F G, H 1033 B]

3395.txt

ivil Appeal No. 1465 of 1990. From the Judgment and Order dated 13.3. 1987 & 27.2.1989 of the Allahabad High Court in S.T.R. Nos. 522/86, 202/89 & 203 of 1989. S.C. Manchanda and A.K. Srivastava for the Appellant. The Judgment of the Court was delivered by RANGANATHAN, J. These three Special Leave Petitions can be disposed of together as they involve a common point. Notices of these petitions have been duly sent but there is no appearance on behalf of the respondents. After hearing the counsel for the petitioner we grant leave and also proceed to dispose of the appeals. The respondents in each of these cases was subjected to assessment under the U.P. Sales Tax Act. The assessment years are different for the three cases being assessment years 1981 82, 1983 84 and 198283 respectively but this does not make any material difference. In each of the cases, the assessee preferred an appeal to the first appellate authori ty and, along with the appeal, moved an application praying for the waiver of any deposit of tax which was necessary before the appeal could be entertained. But the first appel late authority, in two of the cases, dismissed the applica tion. In the third he directed the assessee to deposit 10% of the disputed tax within ten days from the, date of the order. Dis satisfied with the orders of the first appellate authority, 1033 each of the assessees preferred an appeal to the Tribunal. The Tribunal, in all the three cases, directed the assessee to pay 10% of the assessed tax before the appeal could be entertained. Each of the assessees preferred a revision petition before the High Court. The learned Single Judge who heard the revision petition in the main appeal preferred by Atma Ram Misra distinguished the earlier judgment of the Court in Vishamber Nath vs Commissioner of 'Sales Tax, U.P., [1979] U.P.T.C. 1276 and held that the condition requiring deposit of tax was not applicable in the instant case as no returns at all had been filed by the assessee for the relevant assessment year and no turnover stood admitted by the asses sees at any stage of the assessment proceedings. This was followed in the other two cases with the result that the first appellate authority was held bound to entertain the appeals of the assessee without calling upon it for deposit of any portion of the tax. It is this conclusion of the learned Single Judge that is the subject matter of the present appeals. The question at issue turns upon the language of section 9 of the U.P. Sales Tax Act. Since this section has been amended from time to time, it is necessary to extract the provisions of this section, in so far as it is relevant for the present purposes, as it stood from time to time: The section, when originally enacted read as follows: "Sec. 9 Appeals. (1) Any assessee objecting to an assessment made on him may, within thirty days from the date on which he was served with notice of the assessment, appeal to such authority as may be prescribed: Provided that no appeal shall be entertained under this sub section unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable as the case may be." This provision made it obligatory on an assessee to pay up the admitted tax before his appeal against the assessment could be entertained. 1034 There were amendments to the above sub section by Amend ment Act No. 8 of 1954, Amendment Act No. 7 of 1959 and Amendment Act No. 11 of 1968. These are not material for the present purposes. Next came an amendment by Amendment Act No. 3 of 1971 which took effect from 1.10.1970. This substi tuted the following provision in place of the original sub section (1): "(1) Any dealer objecting to any order made by the assessing authority other than an order mentioned in section 10 A, may within thirty days from the date of service of the copy of order, appeal to such authority as may be prescribed: Provided that no appeal against an assessment order under this Act shall be entertained unless the appel lant has furnished satisfactory proof of the payment of not less than: (a) When return is filed the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the return filed by him or at a later stage in proceeding before the assessing authority, whichever is greater. (b) Where no return is filed the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be admitted at any stage in proceedings before the assessing authority, or 20 per cent, of the amount of tax of fee assessed whichever is greater. Provided further that the appellate authority may, for special and adequate reasons to be recorded in writing, waive or relax the requirements of clause (b) of the pro ceeding proviso. " This provision, it will be observed, effected two important changes: (a) The assessee had to deposit the highest amount of tax due on his admitted turnover. However, if he had filed no return and had been assessed to tax, he had to deposit 20% of the assessed tax, if that was higher than the admitted tax; and 1035 (b) A discretion was conferred on the appellate authority to waive or relax the above requirement in appropriate cases. The next amendment was by U.P. Act No. 12 of 1979 with effect from 1 11 1978. The provision, as now amended, stood as follows: "(1) Any dealer or other person aggrieved by an order made by the assessing authority, other than an order mentioned in section 10 A may, within thirty days from the date of serv ice of the copy of the order, appeal to such authority as may be prescribed: Provided that no appeal against an assessment order under this Act shall be entertained unless the appel lant has furnished satisfactory proof of the payment of not less than (a) Where all the returns for the assessment year have been filed, the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater; or (b) Where some the returns for the assessment year have not been filed or no return has been filed for such year, the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns, if any, filed by him or at any stage in any proceedings under this Act or 20 per cent of the amount of tax or fee assessed whichever is greater; and Provided further that the appellate authority may, for special and the adequate reasons to be recorded in writing,. waive or relax the requirements of clause (b) of the preceding proviso. XXX XXX XXX This provision was in substance the same as the earlier one, but a change in language was necessitated by the fact that the Act contemplated not one but several returns from an assessee in the course of an assessment year and the earlier provision, which proceeded on the 1036 basis of a single return due from an assessee for the year having been filed or not filed, needed to be clarified. Finally came Amendment Act No. 22 of 1984 on the heels of earlier ordinances which effected an amendment in Section 9 with effect from 12.2.1983. The new sub section reads as follows: "(1) Any dealer or other person aggrieved by an order made by the Assessing Authority, other than an order mentioned in Section 10 A, may, within thirty days from the date of service of the copy of the order, appeal to such authority as may be prescribed: Provided that where the disputed amount of tax, fee or penalty does not exceed one thousand rupees, the appel lant may, at his option, request the Appellate Authority in writing for summary disposal of his appeal, whereupon the Appellate Authority may decide the appeal accordingly. (I A) The manner and procedure of summary disposal of appeal shall be such as may be prescribed. (I B) No appeal against an assessment order under this Act shall be entertained unless the appellant has furnished satisfactory proof of the payment of not less than (a) the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceedings under this Act, whichever is greater, where all the returns for the assessment year have been filed, or (b) the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns, if any, filed by him or at any stage in any proceedings under this Act, or twenty per cent, of the amount of tax or fee assessed, whichever is greater, where some of the returns for the assessment year have not been filed or no return has been filed for such year: 1037 Provided that the Appellate Authority may, for special and adequate reason to be recorded in writing, waive or relax the requirement of the Clause (b) of this sub section in so far as it relates to deposit of twenty per cent of the amount of tax or fee assessed. " Except for shifting the contents of the relevant provision to new subsection (1 B) and for a recasting of the section, the new provision has brought about no material change in the position so far as the issue before us is concerned. It may be mentioned here that the assessment years before us being 1981 82 to 1983 84 appear to be governed by the provisions of the Act as they stood before the amendment in 1983. However this does not make much of a difference since, as already pointed out, the effect of the provisions before and after amendment is the same. The section, as it stands since 1 11 78, provides for two sets of situations. Clause (a) deals with a case where all the returns for the assessment year have been filed by the assessee. This means that there is a figure of turnover admitted by the assessee. Again, in the course of the as sessment proceedings, it is possible that he may have admit ted a different figure of turnover from that disclosed in his returns. In such a situation the provision requires the assessee to deposit the amount of the tax admitted by him (either in the returns or at any subsequent stage of the proceedings before the officer, whichever is greater). Clause (b) deals with the situation where (a) some, though not all, the returns due from the assessee have been filed and (b) no return at a11 has been filed. In this eventuali ty, the requirement of deposit turns not merely on the admitted amount of tax (as there may be no such admitted tax where no return at all has been filed) but is also made to turn on the assessed tax. The provision requires the asses see to deposit the amount of tax admitted in the returns or at any stage of the proceedings under the Act or 20% of the amount of tax assessed whichever was greater. In other words, the provision contemplates a comparison of (i) the admitted tax and (ii) 20% of the assessed tax. Whichever of these two figures is higher has to be deposited by the assessee before his appeal against the assessment can be entertained. There are perhaps two ways of reading clause (b). One is that, in a case where no return at all has been filed and no admission had at all has been made by the assessee of any figure of turnover, then the first figure to be computed under clause (b) will be zero. If, however, there is an assessment made on the assessee of any tax higher than nil, that 1038 will be the greater of the two figures to be computed under the clause and the assessee will have to deposit 20% of the assessed tax. The other way of interpreting the sub section, which appears to have commended itself to the High Court, is to say that clause (b) will be attracted only if two figures are available for comparison: (1) a figure of turnover admitted in a return or in subsequent proceedings; and (2) a figure of assessed tax. If the assessee has filed no return at all and if he has made no admission regarding his turn over at any stage of the proceedings, then figure (1) above cannot be computed. Hence it is not possible to make a comparison between the two figures indicated above and therefore the provisions of deposit contained in clause (b) will not at all apply. We think it is manifest that the first of the two con structions referred to above is the correct one. The inter pretation accepted by the High Court, is, in our view, erroneous for two reasons. In the first place, it does not give full effect to the last few words of clause (b) which clearly cover a case where no return at all has been filed for the assessment year in question. True, even on this interpretation, the provision will govern a case where no return has been filed but the assessee has, in the course of the assessment proceedings, made some admission regarding his turnover but such cases are likely to be very few. When the provision clearly contemplates a deposit of tax in cases where no return has been filed or where only some returns have been filed, it would be running in the teeth of the provision to interpret it in such a manner as to exclude the majority of such cases. Secondly, the High Court 's interpre tation leads to a clear anomaly. For, it would indeed be odd to suggest that a deposit is necessary where an assessee has filed his returns or admitted his turnover in the course of assessment proceedings but that an assessee who has not filed any return at all or made any admission at all can be allowed the privilege of an appeal even without making any deposit at all. Such an interpretation will only result in putting a premium upon recalcitrant and dishonest assessees. We do not think that this is the correct and proper way of interpreting the statutory provision. The clear intent of the clause is that an assessee should be asked to pay up the admitted tax or 20% of the assessed tax, whichever is great er, before an appeal could 'be entertained and the provision should be interpreted in such a way as to give effect to this intent. In this context, it is significant that the provision does not call upon the assessee to pay up the entire amount of assessed tax. The Legislature fully appreciates that an assessment made, in the absence 1039 of any return or admission, may not always reflect the correct figure of tax leviable on the assessee. It could be that the assessed figure involves an estimate which takes it beyond the figure which may be ultimately determined in the case. But, at the same time, it cannot be said, merely because an assessee has not filed any return or made any admission expressly, that he necessarily disputes the en tirety of the assessed tax. It could well be that he has not done either of these things just to postpone the payment of even the tax which he may not be in a position to contest. Realising this situation, the provision in question makes two relaxations. It does not make it obligatory on the assessee to deposit the entire amount of assessed tax. It restricts the deposit of 20% of the assessed tax (a figure which can be treated as an ad hoc statutory quantification, on an average, of the tax demand in such cases on which there could be no quarrel). Added to this, it empowers the appellate authority to waive or relax the requirements of clause (b). This is because the appellate authority will be in a position to, prima facie, judge the extent to which, in the circumstances of a particular case, there is a real dispute in the appeal and to insist upon the deposit of such percentage of the assessed tax (not exceeding 20%) as it may consider appropriate. If the intention of the legislature were only that the deposit should be confined only to the admitted tax in all cases, the second part of clause (b) referring to deposit of 20% of the assessed tax and, indeed, even the bifurcation made in clauses (a) and (b) would be redundant. We are, therefore, of opinion that the deposit contemplated under clause (b) also covers cases where no returns have been filed and no admission of any turnover has come from the assessee. We would like to make it clear that we modify the judg ment of the High Court only in so far as it directs that an assessee who has not made any return at all and has not admitted any figure of turn over in the course of the as sessment proceeding is relieved of the requirement to depos it 20% of the assessed tax under section 9(1) or 9(1 B), as the case may be. What we have held, however, does not in any way affect the power of the appellate authority to waive or reduce the amount to be deposited, depending on the circum stances of the each case, under the proviso to the above sub section. We should also like to make it clear that, despite our above conclusion, we do not propose to interfere in any of the three appeals, with the ultimate result of the High Court 's decision. This is because 1040 the High Court has already permitted the appeals to be disposed of without requiring any deposits. The learned counsel for the appellants is not in a position to state whether the appeals are still pending or whether they have since been disposed of pursuant to the directions of the High Court. It would not be proper, in this situation, to modify the decretal position of the High Court 's order. We, therefore, dismiss these appeals but make it clear that we do not agree with the High Court 's interpretation of the statutory provisions for the reasons set out above. We make no order as to costs in the circumstances of the case. R.N .J. Appeals dis missed.

The respondents in each of these three cases was sub jected to assessment under the U.P. Sales Tax Act. In each of these cases the assessee preferred an appeal to the first appellate authority and moved an application for the waiver of any deposit of the tax which was necessary before the appeal could be entertained. The first appellate authority in two of the cases dismissed the application and in the third directed the assessee to deposit 10% of the disputed tax within ten days from the date of the order. Dis satis fied with the orders of the first appellate authority each of the assessees preferred an appeal to the Tribunal. The Tribunal in all the three cases directed the assessee to pay 10% of the assessed tax before the appeal could be enter tained. Each of the assessees preferred a revision petition before the High Court. The High Court held that the condition requiring deposit of tax was not applicable in the instant case of M/s Atma Ram Misra as no returns at all had been filed by the asses see for the relevant assessment year and no turnover stood admitted by the assessee at any stage of the assessment proceedings which was followed in the other two cases with the result that the first appellate authority was held bound to entertain the appeals of the assessee without calling upon it for deposit of any portion of tax. The department has preferred these appeals by special leave against the decision of the single judge of the High Court in all the three cases. This Court while dismissing the appeals made it clear that it did not agree with the High Court 's interpretation of the statutory provisions and, HELD: The provision in question makes two relaxations. It does not make it obligatory on the assessee to deposit the entire amount of assessed tax. It restricts the deposit to 20% of the assessed tax. [1039C] 1032 It empowers the appellate authority to waive or relax the requirements of clause (b). [1039C] The deposit contemplated under clause (b) also covers cases where no returns have been filed and no admission of any turnover has come from the assessee. [1039E] This, however, does not in any way affect the power of the appellate authority to waive or reduce the amount to be deposited, depending on the circumstances of each case, under the proviso to the above subsection. [1039G] Vishamber Nath vs Commissioner of Sales Tax, U.P., [1979] U.P.T.C. 1276.

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Appeal No. 4702 of 1991. From the Judgment and Order dated 26.8.88 of the Bombay High Court in W.P. No. 2264 of 1984. T. Andharujina, F.H. Talyarkha, R.F. Nariman, R. Narain, Ashok Sagar and Ms Amrita Mitra for the Appellants. K.K. Singhvi, B.N. Singhvi and Anil K. Gupta for the Re spondents. The Judgment of the Court was delivered by 451 V. RAMASWAMI, J. Leave granted. The First appellant Tara Engineering and Locomotive Company Limited (hereinafter called the 'Company ') is a. company registered under the Indian Companies Act, 1913 and the second appellant is one of its Directors. The Company is carrying on business of manufacture and sale of motor vehi cles and spare parts of motor vehicles and excavators. Their manufacturing units are at Pune and Jamshedpur outside the Thane Municipal Corporation limits. They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicles parts 'and excavators parts from their own factories at Pune and Jamshedpur. They also bring in parts manufactured by their ancillaries within India and also parts imported from aboard. These products or parts are brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the re quirements of the customers in various parts of the country. It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory produced parts. On and from 1 st October, 1982 with the notification under Section 3 of the Bombay Provincial Municipal Corpora tion Act, 1949, the Thane Municipal Council became a Munici pal Corporation (hereinafter called the Corporation). Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965. Prior to 1 st October, 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment of octroi under the Maharashtra Municipalities Act, 1965 and the Maharashtra Municipalities (Octroi) Rules, 1968 made thereunder. The Municipal Council had also granted permis sion under Rule 10 (2) to the Company for maintaining a godown or warehouse of their own. Their is no dispute that even after the coming into existence of the Thane Municipal Corporation the appellants were permitted to have a ware house of their own and keep a current account facility without the requirement of immediate payment of octroi at the Octroi Naka. In terms of granting those facilities the Company had made as security a cash deposit of Rs. 7 lakhs with the Corporation and had also given a Bank Guarantee for an equivalent amount as agreed to between the Company and the Corporation. However, there is some dispute as to what were the formalities that were dispensed with in the matter of claiming refund of the octroi when the goods were export ed. But suffice it to say at this stage that the appellants were permitted to carry out their activities of imports and exports under the current account procedure with a facility of unpacking the bulk, repacking and exporting. 452 During the period 1st January, 1983 to 31st March, 1964 it is stated that the appellants had made 1182 claims for refund. All these claims were rejected by the letters of the Corporation dated 31.8.1983, 12.1. 1984, 5.4.1984 and 6.4.1984. They were rejected on the following two grounds: (1) the Company had "sold" the spare parts within the octroi limit (which is co terminus with the Corporation limit) in contravention of Rule 25 (3) (d) of the Maharashtra Munici palities (Octroi) Rules, 1968 (hereinafter called the "Rules"), (2) the procedure prescribed for export and the claim of refund had not been strictly followed. The non compliance with)the procedure prescribed referred to in the second ground according the Corporation were: (i) Form 4 of the Octroi Rules and the original invoices were not submit ted, or (ii) Forms 11 and 12 filed were incomplete and all the required information were not given or (iii) certificate of the Octroi exit Naka Officer had not been obtained. The rejection of the claim was either on one or more than one or all the grounds mentioned above. The appellants filed a writ petition under Article 226 in the High Court of Judicature at Bombay contending that the action of the Municipal Corpo ration in refusing refund is unconstitutional and illegal and for certain other reliefs. The Division Bench of the High Court which heard the same dismissed the writ petition on the 26th August, 1988. It is against this judgment that the present appeal has been filed. It appears that during the hearing of the writ petition the learned counsel appearing for the Corporation did not counter the contention of the Company that the rejection under Rule 25 (3) (d) was not correct and the learned Judges have also recorded the same in the judgment. But the learned counsel for the respondent before us stated that it is not correct to say that he had conceded any point and that since he could not argue that point in view of the decision of another Division Bench of the same High Court in Khandelwal Trader Akola vs The Akola Municipal Council, AIR 1985 Bombay 218 which was binding on the Bench which heard the writ petition and also in view of certain observations of this Court in Burmah Shell Company vs Belgaum Municipal, [1963] Suppl. 2 SCR 216 and Hiralal Thakorlal Dalai vs Brash Broch Municipality, he did not press the point. We have therefore, permitted the point to be argued in this appeal. Before we discuss the points in controversy we may state that in the counter affidavit filed in the writ petition the respondents have admitted that the Company was enjoying the current account facility prior to 1.10. 1982 and the re spondent Corporation had also given the said facility to the Company even after 1st October, 1982 on their making a cash deposit of Rs. 7 Lakhs and furnishing a Bank Guarantee for a like sum as security 453 for grant of that facility. The respondent had also admitted that the Company had been given permission under Rule 10 (2) to maintain their own godown from 12th December, 1982. Broadly stated under the current account facility granted, no octroi duty is recoverable in cash from the appellants at the entry octroi naka point. However, the Company was re quired to submit a statement of goods imported in Form 5 before the 10th of the following month. The officers of the respondent after scrutiny of the statement so filed deter mine the octroi duty payable thereon and debit the amount in the current account kept and send a demand notice to the company. The Company is required to pay the amount to the Corporation within 15 days of the determination of duty. The first submission of Mr. Andharujina, learned counsel for the appellants was that the sales were not for consump tion or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consumption or use outside such limits and therefore the rejection of the claims on the ground that the spare parts were sold within the municipal limits and that it amounted to a contravention of Rule 25 (3) (d) of the Rules is ille gal. Mr. K.K. Singhvi, the learned counsel for the Corpora tion on the other hand contended that the meaning of words "sales therein" in the definition of octroi in the Acts and in Entry 52 of List II could not be limited to sales of the goods for purposes of consumption or use within the munici pal limits. When an importer wants to export dutiable goods tempo rarily detained by him in his own godown he shall present an intimation cumapplication for written permission in Form 11 to the Superintendent of Octroi to export such goods. Rule 25 (3) (d) states that no such intimation shall be accepted unless: .LM15 "the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership" .LM0 The case of the Corporation was that there was a change in the ownership of the goods since a sale in law had taken place inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits. Section 127 of the Bombay Provincial Municipal Corporation Act,1949 and the corresponding section 105 of the Maharashtra Municipalities Act,1965 authorises the Muncipality to levy "Octroi". Both these Acts define 454 octroi as meaning a tax on the entry of goods into the municipal area "for consumption, use or sale therein". The Maharashtra Municipalities (Octroi) Rules 1968 made under the Maharashtra Municipalities Act, 1965, provides for the levy, collection and refunds of octroi duty on the goods specified in the schedule thereunder and the procedure for the same. These Rules were in force in Thane Municipality before Thane was declared as "City" under the Bombay Munici pal Corporations Act LIX of 1949. However these Rules are continued in the Thane Municipal Corporation by virtue of paragraph 5 of Appendix IV to the Act LIX of 1949. The legislative entry relating to the constitutional power to levy this tax is found in List II Entry 52 of the 7th Schedule to the Constitution which reads: "52. Taxes on the entry of goods into a local area for consumption, use or sale therein". The Bombay Municipal Boroughs Act, 1925 which was in force prior to the enactment of the Maharashtra Municipali ties Act, 1965 also contained a similar provision in section 73 enabling the Municipalities covered by that Act to levy "Octroi on animals or goods or both brought within the octroi limits for consumption or use therein". This provi sion was amended by Amending Act 35 of 1954 by substituting the words "use or sale" for the words "or use" with effect from May 5, 1954. In other words before 1954 the word "sale" was not included in the provision of octroi on goods which the Municipality was authorised to impose. After the amend ment the Municipality could levy octroi on goods brought within the octroi limits "for consumption, use or sale therein". This provision came up for consideration in Burmah Shell case (supra). Two of the categories of transactions which were considered in this case related to transactions under which (1) goods were sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company and (2) goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits. The Company contended that the tax could not be collected on goods which were merely sold but not con sumed inside the octroi limits. In connection with this con tention this Court considered the meaning of words "consump tion, use or sale therein" and observed: "It is not the immediate person who brings the goods into a local area who must consume them him self, the act of consumption may be post poned or may be performed by someone else but so long as the goods have been brought into the local 455 area for consumption in that sense, no matter by whom, they satisfy the requirements of the Boroughs Act and octroi is payable". " . . The goods must be regarded as having been brought in for purposes of consumption when a person brings them either for his own use or consumption, or to put them in the way of others in the area, who are to use and consume". And concluded holding: "In our opinion, the Company was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it. The Company was, however, not liable to Octroi in respect of goods which it brought into the local area and which was re exported". The ratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of the goods inside the octroi area though ultimately the person to whom it was sold for consumption does not consume the goods inside but does the same outside the limit. After consideration of the judgment in Burmah Shell Company 's case (supra) the Gujarat High Court in one of the cases arising for refund of octroi duty paid, took the view that octroi leviable on goods brought within the octroi limits 'for consumption, use or sale therein ' and that the word 'sale ' could not be given the narrow meaning of a sale for consumption to the ultimate consumer within the octroi limits. Accordingly if the goods were sold within the octroi limits by the importer even if it resulted in export and consumption was also outside the octroi limit, octroi duty paid is not refundable. This decision came up in appeal before this Court and the decision of this Court is reported in Hiralal Thakorlal Dalai vs Brash Broach Municipality, On facts that case related to a con signment sale and the goods were despatched to destination outside octroi limits for consumption there. A plea for review of the decision in Burmah Shell Company s case (supra) was also made in this case. However a Constitution Bench rejected the request for reconsideration and held that the word "sale" in the colloquium of the words "consumption, use or sale therein" means sale for consumption within the octroi limits. The ratio of these two decisions was consid ered by the Bombay High Court in Khandelwal Traders Akola 's case (supra), which was referred to in the Judgment under appeal. It was held in this case also 456 that where a dealer imports goods within the octroi limits not for ultimate consumption or sale for consumption within the limits but for the purpose of export and obtain permis sion for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi limits, that is to say even where the situs of the sale could be fixed within the octroi limit. The matter is now put beyond any pale of doubt by the latest decision of this Court in Munic ipal Council, Jodhpur vs M/s. Parekh Automobiles Ltd. & Ors., ; Rule 13 (4) of the Rajasthan Munici pal Octroi Rules, 1962 which was one of the provisions considered in this case provided that "In cases provided for in sub rule (3) (that is who is given the account current facility)amount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the munic ipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under subsection (4), the goods trans ported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from the date of their import in such limits". Relying on this provision the municipality in that case contended that if the sale had taken place within the octroi limits though the sale was not for consumption or use within the octroi limits, duty was payable and no refund could be claimed. The learned Single Judge who heard the matter in the High Court did not permit the importer to raise the question that the sale took place only outside the octroi limits of Jodhpur and proceeded on the footing that the sale of product in question took place within the octroi limits of Jodhpur. He however accepted the contention of the Indian Oil Corporation (importer) that the sale to the dealer was for the purpose of export and the dealer did export the goods outside the octroi limits and that, therefore, even if the sale was said to have been effected within the octroi limits no octroi was leviable. Since admittedly the goods had been sold in Jodhpur octroi limits only for their on wards transmission for use and consumption in Dangia was outside the octroi limits he held that no octroi duty was payable. This view of the learned Single Judge was confirmed on appeal by the Division Bench of the High Court. On appeal this Court confirmed this view and held that the Indian Oil Corporation (importer) who had the current account facility and gov 457 erned by the terms of rule 13 was entitled to go on paying octroi duty "on to basis of the goods brought by it within the municipality less the goods transported outside the municipality even where the transport outside the municipal ity may be in pursuance of a sale within the municipality so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the municipal limits". In the present case the sales were to person who were carrying on business outside the limits of the Corporation and the goods were also intended to be consumed or used outside such limits and in fact the goods were also export ed. The ratio of the decisions above referred clearly, therefore, governs this case, even if it were to be assumed that the sale in the general sense took place inside the municipal limits. However we may state that it was the contention of the learned counsel for the appellant that the sale in fact took place outside the municipal limits and in support of this contention he relied on the following facts among others. The spare parts were consigned by the Company to out station purchasers. The goods were transported by the Company them selves across the octroi limits. The consignment or lorry receipt mentioned the consignee as self. The bills for collection were sent through Bank and the goods were not to be delivered to the consignee until the payment was made by the consignee through the Bunk. Right of disposal expressly reserved with the vendor. On the other hand on behalf of the Corporation it was contended that orders were both received and accepted in Thane, goods were despatched from Thane and challans were also made in the name of the buyers and the property in the goods passed within Thane. The sale had in fact taken place within municipal area. In fact he further contended that being a question of fact we are not entitled to go into the same in view of the finding of the High Court. It is not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipal limits. Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale, were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded. Accordingly the rejection of the refund claims on the ground that Rule 25 (3) (d) had not been strictly complied with is illegal and could not be sustained. Such of those claims which were rejected only on the grounds of contravetion of 458 Rule 25 (3) (d) shall now be taken up by the respondent and passed for payment. In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. Mere physical entry into the octroi limits would not attract levy of octroi. When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable. But in order to ensure, in such circumstances, that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit, Rules provide for deposit of a certain sum of money or the actual octroi duty payable subject to a right to get a refund of the same when the goods are exported. When the goods in respect of which octroi was paid are exported, the octroi became refundable and that is the very scheme of the ' levy of octroi. The octroiable event in such a case shall be deemed not have happened. Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable. The rules merely regulate the system on which refunds shall be allowed. The procedure prescribed and the need to adhere to the procedure shall have to be considered in the light of these legal incidence and nature of octroi duty. Before we deal with the question whether the Company had not followed any of the procedure prescribed and the right of the Corporation to deny refund of octroi on non compli ance with any of those provisions in the Rules, it is neces sary to broadly set out the different types of procedures prescribed, depending on different purposes of imports and exports, contemplated under the Rules. This may be broadly classified into five categories, (i) goods imported for Consumption, use or sale in the municipal area, (ii) goods imported not for consumption, use or sale within the munici pality but for immediate export, (iii) goods intended to be temporarily detained within the municipality in the bonded warehouse maintained by the Corporation and eventual export; (iv) goods intended for temporary detention in the private licensed bonded wharehouse of the importer and eventual export; and (v) goods imported by any person, mercantile firm or body which has been permitted by the municipal Corporation to keep an current account. In the first case, since octroi is attracted on arrival of the dutiable goods at the Octroi Naka the importer pays the amount of octroi assessed by the octroi officer and takes the goods inside the municipal limits. In the second case, the importer gives a declaration cum application that the goods are not being imported in the municipal limits for consumption, use or sale but are intended for immediate export outside the octroi limits. He is required to deposit an amount in 459 accordance with the scale fixed under clause (b) of sub rule (1) of Rule (5). On such deposit being made a receipt is given in the form prescribed by the Entrance Naka Inspector and a written permission cum transit pass issued by the Octroi Officer. On arrival of the goods at the exit Naka and on surrender of the written permission cum transit pass the deposit amount is refunded. In the third category of cases, the importer makes an application to the Octroi officer at the Entrance Naka for a written permission to deposit such goods at the bonded warehouse maintained by the Corporation. The Octroi Officer then makes an entry on the application that the importer is allowed to proceed with the goods to the bonded warehouse. The Officer in charge of the bonded warehouse will receive the goods and keep them in the bonded warehouse until exported. When the importer wants to export the goods he is required to apply for a written permission cum export pass in the prescribed form and also deposit an amount equal to the octroi leviable therein. On such deposit made a written permissioncum export pass is issued. When the goods are taken out of the municipal limits the Officer Incharge of the Exit Naka endorses the export pass certify ing the export and the refund of the deposit is claimed thereafter producing the certificate issued by the Exit Naka Officer. In the fourth category, the importer gives a decla ration in Form 4 that the goods are meant for temporary detention with him at his own warehouse for eventual export. After verification of the particulars furnished in that form with the invoices and other documents produced he is re quired to deposit at the Entry Octroi Naka point itself an amount equal to the amount of full octroi duty thereon as deposit. A receipt is given by the Octroi Inspector stating that the said amount "on account of deposit" has been recov ered. When he wants to export the dutiable goods detained with him he presents an intimation cum application in Form 11 for written permission to export the goods. He is also required to produce the goods at the Central Octroi officer along with the application. On satisfaction that all the conditions prescribed have been fulfilled and after verifi cation of the goods a written permission cum refund export pass in Form No. 12 is given to the importer. On presenta tion of these documents the Octroi officer at the Exit Naka gives a certificate that the goods mentioned therein have passed octroi limits and with that the refund application is made and refund obtained. The instant case falls under the fifth category. The Company has been permitted by the Municipal Corporation to keep the dutiable goods in a bonded warehouse of their own with a current account facility. The rules which were relied on by the Respondent and some of which are said to have not been complied with by the Company may be set out: "10. Maintenance of Bonded Warehouses. 460 (1) x x x (2) A Council may permit any importer to maintain a private Bonded Warehouse for keep ing goods which are imported by such importer for temporary detention and eventual export and grant a licence to such importer for that purpose subject to the conditions and restric tions laid down in such licence. A fee shall be charged for such licence at the rates specified in the bye laws relating to the grant of such licence." "14. Declarations to be made by importer, etc. (1) On arrival of any dutiable goods at the Octroi Naka, the Octroi Officer shall call upon the importer or the driver of the Vehicle or conveyance or the person incharge of the pack animal or other persons bringing the goods (a) X X X X (b) X X X X (C) X X X X (d) to make a declaration in Form 4, in respect of the goods intended for temporary detention with himself and eventual export; (e) to make a declaration in Form 5, in respect of the goods imported by, or on behalf of, any person, mercantile firm or body which has been permitted by the Council to keep an account current under Section 142; "15. Procedure for assessment and recovery of octroi. (4) On receipt of a declaration in Form 5 under the last preceding rule, the Octroi Officer shall ascertain whether the name of the person, mercantile firm or body on whose behalf the goods are being imported is on the list of persons, firms or bodies allowed to keep an account current, and if so, check the goods with the details entered in the declara tion and fill up the certificate below the declaration and issue a pass in Form 6. The Octroi Officer shall forward all such declara tions together with a list in duplicate there of to the Central Octroi Officer for further action in accordance with the provisions of Section 142. "24.Procedure for temporary detention of dutiable goods meant for eventual export, with importer himself. (1) Where dutiable goods intended for temporary detention within the octroi 461 limits and eventual export are to be detained by the importer at his residence or a Bonded Warehouse licensed under sub role (2) of rule 10 within the octroi limits, he may do so on giving a declaration to the Octroi officer in Form 4, and on payment of an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee at the Entrance Naka. (2) In case the importer cannot export the goods without breaking bulk or without assem ble and testing in the case of machinery, he shall do the same only with the sanction of the Superintendent of Octroi in the presence of an officer deputed for this purpose by the said Superintendent. Such goods, if necessary shall be formed into packages, which may be sealed and marked by the Officer so deputed. "25.Procedure for export of dutiable goods temporarily detained with importer. (1) When the importer wants to export dutiable goods detained with him, he shall present an intima tion cum application for written permission in Form 11 to the Superintendent of Octroi to export such goods, giving necessary details; and produce such goods for verification on any working day during the hours fixed by the Chief Officer at the Central Octroi Office or at any other Branch Office, as may be estab lished by the Council for the purpose. (2) A separate intimation cum application shall be given by each importer or his own goods. One such intimation cumapplication shall be sufficient for a single consignment. When such consignment contains goods of dif ferent descriptions, full details shall be given separately in the intimation cum appli cation. Not more than one intimation cum application for export can be given by an importer for goods passing through an Exit Naka in a day. (3) No such intimation cum application shall be accepted unless (a) it is complete in all respects and signed by the importer himself or by a person authorised by him in writing in this behalf; (b) it is supported by the receipt for the deposit paid at the time of import and is accompanied by the original invoice, if any, filed at the time of import; 462 (c) the goods produced for inspection and intended to be exported are, subject to the provisions of sub rule (2) of the last preced ing rule, identical with what they were at the time of import. (d) the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership. The requirement of clause (c) shall not be applicable in the case of dutiable goods to which sub rule (3) or (4) of the last preceding rule applies. (4) On receipt of such intimation cum applica tion and on arrival of the goods intended for export, at the Central Octroi Office or Branch Office, the Superintendent of Octroi or any officer authorised by him shall (a) satisfy himself that all the condi tions prescribed above are fulfilled; (b) verify that the goods actually pro duced for inspection are as described in the intimation cum application and in the relevant import invoice, if any, or in the import declaration in Form 4, and seal and mark such goods whenever deemed necessary; and (c) issue a written permission cum refund export pass in Form 12 after obtaining a specimen signature of the importer or his authorised agent on such pass. (5) The importer accompanied by an escort, if provided by the Council, shall then take the goods beyond the octroi limits through the Exit Naka within the time limit and by the route specified in the pass. Before crossing the Exit Naka, the impoter shall present the goods to the Octroi Officer at the Exit Naka for inspection, with the pass. The time limit shall be fixed with due regard to the distance of the Exit Naka from the Central Octroi Office or the Branch office, but in no case it shall exceed 12 hours from the time of issue of the permission cumrefund export pass. (6) The Octroi Officer at the Exit Naka, on presentation of such goods as well as the pass, shall satisfy himself that (a) the pass as well as the goods are presented within the specified time limit; 463 (b)the seals or marks, if any, are inact; and (c) the goods actually tally with those men tioned in the pass. On being so satisfied, he shall make relevant entries in the register maintained for the purpose, obtain signature of the importer thereon, sign a certificate as given on the pass, deliver the same to the importer and allow the goods to pass beyond the octroi limits. Provision for refund of deposit. (1) When any goods for which a deposit has been paid under rule 24 at the time of their import are exported, the amount of deposit recovered shall, subject to the provision of sub rule (2), be refunded. (2) The refund shall be admissible, if all the conditions below are satisfied. (a) The refund is applied for within one month from the date of e x port. (b) The goods are exported out of the octroi limits within a period of six months of their import. (c) The application for refund is supported by a duly certified written permission cum refund export pass. (d) All the conditions in sub rule (3) of rule 25 are fulfilled. (e) The amount claimed as refund is with drawn within three months from the date of intimation to the importer to receive the amount. (f) The goods exported were declared to be intended for temporary detention with the importer and eventual export at the time of import: Provided that the said period of six months shall not apply to goods imported by the Food Corporation of India established under section 3 of the Food Corporation Act, 1964. Procedure for refund. (1) The Applica tion for refund of deposit shall be made in Form 13 by the importer himself or by his duly authorised agent in this behalf in writing on any working day during the hours fixed for money transactions by the Council at the Central Octroi Office within one month from the date of the actual export. If the last day for claiming refund falls on a public holiday such application shall be accepted on the next working day. 464 (2) Such application shall be accompanied by the duly certified relevant written permis sion cure refund export pass and shall contain reference to the connected export intimation cum application already given by the importer. There shall be a separate application for each written permission cure refund export pass. (3) If the refund application is in order and satisfies all the conditions specified in the last preceding rule, the amount of the refund shall be correctly determined subject to the limitation prescribed in the next succeeding rule". Value, weight, etc. of goods for purposes of refund. When the refund is claimed in respect of goods on which duty is leviable ad valorem, the value for the purposes of refund shall be the value as per invoice on the strength of which the duty was originally paid together with such cost of carriage and other incidental charges that were then deter mined. Where the value was determined in the absence of invoice on the basis of market rate prevalent on the day of import, that value only should be considered and not the market price prevalent in the local market on the day of export". FORM 4 (Rules 14, 24 and 25) Declaration in respect of the dutiable goods imported into the Municipal octroi limits, which are intended for temporary detention with the importer and eventual export. To The Octroi Officer, Octroi Naka No. . . . . Municipal Council. I, . . . . (insert full name and address of the importer) hereby declare that the below mentioned goods are meant for temporary detention with me at . . (specify address at which to be kept) for eventual export outside the octroi limits. I am willing to pay an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee and may claim refund according to the rules if these goods are exported outside limits within six months from the date of their import. The below mentioned details are true and according to the original invoice, true copy of which is filed herewith. The said invoice covers all the goods im ported by me as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air consignment Note No. . .dated . . 465 Sr. No No.and Description Weight Value Senders Rem No &date descri of the or plus all name& arks of ption of goods goods incidental address import packages charges in full document which are to given seper ately 1 2 3 4 5 6 7 8 Full residential/business address of the importer. Date . . Signature of the Importer I have checked the above particulars with the invoice and verified the goods, which are found to be correct. True copy of the invoice appended is verified and found to be correct. The weight or quantity or value, together with the incidental charges declared, is correct. The taxable weight/quantity/value of the goods is . . and the rate of octroi . . Date. . Inspector/Clerk. The amount of Rs. . on account of deposit has been recovered under receipt No. . . dated . . . Date . . Inspector/Clerk. FORM5 (Rules 14 and 15) Declaration in respect of the dutiable goods imported on behalf of person, firm, or body allowed to keep an account current. To, The Cetroi Officer, Octroi Naka No. . Municipal Council. I,. . . . (insert the full name and address of the importer) hereby declare that the below mentioned goods are being imported into the Municipal Octroi limits on behalf of . . . (insert the name of persons, firm or body allowed to keep an account current) and that the below mentioned value and weight/quantity of the goods is true and correct and is according to the original invoice, true copy of which is filed herewith. The said invoice fully covers all the goods imported by me today as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air Consignment Note No. . dated . . , I further undertake to produce the said invoice for your inspection whenever demanded by you within one year from today. 466 To be filled in by the importer To be filled in at the Central Octroi Office 1.Sr. No. 2. Bill of Entry 'Railway Receipt ' Goods Transport Memo/ Air Consignment Note. Number description of packages. Goods. Value plus incidental charges which are to be given seperately. 7.Rate of Ovctroi. Amount of Octroi recoverable. Date. .Signature of the importer Dues entered in I have checked the above particulars Account Current with the invoice and verified the goods, Date . . which are found to be correct. True Octroi copy of the invoice appended is Superintendent verified and found to be correct. The weight or quantity or value, together with the incidental charges declared, is correct. Issued pass No . dated . Date . . . Inspector/Clerk FORM6 (Rule 15) Pass for goods imported on behalf of person, firm or body allowed to keep an account current . Municipal Council:. .Municipal Council Book No. Entrance Naka No. : Book No. En trance Naka No. Counterfoil of pass Pass for goods imported by in account current . (Name of Person, firm or body) Description No. and Description Weight, Description of the quantity of packages goods or value 1 2 3 Dated . . Dated . . Entrance Naka Inspector/Clerk Entrance Naka Inspector/Clerk 467 Form 11 (Rules 25 and 26) Intimation cum application for written permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi, . . Municipal Council. Sir, I. . . . . (insert the full name and address of the importer) hereby declare my intention to export the goods to. . .through Naka No. . as detailed below. The certified copy of original invoice/invoices under which these goods were imported are appended herewith. I have produced the goods for actual verification. Kindly grant me the permission to carry the goods to the said Naka. Description Quantity Date of Import Deposit Gross No. of the (Number of Import invoice receipt weight goods bags or & No. of No. and number & cases) entrance date date Naka 1 2 3 4 5 6 7 Value Amount to be Number of Name and How Remarks refunded Refund Export address of exported pass granted the consignee 8 9 10 11 12 13 Date . . . Signature of Importer Verified the contents and the weight as above and found correct. Countersigned. Octroi Officer. Signature of the Refund Inspector/Clerk. Receipt No. . 468 FORM Rule 25) Written Permission cum Refund Export Pass Receipt No. . . Date . . . 19 Sl. Month Name and Name and Description Quantity Gross No. and address of address of of the (number of weight date the impoter the consignee goods bags or cases) 1 2 3 4 5 6 7 Value Deposit How Exist Date & time by Whether Remarks to be exported Naka which the goods goods refunded No. should reach the sealed or Export Naka escort given 8 9 10 11 12 13 14 *Fee for Written Permission Cum Refund Pass Rs . . Miscellaneous Receipt No. . , dated. . , Signature of the importer Signature of Octroi Officer I hereby certify that the goods mentioned above have passed outside the octroi limits this day the. . of the month. . 19 Time. . . a.m./p.m. in my presence Railway receipt. . /Vehicle No. . The seals, if any, thereon were intact when the goods were presented to me for verification. Date . . . Signature of the Exist Naka Officer Naka No. . *This fee should be levied in accordance with the bye laws framed under section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exist Naka. FORM13 (Rule 29) Application for Refund of Deposit To The Superintendent of Octroi, . . Municipal Council. 469 Sir, I, . . . the resident of. . hereby apply for refund of deposit as per enclosed Written Permis sion cum Refund Export Pass No. . .dated. . , as the goods mentioned in the pass were exported on. .under my intimation cum application, dated. . , I therefore, request you to grant the refund of Rs. . and oblige. Enclosure: Date. . Signature of Importer On a reading of these rules it appears to be that Rules 24, 25 and 28 in terms would apply only to cases failing under category four, stated above. The declaration in Form 4 referred to in Rule 24 and deposit of the amount equivalent to octroi duty payable at the entry point, production of the goods for verification at the Central Octroi Office are all consistent with its being applicable to a case where dutia ble goods are imported for temporary detention and eventual export by a person having a bonded warehouse of his own contemplated in Rule 14 (1) (d) and not Rule 14 (1) (e). However, Rules 29 and 30 are general in terms and may be invoked in both the cases falling under Rule 14 (1) (d) and (e). Sub rule (3) of Rule 29 refers to the compliance of the conditions in Rule 28 and that is how it may be said that the provisions of Rule 28 are attracted to the cases of a person having a bonded warehouse and the facility of account current. However, the Rules have to be read and applied in such way that they do not conflict with but are consistent with the facility of current account given to the Company. Form 5 which is applicable to a case falling under Rule 14 (1) (e) does not require the Company (importer) to give a declaration at the time of arrival of the goods at the entry Naka point that the "goods are meant for temporary detention with" the Company at its warehouse "for eventual export outside the octroi limits". The Company need not also make any deposit with the Naka Inspector at the point of entry. An amount equivalent to the octroi duty payable in respect of the goods is only entered in the account current after the goods have reached the warehouse and verified by the Octroi Officer. Form 4is not applicable to the case of the Company which has got a current account facility. The Compa ny, is, therefore, bound to give a declaration only in Form 5, and need not give a declaration as in Form 4 nor is there any obligation to deposit an amount equivalent to the full octroi duty with the Octroi Inspector at the Entry Naka Point. Further reference to original invoices/in Forms 4 and 5 is only for the purpose of checking the particulars en tered into in the forms. The production of an invoice is not, having regard to the 470 purpose of such production, to be insisted blindly. If the particulars furnished in the form including weight/quantity or value could be established satisfactorily by other docu ments, we have no doubt that will be sufficient compliance with the Rules. Column 5 of Form 11 also refers to invoice and the date of invoice. This is again to correlate the goods exported with the goods imported. If the identity of the goods could be established by evidence other than the production of invoices that should satisfy the Rules. The invoice as such has no bearing on the liability of the goods for octroi or the right of the Company for refund. So far as the production of the original invoices are concerned, the learned counsel for the Company pointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable. Under the current account procedure the invoices, if any and all the other documents are verified when the goods reach the ware house with reference to the description of the goods, weight/quantity, value and other particulars and it is only after verification the octroi duty leviable is determined and amount is debited in the account current and the demand also is issued. The learned counsel for the appellant also referred to certain documents to show that for every category of arti cle, the Company has given a distinctive number and the goods are easily identifiable and the number of items or quantity imported are all record in the register and com puterised for easy verification. It is these identifying numbers of the articles that are mentioned in the intima tion cure application for written permission for export. He also relied on the fact that the Company has no manufactur ing unit within the Thane Municipality. Similarly, Column 6 of Form II also could not be complied with as it is not applicable to a person who is having current account facili ty. So far as the value is concerned the learned counsel for the appellants have fairly stated that the respondent was taking 72% of the list price of the articles for determining octroi payable, for which he has no objection. In fact, he has suggested that since the Company publishes the price list periodically and that which shows the current price at any point of time may be taken as the basis for such valua tion. The Octroi Exit Naka Officer had refused to give the certificate of export pass on the ground that the particu lars in Columns 5 and 6 of Form 11 could not be verified as the original invoices and the deposit receipts were not produced. Since these columns could be filled only to the extent possible by a person having an account current facil ity and there is no dispute about the export of the goods mentioned therein the refusal to give the export pass cer tificate. by the Exit Naka Officer could not be sustained. 471 The next point to be considered is the procedure to be followed when the importer wants to "breaking the hulk" and repack the goods in smaller quantities and also the proce dure relating to filling up Forms 11 and 12 and the refund applications in such circumstances. Rules 24 (2.) states that for breaking the bulk and repacking in smaller pack ages, sanction of the Superintendent of Octroi is necessary and the "breaking bulk" shall also be done in the presence of an officer deputed for this purpose. Rule 62 of Chapter VIII of the Schedule to the Bombay Provincial Municipal Corporation Act, 1949 provides that subject to the standing orders not less than 90% of the octroi paid on any goods shall be refunded if such goods are exported beyond the limits of the city within six months of payment: "provided that. (C) in the case of goods which have been broken bulk prior intimation has been given to the officers specified in this behalf in the standing orders and the place or places of storage have been reported to him from time to time". Paragraph 5 of Appendix IV to this Act which we have noticed earlier states that the rules flamed under the Municipal Act shall "in so far as it is not inconsistent with the provisions of this Act, continue in force". Rule 62 of Chapter VIII forms part of the Act. The learned counsel for the appellant, therefore, contended that Rule 62 shall prevail and prior intimation of the intention to 'breaking bulk ' shall be enough and there was no necessity for the Company to get the sanction of the Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule (2) of Rule 24. In other words according to the learned counsel Rule 24 (2) of the Octroi Rules is inconsistent with Rule 62 of Chapter VIII of the Schedule to the Act and to the extent. _ of inconsistency it shall be deemed to be not applicable. On the other hand the learned counsel for the respondent con tended that Rule 62 (c) deals with prior intimation and Rule 24 (2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency. We are not impressed with the argument that there is an inconsistency between Rule 62 and Rule 24 (2). The intimation contemplated in Rule 62 imply that the break ing the bulk shall be done with the knowledge of the octroi authorities. But it Cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent. Both the rules thus can stand together. In H.M.M. Limited vs Administrator, ; this Court had occasion to consider the effect of non com pliance with this require 472 ment of a similar provision, on the right to get refund. Shortly stated the facts in that case were these: The appel lant brought into the municipal limits Horlicks in bulk containers (large steel drums) for being packed in unit containers (glass bottles) at the packing station in Banga lore and thereafter exported outside the municipal limits. In respect of the milkfood so exported in glass bottles the appellants sought refund of octroi on the ground that there was no consumption, use or sale within the municipal limits and the goods were exported. Rule 24 of the Octroi Rules that were in force in Bangalore city provided: "24. 0n all articles on which octroi duty has been paid and which are subsequently exported beyond the octroi limits without breaking bulk, refunds shall, subject to the following rules, be granted at the rate originally charged at the time of import; provided that no such refunds shall, except in the ease of timber imported and re exported in log be granted unless such goods are exported within three months from the date on which octroi was levied". Relying on this provision it was contended by the Munic ipality that breaking the bulk amounted to "use" within the municipal limits attracting levy of octroi and no refund was permissible. The refund application had also not been made within three months from the date on which octroi was levied. It was admitted that the appellants had not followed that procedure prescribed in Rule 24. This Court held that mere transferring of a bulk product in small containers like packets or bottles for the purpose of sale does not amount to use of the goods in the sense the word is used in rela tion to levy of octroi. It was further held that the words "without breaking bulk" is not an expression of art and that meant only transferring the product from the drums by break ing the seal of the drums, to the bottles for the purpose of exporting or for taking them out of the municipal limits, and that would not amount to either use or consumption of the Horlicks powder within the municipal limits attracting the levy of octroi. The ratio of the judgment clearly is that merely on the ground that the goods are not exported in bulk as originally imported, the levy does not become valid or that the import er who exported the goods loses his right to a refund of the octroi paid. The goods neither loose their identity nor cease to be identifiable. Once we reach the conclusion that there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages. This is particu 473 larly so because in the case of goods not consumed or used within the octroi area but exported there is a constitution al bar for the levy of octroi. In this connection we may also refer to another decision reported in Municipal Committee, Khurari vs Dhannalal Sethi & Ors., [1969] I SCR 166. The rules considered in that case also provided that an application for refund was to be made in the prescribed form and that the exporter after filling in the particulars had to present his application at the office appointed for that purpose. There were other rules which provided an elaborate procedure to be followed at the time of export of the goods. These rules related to the octroi officers satisfying himself that the goods brought for export agree with those mentioned in the application, presentation of the claim within the prescribed time, iden tifying of the goods exported with those imported and other matters. This Court held that: "these rules do provide a procedure which an exporter wishing to claim refund has to fol low. But the question is whether in a case where an exporter has not done so, is he disentitled from claiming the refund. The real difficulty in the way of the appellant Commit tee is that though the rules lay down a proce dure which such an applicant has to follow, they do not provide at the same time that an applicant for refund who has failed to follow the procedure laid down in r.r. 35 to 39 would be disentitled to claim the refund. In the absence of such a provision coupled with the categorical language of r. 27 giving a right to an exporter of dutiable goods to claim 7/8th of the duty paid on such goods on their import, it becomes difficult to uphold the denial by the appellant Committee of the right of respondents 1 and 2 such a refund. We are, therefore, of the opinion that in the present state of the rules, the appeal must fail though for reasons different from those given by the Board of Revenue and the High Court". It may be pertinent to mention that the Maharashtra Municipalities (Octroi) Rules, 1968 also do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitIed to claim the refund. It may be noted that the amount collected which is equivalent to the octroi duty payable on the goods, on entry into the octroi limits while in detention in the warehouse is only as a deposit pending export of the goods. The other aspect is that once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods. Further in a given set of facts, whether the rules have been complied with will have 474 to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satisfied. ` Rule 28 also merely states that the refund shall be admissible if all the conditions in sub rule 2 of that Rule are satisfied. The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported. In other words the whole requirement relates to the identification of the goods. In that sense if the same is otherwise complied with the right to refund cannot be denied. These rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use. As held by this Court in Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; the octroi rules are intended to regulate the system on which the refunds shall be allowed and paid. What are merely matters of procedure which the municipality was entitled to require compliance with in granting refund cannot be treated as condition precedent for the entitlement of the refund itself. The Constitution prohibits levy of tax except in accordance with law. When the goods are not imported for consumption or use within the octroi area the municipality ceases to have any constitutional right to levy octroi. If the goods therefore have merely entered into the octroi limits and passed out of the same no octroi duty is attracted. The concept of octroi as held by this Court in Burma Shell s case (supra) may include "the bringing in of goods in a local area so that the goods come to a repose there". It is this concept that is reflected in Rule 28 (2) Co) when it requires evidence that the goods were exported out of the octroi limits within a period of six months of their im ports. The learned counsel for the appellants Mr. Andharuji na had expressed certain difficulties in satisfying the Corporation that the goods imported were exported within the period of six months as provided in the rules in view of certain peculiar circumstances in this case. He pointed out the goods received in bulk are small small items and there are about 16000 distinctive types of articles and when the bulks are broken and each of the categories items are mixed up together it becomes difficult for him to individually identify when the goods were received and when they were exported. However, he was sure that the goods were exported before six months. When this difficulty was pointed out during the pendency of the appeal, as an interim direction this Court by Order dated 1.5. 1989 directed the parties to proceed on the basis that the goods which came in first had gone out first unless some factors or features indicate otherwise. This is not equitable principle unknown to law. Even as early as in 1816 with reference to money paid on account to a creditor, in Clayton 's case (1814) 475 23 All. E.R. Rep. P. 1, it was held that in the absence of an agreement to the contrary, in the case of current account containing debit and credit entries there is a presumption that the first item on the credit side of the account is intended to be applied in the payment of the first item on the debit side of the account. This is an equitable princi ple which could be followed in the instant case and it may be presumed that the goods which came in first have gone out first and the six months period could be determined on that basis. In any case in view of the interim direction given by this Court on May 1,1989 that may be usefully be followed for the future also in this case. To sum up: Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable. The words 'sale therein in the words "consumption, use or sale therein in the defi nition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area. If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant. Rules 24 to 30 and the forms in the system of levy of octroi are intended to regulate the procedure for collection, identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collect ed. In view of constitutional bar octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occa sions the export. Compliance with the procedure prescribed in the Rules for filing claims of refunds are not condition precedent for the right or eligibility for refund or the liability to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaus tive either. They are to be interpreted and understood in that sense. The object of the Rules fixing a period of limitation for export however is different. The export cannot be put in perpetual doubt and the goods may be con sidered to have come to a repose if they were not exported within a particular period provided in the rules. Applying these principles to the instant case, on facts the rejection of refund applications on the ground that Rule 25 (3) (d) had not been complied with was illegal. Since the rejection of the claims for refund was merely on the ground that either Form 4 and original invoices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds which we have stated are untenable the other orders of rejections are also invalid. If the goods are mixed up and unidentifia ble 476 due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported, subject to any evidence available to the contrary, may be applied and the six months period prescribed for export may be determined accordingly. When these appeals were pending by way of interim ar rangement this Court by order dated 25.4.1990 directed that in order to obviate the difficulty of identifying the goods at the time of export by reason of the breaking of the)bulk and in order avoid doubts, the respondent Corporation may depute their officer or officers on all working days at the warehouse of the Company to supervise the breaking of the bulk subject to the Company reimbursing the entire monthly payments and other allowances to be paid to the said officer or officers as per bill or pay slips sent by the Corporation to the Company. We think that this procedure could be con tinued and followed in future also so that while the pur poses of the rules are served the free trade and commerce of the Company which is stated to have a large turnover is also not affected. The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund. The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed. This argument is based on the ground that in the selling price the company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for the fact that they were initially asked to deposit octroi. There is no evidence that any of the arti cles sold by the Company is subject to any price control by the Government or that the Company had charged any octroi separately in the bills, Invoices and the other documents of sale to the outside purchasers produced before us do not also show that any octroi was separately charged and col lected by the Company. It may be mentioned that in the rejoinder filed by the appellant in the writ petition they have specifically denied that they "have recovered the amount paid by them by way of octroi duty from the dealers to whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers". In view of this the question of unjust enrichment does not arise. 477 This appeal is accordingly allowed on the above terms. There will 'however be no order as to costs. T.N.A. Appeal allowed.

The appellant company was carrying on business of manu facture and sale of motor vehicles, spare parts of motor vehicles and excavators. Their manufacturing units were located outside the municipal limits of the respondent corporation. Pursuant to the permission granted by the Respondent Corporation under Rule 10(2) of 446 the Maharashtra Municipalities (Octroi) Rules, 1968 the appellant company was maintaining a bonded warehouse within the municipal limits of the Respondent Corporation. The motor vehicles parts and excavators parts brought from the Company 's own factories as well parts imported from abroad were stored in this warehouse. These products were brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the requirements of the customers in various parts of the country. The appellants were also granted current account facilities without the requirement of immediate payment of octroi at the Octroi Naka. Accordingly, the appellants were carrying out their activities of imports and exports under the current account procedure with facility of unpacking the bulk, repacking and exporting. Under the Octroi Rules the octroi becomes refundable when the goods in respect of which octroi was paid are exported out of octroi limits within 6 months of their im port. During the period 1st January, 1983 to 31st March, 1984 the appellant Company made 1182 claims for refund of octroi which were rejected by the Corporation on the grounds: (1) the Company had "sold" the spare parts within the octroi limits of the Corporation in contravention of Rule 25(3) (d) of the Maharashtra Municipalities (Octroi) Rules, 1968; (2) the procedure prescribed for export and the claim of refund had not been strictly followed. The appellants filed a writ petition under Article 226 in the High Court of Bombay contending that the action of the Municipal Corporation in refusing refund was unconstitu tional and illegal. The Division Bench of the High Court dismissed the writ petition. The Company filed an appeal in this Court against the decision of the High Court. In appeal to this Court it was contended on behalf of the appellant (i) since the sales were not for consumption or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consump tion or use outside such limits the rejection of the claims by the Respondent Corporation on the ground that the sales were within the municipal limits in contravention of rule 25(3) (d) of the Rules is illegal; (ii) Under Rule 62 of Chapter VIII of the Schedule to Bombay Provincial Municipal Corporation Act, 1949, prior intimation of the intention to 'break the bulk ' is enough and there is no necessity for the company to get the sanction 447 of Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule (2) of Rule 24 of the Maharashtra Municipali ties (Octroi) Rules, 1968; Rule 24(2) of the Octroi Rules is inconsistent with Rule 62 and to the extent of inconsistency it shall be deemed to be not applicable. On behalf of the respondent Corporation it was contended (i) that the meaning of words "sales therein" in the defini tion of octroi in the Acts and in Entry 52 of List II of VII Schedule to the Constitution could not be limited to sales of the goods for purposes of consumption or use within the municipal limits; (ii) there was a change in the ownership of the goods since a sale in law had taken inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits; (iii) that while Rule 62 (c) deals with prior intimation Rule 24(2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency; (iv) since the appellants have recovered the amounts paid by them by way of octroi duty from their deal ers or customers they are not entitled to refund; ordering of refund would amount to allowing the appellants to unjust ly enrich themselves at the cost of the public to whom the burden had already been passed. Allowing the appeal, this Court, HELD: 1. In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. Mere physical entry into the octroi limits would not attract levy of octroi. When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable. The octroiable event in such a case shall be deemed not to have happened. This is particularly so because in the case of goods not consumed or used within the octroi area but exported there is a constitutional bar for the levy of octroi. In view of the constitutional bar, octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occasions the export. [458 B C, 472 H, 473 A, 475 E] 1.1 Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an 448 ultimate user or consumer in the octroi area no octroi is leviable. The words 'sale therein ' in the words 'consump tion, use or sale therein ' in the definition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area. If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant. Therefore octroi rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use. [475 C, 474 B] Burmah Shell Co. vs Belgaum Municipal, ll963I Suppl. 2 S.C.R. 216; Hira Lal Thakur Lal Dalai vs Brash Broach Munic ipality, ; Municipal Council of Jodhpur vs Parekh Automobiles Ltd. & Ors., ; and H.M.M. Ltd. vs Administrator, ; , relied on. Khandelwal Traders Akola vs The Akola Municipal Council, AIR 1985 Born. 218, approved. 1.2 Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded. Accordingly the rejection of the refund claims on the ground that Rule 25(3) (d) had not been strictly complied with is illegal and could not be sustained. [457 G H] 2. Once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods. [473 G H] 2.1 Under the octroi scheme, when the goods in respect of which octroi is paid are exported, the octroi becomes refundable. Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable. [458 C] 2.2 If there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages. [472 H] 3. The rules merely regulate the system on which refund shall 449 be allowed. In a given set of facts, whether the rules have been complied with will have to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satis fied. [458 D, 473 H, 474 A] 3.1 The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported. In other words the whole require ment relates to the identification of the goods. In that sense if the same is otherwise complied with the right to refund cannot be denied. [474 A B] 3.2 Rules 24 to 30 of the Maharashtra Municipalities (Octroi) Rules, 1968 and the forms in the system of levy of Octroi are intended to regulate the procedure for collection identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collected. [475 D] The rules do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitled to claim the refund. [473 G] 3.3 Compliance with the procedure prescribed in the Rules for filing claims of refunds are not conditions prece dent for the right or eligibility for refund or the liabili ty to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaustive ei ther. They are to be interpreted and understood in that sense. [475 E F] Municipal Committee Khurari vs Dhannalal Nethi & Ors., ; ; Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; , applied. 3.4 Since the rejection of the claims for refund was merely on the ground that either form 4 and original in voices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds are untenable the orders of rejection are invalid. 1475 G H] 4. The object of the Rules fixing a period of limitation for 450 export however is different. The export cannot be put in perpetual doubt and the goods may be considered to have come to a repose if they were not exported within a particular period provided in the rules. [475 F] 4.1 However an equitable principle could be followed in this regard and it may be presumed that the goods which came in first have gone out first. If the goods are mixed up and unidentifiable due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported, subject to any evidence available to the contrary, may be applied and the six months period prescribed under Rule 28(2) (b) for export may be determined accordingly. [475 A B, H, 476 A] Clayton 's case; , , applied. There is no inconsistency between Rule 62 and Rule 24(2). The intimation contemplated in Rule 62 imply that the breaking the bulk shall be done with the knowledge of the octroi authorities. But it cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent. Therefore, both the rules can stand together. [471 F G] 6. There in no evidence that any of the articles sold by the Company is subject to any price control by the Gov ernment or that the Company had charged any octroi separate ly in the bills. Documentary evidence do not also show that any octroi was separately charged and collected by the Company. Therefore the question of unjust enrichment does not arise. [476 F H]

6946.txt

44 of 1958. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. Naunit Lal and Gopal Singh, for the petitioners. H. N. Sanyal, Additional Solicitor General of India, N. section Bindra, K. R. Choudhri and R. H. Dhebar, for the respondent. October 27. The petitioners have moved this Court under article 32 of the Constitution for a writ of mandamus against the respondent to verify the claims put forward by the petitioners and to grant compensation in respect thereof; but there is little merit to commend the acceptance of the petition. The petitioners are displaced persons from West Punjab which is now known as West Pakistan and have taken up their residences in different parts of India. They put forward certain claims in regard to village houses which they had left in West Pakistan and which were situate in different villages. The petitioners have in their petition set out their respective claims which were rejected by the Rehabilitation authorities. It is unnecessary to give details of the properties in the various villages in regard to which claims were made. It is sufficient to say that the claims were put forward and they were for amounts above Rs. 20,000 in the case of petitioners Nos. 1 and 2 and above Rs. 10,000 in the case of petitioners Nos. 3 The petitioners challenge the vires of two rules Rule 5 under the , (Act 12 of 1954) and r. 65 of the Rules made under the Displaced Persons (Compensation and Rehabilitation Act), Act 44 of 1954. The challenge is on the ground of violation of article 14 of the Constitution. It is necessary at this stage to set out the various Acts and regulations which were passed in regard to displaced persons dealing with 122 verification of their claims and the giving of compensation to them. On April 1, 1948, the East Punjab Refugees (Registration of Claims) Act, 1948, East Punjab Act 8 of 1948, was passed and this was followed by the East Punjab Refugees (Registration of Land Claims) Act 12 of 1948. In the latter Act " land " was defined in section 2(b) to mean " land which is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes subservient to agriculture or for pasture and includes (i) the sites of buildings and other structures on such land;". Under section 2(a) " claim " was defined as " a statement of loss or damage suffered by a refugee since the first day of March 1947, in respect of his land within the territory now comprised in the Province of (Punjab in Pakistan), North West Frontier Province, Sind or Baluchistan, or in any State adjac. ent to the aforesaid Provinces and acceding to Pakistan ". Section 4(1) of that Act made provision for submission for registration of claims in respect of land abandoned by a refugee. On November 19, 1949, East Punjab Displaced Persons (Land Settlement Act) 1949, East Punjab Act 36 of 1949, was passed. By section 2(b) of this Act the word " allottee " was defined and by section 2(d) " land " was defined. This definition which was slightly different from the definition in the East, Punjab Act (Act 12 of 1948) was as follows: section 2(d). " " Land " means land which is not urban land and is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes subservient to agriculture or for pasture and includes (i) the sites of buildings and other structures on such land;". On May 18,1950, another Act, the Displaced Persons (Claims) Act 44 of 1950, was passed by the Central Legislature. In this Act " claim " was defined in 123 section 2(a) as " the assertion of a right to the ownership of, or to any interest in (ii) such class of property in any part of West Pakistan other than in any urban area as may be notified by the Central Government in this behalf in the Official Gazette;". This Act was in force for two years and then lapsed. Under section 2(a)(ii) the Central Government issued a notification on May 27, 1950, specifying the property in respect of which claims might be submitted. The properties were: (1) Any immoveable property in West Pakistan which forms part of the assets of an industrial undertaking and is situate in an area other than an urban area. (2) Any other immoveable property in West Pakistan comprising of a building situated in an area, other than an urban area, the estimated cost of construction of which at present prevailing rates is not less than Rs. 20,000. (3) Any agricultural land in any part of West Punjab ". This shows that claims could only be submitted in regard to building in a rural area which was valued at not less than Rs. 20,000 and there was no such restriction in regard to urban area. This notification was amended by a notification dated September 13, 1950. Clause (2) of the previous notification was substituted by a new clause: " (2) Any other immoveable property in West Pakistan comprising of a building situated in an area other than an urban area; provided that where the person making the claim hag been allotted any agricultural land in India (a) where the gricultural land so allotted exceeds 4 acres the value of the building in respect of which the claim is made shall not, according to the present estimated cost of construction, be less than Rs. 20,000. (b) where the agricultural land so allotted is 4 acres or less, the value of the building in respect of which the claim is made shall not, according to the 124 present estimated cost of construction, be less than Rs. 10,000. Explanation 1. . . . . Explanation 11. For the purpose of this clause a person shall be deemed to have been allotted agricultural land in India if he is allotted such land in any manner whatsoever whether on temporary or quasipermanent basis." On March 23, 1954, the of 1954, was passed and a. 12 provided for the making of rules. Rule 5 was made in the following terms: " R. 5. The classes of property in respect of which claims may be verified under these rules shall be the same as under the principal Act and the rules made thereunder, that is to say (1) any immoveable property situated within an urban area in West Pakistan; (2) any immoveable property in West Pakistan, which forms part of the assets of an industrial undertaking and is situated in any area other than an urban area ; (3) any other immoveable property in West Pakistan comprising of a building situated in any area other than an urban area; Provided that where a claimant has been allotted any agricultural land in India and that (a) where the agricultural land so allotted exceeds four acres, the value of the building in respect of which the claim is made shall not, according to the present estimated cost of construction, be less than Rs. 20,000, (b) where the agricultural land so allotted does not exceed four acres, the value of building in respect of which the claim is made, shall not, according to the present estimated cost of construction, be less than Rs. 10,000." Explanation II is in the same terms as in the notification of September 13, 1950. On October 9, 1954, the 44 of 1954 (to be hereinafter termed Act 44 of 1954) was enacted by Parliament. Section 2(a) defines compensation pool 125 which is constituted under section 14. Section 2(e) defines " verified claim " as follows : " " Verified claim " means any claim registered under the Displaced Persons (Claims) Act, 1950 (44 of 1950) in respect of which a final order has been passed under that Act or under the , but does not include Section 4 provided for application for payment of compensation. Section 7 for the determination of the amount of compensation and section 40 for the making of rules. Rules were made under this Act by a notification No. section R. O. 1363, dated May 21, 1955. Rule 2(h) defines " urban area " and a. 2(f) " rural area " which means area which is not an urban area Rule 16 provides for the scale of compensation which is set out in appendix 8 or 9. Under r. 18 compensation was to be determined on the total value of all claims which included all kinds of properties other than agricultural land left by claimants in West Pakistan. Rule 44 deals with allotment of acquired evacuee houses in rural areas in lieu of compensation. Under sub section (3) of this rule houses in rural areas were graded and under r. 47 payment of compensation was to be made subject to r. 65. Rule 57 provided for allotment of houses in addition to agricultural land. This rule provided: R. 57. " A displaced person having a verified claim in respect of agricultural land who has settled in a rural area and to whom agricultural land has been allotted a house in addition to such land in accordance with the following scale (1) Claimants allotted land up to Ten Standard acres Grade (H), (2) Claimants allotted and exceeding Ten Standard acres but not exceeding fifty standard acres . . . Grade (G) provided that if such person holds a verified claim in respect of any rural building and that claim has been satisfied wholly or partially before the allotment of such land the provisions of rule 65 shall not be 126 applicable in his case but he shall not be entitled to the allotment of a house or a site and building grant in lieu thereof. Explanation 1 Where no house is available in the same village, an allottee may be granted: (a) if he has been allotted agricultural land not exceeding ten standard acres, a site measuring 400 square yards and a building grant of Rs. 400; and (b) if he has been allotted agricultural land exceeding ten standard acres but not exceeding fifty standard acres a site measuring 600 square yards and a building grant of Rs. 600. Explanation II The reference to grades in this rule is to the grades of houses specified in rule 44. " Rule 61 deals with refusal of acceptance of allotment and is as under: Rule 61. " Where any person refuses to accept the allotment of any agricultural land offered to him the claim for compensation of the allottee shall be deemed to have been satisfied to the extent of the value of the allotted land and such land shall be available for allotment to any other claimant." The impugned rule 65 provided: " (1) Any person to whom more than four acres of agricultural land have been allotted shall not be entitled to receive compensation separately in respect of his verified claim for any rural building the assessed value of which is less than Rs. 20,000. (2) Any person to whom four acres or less of agricultural land have been allotted shall not be entitled to receive compensation separately in respect of his verified claim for any rural, building the assessed value of which is less than Rs. 10,000 ". It was argued on behalf of the petitioners that the object of the various Acts and the rules made thereunder was to rehabilitate displaced persons but by the rules a classification had been made which was discriminatory as neither the classes were based on any intelligible differentia nor was there a rational nexus between that differentia and the object sought to be achieved. The classification, according to the argument was: (1) between urban population and rural 127 population; (2) between refugees from rural areas who owned lands and those who owned only rural houses and (3) between those who had quasi permanent and permanent allotments. In order to determine the question raised it is necessary to trace in chronological order the various steps taken to rehabilitate the millions of persons who were forced to migrate into India leaving behind properties worth varyingly large amounts. When displaced persons came from West Punjab and other provinces of India which became Pakistan, the authorities allotted to every agricultural family certain area of agricultural land the object being (1) to give temporary shelter to the displaced persons and (2) to preserve whatever crops bad been left by persons who went away to Pakistan. At an Inter Dominion Conference between the Governments of India and Pakistan held at Karachi between January 10 and 13, 1949, a permanent Inter Dominion Commission was set up to consider the question of administration, sale and transfer of evacuee property in both the dominions. In pursuance of this decision the question in respect of shops and houses in rural areas was considered by the Commission at New Delhi on March 11 and 13, 1949. It was recommended at this meeting that buildings in rural areas of the value of Rs. 20,000 or more should be considered to be substantial buildings and the buildings which were of lesser value than that were to be treated as appendages of agricultural land and as such were to be treated as " agricultural properties " : vide the minutes of that meeting at p. 242 of a compilation known as " Documents concerning Evacuee Property" of the years 1947 51. Chapter IX of the Land Resettlement Manual for Displaced Persons by Mr. Tarlok Singh, a book of undoubted authenticity and value, deals with allotment of rural houses and sites. Rule 3 shows how the equitable distribution of houses was to be effected. In order to ensure fairness the size of the land allotment made to a displaced person and the type of house abandoned by him were considered to be major factors. For each standard acre allotted 128 one mark was to be given and subject to a maximum of 20 marks houses abandoned in West Punjab were valued at the rate of one mark for each one thousand of the value of the house and houses above the value of Rs. 20,000 were excluded for allotment as they were to be dealt with according to the terms of an earlier agreement between India and Pakistan. In each village after their relative rights had been valu ed, the allottees could choose houses according to the village list. In appendix 11 of that book is set out the summary of principles of allotment of rural evacuee houses. Evacuee houses of kamins (menial servants), artisans, etc. were to be given to displaced artisans and evacuee shops to evacuee shopkeepers. Rule 3 provided that temporary allotment did not create any rights of allotment on quasi permanent basis but subject to this, allottees were not to be disturbed if they are otherwise qualified for similar accommodation in the villages. Elaborate rules are given in that Chapter as to how these allotments were to be made including partition of houses where two or more families could be accommodated. Rule 20 is important and may be quoted : Rule 20. "Where necessary, evacuee abadi sites should be extended to suit the layouts of model villages. The Additional Deputy Commissioner should endeavour to persuade the allottees to surrender a part of their holdings in exchange for land out of the common pool or out of areas excluded from allotment ". Rule 21 gave effect to another Inter Dominion agreement and therefore houses of the value of Rs. 20,000 or more which were liable to exchange or sale were excluded from allotment. Thus according to these instructions contained in that book every effort was made to allot houses to persons who were allotted lands and in this manner compensation was sought to be given to displaced persons. By rule 97 made under Central Act 44 of 1954, rehabilitation grants to allottees of agricultural land of less than 4 acres were to be given as follows: 129 R. 97. " Any person who has been allotted four acres or less of agricultural land and whose claim in respect of rural buildings left in West Pakistan has, by virtue of such allotment, been totally rejected may be given a rehabilitation great: Provided that (a) he has not accepted such allotment of the agricultural land or such allotment has been cancelled ; (b) he does not hold a verified claim in respect of any other kind of property, that is to say, for any substantial rural building and Provided further that where any such person is given a rehabilitation grant under rule 97 A, he shall not be given a rehabilitation grant under this Rule 97 A provided: " Any person who has been allotted two standard acres or less of agricultural land in the State of Punjab or Patiala and East Punjab States Union under any notification specified in Section 10 of the Act may be given a rehabilitation grant at the rate of Rs. 450 per standard acre of the area allotted to him. Provided that (a) he has not accepted such allotment of the agricultural land or such allotment has been cancelled; (b) he does not hold a verified claim in respect ,of any other kind of property, that is to say, for any urban property or for any substantial rural building ". By Rule 57 which has already been quoted, houses of all grades were allotted to persons who were allotted certain areas of land and provision was made for building sites and payment of building grants where no houses were available in the villages. These rules made under Act 44 of 1954 and those set out in Land Resettlement Manual by Mr. Tarlok Singh show that every one was allotted or was given building sites and money for the purpose of houses in rural areas. The rule in regard to filing of claims for houses valued at Rs. 10,000 or more where allotment of land was up to 4 acres and Rs. 20,000 or more where allotment of land was in excess of 4 acres was also in pursuance of an Inter Dominion Agreement between the 17 130 two Governments which has received recognition in article 31(5)(b)(iii). Thus it appears that rules made in regard to fixing of the value of the houses for claim of Rs. 10,000 in one case and Rs. 20,000 in the other was a policy decision arising out of an agreement at a meeting of the Inter Dominion Commission with regard to evaluation of evacuee property. Rules which have been framed are only restatement of what was contained in the notifications of May 27, 1950, and September 13, 1950, which themselves were the result of decisions arrived at the meetings of the Inter Dominion Commission. Under article 14 of the Constitution the State shall not deny to any person equality before the law or the equal protection of the laws within the territories of India. By judicial decisions the doctrine of classification has been incorporated in the equality clause, but the classification cannot be arbitrary but must be based upon differences pertinent to the subject in respect of the purpose for which it is made. There must be a reasonable nexus between the classification and the object sought to be achieved. The object of the impugned provisions, read with the relevant Acts, is to rehabilitate the evacuees on an equitable basis. To implement the scheme of rehabilitation the evacuee law has classified evacuees under different categories. Broadly speaking, the main division is between persons who were residing in Pakistan in rural areas with agriculture as their avocation and those persons who were residing in urban areas in Pakistan. Persons from rural areas have been divided into two categories, namely, persons who owned agricultural land with a building as part of the holding and persons who held agricultural land with an independent building which cannot be described as part of the holding. Separate treatment is given to rural areas and urban areas. In the rural areas, land with a building is treated as one unit, but when the building is of a substantial value it is put in a different category and separately compensated for. This classification has certainly a reasonable relation to the object of rehabilitation, for it cannot be denied that the three categories require separate treatments for the purpose of 131 resettlement on new lands and for the payment of compensation. It cannot be seriously disputed that a house in a rural area and that in an urban area cannot be treated alike, but the real grievance of the petitioners is in respect of the distinction between houses in rural areas. As to what is a substantial building has to be ascertained and a line must be drawn somewhere. Here the question arises whether the classification has been made arbitrarily and without any sound basis. It may perhaps appear odd to say that a property worth Rs. 9,999 in one case or a property worth Rs. 19,999 in another would be a building of unsubstantial character or that the extent of the land, namely, four acres in one case and above four acres in another have any relevant bearing on the substantiality of the building. This perhaps may lend support to the plea of discrimination but an unprecedented situation bad to be faced and provision made for the rehabilitation of such a vast multitude of humanity who had been uprooted from their homes. This necessitated an equitable treatment for them all and an equal distribution of the available evacuee properties left in India. In order to lighten the heavy burden undertaken an Inter Dominion adjustment became necessary and the two Dominions entered into an agreement presumably based upon the relevant circumstances in regard to the treatment of rural house property. The reasonableness of the classification must therefore be judged after taking these surrounding circumstances and the conditions then prevailing into consideration. The basis of the classification must be judged by the fact that compensation is given in every case. Rules 57 and 97 A framed under Act 44 of 1954 afford a reasonable justification for the classification. Under the Rules every displaced person who has settled in a rural area is allotted a house in addition to such land; if no house is available in the same village the allottee is given a site and a building grant. But where his claim for a house is rejected he is given 132 a rehabilitation grant. But under the impugned provisions separate compensation is given for a rural house of value above a prescribed limit. It will, therefore, be seen that the classification is not arbitrary but is based upon sound principles and on equitable considerations. A distinction between a rural house which is part of a holding and one which is not a part of a holding but an independent unit is made and different principles of rehabilitation are applied to meet different situations. The hardship which the division into two categories must cause is diluted by providing to the claimant falling on the wrong side of the line a rural house or a rehabilitation grant. The attack on the ground of want of intelligible differentia must fail. Appendix XI of Land Resettlement Manual by Mr. Tarlok Singh illustrates the principles of allotment of rural evacuee houses and the elaborate system of marking which was done in order to either give houses to allottees of land or to give them building sites with subsidy to build houses and finally in r. 97 and r. 97 A of the rules made under Act 44 of 1954 detailed provisions were made for rehabilitation grants including grants to those allottees of agricultural land whose claim for rural property had been rejected or who had refused to take land allotted to them. Similarly r. 57 which has been quoted above shows that a provision has been made for giving sites as well as subsidy for building houses. It cannot be said therefore that the rules suffer from any infirmity on the ground of discrimination. In the result this petition fails and is dismissed with costs of. Petition dismissed.

The petitioners who were displaced persons from West Pakistan put forward certain claims in regard to village houses which they had left there, but which were rejected by the Rehabilitation authorities. The claims were for amounts above Rs. 20,000 in the case of some of the petitioners and above Rs. 10,000 in the case of the others. By r. 5 framed under the , claims could be verified provided, inter alia, that where a claimant had been allotted any agricultural land in India and such land so allotted exceeded four acres, the value of the building in respect of which the claim was made shall not be less than Rs. 20,000 and where it did not exceed four acres the claim made was not less than Rs. 10,000 Rule 65 of the , provided that any person to whom more than four acres of agricultural land had been allotted shall not be entitled to receive compensation separately in respect of his verified claim for any rural building the assessed value of which was less than Rs. 20,000, and any person allotted four acres or less was not entitled to receive compensation where the value was less than Rs. 10,000 The petitioners challenged the validity of the aforesaid rules as being discriminatory and thereby contravening article 14 of the Constitution of India on the grounds that the object of the various Acts and the rules made thereunder was to rehabilitate displaced persons but by the rules, classifications had been made with reference to houses in rural areas which were discriminatory as neither the classes were based on intelligible differentia nor was there a rational nexus between that differentia and the object sought to be achieved. It was found that the impugned rules were made in pursuance of an Inter Dominion Agreement between the two Governments with regard to evaluation of evacuee property, which had received recognition in article 31(5) (b)(iii) of the Constitution. Held, that the impugned rules afforded a reasonable justifi cation for the classification and did not contravene article 14 of the Constitution.

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Appeal No.1539 of 1971. (From the Judgment and Order dated 5 8 1969 of the Allahabad High Court in Special Appeal No. 58/65). B.B. Ahuja and R.N. Sachthey, for the Appellant. A.T.M. Sampath and Ram Lal, for Respondent No. 1. 215 The Judgment of the Court was delivered by SARKARIA, J. This appeal on certificate is directed against an appellate judgment, dated August 5, 1969, of a Bench of the High Court of Allahabad. It arises as follows: M/s. S.B. Singar Singh and Sons (hereinafter called the assessee) were assessed to Excess Profits tax for the chargeable accounting periods, ending March 31, 1945 and March 31, 1946. under two assessment orders dated August 26, 1949. The previous years 193637 was chosen by the assessee as his standard period. " The profits of that year were Rs. 38,703/ . After deducting the profits of the standard year, the Excess Profits Tax Officer, assessed the tax on the remaining amounts of profits. The Excess Profits Tax thus assessed for the accounting years, was to the tune of Rs. 1,06,181.5 and Rs. 48,978/ , respectively. In his orders, the assessing Officer said that "for reasons detailed in the earlier assessment orders no adjustments are made for capital variations in the standard period and the chargeable accounting period". These reasons as given in the earlier assessment order, dated October 30, 1947, per taining to the chargeable accounting period ending March 31, 1944, were: "As complete and regular accounts are not maintained by the assessee, it is not possible to make any adjustment for variations in average capital which cannot be accurately ascertained". Against the orders of assessment, the assessee preferred two appeals on September 24, 1949 to the Assistant Appellate Commissioner. By two separate applications dated October 24, 1949, the assessee took an additional ground of appeal which obvious ly he had not taken in the original memorandum of appeal that the Excess Profits Tax Officer had erred in not allowing adjustments on account of the increase and decrease of capital in the relevant chargeable accounting period. The assessee added that he "was always prepared to file his computa tions of average capital". Dismissing the appeals by his orders, dated November 24, 1949, the Assist ant Appellate Commissioner negatived the assessee 's contention, in these terms: "As in these years no regular accounts have been maintained and it is not possible to make any adjustment for variations in average capital which cannot be exactly ascertained. No figures have been shown to me, nor has any exact working been fur nished at this stage. The accounts are left in the same manner as for the earlier years. Profits in the major accounts had to be worked out by the application of a rate to the turnover. I am, thus, unable to allow this contention. " Aggrieved, the assessee carried appeals to the Income tax Appellate Tribunal. In the memoranda of appeals, one of the specific grounds taken was, that "the Excess Profits Tax Officer and the Assistant Appellate Commissioner had erred in not allowing to the assessee proper standard profits in accordance with the standard period subject to the adjust ment on account of the increase and decrease of capital in the relevant chargeable accounting period. " It was reiter ated that "the 216 appellant was always prepared to file his computation of average capital. " This ground relating to standard profits was not dis cussed by the Tribunal and no finding was recorded thereon. The Excess Profits Tax Appeals and other Income tax appeals filed by the assessee were heard together by the Tribunal and disposed of by common orders dated February 24, 1951. In the Income tax appeals, some relief was granted, but in the Excess Profits appeals, no relief was granted due to the variation of the capital in the chargeable accounting period of 1945 46 and 1946 47. The assessee on July 27, 1951, made an application under section 35 of the Income tax Act, 1922 for rectification of its order to the Tribunal on grounds other than the one regarding variation in the standard profits due to increase and decrease of the capital. This application was dismissed on August 27, 1951 by the Tribunal on the ground that there was no mistake apparent on the record. No grievance was made in this application that the Tribunal did not consider and decide the ground relating to adjustment of standard profits according to variation in capital during the relevant peri od. On March 11, 1954, the assessee made a representation to the Central Board of Revenue praying for reopening of the assessments. In this representation, also, he did not take up Ground No. 1. Subsequently however on May 24, 1954 he wrote a letter to the Income tax Officer saying that he was sorry to omit 'one important point ' i.e., Ground No. 1, from his representation to the Board, and that the Income tax Officer should "supplement the same while making (his) report to the higher authorities. ' His representation dated March 11, 1954 and the petition dated May 24, 1954, both were rejected and the Commissioner communicated those rejec tions to the assessee by a letter dated May 25, 1955, saying that he did not see any justification for re opening the assessments which had become final and closed. Thereafter on April 2, 1956, the assessee made a second application to the Tribunal (which in substance was one for review of its orders, dated .February 24, 1951), contending that Ground No. 1 raised in his two appeals, relating to the standard profits of the two chargeable accounting periods and pointing out the failure of lower authorities to make necessary adjustments in such profits according to section 6 of the Excess Profits Tax Act (hereinafter referred to as Ground No. 1 ) was not disposed of by the Tribunal. It was prayed that the appeals relating to excess profits tax matters which should be deemed to be still pending owing to the non decision of Ground No. 1 be disposed of after hear ing the assessee. The Tribunal rejected this contention with the remark that the appeals were decided as early as 24th February, 1951 and it is now futile to contend that the matter was pending when the Tribunal had already passed orders and the orders were served on the assessee. " The Tribunal further observed that the absence of a reference "to the contention of the assessee regarding the standard profits and the necessary adjustments would not render the Tribunal 's order a nullity, nor would it mean that the Tribunal had partially disposed of the appeals and some residue is pending". In the alternative, it held that even on the assumption that 217 Ground No. 1 was argued and was not disposed of by the Tribunal, the proper remedy for the assessee was either to apply for rectification under section 35 or to move an applica tion under section 66. The Tribunal refused to treat this application as one for rectification because, in its opinion, such an application would be much too time barred. In the result, the Tribunal dismissed that application by an order dated June 9, 1956. The assessee had filed a reference application, also under section 66(1) the Income tax Act in these cases. That application was dismissed by the Tribunal on August 28, 1951. The assessee then made applications under section 66(2) of the Income tax Act before the High Court requesting for reference on certain question of law arising out of the order, dated February 24, 1951, of the Tribunal. In these applications, alsO, he did not ask for reference on a question relating to Ground No. 1 (regarding adjustment of standard profits). These applications were allowed by the High Court by an order, dated April 12, 1956, whereby the Tribunal was directed to state a case and refer for decision certain questions of law to the High Court. Thereafter, during the proceedings before the Tribunal for preparation of the statement of the case, the assessee moved an application, dated July 23, 1957, requesting it to refer the question of adjustment of standard profits on account of increase and decrease in the capital in the relevant periods to the High Court, in addition to the questions of law directed by the High Court to be referred to it. This application was rejected for the reason that the question had not been raised in the reference applica tion, nor did it arise out of the appellate orders of the Tribunal. On July 24, 1957, the Tribunal stated the case and made a reference on the other question to the High Court in compliance with that Court 's order, dated April 12, 1956. On November 4, 1968, the assessee filed a writ petition in the High Court praying for a writ of Mandamus requiring the Tribunal to consider his Ground No. 1 mentioned in the Excess Profits Tax Appeals Nos. 651 and 660 of 1949 and 1950 and his subsequent application dated April 2, 1956. The writ petition was heard by a learned single Judge of the High Court who held that while disposing of the appeals, it was the duty of the Tribunal to record a finding on Ground No. 1 which had been specifically raised in the memoranda of appeals before it, that the Tribunal therefore, could and should have reviewed its orders and rectified its mistake in the exercise of its inherent powers when that mistake was brought to its notice by the assessee by his application dated April 2, 1956; that section 35 of the Income tax Act which provides a period of four years ' limitation for seeking rectification of mistakes in assessment orders, was not applicable to assessment orders made by the. Tribunal under the Excess Profits Act; that consequently, the Tribunal was in error in refusing to treat the assessee 's application, dated April 2, 1956,.as one for rectification of a mistake of the Tribunal on 16 1003 8C1/76 218 the ground of limitation. In the result, the learned Judge set aside the Tribunal 's order, dated June 9, 1956, and directed the Tribunal to dispose of the assessee 's applica tion dated April, 2, 1956, afresh in accordance with law. The Revenue filed a Special Appeal against the order of the learned single Judge before the Appellate Bench of the High Court. The Bench dismissed the appeal and affirmed the findings and orders of the learned single Judge. Hence this appeal. Mr. Ahuja, appearing for the appellant, con tends that the writ petition of the assessee should have been thrown out by the High Court on the preliminary ground that he had not come with clean hands. In this connection Counsel has pointed out several circumstances which according to him, belie the main plea of the assessee that the Tribunal had not considered his Ground No. 1 although the same was urged before it at the hearing of the appeals. It is stressed that .Ground No. 1 was not original ly taken by him in the grounds of appeal filed before the Assistant Appellate Commissioner, al though subsequently in the Additional grounds filed about one month after the institution of the ap peals, he, as an after thought, did introduce "Ground No. 1", that he did not make any grievance whatever on the score of Ground No. 1 in his appli cation for rectification of the Tribunal 's orders, filed on July 27, 1951; that for more than 5 years after the announcement of the appellate orders of the Tribunal, he made no application to the Tribu nal for review and rectification of its appellate orders in relation to Ground No. 1; that the assessee delayed the making of the application, dated April 2, 1956 presumably with a view to ensure that at the time of its presentation, none of the members of the Tribunal who had originally decided the assessee 's appeals, was there to hear the application; that even in this inordinately delayed application, review and rectification was not asked for in a straight forward manner but it was disguised as an application for decision of the appeals which on account of non decision of Ground No. 1 were alleged to be still pending; that the writ petition was filed after an abnormal delay of ten years; that a perusal of the assessment orders made by the Excess Profits Tax Officer and the Assistant Appellate Commissioner, and even the memoranda of appeals filed before the Tribunal shows that at no stage the assessee furnished complete accounts or even a statement showing variation in the capital during the relevant peri ods. It is emphasised that all that the assessee said in the memoranda of appeals was that he was "prepared" to furnish a statement of such computa tion and accounts. It is further pointed out that no certificate of Shri Surinderjit Singh, Advocate who is supposed to have argued the appeals before the Tribunal, was filed. It is maintained that the only reasonable inference from these circumstances was that Ground No. 1 was not pressed or argued at all by Shri Surinderjit Singh before the Tribu nal who consequently, did not think it necessary to deal with it. Mr. Sampath, appearing for the assessee respondent has not been able to deny the existence of the circumstances pointed out by Mr. 219 Ahuja. His argument is that in the affidavit accompanying the writ petition, the deponent had sworn that Ground No. 1 was, in fact, argued before the Tribunal and that this sworn statement had been believed by the High Court. This being the case, it is argued, this Court should not re open the question as to whether Ground No. 1 was, in fact, argued or not before the Tribunal. According to Mr.Sampath, over 5 years ' delay in making the application dated April 2, 1956, partly stood explained by the circumstance that he had made a representation to the Board supplemented by the assessee 's letter of May 24, 1954 to the Income tax Officer, seeking relief on the basis of Ground No. 1. We find a good deal of force in the submissions made by Mr. Ahuja. The sheet anchor of the assessee 's case in the writ petition was that at the hearing of the appeals, his Counsel had argued Ground No. 1 set out in the memoranda of appeals, but the Tribunal did not consider it at all. The question whether or not this Ground had been argued, was one of fact. The tell tale circumstances enumerated by Mr. Ahuja, unerringly lead to the conclusion that, in all proba bility, Ground No. 1 was not argued by the Counsel, possibly because he was aware that in the absence of a complete statement of accounts showing variations in the capital during the relevant periods, a contention rounded on Ground No. 1 would be an exercise in futility. It is noteworthy that at no stage before the Revenue authorities or the Tribunal, did the assessee categorically say that he had actually produced a complete statement of accounts and computation of the increase and decrease in capital. All that he said in his Additional Grounds of appeal before the 'Assistant Appellate Commissioner and the Appellate Tribunal in Ground No. 1, was that he was prepared to file such a statement. Shri Surinderjit Singh, Counsel who argued the appeals, has not thought it fit to certify that Ground No. 1 was actually argued, and not abandoned, by him. The affida vit of another person who could not be the best informed person on this point, was of little value and could hardly displace the irresistible inference arising from the sur rounding circumstances and the conduct of the assessee, namely, that his Counsel had not argued on Ground No. 1, at all and had thus given it up. In the light of what has been observed above, we are of opinion that the High Court could not justifiably interfere in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution with the appellate orders of the Tribunal. In any case, the question as to whether the omission to record a finding on Ground No. I by the Tribunal was due to the failure of the appellant to urge that ground or due to a lapse on the part of the Tribunal, which de served rectification, was a .matter entirely for the author ities under those Taxation statutes. It will be well to recall once more what this Court speaking through J.C. Shah J. (as he then was,) had stressed in Shivram Poddar vs Income tax Officer(1) "Resort to the High Court in exercise of its extraordi nary jurisdiction conferred or recognised by the Constitu tion in matters relating to assessment, levy and collection of income tax may be permitted only when questions of infringe ment of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting to bypass the provisions of the Income tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the revenue authorities, the party approaching the court has often to ask the Court to make assumptions of facts which remain to be investigated by the revenue authorities." In the instant case, the High Court had assumed juris diction on the assumption that a certain ground had been urged before the Income tax Appellate Tribunal which had arbitrarily refused to consider the same and record a find ing thereon. This assumption, in our opinion, stood thor oughly discounted by the concomitant circumstances of the ease, including the dilatory and questionable conduct of the assessee. This was therefore not a fit ease for the exer cise of its special jurisdiction under Article 226 by the High Court. Accordingly, on this short ground we allow the appeal and dismiss the writ petition. As the appeal succeeds on a preliminary ground, we do not feel it necessary to express any opinion on the question as to whether or not the Appel late Tribunal under the Excess Profits Tax Act has statutory or inherent power to review and rectify mistakes in its orders. The assessee shall pay one set of the costs of the appellant. P.B.R. Appeal allowed.

Since the assessee had not maintained complete and regular accounts for the purpose of Excess Profits tax, the Excess Profits Tax Officer assessed tax on the basis of accounts of certain previous years chosen by the assessee as his "standard period", pointing out that because of this position it was not possible to make any adjustment for variations in average capital. The Assistant Appellate CommisSioner upheld the assessment order. In appeal to the Appellate Tribunal one of the specific grounds taken by the assessee was that the Excess Profits Tax Officer and the Assistant Appellate Commissioner had erred in not allowing proper standard profits in accordance with the standard period subject to the adjustment on account of increase and decrease of capital in the relevant chargeable accounting period and that they were prepared to file computation of average capital. Without discussing the ground relating to the standard profits the Tribunal disposed of the appeals. The assessee 's second application alleging that the ground relating to the standard profits was not disposed of by it was rejected by the Tribunal. In an application under section 66(2) of the Income Tax Act before the High Court, the assessee did not ask for a reference on this ground. But during proceedings for preparation of statement of case, the assessee 's application requesting the Tribunal to refer this ground to the High Court was rejected by it. The assessee 's petition for a writ of Mandamus requiring the Tribunal to consider the ground relating to standard profits was allowed by the High Court. Allowing the Department 's appeal to this Court, HELD: The High Court could not justifiably interfere, in the exercise of its extraordinary jurisdiction under article 226 of the Constitution, with the appellate orders of the Tribunal. The question as to whether the omission to record a finding on Ground No. 1 by the Tribunal was due to the failure of the appellant to urge that ground or due to a lapse on the part of the Tribunal, which deserved rectifica tion, was a matter entirely for the authorities under the statute to decide. [219 G] Shivram Poddar vs Income tax Officer (1964) 51, I.T.R. 823, 829 (,S.C.) applied. In the instant case the High Court had assumed jurisdic tion on the assumPtion that a certain ground had been urged before the Tribunal which had arbitrarily refused to consid er the same and record a finding thereon. This assumption, stood thoroughly discounted by the concomitant circumstances of the case including the dilatory and questionable conduct of the assessee. This was not a fit case for the exercise by the High Court of its ' special jurisdiction under article 226. [220 C]

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Appeal No. 2177 of1966. Appeal by special leave from the judgment and order dated July 12, 1963 of the Mysore High Court in Writ Petition No. 1076 of 1962. Veda Vyasa, R. Ganapathy Iyer, R. N. Sachthey and section P. Nayar, for the appellant. R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. The respondents a Hindu undivided family were assessed for the assessment year 1949 50 to tax under s ' 23 of the Mysore Income tax Act on a total income of Rs. 10,100/ The Second Additional Income tax Officer (Urban Circle), Bangalore, commenced a proceeding under section 34 of the Mysore Income tax Act for re assessment of the income of the respondents for the 7 assessment year 1949 50, and served a notice in that behalf on March 6, 1951. On May 21, 1954 the Income tax Officer determined the respondents ' total income at Rs. 75,957/ . In appeal against the order, the Appellate Assistant Commissioner of Income tax. 'A ' Range, Bangalore, by order dated November 4, 1961, set aside the order and directed the Income tax Officer to make a fresh assessment after making inquiries on certain matters specified in the order. At the request of the respondents under section 66(2) of the Mysore Income tax Act, the Commissioner of Income tax, Mysore, referred the following questions to the High Court of Mysore: "1. On the facts and in the circumstances of the assessee 's case whether within the meaning of section 34 of the Mysore Income tax Act, if a notice under that section is issued within the prescribed period, whether the Income tax Officer can proceed to assess or re assess such escaped income after four years from the close of the assessment year? 2. On the facts and in the circumstances of the case, whether the Appellate Assistant Commissioner of Incometax is competent to set aside and give directions to the Income tax Officer to re do the assessment in the manner the Appellate Assistant Commissioner of Income tax has done?" At the hearing of the reference, the respondents did not press the first question, and the High Court answered the second question in the affirmative. The Income tax Officer commenced inquiry directed by the Appellate Assistant Commissioner. The respondent , then applied to the High Court of Mysore for issue of a writ of prohibition restraining the Income tax Officer from continuing the assessment proceeding for the year 1949 50 on the plea that the proceeding was because of expiry of the period of limitation barred. The High Court of Mysore upheld the contention of the respondents and allowed the petition. In the view of the High Court the provisions of section 34 of the Mysore Income tax Act were "more or less similar to Rule 34 of the Mysore Sales Tax Act, 1948. Hence the present case clearly comes within the rule laid down by this Court in M/s K. section Subbarayappa and Sons vs State of Mysore [(1952)] Mysore L. J. 2341 which means that the present proceedings are barred". The Commissioner of Income tax has appealed to this Court with special leave. The question arising in this appeal must, it is common ground, be determined in the light of the provisions of the Mysore Incometax Act, 1923. Even after the merger of the State of Mysore with 8 the Union of India a proceeding for assessment of income tax relating to the assessment year 1949 50 has to be heard and disposed of under the Mysore Act. Section 34 of the Mysore Incometax Act reads as follows "If for any reason, profits or gains chargeable to income tax have escaped assessment in any year, or have been assessed at too low a rate, the Income tax Officer may, 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 provision of this Act shall, so far as may be, apply according as if the notice were a notice issued under that sub section". A proceeding for re assessment under section 34 of the Mysore Act may be commenced if two conditions co exist: (i)that the profits and gains chargeable to income tax have escaped assessment or have been assessed at too low a rate, and (ii) the notice is served within four years of the end of the year of assessment. But if a proper notice is served within the period provided by the section, the proceeding may be completed even after the expiry of four years from the close of the assessment year, for the Act prescribes no period for completion of the proceeding. A notice for re assessment was in fact served on the respon dents on March 6, 1951 under section 34 of the Mysore Act. That notice was served within four years of the end of the year of assessment 1949 50, and the Income tax Officer was of the view that tie profits or gains chargeable to income tax had escaped assessment in the year 1949 50. It is true that the Appellate Assistant Commissioner vacated the order of assessment dated May 21, 1954, but he did not set aside the notice served upon the respondents. He merely remanded the case for further inquiry to be made in the light of the directions given by him. It is difficult to appreciate the grounds on which it could be held that the proceeding for re assessment to tax the income which had escaped assessment in the year 1949 50 commenced after due notice served on March 1951 was barred. The High Court was, in our judgment, plainly in error in holding that the proceeding for re assessment was barred. It must also be remembered that the respondents had under an order of the Commissioner obtained a reference on the first question set out hereinbefore. That question was not pressed before the High Court, and it must be deemed to have been answered 9 against the respondents. That question could not thereafter be reagitated by the respondents in a petition for the issue of a writ under article 226 of the Constitution. The appeal is allowed. The order passed by the High Court is set aside. The respondents will pay the costs of the Commissioner in this Court and in the High Court. Appeal dismissed.

The Income tax Officer, Bangalore commenced a proceeding under section 34 of the Mysore Income tax Act for reassessment of the income of the respondents for the assessment year 1949 50 and served a notice in that behalf in March 1951, on the respondents. The Income tax Officer determined the total income of the respondents in May 1954, but the order was set aside by the Appellate Assistant Commissioner in November 1961, and the Income tax Officer was directed to make a fresh inquiry, When the Income tax Officer commenced inquiry, the respondents applied to the High Court for a writ of prohibition and the High Court passed an order restraining the Income tax Officer on the ground that the assessment proceeding was barred because of the expiry of the period of limitation. In appeal to this Court, Held: The High Court was in error, because, though the Appellate Assistant Commissioner vacated the Income tax Officer 's assessment order of 1954 and remanded the case for further inquiry, the Appellate Assistant Commissioner did not set aside the notice of March 1951 served on the respondents, If a proper notice was served within the period provided by the section (four years from the close of the assessment year) the proceeding could be completed even after the expiry of four years for the Act prescribes no period for completion of the proceeding. [8E G]

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Appeal No. 1044 of 1968. Appeal from the judgment and order dated October 3, 1967 of the Gujarat High Court in Special Civil Application No. 380 of 1965. section T. Desai, V. B. Patel and I. N. Shroff, for the appellant. section S Shukla, for respondents Nos. 1 to 9. The Judgment of the Court was delivered by Dua, J. This appeal has been presented to this Court by the Ahmedabad Manufacturing & Calico Printing Co., Ltd., pursuant to the certificate granted by the Gujarat High Court under article 187 133(1)(c) of the Constitution. The Gujarat High Court had, on being approached by the respondents under article 227 of the Constitution, quashed and set aside the order of the Industrial Court, Gujarat dated February 5, 1964 which had affirmed the order of the Second Labour Court, Ahmedabad dated August 9, 1963, and after setting aside that order had directed the Industrial, Court to decide the matter afresh in the light of the observations made by the High Court in the impugned order. The respondents in this Court had applied to the Labour Court under section 79 of the Bombay Industrial Relations Act, No. XI of 1947 (hereinafter called the Act) in December, 1962 complaining that the appellant company was liable to pay to the respondents (applicants before the Labour Court) dearness allowance every month according to the Dearness Allowance Award made by the Industrial Court but the same had not been paid for the month of September, 1962 which was distributed in October, 1962. It was alleged that from October, 1962 the Company had been committing breach of the Dearness Allowance Award of the Industrial Court. In that application the present respondents had based their claim on the following averments in para 3: ". the applicants are being paid Rs. 68 as basic pay by the opponent. The maintenance of the garden is the legal responsibility of the opponent and for the health, welfare, recreation of the employees working in the several departments and for the decency of the adjacent offices the opponents are maintaining it. The applicants are doing the entire work in respect thereof. " In the written statement the appellant company raised several pleas in opposing that application. The pleas which were pressed in the Second Labour Court and in the Industrial Court and which are now strongly pressed before us are contained in paras 3. 8 and 10 which so far as relevant may be reproduced: 3. That the applicants not being in the employment of the opponent they have no locus standi to make an approach or to file this application. That the opponent is not the employer of the applicants and the applicants are not its employees within the meanings of those words in the Act and as such the application is misconceived and not legally tenable. With respect to the allegations and averments made in paras 1 to 4 of the application it is denied that the applicants are the employees of the opponent within the meaning of that term of the Act as alleged or that 188 they are entitled to the benefits of the dearness allowance as alleged or otherwise. The true fact is that the applicants are not employed in any work which is ordinarily a part of the undertaking and as such they are not the employees within the definition of that word in the Act. The applicants are employed as coolies by a gardening contractor Messrs Dbiraj Painters and they are paid by the said contractor. The said garden lands include a large area of offices of some other concerns, a Government Post Office and a Museum which are open to the public, some quarters for workers as well as assistants and officers a hospital. It is for the garden of the area which comprises these buildings and the area round caustic plant factory as well as the field in Dani Limda that this agreement was entered into with the contractor for keeping the trees and plants in proper trim. Hence the work which they are performing has been held to be not ordinarily a part of the undertaking and as such the application is wholly misconceived and not legally tenable and is clearly barred by res judicata. " The Second Labour Court dismissed the respondent 's appli cations. In that Court 's view the real question in issue was whether the appellants did any work which is ordinary part of the undertaking. The plea of res judicata based on the decision of the Labour Appellate Tribunal of India, Bombay (Appeal No. 135 of 1954 reported in was negatived but it was observed that the principle laid down in the earlier case would govern the present case as well. After quoting the following passage from the earlier case "Now the Industrial Court was correct in holding that the agreement applied to the area which was outside the factory proper. But to our mind the principle question involved is whether the maintenance of trees and plants can be said to be work which is ordinarily part of the undertaking. In another case, this Tribunal had decided that a ration shop was a part of the work which is ordinarily a part of the, undertaking, but the maintenance of these trees and plants stands on a different footing and can hardly be regarged as part of the work of this particular undertaking which in fact is concerned with the production of cloth. We can see no intrinsic connection between the maintenance of the trees and plants and the work which is ordinary part of the undertaking." the Labour Court observed that the "applicants ' gardeners or malis who are contractor 's employees cannot thus invoke the statutory definition of the employer". 189 On appeal by the aggrieved malis the Industrial Court in the course of its judgment observed that there was no dispute that the appellants in that court had been working as gardeners or garden mazdoors and had been employed through a contractor and not directly by the mill. After referring to the decision of this Court in J.K. Cotton Spg. & Wvg. Mills Co. Ltd., vs Labour Appellate Tribunal of India (1) and to the decision of the Madras High Court in Thyagaraja Chettiar vs Employees State Insurance Corporation( ' ') the, Industrial, Court observed : "Shri Jyotikar had urged that the term 'mill premises ' as interpreted by the courts would include even Places around the factory and so the question whether the appellants were working in one compound or the other would not be material. But it is not necessary to consider this contention because looking to the nature of the work done by the appellants and to the fact that they were .not directly employed by the employer but through a contractor, it has been held that they cannot be covered within the scope of section 3(13). Shri Jyotikar had also argued that under the Standing Orders, the term 'operative 'has been defined to include persons employed through contractor; but the Standing Orders would apply to a particular person only if he is an employee as defined under the Bombay Industrial Relations Act. The definition under the Standing Orders cannot; therefore. be of any help in considering whether a person is covered within the scope of the Bombay Industrial Relations Act or not. Shri Jyotikar had then urged that in view of the fact that matters concerning health, safety and welfare of the employees are included in Item 3 of Schedule III, maintenance of gardens would be an ordinary part of the work of the undertaking. It is true that maintenance of gardens may be a matter concerning health or welfare of the employees, but there is no, legal obligation to maintain such gardens. Had any such obligation been created under any provision of law, the position might have been as urged by Shri Jyotikar; but, as the facts stand at present, it is not mandatory on a management of a cotton textile undertaking to maintain any garden and hence the work of maintenance of a garden cannot be said to be a work which is a part of the ordinary work of a cotton textile mill. It is clear from the above that the appellants cannot be held to be employees as, defined under the Bombay Industrial Relations Act and so the Labour Court was right in dismissing the a plication." (1) [1964] 3 S.Ck. 24. (2) [1963] II L.L.J. 207. 190 The High Court, on being approached by the aggreived malis tinder article 227 of the Constitution, went into the matter at considerable, length and after copiously quoting from the decision in the case of J. K. Cotton Spg. & Wvg. Mills case (supra) the High Court found it difficult to agree with the reasoning of the Industrial Court that the work of maintaining the garden was not a part of the ordinary work of a cotton textile mtill. Earlier in the course of its judgment the High Court, after referring to the definitions of the term "employee" in section 3(13) and of the word "industry" in section 3(19) of the Act had observed : ". The definition of the term 'industry ' is thus wide enough to include a workman employed in any calling, service, employment, handicraft, or industrial occupation or avocation of employees and it would not be correct to assume that simply because a workman happened to be engaged as a gardener, he would not fall within the definition of the term 'employee ' as given in the Bombay Industrial Relations Act. A garden when attached to a mill is an amenity that is provided to the workers employed in the mill and it is not necessary that an amenity should arise from a statutory requirement or obligation and it hardly makes any difference if the garden was provided for voluntarily or under a statutory obligation. The activities in an undertaking suck as a textile mill are not confined purely to factory work of manufacturing textile fabric within the mill premises, but various other incidental and connected institutions such as hospital, a canteen, a playground and a garden might be maintained by the mill to provide amenities to its workers and these activities could be considered as the activities made in relation to and in the usual course of conducting the affairs of the mill. Not merely within the turning of the wheels of the machine which, no doubt, is directly responsible for the production of the article for which the plant of the particular industry was installed and not merely in utilising the power to move the machine to action, the field of activities of the undertaking is restricted and exhausted, but there are many more varieties though allied and complementary activities which are being carried on by the management and which help, though in an indirect manner, in creat ing a healthy atmosphere of well being and cooperation amongst the workers by providing essential facilities such as means for treating of their ailments, for general entertainment and care not only of the workers but of the children who are left unattended while their parents are engaged in their work in the factory. While, there 191 fore, construing the words 'in the course of ' and 'ordinarily a part of the undertaking ' we must give them a meaning which is natural and consistent with the working of a factory as it exists in the present times and while doing so, our approach should not be theoretical and academic but pragmatic and practical. The activities that are usually conducted as a part of an undertaking by which not only workers participate in the actual running of the machinery but also activities which conduce to the smooth working of the plant as a whole must be considered to fall within the ambit of the definition. We are, therefore, unable to agree with the contention of Mr. Patel that the application of the Act must be restricted to only those workers who are directly engaged in the manufacture of textile fabric." While commenting on the order of the Industrial Court where it is stated that the maintenance of gardens though a matter concerning health or welfare of the employees was not mandatory on the management of a cotton textile mill undertaking and hence the work of maintenance of a garden could not be said to be part of the ordinary work of such mill, the High Court observed that " an activity undertaken as a part of the undertaking and in the course of its conduct may be undertaken voluntarily or as a result of a statutory duty or obligation but what is necessary is that the activity must reasonably be attributable to the undertaking in its, usual and ordinary course in the conduct of the business or undertaking, and if that be so then such an activity could be considered as the activity of a, worker who would fall within the definition of employee within section 3(13) of the Act. " It was, however, contended in the High Court on behalf of the present appellant that the garden in which the present respondents had been working as gardeners was not situated within the premises of the mill and that the garden area included office of some other concerns, a Government post office and a museum which was open to the public and, some quarters for workers as well as assistance and officers of the hospital. The garden area, according to Mr. Patel who reprented the present appellants in the High Court comprised of the buildings just mentioned and the area round the caustic plant factory as well as the field at Dami Limda in respect of which an agreement had been entered into with the contractor for keeping the trees and plants in proper trim. This contention having not been considered by the 192 Industrial Court the High Court, as already observed, sent the case back to the Industrial Court for a fresh decision in the light of the observations of the High Court. In this Court Shri Desai on behalf of appellants contended that the High Court, while exercising its jurisdiction under article 227 of the Constitution, was not =powered to reverse the findings of the Industrial Court and the Labour Court because under that Article it could not perform the functions of an appellate or a revisional court. On the merits also he contended that having regard to section 2(3) of the Act read with the notification dated May 30, 1939, the Act only applied to cotton spinning and cotton weaving department, mechanics shops, dyeing and bleaching and printing departments and offices of the appellant, and to no other activities of the appellant company. The counsel further contended that cis. (13) and 14(e) of section 3 of the Act have to be road together and when so read they could not take within their fold a person employed by an independent contractor because such a person could by no means be considered as an employee of the appellant company unless the work done by him can be described as "ordinarily part of the textile undertaking". While developing this point the learned counsel said that the word "ordinarily" occurring in the context "work which is ordinarily a part of the undertaking" in section 3 (14) (e) conveys the idea that the work should be in the line or in the regular or norm* course of the textile undertaking or any part of it. The work 'it was explained, should be such as, in the regular or normal course, is part and parcel of the textile undertaking and not merely having some sort of incidental connection with the same. The work of gardening, added the counsel, cannot be considered to have done in "execution" of any "work" which is "ordinarily" part of the textile undertaking. Before considering these points it would not be out of place to mention that in the certificate of fitness granted by the High Court there is no indication about the precise point or points which induced the High Court to certify the case to be fit for appeal under cl.(c) of article 133(1). This clause though couched in general terms is intended to apply to special cases in which the question raised is of such great public or private importance as deserves appropriately to be authoritatively settled by this Court. This clause of course does not in terms say so but it has always been so construed. The question whether or not to certify a given case to be fit for appeal under this clause is a matter for the judicial discretion of the High Court. The word "certify" used in this clause suggests that the High Court is expected to apply its mind before certifying the case to be fit for appeal. The mere grant of a certificate would, however, not preclude this Court from determining whether the conditions pre requisite for the grant are 193 satisfied. It is, therefore, always desirable and expedient for the High Court to give its reasons for granting the certificate. That would assist this Court better in appreciating if the conditions pre requisite are satisfied. In the application for certificate in the present case a number of grounds were stated for securing it. We are unable to find from the certificate as to which ground was considered by the High Court to be important enough to justify the certificate. Now, in this case the respondents in fact questioned before us the competence of the High Court to grant the certificate of fitness but the objection raised by Shri Shukla was based only on the Submission that Art 133 is inapplicable because the impugned order is not a final order, We may first deal with this preliminary objection. Article 227 of the Constitution no doubt does not confer on the High Court power similar to that of an ordinary court of appeal. The material part of this Article substantially reproduces the provisions of section 107 of the Government of India Act, 1915 except that the power of superintendence has been extended by this Article to Tribunals as well. Section 107 according to preponderance of judicial opinion clothed the High Courts with a power of judicial superintendence apart from and independently of the provisions of the other laws conferring on them revisional jurisdiction The power under article 227 of the Constitution is intended to be used sparingly and only in appropriate cases, for the purpose of keeping the subordinate courts and tribunals within the bounds of their authority and, not for correcting mere errors: see Naryan Singh vs A mar Nath (1). At this stage we consider it proper to refer to some of the judicial pronouncements by this Court with regard to the right of appeal under article 133 from interlocutary orders. In Tarapur & Co. vs M/s. V/O Tractors Export(2) it was observed that an order of the High Court in appeal which does not dispose of the suit but merely refuses to grant an interim injunction is not a final order within the meaning of article 133 even though as a result thereof the pending suit as framed may become infructuous requiring amendment of the plant. On the other hand, an order dismissing a writ petition challenging industrial award which disposes of only one of the items of a charter of demands by the workmen, leaving the rest of the items to be adjudicated by a subsequent award was held in Asbestos Cement Ltd. vs Savarkar(3) to be a final order in a civil proceeding and, therefore, appealable under article 133. Under article 226 of the Constitution it may in this connection be pointed out the High Court does not bear an appeal or a revision : that court is moved to interfere after (2) [1969] 2 S.C.R. 699. (1) ; (3) ; 194 bringing before itself the, record of a case decided by or pending before a court, a tribunal or an authority, within its jurisdiction. A decision in the exercise of this extraordinary jurisdiction which finally disposes of the proceedings is a final order, in an original proceeding. An appeal or a revision on the other hand is generally. considered to be a continuation of the original suit or proceeding and in a case, where the High Court deals with an appeal or a revision, finality for the purpose of article 133 must attach to the whole of the matter so that after the decision of the High Court the matter is not a live one. , (see Ramesh vs Ganda Lal(1) The impugned order before us was made by the Gujarat High Court on an application under article 227 of the Constitution, the prayer in that application being, to remove the record of the case of the High Court "and after examining the same" (a) to quash the order and judgment of respondent No. 2 at Annexure 'B ' and (b), to direct respondent No. 2 to dispose of the appeal of the petitioner according to law." Now, in some, High Courts article 227 is utilised for the purpose of securing relief by way of writs or directions in the nature of writs more accurately contemplated by article 226 of the Constitution : (Ramesh vs Ganda Lal(1) and in some this Article is invoked for getting orders of tribunals revised just as section 115, C.P.C. is utilised for revision of orders of subordinate courts : (Surinder Nath vs Stiphen ( 2 ) (P) Ltd. As such power under article 227 may also be exercised suo motu. In the present case article 227 appears to us to have been used in effect as a substitute for article 226 for seeking a direction in nature of a writ for quashing the orders of the subordinate tribunals. At least it appears that the proceeding before the High Court was so treated by all concerned. We should, however, not be understood to express our approval of the use of article 227 for seeking relief by way of writs or directions in the nature of writs for which purpose article 226 is expressly and in precise language designed. From that point of view if otherwise the High Court, while disposing of a petition under article 227, finally settles some points affecting the rights of the parties then to that extent the impunged order may be considered to operate as a final order just as an order made under article 226 would. As to whether the High Court has jurisdiction to make the impugned order while exercising its power under article 227 will depend on our conclusion when considering the merits of the case. Coming to the merits of the case we should like first to reproduce the notification dated May 30, 1939 and the definitions of the word "employee" and "employer" so far as relevant for our purpose as contained in the Act. The notification reads : (1) A.T.R. at 1449. (1) ; 195 "BOMBAY CASTEL, 30th May, 1939 BOMBAY INDUSTRIAL DISPUTES ACT, 1939 No. 2847/34 A. In exercise of the powers conferred by sub section (3) of Section 2 of the Bombay Industrial Disputes Act, 1938 (Bom. XXV of 1938), and in supersession of Government Notification in the Political and Service Department No. 2847/34 2 dated the 14th March, 1939, the Government of Bombay is pleased to direct that the provisions of the Act which have been extended to the Province of Bombay under Government Notification in the Political and Services Department No. 2847/34 1, dated the 14th March, 1939, shall apply to the cotton Textile Industry as specified below: (a) All concerns using power and employing twenty or more workers which are engaged in cotton spinning; (b) all concerns using power and employing twenty or more workers which are engaged in cotton weaving with or without an admixture of silk, rayon, artificial silk or one or more of these; (c) all mechanics shops attached to and (all dyeing bleaching and printing departments, whether situated within or outside the precincts, of and forming integral part of) the concerns falling under clause (a) or (b). (d) All the offices, whether situated within or outside the precincts of the concerns falling under clause (a) or (b)." "Employee" and "employer" so far as relevant for our purpose ,ire defined as "3. In this Act unless there is anything repugnant in the subject or context (13) 'employee ' means any person employed to do any skilled or unskilled work for hire or reward in any industry, and includes (a) a person employed by a contractor to do any work for him in the execution of a contract with an employer within the meaning of sub clause (e) of clause (14); (14) 'employer ' includes (e) where the owner of any undertaking in the course of or for the purpose of conducting the undertaking 196 contracts with any person for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the undertaking, the owner of the undertaking." Shri Desai on behalf of the appellant submitted that the respondents in this Court who were gardeners employed by a contractor cannot fall within the definition of the word employee as contained in section 14(e) of the Act. He further contended that the notification issued under the Act extending its applicability to the textile undertaking does not take within its fold the respondents who are not directly connected with any part of the activity with which the appellant textile industry is directly concerned. In support of his contention he relied on some decided cases. The first decision to which our attention was drawn is reported as Kesar Lal Narsing Bhai vs Mls. Calico Printing Ltd.(1). This is a decision by the Labour Appellate Tribunal of India, Bombay and the present appellant was a respondent in that case. There, the gardeners who used to work outside the gate of the factory and had been employed through a contractor had applied under section 78(1 ) (A) (c) of the Act for a declaration from the first Labour Court that the mill 's failure to pay wages and Dearness Allowance in accordance with the Standardisation Award amounted to an illegal change. The Labour Court had granted their application but the Industrial Court on appeal had reversed that decision. The employees took the matter on further appeal to the Appellate Tribunal but without success. In that case the employees had wrongly asserted in their applications that they were direct employees of the mills in question and the relief claimed was based on this erroneous assertion. The Standardisation Award by which the company was bound, it is pertinent to point out, was given only in respect of those persons who had been employed directly for the purpose of looking after the garden of, the factory proper. it would thus be obvious that the employees ' claim there was liable to fail on the short ground that they were not direct employees as wrongly claimed by them and that the relief under the award was confined to direct employees only. But this apart, it is further clear from the decision of the Appellate Tribunal that under the agreement with the contractor there the latter had been employed for the purpose of looking after the garden not within the factory compound proper but beyond it. Indeed, the contractor 's obligation to look after the garden extended further beyond even that area. It is in this context and background that the Appellate Tribunal observed in the concluding part of its order that "statutory definition of an employee in our opinion cannot be invoked by a gardener who has been employed through a contractor for the work as undertaken here." (emphasis supplied). This decision, (1) 1955 Industrial Court Reporter 1105. 197 therefore, does not assist us on the precise question raised. The next decision relied upon by Mr. Desai is reported as Hakim Singh vs J. C. Mills Ltd.(1). In that case the mills had employed a contractor to supply packing material. The contractor because of the nature, of his work was given a room in the mills premises for preparing a particular packing material. An employee of the contractor applied to the Industrial Court for relief under the pro visions of the Act. It was held that he could not be deemed to be an employee of the mills because the work which was carried on by the employer of the petitioner was not a part of the industrial undertaking. While commenting on the scope of section 3 (13) (a) and section 14(e) of the Act which define the words "employee" and " employer", it was said that for the purpose of these provisions, there must be an industrial undertaking owned by somebody ' some work, which is ordinary part of the undertaking must have been entrusted by the owner to the contractor: that contractor must be employed an employee ' that employee can then by the combined operation of these provisions insist upon being treated as employee of the owner himself, the obvious idea behind this scheme being that the owner of an industrial undertaking should not be allowed to evade responsibilities towards his employees which are imposed by the labour laws, by entrusting a part or whole of the undertaking to a contractor. The actual decision of this case is on different facts and is clearly not of much help though the observations regarding the purpose of the provisions of the definitions admit of no controversy. Reliance was further placed by Shri Desai on the decision of this Court in Messrs Godavari Sugar Mills Ltd. vs D. K. Worlikar(2) where a notification applicable to the manufacture of sugar and its by products was held not to cover the head office of the sugar mills at Bombay and the employees engaged there, when the head office was Separated from the factories by, hundreds of miles. The notification was held not to cover sugar industry as such Shri Desai also sought support from Begibhai M. Chokshi vs Ahmedabad Manufacturing & Calico Printing Co. Ltd. (3 ) (a decision of the Industrial Court, Bombay) which dealt with running of a retail shop; New India Tannis vs Aurora Singh Moibi ( 4 ) a case of doing repairs to the machinery of the factory and from section M. Ghose vs National Street & Metal Works Ltd.(5) a case of an employee of a contractor engaged to paint the premises. Both the Calcutta. decisions are under the Workmen 's Compensation Act. (1) [1963] M.P.L.J.714. (2) ; (3) (4) A.I.R. 1947 Cal. (5) A.t. R. 198 The respondents ' learned counsel, apart from urging that the High Court has sent the case back for deciding the nature of work done by the malis in this case and that, there are, tie appellant cannot appropriately ask this Court to determine these questions which are awaiting decision by the Industrial Court, also relied on Basti Sugar Mills Ltd. vs Ramjagar(1) and on J. K. Colton Spg. & W. vs Mills (supra). In the former case the respondents there employed by a contractor to remove press and from the sugar factory were held to be workmen employed by the factory because removing press. mud was considered ordinarily to be a part of the sugar industry. The latter case is an authority for the proposition that an employee engaged in any work or operation which is incidentally connected with the main industry is a workman if other requirements of section 2(s) of the Industrial Disputes Act, 14 of 1947 ,are satisfied and that the malis in that case were workers within the meaning of section 2 of U.P. Industrial Disputes Act, 28 of 1947. The bungalows and gardens on which the malis in that case worked were a kind of amenity supplied by the mills to its officers and on this, reasoning the malis were held to be engaged in operations incidentally connectd with the main industry carried on by the employer. It was by relying on the ratio of this decision that the High Court in the present case came to the conclusion that the workers in order to come within the definition of "employee" need not necessarily be directly connected with the manufacture of textile fabrics. This decision. is binding on us and indeed Shri Desai also fairly accepted its ratio. He only contended that the malis employed by a contractor unless, directly connected with the textile operations cannot get the benefit of this decision. In our view on the conclusions of the High Court which have not been shown to be erroneous justifying interference it is not possible to reverse its decision on the basis of the abstract submission advanced by Shri Desai. As observed in J. K. Cotton Spg. & Wvg. Mills case (supra) the problem has to be looked at from the considerations of social justice which has become an integral part of our industrial law. This concept of social justice has a comprehensive sweep and it is neither pedantic nor one sided but, is founded on socioeconomic equality. It demands a realistic and pragmatic approach for resolving the controversy between capital and labour by weighing it on an even scale with the consciousness that industrial operations in modem times have become complex and complicated and for the efficient and successful functioning of an industry various amenities for those working in it are deemed as essential for a peaceful and healthy atmosphere. The High Court has left open for the decision by the Industrial Court the question as to the nature of the work done by the (1) [1964]2 S.C.R. 838. 199 respondents for determining whether or not, in view of the fact that they are employed through a contractor and not directly, their case falls within section 3(13). This is what the High Court has said "It was urged by Mr. Patel that the garden in which the petitioners were working as gardeners was not situated within the premises of the mill and that the garden area included a large area of offices of some other concerns, a Government Post Office and Museum which were open to public and some quarters for workers as well as assistants and officers of a hospital. It was also urged by Mr. Patel that the garden area comprised of the above buildings and the area round the caustic plant factory as well as the field at Dani Limda in respect of which an agreement was entered into with the contractor for keeping the trees and plants in proper trim. It appears that this contention made on behalf of the mills was not considered by the Industrial Court as it appears from para 7 of the order of the Industrial Court because according to the Industrial Court, looking to the nature of the, work done by the petitioners and to the fact that they were not directly employed by the employer but through a contractor, they could not be covered within the scope of section 3 (13) of the Bombay Industrial Relations Act. Since this contention has not been considered by the Industrial Court, we do not wish to express any opinion as regards the merits of this contention and it would be open to Respondent No. 1 to raise the contention before the Industrial Court which will decide on the merits of the contention if raised. Subject to this, the order of the Second Labour Court Ahmedabad dated 9th August, 1963 passed in Application No. 2005 of 1962 and the order of the Industrial Court, Ahmedabad dated 5th February, 1964 passed in Appeal (I.C) No. 123 of 1963 must be quashed and set aside and we direct that the matter should now be decided by the Industrial Court in the light of the observations made above 200 There is no cogent ground why this matter should be, decided by this Court and not by the Industrial Court in the normal course as directed by the High Court, In our opinion the order of the High Court is legally correct and is also eminently. just and fair. We are unable, therefore, to. agree with Mr. Desai that this order requires any intereference. The principle followed by the High Court is the one which was laid down by this Court in J. K. Cotton Spg. & Wvg. Mills case (supra). The decisions of the Labour Court and the Industrial Court were based on misconception of the legal position and the High Court was within its authority to interfere under article 227 of the Constitution to quash them. The appeal accordingly fails and is dismissed with costs. G.C. Appeal dismissed.

The respondents were malis who under a contractor looked after the maintenance of a garden adjacent to but outside the Premises of the appellant company which produced textiles. In an application before the Labour Court the respondents claimed that they were employees of the company within the meaning of section 3(13) of the Bombay Industrial Relations Act 11 of 1947 and therefore entitled to dearness allowance. The Labour Court rejected the claim on the ground that the respondents worked under a contractor. On appeal the Industrial Court held that the company was under no legal obligation to maintain the garden and therefore the respondents did not fall within the definition of employee. The High Court in a petition under article 227 of the Constitution held that statutory obligation was not necessary condition of an activity being considercd a part of the ordinary work of an undertaking but what had to be seen was whether the activity was reasonably attributable to the undertaking in its usual and ordinary course in the conduct of the business or undertaking. Since the appellant company contended before the High Court for the first time that the garden area in question did not pertain only to the appellant but to several other employers the High Court remanded the matter to the Industrial Court for a fresh decision in the light of the observations of High Court. The appellant company in appeal by certificate contended that the High Court had exceeded its jurisdiction under article 227 of the Constitution, that a employed through an independent contractor could not be an employee and that maintenance of a garden could not be considered to be work which was ordinarily Li part of the undertaking within the meaning of section 3(14) of the Act. The respondents raised a preliminary objection that the order of the High Court was not a. 'final order ' and, therefore, the certificate granted by the High Court under article 133 was incompetent. HELD : (i) in this case article 227 appears to have been used as a substitute for article 226 for quashing the orders of the subordinate tribunals. If, therefore, while disposing of the petition under article 227 theHigh Court finally settles some points then to that extent the impugned order may be considered to, operate as a final order just as an order under article 226 would. [194F] (ii) The mere grant of a certificate would not preclude this Court from determining whether the conditions pre requisite for the grant are satisfied. it is, therefore, always desirable and expedient for the High Court to give its reasons for granting the certificate. That would assist this Court better in appreciating if such conditions are satisfied. [192H] LI208SupCII72 186 Waryam Singh vs Amar Nath, , Tarapur & Co. vs Mls. Y/O Tractors Export, [1969] 2 S.C.R. 699, Asbestos Cement Ltd. vs Savarkar, ; , Ramesh vs Ganda Lal; , at 1449 and Surinder Nath vs Stiphen (P) Ltd., ; , referred to. (iii) As held by this Court in J.K. Cotton Spg. and Wvg. Mills an employee engaged in any work or operation which is incidentally connected with main industry is a workman if other requirements of section 2(s) of the Industrial Disputes Act 14 of 1947, are satisfied. The bunglows and ' gardens on which the malis in that ease worked were a kind of amenity supplied by the mills to its officers and on this reasoning the malls were heldp to be engaged in operations incidentally connected with the main industry carried on by the employer. The High Court rightly relied on that decision in arriving at its conclusion in the present case that the workers in order to come within the definition of 'employee ' need not necessarily be directly connected with the manufacture of textile fabrics. The problem has to be looked at from the considerations of social justice which has become an integral part of our industrial law. [198F] J. K. Cotton Spg. & Wvg. Mills Co. Ltd. vs Labour Appellate Tribunal of India, ; , applied. Thyagaraja Chettiar vs Employees State Insurance Corporation [1963] It L.L.J. 207; Kesar Lal Narsing Bhai V. Calico Printing Ltd., 1955 Industrial Court Reporter, 1105, Hakim Singh vs J.C.Mills Ltd., , Messrs Godavari Sugar Mills Ltd. vs D. K. Worlikar. ; , Begibhai M. , Chokshi vs Ahmedabad Manufacturing & Calico Printing Co. Ltd., , New India Tannis vs Aurora Singh Moibi, A.I.R. 1947 Cal. 613, section M. Ghose vs National Sheet & Metal Works Lid. , A.I.R. 1950 Cal. 548 and Basti Sugar Mills Ltd. v . Ramjagar, ; , referred to. (iv) The High Court had remanded the case to the industrial Court because the appellant 's contention that the garden pertained to several ,other offices and buildings in the area and not to the appellant 's factory alone, had not began considered by the industrial Court. There was no cogent ground why this matter should be decided by this Court and not by the Industrial Court. The order of the High Court was legally correct and it was within its authority under article 227 to quash the decisions of the Labour Court and the Industrial Court which were based on misconception of the legal position. [200A]

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tition For Special Leave to Appeal (Civil) No. 2448 Of 1985 From the Judgment and Order dated 10.7.84 of the High court of Karnataka at Bangalore in Writ Appeal No. 1267/84. B. Datta, ASG. and Ms. section Relan for the Petitioner. The following Order was delivered This Special Leave Petition has been filed beyond the period prescribed by the Rules for filing a special leave petition. The petitioner has flied an application for condo nation of delay in filing the special leave petition. There are no grounds made out in the application for condonation of delay and the only material set out in the application is the list of dates as starting from the date of receipt of the certified copy of the judgment upto the dates of filing of the Special Leave Petition. It appears from the list of dates that the certified copy was received by the Collector of Central Excise on 22nd July, 1984 (wrongly 368 mentioned as 22nd July, 84) and it was after a period of two months, on 29th September, 1984 that the certified copy was despatched by the Collector of Central Excise to the Minis try of Finance. The Ministry of Finance referred the Case to the Central Agency Section on 15th October, 1984. But the Central Agency Section sent back the case to the Ministry of Finance with the remark that the same should be sent to the Ministry of Law. This process of realisation that the case should have been referred to the Ministry of Law and not to the Ministry of Finance took about 24 days and thereafter, again, some time was taken up at the subsequent stages. The learned Additional Solicitor General gave his opinion on 18th December, 1984 that the special leave petition should be filed. But even thereafter, there was a delay of more than a month and a half and on 7th July, 1985, a special leave petition was filed without offering any explanation for this delay at three stages. The Learned Additional Solicitor General requested us to give him an opportunity to file a supplemental affidavit explaining the delay at the three stages. But we do not see why any further time should be granted to the petitioners to file a supplemental affida vit. The application for condonation of delay was made on 7th January, 1985 and we are now in November 1986 and the petitioners thus had a period of about one year and nine months to rectify the defect by filing a supplemental affi davit but the petitioners have failed to do so. We do not under the circumstances find any justification for condoning the delay and the application is therefore rejected and so is the Special Leave Petition. S.R. Petition dismissed.

Dismissing the SLP and CMP, the Court, HELD: In the absence of any ground having been made out in the application for the condonation of delay in filing the Special Leave Petition, filed on 7.1.85, excepting the listing of dates on which different departments took steps in passing on the file, the Supreme Court cannot exercise its inherent powers under Rule 1 of Order XLVII of the Supreme Court Rules read with section 5 of the and condone delay. Nor would it grant permission upon oral request to file a supplemental affidavit after a lapse of nearly two years. [368C D]

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Civil Appeal No. 1037 of 1971. (From the Judgment and Order dated the 17th June, 1971 of the Gujarat High Court in Special Civil Application No. 112/67). V.P. Raman, Addl. and Girish Chandra, for the appellants. G.N. Dikshit and R.N. Dikshit, for the respondent. The Judgment of the Court was delivered by GUPTA, J. The respondent is a partnership firm manufac turing non woven felts from woollen fibres which are uti lised for the purpose of filtration in heavy industries. Between August 25, 1965 and January 5. 1967 the Excise authorities compelled the respondent to pay Rs. 55,055/87 p. as excise duty on its products. The respondent 473 filed a writ petition in the High Court of Gujarat at Ahme dabad for quashing the order levying excise duty on the felts manufactured by the respondent treating them as 'woo llen fabrics ' covered by entry 21 in Schedule I to the (hereinafter referred to as the Act). The High Court allowed the writ petition holding that the respondents products were not 'woollen fabrics ' and directed refund of the sum of Rs. 55,055/87 p. collected as excise duty from the firm. The Union of India has preferred this appeal on certificate of fitness granted by the High Court questioning the correctness of the deci sion. The only question in the appeal is whether the felts manufactured by the respondent are "woolien fabrics" within the meaning of entry 21 in the first schedule to the Act. The writ petition describes the process of manufacture and states that the thickness of the felts produced varies from 1 mm. to 50 mms. according to. the specification of the customers and that these are really machine pressed raw woolwaste. It is stated further that the felts manufactured .by the process described are neither sheets nor fabrics, they are not material from which garments could be prepared nor they could be used 'as covering or for similar other purposes. Entry 21 in the first schedule to the Act reads: "21. WOOLLEN FABRICS "Woollen fabrics" .means all varieties of fabrics manufactured wholly of wool or which contain 40 per cent, or more by weight of wool and includes blankets, lohis, rugs, shawls and embroidery in the piece, in strips or in motifs: Provided that in the case of embroidery in the piece, in strips or in motifs, the percentage referred to above shall be in relation to the base fabrics which are embroi dered _ (1) Woollen fabrics, other than Ten percent. embroidery in the piece, in ad valorem. strips or in motifs. (2) Embroidery in the piece in The duty for strips or in motifs, in or in the time being relation to the manufacture leviable on the of which any process is ord base fabrics, inarily carried on with the if not already aid of power. paid, plus twenty percent. ad va 'orern Explanation " Base fabrics" means fab rics falling ' under sub item (1) of this Item which are subjected to the process of embroi dery. " 0 Are the products of the respondent 's factory woollen fabrics ? Fabric means woven material. The articles manu factured by the respondent, as already stated, are non woven felts from woollen fibres. It is contended on behalf of the appellant, Union of India, 474 that in a technical sense the felts manufactured by the respondent would still be woollen fabrics. The well known rule in interpreting items in statutes like the one we are concerned with is that "resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense". (Commissioner of Sales Tax, Madhya Pradesh, Indore vs M/s. Jaswant Singh Charan Singh)(1). The High Court has held that a trader dealing in woollen fabrics would not regard the respondent 's products as woollen fabrics, but it does not appear that there is any evidence on the record of the case to support the finding. However, an inquiry re garding the meaning of the term woollen fabrics as commer cially understood would be relevant only when there is doubt as to the sense in which the term has been used in entry 21; it seems to us plain from the entry read as a whole that the respondent 's products did not fail within it. Entries 19 to 22 in the schedule all deal with fabrics. Entry 19 deals with cotton fabrics which is stated to cover, barring the exceptions specified, all varieties of fabrics manufactured either wholly or partly from cotton and in cludes, dhoties, sarees, chadders, bed sheets, bed spreads etc. Entry 20 relates to slik fabrics which is said to mean all varieties of fabrics manufactured. either wholly or partly from silk with certain exceptions and includes em broidery in the piece, in strips or in motifs. Entry 22 relates to rayon or artificial silk fabrics which also is said to mean all varieties of fabrics manufactured either wholly or partly from rayon or artificial silk with some exceptions and includes embroidery in the piece, in strips or in motifs etc. In this group, entry 21 describes woollen fabrics as meaning all varieties of fabrics manufactured out of wool, barring the exceptions mentioned, including blankets, lohis, rugs, shawls and embroidery in the piece, in strips or in motifs. If the term 'woollen fabrics ' in this entry had been used in its technical or scientific sense and, if in that sense, it was wide enough to cover non woven material which is wool based, then it is diffi cult to explain why the entry should specifically mention blankets, rugs and shawIs as being included within it. No one could possibly be in any doubt in respect of these few items if the term was so pervasive, and there was no reason for singling out these specific objects. On the contrary, the mention of these items suggests that the word 'fab rics ' in entry 21 has been used to mean woven material in which sense it is popularly understood, and blankets, rugs and shawls etc. have been specifically included in the entry out of abundant caution to indicate that 'woollen fabrics ' in entry 21 means not only woollen garments but also woollen material used as 'covering or for similar other purposes. We therefore find no reason to take a view different from that taken by the High Court. The appeal is dismissed with costs. S.R. Appeal dismissed.

An excise duty of Rs. 55055.87 was levied and collected from the respondent firm by the Excise authorities treating the non woven felts manufactured by them as "woollen fab rics" covered by entry 21 in Schedule I to the . The Gujarat High, Court allowed the writ petition filed by the respondent and held that the respondent 's products were not "woollen fabrics" and direct ed the refund of the entire sum collected as excise duty. Dismissing the appeal by certificate to this Court, HELD: (1) The well known rule in interpreting items in statutes is that resort should be had not to the scientif ic or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, their commercial sense. [474 A B] Commissioner of Sales Tax, Madhya Pradesh, Indore vs M/s. Jaswant Singh Charan Singh; , , applied. (2) Fabric means woven material. Entries 19 to 22 in the Schedule deal with fabrics. Entry 21 describes woollen fabrics as meaning all varieties of fabrics manufactured out of wool, barring the exceptions mentioned, including blan kets, lohis, rugs, shawls and embroidery in the piece in strips or in motifs. The word "fabric" in entry 21 has been used to mean woven material in which sense it is popularly understood. The term "woollen fabrics" in that sense was not wide enough to cover non woven material which is wool based. Blankets. rugs and shawls etc. have been specifical ly included in the entry out of abundant caution to indicate that "woollen fabrics" in entry 21 means not only woollen garments but also woollen material used as covering or for similar other purposes. [473 H, 474 F G] (3) It is plain from entry 21 in Schedule 1 to the that the respondent 's products did not fall within it as they are nonwoven felts from woollen fibres. [474 C]

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ivil Appeal No. 3678 of 1984. From The Judgment and Order dated 5.1.1982 of the Delhi High Court in Civil Writ Petition No. 2923 of 1981. R.B. Dattar, section Wasim Qadi for the Appellants. V.C. Mahajan, K.K. Venugopal, G. Viswanatha lyer, R.B. Mishra, Ms. A. Subhashini, Mrs. Baby Krishnan, C.B. Vaidya nathan, K.V. Mohan, Dilip Pillai, P. Kesava Pillai and N. Sudhakaran for the Respondents. The Judgment of the Court was delivered by SINGH, J. The two appellants, S/Sh. Virendra Nath Gupta and Mohammad Aslam Kidwai are teachers in the Kerala Educa tion Society Senior Secondary School, New Delhi. They chal lenged the appointment of T.N. Vishwanathan Nair, respondent No. 5 as VicePrincipal of the Institution by means of a writ petition before the Delhi High Court under Article 226 of the Constitution of India. The High Court by its order dated January 5, 1982 dismissed the petition in limine. Hence this appeal by special leave. The Kerala Education Society (hereinafter referred to as 'the Society ') is a Society registered under the Societies Registration Act, XXI of 1960. The Society is running the Kerala Education Society Senior Secondary School in New Delhi. The Delhi Administration as 808 well as the Education Authorities have recognised the Insti tution as a linguistic minority school. The Institution is aided and recognised by the Delhi Administration. The ob jects of the Society are: (i) to provide facility for the education of children in the Union Territory of Delhi by making provision for suitable institutions; (ii) to promote the study of Malayalam. A sizable number of persons belong ing to State of Kerala who speak Malayalam are residents in Delhi and they constitute a linguistic minority. The Ma layalees have their own language, script and culture, and in order to preserve the same they established the Institution which is administered by the linguistic minority, with the primary purpose of promoting the study of Malayalam and also for preserving their culture, dance, music and other Kerala articles Teaching of Malayalam in the aforesaid Institution is compulsory from Classes I to V, as the medium of instruction is Malayalam. However, Malayalam is an optional subject in VI to XII standard. The school has 1700 students and more than 60% of parents and guardians belong to the lower income group of Malayalam speaking community. The Institution is regulated by the provisions of the Delhi School Education Act 1973 (hereinafter referred to as the Act) and the Rules framed thereunder, namely, Delhi School Education Rules 1973 (hereinafter referred to as the Rules.) One post of Vice Principal was created in the Insti tution in the pay scale of Rs.650 1200 with effect from 1.10. 1980. In March, 1981 a Departmental Promotion Commit tee (hereinafter referred to as DPC) was constituted to make selection for appointment to the post of Vice Principal in accordance with the recruitment rules made under Section 8(1) of the Act read with Rule 100 of the Rules issued on 25.2. 1980 and published in the Delhi gazette Extraordinary dated 7.4. The DPC made selection from amongst the teachers of the Institution to fill up the post of Vice Principal by promotion in accordance with the aforesaid Rules. The DPC recommended the name of T.N. Vishwanathan Nair, respondent No. 5 for promotion to the post of Vice Principal although he did not fall within the zone of con sideration as he was junior to the appellants at Sl. No. 10 in the seniority list. The Management of the Institution accepted the recommendation of the DPC and forwarded papers to the Director of Education for approval. Meanwhile, the appellants made representation to the Director of Education against the selection and appointment of respondent No. 5. The Director of Education rejected the Management 's proposal and refused to approve the selection and appointment of respondent No. 5 on the ground that he did not fall within the zone of consideration according to the Rules and further he did not possess the essential qualification of five years experience as 809 Post Graduate Teacher as required by the Recruitment Rules. Since no suitable candidate was available for promotion within the zone of consideration the Director of education permitted the Managing Committee to advertise the post for filling the same by direct recruitment. Thereafter, adver tisement was published on 24.9.1981 inviting applications for the post of Vice Principal. The advertisement stated the essential qualifications being Master 's Degree with second division, five years ' teaching experience as Post Graduate Teacher or ten years ' teaching experience as Trained Gradu ate Teacher, and also ability to speak and write Malayalam. Since the knowledge of Malayalam was prescribed as an essen tial qualification, the appellants were not eligible for selection or appointment as they could not speak or write Malayalam. On the recommendation of the Selection Committee respondent No. 5 was appointed as a direct recruit to the post of Vice Principal and the Director of Education ap proved his appointment. Learned counsel for the appellants assailed the validity of the appointment of respondent No. 5 on three grounds; (i) since under the Rules post of Vice Principal was a promo tional post, no direct recruitment was permissible; (ii) respondent No. 5 did not possess the essential qualification of Master 's Degree in second division; (iii) the Management malafide introduced knowledge of Malayalam as an essential qualification with a view to favour respondent No. 5 and to oust the appellants even though the Rules did not permit knowledge of Malayalam as an essential qualification. We will deal with these submissions in seriatim. There is no dispute that the recruitment/appointment to the post of Vice Principal in the Government aided schools and recognised schools in the Union Territory of Delhi is regulated by the Rules published on 7.4.1980, a copy of which has been placed before us, farmed under Section 8(1) of the Act read with Rule 100. Since the Institution is an aided and recognised school the aforesaid Rules were ap plicable for the purpose of recruitment to the post of Vice Principal. According to the Rules recruitment to the post of Vice Principal is to be made by selection. The Rules prescribe educational and other qualifications. The Rules provide that the post of Vice Principal should be filled by promotion failing which by direct recruitment as stated in Col. 8 of Annexure B to the Rules. As noticed earlier the Management made attempt to fill the post of promotion and the DPC had con . sidered the case of teachers of the Insti tution for promotion to the post ' of Vice Principal and it recommended respondent No. 5, but the same was not approved by the Director of Education. The selection Com 810 mittee, had considered the appellants also but it did not find them suitable for promotion, instead it recommended respondent No. 5 for promotion but the recommendation of the Selection Committee was not approved by the Director of Education. The Director of Education by his letter dated 2.5.1981 directed the Management of the Institution to fill the post by direct recruitment. Pursuant to that direction the Management issued advertisement for making the recruit ment. The Rules thus contain express provision for direct recruitment to the post of Vice Principal and as such we find no merit in the submission made on behalf of the appel lants. Admittedly, respondent No. 5 did not possess Master 's Degree in second division, which was an essential qualifica tion but Column No. 5 to Annexure B to the Rules which prescribes essential qualifications, states: "Condition of second division relaxable in case of candidates belonging to the same school and also in case of Scheduled Castes/Sched uled Tribes. " The Rules further contain a note;"Competent authority may relax the essential qualifications in excep tional cases of the candidates of the same school, after recording reasons therefor". The Selection Committee as well as the competent authority granted relaxation to respondent No. 5 as he belonged to the same school. Further he had ten years ' experience as .Trained Graduate Teacher and as such he was eligible for direct recruitment under the Rules. The appellant 's plea that since the Management was interested in appointing respondent No. 5 to the post of Vice Principal, it manipulated to get his selection made for appointment to the said post, is without any foundation. The Selection Committee consisted five members out of which three were representatives of the Education Department appointed by the Director of Education. The Selection Committee made the selection in accordance with the Rules and found respondent No. 5 suitable for appointment to the said post. In this view there is no merit in the second submission made on behalf of the appellants. The third submission made on behalf of the appellants is that the additional essential qualification regarding knowl edge of Malayalam was prescribed in contravention of the Rules and this was done with a view to oust the appellants who were the senior teachers fully equipped with other essential qualifications for appointment to the post of police Principal. While considering this question we cannot over look fact that the Institution is a linguistic minority institution, its object , to promote the study of Malayalam and to promote and preserve malayalee dance, culture and article Article 29 of the Constitution of 811 India guarantees fight of linguistic minorities having a distinct language, script and culture of their own and, it also protects their fight to conserve the same. Article 30 of the Constitution guarantees the right of minorities whether based on religion or language to establish and administer educational institutions of their choice. A linguistic minority has not only the right to establish and administer educational institution of its choice, but in addition to that it has further constitutional right to conserve its language, script and culture. In exercising this fight a linguistic minority may take steps for the purpose of promoting its language, script or culture and in that process it may prescribe additional qualification for teachers employed in its institution. The rights conferred on linguistic minority under Artides 29 and 30 cannot be taken away by any law made by the Legislature or by rule made by executive authorities. However, the Management of a minority institution has no right to mal administer the institution, and it is permissible to the State to prescribe syllabus, curriculum of study and to regulate the appoint ment and terms and conditions of teachers with a view to maintain a minimum standard of efficiency in the educational institutions. This is the consistent view of this Court, as held in a number of decisions where the scope and extent of minority 's fight to manage its institutions were considered. See "In Re The Kerala Education Bill, 1957. Reference under Article 143(D of the Constitution of India, [1959] SCR 995; The Ahmedabad St. Xaviers College Society & Anr. vs State of Gujarat & Anr. , ; ; Lilly Kurian vs Sr. Lewina and Ors. , ; ; Frank Anthony Public School Employees ' Association vs Union of India & Ors., ; ; Mrs. Y. Theclamrna vs Union of India & Ors., ; and All Bihar Christian Schools Association vs State of Bihar; , Though minority 's right under Articles 29 and 30 is subject to the regulatory power of the State, but regulatory power cannot be exercised to impair the minority 's fight to conserve its language, script or culture while administering the educational institutions. An institution set up by the religious or linguistic minori ty is free to manage its affairs without any interference by the State but it must maintain educational standards so that the students coming out of that institution do not suffer in their career. But if the recognised minority institution is recipient of Government aid, it is subject to the regulatory provisions made by the State. But these regulatory provi sions cannot destroy the basic fight of minority institu tions as embodied under Article 29 and 30. The Kerala Education Society is a recognised and aided institution, it is subject to the regulatory provisions contained in the Delhi 812 School Education Act 1973 and the Rules made thereunder. The question is whether the Management of the Institution could validly prescribe knowledge of Malayalam as an essential qualification for the post of Vice Principal. Admittedly, the Institution is for promotion of Malayalam language and as Malayalam is compulsory for students upto Vth standard and it is one of the optional subjects from VIth to XIIth standard, it is not only proper but desirable that the incumbent holding the office of Principal or Vice Principal being administrative in nature should have knowledge of speaking and writing Malayalam. The requirement of knoweldge of Malayalam is closely connected with the fight of the linquistic minority to subserve its script, language and culture. The Management of the Institution acted within its fight in prescribing an additional essential qualification regarding knowledge of Malayalam and no exception can be taken to the same as it is the constitutional right of the linguistic minority to insist on the knowledge of the lan guage, on the basis of which the linguistic minority is recognised. The provisions of the Act and the Rules are subject to the guarantees of constitutional rights of the minorities ' institutions. In our opinion, the Management acted within its constitutional right in insisting the knowledge of Malayalam as an essential qualification for the post of Vice Principal. The Education Department of Delhi Administration did not raise any objection to the Manage ment 's action; on the other hand, the Selection Committee constituted by the Director of Education made its recommen dation on the basis of the qualifications prescribed in the advertisement and the Director of Education approved the appointment of respondent No. 5. In this view we find no merit in the appellants ' submission that the knowledge of Malayalam was prescribed mala fide with a view to oust them from consideration. In view of the above discussion we find no legal infirm ity in the appointment of respondent 'No. 5 as Vice Princi pal. It appears that during the pendency of the appeal a vacancy arose in the post of Principal to which respondent No. 5 was promoted. Consequently there was a vacancy in the post of Vice Principal to which K.D. Antony, another teacher of the School was appointed. The appellants filed an appli cation for impleading K.D. Antony to the appeal but no relief was claimed against him. The application for implead ing K.D. Antony is accordingly rejected. The appeal fails and it is accordingly dismissed. There will be no order as to costs. Y. Lal Appeal dismissed.

The appellants are teachers in the Kerala Education Society Senior Secondary School, New Delhi. They challenged the appointment of Respondent No. 5 as Vice Principal by filing a writ petition in the Delhi High Court. The circum stances that led to the filing of writ petition are: The Kerala Education Society is a recognised and aided Society. Its primary objects are to promote the study of Malayalam language and to provide facilities for the educa tion of children and to conserve Malayalam language, script and culture. In furtherance of these objectives, the Society is running Senior Secondary School in New Delhi. Delhi Administration as also the educational authorities have recognised the Institution, as a linguistic minority school. The institution is. regulated by the provisions of the Delhi School Education Act and the rules framed thereunder. One post of Vice Principal was created in the school w.e.f. 1.10.80. In March 1981, Departmental Promotion Committee was constituted to make selection for the appointment to the post of Vice Principal in accordance with the recruitment rules. The Departmental Promotion Committee made selection from amongst the teachers of the institution to fill up the post of Vice Principal by promotion in accordance with the Rules. The Departmental Promotion Committee recommended the name of Respondent No. 5 for promotion to the post of Vice Principal though he did not fall within the zone of consid eration being junior to the appellants. The management of the school accepted the recommendation of the Departmental Promotion Committee and forwarded the papers to the Director of Education for necessary approval. The appellants made representations to the Director of Education against the selection and appointment of Respondent No. 5. The Director of Education rejected the proposal of the 806 management and declined to approve the selection and ap pointment of Respondent No. 5 on the ground that he did not fail within the zone of consideration and further that he did not possess the necessary qualification of five years experience as Post Graduate Teacher as required by the recruitment rules. The Director of Education however permit ted the management to advertise the post for filling the same by direct recruitment. The management then issued advertisement prescribing the necessary qualifications for the post which included Master 's Degree with second divi sion; five years teaching experience as Post Graduate Teach er or 10 years experience as trained graduate teacher and ability to speak Malayalam as an essential qualification. The appellants were straightaway not eligible for appoint ment as they were not able to speak or write Malayalam. On the recommendation of the selection committee, respondent No. 5 was appointed as direct recruit to the post of Vice Principal and the Director of Education approved the ap pointment. Thereupon the appellants, as stated earlier filed writ petition in the High Court challenging the appointment of Respondent No. 5 and the writ petition was dismissed. Hence this appeal by special leave. Dismissing the appeal, this Court, HELD: An institution set up by the religious or linguis tic minority is free to manage its affairs without any interference by the State but it must maintain educational standards so that the students coming out of that institu tion do not suffer in their career. But if the recognised minority institution is recipient of Government aid, it is subject to the regulatory provisions made by the State. The regulatory provisions however cannot destroy the basic right of minority institutions as embodied under Articles 29 and 30. [811F G] The Kerala Education Society is a recognised and aided institution. It is subject to the reguIatory provisions contained in the Delhi School Education Act, 1973 and the rules made thereunder. [811H] The institution is for promotion of Malayalam language and as Malayalam is a compulsory subject for students upto Vth standard and it is an optional subject for Vlth to XIIth standard. In the circumstance it is not only proper but desirable that the incumbent holding the office of Principal or Vice Principal being administrative in nature should have knowledge of speaking and writing Malayalam. [812B] The management of the institution acted within its right in pre 807 scribing an additional essential qualification regarding knowledge of Malayalam and no exceptional can be taken to the same as it is the constitutional right of the linguistic minority to insist on the knowledge of the language, on the basis of which the linguistic minority is recognised. [812C] The Kerala Education Bill, 1957 Reference under Article 143 of the Constitution, [1959] SCR 995; The Ahmedabad St. Xaviers College Society and Anr. vs State of Gujarat and Anr. , ; ; Lilly Kurian vs Sr. Lewina and Ors. , ; ; Frank Anthony Public School Employees ' Association vs Union of India & Ors., ; ; Mrs. Y. Theclamma vs Union of India and Ors., ; and All Bihar Christian Schools Association vs State of Bihar, ;

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ivil Appeal No. 1996 of 1990. From the Judgment and Order dated 14.9. 1989 of the Delhi High Court in Civil Writ No. 2038 of 1988. T.S. Krishnamurthy Ayer, T.V.S.N. Chari and C.V. Rao for the Appellants. Ashok Grover and V.N. Kaura for the Respondents. The Judgment of the Court was delivered by SAWANT, J. This appeal raises some questions which are important both for the Delhi Administration as well as for their lessees of land. Shortly stated, the questions in volved are: (a) what constitutes an application for permis sion to convert the user of the land? (b) from which date the conversion charges are leviable? and (c) from which date interest is chargeable on the conversion charges? 2. The land involved in the present ease is at 20, Barakhamba Road, New Delhi and admeasures about 0,956 acre. It was leased by 304 the Governor General in Council to one Smt. Rama Bai on November 17, 1931. The regular lease deed was drawn up in 1938. It was a perpetual lease given on a premium of Rs.8,000 at the annual rent of Rs.400. Rama Bai con structed a residential building on the land. On May 20, 1938, Smt. Rama Bai assigned the lease in favour of Smt. Leelawati who died on November 6, 1969. The interest in the lease devolved on respondents 1 4 and one Hans Raj Gupta and their names were mutated in the record of rights as is evidenced by the Government Memo of November 21, 1977. Hans Raj Gupta died on July 31, 1985. Respondents 5 11 are his heirs and legal representatives. It appears that Hans Raj Gupta had left a will. It is the subject matter of probate proceedings in Suit No. 62 of 1985 which is being contested. If the will is probated then share of the late Hans Raj Gupta will devolve upon respondents 6 9; otherwise, it will devolve on all his heirs, viz., respondents 5 11. For the purpose of the questions to be answered in this appeal, we are not much concerned with the revolution of property after the death of late Hans Raj Gupta. In September 1962, the Delhi Development Authority prepared a Master Plan for Delhi under Section 7 of the Delhi Development Act, 1957 (hereinafter referred to as the "Act"). Before the names of respondents 1 4 and the late Hans Raj Gupta were mutated in the property register on November 21, 1977, a letter was written on April 25, 1977 by one of the lessees to be precise, by the first respondent, through an advocate, to the Land & Development Officer which read as follows: ". . My client Shri Dev Raj Gupta son of late Smt. Leela Gupta proposes to construct a multi storeyed building on the above mentioned plot. Please let me know the charges, if any, payable for conversion of the land use from residen tial to commercial for constructing a multi storeyed commer cial building on the said plot after demolishing the exist ing bungalow constructed on the above said plot. Your early response in the matter shall highly be appreciated. Thanking you, We do not have on record reply, if any, sent to this letter. But it 305 appears that there was some letter of the same date, viz., April 25, 1977 addressed by "the heirs and executors" of the estate of late Smt. Leelawati Gupta, C/o Shri Prem Shankar, Advocate, i.e., the very same advocate who had written the letter earlier alluded to on behalf of the first respondent, and a reply was given by the office of the Land & Develop ment Officer on July 29, 1977 to this letter of the "heirs and executors etc." stating therein that their letter was receiving attention. What that letter was has not come on record. The only development thereafter was, as stated earlier, the Government Memo of November 21, 1977 communi cating that the names of respondents 1 4 and of the late Hans Raj Gupta were mutated in the property register against the leased land. It may be mentioned here that this Govern ment Memo was addressed to the late Hans Raj Gupta and respondents 1 4 care of the said Advocate, Shri Prem Shan kar. We are informed at the Bar that the request for such mutation was made on October 12, 1972 on the basis of a partition deed of December 15, 1970 after the death of Smt. Leelawati on November 26, 1969. What is important to note from the developments so far, as tar as the issues involved in this appeal are concerned, is that no application for conversion of the land was made on behalf of the lessees of the land. On February 15, 1978, the late Hans Raj Gupta, for himself and "Dev Raj Gupta and others", wrote a letter to the Land & Development Officer stating therein as follows: "Under the Master Plan and the Zonal Plan the above plot now residential can be developed for the construction of a Commercial building. Please let me know your terms in respect thereof together with commercialisation charges that will have to be paid by us. The plans have already been submitted to the N.D.M.C. after their approval by the Urban Land Art Commis sioner. Yours faithfully, S/ d Hans Raj Gupta for Hans Raj Gupta, Dev Raj Gupta and Others" 306 We have then on record a letter dated March 1, 1980 by the Assistant Settlement Commissioner to the lessees as follows: S/Shri Hans Raj Gupta, Dev Raj Gupta, Prem Raj Gupta Pardeep Kumar Gupta, C/o Shri Hans Raj Gupta, 3 Ratendon Road, New Delhi. Sub: Premises situated on Plot No. 5, Block No. 205 known as 20 Barakhamba Road, New Delhi. Dear Sir, I am to say that the applications in respect of the above mentioned premises received so far from different persons (some of them are not co lessees) to intimate con version charges for the construction of Multi stroyed Commercial building and your intention to sell the property to M/s. Central Investment (P) Ltd. and the United Towers India (Pvt.) Ltd. but rejection of the same by *.he Compe tent authority under Urban (Ceiling & Regulation) Act, 1976 have created some doubts about that ownership. It has there fore been decided that a fresh application for the permis sion to construct the Multi storeyed Building duly signed by all the co lessees be asked for. You arc therefore requested to make an application in the prescribed proforma for the permission to construct the Multi storeyed Commercial building duly signed by all the co lessees. Yours faithfully, S/d Encl. As above. (R.L. Gupta) Asstt. Settlement Commissioner". On June 3, 1980, a reminder was sent by the Government to the late Hans Raj Gupta and respondents 1 4 which reads as follows: " . . I am to refer to this Office Letter No. LI 9/205(5)/ 307 80/197 dated 1.3.1980 on the above subject and to say that no reply thereto has to far been. (sic.) In case no reply is received from you within 15 days from the said date of receipt on this letter, then it will be presumed that you are not interested for the permis sion to construct the multi storeyed Commercial Building and the case will be treated as closed . . " To this reminder, the late Hans Raj Gupta replied that the letter of March 1, 1980 sent by the Government appeared to have been lost in transit and did not reach their hands and requested for a duplicate of the same to enable them to take necessary steps. The Government by its letter of August 11, 1980 sent a copy of its letter of March 1, 1980 and along with it also sent to the late Hans Raj Gupta and others a show cause notice dated May 31, 1980 which had also been received back by the Government undelivered. Thereaf ter, on February 27, 1981, the late Hans Raj Gupta, and one Raj Kumar Gupta as a constituted Attorney for respondents 1 4, sent an application in the prescribed form. In the accompanying letter of the same date, if was mentioned that the application was sent with reference to the Land & Devel opment Officer 's letter dated March 1, 1980 and the discus sions held in his office on February 9, 1981 for permission to construct a multi storeyed building. All that is neces sary for us to note from the contents of the application form is firstly that it was mentioned there against the relevant query that the plan for constructing commercial building was sanctioned on January 21, 1981 by the New Delhi Municipal Committee and that exemption application under Section 20(1) of the Urban Land (Ceiling & Regulation) Act, 1976 was being processed. On January 12, 1984, the Govern ment intimated to the parties that with reference to their letter of February 27, 1981 seeking permission for construc tion of multi storeyed commercial building, the lessor, i.e., the Government was willing to consider their said request provided they were willing to comply with the terms and conditions mentioned therein full in advance. The terms and conditions mentioned in this communication included, among other things, the payment of additional premium of Rs.1,77,31,548 in jumpsum and payment of interest on the additional premium at 10 per cent per annum from 27th May, 1981 to 14th July, 1983 being Rs.37,84,349.55 and from 15th July, 1983 to the date of payment, at Rs. 1,47,762.90 per month. The other terms and conditions imposed by the said letter are not in dispute and, therefore, they need not be reproduced here. 308 6. On receipt of this letter, the late Hans Raj Gupta and other lessees made a representation on March 31, 1984 to the Works & Housing Minister of the Government of India requesting reconsideration of the terms and conditions imposed in the Government 's letter of permission of January 12, 1984. It appears that thereafter there was a correspond ence between the parties which finally culminated in the Government 's letter of June 12, 1987 which virtually reject ed the representations of the lessees. Further representa tions were made thereafter for reconsideration of the terms and conditions offered by the Government for conversion of the use of the leased land but it appears that they were not replied to. The result was that the lessees approached the High Court by a writ petition challenging the appellant 's letter dated June 12, 1987 reiterating the terms and condi tions which were intimated earlier by the letter of January 12, 1984. The main challenge in the petition was to the base year for the calculation of the charges for conversion of the land from the residential to the commercial purpose. It was the contention of the petitioners that since they had applied to the respondents for permission to convert the user on February 15, 1978, they were liable to pay charges calculated with reference to the said date and not as the respondents had done with reference to May 25,1981. Their second contention was that for the same reason no charges for the misuse of the land could be levied after February 15, 1978 and their third contention was that no interest could be charged on the alleged additional premium which was calculated by taking into consideration May 25, 1981 as the base date. The High Court accepted all the said three con tentions by holding that the date with reference to which the conversion charges had to be calculated was February 15, 1978 when according to the court the respondents had duly applied for conversion of the user. The High Court also held that in fact there was no need to make any such application for conversion after September 1962 when the Master Plan was prepared by the Delhi Development Authority declaring the region in which the leased land was situate as a commercial zone. According to the court, there was an automatic and statutory conversion of the use of the land from residential to commercial purpose and hence there was no question of either payment of conversion charges or the misuse charges. In this view of the matter the court held that the demand which had been made by the appellants for conversion charges calculated on the basis of the rate prevalent in April, 1981 instead of the rate prevalent on February 15, 1978 was not in accordance with law and the respondents were not obliged to make the payment pursuant to an invalid demand. The High Court, therefore, quashed the 309 demand for conversion charges contained in the appellants letters dated January 12, 1984 and June 12, 1987 and direct ed the appellants to recompute the additional premium and other charges within a period of six months in accordance with law and in accordance with the observations made by it. It is this decision which is challenged in this appeal. While narrating the facts we have referred to the alleged application made by the respondents or on their behalf on April 25, 1977 and February 15, 1978. Since the respondents do not contend that their alleged application of April 25, 1977 was an application for conversion of the user of the land, it is not necessary for us to deal with the same. However, since it is contended vehemently on their behalf that the application of February 15, 1978 was a proper application for conversion of the user of the land and the High Court has also accepted it as such, it is necessary to deal with the same. The contents of the said application have been reproducted above. In the first in stance, this application was sent by the late Hans Raj Gupta for himself and for "Dev Raj Gupta and others". The late Hans Raj Gupta did not sign it for Dev Raj Gupta and others as the holder of the power of attorney from them. Nor did he make clear who "the said others were". The lessees of the property at that time were Dev Raj Gupta Prem Raj Gupta and Pradeep Kumar Gupta in addition to the late Hans Raj Gupta. Neither the said letter was signed by Dev Raj Gupta Prem Raj Gupta and Pradeep Kumar Gupta nor was it stated any where in the letter that they had authorised the late Hans Raj Gupta to seek permission on their behalf. As far as the contents of the letter are concerned, they are self explanatory. All that the late Hans Raj Gupta wanted to know from the Land and Development Officer were the terms and conditions for the construction of a commercial building on the land and the charges that would have to be paid for the same. This can hardly be called an application for permission to con struct a commercial building on the land. It is no more than an enquiry. We are, therefore, unable to appreciate the contention that this letter constituted an application for permission to use the land for commercial purposes. It is for this reason that we are unable to agree with the High Court 's finding that this letter was an application for the conversion of the user of the land. It is immaterial in this connection whether any regular form of application was prepared and was available for use at the relevant time. Even assuming that such a form was prescribed for the first time on June 15, 1978, the letter of February 15, 1978 could hardly be described as an application signed by the lessees, meaning thereby, all the lessees for permission to convert the user of the land. 310 The absence of a prescribed from does not made the letter the required application. The least that is expected in an application for the purpose is a request by all the lesseess to permit the change of the user of the land showing readi ness and willingness to abide by the terms and conditions for such conversion of the user. The letter in question, on the other hand, did nothing more than make an enquiry sug gesting that the application for the change of the would be made after the terms and conditions including the charges for the same are known. We are, therefore, satisfied that the letter of February 15, 1978 was not an application made for the change of the user of the land. It is for this very reason that we are of the view that it was for the first time on February 27, 1981 that a proper application was made for the purpose. As has been pointed out hereinabove, after the letter of February 15, 1978 addressed by the late Hans Raj Gupta and others to the authority, we have on record only the letter of March 1, 1980 addressed by the authority to Hans Raj Gupta and others pointing out that applications in respect of the land were received by him from different persons some of whom were not even co lessees, to intimate conversion charges for the construction of "multi storeyed commercial building". The letter also referred to their intention to sell the property to M/s. Central Investment Private Limited and the United Towers India Private Limited". The authority also referred to the reflection of the same by the competent authority under the Urban Land (Ceiling and Regulation) Act, 1976 stated that the same had created some doubts about the ownership of the land. It was, therefore, necessary accord ing to the authority that a fresh application for the per mission to construct the multi storeyed building" duly signed by all the co lessees" in the prescribed form should be sent. It is obvious from this letter that there was some correspondence between the parties between February 15, 1978 and March 1, 1980 which has not come on record. The letter of March 1, 1980 is obviously not a reply sent by the au thority to the late Hans Raj Gupta 's letter of February 15, 1978, for the latter does not refer to the construction of a multi storeyed building or the intended sale of the property to a third party. The letter is also addressed not to the late Hans Raj Gupta and Dev Rai Gupta and others, but to the late Hans Raj Gupta, Dev Raj Gupta, Prem Raj Gupta and Pradeep Kumar Gupta. It is also clear from the authority 's letter that different persons were seeking permission for change of the user of the land and some of them were not even the co lessees of the land. The situation which ob tained till March 1, 1980 was, therefore, that there was no firm application by the authorised person or persons for conversion of the user of the land and it 311 is for this reason that the authority had asked the lessees to send the application in the prescribed form duly signed by all the co lessees. There was no reply to this letter of March 1, 1980 and hence a reminder was sent by the authority on June 3, 1980 warning the lessees that in case no reply was received from them within 15 days, the matter would be treated as closed. It is pursuant to this reminder that on February 27, 1981 a letter accompanied by an application in the prescribed form was sent, and both the letter as well as the prescribed form were duly signed for the first time by all the co lessees. The contents of the accompanying letter make it clear that even the lessees treated this application as the first duly made application for the purpose. It may also be mentioned here that, as has been stated in the application, the plans for the construction of the commer cial building were sanctioned only on January 21, 1981 and the,exemption application made to the competent authority under Section 20 (1) of the Act was even then still under process. It is in response to this application that the sanction was given by the authority on January 12, 1984 to convert the user of the land. We are, in the circumstances, of the view that it was only on February 27, 1981 that an application for the change of the user of the land was made by or on behalf of the respondent lessees of the land. There is no explanation given by the appellants as to why the application made by the respondents of February 27, 1981 was not replied to till January 12, 1984. Hence in the absence of anything else on records, it will have to be held that the date with reference to which conversion charges have to be counted is 27th February, 1981. The authority has calculated additional premium with reference to May 27, 1981 on the footing that the outer limit for granting permission was three months from the date of the receipt of the application. There is no justification for the authority to hold thus, for they are expected to process the application as early as possible and not to wait till the end of three months. Unless there are valid reasons for them to do so or the delay is caused on account of an omission or commission on the part of the applicants, it is not proper to take the end of the three months as the date with reference to which the conversion charges should be calculated. We are, however, informed that in the present case it makes no difference whether the charges are calculated with reference to 27th February 1981 or May 27, 1981. Hence, the difference in dates in immaterial for our purpose. 312 11. The High Court is further not right in holding that there was an automatic or a statutory conversion of the user of the land because in the Master Plan the land in question fell in the area reserved for commercial use. The High Court failed to appreciate that the charge of user of the land permitted by the Plan was only enabling in nature. It lifted the restriction which was otherwise there for using the land for commercial purpose. The land has to be used as per the agreement between the contracting parties, and no change of the user can be made contrary to the agreement even if the Plan permits such user. The Plan helps the parties to change the user, if the parties mutually agree to do so. It does not permit the occupant to change the user unilaterally. It is not, therefore, correct to say that no permission of the landlord was reeded to change the user of the land. In the view we have taken, we direct that the addi tional premium should be calculated by the appellants on the basis of the rate which was prevalent as on February 27, 1981 which is the date of the application made for the change of the user. The interest should be charged on such additional premium w.e.f. 12th April, 1984 since a period of three months from the date of notice, viz., January 12, 1984 was available to the respondent lessees to make the payment of the additional premium. Taking into consideration the facts and circumstances of the present case, the appellants should be given the facility to make the payment in three equal annual installments and the interest should be charged on such deferred payment at not more than 14 per cent per annum. The respondent lessees would, however, not be enti tled to convert the present user of the land into the com mercial user until and unless the last of the amount of the additional premium together with the interest thereon is paid. The respondents will further be liable to pay the misuse charges mentioned at items 6 and 7 of the ,notice of 12.1.1984 till 12th April, 1984 from which date, they would be paying the conversion charges as above. The appellants will give the respondents the facility to pay the rest of the amounts, i.e., the amounts other than the conversion charges in twenty four monthly installments with interest at no more than 10 per cent annum. The decision of the High Court is set aside and the appeal is allowed accordingly with no order as to costs. G.N. Appeal al lowed.

The land in this case was leased by the Government to one R in 1931 and a regular lease deed was drawn in 1938. It was a perpetual lease. The lessee constructed a residential building on the land, and assigned the lease in favour of one L. On the death of L, the interest in the lease devolved on the respondents. Respondent No. 1 sent a letter through his Advocate to the Land & Development Officer, stating that he proposed to construct a multi storeyed building demolish ing the bungalow and demanding to know the charges for conversion of the land use from residential to commercial purposes. The Land & Development Officer replied that the letter was receiving attention. Actually the names of the respondents were mutated in the property register after the exchange of the above letters. However, no application for conversion of the land user was made on behalf of the les sees of the land. Again in 1978 the parties sent a letter to the Land & Development Officer demanding to know the terms for con struction of a commercial building on the lease land and the charges to be paid for the same. The Assistant Settlement Commissioner sent a reply requesting that a formal applica tion be made in the prescribed proforma for permission to construct multi storeyed commercial building duly signed by all the co lessees. In 1980 a reminder was sent to the parties. Only thereafter the parties filed an application in the prescribed form. In 1984, the Government intimated the parties that it was willing to comply with the request, provided the parties were willing to abide by certain terms and conditions in advance. The parties made a representation to the Works & Housing Minis 301 ter requesting for reconsideration of the terms and condi tions. After a good deal of correspondence the Government rejected the representation. Thereafter the parties ap proached the High Court by way of a Writ Petition challeng ing the terms and conditions imposed by the Government. It was contended that since they applied for permission to convert the user of land on 15.2.1978, they were liable to pay charges calculated with reference to that date only; that no charges for misuse of the land could be levied after 15.2.1978; that no interest could be charged on the alleged additional premium which was calculated by taking into consideration May 25, 1981 as the base date. Accepting the contentions, the High Court held that there was no need to make any application for conversion after 1962 when the Master Plan was prepared by the Delhi Development Authority declaring the region as a commercial zone and that the conversion was automatic and statutory. The High Court held that the Respondents were not,obliged to make the payment of conversion charges calculated at rates prevalent in April, 1984 instead of the rates obtaining in February, 1978. It directed the Government to recompute the additional premium and other charges. Aggrieved by the High Court Judgment, the Government preferred the present appeal. The same contentions as were raised in the High Court were advanced before this Court, by both the parties. Allowing the appeal, this Court, HELD: 1. The land has to be used as per the agreement between the contracting parties, and no change of the user can be made contrary to the agreement even if the Master Plan permits such user. The Plan helps the parties to change the user, if the parties mutually agree to do so. It does not permit the occupant to change the user unilaterally. It is not, therefore, correct to say that no permission of the landlord was needed to change the user of the land. The High Court is not right in holding that there was an automatic or a statutory conversion of the user of the land because in the Plan the land in question fell in the area reserved for commercial use. The High Court failed to appreciate that the change of user of the land permitted by the Plan was only enabling in nature. It lifted the restriction which was otherwise there for using the land for commercial purpose. [312B C & A] 2. All that the parties wanted to know from the Land & Development Officer were the terms and conditions for the construction of a commercial building on the land and the charges to be paid for the same. This can hardly be called an application for permission to con 302 struct a commercial building on the land. It is no more than an enquiry. It is immaterial in this connection whether any regular form of application was prepared and was available for use at the relevant time. Even assuming that such a form was prescribed for the first time on June 15, 1978, the letter of February 15, 1978 could hardly be described as an application signed by the lessees meaning thereby all the lessees for permission to convert the user of the land. The absence of a prescribed form does not make the letter the required application. The least that is expected in an application for the purpose is a request by all the lessees to permit the change of the user of the land showing readi ness and willingness to abide by the terms and conditions for such conversion or the user. The letter in question, on the other hand, did nothing more than make an enquiry sug gesting that the application for the change of the user would be made after the terms and conditions including the charges for the same are known. Thus, the letter of February 15, 1978 was not an application made for the change of the user of the land. [309F H; 310A B] 3. It is clear from the authority 's letter dated March 1, 1980 that different persons were seeking permission for change of the user of the land and some of them were not even the co lessees of the land. Since there was no firm application by the authorised person or persons for conver sion of the user of the land the authority had asked the lessees to sent the application in the prescribed form duly signed by all the co lessees. There was no reply to this letter of March 1, 1980 and hence a reminder was sent by the authority on June 3, 1980 warning the lessees that in case no reply was received from them within 15 days, the matter would be treated as closed. It is pursuant to this reminder that on February 27, 1981 a letter accompanied by an appli cation in the prescribed form was sent, and both the letter as well as the prescribed form were duly signed for the first time by all the co lessees. The contents of the accom panying letter make it clear that even the lessees treated this application as the first duly made application for the purpose. As has been stated in the application, the plans for the construction of the commercial building were sanc tioned only on January 21, 1981 and the exemption applica tion made to the competent authority under Section 20(1) of the Delhi Development Act, 1957 was even then still under process. It is in response to this application that the sanction was given by the authority on January 12, 1984 to convert the user of the land. Thus, it was only on February 27, 1981 that an application for the change of the user of the land was made by or on behalf of the respondent lessees of the land. [310G H; 311A D] 4. There is no explanation given by the appellants as to why the 303 application made by the respondents on February 27, 1981 was not replied to till January 12, 1984. Hence in the absence of anything else on record, it will have to be taken that the date with reference to which conversion charges have to be counted is 27th February, 1981. [311E] 5. The additional premium should be calculated by the appellants on the basis of the rate which was prevalent as on February 27, 1981 which is the date of the application made for the change of the user. The interest should be charged on such additional premium w.e.f. 12th April, 1984 since a period of three months from the date of notice, viz., January 12, 1984 was available to the respondent lessees to make the payment of the additional premium. The respondent lessees would not be entitled to convert the present user of the land into the commercial user uniess and until the last of the three annual installments of the addi tional premium together with the interest thereon is paid. [312C E] 6. The respondents will further be liable to pay the misuse charges mentioned at items 6 and 7 of the notice of 12.1.1984 till 12th April, 1984 from which date, they would be paying the conversion charges. [312F]

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Civil Appeal No. 754 of 1988. From the Judgment and order dated 31.8.1987 of the Allahabad High Court in W.P. No. 7899 of 1986 Raja Ram Aggarwal, V.K. Pandita, E.C. Aggarwala and Atul Sharma for the Appellants. S.C. Misra and P.K. Chakraborty for the Respondents. Manoj Swarup and Ms. Lalita Kohli for the Interveners. The Judgment of the Court was delivered by DUTT, J. As elaborate submissions have been made by both the parties at the preliminary hearing of the special leave petition, we proceed to dispose of the points involved in the case on merits after granting special leave. The appeal is directed against the judgment of the Allahabad High Court striking down rule 5 C of the Cantonment Funds Servants Rules, 1937, hereinafter referred to as 'the Rules ', as ultra vires the provisions of the Cantonment A rt, 1924 and also quashing the impugned order of transfer dated October 27, 1986 passed by the GOC in Chief, Central Command. 66 The respondent, Dr. Subhas Chandra Yadav, was appointed a Sub Charge, Cantonment General Hospital, Lucknow, by the Cantonment Board by the appointment letter dated 23.4.1969. He was confirmed in that post on 1.12.1969 by an order issued by the Cantonment Board. The conditions of service of the employees of the Cantonment Board, which is a statutory body, are governed by the provisions of the Rules. At the time of the appointment of the respondent, his services were not transferable as per the provisions of the Rules then prevailing. His appointment letter also did not include any condition for transfer from one Board to another. By a notification dated 16.12.1972, the Rules were amended and a new rule, being rule 5 C was added to the Rules. Rule S C reads as follows: "R.5 C. (1) The service of a servant shall be transferable from one post in one Board to another post in another Board. Provided that: (a) The transferor and transferee Boards are situated within the same State; and (b) The posts in both the Boards are similar and carry the same scales of pay. (2) Subject to such general directions as the Central Government may issue from time to time, the officer Commanding in Chief, the Command, or such other authority as may be authorised by the Central Government in this behalf, shall be the competent authority to transfer a servant under this rule. (3) A servant on transfer under sub rule (I) from one Board to another may, for the purpose of determination of seniority and eligibility for promotion opt: (i) to be governed by the conditions applicable in this behalf to the servants of the Board from which he has been transferred (hereinafter referred to as the transferor Board); or 67 (ii) to be governed by the conditions applicable in this behalf to the servants of the Board to which he has been transferred (hereinafter referred to as the transferee Board): Provided that where a servant does not opt under this rule within thirty days from the date of assumption of charge in the transferee Board, he shall, for purposes of promotion and seniority, be governed by the conditions application in this behalf to the servants of the transferor Board . (4) Save as provided in sub rule (3), the terms and conditions of service of a servant transferred under this rule shall be deemed to be these applicable to the servants of the transferee Board. (5) Where the servant opts under clause (ii) of subrule (3), the service put in by him under the transferor Board before his transfer shall be deemed to be service under the transferee Board. " For the first time, rule 5 C provided for the transfer of the services of the employees of the Cantonment Boards from one post in one Board to another post in another Board within the same State. The GOC in Chief, Central Command, by his order dated October 27, 1986 transferred the respondent from the Cantonment General Hospital, Lucknow, to the Cantonment General Hospital, Varanasi, in place of one Dr. Bansal, who was also transferred by the same order to the Cantonment General Hospital, Bareilly. Being aggrieved by the said order of transfer passed under rule 5 C of the Rules, the respondent filed a writ petition in the Allahabad High Court challenging the validity of the order of transfer on the ground that rule 5 C was ultra vires the provisions of the Cantonment Act and, as such, void. As has been stated already, the High Court has struck down rule 5 C holding, inter alia, that the services of the employees of the Cantonment Board are neither centralised nor is there a common State level service and that the impugned rule 5 C, having provided for the transfer of the employees of one Board to another Board by the GOC in Chief, Central Command, is beyond the rule making power 68 of the Central Government as contained in clause (c) of sub section (2) of section 280 of the Cantonment Act as it stood before it was amended. Hence this appeal. Section 280 of the Cantonment Act confers power on the Central Government to make rules. The relevant portion of section 280 of the Cantonment Act is as follows: "section 280. POWER To MAKE RULES: The Central Government may after previous publication, make rules to carry out the purposes and objects of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: (a). . . . . . . . (b). . . . . . . (bb). . . . . . . (c) the tenure of office, salaries and allowances, provident funds, pensions, gratuities, leave of absence and other conditions of service of servants of Boards;" Clause (c) of sub section (2) of section 280 was substituted by the amendment of the Cantonment Act by Act XV of 1983. Before such amendment in 1983, clause (c) was as follows: "(c). the appointment, control supervision, suspension, removal, dismissal and punishment of servants of Boards;" It is apparent that before the amendment, clause (c) did not confer on the Central Government power to frame rules regarding conditions of service which necessarily include transfer of the employees of the Boards. Rule 5 C, which was inserted in the Rules by a notification dated November 23, 1972 providing for the transfer of the employees of the Cantonment Boards, is on the face of it contrary to the rule making power of the Central Government, as it stood before the amendment of the Act in 1983. 69 It is, however, contended by Mr. Raja Ram Aggarwal, learned Counsel appearing on behalf of the appellants, that after the amendment of clause (c) of sub section (2) of section 280 of the Cantonment Act, conferring on the Central Government the power to lay down the conditions of service of the employees of the Boards, which include the power to make rules for transfer, rule 5 C is valid, being quite in conformity with the provisions of the rule making power under section 280(2)(c) of the Cantonment Act. We are unable to accept the contention. When rule 5 C was inserted into the Rules, it was void as being contrary to and in excess of the rule making power of the Central Government as contained in the unamended clause (c) of sub section (2) of section 280 of the Cantonment Act. It does not become valid merely because of the amendment of clause (c), inter alia, conferring power on the Central Government to frame rules relating to conditions of service. Our attention has been drawn to the provision of sub section (2) of section 281 of the Cantonment Act, which provides that all rules made under the Act shall be published in the official Gazette and in such other manner, if any, as the Central Government may direct and, on such publication, shall have effect as if enacted in the Act. It is urged on behalf of the appellants that in view of sub section (2) of section 281, rule 5 C became a part of the statute and, accordingly, the question of its being contrary to the provisions of the Cantonment Act does not at all arise. This contention is unsound. It is well settled that rules framed under the provisions of a statute form part of the statute. In other words, rules have statutory force. But before a rule can have the effect of a statutory provision, two conditions must be fulfilled, namely, (1) it must conform to the provisions of the statute under which it is framed; and (2) it must also come within the scope and purview of the rule making power of the authority framing the rule. If either of these two conditions is not fulfilled, the rule so framed would be void. The position remains the same even though sub section (2) of section 281 of the Act has specifically provided that after the rules are framed and published they shall have effect as if enacted in the Act. In other words, in spite of the provision of sub section (2) of section 281, any rule framed under the Cantonment Act has to fulfil the two conditions mentioned above for their validity. The observation of this Court in Jestamani vs Scindia Steam Navigation Company, ; , 70 relied upon by Mr. Aggarwal, that a contract of service may be transferred by a statutory provision, does not at all help the appellants. There can be no doubt that a contract of service may be transferred by statutory provisions, but before a rule framed under a statute is regarded a statutory provision or a part of the statute, it must fulfil the above two conditions. Rule 5 C was framed by the Central Government in excess of its rule making power as contained in clause (c) of sub section (2) of section 280 of the Cantonment Act before its amendment by the substitution of clause (c); it is, therefore, void. It is not disputed that the Cantonment Boards are statutory and autonomous bodies controlled entirely by the Cantonment Act. Each Cantonment Board is an independent body functioning within its limited jurisdiction. The Board is the appointing authority of its employees. The service under the Cantonment Board is not a centralised service nor is it a service at the State level. There is much force in the contention of the respondent that as service under the Cantonment Board is not a centralised service or a service at the State level, the transfer of an employee from one Cantonment Board to another would mean the termination of appointment of the employee in the Cantonment Board from which he is transferred and a fresh appointment in the Board where he is so transferred. The GOC in Chief, Central Command, is not the appointing authority of the respondent or the employees of the Cantonment Board, and so transfer of the respondent by the GOC in Chief is not permissible. In any event, one autonomous body cannot transfer its employee to another autonomous body even within the same State, unless the services of the employees of these two bodies are under a centralised or a State level service. In this connection, we may refer to a decision of this Court in Om Prakash Rana vs Swarup Singh Tomar; , Pathak, J. (as His Lordship then was) speaking for the Court observed as follows: "As is clear by now, the fundamental basis of the contention that the power of transfer under the Education Act and its Regulations continues in force even after the enactment of the Services Commission Act rests on the assumption that the power of appointment does not include the power of transfer. In our opinion, the assumption is unsustainable. The scheme under the Education Act envisages the appointment of a Principal in relation to a specific college. The appointment is in relation to that college and to 71 no other Moreover, different colleges may be owned by different bodies or organisations, so that each Principal serves a different employer. Therefore, on filling the office of a Principal to a college, a new contract of employment with a particular employer comes into existence. There is no State level service to which Principals are appointed. Had that been so, it would have been possible to say that when a Principal is transferred from one college to another no fresh appointment is involved. But when a Principal is appointed in respect of a particular college and is thereafter transferred as a Principal of another college it can hardly be doubted that a new appointment comes into existence. Although the process of transfer may be governed by considerations and move through a machinery different from the considerations governing the appointment of a person ab initio as Principal, the nature of the transaction is the same, namely, that of appointment, and that is so whether the appointment be through direct recruitment, through promotion from the teaching staff of the same institution or by transfer from another institution. " The observation extracted above clearly supports 'the contention made on behalf of the respondent that the employees of one Cantonment Board cannot be transferred to another Cantonment Board inasmuch as the service under the Cantonment Board is not a centralised service or a service at the State level. Mr. Aggarwal, however, submits that the respondent would not be in the least prejudiced by the transfer in as much as full safeguard has been provided for in rule 5 C. The question whether the interest of the transferee has been protected or full safeguard has been provided for by rule 5 C is quite irrelevant, if it is invalid and void. Moreover, the provisions of rule 5 C are clumsy and lack clarity and a transfer may affect the transferee prejudicially. It is not necessary for us to discuss how the provisions of rule 5 C may be prejudicial to the interest of an employee transferred to another Cantonment Board within the State, for, we are of the view that rule 5 C is ultra vires the provision of the rule making power of the Central Government under the Cantonment Act. The question, however, is whether the Central Government is entitled to frame rules for transfer of the employees of the Cantonment Boards under the substituted clause (c) of sub section (2) of 72 section 280 of the Cantonment Act. It is true that under clause (c), as it now stands, the Central Government can frame rules pertaining to conditions of service of the Cantonment Board employees. But, in our opinion, even in spite of substituted clause (c), the Central Government will not be entitled to frame rules for transfer of an employee from one Cantonment Board to another within the State for the reasons stated already, namely, (1) the Cantonment Boards are autonomous bodies; (2) the service under the Cantonment Board is neither a centralised service nor is it a service at the State level; and (3) any such transfer of an employee will mean termination of service of the employee in the Cantonment Board from where he is transferred and a fresh appointment by the Cantonment Board which he joins on such transfer. So long as the Cantonment Board service is not made a centralised service or at least a State level service, there can be no transfer from one Cantonment Board to another Cantonment Board within the same State. The Central Government has better consider the question of making the Cantonment Board service a centralised service so as to enable one Cantonment Board to transfer its employees to another Cantonment Board. As has been held by the High Court, the Central Government has power to frame rules about the transfer of the servants of the Board in exercise of its powers under clause (c) of sub section (2) of section 280 of the Act within the region in respect of which it has jurisdiction. For example, the respondent could be transferred from one hospital of the Cantonment Board, Lucknow, to another hospital under the same Board. But that apart, the Cantonment Act does not authorise the Central Government to frame rules for transfer from one Cantonment Board to another. The High Court was, therefore, quite justified in striking down rule 5 C of the Rules and in quashing the impugned order of transfer of the respondent. For the reasons aforesaid, the judgment of the High Court is affirmed and this Appeal is dismissed. There will, however, be no order as to costs. N.V.K. Appeal dismissed.

% The first respondent was appointed a Sub Charge, Cantonment General Hospital, Lucknow by the Cantonment Board by an appointment letter dated 23.4.1969, and was confirmed in that post on 1.12.1969. The conditions of service of the employees of the Cantonment Board, a statutory board, were governed by the provisions of the Cantonment Funds Servants Rules, 1937. At the time of appointment, the services of the respondent were not transferable as per the provisions of the Rules as then prevailing. His appointment letter also did not include any condition for transfer from one Board to another. By a notification dated 16.12.1972, the Rules were amended and a new rule, being rule 5 C was added to provide for the transfer of the services of the employees of the Cantonment Boards from one post in one Board to another post in another Board within the same State. The G.O.C. in Chief, Central Command by his order dated October 27, 1986 transferred the first respondent from the Cantonment General Hospital, Lucknow, to the Cantonment General Hospital, Varanasi, and the incumbent at Varanasi in turn being transferred to the Cantonment General Hospital, Bareilly. Being aggrieved by the order of transfer passed under rule 5 C of the Rules, the first respondent filed a writ petition in the High Court challenging the validity of the order of transfer on the ground that rule 5 C was ultra vires the provisions of the and as such, void. 63 The High Court struck down rule 5 C as being ultra vires the provisions of the and held that the services of the employees of the Cantonment Board are neither centralised nor is there a common State level service and that rule 5 C having provided for the transfer of the employees of one Board to another Board by the GOC in Chief, Central Command is beyond the rule making power of the Central Government as contained in clause (c) of sub section (2) of section 280 of the as it stood before it was amended. It accordingly quashed the order of transfer dated October 27, 1988 passed by the GOC in Chief, Central Command. In the appeal to this Court it was contended on behalf of the appellants: (1) that after the amendment of clause (c) of sub section (2) of Section 280 of the conferring on the Central Government the power to lay down the conditions of service of the employees of the Boards, which include the power to make rules for transfer, rule 5 C is valid being in conformity with the provisions of the rule making power under section 7.80(2)(c) of the Act, and (2) that the respondent would not be in the least prejudiced by the transfer inasmuch as full safeguard has been provided for in rule 5 C. On behalf of the respondent it was contended that: (1) service under the Cantonment Board is not a centralised service or a service at the State level, and (2) the transfer of an employee from one Cantonment Board to another would mean the termination of the appointment of the employees in the Cantonment Board from which he is transferred and a fresh appointment in the Board where he is so transferred. Dismissing the Appeal, ^ HELD: 1. The High Court was justified in striking down rule 5 C of the Rules and in quashing the order of transfer of the respondent. [172G] 2. Rules framed under the provisions of a statute form part of the statute. Rules have statutory force. But before a rule can have the effect of a statutory provision two conditions must be fulfilled, namely, (1) it must conform to the provisions of the statute under which it is framed; and (2) it must also come within the scope and purview of the rule making power of the authority framing the rule. If either of these two conditions is not fulfilled the rule so framed would be void. [69F G] 3. When Rule 5 C was inserted in the Rules, it was void as being 64 contrary to and in excess of the rule making power of the Central Government as contained in the unamended clause (c) of sub section (2) of Section 280 of the Act. It does not become valid merely because of the amendment of clause (c), conferring power on the Central Government to frame rules relating to conditions of service.[69C] 4. The position remains the same even though sub section (2) of Section 281 of the Act has specifically provided that after the rules are framed and published they shall have effect as if enacted in the Act. In spite of the provision of sub section (2) of Section 281, any rule framed under the has to fulfil the aforementioned two conditions regarding their validity. [69G H] Jestamani vs Scindia Steam Navigation Company, ; , distinguished. The Cantonment Board are statutory and autonomous bodies controlled entirely by the . Each Cantonment Board is an independent body functioning within its limited jurisdiction. The Board is the appointing authority of its employees. The services under the Cantonment Board is not a centralised service nor is it a service at the State level. [70C] 6. One autonomous body cannot transfer its employee to another autonomous body even within the same State, unless the services of the employees of these two bodies are under a centralised or State level service. [70E F] In the instant case, the GOC in Chief, Central Command is not the appointing authority of the respondent or the employees of the Cantonment Board, and so transfer of the respondent by the GOC in Chief is not permissible. [70E] Om Prakash Rana vs Swarup Singh Tomar, ; , referred to. Even in spite of substituted clause (c) of sub section (2) of Section 280 the Central Government will not be entitled to frame rules for transfer of an employee from one Cantonment Board to another within the State for the reasons: (t) the Cantonment Boards are autonomous bodies; (2) the service under the Cantonment Board is neither a centralised service nor is it a service at the State level and (3) any such transfer of an employee will mean termination of service of the 65 employee in the Cantonment Board from where he is transferred and a fresh appointment by the Cantonment Board which he joins on such transfer. [72B C] 8. The Central Government, however, has power to frame rules about transfer of servants of the Board in exercise of its powers under clause (c) of subsection (2) of Section 280 of the Act within the region in respect of which it has jurisdiction. For example, the respondent in the instant case, could be transferred from one hospital of the Cantonment Board, Lucknow, to another hospital under the same Board. [72E F] 9. The Central Government had better consider the question of making the Cantonment Board Service a centralised service so 85 to enable one Cantonment Board to transfer its employees to another Cantonment Board. [72D],,

5644.txt

Criminal Appeal 151 of 1963. Appeal by special leave from the judgment and order dated March 27, 1962 of the Punjab High Court in Criminal Revision No. 1137 or 1961. Gopal Singh, for the appellant. The respondent did not appear. The Judgment of Wanchoo and Sikri JJ. was delivered by Wanchoo J. Mudholkar J. delivered a dissenting opinion. Wanchoo, J. This appeal by special leave raises the question of the interpretation of section 259 of the , No. 11 of 1924, (hereinafter referred to as the Act). The respondent was a tenant of the appellant. An application was made by the Cantonment Executive Officer, Ambala, on January 7, 1960, for realisation of a sum of Rs. 649.50 from the respondent under section 259 of the Act on the ground that the amount was due as arrears of rent on the basis of a lease in favour of the respondent. The respondent apparently questioned the jurisdiction of the magistrate to realise the amount. The magistrate held that he had jurisdiction and issued warrants for attachment of the movable property of the respondent on June 13, 1961. Thereupon the respondent went in revision to the Sessions Judge Ambala contending that the magistrate had no jurisdiction to realise the arrears of rent due under a lease 343 under section 259 of the Act and in any case that could not be done without taking into account the objections of the respondent. The Sessions Judge following certain earlier decisions of the Lahore High Court took the view that rent under a lease could not be recovered under section 259 of the Act and made a reference to the High Court under section 439 of the Code of Criminal Procedure. The High Court heard the reference and accepted the view of the Sessions Judge and set aside the order of the magistrate dated June 13, 1961. The High Court having refused the certificate, the appellant obtained special leave from this Court; and that is how the matter has come up before us. Two questions have been raised by learned counsel for the appellant in this appeal. In the first place, he urges that the magistrate when he is acting under section 259 of the Act is a persona designata and therefore his order is not revisable under sections 435/439 of the Code of the Criminal Procedure. The Sessions Judge and the High Court therefore had no jurisdiction to interfere with that order under sections 435/439 of the Code of Criminal Procedure. Secondly, it is urged that the view taken by the High Court that arrears of rent due under a lease cannot be recovered under section 259 of the Act is incorrect. The question as to the jurisdiction of the Sessions Judge and High Court was never raised before the appeal in this Court. Learned counsel, however, relies on the Dargah Committee,Ajmer vs State of Rajasthan(1) in support of his contention that the magistrate acting under section 259 of the Act acts as a persona designata and therefore his order under that section is not revisable under sections 435/439 of the Code of Criminal Procedure and the Sessions Judge and the High Court had no jurisdiction under those provisions to interfere with such an order. The case cited on behalf of the appellant certainly supports the contention put forward; but in the circumstances of this case we are not prepared to allow this contention to be raised at this stage. It is true that a question of jurisdiction, not depending upon facts to be investigated, can be allowed to be raised at any stage. Ordinarily if we were satisfied that the High Court had no jurisdiction at all to interfere we would have allowed this question to be raised even at this late stage. But we are of opinion that though the High Court may not have jurisdiction to interfere under sections 435/439 of the Code of Criminal Procedure it could certainly interfere with the order of the magistrate under article 227 of the Constitution. Now if this point had been raised before the High Court it may very well be that the High Court might have considered the reference as if it was an application before it under article 227 of the Constitution, in which case the High Court would have jurisdiction to interfere with the order or the magistrate if it came to the conclusion that the magistrate had 344 no jurisdiction in such circumstances under section 259 of the Act. In these circumstances we are not prepared to permit the appellant to raise this point before us at this late stage. This brings us to the interpretation of section 259 of the Act as it stood after amendment by Act II of 1954. The relevant part of the section now reads as follows : "Notwithstanding anything elsewhere contained in this Act, arrears of any tax, rent on land and buildings and any other money recoverable by a Board or a Military Estate Officer under this Act or the rules made thereunder may be recovered together with the cost of recovery either by a suit or. on application to a Magistrate having jurisdiction in the cantonment or in any place where the person from whom such tax, rent or money is recoverable may for the time being be residing, by the distress and sale of any movable property of, or standing timber, or growing crop belonging to such person which is within the limits of such magistrate 's jurisdiction, and shall if payable by the owner of any property as such, be a charge on the property until paid; provided. . . . . . . . . (2) * * * * . ' ' The first question that arises is whether rent on land and buildings mentioned ' in the section is governed by the words "recoverable b a Board or a Military Estates Officer under this Act or the rules made thereunder". There is no doubt that "any tax" and "any other money" mentioned in the section are governed by the words "recoverable by a Board etc. " It seems to us that the words "rent on land and buildings" which appear between the words "any tax" and "any other money" must equally be governed by the words "recoverable by a Board etc." Therefore the provisions of section 259 of the Act can be utilised for realisation of arrears of rent on land and buildings only if such rent is recoverable by a Board or a Military Estates Officer under the Act or the rules made thereunder. The word "recoverable" in the context obviously means "claimable". for section 259 itself provides for the manner of recovery. Therefore action for recovery can be taken under section 259 with respect to rent on land and buildings provided such rent is claimable by a Board under the Act or the rules framed thereunder. This view was taken by the Lahore High Court in Banarsi Das vs Cantonment Authority Ambala Cantonment (1) and is in our opinion correct. It may be added that in 1938. the words "rent on land ' and buildings" and "under the rules" did not appear in section 259. Even so. the Lahore High Court took the view with respect to the section as it then stood that the money to be recovered under 8. 259 must be claimable by the Board under the Act. (1) A.I.R. 1933 Lah. 345 The next question that arises is whether "rent on land and buildings" on lease can be said to be claimable by the Board "under the Act or the rules. made thereunder". It is urged on behalf of the appellant that cl. (p) of section 116 of the Act provides for "maintaining and developing the value of property vested in, or entrusted to the management of the Board", and section 116 A gives the Board power to manage any property entrusted to its management by the Central Government on such terms as to the sharing of rents and profits accuring from such property as may be determined by rule. Further reliance is placed on the Cantonment Property Rules, 1925. Rule 8 thereof provides that immovable property which vests in and belongs to the Cantonment Authority may be leased by the Cantonment Authority without a premium on the condition that a reasonable rent is reserved and made payable during the whole term of the lease and that the lease or the agreement for the lease is not made without the previous sanction of the Cantonment Authority by resolution at a general meeting, or the Officer Commanding in Chief of the Command or the Government of India as the case may be. It is urged that these provisions of the Act and the Rules show that the Board has the power to claim rent thereunder in respect of the leased property. Reliance is further placed on the Cantonment Land ' Administration Rules 1937 which provide how rents would be fixed when land is leased out by the Cantonment Authority. Rule 4 of these Rules provides for classification of land and r. 8 for standard table of rents; r. 9 (6) vests the management of class 'C ' land in the Board; r. 26 provides for disposal of land ' by private agreement; r. 28 for execution of leases, rr. 29 and 30 for maintenance of grants registers of building sites; r. 31 for leases for special periods and on special terms; r. 32 for agricultural land leases; r. 34 for record of agricultural leases; r. 35 for execution of agricultural leases; r. 37 for leases for miscellaneous purposes and r. 41 for special conditions in leases. It may be mentioned that originally there was a rule (r.42) in these terms : "Recovery of arrears All arrears of rent and other payment under these rules together with interest on such arreas at the rate of seven and a half per cent per annum from the date when they become due to the date of their realisation, shall, on the application of the person specified in sub section (2) of section 259 of the Act, or of the Military Estates Officers, as the case may be, recoverable in the manner provided in that section. " That rule however no longer exists as it was repealed in 1940. There is no doubt that in view of the provisions of the Act, the Property Rules and the Land Administration Rules to which we have referred above, the Board has the power to manage lands (1) A.I.R. 1933 Lab. 517, 346 and Buildings vested in it or entrusted to its management, lease them out and fix rents therefor. But the right of the Board to claim the rent on land and buildings does not arise from these provisions under the Act and the Rules referred to above. The right of the Board to claim rent only arises after the execution of the lease. Therefore rent on land and buildings is not claimable by the Board under the provisions of the Act or the Property Rules or the Land Administration Rules but under the lease. It follows therefore that section 259 (1) cannot be applied to a simple case of money due to the Board on a contract of lease. It is however urged on behalf of the appellant that the words "rent on land and buildings" which were added by the 1954 Amendment refer to something of that kind which is recoverable under section 259 as otherwise the amendment would be meaningless. That is undoubtedly so. We find however, that section 256 provides that in the event of non compliance with the terms of any notice, order or requisition issued to any person under this Act, or any rule or bye law made thereunder, requiring such person to execute any work or to do any act, it shall be lawful for the Cantonment Authority after giving notice in writing to such person, to take such action or such steps as may be necessary for the completion of the act or work required to be done or executed by him, and all the expenses incurred on such account shall be recoverable by the Cantonment Authority. Section 257 then provides that if any such notice as is .referred to in section 256 has been given to any person in respect of property of which he is the owner. the Cantonment Authority may require any occupier of such property or of any part thereof to pay to it, instead of to the owner, any rent payable by him in respect of such property, as it fails due, upto the amount recoverable from the owner under section 256 and it further provides that any amount recovered from any occupier instead of from an owner under sub section (1) shall. in the absence of any contract between the owner and the occupier to the contrary, be deemed to have been paid to the owner. Here at any rate we have an example of the Board 's power to claim rent from a tenant of an owner under section 257 of the Act read with section 256. So it cannot be said that there is no case where the Act does not provide for claim of rent by the Board. We may add that there may be other cases like this either under the Act or under the Rules. In our view it is in such cases where the Act or the Rules in terms make the rent on land and buildings claimable by the Board. that section 259 will apply. But where the liability to pay rent arises purely on the basis of a lease between the Board and the tenant, nothing in the Act or the Rules has been brought to our notice, particularly after r. 42 referred to above has been repealed, which makes such rent claimable by the Board under the Act or the Rules. We may add r. 42 was repealed long before 1954 when the words "rent on land and buildings" came in section 259. So it cannot be argued that the omission of r. 42 was due to the amendment of 1954. 347 It is urged that the section provides for recovery by suit also and as such it wilI not be possible for the Board to recover rent of land and buildings let out by it even by suit if the rent in the section refers only to rent directly claimable under the Act or the Rules. This is clearly incorrect. The section does not bar the right of the Board as an owner or holder of land and buildings to take action for recovery of rent thereof by suit under the general law of the land. Further by providing for recovery of rent of the kind we have indicated above by suit or by application rent of the kind we have indicated above by suit or by application to a magistrate the section does not affect the right of the Board to recover rent of its land and buildings by suit for such rents are entirely outside the section and the right of the Board under the general law of the land is not taken away by the section. It may be that the section provided for recovery by suit as an alternative as a matter of abundant caution to avoid an argument that the application to a magistrate was the only means open to the Board for recovery of sums covered by the section. In any case the view we are taking will not affect the right of the Board to recover by suit under the general law rent of its land and buildings given on lease. In the circumstances we agree with the High Court that the rent in this case was not claimable by the Board under the Act or the Rules but only under the lease in favour of the respondent. Therefore section 259 (1) insofar as it refers to recovery of such rent by application to a magistrate will not apply. In the circumstances the appeal fails and is hereby dismissed. Mudholkar, J. The question which falls for a determination in this appeal is whether under section 259 of the Cantonment Act, No. II of 1924 'rent ' on land or buildings under the management of the Cantonment Board can be recovered thereunder by a Magistrate. This question was raised by the respondent in a revision application made by him before the Sessions Judge under section 435 of the Code of Criminal Procedure against the order of the Magistrate, II Class, made under the aforesaid provision upon an application made to him by the Executive Officer, Ambala Cantonment for the recovery of Rs. 649.50 nP being the arrears of rent alleged to be due from the respondent to the Cantonment Board. the learned Sessions Judge made a reference to the High Court under section 438 of the Code of Criminal Procedure on the authority of the decisions in Municipal Committee, Delhi vs Hafiz Abdullah (1) and Guranditta Mal vs Emperor (2). The High Court, after referring to these cases and to Banarsi Das vs Cantonment Authority, Ambala Cantonment (2) accepted the reference and set aside the order of the Magistrate. By special leave the Cantonment Board has come up to this Court in appeal. (1) A.I.R 1994 Lah 699 (2) A.l. R. (3) A.l. R. 348 Two points were urged by Mr. Gopal Singh appearing for the appellant. The first is that the proceeding before the Magistrate was not one under the Code of Criminal Procedure and, therefore, neither could a reference be made by the Sessions Judge to the High Court under section 438. P.C. nor could an order be made by the High Court under section 439. The second point is that upon a correct interpretation of section 259 of the Act the Magistrate had the power to recover the rent due to the appellant in the manner provided for in the section. We did not allow the first contention to be raised for two reasons. In the first place the point was not raised in the High Court and in the second place it would not be fair to the respondent who is ex parte to have the appeal decided upon a new ground altogether. In so far as the second point is concerned it seems to me that the contention of Mr. Gopal Singh is correct and that the High Court was in error in setting aside the order of the Magistrate. The two cases upon which reliance was placed before the High Court arose under section 81 of the Punjab Municipal Act (III of 1911) which runs thus: "Any arrears of any tax, water rate, rent, fee or any other money claimable by a committee under this Act may be recovered on an application to a Magistrate." According to the Lahore High Court the operation of this section was controlled by the words "claimable by a committee under this Act" and that it was not any sum that could be described as rent or fee which could be recovered under summary provisions of that section. According to that High Court only a sum that was claimable by the Committee under the express provisions of that Act could be recovered by resort to summary procedure provided by that section. In Banarsi Das 's case(1) it was similarly held that the expression "recoverable by the Cantonment Authority under the Act" did not include money due under an ordinary contract between the Cantonment Authority and others and that section 259 of the Act applied only to such monies as were recoverable by that authority under express provisions of the Act. It is this last decision which was relied upon by the High Court and it pointed out that though the word rent did not occur in section 259 of the Act as it stood when Banarsi Das 's case(1) was decided the introduction of that word had not altered the position in so far as recovery of rent is concerned. Section 259 of the Act as it now stands runs thus: "Notwithstanding anything elsewhere contained in this Act, arrears of any tax, rent on land and buildings and any other money recoverable by a Board or a Military Estates Officer under this Act or the rules made thereunder may be recovered together with the cost of recovery (1) A.I.R. 1938 Lah. 349 either by a suit or on application to a Magistrate having jurisdiction in the cantonment or in any place where the person from whom such tax, rent or money is recoverable may for the time being be residing, by the distress and sale of any movable property of, or standing timber or growing crop belonging to such person which is within the limits of such magistrate 's jurisdiction, and shall, if payable by the owner of any property as such, be a charge on the property until paid for. " Then there is a proviso which need not be quoted. The aforesaid section deals with "Method of recovery". It sets out two methods: one is institution of a suit and the other is making of an application to a Magistrate. Therefore, where rent of land or building under the management of the Cantonment Authority falls to be recovered. resort could be had ' either to a suit or to summary proceeding as provided in the section. But if the expression "rent" is confined to money due under some express provision of the Act it will lead to a curious result. Thus in respect of rent of land or buildings under the management of the Board neither remedy would be available though the claim for the rent is ultimately traceable to those provisions of the Act and ' the Rules which empower the Board to let out the land or buildings upon the ground that it cannot be said to be claimable or recoverable under any express provision of the Act. Surely the Legislature could never have meant that even a suit for recovery of rent would be maintainable at the instance of the Board only if it was for the purpose of recovery of rent from a tenant who was liable under an express provision of the Act or the Rules to pay rent to the Board. Under sections 116 and 116A of the Act. read along with Cantonment Land Administration Rules, 1937, the Cantonment Board is entrusted with certain duties and is empowered to do certain acts in relation to the Cantonment property under its management. It is the duty of the Board, among other things, to maintain and develop the property vested in or entrusted to its management. Section 116 A provides as follows: "A Board may, subject to any conditions imposed by the Central Government, manage any property entrusted to its management by the Central Government on such terms as to the sharing of rents and profits accruing from such property as may be determined by rules made under section 280. " The Cantonment Land Administration Rules, 1937 contain detailed provisions as to the leasing of land, standardisation of rents, disposal of land by a private agreement, execution of leases etc. Powers are thus conferred upon the Board to let out property vested in it or which is under its management. It would follow from this that where in exercise of these powers the Board has let out any land or buildings it has the right as well as the duty to collect the rent from the tenant. Therefore, though, strictly speaking, the 350 rent due from the tenant cannot be said to be payable under any express provision of the Act the tenant 's liability to pay and the Board 's right to recover it is ultimately traceable to the Act inasmuch as this liability has arisen by reason of the exercise of a power exercised or performance of duty by the Board under express provisions of the Act and the Rules. Surely the Board cannot be deprived of the right to recover the rent or be absolved from the duty to recover it by resort to the normal remedy of suit. Yet upon the interpretation placed upon section 259 of the Act by the Lahore High Court and by the Court below a suit as well as a proceeding before a Magistrate have to be placed on the same footing. This will lead to an impossible position and it cannot for one moment be thought that this is what the Legislature had intended. What the expression "recoverable by a Board ' or the Military Estates Officer under this Act or the rules made thereunder" means is what the Act or the Rules permit the Board to recover or what the Act or the Rules permit the Military Estates Officer to recover. To put it in another way the words "recoverable by" and "under this Act or the Rules made thereunder" are meant to govern "a Board" or "a Military Estates Officer". It was necessary to make this provision because certain duties are imposed and powers conferred on the Board and certain other duties imposed and powers conferred upon the Military Estates Officer and the section makes it clear that the power to recover money is exercisable by such of these two authorities as performs the duty or exercises the power by reason of which the liability of another to pay the tax, rent or any other money arises. In support of the view which I have expressed I may refer to a decision of the Court of Appeal in Tideway Investment and Property Holdings Ld. vs Wellwood (1). There one of the questions which had to be considered related to awarding costs to the successful plaintiffs who were the landlords of the defendants. The suit was brought in the High Court and the plaintiffs contended that since the defendants have committed a breach of the provisions of the lease they had forfeited it and, therefore, were entitled to possession on forfeiture as also to damages for breach of the contract contained in the lease. The defendants claimed protection of the Rent Acts and Harman J., who heard the case held that the lease having already expired there could be no forfeiture and the tenant who was holding over became a statutory tenant entitled to the protection of the Rent Acts. Evershed M.R., however, said that the tenant became a trespasser or a statutory tenant and that the breach of the convenant was a continuing one. Therefore, he said, it was plain that all claims arising out of the breach of the convenant and consisting primarily of a claim for possession must be regarded as arising out of or under the Rent Restriction Act, 1920. Harman J., also held that the claim must be regarded as (1) 351 claims under the Rent Act and section 17(2) precluded ' him from awarding costs to the successful plaintiffs. Section 17(2) reads thus: "A county court shall have jurisdiction to deal with any claim or other proceedings arising out of this Act or any of the provisions thereof, notwithstanding that by reason of the amount of claim or otherwise the case would not but for this provision be within the jurisdiction of a county court, and, if a person takes proceedings under this Act in the High Court which he could have taken in the county court, he shall not be entitled to recover any costs. " The Master of the Rolls, with whom the other Lords Justices agreed, took the same view as Harman J. It may be mentioned that the suit was not instituted under any specific provision of the Rent Acts and the claim for possession was based on the breach of a covenant in the lease which the Court of Appeal treated as a continuing one and yet was treated as one under the Rent Restriction Act, 1922 because of the defence raised. This case thus illustrates that an expression such as the one found in section 259 of the Act must be construed liberally and not narrowly. In Stroud 's Judicial Dictionary, Vol. I, an Australian case, Winstone vs Wurlitzer Automatic Phonograph Co. of Australia Pty Ltd. C) on which could not lay my hands is cited. There it was held that 'authorise ' should be read in its ordinary sense of sanction, approve or countenance. I do not think that there is any substantial difference between "Authorised by the Act" and "under the Act". It would, therefore, be not right to construe the section in the way it was construed by the court below. On the other hand it must be held that where the liability to pay money arises against a person by reason of something done by the Board or the Military Estates Officer in exercise of a power or the performance of a duty under the Act that liability can be enforced by the authority concerned either by instituting the suit or by making an application to a Magistrate. Further, if the word 'rent ' in section 259 of the Act were to be given a restricted meaning that word itself would be rendered otiose because there is no provision whatsoever in the Act which expressly makes rent claimable or recoverable by either of the two authorities specified therein. Our attention was drawn to section 257(1) which with.out its proviso reads thus: "If any such notice as is referred to in section 256 has been given to any person in respect of property of which he is the owner, the Board may require any occupier of such property or of any part thereof to pay to it, instead of to the owner, any rent payable by him in respect of ; 352 such property, as it falls due, up to the amount recoverable from the owner under section 256. " It cannot, however, be said that what the Legislature had in contemplation when it am.ended section 259 by adding the word "rent" therein was "rent" to which reference is made in section 257(1). Section 257 is complementary to section 256. What section 256 provides is as follows: "In the event of non compliance with the terms of any notice, order or requisition issued to any person under this Act, or any rule or bye law made thereunder, requiring such person to execute any work or to do any act, it shall be lawful for the Board, whether or not the person in default is liable to punishment for such default or has been prosecuted or sentenced to any punishment therefor, after giving notice in writing to such person, to take such action or such steps as may be necessary for the completion of the act or work required to be done or executed by him, and all the expenses incurred on such account shall be recoverable by the Board. " Therefore, what the Board has the power to recover from the person is the expenses which it has incurred. One of the modes is to proceed against the occupier of any property belonging to the owner thereof and require that occupier to pay to the Board instead of to the owner the rent payable by him to the owner. What the Board thus recovers from the person cannot obviously be regarded as rent in so far as the Board is concerned. For, the Board is not the landlord of the occupier and what it recovers from his is not something which was due to the Board as rent from him. 'Rent ' as commonly understood and as defined in Jowitt 's Dictionary of English Law ' is a sum of money payable periodically by a tenant to a landlord as compensation for occupation of a building or land belonging to the landlord. It cannot thus include money payable by one person to another when they do not stand in the relationship of tenant and landlord. It is the Dictionary meaning which has to be given to the word 'rent ' in section 259. Giving it this meaning it would be clear that what is referred to in section 257(1) as rent was not intended to be included in that expression in section 259. Apart from section 257 no other provision has come to our notice which can support the view of the High Court as to the interpretation of section 259. It may be mentioned that before the year 1940 there was r. 42 in the Cantonment Land Administration Rules, 1937 which expressly authorised the Board to recover all arrears of rent and "other payments" under the Rules by resorting to section 259 of the Act. But that rule was repealed in 1940. It was represented to us by Mr. Gopal Singh that this was repealed because in view of the wide language of section 259 there was no need felt for the retention of the rule. Whatever that may be. the position ;,s, if I may repeat. 353 that if the word rent is given a restricted meaning as has been done by the High Court, that word would become purposeless. On the other hand if the expression is interpreted in the way suggested here it will serve a purpose for which it was intended. For these reasons I am of the view that the appeal should be allowed. ORDER BY COURT In accordance with opinion of the majority the appeal is dismissed.

In 1954, the words "rent on land or buildings" were added to section 250 of the . After the amendment, the appellant (Cantonment Board), applied under the section to the concerned Magistrate, for realisation of arrears of rent from the respondent, on the basis of a lease in his favour. The Magistrate issued warrants for attachment of the movable property of the respondent. The respondent went in revision to the Sessions Judge. He made a reference to the High Court and the High Court set aside the Magistrate 's order. In its appeal to the Supreme Court, the appellant contended that, upon a correct interpretation of the section, the Magistrate had the power to order the recovery of rent due to the appellant. HELD: (Per Wanchoo and Sikri JJ.) ' The rent was not claimable by the appellant under the Act or the Rules but only under the lease in favour of the respondent. Therefore, section 259(1), in so far as It refers to recovery of such rent by application to Magistrate, would not apply. In view of the provisions of the Act, Cantonment Property Rules, 1925, and the Cantonment Land Administration Rules, 1937, a Cantonment Board has power, to manage the lands or buildings vested in it or entrusted to its management, to lease them out and to fix rents therefor. But section 259 can be utilised for realisation of arrears of rent on land and buildings, only if such rent is recoverable by a Board or a Military Estates Officer under the Act or the Rules made thereunder. The word "recoverable" means "claimable". Section 257 read with section 2.56 is an example of the Board 's power to claim rent from the tenant of an owner. There may be other such cases, and it is only in those cases, where the Act or the Rules, in terms, make the rent on land and buildings claimable by the Board, that the section will apply. But where the liability arises purely on the basis of a lease between the Board and the tenant, nothing in the Act or the Rules, particularly after r. 42 which provided for such recovery had been repealed, makes such rent claimable by the Board under the Act or the Rules. Since. the repeal was in 1940 before the section was amended, it cannot be argued that the rule was repealed because of the amendment of the section. [344 F H; 346 F H] The view taken, however, would not affect the right of the Board to recover by suit, under the general law, rent of its land and buildings given by it on lease. [347 B] Per Mudholkar, J. (dissenting): The High Court was in error in setting aside the order of the Magistrate. What the expression "recoverable by a Board or a Military Estates Officer under the Act or the Rules made thereunder," in section 259 means is, what the Act or the Rules permit the Board to recover, or what the Act or the Rules permit the Military Estates Officer to recover. The words "recoverable by" and "under this Act of the Rules made thereunder." are meant to govern "a Board" or "a Military Estates Officer." Thus under the section the power to recover money is exercisable by such of these two authorities as performs the duty or exercises the power by reason of which the liability of another 342 to pay the tax, rent or any other money arises. Powers are conferred upon a Board under the Act read with the Cantonment Land Ad ministration Rules, 1937. to let out property vested in it or which is under its management. Where, in exercise of those powers the Board has let out any land or buildings, it has the right as well as the duty to collect the rent from the tenant. Therefore, where the liability to pay money arises against a person, by reason of something done by the Board or the Military Estates Officer, in exercise of a power or the performance of a duty under the Act, that liability can be enforced by the authority concerned, either by instituting a suit or by making an application to a Magistrate. But if the word "rent" is confined to money due under some express provision of the Act or Rules, it will lead to the curious result, that, in respect of land or buildings under the management of the Board, neither remedy would be available though the claim for rent is ultimately traceable to those provisions of the Act and the Rules which empower the Board to let out the land or buildings upon the ground that it cannot be said to be claimable or recoverable under any express provision of the Act. [350 C E; 351F; 351 G H] Further, if the meaning of the word "rent" is so restricted, that word itself would be rendered otiose, because, there is no provision whatsoever in the Act which expressly makes rent claimable or recoverable by either of the two authorities specified therein. What the Board recovers under sections 256 and 257 cannot be regarded as rent, giving the word its dictionary meaning, for, the Board is not the landlord of the occupier, and what it recovers from him, is not something which was due to the Board as rent from him. [352 E G].

1941.txt

Civil Appeal No. 564 of 1970. Appeal by special leave from the judgment and decree dated the 3rd April, 1969 of the Kerala High Court in S.A. No. 266 of 1968. A.S. Nambiyar for the Appellants. K.T. Harindra Nath, N. Sudhakaran and M.R.K. Pillai for Respondent No. 1. The Judgment of the Court was delivered by KOSHAL, J. This appeal by special leave is directed against the judgment dated 3rd of April, 1969 of the High Court of Kerala rendered in a Second Appeal arising from a suit for partition of immovable property. The suit was filed in the Court of Munsiff at Parappanangadi in the year 1938. That Court passed a preliminary decree for partition on the 18th February, 1940 and thereafter the parties took no further interest in the matter for more than two decades. In the mean time the High Court passed an order dated December 22, 1956 redefining the territorial limits of the Courts of Munsiffs functioning in district Calicut, of which the Court of Munsiff at Parappanangadi was one. According to that order the territory in which the property disputed in the suit was situated, came under the territorial jurisdiction of the Munsiff 's Court at Manjeri and it was in that Court that the plaintiff filed, on the 18th January, 1966 an application (I.A. No. 109 of 1966) praying that a final decree in the suit be passed. Defendant No. 12 (who is now dead and is represented in this appeal by respondents No. 1 and Ors.) immediately took an objection that the Manjeri Court had no territorial jurisdiction to hear the application and that the matter should have been agitated in the Court of Munsiff at Parappananagadi. The objection was overruled by the Manjeri Court which proceeded to partition the property by metes and bounds and ultimately passed a final decree in that behalf on 9th July, 1968. An appeal was filed 185 against final decree by defendant No. 12 in the Court of District Judge before whom the objection to the jurisdiction assumed by the Manjeri Court was again taken but was repelled with the result that the final decree was confirmed. The third round of litigation in regard to question of jurisdiction took place in the High Court wherein a learned single Judge upheld the objection and ruled that it was only the Parappanangadi Court that had the territorial jurisdiction to entertain the application praying for final decree and that the assumption of such jurisdiction by the Manjeri Court was not justified. The objection being upheld, the final decree was set aside and there was thus no occasion for the High Court to decide the other points arising in this appeal. We have heard learned counsel for the parties on the question of jurisdiction. An unfortunate aspect of this litigation has been that although that question has been agitated already in three courts and has been bone of contention between that parties for more than a decade, the real provision of law which clinches it was never put forward on behalf of the appellant before us nor was adverted to by the learned District Judge or the High Court. That provision is contained in sub section (1) of Section 21 of the Code of Civil Procedure which runs thus: "21 (1) No objection as to the place of suing shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice." In order that an objection to the place of suing may be entertained by an appellate or revisional court, the fulfilment of the following three conditions is essential: (1) The objection was taken in the Court of first instance. (2) It was taken at the earliest possible opportunity and in cases where issues are settled, at or before such settlement. (3) There has been a consequent failure of justice. All these three conditions must co exist. Now in the present case conditions Nos. 1 and 2 are no doubt fully satisfied; but then 186 before the two appellate Courts below could allow the objection to be taken, it was further necessary that a case of failure of justice on account of the place of suing having been wrongly selected was made out. Not only was no attention paid to this aspect of the matter but no material exists on the record from which such failure of justice may be inferred. We called upon learned counsel for the contesting respondents to point out to us even at this stage any reason why we should hold that a failure of justice had occurred by reason of Manjeri having been chosen as the place of suing but he was unable to put forward any. In this view of the matter we must hold that the provisions of sub section above exracted made it imperative for the District Court and the High Court not to entertain the objection whether or not it was otherwise well founded. We, therefore, refrain from going into the question of the correctness of finding arrived at by the High Court that the Manjeri Court had territorial jurisdiction to take cognizance of the application praying for final decree. In the result we accept the appeal, set aside the judgment of the High Court and remand the case back to it for deciding on merits the appeal which culminated in that judgment. As the proceedings for the final decree have been pending since 1966, we further direct that the High Court shall decide the appeal last mentioned at the earliest possible and, in any case, within three months from the receipt of the records from this Court. The Registry shall take immediate steps to have the records despatched to the High Court. There will be no order as to costs. S.R. Appeal allowed.

In a suit for partition of immovable property filed in the Court of Munsiff Parappanangadi in the year 1938 that Court passed a preliminary decree for partition on the 18th February, 1940. The parties to the suit took no further interest in the matter for more than two decades. In the meantime according to the order of the High Court of Kerala dated December 22, 1956 refining the territorial limits of the Courts of Munsiffs functioning in district Calicut, of which the Court of Munsiff at Parappanangadi was one, the suit property came under the territorial jurisdiction of the Munsiff 's Court at Manjeri. The plaintiff on the 18th January, 1966 filed an application praying that a final decree the suit be passed. Defendant No. 12 immediately took an objection that the Manjeri Court had no territorial jurisdiction to hear the application and that the matter should have been agitated in the Court of Munsiff at Parappanagadi. The objection was overruled by the Manjeri Court which proceeded to partition the property metes and bounds and ultimately passed a final decree in that behalf on 9th July, 1968. An appeal filed against the final decree by defendant No. 12 failed, but he succeeded before learned single Judge of the Kerala High Court who ruled that it was only the Parappanangadi Court that had the territorial jurisdiction to entertain the application and the final decree was set aside. Hence the appeal by special leave. Allowing the appeal, the Court ^ HELD: 1:1. In order that an objection to the place of suing may be entertained by any appellate or revisional Court, the fulfilment of the following three conditions is essential, according to the provisions contained in sub section (1) of section 21 of the Code of Civil Procedure: (i) The objection was taken in the Court of first instance; (ii) it was taken at the earliest possible opportunity and in case where issues are settled, at or before such settlement; (iii) there has been a consequent failure of justice. [185 F G] 1:2. In the present case conditions Nos. 1 and 2 are no doubt fully satisfied; but before the two appellate Courts below could allow the objection to be taken, it was further necessary that a case of failure of justice on account of the place suing having been wrongly selected was made out. Since the respondents failed to point out even before this Court that a failure of justice had occurred by reason 184 of Manjeri having been chosen as the place of suing, the provisions of sub section (1) of section 21 of the Code of Civil Procedure made it imperative for the District Court and the High Court not to entertain the objection, whether or not it was otherwise well founded. [185 H, 186 A C]

4432.txt

Civil Appeals Nos. 2567, 2818 20, 2648, 3277, 2817, 2918, 3079 83, 3001 04, 3543 48, 2810 16, 3375, 2864 2917, 2989 3000, 3084 3088, 3268 71, 3253 54, 3399 3400 of 1982. Appeals by special leave from the Judgments and orders dated the 30th April, 1982, 5th, 6th, 7th, 10th, 11th, 12th, 13th, 15th, May, 1982, 3rd, 17th, 23rd, August, 1982 of the Patna High Court in C.W.J.C Nos. 1788, 3726, 3727, 4529 of 1981, 253, 688, 1473 of 1982, 2771/81, 96/82, 1233, 1498, 1907, 1986 of 81, 1042, 1043, 1121, 1044 of 1982, 3198, 3197, 3195, 3147, 3146, 3148, 1573, 1377, 1802, 1852, 1800, 1950, 1776 of 1981, 1038 of 1982, 1300, 1301, 1303, 1329, 1334, 1383, 1648 of 1981, 255 of 1982, 1193, 1198, 1204, 1206, 1209, 1211, 1213, 1214, 1262 64, 1273, 1282, 1283, 1287, 1331, 1355 1382, 1384, 1386, 1431, 1432, 1484, 1488, 1489, 1548, 1645, 1734, 1833 of 1981, 78 of 1982, 1154, 1160, 1168, 1169. 1186, 1187, 1191, 1549, 1556, 1557 58, 1415, 1461, 1465, 1487 of 1981, 251 of 1982, 228, 1321 of 1981, 394, 1478 of 1982, 1320/81, 902, 565/82, 1775, 1177, 1801 of 1981, 503/82, 1804/81, 1, 3, 4, 6 & 7 of 1982, 3079, 3528 of 1981, 1947/82, 1254/82, 2922/81, 1372/82, 1408 & 1482 of 1981. AND Special Leave Petitions Nos. 10744 53, 9554 58, 9788, 9821 22, 10907, 9095, 1202 05, 9886 88, 9500 02, 9753, 9523, 10912, 11069, 10754 56, 10797 10812, 10891, 9702, 9782, 9561, 14001, 14364 66 of 1982, 1393 96, 1422 23, 1472 73 of 1983. From the Judgments and orders dated the 30th April, 1982, 3rd May, 5th, 6th, 7th, 10th, 11th, 12th, 13th May, 19th August 9th & 15th September, 8th & 18th October 1982, 20th & 21st January, 1983 of the Patna High Court in C.W.J.C. Nos. 1176, 1516 139 1435, 1177, 1618, 1469 & 1252 of 1982, 3398/81, 1355/82, 525182, 3640, 3641, 3642, 3743 & 3745 of 1982, 1326, 1784, 1405, 1854, 3337, A 1656 of 1981, 349, 1108, 1148, 4073, 4074, 4075 of 1982, 3118, 3080, 1161, 1374, 2804, 3035 of 1981, 4213/82, 1517/82, 1278, 1414, 1290, 1291, 1292, 1297, 1306, 1200, 1212, 1256, 1276, 1277, 1485 of 1981, 484, 509/82, 1517, 1578, 1450, 4037, 2944, 1788, 2889 of 1981, 1547, 506, 507, 508, 4931, 1253, 1431, 1432, 207 & 214 of 1982 & 182 & 203 of 1983. WITH Writ Petitions Nos. 9266, 10055 56, 7002 09, 7019 23, 7024, 7921 22, 7996.97, 8508 10, 9680 92, 9322, 7647 53, 8005, 8067, 7160 of 1982, 415 76 78, 640 41, 652 of 1983 (Under article 32 of the Constitution of India) A.B. Divan, A.K. Sen, Shankar Ghose, P.R. Mridul, Hardev Singh & S.T. Deasi, Talat Ansari, Ashok Sagar, Sandeep Thakore, Ms. Rainu Walia, D.N. Misra, D.P. Mukherjee, B.R. Agarwala, Miss Vijayalakshmi Menon, U.P. Singh, B.B. Singh. B.S. Chauhan, Anil Kumar Sharma, Praveen Kumar, A.T. Patra, Vineet Kumar, A.K. Jha, M.P. Jha, R.S. Sodhi, A. Minocha, Mrs. Indu Goswamy, S.K. Sinha, Vinoo Bhagat, P.N. Misra, KK. Jain and Pramod Dayal for the Appellants. K Parasaran, Solicitor General, R.B. Mahto, Addl. Advocate General. Bihar. Pramod Swarup and U.S. Prasad for the Respondents. The Judgment of the Court was delivered by SEN, J. These are appeals by special leave from a judgment and order of the High Court of Patna dated April 30, 1982 by which the High Court upheld the constitutional validity of sub section (I) of s.5 of the Bihar Finance Act, 1981 ("Act ' for short) which provides for the levy of a surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him, at such rate not exceeding 10 per centum of the total amount of tax, and of sub section (3) of section 5 of the Act which prohibits such dealer from collecting the amount of surcharge payable by him from the purchasers. 140 The Bihar Finance Act 1981, is not only an Act for the levy A of a tax on the sale or purchase of goods but also is an Act to consolidate and amend various other laws. We are here concerned with section S of the Act which finds place in Part I of the Act which bears the heading "Levy of tax on the sale and, purchase of goods in Bihar and is relatable to Entry 54 of List II of the Seventh Schedule. By two separate notifications dated January 15, 1981 the State Government of Bihar in exercise of the powers conferred by sub section (I) section S of the Act appointed January, IS; 1981 to be the date from which surcharge under section 5 shall be leviable and fixed the rate of surcharge at 10 per centum of the total amount of the tax payable by a dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him. The Act was reserved for the previous assent of the President and received his assent on April 20, 1981. There is no point raised as regards the validity of the notifications in question and therefore there is no need for us to deal with it. The principal contention advanced by the appellants in these appeals is that the field of price fixation of essential commodities in general, and drugs and formulations in particular, is an occupied field by virtue of various control orders issued by the Central Government from time to time under sub section (I) of section 3 of the which allows the manufacturer of producer of goods to pass on the tax liability to the consumer and therefore the State Legislature of Bihar had no legislative competence to enact sub section (3) of section S of the Act which interdicts that no dealer liable to pay a surcharge, in addition to the tax payable by him, shall be entitled to collect the amount of surcharge, and thereby trenches upon a field occupied by a law made by Parliament. Alternatively, the submission is that if sub s (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are fixed by the Central Government by various control orders issued under the Essential commodities Act, then there will be repugnancy between the State law and the various control orders which according to section 6 of the must prevail. There is also a subsidiary contention put forward on behalf of the appellants that sub section (I) of section S of the Act is ultra vires the State Legislature in as much as the liability to pay surcharge is on a dealer whose gross turnover during a year exceeds Rs. 5 lakhes or more i.e. inclusive of transactions relating to Sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the State or in the course of import into, or 141 export of goods outside the territory of India. The submission is that such transactions are covered by article 286 of the Constitution and A therefore are outside the purview of the Act and thus they cannot be taken into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge under sub section (1) of section 5 of the Act. It will be convenient, having regard to the course taken in the arguments, to briefly refer to the facts as are discernible from the records in Civil Appeal No. 2567 of 1982 Messrs Hoechst Pharmaceuticals Limited & Another vs The State of Bihar & others, and Civil Appeal No. 3277 of 1982 Messrs Glaxo laboratories (India) Limited vs The State of Bihar & others. Messrs Hoechst Pharmaceuticals Limited and Messrs Glaxo Laboratories (India) Limited are companies incorporated under the engaged in the manufacture and sale of various medicines and life saving drugs throughout India including the State of Bihar. They have their branch or sales depot at Patna registered as a dealer under section 14 of the Act and effect sales of their manufactured products through wholesale distributors or stockists appointed in almost all the districts of Bihar who, in their turn, sell them to retailers through whom the medicines and drugs reach the consumers. Almost 94% of the medicines and drugs sold by them are at the controlled price exclusive of local taxes under the Drugs (Price Control) order, 1979 issued by the Central Government under sub section (1) of section 3 of the and they are expressly prohibited from selling these medicines and drugs in excess of the controlled price so fixed by the Central Government from time to time which allows the manufacturer or producer to pass on the tax liability to the consumer. The appellants have placed on record their printed price lists of their well known medicines and drugs manufactured by them showing the price at which they sell to the retailers as also the retail price, both inclusive of excise duty. It appears therefrom that one of the terms of their contract is that sales tax and local taxes will be charged wherever applicable. These appellants have also placed on record their orders of assessment together with notices of demand, for the assessment years 1980 81 and 1981 82. For the assessment year 1980 81, the Commercial Taxes officer, Patna Circle, Patna determined the gross turnover of sales in the State of Bihar through their branch office at Patna of Messrs Hoechst Pharmaceuticals Limited on the basis of the return 142 filed by them at Rs. 3,13,69,598,12p. and the tax payable thereon at Rs. 19,65,137.52.p. The tax liability for the period from January 15, 1981 to March 31, 1981 comes to Rs. 3,85,023.33.p. and the surcharge thereon at 10% amounts to Rs. 38,503.33p. Thus the total tax assessed of Messrs Hoechst Pharmaceuticals Limited including surcharge for the assessment year 1980 81 amounts to Rs. 20,03,640.85p. The figures for the assessment year 1981 82 are not available. Foe the assessment years 1980 81 and 1981 82 the annual returns filed by Messrs Glaxo Laboratories (India) Limited show the gross turnover of their sales in the State of Bihar through their branch at Patna at Rs. 5,17,83,985.76p. and Rs. 5,89,22,346.64p. respectively. They have paid tax along with the return amounting to Rs. 34,06,809.80p. and Rs. 40,13,057.28p. inclusive of surcharge at 10% of the tax for the period from January 15, 1981 to March 31, 1981 and April 1981 to January 19, 1982 amounting to Rs. 34,877.62p. and Rs. 3,09,955.86p. respectively. There is excess payment of Rs. 55,383.98p. in the assessment year 1980 81 and Rs. 13,112.35p. in the year 1981 82. These figures show the magnitude of the business carried on by these appellants in the State of Bihar alone and their capacity to bear the additional burden of surcharge levied under sub section (I) of section 5 of the Act. The High Court referred to the decision in section Kodar vs State of Kerala(1) where this Court upheld the constitutional validity of sub section (2) of section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 which is in pari materia with sub section 3 of section S of the Act and which interdicts that no dealer referred to in sub section (l) shall be entitled to collect the additional tax payable by him. It held that the surcharge levied under sub section (1) of section 5 is in reality an additional tax on the aggregate of sales effected by a dealer during a year and that it was not necessary that the dealer should be enabled to pass on the incidence of tax on sale to the purchaser in order that it night be a tax on the sale of goods. Merely because the dealer is prevented by sub section (3) of section 5 of the Act from collecting the surcharge, it does not cease to be a surcharge on sales tax. It held relying on Kodar 's case, supra, that the charge under sub section (I) of section 5 of the Act falls at a uniform rate of 10 per centum of the tax on all dealers falling within the class specified therein i. e. whose gross turnover during a year exceeds Rs. 5 lakhs, and is therefore not discriminatory and violative of article 14 of the Constitution, nor is it possible to say that 143 because a dealer is disabled from passing on the incidence of surcharge to the purchaser, sub section (3) of section 5 imposes an unreasonable A restriction on the fundamental right guaranteed under article 19 (1) (g). As regards the manufacturers and producers of medicines and drugs, the High Court held that there was no irreconcilable conflict between sub section (3) of section 5 of the Act and paragraph 21 of the Drugs (Price Control) order 1979 and both the laws are capable of being obeyed. Undeterred by the decision of this Court in Kodar 's case, supra, the appellants have challenged the constitutional validity of sub section (3) of section 5 of the Act in these appeals on the ground that the Court in that case did not consider the effect of price fixation of essential commodities by the Central Government under sub s (I) of section 3 of the which, by reason of section 6 of that Act, has an overriding effect notwithstanding any other law inconsistent therewith. These appeals were argued with much learning and resource particularly with respect to federal supremacy and conflict of powers between the Union and State Legislatures and as to how if there is such conflict, their respective powers can be fairly reconciled. In support of these appeals, learned counsel for the appellants have advanced the following contentions viz: (1) The opening words of article 246 (3) of the Constitution "Subject to clauses (1) and (2)" make the power of the Legislature of any State to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule subject to the Union power to legislate with respect to any of the matters enumerated in List I or List III. That is to say, sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the surcharge levied on him must therefore yield to section 6 of the which provides that any order made under section 3 of the Act shall have effect notwithstanding anything inconsistent therewith contained in any enactment other then the Act or any instrument having effect by virtue of any enactment other than the Act. The entire submission proceeds on the doctrine of occupied field and the concept of federal supremacy. In short, the contention is that the Union power shall prevail in a case of conflict between List II and List III. (2) sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge levied on him, clearly falls within Entry 54 of List II of the Seventh Schedule and it collides with, and or is inconsistent with, or repugnant to, the scheme of Drugs (Price Control) order? 1979 generally so far as 144 price fixation of drugs is concerned and particularly with paragraph 21 which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. If that be so, then there will be repugnancy between the State law and the Control order which according to section 6 of the , must prevail. It is the duty of the Court to adopt the rule of harmonious construction to prevent a conflict between both the laws and care should be taken to see that both can operate in different fields without encroachment. It is therefore submitted that there is no question of repugnancy and it can be avoided by the principle of reconciliation. That is only possible by giving full effect to the non obstante clause in section 6 of the . (3) The provisions contained in sub section (3) of section 5 of the Act is ex facie and patently discriminatory. The treats certain controlled commodities and their sellers in a special manner by fixing controlled prices. The sellers so treated by this Central law are so circumstanced that they cannot be equated with other sellers not effected by any control orders. The class of dealers who can raise their sale prices and absorb the surcharge levied under sub section (1) of section 5 and a class of dealers like the manufacturers andproducers of medicines and drugs who cannot raise their sale prices beyond the controlled price are treated similarly. Once the fact of different classes being separate is taken, than a State law which treats both classes equally and visits them with different burdens, would be violative of article 14. The State cannot by treating unequals as equals impose different burden on different classes. (4) The restriction imposed by sub section (3) of section 5 of the Act which prevents the manufacturers of producers of medicines and drugs from passing on the liability to pay surcharge is confiscatory and casts a disproportionate burden on such manufacturers and producers and constitutes an unreasonable restriction on the freedom to carry on their business guaranteed under article 19 (1) (g). (5) Sub s (1) section 5 of the Act is ultra vires the State Legislature of Bihar insofar as for the purpose of the levy of surcharge on a certain class of dealers, it takes into account his gross turnover as defined in section 2 (j) of the Act. It is urged that the State Legislature was not competent under Entry 54 of List II of the Seventh Schedule to enact a provision like sub section (1) of section S of the Act which makes the grass turnover of a dealer as defined in section 2 (j) to be the basis for the levy of a surcharge i. e. inclusive of transactions relating to sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the territory of India. Such transactions are outside the purview of the Act and therefore they cannot be taken 145 into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge. The contention to the contrary advanced by the learned Solicitor General appearing on behalf of the State of Bihar is that there is no inconsistency between sub section (3) of section 5 of the Act and paragraph 21 of the Control order and both the laws are capable of being obeyed. According to him, the question of repugnancy under article 254(1) between a law made by Parliament and a IdW made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent list, and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will to the extent of repugnancy, become void. The learned Solicitor General contends that the question has to be determined not by the application of the doctrine of occupied field but by the rule of 'pith and substance '. He further contends that the appellants being manufacturers or producers of drugs are not governed by paragraph 21 of the Control order which relates to retail sale but by paragraph 24 thereof which deals with sale by a manufacturer or producer to wholesale distributor. Under paragraph 24 of the Control order, the manufacturer or producer is not entitled to pass on the liability to pay sales tax and the price that he charges to the wholesaler or distributor is inclusive of sales tax. He also contends that the controlled price of an essential commodity particularly of medicines and drugs fixed by a control order issued by the Central Government under sub section (1) of s: 3 of the is only the maximum price thereof and there is nothing to prevent a manufacturer or producer of medicines and drugs to sell it at a price lower than the controlled price. All that will happen, the learned Solicitor General reasons, is that the levy of surcharge under sub section (1) of section 5 of the Act will cut into the profits of the manufacturer or producer but that will not make the State law inconsistent with the Central law. As regards medicines and drugs, the surcharge being borne by the manufacturers or producers under sub section (3) of section 5 of the Act, the controlled price of such medicines and drug to the consumer will remain the same. Lastly, the Solicitor General submits that there is no material placed by the, appellants to show that the levy of surcharge under sub section (I) of section 5 of the act would impose a burden disproportionate to the profits 146 earned by them or that it is confiscatory in nature. There is, our opinion, considerable force in these submissions. Before proceeding further it is necessary to mention that the contentions raised on behalf of manufacturers and producers of medicines and drugs can govern only those appellants who are dealers in essential commodities, the controlled price of which is exclusive of sales tax as filed by control orders issued by the Central Government under sub section (1) of section 3 of the , but cannot be availed of by the other appellants who are dealers in other commodities. The case of such appellants would be squarely governed by the decision of this Court in Kodar 's case, supra, and their liability to pay surcharge under sub section (1) of section 5 of the Act must be upheld, irrespective of the contentions raised in these appeals, on based on the opening words "Subject to clauses (1) and (2)" in article 246(3) of the Constitution and on section 6 of the . It is therefore necessary to first deal with the principle laid down in Kodar 's case, supra. In Kodar 's case, supra, this Court upheld tho Constitution validity of the Tamil Nadu Additional Sales Tax Act, 1970 which imposes additional sales tax at 5% on a dealer whose annual gross turnover exceeds Rs. 10 lakhs. The charging provision in sub section (1) of section 2 of that Act is in terms similar to sub section (1) of section 5 of the Act, and provides that the tax payable by a dealer whose turnover for a year exceeds Rs. 10 lakhs shall be increased by an additional tax 5% of the tax payable by him. Sub section (2) of that Act is in pari materia with sub section (3) of section 5 of the Act and provides that no dealer referred to in sub section (I) shall be entitled to collect the additional tax payable by him. The Court laid down that: (l) The additional tax levied under sub section (I) of section 2 of that Act was in reality a tax on the aggregate of sales effected by a dealer during a year and therefore the additional tax was really a tax on the sale of goods and not a tax on the income of a dealer and therefore falls within the scope of Entry 54 of List II of the Seventh Schedule. (2) Generally Speaking, the amount or rate of tax is a matter exclusively within the legislative judgment and so long as a tax retains its avowed character and does not confiscate property to the State under the guise of a tax, its reasonableness cannot be questioned by the Court The imposition of additional tax on a dealer whose annual turnover exceeds Rs. 10 lakhs is not an unreasonable restriction on the fundamental rights guaranteed under article 19(1)(g) or (f) as the tax 147 is upon the sale of goods and was not shown to be confiscatory. (3) It is not an essential chracteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for seller to collect the tax from the purchasers. Merely because sub section (2) of section 2 of that Act prevented a dealer from passing on the incidence of additional tax to the purchaser, it cannot be said that the Act imposes an unreasonable restriction upon the fundamental rights under article 19(1)(g) or (f). The Act was not violative of article 14 of the Constitution as classification of dealers on the basis of their turnover for the purpose of levy of additional tax was passed on the capacity of dealers who occupy position of economic superiority by reason of their greater volume of businesses i.e. On capacity to pay and such classification for purposes of the levy was not unreasonable. In order to appreciate the implications of the wide ranging contentions advanced before us, it is necessary to set out the relevant statutory provisions. Sub section (1) of section 5 of the Act provides for the levy of surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs and, the material provisions of which are in the following terms: "5. Surcharge (I) Every dealer whose gross turnover during a year exceeds rupees five lakhs shall, in addition to the tax payable by him under this Part, also pay a surcharge at such rate not exceeding ten per centum of the total amount of the tax payable by him, as may be fixed by the State Government by a notification published in the official Gazette: Provided that the aggregate of the tax and surcharge payable under this Part shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the central Sales Tax Act, 1256 (Act 74 of 1956), the rate fixed by section 15 of the said Act: The expression "gross turnover" as defined in section 2(j) Of the Act insofar as material reads: 148 "2(j) "gross turnover" means (i) for the purposes of levy of sales tax, aggregate of sale prices received and receivable by a dealer, during any given period, in respect of sale of goods (including the sale of goods made outside the State or in the course of inter State trade or commerce or export) but does not include sale prices of goods or class or classes or description of goods which have borne the incidence of purchase tax under section 4. " Sub section (3) of section 5 of the Act, the constitutional validity of which is challenged, provides: "5(3) Notwithstanding anything to the contrary contained in this Part, no dealer mentioned in sub section (1), who is liable to pay surcharge shall be entitled to collect the amount of this surcharge. " It is fairly conceded that not only sub section (1) of section 5 of the Act which provides for the levy of surcharge on dealers whose gross turnover during a year exceeds Rs. 5 lakhs, but also sub section (3) of section 5 of the Act which enjoins that no dealer who is liable to pay a surcharge under sub section (I) shall be entitled to collect the amount of surcharge payable by him, are both relatable to Entry 54 of List II of the Seventh Schedule which reads: "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I." There can be no doubt that the Central and the State legislations operate in two different and distinct fields. The provides for the regulation, production, a supply distribution and pricing of essential commodities and is relatable to Entry 33 of List III of the Seventh Schedule which reads: "33. Trade and commerce in, and the production, supply and distribution of, . (a) the products of any industry where the control of such industry by the Union is declared by Parliament 149 by law to be expedient in the public interest, and imported goods of the same kind as such products. " The definition of "essential commodities" in section 2(a) of the now includes 'drugs ' by the insertion of cl. (iva) therein by Act 30 of 1974. Sub section (I) of section 3 of the provides: B "3. Powers to control production, supply, distribution, etc., of essential commodities (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, or for securing any essential commodity for the defence of India or the efficient conduct of military operations it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof. and trade and commerce therein. " Sub section (2) lays down without prejudice to the generality of the powers conferred by sub section (1), an order made therein may provide for the matters enumerated in cls. (a) to (f). (c) of sub section (2) provides: "For controlling the price at which an essential com modify may be bought or sold. " section 6 of the which has an important bearing on these appeals is in these terms: "6. Effect of orders inconsistent with other enactments Any order made under section 3 shall have effect not withstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act. " The Drugs (Price Control) order, 1979 issued by the Central Government in exercise of the powers conferred under section 3 of the provides for a comprehensive scheme of price fixation both as regards bulk drugs as well as 150 formulations. The expressions "bulk drug" and "formulation" are A defined in paragraph 2(a) and 2(f ) as: "2. In the order, unless the context otherwise requires, (a) "bulk drug" means any substance including pharmaceutical, chemical, biological or plant product or medicinal gas conforming to pharmacopoeal or other standards accepted under the , which is used as such or as an ingredient in any formulations; (f) "formulations" means a medicine processed out of, or containing one or more bulk drug or drugs, with or without the use of any pharmaceutical aids for internal or external use for, or in the . diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include We are here concerned with the impact of sub section (3) of section 5 of the Act on the price structure of formulation, but non the less much stress was laid on fixation of price of bulk drugs under paragraph 3(2) which allows a reasonable return to the manufacture under sub paragraph (3) thereof. A manufacturer or producer of such bulk drugs is entitled to sell it at a price exceeding the price notified under sub paragraph (1), plus local taxes, if any, payable. What is of essence is the price fixation of formulations and the relevant provisions are contained in paragraph, 10 to 15, 17, 20, 21 and 24. Paragraph 10 provides for a formula according to which the retail price of formulation shall be calculated and it reads: "10. Calculation of retail price of formulations The retail price of a formulation shall be calculated in accordance with the following formula, namely: R.P.=(M.C+C.C+P.M.+P.C) X 1 + MU / 100 + ED Where "R.P." means retail price. 151 "M C." means material cost and includes the cost of drugs and other pharmaceutical aids used including h overages, if any, and process loss thereon in accordance with such norms as may be specified by the Government from time to time by notification in official Gazette in this behalf. "C.C." means conversion cost worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "P.M." means the cost of packing material including process loss thereon worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "P.C." means packing charges worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "M.U." means mark up referred to in paragraph 11. "E.D." means excise duty: Provided that in the case of an imported formulation the landed cost shall from the basis for fixing its price along with such margin as the Government may allow from time to time. Provided further that where an imported formulation is re packed, its landed cost plus the cost of packing materials and packing charges as worked out in accordance with such norms as may be specified by the Government from time to time, by notification in the official Gazette, shall form the basis for fixing its price. Explanation For the purposes of this paragraph, "landed cost" shall mean the cost of import of drug inclusive of customs duty and clearing charges". 152 The expression "mark up" referred to above is dealt within A paragraph 11 and it provides: "11. Mark up referred to in paragraph 10 includes the distribution cost, outward freight, promotional expenses, manufacturers margin and the trade commission and shall not exceed (i) forty percent in the case of formulations specified in Category I of the Third Schedule; (ii) fifty five percent in the case of formulations specified in Category II of the said Schedule: (iii) one hundred per cent in the case of formulations specified in Category III of the said Schedule. " It is unnecessary for our purposes to reproduce the provisions of paragraphs 12 to 14 which formulate a detailed scheme of price fixation. Paragraph 15 confers power of revision of prices and it reads: "15. Power to revise prices of formulations Not withstanding anything contained in this order . (a) The Government may, after obtaining such information as it may consider necessary from a manufacturer or an importer, fix or revise the retail price of one or more formulations marketed by such manufacturer or importer, including a formulation not specified in any of the categories of the Third Schedule in such manner as the pre tax return on the sales turnover of such manufacturer or importer does not exceed the maximum pre tax return specified in the Fifth Schedule; (b) the Government may, if it considers necessary so to do in public interest, by order, revise the retail price of any formulation specified in any of the categories of the Third Schedule. " 153 Paragraph 17 Casts a mandatory duty on the Central Government to maintain 'Drugs Prices Equalisation Account ' to which shall be credited (a) by the manufacturer, importer or distributor, as the case may be (i) the amount determined under sub paragraph (2) of paragraph 7; (ii) the excess of the common selling price or, as the case may be, pooled price over his retention price; (b) such other amount of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time. The amount credited to the Drugs Prices Equalisation Account is meant to compensate a manufacturer, importer or distributor the short fall between his retention price and the common selling price or, as the case may be, the pooled price for the purpose of increasing the production, or securing the equitable distribution and availability at fair prices, of drugs after meeting the expenses incurred by the Government in connection therewith. Every manufacturer, importer or distributor is entitled to make a claim for being compensated for the short fall. Paragraph 19 interdicts that every manufacturer or importer of a formulation intended for sale shall furnish to the dealers, State Drug Controllers and the Government, a price list showing the price at which the formulation is sold t.) a retailer inclusive of excise duty. Every such manufacturer or retailer has to give effect to the change in prices as approved by the Government. Every dealer is required to display the price list at a conspicuous part of the premises. It is, however, necessary to reproduce paragraphs 20, 21 and 24 as they are of considerable importance for our purposes and they read: "20. Retail price to be displayed on label of container Every manufacturer, importer or distributor of a formulation intended for sale shall display in indelible 154 print mark on the label of the container of the formulation or the minimum pack thereof offered for retail sale, the maximum retail price of that formulation with the words "retail price not to exceed" preceding it, and "local taxes extra" succeeding it." "21. Control of sale prices of formulations specified in Third Schedule No retailer shall sell any formulation specified in any of the categories in the Third Schedule to any person at a price exceeding the price specified in the current price list or the price indicated on the label of the container or pack thereof, whichever is less, plus the local taxes, if any, payable. Explanation For the purpose of this paragraph, "local taxes" includes sales tax and octroi actually paid by the retailer under any law in force in a particular area." "24. Price to the wholesaler and retailer (a) No manufacturer, importer or distributor shall sell a formulation to a wholesaler unless otherwise permitted under the provisions of this order or any other order made thereunder at a price higher than: (a) the retail price minus 14 per cent thereof, in the case of ethical drugs, and (b) the retail price minus 12 percent thereof, in the case of non ethical drugs. (2) No manufacturer, importer, distributor or wholesaler shall sell a formulation to a retailer unless otherwise permitted under the provisions of this order or any order made thereunder, at a price higher than: (a) the retail price minus 12 percent thereof, in the case of ethical drugs, and (b) the retail price minus 10 percent thereof, in the case of non ethical drugs. 155 Explanation For the purposes of this paragraph (i) "ethical drugs" shall include all drugs specified in Schedule C, entries Nos. 1, 2, 3, 7, 8 and 9 of Schedule C(l), Schedule E, Schedule G, Schedule and Schedule L, appended to the Drugs and Cosmetics Rules, 1945 made under the , (23 of 1940); and (ii) "non ethical drugs" shall mean all drugs other than ethical drugs. (3) Notwithstanding anything contained in sub para graphs (1) and (2), the Government may, by a general or special order, fix, in public interest, the price to the wholesaler or retailer in respect of any formulation the price which has been fixed or revised under this order. " Much emphasis was laid on fixation of price of bulk drugs under paragraph 3 which provides by sub paragraph (1) that the Government may, with a view to regulating the equitable distribution of an indigenously manufactured bulk drug specified in the First Schedule or the Second Schedule and making it available at a fair price and subject to the provisions of sub paragraph (2) and after making such inquiry as it deems fit, fix from time to time, by notification in the official Gazette, the maximum price at which such bulk drug shall be sold. Sub paragraph (2) enjoins that while filing the price of a bulk drug under sub paragraph (1), the Government may take into account the average cost of production of each bulk drug manufactured by efficient manufacturer and allow a reasonable return on net worth. Explanation thereto defines the expression "efficient manufacturer" to mean a manufacturer (i) whose production of such bulkdrug in relation to the total production of such bulk drug in the country is large, or (ii) who employs efficient technology in the production of such bulk drug. Sub paragraph (3) provides that no person shall sell a bulk drug at a price exceeding the price notified under sub paragraph (1), plus local taxes, if any, payable. It is urged that while fixing the price of bulk drug, the Government has to take into account the average cost of production 156 of that bulk drug by a particular manufacturer, by taking into A consideration the cost to a manufacturer who employs efficient methods and allowing a reasonable return on the net worth of the drug manufactured. Otherwise, every manufacturer will show a figure as cost of production, which may not be acceptable. The average cost of production of an efficient manufacturer is made the standard for fixing the price but such fixation of the price of bulk drug allows a reasonable return to the manufacturer. Under sub paragraph (3) the manufacturer or producer of such bulk drug is entitled to sell it at a price not exceeding the price so fixed plus local tax if any, payable. Much stress is laid that the average cost of an efficient manufacturer allows a reasonable return on net worth of the drug manufactured and the price so fixed is exclusive of local taxes i.e. sales tax. It is further urged that the term "local taxes" in sub paragraph (3) means and includes sales tax leviable in a State and attention is drawn to Explanation to paragraph 21 for that purpose. We fail to appreciate the relevance of sub paragraph (3) of paragraph 3 which relates to a manufacturer or producer of bulk drugs or of paragraph 21 of the Control order which fixes the controlled price of formulations specified in the Third Schedule exclusive of local taxes i.e. sales tax. The appellants are manufacturers or producers of medicines and drugs and are governed by paragraph 24. Under paragraph 24, a manufacturer or producer is not entitled to sell a formulation to a wholesaler at a price higher than the retail price minus 14% thereof in case of ethical drugs and minus 12% in case of non ethical drugs. It is quite clear upon the terms of paragraph 24 that the price chargeable by the appellants as manufacturers or producers is a price inclusive of sales tax. The entire argument built upon sub paragraph (3) of paragraph 3 and paragraph 21 of the Control order showing that the controlled price is exclusive of sales tax and thereof is in conflict with sub s (3) of section S of the Act appears to be wholly misconceived. It is urged that the appellants in their price lists have a term embodied that sales tax would be chargeable from a wholesaler or distributor and therefore they are entitled to recover sales tax on the sale of their medicines and drugs cannot possibly prevail. Such a term would be in clear violation of para graph 24 of the Control order which is an offence punishable under section 7 of the . It cannot be doubted that a surcharge partakes of the nature of sales tax and therefore it was within the competence of the State 157 Legislature to enact sub section (I) of section S of the Act for the purpose of levying surcharge on certain class of dealers in addition to the tax payable by them. When the State Legislature had competence to levy tax on sale or purchase of goods under Entry 54, it was equally competent to select the class of dealers on whom the charge will fall. If that be so, the State Legislature could undoubtedly have enacted sub section (3) of section S of the Act prohibiting the dealers liable to pay a surcharge under sub section (I) thereof from recovering the same from the purchaser. It is fairly conceded that sub section (3) of section S of the Act is also relatable to Entry 54. The contention however is that there is conflict between paragraph 21 of the Control order which allows a manufacturer or producer of drugs to pass on the liability to pay sales tax and sub section (3) of section S of the Act which prohibits such manufacturers or producers from recovering the surcharge and therefore it is constitutionally void. It is said that the Courts should try to adopt the rule of harmonious construction and give effect to paragraph 21 of the Control order as the impact of sub section (3) of section S of the Act is on fixation of price of drugs under the Drugs (Price Control) order and therefore by reason of section 6 of the , paragraph 21 of the Control order which provides for the passing on of tax liability must prevail. The submission rests on a construction of article 246 (3) of the Constitution and it is said that the power of the State Legislature to enact a law with respect to any subject in List II is subject to the power of Parliament to legislate with respect to matters enumerated in Lists I and III. It is convenient at this stage to deal with the contention of the appellants that if sub section (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are controlled by the Central Government under the various control orders issued under sub section (I) of section 3 of the , then there will be repugnancy between the State law and such contral orders which according to section 6 of the must prevail. In such a case, the State law must yield to the extent of the repugnancy. In Hari Shankar Bagla & Anr. vs State of Madhya Pradesh(1) the Court had occasion to deal with the non obstante clause in section 6 of the Essential Supplies (Temporary Powers) Act, 1946 which was in pari materia with section 6 of the and it was observed: 158 "The effect of section 6 certainly is not to repeal any one of these laws or abrogate them. Its object is simply to by pass them where they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) Act, 1946, or the orders made thereunder. In other words, the orders made under section 3 would he operative in regard to the essential commodity covered by the Textile Control order wherever there is repugnancy in this order with the existing laws and to that extent the existing laws with regard to those commodities will not operate. By passing a certain law does not necessarily amount to repeal or abrogation of that law. That law remains unrepealed but during the continuance of the order made under section 3 it does not operate in that field for the time being. " The Court added that after in order is made under section 3 of that Act, section 6 then steps in wherein Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than that Act. Placing reliance on the observations in Hari Shankar Bagla 's case, supra, it is urged that the effect of the non obstante clause in section 6 of the is to give an overriding effect to the provisions of paragraph 21. It is further urged that paragraph 21 of the Control order having been issued by the Central Government under sub section (1) of s 3 of the which permits the manufacturer or producer to pass on the liability to pay sales tax must prevail and sub section (3) of section S of the Act which is inconsistent therewith is by passed. The contention appears to be misconceived. The appellants being manufacturers or producers of formulations are not governed by paragraph 21 of the Control order but by paragraph 24 thereof and therefore the price chargeable by them to a wholesaler or distributor is inclusive of sales tax. There being no conflict between sub section (3) of section S of the Act and paragraph 24 of the Control order, the question of non obstante clause to section 6 of the coming into play does not arise. Even otherwise i. e. if some of the appellants were governed by paragraph 21 of the Control order, that would hardly make any difference. Under the scheme of the Act, a dealer is free to pass 159 on the liability to pay sales tax payable under section 3 and additional sales tax payable under section 6 to the purchasers. Sub section (3) of section S of A the Act however imposes a limitation on dealers liable to pay surcharge under sub section (1) thereof from collecting the amount of surcharge payable by them from the purchasers which only means that surcharge payable by such dealers under sub section (I) of section S of the Act will cut into the profits earned by such dealers. The controlled price or retail price of medicines and drugs under paragraph 21 remains the same, and the consumer interest is taken care of in as much as the liability to pay surcharge sub section (3) of section 5 cannot be passed on. That being so, there is no conflict between sub section (3) of section S of the Act and paragraph 21 of the Control order. The entire sub mission advanced by learned counsel for the appellants proceeds on the hypothesis that the various control orders issued under sub section (1) of section 3 of the are for the protection of the manufacturer or producer. There is an obvious fallacy in the argument which fails to take into account the purpose of the legislation. Where the fixation of price of an essential commodity is necessary to protect the interests of consumers in view of the scarcity of supply, such restriction cannot be challenged as unreasonable on the ground that it would result in the elimination of middleman for whom it would be unprofitable to carry on business at fixed rate or that it does not ensure a reasonable return to the manufacturer or producer on the capital employed in the business of manufacturing or producing such an essential commodity. The contention that in the field of fixation of price by a control order issued under sub section (1) of section 3 of the , the Central Government must have due regard to the securing of a reasonable return on the capital employed in the business of manufacturing or producing an essential commodity is entirely misconceived. The predominant object of issuing a control order under sub section (1) of section 3 of the Act is to secure the equitable distribution and availability of essential commodities at fair prices to the consumers, and the mere circumstance that some of those engaged in the field of industry, trade and commerce may suffer a loss is no ground for treating such a regulatory law to be unreasonable, unless the basis adopted for price fixation is so unreasonable as to be in excess of the power to fix the price, or there is a statutory obligation to ensure a fair return to the industry. In Shree Meenakshi Mills 160 Ltd. vs Union of India(l) Ray, J speaking for the Court rejected the A contention that the controlled price must ensure a reasonable return on the capital employed in the business of manufacturing or producing essential commodities in these words : "In fixing the prices, a price line has to be held in order to give preference or predominant consideration to the interests of the consumers or the general public over that of the producers in respect of essential commodities. The aspect of ensuring availability of the essential commodities to the consumer equitably and at fair price is the most important consideration." In Prag Ice & Oil Mills & Anr. etc. vs Union of India(a) Chandrachud, J. (as he then was) negatived a similar contention that fixation of a price without ensuring a reasonable return to the producers or dealers was unconstitutional. In repelling the contention, Chandrachud J. speaking for the Court referred to the two earlier b decisions in Panipat Cooperative Sugar Mills vs Union of India(3) and Anakapalle Cooperative Agricultural & Industrial Society Ltd. vs Union of India(4) and observed: "The infirmity of this argument, as pointed out in Meenakshi Mills 's case, is that these two decisions turned on the language of s 3 (3C) of the under which it is statutorily obligatory to the industry a reasonable return on the capital employed in the business of manufacturing sugar. These decisions can therefore have no application to cases of price fixation under section 3 (1) read with section 3 (2) (c) of the Act. Cases falling under sub sections (3A), (3B) and (3C) of section 3 of the Act belong to a different category altogether. " The learned Chief Justice then observed: "The dominant purpose of these provisions is to ensure the availability of essential commodities to the consumers at a fair price. And though patent injustice to 161 the producer is not to be encouraged, a reasonable return on investment or a reasonable rate of profit is not the sine qua non of the validity of action taken in furtherance of the powers conferred by section 3 (1) and section 3 (2) (c) of the . The interest of the consumer has to be kept ill the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration. " The contention advanced does not take note of the distinction between the controlled price fixed under cl. (c) of sub section (2) of section 3 of the Act read with sub section (I) thereof and the procurement price fixed under sub sections (3A), (3B) and (3C). In fixing a procurement price under sub sections (3A), (3B) and (3C), there is a statutory obligation cast on the Central Government to ensure a fair return to the producers or dealers of essential commodities. while in fixing the controlled price under c]. (c) of sub section (2) of section 3 read with sub section (1) thereof, the predominant factor is the basis to secure the equitable distribution and availability of essential commodities at fair prices to the consumers and a reasonable return on investment or a reasonable rate of profit to the manufacturer or producer i. not a relevant criterion although it should not ordinarily work patent injustice to a manufacturer or producer. Just as the industry cannot complain of rise and fall of prices due to economic factors in open market, it cannot similarly complain of some increase in, or reduction of, prices as a result of an order issued under sub section (I) of section 3 of the essential commodities Act, or a cut in the margin of profits brought about by a provision like sub section (3) of section 5 of the Act which provides that a manufacture or producer shall not be entitled to recover the surcharge levied on him under sub section (I) of section S of the Act because such increase or reduction is also based on economic factors. The principal point in controversy is: Whether there is repugnancy between sub section (3) of section 5 of the Act and paragraph 21 of the Control order and therefore sub section (3) of section 5 must yield to that extent. The submission is that if Parliament chooses to occupy the field and there is price fixation of an essential commodity with liberty to pass on the burden of tax to the consumer by a law made by Parliament under Entry 33 of List III of the Seventh Schedule, then it is not competent for the State Legislature to enact a provision 162 like sub section (3) of section S of the Act while enacting a law under Entry 54 of List II prohibiting the passing on of liability of tax to the purchaser. The true principle applicable in judging the constitutional validity of sub section (3) of section S of the Act is to determine whether in its pith and substance it is a law relatable to Entry 54 of List II of the Seventh Schedule and not whether there is repugnancy between sub section (3) of section S of the Act and paragraph 21 of the Drugs {Price Control) order made under sub section (1) of section 3 of the , is therefore void. In dealing with the question, we must set out article 246 of the Constitution which is based on section 100 of the Government of India Act, 1935 and it reads: "246(1) Notwithstanding anything in clauses (2) and t (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List"). (2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List"). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not 9 included in a State notwithstanding that such matter is a matter enumerated in the State List. " It is obvious that article 246 imposes limitations on the legislative powers of the Union and State Legislatures and its ultimate analysis would reveal the following essentials: 1. Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I 163 notwithstanding anything contained in cls. (2) and (3). The non obstante clause in article 246(1 ) provides for predominance or supremacy of Union Legislature. This power is not encumbered by anything contained in cls. (2) and (3) for these causes them selves are expressly limited and made subject to the non obstante clause in article 246(1). The combined effect of the different clauses contained in article 246 is no more and no less than this: that in respect of any matter falling within List I, Parliament has exclusive power of legislation. The State Legislature has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule and it also has the power to make laws with respect to any matters enumerated in List III. The exclusive power of the State Legislature to . legislate with respect to any of the matters enumerated in List II has to be exercised subject to cl. (l) i.e. the exclusive power of Parliament to legislate with respect to matters enumerated in List I. As a con sequence, if there is a conflict between an entry in List I and an entry in List II which is not capable of reconciliation, the power of Parliament to legislate with respect to a matter enumerated in List TI must supersede pro tanto the exercise of power of the State Legislature. Both Parliament and the State Legislature have con current powers of legislation with respect to any of the matters enumerated in List III. article 254 provides for the method of resolving conflicts between a law made by Parliament and a law made by the Legislature of a State with respect to a matter falling in the Concurrent List and it reads: "254(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, 164 subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall if it has been reserved for the consideration of the President and has received his assent, prevail in that State. Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State. " We find it difficult to subscribe to the proposition advanced on behalf of the appellants that merely because of the opening words of article 246(3) of the Constitution "Subject to clauses (I) and (2)" and the non obstante clause in article . 246(1) ' 'Notwithstanding . anything in clauses (2) and (3)", sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge must be struck down as ultra vires the State Legislature inasmuch as it is in consistent with paragraph 21 of the drugs (Price Control) order issued by the Central Government under sub section (I) of section 3 of the which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. The submission is that sub section (3) of section 5 of the Act enacted by the State Legislature while making a law under Entry 54 of List II of the Seventh Schedule which interdicts that a dealer liable to pay surcharge under sub section (1) of section 5 of the Act shall not be entitled to collect it from the purchaser, directly trenches upon Union power to legislate with respect to fixation of price of essential commodities under Entry 33 of List Ill. It is said that if both are valid, then ex hypothesi the law made by Parliament must prevail and the State law pro tanto must yield. We are afraid, the contention cannot prevail in view of the well accepted principles, 165 The words "Notwithstanding anything contained in clauses (2) and (3) ' in article 246 (l) and the words "Subject to clauses A (I.) and (2)" in article 246(3) lay down the principle of Federal supremacy viz. that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List T shall prevail over the State power as enumerated in List II and III. and in case of overlapping between List 11 and III, the 13 former shall prevail. But the principle of Federal supremacy laid down in article 246 of the Constitution cannot be resorted to unless there is an "irreconcilable" conflict between the Entries in the Union and State Lists. In the case of a seeming conflict between the Entries in the two lists, the Entries should be read together without giving a narrow and restricted sense to either of them. Secondly, an attempt should be made to see whether the two Entries cannot be reconciled so as to avoid a conflict of jurisdiction. lt should be considered whether a fair reconciliation can be achieved by giving to the language or the Union Legislative List a meaning which, if less wide than it night in another context bear, is yet one that can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The non obstante clause in article 246(l) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two lists will arise if the impugned legislation, by the application of the doctrine of "pith and substance" appears to fall exclusively under one list, and the encroachment upon another list is only incidental. Union and State Legislatures have concurrent power with respect to subjects enumerated in List III, subject only to the pro vision contained in cl. (2) of article 254 i.e. provided the provisions of the State Act do not conflict with those of any (Central Act on the subject. However, in case of repugnancy between a State Act and a Union Law on a subject enumerated in List III, the State law must yield to the Central law unless it has been reserved for the assent of the President and has received his assent under article 254(2). The question of repugnancy arises only when both the Legislatures are competent to legislate in the same field i.e. when both the Union and the State laws relate to a subject specified in List III and occupy the same field. As regards the distribution of legislative powers between the Union and the States, article 246 adopts with immaterial alterations the 166 scheme for the distribution of legislative powers contained in section 100 A of the Government of India Act, 1935. Our Constitution was not written on a clean slate because a Federal Constitution had been established by the Government of India Act, 1935 and it still remains the framework on which the present Constitution is built. The provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act, 1935 and the principles laid down in connection with the nature and interpretation of legislative power contained in the Government of India Act, 1935 are applicable, and have in fact been applied, to the interpretation of the Constitution. In the matter of the Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938(1) Gwyer, C.J. referred to the two decision of the Privy Council in Citizen Insurance Company vs Wiliam Parsons(2) and Attorney General for the Province of Ontario vs Attorney General for the Dominion of Canada(3) which in his opinion had laid down 'most clearly the principles which should be applied by Courts in the matter of deciding upon the competence of the two rival Legislatures that have been set up under the Indian Federal system. With regard to the interpretation of the non obstante clause in section 100(l) of the Government of India Act, 1935 Gwyer, C.J. observed: "It is a fundamental assumption that the legislative powers of the Centre and Provinces could not have been intended to be in conflict with one another and, therefore, we must read them together, and interpret or modify the language in which one is expressed by the language of the other." "In all cases of this kind the question before the Court", according to the learned Chief Justice is not "how the two legislative powers are theoretically capable of being construed, but how they are to be construed here and now." The general scheme of the British North America Act, 1867 with regard to the distribution of legislative powers, and the general 167 scope and effect of sections 91 and 92, and their relations to each other were fully considered and commented upon in the case of Citizen Insurance Company 's case, supra. Sir Montague Smith delivering the judgment for the Board evolved the rule of reconciliation observing: "In these cases it is the duty of the Courts, however difficult it may be, to ascertain in what degree and to what extent, authority to deal with matters Falling within these classes of subjects exists in each legislature, and to define in the particular case before them the limits of their respective power. It could not have been the intention that a conflict should exist; and, in order to prevent such a result, the two sections must be read together and the language of one interpreted and, where necessary, modified by that of the other. In this way it may, in most cases, be found possible to arrive at a reasonable and practical construction of the language of the Section, so as to reconcile the respective powers they contain and give effect to all of them. Earl Loreburn, L.C. delivering the judgment of the Judicial Committee in Attorney General for the Province of Ontario 's case, (supra) observed that in the interpretation of sections 91 and 92 of the E: British North America Act: "If the text is explicit, the text is conclusive alike for what it directs and what it forbids. " When the text is ambiguous, as for example when the words establishing two mutually exclusive jurisdictions are wide enough to bring a particular power within either, recourse must be had to the context and scheme of the Act. In A.L.S.P.P. Subrahmanyan Chettiar vs Muttuswami Goundan(l) Gwyer, C.J. reiterated that the principles laid down by the Privy Council in a long line of decisions in the interpretation of sections 91 and 92 of the British North America Act, 1867 must be accepted as a guide for the interpretation of section 100 of the Government of India Act, 1935: 168 "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that build adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance ' or its true nature and character for the purpose of determining whether it is legislation in respect of matters in this list or in that. " It has already been stated that where the two lists appear to conflict with each other, an endeavour should be made to reconcile them by reading them together and applying the doctrine of pith and substance. It is only when such attempt to reconcile fails that the non obstante clause in article 246(1) should be applied as a matter of last resort. For, in the words of Gwyer, C.J. in C.P. & Berar Taxation Act 's case, supra: "For the clause ought to be regarded as a last re source, a witness to the imperfections of human expression and the fallibility of legal draftsmanship. " The observations made by the Privy Council in the Citizen 's Insurance Company 's case, supra, were quoted with approval by Gwyer, C.J. in C.P. & Berar Taxation Act 's case, supra, and he observed that an endeavour should be made to reconcile apparently conflicting provisions and that the general power ought not to be construed as to make a nullity of a particular power operating in the same field. The same duty of reconciling apparently conflicting provisions was reiterated by Lord Simonds in delivering the judgment of the Privy Council in Governor General in Council vs Province of Madras(1): "For in a Federal constitution in which there is a division of legislative powers between Central and Provincial Legislatures, it appears to be inevitable that controversy should arise whether one or other legislature 169 is not exceeding its own, and encroaching on the other 's constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its "pith and substance" as it has sometimes been said, which must determine into what category it falls. " B Their Lordships approved of the decision of the Federal Court in The Province of Madras vs Messrs Boddu Paidanna & Sons(l) where it was held that when there were apparently conflicting entries the correct approach to the question was to see whether it was possible to effect a reconciliation between the two entries so as to avoid a conflict and overlapping. In Prafulla Kumar Mukherjee & Ors. vs Bank of Commerce Ltd., Khulna(1) Lord Porter delivering the judgment of the Board laid down that in distinguishing between the powers of the divided jurisdictions under list I, II and III of the Seventh Schedule to the Government of India Act, 1935 it is not possible to make a clean cut between the powers of the various Legislatures. They are bound to overlap from time to time, and the rule which has. been evolved by the Judicial Committee whereby an impugned statute is examined to ascertain its pith and substance or its true character for the purpose of determining in which particular list the legislation falls, applies to Indian as well as to Dominion legislation. In laying down that principle, the Privy Council observed: "Moreover, the British Parliament when enacting the Indian Constitution had a long experience of the working of the British North America Act and the Australian Commonwealth Act and must have known that it is not in practice possible to ensure that the powers entrusted to the several legislatures will never overlap." The Privy Council quoted with approval the observations of Gwyer, C.J in Subramanyan Chettiar 's case, supra, quoted above, and observed: 170 "No doubt experience of past difficulties has made A the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between. those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental. But the overlapping of subject matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth. and many of the subjects entrusted to provincial legislation could never effectively be dealt with. " It would therefore appear that apparent conflict with the Federal power had to be resolved by application of the doctrine of pith and substance and incidental encroachment. Once it is found that a law made by the Provincial Legislature was with respect to one of the matters enumerated in the Provincial List, the degree or extent of the invasion into the forbidden field was immaterial. "The invasion of the provinces into subjects in the Federal List", in the words of Lord Porter, "was important": " . not . because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining as to what is the pith and substance of the impugned Act. Its pro visions may advance so far into federal territory as to show that its true nature is not covered with Provincial matters, but the question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking ? once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content. " The passage quoted above places the precedence according to the three lists in its proper perspective. In answering the objection that 171 view does not give sufficient effect to the non obstante clause in section 100(1) of the Government of India Act, 1935, as between the three lists, the Privy Council observed: "Where they come in conflict, List I has priority over Lists III and II and List III has priority over List II." But added: "The priority of the Federal Legislature would not prevent the Provincial Legislature from dealing with any matter within List II though it may incidentally affect any item in List I." It would therefore appear that the constitutionality of the law is to be judged by its real subject matter and not by its incidental effect on any topic of legislation in another field. The decision of the Privy Council in Prafulla Kumar Mukherjee 's case, supra, has been repeatedly approved by the Federal Court and this Court as laying down the correct rule to be applied in resolving conflicts which arise from overlapping powers in mutually exclusive lists. It may be added as a corollary of the pith and substance rule that once it is found that in pith and substance an impugned Act is a law on a permitted field any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact that Act; Ralla Ram vs Province of East Punjab(2), State of Bombay vs Nerothamdas Jethabai & Anr(2), State of Bombay vs F. N. Balsara(3), A. section Krishna vs State of Madras(4), M. Karunanidhi vs Union of India(5), Union of India vs H.S. Dhillon(6) and Southern Pharmaceuticals & Chemicals Trichur & Ors. etc. vs State of Kerala & Ors. etc.(7) In Laskin 's Canadian Constitutional Law, 4th edn. , it is observed at p. 24 that the doctrine of paramountcy Is tied up with 172 the "trenching" doctrine in the first of the four propositions formulated by Lord Tomlin in Attorney General for Canada vs Attorney General for Britain Columbia & Ors.(1) case, and then he goes into the question,: "What is the basis of the paramountcy doctrine ?" Laskin quotes from Lefroy 's Canada 's Federal System at p. 126: "But the rule as to predominance of Dominion legislation it may be confidently said, can only be invoked in cases of absolutely conflicting legislations in pari materia, when it would be an impossibility to give effect to both the Dominion and the provincial enactments. " The learned author refers two the two decisions of the Privy Council in Attorney General of Ontario vs Attorney General of Canada(2) and City of Montreal vs Montreal Street Railway(3) laying down that: "There must be a real conflict between the two Acts, that is, the two enactments 'must come into collision '. . or 'comes into conflict . over a field of jurisdiction common to both '. " Laskin observes that the "conflict" test espoused by these authorities seems clear enough in principle even if it raises problems in application. He then at p. 26 notices that there is a recent trend in the decisions of the Supreme Court of Canada to the strict view of paramountcy reflected in the conflict or collision test, which he describes as the test of operating incompatibility and observes at p. 27 : . "It is necessary to be reminded at all times that no issue of paramountcy can arise unless there is in existence federal and provincial legislation which, independently considered, is in each case valid. If either piece of legislation, standing alone, is invalid there is no occasion to consider whether the field has been occupied. The issue that will have been resolved in such case would be the anterior one of the "matter embraced by the legislation, whether of Parliament or of the provincial legislature, as the case may be. " 173 At p. 28, he states: "The doctrine of occupied field applies only where there is a clash between Dominion legislation and provincial legislation within an area common to both. " Here there is no such conflict. The Union and the State laws operate on two different and distinct fields and both the laws are capable of being obeyed. Questions of conflict between the jurisdiction of Parliament of the Dominion and of the Provincial Legislature have frequently come up before the Privy Council and we may briefly refer to the decisions relied upon though they are of little assistance to the appellants. In Grand Trunk Railway Company of Canada vs Attorney General of Canada(1), Lord Dunedin observed: The construction of the provisions of the British North America Act has been frequently before their Lordships. It does not seem necessary to recapitulate the decisions. But a comparison of two cases decided in the year 1894 viz. , Attorney General of Ontario vs Attorney General of Canada(2) and Tennant vs Union Bank of Canada(3) seem to establish these two propositions First, that there can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires, if the field is clear; and secondly, that if the field it not clear, and in such a domain the two legislations meet, then the Dominion legislation must prevail. " In a later decision of the Privy Council in Attorney General for Canada vs Attorney General for British Columbia & Ors. case, supra, Lord Tomlin summarized in four propositions the result of the earlier decisions of the Board on the question of conflict between the Dominion and Provincial Legislatures. The third proposition is to the effect that it is within the competence of the Dominion Parliament to provide for matters which, though otherwise within the 174 legislative competence of the Provincial Legislature, are necessarily incidental to effective legislation by Parliament of the Dominion upon a subject of legislation expressly enumerated in section 91. The fourth proposition on which the entire argument of learned counsel for the appellants proceeds is based upon the dictum of Lord Dunedin in Grand Trunk Railway Company 's case, supra, set out above. It is well settled that the validity of an Act is not affected if lt incidentally trenches upon matters outside the authorized field and therefore it is necessary to inquire in each case what is the pith and substance of the Act impugned. If the Act, when so viewed, substantially falls within the powers expressly conferred upon the legislature which enacted it, then it cannot be held to be invalid merely because it incidentally encroaches on matters which have been assigned to another Legislature. In Board of Trustees of the Lethbrige Northern Irrigation District & Anr. vs Independent order of Foresters(1), Viscount, Caldecote, L.C. Observed: "These sections have been the subject of repeated examination in the Judicial Committee, and there can no longer be any doubt as to the proper principles to their interpretation, difficult though they may be in application. Lord Haldane, in delivering the judgment of the Judicial Committee in, Great West Saddlary Co. vs The King(2) said "The rule of constraction is that general language in the heads of section 92 yields to particular expressions in section 91, where the latter are unambiguous. " In a later decision of the Judicial Committee, Attorney General for Canada vs Attorney General for British Columbia, supra, Lord Tomlin summarized in four propositions the result of the earlier decisions of the Board on questions of conflict between the Dominion and the Provincial Legislatures. The first proposition is to the effect that the legislation of the Provincial Parliament of the Dominion, so long as it strictly relates to subjects of legislation expressly enumerated in section 91, is of paramount authority, even though it trenches upon matters assigned to the Provincial 175 Legislatures by section 92, Lord Tomlin referred to Tennant vs Union Bank of Canada, supra, as the authority for this statement." Viscount Caldecote then observed: "In applying these principles, as their Lordships propose to do, an inquiry must first be made as to the "true nature and character of the enactment in question" Citizen Insurance Co. Of Canada vs Wiliam Parsons) (supra) or, to use Lord Watson 's words in delivering the judgment of the Judicial Committee in Union Colliery Company of British Columbia vs Bryden(1) as to their "pith and substance". Their Lordships now address themselves to that inquiry." "Legislation", said Lord Maugham in delivering the judgment of the Privy Council in Attorney General for Alberta vs Attorney General for Canada,(2) "given in pith and substance within one of the classes specially enumerated in section 91 is beyond the legislative competence of the Provincial Legislature under section 91". At p. 370 of the Report, Lord Maugham laid down on behalf of the Privy Council: "Since 1894 it has been a settled principle that if a subject of legislation by the Province is only incidental or ancillary to one of the classes of subjects enumerated in section 91 and is properly within one of the subjects enumerated in section 92, then legislation by the Province is competent unless and until the Dominion Parliament chooses to occupy the field by legislation." (Emphasis supplied.) Lord Maugham 's reference to the year 1894 points to the decision of the Privy Council in Attorney General for Ontario vs Attorney General for Canada, supra. In Attorney General for Canada vs Attorney General for the Province of Quebed,(3) Lord Porter in delivering the judgment of the Board drew attention to these principles and then observed: 176 "In calling attention to these principles their Lordships are but repeating what has many times been set forth in the judgments of the Board, and it only remains to apply them to the individual case under consideration. ' The rule of pith and substance laid down by the Privy Council was reaffirmed by Viscount Simon in Attorney General of Sasketchewan vs Attorney General of Canada & Ors (1) This was emphasized very clearly by Lord Atkin while dealing with the validity of the Milk and Milk Products Act (Northern Ireland) which was impugned as violating section 4 of the Government of Ireland Act, 1920 in Gallahagher vs Lynn(2) in his own terse language: "It is well established that you are to look at the "true nature and character" of the legislation; Russell vs The Queen(3) "the pith and substance of the legislation". If on the view of the statute a, whole, you find that the substance of the legislation is within the express powers, then it is now invalidated if incidentally it affects matters which are outside the authorized field. " Much stress is laid on the fourth propositions formulated by Lord Tomlin in Attorney General for Canada vs Attorney General for British Columbia & Ors., (supra) based on the dictum of Lord Dunedin in Grand Trunk Railway Company of Canada 's case, supra, which, even at the cost of repetition, we may set out below: "4. There can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires if the field is clear, but if the field is not clear and the two legislations meet, the Dominion legislation must prevail: see Grand Trunk R. of Canada vs Attorney General of Canada, (supra). " The question is whether the field is not clear and the two legislations meet and therefore on the doctrine of Federal supremacy sub s (3) 177 of section S of the Act must be struck down as ultra vires The principle deducible from the dictum of Lord Dunedin as applied to the distribution of legislative powers under Art 246 of the Constitution, is that when the validity of an Act is challenged as ultra vires, the answer lies to the question, what is the pith and substance of the impugned Act ? No doubt, in many cases it can be said that the enactment which is under consideration may be regarded from more than one angle and as operating in more than one field. If however, the matter dealt with comes within any of the classes of subjects enumerated in List II, then it is under the terms of article 246 (3) not to be deemed to come within the classes of subjects assigned exclusively to Parliament under article 246 (1) even though the classes of subjects looked at signly overlap in many respects. The whole distri bution of powers must be looked at as Gwyer, C. J. Observed in C.P. & Berar Taxation Act 's case, supra, in determining the question of validity of the Act in question. Moreover, as Gwyer, C.J. Laid down in Subrahmaniyan Chettiar 's case, (supra), and affirmed by their Lordships of the Privy Council in Prafulla Kumar Mukherjee 's case, (supra) it is within the competence of the State Legislature under article 246 (3) to provide for matters which, though within the competence of Parliament, are necessarily incidental to effective legislation by the State Legislature on the subject of legislation expressly enumerated in List II. We must then pass on to the contention advanced by learned counsel for the appellants that there is repugnancy between sub s (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order and therefore sub section (3) of section 5 of the Act is void to that extent. Ordinarily, the laws could be said to be repugnant when they involve impossibility of obedience to them simultaneously but there may be cases in which enactments may be inconsistent although obedience to each of them may be possible without disobeying the other. The question of "repugnancy" arises only with reference to a legislation falling in the Concurrent List but it can be cured by resort to article 254 (2). As we have endeavoured so far, the question raised as to the constitutional validity of sub section (3) of section S of the Act has to be determined by application of the rule of the pith and substance whether or not the subject matter of the impugned legislation was competently enacted under article 246, and therefore tho question of repugnancy under article 254 was not a matter in issue. The submission 178 put forward on behalf of the appellants however is that there is direct collision and/or irreconciliable conflict between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is relatable to Entry 33 of List III. It is sought to be argued that the words "a law made by Parliament which Parliament is competent to enact" must be construed to mean not only a law made by Parliament with respect to one of the matters enumerated in the Concurrent List but they are wide enough to include a law made by Parliament with respect to any of the matters enumerated in the Union List. The argument was put in this form. In considering whether a State law is repugnant to a law made by Parliament, two questions arise: First, is the law made by Parliament viz. the , a valid law ? For, if it is not, no question of repugnancy to a State law can arise. If however it is a valid law, the question as to what constitutes repugnancy directly arises. The Second question turns on a construction of the words "a law made by Parliament which Parliament is competent to enact" in article 254 (1). Strong reliance is placed on the judgment of the High Court of Australia in Clyde Engineering Company Limited vs Cowburn(1) and to a passage in Australian Federal Constitutional Law by Colin Howard, 2nd edn. at pp. 34 35. Our attention is also drawn to two other decisions of the High Court of Australia: Ex parte Mc Lean(2) and Stock Motor Ploughs Limited vs Forsyth.(3) The decision in Clyde Engineering Company 's cases, supra, is an authority for the proposition that two enactments may be inconsistent where one statute takes away the rights conferred by the other although obedience to each one of them may be possible without disobeying the other. The contention is that paragraph 21 of the Control order confers a right on the manufacturers and producers of medicines and drugs to pass on the liability for sales tax while sub section (3) of section 5 of the Act prohibits such manufacturers or producers from passing on such liability. The argument cannot prevail for two obvious reasons viz (1) Entry 54 of List II is a tax entry and therefore there is no question of repugnancy between sub section (3) of section 5 of the Act which is a 179 law made by the State Legislature for the imposition of tax on sale or purchase of goods relatable to Entry 54 and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is a law made by Parliament relatable to Entry 33 of List III. And (2). The question of 'repugnancy ' can only arise in connection with the subjects enumerated in the Concurrent List as regards which both the Union and the State Legislatures have concurrent powers so that the question af conflict between laws made by both Legislatures relating to the same subject may arise. This Court has considered the question of repugnancy in several cases and in Deep Chand vs The State of Uttar Pradesh & Ors.(1) the result of the authorities was thus stated by Subba Rao, J.: "Nicholas in his Australian Constitution, 2nd edn., p. 303, refers to three tests of inconsistency or repugnancy: 1. There may be inconsistency in the actual terms of the competing statutes; 2. Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive Code; and 3. Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter." In Ch. Tika Ramji & Ors. vs The State of Uttar Pradesh & Ors.(2) the Court accepted the above three rules evolved by Nicholas, among others, as useful guides to test the question of repugnancy. article 254 of the Constitution makes provision first, as to what would happen in the case of conflict between a Central and State 180 law with regard to the subjects enumerated in the Concurrent List, and secondly, for resolving such conflict. article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter. (1) lays down that if a State law relating to a concurrent subject is 'repugnant ' to a Union law relating to that subject, then, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void. To the general rule laid down in cl. (1), cl. (2) engrafts an exception, viz., that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a concurrent subject. In such a case, the Central Act will give way to the State Act only to the extent of inconsistency between the two, and no more. In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concurrent subject would be that the State Act will prevail in that State and override the provisions of the Central Act in their applicability to that State only. The predominance of the State law may however be taken away if Parliament legislates under the proviso to cl. The proviso to article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the 'same matter '. Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law will become void as soon as the subsequent law of Parliament creating repugnancy is made. A State law would be repugnant to the Union law when there is direct conflict between the two laws. Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together. : See: Zaverbhai Amaidas vs State of Bombay(1), M. Karunanidhi vs Union of India(2) and T. Barai vs Henry Ah Hoe d: Anr.(2) We may briefly refer to the three Australian decisions relied upon. As stated above, the decision in Clyde Engineering Company 's case (supra), lays down that inconsistency is also created when one statute takes away rights conferred by the other. In Ex Parte McLean 's case, supra, Dixon J. laid down another test viz., two 181 statutes could be said to be inconsistent if they, in respect of an identical subject matter, imposed identical duty upon the subject, but provided for different sanctions for enforcing those duties. In Stock Motor Ploughs Limited 's case, supra, Evatt, J. held that even in respect of cases where two laws impose one and the same duty of obedience there may be inconsistency. As already stated the controversy in these appeals falls to be determined by the true nature and character of the impugned enactment, its pith and substance, as to whether it falls within the legislative competence of the State Legislature under article 246(3) and does not involve any question of repugnancy under article 254(1). We fail to comprehend the basis for the submission put forward on behalf of the appellants that there is repugnancy between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the relatable to Entry 33 of List III and therefore sub section (3) of section 5 of the Act which is a law made by the State Legislature is void under article 254(1). The question of repugnancy under article 254(1) between a law made by Parliament and a law made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent List, and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will, to the extent of repugnancy become void. article 254(1) has no application to cases of repugnancy due to overlapping found between List II on the one hand and List I and List III on the other. If such overlapping exists in any particular case, the State law will be ultra vires because of the non obstante clause in article 246(1) read with the opening words "Subject to" in article 246(3). In such a case, the State law will fail not because of repugnance to the Union law but due to want of legislative competence. It is no doubt true that the expression "a law made by Parliament which Parliament is competent to enact" in article 254(1) is susceptible of a construction that repugnance between a State law and a law made by Parliament may take place outside the concurrent sphere because Parliament is competent to enact law with respect to subjects included in List III as well as 'List I" But if article 254(1) is read as a whole, it will be seen that it is expressly made subject to cl. (2) which makes reference to repugnancy in the field of Concurrent List in other words, if cl. (2) is to be the guide in the determination of scope of cl. (1), the 182 repugnancy between Union and State law must be taken to refer only to the Concurrent field. article 254(1) speaks of a State law being repugnant to (a) a law made by Parliament or (b) an existing law. There was a controversy at one time as to whether the succeeding words "with respect to one of the matters enumerated in the Concurrent List" govern both (a) and (b) or (b) alone. It is now settled that the words "with respect to" qualify both the clauses in article 254(1) viz. a law made by Parliament which Parliament is competent to enact as well as any provision of an existing law. The under lying principle is that the question of repugnancy arises only when both the Legislatures are competent to legislate in the same field i.e. with respect to one of the matters enumerated in the Con current List. Hence, article 254(1) can not apply unless both the Union and the State laws relate to a subject specified in the Con current List, and they occupy the same field. This construction of ours is supported by the observations of Venkatarama Ayyar, J. speaking for the Court in A. section Krishna 's case, supra, while dealing with section 107(1) of the Government of India Act, 1935 to the effect: "For this section to apply, two conditions must be fulfilled: (1) The provisions of the Provincial law and those of the Central legislation must both be in respect of a matter which is enumerated in the Concurrent List, and (2) they must be repugnant to each other, It is only when both these requirements are satisfied that the Provincial law will, to the extent of the repugnancy, become void." In Ch. Tika Ramji 's case, supra, the Court observed that no question of repugnancy under article 254 of the Constitution could arise where parliamentary legislation and State legislation occupy different fields and deal with separate and distinct matters even though of a cognate and allied character and that where, as in that case, there was no inconsistency in the actual terms of the Acts enacted by Parliament and the State Legislature relatable to Entry 33 of List III, the test of repugnancy would be whether Parliament and State Legislature, in legislating on an entry in the Concurrent List, exercised their powers over the same subject matter or whether the laws enacted by Parliament were intended to be exhausted as to cover the entire field, and added: 183 "The pith and substance argument cannot be imported here for the simple reason that, when both the Centre as well as the State Legislatures were operating in the con current field, there was no question of any trespass upon the exclusive jurisdiction of the Centre under Entry 52 of List I, the only question which survived being whether put in both the pieces of legislation enacted by the Centre and the State Legislature, there was any such repugnancy. " This observation lends support to the view that in cases of overlapping between List II on the one hand and Lists I and III on the other, there is no question of repugnancy under article 254(1). Subba Rao. J. speaking for the Court in Deep Chand 's case, supra, interpreted article 254(1) in these terms: "article 254(1) lays down a general rule. Clause (2) is an exception to that Article and the proviso qualified the said exception. If there is repugnancy between the law made by the State and that made by the Parliament with respect to one of the matters enumerated in the Con current List, the law made by Parliament shall prevail to the extent of the repugnancy and law made by the State shall, to the extent of such repugnancy, be void. " In all fairness to learned counsel for the appellants, it must be stated that they did not pursue the point any further in view of these pronouncements. We are unable to appreciate the contention that sub section (3) of section 5 of the Act being a State law must be struck down as ultra vires as the field of fixation of price of essential commodities is an occupied field covered by a central legislation. It is axiomatic that the power of the State Legislature to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List 11 of the Seventh Schedule and to make ancillary provisions in that behalf, is plenary and is not subject to the power of Parliament to make a law under Entry 33 of List III. There is no warrant for projecting the power of Parliament to make a law under. Entry 33 of List III into the State 's power of taxation under Entry 54 of List II. Otherwise, Entry 54 will have to be read as: 'Taxes on the sale or purchase of goods other than essential commodities etc 184 cetra '. When one entry is made 'subject to ' another entry, all that it means is that out of the scope of the former entry, a field of legislation covered by the latter entry has been reserved to be specially dealt with by the appropriate Legislature. Entry 54 of List II of the Seventh Schedule is only subject to Entry 92A of List I and there can be no further curtailment of the State 's power of taxation. It is a well established rule of construction that the entries in the three lists must be read in a broad and liberal sense and must be given the widest scope which their meaning is fairly capable of because they set up a machinery of Government. The controversy which is now raised is of serious moment to the States, and a matter apparently of deep interest of the Union. But in its legal aspect, the question lies within a very narrow compass. The duty of the Court is simply to determine as a matter of law, according to the true construction of article 246(3) of the Constitution, whether the State 's power of taxation of sale of goods under Entry 54 of List II and to make ancillary provisions in regard thereto, is capable of being encroached upon by a law made by Parliament with respect to one of the matters enumerated in the Concurrent List. The contention fails to take into account that the Constitution effects a complete separation of the taxing power of the Union and of the States under article 246. It is equally well settled that the various entries in the three lists are not 'powers of legislation, but 'fields ' of legislation. The power to legislate is given by article 246 and other Articles of the Constitution. Taxation is considered to be a distinct matter for purposes of legisla tive competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production, supply and distribution of essential commodities under Entry 33 of List III, although the liability to pay tax may be a matter incidental to the Centre 's power of price control. "Legislative relations between the Union and the States inter se with reference to the three lists in Schedule VII cannot be under stood fully without examining the general features disclosed by the entries contained in those Lists: "Seervai in his Constitutional Law of India, 3rd edn. 1 at pp. 81 82. A scrutiny of Lists I and II of the Seventh Schedule would show that there is no overlapping 185 anywhere in the taxing power and the Constitution gives independent sources of taxation to the Union and the States. Following the scheme of the Government of India Act, 1935, the Constitution has made the taxing power of the Union and of the States mutually exclusive and thus avoided the difficulties which have arisen in some other Federal Constitutions from overlapping powers of taxation. It would therefore appear that there is a distinction made between general subjects of legislation and taxation. The general subjects of legislation are dealt with in one group of entries and power of taxation ill a separate group. In M.P. Sundararamier & Co. vs The State of Andhra Pradesh & Anr.(1) This Court dealt with the scheme of the separation of taxation powers between the Union and the States by mutually exclusive lists. In List I, Entries 1 to 81 deal with general subjects of legislation; Entries 82 to 92A deal with taxes. In List 11, Entries 1 to 44 deal with general subjects of legislation; Entries 45 to 63 deal With taxes. This mutual exclusiveness is also brought out by the fact that in List Ill, the Concurrent Legislative List, there is no entry relating to a tax, but it only contains an entry relating to levy of fees in respect of matters given in that list other then court fees. Thus, in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise. That being so, it is difficult to comprehend the submission that there can be intrusion by a law made by Parliament under Entry 33 of List III into a forbidden field viz. the State s exclusive power to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List II of the Seventh Schedule. It follows that the two laws viz. sub section (3) of section 5 of the Act and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the , operate on two separate and distinct fields and both are capable of being obeyed. There is no question of any clash between the two laws and the question of repugnancy does not come into play. The remaining part of the case presents little difficulty. It would be convenient to deal with the contention based on articles 14 and 19 (1) (g) of the Constitution together as the submissions more or less proceed on the similar lines. It is urged that the provision contained in sub section (3) of section 5 of the act is violative of article 14 of the Constitution inasmuch as it is wholly arbitrary and irrational and it 186 treats "unequals as equals". It is urged that the treats certain controlled commodities and their sellers in a special manner by fixing controlled prices. The dealers so treated by this Central law are so circumstanced that they cannot be equated with other dealers who can raise their sale prices and absorb the surcharge levied under sub section (1) of section 5 of the act and a class of dealers like manufacturers and producers of medicines and drugs and other dealers of essential commodities who cannot raise their sale prices beyond the controlled price are being treated similarly without any rational basis. Once the fact of different classes being separate is taken, then a State law which treats both classes equally and visits them with different burdens would be violative of article 14. The State cannot by treating 'equals as unequals ' impose different burdens on different classes. It is submitted that the restriction imposed by sub section 3 of section 5 of the act which prevents the manufacturers and producers of medicines and drugs and other essential commodities from passing on the liability to pay surcharge is confiscatory and imposes a disproportionate burden on such manufacturers and producers or other dealers. These two abstract questions have been convassed on the basis that each of the appellants was a dealer having a gross turnover of Rs. 5 lakhs or more in a year and therefore liable to pay surcharge, in addition to the tax payable by him, under sub section (1) of section 5 of the Act. It is lamentable that there is no factual foundation laid to support the contention that the levy of surcharge under sub section (1) of section 5 of the Act imposes a disproportionate burden on a certain class of dealers such as manufacturers or producers of drugs and pharmaceuticals or dealers engaged in the business of distribution and sale of motor trucks etc. to support the assertion that sub section (3) of section 5 of the Act which prohibits such persons from passing on the liability to pay surcharge is arbitrary or irrational, or that it treats 'unequals as equals ' and thus infringes article 14 of the Constitution or is confiscatory in nature. There is no ground whatever for holding that sub section (3) of section 5 of the Act is arbitrary or irrational or that it treats 'unequals as equals ', or that it imposes a disproportionate burden on a certain class of dealers. It must be remembered that sub section (1) of section 5 of the Act provides for the levy of a surcharge having a gross turnover of Rs 5 lakhs or more in a year at a uniform rate of 10 per centum of the tax payable by them, irrespective whether they are dealers in essential 187 commodities or not. A surcharge in its true nature and character is nothing but a higher rate of tax to raise revenue for general purposes. The levy of surcharge under sub section (1) of section 5 of the Act falls uniformly on a certain class of dealers depending upon their capacity to bear the additional burden. From a fiscal point of view, a sales tax on a manufacturer or producer involves the complication of price structure. It is apt to increase the price of the commodity, and tends to be shifted forward to the consumer. The manufacturers or producers often formulate their prices in terms of certain profit targets. Their initial response would be to raise prices by the full amount of the tax. Where the conventional mark up leaves substantial unrealized profits, successful tax shifting is possible regardless of the nature of the tax. If, on the other hand, the tax cannot be passed on to the consumer, it must be shifted backwards to owners inputs. Despite theoretical approach of economists, businessmen always Regard the tax as a cost and make adjustments accordingly, and this is brought out by John C. Winfrey on Public Finance at p. 402 in the following passage: "The businessman . . has been skeptical regarding the entire approach of marginal cost pricing. His position has been that taxes are treated as a cost when determining prices, be it as part of a full cost pricing" rule? by application of a conventional mark up rate defined net of tax, or by pricing to meet a net of tax target rate of return. According to these formulas, a change in tax rate leads to an adjustment in price. The profits tax becomes a quasi sales tax. The fact that such a price policy is not consistent with the usual concepts of profit maximization does not disprove its existence. " Pausing here for a moment, we may observe that a surcharge being borne by the manufacturers and producers of medicines and drugs under sub section (3) of section 5 of the Act, the controlled price of such medicines and drugs to the consumer will remain the same. From the figures set out above, it will be seen that the business carried on by the appellants in the State of Bihar alone is of such magnitude that they have the capacity to bear the additional burden of surcharge levied under sub section (1) of section 5 of the Act. It roughly works out to one paisa per rupee of the sale price of the manufactured commodity. There is no material placed on record that the surcharge levied under sub section (1) of section 5 of the Act imposes a 188 disproportionate burden on the appellants or that it is confiscatory in nature. The argument of arbitrariness is an argument of despair. Sub section (1) of section Of the Act levies surcharge on dealers whose gross turnover in a year exceeds Rs. 5 lakhs irrespective of whether such dealers deal in essential commodities or not. lt is a general tax and all dealers falling within the class defined under sub section (1) of section 5 of the Act have been levied the surcharge at a uniform rate of 10 per centum of the tax. It will be noticed that first proviso to sub section (1) of section 5 enjoins that the aggregate of the tax and surcharge payable under the Act shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the , the rate fixed by section 15 thereof. Under section 14 of the Act, almost all commodities which are essential to the life of the community are declared to be goods of special importance in inter State trade or commerce and therefore the maximum sales tax leviable on sale or purchase of such goods cannot exceed 4 per cent. It would therefore appear that generally dealers having a gross turnover of Rs. 5 lakhs in a year dealing in commodities covered by section 14 will not have to bear the burden of surcharge under sub section (1) of section 5 of the Act. It is the misfortune of these appellants that medicines and drugs are not declared to be of special importance in respect of inter State trade or commerce by section 14 of the . That apart, the appellants as manufacturers or producers of drugs under paragraph 24(1) have to bear the burden of sales tax on the controlled price that they cannot charge to a wholesaler a price higher than (a) the retail price minus 14 per cent thereof, in the case of ethical drugs; and (b) the retail price minus 12 per cent thereof, in the case of non ethical drugs. Under paragraph 24(2) they cannot sell to a retailer at a price higher than (a) the retail price minus 12 per cent thereof, in the case of ethical drugs; and (b) the retail price minus 10 per cent thereof, in the case of non ethical drugs. These provisions merely indicate that there is a margin of 14 per cent to the wholesaler in the case of ethical drugs and of 12 per cent in the case of non ethical drugs,. and the wholesaler has a margin of 2 per cent in either case when he sells to the retailer. In contrast, the profit margins of manufacturers and producers of medicines and drugs is considerably higher. Under the scheme of the Drugs (Price Control) order, the calculation of the retail price of formulations under paragraph 10 has to be accordance with the formula set out therein. One of the elements that enters 189 into the price structure is the 'mark up ' which is defined in paragraph 11 to include distribution cost, outward freight, promotional expenses, manufacturers margin and trade commission. Clauses (1) to (3) of the Third Schedule show that the mark up ranges from 40% in the case formulations specified in category (i), 55% in the case of formulations specified in category (ii) and 100% in the case of formulations specified in category (iii). This gives an indication of the extent of profits earned by the manufacturers and producers of formulations. In Market situations where uncertainty about demand prevails and mark up pricing is practised, the usual response is to attempt to shift taxes to the consumer. Musgrave in his Public Finance in Theory and Practice observes that economists like to think of business behaviour as being rational, in the sense of following a maximising rule, but businessmen may not act rationally. They regard the tax as a cost and make adjustments accordingly: "One of these is the practice of markup or margin pricing. Under this rule, costs are "marked up" to allow for a customary ratio of profits to costs, or price is set such as to leave profits (i.e., sales minus cost) a customary fraction of sales. Whether this gives rise to shifting depends on how costs and margins are defined. Shifting occurs if the tax is included as a cost, or if the margin if defined net of tax. " It would therefore appear that businessmen are skeptical regarding the entire approach of marginal cost pricing. their position is that taxes are treated as a cost when determining prices, be it as part of a "full cost pricing" rule, by application of a conventional mark up rate defined net of tax, or by pricing to meet a net of tax target rate of return. According to these formulae, a change in tax rate leads to an adjustment in price. If the appellants find that the levy of surcharge under sub section Of section 5 of the Act cannot be borne within the present price structure of medicines and drugs, they have the right to apply to the Central Government for revision of the retail price of formulations under paragraph 15 of the Control order. It was a startling proposition advanced by learned counsel for the appellants that the Court was wrong in Kodar 's case in 190 justifying on the basis of economic superiority the burden of additional sales tax on a certain class of dealers. It was held by the Court relying upon the dissenting opinion of Cardozo, J. in Stewart Dry Goods Co. vs Lewis ; that a gross sales tax graduated at increasing rates with the volume of sales on a certain class of dealers does not offend against article 14 of the Constitution. The contention that ability to pay is not a relevant criterion for upholding the validity of sub section (3) of section 5. Of the Act cannot be accepted. To say the least, there is no basis for this submission. It is beyond the scope of this judgment to enter into intricacies of public finance viz. Objectives and criteria of a tax, problems of shifting et cetera. Nor is it necessary for us to enter into a discussion of the so called benefit principle, or the alternative approach of ability to pay. There is probably widespread agreement now that taxes that fall on the 'better off ' rather than the worse off ' and are progressive rather tean proportional, are to be preferred. The concept of 'ability to pay ' implies both equal treatment of people with equal ability, however measured, and the progressive rate structure. The 'ability to pay ' doctrine has strong affinities to egalitarian social philosophy, both support measures designed to reduce inequalities of wealth and income. On questions of economic regulations and related matters, the Court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for discretion of the law makers. It is not the function of the Court to consider the propriety or justness of the tax, or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirement is satisfied. The equality clause in article 14 does not take from the State power to classify a class of persons who must bear the heavier burden of tax. The classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequalities. In Kodar 's case, supra, the constitutional validity of a similar levy was upheld on the capacity to pay. It was observed: "The large dealer occupies a possition of economic superiority by reason of his greater volume of his business. And to make his tax heavier, both absolutely and relatively, is Dot arbitrary discrimination,, but an attempt 191 to proportion the payment to capacity to pay and thus to arrive in the end at more genuine equality. " The economic wisdom of a tax is within the exclusive province of the Legislature. The only question for the Court to consider is whether there is rationality in the belief of the Legislature that capacity to pay the tax increases by and large with an increase of receipts. The view taken by the Court in Kodar 's case, supra, is in consonance with social justice in an egalitarian State and therefore the contention based on article 14 of the Constitution must fail. The contention that sub section (3) of section 5 of the Act imposes an unreasonable restriction upon the freedom of trade guaranteed under article 19 (1) (g) of the Constitution proceeds on the basis that sales tax being essentially an indirect tax, it was not competent for the Legislature to make a provision prohibiting the dealer from collecting the amount of surcharge cannot prevail. It is urged that the surcharge does not retain its avowed character as sales tax but in its true gature and character is virtually a tax on income, by reason of the limitation contained in sub section (3) of section 5 of the Act. We are not impressed with the argument. Merely because a dealer falling within the class defined under sub section (1) of section 5 of the Act is prevented from collecting the surcharge recovered from him, does not affect the competence of the State Legislature to make a provision like sub section (3) of section 5 of the Act nor does it become a tax on his income. It is not doubt true that a sales tax is, according to the accepted notions, intended to be passed on to the buyer, and the provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not effect the competence of the legislature: see: The Tata Iron & Steel Co. Ltd. vs The State of Bihar(1): M/s. J.K. Jute Mills Co. Ltd. vs The State of Uttar Pradesh & Anr.(2) 5. Kodar vs State of Kerala.(3) The contention based on the article 19 (1) (g) cannot therefore be sustained. 192 There was quite some discussion at the Bar as to whether the assent of the President is justiciable. rt was submitted that since not only sub section (1) of section 5 of the Act which provides for the levy of a surcharge on dealers having a gross turnover of Rs. 5 lakhs in a year but also sub section (3) thereof which interdicts that no such dealer shall be entitled to recover the amount of surcharge collected from him, are both relatable to Entry 54 of List II of the Seventh Schedule, there was no occasion for the Governor to have referred the Bill under article 200 to the President for his assent. It is some what strange that this argument should be advanced for the first time after a lapse of 30 years of the inauguration of the Constitution. Immediate provocation for this argument appears to be an obiter dictum of Lord Diplock while delivering the judgment of the Judicial Committee in Teh Cheng Poh @, Char Meh vs Public Prosecutor, Malaysia(1) that "the Courts are not powerless when there is a failure to exercise the power of revocation of a Proclamation of Emergency "issued by the Ruler of Malaysia under section 47 (2) of the Internal Security Act. The ultimate decision of the Privy Council was that since by virtue of s 47 (2) of that Act the security area proclamation remained lawful until revoked by resolutions of both Houses of Parliament or by the Ruler, it could not be deemed to lapse because the conditions upon which the Ruler had exercised his discretion to make the Proclamation were no longer in existence. That being so, the decision in Teh Cheng Poh 's case, supra, is not an authority for the proposition that the assent of the President is justiciable nor can it be spelled out that that Court can enquire into the reasons why the Bill was reserved by the Governor under article 200 for the assent of the President nor whether the President applied his mind to the question whether there was repugnancy between the Bill reserved for his consideration and received his assent under article 254 (2). The constitutional position of a Governor is clearly defined. The Governor is made a component part of the Legislature of a State under article 168 because every Bill passed by the State Legislation has to be reserved for the assent of the Governor under article 200. Under that Article, the Governor can adopt one of the three courses, namely: (1) He may give his assent to it, in which case the Bill becomes a law; or (2) He may except in the case of a 'Money Bill ' withhold his assent therefrom, in which cases the Bill falls through unless the procedure indicated in the first proviso is followed 193 i. e. return the Bill to the Assembly for consideration with a message, or (3) He may "on the advice of the Council of Ministers" reserve the Bill for the consideration of the President, in which case the President will adopt the procedure laid down in article 201. The first proviso to article 200 deals with a situation where the Governor is bound to give his assent and the Bill is reconsidered and passed by the Assembly. The second proviso to that Article makes the reservation for the Consideration of the President obligatory where the Bill would, "if it becomes law, dergoate from the powers of the High Court". Under article 201, when a Bill is reserved by the Governor for the consideration of the President, the President can adopt two courses, namely: (1) He may give his assent to it in which case again the Bill becomes a law; or (2) He may except where the Bill is not a 'Money Bill ', direct the Governor to return the Bill to the House or, as the case may be, the Houses of the Legislature of the State together with such message as is mentioned in the first proviso to article 200. When a Bill is so reserved by the President, the House or Houses shall reconsider it accordingly within a period of six months from the date of receipt of such message and if it is again passed by the House or Houses with or without amendment, it shall be presented again to the President for his consideration. Thus, it is clear that a Bill passed by the State Assembly may become law if the Governor gives his assent to it or if, having been reserved by the Governor for the consideration of the President, it is assented to by the President There is no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. A Bill which attracts article 254 (2) or article 304 (b) where it is introduced or moved in the Legislative Assembly of a State without the previous sanction of the President or which attracted article 31 (3) as it was then in force, or falling under the second proviso to article 200 has necessarily to be reserved for the consideration of the President. There may also be a Bill passed by the State legislature where there may be a genuine doubt about the applicability of any of the provisions of the Constitution which require the assent of the President to be given to it in order that it may be effective as an Act. In such a case, it is for the Governor to exercise his discretion and to decide whether he should assent to the Bill or should reserve it for consideration of the President to avoid any furture complication Even if it ultimately turns out that there was no necessity for the Governor to have 194 reserved a Bill for the consideration of the President, still he having done so and obtained the assent of the President, the Act so passed cannot be held to be unconstitutional on the ground of want of proper assent. This aspect of the matter, as the law now stands, is not open to scrutiny by the courts. In the instant case, the Finance Bill which ultimately became the Act in question was a consolidating Act relating to different subjects and perhaps the Governor felt that it was necessary to reserve it for the assent of the President. We have no hesitation in holding that the assent of the President is not justiciable, and we cannot spell out any infirmity arising out of his decision to give such assent. There still remains the contention that for the purpose of levying surcharge it is impermissible to take into account the method of computation of gross turnover, the turnover representing sales in the course of inter State trade and outside the State and sales in the course of export out of India. It is urged that the non obstante clause in section 7 of the Act has the effect of taking these transactions out of the purview of the Act with the result that a dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder. The submission is that sub section (1) of section 5 of the Act is ultra vires the State Legislature in so far as for purposes of levying the charge, the incidence of liability of a dealer to pay such surcharge depends on his gross turnover as defined in section 2 (j) of the Act. In support of the contention, reliance was placed on the following passage in the judgment of this Court in A. V. Fernandez vs State of Kerala(1): "There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non liability to tax or non imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the 195 sales or purchases are exempted from taxation altogether. The legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the act at all. The very fact of their non liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. The submission appears to proceed on a misapprehension of the principles laid down in Fernandez 's case, supra. To understand the ratio deducible in Fernandez 's case, supra, a few facts have to be stated. The business of the assessee in that case consisted in the purchase of copra, manufacture of coconut oil and cake therefrom and sale of oil and cake to parties inside the State and sale of oil to parties outside the State. In 1951, the Travancore Cochin General Sales Tax Act, 1125 was amended by addition of section 26 which incorporated the ban of article 286 of the Constitution and was in pari materia with section 7 of the Act. For the year 1951 52, the Sales Tax officer assessed the assessee to sales tax on a net assessable turnover by taking the value of the whole of the copra purchased by him, adding thereto the respective values of the oil and cake sold inside the State and. deducting only the value of the copra relatable to the oil sold inside the State. It was contended by the assessee that in the calculation of the net turnover, he was entitled to include the total value of the oil sold by him, both inside and outside the State, and deduct therefrom the total value of the copra purchased by him and further, under the overriding provision of section 26 of the Act, he was entitled to have the value of the oil sold outside the State deducted. The main controversy between the parties centered around the method of computation of the net turnover. The contention advanced by the assessee was rejected by the High Court, which limited the deduction to purchase of copra relatable to the sales inside the State. In affirming that decision, this Court observed that so far as sales of coconut oil outside the State were concerned, they were, as it were, by reason of section 26 of the Act read in conjunction with article 286, taken out of the purview of the Act, and that they had the effect of setting at naught and obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in 196 particular the provision contained in the charging section, section 3, and the provisions contained in r. 20(2) and other provisions which were incidental to the process of levying such tax. The aforementioned passage relied upon cannot be read out of context in which it appears and if so read, it is hardly of any assistance to the appellants. In the penultimate paragraph in Fernandez 's case, supra, the Court after laying down that the non obstante clause in section 26 had the effect of taking sales in the course of inter State trade and outside the State out of the purview of the Act with the result that the dealer was not required nor entitled to include them in computation e of the turnover liable to tax thereunder, observed: "This position is not at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act. The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer 's turnover. Such inclusion, however, for the purposes aforesaid would not affect the non liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding pro vision enacted in the Act, as above. " The decision in Fernandez 's case, supra, is therefore clearly an authority for the proposition that the State Legislature notwithstanding article 286 of the Constitution while making a law under Entry 54 of List II of the Seventh Schedule can, for purposes of the registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286 of the Constitution That being so, the constitutional validity of sub section (1) of section 5 of the Act which provides for the classification of dealers whose gross turnover during a year exceeds Rs. 5 lakhs for the purpose of levy of surcharge, in addition to the tax payable by him, is not assailable. So long as sales in the course of inter State trade and commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed, there is nothing to prevent the State Legislature while making a law for the levy of a surcharge under Entry 54 of List II of the Seventh 197 Schedule to take into account the total turnover of the dealer within the State and provide, as has been done by sub section (1) of section 5 of the Act, that if the gross turnover of such dealer exceeds Rs. 5 lakhs in a year, he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10 per centum of the tax as may be provided. The liability to pay a surcharge is not on the gross turnover including the transactions covered by article 286 but is only on inside sales and the surcharge is sought to be levied on dealers who have a position of economic superiority. The definition of gross turnover in section 2(j) of the Act is adopted not for the purpose of bringing to surcharge inter State sales or outside sales or sales in the course of import into, or export of goods out of the territory of India, but is only for the purpose of classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. The underlying object is to classify dealers into those who are economically superior and those who are not. That is to say, the imposition of surcharge is on those who have the capacity to bear the burden of additional tax. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. Sufficiency of territorial nexus involves a consideration of two elements viz.: (a) the connection must be real and not illusory, and (b) the liability sought to be imposed must be pertinent to that territorial connection: State of Bombay vs R.M.D. Chamarbaugwala(1), The Tata Iron & Steel Co. Ltd. vs State of Bihar(2), and International Tourist Corporation etc. vs State of Haryana & Ors.(3) The gross turnover of a dealer is taken into account in sub section (1) of section 5 of the Act for the purpose of identifying the class of dealers liable to pay a surcharge not on the gross turnover but on the tax payable by them. For these reasons, these appeals and the connected writ petitions and special leave petitions are dismissed with no order as to costs. H.L.C. Appeals dismissed.

Sub section (l) of section S of the Bihar Finance Act, 1981 provides for the levy of a surcharge in addition to the tax payable, on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs and, sub section (3) thereof prohibits such a dealer from collecting amount of surcharge payable by him from the purchaser. In exercise of the power conferred by this section, the State Government fixed the rate of surcharge at 10 per cent of the total amount of tax payable by a dealer. Two of the appellants in this batch of appeals were companies engaged in the manufacture and sale of the medicines throughout India whose branches sales depots in Bihar were registered as dealers. Their products were sold through wholesale distributors/stockists appointed in almost all the districts of the Slate and their gross turnover within the State during the relevant period ran into crores of rupees. Most of the medicines and drugs sold by them were covered by the Drugs (Price Control) Order, 1919 issued under sub section (l) of 131 section 3 of the Essential Commodities Act in terms of which they were expressly prohibited from selling those medicines and drugs in excess of the controlled A price fixed by the Central Government from time to time but were allowed to pass on the liability to the consumer. During the assessment years 1980 81 and 1981 82 they had to pay the surcharge under section 5(1) of the Bihar Finance Act, 1981 at 10 per cent of the tax payable by them. The appellants challenged the Constitutional validity of sub section (3) of section 5 but the same was repelled by the High Court relying on the decision in section Kodar. vs State of Kerala, [1979]1 S.C.R. 121. It was contended on behalf of the appellants: (i) that sub section (3) of section S of the Act which is a State law relatable to Entry 54 of List 11 of the Seventh Schedule to the Constitution and which provides that no dealer shall be entitled to collect the surcharge levied on him is void in terms of the opening words of article 246(3) of the Constitution as it is in direct conflict with paragraph 21 of the Drugs (Price Control) order 1979, issued under sub section (1) of section 3 of the essential Commodities Act, 1955 which is a Union Law relatable to Entry 33 of List III and which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer; (ii) that the words "a law Mads by Parliament which Parliament is competent to enact ' contained in article 254(1) must be construed to mean not only a law made by Parliament with respect to one of the matters enumerated in the Concurrent List but also to include a law made by Parliament with respect to any of the matters enumerated in the Union List and therefore sub section (3) of section 5 of the Act being repugnant to Paragraph 21 of the Control order is void under article 254(iii) that if both sub section (1) and sub section (3) of section 5 were relaxable to Entry 54 of List II, there was no need for the Governor to have referred the Bihar Finance Bill, 1981 to the President for his assent and that the President 's assent is justiciable; (iv) that dealers of essential commodities who cannot raise their sale prices beyond the controlled price cannot be equated with other dealers who can raise their sale prices and absorb the surcharge and since sub section (3) of section S treats "unequals as equals" it is arbitrary and irrational and therefore Violative of article 14 of the Constitution: (v) that sales tax being essentially an indirect tax, the legislature was not competent to make a provision prohibiting the dealer from collecting the amount of surcharge and that the true nature and character of surcharge being virtually a tax on income, sub section (3) of section 5. is unconstitutional as it imposes an unreasonable restriction upon the freedom of trade guaranteed under article 19(1)(g). (vi) that sub section (3) of section S of the Act which is a State law being repugnant to paragraph 21 of the Drugs (Price Control) Order which is issued under a Union law, the latter must prevail in view of the non obstants clause in section 6 of the Essential Commodities Act and the former which is inconsistent therewith should be by passed in terms of the decision in Hari Shankar Bagla and Anr. vs State of Madhya Pradesh, [1955] I S.C.R. 380. and (vii) that in view of the decision in A. V fernandez vs State of Kerala.[1957] S.C.R. 837, sub section (1) of section 5 of the Act which makes the "gross turnover" as defined in section 2(j) of the Act which includes transactions taking place in the course of inter state or International Commerce to be the basis for the levy of surcharge is ultra vires the State Legislature, 132 Dismissing the appeals, ^ HELD: 1. (a) It cannot be doubted that the surcharge partakes of the nature of sales tax and therefore it was within the competence of the State Legislature to enact sub section (1) of section 5 of the Act for the purpose of levying surcharge on certain class of dealers in addition to the tax payable by them. When the State Legislature had competence to levy tax on sale or purchase of goods under Entry 54 of List II of the Seventh Schedule it was equally competent to select the class of dealers on whom the charge would fall. If that be so, the State Legislature could undoubtedly have enacted sub section (3) of section S prohibiting the dealers liable to pay the surcharge under sub s.(l) thereof from recovering the same from the purchaser. [156 H 157 B] (b) The power of the State Legislature to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List II and to make ancillary provisions in that behalf is plenary and is not subject to the power of Parliament to make a law under Entry 33 of List III. There is no warrant for projecting the power of Parliament to make a law under Entry 33 of List III into the State s power of taxation under Entry 54 of List II. Otherwise, Entry 54 of List II will have to be read as: "Taxes on sale or purchase of goods other than the essential commodities, etc. " When one entry is made 'subject to ' another entry, all that it means is that out of the scope of the former entry, a field of legislation covered by the latter entry has been reserved to be specially dealt with by the appropriate legislature. Entry 54 of List II is only subject to Entry 92A of List I and there can be no further curtailment of the State 's power of taxation. [183 F H, 184 A B] (c) The Constitution effects a complete separation of the taxing power of the Union and of the States under article 246 The various entries in the three lists are not 'powers of legislation, but 'fields of legislation. The power to legislate is given by article 246 and other Articles of the Constitution. Taxation is considered to be a distinct matter for purposes of legislative competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production supply and distribution of essential commodities under Entry 33 of List II, although the liability to pay tax may be a matter incidental to the Centre 's power of price control. [184 E G] (d) A scrutiny of Lists I and II would show that there is no overlapping anywhere in the taxing power and that the Constitution gives independent sources of taxation to the Union and the States. There is a distinction made between general subjects of legislation and taxation and these are dealt with in separate groups of entries: in List I, Entries I to 81 deal with general subjects of legislation and entries 82 to 92A deal with taxes; in List II Entries I to 44 deal with general subjects of legislation and Entries 45 to 63 deal with taxes. This mutual exclusiveness is also brought out by the fact that in List III, there is no entry relating to a tax it only 133 contains an entry relating to levy of fees. Thus, in our Constitution, a conflict of taxing power of the Union and of the States cannot arise. The two A laws viz., sub section (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order issued under sub s (I) of section 3 of the Essential Commodities Act operate on two separate and distinct fields and both are capable of being obeyed. There is no question of any clash between them. [184 H 185 F] M.P. Sundararamier and Co. vs State of Andhra Pradesh and Anr., ; , referred to. Seervai: Constitutional Law of India, 3rd Ed., Vol, I, pp. 81 82, referred to. (e) The words `Notwithstanding anything contained in cls. (2) and (3) in cl. (1) of article 246 and the words "Subject to cls. (1) and (2)" in cl. (3) thereof lay down the principle of Federal Supremacy viz., that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List I shall prevail over the State power as enumerated in Lists ll and III, and in case of overlapping between Lists li and III, the former shall prevail. But the principle of Federal Supremacy laid down in article 246 cannot be resorted to unless there is an 'irreconcilable ' conflict between the Entries in the Union and State Lists. The non obstante clause in cl. (I) of article 246 must operate only if reconciliation should prove impossible. However, no question of conflict between the two Lists will arise is the impugned legislation, by the application of the doctrine of 'pith and substance ' appears to fall exclusively under one List, and encroachment upon another List is only incidental [165 A E] (f ) The true principle applicable in judging the constitutional validity of sub section (3) of section S of the Act is to determine whether in its pith and substance it is a law relatable to Entry 54 of List II and not whether there is repugnancy between it and paragraph 21 of the Drugs (Price Control) order The constitutionality of the law has to be judged by its real subject matter and. not by its incidental effect upon any topic of legislation in another field. Once it is found that in pith and substance the impugned Act is a law on a permitted field any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact that Act. No doubt, in many cases it can be said that the enactment which is under consideration may be regarded from more than one angle and as operating in more than one field. If, however, the matter dealt with comes within any of the classes of subjects enumerated in List II, then, under the terms of article 246(3) it is not to be deemed to come within the classes of subjects assigned exclusively to Parliament under article 246(1) even though the classes of subjects looked at singly overlap in many respects. The whole distribution of powers must be looked at from the point of view of determining the question of validity of the impugned Act. It is within the competence of the State Legislature under article 246(3) to provide for matters which though within the competence of Parliament, are necessarily incidental to effective legislation by the State Legislature on the subject of legislation expressly enumerated in List II. [162 B, 171 D, 177 C E] 134 In the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, ; Citizen Insurance Company vs William Parsons, ; Attorney General for the Province of ontario vs Attorney General for the Dominion of Canada, ; A.L.S.P.P.L. Subrahmanyam Chettiar vs Muttuswami Goundan, ; Governor General in Council vs Province of Madras, ; The Province of Madras vs Messers Boddu Paidanna & Sons, , Prafulla Kumar Mukherjee & Ors vs Bank of Commerce Ltd., Khulna, A.I.R. ; and Grand Trunk Railway Company of Canada vs Attorney General of Canada, L R [19071 A.C. 65, referred to. 2.(a) The question of repugnancy under article 254(1) between a law made by Parliament and a law made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent List and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will, to the extent of repugnancy become void. article 254(1) has no application to cases of repugnancy due to overlapping found between List ll on the one hand and List I and List Ill on the other. If such overlapping exists in any particular case, the State law will be ultra Vires because of the non obstante clause in article 246(1) read with the opening words 'Subject to ' in Art 246(3). In such a case, the State law will fail not because of repugnance to the Union law but due to want of legislative competence. [145 C, 181 F] (b) It is no doubt true that the expression "a law made by Parliament which Parliament is competent to enact" in article 254(1) is susceptible of a construction that repugnance between a State law and a law made by Parliament may take place outside the Concurrent sphere because Parliament is competent to enact law with respect to subjects included in List III as well as List I. But, if article 254(1) is read as a whole, it will be seen that it is expressly made subject to cl. (2) which makes reference to repugnancy in the field o Concurrent List. In other words, if cl. (2) is to be the guide in the determination of the scope of cl. (l), the repugnancy between Union and State law must be taken to refer only to the Concurrent field. article 254(1) speaks of a State law being repugnant to a law made by Parliament or an existing law. The words "with respect to qualify both the clauses in article 254(1) viz., a law made by Parliament which Parliament is competent to enact as well as any provision of an existing law. The underlying principle is that the question of repugnancy arises only when both the legislatures are competent to legislate in the same field, i.e., with respect to one of the matters enumerated the Con current List. [181 G 182 A, R C] Deep Chand vs State of Uttar Pradesh & Ors [1959] Supp. 2 S.C.R. 8 Ch. Tika Ramji & ors vs State of Uttar Pradesh & Ors., ; zaverbhai Amidas vs State of Bombay, [1955] I S.C.R. 799; M. Karunanidhi vs Union of India, ; ; T. Barai vs Henry Ah Hoe, [1983] I S.C.C. 177; A. section Krishna vs State of Madras, [1957] S.C.R. 399; Clyde Engineering C xf8. Ltd. vs Cowburn, [1926] 37 Com. L.R. 465; Ex Parte Mclean, [1930] 43 ; and Stock Motor Ploughs Limited vs Forsyth, , referred to. (c) Entry 54 of List II is a tax entry and therefore there is no question of repugnancy between sub section (3) of section 5 of the Act and paragraph 21 of the Control order. The question of repugnancy can only arise in connection with the subjects enumerated in the Concurrent List as regards which both the Union and the State Legislatures have concurrent powers. [178 G 179 B] B 3. It is clear from articles 200 and 201 that a Bill passed by the State Assembly may become law if the Governor gives his assent to it or if, having been reserved by the Governor for the consideration of the President, it is assented to by the President. There is no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. It is for the Governor to exercise his discretion and to decide whether he should assent to the Bill or should reserve it for consideration of the President to avoid any future complication. Even if it ultimately turns out that there was no necessity for the Governor to have reserved a Bill for the consideration of the President still he having done so and obtained the assent of the President, the Act so passed cannot be held to be unconstitutional on the ground of want of proper assent. This aspect of the matter, as the law now stands, is not open to scrutiny by the Courts. In the instant case, the Finance Bill which ultimately became the Act in question was a consolidating Act relating the Different subjects and perhaps the Governor felt that it was necessary to reserve it for the assent of the President The assent of the President is not justifiable and the Court cannot spell out any infirmity arising out of his decision to give such assent. [193 A 194 B] Teh Chang Poh @ Char Meh. vs Public Prosecutor. , Malaysia, referred to. (a) There is no ground for holding that sub section (3) of section 5 of the Act is arbitrary or irrational or that it treats "unequals as equals" or that it imposes a disproportionate burden on a certain class of dealers. A surcharge in its true nature and character is nothing but a higher rate of tax to raise revenue for general purposes. The levy of surcharge under sub section (l) of section S falls uniformly on a certain class of dealers depending upon their capacity to bear the additional burden. The economic wisdom of a tax is within the exclusive province of the legislature. The only question for the Court to consider is whether there is rationality in the behalf of the legislature that capacity to pay the tax increases by and large with an increase of receipts. The view taken by the Court in kodar 's case that, to make the tax of a large dealer heavier is not arbitrary discrimination, but an attempt to proportion the payment to capacity to pay, and thus to arrive at a more genuine equality, is in consonance with social justice in an egalitarian State. [186 H 187 A, 191 B, 191 A] section Kodar vs State of Kerala, [1975] I S.C.R. 121, relied on. 136 (b) There is no basis for the submission that the Court was wrong in Podar 's case. The contention that ability to pay is not a relevant criterion for upholding the validity of sub section (3) of section 5 of the Act in question cannot be accepted. On questions of economic regulations and related matters, the Court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for the discretion of the law makers It is not the function of the Court to consider the propriety or justness of a tax or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirement is satisfied The equality clause in article 14 does not take away from the State the power to classify a class of persons who must bear the heavier burden of tax. The classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequalities. [189 H 190 G] (c) There is no lacteal foundation laid to support the contention that the levy of surcharge imposes a disproportionate burden on a certain class of dealers such as manufacturers or producers of drugs, etc. The business carried on by the appellants in the State of Bihar alone is of such magnitude that they have the capacity to bear the additional burden of surcharge That apart under the scheme of the Control order the profit margins of manufacturers and producers of medicines and drugs is considerably higher than that of wholesalers. If the appellants find that the levy of surcharge cannot be borne within the present price structure of medicines and drugs, they have the right to apply to the Centrals Government for revision as the retail price of 'formulations under paragraph I S of the Control order. G, 189 G] 5. It is no doubt true that a sales tax is, according to the accepted notions, intended to be passed on to the buyer, and the provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. However, it is not an essential characteristic of sales tax that the seller must have the right to pass it on to the consumer; nor is the power of the legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the legislature. The contention based on article 19(1)(g) cannot therefore be sustained. [191 E H] The Tata Iron & Steel Co., Ltd. vs The State of Bihar, ; ; M/s. J. K Judge Mills Co. Ltd. vs 'The State of Uttar Pradesh; , and section Kodar vs State of Kerla, [1975] I S.C.R. 121, referred to. (a) The appellants being manufacturers or producers of 'formulations ' are not governed by paragraph 21 of the Control order but by paragraph 24 thereof and therefore the price chargeable by them to wholesaler or distributor is inclusive of sales tax. There being no conflict between sub section (3) of 137 section 5 of the Act and paragraph 24 of the Control order, the question of the non obstante clause to section 6 of the Essential Commodities Act coming into play does A not arise. [158 G] Hari Shankar Bagla & Anr. vs State of Madhya Pradesh, , referred to. (b) Even otherwise, i.e., if some of the appellants were governed by paragraph 21 of the Control order, that would hardly make any difference. Under the scheme of the Act, a dealer is free to pass on the liability to pay sales tax payable under section 3 and additional sales tax payable under section 6 to the purchasers. Sub section (3) of section 5 however imposes a limitation on dealers liable to pay surcharge under sub section (I) thereof from collecting the amount of surcharge payable by them from the purchasers which only means that surcharge payable by such dealers under sub section (I) of section 5 will cut into the profits earned by such dealers. The controlled price or retail price of medicines and drugs under paragraph 21 remains the same, and the consumer interest is taken care of inasmuch as the liability to pay surcharge; under sub section (3) of section 5 cannot be passed on. That being so, there is no conflict between sub section (3) of section 5 of the Act and paragraph 21 of the Control order. [158 H 159 C] The predominant object of issuing a control order under sub section (I) of section 3 of the Essential Commodities Act is to secure the equitable distribution and availability of essential commodities at fair prices to the consumers, and the mere circumstance that some of those engaged in the field of industry, trade or commerce may suffer a loss is no ground for treating such a regulatory law to be unreasonable, unrest the basis adopted for price fixation is so unreasonable as to be in excess of the lower to fix the price, or there is a statutory obligation to ensure a fair return to the industry. [159 G H] Shree Meenakshi Mills Ltd. vs Union of India, ; and Prag Ice & oil Mills vs Union of India, ; referred to 7. The decision in Fernandez 's case is an authority for the proposition that the State Legislature, notwithstanding article 286 of the Constitution, while r making a law under Entry 54 of the List II can, for purposes of registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286. That being so, the constitutional validity of sub section (I) of section 5 which provides for the classification of dealers whose gross turnover during a year exceeds Rs. 5 lakhs for the purpose of levy of surcharge in addition to the tax payable by them, is not assailable. So long as sales in the course of inter State trade and Commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed there is nothing to prevent the State Legislature while making a law for the levy of surcharge under Entry 54 of the List II to take into account the total turnover of the dealer within the State and provide that if the gross turnover of such dealer exceeds Rs. 5 lakhs in a year he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10% of the tax as may be provided. The liability to pay the surcharge is not on the Gross turnover 138 including the transactions covered by article 286 but is only on inside sales and A the surcharged is sought to be levied on dealers who have a position of economic superiority. The definition of gross turnover in section 2(j) is adopted not for the purpose of bringing to surcharge inter State sales etc., but is only for the purpose or classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. [196 F 197 D] A. V. Fernandez vs State of Kerala, ; ; State of Bombay vs R.M.D. Chamarbaugwala, ; ; The Tata Iron and Steel Company Ltd. vs State of Bihar, ; ; and International Tourist Corporation etc. vs State of Haryana and Ors. , ; , referred to.

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Appeal No. 445 of 1962. Appeal from the judgment and order dated April 1 1 and 12. 1960, of the Bombay High Court in Income tax Reference No. 52 of 1959. R. J. Kolah and I.N. Shroff, for the appellant. K. N. Rajagopal Sastri, and R.N. Sachthey, for the respondent. April 10. The judgment of the Court was delivered by section K. DAS, J. This is an appeal on a certificate of fitness granted by the High Court of 973 Bombay under section 66 A (2) of the Indian Income tax Act, 1922. The New Jehangir Vakil Mills Co., Ltd. Bhavnagar, appellant before us and called tile assessee, carried on the business of manufacturing and selling textile piecegoods at Bhavnagar in the former Bhavnagar State. The present appeal is concerned with the assessment year 1945 46, the account year being the calendar year 1944. In the said assessment year the Income Tax officer concerned added to the taxable income of the assessee a sum of Rs. 1,86,931/ (which was later reduced to Rs. 1,23,840/ ) as a revenue receipt, representing an amount by which the sale price exceeded the original cost of certain shares and securities purchased and sold by the appellant. It was held that in the relevant account year in which the shares were sold and profits made as also in the preceding years, the assessee was a dealer in shares and securities. In respect of this addition of Rs. 1,23,840/ the assessee raised two contentions. The first contention was that it was not a dealer in shares and securities in the relevant account year or in the years past and that the shares and securities were held by way of investment and the investment surplus was in the nature of a capital receipt. The second contention was that even if the assessee was a dealer in shares and securities in the relevant account year, the Income tax officer committed an error in the matter of the computation of profits in not taking the market value of the shares as at the opening day of that year as the cost thereof. These were the two questions along with a third question which were referred to the High Court under section 66 (2) of the Act. The third question does not now survive, and therefore we set out below the two questions which fall for decision in this appeal: 1. In the event of the surplus aforesaid being held to be income assessable to income tax 974 whether the income should be ascertained by taking the market value of the shares as at the opening day of the year as the cost ? 2. Whether there is any evidence on record to justify the Tribunal 's finding that the assessee company was a dealer in shares not only in the year under consideration but in the years past ? Now, as to the contention whether the assessee was a dealer or not in shares and securities in the calendar year 1944 the position appears to be that the Income tax officer found against the assessee. There was an appeal to the appellate Assistant Commissioner who remanded the case to the Income tax officer on the ground that the materials in the record were not adequate to decide the question. The the remand proceedings the assessee filed before the Income tax officer statements showing the position of transactions relating to shares and securities from 1939 onward. These statements marked as annexure 'C ' form part of the statement of the case. In his remand report dated April 1, 1952 which is also a part of the statement of the case, the Income tax officer examined the purchase and sale of shares in different years by the assessee and came to the conclusion that the assessee was a dealer in shares at least from the year 1942 by reason of the frequency and multiplicity of the transactions which the assessee conducted since that year. It further pointed out that the assessee had sold certain shares out of a block of shares in the year 1943, and after taking out the price of the shares realised in 1943, the remaining amount was shown in the balance sheet as the value of the remaining shares in each block. The value of such shares as shown in the balance sheet for 1943 was not the cost price of the assessee. In some cases it was below 975 cost. As a result of this valuation in the balance sheet, the profits from the sale of shares during 1945,46 would be Rs. 1,23,8401 . If, however, the difference between the sale price and the market value of the shares as on the first day of the account year was taken into account, the results might be different. On the basis of the aforesaid remand report the Appellate Assistant Commissioner examined the records of the transactions and observed : "There are five different transactions of purchase and two transactions of sale in 1942. The tempo of purchases and sales goes up from 1943. There are purchases of fifteen or twen ty different dates in 1943. There is a similar number of transactions in 1944. Many of the shares purchased in 1943 have been disposed of in 1944. Several scrips purchased in 1944 have been sold within the year. The number of transactions is, in my opinion, sufficiently numerous to show that the assessee is a dealer in shares. " There was an appeal then to the Tribunal. The Tribunal came to the conclusion that so far as Government securities were concerned the assessee was obliged to keep its large cash invested in Government securities and, therefore, so far as these securities were concerned, the amount realised by their sale was not a revenue receipt and should not be included in the total income of the assessee. It held, however, that the assessee was a dealer in shares in 1944 and as to the computation of the profits made on the sale of the shares, such profits were correctly computed to be the difference between the original cost price of the shares to the assessee at the time of purchase and the price realised at the time of sale, and the Tribunal significantly added that this computation was correct on the finding that the 976 assessee was a dealer not only in 1944 but from 1942onward. We may here state that for the years prior to the account year 1944, the department had treated the assessee as an investor and not a dealer in shares and had made assessments accordingly for those years. Those assessments have now become final. When the matter went to the High Court on a case stated by the Tribunal, the High Court observed that the crucial year was the year 1943, for if the assessee was a dealer in shares since 1943 and sold some of them in the account year 1944 and made profits thereon, then both the questions referred to the High Court must be answered against the assessee. The High Court re framed the second question by substituting the words "in the year 1943" for the words "in the years past". The High Court further pointed out that in the exercise of its advisory jurisdiction it did riot sit in appeal over the decision of the Tribunal that the assessee was a dealer in shares in the year 1943. It also held that on the materials on record it was open to the Tribunal to come to the conclusion that the assessee was a dealer in shares in 1943 and as to the computation of profits it pointed out that if the assessee was a dealer in 1943 also, then it was not open to the assessee to say that the market value of the shares as on the opening day of the year 1944 should be taken as the cost of the shares. Accordingly, the High Court answered both the questions against the assessee. Learned counsel for the appellant has addressed us at length on both questions. However, it appears to us that by reason of the re framing of the second question, the two questions really merge into one, namely, was the assessee a dealer in shares in 1943 and continued to be such a dealer in 1944 which is the relevant account year ? The question no doubt has two aspects. Firstly, there is the aspect whether there is any evidence to justify the finding that the 977 assessee was a dealer in shares in 1943. ,Secondly, there is the aspect as to how the profits made from the sale of shares in 1944 should be computed in the assessment year 1945 46. It is however manifest that it ' the assessee was a dealer in 1943 also, then the principle laid down by this court in Commissioner of Income tax vs Bai Shirinbai K. Kooka (1), will not apply, for that decision proceeded on the footing that the assessee of that case converted her investment shares into a stock in trade and carried on a trading activity as from April 1, 1946, the relevant account year being the financial year 1946 47. If the assessee in the present case was a dealer in 1943, then nothing happened on the opening day of the relevant account year, namely, January 1, 1944 and there is no reason why the market value of the shares on that date should be taken into consideration in computing the profits. Learned counsel for the assessee has however pressed an argument which may now be stated. He has submitted that he is not arguing that it was not open to the assessing authorities to consider the question whether the assessee was a dealer in shares in 1944 which was the relevant account year. What he contends is that it was not open to the taxing authorities to consider and find that the assessee was a dealer in shares in 1943; because for all years prior to 1944 the department had already assessed the assessee on the footing that it was an investor of shares and not a dealer and those assessments having become final could be re opened only either under section 34 or section 35 of the Act. The argument is that in assessing the assessee for the account year 1944 it was open to the department to treat the assessee as a dealer in 1944 but not for any earlier year which was not the subject of the assessment proceedings Learned counsel states that if he is right in his first contention, then the profits made on the sale of shares in 1944 must be computed in the manner laid down in Commissioner of Income tax vs Bai Shirinbai K. Kooka(1), (1) [1962] Supp, 3 S.C.R. 391. 978 because the assessee will be treated as a dealer for the first time in the relevant account year 1944. The argument appears plaussible at first sight and it may perhaps be conceded that the question of the computation of profits in a case like this is not entirely free from difficulty. However, on a very careful consideration of the argument we have come to the conclusion that it is not worthy of acceptance. As to the first aspect of the question we see no difficulty. The appellate Assistant Commissioner and the Tribunal have referred to various transactions relating to shares shown in the books of the assessee. From those transactions they came to the conclusion that the assessee was a dealer in 1943. The High Court has also summarised the various transactions in which the assessee indulged in the year 1943. Having regard to the frequency and nature of those transactions it was open to the taxing authorities to come to the conclusion that the assessee was a dealer in shares in 1943. We are not prepared to say that the rule of "no evidence" can be applied to the present case. We therefore consider that the High Court correctly answered the question relating to this aspect of the case. Now, as to computation of profits. Though it is true that the question which directly arose before the taxing authorities in the present case was ' whether the assessee was a dealer in 1944, the question of the position of the assessee in 1943 also arose in determining how the profits made in 1944 should be computed. It is not therefore quite correct to say that the position of the assessee in 1943 was completely outside the scope of the assessment proceedings of 1945 46. In determining or computing the profits made by the sale of shares in 1944, the assessing authorities had to go into the question did the assessee start its trading 979 activity on January 1, 1944 or did it start the trading activity at an earlier date ? If the assessee was a dealer when the shares sold in 1944 were originally purchased, then obviously the principle in Commissioner of Income tax vs Bai Shirin Bai K. Kooka (1), will not apply and the profits will be the excess of the sale price over the original cost price. The extent to which a decision given by an Income tax officer for one assessment year affects or binds a decision for another year has been considered by courts several times and speaking generally it may be stated that the doctrine of res judicata or estoppel by record does not apply to such decisions; in some cases it has been held that though the Income tax officer is not bound by the rule of res judicata or estoppel by record, he can re open a question previously decided only if fresh facts come to light or if the earlier decision was rendered without taking into consideration material evidence etc. As to the argument based on sections 34 and 35, it is enough to point out that the assessment relating to the year 1943 is not being reopened. That assessment stands. What is being done is to compute the profits of 1944, which the assessing authorities could do, by finding out when the trading activity in shares began? The question of the profits in 1944 was not and could not be the subject of any assessment proceeding relating to 1943, for such profits arose only on the sale of the shares in 1944. In Broken. Hill Proprietary Company vs Broken Hill Municipal Council (2), the question was one of the capital value of a mine for rating purposes. This question of valuation as between the parties was determined by the High Court of Australia in a previous year. But it was held that the decision did not operate as res judicata. The reason given was : "The decision of the High Court related to a valuation and a liability to a tax in a previous (1) [1962] Supp. 3 S.C.R. 391. (2) 980 year, and no doubt as regards that year the decision could not be disputed. The present case relates to a new question namely, the valuation for a different year and the liability for that year. It is not eadem questio and therefore the principle of res judicata cannot apply. " In another decision reported in the same volume, Hoystead vs Commissioner of Taxation (1), one of the questions was whether certain beneficiaries under a will were joint owners. It was held that though in a previous litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, the matter so admitted was so fundamental to the decision then given that it estopped the Commissioner. The latter decision was distinguished in Society of Medical officers of Health vs Hope (2). Both the decisions were again considered by the judicial Committee in Caffoor vs Income Tax Commissioner (3). The decision in Broken Hill Proprietary Company 's case (4), was approved and the principle laid down was that in matters of recurring annual tax a decision on appeal with regard to one year 's assessment is said not to deal with eadem questio as that which arises in respect of an assessment for another year and consequently not to set up an estoppel. As to the decision in Hoystead 's case (1), it was stated : "Their Lordships are of opinion that it is im possible for them to treat Hoystead 's case as constituting a legal authority on the question of estoppels in respect of successive years of tax assessment. So to treat it would bring it into direct conflict with the contemporaneous decision in the Broken Hill case ; and to follow it would involve preferring a decision, in which the particular point was either assumed without (1) (2) (3) (4) , 981 argument or not noticed to a decision, in itself consistent with much other authority, in which the point was explicitly raised and explicitly determined. " In Installment Supply (P) Ltd. vs Union of India (1) this court referred to the decisions just mentioned and said that it was well settled that in matters of taxation there would be no question of res judicata. On the principle stated above, it seems to us that it was open to the taxing authorities to consider the position of the assessee in 1943 for the purposes of determining how the gains made in 1944. should be computed, even though the subject of the assessment proceedings was the computation of the profits made in 1944. The circumstance that in an earlier assessment relating to 1943 the assessee was treated as an investor would not in our opinion estop the assessing authorities from considering, for the purpose of computation of the profits of 1944, as to when the trading activity of the assessee in shares began. The assessing authorities found that it began in 1943. On that finding the profits were correctly computed and the answer given by the High Court to the question of the computation of the profits was correctly given. For these reasons the appeal fails and is dismissed with costs.

The assessee appellant carried on the business of manu facturing and selling textile piece goods. In the assessment year 1945 46, the Income tax officer added to the taxable income of the assessee a sum of Rs. 1,86,931 which was later on reduced to Rs. 1,23,840 as a revenue receipt, representing an amount by which the sale price exceeded the original cost of certain shares and securities purchased and sold by the appellant. The assessee was held to be a dealer in shares and securities. The contention of the assessee was that it was not a dealer in shares and securities in the relevant account year or in the years past and the shares and securities were held by way of investment and the investment surplus was in the nature of capital receipt. Even if the assessee was a dealer in shares and securities in the relevant account year, the Income tax officer committed an error in the matter of the computation of profits in not taking the market value of the shares as at the opening day of that year as the cost thereof. The Appellate Assistant Commissioner rejected the contentions of the appellant and held that the number of transactions was sufficiently large to show that the assessee was a dealer in shares. The Appellate Tribunal rejected the contentions of the appellant. These assertions were then referred to the High Court and they were decided against the assessec appellant. 972 Held that the assessee was a dealer in shares and securities and the income from their sale was a revenue receipt and not capital receipt. The profits of the assessee were the difference between the original cost price of the shares to the assessee at the time of purchase and the price realized at the time of sale. Held also that in the matter of taxation, there was no question of resjudicata. It was open to the taxing authorities to consider the position of the assessee in 1943 for the purpose of determining how the gains made in 1944 should be computed, even though the subject of the assessment proceedings was the computation of the profits made in 1944. The circumstance that in an earlier assessment relating to 1943, the assessee was treated as an investor would not estop the assessing authorities from considering, for the purpose of computation of the profits of 1944, as to when the trading activity of the assessee in shares began. The assessing authorities found that it began in 1943 and on that finding, the profits were correctly computed. Commissioner of Income tax vs Bai Shirinbai K. Kooka, [1962] Supp. 3 S.C.R. 391, Broken Hill Property Company vs Broken Hill Municipal Council, , Boystead vs Commissioner of Taxation, Society of Medical officer of Health vs Hope, , Caffoor vs Income tax Commissioner, and Installment Supply (P) Ltd. vs Union of India, ; , referred to,

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Appeal No. 26 of 1966. Appeal from the judgment and order dated October 28, 1964 of the Punjab High Court in I. T. Reference No. 28 of 1962. section K. Mitra, Gopal Singh, section P. Nayyar and R. N. Sachthey,. for the appellant. Veda Vyasa and B. N. Kirpal, for the respondent. The Judgment of the Court was delivered by Sikri, J. At the instance of the Commissioner of Income Tax,, the Appellate Tribunal, Delhi Bench "C", referred the following question "Whether the cost of land is entitled to depreciation under the schedule to the Income tax Act alongwith the cost of the building standing thereon.?" 182 This question arose out of the following facts : The respon dent, M/s Alps Theatre, hereinafter referred to as the assessee, carries on business as exhibitor of films. The Income Tax Officer initiated proceedings under section 34(1)(b) of the Indian Income Tax Act, 1922, on the ground that in the original assessment depreciation was allowed on the entire cost of Rs. 85,091/ , shown as cost ,of the building which included Rs. 12,000/ as cost of land. The Income Tax Officer, by his order dated February 22, 1959, recomputed the depreciation, excluding cost of land. The assessee ap pealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the order of the Income Tax Officer. The assessee then appealed to the Appellate Tribunal which accepted the appeal. In accepting the appeal it observed as follows : "You cannot conceive of a building without the land beneath it. It is not possible to conceive of a building without a bottom. What Section (10) (2) (vi) of the Act says is that depreciation will be allowed on the building. The word "building" itself connotes the land upon which something has been constructed. It was, therefore, wrong on the part of the authorities below to exclude the value of the land upon which some construction was made. The true meaning of the word 'building ' means the land upon which some construction has been made. The two must necessarily go together. " The High Court answered the question referred to it against the Department. Mahajan, J., observed that in Section 10(2)(vi) of the Income Tax Act, a building is placed at par with machinery and furniture and is treated as a unit, and, therefore, for the purposes of depreciation a building cannot be split up into building material and land. He further observed that if the Legislature wanted to exclude land from the building for purposes of depreciation it could have said so. He then added : "Moreover, depreciation is allowed on the capital. The capital here is a unit building. If later on it is sold and it fetches more than its written down value the surplus is liable to tax [see in this connection Section 10(2) (vii) proviso.]" He felt that "the crux of the matter is that the building is treated as a unit for purposes of depreciation or repair, and there is no warrant in the Act which would permit us to split the unit for the purposes of section IO." He further felt that at any rate two equally plausible interpretations are possible and the one in favour of the assessee should be adopted. 183 Dua, J., in a concurring judgment, felt that the question was not free from difficulty, but he answered the question in favour of the assessee on the ground that much could be said for both points of view and the view in support of the assessee 's submission had found favour with the Tribunal which had not been shown to be clearly erroneous. The answer to the question depends upon the true interpreta tion of section 10(2)(vi), and in particular whether the word "building" occurring in it includes land. Section 10 deals with the profits and gains derived from any business, profession or vocation. Section 10(2) provides that such profits or gains shall be computed after making certain allowances. The object of giving these allowances is to determine the assessable income. The first three allowances consist of allowance for rent paid for the business premises, allowance for capital repairs and allowance for interest in respect of capital borrowed. Sub clauses (iv), (v), (vi), (vi a) and (vii) of section 10(2) deal with allowances in respect of buildings, machinery, plant or furniture. The word "building" must have the same meaning in all these clauses. Sub clause (iv) runs as under : "in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture,stocks or stores, used for the purpose of the business,profession or vocation, the amount of any premium paid. " "Building" here clearly, it seems to us, does not include the site because there cannot be any question of destruction of the site. Clause (v) reads : " in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof. " This again cannot include the site. Then we come to sub cl. (vi), the relevant portion of which reads as under : "in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent . as may in any case or class of cases be prescribed. " It would be noticed that the word used is "depreciation" and "depreciation" means : a decrease in value of property through wear, deterioration, or obsolescence the allowance made for this in book keeping, accounting, etc." (Webster 's New World Dictionary '). In that sense land cannot depreciate. The other words to notice are "such buildings". We have noticed that in sub cls. (iv) and 184 (v), "building" clearly means structures and does not include site. That this is the proper meaning is also borne out by r. 8 of the Indian Income Tax Rules, 1922. Rule 8 has a schedule, and as far as buildings are concerned, it reads as under : Class of asset Rate per Remarks centage 1.Buildings (1) First class substantial buildings of materials. 2.5 Double these numbers (2)Scond class building will be taken for factory of less substantial con 5 buildings excluding struction. offices,godowns,officer 's (3)Third class building 7.5 and employees quarters. of construction infeior to that of second class building,but not inclu ding purely temporory erection. (4) Purely temporary No rate is prescribed: erection such as wooden renewals will be allowed structure. as revenue expenditure. The rate of depreciation is fixed on the nature of the structure. If it is a first class substantial building, the rate is less. In other words, first class building would depreciate at a much less rate than a second class building. It would be noticed that for purely temporary erections, such as wooden structures, no rate of depreciation is prescribed and instead renewals are allowed as revenue ex penditure. But if the contention of the respondent is right, some rate for depreciation should have been prescribed for land under the temporary structures. Further it would be difficult to appreciate why the land under a third class building should depreciate three times quicker than land under a first class building. One other consideration is important. The whole object of section 10 is lo arrive at the assessable income of a business after allowing necessary expenditure and deductions. Depreciation is allowable as a deduction both according to accountancy principles and according to the Indian Income Tax Act. Why '? Because otherwise one would not have a true picture of the real income of the business. But land does not depreciate, and if depreciation was allowed it would give a wrong picture of the true income. The High Court relied on Corporation of the City of Victoria and Bishop of Vancouver Island(), but in our view this case is distinguishable and gives no assistance in determining the meaning of the 'word 'buildings ' in the context of section 10(2)(vi). In this case the Privy Council had to construe section 197(1) of the Municipal Act, British Columbia, which exempted from municipal rates and taxes (1) [1912] 1 2 A.C. 384. 185 "every building set apart and in use for the public worship of God." The Privy Council held that the above exemption applied to the land upon which a building of the description mentioned above was erected as well as to the fabric. The Privy Council was not concerned with the question of depreciation but with the question of exemption from Municipal rates. In the result the appeal succeeds, the judgment of the High Court set aside and the question referred is answered in the negative and against the assessee. In the circumstances there will be Y.P Appeal allowed.

The Revenue authorities did not allow depreciation on the cost of land alongwith the cost of building standing thereon. The Appellate Tribunal accepted the assessee 's appeal and the High Court answered the question in favour of the assessee. In appeal to this Court by the Revenue: HELD: The appeal must be allowed. Building under section 10(2), does not include the site because there cannot be any question of destruction of the site. [183 E] The word used in section 10(2)(vi) is "depreciation" and "depreciation" means "a decrease in value of property through wear, deter oration, or obsolescence, and allowance made for this in book keeping, accountings etc." In that sense land cannot depreciate. [183 H] By r. 8 of the Indian Income tax Rules the rate of depreciation is fixed on the nature of the structure. It would be difficult to appreciate why the depreciation of land would be dependant on the class of structures. [184 D E] The whole object of section 10 is to arrive at the assessable income of a building after allowing necessary expenditure and deductions. If depreciation on land was allowed it would give a wrong picture of the true income. [184 F G] Corporation of the City of Victoria and Bishop of Vancover , distinguished.

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vil Appeal No. 1747 (N) of 1973. From the Judgment and Order dated 16.6.1972 of the Calcutta High Court in Appeal No. 54 of 1969. C.S. Vaidayanathan, Pravir Choudhary, K.V. Mohan, H.K. Dutt and S.R. Bhat for the Appellant. G.S. Chatterjee for the Respondent. The Judgment of the Court was delivered by KHALID, J. This is an appeal by special leave filed by the plaintiff bank against the judgment of the Calcutta High Court, arising from suit No. 547 of 1952, filed for recovery of a sum of Rs.17,091 0 1 with interest. The question in volved in this appeal is a short one, but of general impor tance to banks in the country. we have made it clear to the appellant bank that we are interested only in laying down the law in this appeal and not in giving a decree to the bank for this small amount, the claim for which originated nearly 35 years ago. The learned counsel for the appellant bank has agreed to this suggestion. The defendant in the suit was one Ramesh Chandra Roy Choudhury. The plaintiff was the United Bank of India Ltd. The defendant had an over draft account with the bank. He died on the 6th November, 1960. On the 20th Dec., 1960 the widow of the defendant, 1092 Smt. Kananbala Devi informed the Deshapriya Park Branch of the bank of the death of the defendant. The bank had several branches in Calcutta. One of the branches was the Royal Exchange Branch. It was this branch that instituted the suit in question. The applications for impleading the legal representa tives of the defendant and for setting aside abatement were made by a Chambers Summons on the 8th August, 1968 about 8 years after the death of the defendant. The delay in making these applications was attempted to be explained with the plea that the Royal Exchange Branch of the bank had no knowledge of the death of the defendant till the Deshapriya Park Branch was informed of the death. The High Court re jected the applications holding that "In our opinion it is no explanation to say that the Royal Exchange Branch of the plaintiff bank which had really instituted the suit could not and/or did not have knowledge of the death of Ramesh Chandra Roy Choudhury. An intimation of the death of Ramesh Chandra Roy Choudhury to the bank in the Deshapriya Park Branch could not be treated as no intimation to the bank which happens to be the plaintiff in this suit. In our view no sufficient cause was shown in the petition for setting aside the abatement and the learned Judge was right in dismissing the said application. The appeal, therefore, fails and is dismissed" Hence this appeal. The learned counsel for the appellant submits that it would be extremely dangerous for courts to impute knowledge of the death of a customer with all the branches of a bank, solely on the strength of information given to a particular branch of the bank. It is submitted that in these days when banking business has expanded by leaps and bounds with branches spread over large areas, it would not be possible for a particular branch to know the death of one of its customers if that branch had not been informed of the death. In the absence of highly technical modern methods or com puterised information to all the branches, of their custom ers and their details, no branch of a bank can be presumed to know whether a particular customer is alive or not unless that hank is given necessary information. The submission that all branches of a bank should be imputed with constructive knowledge of the death of a cus tomer simply because one of the branches had been informed of it would result in adverse consequences and would defeat actions by banks for recovery of dues 1093 and would work great loss to banks and would harm public interest. In this case, it is not stated or proved that the Royal Exchange Branch had information earlier about the death of the defendant. To prove this we have two letters produced by the appellant: (1) dated 3rd June, 1968 and the other dated 17th June, 1968. The two letters read as fol lows: 10 OLD POST OFFICE ST., CALCUTTA. M/s. S.N. Sen & Co. Dear Sir, 3rd June, 1968. United Bank of India Ltd. vs Ramesh Chandra Roy Choudhury. As I have not yet been able to make contact with my client until now in spite of my at tempts on that behalf, please do not mention the suit tomorrow but mention the suit some time next week. The suit was part heard about 9 or 10 years before and my client has not seen since then. I hope you will mention the suit next week on previous notice to me. Yours faithful ly, sd/ K.P. Mustaphy. M/s. S.N. Sen & Co. Dear Sir, 17th June 1968. Suit No. 547 of 1952 United Bank of India Ltd. V. Ramesh Chandra Roy Choudhury Kindly note that when the above suit will be mentioned by you before his Lordship the Hon 'ble Mr. Justice R.M. Dutt, I will submit his Lordship that as the defendant died in 1960, the suit has abated and cannot be pro ceeded with. Yours faithful ly, Sd/ K.P. Mustaphy. Both the letters are written by the counsel for the defend ant to 1094 the bank. It is evident from the first letter that even on 3rd June, 1968, the counsel for the defendant did not know about the death of the defendant. It was only thereafter that he came to know of the same. This branch of law appears to be barren of authority. A question akin to this is reported in 1918, The Times Law Reports, Volume XXXV, page 142. The brief facts are as follows: The plaintiffs ' claim in the suit was on a cheque for a 100, dated February 5, 1918 drawn by the ,defendant and made payable to the order of a Mrs. N. Try, who endorsed it to the plaintiffs. The defendant obtained leave to defend. The bank had branch at Victoria street, Westminster. of which the manager was Mr. Stephen Trott. Among their customers was Mrs. Try. The bank had a branch at the Oxford street branch of the Bank and she asked the manager to cash it. The amount was paid. The manager had no notice that the cheque had been stopped. The cheque when presented by the Victoria street Branch to the Oxford street Branch was returned marked "Ordered not to pay". The cheque was stopped by a letter from the defendant to the Oxford street Branch. That letter was undated. It was under these circumstances that the action was brought. The question was when the drawer of a cheque stops payment by a notice given only to that branch on which it is drawn and the payee afterwards endorses the cheque to anoth er branch of the same bank and the manager of that other branch advances money on the cheque in good faith and with out notice that the cheque had been stopped, whether the bank is entitled to recover against the drawer in an action on the cheque. Here it was clear that the cheque was stopped on the Oxford street Branch and that there was no notice yet at the Victoria street Branch when the cheque was pre sented. it was held that the bank was the holder of the cheque and the fact that the branch at Oxford street had notice not to pay the cheque did not affect the bank and, therefore, the bank was entitled to relief. It was observed that there was a right to a separate notice of dishonour as between the different branches of a bank. Though this judgment is not .on all fours with our case, we seek some assistance from it for our purpose and that limited purpose is that notice to one branch of a bank is no notice to the other branches. That being so the fact that the Deshapriya Park Branch had knowledge of 1095 the death, will not be sufficient to impute Royal Exchange Branch with constructive notice and reject the applications to set aside abatement and to condone delay. Of course, the law under the present Civil Procedure Code obviates this difficulty to some extent under Order 22 Rule 10 A, Under the rule, when a pleader appearing for a party to the suit comes to know of the death of that party, he shall inform the Court about it, whereupon the Court shall give notice of such death of the other party. However, this provision not being absolutely mandatory and cast a duty only on the pleader, we thought it necessary to answer the question of law involved in this appeal. For the foregoing reasons we hold that the High Court was in an error in rejecting the application to set aside abatement and to condone delay on the plea that notice to one branch will be notice to other branches. We set aside the judgment of the High Court and allow this appeal with no order as to costs, As indicated above, the matter will rest here and the bank will not be permitted to proceed against the defendant or his legal representa tives to realize the amount involved in the suit. The amount will be deemed to have been fully discharged. We have only decided the question of law for the benefit of the banks and general public. P.S.S. Appeal allowed.

The defendant had an overdraft account with a particular branch of the plaintiff bank in the city. A suit was insti tuted against him by that branch in 1952 for recovery of certain sums with interest. He died on 6th November 1960. The widow informed another branch of the bank of the death of her husband on 20th December, 1960. The applications for impleading the legal representa tives of the defendant and for setting aside abatement were made in 1968, about 8 years after the death of the defend ant. The delay in making these applications was sought to be explained with the plea that the concerned branch of the bank had no knowledge of the death of the defendant till it was informed by the other branch. The High Court rejected the applications on the ground that no sufficient cause was shown for setting aside abate ment. It held that an intimation of the death of the defend ant to the bank in the other branch could not be treated as no intimation to the branch which was the plaintiff in the suit. Allowing the appeal by special leave, the Court, HELD: The High Court was in error in rejecting the application to set aside abatement and to condone delay. [1095C] All branches of a bank could not be imputed with con structive knowledge of the death of a customer simply be cause one of the branches had been informed of it, for notice to one branch of a bank is no notice to the other branches. [1092H; 1094H] 1091 In the instant case, it is not stated or proved that the branch which had filed the suit had information earlier about the death of the defendant. It is evident from the record that even on 3rd June, 1968 the counsel for the defendant did not know about the death of the defendant. The fact that a particular branch of the plaintiff bank had knowledge of the death was not sufficient to impute the concerned branch with constructive notice. [1093A; 1094A, H; 1095A] (1918) The Times Law Reports, Vol. XXXV, p. 142 referred to. The provisions of 0. 22, R. 10 A of the Civil Procedure Code requiring a pleader appearing for a party to the suit to inform the court when he comes to know of the death of that party, whereupon the court is enjoined to give notice of such death to the other party, casts a duty only on the pleader and is not absolutely mandatory. [1095B]

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Appeal No. 349 of 1966. Appeal by special leave from the judgment and order dated December 17, 1963 of the Punjab High Court,. Circuit Bench at Delhi in R.F.A. No. 164 C of 1963. 1003 section V. Gupte and A. N. Goyal, for the appellants. C. B. Agarwala, H. K. Puri and B. N. Kirpal, for respondent No. 1. The Judgment of the Court was delivered by Hegde, J. The only question that arises for decision in this appeal by special leave is whether the suit from which this appeal has arisen is barred by res judicata in view of the decision in Civil Suit No. 15 of 1943. The trial court answered that question in the affirmative but the High Court has taken a contrary view. Hence this appeal. The facts of the case leading up to this appeal, briefly stated, are as follows : One Krishen Gopal had lease hold rights in the suit pro perties. After the death of the aforesaid Krishen Gopal dispute arose between Jawala Prashad, the father of the appellants and Banwari Lal Verma, the father of the respondents as to the title of the suit properties. Each one of them claimed that those properties had been gifted to him by Krishen Gopal. As a result of this dispute Jawala Prashad instituted on January 20, 1943, Civil Suit No. 15 of 1943 against Banwari Lal Verma claiming possession of the suit properties on the strength of the alleged gift in his favour. In defence Banwari Lal Verma pleaded that those properties had been gifted to him by Krishen Gopal. The principal issue that arose for decision in that suit was whether the suit properties had been gifted to Jawala Prashad or Banwari Lal Verma. The trial court dismissed the suit but in appeal the decree of the trial court was reversed and the suit was decreed as prayed for. That decision was confirmed by the High Court and thereafter by this Court in, Civil Appeal No. 164 of 1953. After the decision of this Court Banwari Lal Verma made various applications to this Court asking for reliefs which if they had been granted, would have practically nullified the effect of the decree but those applications were rejected by this Court. Thereafter efforts appear to have been made to obstruct the execution of the decree in diverse ways. When everyone of those efforts failed Rangi Lal Verma the eldest son of Banwari Lal Verma filed a suit praying for a declaration that the suit properties belonged to his joint. family consisting of Banwari Lal Verma and his sons. This suit was dismissed for non prosecution. It is only thereafter the present suit has, been filed by one of the sons of Banwari Lal , Verma claiming partition in the suit properties on the allegation that the same had been gifted by, Krishen, Gopal to. his joint family. 1004 The gift put forward by the plaintiff is said to have been made in 1928. Admittedly at that time all the sons of Banwari Lal Verma were minors (see the affidavit filed in this Court by Rangi Lal on behalf of the plaintiff, on February 26, 1969 Therefore, naturally the gift, if true could have been accepted only by Banwari Lal Verma who was the Karta of the family at that time. was not even urged that Banwari Lal Verma did not safeguard the interest of his family while contesting the previous suit. Further it is not the case of the respondents that there was any conflict of interest between Banwari Lal Verma and his sons. The facts disclosed make it obvious that Banwari Lal Verma and after his death his sons are availing themselves of every possible loophole in our judicial system to delay, if not defeat the course of justice. The effort is one, and continuous. The suit from which this appeal has arisen is a clear abuse of judicial process. It is in this setting that we have to see whether the decision in Civil Suit No. 15 of 1943 operates as res judicata in the present case. In the Civil Suit No. 15 of 1943, there was no room for con troversy as to whether the alleged gift was in favour of Banwari Lal Verma in his individual capacity or in his favour as the Karta of his family. Therein the controversy was whether the suit properties had been gifted to Jawala Prashad or Banwari Lal Verma. As seen earlier Banwari La] Verma pleaded that they had been gifted in his favour. He did not make it clear nor was it necessary for him to do so in that suit as to whether they were gifted to him as the Karta of the family or in his individual capacity. The properties that were in dispute in the former suit as well as in the present suit are identical properties. It cannot be disputed that Banwari Lal Verma by himself could have represented his family in that suit. That suit must be deemed to have been instituted against Banwari Lal Verma in that capacity in which he claimed title to it. If his claim in that suit is understood to have been made on behalf of his family then he must be deemed to have been sued therein as the Karta of his family. It was for Banwari Lal Verma to make clear the capacity in which he was defending the suit. That being so we fail to appreciate the conclusion of the High Court that the decision in the previous suit does not operate as res judicata in the present suit. It is not necessary, in order that a decree against the manager may operate as res judicata against coparceners who were not parties to the suit that the plaint or written statement should state in express terms that he is suing as manager or is being sued as a manager. It is sufficient if the manager was in fact suing or being sued as representing the whole family, see Lalchand vs 1005 Sheogovind(1); Ram Kishan vs Ganga Ram(2); Prithipal V. Rameshwar(3); Surendranath vs Sambhunath(4). The suit by or against the manager will deemed to be one brought by him or against him as representing the family if the circumstances of the case show that he is the manager of the family and the property involved in the suit is family property, see Mulgaund Co operative Credit Society vs Shidlingappa Ishwarappa(5). See also Venkakanarayana vs Somaraju(6). It is not not necessary, where the manager is the plaintiff, that the plaint should state in distinct terms that he is suing as manager or where he is the defendant that he is being sued as manager. A Karta can represent the family effectively in proceeding though he is not named as such, see Mani Sahoo vs Lokanath(7). For the reasons mentioned above this appeal is allowed and the judgment and decree of the High Court is set aside and that of the trial court restored. The respondent shall pay the costs of the appellants in all the courts. V.P.S. Appeal allowed. (1) (1929) I.L.R.8, Pat. 788. (2) , Lab. (3) , Luck. (4) , Cal.

A suit between J the father of appellants and B the father of respondents, each claiming possession of the suit properties on the strength of an alleged gift deed in his favour, was decreed in favour of J and the decree was confirmed by this Court. After various attempts by B and after his death by his sons, to defeat J 's rights, one of B 's sons filed a suit for partition of the suit properties on the allegation that they were gifted to the joint family of which B was the karta. On the question whether the decree in the earlier suit operated as res judicata. HELD : It is not necessary in order that a decree against a manager may operate as res judicata against coparceners who were not parties to the earlier suit, that the plaint or written statement should state in express terms that he was suing or was being sued as a manager,. It is sufficient if the manager was in fact suing or was being sued as representing the whole family. A suit by or against the manager will be deemed to be one brought by or against him as representing the family if the circumstances show that he was the manager and the property involved in the suit was family property. [1004 H; 1005 A B] In the present, case, B must be deemed to have been sued in the previous suit as the karta of his family, because : (a) the alleged gift in favour of the joint family was at a time when all the sons of B were minors and if true the gift could have been accepted by B only as the karta, (b) there was no conflict of interest between B and his sons and there was no allegation that B did not safeguard the family 's interest while contesting the previous suit; and (c) B did not claim in the earlier suit that the gift was to him in his individual capacity. [1004 A C; 1005 C] Lalchand vs Sheogovind, Pat. 788, Ram Kishan vs Ganga Ram, Lah. 428, Prithipal vs Rameshwar, Luck. 288, Surendranath vs Sambhunath, Cal. 210, Mulgaund Co operative Credit Society vs Shidlingappa Ishwarappa, I.L.R. , Venkatanarayana vs Somaraju, A.I.R. 1937 Mad. 610 (F.B) and Mani Sahoo vs Lokanath, A.I.R. , referred to.

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minal Appeal No. 123 of 1968. Appeal by special leave from the judgment and order dated May 3, 1968 of the Patna High Court in Criminal W.J.C. No. 17 of 1968 and Criminal Miscellaneous Case No. 447 of 1968. B. C. Ghose, section N. Misra and A. K. Nag, for the appellant. D. Goburdhun, for the respondent. The Judgment of the Court was delivered by Shelat, J. This appeal, by special leave, is. against the dismissal by the High Court of Patna of the Writ Petition and an application under section 561A of the Code of Criminal Procedure, for a writ of habeas corpus and an order of a like nature. filed by the appellant. Both of them were heard together as they contained common allegations and both were dismissed by a common judgment. In the two aforesaid proceedings, the case of the appellant was that he was arrested on February 18, 1968, that since then he had been detained in custody without being informed of the grounds for his arrest and detention and also without having been produced before a Magistrate either within 24 hours after his detention as required under the Code, or even thereafter. On February 21, 1968, he was removed to Darbhanga jail where he was threatened that he would be falsely involved in several cases of dacoity unless he made certain incriminating statements which the police wanted him to make. He made two applications from jail one on February 25, 1968, and the other on February 28, 131 1968 to the Sub Divisional Magistrate. The first was not received at all by the Magistrate, while the second was received but after 'a long time, and was rejected. He also alleged that thereafter he made two further applications, one dated March 22. 1968 and the other dated March 27, 196,8 wherein he applied for directions to the police to 'furnish him with particulars of offences charged against him and for bail, but that he received no order on either of them. On these allegations, he claimed release forthwith from detention and the quashing of the criminal proceedings against him. In the counter affidavit filed by the State before the High Court, it was stated that one Bilat Sahni and one Baleshwar Paswan made confessions before the Magistrate at Samastipur on 23rd and 24th January, 1968 confessing their own guilt and implicating the appellant and certain other persons, in about eight dacoity cases, all having been committed in that locality, Thereupon, the appellant was arrested on February 17, 1968 He was produced before the Sub Divisional Magistrate of Samastipur on February 18, 1968, but was remanded to police custody by the said Magistrate for four days on an application by the police therefore. On February 21, 1968, the appellant was once again produced before the same magistrate and on an application by the police he was remanded to jail custody. The affidavit alleged that the appellant was involved in as many as nine dacoity case; wherein remand orders had been passed from time to time and that that was how he had, since February 21, 1968, been detained as an under trial prisoner. On April 19, 1968, an identification parade was held in connection with one, of the said nine cases whereat the relevant complainant identified the appellant. The case of the State was that the appellant was one of the three leaders engaged with certain hardened criminals in the aforesaid several dacoity cases, that it Was not true that he was unaware of the case against him or that he was not produced before the magistrate or that he was kept in prison without proper remand orders having been passed by the Magistrate. Five contentions were raised before the High Court, viz., (1) that the appellant was never produced before any magistrate within 24 hours after his arrest or even thereafter; hence his detention was in breach of article 22 of the Constitution, (ii) that although the order sheet, in respect of Laheriasarai Police Station Case No. 1 of 1968, records that the appellant had been produced before the Magistrate on several days set out therein, that order sheet had been falsely made; (iii) that the magistrates had no power to detain the appellant in jail in excess of 15 days in all, (iv) that even if he had the power to remand him in excess of 15 days in all, the condition for passing such orders was not 13 2 satisfied, and (v) that no remand order was factually ever passed. None of these contentions was accepted by the High Court, and the High Court, therefore, dismissed, as aforesaid, both the applications on May 3, 1968. Mr. Ghose, who appeared for the appellant before the High Court and who appeared before us also raised the following points: (1) that the appellant was not produced before any magistrate either on February 18, 1968 or on any other date thereafter, (2) that the appellant was never informed of the ,,rounds for his arrest, and detention thereafter, (3) that no custody warrant was ever issued warranting the jail authorities to keep the appellant in jail custody, and (4) that assuming that the said remand orders were passed, the appellant could not be kept in jail custody for more than 15 days in the whole. On the basis of these four points he urged that the appellant 's arrest .and detention were illegal and that therefore he was entitled to be released forthwith and the criminal proceedings instituted against him by the police quashed. Mr. Ghose also made a point that the jail Superintendent did not produce before the High Court the jail records which would show his having been taken out of the jail for being produced before the Magistrate when the magistrate decided the applications for remand by the police and passed the remand orders said to have been passed by him and that instead the jail Superintendent produced his report, thus disabling the appellant from establishing his case as laid in his writ petition. We may at this stage dispose of Mr. Ghose 's last point in regard to the non production of the jail record before the High ,;Court. It is true that the appellant did ask for production of that record first in the writ petition, and then on April 22, 1968 to which date the hearing of the writ petition was adjourned. But the order sheet maintained by the High Court in connection with the writ petition and the said application under section 561A of the Code shows that when the writ petition came up for admission, the learned Judges called for the record of the Magistrate 's Court and report from the jail superintendent regarding the dates on which the appellant was said to have been produced before the Magistrate for the purpose of the hearing of the remand applications. It appears that on April 22, 1968, to which date the writ petition was made returnable, neither the record of the Magistrate 's Court nor the report of the jail Superintendent had arrived. On that day, the appellant made an application for his production in Court at the time of the hearing and for the production of the jail record. The High Court, how ever, rejected the prayer for his production in Court and as regards the jail record ordered as follows: 133 so far as the production of the record of the jail is concerned, an express reminder by telegram may be sent to the Superintendent of jail to send the report already called for immediately, if possible by a special messenger. A reminder may also be sent to the Court concerned to send the records immediately, if possible, by a special messenger. " The High Court does not seem to have pressed for the produc tion of the jail record as it presumably thought that the Court 's record would show the dates when the appellant was produced before it and the Superintendent 's report would make that point clear. It 'appears from that order that the appellant also was content with the production of the Superintendent 's report and did not press for the calling of jail record. The judgment of the High Court also shows that that was also the case when the High Court heard the writ petition and the said section 561A application. Neither the order sheet nor the judgment of the High Court seems to warrant the allegations made in para 28 of the Special Leave Petition that repeated prayers were made for the production of the jail record. In any event, no prejudice appears to have been caused to the appellant 's case since the jail record could not have proved anything more than what the jail Superintendent 's report proved. The report, which was before the High Court, clearly pointed out that the appellant was remanded to jail custody on February 21, 1968 by the Sub Divisional Magistrate, Sadar in the case under section 395 of the Penal Code. The next date for his appearance was fixed on March 5, 1968, but the appellant refused to go to the Magistrate 's Court on that day as also on March 20, 1968 and April 4, 1968, on the ground that the identification parade for him had not yet been held and his going to and appearing in the Court would expose him to possible witnesses. 'Me Magistrate, therefore, had to postpone his production before him to April 18, 1968 when the appellant was produced and once again remanded to jail custody till the, next date, that is, May 2, 1968. The report of the jail Superintendent, thus, frankly conceded that the appellant could not be produced on the dates above stated and that the Magistrate, therefore, had to pass remand orders in his absence. It is clear from the report that the appellant himself had refused to appear and be present before the Magistrate when he heard the remand applications. therefore, cannot legitimately make a grievance that those orders were passed in his absence. Those orders could be passed validly in his absence if his presence at the time could not be secured. This has been held by the majority judgment of this 134 Court recently in Rai Narain vs Superintendent, Central jail, New Delhi. (1) We now proceed to consider the remaining points in the order in which Mr. Ghose raised them. The first point urged before us was that the appellant was not produced before a magistrate within 24 hours after his arrest as required by section 167 of the Code of Criminal Procedure, or even later and that therefore his arrest and the detention were bad in law. The order sheet of the Laheriasarai Police Station Case No. 1(i)68 produced before the High Court shows that the appellant was produced before the Magistrate on February 18, 1968, that is, within 24 hours after his arrest and that the Magistrate remanded him to jail custody on the application by the police until March 5, 1968. So far there is no difficulty because these entries in the order sheet are corroborated by the report of the Superintendent of jail. The order sheet, however, has entries dated March 5, 1968, March 20, 1968 and April 4, 196 8 when remand orders are shown to have been made, each for a period of 15 days, and further that the appellant was produced before the Magistrate on each of those three occasions. That, as the High Court has rightly observed, was not correct as the jail Superintendent 's report clearly showed that the appellant had refused to go from the jail for fear that he would be seen or be shown to probable witnesses. No reason has been shown as to why we should not agree with the aforesaid observation of the High Court, viz., that the Magistrate had wrongly recorded that the appellant was produced before him and that the remand orders were passed in his presence. The wrong entries made by him, however, do not mean that the remand orders were not in fact passed by him though he did so in the absence of the appellant. Such orders, as already pointed out, can be lawfully passed if ail accused person cannot for some reason or the other be brought before the Magistrate. It is, therefore, not possible to say that remand orders were not passed or that consequently his detention in the jail was without a valid basis. In the High Court no such contention, viz., that remand orders were not passed on those three dates appears to have been raised. Indeed, the allegation that the appellant was never produced before the Magistrate is belied by an elaborate order made by the Magistrate on March 28, 1968 when the appellant was represented by counsel. At that stage his counsel did not argue that the appellant was never produced before the Court or that no remand orders were ever, passed. The argument urged at that time was that the proceedings at that stage attracted section 167 of the Code, that the stage had not yet reached when section 344 would operate and that therefore the Magistrate bad no power to remand the appellant to jail custody for more than 15 days in the whole. That contention was (1) Writ Petition No. 330 of 1970, dcc. on September 1, 1970. 135 rejected by the Magistrate holding that there was an inquiry before him, and that therefore, section 344 applied and he was competent, therefore, to pass remand orders from time to time so long as each of those orders was not for a period in excess of 15 days. By that very order, the Magistrate rejected the bail application made by the appellant 's advocate holding that the investigation in the cases of dacoity in which the appellant was concerned was going on at that stage and that release of the appellant on bail would hinder its progress. The next contention was that the appellant was never informed of the grounds of his detention and that that being so, his detention was invalid. Paras 3, 4 and 35 of his writ petition did not charge that at the time of his arrest he was not informed of the grounds for his arrest and that even when he filed his writ petition he was not informed of those reasons, and that that constituted breach of article 22(1). This allegation is without any foundation. All throughout, his case was that the police had tortured him and threatened to involve him in a number of dacoity cases unless he made certain incriminating statements which they wanted from him. What were those incriminating statements which the police were trying to get from him ? From the fact that the police were wanting him to make those statements, he must have realised that those statements were related to the cases for which he had been arrested. Next, in the application he made from jail to the Magistrate on February 28, 1968, he alleged that the senior Sub Inspector of Police came to him on February 19, 1968, first abused him and then later on asked him "to admit that offence and promised that by doing so I would be discharged". According to that application he refused to admit the offence whereupon he was assaulted by the police. It also appears that he knew that an identification parade was going to be held and therefore had refused to be taken out of jail for being produced before the Magistrate. All these facts negative the suggestion of his being kept in ignorance of the reasons for his arrest or the cases charged against him. The third contention was that no valid custody warrant was issued by the Magistrate enabling the jail authorities to detain the appellant in the Darbhanga jail and licence the detention must be held to be without any legal authority. In support of the argument, counsel pointed out the custody warrant dated February 18, 1968 which according to him must be deemed to have been cancelled is at the foot of it there is the Magistrate 's endorsement that the appellant was instead remanded to police custody. Assuming that to be so, there is nothing to show that on February 21, 1968 when the Magistrate ordered the appellant to be taken into jail custody, a fresh custody warrant had not been issued by him. The Magistrate, while passing that order, must have known that the 136 jail authorities would not accept the appellant in jail unless the police taking him there produced a custody warrant. There is no reason to think first that the Magistrate had not issued such, a warrant, and secondly, that the jail Superintendent inducted the appellant in the jail without such a warrant. The contention, in our view is wholly without any basis. The last contention of Mr. Ghose was, firstly, that the remand orders passed by the Magistrate were under section 167 and not section 344, as the latter section did not apply at that stage, and secondly, that even if section 344 applied, the Magistrate could not order detention for more than 15 days in the whole. 167 appears in Ch. XIV which deals with information and investigation. As its language shows, it deals with the stage when a person is arrested by the police on information that an offence has been committed. In providing that such a person must, in terms of section 61, be produced before a magistrate within 24 hours after his arrest, the section reveals the policy of the legislature that such a person should be brought before a magistrate with as little delay as possible. The object of the section is two fold, one that the law does not favour detention in police custody except in special cases and that also for reasons to be stated by the magistrate in writing, and secondly, to enable such a person to make a representation before a magistrate. In cases falling under section 167, a magistrate undoubtedly can order custody for a period at the most of 15 days in the whole and such custody can be either police or, jail custody. Sec. 344, on the other hand, appears in Ch. XXIV which deal with inquiries and trials. Further, the custody which it speaks of is not such custody as the magistrate thinks fit as in section 167, but only jail custody, the object being that once an inquiry or a trial begins it is not proper to let the accused remain under police influence. Under this section, a magistrate can remand an accused person to custody for a term not exceeding 15 days at a time provided that sufficient evidence has been collected to raise a suspicion that such an accused person may have committed an offence and it appears likely that further evidence may be obtained by granting a remand Thus, section 167 operates at a stage when a person is arrested and either an investigation has started or is yet to start, but is such that it cannot; be completed within 24 hours. Sec. 344, on the other hand, shows that investigation has already begun and sufficient evidence has been obtained raising a suspicion that the accused person may have committed the offence and further evidence may be obtained, to enable the police to do which, a remand to jail custody is necessary. The fact that section 344 occurs in the Chapter dealing with inquiries and trials does not mean that it does not apply to cases in which the process of investigation and 137 collection of evidence is still going on. That is clear from the very language of sub section 1 A under which the magistrate has the power to postpone the commencement of the inquiry or trial. That would be the stage prior to the commencement of the inquiry or trial which would be the stage of investigation. (see A. Lakshamanrao vs Judicial Magistrate(1). Therefore, it is not as if the stage at which the Magistrate passed the remand orders was still the stage when section 167 applied and not section 344. The decision of the Orissa High Court in Artatran vs Orissa(2), to the effect that section 344 does not apply at the stage of investigation and can apply only after the Magistrate has taken cognizance of and issued processes or warrant for the production of the accused if he is not produced before him cannot, in view of A. Lakshamanrao 's case(1) be regarded as correct. The power under section 344 can be exercised even before the submission of the charge sheet, (cf. Chandradip vs State(3) and Ajit Singh vs State(4), that is, at the stage when the investigation is still not over. If the view we hold is correct that section 344 operated, the Magistrate, provided he complied with the condition in the Explanation, was competent to pass remand orders from time to time subject to each order being not for a period exceeding 15 days. There can be no doubt that the Magistrate had satisfied that condition. The judgment of the High Court in para 11 points out that the prosecution case was that the appellant had himself made a confession before the police. That was in addition to a confession by two others which implicated the appellant in the commission of offences under section 395 of the Code. In our view none of the contentions raised on behalf of the appellant can be sustained. The appeal, therefore, fails and has to be rejected. K.B.N. Appeal dismissed. (1) ; (2) A.I.R. 1956 Orissa 129. (3)(1955)Bihar Law Journal Reports, 323.

In the appeal against the order of the High Court dismissing the appellant 's petition for a writ of habeas corpus the appellant urged that he was not produced before a magistrate within 24 hours after his arrest as required by section 167 of the Code of Criminal Procedure or even later; that he was never informed of the grounds for his arrest; that no custody warrant was ever issued warranting the jail authorities to keep the appeal]ant in jail custody; that the remand orders passed by the magistrate were tinder section 167 and not under section 344 of the Code, as the latter section did not apply at the stage of investigation and that even if section 344 applied the magistrate could not order detention for more than 15 days in the whole. He also urged that the Jail Superintendent did not produce before the High Court the jail records but only produced his report, thus disabling the appellant from establishing his case. Dismissing the appeal, HELD : (1) The order sheet produced before the High Court showed that the appellant was produced before the magistrate within 24 hours after his arrest and that the magistrate remanded him to jail custody. Though the order sheet had entries showing that on subsequent occasions when remand orders were made the appellant was produced before the magistrate, the High Court has found that the Magistrate had wrongly recorded that the appellant was produced before him on those occasions. However, the wrong entries made by him do not mean that the remand orders were not in fact passed by him though he did so in the absence of the appellant. Such orders can be lawfully passed if an accused person cannot for some reason or the other be brought before the magistrate. [134 E F] Rai Narain vs Superintendent, Central Jail, New Delhi, Writ Petition No. 330 of 1970, decided on Sept. 1, 1970, referred to. (ii) The facts negative the suggestion of the appellant being kept in ignorance of the reasons for his arrest. [135 F] (iii) There is no reason to think that the magistrate ordered the appellant to lie taken into jail custody without custody warrant. [136 A] (iv) section 167 operates at a stage when a person is arrested and either an investigation has started or is yet to start, but is such that it cannot be completed within 24 hours. Section 344, on the other hand, shows that investigation has already begun and sufficient evidence has been obtained raising a suspicion that the accused person may have committed the offence 130 and further evidence may be obtained, to enable the police to do which a remand to jail custody is necessary. The fact that section 344 occurs in the Chapter dealing with inquiries and trials does not mean that it does not apply to cases in which the process of investigation and collection of evidence is still going on. Therefore, it is not as if the stage at which the Magistrate passed the remand orders was still the stage when section 167 applied and not section 334. The Magistrate, provided he complied with the condition to the Explanation, was competent to pass remand orders from time to time subject to each order being not for a period exceeding 15 days. The Magistrate had satisfied that Condition. [136 G] View contra in Artatran vs ATR 1956 Orissa 129 disapproved. A Lakshamanrao vs Judicial Magistrate, ; , Chanaraatn vs State, and Ajit Singh vs State, (1970) 76 Crl. L.H. 1075, referred to The appellant was content with the production of the superintendent 's report. No prejudice was caused to the appellant 's case since the jail record could not have proved anything more than what the jail superintendent 's report proved.

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o. 749 and 750 of 1967. Appeals by certificate from the judgment and decree dated 19th October 1965 of the Kerala High Court at Ernakulam in Second Appeal No. 400 of 1961. section T. Desai and A. Sridharan Nambiar for the appellants. P. Ram Reddy and A. V. V. Nair for respondent No. 1. The Judgment of the Court was delivered by Hegde, J. In these appeals by certificate only one question arises for decision and that is whether Chandu, the undivided younger brother of Kelu or the grand children of Kelu through his daughter were the legal heirs of Kelu. Before going into that question we may dispose, of the con tention advanced on behalf of the appellants that there is no satisfactory evidence to show that Chandu was the undivided brother of Kelu. The pleadings in this case proceed on the footing that Chandu and Kelu were the members of an undivided family. The evidence also discloses that fact. The judgments of the courts below proceed on that basis. Hence the appellants cannot now be permitted to raise the contention in this Court that Chandu is not proved to be the undivided brother of Kelu. In considering the question formulated above, we shall proceed on the basis that Kelu and Chandu were the members of an undivided family. 758 Kelu was a Thiyya resident of Calicut Taluk (at present known as Kozhikode Taluk). He was governed by the customary law known as Makkathayam. He died on November 15, 1935 leaving behind him besides his two brothers Chandu and Chekku, his widow Manikka, daughter Ichira and Ichira 's son and daughter who were the appellants before the High Court. He left behind him three items of immovable property which are the subject matter of the present appeals. Kelu 's widow Manikka and his daughter Ichira as well as his brother Chekku died prior to 1944 long before the institution of the suits from which these appeals arise. It is not necessary to go into the history of the long litigation. As mentioned earlier, the only question for decision is as to who were the legal heirs of Kelu. It is now established that the suit properties are the self acquired properties of Kelu. There is no dispute about it now. The High Court came to the conclusion that under the Makkathayam rule, Chandu succeeded to the estate of Kelu in preference to his wife, daughter and daughter 's children. The said conclusion is challenged in these appeals. The contesting parties are Hindus. As mentioned earlier, they are governed by Makkathayam rule. If the Hindu law as in force in South India had governed the succession with which we are concerned, the wife of Kelu should have succeeded to the estate of her husband in preference to the other heirs. The claims of the son and daughter of Ichira could come in only later. Therefore the principal question that we have to decide is whether the wife of Kelu succeeded to the estate of Kelu on his death. Mr. section T. Desai, appearing for the appellants contended that Makkathayam rule being a rule of customary law can only derogate the ordinary Hindu law to the extent it is satisfactorily established; in other respects the ordinary Hindu law should prevail; the contesting respondents having not established by positive evidence the claim put forward by them i. e. that Chandu was a preferential heir to Kelu, they must fail. On the other hand it was contended by Mr. Rama Reddy on behalf of the respondents that Kelu was governed by a customary law i. e. Makkathayam law and not by ordinary Hindu law. Hence all that we have to see is whether the customary law pleaded is well established on the basis of the decisions of courts. According to him the custom pleaded is of a community and not of any family. He urged that the custom in question to the extent relevant for our present purpose is well settled. The law relating to Thiyyas of the former Calicut taluk had come up for decision before the Madras High Court in several cases. The approach to be adopted in spelling out the same is 759 laid down in the decision of the Madras High Court in (Parambarathil) Pattukkayal Chakkutti and ors. vs Kothembra Chandukutti(1). Therein the Court observed : "We think the Makkathayam Thiyyas are governed by what is called the customary law and that when a question arises as to what is the rule of law governing them on any particular matter what we have to see is what is the rule of customary law obtaining amongst them in that matter and in cases which are not sufficiently governed by prior decisions, the question will have to be determined with reference to the evidence in the case. " In Parichan vs Perachi and ors.(2) the High Court of Madras came to the conclusion that a community following Makkathayam rule must not be taken to be necessarily governed by the Hindu law of inheritance with all its incidents. On the basis of the evidence in that case, the court held that when a member of the Thiyya community in Calicut following that rule alleged and proved a custom that undivided brother succeeded to the selfacquired property in preference to widow, the court must give effect to it. Therein the competition was between the widow and the brother of the deceased who was a member of an undivided Tarwad and the property in dispute was the self acquisition of the deceased. In Rama Menon vs Chathunni (3) the High Court of Madras held that the ordinary rule of Marurnakatayam against compulsory partition is equally applicable to Tiyans who follow Makkatayam, no custom to the contrary having been made out. In Imbichi Kandan and ors. vs Imbichi Pennu and ors.(4) the High Court held that on the death of a Thiyya of South Malabar following Makkathayam rule of inheritance, his mother, widow and daughter are entitled to succeed to his self acquired properties in preference to his father 's divided brothers. In the course of the judgment, this is what the learned judges observed: "The decision of the subordinate judge is entirely in accordance with the principles laid down in Parichan vs Perachi and Rama Menon vs Chathunni (supra). it has been decided that the rule of impartibility applies to Makkatayam Tiyans of Calicut, and in Parichan vs Perachi following the principle that self acquired property lapses to the tarwad, it was held that the undivided brother succeeded in preference to the widow. (2) I.L.R. (1) (3) I.L.R. (4) I.L.R. 760 But the case is quite, different when the brothers are divided and have no community of interest as in this case, Here it is found that the only property in which plaintiffs and Kelukutti ever had a common interest is in the family burying place, which will certainly not constitute then an undivided tarwad. That being so, the mother, wife and daughter of Changaran who certainly belong to his tarwad are preferential heirs to his uncle who did not belong to his tarwad at all and had no community of interest with him. " From these decisions it is clear that Thiyyas of former Calicut Taluk were governed by the customary law known as Makkathayam. Further as per the Makkathayam rule of inheri tance an undivided brother of a deceased person succeeded to the self acquired property of the deceased in preference to the wife and daughter of the deceased. If that is so the daughter 's son who comes after them under the general Hindu law cannot have a 'superior claim unless a custom to that effect is pleaded and proved. Such a custom is neither pleaded nor proved. No other contention was raised before us. In the result these appeals fail and they are dismissed. But in the circumstances of the case we direct the parties to bear their own costs in this Court. S.C. Appeals dismissed.

The Thiyyas of the former Calicut, Taluk are governed by the customary law known as Makkathayam and as per the Makkathayam rule of inheritance an undivided brother of a deceased person succeeds to the self acquired property of the deceased in preference to the wife and daughter of the deceased. Therefore, the daughter 's son who comes after them under the general Hindu Law cannot have a superior claim unless a custom to that effect is pleaded and proved. [760C] Parambarathial Pattukava Chakkutti and Ors. vs Kothembra Chandukutti, Paricham vs Perachi a Ors. I.L.R. Rama Menon vs Chathunni I.L.R. 17 Mad. 184 Imbichi Kandan & Ors. vs Imbichi Pennu & Ors. I.L.R. referred to.

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Appeals Nos. 231 and 232 of 1958. Appeal by special leave from the judgment and order dated October 21, 1957, of the Madras High Court in Writ Petitions Nos. 675 and 676 of 1957. R. Ganapathy Iyer, section B. Adityan and G. Gopalakrishnan, for the appellant. A. N. Sinha and P. K. Mukherjee, for respondent No. 1. 1958. November 24. , J. These appeals raise a question of considerable importance as to the scope of an enquiry in an election petition wherein election is called in question under section 100(1)(c) of the Representation of the People Act, 1951 (43 of 1951), on the ground that a nomination paper had been improperly ' rejected. 625 The facts are that during the general elections which were held in 1957 six persons including the,, appellant, Veluswami Thevar, the second respondent ' Chellapandian, and the fourth respondent, Arunachalam, were nominated for election to the Legislative Assembly of the State of Madras from Alangulam Constituency in the District of Tirunelveli At the time of the scrutiny which was on February 1, 1957, Chellapandian raised an objection to the nomination of Arunachalam on the ground that he was the Head Master of the National Training School, Tiruchendur, which was a Government aided school, and that he was therefore disqualified under section 7, cls. (d) and (e) of the Representation of the People Act, 1951 (hereinafter referred to as the Act), as holding an office of profit under the Government. In upholding this objection, the returning officer observed: " Sri section Arunachalam is not present at the time of scrutiny of nominations nor any authorised agent of his could take notice of the objection and file a reply. ' In view of the objection which has not been cleared by Sri section Arunachalam by satisfying me that he is not holding an office of profit in a concern in which the State Government has financial interest, the objection is upheld and Sri section Arunachalam is disqualified under Sections 7(d) and (e) of Act 43 of 1951. Accordingly his nomination is rejected. " The five nomination papers were accepted; two of the candidates subsequently withdrew from the election; the other three went to the polls, and on March 10, 1957, the appellant who secured the largest number of votes was declared elected. On April 18, 1957, Raja Nainar, the first respondent, who was not a candidate but a voter filed E. P. No. 109 of 1957 praying that the election of the appellant be declared void on the ground that the rejection of the nomination paper of Arunachalam was improper, because he had ceased to be a Head Master at the time of his nomination, and that further the institution was a private one. The appellant filed a written statement in which he pleaded that Arunachalam was 79 626 not qualified to be chosen not merely on the ground put forward by Chellapandian before the returning officer but also on the grounds that he was interested as a partner in contracts for the execution of works for the Government, and that further he had entered into an agreement with the District Board, Chittoor, to serve as a teacher in that Board, and that his nomination paper was therefore rightly rejected. Raja Nainar then came out with the application, 1. A. No. 5 of 1957, out of which the present proceedings arise, to strike out the additional grounds of disquali fication raised in the statement of the appellant on the ground that the Tribunal had no jurisdiction to enquire into any ground of disqualification which was not taken before the returning officer, and that accordingly the new grounds put forward by the appellant should be struck out. By its order dated August 17, 1957, the Tribunal held that the question to be decided by it was whether there was a valid nomination paper, and that to decide that, it could go into grounds other than those which were put forward before the returning officer, and, in that view, dismissed the application. The correctness of this order was challenged by Raja Nainar in two Writ Petitions Nos. 675 and 676 of 1957, preferred under article 226. Therein, he repeated his contention that it was not competent to the Tribunal to enquire into any but the grounds which had been put forward before the returning officer, and prayed that a writ of certiorari be issued to quash the order in 1. A. No. 5 of 1957 and a writ of prohibition, to restrain the Tribunal from enquiring into the new grounds raised by the appellant. These applications were heard by a Bench of the Madras High Court consisting of Rajagopalan and Rajagopals Ayyangar, JJ., who upheld the contention of the petitioner, and stated their conclusion in these terms: " We are clearly of opinion that the enquiry before the Tribunal must be restricted to the objections which the returning officer had to consider and decide, but not necessarily to the material placed 627 before the returning officer at the stage of the summary enquiry. The Tribunal has jurisdiction to adjudicate upon the truth and validity of those objections on relevant material, even if that material be other than that placed before the returning officer. The Tribunal has no jurisdiction to investigate the truth or validity of the objections which were not put forward before the returning officer, and which he had therefore no occasion to consider. Once again we have to point out that we are discussing only the position of a candidate whose nomination was rejected, and not, for instance, that of a returned candidate." " A further objection was also taken before the learned judges that as the decision of the Election Tribunal was open to appeal under section 116A of the Act, the court should, in exercise of its discretion under article 226, decline to entertain writ petitions against interlocutory orders. But the learned judge held that as the Tribunal had no jurisdiction to entertain grounds other than those which were put forward before the returning officer, writs could issue under article 226. In the result, they quashed the order of the Election Tribunal in 1. A. No. 5 of 1957, and issued a writ of Mandamus directing it to dispose of the application afresh in accordance with law as laid down in the judgment. It is against this judgment that the present appeals have been preferred on leave granted by this Court under article 136, and the point that arises for decision is whether in an election petition questioning the propriety of the rejection of a nomination paper under section 100(1)(c) of the Act, it is open to the parties to raise grounds of disqualification other than those put forward before the returning officer. It will be convenient at this stage to refer to the provisions of the Act hearing on this question. Section 32 of the Act provides that, "Any person maybe nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill that seat under the provisions of the Constitution and this Act. " Under section 33(1), the candidate is to deliver to the returning officer a nomination paper completed in the 628 prescribed form and signed by the candidate and by an elector of the constituency as proposer. Section 33 (4) enacts that, " On the presentation of a nomination paper, the returning officer shall satisfy himself that the names and electoral roll numbers of the candidate and his proposer as entered in the nomination paper are the same as those entered in the electoral rolls: Provided that the returning officer shall permit any clerical or technical error in the nomination paper in regard to the said names or numbers to be corrected in order to bring them into conformity with the corresponding entries in the electoral rolls; and where necessary, direct that any clerical or printing error in the said entries shall be overlooked. " Section 35 provides inter alia that the returning officer shall cause to be affixed in some conspicuous place in his office a notice of the nomination containing descriptions similar to those contained in the nomination paper both of the candidate and of the proposer. Section 36, omitting what is not material, is as follows: 36. (1) " On the date fixed for the scrutiny of nominations under section 30, the candidates, their election agents, one proposer of each candidate, and one other person duly authorized in writing by each candidate, but no other person, may attend at such time and place as the returning officer may appoint; and the returning officer shall give them all reasonable facilities for examining the nomination papers of all candidates which have been delivered within the time and in the manner laid down in section 33. (2) The returning officer shall then examine the nomination papers and shall decide all objections which may be made to any nomination, and may, either on such objection or on his own motion, after such summary inquiry, if any, as he thinks necessary, reject any nomination on any of the following grounds: (a) that the candidate either is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may, be applicable, namely 629 Articles 84, 102, 173 and 191, Part 11 of this Act, or (b) that there has been a failure to comply With any of the provisions of section 33 or section 34; or (c) that the signature of the candidate or the pro. poser on the nomination paper is not genuine. . . . . . . . . . (5) The returning officer shall hold the scrutiny on the date appointed in this behalf under clause (b) of section 30 and shall not allow any adjournment of the proceedings except when such proceedings are interrupted or obstructed by riot or open violence or by causes beyond his control: Provided that in case an objection is made the candidate concerned may be allowed time to rebut it not later than the next day but one following the date fixed for scrutiny, and the returning officer shall record his decision on the date to which the proceedings have been adjourned. (6) The returning officer shall endorse on each nomination paper his decision accepting or rejecting the same ania, if the nomination paper is rejected, shall record in writing a brief statement of his reasons for such rejection. " Then, we have section 100(1)(c), the construction of which is the main point for determination. It is as follows: 100. (1) " Subject to the provisions of subsection (2), if the Tribunal is of opinion (c) that any nomination has been improperly rejected ;. the Tribunal shall declare the election of the returned candidate to be void." Now, the whole controversy between the parties is as to what the expression " improperly rejected " in section 100(1)(c) means. According to the appellant, when the nomination paper of a candidate who is under no such disqualification as is mentioned in section 36(2) has been rejected, that is improper rejection within section 100(1)(c). Acoording to the respondent, when the 630 nomination paper of a candidate is rejected by the returning officer on the ground that he is subject to a specified disqualification, the rejection is improper, if it is found that that disqualification does not exist. If the former view is correct, then the scope of an enquiry before the Tribunal must extend to all matters which are mentioned in section 36(2), and if the latter, then it must be limited to determining whether the ground on which the returning officer has rejected the nomination is well founded. Now, to decide what the expression " improperly rejected " in section 100(1)(c) precisely imports, it is necessary to examine the relevant provisions of the Act bearing on the question and the setting of the above section therein. Under section 32 of the Act, any person may be nominated as a candidate for election if he is duly qualified under the provisions of the Constitution and the Act. Section 36(2) authorises the returning officer to reject any nomination paper on the ground that he is either not qualified, that is, under sections 3 to 7 of the Act, or is disqualified under the provisions referred to therein. If there are no grounds for rejecting a nomination paper under section 36(2), then it has to be accepted, and the name of the candidate is to be included in a list. Vide section 36(8). Then, we come to section 100(1)(c) and section 100(1)(d)(1), which provide a remedy to persons who are aggrieved by an order improperly rejecting or improperly accepting any nomination. In the context, it appears to us that the improper rejection or acceptance must have refer ence to section 36(2), and that the rejection of a nomination paper of a candidate who is qualified to be chosen for election and who does not suffer from any of the dis qualifications mentioned in section 36(2) would be improper within section 100(1)(c), and that, likewise, acceptance of a nomination paper of a candidate who is not qualified or who is disqualified will equally be improper under s.100(1)(d)(1).Section 32 confers a substantive right on a candidate to be chosen to the legislature subject only to the limitations enacted in articles 84, 102, 173 and 191 of the Constitution and sections 3 to 7 of the Act, and sections 36 and 100 provide the machinery for the exercise and enforcement of that right. It is a sound 631 rule of construction that procedural enactments should be construed liberally and in such manner as to render the enforcement of substantive rights effective. Readings section 100(1)(c) in the context of the whole enactment, we think that an enquiry before the Tribunal must embrace all the matters as to qualification and disqualification mentioned in section 36(2), and that it cannot be limited to the particular ground of disqualification which was taken before the returning officer. It was contended for the respondent that the proceedings before the Tribunal are really by way of appeal against the decision of the returning officer, and that, therefore, the scope of the enquiry in the election petition must be co extensive with that before the returning officer, and must be limited to the ground taken before him. It was argued that a decision could be said to be improper only with reference to a ground which was put forward and decided in a particular manner by the returning officer, and that therefore the expression " improperly rejected " would, in its true connotation, restrict the scope of the enquiry before the Tribunal to the ground taken before the returning officer. We are unable to agree with this contention. The jurisdiction which a Tribunal exercises in hearing an election petition even when it raises a question under section 100(1)(c) is not in the nature of an appeal against the decision of the returning officer. An election petition is an original proceeding instituted by the presentation of a petition under section 81 of the Act. The respondents have a right to file written statements by way of reply to it; issues have to be framed, and subject to the provisions of the Act, the provisions of the Code of Civil Procedure regulate the trial of the petition. All the parties have the right to adduce evidence, and that is of the essence of an original proceeding as contrasted with a proceeding by way of appeal. That being the character of the proceedings, the rule applicable is that which governs the trial of all original proceedings; that is, it is open to a party to put forward all grounds in support of or negation of the claim, subject only to such limitations as may be found in the Act. 632 It should be noted in this connection that if a petition to set aside an election on the ground of improper rejection of a nomination paper is in the nature of an appeal against the decision, of the returning officer, then logically speaking, the decision of the Tribunal must be based only on the materials placed before the returning officer given with respect to the ground which was urged before him, and no fresh evidence could be admitted before the Tribunal except in accordance with 0. 41, R. 27. The learned judges in the court below, however, observe that though the enquiry before the Tribunal is restricted to the particular ground put forward before the returning officer, it is not restricted to the material placed before him, and that all evidence bearing on that ground could be adduced before the Tribunal. This, in our view, is quite correct. The enquiry which a returning officer has to make under section 36 is summary in character. He may make " such summary enquiry, if any, as he thinks necessary "; he can act suo motu. Such being the nature of the enquiry, the right which is given to a party under section 100(1)(c) and section 100(1)(d)(1) to challenge the propriety of an order of rejection or acceptance of a nomination paper would become illusory, if the Tribunal is to base its decision only on the materials placed before the returning officer. It was contended for the respondent that even with reference to the ground taken before the returning officer, no evidence other than what was placed before him could be brought before the Tribunal, and he relied on the following observations of the learned judges in Charanjit Lal vs Lehri Singh (1) : " Whether a nomination has been improperly rejected or not, has to be considered in relation to the state of evidence before the returning officer at the time of the scrutiny. The testimony of the returning officer shows that he rejected the nomination, because it did not appear to him that on the question of age the candidate Shri Pirthi was qualfied to stand for election ' " (1) A. I. R. 1958 punj. 633 There,, a nomination paper had been rejected by the returning officer on the ground that the candidate did,, not appear to possess the age qualification required by article 173. The correctness of this order was challenged in an election petition. Evidence was taken as to the age of the candidate in this petition, and eventually it was held that the order of the returning officer was right. In the order of rejection, the returning officer also stated: " The nomination is rejected as the age is not mentioned in the nomination paper. Neither the candidate nor the proposer or any person duly authorised on his behalf is present to testify to his age. " Now, the argument before the High Court was that the failure to mention the age in the nomination paper was a formal defect which should have been condoned under section 36(4) of the Act. The learned judges held that the defect was not merely one of failure to mention the age but of want of the requisite qualification in age, and that that could not be cured under section 36(4). In this context, the observations relied on could not be read as meaning that no evidence could be adduced even in respect of a ground which was urged before the returning officer, as, in fact, evidence was taken before the Tribunal and a finding given, and if they meant what the respondent suggests they do, we do not agree with them. It is to be noted that in many of the cases which came before this Court, as for example, Durga Shankar Mehta vs Thakur Raghuraj Singh and others (1), the finding of the Tribunal was based on fresh evidence admitted before it, and the propriety of such admission was never questioned. And if the true position is, as we have held it is, that it is open to the parties to adduce fresh evidence on the matter in issue, it is difficult to imagine how the proceedings before the Tribunal can be regarded as in the nature of appeal against the decision of the returning officer. In support of his contention that it is only the ground that is urged before the returning officer that (1) [1955] 1 S.C.R. 267. 80 634 can be raised before the Tribunal, Mr. Sinha, learned counsel for the respondent, relies on the provision in section 36(6) that when a nomination paper is rejected, the returning officer should record his reasons therefor. The object of this provision, it is argued, is to enable the Tribunal to decide whether the order of the returning officer is right or not, and by implication it confines the scope of the enquiry before the Tribunal to the ground put forward before the returning officer. This contention is, in our opinion, unsound. Now, when a nomination paper is accepted, section 36(6) does not require that any reason should be recorded therefor. If the contention of the respondent is right, it would follow that acceptance of a nomination paper can never be questioned. But that would be against section 100(1)(d)(1), and it must therefore be held that an acceptance can be questioned on all the grounds available under section 36(2). Section 100(1)(d)(1) deals with improper acceptance of a nomination paper, and if the word " improper " in that provision has reference to the matters mentioned in section 36(2), it must have the same connotation in section 100(1)(c) as well. The word " improper " which occurs in both section 100(1)(c) and section 100(1)(d)(1) must bear the same meaning in both the provisions, unless there is something in the context to the contrary, and none such has been shown. There is another difficulty in the way of accepting this argument of the respondent. A candidate may be subject to more than one disqualification, and his nomination paper may be questioned on all those grounds. Supposing that the returning officer upholds one objection and rejects the nomination paper on the basis of that objection without going into other objections, notwithstanding that under section 36(2) he has to decide all the objections, is it open to the respondents in the election petition to adduce evidence on those objections ? According to the respondent, it is not, so that if the decision of the returning officer on the objection on which he rejected the nomination paper is held to be bad, the Tribunal has no option but to set aside the election under section 100(1)(c), even though the candidate was, in fact, disqualified and his nomination paper was rightly rejected. Mr. Sinha for the respondent concedes that the result would be anomalous, but he says that the Law of Election is full of anomalies, and this is one of them, and that is no reason for not interpreting the law on its own terms. It is no doubt true that if on its true construction, a statute leads to anomalous results, the Courts have no option but to give effect to it and leave it to the legislature to amend and alter the law. But when on a construction of a statute, two views are possible, one which results in an anomaly and the other not, it is our duty to adopt the latter and not the former, seeking consolation in the thought that the law bristles with anomalies. Anomalies will disappear, and the law will be found to be simple and logical, if it is understood that when a question is raised in an election petition as to the propriety of the rejection of a nomination paper, the point to be decided is about the propriety of the nomination and not the decision of the returning officer on the materials placed before him, and that decision must depend on whether the candidate is duly qualified and is not subject to any disqualifications as provided in section 36(2) It remains to deal with one more contention advanced on behalf of the respondent, and that is based on the following observations in Hari Vishnu Kamath vs Syed Ahmad Ishaque and others (1): " Under this provision R. 47(4), the Tribunal is constituted a court of appeal against the decision of the returning officer, and as such its jurisdiction must be co extensive with that of the returning officer and cannot extend further. " The argument is that if the jurisdiction of the Tribunal is co extensive with that of the returning officer, then the enquiry before it must be confined to the grounds which were urged before the returning officer. Now, the observations quoted above were made statedly with reference to R. 47, and assuming that they apply to an enquiry under section 100(1)(c), the question still remains, what is the jurisdiction of the returning officer in hearing objections to nomination papers? (31) ; , 1132. 636 His jurisdiction is defined in section 36(2), and the Tribunal must therefore have jurisdiction to decide all the questions which can be raised under that section. The fact that a particular ground which could have been raised was not, in fact, raised before the returning officer does not put an end to his jurisdiction to decide it, and what he could have decided if it had been raised, could be decided by the Tribunal, when raised. Mr. Ganapathy Iyer, learned counsel for the appellant, invited our attention to the decisions of the Election Tribunals on the question whether grounds other than those raised before the returning officer could be put forward in an enquiry in an election petition. They held, with one solitary exception, that it is permissible, and indeed, it is stated in Mengh Raj vs Bhimandas (1) as settled law that the rejection of a nomination paper can be sustained on grounds not raised before the returning officer. If the legislature which must be taken to have knowledge of the law as interpreted in those decisions wanted to make a departure from it, it would have said so in clear terms, and in the absence of such an expression, it would be right to interpret section 100(1)(c) as not intended to alter the law as laid down in those decisions. It is now necessary to refer to the decisions which have been cited before us. In Durga Shankar Mehta 's case (2), the election was to a double member constituency. The appellant who obtained the largest number of votes was declared elected to the general seat and one Vasantarao, to the reserved seat. The validity of the election was challenged on the ground that Vasantarao was below the age of 25 years, and was, therefore, disqualified to stand. The Election Tribunal upheld that objection, and set aside the entire election. The decision was taken in appeal to this Court, and the point for determination was whether the election of the appellant was liable to be set aside on account of the disqualification of Vasantarao. It was held that the matter fell within section 100(2)(c) as it then stood and not under section 100(1)(c), and that the election of the appellant could not be declared void. (1) , 31O. (2) [19551 1 S.C.R. 267. 637 This is not a direct pronouncement on the point now in controversy, and that is conceded. In Vashist Narain Sharma vs Dev Chandra and others (1), a question was raised as to what would be " improper acceptance " within the meaning of section 100; but in the view taken by this Court, no opinion was expressed thereon. The question now under consideration came up directly for decision before the High Court of Rajasthan in Tej Singh vs Election Tribunal, Jaipur (2), and it was held that the respondent to an election petition was entitled to raise a plea that the nomination of the petitioner rejected on one ground by the returning officer was defective on one or more of the other grounds mentioned in section 36(2) of the Act, and that such a plea, if taken, must be enquired into by the Election Tribunal. In Dhanraj Deshlehara vs Vishwanath Y. Tamaskar (3), it was observed by a Bench of the Madhya Pradesh High Court that in determining whether a nomination was improperly rejected, the Election Tribunal was not bound to confine its enquiry to the ground on which the returning officer rejected it, and that even if the ground on which the returning officer rejected the nomination could not be sustained, the rejection could not, be held to be improper if the Tribunal found other fatal defects in the nomination. An unreported judgment of the Andhra Pradesh High Court in Badrivishal Pitti vs J. V. Narsing Rao (4) has been cited before us, and that also takes the view that in an enquiry before the Election Tribunal, it is open to the parties to support an order of rejection of a nomination paper on grounds other than those which were put forward before the returning officer. We are in agreement with these decisions. As the question has also been raised as to the propriety of interfering in writ petitions under article 226 with interlocutory orders passed in the course of an enquiry before the Election Tribunal, we shall express our opinion thereon. The jurisdiction of the High Court to issue writs against orders of the Tribunal is (1) ; (2) [1954] 9 E.L.R.193 (3) (4) Special Appeal No. 1 Of 1957. 638 undoubted; but then, it is well settled that where there is another remedy provided, the court may properly exercise its discretion in declining to interfere under article 226. It should be remembered that under the election law as it stood prior to the amendment in1956, election petitions were dismissed on preliminary grounds and the correctness of the decision was challenged in applications under article 226 and in further appeals to this Court, with the result that by the time the matter was finally decided, the life of the legislatures for which the election was held would have itself very nearly come to an end thus rendering the proceedings infructuous. A signal example of a case of this kind is to be found in the decision reported in Bhikaji Keshao Joshi and another vs Brijlal Nandlal Biyani and others (1). It is to remedy this defect that the legislature has now amended the law by providing a right of appeal against a decision of the Tribunal to the High Court under section 116 A, and its intention is ' obviously that proceedings before the Tribunal should go on with expedition and without interruption, and that any error in its decision should be set right in an appeal under that section. In this view, it would be a proper exercise of discretion under article 226 to decline to interfere with interlocutory orders. In the result, we allow the appeals, set aside the orders of the court below, and dismiss the writ petitions. filed by the respondent, with costs here and in the court below. Appeal allowed (1) [1055] 2 S.C.R. 428.

The nomination paper of the fourth respondent who was one of the candidates for election to the Legislative Assembly of the State, was rejected by the returning officer on the ground that as he was the Headmaster of a Government aided school he was disqualified under section 7(d) and (e) of the Representation of the People Act, 1951, to be chosen for election. One of the voters of the constituency filed a petition praying that the election of the appellant be declared void under section 100(1)(c) of the Act on the ground that the rejection of the nomination paper of the fourth respondent was improper because the latter had ceased to be a Headmaster at the time of his nomination and that, further, the institution was a private one. The appellant, who was the second respondent in the petition, contended that the nomination paper of the fourth respondent was rightly rejected not only on the ground put forward before the returning officer but also for the reasons that he was interested in Government contracts and that he had agreed to serve as a, teacher under the District Board. The question was whether in an election petition challenging the validity of the rejection of a nomination paper under s: 100(1)(c) of the Act, it was open to the parties to raise grounds 624 of disqualification other 'than those put forward before the returning officer. It was contended for the respondent that the proceedings before the Election Tribunal were really by way of appeal against the decision of the returning officer and that, therefore, the scope of the enquiry in the election petition must be co extensive with that before the returning officer and must be limited to the grounds taken before him. Held, that an election petition is an original proceeding instituted by the presentation of a petition under section 81 of the Representation of the People Act, 1951, and that the jurisdiction which a Tribunal exercises in hearing an election petition even when it raises a question under section 100(1)(c) of the Act is not in the nature of an appeal against the decision of the returning officer. Held, further, that in considering whether a nomination paper was improperly rejected under section 100(1)(c), the real question for decision would be whether the candidate was duly qualified and was not subject to any disqualifications as provided in section 36(2) of the Act. The Tribunal would, consequently, be competent to entertain grounds of disqualification other than those put forward before the returning officer. The expression " improperly rejected " in section 100(1)(c) of the Act, explained. Mengh Raj vs Bhimandas, , Tej Singh vs Election Tribunal, JaiPur, and Dhanraj Deshlehara vs Vishwanath Y. Tamaskar, (1958) 15 E. L. R. 260, approved.

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Appeal No. 22 of 1960. Appeal by special leave from the judgment and order dated March 19, 1958, of the Allahabad High Court in F. A. No. 62 of 1954. section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant. G. section Pathak, section K. Kapur, B. N. Kirpal and Ganpat Rai, for the respondent. April 27. The Judgment of the Court was delivered by section K. DAs, J. This is an appeal by special leave granted by this Court on December 8, 1958. On July 19, 1950, Satya Deo Gupta, respondent before us, made an application under a. 14 of the (Act V of 1940) (hereinafter referred to as the Act) for registration of the trade name of a biochemical medicinal preparation, commonly known as 'Laksbmandhara ', in Class 5 of the Fourth Schedule to the Trade 486 Marks Rules, 1942. The application was made by the respondent as the sole proprietor of Rup Bilas Company situate, at Dhankutti in Kanpur. The averments made in the application were that the said medicinal preparation had been in use by the name of "Lakshmandhara ' since 1923 and was sold throughout the length and breadth of India as also in some foreign markets; the mark or name 'Lakshmandhara ' was said to be distinctive to the article, and it was stated that the approximate annual turnover was Rs. 40,000/ . Notice of the application was given by the Registrar of Trade Marks, Bombay, and the Amrit dhara Pharmacy, a limited liability company and appellant before us, filed an application in opposition. In this application the appellant stated that the word 'Amritdhara ' was already registered as a trade name for the medicinal preparation of the appellant, and that medicinal preparation was introduced in the market so far back as in the year 1901; on account of its great popularity many people advertised similar medicines with slight variations of name to pass off their goods as 'Amritdhara '. It was averred that the composite word Lakahmandhara ' was used to denote the same medicine as Amrit, dhara '; and the single word dhara , it was stated, was first used in conjunction with 'Amritdhara ' to denote the medicine of the appellant and the medicine 'Lakahmandhara ' being of the same nature and to quality could be easily passed off as 'Amritdhara ' to the ultimate purchaser. The appellant contended that as 'Amritdhara ' was already registered and 'Lakshmandhara ' being a similar name was likely to receive the public, registration should be refused. On behalf of the respondent a counter affidavit was made in which it was stated that "Amritdhara ' and Lakshinandhara ' were two distinctly different names and no one could pass off one for the other. 487 It was further stated that during the long period of introduction and sale of Lakshmandhara ' since 1923, no objection was ever raised from any quarter, from the appellant or anybody else, to the use of the name 'Lakshmandhara '. It was denied by the respondent that the composite word 'Lakshmandhara ' was likely to deceive the public or could by any stretch of imagination be taken or mistaken for 'Amritdhara '. The respondent further alleged that the single word 'dhara ' had no particular significance in relation to the medicine, nor did that word mean or convey any special or exclusive meaning or effect in relation to the medicine. It was also stated that apart from the difference in name, the phial, label and packing of 'Lakshmandhara ' had exclusive designs of their own and were not likely to be confused with 'any other medicine of similar nature, least of all with 'Amritdhara ' whose packing was distinctly different in colour, design and layout. The Registrar of Trade Marks dealt with the application and the opposition thereto by his order dated September 10, 1953. It appears that apart from the affidavits filed, no other evidence was led on behalf of either party; but certified copies of certain decisions in earlier cases (to which the respondent was not, however, a party) given in favour of the appellant in support of its claim of infringement of its registered trade mark 'Amritdhara ' were filed. A list of such cases has been printed as annexure 'A '. These cases showed that a number of medicines with the word 'Amrit ' or 'dhara ' as part of their names had been introduced in the market since 1947; and the appellant 'successfully took action against them for infringement of its trade mark. Even in the Trade Marks Registry the appellant successfully opposed the introduction of names which contained the word 'dhara ' as part of the,trade name. A question has 488 been raised before us whether the Registrar of Trade Marks was justified in taking into consideration the decisions in those cases. To that question we shall advert later. The Registrar found that in 1901 Pandit Thakur Datta Sharma commenced to do business at Lahore in a particular ayurvedic medicine which was meant for alleviation for of headaches, diarrohea, constipation and other complaints. This medicine was first sold under the mark 'Amrit Ki Dhara ', but in 1903 the name was changed to "Amritdhara ', Pandit Thakur Datta Sharma formed a limited liability company in 1942 and the name 'Amritdhara ' became a well known popular name for the medicine. The sale of the medicine went up to about Re. 4 lacs a year. The business was done in Lahore but when partition came in 1947, the appellant established its business in Dehradun. The Registrar expressed the view that if the matter had rested on section 8 and section 10(1) of the Act, he world have no hesitation in allowing the opposition and dismissing the application. This could only mean that the Registrar was of the view that the name 'Lakshmandhara ' so nearly resembled the trade mark 'Amritdhara ' that it was likely to deceive the public or cause confusion to the trade. We are saying this because the High Court through that the Registrar did not express his own opinion whether the name 'Lakshmandhara ' was likely to cause deception to the public or confusion to the ' trade. The respondent, however, relied also on two other circumstances, viz. (a) honest concurrent user of the name 'Lakshmandhara ' since 1923, and (b) acquiescence on the part of the appellant in the user of the name Lakshmandhara '. The respondent contended that these two circumstances brought the case With in the meaning of special circumstances ' in A. 10(2) of the Act, which permitted the registration by more than one Proprietor of trade marks which are identical or 489 nearly resemble each other, subject to such condition and limitations, if any, as the Registrar might think fit to impose. On the point of honest concurrent user the Registrar found in favour of the appellant. As to acquiescence he, however, found in favour of the respondent and expressed his finding in these words. "In the case before me it is not disputed that the applicant commenced his user in a small way in 1923 and it may even be said that up to about 1942 the applicant 's user was insignificant. In paragraph 12 of the appli cant 's affidavit dated the 30th March, 1953 he has given details of advertisements in directories, pamphlets, newspapers etc. in which both the applicant 's and the opponents ' marks were advertised. The facts given in the affidavit go to show that from 1938 right up to the date of the applications by the applicant he has been advertising through mediums which were common to both the applicant and the opponents. Here we have a case in which Pandit Thakur Datta Sharma states that he had no notice of the applicant 's mark. He has, however, admitted that he had about 12 persons in his factory which constituted the clerical staff and amongst them were persons who were in charge of advertising the opponents mark. It seems to me that the opponents and their agents were well aware of the advertisements by the applicant and did not raise any protest till the applicant 's mark was advertised in the Trade Mark Journal. In other words the opponents stood by and, allowed the applicant to develop his business and, as I have shown, from small beginning he began to sell these medicines to the extent of about Rs. 43,000/ in 1949. In my opinion, this is 490 acquiescence which would come under, the phrase 'or other special circumstances ' in section 10(2) of the and, that appears to me to be fatal to the case of the opponents. " Before the Registrar it was admitted on behalf of the respondent that his goods were sold mainly in, Uttar Pradesh and there were, at the most, only sporadic sales in other States. Taking that circumstance into consideration the Registrar passed an order allowing registration of 'Lakshmandhara ' for sale in the State of Uttar Pradesh only. From the decision of the Registrar two appeals were referred to the High Court of Judicature at Allahabad under section 76 of the Act: one appeal Was referred by the respondent and ' the other by the appellant. The respondent complained of the registration being limited to Uttar Pradesh only and the appellant pleaded that registration should: have been refused altogether, The learned Judges of the High Court held that the words 'Amrit ' and 'dhara ' were common, words in the Hindi language and the combined word 'Amritdhara ' meant current of nectar ' or the flow of nectar '; the two words 'Lakshman ' and 'dhara 'were also well known common words and combined, together they meant "current or flow of Lakshman '. The learned Judges, then said: "There is no possibility of any Indian confusing the two ideas. Even phonetical differences are wide enough not to confuse anybody. The claim of the Amritdhara pharmacy that both the words Amrit and dhara ' have become so associated with their goods that the use of each part separately or in any combination is ' likely to mislead is an, untenable claim. The whole phrase 'Amritdhara ' had been registered and the Monopoly ' has to be 491 confined only to the use of the whole word. The words of common language like "Amrit ' and 'dhara ' cannot be made the monopoly of any individual. We, therefore see no reason to disallow registration of the trade mark "Lakshmandhara '. " As to honest concurrent user from 1923 to 1942 the learned Judges again held in favour of the respondent. But on the point acquiescence they held against the respondent and found in favour of the appellant. They said that from the fact that both the medicines were being advertised in the same journals or periodicals it did not, following that the attention of the appellant was, drawn to@ the use of the word 'Lakshmandhara ' by the respondent. In view, however, of their finding that the two names were not likely to cause any confusion and that the ' respondent had been an honest concurrent user from 1923 onwards, they held that there was no justification for refusing registration to the trade mark 'Lakshmandhara ' for the whole of India. They accordingly allowed the appeal of the respondent and dismissed that of the appellant by their judgment dated March 19, 1958. The appellant then obtained special leave from this Court and the present appeal has been filed in pursuance of the leave granted by this court. Two points have been agitated before us. The first point is whether the name 'Lakshmandhara ' was likely to deceive the public or cause confusion to trade within the meaning of section 8 and section 10 (1) of the Act. The second point is whether there was Such, acquiescence on) behalf of the appellant in the use of the name 'Lakshmandhara ' in the. State of Uttar Pradesh as to bring it within the, expression 'special circumstances ' mentioned in sub section 10 of the Act. We shall deal with these two points in the order in which we have stated them, 492 We may first read the relevant sections of the Act, viz.s. 8 and 10. 8. Prohibition of registration of certain matter. No trade mark nor part of a trade mark shall be registered which consists of, or contains, any scandalous design, or any matter the use of which would. (a) by reason of its being likely to deceive or to cause confusion or otherwise, be disentitled to protection in a Court of justice ; or (b) be likely to hurt the religious susceptibilities of any class of the citizen of India or (c) be contrary to any law for the time being in force, or to morality. Prohibition of registration of identical or similar trade mark. (1) Save as provided in sub section (2), no trade mark shall be registered in respect of any goods or description of goods which is identical with a trade mark belonging to a different proprietor and already on the register in respect of the same goods or description of goods or which so nearly resembles such trade mark as to be likely to deceive or cause confusion. (2) In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do he may permit the registration by more than one proprietor of trade marks which are identical or nearly resemble each other in respect of the same goods or description of goods, subject to such conditions and limitations if any, as the Registrar may think fit to impose. (3) 493 It will be noticed that the words used in the sections and relevant for our purpose are "likely to deceive or cause confusion. " The Act does not lay down any criteria for determining what is likely to deceive or cause confusion. Therefore, every case must depend on its own particular facts, and the value of authorities lies not so much in the actual decision as in the tests applied for determining what is likely to deceive or cause confusion. On an application to register, the Registrar or an opponent may object that the trade mark is not registerable by reason of cl. (a) of section 8, or sub section (1) of section 10, as in this case. In such a case the onus is on the applicant to satisfy the Registrar that the trade mark applied for is not likely to deceive or cause Confusion. In cases in which the tribunal considers that there is doubt as to whether deception is likely, the application should be refused. A trade mark is likely to deceive or cause confusion by the resemblance to another already on the Register if it is likely to do so in the course of its legitimate use in a market where the two marks are assumed to be in use by traders in that market. In considering the matter, all the circumstances of the case must be considered. As was observed by Parker, J. in Pianotist Co. s Application (1), 'which was also a case of the comparison of two words "You must take the two words. You must Judge them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact you must consider all the surrounding circumstances and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks (1) ,777. For deceptive resemblance two important questions are: (1) who are the persons whom the resemblance must be likely to deceive or confuse, and (2) what rules of comparison are to be. adopted in judging whether such resemblance exists. As to confusion, it is perhaps an appropriate description of the state of mind of a customer who, on seeing a mark thinks,that it differs from the mark on goods which ' he has previously bought, but is doubtful whether that impression is Dot due to imperfect recollection. (See Kerly on Trade Marks, 8th edition, p. 400.) Let us apply these tests to the facts of the case under our consideration. It is not disputed before use that the two names 'Amritdhara ' and 'Lakahmandhara ' are in use in respect of the same description of goods, namely, a medicinal preparation for the alleviation of various ailments, Such medicinal preparation will be purchased mostly by people who instead of going to a doctor wish to purchase a medicine for the quick alleviation of ;their suffering, both villagers and townsfolk, literate as well as illiterate. As we said in Corn Products Refining Co. vs Shangrila Food Products Ltd (1); the question has to be approached from the point of view of a man of average intelligence and imperfect recollection. To such a man the overall structural and phonetic similarity of the ,two names 'Amritdhara ' and 'Lakshmandbara ' is, in our, opinion likely. t o deceive or ; cause confusion. We must consider, the overall similarity of the two composite words 'Amritdhara ' and 'Lakshman dhara '. We do not think that the learned Judges of the High Court were right in Paying that no Indian would mistake one 'for the other. An unwary purchaser of average intelligence and imperfect recollection would not, as the High Court supposed, split the name into its component parts and consider the etymological meaning thereof or 495 even consider the meanings of the composite words as 'current of nectar ' or current of Lakshman '. He. would go more by the overall structural and phonetic similarity and the nature of the medicine he has previously purchased, or has been told about, or about which has other vise learnt and which he wants to purchase. Where the trade relates to goods largely sold to illiterate or badly educated persons, it is no answer to say that a person educated in the Hindi language would go by the entymological or ideological meaning and, see the difference between 'current of nectar ' and current of Lakshman '. 'Current of Lakshman in a literal sense has no meaning to give it meaning one must further make the inference that the 'current or stream ' is as pure and strong as Lakshman of the Ramayana. An ordinary Indian villager or townsmen will perhaps know Lakshman, the story of the Ramayana being familiar to him but we doubt if he would etymologine to the extent of seeing the so called ideological difference between 'Amritdhara 'and 'Lakshmandhara '. He would go more by the similarity of the two names in the context of the widely known medicinal preparation which he wants for his ailments. We agree that the use of the word 'dhara ' which literally means 'Current or stream ' is not by itself decisive of the matter. What we have to consider here is the overall similarity of the composite words, having regard to the circumstance that the goods bearing the two names are medicina l preparations of the same description. We are aware that the admission of a mar is not to be refused, because unusually stupid people, "fools or idiots", may be deceived. A critical comparison of the two names may disclose some points of difference. but an unwary purchaser of average intelligence and imperfect recollection would be deceived by the overall similarity of the two names having regard 496 to the nature of the medicine he is looking for with a somewhat vague recollection that he had purchased a similar medicine on a previous occasion with. a similar name. The trade mark is the whole thing the whole word has to be considered a the case of the application to register 'Erectiks ' (opposed by the proprietors of the trade mark 'Erector ') Farwell, J. said in William Bailey (Bir mingham) Ltd.8 Application (1) : "I do not think it is right to take a part of the word and compare it with a part of the other Word; one word must 'be considered as a whole and compared with the other word as a whole. . . I think it is a danger ous method to adopt to divide the word up, and seek to distinguish a portion of it from a portion of the other word". Nor do we think that the High Court was. right in thinking that the appellant was claiming a. monopoly in the common Hindi word 'dhara '. We do not think that is quite the position here. What the appellant is claiming is its right under section 21 of the Act, the exclusive right to the use of its trade mark, and to oppose the registration of a trade mark which go nearly resembles its trade mark that it is likely to deceive or cause confusion. A large number of decisions relating to the use of composite words, such as Night Cap and RedCap, Limit and Summit, Rito and Lito, Notrate and Filtrate, etc. were cited in the High Court. Some more have been cited before us. Such deci sions, examples of deceptive resemblance arising out of contrasted words, have been summarised at page 429 to 434 in Karly on Trade Marks, 8th Edition. No useful purpose will be served by referring to them all. As we have said earlier, each case must be decided or its own fact. What degree of ' (1) 497 resemblance is necessary to deceive or cause confusion must the nature of things be incapable of definition a priori. As to the decisions in annexure 'A ', it has been argued before us that they were not at all admissible by reason of sections 40 to 43 of the . On behalf of the appellant it has been contended that they were admissible under section 13 of the Evidence. Act as showing the particular instances in which the appellant claimed its right under section 21 of the Act. We consider it unnecessary to decide this question for the purposes of this case because those decisions even if they are admissible under section 13 do not throw any light on the question whether 'Amritdhara ' and 'Lakshmandhara ' so nearly resemble each other as to cause deception or confusion. That is a, question which we must determine as a case of first impression and irrespective of the earlier decisions. On a consideration of all the circumstances, we have come to the conclusion that the overall similarity between the two names in respect of the same description of goods was likely to cause deception or confusion within the meaning of section 10(1) of the Act and Registrar was right in the view he expressed. The High Court was in error taking a contrary view. We know go the second question, that of acquiescence. Here again we are in agreement with the Registrar of Trade Marks, who in a paragraph of his order quoted earlier in this judg ment has summarised the facts and circumstances on which the plea of acquiescence was based. The matter has been put thus in Halsbury 's Laws of England, Vol. 32 (second edition) pages 659 657, paragraph 966. " If a trader allows another person who is acting in good faith to build up a reputa 498 tion under a trade name or mark to which he has rights, he may lose his right to complain, and may even be debarred from himself using such name or work. But even long user by another, if fraudulent, does not affect the plaintiff 's right to section final injunction on the other hand prompt warning or action before. the defendant has built up any good will may materially assist the plaintiff 's case". We do not think that there was any fraudulent user by the respondent of his trade name 'Lakshmandbara '. The name was first used in 1923 in a small way in Uttar Pradesh. Later it was more extensively used and in the same journals the two trade marks were publicised. The finding of the Registrar is that the appellant and its agent were well aware of the advertisements of the respondent, and the appellant stood by and allowed the respondent to develop his business till it grew from a small beginning in 1923 to an annual turnover of Rs. 43,000/ in 1946. These circum stances establish the plea of acquiescence and bring the case within sub section (2) of section 10, and in view of the admission made on behalf of the respondent 'that his goods were sold mainly in Uttar Pradesh, the Registrar was right in imposing the limitation which he imposed. For these reasons, we would allow the appeal, set aside the Judgment and order of the High Court, and restore those of the Registrar of Trade Marks, Bombay, dated September 10. 1953. In the circumstances of this case, there will be no order for costs. Appeal allowed.

The respondent applied for registration of the trade name "Lakshmandhara" in relation to the medicinal preparation manufactured by him at Kanpur since 1923. It was admitted that the respondent 's product was mainly sold in the State of Uttar Pradesh. The appellant opposed the registration on the ground that it had an exclusive proprietary interest in the trade mark "Amritdhara" in relation to a similar medicinal preparation which had acquired considerable repu tation since 1903 and that the respondent 's trade name "Lakshmandhara" was likely to deceive and cause confusion and therefore the registration was prohibited by section 8 of the Trade Marks Act. The Registrar of Trade Marks held that there was sufficient similarity between "Amritdhar 'a ' and "Lakshamandhara" so as to cause confusion and it was likely to deceive the public, but the acquiescence of the appellant in the use of the trade name "Lakshmandhara" by the respondent in the relation to his product for a long period to the knowledge of the appellant was special circumstance under section 10(2) entitling the respondent to have his name registered along with the appellant 's trade name. He, however, confined the registration to sales with the State of Uttar Pradesh. Both the appellant and the respondent appealed to the High Court which allowed the respondent 's appeal holding that the words "Amrit" and "dhara" were common words in the Hindi language as also the words "Lakshman" and "dhara" and that there was no possibility of any Indian confusing the two ideas. The High Court further held there had been honest concurrent user by the respondent. ,, On the question of acquiescence it held against the respondent. On appeal by special leave. Held, that the question whether a trade name is likely to deceive or cause confusion by its resemblance to another al. ready registered is a matter of first impression and one for decision in each case and has to be decided by taking an over. all view of all the circumstances. The standard of comparison to be adopted in judging the resemblance is from the point of 485 view of a man of average intelligence and imperfect recollection. Pianotist Co. 's Application, , referred to. Corn Products Refining Co., vs Shangrila Food Product8 Ltd., , referred to. Held, further, that the two names as a whole should be considered for comparison and not merely the component words thereof separately. William Bailey (Birmingham) Ltd. '8 application, (1935) 52 R. P. C. 137, referred to. Held, also, that in the present case the similarity in the two name in respect of the same description of goods was likely to deceive or cause confusion; but the facts found by the Registrar established the plea of acquiescence so a to bring the case within sub s.(2) of section 10, and the Registrar was right in imposing the limitation which he imposed.

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N: Criminal Appeal No. 117 of 1978. (Appeal from the Judgment and order dt. 5 12 77 of the Punjab & Haryana High Court in Criminal Misc. Petition No. 3892 M of 1976). R. section Narula, M. section Marwah and D. section Narula for the appellant. section K. Mehta, K. R. Nagaraja and P. N. Puri for the respondents. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Jagir Singh, the appellant in this appeal by special leave, was married to Kirpal Kaur in 1951. Husband and wife became estranged in 1954, since when they have been living separately. Ranbir Singh, the issue of the marriage, was born in 1954. Jagir Singh married again and it is said that he has a son and a daughter by the second wife. On 25th May, 1971, Kirpal Kaur and Ranbir singh filed an application for maintenance under Section 488 of the Criminal Procedure Code, 1898. One of the defences raised by the appellant to that application was that Ranbir Singh was a major and, therefore, not entitled to claim maintenance under Section 488. The Magistrate held that Ranbir Singh was a student who was unable to maintain himself and, therefore, the question whether he was a major or a minor was immaterial. On 19th May, 1973, he made an order awarding maintenance at the rate of Rs. 200/ per month to Kirpal Kaur and Rs. 75/ per month to Ranbir Singh, Jagir Singh filed a revision petition before the Sessions Judge. By consent of the parties, the Sessions Judge made a reference to the High Court recommending that the award of maintenance in favour of the wife should be reduced to Rs. 150/ per month and that the award of Rs. 75/ per month to the son should be confirmed. The reference was accepted by the High Court. The Criminal Procedure Code 1898 was repealed and the Criminal Procedure Code 1974 was enacted in its place. The new Code came into force on 1st April, 1974. On 3rd May, 1974, the appellant made an application before the Magistrate, purporting to be under Section 127 of the new Code, for cancellation of the order of maintenance in favour of the son on the ground that the son had attained majority 285 and did not suffer from any infirmity or abnormality which prevented A him from maintaining himself. It was claimed on behalf of the appellant that under the new Code it was not permissible to award maintenance or enforce an order to maintenance in favour of a child who had attained majority and who was not unable to maintain itself by reason of any physical or mental abnormality or injury. On 3rd June, 1974, the son filed a counter admitting that he had attained majority but claiming that he was still a student, unable to maintain himself. The son claimed that the order in his favour had been validly passed under the old Code and continued to remain in force notwithstanding the enactment of the new Code. On 9th May, 1975, the learned Magistrate allowed the application of the father under Section 127 of the Criminal Procedure Code 1974 and cancelled the order for maintenance made earlier in favour of the son. Ranbir Singh, the son, filed a Revision Application before the Sessions Judge. It was dismissed on 12th March, 1976. The learned Sessions Judge held that the order made under Section 488 of the old Code could survive under Section 484(2) of the new Code if there was a corresponding provision under the new Code which enabled the award of maintenance to a major child. Since there was no such corresponding provision the order under Section 477 in favour of Ranbir Singh ceased to be in force. Ranbir Singh then filed a Revision Application before the High Court of Punjab and Haryana which was allowed on 5th December, 1977. The High Court held that notwithstanding the change in the law which disentitled a major child from claiming maintenance, Section 125 of the new Code did correspond to Section 488 of the old Code. Therefore, the order for maintenance in favour of Ranbir Singh was saved by Section 484(2) of the Code of 1974. 1974 Jagir Singh has preferred this appeal after obtaining special leave from this Court under Article 136 of the Constitution. Shri R. section Narula, learned Counsel for the appellant contended that the Revision Application to the High Court was incompetent as it was barred by the provisions of Section 397(3) of the Code of Criminal Procedure 1974. He argued that the right of the respondent to invoke the revisional jurisdiction of a superior Court became exhausted when he invoked the revisional jurisdiction of the Sessions Judge. Shri Narula further contended that under Section 125 of the Criminal Procedure Code 1974, a major son who did not suffer from any physical or mental abnormality or injury which prevented him from maintaining himself was not entitled to get an order for maintenance in his favour and that an order made in favour of such a son under Section 488 Criminal Procedure Code of 1898 was not saved either by Section 484(2) of the Code of Criminal Procedure 1974 or Sections 6 and 24 286 of the General Clauses Act. Shri section K. Mehta, learned Counsel for the respondent submitted that the revision application before the High Court could be treated and maintained as one directed against the order of the Sessions Judge rejecting the Revision Application made to him. In any case he argued that the Revision Application could be treated as one under Article 227 of the Constitution. He contended that the order of the Magistrate under Section 488 of the Criminal Procedure Code 1898 continued to be in force and that it could not be cancelled merely because Section 125 did not provide for the award of maintenance to a major son who did not suffer from any abnormality or injury. The first question for consideration is whether the High Court was precluded from interfering with the order of the Magistrate in the exercise of its revisional jurisdiction by reason of the provisions of Section 397(3) of the Criminal Procedure Code 1974. Section 397 which corresponds to Section 435 of the Criminal Procedure Code 1898 invests the High Court and the Sessions Judge with concurrent revisional jurisdiction over inferior criminal Courts within their jurisdiction The District Magistrate who also had revisional jurisdiction under Section 435 of the Code of Criminal Procedure 1898 is now divested of such jurisdiction. In addition, there are, in the 1974 Code two important change Both of which are apparently designed to avoid delay and to secure prompt rather than perfect justice. The first change is that introduced by Section 397(2) which bars the exercise of revisional power in relation to any interlocutory order passed in any appeal, enquiry, trial or other proceeding. The second is that introduced by Section 397(3) which provides that if an application under the Section has been made by any person either to the High Court or to the Sessions Judge, and further application by the same person shall be entertained by the other of them. We are concerned with this provision in this appeal. The object of Section 397(3) is clear. It is to prevent a multiple exercise of revisional powers and to secure early finality to orders. Any person aggrieved by an order of an inferior Criminal Court is given the option to approach either the Session Judge or the High Court and once he exercises the option he is precluded from invoking the revisional jurisdiction of the other authority. The language of Section 397(3) is clear and peremptory and it does not admit of any other interpretation. We may also mention here that even under Section 435 of the previous Code of Criminal Procedure, while the Sessions Judge and the District Magistrate had concurrent jurisdiction, like present Section 397(3) previous Section 435(4) provides that if an application under the Section had been made either to the Sessions 287 Judge or District Magistrate no further application shall be entertained by the other of them. In order to cross the hurdle imposed by Section 397(3) it was suggested that the revision application before the High Court could be treated as an application directed against the order of the Sessions Judge instead or an one directed against the order of the Magistrate We do not think that it is permissible to do so. What may not be done directly cannot be allowed to be done indirectly, that would be an evasion of the statute. It is a "well known principle of law that the provisions of an Act of Parliament shall not be evaded by shift or contrivance" (per Abbott C.J. in Fox vs Bishop of Chester(1) "To carry out effectually the object of a Statute, it must be construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined" (Maxwell, 11th edition, page 109). When the Sessions Judge refused to interfere with the order of the Magistrate, the High Court 's jurisdiction was invoked to avoid the order of the Magistrate and not that of the Sessions Judge. The bar of Section 397(3) was, therefore, effectively attracted and the bar could not be circumvented by the subterfuge of treating the revision application as directed against the Session Judge 's order. If the` revision application to the High Court could not be maintained under the provisions of the Criminal Procedure Code, could the order of the High Court be sustained under Article 227 of the Constitution, as now suggested by the respondent ? In the first place the High Court did not purport to exercise its power of superintendence under Article 227. The power under Article 227 is a discretionary power and it is difficult to attribute to the order of the High Court such source of power when the High Court itself did not, in terms, purport to exercise any such discretionary power. In the second place the power of judicial superintendence under Article 227 could only be exercised, sparingly, to keep subordinate Courts and Tribunals within the bounds of their authority and not to correct mere errors. Where the statute banned the exercise of revisional powers by the High Court, it would indeed require very exceptional circumstances to warrant interference under Article 227 of the Constitution, since the power of Superintendence was not meant to circumvent statutory law. In the third place it was doubtful if the High Court could exercise any power of judicial superintendence on the date of its order as the Constitution 42nd Amendment Act had by then been passed. By the 42nd Amendment Act clause (5) was added in Article 227 of the Constitution and it says "Nothing in this article shall (1) (1824) 2 B & 635. 288 be construed as giving to a High Court any jurisdiction to question any judgment of any inferior Court which is not otherwise subject to appeal or revision". Clause (5) of Article 227 introduced by the 42nd Amendment Act is a verbatim reproduction of Sub Section (2) of Section 224 of the Government of India Act, 1935 which it was held conferred powers of administrative superintendence only and not the power of Judicial Superintendence. In the present case the revision application was, however, filed before the passing of the 42nd Amendment Act and it was therefore, argued by the learned Counsel for the respondent that the High Court could exercise the power of superintendence possessed by it before the 42nd Amendment. We have serious doubts. Article 227, before the 42nd Amendment, gave no right to any party. An application invoking the High Court 's power of Superintendence did not create any vested right in the suitor. There could, therefore, be no question of any vested right being taken away or not being taken away by the amendment. It was just a question whether the High Court possessed the power of Superintendence on the date of the High Court 's order. There is no dispute that it did not. We do not wish to pursue the matter further as in our view there was no case to warrant interference under Article 227 of the Constitution. In view of the foregoing discussion, the revision application to the High Court must be held to be incompetent. In that view it is unnecessary to go into the question whether the original order under Section 488, Criminal Procedure Code, 1898 in favour of the respondent could be cancelled under Section 127 of the Criminal Procedure Code 1974, But the lower Courts went into the question at some length and detailed submissions were made before us. We will express our opinion briefly. Section 484(1) of the 1974 Code repeals the Code of Criminal Procedure 1898. Section 484(2) (a) provides for the continuance and disposal of pending cases in accordance with the provisions of the old Code. Section 484(2)(b) provides that 'all notifications published,, proclamations issued, powers conferred, forms prescribed, local jurisdictions defined, sentences passed and orders, rules and appointments made under the old Code and which are in force immediately before the commencement ' of the new Code, shall be deemed, respectively, to have been published, issued, conferred, prescribed, defined, passed or made under the corresponding provisions of the new Code. In the present case the order of the Magistrate under Section 488 of the old Code awarding maintenance to the respondent was made on 19th May, 1973. The new Code came into force on 1st April, 1974. Therefore, the order was in force immediately before the commencement of the new Code. 289 It must, therefore, be deemed to have been made under the corresponding provision of the new Code. The question,, therefore, is whether there is any provision of the new Code corresponding to the provision of the old Code under which maintenance was awarded to the respondent. As we said, the respondent was awarded maintenance under Section 488 of the Criminal Procedure Code 1898. Under Section 488 Criminal Procedure Code 1898 a person having sufficient means and neglecting or refusing to maintain his wife or his legitimate or illegitimate child unable to maintain itself could be ordered to make a monthly allowance for the maintenance of his wife or such child. The word child used in Section 488 led to some controversy whether a person could be ordered to pay maintenance to a child who had attained majority but who was unable to maintain itself. In Nanak Chand vs Chandra Kishore Agarwal & Ors. (1) the Supreme Court held that the word 'child ' in Section 488 did not mean a minor son or daughter and that the real limitation was contained in the expression 'unable to maintain itself. Irrespective of whether a son or daughter was a major or minor, a father was bound to maintain the son or daughter if such son or daughter was unable to maintain himself or herself. Section 125 of the 1974 Code makes a slight departure. Under this provision child who has attained majority is not entitled to be awarded maintenance unless such child is unable to maintain itself by reason of any physical or mental abnormality or injury. According to Shri R. section Narula in view of the change it cannot be said that the new Code contains ally provision corresponding to the provision in the old Code which authorised the award of maintenance to a child who had attained majority and who was unable to maintain itself even if such child did not suffer from any physical or mental abnormality or injury. Therefore, according to Shri Narula, Section 484(2) (b) does not save all order awarding maintenance in favour of a child who has attained majority and who does not suffer from any physical or mental abnormality or injury. It is difficult to agree with the submission of Shri Narula. To accept the submission would be to give the expression "corresponding provision" the meaning "identical provision". Whenever an Act is repealed and re enacted there are bound to be changes and modifications. To say that a modified provision dealing with the same subject matter in substantially the same manner as the original provision is not a corresponding provision would be to practically mullify the effect of a "Repeal and Savings" provision like Section 484(2) (b) of the new Code. In the Shorter oxford English Dictionary Third Edition Vol. I, the word 'correspond ' is said to mean ' (1) to answer to something else in the way H (1) A.l. R 290 of fitness; to agree with; be conformable to; be congruous or in harmony with. (2) To answer to in character or function; to be similar to '. In Butterworths 'Words and Phrases Legally defined ' Second Edition Vol. 1, it is said " 'to correspond ', does not usually, or properly, mean 'to be identical with ', but 'to harmonise with ', or 'to be suitable to ' " and reference is made to Sackville West vs Holmesdale (Viscount) (1). We are, therefore, of the view that Section 125 of the new Code corresponds to Section 488 of the old Code notwithstanding the fact that under the new Code a child who has attained majority and who does not suffer from any infirmity is not entitled to be maintained by the father. We also note that there are no words in Section 484(2) (b) limiting its application to orders made and sentences passed which are not inconsistent with the provisions of the new Code. There are no such limiting words as may be found as for example in Section 24 of the General Clauses Act which limits its application to an order, rule, etc. "so far as it is not inconsistent with the provisions re enacted". This does not mean that statutory instruments made under the old Code and which are inconsistent with the provisions of the new Code continue to be effective. All that Section 484(2) (b) says is that such statutory instruments shall be deemed to be made under the corresponding provisions of the new Code. Their validity will have to be tested like any other statutory instruments made under the provisions of the new Code and they will have to answer the test whether they are consistent with the provisions of the new Code. But, in the case of Judicial orders made and sentences passed such orders and sentences which have attained finality and which have created rights in parties do not have to answer the test of being consistent with the provisions of the new Code. We, therefore, hold that the order for maintenance made in favour of the respondent must be deemed to be an order made under Section 125 of the new Code and that it does not automatically cease to be effective on the coming into force of the new Code. The High Court arrived at this conclusion and thought that it was sufficient to hold in favour of the respondent and to allow the Revision Application. We do not think that the High Court was right in stopping there. The High Court should have further considered the question whether the order for maintenance which was deemed to be an order under Section 125 of the new Code could not be cancelled under the provisions of Section 127 of the new Code. Once the, order under Section 488 is deemed to be an order under Section 125 of the new Code, it must be so deemed for all purposes including the application of Section 127 of the new Code. Section 127 provides for consequential orders upon proof of a change in the circumstance of any person (1) (1878) L.R. 4 l. 543. 291 receiving, under Section 125, a monthly allowance, or ordered under the A same Section to pay a monthly allowance to his wife, child, father or mother, as the case may be. The admitted attainment of majority of the respondent and the change of the law were surely circumstances which entitled the appellant to have the order in favour of the respondent cancelled. We accordingly allow the appeal and set aside the judgment of the High Court. B M.R. Appeal allowed.

Ranbir Singh is Jagir Singh 's son from his separated first wife. Ill 1971 he and his mother applied for maintenance under section 488 of Cr.P.C., 1898. Although Ranbir Singh was a major, maintenance was awarded to him on the ground that he was a student unable to maintain himself. In April 1974, the new Cr. P.C. came into force, and under section 127 jagir Singh applied for cancellation of the maintenance order, on the ground that the major son WAS not prevented from maintaining himself through any infirmity or abnormality, and is not entitled to maintenance under the new code. The respondent contended that the maintenance order had been validly passed under the old Code, and continued to remain in force notwithstanding the enactment of the new Code but the Magistrate cancelled the maintenance order, Ranbir Singh 's Revision Application was dismissed by the Sessions Court, on the ground that the order made under section 488 of the Cr.P.C., 1898 would not survive under section 484(2) of the Cr. P.C. 1974 due to the absence of a corresponding provision under the new Code, enabling his maintenance. He then applied to the High Court for a Revision. The High Court allowed the Revision holding that 9. 125 of the Cr. P.C., 1974 did correspond with section 488 of the Cr. P.C. 1898. The appellant contended that Ranbir Singh 's Revision application to the High Court was barred by section 397(3), Cr.P.C., 1974, and was incompetent, and that his right to invoke revisional jurisdiction of a superior court became exhausted when he moved the Sessions Court in Revision. He further contended that the maintenance order was not saved either by section 484(2), Cr. P.G 1974 or section 6 and 24 of the General Clauses Act. The respondent submitted that his Revision application before the High Court could be treated and maintained, as, one directed against the Sessions Judge 's order rejecting his Revision application, or It could be treated as one under article 227 of the Constitution. Allowing the appeal, the Court. ^ HELD: (1) The power under Act. 227 is discretionary. The power of judicial superintendence under it could only be exercised sparingly to keep subordinate courts and Tribunals within the bounds of their authority, and not to collect mere errors. Where the statute banned the exercise of revisional 283 powers by the High Court, it would require very exceptional circumstances to A warrant interference under article 227, since the power of superintendence was not meant to circumvent statutory law. By the 42nd. Amendment Act, clause (5) was added in article 227, which is a verbatim reproduction of section 224(2) of the Government of India Act, 1935, conferring powers of administrative superintendence only, and not the power of judicial superintendence. [287F H, 288A] (2) In the Cr. Of 1974 the District Magistrate is divested of his revisional jurisdiction over inferior criminal courts. In addition, there are two important changes apparently designed to avoid delay and to secure prompt justice. The first change is introduced by section 397(2) which bars the exercise of revisional power in relation to any interlocutory order passed in any appeal, enquiry, trial or other proceeding. The second change is introduced by section 397 (3) under which any person aggrieved by an order of an inferior criminal court, is given the option to approach either the Sessions Judge or the High Court, and once he exercises the option, he is precluded from invoking the revisional jurisdiction of the other authority. The object is, to prevent a multiple exercise of revisional powers and to secure early finality to orders. [286C F] For vs Bishop of Chestor, ; ; Maxwell (11th Edn. page 109); applied. (3) Whenever an Act is repealed and re enacted, there are bound to be changes and modifications. To say that a modified provision dealing with the same subject matter in substantially the same manner as the original provision is not a "corresponding provision", would be to practically nullify the effect of a "Repeal and Savings" provision like section 484 (2) (b) of the new Code. "To correspond" does not usually, or properly, mean to be identical with but to harmonise with, or to be suitable to. There are no words in section 484 (2) (b) limiting its application to orders made, and sentences passed, which are not inconsistent with the provisions of the new Code. All that section 484(2)(b) says is that such statutory instruments shall be deemed to be made under the corresponding provisions of the new Code. Their validity will have to be tested like any other statutory instrument made under the provisions of the new Code. There validity will have to be tested like any other statutory made under the provisions of the with the provisions of the new Code. and they will have to answer the test whether they are inconsistent with the provisions of the new Code. But in ease of judicial orders made, and sentences passed, such orders and sentences which have attained finality and which have created rights in parties, do not have to answer the test of being consistent with the provisions of the new Code. [289F H, 290B E] Butterworth 's (Words and Phrases legally defined)(2nd Edn Vol. I), Shorter oxford English Dictionary (3rd Edn. I); Sackville West vs Holmsdale (Viscount), [1870] LR. ; applied. (4) Section 125 of the new Code corresponds to section 488 of the Cr.P.C., 1898 notwithstanding the fact that under the Cr.P.C. Of 1974, a child who has attained majority, and who does not suffer from any infirmity, is not entitled to be maintained b`y the father. Once an order under section , is deemed to be an order under section 125 of the Cr. P.C. 1974, it must be to deemed for all purposes, including the application of section 127 of the new Code. [290B, G] 20 817 SCI/78 284 Nanak Chand vs Chandra Kishore Aggarwal & Ors., ; ; referred to.

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Appeal No. 1113 of 1970. Appeal from the judgment and order dated April 3, 1970 of the Bombay High Court in Company Appeal No. 1 of 1970. V. M. Tarkunde, R. L. Mehta and 1. N. Shroff, for the appellant. M. C. Chagla and section N. Prasad, for Creditors Nos. 1, 3 to 6 and 10. A. K. Sen and E. C. Agrawala, for creditor No. 9. The Judgment of the Court was delivered by Ray, J. This is an appeal by certificate, from the judgment dated 3 April, 1970 of the High Court of Bombay confirming 203 the order of the learned Single Judge refusing to wind up the respondent company. The appellants are a partnership firm. The partners are the Katakias. They are three brothers. The appellants carry on partnership business in the name of Madhu Wool Spinning Mills. The respondent company has the nominal. capital of Rs. 10,00,000 divided into 2000 shares of Rs. 500 each. The issued subscribed and fully paid up capital of the company is Rs. 5,51,000 divided into 1,103 Equity shares of Rs. 500 each. The three Katakia brothers had three shares in the company. The other 1,100 shares were owned by N.C. Shah and other members described as the group of Bombay Traders. Prior to the incorporation of the company there was an agreement between the Bombay Traders and the appellants in the month of May, 1965. The Bombay Traders consisted of two groups known as the Nandkishore and the Valia groups. The Bombay Traders was floating a new company for the purpose of running a Shoddy Wool Plant. The Bombay Traders agreed to pay about Rs. 6,00,000 to the appellants for acquisition of machinery and installation charges thereof. The appellants had imported some machinery and were in the process of importing some more. The agreement provided that the erection expenses of the machinery would be treated as a loan to the new company. Another part of the agreement was that the machinery was to be erected in portions of a shed in the compound of Ravi Industries Private Limited. The company was to pay Rs. 3,100 as the monthly rent of the portion of the shed occupied by them. The amount which the Bombay Traders would advance as loan to the company was agreed to be converted into Equity capital of the company. Similar option was given to the appellants to convert the amount spent by them for erection expenses into equity capital. The company was incorporated in the month of July, 1965. The appellants allege that the company adopted the agreement between the Bombay Traders and the appellants. The company however denied that the company adopted the agreement. The appellants filed a petition for winding up in the month of January, 1970. The appellants alleged that the company was liable to be wound up under the provisions of section 43 3 (c) of the as the company is unable to pay the following debts. 204 The appellants claimed that they were the creditors of the company for the following sums of money : A.(a) Expenses incurred by the appellants in connection with the erection of the plant and machinery. Rs. 1,14,344.97 (b) Interest on the sum of Rs. 1,14,344.97 from 1 April, 1966 till 31 December, 1969 at 1% per mensem. Rs. 51,453.13 (c) Commission on the sum of Rs. 1,14,344. 97 due to the app ellants at the rate of Ipercent per mensem from 1 April 1966 till 13 December,1969. Rs. 51,453.12 B. (a) Compensation payable by the company to the appellants at the rate of Rs. 3,100 per month for 22 months and 14 days in respect of occupation of the portion of the shed given by the appellants to the company on the basis of leave and licence. Rs.69,600.00 (b) Interest on the amount of com pensation from time to time by the said company to the appellants till 12 April, 1967. Rs. 7,857.00 (c) Further interest on compensation from 13 April, 1967 to 31 December, 1969. Rs. 21,576.00 C. (a) Invoices in respect of 3 machines. Rs. 85,250.00 (b) Interest on Rs. 85,250 Rs. 37,596.00 (c) Commission at the rate of 1% per cent or Rs.85,250 Rs. 37,596.00 The appellants alleged that the company failed and neglected to show the aforesaid indebtedness in the books of account save and except the sum of Rs. 72,556.01. The other allegations of the appellants were these. The company incurred losses upto 31 March, 1969 for the sum of Rs. 6,21,177.53 and thereafter incurred further losses. The company stopped functioning since about the month of Septem ber, 1969. The company is indebted to a Director and the firms of M/s Nandkishore & Co. and M/s Bhupendra & Co. in which some of the Directors of the company are interested. The in , debtedness of the company to the creditors including the appellant 's claim as shown by the company at the figure of Rs. 72,556.01 is for the sum of Rs. 9,56,829.47. The liability of the company including the share capital amounted to Rs. 14,98,923.3 3. The liability excluding the share capital of the company is Rs. 9,56,829.47 and the assets of the company on the valuation put by the company on the balance sheet amount to Rs. 8,81,171.96. The value of the current and liquid assets is about Rs. 2,74,247.38. The appellants on these allegations alleged that even after the proposed sale of the machinery at Rs. 4,50,000 the company would not be in a position to discharge the indebtedness of the company. The proposed sale, of machinery for the sum of Rs. 4,50,000 was at a undervalue. The market value was Rs. 6,00,000. The Board did not sanction such a sale. It was alleged that the substratum of the company disappear ed and there was no possibility of the company doing any business at profit. The company was insolvent and it was just and equitable to wind up the company. 205 When the petition was presented to the High Court of Bombay the learned Single Judge made a preliminary order accepting the petition and directing notice to the company. When the company appeared all the shareholders and a large number of creditors of the company of the, aggregate value of Rs. 7,50,000 supported the company and opposed winding up. The company disputed the claims of the appellants under all the heads save the two amounts of Rs. 14,650 and Rs. 36,000 being the amounts of the second and third invoices. The company produced books of account showing a sum of Rs. 72,556.01 due to the appellants, as on 31 March, 1969. The company alleged that the appellants had agreed to reduction of the debt to a sum of Rs. 14,850 and to accept payment of the same out of proceeds of sale of the machinery. The learned Single Judge held that the claims of the appel lants were disputed save that a sum of Rs. 72,556,.01 was payable by 'the company to the appellants and with regard to the sum of Rs. 72,556.01 the company alleged that there was a settlement at Rs. 14,850 whereas the appellants. denied that there was any such compromise. The learned Single Judge refused to wind up the company and asked the company to deposit the disputed amount of Rs. 72,556.01 in court. The further order was that if within six weeks the appellants did not file the suit in respect of the recovery of the amount the company would be able to withdraw the amount and if the suit would be filed the amount would stand credited to the suit. The High Court on appeal upheld the judgment and order and found that the alleged claims of the appellants were very strongly and substantially denied and disputed. The first claim for erection of plant and machinery was to tally denied by the company. The defences were first that the books of the company showed no such transactions; secondly, there was no privity between the company and the persons in whose names the appellants made the claims; thirdly, the alleged claims were barred by limitation; and, fourthly, there was never any demand for the alleged claims either by those persons or by ,the appellants. The alleged claims for interest and commission were therefore equally baseless according to the defence of the Company. The second claim for compensation was denied on the grounds ,that the appellants were not entitled to any compensation for use of The portion of the shed 'and the alleged claim was barred by imitation. As to the claim for compensation the company relied on the resolution of the Board of Directors at which the Katakia brothers were present as Directors The Board resolved 206 confirmation of the arrangement with M/s Ravi Industries for use of the premises for the running of the industry at their shed at a monthly rent of Rs. 4,250: Prima facie the resolution repelled any claim for compensation or interest on compensation. With regard to the claim of invoices the High Court held that the first invoice for Rs. 34,600 was paid by the company to the appellants. The receipt for such payment was produced before the learned trial Judge. The appellants also admitted the same. As to the other two invoices for Rs. 14,650 and for Rs. 36,000 the amounts appeared in the company 's books. According to the company the claim of the appellants was for Rs. 72,556.01 and the case of the company was that there was a settlement of the claim at Rs. 14,850.00. The High Court correctly gave four principal reasons to re ject the claims of the appellants to wind up the company as creditors. First, that the books of account of the company did not show the alleged claims of the appellants save and except the sum of Rs. 72,556.01. Second, many of the alleged claims are barred by limitation. There is no allegation by the appellants to support acknowledgement of any claim to oust the plea of limitation. Thirdly, the Katakia brothers who were the Directors resigned in the month of August, 1969 and their three shares were transferred in the month of December, 1969 and up to the month of December, 1969 there was not a single letter of demand to the company in respect of any claim. Fourthly, one of the Katakia brother was the Chairman of the Board of Directors and therefore the Katakias were in the knowledge as to the affairs of the company and the books of accounts and they signed the balance sheets which did not reflect any claim of the appellants except the two invoices for the amounts of Rs. 14,650 and Rs. 36,000. The High Court characterised the claim of the appellants as tainted by the vice of dishonesty. The alleged debts of the appellants are disputed, denied, doubted and at least in one instance proved to be dishonest by the production of a receipt granted by the appellants. The books of the company do not show any of the claims excepting in respect of two invoices for Rs. 14,650 and Rs. 36,000. It was said by the appellants that the books would not bind the appellants. The appellants did not give any statutory notice to raise any presumption of inability to pay debt. The appellants would therefore be required to prove their claim. This Court in Amalgamated COmmercial Traders (P) Ltd. v.A. C. K. Krishnaswami and Anr. (1) dealt with a petition to wind up the company on the ground that the company was indebted to the petitioner there for a sum of Rs. 1,750 being the net dividend (1) 35 Company cases 456. 207 amount payable on 25 equity shares which sum the company failed and neglected to pay in spite of notice of demand. There were other shareholders supporting the winding up on identical grounds. The company alleged that there was no debt due and that the company Was in a sound financial position. The resolution of the company declaring a dividend made the payment of the dividend contingent on the receipt of the commission from two sugar mills. The commission was not received till the month of May, 1960. The resolution was in the month of December , 1959. Under section 207 of the a company was required to pay a dividend which had been declared within three months from the date of the declaration. A company cannot declare a dividend payable beyond three months. This Court held that the non payment of dividend was bona fide disputed by the company. It was not a dispute 'to hide ' its inability to pay the debts. Two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon. and the sum demanded by the, creditor was unreasonable (See London and Paris Banking Corporation (1). Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company When the company contended that the work had not been done properly was not allowed. (See Re. Brighton Club and Norfold Hotel Co. Ltd. (2) Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt (See Re. A Company 94 S.J. 369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debt precisely (See Re. Tweeds Garages Ltd. (3) The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. Another rule which the court follows is that if there is opposition to the making of the winding up order by the creditors the court will consider their wishes and may decline to make the winding up order. Under section 557 of the Company Act 1956 (1) (3) (2) ; 208 in all matters relating to the winding up of the company the court may ascertain the wishes of the creditors. The wishes of the shareholders are also considered though perhaps the court may attach greater weight to the views of the creditors. The law on this point is stated in Palmer 's Company Law, 21st Edition page 742 as follows : "This right to a winding up order is, however, qualified by another rule, viz., that the court will regard the wishes of the majority in value of the creditors, and if, for some good reason, they object to a winding up order, the court in its discretion may refuse the order '. The wishes of the creditors will however be tested by the court on the grounds as to whether the case of the persons opposing the winding up is reasonable; secondly, whether there are matters which should be inquired into and investigated if a winding up order is made. It is also well settled that a winding up order will not be made on a creditor 's petition if it would not benefit him or the company 's creditors generally. The grounds furnished by the creditors opposing the winding up will have an. important bearing on the reasonableness of the case (See Re. P. & J. Macrae Ltd.(1). In the present case the claims of the appellants are disputed in fact and in law. The company has given prima facie evidence that the appellants are not entitled to any claim for erection work, because there was no transaction between the company and the appellants or those persons in whose names the appellants claimed the amounts. The company has raised the defence of lack Of privity. The company has raised the defence of limitation. As to the appellant 's claim for compensation for use of shed the company denies any privity between the company and the appellants. The company has proved the resolution of the company that the company will pay rent to Ravi Industries for the use of the shed. As to the three claims of the appellants for invoices one is proved by the company to be utterly unmeritorious. The company produced a receipt granted by the appellants for the invoice amount. The falsehood of the appellants ' claim has been exposed. The company however stated that the indebtedness is for the sum of Rs. 14,850 and the company alleges the agreement between the company and the appellants that payment will be made out of the proceeds of sale. On these facts and on the principles of law to which reference has been made the High Court was correct in refusing the order for winding up. Since the inception of the company Jayantilal Katakia a partner of the appellants was the Chairman of the company until 22 August, 1969. His two brothers were also Directors of the company since its inception till 22 August, 1969. The Bombay group had also Directors of the company. (1) 209 The company proved the unanimous resolution of the Board at a meeting held on June, 1969 for sale of machinery of the company. The Katakia brothers were present at the meeting. The Katakia brothers thereafter sold their three shares to the Valia group. The cumulative evidence in support of the case of the company is not only that the Katakia brothers consented to and approved of the sale of machinery but also parted with their shares of the company. The three shares were sold by the Katakia Brothers shortly after each of them had written a letter on 27 July, 1969 expressly stating that they had no objection to the sale of the machinery and the letter was issued in order to enable the company to hold an Extra ordinary General meeting on the subject. The company relied on the resolution of the Board meeting on 24 October, 1969 where it was recorded that the Valia group would sell their 367 shares and 3 other shares which they had purchased from the appellants to the Nandkishore group and the appellants would accept Rs. 14,850 in settlement of the sum of Rs. 72,000 due from the company and the company would make that payment out of proceeds of sale of the machinery. The Board at a meeting held on 17 September, 1969 resolved that the proposal of R. K. Khanna to purchase the machinery be accepted. On 20 December, 1969 an agreement was signed between R. K. Khanna and the company for the sale of the machinery. At the Annual General Meeting of the company on 8 January, 1970 the Resolution for sale of the machinery was unanimously passed by the company. It is in this background that the appellants impeached the proposed sale of the machinery as unauthorised and improvident. The appellants themselves were parties to the proposed sale. The appellants themselves wanted to buy the machinery at a higher figure. These matters are within the province of the management of the company. Where the shareholders have approved of the sale it cannot be said that the transaction is unauthorised or improvident according to the wishes of the shareholders. It will appear from the judgment of the High Court that the creditors for the sum of Rs. 7,50,000 supported the company and resisted the appellants ' application for winding up. There was some controversy as to whether all the creditors appeared or not. At the hearing of this appeal the company gave a list of the creditors and notices were issued to the creditors. Apart from the appellants, two other creditors who supported the appellants were Ravi Industries Ltd. whose name appears as one of the creditors as on 2 August, 1971 in the list of creditors furnished by the company and K. section Patel & Co. with a claim for Rs. 44,477.56 though their name does not appear in the list. Among the creditors who 210 supported the company the largest amount was represented by Nandikshore and Company with a claim for Rs. 4,95,999. The two creditors who supported the claim of the appellants in regard to the prayer for winding up were Ravi Industries Ltd. with a claim for Rs. 2,97,500 on account of rent and K. section Patel & Co. of Bombay with a claim for Rs.44,477.56. It may be stated here that this claim of Rs. 44,477.56 was made on account of erection work of machinery and this identical claim was included in the list of expenses claimed by the appellants on account of erection work. The company disputed the claim. The High Court correctly found that the appellants could not sustain the claim to support winding up. It is surprising that a claim of the year 1965 was never pursued until it was included as an item of debt in the petition for winding up the company. With regard to the claim for rent, the company pursuant to an agreement between the company and Ravi Industries Private Ltd. credited Rowe Industries with the sum of Rs. 1,52,000 with the result that a sum of Rs. 1,45,500 would be payable by the company to Ravi Industries Ltd. in respect of rent. The company alleges that Ravi Industries Pvt. Ltd. supported the company in the High Court and that they have taken a completely different position ill this Court. In this Court the company has also relied on a piece of writing dated 24 September, 1971 wherein Ravi Industries Private Ltd. acknowledged payment of Rs. 1,52,000 to Rowe Industries Pvt. Ltd. and further agreed to write off the amount of Rs. 1,45,500. Ravi Industries Pvt. Ltd. is disputing the same. This appears to be a matter of substantial dispute. The Court cannot go into these questions to settle debts with doubts. Counsel for the appellants extracted observations from the judgment of the High Court that it was never in dispute that the company was insolvent and it was therefore contended the company should be wound up. Broadly stated, the balance sheet shows the share capital of the company to be Rs. 5,51,500, the liabilities to be Rs. 9,77,829.47 and the assets to be Rs. 8,87,177.93. The assets were less than the liability by Rs. 90,000. Accumulated losses of the company for five years appear to be Rs. 6,21,17.53. The plant and machinery which are shown in the balance sheet at Rs. 6,07.544.58 are agreed to be sold at Rs. 4,50,000. There would then be a short fall in the value of the fixed assets by about Rs. 1,50,000 and if that amount is added to the sum of Rs. 90,000 representing the difference between the assets and liabilities the shortfall in the assets of the company would be about Rs. 2,50,000. The appellants contended that the shortfall in the assets of the company by about Rs. 2,50,000 after the sale of the machinery would indicate first that the substratum of the company was 211 gone and secondly that the company was insolvent. An allegation that the substratum of the company is gone is to be alleged and proved as a fact, The sale of the machinery was alleged in the petition for winding up to indicate that the substratum of the company had disappeared. It was also said that there was no possibility of the company doing business at a profit. In determining whether or not the substratum of the company has gone, the objects of the company and the case of the company on that question will have to be looked into. In the present case the, company alleged that with the proceeds of sale the company in , tended to enter into some other profitable business. The mere fact that the company has suffered trading losses will not destroy its substratum unless there is no reasonable prospect of it ever making a profit in the future, and the court is reluctant to hold that it has no such prospect. (See Re. Suburban Hotel Co.(1); and Davis & Co. vs Brunswick (Australia) Ltd. (2 ) The company alleged that out of the proceeds of sale of the machinery the company would have sufficient money for carrying on export business even if the company were to take into consideration the amount of Rs 1,45,000 alleged to be due on account of rent. Export business, buying and selling yarn and commission agency are some of the business which the company can carry on within its objects. One of the Directors of the Company is Kishore Nandlal Shah who carries on export business under the name and style of M// 'section Nandkishore & Co. in partnership with others. Nandkishore & Co. are creditors 'of the company to the extent of Rs. 4,95,000. The company will not have to meet that claim now. On the contrary, the Nandkishore group will bring in money to the company. This Nandkishore group is alleged by the company to help the company in the export business. The company has not abandoned objects of business. There is no such allegation or proof. It cannot in the facts and circumstances of the present case be held that the substratum of the company is gone. Nor can it be held in the facts and circumstances of the present case that the company is unable to meet the outstandings of any of its admitted creditors. The company has deposited in court the disputed claims of the appellants. The company has not ceased carrying on its business. Therefore, the company will meet the dues as and when they fall due. The company has reasonable. prospect of business and resources. Counsel on behalf of the company contended that the appel lants presented the petition out of improper motive. Improper motive can be spelt out where the position is presented to coerce the company in satisfying some groundless claims made against it by the petitioner. The facts and circumstances of the present case indicate that motive. The appellants were Directors. They sold, ' (1) (2) [1936] 1 A.F.R. 299. 212 their shares. They went out of the management of the company in the, month of August, 1969. They were parties to the proposed sale. Just when the sale of the machinery was going to be effected the appellants presented a petition for winding up. In the recent English decision in Mann & Anr. vs Goldstein & Anr. (1) it was held that even though it appeared from the evidence that the company was insolvent, as the debts were substantially ,disputed the court restrained the prosecution of the petition as an abuse of the process of the court. It is apparent that the appellants did not present the petition for any legitimate purpose. The appeal therefore fails and is dismissed with costs. The company and the supporting creditors will get one hearing fee. The amount of Rs. 72,000 which was deposited in court will remain deposited in the court for a period of eight weeks from this date and if in the meantime no suit is filed by the appellants within eight weeks the company will be at liberty to withdraw the amount by filing the necessary application. In the event of the suit being filed within this period the amount will remain to the credits of the suit. V.P.S. Appeal dismissed.

The appellants filed a petition for winding up of the respondent company, on the grounds : (1) that the company was unable to pay the debts due to the appellants, (2) that the company showed their indebtedness in their books of account for a much smaller amount, (3) that the company was indebted to other creditors, (4) that the company was effecting an unauthorised sale of its machinery, and (5) that the company had incurred losses and stopped functioning, and therefore the substratum of the company disappeared and there was no possibility of the company doing any business at profit. The High Court dismissed the petition. Dismissing the appeal to this Court, HELD : The rules for winding up on a creditor 's petition are if there is a bona fide dispute about a debt and the defence is a substantial one, the court would not ' order winding up. The defence of the company should be in good faith and one of substance. if the defence is likely to succeed on a point of law and the company adduced prima facie proof of the facts on which the defence depends, no order of winding up would be made by the Court. Further under section 557 of the , in all matters relating to winding up of a company the court may ascertain the wishes of the creditors. If, for some good reason the creditors object to a winding up order, the court, in its discretion, may refuse to pass such an order. Also, the winding up order will not be made on a creditor 's petition if it would not benefit the creditor or the company 's creditors generally. [207 D, G H; 208 C D] (1) In the present case, the claims of the appellants were disputed both in fact and in law. The company had given prima facie evidence that the appellants were not entitled to any claim. The company had also raised the defence of lack of privity and of limitation. [208 D F] (2) One of the claims of the appellants was proved by the company to be unmeritorious and 'false, and as regards the admitted debt the company had stated that there was a settlement between the company and the appellants that the appellants would receive a lesser amount and that the company would pay it off out of the proceeds of sale of the company 's properties. [208 F G] (3) The creditors of the company for the sum of Rs. 7,50,000 supported the company and resisted the appellants ' application for winding up. [209 G] (4) The cumulative evidence in support of the case of the company is that the appellants consented to any approved of the sale of the machinery. As shareholders, they had expressly written that they had no objection to the sale of the machinery and the letter was issued in order to enable the company to hold an extraordinary general meeting on the subject. The company passed a resolution authorising the sale. The 256 Sup. Cl/72 202 appellants themselves were parties to the proposed sale and wanted to buy the machinery. Where the shareholders had approved of the sale it could not be said that the transaction was unauthorised or improvident.[209 A F] (5) In determining whether or not the substratum of the company had gone, the objects of the company and the case of the company on that question would have to be looked into. In the present case, the company alleged that with the proceeds of sale the Company intend to enter into some other profitable business. such as export business which was within its objects. The mere fact that it had suffered trading losses will not destroy its substratum unless there is no reasonable prospect of it ever making a profit in the future. A court would not draw such an inference normally. One of its largest creditors, who opposed the winding up petition would help it in the export business. The company had not abandoned the objects of its business. Their ,fore, on the facts and circumstances of the present case it could not be held that the substratum of the company had gone. Nor could it be held that the company was unable to meet the outstandings of any of its admitted creditors. The company had deposited money in court as per the directions of the Court and had not ceased carrying on its business. [211A G] (6) On the facts of the case it is apparent that the appellants had presented the petition with improper motives and not for any legitimate purpose. The appellants were its directors, had full knowledge of the company 's affairs and never made demands 'for their alleged debts. They sold their shares, went out of management of the company and just when the sale of the machinery was going to be effected presented the petition for winding up. [211 A; 212 A C] Amalgamated Commercial Traders (P.) Ltd. vs A. C. K. Krishnaswami & Anr., , London & Paris Banking Corporation, , Re. Brighton Club & Norfold Hotel Co. Ltd., ; , Re. A. Company, 94 S.J. 369, Re. Tweeds Garages Ltd., (1962) Ch. 406, Re. P. & J. Macrae Ltd., , Re. Suburban Hotel Co. and Davis & Co.v. Burnswick (Australia) Ltd., , and Mann & Am .v. Goldstein & Anr., , referred to.

3067.txt

N: Criminal Appeal No. 384 of 1974. Appeal by Special leave from the Judgment and Order dated the 24th October, 1973 of the Allahabad High Court in Crl. Appeal No. 710 of 1973. Dalveer Bhandari, H.M. Singh & Ranbir Singh for the Appellant. R.K. Garg, V.J. Francis & Nikhil Chandra for the Respondent. The Judgment of the Court was delivered by VENKATARAMIAH, J. It was about 5.30 P.M. on October 15, 1971. Bankey Lal son of Jang Bahadur Singh and his wife Chandra Kali were returning home from their 'Khalihan ' (threshing floor) which was situated towards the north of their village Kishunpur Chirai. As they came near the village they were met by Pussu alias Ram Kishore and his brother in law Sheo Rakhan. Pussu was armed with a licensed gun of his father Jia Lal and Sheo Rakhan with a country made pistol. They both fired at Bankey Lal causing him injuries. Chhatrapal and Gaya Prasad who were going that very way towards the village saw the occurrence and asked Pussu and Sheo Rakhan to desist from firing and also tried to stop them from continuing to fire. Pussu fired with the gun towards Chhatrapal who in spite of being fired at tried along with some others who were there to catch hold of Pussu and to snatch the gun from his hands. As Pussu could not reload the gun he assaulted those who tried to catch him with the butt of the gun. Gaya Prasad was, however, able to snatch the gun from the hands of Pussu after delivering few blows with his lathi on the head of Pussu. Pussu suddenly managed to escape from the hold of the witnesses and ran towards Sheo Rakhan who was standing near a mango tree with his country made pistol which he was not in a position to open and reload in spite of his attempts. In the meantime the witnesses were carrying the injured Bankey Lal towards the village and when they came near a pipal tree, Pussu ran towards them 297 with the country made pistol which he had reloaded by then and fired again at Bankey Lal and killed him instantaneously. This in brief is the prosecution case. The defence version appears to be that on the date and at the time of the occurrence Pussu and Sheo Rakhan were going towards the 'Bhagwa Talab ' near their village and on the way they came across Bankey Lal, his servant Nanhoon and Chhatrapal. These three persons surrounded both Pussu and Sheo Rakhan and began to assault them. On hearing their cries Jialal, the father of Pussu ran towards them with his licensed gun and fired in self defence at Chhatrapal and Bankey Lal causing injuries to Chhatrapal and killing Bankey Lal. On the basis of the allegations of the prosecution, Pussu was charged for an offence punishable under section 302 I.P.C. for having committed the murder of Bankey Lal and for an offence punishable under section 307 I.P.C. for having attempted to commit the murder of Chhatrapal. He was also charged under section 323 for having caused hurt to Gaya Prasad and under sections 25 and 27 of the Arms Act for having been found in illegal possession of and for having used a licensed gun for unlawful purposes. He was also charged separately under section 302/34 I.P.C. for having committed murder of Bankey Lal in furtherance of the common intention of himself and of Sheo Rakhan. Sheo Rakhan was charged under section 304/34 I.P.C. for the murder of Bankey Lal in furtherance of the common intention of himself and of Pussu. Jia Lal, father of Pussu, was charged under section 30 of the Arms Act for contravening the conditions of the licence issued in respect of his gun by allowing Pussu to take and use it as stated above. The learned Sessions Judge at Fatehpur in Sessions Trial No. 128/72 found Pussu guilty of the offence punishable under section 302 I.P.C. for having committed the murder of Bankey Lal and imposed the sentence of death on him subject to confirmation by the High Court. Pussu was also found guilty of offences punishable under sections 307 I.P.C. 323 I.P.C. and under section 27 of the Arms Act for which he was sentenced to undergo rigorous imprisonment for seven years, for one year and for one year respectively which were to run concurrently. Sheo Rakhan was found guilty of an offence punishable under section 302/34 I.P.C. and was sentenced to undergo imprisonment for life. Jia Lal, father of Pussu, was however acquitted of the charge against him. 298 On appeal by Pussu and Sheo Rakhan, in Criminal Appeal No. 710/73/Referred No. 34 of 1973 the High Court of Allahabad set aside the convictions and sentences imposed on them and acquitted them of the changes levelled against them. Against the judgment of the High Court the State Government applied to this Court for special leave to appeal against Pussu and Sheo Rakhan after a petition for a certificate under Article 134 (1) (c) of the Constitution had been dismissed by the High Court. By its order dated October 28, 1974, this Court granted special leave to appeal against Pussu alone and hence this appeal by special leave against Pussu only. In the present case many facts are not in dispute. That Bankey Lal was killed by injuries caused by a fire arm is not in dispute. The time, the date and place of the alleged occurrence are also not in dispute. The presence of Chhatrapal, Bankey Lal, Pussu and Sheo Rakhan at the scene of occurrence when the occurrence took place is not also disputed. That the licensed gun of Jia Lal, father of Pussu was used at the time of occurrence is also not in dispute. That Chhatrapal suffered injuries on account of shots fired from that gun is also not in dispute. That there was enmity between the family of Bankey Lal and the family of Pussu owning to some consolidation proceedings is not seriously questioned before us. The only points in dispute are (1) whether Bankey Lal was killed on account of firing by Pussu as stated by the prosecution or whether he was killed on account of the shots fired by Jia Lal, father of Pussu, (2) whether Chhatrapal suffered injuries on account of shots fired by Pussu with the said gun or whether he suffered these injuries on account of the firing by Jia Lal, (3) whether Gaya Prasad was assaulted by Pussu and (4) whether Pussu had committed any offence under the Arms Act. The report containing the first information about the occurrence, according to the prosecution, was written by Yashwant Singh (P.W.6), a young person of about 18 years who was a resident of Kishunpur Chirai to the dictation of Jang Bahadur Singh, the father of Bankey Lal. Yashwant Singh has stated that he was a student studying in the IXth class, that he had written the report to the dictation of Jang Bahadur Singh, that after writing it he had read it out to Jang Bahadur Singh who signed before him and that thereafter he had handed over the report to Jang Bahadur Singh. He has denied that he had written the report either to the dictation of 299 Lakhanlal and others or some time later to the dictation of the police. The report contains details which Jang Bahadur Singh (P.W.13) was able to collect from his daughter in law and others who were near by at the time of the incident. In that report there is no reference to Jia Lal, father of Pussu, at all, (one Jia Lal whose name is mentioned in it is a different person). The presence of Pussu and Sheo Rakhan at the scene is mentioned. The role played by each of them is stated to be as in the prosecution case set out above. The names of persons who were present there including Chhatrapal are also mentioned. The above report and the licensed gun of Jia Lal, the father of Pussu, which had been seized by the witnesses were received at about 8.30 P.M. on that very day at the Police Station at Khakhreru which was about four miles from Kishunpur Chirai where the occurrence had taken place. On the basis of the said report the First Information Report was prepared under section 154 Criminal Procedure Code. The learned Trial Judge has opined that the First Information Report has been promptly prepared and sent in this case. The only criticism made against it before the trial court on behalf of the accused was that it did not contain some details including the injuries said to be on the person of Pussu and Sheo Rakhan. The trial court has observed that the report was not one dictated by an eye witness but by Jang Bahdur Singh who collected information from people who were there, that Jang Bahadur Singh who had lost his only son could not be expected to furnish all details at the time when the report was prepared and that the report contained broadly all the particulars of the occurrence. The trial court also observed that no motive could be assigned to the omission to refer to the injuries on the person of the accused said to have been caused by lathi blows. The High Court has, however, considered this last aspect namely the omission to refer to Gaya Prasad (P.W.7) giving lathi blows to Pussu and to Chhatrapal catching hold of Pussu and preventing him from reloading the gun was a material omission. We shall advert to this aspect of the matter again at a later stage. One significant aspect of the First Information Report however is that even though there was enmity between the family of Jang Bahadur Singh and the family of Jia Lal, the father of Pussu, and although the defence theory is that the said Jia Lal had fired at Chhatrapal and Bankey Lal, there is no reference to the presence of Jia Lal the father of Pussu, at the scene of occurrence. 300 After the receipt of the information regarding the occurrence, the Sub Inspector of Police, Dharam Singh (P.W. 14) and the Station Officer Yamuna Prasad Pandey (P.W. 15) conducted the investigation. Pussu and Sheo Rakhan could not be arrested till October 23, 1971. They were absconding till then and they surrendered in the court of the Additional District Magistrate (J) on October 23, 1971. Pussu has admitted this fact in his examination under section 364 Criminal Procedure Code, 1898 by stating that on learning about the report they surrendered before the court. After the investigation was over a police report was filed in the court of the magistrate which ultimately led to the committal of Jia Lal, Sheo Rakhan and Pussu to take their trial before the Sessions Court. Exhibit Ka 35 is the post mortem certificate issued by Dr. S.C. Misra, who had conducted the post mortem examination on the body of Bankey Lal. He has stated therein that there were a number of gun shot injuries on the person of the deceased, and the death was due to shock and haemorrhage caused by gun shot injuries. There is no comment made by either side on this report. It is relevant to mention here that Dr. S.C. Misra has stated in his deposition (exhibit Ka 34) that on October 16, 1971 at about 2.30 p.m. he had also examined the injuries of Ram Kishore son of Jia Lal (Ram Kishore is the other name of Pussu) and had found three lacerated wounds, one abrasion, one contusion and one abraded contusion and had issued a certificate as per Exh. He also stated that the said injuries could be caused by lathi blows. Pussu has admitted that he was so examined in his statement under section 364 Criminal Procedure Code, 1898. P.W.2 Dr. V.P. Singh is the person who examined the injuries on the person of Chhatarpal Singh (P.W.5), on the person of Gaya Prasad (P.W.7) and on the person of Ram Gopal. He has stated that there were gun shot injuries on the person of Chhatrapal Singh and an abrasion and a lacerated wound which could have been caused by a blunt weapon on the person of Gaya Prasad. Ram Gopal is stated to have a small contusion and an abrasion on his person. P.W. 5 Chhatrapal Singh, P.W. 7 Gaya Prasad, P.W. 1 Lakhanlal and P.W. 10 Ramnath are the eye witnesses. Of them P.W. 5 Chhatrapal Singh and P.W. 7 Gaya Prasad are injured witnesses. The statement of Lakhanlal was recorded by the police on 301 October 15, 1971 itself when he handed over the report about the occurrence and the statements of Chhatrapal Singh, Gaya Prasad and Ramnath were recorded by the police on October 16, 1971. Before considering the evidence of these eye witnesses, it is necessary to refer to a curious experiment which was carried out by the High Court in the course of the hearing of the appeal. The experiment relates to the capacity of Chhatrapal to run when he was fired at by Pussu. One of the arguments addressed on behalf of the accused before the High Court was that Chhatrapal could not have been fired at from a short distance but he must have been shot from a long distance as the injuries on his person were superficial and hence he could not run and try to catch hold of Pussu by his waist before Pussu could reload his gun. Chhatrapal was about 60 years of age at the time of the incident. In support of its conclusion that Chhatrapal could not run towards Pussu in order to catch hold of him this is what the High Court says: "Chhatrapal appeared in the Court and we asked him to move briskly to a certain distance in order to demonstrate his ability. He did so. We also got one of the young lawyers present in Court unload and reload a single barrel gun of exactly the same make as the gun, material exhibit 1. Our assessment on the demonstration about the brisk movement of Chhatrapal and the time taken in reloading the gun by the young lawyer is that even if Chhatrapal aged 60 years after receiving the gun shots injuries had run from 8 to 10 paces, he could neither catch hold of Pussu, a young lad, nor prevent him from reloading his gun." This procedure of conducting an experiment which was carried out two years after the incident in court with the aid of an young lawyer (about whose proficiency in handling a gun we know nothing) who was asked to handle a different gun altogether and which had been used to reject the truth of the evidence of the eye witnesses appears to be highly irregular. The High Court has not addressed itself to the degree of efficiency, or shall we say, inefficiency of Pussu in handling a gun. The time taken by any person to reload a gun depends upon several factors including the condition of the gun and the surcharged atmosphere created by the firing bout which may have preceded the time of reloading the gun. We shall now refer to what Chhatrapal has stated in the course of his deposition. He has stated: 302 "At the time when I saw Pussu and Sheo Rakhan near the mango tree, I saw weapons in their hands. At the place where the firing took place for the first time, both the accused person were opening and loading the cartridges. They had loaded the cartridge near the mango tree. On the first occasion, at the time of loading of the cartridges, I was at a distance of 1 15 paces towards east behind Bankey. At the time of first firing, t e sounds of the gun fires made by the two accused person were separate. They had fired from some distance from each other. Both the accused persons were almost at equal distance. They were not one behind the other. I can not, however, rule out the difference of 1 or 2 paces. At the first gunfire, Bankey ran towards the village. He must have run upto a distance of 5 10 paces when the second fire was opened. Bankey Lal was hit by the Ist as well as the 2nd gunfire. At the time of firing, the accused persons were on the north eastern side of the passage. The third gun fire was made by the accused persons at that very place. Bankey could not go ahead. At the time of 3rd fire, the accused persons were on the western side of Bankey Lal. After this third fire, I rebuked the accused persons. Thereupon Pussu fired at me and then I caught hold of him from behind. The snatching of the gun took place at a distance of ten paces on the eastern side of the place where Bankey Lal had sat down. As soon as Pussu fired at me, I caught hold of him by his waist. After I had caught hold of his waist Pussu could not fire again so long as he did not get himself freed. To Court: At the time when Pussu fired at me and I caught him by his waist, the empty cartridge fired at me remained inside the gun. Pussu could not take it out or throw it away nor could he open the gun. To counsel: And in the meantime the gun was snatched. " 303 There is nothing elicited in the cross examination of this witness which could discredit his testimony. There was no ill will between Chhatrapal and the members of Pussu 's family. He denied a suggestion that there were some proceedings under section 107 Criminal Procedure Code against him. There was also no evidence in support of that suggestion. Chhatrapal had been in fact injured by gun shots and the gun used on that occasion had in fact been seized. Why he should exonerate Jia Lal the father of Pussu from the responsibility of injuring him if Jia Lal was in fact responsible for it but implicate Pussu is in comprehensible. Gaya Prasad (P.W. 7) who was also an injured eye witness stated in the course of his deposition thus: "When Bankey Lal and his wife reached near Har Sakri well, Pussu accused, who was armed with the gun of his father, and Sheo Rakhan accused who was armed with a country made pistol began to fire gunshots at Bankey Lal. Bankey Lal and his wife raised alarm and ran towards the village. Chhatrapal and I, following him were going towards the village by the same passage. Chhatrapal forbade him but Pussu said that he would not leave Bankey Lal alive. At this Chhatrapal ran to catch hold of Pussu whereupon Pussu aimed the gun at Chhatrapal. Chhatrapal turned and the gunshot hit him on his back. Even after being hit by the gunshot, Chhatrapal caught hold of Pussu by his waist. Ram Gopal, Lakhan Lal, Jia Lal Gadaria, and Ram Nath came running to the place of occurrence from the south. Ram Gopal and I went just close to Pussu, Ram Gopal and I advanced to snatch the gun, but Pussu gave one blow of the butt of the gun to each of us on the head. At this I gave 4 5 blows of lathis to Pussu and then we jointly snatched his gun. When we snatched his gun he went away towards the mango tree where his sala (brother in law) was present On receiving the injury, Bankey Lal had sat down in the way. Ram Nath and Jia Lal lifted him on their arm and started for the village. When they reached near the peepal tree, Pussu came with the pistol of his brother in law Sheo Rakhan struck it with the abdomen of Bankey Lal and fired, Bankey Lal 304 died just on receiving the pistol shot. Thereafter Pussu and Sheo Rakhan ran away towards Raeepur. " Jia Lal referred to in the above passage is Jia Lal Gadaria and not Jia Lal the father of Pussu. Even this witness is not shown to be interested in giving false testimony. Lakhan Lal (P.W. 1) and Ram Nath (P.W. 10) who were also eye witnesses have given substantially the same version as the evidence of Chhatrapal and Gaya Prasad and their evidence is not also shown to be unworthy of acceptance. As against the above evidence adduced by the prosecution, we have the evidence of Jagannath (D.W.1). He has stated that at the time when the occurrence took place he was in his plot near Bhagwa Talab which was close to the scene of occurrence, that he heard the cries of Pussu 'Run up, save me, Bankey Lal and Ghaseetey are killing me '. What took place thereafter may be narrated in his own words thus: Having gone there, I saw that Bankey Lal deceased and Ghaseetey were assaulting Pussu accused with lathis. Jia Lal challenged both of them and said "Do not beat him, otherwise I shall shoot you down". On Jia Lal 's saying so, Chhatrapal and Bankey stopped for a short time; but they again rushed to assault Pussu. In the meantime Pussu accused took shelter behind the mango tree. Then Jia fired 2 3 shots at Chhatrapal and Bankey. On receiving the gun shots injuries Chhatrapal fell down on the ground. Bankey Lal, too, received some injuries. In the meantime Bankey Lal 's servant Nanhua caught hold of Jialal accused from behind, as a result of which his arms also got bound. Nanhua shouted "Run up. I have caught hold of the sala". At this Shiva Rakhan accused reached there. He caught hold of Nanhua and felled him down and Jia Lal accused was released from his hold. Bankey Lal deceased rushed to snatch the gun of Jia Lal accused, but as soon as his hand fell on the barrel of the gun, it got discharged and the shot hit Bankey Lal on his right flank, as a result of which Bankey Lal fell down dead then and there. The accused persons ran away with their licensed gun towards their house. 305 This defence witness has not been believed by the trial court. Nor do we find that any reliance has been placed on his evidence by the High Court. The statement of this witness was recorded by the police on January 31, 1972 after P.W. 15 Yamuna Prasad Pandey came to know that the name of this witness had been mentioned in the report given by Pussu at the Kotwali Police Station. He has stated in his cross examination that "When I sighted for the first time, I saw that Jia Lal was firing shots at Ghaseetey alias Chhatrapal and Bankey". If that is so his version about what all had preceded that stage is manifestly his imagination. We have carefully gone through his evidence and it does not inspire confidence. The prosecution evidence cannot be rejected on the basis of the evidence of this defence witness, particularly because the minor injuries stated to be on the person of Pussu are not sufficient to hold that Pussu and Sheo Rakhan were the victims of the aggression on the part of Chhatrapal and Bankey Lal. This defence version is also contradicted by the conduct of Pussu immediately after the incident. If he was an innocent person and his father had fired the gun in defence of Pussu and Sheo Rakhan he would also have been an informant of the incident at the Khakhreru Police Station which was only about four miles from his village or he would have been available for interrogation by the police, if they came at the instance of somebody else. But he ran away from the village and he was found at 8 A.M. on the next day i.e. October 16. 1971 at the Kotwali Police Station, Fatehpur which was about forty five miles from his village. In order to reach that place he had to pass through at least three places where there were police stations. As the trial court has observed he must have gone there to have proper legal advice before gaving his version of the incident at a police station where he could find an officer who would oblige him by not arresting him. Ordinarily in a case of this nature a police officer would have contacted the concerned police station to ascertain facts and to seek instructions. Pussu, as mentioned earlier, was arrested on October 23, 1971 when he surrendered before court. The gist of the version in the F.I.R. (Exh. Ka. 10) given by Pussu at the Kotwali Police Station, Fatehpur is summarised by the trial court in its judgment and the relevant portion of that judgment reads thus: "When both these accused reached near "Bhagwa Talab" they found deceased Bankey Lal. Ghaseetey alias Chhatrapal and Bankey Lal 's servant Nanhoon coming from north side of the village towards them armed with lathis. On account of fear both these accused left that 306 passage but the aforesaid three persons rushed up at them and began to assault them with lathis. On hearing their cries his father accused Jia Lal who was having his licensed gun, Jagannath and Sheo Autar reached there and began to save them from the assault. The assailants namely Bankey Lal, Chhatrapal and Nanhoon threw down his father Jia Lal on the ground and began to snatch his gun. In the meantime he ran away from there but when he was running away he heard a gun shot sound. He did not go to his police station due to fear and, therefore, reached Police Station Kotwali, Fatehpur. He had also stated about injuries over his head, hand and back caused by lathi blows". This version, apart from the other infirmities pointed out by the trial court, contradicts the version of Jagannath (D W. 1) that when he first 'sighted ' Jialal the father of Pussu was already firing shots. The story contained in Exh. Ka 10 appears to be one spun out after a lot of deliberation. We have set out above in some detail the prosecution evidence and the defence version only to show how demonstrably the High Court was in error in rejecting the case of the prosecution. We have already referred to the experiment carried out by High Court at the hearing of the appeal by asking Chhatrapal to run about and an advocate to load a gun in their presence. Having been impressed by the result of that experiment the High Court first rejected the evidence of Chhatrapal that he had tried to catch hold of Pussu. The High Court then found that there was a material omission in the information given by Jang Bahadur Singh as "there was no mention about Gaya Prasad having inflicted four or five lathi blows on Pussu and it is only in the trial court that the eye witnesses have asserted that four or five lathi blows were inflicted on Pussu". Having regard to the several details about the incident given by Jang Bahadur Singh who was in fact not an eye witness, the omission referred to above appears to be a trivial one not affecting credibility of the prosecution version. The third ground on which the High Court found the prosecution case as not being worthy of acceptance is again a strange one. The relevant part of the judgment of the High Court reads thus: "The eye witnesses have asserted that after the gun had been snatched away, Pussu freed himself and 307 taking the pistol from appellant Sheo Rakhan fired a fatal shot at Bankey Lal from point blank range. It is highly improbable that after Pussu had been arrested and disarmed he could be allowed to free himself from the hands of young men like Lakhan Lal, Gaya Prasad and Ram Pal. The normal conduct of Pussu after he had freed and rearmed himself with pistol would have been to demand the return of his gun from Gaya Prasad on the point of his pistol rather than to pursue his injured victim Bankey Lal and to shoot him dead". What is improbable about the prosecution version, we fail to see. If Pussu 's object was to kill Bankey Lal, he would instead of demanding the return of the gun on the point of his pistol, run towards Bankey Lal and shoot at him, which in fact is what he is alleged to have done in this case. The High Court 's opinion that the normal conduct of a person in the position of Pussu would have been what the High Court has stated in the course of its judgment is a mere surmise. At any rate on such an imaginary ground the evidence of the eye witnesses could not be rejected. Another reason given by the High Court is again a supposition resting on no solid ground and that relates to the condition of the gun (Exh. Ka 1). The High Court has observed: "None of the eye witnesses has stated that any blow of lathi plied by Gaya Prasad fell on the butt of the gun. Gaya Prasad has stated that he inflicted four or five lathi blows on Pussu. The gun was deposited in the Mal Khana at the Police Station and a piece of the wooden part of the butt of the gun was found broken. This was noted in the recovery memo (Exh. Ka 1). The gun was examined by us and we found a wooden piece of the butt having chipped off and the opening lever of the gun had become inoperative. This could only happen if lathi blow fell on the butt of the gun. None of the eye witnesses has deposed that any blow from lathi plied by Gaya Prasad registered a hit on the gun. There is no explanation as to how the wooden butt of the gun (material Exh. 1) got broken and consequently the gun could not be opened. " In reaching the above conclusion, the High Court has overlooked the evidence of Gaya Prasad (P.W. 7) in his examination in 308 chief that when they were trying to snatch the gun Pussu gave one blow with the butt of the gun on his head and one blow on the head of Ram Gopal and the further statement in his cross examination that on account of its being snatched with jerks, the wood fixed at the lower part of the gun was left in the hands of Pussu himself and that the gun could have been damaged by being used as mentioned above. The High Court was wrong in holding that the gun could have been damaged only if a lathi blow had fallen on it. The explanation given by the prosecution is quite satisfactory indeed. We are not also impressed by the other ground relied on by the High Court that "in cases of emergency is repeated firing a shooter does not normally start collecting empty cartridges automatically ejected from the gun before reloading the gun" and "the non recovery of the fired cartridge either in the breach of the gun or from the spot is a suspicious circumstance" having regard to the overwhelming evidence in this case in support of the prosecution case. The rule governing the appreciation of evidence in a criminal case is laid down by this Court in State of Punjab vs Jagir Singh & Ors.(1) in which this Court set aside the judgment of acquittal passed by the High Court which had reversed the conviction and sentence imposed by the trial court thus: "A criminal trial is not like a fairy tale wherein one is free to give flight to one 's imagination and phantasy. It concerns itself with the question as to whether the accused arraigned at the trial is guilty of the crime with which he is charged. Crime is an event in real life and is the product of interplay of different human emotions. In arriving at the conclusion about the guilt of the accused charged with the commission of a crime, the court has to judge the evidence by the yardstick of probabilities, its intrinsic worth and the animus of witnesses. Every case in the final analysis would have to depend upon its own facts. Although the benefit of every reasonable doubt should be given to the accused, the courts should not at the same time reject evidence which is ex facie trustworthy on the grounds which are fanciful or in the nature of conjectures". 309 We have pointed out above the manifest errors committed by the High Court in the course of its judgment acquitting the accused Pussu. On a careful reading of the evidence in this case, we feel that Jia Lal had out of love and affection towards his son from the beginning tried to shield Pussu but has ultimately not been successful. From the evidence it is obvious that Pussu and Sheo Rakhan were armed with fire arms and they were the aggressors. The plea of self defence urged on behalf of Pussu cannot be accepted. A person who is an aggressor and who seeks an attack on himself by his own aggressive attack cannot rely upon the right of self defence if in the course of the transaction he deliberately kills another whom he had attacked earlier. In the instant case having regard to the nature of the weapon used it has to be held that the act by which the death of Bankey Lal was caused by Pussu was done with the intention of causing death, and we do not find any extenuating circumstances which would mitigate the offence committed by Pussu. The trial court was, therefore, right in convicting Pussu of an offence punishable under section 302 I.P.C. The acquittal of Sheo Rakhan does not affect the prosecution case against Pussu. There is no legal bar for convicting Pussu alone in this case on the facts and in the circumstances of the case. The principle of issue estoppel is inapplicable here. This is not a case in which it could be said that two views were reasonably possible. The only reasonable view to be taken is the one taken by the trial court. We are aware of the rule of practice that ordinarily this Court should not interfere with judgments of acquittal on a mere re appreciation of evidence. But if there are glaring infirmities in the judgment of the High Court resulting in a gross miscarriage of justice, it is the duty of this Court to interfere. In the instant case we find that the approach of the High Court is basically erroneous and its judgment is founded on false assumptions, conjectures and surmises. On a consideration of the entire mass of evidence adduced in this case we are satisfied that the prosecution has established beyond reasonable doubt that Pussu had committed the murder of Bankey Lal. In cases of this nature it is advisable to bear in mind the following observations of Krishna Iyer, J. in Shivaji Sahebrao & Anr. vs State of Maharashtra(1) at pages 492 493: 310 "Even at this stage we may remind ourselves of a necessary social perspective in criminal cases which suffers from insufficient forensic appreciation. The dangers of exaggerated devotion to the rule of benefit of doubt at the expense of social defence and to the soothing sentiment that all acquittals are always good regardless of justice to the victim and the community, demand especial emphasis in the contemporary context of escalating crime and escape. The judicial instrument has a public accountability. The cherished principles or golden thread of proof beyond reasonable doubt which runs thro ' the web of our law should not be stretched morbidly to embrace every hunch, hesitancy and degree of doubt. The excessive solicitude reflected in the attitude that a thousand guilty men may go but one innocent martyr should not suffer is a false dilemma. Only reasonable doubts belong to the accused. Otherwise any practical system of justice will then break down and lose credibility with the community. The evil of acquitting a guilty person lightheartedly as a learned author Glanville Williams in 'Proof of Guilt ' has sapiently observed, goes much beyond the simple fact that just one guilty person has gone unpunished If unmerited acquittals become general, they tend to lead to a cynical disregard of the law, and this in turn leads to a public demand for harsher legal presumptions against indicted 'persons ' and more severe punishment of those who are found guilty. Thus too frequent acquittals of the guilty may lead to a ferocious penal law, eventually eroding the judicial protection of the guiltless. For all these reasons it is true to say, with Viscount Simon, that "a miscarriage of justice may arise from the acquittal of the guilty no less than from the conviction of the innocent. " In short, our jurisprudential enthusiasm for presumed innocence must be moderated by the pragmatic need to make criminal justice potent and realistic. " In the result, we set aside the judgment of the High Court in so far as Pussu is concerned and restore his conviction for the offence punishable under section 302 I.P.C. as ordered by the trial court. As regards sentence we feel that ends of justice would be met if we impose the punishment of imprisonment for life on him. We 311 accordingly sentence Pussu to imprisonment for life. We also restore the conviction of Pussu for the offences punishable under sections 307 I.P.C., 323 I.P.C. and section 27 of the Arms Act and the sentences imposed on him on that account as ordered by the trial court. All the sentences shall run concurrently. The appeal is accordingly allowed. Pussu is on bail. He is directed to surrender in accordance with the terms of his bail and undergo the punishment imposed on him. P.B.R. Appeal allowed.

The prosecution case against the accused respondent was that when the deceased and his wife were returning home from their field, he and the co accused armed with a gun and a country made pistol fired at the deceased causing him injuries, that some passersby, including the two eye witnesses, overpowered the respondent but that he escaped from their hold and ran towards the co accused who then was standing at some distance, snatched the pistol from his hand and fired at the deceased while he was being carried towards the village. As a result of this shot the deceased was killed instantaneously and one of the witnesses sustained injuries. The defence version, on the other hand, was that on the date and time of the occurrence when the two accused were going out of the village the deceased, his servant and the injured witness assaulted them and on hearing their cries, the respondent 's father fired at the deceased in self defence and that this had resulted in the death of the deceased and injury to the witness. The trial court found him guilty of the offence punishable under section 302 I.P.C. and sentenced him to death and the co accused with imprisonment for life. Before the High Court the argument for the respondent was that since the injuries on the person of the witness were superficial, he could have been fired at only from a long distance and being an aged man of 60 years, he could not have run and caught hold of the respondent before the respondent could reload his gun. To test the capacity of the witness to run and to assess the time taken in reloading a gun, the High Court conducted an experiment by asking the witness, who was present in the court, to move briskly to a certain distance. A young lawyer present in the Court was asked to unload and reload a gun exactly of the same make as the gun used by the respondent. On the basis of this experiment the High Court came to the conclusion that 295 even if the witness, after receiving gun shot injuries had run some distance towards the respondent; he could neither have caught hold of him nor could he have prevented him from reloading his gun. Disbelieving the prosecution story, the High Court acquitted both the accused. The State 's Special Leave Petition against the judgment of the High Court was granted only with respect to the respondent. On the question whether the High Court was correct in conducting the experiment that it did and in coming to the conclusion that the respondent was not guilty of the offence of murder. Allowing the appeal, ^ HELD: The procedure of conducting an experiment in Court two years after the incident with the aid of a young lawyer (about whose proficiency in handling a gun there is no authentic evidence) who was asked to handle a different gun altogether and using the conclusion based on that experiment to reject the truth of the evidence of the eye witness, was highly irregular. The High Court has not addressed itself to the degree of efficiency or inefficiency of the respondent in handling a gun. The time taken by any person to reload a gun depends upon several factors, including the condition of the gun and the surcharged atmosphere created by the firing bout which may have preceded the time of reloading the gun. [301 F H] Ordinarily, this Court would not interfere with the judgment of acquittal on mere re appreciation of evidence. But if there are glaring infirmities in the judgment of the High Court resulting in miscarriage of justice it is the duty of this Court to interfere. [309 F G] In the instant case the High Court was wrong in conducting the experiment carried out by it at the hearing of the appeal. Having been impressed by its result it first rejected the evidence of the eye witness on trivial omissions which would not affect the credibility of the prosecution version on imaginary grounds. From the evidence it is obvious that the two accused were armed with fire arms and were the aggressors. On a careful reading of the evidence, it is clear that the father of the accused respondent, out of love and affection towards his son, tried to shield him. [306 F G] The plea of self defence cannot be accepted. A person who was an aggressor and who sought an attack on himself by his own aggressive attack cannot rely upon the right of self defence if in the course of the transaction he deliberately kills another whom he had attacked earlier. Having regard to the nature of the weapon used, the act by which death was caused by the respondent was done with the intention of causing death and there were no extenuating circumstances which would mitigate the offence committed by him. [309 C D] State of Punjab vs Jagir Singh & Ors. [1974] 1 S.C.R. 328; Shivaji Sahebrao Bobade & Anr. vs State of Maharashtra ; followed. 296 The trial court was right in convicting the respondent. The acquittal of the co accused did not effect the prosecution case against him. There is no legal bar for convicting the respondent alone in this case on the facts and circumstances of the case. The principle of issue estoppel is inapplicable here. [309 D E]

4628.txt

vil Appeal No. 536 of 1962. Appeal from the judgment and decree dated March 26. 1958, of the High Court at Patna in First Appeal No. 340 of .1951. 147 Niren De, Additional Solicitor General, N.D. Karkhanis and B.R.G.K. Achar, for the appellant. Bishan Narain, P. D. Himmatsinghka section Murthy and B.P. Maheshwari, for the respondent. The judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Patna High Court. The respondent sued the Union of India as representing G.I.P. Railway, Bombay and E.I.R. Calcutta for recovery of damages for non delivery of 31 bales of piece goods, out of 60 bales which had been consigned to Baidyanathdham from Wadibundar. This consignment was loaded in wagon No. 9643 on December 1. 1947. It is not in dispute that the consignment reached Mughalsarai on the morning of December 9, 1947 by 192 On goods train. After reaching Mughalsarai, the wagon was kept in the marshaling yard till December 12, 1947. It wag sent to Baidyanadham by 214 On goods train from Mughalsarai at 6 40 p.m. on December 12, 1947 and eventually reached Baidyanathdham on December 21, 1947. The respondent who was the consignee presented the railway receipt on the same day for delivery of the consignment. Thereupon the railway delivered 29 bales only to the respondent and the remaining 31 bales were said to be missing and were never delivered. Consequently on August 311948, notice was g:yen under section 80 of the Civil Procedure Code and this was followed by the suit out of which the present appeal has arisen on November 20, 1948. The consignment had been booked under risk note form Z which for all practical purposes is in the same terms as risk note form B. The respondent claimed damages for non delivery on the ground that the non delivery was due to the misconduct of the servants of the railway, and the claim was for a sum of Rs. 36,461/12/ . The suit was resisted by the appellant and a number of defences were taken. In the present appeal we are only concerned with two defences. It was first contended that the suit was barred by section 77 of the Indian Railways Act, No. IX of 1890, (hereinafter referred to as the Act), inasmuch as notice required therein was not given by the respondent. Secondly it was contended that the consignment was sent under risk note form Z and under the terms of that risk note the railway was absolved from all responsibility for loss, destruction or deterioration of goods consigned thereunder from any cause whatsoever except upon proof of misconduct of the railway of its servants. and that the burden of proving such misconduct subject to certain exceptions was on the respondent and that the respondent had failed to discharge that burden. Further in compliance with the terms of the risk note, the railway made a disclosure in the written statement as to how the consignment was dealt with throughout the period it was in its possession or control. The case of the railway in this connection was that there was a theft in the running train between Mughalsarai and 148 Buxar on December 12, 1947 and that was how part of the con signment was lost. As the loss was not due to any misconduct on the part of the railway or its servants and as the respondent had not discharged the burden which lay on him after the railway had given evidence of how the consignment had been dealt with, there was no liability on the railway. On the first point, the trial court held On the basis of certain decisions of the Patna High Court that no notice under section 77 was necessary in a case of non delivery which was held to be different from loss. On the second point relating to the responsibility of the railway on the ' basis of risk note form Z, the trial court held that it had not been proved that the loss was due to misconduct of the railway or its servants. It therefore dismissed the suit. Then followed an appeal by the respondent to the High Court. The High Court apparently upheld the finding of the trial court on the question of notice under s.77. But on the second point the High Court was of opinion that there was a breach of the condition of disclosure provided in risk note Z under which the consignment had been booked, and therefore the appellant could not take advantage of the risk note at all and the liability of the railway must be assessed on the footing of a simple bailee. It therefore went on to consider the liability of the railway as a simple bailee and held on the ' evidence that the railway did not take proper care of the wagon at Mughalsarai and that in all probability the seals and rivets of the wagon had been allowed to be broken there and all arrangements had been completed as to how the goods would be removed from the wagon when the train would leave that station and this could only be done either by or in collusion with the servants of the railway at Mughalsarai. In this view of the matter the High Court allowed the appeal and decreed the suit with costs As the judgment was one of reversal and the amount involved was over rupees twenty thousand, the High Court granted a certificate. and that is how the matter has come up before us. We .shall first deal with the question of the notice. We are in this case concerned with the Act as it was in 1947 before its amendment by Central Act 56 of 1949 and Central Act No. 39 of 1961 and all references in this judgment must be read as applying to the Act as it was in 1947. Now section 77 inter alia provides that a person shall not be entitled to compensation for the loss, destruction or deterioration of animals or goods delivered to be carried ' by railway, unless his claim to compensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery of the animals or goods for carriage by railway. There was a conflict between the High Courts on the question whether non delivery of goods carried by railway amounted to less within the meaning of section 77. Some High Courts (including the Patna High Court) held that a case of non delivery was distinct from a case of loss and no notice under section 77 was necessary .in the case of non delivery. Other High Courts however took a contrary view and held that a case of non delivery also was a case of loss. This conflict has now been resolved by the decision of this Court in Governor General in Council vs Musaddilal (1) and the view taken by the Patna High Court has been overruled. This Court has held that failure to deliver goods is the consequence of loss or destruction and the cause of action for it is not distinct from the cause of action for loss or destruction, and therefore notice under section 77 is necessary in the case of non delivery which arises from the loss of goods. Therefore notice under section 77 was necessary in the present case. It is true that the respondent stated in the plaint in conformity with 'the view of the Patna High Court prevalent in Bihar that no notice under s.77 was necessary as it was a case of non delivery. But we find in actual fact that a notice was given by the respondent to the railway on April 10, 1948 to the Chief Commercial Manager, E.I.R. in which it was stated that 60 bales of cloth were booked for the respondent but only 29 bales had been delivered and the balance of 31 bales had not been delivered. Therefore the respondent gave notice that if the bales were not delivered to him within a fortnight, he would file a suit for the recovery of Rs. 36,461/12/ , and the details as to how the amount was arrived at were given in this notice. It is true that the notice was not specifically stated to be a notice under section 77 of the Act but it gave all the particulars necessary in a notice under that section. This notice or letter was sent within six months of the booking of the consignment. A similar case came up before this Court in Jetmull Bhojraj vs The Darjeeling Himalayan Railway Co. Ltd.(2) and this Court held that the letter to the railway in that case was sufficient notice for the .purpose of section 77 of the Act. 'Following that decision we hold that the letter in the present case which is even more explicit is sufficient notice for the purpose of S: 77 of the Act. We may add that the learned Additional Solicitor General did not challenge this in view of the decision in Jetmull Bhojraj 's case(2). This brings us to the second question raised in the appeal. We have already indicated that the High Court held that as the burden of disclosure which was on the railway had not been discharged there vas a breach of one of the terms of the risk note Z and therefore the risk note did not apply at all and the responsibility of the railway had to be assessed under ' section 72 (1) of the Act. This view of the law has been contested on behalf of the appellant and it is urged that after the risk note is executed either in form Z or in form B, the responsibility of the railway must be judged in accordance with the risk note even if there is some breach of the condition as to disclosure. It may be mentioned that risk note form Z and risk note form B are exactly similar in their terms insolar as the responsibility of the railway is concerned for risk note 150 form B applies to individual consignment while form Z is executed by a party who has usually to send goods by railway in large numbers. Risk note form Z is general in its nature and applies to all consignments that a party may send after its execution. It is proved that the consignment in this case was covered by risk note form Z. The main advantage that a consignor gets by sending a consignment under from Z or form B is a specially reduced rate as compared t3 the ordinary rate at which goods are carried by the railway and it is because of this specially reduced rate that the burden is thrown on the consignor in a suit for damages to prove misconduct on the part of the railway or its servants in the case of loss etc.of the goods, subject to one exception. On the other hand the argument on behalf of the respondent is that the view taken by the Patna High Court is right and it is the duty of the railway administration under the risk note, as soon as there is non delivery and a claim is made on the railway for compensation, to disclose how the consignment was dealt with throughout while it was in its possession or control and that its failure to do so results immediately in breach of the contract with the result that the responsibility of the railway has to be judged solely on the basis of section 72 (1) of the Act ignoring the risk note altogether. Section 72 (1) defines the responsibility of the railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway to be the same as that of a bailee under sections 152 and 161 of the , subject to other provisions of the Act. Sub section (2) of section 72 provides that an agreement purporting to limit the responsibility under section 72 (1) can be made subject to two conditions, namely, (i) that it is in writing signed by or on behalf of the person sending or delivering to the railway administration the animals or goods, and (ii) that it is in a form approved by the Governor General. Sub section (3) of section 72 provides that nothing in the common law of England or in the Carriers Act 1865 regarding the responsibility of common carriers with respect to carriage of animals or goods shall affect the responsibility as in this section defined of the railway administration. So the responsibility of the railway for loss etc. is the same as that of a bailee under the Indian Contract Act. But this responsibility can be limited as provided in section 72 (2). For the purpose of limiting this responsibility risk notes form B and form Z have been approved by the Governor General and where goods are booked under these risk notes the liability is limited in the manner provided thereunder. It is therefore necessary to set out the relevant terms of the risk note, for the decision of this case will turn on the provisions of the risk note itself. The risk note whether it is in form B or form Z provides that where goods are carried at owner 's risk on specially reduced rates, the owner agrees or undertakes to hold the railway administration 151 "harmless and free from all responsibility for any loss, deterioration or destruction of or damage to all or any of such consignment from any cause whatever, except upon proof that such loss, destruction, deterioration or damage arose from the misconduct on the part of the railway administration or its servants". "thus risk notes B and Z provide for complete immunity of the railway except upon proof of misconduct. But to this immunity there is a proviso and it is the construction of the proviso that arises in the present appeal. The proviso is in these terms: "Provided that in the following cases: (a) Non delivery of the whole of a consignment packed in accordance with the instruction laid .down in the tariff or where there are no instructions, protected otherwise than by paper or other packing readily removable by hand and fully addressed, where such non delivery is not due to accidents to train or to fire; (b) . . . "The railway administration shall be bound to disclose to the consignor how the consignment was dealt with throughout the time it was in its possession or control, and if necessary, to give evidence thereof before the consignor is called upon to prove misconduct, but, if misconduct on the part of the railway administration or its servants cannot be fairly inferred from such evidence, the burden of proving such misconduct shall lie upon the consignor". It is not in dispute that the present case comes under cl(a) of the risk note. An exactly similar provision in risk note form B came up for consideration before the Privy Council in Surat Cotton Spinning & Weaving Mills vs Secretary Of State for India in Council, ( ') and the law on the subject was laid down thus at pp.181 182: "The first portion of the proviso provides that the Rail way Administration shall be bound to disclose to the consignor 'how the consignment was dealt with through out the time it was in its possession or control, and, if necessary to give evidence thereof, before the consignor is called upon to prove misconduct '. In their Lordships ' opinion, this obligation arises at once upon the occurrence of either of cases (a) or (b), and is not confined to the stage of litigation. Clearly one object of the provision is to obviate, if possible, the necessity for litigation. On the other hand, the closing words of the obligation clearly apply to the litigious stage. As to the extent of the disclosure, it is confined to the period during which the (1) [1927] L.P LXIV: 152 consignment was within the possession or control of the Railway Administration; it does not relate, for instance, to the period after the goods have been the fatuously removed from the premises. On the other hand, it does envisage a precise statement of how the consignment was dealt with by the Administration or its servants. The character of what is requisite may vary according to the circumstances of different cases, but, if the consignor is not satisfied that the disclosure has been adequate, the dispute must be judicially, decided. As to the accuracy or truth of the information given, if the consignor is doubtful or unsatisfied, and considers that these should be established by evidence, their Lordships are of opinion that evidence before a Court of law is contemplated, and that as was properly done in the present suit, the Railway Administration should submit their evidence first at the trial. "At the close of the evidence for the Administration two questions may be said.to arise, which it is important to keep distinct. The first question is not a mere question of.procedure, but iS whether they have discharged their obligation of disclosure, ' and, in regard to this, their Lordships are of opinion that the terms of the Risk Note require a step in procedure, which may be said to :be Unfamiliar in the practice of the Court; if the consignor is not satisfied with the ' disclosure made their Lordships are clearly of opinion that is for him tO say so, and to call on the Administration to fulfill their obligation .Under the contract, and that the Administration should then have the opportunity to meet the demands of the consignor before their case is closed; any question as to whether the consignor 's demands go beyond the obligation should be then determined by the Court. If the Administration fails to take the opportunity to satisfy the demands of the consignor so far as endorsed by the Court, they will be in breach of their contractual obligation of disclosure. "The other question which may be said to arise at this stage is whether misconduct may be fairly inferred from the evidence of the Administration; if so, the consignor is absolved from his original burden of proof. But, in this case, the decision of the Court may be given when the evidence of both sides has been completed. It is clearly for the Administration to decide for themselves whether they have adduced all the evidence which they consider desirable in avoidance of such fair "inference of misconduct". They will doubtless keep in mind the provisions of s.114 of the Indian Evidence Act". With respect we are of opinion that this exposition of the law relating to risk note B applies also to risk note Z and we accept it 153 as correct. Thus the responsibility of the railway. administration to disclose to the consignor how the consignment was dealt with thrOughOut the time it Was in its possession or control arises at once under the agreement in either of the cases (a) or (b) and is not confined to the stage of litigation. But we are not prepared to accept the contention on behalf of the respondent that this responsibility to make full disclosure arises immediately the claim is made by the consignor and if the railway immediately on such claim being made does not disclose all the facts to the consignor, there is immediately a breach of this term of the contract contained in the risk note. It is true that the railway is bound to disclose to the consignor how the Consignment was dealt with throughout the time it was in its possession even before any litigation starts; but we are of opinion that such disclosure is necessary only where the consignor specifically asks the railway to make :the disclosure. If no such disclosure is asked for, the administration need not make it before the ' litigation. In the present case there is ' no proof that any disclosure was asked for in this behalf by the consignor at any time before the, suit was filed. Therefore if the railway did not disclose how the consignment was dealt with throughout before the suit was filed, it cannot be said to have committed breach of this term of the contract. The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its servants. if the disclosure is asked for before the litigation commences and is not given or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the court then to say if a suit is brought whether there has been Ia breach of this term ' of the contract. After this, comes the stage where the consignor or the consignee ' being dissatisfied brings a suit for compensation. At that stage evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation to the Consignor or which might have been made in the written statement in reply to the suit. When the railway administration has given its evidence in proof of the disclosure and the plaintiff is not satisfied with the disclosure made in the evidence, the plaintiff is entitled to ask the court to call upon the railway to fulfil its obligation under the contract and the railway should then .have the opportunity of meeting the demands of the plaintiff before its case is closed. Thus in addition to the evidence that the railway may adduce on its own and in doing so the railway has necessarily to keep in mind the provisions of section 114 of the Indian Evidence Act, the plaintiff can and should draw the attention of the court if he feels that full disclosure has not been made. , In .that case he can ask the court to require the railway to make further disclosure and should tell the court what further disclosure he wants. It is then for the court to decide whether the further disclosure .desired by the plaintiff should be made by the railway, and if the court decides that such further disclosure 154 should be made the railway has to make such further disclosure as the court orders it to make on the request of the plaintiff. If the railway fails to take the opportunity so given to satisfy the demands of the plaintiff, endorsed by the court, the railway would be in breach of its contractual obligation of disclosure. It is at this stage therefore that the railway can be truly said to be in breach of its contractual obligation of disclosure, and that breach arises because the railway failed to disclose matters which the court on the request of the plaintiff asks it to disclose. The question then is what is the effect of this breach. It is remarkable that the Privy Council did not lay down that as soon as the breach is made as above the risk note comes to an end and the responsibility of the railway is that of a bailee under section 72 (l) of the Act. In the observations already quoted, the Privy Council has gone on to say that after this stage is over, the question may arise whether misconduct may be fairly inferred from the evidence of the railway. It seems to us therefore that even if there is a breach of the term as to full disclosure it does not bring the contract to an end and throw the responsibility on the railway as if the case was a simple case of responsibility under section 72(1) of the Act; the case is thus not assimilated to a case where the goods are carried at the ordinary rates at railway risk. The reason for this seems to be that the goods have already been carried at the reduced rates and the consignor has taken advantage of that term in the contract. Therefore, even though there may be a breach of the term as to complete disclosure by the railway the consignor cannot fall back on the ordinary responsibility of the railway under section 72 (1) of the Act as if the goods had been carried at railway 's risk at ordinary rates, for he has derived the advantage of the goods having been carried at a specially reduced rates. The risk note would in our opinion continue to apply and the court would still have to decide whether misconduct can be fairly inferred from the evidence of the railway, with this difference that where the railway has been in breach of its obligation to make full disclosure misconduct may be more readily inferred and section 114 of the Indian Evidence Act more readily applied. But we do not think that the conditions in the risk note can be completely ignored simply because there has been a breach of the condition of complete disclosure. The view of the Patna High Court that as soon as there is breach of the condition relating to complete disclosure the risk note can be completely ignored and the responsibility of the railway judged purely on the basis of section 72 (1) as if the goods were carried at the ordinary rates on railway 's risk cannot therefore be accepted as correct. We may point out that in Surat Cotton Spinning and Weaving Mills Limited 's case, (I) the plaintiffs wanted the guard of the train to be examined and he was undoubtedly a material witness. Even so the witness was not examined by the railway. Finally therefore the Privy council allowed the appeal with these observations at p. 189: "While their Lordships would be inclined to hold that the respondent, by his failure to submit the evidence of Rohead, was in breach of his contractual obligation to give the evidence necessary for disclosure of how the consignment was dealt with, they are clearly of opinion that the failure to submit the evidence of Rohead, in the circumstances of this case, entitles the court to presume, in terms of section 114 (g) of the Evidence Act, that "Rohead 's evidence, if produced, would be unfavorable to the respondent, and that, in consequence, misconduct by complicity in the theft of some servant, or servants of the respondent may be fairly inferred from the respondent 's evidence". These observations show that even though there may be a breach of the obligation to give full disclosure that does not mean that the risk note form Z or form B can be ignored and the responsibility of the railway fixed on the basis of section 72 (1) as a simple bailee. If that was the effect of the breach, the Privy Council would not have come to the conclusion after applying section 114 (g) of the Evidence Act in the case of Rohead that misconduct by complicity in the theft of some servant or servants of the railway may be fairly inferred from the railway 's evidence. The appeal was allowed by the Privy Council after coming to the conclusion that misconduct by the servant or servants of the railway might be fairly inferred from the evidence including the presumption under section 114(g) of the Evidence Act. It seems to us clear therefore that even if there is a breach of the obligation to make full disclosure in the sense that the railway does not produce the evidence desired by the plaintiff in the suit even though the request of the plaintiff is endorsed by the court, the effect of such breach is not that the risk note is completely out of the way, the 'reason for this as we have already indicated being that the consignor has already taken advantage of the reduced rates and therefore cannot be allowed to ignore the risk note altogether. But where there is a breach by the railway of the obligation to make full disclosure the court may more readily infer misconduct on the part of the railway or its servants or more readily presume under section 114 (g) of the Evidence Act against the railway. This in our opinion is the effect of the decision of the Privy Council in Surat Cotton Spinning and Weaving 'Mills Limited 's case(1). As we have already said we are in respectful agreement with the law as laid down there. So far as the present appeal is concerned, there was no de by the consignor for disclosure before the suit. Even after the suit was filed there was no statement by the respondent at any (1) [1937] L.R. 64 I.A. 176. 156 stage that the disclosure made by the appellant in the evidence was in any way inadequate. The respondent never told the court after the evidence of the railway was over that he was not satisfied with the disclosure and that the railway be asked to make further disclosure by producing such further evidence as the respondent wanted. In these circumstances it cannot be said in the present case that there was any breach by the railway of its responsibility to make full disclosure. In the circumstances we are of opinion that the risk note would still apply and the court would have to decide whether misconduct on the part of the railway can be fairly inferred from the evidence produced by it. If the court cannot fairly infer misconduct from the evidence adduced by the railway, the burden will be on the respondent to prove misconduct. that burden, if it arises, has clearly not been discharged for the respondent led no evidence on his behalf to discharge the burden. We therefore turn to the evidence to see whether from the evidence produced by the railway a fair inference of misconduct of the railway or its servants can be drawn on the facts of this case. It is not in dispute in this case that the wagon containing the consignment arrived intact at Mughalsarai on December 9, 1947. Besides there is evidence of Damodar Prasad Sharma, Assistant Trains Clerk, Mughalsarai, P.W. 14, who had the duty to receive trains at the relevant time that 192 Dn. goods train was received by him on line No. 4 and that there were two watchmen on duty on that line for examining the goods train and they kept notes of the same. He also produced the entry relating to the arrival of the train and there is nothing in the entry to show anything untoward with.this wagon when the train arrived at Mughalsarai. His evidence also shows that the train was sent to the marshaling yard on December 11, 1947. Finally there is the evidence of Chatterji (P.W. 8) who is also an Assistant Trains Clerk. It was his duty to make notes with respect to goods trains which left Mughalsarai. He stated that this wagon was sent by train No. 214 on December 12, 1947 in the evening. He also stated that the wagon was in good condition and produced the entry relating to this wagon. It appears however from his evidence that rivets and seals are examined by the watch and ward staff and they keep record of it. Apparently therefore he did not actually inspect the wagon before it left though he says that it was in good condition. The relevance of his evidence however is only this that in his register showing the dispatch of trains there is no entry to the effect that there was any thing wrong with this wagon when it was dispatched. The most important evidence however is of the guard of the train, Ram Prasad Ram (P.W. 2). He stated that before the train started from Mughalsarai he patrolled both sides of it and the place from where the train started was well lighted and watch and ward staff also patrolled the area. He also stated that the rivets and seals of all the wagons in the train were checked at Mughal sarai and there was apparently nothing wrong with them. Now if 157 the evidence of the guard is believed it would show that the wagon containing the consignment was intact at Mughalsarai upto the time 214 goods train including this wagon left Mughalsarai. If so there would be no reason to hold that anything was done to the wagon before the train left Mughalsarai. It may be mentioned that the trial court accepted the evidence of the guard while the High Court was not prepared to believe it. On a careful consideration of the evidence of the guard we see no reason why his evidence should not be believed. It is obviously the duty of the guard to see that the train was all right, when he took charge of it. It appears that in discharge of his duty the guard patrolled the train on both sides and looked at rivets and seals to see that they were intact. It is, however, urged that the guard 's evidence does not show that the seals which he found intact were the original seals of Wadibundar and the possibility is not ruled out that the original seals might have been tampered with and new seals put in while the train was in the marshaling yard at Mughalsarai for two days, as the evidence of the watch and ward staff had not been produced. It would perhaps have been better if the evidence of the watch and ward staff had been produced by the railway; but if the evidence of the guard is believed that the seals and rivets were intact when the train left Mughalsarai, the evidence of the watch and ward staff is ' not necessary. It is true that the guard does not say that the seals were the original seals of Wadibundar but it appears from the evidence of Jagannath Prasad (P.W. 9) who was the Assistant Station Master at Dildarnagar that he found when the train arrived there that the northern flapdoors of the wagon were open while southern flapdoors were intact with the original seals. This evidence suggests that the original seals could not have been tampered with when the train left Mughalsarai and that the guard 's evidence that seals and rivets were intact shows that nothing had happened to the wagon while it was at Mughalsarai. Further it is also in evidence that there is ample light in the marshalling yard at Mughalsarai and that watch and ward staff is posted there as well. So the chances of tampering with the seals and rivets in the marshalling yard in the circumstances are remote. As such the evidence of the guard that the seals and rivets were intact when he left with the train on the evening of December 12, would apparently exclude the possibility that there was any tampering with the wagon before it left Mughalsarai. It is true that on the last day when the evidence for the railway was recorded and the guard had been recalled for further cross examination it was suggested to him that the railway servants at Mughalsarai had removed the bales and were responsible for the theft. He however denied that. But it is remarkable that if the respondent was dissatisfied with the evidence of the guard which was to the effect that the wagon was all right when he left Mughalsarai with the train on December 12, it did not ask the court to order the railway to produce the evidence of the watch and ward staff with respect to this wagon while it was in the marshalling yard at Mughalsarai. The respondent could ask for such disclosure. If the court L/B(D)2SCI 12 158 had accepted the request and the railway had failed to produce the evidence of the watch and ward staff it may have been possible to use section 114 of the Evidence Act and hold that the watch and ward staff having not been produced their evidence, if produced, would have gone against the railway. But in the absence of any demand by the respondent for the production of the watch and ward staff which he could ask for, we see no reason why the statement of the guard to the effect that seals and rivets of the wagon were intact when he left Mughalsarai with the train should not be accepted. In the absence of any demand by the respondent for the production of watch and ward staff his mere suggestion that the railway servants at Mughalsarai might have committed the theft cannot be accepted. There is the further evidence of the guard as to what happened between Mughalsarai and Buxar. It appears between these two stations the train stops only at Dildarnagar. The evidence of the guard however is that the train suddenly stopped between the warner and home signals before it reached Dildarnagar. He therefore got down to find out what the trouble was. He found that the hosepipe between two wagons had got disconnected and this resulted in the stoppage of the train. The evidence further is that the hosepipe was intact when the train started from Mughalsarai. He made a note of this in his rough memo book which was produced. It is noted by him that the northern flap door of this wagon was open. He reconnected the hosepipe and went up to Dildarnagar. There he reported the matter to the station staff. His further evidence is that there were three escorts with the train and that they were guarding the train when the train was standing between the warner and the home signals before it reached Dildarnagar. Nothing untoward was reported to him by these escorts. It was at this stop between the two signals that the guard noticed that the rivets and seals of this wagon on one side had been broken. The case of the railway is that there was theft in the running train between Mughalsarai and Buxar and that is how part of the consignment was lost. The evidence of the guard does suggest that something happened between Mughalsarai and Dildarnagar and then between Dildarnagar and Buxar. In addition to this the evidence of the station staff at Dildarnagar is that the flapdoors of this wagon were found open when the train arrived at Dildarnagar. The contents were not checked at Dildarnagar as there was no arrangement for checking at that station. The wagon was resealed at Dildarnagar, and the fact was noted in the station master 's diary. It may be mentioned that the evidence of the station staff was that the wagon was resealed though the guard says that it was riveted also at Dildarnagar. The entry in the guard 's rough memo however is only that the wagon was resealed. The guard certainly says that it was rivetted also at Dildarnagar but that is not supported by the station staff and the entry in the guard 's rough memo. It seems that the statement of the guard may be due to some error on his 159 part. That may also explain why, when the train arrived at Buxar, the flapdoor again was found open, for it had not been rivitted at Dildarnagar. Then the evidence of the Buxar station staff is that the northern flapdoors of this wagon were open when the train arrived at Buxar. It was then resealed and rivetted and was detached for checking. The checking took place on December 14th at Buxar. It was then found that one side had the original seals of Wadibun dar while the other side had the seals of Buxar. On checking the wagon, 27 bales were found intact, covering of one bale was torn and one bale was found loose and slack. This evidence asto what happened between Mughalsarai and Buxar thus makes it probable that there was theft in the running train between Mughalsarai and Buxar and that may account for the loss of part of the consignment. It is however contended on behalf of the respondent that no evidence was produced from Mughalsarai asto what happened while the wagon was in the marshalling yard and that the seal book which is kept at every railway station containing entries of resealing when a wagon is resealed was not produced from Mughalsarai and an adverse inference should be drawn from this non production. We are however of opinion that the evidence of the guard to the effect that the seals were intact when he left Mughalsarai with the train is sufficient to show that the wagon was in tact with the original seals when it left Mughalsarai and there fore it is not possible to draw any adverse inference from the non production of the watch and ward staff or the seal book of Mughalsarai in the circumstances of this case. It would have been a different matter if the respondent had asked for the production of the seal book as well as the evidence of the watch and ward staff. But the respondent contented itself merely with the suggestion that a theft might have taken place at Mughalsarai which was denied by the guard and did not ask the court to order the railway to produce this evidence. In these circumstances in the face of the evidence of the guard and the fact that one seal on the southernside of the door was of the original station. we do not think that it is possible to draw an adverse inference against the railway on the ground that the evidence of the watch and ward staff and the seal book at Mughalsarai were not produced. The seal book would have been of value only if the wagon had been resealed at Mughalsarai but there is in our opinion no reason to think that the wagon had been resealed at Mughalsarai after the evidence of the guard that he found the seals and rivets intact when he left Mughalsarai with the train. On a careful consideration of the evidence therefore we are of opinion that a fair inference cannot be drawn from the evidence of the railway that there was misconduct by the railway or its servants at Mughalsarai during the time when the wagon was there. If the evidence of the guard is accepted, and we do accept it, there can be no doubt that the loss of the goods took place be case of theft in the running train between Mughalsarai and 160 Buxar. There is no evidence on behalf of the respondent to prove misconduct and as misconduct cannot fairly be inferred from the evidence produced on behalf of the railway, the suit must fail. We therefore allow the appeal, set aside the judgment and decree of the High Court and restore that of the Additional Subordinate Judge. In the circumstances of this case we order parties to bear their own costs throughout. Appeal allowed.

Out of a consignment of 60 bales of piece goods despatched by the Railway, under risk note Form Z, only 29 bales were delivered to the respondent who was the consignee. By sending the consignment thus, the consignor got a specially reduced rate but the burden was thrown on him, of proving misconduct on the part of the railway or its servants, if there was a loss of goods. The risknote also imposed an obligation on the Railway, to disclose how the consignment was dealt with by it, during the time the consignment was in its possession or control. The respondent wrote a letter to the Chief Commercial Manager of the Railway stating that 60 bales were booked but only 29 bales had been delivered, and that a suit for damages would be filed. The letter was sent within 6 months of the booking of the consignment ,and contained the details as to how the amount of damage was arrived at. Later on, a notice was given under section 80 of the Civil Procedure Code, 1908, and a suit was filed for damages. But, before the filing of the suit, there was no demand by the consignor for a disclosure as to how the consignment was dealt with by the Railway throughout the period it was in its possession or control. The Railway however, made a disclosure in its written statement as. to how the consignment was, dealt with throughout that period. Its defence was that, there was a theft in the running train and that was how part of the consignment was lost and not due to any misconduct on the part of the Railway or its servants. Even after the suit was filed and evidence let in at the trial, by the railway there was no statement by the respondent at any stage that the disclosure made by the Railway in the written statement or in the evidence, was in any way inadequate. The resplendent never told the court after the evidence of the Railway w.as over, that he was net satisfied with the disclosure and that the Railway should be asked to make a further disclosure. The suit was dismissed by the trial court but decreed on appeal, by the High Court. In the appeal to the Supreme Court it was contended that, (i) the, suit was barred by section 77 of the Indian Railways Act, 1890, inasmuch as notice required therein was not given by the respondent, and (ii) under the terms of the risk note the Railway was absolved from all responsibility for the less of the goods consigned thereunder, from any cause whatsoever. except upon proof of misconduct of the Railway or its servants, that the burden of proving such misconduct was on the respondent and that the respondent had failed to discharge the burden. HELD: (i) A notice under section 77 of the Act is necessary in the case of non delivery which arises from the loss of goods. Though the letter, written by the respondent to the Chief Commercial Manager, was not specifically stated to be a notice under the section it gave all 'the 'particulars necessary for such a notice and it was also given within time prescribed. Therefore, the letter was sufficient notice for the purpose of the Act, [149 D F] 146 Governor General in Council vs Musaddilal [1961]3 S.C.R. 647 and Jatmull Bhojraj vs The Darjeeling Himalayan Railway Co.Ltd. ; , followed. (ii) The view of the High Court, that there was a breach of the condition relating to complete disclosure, and that on such breach the risk note could be completely ignored and the responsibility of the Railway judged purely on the basis of section 72(1) of the Act, as if the goods were consigned at the ordinary rates on the Railway 'srisk, was not correct. [154 H] The responsibility of the railway administration to disclose to the consignor as to how the consignment was dealt with throughout the time it was in its possession or control arises at once, under the risk note, in either of the cases referred to therein, and is not confined to the stage of litigation. But such disclosure is necessary only where a consignor specifically asks the railway to make the disclosure. If no such disclosure is asked for, the administration need not make it before the litigation. Therefore, if the Railway did not make the disclosure, before the suit was filed, it could not be said to have committed a breach of the term of the contract [153 A D] The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its servants. If the disclosure is asked for before litigation commences and is not given, or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the court to say, if a suit is filed, whether there .has been a breach ,of the term. At that stage, evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation, to, the consignor, or which might have been made in the written statement. When the administration has given its evidence in proof of the disclosure, if the plaintiff is not satisfied with the disclosure made in evidence, he is entitled to ask the court to call upon the railway to fulfill its obligation under the contract, and the railway should then have the opportunity of meeting the demands of the plaintiff. It is then for the court to decide whether the further disclosure desired by. the plaintiff should be made by the railway, and if the court decides that it should be made, the railway has to make such further disclosure as the court orders. If the railway fails to take that opportunity to satisfy the demands of the plaintiff endorsed by the court, the railway, at that stage, would be in breach of its contractual obligation of disclosure. [153 E 154 B] The effect of the breach however is not to bring the contract to an end and throw the responsibility on the railway, as if the case was a simple case of responsibility under s.72(1). The risk note would continue to apply and the court would have to decide whether the misconduct can be fairly inferred from the evidence of the railway, with the difference that, where the railway has been in breach of its obligation to make full disclosure, misconduct may be more readily inferred and section 114 of the Evidence Act more readily applied. But the conditions of the risk note cannot be completely ignored, simply because there has been a breach of the condition of complete disclosure.[154 D G] Surat Cotton Spinning & Weaving Mills vs Secretary of State for India in Council [1937] 64 I.A. 176, applied.

1935.txt

Appeal No. 108 of 1954. Appeal from the judgment and decree dated March 21, 1952, of the Calcutta High Court in Appeal from Appellate Decree No. 971 of 1950, arising out of the judgment and decree dated August 29, 1950, of the Court of District Judge of Zillah Burdwan in Title Appeal No. 247/16 of 1948 against judgment and decree dated September 25, 1948, of the Court of Additional Sub Judge, 1st Court, Burdwan, in Title Suit No. 7 of 1946/27 of 1947. 1311 N. C. Chatterjee and Sukumar Ghose, for the appellant. J. N. Banerjee and P. K. Ghose, for the respondents. September 18. The Judgment of the Court was delivered by VENKATARAMA AIYAR J. This is an appeal by the plaintiff against the judgment of the High Court of Calcutta in a second appeal which, in reversal of the judgments of the Courts below dismissed his suit, which was one in ejectment. The suit property is a Mahal of the extent of 84 Bighas 18 Cottas situated within lot Ahiyapur village, which is one of the villages forming part of the permanently settled estate of Burdwan Zamindari. This village was granted by the Maharaja of Burdwan in Patni settlement to the predecessors in title of defendants I to 7. The exact date of this grant does not appear, but it is stated that it was sometime prior to the enactment of the Bengal Patni Taluks Regulation, 1819 (Bengal Regulation VIII of 1819), hereinafter referred to as the Regulation, and nothing turns on it. The Mahal with which this litigation is concerned, had been at or prior to the permanent settlement set apart as Chaukidari Chakaran lands; that is to say, they were to be held by the Chaukidars for rendering service in the village as watchmen. In 1870, the Village Chaukidari Act, 1870 (Ben. VI of 1870), hereinafter referred to as the Act, was passed, and section 48 of that Act provides that all Chaukidari Chakaran lands assigned for the benefit of any village shall be transferred to the zamindar of the estate in the manner and subject to the provisions contained in the Act. Under section 50, the Collector is authorized to make an order transferring those lands to the Zamindar after determining the assessment payable thereon, and section 51 enacts that: " Such order shall operate to transfer to such zamindar the land therein mentioned subject to the amount of assessment therein mentioned, and subject 1312 to all contracts theretofore made, in respect of, under, or by virtue of, which any person other than the zamindar may have any right to any land, portion of his estate, or tenure, in the place in which such land may be situate. " In accordance with the provisions aforesaid, the suit properties were transferred to the Maharaja of Burdwan, and on June 3,1899, he granted the same to the predecessors in title of defendants I to 7, who at that time held the Patni interest in respect of lot Ahiyapur. Under the grant which has been marked as exhibit B, the yearly rental for the area was fixed at Rs. 126 8 as., out of which Rs. 84 4 as., had to be paid to the Panchayat within the 7th of Baisakh for being credited to the Chaukidari Fund and the balance of Rs. 42 4 as., was to be paid to the Zamindar within the month of Chaitra. Exhibit B also provides that in default of payment of kist the lands are liable to be sold in proceedings taken under the Bengal Regulation VIII of 1819. Acting under this clause, the Maharaja applied under section 8 of the Regulation to bring the suit lands to sale for realisation of arrears, and at the auction held on May 15, 1937, himself became the purchaser. On February 13, 1941, he granted the lands again on Patni to the appellant, who filed the suit, out of which the present appeal arises, in the Court of the Subordinate Judge, Burdwan, to recover possession thereof from the defendants alleging that they had trespassed thereon. The respondents contested the suit on the ground that, in fact, there were no arrears of rent due under Exhibit B, and that the sale was therefore void. The Subordinate Judge held that there were arrears of rent due from the respondents, and that further as they had not sued to set aside the sale under section 14 of the Regulation within the time limited by law, they could not set up its invalidity as a defence to the action in ejectment. The defendants preferred an appeal against this judgment to the District Court of Burdwan, and there raised a new contention that under the grant, Exhibit B, the suit lands became part of lot Ahiyapur, and that a sale of those lands was 1313 illegal as being a sale of a portion of the Patni. The District Judge after observing that the point was taken for the first time, held on a construction of Exhibit B that it created a new Patni, and that it could therefore be brought to sale, and he also held that section 14 of the Regulation operated as a bar to the validity of the sale being questioned on the ground that the rent claimed was not, in fact, due. He accordingly dismissed the appeal. The respondents took the matter in second appeal to the High Court, and that was heard by a Bench consisting of Das Gupta and Lahiri JJ. who differed from the District Judge both on the construction of Exhibit B and on the bar of limitation based on section 14 of the Regulation. They held that the effect of Exhibit B was merely to make the suit lands part and parcel of the Patni lot Ahiyapur, and that, therefore, the sale of those lands only was bad, as being a sale of a part of the Patni. They further held that as such a sale was void, section 14 of the Regulation had no application. They accordingly allowed the appeal, and dismissed the suit. It is against this judgment that the present appeal has been brought on a certificate granted by the High Court under article 133(1)(a). Mr. N. C. Chatterjee for the appellant urged the following contentions in support of the appeal: (1) The defendants did not raise either in the written statement or during the trial, the plea that under the sanad, Exhibit B, the Chaukidari Chakaran lands comprised therein became part of the Patni settlement of lot Ahiyapur, and, in consequence, their sale was bad as being of a part of the Patni, and the learned Judges should not have allowed that point to be raised in appeal. (2) Exhibit B properly construed must be held to create a new Patni distinct from lot Ahiyapur, and its sale is therefore valid. (3) Assuming that the sale is invalid as being of a part of a tenure, the only right of the defendants was to sue to have it set aside, as provided in section 14 of the Regulation, and that not having been done, it is not open to them to attack it collaterally in these proceedings. We see no substance in the first contention. It is 1314 true that the defendants did not put forward in the trial Court the plea that the effect of Exhibit B was to incorporate the suit lands in lot Ahiyapur Patni, and that, in consequence, the sale was illegal as being of a part of the Patni. On the other hand, the written statement proceeds on the view that Exhibit B created a new Patni unconnected with lot Ahiyapur, and the only defence raised on that basis was that no arrears of rent were due under Exhibit B, and that the sale was therefore invalid. But the true nature of the grant under Exhibit B is a matter to be decided on a construction of the terms of the document, and that is a question of law. It is argued for the appellant that it would be proper in determining the true character of the grant under Exhibit B to take into account surrounding circumstances, that to ascertain what those circumstances are, it will be necessary to take evidence, and that, in consequence, a question of that kind could not be permitted to be agitated for the first time in appeal. But it is well settled that no evidence is admissible on a question of construction of a contract or grant, which must be based solely on the terms of the document, there being no suggestion before us that there is any dispute as to how the contents of the document are related to existing facts. Vide Balkishen Das vs Legge (1) and Maung Kyin vs Ma Shwe La (2). It should, moreover, be mentioned that when the defendants sought to raise this contention in their appeal in the District Court, no objection was taken by the plaintiff thereto. Under the circumstances, the learned Judges were right in allowing this point to be taken. This contention must therefore be rejected. The next point for determination is as to the true character of the grant under Exhibit B, whether it amounts to a new Patni with reference to the Chaukidari Chakaran lands as contended for by the appellant, or whether it incorporates those lands in the Patni of lot Ahiyapur, so as to make them part and parcel of the lands comprised therein, as is maintained by the respondents. To appreciate the (1) (1899) L.R. 27 I.A. 58, 65. (2) (1917) L.R 44 I.A. 236, 243. 1315 true position, it is necessary to examine what the rights of the Zamindar and of the Patnidar were with respect to Chaukidari Chakardan lands at the time of the grant, Exhibit B. These lands had been originally set apart as remuneration for the performance of services by the village chaukidars as watchmen, and for that reason when the village was granted to the Zamindar in permanent settlement, the income therefrom was not taken into account in fixing the jama payable by him, though they passed to him under the permanent settlement. Then came the Village Chaukidari Act, and under that Act the Government put an end to the services of the Chaukidars as village watchmen, resumed the lands and imposed assessment thereon, and, subject to it, transferred them to the Zamindar; and where the Zamindar had already parted with the village in which the lands were situate, by granting Patni, it became necessary to define the rights of the Zamindar and the Patnidar with reference to those lands. Dealing with this matter, section 51 of the Act provides that the title of the Zamindar on resumption and transfer by the Government shall be subject to " all contracts theretofore made ". Under this section, the Patnidar would be entitled to the Chaukidari Chakaran lands in the same right and on the same terms on which lie held the village in which they are situate. The nature of this right has been the subject of consideration in numerous authorities, and the law on the subject is well settled. In Ranjit Singh vs Maharaj Bahadur Singh (1), it was held by the Privy Council that though the reservation under section 51 is of rights under contracts made by the Zamindar and the word " contract " primarily means a transaction which creates personal obligations, it might also refer to transactions which create real rights, and that it was in that sense the word was used in section 51, and that accordingly the Patnidar was entitled to institute a suit against the Zamindar for possession of those lands and was not obliged to suit for specific performance. But this does not mean that the Patnidar is (1) (1918) L.R. 45 I.A. 162. 167 1316 entitled to hold the lands free of all obligations. He is under a liability to pay to the Zamindar the assessment due thereon, when it is fixed under section 50, and also a share of profits. Vide Bhupendra Narayan Singh vs Narapat Singh (1), where it was held by the Privy Council that when Chaukidari Chakaran lands included in a Patni settlement had been resumed and transferred to the Zamindar under section 51 of the Act, he is entitled to the payment of a fair and equitable rent in respect thereof, and that the fixing of the rent is a condition to the Patnidar being put in possession. Vide also Rajendra Nath Mukherjee vs Hiralal Mukherjee (2) and Gopendra Chandra vs Taraprasanna (3). These being the rights and obligations of the Zamindar and the Patnidar under section 51 of the Act, a grant of the Chaukidari Chakaran lands by the former to the latter serves, in fact, two purposes. It recognises that the grantee is entitled to hold those lands by virtue of his title as Patnidar of the village of which they form part, and it fixes the amount payable by him on account of assessment and share of profits. The question then arises as to what the exact relationship is in which the new grant stands to the original Patni grant. Now, when section 51 of the Act recognises and saves rights which had been acquired under contract with the Zamindar, its reasonable implication is that the rights so recognised are the same as under the contract, and that, in consequence, the settlement of the Chaukidari Chakaran lands in Patni must be taken to be a continuance of the Patni of the village in which they are included. But it is open to the parties to agree that the Chaukidari Chakaran lands should form a new and distinct Patni, and the result of such an agreement will be that while the grantee will hold those lands in Patni right, that is to say, the tenure will be permanent, heritable and alienable so far as his liability to pay jama and the corresponding right of the Zamindar to sell it under the Regulation if there is any default in the (1) (1925) L.R. 52 I.A. 355. (2) (3) Cal. 1317 payment thereof are concerned, the now grant will be an entity by itself independent of the original Patni. That that could be done by agreement of parties is well settled, and is not disputed before us. If that is the true position, then the real question to be considered is, what is the agreement of parties with reference to the Chaukidari Chakaran lands, whether they are to be constituted as an independent Patni or whether they should be treated as a continuation of the original Patni or an accretion thereto, and the answer to it must depend on the interpretation to be put on the grant. It is now necessary to refer to the material terms of Exhibit B under which the Chaukidari Chakaran lands were granted to the predecessors of respondents I to 7. It begins by stating that the Patnidars of lot Ahiyapur appeared before the Zamindar and ,prayed for taking Patni settlement of the said 84 Bighas 18 Cottas of land at a yearly rental of Rs. 126/8 as.", and then provides how the amount is to be paid. Then there is the following clause, which is important: "You will pay the rent etc., Kist after Kist according to the Kistbandi in accordance with law, and if you do not pay the same, I will realise the arrears together with interest and costs by causing the aforesaid lands to be sold by auction by instituting proceedings under Regulation VIII of 1819 and other laws which are in force or will come into force. " Then follow provisions relating to the transfer by the Patnidars of " the aforesaid lands ", succession by inheritance or by will to " the aforesaid lands " and the registration of the name of the transferee or successor in the Sherista, and it is expressly stated that "so long as the name of the new Patnidar is not recorded in the Sherista, the former Patnidar whose name is recorded in the Sherista will remain liable for the rent, and on a sale of the Mahal by auction on institution of proceedings against him under Regulation VIII of 1819 or any other law that will be in force for realisation of arrears of rent, no objection thereto on the Part of the new Patnidar can be entertained." 1318 Then ,there are two clause on which on the respondents rely, and they are in these terms: " If in future it transpires that any other persons besides yourselves have Patni rights in the Patni interest of the, said lot Ahiyapur, such persons shall have Patni rights in these Chakaran lands also to the same extent and in the same manner as they will be found to have interests in the Patni of the aforesaid lot, and if for the said reason any person puts forward any claim against the Raj Estate and the Raj Estate has to suffer any loss therefor, you will make good the said claim and the loss without any objection. If in future the Patni interest in the said lot Ahiyapur be transferred for liability for arrears of rent or if the same comes to an end for any reason, then your Patni interest in these Chakaran lands also will be transferred or will come to an end alongwith the original Patni ,simultaneously. " It is on these two clauses that the learned Judges in the Court below have based their decision that the intention of the par ties was to treat the suit lands as part of the Patni of lot Ahiyapur. Now, it cannot be disputed that the two clauses aforesaid afford considerable support to the conclusion to which the learned Judges have come. The first clause provides that if besides the grantee under Exhibit B there were other persons entitled to Patni rights in lot Ahiyapur, those persons also shall have Patni rights in Chaukidari Chakaran lands to the same extent as in Patni Ahiyapur. That clearly means that the rights conferred on the grantees under Exhibit B have their roots in the Patni lot of Ahiyapur. Likewise, the provision in the last clause that the grantees will lose their rights to the Chaukidari Chakaran lands if their interest in Ahiyapur Patni was sold clearly suggests that the grant under Exhibit B is to be an annexe to the grant of Ahiyapur. As against this, the appellant argues that the other clauses in Exhibit B quoted above strongly support his contention, and that when the document is read as a whole, it unmistakably reveals an intention to treat the suit lands as a distinct Patni. We must now 1319 refer to these clauses. Exhibit B begins by reciting that the grantees desired to take a Patni settlement of 84 Bighas 18 Cottas, which is some indication, though not very strong, that it is to be held as a distinct entity. We have then the clause which provides that when there is default in the payment of kist, the lands are liable to be sold in proceedings instituted under the Regulation. Now, the law had long been settled that a sale of a portion of a Patni is bad, but that if by agreement of all the parties interested different portions thereof are held under different sadads, which provide for sale of those portions for default in pay ment of kist payable respectively thereon, then each of those sanads might be held to have created a separate Patni in respect of the portion comprised therein. Vide Mohadeb Mundul vs Mr. H. Cowell(1) and Monomothonath Dev and another vs Mr. G. Glascott (2). When, therefore, the Zamindar and the Patnidar agreed under Exhibit B that the lands comprised therein could be sold under the Regulation when there was default in payment of kist fixed therefor, they must clearly have intended that those lands should be constituted into a distinct Patni. Otherwise, the clause will be inoperative and void, and indeed, the learned Judges in the Court below have, on that ground, declined to give any effect to it. Now, it is a settled rule of interpretation that if there be admissible two constructions of a document, one of which will give effect to all the clauses therein while the other will render one or more of them nugatory, it is the former that should be adopted on the principle expressed in the maxim " ut res magis valeat quam per eat ". What has to be considered therefore is whether it is possible to give effect to the clause in question, which can only be by construing Exhibit B as creating a separate Patni, and at the same time reconcile the last two clauses with that construction. Taking first the provision that if there be other persons entitled to the Patni of lot Ahiyapur they are to have the same rights in the land comprised in Exhibit B, (2) (1873) 20 Weekly Reporter 275. 1320 that no doubt posits the continuance in those persons of the title under the original Patni. But the true purpose of this clause is, in our opinion, not so much to declare the rights of those other persons which rest on statutory recognition, but to provide that the grantees tinder the document should take subject to those rights. That that is the purpose of the clause is clear from the provision for indemnity which is contained therein. Moreover, if on an interpretation of the other clauses in the grant, the correct conclusion to come to is that it creates a new Patni in favour of the grantees thereunder, it is difficult to see how the reservation of the rights of the other Patnidars of lot Ahiyapur, should such there be, affects that conclusion. We are unable to see anything in the clause under discussion, which militates against the conclusion that Exhibit B creates a new Patni. Then there is the clause as to the cesser of interest of the grantees in the Chaukidari Chakaran lands when their title to lot Ahiyapur comes to an end, and according to the respondents, this shows that under Exhibit B the Chaukidari Chakaran lands are treated as part and parcel of the Ahiyapur Patni. If that were so, a sale of lot Ahiyapur must carry with it the Chaukidari Chakaran lands, they being ex hypothesi, part and parcel thereof, and there was no need for a provision such is is made in the last clause. But that clause would serve a real purpose if the Patni under Exhibit B is construed as separate from that of lot Ahiyapur. In that view, when the major Patni of lot Ahiyapur is sold, the intention obviously is that the minor Patni under Exhibit B, should not stand out but be extinguished, a result which could be achieved only by a special provision. We should finally refer to the clauses in Exhibit B providing for transfer of or succession to the Chaukidari Chakaran lands and for the recognition of such transferee or successor as a Patnidar of those lands. It is clear from these provision,s that such a transferee or successor is to hold the lands as a Patnidar, different from the Patnidar of lot Ahiyapur. Reading these clauses along with the last clause, it seems clear that the intention of the parties 1321 was that while a transfer of the Ahiyapur Patni by sale should extinguish the title of the holders of the Chaukidari Chakaran lands a transfer of these lands would have no effect on the title to the lot Ahiyapur Patni. Construing Exhibit B, as a whole, we are of opinion that the intention of the parties as expressed therein was that the Chaukidari Chakaran lands should be held as a distinct Patni. We must now refer to the decision on which the learned Judges in the Court below have relied in support of their conclusion. In Kanchan Barani Debi vs Umesh Chandra (1), the facts were that the Maharaja of Burdwan had created a Patni of lot Kooly in 1820. The Chaukidari Chakaran lands situated within that village were resumed under the Act and transferred to the Zamindar who granted them in 1899 to one Syamlal Chatterjee in Patni on terms similar to those in Exhibit B. In 1914 the Patni lot Kooly was sold under the Regulation, and purchased by Sint. Kanchan Barani Debi. She then sued as such purchaser to recover possession of the Chaukidari Chakaran lands. The defendants who represented the grantees under the Patni settlement of 1899 resisted the suit on the ground that the sale of Patni Kooly did not operate to vest in the purchaser the title in the Chaukidari Chakaran lands, as they formed a distinct Patni. Dealing with this contention, B. B. Ghose J. who delivered the judgment of the Court, observed : concerned to alter the terms of the original patni if they chose to do so; and what we have to see is whether that was done. In order to do that, we have to examine the terms of the pattah by which the Chaukidari Chakaran lands were granted to Syamlal Chatterjee." The learned Judge then refers to the two clauses cor responding to the last two clauses in Exhibit B, and comes to the conclusion that their effect was merely to, restore the position as it was when the original Patni was created, and that, in consequence, the purchaser was entitled to the Patni as it was created in 1820, (1) A.I.R. 1925 Cal. 807, 1322 and that the plaintiff was entitled to the possession of the Chaukidari Chakaran lands as being part of the Patni. Now, it is to be observed that in deciding that the Chaukidari Chakaran lands granted in 1899 became merged is lot Kooly, as it was in 1820, the learned Judge did not consider the effect of the clause providing for sale of those lands as a distinct entity under the provisions of the Regulation when there was default in the payment of ret payable thereon under the deed, and that, in our opinion, deprives the deci sion of much of its value. In the result, we are unable to hold that the two clauses on which the learned Judges base their conclusion are really inconsistent with the earlier clauses which support the view that the grant under Exhibit B is of a distinct Patni. Nor do we agree with them that the earlier clause providing for the sale of the Chaukidari Chakaran lands in default of the payment of jama, should be construed so as not to override the later clauses. If, in fact, there is a conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clause that must override the later clauses and not vice versa. In Forbes vs Git (1), Lord Wrenbury stated the rule in the following terms : " If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails. In this case the two clauses cannot be reconciled and the earlier provision in the deed prevails over the later. " We accordingly hold that Exhibit B created a new Patni and that the sale of the lands comprised therein is not bad as of a portion of a, Patni. We are conscious that we are differing from the learned Judges of the Court below on a question relating to a local tenure on which their opinion is, by reason of the special knowledge and experience which they have of it, entitled to the greatest weight. It is also true that the decision in Kanchan Barani Debi vs (1) ,259. 1323 Umesh. Chandra (1) has stood now for over three decades, though it is pertinent to add that its correctness does not appear to have come up for consideration in any subsequent decision of the Calcutta High Court, prior to this litigation. But then, the question is one of construction of a deed, and our decision that the effect of an agreement of the kind in Exhibit B was to constitute the Chaukidari Chakaran lands into a distinct Patni will not result in any injustice to the parties. On the other hand, the rule that a portion of a Patni should not be sold being one intended for the benefit of the Patnidars, there is no reason why an agreement entered into by them with the Zamindars providing for the sale of a portion, thereof which is really to their advantage, should not be given effect to. Having anxiously considered the matter, we have come to the conclusion that Exhibit B creates a distinct Patni, that the sale thereof on May 15, 1937, is valid, and that the plaintiff has therefore acquired a good title to the suit lands under the grant dated February 13, 1941. In this view, it is unnecessary to express any opinion on the point that was the subject of considerable argument before us as to whether it is open to the defendants to raise the invalidity of the sale held on May 15, 1937, in answer to this action, they not having taken steps to have set it aside, as provided in section 14 of the Regulation. In the result, the appeal is allowed, the judgment of the lower Court reversed and that of the District Judge restored, with costs throughout. Appeal allowed. (1) A.I.R. 1925 Cal.

The lands in question are situate in lot Ahiyapur which is one of the villages forming part of the permanently settled estate of Burdwan and had been set apart as Chaukidari Chakaran lands to be held by the Chaukidars for rendering service in the village as watchmen. At the time of the permanent settlement the income from these lands was not taken into account in fixing the jama payable on the estate. Some time before the enactment of the Bengal Patni Taluks Regulation, 1819, the entire village of Ahiyapur was granted by the then 1310 Zamindar of Burdwan, to the predecessors in title of the defendants on Patni settlement. In 1870 the Village Chaukidari Act came into force and acting under the provisions of that Act the Government put an end to the services of the Chaukidars resumed the lands and imposed an assessment thereon, and, subject to it, transferred the lands to the Zamindar. On June 3, 899, the Zamindar granted the suit lands on Patni to the predecessors in title of the defendants who were the then holders of the village in Patni. In proceedings taken by the Zamindar under the provisions of the Bengal Patni Taluks Regulation, 1819, the suit lands were brought to sale for arrears of rent and purchased by him. On February I3, 1941, the Zamindar sold the lands to the appellant who sued to recover possession thereof from the defendants. The defendants resisted the suit on the ground, inter alia, that the effect of the grant of the Chaukidari Chakaran lands on June 3, 1899, was to make them part and parcel of the Patni settlement of the village of Ahiyapur and that, in consequence, the sale of those lands, apart from the village of Ahiyapur, was bad as being a sale of a portion of the Patni. Held, that when the Zamindar made a grant of the Chaukidari Chakaran lands which formed part of a village which had previously been settled in Patni, it was open to the parties to agree that those lands should form a new and distinct Patni and the result of such an agreement would be that while the grantee would hold those lands in Patni right, that is to say, that the tenure would be permanent, heritable and alienable, so far as his liability to pay jama and the corresponding right of the Zamindar to sell it under the Regulation if there was a default in the payment thereof were concerned, the new grant would be a distinct Patni, independent of the original Patni. Held, further, that construing the grant dated June 3, 899, as a whole, the intention of the parties as expressed therein was that the Chaukidari Chakaran lands were to be treated as a distinct Patni and that, therefore, the sale of the lands for arrears of rent was valid.

636.txt

Appeal No. 2063 of 1973. Appeal by special leave from the judgment and decree dated the 25th July. 1973 of the Calcutta High Court in Appeal from Appellate Decree No. 1193 of 1972. Civil Appeal No. 1304 of 1973. From the judgment and order dated the 3rd February, 1972 of the Calcutta High Court in L.P.A. No. 14 of 1969. P. Chatterjee and Rathin Das, for the appellant (In C. A. 2063/73). Urmila Kapoor and Shobha Dikshit, for the respondent (In C.A. No. 2063/73). P.K. Chatterjee, G. section Chatterjee, and Sukumar Basu, for the Advocate General for the State of West Bengal. Sukumar Ghose, for the appellants. (In C.A. No. 1304/73). D. N. Mukherjee, for the respondents (in C.A. No. 1304/73). The judgment of M. H. Beg and V. R. Krishna Iyer, JJ was delivered by Krishna Iyer, J. P. K. Goswami, J. gave a separate Opinion. KRISHNA IYER, J. Calcutta or Cochin, for the urban people of India, the shocking scarcity of a roof to rest one 's tired bones is an L346SupCI/75 778 unhappy problem of social justice that compels control of rent. and eviction laws. In the case now before us, attacking the constitutionality of legislation handcuffing the landlord proprietariat 's right of eviction, the law has to be tested not merely by the cold print of article 19(1)(f) but also by the public concern of article 19(5) and the, compassionate animus of article 39, Parts III and IV of the Constitution together constitute a complex of promises the nation has to keep and the legislation challenged before us is in partial fulfilment of this tryst with the people. These observations become necessary in limine since counsel for the respondents dismissed the concept of social justice as extraneous to an insightful understanding of the section invalidated by the High Court, while we think that judicial conscience is not a mere matter of citations of precedents but of activist appraisal of social tears to wipe out which the State is obligated under the Constitution. The two appeals before us, raising substantially identical points, have been heard together and are being disposed of by a common judgment. Both of them stem from a decision of the Calcutta High Court reported as Sailendra Nath vs section E. Dutt(1). One of the decisions under appeal (C.A. 2063 of 1973) was rendered by a Single Judge of the High Court following a Division Bench ruling of the same Court (i.e., the one reported as Sailendra Nath vs section E. Dull) since he was obviously bound by it. A provision imparting some sort of retroactivity to a 1969 legislative amendment implanting additional restrictions on eviction of premises under the earlier West Bengal rent control law has been voided by the High Court in the judgment& under appeal. The aggrieved tenant in each case has appealed and the State, not being directly a party to the legislation, has entered appearance to support, the legislation and to challenge the Calcutta decision to the extent it has invalidated the retrospective part of the statute. Welfare legislation calculated to benefit weaker classes, when their vires is challenged in Court, casts an obligation on the State, particularly when notice is given to the Advocate General, to support the law, if necessary by a Brandeis brief and supply of socio economic circumstances and statistics inspiring the enactment. Courts cannot, on their own, adventure into social research outside the record and if Government lets down the Legislature in Court by not illumining the provisions from the angle of the social mischief or economic menace sought to be countered, the victims will be the class of beneficiaries the State professed to protect. In this case, we are unable to compliment the State or the Advocate General from this point of view. It may happen that when the Court decides against the validity of a measure or order because Government fails to bring the socially relevant totality of facts, it is used Is an alibi by (1) A.1 R. 779 he latter for the misfortune. Courts cannot help cover up the Executive 's drowsy default or half hearted help in making the socioconomic conspectus available. The West Bengal Premises Tenancy Act, 1956 (Act XII of 956) (for short, referred to as the basic Act) clamped down several restrictions on ejectment of tenants by landlords from buildings, the policy behind it being alleviation of the lot of the weaker segment of the urban community without their own homes in the context of the scarcity of accommodation and the colossal sociceconomic upheaval which would follow if unbridled evictions were allowed. The temptation to evict or rack rent under scarcity conditions is an irresistible evil in our economic order and it is an all India phenomenon that the social conscience of the State Legislatures has responded to this large scale threat by effective control measures. Indeed, for decades now, every State in India has on, the statute book rent control law and, what is more pertinent to the present case, tactics of circumvention have compelled the enactment of additional safeguards from time to time by vigilant statutory measures. West Bengal, a populous State, with an overcrowded city choked by the largest human congregation in the country, enacted the basic Act whereby the plenary right of landlords to recover possession of their buildings was shackled in many ways. Industrial growth and other factors induced demographic congestion such as was witnessed in the urban areas of that State. Consequently, the legislature, was faced with a fresh danger in the shape of ingenious transfers of ownership of buildings by indigenous but indigent landlords and the transferees resorting to eviction on a large scale equipped as they were with better financial muscles and motivated as they were by hope of speculative returns from their investments oil eviction. Presumably, the phenomenal increase of the menance of eviction by the new species of transferee owners of building was countered by a legislative measure the West Bengal Premises Tenancy (Second Amendment) Act, 1969 (Act XXXIV of 1959) (hereinafter referred to as the amendment Act). By this legislation the new class of transferee landlords was subject to a stringent trammel viz. that they should not sue for eviction within three years of the date of transfer (We are not immediately concerned here with certain other changes effected by the Amendment Act). The social objective and the practical effect of this fetter will be con Court has upheldthis provision which is now contained in section 13(3A) sidered briefly the little later. Suffice it to say at this stage the High of the basic Act. However , while holding the provision substantial intra vires the Court has invalidated the giving effect to the provision to pending suits and appeals. Such limited retrospectivity had been incorporated by section 13 of the amending Act and, if the law were only prospective the landlords in the two cases who had initiated their litigation several years prior to the enactment of the Amendment Act would be free from the three year interdict and the other extra restrictions. Once the embargo is out of their way, the decree , for eviction they have secured must stand. On tile contrary, if the restriction on eviction by the transferee landlords were to operate on 780 pending litigation the appellants tenants are immune to eviction in the current proceedings as they now stand. Thus the short constitutional issue is as to whether section 13(3A) of the basic Act to the extent it applies to pending litigation on the strength of section 13 of the Amending Act is violative of articles 14 and 19(1)(f) of the Constitution, weapons relied upon for the attack before the High Court, and here. We will proceed to consider the constitutional vulnerability of this limb of the protective legislation. By way of anticipating our conclusion we may also pose the problem whether sections 1 3 and 4 of the Amendment Act can be validly implemented vis a vis pending actions in any other just manner which will preserve the additional protection, minimise multiplicity of litigation and make law and justice bedfellows in the &hanged statutory circumstances. Some background observations to appreciate the contest in court are necessary. No social realist will deny the frightful dimensions of the problem of homeless families and precarious tenancies; and if the Directive Principles of State Policy are not to be dismissed by the masses as a 'teasing illusion and promise of unreality ', curtailment, in public interest, of such extreme rights of the landlord as are 'red in tooth and claw ' is a constitutional compulsion. The Court, informed by this sore economic situation and reinforced by the initial presumption of constitutionality, hesitates to strike a socially beneficial statute dead, leading to escalation of the mischief to suppress which the House legislated unless, of course, a plain breach of the fundamental right of the citizen is manifest. The perspective of the amending Act is sketched by the High Court in lurid language : "The scarcity of accommodation is a burning problem, not only of the State of West Bengal but of the other States as well. Keeping pace with the needs of the gradually swelling population of West Bengal, new buildings have not been built owing to abnormal high price of land and materials. A large majority of the people of West Bengal live in those premises at the mercy of the landlords. " The explosive import of neglecting such a distressing urban development reasonably obliges the State to impose drastic restrictions on landlords ' right to property. And when circumvention of wholesome legal inhibitions are practised on a large scale the new challenge is met by clothing the law with more effective amount and that is the rationale of the Amendment Act. The learned Judges rightly refer to the legislative proceedings, notorious common knowledge and other relevant factors properly brought to their ken. The 'sound proof theory ' of ignoring voices from parliamentary debates, once sanctified by British tradition, has been replaced by the more legally realistic and socially responsible canon of listening to the legislative authors when their artifact is being interpreted We agree with the High Court when it observes : "Proceedings of legislature can be referred to for the limited purpose of ascertaining the conditions, prevailing at 781 or about the time of the enactment in question, which actuated the sponsor of the bill to introduce the same and the extent and urgency of the evil, sought to be remedied. In the Statement of Objects and Reasons of the West Bengal Premises Tenancy (Second Amendment) Bill, 1969, it is stated that it has been consider necessary that some more reliefs should be given to the tenants against eviction. It is found from the speech of the Minister at the time of introducing the Bill in the legislature, that the problems of tenants are many : there are landlords of different kinds : there is one class original owners who are the old inhabitants of the city : these owner landlords are Dot affluent: they solely depend upon the rents received from the tenants. It has been ascertained from experience that two of the, grounds of eviction, namely, of the landlords and for the purpose of building and rebuilding, have been misused by the landlords. In the city of Calcutta and other towns, there are millions of tenants who are left at the mercy of the landlords. In this background and after taking into account similar provisions in other States, it has been decided that some restrictions ought to have been imposed upon transferee landlords prohibiting them from bringing ejectment suits against the tenants within three years from their purchase. On the above two grounds and for that purpose, the said classification has been made. " The conclusion of the Court, crystellised in the following words, commends itself to us : "Taking an overall view of the various considerations, the statement of, the Minister, the objects of the Bill, matters of common knowledge and state of facts, existing at the time of the legislation, it may be well conceived that underlying policy and objects of the amended provision is to give more protection to the tenants against eviction and the classification of landlords into owner landlords and transfereelandlords is based upon a rational and intelligible differentia and we hold accordingly. " Proceeding to examine the limited attack on section 13(3A) of the basic Act read with section 13 of the Amending Act, we have to remember die comity of constitutional instrumentalities and raise the presumption that the legislature understands and appreciates the needs of the people and is largely aware of the frontiers of and limitations upon its power. (See: The State of Bombay vs R. M. D. Chamar baguwala(1) and Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar & Others(2). Some Courts have gone, to the extent of holding that "there is a presumption in favour of constitutionality, and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt; and 'to doubt the constitutionality of a law is to resolve it in, favour of its validity. "(3) Indeed, the Legis (1) ; (2) ; (3) Constitutional law of India by H. M. Seervai p 54 vol. 1. 782 lature owes it to the Court to make like respectful presumptions. We therefore view the provision impugned through a socially constructive, not legally captious, microscope to discover glaring unconstitutional infirmity, if any, and not chase every chance possibility of speculative, thought which may vitiate the law. Stray misfortunes when laws affecting large chunks of the community are enacted are inevitable and the respondents before us may perhaps belong to that category. Social legislation without tears, affecting vested rights, is impossible. Statutory construction has a benignant sensitivity and we are satisfied the High Court, in substantially upholding the Amendment Act, has done right, but in striking down the retrospective portion of the section has stumbled into a specious error. It is helpful to reproduce the relevant portion of section 13 of the basic Act in its unamended state and the amendments dovetailed into it by the 1969 Act, The so called 'retrospectivity ' of this provision has been anathematised by the respondent landlords and annulled by the High Court : "13(1) Notwithstanding anything to the contrary in any other law, no order or decree for the recovery of possession of any premises shall be made by any Court in favour of the landlord against a tenant except on one or more of the following grounds, namely: unamended cl. (f) : where the premises are reasonably required by the landlord either for purposes of building or rebuilding or for making thereto substantial additions or alterations or for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held; cls. (f) and (ff) substituted therefor (f)subject to the provisions of sub section (3A), and section 18A, where the premises are reasonably required by the landlord for purposes of building or re building or for making thereto substantial additions or alterations and such building or rebuilding or additions or alterations cannot he carried out without the premises being vacated, (ff) subject to the provisions of subsection (3A), where the premises are reasonably required by the landlord for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held and the landlord or such person is not in possession of any reasonably suitable accommodation, Sub section (3A) newly introduced. 13(3A) Where a landlord has acquired his interest in the premises by transfer, no suit for the recovery of possession of the premises on any of the grounds mentioned in clause (f) or clause (ff) of sub section (1) shall be insti 78 3 tuted by the landlord before the expiration of a period of three years from the date of his acquisition of such interest : Provided that a suit for the recovery of the possession of the premises may be instituted on the ground mentioned in clause (f) of sub section (1) before the expiration of the said period of three years if the Controller, on the application of the landlord and after giving the tenant an opportunity of being beard, permits, by order, the institution of the suit on the ground that the building or rebuilding, or the additions or alteration, as the case may be, are necessary to make the premises safe for human habitation. " Once the substantive restriction super added by section 13(3A) is held valid, we have to focus attention only on the extension of the new ban to pending proceedings. That legislative competence to enact retroactively exists is trite law and we have only to test its validity on the touchstone of articles 14 and 19 (1) (f) pressed into service before us. Law is a social science and constitutionality turns not on abstract principles or rigid legal canons but concrete realities and given conditions; for the rule of law stems from the rule of life. We emphasize this facet of sociological jurisprudence only because the High Court has struck down section 13 of the Amendment Act on surmises, possi bilities and may be rather than on study of actualities and proof of the nature, number and age of pending litigations caught in the net of the retrospective clause. Judges act not by hunch but on hard facts properly brought on record and sufficiently strong to rebuff the initial presumption of constitutionality of legislation. Nor is the Court a third Chamber of the House to weigh whether it should legislate retrospectively or draft the clause differently. We find no foundation for the large assumptions made by the High Court and duly repeated before us by counsel that there may be cases of ejectment instituted prior to 1956 or that a number of suits and decrees perhaps decades old will unjustly be nullified by the previous operation of the new ban. Recondite instances and casual hardships cannot deflect constitutional construction of social legislation, if the main thrust of the statute relates to a real social evil of dimensions deserving to be antidoted by antedated legislative remedy. In the present case, indubitably the State was faced with a new, insidious and considerable situation of exploitation, undermining the security of tenancy conferred by the basic Act. A large number of original landowners living in their own home could not, under the basic Act, claim recovery of possession, being occupants of their own houses. Likewise, they could not urge the ground of recovery for rebuilding, not being financially able to invest on such a costly venture. They had to look up to modest old time rentals as the only source of return and lest the penurious tenantry desperately inhabiting little tenements be forced to pay extortionate rents the rent control law of 1956 froze the rates at the 1940 level with gentle increases as provided therein. However, for now buildings to be constructed 784 special incentive provision was made by deeming the contract rent as fair rent, thus ensuring a high return on building investment. The social upshot of this scheme was that the old landlords found their ownership a poor return investment, saw a new class of wealthier investors streaming into cities and towns ready to buy the premises evict old tenants, re let on rack rents or re build and reap a rich return. They had no buildings of their own and could prove plans to rebuild, thus disarming the nonevictability provision of section 13 of the basic Act. The transferees could thus get decrees for eviction under the basic Act. Naturally, transfers of buildings to this somewhat speculating class increased and the spectacle of eviction litigation ' or potential eviction proceedings was projected on the urban scene. The Legislature promptly reacted by the Amendment Act to rescue the lessees by clamping down new restrictions by way of section 13 (3A). A three year moratorium was given to the tenants from being hunted out of their homesteads by imposing a ban on institution of suits for eviction by transferee landlords. This would both disenchant speculative purchases and provide occupants time to seek alternative housing. Presumably, these objects inspired the law makers to extend the embargo backwards to pending eviction proceedings. Quite conceivably, the tendency to create a transferee class of real estate owners gradually gathered in volume and showed up in rashes of pending actions. When Government was alerted amending legislation was proposed. Unfortunately, the State 's legal wing has failed to protect, in Court the class for whose benefit the amending law was made by placing luscent social or statistical materials on these aspect . As earlier stated by us, Government have a duty, where social legislation to protect the weak are challenged, to exhibit the same activism in the Halls of Court as in the Houses of Legislature. Failure in the former duty can be as bad as not promulgating the law. Not an elucidatory affidavit by the State nor even the Minister 's explanatory speech has been filed in this Court. We make these observations because of the handicaps we have faced and the little help on facts the State has given to sustain the legislation. The Calcutta High court has upheld the vires of sub section (3A) but invalidated its application to pending litigation. So the short issue is whether this projection into the past of the otherwise reasonable restriction on the right of eviction arbitrary, irrational, ultra vires ? If yes, the lethal sting of articles 14 and 19(1) (f) will deaden section 13 of the Amendment Act. And the High Court has held so on ,he latter Article. The prospective validity of the restriction under articles 14 and 19(1) (f), the High Court thinks, is vindicated by sound classification and sanctioned reasonably by the interest of the general public. Having regard to the policy of the legislation, the classification of landlords into two classes of owner landlords and transferee landlords and the imposition of an embargo on the latter minacious class against bringing eviction suits within three years of purchase passes the dual tests of reasonable classification and the differentia having a rational nexus with the statutory object. Therefore, the High Court had no hesitation and we totally concur that the provision is 78 5 impregnable. The controversy rages round giving effect to these stringent restraints newly enacted on earlier legal actions. This, it is contended, is a horrendous invasion of property right,; and unjust anteriority which hits innocent plaintiffs whose, purchases were beyond three years. Before us respondents ' counsel have contended that article 14 is violated. by section 3 read with section 4 of the Amendment Act although the high Court has negatived this submission thus : "We have carefully considered the arguments advanced by the learned counsel and we are of the Opinion that the retrospective operation of sub section (3A) on pending suits and appeals does not offend Article 14 of the Constitution. " Since the argument, dressed, differently, has been urged before us again we will briefly deal with it, agreeing as we do with the High Court. Plaintiffs whose transfers are twenty years ago or two years before the Act, are lugged together and subjected to the same ban if their suits were instituted within three years of the transfer. This blanket ban regardless of the varying periods which have elapsed after the transfers and before the Act was passed was unequal treatment or rather harshly equal subjection to restriction of plainly unequally situated transferees. There is seeming attractiveness in this presentation. But Courts are concerned not how best to hammer out equal justice but to oversee whether the classification is without rational basis unrelated to the object of the Act. That is why we are confined to check whether the reasoning on this aspect adopted by the High Court is not tenable. We may or may not disagree with the wisdom of the Legislature in the grouping adopted or hold views about fairer ways of treatment. But our powers are judicial, not legislative and arbitrariness and irrationality are not writ large in the method of differentiation the legislature has here chosen. In the words of A. K. Mukuherji J : "In the instant case, suits of the affected transfereelandlords may be regarded as a sub class, within a class and, if within the said sub class, the suits are not differently treated, they will not be hit by Article 14. The persons affected are transferee landlords who instituted their suits within three years of their purchase and they form a separate class and, among the suits of that 'affected class ', there is no discrimination. The law applied equally with respect to the pending suits with regard to this affected class. " Some hardship is bound to occur peripherally in any mode of classification and a few hard cases (we have not been shown whether many have been struck by this pattern of grouping) cannot guide the Court in upsetting legislative compartmentalisation. The next attack by the respondents is that the deprivation of the right to sue is absurdly beyond the object of the Act when applied to pending cases where the transfers took place more than three years before the Act. Were we draftsmen of legislation, may be counsel 's submission could have had more potency. But our limited power is to 786 examine the reasonableness of the restriction, not by substituting our personal notions but by interfering if the Legislature has gone haywire in unreasonably hamstringing transferee landlords by dismissing suits brought long before the legislative bill was in the womb of time. In an earlier case this Court observed(1) "Right at the, threshold we must warn ourselves of the limitations of judicial power in this jurisdiction. Mr. Justice Stone of the Supreme Court of the United States has delineated these limitations in United States vs Butter ; 80 Law. Ed. 477 thus: The power of courts to declare a statute unconstitutional is subject to two guiding principles of decision which ought never to be absent from judicial consciousness. One is that courts ire concerned only with the power to enact statutes, not with their wisdom. The other is that while unconstitutional exercise of power by the executive and legislative branches of the government is subject to judicial restraint, the only check upon our exercise of power is our own sense of self restraint. For the removal of unwise laws from the statute books appeal lies not to the courts but to the ballot and to the processes of democratic government. " In short, unconstitutionality and not unwisdom of a legislation is the narrow area of judicial review." The High Court has assumed that even proceedings started prior to 1956 may be affected. This, admittedly, is wrong as pre basic Act suits will be governed by the, then law as provided in section 40 and the Amendment Act amends only the 1956 Act. It may also be conceded that in both the appeals before us, thanks to Indian longevity of litigation, more than three years from the date of transfer in favour of the plaintiff has passed and thus the spirit of the protection in that sense is fulfilled. Indeed, counsel for the. respondents urged that the validation of the retrospective limb of the law would only drive the parties to fresh suits, thus promoting multiplicity of suits ruinous to both sides with no social gain. There is force in this submission. Its relevance to decide, the constitutional issue is doubtful but its influence on our ultimate solution in this case, as will be seen later, is undeniable. A closeup of the social milieu leading up to the enactment in 1969 of the Amendment Act is useful to identify the substantial, mischief the law was intended to overpower. Did that evil reasonably necessitate, for effectual implementation of purpose, the extension of the new law to pending suits and appeals ? How many suits, appeals and second appeals by transferees within the three year belt were pending? How long had they been so pending? Were there only stray eviction cases of long ago and was it feasible or necessary to (1) Murthy Match Works vs Asst. Collector of Central Excise, A.T.R. 1974 8.C. 497, 503. 787 draw a line somewhere to prevent injustice to non speculative and old time buyers of buildings without impairing the limited immunity meant for tenants and intended against now realty investors ? On these facts the State has sat with folded hands and we have been thrown on our own to scan and sustain or strike down. But here arises the significance of initial presumption of constitutionality. The High Court has made short shrift of this plea thus : "There is nothing on the record to show that the mischief, sought So be remedied by the amended legislation, was in existence since 1956. On the other hand, the ministerial speech, referred to above, rather indicates that the said mischief was of comparatively recent origin. In this context, the application of the restriction on the omnibus scale to ill pending suits and appeals would smack of unreasonableness. " Who has the onus to place compelling facts, except in flagrant cases of gross unreasonableness, to establish excessiveness, or perversity, in the restriction imposed by the statute? Long ago in Dalmia 's Case(1) this Court held that "there is always 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 principles"; and 'that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds ," If nothing is placed on record by the challengers the verdict ordinarily goes against them. Moreover, what is the evil corrected by the Amendment Act? The influx of a transferee class of evictors of tenants and institution of litigation to eject and rack rent or re build to make larger profits. Apparently, the inflow of such suits must have been swelling slowly over the years and when the stream became a flood the Legislature rushed with an amending bill. Had it made the law merely prospective, those who bad, in numbers, already gone to Court and induced legislative attention would have escaped the inhibition. This would defeat the object and so the application of the additional ban to Pending actions could not be called unreasonable. To omit to do so would have been unreasonable folly. The question is whether those cases which were filed several years ago should have been carved out of the category of transferees hit by the Act ? Where do you draw the line ? When did the evil assume proportions ? These are best left to legislative wisdom and not court 's commonsense although there may be grievances for some innocent transferees. (1) ; , 297 propositions (b) and (c). 788 If this be the paradigm of judicial review of constitutionality, we have to ignore exceptional cases which suffer misfortune unwittingly. The law is made for the bulk of the community to produce social justice and isolated instances of unintended injury are inevitable martyrs for the common good since God Himself has failed to make perfect laws and perfect justice, Freaks have to be accepted by the victims rightly or wrongly as forensic fate: Not that it should be so but human infallibility being unattainable, easily the next best in social justice is to promote the public weal sacrificing some unmerited private hurt as unfortunate but unavoidable. It must be conceded that prima facie the two landlord respondent 's had purchased the buildings in the early sixties and three time three years or more have now passed since that date. But while considering constitutionality can we be moved by such accidental instances ? No. The substantial evil has been substantially met by a broad application of the new ban to pending proceedings. We see in the Amendment Act no violation of article 19(1) (f) read with 19(5). The same High Court, in a later case Kalyani Dutt vs Pramila Bala Dassi(1) came to the same conclusion by what it called 'independently considering the question '. We discern nothing substantially different in the analysis or approach to merit review of our result. We hold section 13 of the Amendment Act valid and repel the vice of unreasonableness discovered in both the reported rulings of the High Court. And if reasonable interpretation can avoid invalidation, it is surely preferable. Here humanist considerations, public policy and statutory purpose may provide guidelines of construction within reasonable limits. Section 13 of the Amendment Act reads: "13. Retrospective effect. The amendments made to the said Act by section 4, 7, 8 and 9 of this Act shall have effect in respect of suits including appeals which are pending at the date of commencement of this Act. " The Court is called upon 'to give effect to section 4. of this new Act. ' Section 4 introduced amendments in section 13 of the basic Act which we have set out earlier. There is no doubt that the purpose of the law is to interdict, for a spell of three years, institution of suits for eviction on grounds (f) and (ff) of sub section Section 13 of the Amending Act makes it expressly applicable to pending actions, so much so the operation of the prohibition is not simply prospective as in the Kerala case cited before, us (Nealakandhayya Fillai vs Sankaran(2). Section 13, fairly read, directs that the amendment made by section 4 shall have effect in respect of suits, including appeals, pending at the commencement of the Act. We are therefore bound to give effect to section 4 in pending actions, regardless of isolated anomalies and individual hardships. As earlier noticed, section 4 has two limbs. It amends section 13 of the basic Act by substituting two new clauses (f) and (ff) in place of the old clause (f) of sub section (1) of section 13 Secondly, it forbids, for a period of three years from the date of acquisition, suits by new acquirers of (1) I.L.R. (2) (1961) R.L.T. 755. 789 landlord 's interest in premises, for recovery of possession on any of the grounds mentioned in cl. (f) or cl. (ff) of sub section (1). The result of the= two mandatory provisions has to be clearly understood. For one thing although the old cl. (f) is substantially similar to the present cls. f) and (ff), the latter imposes more severe restrictions protecting the tenants. Much more has to be proved by the landlord now before he can get eviction than when he was called upon to under the earlier corresponding provision of the basic Act. Moreover, the three year prohibition against institution of the suit is altogether new. It follows, therefore, that on the present allegations and evidence the landlord may not get a decree, his suit having been instituted at a time when he could not have foreseen the subsequent enactment saddling him with new, conditions. We consider that where two interpretations are possible that which validates the statute and shortens litigation should be preferred to the one which invalidates or proliferates it. We are guided by that consideration in the interpretative process. We are satisfied further that originally brought in, is defective since it did not contain and ordinarily could not averments complying with the new cls. (f) and (ii) of sub section (1) of section 13 and we are making it effectively by construing the word 'institute ' in a natural and grammatical way. The suit is really instituted in compliance with cls. (f) and/or (ff) only when the new pleading is put in. The bigger roadblock in the way of the plaintiff is in a pending action lies in the prohibition of the institution of the suit within three years of the transfer from the landlord. Indeed, such prohibitions are common in rent control legislation as has been noticed by the Calcutta High Court and is found even in agrarian reforms laws (vide Malaber Tenancy Act, as amended by Act VII of 1954, Madras). Section 13 of the Amendment Act compels the postponement of the institution of the suit (including appeal) for a period of three years from the date of the transfer. In both the cases before us, the suits were instituted within the prohibited period of three years. The argument therefore is that the suits must be straightaway dismissed, the institution being invalid. We do not think that this consequence is inevitable. 'To institute, is 'to begin or commence ', in plain English. The question then is whether the suit can be said to begin on the date it was filed in 1961 or 1964 as the case may be. Here we have to notice a certain nice but real facet of sub section The prohibition clamped down by sub section (3A), carefully read, is on suits for recovery of possession by transferee landlords 'on any of the grounds mentioned in cl. (f) or cl. (ff) of subs.(1) '. Obviously the suits with which we are concerned are not for recovery on grounds contained in cis. (f) and (ff). They were based on the repealed cl. (f) of section 13 of the basic Act. Strictly speaking, sub section (3A) brought in by section 4 of the Amending Act applies only if (a) the suit is by a transferee landlord; b) it is for recovery of possession of premises and (c) the ground for recovery is what is mentioned in cl. (f) and cl. (ff) of sub section Undoubtedly the third condition is not fulfilled and there fore sub section (3A) is not attracted. This does not mean that the suit 790 can be proceeded with and decree for recovery passed, because section 13 of the basic Act contains a broad ban, on eviction in the following words : "13(1) Notwithstanding anything to the contrary in any other law, no order or decree for the recovery of possession of any premises, shall be made by any Court in favour of the landlord against a tenant except on one or more of the following grounds, namely: (emphasis, ours) Since the new cls. (f) and (ff) are included by the Amendment Act in section 13 of the basic Act and since the suits we are concerned with, as they now stand, do not seek eviction on those grounds they will have to be dismissed on account of the omnibus inhibition on recovery of possession contained in section 13 itself. A just resolution of this complex situation was put by us to counsel on both sides and the learned Advocate representing the State readily agreed that the policy of the legislation and the conditions in the Amendment Act would be fulfilled if the interpretation we proposed were to be accepted. We are satisfied that as far as possible courts must avoid multiplicity of litigation. Any interpretation of a statute which will obviate purposeless proliferation of litigation, without whittling down the effectiveness of the protection for the parties sought to be helped by the legislation, should be preferred to any literal, pendantic, legalistic or technically correct alternative. On this footing we are prepared to interpret section 13 of the Amendment Act and ,give effect to section 4 of that Act. How do we work it out ? We do it by directing the plaintiffs in the two cases to file fresh pleadings setting out their grounds under cls. (f) and/or (ff)_ of sub s.(1) if they so wish. On such pleading being filed we may legitimately bold that the transferee landlord institutes his suit on grounds mentioned in cls. (f) or (ff) of sub section (1) on that '.ate. It is only when he puts in such a pleading setting out the specific ground covered by sub section (3A) of section 13 that we can say he, has begun or instituted a suit for the recovery of possession of the premises on that ground. Institution of a suit earlier has to be ignored since that was not based on grounds covered by cls. (f) and/or (ff) and is not attracted by sub section (3A). He begins proceedings on these new grounds only when he puts in his pleading setting out these_grounds. In spirit and in letter he institutes his suit for recovery on the new grounds only on the date on which he puts in his new pleading. We cannot be ritualistic in insisting that a return of the plaint and a representation thereof incorpo rating amendments is the sacred requirement of the law. On the other hand, social justice and the substance of the matter find fulfilment when the fresh pleadings are put in, subject of course to the three year interval between the transfer and the filing of the additional pleading. Section 13 of the Amendment Act speaks of suits including appeals. It thus follows that these fresh pleadings can be put in by the plaintiff either in the suit, if that is pending. or in appeal or second appeal, if that is pending. Thereupon, the opposite party. tenant, will be given fin opportunity to file his written statement and the Court 'Will dispose of it after giving both sides the right to lead 791 additional evidence. It may certainly, be open to the appellate Court either to take evidence directly or to call for a finding. Expeditious disposal of belated litigation will undoubtedly be a consideration with the court in exercising this discretion. The proviso to sub section (3A) can also be complied with if the plaintiff gets the permission of the Rent Controller in the manner laid down therein before filing his fresh pleading. We, are conscious that to shorten litigation we are straining language to the little extent of interpreting the expression 'institution of the suit ' as amounting to filing of fresh pleading. By this construction we do no violence to language but, on the other hand, promote public justice and social gain, without in the least imperiling the protection conferred by the Amendment Act. Ruinous protraction of litigation, whoever may temporarily seem to benefit by delay, bankrupts both in the end and inflicits wounds on society by sterile misuse of money. Tenant passengers who prolong their expensive flight on the litigation rocket, are buying tickets for financial crash, drugged though they be by the seeming blessings of law 's delays. Courts, by interpreting the expression 'institution of suits ' cannot authorize reincarnation, all over again, of litigation for eviction. We save the tenant by applying it to pending cases and save him also from litigative waste. This consideration is itself germane, to the larger concept of justice which it is the duty of Courts to promote. Law finds its finest hour when it speaks to justice on fair terms. In the present case our interpretative endeavour has been imbued with this spirit. In the process of interpretation where alternatives are possible ' the man in the law influences the law in the man may be and the construction on sections 4 and 13 of the Amendment Act herein adopted, we admit, appeals to us as more, humane. The calculus of statutory construction relating to complex problems of the community cannot be hide bound by orthodox text book canons. An obiter, maybe. More buildings is the real solution for dwelling shortage; freezing scarcer accommodation relieves for a little while. Tiger balm is no serious cure for brain turnover We make no more comments on the need for dynamic housing policies beyond statutory palliatives. These belong to legislative 'wisdom ' and administrative ,activism ' and not to judicial 'constitutionalism '. It was noticed in the course of arguments that a later Amending Act of 1970 purporting to give relief to tenants against whom decrees for eviction bad been passed but dispossession had not ensued, had been put on the statute book. It is surprising that counsel on either side did not choose to address us any arguments on the basis of those provisions. We therefore do not go into the impact of that Act on situations where eviction has been ordered by Courts. We therefore allow the appeals with costs but direct the High Court to dispose of the cases in the light of the directions and obser 792 vations we have made. It will be open to the, Court seised of the matter to direct, in its discretion, award of costs to be incurred hereafter. GOSWAMI, J.Civil Appeal No. 1304 of 1973 is by certificate granted by the Calcutta Hi Court and Civil Appeal No. 2063 of 1973 is by Special Leave of this Court. The first one arises out of Letters Patent Appeal No. 14 of 1969 of the Calcutta High Court dismissed on February 3, 1972, relying upon its earlier decision in Kalyani Dutt vs Pramila Bala Dassi since reported in I.L.R. (1972) 2 Calcutta 660. A preliminary question had arisen in connection with the aforesaid Letters Patent Appeal along with three other appeals at an earlier stage with regard to the constitutionality of section 13(3A) of the West Bengal Premises Tenancy (Second Amendment) Act, 1969 (briefly the Amendment Act). A Division Bench repelled the contention of the appellants in decision which has since been reported in A.I.R. (1971) Calcutta 331 (Sailendra Nath Ghosal & Ors. vs Sm. Ena Dutt & Others). The Division Bench had held that sub section (3A) of section 13 in so far as it was retrospective in operation was ultra vires Article 19(1) (f) of the Constitution on the ground of unreasonableness. Since, however, the Letters Patent Appeal was not completely disposed of, the bar of sub section (3A) was this time pleaded asserting that Article 19 was not at all attracted to the present case on the ground that the right of reversion of the landlord, namely, the right to recover possession of the property from the tenant, is not a right of property which is a condition precedent to the application of Article 19(1) (f) and consequently, the question as to the infringement of fundamental right did not at all rise and that there could not be, any scope for holding that the provision of sub section (3A) offended against Article 19(1)(f). This second contention which was allowed to be raised by the Letters Patent Bench was also repelled following its earlier decision in Kalyani Dults case (supra) disposed of on September 7, 1971. Civil Appeal No. 2063 of 1973 arises out of the decision of the High Court in Second Appeal No. 1193 of 1972 disposed of on 25th July, 1973 relying upon Sailendra Nath Ghosal 's case (supra) which is the subject matter of appeal in Civil Appeal No. 1304 of 1973. The history of tortuous litigation in both the appeals may also be noticed. In Civil Appeal No 1304 of 1973 the plaintiff (respondent herein) purchased the premises in suit on February 16, 1961. She instituted Title Suit No. 480 of 1961 in the court of Munsif of Sealdah, District 24 Pargana, for ejectment of the defendant, on July 24, 1961. The suit was decreed by the Munsif on July 21, 1964, but was dismissed by the lower appellate court on May 17, 1965. On second appeal at the instance of the plaintiff, the High Court framed an additional issue and remanded the suit to ram a finding on the same. On receipt of the finding of the court below, the learned single Judge of the High Court, dismissed the second appeal and granted 793 leave to a Letters Patent Appeal. That appeal was dismissed on February 3, 1972. The High Court granted certificate to appeal against that decision to this Court on May 24, 1973, referring to the earlier certificate granted by that Court in Kalyani Dutt 's case (supra). That is how Civil Appeal No. 1304 of 1973 is now before us. The facts in Civil Appeal No. 2063 of 1973 are these. The property in suit was purchased by the plaintiff (respondent herein) on February 7, 1964 and the eviction suit No. 76 of 1966 was instituted in February 1965. The suit was dismissed by the Trial Court on October 11, 1966. On appeal by the plaintiff, the Additional District Judge allowed the appeal on June 8, 1967, and remanded the suit for disposal after taking additional evidence. The Munsif thereafter decreed the plaintiff 's suit on December 23, 1968. On appeal by the defendant the Additional District Judge allowed the same and dismissed the suit on April 8, 1969. On plaintiff 's appeal to the High Court in Second Appeal No. 968 of 1969, the High Court allowed the same on April 3, 1971 and remanded the suit to the Munsif for retrial. The Munsif again dismissed the plaintiff 's suit on September 13, 1971. On appeal by the plaintiff the Additional District Judge allowed the same and decreed the suit on April 29, 1972. The High Court on appeal by the defendant dismissed the second Appeal on July 25, 1973, relying upon Salindra Nath Ghosal 's case (supra) disposed of on January 28, 1971. The defendant then obtained special leave. Thus the life of litigation in Civil Appeal No. 1304 of 1973 is now in the fourteenth year after purchase of the premises by the plaintiff six months earlier. The second one is a decade old; the property having been purchased about a year earlier. Both the appeals were argued together and will be governed by this common judgment. The suits in both the appeals are by what has come to be known as transferee landlords. They have instituted suits in one case within six months of the purchase in 1961 and in the other within one year of the purchase in 1965. During the long pendency of the litigation the West Bengal Premises Tenancy (Second Amendment) Act was passed which came into force on November 14, 1969. and section 4, inter alia, was made applicable to pending suits including appeals. It amended the West Bengal Premises Tenancy Act, 1956 (West Bengal Act XII of 1956) (briefly the Original Act). Section 4 of the Amendment Act introduced the following changes in section 13 of Section 13(1) (f) of the Original Act stood as follows the Original Act : "13(1) Notwithstanding anything to the contrary in any other law, no order or decree for the recovery of possession of any premises %hall be made by any Court in favour of the landlord against a tenant except on one or more of the following grounds, namely (f)Where the premises are reasonably required by the landlord either for purposes of building or rebuilding; or 4 L346Sup. CI/75 794 for making thereto substantial additions or alterations or for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held". After the amendment of section 13 by section 4 of the Amendment Act clause (f) was split up into two clauses (f) and (ff) which read as under : "(f) Subject to the provisions of,sub section (3A) and section 18A, where the premises are reasonably required by the landlord for purposes of building or rebuilding or for making thereto substantial additions or alterations, and such building or re building, or additions or alterations. cannot be carried out Without the premises being vacated; (ff) Subject to the provisions of sub section (3A), where the premises are reasonably required by the landlord for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held and the landlord or such person is not in possession of any reasonably suitable accommodation". In addition, section 4 of the Amendment Act introduced a new subsection (3A) which reads as follows : "Where a landlord has acquired his interest in the premises by transfer, no suit for the recovery of possession of the premises on any of the grounds mentioned in clause (f) or clause (ff) of sub section (1) shall be instituted by the landlord before the expiration of a period of three years from the date of his acquisition of such interest; Provided that a suit for the recovery of the possession of the premises may be instituted on the ground mentioned in clause (f) of sub section (1) before the expiration of the said period of three years if the Controller on the application of landlord and after giving the tenant an opportunity of being heard, permits, by order, the institution of the suit on the ground that the building or re building or the additions, or alterations, as the case may be, are necessary to make the premises safe for human habitation". It should be noted that the grounds for ejectment in the earlier sub section (f) ,ire the same as the new grounds in clauses (f) and (ff) except for some additional restrictions. The common grounds for eviction are, broadly speaking, reasonable requirement for the Purpose of building or rebuilding, etc. [sub clause (f)] and reasonable requirement for occupation by the landlord, etc. [sub clause (ff)]. There is, there fore, no particular significance to the mention of " grounds" in clause (f) or clause (ff) of subsection (1) in subsection (3A). ,Section 13 of the Amendment Act which is the bone of contention grants retrospectivity to section 4 of the Amendment Act and, therefore, necessarily to sub section (3A) and section 13(1)(f)(ff). The grievance centres round retrospectivity of sub section (3A) and 795 section 13(1)(f) and (ff) made applicable by force of section 13 of the Amendment Act to suits and appeals pending on the commencement of the Act. It may be in order first to deal with the question of retrospectivily of sub section (3A) which is the principal ground of attack in these appeals. Section 13 of the Amendment Act provides that. effect should be given to section 4 of the Amendment Act in pending suits including appeal on the date of the commencement of the Act. The suits of the particular category by transferee landlords, therefore, could be pending on commencement of the Amendment Act and these may have been instituted several years prior to the Amendment Act. There may also be appeals pending in different appellate courts against decrees in such suits. The appeals necessarily have to be understood as appeals arising out of suits instituted within the three years ' ban. The tenants are now permitted to take objection on the score of contravention of section 13(3A), before the courts either in a pending suit or in a pending appeal against decrees in such suits and the point for consideration then would be whether such a suit was instituted within three years ' ban and the appeal was pending against such a banned suit. When section 13 of the Amendment Act provides that section 4 therein has to be given effect in pending suits including appeals, effect has to be given by the courts. Now how will effect be given to section 13(3A) ? Retrospectivity to be given under section 13 of the Amendment Act to section 4 broadly requires compliance as follows (1) that no suit for eviction by a transferee landlord shall be instituted within three years of his acquisition of the premises; (2) if eviction is sought on the ground under section 13(1)(f) of the Amendment Act, an additional restriction is put, namely, that "such building or rebuilding or additions or alterations cannot be carried out without the premises being vacated"; (3) if eviction is sought on the ground under section 13(1)(ff), a further restriction is put upon the right of the landlord to evict, viz., that "the landlord or such person is not in possession of any reasonably suitable accommodation". Under proviso to section 13(3A) a transferee landlord can, however, institute a suit within three years ' ban provided he obtains prior permission from me Controller who on an application by the landlord and after hearing the parties may decide whether permission should be given or not. Prime facie, a suit which had already been instituted prior to the Amendment Act would not come within the mischief of section 13(3A) since this sub section, in terms, prohibits only institution of suits and does not provide for dismissal of suits already instituted. Similarly while there is a relaxation in favour of a transferee landlord under the proviso to obtain permission from the Controller this bene fit is out of the way even in a genuine case where the suit had already 796 been instituted within three years of purchase and the same or an appeal therefrom is now pending after the passing of the Amendment Act. In this regard also it appears sub section (3A) is not intended to be attracted to suits which were already instituted prior to the Amendment Act. But as will be seen hereafter the above position is altered by the express provision of section 13 of the Amendment Act whereby it is intended that the court should give retrospectivity, inter alia, to section 4 of the Amendment Act. On the terms of only section 13 (3A) it is difficult to hold that it would bring old sections within the mischief of section 13 (3A) which imposes a ban expressly on institution of suits within three years of the acquisition of ownership of the premises subject to the relaxation contained in the proviso thereto. This being the correct interpretation of sub section (3A), taken by itself, what is the effect of section 13 of the Amendment Act upon this provision? Section 13 of the Amendment Act in seeking to give retrospective effect to sub section (3A) does exactly what sub section (3A) by itself contra indicates. The first part of section 13(3A) which provides for a ban against institution of suits for eviction within three years of acquisition of the premises must be given effect to under section 13 of the Amendment Act in pending suits and in pending appeals arising out of the decrees passed in such suits provided the former had been instituted within the period of the ban. If, therefore, after the Amendment Act it is found in a pending suit or in a pending appeal that the particular suit was instituted within the three years ' ban the same will have to be dismissed and only in that way the court will be able to give effect to sub section (3A). With regard to the proviso of subsection (3A), when the ground of eviction is relatable to section 13(1)(f) of the Amendment Act the court will have to dismiss the suit in absence of the requisite permission. That being the practical result of restrospectivity given to subsection (3A), is that sub section, in so far as it is retrospective, violative of Article 19(1)(f) of the Constitution? That takes us to the object and purpose of the Amendment Act. The Statement of Objects and Reasons as quoted in Kalyani Dutt 's case (supra) is as follows "It has been considered necessary that some more relief should be given to the tenants against eviction, that the necessity of tender of rent to the landlord every time the rent is deposited with the Controller during a continuous period should be dispensed with, that the interests of the residents of hotels and lodging houses should be safeguarded and that the penalties for contravention of some of the provisions of the West Bengal Premises Tenancy Act, 1956, should be made more stringent". In the earlier judgment of the High Court which is also the subject matter of Civil Appeal No. 1304 of 1973 the High Court referred to the statement of the Minister at the time of piloting of the Bill in the following words: 797 "It is found from the speech of the Minister at the time of introducing the Bill in the legislature, that the problems of tenants are many: there is one class original owners who are the old inhabitants of the city; these owner landlords are not affluent; they solely depend upon the rents received from the tenants. It has been ascertained from experience that two of the grounds of eviction, namely, requirement of the premises for own use of the landlords and for the purpose of building and re building, have been misused by the landlords. In the city of Calcutta and other towns, there are millions of tenants who are left at the mercy of the landlords. In this background and after taking into account similar provisions in other States, it has been decided that some restrictions ought to have been imposed upon transferee landlords prohibiting them from bringing ejectment suits against the tenants within three years from their purchase". The High Court also observed further that "there is nothing on the record to show that the mischief, sought to be remedied by the amended legislation, was in existence since 1956. On the other hand, the ministerial speech, referred to above, rather indicates that the said mischief was of comparatively recent origin". Again in Kalyani Dutt 's case (supra) the High Court in para 27 observed that "such suits are not many and at the same time most of them are pending for more than ten years". The materials relied upon by the High Court stand uncontradicted by any affidavit before US. On the above materials it is safe to hold that the main object of the Amendment Actis to counteract the "recent" mischief of circumvention of theprovisions of the original Act in order to evict tenants on even bona fide requirements specified under the law of device of transfer of premises held under the occupation of tenants. Although the Amendment Act has not completely barred institutions of suits by transferee landlords postponement of litigation for a period of three years from acquisition of the premises was provided for under subsection (3A). This had a twofold purpose, namely, to enable tenants a reasonable respite to arrange their affairs and also to discourage speculative acquisitions with an ulterior motive. This salutary pro vision for the general body of tenants cannot be called unreasonable. But the question is whether by applying the provision to pending suits and appeals has that object been achieved in the interest of the general body of tenants which would certainly constitute the general public within the meaning of clause 5 of Article 19? From the fact ,; and circumstances extra fed above from the two judgments of the High Court. it is not possible to bold that the interest of the general body of tenants would be served by application of sub section (3A) to pending suits and appeals. If the mischief was of "recent" origin, there is no reason to overshoot the mark and outstretch the long rope of the law beyond the 798 requirements of the situation. It is clear that in trying to include old actions that may be surviving in courts, per chance, because of laws ' proverbial delay, section 13 of the Amendment Act has gone far in excess of the actual needs of the time and problems and the provisions thereof cannot be said to impose a reasonable restriction on the right of the transferee landlords, albeit a well defined class, amongst tile landlords, to hold and enjoy their property in the interest of the general public. Such transferee landlords with pending old sections in suits or in appeals are, as observed by the High Court, not likely to be of a large number and necessarily so the tenants of such a sub sec class. It is not in the general interest of the large body of tenants to impose such restrictions on a few transfree landlords of this sub class subject to unbearable delay in litigation, understandably not on their own account. If relief in the shape of postponement of a landlord 's suit were the object of sub section (3A) in giving retrospectivity to it, the law did not take count of the inevitable long delay that takes place in pending litigation of this type as a result of man made laws of procedure in courts such as has even been clearly demonstrated by the cases at hand. The law that misses its object cannot justify its existence. Besides, it will be a sterile relief if tenants have to face a fresh summons next day. Hard cases will be on both sides of the line. law contemplates in terms of generality and is not intended to hit a few individuals by making invidious distinction. Article 19 of the Constitution confers protection of rights specified therein belonging to all citizens. Any individual citizen may complain of encroachment of his rights and freedom guaranteed under the Article. Law 's encroachment upon such rights and freedom of citizens can survive challenge if it passes the tests laid down in the six saving clauses of Article 19. Coming now to article 19(1)(f), with which we are concerned in these appeals, the said provision confers upon each individual citizen the right to acquire, hold and dispose of property, This right is subject to clause (5) which we may read so far as material for our purpose: "Nothing in sub clauses (d), (e) and (f) of the said clause shall . prevent the State from making any law imposing reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses . in the interests of the general public. . Even a single citizen may complain against violation of his fundamental rights under Article 19 (1) (f) and his vindication of his right may be defeated only if the impugned infringement brought upon by the law can be considered as a reasonable restriction and the ,aid restriction is also in the interests of the general public. It is manifest, therefore, under the Constitution. that an individual 's right will have to yield to the common weal of the general community. That general community may be in broad segments, but even then must form a class as a whole. A few individuals cannot take the place of a class and for the matter of that the general public In the present case the particular relief contemplated by the Amendment Act is in favour 799 of tenants in general and the restriction under sub section (3A) must ,be viewed in that context. It cannot be said that the legislature in applying sub section (3A) restrospectively has achieved that avowed object at all. The matter would have been different it, in view of any prevailing conditions, a reasonable date for giving retrospective effect were fixed under the law in the light of the known mischief. In its. absence, applicability of the blanket ban to pending suits and appeals cannot be said to be a reasonable restriction in the interests of the general public. It may help a few tenants in litigation but will prejudice the right of transferee landlords locked up in old and costly litigation. The gain of the few as opposed to the general public cannot be the touchstone for justifying reasonableness of the restriction imposed on the rights of the transferee landlords in applying subsection (3A) to pending suits and appeals. In the social combat between the interests of a few and the general welfare of the community the latter is the clinching factor to be reckoned and hard cases of a few individuals cannot be assigned a higher place and status than they deserve to the detriment of the fundamental rights of even a single individual. Therefore, the retrospectivity so far as sub section (3A) is concerned with regard to institution of suits made applicable to pending suits and. appeals is clearly very wide of a reasonable mark and is, thus, an imposition of an unreasonable restriction on the rights of the transferee landlords in pending suits which had been instituted prior to the Amendment Act and in appeals arising therefrom and it is not saved by the protective clause (5) of Article 19 of the Constitution. Sub section (3A) so far as it is retrospective and as such applicable to pending suits including appeal is ultra vires Article 19 (1)(f) of the Constitution. The provision is valid only prospectively. So far as the retrospectivity of section 13(1)(f) and (ff), the position is entirely different. Clearly further reliefs have been sought to be given to the tenants as a class by these provisions in the Amendment Act. These further reliefs are in the general interests of tenants and can be applied without any difficulty to pending suits including appears. There is nothing unreasonable about such a retrospectivity in applying these provisions for the general welfare of tenants in securing for them a safe and sure tenure as far as practicable untrammelled by inconvenient litigation. It is well established that the legislature in enacting laws can legislate prospectively as well as retrospectively. Section 13(1)(f) and (ff) are, therefore, not ultra vires Article 19(1) (f) of the Constitution. With regard to another contention of the appellants that the right of tile landlords that is affected by sub section (3A) is only a mere right to sue and at best a right of reversion and hence it is not a right to property under Article 19(1)(f) of the Constitution, it is sufficient to state that the question is covered by two decisions of this Court in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1) and Swami (1) ; 800 Motor Transport (P) Limited and Another vs Sri Sankaraswamigal Butt and Another(1). The right to own and hold property in order to make an effective right under the Constitution must include tine right to possession of the property including the right to evict tenants in accordance with law. The submission is, therefore, without any force. The position, therefore, is that in a pending suit or even in a pending appeal a landlord may be given an opportunity to adduce evidence to establish such of the new requirements in 13(1) (f) or (ff) as are relevant to the proceedings. In that case the tenant will have also an opportunity to produce evidence in rebuttal. If the matter arises in a pending suit, it will be disposed of by the trial court. If, however, the matter arises in appeal, it will be open to the appellate court, in order to shorten the life of litigation, to remand the matter to the appropriate court to return a finding on such additional issues as may be framed to meet the requirements of (f) and/or (ff), as the case may be, under order 41, rule 25, Civil Procedure Code. In the result these appeals are partly allowed. The judgment of the High Court with regard to invalidity of sub section (3A) so far as it is retrospective and applicable to pending suits and appeals is upheld. The orders dismissing the appeals are, however, set aside and the appeals are remanded to the High Court for disposal in the light, of the observations with reference to section 13(1)(f) and/or (f) whichever is applicable. The landlords may now be given by the High Court an opportunity, if they so wish, to adduce evidence with regard to such further requirements under (f) and/or (ff) as may be applicable and the High Court will call for a finding from the appropriate court in that behalf and thereafter dispose of the appeals on merits. Since success is shared, there will be no orders as to costs in these appeals. ORDER In accordance with the majority judgment, the appeals are allowed with costs; the cases are remanded to the High Court, and the High Court is directed to dispose of the case in the light of the directions and observations made in the majority judgment. It will be open to the Court seised of the matter to direct, in its discretion, amount of costs to be incurred hereafter. P.B.R. (1) [1963] Supp. 1 S.C.R. 282.

Section 13(1)(f) of the West Bengal Premises Tenancy Act, 1956 Act XII of 1956) enacted that no order or decree for the recovery of possession of any premises shall be made by any court in favour of the landlord against the tenants except among others, on the ground that the premises are reasonably required by the landlord either for the purpose of building or rebuilding or for making thereto substantial additions or alterations or for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held. Section 13(4) of the Act provides that where a landlord requires the premises on any of the grounds mentioned in cl. (1)(f) and the Court is of opinion that such requirement may be substantially satisfied by ejecting the tenant from a part only of the premises the Court shall pass a decree accordingly. In 1969 the Act was amended by West Bengal Premises Tenancy (Second Amendment) Act. Section 13 of the original Act was amended by introducing sub section (3A) in it. This sub section prohibits institution of a suit for ejectment of a tenant by a landlord who has purchased the premises for his own use within three years of the purchase. The Amending Act also enacted that the said Act shall apply to suits and appeals, which are pending at the date of the commencement of the Act. The respondent purchased the suit premises in which the appellant was a tenant and instituted a suit for ejectment of the tenant under s.13(1)(f) of the original Act. The suit was decreed by the lower court and affirmed by the lower appellate court. A single Judge of the High Court dismissed the appeal. When the Letters Patent Appeal was pending before the High Court, the Amending Act of 1969 was passed, whereupon, the tenant appellant invoked the provisions of the new sub sec. (3A) and contended that since the landlord had instituted a suit the ejectment within three years of the purchase, the suit should be dismissed. The High Court held that s.3A was valid prospectively but that the restriction imposed by the sub section. giving it retrospective effect, was violative of article 1(1) (f) of the Constitution. Per Beg and Krishna Iyer, JJ: Allowing the appeals and remitting the case to the High Court, HELD : (1) (a) There is no violation of article 19(1) (f) read with article 19(5) of the Constitution in the Amending Act, and s.13 of the original Act, as amended is valid. The evil corrected by the Amendment Act is to stop the influx of a transferee class of evictors of tenants and institution of litigation to eject and rack rent or re build to make large profits. Apparently the inflow of such suits must have been swelling slowly over the years and when the stream became a flood the Legislature rushed with an amending bill. Had it made the law merely prospective, those who had, in numbers, already gone to Court and induced legislative attention would have escaped the inhibition. This would defeat the object and so the application of the additional ban to Pending actions could not be called unreasonable. There is no foundation for the assumptions made by the High Court that there may be cases of ejectment instituted prior to 1956 or that a number of suits and decrees, perhaps decades old. will unjustly be nullified by the previous operation of the new ban. Recondite instances and casual hardships cannot deflect constitutional construction of social legislation, 775 if the main thrust of the statute relates to a real social evil of dimensions deserving to be antidoted by antedated legislative remedy. Questions such as whether those cases which were filed several years ago should have been carved out of the category of transferees hit by the Act, and at what point of time the evil assumed proportions were best left to legislative wisdom and not to courts commonsense. [788C D; 787F G; 783F; 787H] In the instant case the two landlord respondents had purchased the buildings in the early sixties, but while considering the constitutionality the Court would not be moved by such accidental instances. The substantial evil has been substantially met by a broad application of the new ban to pending proceedings. [788C] Section 13. fairly read, directs that the amendment made by section 4 shall have effect in respect of suits, including appeals, pending at the commencement of the Act. The Court is, therefore, bound to give effect to section 4 in pending actions regardless of isolated anomalies and individual hardships. [788G] (b)Where two interpretations are possible that which validates the statute and shortens litigation should be preferred to the one which invalidates or proliferates it. Although the old cl. (f) is substantially similar to the present cls.(f) and (ff) the latter imposes more severe restrictions protecting the tenants. Much more has to be proved by the landlord now before he can get eviction than when he was called upon to under the earlier corresponding provision of the basic Act. Moreover, the three year prohibition against institution of the suit is altogether new. It follows, therefore, that on the present allegation and evidence the landlord may not get a decree, his suit having been instituted at a; time when he could not have foreseen the subsequent enactment saddling him with new conditions. [789C; 789B] Though therefore, the suit, as originally brought in, would be defective since it did not and could not contain the averments complying with the new cls. (f) and (ff) of section 13(1) it is made effective by construing the term 'institute ' in a natural and grammatical way. [789D] (c) 'To institute is 'to begin or commence '. The prohibition clamped down by sub section (3A), carefully read, is on suits for recovery of possession by transferee landlords on any of the grounds mentioned in cl. (f) Qr cl. (ff) of sub section (1). [789G] In the instant case the suits were not for recovery on grounds contained in clauses (f) and (ff). They were based on the repealed cl.(f) of s.13 of the basic Act. Strictly speaking sub section (3A) brought in by section 4 of the Amending Act applies only if (a) the suit is by a transferee landlord; (b) it is for recovery of possession of premises; and (c) the ground for recovery is what is mentioned in cls. (f) and (ff) of sub section (1). Undoubtedly the third condition is not fulfilled and therefore sub section (3A) is not attracted. [789H] (d)But since the new cls.(f) and (ff) were included by the Amendment Act in s.13 of the basic Act and since the suits did not seek eviction on those grounds they will have to be dismissed on account of the omnibus inhibition on recovery of possession contained in section 13 itself. [790C] Per Goswami, J : (1)(a) In trying to include old actions that may be surviving in courts because of laws ' proverbial delay section 13 of the Amended Act has gone far in excess of the actual needs of the time and problems and the provisions therefore cannot be said to impose a reasonable restriction on the right of the transferee landlords, albeit a well defined class amongst the landlords, to hold and enjoy their property in the interest of the general public. Such transferee landlords with pending old actions in suits or in appeals are not likely to be of a large number. The imposition of such restrictions on a few transferee landlords cannot be in the general interests of the large body of tenants. If relief in the shape of postponement of the landlord 's suit were the object of sub section (3A) in giving retrospectivity to it. the law did not take count of the inevitable long 776 delay that takes place in pending litigation as a result of man made laws of procedure in courts such as have been clearly demonstrated by the cases at hand. The lawthat misses its object cannot justify its existence. Besides it will be a sterilerelief if tenants have to face a fresh summons next days. [798A C] (b)Under the Constitution an individual 's right will have to yield to the commonweal of the general community, That general community may be in broad segments but even then must form a class as a whole. A few individuals cannot take the Place of a class and for the matter of that the general public. [798H] In the present case the relief contemplated by the Amendment Act is in favour of tenants in general and the restriction under sub section (3A) must be viewed in that context. It cannot be said that the legislature in applying sub section (3A) retrospectively has achieved that avowed object at all. The applicability of the blanket ban to pending suits and appeals cannot be said to be a reasonable restriction in ,he interest of general public. [799A B] (c)Sub section (3A) so far as it is retrospective and as such applicable to pending suits including appeals is ultra vires article 19(1) (f) of the Constitution. The provision is valid only prospectively. The retrospectivity so far as subsection (3A) in concerned with regard to institution of suits made applicable to pending suits and appeals is clearly very wide of a reasonable mark and is an imposition of an unreasonable restriction on the right of the transferee landlords in pending suits which had been instituted prior to the amendment Act and in appeals arising therefrom and it is not saved by the protective clause (5) of article 19 of the Constitution. [799D E] (2)On the terms of only section 13 (3A) it is difficult to hold that it would bring old actions within the mischief of section 13(3A) which imposes a ban expressly on institution of suits within three years of the acquisition of ownership of the premises subject to the relaxation contained in the proviso thereto. [796B C] (3)Section 13(1)(f) and (ff) are not ultra vires of article 19(1)(f) of the Constitution. Further reliefs have been sought to be given to the tenants as a class by these provisions in the Amendment Act. These further reliefs are in the general interests of tenants and can be applied without any difficulty, to pending suits including appeals. There is nothing unreasonable about such a retrospectivity in applying these provisions for the general welfare of tenants in securing for them asafe and sure tenure as far as practicable untrammelled by inconvenient litigation.[799F G] Arguments for theappellants In C.A. 2063/73 by P. C. Chatterjee There is no vestedright to eject on determination of the tenancy but it is conditioned by section 13, Cl. (a) to (k) and therefore right to eject is not vested in the landlord until a decree is passed. Upto that stage it is contingent depen ding on the satisfaction of cl. (a) to (k) of s.13. If there is no vested property right, no question of article 19(1)(f) of the Constitution will arise. By denying the right to eject for three years from the date of purchase the right to property is not restricted or burdened. The approach of the High Court of separately treating prospectivity and retrospectivity is not correct. The correct approach adopted by this Court is that in considering the reasonableness of any provision retrospectivity of the law is a factor to be considered. Retrospective operation is not bad because it covers a period of 10 years or so. For respondent (In C.A. 1304 of 1973.) The object of the new sub section (3A) being to give protection to tenants for a limited period of three years from the date of purchase of the premises by the landlord, by giving retrospective effect to ' the said sub section the period limited by the subsection cannot be enlarged. Therefore, s.13 of the Amending Act which gives retrospective effect to the said sub section (3A) should be construed in a manner so as to keep the effect of retrospectively within the period 777 limited by the said new sub section 3A. Sections 4 and 13 of the Amending Act have to be construed harmoniously keeping the object of the Act in view and in doing that if the court has to supply some words to make the meaning clear, it should prefer the construction which is more in consonance with reason and justice. at 745. The language of sub section 3A and the object and reason for introduction of the said sub section make it clear that Only Prospective effect could be given to the sub section and in any case its effect cannot go beyond three years of purchase of the premises by the landlord. If, s.13 of the Amending Act means that section 4 of the Amending Act applies to all pending suits including appeals filed by a transferee landlord after the principal Act came into force, then it is clearly violative of art 19(1)(f) of the Constitution. The High Court therefore, rightly struck down s.13 giving retrospective effect to section 4 of the , Act. Further no law can impose restrictions retrospectively on fundamental rights. Arguments for the respondent in C.A. No. 2063 of 1973. The impugned section cannot be so interpreted as to give it retrospective effect so as to bring within its mischief all suits and proceedings including appeals which may be pending since the enforcement of the Act. This Court can depart from the general rule to apply the law as it is on the date of institution of the suit and apply the law as on the date when the appeal comes up for disposal specially because no injustice is going to be caused between the parties and as such a course would avoid multiplicity of proceedings. Section 13 of the Amending Act is ultra vires of article 19, because, construed literally the section cannot give protection to such of the tenants against whom proceedings are pending for more than 10 years or so, a protection for a period more than what is envisaged by the Amending Act. This is clearly not what is intended or contemplated by the legislature. Giving retrospective effect to the section would only benefit a few and is not in the public interest of the tenants of the transferee landlords. The restriction is arbitrary and invades the right to property and is not saved by cl. (5) of article 19. The restriction is not reasonable.

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tition Nos. 15863 15906 of 1984. (Under Article 32 of the Constitution of India) D.N. Goburdhan, D. Goburdhan, Ms. Gita Luthra and Ms. Pinky Anand for the Petitioners. G. Ramaswamy, Additional Solicitor General, Kuldeep Singh, Additional Solicitor General, C. Ramesh and Mrs. Sushma Suri for the Respondents. G The Judgment of the Court was delivered by RANGANATH MISRA, J. The petitioner in each of these applications under Article 32 of the Constitution is a workman engaged on terms of casual labour for periods varying between 10 140 and 16 years in the Construction Department of the Signal Unit in the Northern Railway. All the writ petitions having disposed of by a common judgment as questions of law and fact involved therein are similar. The petitioners alleged that notwithstanding the fact that each of them has put in continuous service for quite a long period, the Railway Administration, respondent herein, has not treated them as temporary servants and has applied discriminatory rates of wages. They have asked for a direction to treat the petitioners at par with maintenance workers and to declare that they are entitled to equal pay for equal work and have asked for their absorption in the regular cadre in the permanent category as per the circulars issued by the respondents. A number of documents and circulars issued by the Administration have been produced in support of their claim. The Senior Signal & Telecom Engineer (Power Signalling) has filed a counter affidavit on behalf of the respondents challenging the claim of the petitioners. According to the respondents five out of the forty four petitioners in this group of writ petitions had undergone medical examination and were granted temporary status as Khallasis. One of them has been directed to be absorbed against a permanent vacancy in the open line; five others have refused to go to the open line for permanent absorption. He further averred that though prior to the issue of the Railway Board 's directions on January 1, 1984, project casual labourers were not entitled to all the privileges like House Rent Allowance, City Compensatory Allowance, Casual Leave, increment etc., they are now entitled to all the privileges as applicable to open line temporary railway servants after attaining temporary status. In Paragraph 23 of the counter affidavit, it has been specifically pleaded that as per the extant rules, temporary status will first be given in the cadre of Khallasi and then promotion to skilled category after conducting the trade test is admissible. A further detailed counter affidavit has again been filed by another Senior Signal & Telecom Engineer, wherein along with the affidavit particulars of service of each of the petitioners has been provided. Petitioners have filed a Rejoinder. At the hearing of the applications, counsel for the petitioners as also the learned Additionaly Solicitor General were given full opportunity of placing their arguments and documents. In addition, they have also furnished written submissions. 141 It is stated on behalf of the Administration that out of fortyfour petitioners sixteen have now been empanelled and of them five have been given temporary appointments; eleven are said to have refused to join and seventeen are still continuing with temporary status. Learned Additional Solicitor General states that petitioners are project employees and do not belong to the open line. According to him employees in the open line acquire temporary status on completion of 120 days of service as against 180 days which was the previous requirement. That status is acquired on completion of 360 days by casual labour in Project Works as provided in the scheme formulated under orders of this Court, though such status were acquirable by project casual labourers on completion of 180 days of continuous employment previously. Learned counsel for the respondents has placed reliance on the definition of 'Project ' which means: "a project should be taken as construction of new lines, major projects, restoration of dismantled lines and major important open line works, line doubling, widening of tunnels etc. which are completed within a definite time limit". Admittedly the petitioners have put in more than 360 days of service. Though counsel for the petitioners had pointed out that the Administration was requiring continuous service for purpose of eligibility, learned Additional Solicitor General on instructions obtained from the Railway officers present in Court during arguments has clarified that continuity is not insisted upon and though there is break in such continuity the previous service is also taken into account. Learned Additional Solicitor General has made a categorical statement before us that once temporary status is acquired, casual employees of both categories stand at par. Keeping the prevailing practice in the Railways in view, it is difficult for us to obliterate the distinction between the two categories of employees till temporary status is acquired. With the acquisition of temporary status the casual labourers are entitled to: (1) Termination of service and period of notice (subject to the provisions of the ). (2) Scales of pay. (3) Compensatory and local allowances. 142 (4) Medical attendance (5) Leave rules. (6) Provident Fund and terminal gratuity. (7) Allotment of railway accommodation and recovery of rent. (8) Railway passes. (9) Advances. (10) Any other benefit specifically authorised by the Ministry of Railways. It is not disputed that the benefit of Discipline and Appeal Rules is also applicable to casual labour with temporary status. It is also conceded that on eventual absorption in regular employment half the service rendered with temporary status is counted as qualifying service for pensionary benefits. In the Signal and Telecom Construction organisation under which the petitioners are working, according to the Railway Administration further privileges of being regularised in permanent service is affirded by giving them access to their regularisation against permanent vacancies which mostly occur in open line. For such purpose, casual labour in open line as well as willing project casual labour are combined for the purpose of screening and forming of panel on the basis of seniority depending upon the days of work put in. In view of the submission, learned counsel for the respondents has pleaded that the allegation of discrimination does not exist. Disputes arising out of termination of employment and inter se seniority came before this Court in the Writ Petition No. 147 of 1983 (Inderpal Yadav & Ors vs Union of India. This Court changed the existing prevalent practice for reckoning seniority and directed that seniority of project casual labourers should be combined and prepared departmentwise and categorywise and in terms of the directions of this Court, steps have been taken. It has been further contended that by the time these writ petitions were filed, the Railway, Board 's order of 1st of June, 1984, had not been given but with those directions now holding the field, the ambit of grievances has been very much reduced. Learned Additional Solicitor General has gone 143 to the extent of even saying that nothing survives in the writ petitions. What exactly are the benefits admissible to temporary railway servants have, however, been seriously debated. Paragraph 2511 of the Indian Railway Establishment Manual provides: (a) "Casual labour treated as temporary are entitled to all the rights and privileges admissible to temporary railway servants as laid down in Chapter XXIII of the Indian Railway Establishment Manual. The rights and privileges admissible to such labour also include the benefits of the Discipline and Appeal Rules. Their service, prior to the date of completion of six months ' continuous service will not, however, court for any purposes like reckoning of retirement benefits, seniority etc. Such casual labourers will, also, be allowed to carry forward the leave at their credit to the new post on absorption in regulation service. (b) Such casual labour who acquire temporary status, will not, however, be brought on to the permanent establishment unless they are selected through regular Selection Boards for Class IV staff. They will have a prior claim over others to permanent recruitment and they will be considered for regular employment without having to go through employment exchanges. Such of them who join as casual labourers before attaining the age of 25 years may be allowed relaxation of the maximum age limit prescribed for Class IV posts to the extent of their total service which may be either continuous or in broken periods. (c) It is not necessary to create temporary posts to accommodate casual labourers who acquire temporary status for the conferment of attendant benefits like regular scales of pay, increments etc. Service prior to the absorption against a regular temporary/permanent post after requisite selection will, however not constitute as qualifying service for pensionary benefits. " 144 It is the stand of the learned Additional Solicitor General that no pensionary benefits are admissible even to temporary railway servants and, therefore, that retiral advantage is not available to casual labour acquiring temporary status. We have been shown the different provisions in the Railway Establishment Manual as also the different orders and directions issued by the Administration. We agree with the learned Additional Solicitor General that retiral benefit of pension is not admissible to either category of employees. As already stated, sixteen out of the forty four petitioners have already been empanelled and eleven seem to have joined, while seventeen are continuing on temporary status. We expect the Railway Administration to take prompt steps to screen such of the petitioners who have not yet been tested for the purpose of regularising their service. Learned Additional Solicitor General specifically accepted the position that the petitioners should be entitled to the same pay as is 1) admissible to others either in the project or in the open line. That would take away inequality which is main grievance of the petitioners. The respondents shall have a direction to consider the claims of each of the petitioners promptly and make appropriate orders for their regularisation. For over ten years, litigations of this type have been coming to the Court. About three years back, this Court directed a scheme for absorption in Yadav 's case which has been framed and is operative. Casual labour seems to be the requirement of the Railway Administration and cannot be avoided. The Railway Establishment Manual has made provisions for their protection but implementation is not P effective. Several instructions issued by the Railway Board and the Northern Railway Headquarters were placed before us to show that the Administration is anxious to take appropriate steps to remove the difficulties faced by the casual labour but there is perhaps slackness in enforcing them. We hope and trust that such an unfortunate situation will not arise again and in the event any such allegation coming to the Court, obviously the Administration will have to be blamed. The writ petitions are disposed of with the directions indicated above without any order for costs. N.P.V. Petitions disposed of.

% The petitioners, who were engaged on terms of casual labour for periods varying between 10 and 16 years in the Construction Department of the Signal Unit in the Northern Railway, filed writ petitions in this Court alleging that though they had put in continuous service for quite a long period, the Railway Administration the respondent, had not treated them as temporary servants and had applied discriminatory rates of wages, and prayed for a direction to treat them at par with maintenance workers, and to declare that they were entitled to equal pay for equal work and absorption in the regular cadre in The permanent category as per the circulars issued by the respondents. The respondents in their counter affidavits contested the claim of the petitioners contending that out of the forty four petitioners, sixteen bad been empanelled, five of whom had been given temporary appointments, eleven had refused to join and seventeen had been given temporary status, and that by the Railway Board 's directions on January 1, 1984, project casual labourers were now entitled to all privileges that were applicable to open line temporary railway servants, that temporary status will first be given in the cadre of Khallasis and then promotion to skilled category, after conducting trade test, and that the employees in the open line acquired temporary status on completion of 120 days of service whereas such status was acquired by the casual labour in project work on completion of 360 days as formulated under orders of this Court. Disposing of the writ petitions, ^ HELD: Casual labour seems to be the requirement of the Railway 139 administration and cannot be avoided. The Railway Establishment A Manual has made provisions for their protection, but implementation is not effected. Several instructions were issued by the Railway Board and the Northern Railway Headquarters to remove the difficulties faced by the casual labour but there is slackness in enforcing them. This Court hopes and trusts that such an unfortunate situation will not arise again and in the event of any such allegation coming to the Court, the Administration will have to be blamed. [144F G] No doubt, the petitioners have put in more than 360 days of service. But keeping the prevailing practice, distinction between the casual labour employed in the open line, and in the project line cannot be obliterated. [141D F] The Railway Administration should take prompt steps to screen such of the petitioners who have not yet been tested for the purpose of regularising their services. [144C] The respondents are directed to consider the claims of the petitioners promptly and make appropriate orders for their regularisation. [144D E] The petitioners are entitled to the same pay as is admissible to others, either in the project or in the open line. Retiral benefit of pension is not admissible.[144D,B]

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Appeal No. 564 of 1967. Appeal by special leave from the judgment and order dated August 9, 1966 of the Allahabad High Court in S.T.R. No. 563 of 1962. P. Rana, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by Grover, J. The only point for decision in this appeal by special leave is whether the cloth manufactured by means of 942 looms worked by power can be regarded as "cloth manufactured by mills" for which sales tax was payable at the rate of 6 pies in a rupee in terms of the notification dated June 8, 1948 issued under section 3A of the U.P. Sales Tax Act, 1948. The general rate of tax on sale of cloth otherwise was 3 pies per rupee. The High Court on a reference made under the relevant provisions of the Act held that cloth manufactured by means of power looms could not fall under the term "cloth manufactured by the mills". The approach of the High Court was that since the word "mills" had not been defined either by the Act or by the notification mentioned before the meaning of the words "cloth manufactured by the mills" must be considered according to the common understanding of mankind. Reference was made to the dictionary meaning as given in Webster ' New International Dictionary, Vol. 2. According to the dictionary two things were required (1) a building and (2) a machinery, in order to constitute a "mill". The meaning of the word "machine", according to the dictionary in a popular and mechanical sense is. . . . more or less complex combination of mechanical parts, as levers, gears sprocket wheels, pulleys, shafts and spindles, ropes, chains, and bands, cams and other turning and sliding pieces, springs, confined fluids etc., together with the frame work and fastenings, supporting and connecting them, as when it is designed to operate upon material to change it in some pre conceived and definite manner. . . According to the High Court looms which are merely worked by power would hardly fall within the meaning of the word "ma chine". It has been pointed out that looms worked by hand or by power have not been shown by any evidence to be different. It does not appear to have been disputed before the High Court that a building having looms worked by manual labour would not be a mill. The court found no difference between building containing looms worked by manual labour or by power. According to Words and Phrases, Vol. 27 the term "mill" in modem usage, includes various machines or combinations of machinery, as cotton mills, fulling mills, powder mills, etc., to some of which the term "manufactory" or "factory" is also applied. In our judgment although the dictionary meaning may be of considerable assistance in deciding the point before us but what has to be seen is the context in which the word "mills" is used in the notification. It is common ground that if cloth was manufactured by looms worked by manual labour the notification was not applicable and the rate of tax per rupee was 3 pies but if he cloth was manufactured by mills then the rate was to be 6 pies. Thus cloth has been divided broadly into two categories, mill made and loom made. It is quite obvious that loom made cloth would include all cloth manufactured on looms. It is difficult to understand how the energy by which the looms are worked 943 would make any difference. In other words whether the energy is supplied manually or by power cannot convert the essential character of the cloth, namely, its manufacture on looms. As regards mill made cloth the actual process of weaving Is more or less automatic, preconceived and definite and it involves the functioning of machinery. Ramchandra Iyer J., in Sri Dhandapani Power loom Factory, Erode vs Commercial Tax Officer, Coimbatore and Anr.(1), was right in observing that mill cloth is a familiar variety of cloth and everybody knows what a am is. In popular language, a power loom cloth is never associated with a mill cloth. According to Mcnaghten J., in Ellerker vs Union Cold Storage Co. Ltd., (2) a mill is building where goods are subjected to treatment or processing of some sort and where machinery is used for that purpose. The illustrations given were: "The miller in his corn mill grinds wheat into flour, ,or oats into oatmeal. So too, at a scutching mill the miller scutches the flax, to prepare it for spinning. The saw mill, the rolling mill, the flatting mill, the puffing mill and the cotton mill are all buildings where goods are treated or subjected to some process. " It must be remembered that the meaning of the word "mill" ,or "mills" would vary according to the context in which that word is used. In the above case a company carried on a large ,cold storage business. In some of the cold stores part of the building was used for the manufacture of ice for sale; others were ,only used for the purpose of storage. It was held that all the premises fell within the meaning of the words in Schedule D Cases 1 and 11, r. 5(2) of the Income tax Act which were : Mills factories or other similar premises. Counsel for the appellant has sought to argue that once the looms worked by power are used In a building the essential characteristics of "mills" would be satisfied and if any cloth is manufactured on those looms it would be cloth manufactured by " mills" within the meaning of the notification. The falacy (1) 12 section T. C. 304. (2) 944 in this argument is that by the same reasoning a building in which looms worked by manual labour are to be found would also have to be regarded as "mills". This would be contrary to the accepted and popular meaning of handloom or power loom cloth and mill made cloth. We are satisfied that the distinction which was kept in view when the notification was promulgated was between the aforesaid two categories or types of cloth involving essentially a difference in the process by which it was manufactured. We would accordingly uphold the view of the High Court and dismiss the appeal. There will be no order as to costs. K. B.N. Appeal dismissed.

Under the notification dated June 19, 1948 issued under section 3(A) of the U.P. Sales Tax Act, 1948, sales tax at the rate of 6 pies in a rupee was payable on "cloth manufactured by mills". Tax at that rate was sought to be levied on cloth manufactured by means of looms worked by power on the basis that it was "cloth manufactured by mills" within the meaning of the notification. The High Court held that cloth manufactured by power looms could not fall under the term "cloth manufactured by mills". Dismissing the appeal, HELD:What has to be seen is the context in which the word "mill" is used in the notification. The notification, divides cloth broadly into two categories mill made and loom made. Loom made cloth would include all cloth manufactured on looms and, therefore, whether the energy is supplied manually or by power cannot convert the essential character of the cloth, namely, its manufacture on looms. As regards mill made cloth the actual process of weaving is more or less automatic, pre conceived and definite and it involves functioning of machinery. In popular language a power loom cloth is never associated with a mill cloth. [942H943A] Further, it cannot be said that once the looms worked by power are used in a building the essential characteristics of mills would be satisfied. To hold so would be contrary to the accepted and popular meaning of hand loom or power loom cloth and mill made cloth. The distinction which was kept in view when the notification was promulgated was between the aforesaid two categories or types of cloth involving essentially a difference in the process in which it was manufactured. [943H 944B] Sri Dhandapani Power Loom Factory, Erode vs Commercial Tax Officer, Coimbatore & Anr., 12 S.T.C. 304 and Ellerker vs Union Cold Storage Co. Ltd., , referred to.

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ivil Appeal No. 3693 of 1982. From the Judgment and Order dated 29.1.1982 of the Patna High court in C.W.J.C. No. 4087 of 1981. Ranjit Kumar for the Appellant. Ex Parti for the Respondents. The Judgment of the Court was delivered by PUNCHHI, J. This appeal by special leave is directed against the order of the High Court of Judicature at Patna dated 29 1 1982 passed in Civil Writ Number 4087 of 1981 dismissing the Writ Petition of the appellant in limine. The appellant, Bihar State Road Transport Corporation, is a 669 State Transport Undertaking. Under the provision of the (hereafter referred to as the 'Act '), the State Transport Authority invited applications for the grant of stage carriage permits for the route named Bhukunda Chaibasa via Patratu Pithoria Kanke Ranchi Chakradharpur part of which, that is, Ranchi Chaibasa is covered under a notified scheme dated 1 4 1960, duly in force, under the provisions of the Act. On applications received in response to the invitation, the Corporation filed its objections before the State Transport Authority claiming that no private operator could be permitted to operate on the said route, as part of it, being Ranchi Chaibasa, was by itself a notified route and the grant of permits on the route in question would contravene a notified scheme. The objection of the Corporation was rejected by the State Transport Authority in its meeting held on 23rd and 24th January, 1979 taking the view that the overlapping Ranchi Chaibasa route was restrictedly notified for direct services only and as such there could be no legal objection to the grant of permits on the Bhukunda Chaibasa route. It accordingly granted permits to respondents 3 and 4 herein. Appellant 's appeal before the State Transport Appellate Tribunal, Biharwas dismissed and the view of the State Transport Authority was upheld. The Appellate Tribunal in support of its view placed reliance on a division bench of the Patna High Court in M/s Marwari Motor Service vs Chotanagpur Regional Transport Authority and others, AIR 1973 Patna (Vol 60) 273 in which such an objection as raised herein was negatived. The appellant 's writ petition against the orders of the State Transport Appellat Tribunal, Bihar was dismissed in limine giving cause to the appellant to approach this Court for appropriate relief. The notified scheme dated 1 4 1960, afore referred to, where under the Ranchi Chaibasa route was declared a nationalised route was the brain child of the Appellant Corporation itself. Initially a draft scheme was published in the Bihar Gazette on 13 1 1960 under the provisions of Section 68 C of the Act. Objections were invited to the proposed scheme and after considering the objections received, the State Government approved the scheme with some modifications under section 68 D(2) of the Act. The approved scheme was then notified under section 68 D(3) of the Act in the Bihar Gazette on April 1, 1960. The relevant extract of the scheme is reproduced below: "The Bihar State Road Transport Corporation shall run and operate stage carriage services relating to routes or portions thereof specified below to the complete exclusion of other persons except those who, on the dates, specified 670 below, hold permanent permits to run stage carriages in those routes and are hereby allowed to operate them until the dates of expiration of the existing permits. Nature of Name of route Name of Date from which No. service service services as proposed to be plied 1. Stage Ranchi Muri All 1st April, 1961 carriage or portions services thereof 2. Ditto Hazaribagh Ditto 1st April, 1960 Ranchi or portions thereof 3. Ditto Barhi Bagodar Ditto Ditto Dumri Gobind pur or portions thereof 4. Ditto Giridih Dumri Ditto Ditto or portions thereof 5. Ditto Giridih Jamua Ditto 1st April, 1961 Kedarma or portions thereof 6. Ditto Jamua Chakai Ditto Ditto or portions thereof 7. Ditto Ranchi Chaibasa Ditto 1st April,1960 (direct service) It is evident from the Entry in serial No. 7 that the name of the route is Ranchi Chaibasa and in this Entry alone that the bracketed words 'direct service ' finds mention whereas in the remaining serial nos. 1 to 6, the main routes or portions thereof are contrastingly 671 mentioned. In Marwari Motor Service 's case (supra), the then writ petitioner stood already given a stage carriage permit for the route Hazaribag Hazaribag Road and when its renewal was objected to by the corporation on the ground that it would overlap Hazaribag Bagodar notified route, the words 'direct service ' occuring in the relevant entry of the notification under the notified route was required to be interpreted. The contention of the said writ petitioner before the High Court was that though private operators stood ousted on the Hazaribag Bagodar route, it could not be ousted from operating on a longer or shorter route even though overlapping wholly or partially on the Hazaribag Bagodar route. The corporation refuted the argument by contending that no private operator could be permitted to operate on any portion of the route even if he had tended to operate on a longer or a shorter route. Confronted with this situation, the Patna High Court ventured, in the absence of any direct binding judicial precedent, to solve the question by adopting the interpretation given to the bracketed words 'direct service by the Transport Minister of the Bihar Government to mean the exclusion of private operators for direct transport services only and not to the exclusion of private operators thereon overlapping on longer or shorter routes. Another factor which appealed to the High Court was that though the scheme had come into force in 1960 and Hazaribag Bagodar route had been nationalised still the then writ petitioner had thereafter been kept granted route permits on the Hazaribag Hazaribag Road route despite overlapping on the nationalised routes. The High Court in these circumstances made the following observations: The correct meaning is that private operators who were operating directly on Hazaribag Bagodar route were excluded, private operators having these two termini were not allowed to operate but private operators having only one terminus out of these two termini or passing through this route having different termini were not excluded in the approved scheme". Relying on the said ratio the Transport authorities overruled the objection of the Corporation. We have had the advantage of hearing Mr. Ranjit Kumar, learned counsel for the appellant only since no one appeared either on behalf of the State of Bihar nor for the permit holders respondents 3 and 4. The sole point for consideration is whether the view taken by the Patna High Court in Marwari Motor Service 's case (supras in any more rele 672 vant in view of the decision of the Constitution Bench of this Court in Adarsh Travels Bus Service & Another vs State of U.P. & Others, [1985] (Supp.) 3 SCR 661. In Adarsh Travels 's case (supra), this Court ruled that if the route has been nationalised under Chapter IV A of the , a private operator with a permit to ply stage carriage for another route, which has a common overlapping sector with the nationalised route, can ply his vehicle over that part of the overlapping common sector if he does not pick up or drop passengers on the overlapping part of the route, and the question would really get the right answer on the terms of the scheme rather than on the provisions of the statute. The word 'route ' was introduced to be defined in section 2(28A) of the Act by amendment from March 2, 1970 to mean 'the line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another. Spelling out the necessity for its so defining it was recorded: "The introduction of section 2(28A) defining the expression 'route ' appears to have been necessitated to dispel the confusion consequent upon the seeming acceptance by this Court in Nilkantha Prasad and Others vs State of Bihar, [1962] Supp. 1 SCR 728 of the suggested differences between 'route ' and 'highway ' by the Privy Council in Kelani valley Motor Transit Co. Ltd. vs Colombo Ratnapura Omnibus Co. Ltd., where it was said, 'A "highway" is the physical track along which an omnibus runs, whilst a "route" appears to their Lordships to be an abstract conception of line of travel between one terminus and another, and to be something distinct from the highway traversed . there may be alternative roads leading from one terminus to another but that does not make the route any highway the same. ' The present definition of route makes it a physical reality instead of an abstract conception and no longer makes it something distinct from the highway traversed. " In the light of the above observations Ranchi Chaibasa route is identified as the line of travel on which State Transport Undertaking on nationalisation is allowed to run its vehicles. The bracketed words 'direct service ' occuring in serial No. 7 when contrasted with entries in serial nos. 1 to 6 reveal that the total route of Ranchi Chaibasa, without leaving any portion, stood nationalised signifying by its name that 673 Ranchi Chaibasa route is a straight and direct line of travel which would be traversed by a vehicle by the State Transport Undertaking between two termini rendering all kinds of services. Any further interpretation would frustrate the object of Chapter IV A whereunder the scheme is prepared. It was observed in Adarsh Travel 's case (supra) as follows: "It is well known that under the guise of the so called 'corridor restrictions ' permits over longer routes which cover shorter notified routes 'overlapping ' parts of notified routes are more often that no misutilised since it is next to nigh impossible to keep a proper check at every point of the route. Often times permits for plying stage carriages from a point a short distance beyond one terminus to a point at a short distance beyond another terminus of a notified route have been applied for and granted subject to the so called 'corridor restrictions ' which are but mere ruses or traps to obtain permits and to frustrate the scheme. If indeed there is any need for protecting the travelling public from inconvenience, the State Transport Undertaking and the Government will have to make sufficient provision in the scheme itself to avoid inconvenience being caused to the travelling public. " If the interpretation put by the Patna High Court in Marwari Motor Service 's case (supra) to the bracketed words 'direct service ' is to be kept valid, it would frustrate the very purpose of nationalisation, for any person in that event could operate on a nationalised route by adding thereto, or substracting therefrom, some kilometerage and keep one terminus as a point of start, or a point of ending, on an un notified route and put forward his willingness to submit himself to the discipline called 'corridor restrictions ' which practice has been deprecated by this Court. For the views afore expressed, we are of the view that Marwari Motor Service 's case (supra) militates against the principles settled in Adarsh Travel 's case (supra) and thus it should be left to be confined to the facts of that case and not any more a binding precedent. Having taken that view, we come to the conclusion that the State Transport Authority and State Transport Appellate Tribunal were in error in rejecting the objections of the appellant and High Court too was in error in dismissing the writ petition in limine. Accordingly, instead of remanding the matter to the High Court, we allow this appeal and 674 quash the aforesaid three orders but without any order as to costs. Since there was no opposition, we permit respondents 3 and 4 to keep plying vehicles on their permits, subject of course to their being subsisting and valid till date, uptill 31st March, 1991, and not any further, to avoid abrupt disruption of transport facilities. We also leave it open to the State Government to take such steps as are further necessary to avoid inconvenience to the travelling public and for that purpose it may coordinate with the appellant corporation by making suitable amendment and provisions in the scheme to further that cause. R.N.J. Appeal allowed.

The State Transport Authority, Bihar invited application for grant of Stage Carriage permits for the route named, Bhukunda Chaibasa via Patratu Pithoria Kanke Ranchi Chakradharpur part of which, that is, Ranchi Chaibasa is covered under a notified Scheme dated 1.4.1960, duly in force, under the Act. The Bihar State Road Transport Corporation, a State Undertaking, filed its objections claiming that no private operator could be permitted to operate the said route as part of the route being Ranchi Chaibasa was itself a notified route and grant of permits on the route in question would contravene the notified Scheme. Taking the view that the over lapping Ranchi Chaibasa route was restrictedly notified for direct services only, the objections raised by the Corporation were rejected and permits for the route in question granted to respondents 3 and 4. Corporation 's appeal to the State Transport Appellate Tribunal and thereafter Writ Petition before the Patna High Court being unsuccessful, it has come in appeal by special leave against the judgment of the High Court dismissing the Writ Petition in limine. Allowing the appeal and quashing all the three orders, this Court. HELD: In the light of the observations made in Constitution 668 Bench decision of this Court in Adarsh Travels ' case defining the word 'route ', the Ranchi Chibasa route is identified as the line of travel on which State Undertaking on nationalisation is allowed to run its vehicles. The bracketed words 'direct service ' occuring in seriol No. 7 when contrasted with entries in serial nos. 1 to 6 reveal that the total route of Ranchi Chaibasa, without leaving any portion, stood nationalised signifying by its name that Ranchi Chaibsa route is a straight and direct line of travel which would be traversed by a vehicle by the State Transport Undertaking between two termini rendering all kinds of services. Any further interpretation would frustrate the object of Chapter IV A whereunder the scheme is prepared. [672G 673B] If the interpretation put by the Patna High Court in Marwari Motor Service 's case to the bracketed words 'direct service ' is to be kept valid, it would frustrate the very purpose of nationalisation, for any person in that event could operate on a nationalised route by adding thereto, or substracting therefrom, some kilometerage and keep one terminus as a point of start, or a point of ending, on an un notified route and put forward his willingness to submit himself to the discipline called 'corridor restictions ' which practice has been deprecated by this Court. [673E F] M/s Marwari Motor Service vs Chotanagpur Regional Transport Authority and Others, AIR 1973 Patna (Vol. 60) 273, referred to. Adarsh Travels Bus Service & Another vs Stat of U.P. & Others, [1985] (Suppl.) 3 SCR 661, followed.

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Civil Appeal No. 705 of 1962. Appeal by special leave from the Award dated September 19, 1961 of the Fourth Industrial Tribunal, West Bengal in Case No. VIII 42 of 1961. H. N. Sanyal, Solicitor General of India and P. E. Chatterjee, for the appellant. D.L. Sen and Janardhan Sharma, for the respondents. May 2. The judgment of the Court was delivered by GAJENDRAGADKAR J. This appeal arises out of an industrial dispute between the appellant, Khardah Co. Ltd., and the respondents, its workmen. The dispute was in regard to the, dismissal of the appellant 's employee, Samiran jadav. The respondents alleged that the said dismissal was unjustified, whereas, according to the appellant, the said employee had been properly and validly dismissed. The dispute which was referred to the 4th Industrial Tribunal, West Bengal, for its adjudication was whether the said dismissal was justified, and to what relief, if any, was the workman entitled? The Tribunal has held that the dismissal was unjustified and so, it has directed the appellant to reinstate the said employee to his old post within a month from the date of the publication of the award. It has also ordered that the period starting from the date of the dismissal till the date of reinstatement should be treated as leave without pay and as such, should be counted towards the length of service. It is against this award that the appellant has come to this Court by special leave. 509 The respondent 's case was that jadav had been dismissed by the appellant mala fide with the motive of victimising him for his trade union activities. jadav was the Organising Secretary of the Union and since he supported the Union 's demands very strongly, the appellant wanted to get rid of him. It appears that jadav had been working as a weaver for some years past. He was confirmed in service with effect from April 12, 1954. On September 19, 1960, he went on a week 's leave. When he returned on September 26, 1960, he was asked to work on machine producing twill, though, normally, he was assigned work on a plain machine. jadav was not accustomed to work on the complicated machine which produces twill and so, he requested the management that he should be asked to do his usual work on a plain machine. This request was, however, turned down Being unaccustomed to work on the machine producing twill, jadav met with an accident on September 27, 1960, and was grantedmedical leave for a week ending on Saturday, October 1, 1960. On October, 3 1960, when he resumed duty, he again requested the management that he should be permitted to work on the plain machine, but when his request was turned down, he told the management that he would work on the twill machine in the second shift which starts from I P.M. On that day, another employee Mahboob who was ailing and had been on leave, asked for further leave which was refused and he fell unconscious while he was going to operate his machine. As a result, 700 weavers of the appellant stopped work and the weaving section could not resume work at 1 P. M. The management then declared a lock out on October 5, 1960 which continued until October 29, 1960. On October 3, 1960, the management served a charge sheet on jadav in which it was alleged that jadav had wilfully disobeyed the lawful 510 and reasonable order of his superior and had acted in a manner subversive of discipline. The case against him was that he had moved from one place to another in the weaving Department and incited workers of the said department to go on strike. The management alleged that by his conduct, jadav had committed misconduct under Rule 14(c) (i) and (viii) of the Standing Orders. jadav was called upon to offer his explanation within 24 hours after receipt of the charge sheet. After jadav gave his explanation, an enquiry was held. At the initial stages of the enquiry, jadav appeared, but, later, he did not take part in the proceedings. The appellant contends that jadav deliberately refrained from taking part in the proceedings, whereas according. to the respondents, the enquiry was conducted unfairly, and so, it became impossible for jadav to participate in it. This enquiry was conducted by the Manager himself After the enquiry was over, the Manager decided that jadav was guilty of the charge, and so, dismissed him on November 21, 1960. The respondents ' case was that the dismissal was purely vindictive and was not justified at all. On the other hand, the appellant 's case was that jadav had been working in the weaving department both on plain looms and on looms that produce twill. When he returned to duty on October 3, 1960, the departmental Overseer, Mr. jha asked Jadav to go to his loom; but he refused to obey his orders. The appellant further alleged that jadav moved inside the weaving department and incited the workers to stop work. The appellant also pleaded that a proper enquiry had been held against jadav and it was as a result of the said enquiry that he was dismissed for misconduct under Rule 14 (c)(i) & (viii) of the Company 's Standing Orders. Regarding the incident of Mahboob, the appellant alleged that 511 Mahboob was absent on October 3, 1960 and, therefore, no question of his working on any machine arose on that day. In other words, the appellant 's contention was that the Union 's version that the strike was spontaneous because Mahboob fainted, was untrue and the strike was in substance, the result of the instigation of jadav. Before the Tribunal, some oral evidence was led by the parties and reliance was placed by the appellant on the proceedings of the enquiry itself. The Tribunal held that the management had deliberately suppressed the fact that Mahboob had gone to the mill on October 3, and prayed for extension of leave which was refused, and so, the Tribunal came to the conclusion that the strike could not have been instigated by jadav. The Tribunal further commented on the fact that after the enquiry was held, no finding was recorded by the Manager who held the enquiry, and it appeared to the Tribunal that the conclusions on which the management presumably acted in dismissing jadav were of such a character that "no person acting fairly and honestly could have reached them". The Tribunal also held that jadav was not used to work on a twill loom, and so, his request that he should be allowed to work on a plain loom was not unjustified. Its conclusion, therefore, was that a grave charge had been unjustly framed against jadav and that showed want of good faith and Vindictiveness. On these findings, the Tribunal answered the question in favour of the respondents and directed reinstatement of jadav. On behalf of the appellant, the learned Solicitor General has strenuously urged before us that the appellant has held a proper domestic enquiry and has dismissed jadav because the management thought that the enquiry disclosed the fact that the charges framed against jadav had been established. He contends that it is firmly established by decisions of this Court 512 that an Industrial Tribunal will not interfere with the action of the management in dismissing its employee after holding an enquiry into his alleged misconduct unless it is shown that the management has not acted in good faith; or that the dismissal amounts to victimisation or unfair labour practice, or where the management has been guilty of a basic error, or violation of a principle of natural justice, or when on the materials, the finding is completely baseless or perverse, vide Indian Iron & Steel Company Ltd. vs Their Workmen. There is no doubt that this Court has consistently refrained from interfering with the conclusions reached. by the enquiry officer who Conducts domestic enquiries against industrial employees unless one of the four tests laid down in the case of the Indian Iron & Steel Co. Ltd. (1) is satisfied, because we have generally accepted the view that if the enquiry is fairly held and leads to the conclusion that the charge framed against the employee is proved, the Industrial 'Tribunal should not sit in appeal over the finding recorded at the said enquiry and should not interfere with the management 's right to dismiss a workman who is found guilty of misconduct. It would be noticed that the essential basis on which this view is founded is that the enquiry conducted by the management before a domestic tribunal must be a fair and just enquiry and in bringing home to the workman the charge framed against him, principles of natural justice must be observed. Normally, evidence on which the charges are sought to be proved must be led at such an enquiry in the presence of the workman himself. It is true that in the case of departmental enquires held against public servants, this Court has observed in the State of Mysore vs section section Makapur (2) that if the deposition of a witness has been recorded by the enquiry officer in the absence of the public servant and a copy thereof is given to him, and an opportunity is given to him (1) (1958) 1 I L. J. 260. (2) ; 513 to cross examine the witness after he affirms in a general way the truth of his statement already recorded, that would conform to the requirements of natural justice; but as has been emphasised by this Court in M/s Kesoram Cotton Mills Ltd. vs Gangadhar (1), these observations must be applied with caution to enquiries held by domestic Tribunals against the industrial employees. In such enquiries, it is desirable that all witnesses on whose testimony the management relies in support of its charge against the workman should be examined in his presence. Recording evidence in the presence of the workman concerned serves a very important purpose. The witness knows that he is giving evidence against a particular individual who is present before him, and therefore, he is cautious in making his statement. Besides, when evidence is recorded in the presence of the accused person, there is no room for persuading the witness to make convenient statements, and it is always easier for an accused person to cross examine the witness if his evidence is recorded in his presence. Therefore, we would discourage the idea of recording statements of witnesses exparte and then producing the witnesses before the employee concerned for cross examination after serving him with such previously recorded statements even though the witnesses concerned make a general statement on the latter occasion that their statements already recorded correctly represent what they stated. In our opinion, unless there are compelling reasons to do so, the normal procedure should be followed and all evidence should be recorded in the presence of the workman who stands charged with the commission of acts constituting misconduct. In this connection, it is necessary to point out that unlike domestic enquiries against public servants to which article 311 of the Constitution applies, in industrial enquiries, the question of the bona fldes or mala fides off the employer is often at issue. 'If it (1) [1964] Vol. 2 section C. R. 809. 514 is shown that the employer was actuated by a desire to victimise a workman for his trade union activities, that itself may, in some cases, introduce an infirmity in the order ' of dismissal passed against such a workman. The question of motive is hardly relevant inenquiries held against public servants, vide UnionTerritory of Tripura vs Gopal Chandra Dutta Choudhuri (1). That is another reason why domestic enquiries in industrial matters should be held with scrupulous regard for the requirements of natural justice. Care must always be taken to see that these enquiries are not reduced to an empty formality. Take the present case where, after the enquiry was held, the Manager who held the enquiry has not recorded any findings, and so, we do not know what reasons weighed in his mind and how he appreciated the evidence led before him. The learned Solicitor General contends that there was hardly any need to record any findings or to make a formal report in the present case, because the Manager who held the enquiry was himself competent to dismiss the employee. We are not impressed by this argument. The whole object of holding an enquiry is to. enable the enquiry officer to decide upon the merits of the dispute before him, and so, it would be idle to contend that once evidence is recorded, all that the employer is expected to do is to pass an order of dismissal which impliedly indicates that the employer accepted the view that the charges framed against the employee had been proved. One of the tests which the Industrial Tribunal is entitled to apply in dealing with industrial disputes of this character is whether the conclusion of the enquiry officer was perverse or whether there was any basic error in the approach adopted by him. Now, such an enquiry would be impossible in the present case because we do not know how the enquiry officer approached the question and what conclusions he C. R. 266. 515 reached before he decided to dismiss jadav. In our opinion, therefore, the failure of the Manager to record any findings after holding the enquiry constitutes a serious infirmity in the enquiry itself. The learned Solicitor General suggested that we might consider the evidence ourselves and decide whether the dismissal of jadav is justified or not. We are not prepared to adopt such a course. If industrial adjudication attaches importance to domestic enquiries and the conclusions reached at the end of such enquiries, that necessarily postulates that the enquiry would be followed by a statement containing the conclusions of the enquiry officer. It may be that the enquiry officer need not write a very long or elaborate report ; but since his findings are likely to lead to the dismissal of the employee, it is his duty to record clearly and precisely his conclusions and to indicate briefly his reasons for reaching the said conclusions. Unless such a course is adopted, it would be difficult for the Industrial Tribunal to decide whether the approach adopted by the enquiry officer was basically erroneous or whether his conclusions were perverse. Indeed, if the argument urged before us by the learned Solicitor General is accepted, it is likely to impair substantially the value of such domestic enquiries. As we have already observed, we must insist on a proper enquiry being held, and that means that nothing should happen in the enquiry either when it is held or after it is concluded and before the order of dismissal is passed, which would expose the enquiry to the criticism that it was undertaken as an empty for mality. Therefore, we are satisfied that the Industrial Tribunal was right in not attaching any importance to the enquiry held by the Manager in dealing with the merits of the dispute itself on the evidence adduced before it. It is well settled that if the enquiry is held to be unfair, the employer can lead evidence before the Tribunal and justify his action, but in such a case) the question as to whether the dismissal of The employee is justified or not would be open before the Tribunal and the Tribunal will consider the merits ,if the dispute and come to its own conclusion without having any regard for the view taken by the management in dismissing the employee. If the enquiry is good and the conduct of the management is not mala fide or vindictive, then, of course, the Tribunal would not try to examine the merits of the findings as though it was sitting in appeal over the conclusions of the enquiry officer. In the present case, the Tribunal has come to the conclusion that the dismissal of jadav was not effected in good faith and has been actuated by a desire to victimise him for his trade union activities. That is a conclusion of fact which cannot be said to be perverse, and so, it is not open to the,appellant to challenge its correctness of the merits before us. There is one point to which we ought to refer before we part with this appeal. It appears that the main dispute between the parties was whether the strike on October 3, 1960, was spontaneous, or had been instigated by jadav. The respondents contended that the treatment given by the management to Mahboob caused this strike and 700 weavers struck work spontaneously, whereas the appellant urged that Mahboob was not present on the said date, and so, the story that his request for leave was not acceded to and he had to work is altogether false and the strike had really been instigated by jadav. On this point, the Tribunal has made a categorical finding against the appellant and in doing so, it has relied upon the minutes of the Emergency Works Committee meeting held on October 3, 1960, at 3 P.M. with the Manager himself in the chair. These minutes show that when an enquiry was made as to why the strike had commenced, it was definitely reported to the Committee that Mahboob who had 517 gone on leave, had extended his leave and after the expiry of the extended leave, he reported or October 3, and pleaded that he was still unwell and should be given still further leave, but "nobody paid any heed to his prayer", and so, presumably he had to resume duty. The minutes further show that the Labour Officer informed the members of the Com mittee that Mahboob had produced a certificate of fitness on September, 22, 1960 and after discussion, it was unanimously decided to refer his case to the Mill 's Medical Officer on whose recommendation the leave should be considered. These minutes, therefore, clearly prove that Mahboob had gone to the Mill on October 3, had asked for further leave, and his request for further leave was not granted. We ought to add that these minutes have been signed by the joint Secretary on the employer 's side and the joint Secretary on the employees ' side, and their correctness cannot be impeached. It is in the light of these statements that the plea made by the appellant before the Tribunal had to be considered by it. The plea specifically made was that Mabboob was absent on October 3, and, therefore, there was no question of his working on any machine. This plea would seem to suggest that Mahboob was absent from the Mill and that undoubtedly is not true. The learned Solicitor General invited us to consider this plea in the light of the statement made by one of the witnesses in the domestic enquiry. This statement was that Mahboob and the witness had gone to the Labour Officer for extension of leave to Mahboob and the Labour Officer had granted leave. This statement would show that leave had been granted to Mahboob in the morning of October 3, but as 'we have already seen, the Labour Officer himself told the members of the Works Committee at 3 P.M. on the same day that leave had not been granted to Mahboob because he had produced 518 a certificate of fitness dated September 22, and the Works Committee had resolved that Mahboob 's case should be referred to the Mill 's Medical Officer on whose recommendation action should be taken. Thus, there can be not doubt that even if the plea made by the appellant is liberally construed and is read in the light of the statement made by one of the witnesses at the domestic enquiry, the Industrial Tribunal was right in holding that the stand taken by the appellant was wholly untrue and that Mahboob had not been given leave on October 3. That being so, if the Industrial Tribunal took the view that the refusal of the management to give leave to Mahboob exasperated the workmen, we cannot hold that its conclusion is erroneous or that its propriety can be successfully challenged before us. The incident in regard to Mahboob forms the main background of the strike and the anxiety of the appellant was to show that Mahboob was not present on that date. Therefore, once the Industrial Tribunal came to the conclusion that the version given by the appellant was untrue, it naturally changed the complexion of the whole of the charge sheet framed by the appellant against jadav. That is why the Industrial Tribunal came to the conclusion that the conduct of the appellant in dismissing jadav showed lack of good faith and appeared to have been in spired by the desire to victimise jadav for his trade union activities. The learned Solicitor General commented on the fact that the Tribunal had allowed the respondents to call for the register of trade unions after the arguments had been heard before it. It appears that both the parties appeared before the Tribunal on January 19, 1961, when arguments were heard and the award was reserved. The Union then filed an application praying that the trade union record may be called for, and the Tribunal ordered that the record be called for. The grievance made by the 419 learned Solicitor General is that it is improper to have allowed additional evidence to be called for after the arguments had been heard. We do not think there is any force in this argument, because the only purpose for which the record was called for by the Union was to show that jadav was the Organising Secretary of the Union. Since that fact was presumably disputed by the appellant in arguing the case before the Tribunal, the Union urged that the record kept by the Registrar of Trade Unions would show that the appellant 's plea was not well founded. If, in such circumstances, the Tribunal sent for the record to satisfy itself 'that the record showed that jadav was the Organising Secretary of the Union, we do not think any serious grievance can be made by the appellant about the conduct of the Tribunal. It is perfectly true that in dealing with industrial matters, the Tribunal cannot allow evidence to be led by one party in the absence of the other, and should not accept the request of either party to admit evidence after the case has been fully argued unless both the parties agree. In the present case, however, what the Tribunal has done, is merely to send for authenticated record to see whether jadav was the Organising Secretary of the Union or not. The result is, the appeal fails and is dismissed with costs. Appeal dismissed.

The appellant dismissed one of its workmen on a domestic enquiry held by its Manager who did not record any findings, took some of the evidence in the absence of the workman and found him guilty of misconduct under Rule 14 (c) (i) and (viii) of the Standing Orders. The Industrial Tribunal held that the dismissal was unjustified and directed the appellant to reinstate the employee. The respondent Union 's case was that the dismissed workman, who was the Organising Secretary of the union, was dismissed by the appellant mala fide with the purpose of victimising him for his trade union activities. The dispute centered round the question whether the strike which the dismissed workman was charged as having instigated was really instigated by him or was the spontaneous result of the treatment meted out by the appellant to another workman who was sick and fainted on the day the strike started. The case of the appellant was that this latter workman was not present on that day at all. This was belied by the record and the Industrial Tribunal without attaching any importance to the domestic enquiry held by the Manager dealt with the merits of the dispute itself and found in favour of the respondent, holding that the management was unjustified in dismissing the workman on the report of the Manager which was neither fair nor honest. On behalf of the appellant reliance was placed on the decision of this Court in Indian Iron & Steel Co. Ltd. vs Their Workmen and it was contended that the Industrial Tribunal was in error in interfering with the decision of the management. Held the Industrial Tribunal was right in discarding the domestic enquiry. Although this Court has consistently 507 refrained from interfering with the conclusions of domestic enquiries in industrial matters unless one of the four tests laid down in Indian Iron & Steel Co. Ltd. vs Their Workmen was satisfied, the essential basis on which this view is founded is that the domestic enquiry must be conducted fairly and properly in conformity with the principles of natural justice. The evidence on which the charges are sought to be proved against the workman must normally be led in his presence. The procedure of recording statements of witnesses ex parte and thereafter producing the witnesses for cross examination, unless there are compelling reasons to do so, must be discouraged. Departmental enquiries under article 311 of the Consti tution where the question of motive is hardly relevant do not stand on the same footing as those in industrial enquiries where the question of bona fides or mala fides of the employee is often in issue. Indian Iron & Steel Co. vs Their Workmen, , explained. State of Mysore vs section section Makapur, ; ; M/s. Ke.8oram Cotton Mills Ltd. vs Gangadhar, [1961] Vol. 2 S.C.R. 809, and Union Territory of Tripura vs Gopal Chander Dutta Choudhri, [1963] Supp. I S.C.R. 266, referred to. The failure of the Manager to record any findings after holding the enquiry was a serious infirmity in the enquiry and it is not for this Court to go into the evidence to decide whether the dismissal was justified. It is the duty of the enquiry officer in an industrial enquiry to record clearly and precisely his conclusions and to indicate briefly the reasons therefor so that the Industrial Tribunal can judge whether they arc basically erroneous or perverse. Although the Industrial Tribunal should not as a normal procedure allow evidence to be led by one party in absence of the other or admit evidence after the case has been fully argued unless both the parties agree, the mere calling for the authenticated record to see whether the workman was the Organising Secretary could not amount to a breach of the rule.

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Appeal No. 203 of 1986 'From the Judgment and Order dated 16.7.1985 of the Allahabad High Court in W.P. No. 995 of 1985. Manoj Swaroop and Ms. Lalita Kohli for the Appellant. A.K. Gupta, Brij Bhushan Sharma and S.K. Dhingra for the Respondents. 227 The Judgment of the Court was delivered by SINGH, J. This appeal by special leave is directed against the Judgment and Order of the High Court of Allaha bad (Lucknow Bench) dated 16.7.85 dismissing the appellant 's petition filed under Article 226 of the Constitution chal lenging orders for his eviction from the premises in dis pute. Briefly the facts giving rise to this appeal are, that the appellant was a tenant on a monthly rent of Rs.100 of house No. 293/246 situated in old Haider Ganj of which N.N. Meithy was the owner and landlord. On Meithy 's death his heirs respondents nos. 3 to 12 became the owners of the house. It appears that the appellant tendered rent to Prab hat Kumar respondent No. 3 but he did not accept the same. The appellant made application before the Munsif under section 30(1) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (hereinafter referred to as the Act). The Munsif permitted the appellant to depos it rent and since then the appellant has been depositing rent in the Munsif 's court. The respondent landlords served a notice dated 4.8.82 on the appellant on 9.8.82 through their counsel calling upon him to vacate the premises and hand over possession to them and to pay the arrears with effect from 18.10.1979 to 17.9.1982. The appellant through his Advocate gave a reply to the notice on 6.9.82 stating therein that he was ready and willing to pay the rent, and if Prabhat Kumar Meithy, respondent No. 3 was willing to accept the rent he may inform the appellant within reasona ble time so that he may pay the same to him otherwise he would deposit the rent in the Miscellaneous Case No. 57/78 in the Munsif 's court. The respondentlandlords did not give any reply to the appellant instead they filed suit for eviction. Meanwhile the appellant deposited the entire amount of arrears in Munsif 's court on 6.10.1982. The appel lant contested the eviction proceedings before the Judge, Small Causes Court on the ground that he was always ready and willing to pay rent and on landlords ' refusal he had deposited rent in the court under section 30(1) of the Act therefore he was not liable to ejectment The Judge, Small Causes Court decreed the suit on the findings that the appellant had committed default for a period of four months from the date of suit. The appellant preferred revision before the District Judge which was dismissed on 22.2.85. Thereafter the appellant approached the High Court under Article 226 of the Constitution of India seeking relief for quashing the order of the Trial Court as well as Revisional court. A learned single judge of the High Court by his order dt. 16.7.1985 dismissed the petition on the finding that the appellant had failed to 228 tender the arrears of rent to the landlord within one month from the date of service of notice on him therefore he was liable to ejectment and the findings recorded by the subor dinate court did not suffer from any legal infirmity. Learned counsel for the appellant urged that the High Court and the courts below failed to appreciate that the appellant had all along been ready and willing to pay the rent to the landlords and in his reply to the notice dated 6.9.82 he had offered to pay the rent on hearing from Prab hat Kumar Meithy, respondent No. 3. But since the appellant did not receive any reply he deposited the rent in Munsif 's court in proceedings taken under section 30 of the Act, therefore he was not liable to ejectment. On behalf of the respondent landlords it was urged that all the three courts have recorded findings holding the appellant in arrears of rent for a period of more than four months on the date the suit was instituted, therefore the impugned Orders do not suffer from any illegality warranting interference by this Court. Having given our anxious consideration to the submis sions made by the counsel for the parties and having perused the material on record, and after considering the relevant provisions of the Act we are of the opinion that the High Court as well as the courts below have taken a too technical view in holding the appellant guilty of wilful default in payment of rent. U.P. Urban Buildings (Regulations of Letting, Rent & Eviction) Act, 1972 was enacted as the preamble indicates to provide, in the interest of the general public, for the regulation of letting and rent, and the eviction of tenants from, certain classes of buildings situate in urban areas, and for matters connected therewith. Section 4 imposes prohibition on a landlord to take or receive for admitting a tenant to any building any premium or additional payment over and above the rent payable by him. Sections 8 and 9 provided for determination of standard rent in the absence of any agreement between the tenant and the landlord. Sec tion 11 curtails right of a landlord to induct any tenant in a building in pursuance of an allotment order issued under sec. Section 16 provides for allotment of building which may have fallen vacant or is about to fail vacant, or a part thereof to the landlord if he bonafide requires the same. Section 20(1) prohibits institution of a suit by landlord for eviction of a tenant except on the grounds specified under sub sec. Section 20(2)(a) permits filing of a suit by a landlord for the eviction of a tenant, after determination of his tenancy if the tenant is in arrear of rent for a period of not less than four months, and he has failed to pay the same to the landlord within one month 229 from the date of service upon him a notice of demand. When the tenant fails to pay arrears of rent within one month from the date of service of notice of demand the landlord is entitled to obtain decree of eviction but the legislature has provided another opportunity to the tenant to relieve himself from the liability of eviction. Section 20(4) safe guards tenants from eviction if on the first date of hearing of the suit he unconditionally pays, or tenders to the landlord or deposits the entire amount of rent and damages for use and occupation of the building together with inter est thereon @ 9% and the landlords ' costs of the suit in respect thereof, after deducting therefrom any amount depos ited by him under sub sec. (1) of sec. If that is done the Court is bound to pass orders relieving the tenant from liability of eviction. Legislative policy to protect the tenant from eviction is further evidenced from sec. 39 and 40. Section 39 protects a tenant from eviction, it lays down that if a suit for eviction on the ground of default in payment of arrears of rent was pending on the date of com mencement of the Act no decree for eviction shall be passed if the tenant deposited arrears of rent within one month from the date of commencement of the Act. Section 40 also protects tenants from eviction in similar circumstances even at the stage of the pendency of appeal or revision. Section 30 of the Act lays down that if a dispute or difference arises as to the entitlement of landlord to receive rent, the tenant may deposit rent in the prescribed manner and continue to do so in the Munsif 's court, until the landlord signifies in writing his readiness and willingness to accept the rent and if the landlord does not accept the rent it is open to the tenant to deposit the rent in Munsif 's court. Once deposit is made under sub sec. (1) the court shall cause notice of the deposit to be served on the landlord and the amount so deposited may be withdrawn by him on an appli cation made by him to the court. Section 30(6) declares that if deposit is made under sub sec. (1) or under sub sec. (3) of the Act in Munsif 's court it shall be deemed that the tenant has paid the rent to the landlord. The deeming provi sion stipulates that if the tenant is permitted to deposit rent in court, it will amount to payment of rent to the landlord and no decree for eviction of tenant can legally be passed on the ground of arrears of rent. The Scheme and structure and the policy discernible from the provisions of the Act, as discussed, unmistakably aim at regulating the conditions of tenancy, rent and pre venting eviction of tenants. The legislature has taken care to make special provisions protecting the interest of ten ants from eviction while placing obligation on him to pay rent. The right of a tenant not to be evicted and the prohi bition against a landlord from seeking eviction except upon specified grounds are 230 well protected by the provisions of the Act and the tenant is afforded opportunity to pay arrears of rent even after filing of the suit, and, in some cases even after a decree of eviction is passed. The special provisions as contained in secs. 30(4), 30, 39 and 40 indicate the legislative policy to safeguard the interest of a tenant, who he depos its rent in accordance with those provisions. The court must strive to so interpret the statute as to protect and advance the object and purpose of the enactment. Any narrow or technical interpretation of the provisions would defeat the legislative policy. The courts must therefore keep the legislative policy in mind in applying the provisions of the act to facts of each case. In the instant case on the death of N.N. Meithy the original landlord, eight different persons respondents nos. 3 to 12 succeeded to him. The appellant was in doubt as to which of them was entitled to receive rent, he made an attempt to tender rent to Prabhat Kumar, respondent No. 3 but he refused to accept the same, thereupon the appellant made an application under sec. 30(1) in the Munsif 's court and on the permission being granted to him he continued to deposit rent in that court. It is true that on service of the landlord 's notice of demand on 8.9.82 the appellant did not tender the amount to the respondents, instead he gave a reply on 6.9.82 stating therein that he was willing to pay the rent to the landlord, Prabhat Kumar, respondent No. 3 if he expressed his willingness in writing to accept the same. The appellant 's insistence in requesting Prabhat Kumar to signify his willingness in writing appears to be founded on the provision of sec. 30(1) of the Act. It is noteworthy that in his notice dt. 6.9.82 the appellant had clearly stated that he was ready and willing to pay the rent to Prabhat Kumar if he signified his willingness in writing to accept the rent within a reasonable time otherwise he would deposit the same in the Munsif 's court in Misc. Case No. 57 of 1978. Admittedly the appellant 's notice dt. 6.9.82 was served on the respondent landlords but no reply was sent to the appellant, instead they filed suit for his eviction. Since no reply was received by the appellant from the land lords he ,deposited the arrears of rent in the Munsif 's court in Misc. Case No. 57/78. In the face of these facts and circumstances it would be unjust to hold the appellant in arrears of rent, rendering him liable to eviction. It is true that on landlord 's serving notice of demand on a tenant who may be in arrears of rent for a period of more than four months and on the tenant 's failure to tender the rent to the landlord within one month from the service of the notice the tenant is liable to eviction, but in the instant case having regard to the special facts and circumstances available on the record we do not find that the appellant failed to tender the 231 rent to the landlords or that he was in arrear for a period of more than four months. He was all along ready to pay and since the landlords did not give any reply to his notice dt. 6.9.82 he was justified in depositing the arrear in the Munsif 's court. Since the deposit was made it must be deemed that the appellant had tendered rent to the landlords as contemplated by sec. 13(6) of the Act. In this view the High Court as well as the courts below committed error in holding that the appellant had failed to pay arrears of rent for a period of more than four months and on that ground he was liable to ejectment from the premises in dispute. We should not be understood to have laid down that the tenant should deposit rent in court instead of paying the same to the landlord. Primarily a tenant is under a legal obligation to pay rent to the landlord as and when due and if he fails to pay the same on demand from the landlord and if he is in arrears for a period of more than four months he would be liable to ejectment. Where there is a bonafide dispute regarding the landlord 's right to receive rent on account of there being several claimants or if the landlord refuses to accept the rent without there being any justifi cation for the same, the tenant would be entitled to take proceeding under sec. 30 of the Act and deposit the rent in court thereupon he would be deemed to have paid the rent to the landlord, consequently he would be relieved of his liability of eviction. It does not however follow that the tenant is entitled to disregard the landlord or ignore his demand for payment of rent to him. The provisions of the Act safeguard tenant 's interest but it must be kept in mind that the landlord 's right to receive rent and in the event of the tenant 's being in arrears of rent for a period of more than four months, his right to ,evict the tenant is preserved. If the tenant makes the deposit in court without there being any justification for the same or if he refuses to pay the rent even on the service of notice of demand by the land lord, he would be liable to eviction. However the question whether the tenant is justified in depositing the rent in court and whether deeming provision of section 30(6) would be available, him to relieve him from the liability of eviction would depend upon facts of each case. As noted earlier on the special facts of the instant case we have no doubt in our mind that the appellant had relieved himself from the liability of eviction and he was not in arrears of rent for a period of more than four months. We accordingly allow the appeal, set aside the orders of the High Court and the subordinate courts and dismiss the respondent landlords ' suit. In the circumstances of the case there will be no order as to costs. A.P.J. Appeal allowed.

On the death of the owner, landlord of the tenanted premises, his heirs respondents, Nos. 3 to 12 became the owners. The appellanttenant tendered rent to respondent No. 3 but he did not accept the same. The appellant made appli cation before the Munsif under section 30(1) of the U.P. Urban Buildings (Regulation of Letting, Rent & Eviction) Act, 1972, who permitted deposit of the rent and since then the appellant had been depositing rent in the Munsif 's Court. The respondentlandlords served a notice on the appellant calling upon him to vacate the premises, hand over posses sion and pay the arrears of rents from 18.10.1979 to 17.9.1982. In his reply the appellant stated that he was ready and willing to pay the rent, and if respondent No. 3 was willing to accept the rent he may inform him within reasonable time so that he may pay the same to him otherwise he would deposit the rent in the Munsif 's Court. The re spondent landlords did not give any reply to the appellant instead they filed suit for his eviction. Meanwhile the appellant deposited the entire amount of arrears in Munsif 's Court. The Judge, Small Causes Court, decreed the suit holding that the appellant had committed default for a period of four months from the date of suit. The revision filed by the appellant was dismissed by the District Judge. The High Court dismissed the petition of the appellant under Article 226 holding that the appellant had failed to tender arrears of rent within one month from the date of service of notice on him and, therefore, he was liable to ejectment. In appeal to this Court on behalf of the appellant ten.ant it was urged, that the courts below failed to appre ciate, that the appellant had all along been ready and willing to pay the rent to the landlords and in the reply to the notice he had offered to pay rent on hearing from re spondent No. 3 but since the appellant did not receive any reply, he 225 deposited the rent in Munsil"s Court under s.30 and, there fore, he was not liable to ejectment. On behalf of the respondent landlords it was urged that all the three Courts have recorded findings holding the appellant in arrears of rent for a period of more than four months on the date of the suit, therefore, the impugned orders do not suffer from any illegality warranting interference by this Court. Allowing the appeal of the appellant tenant, HELD: 1. The High Court as well as the Courts below have taken a too technical view in holding the appellant guilty of wilful default in payment of rent. [230B] 2. The High Court as well as the Courts below have committed error in holding that the appellant had failed to pay ar rears of rent for a period of more than four months and on that ground he was liable to ejectment from the premises in dispute. [231B] 3. On landlord 's serving notice of demand on a tenant who may be in arrears of rent for a period of more than four months, and on the tenant 's failure to tender the rent to the landlord within one month from the service of the no tice, the tenant is liable to eviction, but in the instant case, having regard to the special facts and circumstances available on the record it cannot be said that the appellant failed to tender the rent to the landlords or that he was in arrear for a period of more than four months. He was all along already to pay and since the landlord did not give any reply to his notice, he was justified in depositing the arrears in the Munsif 's Court. Since the deposit was made it must be deemed that the appellant had tendered rent to the landlords as contemplated by section 13(6) of the Act. [230H 231B] 4. The question whether the tenant is justified in depositing the rent in Court and whether the deeming provi sion of section 30(6) would be applicable to relieve him from the liability of eviction would depend upon facts of each case. The appellant, in the instant case, had relieved himself from the liability of eviction and he was not in arrears of rent for a period of more than four months. [23IF G] 5. The scheme, structure and the policy discernible from the provisions of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 unmistakably aim at regulating the conditions of tenancy, rent and preventing eviction of tenants. The legislature has taken care to make special provisions protecting the interest of tenants 226 from eviction while placing obligation on him to pay rent. The right of a tenant not to be evicted and the prohibition against a landlord from seeking eviction except upon speci fied grounds are well protected by the provisions of the Act, and the tenant is afforded an opportunity to pay ar rears of rent even after filing of the suit and, in some cases even after a decree of eviction is passed. [229G 230A] 6. The special provisions as contained in sections 30(4), 30, 39 and 40 indicate the legislative policy to safeguard the interest of a tenant, who deposits rent in accordance with those provisions. The Court must strive to so interpret the statute as to protect and advance the object and purpose of the enactment. Any narrow or technical interpretation of the provisions would defeat the legislative policy. The Courts must, therefore, keep the legislative policy in mind in applying the provisions of the Act to the facts of the case. [230B] 7. Primarily a tenant is under a legal obligation to pay rent to the landlord as and when due and if he fails to pay the same on demand from the landlord and if he is in arrears for a period of more than four months he would be liable to ejectment. Where there is a bonafide dispute regarding the landlord 's right to receive rent on account of their being several claimants or if the landlord refuses to accept the rent without there being any justification for the same, the tenant would be justified to take proceeding under section 30 of the Act and deposit the rent in Court. Thereupon he would be deemed to have paid the rent to landlord, consequently, he would be relieved of liability of eviction. It does not, however, follow that the tenant is entitled to disregard the landlord or ignore his demand for payment of rent to him and deposit the same in Court. There should be justification for depositing rent in court, in the absence of any justifica tion, tenant would be liable to eviction. [231C E]

5165.txt

Appeal No. 23 of 1964. Appeal from the judgment and decree dated May 12, 1961 of the Allahabad High Court in Civil Misc. Writ No. 3588 of 1958. M. C. Setalvad, K. C. Jain and B. P. Maheshwari, for the appellant. 972 section N. Andley, Rameshwar Nath and P. L. Vohra, for the res pondent. The Judgment of P. B. GAJENDRAGADKAR, C.J., K. N.WANCHOO and RAGHUBAR DAYAL JJ., was delivered by WANCHOO J. M. HIDAYATULLAH and J. R. MUDHOLKAR JJ. delivered separate Opinions. Wanchoo J. This is an appeal on a certificate granted by the Allahabad High Court. The appellant is a public limited company and owns two sugar factories situate in the city of Rampur. The factories comprise a number of buildings including some for residential purposes also. The Municipal Board of Rampur (hereinafter referred to as the respondent) decided to impose water tax in Rampur as provided under section 128(1) (x) of the U.P. Municipalities Act, No. 11 of 1916 (hereinafter referred to as the Act). The procedure for the imposition of tax by the Municipal Board under the Act is provided in sections 131 to 135 of the Act Section 131 provides that when a Board desires to impose a tax, it shall by special resolution frame proposals specifying the tax, the persons or class of persons to be made liable, and the des cription of property or other taxable thing or circumstance in respect of which they are to be made liable, the amount or rate leviable from each such person or class of persons, and any other matter required by the Rules framed by the State Government. The Board has also to prepare a draft of the rules which it desires the State Government to make in respect of the tax, namely, for assessment, collection, exemption and other matters relating to tax, [section 131(2)]. Section 131(3) which is important for our purposes reads thus : "The Board shall, thereupon publish in the manner prescribed in section 94 the proposals framed under sub section (1) and the draft rules framed under subsection (2) along with a notice in the form set forth in Schedule III. " Section 132 provides for procedure subsequent to framing proposals and permits any inhabitant of the municipality within a fortnight from the publication of the notice, to submit to the Board an objection in writing to all or any of the proposals. The Board has to take these, proposals into consideration and pass orders thereon by special resolution and if it thinks necessary it can modify the proposals. if the proposals and the rules (if any) are modified, the modified proposals and rules are again published. It is open to any inhabitant of the municipality again to object to the modified proposals, and if any such objection is made, it 973 is dealt with in the same manner as objections to the original proposals. When the proposals have been finally settled, the Board has to submit them along with the objections to the prescribed authority or the State Government, as the case may be, under section 133 of the Act. The prescribed authority or the State Government has the power thereunder to sanction the proposals or to return them to the Board for further consideration or sanction them without modification or with such modification not involving an increase of the amount to be imposed as it deems fit. Section 134 provides that when the proposals have been sanctioned, the State Government has to take into consideration the draft rules submitted by the Board and make such rules under section 296 of the Act as it thinks fit. When the rules have been made the order of sanction and a copy of the rules has to be sent to the Board, which thereupon by special resolution has to direct the imposition of the tax with effect from the date to be specified in the resolution. Section 135 then provides that a copy of the above resolution has to be submitted to the State Government or the prescribed authority, as the case may be. Upon receipt of such copy, the, State Government or the prescribed authority, as the case may be, has to notify in the official gazette the imposition of the tax from the appointed day and the imposition of the tax is in all cases subject to the condition that it has been so notified under section 135 (2). Then comes section 135 (3), which reads as follows "A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act. " Section 94 (3) which provides for the manner of publication reads thus : "Every resolution passed by a Board at a meeting shall, as soon thereafter as may be, be published in a local paper published in Hindi and where there is no such local paper, in such manner as the State Government may, by general or special order, direct." According to the respondent, it followed the procedure pro vided under the Act for the imposition of the tax and after following the procedure the tax came to be imposed from April 1, 1957 at the rate of 10 per centum of the annual value of lands and buildings. After the tax was thus imposed, the respondent sent notices of demand to the appellant requiring it to pay water tax for the years 1957 58 and 1958 59. This was done on 974 October 7, 1958. It may be added that under section 129 of the Act there are certain restrictions subject to which water tax can be imposed and one of the restrictions is that the tax shall not be imposed, where the unit of assessment is a plot of land or a building, on any such plot or building of which no part is within a radius to be fixed by rule in this behalf for each municipality from the nearest standing or other waterwork whereat water is made available to the public by the Board. In the present case this limit has been fixed by the rules at 600 feet. The appellant objected to the payment of water tax demanded from it, and one of its objections was that it was exempt under section 129 (a), as there was no standpipe or other waterwork whereat water was made available to the public by the respondent within 600 feet of the buildings of the factory, the Central Office or the Govan Colony, except that some buildings outside the main Raza Sugar Factory were within 600 feet. The respondent however rejected the objections, and threatened to recover the amount by coercive process. The appellant then filed a writ petition before the High Court in December 1958 and a large number of grounds were taken in the writ petition in support of its case that it was not liable to pay water tax, including certain constitutional objections to the vires of the Act itself. The appellant failed in the High Court on all points and 'has come up in appeal before us on a certificate granted by the High Court. In the present appeal however only two points have been urged before us on behalf of the appellant. We are therefore not ;concerned with the other points raised in the High Court and shall confine ourselves to the two points urged before us, namely (1) There was no publication as provided by section 131(3) read with section 94(3) of the Act, and as the provision of section 131(3) is mandatory and was not complied with, all subsequent action taken for the imposition of the tax was bad for non compliance with a mandatory provision and therefore the tax itself was not levied according to law and could not be realised; and (2) the tax could not be levied on most of the premises belonging to the appellant as there was no standpipe or other waterwork whereat water was made available to the public by the respondent within 600 feet of all of the buildings of the appellant. 975 We shall first consider the ground as to publication and three questions fall to be decided in that behalf : (first), is publication as provided in section 131 (3) mandatory or directory, for it is contended on behalf of the respondent that publication under section 131(3) is merely directory; (secondly), was the publication in this case strictly in accordance with the manner provided in section 94(3); and (thirdly), if the publication was not strictly in accordance with the manner provided in section 94(3), is the defect curable under section 135(3)? The question whether a particular provision of a statute which on the face of it appears mandatory, inasmuch as it uses the word "shall"as in the present case is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor. The purpose for which the provision has been made and its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting from whether the; provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject and other considerations which may arise on the facts of a particular case including the language of the provision, have all to be taken into account in arriving at the conclusion whether a particular provision is mandatory or directory. The respondent strongly relies on the State of U.P. vs Man bodhan Lal Srivastava(1), where article 320(3) (c) of the Constitution was held to be directory and not mandatory, and contends that the principle of that case applies with full force to the facts of the present case. If is therefore necessary to consider that case before we consider the facts of the present case in the light of the circumstances to which we have referred above and which are helpful in determining whether a particular provision is mandatory or directory. Article 320(3) (c) provides for consultation with the Public Service Commission on all disciplinary matters affecting a person serving under the Government of India or the Government of a State in a civil capacity, and the language of the Article is mandatory in form, as it provides that the Public Service Commission shall be consulted. This Court relied on the following observations of the Judicial Committee of the Privy Council in Montreal Street Railway Company vs Normandin(2) in that connection: (1) ; (2) ; 976 "The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done. " That was a case where the jury., lists had not been revised as required by law. Following the principle laid down in that case, this Court held that article 320(3) (c) itself contemplates three grounds: (i) that the proviso to article 320 itself contemplates that regulations may be made specifying matters in which either generally, or in any particular class of cases or in particular circumstances it shall not be necessary for a Public Service Commission to be consulted; (ii) that the advice of the Public Service Commission was not binding on the Government, and in the ab sence of such binding character it was difficult to see how non compliance with the provisions of article 320(3) (c) could have the effect of nullifying the final order passed by the Government; and (iii) that article 311 was not in any way controlled by article 320 and there was no provision in the Constitution expressly or otherwise providing that the result of non compliance with article 320(3) (c) would be to invalidate the proceedings ending with the final order of the Government. It was also pointed out in that case that an examination of the terms of article 320 showed that the word "shall" appeared in almost every paragraph and every clause or sub clause of that Article. If it were held that the provisions of article 320 (3) (c) were mandatory in terms, the other clauses or sub clauses of that Article would have to be equally held to 'be mandatory. If they were so held, any appointments made to the public services without observing strictly the terms of these sub clauses in cl. (3) of article 320 would adversely affect the person so appointed to a public service, without any fault on 'his part and without his having any say in the matter, and this 'could not have been intended by the makers of the Constitution. 'Thus this Court approximated article 320(3) (c) to a statutory 977 provision like the one which came up for consideration in Montreal Street Railway Company 's case(1) and held that if the Article were construed as mandatory, it would cause serious general inconvenience, and injustice to persons who had no control over those entrusted with the duty. That decision was clearly based on the special facts in that case dealing with appointments and dismissals of public servants and the duty of the Government to consult the, Public Service Commission in that behalf and cannot and should not be extended to cases based on a different set of facts. As the Judicial Committee itself pointed out the question whether provisions in a statute are directory or mandatory cannot be decided by laying down a general rule and in every case the object of the statute must be looked at. That case therefore in the circumstances is of little assistance to the respondent, except insofar as it lays down the principle that no general rule can be laid down for determining the question whether a provision in a statute is directory or mandatory, and that every case will have to be judged on the basis of the object of the statute concerned. This brings us to the examination of the facts and circums tances of the present statute in the light of what we have said above as to the criteria for determining whether a provision in a statute is mandatory or directory. The provision with which we are concerned, namely, section 131(3), can be divided into two parts. The first part lays down that the Board shall publish proposals and draft rules along with a notice inviting objections to the proposals or the draft rules so published within a fortnight from, the publication of the notice (see Sch. The second part provides for the manner of publication and that manner is according to s ' 94(3). We shall first deal with what we have called the first part of section 131(3). This provision deals with taxation. The object of providing for publication of proposals and draft rules is to invite objections from the inhabitants of the municipality, who have to pay the tax. The purpose of such publication obviously is to further the democratic process and to provide a reasonable opportunity of being heard to those who are likely to be affected by the tax before imposing it on them. It is true that finally it is the Board itself which settles the proposals with respect to taxation and submits them to Government or the prescribed authority, as the case may be,, for approval. Even so we have no doubt that the object behind this publication is to find out the reaction of tax payers generally to the taxation (1) ; 978 proposals, and it may very well be in a particular case that the Board may drop the proposals altogether and may not proceed further with them, if the reaction of the tax payers in general is of disapprobation. Further the purpose served by the publication of the proposals being to invite objections, in particular from the tax payers, to the tax proposed to be levied on them, the legislature in its wisdom thought that compliance with this part of section 131(3) would essentially carry out that purpose. In the circumstances if we are to hold that this part of section 131(3) was merely directory, the whole purpose of the very elaborate procedure provided in sections 131 to 135 for the imposition of tax would become meaningless, for the main basis of that procedure is the consideration of objections of tax payers on the proposals of the Board. If such publication is merely directory, the Board can proceed to levy the tax without complying with them and that would make the entire elaborate procedure provided in the Act before a tax is imposed nugatory. We are therefore of opinion that this part of section 131(3) is mandatory and it is necessary to comply with it strictly before any tax can be imposed. We shall consider the interpretation of section 135(3) later, but we have no doubt that in the present case, in spite of section 135(3), the legislature intended that there must be publication as provided in what we have called the first part of section 131(3). We therefore hold that this part of section 131(3) is mandatory considering its language, the purpose for which it has been enacted, the setting in which it appears and the intention of the legislature which obviously is that no tax should be imposed without hearing tax payers. Lastly we see no serious general inconvenience or injustice to anyone if this part of the provision is held to be mandatory; on the other hand it will be unjust to tax payers if this part of the provision is held to be directory, inasmuch as the disregard of it would deprive them of the opportunity to make objections to the proposals, and the draft rules. We therefore hold that this part of section 131(3) is mandatory. Turning now to the second part, which provides for the manner of publication, that manner is provided in section 94(3) already set out above. It seems to us that when the legislature provided for the manner of publication it did not intend that manner should be mandatory. So long as publication is made in substantial compliance with the manner provided in section 94(3), that would serve the purpose of the mandatory part of the section which provides for Publication. It would therefore, not be improper to hold that the manner of publication provided 979 in section 94(3) is directory and so long as there is substantial compliance with that the purpose of the mandatory part of section 131(3) would be served. In this connection we may refer to K. Kamaraja Nadar vs Kunju Thevar(1). In that case, a question arose whether section 117 of the Representation of the People Act (No. 43 of 1951) was mandatory or directory. That section required that a petitioner filing an election petition had to enclose with the petition a Government Treasury receipt showing that a deposit of one thousand rupees had 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 the costs of the petition. This Court analysed this provision and observed that it consisted of three parts : namely, (i) the Government Treasury receipt must show that such deposit had been actually made in a Government Treasury or in the Reserve Bank of India; (ii) it must also show that it had been made in favour of the Secretary to the Election Commission; and (iii) it must further show that it had been made as security for the costs of the petition. The question then arose whether the words 'in favour of the Secretary to the Election Commission" were mandatory in character so that if the deposit had not been made in favour of the Secretary to the Election Commission as therein specified the deposit even though made in a Government Treasury or in the Reserve Bank of India and as security for the costs of the petition would be invalid and of no avail. This Court held that these words in section 1 17 were directory and not mandatory in their character, and that the essence of the provision contained in section 117 was that the Petitioner should furnish security for the costs of the petition and should enclose along with the petition a Government Treasury receipt showing that a deposit of one thousand rupees had been made by him either in a Government Treasury or in the Reserve Bank of India to be at the disposal of the Election Commission to be utilised by it in the manner authorised by law and was under its control and payable on a proper application being made in that behalf to the Election Com mission or to any person duly authorised by it to receive the same, be he the Secretary to the Election Commission or any ,one else. If this essential requirement was complied with, no literal compliance was at all necessary with the words "in favour of the Secretary to the Election Commission" appearing in that section. Though, therefore, the making of the deposit and the presentation of the receipt thereof along with the petition was (1) L2Sup./65 980 held to be mandatory, this Court hold that the form in which the deposit should be made was only directory. The principle of that case in our opinion applies to the manner of publication provided in section 94(3) in the present case. As we have said already the essence of section 131(3) is that there should be publication of the proposals and draft rules so that the tax payers have an opportunity of objecting to them and that is provided in what we have called the first part of section 131,(3); that is mandatory. But the manner of publication provided by section 94(3) which we have called the second part of section 131(3), appears to be directory and so long as it is substantially complied with that would be enough for the purpose of providing the tax payers a reasonable opportunity of making their objections. We are therefore of opinion that the manner of publication provided in section 131(3) is directory. Let us see what section 94(3) requires and what has been done in this case. That section requires the publication to be made in a local paper and that local paper must be one published in Hindi. It further provides that where there is no such local paper, the publication may be made in such manner as the State Government may by general or special order direct. In the present case, the publication has been made in a local paper, but that local paper is not published in Hindi; it is published in Urdu, though the actual publication of the resolution in the present case was in Hindi. The contention on behalf of appellant is that this is no compliance with section 94(3). It appears that there is a local paper published in Hindi also in Rampur, but the evidence is that it is published very irregularly. It is urged that if there was no local paper published regularly in Hindi in Rampur, then the direction of the State Government should have been sought for the manner of publication. It may be accepted that there has not been strict compliance with the provisions of section 94(3) inasmuch as the publication has not been made in a local paper published in Hindi. We must however point out that if section 94(3) is interpreted literally, all that it requires is that the publication must be in a local paper and that local paper must be published in Hindi, though the actual publication of the resolution may not be in Hindi. That does not seem to us to be the real meaning of section 94(3) and what it substantially requires is that the publication should be in Hindi in a local paper, and if that is done that would be compliance with section 94(3). Now what has happened in this case is that the publication has been made in a local paper which on the evidence seems to have good circulation in Rampur and the actual resolution has been published in Hindi, though the paper itself is published in Urdu. It seems to us therefore that there is substantial compliance with the provisions of section 94(3) in this case, even though there is a technical defect inasmuch as the local paper in which the publication has been made is published in Urdu and not in Hindi. But what has happened in this case is in our opinion substantial compliance with section 94(3) and as we have held that provision to be directory it must be held that section 131(3) has been complied with. This brings us to the third point, namely, the effect and interpretation of section 135(3) which we have already set out. That sub section provides that a notification made under section 135(2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act. It has been urged on behalf of the respondent that the publication has been made as required by section 135(2) in the official gazette and therefore is conclusive proof that the tax had been imposed in accordance with the provisions of the Act, i.e., all the provisions of the Act had been complied with. It is urged that once a notification has been made as required by section 135(2), section 135(3) raises an irrebuttable presumption that all the provisions of the Act have been complied. with and therefore it was not open to,the appellant to raise the question of non compliance with the provisions of section 131(3) read with section 94(3) at all in the present case. Reliance in this connection has been placed on the Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon(1). In that case section 67(8) of the C.P. & Berar Municipalities Act, 1922 came up for consideration. That section was in terms similar to the terms of section 135(3). This Court held in that case that as the provision of section 67(7) which correspond to section 135(2) here, had been complied with, that was conclusive evidence of the tax having been imposed in accordance with the provisions of that Act, and it could not be challenged on the ground that all the necessary steps had not been taken. Now what happened in that case was that the necessary publication was made as required by law and objections were invited to the proposed tax. Only one objection was filed in that case and that objection was considered by the Board and rejected. The other procedural provisions were complied with and tax was imposed and a final notification made (1) 982 under section 67 (7) of that Act. Imposition of the tax was challenged on the ground that the Board did not take into consideration the objections filed. The evidence in that case was that the Board had taken into consideration the objections filed and had rejected them on grounds which the appellant (in that case) thought were not proper. It was in those circumstances that this Court held that sub section (8) of section 67 was conclusive. The present case is in our opinion similar to that case. Here also the publication was made, as we have already pointed out in compliance with what we have called the first part of section 131(3). Further the manner of publication was in substantial compliance with section 94(3). Therefore, as there was substantial compliance with the provisions of section 94(3), section 135(3) would in our opinion come to the help of the respondent and it must be held that all necessary steps had been taken. It is however contended on behalf of the respondent that section 135(3) goes further and means that where it applies, the tax must be held to be imposed in accordance with the provisions of the Act, even though none of the procedural provisions may have been complied with at all. It is enough to say that the question in this form does not arise before us directly for we have held that there was publication in compliance with section 131(3) though the manner was not strictly, in accordance with section 94(3). We do not think it necessary in the present case to decide what would happen if there was no compliance at all with the various procedural provisions including section 131(3) by a Board before imposing a tax and the evidence consisted only of a notification under section 135(2). It has been held by the Allahabad High Court in a number of cases that if there is no compliance with the procedural provisions in section 131 to section 134, the mere notification under section 135(2) would not be sufficient to impose a tax and section 135(3) would not save such tax: (see Azimulla vs Suraj Kumar Singh(1) and Municipal Board, Hapur vs Raghuvendra Kripal(2). These are cases in which certain procedural provisions were not complied with at all and the High Court held that section 135(3) would not save the tax in such cases. We do not think it necessary to express any opinion on this question for it does 'not arise in the present case. We may however point out that the decision in the Berar Swadeshi Vanaspathi 's case(1) is not a case where there was no compliance whatsoever with procedural provisions all that had happened in that case was that the objections had (1) A.I.R. (1957) All. 307. (3) (2) 983 been taken into consideration by the Board though they were rejected for reasons which were considered by the appellant in that case to be not sufficient. In that case therefore there was compliance with the provisions of the Act and all that we need say is that case is no authority for the proposition that even if there is no compliance whatsoever with a mandatory provision of a statute relating to procedure for the imposition of a tax, a provision like section 135(3) of the Act or section 67(8) of ' the C.P. & Berar Municipal Act would necessarily save such imposition. If section 135(3) means that where there is substantial compliance with the provisions of the Act that would be conclusive proof that they have been complied with there can be no valid objection to such a provision. But if the section is interpreted to mean, as is urged for the respondent, that even if there is no compliance whatever with any mandatory provision relating to imposition of tax and the only thing proved is that a notification under section 135(2) has been made, the tax would still be good, the question may arise whether section 135(3) itself is a valid provision. For present purposes however it is unnecessary to decide that question. In the present case the mandatory part of section 131(3) has been complied with and its directory part has been substantially complied with and so section 135(3) will apply and the objection that the tax is not validly imposed must fail. This brings us to the second point raised before us. So far as that is concerned, it is enough to say that it is mainly a question of fact whether the buildings or any of them belonging to the appellant are within 600 feet of the standpipe. The restriction imposed in cl. (a) of section 129 is that water tax can be levied on a building where any part of it is within a radius fixed by rules which in the present case is 600 feet from the nearest standpipe or water work whereat water is made available by the Board to the public. What is contended on behalf of the appellant is that these words mean that there should be standpipe or water work from which water is made available to the public by the respondent and that it is not enough if underground pipes carrying water are passing within 600 feet. It seems to us that this contention of the appellant is correct. The restriction in section 129(a) is that no water tax can be levied on a building which is more than a certain distance fixed by the rules from a standpipe or other water work from which water is made available to the public. The restriction that water should be made available to the public within the specified distance does not mean that if pipes carrying water pass underground that would be enough. What is required is that water 984 should be made available to the public from the nearest standpipe or other water work and that requires that there must be something above the ground from which the public can draw water. But even so, the question is one of fact and the High Court has pointed out that there was dispute on this question of fact and there was no sufficient material before it to enable it to come to a definite finding whether all the buildings of the appellant were beyond the radius of 600 feet from the nearest standpipe. In this state of the evidence the question must be left open and the appellant can pursue such remedies as he may be advised to take. The appeal therefore fails and is hereby dismissed with Hidayatullah J. I agree that this appeal should be dismissed but would like to say a few words about the failure to publish the notice in strict compliance with the provisions of section 94(3) of the U.P. Municipalities Act. The procedure for the imposition of a tax by the Municipality has been analysed by my learned brother Wanchoo very succinctly. I agree generally with all he has said but as I view the matter differently on the construction of sections 131 (3), 94(3) and 135(3) of the Act, I shall briefly give the reasons for my decision on that part of the case. The general scheme of taxation in the Act is this: After the Municipal Committee or Board decides to impose a tax it is required to frame proposals by a special resolution [section 131(1)] and to frame rules which it desires the State Government to make relative to the assessment, collection etc., of the tax [section 131(2)]. Section 131(3) then provides: "The Board shall, thereupon, publish in the manner prescribed in section 94 the proposal framed under subsection (1) and the draft rules framed under subsection (2) along with a notice in the form setforth in Schedule III." This enables any inhabitant affected by the proposal to object. The Municipal Committee or the Board then considers the objections and passes orders on the objections but if it modifies the proposals or the rules it publishes them a second time and the whole procedure has to be gone through again. When there is no modification or the proposals or rules are finally settled, the original proposals and rules, if any, have to be forwarded to Government. Government may accept the proposals and the rules or may send them back for further consideration. The proposals and the rules when finally sanctioned by Government are returned to the Municipality which imposes the tax with effect from a specified date by passing a fresh resolution. This does not impose the tax proprio vigore. The resolution has to be submitted to Government and when it is notified in the official Gazette, the tax is imposed from the appointed date. Section 153 (3) then provides "A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act. " The tax here was imposed by Rampur Municipality and the notices were published in an Urdu newspaper called "Aghaz" though the notices were in Hindi. Section 94(3) of the U.l. Act provides: "Every resolution passed by a Board at a meeting shall, as soon thereafter as may be published in a. local paper published in Hindi and where there is no such local paper in such manner as the State Government may, by general or special order, direct. " There was in Rampur another newspaper which was published in Hindi but its circulation was admittedly very poor. The newspaper selected for publication, though in Urdu, was widely read, and the notice itself was in Hindi. Thus there was a local paper with a wide circulation and there was a notice in Hindi. The only breach was that the paper was not 'published in Hindi '. There was, clearly no literal compliance with section 94(3). Two questions, therefore, arise : (a) Is section 94(3) mandatory ? and (b) If section 94(3) is not strictly complied with whether section 135(3) makes the notification conclusive against the defect ? In my judgment the answers to these questions depend upon the nature of the functions of a Municipal Committee and its powers of imposing a tax. A Municipal Committee enjoys powers of taxation not as a legislature but as a delegate of the legislature. Taxes levied by it are in effect levied by Government. They are allowed to be imposed and retained by the Municipality to perform its functions and to pay for its expenses. The whole procedure is shortened in this way, otherwise Government would be required to levy taxes and to give the proceeds to the Municipality. However, the final 986 word lies with Government and the legislature makes this the vital condition in the imposition of the tax. What the Municipality does in consequence of the power so conferred, it can only effectively do if the conditions laid down with the grant of power are followed and Government finally approves of the tax. the manner of its imposition and manner of its collection. Once Government has approved of the Resolution and published it in the Gazette the tax is deemed to be conclusively imposed in accordance with the procedure laid down. The legislation on the subject is then complete and the tax derives its legislative validity from the legislature 's will. Now sections 131 135 lay down the procedure. All the conditions apparently seem equally obligatory because every condition is couched in mandatory language. The crux of the problem before us is whether all the conditions are to be treated as mandatory or all of them as directory or some of them as of one kind and some of the other kind ? What is the test to apply and if a distinction is to be made, on what principle? In my opinion, the way to look at the matter is this. A tax to be valid must be imposed in accordance with the Municipalities Act. The Act lays down conditions some of which are devised for the protection of the taxpayers and some others for ministerial operations connected with the method or system of imposing the tax or for promoting dispatch, efficiency and publicity etc. All conditions of the first kind must, of course, be regarded as mandatory, because they lie at the very root of the exercise of the power. Thus preparation of assessment rolls, hearing of objection, framing of assessment rules are all mandatory. Similarly, conditions involving the passing of resolutions by the necessary majority at special meetings after proper notice to members are fundamental and cannot be overlooked. If a defect of a fundamental kind occurs it would (in the absence of curative provision) remain even if Government gave its sanction See Scadding vs Lorant(1) (affirming Sub Nom) (2) and Joshi Kalidas vs Dakor Town Municipality(3). Conditions which promote despatch or provide for ministerial operations are usually directory and although compliance with them is also necessary it is sufficient if the compliance is substantial. It may be accepted that a provision for a notice to the tax payers informing them about the proposal to impose a Particular tax and the rules made for the imposition, is fundamental. Such (1) E.R. H.L. 164. (2) 13 Q.B. 706. (3) I.L.R. 987 a provision, if ignored, would frustrate the very policy of the law that there should be no tax without an opportunity to object, and to ignore it would ordinarily be fatal. Similarly the direction at. The notice should be published in a local newspaper is also an integral part of the Scheme. The same purpose cannot be achieved by proclaiming by beat of drum or distributing hand bills or publishing a notice in a newspaper not circulating locally. There is no option there because if the notice cannot be published in a local newspaper the section goes on to provide for alternative modes of publication to be determined by Government. The sub section, however, goes further and says that the newspaper must be one that is published in Hindi. I would be disposed to consider this further direction as not fundamental. If a newspaper is selected which is very widely read in the locality but is not in Hindi and the notice is published in Hindi, I imagine the intention of the law is better promoted than if another newspaper published in Hindi with next to no circulation is selected. There is no doubt a departure from the letter of the law but the departure promotes the very object and purpose of it. I would regard such a provision as directory. It is a provision for the guidance of the Municipality and not something which can be said to be essential to the validity of the imposition. It seems to me that it is not necessary at all to go into the niceties of the distinction between mandatory and directory provisions in general or in relation to the provisions of the U.P. Municipalities Act in particular. The legislature has itself furnished the solution by enacting section 135(3) which indicates the consequences of an omission. It lays down emphatically a rule of evidence which precludes courts from making inquiries into the minutiae of the procedure with a view to declaring the imposition invalid. The legislature is quite content to enact that Government should review the proposals, the rules and the procedure before accepting the resolution imposing the tax and that after this is done and a notification issues all questions about the procedural part of the imposition must cease. The legislative will takes over from that stage and the tax is imposed as validly as if the legislature itself imposed it. Whether one reads section 135(3) as enacting an absolute rule of evidence (and I am in favour of reading it as such See: The Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon) (1) or as merely related to venial defects, errors or omissions, it is plain that it must at least protect the imposition of water tax in Rampur against a flaw in procedure of the (1) 988 kind we are dealing with or it would serve no purpose at all. This provision, therefore, 'serves to cure the breach of the direction which was intended to serve merely as a guide to the municipalities, and it precludes courts from inquiring into such a breach. That was a matter for Government to take into consideration before according its approval and Government must be deemed to have approved this other mode of publication which, it is clear enough it could have permitted to be followed in the first instance under the latter part of section 94(3) itself. Subject to these reasons for holding the tax to be valid I agree that the appeal be dismissed with costs. Mudholkar J. I agree that the appeal be dismissed but on the point of law urged before us I would like to state my reasons separately. I find it difficult to construe sub section (3) of s.131 as partly directory and partly mandatory; that is to say, that the requirement of publication is mandatory but the requirement of the manner of publication is not mandatory but only directory. To construe the section that way would be giving two different meanings to the verb "shall" occurring in the provision which governs both publication as well as the manner of publication. "Shall" can, according to the authorities, no doubt be construed literally and, therefore, as being mandatory or, liberally and thus being only directory depending upon the object of the provision in which it occurs, the connected provisions and other similar matters. But it seems to me on principle that when a verb used in a provision governs two different matters it cannot be given one meaning in so far as it relates to one matter and another meaning insofar as it relates to another matter. The provisions of section 94(3) are clearly directory inasmuch as a deviation from the mode of publication prescribed therein that is publication in a local newspaper in the Hindi language is contemplated by it. The requirement of section 131(3) is publication in the manner provided for in section 94 which is actually provided in sub section (3) of section 94. Since the latter provision is directory it is immaterial to consider whether section 131(3) is directory or mandatory or to read it as partly one and partly the other and depart from the normal rule of construction which discountenances read ing a word in a provision in two different senses. While a mandatory provision must be strictly complied with, substantial compliance is sufficient with respect to a directory 989 provision. There has been substantial compliance with the provisions of section 94(3) since the proposals were in fact published in the Hindi language in a local newspaper. The only departure from the letter of the law was not obtaining the permission of the State Government for publishing the proposals in an Urdu newspaper. In my view the essential requirement of section 94(3) is publication in a local newspaper. Where this requirement is satisfied, the omission to obtain a direction from the State Government permitting publication in a newspaper other than one in the Hindi language is not of much consequence. Upon this view the question whether section 131(3) is mandatory or whether section 135(3) has become void by reason of article 13(1) of the Constitution or whether it can cure a defect resulting from non compliance with a mandatory provision do not at all arise for consideration.

The appellant company challenged the imposition of water tax by the Rampur Municipal Board in a petition under article 226 of the Constitution of India on the ground that the tax had not been imposed according to law inasmuch as the proposals and draft rules had been published by the Board in an Urdu paper whereas according to the mandatory provisions of section 131(3) read with section 93(3) of the U.P. Municipalities Act, 1916, they should have been published,in a Hindi paper. The High Court dismissed the petition but granted a certificate under article 133(1)(c). The questions for consideration were whether the whole of section 131(3) was mandatory, or the part of it requiring publication in the manner laid down in section 94(3) i.e., in a Hindi newspaper was merely directory; and whether the publication in the Government Gazette of the notification imposing the tax was not conclusive proof, as provided in section 135(3), of the prescribed procedure having been observed. HELD: (Per GAJENDRAGADKAR" C. J., WANcHoo and RAGHUBAR DAYAL JJ.) (i) Section 131(3) can be divided into two parts the first one providing that the proposal and draft rules for a tax intended to be imposed should be published for the objections of the public, if any, and the second laying down that the publication must be in the manner laid down in section 94(3). Considering the object of the provisions for publication namely to enable the public to place its viewpoint before the Board it Is necessary to hold that the first part of the section is mandatory, for to hold otherwise would be to render the whole procedure prescribed for the imposition of taxes nugatory. The second part of the section is, however, merely directory. What it substantially requires is that the publication should be in Hindi in a local paper, and if that is done that would be compliance with section 94(3). In the instant case publication was made in Hindi in a local paper which on the evidence seems to have good circulation in Rampur. There is no regularly published local Hindi newspaper. There was, in the circumstances, substantial compliance with the provisions of section 94(3) in this case. [977 E F; 978 D F; 980 C; 981 A B] (ii) Section 135(3) provides that a notification of the imposition of tax in the Government Gazette was conclusive proof that the tax had been imposed in accordance with the provisions of the Act. Whether such a notification will save a tax which has been imposed without at all complying with one of the mandatory provisions of the relevant law was a question that did not directly arise in the case. In the instant case there had been compliance with the mandatory part of section 131(3) and substantial compliance with the second part. Therefore a. 135(3) applied to the case 971 and the objection that the tax was not validly imposed could not succeed. [983 B D; 983 D E]. K. Kamaraja Nadar vs Kunju Thevar, , relied on. State of U.P. vs Manbodhan Lai Srivastva, ; and Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon, , distinguished. Montreal Street Railway Company vs Normandin, ; , Azimulla vs Suraj Kumar Singh, A.I.R. (1957) All. 307 and Municipal Board, Hapur vs Raghuvendra Kripal, 1960 A.L.I. 185, referred to. Per HIDAYATULLAH J. A Municipal Committee enjoys powers of taxation not as a legislature but as a delegate of the legislature. Taxes levied by it are in effect levied by the Government. What the Municipality does in exercise of the delegated power can be effective only if the conditions laid down with the grant of the power are complied with and the Government finally approves the tax. Once the Government after giving its approval has notified its imposition in the Government Gazette the tax is deemed to be conclusively imposed in accordance with the procedure laid down. [985 H to 986 D] Some conditions which are laid down are for the protection of taxpayers and some others are for ministerial operations. The first kind are fundamental and cannot be overlooked. Conditions which promote dispatch or provide for ministerial operation are directory and substantial compliance is sufficient. [986 G] The direction to publish the notice in a paper published in Hindi regarded as sufficient compliance in the case. [987 C D] The Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon, , relied on. Per MUDHOLKAR J. Where a verb used in a provision governs two different matters it cannot be given one meaning insofar as it relates to one matter and another meaning insofar as it relates to another matter.[988 F] Since section 94(3) is clearly directory it is immaterial to consider whether section 131(3) is directory or mandatory or to read it as partly one and partly the other and depart from the normal rule of construction which discountenances reading a word in a provision in two different senses. [988 G H] The essential requirement of section 94(3) is publication in a local newspaper. Where the requirement is satisfied, the omission to obtain a direction from the State Government permitting publication in a newspaper other then one in Hindi language is not of much consequence. Upon this view the question whether section 131(3) is mandatory or whether section 135(3) has become void by reason of article 13(1) of the Constitution or whether it ran cure a defect resulting from non compliance with a mandatory provision does not at all arise for consideration. [989 B C]

1873.txt

iminal Appeals Nos. 93 & 94/1958. Appeals by special leave from the judgment and order dated April 9, 1956, of the former Bombay High Court in Criminal Appeals Nos. 419 and 420 of 1956, arising out of the judgment and order dated October 15, 1955, of the Chief Presidency Magistrate, Bombay, in Cases Nos. 370/S and 371/S of 1955. C. K. Daphtary, Solicitor General of India, N. section Bindra and R. H. Dhebar, for the appellant (in both the appeals). section P. Varma, for respondents Nos. 1, 2 and 3 (In both the appeals). A. N. Goyal, for respondent No. 4 (In both the appeals). N. P. Nathwani, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for respondents Nos. 5 to 7 (In both the appeals). September 23. The Judgment of the Court was delivered by 803 SARKAR J. The respondents were Directors of Hirjee Mills Ltd. They were prosecuted before the Chief Presidency Magistrate, Bombay, for two offences under the Companies Act, 1913, as amended by Act XXII of 1936. The first offence was that they knowingly and wilfully authorised the failure to file the summary of share capital for the year 1953 and thereby became punishable under sub section (5) of section 32 of the Act, for a default in carrying out the requirements of that section. The second offence was that they were knowingly and wilfully parties to the failure to lay before the Company in general meeting the balance sheet and profit and loss account as at March 31, 1953 and thereby became punishable under section 133(3) of the Act for a default in complying with the requirements of section 131. There was a separate trial in respect of each offence. The learned Magistrate found that no general meeting of the company had been held in the year concerned. Following Imperator vs The Pioneer Clay and Industrial Works Ltd. (1) he acquitted the respondents, being of the view that no offence under either section could be committed till the general meeting had been held. The learned Magistrate did not go into the merits of the cases on the facts. Appeals by the appellant to the High Court at Bombay from the orders of the learned Magistrate were summarily dismissed. It has preferred the present appeals from the decisions of the High Court at Bombay with special leave granted by this Court. The appeals have been heard together and are both disposed of by this judgment. It appears that respondent No. 7, N. K. Firodia, was discharged by the learned Magistrate because it was conceded at the trial that he was not a director of the Company at any material time. He has been made a respondent to the present appeals clearly through some misapprehension. The appellant, the State of Bombay, does not and cannot proceed against him. The name of respondent Firodia should there fore be struck out from the records of this appeal. (i) I.L.R. 804 Respondent No. 5, Fateh Chand Jhunjhunwala, died while this appeal was pending in this Court. The appeal is therefore concerned with the remaining five respondents only. Sub section (1) of section 32 requires a company once at least in every year to make a list of its shareholders as on the date of the first or only ordinary general meeting in the year. Sub section (2) requires that the list shall contain a summary specifying various particulars mentioned in it. Sub section (3) states that the list and summary shall be completed within twenty. one days after the day of the first or only ordinary general meeting in the year and the company shall forthwith file a copy with the registrar together with a certificate from a director or the manager or the secretary of the company that the list and summary state the facts as they stood on the day aforesaid. Sub section (5) contains the penal provision, that " If a company makes default in complying with the requirements of this section, it shall be liable to a fine not exceeding fifty rupees for every day during which the default continues, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty". It is said on behalf of the respondents that there is no default in complying with the requirements of the section until a general meeting is held. That, it is said, follows from the language of the section, for it requires certain things as at the date of the meeting to be stated in the list and summary and also requires these to be filed within a certain time of the meeting. So, it is said, that, the section requires certain things to be done only after the meeting has been held and no question of performing those things arises till the meeting has been held. A contrary view has been taken in England on the corresponding provisions of the English Companies Acts of 1862 and 1908: see Gibson vs Barton(1), Edmonds vs Foster(2) and Park vs Lawton (3). It was said in these cases that a person charged with an (1) (2) (1875) 45 Law J. Rep. M.C. 41. (3) 805 offence could not rely on his own default as an answer to the charge, and so, if the person charged was responsible for not calling the general meeting, he cannot be heard to say in defence to the charge that the general meeting had not been called. It was also said that the company and its officers were bound, to perform the condition precedent if they could do that, in order that they might perform their duty. This seems to us to be the correct view to take. If the person charged with the failure to carry out the requirements of the section could have called the meeting, he cannot defeat the provisions of the section simply by not calling the meeting wilfully. It is true that under section 76 of the Act a general meeting of a company has to be held once at least in every calendar year and if a default is made, the company and every director or the manager of the company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees. That however is, in our opinion, no reason for saying that a person charged with a failure to file the list and summary as required by section 32 where a meeting had not been held, could only be prosecuted under section 76 and not under section 32. Section 76 imposes an obligation to hold a meeting and attaches a penalty to a failure to perform that obligation. In the case of section 32 it is necessary that the meeting should be held in order that the requirements of that section may be carried out. It is no less necessary to call a meeting for performing the obligations imposed by section 32, because under section 76 there is an obligation to call a meeting the breach of which entails an independent penalty. The two sections deal with different matters and section 76 does not interfere with the operation of section 32. The effect of section 32 must be derived from its terms: the terms cannot have different effects depending on whether there is a provision like section 76 in another part of the Act or not. Without a provision like section 76 a delinquent officer of the company may make section 32 infructuous, and therefore, as already stated, it must be held that liability 103 806 under section 32 would be incurred where the officer has wrongly assisted in the meeting not being held. The result cannot be different because of the presence of a provision like section 76. Nor do we think that sub sec. 5 of section 32 by imposing a daily fine during the continuance of the default indicates that the default is not committed till the meeting has been held. In order that the default may continue it has no doubt first to occur. In our view, it occurs after the expiry of 21 days from the day when the meeting should have been held within the year. The respondents referred to the case of Queen vs Newton (1) where it having been proved that the general meeting was not held, the persons charged with the default were acquitted. That case however is clearly distinguishable, " because the decision proceeded on the ground that, the summons having alleged in terms that the default was made after the general meeting had been held, it became essential to prove when the meeting was held as a matter of fact, and in the absence of proof the court held that the summons was rightly dismissed ". In this case Cockburn, C. J., expressed some doubts about the correctness of the decision in Edmonds vs Foster (2). In Park vs Lawton (3) however, Lord Alverstone said that he was unable to share those doubts, and with this view, we agree. We may add that such doubts have not been shared by anyone upto now. Another case to which we were referred on behalf of the respondents was Dorte vs South African Super Aeration Ltd. (4). There a company was convicted for a failure to file the list and summary in a case where the general meeting had not been held and fined Id and Id per day upto a certain day. Subsequently a further summons against it was taken out in respect of the same default for further penalties from that day to another later day. It was held that the word " default " implied a wilful and continued neglect to do an act required and that the company could not (1) (1879) 48 Law J. Rep. M. C. 77. (2) (1875) 45 Law J. Rep. M. C. 41. (3) (4) (1004) 807 be liable to a continuing daily fine for an omission which it was impossible to remedy. The report does not set out the arguments nor the judgment and it is not clear on what grounds the decision was given. It appears, however, that Lord Alverstone was one of the Judges who decided that came. In Park vs Lawton(1), Lord Alverstone himself observed with regard to the Dorte 's case that there, " there was no question of the defendant being also in default as to the general meeting, and that decision, therefore, in no way conflicts with the earlier authorities. " We do not think, therefore, that Dorte 's case assists the respondents at all. It is authority only for the proposition that a continuing daily fine will not be exacted where, owing to no meeting having been held, it is impossible to remedy the default: see Buckley 's Company Law (13th Ed.), p. 311. Turning now to section 131, we find that it requires the directors of a company, once at least in every calendar year, to lay before the company in general meeting a balance sheet and profit and loss account of the company. Sub section (3) of section 133 makes the company and every officer of it who is knowingly and wilfully a party to the default in carrying out the provisions Of section 131, punishable with fine which may extend to five hundred rupees. As in the case of section 32 and for the same reasons, here also it is no defence to the charge for breach of section 131 to say that a meeting was not called. As regards Imperator vs Pioneer Clay and Industrial Works Ltd. (2), OD which the courts below held that the respondents must be acquitted, we find that it turned on section 134 of the Companies Act, 1913. The language of that section is to a certain extent different from the language used in sections 32 and 131. Section 134(1) says, " After the balance sheet and profit and loss account. . . have been laid before the company at the general meeting, three copies thereof. . shall be filed with the Registrar. " Sub section (4) of this section provides a penalty for breach of section 134, in terms similar to those contained in sub see. (5) of section 32. If the language of section 134(1) (1) (2) I.L R. 808 makes any difference as to the principle to be applied in ascertaining whether a breach of it has occurred or not as to which we say nothing in this case then that case can be of no assistance to the respondents. If however no such difference can be made, then we think that it was not correctly decided. We observe that Chagla, C. J., who delivered the judgment of the Court in that case, did not question the correctness of the decision in Park vs Lawton (1) which be was asked to follow. All that he said with regard to that case was that the scheme and terms of the section on which it turned were different from section 134 of the Companies Act, 1913. That may or may not be so. There is however no difference between section 26 of the English Companies Act, 1908, on which Parker 's case turned and which apparently through some mistake Chagla, C.J., cited section 36, and section 32 of the Indian Companies Act of 1913, except that the English section required the summary to include a statement in the form of a balance sheet containing certain particulars mentioned, whereas our section does Dot require that. Section 131 of our Act contains some provision about the laying of the balance sheet before the general meeting. This provision was inserted in the Act by the amending Act of 1936. The fact, that one of the requirements of the English section 26 is not present in section 32 of our Act cannot create any material difference between section 32 of our Act and section 26 of the English Act. If the principle that a person charged with an offence cannot rely on his own default as an answer to the charge is correct, as we think it is, and which we do not find Chagla, C. J., saying it is not, then that principle would clearly apply when a person is charged with a breach of section 32 of our Act. We think therefore that the appeal should be allowed. The case will now go back to the learned Presidency Magistrate and be tried on the merits according to the law as laid down in this judgment. A.p.peal allowed. Case remanded.

The respondents, directors of a company, were prosecuted under sections 32(5) and 133(3) of the Companies Act, 1913, for breaches Of sections 32 and :131 of that Act for having knowingly and wilfully authorised the failure to file the summary of share capital for the year 1953 and being knowingly and wilfully parties to the failure to lay before the company in general meeting the balance sheet and profit and loss account as at March 31, 1953. The respondents contended that there was no default in complying with the requirements of the section as no general meeting had been held in the year concerned. Held A person charged with an offence cannot rely on his default as an answer to the charge and so, if the respondents were responsible for not calling the general meeting, they cannot be heard to say in defence to the charges brought against them that the general meeting had not been called. The company and its officers were bound to perform the conditions precedent, if they could do that, in order that they might perform their duty. 802 It is no less necessary to call a meeting for performing the obligations imposed by section 32 because section 76 creates an obligation to call a meeting and imposes an independent penalty for breach of that obligation. Liability under section 32(5) or section 133(3) would be incurred where the officer has wrongfully assisted in the meeting not being held though he might also be liable at the same time to the penalty under section 76. Sub section (5) Of section 32 by imposing a daily fine during the continuance of the default does not indicate that the default is not committed till a meeting has been held. The default occurs after the expiry of twenty one days from the day when the meeting should have been held. Imperator vs The Pioneer Clay and Industrial Works Ltd., I.L.R. , Queen vs Newton, (1879) 48 Law J. Rep. M.C. 77 and Dorte vs South African Super Aeration Ltd., , distinguished. Gibson vs Bayton, , Edmonds vs Foster, (1875) 45 Law J. Rep. M.C. 41 and park vs Lawton, , approved. Doyle vs South African Super Acration Ltd., , not applicable.

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vil Appeal No. 41819 of 1989. From the Judgment and Order dated 29.4.1988 of the Gujarat High Court in F.A. Nos. 848 849 of 1986. V.B. Patel, D. Patel, T.H Pandey and R.P. Kapur for the Appellant. Soli J. Sorabjee, Atul Setalwad, N.J. Mehta, P. Shah, S.K. Sharma, section Sharma and P.H. Parekh for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an application for leave to appeal under Article 136 of the Constitution from the judgment and order of the High Court of Gujarat dated 29th April, 1988. To appreciate the questions involved herein, few facts have to be emphasized. In 1978, the State Government of Gujarat undertook a scheme known as 'Bhavnagar City Water Supply Scheme '. The 322 Scheme was divided into two parts: (i) Raising Main; and (ii) Gravity Main. Raising Main was divided into two sec tions, namely, 10.1 k.ms. and 7.4 k.ms. steel welded pipe line. On or about 15/16th December, 1978, the State Govern ment issued letter of approval to the bargain between the parties on certain terms. On 12th January, 1979, two contracts were awarded to the respondent No. 1 for Rs. 1,29,39,691 and Rs.94,30,435 which provided the dates of completion as February 1979 and the 3rd week of September, 1980 respectively. On 29th March, 1981 the respondent No. 1 filed the Civil Suit No. 588 of 1981 in the City Civil Court with regard to measurements recorded by the Deputy Engineer and alleged underpayments. On 4th June, 1981, the respondent No. 1 gave notice to the State Government and the petitioner Board requesting for reference of the alleged disputes to the arbitrator under clause 30 of the agreement. On or about 8th July, 198 1 the respondent No. 1 gave notice under Section 8 of the Arbitra tion Act, 1940 (hereinafter called 'the Act ') calling upon the petitioner to concur in the appointment of one Shri G.G. Vaidhya. On 21st July, 1981, he withdrew the Civil Suit No. 588 of 1981. On 6th August, 1981, the respondent No. 1 filed Civil Miscellaneous Application No. 231 of 1981 in the Court of Civil Judge, (SD), Ahmedabad for appointment of the said Shri G.G. Vaidhya as the sole arbitrator. On 7th November 1981, the petitioner filed reply contesting the arbitrabili ty of the various claims made in the application and inter alia contending that the application was not maintainable. On or about 15th December, 1981 the learned Civil Judge appointed Shri G.G. Vaidhya as the sole arbitrator with a direction that he should first decide as to which disputes fell within the purview of clause 30 of the agreement. On 5th May, 1982, Shri Vaidhya gave an interim award holding that the claims at section Nos. 10(g) and 10(1) only were not arbitrable and further that the other claims were arbitra ble. A petition was filed in High Court which was dismissed and then there was an application to this Court under Arti cle 136 of the Constitution which was disposed of by consent on 30th November, 1983. The said order inter alia provided that the parties had agreed to settle the matter amicably and one Shri Mohanbhai D. Patel, Retired Secretary, Public Works Department, Gujarat and at that time Sitting Member of the petitioner Board was appointed as the sole arbitrator in place of Shri Vaidhya to decide all disputes between the parties relating to the following works: "i) providing, fabricating, laying and joint ing 1000 mm dia. 10,000 M long steel welded pipe line under Bhavnagar 323 Emergency Water Supply Scheme based on She trunji Dam Agreement No. 5/2 1 of 1978 79. ii) providing, fabricating laying and jointing 1000 mm dia 7,400 M long steel welded pipe line under Bhavnagar Emergency Water Supply Scheme based on Shetrunji Dam Agreement No. B 2/2 of 1978 79. " It was further provided that all disputes concerning the said two works in question should be referred to the sole arbitrator and the Board could also be entitled to put counter claims before him. The consent terms also provided the following terms: "That the arbitration proceedings shall be started de novo meaning thereby that the earlier appointment and proceedings before the Sole Arbitrator Shit G.G. Vaidhya shall be inoperative and void. That the Board shall have a right to agitate all points both in fact and in law before the Sole Arbitrator as per the terms and condi tions of the contract including the question of arbitrability within the meaning of clause 30 of the contract. Both parties shall have a right to be repre sented by an Advocate and/or their representa tives. The expenses of arbitration shall be borne by .both the parties as per rules of Govern ment in this behalf. That both parties shall agree to extend time as and when necessary for competition of arbitration proceedings. That a formal agreement for arbitration shall be executed between the parties defining the scope of Arbitration. _ That the provisions of the Indian shall apply to the proceedings before this Sole Arbitrator." On 31st March, 1984, Shri M.D. Patel was appointed as the sole arbitrator jointly by the parties, and on 2nd April, 1984 he accepted his appointment and directed the parties to file their claim statements within 15 days. Thereafter, the respondent No. 1 filed claim to the tune of Rs.4,92,20,683 and a counter claim to the extent of 324 Rs.26,87,217.40. On 22nd August, 1984 the parties appeared before the arbitrator after filing of claims and counter claims. On 1st October, 1984 the petitioner filed an application before the arbitrator praying that preliminary issues be raised and decided first as to which of the disputes were arbitrable under clause 30 Of the agreement. On 8th July, 1985, a lumpsum award was made by the arbitrator, and on 19th July, 1985 the parties were informed about the signing of the award. On the same day the award filed by the re spondent No.1 's Advocate which was dated 8.7.1985 was regis tered as Civil Miscellaneous Application No. 144/85. There after, notice was issued on the same day and served on the petitioner also on the same day. The petitioner filed objec tions to the award and the Objection Petition was registered as Civil Miscellaneous Application No. 158/85. Reply to the objections was filed by the respondent No. 1. On 17th June, 1986, however, the learned Civil Judge directed that decree be passed in terms of the award. Two appeals were filed by the petitioner. On the 29th April, 1988 the High Court by a judgment dismissed the petition challenging the award and upheld the award. Aggrieved thereby, the petitioner has moved this Court as mentioned hereinbefore. Various grounds were urged in support of this applica tion. It was contended, firstly, that there was an error apparent on the face of the award and that the award was bad. It was submitted that the arbitrator had committed an error of law in not deciding or disclosing his mind about the arbitrability of claims or counter claims, more so when the Board 's application for deciding the same, was pending before the arbitrator. Before the learned Trial Judge the Board had submitted an application to the arbitrator seeking to raise a preliminary issue regarding arbitrability of the claims. As noted by the learned Trial Judge, it appears that the third meeting specifically mentioned that the claims were placed before the arbitrator and their contentions about the arbitrability were considered. So, these issues were gone into and it appears that the parties had agreed and proceeded on the basis that the claims may be examined and it was not necessary to decide preissue of arbitrability and it was agreed that aH the claims be decided claimwise. So, it cannot be said that the arbitrator had acted arbi trarily in discussing all the questions raised before him without first deciding the question of arbitrability or non arbitrability of an issue as such. The Court in its judgment has discussed the conduct of the parties. It appears that the Court found that the par ties themselves had 325 agreed that the arbitrator should decide claimwise and on merit. The Court so found, and in or opinion, rightly. The arbitrator so proceeded. There was no error committed by the arbitrator in so conducting himself. It was, secondly, contended that out of the numerous claims before the arbi trator, some of which, according to the petitioner, were ex facie not arbitrable and some were withdrawn including the claims for interest of Rs.54,61,073 and compound interest of Rs.82,26,039. and in the award no basis or indication was given as to which claim was rejected and further of the amount which was awarded as claim and what amount towards element of interest. It was, thirdly, contended that there was an error apparent on the face of the award inasmuch as the basis on which interest has been awarded has not been disclosed and whether the interest has been awarded from the date of the institution of the proceedings. It was, fourth ly, contended that granting of interest pendente lite was contrary to the decision of this Court. It was, lastly, contended that non speaking award had resulted in great prejudice inasmuch as against the claim of Rs. 1 lakh, Rs.57 lakhs have been awarded. The scope and extent of examination by the Court of the award made by an arbitrator has been laid down in various decisions. It has to be noted that there is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards between the parties is pending adjudication by the Constitution bench of this Court. Even, however, if it be held that it is obligatory for the arbi trator to state reasons, it is not obligatory to give any detailed judgment. An award of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof. Short intelligible indications of the grounds should be discernible to find out the mind of the arbitrator for his action even if it be enjoined that in all cases of award by any arbitrator reasons have to be stated. The reasons should not only be intelligible but should also deal either expressly or impliedly with the substantial points that have been raised. Even in a case where the arbitrator has to state reasons, the sufficiency of the reasons depends upon the facts and the circumstances of the case. The Court, however, does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous. See the observations of this Court in Indian Oil Corporation Ltd. vs Indian Carbon Ltd.; , 326 In the instant case, the arbitrator by virtue of the terms mentioned in the order of this Court had to decide which of the disputes were arbitrable and which were not. It is true that the arbitrator has not specifically stated in the award that he had to decide the question of arbitrabili ty. The arbitrator has rested by stating that he had heard the parties on the point of arbitrability of the claim and the ,counter claim. He has further stated that after 'con sidering all the above aspects ' and 'the question of arbi trability or non arbitrability ' he had made the award on certain aspects. Reading the award along with the preamble, it appears clear that the arbitrator had decided the arbi trability and the amount he has awarded was on the points which were arbitrable. The contention that the arbitrator had not decided the question of arbitrability as a prelimi nary issue cannot also be sustained. A reference to the arbitrator 's proceedings which were discussed in detail by the High Court in the judgment under appeal reveal that the procedure adopted by the arbitrator, i.e., that he will finally decide the matters, indicated that the parties had agreed to and the arbitrator had proceeded with the consent of the parties in deciding the issues before him and in not deciding the question of arbitrability as a separate, dis tinct and preliminary issue. The arbitrator has made his award beating all the aspects including the question of arbitrability in mind. It was contended before us that the arbitrator has made a non speaking award. It was obliged to make a speaking award, it was submitted by terms of the order of this Court. We cannot sustain this submission because it is not obligatory as yet for the arbitrator to give reasons in his decision. The arbitrator, however, has in this case indicated his mind. It appears to us that the point that the non speaking award is per se bad was not agitated before the High Court. We come to that conclusion from the perusal of the judgment under appeal though, howev er, this point has not been taken in the appellant 's appeal. It is one thing to say that an award is unintelligible and is another to say that the award was bad because it was a non speaking award. The point taken was that the award was unintelligible and not that it was non speaking. But there was nothing unintelligible about the award. We were invited to refer the matter to the Constitution Bench and await the disposal of this point by the Constitu tion Bench. The contract in this case was entered into in 1978. The proceedings for initiation of arbitration started in 1981. The matter had come up to this Court before which resulted in the order dated 30th November, 1983. Pursuant thereto, the award has been made and no grounds specifically were urged though they were taken in the appeal in the High 327 Court in the arguments before the High Court about the award being bad because it is non speaking. In those circum stances, it will not be in consonance with justice for us to refer the matter to the Constitution Bench or to await the disposal of the point by the Constitution Bench. It was further submitted before us that the award was unreasonable and that the arbitrator had awarded a large amount to money but the original claim was not so large and as such the award was disproportionate. This contention, as it is, it appears from the judgment of the High Court, was not urged and canvassed before the High Court. The claim and the counter claim together in its totality, in our opinion, does not make the award amount disproportionate. Reasonableness as such of an award unless the award is per se preposterous or absurd is not a matter for the court to consider. Ap praisement of evidence by the arbitrator is ordinarily not a matter for the court. It is difficult to give an exact definition of the word 'reasonable '. Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks. The word 'reasonable ' has in law prima facie meaning of reasona ble in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know. See the observations on this point in Municipal Corporation of Delhi vs M/s. Jagan Nath Ashok Kumar & Anr., ; Judged by the aforesaid yardstick the award cannot be condemned as unreasonable. There is, however, one infirmity in the award which is apparent on the face of the award which in the interest of justice as the law now stands declared by this Court, we should correct, viz., the question of interest pendente lite. The right to get interest without the intervention of the Court and the powers of the court to grant interest on judgment have been examined by this Court in Executive Engineer (Irrigation) Balimela and Ors. vs Abhaduta Jena & Ors., [1988] 1 SCC 418 which observations were also followed by this Court in State of Orissa & Ors. vs Construction India, [1987] Supp. SCC 709. In accordance with the princi ples stated therein and the facts in this case, it appears that the principal amount awarded is Rs.57,65,273. This is confirmed. In this case, 2nd April, 1984 is the date of the reference to arbitration, on 22nd August, 1984 the arbitra tor entered upon the reference. 8th July, 1985 is the date of the award and 19th July, 1985, is the date of the publi cation of the award. The interest awarded, in the instant case, covers three periods: (i) 6th August, 1981 to 21st August, 1984 prior to the commencement of the arbitration proceedings; (ii) 22nd August, 1984 to 19th July, 328 1985 pendente lite; and (iii) 19th July, 1985 to 17th June, 1986 (date of award to date of decree). Having regard to the position in law emerging from the decision of this Court in Executive Engineer (Irrigation) Balimela & Ors. (supra) and section 29 of the and section 34 of the Code of Civil Procedure, we would modify the grant of interest in this case. The arbi trator has directed interest to be paid at 17% per annum from 6.8.1981 upto the date of decree viz., 17.6.1986. Since in this case the reference to arbitration was made after the commencement of the , the arbitrator under section 3(1)(a) of the said Act was entitled to award inter est from 6.8.1981 till 21.8.1984 in view of this Court 's decision in Abhaduta Jena 's case (supra). In the light of the same decision, he could not have awarded interest for the period from 22.8.1984 till the date of the publication of the award viz. 19.7. So far as interest for the period from the date of the award (19.7.1985) till the date of the decree is concerned, the question was not specifical ly considered in Abhaduta Jena 's case (supra) but special leave had been refused against the order in so far as it allowed interest for this period. We think interest should be allowed for this period, on the principle that this Court can, once proceedings under sections 15 to 17 are initiated, grant interest pending the litigation before it, i.e., from the date of the award to the date of the decree. It may be doubtful whether this can be done in cases arising before the in view of the restricted scope of section 29 of the . But there can be no doubt about the court 's power to grant this interest in cases governed by the as section 3(1)(a) which was applied by Abhaduta Jena to arbitrators will equally apply to enable this Court to do this in these proceedings. In this connection, it is necessary to consider whether the date of commencement of the arbitration proceedings should be taken as the date of the reference or the date on which the arbitrator entered upon the reference as the date of the calculation of interest. In this case, the proceed ings commenced on 2nd April, 1984 and the arbitrator entered upon the reference on 22nd August, 1984. Having regard to the facts and the circumstances of the case, it is neces sary, in our opinion, to take 22nd August, 1984 as the date. It is also necessary to consider whether the date of award should be taken as the date of its making or its publica tion. The award was made on 8th July, 1985 and it was pub lished on 19th July, 1985, and, therefore, the latter date would be taken as the date of the award. 329 We would, however, delete the interest awarded by the arbitrator for the period from 22.8.1984 till the date of the award and confine the interest on the principal sum of Rs.57,65,273 to interest at 9 per cent from 6.8.1981 till 21.8.1984 (which has been worked out at Rs.29,82,443). However, in exercise of our powers under section 3 of the and section 29 of the , we direct that the above principal sum or the unpaid part thereof should carry interest at the same rate from the date of the award (19.7.1985) till the date of actual pay ment. The appeals are disposed of in the above terms. N.V.K. Appeals disposed of.

In 1978 the State Government undertook the construction of the 'Bhavnagar City Water Supply Scheme ', and on 12th January, 1979, two contracts in respect thereof were awarded to respondent No. 1. On 29th March, 1981, respondent No. 1 filed a civil suit with regard to measurements recorded by the Deputy Engineer and alleged underpayments. On 14th June, 1981, he gave notice to the State Government and the peti tioner Board requesting for reference of the disputes to an arbitrator as provided for under clause 30 of the Agreement, and gave notice under section 8 of the calling upon the petitioner to concur in the appointment of one Shri G.G. Vaidhya. On 6th August, 1981 respondent No. 1 filed a civil miscellaneous application for appointment of the said Shri G.G. Vaidhya as the sole arbitrator after withdrawing the civil suit. The petitioner contended that the application was not maintainable. The Civil Judge howev er appointed the said Shri G.G. Vaidhya as sole arbitrator. The arbitrator gave an interim award holding that only two claims were not arbitrable and that the other claims were arbitrable. The High Court having dismissed the appeal, a further appeal was filed in this Court. This appeal was, however, disposed of by con 319 sent on 30th November, 1983 to the effect that a retired Secretary, Public Department who was at that time sitting member of the petitioner Board be appointed as the sole arbitrator to decide all the disputes between the parties. On 8th July, 1985, this sole arbitrator made a lump sum award. The Civil Judge directed that the decree be passed in terms of the award, rejecting the objections of the peti tioner. The High Court by a common judgment dismissed the two appeals of the petitioner challenging the award. In the appeals to this Court by special leave, it was contended: (1) that the arbitrator had committed an error of law in not deciding or disclosing his mind about the arbi trability of the claim or counterclaims, (2) in the award no basis or indication was given as to which claim was reject ed, and further what amount was awarded as claim and what amount towards element of interest, (3) there was an error apparent on the face of the award inasmuch as the basis on which interest had been awarded had not been disclosed and whether the interest has been awarded from the date of the institution of the proceedings, (4) that the granting of interest pendente lite was contrary to the decision of this Court and (5) that the non speaking award had resulted in great prejudice to the petitioner inasmuch as against the claim of Rs.1 lakh, Rs.57 lakhs had been awarded. Disposing of the appeals, the Court, HELD: 1(a) There is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards is pending adjudication by the Constitution Bench of this Court. Even if it be held that it is obligatory for the arbitrator to state reasons, it is not obligatory to give any detailed judgment. [325E] 1(b) An award Of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof. Short intelligible indications of the grounds shall be discernible to find out the mind of the arbitrator for his action. [325F] l(c) The Court does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous. [325G H] 320 Indian Oil Corporation Ltd. vs Indian Corbon Ltd., ; , referred to. l(d) It is one thing to say that an award is unintelli gible and it is another thing to say that the award was bad because it was a nonspeaking award. [326F] In the instant case, the arbitrator, in pursuance to the order of this Court had to decide which of the disputes were arbitrable and which were not. Reading the award along with the preamble, it appears clear that the arbitrator had decided the arbitrability and the amount which he has award ed was on the points which were arbitrable. In such circum stances it will not be in consonance with justice to refer the matter to the Constitution Bench or to await the dispos al of the point by the Constitution Bench. [326B, G] 2. Reasonableness as such of an award unless per se preposterous or absurd is not a matter for the Court to consider. Appraisement of evidence by the arbitrator is ordinarily not a matter for the Court. It is difficult to give an exact definition of the word 'reasonable '. The word 'reasonable ' has in law, prima facie meaning of reasonable in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know. The award in the instant case cannot be condemned as unreasonable. [327C D] Municipal Corporation of Delhi vs M/s. Jagan Nath Ashok Kumar & Anr., ; referred to. The grant of interest pendente lite is however one infirmity in. the award which is apparent on the face of the award which in the interest of justice should be corrected. [327E] Executive Engineer (Irrigation) Balimela and Ors. vs Abhaduta Jena & Ors., [1988] 1 SCC 418 and State of Orissa & Ors. vs Construction India, [1987] Supp. SCC 709 referred to. In the instant case, April 2, 1984 is the date of the reference to arbitration, on August 22, 1984 the arbitrator entered upon the reference. July 8, 1985 is the date of the award and July 19, 1985 the date of publication of the award. The latter date should be taken as the date of the award. Since the reference to arbitration was made after the commencement of the the arbitrator under section 3(1)(a) of the said Act was entitled to award inter est from August 6, 321 1981 till August 21, 1984. He could not have awarded inter est for the period from August 22, 1984 till the date of publication of the award viz. July 19, 1985. [327G H; 328A] 4. So far as interest for the period from the date of the award (July 19, 1985) till the date of the decree is concerned, interest should be allowed for this period, on the principle that this Court can, once proceeding under sections 15 to 17 are initiated, grant interest pending the litigation before it, i.e. from the date of the award to the date of the decree. It may be doubtful whether this can be done ln cases arising before the in view of the restricted scope of section 29 of the . [328D E] 5. The interest awarded by the arbitrator for the period from August 22, 1984 till the date of award is deleted; and the interest on the principal sum is confined to 9% from August 6, 1981 till August 21, 1984. However, exercising powers under section 3 of the and section 29 of the , the Court directed that the principal sum or unpaid part thereof should carry interest at the same rate from the date of the award (July 19, 1985) till the date of actual payment. [329A B]

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Appeal No. 147 of 1958. Appeal from the judgment and decree dated January 4, 1955, of the Allahabad High Court in Special Appeal No. 36 of 1955. A. V. Viswanatha Sastri, C. P. Lal and G. C. Mathur, for the appellants. K. B. Bagchi, section N. Mukherjee for P. K. Bose, for the respondent No. 1. 1961. April 18. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by certificate raises the question of construction of a will executed by one Pyare Mohan Bannerji. 29 The facts giving rise to this appeal lie in a small compass and they are as follows: Pyare Mohan Bannerji died in October 1874 leaving behind him considerable property. He executed a will dated February 12, 1874, making various bequests, including the payment of certain amounts to the first respondent, Uttar para Hitakari Sabha. After his death, his widow held the property for life till her death on March 25, 1945. Thereafter, the property went into the possession of the appellants, who are the heirs at law of the testator. On March 17, 1950, the first respondent, Uttarpara Hitakari Sabha (hereinafter referred to as the Sabha) filed an application in the High Court of Judicature at Allahabad under section 10 of the Official Trustees Act (Act II of 1913) claiming that the late Pyare Mohan Bannerji had created a trust by his will and praying that an official trustee be appointed to be the trustee of the properties of the trust. This was registered as Testamentary Case No. 9 of 1950. The appellants contested the claim of the Sabha and contended, inter alia, that no trust had been created by the testator and that the appellants, being the legal heirs of the testator, were entitled to succeed to the entire pro perty left by him. Mootham, J., as he then was, who heard the said case at the first instance, held that by his last will Pyare Mohan Bannerji created a trust in favour of the Sabha, and appointed the Official Trustee a trustee of all the properties left by Pyare Mohan Bannerji specified in Schedule B to the petition. On appeal, a division bench of the said High Court, consisting of Malik, C. J., and Agarwala, J., agreed with Mootham, C. J., that the will created a trust in favour of the Sabha; but the learned Judges held that the Sabha was entitled only to a half share in the cash and properties pertaining to the estate of the said testator, and appointed the Official Trustee as trustee only in regard to the said share: on that basis, suitable directions were given. The first respondent accepted that position, but the appellants, i.e., the persons claiming to be the heirs at law, preferred the present appeal against the judgment of the High Court in so far as it went against them. 30 Learned counsel for the appellants contends that under the will not a trust but only a charge was created in favour of the first respondent and, therefore, the first respondent could not invoke in aid the provisions of section 10 of the Act. Section 10 of the Act reads: "(1) If any property is subject to a trust other than a trust which the Official Trustee is prohibited from accepting under the provisions of this Act, and there is no trustee within the local limits of the ordinary or extraordinary original civil jurisdiction of the High Court willing or capable to act in the trust, the High Court may on application make an order for the appointment of the Official Trustee by that name with his consent to be the trustee of such property. " It is common case that if the will created a trust, it would not fall under any one of the exceptions mentioned in the section. Therefore, the only question is whether the will created a trust or a charge in favour of the first respondent. The concepts of trust and charge are well defined. A trust is "an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another, or of another and the owner. " Where property "of one person is made security for the payment of money to another, the latter person is said to have a charge on the property. " The boundaries between the two concepts are well demarcated; but, more often than not, courts found considerable difficulty in construing a particular document to place it in one or other of the categories. The same difficulty was encountered even in England. The test laid down for marking out the one from the other by some of the authoritative text books on the subject may be useful in construing the will in question. In Halsbury 's Laws of England, 2nd Edn. 33 (Lord Hailsham), the distinction between the two concepts has been stated thus at p. 98: "Where property is given to a person upon condition that he does a certain act or confers a 31 certain benefit on another person, the condition may constitutes a trust if it is directed to be, or must necessarily be, performed and satisfied out of the property, and consequently imposes a fiduciary obliga tion in respect of the property; but it will not be construed as a trust if this is not the case and the condition merely imposes a collateral duty. Similarly, a devise of land upon condition of paying a sum of money or an annuity does not create a trust, though it may create a charge. A charge does not in itself create a trust, but it may do so if it is coupled with other trusts or the context, otherwise so requires. Conversely a trust may amount merely to a charge." Lord St. Leonards points out (Sugden on Powers, 7th Edn., p. 122) that, "What by the old law was deemed a devise upon condition, would now, perhaps, in almost every case be construed as a devise in fee upon trust, and by this construction, instead of the heir taking advantage of the condition broken, the cestui que trust can compel an observance of the trust by suit in equity. " In The Commissioners of Charitable Donations and Bequests vs Wybrants (1) a testator had devised lands to trustees and their heirs upon trust to grant and convey the same to the use of John Wybrants for life 'subject nevertheless to and charged and chargeable with ' four annuities, three of which were to be paid to charitable institutions and the fourth to the poor of a parish. In construing that provision, the Lord Chancellor said at p. 285: "It certainly is not necessary to use the word 'trust ' in order to create an express trust. I do not intend to lay it down that every charge creates a trust, although it imposes a burden; but a charge may create a trust; depending on the nature of the charge. In Bailey vs Ekins (2) Lord Elton said he was confident Lord Thurlow 's opinion was that a charge (of debts) is a devise of the estate, in substance and effect, pro tanto upon trust to pay the (1) (1845) 69 R.R. 278. (2) , 323. 32 debts:and this is supported by the current of authorities. The principle is no less powerful in the case of charities, particularly where the charity is to a fluctuating, uncertain body, like the poor of a parish. The testator gives the estate to one, subject to this charge. Who is to pay the annuities but the person who is liable to the burden: and this, in the case of a charity, impresses him with the character of a trustee for the charity. By the ancient rule of equity, no one could acquire an estate, with notice of a charitable use, without being liable to it. " The fact that a beneficial interest is also created in favour of the trustees in respect of the property subject to a trust does not make the transaction any the less a trust. The law permits a person to bequeath his property to another subject to a trust in respect of a portion of the income in favour of a third party or a charity. On this subject in Lewin on Trusts, it is stated at P. 133: "Upon this subject a distinction must be observed between a devise to a person for a particular purpose with no intention of conferring the beneficial interest, and a devise with the view of conferring the beneficial interest, but subject to a particular injunction. " So too, Tudor in his book on Charities, 5th Edn., says much to the same effect at p. 52: "A charitable trust may be made to attach to a part of the property only, or it may be limited to particular payments directed to be made out of the income, as in the numerous cases where property has been given to a college, or municipal corporation, or city guild, upon trust or to the intent that certain specified charitable payments shall be made or subject to or charged with certain charitable payments. In these cases, as will be seen, the donees as a rule take beneficially, subject only to the specified charitable payments. " The said tests may afford a guide to ascertain whether a document creates a charge or a trust; but they are subject to the fundamental rule of construction that a trust may be created in language sufficient 33 to show the intention, and no technical words are necessary; the said intention must be gathered from a fair reading of the provisions of the document. In the light of the foregoing discussion, let us look at the provisions of the will to ascertain the express intention of the testator. At the time the testator executed the will he had a wife, and a nephew by name Sital Prasad Chatterji, but no children. He had many other close relatives and dependents. He was also charitably disposed. He executed the will making suitable provision for his wife, nephew, relatives and for charities. He could carry out his intention in two ways: he could bequeath his entire property to his widow and nephew subject to a fiduciary obligation imposed on them to pay certain amounts to the relatives and the charities; or, he could give the entire property to his widow and nephew subject to the payment of certain amounts charged on the said property. The question is, what did he intend to do by this document? He did not use either the word "trust" or "charge" and, therefore, we must gather the intention only from the circumstances obtaining at the time the document was executed and the recitals found therein. Under the will the testator made the following bequests depending upon different contingencies: Firstly, the property was given to his wife and nephew in equal shares for their lifetime subject to the payment of all his debts, annuities and charges; it is also provided therein for the sale of a standing jungle in Doomree and Sukhiae in the Gorakhpore District for the purpose of discharging the debts. The second contingency related to the event of the testator and his nephew begetting son or sons; in that event, after the lifetime of his wife and nephew the son or sons of his nephew would get one fourth share subject to their paying one fourth of the annuities and charges, and whole of the remainder was given to his son or sons subject to their paying the remaining three fourths of the annuities and charges. The third contingency related to the testator getting no children, but his nephew having sons; in that event, after the 34 death of his wife and nephew, the whole of his property would go to the said son or sons subject to the said annuities and charges. In the event of the testator having children and the nephew having no son or sons, after the death of his wife and nephew, the property would go to his children subject to the payment of annuities and charges mentioned in the first portion of the will. The last contingency contemplated was that neither the testator nor his nephew had any issue; in that event the whole of the property was given to his legal heirs subject to the payment of annuities and charges. The quantum of bequests made in favour of the Sabha expanded from contingency to contingency. During the lifetime of the nephew and the widow, the said Sabha got rupees fifteen per month. In the event of either the testator or his nephew not having any children, the direction was that the said Sabha should get rupees fifty per month. In that contingency not only the said Sabha but any other institution which took its place ' would get the said amount. It was also mentioned that the amount should be given only to be spent in paying the school fees of indigent boys of Coterie reading in the Ooterpara School and whose parents or guardians might not have the means to pay their school fees. On the happening of the last contingency, that is, both the testator and his nephew dying without children, his legal heirs took the property subject to the payment of half of the net income to the said Sabha or any institution which might take its place. The said amount was directed to be paid thus: "Rupees fifty per month in payment of schooling fees of indigent boys of Ooterpara reading in the Ooterpara school and the balance, if any, as scholarships to persons resident of Ooterpara or failing such of Bengal who after passing the entrance examination of the Calcutta University may wish to learn practical agriculture or Chemistry or Mechanics. " At present it is common case that all the relatives for whom provision was made in the will passed away, that there are no daughters of testator 's nephew and that the Sabha is the only institution entitled to receive the 35 amounts provided for under the will. We are, therefore, only concerned with the question whether a trust was created in favour of the first respondent or not, on the happening of the last contingency, namely, the testator leaving no children and his nephew no sons. On the happening of that event the property passed to his legal heirs. When that stage was reached the testator was more interested in charities than to make provision for persons for whom he had love and affection. The amount was payable to the Sabha or any other institution which might take its place. Further, there was a direction that the said amount should be spent towards specified charitable purposes. The direction was couched in an elastic form to prevent the charitable object being defeated. The charity was conceived to be a permanent one and it was necessary that the regular payment of the amount was secured. It is, therefore, clear that under the will, on the happening of the said contingency, the testator clearly intended that his legal heirs should regularly pay half the net income to the first respondent so that the specified charities may be carried out perpetually. That object would not be achieved if the first respondent was placed in the position of a creditor with a charge on the property with an off chance of the charge being defeated by a bonafide purchaser for value of the property bequeathed to the legal heirs. Learned counsel emphasized the fact that under the will the first respondent had to spend the moneys for specified objects and not the legal heirs and contended that the first respondent might be in the position of a trustee in respect of the amounts received from the legal heirs, but the legal heirs were not trustees in respect of the charity. The question is not whether the legal heirs, or the first respondent, are the trustees in respect of the fund after it reached the hands of the first respondent; but the question is whether the legal heirs, as owners of the property, were under a fiduciary obligation to pay the said amount for charitable purposes. Having regard to the circumstances visualized at the time the last contingency happened, 36 the fluctuating amount the donees had to pay, the permanent nature of the charity and the declared intention of the testator to pay as much as half the net income towards the carrying out of the said charitable object, we hold that the legal heirs took the property of the testator subject to a trust rather than a charge. No other question arises in this appeal. For the foregoing reasons, we hold that the conclusion arrived at by the High Court is correct. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

One P died in 1874 leaving considerable property. He also left a will which provided for several contingencies; the first respondent was given an interest under each contingency which was enlarged from contingency to contingency. Under the last contingency which happened the entire property was given to the heirs with a direction that half of the income of the property be given to the first respondent. The heirs contended that the direction merely created a charge and not a trust of half of the property. Held, that the direction created a trust rather than a charge. The charity was conceived to be a permanent one and it was necessary to secure regular payments to it. The testator clearly intended that the heirs should regularly pay half the income to the first respondent so that the specified charities may be carried on perpetually. This object could not be achieved if the direction merely created a charge and not a trust. The Commissioners of Charitable Donations and Bequests vs Wybrants , (1845) 69 R. R. 278 and Bailey vs Ekins, 7 Ves. 319, referred to.

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ivil Appeal Nos. 446 449 of 1976. Appeals by Special Leave from the judgment and Orders dated. 14 1338SCI/76 1004 7 4 1969 and 25 1 1972 of the Bombay High Court (Nagpur Bench) In S.T.R. Nos. 17 to 20 of 1964 and CIVIL APPEAL NOS. 450453 OF 1976. V. p. Raman, Addl. General for India, S.B. Wad and M. N Shroff for Appellants in CAs. 450 to 453/76. G.L. Sanghi, A. section Bobde, M.L. Vaidya, V.A. Bobde, A. G. Meneses, J.B. Dadachanji, K.J. John, O.C. Mathur and Ravind er Narain for the Respondents in CAs. 446 449/76 and Appel lants in (2. 450 453/76 The Judgment of the Court was delivered by BEG, J. The eight appeals before us by special leave arise out of four Sale "Tax References, under Section 23(1) of the Central Provinces and Berar Sales Tax Act, 1947, (hereinafter referred to as 'the Act '). Five of these were decided by a Division Bench of the Bombay High Court. As it answered the main question determining liabili ty to pay the sales tax under the Act against the State, there are four appeals against it by the State. The sixth question, which was one of law only, was referred by the Division Bench to a Full Bench, and, this was determined in favour of the State. There are, therefore, four appeals by the assessee against the Full Bench decision. M/s. Central Provinces Manganese Ore Co. Ltd., the assessee, has its Head Office in London. It carries on business on an extensive scale. It owns 22 manganese ore mines in Madhya Pradesh from where manganese ore, after being excavated, is sent mostly abroad through different ports. The Company is a registered dealer under the Act. It used to enter into contracts at places outside Madhya Pradesh for the despatch of what came to be known, in the special parlance of this company 's business, as "Oriental Mixture" But the contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures. The term "Oriental Mixture" was evidently employed by the Company itself to describe a particular type of conglomerate which the unloading at one place of Various types of manganese ore produced. The required average consistency or strength of manganese ore specified in the contracts, which did not contain a reference to any "Oriental Mixture", was said to be obtained in the course of this mechanical process of transportation when various grades of manganese ore were heaped together. These grades of manganese ore were trans ported, in railway wagons, from one or more mines, and, it appears that the order in which trucks were.loaded in goods trains and unloaded was also so,arranged that the mixture came into existence, as described above, in the mere process of unloading at the port. 1005 But, this procedure did not seem to involve a process of "Manufacture", as that term is ordinarily understood, to which the assessee could be said to have subjected its manganese ore. The case of the assessee company was that the "Oriental Mixture" as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that it could not be taxed as "goods in exist ence" in Madhya Pradesh at the time when ,contracts relating to these goods were made. Other questions ,appear to be subsidiary. Nevertheless; we have to consider them 'before coming to the crucial question which is: Is the process described above one of "manufacture" so that a new kind of goods, known as "Oriental Mixture", came into existence at the port where manganese ore trucks were unloaded? As the High Court pointed out, the periods involved in the four references before it were not governed by the provisions of the Constitution. Reference No. 17 of 1964 for the period 1st January, 1947 30th September, 1947. Reference No. 18 of 1964 for the period 1st October, 1947 to 31st December, 1948. Reference No. 19 of 1964 for the period 1st January, 1949 to 31st December, 1949. Reference No. 20 of 1964 for the period 1st January, 1950 to 25th January, 1950. We, therefore, agree with the High Court 's view that Article 286 of the Constitution, which is not retrospective in operation, could not help the assessee merely because it was there at the time of assessment. The next question to be considered, which was referred to the Full Bench, flows from Explanation (II) to Section 2(g) of the Act which was amended by the C.P. & Berar Sale Tax (Amendment) Act No. XVI of 1949, came into force on 11th April, 1949. Hence, the law, as found after the amending Act, could apply, .if valid, only to the last two refer ences. But, the question which arose, on the assumption that the amendment was ineffective, was whether the unamended law could be applied at all after the purported amendment. Section 2(g) of the Act, with its two explanations, before it was amended, may be reproduced here in toto. It reads as follows: "2(g) 'sale ' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable considera tion, 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 (I): A transfer of goods on hire purchase or other installment system of pay ment ' shall, notwithstanding 1006 that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale; Explanation (11): 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 define 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". Section 2 of the Amending Act of 1949 provid ed: 2. In section 2 of the Central Provinces and Berar Sales Tax Act 1947 (hereinafter referred to as the said Act), (a) in clause (g) for Explanation (I1) the following shall be substituted : Explanation (I1) : Notwithstanding anything to the contrary in the Indian , the sale or purchase of any goods shall be deemed for the purposes of this Act, to have taken place in this province, wherever the contract of sale or purchase might have been made "(a) if the goods were actually in this province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by descrip tion, then, if the goods are actually produced or found in this Province at any time after the contract of sale or purchase in respect thereof was made". The submission made on behalf of the assessee, which was accepted by the High Court was that, as the amendment did not receive the assent of the Governor General under Section 107 of the Govt. of India Act, it was void. It was, howev er, also urged, on behalf of the assessee, that a repeal of the previously existing section did not require the assent of the Governor General at all. The argument was that the original provision was validly repealed, but, as no substi tution of the new provision could take place, because the assent of the Governor General was not obtained, only the repeal survived. The result of accepting such a submission would be that the substitution will have to be split up into two distinct enactments; firstly, a repeal of the original section 2(g) of the Act; and, secondly, the substitution of the new provision for the repealed one. The assessee 's argument was that two processes, one of repeal and another of substitution, are necessarily implied in such an amend ment as the one before us. It was urged that both had received the assent of the Governor, but, since the substi tuted provision alone required the assent of the Governor General, which was not obtained, a repeal, which was assent ed to by the Governor, stood on its own separate footing. Thus, the result was said to be a repeal simpliciter without the enactment of the fresh provision meant to replace it. 1007 It was submitted that the High Court, after finding the substituted provisions of section 2(g) of the Act to be invalid, had erred in holding that the repeal was also ineffective. It was contended that such a view resulted in attributing to the legislature an intention contrary to that which it had unmistakably expressed by repealing the una mended provision. It was urged that the repeal, which was clearly intended, must be held to be valid. assessment periods. Of course, this argument assumes that the repeal and the new ' enactment are separate. In Shriram Gulabdas vs Board of Revenue, Madhya Pradesh & Ant. the province, is not ultra vires the Provision Legislature. We must make it clear that our answer to this question is in the affirmative, free from considerations arising under Article 286. We have shown that the necessary power to make the unamended Explanation did exist in the State Legisla ture; but we have also made it clear that by virtue ' of Article 286 the Explanation can no longer be enforced because under the present Constitution the sales tax can only be col lected at the market and where the goods are delivered for consumption. We may also state that the amended Explanation II is not validly enacted because it makes drastic changes in the rules as found in the without obtaining the ' assent of the Governor General. The effect of the amended Explanation going out would be to rehabilitate the old Explanation as it existed because the amendment being unconstitutional will fail to work any change in the law (See the opinion given by one of us, Hidayatullah, J., in Laxmibai vs The State (I.L.R. , 608, 610 (F.B.)". No question relating to the enforcement of the Sales tax by any collection to be made after the Constitution came into force was raised the cases before us. This was held to be the correct position in the case of Shriram Gulabdas (Supra). It was also clearly held there that the 'result of the invalidity of the amended explana tion was to leave the law unaltered as it stood before the amendment. We approve of this pronouncement made long ago on this very question. It was urged on behalf of the assessee that the case of Shriram Gulabdas (supra) contained what was merely an obser vation with regard the "rehabilitation" of the preexisting law as that question was no directly under consideration there It was also submitted that this observation must be deemed to have been over ruled by subsequent pronouncements of this Court. (1) (1952) 3 S.T.C. 343. 1008 The passage cited above by us occurs in answering the fifth question considered there which was framed as follows: "(v) Whether Explanation II to clause (g) of Section 2, which makes an agreement of sale taxable even though the sale may have taken placed outside the Province, ultra vires of the Provincial Legislature ?" Other questions framed indicate that it was not only the validity of the provision, both before and after its amend ment, which was directly considered and pronounced upon, but the application of the concept of sale under the unamended law and its effects were also under consideration. We think that the view that the unamended law was in operation was not a mere obiter dictum. It was necessary to decide that question before other questions could be determined. We give out own reasons below for accepting the correctness of the view taken then. The following passage was also cited from Koteswar Vittal Kamath V.K. Rangappa Baliga & Co. (at p. 509): "Learned counsel for the respondent, however, urged that the Prohibition Order of 1119 cannot, in any case, be held to have continued after 8th March, 1950, if the prin ciple laid down by this Court in Firm A.T.B. Mehtab Majid & Co. vs State of Madras, (1963) Supp. 2 SCR 435 (AIR 1963 SC 928) is applied. In that case, rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, was impugned. The Court held that the ' new Rule 16(2) was invalid because the provisions of that. rule contra vened the provisions of Article 304(a) of the Constitution. Thereupon, it was urged before the Court that, if the impugned rule be held to be invalid, the old Rule 16 gets revived, so that the tax assessed on the basis of that rule will ' be good. The Court rejected this submission by holding that : 'Once the old rule has been substituted by the new rule, it ceases to exist and it does not automatically get revived when the new rule is held to be invalid '. On that analogy, it was argued that, if we hold that the Prohibition Order of 1950 was invalid, the previous Prohibition Order of 1119 cannot be held to be revived. This argument ignores the distinction between supersession of a rule, and substitution of a rule. In the case of (1963) Supp. 2 SCR 435 (AIR (supra), the new Rule 16 was substituted for the old Rule 16. The process of substitution consists of two steps. First, the old rule is made to cease to exist, and, next, the new rule is brought into existence in its place. Even if the new rule be in valid, the first step of the (1) ; 509: ; 47.1009 old rule ceasing to exist comes into effect and it was for this reason that the Court held that, on declaration of the new rule as in valid, the old rule could not be held to be revived". In the above mentioned passage, this Court merely explained the argument which was ac cepted in the case of firm A.T.B. Mehtab Majid & Co. vs State of Madras(1). After doing so, it distinguished the facts in Koteswar 's case (supra), relating to an alleged substitution of one Prohibition Order by a subsequent order which was found to be invalid. It recorded its conclusion as follows (at p. 509): "In the case before us, there was no substitution of the Prohibition Order of 1950 for the Prohibition Order of 1119. The Prohibition Order of 1950 was promulgated independ ently of the Prohibition Order of 1119, and because the provisions of law it would have had the effect of making the Prohibition Order of 1119 inoperative if it had been a valid order. If the Prohibition Order of 1950 is found to be void ab initio, it could never make the Prohibition Order of 1119 inopera tive". The argument before us is that since the word "substi tuted" is used in the amending Act of 1949, it necessarily follows that the process embraces two steps. One of repeal and another of the new enactment. But, this argument is basically different from the argument which prevailed in Koteswar 's case (supra) where a distinction was drawn be tween a "substitution" and "supersession". It is true that, as the term substitution was not used there, the old rule was not held to have been repealed. Nevertheless, the real basis of that decision was that what was called supersession was void ab initio so that the law remained what it would have been if no such legislative process had taken place at all. It was held that the void and inoperative legislative process did not affect the validity of the pre existing rule. And, this is precisely what is contended or by the State before us. In the case before us although the word "substitution" is used in the amending Act, yet the whole legislative process termed substitution was itself abortive. of India Act, was lacking. Such ineffectiveness was the very reason why, in the case of Sriram Gulabdas (supra), it was held that the previous law stood unaffected by the attempted legislation called substitution. Moreover, the case of Shriram Gulabdas (supra) is a direct authority on the very provisions now before us. Other cases cited are on very different legislative provisions. We do not think that the word substitution necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. Indeed, the natural meaning of the word "substitution" is to indicate that the process cannot be split up into two pieces like this. If the process de scribed as substitution fails, it is totally ineffective so as to leave intact what was sought (1) [1963] Suppl. 2 S.C.R. 435. 1010 to be displaced. That seems to us to be the ordinary and natural meaning of the words "shall be substituted". This part could not become effective without the assent of the Governor General. The State Governor 's assent was insuffi cient. It could not be inferred that, what was intended was that, in case the substitution failed or proved ineffective, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter. Pri marily, the question is one of gathering the intent from the use of words in the enacting provision seen in the light of the procedure gone through. Here, no intention to reveal, without a substitution, is deducible. In other words, there ' could be no repeal if substitution failed. The two were a part and parcel of a single indivisible process and not bits of a disjointed operation. It could not be said that what the Legislature intended. or what the Governor had assented to consisted of a separate repeal and a fresh enactment. The two results were to follow from one and the same effective Legislative process. The process had, therefore, to be so viewed and interpreted. Some help was sought to be derived by the citation of B.N. Tewari vs Union of India & Ors.,(1) and the case of Firm A.T.B. Mehtab Majid & Co vs State of Madras (supra). Tewari 's case (supra) related to the substitution of what was described as the "carry forward" rule contained in the departmental instruction which was sought to be substituted by a modified instruction declared invalid by the Court It was held that when the rule contained in the modified in struction of 1955 was struck down the rule contained in a displaced instruction did not survive. Indeed, one of the arguments there was that the original "carry forward" rule of 1952 was itself void for the very reason for which the "carry forward" rule, contained in the modified instructions of 1955, had been struck down. Such a doctrine applies in a case where a judgment of a Subordinate Court merges in the judgment of the Appellate Court or an order reviewed merges in the order by which the review is granted. Its application to a legislative process may be possible only in cases of valid substitution. The legislative intent and its effect is gathered, inter alia, from the nature of the action of the authority which func tions. It is easier to impute an intention to an executive rule making authority to repeal altogether in any event what is sought to be displaced by another rule. The cases cited were of executive instructions. The procedure for enactment is far more elaborate and formal. A repeal and a displacement of a Legislative provision by a fresh enactment can only take place after that elaborate procedure has been followed in toto. In the case of any rule contained in an executive instruction. (1) ; 1011 on the other hand, the repeal as well as displacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject. In Mehtab Majid & Co 's case (supra) a statutory role was held not to have revived after it was sought to be substi tuted by another held to be invalid. This was also a case in which no elaborate legislative procedure was prescribed for a repeal as it is in the case of statutory enactment of statutes by legislatures. In every case, it is a question of intention to be gathered from the language as well as the acts of the rulemaking or legislating authority in.the context in which these occur. A principle of construction contained now in a statutory provision made in England since 1850 has been: "Where an Act passed after 1850 repeals wholly or partially any former enactment and substitutes provision for the enactment repealed, the repealed enactment remains in force until the substituted provisions come into operation". (See: Halsbury 's Laws of England, Third Edn. ; Craies on "Statute Law", 6th Edn. p.386). Although, there is no corresponding provision in our General Clauses Acts, yet, it shows that the mere use of words denoting a substitution does not ipso facto or automatically repeal a provision until the provision which is to take its place becomes legally effective. We have, as explained above reached the same conclusion by considering the ordi nary and natural meaning of the term "substitution" when it occurs. without anything else in the language used or in the context of it or in the surrounding facts and circumstances to lead to another inference. It means, ordinarily, that unless the substituted provision is there to take its place, in law and in effect, the pre existing provision continues. There is no question of a "revival". This question of interpretation was referred separately to the Full Bench of the Bombay High Court which drew a distinction between the two meanings of the word "substitut ed"; firstly, where it involved a direction as to what would have to be removed or repealed simultaneously with another as to what was to be substituted, so as to involve two directions and secondly where the "substitution" merely carried one direction to modify . It is difficult to see how a single direction to one direction to modify. It is difficult to see how a single direction to substitute would be effective without implying in it another to remove 'what was to be displaced. Perhaps more simply and correct ly stated, the difference between two meanings of the word "substituted" is one 'where it stands for two separable legislative process and another where it stands for one total or completed legislative procedure, including the assent of the Governor General, which would be covered by the words "shall be substituted". The Full Bench came to the conclusion that, in the context in which the words directing substitution occur, they do not imply that in the event of the failure of the amendment, taken as a whole a repeal would survive. To be able to "Survive" a repeal 1012 had first to come into existence. In the situation before us no repeal came into legal existence. The real question for determination is always one of the meaning of words used in a purported enactment in a particu lar context. We think that the Full Bench of the High Court correctly held that there was no repeal of the existing provision when "substitution", by means of an amendment, failed to be effective. It had also rightly distinguished some of the cases cited before it on the ground that, in those cases, the process for substitution was interpreted to necessarily imply both a repeal and re enactment out of which only the repeal which took place had survived when the re enactment proved abortive. On the question whether the particular goods existed in Madhya Pradesh at all at the time of the contracts, so that the contract could be said to be referable to them, the High Court had observed: " . the question was whether Oriental Mixture was present in the former State of Madhya Pradesh when the contracts of sale in respect of Oriental Mixture were made by the applicant company. On this point, which was purely a question of fact, the decision of the second appellate authority was final and that decision was that Oriental Mixture in the form in which the contracts to sell that commodity were made was present in the State of Madhya Pradesh at the time when those contracts were made. Therefore, that point was not open for decision before the Tribunal and it is not necessary to dilate on the facts relating to that question". It also said: "In Commissioner of Sales Tax, Eastern Division, Nagpur vs Hesenali Adamji & Co. (1959) (10 STC 297), there was no evidence that at the date when the agreement for sale was made, the particular logs delivered there under were in Central Provinces in the shape of logs at all, and a standing tree which was in existence at the date of the agreement of sale and out of which the logs were later on prepared cannot be said to be the form of the commodity in respect of which the agree ment of sale was made. The Tribunal relied on the observations in the Judgment of the Su preme Court at page 310 which are to the effect that the goods must, at the date of the contract, be there in the taxing State in the form in which they are agreed to be sold. In that case, the agreement of sale can be said to be in respect of those goods. Here, as found by the second appellate authority, ore in the form of Oriental Mixture was present in the taxing State when contracts of sale in re spect of Oriental Mixture were made by the Head Office of the applicant company". After giving the findings set out above, on the question whether the. goods existed in the State of Madhya Pradesh when they were sold and, whether the contracts were refera ble to these goods, the High Court 1013 proceeded to consider the question whether "Oriental Mix ture" itself had come into existence in Madhya Pradesh or at the port where the goods forming the "Oriental Mixture" became mixed up in the process of unloading and transporta tion. Apparently, what the High Court had meant by its earlier findings was not that the "Oriental Mixture" was in existence in Madhya Pradesh, but that the ingredients which went into its composition existed in Madhya Pradesh at the time when the contracts were made. It had finally reached the conclusion that the Mixture itself was formed at the port where the ingredients were unloaded. We are unable to accept the High Court 's reasoning that, while the goods which went into the composition of the "Oriental Mixture" existed in Madhya Pradesh when the contracts were made, yet, they were not taxable in Madhya Pradesh because ' the "Oriental Mixture" came into existence at the port. In other words, it held that a mere mixture of goods, even if it occurs in the process of unloading, converts the goods, which existed in Madhya Pradesh and were transported to the port, into separately identifiable commercial commodity Known as "Oriental Mixture". As already mentioned above, this term is not used in the contracts but is a term employed by the firm itself to indicate the specifications contained in the contracts of goods ordered. It is difficult to see what process of manufacture is gone through so as to bring a new category or genus of commercial goods into existence at the port. The High Court had relied on cases where raw tobacco subjected to various processes, such as sprinkling of jag gery juice or water on it and allowing it to ferment for some time before cutting it up and packing it, was held to become a new commodity. These cases were: The State of Madras vs Bell Mark Tobacco Co. C); The State of Madras vs Swasthik Tobacco Factory(2); Anwarkhan Mehboob Co. vs The State of Bombay (Now Maharashtra) & Ors. Reliance was also placed on behalf of the assessee on Shaw Wallace & Co. Ltd. vs The State of Tamil Nadu(4), where it was held that goods were actually subjected to a process of manufacturing when chemical fertilisers and fillers like "China clay", "gypsum", and other ingredients, were mixed at a "mixing works" of a company, by means of shovels, so as to conform to a particular formula. It was held there by this Court that the resulting product was a commercially distinct commodity. Several cases of manure mixtures are referred to in the case. Now, ' in the case of manure mixtures, made out of different ingredients, at a "mixing works", it can per haps be said that a chemical process is gone through. In any case, the product which came into existence was known and sold as a separate commercial commodity in the mar ket. It required a process to be gone through at what were known as mixing works of the company to convert it into that commodity. On the other hand, in the case before us, it seems to us that what has been "manufactured" by the asses see is the same "Oriental Mixture" (1) (1967) 19 S.T.C. 129. (2) (1966) 17 S.T.C. 316. (3) (1960) 11 S.T.C. 698. (4) (1976) 3 S.T.C. 522. 1014 only if the term "manufacture" can be employed at all to anything done by the assessee. What is to be determined is whether there has been the manufacture of a new product which has a separate commercially current name in the mar ket. The mere giving of a new name by the seller to what is really the same product is not the "manufacture" of a new product. There is, it appears to us, no new process of the manufacture of goods at all by the assessee before us. Again, cases in which logs of wood were cut in order to convert them into planks [e.g. Shaw Bros & Co. vs The State of West Bengal(1)] could be of no assistance in the case before us. That too could be a process of "manufacture". The High Court had also made a passing reference to Nil giri Ceylon Tea Supplying Co. vs The State of Bombay(2), a case decided by the Bombay High Court, where different brands of tea, purchased in bulk and "without application of any mechanical or chemical process", were mixed so as to conform to a particular mixing formula, but this mixture was held not to constitute a fresh commodity as neither process ing nor alteration of the ingredients of the tea in any manner had taken place. We think that the similarity of the process to which goods sold were subjected in this case seems to make the reasoning adopted in this case more prop erly applicable to the cases before us than any other found in other cases mentioned above. The ingredients were not even shown to have got so mixed up as to become inseparable. As already mentioned above, this is a case in which the term "Oriental Mixture" was nothing more than a name given by the appellant company itself to the goods which were in the State of Madhya Pradesh at the relevant time and sent from there specially in order to satisfy the specifications given in the contracts. The goods get mixed up in the process of unloading. The mere fact that the specifications in the contracts are satisfied when they get mixed up is not a good enough ground for holding that a new product has been manufactured. They could no more constitute a new commodity than parts of some machinery sent by its manufacturer to a purchaser outside a State, so that the buyer has to just fit in the various parts together, becomes a new commodity when the parts are fitted in. The mere fitting up of parts or a mixture of goods, without employing any mechanical or chemical process of manufacture, could not, we think, result in a new commod ity. We, therefore, answer the following six questions before the High Court as follows: Q. 1. Was the Tribunal right in holding that, although the assessment order was made after the Constitution of India came into force, Article 286 was thereby not contravened, because such order related to a period prior to 26.1.1950? (1) (1963) 14 S.T.C. 878. (2) (1959) 10 S.T.C. 500. 1015 Ans. Yes, The provisions of Article 286 were not contravened. Was the Tribunal right in holding that Explanation (II) to Section 2(g) as was origi nally embodied in the Sales Tax Act, 1947, got restored on the Statute book because of the unconstitutionality of the substituted Expla nation enacted in the Sales Tax (Amendment) Act, 1949 ? Ans. There is no question of restoration of unamended explanation (II) to Section 2(g) as the purported amendment itself did not take effect. Hence, the unamended provision stood as it was before the attempted amendment. The question framed rests on a misconception that there was something to be restored. As nothing was taken away, nothing was there to be restored. And, there was nothing added or substituted. Does the Tribunal 's decision not contra dict the true meaning of the language "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", as occuring in Explanation (II) to section 2(g) of the Sales Tax Act, with reference to "in respect thereof" is reference to "specified or ear marked" goods which are actually present in the taxing State when the contracts are made ? Ans. This is a question of fact as to what contracts specify and whether those goods were taxed, on which the finding already recorded are enough to dispose it off against the assessee. In any case, was the Tribunal right in its interpretation, application and use of the provisions of original Explanation (II) to section 2(g) of the Sales Tax Act even as they were ? Ans. Was the Tribunal right in assuming the law to be that the existence of ingredients of ores in the taxing State in question, which were sufficient if and when mixed in the due proportion for yielding different varieties of standard mixtures contracted for by the over seas buyers, was in law enough to attract the tax ? Ans. There is no question of assuming any thing. It was only manganese ore of different grades which was unloaded at the port and gives the name of "Oriental Mixture" because the ingredients got mixed up automati cally in transportation and satisfied certain specifications. No new commodity was produced in this process. Was the Tribunal right in holding that the Sales Tax Authorities had found as a fact that the goods consisting of oriental mixture 1016 were in the Madhya Pradesh State when the contracts in respect of these goods were made ? Ans. Before we part with the case we may observe that the questions could have been much more lucidly and simply and less culmsily stated. The appeals of the assessee company against the decisions of the Full Bench are dismissed. The appeals of the State of Maharashtra against the judgment of the Division Bench are allowed. Parties will hear their own costs. V.P.S. Appeals dismissed.

Section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947 defines 'sale ' and Explanation II to the sub section provides that notwithstanding anything to the contrary in the Indian , the sale of any goods which are actually in the State at the time when the contract of sale, as defined in that Act in respect thereof is made, shall, wherever the contract of sale is made, be deemed for the purpose of this Act to have taken place in the State. The Amending Act of 1949 substituted for this Explanation another Explanation but as the amend ment did not receive the assent of the Governor General under section 107 of the Government of India Act, 1935, it was void. The assessee owned manganese ore mines in the State and was entering into contracts at places outside the State for the despatch abroad of manganese ore through different ports. The contracts contained specifications of strengths of manganese ore to be supplied with permissible percentages of other ingredients an admixtures. The assessee arranged for the transport of various grades of menganese ore in railway wagons from one or more of the mines, and the order in which trucks were loaded and unloaded was so arranged that the required average consistency or strength of manganese ore specified in the contracts was obtained in the course of such unloading. The assessee described the par ticular type of conglomerate as 'Oriental mixture. ' The assessee contended (1) that the original Explanation II was validly repealed by the Amending Act and since no sub stitution of the new provision had taken place, only the repeal survived, and that, therefore neither the old una mended provision nor its replacement were in operation, with the result that the Sales after the date of amendment were. not subject to sales tax, and (2) even assuming that the unamended provision was in force, 'Oriental Mixture ', as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that, its sale could not be taxed as 'goods which are actu ally in the State ', at the time when contracts: were entered into. The High Court on a reference held the first contention against the assessee and the second in favour of the asses see. Both sides appealed to this Court. Dismissing the appeals of the assessee and allowing the appeals of the State. HELD: (1) As the period involved is preconstitution period, article 286 of Constitution, which is not retrospective in operation would not help the assessee even though the as sessment was after the Constitution came into force. [1007 F] (2) There was no repeal of the existing Explanation when 'substitution ' by means of the amending Act failed to be effective and so the sale could be taxed under it. [1012 A B] (a) The question is one of gathering the intent from the use of words in the enacting provisions seen in the light of the procedure gone through, and from the nature of the action of the authority which functions, [1010 B] 1003 (b) The word 'substitution ' does not necessarily or 'always connote two severable steps, one of repeal and another of a fresh enactment, even if it implies two steps. The natural meaning of the word 'substitution ' is to indicate that the process cannot be so split up. If the process described as substitution fails, it is totally ineffective so as to leave in tact what was sought to be displaced. It could not be inferred that; what was intended was that in case the substitution failed or proved ineffec tive, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter. The term 'substitution ' when it occurs without anything else in the language used or in the context of it or in the sur rounding facts and circumstances, means, ordinarily, that unless the substituted provision is there to take its place, in law and in effect, the preexisting provision continues. [1009 H, 1010 A G] (c) In the present case, the whole legislative process termed substitution was abortive. because, it did not take effect for want of the assent of the GovernorGeneral. Considering the actual procedure, even if the Governor had assented the substitution, yet the amendment would have been effective as a piece of valid legislation only when the assent of the Governor General had also been accorded to it. It could not be said that what the Legislature intended or what the Government had assented to consisted of a separate repeal and a fresh enactment. The two results were to follow from one and the same effective legislative process. [1010 CD] (d) It is easier to impute an intention to an executive rule making authority to repeal altogether, in any event, what is sought to be displaced by another rule, because the repeal as we11 as replacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject. In the case of a legislative provision sought to be amended by a fresh enactment, the procedure for enact ment is far more elaborate and formal. A repeal and a replacement of a legislative provision by a fresh enactment can only take place after such elaborate procedure has been followed in toto. Even the analogy of a merger of an order into another which was meant to be its substitute could only where there is a valid substitute. [1011 C F, 1012 A B] Koteswar Vittal Kamath vs K. Rangappa Balica & Co. AIR 1969 SC & 509 ; @ 47 Firm .A.T.B. Mehtab Majid & Co. vs State Madras [1963] Suppl. 2, SCR 435 and B.N. Tewari vs Union of India & Ors. ; explained. Shriram Gulabdas vs Board of Revenue, Madhya Pradesh & Anr. (1952) 3 STC 343 @ 367 approved. The present case is not one of mixing various ingre dients at a 'mixing works ', and the product which comes into existence being sold as a separate commercial commodity in the market. The goods got mixed up in the process of un loading without employing any mechanical or chemical process of manufacture. The mere fact that the specifications in the conrtacts were satisfied when they got so mixed up is not a good enough ground for holding that a new product has been manufactured. The mere giving of the new name 'Orien tal mixture by the assessee to. what is really the same product is not the manufacture of a new product. [1013 A D, G H, 1014 A B] The Stale of Madras vs Bell Mark Tobacco Co. (1967) 19 STC 129, The State of Madras vs Swasthik Tobacco Factory (1966) 17 STC 316 and Anwarkhan Mchboob Co. vs The State of Bombay (Now Maharashtra) & Ors. (1960) 11 STC 698 and Shaw Bros & Co. vs The State of West Bengal (1963) 14 STC 878 referred to. Shaw Wallace & Co. Ltd. vs The State of Tamil Nadu (1976) 37 STC 522 explained. Nilciri Ceylon Tea Supplying Co. vs The State of Bombay (1959) 10 STC 500 approved.

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Civil Appeals Nos. 493 495 of 1 974 Appeals by special leave from the judgment and order dated the 9th August, 1973 of the Madras High Court in Civil Revision Petition Nos. 1470 to 1472 of 1973. K. section Ramamurthi, T. N. Vallinayagam, R. N. Nath and V. Maya Krishnan, for the appellant. M. Natesan, K. Jayaram and R. Chandrasekhar, for the respondent. The Judgment of the Court was delivered by GOSWAMI, J. These appeals by special leave are directed against the order of the High Court of Madras in three Civil Revision Petitions under section 25 of the Madras Buildings (Lease and Rent Control) briefly the (Act) whereby the High Court refused to interfere A with the orders of the appellate authority under the Act holding that the appellant (hereinafter to be described as the landlord) has no right to evict the respondents (hereinafter to be described as the tenants) from the premises in question on the ground of demolition and reconstruction. The tenancy under the landlord is admitted by the tenants there is also no question with regard to validity of the notice of eviction. The only questions in controversy in these appeals are whether the landlord in this case, who is the holder of life interest in the property, is entitled to evict the tenants under section 14(1) (b) of the Act on the ground that the building is bona fide required by the landlord for demolition and for reconstruction. The second question raised` in one of the appeals is whether a single petition is maintainable to evict the tenants from two different tenancies one for residential purpose and the other for non residential purpose. The latter point has been held by the High Court in favour of the landlord but the tenants are raising it in seeking to support the earlier order of the appellate authority. The premises are situated at Anna Pinai Street, Madras. Originally the premises belonged to late section Manicka Chettyar, father of section M. Gopalakrislina, the present landlord. By virtue of a Deed of Settlement executed by section Manicka Chettyar on May 9, 1934, possession of the premises was delivered to his wife, Manoranjithammal, as trustee and guardian an of his three minor children, section M. Gopalakrishna then aged 13` years, and his two minor daughters, Indrani Ammal and Palani Ammal. We are not concerned with the various directions in the Deed of Settlement except to note the admitted position that Manoranjithammal was allowed to enjoy the rents and profits of the property for her life time subject to certain charges mentioned in the Deed. After the life time of the settlor 's wife, his son, section M. Gopalakrishna (appellant) shall enjoy the rents and profits of the said property. for his life time" subject lo certain charges on account of his two sisters. It is further mentioned in the Deed that after the life time of Gopalakrishna, his son and son 's heir of any predeceased son living at that time shall enjoy the property subject to identical charges as absolute owners, with right of sale, gift, etc. There are further directions in case of other contingencies with which we are not concerned. We may, however, note that section M. Gopalakrishna is issueless. From the above terms of the Settlement it is contended by the tenants that the landlord has only a life interest in the premises in question and that it is inherent in such a life interest that it is not permissible for the landlord to invoke section 14(1) (b) as grounds for eviction of the: tenants by demolition of the property for the purpose of reconstruction. It is emphasised that since the interest of the remainder man may be prejudiced? the landlord with a life interest in the premises cannot evict the tenants on these grounds. The Rent, Controller held that the requirement of the landlords bona fide and ordered for eviction of the tenants. The Court of Small Causes, 275 which is the appellate authority, allowed the appeals lodged by the tenants against the orders of eviction and set aside the orders of eviction. As noticed earlier the High Court refused to interfere in revision. The High Court agreed with the! view of the appellate authority that the landlord had no right to ask for eviction of the respondents on the ground of demolition and reconstruction, he admittedly having only a life interest or right to enjoy the property for his life. The appellant sub mits that this view is not legally tenable. Before we proceed to consider the point in controversy, we may read section 14(1)(b): 14. "Recovery of possession by landlord for repairs or for reconstruction. (1) Notwithstandig anything contained in this Act, but subject to the provisions of section 12 and 13, on an application made by a landlord the Controller shall, if he is satisfied (b) that the building is bona fide required by the landlord for the immediate purpose of demolishing it and such demolition is to be made for the purpose of erecting a new building on the site of the building sought to be demolished, pass an order directing the tenant to deliver possession of the building to the landlord before a specified date". The expression landlord is defined under section 2(6) as follows: " 'Landlord ' includes the person who is receiving or is entitled to receive the rent of a building, whether on his own ac count or on behalf of another or on behalf of himself and others or as an agent, trustee, executor, administrator, receiver or guardian or who would so receive the rent or be entitled to receive the rent, if the building were let to a tenant". x x x x This inclusive definition o landlord would clearly take in its sweep the present landlord who holds a life interest in the premises and who admittedly has been on his own right under the Deed of Settlement as a trustee receiving rents of the premises from the tenants. We are not even concerned with the question as has been sought to be established in the case by proving that there is no possibility or any objection from the daughters of the settlor or from any other remainder man. It is sufficient to observe that the rights between section M. Gopalakrishna and the remainder man with regard to the terms of the Deed of Settlement win have to be worked out in appropriate proceedings, if necessary and the general law win govern the matter if any occasion arises. On the other hand, the Act with which we are concerned is a self contained and complete code for regulation of the rights between landlord and tenants as defined in the Act (See M/s Raval and Co. vs K. G. 276 Ramachandra and others (1). Thus a controversy that may arise between a landlord and others, who are not his tenants under the Act, is outside the ken of this Act. Even a possible dispute, imaginary or real, between the landlord and the remainder man cannot affect adjudication of the claim of the landlord against his tenants under the provisions of the Act. It win also not affect the efficacy of the nature of the plea of bona fide on the part of the landlord, if otherwise so. Such questions as are raised in this appeal by the tenants are, therefore, irrelevant in a litigation between the landlord and tenants when a suit for eviction is instituted by the former on any of the grounds available to him under the Act. It is clear that when the objection on the score of the landlord being a holder of life interest and hence incapable of invoking section 14 (1) (b) fails the suit must be decreed. lt was strenuously submitted by Mr. Natesan that a tenant with a life interest cannot be allowed to demolish the property in order to reconstruct it as that action would, per se be not bona fide. We are unable to accede to this submission. A landlord has every right to demolish his property in order to build a new structure on the site with view to improve his business or to get better returns on his investment. Such a step per se, cannot be characterised as mala fide on the part of the landlord. There is therefore. no merit in this contention. Mr. Natesan faintly submitted that a single petition with regard to two different tenancies, although in the same premises, one for residential purpose and the other for non residential purpose, is not maintainable. We do not find any substance in such a contention when the tenancy is one. In the result the appeals are allowed and the order of the High Court as well as that of the appellate authority are set aside. The order of the Controller allowing eviction of the tenants stands restored. We win, however, allow time to the tenants upto 31st January, 1976, to vacate the premises on the distinct condition that they shall submit affidavits in this Court undertaking to vacate the premises by the aforesaid date within two weeks from to day. The appellant win be entitled to his costs in these appeals. One set of costs P.H.P. Appeal allowed.

The appellant landlord is a holder of life interest in the property in question He filed a suit against the tenant for eviction on the grounds of bona fide requirement by him for demolition and reconstruction. The Rent Controller held the requirement of the landlord bona fide and ordered eviction of the tenant. The appellant filed one petition for evicting the tenants in respect of two different tenancies, one for residential purpose and the other for non residential purpose. The appellate Authority under the Madras Buildings (Lease and Rent Control) Act, 1960 dismissed the appellant 's application for eviction on the ground that a landlord having a life interest cannot seek eviction for bona fide requirement for demolition and reconstruction. The High Court in Revision refused to inter fere with the order of the Appellate Authority under the Act. On appeal by special leave, it was contended by the appellant that the land lord having a life interest is entitled to evict the tenant for bona fide requirement for demolition and reconstruction under section 14 of the Act. The respondent contended that granting of the application of the landlord might prejudice the interest of the remainder man. ^ HELD: Allowing the appeal, (1) Definition of landlord under section 2(6) is wide enough to include the appellant who holds a life interest in the premises. The right between the appellant and the remainder man with regard to the deed of settlement would have to be worked out in appropriate proceedings. 'The Act in question is a self contained and, complete Code for regulation of the rights between the land lord and tenants. Even a possible dispute between the landlord and the remainder man cannot affect adjudication of the claim of the landlord against his tenants under the provisions of the Act. [275F 276D] (2) A single petition with regard to two tenancies in the same premises is maintainable when the tenancy is one. [276D E]

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ivil Appeal No. 4159 of 1984. From the Judgment and Order dated 20.1. 1984 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED(SB)(T) 644/81 A (Order No. A29/84). P.P. Rao, Rameshwar Nath, D.N. Mehta and Ravinder Nath for the Appellants. V.C. Mahajan, Arun Madan and P. Parmeshwaran for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L(b) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ') from the judgment and order of the Customs, Excise & Gold (Control) Appellate Tribunal (herein after referred to as 'the Tribunal ') dated the 20th January, 1984. The appellants are the manufacturers of 'Supercem Water proof Cement Paint ', hereinafter called as the 'Product ', and other allied products in their factory at Madras. They manufacture and market this product throughout India. It is stated that the appellants are a small manufacturing firm with no branches and/or sales offices in any other State, city or town. In these circumstances, an agreement for sale described as an 'agreement of sale ' dated 1st May, 1962 was entered into with Gillanders Arbuthnot & Co. Ltd., of Cal cutta, hereinafter called 'Gillanders '. The said company has a very big sales organisation having its offices located at all important places in the territory of Union of India and they market goods of all types, not only of the appellants herein, but also of several other reputed manufacturers through their well staffed offices in all the States of India. The appellants vide their letters dated 23rd April, 1979 and 15th May, 1980 to the Excise authorities, had claimed a refund of Rs.2,39,153.63 on account of excess excise duty paid on the assessable value on the basis of price at which the Gillanders had sold the products to its customers, during the period July, 1977 to March, 1979. Both the Assistant Collector by his order dated 29th May, 1980 and the Collector by his order dated 24th March, 1981 re jected the contention of the appellants and held that the assessable value is the price at which Gillanders sold the goods. 786 The Tribunal in its order dated 20th January, 1984 referred to relevant clauses in the said agreement dated 1st May, 1962 and came to the conclusion that it was abundantly clear from the conditions that the title to and the owner ship in the goods consigned to Gillanders was not to pass to them. According to the Tribunal a sine qua non of a sale is that the title should pass from the seller to the purchaser. When once that were not so, according to the Tribunal, then it was futile to contend that it was an agreement for sale. The Tribunal on an analysis of conditions of agreement, came to the conclusion that the true character of the agreement was that it was an agreement for sole selling agency and not an agreement for sale. The Tribunal also referred to the expression 'a related person ' in the definition given by Sec. 4(4)(c) of the Act and held that Gillanders was a related person and, therefore, the assessable value of the goods for levy of excise duty must be on the basis of the price at which Gillanders ordinarily sold these in the course of wholesale trade less the transportation cost and other permissible deductions such as duty of excise and sales tax, if any, subject to proof. Aggrieved thereby, the appellants have come up in this appeal to this Court. The first question that was canvassed and which requires to be determined is whether the agreement dated 1st May, 1962 is an agreement for sale or is one for sole selling agency. In the said agreement, the appellants have been de scribed as a partnership firm carrying on business at Madras and referred to as 'The Manufacturer ' and Gillanders of Calcutta described as 'The Selling Agents '. The agreement, inter alia, stated that the selling agents had agreed to stock adequate quantities of the product for the purpose of sale thereafter. The manufacturer however agreed to accept return of all stocks held by the selling agents for a period of more than two years and replace such stocks free of all charges, provided the lids of the containers were intact and sealed. The agreement further stated that all consignments would be despatched by the manufacturer at Railway risk. In case there was any damage or shortage in transit the selling agents would lodge a claim on the Railways, provided, howev er, that the manufacturer should take all suitable actions for recovery of the damages from the Railway authorities and should reimburse the selling agents all losses and damages that they might suffer in the premises. It was further agreed that in consideration of the premises, the manufac turer should pay the selling agents a discount, namely, 17 1/2 % on the transfer prices of all materials supplied against the orders received from the selling agents 787 from its offices at Calcutta, Kanpur, Delhi and Bombay; 18% on the transfer prices of all materials supplied against the orders received from the selling agents from its Madras Office. It also provided for an additional cash discount of 1 1/2 % on the net transfer price, that is to say, transfer price less the discount specified above provided the selling agents paid the price of the goods supplied by the manufac turer within 30 days from the date of the bills by the manufacturer in respect of orders placed by the selling agents from its offices at Calcutta, Bombay, Madras and Delhi and within 45 days from the date of the bill by the manufacturer in respect of orders placed by the selling agents from its Kanpur Office. It also provided for an additional turnover discount of 1% on the transfer prices over and above the discount specified above provided the total sales calculated at the selling prices exceeded Rs. 4 lakhs per annum and 1 1/2% on the transfer prices on such amount exceeding Rs. 4 lakhs per annum. In calculation of the turnover figure of Rs. 4 lakhs, the orders received by the manufacturer directly from the Government would not be taken into consideration. The manufacturer would normally, the agreement provided, expect the selling agents to pay all bills within 60 days from the date of such bills to the selling agents. The selling agents agreed to send to manu facturer the necessary 'C ' Declaration Forms under the Central Sales Tax Act as quickly as possible in respect of sales made directly to the selling agents. The manufacturer further agreed to supply the selling agents with all neces sary publicity materials and to advertise at their own cost at regular intervals through the media of the daily press, trade journals, Government publications and cinema slides and in all such advertisements should mention that the selling agents were the sole selling agents of the products. The manufacturer also agreed to supply the selling agents reasonable quantities of sample free of charge. All expenses such as godown rent, transport charges, postal and telegram charges, bank commission, etc., connected with the sales of the products, it was stipulated, would be borne by the selling agents. It was, inter alia, provided that the sell ing prices and transfer prices of the product would be mutually agreed to from time to time between the manufactur er and the selling agents. Current selling prices and trans fer prices were set out in the schedule to the agreement. It was stipulated also that the selling agents might allow any discount to any dealer at their discretion. The manufacturer agreed to execute and despatch orders to all dealers outside the State of Madras, provided firm instructions were re ceived to that effect from the selling agents, to eliminate unnecessary handling charges. The agreement provided that in such cases, the manufacturer would credit the selling agents with their usual commission after deducting therefrom any discounts which 788 might be allowed to the dealer on the specific instructions of the selling agents. The manufacturer further agreed to execute such orders against the guarantee of the selling agents. In the case of direct orders to dealers outside the State of Madras, the selling agents might quote either F.C).R. station of despatch or destination terms. If the goods supplied by the manufacturer were found to be sub standard goods or inferior in quality the manufacturer should at his own cost take back the goods and replace the goods of satisfactory marketable quality at its own cost. The manufacturer should not be responsible for failure to deliver or for any delay in delivery if such failure or delay was due to act of God or enemies of the State, wars, revolution, embargo, riots, civil or political disturbances, strikes, lockouts declared due to circumstances beyond the control of the manufacturer, shortage of labour, cut or failure of power supply or service, force majeure or any other cause beyond their control. The agreement, it was stipulated by clause 19 thereof, would remain in force for one year from the date of the agreement. But the parties had the fight to terminate the agreement by giving three months notice in writing to either side. It was further stipulated that if the agreement was terminated whether by the manufac turer or by the selling agents, the manufacturer should accept return of all unsold stocks lying with the selling agents at their various branches and to reimburse the sell ing agents with the net value of such stocks at the transfer prices in force on the date of the termination of the agree ment. There was arbitration clause and other clauses which are not material for the present purpose. The Tribunal analysed the agreement and emphasised that Gillanders were described as sole selling agent of the product of the appellants throughout India. It also noticed that the appellants were to supply to the Gillanders with advertisement material. The Tribunal also noted the clause which provided that the stocks left over unsold beyond two years from their receipt with Gillanders could be returned to the appellants who were bound to replace these. The Tribunal noticed that it was not the appellant who was to prefer claims for recovery of damages from the carriers. The Tribunal referred to the clause which stipulated that Gil landers were to promote sales of the product throughout India and were not to handle sales of any other material likely to conflict with the sales of the appellants ' product. It noted that any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with Gillanders. Although, the appellants retained the right of sale directly to large Government consumers, Gillanders were to follow up such . transactions and were to be paid an over riding commission of 2 1/2%. 789 Where, however, Gillanders tendered for Government supplies and followed it up, they were to be paid a commission of 5%. In all other cases, they were to earn a commission, de scribed, however, as a discount and additional cash discount apart from total sales discount in case where total sales exceeded Rs. 4 lakhs, on the orders received from Gilland ers. The Tribunal also referred to the clause which provided that on termination of the agreement by either party, unsold stocks lying with the Gillanders were to be returned to the appellants. On an analysis of the aforesaid aspects of the clauses, the Tribunal came to the conclusion that the title to and ownership of goods, continued with the appellants and did not pass to the Gillanders. In order to be sale, the title should pass from the seller to the purchaser for a price. If it is not so, the Tribunal noted, then it was not sale. The Tribunal came to the conclusion that it was an agreement for sole selling agency and not an agreement for sale. The question is whether the Tribunal was right on this aspect. On behalf of the appellants, Shri P.P. Rao contended that it has to be emphasised that there was no flow back of the profit to the manufacturer and that was absent in the instant case. He also referred to the fact that there were two prices transfer price and selling price and there was good deal of difference between these prices. He submitted that read in the proper perspective, there was no agency. He emphasised that there was stipulation for payment of sales tax and these were separately specified one was described as selling agent and the second one the real purchaser. It is well settled that in a situation like this, wheth er there was an agreement for sale or an agreement of agen cy, must depend upon the facts and the circumstances and the terms of each case. Such facts and terms must be judged in the background of the totality of the circumstances. All the terms and conditions should be properly appreciated. It is also correct that though the appellants described the Gil landers as selling agent, but that is not conclusive. And it is also correct to state that the difference of the prices between the transfer and the selling prices is suggestive of an outright sale. In W.T. Lamb and Sons vs Goring Brick Company Ltd., , by an agreement in writing certain manufacturers of bricks and other building materials appointed a firm of builders ' merchants "sole selling agents of all bricks and other materials manufactured at their works". The agreement was expressed to be for three years and afterwards continuous subject to twelve months ' notice by either party. While the agreement was in force, the manufacturers informed the merchants that they 790 intended in the future to sell their goods themselves with out the intervention of any agent, and thereafter they effected sales to customers directly. In an action by the merchants against the manufacturers for breach of the agree ment, it was held both by Justice Wright in the Trial Court and on appeal by the Court of Appeal, that the effect of the agreement was to confer on the plaintiffs the sole right of selling the goods manufactured by the defendants at their works, so that neither the defendants themselves nor any agent appointed by them, other than the plaintiffs, should have the right of selling such goods. In those circum stances, it was held that the agreement was one of vendor and purchaser and not of principal and agent. Lord Justice Scrutton was of the view that in certain trades the word "agent" is often used without any reference to the law of principal and agent. Lord Justice Scrutton was of the view that the words "sole selling agent" in the contract had a distinct meaning implying that the manufacturers were to sell to no one but the merchants who paid them the fixed price, and the merchants sold, and they were the only per sons to sell, to various builders and contractors. Lord Justice Slesser was of the view that the agreement in the present case was somewhat difficult to understand, because in one and the same document the same parties were described as "merchants" and as "sole selling agents," the first being a correct, but the second one an incorrect description, according to the Lord Justice. It was held that the agree ment was one of vendor and purchaser. Referring to some of the contract terms in the instant case, Shri Rao submitted that in this case also, the terms referred to by the Tribu nal and emphasised before us by Shri Mahajan, learned coun sel for the respondent, were merely indicative of the fact that the parties described a 'purchase upon terms ' as "sole selling agent". It was an agreement whereby the purchaser upon terms was described as "sole selling agent," submitted Shri Rao. This Court had occasion to consider this aspect in Gordon Woodroffe & Co. vs Sheikh M.A. Majid & Co., In that case, the respondent was a trader in hides and skins and the appellant was an exporter. During the period January to August, 1949, there were several contracts between them. The contracts mentioned that the appellant was buying the goods for resale in U.K. The price quoted was C.I.F. less 2 1/2%. The contracts also provided that time should be the essence of the contract, that the sales tax was on respondent 's account, that the respondent was answerable for weight as well as quality, that there should be a lien on the goods for moneys advanced by the appellant, and that any dispute regarding quality should be settled by arbitration according to the customs of the trade 791 in the U.K. The course of dealing between them showed that before the goods were shipped these were subjected to a process of trimming and reassortment in the godowns of the appellant with a view to make these conforming to London standards, that the goods were marked with the respondent 's mark and that premiums were paid to the respondent in case the goods supplied were of special quality. The respondent filed a suit on the original side of the High Court praying that an account should be taken of the dealings between himself and the appellant on the ground that the appellant was his agent. The appellant 's case was that there was an outright purchase of the respondent 's goods and that the appellant was not an agent of the respondent. The trial Judge dismissed the suit. On appeal, the High Court held that the appellant acted as a del credere agent of the respondent and directed the taking of accounts. In appeal to this Court, it was contended by the appellant that the terms of the contracts and the course of dealing between the parties showed that the appellant was not the agent of the respondent but was an outright purchaser of the goods and that there was a settled account between the parties which the respondent could not reopen. This Court held that the appellant was the purchaser of the respondent 's goods under the several contracts and not his agent for sale, and there fore, the view taken by the High Court was not correct. It was reiterated that the essence of sale is the transfer of the title to the goods for price paid, or to be paid, where as the essence of the agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods, and the agent would be liable to account for the proceeds. On the terms of the contract and the course of dealing between the parties, the contract was not one of agency for sale but was an agreement of sale. The appellant purchased the goods from the respondent at 2 1/2 % less and sold them to the London purchasers at the full price so that the 2 iii % was its margin of profit and not its agency commission. This point was emphasised by Shri Rao as a point similar to the instant case. This Court held therein that the fact that the goods were sent with the respondent 's mark, that the premium was paid outside the terms of the contract, that the appellant considered it fair and just to pay the whole of the premium to the respondent or to share it with him, and that additional burden with respect to weight and quality was thrown on the respondent, had no significance in deciding the nature of the contract. This Court was also of the opinion that the clause with regard to lien was consistent with the transaction being an outright sale, because the appellant was acting as creditor of the respondent and charged interest on advances only till the date of shipment of the goods when it became 792 the purchaser of the goods from the respondent. It was held that an agent could become a purchaser when the agent paid the price to the principal on his own responsibility. This was another aspect which was emphasised in the facts of the present case by Shri Rao. In that case, however, before the goods were shipped to London, these were subjected to a process of trimming and reassortment in the godown of the appellant with a view to make them conform to London stand ards. In that process, the defendants often called upon the plaintiff to replace the pieces found defective. If the defendants were merely acting as agents, this Court ob served, the process of trimming and reassorting in the godowns to make the goods conform to London standards and specifications would be unnecessary, for in that case the defendants were merely bound to ship the goods as these were delivered to them. Another important feature of the transac tion was that in several contracts, time was fixed for delivery of the goods. This Court found that the defendants were acting only as the agents for the sale, there was no reason why there should be a stipulation that time should be the essence of the contract. On behalf of the plaintiff, reference was also made to the fact that the contract pro vided for a lien on all the goods covered by the contracts for all moneys advanced by the defendants, including ex penses incurred and interest thereon. But it was emphasised that in making such advances, the defendants were only acting as creditors of the plaintiff and were therefore entitled to charge interest on such advances till they actually purchased the goods from the plaintiffs. The Court found that the primary object of the contract was that there was a purchase by the defendants from the plaintiff of the goods for resale in the U.K. and in keeping with that ob ject, the buyer stipulated with the seller for delivery of the goods abroad and for that purpose adopted a c.i.f. form of sale. This Court referred to the principle that an agent could become a purchaser when an agent paid the price to the principal on his own responsibility. Reference was made to the passage from Blackwood Wright, 'Principal and Agent ', Second Edn., page 5, at page 10 of the Report, where it was stated that in commercial matters, where the real relation ship was that of vendor and purchaser, persons were some times called agents when, as a matter of fact, their rela tions were not those of principal and agent at all, but those of vendor and purchaser. If the person called an 'agent ' was entitled to alter the goods, manipulate them, to sell them at any price that he thought fit after these had been so manipulated, and was still only liable to pay them at a price fixed beforehand, without any reference to the price at which he sold them, it was impossible to say that the produce of the goods so sold was the money of the con signors, or that the relation of principal and agent 793 existed, according to this Court in that case. Reliance was also placed on Tirumala Venkateswara Timber and Bamboo Firm vs Commercial Tax Officer, Rajahmundry, ; , where the concept of 'sale ' in the back ground of the Andhra Pradesh General Sales Tax Act, 1957 was considered. At page 480 of the report, this Court observed that as a matter of law, there is a distinction between a contract of sale and a contract of agency by which the agent is authorised to sell or buy on behalf of the principal and make over either the sale proceeds or the goods to the principal. The essence of a contract of sale is the transfer of title to the goods for a price paid or promised to be paid. The transferee in such a case is liable to the trans feror as a debtor for the price to be paid and not as agent for the proceeds of the sale. The essence of agency to sell is the delivery of the goods to a person who is to sell these, not as his own property but as the property of the principal who continues to be the owner of the goods and will therefore be liable to account for the sale proceeds. The true relationship of the parties in each case has to be gathered from the nature of the contract, its terms and conditions, and the terminology used by the parties is not decisive of the legal relationship. Shri Mahajan, learned counsel appearing for the respondent, drew our attention to Section 182 of the , and submitted and in the circumstances of this case, the clauses emphasised by the Tribunal clearly established that this was an agreement of agency and not a sale. As mentioned hereinbefore, it depends on the facts and circumstances of each case to determine the true nature of the dealings between the parties. In the instant case the most important fact suggesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these. Shri Rao, however, suggested that the appellants were manufacturing paint which was liable to loose its efficacy and quality after lapse of time and as the appellants were keen for its reputation, such a clause was inserted to ensure that the bad quality goods or stale goods did not, through Gillanders, go to the market and damage the reputation of the appellants. This should be considered with the fact that the appellants were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with Gillanders and the obligation that on the termination of the contract by either the appellant or Gillanders, unsold stocks lying with the latter were to be returned to the former. In 794 the aforesaid light we are of the opinion that the Tribunal was right in considering this agreement as the agreement for sole selling agency and not as an outright sale. If that is the position then the first ground, in our opinion, taken by the Tribunal cannot be assailed. Shri Rao had contended that the Tribunal was wrong in holding that Gillanders were related persons in terms of Section 4(4)(c) of the Act. He submitted that the concept of 'having interest directly or indirectly in the business of each other ' has to be judged independently of the transac tion in question. He drew our attention to the various authorities for the proposition that the purpose of intro duction of definition of 'a related person by the Central Excises and Salt (Amendment) Act, 1973 to contend that the distributors have to be related and that such relationship ought to be found out independently of the transaction in question. Our attention was drawn to the observations of this Court in A.K. Roy vs Voltas Ltd., ; , where at page 1093 of the report, this Court noted that the appellants had contended that the agreements with the whole sale dealers conferred certain extra commercial advantages upon them, and so, the sales to them were not sales to independent purchasers. Our attention was also drawn to the observations of this Court that decisions cited before this Court in the above case were correct in so far as these held that the price of sales to wholesale dealers would not represent the 'wholesale cash price ' for the purpose of section 4(a) of the Act merely because the manufacturer had entered into agreement with them stipulating for commercial advan tages. It was laid down that if a manufacturer were to enter into agreements with dealers for wholesale sales of the articles manufactured on certain terms and conditions, it would not follow from that alone that the price for those sales would not be the 'wholesale cash price ' for the pur pose of section 4(a) of the Act if. the agreements were made at arms length and in the usual course of business. This, however, Mr. Rao related only in explaining the state of law before the Amendment Act 22 of 1973. Our attention was also drawn to the observations of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; where this Court explained the pur pose of the introduction of 'related person ' in the new 'section 4(4)(c) and the transactions of related person covered under section 4(4)(c) of the Act after amendment. In that context, it was contended that where there was such rela tionship independent of the transaction in question which conferred certain additional or extra commercial advantages only on the persons involved in such relationship could be considered to be related persons. It 795 was submitted that in the instant case that was not so. Our attention was drawn to the observations of this Court in Union of India and others vs Atic Industries Limited, ; , at page 937 of the report, where this Court held that on a proper interpretation of the definition of 'relat ed person ' in section 4(4)(c), the words "relative and a distributor of the assessee" did not refer to any distribu tor but they were limited only to a distributor who was a relative of the assessee within the meaning of the . So read, the definition of "related person" was not unduly wide and did not suffer from any constitutional infirmity. This Court explained the nature of relationship required by the persons to have 'interest directly or indi rectly in the business of each other ' under section 4(4)(c) of the Act. Our attention was also drawn to the observations of this Court in Collector of Central Excise, Madras vs T.I. Millers Ltd. Madras & T.I Diamond Chain, Madras, ; Having regard however to the fact that we have come to the conclusion that the Tribunal was right in holding that the transaction with the Gillanders was not a transaction of sale but an agreement for agency, there was, therefore, no sale in favour of Gillanders as contended for the appel lants. If that is the position, then the first sale was by the Gillanders to the customers of the market. Then the price of that sale would be the assessable value under section 4 in this case. The decision of the Tribunal is, therefore, right in any view of the matter, and this other aspect of the matter referred to by the Tribunal is not necessary for us to determine to dispose of this appeal. In that view of the matter, the decision of the Tribunal must be upheld. Shri Rao, however, further submitted that there were certain other claims like cost of transportation and other permissible deductions such as duty of excise and sales tax, which should have been deducted from the value subject to proof by the appellants. Shri Rao submitted that apart from this, there were other permissible deductions as envisaged by this Court in Asstt. Collector of Central Excise & Oth ers, etc. vs Madras Rubber Factory Ltd.; , It may be observed that apart from cost of transportation, excise duty and sales tax, other charges were not sought to be deducted by the appellants in the appeal and were not canvassed before the Tribunal too nor in the grounds of appeal, there was any such claim. Shri Rao, however, submit ted that in view of the decision of this Court in Madras Rubber Factory 's case (supra), the appellants should not be denied the benefit of these deductions, if they are other wise entitled to. Though, strictly speaking that is beyond the scope of the appeal in view of the conten 796 tions raised in the appeal before the Tribunal and in view of the grounds of appeal taken by the appellants before us, but in the interest of justice, we permit the appellants to have these benefits as finally settled by this Court in Madras Rubber Factory 's case (supra). We are informed that the said decision of Madras Rubber Factory is under review in this Court. Therefore, we are of the opinion that subject to the order passed in that review matter, such deductions, as may ultimately be held to be deductible be permitted to the appellants upon proof. With these observations, the appeal fails and is accordingly dismissed with no order as to costs. P.S.S. Appeal dismissed.

The assessee appellants, a partnership firm carrying on manufacturing business in Madras entered into an agreement with a company based in Calcutta for sale of their product through the latter 's sales organisation in all the States of India. In the said agreement the assessee was referred to as the 'manufacturer ' and the company as the 'sole selling agents ' of the product. The agreement itself was described as an 'agreement of sale '. It provided inter alia that the stocks left over unsold beyond two years from their receipt with the selling agents could be returned to the appellants who were bound to replace them, that the appellants should take all suitable action for recovery of damages from the carriers, that they would supply the selling agents with all the necessary publicity material and also advertise at their cost through the media, that the selling prices and transfer prices of the product would be mutually agreed from time to time between them and the selling agents, that any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with the sell ing agents, and that on termination of the contract either by the assessee or by the selling agents, the unused stock lying with the latter was to be returned to the former. The appellants were assessed to excise duty under the for the period July, 1977 to March, 1979 on the basis of the price at which the sell ing agents had sold the goods to their customers in the course of the wholesale trade. They however, claimed that the assessable value should be the price at which the ex cisable goods were sold by them to the selling agents and sought refund of 783 the excess excise duty thus paid. The Assistant Collector of Excise and the Collector rejected the said claim. The TribUnal took the view that a sine qua non of a sale was that the title to the goods should pass from the seller to the purchaser. When once that were not so, then it could not be said that it was an agreement for sale. On an analy sis of the conditions of the agreement in the instant case it found that the title to and the ownership in the goods consigned to the selling agents continued with the appel lants. It, therefore, concluded that the true character of the agreement was that it was an agreement for sole selling agency and not an agreement for sale. It further held that the selling agents were 'a related person ' as understood under section 4(4)(c) of the Act and, therefore, the assessable value of the goods for levy of excise duty must be on the basis of price at which the selling agents ordinarily sold these in the course of wholesale trade less the transporta tion cost and other permissible deductions such as duty of excise and sales tax, if any, subject to proof. In this appeal under section 35 L(b) of the Act it was con tended for the appellants, that there were two prices 'transfer price ' and 'selling price ' and there was good deal of difference between these prices which was suggestive of an outright sale, that the terms referred to by the Tribunal were merely indicative of the fact that it was an agreement whereby the purchaser upon terms was de scribed as 'sole selling agents ', that the appellants were manufacturing a product which was liable to lose its effica cy and quality after lapse of time and as such a replacement clause was inserted to ensure that the bad quality goods did not go to the market and damage their reputation, that the selling agents were not 'related persons ' in terms of section 4(4)(c) of the Act, as there was nothing in common between them and the appellants, and that claims like cost of trans portation and other permissible deductions such as duty of excise and sales tax to which they were otherwise entitled to should have been deducted from the 'value ' subject to proof by the appellants. Dismissing the appeal, HELD: 1.1 Whether there was an agreement for sale or an agreement of agency to sell must depend upon the facts and the circumstances and the terms of each case. Such facts and terms must be judged in the background of the totality of the circumstances. All the terms and conditions should be properly appreciated. The terminology used by the parties is not decisive of the legal relationship. [789F, 793D] 784 1.2 The essence of a contract of sale is the transfer of the title to the goods for a price paid or promised to be paid. The transferee in such a case is liable to the trans feror as a debtor for the price to be paid. The essence of the agency to sell is the delivery of the goods to a person who is to sell these not as his own property but as the property of the principal, who continues to be the owner of the goods, and make over the sale proceeds to the principal. An agent. however, could become a purchaser when he paid the price to the principal on his own responsibility. [793C, 792A] 1.3 In the instant case, the most important fact sug gesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these. Added to it was the fact that the appellants were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agree ment was to be duly reflected in the price of stock lying unsold with the selling agents, and the obligation that on the termination of the contract by either the appellants or the selling agents, unsold stocks lying with the latter were to be returned to the former. [793F, GH] 1.4 The Tribunal was, therefore, right in holding that the transaction with the selling agents was not a transac tion of sale but an agreement for agency. If that be so, then the first sale was by the selling agents to the custom ers of the market. The price of that sale would thus be the assessable value under section 4 of the Act. In that view of the matter it was not necessary to determine the question wheth er the selling agents were 'related persons ' in terms of section 4(4)(c) of the Act. [795DE] W.T. Lamb & Sons vs Goring Brick Company Ltd., ; Gordon Woodroffe & Co. vs Sheikh M.A. Majid & Co., and Tirumala Venkateswara Timber & Bamboo Firm vs Commercial Tax Officer, Rajahmundry., ; referred to. Though apart from cost of transportation, excise duty and sales tax. other charges were not sought to be deducted by the appellants in the appeal and were not canvassed before the Tribunal too, nor in the grounds of appeal there was any such claim, in the interest of justice they are permitted to have the benefit of other deductions envisaged in Assistant Collector of Central Excise & Ors. vs Madras Rubber Factory Ltd.; , subject to the order passed in the review matter. [795G, 796AB] 785

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TION: Criminal Appeal No. 672 of 1989. From the Judgment and Order dated 16.2.1988 of the Madras High Court in Crl. Petition No. 12389 of 1987. R. Mohan and R.A. Perumal for the Appellant. R.K. Jain, Mrs. Aruna Mathur and A. Mariarputham for the Respondents. The Judgment of the Court was delivered by M. FATHIMA BEEVI, J. Special Leave granted. The appellant married the first respondent on 29.4. They lived together until 1982 and have two children. They separated and the legal battle commenced in 1983. The first respondent moved the City Civil Court for divorce. The appellant instituted criminal complaint in the court of the Metropolitan Magistrate. The complaint was taken cognizance of for offences under Sections 494, 496, 498 A, 112, 114, 120, 120 B and 34 IPC against the respondents. It was al leged that the first respondent married the second respond ent while the proceedings for decree of divorce were still pending, the marriage was performed secretly in the presence of respondent Nos. 3 to 6. On the application of the first respondent the High Court by the impugned order quashed the proceedings before the Metropolitan Magistrate. Hence the appeal. Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of Court. In proceedings instituted on complaint exercise of the inherent power to quash the pro ceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482. It is not, however, necessary that there should be a meticu lous analysis of the case, before the trial to find 167 out whether the case would end in conviction or not. The complaint has to be read as a whole. If it appears on a consideration of the allegations, in the light of the state ment on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexa tious. in that event there would be no justification for interference by the High Court. The High Court without proper application of the princi ples that have been laid down by this Court in Sharda Prasad Sinha vs State of Bihar, ; ; Trilok Singh and Others vs Satya Deo Tripathi, [1980] 86 CRL. LJ 882 AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala and Others, ; proceeded to analyse the case of the complainant in the light of all the probabilities in order to determine whether a conviction would be sustainable and on such premises arrived at a conclusion that the proceedings are to be quashed against all the respondents. The High Court was clearly in error in assessing the material before it and concluding that the complaint cannot be proceeded with. We find there are spe cific allegations in the complaint disclosing the ingredi ents of the offence taken cognizance of. It is for the complainant to substantiate the allegations by evidence at a later stage. In the absence of circumstances to hold prima facie that the complaint is frivolous when the complaint does disclose the commission of an offence there is no justification for the High Court to interfere. We, therefore, allow the appeal, set aside the impugned order and direct that the proceedings before the Magistrate shall be restored and disposed of in accordance with the law. P.S.S. Appeal allowed.

The criminal complaint instituted by the appellant was taken cognizance of by the Magistrate for offences under sections 494, 496,498 A, 112, 114, 120, 120 B and 34 IPC. It was alleged that the first respondent had married the second respondent while the proceedings for decree of divorce were still pending, and that the marriage was performed secretly in the presence of respondent Nos. 3 to 6. The High Court, however, on the application of the first respondent quashed the proceedings before the Magistrate. Allowing the appeal by special leave, HELD: The High Court was in error in assessing the material before it and concluding that the complaint cannot be proceeded with. [167C D] In proceedings instituted on complaint exercise of the inherent power under section 482 of the Code of Criminal Proce dure by the High Court to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. It is not necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not. The complaint has to be read as a whole. [166G; 167A] In the instant case, there were specific allegations in the complaint disclosing the ingredients of the offence taken cognizance of. It was for the complainant to substan tiate the allegations by evidence at a later stage. In the absence of circumstances to hold prima facie that the com plaint was frivolous there was no jurisdiction for the High Court to interfere. [167D E] Sharda Prasad Sinha vs State of Bihar, ; ; Trilok 166 Singh & Ors. vs Satya Deo Tripathi, AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala

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Appeals Nos. 1554 64/72. (From the Judgment and Order dated 4 5 1972 of the Gujarat High Court in Special Civil Appln. 1018 and 1045 1054/68 respectively). A.K. Sen, Bishamber Lal Khanna and E.C. Aggrawala for the Appellants. L.N. Sinha, Sol. of India and Mr. Girish Chandra, for ' the Respondents. The Judgment of the Court was delivered by SHINGHAL J. , These appeals by certificate are directed against a common judgment of the High Court of Gujarat dated May 4, 1972. We have heard them together and will dispose them of by a common judgment. The facts giving rise to the appeals are similar in essential respects and may be shortly stated. There are large deposits of bauxite in Gujarat State. The State Government issued a notification on December 31,1963, intimating that the lands in all the talukas of Kutch district and in Kalyanpur taIuka of Jamnagar district had been reserved for exploitation of bauxite in the public sector. A similar notification was issued on February 26, 1964, in respect of all areas of Jamnagar and Junagarh districts. Even so, the appellants made applications to. the State Government for grant of mining leases for bauxite in the 'reserved areas. There were no other applications to that effect, but the State Government rejected the applica tions of the appellants on the ground that, as had been notified, it had reserved the areas for the public sector. The appellants felt aggrieved and applied to the Central Government flor revision of the State Government 's orders. The revision appli cations were dismissed after obtaining the comments of the State Government and the orders of rejection were upheld. In doing so, the Central Government referred to the fact that the minerals "vested" in the State Government which was "owner of minerals" and that the State Government had the "inherent right" to reserve any particular area for exploi tation in the public sector. It also pointed out that once a notification had been issued by the State Government for the reservation of any partic ular area, no party could, as of right, claim any mineral concession in the reserved area. While making its orders of rejection, the Central Govern ment explained the circumstances in which mineral leases were granted to Carborundum Universal Limited and the Gujarat Mineral Development Corpo ration. The appellants felt aggrieved, and chal lenged the orders of the State Government and the Central Government by writ petitions to the Gujarat High Court. It was urged that the State Govern ment had no authority to reserve any area of land for exploitation of bauxite in the public sector, and that the refusal to grant mining leases to the appellants was based on a ground which was alto gether extraneous and irrelevant and could not be supported with reference to the . hereinafter referred to as the Act, and the rules made thereun der. It appears that although the writ petitions 374 were based on that short ground, the Controversy in the High Court ranged over a wider field including that relating to the scope of the executive power of the State Government in respect of the impugned reservations. The High Court there fore examined the controversy with reference to articles 162 and 298 of the Constitution, and the relevant entries in the Lists in the Seventh Schedule, but we are not concerned with that aspect of the matter as the arguments before us have been confined to the provisions of the Act and to the Mineral Concession Rules, 1960, hereinafter referred to as the Rules, made thereunder. It may be mentioned that in pursuance of its exclusive power to make laws with respect to the matters enumerated in entry 54 of List I in the Seventh Schedule, Parliament specifically declared in section 2 of the Act that it was expedient in the public interest that the Union should take under its control the regulation of mines and the develop ment of minerals to the extent provided in the Act. The State Legislature 's power under entry 23 of List II was thus taken away, and it is not disputed before us that regulation of mines and mineral development had therefore to be in accordance with the Act and the Rules. The mines and the minerals in question (bauxite) were however in the territo ry of the State of Gujarat and, as was stated in the orders which were passed by the Central Government on the revision applications of the appellants, the State Government is the "owner of minerals" within its territory, and the minerals "vest" in it. There is nothing in the Act or the Rules to detract from this basic fact. That was why the Central Government stated further in its revisional orders that the State Government had the "inherent right to reserve any particular area for exploitation in the public sector". It is therefore quite clear that, in the absence of any law or contract etc. to the contrary, bauxite, as a mineral, and the mines thereof, vest in the State of Gujarat and no person has any right to exploit it otherwise than in accord ance with the provisions of the Act and the Rules. Section 10 of the Act and Chapters II, III and IV of the Rules, deal with the grant of prospecting licences and mining leases in the land in which the minerals vest in the Government of a State. That was why the appellants made their applications to the State Government. Section 4 of the Act provides that no person shall undertake any prospecting or mining operations in any area, except under and in accordance with the terms and condi tions of a prospecting licence or, as the case may be, a mining lease, granted under the Act and the rules made thereunder, and that no such licence or lease shall be granted "otherwise than in accordance with the provisions of the Act and the rules. " But there is nothing in the Act or the Rules to require that the restrictions imposed by Chap ters II, III or IV of the Rules would be applicable even if the State Government itself wanted to exploit a mineral for, as has been stated, it was its own property. There is there fore no reason why the State Government could not, if it so desired, "reserve" any land for itself, for any purpose, and such reserved land would then not be available for the grant of a prospecting licence or a mining lease to any person. 375 Section 10 of the Act in fact provides that in respect of minerals which vest in the State, it is exclusively for the State Government to entertain applications for the grant of prospecting licences or mining leases and to grant or refuse the same. The section is therefore indicative of the power of the State Government to take a decision, one way or the other, in such matters, and it does not require much argument to hold that power included the power to refuse the grant of a licence or a lease on the ground that the land .in question was not available for such grant by reason of its having been reserved by the State Government for any purpose. We have gone through sub sections (2) and (4) of section 17 of the Act to which our attention has been invited by Mr. Sen on behalf of the appellants for the argument that they are the only provisions for specifying the boundaries of the reserved areas, and as they relate to prospecting or mining operations to be undertaken by the Central Government, they are enough to show that the Act does not contemplate or provide for reservation by any other authority or for any other purpose. The argument is however untenable because the aforesaid sub sections of section 17 do not cover the entire field of the authority of refusing to grant a pros pecting licence or a mining lease to any one else, and do not deal with the State Government 's authority to reserve any area for itself. As has been stated, the authority to order reservation . flows from the fact that the State is the owner of the mines and the minerals within its territo ry, which vest in it. But quite apart from that, we find that rule 59 of the Rules, which have been made under sec tions 13 of the Act, clearly contemplates such reservation by an order of the State Government. That rule deals with the availability of areas for the grant of a prospecting licence or a mining lease in such cases, and provides as follows: "59. Availability of certain areas for grant to be notified In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a pros pecting licence or a mining lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a pros pecting or mining lease, grant the licence or lease after following the procedure laid down in rule 58." Mr. Sen has conceded that it is a valid rule. It clear ly contemplates reservation of land for any purpose, by the State Government, and its consequent non availability for the grant of a prospecting licence or mining lease during the period it remains under reservation by an order of the State Government. A reading of rules 58, 59 and 60 makes it quite clear that it is not permissible for any person to apply for a licence or lease in respect of a reserved area until after it becomes available for such grant, and the availability is notified by the State Government in the Official Gazette. Rule 60 provides that an application for the grant of a prospecting, licence or a mining lease in respect of an area for which no such notification has been issued, inter alia, 8 1104SCI/76 376 under rule 59, for making the area available for grant of a licence or a lease, would be premature, and "shall not be entertained and the fee. if any, paid in respect of any such application shah be refunded. " It would therefore follow that as the areas which are the subject matter of the present appeals had been reserved by the State Government for the purpose stated in its notifications, and as those lands did not become available again for the grant of a prospecting licence or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under rule 60 as premature. The Central Government was thus justified in rejecting the revision applications which were filed against the orders of rejec tion passed by the State Government. We have gone through the decisions in State of Orissa V. Union ' of India(1) and M/s section Lal and Co. Ltd. vs The Union of India and others(2), on which reliance has been placed by Mr. Sen. In the former case the High Court of Orissa took the view that reservation of a particular area for being exploited in the public sector by the State could not be said to be a purpose for which it could be reserved under rule 59. In taking that view the High Court went by the consideration that the subject of the legislation in the Act became an "exclusive subject for legislation by Parliament" and there was no residuary power of working out mines and minerals without observing the conditions prescribed by the Act and the Rules. The High Court therefore went wrong in not appreciating that even ,though 'the field of legislation had been covered by the declaration of the Parliament in section 2 of the Act, that could not justify the inference that the State_ Government thereby lost its right to the minerals which vested in it as a property within its terri tory. The High Court has also erred in taking the view that the State was required to obtain a licence or a lease even though it was itself the owner of the land and there was nothing in the Act or the Rules to show that the provisions for the obtaining of a licence or lease would still be applicable to it. In section Lai and Co. Ltd. vs Union of India and others (supra) the High Court noticed the decision in State of Orissa vs Union of India (supra) but it cannot be urged with any justification that the view expressed in it was followed by the Patna High Court. On the other hand the Patna High Court followed the view which was taken by the Gujarat High Court in the judgment which is the subject matter of the present appeals and held that the State Government has the,, power "to reserve certain areas. for exploitation by itself. or by a statutory corporation or for a company in a public sector. " The controversy in that case was. however, examined with reference to the provisions of article 298 of the Constitution. The two cases cited by Mr. Sen cannot thus be of any avail to the appellants. For the, foregoing reasons there is no merit in these appeals and they are dismissed with costs. P.B.R. Appeals dismissed (1) A.I.R 1972 Orissa 68. (2) A.I R. 1975 Patna 44.

The appellants ' applications for grant of mining leases were rejected by the State Government on the ground that the areas for exploitation of which they had . applied, had been reserved for exploitation in the public sector. The Central Government dismissed the revision applications pointing out that since the minerals vested in the State Government it had inherent right to reserve any particular area for exploitation in the public sector. In writ petitions challenging the orders of the State Government the appellants contended before the High Court that the State Government had no authority to reserve any area for exploitation of minerals in the public sector and its action had no support under the . The High Court dismissed the petitions. Dismissing the appeals, HELD: The State Government was well within its rights in rejecting the applications of the appellants under r.60 as premature and the Central Government was justified in rejecting the revision applications. [376 B] (i) ,The 1957 Act declared that it. was expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals. The State Legislature 's power under Entry 23 of List II was thus taken away .so that regulation of mines and mineral development had to be in accordance with the Act and the Rules. [374 C] (ii) The State Government is the owner of the minerals within its territory, and the minerals vest in it, and no person has any right to exploit them otherwise than in accordance with the provisions of the Act and the Rules. [374 D] (iii) There is nothing in the Act or the Rules to re quire that the restrictions imposed by the Rules would be applicable even if the State Government itself wanted to exploit the minerals. There is no reason why the State Government could not reserve any land for itself for any purpose and such reserved land would then not be available for the grant of prospecting licence or a mining lease. [374 H] (iv) The State Government 's power under section 10 of the Act to entertain applications includes the power to refuse to grant a licence or a lease on the ground that land was not available for such grant by reason of its having been re served by the State Government for any purposes. [375 B] (v) The authority to order reservation flows from the fact that the State is the owner of the mines and the miner als within its territory. Rule 59 clearly contemplates reservation by an order of the State Government. [375 E] (vi) Under rr. 58, 59 and 60 it is not permissible for any person to apply for a licence or lease in respect of a reserved area until after it becomes available for such grant and the availability is notified by the State Govern ment. The State Government in the present case reserved the areas for the purpose stated in the notifications and as these lands did not become available again for grant of a prospecting licence or a mining lease, it was well within its rights in rejecting the applications of the appellants under r. 60 as premature. [375 H; 376 A] State of Orissa (1) vs Union of India, A.I.R. 1972 Orissa 68 and M/s. section Lal and Co. Ltd. vs TIre Union of India and others held inapplicable.

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' Appeal No. '435 of 1967. Appeal from the judgment and decree dated September 30, 1966 of the Bombay High Court Nagpur Bench in Letters Patent No. 4 of 1964. 22 I S C. India/71 338 section T. Desai and A. G. Ratnaparkhi for the appellant. Rameshwar Dial, Jaishi Ram Goel and A. D. Mathur for the respondent. The Judgment of the Court was delivered by Shelat J. By a deed of lease, dated May 5, 1906, the prede cessor in title of the respondent let out to the appellant 's father an open portion of land measuring 26 ft. x 225 ft. out of a larger plot. The lease was for constructing buildings and for a period of 30 years certain at the annual rate of Rs. 130. The lease contained, iner alia, the following : "Even after the prescribed time limit, I shall have a right to keep my structure on the leased out land, so long as I like, and I shall be paying to you the rent every year as stated above. You will have no right to increase the rent and I shall also not pay it, myself and my heirs shall use this land in whatever manner we please. After the lease period, we shall, if we like, remove our building_ right from the foundation and vacate your land. In case we remove our structure before the stipulated period, we shall be liable to pay to you,, the rent for all the thirty years, as agreed to above. . . In case I were to sell away the buildings, which I shall be constructing on the above land, to anyone else, then, the purchaser shall be bound by all the terms in this lease deed. . . The trouble between the parties started when the respondent commenced construction on the rest of the land in a fashion so as to be in close vicinity to the western boundary of the leased land to house an industry, called Sudha Industries. The appellant filed the suit in 1958, out of which this appeal arises, urging that the said lease was a permanent lease, that buildings had been constructed on the leased land partly in 1906, and the rest in 1909 and 1922, that the said plot of land was subsequently demarcated into two survey numbers, 94 and 93, that a strip of land, 4 ft. in width and measuring 650 sq. immediately to the west of survey No.,94 and forming part of survey No. 93 was covered by the said lease and was in his possession as part of the leased land or was acquired by him as accession. Pending the suit the appellant amended the plaint asserting that the portion let out under the said deed of lease was 5850 sq. in the aggregate, which included the said strip, of land and annexed a new plan showing details of the land which according to him was leased out under the said deed. 339 Out of the structures put up by the appellants father, the central building, as shown in the plan produced by the appellant, has windows on the ground, first and second floors, all opening on the western side. The eaves of that building protrude on that side by about 2 1/2 ft. with the result that the rain water falls over the said strip of land. According to the plaint. there is a drain partly in plot No. 94 and partly over the said strip of land which carries the entire waste, water from the said building. According to the appellant, the said construction made by the respondent shut off light and air which he had been enjoying from the aforesaid windows. He had other complaints also to make and claimed amongst other things a declaration that the said strip of land was part of the leased land covered by the said deed, or in the alternative, that he bad acquired it by way of accession, and prayed for a permanent injunction against shutting off light and air through the said windows and interference with his rights over the said strip of land either as the lessee thereof or as and by way of easements over it. The respondent 's answer to the suit briefly was that the appellant was not entitled to the said strip of land either as failing under the said lease or as accession. The respondent also denied that the appellant was entitled to any of the reliefs claimed by him, that the said lease was not a permanent lease but was for a period of 30 years in the first instance, but being a lease for constructing buildings thereon and being transferable, could at best be for the lifetime of the lessee, the appel lant 's father. He also averred that part of the land comprised in plot No. 93 used to be let out from time to time to persons including the, appellants father, who had executed a separate rent note, dated July 21, 1935, and who had under the said note been in possession thereof as a lessee from 1935 to 1941, and that 'he having been permitted a,% such a lessee the use of the said strip of land to enable him access to the said leased portion of survey No. 93, there was no question of his having acquired any easementary rights by prescription over the said strip of land. The Trial Court partially decreed the appellant 's suit, in that it rejected the appellant 's claim to the said strip of land, but granted a declaration of easement for light and air, through the said windows and for carrying said drain over the decree the appellant filed an appeal before the respondent also filed cross objections. The dismissed the appellant 's appeal with the result that the appellant 's waste and rain water through the said strip of land. Against that judgment and District court District Court and allowed the cross objections suit was dismissed. A second appeal filed by the appellant in the High Court was heard by a Single Judge, who, held that the said lease was a permanent lease, that the appellant had acquired the said strip of land as accession to the leased land and as a consequence of those findings 340 granted a mandatory injunction directing removal of any con struction or projection by the respondent over the said :strip of land. In view; of his finding that the said strip of land had always been in the.possession of the appellant and earlier of his father ever since 1906 and thus had been acquired as an accession, he considered it unnecessary to go into the question of easementary rights claimed by the appellant. The principal ground on which the Single Judge founded his; judgment was that the lease was both, transferable and heritable, and therefore, had to be held as a permanent lease. Aggrieved by the:.judgment and decree passed by the learned Single Judge, the respondent filed a letters patent appeal wherein three principal questions were canvassed , (1) whether the said lease was a permanent lease, (2) whether the strip of land in dispute was covered by the said lease, or in the alternative, acquired as accession, and (3) in. the: alternative;: whether, the appellant had acquired easementary rights over the said strip of land (a) of light and air,. (b) of passage and (c) of draining water, both waste and rain, over, the said strip of land. The Letters Patent Bench answered all the, three questions, against the appellant holding that the said lease being a lease for building purposes and transferable, was a lease for an indefinite period, and therefore, for the lifetime of the: lessee, the said Dhanji, that the said strip. of land was neither,covered. under the said lease, nor acquired as accession through adverse possession, and lastly, that. except for the drain extending upto 32 ft. constructed on the said strip of land. the appellant had not acquired any other easementary, rights over it. As to light and air, ,the Bench held that the appellant failed to establish that the obstruction caused by the respondent 's construction was such as to give him an actionable claim against the res pondent. The result was that except for the said drain,theBench dismissed the appellant 's suit. Mr. Desai for the appellant raised three contentions in sup port of the appeal; (1) that on a proper interpretation of the document of lease. the lease was a permanent lease, (2) that there was an accession in respondent of the said strip of land within the meaning of section 108,(d) of the , and therefore '. the said strip of land must be deemed to be comprised in the lease. and (3) that the appellant had acquired by prescription rights of easement of light and air, of throwing rain water and draining waste water through the said drain and of passage over the said strip of land Under section 15 of the Easements Act, 1882. On the question of interpretation of the document of lease, Mr. Desai supported, the View taken by the Single Judge. The learned Single Judge construed the document to mean (a) that the 'lease was for building purposes, (b) that It was in the first 341 instance for 30 years certain (c) that the lessee was to continue to enjoy all rights as a lessee even after the expiry of 30 years, and (d) that the lesser could not increase the rent even after the expiry of 30 years. The most important: term of the said lease. said the Single Judge, was "the one which provides for the leasehold right continuing to the heirs and successors". The Letter Patent Bench, however, felt that on a proper construction of the document, the lease was for an indefinite period, and though transferable, did not provide for any hereditary rights. , In support of that conclusion the Bench pointed out that the view consistently taken by the High Court of Bombay, right from the decision in Vaman Shripad vs Maki,(1) was that such a lease is to be construed as one for the lifetime of the lessee and not as a permanent lease. The only solitary case where a lease for an indefinite period was construed as permanent was that in Sonabai vs Hiragavri, (2) but subsequent decisions of that High Court had dissented from that decision and had consistently held leases for indefinite periods as leases for the lifetime of the lessee. (see Donkangonda vs Revanshiddappa (3). In Bavasaheb vs West Patent Co.(4) Sonabai 's case (2) was once again dissented from, the High Court reiterating that a lease for an indefinite period is ordinarily to be construed as one for the lifetime of the lessee and that a distinction should be made between a transferable and a. heritable lease. The High Court. there observed (1) that if a lease were to be for a definite period and before that period was over, the lessee died, the leasehold rights during the remainder of the period would enure for the benefit of his heirs, unless the document stipulated that in such an event the rights of the lessee were not to enure for the benefit of his successors, (2) that if the lease was for an indefinite 'period, it would not enure for the benefit of the lessee 's heirs. such a lease would usually be for the lifetime of the lessee himself unless it clearly appeared from the contract that the benefit of the lease was intended to accrue to the lessee 's successors. , Whether a lease was permanent or for the lifetime only of the lessee, even where it was for building structures and was transferable, depended upon the, terms of the lease and the Court must, therefore, look at the substance of it to ascertain whether the parties intended it to be a permanent lease. But the fact that the lease provided that the lessee could continue in possession of the property so long as he. paid 'the stipulated rent did ' hot mean that the 1ease. was for perpetuity. It would usually be regarded as a lease for an indefinite period and as such. for ' the lessee 's lifetime. The High Court also pointed out that the fact that tenancy rights were transferable,, as provided (1) I.L.R. (2) (3) (4) 56 Bom. L.R.61 342 by section 108(j) of the , did not mean that they were also heritable. In two of its decisions, Runge Lail Lobes vs Wilson(1) and Promada Nath Roy vs section Chowdhry(2) the Calcutta High Court took the view that where the purpose of the lease was for constructing buildings, the court could presume, even though the document did not in terms so provide, that the lease was intended to be permanent. To the same effect was also the decision in Navalram vs Javerlial(3). On the other hand in Lekhraj Roy vs Kunhya Singh(4) where the lease was for the period of the continuance of ,the lessors ' mokurruri, the Privy Council held that if it could be ascertained what the term was. the rule of construction that a grant of an indefinite nature enured for the lifetime of the grantee would not apply. But, if the grant was made to, a person for an indefinite period, it enured, generally speaking, for his lifetime and passed no interest to his heirs unless there were words showing an intention to grant a hereditary interest. In Abdul Rahim vs Sarafalli (5) the Bombay High Court adhered to the view consistently taken by it that the lease there was for the lessee 's lifetime. The lease there contained terms similar to those before us. It was for building a factory and although it provided for 25 years certain in the first instance it also provided that after the expiry of that period the lessee would continue to take the agreed rent so long as the lessee remained in possession and further provided for the lessee 's right to remove the factory when he decided to hand over the land to the lessor. The conflict of opinion amongst these decisions has since then been resolved by the decision in Bavasaheb 's case(6) having been expressly approved by this Court in Sivavogeswara Cotton Press vs Panchaksharappa (7) The lease here was for building factories and other structures and was for a period of 20 years certain. It, however, provided that the lessee could continue to remain in possession so long as he desired and observed the terms of the lease which provided for a higher rent for the first 10 years after the expiration of the said 20 years and a still higher rent thereafter. (14) of the lease in addition provided that it was to be binding "on me, my heirs, executors, administrators, successors and assigns, as well as on. your heirs, executors, administrators, successors and assigns. . The question was as to the (1) [1899]I.L.R.26 Cal.204.(2) Cal. (3) (4) [1876 77] L. R. 4 I. A. 223. (5) (6) 56 Bom. L. R. 61. (7) 343 nature of the lease. At page 885 .of the report, the Court remarked that cl. (14) was a very important clause "which though coming as the last clause must govern all the stipulations between the parties. Thus the terms conditions of the km which created the rights and obligations between the lessor and the lessee were specifically declared to be binding on the heirs and successors in interest of the lessor the lessee". The Court then examined various decisions of the different High Courts including Navalram 's case Promnada Nath Roy 's case (2) and lastly, Bavwaheb 's case (3). As to the last case, the Court at page 889 of the report expressed its "complete agreement" with the observations of Gajendragadkar, J. (as he then was), namely, that the nature of the tenancy created by a document must be determined by construing the document as a whole, that if the tenancy is for building purposes, prima facie it might be arguable that it was intended for the life time of the lessee or might in certain cases be even a permanent lease, and lastly, that, whether it was a tenancy for life or a permanent tenancy must ultimately depend upon the terms of the contract itself. As can be seen from an earlier passage on that very same page, the Court distinguished Bavagaheb 's (3) case on the ground that the lease there did not contain a provision similar to cl. (14) in the case before it. Besides, the Court sought an additional support for its conclusion that the lease was permanent in the provision which stipulated that the rent would be Rs. 350 a year for the first 20 years, Rs. 400/ for the next 10 years and Rs. 500/ thereafter until the lessee continued to occupy the land, which provision indicated that the lease was not intended to be only for the life time of the lessee. It is clear from the decision that what clearly weighed with the Court was the fact that the document of lease distinctly indicated that the parties intended that the rights under the lease were to be hereditary. The question. therefore,. is whether the lease under consideration is of the type in the case of Sivayogeswara Cotton Press.(4). Looking at the document (exhibit P 4) as a whole. the lease un doubtedly is for building a residential structure. Though it is for 30 years certain, the lessee was entitled to remain in possession of the land so long as he paid the stipulated rent, which the lessor was not entitled to increase. But, though the lease is for building structure and the period is indefinite there are at any rate no (1) (2) Cut. (3) 56 Bom. L.R. 61. (4) ; 344 express words indicating that the leasehold rights thereunder were intended to be heritable. On the other hand it expressly provides, as was the case in Abdul Rehim(1) for the right of the lessee to remove the structures, meaning thereby vacating the land, if he so desired. The clause providing for such removal is not that the lessee would remove the structures on default in payment of rent, but depends on his own volition, a clause indicative of the parties not having intended the lease to be permanent. For, if it was intended to be permanent, there was no necessity for providing such a right. But the argument was that there are words in the document indicative of the lease having been indented to be heritable as was the case in Sivayogeswara Cotton Press (2). The mere fact, however, that a lease provides for the interests thereunder to pass on to the heirs of the lessee would not always mean that It is a permanent lease. Such a provision can be made in two ways resulting in two different consequences. A lease may provide a fixed period and then include a provision that in the event of the lessee dying before the expiry of such period, his heirs would be entitled to have the benefit of the lease for the remainder of the period. In such a case, although, the lease may provide for the heirs to succeed to the interests in the leased land, it would only mean that such heirs succeed to the rights upto the expiry of the lease period. If the lease, on the other hand, were foran indefinite period, and contain a provisions for the rights thereunder being heritable, then such a lease, though ordinarily for the lifetime of the lessee, would be, construed as permanent. The question, therefore, is to which of these two classes, of leases the present lease belongs. After reciting the purpose for which it was made, the term of 30 years and the rent. the, deed provides: "Even after the prescribed time limit, I shall have a right to keep my structure on the leased out land, so long as I like, and I shall be paying to you the rent every year as stated above." Though the period is 30 years, this part of the document would make the lease for an indefinite period which would ordinarily mean a lease for the lifetime of the lessee. What follows then, however gives, scope for the argument that it is not merely for the lifetime of. the, lessee: "You will have no right to increase the rent and I shall also not pay it, myself and my heirs shall also not pay it, myself and my heirs shall use this land in whatever manner we please. After the lease period, we (1) (2)[1962] 3 S.C.R. 876. 345 shall, if we like, remove our building right from the foundation and vacate your land. In case we remove our structure before the stipulated period, we shall be liable to pay to you, the rent for all the thirty years, as agreed to above." And further: "In case I were to sell away the buildings, which I shall be constructing on the above land, to anyone else, then, the purchaser shall be bound by all the terms in this lease deed. " This part of the document undoubtedly gives the lessee the right to transfer by sale the leasehold interest. But, as already stated, a clause enabling the leasehold interest to be transferred does not render such interest heritable. The effect of these clauses is that the first part of the document ensures that the lessor cannot charge rent higher than the agreed rent even if the lessee were to remain in possession after the period of 30 years. That part is consistent with the lease being for an indefinite period, which means for the lifetime of the lessee. The next part provides for the right to remove the structures "after the lease period". The words "after the lease period" mean either at the end of the 30 years, or on the death of the lessee, because, it also says that if the lessee were to remove the buildings before the expiry of 30 years, he would have to pay the rent for the remainder of that period. This part of the document does not show the intention that the lease was to be a permanent lease. It merely ensures the right to remove the structures if the lessee or his heirs so desired on the expiry of the lease period, i.e., either at the end of 30 years, or after the lifetime of the lessee. The heirs are mentioned here to provide for the contingency of the lessee dying before the expiry of 30 years and also for the contingency of his living beyond that period and continuing to occupy the land. In the event of the first contingency, the lessee 's heirs would continue in possession till the expiry of 30 years and then remove the structures if they wished. In the case of the second contingency, the, heirs of the lessee would have the right to remove the structures on the death of the lessee. In either event the right provided for is the right to remove the structures. It is not a provision for the lease being heritable and its being consequently a permanent lease. Thus, the lease is for a period certain, i.e., 30 years and on the expiry of that period if the lessee still were to continue to pay the rent, for his lifetime. In the event of his dying before that period, the benefit of the lease would enure to his heirs till the completion of 30 years. They would be entitled to remove the structures either 346 at the end of the 30 years if the lessee were to die before the expiry of that pariod or at the end of the lessee 's fife were he to continue to be in possession of the leased property after the expiry of 30 years. But the lease did not create hereditary rights so that on the death of the lessee his heirs could succeed to them. In this connection it is necessary to note that, as translated in English, it would appear as if the document uses the pronoun 'I ', meaning as if the lessee in the earlier part and the pronoun "we", meaning the lessee and his heirs, in the latter part. Such a translation, however, is not correct. We ascertained from Mr. Ratnaparkhi who after looking at the original Marathi assured us that the pronoun used throughout is ami, which means "we,", a term often used in documents written in regional language for the executant instead of the singular 'I '. In our view the lease before us is clearly distinguishable from that in the case of Sivayogeswara Cotton Press(1) where the leasehold rights were in clear terms made heritable and where the Court held that cl. (14), though placed last in the document, governed all its There is no provision in the present cast comparable with such a clause. The lease was undoubtedly for an indefinite period which only means that it was to enure for the lessee 's lifetime. Reference in it of the heirs of the lessee is only for the. limited purposes set out earlier and not for making the leasehold interests heritable. We do not find in the document words such as those in Sivayogeswara Cotton Press (1) would compel us to the conclusion that the lease was intended to be permanent. That leads us to the second contention of Mr. Desai. Under section 108(d) of the , if any accession is made to the leased property during the continuance of a lease, such accession is deemed to be comprised in the lease. If the accession is by encroachment by the lessee, and the lessee acquires title thereto by prescription, he must surrender such accession together with the leased land to the lessor it the expiry of the term. The presumption is that the land so encroached upon is added to the tenure and forms part thereof for the benefit of the tenant go long as the km continues and afterwards for the benefit of the landlord The of the appellant. in the plaint in regard to an accession was vague and confused. Para 2 of the plaint simply stated that the said strip of land was part of plot No. 93, but was used by the appellant as a passage. para 7(a) of the plaint, however,used the word "accession to the leasehold rights of the plaintiff in respect of the nazul plot No. 94", but did not say that such (1) ; 347 accession came about as a result of or by means of adverse possession. In para 8(a), which was inserted in the plaint by an amendment in 1959, an alternative plea was made that the said strip of land was part of the land under the lease. The written statement of the respondent denied the user of the said strip of land by the appellant and also the plea of accession thereof to the leased land. But the appellant 's case was only that the building which his father had constructed extended upto the end of the western boundary of plot No. 94, with the result that (a) the eaves of that building projected over plot No. 93 by about 21 ft., that its windows on that side opened on plot No. 93 and a drain was constructed by the side of the appellant 's western boundary through which waste water flowed from that building. According to the appellant 's case, the said strip of land, which withou t doubt forms part of plot No. 93, was used by the appellant as a passage for going to a well situate in plot No. 93. Plot No. 93, however, was an open plot until recently, except for a small structure on its northern side, so that there was no definite or well marked passage which was used by the appellant in order to reach the said well. The projection of the eaves or the opening of the windows on to the said strip of land were not asserted as acts of adverse possession or encroachment but as easementary rights. The appellant did not claim any right to the said well as admittedly the use of the said well for drawing water was with the consent of the lessor. Therefore, the use of the passage for going to the well would be incidental to the permissive use of the said well As regards the drain, the appellant 's evidence was that it passe partially through the said strip of land. Originally a kachha drain, it was made pucca upto a distance of 32 ft. in 1923. No width of it, however, was shown. Obviously, there can, therefore, be no adverse possession over the whole of the 4 ft wide strip of land. The Letters Patent Bench has pointed out three circumstances as emerging from the evidence which clearly negative the case of accession by adverse possession: (1) that the original plot was given two numbers, 94 and 93 in 1929, plot No. 93 being shown as commencing from the western wall of the appellant 's building, (2) that no protest was ever made against such a demarcation by the appellant or his father, and (3) a clear admission by the appellant in cross examination that according to him the said strip of land was covered by the lease deed add was 'not an acquisition over and above the leased land under that deed. Parties to a suit are, it is true, entitled to make contradictory pleas in the alternative in their pleadings. But at the stage of the evidence, no serious attempt was made by the appellant to establish accession by adverse possession. On the contrary, the appel 348 lant sought to make out a case of easementary rights by prescription, a case incompatible with the claim of, adverse possession where a party claims title over the land of another as his own and therefore there would be no dominant tenement claiming a right by prescription over a servient tenement. In this state of the evidence the Letters Patent Bench, in our judgment, was right in rejecting the claim of accession which the learned Single Judge had erroneously accepted. As regards the appellant 's claim to the easementary rights, assuming that a lessee can claim such rights over an adjacent property belonging to his lessor, section 15 of the Easements Act requires that the access and use, on the basis of which an easement is claimed, must be as and by way of easement and without interruption for a period of 20 years. The enjoyment must be, in other words, as of right and not permissive either under a licence or an agreement. In Abdul Rashid vs Brahman Saran(1) a Full Bench of the Allahabad High Court held, on the principle embodied in section 12, that the possession of a tenant being in law the possession of his landlord, the tenant cannot acquire by prescription an easement in favour of his holding except on behalf of his landlord. The Full Bench, however, made a distinction between an easementary right of way and an easementary right of light and air mentioned in the first two paragraphs of section 15, and held that though a lessee of land, who is the owner of the building on such land, cannot acquire by prescription an easement of a right of way or one to flow water over another land of the lessor, so far as the use of light and air or support for his building is concerned he is the owner of the building and may under the first two paragraphs of section 15 acquire such easements as he would not acquire them for any one except himself under section 12. This decision was followed in Haji Abdulla Harron vs Municipal Corporation, Karachi(2). But in Ambaram vs Budhalal(3) the High Court of Bombay differed from the Allahabad High Court holding that the distinction in English law arising from the language of sections 2 and 3 of the Prescription Act, 1832 between an easement of light and air on the one ]hand and of easement of way on the other, did not hold good under the Easements Act as no such distinction is made in sections 4 and 12 of the Act, that it is under section 12 that an easement is acquired and not under section 15 which provides for not the persons who can acquire easementary rights but the method by which they can be acquired, and therefore, the principle laid down in sections 4 and 12 would apply, namely, that if the lessee acquires a right to light and air, he does so on behalf of the owner and therefore he cannot acquire it on behalf of the owner (1) I.L.R. [1938] All. (2) A.T.R. 1939 Sind 39. (3) 349 as against such owner. There is thus clearly a conflict of view between the two High Courts. It is, however, not necessary to resolve this conflict in this case as the question of easements in the present case can be disposed of in another way. IV of the Act deals with the disturbance of easements and section 33, therein provides that the owner of any interest in the dominant heritage or the occupier of such heritage may institute a suit for the disturbance of the easement provided that the disturbance has actually caused substantial damage to the plaintiff. Under Explanation II read with Explanation I to the section, where the disturbance pertains to the right of free passage of light passing through the openings to the house, no damage is substantial unless the interference materially diminishes the value of the dominant heritage. Where the disturbance is to the right of the free passage of air, damage is substantial if it interferes materially with the physical comfort of the plaintiff. In Ravachand vs Maniklal (1), it was held that an easement by prescription under sections 12 and 15 of the Act is in fact an assertion of a hostile claim of certain rights over another man 's property and in order to acquire the easement the person who asserts the hostile claim must prove that he had the consciousness to exercise that hostile claim on a property which is not his own and where no such consciousness is proved he cannot establish a prescriptive acquisition of the fight. Therefore, if the owner of a dominant tenement has, during the period of prescription, exercised rights, on the footing that he is the owner but which he later on claims as an easement over a servient tenement, then, his exercise of those rights is not exercised as an easement and he must fail in a claim for an easement. As already stated, a party to a suit can plead inconsistent pleas in the alternative such as the right of ownership and a right of easement. But, where he has pleaded ownership and has failed, he cannot subsequently turn around and claim that right as an easement by prescription. To prove the latter, it is necessary to establish that it was exercised on some one else property and not as an incident of his own ownership of that property. For that purpose, his consciousness that he was exercising that right on the property treating it as someone else 's property is a necessary ingredient in proof of the establishment of that right as an easement. In his evidence, the appellant did not claim the right of passage or of light and air or of draining his waste and rain water over the said strip of land as rights over the respondent 's property. On the contrary, he made it clear that the said strip of land fell (1) I.L.R. 350 under the document of lease. "I have a right on both, the properties under the lease dead itself". he declared in his. evidence, and added, "whatever rights I have acquired are under the lease deed itself and not afterwards" His claim that the strip of land was included in the leased land could not succeed because he had to admit that although two different municipal numbers, 94 and 93, were given as early as 1929 to the portions of the land, 94 to the portion under his possession, and 93 to that under the possession of the respondent, no complaint was ever made to, the municipality or any other authority that the strip of land which he claimed to be covered under the lease should be included in his plot, namely, No. 94. In 1940, and again in 1955, when transfer deeds in respect of plot No. 94 were executed by him, the area mentioned therein was described as measuring 5182 sq. "ft., which would not include the strip of land forming part of plot No. 93. Having thus failed in his claim that the said strip of land was acquired either as accession or as one covered by the lease deed, he could not turn round and successfully claim that he had during the requisite period exercised rights over it on the footing of an owner of a dominant tenement exercising those rights over a servient tenement of another. Assuming, however, that the said strip of land was used by him as a passage, the evidence clearly showed that it was permissive. There was evidence of a permission having been asked for from the respondent 's father by the appellant for installing a handpump over the respondent 's well in plot No. 93. If the appellant, and previously his father, were permitted to draw water from that well the use of the well for drawing water and of the strip of land as a passage for going to the well was clearly permissive and not as an open hostile use over the lessor 's property. The appellant himself admitted that his father had taken a portion of plot No. 93 on lease paying separate rent therefore at Rs .45/ a year, and had put up thereon a tin shed which stood there from 1935 to 1941. It is clear that the strip of land was allowed to be used as a passage both to the well and the said tin shed. He admitted two letters, dated September 30, 1958 and December 4, 1959, having been written by him to the respondent both relating to rent due, by him in respect of :the said land on which the said tin shed stood. On these facts it is impossible to sustain the right of passage over the said strip of land as an easementary right by prescription for a continuous period of 20 years. As to the light and air through the windows on the western side, it is clear from Explanations II and III to section 33 that to constitute an actionable obstruction of free passage of light or air to the openings in a house it is not enough that the light or air is less than before. There must be a substantial privation of light, enough to render the occupation of the house uncomfortable, 351 according to the ordinary notions of mankind. See Colls vs Home and Colonial Stores(1). The plan produced in evidence shows that the central part of th e appellant 's building has five windows on the ground floor, five in addition to one smaller window on the first floor and four on the second floor. All these windows are in the rear side of the building and open out an to the said strip of land. There can be no doubt and the plan shows clearly that as a consequence of construction by the respondent, there would be a deprivation, partially though it would be, of light and air previously enjoyed 'by the appellant through these windows, especially as they are on the western side. On the ground floor, all the five windows are affected. On the first floor, only three windows are affected, and that too partially. On the second floor, none of the four windows is affected at all. Thus, so far as the ground and first floors are co , the appellant would not have the same amount of light and air. as before. But the evidence shows that there are openings, doors and windows, on each of these floors on the front side, i.e., on the eastern side. There was some evidence also that the ground floor bad so far been used as a godown ,or a store room, though the appellant a that he had been using it also as a living room. No attempt, however, was made on behalf of the appellant to establish that the obstruction caused by the respondent 's construction had been such as to amount to a substantial privation, so as to render occupation of the house by him uncomfortable. In the absence of such proof he was rightly nonsuited by the High Court. As regards the drain, we say nothing, as part of the appel lant 's claim in regard to it has been allowed by the High. Court and there are no cross objections against it by the respondent. In the view that we take, the appellant Cannot succeed on any one of the three questions raised by his counsel. The appeal, therefore, fails and has to be dismissed with costs. V.P.S. Appeal dismissed.

In 1906 the predecessor in title of the respondent leased out an open portion of land to the appellant 's father. The lease was for building a residential structure, and the appellant constructed a house. Though it was for 30 years certain, the lessee was entitled to remain in possession of the land so long as he paid the stipulated rent, which the lessor was not entitled to increase. There were no express words indicating that the leasehold rights were intended to be heritable. The deed provided for the right of the lessee to remove the structures after the lease period, meaning thereby vacating the land, if he so desired. It gave the lessee the right to transfer by sale the leasehold interest. In 1929, the original plot was given two numbers 94 and 93 the latter being the western portion in the possession of the respondent lessor and the former being the eastern portion leased out to the appellant. There was a strip of land, 4 ft. in width, immediately to the west of survey No. 94 and forming part of survey no 93. This strip of land was used by the appellant for passage for going to a well situated in plot No. 93. The appellant 's father had taken a portion of plot No. 93, including the strip, on lease, paying separate rent therefore and put up thereon a tin shed which stood there from 1935 to 1941. Sometime thereafter the respondent commenced construction on survey No. 93 in close vicinity to the appellant 's plot On the questions: (1) Whether the lease was a permanent lease; (2) there was an accession in respect of the strip of land within the meaning of section 108(d) of the , and therefore, the strip of land must be deemed to be comprised in the lease; and (3) whether the appellant had acquired by prescription, rights of easement of light and air and of passage over the strip of land under section 15 of the Easements Act, 1882. HELD: (1) The question as to whether a lease was permanent or for the life time only of the lessee, even where it was for building structures and was transferable, depends upon the terms of the lease. The mere fact that a lease provides for the interests thereunder to pass on to the heirs of the lessee would not always mean that it is a permanent lease. Such a provision can be made in two ways resulting in two different consequences. The lease may provide a fixed period and then include a provision that in the event of the lessee dying before the expiry of such period his heirs would be entitled to have the benefit of the lease for the remainder 336 of the period. In such caes, although the lease may provide for the heirs to succeed to the interests in the leased land it would only mean that such heirs succeed to the rights up. 'to the expiry of the lease period. If the lease provided that the lessee could continue in possession of the property so long as he paid the stipulated rent, it would usually be regarded as lease for an indefinite period and as such for the lessee 's life time. In such a case, if the lease contains a provision for the rights thereunder being heritable, then, such a lease,, though ordinarily for the lifetime of the lessee, would be construed as permanent. [341F H; 344C E] In the present case, since the lessee was entitled to remain in possession even after the lease period it was a lease for an indefinite period. But there was no provision in the deed making the lessee 's right heritable ' and therefore, it was not a permanent lease but only for the lifetime of the lessee. [344A; 346D E] (a) The words, if the lessee were to remove the buildings before the expiry of 30 years he would have to pay rent for the remainder of the period, do not show an intention to create a permanent lease. The clause providing for such removal is not that the lessee would remove the structures on default of payment of rent but on his own volition, a clause indicative of the parties not having intended the lease to be permanent. [344B; 345E F] (b) The words 'after the lease period ' mean either at the end of 30 years or at the death of the lessee. Therefore, the clause that after the lease period we shall, if we like, remove our buildings ', merely ensures the right to remove the structures if the lessee or his heirs so desired on the expiry of the lease period, that is, either at the end of 30 years or after the lifetime of the lessee. The heirs are mentioned here to provide for the contingency of the lessee dying before the expiry of 30 years and also for the contingency of his living beyond that period and continuing to occupy the land. In the event of the first contingency, the lessee 's heirs would continue in possession till expiry of 30 years and then remove the structures if they wished. In the case of the second contingency the heirs of the lessee would have a right to remove the structures on the death of the lessee. In either event the right provided for is the right to remove the structures. It was not a provisions for the lease being heritable and its being consequently a permanent lease. [345D H] (c) The pronoun used in the document is the vernacular equivalent of 'we ' used for the executant instead of the singular 'I ' and does not mean the lessee and his heirs. [346B C] Sivavogeswara Catton Press vs M. Panchaksharappa, ; , Lekhraj Ray vs Kunhya Singh, 1876 77 L.R. 4 I.A. 223 Vaman Shripad vs Maki, I.L.R. , Donkangonda vs Ravanshivappa, , Bavasaheb vs West Patent Co. 56 Bom. L.R. 61 and Abdul Rahim vs Sarafalli, , referred to. Sonabai vs Hiragayri, , Runge Lall Lobes vs Wilson, Cal. 204, Promoda Nath Roy vs section Chowdhry, Cal. 648 and Navalram vs Javerilal, , disapproved. (2) Under section 108(d) of if any accession is made to the leased property during the continuance of a lease, such accession is deemed to be comprised in the lease. [346F] 337 In the present case, the appellant made no serious attempt to establish accession by adverse possession. [347H] (a) When the plots were separately demarcated including the strip in the respondent 's portion no protest was ever made against such a demarcation by the appellant or his father. [347G] (b) The appellant made a categorical statement in evidence, that according to him the said strip of land was covered by the lease deed and was not an acquisition over and above the leased land under the deed, but the evidence showed that strip was not so included. [347G H], (c) The appellant sought to make out a case of easementary right by prescription, a case incompatible with the claim of adverse possession [348A B] (3) Under sections 12 and 15 of the Easements Act an easement by prescription can be acquired by assertion of hostile claim of certain rights over another man 's property. In order to acquire the easement the person who asserts the hostile claim must prove that he had, the consciousness to exercise that hostile claim on a property which is riot his ' own, and where no such consciousness is proved, he cannot establish a prescriptive acquisition of the right. Where he has pleaded ownership and has failed, he cannot subsequently turn round and claim that right as an easement by prescription. To prove the latter it is necessary to establish. that it was exercised on someone else 's property and not as an incident of his own ownership of that property. [349D G] In the present case, the appellant having claimed, though unsuccessfully, that the strip of land was included in the leased land or that there was an accession, he could not successfully claim that during the ' requisite period he exercised rights over it as the owner of a document tenement. Further,. he could not claim any right of passage because his use of the strip as a passage was permissive. [350C E] As to light and air through. the windows on the western side the appellant could succeed only if there was a substantial privation of light, enough lo render the,occupation of his house uncomfortable according to ordinary notions of mankind [350H 351IA] In the present case, the plan showed that as a consequence of construction by the respondent there would be a partial deprivation of light and air. But no attempt was made on behalf 'of the appellant to establish that the obstruction caused by the respondent 's construction had been such as to amount to substantial privation so as to render the occupation of the house by the appellant uncomfortable. [351 C E] Rayachand vs Maniklal, I.L.R. [1946] Boni. 184 (F.B.), approved Colls vs Home and Colonial Stores, ; , applied [The question,whether under sections 4.and,12 of the, Easement Acta lessee can acquire a right to light and air as against the owner, left open] [349A]

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ION: Criminal Appeal No.390/75. Appeal by special leave from the Judgment and Order dated 2.7.1975 of Punjab & Haryana High Court in Cr. A. No. 1554/74. Kapil Sibal, Subhash Sharma and Ravindra Bana for the Appellant. K.G. Bhagat and R. N. Poddar for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. What is the true role of a judge trying a criminal case ? Is he to assume the true role of a referee in a football match or an umpire in a cricket match, occasionally answering, as Pollock and Maitland(1) point out, the question 'How is that ', or, is he to, in the words of Lord Kenning 'drop the mantle of a judge and assume the role of an advocate ?(2) Is he to be a spectator or a participant at the trial ? Is passivity or activity to mark his attitude ? If he desires to question any of the witnesses, how far can he go ? Can he put on the gloves and 'have a go ' at the witness who he suspects is lying or is he to be soft and suave ? These are some of the questions which we are compelled to ask ourselves in this appeal on account of the manner in which the judge who tried the case put questions to some of the witnesses. 14 The adversary system of trial being what it is, there is an unfortunate tendency for a judge presiding over a trial to assume the role of a referee or an umpire and to allow the trial to develop into a contest between the prosecution and the defence with the inevitable distortions flowing from combative and competitive element entering the trial procedure. If a criminal court is to be an effective instrument in dispensing justice, the presiding judge must cease to be a spectator and a mere recording machine. He must become a participant in the trial by evincing intelligent active interest by putting questions to witnesses in order to ascertain the truth. As one of us had occasion to say in the past. "Every criminal trial is a voyage of discovery in which truth is the quest. It is the duty of a presiding Judge to explore every avenue open to him in order to discover the truth and to advance the cause of justice. For that purpose he is expressly invested by section 165 of the Evidence Act with the right to put questions to witnesses. Indeed the right given to a Judge is so wide that he may 'ask any question he pleases, in any form, at any time, of any witness, or of the parties about any fact, relevant or irrelevant. Section 172 (2) of the Code of Criminal Procedure enables the Court to send for the police diaries in a case and use them to aid it in the trial. The record of the proceedings of the committing Magistrate may also be perused by the Sessions Judge to further aid him in the trial." (1) With such wide powers, the Court must actively participate in the trial to elicit the truth and to protect the weak and the innocent. It must, of course, not assume the role of a prosecutor in putting questions. The functions of the counsel, particularly those of the Public Prosecutor, are not to be usurped by the judge, by descending into the arena, as it were. Any questions put by the judge must be so as not to frighten, coerce, confuse or intimidate the witnesses. The danger inherent in a judge adopting a much too stern an attitude towards witnesses has been explained by Lord Justice Birkett: "People accustomed to the procedure of the Court are likely to be over awed or frightened, or confused, or distressed when under the ordeal of prolonged questioning from the presiding Judge. Moreover, when the questioning takes on a sarcastic or ironic tone as it is apt to do, or when it takes on a hostile note as is sometimes almost inevitable, the danger is 15 not only that witnesses will be unable to present the evidence they may wish, but the parties may begin to think, quite wrongly it may be, that the judge is not holding the scales of justice quite eventually"(1) In Jones vs National Coal Board Lord Justice Denning observed: "The Judge 's part in all this is to hearken to the evidence, only himself asking questions of witnesses when it is necessary to clear up any point that has been over looked or left obscure; to see that the advocates behave themselves seemly and keep to the rules laid down by law; to exclude irrelevancies and discourage repetition; to make sure by wise intervention that he follows the points that the advocates are making and can assess their worth; and at the end to make up his mind where the truth lies. If he goes beyond this, he drops the mantle of the judge and assumes the role of an advocate; and the change does not become him well. " We may go further than Lord Denning and say that it is the duty of a judge to discover the truth and for that purpose he may "ask any question, in any form, at any time, of any witness, or of the parties, about any fact, relevant or irrelevant" (Sec. 165 Evidence Act). But this he must do, without unduly trespassing upon the functions of the public prosecutor and the defence counsel, without any hint of partisanship and without appearing to frighten or bully witnesses. He must take the prosecution and the defence with him. The Court, the prosecution and the defence must work as a team whose goal is justice, a team whose captain is the judge. The judge, 'like the conductor of a choir, must, by force of personality, induce his team to work in harmony; subdue the raucous, encourage the timid, conspire with the young, flatter and old '. Let us now take a look at the facts of the case before us. Ram Chander and Mange were tried by the learned Additional Sessions Judge, Jind, for the murder of Dunni. Both were convicted under Sec. 302 read with Sec. 34 Indian Penal Code and sentenced to imprisonment for life. On appeal the High Court acquitted Mange but confirmed the conviction of Ram Chander. The prosecution case was that on February 14, 1974, at about 11 a.m. Dunni was proceeding from his field towards the village, Sucha Khera and was 16 passing near the field of Ram Chander and Mange when he was attacked by them with Jatus (wooden pegs fixed to a cart). They inflicted several injuries on Dunni. Mewa (P.W.9) who was working in his field tried to rescue Ram Chander. He was given a lathi blow on his head. On hearing the alarm raised by Dunni, Hari Chand (P.W.8) and Jiwana (P.W.2) and others came there and witnessed the occurrence. The assailants ran away. Jiwana the Lambardar proceeded to the village to inform the relatives of Dunni. On the way he met Dhan Singh (P.W. 10), and told him about the occurrence. Jiwana thereafter went to the Police Station at Narwana and lodged the First Information Report at about 5.15 p.m. The Sub Inspector of Police went to the village. He held the inquest and sent the dead body for post mortem examination. He looked for Mewa and Hari Chand. Both of them were not available in the village. A constable was sent to fetch them from Sucha Khera. Neither of them was brought that night. Next morning he was able to examine Mewa but Hari Chand was not to be found. Hari Chand was finally examined on 16th. The Doctor who conducted the autopsy found thirteen injuries on the body of Dunni. There were fractures of the left partial, frontal and occipital bones. According to the Doctor that was due to "compression of brain with multiple fractures of skull". On February 15, 1974, at about 4 P.M. the Doctor also examined Mewa and found on the right side of his head an abrasion 1" x 1/4". In support of its case the prosecution examined P.Ws. 2, 8 and 9 as eye witnesses to the occurrence. P.W. 10 was examined to speak to the information alleged to have been given to him by P.Ws. 2 and 8 that the deceased had been beaten by the two accused persons. P.W. 2 did not support the prosecution case and was declared hostile. P.Ws. 8 and 9, the remaining eyewitnesses seemingly supported the prosecution case in varying degrees in the examination in chief, but they made some damaging admissions in cross examination. P.W. 9 even in examination in chief stated that Mange was not armed with any weapon though he was present alongwith Ram Chander. The learned Sessions Judge convicted both Ram Chander and Mange but having regard to the evidence of P.W. 9 the High Court acquitted Mange and confirmed the conviction of Ram Chander. It was argued by Shri Kapil Sibal, learned Counsel for the appellant that in view of the several statements made by P.Ws. 8 and 9 in their cross examination, their evidence should not have been 17 accepted by the Courts below. Shri Sibal also submitted that the accused did not have a fair trial as the learned Sessions Judge particularly assumed the role of a Prosecutor. Hari Chand, P.W. 8 said in his examination in chief that when he was working in his field he heard a noise from the side of the field of Mange. He and Jiwana (P.W. 2) went in that direction. From a distance they saw Mange and Ram Chander giving blows to Dunni with dandas. By the time they went near, Ram Chander and Mange ran away. They saw Mange tying a piece of cloth round the head of Dunni. Dunni was bleeding and was hardly able to breathe. They went to the village to inform the people about the occurrence. On the way they met P.W. 10 and told him about Dunni. having been beaten by the two accused. Later that day he went to Sucha Khera for official work. The police examined him on 16.2.74. We have already referred to the circumstance that he was not available for examination by the Police on 14th and 15th. He sought to explain his absence from the village by stating that he went to Sucha Khera in connection with his official work. In cross examination he admitted that he did not mention this fact in the Roznamcha (daily diary). He also admitted that the village Sucha Khera was not within his jurisdiction. He further admitted that the notice for serving which he went to Sucha Khera was with regard to water shoot No. 14750 at Sucha Khera. In answer to a question whether he only saw the accused running away or doing something else, he categorically stated that he did not see those persons causing injuries but only saw them running away. Thereupon the Sessions Judge told him that in his examination in chief he had said that he had seen Mange and Ram Chander causing injuries and that if he made inconsistent statements on material points he could be prosecuted for perjury. The Sessions Judge has made a note to this effect in the deposition itself. In answer to a further question P.W. 8 stated that when they were running away their backs were towards him. The Sessions Judge once again repeated the warning which he had given earlier. The Sessions note with regard to the first warning is in the following words: "The witness has been explained right here his statement which has gone on record and he has been told that in examination in chief he has said that he had seen Mange and Ram Chander causing injuries. He had also been informed that 18 a person can be prosecuted for perjury if on material points in consistent statements are made. " The second warning which was given by the learned Sessions Judge has been recorded by the learned Sessions Judge in the following words: "As was pointed out to you yesterday also, it is once more pointed out to you that in examination in chief yesterday, you clearly stated before the Court that you saw Ram Chander and Mange causing injuries to Dunni. Later on in cross examination by Shri Shamsher Singh you said that you saw the accused persons running away. You have already been warned about the consequences of inconsistent replies. Without fear or favour tell the Court, which of the two statements is correct and whether you saw Mange and Ram Chander causing injuries to Dunni or not. " To this question the answer of the witness was that when he was at some distance he saw them causing injuries but by the time he went near they had run away. P. W. 9 stated even in his chief examination that when he saw Mange and Ram Chander, they were running in the direction of Denuda. Ram Chander had a danda. Mange was empty handed. They started beating a person who was coming from Denuda side. He tried to rescue, the person. He was given a blow on his head with a stick. He felt giddy and sat down. He did not know what happened afterwards because he was feeling faint. He came to his senses when Lambardar and Patwari came there. Then he went to his village. He stated in cross examination that on 15th he was called by the Police and taken to the field and from the field he was taken to Narwana where he was kept in the Police Station upto 16th. He was allowed to go away after his statement was recorded by the Magistrate under section 164 Cr. Procedure Code. Jiwana was also there at that time. When he was asked whether the statement which he made to the Magistrate was tutored his reply was "Yes, the statement was told". Later again he said "I gave the statement as told by the police." He stated that he was not beaten but only threatened. He further stated that the day before he gave evidence in Court he was threatened by the Police that if he did not give the statement he would himself be involved in a case. He also said that he wanted to say whatever he actually saw but the police did not agree and said that he must give the entire statement as mentioned by them. During the course of the cross examination of 19 the witness the learned Sessions Judge made two notes which may be extracted here. The first note runs: "This time the witness says that the police said that the police will make a case against him. Previously the witness was not prepared to go to that extent. I wonder whether the witness understands the difference between two things namely that the Police will make a case against him and between this that if he changed his statement he will involve himself in a case. The matter to be appreciated at appropriate stage. The second note is as follows: "I will examine the witness through Court questions as to which part of the statement he admits to be correct without fear of the police. The learned defence counsel may proceed further to build up his defence. " Thereafter the learned Sessions Judge himself put some questions to the witness. The witness said that he did not tell the Magistrate that he was making the statement under the pressure of the Police. The learned Sessions Judge then put him the following question: "You have said that even before me you are making a statement under the pressure of the police. Please state whether you mean it. and you were giving the statement under pressure of the police. " The answer was that "I am giving the statement freely. " The learned Sessions Judge put him a few more questions one of which was whether he was honestly stating that Mange was bare headed and Ram Chander had a dunda. The witness answered that he said so honestly. The questions put by the learned Sessions Judge, particularly the threats held out to the witnesses that if they changed their statements they would involve themselves in prosecutions for perjury were certainly intimidating, coming as they did from the presiding judge. The learned Sessions Judge appeared to have become irate that the witnesses were not sticking to the statements made by them under sections 161 and 164 and were probably giving false evidence before him. In an effort to compel them to speak what he thought must be the truth, the learned Sessions Judge, very wrongly, in our opinion, firmly rebuked them and virtually threatened them with prosecutions for perjury. He left his seat and entered the ring, we may say. The principle of 'fair trial ' was abandoned. We find it impossible to justify the attitude adopted by the Sessions Judge and we also find it 20 impossible to accept any portion of the evidence of P.Ws 8 and 9, the two alleged eye witnesses. Shri Bhagat very ingeniously argued that the evidence of P.Ws 8 and 9 could yet be acted upon to the extent their evidence was substantiated by the first information report given by P.W.2. When we pointed out that neither PW 8 nor PW9 was the author of the first information report and, therefore, the report could not be used to corroborate their evidence, Shri Bhagat suggested that we could do so by invoking the provisions of Section 11 of the Evidence Act. He relied upon the following observations of Beg J. in Ram Kumar Pande vs The State of Madhya Pradesh: (1) "No doubt, an F.I.R. is a previous statement which can, strictly speaking, be only used to corroborate or contradict the maker of it. But, in this case, it had been made by the father of the murdered boy to whom all the important facts of the occurrence, so far as they were known up to 9.15 p.m. on 23 3 1970, were bound to have been communicated. If his daughters had seen the appellant inflicting a blow of Harbinder Singh, the father would certainly have mentioned it in the F.I.R. We think that omissions of such important facts, affecting the probabilities, of the case, are relevant under Section 11 of the Evidence Act in judging the veracity of the prosecution case". Beg, J, apparently had the first part of Section 11 in mind and thought that the presence of the daughters at the scene was inconsistent with the failure of the father to refer to their presence in the first information report having regard to the circumstances under which the report must have been made. Even assuming that under certain circumstances it is permissible to use the first information report under the first part of Section 11 (we say nothing about the correctness of the view), there is in the present case no question of invoking the first part of Section 11, which is inapplicable since the first information report is now not sought to be used as being inconsistent with the prosecution case. Nor do we think that the first information report can be used by resort to the second part of section 11, The Evidence Act contains detailed provisions dealing with statements of persons who cannot be called as witnesses and former statements of persons who are called as witnesses. These 21 provisions would appear to become redundant if the evidence of a witness is to be tested and accepted or rejected with reference to the former statement of another witness, on the ground that such former statement renders the evidence highly probable or improbable. We can do no better than to refer to Stephen, the framer of the Section who said: "It may possibly be argued that the effect of the second paragraph of Section 11 would be to admit proof of such facts as these (viz. statements as to facts by persons not called as witness; transactions similar to but unconnected with the facts in issue; opinions formed by persons as to facts in issue or relevant facts). It may, for instance, be said: A (not called as a witness) was heard to declare that he had seen B commit a crime. This makes highly probable that B did commit that crime. Therefore A 's declaration is a relevant fact under Section 11 this was not the intention of the section as is shown by the elaborate provision contained in the following part of Chapter 11 (Sections 31 to 39) as the particular classes of statements, which are regarded as relevant facts either because the circumstances under which they are made invest them with importance, or because no better evidence can be got. The sort of facts which the section was intended to include are facts which either exclude or imply more or less distinctly the existence of the facts sought to be proved". We, therefore, do not think that section 11 may be invoked in the present case, in the manner suggested by the learned counsel. In the result we accept the appeal, set aside the conviction and sentence and direct the appellant to be set at liberty forthwith. V.D.K. Appeal allowed.

The appellant Ram Chander and Mange were tried by the learned Additional Sessions Judge, Jind, for the murder of Dunni. Both were convicted under section 302 read with section 34 Indian Penal Code and sentenced to imprisonment for life. On appeal the High Court acquitted Mange but confirmed the conviction and sentence of Ram Chander. In appeal by special leave it was contended that the conviction and sentence were vitiated as the principle of fair trial was abandoned by the Sessions Judge who rebuked the witnesses and threatened them with prosecution for perjury and based his conviction on such extorted evidence. Allowing the appeal, the Court ^ HELD: 1: 1. If a Criminal Court is to be an effective instrument in dispensing justice, the presiding judge must cease to be a spectator and a mere recording machine. He must become a participant in the trial by evincing intelligent active interest by putting questions to witnesses in order to ascertain the truth. The Court has wide powers and must actively participate in the trial to elicit the truth and to protect the weak and the innocent. It is the duty of a judge to discover the truth and for that purpose he may "ask any question, in any form, at any time, of any witness, or of the parties, about any fact, relevant or irrelevant". But this he must do, without unduly trespassing upon the functions of the public prosecutor and the defence counsel, without any hint of partisanship and without appearing to frighten, coerce, confuse, intimidate or bully witnesses. He must take the prosecution and the defence with him. The Court. the prosecution and the defence must work as a team whose goal is justice, a team whose captain is the judge. The judge, "like the conductor of a choir, must, by force of personality, induce his team to work in harmony; subdue the raucous, encourage the timid, conspire with the young, flatter and old. " F] Sessions Judge, Nellore vs Intna Ramana Reddy and Anr. , I.L.R. , approved. Jones vs National Coal Board, ; , quoted with approval. In the instant case, the questions put by the learned Sessions Judge, particularly the threats held out to the witnesses that if they changed their statements they would involve themselves in prosecution for perjury were certainly intimidating, coming as they did from the presiding judge. In an effort to compel 13 the witnesses to speak what he thought must be truth, the learned Sessions Judge, very wrongly, firmly rebuked them and virtually threatened them with prosecutions for perjury. He left his seat and entered the ring. The principle of "fair trial" was abandoned. [19 F H] 2. The Evidence Act contains detailed provisions dealing with statements of persons who cannot be called as witnesses and former statements of persons who are called as witnesses. These provisions would appear to become redundant if the evidence of a witness is to be tested and accepted or rejected with reference to the former statement of another witness on the ground that such former statement renders the evidence highly probable or improbable. Even assuming that under certain circumstances it is permissible to use the first information report under the first part of section 11 there is in the present case no question of invoking the first part of section 11, which is inapplicable since the first information report is now not sought to be used as being inconsistent with the prosecution case. Nor can first information report be used by resort to the second part of section 11. [20 H 21 A; 20 F G] Ram Kumar Pande vs The State of Madhya Pradesh, ; @ 522, discussed.

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Appeal No. 135 of 1955. Appeal by special leave from the judgment and order dated October 30, 1952, of the Labour Appellate Tribunal of India, Allahabad, in Misc. Case No. C 146 of 1952. R. R. Biswas, for the appellant. Sukumar Ghose (amicus curiae), for the respondents. November 28. The Judgment of the Court was delivered by S.K. DAS J. This is an appeal by special leave from the judgment and order of the Labour Appellate Tribunal of India at Allahabad dated October 30, 1952. The relevant facts are these. The Banaras Ice Factory Limited, the appellant before us, was incorporated on September 13, 1949, as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras though its registered office was in Calcutta. The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times. These workmen were employed from the month of March to the month of September 145 year. The appellant company got into financial difficulties on account of trade depression, rise in the price, of materials and increase in the wages and emoluments of workmen. It tried to secure a loan of Rs. 10,000/ from a Bank but met with no success. Thereupon, it decided to close down the factory and on January 15, 1952, a notice was given to its workmen saying that the factory would be closed down with effect from January 17, 1952, and the services of the workmen would not be necessary for two months from that date. The work. men received their wages up to January 16, 1952. On March 18, 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from January 17, 1952. The dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication. In the meantime, that is, on June 6, 1952, the workmen gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on June 12, 1952. A settlement was, however, arrived at between the parties on June 15, 1952, at the house of the Collector of Banaras. The terms of that settlement, inter alia, were: (1) the management would withdraw its notice of closure dated June 12, 1952 ; (2) the workmen would withdraw their strike notice dated June 6, 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from June 16, 1952, and would report for duty on July 16, 1952, at 8 A.M. and (4) after the workers had resumed their duty on July 16, 1952, the appellant would not terminate the services of any workmen or lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad. On June 28, 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its work , men with regard to the alleged wrongful laying off of the workmen from January 17, 1952, to March 18, 1952, 19 146 referred to above. By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question. On July 16, 1952, none of the workmen reported for duty in accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to the effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from July 16, 1952. The workmen, it is stated, accepted the notice and took their pay for one month (from July 16 to August 15, 1952) without any protest. Against the award of the Regional Conciliation Officer dated June 28, 1952, the appellant filed an appeal to the Labour Appellate Tribunal on July 25, 1952. On August 31, 1952, a complaint was made on behalf of the workmen to the Labour Appellate Tribunal under section 23 of the Industrial _ Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act. The gravamen of the complaint was that the appellant had contravened the provisions of section 22 of the Act. because the appellant had discharged all the workmen with effect from August 15, 1952, without the permission in writing of the Labour Appellate Tribunal during the pendency before it of the appeal filed on July 25, 1952, against the award of the Regional Conciliation Officer. The Labour Appellate Tribunal dealt with this complaint by its order dated October 30, 1952. Before the Labour Appellate Tribunal it was urged on behalf of the appellant that there was no contravention of a. 22, because on July 16, 1952, when the notice of discharge was given by the appellant, no appeal was pending before it, the appellant 's appeal having been filed several days later, namely, on July 25, 1952. This contention was not accepted by the Labour Appellate Tribunal on the ground that though the notice of discharge was given on July 16, 1952, the termination of service was to come into operation after one month, that is, from August 15, 1952, on which date the appeal before the Labour Appellate Tribunal was certainly pending. As learned counsel for the 147 appellant has not again pressed this point before us, it is not necessary to say anything more about it. A second point uroed before the Labour Appellate Tribunal was that the appellant had the right to close down the factory, when the appellant found that it was not in a position any longer to run the factory. The agreement of June 15, 1952, did not stand in the appellant 's way, as the workmen themselves did not report for duty on July 16, 1952. The closure being a bona fide closure, it was not necessary to obtain the permission of the Labour Appellate Tribunal and there was therefore no contravention of section 22 of the Act. The Labour Appellate Tribunal apparently accepted the principle that the appellant had the right to close its business but took the view that permission should have been obtained before the closure. It referred to the agreement of June 15, 1952, and held that though the appellant had the right to close its business, permission was still necessary and in the absence of such permission, the appellant was guilty of contravening cl. (b) of section 22 of the Act, and directed that the appellant should pay its workmen full wages as compensation for the period of involuntary unemployment up to the date of its award, that is, during the period from August 16, 1952, to October 30, 1952. Relying on the decision in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (1), learned counsel for the appellant has urged three points before us. His first point is that the termination of the services of all workmen on a real and bona fide closure of business is not 'discharge ' within the meaning of cl. (b) of section 22 of the Act. His second point is that if the word 'discharge ' in cl. (b) aforesaid includes termination of services of all workmen on bona fide closure of business, then the clause is an unreasonable restriction on the fundamental right guaranteed in el. (g) of article 19 (1) of the Constitution. His third point is that, in any view, the Labour Appellate Tribunal, was not entitled to grant compensation to the workmen, because section 23 of the Act did not in terms entitle the Labour (1) A.I.R. 1956 All. 148 Appellate Tribunal to pass an order of compensation. We may state here that if the appellant succeeds on the first point, it becomes unnecessary to decide the other two points. For a consideration of the first point, we must first read sections 22 and 23 of the Act. Section 22: " During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act, no employer shall (a)alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal. " Section 23: " Where, an employer contravenes the provisions of section 22 during the pendency of proceedings before the Appellate Tribunal, any employee, aggrieved by such contravention, may make a complaint in writing, in the prescribed manner, to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly." The short question before us is whether the word 'discharge ' occurring in cl. (b) of section 22 includes termination of the services of all workmen on a real and bona fide closure of his business by the employer. It is true that the word 'discharge ' is not qualified by any limitation in cl. We must, however, take the enactment as a whole and consider section 22 with reference to the provisions of the , (XIV of 1947) which is in pari materia with the Act under our consideration. We have had occasion to consider recently in two cases the general scheme and 149 scope of the . In Burn & Co., Calcutta vs Their Employees(1) this Court observed that the object of all labour legislation was ' firstly, to ensure fair terms to the workmen and secondly, to prevent disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might not suffer. In Pipraich Sugar Mills Ltd. vs Pipraich Sugar Mills Mazdoor Union (2) it was observed " The objects mentioned above can have their fulfilment only in an existing and not a dead industry. " We accepted the view expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal(3) and K. M. Padmanabha Ayyar vs The State Of Madras (4) that the provisions of the , applied to an existing industry and not a dead industry. The same view was reiterated in Hariprasad Shivshankar Shukla vs A. D. Divikar (5) where we held that 'retrenchment ' in cl. (oo) of section 2 and section 25F did not include termination of the services of workmen on bona fide closure of business. Turning now to section 22 of the Act, it is clear enough that el. (a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end. The alteration referred to in cl. (a) must therefore be an alteration in the conditions of service to the prejudice of the workmen concerned, in an existing or running industry. Similarly, the second part of cl. (b) relating to punishment can have application to a running or existing industry only. When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise. We are then left with the word 'discharge '. Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope of the . Our attention has been drawn to (1) ; (4) (2) 2. (5) [1957] S.C. R.121. (3) A.I. R. 150 the definition of 'workman ' in cl. (s) of a. 2, which says ". for the purposes of any proceeding under this Act in relation to an industrial dispute, (the definition) includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute. " In the said definition clause also, the word 'discharge ' means discharge of a person in a running or continuing business not discharge of all workmen when the industry itself ceases to exist on a bona fide closure of business. The true scope and effect of sections 22 and 23 of the Act were explained in The Automobile Products of India Ltd. vs Rukmaji Bala (1). It was pointed out there that the object of section 22 was " to protect the workmen concerned in disputes which formed the subject matter of pending proceedings against victimisation " and the further object was " to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of these proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relations between the employer and the workmen. " Those objects are capable of fulfilment in a running or continuing industry only, and not a dead industry. There is hardly any occasion for praying for permission to lift the ban imposed by section 22, when the employer has the right to close his business and bona fide does so, with the result that the industry itself ceases to exist. If there is no real closure but a mere pretence of a closure or it is mala fide, there Is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under a.23 of the Act. For these reasons, we must uphold the first point taken before us on behalf of the appellant. The Appellate Tribunal was in error in holding that the (1) ; 151 appellant had contravened cl. (b) of section 22 of the Act. The Appellate Tribunal did not find that the closure of the appellants business was not bona fide; on the ' contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it. As to the agreement of June 15, 1952, the workmen themselves did not abide by it and the appellant 's right cannot be defeated on that ground. In view of our decision on the first point, it becomes unnecessary to decide the other two points. On the point of construction of section 22 of the Act,, we approve of the decision of the Allahabad High Court in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (supra) but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have expressed our assent, contrary to the opinion expressed by us in the case of The Automobile Product8 of India Ltd. (supra) to the view that under section 23 of the Act, it is not open to an industrial Tribunal to award compensation in an appropriate case. In the result, the appeal is allowed and the decision of the Labour Appellate Tribunal dated the 30th October 1952 is set aside. As the workmen did not appear before us, there will be no order for costs. We are indebted to Mr. Sukumar Ghosh for presenting before us the case of the workmen as amicus curiae. Appeal allowed.

Clause (b) Of section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 provides that during the pendency of any appeal under the Act no employer shall discharge any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal, and section 23 enables any employee to make a complaint in writing to such Appellate Tribunal, if the employer contravenes the provisions Of section 22 during the pendency of proceedings before the said Tribunal. 144 During the pendency of an appeal filed before the Labour, Appellate Tribunal the appellant company finding it difficult to run the factory decided to close it down and gave notice to all the workmen that their services would be terminated upon the expiry of thirty days from July 16, 1952. On August 31, 1952, a complaint was made on behalf of the workmen to the Tribunal under section 23 Of the Act that the appellant had discharged them without the permission in writing of the Tribunal and had thereby contravened the provisions of section 22 of the Act. It was found that the closure of the appellant 's business was bona fide. Held, that section 22 of the Act is applicable only to an existing or running industry and that the termination of the services of all workmen, on a real and bona fide closure of business, is not 'discharge ' within the meaning of section 22(b) of the Act. J. K. Hosiery Factory vs Labour Appellate Tribunal of India (A.I.R. 1956 All. 498), approved on the point of construction of section 22 of the Act. Pipraich Sugar Mills Ltd. vs The Pipraich Sugar Mills Mazdoor Union followed.

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Appeal No. 700 of 1963. Appeal by special leave from the judgment and order dated January 11, 1961 of the Madras High Court in Case Referred No. 131 of 1956. 21 H. N. Sanyal, Solicitor General, N. D. Karkhanis and R. N. Sachthei, for the appellant. K. Srinivasan and R. Gopalakrishnan, for the respondent. April 29, 1964. The judgment of SUBBA RAO AND SIKRI JJ. was delivered by SUBBA RAO J. SHAH J. delivered a dissenting opinion. SUBBA RAO, J. This appeal by special leave is directed against the order of the High Court of Madras in a reference made to it by the Income tax Appellate Tribunal under section 66(2) of the Indian Income tax Act, 1922, hereinafter called the Act. The facts that have given rise to the appeal may briefly be stated. There are 5 firms in Sivakasi manufacturing matches under the name and style of Shenbagam Match Works, Brilliant Match Works, Manoranjitha Match Works, Pioneer Match Works and Gnanam Match Works. The total number of the partners of all the 5 firms does not exceed 1 0 or II in number. Rajamoney Nadar is the sole proprietor of Shenbagain Match Works and in the other 4 firms there are more than one partner. In the year 1948 a person from each of those firms in his representative capacity formed a partnership to carry on the business of banking and commission agents, the principal business being the marketing of the products of the different match factories in Sivakasi. When the said partnership applied for registration for the assessment year 1949 50, it was refused by the Income tax Department on the ground that different firms could not constitute a valid partnership. Thereafter, Sankaralinga Nadar, Arumughaswami Nadar, Arunachala Nadar, Palaniswamy Nadar and Rajamoney Nadar the first four being one of the partners of their respective firms and the last being the sole proprietor of his firm, in their individual capacity entered into a part nership for the aforesaid purpose and executed a partnership deed dated April 1, 1950. They presented the said deed of partnership to the Income tax Officer for registration. The Income tax Officer by his order dated October 27, 1952, re gistered the same under section 26A of the Act: but the Commissioner of Income tax under s.33B of the Act, cancell 22 ed the registration by an order dated October 23, 1954, and directed the assessment to take place as that of an unregis tered firm. On appeal, the Income tax Appellate Tribunal held, on a construction of the partnership deed and also on the basis of some other circumstances, that the said deed "is not genuine and brought into existence only as a simulate arrangement, that the profits which are distributed under the deed to the individuals mentioned therein are not the true profits of those individuals." In short it held that the said partnership deed was not a genuine one. On a reference made to the High Court of Judicature at Madras, a Division Bench of that High Court, on a construction of the document, came to the conclusion that the Match Works were not the real parties to the partnership but the parties of the document were the real partners. Hence the present appeal. Learned counsel for the Revenue raises before us the fol lowing two points, namely, (i) the findings of the Appellate Tribunal was one of fact and that the High Court had no jurisdiction to canvass the correctness of its finding on a reference made under section 66(2) of the Act, and (ii) the con clusion arrived at by the Tribunal was the correct one and the High Court erroneously interfered with it. It is common place that under section 66(2) of the Act a reference to the High Court lies only on a question of law. The scope of the provision has been elaborately considered by this Court in Sree Meenakshi Mills Ltd. vs Commissioner of income tax, Madras( '). Therein the scope of the provision has been laid down under different propositions. On the basis of the judgment it cannot be gainsaid that if the order refusing registration goes beyond the scope of the jurisdiction conferred on the Income tax Officer under section 26A of the Act and the Rules made thereunder or if the decision depends upon the construction of the partnership deed or if there is no evidence to sustain the finding of the Tribunal, then the High Court will have jurisdiction to entertain the reference under section 66(2) of the Act. In our view, the finding of the Tribunal falls squarelv under the said three heads. The relevant provisions of the Act read thus: (1) ; 23 Section 26A. (1) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by. the Income tax Officer in such manner as may be prescribed. In exercise of the powers conferred by section 59 of the Act, the Central Board of Revenue made the following rules: Rule 2. Any firm constituted under an instrument of partnership specifying the individual shares of the partners may, under the provisions of Section 26A of the Indian Income tax Act, 1922 (hereinafter in, these rules referred to as the Act), register with the Income tax Officer, the particulars contained in the said Instrument on application made in this behalf. Such application shall be given by all the partners (not being minors) personally and shall be made (a) before the income of the firm is assessed for any year under Section 23 of the Act, or Rule 3. The application referred to in Rule 2 shall be made in the form annexed to this rule and shall be accompanied by the original Instrument of Partnership under which the firm is constituted, together with a copy thereof; 24 FORM I For of Application for Registration of a Firm tinder section 26A of the Indian Income tax Act, 1922 Rule 4. If, on receipt of the application referred to in Rule 3, the Income tax Officer is satisfied that there is or was a firm in existence constituted is shown in the instrument of partnership and that the application has been properly made, lie shall enter in writing at the foot of the instrument or certified copy, as the case may be, a certificate in the following form, namely: . Rule 6B. In the event of the Income tax Officer bein satisfied that the certificate granted under Rule 4, or under Rule 6A, has been obtained without there being a genuine firm in existence, he may cancel the certificate so granted. A combined effect of section 26A of the Act and the rules made thereunder is that if the application made by a firm gives the necessary particulars prescribed by the rules, the Income tax Officer cannot reject it, if there is a firm in existence as shown in the instrument of partnership. A firm may be said to be not in existence if it is a bogus or not a genuine one, or if in law the constitution of the partnership is void. The jurisdiction of the Income tax Officer is, therefore, confined to the ascertain I ing of two facts, namely, (i) whether the application for registration is in conformity with the rules made under the Act, and (ii) whether the firm shown in the document pre sented for registration is a bogus one or has no legal existence. Further, the discretion conferred on him under section 26A is a judicial one and he cannot refuse to register a firm on mere speculation. but he shall base his conclusion on relevant evidence. What are the facts in the present case? The partnership deed is dated April 1, 1950. In the document five persons are shown as its partners. The name of the firm is given, the 25 objects of the partnership business are described, the dura tion of the business is prescribed and the capital fixed is divided between them in equal share. Clause 16 of the Partnership deed, on which the Tribunal relied, reads: "This firm shall collect a commission of half an anna per gross on the entire production of the match factories of the partners, respectively, the Brilliant Match Works, Manoranjitha Match Works, Pioneer Match Works, Shenbagam Match Works and Gnanam Match Works produced from 1st April 1950 whether sales were effected through this firm or not and a further commission of half an anna per gross on the sales effected through this firm. This commission will be collected on all kinds of matches produced from the abovesaid factories. The commission of half an anna per gross on the entire production of these factories accrued due at the end of every month shall be debited to the respective factories under advice to them. " Clauses 22 and 23 which throw further light on the question raised read: Clause 22. The business of this firm shall have and has no connection with the match manufacturing business carried on now by the partners separately or in partnership with others. Clause 23. Any loss to the firm by way of fire accident or by any other cause during the course of the business of the firm, notwithstanding the fact that the loss might have arisen on the sale of or transaction relating to the match manufacturing concerns of the partners to this deed, shall be borne by this firm and shall be equally divided between the partners to this deed. It is not disputed that the partnership deed ex facie conforms to the requirements of the law of partnership as well as the Income tax Act. Under s.4 of the Indian Partnership Act partnership is the relation between persons who have agreed 26 to share the profits of the business carried on by all or any of them acting for all persons who have entered into the partnership with one another called individually partners and collectively a firm and the name under which the business is carried on is called the firm name. The document certainly conforms to the said definition. There is also no prohibition under the Partnership Act against a partner or partners of other.firms combining together to form a separate partnership to carry on a different business. The fact that such a partner or partners entered into a sub partnership. with others in respect of their share does not detract from the validity of the partnership; nor the manner in which the said partner deals with the share of his profits is of any relevance to the question of the validity of the partnership. The document, therefore, embodies a valid partnership entered into in conformity with the law of partnership. But the Tribunal has held that the partnership is not a genuine one for the following reasons: (i) previously the firm entered into a partnership but the registration of the same was rejected; (ii) under cl. 16 of the partnership deed the firm has the right to collect the commission of the entire match production of the larger partnerships whether they effect their sales through the firm or not; (iii) the books of Gnanam Match Works show unmistakably that the capital was contributed not by Palaniswamy Nadar in his individual capacity but by the larger firm as such; and (iv) regarding the other three larger firms also the profit delivered by their representatives from the assessee firm was divided amongst all the partners according to their profit sharing ratio in the larger firms. On the other hand, the High Court found, on a construction of the relevant clauses of the partnership deed that the business was the business of the partners of the firm, alone and that the two circumstances relied upon by the Tribunal were irrelevant in acertaining whether the said partnership was real or not. We have already pointed out that the document ex facie discloses a valid partnership. The partnership was avowedly entered into by the partners in their individual capacity as their previous partnership in their representative capacity was not registered on the ground that such a part 27 nership was illegal. If the larger firms cannot constitute members of a new partnership, some of the partners of those firms can certainly enter into a partnership shedding their representative capacity if they can legally do so. If they can do so, the mere fact that one of them borrowed the capital from a parent firm we are using this expression for convenience of reference or some of them surrendered their profits to the parent firm cannot make it anytheless a genuine firm. Nor does cl. 16 of the partnership deed detract from its genuineness: that clause does not create any right in the partnership to collect the commission; in view of the close Connection between the assessee firm and the parent firms, the parent firms were expected to effect all their sales through the assessee firm. If they did not and if they refused to pay commission, the assessee firm could not enforce its right under the said clause. Clause 22 in express terms emphasizes the separate identities of the assessee firm and the parent firms, and cl. 23 declares that notwithstanding the fact that the loss to the assessee firm has arisen on the sale or transaction relating to the match manufacturing concerns, the assessee firm alone shall bear the loss and thereby indicates that the loss of the assessee firm will not be borne by the parent firms. If the assessee firm has a separate legal existence, the two circumstances relied upon by the Tribunal, namely, that Palaniswamy Nadar, one of the partners of the assessee firm, brought in the capital from his parent firm or that the profits earned by some of the partners were surrendered to the parent firms, would be irrelevant. A partner of a firm can certainly secure his capital from any source or surrender his profits to his sub partner or any other person. Those facts cannot conceivably convert a valid partnership into a bogus one. The Tribunal mixed up the two concepts, viz., the legality of the partnership and the ultimate destination of the partners ' profits. It also mixed up the question of the validity of the partnership and the object of the individual partners in entering into the partnership. If to avoid a legal difficulty 5 individuals, though four of them are members of different firms, enter into a partnership expressly to comply With a provision of law, we do not see any question of fraud 28 or genuineness involved. It is a genuine document and it complies with the requirements of law. It is not an attempt to evade tax, but a legal device to reduce its tax liability. The fact that all the partners of all the firms did not exceed 12 in number and if they chose all of them could have entered into the partnership indicates that there was no sinister inotive behind the partnership. As the Tribunal misconstrued the provisions of the partnership deed and relied upon irrelevant considerations in coming to the conclusion it did., the High Court rightly differed from the view of the Tribunal. In the circumstances, in view of the decision of this Court in Sree Meenakshi Mills ' case( '), a question of law within the meaning of s.66(2) of the Act arose for decision. The High Court rightly answered the question in the negative. In the result, the appeal is dismissed with costs. SHAH J. Sivakasi Match Export Companv hereinafter referred to as 'the assessee ' is a partnership "carrying on business as bankers, commission agents and distributors of the products of different match factories at Sivakasi in the State of Madras". The assessee was formed under a deed dated April 1, 1950. There were five partners of the firm (1) N. P. A. M. Sankaranlinga Nadar (2) K. section section Arumugha swami Nadar (3) K. A. section Arunuchala Nadar (4) K. P. A. T. Rajamoney Nadar and (5) V. section V. P. Palaniswamy Nadar. Before April 1, 1950, there existed a firm also named Sivakasi Matches Exporting Company which "consisted of a combine of six match factories" at Sivakasi constituted under a partnership deed dated March 12, 1948. Registration of this partnership under section 26 A of the Income tax Act, 1922, was refused on the ground that the partnership deed did not specify the actual shares of the individual partners. Thereafter a deed forming the partnership which is sought to be registered in these proceedings was executed on April 1, 1950. It was recited in the preamble that originally four out of the five partners had been carrying on business in partnership as representatives of their respective match concerns, and it was found necessary that they should carry on the said business from April 1, 1950, jointly in their individual capacity, and it was agreed to admit into their part (1) [I956] S.C.R. 691 29 nership as and from April 1, 1950 the fifth person, namely V. section V. Palaniswamy Nadar. The following are the material paragraphs of the agreement of partnership: "(16) This firm shall collect a commission of half an anna per gross on the entire production of the match factories of the partners, respectively, the Brilliant Match Works, Manoranjitha Match Works, Pioneer Match Works, Shenbagam Match Works and Gnanam Match Works, produced from 1st April 1950 whether sales were effected through this firm or not and a further commission of half an anna per gross on the sales effected through this firm. This commission will be collected on all kinds of matches produced from the abovesaid factories. The commission of half an anna per gross on the entire production of these factories accrued due at the end of every month shall be debited to the respective factories under advice to them. "(22) The business of this firm shall have and has no connection with the match manufacturing business carried on now by the partners separately or in partnership with others. (23) Any loss to the firm by way of fire, accident or by any other cause during the course of the business of the firm, notwithstanding the fact that the loss might have arisen on the sale of or transaction relating to the match manufac turing concerns of the partners to this deed, shall be borne by this firm and shall be equally divided between the partners to this deed. " It is common ground that each partner was concerned in the manufacture of matches either as owner or as partner with others. Sankaralinga Nadar carried on business as a manufacturer of matches with two others in the name of the Brilliant Match Works; Armughaswamy Nadar as a partner with three other,, in the name of the Manoranjitha Match Works; Arunachala Nadar as a partner with two others in the name of the Pioneer Match Works, Rajamoney Nadar 30 as a sole proprietor of the Shenbagam Match Works, and Palaniswamy Nadar as a partner with three others in the name of the Gnanam Match Works. On October 27, 1952, the Income tax Officer passed an order under section 26 A granting registration of the partnership constituted under the deed dated April 1, 1950, but the Commissioner of Income tax, Madras, exercising revisional jurisdiction under section 33 B of the Act, set aside the order and directed that the partnership be assessed to tax as an unregistered firm. In the view of the Commissioner the partnership deed did not represent the true state of affairs and that "the actual position as distinguished from the recitals in the partnership deed was that all the partners of the Match Factories were directly partners of the assesses" and as the names of all the partners were not set out in the deed and the other requirements relating to registration had not been complied with, registration be refused. The order was confirmed in appeal to the Income tax Appellate Tribunal. At the direction of the High Court of Madras Linder section 66(2) of the Indian Income tax Act, 1922, the Tribunal referred the following question: "Whether on the facts and the circumstances of the case the refusal of registration of the assessee firm under section 26 A of the Income tax Act was correct in law?" The High Court answered this question in the negative. Against that order, with special leave, the Commissioner of Income tax has appealed to this Court. The Tribunal held that the covenants in the deed of partnership and especially in paragraphs 3 and 16 viewed in the light of the entry in the books of account of Gnanam Match Works debiting the capital contributed in the name of Palaniswamy Nadar to the assessee, and not in the name of its partner, and division of the profits received from the assessee by Palaniswamy Nadar, Sankarlinga Nadar, Aru maghaswamy Nadar and Arunachalam Nadar with others owners of their respective business, indicated that the named partners were acting as representatives of those owners. The 31 High Court also held that cl. 16 of the partnership agree ment did not impose any liability upon the manufacturing concerns to pay any commission as stipulated therein on the " production of the match factories". The High Court ob served: "Clause 16 does not lay any liability upon the manufacturing concerns and cannot operate as an enforceable contract against those other match companies. If one of those match companies should decline to put through its sales business through the assessee firm, the only result would perhaps be that the partnership would not advance moneys or finance to that manufacturing concern; it might also be that the particular partner interested in the manufacturing concern might stand to lose the benefit of this partnership. But that is not the same thing as to say that those manufacturing concerns themselves had become partners of the assessee partnership. " The High Court also observed that the assessee was not concerned with the disposal of the profits received by its partners. Finally the High Court observed that "an indi vidual member of the partnership is not prevented from engaging in business as member of another partnership. The law does not prohibit such a course and even the Income tax law relating to registration of partnerships only refuses registration when the formation of such partnerships is intended to evade the incidence of income tax and nothing more. We are not satisfied that the Tribunal correctly appreciated the facts of the present case in coming to the conclusion that the match works were the real parties to this instrument of partnership". The Solicitor General appearing for the Commissioner contended that the High Court had in exercising its advisory urisdiction, in substance assumed appellate powers and had ought to reappraise the evidence on which the conclusion of the Tribunal was founded. Counsel contended that the Tribunal had recorded a clear finding on the facts that the 32 "match works were the real" partners, and the High Court was bound on the question framed to record its opinion on the questions of law referred on the basis of that finding. Section 26 A of the Indian Income tax Act enacts the procedure for registration of firms. By that section on be half of any firm application may be submitted to the Income tax Officer for registration, if the firm is constituted under an instrument of partnership, specifying the individual shares of the partners. The application has to be made by such person or persons and at such times and shall contain such particulars and shall be in such form as may be prescribed. It is open to a firm to carry on business without registration under the Indian Registration Act. By obtaining an order of registration, the partners of the firm are enabled to et the benefit of lower rates of tax than those applicable to the whole income of the firm, when charged as a unit of assessment. In the relevant year of assessment if the firm was unregistered the tax payable by it had to be determined as in the case of any other distinct entity and tax had to be levied on the firm itself. If, however, the firm was registered, the firm did not pay the tax and therefore the tax payable by the firm was not determined, but the share of profit received from the firm was added to the income of each partner, and on the total so determined tax was levied against the partners individually. It is manifest that if the firm desired to secure this privilege it had to conform strictly to the requirements prescribed by law. Under the rules framed under section 59 of the Indian Income tax Act. 1922, rules 2 to 6B deal with registration and renewal of registration of firms. The application for registration has to be signed by all the partners (not being minors) personally, and the application has to be in the fornm prescribed by rule 3. The form prescribed requires the partners of the firm to disclose the names of each partner, his address, date of admittance to Partnership, and other relevant particulars including each Dartrer 's share in the profits and loss, "particulars of the firm as constituted at the date" of the application, and particulars of the apportionment of the income, profits of gains or loss of the business, profession or vocation in the previous year between the partners who in that previous 33 year were entitled to share in such income, profits or gains or loss, where the application is made after the end of the relevant previous year. If the Income tax Officer is satisfied that there is a firm in existence constituted as shown in the instrument of partnership and the application has been properly made, he has to enter in writing at the foot of the instrument or certified copy, as the case may be, a certificate of registration of the partnership under section 26 A of the Act. This certificate of registration ensures only for the year mentioned therein, but the firm is entitled to obtain renewal of the registration. On the conclusion recorded by the Tribunal that the partnership deed dated April 1, 1950 was in truth an ins trument relating to an agreement to carry on business 'by all the persons who owned the five businesses of which the representatives signed the deed, the application submitted by the live named partners of the assessee did not conform to the requirements of rules 2 and 3 and the Income tax Officer was bound to refuse registration. It is true that the ,ground given by the Tribunal that the share of profits received by individual partners of the assessee was distributed by four of those partners who had entered into partnership contracts with other persons in the business of their respective match factories, standing independently of other grounds, may not be of much value in deciding whether all the partners of the match factories were intended to be partners of the assessee. It is open to a partner who receives his share in the profits of the firm to dispose of that share in any manner he pleases, and no inference from the distribution of the share of such profits alone can lead to the ,inference that the persons who ultimately received the benefit of the profits are partners of the firm which had distributed the profits. But the Tribunal adverted to three circumstances. The terms of the deed of partnership purported to impose an obligation to pay Commission on the production of the five match factories, representatives of which sought to join as partners eo nomine. Imposition of such ,an obligation was in the view of the Tribunal inconsistent with the representatives of those factories being partners of the assessee in their individual capacities. Again it was 51 section C. 3 34 found that Gnanam Match Works had contributed capital to the assessee directly and not through its representative. These wo circumstances, coupled with the ultimate distribution of profits by the individual partners among the partners of the match factories, led to the inference that each partner who signed the deed dated April 1, 1950 was acting not in his personal capacity, but as representing his match factory. Granting that the evidence from which the inference was drawn was not very cogent, it was still exclusively within the province of the Tribunal to decide that question on the evidence before it, and its decision that in entering into the deed of partnership, the named partners represented their respective match factories, was not open to be canvas sed in a reference under section 66(2) of the Indian Income tax Act. The High Court observed that cl. 16 of the partnership deed did no, impose any obligation upon the partners or their representatives of the five firms to pay commission as stipulated under that clause. Undoubtedly, there is no covenant expressly imposing such liability upon the mach factories, but it was open to the Tribunal from he incor poration of such an unusual covenant to infer that the named partners of the assessee were acting as representatives of their respective factories. To assume from the erms of cl. 16 that the owners of these match factories were not bound by the covenants contained in cl. 16 is to assume the answer to the question posed for opinion. There was also the circumstance that in the books of account of the Gnanam Match Works of which Palaniswamy Nadar was a representative, capital was debited as contributed to the assessee. This indicated that the Gnanam Match Works was directly interested in the partnership. If that factory had made an advance to Palaniswamy Nadar to enable the latter to contribute his share of the capital, the entry in the factory 's books of account would have been in the name of its partner and not in the name of the assessee. That also is a circumstance justifying an inference that in entering into the deed dated April 1, 1950 Palaniswamy acted for and on behalf of all the partners of the Gnanam Match Works. Sharing of profits received by the named partners, with their partners in the respective match factories may not, as I have 35 already observed, by itself be a decisive circumstance. But that did not authorise the High Court to disregard the find ing of the Tribunal on a question which was essentially one of fact. When the High Court observed that they were satisfied that the Tribunal had not correctly appreciated the evidence in arriving at the conclusion that each Match factory was the real party in the instrument of partnership, they assumed to themselves jurisdiction which they did not possess. It was not the case of the assessee that there was no evidence on which the conclusion arrived at by the Tribunal could be founded, nor was it the case of the assessee that the conclusion was so perverse that no reasonable body of men properly instructed in the law could have arrived at that conclusion. It is also clear from the record that no such question was even canvassed before the Tribunal. Manifestly such a question could not arise out of the order ,of the Tribunal, and none such was referred to the High Court. By the question actually referred, the Tirbunal sought the opinion of the High Court whether on the facts and circumstances refusal of the application for registration of the assessee was correct in law. If it was the case of the assessee that the conclusion of the Tribunal was based on no evidence, or that it was perverse, the High Court could be asked to call for a reference from the Tribunal on that question. But that was never done. It is true that the object of enacting section 26 A and the rules relating to the procedure for registration is to prevent escapement of liability to tax. But it is not necessary that before an order refusing registration is made, it must be established that there was evasion of tax attempted or actual. It is always open to a person, consistently with the law, to so arrange his affairs that be may reduce his tax liability to the minimum permissible tinder the law. The fact that the liability to tax may be reduced by the adoption of an expedient which the law permits, is wholly irrelevant in considering the validity of that expedient. But where the law prescribes conditions for obtaining the benefit of reduced liability to taxation, those conditions, unless otherwise provided, must be strictly complied with, and if they are not 36 so complied with, the taxing authorities would be bound to refuse to give the taxpayer the benefit claimed. When application for registration of the firm is made, the Incometax Officer is entitled to ascertain whether the names of the partners in the instrument are of persons who have agreed to be partners, whether the shares are properly specified and whether the statement about the shares is real or is merely a cloak for distributing the profits in a different manner. If all persons who have in truth agreed to be partners have not signed the deed or their shares are not truly set out in the deed of partnership, it would be open to the Incometax Officer to decline to register the deed, even if under the general law of partnership the rights and obligations of the partners eo nomine thereto may otherwise be adjusted. As a corollary to this, if the requirements relating to the form in which the petition is to be presented are not complied with, and the relevant information is withheld, the Incometax Officer may be justified in refusing registration. In my view the High Court was in error in holding on the question submitted that the registration of the assessee under section 26 A of the Income tax Act was wrongly refused. The answer to the question referred to the High Court should be in the affirmative. ORDER In accordance with the opinion of the majority, the appeal is dismissed with costs.

There were five firms in Sivakasi manufacturing matches under the name and style of Shenbagam Match Works, Brilliant Match Works, Manoranjitha Match Works, Pioneer Match Works and Gnanam Match Works. The sole proprietor of Shenbagam Match Works and one partner from each of the four firms entered into a partnership in their individual capacity and executed a partnership deed dated April 1, 1950. The Income tax Officer registered the said partnership 'deed under section 26(A) of the Act; but the Commissioner of Income tax acting under section 33B of the Act, cancelled the registration of the said partnership deed. On appeal, the Tribunal held that the said partnership deed was not a genuine one. On a reference the High Court held on a construction of the partnership deed that the Match Works were not the real parties to the partnership but the parties to the document were the real partners. This appeal has come by way of special leave. HELD: (i) (per K. Subba Rao and section M. Sikri JJ) that the discretion conferred on the Income tax Officer under section 26 A of the Act is a judicial one and he cannot refuse to register a firm on mere speculation, but he shall base his conclusion on relevant evidence. The jurisdiction of the Income tax Officer under section 20 A is, confined to the ascertaining of two facts namely, (i) whether the application for registration is in conformity with the rules made under the Act, and (ii) whether the firm shown in the document. (Partnership deed) presented for registration is a bogus one or has no legal existence. (ii) In the present case the partnership deed ex facie conforms to the requirements of the law of partnership as well as the Income tax Act. There is no prohibition under the partnership Act against a partner or partners of other firms combining together to form a separate partnership to carry on a different business. The fact that such a partner or partners entered into a sub partnership with others in respect of their share does not detract from the validity of the partnership; nor the manner in which the said partner deals with the share of his profits is of any relevance to the question of validity of the partnership. (iii) The tribunal erred in holding the partnership deed as not a genuine one. In the present case the assessde firm has a separate legal existence, and as such the two circumstances relied upon by the Tribunal, namely, that one of the partners of the assessee firm, brought in the capital from his parent firm or that the profits earned by some of the partners were surrendered to the parent firm, would be irrelevant. A partner of a firm can certainly ' secure his capital from any source or 20 surrender his profits to his sub partner or any other person. Those facts cannot conceivably convert a valid partnership into a bogus one. In the present case the partnership deed is a genuine document and it complies with the requirements of law. It is not an attempt to evade tax, but a legal device to reduce its tax liability. (iv) A question of law within the meaning of section 66(2) of the Act arose for decision in this case as the Tribunal misconstrued the provisions of the partnership deed and relied upon irrelevant considerations in coming to the conclusion. Sree Meenakshi Mills Ltd. vs Commissioner of Income tax, Madras. [19561 S.C.R. 691, relied on. Per Shah, J. (i) It was exclusively within the province of the Tribunal to decide the question whether the partners entered into the partnership in their individual capacities or as representing their match factories and its decision that in entering into the deed of partnership, the named partners represented their respective match factories, was not open to be canvassed in a reference under section 66(2) of the Indian Incometax Act. In a reference under section 66(2) the High Court was not authorised to disregard the finding of the Tribunal on a question which was essentially one of fact. In the present case the High Court was not justified in interfering with the finding of the Tribunal on a question of fact because it was not the case of the assessee that the conclusion of the Tribunal was based on no evidence or that it was perverse. (ii) Where the law prescribes conditions for obtaining the benefit of reduced liability to taxation, those conditions, unless otherwise provided, must be strictly complied with, and if they are not so complied with, the taxing authorities would be bound to refuse to give the tax payer the benefit claimed. It would be open to the Income tax Officer to decline to register a 'deed, even if under the general law of partnership the rights and obligations of the partners ex nomine thereto may otherwise be adjusted. If the requirements relating to the form in which the petition is to be presented are not complied with, and the relevant information is withheld the Income tax Officer may be justified in refusing registration. In the present case the Income tax Officer was bound to refuse registration as the application submitted by the five partners of the assessee did not conform to the requirements of rr. 2 and 3 of Indian Income tax Rules.

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vil Appeal No. 1522 of 1987. From the Judgment and order dated 29.7.1986 of the Punjab and Haryana High Court in Civil Writ Petition No. 3464 of 1986. Mohan Pandey and Baldev Kapoor for the Appellant. N.K. Sodhi, Mrs. Indu Goswamy for the Respondent. 663 The following Order of the Court was delivered: ORDER Special leave granted. The appeal is heard. This appeal by special leave is filed against the Order dated 29.7. 1986 passed by the High Court of Punjab and Haryana rejecting the writ petition filed by the appellant inter alia for the issue of the writ in the nature of manda mus, directing the State Transport Commissioner, Punjab, who is exercising the powers of the Regional Transport authori ties in the State of Punjab to grant permits to ply stage carriages on the route Taran Taran Muktsar via Ferozepur and Sadiq under Chapter IV of the (hereinafter referred to as 'the Act ') and to dispose of the applications for renewal of stage carriage permits which are pending before the Regional Transport authorities. The appellant was a transferee of a bus along with two permits to operate one return trip on the route Taran Taran Muktsar via Ferozepur and Sadiq. Those permits could not be renewed owing to the default on the part of the transferor to make within time an application for the renew al of the said permits before the permits were actually transferred. Therefore, the State Transport Commissioner, Punjab, who was exercising the powers of the Regional Trans port authorities instead of granting regular permits on applications made under section 46 of the Act granted tempo rary permits in favour of the appellant on the route in question. Thereafter despite the request of the appellant to issue regular permits the State Transport Commissioner proceeded to invite applications for the grant of temporary stage carriage permits. Pursuant to the said notification the appellant and some others made applications. For some reasons which need not be set out here the application of the appellant was rejected and the temporary permits were granted in favour of the 2nd respondent. The appeals filed against the order granting temporary permits in favour of the 2nd respondent became infructuous as the period for which they had been granted expired before the appeals could be disposed of. Be that as it may, the main grievance of the appellant has been that the State Transport Commissioner, Punjab, who is exercising the powers of the Regional Transport authori ties has failed to discharge his duty under the Act which requires him to consider and grant stage carriage permits on applications made under section 46 read with sec 664 tion 57(2) of the Act where there is need to do so to appli cants who are eligible to be granted such permits and to grant renewal of such permits on applications for renewal made under section 58 of the Act. The appellant, therefore, bled the writ petition, out of which this appeal arises, before the High Court of Punjab and Haryana for appropriate relief. The said writ petition was dismissed at the stage of admission. Aggrieved by the order of the High Court the appellant has filed this appeal by special leave. When the Special Leave Petition came up for hearing on September 16, 1986 notice was issued to the State Transport Commissioner requiring him to show cause as to why he should not be directed to take action on applications made under section 46 of the Act for granting permits to ply stage carriages instead of issuing temporary permits under section 62 of the Act periodically, even though there was permanent need to grant regular stage carriage permits. In reply to the said notice the 1st Respondent has filed a counter affidavit, the relevant portion of which is as follows: " In the State of Punjab two separate schemes with regard to the grant of stage carriage permits in favour of the State Trans port Undertakings and the Private Operators were approved by the Government of Punjab under sub section (2) of section 68(D) of the . Out of the two schemes one is called 'Punjab Roadways Scheme ' operative in the erstwhile Punjab areas and the other is called 'Pepsu Road Transport Corporation Scheme ' operative in the erstwhile Pepsu areas. The schemes for Punjab Roadways and Pepsu Road Transport Corporation were published on 19.11.1969 and 18.2.1972 respec tively. A copy of both the schemes are exhib ited as Annexure R1 and R2. According to the above notifications the Punjab Government had announced that: (i) 60% operation will be undertaken by the Punjab Roadways and the remaining 40% by the existing private operators and new entrants in the ratio of 30: 10, respectively in the areas of erstwhile Punjab State. (ii) 60% operation will be undertaken by the Pepsu Road Transport Corporation and 40% by the private operators in Pepsu territory. 665 (iii) Notifications further provided that the schemes will have the effect for a period of 7 years (upto 18.11.1976) in Punjab State and will last till 30th June 1977 in the Pepsu territory. (iv) After the expiry of 7 years (upto 18.11.1976) in the case of Punjab Scheme and from 1st July, 1977 in the Pepsu territory, 1/3rd operations of the private operators will be taken over by the Punjab Roadways/Pepsu Road Transport Corporation every year to complete the take over in three years. Neither the Punjab Roadways nor the Pepsu Transport Corporation have taken over the operations from the private operators in the terms of above mentioned notifications nor new schemes have been announced by the Govern ment. The transport operations have, however, to be continued as at present to save the public from inconvenience. At the same time it will not be advisable to grant regular permits on long terms basis in the absence of any transport policy announced by the Punjab Government. Under these circumstances I am granting/issuing permits on temporary basis after following the prescribed procedure laid down under section 47 of the and after giving due hearings to all the applicants at the time of initial grant. As soon as the new transport policy is fina lised by the Government all the stage carriage permits granted on temporary basis due to non finalisation of transport policy will be granted on regular basis after following the procedure as laid down under sections 57(2) and 57(3) of the . It may, however, be added here that the State Government is in the process of finalising a new Transport policy. " A reading of the counter affidavit filed by the State Transport Commissioner, Punjab practically does not set up any defence at all to the prayer made by the appellant. The counter affidavit refers to two schemes, namely, the Punjab Roadways Scheme and the Pepsu Road Transport Corporation Scheme approved under section 68 D of the Act, which were published on 19.11.1969 and 18.2.1972 respectively. It is, however, admitted that neither the Punjab Roadways nor the Pepsu Road Transport Corporation have taken over the opera tions from the private operators in terms of the above mentioned notifica 666 tions nor any new scheme has been announced by the Punjab Government. The 1st Respondent further states that since there was general inconvenience, the temporary permits were being issued after following the prescribed procedure laid down under the Act. The affidavit further says that due to the non finalisation of the transport policy by the State Government it was not possible to issue regular permits to run stage carriages by following the procedure prescribed under sections 57(2) and 57(3) of the Act. We are of the view that the entire policy followed by the State Government and the 1st Respondent is contrary to the general scheme of the Act. The schemes said to have been published under section 68 D of the Act do not specify any notified routes or any notified areas. It is not possible also to find out from the said scheme whether private operators have been excluded from any particular area of route. The schemes appear to be incomplete and, therefore, are ineffective. In the above situation the Regional Transport authorities whose functions have been delegated under the Act to the State Transport Commissioner, Punjab, cannot decline to grant stage carriage permits on applications properly made to them by intending operators only because the State Government has not announced its transport policy. The State Government cannot have any policy different from or independent of the provisions contained in Chapter IV and Chapter IV A of the Act. The Transport Authorities which are statutory authori ties have to discharge the duties imposed on them by the Act without waiting for any policy to be announced by the State Government. In doing so primary consideration should be given to the public interest and also to the fundamental right of the citizens to carry on motor transport business in accordance with law. It is not denied that there is a permanent need to grant permits to ply stage carriages on the several routes in the State of Punjab. In the circum stances, the policy adopted by the 1st Respondent, namely, issuing of temporary permits from time to time, appears to be a highly irregular one. It is against the language and spirit of section 62 of the Act, which provides for the grant of temporary permits. This Court has observed in several decisions that a Regional Transport Authority would be failing in its duty if it grants repeatedly temporary permits to ply stage carriages on routes even though it is aware of the fact that there is a permanent need for grant ing regular permits in respect of the said routes. The fact that the State of Punjab is thinking of finalising a new transport policy can have no bearing on the question in issue. We are, therefore, of the view that the 1st Respondent cannot successfully resist the writ petition out of which this appeal arises. In the circumstances we feel that it is appropriate to issue a writ in the 667 nature of mandamus to the Regional Transport authorities in Punjab. whose duties are being discharged by the State Transport Commissioner, Punjab, to take immediate steps to invite applications suo motu under section 57(2) of the Act for issuing regular stage carriage permits to deserving applicants, to grant stage carriage permits to deserving applications who make applications for the stage carriage permits in accordance with law and to dispose of the appli cations for renewal, if any, made under section 58 of the Act by the holders of stage carriage permits. We accordingly direct the Regional Transport authorities in the State of Punjab to take immediate steps to invite applications suo moat under section 57(2) of the Act for issuing regular permits to deserving applicants to ply stage carriages in respect of the routes where there is a permanent need, to dispose of the applications made by persons who wish to ply stage carriages on the said routes in accordance with law and to dispose of the applications that may be pending before the Regional Transport authorities for renewal of stage carriage permits under section 58 of the Act. All these steps should be taken within four months from today. The temporary permits which are now in force shall cease on the expiry of the period of four months and the Regional Transport authorities are directed not to issue any fresh temporary permits where there is permanent need for granting a stage carriage permits after four months. This appeal is allowed accordingly. There shall, howev er, be no order as to costs. A copy of this order shall be sent to the Chief Secre tary to the State of Punjab within a week for information and implementation of the above directions. H.L.C. Appeal allowed.

The appellant, a stage carriage operator, applied for renewal of a permit to ply his bus on a particular route but was granted only a temporary permit to do so. Thereafter he applied for issue of a regular permit, but once again, action was initiated for issue of a temporary permit only. Aggrieved by this approach of respondent No. 1, who was exercising the power of the Regional Transport authorities in the State, the appellant filed a writ petition seeking a direction that respondent No. 1 should consider and grant stage carriage permits to eligible persons under section 46 read with section 57(2) and grant renewal of such permits under section 58 of the . The High Court dismissed the petition at the admission stage. Respondent No. 1, in his counter affidavit, stated that the State Government had approved and published two Schemes under section 68(D) (2) of the Act for grant of stage carriage permits in favour of State Transport Undertakings and pri vate operators in two specified areas of the State which envisaged the complete take over of all the routes by the State Transport Undertakings in a phased manner within 3 years of the expiry of the Scheme. Since the State Transport Undertakings had not taken over the operations from the private operators in accordance with the two Schemes and the State Government had neither announced new schemes to re place them, nor declared its transport policy, Respondent No. 1 had considered it inadvisable to grant regular permits on long term basis and was issuing temporary permits only. Allowing the appeal by special leave, 662 HELD: The Transport Authorities which are statutory authorities have to discharge the duties imposed on them by the Act without waiting for any policy to be announced by the State Government. In doing so, primary consideration should be given to the public interest and also to the fundamental right of the citizens to carry on motor trans port business in accordance with law. This Court has ob served in several decisions that a Regional Transport Au thority would be failing in its duty if it grants repeatedly temporary permits to ply stage carriages on routes even though it is aware of the fact that there is a permanent need for granting regular permits in respect of the said routes. [666E; G] The entire policy followed by the State Government and the 1st Respondent is contrary to the general scheme of the Act. The schemes said to have been published under s.68 D do not specify any notified routes or any notified areas. It is not possible also to find out from the said schemes whether private operators have been excluded from any particular area or route. The schemes appear to be incomplete and, therefore, are ineffective. In the above situation the Regional Transport authorities whose functions have been delegated under the Act to the State Transport Commissioner, Punjab, cannot decline to grant stage carriage permits on applications properly made to them by intending operators only because the State Government has not announced its transport policy. The State Government cannot have any policy different from or independent of the provisions contained in Chapters IV and IV A of the Act. [666B E] In the instant case, it is not denied that there is a permanent need to grant permits to ply stage carriages on the several routes in the State of Punjab. The policy adopt ed by the 1st Respondent, namely, issuing of temporary permits from time to time, is highly irregular and is against the language and spirit of section 62 of the Act, which provides for the grant of temporary permits. [666F]

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Civil Appeal No. 87 of 1959. Appeal from the judgment and decree dated April 6, 1955, of the former Andhra High Court in A.S.O. No. 134/50. T. V. R. Tatachari, for the appellants. Bhimasankaram, K. R. Choudhuri and T. M. Sen, for the respondent. December 21. The Judgment of the Court was delivered by: RAGHUBAR DAYAL, J. This is an appeal on a certificate granted by the High Court of Andhra Pradesh, against the judgment and order of the High Court reversing the judgment and order of the District Judge, Vizagapatam, holding that the place of worship in suit was not a temple as defined in the Madras Hindu Religious Endowments Act, 1926 (Madras Act II of 1927), hereinafter called the Act. On March 28, 1947, the Board of Commissioners for Hindu Religious & Charitable Endowments, Madras, held the institution in suit to be a temple as defined in the Act. The appellants, thereafter filed a petition under section 84(2) of the Act, in the Court of the District Judge, Vizagapatam, and prayed for the setting aside of the order of the Board. They alleged that the institution, known as the Poohari Fakir Sadavarthy, at Bondilipuram, Chicacole, a ongstanding institution, was started by one Malukdas 278 Bavajee, some time during the reign of the Moghul Emperor, Aurangazeb. The Emperor, in recognition of the Bavajee 's piety and devotion to God, made certain grants to him with the object and purpose of enabling him to maintain himself and carry on the distribution of Sadavarthy to Fakirs and Sadhus and to pray to God for the prosperity of the Empire and Emperor, according to what was stated in the well known historical works like Bhakthamala by Maharaja Raghunandha Singh Deo of Rewa. The institution flourished and continues up to this day. The original plaintiff No. 2, Rajaram Das Bavajee, was the ninth in succession from the founder Malukdas Bavajee. He died during the pendency of the proceedings and is now represented by appellant No. 2, Mahant Gangaram Das Bavajee. Sithaldas Bavajee, the sixth head of the institution, who lived in the first half of the Nineteenth Century built a temple and installed therein certain idols for his private worship. The shrine was an adjunct of the institution Poohari Fakir Sadavarthy. It is alleged to be a private temple known as Jagannadhaswami temple, Balaga, and is meant for the worship of the Mahant and his disciples, one of whom conducts the daily worship. The income from the various properties granted to Malukdas Bavajee or his successors had been regularly utilised for the maintenance of the head of the institution and for distributing charities to the sadhus and pilgrims passing through Balaga. A part of the income was, however spent on the expenses of the worship in the temple and the incidental expenses connected with it. The respondent Board denied that Jagannadhaswami temple was a private place of worship, that the public had no access to it without the permission of the Bavajee and alleged that the temple possessed all the features of a place of public 279 religious worship and was dedicated to or for the benefit of or used as of right by the Hindu community as a place of religious worship. The appellants examined five witnesses, including plaintiff No. 2, in support of their case. The respondent examined one witness. The plaintiffs also filed a number of documents. The respondent filed a few documents which included the Board 's order dated March 28, 1947, and its enclosure. The learned District Judge concluded, from the evidence, that Jagannadhaswami temple was not a temple as defined in the Act, it being a private temple existing for the benefit of the appellants only. He therefore set aside the impugned order of the Board. On appeal, the High Court came to a different conclusion and allowed the appeal. It mainly relied on the entries in the Inam registers with respect to the institution and on the following facts which it considered to be established : (i) the temple is a very old temple constructed in or about the year 1750; (ii) the temple has the structure and polity of a public temple; (iii) there are utsava vigrahams and vahanams; (iv) it has a big compound wall with the gate opening into the Chinna Bazaar Road; (v) regular worship is performed every day at the scheduled time; (vi) there is an archaka who performs worship; (vii) a large number of pilgrims attend every day and partake in the food given after naivedyam to the God; 280 (viii) there are utsavams and the rathotsavam which is particularly conducted on large scale and is attended by members of the public. The High Court relied on the statement of the solitary witness examined for the Board and rejected the statements of the witnesses examined for the appellants. The sole question for determination in this appeal is whether this institution is a 'temple ' as defined in the Act. Clause (12) of section 9 of the Act reads: " 'Temple ' means a place, by whatever designation known, used as a place of public religious worship and dedicated to, or for the benefit of, or used as of right by, the Hindu community, or any section thereof, as a place of religious worship. " The institution in suit will be a temple if two conditions are satisfied. One is that is a place of public religious worship and the other is that it is dedicated to or is for the benefit of, or is used as of right by, the Hindu community, or any section thereof, as a place of religious worship. We are of opinion that the oral and documentary evidence fully establish the appellants ' case that it is not a temple as defined in the Act. The documents on record and bearing dates from 1698 to 1803 A. D. mention the grants to be for the purposes of the Bavajee, i.e., the head of the institution. The first document, Exhibit P 1, (is of the Hizri year 1117, corresponding to 1698 A.D., and purports to be executed by Ibrahim Khan, Bahadur, a humble servant of Badshah Alamgir Ghazi. , i.e., Emperor Aurangazeb. This order says: "The village of Cheedivalasa, Boonamali Pargana Haveli (town) towards Kaling of the 281 said Sirkar, has been fixed and continued as a complete inam in favour of Poohari (Poojari) Fakir Sadabarty in accordance with the Sanads of the previous rulers. Meanwhile, in view of the claims of the said person it has been confirmed as per endorsement in accordance with momooli (usage) and mustamir (continuing, lasting long). It is necessary that the said village be placed in the enjoyment of the said person so that, utilising the incomes thereof for his own maintenance, he may engage himself in praying for the stability of the State till eternity. " The purpose of the other grants is stated in practically similar terms aud it is necessary to quote them. None of the grants of land or other property on record bears a date subsequent to that of the year 1803 A.D. The documents, Exhibits P 47, P 48 and P 49 are orders of the Collectors and refer to the villages of Cheedivalasa and Thallavalasa, and the last two state that the income of these two villages was given for sadavarty (feeding) for the respective year to Phalari (Phulhari) Bavaji. There is no mention in any of these two documents that any grant was being made for the purposes of the temple or for the purposes of the Bavaji as well as for those of a temple. The only reference to the construction of the temple is in Exhibit P 52, an extract from the Register of Inams dated May 22, 1865, with respect to village Vanzangi. The name of the village, however, does not appear in the document itself. It is stated in this document: "About century ago, the trustees built a temple of Jagannadhaswamy. " According to this note, the temple may be said to have been built in about 1760 A.D. The documents of the period from 1761 to 1803 A.D. Exhibits P 31 282 to P 49, do not record that the grants under them were for the expenses of the temple as well. The grants simply mention them to be for the expenses of Fakirs, in the name of Poohari Fakir Sadavarthy, and not for the temple. The non reference to the temple in the various documents is consistent with the temple being for the private worship of the head of the Sadavarti Institution and being an adjunct to that institution, as in that case there was to be no grant to the temple and the grant had to be to the Sadavarti institution or to its head. It is also a matter for surprise that no independent grant to this temple was made subsequent to its coming into existence. Some one religiously and charitably disposed could have thought of endowing some property to this public temple erected by the Head of a well known institution in that part of the country, where, it has been held judicially, there is a presumption of a temple being a public temple. We may make it clear that among the documents referred to, we are not at the moment including entries in the Inam registers. It follows from an examination of the various documents of the period between 1608 and 1803 A.D., that the various endowments were for the Fakir or Bavajee who ran the Sadavarti institution and that none of the grants was for the temple or even for the Sadavarti institution itself, it being always in the name of the Bavajee in charge of that institution. Before discussing the entries in the inam registers which carry great weight, we may first refer to the Rules in pursuance of which the entries in the Inam registers were made, after due investigation. The various extracts from the Inam registers which have been filed show that the proposals for the grant were confirmed under rule 3, clause (1), tax free. This makes it of importance to consider the rule 283 thus referred to. It is one of the rules for the adjudication and settlement of the inam lands of the Madras Presidency and is quoted at page 219 in the case reported as Arunachellam Chetty vs Venkatachalapathi Guruswamigal (1) "If the inam was given for religious or charitable objects, such as for the support of temples, mosques, colleges, choultries, and other public buildings or institutions, or for services therein, whether held in the names of the institutions or of the persons rendering the services; it will be continued to the present holders and their successors, and will not be subject to further interference, so long as the buildings or institutions are maintained in an efficient state, and the services continue to be performed according to the conditions of the grant. " It was also said at page 217: "But the Inam Register for the year 1864 has been produced, and to it their Lordships attach importance. It is true that the making of this Register was for the ultimate purpose of determining whether or not the lands were tax free. But it must not be forgotten that the preparation of this Register was a great act of state, and its preparation and contents were the subject of much consideration under elaborately detailed reports and minutes. It is to be remembered that the Inam Commissioners through their officials made inquiry on the spot, heard evidence and examined documents, and with regard to each individual property the Government was put in possession not only of the conclusion come to as to whether the land was tax free, but of a statement of the history and tenure of the property itself. While their Lordships do not doubt that such a report would not displace actual 284 and authentic evidence in individual cases; yet the Board, when such is not available, cannot fail to attach the utmost importance, as part of the history of the property, to the information set forth in the Inam Register. " Exhibit P 50 is the extract from the Inam Register No. 48 relating to village Tallavalasa in the Taluk of Chicacole in the district of Ganjam. The note of the Deputy Collector, Inam Commissioner, records inter alia the following particulars: (1) The village was granted originally by the Nawab Mafuz Khan in Hiziri 1155 corresponding with A.D. 1739 to one Inamdar Bairagi; as the original sanad is not forthcoming it is impossible to mention here without entering into details, the object of the grant and the tenure of the village. This mokhasa jahagiri is in possession of the person in column (II) who is known by the name of Palahara Mahant Bartudoss Bavaji, 'a Bairagi '. (2) This Bartudoss Bavaji pleaded that this village and three other villages were granted in the district by the former Rulers for Sadavarti and for certain other Divine Service, and that the proceeds of them were appropriated to the expenses attendant on the temple of Sri Jagannadhaswami to some extent and to distributing Sadavarti or supplying victuals, fire wood, etc., or dressed food to Bairagis and others resorting to Rameswaram from Benaras and vice versa. (3) This Bartudoss Bavaji produced a sanad of Sri Seetaram Ranzi Maharaja, the former zamindar of Vizianagaram in Vizagapatam district, granted to one Gopaladass Palahari Bavaji, dated Subhakrutu year, corresponding with A.D. 1782. This Sanad 285 showed that the said Gopaladass was then a manager of the branch of charity and that this village was granted free from any tax in lieu of the income in the villages of Balaza, Petranivalasa and Serumohannadpuram which were granted originally by the authorities for the support of the charity and which were resumed and incorporated with circar lands. The sanad explicitly stated that the proceeds of the village were to be appropriated for Sadavarti. (4) On the whole it appears that this mokhasa was granted for 'Sadavarti ' and for the support of the temple of Sri Jagannadhaswami in Balaga. There is a Bairagi Mattam in Balaga and a temple of Sri Jagannadhaswami. This is therefore a charitable grant. To keep up the object of grant, I think the village may be confirmed on its present tenure. (5) Column 8, meant for noting the description of the inam, mentioned: 'Granted for the support for the Sadavarti Bairagi mattam in Balaga and of the temple of Sri Jagannadhaswami in the same village now efficiently kept up. ' (6) In column 10, under the heading 'hereditary, unconditional for life only or for two or yihre lives ' is mentioned 'hereditary '. (7) Column 11 meant for recording the name of the grantor and the year of the grant, mentions, under it, Mafusu Khan Nawab, dated Hijiri 1155. (8) In column 13, Mandasa Palahari Bairagi is mentioned as the original grantee. (9) Under column 18, referring to relationship to original grantee or subsequent registered holders, is written 'Sadavarti 286 Bairagi mattam and the temple of Sri Jagannadhaswami in Balaga Trustee Palahara Mahant Barta Dasu Bavaji '. It is clear from the fact that the grant was considered 'a charitable grant ' that the grant was not taken to be for the purposes of the temple, but was taken to be a grant for the purposes Sadavarti. This is also clear from the Statement of Bartudoss Bavaji that it is only a part of the proceeds which is spent on the temple and not a major portion of the proceeds, as his statement is to the effect that the proceeds are appropriated to the expenses attendant on the temple 'to some extent '. There is no suggestion that the temple was in existence in 1739 A. D. when the grant was made. This makes it clear that no grant could have been made for the expenses of the temple and that a small portion of the proceeds was naturally spend on the temple by the Bavaji after the temple had been constructed. Any statement in these entries about the grant being both for Sadavarti and for the expenses of the temple appears to be due to the wrong inference of the person making the enquiry. He could easily commit such an error on account of the existence of a temple at the time of the enquiry and on account of the expression 'divine service '. The 'divine service ' really meant, as would appear from the expression in the other documents of the period 1698 to 1802 A.D., service by way of prayers for the stability and continuity of the State '. The expression that the grant was 'hereditary ' also supports the conclusion that the grant was to the Bavajee personally and not to the temple even if the temple existed at the time of the original grant. In fact, the sanad granted by Seetaram Ranzi Maharaja and produced before the enquiry officers explicitly stated that the proceeds of the village were to be appropriated for Sadavarti. 287 This extract therefore supports the case of the appellants even though the name of the temple has been mentioned along with Sadavarti Bairagi. The confirmation of the grant, tax free, was recommended by the Deputy Collector, Inam Commissioner, under Rule 3, Clause (1). The order of the Officiating Inam Commissioner dated July 1864 is: 'Confirmed on present tenure ', and column 9 described the tenure as 'tax free '. Exhibit P 51 is the extract from the Inam Register in the Zamindari estate of Tekkaly in the Chicacole Taluk, Ganjam District, and relates to the village Chinna Zavanapalli. The report of the Deputy Collector shows that the claim of the then Bavajee was that the village was granted in the name of Gopaladass, trustee and priest of the mattam in Hijari 1165, corresponding to 1752 A.D. It further records: "It is explained by the Zamindar 's shiristadar on behalf of the Zamindar that this was granted for the support of the mattam and this is not a personal grant. This was entered in the permanent settlement account as an agrahar. The object of the grant is to feed Bairagis and etc., who travel between Benaras and Rameswaram or supply victuals clothes and etc. This branch of charity is known by the name of 'sadavarti '. The proceeds of this village with the other villages, which granted for the support of the charity are appropriated to sadavarti and to worship the idols in the temple of the mattam. As this is granted on the whole for the support of the charity branch, it should, I think, be confirmed on its present tenure. " The entries under the various columns are practically on the lines of the entries in Exhibit P 50. The entries in this register also support the case of the appellants to the extent that the original grant 288 in 1752 A. D., was to the then Bavajee and was for the purposes of the charity. Exhibit P 52 is the extract from the Register of Inams with respect to village Vanzangi. It records very clearly: "The object of this grant is to give 'sadavarti ' to travellers, that is, distributing alms and supplying victuals to travellers. This grant was made during the reign of 'Alangir Padsha '. Ever since the Inam is continued undisturbed. About century ago, the trustees built a temple of Jagannadhaswamy. Now in addition to distributing alms and giving Sadavarti to Bairagis and others, the idol in the temple is worshipped and annual festivals are made. It appears that the Trustee is defraying charges to meet the object of the grant and that he is not mis appropriating the proceeds of the Inam in any way. " The inam was confirmed as a charity grant to Mandasu Sadavarty Charity according to the terms of the grant. This extract is of great importance as it, in clear terms, mentions that the object of the grant was to give sadavarti to travellers and that it was confirmed as a charity grant to this charity. It speaks of the erection of the temple and still states that the Trustee was defraying the charges to meet the object of the grant. This indicates that the expenses of the temple were taken to be incidental to the expenses of the entire sadavarti and that the temple was just an adjunct to the sadavarti institution. Exhibit P 7, Parwana dated November 15, 1722, corresponding to 14th day of Rabial Awwal, 1135 Hijiri, refers to the grant of this village to Poohari Fakir Sadavarti. Exhibit P 53 is the extract from the Register of Inams relating to village Ragolu in Chicacole 289 Taluk. It records: 'In the sanad it was mentioned that the inam was given for the support of fakirs to the original grantee about a century ago. The other notes in this extract are practically identical with those in Exhibit P 52. The final order of the Inam Commissioner was also in terms similar, and was 'confirmed to the fakirs the sadavarti charity according to the grant, free, there being no excess. It is interesting to note that in column 2 (general class to which inam belongs) is noted 'Dewadayam ', i.e., dedicated to God; that in column 8 meant for the description of the inam is noted: 'for the support of Pagoda of Sri Jagannadhaswami in Bondilipuram ', and that the entry in column 11 indicates that Anavaruddin Khan Bahadur made the grant in Hijiri 1171 corresponding to 1754 55 A. D. It is clear that the note about the land being dedicated to God is wrong in view of the definite statement that the Sanad mentioned that the inam was given for the support of fakirs to the original grantee (Mandasa Palahari Bairagi in Column 13) about a century ago and that it was the trustees of the institution who constructed the temple. When the temple was constructed by the trustees of the institution, viz., the Sadavarti institution, the original grant could not have been to the temple or to God. The entries in this extract confirm the construction we have placed on similar entries in Exhibit P 52 and other extracts indicating the grant to the temple. Exhibit P 54 is the extract from the Inam Register of No. 85 'Tallavalasa in the Taluk of Chicacole in the District of Ganjam. It is mentioned in this that Pratapa Rudra Narayana Devu granted this village to Falar Gosayi for the support of the 'Bavajee ' or Swami, in Hiziri 1141 which would correspond to about 1747 A. D. It is also noted in the report that the object of the grant was that the proceeds should be appropriated for divine purpose and that the proceeds were appropriated to the temple and sadavarti. The note 'for the support 290 of the pagoda of Jagannadhaswami ' in column 8 meant for the description of the inam, again, appears to be an entry made under an erroneous impression. There was no temple in existence when the grant was made in about 1747 A. D. Exhibit P 55 is an extract from the Register of Inams in the village of Balaga of Chicacole taluk dated August 13, 1881. It mentions, under the heading 'by whom granted and in what year, "the grant was made by Rajah Narayana Gazapati raz Bahadur under orders of Alamgir Padsha on 14th May of Hiziri 1171 corresponding with English years 1754 55. It is also noted: the Sanad granted is in existence. ' It is stated therein that as these lands appear from a former firman to have been granted to Sadavarti Mandass Bavaji for planting topes and raising buildings; they should be restored to him in pursuance of the long standing right. This means that the firman, which was not forth coming during the inam enquiry, dated from very early time. It must be noted again that this extract also describes the inam as Devadayam, i. e., dedicated to God. Again, clearly, this entry is wrong in view of the sanad which was in existence clearly stating that the lands were granted under a firman to Sadavarti Mandass Bavaji for planting topes and raising buildings and also in view of what is recorded in Exhibit P 12, a parvana of 1742 A.D., under the seal of Nawab Jafer Ali Khan. It records: "It has been proved that Mandas, the successor of Poohari (Poojari) Faqir Sadabarti has, per endorsement six kattis of land, free from assessment, in the village of Balaga and etc. , villages of the said Haveli Sircar, fixed for the expenses of the coming and going Fakirs in accordance with the sanads of the previous rulers. Therefore in consideration 291 of the blessings to follow, it has been confirmed as of yore. " It was the result of this wrong view of the enquiry officer that the Inam Commissioner confirmed the grant free of quit rent so long as the service was kept up, presumably the service of the deity, as the distribution of charity would not be properly described as 'service. ' The fact that the Inam Commissioner treated the grant relating to Exhibit P 50 to be in support of Sadavarti and for support of the temple of Sri Jagannadhaswami, would not make the grant for the purposes of the temple when the temple was itself not in existence at the time the grant was made and when a later sanad referring to it definitely stated that the original villages were granted for the purposes of charity. The observations of the Privy Council in Arunachellam 's Case (1) that in the absence of the original grant the Inam Register is of great evidentiary value, does not mean that the entry or entries in any particular column or columns be accepted at their face value without giving due consideration to other matters recorded in the entry itself. We have already stated that the 'divine service ' referred to in this entry does not refer to any religious worship but to the prayers to be offered by the grantee for the preservation of the State. We do not find anything on record to support the observations in the High Court judgment that the Bavajee, with the consent of the Ruler for the time being, constructed a temple and appropriated the income for carrying out the worship of the temple. No document states that the temple was constructed by the Bavajee after obtaining the consent of the ruler for the time being. Exhibits P 52 and P 55 just mentioned that the trustees built a temple of Sri Jagannadhaswami. The 292 expression 'trustees ' refers to the trustees of the Sadavarti institution and not to the trustees of the temple as such. There is nothing in these documents to support the view that the temple was built with the consent of the ruler for the time being. The appellants examined five witnesses to support their case that the Hindu public have no right to offer worship in the temple which is a private temple. The learned Judges described the statement of Janardhana Prasad Bhatt, P.W. 4, as worthless. No particular reliance is placed on his statement by the appellants in this Court. The appellants, however contend that the statements of the other witnesses have been rejected by the High Court for inadequate reasons. The first witness is Iswara Satyanarayana Sarma, P.W. 1. He was aged 63 at the time of his deposition in 1949. He was a Sanskrit and Telugu Pandit in the Municipal High School and practised as an Ayurvedic Doctor. He has given reasons for the view that the temple is not a public temple. It is not necessary to refer to them. His statement, has been rejected as he was considered to be interested in the Mahant who had been his patient and as the statement made by him that people including the sishyas, i.e., the disciples, take permission of the Mahant for worshipping, was considered artificial. This witness did not state that even disciples had to take permission of the Mahant for worship and so the latter reason was based on an erroneous impression of his statement, The mere fact that the Mahant consults him for his ailments and the ailments of other sadhus is no ground for him to make false statements. He is not under obligation to the Mahant. It may be that the Mahant is under obligation to him. The next witness is P. Kameswara Rao, P.W. 2. He is aged about 30 years. He was the 293 Additional Public Prosecutor of Vizagapatam, had been Municipal Councillor for a decade, President of the Co operative Central Bank and resided close to the temple. He was in a very good position to know about the public worshipping at the temple as a matter of right. He stated that he never found the public using the temple and that he himself might have visited the temple roughly about hundred times. He was put a direct question in cross examination and gave a clear cut answer. He denied from personal knowledge that the place was used as a place of public religious worship and that members of the public who were Hindus had a right of access to the temple for purposes of religious worship. It may be mentioned that the question also referred to the temple being built as a place of public religious worship and the answer would include a denial of this fact. It is obvious that the witness could not have known anything about it. He seemed to have overlooked the significance of this part of the question. We do not consider that his denying this fact on personal knowledge affects his veracity in any way, and especially, when he further stated that his personal knowledge consisted of three facts: (i) his attending the Rathayatra and seeing that no offerings of harati and dakshina were made; (ii) his not seeing any member of the public entering the temple whenever he entered into the temple; and (iii) whenever he entered the temple, he took the permission of the mahant. The learned Judges rejected his testimony with this observation: "The evidence of this witness is more like an advocate supporting the case of mahant than that of a witness, who has come into the witness box to speak of facts. The aforesaid facts based on his personal knowledge afford a very slender foundation for the conclusion which this witness has so boldly asserted in the witness box. " 294 The expression 'the aforesaid facts ' had reference to the facts on which his personal knowledge was based. These facts, in our opinion, afford good ground for the view expressed by him that the temple was not a public temple. He visited the temple so many times, and never saw any member of the public visit it. He himself took permission from the Mahant when he entered the temple. Nothing could be better corroboration of his own statement than his own personal conduct in seeking permission from the Mahant. We do not see any good reason for discrediting his testimony. The next witness is G. Venkata Rao, P.W. 3, aged 48 years. He is a chairman of the Municipal Council, Chicacole, Secretary & Vice President of the Co operative Central Bank. His statement has been considered to be very artificial. His statement that whenever he visited the temple he asked the permission of the Mahant is good corroboration of his statement that he considered the temple to be a private temple and not a public one. The facts that the Mahant is also a Municipal Commissioner and consults him occasionally as a doctor, are no good grounds to discredit him. The last witness the plaintiff No. 2, the predecessor of the appellant No. 2. He is undoubtedly interested in the success of the proceedings started by him. But that alone is no reason to ignore his statement altogether. In fact, his statement should be accepted in view of the support it gets from the statements of the other three witnesses just referred to. It is very significant, as pointed out by learned counsel for the appellants, that none from the Hindu public of the place has been examined for the respondent in support of its contention that the Hindu public go to this temple for worship as a matter of right. Quite a good number of people 295 should have been available for the purpose if it was a fact. The respondent, on the other hand, examined only M. Adinarayana Rao, who had been Inspector of Hindu Religious Endowments Board of the Chicacole division from 1946 to 1948. He certainly states that the temple in suit is a public temple in which all people can go as a matter of right for worship. It is a moot question as to how he can make such a statement even if he had seen a number of people entering the temple and worshipping there, which itself is not a fact. When there be good evidence about the temple being a private one, the mere fact that a number of people worship at the temple is not sufficient to come to the conclusion that the temple must be a public temple to which those people go as a matter of right as it is not usual for the owner of the temple to disallow visitors to the temple, even if it be a private one. He stated that there were several festivals like Nethroshasevam, the car festival and kalyanam. In cross examination he had to admit that he had not visited the kalyan festival and did not know when it was celebrated. This is sufficient to indicate that he is a zealous witness. He stated that there was an archak, but he could not give the archak 's name. Ordinarily, it need not have been expected of him to have known the archak 's name. But, considering that he was an Inspector of the Board and had visited the temple officially also and had to submit a report, it is rather difficult to believe that if he had really found an archak, a priest other than the Mahant and his disciples, he would not have considered it essential for the purposes of his enquiry to know his name. We see no reason to prefer his shaky statement to the statements of the witnesses examined for the appellants. 296 We need not consider the statements of the witnesses with respect to the features associated with the public temple and which are said to be absent in the temple in suit. It is admitted by the respondent 's witness that there is a Tulsi plant before the shrine. It is strenuously urged for the appellants that no public has a Tulsi Kotta, and this contention seems to find support from the statement made by the respondent 's witness in reexamination that generally, in Oriya temples no flag staffs are located and Tulsi plants are grown instead. The description of the temple with respect to its construction, equipment, practices, observances and the forms of worship are not inconsistent with the inference from the other evidence that the temple is not a public temple. The statement of the respondent 's witness that generally Oriya temples have no flag staffs and have Tulsi plants has significance in one other connection also. It was said in Mundancheri Koman vs Achuthan Nair (1) at page 408 that in the greater part of the Madras Presidency, where private temples were practically unknown, the presumption is that temples and their endowments form public charitable trusts. The presumption is certainly rebuttable. The evidence in this case sufficiently rebuts it. The temple is situate at a place which was practically at the boundary of the Madras Presidency, and close to the common boundary between that Presidency and Orissa. The presumption with respect to the temple in the Madras Presidency, therefore, will be a very weak one with respect to the temple so situated. We are therefore of opinion that the temple in suit is not a temple as defined in the Act as it is not used as of right by the Hindu community, or any section thereof, as a place of religious worship. We therefore allow the appeal with costs throughout, set aside the order of the Court below and 297 restore the order of the District Judge, Vizagapatam, setting aside the order of the Board dated March 28, 1947. Appeal allowed.

The Emperor Aurangazeb made certain grants to one Mukuldas Babajee, founder of the institution Poohari Fakir Sadavarthy, for the purpose of his maintenance and to carry on the distribution of Sadavarthy to Fakirs etc. The sixth head of the institution built a shrine for his private worship. It was adjunct to the aforesaid institution, and the public had no access to it without the permission of Mahant. The income from various properties granted to the founder and his disciples had been regularly utilised for the maintenance of the head of the institution and for distributing charities for the Sadhus and pilgrims; a part was spent on the expenses of the worship in the temple. The Board of Commissioners for Hindu Religious and Charitable Endowments, Madras held that the temple in suit was a public temple. The sole question for determination was whether this institution was a public temple as defined in the Act. ^ Held, that an institution would be a public temple within the Hindu Religious Endowments Act, 1926, if two conditions are satisfied; firstly, that it was a place of public religious worship and secondly, that it was dedicated to, or was for the benefit of, or was used as of right by the Hindu Community, or any section thereof, as a place of religious worship. When there be good evidence about the temple being a private one, the mere fact that a number of people worship at the temple, is not sufficient to come to the conclusion to the temple must be a public temple to which those people as a matter of right as it is not usual for the owner of together temple to disallow visitors to the temple, even if it be private one. In the present case the description of the temple with respect to its construction, equipment, practices, observances 277 and the form of worship are not inconsistent with the inference from the other evidence that the temple is not a public temple. The temple is not a temple as defined in the Act and it is not used as of right by Hindu Community, or any section thereof, as a place of religious worship. Held, further that the Inam Register is of great evidentiary value, but that does not mean that the entry or entries in any particular column or columns be accepted at their face value without giving due consideration to other matters recorded in the entry itself.

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Appeals Nos. 401 to 403 of 1960. Appeals by special leave from the judgment and orders dated March: 1, 1960, of the Punjab High Court 601 (Circuit Bench) at Delhi in Civil Revision Cases Nos. 166 D, 167 D and 168 D of 1958. A. V. Viswanatha Sastri, section section Chadha and R. section Narula, for the appellants (in all the appeals). C. B. Aggarwala and B. Kishore, for the respondents (in C. A. No. 401 of 60). C. B. Aggarwala, R. M. Gupta and G. O. Mathur, for the respondents (In C. As. 402 & 403 of 60). September 8. The Judgment of the Court was delivered by KAPUR J. These appeals are directed against three judgments and orders of the Punjab High Court in three Civil Revisions Nos. 166 D, 167 D and 168 D which were brought by the appellants against three of their tenants under section 35 of the Delhi & Ajmer Rent Control Act (XXXVIII of 1952), hereinafter termed the Act. The appellants in all the three appeals are the landlords and the respondents in the three appeals are three different tenants. The appellants filed three separate suits for the eviction of their three tenants under cl. (g) of proviso to section 13(1) of the Act on the ground that the premises were bona fide required for purposes of rebuilding. On February 27, 1953, the parties in all the three suits entered into a compromise in the following terms : "We have compromised the case with the plaintiff. A decree may be passed for Rs. 82/8/ on account of rent in suit and for ejectment in respect of the shop in suit in favour of the plaintiff against the defendants ' The defendants will vacate the shop by 4 3 53 and hand over possession to the plaintiff and the plaintiff will hand over its possession again (second time) to the defendants within six months from 4 3 53 after constructing it afresh. We shall pay such rent as this court will fix ". Thereupon the court passed the following order and a decree followed thereon: " In terms of the statements of the plaintiff., defendant and counsel for defendants a decree for Rs. 82/8/ on account of rent in suit be passed in favour 602 of the plaintiff against the defendants. Also decree for ejectment be passed in respect of the shop in suit in favour of the plaintiff against the defendants and that the defendants do give possession of the shop in suit by 4 3 53 to the plaintiff and that the plaintiff after constructing it afresh within six months from 4 3 53 give it to the defendants. From out of the money deposited, a sum of Rs. 82/8/ be paid to the plaintiff and the balance returned to the defendants. The defendants shall be responsible to pay the rent fixed by the court ". According to the decree the possession was to be given to the appellants on March 4, 1953, but it was actually delivered by the three respondents between March 7 and 15, 1953. On the completion of the building the three respondents filed three separate applications under section 15 of the Act for their being put into possession. These applications were filed on October 7, 1953. The High Court held that the compromise did not comprise any matter which was not the subject matter of the suit ; that the respondents could enforce the terms of the decree in the proceedings which they took, i. e., under section 15 of the Act; that time was not of the essence of the compromise and therefore of the decree and consequently in spite of the possession of the premises having been given by the respondents after the date specified in the decree, i. e., March 4, 1953, the respondents were entitled to enforce the decree by execution and apply for possession being restored to them ; at any rate they could apply for restitution under the inherent powers of the Court. Thus the High Court was of the opinion that though section 15(2) of the Act was not applicable to the proceedings they could be treated as Execution proceedings. Against this judgment and order the appellants have come in appeal to this court by special leave. Under section 13 of the Act the respondents are protected against eviction excepting for the reasons given in the proviso. The appellants had filed the original suits for eviction under section 13, proviso (g), which was as under 603 Section 13: " Notwithstanding anything to the contrary contained in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any court in favour of the landlord against any tenant including a tenant whose tenancy is terminated): Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied (g) that the premises are bona fide required by the landlord for the purpose of rebuilding the premises or for the replacement of the premises by any building or for the erection of other building and that such building or rebuilding cannot be carried out without the premises being vacated ; ". Thus when the suits were brought the provisions of the Act were invoked. The decrees passed were on the basis that the premises were required by the landlord for rebuilding which falls under section 13 and the decrees also incorporated the requirements of section 15 which provides: "The Court shall, when passing any decree or order on the grounds specified in clause (f) or clause (g) of the proviso to sub. section (1) of section 13 ascertain from the tenant whether he elects to be placed in occupation of the premises or part thereof from which he is to be evicted and if, the tenant so elects, shall record the fact of the election in the decree or order and specify therein the date on or before which he shall deliver possession so as to enable the landlord to commence the work of repairs or building or rebuilding, as the case may be. (2) If the tenant delivers possession on or before the date specified in the decree or order, the landlord shall, on the completion of the work of repairs or building or rebuilding place the tenant in occupation of the premises or part thereof. (3) If, after the tenant has delivered possession on or before the date specified in the decree or order the landlord fails to commence the work of repairs or building or rebuilding within one month of the specified date or fails to complete the work in a reasonable 604 time or having completed the work, fails to place the tenant in occupation of the premises in accordance with sub section (2), the Court may, on the application of the tenant made within one year from the specified date, order the landlord to place the tenant in occupation of the premises or part thereof on the original terms and conditions or to pay to such tenant such compensation as may be fixed by the Court". The compromise, the order and the decree provided (1) that the respondents will vacate their respective shops on March 4, 1953, and hand over possession to the appellants; (2) they elected to get back possession after rebuilding,which the appellants agreed to hand back on September 4, 1953; (3) the rent after such possession was to be determined by the court. It was contended on behalf of the appellants that the above facts taken with the circumstances that the decree was passed in a suit under section 13(1), proviso (g), show that this was an order passed and a decree made in accordance with the terms of section 15 of the Act. It is significant that the respondents themselves made the applications to the court under section 15 of the Act. For the respondents it was argued that the decree was not one under section 15 of the Act because the decree was based on a compromise whereby the parties fixed the date of delivery of possession to the appellants; fixed the date for completion of the rebuilding and agreed between themselves as to repossession by the respondents. It was submitted that although the time for giving delivery to the appellants was fixed in the compromise it was not of the essence of the contract. In our opinion the contentions raised by the appellants are well founded and the appellants must succeed. The suits for eviction were brought within the framework of the Act and were based on the provisions of section 13, proviso (g). No eviction would have been possible excepting when conditions laid down in section 13 were satisfied. The decrees which were passed were substantially in accordance with the provisions of section 15 of the Act and as was contended by the appellants they were decrees under which the premises had to be vacated by the respondents on a specified day. 605 Under that section they had the right to elect and did elect to get possession after rebuilding; this possession was to be given by the landlords to the tenants within a reasonable time and six months ' period was fixed by Consent between the parties and the rent, if the respondents were not put into possession on the same terms as before, was to be settled by court and that is what was done under the terms of the consent decree. The applications for being put into possession which were filed by the respondents were really under section 15(3) of the Act. As the respondents did not deli ver possession to the appellants on or before the dates specified in the decree the provisions of section 15 contained in sub section (3) of that Act were not available to them and they were ,not entitled to be put into possession as prayed by them. It was argued that the appellants had taken possession of the premises after the specified date without protest and had even accepted rent upto then and were therefore estopped from raising that defence. The appellants had conceded in the court,% below that plea could be raised in a suit if it was brought. In the view we have taken we think it unnecessary to express any opinion oil this point. The High Court was, in our opinion, in error in ordering possession to be, delivered to the respondents. The appeals must therefore be allowed and the judgments and orders of the High Court set aside. The appellants will have their costs in this Court. One set of hearing Costs. Appeal allowed.

Three separate suits for eviction by the appellant were brought against the three respondents within the framework of the Delhi & Ajmer Rent Control Act and were based on the provisions of section 13(g) for the bona fide requirements of rebuilding. Terms of compromise which were substantially in accordance with the provisions of section 15 of the Act were put in by the parties and decrees were passed in the suits, under which the premises had to be vacated by the respondents on a specified day, which condition the respondents failed to observe and actually handed over the possession of the premises in suit at a later date. On completion of the building the respondents filed an application under section 15 of the Act for their being put into possession. The High Court inter alia held that though section 15 of the Act was not applicable to the proceedings yet the respondents could impose the terms of the decree and the proceedings could be treated as execution proceedings for enforcing the said terms. The appellants challenged the judgments of the High Court and contended that on the facts of the case and the circumstances, the decrees in suit under section 13(1) proviso (d) shows that the order was passed and a decree made in accordance with the terms of section 15 of the Act and further it was significant that the respondents them selves had made the application to the Court under section 15 of the Act. The respondents submitted that the decree was not one under section 15 of the Act because the decree was based on a compromise and the time for giving possession was not. of the essence of the contract : Held, that as the tenant respondents did not deliver posses sion of the premises to the landlord appellant on or before the dates specified in the decree, the provisions of section 15 (3) of the Delhi and Ajmer Rent Control Act (38 of 1952) were not available to them and they were not entitled to be put in possession.

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Appeal No. 297 of 1976. Appeal by Special Leave from the Judgment and Order dated the 16 10 74 of the Allahabad High Court in Special Appeal No. 169/72. S.T. Desai, M.K. Garg, K.B. Rohtagi, V.K. Jain and M.M. Kashyap, for the Appellant. O.P. Rana for Respondents 1 4. V.M. Tarkunde, Pramod Swarup and R.S. Verma for Respond ent No. 5. The Judgment of the Court was delivered by KHANNA, J. This appeal by special leave is against the judgment of a Division Bench of the Allahabad High Court, reversing on appeal the decision of learned single Judge, whereby notification dated April 23, 1966 issued by the State Government under section 7(1) of the U.P. Land Acqui sition (Rehabilitation of Refugees) Act, 1948 (hereinafter referred to as the Act) had been quashed. As a result of the decision of the Division Bench, the writ petition filed by the appellants to quash that notification stood dis missed. The Sufferers ' Co operative Housing Society, Jaunpur, respondent, applied to the Uttar Pradesh Government in 1955 for acquiring four acres of land for the purpose of erecting houses, shops and workshops for the rehabilitation of the refugees who were members of that society. At the instance of the State Government, the society deposited a sum of Rs.15,000 towards the cost of the land to be acquired. In 1964, the society entered into an agreement with the State Government under section 6 of the Act. The State Government thereafter published on April 23, 1966, the impugned notifi cation and the same reads as under: "Under sub section (1 ) of section 7 of the U.P. Land Acquisition (Rehabilitation of Refugees) Act No. XXVI of 1948, the Governor of Uttar Pradesh is pleased to declare that he is satisfied that the land mentioned in the Schedule is needed and is suitable for the erection of houses, shops and 228 workshops for the rehabilitation of displaced persons and/ or for the provision of amenities directly connected therewith. All the persons interested in the land in question are, therefore, required to appear personally or by duly autho rised agent before the Compensation Officer of the Distt. at Jaunpur on the twenty seventh day of April 1966, with neces sary documentary or other evidence for the determination of the amount of compensation under section 11 of the Act. The Collector of Jaunpur is directed to take possession of the aforesaid land fourteen days after the publication of this notice in the official gazette. Upon the publication of this notice, the aforesaid land shall be deemed to have been acquired permanently and shall vest absolutely in the State Government free from all encum brances from. the beginning of the day on which the notice is so published. SCHEDULE Distt. Pargana Mauza Municipality PlotNo. Area Cantonment, Town area or Notified area 154 Mohalla Diwan Shah Kabir alias 152/1 1,00 Tartala Pargana Haveli, Tahsil 152/2 Jaunpur Municipal Area 149 Jaunpur 153 2 shops No. 6 and 7 For what purpose required: for the rehabilitation of displaced persons. Note: A copy of the site plan may be inspected at the office of the Collector, Jaunpur. " Subsequent to that notification, the Land Acquisition Offi cer determined the amount of compensation for the land and shops to be acquired at a little over rupees forty one thousand. The balance of the amount to be paid as compensa tion was thereafter deposited by the society. On April 10, 1970 the appellants, claiming to be the owners of a part of the land sought to be acquired, fried petition under article 226 of the Constitution of India in the Allahabad High Court with a prayer for quashing the impugned notification. The notification was assailed on the following three grounds: (1) The notification did not properly specify the lands sought to be acquired; (2) The notification was ultra vires the Act inasmuch as it sought to acquire lands for the rehabilitation of the displaced persons and not for the rehabilitation of refugees; and (3) The notification was not in accordance with the provisions of section 7(1) of the Act. 229 The learned single Judge, while allowing the writ peti tion, did not go into the first ground. He, however, accepted the second and third grounds and in the result quashed the notification. On the second ground, the learned Judge referred to the definition in section 2(7) of the Act, according to which refugee means any person who was a resident in any place forming part of Pakistan and who, on account of partition of civil disturbances or the fear of such disturbance, has on or after the first day of March 1947 migrated to any place in the U.P. and has been since residing there. It was observed that there was nothing to show that the displaced persons for whose benefit the land in question was being acquired had settled in Uttar Pradesh. Regarding the third ground, the learned Judge expressed the view that the notification under section 7(1) of the Act required that the State Government should indicate in the notification that it had decided to acquire the land. As the word "decided" was not mentioned in the notification, the notification was held to be not in accordance with law. On appeal, the Division Bench of the High Court disagreed with the learned single Judge on both the grounds on which he had quashed the notification. It was held that the notification was substantially in accordance with section 7(1) of the Act. It was further observed that the society for whose benefit the land was being acquired consisted of refugees. Dealing with the first ground, namely, that the notification was vague as it did not properly specify the land sought to be acquired, the Division Bench held that all the necessary particulars in respect of the land sought to be acquired had been given. In the result, the appeal was allowed and the writ petition was dismissed. In appeal before us, Mr. Desai has assailed the decision of the Division Bench on all the three grounds and has urged that the impugned notification is liable to be quashed on each of those grounds. We shall accordingly deal with those grounds. So far as the ground is concerned that the persons for whose rehabilitation the land is sought to be acquired are not refugees, Mr. Desai could not in spite of our query refer us to any paragraph in the writ petition wherein the above ground had been taken. All the same, he submitted that as the question had been allowed to be agitated before the High Court, we should not debar the appellants from advancing arguments on that score. The submission made by the learned counsel in this behalf is that there is nothing to show that the persons for whose benefit the land is being acquired arc settled in Uttar Pradesh. In this respect we are of the view that the question as to whether those per sons are settled in Uttar Pradesh or not is essentially one of fact. In the absence of any averment in the writ peti tion that the person concerned were not settled in Uttar Pradesh, it is obvious that the material facts having bear ing on this point could not be brought on record. A party seeking to challenge the validity of a notification on a ground involving questions of fact should make necessary averments of fact before it can assail the notification on that ground. As such we find it difficult to sustain the contention of Mr. Desai that the persons for whose benefit the land is being acquired were not settled in Uttar Pra desh. Apart from that, we find that 230 ground No. 13 taken in the writ petition proceeds upon the assumption that the persons for whose benefit the land was being acquired were in fact refugees. It further appears from the judgment of the Division Bench that there was hardly any dispute before the Division Bench on the point that the respondent society, namely, Sufferers ' Co opera tive Housing Society, consists of refugees and has refugees as its members. Coming to the second ground taken by the appellants that the notification was not in conformity with section 7(1) of the Act inasmuch. as it did not state that the State Gov ernment had decided to acquire the land in dispute, we are of the opinion that a reading of the notification which has been reproduced above leaves no manner of doubt that the State Government had decided to acquire the land. It is stated in the notification that the Governor of Uttar Pra desh is pleased to declare that he is satisfied that the land mentioned in the schedule is needed and is suitable for the erection of houses, shops and workshops for the rehabil itation of displaced persons and/or for the provision of amenities directly connected therewith. The notification further proceeds to state that the land in question shall be deemed to have been acquired permanently and shall vest absolutely in the State Government free from all encum brances from the date of the notification. The recital in the earlier part of the notification as well as the opera tive part of the notification that the land shall be deemed to have been acquired permanently and shall vest in the State Government lend clear support for the conclusion that the State Government decided to acquire the land and the order of acquisition was merely an implementation of that decision. The fact that the word "decided" has not been used in the notification would not prove fatal when the entire tenor of the notification reveals the decision of the State Government to acquire the land and is consistent only with the hypothesis of such a decision having been arrived at. The courts should be averse to strike down a notification for acquisition of land on fanciful grounds based on hypertechnicality. What is needed is substantial compliance with law. The impugned notification, in our opinion, clearly satisfies that requirement. Lastly, we may deal with the contention advanced on behalf of the appellants that the notification in question is vague. It is pointed out by Mr. Desai that the total area of the land comprised in field numbers mentioned in the notification is 1.26 acres, while the actual area which is sought to be acquired is one acre. The learned counsel accordingly urges that it is not possible to find out the particular portions of those fields which are sought to be acquired. As such, the notification is stated to be vague and thus not in conformity with law. Our attention has also been invited by Mr. Desaid to the report dated June 23, 1971 of the Tehsildar, who was deputed to deliver possession of the acquired land to the society. In the said report the Tehsildar stated that he found it difficult to find out as to which part of the fields mentioned in the notification were acquired. In this respect we find that the report of the Tehsilder itself indicates that when he went to the spot to deliver possession of the acquired 231 land, he did not take with, him the correct plan of the said land. The impugned notification makes an express reference to the site plan. An affidavit has been filed on behalf of the society and that affidavit makes it plain that the area of the land which has been acquired comes to exactly one acre. There appears to be no cogent ground to interfere with the finding of the Division Bench of the High Court that the impugned notification has not been shown to be vague. We, therefore, find no infirmity in the impugned notification. The appeal fails and is dismissed but in the circumstances with no order as to costs. Before we conclude, we would like to observe that the case before us tells a sad tale of delays in a matter which on sheer humanitarian grounds needed to be attended to with expedition. The case, as would appear from the above, pertains to the acquisition of land with a view to rehabili tate refugees who were uprooted from their hearths and homes in areas now in Pakistan because of disturbances and fear of disturbances which marred the partition of the country. The refugees for this purpose formed a society, and applied to the administration in 1955 for acquisition of land so that they could erect shops and workshops on that land with a view to earn their livelihood. It took the administra tion 11 years thereafter to issue necessary notification for the acquisition of the land in dispute. Four years were thereafter spent because possession of the land could not be delivered. The only attempt made to deliver possession proved infructuous as the Tehsildar entrusted with this task took a wrong plan. From 1970 till today the delivery of possession remained stayed because of the writ proceedings initiated by the appellants. One can only hope that now that the final curtain has been dropped, the matter would be attended to with the necessary promptitude. P.H.P. Appeal dismissed.

U.P. Government issued a notification under Section 7(1) of the U.P. Land Acquisition (Rehabilitation of Refugees) Act, 1948 for acquiring the land belonging to the appellant for the purpose of Sufferers Cooperative Housing Society. The Society entered into an agreement with the Government under section 6 of the Act. The Land Acquisition Officer determined the amount of compensation for the acquired land. The appellants challenged the validity of the said notifica tion on the following grounds: 1. The notification did not properly speci fy the land sought to be acquired. The notification was ultra vires the Act because it sought to acquire land for the rehabilitation of displaced persons and not for the rehabilitation of refugees. The notification was not in accordance with the provisions of section 7(1) of the Act. The single Judge of the High Court did not go into the first ground but accepted the second and third grounds and quashed the notification. He held that according to the definition of refugees in section 2(7) a refugee is a person who has migrated from Pakistan to any place in the U.P. and has been since then residing in U.P. and that there was nothing to show that the displaced persons who are the members of the Society had settled in U.P. While accepting the third ground the learned Judge held that section 7(1) requires to indicate in the notification that it had decid ed to acquire the land. However, the notification did not mention the expression "decided". On an appeal, the Division Bench disagreed with the conclusions of the Single Judge and allowed the appeal. The Division Bench held that the notification was substantially in accordance with the sect.ion 7( 1 ) and that the members of the Society consisted of refugees. The Division Bench also held that the notification was not vague and it proper ly specified the land sought to be acquired. In an appeal by Special Leave the appellants repeated the 3 grounds. Dismissing the appeal HELD: 1. The ground about the members of the Society not being refugees has not been taken in the Writ Petition at all. The question whether those members have settled in U.P. is essentially one of fact. In the absence of any averment in the writ petition the material facts having bearing on the point could not be brought on record. A party seeking to challenge the validity of a notifi cation on a ground involving questions of fact should make necessary averments of fact before it can assail the notification on that ground. [229 F H] 227 2. The recital in the earlier part of the notification as well as the operative part of the notification that the land shall be deemed to have been acquired permanently and shall vest in the State Government lends clear support to the conclusion that the State Government decided to acquire the land and the order of acquisition was merely an implementa tion of that decision. The fact that the word decided has not been used in the notification would not prove fatal when the entire tenor of the notification reveals the decision of the State Govt. to acquire land. The court would not strike down a notification for acquisition on hypertechnicality; what is needed is sub stantial compliance with law and the impugned notification clearly satisfies that require ment. [230 D F] 3. The contention that the notification in question is vague is not substantiated. The notification makes an express reference to the site plan. [230 G 231 A]

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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 5(2) of the Prevention of Corruption Act read with section 5(1) (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 5(1)(d). The relevant part of section 5(1)(d) 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 5(2) read with section 5(1)(d) of the Prevention of Corruption Act. The essence of an offence under section 5(2) read with section 5(1)(d) 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 5(1)(d) 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 5(1)(d) 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, i.e., 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 4(1) of the Prevention of Corruption Act arises in this case as money passed hands from Prem Singh to the accused and section 4(1) 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 4(1), 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.

The respondent who was a teacher in a railway school was prosecuted under section 161 of the Indian Penal Code and section 5(2) read with section 5(1)(d) 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 5(1)(d) 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 5(2) read with section 5(1)(d)of 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 4(1) 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.

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Civil Appeal No. 233 of 1991 etc. From the Judgment and Order dated 21.6.1988 of the Central Administrative Tribunal, Bombay Bench in O.A. No. 58 of 1988. V.C. Mahajan, S.N. Terdal, A.K. Srivastava, C.V, Subba Rao, S.K. Gambhir, Dr. B. L. Wadhera, Sudarshan Menon, P. Parameshwaran and G.D. Gupta for the appearing parties. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J. To cater to the educational needs of children of persons employed in the ordnances factory at Ambazari the Central Government has sanctioned and is running a Primary School from classes I to V. In the same premises, the employees 687 of the ordance factory, by their own arrangement are also having a Secondary School with classes VI to X. They have appointed the respondents as teachers in the Secondary School. They are paid honorarium and not full salary. Their honorarium is paid out of fees from the children and other donations received by the school. the respondents, however, approached the Central Administrative Tribunal seeking regularisation of their services and demanding equal pay for equal work. The Tribunal has allowed their claim with certain directions to the appellants including the Union of India. The directions issued by the Tribunal are as follows: "(i) The respondents will immediately take up an assessment of the needs of the school to carry on its activities at their present level and the number of additional teachers required for this purpose; (ii) After assessing the number of teachers needed, the respondents will proceed to create a sufficient number of posts to be filled up on a regular basis; (iii) After completing the above exercise respondents will take steps to fill up the newly created posts in accordance with recruitment rules to be framed for the purpose. the applicants who have worked as teachers in past should be first considered for the posts and only if they are found unsuitable should candidates from sources like the Employment Exchange be considered; (iv) Once the procedure outlined above is completed all persons selected should be appointed on a regular basis and on remuneration admissible to the regular teachers of the primary school; (v) Similar procedure should also be followed in respect of posts of peon giving Shri Tadas an opportunity of competing for regular appontment; (vi) Till the exercise outlined above is completed which we hope will be done before the academic year 1989 90 commences the present procedure may continue and such of the applicants as are selected for appointment will be subject to the same conditions of service as before. " The Union of India and the officers of the ordnance factory have challenged the validity of these directions in Civil Appeal No. 233/1991. The respondents who have not been recruited as per the directions of the Tribunal have preferred Civil Appeal No. 480/1989. We have considered the submissions of counsel on both sides in the light of the material on record. At the outset we may point out that 688 there is no evidence that the respondents were appointed as teachers on honorarium by or on behalf of the Central Government. There is also no evidence that the respondents were initially appointed in the Primary School and latter they were shifted to the Secondary School. The fact, however, remains that when the respondents moved the Tribunal for relies they were only teaching in the Secondary School. It is undisputed that the Central Government has not sanctioned the Secondary School nor created any posts thereto. the Central Government has only sanctioned the Primary School and the posts connected therewith. Those posts are being occupied by regularly recruited teachers. The Tribunal, however, has directed the Central Government immediately to take up an assessment of the needs of the School to carry on its activities at the present level and to create a sufficient number of posts to be filled up on a regular basis. The Tribunal has further directed the Central Government to take steps to fill up the newly created posts in accordance with the recruitment rules to be framed for the purpose. These directions are indeed amazing. It has compelled the Government to sanction the Secondary School, create adequate number of posts and fill up the posts after framing the recruitment rules for the purpose. There is no law requiring the Central Government to sanction the Secondary School. the Central Government has taken a decision that it will not involve itself in sanctioning or running classes beyond the Primary School level. It is a policy matter involving financial burden. No Court or the Tribunal could compel the Government to change its policy involving expenditure. The Tribunal therefore, could not have, could not have, issued the directions as it did to compel the Central Government to assess the needs of the school and create the necessary posts without support of law. Secondly, the respondents are not paid by the Central Government. They are not holding any appointment under the Central Government. There is no relationship of master and servant between the Central Government and the respondents. The respondents are employed in the Secondary School by local arrangement made by the officers of the ordnance factory. It is not proved that how the Central Government is accountable to such arrangement made by the local officers. Thirdly, Section 14 of the confers no jurisdiction, power and authority on the Tribunal to deal with the service matters of the employees like the respondents. 689 In any view of the matter, the respondents cannot claim the pay scale admissible to the Government school teachers much less regularisation of their services by the Central Government. The directions issued by the Tribunal therefore, cannot be sustained. They are apparently injustified and without authority of law. In the result we allow the Civil Appeal No. 233/1991, and set aside the order of the Tribunal. the Civil Appeal No. 480/1989 is dismissed. In the circumstances of the case, however, we make no order as to costs. S.B. CA No. 233/91 allowed and CA No. 480/89 dismissed.

The appellant i.e. the Central Government sanctioned primary school from classes I V to cater to the educational needs of children of persons employed in the ordance factory at Ambazari. The employees on their own in the same premises opened a secondary school with classes VI to X. The respondents are teachers in the Secondary School and are being paid out of fees and other donations received by the school, They approached the Central Administrative Tribunal seeking regularisation of their service and demanded equal pay for equal work. The Tribunal allowed their claim with certain directions to the appellants including the Union of India i.e. directing the Central Government immediately to take up an assessment of the needs of the School to carry on its activities at the present level and to create a sufficient number of posts to be filled up on a regular basis. The Tribunal further directed the Central Government to take steps to fill up the newly created posts in accordance with recruitment rules to be framed for the purpose. Allowing Civil appeal No. 233 of 1991 of the Union of India, and setting aside the order of the Tribunal dismissing Civil Appeal No. 480 of 1989 of the respondents who have not been recruited as per direction of the Tribunal, the Court. HELD: 1. There is no evidence in record that respondents were appointed as teachers on honorarium by or on behalf of the Central Government. There is no evidence that they were initially appointed in primary School and later shifted to the Secondary School. It is undisputed 686 that the Central Government has not sanctioned the Secondary School nor created any posts thereto. It had only sanctioned the Primary School and the posts connected therewith which are being occupied by regularly recruited teachers. [688A B] 2. The directions of the Tribunal are indeed amazing compelling the Central Government to sanction the Secondary School. The Central Government has taken a decision that it will not involve itself in sanctioning or running classes beyond the Primary School level. It is a policy matter involving financial burden. No court or the Tribunal could compel the Government to change its policy involving expenditure. [688D E] 3. The respondents are not paid by the Central Government. There is no relationship of master and servant between the Central Government and the respondents. The respondents are employed by the local officers so how the Central Government is accountable. [688G] 4. Even section 14 of the Administrative Tribunal Act, 1985 confers no jurisdiction, power or authority on the Tribunal to deal with the service matters of the employees like the respondents. the respondents cannot claim the pay scale admissible to the Government school teachers and much less regularisation of their services by the Central Government. [688H 689A] 5. The directions of the Tribunal are apparently unjustified and without authority of law so cannot be sustained. [688F]

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ivil Appeal No. 165 of 1974 etc. From the Judgment and Decree dated 22.10.1973 of the Kerala High Court in S.A. No. 580 of 1970. T.S. Krishnamoorthy Iyer and N. Sudhakaran for the Appellants. P.S. Poti, S.B. Saharya and Ms. Ratna Nair for the Respondents. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. After hearing Counsel appearing on both sides we do not find any merit in this appeal and the Special Leave Petitions. The sole question raised before us in the appeal con cerns the interpretation of Section 7D of the Kerala Land Reforms Act, 1963 Act 1 of 1964 as amended by Act, 35 of 1969. That section reads "7D. Certain persons occupying private forests or unsur 111 veyed lands to be deemed tenants Notwith standing anything to the contrary contained in section 52 or any other provision of the , or any other law, or in any contract, custom or usage, or in any judgment, decree or order of court, any person in occupation at the commencement of the Kerala Land Reforms (Amendment) Act, 1969, of the land of another situate in Malabar to which the provisions of the Madras Preserva tion or Private Forests Act, 1949 (XXVII of 1949), were applicable on the 11th day of April, 1955 or which was unsurveyed on that date, shall be deemed to be a tenant if he or his predecessor in interest was continuously in occupation of such land for not less than two years within a period of twelve years immediately preceding the 11th day of April, 1967. " The High Court has taken the view that the benefit of the above section would apply only to persons whose occupa tion of the private forests or unsurveyed lands had a lawful origin and not to persons m unlawful occupation based on trespass or forcible and unlawful entry. We are of opinion that the said interpretation placed by the High Court on the section is perfectly correct. For a proper understanding of the scope and intendment of Section 7D, it is necessary to examine the setting and the context in which the said section occurs in the Act. This will require a conjoint study of the provisions con tained in Section 7A to 7C and Sections 8 and 9 of the Act which immediately precede and succeed Section 7D. Those sections are in the following terms: "7A. Certain persons occupying land for not less than ten years to be deemed tenants notwithstanding anything to the contrary contained in section 52 or any other provision of the , or any other law, or in any contract, custom or usage, or in any judgment, decree or order of court, a person shall be deemed to be a tenant in respect of the land of another in his occupation if (a) he or his predecessor in interest occupied such land believing it to be the property of the Government; (b) subsequent to such occupation such land has become the property of such other person as a consequence of any judgment, decree or order of any civil court, and 112 (c) such land has been in the continuous occupation of such person for a period of not less than ten years preceding the commencement of the Kerala Land Reforms (Amendment) Act, 1969. Explanation I In computing the period of occupation of a person for the purpose of clause (c), the period during which the predecessor in interest or predecessors in interest of such person was or were in occupation shall also be taken into account. Explanation II For the purpose of this section, a person shall be deemed to be in continuous occupation notwithstanding any order of court for delivery of possession to another person or any court record of dispos session. 7B. Certain persons occupying lands under leases granted by incompetent persons to be deemed tenants (1) Notwithstanding anything to the contrary contained in any law, or in any contract, custom or usage, or in any judgment decree or order of court, any person in occupation of the land of another at the commencement of the Kerala Land Reforms (Amendment) Act, 1969, on the basis of a registered deed purporting to be a lease deed, shall be deemed to be a tenant if he or his predecessor in interest was in occupation of such land on the 11th day of April, 1957, on the basis of that deed, notwithstanding the fact that the lease was granted by a person who had no right over the land or who was not competent to lease the land. (2) Notwithstanding anything to the contrary contained in any law, or in any contract, custom or usage, or in any judgment, decree or order of court, any person who on the 11th day of April, 1957, was in occupation of the land of another and continued to be in occupation of such land till the commencement of the Kerala Land Reforms (Amendment) Act, 1969, shall be deemed to be a tenant if the court has delivered a judgment or passed an order before the date of publication of the Kerala Land Reforms (Amendment) Bill, 1968, in the Gazette that the occupation by such person was on the basis of an oral permission or an unregistered deed purporting to be a lease deed granted by a persOn who had no right over the land or who was not competent to lease the land. 113 7C. Certain persons who have paid amounts for occupation of land shall be deemed to be tenants: Notwithstanding anything to the contrary contained in any law, or in any con tract, custom or usage, or in any judgment, decree or order of court, any person who is in occupation of the land of another at the commencement of the Kerala Land Reforms (Amendment) Act, 1969, shall be deemed to be a tenant if he or his predecessor in interest has paid within a period of ten years immedi ately preceding such commencement any amount in consideration of such occupation or for the use and occupation of such land and has ob tained a receipt for such payment from any person entitled to lease that land or his authorised agent or a receiver appointed by a court describing the payment as modavaram or nashtavaram or modanashtavaram or a receipt described as M.R. receipt. XX XX XX XX XX 8. Certain persons who were cultivating land on varam arrangement to be deemed tenants Notwithstanding anything to the contrary contained in any law or in any contract, custom or usage, or in any judgment, decree or order of court, any person who, by virtue of the provisions of section 6 of the Kerala Stay of Eviction Proceedings Act, 1957, was enti tled to cultivate any nilam after the 11th day of April, 1957, and was cultivating the nilam at the commencement of this Act, shall be deemed to be a tenant, notwithstanding the expiry of the term fixed under the varam arrangement. Certain persons who surrendered lease hold rights but continued in possession to be deemed tenants Notwithstanding anything to the contrary contained in any law, or in any contract, custom or Usage, or in any judgment, decree or order of court, where, on or after the 11th day of April, 1957, a tenant holding land less in extent than the ceiling area, had executed a deed surrendering his leasehold right to the landlord, but had not actually transferred possession of the land to the landlord before the commencement of this Act, such deed shall be deemed to be invalid and such person shall be deemed to be a tenant. " 114 On a careful scrutiny of the aforesaid provisions, it becomes abundantly clear that the intention of the legisla ture was to grant protection only to persons whose posses sion had a lawful origin in the sense that they had either bona fide believed the lands to be Government 's lands of which they could later seek assignment or had taken the lands on lease from persons whom they bona fide believed to be competent to grant such leases or had come into posses sion with the intention of attorning to the lawful owners or on the basis of arrangements like varam etc. which were only in the nature of licences and fell short of a leasehold right. It was not within the contemplation of the legisla ture to confer the benefit of protection on persons who had wilfully trespassed upon lands belonging to others and whose occupation was unlawful in its origin. The expression "in occupation" occurring in Section 7D must be construed as meaning "in lawful occupation. " In the present case the finding of fact entered by the High Court is that the appellant had come into possession of the lands by trespass. His plea before the Courts below was that he was himself the owner of the area having acquired title to it by adverse possession. In such circumstances the High Court was in our opinion fully justified in holding that the appellant was not entitled to the protection of Section 7D. The appeal, is, therefore, devoid of merits. Shri P.S. Potti, learned Senior Counsel appearing on behalf of the respondents has very fairly submitted before us that his clients respondents are prepared to pay to the appellant a sum of Rs.50,000 as ex gratia payment in full and final settlement of whatever claims the appellant may have towards the value of the rubber trees standing in plots. A, B and C or in any other respect. We record this submission and direct that an amount of Rs.50,000 shall be deposited by the respondents in the trial Court within a period of three months from today, whereupon the appellant will be at liberty to withdraw the said amount from Court without furnishing any security. Subject to the aforesaid observation and direction, the appeal and the Special Leave Petitions. are dismissed. The parties will bear their respective costs. The amounts depos ited in the trial court by the Receiver may be withdrawn by the respondents herein. A.P.J. Appeal & Petitions dismissed.

Section 7D of the Kerala Land Reforms Act, 1963 Act 1 of 1964 as amended by Act 35 of 1969 provides that a person occupying private forests or unsurveyed lands shall be deemed to be a tenant if he or his predecessor in interest was continuously in occupation of such land for not less than two years within a period of 12 years immediately precedings the 11th day of April, 1969. In the instant case, the High Court while interpreting section 7D took the view that the benefit of section 7D would apply only to persons whose occupation of the private forests or unsurveyed lands had a lawful origin and not to persons in unlawful occupation based on trespass or forcible and unlaw ful entry. In the appeal to this Court also the so1e question concerning the interpretation of section 7D was raised. Dismissing the appeal and the special leave petitions, HELD: 1. On a careful scrutiny of the provisions con tained In sections 7A to 7C and sections 8 and 9 of the Act it is clear that the intention of the legislature was to grant protection only to persons whose possession had a lawful origin in the sense that they had either bona fide believed the lands to be Government 's lands of which they could later seek assignment or had taken the lands on lease from persons whom they bona fide believed to be competent to grant such leases or had come into possession with the intention of attorning to the lawful owners or on the basis of arrange ments like varam etc. which were only in the nature of licences and fell short of a leasehold right. It was not within the contemplation of the legislature to confer the benefit of protection on persons 110 who had wilfully trespassed upon lands belonging to others and whose occupation was unlawful in its origin. [114A C] 2. The expression "in occupation" occurring in section 7D must be construed as meaning ' 'in lawful occupation". [114C] 3. In the present case, the finding of fact entered by the High Court is that the appellant had come into posses sion of the lands by trespass. His plea before the Courts below was that he was himself the owner of the area having acquired title to it by adverse possession. In such circum stances the High Court was fully justified in holding that the appellant was not entitled to the protection ors. 7D. [114D] [In view of the offer made by the respondents that they are prepared to pay to the appellant a sum of Rs.50,000 as ex gratia payment in full and final settlement of his claim, the Court directed that an amount of Rs.50,000 shall be deposited by the respondents in trial Court within three months with liberty to appellant to withdraw the same with out furnishing any security. [114E]

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Special LeaVe Petition (Civil) No. 6765 of 1985. From the Judgment and Order dated 11.12. 1984 of the Andhra Pradesh High Court in C.M.A. No. 244 of 1981. D .N. Gupta and Vijay Kumar Verma for the Petitioner. The Order of the Court was delivered by VENKATARAMIAH, J. This petition is filed under Arti cle 136 of the Constitution for special leave to appeal against the judgment of the High Court of Andhra Pradesh dated 11.12.84 allowing an appeal filed against the judgment dated 31.12.80 in E.I. case No. 4 of 1980 on the file of the Employees ' Insurance Court at Hyderabad. The petitioner is a limited company carrying on busi ness at Secunderabad and at some other places in India. The petitioner is engaged in the business of importing fertiliz ers. It represents some foreign principals for the sale of their products in India. The petitioner imports fertilizers into India which is an item purchased by the Central Government through the State Trading Corporation/Minerals and Metals Trading 'Corporation of India. In the course of its business the petitioner obtains the tenders from the State Trading Corporation Minerals and Metals Trading Corporation of India and passes them on to its principals abroad. Thereafter negotiations are carried on directly between the State Trading Corporation/Minerals Metals and Trading Corporation of India and the foreign principals. After the deal is completed and the fertilizers arrive at the Indian ports the fertilizers are delivered to the Cen tral Government at the ports. Before delivering the goods to the Central Government the petitioner supervises the 984 unloading of the goods and conducts the survey of the goods imported to ascertain the condition of the goods and to find out whether there are any shortages in the consignments so that there may be no disputes later on about the quality and quantity of the goods delivered. The petitioner company has its branch offices in Bombay, Calcutta and Madras for super vising its work at the ports and to attend to other matters relating to clearing of shipments and in Delhi for securing payments of bills. Its central office is at Secunderabad. The Government of Andhra Pradesh after giving six months notice vide its gazette notification No. 788 Health dated 25.9.74 as required under section 1(5) of the (hereinafter referred to as 'the Act ') extended the provisions of the Act with effect from 30.3.75 among others to the establishments mentioned therein in which 20 or more persons were employed for wages on any day of the preceding 12 months by Notification G.O.M. section No. 297, Health dated 25th March, 1975 published in the Andhra Pradesh Gazette dated March 26, 1975. Item 3(iii) in the list of establishments in that notification to which the Act was so extended by the State Government was "shops". On inspection by the Insurance Inspector of the premises in which the petitioner was carrying on its business at Secun derabad it was found on 28.4.75 that the petitioner had employed persons ranging from 27 to 29 for wages within the relevant period and was carrying on the business of import of fertilizers. On being asked by the Employees ' State Insurance Corporation to comply with the provisions of the Act the petitioner agreed that its business was covered by the Act in view of the notification issued by the State Government as it happened to be a "shop" and submitted contribution forms of its employees to the office of the Employees ' State Insurance Corporation. After complying with the provisions of the Act for a period of four years the petitioner raised a dispute about its liability to pay the contributions payable under the Act and instituted under section 75 of the Act the case out of which this petition arises before the Employees ' Insurance Court at Hyderabad for a declaration that the establishment in which the peti tioner was carrying on its business was not a "shop" and therefore it was not covered by the notification issued by the State Government and that the petitioner was not liable to comply with the provisions of the Act. The above petition was resisted by the Regional Director, Employees ' State Insurance Corporation. It was pleaded on his behalf that the establishment which was being run by the petitioner was a "shop" and therefore it was liable to comply with the provi sions of the Act. The Employees ' Insurance Court upheld the plea of the petitioner and 985 declared that the establishment of the petitioner was not covered by the Act. Aggrieved by the decision of the Employ ees ' Insurance Court, the Regional Director of the Employ ees ' State Insurance Corporation filed an appeal before the High Court under section 82 of the Act. The High Court allowed the appeal, reversed the decision of the Employees ' Insurance Court and dismissed the petition filed by the petitioner under section 75 of the Act. The High Court was of the view that the establishment of the petitioner at Secunderabad was a "shop" to which the Act was applicable by virtue of the notification issued by the State Government. Aggrieved by the decision of the High Court the petitioner has filed this petition under Article 136 of the Constitu tion requesting this Court to grant special leave to appeal against the decision of the High Court. On behalf of the petitioner it is urged before us that since no goods were actually being delivered in the premises in which the petitioner was having its establishment the said establishment could not be treated as a shop which is referred to in item 3(iii) of the Government 's notification. The word "shop" is not defined in the Act or in the notifi cation issued by the State Government. According to the Shorter Oxford English Dictionary the expression "shop" means "a house or building where goods are made Or prepared for sale and sold". It also means a "place of business" or "place where one 's ordinary occupation is carried on". In ordinary parlance a "shop" is a place where the activities connected with the buying and selling of goods are carried on. The evidence produced in the case shows that the peti tioner is carrying on its business at its business premises in Secunderabad. At that place the petitioner carries on the commercial activity facilitating the emergence of contracts of sale of goods between its foreign principals and the State Trading Corporation ' Minerals and Metals Trading Corporation of India. It arranges for the unloading of the goods under its supervision and for the survey of the goods despatched by its foreign principals at the ports on behalf of its foreign principals and on the goods being delivered to the Central Government it collects the price payable by the Government and remits it to its foreign principals. All these activities are directed and controlled from its prem ises at Secunderabad. It is thus clear that the activities carried on by the petitioner constitute trading activities although the goods imported from abroad are not actually brought to the said premises and delivered to the purchaser there. In our opinion it is not actually necessary that the delivery of the goods to the purchaser should take place at the premises in which the business of buying or selling is carried on to constitute the said premises into a "shop". 986 The delivery 0f the goods sold to the purchaser is only one aspect of trading activities. Negotiation of the terms of sale, carrying on of the survey of the goods imported, arranging for the delivery of the goods sold, collection of the price of the goods sold etc. are all trading activities. The premises where business is carried on by the petitioner is undoubtedly a shop as the activities that are carried on there relate only to the sale of goods which are imported into India. The petitioner acts as the agent of its foreign principals who are the sellers. The petitioner directs and controls all its activities from the premises in question. If orders are received at a place which ultimately fructify into sales and the resulting trading activity is directed from there that place comes to be known as a "shop". In our view the Employees ' Insurance Court placed a very narrow interpretation on the expression "shop" white upholding the contention of the petitioner by confining "shop" to a place where goods are actually stored and delivered pursuant to a sale. We agree with the decision of the High Court that while construing a welfare legislation like the Act and the notification issued thereunder a liberal construction should be placed on their provisions so that the purpose of the legislation may be allowed to be achieved rather than frus trated or stultified. There is no doubt that the establish ment of the petitioner at Secunderabad is a "shop" where selling activity is carried on and by virtue of the notifi cation issued by the State Government the Act became ap plicable to it. The petitioner is bound to comply with the provisions of the Act as admittedly at all relevant times the petitioner had engaged more than 20 persons for wages at its place of business. There is no ground to interfere with the judgment of the High Court. In the result this petition fails and is dismissed. N.P.V. Petition dis missed.

The petitioner, a limited company, having central office at Secunderabad was carrying on business of importing ferti lizers and represented some foreign principals for the sale of their products in India. The Government of Andhra Pradesh after giving six months notice, vide its gazette notification No. 788 Health dated 25 9 74 as required under section 1(5) of the extended the provisions of the Act with effect from 30 3 75 to the establishments mentioned therein in which 20 or more persons were employed for wages on any day of the preceding 12 months by Notification G.O.M.S. No. 297, Health, dated 25th March, 1975. Item 3(iii) in the list of establishments in that notification to which the Act was so extended by the State Government was "shops". On inspection of the premises of the petitioner company at Secunderabad on 28 4 75, the Employees ' State Insurance Inspector found that the petitioner had employed persons ranging from 27 to 29 for wages and was carrying on the business of import of fertilizers, and the petitioner was asked to comply with the provisions of the . The petitioner agreed and submitted contribu tion forms of its employees to the office of the Corpora tion. After complying with the provisions of the Act for a period of four years the petitioner instituted a case under Section 75 of the Act before the Employees ' Insurance Court for a declaration that the establish 982 ment in which the petitioner was carrying on its business was not a "shop", and, therefore, it was not covered by the aforesaid notification and that the petitioner was not liable to comply with the provisions of the Act. On behalf of the Corporation it was submitted that the establishment being run by the petitioner was a "shop" and, therefore, liable to comply with the provisions of the Act. The Employ ees ' Insurance Court upheld the plea of the petitioner and declared that the establishment was not covered by the Act. The High Court allowed the appeal of the Corporation and held that the establishment was a "shop" to which the Act was applicable by virtue of the State Government 's notifica tion. In the Special Leave Petition, on behalf of the peti tioner it was urged that since no goods were actually being delivered in the premises in which the petitioner was having its establishment, the said establishment could not be treated as a 'shop ' which was referred to in item 3(iii) of the Government 's notification. Dismissing the Special Leave Petition, this Court, HELD: 1. The petitioner company is bound to comply with the provisions of the Act as, at all relevant times, the company had engaged more than 20 persons for wages at its place of business. [986E] 2.1 The word "shop" is not defined in the Act or in the notification issued by the Government. [985D] 2.2 In ordinary parlance a "shop" is a place where the activities connected with the buying and selling of goods are carried on. [985E] 2.3 It is not actually necessary that the delivery of the goods to the purchaser should take place at the premises in which the business of buying or selling is carried on to constitute the said premises into a "shop". The delivery of the goods sold to the purchaser is only one aspect of trad ing activities. Negotiation of the terms of sale, carrying on of the survey of the goods imported, arranging for the delivery.of the goods sold, collection of the price of the goods sold etc. are all trading activities. [985H, A] In the instant case, the premises where business is carried on by the petitioner is undoubtedly a "shop" as the activities that are carried on there relate only to the sale of goods which are imported into India. 983 The petitioner acts as the agent of its foreign principals who are the sellers. The petitioner directs and controls all its activities from the premises in question. If orders are received at a place which ultimately fructify into sales and the resulting trading activity is directed from there, that place comes to be known as a "shop". [986B C] 3. The High Court was right in holding that while construing a welfare legislation like the Act and the noti fication issued thereunder a liberal construction should be placed on their provisions so that the purpose of the legis lation may be allowed to be achieved rather than frustrated or stultified. [986D]

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vil Appeal No. 331 of 1961. Appeal from the judgment and decree dated March 29, 1956, of the Andhra Pradesh High Court in Appeal Suit No. 182 of 1950. B. Manavala Chowdhry and B. K. B. Naidu, for the appellants. Narasiah Chowdhry and R. Gopalakrishnan, for Respondents Nos. 1, 2 and 8. 987 1963. May 10. The judgment of the Court was delivered by DAS GUPTA J. This appeal brought on a certificate granted by the High Court of Andhra Pradesh is against a decision of that Court reversing a decree granted by the Subordinate judge, Masulipatnam, dismissing a suit for partition. Of the three plaintiffs who brought the suit, two claimed to be the reversioners of Boppanna Chandrappa, to whom we shall refer to as Chandrappa, and the third a purchaser of the interest of some of the reversioners, viz., defendants 4, 5 and 7. According to the plaint the three plaintiffs were thus entitled to a 5/6th share of the properties while the 6th defendant was entitled as a reversioner of Chandrappa to the remaining 1/6th share. The property was however in the actual possession of the three sons of Nagayya who were impleaded as the first three defendants. In contesting the suit these defendants denied that these properties had ever belonged to Chandrappa and further that the plaintiffs 1 and 2 or the defendants 4, 5, 6 and 7 were his reversioners. The main defence however was that even if the properties did belong to Chandrappa, the defendant 's father Nagayya became entitled to these as Chandrappa 's illatom son in law. The basis of this plea of illatom son in lawship was said to be that Chandrappa had brought Nagayya into his family under an arrangement that the latter would marry his wife 's sister 's daughter Mangamma and help him in cultivation and management of the properties, in consideration of which Nagayya would inherit the entire property after Chandrappa 's death. The Trial Court held that all the suit properties except a small portion did belong to Chandrappa 988 and the plaintiffs would be entitled to 5/6th share of Chandrappa 's properties and the 6th defendant to the remaining 1/6th share, on the death of Chandrappa 's widow Ramamma. He however accepted the defence case that Nagayya had become entitled to the property on Chandrappa 's death as Chandrappa 's illatom son in law and accordingly dismissed the suit. On appeal, the High Court held that the custom by which an illatom son in law inherited property could not be extended to a case where the marriage took place not with the daughter of the owner of the property but with some other relation of his. The High Court also rejected an alternative plea that appears to have been raised before it that Nagayya became entitled to the property on the basis of a contract between him and Chandrappa. In this view of the law, the High Court set aside the order passed by the Trial Court and decreed the suit. It is no longer disputed before us that the rights of an illatom son in law cannot be claimed by a person who under a promise from the owner of the property that he would inherit the property marries not the daughter but some other relation of the owner of the property. 'The alternative contention which was raised before the High Court has however been repeated before us, It has been urged that there was a good and valid contract between Chandrappa and Nagayya, that in consideration of Nagayya marrying Mangamma and looking after Chandrappa 's property, Chandrappa would make him his heir and that the consequence of this contract was that Nagayya became Chandrappa 's heir. The question here is not whether on Chandrappa 's death Nagayya could have obtained specific performance of the alleged contract. For, assuming that there was a contract as alleged and that it was a valid contract, enforceable at law and also such of which specific performance could 989 have been obtained by proper proceedings in courts, the appellants ' rights would be to seek such specific performance. The contention on behalf of the appellant is that even though specific performance has not been sought or given the contract itself would have the effect of transferring interest in the property to Nagayya on Chandrappa 's death. In support of this contention the learned Counsel relied on three decisions of High Courts in India and also a decision of the Privy Council. The first decision in point of time is the case of Challa Papi Reddi vs Challa Koti Reddi (1). The facts there were that the defendant 's father who was selected by Musalireddi, in pursuance of a special custom, as a son in law who should take his property as if he was a son entered into possession of the property on Musalireddi 's death. lie then associated with himself the plaintiff in the management of his property on promise of a share. The plaintiff continued thus for many years, aiding in the management and improvement of the property, until a short time before the suit was brought, the first defendant turned the plaintiff out of doors and refused to give him the promised share. The High Court of Madras held that the agreement by the first defendant 's father was to the effect that the plaintiff was being admitted to the rights of a co sharer and further, as there was a complete adoption or ratification of the father 's contract by the first defendant he ought to be held to it and the plaintiff was therefore a co sharer in the property. It has to be mentioned that this case was decided long before the was enacted and the question whether a written document was necessary for transfer did not come up for consideration. In Bhalla Nahana vs Prabhu Hari (2), which was the next case cited, what happened was that one Gosai (1) (1872) 7 Mad. H.C.R. 25. (2) 990 Ramji induced the parents of the defendant Prabhu Hari to give him in adoption by an express promise to settle his property upon the boy but died before such settlement could be executed. Nearly 30 years after his death Ramji 's widow Bhani gave effect to her husband 's undertaking by executing a deed of gift of his property in her hands in favour of Prabhu Hari. The reversioner to Gosai Ramji 's estate con tested in a suit brought by him, the validity of this alienation. In holding that the alienation was valid, the High Court of Bombay pointed out that the performance of a husband 's contracts was among the proper and necessary purposes specified by Hindu jurists under which a widow could alienate property and said further that the equity to compel the heir and legal representative of the adoptive father specifically to perform his contracts survived and the property in the hands of his widow was bound by that contract. Whether Prabhu Hari would have been entitled to the property even in the absence of the deed of gift did not fall for consideration in that case. It also deserves to be Mentioned that this case was also decided several years before the came into force. In Asita Mohon Ghosh Moulik vs Mohan Ghosh Moulik (1), one of the questions in dispute was whether the adopted son could take an equal share with the son Answering the question in the affirmative, the High Court of Calcutta after deciding that under the Hindu Law the adopted son was entitled to an equal share, also referred to an Ikrarnama which had been executed by the adoptive fatherland holding that the Ikrarnama was valid and operative, said that even apart from the law, the adopted son, would be so entitled. It is difficult to see how this can be of any assistance in solving our present problem. (1) 991 Lastly, the learned Counsel relied on the decision of the Privy Council in Malraju Lakhmi Venkayyamma vs Ventaka Narasimha Appa Rao (1). The main question in controversy in that case was whether there was a completed contract by which the Rani, the former owner of the property had agreed that the possession of the property would be given to her niece Venkayyamma Rao immediately upon the expiry of her life interest. The Privy Council held that there was such completed contract and directed the Receiver to deliver possession "upon the terms of the contract now affirmed". It may be mentioned that this decision in Venkayyamma Rao 's Case (1), was among the authorities on which the Calcutta High Court relied in Ariff vs Jadunath Majumdar (2). The High Court held that the result of equitable principles which had been applied in many cases in England and were also applied by the Privy Council in Venkayyamma Rao ' Case was that the defendant had acquired the rights of a permanent tenant. When this very case went up to the Privy Council in appeal (1), the High Court 's decision was reversed. The Privy Council pointed out that the dicta in Venkayyamma Rao 's Case did not mean "that equity can override the provisions of a statute and (where no registered document exists and no registrable document can be procured) confer upon a person a right which the statute enacts, shall be conferred only by a registered instrument". This decision of the Privy Council in Ariff vs Jadunath Majumdar (2), was given in January 1931. Nearly two years before that section 53A had been enacted in the introducing in a limited form the doctrine of equity of part performance. There can, in our opinion, be no doubt that after section 53A was enacted the only case in which the English doctrine of equity of part performance could (1) (1916) L. R. 43 I.A. 138. (2) (1930) 1. (3) (1931) L. R. 58 1. A. 91. 992 be applied in India is where the requirements of 53A are satisfied. Quite clearly, section 53A does not apply to the facts of the present case. It must therefore be held that the considerations of equity cannot confer on Nagayya or his heirs any title in the lands which under the statute could be conferred only by a registered instrument. Our conclusion therefore is that the High Court was right in holding that Nagayya or his heirs had acquired no right in the property. The appeal is accordingly dismissed. In the circumstances of the case, we make no order as to costs. Appeal dismissed.

The plaintiffs brought a suit for partition, two of them claimed to be the reversioners of Chandrappa and the third a purchaser of the interest of the reversioners, defendants 4, 5 and 7. They were thus entitled to a 5/6th share of the properties while the 6th defendant was entitled as a reversioner of Chandrappa to the remaining 1/6th share. The property was in the possession of the three sons of Nagayya, the first three 986 defendants, who denied these properties ever belonged to Chandrappa and also that the plaintiffs 1 and 2 or defendants 4 to 7 were his reversioners. The main defence was that even if the properties belonged to Chandrappa, the defendants ' father Nagayya became entitled to these as Chandrappa 's illatom son in law, on the basis that Chandrappa had brought Nagayya into his family under an arrangement that the latter would marry his wife 's sister 's daughter Mangamma and inherit the entire property after Chandrappa 's death. The trial court dismissed the suit. On appeal the High Court set aside the order and decreed the suit. On certificate, the only contention, raised by the appellant in this court was that even though specific performance had not been sought, the contract itself would have the effect of transferring interest in the property to Nagayya on Chandrappa 's death. Held that after enactment of section 53A in the , the only case in which the English doctrine of equity of part performance could be applied in India is where the requirements of section 53A are satisfied. In the instant Case, 53A has no application. It must be held therefore that the considerations of equity cannot confer on Nagayya or his heirs any title in the lands which under the statute could be conferred only by a registered instrument. The appeal, therefore, must be dismissed. Challa Papi Reddi vs Challa Koti Reddi, (1872) 7 Mad. H C. R. 25; Bha 'a Nahana vs Parbhu Hari, (1877) 2 I.L.R. Bom. 67; Asita, Mohan Ghosh Moulik vs Mohan Ghosh Moulik, (1016) 20 G.W.N. 901; Venkatayyamma Rao vs Appa Rao, (1916) L. R. 43 1. A. 138; Ariff vs Jadunath Majamdar, Cal. 1235, held inapplicable. Ariff vs Jadunath Majumdar, (1931) L. R. 58 I.A. 91, relied on.

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Civil Appeal No. 533 of 1979. From the judgment and order dated 2nd January, 1979 of the High Court of Kerala in original Petition No. 4935 of 1974 D. and Special Leave Petition No. 81 OF 1971. From the judgment and order dated the 27th July, 1971 of the Kerala High Court in O.P. No. 4706 of 1969. T.S. Krishnamoorthy Iyer, C.J. Balakrishnan, K Prabhakaran, P. Parameswaran and A.S. Nambiar for the appellant in C.A. No. 533/79. P. Govindan Nair, Mrs. Baby Krishnan, K.R. Nambiar and K.M.K Nair for the respondent in C.A. No. 533/79. S.B. Sahariya and V.B. Sahariya for the petitioner in S.L.P. No. 81/72. The Judgment of the Court was delivered by SEN, J. This appeal. by special leave, is directed against a judgment of the Kerala High Court by which the High Court dismissed the writ petition of the appellants who are manufacturers of medicinal and toilet preparations containing alcohol and upholding the constitutional validity of sections 12A, 12B, 14(e) and (f) and 68A of the Abkari Act, 1077 (1 of 1077) (hereinafter called 'the Act '), introduced by the Abkari (Amendment) Act, 1967 (10 of 1967), and rr. 13 and 16 of the Kerala Rectified Spirit Rules, 1972. The main question in the appeal is as to the legislative competence of the State to enact a law relating to medicinal and toilet preparations containing alcohol under Entry 8, List II of the Seventh Schedule to the Constitution. The appellants, by virtue of a licence in Form 25 granted under the and a licence in Form Ll granted under the (hereinafter referred to as 'the Central Act ') are entitled to manufacture the drugs specified therein. They filed a writ petition in the High Court complaining that they were entitled to the supply of alcohol free of duty for the manufacture of their medicinal and toilet 525 preparations under r. 21 of the Medicinal and Toilet Preparations A (Excise Duties) Rules, 1956 (hereinafter referred to as 'the Central Rules '), and r. 8 of the Kerala Rectified Spirit Rules, 1972, and challenged the validity of the impugned provisions mainly on the ground that the State Legislature has no power to enact the law relating to medicinal and toilet preparations as the topic of legislation is within the exclusive domain of Parliament under Entry 84, List I of the Seventh Schedule to the Constitution. The High Court held that there was no conflict between the impugned provisions and the Central law as they dealt with different subjects. The impugned provisions, as introduced by the Abkari Amendment) Act, 1967, in so far as they are relevant, are as follows: Section 12A reads: 12A. No preparation to which liquor or intoxicating drug is added during the process of its manufacture or in which alcohol is self generated during such process shall be manufactured in excess of the quantity specified by the Commissioner: Provided that in specifying the quantity of a medicinal preparation, the Commissioner shall have due regard to the total requirement of that preparation for consumption or use in the State. Section 12B provides: 12B. (1) No person shall utilise liquor or intoxicating drug in the manufacture of any preparation, in excess of the quantity specified by the Commissioner and except under and in accordance with the terms and conditions of a licence granted by the Commissioner in that behalf: G Provided that where such preparation is a medicinal preparation, Commissioner shall, in specifying the quantity of liquor or intoxicating drug have due regard to the total requirement of such medicinal preparation for consumption or use in the State. 526 Section 14 provides: 14. The Commissioner may, with the previous approval of the Government . . . (d) prescribe the mode of supervision that may be necessary in a . manufactory where preparations containing liquor or intoxicating drugs are manufactured, to ensure the proper collection of duties, taxes and other dues payable under this Act or the proper utilisation of liquor or intoxicating drugs; (e) prescribe the size and nature of the establishment necessary for such supervision and the cost of the establishment and other incidental charges in connection with such supervision to be realised from the licensees: and (f) prescribe the allowance for wastage of alcohol that may occur in (i) . . (ii) the process of manufacture of any preparation containing alcohol; and (iii) . . Section 68A provides that the Government shall appoint an Expert Committee consisting of the Drugs Controller, the Chemical Examiner to the Government, two representatives each one of them shall be a non official, of the Allopathic, Indigenous and Homoeopathic systems of medicine appointed by the Government, and an officer of the Excise Department not below the rank of Deputy Commissioner; and the Committee shall advise the Commissioner (a) as to whether a medicinal preparation is a bona fide medical preparation or not; and (b) as to the total requirements of medicinal preparations containing liquor or intoxicating drugs or in which alcohol is self generated during the process of their manufacture, for the whole of the State during one year. Before this Court the constitutional validity of the impugned provisions was mainly challenged on these grounds, namely: (I) The State Legislature had no legislative competence to enact the impugned 527 provisions because the field was occupied by the provisions of the A (the Central Act) and the Medicinal and Toilet Preparations (Excise Duties ) Rules, 1956 (the Central Rules), and alternatively, the impugned provisions are violative of the fundamental right guaranteed in article 19(1) (g) of the Constitution. (2) The Parliament having made a declaration in section 2 of the Industries (Development and Regulation) Act, 1951, declaring "Drugs and Pharmaceuticals" to be a scheduled industry, being item 22 of the First Schedule thereof, the power of the State Legislature to make a law in respect of medicinal and toilet preparations containing alcohol is taken away. (3) The provisions made in section 14(e) of the Act for the collection of supervisory charges was clearly invalid in as much as (a) they are in conflict with r. 45 of the Central Rules, and (b) they could not be sustained as a fee as there was no quid pro quo. (4) Rule 13 of the Kerala Rectified Spirit Rules, 1972, providing for the levy of excise duty as excess wastage of alcohol in the manufacture of medicinal and toilet preparations cannot be supported in terms of the charging provision contained in section 17 of the Act. We cannot accept any of these contentions With regard to the first ground, it was submitted that the conferral of power on the Commissioner under section 12A of the Act to restrict the quantity of medicinal and toilet preparations to which liquor or intoxicating drug is added during the process of its manufacture with the requirement that the Commissioner shall, in specifying such quantity, have due regard to the total requirements of consumption or use in the State, the prohibition contained in section 12B of the Act that no person shall utilise liquor or intoxicating drug in the manufacture of any preparation, in excess of the quantity so specified by the Commissioner and the condition that no person shall manufacture any such preparations except under and in accordance with the terms and conditions of a licence granted by him, is clearly contrary to the general scheme of the Central law and in particular, rr. 18 and 21 of the Central Rules. In this respect, it was said that under r. 18 of the Central Rules, rectified spirit ordinarily had to be supplied to a manufacturer from a distillery or a spirit warehouse of the State in which the manufactory is situate, and the manufacturer was not precluded from obtaining his requirements of rectified spirit from sources outside the State. Under r. 21, rectified spirit had to be issued without previous payment of duty for the manufacture of medicinal and toilet preparations containing alcohol subject to the condition that 528 manufacturer enters into a bond in Form Bl with sufficient security as laid down in r. 96, towards due payment of duty and observance of the rules. It is submitted that the State Legislature has no power to make any such law imposing restrictions on a person carrying on the business of manufacture and sale of medicinal and toilet preparations containing alcohol in as much as the matter relates to an occupied field. There is no merit in these contentions. The enactment of the by Parliament under Entry 84, List I of the Seventh Schedule of the Constitution, or the framing of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 by the Central Government in exercise of their rule making power under section 19 of the Act, for the purpose of levying duties of excise on medicinal and toilet preparations containing alcohol etc., do not prevent the State Legislature from making a law under Entry 8, List II of the Seventh Schedule to the Constitution with respect to 'intoxicating liquors ', or a law under Entry 51, List II for levying excise duties on alcoholic liquor for human consumption. In order to appreciate the contention regarding the applicability of the doctrine of 'occupied field ', it is necessary to examine the scheme of both the enactments. The scheme of the Act, as reflected in the preamble, is that it is an Act "to consolidate and amend the law relating to the import, export, transport, manufacture, sale and possession of intoxicating liquor and all intoxicating drugs in the State of Kerala". It is not necessary to set out all the provisions of the Act in question, but reference may be made to the definitions of expressions 'spirit ', 'liquor ', 'country liquor ', 'foreign liquor and 'intoxicating liquor ' defined in sections 3(9), (10), (12), (13) and (14). The expression 'liquor ' as defined in section 3(10) reads: 3(10). 'Liquor ' includes spirits of wine, methylated spirits, spirits, wine, toddy, beer, and all liquid consisting of or containing alcohol. Section 12(1) provides: 12(1). No liquor or intoxicating drug shall be manufactured. except under the authority and subject to the terms and conditions of licence granted by the Commissioner in that behalf, or under the provisions of section 21, 529 Section 15 provides: 15(1). No liquor or intoxicating drug shall be sold with out a licence from the Commissioner, provided that a person having the right to the toddy drawn from any tree may sell the same without a licence to a person licensed to manufacture or sell toddy under this Act. B Section 17 provides: 17. A duty of excise or luxury tax or both shall, if the Government so direct, be levied on all liquor and intoxicating drugs: . . . (f) issued from a distillery, brewery, winery or other manufactory or warehouse licensed or established under section 21 or section 14; or The Act is clearly relatable to the State 's power to make a law on the topics of legislation covered by Entries 8 and 51, List II of the Seventh Schedule to the Constitution which read as under: 8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India: (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry. The legislative history of the Central Act is well known. Under Entry 40, List II of the Seventh Schedule to the Government of 530 India Act, 1935, medicinal and toilet preparations containing alcohol etc., were subjected to Provincial excise duties. Under the Constitution, the entry relating to the excise duty on medicinal and toilet preparations containing alcohol was transferred to the Union List. In the light of experience gained, there was necessity to achieve a synthesis from a vast body of existing rules and regulations in force in the States having regard to the sole object of the measure, namely, to bring about uniform treatment in excise matters. This was a highly complicated subject because, firstly, the excise duty was to be collected and retained by the State Governments, and, secondly, a certain amount of flexibility in statutory operations was necessary if spurious medicines were not to defeat the policy of prohibition which is one of the Directive Principles of State Policy under article 47 of the Constitution. Some of the provisions of the Central Act are so designed as to lay down only broad principles. Matters of detail, such as classification of the preparations as capable or not capable of being used as ordinary alcoholic beverages, regulation for the purpose of the Act, of production, storage and movement, were left to be regulated by rules. Parliament accordingly enacted the , to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol. The Act is relatable to Entry 84, List I of the Seventh Schedule to the Constitution, which reads: 84. Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry. The scheme of the Central Act is to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol etc. The Act is entitled as "An Act to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol, opium. Indian hemp or other narcotic drug or narcotic". Section 2 is the definition Section and 531 the expression 'dutiable goods ' as defined in section 2(c) takes in medicinal and toilet preparations specified in the Schedule. The expression 'medicinal preparation ' is defined in section 2(g) as: 2(g). 'medicinal preparation ' includes all drugs which are a remedy or prescription prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals; It is not necessary to refer to the definition of toilet ' preparation in section 2(k) as it is not relevant for the present purpose. Section 3 is the charging section which levies duties of excise on all 'dutiable goods ' manufactured in India and also lays down the mode of collection of the said duties. Section 3 (1) reads: 3(1). There shall be levied duties of excise, at the rates specified in the Schedule, on all dutiable goods manufactured in India. Section 6 prohibits any person from engaging in the production or manufacture of any dutiable goods etc., except under the authority and in accordance with the terms and conditions of the licence granted under the Central Act. Section 19 (1) empowers the Central Government to make rules to carry out the purposes of the Act, and sub section (2) thereof specifies the various matters in respect of which such rules may be made. Section 21 provides for the repeal and savings. The Schedule to the Act contains a description of 'dutiable goods ' and the rates of duty payable thereon. In exercise of the powers conferred by section 19 (1) of the Central Act, the central Government framed the Central Rules which practically deal with all the facets of manufacture and production of medicinal and toilet preparations, as required in cls. (i) to (xxi) of sub section (2) thereof, with the ultimate object of providing a machinery for collection of duty on the said preparations. Chapter IV of the Central Rules deals with 'Manufacture '. Rule 18 in Chapter IV provides that rectified spirit shall ordinarily be supplied to a manufacturer from a distillery. Of the State in which the manufactory is situated. It further provides that the manufacturer is not precluded from obtaining his requirements of rectified spirit from sources outside the State. Rule 21 provides that rectified spirit H shall be issued without previous payment of duty to a manufacturer of medicinal and toilet preparations containing alcohol. Rule 33 532 provides for taking of samples of the manufactured product for analysis for determining the strength of alcohol and medicaments. Rule 38 provides for wastage in manufacture. Rule 45(1) enjoins that the officer in charge shall exercise such supervision as is required to ensure that alcohol issued for a certain preparation is added to the materials which go to make that preparation and that no portion of such alcohol is diverted to other purposes. These rules are intended and meant to carry out the main object of the Central Act, i.e. to levy and collect duties of excise on medicinal and toilet preparations containing alcohol etc. It is the charging section which gives the true index to the a real character of a tax. The nature of the machinery by which the tax is to be assessed is not of assistance, except in so far as it may throw light on the general character of the tax. The charging section in section 3 of the Central Act clearly shows that it does not seek to levy a duty of excise on alcoholic liquor for human consumption falling within Entry 51, List II of the Seventh Schedule, but to levy a duty of excise on medicinal and toilet preparations containing alcohol etc. The topic of legislation under Entry 84, List I of the Seventh Schedule is not 'duties of excise on alcoholic liquors for human consumption ' but 'duties of excise on medicinal and toilet preparations containing alcohol etc '. There can be little doubt that the Central Act must, in pith and substance, be attributed to Entry 84, List I. In determining whether an enactment is a legislation 'with respect to ' a given power, what is relevant is not the consequences of the enactment on the subject matter or whether it affects it, but whether, in its pith and substance, it is a law upon the subject matter in question. The Central and the State Legislations operate on two different and distinct fields. The Central Rules, to some extent, trench upon the field reserved to the State Legislature, but that is merely incidental to the main purpose, that is, to levy duties of excise on medicinal and toilet preparations containing alcohol. Similarly, some of the impugned provisions may be almost similar to some of the provisions of the Central Rules, but that that does not imply that the State Legislature had no competence to enact the provisions. It is sufficient to say upon the first ground that the impugned legislation is confined to 'intoxicating liquor ', that is, to ensure proper utilisation of rectified spirit in the manufacture of medicinal and toilet preparations and, therefore, within the powers granted 533 to the State Legislature under Entry 8, List II. It further seeks to regulate the manufacture of bona fide medicinal preparations and prevent misuse of rectified spirit in the manufacture of spurious medicinal and toilet preparations containing alcohol capable of being used as ordinary alcoholic beverages. It was suggested that the provisions are identical with the provisions contained in the Central Rules and, in particular, to rule 45(1) and, therefore, the legislation is in the occupied field. The answer is that the enumeration of 'intoxicating liquor ' in Entry 8, List II, confers exclusive power to the State to legislate in respect of medicinal and toilet preparations containing alcohol. In Prafulla Kumar Mukherjee and Ors. vs Bank of Commerce Ltd., Khulna(1) the Privy Council in dealing with the question or distribution of powers laid down the tests that in order to see whether an Act is in respect of a particular subject, one must look to "its true nature and character"; "its pith and substance". Lord Porter, in delivering the judgment of the Judicial Committee, observed: "As Sir Maurice Gwyer, C.J. said in the Subramanyam Chettiar Case: ' It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely inter twined that blind observance to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee, whereby the impugned statute is examined to ascertain its 'pith and substance ', or 'its true nature and character ', for the purpose of determining whether it is legislation with respect to matters in this list or in that" . The doctrine of 'pith and substance ' evolved by the Privy Council has been followed by this Court throughout. Thus, in State of Bombay vs F. N. Balsara(2) Fazl Ali, J., followed the decision of the Judicial Committee, reiterated: 534 "If the Act, when so viewed, substantially falls within the powers expressly conferred upon the Legislature which enacted it, then it cannot be held to be invalid, merely because it incidentally encroaches on matters which have been assigned to another Legislature. " In such matters of seeming conflict or encroachment of jurisdictions, what is more important is the true nature and character of the legislation. A necessary corollary of the doctrine of pith and substance is that once it is found that in pith and substance the impugned Act is a law on a permitted field, any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact the law. The main thrust of the argument is the decision of this Court in Hyderabad Chemical and Pharmaceutical Works Ltd. vs State of n Andhra Pradesh and Ors(1) which, we are afraid, is clearly distinguishable. There the Court was concerned with the question whether r. 36 of the Medical Preparations and Spirituous Rules, 1345 Fasli, framed under the Hyderabad Abkari Act, 136 Fasli which provided that "the expenses of the establishment for the supervision of the work shall be borne by the pharmaceutical laboratory (licensee) as per the decision of the Commissioner of Excise", was still enforceable having regard to section 21 of the Central Act and r. 143 of the Central Rules. It was held that the effect of section 21 of the Central Act was that so far as the Hyderabad Act applied to the use of alcohol in the manufacture of medicinal and toilet preparations, the Act must be deemed to have been repealed and, therefore, r. 36 could not survive. In that case, the Court was concerned with the levy of supervisory charge at the stage of manufacture of medicinal and toilet preparations, and not with the levy of supervisory charges at the stage of the supply and utilisation of rectified spirit in the manufacture of medicinal and toilet preparations. This is clear from an observation at p. 380 of the Report to the effect: The supervisory staff which has to be paid for under r. 36 therefore is meant for the supervision of the manufacture of medicinal preparations and it is for that purpose only that expenses have to borne by the laboratory con 535 cerned. The purpose of the rule therefore is clearly covered by the Act and the Rules framed thereunder and it cannot survive the Act and the rules in view of section 21 of the Act and r 143 of the 1956 Rules, and the proviso to s 21 cannot be availed of by the State. While repelling the contention that r. 36 could still be good law as it was meant to carry out the general law relating to alcohol and intoxicating drugs, the Court pointed out that the Central Rules make no provision for recovery of supervisory charges, the intention being that the duty under the Act would cover all expenses for enforcing it and observed (1) We are of opinion that there is no force hl this contention either. In the first place, as we have already indicated, the main object of the supervisory staff mentioned in r. 36 is to supervise the manufacture of medicinal preparations. In that connection the supervisory staff will certainly see that the alcohol supplied is used for the purpose for which it is supplied and it is not used in any other manner. Rule 36 is only concerned with seeing that the manufacture of medicinal preparations is made properly and is done under the supervision of the establishment attached to each laboratory; and it is only incidentally that in that connection the establishment is also to see that the alcohol supplied is not used otherwise than for the purpose of manufacture. Further, the Central Act, which the Court was considering, was a fiscal measure. The whole object and purpose of that Act is to levy a duty of excise on medicinal and toilet preparations containing alcohol. The Central Rules have mainly been framed to achieve this object. Rule 45(1) on which reliance was placed, reads: 45(1). The officer in charge shall exercise such supervision as is required to ensure that alcohol issued for a certain preparation is added to the materials which go to make that preparation and that no portion of such alcohol is diverted to other purposes. The provision is merely incidental to the main purpose, i.e., collection of excise duty on medicinal and toilet preparations containing alcohol. 536 There can be no doubt that the impugned Act is relatable to Entry 8, List II of the Seventh Schedule. In Balsara 's case(1) the Court held that the expression 'liquor ' in Entry 31, List II of the Seventh Schedule to the Government of India Act, 1935, took within its sweep all liquids containing alcohol. In dealing with the question, Fazal Ali, J. Observed: The framers of the Government of India Act, 1935, could not have been entirely ignorant of the accepted sense in which the word 'liquor ' has been used in the various excise Acts of this country and, accordingly I consider the appropriate conclusion to be that the word 'liquor ' covers not only those alcoholic liquids which are generally used for beverage purposes and produce intoxication, but also all liquids containing alcohol. It may be that the latter meaning is not the meaning which is attributed to the word 'liquor ' in common parlance especially when that word is prefixed by the qualifying word 'intoxicating ', but in my opinion having regard to the numerous statutory definitions of that word, such a meaning could not have been intended to be excluded from the scope of the term 'intoxicating liquor ' as used in entry 31 of List II. It is not disputed by the appellants that the impugned Act does not levy a duty of excise on medicinal and toilet preparations containing alcohol, but they contend that, whatever be the intention, the State Legislature had, in fact, encroached upon an occupied field. The contention is, in our opinion, wholly misconceived. The main purpose of the impugned Act is to consolidate the law relating to manufacture, sale and possession of intoxicating liquor and intoxicating drugs which squarely falls under Entry 8, List II of the Seventh Schedule, while the main object of the Central Act is to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol falling under Entry 84, List I of the Seventh Schedule. When the frame work of the two enactments is examined, it would be apparent that the Central and the State Legislations operate in two different and distinct fields. In the matter of making rules or detailed provisions to achieve the object and purpose of a legislation, there may be some provisions seemingly overlapping or encroaching upon the forbidden field, but 537 that does not warrant the striking down the impugned Act as ultra virus the State Legislature. The alternative contention that the impugned provisions are violative of article 19(1)(g) of the Constitution, is wholly devoid of any merit. No citizen has any fundamental right guaranteed under article 19(1)(g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors. The power to legislate with regard to intoxicating liquor carries with it the power to regulate the manufacture, sale aud possession of medicinal and toilet preparations containing alcohol, not for the purpose of interfering with the right of citizens in the matter of consumption or use for bona fide medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on under the guise of medicinal and toilet preparations. It was within the competence of the State Legislature to prevent the noxious use of such preparations, i.e. their use as a substitute for alcoholic beverages. The general test for determining what medicinal preparations containing alcohol are capable of being misused and, therefore, must be considered intoxicating within the meaning of the term 'intoxicating liquor ', is the capability of the article in question tor use as a beverage. The impugned provisions have been enacted to ensure that rectified spirit is not misused under the pretext of being used for medicinal and toilet preparations containing alcohol. Such regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health. Section 12A of the Act provides that no preparation to which liquor or intoxicating drug is added during the process of its manufacture or in which alcohol is self generated during such process shall be manufactured in excess of the quantity specified by the Commissioner: Provided that in specifying the quantity of a medicinal preparation, the Commissioner shall have due regard to the total requirement of that preparation for consumption or use in the State. Section 12 provides that no person shall utilise liquor or intoxicating drug in the manufacture of any preparation, in excess of the quantity specified by the Commissioner and except under and in accordance with the terms and conditions of a licence granted by the Commissioner in that behalf: Provided that where such preparation is a medicinal preparation, the Commissioner shall, in 538 specifying the quantity of liquor or intoxicating drug, have due regard to the total requirement of such medicinal preparation for consumption or use in the State. Now, section 68A provides for the Government to appoint an Expert Committee to advise the Commissioner as to whether a medicinal preparation is a bona fide medicinal preparation or not and as to the total requirement of the medicinal preparations containing alcohol or intoxicating drug or in which alcohol is self generated during the process of their manufacture for the whole of the State during one year. The challenge to the validity of sections 12A and of the Act is mainly based on the words "shall have due regard to the total requirement of such medicinal preparations for consumption or use in the State "occurring in the provisions thereof. The submission is that the quantity of medicinal preparations manufactured by the appellants would be restricted looking to the total requirements of such preparations for consumption or use in the State. The medicines are in demand not only in the State, but throughout the country and to limit consideration by the Commissioner in granting a licence only to the requirements of preparations for consumption or use in the State, would be an unreasonable restriction on the fundamental right guaranteed under article 19(1) (g) of the Constitution. We do not think that the impugned provisions contained in sections 12A and 12B have that effect. All that the provisions ordain is that the Commissioner shall 'have regard to the total requirements for use and consumption within the State '. The expression 'shall have regard to ' had been subject to judicial interpretation in Ryots of Garabandho and other villages vs Zamindar of Parlakimidi and Anr.(1) It only means 'take into consideration '. Understood in the light of this judicial exposition, the Commissioner only has to take into account the total requirements within the State as an element which should enter the assessment and no more. As a necessary corollary, it follows that in fixing the quantity of medicinal and toilet preparations to which alcohol is added or in which it is self generated, normally the Commissioner shall have regard to larger requirements of the manufacturer, if the manufactured product has a market outside the State. As a corollary, it must result in the consequence that in the case of medicinal and toilet preparations which are capable of being misused as alcoholic beverages, or which are not bona fide medicinal preparations in the opinion of the Expert Committee, the Commissioner may totally prohibit the manufacture of such pre 539 parations. The restrictions imposed by section 12B as to the alcoholic content of medicinal and toilet preparations and the requirement that they shall not be manufactured except and in accordance with the terms and conditions of a licence granted by him, are nothing but reasonable restrictions within the meaning of article 19(6). The impugned provisions, therefore, cannot be struck down as offending article (1) (g) of the Constitution. As regards the second ground, the contention that Parliament having made the requisite declaration in section 2 of the Industries (Development and Regulation) Act, 1951 declaring "drugs and pharmaceuticals" to be a scheduled industry, being item 22 of Schedule I thereof, the State Legislature was denuded of its competence to enact the impugned provisions under Entry 8, List II, cannot be accepted. In Ishwari Khetan Sugar Mills (P) Ltd. vs State of Uttar Pradesh(1), this Court held that the legislative power of the States under Entry 24, List II is eroded only to the extent of control assumed by the Union by reason of a declaration made by Parliament in respect of a 'declared industry ' as spelt out by a legislative enactment under Entry 52, List I, and the field occupied by such enactments is the measure of erosion. But subject to such erosion, on the remainder the State Legislature will still have power to legislate in respect of a declared industry without, in any way, trenching upon the occupied field. Now, the impugned Act, in pith and substance, is not a legislation under Entry 24, List II and, therefore, the question really does not arise. The third ground that the levy of supervisory charges under s.14(e) of the Act and r.16(4) of the Kerala Rectified Spirit Rules, 1972 being in conflict with r. 45(1) of the Central Rules, is constitutionally impermissible, cannot be accepted. The submission rests on a misconception as to the scope and effect of the decision of this Court in the Hyderabad Chemicals and Pharmaceutical 's case (supra). As we have already explained, the Court in that case was concerned with the levy of supervisory charges at the stage of manufacture of medicinal and toilet preparations and not with the levy of supervisory charges at the stage of supply and utilisation of rectified spirit in the manufacture of medicinal and toilet preparations. There can be supervision at both the stages. Merely because the Central Rules made no provision for realisation of supervisory charges at the stage of manufacture of medicinal and toilet preparations, does not imply 540 that the State has no power to prescribe the mode of supervision in a manufactory where preparations containing intoxicating liquor or intoxicating drugs are manufactured, or to ensure proper collection of duties, taxes and other dues payable under the Act, or to the proper utilisation of liquor or intoxicating drug. The provision contained in section 14(e) of the Act is clearly relatable to the State 's power to make a law under entry 8, read with Entry 51(a), List II of the Seventh Schedule. It necessarily follows that section 14(e) of the Act is valid in so far as it provides that the Commissioner may prescribe the size and nature of the establishment for such supervision and the cost of establishment and other incidental charges in connection with such supervision to be realised from the licensee. There is no f ' warrant for the submission that the framing of such an incidental provision like r. 45(1) of the Central Rules takes away the State 's power to recover supervisory charges from the licensee. There still remains the question whether the levy of supervisory charges must be regarded as a fee and, therefore, cannot be sustained, there being no quid pro quo. In support of the contention, reliance is placed on the decision in Indian Mica Micanite Industries vs The State of Bihar and Ors.(1) The distinction between a 'tax ' and a 'fee ' is well settled. The question came up for consideration for the first time in this Court in the Commissioner, H.R.E. Madras vs Lakshmindra Thirtha Swamiar of Shirur Mutt.(2) Therein, the Court speaking through Mukherjee, J. quoted with approval the definition of 'tax ' given by Latham, C.J. in Matthews vs Chickoory Marketing Board(3). In that case, the learned Chief Justice observed: A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. Dealing with the distinction between 'tax ' and 'fee ' the learned Judge observed :(4) It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without 541 the tax payer 's consent and the payment is enforced by law. A The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the tax payer and the public authority. Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the tax payer depends gene rally upon his capacity to pay. Coming now to fees, 'a fee ' is generally defined to be a charge for a special service rendered to individuals by some Governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all cases. . If, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should on the face of the legislative provision, be co related to the expenses incurred by Government in rendering the services. The same view was reiterated by this Court in Mahant Sri Jagannath Ramanuj Das vs The State of Orissa(1) and in Ratilal Pannchand Gandhi vs The State of Bombay. (2) 'Fees ' are the amounts paid for a privilege, and are not an obligation, but the payment is voluntary. Fees are distinguished 542 from taxes in that the chief purpose of a tax is to raise funds for the support of the Government or for a public purpose, while a fee may be charged for the privilege or benefit conferred, or service rendered or to meet the expenses connected therewith. Thus, fees are nothing but payment for some special privilege granted or service rendered. Taxes and taxation are, therefore, distinguishable from various other contributions, charges, or burdens paid or imposed for particular purposes and under particular powers or functions of the Government. It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence, are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure for rendering the service is not by itself decisive. That is because the Constitution did not contemplate it to be an essential element of a fee that it should be credited to J a separate fund and not to the consolidated fund. It is also increasingly realised that the element of quid pro quo stricto senso is not always a sine qua non of a fee. It is needless to stress that the element of quid pro quo is not necessarily absent in every tax. We may, Din this connection, refer with profit to the observations of Seervai in his Costitutional Law, to the effect: (1) It is submitted that as recognised by Mukherjee, J. him self, the fact that the collections are not merged in the consolidated fund, is not conclusive, though that fact may enable a court to say that very important feature of a fee was present. But the attention of the Supreme Court does not appear to have been called to article 266 which requires that all revenues of the Union of India and the States must go into their respective consolidated funds and all other public moneys must go into the respective public accounts of the Union and the States. It is submitted that if the services rendered are not by a separate body like the Charity Com missioner, but by a government department, the character of imposition would not change because under article 266 the moneys collected for the services must be credited to the consolidated fund. It may be mentioned that the element of quid pro quo is not necessarily absent in every tax. (emphasis added) Our attention has been drawn to the observations in Kewal Krishan Puri & Anr vs State of Punjab and Ors. (2) 543 The element of quid pro quo must be established A between the payer of the fee and the authority charging it. It may not be exact equivalent of the fee by a mathematical precision, yet, by and large, or predominantly, the authority collecting the fee must show that the service which they are rendering in lieu of fee is for some special benefit of the payer of the fee. To our mind, these observations are not intended and meant as laying down a rule of universal application. The Court was considering the rate of a market fee, and the question was whether there was any justification for the increase in rate from Rs. 2/ per every hundred rupees to Rs. 31 . There was no material placed to justify the increase in rate of the fee and, therefore, it partook the nature of a tax. It seems that the Court proceeded on the assumption that the element of quid pro quo must always be present in a fee. The traditional concept of quid pro quo is undergoing a transformation. It seems obvious that. in the case of a manufacturer of medicinal and toilet preparations containing alcohol in a bonded manufactory, the imposition of the cost of establishment under section 14(e) of the Act calculated in accordance with the nature and extent of that establishment could not be said to be an imposition of a duty of excise, but is a price for his franchise to carry on the business. If an exaction is to be classed as a duty of excise, it must, of course, be a tax; its essential distinguishing feature is that it is a tax imposed "upon" or "in respect of ' or "in relation to" goods: Matthews vs Chickory Marketing Board (l). The exaction is in truth, as it purports to be, simply a fee payable as a condition of a right to carry on a business. No one has a fundamental right to the supply of rectified spirit which is an intoxicating liquor. It is up to the State to control and regulate its supply from a distillery or a spirit warehouse in the State under and in accordance with terms and conditions of a licence or permit its import from outside by grant of a privilege and charge a fee for the same. A fee may be charged for the privilege or benefit conferred, or service rendered, or to meet the expenses connected therewith. A fee may be levided to meet the cost of supervision and maybe, something more. It is in consideration for the privilege, licence or service. The State is undoubtedly entitled to levy H 544 excise duty on the rectified spirit issued from a distillery under section 17(f) of the Act read with r. 13 of the Kerala Rectified Spirit Rules, 1972, but it refrained from making any such levy by reason of r. 21 of the Central Rules and has, therefore, by proviso to r. 8, allowed a manufacturer of medicinal and toilet preparations to draw rectified spirit from a distillery without payment of duty. It is thus a privilege conferred on the licensee. To claim the privilege he must comply with the conditions prescribed. If one of the condition is the payment of cost of establishment under section 14(e) of the Act read with r. 16(4) of the Central Rules, the manufacturer of such preparations must necessarily bear the burden as the licensee gets services in return in lieu of such payment. The decision in the Indian Mica Micanite Industries case (supra) on which reliance is placed furnishes a complete answer to the appellant 's contention. The Court there was concerned with the validity of supervisory charges of the excise establishment from a consumer and not from the manufacturer under the Bihar and Orissa Excise Act, 1915. It was clearly indicated that the burden of the cost of supervisory charges must fall on the manufacturer and not on the consumer because there was no co relationship between the levy of fee and the services rendered. Further, though there was a double duty on the manufacturer as well as the consumer, the Court did not strike down the levy on the consumer because it was observed that the question of co relationship between the services rendered and the fee levied is essentially a question of fact. In dealing with the question whether the impugned levy could be justified as a fee on the basis of the law as enunciated by this Court, it was observed : (1) According to the finding of the High Court the only services rendered by the Government to the appellant and to other similar licensees is that the Excise Department have to maintain an elaborate staff not only for the purposes of ensuring that denaturing is done properly by the manufacturer but also for the purpose of seeing that the subsequent possession of. denatured spirit in the hands either of a wholesale dealer or retail seller or any other licensee or permit holder is not misused by coverting the denatured spirit into alcohol fit for human consumption and thereby 545 evade payment of heavy duty. So far as the manufacturing A process is concerned, the appellant or other similar licensees have nothing to do with it. They are only the purchasers of manufactured denatured spirit. Hence the cost of super vising the manufacturing process or any assistance rendered to the manufacturers cannot be recovered from the consumers like the appellant. Further, under Rule 9 of the Board 's rules the actual cost of supervision of the manufacturing process by the Excise Department is required to be borne by the manufacturer, There cannot be a double levy in that regard. (emphasis added) The Court then went into the question whether there was any corelationship between the services rendered and the fee levied and whether the levy in question was not disproportionate to the value of the services rendered by the State, and observed: D In the opinion of the High Court the subsequent transfer of denatured spirit and possession of the same in the hands of various persons such as whole sale dealer, retail dealer or other manufacturers also requires close and effective supervision because of the risk of the denatured spirit being converted into palatable liquor and thus evading heavy duty. Assuming this conclusion to be correct, by doing so, the State is rendering no service to the consumer. It is merely protecting its own rights. Further in this case, the State which was in a position to place material before the Court to show what services had been rendered by it to the appellant and other similar licensees, the costs or at any rate the probable costs that can be said to have been incurred for rendering those services and the amount realised as fees has failed to do so. On the side of the appellant, it is alleged that the State is collecting huge amounts as fees and that it is rendering little or no service in return. The co relationship between the services rendered and the fee levied is essentially a question of fact. Prima facie, the levy appears to be excessive even if the State can be said to be rendering some service to the licensees. The State ought to be in possession of the material from which the co relationship between the levy and the services 546 rendered can be established at least in a general way. But the State has not chosen to place those materials before the Court. Therefore the levy under the impugned Rule can not be justified. Nevertheless, the Court remitted the matter to the High Court with a direction that opportunity be given to the State to place material to show that the value of the services rendered has reasonable co relationship with the fee charged. We fail to see how the decision in the Indian Mica Micanite case (supra) can be of any help to the appellants. The portions extracted above clearly show that the levy of service charges on the manufacturer are valid. There is a broad co relationship between the fee collected and the cost of the establishment. Under section 14(e) of the Act it is provided that the Commissioner, with the previous approval of the Government, may prescribe the size and nature of the establishment necessary for supervision of a manufactory and the cost of the establishment and other incidental charges in connection with such supervision be realised from the licence. There can be no doubt that the supervisory staff is deployed in a bonded manufactory by the Government for its own protection to prevent the leakage of revenue, but there is no denying the fact that a licensee undoubtedly receives a service in return. The cost of the establishment levied under section 14(e) of the Act is to be collected from the licensee in the manner provided by r. 16(4) of the Kerala Rectified Spirit Rules, 1972, relevant part of which reads: (4) All the transactions in the spirit store shall be conducted only in the presence of an Excise officer not below the rank of an Excise Inspector. Such officer shall be assisted by at least two Excise Guards. The cost of establishment of such officer and the guards shall be payable by the licensee in advance in the first week of every month as per countersigned chalan to be obtained from such officer. The rate at which the cost of establishment is to be paid by the licensee shall be fixed by the Commissioner from time to time and intimated to the licensee in writing There is admittedly no provision made in the Central Rules for the recover of supervisor charges, perhaps because as the Court 547 Observed in the Hyderabad Chemicals and Pharmaceutical 's case A (supra) it was felt that the duty on medicinal and toilet preparations containing alcohol would be sufficient to defray the cost of such supervision. But the absence of such a provision in the Central Rules, as we have already indicated, does not deprive the State from making a provision in that behalf. It is true that the supervisory charges are in the nature of a compulsory exaction from a licensee and the collections are not credited to a separate fund, but are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure incurred in rendering the service. However, as observed in Government of Madras vs Zenith Lamp and Electricals Ltd. (1) followed in State of Rajasthan vs Sajjanlal Panjawat and Ors. (2), that by itself is not decisive, by reason of article 266 of the Constitution. lt is equally true that normally a fee is uniform and no account is taken of the paying capacity of the recipient of the service, but absence of uniformity will not make it a tax if co relationship is established (see Commissioner, H.R.E. Madras vs Lakshmindra Thirtha Swamiar of Shirur Mutt and Government of Madras vs Zenith Lamp and chemicals Ltd. supra). The cost of supervisory charges can be sustained even if they are regarded as a fee for services rendered by the State or its instrumentalities. The last ground on which the appellants took their stand is even less tenable. It is urged that r. 13 of the Kerala Rectified Spirit Rules, 1972, providing for the levy of excise duty on excess wastage of alcohol in the manufacture of medicinal and toilet preparations cannot be supported in terms of the charging provision contained in section 17 of the Act. Rule 13 reads as follows: 13(1) If the rectified spirit imported or purchased P under these rules is used for the manufacture of medicinal and toilet preparations which duty of excise is leviable under the (Central Act 16 of 1955), no duty shall be collected under the Abkari Act 1 of 1077 on so much quantity of alcohol, as is present in the finished product. (2) The assessment of duty under the Medicinal and Toilet Preparations Excise Duties) Act, 1955 (Central Act 548 16 of 1955) being applicable only to the quantity of spirit existing in the finished product, all spirit wasted during the course of manufacture of any medicinal or toilet preparation shall be assessable to duty under the Abkari Act, 1 of 1077. Provided that the Government may, in consultation with the Drugs Controller and the Chemical Examiner, by notification in the Gazette. permit such allowance as they think fit for such wastages occurring during the manufacture. No exception is taken to r. 13(1) which provides that no duty shall be collected under the Act on so much quantity of alcohol "as is present in the finished product". The objection is to the validity of r. 13(2) in so far as it enables the levy of duty on excess wastage of alcohol. We find it difficult to appreciate the contention that r. 13(2) cannot be supported in terms of the charging provision in section 17(f). Rule 13(2) is nothing but a corollary of r. 13(1). On a combined reading of section 17(f) and r. 8 read with the proviso thereof, no duty is chargeable on alcohol actually used in the manufacture of medicinal and toilet preparations. The Government fully realised that some margin for wastage should be allowed and, therefore inserted the proviso to r. 13(1). It provides that the Government may, in consultation with the Drugs Controller and the Chemical Examiner, by notification in the Gazette, permit such allowance as they think fit for such wastages occurring during the manufacture. Beyond the permissible limit, the State has the right to levy a duty on excess wastage of alcohol, i.e. On alcohol not accounted for. In the connected Special Leave Petition, the petitioner, P. Krishna Wariyar, Managing Trustee, Arya Vaidyasala, Kottakkal, who is engaged in the business of manufacture for sale of ayurvedic medicinal preparations, challenges the validity of sections 12A, 56A and 68A of the Act and rr. 5, 6 and 7 of the Kerala Spirituous Preparations Rules. Apart from the question of legislative competence, two other grounds were raised: (1) the power to restrict the quantity of medicinal preparations to be manufactured, by the Commissioner under section 12 cannot be exercised in relation to ayurvedic preparations as alcohol is self generated in the process of manufac 549 ture; and (2) the impugned provisions offend against article 301 of the Constitution. As regards the Rules, it was generally said that they constitute unreasonable restrictions on the fundamental right guaranteed under article 19(1) (g) of the Constitution. None of these contentions can prevail. It is to be observed that restriction imposed by section 12A of the Act as to the quantity of medicinal preparations to be manufactured relates not only to such preparations to which alcohol is added, but also to medicinal preparations in which alcohol is self generated. There can be no doubt that ayurvedic asavas and aristhas which are capable of being misused as alcoholic beverages can come within the purview of the definition of 'liquor ' contained in section 3(10) of the Act being of the Spirituous Preparations (Control) Rules, 1969 liquids containing alcohol The contention that Note to r. 3(1) is an unreasonable restriction on the freedom of trade guaranteed under article 19(1) (g) of the Constitution has no substance. It provides that unless otherwise declared by the Expert Committee, asavas and aristas and other preparations containing alcohal are deemed to be spurious if their self generated alcohol content exceeds 12% by volume. It is a matter of common knowledge that such preparations are always likely to be misused as a substitute for alcoholic beverages and, therefore, the restriction imposed by section 12A is a reasonable restriction within the meaning of s 19(6) of the Constitution, So far as the contention based on article 301 of the constitution is concerned, it is urged that there is demand for the petitioner 's medicinal preparations not only in the State, but throughout the country and to limit the quantity to be manufactured, taking into account the requirements of the State alone, is but an abridgment on the freedom of inter State trade and commerce. In our opinion, section 12A has no such effect. As already stated, the expression 'shall have regard to ' as interpreted by the Judicial Committee in the Ryots of Garobandho 's case (supra), means 'shall take into consideration '. All that the provision enjoins is that the Commissioner shall have regard to the total requirements for consumption and use in the State, while fixing the quantity of the medicinal preparations to be manufactured. Furthermore, the challenge with regard to article 301 does not arise as, admittedly, the Bill was reserved for the assent of the President, and 550 is, therefore, protected by article 304(b) of the Constitution. It is not disputed that the provisions are regulatory in nature and they impose reasonable restrictions on the freedom of trade. For these reasons, both the Appeal and the Special Leave Petition must fail and are dismissed with costs.

The appellants, who were manufacturers of medicinal and toilet preparations containing alcohol challenged the constitutional validity in their writ petitions under article 226 of the Constitution of the provisions of sections 12A, 12B, 14(e) and (f ), 56A and section 68A of the Kerala Abkari Act, 1967 (Act No. X of 1967) and Rules 13 and 16 of the Kerala Rectified Spirit Rules, 1973 and rr. 5, 6 and 7 of the Kerala Spiritious Preparations Rules, 1969 on the ground that the State Legislature had no power to enact a law relating to medicinal and toilet preparations as the topic of the legislation was within the exclusive domain of Parliament under Entry 84, List I of the Seventh Schedule of the Constitution and also on the ground that they were violative of article 19(1) (g) read with article 301 of the Constitution. The High Court dismissed the writ petition holding that there was no conflict between the impugned provisions and the Central law, i.e., the or the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 framed thereunder as they dealt with different subjects. The High Court further held that the impugned provisions do not offend against article 19(1) (g) or article 301 of the Constitution. In the appeal and the special leave petition to this Court it was contended on behalf of the appellants (t) The State Legislature had no legislative competence 520 to enact the impugned provisions because the field was occupied by the provisions of The (The Central Act) and the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 (the Central Rules), and alternatively, the impugned provisions are violative of the fundamental right guaranteed in article 19(1) (g) of the Constitution. (2) "Drugs and Pharmaceuticals" having been declared by Parliament under section 2 of the Industries Development and Regulation) Act, 1951 to be a scheduled industry, being item 22 of the First Schedule thereof, the power of the State Legislature to make a law in respect of medicinal and toilet preparations containing alcohol was taken away. (3) The provisions made in section 14(e) of the Act for the collection of supervisory charges was clearly invalid in as much as (a) they are in conflict with r. 45 of the Central Rules, and (b) they could not be sustained as a fee as there was no quid pro quo. (4) Rule 13 of the Kerala Rectified Spirit Rules, 1972, providing for the levy of excise duty as excess wastage of alcohol in the manufacture of medicinal and toilet preparations cannot be supported in terms of the charging provision contained in section 17 of the Act. (S) The power to restrict the quantity of ayurvedic asavas and arishtas in which alcohol is self generated in the process of manufacture having regard to the total requirement of such medicinal preparations for consumption or use in the State is an unreasonable restriction on The fundamental right to carry on trade or business guaranteed under An. 19(1) (g) and was also violative of article 301 as there was demand for such medicinal preparations not only in The Slate but throughout the country. Dismissing The Appeal and Special Leave Petition, ^ HELD: (l) The Central and State Acts operate in two separate and distinct fields and are not in conflict with each other. While the main purpose of the impugned Act is to consolidate the law relating to manufacture, sale and possession of intoxicating liquors and intoxicating drugs, a subject which falls under Entry 8 of List II of the Seventh Schedule, the main object of the Central Act is lo provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol falling under Entry 84 List I. [536 G F] 2(i). The enactment of the by Parliament under Entry 84, List I of the Seventh Schedule of the Constitution, or the framing of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 by the Central Government in exercise of their rule making power under section 19 of the Act, for the purpose of levying duties of excise on medicinal and toilet preparations containing alcohol etc., do not pre vent the State Legislature from making a law under Entry 8, List II of the Seventh Schedule to the Constitution with respect to 'intoxicating liquors ' or a law under Entry 51 List II for levying excise duties on alcoholic requirements for human consumption. [528 C D] (ii) It is the charging section which gives the true index to the real character of a tax. The nature of the machinery by which the tax is to be assessed is not of assistance, except in so far as it may throw light on the general character of the tax. The charging section in section 3 of the Central Act clearly shows that it does not seek to levy a duty of excise on alcohol liquor for human consumption falling within Entry 51 List II of the Seventh Schedule, but to levy a duty of 521 excise on medicinal and toilet preparations containing alcohol etc. The topic of legislation under Entry 84, List I of the Seventh Schedule is 'duties of excise on medicinal and toilet preparations containing alcohol etc. The Central Act must in pith and substance, be attributed to Entry 84, List. [532 C E] (iii) The Central and the State Legislations operate on two different and distinct fields. The Central Rules, to some extent, trench upon the field reserved to the State Legislature, but that is merely incidental to the main purpose, that is, to levy duties of excise on medicinal and toilet preparation containing alcohol. Some of the impugned provisions may be almost similar to some of the provisions of the Central Rules, but that does not imply that the State Legislature had no competence to enact the provisions. The State Legislation is confined to 'intoxicating liquor ', that is, to ensure proper utilisation of rectified spirit in the manufacture of medicinal and toilet preparations and, therefore, within the powers granted to the State Legislature under Entry 8, List II. It further seeks to regulate the manufacture of bona fide medicinal preparations and prevent misuse of rectified spirit in the manufacture of spurious medicinal and toilet preparations containing alcohol capable of being used as ordinary alcoholic beverages. [532 F 533 A] (iv) The enumeration of 'intoxicating liqour ' in Entry 8, List II, confers exclusive power to the State to legislate in respect of medicinal and toilet preparations containing alcohol. [533 B] (v) In matters of seeming conflict or encroachment of jurisdictions, what is more important is the true nature and character of the legislation. A necessary corollary of the doctrine of pith and substance is that once it is found that in pith and substance the impugned Act is a law on a permitted field, any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact the law. [534 B C] Prafulla Kumar Mukherjee and Ors. vs Bank of Commerce Ltd. Khulna A.I.R. 1947 PC 60 at 65 and State of Bombay vs F. N. Balsara ; at 694 5 referred to. (vi) There can be no doubt that the impugned Act is relatable to Entry 8, List II of the Seventh Schedule. [536 A] (vii) When the frame work of the two enactments is examined, it would be apparent that the Central and the State Legislature operate in two different and distinct fields. In the matter of making rules or detailed provisions to achieve the object and purpose of a legislation, there may be some provisions seemingly overlapping or encroaching upon the forbidden field, but that does not warrant the striking down of the impugned Act as ultra vires the State Legislature. [536 G 537 A] Hyderabad Chemical and Pharmaceutical Works Ltd. vs State of Andhra Pradesh and Ors. ; distinguished. (viii) No citizen has any fundamental right guaranteed under article 19(1) (g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors, The power to legislate with regard to intoxicating liqour carries with it the power to regulate the manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for the 522 purpose of interfering with the right of citizens in the matter of consumption or use for bonafide medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on under the guise of medicinal and toilet 'preparations. It was within the competence of the State Legislature to prevent the noxious use of such preparations i.e. their use as a substitute for alcoholic beverages. [537B D] In the instant case the provisions have been enacted to ensure that rectified spirit is not misused under the pretext of being used for medicinal and toilet preparations containing alcohol. Such regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health. [537 E] (ix) All that the provisions of sections 12A and 12B ordain is that the Commissioner "shall have due regard to the total requirement of such medicinal preparations for consumption or use in the State". The Commissioner has, therefore, only to take into account the total requirements within the State as an element which should enter the assessment and no more. As a necessary corollary, it follows that in fixing the quantity of medicinal and toilet preparations to which alcohol is added or in which it is self generated, normally the Commissioner shall have regard to larger requirements of the manufacture, if the manufactured product has a market outside the State. The restrictions imposed by section 12B as to the alcoholic content of medicinal and toilet preparations and the requirement that they shall not be manufactured except and in accordance with the terms and conditions of a licence granted by him, are nothing but reasonable restrictions within the meaning of article 19(6). The impugned provisions, therefore, cannot be struck down as offending article 19(1) (g) of the Constitution. [538 E 539 B] 3. The State Act, in pith and substance, is not a legislation under Entry 24, List 11 and, therefore, the question does not arise. [539 E 539 B] 4(i) (a) The provision contained in section 14(e) of the Act is clearly relatable to the State 's power to make a law under Entry read with Entry 51(a), List II of the Seventh Schedule. section 14(e) of the Act is valid in so far as it provides that the Commissioner may prescribe the size and nature of the establishment for such supervision and the cost of establishment and other incidental charges in connection with such supervision to be realised from the licensee. There is no warrant for the submission that the framing of such an incidental provision like r. 45(1) of the Central Rules takes away the State 's power to recover supervisory charges from the licensee. [540 B C] (b) 'Fees ' are the amounts paid for a privilege and are not an obligation. Fees are distinguished from taxes in that the chief purpose of a tax is to raise funds for the support of the Government or for a public purpose, while a fee may be charged for the privilege or benefit conferred, or service rendered or to meet the expenses connected therewith. Thus, fees are nothing but payment for some special privilege granted or service rendered. Taxes and taxation are, therefore, distinguishable from various other contributions, charges, or burdens paid or imposed for particular purposes and under particular powers or functions of the Government. It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence, are taken to the Consolidated Fund of the State and are not separately appropriated towards the expenditure for rendering the service is not by itself decisive. It is also increasingly realised that the element of quid pro quo stricto sensu is not 523 always a sine qua non of a fee. It is needless to stress that the element of quid A pro quo is not necessarily absent in every tax, [541 G 542 D] Mahant Shri Jagannath Ramanuj Das vs The State of Orissa ; , Ratilal Panachand Gandhi vs The State of Bombay [1954] SCR 1055, Constitutional Law of India by H.M. Seervai, 2nd Edn. Vol. 2, p. 1252, para 22.39 & Kewal Krishan Puri & Anr. vs State of Punjab & Ors. at 1230 referred to. (ii) In the case of a manufacturer of medicinal and toilet preparations containing alcohol in a bonded manufactory, the imposition of the cost of establishment under section 14(e) of the Act calculated in accordance with the nature and extent of that establishment could not be said to be an imposition of a duty of excise, but is a price for his franchise to carry on the business. [543 D E] (iii) No one has a fundamental right to the supply of rectified spirit which is an intoxicating liquor. It is upto the State to control and regulate its supply from a distillery or a spirit warehouse in the State under and in accordance with the terms and conditions of a licence or permit its import from outside by grant of a privilege and charge a fee for the same. A fee may be charged for the privilege or benefit conferred, or service rendered, or to meet the expenses connected therewith. A fee may be levied to meet the cost of supervision and may be something more. It is in consideration for the privilege, licence or service. The State is undoubtedly entitled to levy excise duty on the rectified spirit issued from a distillery under section 17(f) of the Act read with r. 13 of the Kerala Rectified Spirit Rules, 1972 but it refrained from making any such levy by reason of rule 21 of the Central Rules and has, therefore, by proviso tc) rule 8 allowed a manufacturer of medicinal and toilet preparations to draw rectified spirit from a distillery without payment of duty. It is thus a privilege conferred on the licensee. To claim the privilege he must comply with the conditions prescribed If one of the conditions is the payment of cost of establishment under section 14(e) of the Act read with rule 16(4) of the Central Rules, the manufacturer of such preparations must necessarily bear the burden s the licensee gets services in return in lieu of such payment. [543 G 544 C] 5. Rule 13(2) is nothing but a corollary of rule 13(1). On a combined reading of section 17(f) and rule 8 read with the proviso thereof, no duty is chargeable on alcohol actually used in the manufacture of medicinal and toilet preparations. The Government realised that some margin for wastage should be allowed and, therefore, inserted the proviso to rule 13(2), which provides that the Government may, in consultation with the Drugs Controller and the Chemical Examiner, by notification in the Gazette, permit allowance for wastage occurring during the manufacture. Beyond the permissible limit, the State has the right to levy a duty on excess wastage of alcohol, i.e. on alcohol not accounted for. [548 D F] 6. The restriction imposed by section 12A of the Act as to the quantity of medicinal preparations to be manufactured relate not only to preparations to which alcohol is added but also to medicinal preparations in which alcohol is self generated. There can be no doubt that ayurvedic asavas and aristhas which are capable of being misused as alcoholic beverage and come within the purview of the definition of 'liquor ' contained in section 3(10) of the Act being liquid containing alcohol. The contention that Note to rule 3(1) is an unreasonable restriction on the freedom of trade guaranteed under. Article 19(1) (g) of the Constitution has no substance. [549 B D] 524

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l Leave Petition (Civil) No. 10784 of 1992 etc. From the judgment and Order dated 13.3.1992 of the Central Administrative Tribunal, New Delhi in O.A. No. 262 of 1991. M. K. Ramamoorthy, H.S. Gururaja Rao, R. Venkataramani, S.M. Garg, T.L. Roy, T.V. Ratnam, E.X. Joseph, D.N. Paul and M.M. Kashyap for the Petitioners. D.N. Dwivedi, Addl. Solicitor General, V.K. Verma and Ms. Ameeka Singh for the Respondents. The Judgment of the Court was delivered by VENKATACHALA,J. In these Special Leave Petitions, we are concerned with the Grievance of the employees belonging to the office of the Comptroller and Auditor General of India, working in the Railway Audit Department. These employees who were Section Officers prior to 1st March, 1984, got promotion from that day as Assistant Audit Officers on a pay scale of Rs. 650 30 740 35800 EB 40 1040 and were designated as Officers 'Group B Gazetted '. On the recommendations of the Fourth Pay Commission; the said pay scale of Assistant Audit Officers was revised to Rs. 2,000 3,200 from 1st January, 1986. The grievance of the Assistant Audit Officers Group B Gazetted, is that the Indian Railways should not have denied to them the benefits, such as, issue of Railway Travel Passes/P.T.0s., allotment of Railway Quarters, giving of accommodation in Rest Houses/Retiring Rooms, taking of family members while on tour, etc. admissible to Group B Gazetted Officers of the Railways. The Principal Bench of the Central Administrative Tribunal, to be referred to herein after as "the Tribunal", which examined the said grievance, rejected it by order dated 13th March, 1992. The grievance, so rejected by the Tribunal, is again ventilated in these Special Leave Petitions, seeking redressal therefor. Since the facts which have given rise to the grievance, furnish the background, for examining its merit, it would be advantageous to advert to them at the 299 out set. The Railway Board in its letter No. E(G) 58PS5 20/1 dated 14th April, 1960, addressed to the General Managers of the Indian Railways, spelled out its policy in the matter of issuance of Railway Passes/P.T.0s. to the staff of the Railway Audit Department including the Indian Audit & Accounts Service Officers (IA&AS Officers) of that Department, thus: i. The scale of Passes/P.T.0s. and the rules governing their issue will be the same as applicable to Railway servants from time to time. Passes/P.T.0s. to IA & AS Officers, if are to be issued when they are proceeding on leave exceeding four months, they should have completed one year 's service in the Railway Audit Department and the Comptroller and Auditor General of India ought to assure by declaring that the Officers concerned will return to Railway Audit Department on the expiry of such Officers ' leave. IA & AS Officers working in the Railway Audit Department will pot be entitled to grant of certificates which would entitle them to obtain travel concessions on Railways outside India. Passes/P.T.0s. will be issued by the Chief Auditors irrespective of home or foreign line. It was mentioned in the above letter that the same was issued with the sanction of the President of India. The policy contained in the above letter was followed by the Indian Railways for several years. In the meantime, the Director of Audit, Central Railway, by his notice dated 19th December, 1983, made it known that the Central Government had, on the recommendations of the Comptroller and Auditor General of India, sanctioned higher scale of pay of Rs. 650 30 740 35 800 EB 40 1040 to 80 per cent of Section Officers on the staff of the Railway Audit Department and that scale of pay would become effective from 1st March, 1984. It was indicated in that notice that the Section Officers on the staff of the Railway Audit Department getting such higher scale of pay, will have their designation as Assistant Audit Officers (Group B Gazetted). Similar notice, it is said, was issued by the concerned Director of Audit of every other Zone of the lndian Railways. The said scale of the pay of the Assistant Audit Officers (Group B Gazetted) came to be revised as Rs. 2,000 300 3,200 from 1st January, 1986 as per the recommendations of the Fourth Pay Commission. Even then, the Assistant Audit Officers who Were designated as 'Group B Gazetted ' continued to have the privileges and facilities of 'Group B Officers of the Indian Railways. However, by its letter No. E(W) 87PS51/3 dated 27th July, 1989 addressed to all General Managers, Indian Railways, the Railway Board referring to the creation of posts of Assistant Audit Officers in the Railway Audit Department and the incumbents in those posts having been given Group B Gazetted status, stated thus: "As a result of restructuring of the cadre of Indian Audit and Accounts Department, a number of posts of Assistant Audit Officers have been created in the scale of Rs. 2000 3200 and classified as Group 'B 'posts carrying a gazetted status. The eligibility of these officers to various facilities as admissible to the Gazetted Officers on Railways in scale of Rs. 2000 3500 has been considered but the same has not been agreed to. It has been decided that the Audit Officers in scale of Rs. 2000 3200 may be given the privileges and facilities viz. Passes/PTOs. allotment of Railway Quarters and Rest Houses/retiring Rooms and taking family with them while on tour etc. as admissible to the Railway Employees in identical scale of pay viz. Rs. 2000 3200. " The said letter shows that it had been issued with the concurrence of the Finance Directorate of the Ministry of Railways. But, the contents of the said letter were modified by a telegram, which read thus: "No. E(W)87PS51/3. In partial notification of Ministry of Railway 's letter of even number dated 27.7.89 Ministry of Railway have decided that the Assistant Audit Officers given the Gazetted status between 1st March, 1984 and 31.12.1985 shall continue to enjoy the facility of passes, PTOS. Quarters etc. enjoyed by them as a result of conferring of the gazetted status on them during the period mentioned above (As personal to them.)" The said telegram makes it obvious that those Assistant Audit Officers in the Railway Audit Department who got Gazetted status between 1st March, 1984 and 31st December, 1985, shall alone be entitled to the facilities of Passes/P.T.0s. , Quarters etc,and not those who got such Gazetted status after 31st December, 301 Then, there is the letter No. PCIV/86/ Imp./46 dated 30th October, 1987 issued by the Railway Board to the General Managers of the Indian Railways, which shows that the president of India had, consequent upon the revision of pay scales of the Central Government employees recommended by the Fourth Pay Commission, reclassified all the posts under the Indian Railways, thus: "Classification Description of Posts of posts Group A All posts in scale Rs. 2200 4000 and above. Group B Posts in scale Rs. 2375 3500 applicable to accounts Officers only and other posts of Officers in scale Rs. 2000 3500(all Deptts.) Group C. All posts in scales Rs. 825 1200 and above including posts of Post graduate Teachers (Selection Grade)/Head masters Middle School (Selection Grade)in scale Rs. 2000 3500, Supervisors in scale Rs. 2375 3500 and excluding those mentioned for Groups 'A ' and `B '. Group D All posts in scales Rs. 750 940, Rs. 7751025 and Rs. 800 1150. " The said classification of posts in the Indian Railways is done, as becomes clear from the said letter, consequent upon the introduction of Railway Services (Revised Pay) Rules, 1986. In this context, it would be necessary to advert to the Railway Servants (Pass) Rules, 1986 made by the President of India under the proviso to Article 309 of the Constitution regulating the issuance of passes and Privileged Ticket Orders to Railway servants. Meaning of 'railway servant for the purposes of the said Rules is given in clause (h) of Rule 2 thereof,. thus: "railway servant ' means a person who is a member of a service or who holds a post under the administrative control of Railway Board and includes a person who holds a post in the Railway Board. Persons lent from a service or post which is not under the administrative control of the Railway Board to a service or post which is under such administrative control do not come within the scope of this definition. This term excludes casual labour for whom special 302 orders have been framed. " Schedule II of the said Rules contains the classification (categorisation) of Railway servants into Group A, Group B, Group C and Group D and refers to certain privileges admissible to them. That Schedule, which provides for issue of passes on privilege account to Railway servants puts Group A Group B Railway servants in one category. Group C Railway servants are put in altogether a different category for the purpose of issue of passes to them. From the said facts, it becomes clear that the Assistant Audit Officers in the Railway Audit Department, who hold the posts on the pay scale of Rs. 2,0003,200, although designated as Group B Officers, are not treated on par with Railway servants of the Indian Railways in the category of Group B Officers, to wit, the Railway servants holding the posts of Assistant Accounts Officers and other Officers on the higher pay Scale of Rs 2,000 3,500. Therefore, the obvious reason for denial of the privileges conferred upon Group B Railway Officers under the Railway Servants (Pass) Rules, 1986, to Assistant Audit Officers of the Railway Audit Department, was the latter holding posts of lower pay scale of Rs. 2,000 3,200. It was contended by the learned counsel for the petitioners that the Assistant Audit Officers working in the Railway Audit Department could not have been treated differently from Group B Officers of the Indian Railways in the matter of issue of privilege Passes/P.T.0s. to them when the latter No. E. (G) 58PS5 20/1 dated 14th April, 1960 issued by the Railway Board with the sanction of the President, clearly laid down the policy that scale of Passes/P.T.0s. and the Rules governing their issue will be the same as applicable to Railway servants from time to time. It was also contended by them that the Railway Servants (Pass) Rules, 1986 issued by the President of India, since exclude the Assistant Audit Officers from 'B ' category Officers, they would be violative of Article 14 of the Constitution. Lastly, it was contended by them that the decision of the Indian Railways that the Assistant Audit Officers of the Railway Audit Department, who were given the Gazetted status between 1st March, 1984 and 31 st December, 1985, alone shall continue to enjoy the facilities of Passes/P.T.0s., Quarters etc. has since resulted in denial of such facilities to the Assistant Audit Officers who were given the Gazetted status after 31st December, 1985, the same (decision) is violative of Article 14 of the Constitution. We are unable to find merit in any of the said contentions urged on behalf of the Assistant Audit Officers in support of their grievance, for the reasons which we shall presently state. 303 The Assistant Audit Officers although working in the Railway Audit Department, are the Officers who are appointed by the Comptroller and Auditor General of India and work under his. control and supervision. No doubt, the Railway Board, as seen from its letter dated 14th April, 1960 adverted to earlier, had decided to give to the staff and Officers working in the Railway Audit Department the facilities admissible to Railway servants of comparable status. It is not for us to go into the question whether it was obligatory for the Railways to confer such facilities on the staff and Officers of the Railway Audit Department, who in reality belong to the Department of Comptroller and Auditor General of India, inasmuch as that question is not required to be decided by us. When the said letter dated 14th April, 1960, containing the Railway Board 's policy of issuance of Passes/P.T.0s. is seen, it shows that the staff of the Railway Audit Department is treated more generously than the Officers of the same Audit Department in the matter of issuance of Passes/P.T.0s. to them (Officers), in that, the issuance of passes to the latter category is made subject to certain restrictions. No doubt, when certain Section Officers were promoted as Assistant Audit Officers and conferred the status of 'Group B Gazetted ' by the Comptroller and Auditor General of India, such Officers were treated notwithstanding their lower pay scale, on par with 'B ' Group Officers in the Indian Railways as regards privileges/facilities obtainable by them from the Railways. But, when the scale of pay of the Assistant Audit Officers of the Railway Audit Department was revised on the recommendations of the Fourth pay Commission, the scale of pay of the Assistant Audit Officers, who had been designated as Group 'B ' Officers, by the Comptroller and Auditor General of India, fell short of the scale of pay of the Railway servants of the Railway Department classified as Group 'B ' Officers by the President of India. It cannot be overlooked that it is the President of India, who made the Railway Services (Revised Pay) Rules, 1986, on the basis of the pay revision of the Central Government Servants, as recommended by the Fourth Pay Commission and it is again the order of the President of India, which classified the Railway servants into Group A, Group B, Group C, and Group D according to the minimum and maximum scale of pay of the posts held by them. Indeed, it was not disputed on behalf of the petitioners that the Assistant Audit Officers of the Railway Audit Department who are on the pay scale of Rs. 2,000 3,200 are treated on par with the Railway servants (Officers) who are on the pay scale of Rs. 2,000 3,200 in matters of giving the facilities or conferring of privileges. What has happened is that the Railway Servants (Pass) Rules, 1986, when are made, certain extra privileges relating to issuance of Passes/P.T.0s. are conferred on Railway servants, that is, Officers in Group 'A ' and Group 'B ' However, Group 'B ' Railway servants, according to classification made by the president of India, on revision of their pay scales are those whose pay scales are Rs.2,000 3,500. What is contended for on behalf of the Assistant Audit Officers, is that the fact that their 304 scale of pay is lower then Rs. 2,000 3,500 as applicable to `B ' Group Gazetted Officers of the Railways should be ignored and the status that is conferred upon them by the Comptroller and Auditor General of India as Group B Gazetted ' alone should form the basis to give them facilities or confer privileges on par with 'B ' Group Gazetted Railway servants. The submission made on behalf of the Railways, was to the contrary. According to the submission, the fact that the Assistant Audit Officers in the Railway Audit Department, on the pay scale of Rs. 2,000 3,200, are designated by the Comptroller and Auditor General of India as 'Group B Gazetted ' is not sufficient to equate them with Group B Officers of the Indian Railways who hold higher posts with scale of pay of Rs. 2,000 3,500. If the Railways give the facilities and privileges to the Assistant Audit officers, who are not Railway servants, treating them on par with Railway servants of Group 'B ' they could find no valid reason to deny such facilities and privileges to the Railway servants holding posts on the pay scale of Rs. 2,000 3,200. If that has to be done, the Indian Railways would be required to extend similar facilities and privileges to all Railway servants who hold posts in the Indian Railways on the scale of pay of Rs. 2,000 3,200. It means extending the benefits to thousands of Railway servants involving heavy financial burden on the Indian Railways. We find that the contentions raised on behalf of the Assistant Audit Officers, are unacceptable in that, if accepted, they would lead to unjust results of the Indian Railways conferring special privileges and facilities upon persons belonging to foreign Department of Comptroller and Auditor General of India, while their own servants who hold equivalent posts on the same scale of pay will be denied such privileges and facilities. Therefore, there is substance in the submissions made on behalf of the Indian Railways that the grievance sought to be made out on behalf of the Assistant Audit Officers lacks merit and calls to be rejected. We, accordingly, reject the contention advanced on behalf of the Assistant Audit Officers that they should be treated by the Indian Railways on par with Railway servants classified in Group 'B "in matters relating to the conferring of privileges and giving of facilities. Again, when the Railway Servants (Pass) Rules, 1986, made in consonance with the classification of Railway servants, rightly made by the President of Indian consequent upon the Railway services (Revised Pay) Rules, 1986 issued under the proviso to Article 309 of the Constitution, confer facilities or privileges according to the class to which Railway servants belong, they cannot be treated as Rules which are violative of Article 14 of the Constitution. Nor can they be regarded as arbitrary. Hence, the contentions raised on behalf of the Assistant Audit Officers on the unsustainability of the Railway Servants (Pass) Rules, 1986 based on Article 14 of the Constitution, wan ant rejection as those lack in merit. 305 Coming to the last contention, viz, that the privileges given to and facilities conferred on the Assistant Audit Officers, who had been given the status of `Group B Gazetted by the comptroller and Auditor General of India, between 1st March, 1984 and 31st December, 1985, are discriminatory, all that we would wish to say is that even if such discrimination is brought about by the Railways in regard to the officers of the same category, that is, Assistant Audit Officers, such discriminatory treatment accorded to a small number cannot be availed of by the petitioners to obtain the benefit of such wrongly conferred privileges and facilities. However, we do not consider it appropriate to pronounce upon the correctness of the conferment of such privileges and facilities on a small number of Assistant Audit Officers in these petitions, when they are not impleaded by the petitioners as party respondents, in these petitions. Hence, we reject the last contention, as well. We, therefore, find no good reason to disagree with the order of the Tribunal impugned in these Special Leave Petitions. In the result, we dismiss these Special Leave Petitions. However,.in the facts and circumstances of the cases we make no order as to costs. SLPs dismissed.

Petitioners were in service, under Comptroller and Auditor General of India (C & AG for short), as Assistant Audit Officers (A.A.O. for short) Group B Gazetted, in pay scale Rs. 2000 3200, and were working in Railway Audit Department, after December 31,1985. In 1960, Railway Board spelled out its policy, stating that scale of passes/P.T.0s. and the rules governing their issue to staff of the Railway Audit Department will be the same as applicable to Railway servants. However some distinctions were made as regards Indian Audit and Accounts Service Officers (IA & AS Officers) of Railway Audit Department, on recommendations of the C & AG., Central Government sanctioned higher scale of pay effective from March 1, 1984, for 80 per cent of Section officers in the Railway Audit Department to be designated as A.A.Os (Group B Gazetted). Their pay scale was revised to Rs. 2000 3200 from January 1, 1986, on recommendation of Fourth Pay Commission. They continued to have the privileges and facilities of Group B Officers of Indian Railway. In 1987, consequent to the revision of pay scales of Railway posts, on recommendation by the Fourth pay Commission, the posts under Indian Railways were re classified. Posts in scale of Rs. 2000 3200 were classified as Group 'C ' instead of Group B. In 1989, the Railway Board, in view of restructuring of cadre of Indian Audit and Accounts Department, creation of posts of A.A.Os in scale of Rs. 2000 3200, classified as Group B Gazetted status, issued instructions that Audit Officers in Scale of Rs. 2000 3200 may 297 be given privileges and facilities viz Passes/P.T.0s. Quarters etc, as admissible to Railway employees in identical scale. Consequently they were not entitled to the privileges and facilities admissible to gazetted Railway Officers. classified in Group B in scale of Rs. 2000 3500. However, Assistant Audit Officers given Gazetted status between March 1, 1984, and December 31, 1985 were allowed to continue to enjoy the facilities of Passes/p. T.Os quarters etc. Petitioners filed application before the Central Administrative Tribunal, Principal Bench, claiming that Assistant Audit Officers, given Gazetted status Group B after December 31, 1985, were also entitled to the privileges and facilities admissible to Railway Officers, classified 'Group B '. The application was rejected by the Tribunal and the Petitions filed Special Leave petition seeking redressal. This Court dismissed the special leave petition and, HELD: That conferring special privileges and facilities, to Assistant Audit Officers, which are not provided to Railway servants in identical pay scale would lead to unjust results. It would result in conferring special privileges and facilities, by the Indian Railways to persons belonging to foreign department of Controller and Auditor General of India, while their own servants, who hold equivalent posts on the same scale of pay will be denied such privileges and facilities. The Railway Board 's letter dated April 14, 1960 also shows that the staff of the Railway Audit Department is treated more generously than the officers (if the same Audit Department in matters of issuance of Passes/P.T.0s. The Assistant Audit Officers, who had been given status of gazetted Group B, by the comptroller and Audit General, cannot be treated, by the Indian Railways on par, with Railway servants, classified group B. In matters relating to conferring privileges and giving of facilities. The Railway Servant (Pass) Rules, 1986, made in Consonance with classification of Railway servants, rightly made by the President of India, consequent upon the Railway services (Revised Pay) Rules, 1986, issued under the proviso to Article 309 of the Constitution, confer facilities and privileges according to class to which Railway servants belong, they can not be treated as Rules violative of Article 14 of the Constitution. Nor can they be regarded as arbitrary. (303 C, 304 G) That even if discrimination was brought about by the Railways in regard to officers of the same category, that is, Assist Ant Audit Officers, such discriminatory treatment accorded to a small number cannot be availed of by the Petitioners, to obtain she benefit of such wrongly conferred privileges and facilities. However, this Court did not consider it appropriate to pronounce 298 upon the correctness of the conferment of such privileges and facilities to the Assistant Audit Officers, given status of Gazetted Group B between March 1, 1984 and December 31, 1985, when they had not been impleaded as party respondents. (305 A C)

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Civil Appeal No. 504 Of 1985 From the Judgment and Order of the High Court of Bombay, Panaji Bench (Goa) dated the 26th June, 1984, in writ Petition No, 8 of 1984. B. Zaiwala, Anil B. Divan, Usgaonkar, Ravinder Narain, and Aditia Narayan, for the Appellant. S.C. Desai, M.M Abdul Khader, Naunit Lal, Kailash Vasdev, Mrs. Vinod Arya, and Miss A Subhashini for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted. This appeal filed by M/s Fomento Resorts and Hotels Limited raises the short question as to whether compliance with rule 4 of the Land Acquisition (Companies) Rules, 1963 (hereinafter called the Rules) is necessary before issuing notifications under section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as the Act). It appears that the land in question was purchased by Gustavo Ranato da Cruz Pinto hereinafter referred to as the land owner and the original respondent No. 1 on 10th of March, 1978. The original respondent No. 2 and the appellant herein on the 15th November, 1978 made an application under Chapter 7 of the Act for the acquisition of the said properties. The government issued on the 29th October, 1980 notification in respect of the land in question under section 4 of the Act which was published in the Government Gazette dated 30th October, 1980. The land owner being respondent No. 1 to this appeal objected to the said notification under section 4. Subsequently government held enquiry under section 5A of the Act and the Deputy Collector submitted the report to the Government in March, 1981. On or about 10th April, 1981 the Deputy Collector issued notice to respondent No. 1 that enquiry under rule 4 of the Rules would be held on 15th April, 1981. The respondent No. I filed his objections on merit by the letter dated 4th May, 1981. On 26th October, 1983, agreement was executed between the government and the acquiring company that the land in question was needed for the purpose of development of tourism. the government issued notification under section 6 of the Act which was published in the government Gazette dated 27th October, 1983. 941 The petition under Article 226 out of which this appeal arises was filed in the Bombay High Court by respondent No. I challenging the said notifications under sections a and 6 of the Act. The High Court of Bombay (Goa Bench) quashed the said notification under sections 4 and 6 of the Act only on the ground that enquiry under rule 4 of the Rules was not held prior to the notification under section 4 of the Act. The propriety 1 and validity of the said decision of the High Court are under challenge in this appeal. The High Court, however, noted that the impugned notification had been challenged on several other grounds but in the view it had taken on the first ground namely that the notifications under sections 4 and 6 of the Act being bad for prior non compliance with rule 4 of the Rules, the High Court felt that it was not necessary to deal with other grounds. The petition succeeded before the High Court and the notifications under sections 4 and 6 of the Act were quashed. This appeal is filed against the judgment of the High Court. Under the scheme of the Act, it is necessary for the purpose of acquisition of land first to issue a notification under section 4 of the Act, whenever it appears to the appropriate government that land in any locality is needed or likely to be needed for any public purpose. The purpose and object of the notification under section 4 of the Act have been explained by this Court in the case of Babu Barkya Thakur vs State of ,Bombay (now Maharastra) and others thus: "The purpose of the notification under section 4 is to carry on a preliminary investigation with a view to finding out after necessary survey and taking of levels, and, if necessary, digging or boring into the sub soil whether the land was adapted for the purpose for which it was sought to be acquired. It is only under section 6 that a firm declaration has to be made by Government that land with proper description and area so as to be identifiable is needed for a public purpose or for a Company. What was a mere proposal under section 4 becomes the subject matter of a definite proceedings for acquisition under the Act. Hence, it is not correct to say that any defect in the notification under section 4 (1) ; at 1208. 942 is fatal to the validity of the proceedings, particularly when the acquisition is for a Company and the purpose has to be investigated under section 5A or section 40 necessarily after the notification under S.4 of the Act." This Court emphasised that when the acquisition is for a Company the purpose has to be investigated under section . A or section 40 necessarily after the notification under section 4 of the Act. The land acquisition proceedings begin with the publication of the preliminary notification. Section 5A enjoins hearing of the objections and disposal of objections. Sections 6 of the Act provides that if the government is satisfied after considering the report, if any, made under section 5A, that any particular land was needed for public purpose, or for a Company, a declaration shall be made to that effect subject to certain conditions mentioned in the various sub sections of section 6 of the Act. After declaration under section 6, section 7 enjoins the Collector to take order for acquisition of land. Various steps for the actual acquisition are enumerated in subsequent section of the Act which need not be set out in detail. Section 16 empowers taking of the possession after an award is made under section 11 and thereafter the land shall vest in the government free from all encumbrances. It is important to note that section 23 of the Act deals with the matters to be considered in determining compensation for acquisition of land and ht enjoins that the market value should be determined as on the date of the publication of the notification under section 4. In other words section 23 pegs the market value of the land as on the date of the notification under section 4 as one of the factors to be taken into consideration in determining the compensation to be paid. Part VII of the Act deals with acquisition of land for companies. Section 41 of the Act provides that if the appropriate government is satisfied after considering the report, if any, of the Collector under section 5A, or on the report of the officer making an enquiry under section 40 of certain matters, the details of which are not necessary for the purpose of appeal to be set out, it shall require the Company to enter into an agreement with the appropriate government providing for the satisfaction of the appropriate government for certain matters enumerated in different sub sections of section 40 The said provisions need not be set out in detail. Essentially the satisfaction and agreement with the company arc to ensure that the 943 land in question will be put to such use which will be useful to the A public. Rule 3 of the Rules provides for the constitution of the Land Acquisition Committee. Rule 4 is headed "Appropriate Government to be satisfied with regard to certain matters before initiating proceedings" and sub rule (l) of rule 4 lays down certain matters about which the appropriate government has to be satisfied when the acquisition is for the Company. Sub rule (4) of rule 4 of the Rules provides that no declaration shall be made by the appropriate government under section 6 of the Act unless (i) the appropriate government had consulted the committee and had considered the report submitted under the said rule and the report, if any, submitted under section SA of the Act and (ii) further any agreement under section 41 of the Act executed by the Company. Rule S of Rules deals with the matters which are to be provided for in the agreement under section 41 of the Act. Rule 6 similarly deals with the additional matters which might be provided in the agreement under section 41 of the Act. Rule 7 provides for submission of periodical reports. Rule 8 of the Rules deals with the conditions under which sanction is to be given for transfer of land. Rule g deals with special provisions in relation to certain Companies. It is not necessary to discuss these rules in detail for the present purpose. A conspectus of the provisions of the Act as well as the Rules indicate that there are two purposes of acquisition of land one being for the public purpose and the other for the purpose of a Company. In case of acquisition for Company, the appropriate government has to satisfy itself that such acquisition is needed and would be useful also for public need. Rule 4 of the Rules provides for satisfaction of the appropriate government with regard to various matters before acquisition. The learned judges of the Bombay High Court were of the view that the enquiry under rule 4 was necessary for the initiation of the acquisition proceedings to be satisfied that acquisition was necessary for the Company. We are unable to accept this conclusion for the following reasons: (i) To complete the acquisition proceedings, notification under 944 section 6 of the Act is required. Section 6 of the Act enjoins that the government has to be satisfied that the land is needed for public purpose or for a Company and after declaration is made the acquisition is complete after the award is made and possession of the land is taken the land vests under section 16 in the government free from encumbrances. Section 4 does not require as such this satisfaction of the government. The government might initiate acquisition proceedings "if it appears" to the government that land is needed either for public purpose or for a Company. That might appear to the government by enquiry aliunde or on a petition or application made by any Company. Whether the need is proper or genuine that can be found by the government subsequently after notice under section 4 of the Act. An enquiry under rule 4 might be made before issuance of the notification under section 4 of the Act but it is not a sine qua non for the issuance of the notification under section 4 to have an enquiry under rule 4 of the Rules. The scheme and the language of the Act and the Rules do not indicate that. As noted before, section 4 does not require government to be satisfied, it is sufficient if it appears to the government that land is needed either for public purpose or for a Company. It may so appear to the government either by independent enquiry or from reports and information received by the government or even from an application by the company concerned. Section 6 undoubtedly requires satisfaction of the government and enquiry contemplated under rule 4 must precede publication of the notification under section 6 of the Act. So also there must be before section 6 notification an enquiry under section 5A. The p significant pointer to the scheme is provided in sub rule (4) 'of rule 4, the material portion of which reads as follows: "(4) No declaration shall be made by the appropriate Government under section 6 of the Act unless (i) the appropriate Government has consulted the Committee and has considered the report submitted under this rule and the report, if any, submitted under section 5A of the Act; and (ii) the agreement under section 41 of the Act has been executed by the Company. " 945 The said sub rule significantly does not prohibit or forbid A issuance of notification under section 4 of the Act unless rule 4 (l) has been complied with. If it is now insisted that there should be no issuance of notification under section 4 of the Act before enquiry under rule 4 then this sub rule has to be re written by stating that no notification under section 4 and no declaration under section 6 issued or made as the case may be unless the requirements mentioned in clauses (i) and (ii) of sub rule (4) of lure 4 have been complied with. We find no warrant to do that. On the contrary, it will be contrary to the scheme and purpose of the acquisition proceedings because the compensation for the acquisition has to be fixed under section 23 of the Act keeping the market rate as on the date of the issuance of the notification under section 4 in view. If it be that the enquiry as contemplated by rule 4 should also precede issuance of notice under section 4 of the Act then that may upset the fixation of the market value and escalation of price with the passage of time between publication of the notifications under sections 4 and 6 would make acquisition difficult. An argument was sought to be built on the basis of the heading of rule 4 which stipulates that "Appropriate Government to be satisfied with regard to certain matters before initiating acquisition proceedings". It is true that before the initiation of the acquisition proceedings, government had to be satisfied of certain matters mentioned in the various sub rules of rule 4 as well as various provisions of the Act. Though preliminary steps for initiation of acquisition proceedings are necessary and those can only be taken by the authority of the notification under section 4 as mentioned in the decision of Babu Barkya Thakur vs State of Bombay (now Maharashtra) and Others, (supra) the initiation of the acquisition proceedings for all practical purposes begins after section 6 notification Satisfaction is necessary for proceeding for acquisition under section 6 of the Act but section 4 unlike section 6 does not require for the issuance of the notice to be satisfied but it might act only "when it appears" to it that the land is needed or is likely to be needed for any public purpose. Reading the Act and the Rules and keeping in view the scheme of the Act, it is apparent, in our opinion, that before the issuance of section 4 notification, there is no requirement as such of compliance with the procedure contemplated by rule 4 of the Rules. We are therefore unable to subscribe to the view that 946 enquiry by rule 4 must precede the issuance of notification under section 4 (1) of the Act. Furthermore as indicated before certain matters which are required to be done under rule 4 can not be done because the officer or the person authorised by him would have no authority unless notification under section 4 is issued. Reliance was placed before the Bombay High Court and before us in support of the judgment of the High Court on a decision of this Court in the case of Abdul Husein Tayabali and Ors. vs State of Gujarat and Ors. There the contention before the Court was that Master was only a Special Land Acquisition Officer and not the Collector within the meaning of rule 4. Furthermore, it was urged, in any event, the notification in question did not 'specially ' appoint him but was a general notification authorising all the Special Land Acquisition Officers in the State appointed not only before the date of section 4 notification but also those who would be appointed in future It was further contended that notification did not "appoint" but simply authorised him to perform the functions of the Collector, the State Government had not given any directions to him to make a report as required by rule 4; therefore the enquiry held by him under that rule and the report made by him was invalid and consequently no notification either under section 4 or section 6 could be validly issued. It was urged, therefore, the section 6 notification was issued without complying with Part VII of the Act and without the valid consent of the State Government as required under section 39(iii), that the acquisition was made malafide and without application of mind to the relevant facts and the acquisition did not involve any public purpose and the State government was bound to give an opportunity Of being heard to the appellants before taking a decision under section 5A particularly when the report made by Master was against the acquisition. In this connection our attention was drawn to section 39 of the Act which provides that provisions of sections 6 to 37 (both inclusive) shall not be put into force in order to acquire land for any Company unless with the previous consent of the appropriate Government nor unless the Company shall have executed the agreement therein after mentioned. This section, in our opinion, has no relevance for determining whether to be a proper acquisition, enquiry contemplat (1) ; 947 ed under rule 4 must precede issuance of the notification under section 4 of the Act. In the decision of this Court referred to hereinbefore, this question did not really fall for consideration because there was compliance with rule 4 before issuance of the notification and the infirmities of the enquiry under rule 4 urged on behalf of the appellants were not established. It was urged before this Court that the enquiry under rule 4 was a quasi judicial enquiry and therefore it was incumbent on Master to give an opportunity to the appellants to be heard. This Court was of the view that the rule provide that an officer conducting the enquiry has to hear the Company before making his report. Whether he was also to hear the owners of the land or not did not fall for decision in those appeals as the officer had in fact given such an Opportunity to the appellants by serving them with notices and recorded the statement of such of them who cared to appear before him. It was then contended that the enquiry under rule 4 had to beheld after the notification under section 4 was issued and not before and therefore the enquiry held by Master was not valid. This Court observed at page 604 of the report "We do not find anything in rule or in any other rule to warrant such a proposition. The enquiry, the report to be made consequent upon such enquiry, obtaining the opinion of the Land Acquisition Committee, all these intended to enable the Government to come to a tentative conclusion that the lands in question were or were likely to be needed for a public purpose and to issue thereafter section 4 notification In our opinion no objection to the appointment of Master to perform the functions of the Collector under section 3(c) or to his competence to make the enquiry and the report under rule 4 or their legality can be validly made. " In our opinion when this Court observed that the report of the enquiry under rule 4 was a factor to be taken into consideration and "to issue thereafter section 4 notification" was by general observation. It is undoubtedly true that a notification under section 4 can be issued after enquiry under rule 4. But under the scheme of the Act, the converse is not correct i.e. the enquiry under rule 4 must always precede notification under section 4 of the Act. In that decision this Court analysed the importance of section SA and it is after considering the report under rule 4 and report under section SA that notification under section 6 will be issued. It is undoubtedly true that 948 enquiry under rule 4(1) must precede action under section but we do not find reading the said decision of this Court in the context of the facts and circumstances and the contentions urged in that case that this Court laid down any proposition that enquiry under rule 4(1) must precede issuance of notification under section 4. Indeed as we have mentioned before, notification under section 4 would facilitate the matters to be inquired under rule 4(1). Reliance was also placed on certain observations in the case of General Govt. Servants Co operative Housing Society Ltd" Agra vs Wahab Uddin & Ors. Etc. 1 There the scheme of the Act was analysed and what were matters to be required under rule 4 of the Rules were mentioned. This Court observed at pages 53 54 of the report as follows: "No declaration shall be made by the appropriate Government under section 6 of the Act unless the Committee has been consulted by the Government and has considered the report submitted by the Collector under section SA of the Act. In addition, under clause (ii) of sub rule (4) of rule , the Company has to execute an agreement under section 41 of the Act. The above consideration shows that rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by rule 4 are complied with the notifications under section 6 will be invalid. A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act. " It may be borne in mind in that decision the notification under section 6 was quashed but notification under Section 4 was not quashed though observations were made about the purpose and the role of compliance with rule 4. Reliance was placed on the following observations at page 54 of the report: "A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act. " It appears to us that the reference to rule 4 in the context in which it was made was inadvertent. What perhaps the Court want (1) ; 949 ed to convey was the need of compliance of entering into agreement A under section 41 before the issuance of notification under section 6 of the Act. Otherwise it appears that there was no enquiry under rule 4 of the Rules before issuance of the notification under section 4 yet the notification under section 4 was not quashed. The observation then in any event is obiter. On the scheme of the Act, we are of the opinion that on a correct interpretation, it is not necessary that enquiry under rule 4 must in all cases precede issuance of the notification under section 4 of the Act. In an appropriate case if it is possible, enquiry under rule 4(1) may be held before the issuance of the notification under section 4. But it is not a mandatory requirement that it must precede before the issuance of the notification under section 4. Our attention was drawn to a Bench decision of the Allahabad High Court in the case of Raja Ram Jaiswal vs Collector, Allahabad & Another (1), where it was held that it would not be right to say that a case where a company makes an application for acquisition of land to the Collector it was obligatory that the provisions of rule 4(1) must be complied with before the Collector could issue a notification under section x(1) of the Act. With this conclusion we are in agreement, though factually the case was slightly different in the sense that there the Collector was authorised to make a notification under section 4(1) of the Act and not the State Government as in this case. Therefore, though there may be in certain cases compliance with rule 4(1) of the Rules it was not mandatory that before issuance of notification under section 4(1) of the Act there should be an enquiry in compliance with rule 4(1). In the premises in so far as the Bombay High Court held that non compliance with rule 4 before the issuance of notification under section 4(1) of the Act is bad is set aside. As mentioned hereinbefore, since the issuance of the notifications was challenged on several other grounds and the High Court had not decided those grounds, we remit the matter back to the High Court to decide those grounds We request the High Court to dispose of those grounds as early as possible. (1) [1980] 2 ILR Allahabad 269. 950 In a matter of this nature there several contentions factual and legal are urged and when there is scope of an appeal from the decision of the Court, it is desirable as was observed by the Privy Council long time ago to avoid delay and protraction of litigation that the court should, when dealing with any matter dispose of all the points and not merely rest its decision on one single point. In the facts and circumstances of the case, as the matter is being remitted back to the High Court, costs of this appeal will abide by the result of the High Court decision.

The appellant made an application on the 15th November, 1978 under chapter VII of the Land Acquisition Act, 1894 for the acquisition of the lands earlier purchased by Respondent No. 1 herein. The Government issued on the 29th October, 1980 a notification for acquisition of the said land under section 4 of the Act which was published in the Government Gazette dated 30th October, 1980. Respondent No. 1 objected to the said notification. Subsequently the Government bled an enquiry under section SA of the Act and, after submitting a report in March 1981, on or about 10th April 1981, the Deputy Collector issued notice to Respondent No. I that enquiry under rule 4 of the Land Acquisition (Companies) Rules 1963 would be held on the 15th April, 1981 to which the latter filed his objections on merit by his letter dated 4th May, 1981. On 26th October, 1983, agreement was executed between the government and the acquiring company. A notification under section 6 that the land in question was needed for the purpose of development of tourism, was published in the Government Gazette dated 27th October 1983. Respondent No. 1, thereupon, filed a petition under Article 226 of the Constitution challenging the said notifications under sections 4 and 6 of the Land Acquisition Act. The High Court of Bombay (Goa Bench) quashed the said notifications on the first ground alone namely, the notifications were bad for prior non compliance with Rule 4 of the Land Acquisition (Companies) Rules 1963, and noted that it was not necessary to deal with other grounds of challenge. Hence the appeal by special leave 938 Allowing the appeal and remitting the case back, the Court ^ HELD: 1. ON a correct interpretation of the scheme of the Land Acquisition Act, it is not necessary that enquiry under rule 4 of the Land Acquisition (Companies) Rules, 1963 must in all cases precede issuance of the notification under section 4 of the Act. In an appropriate cash if it is possible, enquiry under rule 4(1) may be held before the issuance of the notification under section 4. But it is not a mandatory requirement that it must precede the issuance of the notification under the Act. [949B C] RAJA Ram Jaiswal vs Collector, Allahabad & Another, (1980) 2 ILR Allahabad 269; conclusion approved. Babu Barkya Thakur vs State of Bombay (now Maharashtra), ; at 1206, followed. Abdul Husein Tayabali & Ors. vs State of Gujrat l Ors. , [1968] I SCR 597. explained and distinguished. A consepectus of the provisions of the Land Acquisition Act as well as Land Acquisition (Companies) Rules 1963 indicate that there are two purposes of acquisition of land one being for the public purpose and other for the purpose of a company, In case of acquisition for company, the appropriate Government has to satisfy itself that such acquisition is needed and would be useful also for public need. [943E F] 2.2 Land Acquisition proceedings begin with the publication of the preliminary notification under section 4 of the Land Acquisition Act, 1894. When the acquisition is for a company the Purpose has to be investigated under section SA (by hearing objections and disposing them) or under section 40 necessarily after the notification under section 4 of the Act. Under section 6 if the Government is satisfied after considering the report, if any, made under section 5A that any particular land was needed for public purposes or for a company a declaration shall be made to that effect subject to certain conditions stipulated therein. Sub rule 4 of Rule 4 of the Land Acquisition (Companies) Rules 1963 provides that no declaration shall be made by the Appropriate Government under section 6 of the Act unless (i) the appropriate government had consulted the committee and had considered the report submitted under the said rule and the report if any, submitted under section SA of the Act and (ii) further any agreement under section 41 of the Act executed by the Company. To complete the acquisition proceedings notification under section 6 of the Act is required. Section 6 of the Act enjoins that the government has to be satisfied that the land is needed for public purpose or for a company and after declaration is made the acquisition is complete after the award is made and possession of the land is taken when the land vests under section 16 in the government free from encumbrances. Section 4 939 does not require as such this satisfaction of the government. The government might initiate acquisition proceedings "if it appears" to the government that land is needed either for public purpose or for a company. That might appear to the government by enquiry aliunde or on a petition or application made by any company. Whether the need is proper or genuine that can be found by the government subsequently after notice under section 4 of the Act. An enquiry under rule 4 might be made before issuance of the notification under section 4 of the Act but it is not a sine qua non for the issuance of the notification under section 4 to have an enquiry under rule 4 of the Rules. The scheme and the language of the Act and the Rules do not indicate that. Therefore, section 4 as such does not require government to be satisfied, it is sufficient if it appears to the government that land is needed either for public purpose or for a complain. It may so appear to the Government either by independent inquiry or from reports and information received by the government or even from an application by the company concerned. [943H; 944A F] 2.3 It is undoubtedly true that a notification under section 4 can be issued after enquiry under rule 4. But under the scheme of the Act, the converse is not correct, i.e., the enquiry under rule 4 must always precede notification under section 4 of the Act, though enquiry under rule 4(1) must precede action under section 6 of the Act. Further certain matters which are required to be done under rule 4 cannot be done before because the officer or the person authorised by him would have no authority, unless notification under section 4 is issued. [945G H; 946A] Rule 4(4) does not prohibit or forbid issuance of notification under section 4 of the Act unless rule 4(1) has been compiled with. If it is now insisted that there should be no issuance of notification under section 4 of the Act before enquiry under rule 4 then this sub rule has to be re written by stating that no notification under section 4 and no declaration under section 6 issued or made as the case may be unless the requirements mentioned in clauses (i) and (ii) of sub rule (4) of rule 4 have been complied with. On the contrary, it will be contrary to the scheme and purpose of the acquisition proceedings because the compensation for the acquisition has to be fixed under section 23 of the Act keeping the market rate as or the date of F the issuance of the notification under section 4 in view. If it be that the enquiry as contemplated by rule 4 should also precede issuance of notice under section 4 of the Act then that may upset the fixation of the market value and escalation of price with the passage of time between publication of the notification under sections 4 and 6 would make acquisition difficult. [945A.D] 3. In a matter of this nature where several Contentions factual and legal are urged and when there is scope of an appeal from the decisions Of the Court, it is desirable as was observed by the Privy Council long time ago to avoid delay and protraction of litigation that the court should, when dealing with any matter dispose of all the points and not merely rest its decision on one single point. [950A B] 940

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Civil Appeal No. 232 of 1970. Appeal by special leave from the Award dated the 2 9 1969 of the 5th Industrial Tribunal, West Bengal, in Case No. 321 of 1967 published in the Calcutta Gazette dated the 16 10 1969 229 section Chaudhury and D. N. Gupta for the Appellant. Kapil Sibbal for the Respondents. The Judgment of the Court was delivered by " KRISHNA IYER, J. There is a tragic touch in processual protraction as this little lis lasting a whole decade pathetically illustrates. Such lingering legal machinery is by passed by both sides in practice largely because, by sheer slow motion, it denies relief when needed and drives parties to seek remedies by direct action or political intervention. What elegant alibi can there be for the routine charter of demands put forward in the middle of 1966, ripening into an industrial reference in November 1966 after a flare up of illegal strike and failure of conciliation, taking around 3 years for rendering a short award and a little over five years for reviewing it in this Court? Law makers whose vocal concern for industrial peace and constitutional promises for the working class is being put to the test by failure in the field will, we hope, alert themselves. Labour litigation can be a course or dread where one side is weak, as here, and has not been able to hire legal services but has been made good by amicus curiae, and some other side, regardless of cost, is anxious to settle some principle, as counsel for the appellant impressed on us. We now move into the area of facts which wears a jural apparel. The narrative of necessary facts starts naturally with a bonus dispute in the Statesman Ltd (a newspaper with editions published in Calcutta and Delhi) which was referred to adjudication in September 1966 and was, admittedly, pending at a time when the Calcutta workers reportedly resorted to rude tactics to press an earlier charter of demands presented to the management. On September 20, 1966, events reached a crescendo of illegal and disorderly strike at midday with a reprisal of lock out at mid night so soon as the administrative officer, with police assistance, gained his freedom. Even in humane affairs a storm is followed by a calm, may be. For, the two Unions, sobered, perhaps by this sudden action of the management wrote the very next day (21st September) to the employer requesting for lifting the lock out, proferring peaceful resumption of work and requiring at least an interim relief on the 'economic ' demands. The letter speaks for itself and may be read presently. The employer was not ready to accept this assurance. The lock out dragged on, despite the seeming offer of the olive branch by Labour. Mistrust on both sides is inevitable when estrangement vitiates a relations and language is suspect when bitterness is the rule of interpretation. Right or wrong, the management took the view that the offer of good behavior by the workers was conditional and not convincing, so that the lock out was not lifted for several days. The deputy Commissioner of Labour, who had interceded to conciliate, had unavailingly requested the Management to lift the lock out and had found Labour insisting on some interim 'economic ' relief as a H ' ' ground for withdrawal of the strike. At certain stages of conflict in this world, face saving becomes more important than heart searching Life is not logic and Prestige amends propriety. 230 The cold war correspondence continued for a little while more, each blaming the other, till at last the State, on November 4, 1966. referred SL prints of dispute to the Fifth Industrial Tribunal Calcutta, before whom the bonus dispute was already pending. Better sense on both sides resulted in the termination of the strike and the closure, and work was resumed from November 8, 1966. The award that " followed upon the dispute was rendered on September 2, 1969, nearly three years after the reference of the dispute. One is led to wonder why there should have been so much delays but the blame, if any, has to be shared between the State Government and the Tribunal. For, after the Fifth Tribunal started the enquiry and examined a few witnesses, the State Government ordered transfer of the industrial dispute to another Tribunal and, not surprisingly, omitted to communicate promptly the factum of such transfer to the affected Tribunal. Thus, although the order of transfer was made on March 31, 1967 the enquiry continued upto April 22, 1967. When actual notice of the transfer was received by the Fifth Tribunal on April 24, representation was made by it about the enquiry having commenced and, naturally, Government re transferred the dispute to the same Tribunal. After this minor episode, of transfer and re transfer, the enquiry was continued and the award made. We are now concerned only with three disputes. Of the three issues, two deal with petty items like warm coats for the subordinate staff and canteen allowance for the employees ' canteen staff financially too negligible to engage the attention of this Court. The other item, which is meaty enough to merit our verdict, relates to the wages during the period of work stoppage from September 20, 1966 to November 8, 1966. The tribunal, considering, in its totality the facts and circumstances of the case, the share of blame on the part of each party the role of broad justice in producing industrial peace and advertence to the relevant materials on record, held 'that the company should pay half the wages to the employees during the period from September 20 to November 7, 1966. The Management, disappointed by this directions as well as the orders regarding warm coats and canteen allowance, has come directly to this Court securing special l have under article 13. Even though leave has been granted by this Court, the very width of its power under article 136 is a warning against its free wheeling exercise save in grave situations. In Bengal Chemical (1) Subbarao, J. (as the then was) pointed out that: "The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of. It would be illogical to apply two different standards at two different stages of the same case. The same view was expressed by this Court in Pritam Singh vs State of Madras ; , Hem Raj vs State of Ajmer (1954 SCR (1) [1959] Supp. 2 S.C.R. 136, 141 231 1153) and Sadhu Singh vs State of Pepsu (AIR 1954 SC A 271)". From this it follows that when awards of Industrial Tribunals are challenged in this Court, we have to apply those several tests which have become part of the self imposed restraints on its special jurisdiction. What are these self created trammels upon the exercise of this Court 's power ? The answer is furnished by this Court in the Associated Cement Companies Ltd.(1) Mathew J. followed Bengal Chemical (2) (both these cases related to industrial awards challenged in appeal under article 136 of the Constitution), where this Court had observed: "Though article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice causing substantial and grave injustice to parties or raising an important principle of industrial law requiring elucidation and final decision by this Court or disclosing such other exceptional or special circumstances which merit the consideration of this Court." "The portion of the award with which we are concerned does not raise any important principle of law requiring elucidation and final decision by this Court. Nor does it disclose any exceptional or special circumstances which merit decision by this Court. On a question like this, where the Tribunal, on a consideration of all the materials placed be fore it and having regard to the overall picture came to a conclusion, we do not think this Court should interfere. " Circumspection and circumscription must therefore induce us to interfere with the award under challenge only if extraordinary flaws or grave injustice or other recognised grounds are made out. This perspective is sufficient in itself to dispose of the two tiny items of dispute bearing on warm coats and canteen allowance. Even so, we will briefly refer to them. The canteen staff claimed allowance of 50 paise per working day. There are two canteens, one for officers and the other for the subordinate staff. While the staff of the officers ' canteen are drawing the dietary allowance of SO paise, the employees of the staff canteen are denied this paltry sum. There is no reasonable basis for this invidious treatment and we find no ground to interfere with the Tribunal 's direction that 'the company should pay tiffin allowance at the rate of 50 paise per working days to the employees in the staff canteen '. Of course, if they take free food from the canteen they will be ineligible for the allowance since they cannot have both. Equally untenable is the grievance against warm coats supplied to the subordinate staff. It is common case that the management does supply warm coats to Jamadars, gate darwans and inspectors but does not extend this warm facility to darwans and delivery peons Calcutta. (1) A1.I.R. , 1554. (2) [1959] Supp. S.C.R. 136,141 16 L390 SCI/76 232 cold does not spare either category and therefore no climatic distiction can be made between the two. True it is that in the charter of demands warm coats were claimed only for those employees who delivered newspapers. Even of the dispute referred to the Tribunal is in wider terms and we are satisfied that the award calls for no interference when it states 'that all the members of the subordinate staff should be supplied with warm coats '. Of course, it need hardly be said that these employees cannot claim warm jerseys over and above coats. The bone of contention between the parties bears upon the wages during the strike period. We have already indicated that the award crystallizes a discretionary conclusion reached after a survey of all the facts and animated by a sense of broad justice. The Tribunal had something to say against the workers and the management and felt impelled to state: "I find that both the parties were at fault. That being, the position I am of opinion that both the parties should be held responsible for the delay in the matter of the with drawing of the lock out. In these circumstances, I am of opinion that the company should pay half the wages to the employees during the period from 20th September 1966 to 7th November 1966. " Captious criticisms apart, the conspectus of relevant circumstances more or less bears out the propriety this direction. The crucial issue is as to whether we have any material to castigate this conclusion as unconscionable or unjuristic, involving gross injustice, violating a well established rule of law or otherwise attracting out special responsibility to declare the law in a twilit area of public importance to industrial life. We will examine the pertinent circumstances from this angle and it will be evident that the more we ponder the subject the more we are satisfied about the legal soundness and practical wisdom of the award, having in mind industrial peace as the goal. The smouldering dispute between the Management and the workers apparently burst into flame on September 2, 1966 Going by the Tribunal 's reading of the situation there was a strike that day. The pendency of certain types of proceedings Before a Tribunal stamps a strike or lockout with illegality as. (s.24). While section 23 prohibits strikes and lock outs when mentioned there are under way, section 24 (3) absolves a lockout of illegality if it is caused by an illegal strike. There surely was a pending industrial dispute when the Union sprang the strike. Being therefore illegal, the lock out that followed became a legal, defensive measure. So far is smooth sailing. But the management cannot behave unreasonably merely because the lock out is born lawfully. If by subsequent conduct, imaginatively interested the Unions have shown readiness to resume work peacefully, the refusal to re start the industry is not right and the initial legitimacy of the lockout loses its virtue by this blemished sequel. Nor can any management expect, as feelings run high, charge sheets in criminal courts are laid against workers and they are otherwise afflicted by the pinch of 233 unemployment , to get proof of good behaviour beyond their written word. Nor can they realistically insist that they abandon their demands for better benefits before the lock out is lifted. In this hungry world the weaker many cannot afford the luxury of finery in speech which the happier new can afford. In the rough and tumble of industrial disputes conciliation is a necessary grace the stronger party, the socially conscious management, must cultivate and huff a flaw it must eschew. In the realistic temper of bargaining between two wings of an industry loth managements and workers belong equally to the industry, for in one owns the other produces a feeling of partnership must prevail to persuade the two sides to trust each rather than such to point flaws t in the language used. Such is the spirit of give and take which must inform industrial negotiation if peace and production are the bona fide end and national development the great concern. This broad philosophic approach amply vindicates the justice of the Tribunal 's impugned award. To appreciate this view, a flash back into the events around and after September 20, 1966 is helpful. The backdrop of law may be briefly recapitulated before going into factual details. If the strike is illegal, wages during the period will ordinary be negatived unless considerate circumstances constrain a different course. Likewise if the lock out is illegal full wages for the closure period shall have to be 'forked out ', if one may use that expression. But in between lies a grey area of twilit law. Strictly speaking, the whole field is left to the judicious discretion of the Tribunal. Where the strike is illegal and the sequel of a lock out legal, we have to view the whole course of developments and not stop with examining the initial legitimately. If one side or other behaves unreasonably or the over all interests of good industrial relations warrant the tribunal making such directions regarding strike period wages as will meet with justice, fair play and pragmatic wisdom, there is no error in doing so. His power is flexible. We are heartened and strengthened in our approach by the decision in India Marine Service(1). There the Court noted that 'the attitude of the company was a reasonable one and that it even proposed to the union and through it to its workmen that work should go on, that the dispute should be taken before the Conciliation officer for conciliation and that in the meanwhile they were prepared to grant some interim relief to the workmen. 'In our opinion ', added the Court "while the strike was unjustifiable, the lock out when it was ordered on November 13. , 1958, was justified. It seems to us, however, that though the lock out was justified at its commencement its continuance for 53 days was wholly unreasonable and therefore, unjustified. IQ a case where a strike is unjustified and is followed by a lock out which has, because of its long duration. become unjustified it would not be a proper course for an industrial tribunal to direct the payment of the whole of the wages for the period of the lock out. We would like to make it clear that in a case where the strike is unjustified and the lock out is justified the (1) 234 workmen would not be entitled to any wages at all. Similarly where the strike is justified and the lock out is unjustified the workmen would be entitled to the entire wages for the period of strike and lock out. Where, however, a strike is unjustified and is followed by a lock out which becomes unjustified, a case for apportionment of blame arises. In our opinion in the case before us the blame for the situation " which resulted after the strike and the lock out can be apportioned roughly half and half between the company and its workers. In the circumstances we therefore direct that the workmen should get half their wages from November 14, , 1958 to January 3, 1959 (both days inclusive). " The factual milieu surrounding the strike lock out complex, as neatly presented by Shri Kapil Sibbal, shows how the flow of events exonerated the Unions of serious impropriety and the employer was trying to be too clever. When the workers struck, the Management put up a notice of closure wherein it was stated: "The stay in strike resorted to by the workmen is unjustified and illegal in view of the pendency of the proceedings before the Fifth Industrial Tribunal and also violates the Code of Discipline. The representatives of the Unions were made aware of this fact when the management met them to discuss their demands today. In the circumstances, the management has no option but to keep the establishment closed until such time as the work men assure the management of Normal and peaceful resum ption of work." (emphasis, added) The simple insistence of the Management in the closure notice was an assurance from the workmen 'of normal and peaceful resumption of work '. No sooner was this notice put up than the Unions responded constructively, moderating the usual tantrums they are given to in an atmosphere of conflict. The very next day after the closure, i.e., on September 21, the Secretary of the Union wrote back a letter wherein he stated inter alia: "While we deny the various allegations contained in your said Notice and hold you wholly liable for the development on 20 9 66 in suddenly advising your supervisory staff to stop all processes of work from 12.30 p.m. and creating a confusion amongst the workmen who were working all the time till then, presumably to prepare a ground for the illegal Lockout since some days past as peaceful and ' constitutional movement of the Unions was there to your dislike, we should tell you here and now that no useful purpose will be served by such black mailing Notice far less the cause of the industrial peace and progress of a reputable concern like 'The Statesman ' . " x x x x x "You know more than anybody. else that your workmen are all peace loving people and have coop rated with you 235 all along with respect and affection. You had never any A occasion to find fault with them for any indisciplined con duct. Our Unions have also a long tradition of faithful cooperation with the management in every hour of crisis and we are proud of our said lofty tradition. There was no obstruction in the movement of anybody at any stage on 20 9 66 as alleged or at all and the police ought not to have been invited in the office. Considering everything we are of "P the opinion that no interest of the management or of the workmen will be served by such acrimonious correspondence " any delay in the settlement of the outstanding disputes will make the situation more complex. You are therefore requested to withdraw your aforesaid Notice, arrange an immediate sitting with us and meet the genuine grievances of the employees, if not in full at least as an interim arrangement and note in this context if any assurance is necessary that all along in the past the workmen will maintain peace and work normally and peacefully unless they are sufficiently provoked from your end." (emphasis, added) It is obvious that the tone of this reply is conciliatory and literally conforms to the demand for the assurance from the workmen of peaceful and normal resumption of work. It is fair to infer that the receipt of this letter should have persuaded the Management in a spirit of goodwill, to lift the lock out and give a trial to the workers ' willingness. Is not a worker 's word, until the contrary is proved, as good as his bond ? Moreover, a strike is called off when the strikers agree to come back to work. Curiously enough, the management struck a discordant note in their letter two days later. Instead of a favourable response, the appellant recited the old facts and concluded: "We have no intention of keeping the office closed longer than is necessary, and as soon as the Management is reason ably convinced that discipline and normal production will be maintained and that there will be no recurrence of the acts of indiscipline which led to the illegal strike and closure, we shall take steps to open the office " The shift in stand is obvious. The first letter merely demanded of the workmen an assurance of normal and peaceful resumption of work. When this was given the Management quietly tilted its stance and demanded that it should be 'reasonably convinced that discipline and normal production will be maintained and that there will be no recurrence of the acts of indiscipline '. The further letter of October 31, 1966 by the Union highlights the anxiety of the workers for resumption of work Of course, the staying power of the workers is limited and wanes after a time. Naturally, they press the Management to withdraw the closure. The language of the letter Exhibit E 7 is tellingly temperate: "Assuming though not conceding even by any stretch of imagination that there was an illegal strike as alleged by 236 you and the lock out for 41 days till date after the Unions ' unequivocal assurance of peace and cooperation given to you on behalf of the workmen in their letter dated 21 9 66 in reply to your notice dated 20 9 66 where you asked for such an assurance. So far as the Unions demands are concerned, they are only of incidental nature because of the suffering thrust upon the workers on account of the unproved lock out. We want peace and a climate where lock and strike will he a matter of the past. In that spirit we have selected the least controversial 11 items out of all the items of demands for immediate settlement. Hope you will appreciate the same by entering into a negotiated settlement and we assure you that if necessary we shall not even fight the Bonus case before the Tribunal if on that item also you agree to settle. " J ' lt was mentioned by Shri Sibbal that there were charge sheets against the workers at the instance of the Management which embittered relations. There is also the reference in the evidence of the Deputy Commissioner of Labour that the Management was unwilling to lift the lock out when requested and the workers were unwilling to withdraw the strike without settlement of disputes. In an escalating situation of conflict, developments lead to deterioration of industrial quiet and we have to look at the whole picture with realism. There was a minor ripple of disputation as to whether the evidence recorded by the Fifth Industrial Tribunal between the date when the transfer order was passed by the government and the re transfer order was made could be read as evidence. The Tribunal has come to the same conclusion both by excluding and by including such evidence in his verdict. Shri Kapil Sibbal has fairly taken us through these materials to convince us that the verdict cannot be deflected by eliminating or reading the disputed testimony. We feel satisfied that there is much to be said in favour of the ultimate view taken by the Tribunal that blameworthiness may be equally apportioned between the parties Had the Management reacted with goodwill when the workers the very next day offered to be peaceful and resume work, the prolonged situation of cessation of work could have been saved. It is therefore a case which attracts Indian Marine Service (supra). In that case also this Court found it fair to direct that the workmen should get half the wages during the strike period. The Tribunal 's view is certainly not unreasonable. May be, it is a just solution. We hope that both sides after these long years, will bury the hatchet and work for the better efficiency and greater status of a leading newspaper of India. Having regard to the circumstances of the case, it is proper to direct that the appeal be dismissed but the parties will bear their respective costs. Before parting with this case we deem it our duty to record our appreciation of the thoroughness of preparation of Shri Kapil Sibbal a young advocate of promise, who has assisted the Court as amicus curiae with presidential industry and persuasive felicity.

Even when a bonus dispute was pending adjudication before the Industrial Tribunal, the workmen of the appellant resorted to rude tactics to press their earlier charter of demands, which took the turn of an illegal and disorderly strike. The management declared a lockout. On the day following the declaration of lockout, the workmen requested the management to lift the lockout proferring peaceful resumption of work and asking for an interim relief on their economic demands. The management did not agree to lift the lockout. Eventually however, The lockout was lifted and the strike called off. On the question of wages during the strike period, the Industrial Tribunal, apportioning fault to both the parties directed that the management should pay half the wages to the employees during the strike period. Dismissing the appeal, ^ HELD: (1) There is much to be said in favour of the view of the Tribunal that the blameworthiness may be equally apportioned between the parties. Where the strike is illegal and sequel of a lockout legal, the Court has to view the whole course of developments and not stop with examining the initial legitimacy. If one side or other behaves unreasonably or the overall interests of good industrial relations warrant the Tribunal making such directions regarding strike period wage as will meet with justice, fairplay and pragmatic wisdom, there is no error in doing so. The power of the Tribunal is flexible. D E] India Marine Service, , followed. In the instant case there was a pending industrial dispute when the Unions sprang a strike notice. The strike being illegal, the lockout that followed, be came a legal, defensive measure. But the management could not behave unreasonably merely because the lockout was born lawfully. by subsequent conduct, the Unions had shown readiness to resume work peacefully, the refusal to restart the industry was not right and the initial legitimacy of the lockout lost its virtue by this blemished sequel. [232 G Hl (2) In an appeal under Article 136 of the Constitution, this Court would interfere with the Award under challenge only if extraordinary flaws or grave injustice our other recognised grounds are made out. [231 E F] Bengal Chemical. [1959] Suppl. 2 SCR 136, 141; and Associated Cement Companies Ltd. AIR 1972 SC 1552. 1554, followed. In the instant case the direction of the Tribunal that the Company should pay tiffin allowance at the rate of 50 paise on working days to the employees in the staff canteen and that the members of the subordinate staff should be sup plied with warm coats did not call for interference.

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ns Nos. 1524, 1537 1580 of 1973 and 74, 75, 254, 510 512 of 19702 ' 21 of 1971 and 1525 & 1581 1606 of 1973. Petitions under article 32 of the Constitution of India. A. K. Sen, Yogeshwar Prasad, section K. Bagga and section Bagga, for the petitioners (in W.Ps. 1524 and 1537 1580/73). A. K. Sea, (in W.P. No. 74/70), Hardyal Hardy (in W.P. No. 75/70), Yogeshwar Prasad, section K. Bagga and section Bagga, for the petitioners in (W.P. Nos 74, 75, 254 and 510 512/70, 21/71 and 1525, 1581 1606/1973). L. N. Sinha, Solicitor General and O. P. Rana, for respondents (in W.Ps. 1524, 1537 1580173). O. P. Rana, for respondents (in W.Ps. Nos. 74, 254/70, 21171, 1525, 1581 1606/73 and respondents nos. 1 & 3 in W.P. 75 and 510 512/70). V. M. Tarkunde and E. C. Agarwala, for respondent No. 2 (in W. P. No. 75/70 and applicant/intervener in W.P. No. 75/70. The Judgment of the Court was delivered by Goswami, J. By the above writ applications under Article 32 of the Constitution the validity of the Uttar Pradesh Krishi Utpadhan Mandi Adhiniyam, 1964 (U.P. Act No. XXV of 1964 as amended by U.P. Act No. 10 of 1970) (briefly called the Act) and the rules made thereunder are challenged on the ground of violation of Article 14 and Article 19(1)(g) of the, Constitution. The petitioners in all the above cases are traders or commission agents dealing in agricultural produce. The following submissions are made on behalf of the petitioners (1) The constitution of the Market Committee under section 13 of the Act is highly prejudicial to their interests and of the traders in general since, it will have a perpetual majority of producers. (2) To entrustment of licensing to such a Market Committee instead of to any impartial authority is unfair and an un . reasonable restriction on the right to trade. (3) The Act in the matter of grant of licences gives no guidance at all and even under rule 70(4) two vague criteria have been laid down in the matter of issue of licences under the Act. (4) The petitioners are required to provide a storage space to the producers for their agricultural produce going to the market and this obligation is also an unreasonable res triction on the fundamental right of the petitioners. 379 (5) Rule 76 (1) is invalid and ultra vires section 40 of the Act and has also placed unreasonable restrictions on the right to carry on trade or business. Before we deal with these submissions, we may turn out attention to the Act. As the preamble shows the Act has to provide for the regulation of sale and purchase of agricultural produce and fox the establishment, superintendence, and control of markets therefore in Uttar Pradesh. The statement of object and reasons gives a clear picture of the evils sought to be, remedied by this legislation and a portion therefrom may be extracted below : "The present chaotic state of affairs as, obtaining in agricultural produce markets is an acknowledged fact. There are. ,innumerable charges,, levies. and exactions which the agricultural producer is required to pay without having any say in the proper utilisation of the amount so paid by him. In matters of dispute, between the seller and the buyer, the former is generally put at a disadvantage; by being given arbitrary awards. The producer is also denied a large pa rt of his produce by manipulation and defective use of weights and scales in the market. The Government of India and the various committees and commissions appointed to study the condition of agricultural markets in the country have also been inviting the attention of the State Government from time to time towards improving the conditions of these markets . The Planning Commission stressed long ago that legislation in respect of regulation of markets should be, enacted and enforced by 1955 56". It is also mentioned that legislation in the State was first proposed in 1938 but lapsed. It also appears that most of the other states have already passed legislation in this respect. It is, therefore, clear that the principal object of this Act is to come in aid of the producers who are generally ill organised and are by far and large the exploited party in the bargain between unequals. Section 2 contains the definitions. By section 2(a) " 'agricultural produce ' means such items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture, animal husbandry or forest as are specified in the schedule, and includes admixture of 2 or more of such items, and also includes any such item in processed form, and further includes gur, rab, shakkar, khandsari and jaggery". By section 2 (f) " 'Committee ' means a Committee constituted under this Act". By section 2(k) " 'Market Area ' means an area notified as such under section 6 or as modified under section 8". By section 2(p) " 'producer ' means a person who, whether by himself or through hired labour, produces, rears or catches, any agricultural produce, not being a producer who also works as a trader, broker or Dalal, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business, of storage of agricultural produce". We are not concerned with the pro viso attached thereto. By section 2(y) " 'trader ' means a person who in the ordinary course of business is engaged in buying or selling agricultural produce as a principal or as a duly authorised agent of one or more 380 principals and includes a person, engaged in processing of agricultural produce". After notification by the State Government of its intention to declare a particular area as a Market Area under section 5 and after inviting objections and consideration of the same, the State Government under section 6 declares the whole or any specified portion of the area mentioned in the notification to be the Market Area in respect of such agricultural produce as may be specified. Similarly under section 7, the Principal Market Yard and Sub Market Yards are declared. Section 9(2) which is material for our purpose, may be quoted: "No person shall, in a Principal Market Yard or any Sub Market Yard, carry on business or work as a trader, broker, commission agent, warehouse man, weighman, palledar or in such other capacity as may be prescribed in respect of any specified agricultural produce except under and in accordance with the conditions of a licence obtained therefore from the Committee concerned". The petitioners make a great grievance of this licensing provision by the Market Committee called the Mandi Samiti of the Market Area. Section 13 provides for constitution of the Market Committee and provides for representation from different sources as detailed in (i) to (xi) thereunder. The learned counsel draws our attention to clauses, (vii) and (vii a) of section 13(1) whereby ten representatives of the producers are included in the Committee. It is pointed out by the learned Solicitor General and not contradicted by Mr. Sen that ' the Committee under section 13 consists of 23 members out of which ten are from the producers. Section 16 provides for functions and duties of the Committee and, inter alia, under section 2(i) thereof "a Committee shall ensure fair dealings between the producers and persons engaged in the sale or purchase of specified agricultural produce. " Under section 17, "A Committee shall, for the purposes of this Act, have the powers to (i) issue or renew licences under this Act on such terms and conditions and subject to such restrictions as may be prescribed, or, after recording reasons therefore, refuse to issue or renew any such licence; (ii) suspend or cancel licences issued or renewed under this Act". Section 25 provides for appeals against the, orders of the Committee to the Director of Agriculture who is to decide the same in accordance with the rules. Under section 32, the State Government also has powers of revision and may call for the records of the proceedings of the Committee and pass orders modifying, annulling or reversing the same. Section 40 enables the State Government to make rules for carrying out the purposes of this Act. The rules, inter alia, provide for matters relating to the functions, powers and duties of the Committee, licensing fee, or market fee which may be levied and realised by the Committee and their mode of recovery and the terms and conditions for assessment and renewal of licences under this Act [section 40 (2) ]. There is a schedule to the Act 381 which contains the description of the agricultural produce Under eight different heads. Chapter VIII of the rules deals with transaction of business in Market Yards and the opening rule 70 provides for licensing by the Market Committees. By sub rule(3) "any person desiring to hold licence under sub rule (1) shall make, in Form No. XI or Form No. XII, as the case may be, a written application for a licence to the Market Committee and shall pay the licence fees prescribed under rule 67". Rule 70(4) (i) may now be quoted: "On receipt of such application together with the amount of fee prescribed under rule 67, the Market Committee may issue him the licence applied for,, if (a) it is satisfied that the applicant is solvent; (b) it is satisfied that the applicant is a desirable person to whom a licence may be granted; provided that the provisions of sub clause (a) shall not apply to weighmen, measurers, palledars, truck plyers and Thela plyers". This rule will have to be read with section 17 quoted above. By rule 73, the order of refusal, cancellation or suspension of a licence by, the Committee shall be communicated to the person concerned in the specified manner indicated therein. Rule 76(1) which is impugned may be quoted : "Every consignment of specified agricultural produce brought for sale into the Principal Market Yard or any sub Market Yard shall be sold by open auction: Provided that nothing in this sub rule shall apply to a retail sale as may be specified in the bye laws of the Committee". Some provisions of similar Acts of the States of Madras, Bombay and Gujarat had earlier been the targets of unsuccessful attack in this Court and hence the constitutional challenge in the present applications against the U.P. Act is necessarily on different ground,,. [See M. C. V ' section Arunchala Nadar etc. vs The State of Madras & others;(1) Mohammad Hussain Gulam Mohammad and Another vs The State of Bombay and another;(2) and Jan Mohammed Noor Mohammed Begban vs State of Gujarat and Another(3)]. We may now turn to the Submissions. With regard to the first submission, as earlier noted, the grievance is not factually accurate. Out of 23 members of. the Committee only 10 are from the producers. Therefore, there is no question of a perpetual majority of the producers in the Committee. Besides under section 13(1)(vii), 8 producers are elected. It may be even a legitimate expectation of the legislature that there may be reasonable likelihood that Producers of eight categories of agricultural produce mentioned in the schedule, (1) [1959] (Supp) (1) S.C.R. 92. (2) ; (3) ; 382 may be represented. Under section 13(1)(vii a), which was introduced by an amendment in 1970, two producers belonging to the scheduled castes are to be nominated by the State Government This provision is made in the interest of the People belonging to the scheduled castes who may not be able to. get due representation in the elections. We do not find any unreasonable features in the scheme of representation in the Committee under section 13. This will be clear even from section 14 whereby the first Committee appoints suit able members "to represent different interests referred to in sub section (1) of section 13". The first submission of the petitioners is, therefore, of no avail. We may now take up consideration of the second and the third submissions which may be dealt with together. It is submitted that the licensing of the traders should not be left in the hands of the Market Committee. We find it difficult to appreciate how the performance of this duty by the Committee will at all prejudice the traders. To say the least it is a hypothetical objection in this case, as, we understand, none of the petitioners have been refused a licence. It is true that usually some governmental authority is charged with the duty of granting of licences under various local Acts. That, however, does not prove that the duly cannot be properly and impartially exercised by the Committee representing various interests which are vitally interested in the trade of agricultural produce. Whether in a particular case the action of the Committee is mala fide or otherwise, objectionable, may be a different matter and such a grievance can be properly dealt with. That would, however, not make, the, provision invalid nor can it be said to place an unreasonable restriction on the right of the petitioners to trade. It is further submitted that there is no guidance in the Act in the matter of grant of licence and the relevant rule 70(4)(1) prescribes only two vague criteria in the matter. This submission fails to take note of the fact that the Committee which is entrusted with the duty of granting licences consists of people from different sources vitally interested in the marketing of agricultural produce. The Committee consists also of representatives from local bodies, cooperative marketing societies Central Warehousing Corporation, State Warehousing Corporation, representatives of traders and commission agents, Government officials of whom one shall be a representative of the Agriculture Department and the other of Food and Supplies Department, and so forth. It is, therefore, a fairly well represented Committee which is expected to know the object and purpose of the Act of which it is a creature. One may legitimately expect that the members are well aware of the difficulties of the producers, interests of the traders and the intricacies of the trade. There is sufficient guidance from the preamble and other provisions of the Act with which the members of the Committee owe their duty to be conversant For example under section 16 the Committee is charged with the duty of enforcing the provisions of the Act, the rules and the bye laws. It has to exercise its powers and perform its duties and discharge its functions in accordance with the provisions of the Act and the rules. 38 3 Under sub section (2) of section 16, the Committee shall ensure fair dealings between the producers and the traders besides performing other functions. Form No. XI in which a trader has to submit his application for a licence. also gives various particulars from which the Committee would be able to consider his claim for a licence. It will be ' seen that in this form the, applicant has to undertake to abide by the conditions of the licence and the provisions of the Act and the rules. The condition of the licence which are noted in Form No. XIII would also give an indication of the obligations of the licensee. All these would be known to the Committee. At any rate, with the help of the Government officials in the Committee there is no reason to think that the work of the Committee will not function smoothly and that there will be any reason to apprehend that licences would be refused arbitrarily. Even the scope for such an apprehension is sought to be done away with by providing a provision Provision of appeal against the decision of the Committee and also a further revision to the State Government. There is a further limitation on the power of the Committee by insisting upon recording of reasons while refusing a licence. It is, therefore, clear that a speaking order has to be. passed when refusing a licence and it will have to justify that the licence is refused only on relevant considerations with regard to solvency and fitness in terms of the provisions. of the Act. It is submitted that the choice of the two criteria under rule 70(4) (i) is bad and there is no proper guidance in these criteria which are not capable of objective determination. The two criteria laid down are solvency and desirability. The applicant has to satisfy the Committee that he is solvent as opposed to insolvent that is bankrupt. We are informed that the original Hindi version of the rule which is translated into English gives the equivalents as follows : "It is satisfied that the applicant is not a bankrupt (rindiwali) ". "It is satisfied that the applicant is a proper (upoyukta) person to whom a licence may be granted". Mr. Sen candidly admits that the criterion on the score of "bankruptcy" is well known and cannot be said to be vague or indefinite. Hi, however, submits that the second criterion is not at all precise and definite. Although perhaps a more expressive guidance could have been given, we have already observed that the Act itself provides sufficient guidance to the Committee in the matter of deciding whether a particular applicant is or is not a proper person to hold a licence and we cannot accede to the submission that the two criteria taken with the other guidelines from the provisions of the Act and the rules offer no proper guidance to the Committee in tic matter of grant of licence. The second and the third submissions of the petitioners are, therefore, devoid of substance. With regard to the fourth submission, it is sufficient to point out that under section 16(2)(vii) the Committee has to provide, inter 384 alia, accommodation for storage and such other facilities as may be prescribed. Under rule 52(4) storing of the specified agricultural produce shall be subject to the payment of such storage fee and such other conditions as may be specified in the by laws. That being the position, this may be even an interim measure pending arrangements by.the Committee, for proper storage. Even otherwise the storage by the traders in the Market Yards will be always paid for under rule 52(4). There is, therefore, no substance in the fourth submission of the petitioner. With regard to the last submission regarding invalidity of rule 76(1), we are not satisfied that the same is ultra vires section 40 of the Act. Section 40 empowers the State Government to make rules for carrying out the purposes of the Act. Rule 76(1) is well within the rule making power of the State Government under section 40(2), clause (xxvii). Section 9(2) restricts the right to carry on trade except under and in accordance with a licence. Section 17 provides for issuing or renewal of licences subject to the restrictions under the rules. Section 9(2) and section 17 are not challenged before us. Rule 76(1) prescribes the mode of sale that is to say by open auction under the rule making power under section 40 read with clause (xxvii). The rule is not ultra vires section 40 of the Act. It is said that prohibiting private sales by confining only to sale by open auction puts an unreasonable restriction on the right to trade of the petitioners. If section 9(2) and section 17 are not challenged as invalid, it is not understood how rule 76(1) which is within the rule making power can be said to be unreasonable. In order that the producers obtain the best price for their commodity, sale by open auction is prescribed under rule 76(1) lo fulfil one of the important purposes of the Act. Sale by auction is a well known mode of sale by which the producers, for whose interest this Act has been made, can obtain the best price for their commodities. The definition of sale and purchase to which our attention has been drawn by the petitioners do not run counter to the provisions for auction sale under rule 76. It cannot by any stretch of imagination be held to be an unreasonable mode in the entire scheme of the Act. The legislature is intervening to see that the producers get the maximum pecuniary return possible in their transactions and, as a necessary concomitant, eliminated the mode of private sale by individual negotiations resulting in malpractices. Besides by the proviso to rule 76(1) this restriction is not allowed to operate in the case of retail sales. There is, therefore, no substance in the submission that rule 76(1) violates the fundamental right of the petitioners under Article 19 (1) (g) of the Constitution. Mr. Sen particularly drew our attention to two decisions of this Court. The first is given in Lala Hari Chand Sarda vs Mizo District Council and Anr. (1) That was a case where the Executive Committee of the Mizo District Council refused to renew the temporary licence issued to the appellant therein who was a non tribal trader under section 3 of the Lushai Hills District (Trading by non Tribals) Regulation, 1953. This Court by majority struck down section 3 as (1) ; 385 violative of Article 19(1) (g) of the Constitution. This decision is clearly distinguishable from the present case. In that case there was no right of appeal to any superior authority against a refusal to grant or renew a ]licence and the non tribal trader had no remedy whatsoever against such an order. This Court also observed in that case that "a perusal of the Regulation shows that it nowhere provides any principle or standard on which the Executive Committee has to act in granting or refusing to grant the licence" (emphasis added). The second decision, is in Harakchand Ratanchana Benthia and Ors. etc. vs Union of India and Ors.(1) This was a case under the Gold (Control) Act and Mr. Sen drew our attention to the expression 'suitability of the applicant" in section 27(6)(e) of the Gold (Control) Act which was held to provide no objective standard or norm and as such was held to be constitutionally invalid. This Court while dealing with the objection to section 27 of the Gold (Control) Act which relates to licensing of dealers held as follows : "Section 27(6)(a) states that in the matter of issue or renewal of licences the Administrator shall have regard to the number of dealers existing in the region in which the applicant intends to carry on business as a dealer, But the word 'region is nowhere defined in the Act. Similarly section 27(6)(b) requires the Administrator to have due regard to the anticipated demand, as estimated by him for ornaments in that region, but the expression anticipated demand ' is vague and incapable of objective assessment and is bound to lead to a great deal of uncertainty. In the same way 'the expression 'Suitability of the applicant in section 27(6 ) (e) and 'public interest" in section 27 (6) (g) do not provide any objective standard or norm. Further, the requirement in the section imposing the same conditions for the renewal of the licence as for the initial grant is unreasonable, as it renders the entire future of the business of the dealer uncertain and subject to the caprice and arbitrary will of the administrative 'autho rities. Therefore, clauses (a), (b), (e) and (g) of section 27(6) are constitutionally invalid". In the instant case we have already examined the two criteria laid down under rule 70(4) (i) and have held that they do not place any unreasonable restriction on the right of the applicants to obtain a licence. By rule, 70(4)(i)(b) the Committee has to be satisfied that the applicant is a fit and proper person (upoyukta) to whom a licence may be granted. This is not the same thing as the suitability simpliciter which this Court had to deal with in the Gold (Control) Act case. The decision is, therefore, clearly distinguishable. In the result all the applications fail and are dismissed. The parties will pay and bear their own costs. V.P.S. Petitions dismissed. (1) [1970] (1) S.C.R.479.

The Uttar Pradesh Krishi Utpadhan Mandi Adhiniyam, 1964 as amended by U.P. Acts 25 of 1964 and 10 of 1970. was enacted to provide for the regulation of the sale and purchase of agricultural produce, to protect the producers from exploitation and for the establishment, superintendence and control of markets in U.P. Under section 5, the State Government is empowered to declare a particular area as market area and under section 7. the principal market yard and sub market yards are declared. Section 7(2) provides that no person shall in a principal market yard or sub market yard carry on business as a trader, broker, commission agent etc., in respect of specified agricultural produce except in accordance with the conditions of a licence obtained from he concerned market committee. Sec. 13 provides for the constitution of the market committee and for representation on the committee from different sources. Under section 17. the committee has power to issue, renew, suspend or cancellicences. Section 25 provides for appeals against orders of the committeeto the Director of Agriculture and section 32 for revision by the State Government Under section 16(2)(vii), the committee has to provide accommodation for storage. 40 enables the ' State Government to make rules Rule 70(4)(1)provides that the Committee may issue a licence to an applicant if it is satisfied. (a) that the applicant is solvent and (b) that the applicant is a desirable person. Rule 76(1) provides that every consignment of specified agricultural produce brought for sale into the principal or sub market yard shall be sold by open auction. The petitioners who were traders or commission agents, dealing in agricultural produce, challenged the validity of the Act, and the rules made thereunder on the ground of violation of articles 14 and19(1)(g). They contended that : (1) that constitution of the committee is prejudicial to their interests since. it will have a perpetual majority of producers, (2) the entrustment of licensing to such a committee is an unreasonable restriction on their right to trade, (3) there is no guidance in the matter of grant of licences, the criteria mentioned in r. 70(4) being vague, (4) the requirement to provide storage space for the producers by the petitioners is an unreasonable restriction, and (5) r. 76(1) is ultra vires section 40 and also places an unreasonable restriction on the petitioners. Dismissing the petitions, HELD : (1) Under section 13, the Committee is to consist of 23 members and out of, them only 10 are from the producers. Therefore the submission is factually inaccurate as there is no question of a perpetual majority of producers. [381G H] (2) There are no unreasonable features in the scheme of representation in the committee. Under 8. 13, 8 producers are elected who may represent the 8 categories of agricultural produce mentioned in the schedule and two producers are nominated from the schedule castes by the Government, because, they may not get due representation in the election. The performance of the duty of licensing by such a committee cannot prejudice the petitioners. In fact, none of the petitioners has been refused a licence. Though usually some governments] authority is charged with the duty of granting licences under various Acts, that does not prove that the duty cannot be property and impartially exercised by a Committee representing various interests which are 377 vitally interested in the trade. of agricultural produce. If in a particular case. the action of the Committee is mala fide ' or otherwise objectionable such grievance can be properly dealt with. [381H 382E] (3) It is not correct to say that there is no guidance in the Act in the matter of grant of license and that the two criteria provided by rule 70(4)(1) are vague. [382E F] (a) The Committee which is entrusted with the duty of granting licences consists of people from different sources vitally interested in the marketing of agricultural produce, as well as Government officials. It is a well represented Committee which is expected to know the object and purpose of the Act of ' which it is a creature. There is sufficient guidance from the preamble and other provisions of the Act with which the members of the Committee would be familiar and conversant, for example, section 16 of the Act and the particulars in Forms XI and XIII. for the application of a licence and Conditions of a licence. With the help of Government officials in the committee there is no reason to think that the Committee will not function smoothly or to apprehend that licence would be refused arbitrarily. There is also a limitation on the power of the Committee in that the Act insists that the Committee should record its reasons while refusing a licence. Further, there is provision of appeal against the decision of the Committee and a further revision to the State Government. [382F 383D] (b) One of the two criteria mentioned in r. 70(4)(i). is solvency and the criterion on the score or 'bankruptcy is well known and cannot be said to be vague or indefinite. As regards the second criterion, namely, that the applicant should be a desirable person the Act itself provides sufficient guidance to the Committee in the matter of deciding whether a particular applicant is or is not a proper person to hold the licence. [383F H] (4) The requirement to provide a storage space is only an interim measure pending arrangements by the Committee for proper storage as required by section 16. Under r. 52(4) storing of the specified agricultural produce shall be subject to the payment of such storage fee and other conditions as may be: specified in the bye laws. Since the storage by the traders in the market yards will always be paid for under the rule there is no substance in the contention that the requirement is unreasonable. [384A B] (5)(a Rule 76(1) is not ultra vires section 40 Section 9(2) restricts the right to carry on trade except under and in accordance with the licence_ and section 17 provides for issuing or renewal of licences subject to the restrictions under the rules, and these sections are not challenged. Section 40 empowers the State Government to make rules for carrying out the purposes of the Act, and under section 40(2) (xxvii), r. 76(1) only prescribes open auction as the mode of sale. [384B D] (b) The rule does not violate the fundamental right of the petitioners under article 19(1)(g). [384G] The definitions of sale and purchase in the. Act do not run counter to the provisions relating to auction sale under, the rule and, it Could not be field to be an unreasonable mode considered in the entire scheme of the Act. in order that the producers may obtain the best price for their commodity, sale by open auction is prescribed under the rule to fulfil one of the important purposes of the Act. The legislature is intervening to see that the producers get the maximum pecuniary return possible in the transaction and as a necessary concomitant eliminated the made of private sale by individual negotiation resulting in malpractices. Besides, by the Proviso to the rule the restriction is not allowed to operate in the case of retail sales. [384D G] Lala Hari Chand Sarda vs Mizo District Council and all) . and Harakchand Ratanchand Banthia and ors. vs Union of India and ors. ; , distinguished.

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Civil Appeal No. 1464 of 1971. From the Judgment and order dated 18 3 71 of the Kerala High Court in Writ Appeal No. 126 of 1971. K. R. Sudhakaran and N. Sudhakara and P. K. Pillai for the Appellants. K. T. Harindranath and K. M. K. Nair for Respondent. The Judgment of the Court was delivered by BEG, J. The appellants before us, by certification of the case, had filed a petition to quash revenue recovery proceedings started against them for realisation of the remainder of the amounts due on account of their bids at auction sales of some toddy shops for the period 1st April, 1967, to 31st March, 1969, by the Government of Kerala. The amounts at which the shops were knocked down were: 1. Shop No. 1 = 84,000/ 2. Shop No. 4 = 46,500/ 3. Shop No. 8 = 56,100/ 4. Shop No. 11 = 1,50,000/ . The notified conditions of the auction sales made it incumbent upon the bidder to pay immediately 10% of the amount due and to provide personal security for the rest. There was no assurance or guarantee given there that prohibition will not be removed in future by the Government in any area in the State or about any other matter of future policy of the Government relating to intoxicants. According to notified conditions, the successful bidders had to deposit 30% of the total amount payable on demand by the Assistant Commissioner and also to execute agreements before getting the necessary licences. The petitioners had deposited the necessary amounts on demand. They were also allowed to start the business of running their toddy shops even before the licences were issued in their favour. The petitioners ' case is that, at the time of bidding, there was an understanding that the respondent State will not remove prohibition so that they expected adequate profits. As observed above, there is nothing in the notified conditions to indicate this. It appears that in April, 1967, the respondent State announced removal of prohibition from 1st May, 1967. The appellants allege that they suffered heavy losses due to this policy of the State and were unable to make the remainder of the payments which were sought to be recovered under section 28 of the Abkari Act (hereinafter referred to as `the Act '). It is difficult to see what the removal of prohibition had to do with alleged 782 losses to the appellants. Abandonment of Prohibition either totally or partially, should, ordinarily, not diminish sales of liquor. One should expect such a development to increase sales of liquor. The appellants contend that, as no agreement was executed between them and the Govt. in the manner prescribed by Article 299 of the Constitution, they are not liable to pay the amounts sought to be recovered. This is their main contention. A learned Judge of the Kerala High Court who heard the petition held that the notification in persuance of which the shops in question were auctioned provided that, if the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold. Thus, non execution of the contract due to the unwillingness or inability of a bidder to pay was not a contingency outside the notification for auction the validity of which is not challenged. The notification did not lay down that, in that case, the payment of the remainder will be remitted. On the other hand, the condition was that the whole amount due could, in such an event, be "forfeited". The Kerala High Court held that, despite the absence of a contract executed in accordance with the provisions of Article 299 of the Constitution, the amounts due could be recovered under Section 28 of the Act which reads as follows: "28 Recovery of duties. All duties, taxes, fines and fees payable to the Government direct under any of the foregoing provisions of this Act or of any licence or permit issued under it, and all amounts due to the Government by any grantee of a privilege or by any farmer under this Act or by any person on account of any contract relating to the Abkari Revenue may be recovered from the person primarily liable to pay the same or from his surety (if any) as if they were arrears of Land Revenue, and, in case of default made by a grantee of a privilege or by a farmer the Commissioner may take grant or farm under management at the risk of the defaulter or may declare the grant or farm forfeited, and re sell it at the risk and loss of the defaulter. When a grant or farm is under management under this section, the Commissioner may recover any moneys due to the defaulter by any lessee or assignee as if they were arrears of Land Revenue. " The appellants submit that they had not become "grantee" of any privilege without the execution of contracts complying with the requirements of Article 299 of the Constitution. The learned Judge of the Kerala High Court relied on Madhavan vs Assistant Excise Commissioner, Palghat, affirmed by a Division Bench in Damodaran vs State of Kerala. It appears that, although the Division Bench did not specifically consider whether a bidder at an auction of the kind before us was the "grantee" of a privilege within the meaning of Section 26 of the Act, yet, it held that the liability to satisfy the dues arising out of a bid was enforceable under Section 28 of the Act quite 783 apart from any contractual liability. Reference was also made, in this connection, to the decision of this Court in Union of India vs A. L. Ralia Ram, for contending that the absence of a formal contract is not fatal in all cases so as to make the whole transaction null and void ab initio. Statutory duties and liabilities may be enforced in accordance with statutory provisions. Equitable obligations may also arise and be enforced by decrees of Courts quite apart from the requirements of article 299 of the Constitution. Mulamchand vs State of Madhya Pradesh(2) affords an instance where on a claim for compensation or restitution under Section 70 of the Contract Act, this Court relied upon the principle stated, in Nelson vs Harbolt(3) as follows (at p. 222) : "It is no longer appropriate to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to convass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the Court orders restitution if the justice of the case so requires". In the case before us, we are concerned really with the legality of proceedings under Section 28 quoted above of the Act. It is evident that these proceedings can be taken in respect of "all amounts due to the Government by any grantee of a privilege or by any farmer under this Act or by any person on account of any contract relating to the Abkari Revenue". It is clear that dues may also be "recovered from the person primarily liable to pay the same or from his surety (if any)". It is not a condition precedent to recovery of an amount due and recoverable that it should be due under a formally drawn up and executed contract. Section 18 of the Act shows that the exclusive or other privilege of selling liquor by retail may be granted on payment of rental in in consideration of the grant. The appellants made all the initial payments of rent. We do not think that acquisition of the status of a grantee, for the purposes of Section 18A, need await the actual receipt of a licence. The conditions of the grant are to be laid down by the Government. The amount of rental "may be settled by auction, negotiation or by any other method as may be determined by by the Government, from time to time". The amounts due "may be collected to the exclusion of, or in addition to, the duty or tax leviable under Sections 17 and 18. Section 18A(2) lays down that "no grantee of any privilege made sub section (1) shall exercise the same until he has received a licence in that behalf from the Commissioner". It will be seen that this provision contemplates the statutory status of a "grantee" even before 784 he becomes entitled, as of right, to exercise the privileges of a grantee on the receipt of a licence. What is noticeable is that even before he receives his licence he is described as a "grantee". The successful bidders, in the case before us, had been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of receipt of licences, to exercise the privileges of grantees. They were thus treated as grantees in anticipation of execution of contracts and grants of licences. Grantees under Section 29 of the Act are those who have received the privilege and not necessarily only those who have received the written contracts and licences. The word "grantee" used there seems to us to carry this wider connotation with it. In Madhavan 's case (supra) K. K. Mathew, J., repelled the contention that the execution of an agreement in accordance with the provisions of Article 299 of the Constitution was a condition precedent to the creation of a liability to be proceeded against under Section 28 of the Act for recovery of the balance of the rentals due. He said (at p. 94) : "It was contended on behalf of the petitioners in some of these cases that no agreements were executed by them, and therefore, the Government are not entitled to recover any amount by way of rental. Reliance was placed upon the decisions of the Supreme Court in H. P. Chowdhry vs State of M.P. (AIR and Mulamchand vs State of M.P. (1969(II) S.C.W.R. 397), for the proposition that unless there is an agreement executed in accordance with the provisions of Article 299 of the Constitution, the petitioners in the case where no agreements have been executed, would not be liable to pay rental. The argument was that the liability to pay rental arises only out of the agreement, and if there is no agreement, then there is no liability to be enforced. As I have indicated the liability to pay the rental arises not only by virtue of the agreement but also by the provisions of section 28 of the Act. The decision of the Supreme Court in H. P. Chowdhry vs State of M.P. would make it clear that if there are provisions in the Act, the liability to pay the rental can be enforced. I think that even if no agreement has been executed, there was the liability under section 28 of the Act, and that the liability could be enforced under the provisions of the Revenue Recovery Act. (See Sections 6 and 62 of the T.C.Act)". The appellants became entitled to get licences from the Government which had to perform its duty to execute written agreements and grant licences as soon as the appellants fulfilled required conditions by paying up the remainder of the amounts due. The Government had performed its part of the bargain and even allowed the appellants to start selling liquor. The appellants also became liable and bound to perform their corresponding obligations under the 785 conditions of the auctions imposed in pursuance of statutory provisions. This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity. Consequently, we affirm the view of the Kerala High Court and dismiss this appeal. Parties will bear their own costs throughout. V.P.S. Appeal dismissed.

The appellants bid at auction sales of some toddy shops. The conditions of the sales, notified in pursuance of the statutory provisions, were: (a) It was incumbent upon the bidder to pay immediately 10% of the amount due; (b) The successful bidder had to deposit 30% of the amount payable, on demand by the Assistant Commissioner, and to execute agreements before getting the necessary licences; and (c) If the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold. The appellants deposited the necessary amounts on demand and were allowed to start business even before agreements were executed or licences were issued. But the appellants failed to pay the balance due to the State. The amounts were sought to be recovered under section 28, and the proceedings were challenged, but the High Court held against the appellants. In appeal to this Court, the appellants contended that as no agreement was executed between the appellants and the Government in the manner prescribed by article 299 of the Constitution, the appellants had not become the `grantees ' of any privilege and hence were not liable to pay the amounts sought to be recovered Dismissing the appeal, ^ HELD : The Government had to perform its duty of granting licences as soon as the appellants fulfilled the conditions by paying up the remainder of the amounts due. In the present case, Government had performed its part by allowing the appellants to start selling liquor even before execution of the agreements and the grant of licences. The appellants, therefore, became liable and bound to perform their corresponding obligations. This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity. [784G 785B] (1) It is not a condition precedent to recovery of an amount due and recoverable under the Act that it should be due under a formally drawn up and executed contract. Under the notification, in the event of the non execution of a contract, even if due to the unwillingness or inability of a bidder to pay, the whole amount due could be forfeited. [782C; 783E F] 2(a) The acquisition of the status of a grantee for the purpose of section 18A, does not depend on the actual receipt of a licence. Section 18A(2) lays down that no grantee of any privilege under sub section (I) shall exercise it until the has received a licence. This provision contemplates the statutory status of a `grantee ' even before the successful bidder becomes entitled, as of right, to exercise the privileges of a grantee on receipt of a licence even before he receives his licence he is described as a grantee. [783F G, H 784A] 781 (b) The word `grantee ' used in section 28 carries this wider connotation of persons who have been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of the receipt of licences, to exercise the privileges of grantees, and not necessarily only those who have executed the written contracts and received licences. [784A C] Madhavan vs Assistant Excise Commissioner, Palghat I.L.R. [1969] 2 Kerala 71, approved.

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Appeal No. 219 of 1953. Appeal from the judgment and decree dated June 26, 1952, of the Bombay High Court in Appeal No. 20 of 1952 arising out of the judgment and decree dated December 17, 1951, of the said High Court in its ordinary Original Civil Jurisdiction in Suit No. 1623 of 1948. C. K. Daphtary, Solicitor General of India, M. N. Gharekhan and M. section K. Sastri, for the appellants. H. D. Banaji, D. P. Madon, section N. Andley, Rameshwar Nath and J. B. Dadachanji, for the respondents. January 22. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. This appeal arises out of a suit instituted by the appellants in the High Court of Bombay for damages for conversion estimated at Rs. 4,71,670 15 0. The suit was decreed by Shah J. sitting on the Original Side, but his judgment was reversed on appeal. by Chagla C.J. and Gajendragadkar J. Against this judgment, the plaintiffs have 57 440 preferred the present appeal on a certificate under article 133(1)(a) of the Constitution. Messrs. Maitland Craig Lubricants Ltd. is an American Company engaged in the manufacture and sale of lubricants. It carried on business in India with its head office at Calcutta and a branch office at Bombay. The second plaintiff, H. J. Leach, was employed during the years 1933 to 1935 in the Bombay branch of the said Company. Subsequent thereto, the Company closed its Bombay branch, and eventually wound up its Calcutta office as well, and thereafter its business was taken over firstly by Ewing and Company and then by the defendants. After he left the service of Maitland Craig Lubricants Ltd., Mr. Leach started business as seller of lubricants on his own account and was importing them through the defendants. On June 6, 1941, they entered into an agreement, exhibit A, under which Mr. Leach was given an exclusive right to sell lubricants of the make of Maitland Craig Lubricants Ltd., within the limits of Bombay Presidency, Central Provinces, Rajputana and such parts of Central India and Hyderabad as might be determined by the defendants. The agreement was to continue for a period of five years "unless sooner determined in the manner hereunder provided. " Clause 14 of the agreement runs as follows: "Notwithstanding anything hereinbefore contained this agreement shall be terminable by either of the parties hereto upon giving to the other three calendar months previous notice in writing expiring at any time but without prejudice to the rights and liabilities of the parties respectively which shall have accrued prior to such termination. " Clause 16 provides that the agreement was personal to the selling agent, and that he was not to assign or attempt to assign his rights thereunder without the consent of the defendants in writing first obtained. It is common ground that the dealings between the parties continued on the basis of this agreement during the relevant period. On March 18, 1944, the first plaintiff, which is a Joint Stock Company, was incorporated under the provisions 441 of the Indian Companies Act, and on March 30, 1944, the second plaintiff assigned his business to it. On June 13, 1945, the defendants wrote to the second plaintiff that they were cancelling the agency constituted under the agreement dated June 6, 1941, as he had assigned the same to the first plaintiff without obtaining their consent in writing as provided therein. Before that date, however, the defendants had placed orders for import from America of certain goods which the plaintiffs had required, but these goods were actually received by them after the cancellation of the contract. The plaintiffs called upon them to deliver those goods to them, but they refused to do so. Thereupon, the plaintiffs instituted the present suit for damages for conversion alleging that the goods in question were due to them under Government quotas comprised in Nos. P.L. 1004 to 1007, and that the defendants who had ordered them on their behalf had themselves no title to them. The plaintiffs also averred that in importing those goods the defendants were acting as their agents. The defendants repudiated this claim. They contended that far from they being the agents of the plaintiffs, it was the second plaintiff who was their agent, and that the property in the goods was with the defendants and that the action for damages for conversion was not maintainable. The suit was tried by Shah J. who held that the plaintiffs were not the agents of the defendants, that the goods in question had been imported by the latter on behalf of the former, and that in refusing to deliver the same to them, the defendants were guilty of conversion. He accordingly passed a decree referring the suit to the Commissioner for ascertaining the damages. On appeal, Chagla C.J. and Gajendragadkar J. held that on the terms of the agreement dated June 6, 1941, on which the suit was based, the title to the goods imported by the defendants vested in them, and that it would pass to the plaintiffs only when the defendants endorsed the shipping documents in their favour, and that as that had not been done, the claim for damages on the basis of conversion was misconceived. They accordingly allowed the appeal, and dismissed the suit. 442 Now, the contention of the appellants before us is that on the facts proved, they were entitled to damages on the basis of conversion. There is no dispute as to the position in law. Before the plaintiffs can maintain an action in trover, they must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them. If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants, passed to them in accordance with the provisions of the Sale of Goods Act. If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them could undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price of the goods on behalf of the principal, and had not been reimbursed that amount. This question, however, would not arise on the facts of this case, as the defendants denied the title of the plaintiffs to the goods, and there was no refusal by the latter to pay the price. The main question that arises for determination, therefore, is as to the relationship in which the parties stood with reference to the suit transactions. It is conceded that to start with, it is the agreement, exhibit A, that governs the rights of the parties. It is therefore necessary to examine its terms to ascertain the true relationship of the parties thereunder. It has been already mentioned that under this agreement Mr. Leach was constituted the selling agent of the defendants in certain areas specified therein. Under exhibit A, the second plaintiff was not to sell the goods below a certain price, and they were also to be sold with the mark, Mait land Craig Lubricants Ltd. The course of business was that the second plaintiff used to intimate to the defendants his requirements. They would then import those goods in their own names from America under c.i.f. contracts. After importing them, they would fix their own price for those goods and 443 endorse the shipping documents in favour of the second plaintiff, who would be entitled to clear them at the harbour on payment of 80 per cent. of the price, the balance of 20 per cent. being payable on the delivery of the goods by him to his purchasers. The sales to be effected by the second plaintiff within the area to his own customers were matters which concerned only him and his purchasers. The defendants had nothing to do with them. Under cl. 6, the second plaintiff had to "keep the value of his stocks at all times fully insured against fire risk. " Clause 13 is as follows: " The relationship between parties hereto shall be that of principal and principal only and the selling agent shall have no authority whatsoever except such as may be conferred upon him in writing by the firm to transact any business in the name of the firm or to bind the firm by any contract, agreement or undertaking with or to any third party." In contrast with these terms, there is cl. 4, which provides that the defendants would themselves supply to the Indian Stores Department all their requirements of lubricants within the territory allotted to the second plaintiff, who was to act as their agent in clearing the goods and delivering them to the authorities. And for this, the second plaintiff was to be paid a commission. It is clear that the agreement read as a whole is a composite one consisting of two distinct matters. So far as cl. 4 is concerned, the second plaintiff was merely an agent of the defendants. As regards the other clauses, the true relationship is, as stated in cl. 13, that the second plaintiff was purchaser of the goods from the defendants, and the conditions relating to the minimum price at which they could be sold and the marking of the goods with the name of Maitland Craig Lubricants Ltd. were only intended to protect their trade interests but that once the shipping document were endorsed by the defendants to the second plaintiff, he became the owner of those goods. The object of the insurance clause was obviously to safeguard the interests of the defendants with reference to the balance price payable by the second plaintiff. In this case, we 444 are not concerned with any goods consigned by the defendants for supply to the Government under cl. 4 but with goods which were imported by them for meeting the requirements of the plaintiffs. The relationship of the parties with reference to those goods, if it is governed by this agreement, is undoubtedly that neither party is agent of the other, and that the defendants are the sellers and the plaintiffs are the purchasers. If so, the title to the goods would pass to the plaintiffs only when the defendants appropriated them to the contract, as for example, by endorsing the shipping documents, and as that had not been done, the claim for damages on the ground of conversion would be misconceived. The learned Solicitor General who appeared for the appellants, did not dispute that this was the position under exhibit A. But he contended that the relationship of seller and purchaser created by the agreement became modified when the Government introduced the licence system. That was introduced in August ,September, 1941, while the war was on, with a view to regulate and control imports. The system adopted was that every importer was required to give a statement as to they extent of his import business during the preceding years, and on the basis of that statement, a licence was given to him to import up to a limit. On September 26, 1941, the second plaintiff applied to the Controller for a licence to import lubricants stating that he had been doing that business for seven years and giving particulars as to the volume of his business. Sometime in November, a licence was granted to him by the Government. The defendants also applied for a licence to import lubricants based on the volume of their business and obtained it. That licence did not include the quantity which they sold to the second plaintiff, and thus the two licences were mutually exclusive. Mr. Leach would have been himself entitled under the licence to import goods directly from America, but he chose to import them through the defendants as before, because under the terms of the agreement, exhibit A, he would have to pay only 80 per cent. of the price when clearing the goods. There was, 445 however, this change in the character of the transaction, that whereas before the licence system the defendants were the purchasers from American Companies under c.i.f. contracts and they then sold the goods to the second plaintiff on a price fixed by them, under the licence system the price payable to them was only what they themselves had to pay to the American sellers with an addition by way of commission on the transaction. Now, the argument of the appellants is that as they were the persons entitled to import the goods under the licence granted to them, in importing them on their requisition the defendants must be held to have acted for them, and that the relationship between them was no longer one of seller and purchaser under exhibit A but of agent and principal. To this, the answer of Mr. Banaji, learned counsel for the respondents, was twofold. He contended firstly that in applying for and obtaining the licence in his own name, the second plaintiff was merely acting as the agent of the defendants, and secondly that the present contention was not raised in the plaint and was, therefore, not open to the appellants. On the first contention he referred us to the correspondence which passed between the parties at the relevant period. On September 5, 1941, the defendants wrote to the second plaintiff to send particulars of certain shipments consigned to him so that they could include them in their application for licence, and on September 11, 1941, they further wrote to him that those goods were not to be included in hi,, application for licence. But the second plaintiff was obviously not agreeable to it, and actually included those very shipments in his application for licence dated September 26, 1941. The defendants did not pursue the matter further, and wrote to the second plaintiff or December 10, 1941, to intimate to them the number and date of his import licence and continued to import goods for him on the basis of that licence. Counsel for respondents relied on a letter dated December 11, 1941 in which the defendants advised the second plaintiff to join a group of oil merchants, which was to be formed at Bombay, but that was obviously by way of adviced 446 to him as a customer. This evidence is too inconclusive and too slender to support the contention that the second plaintiff obtained the licence as the agent of the defendants. On the other hand, if the true position of the second plaintiff under exhibit A was that he was a. purchaser of goods, then the sales by him of those goods were as owner and the licence issued to him on the basis of those sales must have been given to him in his own right and not as agent of the defendants. This wag the finding of Shah J. and that has not been reversed on appeal, and we are in agreement with it. It is next contended that the entire plaint is framed on the footing that the rights of the parties are governed by exhibit A, that there is no averment therein that that agreement had been cancelled or modified, and that a new agreement had been substituted after the licence system was introduced, that the evidence of Mr. Leach in the box was also that exhibit A was in force throughout the period, and that therefore it was not open to the appellants now to contend that the rela tionship of seller and purchaser under exhibit A had been altered into one of agent and principal. It is true that the plaint proceeds on the basis that exhibit A is in force, and there is no allegation that it had been modified. But exhibit A had not been wholly abandoned. It was still in force governing the relationship of the parties in respect of various matters such as delivery of goods on payment of 80 per cent. of the price. The plaint does refer to the introduction of the licence system, and the defendants clearly knew as much of the true position thereunder as the plaintiffs, and there could be no question 's surprise. Under the circumstances, if the rights of the parties had to be determined on the basis of the licence system, we would have hesitated to non suit the appellants merely on the ground that the effect of that system had not been expressly stated in the plaint. But then, the licence system itself came to an end in March April, 1942, and was replaced by what is known as " Lease and Lend " scheme. It was under this scheme that the goods which form the subjectmatter of this litigation were imported, and we have therefore to examine what the rights of the parties 447 are with reference to the incidents of that scheme taken along with exhibit A, which is admitted by the appellants to have been in force. This scheme was introduced by the Government of India as a war measure to facilitate the import of certain essential goods and to conserve them for the effective prosecution of the war. Oil and lubricants were among the goods which were controlled under this scheme. Under it, the Government prohibited the direct import of oil and lubricants from America through private agencies, whether individuals, firms or companies and took upon itself to import the required quantity. An association of importers and dealers in Calcutta called the Central Lubricants Advisory Committee (C.L.A.C.) was formed, and importers were to write to the Committee what quantity they required to be imported on their behalf. This Committee was a private body, and served as a liaison between the importers and the Government. A similar Committee was formed at Bombay called the Bombay Lubricants Advisory Committee (B.L.A.C.). The procedure adopted in the import of goods was this: the importers were to state their requirements to the Committee which sent the same to the Government. Then on intimation given by the Government authorities, the dealers would have to make deposits on account of the price to be paid for the goods. The Government had a purchasing agent in America and he would be required by them to purchase the requisite goods and to arrange to get them transhipped to the destinations in India mentioned by the several dealers. The shipping documents would be taken in the name of the Government and on payment of the bills endorsed over to the importer for clearance at the harbour. The features of the system to be noticed are that it was the Government who was the importer of the goods and the dealers became entitled to the goods only on the shipping documents being endorsed to them by the Government. Now, so far as the plaintiffs are concerned, the facts are that they made no deposits with the Government, 58 448 and their names were not in the list of traders for whom the Government imported the goods. They had direct dealings only with the defendants and sent their requirements to them. The defendants would in their application to the Government include what the plaintiffs required as well as what they themselves required and make the necessary deposits for all the goods. But all that would stand only in their name. Though it would be possible to ascertain by reference to the correspondence between the parties which of the orders placed by the defendants with the Government related to the requirements of the plaintiffs, so far as the Government itself was concerned it knew only of the defendants as importers, and it was in their name that. it would endorse the shipping documents, and it was only when the defendants in their turn endorsed the same to them that the plaintiffs would get title to the goods, and the evidence of Mr. Leach makes it clear that this had not been done, as regards the shipments with which the suit is con cerned. This is what he says in his deposition. " The goods were shipped all to the order of the Government of India Separate documents were drawn up in respect of the consignments which were to be supplied to each of the trader according to his requirement submitted to Government. The traders who submitted their requirements cleared the goods by paying the amount of the bills. The Government did not make any allocation to me. I depended on the defendants for obtaining my requirements from the Government. I did not make any cash deposit as required of the dealer. 1 made no deposit with the Government in respect of the quantity which I wanted. The entire deposit was made with the Government by the defendants even in respect of my requirements. The defendants endorsed over the documents in my favour for goods which were meant for me. Excepting for the admitted portions the documents for remaining part of PL. 1004 to 1007 were not handed over to me or endorsed in my favour, except to the extent to which the goods were delivered," 449 The evidence of Sir John Burder for the defendants was "the shipping documents were received in the name of the defendants ". It is thus clearly established that with reference to the goods comprised in P.L. 1004 to 1007, which formed the subject matter of the suit, the shipping documents had not been made out in the name of the plaintiffs, nor had the defendants in whose names they were taken, endorsed the same to them. That being so, unless the plaintiffs established that the defendants were importing the goods as their agents, they would not have title to them, and the claim for damages on the basis of conversion must fail. We should mention that the appellants relied on some of the letters written by the defendants as showing that they recognised the plaintiffs as having the title to the goods. Thus, on August 12, 1944, the defendants wrote to the plaintiffs " We confirm that the consignment is for you ", and on March 24, 1945, they wrote, " We enclose herewith a statement showing quantities and grades that have been ordered by Government on your account against order P.L. 1006/10" But these statements are quite consistent with the position of the defendants as sellers who had ordered the goods on the requisition of the plaintiffs, and do not import that title thereto had passed to them, which could be only after the goods came into existence and were appropriated. That did not happen in this case, and the shipping documents continued in the name of the defendants. We therefore agree with the learned Judges that on the pleadings and on the evidence the claim for damages on the footing of conversion must fail. That would entail the dismissal of this appeal, but the plaintiffs have applied to this Court for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for non delivery of the goods. The respondents resist the application. They contend that the amendment introduces anew cause of action, that a suit on that cause of action could now be barred by limitation, that the plaintiffs had ample opportunity to amend 450 their plaint but that they failed to do so, and that owing to lapse of time the defendants would be seriously prejudiced if this new claim were allowed to be raised. There is considerable force in the objections. But after giving due weight to them, we are of opinion that this is a fit case in which the amendment ought to be allowed. The plaintiffs do not claim any damages for wrongful termination of the agreement, exhibit A, by the notice dated June 13, 1945. What they claim is only damages for non delivery of goods in respect of orders placed by them and accepted by the defendants prior to the termination of the agreement by that notice. Clause 14 of the agreement expressly reserves that right to the plaintiffs. The suit being founded on exhibit A, a claim based on Cl. 14 thereof cannot be said to be foreign to the scope of the suit. Schedule E to the plaint mentions the several indents in respect of which the defendants had committed default by refusing to deliver the goods, and the damages claimed are also stated therein. The plaintiffs seek by their amendment only to claim damages in respect of those consignments. The prayer in the plaint is itself general and merely claims damages. Thus, all the allegations which are necessary for sustaining a claim for damages for breach of contract are already in the plaint. What is lacking is only the allegation that the plaintiffs are, in the alternative, entitled to claim damages for breach of contract by the defendants in not delivering the goods. It is no doubt, true that courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application. But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice. In Charan Das vs Amir Khan (1) the Privy Council observed: " That there was full power to make the amendment cannot be disputed, and though such a power (1) [1920] 47 I.A. 255. 451 should not as a, rule be exercised where the effect is to take away from a defendants, legal right which has accrued to him by lapse of time, yet there are cases where such considerations are out weighed by the special circumstances of the case. Vide also Kisan Das vs Rachappa In the present case, apart from the contents of the plaint already set out, there is the fact that the defendants cancelled the contract without strictly complying with the terms of cl. 14. The ground on which they repudiated the contract was that the second plaintiff had assigned his interests to the first plaintiff ; but the record shows that subsequent to the assignment the defendants had business transactions with both the plaintiffs and therefore the ground for cancellation appears to have been a mere device to deprive the plaintiffs of the benefits of the orders which they had placed. We are of opinion that the justice of the case requires that the amendment should be granted. The plaintiffs will accordingly be allowed to amend the plaint as follows: " 12(a) In the alternative and without prejudice to the claim on the footing of conversion, the plaintiffs say that by reason of the facts aforesaid, there was a contract between the parties whereby the defendants undertook to supply and deliver to the plaintiffs (or either of them) the goods ordered out by Government on their (the plaintiffs ') account and included in the quotas PL. 1004 PL. The said goods arrived in Bombay, but the defendants failed and neglected to deliver the same though demanded, and in fact repudiated their obligation to deliver. The plaintiffs say that they were always ready and willing to pay for and take delivery of the same. The defendants at all material times well knew that the plaintiffs had purchased the same for resale and for fulfilment of contracts of sale and supply. The plaintiffs claim damages as per particulars. " This appeal must accordingly be allowed, the decree under appeal set aside, and the suit remanded for (1) Bombay 644. 452 rehearing to the trial court. The defendants will file their written statement to the amended claim and the suit will be tried and disposed of in accordance with law. There remains the question of costs. As the plaintiffs are getting an indulgence, they must pay the costs of the defendants both in the suit and in the appeal to the Bombay High Court. So far as costs of this appeal are concerned, as the defendants persisted in their contention that the plaintiffs were only acting as their agents, a contention which, if upheld, would have furnished a conclusive answer to the amended claim as well, we direct the parties to bear their own costs in this Court. Appeal allowed. Case remanded.

The appellants filed a suit for damages for conversion against the respondents on the allegations that the respondents were the agents of the appellants, that the appellants had placed orders for certain goods with the respondents, and that the respondents had actually imported the goods but refused to deliver them to the appellants. The suit was dismissed on the findings that the parties stood in the relationship of seller and purchaser, and not agent and principal and that the title in the goods could only pass to the appellants when the respondents appropriated them to the appellants ' contracts. In appeal before the Supreme Court, the appellants applied for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for nondelivery of the goods. All the allegations necessary for sustaining a claim for damages for breach of contract were already present in the plaint and the only allegation lacking was that the appellants were, in the alternative, entitled to claim damages for breach of contract by the non delivery of the goods. But a fresh suit on the amended claim was barred by limitation on the date of the application. Held, that this was a fit case in which the amendment should be allowed. The fact that a fresh suit on the amended claim was (1) A.I.R. [1954] Raj. 211. 439 barred by limitation is a factor to be taken into consideration in the exercise of the discretion as to whether the amendment should be ordered or not, and does not affect the power of the court to order it, if that is required in the interests of justice. Charan Das vs Amir Khan, L.R. 47 I.A. 225 and Kisan Das vs Rachappa, Bombay 644, followed. To maintain an action in trover the plaintiffs must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them. If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants had passed to them in accordance with the provisions of the Sale of Goods Act. If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them would undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price on behalf of the principals, and had not been reimbursed that amount.

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Civil Appeal Nos. 450O and 4501 of 1984. Appeals by Special leave from the Judgment and order dated the 18th January and 18 January, 1984 of the Punjab and Haryana High Court in Civil Writ Nos. 33OO of 1981 aud 4757 of 1982. H.K. Puri, M.P. Jha and Sanjeev Walia for the Appellants. S.K Bagga for the Respondent. L.N. Sinha, A.K Panda and Ashwani Kumar for the Respon. dent The Judgment of the Court was delivered by CINNABAR REDDY J. The appellants, who are traders engaged in the purchase and sale of agricultural produce, appear to be a determined lot. For over a decade, they or those similarly placed have been litigating and impeding the levy and collection of Market fee by the Market Committees constituted under the Punjab Agricultural Produce Markets Act. Sometimes they have been successful, sometimes they have not. One of the occasions when they appeared to be successful was when this Court in Kewal Krishan Puri vs State 75 Of Punjab(l) declared that the enhancement of the fee from 2% to 3 % was illegal. The court while striking down the enhancement of the fee laid down no new principles but made certain general observations which, we regret to say, have been so misunderstood and misinterpreted as to lead to some confusion and public mischief. The misunderstanding and confusion have also naturally led to more litigation. Fortunately, in Srinivsa General Trader. vs Slate of Andhra Pradesh(2) this Court has removed much of the misunderstanding, cleared many of the cobwebs and retrieved the situation. Before we proceed to consider the question at issue in present case, it will be fair to recall the object and purpose of the Punjab Agricultural Produce Markets Act and similar enactments in force in other States Far back in 1953, Rajamannar, CJ and T.L. Venkatarama Aiyar, J, in Kutti Keya vs The State of Madras(3) considered the provisions of the Madras Commercial Crops Markets Act 1933, one of the fore runner of the Punjab Agricultural Produce Markets Act and other similar enactments elsewhere. The general nature of the legislation was explained by Venkatarama Aiyar, J, as follows: ". the Subject matter of the impugned Act is marketing and legislation on marketing is now a well recognised feature of all commercial countries The need for such a legislation arises whenever societies pass d on from the stage of self supporting economic unit, producing only articles for its own consumption to that of a commercial community producing articles for sale in outside areas for profit. While in the former stage, transactions would be generally settled directly between the seller and the purchaser, the price being paid and delivery of the commodity taken at the time of the deal, the conditions would be different when commercial crops are begun to be raised. The ultimate purchasers of these commodities would generally be persons outside the area of production, a merchant residing in another State and even in a foreign country. "To bring about a deal between the local producers and the outside purchasers, there emerged a class of (1) ; (2) AIR 1983 S.C, 1246. (3) AIR 1954 Mad. 76 middlemen. Even in well organised and economically advanced countries like England, it was found that the agrIculturist producer had not facilities for disposing of the goods to his best advantage (vide the statement of Dr. Addison, Minister for Agriculture, quoted at page 80 of the Indian Central Banking Enquiry Committee Report, Vol. r, Part II). It is these conditions that have led up to the enactment of marketing laws in all countries having a large volume of trade in commercial crops The object of this legislation is to protect the producers of commercial crops from being exploited by middlemen and profiteers and to enable them to secure a fair need for their produce. The need for such legislation is even greater in India as the producers are as a class illiterate and economically dependent and unstable. This question had engaged the attention of several committees which had been constituted to report on various economic matters. Indian Cotton was a commodity greatly in demand in England and other countries and in the Central Provinces and Berar open markets for cotton were established through legislation. In 1919, the Indian Cotton Committee observed in their report that the marketing system afforded great protection to the producers and that special legislation should be undertaken to establish such markets in every cotton growing area. The Royal Commission on Agriculture in India recorded a considerable body of evidence on the state trade in food crops and it showed the need for legislative action for safeguarding the interests of the producers (vide report dated 1928). In 1931 the Indian Central Banking Enquiry Committee considered in Chapter VII of its report the conditions with reference to marketing. It is therein pointed out that the village producer was seldom able to get a proper price because he was chronically indebted to the middlemen who advanced loans on the security of the crops to be grown and were thus in a position to dictate their own terms and that the bargains were seldom fair to the seller. "It was also observed that for want of facilities for ware housing the produce, the grower was not in a position to wait and sell the commodities for proper price (vide 77 pages 78 and 79). In 1933 the Act now under consideration A was passed with the object of providing for "the better regulation of buying and selling of commercial crops". It must be mentioned that at that time the only products which had become commercial crops having an international market were cotton, groundnuts and tobacco; and the definition of commercial crops as enacted originally corn prised only these three crops." . . . . . . . . . . . "Various suggestions were made for improving the market conditions (vide pp 92 and 63). In the report of the Planning Comission published in 1952, Chapter XVII, Vol l, deals with agricultural marketing and after referring to the working of the regulated markets in Bombay, Madras, Hyderabad and Madhya Pradesh, it throws out several suggestions for future improvements. It must be added that there has been legislation on lines similar to those of the Madras Act in several of the States in India. "It will be clear from the above survey of the market ing legislation that its object is to enable producers to get a fair price for their commodities and that it has been generally adopted in all commercial States Such laws have been held in America to be within the Police Power of the State as tending to promote general welfare (Vide 'Parker vs Brown [(1942) 87 Law ED 315 (D).] Under the Indian Constitution, they must be upheld under article 19 (6) as reasonable and enacted in the interests of the general public." The decision of the Madras High Court in Kutti Keva vs The State was affirmed by a Constitution Bench of The Supreme Court in Arunachala Nadar vs State of Madras.(l) Subba Rao, J. referring to the background of the Act, observed: "There is a historical background for this Act. Market ing legislation is now a well settled feature of all commercial countries. The object of such legislation is to protect the producers of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce. In Madras State, as in other (l) AIR l959 SC 30O. 78 parts of the country, various Commissions and Committees have been appointed to investigate the problem, to suggest ways and means of providing a fair deal to the growers of crops particularly commercial crops, and find a market for selling their produce at proper rates. Several Commit tees, in their reports, considered this question and suggested that a satisfactory system of agricultural marketing should be introduced to achieve the object of helping the agriculturists to secure a proper return for the produce grown by them." The learned Judge then referred to the report of the Royal Commission on Agriculture in India, the report of the Expert Committee appointed by the Government of Madras, and proceeded to observe: "With a view to provide satisfactory conditions for the growers of commercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on 25th July, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and for that purpose to establish market and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by exports in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated market by eliminating middlemen and bringing face to face the produces and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens and right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and over reach the scope of the object to achieve which it is enacted." . . . . . . . . . . . . . . . . . . . " . Shortly stated, the Act, Rules and the Bye laws framed thereunder have a long term target of providing a net work of markets where in facilities for correct weighment are ensured, storage accommodation is provided, and equal 79 powers of bargaining;, ensured, so that the growers may t, bring their commercial crops to the market and sell them at reasonable prices 1 11 such markets are. established, the said provisions, by imposing licensing restrictions, enable The buyers and sellers to meet in licensed premises, ensure correct weighment, make available to them reliable market information and provide for them a simple machinery for settlement of disputes. After the markets are built or opened by the marketing committees, within a reasonable radius from the market, as prescribed by the Rules, no licence is issued; thereafter all growers will have to resort to the market for vending their goods. The result of The implementation of the Act would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of commercial crops to secure best prices for their commodities " In Immedisetti Ramkrishnaiah Sons vs State of Andhra Pradesh(l), the nature of the duties of a Market Committee was explained: "Another unfounded assumption of the learned counsel was that the activities of the Market Committee and the facilities provided by it were confined by the Act to the market area only. The establishment, maintenance and improvement of the market is one of the purposes for which the Market Committee Fund might be expended under Sec. I S of the Act. The other Services such as the pro vision and maintenance of standard weights and measures, the collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of noticed agricultural produce, livestock and pro ducts of livestock schemes for the extension or cultural improvement of notified agricultural produce including the grant of financial aid to scheme for such extension on improvement within such area undertaken by other bodies or individuals, propaganda for the improvement of agriculture, livestock and products of livestock and thrift, the promotion of grading services, measures for the preservation of the foodgrains, etc. are not services which are (1) AIR 1976 AP 193. 80 confined to the market area only. They area services which are required to be performed by the Market Committe and which may be rendered throughout the notified market area without being confined to the market. Further, the facilities provided in the market are available for the use of every grower of agricultural produce and owner of live stock within the notified market area. It is too much to expect the Market Committee to provide the same facilities as are available in the market area in every nook and corner of the notified market area. It is up to the growers of agricultural produce and owners of livestock to avail themselves of the facilities afforded in the market. None can complain against the levy of licence fees on the ground that some may not avail themselves of the facilities available in the market. " Immedisetti Ramakrishnayya Sons vs State of Andhra Pradesh (supra) was approved by this Court in Sreenivasa General Traders vs State of A.P.,(1) where it was observed: "It is obviously in the interests of the producers of agricultural produce that they can get the best competitive prices in an open market and that they have not to pay the middlemen. Sale or purchase of agricultural produce in h such a market under the supervision and control of the market committee is likely to be in ready cash and there fore advantageous to the producers and the use of standard weights must eliminate the possibility of his being victimized by malpractices. Supervision of the operations in the notified market area can be more conveniently done if business is carried on in a specified area or areas intended for that purpose. The Act is an integrated one and it regulates the buying and selling of notified agricultural produce, livestock and products of livestock from a centralized place. " . . . . . . . . . . . . . . . . . . . . . . . "The contention that there is no liability cast on the petitioners to pay market fee on transactions of sale and purchase of notified agricultural produce, livestock and (1) ATR.1983 S.C. 1246. 81 product of livestock proceeds on a wrongful assumption that they can still carry on such trade from their premises in the notified market area, but outside the market in that area. In view of the express prohibition contained in subsection (6) of Sec. 7, the petitioners cannot carry on such trade by not resorting to the market proper. " "There is a fallacy underlying the argument that since the services are rendered by market committees Within the market proper, there is no liability to pay a market fee on purchase or sale taking place in the notified market area but outside the market. The contention does not take note of the fact that establishment of a regulated market for the purchase or sale of notified agricultural produce, livestock or products of live stock is itself a service rendered to persons engaged in the business of purchase or sale of such commodities. The duty of a market committee constituted under sub section (1) of sec. 4 of the Act does not end with establishing such number of markets in the notified market area under the first part of sub section (3) but also extends to the providing of such facilities in the market as the Government may from time to time by general or special order specify under the second part of sub section (3). In exercise of their powers under sec. 33 of the Act, the State Government have framed the Andhra Pradesh (Agricultural Produce and Livestock) Markets Rules, 1969. Chapter V relates to 'Regulation of trading '. It would appear that Rules 48 to 53 are the machinery provisions for controlling the trade in notified agricultural produce, livestock and products of livestock in a notified area while Rules 54 to 73 impose restrictions on the carrying on of all such trade in such area. It is clear from the provisions of sec. 15 of the Act that the services to be rendered by the market committee and facilities to be provided are not confined to the market proper but extend throughout the notified area. " The general scheme of the Punjab Agricultural Produce. Markets Act and the Act, as amended and in force in Haryana, 82 are broadly on the same lines as the Madras and the Andhra Pradesh Acts and similar enactments in other States. Though we do not consider it necessary to refer to all the provisions of the Punjab and Haryana Acts, we think it may be appropriate to mention here those provisions of the Act which enumerate some of the duties and powers of the Market Committees constituted under the Acts and the purposes for which the Marketing Development Fund and the Market Committee Fund may be expended. We may mention that while there is to be a State Agricultural Marketing Board for the entire State for performing the functions and duties assigned to the Board by the Act, the State Government may declare specified, notified areas as market areas for each of which there shall be a market committee. The Board is vested with powers of superintendence and control over the committees. Section 13 prescribes the duties and powers of market committees and is in the following terms: "13 Duties and powers of Committee (1) It shall be the duty of a Committee (a) to enforce the provisions of this Act and the rules and bye laws made thereunder in the notified market area and, when so required by the Board , to establish a market therein providing such facilities for persons visiting it in connection with the purchase, sale, storage, weighment and processing of agricultural produce concerned as the Board may from time to time direct; (b) to control and regulate the admission to the market, to determine the conditions for the use of the market and to prosecute or confiscate the agricultural produce belonging to person trading without a valid licence; (c) to bring, prosecute or defend or aid in bringing, prosecuting or defending any suit, action, proceeding, application or arbitration, on behalf of the Committee or otherwise when directed by the Boards. (2) Every person licensed under sec. 10 or sec. 13 and every person exempted under sec. 6 from taking out licence, shall on demand by the Committee or any person 83 authorised by it in this behalf furnish such information and returns, as may be necessary for proper enforcement A of Act or the rules and bye laws made thereunder. (3) Subject to such rules as the State Government may make in this behalf, it shall be the duty of a Committee to issue licences to brokers, weighmen, measurers, surveyors, godown keepers and other functionaries for carrying on their occupation in the notified market area in respect of . agricultural produce and to renew, suspend or cancel such licences. (4) No broker, weighman, measurer, surveyor, godown keeper or other functionary shall, unless duly authorised by licence, carry on his occupation in a notified market area in respect of agricultural produce: Provided that nothing in sub sections (3) and (4) shall apply to a person carrying on the business of warehouse man who is licensed under the Punjab Warehouses Act, l957 (Punjab Act No.2 of 1958)". Section 25 provides for the creation of a Marketing Development Fund out of which the Board has to defray its expenditure. Sections 27 provides for the creation of Market Committee Fund out of which the Committee has to defray its expenditure. The purpose for which the Marketing Development Fund may be expended are specified in sec. 26 as follows: "26 The Marketing Development Fund shall be utilised out of following purposes: (i) Better marketing of agricultural produce; (ii) Marketing of Agricultural produce on co operative lines; (iii) collection and dissemination of market rates and news; (iv) grading and standardisation of agricultural produce: (v) general improvements in the markets or their respective notified; (vi) maintenance of the office of the Board and construction and repair or its office buildings, rest house and staff quarters; 84 (vii) giving aid to financially weak Committees in the shape of loans and grants, (viii) payment of salary, leave allowance, gratuity, corn passionate allowance, compensation for injuries or death resulting from accidents while on duty, medical aid, pension or provident fund to the persons employed by the Board and leave and pension contribution to Government servants on deputation; (ix) travelling and other allowances to the employees of the Board, its members and members of Advisory Committees; (x) propaganda, demonstration and publicity in favour of agricultural improvements; (xi) production and betterment of agricultural produce; (xii) meeting any legal expenses incurred by the Board; (xiii) imparting education in marketing or agriculture; (xiv) construction of godowns; (xv) loans and advances to the employees; (xvi) expenses incurred in auditing the accounts of the Board; (xvii) with the previous section of the State Government, any other purpose which is calculated to promote the general interests of the Board and the Committees (or the national or public interests); Provided that if the Board decides to give aid of more than five thousand rupees to a financially weak Committee under clause (vii), the prior approval of the State Government to such payment shall be obtained. The purposes for which the Market Committees Fund may be expended are specified in sec. 28 as follows: "28 Purposes for which the Market Committee Funds may be expended. Subject to the provisions of section 27 the Market Committee Funds shall be expended for the following purposes: (1) AIR 1983 SC 1246 85 (i) acquisition of sites for the market; A (ii) maintenance and improvement of the market; (iii) construction and repair of buildings which are necessary for the purposes of the market and for the health, convenience and safety of the persons using it; (iv) provision and maintenance of the standard weights and measures: (v) pay, leave, allowances, gratuities, compassionate allowances and contributions towards leave allowances, compensation for injuries and death resulting from accidents while on duty, medical aid, pension or provident fund of the persons employed by the Committee; (vi) payment of interest on loans that may be raised for purposes of the market and the provisions of a sinking fund in respect of such loans; (vii) collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of the agricultural produce concerned; (viii) providing comforts and facilities, such as the shelter, shade, parking accommodation and water for the per sons, draught cattle vehicles and pack animals link roads I coming or being brought to the market or on construction and repair of approach roads, culverts, bridges and other such purposes: (ix) expenses incurred in the maintenance of the offices and in auditing the accounts of the Committees, (x) propaganda in favour of agricultural improvements and thrift: (xi) production and betterment of agricultural produce; (xii) meeting any legal expenses incurred by the Committee, (xiii) imparting education in marketing or agriculture; (xiv) payments of travelling and other allowances to the members and employees of the committee, as prescribed; 86 (xv) loans and advances to the employees; (xvi) expenses of and incidental to elections, and (xvii) with the previous sanction of the Board, any other purpose which is calculated to promote the general interest of the Committee or the notified market area (supra) (or with the previous sanction of the State Government, any purpose calculated to promote the national or public interest)". It will be seen that sections 26 and 28 cover a vast range of topics and are so wide as to take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the better regulation of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds maybe expended may on a first impression appear to be municipal or govemental functions, but a closer scrutiny will reveal that they are clearly associated with providing better facilities for marketing of agricultural produce. In fact, some of them may be municipal or governmental functions, but may yet be purpose for which the funds of the marketing board and marketing committees may be usefully, lawfully and perhaps necessarily expended. For example, it is of fundamental importance that there should be a network of roadways if effective aid is to be given to farmers to transport and market their produce. Section 23 of the Act enables the Committee, subject to such rules as may be made by the State Government in that behalf, to levy on ad volorem basis, fee on the agricultural produce bought or sold by a licensee in the notified market area at a rate not exceeding the rate mentioned in sec. 23 from time to time for every one hundred rupees. The fee which was originally 50 paise per 100 was raised to Re. l per 100 in 1969, thereafter to Rs. 1.50 in 1973 and to Rs. 2.25 in 1974. Later the fee was raised to Rs. 3 per 100. It was this enhancement of fee to Rs. 3 per 100 that was challenged by several dealers from Punjab and Haryana in Kewal Krishan vs State of Punjab (Supra). A Constitution Bench of this Court, after referring to the principles laid down in the leading cases of Shirur Malt,(1) Hingir Rampur Coal Co. Ltd. vs State of Orissa,(2) Corporation of Calcutta vs Liberties Cinema etc. thought that in all the (1) (2) 119621 2 SCR 537 87 circumstances of the case, an increase of the license fee beyond Rs 2 A per 100 was not justified. The court noticed that each of the market Committees had huge surpluses and had made large donations to educational institutions and expended funds for other purposes wholly unconnected with the purpose stipulated by the Act. It appeared that the increase from Rs. Z to Rs. 3 in the year 1978 was made largely to compensate the market committees for having contributed the huge sum of Rs. One crore to the Medical College, Faridkot. Having regard to the huge surpluses and unanthorised items of expenditures, the court came to the conclusion, on the facts of the case, that the increase of fee above Rs. 2 per 100 was not justified. In the course of the discussion, Untwalia, J. who spoke for the Court made certain observations which when turn out of context appear to give rise to some misunderstanding. For example, at page 1016 of AIR, he said: . 'But generally and broadly speaking, it must be shown with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the amount of the fee realised is spent for the special benefit of its payers". This sentence should not be read in isolation. It must be read in the context of the facts of the case. In fact, in the very sentence, preceding the one quoted, it was said: "It may be so intimately connected or interwoven with the services rendered to others that it may not be possible to do a complete dichotomy and analysis as to what amount of special service was rendered to the payers of the fee and what proportion went to others". That was why Sen J. in Sreenivasa General Traders vs State of Andhra Pradesh (Supra) took immense pains to explain the observations of Untwalia J. and place them in their proper setting. He observed, very rightly indeed, G "In the ultimate analysis, the Court held in Kewal Krishan Puri 's case, supra that so long as the concept of fee remains distinct and limited in contrast to tax, such expenditure of the amounts recovered by the levy of a market fee cannot be countenanced in law. A case is an authority H 88 only for what it actually decides and not for what may logically follow from it. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be founded there are not intended to be expositions of the whole law but governed or qualified by the particular facts of the case in which such expressions are to be found. It would appear that there are certain observations to be found in the judgment in Kewat Krishan Puri 's case, supra. which were really not necessary for purposes of the decision and go beyond the occasion and therefore they have no binding authority though they may have merely persuasive value. The observation made therein seeking to quantify the extent of correlation between the amount of fee collected and the cost of rendition of service, namely: "At least a good and substantial portion of the amount collected on account of fees, may be in the neighborhood of two thirds or three fourths must be shown with reason able certainty as being spent for rendering services in the market to the payer of fee". appears to be an obiter". obviously Untwalia, J. did not purport to lay down any new principles and could not have intended to depart from the series of earlier case of this Court. For instance, in H. H. Sudhundra Thirtha Swamiar vs Commissioner(l) the Court had said, ". nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to individual who obtains the benefit of the service. If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax. but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence, or because of compulsion in the collection thereof, or because some of the contributories do not obtain the same degree of service as others may". (1) [1963] Supp 2 SCR 302. 89 In Hingir Rampur Coal Co. Ltd. vs State of orissa (Supra) the A Court had said,: "If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business, the cess is distinguishable from a tax and is described as a fee". . . . . . . . . "It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a while may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case, it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy, Again in H.H. Shri Swamiji vs Commissioner, Hindu Religious and Charitable Endowments Department (1) Chandracud C.J. said: "For the purpose of finding whether there is a correlationship between the services rendered to the fee payers and the fees charged to them, it is necessary to Know the cost incurred for orgainsing and rendering the services. But matters involving consideration of such a correlation ship are not required to be proved by a mathematical formula. What has to be seen is whether there is a fair correspondence between the fee charged and the cost of (1) ; 90 services rendered to the fee payers as a class. The further and better particulars asked for by the appellants under order 6, Rule S of the Civil Procedure Code, would have driven the Court, had the particulars been supplied, to a laborious and fruitless inquiry into minute details of the Commissioner 's departmental budget. A vivisection of the amounts spent by the Commissioner 's establishment at different places and for various purposes and the ad hoc allocation by the Court of different amounts to different heads would at best have been speculative. It would have been no more possible for the High Court if the information were before us than it would be possible for us if the information were before us, to find out what part of the expenses incurred by the Commissioners establishment at various places and what part of the salary of his staff at those places should be allocated to the functions discharged by the establishment in collection with the services rendered to the appellants. We do not therefore think that any substantial prejudice has been caused to the appellants by reasons of the non supply of the information sought by them. " On a consideration of these cases Sen J. concluded as follows in Sreenivasa General Traders vs State of Andhra Pradesh (Supra): "The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public interest In determining whether a levy is a fee,the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be "by and large" 91 a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered A expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a "reasonable relationship" between the levy of the fee and the services rendered. " Referring to the catena of these cases it was observed by this Court in Municipal Corporation Delhi vs Mohd. Yasin (1): "What do we learn from these precedents ? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hallmark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with primary motive of regulation in the public interest. Nor is the court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too, meticulously the cost of his service reinduced etc. not against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo the strict sense is not the one and only true index of a fee; nor is it necessarily absent in tax. " Earlier on a question of interpretation it was pointed out: " A word on interpretation. Vicissitudes of time and necessitudes of history contribute to changes of philosophical attitudes, concepts, ideas and ideals and, with them, the meanings of words and phrases and the language itself. The philosophy and the language of the law are no excep (1) ; H 92 tions. Words and phrases take colour and character from the context and the times and speak differently in different contexts and times. And, it is worthwhile remembering that words and phrases have not only a meaning but also a content, a living content which breathes, and so, expands and contracts. This is particularly so where the words and phrases properly belong to other disciplines. 'Tax ' and 'fee ' are such words. 'they properly belong to the world of Public Finance but since the Constitution and the laws are also concerned with Public Finance, these words have often been adjudicated upon in an effort to discover content. " In Sreenivasa General Traders vs State of Andhra Pradesh (supra), Sen, J. had also pointed out that there was no generic difference between a tax and a fee, that both were compulsory exactions of money by public authorities and that a levy in the nature of a fee did not cease to be of that character merely because there was an element of compulsion or coerciveness present in it nor was it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual, who obtains the benefit of the service. He also drew attention to the increasing realization that the element of quid pro quo in the strict sense was not always sine quo non for fee. Nor was the element of quid pro quo necessarily absent in every tax. He further pointed out that an insistence upon a good and substantial portion of an amount collected on account of fee, say in the neighbourhood of two thirds or three forths, being shown with reasonable certainty as having been spent for rendering services in the market to the payer of fee, could not be a rule of universal application, and that it was a rule which had necessarily to be confined to the special facts of Kewal Krishan Puri 's case. Otherwise, it would affect the validity of marketing legislations undertaken throughout the country during the past half a century. We agree with the view of Sen, J. that the observations extracted by him from Kewol Krishan Puri 's case were not really necessary for that case and we also agree with the clarification of the observation made by Sen, J. There is one other significant sentence in Sreenivasa General Traders vs State of A.P. (Supra) with which we must 93 express our agreement. It was said, . with utmost respect, these observations of the learned judge are not to be read as Euclid 's A theorems, nor as provisions of the statute. These observations must be read in the context in which they appear. " We consider it proper to say, as we have already said in other cases, that judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. vs Horton (1) Lord Mac Doormat observed, "The matter cannot, of course, resettled merely by treating the ip sesame verba of Willes, J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge. " D In Home office vs Dorset Yacht Co.(2) Lord Reid said, "Lord Atkin 's speech. is not to be treated as if it was a statutory definition. It will require qualification in new circumstances. " Megarry, J. in 1971(1) W.L.R. 1062 observed, "one must not, of course, construe even a reserved judgment of even Russell L. J. as if it were an Act of Parliament. And, in Herington vs British Railways Board. "(2) Lord Morris said: "There is always peril in treating the words of a speech or judgment as though they are words in a legislative P enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. There are a few other observations in Rewal Krishan Puri 's case to which apply with the same force all that we have said above. It is needless to repeat the of quoted truism of Lord Halsbury that (1) at 761 (2) ; (3) [19721 2 W.L.R. 537 H 94 a case is only an authority for what it actually decides and not for what may seem to follow logically from it. We have said so much about Kewal Krishan Puri 's case because the learned counsel placed implicit reliance upon it though as we shall presently show, we do not see how a mere declaration that the levy and collection of fee in excess of Rs.2 per hundred automatically vest in the dealer the right to get at the excess amount when in fact he did not bear the burden of it and when the moral and equitable owner of it was the consumer public to whom the burden had been passed on. Soon after judgment was pronounced in Kewal Krishan 's case, the question arose as to what was to be done with the fee in excess of Rs.2 per 100 collected by various market committees. Were the Market Committees to be permitted to retain the excess amounts ? Were the excess amounts to be refunded to the traders from whom the amounts had been collected notwithstanding the fact that the traders themselves had already passed on the burden to the next purchasers and consumers ? In other words, were the traders to be allowed to get a refund from the market committees and unjustly enrich themselves ? Were they to be allowed to profiteer by ill gotten gains ? or were the next purchasers or consumers to be traced and the amounts refunded to them, which of course, would well nigh be an impossible task in practice? If it was not possible to trace the individual consumers who had borne the burden, was it not right that the public authority who levied and collected it should be allowed to hold and retain the amount as if it were in trust for their benefit to be used for the purposes for which the statute . desired the levy of the fee ? Some dealers, however, wanted the monies to be refuned to them and moved this Court. Instead, in the circumstances, the court in Shiv Shankar Dal Mil1s vs State of Haryana. ' '(l) gave the following directions: "I. Subject to the directions given below, all the sums collected by the various market committees who are respondents in these various writ petitions or appeals shall be liable to be paid into the High Court of Punjab and Haryana within one week of intimation by the Registrar of the amount so liable to be paid into the court. A statement of the amounts collected in excess (1) ; 95 (1%) shall be put into this Court by the dealers with copies A to the various market committees aforesaid and furnished to the writ petitioners and appellant with 1O days from today, and if there is any difference between the parties it shall be brought to the notice of this Court in the shape of miscellaneous petitions. On final orders, if any passed thereon by this Court, those amounts, so as determined, shall be treated as final. The Registrar of the High Court shall issue public notice and otherwise give due publicity to the fact that dealers who have not passed on the liabilities to others and others who have contributed to or paid the excess one percent covered by these writ petitions and appeals may make claims for such sums as are due to them from him Within one month or such other period as he may fix. The Registrar shall scrutinise such claims and ascertain the sums so proved. He will thereupon demand of all the market commit tees concerned payment into the Registry of such sums in regard to which proof of claims have been made. On such intimation, the market committees shall pay into the Registry the amounts so demanded by the Registrar within one week of such intimation. The amount shall be paid together with interest at 10 per cent per annum from today up to the date of deposit with the Registrar. It shall be open to the Registrar to make such periodical claims on appropriate proof by claimants on the line stated above. V. He will devise the mechanics of processing the claims as best as he may and, in the event of dispute, may refer to the High Court for its decision of such disputes, if he thinks it necessary. Otherwise, he may dispose of the objections finally. If any further directions regarding the mechanics of the claim of refund or otherwise are found necessary from this Court, the High Court will report about such matter to this Court and orders made thereon will bind the parties. N 96 VII. If parties eligible for repayment of amounts do not claim within one year from today the Registrar will not entertain any further claims. It will be open to such parties to pursue their remedies for recovery for any sums that may be due to therm. Each State Marketing Board will deposit within 1O days from today a sum of Rs. 5.000/ before the Registrar for the preliminary expenses of publicity and other incidentals for the implementation of the directions given above. Any unexpended amount, at the end of one year, will be repaid to the respective State Marketing Board. We further direct that the unclaimed amount, if any, shall be permitted to be used by the respective Marketing Committees for the purpose falling within the statute as interpreted by this Court in the C. A. No. 1083/77". Thereafter, more or less in tune with the directions given by the Court in ShivShankar Dal Mills case, the Punjab Agricultural Produce MarKets Act was amended by the introduction of sec. 23 A providing as follows: "In the Principle Act, after Section 23, the following section p shall be inserted namely: '23 A(1) Notwithstanding anything contained in any judgment decree or order of any Court, it shall be lawful for a Committee to retain the fee levied and collected by it from a licensee in excess of that levied under Section 23, if the burden of such fee was passed on by the licensee to the next purchaser of the Agricultural Produce in respect whereof such fee was levied and collected. (2) No suit or other proceedings shall be instituted, main trained or continued in any court for the refund of whole or any part of the fee retained by a Committee under sub section (1) and no court shall enforce any decree or order directing the refund of whole or any Part of such fee. (3) If any dispute arises as to the refund of any fee retained by a Committee by virtue of sub section (1) and 97 the question is whether the burden of SUCH fee was passed on by the licensee to the next purchaser of the concerned agricultural produce, it shall be presumed unless proved otherwise that such burden was so passed on by the licensee. If any amount of tee retainable by a Committee under sub section (1) has been refunded to any licensee, the same shall be recoverable by the Committee in the manner indicated in sub section (2) of Section 41. The provisions of this section shall not effect the operation of Section 6 of the Punjab Agricultural Produce Markets (Amendment and Validation) Act, 1976". The primary purpose of sec. 23 A is seen on the face of it; it prevents the refund of license fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who went to unjustly enrich themselves by obtaining the refund from the market committee. section 23 A, in truth, recognises the Consumer public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and therefore directs the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the Committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotten gains, the legislature has devised a procedure to undo the wrong item that has been done by the excessive levy by allowing the Committees to retain the amount to be utilised here after for the benefit of the very persons for whose benefit the Marketing legislation was enacted. The constitutional validity of sec. 23A was questioned before the High Court of Punjab and Haryana, but was upheld in Walati Ram Mahabir Prasad vs State of Punjab(l). The correctness of this decision is questioned before us in these two civil appeals. The submission of the learned counsel was that sec. 23 A was (1). AIR 1984 P&H 120 98 a blatant attempt to validate a levy which had been declared invalid by this court and this, according to the learned counsel, was not permissible. We entirely disagree with the submission that sec. 23 A is an attempt at validating on illegal levy. Section 23 A does not permit any recovery of fee @Rs. 3 per 100 in respect of any sales of agricultural produce before or after the coming into force of that provision. There is no attempt at retrospective validation of excess collection nor any attempt at providing for future collection at the rate of Rs. 3 per 100. All that sec. 23 A does is to prevent unjust enrichment by those dealers who have already passed on the burden of the fee to the next purchaser and so reimbursed themselves by also claiming a refund from the Market Committees. We have already explained the true purpose of S 23 A. It gives to the public through the market committee what it has taken from the public and is due to it. It renders into Caesar what is Caesar 'section We do not see any justification for characterising a provision like Sec. 23 A as one aimed at validating an illegal levy. The decision of this Court in A. V. Nachane and ors. vs Union of lndia(1) on which the counsel placed reliance has no application whatsoever. Section 23 A in our view, is consistent with the spirit of Kewal Krishan and the letter of Shiva Shankar Dal Mills. Another submission of the learned counsel was that while the legislature was competent to enact a law for the levy of a fee and matters incidental and ancillary thereto it was incompetent to legislate providing for the retention by any authority of fee illegally levied. For this purpose, reliance was placed by the learned counsel on the decision of this Court in Abdul Quadar & Co. vs Sales tax officer(a). We are afraid that this decision also is of no avail to the appellants. In orient Paper Mills Limited vs State of Orissa(3), a dealer had been assessed to tax and had paid the tax. Later he applied for re fund of tax which was held to be not exigible by this Court in State of Bombay vs United Motors (India) Ltd( ') . When the appeals were pending in this Court, the orissa Legislature intervened in the matter and introduced sec. 14 A in the Principal Act providing that (1) [1982] I SCC 206. (2) ; (3) [19621 1 SCR 549 (4) [19531 SCR 1069. 99 refund could be claimed only by a person from whom the dealer has A actually realised the amount as tax. The vires of the provision was challenged in this Court, but it was upheld on the ground that it came within the incidental power arising out of Entry 54 of List II. The matter was considered to be a question of refund and it was held that it could not be doubted that refund of the tax collected was always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. The Constitution Bench held, "By item 54 of List Il of Schedule 7 to the Constitution, the State Legislature was indisputably competent to legislate with respect to taxes on sale or purchase of papersand paper boards. The power to legislate with respect to a tax comprehends the power to impose the tax, to prescribe machinery for collecting the tax, to designate the offers by whom the liability may be enforced and to prescribe the authority, obligations and indemnity of those officers. The diverse heads of legislation in the Schedule to the Constitution demarcate the periphery of legislative competence and include all matters which are ancillary or subsidiary to the primary head. The Legislature of the orissa State was therefore competent to exercise power in respect of the subsidiary or ancillary matter of granting refund of tax improperly or illegally collected, and the competence of the legislature in this behalf is not canvassed by counsel for the assesses. If competence to legislate for granting refund of sales tax improperly collected be granted, is there any reason to exclude the power to declare that refund shall be claimable only by the person from whom the dealer has actually realised the amounts by way of sales tax or otherwise ? We see none. The question is one of legislative competence and there is no restriction either express or implied imposed upon the power of the Legislature in that behalf. " The present case is a case akin to orient Paper Mills case (supra). Section 23 A, as we have seen, disables a dealer from getting a refund of fee paid by him, the burden of which he has already passed on to the next purchaser. As we said all that sec. 23 A does is to prevent unjust enrichment by means 100 of a refund to which the person claiming it has no moral or equitable entitlement. Abdul Quader & Co. vs Sales Tax officer (supra) on which considerable reliance was placed by the learned counsel for the appellants was an entirely different case. The dealer in that case had collected sales tax from the purchasers in connection with the sales made by him on the basis that the incidence of the tax lay on the sellers and assured the purchaser that after paying the tax to the appellant, there would be no further liability on them. After realizing the tax, however, the appellant did not pay the amount realized to the Government, but kept it in a suspense account. When the Sales Tax Department discovered this and called upon the appellant to pay the amount realized, he refused to do so. On behalf of the Government, reliance was placed upon sec. 11 (2) of the Hyderabad General Sales Tax Act which laid down that any amount collected by way of tax otherwise than in accordance with the provisions of the Act shall be paid over to the Government and in default of such payment, the said amount shall be recovered from such person as if it were arrears of land revenue. The Court held that it was clear that the words "otherwise than in accordance with the provisions of this Act", included amounts which may have been collected by way of tax though not exigible as tax under the Act. The Court then held that the State Legislature was income tent to enact a provision like sec. 11(2) as it enabled the Government to recover an illegal levy and it could not possibly be said to be an incidental or ancillary power capable of exercise in aid of the main topic of legislation, which was, a tax on the sale or purchase of goods. The decision in orient Paper Mills case was distinguished on the ground that it dealt with a case of refund and not the collection of tax, not really due as a tax under the law. In their precise words, they said: "The matter (In orient Paper Mills case) dealt with a question of refund and it cannot be doubted that refund of the tax collected is always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. We are not dealing with a case of refund in the present case. What sec. 11(2) provides is that some thing collected by way of tax, though it is not really due as a tax under the law enacted under Entry 54 of List II must be paid to the Government. This situation in our 101 Opinion is entirely different from the situation in orient , A Paper Mills case. " The decision in orient Paper Mills case was expressly affirmed by a Bench of Seven Judges of this Court in R.S. Joshi vs Ajit Mills(l) and observations to the contrary Ashoka Marketing Company case(2) were expressly dissented from. We are, therefore. satisfied that sec. 23 A of the Punjab Agricultural Produce Markets Act was within the competence of the Punjab Legislature and that it was not also otherwise invalid in any manner. The appeals are, therefore, dismissed with costs. M .L.A. Appeals dismissed.

After the decision of the Supreme Court in Kewal Krishan Puri vs State of Punjab ; holding that the increase of the market fee from Rs. 2 to Rs. 3 perhundred leviable on the agricultural produce brought or sold by a licensee in the notified market area under section 23 of the Punjab Agricultural Produce Markets Act was not justified, some dealers wanted refund of the market fee in excess of Rs. 2/ per hundred already collected by various market committees. But, the Supreme Court held in Shiv Shankar Dal Mills vs State of Haryana ; that dealers who had not passed on the liabilities to others and others who had contributed to or paid the excess one percent were entitled to make claim for such sums as were due to them from the Concerned market committees and directed the market committees to pay the same The Court further directed that the unclaimed amounts, if any, shall be permitted to be used by the respective market committee for the purposes falling within the statute as interpreted by this Court in C.A. 1083 of 1977. Thereafter more or less in tune with these directions given by the Court, the Punjab Agricultural Produce Markets Act was amended by the introduction of section 23 A It provided, inter alia, that not with standing anything contained in any judgment decree or order of any court, it shall be lawful for a committee to retain the fee levied and collected by it from a licensee in excess of that leviable under section 23 if the burden of such fee passed on by the licensee to the next purchaser of the agricultural produce in respect whereof such fee was levied and collected The appellants challenged before the High Court the constitutional validity of section 23 A and the same was upheld. The appellant contended (1) that Section 23 A was a blatant attempt to validate a levy which had been declared invalid by the Supreme Court and this was not permissible (2) that while the legislature was competent to enact a law for the levy of fee and matters incidental and ancillary thereto, it was incompetent to legislate providing for the retention by any authority of fee illegally levied. 73 Dismissing the appeals by the appellants ,. ^ HELD: (1) The general scheme of the Punjab Agriculture Produce Markets Act and the Act, as amended and in force in Haryana, are broadly on the same lines as the Madras and the Andhra Pradesh Acts and similar enactments in other States. Sections 13, 26 and 28 of the Act covers a vast range of topics and are so wide as take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the better regulation of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds may be expended may on a first impression appear to be municipal or governmental functions, but a closer scrutiny will reveal that they are clearly associated with providing better facilities for marketing of agricultural produce. [81H; 86C D] (2) The primary purpose of section 23 A is to prevent the refund of licence fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who want to unjustly enrich themselves by obtaining the refund from the market committee. section 23 A, in truth recognises the consumer.public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and there fore direct the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the Committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotton gains, the legislature has devised a procedure to undo the wrong that has been done by the excessive levy by allowing the Committees to retain the amount to be utilised hereafter for the benefit of the very persons for whose benefit the marketing legislation was enacted. [97D G] (3) There is no substance in the argument that sec. 23 A is an attempt at validating an illegal levy. Section 23 A does not permit any recovery of fee at the rate of Rs 3 per hundred in respect of any sales of agricultural produce before or after the coming into force of that provision. There is no attempt at retrospective validation of excess collection nor any attempt at providing for future collection at the rate of Rs. 3 per hundred. All that section 23 A does is to prevent unjust enrichment by those dealers who have already passed on the burden of the fee to the next purchaser and so reimbursed themselves by also claiming a refund from the market committees. It gives to the public through the market committee what it has taken from the Public and is due to it. There is no justification for characterising a provision like section. 23.A as one aimed at validating an illegal levy. It is consistent with the spirit of Kewal Krishan case and the Letter of Shiv Shankar Dal Mills case. [98B D] Walati Ram Mahabir Prasad vs State of Punjab, AIR 1983 P & 120 & R. section Joshi vs Ajit Mills ; approved. 74 Shiv Shankar Dal Mills vs State of Haryana ; followed. orient Paper Mills Limited vs State of Orissa ; , R.S. Joshi vs Ajit Mills ; relied upon. Kewal Krishan Puri vs State of Punjab ; , Srinivasa General Traders State of Andhra Pradesh AIR 1983 section C. 1246 Kutti Keya vs State of Madras AIR l954 Mad 621 Arunachala Nadar, State of Madras, AIR 1959 SC 30O, Immedisetti Ramkrishnaiah Sons vs State of Andhra Pradesh, AIR 1976 AP 193 Sreenivasa General Taaders vs State A. P. AIR 1983 SC 1246, Shirur Matt ; ; Hingir Rampur Coal Co. Ltd. vs State of Orissa, , Corporation of Calcutta vs Liberties Cinema ; , H. H. Sudhundra Thirtha Swamiar vs Commissioner, [1963] Supp. 2 SCR 302, H. H. Shri Swamiji vs Commisssioner, Hindu Religious and Charitable Fndowments Department [1980] I SCR 368, Municipal Corporation Delhi vs Mohd. Yasin ; , Craving Dock Co. Ltd. vs Horton, at 761, Home office vs Dorset Yacht Co., [1970] 2 All E. R. 294, Herington v British Railways Board [1972] 2 W. L R. 537, & State OF Bombay vs United Motor. (India) Ltd., ; referred to. A. V Nachane and Ors. vs Union of India, and Abdul Quadar & Co. vs Sales tax officer; , ; held inapplicable.

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Appeal No. 647 of 1963. Appeal from the judgment and order dated September 21, 1962, of the Punjab High Court in Civil Writ No. 280 of 1962. the appellant appeared in person. S.V. Gupte, Additional Solicitor General, N.S. Bindra and R.H. Dhebar, for the respondent (Union of India). S.M. Sikri, Advocate General, Punjab, N.S. Bindra and R.H. Dhebar, for the respondent (State of Punjab). November 19, 1963. The Judgment of P.B. Gajendragadkar, K. Subba Rao, K.N. Wanchoo and J.C. Shah, JJ. was delivered by Wanchoo, J. Raghubar Dyal, J. delivered a dissenting Opinion. WANCHOO J. This is an appeal on a certificate granted by the Punjab High Court. The appellant joined the Indian Civil Service in 1939 and was governed in matters relating to discipline by the Civil Services (Classification, Control and Appeal) Rules, (hereinafter referred to as the Appeal Rules) made by 435 the Secretary of State for India in Council. He continued in service till the transfer of power under the Indian Independence Act, 1947. Under s.10 of that Act he continued to serve under the Government of India and was entitled to receive from the Government of India or of the Province which he might from time to time be serving the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed cir cumstances may permit as he was entitled to immediately before the transfer of power, which took place on August 15, 1947. The same guarantee was extended to the appellant and all members of what were the Secretary of State 's Services before August 15, 1947 by article 314 of the Constitution. As the appellant 's case is based on 'that Article we may set it out: "Except as otherwise expressly provided by this Constitution, every person who having been appointed by the Secretary. of State or Secretary of State in Council to a civil. service of the Crown in India continues on and after the commencement of this Constitution to serve under the Government of India or of a State shall be entitled to receive from the Government of India and the Government of the State, which he is from time to time serving, the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before such commencement. " We shall hereafter refer to such a person as a member of the (former) Secretary of State 's Services. It appears that the appellant was in the Indian Civil Service cadre in the State of Madras at the time of transfer of power, though later he was transferred to the Punjab. After the transfer of power the Indian 436 Civil Service as a Secretary of State 's Service came to an end and thereafter a new Service was constituted known as the Indian Administrative Service. Formal legal shape was given to the new Service after the enactment of the All India Services Act, No. LXI of 1951, and the Indian Administrative Service (Recruitment) Rules, 1954, (hereinafter referred to as the Recruitment Rules) were framed under Act LXI of 1951. By r. 3 of these Rules, the Indian Administrative Service was to consist of (a) members of the Indian Civil Service, not permanently allotted to the judiciary; (b) members of the Indian Civil Service per manently allotted to the judiciary who have been holding executive posts from the date of the commencement of the Constitution and who may be declared by the Central Government to be members of the Service in consultation with the State Government; (c) persons who, at the commencement of these rules, are holding substantively listed posts, other than posts in the judiciary, (d) persons recruited to the Service before the commencement of these rules: and (e) persons recruited to the Service in accordance with the provisions of these rules. The appellant thus became a member of the new Indian Administrative Service by virtue of these rules and continued to serve in the Punjab. In 1955, the Central Government framed the All India Services (Discipline and Appeal) Rules, 1955 (hereinafter referred to as the Discipline Rules) which were applicable to all members of the Indian Administrative Service and the Indian Police Service. On July 18, 1959, the appellant was suspended with immediate effect by the Governor of the Punjab on the ground that a criminal case was pending against him. The order also provided that for the period of suspension the appellant shall be paid subsistence 437 allowance which shall be equal to leave salary which he would have drawn under the leave rules applicable to him if he bad been on leave on half average pay with a further provision that in case the suspension lasted for more than twelve months a further order fixing the rate of subsistence allowance shall be passed. This order appears to have been passed under r. 7(3) of the Discipline Rules and in consequence thereof the appellant remained under suspension. The appellant filed a writ petition in the Punjab High Court on February 16, 1962, challenging this order of suspension. His contention was that he was entitled to. the guarantee contained in article 314 of the Constitution and the order of suspension passed against him violated that guarantee and was therefore ineffective and invalid. He relied for this purpose on r. 49 of the Appeal Rules, which provided for suspension as a penalty. He contended that the Appeal Rules which governed him and which must be held to have continued to govern him in view of the guarantee contained in article 314 provided for suspension as a penalty only and that there was no provision anywhere in any rule or statute immediately before January 26, 1950 on which date the Constitution came into force, providing for suspension otherwise than as a penalty. Therefore it was not open to the Governor to suspend him in the manner in which he did so in the present case, though it was not denied that he could be suspended pending criminal proceedings provided the suspension was as a penalty under r. 49 of the Appeal Rules; on the other hand mere suspension pending a criminal case not inflicted as a penalty was not provided at all by the Rules or the statute governing the appellant immediately before January 26, 1950. Therefore when the Governor proceeded to suspend him under r. 7(3) of the Discipline Rules, he violated the guarantee contained in article 314. The appellant also contends that as it was not open to any authority to suspend him except as a punishment immediately before January 26, 1950, r.7 of the Discipline Rules 438 which provides for suspension during disciplinary proceedings or during the pendency of a criminal charge insofar as it applies to him was ultra vires article 314 of the Constitution. He also attacked rr.3 and 10 of the Discipline Rules as violative of article 314 of the Constitution, r.3 being concerned with penalties to be imposed on members of the Indian Administrative Service and r.10 with the right of appeal. The contention in this connection was that r.3 omitted the penalty of suspension which was to be found in r.49 of the Appeal Rules with the result that suspension under r.7 was not open to appeal under r.10 which provided for appeals against penalties mentioned in r.3. Therefore the guarantee under Art.314 was violated inasmuch as previously whenever the penalty of suspension was inflicted on a member of the Secretary of State 's Services it was open to him to appeal under r. 5 6 of the Appeal Rules. Therefore the scheme of the Discipline Rules was such as to take away the protection to a member of the Secretary of State 's Service which was available to him immediately before the Constitution came into force and in consequence rr.3 and 10 also violated the guarantee contained in article 314 and were ultra vires. The appellant therefore prayed for an appropriate writ, order or direction in the nature of mandamus striking down rr.3,7 and 10 of the Discipline Rules being violative of article 314 of the Con stitution and also for an order striking down the order of the Governor dated July 18, 1959, by which he suspended the appellant and such other appropriate relief as was just and proper. The petition was opposed by the State of Punjab and its main contention was that rr. 3,7 and 10 of the Discipline Rules were perfectly valid and did not violate the guarantee contained in Art.314. It was urged that article 314 only gave restricted protection to the members of what were formerly the Secretary of State 's Services in respect of disciplinary matters and stress was laid on the words "or rights as similar thereto as changed circumstances may permit" appear 439 ing therein. It was also urged that suspension pending departmental enquiry or pending a criminal case was not the same thing as suspension by way of punishment and that previous to January 26, 1950, there could be suspension pending departmental enquiry or pending a criminal case and that no appeal lay from such suspension even then. It was also urged that suspension pending a departmental enquiry or pending a criminal case was not a disciplinary matter at all and was therefore not included within the sweep of article 314 and in any case the rule relating to suspension even if it is connected with disciplinary matters was liable to variation as changed circumstances might demand and r.7 was framed in view of the changeed circumstances. It was also urged that removal of suspension as a penalty under r. 3 could not affect the guarantee contained in article 314, for the effect of such removal was that there could be in future no penalty of suspension. against a member of the Indian Administrative Service. Therefore as the penalty had gone r. 10 did not naturally provide for an appeal against a penalty which did not exist. Rule 7 which provides for suspension does not provide for any penalty and therefore there was no necessity of providing for any appeal against it. It was urged that a difference must be made between suspension as a penalty and suspension as an interim measure only pending a departmental enquiry or pending a criminal case and if that difference was borne in mind there was no reason for holding that rr.3 and 10 were ultra vires article 314. The respondent State finally contended that the order of the Governor passed under r. 7(3) was perfectly valid and did not violate the guarantee contained in article 314. The High Court dismissed the petition. It was of the view that it was inconceivable that under the old rules prevailing 'before January 26, 1950, a civil servant could never be suspended while an enquiry into his conduct was pending. It was further of the view that suspension during the pendency of an enquiry was a power inherent in an employer like the 440 Government and the power to suspend was always implied in the authority making the appointment. The High Court therefore rejected the contention of the appellant that under the old rules no member of the Secretary of State 's Services could have been suspended except by way of punishment. The High Court further held that even if the contention of the appellant be accepted that a member of the Secretary of State 's Services had a right of appeal even where he was suspended during a departmental enquiry there was a provision in the Discipline Rules for a memorial to the President (see r.20) and that in the opinion of the High Court gave a right as similar to the right existing before January 26, 1950, as the changed circumstances permitted. The High Court therefore dismissed the petition. The appellant then applied for a certificate which was granted; and that is how the matter has come up before us. The only question that has been debated before us is with respect to suspension whether as a punishment or otherwise of a member of one of the Secretary of State 's Services, in this case the Indian Civil Service, members of which have become members of the Indian Administrative Service under the Recruitment Rules; and it is only this question that falls to be determined in the present appeal. But the appellant has also challenged rr.3 and 10 of the Discipline Rules which do not deal with suspension at all. In these circumstances we do not propose to consider the vires of rr. 3 and IO, for that does not fall for decision as the order which is challenged has not been made under r. 3 and relates only to suspension. It is therefore unnecessary to decide whether rr. 3 and 10 can in the changed circumstances apply to those members of the Indian Administrative Service who were at one time members of the Indian Civil Service. We shall therefore express no view one way or the other on the vires of r. 3 and r. 10 and consider only r. 7 which deals with suspension. We should also like to make it clear that what we say during the course of ' this judgment 441 with respect to suspenion refers only to those members of the Indian Administrative Service who became members thereof under r. 3 (a) and (b) of the Recruitment Rules and not to other members of the Indian Administrative Service who were not members before 1947 of the Indian Civil Service, for it is only the former kind of members of the Indian Ad ministrative Service who are entitled to the protection of article 314 and the whole case of the appellant is based on that protection. Let us therefore turn to article 314 which we have already set out above. This Article came to be considered by this Court in the Accountant General Bihar vs N. Bakshi(1). In that case, however, that part of it was considered which related to "conditions of service as respects remuneration, leave and pension", and it was held that r. 3 of the All India Services (Overseas Pay, passage and leave salary) Rules, 1957, was ultra vires having regard to the guarantee contained in article 314 of the Constitution. That case is an authority for the proposition that where any rule is framed, which is inconsistent with the guarantee contained in article 314 with respect to remuneration, leave and pension, that rule would be bad. In the present case we are concerned with another part of article 314, namely, "the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before such commencement". The same principle will apply to this part of article 314 also and if any rule is framed which goes against the guarantee contained in this part of article 31.4 with respect to members of what were former Secretary of State 's Services, it will be bad. What article 314 provides with respect to disciplinary matters is that the members of the former Secretary of State s Services who continue to serve under the Government of India or of a State would be entitled to the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances (1) [1962] Supp. 1. S.C.R. 505. 442 may permit. Stress has been laid on behalf of the respondent on the words "rights as similar thereto as changed circumstances may permit", and it is urged that in view of these words it was open in the " changed circumstances" to frame rules in particular with respect to suspension pending departmental enquiry or pending criminal proceedings. These words in our opinion cannot bear this interpretation. What the words "changed circumstances" mean is the change in circumstances due to transfer of power in August, 1947, and the coming into force of the Constitution in January, 1950, and no more. Therefore when article 314 speaks of "rights as similar thereto as changed circumstances may permit", it only means that a member of the former Secretary of State 's Services would have rights similar to his pre existing rights as the changed circumstances resulting from constitutional changes may allow. As an illustration take a case where a member of a Secretary of State 's Service could before August, 1947, be dismissed only by the Secretary of State; but after the transfer of power and the coming into force of the Constitution, circumstances have changed and there is no Secretary of State, therefore we have to look to the changed circumstances and find out which would be the authority to dismiss such a member in the changed circumstances. If we do so, we find that the Government of India can be the only authority which now in the changed circumstances will have the power to dismiss such a member in the absence of a specific provision of law in force before January 26 , 1950. These words do not mean that as time passes circumstances change and therefore new rules may be framed to meet the new circumstances due to passage of time. The words "changed circumstances" in article 314 only refer to the constitutional changes which occurred after the transfer of power in August, 1947, and the coming into force of the Constitution in January 1950. Further, article 314 provides that the protection is limited only to those rights as to disciplinary matters which a member of the former Secretary of State 's 443 Services was entitled to immediately before the commencement of the Constitution i.e. on January 25, 1950. It is only those rights which are protected and no more. Another argument that is urged on behalf of the respondent is that suspension pending a departmental enquiry or pending a criminal proceeding cannot be said to be a disciplinary matter at all and therefore the protection of article 314 does not extend to such suspension. We cannot accept this argu ment. The words "disciplinary matters" with which we are concerned appear in a constitutional provision and must be given their widest meaning consistent with what disciplinary matters may reasonably include. Suspension is of two kinds, namely, as a punishment, or as an interim measure pending a departmental enquiry or pending a criminal proceeding. We shall deal with these aspect 's of suspension in detail later. So far as suspension as a punishment is concerned, it is conceded that it is a disciplinary matter. The dispute is only as to suspension pending a departmental enquiry or pending a criminal proceeding. There can in our opinion be no doubt that suspension of this kind also must be comprised within the words "disciplinary matters" as used in article 314. Take the case of suspension pending a departmental enquiry. The purpose of such suspension is generally to facilitate a departmental enquiry and to ensure that while such enquiry is going on it may relate to serious lapses on the part of a public servant , he is not in a position to misuse his authority in the same way in which he might have been charged to have done so in the enquiry. In such a case suspension pending a departmental enquiry cannot be but a matter intimately related to disciplinary matters. Take again the case where suspension is pending criminal proceedings. The usual ground for suspension pending a criminal proceeding is that the charge is connected with his position as a government servant or is likely to embarass him in the discharge of his duties or involves moral turpitude. 444 In such a case a public servant may be suspended pending investigation, enquiry or trial relating to a criminal charge. Such suspension also in our opinion is clearly related to disciplinary matters. If the trial of the criminal charge results in conviction, disciplinary proceedings are bound to follow against the public servant so convicted. Even in case of acquittal proceedings may follow where the acquittal is other than honourable. The usual practice is that where a public servant is being tried on a criminal charge, the Government postpones holding a departmental enquiry and awaits the result of the criminal trial and departmental proceedings follow on the result of the criminal trial. Therefore, suspension during investigation, enquiry or trial relating to a criminal charge is also in our opinion intimately related to disciplinary matters. We cannot therefore accept the argument on behalf of the respondent that suspension pending a departmental enquiry or pending investigation, enquiry or trial relating to a criminal charge is not a disciplinary matter within the meaning of those words in article 314. Before we investigate what rights a member of the former Secretary of State 's Services had with respect to suspension, whether as a punishment or pending a departmental enquiry or pending criminal proceedings, we must consider what rights the Government has in the matter of suspension of one kind or the other. The general law on the subject of suspension has been laid down by this Court in two cases, namely, The Management of Hotel Imperial New Delhi vs Hotel Workers ' Union(", and T. Cajee vs U. Jormanik Siem(2). These two cases lay down that it is well settled that under the ordinary law of master and servant the power to suspend the servant without 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. It was further held that an order (1) ; (2) ; 445 of interim suspension could be passed against an employee while inquiry was pending into his conduct even though there was no specific provision to that effect in his terms of appointment or in the rules. But in such a case he would be entitled to his remuneration for the period of his interim suspension if there is no statute or rule existing under which it could be withheld. The general principle therefore is that an employer can suspend an employee pending an enquiry into his conduct and the only question that can arise on such suspension will relate to the payment during the period of such suspension. If there is no express term in the contract relating to suspension and payment during such suspension or if there is no statutory provision in any law or rule, the employee is entitled to his full remuneration for the period of his interim suspension; on the other hand if there is a term in this respect in the contract or there is a provision in the statute or the rules framed thereunder providing for the scale of payment during suspension, the payment would be in accordance therewith. These general principles in our opinion apply with equal force in a case where the government is the employer and a public servant is the employee with this modification that in view of the peculiar structural hierarchy of government, the employer in the case of government, must be held to be the authority which has the power to appoint a public servant. On general principles therefore the authority entitled to appoint a public servant would be entitled to suspend him pending a departmental enquiry into his conduct or pending a criminal proceeding, which may eventually result in a departmental enquiry against him. This general principle is illustrated by the provision in section 16 of the General Clauses Act, No. X of 1897, which lays down that where any Central Act or Regulation gives power of appointment that includes the power to suspend or dismiss unless a different intention appears. Though this provision does not directly apply in the present case, 446 it is in consonance with the general law of master and servant. But what amount should be paid to the public servant during such suspension will depend upon the provisions of the statute or rule in that connection. If there is such a provision the payment during suspension will be in accordance therewith. But if there is no such provision, the public servant will be entitled to his full emoluments during the period of suspension. This suspension must be distinguished from suspension as a punishment which is a different matter altogether depending upon the rules in that behalf. On general principles therefore the govern ment, like any other employer, would have a right to suspend a public servant in one of two ways. It may suspend any public servant pending departmental enquiry or pending criminal proceedings; this may be called interim suspension. Or the Government may proceed to hold a departmental enquiry and after his being found guilty order suspension as a punishment if the rules so permit. This will be suspension as a penalty. These general principles will apply to all public servants but they will naturally be subject to the provisions of article 314 and this brings us to an in vestigation of what was the right of a member of the former Secretary of State 's Services in the matter of suspension, whether as a penalty or otherwise. As article 314 only guarantees protection to those rights which were in existence immediately before the Constitution came into force, all that is necessary is to find out the position before August 14, 1947, when the transfer of power took place and on January 25, 1950, just before the Constitution came into force. Members of the Secretary of State 's Services who are protected under article 314 were appointed either by the Secretary of State or by the Secretary of State in Council. Therefore on general principles it would have been open to the Secretary of State or the Secretary of State in Council, as the case may be, to suspend a member of such Services as the appointing authority as an interim measure pending a departmental enquiry or pending a criminal proceeding if it thought fit to do so. What 447 remuneration such a public servant would get during such interim suspension would depend upon the rules if any, and if there were no rules he would be entitled to his full emoluments during such interim suspension. But it appears that as the Secretary of State or the Secretary of State in Council was in London it was thought proper for the sake of administrative convenience to provide for suspension by authorities other than the appointing authority. Reference in this connection may be made to section 247 (2) of the Government of India Act. 1935, as in force upto August 13, 1947. That subsection provided that "any order suspending any such person (meaning thereby a member of the former Secretary of State 's Services) from office shall, if he is serving in connection with the affairs of the Federation, be made by the Governor General exercising his individual judg ment and, if he is serving in connection with the affairs of a Province, be made by the Governor exercising his individual judgment". This sub section therefore made a specific provision for suspension by authorities other than the appointing authority; this was in addition to the general right of the employer (namely, the Secretary of State who was the appointing authority) to suspend an employee (namely, a member of one of the former Secretary of State 's Services). Suspension in section 247 (2) cannot in our opinion be confined only to suspension as a penalty. The words are general and must be given their full meaning and would include any kind of suspension, whether as a penalty or otherwise; and this power vested firstly in the Secretary of State or the Secretary of State in Council, as the case may be, under the general law of master and servant and also in the Governor General and the Governor, as the case may be, by virtue of this provision of the statute. Further section 247 (3) also provided for remuneration of a suspended member of one of the former Secretary of State 's Services and laid down that "if any such person as aforesaid is suspended from office, his remuneration shall not during the period of his suspension be reduced except to such extent, if any, as may be directed by the Governor General exercising his in 448 dividual judgment or, as the case may be, by the Governor exercising his individual judgment". Besides this statutory provision relating to former Secretary of State 's Services, there was a general provision as to payment to a government servant under suspension in Fundamental Rule 53. That general provision is that a suspended governmentservant is at least entitled to one fourth of his pay. This general provision was subject ,to section 247 (3) andin the case of members of the former Secretary of State 's Services, the Governor General or the Governor as the case may be, had to specify the amount which could be even more than what was provided by F.R. 53. Here again when F.R. 53 speaks of suspension, it speaks of it in general terms. It applies to all kinds of suspension whether as a penalty or otherwise. Further r. 49 of the Appeal Rules deals with penalties and provides suspension as a penalty. It also provides for appeals in r. 56 etc. where suspension is inflicted as a penalty for good and sufficient reasons. Rule 49 applied to the former Secretary of State 's Services also and thus these members were subject to the penalty of suspension. A review therefore of the general law of master and servant, the provisions of the Government of India Act, 1935, of the Appeal Rules and the Fundamental Rules discloses that the position on August 13, 1947 with respect to members of the former Secretary of State 's Services with respect to suspension whether as a punishment or otherwise was as follows. Members of the former Secretary of State 's Services were liable to suspension either as an interim measure or as a punishment. Where suspension was as an interim measure and not as a punishment, it could be imposed either by the Secretary of State or the Secretary of State in Council as the appointing authority or by the Governor General or the Governor as the case may be as the statutory authority. Suspension could also be imposed by the proper authority as a punishment under the Appeal Rules and such orders of suspension were subject to appeals as provided by the Appeal Rules. There 449 was also provision for payment during suspension in the shape of subsistence allowance which was governed generally by F.R. 53 and in the case of members of the former Secretary of State 's Services, F.R. 53 was subject to section 247 (3) of the Government of India Act, 1935. Therefore, the contention of the appellant that there could be no suspension except by way of punishment under r. 49 of the Appeal Rules before 1947 is not correct. It is equally clear that where suspension before 1947 was an interim measure and not as a punishment under r. 49, there was no question of any appeal from such an interim suspension pending a departmental enquiry or pending a criminal proceeding. If the position on January 25, 1950, stood as it was on August 13,1947, the appellant could not susbstantially challenge the order of the Governor passed on July 18, 1959, for it would have been covered by section 247(3) of the Govemment of India Act, 1935, and the appellant could not claim anything more under article 314 of the Constitution. But article 314 does not speak of the protection which members of the All India Services had on August 13, 1947; it speaks of protection which they had immediately before the commencement of the Constitution i.e. on January 25, 1950, and that brings us to a consideration of the changes that took place between 1947 and 1950 after the transfer of power on August 15, 1947. The effect of the transfer of power on the Secretary of State 's Services in particular came up for consideration be fore this Court in State of Madras vs K.M. Rajagopalan(1) and it was held that "the conferral of Independence on India brought about an automatic and legal termination of service on the date of Independence. But all persons previously holding civil posts in India are deemed to have been appointed and hence to continue in service, except those governed by 'general or special orders or arrangements ' affecting their respective cases, The guarantee about prior conditions of service and the previous statutory safeguards relating to disciplinary (1) ; 1 SCI/64 29 450 action continue to apply to those who are thus deemed to continue in service but not to others". Section 10 of the Indian Independence Act provides or the Secretary of State 's Services and lays down that every person who having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown in India continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof, shall be entitled to receive the same conditions of service as respects remuneration, leave and pension and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before the appointed day, i.e. August 15, 1947 By virtue of this provision those members of the Secretary of State 's Services who continued to serve the Government of India or the Government of any Province from August 15, 1947, were entitled to the protection of section 10. What Rajagopalan 's case(" decided was that the Government of India was not bound to continue in service every member of the Secretary of State 's Services because of section 10 of the Indian independence Act; but that the protection of that section only applied to such members of the afore said services whose services the Government of India agreed to continue after August 14, 1947. In Rajagopalan 's case(" the Government of India did not agree to continue Rajagopalan 's services and therefore, he could not claim the protection of section 10 of the Indian Independence Act. In the appellant 's case his service continued after the transfer of power and therefore he was entitled to the protection of section 10 of the Indian Independence Act, which was almost in similar terms as article 314 of the Constitution so far as disciplinary matters were concerned. On August 14, 1947, however, the India Provisional Constitution) Order, 1947, was promulgated as G.G.O. 14. By that Order, section 247 of the Government of India was substituted by a new section and sub sections (2) and (3) (1) ; 451 thereof to which we have already referred were repealed. The substituted section 247 read as under: "Conditions of service of persons orginally recruited by Secretary of State The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province, shall (a) as respects persons serving in connection with the affairs of the Dominion, be such as may be prescribed by rules made by the Governor General; (b) as respects persons serving in connection with the affairs of a Province (i) in regard to their pay, leave, pensions, general rights as medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such as may be prescribed by rules made by the Governor General; and (ii) in regard to any other matter, be such as may be prescribed by rules made by the Governor of Province. " It will be clear from this that sub sections (2) and (3) of section 247 disappeared on August 14, 1947. No rules framed by the Governor General under the new section with respect to what we have called interim suspension have been brought to our notice. Therefore no power was left in the Governor General or the Governor, as the case may be, to suspend a member of the former Secretary of State 's Services as an interim measure and only the appointing authority could suspend such a public servant, which in the changed circumstances would be the Government of India. The explanation for this may be that as the Secretary of State disappeared and his place was taken by the Government of India, 452 it might not have been thought necessary to continue the further powers conferred by section 247 (2) in addition to the general power of the appointing authority to suspend. Be that as it may, the fact remains that on August 14, 1947, section 247 (2) disappeared and therefore the Governor General and the Governor lost the power to suspend as an interim measure a member of the former Secretary of State 's Services and such power could only be exercised by the appointing authority which in the changed circumstances must be deemed to be the Government of India. As for suspension as a punishment that continued to be provided in the Appeal Rules and no change was made therein. It has however been urged that as the conferral of Independence on India brought about an automatic and legal termination of service on the date of Independence, there must in law have been reappointment of all members of the former Secretary of State 's Services. This reappointment in case of those serving in connection with the affairs of a Province must be deemed to have 'been made by the Governor of the Province concerned and consequently the Governor will have the power to suspend as the appointing authority. We are of opinion that there is no force in this argument. The antecedent circumstances with respect to such Services have been fully dealt with in Rajagopalan 's case (1) and those circumstances show that the question of the retention of officers serving in these Services was dealt with between the Government of India and His Majesty 's Government and it was the Government of India which decided ,that all such officers should continue except those whom the Government of India, was not prepared to invite to continue and in the case of this limited class the Government of India agreed to compensation. It was in consequence of this agreement between the Government of India and His Majesty 's Government that section 10 of the Independence Act provided that those officers who continued would have the same conditions of service etc. as they were entitled to immediately before August 14, 1947. The Governors of Provinces were nowhere in the picture in this matter and we can see (1) ; 453 no warrant for holding that the appointment must be deemed to be by the Governors of Provinces where such officers were serving in connection with the affairs of a Province. It is true that the Indian Administrative Service as an all India Service was legally and formally constituted in 1951. It is also true that under section 10 of the Indian Independence Act members of the former Secretary of State 's Services continued on and after August 14, 1947, to serve under the Government of either of the new Dominions or of any Province or part thereof It is also true that there are some passages in the correspondence between His Majesty 's Government and the Government of India which suggest that His Majesty 's Government was thinking on the lines that members of the former Secretary of State 's Services will become members of the Provincial Services. These however are not conclusive of the matter and we have to find out what actually took place after this exchange of correspondence between the Government of India and His Majesty 's Government in connection with the former Secretary of State 's Services. We have already indicated that section 10 was incorporated in the Indian Independence Act in consequence of this correspondence between the Government of India and His Majesty 's Government. Thereafter we find that the India (Provisional Constitution) Order, 1947 (i.e. G.G.O. 14) was passed on August 14,1947, under powers conferred on the GovernorGeneral by virtue of section 9 (1) (a) of the Indian Independence Act. Article 7 (1) of that Order is in these terms: "(1) Subject to any general or special orders or arrangements affecting his case, any person who immediately before the appointed day is holding any civil post under the Crown in connection with the affairs of the Governor General or Governor General in Council or of a Province other than Bengal or the Punjab shall, as from that day, be deemed to have been duly appointed to the corresponding post under the,Crownin connec 454 tion with the affairs of the Dominion of India or, as the case may be, of the Province. " Reading this provision along with the provision in section 10 of the Indian Independence Act, it would in our opinion be right to say that so far as the. members of the former Secretary of State 's Services are concerned they must be deemed to have been appointed to the posts on which they were serving at the time of conferral of Independence, by the Govemmentof India. The deemed appointment under article 7 (1) of G.G.O. 14 was "subject to any general or special orders or arrangements affecting his case", and these arrangements are clear from the correspondence which ensued between the Government of India and His Majesty 's Government. That correspondence and the special orders or arrangements contemplated by article 7 (1) of G.G.O. 14 show that so far as the members of the former Secretary of State 's Services were concerned, it was the Government of India which took the final decision whether to continue such officers or not. It is true that in so doing it consulted the various Provincial Governments and was to a large extent guided by the views of the Provincial Governments, particularly in connection with such officers who were serving in connection with the affairs of the Provinces; even so, as the facts in Rajagopalan 's case(1) show, the final decision whether to continue or not a member of the former Secretary of State 's Services was taken by the Government of India. In these circumstances it would in our opinion be reasonable to hold that in the case of the members of the former Secretary of State 's Services it was the Government of India which must be deemed to have appointed them after the conferral of Independence on India to the respective posts which they were holding whether under the Government of India or under the Governments of Provinces. This conclusion is reinfored by the fact that the system in force before 1947 was that all members of the Secretary of State 's Services were assigned to one Province or other and from them such members as were necessary used to be on deputation to the Government of India for serving it directly. It would be very anomalous (1) [1955].2 S.C.R. 541. indeed that the accident whether an officer was serving on August 13, 1947, on deputation under the Government of India directly or in the Province to which he was assigned should determine who the appointing authority must be deemed to be on the date of the transfer of power. Such an anomaly could in our opinion never have been intended and we have no doubt therefore in view of the history dealt with in Rajagopalan 's case(1) that on the conferral of Independence, even if there was legal termination of the services of members of the former Secretary of State 's Services, the reappointment must be deemed to be by the Government of India and not by the Governors of Provinces even in the case of officers who were serving in connection with the affairs of Provinces. In this connection our attention has been drawn to section 241 (1) of the Government of India Act 1935 as it then stood, which is in these terms: "(1) Except as expressly provided by this Act, appointments to the civil services of, and civil posts under, the Crown in India, shall be made (a) in the case of services of the Dominion, and posts in connection with the affairs of the Dominion, by the Governor General or such person as he may direct; (b) in the case of services of a Province, and posts in connection with the affairs of a Province, by the Governor or such person as he may direct." This provision in our opinion does not apply in the peculiar circumstances arising out of the transfer of power in August 1947. It is a general provision relating to appointments to civil services and civil posts under the Dominion or under the Provinces. It has in our opinion nothing to do with the case of members of the civil services and holders of civil posts who were deemed to have continued by virtue of article 7 of G.G.O. 14 of August 14, 1947. Clause (b) of section 241 (1) therefore cannot in our opinion lead to the inference that in the case of those members of the former Secretary of State 's (1) 456 Services who were deemed to have been appointed in connection with the affairs of a Province under article 7 (1) of G.G.O. 14, the appointments must be deemed to have been made by the Governor. Such deemed appointments in our opinion must depend for their validity on article 7 G.G.O 14 and not on section 241 of the Government of India Act which is not a deeming provision and therefore we have to look to article 7 (1) to find out by whom the appointments must be deemed to have been made in these of the members of the former Secretary of State 's Services. As article 7 opens with the words "subject to any general or special orders or arrangements affecting his case " (i.e. each individual officer 's case), it must be held in view of the history which is elaborately set out in Rajagopalan 's case( ) that so far as members of the former Secretary of State 's Services were concerned, it was the Government of India who must be deemed to have made the appointments in view of the special orders and arrangements with respect to such officers. Reliance in this connection was also placed on the amendment of section 240 (2) of the Government of India Act by the same G.G.O. Section 240 (2) as it originally stood provided that " no such person as aforesaid (meaning thereby a member of a civil service of the Crown in India or a person holding any civil post under the Crown in India) shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed". Amendment of this sub section became necessary as the Secretary of State for India was disappearing and some authority had to be provided which could dismiss members of the former Secretary of State 's Services. G.G.O. 14 therefore provided that no member of a Secretary of State 's Services who continued in service after August 14, 1947, shall be dismissed by any authority subordinate to the Governor General or the Governor according as that person was serving in connection with the affairs of the Dominion or of a Province. This amendment gave power to the Governor to dismiss even members of the former Secretary of State 's Services and stress has been laid on behalf of (1) 457 the respondent on this amendment and it is urged that this shows that appointments of such members who were serving in connection with the affairs of the Provinces must be deemed to have been made by the Governor concerned. It appears however that the amendment by which the Governor could dismiss a member of the former Secretary of State 's Services may have crept in by inadvertence, for it would prima facie be against the provisions of the guarantee contained in s.10 of the Indian Independence Act. In any case this sub section was further amended by G.G.O. 34 and the power of dismissal was only vested in the Governor General and was taken away from the Governor. We are therefore of opinion that no inference can be drawn from the fact that for a short time section 240 (2) provided that the Governor may dismiss a member of the former Secretary of State 's Services, that the appointments of such members who were serving in connection with the affairs of the Province was by the Governor, and not by the Government of India. Such an inference is in our opinion against the conclusion which can be plainly drawn from the history relating to the continuance and appointment of the members of the former Secretary of State 's Services at the time of conferral of Independence and the provisions of article 7 (1) of G.G.O. 14 of August 14, 1947. The final position therefore on January 25, 1950, with respect to suspension of a member of the former Secretary of State 's Services whether as a punishment or as an interim measure pending departmental enquiry or pending a criminal proceeding was this. Such member could be suspended under the general law by the appointing authority, which in the changed circumstances was, the Government of India, as an interim measure pending a departmental enquiry or pending a criminal proceeding, but there was no power in any other authority to pass such an order of interim suspension, for as we have already indicated the power under section 247 (2) was repealed by G.G.O.14 of August 14. Besides this power of interim suspension otherwise than as a punishment, the power to suspend 458 as punishment continued under r. 49 of the Appeal Rules and an order of suspension made in exercise of that power was subject to appeal under r. 56 etc. , thereof So far as payment during the period of interim suspension or during the period of suspension as a penalty is concerned, section 247 (3) had disappeared and therefore the general provision contained in F.R. 53 applied. That general provision has made some distinction between the members of the Indian Civil Service and others; but that is a matter of detail, in which it is unnecessary to go. So the position immediately before the commencement of the Constitution was that members of the former Secretary of State 's Services could be suspended either as an interim measure pending departmental enquiry or pending criminal proceeding or as a punishment. Where suspension was as an interim measure and not as a punishment such suspension could only be by the appointing authority, which in the changed circumstances should be deemed to be the Government of India. Such interim suspension was not subject to any appeal. So far as suspension as a punishment was concerned, r. 49 of the Appeal Rules applied and the authorities specified in these Rules could pass an order of suspension as a punishment and that order would be subject to appeal provided in r. 56 and other rules therein. As to the payment during the period of suspension that was governed by F.R. 53. It is this position which was protected by article 314 of the. Constitution so far as suspension of members of the former Secretary of State 's Services was concerned whether as an interim measure or as a punishment. Then we come to the Discipline Rules 1955. Rule 3 of these Rules provides for penalties and omits suspension as a penalty. Now if suspension had remained a penalty under r. 3 of the Discipline Rules, the appellant would have been entitled to the same rights as respects suspension as a punishment or rights as similar thereto as changed circumstances would permit in view of article 314. But r. 3 of the Discipline Rules has altogether done away with the penalty of suspension for members of 459 the Indian Administrative Service, which includes the members of the lndian Civil Service under r. 3 (a) and (b) of the Recruitment Rules. Further rules corresponding to the Discipline Rules was repealed by r. 23 of the Discipline Rules , so after the Discipline Rules came into force in 1955 suspension could no longer be inflicted as a penalty on a member of the Indian Administrative Service (including members of the Indian Civil Service who became members of the Indian Administrative Service). It is therefore unnecessary for us to consider whether the order of July 18, 1959, can be justified as a punishment and if so whether the memorial provided by r. 20 of the Rules is a sufficient protection for the purpose of article 314 which speaks of "rights as similar thereto as changed circumstances may permit". Nor is it the case of the respondent that the appellant was suspended by way of punishment by the order of July 18, 1959. The respondent justifies the said order under r. 7 ( 3) of the Discipline Rules and thus the case of the respondent is that the appellant was suspended not as a punishment but that the order of suspension was passed by the Governor as an interim measure which he could do either pending a departmental enquiry or pending a criminal charge. The appellant has thus been suspended by the order of July 18, 1959, not as a punishment but as an interim measure pending a criminal charge against him; and this is what practically in terms the order says, for it places the appellant immediately under suspension because a criminal case was pending against him. But as we have already pointed out the power to pass an order of interim suspension in the case of a member of the former Secretary of State 's Services on January 25, 1950, was only in the appointing authority, (namely, the Government of India). The power to suspend a member of the Indian Administrative Service which the appellant became by virtue of r. 3 of the Recruitment Rules as punishment has disappeared from r. 3 of the Discipline Rules 1955. The appellant therefore could not be suspended by the Governor as an interim measure and such suspension could only be by the Government of India. The proper procedure therefore in a case 460 where the State Government wants a member of the former Secretary of State 's Services to be suspended pending departmental enquiry or pending investigation, inquiry or trial of a criminal charge against him is to approach the Government of India and ask it as the appointing authority to suspend such officer as an interim measure. It is not open to the Government of India by framing a rule like r. 7 of the Discipline Rules to take away the guarantee as to Disciplinary matters contained in article 314. We have already said that the guarantee in the case of a member of the former Secretary of State 's Services is that in disciplinary matters his rights would be the same or as similar thereto as changed circumstances would permit as they were immediately before the commencement of the constitution. The right in the matter of interim suspension As distinct from suspension as a punishment was that a member of the former Secretary of State 's Services could not be suspended by any authority other than the Government of India. That was guaranteed by article 314 and could not be taken away by framing a, rule like r. 7 of the Discipline Rules. We have already referred to Bakshi 's case(" in which it has been held that the rights guaranteed by article 314 of the Constitu tion could not be destroyed or taken away by the Central Government in exercise of its rule making power ' In the present case the right guaranteed to a member of the former Secretary of State 's Services with respect to interim suspension (as distinct from suspension as a punishment is that such a member cannot be so suspended except by the appointing authority which in the changed circumstances is the Government of India. That right has in our opinion been violated by r. 7 of the Discipline Rules insofar as it permits any authority other than the Government of India to suspend pending a departmental enquiry or pending a criminal charge a public servant who was a member of the, former Secretary of State 's Services. Rule 7 therefore insofar as it permits this violation of the guarantee contained in article 314 with respect to interim suspension (other than suspension (1) [1962] Supp. I S.C.R. 505. 461 as a punishment) is to that extent ultra vires article 314 i.e. insofar as it applies to the members of the Indian Adminstrative Service who fall within cls. (a) and (b) of r. 3 of the Recruitment Rules. it follows therefore that the order of the Governor dated July 18, 1959, purporting to be passed under r. 7 (3) of the Discipline Rules is without authority and must be set aside. This brings us to the question of relief to be granted to the appellant. it appears that on September 11, 1963, the Governor passed an order by which he reinstated the appellant for the period from July 18, 1959, to April 4, 1963, and granted him his full emoluments for that period. The writ petition in the present case was filed in February 1962. So the appellant is apparently not entitled to any further relief in the matter of his emoluments besides what has been granted to him by the Governor. The order of reinstatement contained therein is unnecessary in view of our decision and the order granting full emoluments may be taken to be in pursuance of our judgment. We therefore allow the appeal and declare r. 7 of the Discipline Rules insofar as it applies to members of the Indian Administrative Service who are members thereof by virtue of r. 3 (a) and (b) of the Recruitment Rules to be bad to the extent to which it permits an authority other than the Government of India to suspend as an interim measure (and not as a punishment) such members of the Services. In consequence we set aside the order of the Governor dated July 18, 1959. As however the order of September, 1963, has granted all such monetary reliefs to the appellant as we could grant him on setting aside the order of July 18, 1959, no further relief can be granted to the appellant. We order the respondent the State of Punjab to pay the costs of the appellant in this Court as well as in the High Court. RAGHUBAR DAYAL J. I am of opinion that this appeal should be dismissed. The appellant a member of the Indian Civil Service, was serving under the Government of Madras immediately before the appointed day ', i.e. August 15 462 1947, as laid down in sub section (2) of section I of the Indian Independence Act, 1947 (10 & 11 Geo. 6, Ch. 30) hereinafter referred to as the Independence Act. He continued to serve under the Government of Madras on and after the appointed day. Subsequently, he was transferred to the State of Punjab where he was serving on ,,July 18, 1959, when he was suspended by the Governor of Punjab as a criminal case was pending against him. 'the appellant was a member of the Indian Administrative Service in 1959 and the order of suspension appears to have been made by the Governor in exercise of the power conferred by r. 7 of the All India Services (Discipline and Appeal) Rules, 1955, hereinafter referred to as the Discipline Rules. The appellant challenges the validity of this order on the ground that this rule violates the provisions of article 314 of the Constitution. His contention is that prior to August 15, 1947, a member of the Indian Civil Service could be suspended by way of punishment in view of r. 49 of the Civil Services (Classification, Control and Appeal) Rules, hereinafter referred to as the Classification Rules and that there was no provision for his suspension otherwise than as a penalty and that his suspension, as a disciplinary measure, though permissible, would have been then treated as suspension by way of penalty and therefore as subject to an apeal under r. 56 of the Classification Rules. No appeal is provided under the Discipline Rules against an order of suspension under r. 7 which therefore violates article 314 of the Constitution as, according to that article, he was entitled to receive from the Government the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances, permitted as he was entitled to immediately before 'the commencement of the Constitution. He further contends that sub section (2) of section 10 of the Independence Act guaranteed to him the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances permitted, as he was entitled to immediately before the appointed day. It was further contended, during the course of the submissions in Court, that though prior to the appoin 463 ted day an order of suspension during the pendency of a departmental enquiry or of a criminal charge could have been made only by the Governor General or the Governor, such an order thereafter and till January 26, 1950 could be made only by the Governor General, and that therefore such a suspension order subsequent to the commencement of the Constitution could be made by the Union Government and not by the Government of Punjab and that for this reason too, r. 7 of the Discipline Rules empowering the State Government to make an order of such suspension violates article 314. I need not discuss the various points on which I agree with my learned brother Wanchoo, J. I agree that the expression 'changed circumstances ' in article 314 only refer to the constitutional changes which occurred after the transfer of power in August, 1947, and the coming into force of the Constitution in January, 1950, that suspension during the pendency of disciplinary proceedings or of a criminal charge is related to disciplinary matters within the meaning of those words in article 314, that from the appointed day there was no express provision in the Government of India Act or in the rules framed thereunder empowering the Governor General or the Governor to suspend, otherwise as penalty, officers appointed by the Secretary of State for India and that any order of suspension pending enquiry against a person appointed by the Secretary of State on a day immediately before the coming into force of the Constitution had to be made by the Government in the exercise of the general power of suspension which an employer has with respect to his employee, that this general power an employer has to suspend an employee pending an enquiry into his conduct vests in the appropriate authority where the Government is the employer and a public servant is the employee and that such an authority in the case of Government, in view of the peculiar structure of the hierarchy of Government, be taken to be the, authority which has the power to appoint the public servant concerned. I am however. further of opinion that the appropriate authority in this connection can also include officers superior to 464 the appointing authority and that in the case of members of All India Services serving under any state includes the Governor who, as the executive head of State, has administrative control cover all officers serving under the State Government. It would be anomalous to hold that the Governor could not suspend a person, appointed by the Secretary of State, during the pendency of departmental proceedings or a criminal charge against him, though he could have imposed a penalty of suspension on such a person in view of rr. 49 and 62 of the Classification Rules which were in force between the appointed day and January 25, 1950, and continued in force subsequently, up to the coming into force of the Discipline rules. 1, however, do not rest my decision on this view as, in my view, the appellant is to lie deemed to have been appointed by the Governor of Madras, on the appointed day, to the post corresponding to ,the post he was holding immediately before the appointed day under the Madras Government. I now deal with the question of the authority which should be taken to be the appointing authority for persons who had been appointed by the Secretary of State to the Civil Services or to any post under the Crown and who continued to serve the Government after the appointed day. To determine this question it is necessary to consider the following matters: (1) Did the Service known as the Indian Civil Service, whose members were to be recruited by the Secretary of State for India in view of section 244 (1) of the Government of India Act, cease to exist on and from the appointed day and, if so, whether any other AR India Service took its place immediately after it had ceased to exist? (2) If it ceased to exist, were the services of the members of the Indian Civil Service terminated immediately before the appointed day? (3) Which members of the Service continued in service of the Government on or after the appointed day. (4 ) Whether those who so continued did so on account of their becoming servants of the new Government under the provisions of any Act, or their continuance in service was on account of their fresh appointment. (5) If it was due to fresh 465 appointment, which authority appointed them and to which post or service Before I deal with the above questions, I may set out the relevant provisions which have a bearing in this connection. The Independence Act was enacted by the British Parliament on July 18, 1947, for setting up in India two independent Dominions and to provide for necessary consequential matters. By sub section (1) of section 1, two independent Dominions known as India and Pakistan were to be set up from August 15, 1947. Subsection ( 2) of that section provided for their being referred to as the new Dominions and August 15, 1947, being referred to as the appointed day. One of the consequences of the setting up of the new Dominions was stated in sub section (1) of section 7 to be that His Majesty 's Government in the United Kingdom was to have no responsibility as respects the government of any of the territories which, immediately before the appointed day, were included in British India. Section 9 empowered the Governor General to make such provisions by order as appeared to him to be necessary or expedient for certain purposes mentioned therein. Subsections (1) and (2) of section 10 of the Act read: "(1) The provisions of this Act keeping in force provisions of the Government of India Act, 1935, shall not continue in force the provisions of that Act relating to appointments to the civil services of, and civil posts under, the Crown in India by the Secretary of State, or the provisions of that Act relating to the reservation of posts. (2) Every person who (a) having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown in India continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof; or (b) having been appointed by His Majesty before the appointed day to be a judge of the Federal SCI/64 30 466 Court or of any court which is a High Court within the meaning of the Government of India Act, 1935, continues on and after the appointed day to serve as a judge in either of the new Dominions, shall be entitled to receive from the Governments of the Dominions and Provinces or parts which he is from time to time serving or, as the case may be, which are served by the courts in which he is from time to time a judge, the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed circumstances may permit, as that person was entitled to immediately before the appointed day The Governor General, in the exercise of the powers conferred on him by section 9 made the India (Provisional Constitution) Order, 1947 (G.G.O. 14 of 1947), hereinafter called the Provisional Constitution Order. Article 7(1) of this Order is: "Subject to any general or special orders or arrangements affecting his case, any person who immediately before the appointed day is holding any civil post under the Crown in connection with the affairs of the Governor General or GovernorGeneral in Council or of a province other than Bengal or the Punjab shall, as from that day, be deemed to have been duly appointed to the corresponding post under the Crown in connection with the affairs of the Dominion of India or, as the case may be, of the Province." Sub section (1) of section 241 of the Government of India Act, as modified by this Order, reads: "Except as expressly provided by this Act, appointments to the civil services of, and civil posts under, the Crown in India, shall be made (a) in the case of services of the Dominion, and posts in connection with the affairs of the 467 Dominion, by the Governor General or such person as he may direct; (b) in the case of services of a Province, and posts in connection with the affairs of a Province, by the Governor or such person as he may direct." Section 247 of the Government of India Act as modified reads: "The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province shall, (a) as respects persons serving in connection with the affairs of the Dominion be such as may be prescribed by rules made by the GovernorGeneral; (b) as respects persons serving in connection with the affairs of a Province (i) in regard to their pay, leave, pensions, general rights as to medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such as may be prescribed by rules made by the GovernorGeneral; and (ii) in regard to any other matter be such as may be prescribed by rules made by the Governor of the Province. " Sections 244 to 246 of the Government of India Act, 1935, which dealt with Services recruited by the Secretary of State was omitted from the Act by this Order. Reference may also be made to the announcement by His Excellency the Viceroy on April 30, 1947. It purported to relate to grant of compensation for premature termination of their service in India to members of the Civil Services appointed by the Secre 468 tary of State and to regular officers and British Warrant Officers of the Indian Naval and Military Forces. Its first 7 paragraphs are set out at pp. 548 to 550 in State of Madras vs K.M. Rajagopalan(1). Its para 8 stated inter alia: "In pursuance of their wish to give all possible help to the Government of India in building up the new services, His Majesty 's Government agree 'that their obligation covers the claim to ultimate compensation of those British members of the Services who are asked to serve on in India and decide to do so. " It may also be mentioned that subsequent to June 3, 1947, the Government of India made enquiries through the Provincial Governments from the members of the Secretary of State 's Services, including the Indian Civil Service. about their desire to continue in service of the Government after the transfer of power and also made enquiries from the Provincial Governments themselves about their readiness to retain those officers in service who expressed their desire to continue in service. This Court had occasion to discuss the effect of the steps taken by the Government of India prior to the appointed day and of the provisions of the Independence Act and the Provisional Constitution Order in Rajagopalan 's case(1) Rajagopalan was a member of the Indian Civil Service and was serving in the Province of Madras till August 14, 1947, when his services were terminated, though he had expressed his willingness to continue in the service of the, Govern.ment of Madras on and after the appointed day. What this Court directly held and observed in connection with the points urged before it in that case would be mentioned at appropriate places in discussing the five points I have formulated earlier. This first two points were directly decided in that case. This Court held that the Secretary of State and his Services disappeared as from the appoin (1) ; 469 ted day and that, section 10(2) of the Independence Act and article 7(1) of the Provisional Constitution Order proceeded on a clear and unequivocal recognition of the validity of the various special orders and the individual arrangements made and amounted to an implicit statutory recognition of the principle of automatic termination of the Services brought about by the political change. It is clear therefore that the Indian Civil Service, one of the Secretary of State 's Services, ceased to exist from the appointed day and that the services of its members automatically terminated on August 14, 1947. This Court had not to consider whether any All India Service was set up to take the place of the Indian Civil Service on and from the appointed day, as the termination of Rajagopalan 's services was held to be valid. There is nothing on the record to show that any such new Service took the place of the Indian Civil Service at the changeover, though, subsequently, the Indian Administrative Service was set up as an All India Service. When it was actually set up is not known. Article 312 of the Constitution states in cl. (2) that the Services known at the commencement of the Constitution as the Indian Administrative Service and the Indian Police Service shall be deemed to be services created by Parliament under that article. The All India Services Act, 1951 (Act LXI of 1951) defined an All India Service to mean the service known as the Indian Administrative Service or the service known as the Indian Police Service. The Indian Administrative Service Recruitment Rules, 1954, came into force in 1954 and its r. 3 dealing with the constitution of the service provides inter alia that the Service shall consist of (a) members of the Indian Civil Service, not permanently allotted to the judiciary; (b) members of the Indian Civil Service permanently allotted to the judiciary who have been holding executive posts from the date of commencement of the Constitution; (d) persons recruited to the Service before the commencement of those Rules. It appears therefore that all the 470 members of the Indian Civil Service who continued to serve the Government on and after the appointed day were not made members of the Indian Administrative Service and that those who were made members of the Service became members of such Service in 1954. If the Indian Administrative Service had been set up to replace the Indian Civil Service immediately on the appointed day and the erstwhile members of the Indian Civil Service had become its members, the provisions of r. 3 (a) and (b) would have been different from what they are. This indicates that the Indian Administrative Service did not take the place of the Indian Civil Service automatically after the changeover on the appointed day and that therefore the members of the Indian Civil Service who continued in service did not continue so as members of any All India Service. The Viceroy 's announcement dated April 30, 1947, makes no mention of any All India Service replacing the Indian Civil Service immediately on the transfer of power though it specifically mentioned in para 8 about the giving of all possible help to the Government of India in building up the new Services and to the members of the Secretary of State 's Services continuing to serve under the Government in India after the transfer of power. The provisions of article 7(1) of the Provisional Constitution Order also do not refer to the persons in the Secretary of State 's Services to continue in service as members of any All India Service though it specifically deals with the appointment of such other employees of Government to the posts they had held on the day immediately preceding the appointed day. I am therefore of opinion that the service of the appellant as a member of the Indian Civil Service came to an end on August 14, 1947, and that thereafter he did not automatically or otherwise become member of any All India Service on August 15, 1947. In connection with point No. 3 formulated by me. this Court said in Rajagopalan 's case(1) at P. 552 (1) ; 471 that the continuance of service was contemplated only in respect of such of the previous servants who intimated their desire for the continuance of their services and whose offer in that respect was accepted, and at p. 563 that sub section (2) of section 10 of the Independence Act had nothing to say as to who were the persons who would continue in service and receive the benefit that being obviously left to be provided by delegated 'legislation in the shape of Orders of the Governor General and at p. 565 that in view of the provisions of article 7(1) of the Provisional Constitution Order, all persons who were previously holding civil posts were deemed to have been appointed and hence to continue in service excepting those whose case was governed by general or special orders or arrangements affecting their cases. It is clear therefore that only those members of the Secretary of State 's Services continued in service who had been holding civil posts immediately before the appointed day and were deemed to have been appointed to the corresponding post in view of the provisions of article 7 (1) of the Provisional Constitution Order. The persons who had been holding civil posts immediately before the appointed day did not automatically become servants of the new Government on the appointed day. Article 7(1) of the Provisional Constitution Order contemplates 'deemed appointment ' of such persons to their respective posts on that day. The language of this article is not consistent with any suggestion that they automatically, by the force of the Independence Act or the Provisional Constitution Order, became holders of the respective posts on the appointed day. The language is very much different from the language used in articles 374, 376, 377 and 378 of the Constitution which provide for certain persons holding office immediately before the commencement of the Constitution becoming, on such commencement, holders of corresponding posts on such commencement. The language is also different from that of article 375 of the Constitution which deals with the continuance of courts, authorities 472 and officers after the commencement of the Constitution and reads: "All courts of civil, criminal and revenue jurisdiction, all authorities and all officers, judicial, executive and ministerial, throughout the territory of India, shall continue to exercise their respective functions subject to the provisions of this Constitution. " There is no such expression in this article which would indicate that any of these officers had to be freshly appointed or would be deemed to have been appointed to their respective posts on the commencement of the Constitution. The language of article 7(1) of the Provisional Constitution Order correspond to some extent to that of section 58 of 21 & 22 Vic. Cap. CVI, 1858, an Act for the better Government of India, which was passed when the .,Government of India was transferred to Her Majesty from the East India Company. Section 58 reads: "All persons who at the time of the commence ment of this Act shall hold any offices, employments, or commissions whatever under the said Company in India shall thenceforth be deemed to hold such offices, employments, and commissions under Her Majesty as if they had been appointed under this Act. . . " The language of article 7(1) of the Provisional Constitution Order, for purposes of comparison, may be just noted, and is ". any person who immediately before the appointed day is holding any civil post under the Crown . shall, as from that day, be deemed to have been duly appointed to the corresponding post under the Crown. " The language of section 58 of the 1858 Act contemplated a fresh appointment, though deemed appointment, as is abundantly clear from the words 'shall. be deemed to hold such offices, employments, and corn 473 missions. .as if they had been appointed under this Act. ' I am therefore of opinion that the Provisional Constitution Order, by its article 7(1), provided for deemed fresh appointment of the members of the Secretary of State 's Services whose services had terminated automatically on the day immediately preceding the appointed day. I will now deal with the last point as to which authority would be deemed to have appointed the persons who had been in the Secretary of State 's Services, to their corresponding posts on the appointed day. The Government of India Act, 1935, hereinafter called the Act, as modified by the Orders of the Governor General, was in force on that day and the authorities competent to make appointments on that day would be deemed to have made the appointments of the erstwhile servants in the Secretary of State 's Services. No other authority could have made those appointments and therefore no other authorities could be deemed to have made those appointments which were deemed to be made in view of the provisions of article 7(1) of the Provisional Constitution Order. Section 241 of the Act provided that the GovernorGeneral, or such person as he may direct, would make appointments to the civil services of the Dominion and civil posts in connection with the affairs of the Dominion and that the Governor would make appointments to the services of a Province and posts in connection with the affairs of a Province. Such persons of the Secretary of State 's Services who were holding posts in connection with the affairs of a Province would therefore be appointed to the corresponding posts, on the appointed day, by the Governor of that Province, as only he could have made appointments to those posts. It is to be noticed that article 7(1) of the Provisional Constitution Order refers to appointments to posts and not to appointments to Services and that even prior to the appointed day the appoint 474 ments, to the various posts in the Provinces, of members of All India Services allotted to the cadre of the Provinces were also made by the Governor and not by the Governor General. In this respect, with regard to all appointments to posts in connection with the affairs of the Provinces there had been really no ,change. It is contended for the appellant that his deemed appointment to the post corresponding to the post he had held on August 14, 1947, was by the GovernorGeneral or the Government of India. Article 7(1) of the Provisional Constitution Order does not expressly provide so. Section 241 of the Act did not authorize the Governor General to make appointments to posts in connection with the affairs of the Provinces. The provisions of article 7(1) of the Provisional Constitution Order refer to all the persons employed in the civil services and holding civil posts under the Crown and are not restricted to those persons only who held posts and had been appointed by the Secretary of State. The mere fact that the Provisional Constitution Order was made by the Governor General would not lead to the result that the deemed appointments of all the persons serving under the Crown, whether as members of civil services or as holders of posts, had been made by the Governor General. That could not have been intended. All such employees would be deemed to be appointed by the appropriate authority on the appointed day and the appropriate authority for the appointment of a particular employee is to be found in section 241 of the Act. It is also true that the erstwhile members of the Secretary of State 's Services were not actually reappointed by the appropriate appointing authority and that they were merely deemed to be so appointed in view of the provisions of article 7(1) of the Provisional Constitution Order whose purpose was to validate the continuity of the service of such persons even though they had not been actually appointed. I see no reason why the provisions of section 241 of the Act be not applicable to the deemed appoint 475 ments of such persons who had been in the Secretary of State 's Services. Undoubtedly, it was not a special provision for the deemed appointments at the particular occasion, but was of general application to appointments on and after the appointed day. Appointments, whether actual or deemed to be made by the new Governments immediately on the changeover of the Government, must be governed by its provisions. This Court did not make any reference to section 241 of the Act in Rajagopalan 's Case.(1) This is not because that section did not govern all the erstwhile members of the Secretary of State 's Services, but because the Court was not concerned in that case with the question of such fresh deemed appointments as Rajagopalan did not continue in service as his services were held to be validly terminated on August 14, 1947. It has been urged in support of the appellant 's case that the retention of persons of the Secretary of State 's Services was dealt with between the Government of India and His Majesty 's Government as would appear from the various documents in connection with the steps taken for the setting up of the two Dominions and that only those officers continued in service whom the Government of India invited to continue and that those who were not so invited were to be paid compensation. It is not clear from the antecedent circumstances that it was the Government of India which decided about the continuance in service of such officers of the Secretary of State 's Services who had been prior to the changeover serving under the Government of a Province. Even if it was the Government of India which was to decide and invite the officers to continue, such a decision and invitation cannot amount to its appointing those officers to the various posts in connection with the affairs of a Province, in view of section 241 of the Act. of course, negotiations with respect to the services took place between the Government of India (1) ; 476 and His Majesty 's Government. A Provincial Government could not have continued such negotiations. I do not find any specific mention in any of the documents referred to in Rajagopalan 's Case ' ') to the effect that it was the Government of India which decided which officers were to continue in service. The Viceroy 's announcement dated April 30, 1947, practically sums up the result of the negotiations between the Government of India and His Majesty 's Government. It is clear from what was stated in paragraphs 3 and 6 of this announcement that the undertakings and assurances 'with respect to persons appointed by the Secretary of State and who were to continue in service were given by the Government of India with respect to those who were to continue under its service and by the Provincial Governments with respect to those who would join the Provincial Services. It is said in para 3, which dealt with the terms of pay etc., that the Government of India would then propose to Provincial Governments that they should give similar assurances to members of the Secretary of State 's Services who agreed to join Provincial Services. It was said in para 6 : "His Majesty 's Government have been reviewing the whole position. They have noted the undertaking which the Government of India have given in regard, to officers whom they desire should continue to serve under the Government of India . Many Indian members of the Secretary of State 's services will however become members of provincial services and in their cases His Majesty 's Government 's agreement that the need not be compensated is conditional upon the Provincial Governments guaranteeing the existing terms of service. If they are not prepared to do so His, Majesty 's Government reserve the right to reconsider the matter. It is therefore clear that the Provincial Governments were also concerned in the negotiations though they Were actually made by the Government (1) ; 477 of India and had to agree to guarantee the existing terms of service and safeguards in matters of discipline And had also to agree to pay compensation. It may look anomalous that some persons who had been members of the Secretary of State 's Services may be deemed to have been appointed to their respective posts, on the appointed day, by the Governor of a Province if they had been holding Posts under the Provincial Government and others be deemed to have been appointed by the Governor General if they happened to be then serving posts in connection with the affairs of the Government of India or the Dominion. Such an anomaly was bound to come into existence and had been contemplated during the negotiations between the Government of India and His Majesty 's Government. There was no other choice open to the members of the Secretary of State 's Services who were serving under the Government of a: Province when their services automatically came to an end and when they desired to continue ' in Government service. Their wishes were ascertained in the context of what was taking place. They knew of the; announcement by the Viceroy dated April 30, 1947. It was only with their consent that their services were continued after the changeover. They can therefore have no grievance for being appointed to provincial services or posts under the Provincial Governments and naturally, under its administrative control. In fact, even prior to the changeover, such persons had been under the administrative control of the Provincial Government. This Court, in Rajagopalan 's Case(1), refers at p. 551 to the Government of India asking the Provincial Govemments, by its letter dated June 18, 1947, to state, when forwarding the replies from the individual officers, about their willingness or otherwise to continue in service, whether for any reason they Would prefer such officer not to continue in service notwithstanding his desire to remain in service, and pointing out to the Provincial Government that in case it did not (1) ; 478 desire to retain the services of such persons, the Pro vincial Government would be incurring the liability to pay compensation. Such an enquiry indicates, to my mind, that the decision to continue such persons in service after the changeover rested with the Provincial Government and It was on this account that .it had to bear the liability to the compensation payable to such persons. Such a decision had to be taken by the Provincial Government because it was contemplated that officers serving under the Provincial Government would be appointed to their respective posts after the changeover by that Government itself and that the Government of India will have nothing to do with their appointments. In the circumstances, it follows that it was the Provincial Government which invited such officers to continue in service and not the Government of India. It is true that the Madras Government informed Rajagopalan of the Government 's decision not to retain him in service after August 15, 1947, and stated that a formal communication in that respect would issue from the Government of India. The Government of India in a way approved of the decision of the Madras Government not to continue Rajagopalan in service. But it does not follow that the Government of India 's approval was necessary for the Government of Madras to continue under its service officers whom it was prepared to keep in service. The ter mination of service of such officers was prior to the coming into force of the Act as modified by the Provisional Constitution Order and therefore the termination order had to be formally made by the Government of India. The order had to be passed prior to the changeover and at that time it was proper that any order about the termination of the services be with the approval of the Government of India. The fresh deemed appointment was to be made on August 15, 1947, immediately after the changeover and, in view of the practical difficulties, such a fresh appointment was not actually made but was deemed to have been made, as provided by article 7(1) of the Provisional 479 Constitution Order. When the appointment was to be made of persons serving under the Provincial Governments, there was no necessity of obtaining prior approval of the Government of India to retain such officers in service. I am therefore of opinion that such members of the Secretary of State 's Services who were holdingposts under a Provincial Government immediately before the appointed day and continued in service on and after the appointed day are to be deemed to be appointed to the corresponding posts by the Governor of the Province, in view of the provisions of section 241 of the Act. The appellant was serving under the Madras Government immediately before the appointed day. He will therefore be deemed to be appointed by the Governor of the Province of Madras to the post he was holding on the appointed day. The Governor of the Province was his appointing authority and therefore he could be suspended on the day immediately before the commencement of the Dominion by the Governor of the Province where he might have been then serving. He can at best claim protection of his right of not being suspended pending departmental enquiry or of a criminal charge by any authority of a lower rank. Rule 7 of the Discipline Rules does not provide for such suspension of a person who had been a member of the Secretary of State 's Services by an authority lower than the Governor. The appellant was suspended by the Governor of Punjab on July 18, 1959. He had no right of appeal against such an order of suspension. The Discipline Rules did not provide for an appeal against such an order of suspension and, in not so providing, cannot be said to violate the provisions of article 314 of the Constitution as the appellant had no right of appeal against such an order before the commencement of the Constitution. It follows that r. 7 of the Discipline Rules does not violate the provisions of that Article and that the impugned order of suspension was therefore valid. 480 1 would therefore dismiss the appeal. ORDER in accordance with the opinion of the majority the appeal is allowed with costs in this Court and in the ' High Court.

The appellant joined the Indian Civil Service in 1939 and was posted in the province of Madras. After the transfer of power under the Indian independence Act on August 15,1947, he was 432 transferred to the Punjab and later when the Indian Administrative Service was constituted he became its member. On July 18, 1959, he was suspended by the Governor of the State of Punjab under r. 7(3) of the Indian Services (Discipline and Appeal) Rules, 1955, on the ground that a criminal case was pending against him. He challenged the order of suspension by a writ petition in the Punjab High Court as being violative of the guarantee contained in article 314 of the Constitution and contrary to r. 49 of the Civil Services (Classification, Control and Appeal) Rules which provided only for suspension as a penalty. His case was that there was no provision immediately before January 26, 1950, that provided for suspension otherwise than as penalty. The High Court dismissed the petition. Held: (per Gajendragadkar, Subba Rao, Wanchoo and Shah, JJ). The general law of master and servant and section 247 of the Government of India Act, r. 53 of the Fundamental Rules and rr. 49, 56 of the Civil Services (Classification, Control and Appeal) Rules, read together clearly show that members of the former Secretary of State 's Services were on August 14, 1947, liable to suspension either as an interim measure or as a punishment. Interim suspension could be imposed either by the Secretary of State as the appointing authority or the Governor General or the Governor, as the case might be, as the statutory authority. Management of Hotel Imperial, New Delhi v Hotel Workers ' Union, [19601 1 S.C.R. 476 and T. Cajee vs U. Jormanik Siem, ; , referred to. It was not therefore correct to say that there could be no suspension except by way of punishment under r.49 of the Appeal Rules before 1947. In a case of interim suspension before 1947 there was however no right of appeal. Article 314 of the Constitution, properly construed, affords such protection to the members of the Secretary of State 's Services as they were entitled to immediately before the commencement of the Constitution. There can be no doubt that suspension pending a departmental enquiry or a criminal proceeding falls within the word 'disciplinary matters ' used in that Article. It was not correct to say that as independence was conferred on India and the Services automatically terminated, there was in law reappointment of all the former Secretary of State 's Services, and those serving in a province must be deemed to have been reappointed by the Governor and that, consequently, the Governor as the appointing authority had the power to order suspension. Article 7(1) of India (Provisional Constitution) Order, 1947, G.G.O. 14, read with section 10 of the Independence Act, 1947, in the light of other relevant circumstances shows that the final decision whether or not the former members of the Secretary of State 's Services should continue was of the Government of India and that Government, therefore, must be deemed to have appointed 433 them to posts either under itself or in the Provinces. Section 241(b) of the Government of India Act, as it then stood, and s.240(2) of the said Act, as amended by G.G.O. 14, could not alter this position. State of Madras vs K.M. Rajagopalan, ; , referred to. On the eve of the commencement of the Constitution i.e. January 25, 1950, a former member of the Secretary of State 's Services could be suspended under the general law by the Government of India alone as the appointing authority as an interim measure pending departmental enquiry or criminal proceeding and by no other authority. He was liable to suspension as punishment under section 49 of the Civil Services (Classification, Control and Appeal) Rules. Rule 53 of the Fundamental Rules governed pay during interim suspension or suspension as penalty. While there was no appeal from an order of interim suspension, r. 56 of the Appeal Rules provided for an appeal from an order of suspension as penalty. It was this position which article 314 of the Constitution sought to protect. Rule 7 of the All India Services (Discipline and Appeal) Rules, 1955, violated the guarantee contained in article 314 in respect to interim suspension and was to that extent ultra vires in so far as it applied to the members of the Indian Administrative Services who fell within cls. (a) and (b) of r.3 of the Indian Administrative Services (Recruitment) Rules, 1954. The Governor 's Order under r.7(3) directing interim suspension of the appellant must, therefore, be set aside. The proper procedure would be to approach Government of India for such interim suspension. The Accountant General, Bihar vs N. Bakshi, [1962] Supp. 1 S.C.R. 505, referred to. Per Dayal, J. In view of the provisions of section 241 of the Government of India Act as modified by the India (Provisional Constitution) Order, 1947, G.G.O. 14 of 1947, members of the Secretary of State 's Services who were holding posts under a provincial Government immediately before the appointed day, i.e., August 15, 1947, and continued in service thereafter must be deemed in view of article 7(1) of the said Order to have been appointed to the corresponding posts by the appropriate authority, the Governor of the Province. That article generally applied to all appointments on and after the appointed day. The appellant cannot be deemed to have been appointed by the Governor General or the Government of India. It was not intended that merely because that Order was made by the Governor General, the deemed appointments must be taken to have been made by him. It would be anomalous to hold that the Governor, who was in administrative control of the services, could not pass an interim order of suspension against a person appointed by the Secretary of State, though he could impose a penalty of suspension under 1/SCI/64 28 434 rr. 49 and 52 of the Civil Services (Classification, Control and Appeal) Rules, which continued in force till the All India Services (Discipline and Appeal) Rules came into force in 1955. The Indian Civil Services ceased to exist from August 15,1947, and the services of its members automatically terminated on August 14, 1947. The appellant 's service, therefore, came to an end on August 14, 1947, but since he was serving under the Madras Government immediately before August 15, 1947, and continued to do so thereafter he must be deemed to have been appointed by the Governor of Madras to the post he was holding on the appointed day. Rule 7 of the All India Services (Discipline and Appeal) Rules, 1955, does not violate the provision of article 314 of the Constitution, nor can the absence of a right of appeal against interim suspension do so since the appellant had none before the Constitution. His suspension by the Governor of Punjab under r.7(3) was, therefore valid. State of Madras vs K.M. Rajagopalan, ; , considered.

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Civil Appeal No. 27 of 1971. (Appeal by special leave from the judgment and order dated 21st May 1970 of the Punjab & Haryana High Court at Chandigarh in civil writ No. 197 of 1968) J. Ramamurthi, for the appellant. Naunit Lal and R. N. Sachthey, for respondents Nos. 1 and 2. Bishamber Lal, for respondent No. 3. The Judgment of the Court was delivered by GOSWAMI, J. This appeal by special leave is directed against the judgment of the Division Bench of the Punjab and Haryana High Court by which the appellant 's application under article 226 of the Constitution was rejected. The appellant was a veterinary compounder serving at the material time under the Chairman, Panchayat Samiti, Hansi I. The Zila Parishad Trihunal transferred him from Hansi I Block to Singhani (Loharu Block) by its resolution of June 30, 1967. The order appear to be transmitted by Memo No. 3201 A of July 6, 1967. On July 27, 1967, the Chairman of the Panchayat Samiti, Hansi I, requested the Chairman of the Zila Parishad, Hissar, to reconsider the decision of transfer and to allow him to continue at his village Umra in public interest. A copy of this letter writen to the Zila Parishad was forwarded to the appellant. Since the appellant did not comply with the order of transfer, the Chairman, Zila Parishad mal, served a notice upon him on August 13, 1967. , to show cause as to why he should not be dismissed from service on the grounds mentioned in the notice. It is mentioned in the notice that this action has been taken under section 124 of the Punjab Panchayat Samitis and Zila Parishads Act,1961 (briefly the Act). The particulars of charge described in the show cause notice are briefly as under: (1) You did not hand over charge of veterinary dispensary to Balwan Singh, Veterinary Compounder, on 25 7 1967. in compliance with the transfer order dated 6 7 1967. (2) You also did not hand over charge to the District Animal Husbandry officer who was ordered to personally take over charge from you on 26 7 1967. (3) You were again asked by letter dated 2 8 67 to hand over charge to Balwan Singh Veterinary Compounder, but you did not hand over the charge. 632 (4) When Ch. Bir Singh Lamba, Secretary, Zila Parishad Tribunal, along with Balwan Singh reached Umra on 10 8 67 between 4.30 and 5.00 P.M. in order to take charge from you they found you absent and the dispensary locked. (5) That on 15 8 67 at about 4.00 P.M. when Balwan Singh went to take charge from him along with Ch. Bir Singh Lamba, Secretary, Zila Parishad Tribunal, along with Ch. Balbir Singh, Chairman, Zila Parishad, Hissar and Kali Ram, Member, Panchayat Samiti, Hissar, you refused to hand over charge to Balwan Singh Veterinary Compounder. (6) When on 15 8 67 Ch. Bir Singh Lamba, Secretary Zila Parishad Tribunal, with the help of Balwan Singh, was preparing a list of stock in the presence of the Chairman and others, you with Rattan Singh, Sarpanch, Gram Panchayat, Umra, Giani Ram of village Majahadpur and three or four other unknown villagers entered the office. Giani Ram out of your group snatched the paper from Ch. Bir Singh Secretary, Zila Parishad Tribunal and threatened them to leave the dispensary before they manhandled him. You are thus at the root of all this incident. The appellant submitted a reply on September 13, 1967, describing it as an interim explanation and reserving his right to submit a final reply after inspection of certain records and he requested for a date for inspection of the records. In this reply he admitted to have received the transfer order and pleaded that he did not hand over charge to Balwan Singh on 25 7 1967 under instructions from the Chairman, Panchayat Samiti, who, according to him, was the appointing authority and he was carrying out his orders. He particularly denied the incident of August 15, 1967, for which he was held principally responsible in the show cause notice. It does not appear that the Zila Parishad Tribunal gave any opportunity to the appellant for inspection of records, nor sent any communication to him rejecting the request giving any justifiable reason. The appellant seemed to have been waiting for some communication to his interim reply in order to submit final explanation when on December 5, 1967 he received the order of the Zila Parishad Tribunal dismissing him from service with immediate effect in pursuance of its resolution of December 1, 1967. The resolution states: "The Tribunal has come to a conclusion that your reply is not a satisfactory one. And the allegations made against him (sic) seemed to be correct". That led to the appellant 's writ application in the High Court resulting in the impugned order. The short question that arises for decision is whether the order of dismissal is in conformity with section 124 of the Act, or, in 633 other words, whether the same is in violation of the principles of natural justice. We may, therefore, read the material provision under section 124(2) of the Act: 124(2): "The tribunal may suo motu or on the move of the Panchayat Samiti or the Zila Parishad or on the application of any servant of a Panchayat Samiti or Zila Parishad other than a government servant placed at their disposal enquire into the conduct of any servant of the Panchayat Samiti or the Zila Parishad and after making such enquiry as it may deem fit pass such orders imposing any punishment including dismissal or removal as it may deem proper; Provided that the tribunal shall not pass any such order in respect of a servant having a right of appeal under section 116; Provided further that the tribunal shall before passing any order of dismissal or removal give a notice to the servant to show cause against the action proposed to be taken against him". A persual of section 124(2) goes to show that before any action is taken for dismissal or removal of an employee the Tribunal has to enquire into his conduct justifying such action. This enquiry must necessarily have to be made in the presence of the employee giving him an opportunity to rebut the allegations mentioned against him. It is only after affording him a reasonable opportunity to rebut the allegations in the charge and the Tribunal is satisfied that the misconduct is established the question of final punitive action either of dismissal or removal has to be considered. Unlike as in article 311 of the Constitution, section 124(2) does not in terms mention two stages of a departmental enquiry for misconduct against an employee. Even so, the nature of an enquiry with an object to dismiss an employee is such that a full and fair reasonable opportunity must be given to him to meet the charges. The second proviso to section 124(2) provides in unmistakable terms that before passing any order of dismissal or removal a notice has To he given to the employee to show cause against the proposed action. The action of dismissal or removal cannot be proposed, in all fairness, unless the Tribunal had reached a conclusion about the guilt after making a proper enquiry giving the employee a reasonable opportunity to defend. In the instant case, apart from giving the show cause notice, no other communication was made to the appellant except the order of sal. This is a clear case where the reasonable opportunity envisaged under section 124(2) has not been afforded to the appellant far marking an effective representation to establish his innocence. It is easy to see that the summary order of dismissal must have been influenced by the allegations appreciation to the incident of August 634 15,1967 for which, we understand, even a criminal case was instituted against the appellant. That criminal case, we are told, ended in acquittal of the appellant and others on June 10, 1970. At any rate the said incident being included in the articles of charge against the appellant he did not have any opportunity whatsoever to establish his innocence when he had clearly denied the allegations even in his interim reply. The principles of natural justice are clearly ingrained in the provisions of section 124(2). It is a clear case where the provisions of section 124(2), which are of a mandatory character in a departmental enquiries have been violated vitiating the order of dismissal. The High Court, therefore, should have accepted the petition of the appellant under article 226 of the Constitution and quashed the order of dismissal. Although in the ordinary course it would have been open to the authority to institute a fresh enquiry his reinstatement, after the order of dismissal has been set aside, we are clearly of opinion that this is not a case where that procedure should be permitted. For one reason the appellant was dismissed in December 1967 and he had been out of employment for over eight years. He has also not many years to serve. Besides, the serious allegations regarding the incident of August 15, 1967, which, according to us, must have influenced the authority to pass the order of dismissal, have not been found to be established in a judicial trial. While, therefore, quashing the impugned order of dismissal, which we hereby do, we direct that the appellant shall be reinstated in service with immediate effect and there shall be no further enquiry to the allegations forming the subject matter of charge against him. The period of absence shall be treated as leave without pay so that the appellant will not lose continuity of his service. In the result the judgment of the High Court is set aside and the appeal is allowed with costs. P.H.P. Appeal allowed.

The appellant was a Veterinary Compounder serving under the Panehayat Samiti, Hansi. The Zilla Parishad Tribunaul tranferred him from Hansi to Singhani. The Chairman of the Panchayat Samiti. Hansi requested the Chairman of Zilla Parishad Tribunal served a notice on the appellant to show cause why he should not be dismissed for not having handed over the charge of the dispensary to the person who was appointed in his place and also on the ground that when the Secretary of the Zilla Parishaod Tribunal with the help of the compounder, who was directed to take charge from the appellant, was prepaering a list of stock, the appellant and others entered the office and one of the persons out of the appellant 's group snatched the papers from the Secretry and manhandled him. The appellant submitted an interim explanation and reserved his right to submit a final reply after inspection of certain records was given to him. The Zilla Parishad Tribunal did not give any opportunity to the appellant for inspecation of record nor sent any communication to him rejecting the request giving any justifiable reasons. However, the appellant was served with a letter dismissisng him from service. Section 124(2) of the Punjab Panchayat. Samitis & Zilla Parishad. Act, 1961, authorises the Tribunal to impose any punishment including the punishment of dismissal on any servant of the Panchayat Samiti or Zilla Parishad. The proviso,howvever. requires the Tribunal before passing any order of dismissal or removal to give a notice to the servant to show cause against the action proposed to be taken against him The appellant filed a writ petition in the High Court challengaing the dismissal order. The High Court dismissed the writ petition. Allowing the appeal by special leave, ^ HELD: (1) A perusal of section 124(2) goes to show that before any action is taken for dismissal or removal of an employee the Tribunal has to enquire into his conduct justifying such action. This enquiry must necessarily be made in the presence of the employee giving him an opportunity to rebut the allegations made against him. It is only after affourding him a reasonable opportunity to rebut the allegations in the charge and after the Tribunal is satisfied that the misconduct is established, the question of final punitive action either of dismissal or removal has to be considered. The employee must be given a full and fair. reasonable opportunity to meet the charges. [633D E] (2) In the instant case apart from giving the show cause notice no other communication was made to the appellant except the order of dismissal. This is a clear case where the reasonable opportunity envisaged under section 124(2) has not been afforded to the appellant for making an effective representation to establish his innocence. Even in respect of the incident of 15 8 1967, the appellant was acquitted in a criminal case lodged against him. In the instant case the provisions of section 124(2) which embody the principles of natural justice and which are of a mandatory character have been violated vitiating the order of dismissal. [633G. 634A C] (3) In the ordinary course it would have been open to the authority to institute a fresh enquiry after the reinstatement. But in this case, that procedure was not permitted because the appellant was dismissed in December, 1967, and 631 has been out of employment for over 8 years. Secondly, he does not have many years to serve. Thirdly, the serious allegations regarding the incident of 15 8 1967 have not been found to be established in a judicial trial. The Court, therefore, quashed the order of dismissal and directed that the appellant should be treated on leave without pay and further directed that no further enquiry into the allegations forming the subject matter of charge should be made. [634C E]

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Appeal No. 37 of 1960. Appeal from the judgment and decree dated November 12, 1952, of the Bombay High Court in First Appeal No. 492 of 1949, arising out of the judgment and decree dated the 20th April, 1949, of the First Class Sub Judge, Dharwar, in Special Civil Suit No. 16 of 1943. section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. Naunit Lal, for respondent No. 1. B. R. L. Iyengar and T. M. Sen, for respondent No. 2. 1960. April 29. The Judgment of the Court was delivered by section K. DAS, J. This is an appeal on a certificate given by the High Court of Bombay, from the judgment and decree of the said High Court dated 791 November 12, 1952, by which it reversed the decision of the Civil Judge, First Class, at Dharwar dated ,, April 20, 1949, in Special Civil Suit No. 16 of 1943. The material facts are these. Gajendragad in Taluk Ron in the district of Dharwar is a Saranjam estate known as the Gajendragad Saranjam bearing number 91 in the Saranjam list maintained by Government. Within that estate lay village Dindur and survey field No. 302 of Unachgeri, which are the properties in suit. One Bhujangarao Daulatrao Ghorpade was the holder of the Saranjam estate at the relevant time. In 1932 the Saranjam was resumed and re granted to the said Bhunjangarao by Resolution No. 8969 dated June 7, 1932, of the Government of Bombay in the Political Department. This Resolution said: " The Governor in Council is pleased to direct that the Gajendragad Saranjam should be formally resumed and re granted to Bhujangarao Daulatrao Ghorpade, the eldest son of the deceased Saranjamdar Daulatrao Bhujangarao Ghorpade, and that it should be entered in his sole name in the accounts of the Collector of Dharwar with effect from the date of the death of the last holder. The Collector should take steps to place the Saranjamdar in possession of the villages of the Saranjam estate which were in possession of the deceased Saranjamdar. The Governor in Council agrees with the Commissioner, Southern Division, that the assignments held by the Bhaubands as potgi holders should be continued to them as at present. " One of the younger branches of the Ghorpade family was Babasaheb Bahirojirao Ghorpade, to be referred to hereinafter as Babasaheb. He held by way of maintenance (as potgi holder) the aforesaid village of Dindur and survey field No. 302 of Unachgeri. He had an undivided brother called Dattojirao, who was defendant No. 2 in the suit and is appellant before us. In this judgment we shall call him the appellant. Babasaheb died on May 14, 1940. On his death he left a widow named Abayabai and the appellant, his undivided brother. On July 10, 1941, Abayabai adopted Vijayasinhrao as a, son to her deceased husband. Vijayasinha was the plaintiff who brought the suit ' 792 and is now the principal respondent before us. It will be convenient if we call him the plaintiff respondent, and state here that he was the natural son of Bhujaugarao 's younger brother, another Dattajirao to be distinguished from the appellant who also bears the same name. On Babasaheb 's death Abayabai asked for sanction of Government to her taking a boy in adoption; this application was opposed by the appellant. On December 17, 1941, the Government of Bombay passed a Resolution in the following terms: " 1. Government is pleased to direct that the Saranjam potgi holding of village Dindur and Survey No. 302 of Unacbgeri, which were assigned for maintenance to the deceased potgidar, Mr. Babasaheb Bahirajirao Ghorpade, at the time of the re grant of the Gajendragad Saranjam, should be continued to his undivided brother, Mr. Dattajirao Babirojirao Ghorpade. 2.Government is also pleased to direct, under Rule 7 of the Saranjam Rules, that the new potgidar, Mr. Dattajirao Bahirojirao Gborpade, should give to Bai Abaibai, widow of the deceased Potgidar, Mr. Babasaheb Bahirojirao Ghorpade, an annual maintenance allowance of Rs. 300 for her life. 3.These orders should take effect from the 14th May, 1940, i.e., the date on which the deceased potgidar, Babasaheb Bahirojirao Ghorpade, died. 4.The Commissioner section D. should be requested to communicate these orders to Bai Abaibai, widow of the late potgidar, with reference to her petitions addressed to him and also to the Rayats of Dindur, with reference to their petition, dated the 12th May, 1941. The orders should also be communicated to the present Saranjamdar of Gajendragad. " On February 8, 1943, the plaintiff respondent brought the suit against the Province of Bombay as defendant No. 1, the appellant as defendant No. 2 and Abayabai as defendant No. 3. The suit was contested by the Province of Bombay (now substituted by the State of Bombay) and the appellant. Abayabai supported the case of the plaintiff respondent, but she died during. the Pendency of the suit. 793 The claim of the plaintiff respondent was that on his adoption the estate of his deceased adoptive father devolved on him by the, rule of lineal primogeniture in preference to the appellant. The main plea of the plaintiff respondent was stated in paragraph 6 of the plaint, which read as follows: " 6. The Government Resolution passed by defendant No. 1 in 1941 is ultra vires and null and void for the following reasons: (a)Defendant No. 1 made a re grant of the Saranjam estate to Shrimant Sardar Bhujaragarao Ghorpade in 1932 and therein the suit properties were, according to defendant No. 1, continued to the adoptive father of plaintiff Under the Saranjam rules no occasion has arisen for interference by Government at this stage. The re grant made by Government would in any case be effective during the life time of the grantee, viz., Shrimant Sardar Bhujangarao Ghorpade. Further the said Shrimant Sardar Bhujangarao Ghorpade was not consulted by defendant No. 1 before the said Government Resolution. (b)By the custom of the family to which the family belongs, the estate of a deceased person devolves by the rule of lineal primogeniture. Hence after the death of plaintiff 's adoptive father and the adoption of plaintiff himself, all the estate vested in plaintiff 's adoptive father has devolved on the plaintiff in preference to defendant No. 2. The action of defendant No. 1 in ignoring this rule of succession prevalent in the family is ultra vires and null and void. " On the aforesaid pleas, the plaintiff respondent prayed for (a) recovery of possession of properties in suit from the appellant, (b) mesne profits, and (c) costs. On behalf of the Province of Bombay several pleas by way of defence were taken. The main pleas were (1) assuming that the plaintiff respondent was validly adopted, he had nevertheless no legal claim to the properties in suit because under the relevant Saranjam Rules the interest of Babasabeb came to an end on his death and was not of such a nature as would 794 devolve on the plaintiff respondent despite the Government Resolution dated December 17, 1941, (2) that the alleged family custom did not apply to maintenance grants, and (3) that, in any event, the suit was barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. The appellant besides supporting the aforesaid pleas raised the additional pleas that there was no valid adoption of the plaintiff respondent and Abayabai was expressly prohibited by her husband from adopting a son. On these pleadings several issues were framed. The suit was originally dismissed on a preliminary ground, namely, that the plaint did not disclose any cause of action. The learned Civil Judge apparently took the view that the properties in suit were subject to the Saranjam Rules and on examining those rules, he came to the conclusion that as the plaintiff respondent on his adoption became a nephew of the appellant and in that sense was claiming maintenance from the latter, it was necessary for him to have alleged the necessary circumstances under which certain members of a Saranjam Family are entitled to claim maintenance under Rule 7 of the said Rules and as those circumstances were not pleaded by the plaintiff respondent, the plaint disclosed no cause of action. The High Court rightly pointed out that the plaintiff respondent did not make a claim for maintenance under Rule 7 of the Saranjam Rules, but claimed that the properties in suit devolved on him by reason of his adoption and the custom of lineal primogeniture. Therefore, the High Court held that the claim of the plaintiff respondent was much more fundamental than a mere claim of maintenance, and the learned Civil Judge had misdirected himself as to the true scope of the suit. Accordingly, the High Court set aside the decree of dismissal and directed the suit to be tried on all the issues. After this direction the learned Civil Judge tried all the issues. Issues 1 and 2 related to the question of adoption, namely, (1) whether the ceremony of adoption was properly proved and (2) whether Babasaheb during his life time had prohibited his wife from making an adoption. On the first issue the learned 795 Civil Judge found in favour of the plaintiff respondent and on the second against him. The High Court affirmed the finding on the first issue, and on a careful and detailed examination of the evidence held on the second issue that the learned Civil Judge was wrong in holding that the adoption was invalid by reason of the alleged prohibition of Babasaheb. The High Court held that there was no such prohibition, and the adoption was valid. We do not think that this finding of the High Court has been or can be successfully assailed before us. Therefore, we have proceeded in this appeal on the basis that the plaintiff respondent was validly adopted by Abayabai on July 10, 1941. We go now to a consideration of those issues which are material for a decision of this appeal. They are: Issue No. 3 Does plaintiff prove his title to the suit property ? Issue No. 4 Is it proved that the Government Resolution (D. G.) No. 8969 of December 17, 1941, is ultra vires and null and void as alleged in the plaint ? Issue No. 5 Is the suit barred under section 4 of the Revenue Jurisdiction Act ? Issue No. 7 Is the alleged custom set up in para. 6(b) of the plaint proved ? On all these issues the learned Civil Judge found against the plaintiff respondent, and held that the latter was not entitled to recover possession Of the properties in suit, that he had failed to prove the custom pleaded in paragraph 6(b) of the plaint, that the Government Resolution of December 17,1941, was not ultra vires, and that the suit itself was barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. The High Court reversed the decision of the learned Civil Judge on all the aforesaid issues, and held that as the properties in suit were given to the junior branch of Babasaheb for its maintenance and were impartible and governed by the rule of lineal primogeniture, they devolved on the appellant after Babasaheb 's death ; but as soon as Babasaheb 's widow 796 made a valid adoption, the properties were divested and inasmuch as the plaintiff respondent became the eldest member of the senior branch of Babasaheb 's family, he became entitled thereto as a result of the combined effect of the family custom and ordinary Hindu law. The High Court said that looked at from this point of view, no question arose of the validity of the Government Resolution dated December 17, 1941, and no relief for possession having been claimed against Government, the suit was not barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. On behalf of the appellant, it has been very strenuously argued that the High Court was in error in holding that the properties in suit which are part of a Saranjam, vested in the appellant on 'the death of Babasaheb and were then divested on the adoption of the plaintiff respondent; it is contended that such a conclusion is inconsistent with the nature of a Saranjam tenure and furthermore, the properties in suit having vested in the appellant by reason of the re grant dated December 17, 1941, they could not be divested by the adoption made on July 10, 1941. Nor does it follow, it is contended, from the custom pleaded in paragraph 6(b) of the plaint, apart from the question whether even that custom has been proved or not, that the properties in suit having once vested in the appellant will be divested on a valid adoption. Secondly, it has been contended that the High Court was also in error in holding that there was no claim against Government within the meaning of the fourth sub cl. of section 4(a) of the Bombay Revenue Jurisdiction Act, 1876. The argument before us has been that there was such a claim, and no Civil Court had jurisdiction to determine it. We are satisfied that these arguments are correct and should be accepted. The claim of the plaintiff respondent that the properties in suit devolved on him on his adoption may be examined either from the point of view of the Saranjam Rules or the custom which he pleaded in paragraph 6(b) of the plaint. Let us examine the claim first from the point of view of the Saraniam Rules assuming here that they apply, 797 as far as practicable, to maintenance grants (potgis) within the Saranjam. In the Resolution of June 7, 1932, quoted earlier, the Government of Bombay treated the potgi holders as being within the Saranjam and made provision for them. The Resolution of December 17, 1941, also proceeded on that footing. Two earlier Resolutions, one of 1891 (exhibit 100) and the other of 1936 (exhibit 101), also treated the whole of Gajendragad and also parts thereof as a Saranjam. Babasaheb in his lifetime wanted to surrender the grant in his favour to the Saranjamdar, but Government refused to accept such relinquishment. Even Abayabai asked for permission of Government to take a boy in adoption, which permission she did not obtain. All this shows that the potgi holding was part of the Saranjam and was treated as such by all the parties concerned. What is a Saranjam ? The word " Saranjam literally means apparatus, provisions or materials. In his Glossary, Wilson defines Saranjam as temporary assignments of revenue from villages or lands for support of troops or for personal service usually for the lifetime of the grantees. Dr. G. D. Patel in his book on " The Indian Land Problem and Legislation has said: " According to the account given by Col. Etheridge in his preface to the Saranjam List, it was the practice of the former Governments, both the Muslims and the Marathas, to maintain a species of feudal aristocracy for the State purposes by temporary assignments of revenue either for the support of the troops or personal service, the maintenance of official dignity or for other specific reasons. The holders of such lands were entrusted at the time with the necessary powers for enabling them to collect and appropriate the revenue and to administer the general management of the lands. Under the Muslim rule, such holdings were called Jahagirs and under the Maratha rule, they came to be called Saranjam. However, this distinction between these tenures ceased to exist during the Maratha period. At the time of the introduction of the British rule, 104 798 the difference between a Jahagir and a Saranjam ceased to exist, to all intents and purposes. The two terms became convertible and all such grants came to be known by the general term "saranjam". Apart from the Saranjam grants, which were found only in the Deccan, there were other grants of a political nature found scattered over the whole State. Their origins did not materially differ from those of the Saranjam with the result that the British treated them under the same rules called the Saranjam Rules ". The Saranjam Rules were made in exercise of the powers referred to in r. 10 of Schedule B of Act Xi of 1852 and of the second sub cl. to el. 3 of section 2 of Bombay Act VII of 1863. We may here reproduce some of these Rules: " Rule I Saranjams shall be ordinarily continued in accordance with the decision already passed or which may hereafter be passed by Provincial Government in each case. Rule 2 A Saranjam which has been decided to be hereditarily continuable shall ordinarily descend to the eldest male representative in the order of primogeniture, of the senior branch of the family descended from the First British grantee or any of his brothers who were undivided in interest. But Provincial Government reserve to themselves the rights for sufficient reasons to direct the continuance of the Saranjam to any other member of the said family, or as an act of grace, to a person adopted into the same family with the sanction of Provincial Government. When a saranjam is thus continued to an adopted son, he shall be liable to pay to Provincial Government a nazarana not exceeding one year 's value of the saranjam, and it shall be levied from him in such instalments as Provincial Government may in each case direct. Rule 5 Every saranjam shall be held as a life estate. It shall be formally resumed on the death of the holder, and in cases in which it is capable of further continuance, it shall be made over to the next holder as a, fresh grant from Provincial 799 Government, unencumbered by any debts or charges save such as may be specially imposed by Provincial Government itself Rule 7 Every saranjamdar shall be responsible for making a suitable provision for the maintenance of the widow or widows of the preceding saranjamdar, his own brothers, or any other member of his family who, having a valid claim arising from infancy, mental or physical deformity rendering such member incapable of earning a livelihood, may be deemed deserving of support at his hands. When this obligation is not fulfilled by any saranjamdar, Provincial Government may direct him to make suitable provision for such person and may fix the amount, which he shall pay in each instance; provided that no one who has independent means of his own, or is, in the opinion of Provincial Government, otherwise sufficiently provided for, shall be entitled to maintenance from the Saranjamdar. Rule 8 Every order passed by Provincial Government under the above rule for the grant of maintenance by a Saranjamdar shall hold good ' during his life only The true nature of a Saranjam tenure was considered by a Full Bench of the Bombay High Court in Daulatrao Malojirao vs Province of Bombay(1) where their Lordships after referring to the earlier decisions in Shekh Sultan Sani vs Shekh Ajmodin (2) and Raghojirao vs Laxmanrao(3) observed: " An examination of the authorities, makes it clear that the whole structure of a Saranjam tenure is founded in the sovereign right, which can only change by conquest or by treaty. So founded, jagirs and Saranjams, with the feudal incidents connected with them, are granted or withheld at the will and pleasure of the sovereign power, and, if granted, the fixity of tenure is always subject to interruption and revocation by resumption, be it temporary or absolute in character. No incident normally applicable (1) (2) (1892) L.R. 20 I.A. 50. (3) 800 to private rights between subject and subject can fetter or disturb the sovereign will ". It seems to us manifestly clear that the Saranjam Rules furnish no basis for the claim of the plaintiff respondent. Abayabai asked for sanction to her taking a boy in adoption. No such sanction was given. On the death of Babasaheb, it was open to Government to resume the grant, and by its Resolution of December 17, 1941, Government directed that the Saranjam potgi holding of village Dindur and Survey No. 302 of Unachgeri should be continued to the appellant. This really amounted to a resumption and fresh grant and we do not agree with the High Court that the order passed amounted to no more than recognising the legal position according to the rule of succession and stood on the same footing as any order of ordinary mutation. The High Court has emphasised the use of the word " continued " in the Resolution dated December 17, 1941, and has contrasted that Resolution with the earlier Resolution dated June 7, 1932, which was clearly a Resolution giving effect to a resumption and regrant of the Gajendragad Saranjam. It may, however, be pointed out that in paragraph 2 of the earlier Resolution, Government used the same word " continued " in connection with the maintenance grants, namely, potgi holdings within a Saranjam. Nothing, therefore, turns upon the use of the word " continued " and if the ]Resolution dated December 17, 1941, is read as a whole it is clear that the potgi of village Dindur and Survey field No. 302 of Unachgeri was granted to the present appellant. It was open to Government to pass such an order, and we see no reasons to hold that it was null and void. Indeed, the High Court did not say that it was an invalid order; on the contrary, it said that it was a good order and operated with effect from the death of Babasaheb. But it said erroneously in our opinion, that by reason of the subsequent event of adoption, the order ceased, for all practical purposes, to have any effect from that event. It is well to remember that the adoption took place on July 10, 1941, and the Resolution was passed on December 17, 801 1941, though it took effect retrospectively from the date of death of Babasaheb. We see no reasons why S, a valid order made by Government will cease to have any effect because of an adoption made by Abayabai without sanction of Government. To hold that the Government Order ceased to have any effect by reason of the act of a private party will be to go against the very nature of a Saranjam tenure. Let us now examine the claim of the plaintiff respondent from the point of view of the custom pleaded in paragraph 6(b) of the plaint. The custom pleaded was the rule of lineal primogeniture. In its written statement Government said: " The family custom alleged in clause (b) is not admitted, and it is denied that such a custom can apply in respect of maintenance grants. Under Rule 7 of the Saranjam Rules, which merely embody the customary law relating to Saranjams, Government is given absolute discretion to determine whether or not to make an order and what provision to make and in whose favour The appellant said: " The contents of para. 6(b) of the plaint are not correct. The custom of descent by the rule of primogeniture is denied. This defendant has become the owner by survivorship, after the death of Babasaheb ". The learned Civil Judge found that the custom pleaded in paragraph 6(b) of the plaint was not proved. The High Court has not referred to any evidence on which the custom could be said to have been proved, but observed that " it is common ground that the properties which had been assigned to this branch for its maintenance is impartable and goes by primogeniture". Even if we assume that the High Court is right in its observation, though in face of the denial in the two written statements it is difficult to see how this could be common ground between the parties, we fail to appreciate how the assumption helps the plaintiff respondent. On the operation of the rule of lineal primogeniture after the death of Babasaheb, the appellant became entitled to and got the 802 properties. It was not pleaded in the plaint that the properties once vested by the customary rule of lineal primogeniture were divested on subsequent adoption, by the widow. No such plea was specifically taken, but the High Court relied on the concession made by learned advocate for the appellant that under ordinary Hindu law the properties which were vested in the appellant were divested on a subsequent valid adoption by the widow. We consider it unnecessary to go into the vexed question of divesting of an estate on a subsequent valid adoption by the widow. It is enough to point out that the plaint disclosed no such case; no such issue was raised and it was not open to the plaintiff respondent to make out a new case for the first time in appeal. The plaintiff respondent set up a family custom of lineal primogeniture different from the ordinary law of inheritance; it was incumbent on him to allege and prove the custom on which he relied and to show its precise extent and how far it prevailed over ordinary Hindu law. In our opinion, he failed to plead or prove any family custom by which the properties devolved on him. Moreover, in order to succeed the plaintiff respondent must further establish that the custom was such as would bind the Government. The appellant and the Government never conceded that the custom of lineal primogeniture, if it prevailed in the family, took away the right of Government to resume the maintenance grant which was part of a Saranjam and make a fresh grant thereof in accordance with the Saranjam Rules. Now, as to section 4 of the Bombay Revenue Jurisdiction Act, 1876. The section, so far as it is relevant for our purpose, says: " section 4. Subject to the exceptions hereinafter appearing, no Civil Court shall exercise jurisdiction as to any of the following matters: (a)claims against the Government relating to any property appertaining to the office of any hereditary officer appointed or recognised under Bombay Act No. III of 1874 or any other law for the time being in force, or of any other village officer or servant, or 803 claims to perform the duties of any such officer or servant, or in respect of any injury caused by,, exclusion from such office or service, or suits to set aside or avoid any order under the same Act or any other law relating to the same subject for the time being in force passed by the State Government or any officer duly authorized in that behalf, or claims against the Government relating to lands held under treaty, or to lands granted or held as Saranjam, or on other political tenure, or to lands declared by the Provincial Government or any officer duly authorized in that behalf to be held for service". In Mallappa alias Annasaheb Basvantrao Desai Nadgouda vs Tukko Narshimha Mutalik Desai and Others (1) it was pointed out that in the section a distinction has been made between claims and suits. The subclause we are concerned with is the fourth sub clause which relates inter alia to " claims against the Government relating to lands granted or held as Saranjam ". The High Court has taken the view that no claim was made against Government in the present case. We are unable to agree. In express terms, the plaintiff respondent asked for a finding that the Government Resolution dated December 17, 1941, was null and void and did not affect the properties in suit because the Government had either no authority to make such an order or no occasion to do so. He asked for possession of those properties in spite of the orders of Government. In these circumstances we must hold that Government was more than a purely formal party, and a claim was made against it in respect of the orders contained in its Resolution dated December 17, 1941. Unless the Resolution is out of his way, the plaintiff respondent is not entitled to claim recovery of possession from the appellant with mesne profits, etc. The Civil Court has no jurisdiction to determine any claim against the Government in the matter of the Resolution of December 17, 1941, relat ing to Saranjam lands, and the suit was barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. (1) I.L.R. 804 We accordingly allow this appeal, set aside the judgment and decree of the High Court dated November 12, 1952, and restore that of the learned Civil Judge dated April 20, 1949. The appellant will be entitled to his costs throughout from the plaintiff respondent. Appeal allowed.

Upon the death of the holder in 1932, the Government of Bombay by order dated June 7, 1932, resumed the Saranjam estate of Gajendragad and re granted the same to his eldest son. By the same order the assignment of some lands out of the estate in favour of B, a younger member of the family, by way of maintenance was also continued. On May 14, 1940, B died leaving his widow, A, and his undivided brother, D. A asked the Government for permission to adopt a son but without the permission being granted adopted V on July 10, 1941. By an order dated December 17, 1941, the Government continued the maintenance grant (Saranjam potgi) to D. Thereupon V filed a suit against the Government and D for recovery of the lands on the grounds (i) that the order of the Government dated December 17, 1941, was ultra vires, null and void, and (ii) that by the custom of lineal primogeniture which prevailed in the family the lands, upon the death of B and upon the adoption of V by A, devolved upon V in preference to D. The suit was contested, inter alia, on the grounds: (i) that under the relevant Saranjam Rules the interest of B came to an end on his death and was not such as could devolve upon V despite the order dated December 17, 1941, (ii) that the alleged family custom did not apply to maintenance grants and (iii) that the suit was barred under section 4 Of the Bombay Revenue jurisdiction Act, 1876: Held, that the plaintiff was not entitled to the lands either under the Saranjam Rules or under the custom; further that the suit was barred by $ 4 of the Bombay Revenue jurisdiction Act, 1876. 103 790 The maintenance grant (potgi holding) was part of the Saranjam and was governed by the incidents of Saranjam tenure and by the relevant Saranjam Rules. Saranjam grants were granted or withheld at the will and pleasure of the sovereign power and the grant was always subject to interruption and revocation by resumption, temporary or absolute. On the death of B it was open to the Government to resume the grant and to grant it to D and this is what it did by the order dated December 17, 1941. The taking in adoption of the plaintiff by the widow of the deceased could not affect the operation of the order passed by the Government. Daulatrao Malojiyao vs Province of Bombay (1946) 49 Bom. L.R. 270, referred to. Even under the custom of lineal primogeniture pleaded by the plaintiff, D was entitled to get the properties after the death of B. It was not pleaded that the properties once so vested were divested by subsequent adoption by the widow. Further it was neither pleaded nor proved that the custom took away the right of the Government to resume the maintenance grant and to make a fresh grant thereof. Sub clause 4 of the Bombay Revenue jurisdiction Act, 1876, barred the jurisdiction of civil courts in respect of " claims against the Government relating to lands granted or held as Saranjam". The plaintiff asked for a finding that the order of December 17, 1941, was null and void and did not affect the properties in suit. Unless the order was out of his way, the plaintiff was not entitled to claim recovery of possession. The claim was one which fell within the mischief of section 4 and the suit was barred.

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ON: Criminal Appeal No. 392 of 1974 Appeal by Special Leave from the Judgment and order dated the 25th April, 1974 of the Andhra Pradesh High Court in Criminal Appeal No. 701 of 1972. P. Basi Reddy and G. Narasimhulu, for the appellant, A, section Mulla, T. V. section N. Chari and P. P. Rao, for the respondent. The Judgment of the Court was delivered by SARKARIA J. This appeal is directed against a judgment of the High Court of Andhra Pradesh, converting on appeal by the State the acquittal of the appellants into conviction. Appellant No. 1 (for short A 1) was an arrack contractor doing liquor business inter alia within the territorial jurisdiction of Police Station Indukurpet, District Nellore, while Appellant No. 2 (for short, A 2) was a Sub Inspector of Police in charge of this Police Station, The appellants and one other person were tried by the Firs Additional Sessions Judge Nellore on charges under ss.120 B, 366, 376, 302/34., 201, 218, 468/34, 324, Penal Code relating to the abduction, rape and murder etc. Of two sisters, named Kalarani and Chandrika Rani of Nellore. The Sessions Judge acquitted the three accused of all the charges. Against the acquittal of the appellants only the State preferred an appeal. The High Court partly allowed the appeal, set aside the acquittal on charges 7, 8, 9 and convicted A 2 and A I. under ss, 201, 201b34, Penal Code and sentenced each of them to five years rigorous imprisonment. A 2 and A 1 were further Convicted under section 218 and 218/109, Penal Code and sentenced to two years rigorous imprisonment, each. They were also convicted under 605 section 468 and 468/34, Penal Code and sentenced to two years rigorous imprisonment each. The sentences on all the counts were directed to run concurrently. Their acquittal on the remaining charges, including those of abduction, rape and murder, was upheld. The facts of the prosecution case, as they emerge from the record" arc as follows: Kalarani and Chandrika Rani deceased were two of the six daughters of PW1, a legal practitioner of Nellore. Kalarani was aged 21 and a graduate from the local Women 's College, Nellore. She used to be the President of the College Union and as such was well known. Chandrika Rani was, aged 17 and a B.A. student in that very college. on 6 6 1971 in the morning the deceased girls along with their parents and other sisters attended a marriage in the house of a family friend (P.W.2). In the afternoon they went away from the marriage house saying that they were going out to have coca cola. At about 4 p.m. they boarded a bus bound for Mypaud which is a sea shore resort at a distance of 11 miles from Nellore. At about 5.40 p.m. they were seen alighting from the bus as Mypaud and then proceeding towards Sagarvilla, a Travellers ' Bungalow situated near the seashore. They were last seen at about 6 30 p.m. On the seashore by P.Ws. 11, 12, 13 and 14. Shortly there after, P.W. 18, a rickshaw puller was attracted to the seashore by the outcry of a woman. When be proceeded in hat direction, Chandrika Rani came running to him for help. P.W. 18 saw 4 persons including A 1 and A 2 carrying away Kalarani who was groaning. On seeing P.W. 18, A 1 and A 2 turned on him. A 1 first slapped and then stabbed P.W. 18 on his right arm with a pen knife, while A 2 gave blows on his back. Out of fright, P.W. 18 took to his heels while Chandrika Rani was dragged away by the appellants. On 6 6 1971 Chamundeshwari Festival was being celebrated in Gangapatnam and neighbouring areas at about 9 p.m. It was a bright moonlight On learning that the dead body of a girl had been seen on the beach of Pallipalem which is a hamlet o Gangapatnam, many persons went there. P.W. 23, a fisherman of Pallipalem and P.W. 25. an employee of the Electricity Department were also among those persons. It was the body of a girl, aged about 21 or 22 years, of fair complexion and stout built. Blood was oozing from a reddish abrasion on the forehead. There was a gold ring with a red stone on the finger of the body. Next morning, P.W. 23 went to P.W. 26, the Sarpanch of Gangapatnam and informed the later about the corpse on the seashore. P.W. 23 and P.W. 26 then went to the village Karnam (P.W. 27) as they found the village Munsiff absent. The Kamam scribed a report to the dictation of P.W. 23. The Sarpanch signed it and sent it at about 7 30 a.m. through a bus driver (P.W. 29) to the Police Station, Indukurpet. The report was handed over in the Police Station at about 8 30 a.m. to the Head Constable (P.W. 34), as A 2. the Sub Inspector was away. The Head Constable (P.W. 34). read the report and returned it to P.W. 29 with the objection that the bearer should fetch a report drawn up on the printed form and signed by the village Munsiff. Within a few minutes 606 of the return of the report, between 8 30 and 8 45 A.M., A 2 returned to the Police Station. Just at this juncture P.W. 49, a Personal Assistant to P.W. 38, a cine actor of Madras, and A 1, arrived there in Car No. M.S.V. 1539, driven by a motor driver. The car had met an accident on the 4th June within the jurisdiction of this Police Station. The car was therefore at least theoretically in the custody of the Police. A 1 was a mutual friend of A 2 and of the owner of the car. P.W. 49 therefore, had brought A 1 to the Police Station to help the former in getting the car released. A 1 introduced P.W. 49 to A 2. A 1 then asked A 2 if he knew that the dead body of a girl was found floating on the sea shore. A 2 then asked the head Constable (PW 34) if any report regarding the dead body was received. The Head Constable replied that a report from the Sarpanch about the dead body seen on the sea shore at Pallipalem had been received but had been returned, as it was not from the village Munsiff. A 2 said some person might have drowned as it usually happened on the seashore. The Head Constable and A 1 told A 2 that the body found on the shore was said to have been wearing drawers and might be of a person of high class family. A 2 said that he himself would go and enquire about it. A 2 asked P.W.4 to take him in his car to the spot. Thereupon" A 1, A 2, P.W. 49, two constables and two others in addition to the driver, proceeded in the car. After going some distance, the two "others" got down. A 1 and A 2 had a talk with them. The car was then taken to Ramudupalem. There at about 11.30 A.M., A 1 and A 2 met the Sarpanch (P.W. 26) and asked him to follow them to Pallipalem. The car was then taken to Gangapatnam. There the Constables were dropped. They left a message for the Karnam of the village to reach Pallipalem. Thereafter, they proceeded to the sea shore of Pallipalem. The car was left at the canal before the sea. A 2, A 1, P.W. 49 and P.W. 26; then at about Noon, went to the beach where the dead body lay. P.W. 23 and P.W. 25 were guarding the deadbody. It was the body of a fair, stout girl aged about 20 years, who was wearing brassiers, blouse, striped drawers and a white petticoat. P.W. 23 handed over the ring M.O.9 to A 2 after removing the same from the body. On being directed by A 2, P.W. 23 washed ' the face of the corpse. There was a mark on the forehead from which blood was oozing out. There was a reddish abrasion on the thigh and blood marks on the drawer of the dead body. On seeing the blood marks on the drawer, A 2 said that she might be in menses. A 2 further remarked that the body appeared to be of a girl from a high class family who had been out of doors. A 2 did not hold any inquest there on the dead body. He did not prepare any record there. He directed the village vettis (menials) to bury the dead body forthwith while he himself proceeded along with his companions towards the village. In the distance they saw the Constables coming towards them. A 2 signalled them not to come near the dead body but to proceed to the Travellers ' Bungalow at Mypad, while A 2 and party went to Mahalaxamma Tample in village Pallipalem. There A 2 607 secured the signature of P.W. 25, P.W. 26, P.W. 28 and A 1 on a blank sheet of paper. A 2 and his companions then went to the car. The Karnam (P.W. 27) was there. A 2 reproached the Karnam for coming late and added that he had finished all the work for which he (Karnam) had been sent for. He further told the Karnam that he had got the body buried. The karnam asked as to why A 2 did not send the body for post mortem examination A 2 replied that the body was of a prostitute who had committed suicide and that he did not suspect any foul play and so he ordered burial The Karnam then enquired if any relation of the deceased had come. A 1 replied "yes", while A 2 pointed towards P.W. 49 and said that he was the person connected with the deceased. A 1, A 2, P.W. 26, P.W. 27 and P W. 49 then got into the car and proceeded. P.Ws. 26 and 27 were dropped near their houses. On the way P.W. 49 asked A 2 as to why he had represented him (P.W. 49) as a relation of the deceased. A 2 assured P.W. 49 that there was nothing to worry. According to the prosecution, this dead body found ashore near Pallipalem which is about 2 miles from Mypad was of Kala Rani deceased who was well known to A 2. Inspite of it in the inquest report (Ex P 11) which was not prepared on the spot but sometime later, A 2 wrote That the body was of a prostitute, named Koppolo Vijaya, daughter of Crhandravya, Baliya by caste of Ongole Town who had on 6.6.71, come to Mypad along with her prostitute friend Nirmala by Bus A.P.N. 1400 at 5.45 P.M. and thereafter both these girls committed suicide by entering sea at about 6.30 P.M. A 2 ended the report with an emphatic note: "It is conclusive that the deceased (Koppulu Vijaya) died due to drowning". Despite the presence of injuries noticed on the dead body A 2 recorded: "There are no injuries on the dead body". In order to support his version as; to the cause of death A 2, according to the prosecution falsely noted that the "stomach is bloated due to drinking of water". The prosecution case further is that A 2 fabricated some time after the burial of the deadbody, a false report (Ex. P 25) purporting to have been made to him on 7.6.1971 by one Nuthalapati Subba Rao who despite the best efforts of the investigators has remained untraced and is believed to be a fictitious person. As this report has an important bearing on the points for determination, we will reproduce it in extenso: "Statement of Nuthalapati Subbarao, son of Venkateswarlu, aged about 30 years" Vysya of Patha Guntur: Being an orphan for about 1 years, I have been doing brokerage in supplying extras in the cine field. Day before yesterday i.e. On Friday at Chirala near Lodges two girls Koppulu Vijaya d/o Sundrayya of Ongole and Paranjapi Nirmala d/o Raghavayya of Chilakaluripeta were met by me. I came to know that they live by prostitution. When I told them that I would join them in Cinema they believed me 608 and came with me. On Sunday i.e. On 6 6 1971, in the morning we came to Nellore and stayed in Venkateswara Lodge till 3.30 p.m. Their demand came for the girls. I booked two males for these two girls. Afterwards dispute arose between me and the girls in respect of my broekerage, sharing of the money got by such prostitution out of the money collected. They scolded me in an angry tone and went away crying and weeping and saying that I took them away from their places promising to join them in Cinema, cheated them and committed rowdyism without giving them money due to them. They had only wearing apparel with them. Vijaya is short, stout and fair. Nirmala is lean, tall and fair. They did not come back. I waited for a long time. 1 searched for them at the railway station, bus stand and lodges. When I was inquiring at Atmakur Bus Stand I came to know that the girls went by Mypaud bus at 4.30 p.m. I went to Mypaud and enquired. It was learnt that the two girls went towards north of Pattapulalem and entered the sea at 6 p.m. Having learnt that the body of Vijaya was washed ashore I went and saw the dead body. She had died and appears to have committed suicide. It was also learnt that the second girl also committed suicide but her dead body was not washed ashore. Other facts about them are not known. Sd/ N. Subbarao Taken down by me, read over to the person and admitted by him to be correct. On this 7th day of June 1971 at 11 30. Sd/ B. Manoharan S.I., E 3, dt. 7 6 1971. H.C. 1212 Issue F.I.R. u/s 174, Cr. P.C. and send copy to me for investigation. Sd/ B. Manoharan, S.I. E 3, Camp Mypaud dt. 7 6 1971. " The dead body of the other girl, Chandrika Rani was not washed ashore. But in the morning of 7 6 1971, P.W. 36, a fisherman saw the dead body of a girl agled 16 or 17 years floating in the sea at a distance of about 21 or 3 mils from Pallipalem, P.W. 36 saw a piercing wound on the left arm and black marks indicating throttling, on the neck of the deadbody. P.W. 36 removed a wrist watch, a ring and an ear ring from the deadbody and allowed it to drift away. These articles were later handed over by P.W. 36 to the investigating officer and were identified to be of Chandrika Rani. The disappearance of the deceased girls caused a sensation. The local newspapers took up the matter. Representations were made to the Home Minister to get the matter investigated by the C.I.D. The Superintendent of Police directed P.W. 59, a Probationer D.S.P., to investigate the matter. On 18 6 1971, at the request of P.W. 59, the Tehsildar (P.W. 40) proceeded to exhume the deadbody of Kalarani. The place was pointed out by P.W. 33. A 2 was also present there. On digging the bit only some clothes were found in it. But close to 609 it, was found a skeleton. No marks of violence were detected on the skeleton by the Medical officer, P.W. 45, who examined it at the spot. The skeleton was sent to P.W. 44, Professor of Forensic Medicine. Who opined that it was of a female aged between 18 to 25 years. Further investigation of the case was taken over by P.W. 60, the C.I.D. Inspector who, after completing it laid the charge sheet against A 1, A 2 and one other person in the court of the Magistrate. A 1 pleaded that he had been falsely implicated. He stated that he knew nothing about the deceased girls. He added that on 7 6 1971, he was in the Travellers ' Bungalow at Mypad and went away from that place in the afternoon. He admitted that he had accompanied, P.W. 49, to the Police Station on 7 6 1971 to assist the latter in getting the car release, and from the Police Station both of them (A 1 and P.W. 49) on being asked by A 2, went with the latter in the car to the spot. He further admitted that he had slab signed on a sheet of paper like others but he expressed ignorance if any inquest was held by A 2. The plea of A 2 was that he had duly made an inquiry as to the cause of the death and prepared the inquest report exhibit P l 1. He denied that there were injuries on the dead body. Pleading alibi for the 5th and 6th June 1971, he said that on these dates he was away on casual leave to attend the marriage of a cousin at Chiraja which at a distance of about 100 miles from Indukurpet. He said that he had proceeded to Chiraja in a car on the 5th morning., and after attending the marriage returned to Nellore on the 6th by 5 30 p.m. and then on the morning of the 7th June, resumed duty at Indukurpet Police Station. On receiving information about the corpse of a female washed ashore, he went to Mypad and enquired about a person named Nathalapati Subba Rao. The latter gave the information, exhibit P.25, which he (A 2) reduced into writing and then held the inquest in the presence of this Subba Rao and other Panchaitdars at the spot. He did not know if Vijaya and Nirmala mentioned in exhibit P. 25 and exhibit P. 11 were fictitious persons. He further admitted that he was unable to produce this Subba Rao in response to the memo dated 15 6 1971, issued by the D.S.P. (P.W. 59) during the stipulated time of 48 hours. The Additional Sessions Judge held that the dead bodies found floating near the sea shore were of Kala Rani and Chandrika Rani. He further found that PW 18, who claimed to be an eye witness of the occurrence, was not worthy of credit, and consequently, the charges of abduction, rape and murder had not been proved against the accused. Regarding the charge under section 201, Penal Code, the trial Judge held that the prosecution had failed to`prove that an offence had been committed in respect of the deceased. While holding that the identity of the deceased was wrongly mentioned in exhibit P. 25 and exhibit P. 11 as Vijaya and Nirmala, prostitutes he did not rule out the possibility of suicide. In the result? he acquitted the accused of all the charges. In appeal by the State, the learned Judge of the High Court, after an exhaustive survey of the evidence, upheld the acquittal of the 610 accused in respect of the charge of abduction, rap and murder, but reversed the findings of the trial Judge in regard to the charges under sections 201, 218 and 468, Penal Code against Al and A2. In order to bring home an offence under section 201, Penal Code the prosecution has to prove: (1) that an offence has been committed; (2) that the accused knew or had reason to believe the com mission of such offence (3) that with such knowledge or belief he (a) caused any evidence of the commission of that offence to disappear, or (b) gave any information respecting that offence which he then knew or believed to be false; (4) that he did so as aforesaid, with the intention of screening the offender from legal punishment (5) If the charge be of an aggravated form, as in the present case, it must be proved further that the offence in respect of which the accused did as in (3) and (4), was punish able with death, or with imprisonment for life or imprisonment extending to ten years. The High Court has found that all these ingredients of section 201, were established in the present case. Mr. Basi Reddy, learned Counsel for the appellant assails the finding of the High Court with particular reference to the first and the last ingredients enumerated above. Counsel contends that the conviction under section 201 cannot be sustained as there is no credible evidence on record to show that an offence had been committed. It is maintained that the prosecution has been unable to prove that the two girls met a homicidal death. In all probability, proceeds the argument, the deceased girls committed suicide by jumping into the sea and were drowned. For reasons that follow we are unable to accept these contetions. The concurrent finding of the courts below that the dead body washed ashore near Pallipalem was of Kala Rani deceased and that seer. floating in the sea, two miles away was of Chandrika Rani deceased, has not been disputed before us. It is also not controverted that these two girls died an unnatural death on the night between the 6th and 7th of June, 1971 sometime after 6.30 P.M. at Mypad. Only the cause of their death is in issue. In regard to such cause, there could be only three possibilities, the choice of any of which would lead to the exclusion of the other two. First, the girls committed suicide by drowning. Second, that their deaths were accidental. Third, that they were done to death by some person or persons. 611 After a careful consideration of these alternatives in the light of ' evidence on record, the learned Judges of the High Court firmly ruled out the first and the second possibilities, and concluded in favour of the third. In our opinion, the credible circumstantial evidence on record reinforced by the inferences available from the incriminating conduct o ' ' the appellants, particularly of A2 in deliberately preparing false records to suppress the identity and cause of the deaths of the deceased girls, fully justifies the conclusion reached by the learned judges. We, therefore, do not feel the necessity of embarking upon a reappraisal of the entire evidence. It would be sufficient to survey and consider the salient circumstances bearing on the alternatives posed above First, we take up the possibility of suicide. Mr. Reddy submits with reference to the statement of PW1, the father of the deceased girls. that on a previous occasion both these girls had without the permission of their parents, run away from home and were ultimately traced to the Rescue Home in Madras. that Kala Rani deceased had about 4 or 5 years before the occurrence taken an overdone of tranquilizers presumably to end her life that they did not feel happy in their parental house and once attempted to join the Ashram. This background, according to the learned Counsel, shows that the deceased had a predisposition to commit suicide. In the alternative, suggests Mr. Reddy, something might have happened at Mypad on the 6th June, 1971, which impelled them to commit suicide. Might be the girls got themselves into such a situation that they thought suicide was the only course left to them to get out of the same. We are not impressed by these arguments. It is wrong to assume that these girls were very unhappy in their parental house, or their relations with their parents were estranged. Kala Rani, particularly, was a mature graduate girl of 22 years. She used to be the leader of the College Union. On the day of occurrence, the deceased girls along with their parents and sisters had participated in the festivities of a marriage in the house of a family friend. They took their meals in the marriage house. From Nellore, these girls brought change of clothes for two or three days ' stay. Thereafter, they came happily to Mypad. They first went to the Travellers ' Bungalow and were then last seen together at about 6 30 p.m. On the sea shore. It is in evidence that the evening of the 6th June, was an occasion of Channdamma Festival. Procession of the deity accompanied by festivities was being taken out by the devotees of the neighbouring villages. These circumstances unmistakably show that the diseased girls had come to enjoy and stay at the sea side resort of Mypad for 2 or 3 days. They were not suffering from any mental depression or schizophrenia with suicidal tendencies . Another circumstance in the case of Kala Rani which is contraindicative of suicide, is that her dead body though seen within an hour or two of the occurrence on the beach, was in a semi nude condition. 612 The sari was not on her dead body, which she was wearing when last seen at about 6 3 P.M. It can be argued that the sari was washed off her body by the sea waves. But considering that her dead body was detected only within a couple of hours of the occurrence and the fact that it is customary for women living in or near the coastal towns to tie their series tightly, the possibility of the sari having been swept off by the sea waves was remote. The inference is that in all probability, she was not wearing this sari when her body was immersed in water. Ordinarily, no Indian woman would commit suicide by jumping into the sea by getting into such a near nude condition and thereby expose her body to the risk of post mortem indignity. Another important circumstance which militates against the suggestion of the death of Kala Rani from drowning is that when the body was first seen at 9 P.M., its stomach was not in a bloated condition, for was any froth seen coming out of the mouth of the corpse. the fact was vouched by PW 23, a fisherman, who was rightly found worthy of credence by the High Court. It may be added that contrary to what PW 23 has testified A 2 has in the inquest report said that the stomach was bloated with water and froth was coming out of the mouth. But as shall be presently discussed, these notes regarding the condition of the dead body, were invented by A2 to support his false report that the deceased had committed suicide and her death was from drowning. Medical jurisprudence tells us that in a case of death from drowning, the stomach is ordinarily found bloated with air and water which is instinctively swallowed by the drowning person during the struggle for life (see Taylor 's Medical Jurisprudence, 12th Edn. 374 375). The facts that the stomach was not filled with water and bloated and no froth was coming out of the mouth of the deceased, are important symptoms which to a long way to exclude the possibility of death being as a result of suicide by drowning. Then there were injuries and blood marks on the dead body. PWs 23, 25, 26 and 27, all testified with one voice that they had seen one injury, from which blood was oozing out on the forehead, another on the thigh and blood marks on the drawer (under garment) of the deceased. In examination in chief, even PW 49, who in cross examination tried to dilute his version in a possible attempt to favour A2, stated that he had seen a reddish strain (stain ?) on the forehead and blood marks on the drawer of the deceased. Out of these PWs, 23, 25 and 26 were present near the dead body when A2, accompanied by Al and P.W. 49, went there to hold the presence of an inquest. PW 23 was a fisherman of Pallipalem, PW 25 was also a resident of the same hamlet. He was an employee of the Electricity Department. PW 27 was the Karnam of Gangapatnam. PWs 23 and 25 were among those villagers who had seen the deadbody washed ashore at about 9 P.M. On 6 6 71. The High Court found that the version of these witnesses in regard to the injuries and blood marks on the deadbody was entirely reliable. No reason has been shown why we should take a different view of their evidence. 613 It is further in the evidence of PWs. 23, 25, 26 and 49 that when the blood marks on the drawer pointed out to A2, the latter ignored it saying that the girl had been out of doors and was in menstruation. Contrary to what he and the PWs. had observed at the spot, A2 wrote in the inquest report, P 11, Col. VII: "There are no injuries on the dead body". Having excluded the possibility of suicide, we may now consider,. whether the deaths of these girls were accidental. It is no body 's case that on the 6th June, 1971, any sea craft, vessel or boat met with an accident off or near about Mypad resulting in loss of human life. No suggestion of accidental death of any person, much less a women, off or. On the sea share near or far from Pallipalem was put to any of the prosecution witnesses. Nor such a plea has been put forward by the accused in their statements recorded under section 342, Cr. P.C Indeed, tie learned Counsel for the appellants has not pursued any such line of argument. We have, therefore, no hesitation in negating the possibility of accidental death. This process of elimination inevitably leads us to the conclusion that in all probability the death of these girls, at any rate of Kala Rani, was due to culpable homicide. Now we come to the last but the most telling circumstance which not only confirms this conclusion and puts it beyond doubt, but also. unerringly establishes, by inference, the other ingredients of the offence, including that the accused knew or had reason to believe that culpable homicide of Kala Rani had been committed. This circumstance is the conduct of A2, in intentionally preparing false records and its abetment by A1. From its very start the investigation conducted by A2 was dishonest and fraudulent. He intentionally indulged in suppressio veri and suggestio falsi at every step. He had been informed by the Head Constable (PW 34) at about 8 or 8 45 A.M. in the Police Station that a report from the Sarpanch had been received about the dead body of a girl bearing injuries, found washed ashore near Pallipalem. This in formation which was passed on to A 2 and on receiving which he proceeded from the Police Station for investigation, was the real I.R. It was the duty of A 2 to enter faithfully and truly the substance of this information in the Station Diary and to record further that he was proceeding for investigation on the basis thereof. Instead of doing so, he intentionally suppressed the factum and substance of this first information and the real purpose of his departure from the Police Station in the records prepared by him or by his subordinates in his immediate presence or under his supervision. Instead of retrieving the written report that had been first received at 8 A.M. in the Police Station and was, returned by the Head Constable to the Sarpanch, he fabricated the document exhibit P. 25, purporting to be the F.I.R. given to him at Mypad by one N. Subba Rao. The false story contained in this document has been substantially repeated in the inquest report, exhibit P. 25. 614 P.Ws. 23, 25, 27 and 49 discount the presence of any such person, named N. Subba Rao either at the inspection of the dead body in the sea shore by A 2 or at the 'Temple, where according to A 2, he prepared the inquest report. None of these PWs has sworn that a statement of any N. Subba Rao was recorded in their presence by A 2. No specific question was put by the defense to PW 49 in cross examination to establish that the report exhibit P 25 was scribed by A2 at Mypad at about 11.30, to the dictation of N. Subba Rao or any other person although the witness was generally questioned as to the number of persons carried in the car. P. W. 27, the Karnam, has definitely excluded the presence of any informant named Subba Rao. P.W. 27 testified that after the inquest, Al" A2, P.W. 26 and "a new person" implying PW 49, met him and thereafter all the five (including PW 27) got into the car and proceeded to the village. P.W. 27 did not vouch the presence of a sixth man in the car. Only PW 26 has stated that R2 had recorded the statements of witnesses including that of a per son named N. Subba Rao. PW 26 had reason to tell a lie on this point. PW 26 admitted that at the time of the inquest, he was an accused in a criminal case of Indukurpet Police Station. A2 was at the material time In charge of that Police Station and was presumably concerned with the investigation of that case against PW 26. PW 26 therefore appears to have deviated from truth in regard to the presence of N. Subba Rao, under the influence of the accused. In any case, the evidence of PW 26 on this point stands contradicted by the reliable testimony of PWs 23, 25, 27 and 49. In the inquest report, as also in exhibit P 25, the address of this mysterious person is recorded as "Nuthalapatti Subba Rao son of Venkateswarlu, aged about 37 years, Vysya of Patha Guntur." Despite efforts, the investigating officers, PWs 59 and 60, could not trace on the basis of this address, any person bearing the said particulars at Pata Guntur or anywhere else in the District. In response to the memo issued by the D.S.P. (PW 59) A 2 could neither produce this N. Subba Rao, nor give any indication about his existence, though A2 claimed to have known him. For these reasons, the High Court was right in holding that this Nathalapatti Subba Rao was a fictitious person of A2 's imagination. Similarly, during investigation all efforts made by PWs 59 and 60 to trace and find if Vijay and Nirmala prostitutes, represented in exhibit P 25 and exhibit P 11 as the deceased persons ever existed in flesh and blood, remained futile. In these premises, the High Court was right in concluding that Vijaya and Nirmala prostitutes were also the coinage of the brain of A2. It is necessary to say something more about exhibit P 25 because the entire story was spun around it by A 2. It did not see the light of the day till the 11th June. A 2 did not send it to the Police Station for registration before that date. It is in the evidence of P. W. 55, who at the material time was a Head Constable posted in this Police Station, that after his departure in the morning of the 7th, A 2 returned to the Police Station on the 10th evening and it was then that he handed over this document to the witness with the direction that the latter should enter that report in the relevant register, dating it as the 7th June, 1971. The Head Constable after slight hesitation 615 agreed and inserted this report in the blank space meant for the entries of the 7th June, and thereafter, as required by A2, handed over to the latter, a copy of that report. A 2 also made an entry (exhibit P 34) in the General Diary of the Police Station, dated 10.6.1971 on 11.6.1971 at 2 A.M. It reads: "Returned to P.S. after leaving it on 7.6.71 at 9.30 a.m. visited Mypadu en route to Gangapatnam at 11 00 hours at 11 30 a.m., recorded statement of N. Subba Rao, sent to Police Station for issuing First Information Report u. sec. 174 Cr. P.C. then visited Pallipalem at 12 30 p.m. investigated, held inquest over dead body of K. Vijaya. At 20 30 p.m., left village reached Mypadu at 21.30 hours, made enquiries in Cr. 48/71 and halted. On 9.6.71 visited Gangapatnam detailed duties for bandobust and visited Ravur, investigated into Cr. 47/71, visited Nellore at 12 30 hours" did bandobust for festival and halted for the night. On 9.6.71 visited Mypadu for petition enquiry and investigated into Cr. 48/71, 41,42 and 44/71 and hailed. On 10 6 71 visited Gangapatnam, supervised and did bandobust for car festival at 00. 30 hours, received First Information Reports in Cr. 49 to 51/71 at 00 45 hours, left the village with men and reached Police Station. " A mere glance at this report betrays its falsity. This shows how in his anxiety to suppress the truth he tried to reinforce and cover up one falsehood with another. In this connection, it may be noted that the D.S.P. persistently pressed A 2 to send the copies of the F.I.R. and the Inquest Report. A 2 was unable to supply any copy of the F.I.R. before the 12th of June, when the D.S.P. himself came to the Police Station and collected it. The D.S.P. (P.W. 59) testified that on the 11th June, 1971, he had questioned A 2 about the First Information Report and the inquest report. As a result he received a copy of the F.I.R. On the 12th but did not receive any copy of the inquest report. Consequently on 14.6.71, he telephoned to A2 to send the case diaries and inquest report without further delay. Despite these efforts, the D.S.P. did not receive whose records on that day. on 15.6.71, he issued a memo. to A 2 directing the latter to produce immediately the complaint of N. Subba Rao, the inquest report and the case diaries. It was only then that A2 produced the persistently requisitioned records. These inordinate delays in sending the records prepared by A2, confirm the testimony of PWs 23, 25 and 49 that no inquest on the dead body was held at the spot, nor was the inquest report or any other record prepared there and then, and that their signatures were obtained by A2 on a blank sheet of paper. Of course PW 26 stated that A2 had recorded statements of witnesses and had prepared the inquest report at the Temple. As already noticed, it is not prudent to accept this version of PW 26. He had a motive to favour A2. Moreover, his version stands inferentially falsified by the circumstances including the unusual delay in registering the report exhibit P 25 in the Police Station and in sending the copies of the records to the D.S.P. 616 Section 174, Cr.P.C peremptorily requires that the officer holding an inquest on a deadbody should do so at the spot. This mandate is conveyed by the word "there" occurring in sec. 174(1). Sub section (3) of the Section further requires the officer holding the inquest to forward the body with a view to its being examined, by the medical man appointed by the State Government in this behalf, if the state of the weather and the distance admit of its being so forwarded without risk of such purification on the road as would render such examination useless. The sub section gives a discretion to the Police officer not to send the body for post mortem examination by the medical officer only in. One case, namely, where there can be no doubt as to the cause of the death. This discretion however is to be exercised prudently and honestly. Could it be said in the circumstances of the case, that there was no doubt as to the death of Kala Rani being from drowning ? In this connection it is important to note that Kala Rani was not a total stranger to A 2. It is in evidence that A 2 used to go to Nellore for Bandobust and there he had sufficient opportunity to come across Kala Rani who was a prominent student leader. The testimony of P.W. 47 is to the effect that when on 17.7.1971, A2 came to him and requested the witness to dissuade the father of the deceased from getting the dead body exhumed, he (A2) admitted that Kala Rani deceased was well known to him The body was not in an unidentifiable condition. A 2 therefore could he under no mistake that it was the body of Kalarani deceased particularly when he inspected it after its face had been washed by PW. 23 under the orders of A 2. Despite such knowledge, he laid a false trail and prepared false record mentioning that the deadbody was of a prostitute named Vijaya. Medical jurists have warned that in the case of a deadbody found floating in water, the medical man from a mere observance of the external condition of the body should not jump to the conclusion that the death was from drowning. Only internal examination of the body can reveal symptoms which may indicate with certainty as to whether the death was from drowning or from. unlawful violence before the body was immersed in water. That is what Taylor the renowned medical jurist, has said on the point: "When a deadbody is thrown into the water. and has remained there sometimes water. fine particles of sand, mud. weeds etc. may pass through the windpipe into the large air tubes. In these circumstances, however, water rarely penetrates into the smaller bronchi and alveoli as it may by aspiration, and even the amount which passes through the glottis is small. If immersed after death the water is found only in the larger air tubes and is unaccompanied by mucous froth. Water with suspended matters can penetrate even to the distant air tubes in the very smallest quantity even when not actively inhaled by respiratory efforts during life The quality, or nature of the suspended matter may be of critical importance.***When decomposition is advanced the lungs 617 may be so putrefied as to preclude any opinion as to drowning but the demonstration of diatoms in distant parts of the body inaccessible except to circulatory blood, provides strong evidence of immersion in life if not of death from drowning." (emphasis supplied) A2 was a Police officer of standing and experience. He knew the deceased. He saw injuries on her deadbody. He must have known if he were honest that in the circumstances of the case autopsy of the deadbody by a medical officer was a must to ascertain the cause of her death. Instead of sending the deadbody for post mortem examination, he in indecent haste, purposely got it buried without holding, any inquest at the spot. He did not send for the relations of the deceased. Even a layman like the Karnam (PW 27) felt something strangely amiss in this conduct of A2. In response to the queries made by the Karnam, A2 made false excuses. He intentionally misrepresented (in concert with A1) that PW 49 was a relation of the deceased. He flouted all the salutary requirements of section conduct in distorting and suppressing material evidence and in preparing false records (exhibit P 11 and P 25) as to the identity of the deadbody, the cause of the death and the falsification of the data bearing on that cause, could not be explained on any reasonable hypothesis save that of his guilt. The circumstances established in this case unmistakably and irresistably point to the conclusion that within all human probability, accused No. 2 knew or had reasons to believe that Kala Rani had been done to death by some person or persons. All the elements of the charge under section 201 had thus been proved to the hilt against him. Before considering the case of Al, we may notice here the decision of this Court in Palvinder Kaur, vs State of Punjab(1). This decision was cited by the learned Counsel for the appellants in support of his argument that the circumstances: that the deceased died, that the appellant prepared false record regarding the cause of her death or caused post haste disposal of the dead body without any autopsy or its identification by the relations of the deceased, do not establish the cause of Kalarani 's death or the manner and the circumstances in which it came about. Counsel laid particular stress on the observation of this Court in that case that in cases depending on circumstantial evidence courts should safeguard themselves against the danger of basing their conclusions on suspicions howsoever strong. The decision in Palvinder Kaur 's case (supra) is a precedent on its own facts. The observations of this Court to the effect, that "Jaspal died, that his body was found in a trunk and was discovered from a well and that the appellant took part in the disposal of the body do not establish the cause of his death or the manner and circumstances in which it came about" cannot be construed as an enunciation of a rule of law of general application. Whether the circumstantial evidence in a particular case is sufficient and safe enough to warrant a finding that an offence has been committed. is (1) 9 L925SupCI/75 618 a question which belongs to the realm of facts and not of law. So is the question whether the accused knew or had reasons to believe that such an offence has been committed. It is true that this question further depends on an assessment of the accused 's mind. Nevertheless, it is a question of fact "The state of a man 's mind", quoth Lord Bowen, "is as much a fact as the state of his digesion". In Palvinder Kaur 's case (supra) there was, in the first place, no material, direct or indirect, justifying a finding that the death of Jaspal was caused by the administration of potassium cyanide and if the defence version was believed his death would be the result of an accident. In that version was disbelieved then there was absolutely no proof of the cause of his death. In the method and the manner in which the deadbody of Jaspal was dealt with and disposed of by the accused did raise some suspicion but from these facts, the Court found it unsafe to draw a positive conclusion that he necessarily died an unnatural death. Nor could the possibility of the commission of suicide by Jaspal be totally ruled out. The position of A2 in the present case was very different. He was a Police officer and as such was expected to discharge the duties entrusted to him by law with fidelity and accuracy. He was required to ascertain the cause of the death and to investigate the circumstances and the manner in which it was brought about. His duty it was to make honest efforts to reach at the truth. But he flagrantly abused the trust reposed in him by law. He intentionally fabricated false clues, laid false trails, drew many a red herring across the net, smothered the truth, burked the inquest, falsified official records and short circuited the procedural safeguards. In short, he did everything against public justice which is penalised by s 201, Penal Code. The other circumstantial evidence apart, the series of these designed acts of omission and commission on the part of A2, were eloquent enough to indicate in no uncertain terms that A2 knew or had reasons to believe that Kalarani 's death was homicidal. It is not disputed that A1 was a friend of A 2. It was A l who had supported A 2 's idea that the latter should himself go to the spot to investigate as the deceased girl appeared to be from a high class family. Standing alone, this circumstance is not of a conclusive tendency. But in the context of his subsequent conduct it assumes significance. He wilfully conducted himself in such a manner that there could be no doubt that he was a guilty associate of A 2. When in the context of the burial of the deadbody ordered by A 2 without sending the body for post mortem, the Karnam (PW 27) asked whether any relation of the deceased had come, A 2 pointed towards PW 4 saying that he was related to the deceased. Simultaneously, A 1 said . "Yes". This concerted conduct of A 1 in fraudulently representing PW 49 to be a relation or the deceased, when he knew that PW 49 was not such a relation, clearly marks him out as an intentional abettor and a guilty partner in the commission of the offence under sec. 201, Penal Code. 619 There can be no doubt that on the basis of the facts found, the charges under sections 218, 468, Penal Code had been fully established against the appellant; A 2 being a public servant charged with the preparation of official record relating to the investigation of the cause of the death of Kalarani, framed that record in a manner which he knew to be, incorrect with intent to save or knowing to be likely that he will thereby save the true offender or offenders from legal punishment. obviously, he prepared this false and forged record with the fraudulent and dishonest intention of misleading his, superior officers and in during them to do or omit to do anything which they would not do or omit if they were not so deceived or induced. A l, as discussed already, facilitated and intentionally aided A 2, in the preparation of the false and forged record. For the foregoing reasons we uphold the convictions and sentences of the appellants, on all the counts, as recorded by the High Court, and dismiss the appeal. V.P.S. Appeal dismissed.

On a report given by the father, regarding the disappearance of his two daughters, investigation was taken up by the D.S.P. because of certain special circumstances. After completing the investigation, A 2, a sub inspector of police, A 1, his friend, and another were charged with offenses under sections 120B, 366, 376. 302/34, 201, 218, 468/34, and 324 I.P.C. for conspiracy, abduction, rape, murder, calling evidence of crime to disappear, fabricating reports, forgery and causing hurt. The trial court acquitted all the accused. On appeal by the State, the High Court convicted A.1 and A.2 for offences under sections 201, 218 and 468 I.P.C. Dismissing the appeal to this Court, ^ HELD: (1) In order to bring home an offence under section 201, I.P.C., the prosecution has to prove; (a) that an offence has been committed; (b) that the accused knew or had reason to believe that the offence has been committed; (c) that with such knowledge or belief he, (1) caused any evidence of the commission of that offence to disappear, or, (ii) gave any information`respecting that offence which he then knew or believed to be false; (d) that he did so with the intention of screening the offender from legal punishment; and (e ) if the charge be of an aggravated form, as in the present case, that the offence in respect of which the accused caused evidence to disappear was punishable with death or with imprisonment for life or with imprisonment extending to 10 years. [610A E] Whether the circumstantial evidence in a particular case is sufficient and safe enough to warrant a finding that an offence has been committed, is a question which belongs to the realm of facts and not of law. So is the question whether the accused knew or had reason to believe that such an offence has been committed. [617H 618B] F Palvinder Kaur vs State of Punjab , explained. (2) In the present case the two girls died an unnatural death. The corpse of one was found on a beach having been washed ashore and the Corpse of the other was seen floating in the sea. A fisherman who noticed the second body saw marks indicating throttling. He removed a wrist watch and ornament, from it and allowed the body to drift away. The wrist watch and ornaments were identified as belonging to the younger sister of the first victim. The 3 possibilities are, that they committed suicide by drowning, or that their deaths were accidental, or that they were done to death by some person or persons. The choice of any of these possibilities would lead to the exclusion of the other two. [610G H] 3(a) The elder sister was a graduate and a nature girl of 22 who used to be the leader of the College Union. On the day of the occurrence the deceased girls along with their parents had participated in certain festivities. They were cheerful and there was no evidence to show that they were suffering from any mental depression with suicidal tendencies. [611E H] 603 (b) The body on the sea shore was in a semi nude condition. It had on only blouse, brassiere, petticoat and drawers but no sari. From the fact that it is customary for women of the locality to tie their series, tightly the possibility of the sari having been swept off be waves was remote. This shows that she was not wearing her sari when her body was immersed in water, but no Indian woman would commit suicide by jumping into sea in such a near nude condition because. ii would expose her body to post mortem. indignity. [611 H 162 C] (c) When the body was first seen there were, an injury on the forehead from which blood was oozing, a reddish abrasion on the thigh and blood marks on the drawers. the stomach, however, was not in a bloated condition. These circumstances show that death was not due to drowning. [612 G; E F] (4) It was nobody s case that any boat met with an accident off or near the sea shore resulting in loss of human life. No suggestion of accidental death of any person or woman was put to and prosecution witness. Such a plea had not ever been put forward by the accused in their statements recorded under s, 342, Cr. P.C. Therefore, the possibility of accidental death must also be excluded. [613 B D] (5) This process of elimination of suicide and accidental death inevitably leads to the conclusion that the death of these two girls, or at any rate of the first victim, was due to culpable homicide. [613 D] (6) From the very start, the investigation conducted by A. 2 was dishonest and fraudulent. He intentionally indulged in suppessio veri and suggestio falsi. [613 E F] (a) The morning after the night when the dead body was seen on the beach, a report was handed at the Police Station but the Head Constable returned it saying that it should be drawn up in the printed form and signed by the village Munsuff. A little later, A 2, the sub inspector incharge of the police station, came there and the Head Constable told him about the report. At that time A.1 and P. W. 49, also came to the Police Station, and A.1 also referred to the finding of the dead body on the seashore. Thereafter, A.1` A 2 and P.W. 49 and others went to the seashore at about noon. A 2 did not hold any inquest on the dead body, but instead, directed the body to be buried. When the Karnam questioned A 2 why he did not send the body for post mortem examination, A 2 replied that the body was that of a prostitute though the body was in an identifiable condition and he new the victim personally. He also said that it was a case of suicide and that P.W, 49 was a relation of the victim. A.1, who heard this, also said that P.W. 49 was a relation of the victim. Thereafter, A 2 fabricated an Inquest Report in which he stated falsely that there were no injuries on the dead body and that the stomach was bloated due to drinking of water, suggesting that it was a case of death by drowning. He also fabricated a false report as if given to him by one who knew the victim and the other girl to be prostitutes. That report was handed over by A 2 at the Police Station only 5 days later and he asked the Head Constable to note the date as if given 3 days before. The Head Constable did so after some hesitation. Inspire of persistent requests by the D.S.P., A.2 sent the copies of the F.I.R. and Inquest Report prepared by him only after an inordinate delay. A 2 also made false entries in the General Diary of the Police Station to corroborate the false Inquest Report and the fictitious complaint. He even tried to dissuaded the father from getting the body, which was buried, exhumed. [605 G 607 C; 614 G 616 E] (b) It was A 2 s duty to enter faithfully and truly the substance of the information in the station diary and to record further that he was proceeding for investigation on the basis thereof when he received information from the Head Constable about the reports regarding the finding of a dead body on the seashore. Instead of retrieving the written report that had been first received at the police station and returned by the head constable, he fabricated another document purporting to be the first information. All the reliable witnesses for the prosecution have deposed that no such person as the one who gave the first information was present at the scene of occurrence. When the D.S.P. was investigating into the matter, A 2 was not able to produce or give any indication about that informant though he claimed to have known him. Efforts to trace the existence of the two prostitutes mentioned in that report were also futile leading to the inference that they were also fictitious persons. [613 F 614 F] 604 The credible circumstantial evidence on record re inforced by the inference available from the incriminating conduct of the appellants, particularly A 2, in deliberately preparing false records to suppress the identity and the cause of death of the deceased girls fully justifies the conclusion reached by the High Court. [611 B C] (c) Section 174, Cr. P.C. peremptorily requires that the officer should hold an inquest on a dead body at the spot. This mandate is conveyed by the word there occurring in section 174(1). Section 174(3) gives a discretion to the Police officer not to sent the body for post mortem examination only in one case, namely, where there can be no doubt as to the cause of the death. This discretion has to be exercised prudently and honestly. [616 A C] (d) A 2 is a police officer of standing and experience, who was expected; to discharge the duties entrusted to him by law with fidelity and accuracy. He was required to ascertain the cause of death and investigate the circumstances and the efforts in which it was brought about. His duty was to make honest efforts to reach at the truth. He knew the deceased and saw the injuries on her dead body and must have known that in the circumstances of the case autopsy of the dead body was necessary to ascertain the cause or her death. He flouted all the salutary requirements of section 174. P.C. and his conduct in distoring and suppressing material evidence and preparing false records as to the identity of the dead body the cause of death and the falsification of the data bearing on that cause, could not be explained on any reasonable hypothesis save that of his guilt. [617 B E; 618 D F] (7) As regards A 1, his concerted conduct, including that in supporting the fraudulent misrepresentation made by A 2 to the Karnam. regarding PW 49 being a relation of the deceased, shows that he was a guilty associate of A 2.

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No. 1325 of 1987. 937 (Under Article 32 of the Constitution of India) P. Rangaswamy, K.K. Gupta and Capt. Virendera Kumar for the Petitioners. K.R. Nagaraja and R.S. Hegde, for the Respondents. The following Order of the Court was delivered: ORDER Thirty two petitioners in this application under article 32 of the Constitution are Bus Conductors in the employment of the Karnataka State Road Transport Corporation, respondent No. 1. They have alleged that the respondent Corporation is a statutory organisation and is 'State ' within the meaning of article 12. The normal practice prevalent in the Corporation is to initially appoint Conductors on daily wage basis and regularise them in due course. According to them, 19 daily wage Conductors as mentioned in Annexure 'A ' to the petition were regularised and brought on the time scale of pay with effect from the original date of their employment as daily wage Conductors, while though the petitioners have served for quite a long period they have not yet been regularised. They have alleged discrimination and claimed relief on the basis of article 14. They have asked for a direction to the Transport Corporation to bring them on the time scale by regularisation from the date each of them came to be em ployed by the Corporation, as stated in Annexure 'B '. The Corporation in its return to the rule has accepted the position that it is a statutory body created under section 3 of the Road Transport Corporation Act of 1950. There is no challenge to the allegation of the petitioners that initial appointment is on daily wage basis and as and when regular vacancies arise the daily rated employees are brought on time scale of pay and services are regularised. Paragraph 9 of the counter affidavit specifically challenged the asser tion of the petitioners that 19 similarly placed employees were confirmed on the date of initial employment on daily rated basis. The plea in paragraph 9 is as follows: "The information furnished in Annexure A showing that 19 persons who were working in different divisions have been appointed on time scale on the same date is absolutely wrong and misleading. The petitioners have sworn 938 false affidavit without making any effort to verify the factual position. The date of confirmation in majority of the cases has been shown in Annexure A as the date of their appointment just to prejudice this Court. " Learned counsel for the petitioners placed reliance on the decision of this Court in Daily Rated Casual Labour vs Union of India & Ors., and an order made on 14th of July, 1988 in Writ Petition No. 8307 11/83 which is still awaiting final disposal. The facts of the reported decision were very different. It would be sufficient to refer to paragraph 2 of the judgment: "The principal complaint of the petitioners is that even though many of them have been work ing for the last ten years as casual labour ers, the wages paid to them are very low and far less than the salary and allowances paid to the regular employees of the Posts and Telegraphs Department belonging to each of the categories referred to above and secondly no scheme has been prepared by the Union of India to absorb them regularly in its service and consequently they have been denied the bene fits, such as increments, pension, leave facilities etc. which are enjoyed by those who have been recruited regularly. They allege that they are being exploited by the Union of India " Petitioners have not made these allegations and their sole grievance is of discrimination on the basis that while they have not been regularised though they have been serving for a good number of years in some cases about 14 years the 19 persons named in Annexure 'A ' have been regu larised from the date of initial employment. It is, there fore, not necessary to refer to the decision. The order in the pending writ application is also on a different set of facts and, therefore, need not be further referred to. At the hearing of the writ application, petitioners relied upon a draft seniority list published by the Corpora tion in support of their stand while the Corporation on the basis of a document appended to the counter affidavit main tained that the particulars were wrong and since the docu ment was only at the draft stage and mistakes appearing therein were yet to be corrected, no reliance can be placed on the particulars appearing therein and the original record should be referred to. 939 In view of the pointed question raised by the petition ers and the denial in the return, we made an order on 28.2.1989 to the following effect: "The dispute has arisen before us regarding the identity of all the persons. The Registrar General is directed to assign an Officer to examine the photostat copy of the Original Record in possession of learned counsel for the respondents for the purpose of determining whether there is any discrepancy between that record and the printed list which has been furnished before us in relation to the 34 petitioners as well as the 19 employees set out in Annexure 'A ' annexed to the Writ Peti tion. " The report dated 2nd of March, 1989 on the basis of the printed document and the photostat copies of records made available at the time of examination to the Officer shows that there are discrepancies. The original record, however, is not available in the Court. It is not disputed before us by counsel for the respond ents that in case benefit of regularisation has been con ferred on daily rated employees from the date of initial employment and such benefit has not been extended to the petitioners, the grievance grounded upon article 14 of the Constitution would be valid. The matter to be examined, therefore, is with reference to factual position as to when the 19 persons in Annexure 'A ' were initially employed and when they have been regularised as against the initial employment of each of the petitioners. This can be done only by reference to appropriate records. We direct that a senior officer of the Corporation shall be named by respondent No. 1 to look into these allegations and at the time the ques tion is examined by such officer the petitioners shall be given appropriate opportunity of being heard, if asked for through counsel also, and all relevant documents should be looked into to ascertain whether the claim of the petition ers that they have been discriminated against in the facts indicated in their writ petition particularly with reference to Annexure 'A ' is correct; and in case it is found that the petitioners have not been given the benefit which has been given to the 19 daily rated Conductors specified in Annexure 'A ', petitioners may be conferred the same benefit as has been extended to those 19 persons unless the respondent is able to assign satisfactory and cogent reasons and states as to why petitioners are not entitled to the same benefit. This would be so on the footing that regularisation does not require a specified period of service to have been put in. The respondent 940 Corporation shall designate the authority within two weeks and the enquiry by him in the manner directed above shall be completed within three months. On the basis of the report furnished by such authority the respondent is directed to take a final decision within two months thereafter. There shall be no direction as to costs.

The petitioners who had served the respondent Corpora tion for long periods on daily wage basis prayed for regu larisation of services and grant of time scale pay from their dates of initial appointment on the ground that others similarly placed had been granted these benefits. The Court, after noticing that there were discrepancies in the factual position adopted by the parties, DIRECTED: The matter to be examined is with reference to factual position as to when the 19 persons in Annexure 'A ' were initially employed and when they have been regularised as against the initial employment of each of the petition ers. This can be done only by reference to appropriate records. We direct that a senior officer of the Corporation shall be named by respondent No. 1 to look into these alle gations and at the time the question is examined by such officer the petitioners shall be given appropriate opportu nity of being heard, if asked for through counsel also, and all relevant documents should be looked into to ascertain whether the claim of the petitioners that they have been discriminated against in the facts indicated in their writ petition particularly with reference to Annexure 'A ' is correct; and in case it is found that the petitioners have not been given the benefit which has given to the 19 daily rated Conductors specified in Annexure 'A ', petitioners may be conferred the same benefit as has been extended to those 19 persons unless the respondent is able to assign satisfac tory and cogent reasons and states as to why petitioners are not entitled to the same benefit. This would be so on the footing that regularisation does not require a specified period of service to have been put in. [939E H]

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Appeal No. 999 of 1964. Appeal by special leave from the order dated March 25, 1954 of the Life Insurance Tribunal, Bombay in Case No. 27 of 1962. C. K. Daphtary, Attorney General, section J. Banaji, Atiqutor Rehman and K. L. Hathi, for the appellant. N. A. Palkhivala, section J. Sorabjee, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the respondent. The Judgment of the Court was delivered by Wanchoo J. The only question that arises for determination in this appeal by special leave from the order of the Life Insurance Tribunal, Bombay, is the interpretation of the words "life insurance fund" as used in paragraph 4 of Part B of the First Schedule to the , No. 31 of 1956, (hereinafter referred to as the Act). The question arose in connection with the payment of compensation to the respondent, the Crown Life Insurance Company, which is incorporated in Canada, by the appellant, the Life Insurance Corporation of India on the taking over of the business of the respondent by the appellant under the Act. The respondent claimed Rs. 27,86,658 as compensation while the appellant was prepared to pay Rs. 1, 1 1,466. The respondent claimed that as its life insurance fund was always in deficit before the Act came into force, there was no liability on it under cl.(d) of paragraph 4 of Part B of the First Schedule to the Act. The appellant on the other hand claimed that under that cl. (d), there was a surplus of Rs. 27,86,658 and therefore under cl. (d) a sum of Rs. 26,75,192 was to be debited towards the liabilities of the respondent. That is how the appellant arrived at the compensation of Rs. 1,11,466. The appellant claimed that the words "life insurance fund" in cl. (d) meant the difference between the total assets and the liabilities under cls. (a) and (c) of the said paragraph 4. The respondent on the other hand contended that the words "life insurance fund" in cl. (d) had the same meaning as those words had under the , No. 4 of 1938 (hereinafter referred to as the ). The respondent therefore claimed that as there was always a deficit in its working as shown by form 1 of the Fourth Schedule to the , no amount was to be deducted as liability under cl. (d) of the said paragraph 4. It is this difference in the meaning assigned to the words "life insurance fund" by the parties 477 that is responsible for the large difference in the amount claimed by the respondent and offered by the appellant. The Insurance Tribunal has accepted the contention put for ward on behalf of the respondent and has held that the words "life insurance fund" in cl. (d) of the said paragraph 4 have the same meaning as in the , and that there is only one meaning of these words in the . It has rejected the contention raised on behalf of the appellant and has in consequence awarded compensation at Rs. 27,86,658. Aggrieved by this order, the appellant got special leave from this Court; and that is how the matter has come up before us. The sole question that falls for determination therefore de pends on the interpretation of the words "life insurance fund" and for that purpose we shall have to consider certain provisions of the as well as of the Act. We may at the outset refer to section 2 (10) of the Act, which is as follows: " In this Act, unless context otherwise require (10) all other words and expression used herein but not defined and defined in the shall have the meanings respectively assigned to them in that Act. " It is not in dispute that the words "life insurance fund" appear In the though not in the definition section thereof. Section 2 (10) of the Act however does not refer only to the definitions in the definition section of the ; it lays down generally that any words and expressions used in the Act and defined in the shall have the meanings assigned to them in the (and that means anywhere in the ) unless the context otherwise requires. We have therefore to turn to the first to find out the meaning of the words "life insurance fund" as given therein and then to see whether the context of cl. (d) of the said paragraph 4 requires otherwise. If we come to the conclusion that it does not require otherwise, the words "life insurance fund" in cl. (d) of the said paragraph 4 will have the same meaning as in the . Let us therefore turn to the to see what the words "life insurance fund" mean under that Act. It has been urged in the first place on behalf of the appellant that the words "life insurance fund" under the have not one meaning only and therefore it is not possible to give that meaning to these words in cl. (d) with which we are concerned. In the alternative it is urged that the context requires that even if the words "lift insurance fund" have only one meaning under the , they have a different meaning under cl. We have therefore to find out what the words "life insurance fund" mean under the and whether they have the same meaning throughout the Act. We have already pointed out that the words "life insurance fund" have not been defined in section 2 (N)4SCI 4 478 of the insurance Act, which is the definition section. But there is no doubt that in section 10 of the , these words have been given a specific meaning to which we shall now refer. The was concerned not only with life insurance business but also with insurance business of other kinds, namely, marine, fire and miscellaneous. It was open to an insurance company to carry on either the life insurance business only or life insurance business along with insurance business of other kinds also. Therefore, section 10(1) of the provided that where an insurer carried on business of more than one kind, he was boUnd to keep a separate account of all receipts and payments in respect of each kind of business. Section 10(2) dealt specifically with life insurance and we therefore read the relevant part of that sub section: "Where the insurer carries on the business of life insurance, all receipts due in respect of such business shall be carried to and shall form a separate fund to be called the life insurance fund the assets of which shall. be kept distinct and separate from all other assets of the insurer and the deposit made by the insurer in respect of life insurance business shall be deemed to be part of the assets of such fund and every insurer sHall. furnish to the Controller a statement showing in detail such assets as at the close of every calendar year duly certified by an auditor or by a person qualified to audit under the law of the insurer 's country"; There are three provisos to this section to which it is unnecessary for our purposes to refer. Sub section (3) of section 10 is also material and runs as follow: "The life insurance fund shall be as absolutely the security of the life policy holders as though it belonged to an insurer carrying on no other business s than life insurance business and shall not be liable for any contracts of the insurer for which it,would not have been liable had the business of the insurer been only that of life insurance and shall not be applied directly or indirectly for any purposes other than those of the life insurance business of the insurer. " Section II (c) then provides for keeping a revenue account in form D of the Third Schedule in respect of each insurance business for which separate account was required to be kept under section 10(1). Regulation 1 of of the Third Schedule provides that form D as set out in is appropriate for life insurance business. A perusal of form D shows what items have to be entered on the ,receipts side of the form and these items are: premiums of an kinds, consideration for annuities, interest, dividends and rents (obviously from assets of the life insurance fund); regulation fees and other income. It is thus clear that the revenue account on the receipt side mainly has income from premiums and income arising 479 out of 'Investments from life fund and this forms the main basis of the life insurance fund. On the expenditure side of form D there is provision for claims under policies, annuities, surrenders, bonuses in cash, bonuses in reduction of premiums, expenses of management (i.e. salaries etc., travelling expenses, directors ' fees, auditors ' fees, and charges for advertisements, printing and stationary, other expenses of management, rents for offence belonging to and occupied by the insurer, rent of other offices kept by the insurer), bad debts and other expenditure. Thereafter a balance has to be struck and this balance is the balance of the life insurance fund. This balance is arrived at after taking into account the balance of the fund at the beginning of the year and after making adjustments with respect to profit and loss and transfers from appropriation account. It is this balance which goes into the balance sheet form A provided in the First Schedule of the as life insurance fund and includes as provided in section 10(2) the deposit made by the insurer in respect of life insurance business. There is no doubt therefore that the words "life insurance fund" under the have got the meaning assigned to it under section 10(2) read with section 11 and form D of the Third Schedule. It is equally clear that all the assets of an insurance company doing life insurance business do not form part of the life insurance fund, for example, if the insurance company has got share capital that is not part of the life insurance fund even though the deposit required by law to be made for life insurance business is part of the fund. So far therefore as section 10(2), section 1 1 and form D are concerned, life insurance fund has a definite meaning. The working of a life insurance company is in some respects different from that of ordinary companies inasmuch as it is not open to a life insurance company to distribute dividends unless there is surplus computed under the . This surplus is determined thus: First of all the life insurance fund as disclosed by revenue account in form D is found out. Then the valuation of the policies in force as on a certain date is determined by actuarial valuation which has to be made at least once in three years under section 13(1) of the . After valuation of the policies of different kinds they are grouped under different heads and their summary is set out in form H of the Fourth Schedule. Form 1 of the said Schedule provides for determining the surplus or deficit. This form is known as valuation balance sheet and the surplus or deficit is the difference between net liability in business as shown in form H and the life insurance fund as shown in balance sheet form A. Surplus will only result if the balance of life insurance fund is greater than the net liability under form H. Where however the balance of life insurance fund is less than the net liability under form H, there will be a deficiency and not surplus. Section 49(1) of the insurance Act then provides that no amount of the life insurance fund will be used to pay any dividend to share holders or any bonus to policy holders or for making any payment in service of any debenture, unless the valuation balance sheet in form 1 of the Fourth Schedule 480 shows a surplus. It is further provided that out of the surplus only 71 per centum shall be allocated to or reserved for shareholders with the consequence that the balance of 92 1/2 per centum of the surplus remains in the fund for policyholders or may be allocated as bonus to policyholders. The life insurance find as defined in section 10(2) is an absolute security of the life policy holders and cannot be used in any manner except in accordance with the provisions to which we have already referred. Thus the words "life insurance fund" have a definite meaning under the under section 10(2), read with section 1 1 and form D of the and the words "surplus" and "deficiency" have also special meaning appearing from a combined reading of section 13 of the and form H and form 1 of the Fourth Schedule. The next question is whether the words "life insurance fund" have any other meaning under the . These words appear in a number of provisions of that Act. It is not necessary however to refer to all of those provisions for it is not in dispute that in most of the provisions the words have the meaning assigned to them under section 10(2) of the . But three provisions have been specifically brought to our notice where it is said that the words have a different meaning. The first is section 56 which deals with winding up of insurance companies. In sub section (2) thereof reference is made to surplus of assets over liabilities and how such surplus which is called prima facie surplus in the sub section is to be dealt with. It will however be seen that the sub section does not use the words "life insurance fund" when speaking of prima facie surplus which is the difference between all assets and all liabilities. But it is urged that the marginal note to the section which is in these words "application of surplus assets of life insurance fund in liquidation or insolvency" shows that for the purpose of this section, the words "life insurance fund" as used in the marginal note may have a different meaning. We are however of opinion that this is not so. Sub section (2) after speaking of prima facie surplus, which is equal to total assets minus total liabilities, provides how the prima facie surplus is to be dealt within winding up proceedings. The sub section provides that this prima facie surplus would be divided into two parts and one part would be in proportion to the profits of the insurer allocated to policy holders. This part will naturally be determined with respect to form 1 of the Fourth Schedule which deals with life insurance fund and surplus or deficiency. The sub section thus provides that out of the prima facie surplus a certain amount will be deducted in proportion to the profit allocated to the policy holders, and remaining will be the amount which may go to shareholders in winding up. Therefore as we read sub section (2) we find that it deals with entire assets and these entire assets will certainly include the life insurance fund. The marginal note indicates how out of the prima facie surplus indicated in sub section (2) the surplus in the life insurance fund as arrived at in form shall be used. The argument that the words "life insurance fund" in 481 section 56(2) has a different meaning therefore has no force for two reasons. In the first place the section does not use the words "life insurance fund" and in the second place when the marginal note refers to surplus assets of life insurance fund it means in reality the surplus to be found in form 1, for the prima facie surplus will include that. We cannot therefore accept the contention that for the purposes of section 56(2) the words "life insurance fund" have a different meaning in view of the marginal note of section 56. The next section to which reference is made in this connection is section 58(3). Section 58 deals with schemes for partial winding up of insurance companies, i.e. winding up of one kind of business while another kind of business goes on. Section 58(3) provides that the, provisions of this Act relating to valuation of liabilities of the in , surer in liquidation and insolvency and to the application of surplus assets of the life insurance fund in liquidation or insolvency shall apply to the winding up of any part of the affairs of the company. It is argued that the words "life insurance fund" here are used in a different sense . We are of opinion that this is not so. Sub section (3) of section 58 has to be read along with section 56 and in particular with Sub section (2) thereof and as we have already indicated the words "life, insurance fund" in the marginal note of section 56 have no different meaning from that to be found in section 10(2) the same applies to the use of the words "life insurance fund" in section 58(3) mutates mutandis. Lastly reference was made to regulation 7 of of the First Schedule, which provides for a certificate that no part of the assets of the life insurance fund has been directly or indirectly applied in contravention of the provisions of the relating to the application and investment of life insurance funds. It is urged that the use of the plural suggests that a different meaning is to be given to the words "life insurance fund" here. We are unable to agree with this contention either. The use of the words "life insurance funds" in plural is merely due to the exigencies of grammar in this provision and does not mean that the words have a meaning different from that assigned to them in section 10(2) to which we have already referred. We must therefore reject the contention on behalf of the appellant that the words "life insurance fund" have any meaning other than that assigned to them in section 10(2) of the so far as that Act is concerned. Reference is then made to section 27(1) of the which requires that every insurer shall invest and at all times keep invested assets equivalent to not less than the sum of the amount of his liabilities to holders of life insurance policies in India on account of matured claims and the amount required to meet the liability on policies of life insurance maturing for payment in India subject to certain deductions. It is urged that this provision lays down that an insurer is required to keep certain sums invested to meet his liabilities mentioned therein and this shows that the entire assets of the insurer are security for the policy holders. It is true that this provision requires an insurer to keep certain assets invested and those 482 have to be equal to his liabilities on policies matured and policies yet to mature. This provision is for the protection of the policyholders ' interest. It has however in our opinion nothing to do with the life insurance fund as such. What in fact it provides is that when the life insurance fund shows a deficit in form it would be the duty of the insurer to see that he has further assets to cover the deficit, and that these assets are always kept invested in accordance with the ; but the section does not provide that the assets brought in to cover the deficit would become part of the life insurance fund. It is not in dispute that there is no other provision in the which requires that whenever. the life insurance fund is in deficit the insurer must put sufficient money in that fund itself to 'cover the deficit. It is true that form D of the Third Schedule includes an item "other income" but that does not mean that any sum kept invested by an insurer for the purposes of section 27(1) in order to cover the deficit in the life insurance fund becomes part of that fund. Note (e) which appertains to "other income" of the said form makes it clear that all the amounts received by the insurer directly or indirectly whether from his head office or from any other source outside 'India shall also be shown separately in the revenue account except such sums as properly appertain to the capital account. Therefore sums invested for purposes of section 27(1) of the do not necessarily form part of the life insurance fund. It is only such moneys which are included in form D and which are not of capital nature that form part of the life insurance fund. In the present case it is not in dispute that the business of the respondent 1 in India always had shown a deficit in form . It is also not in dispute that in order to meet that deficit as required by s, 27(1), the respondent took advantage of section 27(6) which provides that the assets required by this section to be held invested by an insurer incorporated or domiciled outside India shall subject to certain exceptions be held in India and all such assets shall be held in trust for the discharge 'of the liabilities of the nature referred to in sub section (1) and shall be vested in trustees resident in India and approved by the Central Government and the instrument of trust under this sub section shall be executed by the insurer with the approval of the Central Government and shall define the manner in which alone the subject matter of the trust shall be dealt with. Such an instrument of trust was executed by the respondent and the State Bank of India was the trustee of the fund required to be kept under section 27(1) read with section 27(6). But that in our opinion did not make the whole of this trust fund part of the life insurance fund as defined in section 10(2). The money required to cover the deficit in form I could only become part of the life insurance fund if that was included in the revenue account form D and in such a case there would then be no deficit left in the life insurance fund. It is not ill dispute that in this case funds brought in by the respondent from outside to cover the deficit were never put in the revenue account and were never made part of the life insurance fund, though 483 they remained vested in the trustee for the purpose of section 27(1) read with section 27(6). The appellant 's contention always was that the case of the respondent, for purpose of compensation, was covered by part B of the First Schedule to the Act and not by its Part A, and this was because there was a deficit in form I submitted by the respondent throughout its working. It appears that in spite of this deficit in the Indian working of the respondent, the respondent used to pay bonuses to its policy holders out of its global surplus and these payments were made in cash. Even so the appellant insisted and rightly that as form I showed deficit at the relevant time the respondent was not entitled to take advantage of Part A. of the First Schedule to the Act for purposes of compensation. In such circumstances it seems strange when admittedly there was always a deficit in form I submitted by the respondent in connection with its. Indian. business that the appellant should now say for the purpose of compensation that there is a surplus disclosed by the business of the respondent, 96 per centum of which would go to the appellant under cl. (d) of the aforesaid 4th paragraph, We are. therefore of opinion that the appellant cannot take advantage of section 27(1) and ask us to hold that all the funds which are mentioned in.s. 27(1) to be kept invested are part of the life insurance fund. Part B applies to. ' two kinds of insurance companies viz., those which had deficits and those which had surplus but had not distributed it at the relevant time. It is the latter class of companies that cl. (d) is really meant to cover. As we have already. said section 27(1) has nothing to do with the life insurance fund and is meant only as a safety device for policyholders, particularly in cases where there is deficit in the life insurance fund. : But where such deficit is made up for the purpose of section 27(1), the extra amount so invested by the insurer to make up the deficit does not automatically become part of the life insurance fund unless it is put through the revenue account form D. That was admittedly never done in this case and form I always showed a deficit in the case of the respondent. Section 27(1) therefore does not help the appellant, for it is not in dispute that an insurer is not bound to make up the deficit by putting money in the life insurance fund though he is bound to keep assets invested to make up the deficit; but such assets may be kept outside the life insurance fund. Now we come to the last question whether there is anything in the Act which requires that we should give a different meaning to the words "life insurance fund" in cl. (d) of the aforesaid 4th paragraph. We have already referred to section 2(10) of the Act which lays down that all other words and expressions used in the Act but not defined and defined in the shall have the meanings respectively assigned to them in that Act. Prima facie, therefore, the words "life insurance fund" used in cl. (d) of the aforesaid 4th paragraph have the same meaning as in the , and the question is whether the context of the Act requires that we should give a different meaning to these words. We are of opinion 484 that there is nothing in the context of the Act which requires that a different meaning should be given to these words. If anything, the Act shows that these words have the same meaning in cl. (d) of the aforesaid 4th paragraph as in the . In the first place we have to see what is the reason for the provision in cl. (d) of the aforesaid 4th paragraph. We have no doubt that the provision in cl. (d) is related to the provision in section 49(1) of the . We have already referred to that section and it requires that 921% of the surplus in form I shall be kept for the policy holders. Where therefore there is surplus in form 1, 921/2 per centum thereof is meant for the policy holders under this provision. Secondly when transfer of life insurance business from the life insurance companies to the Life Insurance Corporation took place a provision had to be made to carry out the effect of section 49(1) in connection with the transfer. That provision is to be found in cl. It lays down that where there is a surplus in the life insurance fund as a result of the actuarial valuation of policy liabilities made under cl. (b) of the aforesaid paragraph 4, 96 per centum of such surplus shall be shown as a liability. This means that just as under section 49(1), 921 per centum of the surplus in form I was meant for the policy holders so in the case of transfer, 96 per centum or that surplus shall go to the Life Insurance Corporation in order to meet the liabilities arising under section 49(1) of the for past surplus and to that extent the compensation to be paid to the insurance company from which the Life Insurance Corporation was taking over business would have to be reduced. This was with reference to the past and could not be with reference to the future, for so far as the future was concerned, the Life Insurance Corporation alone was responsible. But if there was a deficit in form I of the insurance company which was being taken over by the Life Insurance Corporation there could be no allocation to the policy holders under section 49(1) of the and there would be no liability for the past. So there would be no liability for the past under cl. (d) on the insurer whose business was being taken over by the Life Insurance Corporation. In the present case admittedly there was no surplus in form I in the case of the respondent and therefore there would be no liability on the respondent under cl. (d) of the aforesaid 4th paragraph. This in our opinion is the rationale behind the provision in cl. (d) and as there was always a deficit in connection with the working of the respondent, there could be no liability on the respondent under cl. But apart from this rationale behind cl. (d) we find that the language of Part A and Part B of the First Schedule relating to principles for determining compensation also leads to the same inference. Part A provides that compensation to be given to an insurer having a share capital on which dividend or bonus is payable who has allocated as bonus to policy holders the whole or any part of the surplus as disclosed in the abstracts prepared in accordance with of the Fourth Schedule to the in 485 respect of the last actuarial investigation relating to his controlled business as at a date earlier than January 1, 1955 shall be computed under that part. Clearly therefore this provision in Part A refers to surplus to be found by looking at form of the Fourth Schedule to the . Part B of the First Schedule to the Act then speaks of compensation to be given to an insurer having a share capital on which dividend or bonus is payable but who has not made any such allocation as is referred to in Part A. This immediately brings in the opening words of Part A and shows that Part B applies also to those insurers who having a surplus in form I have not allocated the whole or any part of such surplus to policyholders. The surplus in form I is arrived at as already indicated when the life insurance fund is larger than the liabilities on the policies still to mature. Clearly, Part B provides how compensation is to be paid to companies who had no surplus as disclosed in form 1 of the Fourth Schedule to the or who if they had any surplus in that form had made no allocation to policy holders. Therefore when cl. (d) of the aforesaid 4th paragraph speaks of the life insurance fund being in surplus that surplus has to be determined in accordance with form 1 of the Fourth Schedule to the subject to modifications indicated in Part B in the matter of valuation under form H and not in the manner suggested on behalf of the appellant. The word "surplus" in cl. (d) cannot have a meaning different from what it has in the opening words of Part B which come therein from Part A. The context therefore instead of showing that there is any other meaning of the words "life insurance fund" in cl. (d) shows that they have the same meaning in that clause as in form 1 of the Fourth Schedule to the . Another reason which points to the same conclusion,namely, that the words "life insurance fund" in cl. (d) have the same meaning as in form 1 of the Fourth Schedule to the , is to be found in section 35(1) and (2) of the Act. Section 35(1) permits a foreign insurer to repatriate certain assets. It says that an insurer incorporated outside India may, before the appointed day, make an application to the Central Government stating that among the assets appertaining to the controlled business of the insurer there are assets brought into India by him for the purpose of building up his life insurance business in India which should not be transferred to and vested in the Life Insurance Corporation. On receipt of such an application, the Central Government has to determine the value of the assets of the insurer appertaining to his controlled business in existence on December 31, 1955 in accordance with the provisions contained in paragraph 3 of Part B of the First Schedule to the Act and deduct therefrom the total amount of the liabilities of the insurer appertaining to his controlled business as on December 31, 1955 computed in accordance with the provisions contained in the Second Schedule to the Act; and if there is any excess, the Central Government may direct that such assets equivalent in value to the excess shall not be transferred to or vested in 486 the Life Insurance Corporation. It is obvious from these provisions that where the legislature intended to refer to all the assets and liabilities it said so in terms and did not use the words "life insurance fund". The use of the words "life insurance fund" in cl. (d) of the aforesaid 4th paragraph therefore must have the special significance assigned to these words in the and cannot be equated to the difference between the total assets and liabilities apart from liabilities towards policies yet to mature. Besides we are of opinion that if the words "life insurance fund" in cl. (d) are to be given the meaning for which the appellant is contending there will be a clear inconsistency between cl. (d) and it. 35 of the Act. Section 35 permits a foreign insurer to take away what may be called excess assets but a foreign insurer is not bound to make an application under section 35. Now take the case of the respondent. It is not in dispute that the respondent has taken away excess assets with the permission of the Central Government under section 35, to the tune of about rupees fifteen or sixteen lakhs. But if the respondent had not, chosen to make the application under section 35, all Ms assets would have to be considered under Part B relating to compensation. If that Was so, according to the contention put forward on behalf of the appellant as to the meaning of the words "life insurance fund", the total compensation under Part B of the First Schedule to 'which the respondent would have been entitled, would be Rs. 1.74,408. This means that as by making an application the respondent was able to take away Rs. 15,73,540 under section 35(2) he would further get Rs. 1,11,466 as compensation under Part B of the First Schedule to the Act. But if he had not made the application under section 35, he would only get Rs. 1,74,408 in all. There is no doubt that the legislature could not have intended such a result, namely, that the insurer should get away with a much larger amount if he applies under section 35 and should get a much smaller amount if he does not choose to apply under section 35. On the other hand, if we accept the contention of the respondent as to the meaning of the words " 'life insurance fund" it would make no difference to the compensation whether the insurer applies under section 35 or not. We must hold that the legislature intended that in either case an insurer would get the same amount whether it comes to him as compensation in one sum or comes to him as compensation plus repatriation of excess assets. If the words "life insurance fund" are interpreted to mean what the respondent says, the result would be this. If it applies for repatriation it would get Rs. 15,73,540 as repatriation of excess assets and Rs. 27,86,658 as compensation under Part B: total Rs. 43,60,198. If it does not apply for repatriation and if cl. (d) has the meaning urged on behalf of the respondent, its total compensation would come to the same figure, namely, Rs. 43,60,198. This clearly shows that the legislature intended the words "life insurance fund" to mean what they meant in section 10(2) for that would give in our opinion the same result whether an insurer applied under section 35 or not. 487 We have already said that cl. (d) provides for past surplus in form 1, the responsibility for which passes on to the Life Insurance Corporation when it takes over the life business of an insurer. So far as the future is concerned, cl. (b) of the aforesaid 4th paragraph provides for a higher valuation for with profits policies with the result that the liability which the insurer whose business is being taken over has to bear with respect to with profits policies is higher. The appellant apparently claimed an amount under cl. (d) on the ground that at future valuation the bonus payable to the policy holders would be reduced. Now cl. (d) in our opinion provides for cases where there have been surpluses in the past while the provision for the future in respect of profit policies is to be found in cl. The appellant therefore cannot lay claim to anything under cl. (d) unless there were surpluses in the past in form 1 of the Fourth Schedule to the . The contention that the appellant is likely to suffer if the meaning contended for by the respondent is given to the words "life insurance fund", particularly with respect to with profit policies has in the circumstances no force, for there is already a weightage in favour of calculating liability for with profit policies under cl. (b) of the 4th. paragraph of Part B of the First Schedule to the Act. Lastly there will be another curious result if the words "life insurance fund" in cl. (d) is given the meaning contended for on behalf of the appellant. Take the case of an Indian company which has shares but which has always been showing deficit in form 1 of the Fourth Schedule to the . If its life insurance fund for the purposes of cl. (d) is calculated in the manner contended for on behalf of the appellant the result would be that the share capital of such a company would also come into the assets and if as a result of the share capital going into assets the deficit in form is converted into surplus such a company would in conceivable circumstances lose 96 per centum of its share capital as if it was part of the life insurance fund. It is obvious that the share capital of an insurance company cannot be a part of the life insurance fund; but on the interpretation urged on behalf of the appellant even 96 % of the share capital may be lost to an insurance company, whose business is being taken over by the Life Insurance Corporation if the words "life insurance fund" are given the wide meaning for which the appellant is contending. We have therefore no doubt that the tribunal was right in its conclusion that the words "life insurance fund" as used in cl. (d) of the aforesaid 4th paragraph have the same meaning as that given to them in section 10(2) of the read with section 1 1 and form D of the Third Schedule to the . In this view of the matter, the appeal must fail. We therefore dismiss the appeal with costs to the respondent. The respondent will be at liberty to withdraw the money deposited in this Court towards compensation. Appeal dismissed.

Under section 10(2) of the , where an insurer carries on the business of life insurance, all receipts due in respect of such business shall be carried to and form a separate fund called the life insurance fund. Section 11 (c) provides for keeping a revenue account in Form D of the Third Schedule, which applies to life insurance business also. This account, on the receipt side, has mainly income from premiums and out of investments from life fund and, on he expenditure side, all expenses and bad debts connected with the life business. A balance is struck after taking into account the balance of the fund at the beginning of the year and after making some adjustments and transfers, and the "life insurance fund" is arrived at. Form 1 of the Fourth Schedule to the , provides for determining the surplus or deficit, which is the difference between the net liability in business determined by actuarial valuation of policies in force and the Life Insurance Fund. If there is a surplus, section 49(1) of the provides, that 712 1/2 % of the surplus shall be allocated to shareholders, and the balance shall remain in the fund for policy holders. When transfer of life insurance business from the life insurance companies to the Life Insurance Corporation took place, a provision had to be made for carrying out the effect of s.49(1). That provision was made in Cl. (d) of para. 4 of Part B of the First Schedule to the , according to which, where there is surplus in the life insurance fund, as a result of the actuarial valuation of policy liabilities under Cl. (b) of the same Para. 4, 96 % of such surplus shall be shown as a liability, that is, 96% of that surplus shall go to the Corporation in order to meet the liabilities, and to that extent the compensation to be paid to the insurance company would be reduced. Part B applies to those insurers, who, having a surplus in Form 1 have not allocated the whole or any part of such surplus to policy Holders, and also provides, how compensation is to be paid to companies who had no surplus as disclosed in Form T. In the latter case, that is, if there was a deficit in Form 1, there could be no allocation to the policy holders under s.49(1) of the , and there would be no liability under Cl. On the taking over of the business of the respondent, a life insurance company incorporated in Canada, by the appellants, under the , the respondent claimed Rs. 27 lacs and odd as compensation. The respondent contended that the words "life insurance fund" in Cl. (d) referred to above had the same meaning as those words in the , and since there was deficit in its working as shown by Form 1. no amount was to be deducted as liability under Cl. The appellant was prepared to Day only Rs. 1 lac and odd, on the basis that, the words "life insurance fund" in Cl. (d) meant the difference between the total assets and the liabilities 475 under Cls. (a) and (c) and since there was a surplus of Rs. 27 lacs 'And odd, a sum of Rs. 26 lacs and odd, forming, 96% of it, was to be debited towards the liabilities of the respondent. The Insurance Tribunal accepted the respondent 's contention and awarded the compensation claimed by it. In its appeal to this Court, the appellant contended that: (i) the words "life insurance fund" under the have more than one meaning under that Act, and therefore it was not possible to give the meaning, claimed by the respondent, to those words in Cl. (d) under the Corporation Act, and (ii) even if those words have only one meaning under the , they have a different meaning under the Cl. HELD: (i) A combined reading of sections 10(2), 11 and 13 of the and Form D of the Third Schedule and Form 1 of the Fourth Schedule to the , shows, that the words "life insurance fund", "surplus" and "deficit" have only the definite meaning set out above, as contended by the respondent. [480B C] The contention, that the words "life insurance fund" have different meanings in sections 56(2) and 58(3), and in regulation 7 of of the First Schedule to the , has no force, because when the marginal note of section 56(2) refers to surplus assets of life insurance fund it means in reality the surplus to be found in Form 1 and the same applies to section 58(3); and as regards regulation 7, the plural is used in the words "life insurance funds" merely due to exigencies of grammar. [46OF: 481D E F G] It cannot be said that because section 27(1) of the lays down that an insurer is required to keep certain sums invested to meet his liabilities mentioned therein, the entire assets of the insurer are security for the policy holders and not merely the life insurance fund. This section only provides that when life insurance fund shows a deficit in Form 1 it would be the duty of the insurer to see that he has further assets to cover the deficit, and that these assets are always kept invested in accordance with the ; but the section does not provide that the assets brought in to cover the deficit would become part of the life insurance fund. It is only such moneys which are included in the revenue account, Form D, and which are not of a capital nature that form part of the life insurance fund. Since, in the instant case the business of the respondent in India had admittedly shown a deficit in Form 1, and the funds brought in by the respondent from outside to cover the deficit were never put in the revenue account, they were never made part of the life insurance fund, though they remained vested in a trustee under section 27(6) of the . [48 2B G] (ii) The Tribunal was right in its conclusion that the words "life insurance fund" as used in Cl. (d) of the aforesaid fourth paragraph have the same meaning as that given to them in section 10(2) of the read with section 11 and Form D of the Third Schedule to the . [483H] When Cl. (d) speaks of the life insurance fund being in surplus that surplus has to be determined in accordance with Form 1 subject to certain modifications indicated in Part B of the Corporation Act. The context. therefore, instead of showing that there is any other meaning of the words "life insurance fund" in Cl. (d), shows that they have the same meaning in that clause as in Form J. [485D, E] Section 35(1) and (2) of the Corporation Act also point to the same conclusion. because, these provisions show that where the legislature intended to refer to all the assets and liabilities it said so in terms and did not use the words "life insurance fund", Besides, if these 476 words were given the meaning for which the appellant contended, there would be an inconsistency between Cl., (d) and section 35, in that, the insurer would get away with a much larger amount if he applied for repatriation of excess assets under section 35, and would get a much smaller amount if he did not choose to apply under the section, a result which the legislature could not have intended. Moreover, the share capital of an insurance company cannot obviously form ptrt of the life insurance fund; but on the interpretation urged on behalf of the appellant, even 96% of the share capital may be lost to an insurance company, as part of the life insurance fund in conceivable,, circumstances, [486A C, F; 487G].

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ivil Appeal No. 3948 of 1987. From the Judgment and Order dated 30.9.1987 of the Karnataka Administrative Tribunal in Application No. 1716 of 1987. WITH Civil Writ Petition No. 163 1 of 1987. (Under Article 32 of the Constitution of India). 388 B.R.L. Iyengar, R.B. Mehrotra, (N.P.) and E.C. Vidyasa gar for the Appellants. P.R. Ramaseesh and A.K. Gupta for the Respondents. Anil Dev Singh, R.B. Masodkar and K.L. Taneja for the Intervener. The Judgment of the Court was delivered by SINGH, J. This appeal is directed against the judgment and order of the Karnataka Administrative Tribunal, Banga lore dated September 30, 1987 quashing Karnataka Public Service Commission 's Notification dated 28.9.1983 inviting applications for recruitment of Motor Vehicle Inspectors and the select list prepared by it for appointment to the post of Motor Vehicle Inspectors and further directing the Public Service Commission to invite fresh applications in accord ance with the amended Rules. Some of those candidates whose names were included in the select list prepared by the Public Service Commission for appointment to the post of Motor Vehicle Inspectors have filed a writ petition under Article 32 of the Constitution of India for the issuance of directions to the State Government of Karnataka for making appointments to the post of Motor Vehicle Inspectors from the select list prepared by the Commission. Since the ques tions involved in the appeal by special leave filed against the order of the State .Tribunal and the writ petition are common, we consider it proper to dispose of the same by a common judgment. The dispute involved in the present cases relates to the selection and appointment of Motor Vehicle Inspectors. Recruitment to the said post is regulated by the Karnataka General Service (Motor Vehicles Branch) (Recruitment) Rules, 1962 (hereinafter referred to as 'the Rules ') framed under Article 309 of the Constitution. These Rules provide for direct recruitment to the post of Motor Vehicle Inspectors and it further lays down the minimum qualification requiring a candidate to be holder of Diploma in Automobile Engineer ing or Mechanical Engineering. In 1978 the Karnataka Public Service Commission held selections and about 200 posts of Motor Vehicle Inspectors were filled up from amongst the candidates holding Diploma in Mechanical Engineering and in Automobile Engineering. On September 28, 1983 the Public Service Commission issued an advertisement (published in the Karnataka Gazette on October 6, 1983) inviting applications for 56 posts of Motor Vehicle Inspectors which was later on increased to 102 389 posts. The advertisement specifically stated that the selec tion shall be made in accordance with the Recruitment Rules 1976 and it further stated that a candidate for selection must be holder of Diploma in Automobile Engineering or Mechanical Engineering. The appellants/ petitioners (in writ petition) who were holding Diploma in Mechanical Engineering alongwith others applied for selection to the post of Motor Vehicle Inspectors. The Commission after scrutiny of the application forms issued letters for interview to the suit able candidates and the Commission commenced the holding of interviews in August, 1984. It appears that the Commission refused to interview some candidates who were competing for selection against the reserved seats for 'local candidates ' on the ground that they were not entitled to be treated as 'local candidates ' as they had not actually worked as 'local candidates ' in the post of Motor Vehicle Inspectors and further they had secured low percentage of marks, they were further not entitled to be interviewed against the seats earmarked for general pool as the marks secured by them were less than the percentage of marks obtained by the last candidate called for interview. The candidates claiming reserved seats as 'local candidates ' filed a number of petitions under Article 226 of the Constitution before the High Court of Karnataka and obtained stay orders as a result of which the selection could not be completed. Later interim orders were modified by the High Court and the Commission was permitted to proceed with the selection reserving seats for the petitioners. The High Court further modified its order at a later stage permitting the Commission to make selection and appointment with a condition that the appoint ments so made will be subject to the decision of the writ petitions. Thereafter the Commission resumed interviews again and it completed the same by 2nd June 1987 and de clared the result of the selection on 22.6. 1987 which was published in the Karnataka Gazette dated 23rd July, 1987. The selected candidates were given intimation of their selection and the State Government took steps for imparting them three months ' training before appointing them as Motor Vehicle Inspectors. Meanwhile, the State Government of Karnataka amended the Recruitment Rules by a Notification dated May 4, 1987 pub lished in the Gazette on 14.5. 1987 omitting the qualifica tion of Diploma in Mechamcal Engineering for the post of Motor Vehicle Inspectors. Consequent to the amendment of Rules the holders of Diploma, of Automobile Engineering became exclusively eligible for appointment to the post of Motor Vehicle Inspectors and the holders of Diploma in Mechanical Engineering ceased to be eligible for selection and appointment to the said post. Some of those candidates who were 390 unsuccessful at the selection held by the Commission pre ferred applications before the Karnataka Administrative Tribunal at Bangalore for quashing the select list prepared by the Commission and also for quashing the Notification dated 28.9.1983 inviting applications for appointment to the post of Motor Vehicle Inspectors on the ground that after the amendment of Rules in 1987, no person holding the Diplo ma in Mechanical Engineering was qualified for appointment, therefore fresh selection should be made in accordance with the amended Rules. The State Government of Karnataka as well as the appellants both contested the applications and as serted that the 1987 amendment to the Recruitment Rules were not retrospective instead the amendments were prospective and the amended Rules did not affect the selections which were in the process of finalisation by the Commission. The Tribunal held that after the amendment of the Recruitment Rules in May, 1987 the Commission could not make selection or determine the result on the basis of the Rules which existed prior to 14th May 1987 and as such the selection of candidates holding Diploma in Mechanical Engineering was illegal as holders of Diploma in Mechanical Engineering ceased to be eligible for appointment to the post of Motor Vehicle Inspectors with effect from the date of publication of the amending Rules. On these findings the Tribunal al lowed the applications and quashed the advertisement issued under the Notification dated 28.9.1983 as well as the select list published by the Public Service Commission and it further issued directions to the Public Service Commission to invite fresh applications and to make selections in accordance with the amended Rules. Aggrieved, the appellants who had been selected by the Commission for appointment to the posts of Motor Vehicle Inspectors have preferred appeal before this Court. Some of the selected candidates have directly approached this Court by means of writ petition under Article 32 of the Constitution for issue of mandamus directing the State Government to appoint the selected candidates. There is no dispute that under the Recruitment Rules as well as under the advertisement dated 6.10.1983 issued by the Public Service Commission, holders of Diploma in Mechan ical Engineering were eligible for appointment to the post of Motor Vehicle Inspectors alongwith holders of Diploma in Automobile Engineering. On receipt of the applications from the candidates the Commission commenced the process of selection as it scrutinised the applications and issued letters for interview to the respective candidates. In fact the Commission commenced the interviews in August 1984 and it had almost completed the process of selection but the selection could not be com 391 pieted on account of interim orders issued by the High Court at the instance of candidates seeking reservation for local candidates. The Commission completed the interviews of all the candidates and it finalised the list of selected candi dates by 2nd June 1987 and the result was published in the State Gazette on 23rd July 1987. In addition to that the selected candidates were intimated by the Commission by separate letters. In view of these facts the sole question for consideration is as to whether the amendment made in the Rules on 14th May 1987 rendered the selection, illegal. Admittedly the amending Rule does not contain any provision enforcing the amended Rule with retrospective effect. In the absence of any express provision contained in the amending Rule it must be held to be prospective in nature. The Rules which are prospective in nature cannot take away or impair the right of candidates holding Diploma in Mechanical Engi neering as on the date of making appointment as well as on the date of scrutiny by the Commission they were qualified for selection and appointment. In fact the entire selection in the normal course would have been finalised much before the amendment of Rules, but for the interim orders of the High Court. If there had been no interim orders, the select ed candidates would have been appointed much before the amendment of Rules. Since the process of selection had commenced and it could not be completed on account of the interim orders of the High Court, the appellants ' right to selection and appointment could not be defeated by subse quent amendment of Rules. It is well settled rule of construction that every statute or statutory Rule is prospective unless it is ex pressly or by necessary implication made to have retrospec tive effect. Unless there are words in the statute or in the Rules showing the intention to affect existing rights the Rule must be held to be prospective. If a Rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only. In the absence of any express provision or necessary intendment the rule cannot be given retrospective effect except in matter of procedure. The amending Rule of 1987 does not contain any express provision giving the amendment retrospective effect nor there is anything therein showing the necessary intend ment for enforcing the Rule with retrospective effect. Since the amending Rule was not retrospective, it could not ad versely affect the right of those candidates who were quali fied for selection and appointment on the date they applied for the post, moreover as the process of selection had already commenced when the amending Rules came into force. The amended Rule could not affect the existing rights of those candidates who were being considered for selection as they possessed the 392 requisite qualifications prescribed by the Rules before its amendment moreover construction of amending Rules should be made in a reasonable manner to avoid unnecessary hardship to those who have no control over the subject matter. In A.A. Calton vs Directorof Education & Anr., this Court considered the validity of appointment of Principal by the Director of Education made under Section 16F of the U.P. Intermediate Education Act 1921. The High Court quashed the selection of Principal on the ground that the appointment had been made by the Selection Committee and not by the Director of Education as required by Section 16F(4) of the Act. The High Court directed the Director of Education to make selection and appointment. Pursuant to the direction of the High Court, the Director made appointment to the post of Principal by his order dated March 8, 1977, but before that date, Section 16F(4) of the Act was amended on August 18, 1975 taking away the power of the Director to make appointment under Section 16F(4) of the Act. In view of the amendment of Section 16F of the Act, validity of the order of the Director of Education dated March 8, 1977 making appointment to the post of Principal was again ques tioned. The High Court dismissed the writ petition thereupon the unsuccessful party preferred appeal. This Court held as under: "It is no doubt true that the Act was amended by U.P. Act 26 of 1975 which came into force on August 18, 1975 taking away the power of the Director to make an appointment under Section 16F(4) of the Act in the case of minority institutions. The amending Act did not, however, provide expressly that the amendment in question would apply to pending proceedings under Section 16F of the Act. Nor do we find any words in it which by necessary intendment would affect such pending proceed ings. The process of selection under Section 16F of the Act commencing from the stage of calling for applications for a post up to the date on which the Director becomes entitled to make a selection under Section 16F(4) (as it stood then) is an integrated one. At every stage in that process certain rights are treated in favour of one or the other of the candidates. Section 16F of the Act cannot, therefore, be construed as merely a procedural provision. It is true that the legislature may pass laws with retrospective effect subject to the recognised constitutional limitations. But it is equally well settled that no retrospec tive effect should be given to any statutory provision so as to impair or take away an existing right, unless 393 the statute either expressly or by necessary implication directs that it should have such retrospective effect. In the instant case admittedly the proceedings for the selection had commenced in the year 1973 and after the Deputy Director had disapproved the recommen dations made by the Selection Committee twice the Director acquired the jurisdiction to make an appointment from amongst the qualified candidates who had applied for the vacancy in question. At the instance of the appellant himself in the earlier writ petition filed by him the High Court had directed the Director to exercise that power. Although the Director in the present case exercised that power subsequent to August 18, 1975 on which date the amendment came into force, it cannot be said that the selection made by him was ille gal since the amending law had no retrospec tive effect. It did not have any effect on the proceedings which had commenced prior to August 18, 1975. Such proceedings had to be continued in accordance with the law as it stood at the commencement of the said proceed ings. We do not, therefore, find any substance in the contention of the learned counsel for the appellant that the law as amended by the U.P. Act 26 of 1975 should have been followed in the present case. " In view of the above the appellants ' selection and appointment could not be held as illegal as the process of selection had commenced in 1983 which had to be completed in accordance with law as it stood at the commencement of the selection. The amended Rule could not be applied to invali date the selection made by the Commission. Strangely the Tribunal did not follow the latest authority of this Court as laid down in Calton 's case, on the ground that the view taken in that case was contrary to the Constitution Bench decision of this Court in State of Andhra Pradesh vs T. Ramakrishna Rao, We have carefully consid ered the decision but we do not find anything therein con trary to the view taken in Calton 's case. In Ramakrishna Rao 's case the State Public Service Commission of Andhra Pradesh had invited applications in 1968 for the posts of District Munsifs. Rule 5 of the Re cruitment Rules empowered the Commission to prepare a list of persons considered for the appointment to the post of District Munsifs after holding such examination as the Government would consider necessary. On a challenge made by some of the candidates the High Court held that Rule 5 was void as it 394 empowerd the Government to determine whether an examination was necessary or not, and also the pattern of such an exami nation, in contravention of Article 234 of the Constitution. The High Court further held that the Government orders, pursuant to the said Rule for holding of examination by the Commisssion was also void, having been issued under invalid Rules. Pursuant to the judgment of the High Court the Gover nor amended Rule 5 after consultation with the High Court and the Commission as enjoined by Article 234 of the Consti tution. The Commission thereafter issued advertisement inviting fresh applications to hold examination for the purpose of filling vacancies in the post of District Mun sifs, thereupon some of the candidates who had made applica tions in pursuance to the advertisement issued in 1968 challenged the validity of the holding of the fresh examina tion on the ground that since they had applied in response to the advertisement of 1968 they could not be subjected to written examination under the amended Rule as it was pro spective in nature. They further asserted that the amended Rule prescribing 200 marks for written test and equal number of marks for oral test was contrary to the earlier Rules and since they had acquired right to be considered in accordance with Rule 5 before its amendment, they should not be sub jected to written examination and oral test as required by the amended Rules. The High Court partly allowed the peti tion and directed the Commission to hold a separate examina tion for those who had applied in 1968 in accordance with the unamended Rules and further to hold a separate examina tion for the subsequent vacancies in accordance with the amended Rule 5. On appeal by the State Government, a Consti tution Bench of this Court set aside the order of the High Court. This Court held that since Rule 5 as it stood in 1968 had been declared void the advertisement issued by the Commission inviting applications and all proceedings taken by the Commission including the examination held thereunder was rendered void. In this context this Court made observa tion that those candidates who had made applications in 1968 had not acquired any fight as their applications had been made under a Rule which had been declared invalid. The Court further held that in the facts of that case the question whether amended Rule 5 was retrospective or prospective did not arise. The Court observed as under: "Secondly the respondents had not acquired any right by merely applying for the posts either under that rule or otherwise, to be selected for the posts. The Commission, therefore, was perfectly justified in treating the earlier applications of the respondents as invalid on the ground 395 that they had been invited under an illegal rule and calling for fresh applications and holding a fresh examination in respect of all the 200 vacancies. There was thus no question of any breach of Article 16, nor of any viola tion of any right of the respondents as none was acquired by them. Equally, there was no question of the amended Rule 5, being prospec tive or retrospective as the Commission had to act afresh under the amended Rule, the una mended rule having been struck down and there being therefore no basis on which the applica tions of the respondents made in 1968 could be treated as valid applications. " The above observations as relied by the Tribunal do not apply to the facts of the instant case as the advertisement issued by the Commission on 28.9.1983 was in accordance with the Recruitment Rules of 1976, validity of those Rules was not in question. The Rule prescribing qualification was amended after four years of the advertisement, therefore the law laid down in Ramakrishna Rao 's case does not apply. The Tribunal committed error in ignoring the law laid down in Calton 's case by placing reliance on the observations of this Court in Ramakrishna Rao 's case. In our view the prin ciples laid down in Calton 's case are fully applicable to the instant case. In Y.Y. Rangaiah vs J. Sreenivasa Rao, the question was whether appointment could be made out of the list of approved candidates prepared by the appointing authority against the vacancies which had occurred prior to the amendment of the rules. The Andhra Pradesh Registration and Subordinate Service Rules made provision for the prepa ration of a list of approved candidates for appointment and promotion in the month of September every year. In 1976 the list of approved candidates was not prepared meanwhile in 1977 the original rules were amended providing for promotion or transfer to the category of LDCs for appointment as Sub Registrars Grade II from amongst UDCs employed in the Regis tration and Stamp Department. A list of approved candidates for promotion was made in accordance with the amended Rules and appointments were made as a result of which some of the juniors in the category of LDCs were promoted as Sub Regis trars Grade II. The Andhra Pradesh Tribunal set aside the appointments and directed the State Government to draw a fresh panel for the year 1976 77 in respect of vacancies arising during that year in accordance with the rules as they existed at that stage and to make appointments in the vacancies pertaining to that period on the basis of the panel so drawn. On appeal this Court held 396 that the vacancies which occurred prior to the amended Rules would be governed by the old Rules and not by the amended Rules. The decision does not lay down anything which may be contrary to the view taken in Calton 's case. We would now consider the view taken by this Court in l. J. Divakar vs Government of Andhra Pradesh, 1 as the Tribunal has placed strong reliance on the observations made in that decision in setting aside the selection made by the Public Service Commission. It is necessary to ascertain the facts involved in Divakar 's case. The Andhra Pradesh Public Service Commission invited appli cations for filling posts of Junior Engineers. In response to the advertisement several candidates applied for the said post and appeared at the viva voce test. While the Commis sion was in process of finalising the select list, the Government of Andhra Pradesh issued a Government Order under the proviso to Article 320(3) of the Constitution excluding the posts of Junior Engineers from the purview of the Public Service CommissiOn. The Government regularised the services of all those who were appointed by direct recruitment to the post of ad hoc Junior Engineers and were continuing in service on August 9, 1979 without subjecting them to any test written or oral. The candidates who had applied in response to the advertisement issued by the Commission challenged validity of the Government Order excluding the post of Junior Engineers from the purview of the Commission and also the validity of the decision by the Government to regularise the services of temporary employees. Before this Court the Government 's power of framing regulations exclud ing any post from the purview of the Commission under the proviso to Article 320(3) was conceded. It was, however, urged that since the advertisement had been issued by the Commission inviting applications for the posts of Junior Engineer and as the Commission was in process of selecting candidates the power under the proviso to Clause (3) of Article 320 of the Constitu tion could not be exercised. This Court rejected the contention wit! the following obser vations: "The only contention urged was that at the time when the advertisement was issued the post of Junior Engineer was within the. pur view of the Commission and even if at a later date the post was withdrawn from the purview of the Commission it could not have any retro spective effect. There is no merit in this contention and we are broadly in agreement with the view of the Tribunal that inviting the applications for a post does not by itself create any right to 397 the post in the candidate who in response to the advertisement makes an application. He only offers himself to be considered for the post. His application only makes him eligible for being considered for the post. It does not create any right in the candidate to the post. " After making the aforesaid observations the Court further held that the relevant service Rules conferred power on the Government to fill emergently the vacancies to the post borne in the cadre of service otherwise than in accordance with the rules and therefore the Government had power to regularise temporary appointments made without the consulta tion of the Public Service Commission. Even after upholding the Government order, the Court directed the Commission to consider the case of all those candidates who had applied for the post of Junior Engineers in response to the adver tisement issued by the Commission and to finalise the select list on the basis of viva voce test and to forward the same to the Government. The Court further directed the Government to make appointments from the select list before any outsid er was appointed to the post of Junior Engineers. Thus, the observations made by this Court as quoted earlier were made in the special facts and circumstances of the case, which do not apply to the facts of the instant case. In Divakar 's case since the jurisdiction of the Public Service Commission had been denuded by the Government in exercise of its con stitutional power the Commission had no jurisdiction to conduct selection or prepare select list. In this background the Court made observations that a candidate merely by making applications does not acquire any right to the post. It is true that a candidate does not get any right to the post by merely making an application for the same, but a right is created in his favour for being considered for the post in accordance with the terms and conditions of the advertisement and the existing recruitment rules. If a candidate applies for a post in response to advertisement issued by Public Service Commission in accordance with recruitment Rules he acquires right to be considered for selection in accordance with the then existing Rules. This right cannot be affected by amendment of any Rule unless the amending Rule is retrospective in nature. In the instant case the Commission had acted in accordance with the then existing rules and there is no dispute that the appellants were eligible for appointment, their selection was not in violation of the recruitment Rules. The Tribunal in our opinion was in error in setting aside the select list pre pared by the Commission. In view of the above discussions, we allow the appeal and set 398 aside the order of the Tribunal dated September 30, 1987. We further direct the State Government to make appointments to the posts of Motor Vehicle Inspectors on the basis of the select list prepared and finalised by the Commission. The writ petition is also disposed of accordingly. There will be no order as to costs. P.S.S. Appeal & Petition allowed.

The Karnataka General Service (Motor Vehicles Branch) Recruitment Rules, 1962 (as amended in 1976) laid down the minimum qualification of Diploma in Automobile Engineering or Mechanical Engineering for direct recruitment to the post of Motor Vehicle Inspectors. The Karnataka Public Service Commission issued an advertisement on September 28, 1983 inviting applications for the said post stating specifically that the selection shall be made in accordance with the Recruitment Rules, 1976 and that the candidate must be holder of Diploma in Automobile Engineering or Mechanical Engineering. After scrutiny of the applications the Commis sion issued letters for interview to the suitable candidates and commenced the holding of interviews in August, 1984. The process of selection, however, could be completed only on June 2, 1987 on account of interim orders issued by the High Court at the instance of candidates seeking reservation for local candidates. The result was declared on June 22, 1987 and published in the Karnataka Gazette dated 23rd July, 1987. Thereafter, the selected candidates were given intima tion of their selection and the State Government took steps for imparting them three months training before appointing them as Motor Vehicle Inspectors. In the meanwhile, the State Government amended the Recruitment Rules by a notification dated May 4, 1987 omit ting qualification of Diploma in Mechanical Engineering for the said post. Thereupon some of the candidates who were unsuccessful at the selection preferred applications before the Karnataka Administrative Tribunal for quashing the select list and the notification dated September 28, 1983 inviting applications on the ground that after the amendment of Rules in 1987 no person holding Diploma in Mechanical Engineering was qualified for 386 appointment to the said post. The State Government as well as the appellants both contested the applications and as serted that the 1987 amendment to the Recruitment Rules was not retrospective and that the amended rules did not affect the selections which were in the process of finalisation by the Commission. Allowing the applications, the Tribunal held that after the amendment of the Recruitment Rules in May 1987 the Commission could not make selection or determine the result on the basis of the Rules which existed prior to May 14, 1987 and as such the selection of candidates holding Diploma in Mechanical Engineering was illegal as they had ceased to be eligible for appointment to the post of Motor Vehicle Inspectors with effect from the date of publication of the amending Rules. Consequently it quashed the advertisement issued under the Notification dated September 28, 1983 as well as the select list published by the Commission and directed the Commission to invite fresh applications and to make selections in accordance with the amended Rules. Allowing the appeal and the writ petition preferred by the selected candidates, the Court, HELD: 1. The Tribunal was in error in setting aside the select list preferred by the Commission. 1397H] 2.1 If a candidate applies for a post in response to an advertisement issued by a Public Service Commission in accordance with the recruitment rules, he acquires a right to be considered for selection in accordance with the then existing rules. This right cannot be affected by amendment of any rule unless the amending rule is retrospective in nature. 1397H] In the instant case, the advertisement issued by the Commission on September 28, 1983 was in accordance with the Recruitment Rules of 1976 under which the appellants were eligible for appointment. The process of selection which had commenced on receipt of the applications, however could not be completed on account of the interim orders issued by the High Court. The select list was finalised by June 2, 1987 and the result published in the Karnataka Gazette of July 23, 1987. The selected candidates were also intimated by the Commission by separate letters. If there had been no interim orders the appellants would have been appointed much before the amendment of Rules on May 4, 1987. [395C; 390G; 391D] 387 2.2 Construction of amending Rules should be made in a reasonable manner to avoid unnecessary hardship to those who had no control over the subject matter. Every statute or statutory Rule is prospective unless it is expressly or by necessary implication has retrospective effect. Unless there are words in the statute or in the Rules showing the inten tion to affect existing rights the Rules must be held to be prospective. If a Rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only. In the absence of any express provision or necessary intendment the rule cannot be given retrospective effect except in matter of procedure. [392A; 391E F] In the instant case, the amending Rule of 1987 does not contain any express provision giving the amendment retro spective effect nor there is anything therein showing the necessary intendment in enforcing the Rule with retrospec tive effect. The amended Rule, therefore, could not he applied to invalidate the selection made by the Commission. [391F G; 393E F] A.A. Calton vs Director of Education & Anr., , applied. State of Andhra Pradesh vs T. Ramakrishna Rao, , referred to. Y.Y. Rangaiah vs J. Sreenivasa Rao, and l. J. Divakar vs Government of Andhra Pradesh, , distinguished. The order of the Tribunal dated September 13, 1987 is set aside. The State Government is directed to make appoint ment to the posts of Motor Vehicle Inspectors on the basis of the select list prepared and finalised by the Commission. [398A]

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Appeal No. 272 of 1956. Appeal from the judgment and decree dated June 28, 1954, of the former Nagpur High Court, in First Appeal No. 107 of 1946. M. C. Setalvad, Attorney General for India, Purshottam Trikamdas, section T. Khirwadkar and I. N. Shroff for the appellant. Achhru Ram, A. R. Chaubey and Naunit Lal for the respondents. February 22. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal on a certificate granted by the Nagpur High Court. The brief facts necessary for present purposes are these. One Ramchandar Jat originally owned Annas 10/8 share in Mauza Tamalawadi while the rest belonged to others. Ramchandar executed a simple mortgage deed on July 27, 1920, in favour of Seth Ram Jiwan and two. minors Ram Narain and Radhey Sham. The plaintiffs. respondents are the representatives of the mortgagees. On August 27, 1926, the defendant appellant purchased Annas /5/4 share belonging to the other share holders in the village. Thereafter, the appellant brought a 915 suit against Ramchandar who was lambardar of the village for profits, in which 9, decree was passed against Ramchandar. In execution of that decree the appellant purchased the entire Annas /10/8 share of Ramchandar in the village about the year 1932. In consequence, the appellant became the owner of the entire village subject to the mortgage of the respondents on Annas /5/4 share therein. On July 27, 1932, the respondents sued Ramchandar on the basis of their mortgage deed and a preliminary decree for sale was passed in March, 1937. To this suit the appellant was also a party. The preliminary decree was followed by a final decree and thereafter the property was put to sale and was purchased by the respondents on March 1, 1940. This sale was confirmed on April 12, 1940, and a sale certificate was granted to the respondents. So by the year 1940 the respondents were the owners of Annas /5/4 share in the village while the appellant was the owner of Annas /10/8 share. The appellant was also a lambardar. Ramchandar Jat held sir land in certain khasras with a total area of 252 49 acres. On the sale of Ramchandar 's share to the appellant, Ramchandar became an ex proprietary tenant of his sir land. Thereafter Ramchandar was ejected from his exproprietary tenancy sometime in 1936 and the lands came into possession of the appellant. There were certain other lands which were nominally recorded as Muafi Khairati in the name of Ramchandar 's mother but were actually in the possession of Ramchandar. It appears that Ramchandar was ejected from these lands also and they came into, the possession of the appellant. Further the appellant as a lambardar came into possession of certain other lands by surrender or otherwise. The respondents filed a suit for partition before the Sub Divisional Officer, Hard&, in 1942. In that suit they claimed half share in the lands of Ramchandar and his mother which came into. the possession of the appellant. They also claimed a share in other lands which came into the possession of the appellant as lambardar. Their case was that these lands were 916 accession to the mortgage in their favour and they were therefore entitled to a proper share in them '. This claim was resisted by the appellant before the Sub Divisional Officer. On October 20, 1943, the Sub Divisional Officer passed an order which in effect rejected the contention of the respondents and accepted the plea of the appellant. Thereupon the respondents filed the present suit for a declaration in the civil court in 1944 claiming that they were entitled to a proportionate share in the lands specified in the plaint. The suit was resisted by the appellant and his contention was that the respondents had purchased specific khudkashat and chhotaghas plots and that they therefore could not be allowed anything more than what was mentioned in the decree and the sale certificate which were the basis of their title. As the specific lands with respect to which the respondents claimed a declaration in this suit were not mentioned in the sale certificate, they were not entitled to any share in them. A large number of issues were framed by the trial court, which decreed a part of the claim put forward by the respondents but dismissed the rest. Consequently, the respondents went up in appeal to the High Court. The appeal was allowed so far as the respondents ' claim to one half share in the sir plots held by Ramchandar was concerned. Further, they were allowed one third share in the lands held by the mother of Ramchandar and also in certain other lands which came into the possession of the appellant as lambardar subject to payment of certain amounts. This was followed by an application by the appellant for leave to appeal to this Court and a certificate was granted by the High Court. That is how the matter has come up before us. The main contention of the appellant before us is that the mortgage deed of 1920 which is the basis of the title of the respondents did not include the sir plots in the possession of, Ramchandar nor the plots of Ramchandar 's mother. Nor were these plots included in the suit which was brought by the respondents on the basis of the mortgage deed. Further, the sale certificate also did not include these plots, though 917 some other plots were mentioned therein. Therefore, the respondents were not entitled to these plots as accession to the mortgage. This brings us to a consideration of the mortgage in favour of the respondents. The mortgage was without possession and the property mortgaged was mentioned in these terms: " I do hereby mortgage without possession half share /5/4, five annas and four pies, area 678.31 acres, jama sarkar Rs. 326/10/8 together with khudkashat, chhotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or no fruits and prohibited and unprohibited wood with entire rights and prvileges appertaining to the village. " It will be seen that what was mortgaged was the entire half share of Ramchandar in /10/8 share which he owned in the village. It is true that the mortgage goes on to describe certain other things but that in our opinion is merely by way of precaution, for even if the part underlined* was not there in the mortgage, the respondents being the mortgagees of /5/4 share would be entitled to everything contained in that share. The underlined* part of the mortgage therefore does not cut down the amplitude of the mortgage with respect to the entire /5/4 share out of /10/8 share of Ramchandar. It is true that sir is not specifically mentioned in the mortgage but as the mortgage was of the entire /5/4 share out of /10/8 share it will include (unless there is a specific exclusion of sir) the area of sir also pertaining to the share mortgaged. In this connection our attention was drawn to as. 68 and 69 of the Central Provinces Land Revenue Act, No. 11 of 1917, which was in force at the relevant time. Section 68 deals with sir land and section 69 wit khudkashat. Sir is defined in section 2 (17) and khudkashat is defined in section 2 (5) as " that part of the home farm of a mahal which is cultivated by the proprietor as such and which is not sir land. " Thus though sir land may be a part of the home farm it is a different entity Here printed in italics. 918 from khudkashat land. Reference was also made to sections 49 and 50 of the Central Provinces Tenancy Act, No. 1 of 1920 (hereinafter called the Tenancy Act) which deal with transfer of sir land. Under section 49 (1) a proprietor who temporarily or permanently loses whether under a decree or order of a civil court or by transfer or otherwise his right to occupy any portion of his sir land as a proprietor shall at the date of such loss, become an occupancy. tenant except where he has obtained a sanction under section 50 of the Tenancy Act. Further under section 49 (2) there is a prohibition on the registration of documents which purport to transfer all the rights of a proprietor in big sir land without reservation of the right of tenancy specified in sub section It is urged for the appellant that the reason why sir land was not mentioned in the mortgage deed of 1920 was that otherwise sanction of the Revenue Officer would have been required under section 50 of the Tenancy Act. Now section 50 provides that if a proprietor desires to transfer the proprietary rights in any part of his sir without reservation of a right of occupancy specified in section 49(1) he may apply to the Revenue Officer and if such Revenue Officer is satisfied that the transferor is not wholly or mainly an agriculturist or that the property is self acquired or has been acquired within the twenty years last preceding, he shall sanction the transfer. Sections 49 and 50 in our opinion only come into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently and sanction has to be obtained under section 50 only where the transfer is to be made without reservation of the right of occupancy. But the mortgage in this case is a simple mortgage and there was no transfer of possession under it. Therefore the proprietor Ramchandar never lost his right to occupy his sir land by this mortgage and there was therefore no necessity for him to make any reservation in that respect or to apply for sanction under section 50, for he was not losing the right to occupy his sir at all. But that does not mean that when he mortgaged his entire share of /5/4 out of /10/8 share,, he was excluding from the mortgage the area of sir 919 corresponding to the share mortgaged. As the mortgage deed of 1920 stands, it is a mortgage of all the proprietary rights in /5/4 share including the proprietary right in the sir pertaining to that share ; but as the proprietor was not losing his right to occupy the sir land, the mortgage being without possession, it was not necessary for him to make any application under section 50 of the Tenancy Act. We are therefore of opinion that the appellant cannot take advantage in the circumstances of the fact that no application was made under section 50 of the Tenancy Act and therefore there was no effect of this mortgage on the sir rights. As we read the mortagage it clearly affected the sir Tight also pertaining to /5/4 share and it was not necessary to make an application under section 50 of the Tenancy Act, for the mortgagor was not losing possession of his sir and there would be no question of any ex proprietary tenancy arising in his favour, to relinquish which he would have to apply under section 50. Turning now to the plaint in the mortgage suit we find that the property subject to the mortgage is mentioned in para. 2 thereof inexactly the same terms as in the mortgage deed. In para. 13 it is again recited that the mortgagor mortgaged /5/4 share out of his /10/8 share. Paragraph 13 then goes on to say that on the date of the mortgage, the mortgagor had certain khudkashat and chhotaghas lands and both cultivating and proprietary rights in them pertaining to half share only were liable to be sold. No mention was made of sir in this paragraph. But that in our opinion was not necessary, for the mortgage included the mortgage of sir land also pertaining to /5/4 share though without possession. The prayer in the suit was for sale of the mortgaged property together with khudkashat, etc. ; but this again was a mere matter of precaution, for in any case the entire proprietary right in sir, khudkashat, etc., relating to /5/4 share would be sold on a decree following on the mortgage. Then coming to the sale certificate we find that it certifies that the respondents had purchased /5/4 share in the village with abadi, khudkashat, chhotaghas and all rights pertaining to the 'share. It is true that 920 khudkashat and chhotaghas are specifically mentioned in the sale certificate but the words " all rights pertaining to the share " appearing in the sale certificate would include such proprietary rights in the sir land as belonged to the share mentioned in the sale certificate. We are, therefore, of opinion. that so far as sir land is concerned, the proprietary right in it pertaining to /5/4 share was mortgaged and the respondents by their sale certificate got a right in the sir land also. Now what happened after the mortgage deed in favour of the respondents was that the appellant purchased the entire /10/8 share of Ramchandar subject to the mortgage of the respondents in 1932. At that time Ramchandar became an ex proprietary tenant of his entire sir relating to this share under section 49 of the Tenancy Act. In 1936 Ramchandar was ejected from the ex proprietary tenancy which came in the possession of the appellant as lambardar and has apparently since then remained in his possession. The case of the respondents is that in 1936 their mortgage was subsisting and the sir land which thus came into the possession of the appellant on the extinction of the ex proprietary tenancy became an accession to the mortgage and, therefore, they as mortgagees were entitled to half share in the lands which thus came into the possession of the appellant. We have already pointed out that the mortgage covered the sir plots also so for as the proprietary rights in them were concerned. Therefore, when Ramchandar 's ex proprietary rights came to an end and the land came into the possession of the appellant and became khudkashat, the mortgage would cover this khudkashat land to the extent of the mortgagees ' share therein. It is, true that if Ramchandar 's ex proprietary tenancy had continued, the mortgagee would have no right to ask for half share in it; but when the ex proprietary tenancy was extinguished and this land came in the possession of the lambardar mortgagor it, was an accession to the mortgage under section 70 of the Transfer,of Property Act and the mortgagees could claim a share in it. , It was however urged that accession to be available to 921 the mortgage must be a legal accession. We however see no illegality in the accession which took place. There is also no doubt that the accession took place when the mortgage was still subsisting. Therefore, we agree with the High Court that on the ex proprietary tenancy being extinguished, the sir land which Would otherwise have remained in the exclusive possession of Ramchandar as an ex proprietary tenant became an accession to the mortgaged property and the respondents would be entitled to half of it on their purchasing the /5/4 share in execution of the decree on the mortgage. The fact that the rent of an ex proprietary tenant is due to the person whose ex proprietary tenant he becomes by virtue of the sale or mortgage with possession would make no difference after ex proprietary tenancy is extinguished, for on such extinction the land would go to the entire proprietary body and would thus in this case be an accession to the mortgage to the extent of the share mortgaged. This brings us to the lands in the name of Ramchandar 's mother. It appears that these lands came into the possession of Ramchandar after the mortgage but before the institution of the mortgage suit. They were nominally recorded in the name of his mother and in 1932 after his entire share was purchased by the appellant lie was recorded as an occupancy tenant of these lands. Later the appellant came into possession of them apparently as a lambardar. It is not clear when and how the appellant got possession of them. There can be no doubt however that his possession was for the entire body of proprietors and the respondents would be entitled to a share in them. But it was urged that the claim of the respondents to these lands was barred by 0. 11, r. 2 of the Code of Civil Procedure, because they were not specified in the plaint based on the mortgage deed of 1920. Reliance in this connection is placed on Hazarilal vs Hazarimal (1) and Seth Manakchand vs Chaube Manoharlal (2). These cases in our opinion do not apply, because they are cases of foreclosure while in (1) A. I. R. , (2) A.I.R. 1944 P.C 46, 922 the present case the respondents ' suit was for sale of the share mortgaged with them. Further in the plaint, when specifying the khudkashat plots it wag made clear that they were khudkashat on the date of the mortgage; the respondents thus did not specify the khudkashat plots on the date of the plaint. Though they had specified some plots in the plaint which were mentioned in the sale certificate also, the suit " as for the sale of the entire /5/4 share and that would include khudkashat lands pertaining to the share existing at the time when the suit was filed. It is not necessary in a suit for sale to specify the lands in the possession of the mortgagor specifically and they would pass on sale along with the share sold. The claim, therefore, would not be barred under 0. 11, r. 2, on the ground that these plots entered in the name of the mother of Ramchandar were not specifically mentioned in the plaint. This leaves certain lands which came into the possession of the appellant as a lambardar in the ordinary course of management. The respondents would clearly be entitled to a share in these lands also on payment of proportionate expenses incurred by the appellant in the course of suits in which he came into possession. This is what the High Court has ordered and we see no reason to disagree with that view. The appeal, therefore, fails and is hereby dismissed with costs. Appeal dismissed.

One Ramchandar executed a simple mortgage deed without possession of his share in the property in dispute in favour of the respondents and others the relevant Portion of which ran thus :" I do hereby mortgage without possession half share, five annas and four pies, area 678 31 acres, jama sarkar Rs. 326/10/8 together with Khudkashat, chbotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or no fruits and prohibited and unprohibited wood with entire rights and privileges appertaining to the 'village." After the mortgage Ramchandar 's share was sold to the appellants and certain other lands recorded in Ramchandar 's mother 's name also came into the possession of the appellant. The main questions arising for decision were whether the mortgage included the sir land of Ramchandar and whether the other lands coming into the possession of the appellant were accession to the mortgage. Held, that as the mortgage deed stood it was a mortgage of all the proprietary rights in the mortgagor 's share in the property including the proprietary right in the sir pertaining to that share. As the mortgage was without possession the mortgagor was not losing possession of his sir and it was not necessary for him to make an application under section 50 of the Central Provinces Tenancy Act relating to the reservation of a right of occupancy. Sections 49 and 50 come into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently. Although in the plaint of the suit based on the mortgage no mention was made of sir, the entire proprietary right in sir, khudkashat etc. relating to the mortgagor 's share would be sold on a decree passed in the suit. The words " all rights pertaining to the share " appearing in the sale certificate following the execution of the decree in the mortgage suit passed in favour of the respondents would include the mortgagor 's proprietary rights in the sir land and the respondents by their sale certificate would get a right 'in the sir land also. 914 As the appellant had purchased the entire share of Ram chandar who was later ejected from his ex proprietary tenancy which came into the possession of the appellant as lambardar his sir land which thus came into the appellant 's possession while the mortgage was subsisting became an accession to the mortgage under section 70 Of the and the mortgagees were entitled to half share in the lands which came into the appellant 's possession. The lands recorded nominally in the name of Ramchandar 's mother but in the actual possession of the former having also came into the possession of the appellant as lambardar were held by him for the entire body of proprietors and the respondent would be entitled to a share in them. The respondent 's claim to those lands were not barred by 0. II, r. 2 of the Code of Civil Procedure merely because they were not mentioned in the plaint of the mortgage suit. Hazarilal vs Hazarimal, A.I.R. 1923 Nag. 130 and Seth Manakchand vs Chaube Manohar Lal, A. I.R. , held not applicable.

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Appeal NO. 1317 of 1975. (From the Judgment and Order dated 8 10 1974 of the Bombay High Court in Appeal No. 73 of 1974) P.H. Parekh and Miss Maniu Jetley, for the Appellant section K. Dholakia and R.C. Bhatia, for the respondent. F.S. Nariman and B.R. Aggarwal, for the intervener. The Judgment of the Court was delivered by CHANDRACHUD, J. A question of practical importance concerning the dying profession of Solicitors arises in this appeal by special leave. The question is whether the bill of costs of a Solicitor or an Attorney who has rendered profes sional services to his client in the City Civil Court can be taxed by the Taxing Master, Original Side, Bombay High Court, and if so, whether it can be taxed on the Original Side scale. The dual system which was prestigiously in vogue in Bombay since the inception of the Bombay High Court has been abolished with effect from January 1, 1977 and there fore the question is not of growing importance. All the same, though the question will by and by cease to have the importance which it has to day, we are informed at the bar that quite a few cases are kept pending in Bombay to await the decision of this appeal. Certain properties belonging to appellants were attached by the City Civil Court, Bombay, in execution of a decree passed by a Court in Bellary. The appellants appeared in the execution proceedings through a firm of Solicitors, M/s Raghavayya Nagindas & Co., respondents herein, who by the vakalatnama executed in their favour by the appellants, agreed to act, appear and plead for them in the City Civil Court. The respondents took out three Chamber Summonses on behalf of the appellants for raising the attachment, which was eventually raised in about 1960. Thereafter, they submitted three bills to the appellants for their costs and remuneration. Since the bills remained unpaid, the respond ents obtained on February 8, 1972 an order from the Prothon otary of the High Court directing the TaXing Master to tax the bills 354 The appellants appealed against the order of the Prothono tary by way of Chamber Summons which was dismissed by the Chamber Judge on October 26, 1972 with liberty to the Taxing Master to decide whether respondents were entitled to be remunerated on the Original Side scale of fees, as between an Attorney and. client. The Taxing Master rejected the appellants ' contention, taxed the respondent bills according to the scale of fees applicable on the Original Side of the High Court and directed the issuance of an allocatur. Before the respondents could obtain a payment order on the basis of the allocatur, the appellants took out a Cham ber Summons.on May 7, 1973 challenging the order of the Taxing Master. That Chamber Summons was dismissed by the Chamber Judge whose decision has been confirmed in appeal by a Division Bench. Three contentions were raised by the appellants in the High Court: (1) A Solicitor 's bill for costs and remunera tion in respect of the work done by him in the City Civil Court cannot be taxed by the. Taxing Master, Original Side, High Court; (2) The bill, in any event, cannot be taxed according to the scale of fees applicable on the Original Side as between an Attorney and client; and (3) The recovery of the amount taxed by the Taxing Master is barred by limi tation under article 113 of the . The High Court rejected all these contentions by its judgment dated October 8, 1974. Mr. Parekh, appearing for the appellants before us, did not press the third point regarding limitation and rightly so. Article 113 of the , though residuary, applies to suits and cannot govern the special form of remedy available to the Attorneys for recovering their fees. Proceedings in pursuance of that remedy are governed by rule 573(ii)(a) of the Original Side RUles and the proviso there to. The proceedings for recovery of fees under those provi sions are not barred by time. Counsel has, however, pressed the first two contentions with some zeal. We will first take up for consideration the primary question whether the Taxing Master has jurisdiction at all to tax an Attorney 's bill of costs for professional services rendered by him to his client in connection with a litigation in a court other than the Bombay High Court, in this case the City Civil Court. Rule 569 of "The Rules of the High Court of Bombay (Original Side), 1957" affords, in our opinion, a complete .answer to the appellants ' conten tion that the Taxing Master who is an officer of the Origi nal Side of the High Court has no jurisdiction tot tax the Attorneys ' bills in regard to work done by them in matters other than those on the Original Side. Rule 539 occurs in Chapter XXIX of the Original Side Rules under the rubric "The Taxing Office". The rule reads thus: "569. The Taxing Master shall tax the bills of costs on every side of the Court (except the Appellate Side) and in the Insolvency Court. All other bills of costs of Attorneys shall also be taxed by him when he is directed to do ' so by a Judge 's order. " 355 The rule consists of two parts of which the first part confers jurisdiction on the Taxing Master to tax the bills of costs on every side of the High Court including bills relating to matters in the Insolvency Court but excluding those on the Appellate Side of the High Court. If the rule were to stop with the first part, it would have been possi ble to say that the Taxing Master has no Jurisdiction to tax the bills in regard to matters outside the High Court. But the second parts of the rule puts the matter beyond doubt by providing that all other bills of costs of Attorneys shall also be taxed by the Taxing Master it is argued on behalf of the appellants that "other bills of costs ' must be construed to mean "other bills of costs relating to matters on the Original Side of the High Court" and bills relating to non contentious matters. We see no jurisdiction for cutting down the scope of the second part of the rule by putting a limited meaning on words of width used therein. "All other bills of costs of Attorneys" to which the second part Of the rule refers must 'mean all bills of costs of Attorneys other than those which are referred to in the first part of the rule. That we conceive to be the plain meaning of the particular provision. Rule 573 which was amended by Slip No. 190 also shows that the Taxing Master has jurisdiction to tax the bills of Attorneys in regard to professional services rendered by them in matters outside the High Court. Amended rule 573(i)(a) provides that subject to the proviso and subject to the discretion of the Chamber Judge to enlarge the time, in "every suit or proceeding in the High Court" an Attorney shall lodge his bill of costs for taxation within five years after the disposal of the suit or the proceeding, an.d if an appeal is filed in the . High Court, w!thin five years from the disposal of the appeal. Amended rule 573(ii)(a) pro vides that subject to the proviso and to the Chamber Judge 's discretion, "In the case of matters which are not the sub ject of any proceedings in the High Court, an attorney shall lodge his bill of cost 's for taxation within five years from the completion of the matter. " This latter rule prescribes the time within which an Attorney must lodge his bill of costs in regard to matters which are not the subject of any proceedings in the High Court. The necessity for making this provision arose evidently because rule 569 empowers the Taxing Master to tax the Attorneys ' bills of costs in all matters except those on the Appellate Side of the High Court. The appellants ' contention, if accepted, will render rule 573(ii)(a) otiose because according to that contention, no matter which is not the subject of any proceeding on the Original Side of the High Court or in the Insolvency Court could be taken before the Taxing Master for taxation of the Attorney 's bills. It was then useless. to provide that bills in regard to matters which are not the subject of any proceeding in the High Court must be filed within a particu lar period. Apart from what appears to us to be the only reasonable construction of rule 569, the Bombay High Court, over a long course of years, has consistently taken the view that the Taxing Master has jurisdiction to tax Attorneys ' bills of costs in relation to professional services rendered by them in all matters, contentious or non contentious, and whichev er be the Court in relation to which the services 356 are rendered, except the Appellate Side of the 'High Court ill regard to which an exception has been expressly carved out by the rule '. In Nowroji Pudumji Sirdar vs Kange & Savani(1) the appellants were represented by the respondent firm .of Solicitors in litigation in the District Court and the Subordinate Courts of Poona. The appellants having declined to pay the respondents ' bills on the ground that, they were excessive, respondents obtained an order from the Prothonotary for having the bills taxed by the Taxing Mas ter. In an appeal from the decision of the Chamber Judge who upheld the Prothonotary 's order, it was contended by the appellants that the Taxing Master had no jurisdiction to .tax the bills of the respondents, firstly because the bills pertained to work which was not connected with the Original Side of the High Court and secondly because the services were rendered to the appellants by a partner of the respondent firm in his capacity as a pleader. These conten tions were rejected by a Division Bench consisting of Sir Norman Macleod, C.J., and H.C. Coyajee, 1. who could "see no reason" why a Solicitor practising in Bombay and performing professional Services for a client regarding business in the mofussil should not be entitled to get his bills taxed by the Taxing Master on the Original Side of the High Court. In coming this conclusion, the High Court relied on rule 494 of the Original Side Rules, 1922 which was identical with rule 569 of the Rules of 1957. The High Court observed in Nowroji 's case that it may, be that Attorney would fall within the provisions of the Bombay Pleaders Act, 17 Of 1920, with regard to any work done in mofussil Courts after the coming into force of that Act, but that it was unnecessary to consider that question because the work for which the respondents, had lodged their bills was done before that Act had come into force, Relying upon this observation, it was submitted by Mr. Parekh that the decision in Nowroji 's case is not good law after the coming into force of the Bombay Pleaders Act. It is not possible to accept this submission because even after that Act came into force, the Bombay High Court took the same view as was taken in Nowroji 's case and for good reason which we will expiate while dealing with the appellants contention bearing on i the scale of fees according to which the bills can be taxed. The relevant rule, couched in identical language age, with which the High Court was con cerned from time to time leaves no doubt that the Taxing Master has the jurisdiction to tax all bills of costs of Attorneys, except those in regard to the work done by them on the Appellate Side of the High Court. In Chitnis & Kanga vs Wamanrao section Mantri(2) the appel lants, a firm of Solicitors, had obtained from the Prothono tary of the High Court an order under rule 534 of the Rules of 1936, directing the Taxing Master to tax their bill of costs relating to (1) a suit filed on the Original Side of the High Court, (2) a petition for probate in the District Court at Satara, (3) an appeal in the High Court on its (1) (2) 48 Born. L.R.76. 357 Appellate Side and (4) certain miscellaneous work done in the mofussil. The respondent, to whom the appellants had rendered these professional services, contended before the Taxing Master that the order of the Prothonotary was ultra vires insofar as it related to items (2), (3) and (4). The Taxing Master rejected that contention whereupon the re spondent took out a Chamber Summons submitting that it was not competent to the Attorneys to take advantage of the procedure that applies to taxation of Solicitors ' costs on the Original Side of the High Court in respect of costs incurred in the mofussil and on the Appellate Side of the High Court. The respondent further contended by the Chamber Summons that the matter was governed by the Bombay Pleaders Act, 17 of 1920, and therefore the Taxing Master had no jurisdiction to tax the appellants ' bill in regard to items 2, 3 and 4. The Chamber Judge set aside the ex parte order of the Prothonotary without a speaking order, against which the appellants filed .an appeal which was heard by Sir John Beaumont, C.J., and Kama, J. The Division Bench held that the order of the Prothonotary in regard to item 3 which related to the work done by the appellants on the Appellate Side of the High Court was clearly wrong in view of the provision contained in rule 534 of the Rules of 1936. As regards the remaining three items, namely the suit on the Original Side, the probate proceedings in the Satara Dis trict Court and the miscellaneous work done in the mofussil, the Court following the decision in Nowroji 's case held that the appellants were entitled to have their bill taxed in regard to these items by the Taxing Master of the Original Side, although it related to work done in the mofussil. Adverting to the observation made in Nowroji 's case in regard to the effect of the Bombay Pleaders Act of 1920, the learned Judges held that the provisions of that Act had no effect on the question in issue. The learned Chief Justice referred in his judgment to section 17 of the Act of 1920 which provided that a legal practitioner (which expression includ ed an Attorney) may enter into a special agreement as to the terms of his remuneration and to section 18 which dealt merely with the amount of pleader 's fees which could be recovered against the opposite party. These provisions, according to the High Court, had nothing to do with the question whether an Attorney 's bill of costs in regard to the work done by him in the mofussil could be taxed by the Taxing Master. in Nowroji (supra), the learned Judge held that by reason of rule 569, age & Refrigeration Limited,(1) Mody J., sitting singly, took the same view of the Taxing Master 's power to tax the Attorneys ' bills. In that case the appellants had rendered professional services to the respondents in respect of a petition for winding up which was filed in the High Court of Rajasthan. Respondents raised the same contenions which are raised by Mr. Parekh before us, namely, that the Prothonotary had no jurisdiction to pass the Order direct ing the Taxing Master to tax the bill and secondly, that the bill of costs could not be taxed on the Original Side scale. Relying upon the decision in Nowroji (supra), the learned Judge,held that by reason of rule 569, the very rule with which we are concerned in the instant case, an (1) 358 Attorney of the High Court was entitled to have his bill of costs taxed by the Taxing Master in respect of professional work done by him even in a Court other than the Bombay High Court. The learned Judge also negatived the second conten tion of the respondents before him, but we will turn to that part of the judgment later. These decisions of the High Court contain a correct exposition of the relevant rule which was numbered as Rule No. 494 in the Rules of 1922, No. 534 in the Rules of 1936 and is now Rule No. 569 in the Rules of 1957. The Rules of 1909 also contained a similar .rule bearing No. 491. It is important to mention from the point of view of 'legislative ' history, that prior to the framing of the 1909 rules, the corresponding rule was Rule 544 of the 1907 Rules which. in material respects, was worded differently. It said: "Rules 544. The Taxing Officer shall tax the bills of costs on every side of the Court (Except the Appellate Side) and in the Insolvency Court. He .shall also tax all such attorney 's bills of costs as he may be directed to tax by a Judge 's order on consent of the parties, or on the application by any party chargeable with the bill. " Under this rule, the Taxing Officer could tax the bills referred to in the second part of the rule by consent of parties only of if an application was made for taxation of the bill by a person chargeable with the bill. Further, the second part of Rule 544 did not contain the expression "All other bills of costs" (emphasis supplied) which is to be found in the corresponding rule since the framing of the 1922 Rules. The significant changes introduced in 1922 are directed at conferring on the Taxing Master the power to tax all bills of Attorneys, including those for work done in any other Court save the appellate side of the High Court. It is argued on behalf of the appellants that assuming that the Taxing Master has jurisdiction to tax the bills in regard to the work done by the respondents in the City Civil Court, the bills cannot be taxed on the Original Side scale in view of the provisions contained ' in the Legal Practi tioners (Fees) Act, 21 of 1926. We see no substance in this submission. The statement of Objects and Reasons of the 1926 Act shows that the Act was passed in order to give effect to the recommendation of the Indian Bar Committee that in any case in which a legal practitioner has acted or agreed to act, he should be liable to be sued for negligence and be entitled to sue for his fees, Prior to the Passing of the Act of 1926, various High Courts in India had held almost consistently that Vakils could be. sued for negli gence in the discharge of their professional duties and were entitled to sue for their fees but .Barristers could neither be sued for negligence nor could they sue for their fees. The Indian Bar Committee recommended by paragraph 42 of its report that in practice the distinction relating to suing for negligence and being sued 359 for fees was not of great importance since suits by or against legal practitioners 'in respect .of fees and the conduct of cases were extremely rare; but it was necessary to provide that in any case in which a legal practitioner had 'acted ' or 'agreed to act ', he should be liable to be sued for negligence and be entitled to sue for his fees. The long title of the Act of 1926 describes it as an Act "to define in certain cases the rights of legal practitioners to sue for their fees and their liabilities to be sued in respect of negligence in the discharge of their professional duties. " The preamble of the Act is in the same terms. Section 2(a) of the Act defines a 'legal practitioner ' to mean a legal practitioner as ' defined in section 3 of the according to which a 'legal practi tioner ' means "an Advocate, Vakil or Attorney of any High Court, a Pleader, Mukhtar or Revenue Agent". Section 3 of the Act of 1926 provides that any legal practitioner who acts or agrees to act for any person may by private agree ment settle with such person the terms of his engagement and the fee to be paid for his professional services. Section 5 of the Act provides that no legal practitioner who has acted or agreed to act shall, by reason only of being a legal practitioner, be exempt from liability to be sued in respect of any loss or injury due to any negligence in the conduct of his professional duties. Section 4 of the Act of 1926 which is the sheet anchor of Mr. Parekh 's argument reads thus: "4. Right of legal practitioner to sue for fees. Any such legal practitioner shall be entitled to institute and maintain legal proceedings for the recovery of any fee due to him under the agreement, or, if no such fee has been settled, a fee computed in accordance with the law for the time being in force in regard to the computation of the costs to be awarded to a party in respect of the fee of his legal practitioner." ' In the first place, as explained above, the Act of 1926 was passed for an entirely different purpose with which we are not concerned in the present case. Secondly, and that is more important, section 4 on which the appellants rely deals, as shown by its marginal note, with a limited ques tion viz., the right of a legal practitioner to sue for his fees. It may be that since an Attorney is included within the meaning of the expression 'legal practitioner ', he will be governed by the provisions Contained in section 4 of the Act of 1926 if he brings a suit for the recovery of his fees. But we are not concerned in this case to determine_ the scope and extent of an Attorney 's right to sue for his fees. It must further be borne in mind that section 4, which iS in two parts, provides in the first place that a legal practitioner 'shall be entitled ' to institute and maintain a legal proceeding for the recovery of any fee due to him under an agreement. This part of the section confers an additional entitlement on legal practitioners and cannot justifiably be construed as detracting from any other right which they may possess in regard to the taxation and re covery of their fees. Section 4 provides by its second part that if there is no agreement between the legal 'practition er and his client in regard to the fees payable to him, he shall be entitled to institute and 360 maintain legal proceedings for the recovery of a fee comput ed in the manner provided therein. This also is in the nature of an entitlement, the right recognised thereby being .the right to bring a suit to recover the fees in the absence of an agreement. Any legal practitioner who wants to enforce the right which is specially created and con ferred by the Act of 1926 will have to comply with the conditions on which that right is conferred. When a statute creates a special right, it can only be enforced in the manner and subject to the conditions prescribed by the statute. Therefore, the fees for the recovery of which legal proceedings are brought under section 4 cannot be any. larger than the fees computed in accordance with the law for the time being in force in regard to the ' computation of the costs to be awarded to a party in respect of the fee of his legal practitioner. But, as we have stated earlier, the provisions of the Act of 1926 are ,entirely beside the point. They have no bearing on the question whether an Attorney can have his bill taxed by the Taxing Master in respect of the work done by him in courts other than the High Court of Bombay and if so, on what scale. The Bombay High Court in the judgment under appeal thought that there was an apparent conflict between section 4 of the Act of 1926 and the Original Side Rules relating to the taxation of an Attorney 's bill of costs. We would like to make it clear that bearing in mind the true object and purpose for which the Act of 1926 was passed and the drive of section 4 thereof, there is no conflict, apparent or real, between any of the provisions of the Act of 1926 and the rules of taxation contained in the Original Side Rules of 1957. In that view, it is unnecessary to resort to the principle of harmonious construction which the High Court alternatively relied upon for holding that the Taxing Master has the jurisdiction to tax the respondents ' bill in the instant case and on the Original Side scale. Mr. Parekh then relied upon the rules framed by the Bombay High Court under section 224(1)(d) of the Government of India ACt, 1935 which corresponds roughly to article 227(3) of the Constitution and contended that the respondents ' bills must be taxed in accordance with those rules and not accord ing to the scale prescribed by the Original Side Rules. This contention too is unacceptable. The rules on which counsel relies were framed by the High Court "for fixing and regulating by taxation or otherwise the fees payable as Costs by any party in respect of the fees of his adversary 's Attorney appearing, acting and pleading upon all proceedings in the Bombay City Civil Court." These rules, according to their very terms, have nothing to do with the taxation of any Attorney 's bill of costs as between himself and his own client. The rules govern the fees payable by way of costs by any party in the City Civil Court, in respect of the fees of his adversary 's Attorney. That is to say, if an order of costs is passed in favour of a party to a suit or proceeding in the City Civil Court, he is entitled to recov er from his adversary by way of professional charges in curred by him, the fees computed in accordance with the rules framed under section 224(1)(d) of the Government of India Act and not what he has in fact paid to his 361 Attorney. Rule 9 on which 'counsel relies particularly, makes this position clear by providing: "9. Where costs are awarded to a party in any proceeding ' the amount of the Attor ney 's fee to be taxed in the bill of costs is recoverable by such party if represented by an Attorney from the adversary and shall be computed in accordance with the rules above unless such fee has been settled under the provisions of section 3 of the Legal Practi tioner 's (Fees) Act, 1926, for a lesser amount in which case not more than such lesser amount shall be recoverable. " The combined effect of this rule and section 4 of the Legal practitioners (Fees) Act, 1926 is that if an Attorney who has appeared or acted for his client in the City Civil Court sues his client for fees, he cannot recover in the suit anything more than is permissible under the rules framed by the High Court under section 224(1)(d) of the Government of India Act, 1933. Neither those rules nor anything. contained in the Act of 1926 is calculated to affect the Attorney 's right to have his bill taxed by the Taxing Master on the Original Side scale, for work done by the Attorney in the City Civil Court. The Bombay City Civil Court Act, 69 of 1948, provides by section 18(1) that all suits and proceedings cognizable by the City Civil Court and ,pending in the High Court, in which issues have not been settled or evidence has not been re corded shall be transferred to the City Civil Court. By section 18(2), costs incurred in the High Court till the date of the transfer of the suit are to be assessed by the City Civil Court in such manner as the State Government may after consultation with the High Court determine by rules. Mr. Parekh. drew our attention to rule 8 framed by the Government of Bombay under section 18(2) but we do not see its relevance on the issue under consideration in the instant case. That rule shows that even as regards the fees of Attorneys, the Registrar of the City Civil Court is given the power to tax and allow all such costs and out of pocket expenses as shall have been properly incurred by an Attorney up to the date of the transfer of the suit. The rule further provides that after the date of the transfer such fees shall be taxed and allowed as in the opinion of the Registrar are commensurate with the work done by the Advocate having regard to the scale of fees sanctioned for the Advocate in the City Civil Court by the High Court. Rule 2, being a rule framed under section 18(2) of the Act of 1948, governs transferred, suits only and it expressly authorises the Registrar to tax the Attorney 's bill for the work done in such suits both before and after the transfer of the suit from the High Court to the City Civil Court. There is no corresponding rule which can apply,to suits and proceedings instituted in the City Civil Court after the Bombay City Civil Court Act, 1948 came into force and in the absence of such rule, the rules framed under section 18(2) cannot 'support the appellants ' contention. Mr. Parekh also drew our atten tion to the "Rules of the Bombay City Civil Court, 1948" framed by the Bombay High Court under section 224 of the Govern ment of India Act, 1935 but we see nothing 362 in those rules either which can assist his contention re garding the power of the Taxing Master to tax an Attorney 's bill as between himself and his client. While we are on this aspect of the matter it would be useful to refer to the Supreme Court Rules, 1966 and the Bombay High Court Appellate Side Rules, 1960. The Supreme Court ' Rules contain elaborate provisions in Order XLI and XLII thereof regarding costs of proceedings and taxation of costs. Rule 13 of Order XLII provides that except as other wise provided in the rules or by any law for the time being in force, the fees set out in the Second and Fourth Sched ules to the Rules may be allowed to Advocates and officers of the Court respectively. Rules 23 to 29 of Order XLII deal specifically with Advocate and Client taxation. The Second Schedule contains detailed provisions under which fees are payable to Advocates. for various types of profes sional services rendered by them. Similarly, Chapter 14 of the Appellate Side Rules of the Bombay High Court contains various rules for computing the fees which an Advocate is entitled to charge his own client. Similar provision is to be found in England in the Supreme Court Costs Rules, 1959 (see The Annual Practice 1965, p. 1998/300). Mr. Natman who appears on behalf ' of the Incorporated Law Society, Bombay, drew our attention to rule 29 of the last mentioned rules under which a Solicitor 's bill can be taxed as between himself and his client. These provisions are on a par with the rules of taxation of the Original Side of the Bombay High, Court. The important point to be noted is that the Rules of the City Civil Court do not, except in regard to suits transferred from the High Court, contain any provi sion under which an Attorney can have, his bill taxed as between himself and his client. Perhaps there is good reason for this because though under section 224(1)(d) of the Government of India Act, 1935 and article 227(3) of the Constitution, the High Court has got the power to settle tables of fees to be allowed to Attorneys practising in Subordinate Courts, that power has not been exercised by the High Court for the reason, probably, that the Rules of Taxation on the Original Side of the High Court adequately and effectively take care of that matter. The High Court did exercise its powers under section 224(1)(d) in relation to the City Civil Court but did not in the rules framed in the exercise of that power provide for taxation of an Attorney 's bill of costs as between him and his client. It is not too much to suppose that the High Court did not want to do once over again what it had elaborately done while framing the rules on the Original Side, which were in vogue for a large number of years and were working satisfac torily. Mr. Parekh sought to derive some sustenance to his argument from a decision of the Calcutta High Court in Messrs Sander sons & Morgans vs Mohanlal Lalluchand Shah(1) but we find that the question which arose for decision therein was entirely different. The appellants therein, a firm of Solicitors, submitted to the respondents a bill of costs for the work done by them for the respondents on the (1) A.I.R. 363 Original Side of the Calcutta High Court. The respondents challenged the bill by a Chamber Summons, which the appel lants resisted on the ground that there was a private agree ment between the parties to pay a particular amount by way of fees and therefore the bill was not liable to be taxed under the Original Side Rules. On a cosideration of the Original Side Rules of the Calcutta High Court, Particularly rules 4 and 74 of Chapter 36, the High Court came to the conclusion that the solicitors were bound to have their bills taxed according to the Original Side scale, agreement or no agreement. We are concerned in the instant case with a different question under a different set of rules and as pointed out by the High Court, the Calcutta Rules are in material respect different from the Bombay Rules. We must interpret the Bombay Rules on their own terms and decisions on other statutes cannot afford material assistance unless, of. course ', .my principle of general application is laid down. We have already mentioned that i.n Messrs Pereira Fa zalbhoy & Co. Mody J., held that an Attorney was entitled to have his bill taxed on the Original Side scale even in respect of the work done by him outside the High Court. For the various reasons mentioned above we endorse that view. Before concluding, we ought to refer to a rather anxious plea made by Mr. Parekh. which involves ethical considera tions. Counsel urged that it is unfair that for small work done in the City Civil Court Solicitors should be permitted to charge high fees prescribed under the Original Side Rules. We find ourselves unable to share this concern. If anything, Solicitors are subject to the watchful supervision of the High Court wherever they may render professional services. The object of binding the Attorneys to the scale of fees prescribed in the Original Side Rules is not to confer on them any special benefit which is denied to other legal practitioners. The object on the contrary is to ensure that Attorneys shall always be subject. to the juris diction of the High. Court no matter whether they have acted on the Original Side or in any Court subordinate to the High Court. The only exception is made by rule 569 in regard to the work done on the Appellate Side of the High Court which, as indicated earlier, prescribes its own scale of fees 'as between an Advocate and his client. In fact, we are unable to see why a power similar to the power of taxation of a. bill of costs between an Advocate and his. client which is to be found in the Supreme Court Rules should not be conferred on appropriate officers of Courts subordinate to the High Court. Such a power may enable the Presiding Judges to control the professional ethics of the Advocates appearing before them more effectively than is possible at present. In this very case, a. bill of Rs. 6000 odd lodged by the appellants was reduced on taxation to a sum of about Rs. 850/ only. If there were no machin ery for taxing the bill, the appellants might perhaps have got off with the demand. We would only like to add that before allowing the costs claimed by an Attorney from his client, the Taxing Master ' must have regard to the fact that the Attorney has appeared in a Subordinate Court and to the scale of fees generally prevalent in that Court. A judi cious exercise of 364 disecretion postulates elimination of unfair play, particu larly where one party to a transaction is in a position to dominate the will of the other. The client must receive.the protection of the Court and its officers, whenever neces sary. For these reasons we confirm the judgment of the High Court and dismiss the appeal. There will however be no order as to costs.

Certain properties belonging to the appellants were attached by the City Civil Court in Bombay in execution of a decree. The appellant engaged the respondent firm of Solicitors who by Vakalat executed in their favour by the appellants agreed to act, appear and plead for them in the City Civil Court. The respondents took out three Chamber Summonses on behalf of the appellants for raising the at tachment. Thereafter, they submitted three bills. Since the bills remained unpaid, they obtained an order from the Prothonotary of the High Court directing the TaXing Master to tax the bills. The appellants filed an appeal against the order of the Prothonotary which was dismissed by the Chamber Judge with liberty to the Taxing Master to decide whether the respondents were entitled to be remunerated on the original side scale of fees as between an attorney and client. The Taxing Master rejected the appellants ' contention and taxed the respondents ' bills according to the scale of fees applicable on the original side by the High Court. A Chamber Summons filed by the appellants before a Single Judge was dismissed. An appeal before the Division Bench by the appellants also failed. In an appeal by Special Leave the appellants contended: 1. The Solicitors ' bill for cost and remuneration in respect of the work done by them in the City Civil Court cannot be taxed by the Taxing Master of the Original Side, High Court. The bill in any event cannot be taxed according to the scale of fees applicable on the original side as between an attorney and client, particularly in view of the provisions contained in the Legal Practitioners Fees Act, 1926, Bombay City Civil Courts Act, 1948 and the Bombay City Civil Court Rules, 1948 as well and the rules framed by the Bombay High Court under section 2 24 ( 1 ) (d) under the Government of India Act, 19 3 5. Dismissing the appeal, HELD: 1. Rule 569 of the Rules of the High Court of Bombay (Original side) 1957, authorises the Taxing Master to tax the bills of cost on every side of the High Court except the Appellate side of the High Court and in the Insolvency Court. All other bills of cost of attorneys shall also be taxed by him when he is directed to do so by a judge 's order. There is no justification for the appellants ' con tention that "other bills of cost" must be construed to mean other bills of cost relating to matters on the original side of the High Court. Rule 573 as amended prescribed a limitation of 5 years for lodging the bill of cost for taxation after the disposal of the suit or the proceedings in the High Court. In respect of matters which are not the subject of any proceedings in the High Court the attorney has to lodge his bill of cost for taxation within 5 years from the completion of the matter. The necessity for making this provision arose because rule 568 empowers the Taxing Master to tax the attorneys bill of cost in all matters except those on the Appellate side of the High Court. The Bombay High Court, over a long Course of years has consist ently taken the view that the Taxing Master has Jurisdiction to tax attorneys bills of cost in relation 8 436SC1/77 352 to the professional services rendered by them whichever be the court in relation to which the services are rendered except the Appellate side of the High Court, in regard to which an exception has been expressly carved out by the rule. [354 G H, 355 A G] Nowroji Fudumli Sirdar vs Kanga & Savani, 28 Born. L.R. 384, Chitnis & Kanga vs Wamanrao section Mantri, and M/s. Pereta Fazalbhoy & Co. vs The Rajputana Cold Stor age & Refrigeration Ltd., approved. The preamble and the statement of objects and reasons of the Legal Practitioners Fees Act 1926 shows that the Act was passed in order to give effect to the recommendations of the Indian Bar Committee that in any case in which a Legal Practitioner has acted or agreed to act he should be liable to be sued for negligence and be entitled to sue for his fees. The Indian Bar Committee recommended by para 42 of its report that the distinction relating to suing for negligence and being sued for fees was not of great impor tance since suits by or against Legal Practitioners in re spect of fees and the conduct of cases were extremely rare. But it was necessary to provide that in any case in which a Legal Practitioner had acted or agreed to act he should be liable to be sued for negligence and be entitled to sue for his fees. The definition of Legal Practitioner in the 1926 Act is the same as in the (which includes an attorney). Section 3 of the Act of 1926 provides that any Legal Practitioner who acts or agrees to act for any person may by private agreement settle with such person the terms of his engagement and fees to be paid for his professional services. Section 4 of the Act pro vides that any such Legal Practitioner shall be entitled to institute and maintain legal proceedings for the recovery of any fee due to him under the agreement or if no such fee has been settled a fee computed in accordance with the law for the time being in force in regard to the computation of the cost to be awarded to a party in respect of the fee of his Legal Practitioner. It may be that if an attorney institutes a suit he may be governed by section 4 but it really confers an additional right on the Legal Practitioner to institute a suit and cannot be construed as detracting from any other right which he may possess in regard to the taxation and recovery of his fees. [358 G H, 359 A B, F H] 3. The High Court was in error in observing that alterna tively there was an apparent conflict between section 4 of the 1926 Act and the original side rules relating to the taxation of an attorney 's bills of cost. Bearing in mind the true object and purpose for which the 1926 Act was passed and the drive of section 4, there is no conflict, apparent or real between the 1926 Act and the High Court Rules of 1957. [360 D E] 4. The rules framed by the High Court under section 224(1)(d) of the 1935 Act, are rules for fixing and regulat ing the fees payable as costs by any ' party in respect of the fees of his adversary 's attorney. These rules according to their very terms have nothing to do with the taxation of any attorney 's bill of cost as between himself and .his own client. [360 F G] 5. The combined effect of section 4 of the 1926 Act and the Rules framed by the High Court under section 224(1)(d) is that if an attorney who has appeared or acted for his client in the City Civil Court sues his client for fees he cannot recover in the suit anything more than what is per missible under the Rules framed by the High Court under section 224(1)(d). However, that do not affect the right of an attorney to have his bill taxed by the Taxing Master on the original side scale. [361 C D] 6. Section 18(2) of the Bombay City Civil Courts Act. 1948 provides that in respect of suits transferred from the High Court to the City Civil Court costs incurred in the High Court till the date of the transfer of the suit are to be assessed by the city Civil Court in such manner as the State Government may after consultation with the High Court determine by rules. Rule 2 framed under section/8(2) pro vides that even as regards the fees of attorneys the Regis trar of the City Civil Court is given the Vower to tax and allow all such costs and out of pocket expenses as shall have been properly incurred by an attorney upto the date of transfer of the suit. The rule further provides that after the date 353 of the transfer such fees shall be taxed and allowed as in the opinion of the Registrar are commensurate with the work done by the advocate having regard to the scale of fees sanctioned for the advocates in the City Civil Courts Rules. The said rule, applies only to transferred suits. It has no application to the suits and proceedings instituted in the City Civil Court after 148. [361 D H] M/s. Sandersons & Morgans vs Mohanlal Lalluchand Shah, A,I.R. distinguished. The Taxing Master, however, before allowing the cost claimed by the attorney from his client must have regard to the fact that the attorney has appeared in a subordi nate court and to the scale of fees generally prevalent in that Court. [363 G H] The Court observed that power similar to the power of taxation of a bill costs between the advocate and client which is found in Supreme Court Rules, 1966, should be conferred on appropriate officers of the Court subordinate to the High Court. Such a power may enable the presiding Judge to control the professional ethics of the advocates appearing before them more effectively than is possible at present. [362 A G]

3770.txt

Civil Appeal No. 2020 of 1980. From the Judgment and Order dated 5 9 1980 of the Madhya Pradesh High Court in Election Petition No. 1 of 1980. A. K. Sen, O. P. Sharma, Rajinder Singh, P. L. Dubey and P. N. Tewari for the appellant. section N. Kacker, Swaraj and Mrs. Sushma Swaraj for Respondent No. 1. Y. section Chitale (Dr.) and Miss Rani Jethmalani for the Intervener. 641 The Judgment of the Court was delivered by SARKARIA, J. This is an appeal under Sections 116(A) and 116(B) of the Representation of People Act, 1951 (hereinafter referred to as the Act) against a judgment dated September 5, 1980, of a learned Judge of the High Court of Madhya Pradesh, whereby the Election Petition 1 of 1980 filed by the respondent was accepted and the appellant 's election to Lok Sabha was declared to be void. The principal question that falls to be determined in this appeal is, whether the election of a returned candidate whose appeal against the orders of his conviction and sentence exceeding two years imprisonment, pending at the date of the scrutiny of nomination papers, is accepted by the appellate court, resulting in his acquittal, before the decision of the election petition against him, can be declared to be void under Section 100(1) of the Act, on the ground that he was disqualified from being chosen as a candidate within the meaning of Section 8(2) of the Act. The material facts are as follow: The respondent and the appellant contested the election as rival candidates, to the Lok Sabha from No. 18 Mahasamund Parliamentary Constituency in Madhya Pradesh. The last date for filing nominations was December 7, 1979. The scrutiny of the nomination papers took place on December 11, 1979. The respondent raised an objection to the validity of the appellant 's nomination before the Returning Officer at the time of the scrutiny. The objection was that the appellant had been convicted and sentenced to imprisonment exceeding two years by the Sessions Judge, Delhi on February 22/27, 1979, and, as such, the appellant was disqualified from being chosen as a candidate in view of sub section (2) of Section 8 of the Act. The Returning Officer, by his order dated December 11, 1979, rejected the objection and accepted the appellant 's nomination as valid. The result of the election was declared on January 7, 1980. The election result was notified on January 10. The appellant was declared elected, and the respondent was defeated. Thereafter on February 18, 1980, the respondent filed an Election Petition in the High Court to get the election of the appellant herein, declared void under Section 100(1) (a) and 100(1) (d) (i) of the Act, alleging that at the date of the election, including the date of the scrutiny of the nomination papers, the appellant was disqualified by virtue of Section 8(2) of the Act from being, chosen as a candidate on account of his aforesaid conviction and sentence. 642 The Session Judge who had convicted the appellant, had, by his order dated February 27, 1979, passed under Section 389 (3) of the Code of Criminal Procedure, suspended the execution of the sentence to afford the appellant time to file an appeal. On March 21, 1979, the High Court of Delhi admitted his appeal and by an order of the same date directed that his sentence shall remain suspended provided the appellant furnished a personal bond and surety in the amount of Rs. 5000/ to the satisfaction of the Sessions Judge. The appellant 's appeal pending in the High Court was transferred to the Supreme Court under the . This Court by its judgment dated April 11, 1980, allowed the appeal, set aside the conviction and sentence of the appellant and acquitted him of the charges against him. Subsequently, by its impugned judgment, dated September 5, 1980, the High Court of Madya Pradesh, allowed with costs, the election petition filed by the respondent, and declared the appellant 's election to be void on the ground contained in Section 100(1) (d) (i) of the Act. Hence this appeal. The contentions canvassed by Shri Asoke Sen, learned counsel for the appellant may be summarised as follows: (1) The conviction and sentence of the appellant had been quashed by the Supreme Court in appeal. The acquittal of the appellant had the effect of wiping out the conviction with retrospective effect as if he had never been convicted and sentenced. In support of this proposition, reliance has been placed on Manni Lal vs Shri Parmi Lal & Ors. Reference has also been made to Dilip Kumar Sharma & Ors. vs State of Madhya Pradesh. (2) Conviction and sentence in Section 8(2) must mean the final and ultimate conviction and sentence. Reference has been made to Union of India vs R. Akbar Sheriff, and Dilbag Rai Jarry v Divisional Superintendent. (3) Invalidity of the appellant 's election, in the instant case, was to be tested under clause (a) and not under clause (d) (i) of Section 100(1) of the Act, because (a) (i) "Election" within the meaning of Section 100(1) (a) connotes the entire process of election commencing with the filing of 643 nominations and ending with the declaration of the result of the poll. The stage of the scrutiny of the nominations and their acceptance or rejection was an important step of the election process and, as such, was an integral part of the 'election '. Reliance on this point has been placed on the decisions of this Court in N. P. Ponnuswami vs Returning Officer, Namaklal Constituency; and M. section Gill vs Chief Election Commissioner. (ii) The term "disqualified" in clause (a) of Section 100(1), as defined in Section 7(b) means "disqualified for being chosen as, and for being, a member of either House of Parliament, etc.", and the expression "being chosen". (which is the language of Article 102 of the Constitution also) has been interpreted by this Court in Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram & Ors., as embracing "a series of steps starting with the nomination and ending with the announcement of the election". (b) In substance and reality, the election of the appellant has been challenged on the ground that both at the date of the scrutiny and acceptance of his nomination and at the subsequent stages of the election including the dates of poll and declaration of the election result, the appellant was disqualified for being chosen on account of his having been convicted and sentenced to imprisonment exceeding two years. This ground finds specific mention in clause (a) and not in clause (d) (i) which is a general and residuary clause and its application to the instant case will be excluded on the principle that the special excludes the general. (c) The phrase "any candidate" in sub clause (i) of clause (d) of Section 100 (1) does not include the returned candidate. (This point was not seriously pressed). (4) (a) Even if it is assumed that clause (d) (i) or (d) (iv) is applicable, then also, the instant case cannot be taken out of the ratio of Manni Lal 's case (ibid), because the effect of the quashing of the appellant 's conviction and sentence by the appellate court, during the pendency of the Election Petition before the High Court was, that the conviction and sentence were retrospectively wiped out, and the High Court could not at the date of deciding the Election Petition hold that in spite of the acquittal by the Appellate Court, the disqualification of the appellant "for being chosen" ever existed even at the date of the acceptance of his nomination paper by the Returning Officer. The proposition enunciated by this Court in Manni Lal 's case must be taken 644 to its logical end and the imagination must not be allowed to boggle down. (b) Clause (a) and clause (d) (i) of Section 100 (1) of the Act should be construed harmoniously. If these clauses are construed differently, there will be serious contradictions and inconsistencies. Under Section 100 (1) (a), the candidate whose conviction and sentence are quashed, is qualified to be chosen and elected on the principle of retrospective wiping out of conviction and sentence, and yet he remains disqualified for his nomination. Such an anomalous result should be avoided. (5) The effect of suspension of the sentence made by the trial court and thereafter by the High Court pending the appeal, would be that the disqualification automatically stood eclipsed. (This point was also not pressed). On the other hand Shri section N. Kacker, learned counsel for the respondent, made these submissions: (1) Article 102 (1) (e) of the Constitution provides that "a person shall be disqualified for being chosen as, and for being, a member of either House of Parliament ______" "if he is so disqualified by or under any law made by Parliament. " Under Section 8(2) of the Representation of People Act, 1951, which is a law made by Parliament the appellant on account of his conviction and sentence exceeding two years, was disqualified at the date of scrutiny of nominations and the Returning Officer was bound in view of Section 36(2) (a), of the Act, to take into account only such facts as they stood on the date of the scrutiny, which is an integral step in the process of election i.e., process of "being chosen". (Reference has been made in this connection to Chaturbhuj 's case (ibid) and Chandan Lal vs Ram Dass and Another. (2) The phrase "date of such conviction" occurring in sub section (2) of Section 8 of the Act means the date of the initial conviction and not the date of the final conviction. If this phrase was construed to mean the date of the final and ultimate conviction on termination of the entire judicial process in the hierarchy of courts, sub section(3) would be redundant. Sub section (3) applies to a special category of persons mentioned therein, and its language makes it clear that in their case, conviction will not operate as disqualification unless it becomes final in the course of judicial process. (3) The present case is governed by clause (d) (i) and not by clause (a) of Section 100(1). In the election petition, both the 645 grounds under Section 100(1) (d) (i) and under Section 100(1) (a) were taken, because (i) the appellant was disqualified on the date of scrutiny a ground under Section 100(1) (d) (i); and (ii) the disqualification also existed on the date of declaration of election result affording ground under Section 100(1) (a). Since the appellant was subsequently acquitted during the pendency of election petition, the ground under Section 100(1) (a) become non existent in view of the principle laid down by this Court in Manni Lal 's case (ibid). but the ground under Section 100(1) (d) (i) still subsisted. Consequently, at the stage of arguments before the High Court, the ground under Section 100(1) (a) was given up and the petition was pressed only on the ground under Section 100(1) (d) (i). (4) Section 100(1)(d)(i) is applicable to a returned candidate as well. (5) The basic distinction between clauses (a) and (d) (i) of Section 100(1) is that under the former clause the existence or non existence of disqualification of the returned candidate is to be determined as "on the date of his election", which date in view of Section 67A. means the date on which he was declared elected under Section 53 or Section 66 of the Act; whereas under clause (d) (i), the enquiry is restricted to judging the propriety or otherwise of the action of the Returning Officer in accepting his nomination on the date of scrutiny; that is to say, for purposes of the latter clause all that has to be enquired into is whether the disqualification existed on the date of scrutiny. (6) The proposition laid down in Manni Lal 's case (ibid) to the effect that subsequent acquittal by the appellate court in a criminal matter has the effect of wiping out the conviction from the date of its very inception is not applicable to the case in hand because: (a) Manni Lal 's case was one under Section 100(1) (a); while the present case is under Section 100(1) (d) (i); (b) in Manni Lal 's case the returned candidate was not disqualified on the date of the scrutiny; whereas in the instant case the disqualification of the appellant did, in fact exist on the date of the scrutiny, although the same may have ceased to exist in point of law due to his subsequent acquittal; and (c) Section 36(2) (a) fixes a date for judging the qualification of a candidate and if the legal fiction of retrospective repeal is applied 646 to the case of subsequent acquittal wiping out the disqualification which in fact existed on the date of scrutiny, Section 36(2) (a) could be rendered nugatory and several inconsistent situations could arise. (7) In sum, the instant case being one under Section 100(1) (d) (i) falls within the ratio of this Court 's decision in Amritlal Ambalal Patel vs Himatbhai Gumanbhai Patel & Anr. and Manni Lal 's case is not in point. Shri Chitale, appearing for the intervener, has elaborated contentions (5) and 6 (c) of Shri Kacker and stressed that the facts constituting the disqualification, as obtaining on the date of scrutiny, are under Section 36 the decisive factor. Before dealing with the contentions canvassed on both sides, it will be necessary to have a look at the relevant constitutional and statutory provisions. Article 102 of the Constitution, so far as material, reads thus: "(1) A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament (a) to (d). . . (e) if he is so disqualified by or under any law made by Parliament. " The words "for being chosen as, and for being, a member of either House of Parliament" have been lifted from Article 102 and incorporated in the definition of "disqualified" given in Section 7(b) of the Act. According to this definition, "disqualified" means "disqualified for being chosen as, and for being, a member of either House of Parliament or of the Legislative Assembly or Legislative Council of a State." Section 8 of the Act provides for disqualification on conviction for certain offences. Under sub section (1), a person convicted of any of the offences specified in that sub section shall be disqualified for a period of six years from the date of such conviction. The material part of sub sections (2) and (3) reads as under: "(2) A person convicted by a court in India for any offence and sentenced to imprisonment for not less than two years shall be disqualified from the date of such conviction and shall continue to be disqualified for a further period of five years since his release: Provided . 647 (3) Notwithstanding anything in sub section (1) and sub section (2), a disqualification under either sub section shall not, in the case of a person who on the date of the conviction is a member of Parliament or the Legislature of a State, take effect until three months have elapsed from that date or, if within that period an appeal or application for revision is brought in respect of the conviction or the sentence, until that appeal or application is disposed of by the court. " Then there is an Explanation appended to this Section, which is not material for our purpose. Chapter I of Part V includes Sections 30 to 39 under the main heading "Nomination of Candidates". Section 30 requires the Election Commission to appoint dates for making nominations, scrutiny of nominations, withdrawal by candidates, for poll and also to specify the date before which the election shall be completed. The provision in clause (b) requires that the date for the scrutiny of nominations shall be the date immediately following the last date for making nominations or, if that day is a public holiday, the next succeeding day which is not a public holiday. Section 32 lays down that any person may be nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill that seat under the provisions of the Constitution and this Act, or under the provisions of the (20 of 1963), as the case may be. Section 36 deals with scrutiny of nominations. Sub section (2) (a) of the Section is material. It reads thus: "(2) The returning officer shall then examine the nomination papers and shall decide all objections which may be made to any nomination and may, either on such objection or on his own motion, after such summary inquiry, if any, as he thinks necessary, reject any nomination on any of the following grounds: (a) that on the date fixed for the scrutiny of nominations the candidate either is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may be applicable, namely: Articles 84, 102, 173 and 191, of this Act and. . " 648 Under sub section (7), for the purposes of this Section, a certified copy of an entry in the electoral roll for the time being in force of a constituency shall be conclusive evidence of the fact that the person referred to in that entry is an elector for that constituency, unless it is proved that he is subject to a disqualification mentioned in Section 16 of the Representation of the People Act, 1950. Before the amendment of 1956. clauses (a) and (b) of sub section (2) of Section 36 read as under: "The returning officer shall then examine the nomination papers and. .refuse any nomination on any of the following grounds: (a) that the candidate is not qualified to be chosen to fill the seat under the Constitution or this Act; or (b) that the candidate is disqualified for being chosen to fill the seat under the Constitution or this Act. . ." The Amendment Act 27 of 1956 recast clauses (a) to (e) of the old Section. It also combined clauses (a) and (b) and the recast clause read as follows: "(a) that the candidate is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may be applicable, 'namely:. . ." The Amendment Act 40 of 1961 substituted in Sub section (2)(a), for the words "that the candidate" the words "that on the date fixed for the scrutiny of nominations the candidate". The same Amendment Act substituted in sub section (5) the proviso for the words "an objection is made" the words "an objection is raised by the returning officer or is made by any other person". Thus, the amendment in sub section 2(a) was only of a clarificatory character. It made it clear that the date of scrutiny of the nominations is a crucial date. Next, we come to Section 100. The Section enumerates the grounds on which an election can be declared to be void. Before the Amendment of 1956, Section 100, so far as material, was as follows: "(1) If the Tribunal is of opinion (a) . . . . (b) . . . . (c) that the result of the election has been materially affected by the improper acceptance or rejection of 649 any nomination, the Tribunal shall declare the election to be wholly void. Explanation. . . (2) Subject to the provisions of sub section (1) if the Tribunal is of opinion (a) . . . . (b) . . . . . (c) that the result of the election has been materially affected by the improper reception or refusal of a vote or by the reception of any vote which is void or by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act or of any other Act or rules relating to the election, or by any mistake in the use of any prescribed form, the Tribunal shall declare the election of the returned candidate to be void". In Durga Shanker Mehta vs Thakur Raghuraj Singh & Ors. nominations were filed for a double member Legislative Assembly constituency in Madhya Pradesh. No objection was taken before the returning officer, that one of the candidates, Vasant Rao, was less than 25 years of age at the date of the nomination and, as such, was not qualified under Article 173 to be chosen to fill the seat. The Returning Officer accepted his nomination. In the Election Petition, the election of the returned candidate, Vasant Rao, was challenged on the ground that his nomination had been improperly accepted by the Returning Officer within the contemplation of Section 100(1)(c) of the Act, as then in force, because he was 'not qualified to be chosen in view of Section 173 of the Constitution. The Tribunal held that the act of the Returning Officer in accepting the nomination of Vasant Rao, who was disqualified to be elected a member of the State Legislature under the Constitution, amounted to an improper acceptance of nomination within the meaning of Section 100(1)(c) of the Act, and as the result of the election was materially affected thereby, the whole election must be pronounced to be void. The controversy centered round the question, whether on the facts proved and admitted the case was one under sub section (1) (c) or Section 2(c) of the then extant Section 100. This Court held that 650 the acceptance of the nomination paper of Vasant Rao by the Returning Officer could not be said to be improper acceptance "within the contemplation of Section 100 (1) (c) of the Act, and that the case was of a description which came under sub section (2) (c) of Section 100 and not under sub section (1) (c) of the Section as it really amounted to holding an election without complying with the provisions of the Constitution. The expression "non compliance with the provisions of the Constitution" in clause (c) of sub section (2) was held to be sufficiently wide to cover such cases where the question was not one of improper acceptance or rejection of the nomination by the Returning Officer, but there was a fundamental disability in the candidate to stand for election at all. There was no material difference between "non compliance" and "non observance" or "breach" and this item in clause (c) of sub section (2) might be taken as a residuary provision contemplating cases where there had been infraction of the provisions of the Constitution or of the Act but which had not been specifically enumerated in the other portions of the clause. After the decision in Durga Shanker Mehta 's case (ibid), Parliament in 1956 amended Section 100 along with Sections 36, 123, 124 and 125 of the Act. By this Amendment, the various clauses of sub sections (1) and (2) were rearranged and recast and simplified in accordance with the recommendations of the Select Committee of Parliament, "that sub sections (1) and (2) of existing Section 100 should be suitably combined retaining the substance of the existing law and at the same time making the law simple and easily intelligible". Now, Section 100, as amended, by the Amending Act of 1956 and subsequent Amendment Acts, reads as under: "100. Grounds for declaring election to be void (1) Subject to the provisions of sub section (2) if the High Court is of opinion (a) that on the date of his election a returned candidate was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or this Act or the (20 of 1963); or (b) that any corrupt practice has been committed by a returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; or 651 (c) that any nomination has been improperly rejected; or (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i) by the improper acceptance of any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii)by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, or (iv) by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the High Court shall declare the election of the returned candidate to be void. (2) If in the opinion of the High Court, a returned candidate has been guilty by an agent, other than his election agent, of any corrupt practice but the High Court is satisfied (a) that no such corrupt practice was committed at the election by the candidate or his election agent, and every such corrupt practice was committed contrary to the orders, and without the consent, of the candidate or his election agent; (b) . . . (c) that the candidate and his election agent took all reasonable means for preventing the commission of corrupt practices at the election; and (d) that in all other respects the election was free from any corrupt practice on the part of the candidate or any of his agents, then the High Court may decide that the election of the returned candidate is not void". A plain reading of Section 100(1) of the Act shows that it can be conveniently divided into two parts. Clauses (a), (b) and (c) 652 of the sub section fall in the first part and clause (d) along with its sub clauses falls in the second part. The distinction between clauses (a), (b) and (c) in the first part and clause (d) in the second part lies in the fact that whereas on proof of any of the grounds mentioned in clauses (a), (b) and (c) the election has to be declared void without any further requirement, in a case falling under clause (d) the election cannot be declared void merely on proof of any of the grounds mentioned in its sub clauses, unless it is further proved "that the result of the election in so far as it concerns the returned candidate has been materially affected". The expression "any nomination" occurring in sub clause (i) of clause (d) in the second part may include nomination of a returned candidate as well, but in the case of a returned candidate whose nomination has been improperly accepted, the effect on the result of the election so far as it concerns him, is obvious. However, if the election is challenged on the ground that the nomination of a candidate, other than the returned candidate has been improperly accepted, the petitioner in order to succeed will be required to prove under clause (d) (i), in addition to improper acceptance the further fact that thereby the result of the election so far as it concerns the returned candidate has been materially affected. Clause (a) of sub section (1) appears to require that the disqualification or lack of qualification of the returned candidate is to be judged with reference to "the date on his election", which date, according to Section 67A, is "the date on which a candidate is declared by the returning officer under the provisions of Section 53 or Section 66, to be elected to a House of Parliament or of the Legislature of a State". But, the word "disqualified" used in clause (a) is capable of an expansive construction also, which may extend the scope of the inquiry under this clause to all the earlier steps in the election process. As already noticed, Section 7(b) defines "disqualified" to mean "disqualified for being chosen as, and for being, a member of either House of Parliament etc. " The words "for being chosen" in that definition have been interpreted by this Court in Chatturbhujs case (ibid) to include the whole "series of steps starting with the nomination and ending with the announcement of the election. It follows that if a disqualification attaches to a candidate at any one of these stages he cannot be chosen". But this definition of "disqualified" is in terms of Section 7(b) meant for Chapter III, in Part II of the Act; while Section 100 falls in Chapter III of Part VI. If the expression "for being chosen" which is a central limb of the definition of "disqualified", is given such an extensive interpretation which will bring in its train the whole series of steps and earlier stages in the election process commencing with the filing of the nominations. it will 653 be repugnant to the context and inconsistent with "the date of his election". Such a construction which will introduce disharmony and inconsistency between the various limbs of clause (a) has to be eschewed. In the context of clause (a), therefore, the ambit of the words "for being chosen" in the definition of "disqualified" has to be restricted to "the date of his election" i.e. declaration of the result of the election under Section 53 or Section 66, and such date is to be the focal point of time in an inquiry under this clause. In contrast with clause (a), in a case falling under clause (d) (i) of Section 100, if an objection is taken before the Returning Officer against the nomination of any candidate on the ground of his being not qualified, or being disqualified for being chosen the crucial date as per Section 36 (2) (a) with reference to which the existence or nonexistence of such disqualification is to be enquired into is the date of scrutiny of the nomination of the candidate. The first question is whether on facts admitted or proved on record, the case falls under Section 100(1) (a) or Section 100(1) (d), or both? The burden of Shri Kacker 's arguments is that the case falls under clause (d) (i) and not under clause (a) of Section 100(1). Learned counsel has conceded that if clause (a) were applicable, the case would have been within the ratio of Manni Lal 's case and that was why at the stage of arguments before the High Court, the challenge under clause (a) of the sub Section was given up. We will therefore, assume that technically, the election petitioner 's case that survives is one under clause (d) (i), and not under clause (a) of Section 100(1). Even so, the fact remains, that, in substance, the election of the appellant is being challenged on the ground that on account of his conviction and sentence exceeding two years, the appellant was under Article 102(1)(e) of the Constitution read with Sections 8(2) and 36 (2) (a) of the Act, disqualified for being chosen to fill the seat concerned. Such being the real ground of challenge, apart from sub clause (i) sub clause (iv) of clause (d) of Section 100 (1) will also be attracted. This is so, because the phrase, non compliance with the provisions of the Constitution or of this Act etc.", according to the decision of this Court in Durga Shanker Mehta 's case (ibid), is wide enough to cover a case where the improper acceptance of rejection of the nomination is challenged on the ground of the candidate being disqualified for being chosen. The controversy thus narrows down into the issue: Whether on facts undisputed or proved on record, the present case falls within the ratio of Manni Lal vs Shri Parmai Lal & Ors., even if the challenge is considered to be one under clause (d) (i) and (iv) of Section 100(1). 654 Before examining the facts and ratio of Manni Lal 's case it will be worthwhile to notice here a general principle of criminal law bearing on this issue. This principle as reiterated by this Court in Dilip Kumar Sharma 's case, ibid, (at page 289), is as follows: An order of acquittal particularly one passed on merits wipes off the conviction and sentence for all purposes, and as effectively as if it had never been passed. An order of acquittal annulling or voiding a conviction operates from nativity. As Kelson puts it, "it is a true annulment an annulment with retroactive force". So when the conviction (for the offence) was quashed by the High Court (in appeal). "it killed the conviction not then, but performed the formal obsequies of the order which had died at birth '. In Manni Lal vs Parmai Lal (ibid), this Court applied this principle to the question of the disqualification of a candidate for being chosen to fill a seat in State Legislative Assembly. In that case, the last date for filing nominations from the U.P. Legislative Assembly Constituency, Hardoi was January 9, 1969. The returned candidate was convicted two days later on January 11, 1969 and sentenced, inter alia, to 10 years ' rigorous imprisonment under Section 304, Indian Penal Code. On January 16, 1969, he filed an appeal against his conviction in the High Court. Polling took place on February 9, 1969 and the result of the election was declared on February 11, 1969, and he was successful in the election. His election was challenged by an election petition primarily on the ground that he was disqualified under Section 8(2) of the Representation of the People Act, because on the date of his election he stood convicted for an offence of imprisonment exceeding two years. Before the election petition was decided, the returned candidate 's appeal was allowed on September 30, 1969 by the High Court and his conviction and sentence were set aside. The question for decision before the Court was: What was the effect of the acquittal in appeal of the returned candidate before the decision of the election petition, on his conviction and sentence, which was the main ground on which he was alleged to be disqualified for being chosen ? The bench presided over by J. C. Shah, J. (as he then was) answered this question thus: ". it is clear that, though the conviction of respondent No. 1 was recorded by the trial court on 11th January, 1969, he was acquitted on 30th September, 1969 in appeal which acquittal had the effect of completely wiping out the conviction. The appeal having once been allowed, it has to be held that the conviction and sentence were vacated with effect 655 from the date on which the conviction was recorded and the sentence awarded. In a criminal case, acquittal in appeal does not take effect merely from the date of the appellate order setting aside the conviction; it has the effect of retrospectively wiping out the conviction and the sentence awarded by the lower court. The disqualification relied upon by the appellant was laid under section 8(2) of the Act read with Article 102(1) (e) of the Constitution. The provision is that a person convicted by a court in India for any offence and sentenced to imprisonment for not less than two years shall be disqualified for a further period of five years since his release. The argument on behalf of the appellant was that, though respondent No. 1 was not disqualified at the time of filing of nomination, he was, in fact, disqualified on 9th February, 1969, the date of polling, as well as on 11th February, 1969, when the result was declared. . The argument overlooks the fact that an appellate order of acquittal takes effect retrospectively and the conviction and sentence are deemed to be set aside with effect from the date they were recorded. Once on order of acquittal has been made, it has to be held that the conviction has been wiped out and did not exist at all. The disqualification, which existed on the 9th or 11th February, 1969 as a fact, was wiped out when the conviction recorded on 11th January, 1969 was set aside and that acquittal took effect from that very date. It is significant that the High Court, under Section 100(1) (a) of the Act, is to declare the election of a returned candidate to be void if the High Court is of opinion that, on the date of his election, a returned candidate was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or the Act. It is true that the opinion has to be formed as to whether the successful candidate was disqualified on the date of his election; but this opinion is to be formed by the High Court at the time of pronouncing the judgment in the election petition. In this case, the High Court proceeded to pronounce the judgment on 27th October, 1969. The High Court had before it the order of acquittal which had taken effect retrospectively from 11th January, 1969. It was therefore, impossible for the High Court to arrive at the opinion that on 19th or 11th February 1969, respondent No. 1 was disqualified. The conviction and sentence had been retrospectively wiped out, so that the opinion required to be formed by the High Court to 656 declare the election void could not be formed. The situation is similar to the one that could have come into existence if Parliament itself had chosen to repeal s.8(2) of the Act retrospectively with effect from 11th January, 1979." (emphasis added) The essence of the decision is in the sentences which have been underlined by us in the above extract. In sum, what was laid down in Manni Lal 's case was that if the disqualification of the returned candidate, viz., his conviction and sentence exceeding two year 's imprisonment which existed as a fact at the date of the election, is subsequently set aside by the Appellate Court, then a challenge to his election on the ground under Section 100(1) (a) of the Act, in an election petition pending in the High Court at the date of such acquittal, must fail because the acquittal has the effect of retrospectively wiping out the disqualification as completely and effectively as if it never had existed. In other words, the ratio decidendi logically deducible from the above extract, is that if the successful candidate is disqualified for being chosen, at the date of his election or at any earlier stage of any step in the election process on account of his conviction and sentence exceeding two years ' imprisonment, but his conviction and sentence are set aside and he is acquitted on appeal before the pronouncement of judgment in the election petition pending against him, his disqualification is annulled and rendered non est with retroactive force from its very inception, and the challenge to his election on the ground that he was so disqualified is no longer sustainable. Learned counsel for the respondent has tried to distinguish Manni Lal 's case from the one before us on three grounds. First, that in Manni Lal 's case, the election was challenged under clause (a) or Section 100(1); whereas in the instant case, the challenge is only on the ground under clause (d) (i) of the Section, since the plea in the election petition on the ground under said clause (a) of Section 100(1) was given at the time of arguments in the High Court. Second, in Manni Lal 's case, the disqualification on account of conviction and sentence of the candidate concerned did not exist on the date of the scrutiny of the nomination papers, but was incurred subsequently to the acceptance of his nomination, whereas in the present case, such disqualification existed as a fact even at the date of the scrutiny of the nomination papers. Third, in view of the mandate in Section 36(2) (a), for the purpose of an enquiry under Section 100(1) (d) (i), the existence or non existence of the disqualification is to be judged as on the date of the scrutiny of the nominations, whereas in Manni Lal, 657 the legislative mandate of Section 36(2) (a) was inapplicable, the challenge to the election being one under Section 100(1) (a) only. It appears to us that this three fold feature pointed out by the learned counsel amounts no more than to a distinction without a difference. The basic ground of challenge and material factual constituents thereof are common in both these cases. In both these cases what has been challenged is the election of the successful candidate. Although at the time of arguments in the High Court the ground under clause (a) of Section 100(1) was not pressed and no arguments were addressed with reference to that clause, it had been pleaded and proved by the election petitioner that both at the date of the scrutiny of nominations and at the date of the election, the appellant 's disqualification existed as a fact. Another undisputed fact apparent on the record is that the appellant was acquitted by the appellate court before the decision of election petition in the High Court. As here, in Manni Lal also, such disqualification of the successful candidate existed not only at the date of his 'election ' as defined in Section 67A, but also at the date of the poll, which was an earlier step in the process of "being chosen". As here, there also, such disqualification had been wiped out with retroactive force on account of his acquittal after the elections but before the decision of the election petition by the High Court. Similar to the third point raised here, in Manni Lal also, it was contended that under section 100(1) (a), the question whether the successful candidate was disqualified on the date of his election was to be determined with reference to the situation obtaining on that date only. This contention was repelled with the observation that such opinion had to be formed by the High Court at the time it proceeds to pronounce the judgment in the election petition and High Court had at that time before it the order of acquittal which had taken effect retrospectively from the date on which the conviction had been recorded by the trial court. Although the Court did not specifically say so, this reasoning employed by the Court in negative the contention of the election petitioner in that case, appears to have been spelled out from a construction of the phrase "if the High Court is of opinion" used by the Legislature in the opening part of Section 100(1). This phrase, be it noted, qualifies not only clause (a), but also clause (d) of the sub section. Thus, the ratio of Manni Lal squarely and fully applies to the present case. On the application of that rule, the acquittal of the appellant herein by the appellate court, during the pendency of the election petition must be held to have completely and effectively wiped out the disqualification of the appellant with retrospective effect from the date of the conviction, so that in the eye of law it existed neither at the date of scrutiny of nominations, nor at the date of the 'election ' or at any other stage of the process of "being chosen". 658 In short, the acquittal of the appellant before the decision of the election petition pending in the High Court, had with retrospective effect, made his disqualification non existent, even at the date of the scrutiny of nominations. This being the position, the High Court could not at the time of deciding the election petition form an opinion as to the 'existence ' of a non existent ground and sustain the challenge to the appellant 's election under Section 100(1) (d) (i). It is true that in order to adjudicate upon the validity of the challenge to the appellant 's election under clause (d) (i) of Section 100(1), what was required to be determined by the High Court was whether the nomination of the appellant was properly or improperly accepted by the Returning Officer. But, in order to determine this question, it was necessary for the High Court to decide, as a preliminary step, whether the appellant was disqualified at the date of scrutiny of the nomination papers, for if he was disqualified, his nomination could not be said to have been properly accepted by the Returning Officer and if, on the other hand, he was not disqualified, his nomination would have to be regarded as properly accepted by the Returning Officer. The primary question before the High Court, therefore, was whether or not the appellant was disqualified at the date of scrutiny of the nomination papers and it is difficult to see how the determination of this question could be made on any principle other than that governing the determination of a similar question under clause (a) of Section 100(1). If, as laid down in Manni Lal 's case, the returned candidate cannot be said to be disqualified at the date of the election, if before or during the pendency of the election petition in the High Court his conviction is set aside and he is acquitted by the appellate court, it must be held, on the application of the same principle, that, in like circumstances, the returned candidate cannot be said to be disqualified at the date of the scrutiny of the nomination papers. On this view. the appellant could not be said to be disqualified at the date of scrutiny of the nomination paper since his conviction was set aside in appeal by this Court and if that be so, the conclusion must inevitably follow that the nomination of the appellant was properly accepted by the Returning Officer. The position is analogous to that arising where a case is decided by a Tribunal on the basis of the law then prevailing and subsequently the law is amended with retrospective effect and it is then held by the High Court in the exercise of its writ jurisdiction that the order of the Tribunal discloses an error of law apparent on the face of the record, even though having regard to the law as it then existed, the Tribunal was quite correct in deciding 659 the case in the manner it did, vide Venkatachalam vs Bombay Dyeing & Manufacturing Company Limited. Amritlal Ambalal Patel(ibid) cited by Shri Kacker is not a parallel case. It is clearly distinguishable. The facts therein were materially different from Manni Lal 's case or the one before us. In that case, the election of Amritlal Ambalal Patel to Gujarat Legislative Assembly was challenged on the ground that he was on the date of scrutiny of nominations less than 25 years of age which was the minimum age prescribed under Article 173(b) of the Constitution and, as such, not being qualified for being chosen, his nomination was wrongly accepted. The candidate attained the age of 25 years on the date of election. Notwithstanding this subsequent fact, it was held by the Court that the nomination of the candidate had been "improperly accepted" within the meaning of Section 100 (1)(d). The rationale of the decision was that the attainment of the prescribed age by the candidate after the date of scrutiny of nominations did not operate retrospectively to remove his disqualification for being chosen, with effect from the date of the scrutiny of the nominations. The disqualification on the date of the scrutiny remained unaffected. That was not a case like the present one where the disqualification of the candidate existing as a fact at the date of the nominations, due to his conviction and sentence exceeding two years, was retrospectively wiped out owing to his subsequent acquittal by the appellate court, during the pendency of the elections petition in the High Court. It is possible that, difficult and anomalous situations may arise if the rule in Manni Lal vs Parmai Lal is applied to a converse hypothetical case wherein the candidate whose nomination is rejected on account of his disqualification, viz., conviction and sentence exceeding two years ' imprisonment existing as a fact on the date of scrutiny of nominations, brings an election petition to challenge the election of the returned candidate on the ground that his nomination was improperly rejected, as his disqualification had been, as a result of his subsequent acquittal by an appellate court, annulled and obliterated with retroactive force. But we do not think it necessary to indulge in this hypothetical and academic exercise. Firstly, the instant case is not one where the election is being challenged under Section 100(1) (c) on the ground that the election petitioner 's nomination was improperly rejected. Secondly, it has not been urged before us by the learned 660 counsel for the respondent, that Manni Lal 's case was wrongly decided and that its ratio needs reconsideration by a larger Bench. All efforts of the learned counsel have been directed to show that the principle enunciated in Manni Lal 's case is inapplicable to the present case because on facts, between these two cases, there is a difference and a distinction, where, in reality, none that matters, really exists. In this situation therefore, we would abide by the principle of stare decisis and follow the ratio of Manni Lal 's case, and in the result, hold that the acquittal of the appellant in appeal prior to the pronouncement of the judgment by the High Court in the election petition had the result of wiping out his disqualification as completely and effectively as if it did not exist at any time including the date of the scrutiny of the nomination papers and that his nomination paper was properly accepted by the Returning Officer. The challenge to the election of the appellant on the ground under clause 100(1) (d) (i) must, therefore, fail. For all the foregoing reasons, we allow this appeal, set aside the judgment of the High Court and dismiss the election petition of the respondent. In view of the law point involved, we will leave the parties to pay and bear their own costs throughout. V.D.K. Appeal allowed.

The appellant had been convicted and sentenced to imprisonment exceeding two years by the Sessions Judge, Delhi, on February 26/27, 1979. By his Order dated February 27, 1979, passed under section 389(3) of the Code of Criminal Procedure, the Sessions Judge who had convicted the appellant suspended the execution of the sentence to afford the appellant time to file an appeal. On March 21, 1979 the High Court of Delhi admitted his appeal and by an order of the same date directed that his sentence shall remain suspended provided the appellant furnished a personal bond and surety in the amount of Rs. 5,000/ to the satisfaction of the Sessions Judge, which was complied with. The respondent and the appellant contested the election as rival candidates to the Lok Sabha from No. 18 Mahasamund Parliamentary Constituency in Madhya Pradesh. The last date for filing nominations was December 7, 1979. The scrutiny of the nomination papers took place on December 11, 1979. The Returning Officer by his Order dated December 11, 1979 rejected the objection of the respondent that the appellant was disqualified from being chosen as a candidate in view of sub section (2) of section 8 of the Representation of the People Act, 1951 and accepted the appellant 's nomination as valid. The result of the election was declared on January 7, 1980. The election result was notified on January 10, 1980. The appellant was declared elected and the respondent was defeated. Thereafter, on February 18, 1980 the respondent filed an election petition 1 of 1980 in the High Court of Madhya Pradesh to get the election of the appellant declared void under section 100(1)(a) and 100(1)(b)(i) of the Act challenging that at the date of the election including the date of the scrutiny of the nomination papers the appellant was disqualified by virtue of section 8(2) of the Act from being chosen as candidate on account of his aforesaid conviction and sentence. The appellant 's appeal pending in the High Court was transferred to the Supreme Court under the . The Supreme Court by its judgment dated April 11, 1980 allowed the appeal set aside the conviction and sentence of the appellant and acquitted him of charges against him. Subsequent 638 to this decision of the Supreme Court, by its judgment dated September 5, 1980 the High Court of Madhya Pradesh allowed the election petition with costs and declared the appellant 's election to be void on the ground contained in section 100(1)(d)(i) of the Act, hence the appeal. Allowing the appeal, the Court ^ HELD: (1). Abiding by the principle of stare decisis and following the ratio decidendi of Manni Lal 's case; , , the acquittal of the appellant in appeal prior to the pronouncement of the judgment of the High Court in the election petition had the result of wiping out his disqualification as completely and effectively as if it did not exist at any time including the date of the scrutiny of the nomination papers and that his nomination paper was properly accepted by the Returning Officer. [660B C] Manani Lal vs Shri Parmai Lal & Ors. ; , applied (2) An order of acquittal particularly one passed on merits wipes off the conviction and sentence for all purposes, and as effectively as if it had never been passed. An order of acquittal annulling or voiding a conviction operates from nativity. [654B] Manni Lal vs Shri Parmai Lal & Ors. , ; ; Dilip Kumar Sharma & Ors. vs State of Madhya Pradesh, ; , followed. (3) The ratio decidendi logically deducible from Manni Lal 's case is that if the successful candidate is disqualified for being chosen, at the date of his election or at any earlier stage of any step in the election process on account of his conviction and sentence exceeding two years ' imprisonment, but his conviction and sentence are set aside and he is acquitted on appeal before the pronouncement of judgment in the election petition pending against him, his disqualification is annulled rendered non est with retroactive force from its very inception, and the challenge to his election on the ground that he was so disqualified is no longer sustainable. [656D E] (4) A plain reading of section 100(1) of the Act shows that it can be conveniently divided into two parts. Clauses (a), (b) and (c) of the sub section fall in the first part and clause (d) along with its sub clauses falls in the second part. The distinction between clauses (a), (b) and (c) in the first part and clause (d) in the second part lies in the fact that whereas on proof of any of the grounds mentioned in clauses (a), (b) and (c), the election has to be declared void without any further requirement, in a case falling under clause (d) the election cannot be declared void merely on proof of any of the grounds mentioned in its sub clauses, unless it is further proved "that the result of the election in so far as it concerns the returned candidate has been materially affected". The expression "any nomination" occurring in sub clause (i) of clause (d) in the second part may include nomination of a returned candidate as well; but in the case of a returned candidate whose nomination has been improperly accepted, the effect on the result of the election so far as it concerns him, is obvious. However, if the election is challenged on the ground that the nomination of a candidate, other than the returned candidate, has been improperly accepted, the petitioner in order to succeed will be required to prove under clause (d)(i) in addition to improper acceptance the further fact that thereby 639 the result of the election so far as it concerns the returned candidate has been materially affected. [651H 652D] Clause (a) of sub section (1) requires that the disqualification or lack of qualification of the returned candidate is to be judged with reference to "the date of his election", which date, according to section 67A is "the date on which a candidate is declared by the returning officer under the provisions of section 53 or section 66, to be elected to a House of Parliament or of the Legislature of a State". But, the word "disqualified" used in clause (a) is capable of an expensive construction also, which may extend the scope of the inquiry under this clause to all the earlier steps in the election process. Section 7(b) defines "disqualified" to mean "disqualified for being chosen as and for being, a member of either House of Parliament etc. " The words "for being chosen" in that definition have been interpreted by the Supreme Court in Chatturbhuj 's case; , , to include the whole "series of steps starting with the nomination and ending with the announcement of the election. It follows that if a disqualification attaches to a candidate at any one of these stages he cannot be chosen." But this definition of "disqualified" is in terms of section 7(b) meant for Chapter III, in Part II of the Act; while section 100 falls in Chapter III of Part VI. If the expression "for being chosen" which is a central limb of the definition of "disqualified", is given such an extensive interpretation which will bring in its train the whole series of steps and earlier stages in the election process commencing with the filing of the nominations, it will be repugnant to the context and inconsistent with "the date of his election". Such a construction which will introduce disharmony and inconsistency between the various limbs of clause (a) has to be eschewed. In the context of clause (a), therefore, the ambit of the words "for being chosen" in the definition of "disqualified" has to be restricted to "the date of his election" i.e. declaration of the result of the election under section 53 or section 66, and such date is to be the focal point of time in an inquiry under this clause. [652H 653D] In contrast with clause (a), in a case falling under clause (d)(i) of section 100, if an objection is taken before the Returning Officer against the nomination of any candidate on the ground of his being not qualified, or being disqualified for being chosen the crucial date as per section 36(2)(a) with reference to which the existence or non existence of such disqualification is to be enquired into is the date of scrutiny of the nomination of the candidate. [653C] Assuming that technically, the election petitioner 's case that survives is one under clause (d)(i), and not under clause (a) of section 100(1). Even so, the fact remains that, in substance, the election of the appellant is being challenged on the ground that on account of his conviction and sentence exceeding two years, the appellant was under Article 102(1)(e) of the Constitution read with section 8(2) and 36(2)(a) of the Act, disqualified for being chosen to fill the seat concerned. Such being the real ground of challenge, apart from sub clause (i), sub clause (iv) of clause (d) of section 100(1) will also be attracted, because the phrase "non compliance with the provisions of the Constitution or of this Act etc. " according to the decision of this Court in Durga Shankar Mehta 's case is wide enough to cover a case where the improper acceptance or rejection of the nomination is challenged on the ground of the candidate being disqualified for being chosen. [653E G] 640 Durga Shanker Mehta vs Thakur Raghuraj Singh & Ors. [1955] 1 SCR 267 and Chatturbhuj Vithaldas Jasani vs Nareshwar Parashram Ors., , followed. (a) It is true that in order to adjudicate upon the validity of the challenge in the appellant 's election under clause (d) (i) of section 100(1), what was required to be determined by the High Court was whether the nomination of the appellant was properly or improperly accepted by the Returning Officer. But, in order to determine this question, it was necessary for the High Court to decide, as a preliminary step, whether the appellant was disqualified, at the date of scrutiny of the nomination papers, for if he was disqualified, his nomination could not be said to have been properly accepted by the Returning Officer and if, on the other hand, he was not disqualified, his nomination would have to be regarded as properly accepted by the Returning Officer. The primary question before the High Court therefore, was whether or not the appellant was disqualified at the date of scrutiny of the nomination papers and it is difficult to see how the determination of this question could be made on any principle other than that governing the determination of a similar question under clause (a) of section 100(1). If, as laid down in Manni Lal 's case, the returned candidate cannot be said to be disqualified at the date of the election, if before or during the pendency of the election petition in the High Court his conviction is set aside and he is acquitted by the appellate court, on the application of the same principle, that, in like circumstances, the returned candidate cannot be said to be disqualified at the date of scrutiny of the nomination papers. On this view, the appellant could not be said to be disqualified on the date of scrutiny of the nomination paper since his conviction was set aside in appeal by this Court and if that be so, the conclusion must inevitably follow that the nomination of the appellant was properly accepted by the Returning Officer. The position is analogous to that arising where a case is decided by a Tribunal on the basis of the law then prevailing and subsequently the law is amended with retrospective effect and it is then held by the High Court in the exercise of its writ jurisdiction that the order of the Tribunal discloses an error of law apparent on the face of the record, even though having regard to the law as it then existed, the Tribunal was quite correct in deciding the case in the manner it did. [656C H] Venkatachalam vs Bombay Dyeing & Manufacturing Company Limited, ; , referred to.

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Civil Appeal Nos. 912 to 916 of 1971. Appeals by Special Leave from the Judgment and Order dated the 2nd July 1969 of the Orissa High Court in Special Jurisdiction Cases Nos. 73, 74, 75 and 76 of 1964. V. C. Mahajan and R. N. Sachthey: for Appellants (In CAs. 912 13/71) R. N. Sachthey; for Appellant in CAs. 914 16/71. Gobind Das, amicus curiae for Respondent. The Judgment of the Court was delivered by GOSWAMI, J. Five quarters of assessment of sales tax are involved in these five appeals, by special leave, the period commencing from January 1, 1959 to March 31, 1960. This judgment will govern all these appeals involving a common question. The Assistant Sales Tax Officer, Cuttack, included in the turnover of the respondent the sale price of jeera, dhania (coriander), panmohuri, methi, postak and pipall and levied 5 per cent sales tax under the Orissa Sales Tax Act (briefly the State Act). On appeal the Assistant Commissioner of Sales Tax, Puri, allowed the claim of the respondent and held that the above items are oil seeds within the meaning of section 14(vi) of the and gave the respondent the benefit of a lower tax of 2 per cent on the sale turnover of those goods instead of 5 per cent under the State Act. On appeal by the State of Orissa to the Sales Tax Tribunal claiming 5 per cent on the sale turnover thereof under the provisions of the , the orders of the Assistant Commissioner were affirmed. On application by the State for each of the five quarters, the Tribunal referred the following two common questions under section 24 of the State Act: "(1) Whether in the facts and circumstances of the case, the Sales Tax Tribunal is right in holding that jeera, dhania, panmohuri, methi, postak and pipali are oil seeds within the meaning of section 14 of the Central Act and the tax payable under the State Law in respect of the sale or purchase of these goods inside the State, cannot exceed 2 per cent of the sale or purchase price thereof. (2) Whether the communication No. 4(8) ST/57 dated 31st January, 1958, issued by the Government of India which is only an official communication having no statutory sanction behind it can have any legal effect to hold the goods in question as oil seeds as understood in common parlance and whether such an official communication is binding on the State Government. " We are not concerned with 'pipali ' in these appeals. 968 When these appeals came before us for hearing the respondent was not represented. We, therefore, requested Mr. Gobind Das to act as amicus curiae in these appeals. Before we may proceed further, we may immediately turn to section 14(vi) of the (briefly the Central Act): "14. Certain goods to be special importance in inter State trade or commerce. It is hereby declared that the following goods are of special importance in inter State trade or commence: (vi) Oil seeds, that is to say, seeds yielding non volatile oils used for human consumption, or in industry, or in the manufacture of varnishes, soaps and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like". The above definition is an explanatory one and uses mentioned therein cover a wide range. If the particular items which are assessed under the State Act can be brought under the definition of "oil seeds", as given in the above provision, the assessee will be entitled to a lower levy of sales tax. Mr. Mahajan appearing on behalf of the appellant sumbits that the Court should adopt the meaning given to these items in common parlance and by the people who use the articles. He chiefly relies upon a decision of the Andhra Pradesh High Court in The State of Andhra Pradesh vs Kajjam Ramchandraiah Gari Anantaiah. In that case the High Court was dealing, inter alia, with an identical item, viz., dhania (coriander) under item 3 of Schedule IV of the Andhra Pradesh General Sales Tax Act, 1957. Item 3 is identical with item (vi) of section 14 of the Central Act giving the definition of "oil seeds". The Andhra Pradesh High Court relied upon a letter from the Director of the National Chemical Laboratory, Poona, dated January 29, 1959, addressed to the Secretary, Council of Scientific and Industrial Research, New Delhi, as also upon another letter from the Central Food Technological Research Institute, Mysore, dated February 18, 1959, and came to the conclusion that, amongst other things, dhania (coriander) did not come "within the definition of oil seeds". The High Court also held that it was not difficult to envisage with the increase in scientific knowledge and technological development that oil could be extracted from any seed which might not be known as an oil seed in common parlance. That Court also observed that there was no evidence to show that any oil was extracted in this country or that the oil extracted from the seeds concerned was used commercially or industrially or could be bought in the market. In this view of the matter the Andhra Pradesh High Court held that dhania and other seeds which came up for consideration were not oil seeds under item 3 of Schedule IV of the Andhra Pradesh Sales Tax Act. It is interesting that on this finding of that Court coriander escaped altogether from assessment. 969 In Commissioner of Sales Tax, Madhya Pradesh, Indore, vs Bakhat Rai and Co., the Madhya Pradesh High Court also took the same view as that of the Andhra Pradesh High Court while dealing with item 3, Part II, Schedule 1 of the C.P. and Berar Sales Tax Act. In the Madhya Pradesh case, however, the term 'oil seed ' has not been defined under the Act. The Court, therefore, held that since it was an item of every day use it must be construed in its popular meaning, that is to say, in that sense which people conversant with the subject matter with which the statute was dealing would attribute to it. The Division Bench of the Kerala High Court has also held in The Deputy Commissioner of Agricultural Income tax and Sales Tax, Kozikode vs V. Sreedhara Shenoy that dhania (coriander) and methi are not oil seeds under section 14(vi) of the Central Act. Mr. Mahajan has strenuously submitted that the articles in question are spices to all indents and purposes and not "oil seeds". He further submits that even if they are oil seeds in the sense that these yield non volatile oil to a certain extent, no evidence has been produced by the assessee that these are used for human consumption or in industry or in the manufacture of varnishes, soaps and the like, or in lubrication, or in medicines, perfumes, cosmetics and the like as mentioned in the definition. Mr. Gobind Das, on the other hand, has drawn our attention to the fact that the High Court had before it the Condensed Chemical Dictionary (7th Edition) edited by Arther and Elizabeth Rose, from which the following informations regarding the seeds in question were available: "Dhania (coriander seed); botanical name coriandrum sativem. Coriander oil is distilled from the coriander sativum a colourless or slightly yellowish, liquid having aromatic odour. Jeera (cumin seed); Cumin oil is distilled from the cumin seed and is used for medicine, flavouring and perfumery. It is a colourless or yellowish, limpid liquid having characteristic odour of cumin. Postak (poppy seed); botanical name papover somniferum. Poppy oil is a very pale, golden yellow liquid with pleasant taste and odour extracted from the seeds and it is used as food oil, artist 's colours, varnishes & lubrication. Methi (Fenugreek); botanical name trigonella Foenumgraecum (vide p. 164, vol. 9 of the Encyclopaedia Britannica). It is stated inter alia therein that it bears a sickle shaped pod, containing from 10 to 20 seeds, from which 6% of a foetid, fatty, and bitter oil can be extracted by ether". Besides, the High Court also had before it the notification of the Ministry of Finance, Department of Economic Affairs, Government of India, dated January 3, 1959, wherein amongst other commodities 970 the following were stated to be included in the term "oil seeds" under item (vi) of section 14 of the Central Act: "(18)Poppy seed (Posta dana, Khaskhas); (37) Aniseed (saunf); (42) Coriander seeds (Dhania); (44) Cuminseed (Jeera, Safed Jeera); (49) Fenugreek seeds (Methi)". Mr. Gobind Das also drew our attention to the Webster 's Third International Dictionary where coriander seed is described as "the ripened dried fruit of coriander used for flavouring especially of pickels, curries, confectioneries, and liquors. " These appeals arise out of a decision in a reference under section 24 of the State Act under article 136 of the Constitution and we have to consider whether it is a fit case for interference with the order of the High Court when it held that the Sales Tax Tribunal was right in its conclusion. It is true the High Court has rightly observed that the aforesaid notification of the Government of India has no statutory force and as such is not binding on the Sales Tax Officer. It cannot, however, be denied that the Ministry of Finance, Department of Economic Affairs, is intimately conversant not only with the policy of legislation for the purpose of implementation of the provisions of the Central Act but is also familiar with the nature and quality of the commodities as also their use from time to time. If, therefore, such an authority issued a notification including certain commodities under the head of 'oil seeds ', as defined under the Central Act, it cannot be said that the Tribunal and the High Court were not right in preferring such an opinion of the Government as good evidence for its conclusion, to the opinions relied upon by the Andhra Pradesh High Court on which great reliance has been placed by the appellant. A persual of the contents of the letters referred to in the judgment of the Andhra Pradesh High Court would indicate that the opinions cannot be said to be very firm or even final. Apart from this, it is not known whether all the uses which are mentioned in the definition of "oil seeds" were brought to the notice of the National Chemical Laboratory, Poona and of the Central Food Technological Research Institute, Mysore, in rendering their opinions. If, therefore, the Tribunal in the facts and circumstances of the case held that the particular commodities came within the definition of clause (vi) of section 14 of the Central Act, it is not possible to hold that it was not right. The answer to the first question by the High Court is, therefore, rightly in the affirmative. We do not also see anything wrong in the High Court 's answering the second question in the way it did. The appeals, therefore, fail and are dismissed. There will be no order as to costs. We are thankful to Mr. Gobind Das for assisting the Court as amicus curaie. V.P.S. Appeals dismissed.

Under section 14(vi), , among goods declared to be of special importance in inter State trade and commerce are mentioned oil seeds, that is to say, seeds yielding non volatile oils used for human consumption, or in industry, etc., or volatile oils used chiefly in medicines etc. The Assistant Commissioner under the Orissa Sales Tax Act, the Tribunal, and the High Court on reference, held that jeera dhania, panmohuri, methi and postak are oil seeds within the meaning of section 14(vi) and liable to a lesser rate of tax. The High Court relied on ordinary and technical dictionaries and a notification of the Ministry of Finance, Department of Economic Affairs, Government of India, dated January 3, 1959 for its conclusion. In appeal to this Court under article 136, it was contended by the State, relying on State of Andhra Pradesh vs Kajjam Ramchandraiah Gari Anantaiah (1961) 12 STC 795, that the Court should adopt the meaning given to these articles in common parlance by people who use them, that so understood they are spices and not oil seeds, and that though they yield non volatile oil to a certain extent, there is no evidence that they fall within the description in section 14(vi). Dismissing the appeal, ^ HELD: It cannot be said that the Tribunal was not right, and so it is not a fit case for interference under article 136, when the High Court held that the Tribunal was right. [970C D, G] (a) Item 3, Schedule IV, A.P. General Sales Tax Act, 1957, is identical with section 14(vi) of the Central Act. In Kajjam Ramachandriah 's case, the Andhra Pradesh High Court held that dhania did not come within the definition of oil seeds relying on some letters from (i) Director, National Chemical Laboratory, Poona, and (ii) Central Food Technological Research Institute, Mysore. [968F] (b) The High Court was right in the present case in holding that the notification of the Government of India had no statutory force and was not binding on the Sales Tax Officer, but it cannot be said that the High Court and Tribunal were not right in preferring the opinion therein as good evidence for their conclusion to the opinions in the letters relied upon by the Andhra Pradesh High Court. The Ministry of Finance, which issued the notification, is intimately conversant not only with the policy of legislation for the purpose of implementation of the provisions of the Central Act, but is also familiar with the nature and quality of the commodities and also their use from time to time. [970D F] (c) Further, the letters of the Director, National Chemical Laboratory and the Central Food Technological Research Institute, do not indicate that the opinions expressed therein were firm or even final or whether all the uses mentioned in the definition of oil seeds were brought to their notice. [970F] Commissioner of Sales Tax, Madhya Pradesh, Indore vs Bakhat Rai and Co. (1966) 18 Sales Tax Cases 285 and The Deputy Commissioner of Agricultural Income tax and Sales Tax, Kozhikode vs Sreedhara Shenoy (1973) 32 Sales Tax Cases 181, referred to. 967

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Appeal No. 944 of 1966. Appeal by special leave from the judgment and order, dated March 30, 1 '965 of the Bombay High Court in Special Civil Application No. 5 of 1964. M.C. Chagla and 1. N. Shrog, for the appellant. Ganpat Rai and R. Mahalingier, for respondent No. 1. The judgment of the Court was delivered by Dua, J. Pundalikrao Laxmanrao Suryawanshi plaintiff (respondent No. 1 in this Court) instituted arbitration proceedings in the Court of the Registrar 's Nominee against the Jalgaon District Central Co operative Bank Ltd., Jalgaon (appellant in this Court) for the recovery of a sum of Rs. 7,605/ as the balance of gratuity with interest at 6 per cent due from 18 8 1962. The claim having been resisted, the same was disallowed on May 16, 1963. An appeal presented to the Maharashtra State Co operative Tribunal under section 97 of the Maharashtra Co operative Societies Act against the award of the Registrar 's Nominee was dismissed and the said award was confirmed. The Bombay High Court was thereupon approached by respondent No. 1 under Article 227 of the Constitution and the High Court allowing the application on July 17, 1965 set aside the orders made by the Co operative Tribunal and by the Registrars Nominee and directed the appellant Bank to pay to respondent No, 1 Rs. 7,605/ together with interest at 4 per cent per annum from June 19, 1963 up to date, The present appeal by special leave is directed against the order of the Bombay High Court. Shri M.C. Chagla, the learned counsel for the appellant, concentrated his challenge to the impugned order on the ground that on July 19, 1962, when respondent No. 1 retired from service of the appellant Bank, there were no valid rules in force entitling him to the amount of gratuity claimed by him. It was not disputed before us that respondent No. 1 had retired on July ' 19, 1962 after 32 years of service. On retirement, he was paid a sum of Rs. 5,070/ by way of gratuity, but his claim in the present proceedings is for a further sum of Rs. 7,605/ . 194 Gratuity Fund Rules were sanctioned by the Board of Directors of the appellant Bank on August 17, 1957. They were framed under the Bank 's bye laws. These rules (thereafter called old rules) were forwarded to the Registrar of Co operative Societies for approval and they were approved with some modifications except Rules 6, 10 and 15 which were kept under consideration. The principal argument pressed before us by Shri Chagla was that Rules 6 and to having not been approved by the Registrar, all the old rules must be deemed to have remained inoperative because these two rules form the real substratum of the scheme embodied in those rules Without these two rules, the remaining rules, according to the argument, cannot effectively operate. We are unable to accept this submission. It would be useful at this stage to reproduce old Rules 6,7, 9,10,15 and 16 which alone are suggested on behalf of the appellant to be relevant. These Rules shall be deemed to have come into force (i.e. in respect of an employee retiring, resigning and/or having terminated his services) from the 1st July, 1953. Every employee who has completed at least five years service shall be granted gratuity at the rate specified herein. In case of retirement, resignation or termination of services gratuity shall be granted: (a) After five years but before completion of 10 years services : half month 's salary for each completed year of service. (b) After 10 years but before completion of 16 years service : 'three fourth of a month 's salary for each completed year of service. (c) After 15 years service three fourth of a month 's salary for each completed year of service, subject to the minimum of fifteen salaries. Payment of the claims on account of the Gratuity payable under these Rules, shall be made within one month from the retirement, resignation, death or the termination of service. The Bank shall contribute on 30th June, very year, or as soon as possible thereafter, but not later 195 than 30th September of the year, an amount not less than the amount contributed by the Bank as contribution to the Provident Fund. 11 to 14. The provisions under sec. 41 of the Bombay Co operative Societies Act (Bombay Act V11 of 1925) as amended upto date shall be applicable to the administration of the 'Gratuity Fund ' created under these Rules. The Board of Directors shall have. powers, subject to the approval of the Registrar Co operative Societies Bombay State, Poona, to alter, add to, or repeal these rules from time to time, provided however that no such alteration, addition or repeal shall have any retrospective effect against the interest of the employee, in the employment of the Bank on that date. " According to the appellant 's learned counsel, the Registrar having withheld approval of Rule 6, the last sentence of which provides that every employee who has completed at least 5 years ' service, shall be granted gratuity at the rate specified in the rules, there is no rule which imposes an obligation on the appellant Bank to pay gratuity. This argument, in our opinion, ignores the express language of Rule 7 which, in unequivocal terms, requires gratuity to be granted in case of retirement, resignation or termination of service according to the rate specified therein. Clause (a) of this rule contains a provision similar in effect to what the last sentence of Rule 6 directs. Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement, resignation, death or termination of service of the employee concerned. Rule 10, which provides for contribution of the Bank towards the Gratuity Fund, was no doubt also kept under consideration and not approved by the Joint Registrar, but this too, in our view, does not render the remaining rules ineffective; nor does this fact by itself absolve the Bank of the obligation imposed on it by Rules 7, 8 and 9. The contention that without there being a Gratuity Fund, the Bank cannot lawfully pay gratuity assumes that the Bank hag no other resources out of which its liabilities under the Rules in question can be discharged an assumption which is not easy to upheld. Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar, then this obligation, in our opinion, cannot be rendered nugatory merely because there is no separate Gratuity Fund. Rule 15 which provides for the applicability of section 41 of the Bombay Co operative Societies Act VII of 1925 to the "administration of 196 the Gratuity Fund" created under the rules in question, does not touch the question of the enforcement of these rules, and indeed even on behalf of the appellant, no attempt has been made to rely on Rule 15 for this purpose. The appellant 's counsel next relied on the new rules which were approved by the Joint Registrar of Co operative Societies and were made retrospective in their operation so. as to be enforceable with effect from July 1, 1953. It was, however, conceded by Shri Chagla and, in our opinion, rightly, that the new rules could not detract from or prejudicially affect the vested rights created under the old rules. Indeed old Rule 16, it may be recalled, prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees. The submission that the old rules have neither been repealed, nor altered, as contemplated by Rule 16, and that the Registrar has merely withdrawn his approval to the old rules and enforced the new ones, does not advance the appellant 's case. The effect of old rule 16, in our opinion, cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the new ones, for in real substance the process seems to us to be covered by Rule 16. The appeal accordingly fails with no order as to costs. G.C. Appeal dismissed.

Respondent No. 1 retired from the service of the appellant bank on July 19, 19 '62 after 32 years of service. Under the Bank 's bye laws Gratuity Fund Rules were sanctioned by the Board of Directors on August 17, 1957. These rules were forwarded to the Registrar of Cooperative Societies for approval and they were 'approved with some modification except Rules 6, 10 and 15. On his retirement Respondent No. 1 was paid a sum of Rs. 5,070/ as gratuity. He instituted arbitration proceedings in the Court of the Registrar 's Nominee for a further sum of Rs. 7,605/as balance of gratuity payable to him with interest at 6 per cent. The claim was disallowed and an appeal before the Maharashtra State Cooperative Tribunal 'also failed. The High Court however in a petition under article 227 of the Constitution allowed the respondent 's claim. The Bank appealed to this Court. It was urged on behalf of the appellant (i) that Rule 6, the last sentence of which provides for the grant of gratuity and RuIe 10 which provides for contributions by the Bank to the Gratuity Fund not having been approved by the Registrar, there remained no basis for the claim of gratuity by respondent No. 1; (ii) that the old rules had neither been repealed nor altered and the effect of retrospective operation of the new rules was that the Registrar had withdrawn his approval to the old rules and enforced the new ones. HELD: (i) The argument that r. 6 not having been approved there was no rule under Which the obligation to pay gratuity arose ignored the express language of r. 7 which, in unequivocal terms requires gratuity to be granted in case of retirement. resignation or termination of services according to the rate specified therein. Clause (a) of this rule contains a provision similar in effect to what the last sentence of r. 6 directs. Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement. resignation, death or termination of service of the employee concerned. [195 D F] (ii) The non approval of r. 10 by the Registrar also could not make the other rules ineffective and could not absolve the Bank of the obligation imposed on it by rr. 7, 8 and 9. Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar, then this obligation cannot be rendered nugatory merely because there is no separate Gratuity Fund. [195] 193 It was conceded that the new rules could not detract from or prejudicially affect the vested rights created under the old ' rules. Old Rule 16 expressly prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees. The effect of old r. 16 cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the new ones. [196 B D]

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Appeal No. 130 of 61. Appeal by special leave from the judgment and decree dated April 25, 1959 of the Madhya Pradesh High Court in First Appeal No. 139 of 1955. M.C. Setalvad, Attorney General of India, section T. Desai, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellants. Sarjoo Prasad and G. C. Mathur, for respondents No. 1 and 2. Ganpat Rai, for respondent No. 3. 1962. February 23. The Judgment of the Court was delivered by SHAH, J. This appeal with special leave is against the decree of the Madhya Pradesh High Court confirming the decree of the 1st Additional District Judge, Jabalpur in Civil Suit No. 12 A of 1952. The dispute between the parties arose in a suit for partition of joint family property. The parties are Digambar Jains of the Porwal Sect and are residents of Jabalpur which at the material time 421 was in Madhya Pradesh. The following pedigree explains the relationship between the parties Garibdas=Mst. Khilonabai d. 24.7.34 (Def. 3) d.3.7.56 Gulzarilal d. 13.4.39 Munnalal Padamchand d.10.1.36 Ramchand (Def 1) (Def 2) Pyaribabu widow Bhuribai Chandrani bahu (Def. 4) (Def. 11) (Def. 8) Adupted son Rajkumar (Def. 12) adopted 26.7.52 Saheblal Ballu Nand Hiralal Ishwari Kumar Prasad (Plaintiff) (dead) (Def. 5) (Def. 6) (Def.7) Rajendra Kumar Abhay Kumar (Def 9) (Def. 10) Saheblal son of Munnalal filed Suit No. 12A of 1952 in the Court of the 1st Additional Subordinate Judge, Jabalpur on June 21, 1952, for a decree of partition and separate possession of his 1/12th share in the joint family property. He claimed that in the property his father 's branch was entitled to have a half share and the remaining half was owned by 422 Ram Chand and his branch. The Additional District Judge ordered that Khilonabai grandmother of Munnalal and Ram chand the wives of Munnalal and Ramchand and their sons and Bhuribai (widow of Padamchand) and Rajkumar who claimed to be a son of Padam Chand by adoption by Bhuribai on July 26, 1952, be impleaded as defendants to the suit. At the trial of the suit the right of Saheblal to a share in the property was Dot questioned . the dispute principally turned upon the claim made by Bhuribai and her adopted son Rajkumar to a share in the property. Padamchand had died before the enactment of the Hindu Womens ' Rigbt to Property Act, 1937, and his widow could not claim by virtue of that Act a share in the property of the family. But Bhuribai and Rajkumar pleaded that the parties were governed in the matter of adoption by the customary law prevalent amongst the Jains of Central India, Madhya Pradesh, Vindhya Pradesh. North and Western India, and Rajkumar as a son adopted by Bhuribai to Padam Chand became a coparcener in the joint family and entitled to a share in the property and accretions thereto. The validity of the adoption of Rajkumar was challenged on many grounds, one only of which is material in this appeal. It was submitted by the contesting defendants and Bhuribai had no authority express or implied from her husband Padam Chand to adopt a son and that the adoption of Rajkumar as a son without such authority was invalid. '.the Additional District Judge rejected this plea and ordered a preliminary decree for partition and declared that the share of the plaintiff was 1/24th, of Munnalal, his wife and 3 sons collectively was 5/24th, of Ramchand and his sons 1/4th, of Khilonabai 1/4th and the remaining 1/4th share belonged to Rajkumar. 423 Against them decree, Munnalal, Ramchand, Khilonabai, wife and sons of Munnalal and the wife and sons of Ramchand who were defendants 1 to 10 preferred an appeal to the High Court of Madhya Pradesh. During the pendency of this appeal Khilonabai died on July 3, 1956 and Ramchand and Munnalal applied to be impleaded as her legal representatives in respect of the interest in the property awarded to Khilonabai by the preliminary decree. By order dated December 12, 1957, the District Judge held that the interest of Khilonabai devolved upon the applicants by virtue of sections 15 and 16 of the which was brought into operation on June 14, 1956, and that the sons of Munnalal, Ramchand and Padam Chand could not take a share in Khilonabai 's interest. Before the High Court two questions were canvassed: (1) as to the factum and validity of the adoption of Rajkumar, and (2) devolution of the share of Khilonabai declared by the preliminary decree on her death. The High Court upheld the finding of the trial Court that Rajkumar was in fact adopted by Bhuribai as a son to her husband on July 26, 1952, and that amongst the Jains residing in the North West Province, Central India, Northern India and in Bombay a widow could adopt a son to her deceased husband without any express authority in that behalf In so holding the High Court relied upon the judgments of the Privy Council in Pemraj vs Mst. Chand Kanwar and Mangibai Gulabchand vs Suganchand Baikamcand (1). But the High Court diclined to accept the view of the trial Court that the right of Khilonabai declared by the preliminary decree devolved upon Munnalal and Ramchand alone. In their view, Khilonabai 's interest under the decree being incohate was not "Possessed" by her within. the meaning of section 14 (1) (1947) L.R. 74 I.A. 254. (2) A.I.R. (1948) P.C. 177. 424 of the , and on her death it merged into the estate, The High Court observed : "The result is that the interest of Smt. Khilonabai remained incohate and fluctuating so that after her death, the interest declared by the preliminary decree is available for partition as joint family property and consequently ss.15 and 16 of the are inapplicable to the interest. As the property never became her absolute property by virtue of s.14 of the Act, the same remained joint family property. " Accordingly the decree of the trial Court was modified and 1/3rd Share in the joint family property was awarded to Rajkumar, 1/3rd to the branch of Munnalal and the remaining 1/3rd to the branch. of Ramchand and adjustments were made on that footing in the shares of the plaintiff and other members of the family. In this appeal by defendant No. 1 (Munnalal) 2 (Ramchand) and 4 to 10, three contentions were raised : (1) in the absence of express authority from her husband, Bhuribai could not adopt a son, (2) that the 'interest of Khilonabai under the preliminary decree became her absolute property by virtue of s.14 of the and on her death it devolved upon her grandsons Munnalal and Ramchand defendants 1 and 2 and (3) the trial Court was in error in delegating to a Commissioner judicial function, such as, ascertainment of property to be divided and effecting parti tion. The third question is easily answered. The trial court appointed a commissioner to propose a partition of joint family property, and for that purpose the court authorised him to ascertain the property, the debts which the family owed and also the individual liability of the parties for the debts. For deciding those questions the Commissioner was empowered to record statements of the parties, frame 425 issues and to record evidence as might be necessary. The commissioner was also directed to submit his proposals relating to the right of Bhuribai to be maintained out of the joint family property. This order, it appears, was passed with the consent of all the parties. It is true that the decree drawn up by the trial Court is not strictly in accordance with the directions given in the judgment. But it is manifest that the trial Judge only directed the Commissioner to submit his proposals for partition of the property, and for that purpose authorised him to ascertain the property which was available for partition and to ascertain the liability of the joint family. By so authorising the Commissioner, the trial Court did not abdicate its functions to the comissioner : the commissioner was merely called upon to make proposals for partition, on which the parties would be heard, and the Court would adjudicate upon such proposals in the light of the decree, and the contentions of the parties. The proposals of the commissioner cannot from their very nature be binding upon the parties nor the reasons in support thereof. The order it may be, remembered was made with the consent of the parties and no objection to the order was, it appears, pressed before the High Court. We do not think that any case is made out for modifying that part of the order. The parties to this dispute are Digamber Jains of the Porwal sect and are resident of Jabalpur. Jains have generally been regarded as heterodox Hindus and in the absence of special custom they are governed by the rules applicable to Hindus. As observed by the Privy Council in Sheokuarbai vs Jeoraff.(1) The Jains are of Hindu origin; they are Hindu dissenters, and although as was pointed out by Mr. Mayne in paragraph 46 of his Hindu Law and Usages "Generally adhering to ordinary Hindu law, that is, the law of the three (1) 426 superior castes, they recognise, no divine authority in the Vedas and do not practise the Shradhs, or ceremony for the dead." "The due performance of the Shradhs, or religious ceremonies for the dead, is at the base of the religious theory of adoption, but the Jains; have so generally adopted the Hindu law that the Hindu rules of adoption are applied to them in the absence of some contrary usage x x x." But amongst the Jainsa custom enabling a widow to adopt a son to her husband without express authority has been reco. gnised by judicial decisions spread over a period longer than a century. In Pemraj vs Musammad Chand Kanwar(1), the Judicial Committee of the Privy Council after a review of the case law observed : " x x x x, in many other parts of India" (parts other than the Provinces of Madras and the Punjab) "it has now been established by decisions based on evidence from widely separated districts and from different sects that the Jains observe the custom by which a widow may adopt to her husband without his authority. This custom is based on religious tenants common to all sects of Jains, and particularly their disbelief of the doctrine that the spiritual welfare of the deceased husband may be affected by the adoption, and though it cannot be shown that in any of the decided cases the parties were of the Khandelwal sect, yet in none of the cases has a distinction been drawn between one sect and another. It is now in their Lordship,% ' opinion no longer premature to hold that the custom prevails generally among all Jains except in those areas in which there are special reasons, not operative in the rest of India, which explains why the custom has not established itself. Mayne, in his treaties on Hindu Law and Usage, at page 209, has lent the weight of his authority to the proposition that among the Jains, except in the Madras Presidency a sonless widow can adopt a son to her (1) (1947) L.K. 74 I.A. 254. 427 husband without his authority or the consent of his sapindas". This view was reiterated by the Privy Council in a case reported in Mangibai Gulabchand vs Suganchand Bhikamchand (1). The Attorney General for the appellants, however, contends that there is no evidence of a custom authorising the widow of a Porwal Digamber Jain residing in Jabalpur to adopt a son to her husband without express authority. Counsel sub mitted that the observations in the two cases relating to the custom of adoption must be restricted to the sects to which the parties to these cases belonged, and in so far as they purport to extend the custom to all Jain residents in India outside Madras and the Punjab they are mere dicta and not binding upon this Court. In Pemraj 's case the parties belonged to the Khandelwal sect domiciled and resident in Ajmer and in Mangibai 's case the parties were Marwari Jains of the Vis Oswal sect who having migrated from Jodhpur had settled down in the Thana District of the Bombay Province, but the opinion of the Judicial Committee expressly proceeded upon a well recognised custom applicable to all Jains in the territory of India (excepting Madras and the Punjab) and not upon proof of a restricted custom governing the sects of Jains to which the parties belonged. Undoubtedly, as observed by this Court in Saraswathi ' Ammal vs Jagadamhal (2) in dealing with the quantum of proof required to prove a family or loca I custom, " it is incumbent on a party getting up a custom to allege and prove the custom on which he relies and it is not any theory of custom or deductions from other customs which can be made a rule of decision but only any customs applicable to the parties concerned that can be the rule of decision in particular case. x x x (1). A.I.R. (1948) P.C. 177. (2) ; 428 Theory and custom are antitheses, custom cannot be a matter mere of theory but must always be a matter of fact and one custom cannot be deducted from another. A community living in one particular district may have evolved a particular custom but from that it does not follow that the community living in another district is necessarily following the same custom. " But the application of the custom to the parties to this appeal does not appear to proceed upon analogies or deductions. It governs the parties, because the custom has become a part of the law applicable to Jains in India (except in Madras and the Punjab) by a long and uninterrupted course of acceptance. A review of the cases decided by different Courts clearlyshows that the custom is generally applicable to Jains all over India, except the Jain domiciled in Madras and the Punjab. The earliest case of which a report is available is Maharaja Govindnath Bay vs Ray Chand (1) decided by the Saddar Court Calcutta in 1933. 'in that case the validity of an adoption by a Jain 'Widow of a son without express authority from her husband was questioned. The Court after consulting the Pandits held that by Jain law a sonless widow could adopt a son just as her husband for the performance of religious rites and that the section of the vitis or priests to the adoption is not essential. In Bhagwandas Tejmal V. Rajmal alias Hiralal Lachmidas(2) the Bombay High Court opined that the widow of a Jain was a delegate either by express or implied authority to adopt a son, but she could not delegate to another person that authority to adopt a son to her husband after her death. In Sheo Singh Rai vs Mussumut Dakho and Moorari Lal, (3) decided in 1878, the Privy 'Council affirmed the view of the North West Provinces High Court that a sonless widow of a Jain had the right of adoption without the permission of her husband or the consent (1) (2) (1873) 10 Bom. H.C. Rep. 241. (3) (1878) L.R. 5 I.& 87 429 of his heirs. In that case before the Subordinate Judge and before the High Court evidence was recorded of the custom applicable to Jains generally, in different place such as Delhi, Jaipur, Mathura, Banaras and it was held that ' the custom was established by evidence. The parties to the suit were Agarwal Jains of Meerut District, but decision of the Board proceeded upon a custom found on evidence to be common to all Jains. In Lakhmi Chand vs Catto Bai. (1) decided in 1886, again the power of a Jain widow to adopt a son to her deceased husband was held proved. In Manik Chand Golecha vs Jagat Settani, (2) decided in 1889, the High Court of Bengal upheld a custom in respect of adoption by a widow of an. Oswal Jain. The decision of the Court did not proceed upon any custom peculiar to the Oswal sect. In Harnabh Pershad alias Rajajee vs Mangil Das(3) decided in 1899, it was held upon the evidence consisting partly of judicial decisions and partly of oral evidence that the custom that a sonless Jain widow was competent to adopt a son to her husband without his permission or the consent of his kinsmen, was sufficiently established and that in this respect there was no material difference in the custom of the Aggarwal, Choreewal (Porwal), Khandwal and Oswal sects of the Jaim ; and that there was nothing to differentiate the Jains at Arrab from the Jains elsewhere. The judgment of the case proceeded upon an elaborate examination of numerous instances in which the custom was held established. In Manohar Lal vs Banarsi Das(4) and in Asharfi Kumar vs Rupchand(5) a similar custom was hold established. In the latter case a large number of witnesses were examined at different places and on a review of the decisions and the evidence the Court held the custom proved. The judgment of the Allahabad (1) All. 319. (2) Cal. 5 1 8. (3) Cal. (4) (1907) 1.L.R. 29 All. (5) All.197 430 High Court in Asharfi 's case was affirmed by the Privy Council in RupChand vs Jambu Prasad. (1) It may be stated that the right of a Jain widow to adopt without authority of her husband was not questioned before the Privy Council. In Jiwraj vs Mt. Sheokuwarbai the Court of the Judicial Commissioner ' Nagpur held that the permission of the husband was not necessary in the case of a Jain widow to adopt a son. This case was also carried to the Privy Council and the judgment was affirmed in Sheokuarbat vs Jeoraj (3). In Banarsi Das vs Samat Prasad (4) a similar custom was held established. The decisions in all these cases proceeded not upon any custom peculiar to the locali ty, or to the sect of Jains to which they belonged, but upon the view that being Jains, they were governed by the custom which had by long acceptance become part of the law applicable to them. It is well settled that where a custom is repeatedly brought to the notice of the Courts of a country, the courts may hold that custom introduced into the law without the necessity of proof in each. individual case. (Rama Rao vs Raja of Pittapur) (5). The plea about the invalidity of the adoption of Rajkumar by Bburibai must therefore fail. Khilonabai died after the was brought into operation on June 14, 1956. This Act by section 2(1)(b) applies to Hindus and also to persons who are Jains by religion. The preliminary decree was passed on July 29, 1955, and thereby Khilonabai was declared entitled to a fourth share in the property of the family. Section 14 of the provides: "14(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be (1) All. 217. (3) (2) A.I.R. (1920) Nag. 162. (4) All. 1019, (5) (1918) L.R. 4 5 1.A. 148. 431 held by her as full owner thereof and not as a limited owner. EXPLANATION. In this sub section ,property" includes both movable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also by such property held by her as stridhana immediately before the commencement of this Act. (2) Nothing contained in sub section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property. " Section 15 provides: "115 (1) The property of a female Hindu dying intestate shall devolve according to the rules set out in section 16, (a) firstly, upon the sons and daughters (including the children of any predeceased son or daughter) and the husband; (b) secondly, upon the heirs of the husband; (c) thirdly ' upon the mother and father; 432 (d) fourthly, upon the heirs of the father; (e) lastly, upon, the heirs of the mother; (2) Notwithstanding anything contained in sub section (1), (a) any property inherited by a female Hindu from her father or mother shall devolve, in the absence of any son or daughter of the deceased (including the children of any predeceased son or daughter) not upon the other heirs referred to in sub section (1) in the order specified therein but upon the heirs of the father: and (b) any property inherited by a female Hindu from her husband or from her father in law shall devolve, in the absence of any son or daughter of the deceased (including the children of any predeceased son or daughter) not upon the other heirs referred to in sub section (1) in the order specified therein, but upon the heirs of the husband." Section 16 which prescribes the order of succession and manner of distribution among, the heirs of a Hindu female provides by Rule ,,Among the heirs specified in sub section (1) of section 15, those in one entry shall be preferred to those in any succeeding entry, and those included in the same entry shall take simultaneously." 433 Counsel for Rajkumar concedes, and in our judgment he is right in so conceding that if the share declared by the preliminary decree in favour of Khilonabai is property possessed by her at the date of her death, it should devolve upon her grandsons Munnalal and Ramchand, to the exclusion of Rajkumar adopted son of Padam Chand. This Court in Gumalapara Taggina Matada Kotturuswami vs Setra Veeravva (1) held that "The word "possessed" in section 14 is used in a broad sense and in the context means the state of owning or having in one 's power". The preliminary decree declared that Khilonabai was entitled to a share in the family 'estate and the estate being with the family of which she was a member and in joint enjoyment, would be possessed by her. But counsel for Rajkumar submitted that under the preliminary decree passed in the suit for partition the interest of Khilonabai in the estate was merely inchoate, for she had a mere right to be maintained out of the estate and that her right continued to retain that character till actual division was made and the share declared by the preliminary decree was separated to her: on her death before actual division the inchoate interest again reverted to the estate out of which it was carved. Counsel relied upon the judgment of the judicial committee in Pratpamull Agarwalla vs Dhanabati Bibi (2) in support of his plea that under the Mitakshara law, when the family estate is divided a wife or mother is entitled to a share. but is not recognised as the owner of such share until the division of the, property is actually made,as she has no preexisting right in the estate except a right of maintenance. Counsel submitted that this rule of Hindu law was not affected by anything contained in section 14 of the . By section 14 (1) the Legislature sought to convert the interest of a Hindu female which under the (1) [1959] 1 Supp. S.C.R. 968. (2) (1935) L.R. 63 I.A 33. 434 Sastric Hindu law would have been regarded as a limited interest into an absolute interest and by the explanation thereto gave to the expression property" the widest connotation. The expression includes property acquired by a Hindu female by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever. By section 14(1) manifestly it is intended to convert the interest which a Hindu female has in property however restricted the nature of that interest under the Sastric Hindu law may be into absolute estate. Pratap mull 's case undoubtedly laid down that till actual division of the share declared in her favour by a preliminary decree for partition of the joint family estate a Hindu wife or mother, was not recognized as owner, but that rule cannot in our judgment apply after the enactment of the . The Act is a codifying enactment, and has made far reaching changes in the structure of the Hindu law of inheritance, and succession. The Act confers upon Hindu females full rights of inheritance, and sweeps away the traditional limitations on her powers of dispositions which were regarded under the Hindu law as inherent in her estate. She it; under the Act regarded as a fresh stock of descent in respect of property possessed by her at the time of her death. It is true that under the Sastric Hindu, law, the share given to a Hindu widow on partition between her sons or her grandsons was in lieu of her right to maintenance. She was not entitled to claim partition. But the Legislature by enacting the Hindu Women 's ' Right to Property Act, 1937 made a significant departure in that branch of the law: the Act gave a Hindu widow the same interest in the property 435 which her husband had at the time of his death, and if the estate was partitioned she became owner in severally of her share, subject of course, to the restrictions on disposition and the peculiar rule of extinction of the estate on death actual or civil. It cannot be amused having regard to this development that in enacting 8. 14 of the , the Legislature merely intended to declare the rule enunciated by the Privy Council in Pratapmulls case. Section 4 of the Act gives an overriding effect to the provisions of the Act. It enacts"Save as otherwise expressly provided in this Act, (a) any text rule or interpretation of Hindi law or any custom or usage as part of that law in force immediately before the commencement of this Act shall cease to have ;effect with respect to 'any matter for which provision is made in this Act : (b) x x x x X" Manifestly, the legislature intended to supersede the rules of Hindu law on all matters in respect of which there was an express provision made in the Act. Normally a rights declared in an estate by a preliminary decree would be regarded as property, and there is nothing in the context in which section 14 occurs or in the phraseology used by the Legislature to warrant the view that such a right declared in relation to the estate of a joint family in favour of a Hindu widow is not property within the meaning of section 14. In the light of the scheme of the Act and its avowed purpose it. would be difficult, without doing violence to the language used in the enactment, to assume that a right declared in property in favour of a person under a decree for partition is not a right to property. , If under a preliminary decree the right in favour of a Hindu male be regarded as property the right declared in favour of a Hindu female must also be regarded 436 as property. The High Court was therefore, in our judgment, in error in holding that the right declared in favour of Khilonabai was not possessed by her, nor are we able to agree with the submission of the learned counsel for Raj Kumar that it was not property within the meaning of section 14 of the Act. On that view of the case, by virtue of so. 15 and 16 of the Act, the interest declared in favour of Khilonabai devolved upon her sons Munnalal and Ramohand to the exclusion of her grandson Rajkumar. The decree passed by the High Court is therefore modified in this respect and the decree passed by the trial Court restored. Having regard to the partial success of the parties, there will be no order as to costs in this appeal and in the High Court.

G, a Digamber Jain of the, Porwal sect, died in 1934 leaving behind his widow Smt. K, his son G who died in 1939 and three grandsons M, P and R. In 1952 M 's son S filed a suit for partition of the joint family properties. Rajkumar, claiming to be a son of P adopted by his widow, claimed a 1/4th share in the joint family property. The adoption was challenged on the ground that no express authority had been given by P to his widow to adopt. The trial court held that no express authority was required by a sinless Jain widow to adopt a son and that the adoption was duly and properly made. Accordingly, a preliminary decree declaring the shares of Smt. K, the branch of M, the branch of R and of Rajkumar to be 1/4th each was passed. M and others pre ferred an appeal to the High Court mainly against the findings on the question of adoption. During the pendency of the appeal, the , came into force. Shortly thereafter Smt. K died. The High Court upheld '.he decision of the trial court on the question of the adoption of Rajkumar. With respect to the share of Smt. K the High Court held that her interest declared by the preliminary decree was inchoate, that she never became "possessed", 419 of any share within the meaning of s 14 of the Act and that it remained joint family property which became divisible amongst the parties proportionately to their shares. The appellants contended that the adoption of Rajkumar was invalid as no custom applicable to the Porwal sect of the jains had been established empowering a widow to adopt without the authority of her husband and that the 1/4th share of Smt. K declared by the preliminary decree had become her absolute property by virtue of section 14 of the Act and upon her death it descended to her grandsons M and R to the exclusion of other parties. Held, that the adoption of Rajkumar was valid. A sonless Jain widow could adopt a son without the express authority of her husband. Such a custom among the Jains not domiciled in the States of Madras and the Punjab) has been recognised by judicial decisions spread over a period longer than a century. Though none of these decisions related to the Porwal sect of Jabalpur to which the parties belonged. They laid down a general custom of the jains which were applicable to the parties. The decisions proceeded not upon. any custom peculiar to any locality or to any sect of the jains but. upon general custom which had by long acceptance become part of the law applicable to them. Where a custom is repeatedly brought to the notice of the Courts, the courts may held that custom introduced into the law without the necessity of proof in each individual case. Pemraj vs Mst. Chand Kanwar, (1947) L. R. 74 1. A. 224 and Mangibai Gulabchand vs Suganchand Bhikamchand, A.I.R. (1948) P. C. 177, relied on. Sheokuarbai vs Jeoraj, , Saraswathi Ammal vs ,Jagadambal, , Maharajah Govind nath Ray vs Gulal Chand, (1833) 5 Sel. Rep. 276, Bhagwandas Tejmal vs Rajmal Alias Hiralal Lachmindas, (1873) 10 Bom. H.C. Rep. 241, Sheo Singh Rai vs Mst. Dakho and Morari Lal (1878) L.R. 5 1. A. 87, Lakhmi Chand vs Gatto Bai, All. 319, Manik Cha nd Golecha vs Jagit Settani, Cal. 518, Harar nabh Parshad alias Rajajee vs Mangil Das, Cal. 379, ManoharLal vs Banarsi Das All. 495, Asharfi Kumar vs Rupchand, All. 197, Rup Chand vs Jambu, Prasad All, 2 47, Jiwaraj vs Mst. Sheokuwarbai, A.I.R. (1920) Nag. 162, Banarsi Das vs Sumat Prasad, All. 1019 and Rama Rao vs Raja of Pittapur, (1918) L. R. 43 1. A. 148, referred to. Held, further that the 1/4th share of Smt. K declared by the preliminury decree was "possessed" by her and on her 420 death it descended to her grandsons in accordance with provisions of sections 15 and 16 of the Act. The word "possessed" in section 14 was used in a broad sense meaning the state of owing or having in one 's power. The rule laid down by the Privy Council that till actual division of the share declared in her favour by a preliminary decree for partition of the,joint family prop" a Hindu wife or mother was not recognised as owner of that share cannot apply after the enactment of the . Section 4 of the Act made it clear that the Legislature intended to supersede the rules of Hindu law on all rs in respect of which there was an express provision made in the Act. Gumalapura Taggina Matada Kotturuswami vs Setra Veerayya, (1959) 1 Supp. S.C.R. 968 and Pratapmull Agarwalla vs Dhanabati Bibi, (1935) L.R. 63 I.A. 33, referred to.

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vil Appeal No. 1622 of 1987. From the Judgment and Order dated 23.6.1986 of the Bombay High Court in W.P. No. 562 of 1986. S.N. Kacker, Mrs. J. Wad and Mrs. Aruna Mathur for the Appellant. G. Ramaswamy, Additional Solicitor General, A.S. Bhasme, K.R. Nagaraja and R.S. Hegde for the Respondents. A. Mariarputham for the Intervener. The Judgment of the Court was delivered by VENKATARAMIAH, J. The question involved in this case relates to the right of a person to obtain a special permit under sub section (6) of section 63 of the (hereinafter referred to as `the Act ') to ply a public service vehicle on routes or portions thereof in respect of which a scheme approved under section 68 D of the Act providing for exclusive operation of contract carriages on the said routes by a State transport undertaking to the complete exclusion of all other persons has been brought into force. By a notification dated 29th November, 1973 published under section 68 D(3) of the Act by the Government of Maharashtra, the Maharashtra State Road Transport Corporation (hereinafter referred to as `the Corporation ') was authorised to operate contract carriage services in the entire area of the State of Maharashtra and on all routes and portions thereof falling within the said area to the complete exclusion of all other persons except those falling under the seven categories of persons mentioned therein, namely, (1) a State Transport Undertaking, as defined under 8section 68 A(b) of the Act; (2) holders of duly countersigned permits on inter State routes save those falling under the second proviso to section 63(1) of the Act, (3) holders of contract carriage permits for operation of motor cars; (4) holders of contract carriage permits granted for operation of air conditioned vehicles only, (5) PG NO 451 holders of contract carriage permits for operation of vehicles owned by them exclusively for transportation of person, employed by them or students or members of their institutions from and to their residences and respective places of work or study and for occasional tours and excursions; (6) holders of contract carriage permits for operation wholly within the municipal limits of Greater Bombay, and cities of Poona, Sholapur and Kolhapur where the municipal authorities are operating road transport service; and (7) holders of contract carriage permits granted to them exclusively for the daily transportation at appointed hours and between specified terminals and pick up points of only the persons employed by or studying in establishments and institutions with which the said permit holders have specified contract for the purpose. The said scheme came into force on January, 1974. The appellant, who did not belong to any one of the above seven categories applied to the Regional Transport Authority, Bombay (C) for a special permit under sub section (6) of section 63 of the Act in relation to the motor vehicle bearing No. MRL 8088 for plying it on the route Bombay to Ashtu Vinayak via Panvel, Mahad, Poona, Shirdi etc. for a period of five days, namely from 18.9.1985 to 22.9.1985 in Form P. Co. Sp. A in accordance with rule 80 of the Bombay Motor Vehicles Rules, 1959. The application made by the appellant for the special permit was rejected by the Secretary, Regional Transport Authority on the ground that the appellant had not produced a `No Objection Certificate ' issued by the Corporation for the grant of a special permit by his Order dated 17.9.1985. It was also stated that the Corporation being the operator having the exclusive privilege in the entire area of Maharashtra State to operate contract carriages under the scheme it was the primary duty of the Corporation to provide transport facilities to the intending passengers and if it failed to do so, the Corporation could issue a `No Objection Certificate ' to enable other intending operators to enter into contract. Hence it was held that in the absence of the `No Objection Certificate ' issued by the Corporation no special permit could be issued under section 63(6) of the Act. Aggrieved by the order passed by the Regional Transport Authority, the appellant filed an appeal under section 64 of the Act before the Maharashtra State Transport Appellate Tribunal, Bombay. The Tribunal allowed the appeal holding that a special permit issued under section 63(6) of the Act was not a contract carriage permit issued under the Act and that the scheme relied upon by the Corporation under which it had exclusive monopoly to operate contract carriages in the State of Maharashtra to the complete exclusion of all persons other than these who were specifically saved from the operation of the scheme did not have the effect of preventing any person from applying for a special permit PG NO 452 under section 63(6) of the Act to operate a public service vehicle on any of the routes in the State of Maharashtra. The judgment of the Tribunal was delivered on December 19, 1983. Aggrieved by the judgment of the Tribunal, the corporation filed a writ petition in Writ Petition No. 562 of 1986 on the file of the High Court of Bombay questioning the correctness of the order of the Tribunal. The said Writ Petition was heard along with another Writ Petition which had been filed by the Corporation against M/s. Auto Hirers, Tardeo, Bombay and others in Writ Petition No. 561 of 1986. By a common judgment the High Court allowed the Writ Petition and set aside the order of the Tribunal. This appeal by special leave is filed against the judgment of the High Court. It is necessary to refer to some of the provisions of the Act at this stage. A `contract carriage ' is defined in section 2(3) of the Act as a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum (i) on a time basis whether or not with reference to any route or distance, or (ii) from one point to another, and in either case without stopping to pick up or set down along the line of route passengers not included in the contract, and includes a motor cab notwithstanding that the passengers may pay separate fares. An application for a contract carriage permit is required to be made in accordance with section 49 of the Act which provides that an application for a permit to use one of more motor vehicles as a contract carriage or carriages shall contain the following particulars, namely, (a) the type and seating capacity of the vehicle or each of the vehicles, (b) the area for which the permit is required; (c) in the case of a motor vehicle other than a motor cab, the manner in which it is claimed that the public convenience will be served by the vehicle; and (d) any other particulars which may be prescribed. Section 50 of the Act specifies the procedure to be followed by the Regional Transport Authority in considering the application for contract carriage permit. It says that a Regional Transport Authority shall in considering an application for a contract carriage permit, have regard to the extent to which additional contract carriages may be necessary or desirable in the public interest; and shall also take into consideration any representations which may then be made or which may previously have been made by persons already holding contract carriage permits in the region or by any local authority or police authority in the region or by any local authority or police authority in the region to the effect that the number of contract carriages for which permits have already been granted is sufficient for or in excess of the needs of the region or any area within the PG NO 453 region. Section 51 of the Act provides for grant of contract carriage permits. That section provides that subject to the provisions of section 50, a Regional Transport Authority, may, on an application made to it under section 49, grant a contract carriage permit in accordance with the application or with such modifications as it deems fit or refuse to grant such a permit. In the event of the Regional Transport Authority deciding to grant a contract carriage permit it can attach to the permit any one or more of the conditions specified in sub section (2) of section 51 of the Act. Section 58 of the Act deals with the duration of a contract carriage permit. It provides that a stage carriage permit or a contract carriage permit other than a temporary permit issued under section 62 of the Act shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority may specify in the permit. Such a permit may be renewed on an application made and disposed of as if it was an application for a permit under sub section (2) of section 58 of the Act. Section 62 of the Act lays down the provisions for grant of a temporary permit to be effective for a limited period not exceeding four months. Then follows section 63 of the Act which deals with the validation of permits for use outside the region in which granted. Sub section (1) of Section 63 provides that except as may be otherwise prescribed, a permit granted by the Regional Transport Authority of any one region shall not be valid in any other region, unless the permit has been counter signed by the Regional Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless counter signed by the State Transport Authority or that other State or by the Regional Transport Authority concerned. Sub section (6) of section 63 of the Act with which we are concerned in this case reads thus: "(6) Notwithstanding anything contained in sub section (1), but subject to any rules that may be made under this Act, the Regional Transport Authority or any one region may, for the convenience of the public, grant a special permit in relation to a public service vehicle for carrying a passenger or passengers for hire or reward under a contract, express or implied, for the use of the vehicle as a whole without stopping to pick up or set down along the line of route passengers not included in the contract, and in every case where such special permit is granted, the Regional Transport Authority shall assign to the vehicle, for display thereon, a special distinguishing mark in the form and PG NO 454 manner specified by the Central Government and such special permit shall be valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or of the State Transport Authority of the other region or of the State Transport Authority of the other State, as the case may be. " It is no doubt true that the special permit issued under sub section (6) of section 63 of the Act has same of the features of a contract carriage permit but it is not the same as a contract carriage permit. The distinguishing features of these two types of permits are these: (1) A permit for which an application is made under section 49 of the Act and which is granted under section 51 of the Act is called a contract carriage permit. A permit issued under section 63(6) of the Act is called a special permit. (2) While a contract carriage permit issued by a Regional Transport Authority of any one region is not valid in any other region unless the permit has been countersigned by the Regional Transport Authority of the other region as provided under section 63(1) of the Act a special permit issued by one Regional Transport Authority under section 63(6) of the Act is valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or the other State as the case may be. (3) While the duration of a contract carriage permit is as prescribed under section 58(1) of the Act, a special permit can be issued only for a specific period which may be for a few days only as in the present case in accordance with the rules prescribed for that purpose. (4) A contract carriage permit is renewable under section 58(2) of the Act, but there is no corresponding provision providing for renewal of a special permit. Thus it is seen that a contract carriage permit and a special permit are not one and the same. A special permit is ordinarily taken to meet a need that exists for a few days like carrying a marriage party or persons going on a pilgrimage etc. The learned counsel for the Corporation relied upon two decisions of the Andhra Pradesh High Court, i.e., Mohd. Basha and Others vs The Secretary, Regional Transport Authority and Another, and G. Shaikh Shavalli, Uravakonda and Others vs The Secretary, Regional Transport Authority, Anantapur and Another A.I.R. 1982 A.P. 296 in support of his contention that a special permit is not in any way different from a contract carriage permit. In the first case the question involved was whether it was open to a Regional Transport Authority to insist upon the furnishing of the names of passengers who were included in the contract. The High Court in that case held that the Regional Transport Authority was entitled to call upon the PG NO 455 applicant for a special permit to furnish the names of the passengers in order to satisfy itself that the application was a genuine application for the purposes mentioned in section 63(6) of the Act and was not intended to be a camouflage for using the vehicle unauthorisedly and in deciding the said case the learned Judge, who decided the case, no doubt referred to the common feature, that existed between a contract carriage permit and a special permit, namely, that the passengers could be carried in them only under a single contract without stopping to pick up or to set down along the line of the route passengers not including in the contract. In the second case the question was whether it was open to the holder of a special permit issued under section 63(6) of the Act to take his bus empty from his State into another State and to pick up passengers there and transport them to the end of their voyage, set them down at their starting point in the other State and drive the bus back to the home State empty. The High Court said that the holder of a special permit could not be permitted to do so since such a permit can be issued for carrying passenger or passengers for hire or reward in a contract express or implied for the use of the vehicle as a whole without stopping to pick up along the line of the route passengers not included in the contract. In these decisions it was enough to deal with one of the common features that existed in a contract carriage permit and in a special permit and the ratio of each of the said decisions depended on that common feature. There was no necessity to examine all the features of the two kinds of permits referred to above in order to determine whether they were the same for all intents and purposes. In neither of these two decisions the features that distinguished a contract carriage permit from a special permit have been considered. There was also no consideration of the question whether on the publication of an approved scheme under section 68 D(3) of the Act excluding the operation of contract carriages by persons other than the State Transport Undertaking concerned special permit under section 63(6) of the Act could or could not be issued. On the other hand there are two decisions of the Karnataka High Court where a special permit issued under section 63(6) of the Act has been held to be different from a contract carriage permit issued under section 51 of the Act. In S.R.M.S. Tourist Service Co., Bangalore and Others vs The Secretary, Regional Transport Authority, A.I.R. 1975 Karnataka 166 the State Government had published a scheme under section 68 C of the Act proposing to nationalise contract carriage services. The question for consideration before the Court was whether after the publication of the said scheme it was open to the Regional Transport Authority PG NO 456 to grant a special permit under section 63(6) of the Act. K. Jagannatha Shetty, J. (as he then was) taking into consideration the peculiar features of a special permit took the view that it was impossible to reach the conclusion that the Legislature intended to equate a contract carriage permit with a special permit and held that one was totally different from the other. He accordingly held that the publication of a scheme under section 68 C of the Act proposing to nationalise contract carriage service was not an impediment for the grant of permits under section 63(6) of the Act in respect of the routes covered by the scheme. In K.N. Sreekantaiah vs Deputy Transport Commissioner, Bangalore & Another, a Division Bench of the Karnataka High Court, has taken the view that a special permit issued under section 63(6) of the Act was different from a contract carriage permit issued under section 51 of Act. While doing so it approved the decision of Jagannatha Shetty, J referred to above. We are in agreement with the decisions of the Karnataka High Court. We hasten to add that the conclusions reached in the two Andhra Pradesh High Court decisions are also correct. It is open to the Regional Transport Authority if it wishes to do so to insist upon the furnishing of the names of passengers, who are proposed to be carried in a bus under the special permit for which an application is made and also that a holder of a special permit cannot run his bus empty to another State to pick up passengers, who are not covered by the contract, there, to drop them in that State at the end of the journey and to return to his own State where he had obtained the special permit in an empty bus, because these two conclusions are based on the condition to be found in section 63(6) itself which provides that a holder of a special permit cannot pick up or set down on the route passengers nor covered by the contract. In the present case the High Court of Bombay erred in not taking note of the distinguishing features that existed between a contract carriage permit and a special permit. it is significant that in the State of Maharashtra the Regional Transport Authorities had not taken the view until the High Court pronounced this judgment that in no event a special permit could be issued to a person other than the Corporation and the seven classes of persons who were excluded from the operation of the scheme. They were issuing special permits to such persons on the production of a `No Objection Certificate ' issued by the Corporation. A special permit could not be issued after the publication of the approved scheme even when the Corporation had issued a `No Objection Certificate ' because the scheme did not provide that the clause regarding exclusion of other persons from operating contract carriages would cease to operate if the Corporation PG NO 457 issued a `No Objection Certificate '. The insistence on he production of a `No Objection Certificate ' by the Corporation by a person applying for a special permit under section 63(6) of the Act was therefore wholly unwarranted. We are of the view that the provision in the scheme which excludes operation of contract carriage services by persons other than those who are permitted to do so under the Scheme refers to only those persons who wish to operated contract carriage services under permits issued under section 51 of the Act. The scheme does not in any way prevent the issuing of special permits under section 63(6) of the Act by the Regional Transport Authorities in accordance with law as it does not say that holders of special permits under section 63(6) would also be excluded from running the public service vehicles on the rates in question. It now becomes obvious that the decision in Adarsh Travels Bus Service and another vs State of Uttar Pradesh & Others, [1985] Supp. (3) S.C.R. 661 on which the High Court has relied has no application at all to the case on hand. That decision would have been relevant if a contract carriage permit and a special permit were of the same type. We, therefore, set aside the judgment of the High Court of Bombay against which this appeal is filed. Since the period in respect of which the special permit was sought has expired, there is no necessity to issue a writ directing the Regional Transport Authority to consider the application of the appellant for a special permit again. Hence, we do not issue any such direction. The true legal position has, however, been set out above. The appeal is accordingly disposed of. No costs. R.S.S. Appeals disposed of.

On November 29, 1973 the Government of Maharashtra Notified a scheme approved under section 68 D of the authorising the Maharashtra State Road Transport Corporation to operate contract carriage services in the entire area of the State of Maharashtra to the complete exclusion of all other persons except those falling under the seven categories mentioned therein. The appellant who did not belong to any one of the seven categories applied to the Regional Transport Authority for a special permit under section 63(6) of the Act on the route Bombay to Shirdi for five days. This application was rejected because the appellant had not produced a `No objection Certificate ' from the State Road Transport Corporation. It was held by the Regional Transport Authority that in the absence of a `No Objection Certificate ' no special permit could be issued under section 63(6) of the Act. The Maharashtra State Transport Appellate Tribunal allowed the appellant 's appeal holding that a special permit issued under section 63(6) of the Act was not a contract carriage permit issued under the Act and that the scheme did not have the effect of preventing any person from applying for a special permit under section 63(6) to operate a public service vehicle on any of the routes in the State. The Corporation filed a writ petition in the High Court against the Tribunal 's order. The High Court allowed the Writ Petition. Disposing of the appeal and setting aside the judgment of the High Court, it was, HELD: (1) A contract carriage permit and a special permit are not one and the same, though the special permit has some of the features of a contract carriage permit. [454E Fl (2) A Special permit is ordinarily taken to meet a need PG NO 448 PG NO 449 that exists for a few days like carrying a marriage party or persons going to a pilgrimage, etc. [454F] (3) The distinguishing features of the two types of permits are: (1) A permit for which an application is made under section 49 of the Act and which is granted under section 51 of the Act is called a contract carriage permit. A permit issued under section 63(6) of the Act is called a special permit; (2) while a contract carriage permit issued by a Regional Transport Authority of any one region is not valid in any other region unless the permit has been countersigned by the Regional Transport Authority of the other region as provided under section 63(1) of the Act, a special permit issued by one Regional Transport Authority under section 63(6) of the Act is valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or the other State as the case may be; (3) While the duration of a contract carriage permit is as prescribed under section 58(1) of the Act, a Special permit can be issued only for a specific period which may be for a few days only in accordance with the rules prescribed for that purpose; and (4) A contract carriage permit is renewable under section 58(2) of the Act, but there is no corresponding provision providing for renewal of a special permit. [454B E] (4) The provision in the scheme which excludes operation of contract carriage services by persons other than those who are permitted to do so under the scheme refers to only those persons who wish to operate contract carriage services under permits issued under section 51 of the Act. The scheme does not in any way prevent the issuing of special permits under section 63(6) of the Act by the Regional Transport Authorities in accordance with law as it does any that holders of special permits under section 63(6) would also be excluded from running the public service vehicles. [457B C] (5) The scheme does not provide that the clause regarding exclusion of other persons from operating contract carriages would cease to operate if the Corporation issued a `No Objection Certificate '. The insistence on the production of a `No objection Certificate ' from the Corporation by a person applying for a special permit under section 63(6) of the Act was wholly unwarranted. [456H; 457A B] Mohd. Basha and others vs The Secretary, Regional Transport Authority and Anr., ; G. Shaikh Shavalli, Uravakonda & Ors. vs The Secretary, Regional Transport Authority, Anantapur and Anr., A.I.R. ; S.R.M.S. Tourist Service Co. Bangalore & Ors. PG NO 450 vs The Secretary, Regional Transport Authority, A.I.R. 1975 Karnataka 166; K.N. Sreekantaiah vs Deputy Transport Commissioner, Bangalore & Anr., ; Adarsh Travels Bus Service & Anr. vs State of Uttar Pradesh & Ors. , [1985] Supp. 3 S.C.R. 661, referred to.

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Appeals Nos. 2269 and 2270 of 1966. Appeals by special leave from the judgment and order dated ' May 17, 1966 of the Commissioner of Wealth Tax, Andhra. Pradesh in J. No. Wt. 3(4) and 3(5) of 1959 60. A. K. Sen, B. P. Maheshwari and N. R. Kaitan, for the appellant (in both the appeals). section Mitra, G. Das, R. N. Sachthey and B. D. Sharma, for the respondent (in both the appeals). The Judgement of the Court was delivered by Shah, J. In proceedings for determination of wealth tax for the assesment years 1957 58 and 1958 59 the appellant Com pany claimed depreciation allowance on plant, building and machinery at the rates prescribed under the Income Tax Act and the Rules framed thereunder. The Wealth Tax Officer adopted the method prescribed by section 7 sub section (2) of the Wealth Tax Act and ' admitted the value of the assets as shown in the certified balance sheets on the respective valuation dates. In appeal, the Appellate Assistant Commissioner of Wealth Tax confirmed the order passed by the Wealth Tax Officer. The, Company then moved revision applications before the Commissioner of Wealth Tax under section 25 of the Wealth Tax Act. Against the order passed by the Commissioner of Wealth Tax rejecting the applications, the. Company has filed these appeals under article 136 of the Constitution. Against the orders of the Appellate Assistant Commissioner appeals lay to the Income tax Appellate Tribunal, but the Company preferred revision applications before the Commissioner. We do not ordinarily encourage an aggrieved party to appeal directly to this Court against the order of a Tribunal exercising judicial functions under a taxing statute, and thereby to bypass the normal procedure of appeal and reference to the High Court, but in the present case, it appears to us that a question of principle of great importance arises. We have entertained these appeals because in our judgment the, Commissioner of Wealth Tax has surrendered his authority and judgment to the Board of Revenue in deciding the questions which were sought to be raised by the Company in its revision applications. Section 25 of the Wealth Tax Act provides insofar as it is, material "(1) The Commissioner may, either of his own ,notion or on application made by an assessee in this 306 behalf, call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him, and may make such inquiry, or cause such inquiry to be made, and, subject to the provi sions of this Act, pass such order thereon, not being order prejudicial to the assessee, as the Commissioner thinks fit The power conferred by section 25 is not administrative it is quasi_judicial. The expression "may make such inquiry and pass such order thereon" does not confer any absolute discretion on the Commissioner. In exercise of the power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice : he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority. Section 13 of the Wealth Tax Act provides that all officers and other persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Board. These instructions may control the exercise of the power of the officers of the Department in matters administrative but not quasi judicial. The proviso to section 13 is somewhat obscure in its import. It enacts that no orders, instructions or directions shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner of Wealth Tax in the exercise of his appellate functions. It does not, however, imply that the Board may give any directions or instructions to the Wealth Tax Officer or to the Commissioner in exercise of his quasi judicial function. Such an interpretation would be plainly contrary to the scheme of the Act and the nature of the power conferred upon the authorities 'invested with quasi judicial power. The Commissioner appears, in our judgment, ' to have wholly misapprehended the true character of the jurisdiction with which he is by the Act entrusted and has surrendered his judgment to the directions of the Board of Revenue. The order sheet of the Commissioner (at pp. 10 36 of the printed Paper Book) bears,eloquent testimony to the manner in which the Commissioner has merely carried out the directions of the Board of Revenue, instead of deciding the case according to his own judgment. In entry dated December 31, 1959, there is a reference to the instructions contained in the Board 's Circular No. 7 D (WT) of 59 dated November 12, 1959 received on November 30, 1959. Under entry dated April 28, 1960 there is again a reference to the Board 's Circular No. 7 D of 1959 suggesting the manner in 307 which depreciation has to be worked out for the purpose of determining wealth tax. Again in the entry dated June 17, 1960 under item No. 4 it is stated that the Board 's instructions were, "specific on the point that no adjustment to depreciation relating to the period prior to March 31, 1957 should be made while determining the total wealth of an assessee on the basis of global valuation '. Under entry dated August 7, 1963, recorded by the Inspector, it is stated that "upon reference to the Board for instructions, it was recommended that the petitions be kept pending decision of the matter till" it was decided by the High Court in which the same question was raised. When on January 27, 1966, the Company requested that the applications be kept pending till the disposal of the reference application by the High Court for the assessment year 1959 60 in which a similar point was involved, the Commissioner was of the view that ' the application need not be kept pending, but still directed "write to the Board '. A letter was written to the Board and the Commissioner acted according to the directions of the Board, There is another entry dated March 14, 1966 which refers to the letter of the Board agreeing that the revision applications for the two years may be rejected, It is unnecessary to refer to any more entries made in the case sheet maintained by the Commissioner of Wealth Tax. From the inception of the proceedings the Commissioner of Wealth Tax put himself in communication with the Board of Central Revenue and sought instructions from that authority as to how the revision applications filed before him should be decided. He exercised no independent judgment. The Commissioner also recorded that the case did not require a personal hearing but since the Director of the Company had made a personal request for an interview it was "thought desirable" from "the point of view of public relations to give an interview. " Here also the Commissioner misconceived the nature and extent of his jurisdiction. Counsel appearing on behalf of the Commissioner of Wealth Tax in these appeals has not attempted to support the order under appeal. We set aside the order passed by the Commissioner and direct that the revision applications be heard and disposed of according to law and uninfluenced by any instructions or directions given by the Board of Revenue. The Company will get its costs in this Court. One hearing fee. R.K.P.S. Appeal allowed.

The Appellate Assistant Commissioner of Wealth Tax confirmed an orde Passed by the Wealth Tax Officer as regards the method adopted by the latter in dealing with a claim for depreciation allowance made by the appellant company in the course of its assessment to wealth tax. The appellant company thereafter moved revision applications before the Com, missioner under section 25 of the Wealth Tax Act and the Commissioner rejected these applications on the basis of certain directions issued by the Board of Revenue. On appeal to this Court by special Leave, HELD : The order passed by the Commissioner must be, set aside and 'the revision applications must be heard and disposed of according to law and uninfluenced by any instructions or directions given by the Board of Revenue. [307 G H] It Was clear, on the facts, that from the inception of the proceedings, the Commissioner put himself in communication with the Board of Central Revenue and sought instructions from that authority 'as to bow the, revision applications filed before him should be decided. He had exercised no independent judgment. The Commissioner appeared to have misapprehended the true character of the jurisdiction with which he is by the Act entrusted and surrendered his judgment to the directions of the Board of Revenue. [306 F G; 307 E G] The power conferred by section 25 is not administrative : it is quasi judicial. In exercise of this power the Commissioner must bring to bear an unbiased mind. consider impartially the objections raised by the aggrieved party. and decide the dispute according to procedure consistent with the principles of natural justice; he cannot permit his judgement to be influenced by matters not disclosed to the assesseee, nor by dictation of another authority. Any orders or instructions given by the Board and required to be followed under section 13 by officers employed in the, execution of the Act may control the exercise of their power in matters administralive but not quasi judicial. Although the proviso to section 13, which. is somewhat obscure in its import, enacts that no orders shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions, it does not thereby imply that the Board may give such orders to the Wealth Tax Officer or to the Commissioner in exercise of his quasi judicial function, Such an interpretation would be plainly contrary to the scheme of the Act and the nature of the power conferred upon the authorities invested with quasijudicial power. [306 B F] 305

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Appeal No. 424 of 1958. Appeal from the judgment and decree dated April 25, 1950, of the Madras High Court in A. section No. 67 of 1947. K. Bhimasankaram and. K.R. Chaudhuri. for the appellants. T. V. R. Tatachari, for respondents Nos. 1 to 3. P. Ram Reddy, for respondent No. 9. M. R. Krishna Pillai for respondent No. 24. September 18. The Judgment of the Court was delivered by SHAH J. One Thammiah had two sons Gangaraju and Ramayya and four daughters Ammanna, Sesbamma, Gangamma and Bbavamma, of these, the two sons and the daughter Ammanna .died during Thammiab 's life time. Gangaraju left him surviving his widow Cbetamma and Ramayya his widow Venkamma. Ammanna was survived by her son Rudrayya, who was brought up by Thammiah. Thammiah died in 1885, Seshamma in 1904, Gangamma in 1930 and Bhavamma in 1935. After the death of Bhavamma, Paddaraju (herein after called the plaintiff), son ' of Gangamma filed Suit No. 53 of 1944 in the court of the Subordinate 655 Judge at Rajamundhry against the descendants of Seshamma and Ammanna for a decree for partition and separate possession of a third share in 17 lands, described in Schedule B to the plaint as "agricultural land and measuring in the aggregate 51 acres 72 cents in Patta No. 12 in village Pandalpaka in Pitbapur Zamindari" and in Schedule IC ' described as three houses with sites thereof in village Pandalpaka,. To this suit Jaggarayudu and Paddaraju, sons of Venkataraju brother of the plaintiff were impleaded as defendants 31 and 32. The plaintiff claimed that Thammiah owned occupancy rights in the ryoti lands in the Pithapuram Zamindari and that after Thammiab 's death the lands were managed with the permission of the plaintiff and his brother Venkataraju, in the first instance, by the two daughters in law of Thammiah Chetamma and Rammanna, son of Seshamma and their "possession and management was on behalf of heirs and persons entitled to maintenance out of the estate" and that the right to sue for ' partition accrued on the death of Bhavamma on March 18, 1935. The suit was resisted by the descendants of Seshamma and Annamma principally on the plea that in the lands described in Schedule "B 'Thammiah had not proprietary right and that occupancy right therein accrued to Rudrayya and Veeriah (husband of Seshamma) by virtue of the Madras Estates Lands Act, 1908. It was also pleaded that Thammiah had made an oral will devising his estate in favour of Veeriah who was his illatom son in law and Rudrayya in equal shares. This plea about the oral will was negatived by the Court of First Instance and, the High Court and need no longer be consi dered, because it is not canvassed be fore us in this appeal. The trial Court held that Thammiah had no proprietary interest in the lands in Schedule 'B ' and on that view decreed the plaintiff 's claim for partition of the houses and sites described in Schedule IC ' only and awarded a third share to him, 656 another third share to Ramanna and the remaining third share collectively to defendants 31 and 32sons of Venkataraju. in appeal, the High Court of Madras modified the decree of the trial court holding that in the agricultural lands Thammiah had occupancy rights which on his death devolved on his surviving daughters, and directed that those lands be also partitioned, and that a third share be awarded to the plaintiff and a third share to defendants 31 and 32 together with mesne profits from March 18,1935. the date of Bhavammas death. With certificate under article 133, this appeal is preferred by the descendants of Seshamma and Ammanna. The principal question which falls to be determined in this appeal is whether Thammiah had, as claimed by the plaintiff, occupancy rights in the lands described in Schedule 'B ', or as the contesting defendants contend, Thammiah was an annual tenant of the zamindar and that after his death the lands were held on similar tenure by different members of the family of Thammiah and that the occupancy right was acquired by Rudrayya and Veeriah by virtue of the Madras Estates Lands Act, 1908. The lands are within a permanently settled zamindari under Madras Regulation XXV of 1802, and it is common ground that Thammiah was cultivating the entire area of the lands during his life time. There is no evidence indicating that his possession was ever disturbed during his life time. There is again no evidence about the commencement of the occupation of Thammiah or his pre decessors : commencement of their occupation is therefore lost in antiquity. The lands are described in the various documents, to which we will presently refer, as "jeeroyati landie ' Thammiah as "jeeroyati ryot", and after his death his daughters in law and grandson Ramanna were similarly described. Three documents Exts. D 1, D 2 and D 3which establish that Thammiah was cultivating the lands throw important light on the problem under 657 discussion. Exhibit D 1 is a muchilika dated July St 1, 1883, executed by Thammiah in favour of the zamindar. Exhibits D 2 and D 3 are similar muchilikas dated respectively August 10, 1884, and July 15 1885. Each of these muchilikas is in respect of the seventeen pieces of lands described in Schedule "B ' and the 'cist ' settled is Rs. 419/8/ . The terms of the three muchilikas are identical. Thammiah is described in the muchilikas as "jeeroyati ryot" and the lands are described as "jeeroyati pampus". It is recited in the muchilikas "I have executed and delivered this muchilika agreeing that I should pay the said cist amount of Rs. 419/8/every fasli according to the instalments mentioned hereunder to the Officials on your behalf and to obtain receipts;. . . that during the last year of the term, I should not raise gingelly or chiruyeru crop on these pampus but that I should leave sufficient land for purposes of garden cultivation and seed beds; that I should not cut down any, kind of trees without your permission; that I should not raise permanent gardens or construct houses on these lands without your permission; that I should not cause damage to these lands so as to make them unfit for cultivation purposes; that if at the of the term you should lease out these pampus to anyone, whom you like, for a cist amount advantageous to you, I should not raise objection thereto; that if you had leased out these lands to other ryots for the ensuing year after the expiry of the term, and if 'the said ryots should carry on necessary works for purposes of cultivation during the ensuing year by way of ploughing seed beds, sowing seeds and planting tender sugarcane even before the expiry of this term, I should leave sufficient land to them without raising any objection whatsoever. " By the covenants of the muchilikas Thammiah had undoubtedly undertaken not to raise certain crops, nor to cut trees, nor to put up permanent constructions and had also undertaken to give certain facilities to other tenants 658 inducted in the lands by the zamindar. The evidence does not justify the inference that Thammiah was inducted on the land by Ext. There is even no evidence that the land was acquired from the, zaminder by the members of Thammiab 's family or that the ancestors of Thammiah were not on the land before the zamindari rights accrued to the zamindar. It is also not didputed that land 1, in zamindaries in the Madras Presidency were even held in occupancy right by many ryots before the Madras EstateB Lands Act, 1908, was enacted. As observed in Venkata Narasimha Naidu vs Dandamudi Kotayyo(1) at 301 that "there is absolutely no ground for laying down that the rights of ryots in zamindaries invariably or even generally had their origin in express or implied grants made by the zamindar. The view that in the large majority of instances, it originated otherwise is the one most in accord with the history of agricultural land holding in this country. For, in the first place, sovereigns, ancient or modern, did not here set up more than a right to a share of the produce raised by raiyats in lands cultivated by them, however much that share varied at different. times. And, in the language of the Board of Revenue which long after the Permanent Settlement Regulations were passed, investigated and reported upon the nature of the rights of ryots in the various parts of the Presidency, "whether rendered in service, in money or in kind and whether paid to rajas, jagirdars, zamindars, poligars, mutadars, shrotiemdars, inamdars or to Government officers, such as tehaildars, amildars, amins or thannadars, the payments which have always been made are universally deemed the due of Government. . Therefore to treat such a payment by cultivators to zamindars as 'rent ' in the strict sense of the term and to imply therefrom the relation of landlord and tenant so as to let in the presumption of law that a tenancy in general is one from year to year, would be to introduce (1) Mad.a 299. 659 a mischievous fiction destructive of the rights of great numbers of the cultivating classes in this province who have held possession of their lands for generations and generations. " It was also observed in that case (at p. 303), ",It thus seem unquestionable that prima facie a zamindar and a raiyat are holders of the melvaram and kudivaram rights, respectively. When, therefore, the former sues to eject the latter, it is difficult to see why the defendant in such a case should be treated otherwise than defendants in possession are generally treated, by being called upon, in the first instance, to prove that they have a right to continue in possessions The right to occupy land under the revenue system prevailing in Madras may arise by reason of the customs in the district in which they are situate. In any event, there is no presumption that the holder of the land under a Zamindar is a tenant at will. In each case the rights of the ryot have to be ascertained in the light of the facts proved. In Appa Rau vs Subbanna (1), Muttusami Ayyar and Wilkinson, JJ., were called upon to consider whether a zamindari ryot could mortgage his interest in his holding. It was observed in that case that " 'According to the course of decisions, therefore, in this presidency the landlord may determine the tenancy if there is a contract, express or implied, by exercising his will in accordance with his obligations; that there is no presumption in favour of a tenancy at will; that an occupancy right may exist by customs; that a pattadar or raiyat in a mitta is entitled to continue in possession so long as he regularly pays rent 'and has a saleable interest, and that by reason of special circumstances in evidence the onus of proof may be shifted, even in regard to a permanent occupancy right, from the tenant to the landlord. " The court also observed that it would be ,,monstrous to hold that every tenant in a zamindari is presumably a tenant at will". (1) (1889) 1. L. R. 660 In Vencata Mahalakshmamma vs Ramajogi (1), a zamindar served a notice upon the defendant, who was a cultivating ryot in the zamindari calling upon him to deliver possession of his holding, and on default of compliance sued to evict him from his holding. The defendant pleaded that he and his ancestors had been "jiroyati ryots" of the holding from times immemorial. According to the High Court, the zamindar having failed to prove that the ryot 's tenancy had commenced under the zamindar or his ancestors, the suit should be dismissed. The court observed that "in cases. in which the raiyats ' holding is not shown to have commenced subsequent to the permanent settlement, and when upon the evidence, it is possibly as ancient as the zamindari itself, the principle laid down with reference to tenancies which admittedly commenced under the zamindar" had no application, and that "in such cases it is not unreasonable to hold that the onus of showing that the tenancy commenced under the plaintiff or his ancestors rests on the zamindar, and that until he shows it, the zamindar may be fairly presumed to have been the assignee of Government revenue, and the tenant liable to pay a fair rent and entitled to continue in possession as long as be regularly pays rent. In Yenkata Narasimha Naidu vs Dandamudi Kotayya(2), which we have already referred, it was held that a ryot in a permanently settled estate is prima facie not a mere tenant from year to year but the owner 1 of the kudivaram right in the land he cultivates, and in a suit in ejectment, the zamindar "is to prove that the kudivaram right in the disputed land subsequently passed to the defendant or some person through whom he claims under circumstances which give the plaintiff the right to eject. " The Court observed that there is no substantial analogy between an, English tenant and an Indian ryot for the right of ryots came into existence ' (2) Mad. 661 mostly, not under any letting by the Government of the day or its assignees, the zamindars, but independently of them, according to the Indian: traditions such right were generally acquired by, cultivators entering upon land, improving it and. making it productive. After referring to the judgment of Turner, C. J., and Muttusami Ayyar, J., in Siva Subramanya vs The Secretary of State for India(1), that the Hindu jurisprudence rested private property, on occupation as owner, and to Secretary of State vs Vira Rayan(2) that the right to the possession of lands acquired by the first person who makes a beneficial use of the soil, it was observed that the well known division in the, Madras Presidency of the great interests in land under two main beads of the melvaram interest and the kudivaram interest made the holder of the kudivaram right, far from being a tenant of the holder of the melvaram right, a co owner with him. In Cheekati Zamindar vs Banasooru Dhora and others(3), Shephard, J., observed at p. 322, "Many of the occupants of zamindari lands are not tenants in the proper sense of the word, and the fair presumption is that, when new occupants are admitted to the enjoyment of waste or abandoned lands, the intention is that they should enjoy on the same terms as those under which the prior occupants of zamindari lands held. It is open to the zamindar to rebut the presumption. He may show as was shown in Achayya vs Hanumantrayudu (4) that the usual condition of things does not prevail in his estate or he may adduce evidence as to the particular contract made between him and his tenant. In other words, he may show that the terms of the contract were different from those which ordinarily prevail between a zamindar and the occupant of zamindari lands. " Subrahmania Ayyar, J. observed, "Practically the whole of the agricultural land there (1) mad. (2) Mad. (3) (1899) 1. L. R. (4) (1891) 1. L. R. 662 is not cultivated by persons who merely hire it for a limited time. The raiyats most generally hold by no derivative tenure. And even where the right to cultivate passes to them from zamindars the payment made by them, in the absence of a contract, is regulated by custom in the last resort, as provided in section 11 of the Rent Recovery Act. The raiyats are generally entitled to hold the lands for a unlimited time, that if; as long as they wish to retain it subject to the performance of the obligations incident to the tenure. Nor can it be said that this is true only in regard to so much of the land in the hands of the raiyats as cannot be shown to have been obtained by them from zamindars. For in the case of lands which have been relinquished by the former occupants or which have been lying waste from time immemorial, they too, when taken up by a raiyat, are treated exactly on the same footing as land into the possession of which it is not shown that the raiyat was let in by a zamindar, and the raiyat holds possession of them for an indefinite period". In Kumbham Lakshmanna and others. vs Tanjirala Venkateswarlu and Others (1), the Judicial Committee of the Privy Council held that in a suit to eject the tenant of an inamdar from his holding the burden is on the plaintiff to make out a right to evict by proving that the grant included both the melvaram and the kudivaram interests, or that the tenants or their predecessors were let into possession by the inamdar under a terminable lease. The dispute in that case was between inamdars and a tenant and had to be decided by the Civil Court, for having regard to the definition in a. 3(2) (d) of the Madras; Estates Land Act, 1908, the Act did not apply to inamdars. By section 6 of the Act it having been provided that ",every ryot now in possession or who shall hereafter be admitted by a landholder to possession of ryoti land situated in the estate of such landholder shall have a permanent right of occupancy in his holding," (1) (1949) L. It. 76 T. A. '202. 663 all tenants in possession of land at the date on which the Act came into operation, were declared to be holders of permanent occupancy rights, but the Act did not justify the inference that the holders prior to that date did not and could not hold occupancy rights. The Privy Council was of the view that in any action by an inamdar to evict his tenants and by a zamindar prior to 1908 to evict his raiyats from their holdings, the burden was on the plaintiff to make out the right to evict by proving that the grant included both the melvaram and the kudivaram interests or that the holders of land or their predecessors were let into possession by the inamdar or the zamindar under a terminable lease. The Privy Council judgment, therefore, recorded its approval to the view expressed in the earlier cases to which we have referred. But counsel for the respondents contended that this was not a suit between a zamindar and a ryot and the rule as to the onus of proof in a suit as between a zamindar and a ryot did not apply where the suit was filed by a person like the plaintiff claiming a share in the occupancy right in land in possession of the defendants, and unless the plaintiff establishes affirmatively that the common ancestor was before 1908 in possession as an occupancy tenant, his suit must fail. We do not think that this is a permissible approach. The presumption which arises in a suit by a zamindar against a ryot for possession of the letter 's holding, rests not on the narrow ground of burden that whoever alleges title and claims relief on that footing must establish it ; the presumption has its roots in the system of land tenure and in custom of the area in which the lands are situate, and applies in a suit between persons claiming under the ryot, as well as in a suit against the ryot by the zamindar. Counsel for the respondent relied upon certain circumstances which appeared from the evidence 664 as lending support to the plea of the contesting defendants that the lands were not held by Thammiah in occupancy right. Reliance was placed upon the covenant in Exts. D 1, D 2 and D 3 that the zamindar may on the expiry of the year of the muchilika, let out the lands to any tenant at "cist" advantageous to the, zamindar. It is true that in Exts. D 1, D 2 and D 3 it is recited that if at the end of the terms of the muchilika the zamindar should lease out the land to any one for a "cist" advantageous to hina, Thammiah would not object thereto, and he further agreed that he would leave sufficient land, without raising any objection, for the ryot to carry out the necessary work for cultivation during the ensuring year. But such a covenant is by itself not sufficient to justify the inference that the ryot 's tenure was precarious. It appears that since the decision of the Madras High Court in Chockaling Pilli vs Vythealinga Pundara Sunnady (1) that neither the rent Recovery Act, nor the regulations operated to extend a tenancy beyond the period secured by the express or implied terms of the contract creating it, the zamindars were accustomed to take muchilika or other writings from their ryots admitting notwithstanding the true nature of their rights, that their tenure was restricted or precarious. In Vencata Mahalakshmamma vs Ramajogi (2), in dealing with a muchilika executed by a ryot for a period of one year only, Muttusami Ayyar J., observed, "Neither a patta nor a muchalka granted or executed under Act VIII of 1865 during the continuance of the holding is conclusive evidence that the holding is a tenancy from year to year. A patta or muchalka is ordinarily nothing more than a record of what the tenant has to pay for a particular year with reference to the pre existing relation of landlord and tenant. The fact cannot also be lost sight of that the zamindar is always a man of education, status and influence and often exercises (1) (2) (1892) 1. L. R. 665 revenue power and control over the village records. On the other hand, the raiyats are illiterate persons and it would be easy enough to get them sign anything as long as there is no attempt to interfere with their actual occupation and enjoyment of the land.". It would be unreasonable, therefore, to attach any undue important to the recitals of the, nature contained in Exts. D 1, D 2 and D 3. The Privy Council in Kumbham Lakshmamma 's case referred to the practice among zamindars of taking muchilikas from ryots negativing the existence of the occupancy rights as being prevalent and to the judicial recognition of such a practice in Peravali Kotayya V. Pnnopalli Ramakrishnayya (2) and Zamindar of Chella palli vs Rajalapati Somayya (3). The Judicial Committee referred with approval to the observations of Wallis, C.J., in the latter case to the effect : "In this connection it is to be borne in mind that numerous instances have come before the courts in which subsequent to the decision of in inserting in pattas and muchilikas terms negativing the existence of occupancy right". and pointed out that they could not neglect the consideration that a ryot so long as he is not evicted, might be prepared to sign anything and that the evidential value of such a contract should be judged accordingly. It is true that if there were some reliable or substantial evidence to show that the tenancy had commenced after the zamindari rights accrued or that 'otherwise the tenant 's right was restricted, the value to be attached to the reci tals of 'the nature set out may be greater ; but there are no circumstances in this case lending strength to the recitals contained in Exts. D 1, D 2 and D.3. After the death of Thammiah, muchilikas were obtained 'and pattas granted by the zamindar not in favour of the daughters ' of Thammiab, who were under the Hindu Law his heirs, but in favour (1) (1949) L. R. 76 I. A. 202. (2) (4) 666 of his daughters in law, in the first instance, and thereafter, in favour of one of the daughters in law and Ramanna, grandson of Thammiah. These documents are Exts. D 4, D 5, D 5 (a), D 6 and D 8. Ext 1 @ 4 is a muchilika executed on August 15, 1891 by Venkamma and Chetamma, daughters inlaw of Thammiah. D 5 is another ' muchilika executed on August,, 15, 1893 by Venkamma and Chetamma. Each of these muchilikas is for period of one year. D 5 (a) is a patta executed on October 10, 1893 by the zamindar corresponding to muchilika Ext. exhibit D 6 is a patta executed on May 21, 1904, by the zamindar in favour of Chetemma and Ramanna minor by his guardian Veeriah and there% is Ext. D 8 which is a patta dated January 16, 1906 also in favour of Chetamma and Ramanna. All these muchilikas and pattas related to the same seventeen pieces of land which were originally in the possession of Thammiah, and the covenants thereof are identical. It is true that in respect of the first two inuchilikas the ryots were Chetamma. and Venkamma, and in Exta. D 6 and D 8; the ryots were Chetamma and Ramanna. Counsel for the defendants asks us to infer from Exts. D 4 to D 8 that the zamindar had at the end of the year for which the muchilikas or pattas were executed exercised his right of eviction and had taken possession of the lands and had given them to other persons of his own choice. But it is difficult to draw that inference in the absence of any reliable evidence that the zamindar had evicted ryots who had executed the muchilikas and had then inducted fresh ryots on the land. The reason why Venkamma was omitted after 1893 from the muchilikas and pattas of the land and in her place Ramanna was substituted will be presently mentioned. After the death of Thammiah, his rights in the land would undoubtedly devolve by the law of inheritance upon his surviving daughters with limited interest. But the fact that muchilikas were taken from persons who were strictly not heirs according to Hindu law, but were still 667 representatives of the family, will not justify an inference that the right of the original ryots were extinguished and fresh rights in favour of persons who executed muchilikas were created. The two daughters in law Chetamma and Venkamma after the death of Thammiah, continued to live in the. family house together with Sesharama. Veerayya and Rudriah, and it is not unlikely that the zamindar regarded the two daughters in Law as representatives of the family and took muchilikas from them. there is no warrant for the inference that they were inducted on the land in independent right by the zamindar arid not as representatives of the descendants of Thammiah. The learned Judges of the High Court observed that "in 1895 (when Ext. D 4 was executed) in country parts like Pandalpaka, it is too much to assume such a second knowledge of Hindu law. Besides, Venkamma and Chetamma were, admittedly, living a,long with Veerliah and Rudrayya and Ramanna and Bhavamma during Thammiah 's life time, and continued to live in that some 'house after his death . So, we have no doubt that the Maharaja of Pittapur, the zamindar, never intended.in the least to take away the B Schedule lands from Tammayya 's heirs and given them to Venkamma and Chittemma who were not heirs and we hold that he renewed the patta in favour of these two windows, as they were considered by him to be representing Tammayya 's estate, being his widowed daughters in law. our view, this in the circumstances of the case, is a correct inference. It appears that after 1895 there arose disputes between Veeriah and Venkamma and it was arranged to provide maintenance to Venkamma out of the estate of Thammiab. , Ext. P 1 dated May 16, 1.899 records the terms on which maintenance was granted. This document has a very importal Lt bearing on the question which falls to be decided in this appeal. 1 b is received i@.a E2:t. P 1 that all the properties of Thammiah had, devolved,, after 668 his death, upon his "dowbitras" (daughter 's sons), Rudriah and Ramanna and that the two "dowhitras" were bound to maintain the widowed daughters in law Chetamma and Venkamma and that accordingly they. were being ' maintained, but a Venkamma was unwilling to live in the family house, it. Was decided to give her for maintenance expenses Rs.25 and 240 kunchams of white paddy per year besides a house, for residence. This deed recites that out of the estate of Thammiah the two widows Chetamma and Venkamma were in fact being maintained that the estate was inherite I by Rudriah and Ramanna, and recognises the right of the widows to receive maintenance out of the estate. There is no evidence on the record that besides the lands mentioned in Schedule 'B ' there was any other agricultural land of which Thammiah was possessed and which had devolved upon Rudriah and Ramanna. It is admittedly out of the property of Thammiah which had devolved upon Rudriah and Ramanna that maintenance was agreed to be given, and if Thammiah was not possessed of any property other than the lands in Schedule "B ', Ext. P 1 must lend strong support to the inference that the lands in Schedule 'B ' were regarded at the date of the maintenance deed as belonging to the estate of Thammiah out of which Venkamma was entitled to maintenance. The assumption that the property had, devolved upon Rudriah and Ramanna is evidently not true. long as the daughters or any of them were alive, they were, according to the Hindu law applicable to the Madras Presidency, owners, though for their lifetime only, of the estate left,. by Thammiah. P 1 does therefore land support to the case of the plaintiff that the property was regarded as belonging to the family in which all persons who were living in the house of Thammiah, including the two daughters in law., had;, interest. After. maintenance was provided to Venkamma by Ext. P 1 her name was omitted from the muchilikas and the pattas subsequently Pattas D 6 and 669 D 8 are as we 'have already stated, 'in favour of Chetamma and Ramanna. It is true that rent was enhanced by the zamindar from time to. time under the muchilikas. During the life time of Thammiah the annual rent was Rs. 419 8 0 and it .remained unchanged, but after his death the rent, even though the area 0f the land continued to be ' the same, was enhanced to Rs. 481 8 0 under Ext. There is some error in totaling tip the amount of rent,, but the enhancement of rent by Rs. 52 is substantially the result of alteration of rent of Sr. No. 315. Originally the rent of Sr. No. 315 was Rs. 29 3 9: it was enhanced to Rs. 81 3 9. under Ext. D 5 the rent is Rs 537 (it should have, been Rs. 473), but that again, is the result of some error in totaling, the only enhancement being in respect of No. 358 which was increased from Rs. 5 to Rs. 6 8 0. 'In Ext, D 6 of the year 1904 the rent of this land was enhanced to Rs. 60 8 0 and rent in respect of, Sr. No. '315 was enhanced to Rs. 91 3 9. The High Court has held that this enhancement of rent of the two lands Nos. 315 and 358 was presumably because the lands were irrigated, and, having regard to the circum stances, we think the inference of the High Court is correct. Enhancement of rent of the lands from time to time does not lend support to the inference that fresh pattas and muchilikas were not in recognition of the previous rights. It is, pertinent to note that in the records of the zamindar all the muchilikas in respect of the lands bore No. 12, during the life time of Thammiah and after his death they bore No. 23. The circumstance that the same area of land remained in the occupation continuously of the family of Thammiah under Exts. D 1 to D 8 for a period exceeding 25 years also lends support to the plea of the plaintiff. It is true that by his notice Ext. D 7 the zamindar called upon Ramanna and Chetamma to vacate. the kumatam (which term is translated by the learned counsel for the respondent as home farm) lands of the extent of 51 acres 72 cents. But by the year 670 1905 it was well known that legislation of the nature,which was ultimately enacted as the Madras Estate Land Act, 1908, was on the legislative anvil and no reliance can be placed upon the statements made in the notice which does 'not appear to have been followed by proceedings, for enforcement of the claim to possession. It is common wound that on January 16, 1906, the zamindar issued in favour of Chetamma and Ramanna a patta in respect of the same lands.for an annual rental of Rs. 578 4 0, rent having been enhanced in respect of Sr. No. 46 and 358 only. The High Court placed strong reliance upon the circumstances that in all the muchilikas and pattas the lands were described as "jeroyati lands" and the tenants were described as "joroyati ryots". The High Court observed that "jeroyati ryot" was a well known term indicating prima: facie posses sion of occupancy rights. However, the state of the authorities in the Madras High Court to which cur attention his been invited does not justify as in expressing any definite opinion on that plea. In Zamindars of Bodokimidy vs Badankayala Bhimayya(1), Curgenven, J. held that the phrase "on jirayati tenure ' is only used where occupancy rights exist. But beyond the bare statement in the judgment that "the phrases" on jirayati tenure being so far as my experience goes, only used where occupancy rights exist", there is no further elaboration in the judgment. In (Ivaturi) Lingayya Ayyavaru vs Kandula Guningiah (2), Wallace, J., without referring to the earlier judgment of Curgenven, J., observed that the term "jeroyatidar" did not imply that; the executant was an occupancy ryot. Here also no reasons appear to have been given in support of the view. In Dadamudy Tatayya vs Kelachina Venkatasubbarayya Sastri (3), Devadoss, J., in the course of hearing in appeal called for a finding from the (1) A.I.R 927 Mad. (2) A.I.R. 1928 Mad. 58. (3) A.I.R. 1928 Mad. 671 trial Court as to the meaning of the word jeroyati" as used in the Vuyyur Zamindari and as to the meaning of the expression "savaram jeroyiti" used in documents in that estate. The Subordinate Judge recorded evidence on the question referred to him, and observed after referring to Brown 's Dictionary and Wilson 's Glossary, that the word " 'jeroyiti land" may mean "cultivable or arable land", but it was only the context that must decide which meaning was to be given to the word. He also observed that the word " 'jeroyiti" especially when prefixed to the word " 'right" or hakku had come to mean "rights of occupancy". This report of the Subordinate Judge, it appears, was accepted by the High Court. These are the only decisions of the Madras High Court to which our attention was invited. The task of this Court, in ascertaining the special meaning which an expression used in the revenue administration and by the residents of a certain area has acquired, is indeed difficult. If the expression "jeerayot" is a local variation of "Zeerait" used in the revenue administration, especially in Northern India, it may mean " assessed" land, or "agricultural" land. On the material.% placed, we are unable to express any definite opinion on this part of the ease of the plaintiff. To summarise, there is no evidence to show that occupation of the lands by Thammiah commenced under the zamindar ; and there is no evidence as to the terms on which Thammiah or his predecessors were inducted on the lands: the commence ment of the tenancy and the terms there of are lost in antiquity, but Thammiah and his descendants are proved to have continued in possession of land uninterruptedly till the enactment of the Madras Estates Land Act, 1908. In the light of the presumption that the zamindar is, unless the contrary is proved, the owner of the melvaram and the ryot the owner of the kudivaram the inference is irresistible that Thammiah was the holder of the 672 occupany rights in the lands and that these rights devolved 'upon,. his successors and that the, occupancy rights in the lands were not acquired by virtue of the provisions of Madras Act 1 of 1908. Before parting with the case a minor question relating to mesne profits awarded to the plaintiff ,and defendants 31 and 32 must be mentioned. By his plaint the plaintiff claimed mesne profits in respect of his share for three years prior to the date of the suit. He valued the claim for mesne profits at Rs. 3,800 past profits on plaintiffs 1/3rd share for two years 1940 and 1941 at Rs. 2,280 and past mesne profits on plaintiff 's 1/3rd shares for the year 1942 at Rs.1,520. The trial court dismissed the plaintiff 's suit as to his share in property described in Schedule 'B '. The High Court in awarding a third share to the plaintiff and another third share to defendants 31 and 32 collectively also awarded past mesne profits from the 18th of March, 1935, i.e., the date of the death of Bhavamma, alone with future mesne profits regarding the shares in the B and the C Schedules properties. But the High Court could not award mesne profits prior to August, 1940 which had never been claimed by the plaintiff in the suit. We therefore modify the decree of the High Court and direct that mesne profits 1940. Subject to that modification the decree passed by the High Court is affirmed and the Appeal is dismissed with costs payable by the contesting defendants to the plaintiff. Appeal dismissed subject to modification.

The lands in question which were within the permanently settled Zamindari in the then presidency of Madras, belonged to T who, during his lifetime, was cultivating the lands. He died in 1885 leaving behind, inter alia, three daughters. After the death of the three daughters, the last having died in 1935, the sons of one of them instituted a suit against the descendants of the other two for partition and separate possession of a third share, inter alia in the lands in question on the footing that T owned occupancy rights in the lands. The suit was resisted on the plea that T had, no proprietary right in the lands, that he was only an annual tenant of the Zamindar, that after his death the lands were held on similar tenure by different members by his family and that occupancy rights were acquired by those members of his family who were in possession of the lands when the Madras Estates Land Act, 1908, came into force in 1908. There was no evidence to show that the occupation of the lands by T commenced under the Zamindar, nor was there any evidence as to the terms on which he or his predecessors were inducted on the lands, the commencement of the tenancy and the terms thereof being lost in antiquity, but he and his descendants were proved to have continued in possession of the lands uninterruptedly till the enactment of the Madras Estates Land Act, 1908. Held, that in cases in which a ryot 's holding is not shown to have commenced subsequent to the permanent settlement, the presumption is that Zamindar was only the holder 654 of the melvaram being the assignee of the Government revenue, and that the kudivaram in the land belonged to the ryot who Was entitled to continue in possession as long as he paid the rent regularly; and that this principle was applicable equally in a Suit between persons claiming under the ryot as in a suit against the ryot by the Zamindar. Case law relating to the rights of ryots in Zamindaries in the Madras Presidency reviewed. Held, further, that T was the holder of the occupancy rights in the lands, , that these rights devolved upon his successors and that the said occupancy rights were not acquired by virtue of the provisions of the Madras Estates Land Act, 1908.

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Review Petition No. 104 of 1980. Review Petition against the Judgment and order of this Hon 'ble Court dated 7 5 1980 and 9 5 1980 in CMP. No. 1219/80. Kapil Sibal and R. section Sodhi for the Petitioner. 169 R.K. Garg and P.C. Bhartari for Respondent No. 3. The order of the Court was delivered by KRISHNA IYER, J. A simple petition to review an earlier judgment of this bench has, because of the intervening summer vacation, passed through vicissitudes, gathered episodes and been blown up into an exciting chronicle of unsavoury events, injecting more passion than reason, more heat than light, into the forensic proceedings. We kept completely clear of the unhappy imputations and confined counsel to the merits of the review proceeding before us. 'Justice discards party, friendship, and kindred and is therefore represented as blind '. This objectivity generated clarity and brevity, thanks, of course, to cooperation by counsel on both sides. The facts are few although the fight is furious and the parties are army officers. It is a pity that careerism makes camaraderie a casualty in a profession where self sacrifice for a higher cause is the dedication. Without moralising, we will state the grievance of the petitioner and examine whether our earlier order deserves reconsideration or reversal. Judges have a vested interest not in their judgments but in the justice of the cause and where the former is in error must unhesitatingly suffer surgery so that no curial wrong is done and right, to the best of our lights, is done. Two colonels in the army have one post of brigadier to which either may aspire and become Director of Military Farms. In this musical chair scenario the (review) petitioner apprehending that the Central Government was considering a ' change of policy departing from the 1964 policy, in choosing the officer to become brigadier in charge of the military farms, moved the High Court for a writ to issue to Government against any such new policy. The High Court, before it finally disposed of the case, had directed the Defence Department to select the best colonel to be promoted as brigadier and Farm Director. The selection so made was to be without prejudice to the result of the writ petition but it is significant that the report made was that both the contesting colonels were equal in merit (to run cattle farms?) but the respondent (in the review petition) being senior as colonel may be chosen for, the post Merit being equal, seniority tilts the scales fair enough. Eventually, the High Court considered the legal import of the 1964 policy and allowed the writ petition which meant that the (review) petitioner would become the brigadier. The respondent colonel rushed to this court for special leave to appeal which was granted, and, after hearing both sides and the learned Attorney General for the Central Government, this court passed a final order. We see no reason, whatever to depart from that judgment 170 and no basic flaw therein has been pointed out either. It was plainly laid down that no finality nor infallibility attached to the '1964 policy ' and the Central Government was free to revise or reverse that policy 'provided it acts justly and fairly '. A month 's time to evolve a new policy, if felt necessary, was granted to Government and the learned Attorney General agreed to abide by this direction. Three factors need more than passing notice. The Defence Ministry the file had been shown to us at the hearing of the appeal and there is material in the pleading also has been considering revision of the 1964 policy and the court has upheld its full freedom to do so. Secondly, the post of brigadier fell vacant in 1979 and, on the direction of the High Court, an evaluation of the claims of both was made by the Selection Panel on an updated basis. In this process, both were adjudged equal and the senior (the respondent in the review petition) was recommended for appointment. Thus, it is obvious that had the Defence Ministry been permitted to choose, the respondent would have enjoyed the post. 'There is nothing outrageous in picking the senior when both are otherwise equal. There is a human side to it also. The senior was to retire in a, few months and the other hopefully would have his innings. The third circumstance which should not be overlooked is that this court did give the go by to the High Court 's finding: "We make it further clear that the Central Government will be free to act subject to the directions we have given above and untrammelled by the reasoning or the direction given by the High Court." Indeed, we had, in the judgment, emphatically upheld the Central Government 's plenary power to formulate or modify military policy. Wars are won or lost not through writs of courts but by the best strategy. But even amidst the clash of arms the laws shall not be silent, so much so, the constitutional mandate not to act arbitrarily was binding on the Defence Ministry. The selection on which the review petitioner stakes his claim is of 1971 vintage and the vacancy to be filled was of the year 1979. The respondent, therefore, contested the petitioner 's 1971 credentials as obsolete and even obscurantist. We need not re open that issue except to state that in the final order, passed after hearing both sides, the inviolability of the 1964 policy had been nailed. A closer reading of the 1964 policy statement reveals under it seniority for an earlier promotee is conferred in the substantive rank provided he has been earlier included in the approved list. Such a situation has not arisen here at all. Be that as it may, the final direction of the court appeal. 171 did permit the Central Government to evolve its policy within one month. This not having been done, the respondent drew the attention of the court to the non compliance and for consequential orders. At the hearing of that petition (the so called contempt petition) the respondent through Shri R. K. Garg and the Central Government through the learned Attorney General were heard. Shri Kapil for the petitioner (review) intervened and was heard. But we must fairly state that his client had not been given formal notice and perhaps he had a grievance of not having been heard adequately. We cannot fault him for filing a review petition but hasten to clarify that we wholly desist from making any observations on the happenings set out in the respondent 's papers put into court. Nor did we permit Shri Garg to refer to those matters since they were in our view. extraneous to the merits of the review petition and related to another proceeding pending before another bench. We must record that Shri Kapil has with youthful vigour and clarity of advocacy presented his case fairly. The gravamen of his grievance is merely that he should have been heard if a direction to his prejudice was to be made. We are mindful of the force in this plea and cannot dismiss it merely because the sands of time are running out against the respondent whose approaching retirement will make his legal success, if any, a phyrrhic victory and, worse a tragic irony. Of course. that, by the way, is the life style of most litigative triumphs. Shri Garg in his fighting submissions, complained how his client had been baulked of the fruits of success by dubious proceedings, but, while we are unconcerned about those anecdotes, we do consider that there is justice in his plea that he has been chosen by the panel in 1979, that a bare selection (not actual promotion) of 1971 on which the petitioner relies, is too stale to be relevant, that the Central Government itself had filed an affidavit in this court stating that they had appointed his client and that neither law nor justice supported any interference with this court 's direction of 7 S 1980 to promote the respondent as Brigadier. Let us notice the substance of this Court 's orders dated 7th and 9th May, 1980 which are now sought to be reviewed. On May 7, 1980, the following direction was given following on the non compliance by the Central Government with the earlier judgment: "This Court had given a direction that the policy of the Defence Ministry may be finalised within one month from the date of the order. That period has expired on 26th April 1980 Nevertheless, no policy decision has yet been taken nor even has an application been made for extension of time from this ? Court. We consider that this conduct is far from satisfactory. 172 However, there are two courses open, out of which one must be adopted in the course of couple of days. The Respondent may appoint the petitioner, Director, Military Farm (Brigadier) until he retires, which event, we are told, happens within about four months. Alternatively, the Union of India in the Defence Ministry will take its policy decision within two days and report ', to this Court about it so that further directions may be issued on 9 5 1980 regarding further implementation of the policy consistent with the rights of the petitioner. Post on 9 5 1980. " This order of 7th May, in sequence and consequence, flows out of the judgment of March 216, 1980 made after all parties were fully heard. Two notable circumstances in that order, as earlier highlighted, are these. Firstly, Government had freedom to formulate a new policy, but it had to be done within one month as accepted by the Attorney General. Secondly, Government was freed from the High Court 's insistence on the 1964 statement. If this bondage was not broken, this court could not have directed the Defence Ministry to make any new policy it thought fit. A third fact, undisputed, also emerged from the case, viz., that in 1979 on the High Court 's direction fresh evaluation of promotional merit gave the respondent (review) an edge over the petitioner on the score of seniority not, surely, an extraneous factor. Necessarily, therefore, this Court in its May 7th order gave effect to the earlier judgment virtually with the consent of the Central Government. This is made more manifest in para 5 of the Government 's affidavit put in on May 9, 1980. Paragraphs 4 and 5 of that affidavit merit excerption: "I state that the Government have taken steps for and are in the process of finalising a policy applicable to the officer cadre in the Army in all the Arms (Infantry, Artillery, Armoured Corps) and Services (Army Supply Corps, Army ordnance Service etc. including the Department of Military farms). The chief of the Army Staff has already appointed a High Power study Team comprising of Senior Army officers and headed by an Army Commander to study all aspects of selection and other career management procedures now in vogue in the Army including promotion procedures. 'The Study Team has already made considerable progress in their deliberations. After the Study . Team submits its Report, the matter will have to be considered by the Army Commanders and later examined by the Army Headquarters and the Government. The above process is likely to take some more time. It will not be appropriate to evolve a separate policy for a small Directorate like the Directorate of Military Farms alone. The entire officer Cadre of the Army in 173 the Army like Infantry, Artillery, Armoured Corps and Services A like Army Supply Corps, Army ordnance Service etc. will have to be covered by one uniform policy as is existing at present. In the circumstances and in compliance with this Hon 'ble Court 's directions/orders dated 26 3 1980 and 7 5 1980, the government are willing to abide by this Hon 'ble Court 's directions given on 7 5 1980. Government, however, prays that this Hon 'ble Court may be pleased to direct that the promotion of the petitioner to the rank of Brigadier will be without prejudice to the policy which may ultimately be decided by the Government and subject further to the condition that if under the policy which may be evolved, the petitioner is not eligible for promotion to the rank of Brigadier, he would have no right to continue in the said rank. " It is obvious from this affidavit that Government had decided on abandoning the 1964 policy and was actively pursuing steps to fashion a new policy. So no rights on the old basis, if any, (though we see none) can enure to the benefit of the petitioner especially because he relies on his 3rd rank in a selection for one vacancy made in 1971. That apart, a selection of 1979 turned out in favour of the respondent. And, to come to think of it all, the petitioner is postponed but by a few months and the respondent has been far senior as colonel and will retire in August, 1980. The conspectus of circumstances hardly persuades us that there is injustice in the order of May 7th or May 9th. We have sedulously followed the lucid submissions of Shri Kapil for review of the earlier direction and are clear in our conscience that neither law nor justice has suffered on account of the impugned orders. A review is not a routine procedure. Here we resolved to hear Shri Kapil at length to remove any feeling that the party has been hurt without being heard. But we cannot review our earlier order unless satisfied that material error, manifest on the face of the order, undermines its soundness or results in miscarriage of justice. In Sow Chandra Kanta and Anr. vs Sheik Habib this Court observe. "A review of a judgment is a serious step and reluctant resort to it is proper only where a glaring omission or patent mistake or like grave error has crept in earlier by judicial fallibility. The present stage is not a virgin ground but review of Dn earlier order which has the normal feature of finality. " H 174 By this test and even after re reading the 1964 policy statement for prima facie satisfying ourselves about vesting of valuable rights we are not satisfied that the relief of review is justified. 'The basics of this case are the choice of a brigadier is out of two colonels, the petitioner and the respondent. They are of equal merit as assessed in 1979. The latter is far ahead in seniority and the Central Government has agreed to appoint him as brigadier. He has a period of a month or so to go for retirement when the vacancy will be filled in. probably by the petitioner. The claim of the petitioner is based largely on the 1964 policy statement which the Central Government has decided to give up. Moreover, the claim itself is based upon an ancient selection made a decade ago when the vacant was only one and the petitioner was 3rd in rank. Moreover, whether the 1964 policy statement confers a right merely by inclusion in the approved list where no appointment has taken place as brigadier and the question of substantive rank has not arisen. to say the least. These are sufficient for us to repel the relief of review. Of course, the petitioner has effectively postponed the appointment of the respondent by getting a stay order. We make no comments whatever on the chain of events but permit ourselves the observation that the implementation of the final order which has been passed by this Court has been further delayed by the stay thereof by a learned single judge of this Court during the vacation; and so, we mention this only to justify our imperative direction that no more delay shall take place and the Central Government shall put the respondent in his position as Brigadier in charge of the Military Farms by tomorrow. Law is highly allergic to procrastination. We refuse the review, but in the circumstances without costs and hope that the chapter of unfortunate events referred to in the affidavits will be treated as closed in a spirit of mutual goodwill. It has been brought to our notice that there is a direction by the vacation judge that the extra salary that the respondent may be entitled to in the event of success should be deposited into court by the Central Government and that has been done. The respondent will draw that sum from court. But there will be no direction that the petitioner should refund the extra salary if any, drawn by him because, after all, he must have functioned pending orders of this Court, as Director of Military Farms and so we do not think it just to make any order for refund against the petitioner. P.B.R. Review petition dismissed.

Apprehending that the Government was considering a change of policy framed in 1964 for choosing an officer to become brigadier in charge of military farms the petitioner moved the High Court for the issue of a writ. On directions from the High Court to the Defence Department to select the best man for the post the Department reported that the petitioner and respondent were equal in merit, but since the respondent in the review petition was senior as colonel, he be chosen for the post. After considering the legal import of the 1964 policy the High Court allowed the petitioner to become a brigadier The respondent 's petition for special leave was granted by this Court. The Central Government was given one month 's time to evolve its policy, if necessary. That not having been done the respondent moved this Court again as to the non compliance and for consequential orders. On May 9, 1980 the Court passed orders that the respondent be appointed as brigadier. The petitioner sought review of that order. ^ HELD: A review is not a routine procedure. An earlier order cannot be reviewed unless the Court is satisfied that material error manifest on the face of the order undermines its soundness or results in miscarriage of justice. A review of a judgment is a serious step and resort to it is proper only where a glaring omission or patent mistake or like grave error has crept in earlier by judicial fallibility. In the instant case the relief of review is not justified. [173G H] Chandra Kanta vs Sheikh Habib ; at 933 34, followed. From the affidavits filed by the Government in the Court on May 9. 1980 it is obvious that the Government had decided on abandoning the 1964 policy and was actually pursuing steps to fashion a new policy. Therefore, no rights on the old basis, if any, can enure to the benefit of the petitioner especially because he relied on his third rank in a selection for one vacancy made in 1971 That apart, a selection of 1979 turned out in favour of the respondent. The petitioner is postponed but by a few months and the respondent has been far senior as colonel and will retire in August, 1980. The conspectus of circumstances hardly persuades the Court that there is injustice in the order of May 7th or May 9th. [173D E]

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