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: Criminal Appeals Nos. 211 to 217 of 1962. Appeals by special leave from the judgment and order dated May, 5, 1962, of the Madhya Pradesh High Court (Indore Bench) at Indore, in Criminal Appeals Nos. 216, 222 and 227 to 231 of 1961. C. B. Agarwala and Rameshwar Nath, for the appellant. B. Sen and I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Ayyangar J. These seven appeals are connected as they relate to the same appellant and the point involved in each is identical. They are before us by virtue of special leave granted by this Court and are directed against the common judgment of the Indore Bench of the High Court of Madhya Pradesh convicting the appellant of a contravention of the Indian Iron & Steel (Scrap Control) Order, 1943. The accused, the appellant before us, was the President of the Scrap Dealers Association at Indore and he was prosecuted before the learned Additional City Magistrate, Indore City in seven sets of criminal cases filed by the State of Madhya Pradesh alleging contravention of section 8(4) of the Iron & Steel (Scrap Control) Order, 1943 by selling or causing to be sold scrap iron to different customers on different dates at a rate higher than was authorised by notification dated September 30, 1952 issued by the Steel Controller under the said order. He was acquitted by the Additional City Magistrate but on appeals preferred by the State Government, the learned Judges set aside the acquittal and convicted him of the offences and sentenced him to pay a fine of 325 Rs. 100 in each case with imprisonment in default of payment of fine. It is the correctness of this judgment of the High Court that is canvassed before us by the appellant in these appeals. To appreciate the points raised by the appellant it is necessary to narrate briefly the history of the legislation on the topic of control over the price at which scrap was permitted to be sold by dealers. The Defence of India Act, 1939 enabled the Central Government to frame rules, among others, "for maintaining supplies and services essential to the life of the community (vides. " In pursuance thereof Rule 81 (2) of the Defence of India Rules empowered the Central Government "so far as appears to them to be necessary or expedient for . maintaining supplies and services essential to the life of the com munity" to provide by order, inter alia, (a) for controlling the pi ices or rates at which articles or things of any description whatever may be sold. . and for relaxing any such prices or rates". By virtue of this power, the Central Government promulgated the Iron & Steel (Scrap Control) Order, 1943 (hereinafter referred to as the Indian Scrap Order) on February 25. This Order to whose provisions we shall have to make some reference later would normally have lapsed on the expiry of six months after the revocation of the proclamation of emergency because of the provisions of section 102(3) (a) of the Government of India Act, 1935. In order to avoid this result, the Emergency Provisions Continuance Ordinance, 1946 was promulgated on September 25, 1946 which continued several orders in relation to the control of production, distribution etc. of essential commodities, and Indian Scrap Order among them, and this ordinance was replaced by a permanent legislation the Essential Supplies (Temporary Powers) Act, 1946 (Act 24 of 1946) which also contained a provision for the continuance of the Control Orders in force [vide section 17(2)]. Section 8(4) of the Indian Scrap Order prohibited the sale of scrap in excess of the prices fixed therefore by the Controller. It is not disputed that the sales in regard to which the appellant has been prosecuted were in excess of the maximum there specified. Several defences were raised but of these those which now survive are only two: (1) The legal effect of the parallel provisions on the same subject viz., control over the sale price of scrap which were in force in the Part B State of Madhya Bharat which comprised Indore, and (2) Whether the appellant as the President of the Scrap Dealers Association which was an unincorporated body could be held liable for, a sale in excess of the sup./64 8 326 authorised maximum price effected by a Munim or Munims of the Association. We shall now proceed to narrate in brief outline the history of the parallel provisions relative to control over the sale price of Scrap in the Part B State of Madhya Bharat. These provisions undoubtedly continued in force in the State till September 12, 1950 when the Indian Scrap Control Order, 1943 was in terms made applicable in that State and the principal point raised by Mr. Agarwala was whether a certain notification which had been issued under the State law and was in force on that date continued in force even thereafter. The State legislation on this topic started on October 9, 1948 with the promulgation of the Madhya Bharat Essential Supplies (Temporary Powers) Ordinance, 1948, which was a reproduction of the Indian Essential Supplies (Temporary Powers) Ordinance, 1946. When this Ordinance was replaced in India by the Essential Supplies (Temporary Powers) Act, 1946, the same process was repeated in Madhya Bharat by the enactment of the Essential Supplies (Temporary Powers) Act (Samvat 2005) (Madhya Bharat Act III of 1948). Among the "essential, commodities" dealt with by the State enactment were iron and steel [vide section 2(3)(7)]. Section 4 of the Act read: "4. Powers to control production, supply, distribution etc., of essential commodities. (1) The Government so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodities, or for securing their equitable distribution and availability at fair prices may by an Order notified in the Official Gazette provide for regulating or prohibiting the production, supply, distribution and movement thereof, and trade and commerce therein. (2) Without prejudice to the generality of the powers conferred by sub section (1), an order made thereunder may provide (c) For controlling the prices at which any essential commodity may be bought or sold; to quote only the material words. In exercise of the powers thus conferred the Director of Civil Supplies, Madhya Bharat, to whom the powers in that behalf were delegated by the State Government, promulgated on June 4, 1949 the Madhya Bharat Iron, Steel and Scrap (Production, Procurement and Distribution) 327 Control Order, 1949. Clause 5 of this Order empowered the Director of Civil Supplies, Madhya Bharat to specify from time to time the maximum prices wholesale and retail at which "iron and steel, scrap or specified articles made thereof" may be sold (a) by a producer, (b) by a controlled stockholder, (c) by a registered stockholder (d) by a controlled dealer and (e) by a scrap merchant. The several categories of persons whose sales were thus regulated were defined in the Order. Acting under this provision, the Director Civil Supplies issued a notification on the same date June 4, 1949 which read: "In exercise of the powers conferred on the Director under clause 5(1) of the Madhya Bharat Iron, Steel and Scrap (Production, Procurement and Distribution) Control Order, 1949, I hereby specify that the Price Schedules as may be in force for the time being under . Iron and Steel Scrap Control Order in the Indian Union in respect of sales by producers, controlled and Registered Stockholders and Scrap Merchants shall apply mutatis mutandis to sales by the aforesaid persons in Madhya Bharat; provided however, that the Registered Stockholders shall sell to Controlled Dealers at II column rates of the Government of India Price Schedule for the time being in force, that Iron and Steel which they receive at column I rate from the producers and at column III rate, that Iron and Steel which they receive from the Controlled Stockholders at column II rates : provided also that controlled Dealers in Madhya Bharat shall sell to consumers at a profit margin of not exceeding Rs. 30 per ton; subject however, in all cases to such local extra charges as may be fixed by me or the officers authorised by me in this behalf. " It is only necessary to add that there were similar Orders passed under the Indian Scrap Order, 1943 in which also the classification of dealers etc., proceeded on the same lines. The form of the notification by the Steel Controller to the Government of India, referred to in this notification was on the following lines : There was a schedule to the notification fixing the maximum prices and it was divided into five columns. First was the number of the item, the second was the description or classification of the material and the next three which were headed columns I, II and III dealt with specified maximum basic prices per ton for sale at Calcutta, Bombay and Madras. There were adjustments 328 indicated for arriving at the prices chargeable at other centres. Column I specified the prices for sales by Controlled Sources other than those mentioned in column 11. The second column was headed "specified prices fixed for sales by scrap merchants who have been declared controlled sources" and the ,last or third column specified the maximum for sales by all persons other than those mentioned in columns I and 11. Different maxima were fixed for sale by persons falling under the three columns, the first column price being the lowest, the second t little higher and the last which included sales by retail dealers to the consuming public being the highest. It is common ground that the Scrap Dealers Association, Indore of which the appellant was the President had been declared "a Controlled Source" ' so that the maximum prices at which members of the Association which was an unincorporated body could sell, were those specified in column II of the schedule. It is not necessary to set out the prices at which the actual sales which wore stated to be in violation of the law, took place, but it is sufficient to state that admittedly the servants of the Association sold scrap iron at prices higher than those fixed in column II and at prices fixed for column III. The first submission of Mr. Agarwala learned Counsel for the appellant was that the sale by the Association at the column ]II price was authorised and legal because of a notification issued by the Government of Madhya Bharat dated August 26, 1949. The principal point argued before us in respect of this notification is as to whether this notification was alive and in force on the date of the sales in 1956 which were the subject of the several prosecutions and whether it has survived subsequent Indian legislation extended to the State to which we shall advert presently. But before proceeding to do so, it would be convenient to consider the nature of that notification. The Scrap Dealers Association of Madhya Bharat appear to have made a representation to the State Government that though the dealers in Scrap as constituent units of the Association were treated as a Controlled Source and secured advantages thereby and were bound to sell at prices fixed in column II, still the Association should 'be accorded special privilege and be permitted to sell at prices fixed for the residuary class of dealers in column III. This representation was considered by an Advisory Committee appointed by the State Government and a direction was given that "a change be made to the extent that at present for the goods which is sold to consumers by the Scrap Association 329 at the regional headquarters they will be allowed to charge column III rates on the goods instead of column II rates. " It is stated that the Association has been selling at these rates ever since. There is no doubt that if this direction stood, and we need only add that the validity of this direction was not challenged by the respondent as beyond the powers of the State Government, the appellant could not have been guilty of the offence with which he was charged. But the question is whether this direction or this modification of the prices fixed under section 5(1) of the Madhya Bharat Scrap Control Order by incorporating the notification by the Steel Controller of the Government of India in its text, subsisted in 1956 when the sales which are stated as being in contravention of the Indian Scrap Order, took place. We have already seen that the notification dated June 4, 1949 which we have extracted earlier, was issued under the Madhya Bharat Iron and Steel etc., Control Order, 1949 pro mulgated under the Madhya Bharat Essential Supplies (Tem porary Powers) Act, 1948. The Madhya Bharat Act, however, stood repealed by virtue of the provisions of the Essential Supplies (Temporary Powers) Amendment Act, 1950 (Act 52 of 1950) under which the Essential Supplies (Temporary Powers) Act, 1946 was extended to the Part B States as and from such dates as might be specified by the Central Government. By a notification issued by the Central Government the Essential Supplies Act, 1946 was made applicable to the Part B State of Madhya Bharat from August 17, 1950. The effect of this extension was provided for by section 10 of Act 52 of 1950 which enacted : "1O. Amendment of section 17, Act XXIV of 1946. After sub section (3) of section 17 of the said Act, the following sub section shall be inserted, namely (4) If immediately before the day on which this Act comes into force in a Part B State, there is in force in that State any law which corresponds to this Act, such corresponding law shall on that day stand repealed in so far as it relates to any of the essential commodities governed by this Act: Provided that any Order made and in force immediately before that day in the said State shall continue in force and be deemed to be an Order made under this Act, and all appointments made, licences or permits granted, and directions issued, under any such Order and in force immediately before that day shall likewise continue in 330 force and be deemed to be made, granted or issued in pursuance of this Act. " If the main part of sub section (4) stood alone without the proviso, the effect would have been not merely a repeal of the Madhya Bharat Essential Supplies (Temporary Powers) Act, 1948 which was "a corresponding law" which was in force in that State, but with that repeal, all the subordinate legislation enacted thereunder including the Control Orders as well as the Orders of the Director fixing prices would also have stood repealed. By virtue of the proviso, however, notwithstanding the repeal of the parent enactment, the Orders made under it were continued and were to be deemed to have been made under the Indian Act. Mr. Agarwala laid considerable stress on the proviso and urged that by reason of its language it continued in force not merely the Madhya Bharat Scrap Order of June 4, 1949 and the price fixation by the Director under section 5 ( I) of that Order on the same date, but also the variation in the prices to be charged by the Association effected by the Government Order dated August 26, 1949 which enabled that body, notwithstanding its being a dealer specified in column II to sell at prices fixed for persons falling under column M. We need not pause to consider whether the direction or the notification dated August 26, 1949 is "a direction issued under any such order" within the proviso to section 17(4) but shall proceed on the basis that it is, accepting the construction suggested by learned Counsel. But the replacement of the Madhya Bharat law on this topic by the law in force in India did not stop with that effected by Act 52 of 1950. By a notification of the Government of India dated September 12, 1950, the Indian Scrap Order, 1943 was extended to Madhya Bharat. It is really the legal effect of this extension that calls for scrutiny in these appeals. The notification by which the Indian Scrap Order was extend ed to Madhya Bharat, no doubt, did not expressly provide for the repeal of the "Madhya Bharat Scrap Iron & Steel etc., Order, 1949", but if the two Control Orders cannot operate simultaneously, it would be obvious that the Indian Scrap Order would have repealed and replaced the State law. In the first place, even if the provisions contained in the two sets of Orders were in identical terms, it might be proper to hold that the Indian Scrap Order replaced the State law in order to give some meaning and effect to the extension of the Indian Scrap Order to Madhya Bharat. But that is not the position here. There are 331 marked differences between the provisions of the two Orders such that it would not be possible for the two to stand together. For instance, Rule 3 of the Indian Scrap Order prohibits producers from acquiring or agreeing to acquire scrap except and in accordance with a written order of the Controller etc. There is no rule corresponding to this in the Madhya Bharat Scrap Order. In line with this, in Rule 6 of the Madhya Bharat Order which corresponds to Rule 8(4) of the Indian Scrap Order, there is no prohibition against acquisition for a higher price than the maximum fixed, such as is to be found in Indian Order. Again, Rule 7 of the Madhya Bharat Order relating to the restrictions on the movement of scrap has no corresponding provisions in the Indian Scrap Order. Illustrations of this type of variation may be multiplied, but this is unnecessary as it was conceded that the provisions contained in the two orders were not identical. What we desire to emphasise is that the two orders, though achieving substantially the same object, are not identical in their provisions. If that is so, it is obvious that on the extension to Madhya Bharat of the Indian Scrap Order, the Madhya Bharat Scrap Order would stand repealed and be replaced by the Indian law. Mr. Agarwala, however, submitted that this would not follow because according to him the Madhya Bharat Scrap Order had some sort of higher efficacy or stood on a footing superior to the Indian Scrap Order by reason of its having been continued by the proviso to section 17(4) to Act 24 of 1946, the argument being that the notification etc., should be deemed to be one under the Essential Supplies (Temporary Powers) Act itself. This argument, even if sound, does not really help the appellant, for the Indian Scrap Order itself was preserved by a saving of the same type and couched in exactly the, same language in the Essential Supplies (Temporary Powers) Ordinance, 1946 and the Act of the same name of 1946 [vide section 17(2) & (3) of Act 24 of 1946]. Besides, just as an order made or notification issued. under the Essential Supplies (Temporary Powers) Act, 1946 could be amended, modified or cancelled, even if the Madhya Bharat Scrap Control Order and the notifications issued thereunder are deemed to have been passed under the Act of 1946 which is what learned Counsel contends, they could surely be modified. amended or replaced by other subordinate legislation originating from the same parent Act. The Indian Scrap Order, 1943 was one such, because it is deemed to have been made under that 332 Act. When the Indian Scrap Order was extended to Madhya Bharat, the result was that it effectively replaced the Madhya Bharat Order on the same topic. Even granting that the Madhya Bharat Scrap Order of June 4, 1949 was repealed on the extension to that territory of the Indian Scrap Order, Mr. Agarwala urged that the direction contained in the notification of the State Government dated August 26, 1949 was a special law which stood unaffected by the extension of the Indian Scrap Order to Madhya Bharat. That when the Indian Scrap Order was extended it carried with it the notifications issued by the Controller from time to time and that after the extension of the Scrap Order to Madhya Bharat, all sales of scrap would have to be effected only in conformity with the prices fixed by the 'notifications issued under the Scrap Order was not contested. Nor was it disputed that on the terms of the notifications issued fixing the prices at which several classes of dealers might effect sales tinder the Indian Scrap Order, the Association of which the appellant was the President would have fallen under column 11 and would have been bound to sell scrap only at the prices fixed in that column. But it was submitted that the fact that even before the extension of the Indian Scrap Order to Madhya Bharat in September, 1950 tinder the very provisions of the notification dated June 4, 1949 itself the maximum prices fixed in Madhya Bharat were only those prescribed by the Controller in India and that the deviation in regard to these prices permitted to the Association was thus in effect a local modification of the Indian Order and that consequently the direction issued by the State Government on August 26, 1949 and which was continued even after the repeal of the Madhya Bharat Temporary Powers Act, 1948 by reason of the proviso to section 17 (4) of the Act 24 of 1946 was not affected by the extension of the Indian Scrap Order to Madhya Bharat. We find ourselves unable to accept this argument. The concession allowed to the Association by the notification dated August 26, 1949 could be looked at from one of two alternative positions. The direction could be viewed as in effect a modification of the prices fixed under section 5 (1) of the Madhya Bharat Order by the Director so that in law it should be deemed to have been incorporated in that price fixation and became, as it were, the price fixed by the Controller. The effect of this would be that in Madhya Bharat before the extension of the Indian Scrap Order, the maximum prices chargeable by the specified type of dealer falling under 333 column It would be those applicable to dealers in column III. If this were the true position, the result would be that when the Indian Scrap Order was made applicable to Madhya Bharat without a saving or special provision as regards sales by the Association, it would supersede that law and the special classification effected by the Madhya Bharat law would cease to be in force. In this respect the fact that the prices fixed in Madhya Bharat for sales by dealers etc., specified in the three column corresponded to those fixed by the Controller in India, would be wholly irrelevant, for the authority by which the fixation was effected would be traceable to Madhya Bharat and not the Indian law. The other alternative would be that the notification dated August 26, 1949 was an independent piece of subordinate law making under the Essential Commodities Act and the Madhya Bharat Scrap Order, and it was this aspect that was stressed by Mr. Agarwala. Even if that be so, the appellant would derive no advantage from this, because there has been t repeal not merely of the Madhya Bharat Essential Supplies Act no doubt with a saving but of the Madhya Bharat Scrap Order without a saving and on the repeal of the Scrap Order under which the Subordinate rule or regulation was effected the latter would also stand repealed. As explained by Lord Reading C.J. in Watson vs Winch(1): "It has been long established that, when an Act of Parliament is repealed, it must be considered (except as to transactions passed and closed) as if it had never existed. . It would follow that any bye law made under a repealed statute ceases to have any validity unless the repealing Act contains some provision preserving the validity of the bye law notwithstanding the repeal. " Admittedly there is no saving clause either in the notification of the Central Government by which the Indian Scrap Order was extended to Madhya Bharat nor, of course, in the Scrap Order itself. As the parent order under which the notification was made his been repealed without a saving the effect must be that the notification dated August 26, 1949 must, if it were held to be an independent subordinate legislation, be held also to have been repealed. Mr. Agarwala next referred us to section 24 of the General Clauses Act No. X of 1897 and urged that the notifica (1) , 690. 334 tion would be a bye law that would have continued notwithstanding the repeal of the Madhya Bharat Scrap Order. Section 24 of the General Clauses Act runs thus: "24. Where any Central Act or Regulation, is after the commencement of this Act, repealed and re enacted with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule form or bye law, made or issued under the repealed Act or Regulation, shall, so far as it is not inconsistent with the provisions re enacted, continue in force and be deemed to have been made or issued under the provisions so re enacted, unless and until it is superseded by any appointment, notification, order scheme, rule form or by law, made or issued under the provisions so re enacted and when any Central Act or Regulation, which, by a notification under section 5 or 5A of the Scheduled Districts Act, 1874, or any like law, has been extended to any local area, has, by a subsequent notification, been withdrawn from and reextended to such area or any part thereof, the provisions of such Act or Regulation shall be deemed to have been repealed and re enacted in such area or part within the meaning of this section. " We consider that this submission is entirely without force. Mr. Agarwala fairly conceded that the language of section 24 would not cover a repeal of the Madhya Bharat Scrap Order by the introduction into the Madhya Bharat territory of the Indian Scrap Order. 1943, but he suggested that even though the section was in terms inapplicable, he could invoke the principle underlying it. But this argument, however, proceeds on assuming that section 24 was declaratory of the common rule of interpretation and that even in the absence of section 24 the same principle of law would apply. The position apart from a statutory provision such as is found in section 24 of the General Clauses Act, is thus summarised in Craies on Statute Lent, 6th Edn. 334: "If the statute under which bye laws are made is repealed, those bye laws are impliedly repealed and cease to have any validity unless the repealing statute contains sonic provision preserving the validity of the bye law notwithstanding the repeal. This follows from the rule . when an Act of Parliament is repealed it must 335 be considered (except to transactions passed and closed) as if it had never existed." This submission has, therefore, no merit and must be rejected. The second of the points urged by Mr. Agarwala was that the Scrap Dealers Association was an unincorporated body consisting wholly of retail dealers and that as each of them individually was a dealer who could himself have sold at the column M rate, the Association could not be penalised for selling at that rate. As an unincorporated body, he submitted, it was merely the aggregate of its members and so would have the rights of its constituent units. There is no force in this point either. Apart from the definition of "person" in the General Clauses Act as including an unincorporated body of persons, what we are concerned with is not sales by individual dealers who composed the Association, but sales by and through the Association. It was the Association that was given the facility of obtaining scrap at more favourable prices than dealers and it was that body which was subjected to control in the shape of having to sell what it had purchased from controlled sources at the prices specified in column II. Lastly, it was faintly urged by Mr. Agarwala that the appel lant was merely the President of the Association and could not be held liable for the sales effected by its employees. There was no dispute that the sales were by the Association and at prices fixed by that body. It was also admitted that these prices were in excess of the prices specified for sales fixed for the Association. under section 8 of the Essential Supplies (Temporary Powers) Act, 1946, "Any person who abets the contravention of any order. shall be deemed to have contravened that order." In the circumstances, we do not see bow this affords any defence to the appellant. The result is that these appeals fail and are dismissed. Appeals dismissed.

The Indian Scrap Order, 1943, passed under the Defence of India Rules, was after the expiration of the said Rules, preserved by the Essential Supplies Act, 1946. By (Central) Act 52 of 1950, the said Act was extended, inter alia to the Part B State of Madhya Bharat. That State already had its corresponding law on the subject, namely, the Madhya Bharat Essential Supplies Act, 1948, under which the Madhya Bharat Scrap Order, 1949 had been issued. While extending the Cen tral legislation to the Part B States, Act 52 of 1950 also laid down, in section 17(4) that the "corresponding law" in the State would stand repealed, with a proviso that the orders, directions etc., issued under the repealed law would continue. The appellant who was President of the Scrap Dealers Association, Indore, was prosecuted under the allegation that the Association had sold scrap iron at rates higher than those fixed under the Indian Scrap Order. The defence taken was that the prices at which the sales had been effected were those fixed by a notification dated 26th August, 1949 under the Madhya Bharat Scrap Order which continued in force. The appellant was acquitted by the trial Court but was convicted by the High Court and appealed to the Supreme Court by special leave. The contentions of the appellant were : (1) The Madhya Bharat Scrap Order had not been expressly repealed by the Indian Scrap Order and therefore it continued by force of the proviso to section 17(4) of the Act 52 of 1950, and, in any case, the notification dated 26th August, 1949, continued in force as an independent piece of subordinate legislation. (2) The appellant as President of the Scrap Dealers Association which was an unincorporated body could not be held liable for a sale in excess of the authorised maximum price effected by a Munim or Munims of the Association. HELD : (i) The Central notification by which the Indian Scrap Order was extended to Madhya Bharat, no doubt, did not expressly provide for the repeal of the Madhya Bharat Scrap Order, but the provisions of the two Orders were not identical and they could not, therefore, operate simultaneously. It was therefore obvious that on the extension to Madhya Bharat of the Indian Scrap Order, the Madhya Bharat Scrap Order was repealed and replaced by the Indian law. [331D]. (ii) The notification in question could not survive even if it was treated as an independent piece of subordinate legislation under the State law. According to Craies, if the statute under which by laws are made is repealed, those bye laws are impliedly repealed and cease to have any validity unless the repealing statute contains some provision preserving the validity of the by laws, notwithstanding the repeal. As the parent 324 order under which the notification dated August 26, 1949, was made had been repealed without a saving, the effect was that the said notification also stood repealed. (333D; 333G H; 334H]. (iii) The definition of 'person ' in the General Clauses Act includes within that term an unincorporated body of persons. In the present case it was the Association that was given the facility of obtaining scrap at more favourable prices than dealers, and it was that body which was subjected to control in the shape of having to sell what it had purchased from controlled sources at specified prices. The argument could not be accepted that the Association as such could not be penalised for selling at unauthorised rates. The appellant as President of the Association was liable to be convicted by virtue of section 8 of the Essential Supplies (Temporary Powers) Act, 1946 which made the abetment of contravention of any order under the Act, also an offence. [335C D,E F]. Watson vs Winch. and Craies on Statute Law. 6th Edn. 332, referred to.

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Appeal No. 401 of 1964. Appeal by special leave from the judgment and order dated October 14, 1963, of the Mysore High Court in N.F.A. No. 139 of 1963 and M.F.A. No. 141 of 1963. 317 G. section Pathak and Dipak Datta Choudhri, for the appellant. M. K. Nambiyar, and R. Gopalakrishnan, for respondent No. 1. The Judgment of the Court was delivered by Wanchoo J. This is an appeal by special leave against the judgment of the Mysore High Court in an election matter. An election was held to the Bangalore South (Scheduled Castes) constituency in February 1962. Four persons stood for election including the appellant and Munichinnappa respondent No. 1, who obtained the highest number of votes and was declared elected. The appellant then filed an election petition challenging the election of respondent No. 1 on a number of grounds. In the present appeal we are concerned only with one ground, namely, that respondent No. 1 was not a member of any of, the scheduled castes mentioned in the Constitution (Scheduled Castes) Order, 1950 (hereinafter referred to as the Order). Respondent No. 1 claimed that he belonged to the scheduled caste listed as Bhovi in the Order. The appellant on the other hand contended that respondent No. 1 was a Voddar by caste and that Voddar was not a scheduled caste specified in the Order and consequently respondent No. 1 could not stand for election from a scheduled caste constituency. The Election Tribunal held that the caste mentioned as Bhovi in the Order was a subcaste amongst the Voddars and that only this sub caste was included in the Order and not the entire Voddar caste. The Tribunal also held that respondent No. 1 did not belong to the sub caste of Bhovi and therefore was not eligible for standing as a candidate from the scheduled caste constituency. Consequently the election was set aside and re election ordered by the Tribunal. Respondent No. 1 went in appeal to the High Court and his contention was that he belonged to the scheduled caste Bhovi mentioned in the Order and was therefore entitled to stand for election from the scheduled caste constituency. The High Court held that Voddar caste as such was not included in the Order, but considering the facts and circumstances in existence at the time when the Order was passed in 1950, the Bhovi caste mentioned therein was no other than Voddar caste. It therefore allowed the appeal holding that respondent No. 1 being a Voddar must be held to be a member of the Bhovi caste mentioned in the Order and dismissed the election petition. The High Court having refused leave to appeal, the appellant got special leave 318 from this Court, and that is how the matter has come up before US. The main contention on behalf of the appellant is that a person is only entitled to stand for election from a scheduled caste constituency if he is a member of a caste specified in the Order and that it is not open to any one to claim that though he is not a member of a caste specified in the Order and is a member of some other caste, that other caste is included in the caste specified in the Order. It is submitted that wherever a caste has more than one name, the Order specifies the other name in brackets and that even where a particular caste is spelt in more than one way, the Order has included in the same entry the various spellings of the same caste. Therefore, as the caste Bhovi specified in the Order does not mention the caste Voddar in brackets thereafter, it was not open to the Tribunal to take evidence to the effect that Voddar caste is no other than the Bhovi caste. It is therefore urged that the High Court was wrong in looking into the evidence that was produced before the Tribunal and then coming to the conclusion that the caste Bhovi mentioned in the Order was meant for the caste Voddar and that such evidence should not have been allowed by the Tribunal. If such evidence had not been allowed the respondent who is a Voddar by caste could not stand for election for the Voddar caste is not mentioned in the Order at all. Article 341 of the Constitution which deals with Scheduled Castes is as follows: "(1) The President may with respect to any State or Union territory, and where it is a State, after consultation with the Governor thereof, by public notification, specify the castes, races, or tribes or parts of or groups within castes, races or tribes which shall for the purposes of this Constitution be deemed to be Scheduled Castes in relation to that State or Union territory,, as the case may be. (2) Parliament may by law include in or exclude from the list of Scheduled Castes specified in a notification issued under clause (1) any caste, race or tribe or part of or group within any caste, race or tribe, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent notification. " Clause (1) provides that the President may with respect to any State, after consultation with the Governor thereof, by public 319 notification, specify the castes, races or tribes or parts of or groups within castes, races or tribes which shall for the purposes of the Constitution be deemed to be Scheduled Castes in relation to that State. The object of this provision obviously is to avoid all disputes as to whether a particular caste is a Scheduled Caste or not and only those castes can be Scheduled Castes which are notified in the Order made by the President under article 341 after consultation with the Governor where it relates to such castes in a State. Clause (2) then provides that Parliament may by law include in or exclude from the list of scheduled castes specified in a notification issued under cl. (1) any caste, race or tribe or part of or group within any caste, race or tribe. The power was thus given to Parliament to modify the notification made by the President under cl. Further cl. (2) goes on to provide that a notification issued under cl. (1) shall not be varied by any subsequent notification, thus making the notification by the President final for all times except for modification by law as provided by cl. Clearly therefore article 341 provides for a notification and for its finality except when altered by Parliament by law. The argument on behalf of the appellant is based on the provisions of article 341 and it is urged that a notification once made is final and cannot even be revised by the President and can only be modified by inclusion or exclusion by law by Parliament. Therefore in view of this stringent provision of the Constitution with respect to a notification issued under cl. (1) it is not open to any one to include any caste as coming within the notification on the basis of evidence oral or documentary, if the caste in question does not find specific mention in the terms of the notification. It is therefore urged that the Tribunal was wrong in allowing evidence to show that Voddar caste was the same as the Bhovi caste mentioned in the Order and that the High Court was in error when it held on the basis of such evidence that Voddar caste was the same as the Bhovi caste specified in the Order and therefore respondent No. 1 was entitled to stand for election because he belonged to Voddar caste which was the same as the Bhovi cast. It may be accepted that it is not open to make any modifica tion in the Order by producing evidence to show (for example) that though caste A alone is mentioned in the Order, caste B is. also a part of caste A and therefore must be deemed to be included in caste A. It may also be accepted that wherever one caste has another name it has been mentioned in brackets after it in the Order [see Aray, (Mala) Dakkal (Dokkalwar) etc.]. Therefore, 320 generally speaking it would not be open to any person to lead evidence to establish that caste B (in the example quoted above) is part of caste A notified in the, Order. Ordinarily therefore it would not have been open in the present case to give evidence that the Voddar caste was the same as the Bhovi caste specified in the Order for Voddar caste is not mentioned in brackets after the Bhovi caste in the Order. But that in our opinion does not conclude the matter in the peculiar circumstances of the present case. The difficulty in the present case arises from the fact (which was not disputed before the High Court) that in the Mysore State as it was before the re organisation of 1956 there was no caste known as Bhovi at all. The Order refers to a scheduled caste known as Bhovi in the Mysore State as it was before 1956 and therefore it must be accepted that there was some caste which the President intended to include after consultation with the Rajpramukh in the Order, when the Order mentions the caste Bhovi as a scheduled caste. It cannot be accepted that the President included the caste Bhovi in the Order though there was no such caste at all in the Mysore State as it existed before 1956. But when it is not disputed that there was no caste specifically known as Bhovi in the Mysore State before 1956, the only course open to courts to find out which caste was meant by Bhovi is to take evidence in that behalf. If there was a caste known as Bhovi as such in the Mysore State as it existed before 1956, evidence could not be given to prove that any other caste was included in the Bhovi caste. But when the undisputed fact is that there was no caste specifically known as Bhovi in the Mysore State as it existed before 1956 and one finds a caste mentioned as Bhovi in the Order, one has to deter mine which was the caste which was meant by that word on its inclusion in the Order. It is this peculiar circumstance therefore which necessitated the taking of evidence to determine which was the caste which was meant by the word 'Bhovi ' used in the Order, when no caste was specifically known as Bhovi in the Mysore State before the re organisation of 1956. Let us then turn to the evidence which has been given in this case to prove that it was Voddar caste which was meant by the word Bhovi included in the Order. In this connection reliance has been placed on a communication made to the then government of Mysore as far back as 1944 on behalf of Voddar caste and the Order of the then government of Mysore in February 1946. It seems that a resolution was passed by the Voddar caste ,at a conference in July 1944 in which it was resolved that the 321 name of that caste be changed from Voddar to Bhovi. This resolution was processed in the Secretariat. Eventually an order was passed on February 2, 1946 in these terms: "Government are pleased to direct that the community known as 'Vodda ' be in future called 'Boyi ' in all Government communications and records. " Since then it seems that in all government records the Voddar caste has been known as Boyi, for it is not disputed that Voddar and Vodda are the same. It seems therefore reasonable to infer when the President made the Order in 1950 after consultation with the Rajpramukh of Mysore whom he was bound to consult under the Constitution before passing the Order with respect to the State of Mysore that the caste Vodda was included in the Order as Bhovi because of the Order of the then government of Mysore of February 1946. We shall deal with the difference in spelling later but it does appear that the caste Voddar was not mentioned as such in the Order because the name of that caste was changed in 1946 for all government purposes by the Order of the then government of Mysore. Therefore if the Order had mentioned the caste as 'Boyi ' there would have been no difficulty in holding that it meant the Voddar caste in view of the Order of the then Mysore Government of February 1946 to the effect that the Voddars had given up their original name and had changed it to Boyis from 1946. It is however urged that the Order does not mention the caste Boyi but the caste Bholvi and that wherever there is a difference in spelling of the same caste, the Order has provided for that also; (see for example, Bhambi, Bhambhi, Shenva, Chenva; etc.). Therefore when the Order provided the inclusion of the caste Bhovi therein it could not refer to Voddar caste, for the change of name that was sanctioned by the then government of Mysore in 1946 was from Voddar to Boyi. Here again there is force in the contention that where the same caste was spelt differently, the different spellings have been provided in the Order as illustrated already. 'But the same difficulty which faced us in considering the question whether Voddar caste was meant by the caste Bhovi included in the Order arises when we consider the difference in spellings, for it is not in dispute that there was no caste known as Bhovi in the Mysore State as it existed in 1950 when the Order was passed. As the President could not have included in the Order a non existent caste it means the word 322 'Bhovi ' relates to some caste in Mysore as it was before 1956 and we have therefore to establish the identity of that caste and that can only be done by evidence. In that connection the High Court has held that ever since the Order of 1946, the Voddar caste has been variously spelt as Boyi, Bovi, and Bhovi in English, though the Kanada equivalent is one and the same. The High Court therefore has not attached any importance to the change in the English spelling in the peculiar circumstances of this case. In this connection attention may be drawn to the notification of the then government of Mysore dated February 2, 1946 where Voddar caste is spelt in three ways in the same notification; at one place it is spelt as Voddara, at another place as Yoddar and at two places as Vodda. It seems therefore that we cannot attach undue importance to the spelling in English in this case when we know that there was no specific caste known as Bhovi in Mysore State as it was before 1956 and we have to determine which was the caste which was meant by the use of that term in the, Order. In this connection we may also draw attention to another copy of the same notification which was issued by another department of the Government. In that copy Voddara has been spelt as Vaddara and Boyis as Bovis. It seems to us therefore that the High Court was right in the peculiar circumstances of the present case in not attaching any importance to difference in spelling in English, and to treat Bhoviv as the same as Boyis. We do not think it necessary to refer to the various census reports, which have been referred to by the Tribunal and the High Court for they only show bow the same caste has been differently spelt. In the circumstances therefore we agree with the High Court that respondent No. 1 though Voddar by caste belongs to the scheduled caste of Bhovi mentioned in the Order. We may again repeat that we have referred to the evidence in this case only because there was undoubtedly no caste known as Bhovi in the Mysore State as it was before 1956 and we had to find out therefore which caste was meant by the word Bhovi as used in the Order. But for this fact it would not have been open to any party to give evidence to the effect that (for example) caste A mentioned in the Order includes or was the same as caste B where caste A does exist in the area to which the Order applies. In this view of the matter, the appeal fails and is hereby dismissed with costs. Appeal dismissed.

M, the candidate elected from Bangalore South (Scheduled Castes) constituency claimed to belong to Bhovi caste which was one of the Scheduled Castes mentioned in the Constitution (Scheduled Castes) Order, 1950, but in the election petition filed against him by the appellant it was alleged that he belonged to Voddar caste which was not men tioned in the Order and that therefore he was not entitled to stand for election from the Scheduled Caste constituency. The Election Tribunal recorded evidence on behalf of M to the effect that the Voddar caste was none other than the Bhovi caste. The Tribunal held on the basis of the evidence produced that Bhovi was a sub caste of the Voddar caste, that M did not belong to the Bhovi sub caste, and that therefore he was not entitled to stand from the constituency. The High Court however held that although Voddar caste as such was not included in the order, yet considering the facts and circumstances in existence at the time when the Order was passed in 1950, the Bhovi caste mentioned therein was the game as the Voddar caste. On this finding it dismissed the election petition. The appellant filed an appeal before this Court by special leave. It was contended on behalf of the appellant that : (1) the High Court was wrong in looking into the evidence that was produced before the Tribunal and then coming to the conclusion that the caste Bhovi mentioned in the Order was meant for the caste Voddar (2) the Tribunal should not have allowed evidence to be produced which would have the effect of modifying the Order which was exhaustive, and gave full particulars of each scheduled caste recognised by it including alternative names and alternative spellings. HELD : From the evidence it was clear that in 1950 when the Order was passed there was no caste in the then Mysore State which was known as Bhovi. The Order could not have intended to recognise a caste which did not exist. It was therefore necessary to find out which caste was meant by the use of the name Bhovi and for that purpose evidence was rightly recorded by the Tribunal and acted upon by the High Court. It is only in such extraordinary circumstances that evidence can be so recorded. Generally speaking it would not be open to any person to lead evidence to establish that his caste includes or is the same as another caste which is notified in the Order. [32OA G; 322F G].

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Appeal No. 484 of 1961. Appeal by special leave from the judgment and decree dated March 28, 1958 of the Rajasthan High Court (Jaipur Bench) at Jaipur in D. B. Civil First Appeal No. 64 of 1951. Sarjoo Prasad and Harbans Singh, for the appellants. B. P. Sinha and Naunit Lal, for the respondents. May 8, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C.J. This appeal by special leave arises out of a redemption suit filed by the respondent Dev Karan against the appellant Murarilal. The mortgage sought to be redeemed was executed on the 19th March, 1919 for a sum of Rs. 6,500. The mortgaged property consisted of a shop which was delivered over in the possession of the mortgagee after the execution of the mortgage deed. The mortgage deed had provided that the amount due under the mortgage should be repaid to the mortgagee within 15 years, whereupon the property would be redeemed. It had also stipulated that if the payment was not made within 15 years, the mortgagee would become the owner of the property. The mortgagor was Mangal 241 Ram who died and the respondent claims to be the heir and legal representative of the said deceased mortgagor. In the plaint filed by the respondent, it was averred that the transaction was, in substance, a mortgage and the mortgagor 's right to redeem was alive even though the stipulated period of 15 years for the repayment of the loan had passed. On these allegations, the respondent claimed a decree for redemption of the suit mortgage on payment of Rs. 6,500. It appears that the original mortgagee Gangadhar had also died before the institution of the suit, and so, the appellant Murarilal was impleaded as the defendant on the basis that he was the only heir and legal representative of the deceased mortgagee Gangadhar. The claim for redemption thus made by the respondent was resisted by the appellant on several grounds. It was alleged that after the expiry of the stipulated period of 15 years, the property had become the absolute property of the mortgagee and it was urged that the original transaction was, in substance, and in reality, not a mortgage but a sale. Several other pleas were also raised by the appellant in resisting the respondent 's claim, but it is unnecessary to refer to them. The learned trial Judge framed appropriate issues which arose on the pleading of the parties. In substance, he field that the claim for redemption made long after the 15 years ' period had expired could not be sustained. Findings were made on other issues also and they were against the respondent. In the result, the respondent 's suit was dismissed. The respondent then took the matter in appeal before the Rajasthan High Court. He urged that the view taken by the trial Court that the stipulation as to the mortgagor 's liability to re pay the loan within 15 years did not bar his present suit for redemption, because the said stipulation amounted to a clog on the equity of redemption and as such, could not affect the mortgagor 's right to redeem, and he added that the transaction, in substance, was a mortgage and not a sale, and so, his right to redeem was alive and could be effectively enforced by the present suit. The High Court has upheld his first contention that the relevant 51 S.C. 16. 242 provision as to the period within which the mortgage amount had to be repaid amounted to a clog on the equity of redemption and could not be pleaded as a bar to the present suit. But on the question about the character of the origi nal transaction itself, the High Court appears to have been inclined to take the view that the relevant clause on which the plea about the bar was raised did not really support the said plea, because it was by no means clear that even after the expiration of 15 years, the mortgagee was intended to be the absolute owner of the property. On these findings, the decree passed by the trial Court dismissing the respondent 's suit has been reversed and the suit has been remanded to the trial Court to be disposed of in accordance with law. It is against this order that the appellant has come to this Court by special leave. Pending the appeal before this Court, both the appellant and the respondent have died, and their respective heirs have been brought on the record. The first question which calls for our decision is whether the relevant clause on which the appellant relies makes the mortgagee the owner of the property at the end of the sti pulated period of 15 years. The mortgage provides, inter alia, that after the house which was the mortgage property was delivered over to the mortgagee, it was open to him either to live in it, or to let it out to tenants. The mortgagee was further given liberty to spend up to Rs. 35 for repairing the house and if more expenses were intended to be incurred, the &aid expenditure would be incurred through the mortgagor. On the expenditure thus incurred the mortgagor was liable to pay interest at the rate of As. 0 6 0 per cent per month. Then the document proceeded to add that the mortgagor would get the property redeemed on payment of the mortgage amount as well as the cost of Patta which may have been incurred by the mortgagee and the repairing expenses within a period of 15 years. Then, occurs the relevant clause: "After the expiry of the stipulated period of 15 years, this shop would be deemed as an absolute transfer "Mala Kalam" for this very amount. Till the mortgage money is paid, I shall have no concern with the shop. " The High Court appears to have taken the view that the words "Mala Kalam" which occur at 243 the end of the relevant clause do not necessarily import the notion that the mortgage property would be the absolute property of the mortgagee. According to the High Court, the said words literally mean "where there is no scope for having any say". If that is the meaning of the relevant words, it seems difficult to accept the view that the document did not intend to make the mortgagee the owner of the property at the end of 15 years if the debt due was not paid within that period. When the document says that there would be no scope for the mortgagor to say anything, it necessarily means, in the context, that the mortgagor would, in that case, have lost his title to the property, and that means the mortgagee would become the absolute owner of the property. Therefore, we feel no difficulty in holding that if the terms of the document were to prevail, the appel lant 's contention that the present suit for redemption is barred, must succeed. It is common ground that the amount due under the mortgage deed was not paid by the mortgagor or his heir within the stipulated period and that would extinguish the title of the mortgagor and make the mortgagee to be the owner of the property. But the question is whether such a stipulation can be allowed to be pleaded as a bar to the respondent 's claim for redemption. Just as it is common ground that if the terms of the document were to prevail, the suit would be barred, it is also common ground that if the doctrine that the clog on the equity of redemption cannot be enforced is to prevail in the present proceedings, the respondent 's action for redemption must succeed. The fact that a stipulation of the kind with which we are concerned in the present case amounts to a clog on the equity of redemption, is not and cannot be disputed. Therefore, the main question which arises in the present appeal is: does the equitable doctrine ensuring the mortgagor 's equity of redemption in spite of a clog created on such equity by stipulations in the mortgage deed apply to the present case? This question arises in this form, because the Transfer of Property Act did not apply to Alwar at the time when the mortgage was executed nor at the time when the 15 years ' stipulated period expired. 244 Mr. Sarjoo Prasad for the appellant contends that the High Court was in error in applying the equitable principle, because the said principle cannot be invoked in cases where the Transfer of Property Act does not apply. In support of this argument, he has very strongly relied on an early decision of the Privy Council pronounced in 1870, in the case of Pattabhiramier vs Vencatarow Naicken and Narasimha Naicken(1). In that case, the Privy Council was dealing with a Bye bil wuffa, or mortgage and conditional sale usufructuary executed in 1806 under which the mortgagees were put in possession. The deed contained a condition that if the mortgagor failed to redeem within five years, the conditional sale was to be absolute. The mortgagor failed to redeem within the stipulated period, and the mortgagee, without foreclosing the mortgage, sold the mortgaged pro perty. Thereafter, the mortgagor 's representative sued to redeem the mortgage under section 8 of the Madras Regulation XXXIV of 1802. The Privy Council held that the interest of the mortgagee after the expiry of the stipulated period had become absolute. In dealing with this question, Lord Chelmsford who delivered the opinion of the Board observed that the form of security with which the Board was concerned had long been common in India, and he added that the sti pulations in such contracts were recognised and enforced according to their letter by the ancient Hindu law as well as under Mohammedan law; and in support of this statement, reference was made to certain passages from Colebrooke 's Digest on Hindu Law and Baillie 's introduction to his book on Mohammedan Law of Sale. If the ancient law of the country, observed Lord Chelmsford, has been modified by any later rule, having the force of law, that rule must be founded either on positive legislation, or on established practice; and since neither any specific statutory provision had been cited before the Board, nor established practice in that behalf had been proved, the Privy Council upheld the mortgagee 's plea that he became the absolute owner of the property at the expiration of the stipulated period. While pronouncing this decision, Lord Chelmsford, however, took the precaution of adding that while the Board was allowing (1) [1890] 13 Moore 's I.A. 560 245 the appeal, "it must not be supposed that their Lordships design to disturb any rule of property established by judicial decisions so as to form part of the Law of the Forum wherever such may prevail, or to affect any title founded thereon. " As we will presently point out, the appeal of Pattabhiramier was pending before the Privy Council for as many as 10 years. Meanwhile, Indian High Courts were enforcing the equitable principle that stipulations contained in mortgage deeds which amounted to clog on the equity of redemption could not be enforced. In other words, the jurisdiction which courts of equity exercised in England by refusing to enforce clogs on the equity of redemption, was being exercised by High Courts in India. However, before we refer to those decisions, it would be convenient to cite another decision of the Privy Council pronounced in Thumbusawmy Moodelly vs Hossain Rowthen & Ors(1). In that case, the Privy Council held that the con tract of mortgage by conditional sale is a form of security known throughout India, and by the ancient law of India, it must be taken to prevail in every part of India, where it has not been modified by actual legislation or established practice, and so, must be enforced according to its letter. In this case, Sir James W. Colvile who delivered the opinion of the Board, referred to the earlier decision of the Privy Council in Pattabhiramiers case(1), noticed the trend of judicial pronouncements made by the High Courts in India while Pattabhiramier 's case was pending before the Privy Council, and strongly reiterated the view that the said decisions of the High Courts were radically unsound. He referred to the fact that unfortunately, Pattabhiramier 's case " slept for nine years, and that in the interval the Sudar Court, and afterwards the High Court which succeeded it, continued the course of decision which the former had given in 1858". Then he mentioned the relevant decisions of the Madras and the Bombay High Courts and expressed the opinion that in trying to enforce principles of equity in dealing with stipulations contained in mortgage documents, the High Courts were really assuming the functions of Legislature. So, it is clear that the Privy Council emphatically (1) I.L.R. (2) [1870] 13 M.I.A. 246 declared in 1875 that unless there is a legislative enactment or established practice to the contrary, terms in the contract of mortgage by conditional sale must be taken to prevail in every part of India and must be strictly enforced according to their letter. Mr. Sarjoo Prasad naturally relies on these decisions and contends that so far as the State of Alwar is concerned, there is no legislative enactment to the contrary, nor is there any established practice on which the equitable doctrine could be pleaded by the respondent in support of his case that though 15 years have elapsed, his right to redeem still survives. There are two other decisions of the Privy Council to which we may refer at this stage. In Kader Moideen V. Nepean(1), the Privy Council was dealing with a case from Burma, and it observed that the Burmese Courts are directed, in the absence of any statutory law applicable to accounts against a mortgagee in possession, to follow the guidance of justice, equity, and good conscience. Acting on this principle, the Privy Council accepted Mr. Haldane 's contention that there was no rule of abstract justice in taking the accounts of a mortgagee in possession, and that the Indian rule, which was embodied in section 76 of the Transfer of Property Act, should, though the Act had not been extended to Burma, be followed there in preference to the English practice. It would thus be seen that the equitable principle underlying the provisions of section 76 was extended to the case on the specific ground that the Burmese Courts had been directed by the relevant statutory provision to follow the guidance of justice, equity and good conscience in the absence of any statutory law applicable to accounts against a mortgagee in possession. This decision, therefore, is in line with the two earlier decisions of the Privy Council. Similarly, in Mehrban Khan vs Makhna(2), where the Privy Council was dealing with the provisions in a mortgage deed conferring on the mortgagee upon redemption an interest in the mortgaged property, it was held that the said provisions amounted to a clog or fetter on the equity of redemption and as such, were void not only against the mortgagor, but also against the purchaser of his interest, (1) 25 I.A. 241 (2) 57 I.A. 168 247 since they were inconsistent with the very nature and essence of a mortgage. In this case, again, section 28 of Regulation No. VII which was applicable to the North West Frontier Province, had expressly provided that in cases not otherwise specially provided for, the Judges shall decide according, to justice, equity and good conscience; and so, recourse to the equitable doctrine was permissible because there was the statutory mandate requiring the Judges to apply the said doctrine where there was no specific legislative provision in relation to the matter with which they were dealing. Though the position of the Privy Council decisions is thus clear and consistent, the trend of the decisions of the High Courts in India continued to conform to the same pattern which was set up by the decision of the Madras High Court in the case of Venkata Reddi vs Parvati Ammal(1) and adopted by the Bombay High Court in Ramji bin Tukaram vs Chinto Sakharam (2). The question was elaborately argued on several occasions before the said High Courts and the two earlier decisions of the Privy Council in the case of Pattabhiramier(3) as well as in the case of Thumbuswamy Moodelly(4) were cited and yet, the High Courts have con sistently adhered to the view that in dealing with mortgage transactions which contain unfair, unjust or oppressive stipulations unreasonably restricting the mortgagor 's right to redeem, the Court would be justified in refusing to enforce such stipulations and recognising the paramount character of the equity of redemption. In Bapuji Apaji vs Sonavaraji Marvati(5), Westropp, C.J., has elaborately considered the relevant aspects of this question. He referred to the two Privy Council 's decisions and observed that the doctrine of Ramji vs Chinto(2) had been uniformly followed in the Bombay Presidency in a multitude of cases, and he saw no reason to depart from that decision. In expressing his firm adherence to the pattern of the law prescribed by the decision of the Bombay High Court in Ramji vs Chinto, the learned Chief Justice elaborately considered all the precedents on the point, trend of authorities bearing on the question, the opinion of scholars, and held that he was inclined (1)1 Mad. H.C. Rep. 460 (2) 1 Bom. H.C.Rep. 199 [1864] (3) [1870] 13 M.I.A. 560 (4) I.L.R. (5) I.L.R. 248 to take the law to be that which was settled in Ramji vs Chinto(1) and gave effect to it. So far as the Bombay High Court is concerned, the practice consistently had been to follow the decision of Westropp, C.J. till the Transfer of Property Act was extended to Bombay. In Madras, we find that same position. In Ramasami Sastrigal vs Samivappanayakan(2), the majority view of the Full Bench was that in the Madras Presidency, where con tracts of mortgage by way of conditional sale have been entered into subsequent to the year 1858, redemption after the expiry of the term limited by the contract must be allowed. The, point with which we are dealing in the present appeal was elaborately argued before the Madras High Court; the opinion expressed emphatically by the Privy Council was cited, but Turner, C.J., with whose opinion Muttusami Ayyar, J., agreed made a very significant observation after elaborately examining the merits of the questions "For these reasons," said the learned C.J., "we conceive that we shall not be wanting in due respect for the distinguished tribunal by whose decisions we are bound, if we follow the course they have pronounced there were strong reasons for adopting and apply the rules introduced, however erroneously, by judicial decisions in these provinces. " That view has prevailed in the Madras High Court ever since. These decisions show that the High Courts in India conformed to the view that whether or not there is a statutory provision directing the Judges to give effect to the principles of justice, equity and good conscience, it is their duty to enforce that principle where they are dealing with stipulations introduced in mortgage transactions which ' appear to them to be unreasonable, oppresive or unjust. It is true that according to the strict letter of the ancient Hindu Law, a stipulation that the mortgagor shall pay the amount advanced to him by the mortgage within a specified period, was intended to be enforced. The ancient Hindu law texts use the word "Adhi" to denote pledge of a movable or mortgage of immovable property. IV 124 divides Adhi into two sorts, viz., one that is to be redeemed within (1) 1 Bom. H.C. Rep. 199 Mad. 179 at P. 190 249 a certain time fixed (by agreement at the time of contracting the debt) or to be retained till the debt is paid off. In regard to the first category of mortgages, if the money is not paid at the time fixed, the thing pledged or mortgaged would belong to the creditor (vide Yaj. 58 and as explained by Mitakshara) (1). It also appears that if the mortgage is not redeemed even when the debt has grown to double of the principal by non payment of the interest agreed upon, the mortgagor lost his title over the mortgaged property; so that it must be conceded that under the strict letter of the Hindu law texts, if a mortgage deed contains a stipulation for the repayment of the mortgage amount within a specified period, at the expiration of the said period the mortgagor may lose his title over the mortgaged property. The principle underlying this provision appears to be that Hindu law as enunciated by the ancient texts, attached considerable importance to a person keeping his promise. Though that is so, we ought also to add that according to Sir R. B. Ghose, ordinarily, time was not of the essence of the contract of mortgage in Hindu law(1), and in support of this opinion the learned author quotes with approval Colebrooke 's opinion. Basing himself on this position of the Hindu law, Mr. Sarjoo Prasad contends that we ought to assume that Hindu Law which was applicable to Alwar recognised the importance of compelling the mortgagor to perform his promise that he would repay the debt within a specified time and if he tailed to do so, he would lose his title over the mortgaged property. He urged that the dispute between the parties in the present appeal should be decided in the light of this position of the Hindu law as well as the principles enunciated by the Privy Council in the cases of Pattabhiramier(3) and Thumbusawmy Moodelly (4). In dealing with this argument, it would be relevant to observe that traditionally, courts in India have been con sistently enforcing the principles of equity which prevent the enforcement of stipulations in mortgage deeds which un reasonably restrain or restrict the mortgagor 's right to (1) Dr. Kane 's History of Dharmasastra Vol. ,128 (1) Ghose on 'The Law of Mortgage in India ' Tagore Law Lectures 1875 6, 5th Ed. I. p. 56. (3) [1870] 13 M.I.A. 560 (4) I.L.R. 250 redeem. We may, in this connection, refer to some of the statutes which were in force in India. The old Bengal Regulation III of 1793 by section 21 directed the Judges of the District and City Courts in cases where no specific rule existed to act according to justice, equity and good con science. Similar provision occurs in section 17 of the Madras Regulation II of 1802. The Bengal Civil Courts Act, 1887, and the Madras Civil Courts Act, 1873, contain similar pro visions in sections 37 and 16 respectively. Likewise, in regard to Courts in the Mufassal of Bombay, Bombay Regulation IV of 1827 by section 26 provides that the law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government applicable to the case; in the absence of such Acts and Regulations, the usage of the country in which the suit arose; if none such appears, the law of the defendant, and in the absence of specific law and usage, equity `and good conscience. In fact, in Namdeo Lokman Lodhi vs Narmadabai(1), this Court has emphatically observed that it is axiomatic that the courts must apply the principles of justice, equity and good conscience to transactions which come before them for determination even though the statutory provisions of the Transfer of Property Act are not made applicable to these transactions. These observations, in substance, represent the same traditional judicial approach in dealing with oppressive, unjust and unreasonable restric tions imposed by the mortgagees on needy mortgagors when mortgage documents are executed. There is one other circumstance to which we ought to refer. We do not know what the true position of the Hindu law was in the State of Alwar at the relevant time. In fact, we do not know what the provisions of the Contract Act were in the State of Alwar. Even so, we think it would be reasonable to assume that civil courts established in the State of Alwar were like civil courts all over the country, required to administer justice and equity where there was no specific statutory provision to deal with the question raised before them. Whether or not the Hindu law which prevailed in Alwar was similar to that prescribed by ancient Hindu Sanskrit texts, is a point on which no material is produced (1) ; 251 before us. It may well be that just as in Bombay and Madras, notwithstanding the ancient provisions of Hindu Law which seem to entitle the mortgagee to insist upon the performance of a stipulation as to time within which the mortgage debt has to be paid, the High Courts had con sistently refused to enforce such stipulations, the Courts in the State of Alwar also may have adopted the same approach. In the absence of any material on the record on the point, we are reluctant to accept Mr. Sarjoo Prasad 's argument that the doctrine of equity and justice should be treated as irrelevant in dealing with the present dispute. In this connection, it is material to refer to the recent decisions pronounced by the Rajasthan High Court in which this position has been upheld either because it was conceded, or because the High Court took the view that the principles of equity were enforceable in dealing with mortgage transactions in Rajasthan. In Amba Lal vs Amba Lal(1), the Rajasthan High Court held that section 60 and its proviso contained a general principle of law applicable to mortgages in this country, which should be applicable even in those places where the Transfer of Property Act may not be in force as such, but where its principles may be in force. The property in question which was the subject matter of the mortgage was situated in the State of Udaipur. Similarly, in the case of Seleh Raj vs Chandan Mal(2) , the Rajasthan High Court held that the principle underlying section 60 may well be regarded to be a salutary one and in accordance with the principles of equity, justice ,and good conscience. Accordingly it took the view that though the Transfer of Property Act may not be in force in the territory in question, it would not be unreasonable to decide a case in accordance with the principles underlying the said section. The property with which the Court was concerned in this case was situated in the State of Jodhpur. The same principle has been applied in Himachal Pradesh (vide Nainu vs Kishan Singh)("). (1) I.L.R. r957 Raj. (2) I.L.R. (3) A.I.R. T957 H.P. 46. 252 Thus, it is clear that the equitable principle of justice, equity and good conscience has been consistently applied by Civil Courts in dealing with mortgages in a substantial part of Rajasthan and that lends support to the contention of the respondent that it was recognised even in Alwar that if a mortgage deed contains a stipulation which unreasonably restrains or restricts the mortgagor 's equity of redemption, courts were empowered to ignore that stipulation and enforce the mortgagor 's right to redeem, subject, of course, to the general law of limitation prescribed in that behalf. We are, therefore, satisfied that no case has been made out by the appellant to justify our interference with the conclusion of the Rajasthan High Court that the relevant stipulation on which the appellant relies ought to be enforced even though it creates a clog on the equity of redemption. In the result, the appeal fails and is dismissed with costs.

The respondent sought to redeem a mortgage executed in the State of Alwar in 1919. By a stipulation in the mortgage deed the mortgagor agreed that if the debt was not paid within 15 years the mortgagee would become the owner of the property. The respondent 's case was that the transaction was a mortgage and that he could redeem the mortgage even though the stipulated period was over. The appellant resisted the suit on the ground that the transaction amounted to a sale and not a mortgage. The trial Judge dismissed the suit holding that the claim for redemption was not maintainable after the expiry of the stipulated period. The Rajasthan High Court on appeal reversed the decision of the trial Judge holding that the stipulation was a clog on the equity of redemption and remanded the suit. The stipulation in question I was as follows, "After the expiry of the stipulated period of 15 years this shop would be deemed as an absolute transfer 'Mala Kalam ' for this amount. Till the mortgage money is paid, I shall have no concern with the shop. " Held:If the stipulation were to prevail, the use of the words 'mala kalam ', which meant that there would be no scope for the mortgagor to say anything, would indicate that the mortgagee became the absolute owner of the property. But the stipulation, which was undoubtedly a clog on the equity of redemption, must fail and the suit for redemption must succeed. 240 The equitable principle of justice, equity and good conscience, long and consistently applied by Civil Courts in lndia, could be applied in the State of Alwar even though the Transfer of Property Act had no application there at the time when the mortgage document was executed or its period expired. The strict provisions of the texts of Hindu Law in this regard would be of no avail. Namdeo Lokman Lodhi vs Narmadabai, ; , applied. Pattabhiramier vs Vencatarow Naicken and Narasimha Naicken, (1870) 13 M.I.A. 560 and Thumbusaway Moodelly vs Hossain Rowthen,I.L.R. I Mad. 1, considered. , Venkata Reddy vs Parvati Ammal, I Mad. H.C. Rep. 460, Ramji bin Tukaram vs Chinto Sakharam, I Bom. H.C. Rep. 199 (1864), Bapuji Apaji vs Senavaraji Marvadi, I.L.R. 11 Bom. 231, Ramasami Sastrigal V. Samiyappanayakan, I.L.R. 4 Mad. 179, Amba Lal vs Amba Lal, I.L.R. , Seleh Raj vs Chandan Mal, I.L.R. and Nainu vs Kishan Singh, A.I.R. 1957 H.P. 46, referred to.

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minal Appeal Nos. 87 91 of 1964. Appeal by special leave from the judgment and order dated January 18, 1964, of the Judicial Commissioner 's Court for Tripura in Criminal Misc. (Habeas Corpus) Petitions Nos. 15, 20, 25, 26 and 28 of 1963, and Habeas Corpus Petitions Nos. 24 and 27 of 1963. AND Writ Petitions Nos. 43, 42, 40, 41, 65 and 80 of 1964. Petition Under article 32 of the Constitution of India for the enforcement of the fundamental rights. R. K. Garg, section C. Agarwala, D. P. Singh and M. K. Ramamurthi, for the appellants and petitioners in all. H. N. Sanyal, Solicitor General, D. R. Prem and R. H. Dhebar, for the respondents (Except Respondent No. 2 in W.P. 43 of 1964). D. Goburdhun, for respondent No. 2 (in W.P. 43 of 1 964). July 23, 1964, The Judgment of the Court was delivered by GAJENDRAGADKAR C. J. These Criminal Appeals and Writ Petitions have been placed for hearing together in a group because they raise common questions of law. As is well known, after the Chinese attacked the northern border of India on the 8th September, 1962, the President issued a Proclamation under article 352 of the Constitution on the 26th October, 1962. This proclamation declared that a grave emergency existed which posed a threat to the security of India. On the same day, an Ordi 297 nance was promulgated by the President. This Ordinance was subsequently modified by Ordinance No. 6 of 1962 on the 3rd of November, 1962. The President also issued an Order tinder article 359(1) suspending the rights of citizens to move any court for the enforcement of the rights conferred by Articles 21 and 22 during the pendency of the emergency proclamation. On the 26th October, 1962, the Rules framed by the Central Government under the Defence of India Act (hereinafter called 'the Rules ') were published. Rule 30 of the Rules as originally framed was subsequently modified on the 6th December, 1962 and Rule 30 A was added. Later, an Act was passed on the 12th December, 1962, and section 48(1) of this Act provided for the repeal of the earlier Ordinances. Even so, section 48(2) provided for the continuance of the Rules framed under the Ordinances, so that the relevant Rules framed under the Ordinances have to be taken as Rules framed under the latter Act. It appears that Mr. Mukerjee who was the Administrator of the Union Territory of Tripura at the relevant time, considered the material placed before him as such Administrator and was satisfied that a group of Communists had been agitating amongst the tribals residing in the area and inciting them against the Government, and he came to the conclusion that their activities were likely to endanger the security of the State. Acting on this view, he directed that 68 persons should be detained under Rule 30(1)(b) and passed appropriate orders in that behalf. Later, lie was satisfied that 45 out of these 68 persons need not be detained any longer; and so, he ordered their release from time to time. That left 23 persons under detention and it is with the cases of these 23 persons that we are concerned in the present group if criminal appeals and writ petitions. 12 out of these 23 persons moved the Judicial Commissioner of Tripura under article 226 of the Constitution and prayed that the orders of detention under which they continued to be detained at the time of their petitions were illegal and should be set aside and they should be ordered to be released forthwith. These applications were heard 298 together by the learned Judicial Commisioner and were ultimately dismissed. Against his decision, Criminal Appeals Nos. 87 91 of 1964, and 106 and 107 of 1964 have been filed by the detenues, with special leave granted to them by this Court on petitions made by them in that behalf. It appears that the detenues Mohan Chaudhury and Jagabrata Sen Gupta who have joined in Cr. Nos. 87 91/1964, have also preferred separate criminal appeals Nos. 106 and 107/1964 individually. That is how this group of appeals is concerned with the cases of 12 detenues who had moved the Judicial Commissioner under article 226; and their grievance is that the view taken by the Judicial Commissioner in regard to the points of law raised by them before him, is not correct. The Writ Petitions deal with cases of 11 remaining detenues and they joined the detenues who have preferred appeals before us by special leave in contending that the continuance of their detention is invalid and that a similar plea raised by the appellants before the Judicial Commis sioner should have been upheld by him. That is how the criminal appeals and the writ petitions between them raise common questions of law. Mr. Garg who appeared for the appellants and the petitioners, as well as the learned Solicitor General who appeared for the respondent, the Chief Commissioner of Tripura, agreed that it would not be necessary to consider the facts in each individual case for the purpose of decid ing the common questions of law raised by them. It would be enough if we refer to the facts in one case, because facts in other cases are exactly similar and there would be no point of distinction on facts as such. We would, therefore, refer to the facts relevant to the case of the detenu Biren Dutta. Biren Dutta was detained on the 25th December, 1962, and an order issued in that behalf was duly served on him. On the 26th December, 1962, he was transferred to the Hazaribagh Jail. The respondent 's case is that on the 15th February, 1963, the case of Biren Dutta was reviewed under R. 30A(8) and it was decided to continue his deten 299 tion. Subsequently, his case was reviewed on the 3rd July, 1963, 5th September, 1963, and 11th March, 1964, and on each occasion, it was decided to continue his detention. On the other hand, Biren Dutta 's contention before the Judicial Commissioner was that an order of review had not been passed as required by R. 30A(8) and had not been communicated to him. It was urged on his behalf that Rule 30A(8) requires that the decision to continue the detention of a detenu must be reduced to writing and must be communicated to the detenu, and the argument was that since these two conditions prescribed by the relevant Rule had not been complied with, the continuance of the detenu 's detention was invalid in law. The Judicial Commissioner has negatived the contentions thus raised by the detenu. He has found that the decision to continue the detenu 's detention reached by the respondent under R. 30A(8) had in fact been reduced to writing, and in support of this contention, he has referred to the fact that the original file containing a record of the decision had been produced on behalf of the respondent before the Judicial Commissioner, but since the respondent 's learned Advocate was apparently not prepared to allow the lawyer of the detenu inspection of the said record, the court did not consider the evidence supplied by it. The argument urged by the detenu that the said record may have been subsequently manufactured was rejected by the Judicial Commissioner. The Judicial Commissioner also considered the fact that the affidavit made on behalf of the respondent showed that when the cases of the detenues were considered by him from time to time, he actually ordered the release of some of them. This fact, according to the Judicial Commissioner, showed that the respondent had applied his mind to the cases of all the detenues and since he released some of them, it followed that in regard to the rest he was satisfied that their detention should be continued. The Judicial Commissioner was apparently inclined to take the view that the relevant Rule did not seem clearly to require that the decision reached by the appropriate authority under R. 30A(8) should be reduced to writing, but he thought it unnecessary to make a definite finding 300 on this issue, because he was satisfied that in the case of Biren Dutta, the decision in question had been reduced to writing. The argument that R. 30A(8) requires that the said decision should be communicated to the detenu was rejected by the learned Judicial Commissioner. It is on these findings that he rejected the petition filed by Biren Dutta and 11 other detenues and held that the continuance of their detention was justified in law. When these matters were argued before this Court on the 6th May, 1964, an interim order was passed directing that the Chief Secretary to the Tripura Administration should forthwith transmit to this Court the original files in respect of the detenues concerned and that the Minister, or the Secretary or the Administrator who reviewed the cases of the detenues and had arrived at a decision that their detention should be continued, should file an affidavit in this Court on or before the 8th June, 1964, and that the affidavit should state all material facts and should indicate whether the decision arrived at was duly communicated to the detenues or not. Accordingly, the original files have been produced before us and additional affidavits have been filed. The learned Solicitor General fairly conceded that he would allow Mr. Garg for the appellants an opportunity to inspect the files inasmuch as he was not going to raise any question of privilege in respect of theme. It is in the light of the minutes made on these files that the principal points raised before us now fall to be considered. Mr. Garg contends that the scheme of the Rules clearly shows that the original order of detention passed under R. 30(1)(b), as well as the decision to continue the detention of the detenues reached by the appropriate authority under R. 30A(8) must be recorded in writing and must comply with the provisions of article 166 of the Constitution. He also urges that R. 30A(8) further requires that the relevant decision reached by the appropriate authority must be communicated to the detenu. In support of his argument that the relevant decision under R 30A(8) must comply with article 166 and must be communicated to the detenu, Mr. Garg has relied on the ,decision of this Court in Dattatreya Moreshwar Pangarkar 301 vs The State of Bombay(1), and Bachhittar Singh vs State of Punjab(1). He has also invited our attention to the observations made by Raghubar Dayal J. in section Partap vs State of Punjab(1). The learned Solicitor General has conceded that the order directing the detention of a citizen under R. 30(1) (b), as well as the order incorporating the decision to continue the detention under R. 30A(8) must be in writing. He, however, challenges the correctness of Mr. Garg 's contention that these orders must comply with article 166, and he disputes his case that the decision reached under R. 30A (8) must be communicated to the detenu. In support of his case he has referred us to the decision of this Court in Mohammad Afzal Khan vs State of Jammu and Kashmir(4), as well as the decision of the Bombay High Court in Pralhad Krishna Kurne vs The State of Bombay(1) and that of the Allahabad High Court in Nandan Singh Bhist vs State of U.P.(6). We do not think it necessary to consider the question as to whether the orders passed under R. 30(1) (b) and the record of the decision reached under R.30A(8) should comply with article 166 of the Constitution or not. It also appears to us to be unnecessary to decide in the present group of cases whether the decision recorded under R. 30A(8) should be communicated to the detenu. We are satisfied that the decision to continue the detention of the detenues which, it is urged on behalf of the respondent, was reached by him under R. 30A(8), has not been recorded in writing as required by the said Rule; and there is no other evidence on record to show that such a decision had then been reached and reduced to writing. It will be recalled that in the present proceedings, it is common ground between the parties that there has to be an order in writing indicating the decision of the appropriate authority reached by him after reviewing the case of the detenu that the continuance of his detention should be ordered. Rule 30A(8) provides that every detention order made by an (1) ; ,(2) [1962] SUPP. 3 S.C.R. 713 (3) ; (5) I.L.R. 1952 Bom. 134(6) A.I.R. 1964 All. 327 302 officer empowered by the Administrator and confirmed by him under clause (b) of the sub rule (6) and every detention order made by the Administrator himself shall be reviewed at intervals of not more than six months by the Administrator who shall decide upon such review whether the order should be continued or cancelled. The question which we have to decide is whether it is shown by the minutes made on the file produced before us by the respondent that he did decide that it was necessary to continue the detention of the detenues before us. The minutes made on the file are no doubt a written record of his decision, and so, the requirement that whatever is decided under R. 30A(8) should be reduced to writing is satisfied; but the question is do these minutes show that the cases of the detenues before us were considered and a decision to continue their detention was reached by the respondent on the relevant occasion, and that presents a very narrow problem for our decision in relation to the construction of the said minutes. The first occasion on which the respondent claims to have reviewed the cases of the detenues before us was on the 15th February, 1963. On that date, he made the following order: "On review of the detention order in respect of all detenus CC decided to cancel detention orders in respect of detenues at section No. 1, 3, 4, 5, 6, 7, 8, 9, 12 and 13. " It is urged by the learned Solicitor General that this order shows that the appropriate authority considered the cases of all the detenues and decided to cancel the detention of some of them, and that, he suggests, should be construed to mean that he decided to continue the detention of detenues other than those whose release he ordered. There is no doubt that this order makes a reference to the review of all detenues and, prima facie, it would be open to the Solicitor General to contend that this part of the order shows that the cases of all the 68 detenues must have been considered by the appropriate authority. In this connection. we would like to emphasise the fact that in exercising its power under 303 R. 30A(8), the appropriate ' authority should record its decision clearly and unambiguously. After all, the liberty of the citizen is in question and if the detention of the detenue is intended to be continued as a result of the decision reached by the appropriate authority, it should say so in clear and unambiguous terms. But assuming that an ,order passed by the appropriate authority under R. 30A(8) can in a proper case be construed to mean his implied decision to continue the detention of some detenues, while releasing some others, we find it difficult to hold that such an implied decision can be inferred from the present order. It is relevant to remember that this order was passed on the 15th February, 1963, and the six months ' period within which review had to be made under R. 30A(8) would have expired on the 25th June, 1963. It is quite likely that even before the six months period expired, the authority considered the matter and came to the conclusion that any further detention of the detenues specified in the order was not justified, and so, even before the, six months ' period expired, he directed that they should be released. That undoubtedly shows that the authority was considering the question very carefully and as soon as he felt satisfied that further detention of the said detenues would be unnecessary, he ordered their release forthwith; but this very consideration suggests that he may have considered the cases of only such detenues as should be released forthwith. Besides, there is nothing to show that after the 15th February, 1963, and before the 25th June, 1963, he considered the matter in respect of the detenues before us and held that the continuance of their detention was justified after the expiration of six months. It is necessary to emphasise that the decision recorded under R. 30A(8) is in the nature of an independent decision which authorises the further detention of the detenu for a period of six months. In other words, the initial order of detention is valid for six months and the detention of the detenu thereafter can be justified only if a decision is recorded under R. 30A(8). That being the nature of the decision which is required to be recorded under R. 30A(8), we are unable to hold that the memorandum in question can be reasonably said to include a decision that the continuance of the detention of the 304 detenues before us was thought to be necessary by the appro priate authority after the expiry of the period of six months. It is true that in the additional affidavit filed by the respondent it has been stated as a submission by him that as a result of the said review (15/2/63) the detention of Biren Dutta as well as others whose detention orders were not cancelled, continued. " This undoubtedly is a matter of argument; it being the respondent 's contention that since the order detaining some detenues was cancelled, logically it follows that the detention of the others was ordered to continue. But even assuming that the respondent had stated in his additional affidavit clearly and unambiguously that he had decided on the 15th February, 1963, that the detention of the detenues before us should be continued, we would not have attached much significance to such a state ment, because what we have to consider is the order passed on the 15th February, 1963, and not what the authority making the order thought it meant or intended it to mean; and so, it comes back to the question of the construction of the order itself. We have carefully considered the argu ments urged before us by the Solicitor General, but we are unable to hold that this order can be said to satisfy the requirements of R. 30A(8) at all. We are satisfied that this order cannot be construed to contain a written record of the decision of the respondent that the detention of the detenues before us should be continued after the expiry of six months from the date of the original order of detention. Then as to the next order passed on the 3rd July, 1963, the position is still worse. It appears that on the 15th May, 1963, the Superintendent of Police, Tripura recommended that some of the detenues should be released, because he thought there was no longer any justification for their continued detention. This matter was discussed between the Superintendent of Police and the Chief Secretary on the 6th June, 1963, and eventually as a result of the conference held between the Chief Minister and the Chief Commissioner an order was passed on the 3rd July, 1963. This order shows that the cases of the persons whose release had been recommended by the Superintendent of Police were considered. These detenues were 25 in 305 number. During the course of the discussion between the Chief Minister and the Chief Commissioner, the Chief Minister appears to have suggested that instead of releasing all the aforesaid 25 detenues together it would be better if they were released in batches, but ultimately, the order passed by the Chief Minister which was assented to by the Chief Commissioner was that all of them may be released at the same time on the 6th July, 1963. In other words, reading the letter written by the Superintendent of Police to the Chief Commissioner on the 15th May, 1963, and the record of the discussion that took place between the Chief Secretary, the Chief Minister and the Chief Commissioner on the 3rd July, 1963, it is clear that the only cases which the authorities considered were the cases of 25 detenues whose release had been recommended by the Superintendent of Police. It is common ground that the detenues before us were not included in the said list of 25 detenues, and so, there is no scope for suggesting that at this time the cases of the detenues other than those who were released were concerned. That being so, we must hold that like the earlier order passed on the 15th February, 1963, the order passed on the 3rd July, 1963, is also of no assistance to the respondent, because neither order can be reasonably construed as containing a decision of the appropriate authority reached under R. 30A(8) to continue the detention of the detenues before us. This conclusion necessarily means that the requirement of R. 30A(8) has not been complied with and that inevitably makes the continuance of the detention of the detenues before invalid in law. The fact that those cases were reviewed subsequently on the 25th September, 1963 and 11th March. 1964, and the decision of the authority was in fact communicated to them would not validate the illegal continuance of the detention of the detenues after six months had expired from the date of their original detention. We have already indicated that we do not propose to consider in these proceedings the two other points of law urged by Mr. Garg but before we part with these matters, we would like to emphasise that even assuming that the decision recorded by the appropriate authority under 51 S.C.20. 306 R. 30A(8) is not, as a matter of law, required to be com municated to the detenu, it is desirable and it would be fair and just that such a decision should in every case be communicated to the detenu. If the appropriate authority considers the question about the continuance of the deten tion of a particular detenu and decides that such continu ance is justified, we see no justification for failing to communicate the said decision to the detenu concerned. If the requirement as to such communication were held to be necessary as a matter of law, non communication would render the continuance of the detention invalid; but that is a matter which we are not deciding in these cases. We are only emphasising the fact that it would be fair that such a decision should be communicated to the detenu. In the result, the appeals and writ petitions are allowed and the detenues concerned ordered to be set at liberty at once. Appeals and Writ Petitions allowed.

The Administrator of the Union Territory of Tripura passed orders detaining 68 persons, including the appellants and the petitioners, under R. 30(1)(b) of the Defence of India Rules, 1962. While gradually releasing 45 of them he purported to detain the appellants and the petitioners under R. 30A(8) of the said Rules. The appellants moved the Judicial Commissioner under article 226 of the Constitution and their case was that the decision to continue them in detention was not recorded in writing nor was it communicated to them and was, therefore, invalid in law. The Judicial Commissioner dismissed the said applications. The petitioners moved this Court under article 32 of the Constitution and their case was also the same. The first review held on February 15, 1963, in respect of all the 68 detenus was recorded as follows, "On review of the detention order in respect of all the detenus CC. decided to cancel orders in respect of detenus at section Nos. 1, 3, 4, 5, 6, 7, 8, 9, 12 and 13. " It was urged on behalf of the respondent that the order by implication continued the detention of the appellants and the petitioners and such detention was confirmed by subsequent orders. Held: (i) The order did not comply with the provisions of R. 30A(8) of the Defence of India Rules and the detenus before this Court must be set at liberty. Decision to continue a detenu in detention must not only be recorded in writing but such writing must clearly and unambiguously indicate that decision. Subsequent reviews under the Rule could not validate the illegal continuance of the detention after the expiry of six months from the date of the original order of detention. Decision recorded under R. 30A(8) is in the nature of an independent decision and further detention can be justified only if the decision is recorded as required by it. 296 Even assuming that an order passed under R. 30A(8) could in a proper case imply the decision to continue the detention of some of the detenus, the present case could not be said to be one such. (ii) Assuming, though not deciding, that a decision recorded under R. 30A(8) of the Rules was not in law required to be communicated to the detenue, it was just and proper that the decision should in every case be communicated to the detenu.

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Appeals Nos. 721 and 791 of 1963. Appeals by certificate and special leave from the judgment and order dated February 16, 1962 of the Madras High Court in Writ Appeals Nos. 16 and 15 ,of 1959 respectively. V. P. Ran an and R. Ganapathy Iyer, for the appellant in C.A. No. 721 of 1963). G. B. Pai, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant (in C.A. No. 791/63). T. section Venkataraman, for the respondent No. 2 (in both the appeals). April 6, 1964. The Judgment of the Court was delivered by WANCHOO, J. These two appeals by special leave raise a common question and will be decided together. The appel lants are proprietors of two bidi concerns. A reference was made by the Government of Madras of dispute between the appellants and their workmen with respect to three matters. In the present appeals however we are concerned with only one matter, namely, whether reduction of annas two in the wages of workers employed under the agents of the appellants was justified and to what relief the workers were entitled. The contention of the appellants before the tribunal was that the workers in question were not their workmen and therefore there being no relation of employers and employees between them and the workmen, the reference itself was in competent and there could be no industrial dispute between them and the workmen concerned, their case being that the workmen concerned were the workmen of independent con tractors. It was found by the tribunal on the basis of evi dence led before it by both parties that the modus operandi with respect to manufacture of bidis in the appellants ' con cerns was that contractors took leaves and tobacco from the appellants and employed workmen for manufacturing bidis. After bidis were manufactured, the contractors took them back from the workmen and delivered them to the appellants. 648 The workmen took the leaves home and cut them there; however the process of actual rolling by filling the leaves with tobacco took place in what were called contractors ' factories. The contractors kept no attendance register for the workmen. There was also no condition that they should come and go at fixed hours. Nor were the workmen bound to come for work every day; sometimes the workmen informed the contractors if they wanted to be absent and sometimes they did not. The contractors however said that they could take no action if the workmen absented them, selves even without leave. The payment was made to the workmen at piece rates. After the bidis were delivered to the appellants payment was made therefor. The system was that the appellants fixed the price of tobacco and leaves supplied to the contractors who took them to the places where work of rolling was done and gave them to the workmen. Next day, the manufactured bidis were taken by the contractors to the appellants who paid a certain price for the manufactured bidis after deducting therefrom the cost of the tobacco and the leaves already fixed. The balance was paid to the contractors who in their turn paid to the workmen, who rolled bidis, their wages. Whatever remained after paying the workmen would be the contractors ' commission for the work done. It may also be mentioned that there were written agreements on the same pattern between the appellants and the contractors in that behalf, though no ,such agreement has been printed in the paper books. as if there was a sale of leaves and tobacco by the appellants to contractors and after the bidis were rolled there was a resale of the bidis to the appellants by the contractors. The; tribunal however held that it was clear that there was no sale either of the raw materials or of the finished products, for, according to the agreement, if bidis were not rolled, raw materials had to be returned to the appellants and the contractors were forbidden from selling the raw materials to any one else. Further after the bidis were manufactured they could only be delivered to the appellants who supplied raw materials and not to any one else. Further price of raw materials fixed by the appellant, as well as the price of the finished products always remained the same and never fluctuated according to market rates. The tribunal therefore concluded that there was no sale of raw materials followed by resale of the finished products and this system was evolved in order to avoid regulations under the Factories Act. The tribunal also found that the contractors generally got only annas two per thousand bidis for their trouble. The tribunal 649 also referred to a clause in the agreement that the appellants would have no concern with the workers who rolled bidis for whom only the contractors would be responsible. But it was of the view that these provisiors were deliberately put into the agreement by the appellants to escape such statutory duties and obligations, as may lie on them under the Factories Act or under the Madras Shops and Establishments Act. Finally on a review of the entire evidence, the tribunal found that this system of manufacture of bidis through the so called contractors was a mere camouflage devised by the appellants. The tribunal also found that the contractors were indigent persons and served no particular duties and discharged no special functions. Raw materials were supplied by the appellants to be manufactured into finished products by the workmen and the contractors had no other function except to take the raw materials to the workmen and gather the manufactured material. It therefore held that the so called contractors were not independent contractors and were mere employees or were functioning as branch managers of various factories, their remuneration being dependent upon the work turned out. It therefore came to the conclusion that the bidi workers were the employees of the appellants and not of the so called contractors who were themselves nothing more than employees or branch managers of the appellants. It finally held that reduction in the wages by two annas per thousand bidis was not justified and the workmen were entitled to the old rates. It therefore ordered the reduction in wages to be restored. Thereupon the appellants filed two writ petitions in the High Court, their contention being that the tribunal was wrong in holding that the contractors and the workmen em ployed by the contractors were the workmen of the appel lants. It seems that a sample agreement was produced before the High Court, which provided inter alia for the following terms: (1) That the proprietor should supply the tobacco and the bidi leaves; (2) that the intermediary should engage premises of his own and obtain the requisite license to carry on the work of having the bidis rolled there; (3) that at no time should more than nine bidi rollers work in the premises of that intermediary; (4) that the intermediary should meet all the incidental charges for rolling the bidis including the cost of thread and the remuneration paid to the bidi rollers; 650 (5) that for every unit of 1,000 bidis rolled and delivered by the intermediary to the proprietor, the latter should pay the stipulated amount, after deducting the cost of the tobacco and the bidi leaves supplied by the proprietor; (6) that the intermediary should not enter into similar engagement with any other industrial concern;, (7) that the price of the raw materials and price to be paid for every unit of 1,000 bidis rolled and delivered were to be fixed at the discretion of the proprietor. Besides these conditions, the contract also provided that it was liable to termination on breach of any of the conditions, and that the proprietors had no connection with and that they assumed no responsibility for the bidi workers who had to look to the intermediary for what was payable to them for rolling the bidis. The learned Single Judge on a review of the terms of the contract and the evidence on record held that neither the bidi roller nor the intermediary was an employee of the appellants. In consequence there could be no industrial dispute within the meaning of section 2 (k) of the Industrial Disputes Act between the appellants and the bidi rollers. The petitions were therefore allowed and the award of the tribunal was set aside. Thereupon there were two appeals by the workmen. The appeal court on a consideration of the terms of the contract and the findings of the tribunal came to the conclusion that the so called contractors were really the agents of the appel lants and that there was no utter lack of control by the appellants on the bidi workers who actually rolled the bidi. The appeal court also found that the intermediaries were im pecunious and according to the evidence could hardly afford to have factories of their own. It also found that the evi dence revealed that the appellants took the real hand in settling all matters relating to the workers, and the intermediary was a mere cipher and the real control over the workers was that of the appellants. The appeal court therefore held that the appellants were the real employers of the workmen and the so called intermediaries or so called independent contractors who were in some cases ex employees, were no more than agents of the appellants. In this view of the matter the appeal court held that the conclusion reached by the tribunal that the intermediaries were merely branch managers 651 appointed by the management and the relationship of employer and employees subsisted between the appellants and bidi rollers was correct. The appeals were therefore allowed, and the order of the tribunal was restored. The appellants have come before us on certificates granted by the High Court. The question whether relationship of master and servant subsists between an employer and employee has been the subject of consideration by this Court in a number of cases. In Dharangadhara Chemical Works Limited vs State of Saurashtra(1) it was held that the question whether a person was a workman depended on whether he had been employed by the employer and the relationship of employer and employee or master and servant subsisted between them. It was well settled that a prima facie test of such relationship was the existence of the right in the employer not merely to direct what work was to be done but also to control the manner in which it was to be done, the nature or extent of such con trol varying in different industries and being by its very nature incapable of being precisely defined. The correct approach therefore was to consider whether, having regard to the nature of the work there was due control and supervision by the employer. It was further held that the question whether the relation between the parties was one as between an employer and employee or master and servant was a pure question of fact, depending upon the circumstances of each case. In that case, the dispute was whether certain agarias who were a class of professional labourers, were workmen or independent contractors. The facts found in that case were that the agarias worked themselves with members of their families and were free to engage extra labour on their own account. No hours of work were prescribed. No muster rolls were maintained; nor were working hours controlled by the master. There were no rules as regards leave or holidays and the agarias were free to go out of the factory after making arrangements for the manufacture of salt. Even so, though certain features which were usually to be found in a contract of service were absent, the tribunal held that on the whole the status of agarias was that of workmen and not that of independent contractors, particularly as supervision and control was exercised by the master extending to all stages ,of manufacture from beginning to end. This Court upheld the view of the tribunal on a review of the facts found in that case. The next case to which reference has been made is Shri Chintaman Rao vs The State of Madhya Pradesh(2). (1) ; (2) ; 652 That was a case of bidi manufacture, and the question that arose for determination was whether certain persons known as sattedars and those who worked under the sattedars were workmen or not. It was found that the sattedars undertook to supply bidis by manufacturing them in their own factories or by entrusting the work to third parties at a price to be paid by the management after delivery and approval. Refer ence was made to the principles laid down in Dharangadhara Chemical Works Limited 's case(1) to determine whether the persons employed were workmen or not, and it was found that the sattedars were not under the control of the factory management and could manufacture the bidis wherever they pleased. It was therefore held that the coolies were neither employed by the management directly nor by the management through the sattedars. A special feature of that case was that none of the workmen under the sattedars worked in factories. The bidis could be manufactured anywhere and there was no obligation on the sattedars to work in the fac tory of the management. The sattedars were even entitled to distribute tobacco to the workers for making bidis in the workers ' respective homes. It was in these circumstances that this Court held that the sattedars were independent contractors and the workers employed by them were not the workers of the management. Then we come to the case of Shri Birdhichand Sharma vs First Civil Judge Nagpur(2). That was also a case of bidi manufacture. The facts found were that the workmen who rolled the bidis had to work at the factory and were not at liberty to work at their houses; their attendance was noted in the factory and they had to work within the factory hours, though they were not bound to work for the entire period and could come and go away when they liked; but if they came after midday they were not supplied with tobacco and thus not allowed to work even though the factory closed at 7 p.m. Further they could be removed from service if absent for eight days. Payment was made on piece rates according to the amount of work done, and the bidis which did not come upto the proper standard could be rejected. On these facts it was held that the workers were workmen under the Factories Act and were not independent contractors. This Court pointed out that the nature and extent of control varied in different industries and could not by its very nature be precisely defined. When the operation was of a simple nature and did not require supervision all the time, control could be exercised at the end of day by the method of rejecting bidis which did not come upto proper standard, (1)[1957] S.C.R. 152. (2)[1961] 3 S.C.R. 161. 653 such supervision by the employer was sufficient to make the workers, employees of the employer and not independent contractors. The nature of the control required to make a person a servant of the master would depend upon the facts of each case. The next case is Shankar Balaji Waje vs State of Maha rashtra(1). That was also a bidi manufacturing case. On the facts of that case the majority held that decision in Shri Birdhichand Shama 's case(2) was distinguishable and the appellant was not a worker within the meaning of the Fac tories Act. It may be noted however that that case also followed the line of decisions of this Court since the decision in the case Dharangadhara Chemical Works Limited(3) as to the criteria for coming to the conclusion whether a person was an employee or an independent contractor. The last case to which reference has been made is again a bidi manufacturing case, namely, Bhikusa Yamasa Kashtriya (P) Limited vs Union of India(4). In that case the main question raised was about the constitutionality of section 85 of the Factories Act and the notification issued by the State of Maharashtra thereunder. The Constitutionality of section 85 and the notification made thereunder was upheld. The question there involved was about the application of section 79 of the, Factories Act with reference to leave and the difficulty felt in Shankar Balaji Waje 's case(1) as to how leave could be calculated in the circumstances was explained with reference% to the decision in Shri Birdhichand Sharma 's case(2). It is in the light of these decisions that we have to decide whether the workmen who work under the so called independent contractors in these cases are the workmen of the appel lants. It has been found by the tribunal and this view has been confirmed by the appeal court that so called independent contractors were mere agents or branch managers of the appellants. We see no reason to disagree with this view taken by the tribunal and confirmed by the appeal court on the facts of these cases. We are not unmindful in this connection of the view taken by the learned Single Judge when he held that on the agreements and the facts found the so called intermediaries were independent contractors. We are however of opinion that the view taken by the appeal court in this connection is the right one. As the appeal court has rightly pointed out the (1)[1957] S.C.R. 152. (2) ; (3) (1962) Supp 1. I S.C.R. 249. (4) ; 654 so called independent contractors were indigent persons who were in all respects under the control of the appellants. There is in our opinion little doubt that this system has been evolved to avoid regulations under the Factories Act. Further there is also no doubt from whatever terms of agreement are available on the record that the so called independent contractors have really no independence at all. As the appeal court has pointed out they are impecunious persons who could hardly afford to have factories of their own. Some of them are even ex employees of the appellants. The contract is practically one sided in that the proprietor can at his choice supply the raw materials or refuse to do so, the so called contractor having no right to insist upon the supply of raw materials to him. The so called independent contractor is even bound not to employ more than nine persons in his so called factory. The sale of raw materials to the so called independent contractor and resale by him of the manufactured bidis is also a mere camouflage, the nature of which is apparent from the fact that the so called contractor never paid for the materials. All that happens is that when the manufactured bidis are delivered by him to the appellants, amounts due for the socalled sale of raw materials is deducted from the so called price fixed for the bidis. In effect all that happened is that the so called independent contractor is supplied with tobacco and leaves and is paid certain amount , for the wages of the workers employed and for his own trouble. We can therefore see no difficulty in holding that the so called contractor is merely an employee or an agent of the appellants as held by the appeal court and as such employee or agent he employs workers to roll bidis on behalf of the appellants. The work is distributed between a number of : so called independent contractors who are told not to employ more than nine persons at one place to avoid regulations under the Factories Act. We are not however concerned with that aspect of the matter in the present appeals. But there can be no doubt that the workers employed by the so called contractors are really the workmen of the appellants who are employed through their agents or servants whom they choose to call independent contractors. It is however urged that there is no control by even the agent over the bidi workers. Now the evidence shows that the bidi workers are permitted to take the leaves homes in order to cut them so that they might be in proper shape and size for next day 's work; but the real work of filling the leaves with tobacco (i.e. rolling the bidis) can only be done in the so called factory of the so called independent contractor. No tobacco is ever given to the workers to be taken home to be rolled into bidis as and when they liked. They have to 655 attend the so called factory of the so called independent contractor to do the real work of rolling bidis. As was pointed out by this Court in Shri Birdhichand Sharma 's case(1) the work is of such a simple nature that supervision all the time is not required. In Birdhichand Sharma 's case(1) supervision was made through a system of rejecting the defective bidis, at the end of day. In the present cases we have not got the full terms of the agreement and it is therefore not possible to say that there was no kind of supervision or control over the workers and that the so called independent contractors had to accept all kinds of bidis whether made upto standard 'or not. It is hardly likely that the so called independent contractor will accept bidis which are not upto the standard; for that is usually the system which prevails; in this trade as wilt be apparent from the facts of the many bidi manufacturing cases to which we have referred. We are therefore not prepared to hold in the absence of any evidence one way or the other that there is no supervision whatsoever of the work done by the workers. In the circumstances we are of opinion that the relationship of master and servant between the appellants and the workmen employed by the ;so called independent contractors is established. As the appeal court has ' pointed out whenever there was a dispute in connection with the manufacture of bidis the workers looked to the appel lants for redress. In one of the cases the manager of one of the appellants sent a letter to the labour officer that the factory was agreeable to increase the wages of the workers from, Rs. 1/14/ to Rs. 2/ per thousand bidis. In the other case also a similar letter was addressed showing that whenever there was increase or decrease in wages of the workers who, work under the so called independent contractors the real decision was taken by the appellants. This conduct on the part of the appellants is clearly inconsistent with their plea that the workers are not their employees and there is no privity between them and the said workers. We are therefore of opinion that on the facts found in these cases the appeal court was right in holding that the conclusion reached by the tribunal that the intermediaries were merely branch managers appointed by the management and the relationship of employers and employees subsisted between the appellants and the bidi rollers is correct. In this view the appeals fail and are hereby dismissed with costs one set of hearing costs. Appeal dismissed (1)[1961] 3 S.C.R. 161.

On a reference of industrial disputes between the appel lants, the proprietors of bidi concerns, and their workmen, the appellants contended before the Industrial Tribunal that the workers in question were not their workmen, but were the workmen of independent contractors. The Tribunal found on the basis of evidence led, that the modus operandi was that contractors took leaves and tobacco from the appellant and ' employed workmen for manufacturing bidis. After bidis were manufactured, the contractors took them back from the work men and delivered them to the appellants. The workmen took the leaves home and cut them there; however the process of actual rolling by filling the leaves with tobacco took place in what was called contractors ' factories. The contractors kept no attendance register for the workmen, there was no condition for their coming and going at fixed: hours, nor were they bound to come for work every day; sometimes they informed the contractors if they wanted to be absent and some times they did not. The contractors said that they could take no action if the workmen absented themselves even without leave. The payment was made to the workmen at piece rates after the bidis were delivered to the appellants. The system was that the appellant paid a certain sum for the manufactured bidis, after deduct ing therefrom the cost of tobacco and the leaves already fixed, to the contractors who in their turn paid to the workmen, who rolled bidis, their wages. Whatever remained after paying the workmen would be contractors ' commission for the work done, The Tribunal held that there was no sale either of the raw materials or of the finished products, for, according to the agreement, if the bidis were not rolled, raw materials had to, he returned to the appellants and the contractors were forbidden from selling the raw materials to anyone else. Further the manufactured bidis could only be delivered to the appellants who supplied the raw materials. Further price of raw materials and finished products fixed by the appellants always remained the same and never fluctuated according to market rate. The Tribunal concluded that the bidi workers were the employees of the appellants and not of the so called contractors who were themselves nothing more then employees or branch managers of the appellants. Thereupon, the appellants filed writ petitions in the High Court, which held that neither the bidi roller nor the intermediary was an employee of the appellants and allowed the writ petitions. On appeal by the workmen the appeal court allowed the appeal and restored the order and conclusion of the Tribunal. On appeal by certi ficate: Held: On the facts found the appeal court 'was right in holding that the conclusion reached by the Tribunal that the intermediaries were merely branch managers appointed ' by the 647 management and the relationship of employers and employees subsisted between the appellants and the bidi rollers was correct. Dharangadhara Chemical Works Ltd., vs State of Saurashtra, ; , Shri Chintsman Rao vs State of Madhya Pradesh, ; , Shri Birdhichand Sharma vs First Civil Judge Nagpur; , , Shankar Balaji Waje vs State of Maharashtra, [1962] Supp. 1 S.C.R. 249 and Bikusu Yamasa Kashtriya (P) Ltd. vs Union of India, ; , discussed.

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Appeal No. 322 of 1963. Appeal from the Judgment and order dated April 1, 1958 of the former Bombay High Court in Miscellaneous Application No. 327 of 1957. K.N. Rajagopala Sastry and R. N. Sachthey, for the appellant. 74 Bishan Narain, section P. Mehta, J. B. Dadachanji, 0. C. Mathar and Ravinder Narain, for the respondent. April 30, 1964. The Judgment of the Court was, delivered by SHAH J. M/s Lal and Company hereinafter called the assessee carry on business in Bombay as commission agents. In the course of assessment proceedings for the year 1954 55 the assessee 's books of account were examined by the Income tax Officer and it was noticed that the assessee had business connections with certain non resident parties. On March, 12, 1957, the Income tax Officer issued a notice calling upon the assessee to show cause why in respect of the assessment year 1954 55 the assessee should not be treated under section 43 of the Indian Income tax Act, 1922, as an agent in respect of twenty five non resident parties named in the notice. The assessee denied that he had "direct dealings" with any non resident party and that in any event the proposed action was barred because the period prescribed for initiation of proceeding had expired, and requested the Income tax Officer to drop the proceeding. The Income tax Officer B III Ward, Bombay issued on March 27, 1957, a notice under section 34 of the Indian Income tax Act for assessment of the assessee as an agent of the twentyfive named non resident parties. The assessee submitted a return showing his income as "nil". The Income tax Officer held that the transactions disclosed from the books of account of the assessee clearly showed that the assessee "had regular business connection with" non resident parties, that through the assessee those non resident parties were receiving income, profits and gains, and section 43 was clearly applicable to the assessee there being definite business connection between the assessee and the named non residents. He therefore treated the assessee as agent of the non resident parties, under section 43 of the Act. The Income tax Officer also rejected the contention of the assessee that action under section 34 was barred at the date of the notice issued to the assessee. Relying upon the first proviso to section 34(1) (b) (iii) inserted by the Finance Act, 1956, the Income tax Officer held that the Legislature had 75 by amendment extended the "time limit in clear and express terms so as to cover" action under section 34 against a person on whom the assessment or reassessment is to be made as an agent of a non resident person under section 43 of the Act for the assessment year 1954 55, and accordingly assessed the income of the assessee at Rs. 60,684, estimating the income of the parties residing outside the taxable territories, in the absence of accounts to be Rs. 50,000. The asessee then :filed a petition under article 226 of the Constitution in the High Court of Judicature at Bombay praying that a writ in the nature of mandamus or prohibition do issue restraining and prohibiting the Income tax Officer from giving effect to or taking any steps or proceedings by way of recovery or otherwise in pursuance of the orders of assessment. The assessee pleaded, inter alia, that the proceedings for assessment under section 34 of the Act commenced by the Income tax Officer after the expiry of one year from the end of the assessment year 1954 55 were without the authority of law. The High Court of Bombay, following its earlier judgment in section C. Prashar vs Vasantsen Dwarkadas(1) held that at the date when the notice was issued, by reason of the proviso which was in operation under section 34(1) in respect of the assessment year 1954 55 the notice was out of time and that the period provided thereby could not be extended by the Finance Act of 1956 so as to authorise the Income tax Officer to issue a notice for assessment or reassessment of the assessee as statutory agent of a party, residing outside the taxable territory. In the view of the High Court the notice dated March 27, 1957, was invalid, and a valid notice being a condition precedent to the exercise of jurisdiction under section 34, the proceeding under section 34 was not maintainable. Against the order of the High Court issuing writs prayed for by the assessee, with certificate of fitness this appeal is preferred by the Income tax Officer, Bombay. In order to appreciate the contention raised by the assessee and which has found favour with the High Court, it is necessary to refer to the relevant provisions of section 34, 76 as they stood before the section was amended by the Finance Act, 1956. The clauses relevant prescribing the period within which notice may be issued read as follows: (1) (a) If x x x (b) x x x he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, x x x 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 or recompute the loss or depreciation allowance; x x x Provided that (i) x x x (ii) x x x (iii) Where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of non resident person under section 43, this sub section shall have effect as if for the periods of eight years and four years a period of one year was substituted. " By section 18 of the Finance Act, 1956, section 34 was extensively amended and cl. (iii) of the proviso was substituted by the following proviso: "Provided further that the Income tax Officer shall not issue a notice under this sub section for ,any year after the expiry of two years from that year if the person on whom an assessment or reassessment is to be made in pursuance of the notice is a person deemed to be an agent of non resident person under section 43." Initially a notice of assessment or re assessment under section 34(1) against a person deemed to be an agent of a non 77 resident person under section 43 could not be issued after the expiry of one year from the end of the year of assessment: under the amended section this period was extended to two years from the end of the relevant assessment year. In the course of assessment to income tax for the year 1954 55 the relevant law applicable prescribed that a notice of assessment or re assessment against a person deemed to be an agent under section 43 could not be issued after the expiry of one year from the end of the assessment year. That period expired on March 31, 1956, and after that date no notice could be issued, relying upon the law as it stood before amendment for assessment or re assessment treating the assessee as an agent of a non resident under section 43. But the Income tax Officer sought recourse to the amended provision which gave him a period of two years from the end of the assessment year, for initiating assessment proceedings, and the authority of the Income tax Officer to so act is challenged by the assessee. Section 18 of the Finance Act, 1956, is, it is common ground, not given retrospective operation before April 1, 1956. The question then is, whether the Income tax Officer may issue a notice of assessment to a person as an agent of a non resident party under the amended provision when the period prescribed for such a notice had before the amended Act came into force expired? Indisputably the period for serving a notice of re assessment under the unamended section had expired, and there was in the Act as it then stood, no provision for extending the period beyond the end of one year from the year of assess ment. The Income tax Officer could therefore commence a proceeding under section 34 on March 27, 1957, only if the amended section applied and not otherwise. The amendin Act came into force after the period provided for the issue of a notice under section 34 before it was amended had expired. It is true that there was no determinable point of time between the expiry of the prescribed time within which the notice could have been issued against the assessee under section 34 proviso (iii) before it was amended. But there was no overlapping period either. Prima facie, on the expiry of the period prescribed by section 34 as it originally stood, there was no scope for issuing a notice unless the 78 Legislature expressly gave power to the income tax Officer to issue notice under the amended section notwithstanding the expiry of the period under the unamended provision or unless there was overlapping of the period within which notice could be issued under the old and the amended pro vision. But counsel for the Commissioner submitted that at no time was the Income tax Officer bereft of authority to issue a notice under section 34 of the Indian Income tax Act, 1922. He submitted that till the mid night of March 31, 1956, notice could be issued in exercise of the powers con ferred by section 34 proviso (iii) before it was amended and notice of assessment or re assessment could also be issued under the amended provision immediately thereafter in exercise of the powers conferred by section 18 of the Finance Act, 1956. Counsel relied upon the rule contained in section 5(3) of the General Clauses Act that unless the contrary is expressed, a Central Act or Regulation shall be construed as coming into operation immediately on the expiration of the day preceding its commencement. It was submitted that this is merely a statutory recognition of the rule which is well settled that where a statute names a date on which it shall come into operation, it shall be deemed to come into force immediately on the expiration of the previous day and the law does not take into consideration fractions of a day. Reliance was placed by counsel upon Tomlinson vs Bullock( ') and English vs Cliff(2). In Tomlinson 's case( ') the question was whether an order of affiliation could be made on an application made in respect of a child born at any time of the day an August 10, 1872 under the Bastardy Act, 35 & 36 Vict. c. 65. In an application made for an order of affiliation, it was held that the order could competently be made in respect of a child born at any time of the day on the 10th of August, 1872, because the Act in the contemplation of law for this purpose came into effect from the commencement of the day on which it received the royal assent, and that normally an Act which comes into operation becomes law as soon as it commences. In English vs Cliff (2) it was held by the Court of Chancery (1) (2) 79 that the trustees under a deed of settlement dated May 13, 1892, who stood possessed of an estate during the term of twenty one years from the date of settlement upon trust to apply the rents and profits mentioned therein and who were authorised at the expiration of the said period to sell the estate could competently sell it and their action was not liable to be challenged as infringing the rule of per petuity. It was held in that case that the determination of the term of twenty one years and the conunencement of the trust for sale arising at one and the same moment, the trust was not void for remoteness on the ground that it was limited to take effect at the expiration of the term. Neither of these cases has, in our judgment, any application to the principle applicable in the present case. The power to issue a notice under the unamended Act came to an end on March 31, 1956. Under that Act no notice could thereafter be issued. It is true that by the amendment made by section 18 of the Finance Act, 1956, a notice could be issued within two years from the end of the year of assessment. But the application of the amended Act is subject to the principle that unless otherwise provided if the right to act under the earlier statute has come to an end, it could not be revived by the subsequent amendment which extended the period of limitation. The right to issue a notice under the earlier Act came to an end before the new Act came into force. There was undoubtedly no determinable point of time between the expiry of the earlier Act and the commencement of the new Act; but that would not, in our judgment, affect the application of this rule. Reliance was also placed by counsel for the Commissioner upon the rule which has prevailed in the Supreme Court of the United States of America that "a new statute should be construed as a continuation of the old one with the modifications contained in the new one, although it formally repeals the old statute, when it re enacts its substantial provisions and the two statutes are almost identical." Bear Lake & River Water Works & irrigation Company and Jarvis Conklin Mortgage Trust Company vs William Garland and Corey Brothers & Co.( '). It appears (1) I64 U.S. 1 80 to have been recognised in the Supreme Court of the United states of America in Pacific Mail section section Co. vs jolifee(1) that repeal in terms of a former statute does not necessarily indicate an intention of the legislature thereby to impair right which had arisen under the act which was repealed. As the provisions of the new act took effect simultaneously with the repeal of the old one, the Supreme Court held that the new one might more properly be said to be substituted in the place of the old one, and to continue in force, with modifications, the provisions of the old act, instead of abrogating or annulling them and re enacting the same as a new and original act. Apart from the question whether the rule so enunciated is applicable to the interpretation of Indian statutes, in this case we are not concerned with re enactment of a statute. The statute abrogates one rule of limitation, and enacts another rule with a limited retrospective operation. To such a case the rule enunciated by the Supreme Court of America, assuming it applies, attributing to the Legislature an intention to continue in force the provisions of the old Act, with a modification, so as to give to the new statute in substance operation retrospectively from the date on which the old statute was enacted, can have no application. We do not think that any such intention may be attributed to the Legislature in enacting section 18 of the Finance Act, 1956 so as to make it the basis of a liability to taxation after the expiry of the period prescribed in that behalf by the Legislature . Counsel also submitted that section 34 lays down a rule of limitation for commencing an action for assessment or re assessment, and that in the absence of an express provision to the contrary, a statute of limitation in operation at a given time governs all proceedings from the moment of its enactment, even though the cause of action on which the proceeding was based came into existence before the Act was enacted. Equating a proceeding under section 34 of the Indian Income tax Act with a suit or a proceeding in a civil court, counsel said that the law of limitation being a law of procedure, assessment proceedings including proceedings for re assessment are governed by the law in force (1) 69 U.S. 81 at the date on which they are instituted, and that the rule that the repeal of a statute without express words or clear implication in the repealing statute, cannot take away a right vested in a party acquired under the repealed statute when it was in force, is a rule of prescription and not of procedure, and notwithstanding general observations to the contrary in certain decisions, applies only to those actions in which by the determination of the period prescribed, a right to institute an action for possession of property is extnguished. Counsel relies in support of the plea on Baleswar vs Latafat(1). It is unnecessary to dilate upon this argument in any detail, or to enter upon an analysis of the numerous cases which were mentioned at the Bar to determine whether the rule that without an express pro vision, or a clear implication arising from the amending statute rights acquired under the repealed statute by the determination of the period of limitation prescribed thereby cannot be deemed to be revived, applies to suits for posses sion only. It may be sufficient to make two comments on the argument. The rule has in fact been applied to suits other than suits for possession: e.g. Mahomed Mehdi Faya vs Sakinabai(2) (a suit for restitution of conjugal rights); M. Krishnaswami Nalcker vs A. Thiruvengada Muddaliar(3) (a suit for recovery of a debt); Shambhoonath Saha vs Guruchurn Lahiri (4) (an application for execution); and Nepal Chandra Roy Chowdhury vs Niroda Sundari Ghose(5) (an application for setting aside an ex parte decree). Again soon after it was delivered the the authority of Baleswar 's case( ') was weakened by the judgment in Jagdish vs Saligram(6) where the Court doubted the correctness of the earlier view. A proceeding for assessment is not a suit for adjudication of a civil dispute. That an income tax proceedings it; the nature of a judicial proceeding between contesting parties, is a matter which is not capable of even a plausible argument. The Income tax authorities who have power to assess and recover tax are notacting as judges deciding a (1) I.L.R. 24 Pat. 383 (3) A.I.R. (1935) mad. 245(4) I.L.R. (5) I.L.R. (6) I.L.R. 24 Pat. 391 51 S.C. 6. 82 litigation between the citizen and the States: they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State: The Commissioner of Inland Revenue vs Sneath(1); and Shell Company of Australia Ltd. vs Federal Commissioner of Taxation( '). Again the period prescribed by section 34 for assessment or re assessment is not a period of limitation. The section in terms imposes a fetter upon the power of the Income tax Officer to bring to tax escaped income. It prescribes different periods in different classes of cases for enforce ment of the right of the State to recover tax. It was observed by this Court in Ahmedabad Manufacturing and Calico Printing Co. Ltd. vs section C. Mehta. income tax Officer and another( '): "It must be remembered that if the Income tax Act prescribes a period during which tax due in any particular assessment year may be assessed, then on the expiry of that period the department cannot make an assessment. Where no period is prescribed the assessment can be completed at any time but once completed it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escapement of assessment of income for one reason of another (section 34). Both these sections which enable reopening of back assessments provided their own periods of time for action but all these periods of time, whether for the firs assessment or for rectification, or for reassess ment, merely create a bar when that time passe( (1) 164 (2) [1931) A.C. 275 (3) [1963] SUPP. 2 S.C.R. 92,117 118 83 against the machinery set up by the Incometax Act for the assessment and levy of the tax. They do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period. The liability is not enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reason of a new power. This is, of course, subject to the condition that the law must say that such is the jurisdiction, either expressly or by clear implication. If the language of the law has that clear meaning, it must be given that effect and where the language expressly so declares or clearly implies it, the retrospective operation is not controlled by the. commencement clause. " Counsel for the Commissioner sought to derive some support from Income tax Officer, Companies District I, Calcutta and another vs Calcutta Discount Company Ltd.( ') in which Chakravartti C.J., dealing with the effect of the Income tax and Business Profits Tax (Amendment) Act, 1948, observed: "The plain effect of the substitution of the new section 34 with effect from 30th March, 1948 is that from that date the Income tax Act is to be re ad as including the new section as a part thereof and if it is to be so read, the further effect of the express language of the section is that so far as cases coming within cl. (a) of sub section (1) are concerned all assessment years ending within eight years from 30th March, 1948 and from subsequent dates, are within its purview and it will apply to them, provided the notice con templated is given within such eight years. What is not within the purview of the section is an assessment year which ended before eight years from 30th March, 1948. (1) 84 But it may be recalled that the amending Act of 1948 with which the Court was concerned in Calcutta Discount Company 's case(1) came into force on September 8, 1948, but section 1(2) prescribed that the amendment in section 34 of the Income tax Act, 1922, shall be deemed to have come into force on March 30, 1948, and the period under the unamended section within which notice could be issued under section 34(3) against the assessee company ended on March 31, 1951. Before that date the amending Act came into operation, and at no time had the right to re assess become barred. In considering whether the amended statute applies, the question is one of interpretation i.e., to ascertain whether it was the intention of the Legislature to deprive a taxpayer of the plea that action for assessment or re assessment could not be commenced, on the ground that before the amending Act became effective, it was barred. Therefore the view that even when the right to assess or re assess has lapsed on account of the expiry of the period of limitation prescribed under the earlier statute, the Income tax Officer can exercise his powers to assess or re assess under the amending statute which gives an extended period of limitation, was not accepted in Calcutta Discount Company 's case( '). As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non resident party under the Income tax Act before it was amended, ended on March 31, 1956. It is true that under the amending Act by section 18 of the Finance Act, 1956, authority was conferred upon the Income tax Officer to assess a person as an agent of a foreign party under section 43 within two years from the end of the year of assessment. But authority of the Income tax Officer under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date whenhe issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the (1) 85 commencement of the amending Act. The Legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation i.e., upto April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the Legislature does not intend to attribute to the amending provision a greater retrospectivity than is xpressly mentioned, nor to authorise the Income tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided, become barred. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellant company was carrying on business in Bombay as commission agents. In the course of assessment proceedings for the year 1954 55, the Income tax Officer noticed from the ssee 's boo s of account that the assessee had business connections with certain nonresident parties and found that the transactions disclosed that through the assessee those non resident parties were receiving income, profits and gains. He considered that section 43 of the Indian Income tax Act, 1922, was applicable to the assessee and issued on March 27, 1957, a notice under section 34 of the Act for assessment of the assessee as an agent of the said non resident parties. The assessee pleaded, inter alia, that the proceedings intiated by the Income tax Officer under section 34 were barred since the notice issued by him was after the expiry of one year from the end of the assessment year 1954 55, but the Income tax Officer rejected the contention relying on the amendment made to the proviso to section 34(l)(b)(iii) by the Finance Act, 1956, under which the period of one year was changed to two years. The amendment was given retrospective operation upto April 1, 1956, but since the power to issue a notice under the unamended Act had come to an end on March 31, 1956, the question was whether the Income tax Officer could issue a notice of assessment to a person as an agent of a non resident party under the amended provision when the period prescribed for such a notice had before the amended Act came into force expired. HELD:The proceedings initiated by the Income tax Officer by the notice dated March 27, 1957, were barred; the authority of the Incometax Officer under the Indian Income tax Act before it was amended by the Finance Act of 1956 having come to an end, the amending provision would not entitle him to commence a proceeding even though at the date when he issued the notice it was within the period provided by the amendment. Notwithstanding the fact that there was no determinable point of time between the expiry of the time provided under the old Act and the commencement of the Amendment Act, in the absence of an express provision or clear implication, the legislature could not be said to have intended to attribute to the Amending provision a greater retros pectivity than was expressly mentioned.

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ion No. 211 of 1963. Petition under article 32 of the Constitution of India for the enforcement of the Fundamental Rights. R. K. Garg, for the petitioner. C. K. Daphtary, Attorney General, B. R. L. Iyengar and B.R. G. K. Achar, for the respondents. March 31, 1964. The Judgment of the Court was delivered by SIKRI, J. This is a petition under article 32 of the Consti tution for enforcing the fundamental rights of the petitioner under articles 14, 16 and 19 of the Constitution. Although the petition raises various points, before us only two points have been argued by Mr. Garg, on behalf of the petitioner. We are grateful to Mr. Garg, who has argued as amicus curiae, for the assistance he has given. The two points may be formulated as follows: (1) That the Mysore General Services (Revenue Subordinate Branch) Recruitment Rules, 1959, were not made with the previous approval of the Central Government under section 115(7) of the State 551 Re organisation Act, and, therefore, do not govern the petitioner insofar as the conditions of service have been varied to his disadvantage; (2) That the Madras Government had, prior to, November 1, 1956, by various orders, reduced the petitioner in rank in violation of article 311(2) of the Constitution and article 16. In order to appreciate the arguments addressed to us, it is necessary to give a few facts. The petitioner was selected by the Madras Public Service Commission as a Lower Division Clerk under the Madras Ministerial Service Rules in 1949, and was allotted to the Revenue Department and posted in South Kanara District. He was promoted as Upper Division Clerk on April 2, 1956. According to the petitioner, he should have been promoted much earlier as he had rendered outstanding and meritorious service. According to the State, the petitioner was considered for inclusion in the eligibility list from 1955 onwards, but was not selected as he was not considered fit. The State admits that he was promoted as Upper Division Clerk with effect from April 2, 1956, but alleges that this was on a temporary basis. He was later reverted and then again posted as a temporary Upper Division Clerk. In August 1957, the petitioner was considered and included in the eligibility list at Serial No. 14. This list was regularised on December 12, 1957, in accordance with Rules 39(e) and 35 of the Madras State and Subordinate Service Rules, with effect from October 19, 1957. According to the petitioner this resulted in the loss of benefit of service and increments. In the meantime, reorganisation of States took place under the State Reorganisation Act (XXXVII of 1956) South Kanara District, except Kasaragod Taluk, went to the new Mysore State and the petitioner was allotted to it. On May 11, 1957, the Government of India addressed a memorandum (No. S.O. SRDI 1. APM 57) to all State Governments. Broadly speaking, the Central Government said that some conditions of service should be protected, e.g., substantive pay of permanent employees, certain type of special pay, lave rules unless the Government servant opts for new leave rules, etc. But in respect of departmental promotion it said that "the question whether any protection should be given in respect of rules and conditions applicable to Government servants affected by reorganisation immediately before the date of reorganisation in the matter of travelling allowance, discipline, control, classification, appeal, conduct, pro bation and departmental promotion was also considered. The Government of India agree with the view expressed on behalf of the State representatives that it would not be appropriate 552 to provide for any protection in the matter of these condi tions. " Therefore, it is evident from this memorandum that the Central Government had told the State Government that they might, if they so desire, change service rules as indi cated in the memorandum. But Mr. Garg argues that even so this does not amount to previous approval within section 115(7) of the to the making of the Mysore General Services (Revenue Subordinate Branch) Recruitment Rules, 1959. What then is the true meaning of the expression "previous approval" in the proviso to section 115(7). Sub section (7) of section II 5 provides that: Nothing in this section shall be deemed to affect after the appointed day the operation of the provisions of Chapter 1 of Part XIV of the Constitution in relation to determination of the conditions of service of persons serving in connection with the affairs of the Union or any State; Provided that the conditions of service applicable immediately before the appointed day to the case of any person referred to in sub section (1) of subsection (2) shall not be varied to his disadvantage except with the previous approval of the Central Government. " The effect of this sub section is, inter alia, to preserve the power of the State to make rules under article 309 of the Constitution, but the proviso imposes a limitation on the exercise of this power, and the limitation is that the State cannot vary the conditions of service applicable immediately before November 1, 1956, to the disadvantage of persons mentioned in sub ss (1) and (2) of section 115. It is not disputed that the petitioner is one of those persons. Mr. Garg has submitted that the very fact that the Mysore General Services (Revenue Subordinate Branch) Recruitment Rules, 1959, as framed, were not sent to the Central Government for approval before being promulgated shows that previous approval has not been obtained. The memorandum, he says, is not approval but an abdication of the powers of the Central Government. In this connection he relies on the decision of the Court of Appeal in the case of In re Bosworth and Corporation of Gravesend(1), but this, decision has no bearing on the point under discussion. An Order in Council had been made under the provisions of the Burial Act, 1853, whereby it was ordered that no new burial ground shall be opened in (amongst other places) Gravesend, without the previous approval of one of Her Majesty 's Principal Secretaries of State. Permission was sought of the Secre tary of State to add additional land to an existing cemetery (1) [19051 2 K.B. 426. 553 The Secretary of State replied that his sanction to the pro posed addition was not required. It is this reply which was characterised by Collins, M. R., as renouncing of jurisdiction. We cannot appreciate how this assists us in interpreting the proviso to section 115(7). He further relied on the unreported ' judgment of the High Court of Mysore in C. K. Appanna vs State of Mysore(1), but this proceeds on a concession made by the Government Pleader and does not advance petitioner 's case. In our opinion, in the setting in which the proviso to section 115(7) is placed, the expression "previous approval" would include a general approval to the variation in the conditions of service within certain limits, indicated by the Union Government. It has to be remembered that article 309 of the Constitution gives, subject to the provisions of the Constitution, full powers to a State Government to make rules. The proviso to section 115(7) limits that power, but that limitation is removable by the Central Government by giving its previous approval. In this context, we think that it could not have been the intention of Parliament that Service Rules made by States would be scrutinised in the minutest detail by the Central Government. Conditions vary from State to State and the details must be filled by each State according to its re quirements. The broad purpose underlying the proviso to section 115(7) of the Act was to ensure that the conditions of ser vice should not be changed except with the prior approval of the Central Government. In other words, before embarking on varying the conditions of service, the State Governments should obtain the concurrence of the Central Government. In the memorandum mentioned above, the Central Government, after examining various aspects, came to the conclusion that it would not be appropriate to provide for any protection in the matter of travelling allowance, discipline, control, classification, appeal, conduct, probation and departmental promotion. In our opinion, this amounted to previous approval within the proviso to section 115(7). It may be mentioned that by this memorandum the State Governments were required to send copies of all new rules to the Central Government for its information. Therefore ' in our opinion, there is no force in the first contention of the learned counsel for the petitioner, and we hold that the ruler, were validly made. There are two preliminary hurdles in the way of the petitioner regarding the second point taken on his behalf. Firstly, the State of Madras has not been made a party to this petition. Secondly, he never raised these points while he was serving under the State of Madras. It is difficult at this stage to challenge orders, which if quashed, would affect the rights of other civil servants who are not (1) W.P. No 88 of 1962 ; judgement dated January 13,1964. 554 parties to this petition. At any rate, the petitioner has not been able to show how article 16 was infringed before he was allotted to the new Mysore State. The State in its reply has asserted that all the orders complained against were passed by competent authorities, after considering the merits of the petitioner on each occasion. It was for the competent authorities to judge the merits of the petitioner. We find no force in this contention and hold that no infringement of article 16 has been established. Accordingly, in the result, the petition fails. In the circumstances of the case we order that the parties will bear their own costs in this Court. Petition dismissed.

The petitioner was selected as a Lower Division Clerk under the Madras Ministerial Service Rules in 1949, and was posted in South Kanara District. He was promoted as upper division clerk on April 2, 1956 and according to him, he should have teen promoted much earlier. According to the State, the Petitioner was considered for inclusion in the eligibility list from 1955 onwards, but was not selected as he was not considered fit. The State admitted that he was promoted as Upper Division clerk with effect from April 2, 1956, but alleged that this was on a temporary basis. He was later reverted and then again posted as temporary Upper Division clerk. In August, 1957, the petitioner was considered and included in the eligibility list at serial No. 14. This list was regularised on December 12, 1957, in accordance with Madras State and Subordinate Service Rules, with effect from October 19, 1957. According to the petitioner this resulted in the loss of benefit of service and increments. In the meantime, reorganisati;on of States took place under the and South Kanara District went to the new Mysore and the petitioner was allotted to it. On May 11, 1957, the Government of India addressed a memorandum to all State Governments and in respect of departmental promotion it said that "the question whether any protection should be given in respect of rules and conditions applicable to Government Servants affected by reorganisation immediately before the date of reorganisation in the matter of travelling allowance, discipline, control, classification, appeal, conduct, probation and departmental promotion was also considered. The Government of India agree with the view expressed on behalf of the State res presentatives that it would not be appropriate to provide for any protection in the matter of these conditions. It was urged on behalf of the petitioner (i) that the Mysore General Services Recruitment Rules, 1959, were not made with the previous approval of the Central Government under section 115(7) of the States Re organisation Act, and, therefore, do not govern the petitioner in so far as the conditions of service have teen varied to his disadvantage and (ii) that the Madras Government had, prior to November 1, 1956, by varoius orders, reduced the petitioner in rank in violation of article 311(2) of the Constitution and article 16. 550 Held: (i) In the setting in which the proviso to section 115(7) of the Act is placed, the expression "previous approval" would in clude a general approval to the variation in the conditions of service within certain limits, indicated by the Union Government. article 309 of the Constitution gives, subject to the provisions of the Constitution, full powers to a State Government to make rules. The proviso to section 115(7) of the Act limits that power, but that limitation is removable by the Central Government by giving its previous approval. The broad purpose underlying the Proviso to section 115(7) of the Act was to ensure that the conditions of service should not be changed except with the prior approval of the Central Government. In the memorandum, the Central Government, after examining various aspects, came to the conclusion that it would not be appropriate to provide for any protection in the matter of travelling allowance, discipline, control, classification, appeal, conduct, probation and departmental promotion. This amounted to previous approval within the proviso to section 115(7). By this memorandum the State Governments were required to send copies of all new rules to the Central Government for its information. Therefore, it must be held that the rules were validly made. In re Bosworth and Corporation of Gravesend, [1905] 2 K.B. 426 and C. K. Appamna vs State of Mysore, W.P. No. 88 of 1962, held inapplicable. (ii) The petitioner failed to show, how article 16 was in fringed before he was allotted to the new Mysore State. The State in its reply had asserted that all the orders complained against were passed by competent authorities, after considering the merits of the petitioner on each occasion. It was for the competent authorities to judge the merits of the petitioner. Therefore, it must be held that infringement of article 16 was not established.

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Appeal No. 587 ,of 1963. Appeal by special leave from the judgment and order dated November 30, 1960 of the Madhya Pradesh High Court, in Miscellaneous Civil Case No. 73 of 1960. K.N. Rajagopal Sastri and R. N. sachthev, for the appellant. S.K. Kapoor, section Murty and K. K. fain, for the respondent, 811 April 17, 1964. The judgment of the Court was delivered by SIKRI, J. The respondent, Swadeshi Cotton & Flour Mills, hereinafter referred to as the assessee, is a limited company which owns and runs a textile mill at Indore. For, the assessment year 1950 51 (accounting year calendar year 1949), which was its first year of assessment under the Indian Income tax Act, 1922 (hereinafter referred to as the Act) it claimed that under section 10(2)(x) of the Act it was entitled to an allowance in respect of the sum of Rs. 1,08,325/ which it had paid as bonus for the year 1947 in the calendar year 1949, as a result of the award of the Industrial Tribunal, dated January 13, 1949. The claim of the assessee was not accepted by the Income Tax authorities. The Appellate Tribunal held that it was a liability relating to an earlier year and not the year 1949. However, on an application by the assessee it stated a case and referred two questions. We are concerned only with one which reads thus: "Whether on the facts and in the circumstances of the case the assessee is entitled to claim a deduction of bonus of Rs. 1,08,325/ relating to the calendar year 1947 in the assessment year 1950 51? The High Court of Madhya Pradesh answered the question in the affirmative. The appellant, having failed to get a certificate under section 66A(2) of the Act, obtained special leave from this Court, and that is how the appeal is before us. The facts and circumstances referred to in the question have been set out in the statement of the case. Unfortunately, the facts are meagre, but since the appellant is content to base his case on a few facts, which will be referred to shortly, it is not necessary to call for a further statement of the case. The facts, in brief, are as follows. The assessee paid as bonus to its employees the sum of Rs. 1,08,325/9/3 for the calendar year 1947 in terms of an award made on January 13, 1949 under the Industrial Disputes Act. This amount was debited by the assessee in its profit and loss account for the year 1948 and the corresponding credit was given to the bonus payable account. The books for 1948 had not been closed till the date of order of the Industrial Tribunal, January 13, 1949. This bonus was in fact paid to the employees in the calendar year 1949, the relevant assessment year being 1950 51. The Appellate Assistant Commissioner had further found that upto 1946 when the order for payment of bonus used to be received before the company 's accounts for the year were finalised, the amount of bonus used to be in fact 812 debited to the profit and loss account of the respective year. this finding is repeated by the Appellate Tribunal in its appellate order. On these facts the learned counsel for the appellant, ,Mr. Sastri, contends that according to the mercantile system of accounting, which is followed by the assessee, and on which its profits have been computed for the accounting calendar year 1949, the year to which the liability is properly attributable is the calendar year 1947 and not 1949. He says that it was a legal liability of the assessee which arose in 1947 and should have been estimated and put into the accounts for 1947. In the alternative he has invited us to reopen the accounts for the year 1947, following the practice which,according to him, obtains in England. Inour opinion, the answer to the question must depend on theproper interpretation of section 10(2)(x), read with section 10(5), of theAct. These provisions read as follows: "section 10(2)(x) Any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission; Provided that the amount of the bonus or commission is of a reasonable amount with reference to (a)the pay of the employee and the conditions of his service , (b)the profits of the business, profession or vocation for the year in question; and (c)the general practice in similar businesses, professions or vocations. " section 10(5) In sub section (2), "paid" means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section;. " If we insert the definition of the word 'paid ' in sub cl. (x), it would read as follows: any sum actually paid or incurred according to the method 'of accounting upon the basis of which the profits or gains are computed under this section, to an employee as bonus. " As the assessee 's profits and gains have been computed according to the mercantile system, the question, using for .he time being the terms of the clauses, comes to this: "Has this sum of Rs. 1,08,325/ been incurred by the assessee according to the mercantile system in the calendar year 1947 or 1949?" 813 At first sight the sentence does not read well, but the meaning of the word 'incur ' includes 'to become liable to ' Therefore, the question boils down to: "In what year did the liability of this sum of Rs. 1,08,325/ arise, according to the mercantile system ? " The mercantile system of accounting was explained in a judgment of this Court in Keshav Mills Ltd. vs Commis sioner of Income Tax, Bombay(1) thus: "That system brings into credit what is duc, immediately it becomes legally due and before it is actually received, and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. " These observations were quoted with approval in Calcutta ,Co. Ltd. vs Commissioner of Income Tax, West Bengal(2). On the facts of this case, when did the legal liability arise in respect of the bonus? This depends on the facts of the case and the nature of the bonus awarded in this case. This Court has examined the nature of profit bonus it is common round, that the bonus with which we are concerned with was a profit bonus in various cases. It is explained in Muir Mills vs Suti Mills Mazdoor Union(3) that "there .are two conditions which have to be satisfied before a demand for bonus can be justified and they are (1) when 'wages fall short of the living standard, and (2) the industry makes huge profits part of which are due to the contribution 'Which the workmen make in increasing production. The demand for bonus becomes an industrial claim when either or both these conditions are satisfied. " This matter was again considered in the case of Associated Cement Co. vs Their Workmen(4). This Court observed: "It is relevant to add that in dealing with the concept of bonus this Court ruled that bonus is neither a gratuitous payment made by the employer to his workmen nor can it be regarded as a deferred wage. According to this decision, where wages fall short of the living standard and the industry makes profit part of which is due to the contribution of labour, a claim for bonus can be legitimately made." ; (2) ; ; (4) 814 In 1961, this Court was able to say that "the right to claim bonus which has been universally recognised by indus trial adjudication in cases of employment falling under the said Act has now attained the status of a legal right. Bonus can be claimed as a matter of right provided of course by 'the application of the Full Bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand." (Vide Gajendragadkar, J., as lie then was, in Workmen vs Hercules Insurance Co.(1). The Indian Tea Association vs Workmen(2) this Court held that "the profit bonus can be awarded only by reference to a relevant year and a claim for such bonus has therefore to be made from year to year and has to be settled either amicably between the parties or if a reference is made, it has to be determined by Industrial adjudication. A general claim for the introduction of profit bonus cannot be made or entertained in the form in which it has been done in the present proceedings. " It follows from the above decisions of this Court that: (a) workmen are entitled to make a claim to profit bonus if certain conditions are satisfied; (b) the workmen have to make a claim from year to year; (c) this claim has either to be settled amicably or by industrial adjudication; and (d) if there is a loss or if no claim is made, no bonus will be permissible. In our opinion it is only when the claim to profit bonus, if made, is settled amicably or by industrial adjudication that a liability is incurred by the employer, who follows the mercantile system of accounting, within section 10(2)(x), read with section 10(5) of the Act. On the facts of this case, it is clear that it was only in 1940 that the claim to profit bonus was settled by an award of the Industrial Tribunal. Therefore, the only year the liabiiity can be properly attributed to is 1949, and hence we are of the opinion that the High Court was right in answering the question in favour of the assessee. The second contention of the learned counsel does not appeal to us. We are of the opinion that this system of reopening accounts does not fit in with the scheme of the Indian Income Tax Act. We have already held in Commissioner of Income Tax, Madras vs A. Gajapathy Naidu, Madras(,) that as far as receipts are concerned, there ,an be no reopening ; (2) [1962] Supp. (1) S.C.R. 557. (3)A.I.R. 815 of accounts. The same would be the position in respect of expenses. But even in En land accounts are not opened in every case. Halsbury gives various instances in footnote (m) at p. 148. Vol.20. Mr. Sastri has relied on various English cases but it is unnecessary to refer to them as Lord Radcliffe explains the position in England, in Southern Railway of Peru Ltd. vs Owen(1) thus: "The courts have not found it impossible hitherto to make considerable adjustments in the actual fall of receipts or payments in order to arrive at a truer statement of the profits of successive years. After all, that is why income and expenditure accounting is preferred to cash accounting for this purpose. As I understand the matter, the principle that justified the attribution of something that was in fact, received in one year to the profits of an earlier year, as in such cases as Isaac Holden and Sons vs Inland Revenue Comrs. and Newcastle Breweries Ltd. vs Inland Revenue Comrs. was just this, that the payment had been earned by services given in earlier year and, therefore, a true statement of profit required that the year which had borne the burden of the cost should have appropriated to it the benefit of the receipt. " The principle mentioned by Lord Radcliffe would not apply to a profit bonus. As stated above, a profit bonus is strictly not wages, at least not for the purpose of computing liability to income tax; it is not an expense, in the ordinary sense of the term, incurred for the purpose of earning profits. A fortiori profits have already been made. It is more like sharing of profits on the basis of a certain formula. One other point raised by Mr. Sastri remains. He urged that the word "for the year in question" in the proviso to sub section 10(2)(x) mean "for the year in which allowance is claimed. " We are unable to agree with him. The words 'for the year in question ' mean the year in respect which bonus is paid. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

The respondent company paid to its employees Rs. 1,08,325/ as bonus for the year 1947 in the calendar year 1949, as a result of the award of the Industrial Tribunal dated January 13, 1949. This amount was debited by the company in its profit and loss account for the year 1948 and the corresponding credit was given to the bonus payable account. The books for 1948 were not closed till the date of the award of the Industrial Tribunal. For the relevant assessment year, 1950 51, the company claimed that under section 10(2)(x) of the Indian Income tax Act, 1922, it was entitled to an allowance in respect of the amount paid as bonus, but the claim was rejected by the Income tax authorities on the ground that according to the mercantile system of accounting which was followed by the assessee the year to which the liability was properly attributable was the calendar year 1947 and not 1949. It was the case of the Income tax authorities that it was a legal liability of the assessee which arose in 1947 and should have been estimated and Put into the accounts for 1947, and that, if necessary, the amounts for the year 1947 should be reopened. It was admitted that the bonus in the instant case was a profit bonus. Held:(i) It was only when the claim to profit bonus, if made, was settled amicably or by industrial adjudication that a liability was incurred by the employer, who followed the mercantile system, within section 10(2)(x), read with section 10(5), of the Indian Income tax Act, 1922; and as it was only in 1949 that the claim to profit bonus was settled by an award of the Industrial Tribunal, the only year the liability could be properly attributed to was 1949. (ii) The system of reopening accounts was not applicable under thescheme of the Indian Income tax Act. (iii) The words "Year in question." in proviso (b) to s.10 (2)(x) of the Act meant "year in respect of which bonus was paid".

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ivil Appeal No. 257 of 1962. Appeal from the judgment and decree dated February 19, 1957 of the Allahabad High Court in section A. F. No. 4 of 1952. section T. Desai, and J. P. Goyal, for the appellants. G. section Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent No. 2. The Judgment of the Court was delivered by Shah J. Respondents I to 3 in this appeal presented a petition before the Insolvency Judge, Kanpur for an order adjudicating the second appellant Kotwaleshwar Prasad insolvent. In their petition they alleged that Kotwaleshwar had in the course of business dealings with them borrowed Rs. 15,000 on September 28, 1935 from respondents I and 3 and had executed a promissory note agreeing to repay the amount, and that he had borrowed Rs. 3,500, on January 9, 1936 and Rs. 4,000 on April 7, 1936 from respondent 2, and executed similar promissory notes, that he had failed to repay the amounts due by him and with a view to defeat or delay his creditors secluded himself so as to deprive his creditors of the means of communicating with him, and had thereby committed an act of insolvency. The Insolvency Judge by order dated October 8, 1937 adjudicated Kotwaleshwar insolvent and appointed the first appellant the Official Receiver, Kanpur, as receiver of his estate with powers under section 80 of the Provincial Insolvency Act, 1920 hereinafter called 'the Act '. The Receiver proceeded in exercise of the powers under section 33 read with section 80 of the Act to frame a schedule of debts. The claims set up by the respondents were challenged by Kotwaleshwar and a creditor named Abdul Sayed, but the Official Receiver included the claims of the respondents in the schedule of debts, for in his view Kotwaleshwar had admitted the claims on October 8, 1937 before the Insolvency Court. In appeal under section 68 to the Insolvency Judge the matter was remanded to the Official Receiver with directions to hold a fresh enquiry into the debts due to the respondents. The Official Receiver then held a further enquiry and rejected the claims of the respondents I to 3. He held that it was not proved that Kotwaleshwar had received consideration for the three promissory notes. In the view of the Official Receiver the documentary evidence produced by Kotwaleshwar and the respondents established that the promissory notes were executed by Kotwai 256 eshwar under the influence of respondents I to 3 and their servant Amir Hassan and that the evidence including the books of account of respondents 1 to 3 in support of the advance of consideration under the promissory notes was unreliable. In appeal against the order of the Official Receiver, the Insolvency Judge, Kanpur directed that the names of respondents I to 3 be included in the schedule of creditors. In the view of the Insolvency Judge the presumption of consideration arising under section 118 of the Negotiable Instruments Act supported the rest of the evidence which was directed to establish the genuineness of the signatures and the endorsements of execution on the promissory notes by Kotwaleshwar and on the receipts executed by him and that the Kachi Rokar of the respondents were adequately corr borated by the evidence of the creditors, their witness Abdul Rashid and others and that Kotwaleshwar had failed to discharge the burden which lay heavily on him to establish want of consideration. Against the order of the Insolvency Judge an appeal was preferred to the District Court, Kanpur. During the pendency of the appeal respondents 1 and 3 were declared evacuees under the Administration of Evacuee Property Act and the Assistant Custodian of Evacuee Property in whom their property had vested was impleaded as a party respondent. In the view of the District Court the testimony of witnesses of the respondents in support of the plea of payment of consideration was unreliable and that the admission made by Kotwaleshwar before the Insolvency Judge on October 8, 1937 was procured by the exercise of undue influence and that the books of account relied upon by the respondents and the oral evidence in support thereof were unreliable. The District Judge observed that the presumption under section 118 of the Negotiable Instruments Act in respect of the promissory notes did arise, but it stood in the circumstances of the case weakened and the burden shifted to respondents I to 3, to prove affirmatively that the sums covered by the three promissory notes were in fact paid to the insolvent and that they failed to discharge the burden. Against the order passed by the District Judge, a second appeal being No. 4 of 1952 was preferred under section 75 (I.) proviso 2 of the to the High Court of Allahabad. The Division Bench hearing the appeal referred the following two questions to a Full Bench. These questions were (1) Whether the presumption mentioned in cl. (a) of section 118, can be 257 invoked in insolvency proceedings where an alleged debt against the insolvent is called in question by the official receiver or by a creditor or by the insolvent ? (2) If it can be invoked, would circumstances tending to make it doubtful that consideration passed under the n egotiable instrument even though coupled with a denial on the part of the maker of the instrument, suffice to deprive the creditor of the benefit of the presumption and require him to prove by evidence that consideration did actually pass ? A Full Bench of the High Court by majority having recorded an affirmative answer on the first question, the second appeal was placed for hearing before a Division Bench of the High Court. The Division Bench observed that the District Court had recorded certain findings and from those findings it had inferred as a matter of law that the statutory presumption under section 118 of the stood rebutted. The High Court then observed : "The correctness, or otherwise, of the preliminary inference must need (sic) be considered first. Scrutiny of that inference should however be prefaced with the observation that it is open to question not only because the various findings, or at least the material ones, described as circumstances by the court below, whereon that inference was based suffer from one or the other of the legal defects pointed out above, but also because the inference drawn by that court as a result of its view that the statutory presumption stood rebutted was a finding on a question of law and not on a question of fact. That inference, or finding, of the court below was that the onus of proving consideration had shifted on to the creditors. . .A finding which has to draw on a rule of law for the recording of it or for the ascertainment of its truth is a finding on a question of law, any other a finding on a question of fact. The finding that onus has shifted has to draw on the rules of pleading and proof, of procedure and evidence, for the recording of it as well as for the ascertainment of its truth. It is therefore a finding on a question of law." The Court then held that in the case before it "not only had the insolvent failed to displace, or even to weaken, the presumption in favour of the creditors under section 118 of the Negotiable Instru 258 ments Act, but the consideration stood fully established, even if there was no initial presumption in favour of the creditors, by the evidence adduced by them and by the insolvent 's own admission. " With special leave, this appeal is preferred by the Official Receiver and Kotwaleshwar. The District Court found on the evidence that the insolvent 's father died in 1933 leaving considerable properties, that the insolvent was at the time of his father 's death a young man about 20 years of age, inexperienced and open to all the temptations of early life, that the insolvent "got mixed up" with Amir Hassan and others and "they initiated him into the mysteries of wine and women", that although the promissory notes were not executed ",under the influence of drink" there were grounds for holding that he was under the influence of Amir Hassan when he signed them, that it was significant that the three promissory notes were executed in quick succession and at that time the insolvent was already indebted to other creditors to the extent of Rs. 6,000 that the respondents had no previous business relations with the insolvent, that although the creditors knew that the insolvent 's share in the property left by his father was only Rs. 28,000 to Rs. 30,000 and that he was joint in estate with his brother, no kind of security was taken from the insolvent, nor was any enquiry made whether the said property was encumbered or not, that respondent 3 Abdul Wahid admitted that about 21 months after the execution of the promissory note dated September 28, 1935 he came to know that the insolvent was executing "bogus and fictitious promissory notes" in favour of his friends to defraud his real creditors, and therefore it was incredible that further sums should have been advanced under the two subsequent promissory notes of the aggregate value of Rs. 7,500, that the insolvent was "fairly well off for his ordinary needs" and there was no apparent reason why he should have borrowed those considerable sums of money, that the respondents did not have sufficient funds or resources with them to advance either the amounts covered by the three promissory notes or those under the prior promissory notes of September 4, 1935 and September 15, 1935, that the thumb impression of the insolvent had been taken in addition to his signatures on the promissory note, and that his signatures were also obtained on the Rokar Bahi, that the oral evidence produced by the respondents in proof of the payment of consideration did not inspire confidence, that the admission of the insolvent dated October 8, 1937 on the foot of which the order of adjudication was passed appeared to have been made in suspicious circumstances and it was an erroneous admission and therefore did not bind the insolvent and that the Bahi 259 Khatas of the creditors were of a suspicious character. AR these findings were findings of fact. The District Court inferred from the facts found that the statutory presumption under section 118 of the had been weakened and the burden which lay upon the insolvent was discharged and it was not open to the High Court exercising jurisdiction under section 75(1) proviso 1, nor even under proviso 2, of the Provincial Insolvency Act to set aside the judgment of the District Court, for it is well settled that the question whether a statutory presumption is rebutted by the rest of the evidence is a question of fact : Wali Mohammad vs Mohammad Bakhsh (1). This would be sufficient to dispose of the appeal. But the question whether the Official Receiver is bound to give effect to the statutory presumption in respect of a negotiable instrument arising under section 118 of the when the negotiable instrument is sought to be relied upon by a creditor in the course of the insolvency proceeding in proof of the debts to be entered in the schedule of creditors, has been fully argued before us and as the High Court has overruled an earlier decision of that Court: Ram Lal Tandon vs Kashi Charan (2), and as the question is of some importance, we deem it necessary to express our opinion on that question. Section 33 of the Provincial Insolvency Act by the first subsection provides : "When an order of adjudication has been made under this Act, all persons alleging themselves to be creditors of the insolvent in respect of debts provable under this Act shall tender proof of their respective debts by producing evidence of the amount and particulars thereof, and the Court shall, by order, determine the persons who have proved themselves to be creditors of the insolvent in respect of such debts, and the amount of such debts, respectively, and shall frame a schedule of such persons and debts : The Act imposes a duty upon the court to frame a schedule of creditors and of the debts due to them which are provable under the Act. For that purpose the court has to hold an enquiry into the debts due by the insolvent which are provable. A proceeding under section 33 of the Provincial Insolvency Act is not a proceeding between the insolvent and the proving creditor. (1) L.R. 57 I.A. 86, 92. (2) A.I.R. 1928 All. 260 The proceeding is between the creditors represented by the official receiver and the insolvent. When a creditor, seeking to prove a debt relying upon a negotiable instrument, or other evidence makes a claim for inclusion of the debt due to him, the court, or where he is authorised the receiver of the estate of the insolvent, has to be satisfied about the existence of the debt, the amount due, its particulars and that it is provable in insolvency. Section 33 does not indicate the quantum of proof which may be regarded as sufficient to prove a debt. A court may accept in proof of a debt a registered letter to the court and an affidavit verifying the debt (see section 49 of the Act). That however is a matter of procedure, and does not lay down as to what is sufficient to prove the debt. In each case it is for the court or the receiver (Subject of course to review in the manner provided by the Act) to consider whether the debt of which the creditor claims inclusion is proved. The decision of the question must of necessity depend upon the circumstances and the evidence led to prove the debt. In the present case the High Court by majority took the view that in a proceeding under section 33 when the promissory note is brought before the Court by the promisee, a presumption that the promissory note was made for consideration arises under section II 8 of the and unless that presumption is rebutted by the promissory by other creditors or by the receiver that the amount for which the promissory note is executed must be included in the schedule. In so holding the High Court pri marily relied upon absence of any reference to the nature of the proceeding in which the presumptions are required to be raised in relation to negotiable instruments. It,,must be noticed in the first instance that presumption under section 118 of the is a presumption of consideration : it does not in all cases prove the quantum of debt due by the insolvent at the date of insolvency. The Insolvency Court has, it must be remembered, to ascertain whether a debt is due by the insolvent, whether the debt is provable in insolvency, and the quantum of the debt due at the material date. In making this enquiry in its three aspects even the judgment of a court against the debtor may not be regarded as binding upon the Court. In Ex Parte Lennox(1), it was held that a judgment which the judgment debtor cannot set aside, may still be subjected to investigation by the court of Bankruptcy to enquire whether the debt on which the judgment was founded was a good debt, and if the Court be satisfied that it was not, the Court may refuse to make a receiving (1) [1885]16 Q.B.D. 315, 261 order in respect of the debt. The principle of that case was extended in In Re. Fraser Ex Parte Central Bank of London(1). It was held in that case that "upon the hearing of a creditor 's petition for a receiving order against a judgment debtor, the Court of Bankruptcy has power, at the instance of the debtor himself, to go behind the judgment and to inquire into the validity of the debt, even though the debtor has previously applied in the action to set aside the judgment, and his application has been refused, and the refusal affirmed by the Court of Appeal. " Lord Esher, M. R., observed at pp. 636 637 "The decision (Ex parte Lennox) is based upon the highest ground viz., that in making a receiving order, the Court is not dealing simply between the petitioning creditor and the debtor, but it is interfering with the rights of his other creditors, who, if the order is made, will not be able to sue the debtor for their debts, and that the Court ought not to exercise this extraordinary power unless it is satisfied that there is a good debt due to the petitioning creditor. The existence of the judgment is no doubt prima facie evidence of a debt; but still the Court of Bankruptcy is entitled to enquire whether there really is a debt due to the petitioning creditor. " A debt to be entered in the schedule must therefore be a real debt. A judgment against a debtor which is sought to be relied upon in proving a debt does not necessarily establish the existence of a real debt for the judgment may have gone by default, it may have gone by consent or it may have been procured for any other reason. In a proceeding relating to proof of debts the question which arises being not one between the insolvent and the proving creditor alone, the rights of other creditors of the insolvent have of necessity to be considered. Even if for some reason the debtor himself is estopped from denying the debt there will be no estoppel against the Insolvency Court. The Court therefore in each case has jurisdiction to investigate whether there is a real debt: whether production of a judgment or a negotiable instrument or other evidence may be regarded as sufficient to regard the debt as proved is a matter for the Insolvency Court to decide. The question is not to be adjudged in the light of any estoppel which may operate against the insolvent or of any presumption. The Court in a given case may rely merely upon a judgment or a negotiable or other instrument, and admit the debt to the schedule not because there is an estoppel 1. [1892] 2 Q . B.D. 633. L2Sup./64 4 262 against the Receiver or the other creditors, or presumption of 1aw in favour of the evidence produced, but because in its view in the light of the circumstances no further enquiry beyond proof of the judgment or negotiable instrument or other document evidencing the debt and proof of non satisfaction of the debt since the date thereof is sufficient. The Court has power, however, to insist upon proof of the debt apart from the judgment or the negotiable or other instrument. The reason is that the Insolvency Court with a view to effectively distribute the estate of the insolvent among the creditors is entitled to go behind outward forms of transactions and to ascertain the truth of the debts sought to be proved, and the estoppel to which the insolvent may have subjected himself will not prevail against the Receiver. Whether the power should be exercised in the case of a judgment debt in a given case depends upon the discretion of the Court which has to be exercised on sound judicial principles. It is true that the Court ordinarily; does not go behind a judgment against the debtor, on a bare suggestion by the debtor that the debt which is merged in the judgment did not exist or was bad. There must undoubtedly be circumstances prima facie justifying an enquiry There must appear something that the judgment was procured by fraud or collusion, or that there has been miscarriage of justice But a mere irregularity or error in form will not be a sufficient reason for going behind the judgment. When a debt secured by a promissory note is sought to be proved, the Insolvency Court must enquire into the reality, and the quantum of consideration. What shape this enquiry may take will depend upon the circumstances of the case. In a given case the Insolvency Court may regard an affidavit setting out the particulars ,of the debt, and affirming execution of the promissory note by the insolvent, and asserting non satisfaction of the debt, as sufficient In other cases, the Court may enter upon a fuller enquiry which the circumstances of the case may demand. But in all cases of proof of debts under section 33 the burden is upon the creditor. That burden may be discharged by the affidavit of the creditor viewed in the light of a presumption which the Court may raise under section 114 of the Evidence Act, that a bill of exchange accepted or endorsed, was for good consideration. If that be the true effect of. section 33 of the Provincial Insolvency Act, and we think both on principle and authority that is the true effect, of necessity the presumption under section 118 of the that every negotiable instrument was made or drawn for consideration cannot avail against the Receiver of the estate of the insolvent 263 It is true that section 118 of the , unlike section 119 to section 122 which occur in Ch. XIII, does not refer to a proceeding in suit where the various presumptions directed have to be raised. The section is undoubtedly in terms general. But there is no reason to suppose that it was intended to apply to a proceeding which is not in the nature of a civil dispute between the parties to the negotiable instrument or their privies. The is intended to codify the law merchant relating to 'dealings concerning negotiable instruments. The presumptions which are raised under section 118 do undoubtedly set out special rules of evidence relating to negotiable instruments, but in our opinion the nature of the presumptions from their very nature operate in favour of or against the parties to the negotiable instrument or their privies and cannot generally apply to persons who do not claim under the parties to the instrument. In Anumolus Narayana Rao vs Chattaraju Venkatappayya(1) it was observed by Varadachariar J., that a suit on a promissory note instituted against an undivided son of a Hindu promisor governed by the Mitakshara law after the latter 's death cannot be regarded as one against the heirs or representatives of the promisor, because it only seeks to enforce the Hindu law theory of pious obligation of the sons in respect of the property which the sons have taken by survivorship. The pious obligation can arise only on the assumption of the existence of a debt due by the father and in such a case the onus of proving the existence of the debt must prima facie be laid on the creditor who can call in aid the presumption permissible under the general law of evidence, namely, section 114 of the Indian Evidence Act and not the presumption under section 118 (a) of the . The learned Judge observed "Though this section is not, like sections 119 to 122, limited in terms to a suit upon the instrument, it seems only reasonable to hold that the special rules of evidence laid down in section 118 must have been intended to apply only as between the parties to the instrument or those claiming under them. In other cases the presumption can only be in the terms enacted in section 114 of the Evidence Act (vide illus. c) which by the use of the expression 'may presume leaves it to the Court to apply the presumption or not according to circumstances." (1) I.L.R. 264 Section 114 of the Indian Evidence Act authorises the Court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Under the third illustration of section 114 the Court may presume that a bill of exchange accepted or endorsed was accepted for good consideration. But the section provides, that the, Court shall also have regard to other material facts in considering whether the maxim does or does not apply in the particular case before it. It is therefore open to the Court to consider in its proper setting, the fact that the drawer of a bill of exchange was a man of business, and the acceptor was a young and ignorant person completely under the former 's influence. This is one illustrative fact which the Court may consider in raising the presumption. There may be other circumstances which may also justify the Court in declining to raise the presumption. Mr. Pathak for the respondents urged that the Indian Evidence Act was enacted in 1872 and the having been enacted in 1881, and as the two provisions conflict or overlap, section 118 of the must supersede section 114 of the Evidence Act. We are unable to accept that contention. Undoubtedly section 114 of the Evidence Act is a general provision which enables the Court to presume, though not obliged to do so, that a bill of exchange or a promissory note were founded on a good consideration. Section 118 of the , however, enacts a special rule of evidence which operates between parties to the instrument or persons claiming under them in a suit or proceeding relating to the bill of exchange and does not affect the rule contained in section 114 of the Evidence Act, in cases not falling within section 11 8 the . In our view the High Court was in error in holding that a statutory presumption of consideration arose in favour of the respondents in the proceedings under section 33 for settlement of the schedule of creditors, and the Receiver exercising power under section 80 of the Act was bound to admit the debts in the schedule if the insolvent or the other creditors failed to displace that presumption The appeal must therefore be allowed, the order of the High Court set aside, and the order of the District Court restored, with costs in this Court.

The second appellant, who had executed promissory notes in favour of the respondents was adjudicated an insolvent on a petition by them. The Official Receiver in exercise of the powers under sections 33 and 80 of the Provincial Insolvency Act (5 of 1920) and under directions of the Insolvency Judge, inquired into the claims of the respondents and rejected them. On appeal, the Insolvency Judge directed the inclusion of their names in the schedule of creditors. The appeal to the District Court against the order of the Insolvency Judge was allowed. In second appeal to the High Court, it was held, that the inference drawn by the District Court from its findings was a matter of law and that therefore the High Court had jurisdiction under section 75(1), to interfere with the order of the District Court. Relying upon the presumption in favour of creditors in section 118 of the Negotiable Instruments Act (26 of 1881), the High Court set aside the judgment of the District Court. The Official Receiver and the insolvent appealed to the Supreme Court. HELD : The appeal should be allowed. Since all the findings of the District Court were findings of fact and the question whether a statutory presumption was rebutted by the rest of the evidence was also a question of fact, the High Court had no jurisdiction to set aside the judgment of the District Court. [259A C]. Wali Mohammad V. Mohammad Bakhsh, (1930) L.R. 57 I.A. 86. approved. Section 118 of the Negotiable Instruments Act, enacts a special rule of evidence which operates only between parties to the instrument or persons claiming under them in a suit or proceeding relating to the negotiable instrument. The section does not affect section 114 of the Evidence Act, and in cases not falling within section 118 of the Negotiable Instruments Act the Court may or may not presume that a promissory note was founded on good consideration. Therefore, in a proceeding relating to proof of debts, the question being not one between the insolvent and the proving creditor alone, and since the rights of other creditors of the insolvent have of necessity to be considered, the Court has jurisdiction to investigate whether there is a real debt. Even if for some reason the debtor himself is estopped from denying the debt, there could be no estopped against the Insolvency Court. There is thus no statutory presumption of consideration in favour of the creditors under promissory notes in proceedings under section 33 of the Provincial Insolvency Act for settlement of the schedule of creditors, and the Receiver exercising powers under section 80 of that Act is not bound to admit the debts in the schedule merely because the insolvent or the creditors have failed to displace such a presumption. [261F 262C; 264E G]. Case law reviewed.

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Appeal No. 644 of 1964. Appeal by special leave from the judgment and order dated February 25, 1964, of the Rajasthan High Court in D. B. Election Appeal No: 93 of 1963. R. K. Garg, for the appellant. B. D. Sharma, for respondent No. 1. 117 The Judgment of the Court was delivered by Shah J. At the last general elections held in February 1962 the appellant Kumaranand contested a seat in the Rajasthan Legislative Assembly from the Beawar constituency and was declared elected. Brij Mohan Lal who was a candidate at the election then presented a petition challenging the election of the appellant on the ground that the appellant had in the course of the election committed corrupt practices within the meaning of section 123(4) of the Representation of the People Act, 1951, by publishing a poem containing false statements of fact relating to the personal character and conduct of the applicant Brij Mohan Lal and which were highly prejudicial to his election prospects. The Election Tribunal declared the appellant 's election void under section 1 00 ( 1 ) (b) of the Act. Against the order of the Tribunal, the appellant appealed to the High Court of Rajasthan at Jodhpur. At the hearing of the appeal it was contended by the respondent Brij Mohan Lal, inter alia, that the appellant had failed to enclose with the memorandum of appeal a Government Treasury receipt showing that a deposit of five hundred rupees had been made by him in favour of the Election Commission as security for the costs of the appeal, and his appeal was, on that account, not maintainable. The High Court held that the appellant had failed to comply with the provisions of section 119A of the Act and on that account the appeal filed by him was incompetent. The High Court declined to accede to the request made by the appellant to condone the delay, if any, in the filing of the appeal under the proviso to section 116A(3) and to rectify the defect arising from the appellant 's failure to enclose a Government Treasury receipt for Rs. 500 as required by section 119A, and dismissed the appeal. With special leave, this appeal has been preferred by the appellant. The facts bearing on the plea which has found favour with the High Court of Rajasthan and the relevant provisions of the Representation of the People Act in force at the material time may be briefly stated. Section 119A of the Act which was added by section 64 of Act 27 of 1956 and was further amended by Act 58 of 1958 reads as follows : "Every person who prefers an appeal under Chapter IVA shall enclose with the memorandum of appeal a Government Treasury receipt showing that a deposit of five hundred rupees has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commission as security for the costs of the appeal. 118 Instead of enclosing with the memorandum of appeal a Govern ment Treasury receipt showing that a deposit of Rs. 500 had been made in favour of the Election Commission, the appellant through his Advocate Vijay Chandra Mehta tendered on October 21, 1963, the amount of Rs. 500 in the office of the Registrar of the High Court. The amount tendered was accepted and was duly credited in the name of the appellant as "security deposit '. The tender form for payment into Court of the security for costs, as completed by the office of the Registrar, High Court, Rajasthan, was as follows "Original tender : 771/21 10 63 R.R.D. No. 239/31 10 63. In the High Court of Judicature for Rajasthan at Jodhpur Jaipur Bench Instruction to applicant. Fill up accurately columns 1 to 4. Name of party on whose Shri Kumaranand. behalf the money is tendered 2. Name of parties and num Kumaranand vs Brij Mohan ber of the suit Lal D. B. Election appeal/63. Nature of payment Security Deposits. Amount tendered Rs. 500 (Rs. Five hundred only). Office report May be deposited. Sd./ Vijay Chandra Mehta Sd/ Illegible 21 10 63 Signature of Cashier Stamp Dated Dated Receipt acknowledged in Register No. R.R.D. No. 239/ 31 10 63 only by credited, dated to S.B. Ch. No. 157/54/ 21 10 63. Sd/ Mohammed Haji 31 10 63 Signature of Receiving Officer 119 N.B. To be filed with the record. Sd/ Prem Raj 31 10 Signature of Accountant. " It is clear from the terms of the tender that the amount was deposited in the High Court on behalf of the appellant Kumaranand as "security deposit" in the proceeding "Election appeal Kumaranand vs Brij Mohan Lal", and the cashier endorsed on the tender form that the amount paid "may be deposited". The receipt was then entered in the Register and it was ordered by the Accountant that it may be filed with the record. This deposit of Rs. 500 in the High Court manifestly did not comply with the, requirements of section 119A of the Act. The tender form did not indicate that the deposit was at the disposal of the Election Commission or that it was to be utilised in the manner authorised by law. Even it did not recite that the Election Commission had control over the amount or was payable on proper application being made in that behalf. Section 121 of the Act, insofar as it is material, by Subs. (1) provides that if any direction for payment of costs by any party to any person is made under Part VI such costs shall be paid in full out of the security deposit and the further security deposit, if any, made by such party, on an application made in writing in that behalf to the Election Commission by the person in whose favour the costs have been awarded. Section 119A is enacted with a view to secure the costs of the successful party and for that purpose the Legislature has enacted that the deposit should be made in a Government Treasury in favour of the Election Commission so that the Election Commission would pay the amount to the person entitled to the costs. But failure to comply with the requirements of section 119A does not necessarily result in the dismissal of the appeal, for the Act imposes no express penalty for non compliance with the requirements of that section. Under section 90(3) the Tribunal is bound to dismiss an election petition which does not comply with section 81 or section 82 notwithstanding that it had not been dismissed by the Election Commission under s,. 85. No similar penalty is prescribed by the Legislature in the matter of failure to comply with the requirements of section 119A. It may also be observed that by cl. (4) of section 90 as originally enacted for failure to comply with the provisions of section 117 of the Act which required a petitioner to enclose with an election petition a Government Treasury receipt showing that a deposit of two thousand rupees bad been made by him either in a Govern 120 ment Treasury or in the Reserve Bank of India in favour of the Election Commission as security for the costs of the petition, it was provided that the Tribunal may dismiss an election petition This clause was later modified and renumbered as cl. (3) by Act 27 of 1956, and it was enacted that the Tribunal shall dismiss an election petition which does not comply, amongst others, with the provisions of section 117. By the amendment made by Act 40 of 1961, reference to section 117 was, however, omitted. The Legislature therefore has deliberately made a distinction between failure to comply with certain requirements of the statute. In respect of certain defaults the Election Tribunal is obliged to dismiss the election petition, but for default in complying with the provisions of section 119A no such penalty is imposed. As observed in Jagan Nath vs Jaswant Singh and Ors.(1) by Mahajan, C.J. : "The general rule is well settled that the statutory requirements of election law must be strictly observed and that an election contest is not an action at law or a suit in equity but is a purely statutory proceeding unknown to the common law and the Court possesses no common law power. It is also well settled that it is a sound principle of natural justice that the success of a candidate who has won at an election should not be lightly interfered with and any petition seeking such interference must strictly conform to the requirements of the law. None of these propositions however have any application if the special law itself confers authority on a tribunal to proceed with a petition in accordance with certain procedure and when it does not state the consequence of non compliance with certain procedural requirements laid down by it. In cases where the election law does not prescribe the consequence or does not lay down penalty for non compliance with certain procedural requirements of that law, the jurisdiction of the tribunal entrusted with the trial of the case is not affected." The question which then has to be considered is whether in case of failure to comply with the requirements of section 119A the High Court had jurisdiction to rectify the mistake committed in making the deposit for costs. There can be no doubt that an amount of Rs. 500 was intended to be and was in fact deposited by the appellant as security for costs of the respondent, though it was described in the tender by the somewhat inappropriate caption "security deposit". It appears that the Advocate appearing for the appellant in the High Court did not properly appreciate the scope (1) [1954] (1)S.C.R.892, 895. 121 of the amendment made in the Act by Act 56 of 1956, which incorporated section 119A. He proceeded as if this was an ordinary civil appeal in which security for costs was required by law to be deposited in Court. In not acquainting himself with the statutory provisions applicable to the due lodgement of the memorandum of appeal, the Advocate undoubtedly acted negligently, and if that was the only circumstance governing the disposal of the appeal, we would not be justified in interfering with the order of the High Court. There are, however, certain other considerations which have not been given due effect by the High Court before dismissing the appeal. In the absence of any penalty prescribed by the Legislature for failure to comply with the requirements of section 119A the jurisdiction of the High Court to entertain the appeal is not affected or jeopardised. The appellant was it is true not entitled on that account to ignore the statutory provision requiring that a Government Treasury receipt for the requisite amount in favour of the Election Commission as security for the costs of the appeal shall be enclosed. But when there is default in complying with the requirement, it is for the Court in each case to consider whether it will exercise its discretion to proceed with the appeal after rectifying the mistake committed or it will decline to proceed with the appeal. In the present case as observed earlier the Advocate failed to acquaint himself about the provisions of section 119A. It is also somewhat unfortunate that the office of the Registrar of the High Court shared the ignorance of the Advocate. The tender form which was produced before the High Court clearly discloses that the amount of Rs. 500 was intended to be deposited as security for costs of the respondent in the Election appeal: Kumaranand vs Brij Mohan La]. Instead of depositing that amount in a Government Treasury or in the Reserve Bank, the amount was deposited in the High Court. The amount was accepted and the receipt was filed with the record, and this was regarded as sufficient compliance with the requirements of section 119A. The Deputy Registrar of the High Court accepted the presentation and numbered the appeal without raising any objection to the procedure followed. This would justify an inference that the office of the Registrar of the High Court was misinformed, as the Advocate was, as to the staturory requirements imposed by the Representation of the People Act in the matter of deposit of security for costs of the appeal. If the memorandum of appeal had not. been accepted by the Registrar 's office, because it was not accompanied by a Government Treasury receipt as required by the statute, the defect could have been cured by the appellant. But the memorandum of appeal 122 was accepted, and was numbered as an appeal, and notice of the appeal was issued to the respondent. The objection to the regularity in the procedure was, it appears, brought to the notice of the Court only at the hearing. That the Advocate for the appellant was negligent cannot be gainsaid. But the conduct of the office of the Registrar of the High Court in accepting presentation of the appeal which did not comply with the requirements of section 119A has largely contributed to the irregularity of the procedure followed. It is a trite saying that it is duty of the Court to take care that the act of the Court does no injury to any suitor. The Court is by statute not obliged to dismiss the appeal for failure to comply with the requirements of section 119A : it has therefore jurisdiction having regard to the circumstances, either to permit rectification of the mistake, or to decline to proceed with the appeal which does not comply with the statutory requirements. In the present case we think that the High Court erred in not taking into consideration the conduct of the office of the Registrar in accepting the deposit of costs and also a 'defective presentation of the appeal which contributed to the irregularity of the procedure adopted by the appellant. In our view the High Court should have directed that the amount which had been deposited under the tender form on October 21, 1963, be deposited in the Government Treasury in the name of the Election Commission, and a Government Treasury receipt be obtained in favour of the Election Commission as security for costs of the appeal preferred before the High Court. Accordingly we set aside the order passed by the High Court and direct that the High Court do give an opportunity to the appellant to rectify the error committed in the matter of securing the costs of the appeal in the manner already set out and that the High Court do proceed to hear the appeal on the merits after the Government Treasury receipt in favour of the Election Commission as security for the costs of the appeal has been obtained and filed in the record. We do not think that because of the failure to file the Government Treasury receipt, the jurisdiction of the High Court is affected or that the appeal may be regarded as otherwise barred by the law of limitation. The appeal is allowed. The appellant had acted irregularly and somewhat negligently and the respondent was justified in bringing to the notice of the High Court the defect in the presentation of the appeal. Even at the hearing of the appeal he tried to justify his action. In the circumstances the appellant must pay the costs of the respondent of this appeal. Costs in the High Court will be costs in the appeal. Appeal allowed.

On a petition by the respondent, challenging the election of the appellant to the State Legislative Assembly, the Election Tribunal declared the election void under section 100(1)(b) of the Representation of the People Act. Against the order of the Tribunal, the appellant appealed to the High Court. Instead of enclosing with the memorandum of appeal a Government Treasury receipt showing that a deposit of Rs. 500 had been made in favour of the Election Commission, the appellant through his Advocate tendered the amount in the office of the Registrar of the High Court The amount tendered was accepted and was duly credited in the name of the appellant as "security deposit". At the hearing of the appeal it was contended by the respondent, inter alia, that the appellant had failed to enclose with the memorandum of appeal a Government Treasury Receipt showing that a deposit of five hundred rupees had been made by him in favour of the Election Commission as security of the costs of the appeal, and his appeal was, on that account, not maintainable. The High Court held that the appellant had failed to comply with the provisions of section 119 A of the Act and on that account the appeal filed by him was incompetent, and dismissed the appeal. In appeal by special leave : HELD : The failure to comply with the requirements of section 119 A does not necessarily result in the dismissal of the appeal, for the Act imposes no express penalty for non compliance with the requirements of that section. The Court had therefore jurisdiction having regard to the circum stances, either to permit rectification of the mistake, or to decline to proceed with the appeal which did not comply with the statutory requirements. In the present case the High Court erred in not taking into consideration the conduct of the office of the Registrar in accepting the deposit of costs and also a defective presentation of the appeal which contributed to the irregularity of the procedure adopted by the appellant. [122B D]. Jagan Nath vs Jaswant Singh, ; , referred to.

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ion No. 200 of 1963. Petition under article 32 of the Constitution of India for the enforcement of the fundamental rights. K. P. Bhandari and R. Gopalakrishnan, for the petitioner. and R. N. achthey, for the respondents. April 1, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J. This petition which has been filed by the petitioner section Gurdev Singh Sidhu under Art 32 of the Constitution, challenges the validity of article 9(1) of the Pepsu Services Regulations, Volume 1, as amended by the Governor of Punjab by the notification issued by him on the 19th January, 1960 in exercise of the powers conferred on him by the proviso to article 309 of the Constitution and all other powers enabling him in that behalf. The petitioner 's contention is that the said article contravenes the constitutional right guaranteed to the persons employed in civil capacities either under the Union or the State, by article 311. The petitioner was appointed as Assistant Superintendent of Police in the erstwhile Patiala State by His Highness Maharaja Adhiraj of Patiala on the 4th of February, 1942. The conditions of his service were governed by the Patiala State Service Regulations which had been issued by the Ruler of Patiala State who was at the relevant time the sovereign legislature of the State. Later, the petitioner was confirmed in the rank on the occurrence of a regular vacancy after he had undergone practical district training courses in the Punjab in 1947. On the formation of Patiala and East Punjab States Union on the 20th August, 1948, the petitioner was integrated in Pepsu Police Service. In due course, he was promoted to officiate as Superintendent of Police in February, 1950 by His Highness the Rajpramukh of the erstwhile State of Pepsu. 589 On the 25th March, 1963, respondent No. 2 section Gurdial Singh, Inspector General of Police & Joint Secretary to the Government of Punjab, issued a notice against the petitioner purporting to act under the second proviso to article 9.1 of the Pepsu Services Regulations to show cause why he should not be compulsorily retired. The petitioner alleges that the second proviso to article 9.1 under which the said notice has been issued against him, is invalid, and so, he has moved this Court under article 32 for quashing the said notice on the ground that the article on which it is based is itself ultra vires and inoperative. Respondent No. 1, the State of Punjab, and respondent No. 2 have by their counter affidavit denied the petitioner 's contention that the impugned article 9.1 is constitutionally invalid and they have resisted his claim for quashing the notice issued by respondent No. 2 against the petitioner. That is how the only point which arises for our decision in the present petition is whether the impugned article is shown to be constitutionally invalid. Before dealing with this point, it is necessary to read the said article: "The following shall be added after the first proviso to clause (1) of article 9.1 of the said regulations: (ii) "Provided further that Government retains an absolute right to retire any Government servant after he has completed ten years qualifying service without giving any reason and no claim to special compensation on this account will be entertained. This right will not be exercised except when it is in public interest to dispense with the further services of a Government servant such as on account of inefficiency, dishonesty, corruption or infamous conduct. Thus the rule is intended for use: (a) against a Government servant whose efficiency is impaired but against whom it is not desirable to make formal charges of inefficiency or who has ceased to be fully efficient, (i.e. when a Government servant 's value is clearly incommensurate with the pay which he draws), but not to such a degree as to warrant his retirement on a compassionate allowance. It is not the intention to use the proviso as a financial weapon, that is to say the proviso should be used only in the case of Government servants who are considered unfit for retention on personal as opposed to financial grounds; 590 (b) in cases where reputation for corruption, dishonesty or infamous conduct is clearly established even though no specific instance is likely to be proved under the Punjab Civil Services Punishment and Appeal Rules) Appendix 24 of Volume 1, Part 11 or the Public Servants (Inquiries Act XXXVII of 1850). The word 'Government ' used in this proviso should be given a reasonable opportunity to show causethe power of removing the Government servant concerned from service under the Civil Services (Punishment and Appeal) 'Rules". (iii) Provided further that Government servant should be given a reasonable opportunity to show cause against the proposed action under the rule. No Gazetted Government servants shall, however, be retired without 'the approval of the Council of Ministers. In all cases of compulsory retirement of gazetted Government servants belonging to the State Services, the Public Service Commission shall be consulted. In the case of non gazetted Government servants the Heads of Departments should effect such retirement with the previous approval of the state Government". This article clearly shows that the absolute right retained by respondent No. 1 to deal with public servants can be used against them if it appears to respondent No. 1 that the said public servants suffer from inefficiency, dishonesty, cor ruption, or infamous conduct. It is also clear that one of the reasons for making the amendment in the Pepsu Services Regulations was to use the power thereby conferred on res pondent No. 1 in case where reputation for corruption, dis honesty or infamous conduct may be established to the satis faction of respondent No. 1 even though no specific instance is likely to be proved under the Punjab Civil Services (Punishment and Appeal) Rules. This power was likewise intended for use in cases where the incompetence of the Government servant may not be of such an extent as to warrant his retirement on a compassionate allowance. The only safeguard provided by the amended article is that it was not contemplated to use the power conferred by it on financial grounds. Grounds on which the said power was intended to be used were all grounds personal to the Government servant against whora the said power was exercised. Bhandari for the petitioner contedns that the point raised by the petitoner in this petition is, in substance, concluded by a recent decision of this Court in Moti Ram Deka, 591 etc. vs The General Manager, North East Frontier Railway,(1) etc. His argument is that the trend of the majority, judgment in that case clearly indicates that the impugned Rule is inconsistent with article 311(2) of the Constitution, and as such, must be struck down as being invalid. It is, therefore, necessary to examine briefly the effect of the said judgment. In that case, this, Court was called upon to consider the validity of Rules 148(3) and 149(3) of the Railway Rules. These Rules authorised the termination of services of the railway employees concerned by serving them with a notice for the requisite period or paying them their salary for the said period in lieu of notice. Dealing with the question about the validity of the said Rules, the majority judgment observed that a person who substantively holds a permanent post has right to continue in service subject to two exceptions. The first exception was in relation to the rule of superannuation, and the second was in regard to the rule as to compulsory retirement. The majority judgment accepted the position that a rule fixing the age of superannuation which is applicable to all Government servants falling in a particular category was perfectly constitutional because it applies uniformly to the public servants who fall within its scope and it is based ,on general considerations like life expectation, mental capacity of the civil servants having regard to the climatic condilions under which they work and the nature of the work they do. They are not fixed on any ad hoc basis and do not involve the exercise of any discretion. The second exception was ,affirmed by the majority judgment with the reservation that rules of compulsory retirement would be valid if having fixed a proper age of superannuation, they permit the compulsory retirement of the public servant, provided he has put in a minimum period of service; and while affirming this rule, an express reservation was made that in case a rule of compulsory retirement permitted the authority to retire a permanent servant at a very early stage of his career, the question as to whether such a rule would be valid may have to be considered on a proper occasion. In other words, the acceptance of the ,doctrine that rules for compulsory retirement were valid and constituted an exception to the general rule that the termination of the services of a permanent servant means his removal within the meaning of article 311(2), was not absolute but qualified. At this stage, it is necessary to explain why this, reser vation was made in the majority judgment. The question which fell to be decided in the case of Moti Ram Deka(1) bad no reference to the rule of compulsory retirement; but the argument in support of the validity of the rule proceeded (1) ; 592 on the basis that the previous decisions of this Court in which the validity of the relevant rules of compulsory retirement had been upheld logically supported the contention that the impugned Rules 148(3) and 149(3) were also valid, and this argument made it necessary for this Court to examine the said decisions and to decide whether the observations made in the course of those decisions supported the contention that Rules 148(3) and 149(3) were valid. Let us briefly refer to some of these decisions. In Shyam Lal, vs The State of U.P. and the Union of India(1) the article which was examined was 465 A of the Civil Service Regulations. Note 1 to the said article gave the Government an absolute right to retire any officer after he has completed 25 years of service without giving any reasons, and provided that no claim to special compensation can be entertained from the public servant who has been compulsorily retired under it; this article was held to be valid. In the State of Bombay vs Saubhag Chand M. Deshi,(2) the rule which was considered was 165 A of the Bombay Civil Services Rules as amended by the Saurashtra Government. This rule gave the Government a similar right to retire a Government servant after he has completed 25 years of qualifying service or 50 years of age, and it permitted the Government to ask the Government servant to retire compul sorily without giving any reason and without giving him the right to claim special compensation. The rule further made it clear that the right conferred by it will not be exercised except when it is in the public interest to dispense with the further services of a Government servant such as on account of inefficiency or dishonesty. This rule was also upheld. Reverting then to the argument which was urged in support of the validity of the Railway Rules challenged in the case of Moli Ram Deka(3) the position taken by the learned Additional Solicitor General was that in upholding the impugned rules, the earlier decisions had substantially pro ceeded on the basis that the premature termination of the services of a permanent Government servant would not in every case amount to his removal within the meaning of article 311(2) of the Constitution, and that is how it became necessary to refer to the said decisions which dealt with the question of compulsory retirement, though the problem of compulsory retirement did not fall for the decision of the Court in Moti Ram Deka 's(3) case. The approach adopted by the majority decision in Moti Ram Deka 's(3) case indicates that the Court was not prepared (1) [1955] 1.S.C.R. 26 (2) ; (3) ; 593 to examine the question as to whether the relevant Rules in respect of compulsory retirement which had been upheld were valid or not. The trend of the majority judgment shows that logically, it would be consistent to hold that the premature termination of the services of a permanent Government servant would not amount to hi; , removal under article 311(2) only where such termination is the result of the fixation of a general rule of superannuation. In all other cases where a permanent Government servant is asked to retire compulsorily whether on account of his incompetence, inefficiency, or dishonesty, it may, logically, be open to be suggested that such compulsory retirement is removal within article 311(2). But since 1953, when the case of Satish Chandra Anand vs The Union of India(1) was decided by this Court there appeared to be a consistent course of decisions which had upheld the validity of the rules in regard to compulsory retirement. No doubt, the case of Satish Chandra Anand was one where a person had been employed by the Government of India on a five year contract in the Re ,settlement and Employment Directorate of the Ministry of Labour; but some observations were made in that judgment and similar observations were made in subsequent decisions dealing with the question of compulsory retirement. The majority judgment in Moti Rai Deka 's(2) case took the view that it would be inappropriate and inexpedient to reopen an issue which was covered by several prior reported decisions of the Court. Besides, the point covered by the said decisions did not directly arise in the case of Moti Ram Deka. Even so, the majority judgment took the precaution of adding a note of caution that if a rule of compulsory retirement purported to give authority to the Government to terminate the services of a permanent public servant at a very early stage of his career, the question about the validity of such a rule may have to be examined. That is how in accepting the view that a rule of compulsory retirement can be treated as valid and as constituting an exception to the general rule that the termination of the services of a permanent public servant would amount to his removal under article 311(2), this Court added a rider and made it perfectly clear that if the minimum period of service which was prescribed by the relevant rules upheld by the earlier decisions was 25 years, it could not be unreasonably reduced in that behalf. In other words, the majority judgment indicates that what influenced the decision was the fact that a fairly large number of years had been prescribed by the rule of compulsory retirement as constituting the minimum period of service after which alone the said rule could be invoked. Therefore, it seems to us that Mr. Bhandari is right when he contends that the present (1) ; (2) ; 594 article which reduces the minimum period of service to 10 years, is open to challenge in the light of the majority decision pronounced in the case of Moti Ram Deka(1). In this connection, it is hardly necessary to emphasise that for the efficient administration of the State, it is abso lutely essential that permanent public servants should enjoy a sense of security of tenure. The safeguard which article 311(2) affords to permanent public servants is no more than this that in case it is intended to dismiss, remove or reduce them in rank, a reasonable opportunity should be given to them of ,showing cause against the action proposed to be taken in regard to them. A claim for security to tenure does not mean security of tenure for dishonest, corrupt, or inefficient public servants. The claim merely insists that before they are removed, the permanent public servants should be given an opportunity to meet the charge on which they are sought to be removed. Therefore, it seems that only two exceptions can be treated as valid in dealing with the scope and effect of the protection afforded by article 311(2). If a permanent public servant is asked to retire on the ground that he has reached the age of superannuation which has been reasonably fixed, article 31](2) does not apply, because such retirement is neither dismissal nor removal of the public servant. If a permanent public servant is compulsorily retired under the rules which prescribe the normal age of superannuation and provide for a reasonably long period of qualified service after which alone compulsory retirement can be ordered, that again may not amount to dismissal or removal under article 31](2) mainly because that is the effect of a long series of decisions of this Court. But where while reserving the power to the State to compulsorily retire a permanent public servant, a rule is framed prescribing a proper age of superannuation, and another rule is added giving the power to the State to compulsorily retire a permanent public servant at the end of 10 years of his service, that cannot, we think, be treated as falling outside article 311(2). The termination of the service of a permanent public servant under such a rule, though called compulsory retirement, is, in substance, re moval under article 311(2). It is because it was apprehended that rules of compulsory retirement may purport to reduce the prescribed minimum period of service beyond which compulsory retirement can be forced against a public servant that the majority judgment in the case of Moti Ram Deka(1) clearly indicated that if. such a situation arose, the validity of the rule may have to be examined, and in doing so, the impugned rule may not be permitted to seek the protection of the earlier decisions of this Court in which the minimum (1) ; 595 qualifying period of service was prescribed as high as 25 years, or the age of the public servant at 50 years. We are, therefore, satisfied that Mr. Bhandari is right in contending that the effect of the majority decision in the case of Moti Ram Deka(1) clearly is that the impugned article 9.1 contravenes Article 311(2) of the Constitution and must be struck( down as invalid. The result is, the petition succeeds and article 9.1 as amended by the Governor of Punjab by a notification issued on the 19th January, 1960, is struck down as invalid. In consequence, the notice issued by respondent No. 2 against the petitioner on the 25th March, 1963 must be cancelled. Before we part with this petition we ought to add that the respondents did not urge before us that the writ petition was not competent under article 32 and that the proper remedy available to the petitioner was a petition under article 226 of the Constitution to the Punjab High Court; that is presum ably, because the respondents were anxious to have a decision from this Court on the question about the validity of the impugned article in the Regulations in question. We would, therefore, make it clear that our decision in the present writ petition should not be taken to mean that we have held that a petition like the present is competent under article 32 of the Constitution. In the circumstances of this case, the petitioner is entitl ed to his costs from respondents 1 and 2. Petition allowed.

The petitioner was appointed as Assistant Superintendent of Police in 1942 in the former Patiala State. In 1948 on the formation of Patiala and East Punjab States he was integrated in Pepsu Police Service. He was promoted to officiate as Superintendent of Police in 1950 by the Rajpramukh of Pepsu. On March 25, 1963, respondent No. 2, the Inspector General of Police and Joint Secretary to the Government of Punjab, issued a notice upon the petitioner under the second proviso to article 9.1 of the Pepsu Services Regulation as amended by the Governor by his notification dated January 19, 1960, to show cause why he should not be compulsorily retired. The petitioner moved this Court under article 32 of the Constitution for quashing the said notice on the ground that the said proviso was ultra vires and inoperative by reason of contravention of article 311(2) of the Constitution and relied on the decision of Frontier Railway; , The said proviso was as follows, " * * * that Government retains an absolute right to retire any Government servant after he has completed ten years qualifying service without giving any reason and to claim to special compensation on this account will be entertained. This right will not be exercised except when it is in public interest to dispense with the further services of a Government servant such as on account of inefficiency, dishonesty, corruption or infamous conduct * * *". Held: Article 9.1 of 'the Pepsu Services Regulation in prescribing a minimum period of ten years of service for the purpose of compulsory retirement contravened article 311(2) of the Constitution and must be struck down. The only two valid exceptions to the protection afforded by article 311(2) were, (1) where a permanent public servant was asked to retire on the ground that he had reached the age of superannuation which was reasonably fixed; (2) that he was compulsorily retired under the Rules which prescribed the normal age of superannuation and provided a reasonably long period of qualified service after which along compulsory retirement could be valid. The first would not amount to dismissal or removal from service within the meaning of article 311(2) and the second would be justified by the view taken by this Court in a long series of decisions. 588 It is not permissible for a State while reserving to itself the power of compulsory retirement by framing a rule pres cribing a proper age of superannuation to frame another giving it the power to compulsorily retire a permanent public servant at the end of ten Years of his service, for that rule cannot fall outside article 311(2) of the Constitution. Moti Ram Deka etc. vs General Manager, North East Frontier Railway etc. ; , applied Shyam Lal vs State of U.P. and Union of India, ; and State of Bombay vs Saubhag Chand M. Doshi, [1958] S.C.R. 571, referred to. This decision should not be taken to mean that a petition like the present one was competent under article 32 of the Con stitution.

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Appeal No. 1017 of 1963. Appeal from the judgment and order dated March 30th and 31st, 1960 of the Bombay High Court in Income tax Reference No. 2 of 1949. N. A. Palkhivala and I. N. Shroff, for the appellant. C. K. Daphtary, Attorney General, R. Ganapathy Iyer, R. H. Dhebar and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Gajendragadkar, C.J. When this appeal was argued before a Division Bench of this Court on October 23, 1964, it was urged on behalf of the appellant, the Keshav Mills Co. Ltd., that in view of the present decisions of this Court in The New Jehangir 910 Vakil Mills Ltd. vs The Commissioner of Income tax, Bombay North, Kutch and. Saurashtra(1), and The Petlad Turkey Red Dye Works Co. Ltd., Petlad vs The Commissioner of Income tax, Bombay, Ahmedabad (2), the appeal must be allowed and the case sent back to the Bombay High Court for disposal in accordance with the principles laid down in the latter decision. At that stage, the learned Attorney General for the respondent, the Commissioner of Income tax, Bombay North, Ahmedabad, urged that he wanted this Court to reconsider the said two decisions. He fairly conceded that if the said two decisions were to be followed, the appeal would have to be allowed and sent back as suggested by the appellant. The learned Judges constituting the Division Bench took the view that an opportunity should be given to the learned Attorney General to press his contention, and so, they directed that the appeal be placed before a Bench of five Judges. Thereafter, this appeal came on for hearing before the Constitution Bench on November 5, 1964. On this occasion again, the same contentions were raised on behalf of the appellant and the respondent respectively Mr. Palkhilvala for the appellant urged that it would be inappropriate to reconsider the recent decisions on which he relied, and he argued that on the merits, the view taken by this Court in the said two decisions was sound and correct. On the other hand, the learned Attorney General contended that he wanted this Court to reconsider the said two decisions, and he pointed out that the matter was of importance, and so, the appeal should be referred to a larger Bench in view of the fact that the decision in the case of the Petlad Co. (2) was a unanimous decision of a Bench consisting of five Judges of this Court. It was under these circumstances that the Court directed that the appeal should be placed before a Special Bench of seven Judges. 'Mat is how it has come on for a final decision before a Bench of seven Judges; and the only point which has been raised for the decision of the Special Bench is whether the two decisions in question should be reviewed and revised. Let us begin by stating the relevant facts leading up to the main point of controversy between the parties. The appellant is a company registered in the Baroda State as it then was. The assessment year with which the proceedings giving rise to this appeal are concerned is 1942 43 (the accounting year being calendar year 1941). During the said year, the appellant was a 'non resident '. It carried on business of manufacturing and (1) ; (2) [1963] Supp. 1 section C. R. 871. 911 selling textile goods in the Baroda State. The operations in relation to all sales of goods manufactured by the appellant 's Mills were completed at the appellant 's premises at Petlad on the footing of ex Mill delivery in every case. It appears that on March 22, 1947, the Income tax Officer, E.P.T. Circle, Ward B, Ahmedabad, passed an order under sec tions 23 (3) and 34 of the Indian Income tax Act, 1. 922 (No. 11 of 1922) (hereinafter called 'the Act) and held that sale proceeds in respect of the sales aggregating each of the following three items were received by the appellant in British India. These items were : (i) Sale proceeds actually received in the accounting Year through M/s Jagmohondas Ramanlal & Co. Rs. 12,68,460 (ii) Sale proceeds through British Indian Banks through Drafts: Rs, 4,40,878 (iii) Sale proceeds collected by collecting cheques on British Indian Banks and Hundis onBritish Indian Shorff and Merchants Rs. 6,71,735 It is with this last item that the present appeal is concerned. Aggrieved by the order thus passed by the Income tax Officer, the appellant preferred an appeal before the Appellate Assistant Commissioner of Income tax, Ahmedabad Range. The Appellate Authority held that the Income tax Officer was in error in not excluding items (i) and (iii) respectively from computation of the taxable profits of the appellant. Thus, the appellant succeeded before the appellate authority in respect of the item in dispute. This decision of the appellate authority led to two cross appeals, one by the Income tax Officer and the other by the appellant before the Income tax Appellate Tribunal hereafter called the Tribunal. The Tribunal dismissed the appellant 's appeal in respect of Rs. 4,40,878/ and allowed the Income tax Officer 's appeal in part and held that the item of Rs. 12,68,460/had been wrongly excluded by the Appellate Authority. In respect of item (iii) relating to Rs. 6,71,735/ , the Tribunal held that in the circumstances of the case the sale proceeds represented by the said item were not received in British India but in the State itself. This decision of the Tribunal led to two cross applications by the appellant and the Income tax Officer for raising the questions of law before it in relation to the items in respect of which 912 they had respectively failed. As a result of these proceedings, the Tribunal drew up the statement of the case on November 5, 1948, and raised ' the following question to the Bombay High Court : "Whether on the facts and in the circumstances of the case, the sums of Rs. 12,68,460/ , Rs. 4,40,878/and Rs. 6,71,735/ , or any of them, which represents receipts by the assessee company of its sale proceeds in British India, include any portion of its income in British India ?" In other words, all the three items in dispute between the appeal]ant and the Income tax Officer formed the subject matter of the question raised by the Tribunal before the Bombay High Court. This reference was registered as Income tax Reference No. 2 of 1949. By its judgment and order delivered on the 14th/15th Sep tember, 1949, in relation to items (i) and (ii) the High Court held that the two sums in question were not debts due from British Indian Merchants but sale proceeds of the goods sold by the appellant to merchants in British India and that such sale proceeds were received by the appellant in British India. In other words, the answers rendered by the High Court in respect of the said two items were against the appellant. The appellant came to this Court in appeal against the decision of the High Court, but its appeal failed and the view taken by the High Court was affirmed (vide Keshav Mills Ltd. vs Commissioner of Income tax, Bombay)(). In the result, the controversy between the appellant and the Income tax Officer in respect of the said items has been finally decided against the appellant. Reverting then to item (iii) with which the present appeal is concerned, the High Court took the view that before it could render an answer to the question in relation to the said item, it would like the Tribunal to furnish to the High Court further facts. Accordingly, the High Court directed that the Tribunal should submit a supplementary statement of case and state therein as to whether there was any arrangement or agreement between the Assessee and the merchants that the giving of cheques or hundis by the merchants to the Assessee would result in an unconditional discharge of the liability of the merchants. The High Court also issued some other directions asking the Tribunal to clarify (1) [19531 section C. R. 950. 913 some of its relevant findings which appeared to the High Court to be somewhat confused. As a result of this order, the case went back to the Tribunal which in turn remanded it to the Income tax Officer for getting the requisite information. On receiving the report of the Income tax Officer, the Tribunal submitted its Supplementary Statement of Case to the High Court on August 13, 1954. Whilst these proceedings were thus pending in the High Court, the decision of this Court in The Commissioner of Income tax, Bombay South, Bombay vs Messrs. Ogale Glass Works Ltd., Ogale Wadi(1) was pronounced. In that case, one of the points which arose for decision was whether the Post Office which takes the cheque from the sender to the addressee is the agent of the sender or the addressee; and on this point, the Court held that as between the sender and the addressee, it is the request of the addressee that makes the post office, the agent of the addressee and after such request, the addressee cannot be heard to say that the post office was not his agent. On the other hand, if there is no such request by the addressee, express or implied, then on delivery of the letter or the cheque to the post office by the sender, the post office acts as the agent of the sender. This decision had a significant impact on the further progress of the present dispute. After receiving the Supplementary Statement of Case from the Tribunal, the matter was argued before the High Court on the 15th February, 1955. On this occasion, the High Court referred the matter back again to the Tribunal with the direction : "that the Tribunal will determine on the evidence led by both parties whether the sum in question was paid by various merchants by sending drafts, hundis or cheques by post and that if the Tribunal found that in some cases the amount was not sent by post, then the Tribunal should determine what amount was sent otherwise than by post and the Tribunal should then submit a Supplementary Statement of the Case". It would be noticed that this direction was given by the High Court obviously because the High Court wanted to deal with the question referred to it in the light of the decision of this Court in the case of Ogale Glass Works Ltd." In fact, in giving this second direction, the High Court observed that when it had called for the first Supplementary Statement of the Case, it did not have the benefit of the decision of this Court in the case of Ogale Glass Works Ltd.,(1) and that after the said decision was pronounced, the position with regard ' (1) 914 to receipt of the cheque by the appellant had been considerably simplified. Pursuant to the second order of remand made by the High Court, the Tribunal submitted its second Supplementary Statement of the Case on the 26th October, 1959. After receipt of the second Supplementary Statement, the Reference again came up for hearing before the high Court. After hearing the parties, the High Court has rendered its answer against the appellant on the question in relation to the item in dispute. It is against this order passed by the High Court on the 30th and 31St March, 1960, that the appellant has come to this Court with a certificate granted by the High Court; and on its behalf, Mr. Palkhivala has urged that in view of the decisions of this Court in the New Jehangir Mills(1) case and Petlad Co.(2) case, the appeal must be allowed and the case remitted to the High Court to be dealt with in accordance with the principles laid down by this Court in the latter case. It is common ground that as a result of the two orders of remand passed by the High Court in the present Reference proceedings, some material evidence which was not on the record when the question was framed by the Tribunal and sent to the High Court under section 66(1) of the Act, has been collected and made a part of the Supplementary Statement of the Case; and basing himself on this fact, Mr. Palkhivala contends that the 'High Court had no jurisdiction to direct the Tribunal to collect additional material and form it a part of the Supplementary Statement under section 66(4) of the Act. It is in support of this contention that reliance is placed on the two decisions in question. Before addressing ourselves to the problem as to whether the view taken by this Court in the said two decisions needs to be reconsidered and revised, it is necessary that we should refer to the said two decisions as well as other decisions on which both the parties have relied before us in the course of the arguments. The first decision on which Mr. Palkhivala relies is the New Jehangir Mills(1) case. In that case, the question which was referred by the Tribunal to the High Court was whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar. Before rendering its answer to this question, the High Court had directed the Tribunal to furnish a Supplementary Statement of the Case on the following points "On the finding of the Tribunal that all the cheques were received in Bhavnagar, the Tribunal should find (1) ; (2) [1963] SUPP. section C. R. 871. 915 what portion of these cheques were received by post, whether there was any request by the assessee, express or implied, that the amounts which are the subject matter of these cheques should be remitted to Bhavnagar by post". It would be noticed that as a result of this direction, the question which would really have to be considered by the High Court would be whether the posting of the cheques in British India at the. request, express or implied, of the appellant, amounted to. receipt of sale proceeds in British India. It was urged by the appellant in that case that as a result of the direction issued by the High Court calling for a supplementary,.statement of the case, the nature of the question formulated by the Tribunal had been altered, and that was beyond the competence of the High Court under section 66(4). In substance, this plea was upheld by this Court and it was held that in calling for the supplementary statement of the case, the High Court had misconceived its powers. under section 66(4) of the Act. According to this decision, section 66(4) must be read with section 66(1) and section 66(2), and so read, it did not empower the High Court to raise a new question of law which did not arise out of the Tribunal 's order or direct the, Tribunal to investigate new and further facts necessary to determine the new question which had not been referred to it under section 66(1) or section 66(2) of the Act and direct the Tribunal to submit, supplementary statement of case. The additions and alterations in the statement of case which can be directed under section 66(4) could, in the opinion of this Court relate only to such facts as already formed part of the record but were not included by the. Tribunal in the statement of the case. Mr. Palkhivala contends that in the light of the decision, we ought to hold that in so far as the two orders of remand passed by the High Court in the present Reference proceedings have led to the collection of ' additional material and evidence and their inclusion in the supplementary statements of the case, the High Court has exceeded its jurisdiction under section 66(4). The other case on which Mr. Palkhivala strongly relies is the decision of this Court in the Petlad Co. Ltd (1). In that case, one of the points decided by this Court had reference to the extent of the powers and authority of the High Court under section 66(4). It was held that though the High Court had power to direct a supplemental statement to be made, it was beyond its competence to direct additional evidence to be taken. In other (1) [1963] Supp. 1 section C. R. 871. 916 words, this Court took the view that when the High Court makes an order of remand under section 66(4) and directs the Tribunal to furnish a supplemental statement of the case, it can require the Tribunal to include in such supplemental statement material and evidence which may. already be on the record, but which had not been included in the statement of the case initially made under Is. 66(1). The result of this decision is that section 66(4) does not confer on the High Court power to require the Tribunal to take additional evidence before it renders its answers on the questions formulated under section 66(1) or section 66(2). In accordance with the view thus taken by this Court, the direction issued by the High Court to submit a supplemental statement of the case after taking additional evidence was reversed, and following the precedent in the New Jehangir Mills(1) case, an order was passed that the appeals should be allowed and the matter remitted to the High Court to give its decision on the question of law referred to it as required under section 66(5) of the Act. Before the decision of this Court in the Petlad Co. Ltd. (2 was pronounced, a similar point had been raised in the case of M/s. Zoraster and Co. vs The Commissioner of Income tax, Delhi, Ajmer, Rajasthan and Madhya Bharat (now Madhya Pradesh(2). In this latter case, the question referred to the High Court for its decision was whether on the facts and circumstances of the case, the profits and gains in respect of the sales made to the Government of India were received by the assessee in the taxable territories ? While dealing with this question, the High Court thought it necessary to remand the case to the Tribunal for a supplemental statement of the case calling for a finding on the question whether the cheques were sent to the assessee firm by post or by hand and what directions, if any, had the assessee firm given to the department in the matter ? The validity and correctness of this direction was challenged by the appellant before this Court in view of the decision of this Court in the care of New Jehangir Mills(3). While dealing with this objection raised by the appellant, this Court held that the question as it was framed, was wide enough to include an enquiry as to whether there was any request, express or implied, that the amount of the bills be paid by cheques so as to bring the matter within the dicta of this Court in the Ogale Glass Works(4) case or in Shri Jagdish Mills Ltd. vs The Commissioner of Income tax, Bombay North, Kutch and Saurashtra, Ahmedabad(5) and since it did not appear (1) ; (2) [1963] Supp. 1 section C. R. 871. (3) ; (4) [1955] 1 section C. IL 185. (5) ; 917 from the order of remand passed by the High Court that the High Court intended that the Tribunal should admit fresh evidence before submitting its supplemental statement, the impugned direction could not be said to be invalid. This decision shows that when a question is framed for the decision of the High Court in wide terms, and the High Court finds that before rendering its answer on the said question some new aspects have to be considered and it feels that for dealing with the said new aspects of the matter, a supplemental statement of the case should be called for, the High Court is authorised to call such a supplemental statement, provided, of course, the High Court does not require the Tribunal to collect additional material or evidence before submitting its supplemental statement. The same view has been expressed by this Court in the case of Commissioner of Income tax, Madras vs M. Ganapathi Muda liar(1). According to this decision, a supplementary statement of case may contain such alterations or additions as the High Court may direct, but the statement must necessarily be based on facts which are already on the record. While exercising its jurisdiction under section 66(4), the High Court has no power to ask for a fresh statement of case with a direction that the Tribunal should go into the matter again and record further evidence. There is one more decision to which reference may inciden tally be made before we part with the series of decisions on which Mr. Palkhivala relies. In the Commissioner of Income tax, Bombay vs The Scindia Steam Navigation Co. Ltd., (2) this Court had occasion to consider the scope and denotation of the expression "any question of law arising out of such order ' occurring in section 66(1) of the Act. The majority decision has summed up the result of the discussion as to the scope and effect of the provisions of section 66 in these words : (1) When a question is raised before the Tribunal and is dealt with by it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. (3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. (4) When a question of law is neither raised before the Tribunal nor considered by it will not be a question arising (1) [1964] 53 (2) ; , 918 out of its order notwithstanding that it may arise on the findings given by it. In substance, these propositions mean that it is only a question that has been raised before or decided by the Tribunal that could be held to arise out of its order. Let us now refer to the decisions on which the learned Attorney General has relied in support of his contention that the High Court has power under section 66(4) to call for new additional evidence if it takes the view that such additional evidence is necessary to enable it to determine the question raised for its decision satisfactorily. The learned Attorney General has fairly conceded that he has not been able to find any decision where this question has been answered in favour of the view for which he contends after construing the relevant provisions of section 66(4) of the Act. He, however, urges that there is high authority in support of the practice for which he contends inasmuch as the Privy Council appears to have assumed that the High Court can, in exercise of its powers under section 66(4), call for additional evidence. The first decision of the Privy Council on which he relies is in the case of (Sir Sunder Singh Majithia vs The Commissioner of Income tax, C.P. & U.P.(1). In that case, two of the questions which arose were : whether the steps taken by the assessee to vest in his wife and sons an interest in the immovable assets of the business were not legally effective, e.g., for want of a registered instrument of transfer; and if the factory, land and buildings in question were joint family property, whether it was shown that a partition at the hands of the father of the said properties could not be effected without a written instrument ? The question of law formulated for the decision of the High Court was : "In all the circumstances of the case, having regard to the personal law governing the assessee and the requirements of the Transfer of Property Act (IV of 1882) and the Stamp Act (11 of 1899), has the deed of partnership dated February 12, 1933, brought into existence a genuine firm entitled to registration under the provisions of section 26 A of the Act?" While answering this question, one of the points which had to be decided was whether the immovable properties were the self acquisitions of the father or not. The Privy Council took the view that before a satisfactory answer could be rendered on the question framed, several facts had to be ascertained, and in its judgment the Privy Council has indicated the nature of these facts. "It is necessary to know", says the judgment, "as regards (a) the business, machinery, plant (1) 919 and other movables; (b) the factory buildings and land whether they were before 1931 the self acquired property of the father or his ancestral property or joint family property or whether they fall into some other and what category according to the customary law". The judgment also points out that the rights of the members of the family in respect of the said property would have to be ascertained and the conduct of the parties considered. Then, in regard to the agreement in question, the Privy Council pointed out that it would be necessary to enquire what agreement, if any, was made prior to February 12, 1933, and when as to a partnership being constituted to carry on the sugar factory and as to the assets which it was to have as a firm. "None of these essential facts", says the judgment, "have been found and stated by the Commissioner, with the result that the question referred cannot be answered until the High Court has exercised its powers under sub section (4) of section 66 of the Act". Having made these observations, the Privy Council left it to the discretion of the High Court to specify the particular additions and alterations which the Commissioner should be directed to make. In the result, the advice tendered by the Privy Council was "that the case be remanded to the High Court for disposal after taking such action under sub section (4) of section 66 of the Act as the High Court may think fit in the light of this judgment". The argument is that the facts which the Privy Council thought it necessary to ascertain before answering the question, indicate that they could not have been on the record at the time when the question was originally framed by the Commissioner, and so, the suggestion is that inasmuch as the Privy Council indicated that the High Court should call for a supplemental statement in regard to facts which were apparently not already on the record, this decision should be taken to support the contention that section 66(4) authorised the High Court to call for new additional material before it renders its answers to the questions formulated under section 66(1) or section 66(2). A similar argument is based on another decision of the Privy Council in Trustees of the Tribune Press, Lahore vs Commissioner of Income tax, Punjab, Lahore(1). In that case, the questions which were referred to the High Court were : "(1) whether the income of the Tribune Trust was liable to be assessed in the hands of the Trustees under the provisions of the Income tax Act ?; and (2) if it was, whether it was not exempt under section 4(3) (1) of the Act?" In the High Court, there was a sharp difference of opinion between the Judges who heard the reference; but ultimately the 4 Sup./65 13 920 answers went against the Tribune, and so, the dispute was taken to the Privy Council by the Trustees of the Tribune Trust. At the first hearing of the said appeal before the Privy Council, it was considered by the Board to be desirable that the powers conferred by sub section 4 of section 66 of the Act should be employed to obtain further information. Accordingly, by an Order in Council, dated July 29, 1937, it was directed in accordance with the advice tendered by the Board that the case ought to be remitted to the High Court of Judicature at Lahore with a direction that the said High Court shall refer the case back to the Commissioner under section 66(4), first for the addition of such facts during the life time of the testator Sardar Dayal Singh as may bear upon the proper interpretation of the expression 'keeping up the liberal policy of the said newspaper in clause XXI of the will of the said testator dated the 15th Day of June, 1895, and secondly, for the addition of such facts as to a compromise dated the 1st day of December, 1906, as may show whether the said compromise is binding on all parties interested in the estate of the said testator. Thereafter, a supplementary statement made by the Commissioner was filed and it appears that before he made the said statement, the Commissioner "carefully assembled considerable material explanatory of the direction given by the testator in the phrase 'keeping up the liberal policy of the said newspaper, and showing as their Lordships think, very fairly, the nature and purpose of the trust". After considering the said material, the Privy Council allowed the appeal preferred by the Trustees, because in its opinion the second question framed for the decision of the High Court had to be answered in favour of the assessee. It is urged that this decision also shows that the Privy Council called for additional material and evidence by requiring the High Court to exercise its powers in that behalf under section 66(4) of the Act. The learned Attorney General also stated that there were some other decisions of the High Courts in India where similar additional evidence had been called for by the High Courts under section 66(4), and by way of illustration, he cited before us the decision of the Bombay High Court in Messrs. Govindram Bros. Ltd. vs Commissioner of Income tax, Central, Bombay(1). It is, however, clear that in none of the decisions on which the learned Attorney General relies has the question about the construction of section 66(4) been argued, considered and decided. That, broadly stated, is the position disclosed by the judicial decisions bearing on the point with which we are concerned in the present appeal. (1) [1946]14 I.T.R. 764. 921 In dealing with the question as to whether the earlier decisions of this Court in the New Jehangir Mills(1) case, and the Petlad Co. Ltd.(1) case should be reconsidered and revised by us, we ought to be clear as to the approach which should be adopted in such cases. Mr. Palkhivala has not disputed the fact that in a proper case, this Court has inherent jurisdiction to reconsider and revise its earlier decisions, and so, the abstract question as to whether such a power vests in this Court or not need not detain us. In exercising this inherent power, however, this Court would naturally like to impose certain reasonable limitations and would be reluctant to entertain pleas for the reconsideration and revision of its earlier decisions, unless it is satisfied that there are compelling and substantial reasons to do so. It is general judicial experience that in matters of law involving questions of construing statutory or constitutional provisions, two views are often reasonably possible and when judicial approach has to make a choice between the two reasonably possible views, the process of decision making is often very difficult and delicate. When this Court hears appeals against decisions of the High Courts and is required to consider the propriety or correctness of the view taken by the High Courts on any point of law, it would be open to this Court to hold that though the view taken by the High Court is reasonably possible, the alternative view which is also reasonably possible is better and should be preferred. In such a case, the choice is between the view taken by the High Court whose judgment is under appeal, and the alternative view which appears to this Court to be more reasonable; and in accept ing its own view in preference to that of the High Court, this Court would be discharging its duty as a Court of Appeal. But different considerations must inevitably arise where a previous decision of this Court has taken a particular view as to the construction of a statutory provision as, for instance, section 66(4) of the Act. When it is urged that the view already taken by this Court should be reviewed and revised, it may not necessarily be an adequate reason for such review and revision to hold that though the earlier view is a reasonably possible view, the alternative view which is pressed on the subsequent occasion is more reasonable. In reviewing and revising its earlier decision, this Court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised. When this Court decides questions of law, its decisions are, under article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of (1) ; (2) [1963] Supp. 1 S.C.R. 871. A Sup./65 14 922 this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions. It would always depend upon several relevant considerations :What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based ? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to any relevant and material statutory provision, or was any previous decision of this Court bearing on the point not noticed ? Is the Court hearing such plea fairly unanimous that there is such an error in the earlier view ? What would be the impact of the error on the general administration of law or on public good ? Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts ? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief ? These and other relevant considerations must be carefully borne in mind whenever this Court is called upon to exercise its jurisdiction to review and revise its earlier decisions. These considerations become still more significant when the earlier decision happens to be a unanimous decision of a Bench of five learned Judges of this Court. It is true that in the case of the Bengal Immunity Company Ltd. vs The State of Bihar & Ors. (1) this Court by a majority of 4 : 3 reversed its earlier majority decision (4 : 1) in the State of Bombay and Another vs The United Motors (India) Ltd. and Ors. (2); but that course was adopted by the majority of Judges in that case, because they were persuaded to take the view that there were several circumstances which made it necessary to adopt that course. (1) (2) ; 923 On the other hand, dealing with a similar problem in the case of Sajjan Singh etc. vs The State of Rajasthan etc.(1), this Court unanimously rejected the request made on behalf of the petitioners that its earlier decision in Sri Sankari Prasad Singh Deo vs The Union of India and State of Bihar (2) should be reviewed and revised. Hidayatullah and Mudholkar, JJ. who were somewhat impressed by some of the pleas made in support of the contention that the earlier decision should be revised, in substance agreed with the ultimate decision of the Court that no case had been made out for a review or revision of the said earlier decision. The principle of stare decision, no doubt, cannot be pressed into service in cases where the jurisdiction of this Court to reconsider and revise its earlier decisions is invoked; but nevertheless, the normal principle that judgments pronounced by this Court would be final, cannot be ignored, and unless considerations of a substantial and compelling character make it necessary to do so, this Court should and would be reluctant to review and revise its earlier decisions. That, broadly stated, is the approach which we propose to adopt in dealing with the point made by the learned Attorney General that the earlier decisions of this Court in the New Jehangir Mills(3) case, and the Petlad Co. Ltd. (4 ) case should be reconsidered and revised. Let us then consider the question of construing section 66(4) of the Act. Before we do so, it is necessary to read sub section (1), (2) and (4) of section 66. Section 66(1) reads thus : "Within sixty days of the date upon which he is served with notice of an order under sub section (4) of section 33, the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, require the appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a state ment of the case and refer it to the High Court". There is a proviso to this sub section which is not relevant for our purpose. Section 66(2) reads thus : "If on any application being made under sub section (1), the Appellate Tribunal refuses to state the (1) ; (2) ; (3) ; (4) [1963] Supp. 1 S.C.R. 871. 924 case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of the refusal, apply to the High Court, and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition the Appellate Tribunal shall state the case and refer it accordingly". That takes us to sub section (4) which reads thus "if the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, the Court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf". Section 66(5) provides that the High Court upon hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment. It is clear that when the Tribunal draws up a statement of the case and refers a question of law to the High Court under section 66(1), the said question must arise out of its order, and the statement of the case would necessarily be limited to the statement of facts already brought on the record either before the Income tax Officer or before the Appellate Assistant Commissioner, or before the Tribunal. There is no doubt and indeed no dispute before us that the question of law must arise from the Tribunal 's order and the statement of the case must be confined to the facts already brought on the record. The same would be the position where the High Court requires the Tribunal to state the case and refer to it under section 66(2). The position, therefore, is that when the High Court is exercising its advisory jurisdiction under section 66(4), it is dealing with a question of law arising from the order of the Tribunal and has to answer the said question in the light of the statement of the case submitted to it by the Tribunal. in normal course, the statement of the case would refer to facts selected by the Tribunal from out of the material already on the record and it is in the light of the said statement of the case that 925 the question has to be answered by the High Court. Thus far, there is no controversy or dispute. Section 66(4), however, authorises the High Court to refer the case back to the Tribunal to make such additions to the statement of the case or alterations therein as the Court may direct in that behalf. This power can be exercised by the High Court if it is satisfied that the statement of the case is not sufficient to enable it to determine the question raised by it. If the High Court feels that in order to answer satisfactorily the question referred to it is necessary to have additional material included in the statement of the case, the High Court can make an appropriate direction in that behalf. If the High Court is satisfied that some alterations should be made in the statement of the case to enable it to determine the question satisfactorily, it can make an appropriate direction in that behalf. The question is whether in issuing appropriate directions under $. 66(4), the High Court can ask the Tribu nal to travel outside the record and call for and collect material which is not already produced on the record. If section 66(4) is read along with section 66(1) and section 66(2), it may tend to show that the power of the High Court is limited to requiring the Tribunal to add to or alter the statement of the case in the light of the material and evidence already on the record. If the question that can be raised under section 66(1) and section 66(2) can arise only out of the order of the Tribunal and if the statement of the case required to be drawn up by the Tribunal under the said two provisions would inevitably be confined to the facts and material already on the record, it seems unlikely that section 66(4) would authorise the High Court to direct the Tribunal to collect additional material or evidence not on the record. The scheme of the Act appears to be that before the Income tax Officer all the relevant and material evidence is adduced. When the matter goes before the Appellate Assistant Commissioner, he is authorised under section 31(2) to make such further enquiry as he thinks fit, or cause further enquiry to be made by the Income tax Officer before he disposes of the appeal filed before him. Section 31 (2) means that at the appellate stage additional evidence may be taken and further enquiry may be made in the discretion of the Appellate Assistant Commissioner. When the matter goes before the Appellate Tribunal under section 33, the question about the admission of additional evidence is governed by Rule 29 of the Income (Appellate Tribunal) Rules, 1963. This Rule provides that the parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if 4 Sup./65 15 926 the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or if the Income tax Officer has decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by him or not specified by him, the Tribunal may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. After the Tribunal has passed orders on the appeal before it, the stage is reached to take the matter by way of reference proceedings before the High Court under section 66. This scheme indicates that evidence has to be led primarily before the Income tax Officer, though additional evidence may be led before the Appellate Assistant Commissioner or even before the Tribunal, subject to the provisions of section 31(2) of the Act and Rule 29 respectively, and that means that when the Tribunal has disposed of the matter and is preparing a statement of the case either under section 66(1) or under section 66(2), there is no scope for any further or additional evidence. When the matter goes to the High Court, it has to be dealt with on the evidence which has already been brought on the record. If the statement of the case does not refer to the relevant and material facts which are already on the record, the High Court may call for a supplementary statement under section 66(4), but the power of the High Court under section 66(4) can be exercised only in respect of material and evidence which has already been brought on the record. There is another consideration which is relevant in dealing with the question about the scope and effect of the provisions contained in section 66(4). Proceedings taken for the recovery of tax under the provisions of the Act are naturally intended to be over without unnecessary delay, and so, it is the duty of the parties, both the department and the assessee, to lead all their evidence at the stage when the matter is in charge of the Income tax Officer. Oppor tunity is, however, given for additional evidence by section 31(2) and Rule 29; but if further evidence is allowed to be taken under the directions of the High Court under section 66(4), it is likely that tax proceedings may be prolonged interminably, and that could not be the object of the Act as it is evidenced by the relevant provisions to which we have already referred. These mainly are the grounds on which the earlier decisions of this Court in the New 927 Jehangir Mills(1) case and the Petlad Co. Ltd. (2) case substantially rest. On the other hand, it must be conceded that the words used in section 66(4) are wide enough and they may, on a liberal construction, include the power to call for additional evidence by directing the Tribunal to file supplementary statement of the case. It is true that section 66(4) in terms does not confer such a power and it may be that having regard to the scheme of section 66(1) and (2), one would have expected specific and express terms conferring such power on the High Court in section 66(4) if the Legislature had intended that the High Court would be competent to call for additional evidence; but there are no terms of limitation in section 66(4), and it would be reasonably possible to construe section 66(4) as enabling the High Court to call for additional evidence if it is satisfied that the material in the statement of the case is not sufficient to answer satisfactorily the question raised by the statement of the case. When the High Court is dealing with the statement of the case under section 66(4), it is its duty to answer the question submitted to it. As has been held by this Court in Rajkumar Mills Ltd. vs Commissioner of Income tax, Bombay(1), where the question involved is one of law and the High Court finds it difficult to answer the question owing to the unsatisfactory nature of the statement of the case submitted by the Tribunal, the proper procedure is to call for a further statement of the case and then decide the question itself. The High Court would be adjuring its advisory function if it merely gives some directions and orders the Tribunal to dispose of the matter according to law and in the light of the directions given by it without referring the matter again to the High Court; and so, if the High Court finds that in order to deal with the question referred to it satisfactorily it is necessary to ascertain some relevant and material facts, it should be open to the High Court to direct the Tribunal to make a supplementary statement containing the said material and facts. There is no provision in section 66(4) which prevents the exercise of such a power. In some cases, the question of law referred to the High Court may have to be considered in several aspects some of which may not have been appreciated by the Tribunal. There is no doubt that if a question of law is framed in general terms and in dealing with it several aspects fall to be considered, they have to be considered by the High Court even though the Tribunal may not have considered them. In such a case, if in dealing with some aspects (1) ; (2) [1963] Supp. 1 S.C.R. 871. (3)(1955] 928 of the matter it becomes necessary to ascertain additional facts, it would be unsatisfactory to require the High Court to answer the question without such additional facts on the ground that they have not been introduced on the record already. Refusal to recognise the jurisdiction of the High Court to call for such additional evidence may lead to hardship in many cases, and since there are no words expressly limiting the powers of the High Court under section 68(4), there is no reason why the said powers should receive a narrow and limited construction. That is the view for which the learned Attorney General contends. It must be conceded that the view for which the learned Attorney General contends is a reasonably possible view, though we must hasten to add that the view which has been taken by this Court in its earlier decisions is also reasonably possible. The said earlier view has been followed by this Court on several occasions and has regulated the procedure in reference proceedings in the High Courts in this country ever since the decision of this Court in the New Jehangir Mills(1) was pronounced on May 12, 1959. Besides, it is somewhat remarkable that no reported decision has been cited before us where the question about the construction of section 66(4) was considered and decided in favour of the Attorney General 's contention. Having carefully weighed the pros and cons of the controversy which have been pressed, before us on the present occasion, we are not satisfied that a case has been made out to review and revise our decisions in the case of the New Jehangir Mills(2) and the case of the Petlad Co. Ltd. (2) . That is why we think that the contention raised by Mr. Palkhivala must be upheld. In the result, the order passed by the High Court is set aside and the matter is sent back to the High Court with a direction that the High Court should deal with it in the light of the two relevant decisions in the New Jehangir Mills(1) and the Petlad Co. Ltd. (2 ). Before we part with this appeal, however, we would like to add that in the course of the debate in the present appeal, Rule 39 of the Income tax (Appellate Tribunal) Rules was incidentally referred to, though neither party based any argument on it. That being so, the question as to the true scope and effect of the provisions contained in the said Rule does not fall to be considered in the present proceedings and we express no opinion on it. There would be no order as to costs throughout. Appeal allowed and remanded.

The appellant was a company registered in the erstwhile Baroda State. In connection with the assessment year 1942 43 the Income tax Officer Ahemdabad held that certain sale proceeds were received by the appellant in British India and the profit thereon was taxable under the Indian income tax Act, 1922. One of the items in dispute related to the sale proceeds collected by collecting cheques on British India Shroffs and Merchants. In respect of the said item the Appellate Assistant Commissioner as well as the Appellate Tribunal decided against the appellant, and thereafter, reference was made to the High Court. The High Court felt that it required further facts to decide the reference and twice remanded the case to the Tribunal for investigation of those facts. The Tribunal after taking evidence submitted a supplementary Statement of Case on each occasion. Finally the High Court decided the question against the appellant, but granted it a certificate of fitness to appeal to the Supreme Court. It was contended on behalf of the appellant that the High Court had no jurisdiction to direct the Tribunal to collect additional material and make it a part of the supplementary Statement of Case under section 66(4) as had been decided by this Court in the cases of the Petlad Co. and the New Jahangir Mills. On behalf of the Revenue it was contended that these two cases required reconsideration. The Court therefore had to consider whether it should review and revise its earlier view taken in the said two cases. HELD : (i) The view contended for on behalf of the Revenue namely, that the High Court had power to ask the Tribunal to investigate further facts and submit a supplementary Statement of Case was a reasonably possible view. But on the other hand the opposite view taken by this Court in the Petlad Co. case and the New jahangir Mills case was also reasonably possible. The latter view had been followed by this Court on several occasions and it had regulated the procedure in reference proceedings in the High Courts ever since the decision in the New Jahangir Mills case was pronounced. Besides, no reported decision had been cited at the bar where the question about the constitution of section 66(4) was considered and decided in favour of the view con tended for by the Revenue. No case therefore was made out for a revision or review of the Court 's decisions in the Petlad Co. and New Jahangir Mills cases. [928 C F] Case law discussed. The New jahangir Vakil Mills Ltd. vs Commissioner of Income tax, Bombay North; , and ' The Petlad Turkey Red Dye 909 Works Co. Ltd. Petland vs Commissioner of Income tax, Bombay, Ahemdabad, [1963] Supp. 1 S.C.R. 871, affirmed. (ii) The principle of stare decisis cannot be pressed into service in cases where the power of this Court to reconsider and revise its earlier decisions is invoked, because that power is inherent in this Court; but nevertheless the normal principle that judgments pronounced by this Court would be final cannot be ignored. Unless considerations of a subs tantial and compelling character make it necessary to do so this Court should and would be reluctant to review and revise its earlier decisions. [923 B D] Bengal Immunity Company Ltd. vs State of Bihar , distinguished. (iii) If the Court is satisfied that its earlier decision was clearly erroneous, it should not hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satis fied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions. It would always depend upon several relevant considerations What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based ? On the earlier occasion, did some patent aspects of question remain unnoticed, or was the attention of the Court not drawn to any relevant and material statutory provision, or was any previous decision of this Court bearing on the point not noticed ? Is the Court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be the impact of the error on the general administration of law or on public good ? Has the earlier decision been followed on subquent occasions either by this Court or by the High Courts ? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief ? These considerations become still more significant when the earlier decision happens to be a unanimous decision of a Bench of five learned Judges of this Court [922 B F]

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Appeal No. 611 of 1962. Appeal by special leave from the judgment and decree dated February 11, 1959. of the Patna High Court in Appeal from Original Decree No. 525 of 1951. Bishan Narain. D. R. Prem. B. R. G. K. Achar and R. N. Sachthey, for the appellant. A. V. Viswanatha Sastri and K. K. Sinha, for respondents Nos. 1 to 5. The Judgment of the Court was delivered by Raghubar Dayal J. Bilas Rai Bohra, son of Bansidhar Bohra and Sree Ram Bohra, son of Ganpat Ram Bohra, sued the Union of India for the recovery of Rs. 13,448 from the defendant for 831 compensation on account of loss and damage suffered by the plaintiffs owing to non delivery of II bales of cloth which had been consigned on October 20, 194 8 by M/s Ram Kishan Das Sagarmal of Bombay to the plaintiffs under the description of M/s Banshidhar Ganpat Rai. It was alleged in para 1 of the plaint that the plaintiffs carried on business in cloth and other articles in the name and style of M/s Bansidhar Ganpat Rai which was their joint family trading firm governed by the Mitakshara School of Hindu Law of which joint family the plaintiffs were the kartas and representatives and that they sued as such. This statement in para 1 of the plaint was not admitted in the written statement. The trial Court decreed the suit on August 29, 1951. The decree, inter alia, said : "It is ordered that the suit be decreed with costs defendants do pay to the plaintiffs the sum of Rs. 13,448 with interest thereon." The Union of India appealed to the High Court of Patna and prayed for the setting aside of the decree and for the dismissal of the suit with costs. The plaintiffs respondents were served with notice of the appeal. Subsequently Bilas Rai Bohra died on July 24, 1957. On September 5, 1958, the Union of India presented an application for substitution under 0. 22, r. 4 read with 0. 22, r. 1 1, C.P.C. for setting aside the abatement and condonation of delay. It was stated in the application that the applicant 's advocate came to know of the death of Bilas Rai Bohra, plaintiff No. 1, on May 14, 1958 when the case was on the daily list with a note to that effect, that he promptly communicated the fact to the railway authorities but due to the mistake of the Attacher, proper steps for substitution could not be taken in time. It was further stated that after a good deal of enquiry and efforts for three days the date of the death of Bilas Rai Bohra and the names and addresses of his heirs and legal representatives could be ascertained. A prayer was made for substituting the heirs of Bilas Rai Bohra, they being his sons, a widow and a daughter. Their names were mentioned in the application. This application was opposed on behalf of the heirs of Bilas Rai Bohra. It was mentioned therein that on September 27, 1957, an application for substitution of the heirs of Bilas Rai Bohra was made in another appeal in which the Union of India was a respondent and that therefore the Union of India and its Advocate were aware of the death of Bilas Rai Bohra and of the names of his heirs. 832 On December 1, 1958, the High Court dismissed the applica tion for the setting aside of the abatement of the appeal against Bilas Rai Bohra and for the substitution of the heirs as it was of opinion that there had been gross negligence on the part of the appellant, the Union of India, as its counsel had information about the death of Bilas Rai Bohra at least on May 16, 1958. The High Court did not feel satisfied on the facts of the case that any ground had been made out for setting aside the abatement of the appeal. It may be mentioned here that it was not urged in the High Court that there had been no abatement of the appeal against the heirs and legal representatives of Bilas Rai Bohra. It could not have been urged when the Union of India itself had applied for the setting aside of the abatement and the substitution of the heirs and legal representatives of Bilas Rai Bohra. The appeal of the Union of India against the surviving respondent, viz., Sree Ram Bohra, came up for hearing on February II, 1959, when a preliminary objection was raised on behalf of the respondent to the effect that the appeal had abated entirely as it had abated against the heirs of plaintiff respondent No. 1. It was contended for the Union of India that the two plaintiffs, viz., Bilas Rai Bohra, deceased, and Sree Ram Bohra, had filed the suit as kartas of the joint family which was the owner of the firm of M/s Bansidhar Ganpat Rai and that after the death of one of the kartas the other plaintiff who was also described in the plaintiff 's suit as karta was competent to represent the family and so there could be no question of abatement of the entire appeal. Again, it was not contended that the appeal against the heirs of Bilas Rai Bohra had not abated. The High Court upheld the preliminary objection and held that the appeal had become incompetent and was liable to be dismissed. It was of opinion that even if it be taken that both th plaintiffs had filed the suit in their capacity as kartas of the same joint family, the joint family had gained by virtue of the appeal having abated against the heirs of Bilas Rai Bohra as the decree passed in favour of the joint family through the representation of Bilas Rai Bohra could not be set aside and in case the appeal was permitted to proceed against the joint family in the presence of the other karta Sree Ram Bohra, there might be occasion for the coming into existence of two inconsistent decrees. The High Court, accordingly, dismissed the appeal. It was against 83 3 this order that the Union of India obtained the certificate from the High Court under article 133 and then filed this appeal. The sole point for decision in the appeal then is whether the appeal of the Union of India before the High Court against the respondent Sree Ram Bohra, respondent No. 2, was competent after it had abated against respondent No. 1, Bilas Rai Bohra, on account of his heirs and legal representatives being not brought on the record. It has not been disputed for the appellant that in case it is held that the appeal had abated against the heirs and legal representatives of Bilas Rai Bohra, it became incompetent against the surviving respondent alone. The suit was filed by both the plaintiffs. Both were respondents in the appeal. The decree was a joint one, without any specification regarding the shares of each of the decree holders. The appeal must, therefore, become incompetent if it has abated against one of the respondents. What is really urged for the appellant is that there could be no abatement of the appeal on the death of Sree Ram Bohra and the omission to bring on record his heirs and representatives, as the real plaintiff was the joint family which owned the firm Bansidhar Ganpat Rai, the consignee of the bales which were not delivered and as the suit had been brought by the two named plaintiffs as the kartas of the joint family. It is said that on the death of one of the kartas, the other karta continued to represent the joint family, the real plaintiff respondent, and that therefore there could not be any abatement of the appeal. We do not consider the contention sound. We have not been referred to any text of Hindu Law or any decided case in support of the proposition that a joint Hindu family can have more than one karta. The very idea of there being two kartas of a joint Hindu family does not appear, prima facie, consistent with the concept of a karta. Their describing themselves as kartas of the joint Hindu family owning the firm and their suing as such cannot make them kartas of the joint Hindu family if the Hindu Law does not contemplate the existence of two kartas. In paragraph 236 of Mulla 's Hindu Law, XII Edition, is said "Property belonging to a joint family is ordinarily managed by the father or other senior member for the time being of the family. The manager of a joint family is called karta. 834 The father is in all cases naturally, and in the case of minor sons necessarily, the manager of the joint family property " The existence of two kartas cannot lead to the smooth management of the property of the joint Hindu family and the other affairs of the family in view of the powers which the karta of a joint Hindu family possesses under the Hindu Law, powers which are not restricted to only such powers which ordinarily the manager of property of certain persons who confer authority on him to manage the property possesses. The karta of the joint Hindu family is certainly the manager of the family property but undoubtedly possesses powers which the ordinary manager does not possess. The karta cannot therefore be just equated with the manager of property. Reference was made to the case reported as Bhagwan Dayal vs Mst. Reoti Devi(1). It was stated at p. 482 : "The legal position may be stated thus : Coparcenary is a creature of Hindu law and cannot be created by agreement of parties except in the case of reunion. It is a corporate body or a family unit. The law also recognizes a branch of the family as a subordinate corporate body. The said family unit, whether the larger one or the subordinate one, can acquire, hold and dispose of family property subject to the limitations laid down by law. Ordinarily the manager, or by consent, express or implied, of the members of the family, any other member or members can carry on business or acquire property. subject to the limitations laid down by the said law, for or on behalf of the family. " The fact that any other member or members other than the manager of the joint Hindu family, carry on business etc., on behalf of the family, does not mean that such members who act for the family do so as kartas of the family. In the absence of any text of Hindu law or of any previous decision that a joint Hindu family can have two kartas we are not prepared to express any definite opinion on the question whether there can be two kartas of a joint Hindu family and, if there can be two kartas, what would be the effect of the death of one of them on the maintainability of a suit brought by both of them. (1) ; 835 Two persons may look after the affairs of a joint Hindu family on the basis of the members of the joint Hindu family clothing them with authority to represent the family. They would be two persons entitled to represent the family and their power to represent would depend on the terms of the authority conferred on them by the members of the joint Hindu family. Their authority to act for the family is not derived under any principle of Hindu law, but is based on the members of the joint Hindu family conferring certain authority on them. It cannot, therefore, be said that when two such representatives of a joint Hindu family sue and obtain a decree in their favour for the benefit of the joint Hindu family, and an appeal is filed against both of them as respondents representing the joint Hindu family, the other representative would continue to represent the joint family on the death of one of the representatives. He could not possibly do so when the authority given by the joint Hindu family be to the effect that both of them were to act jointly. In the absence of any knowledge about the terms of authority of the two representatives, it is not possible to urge successfully that on the death of one of the representatives, the other representative still continued to represent the joint Hindu family. On the death of one of the representatives, the karta of the family, in accordance with the principles of Hindu law, will automatically be the person entitled to represent the joint Hindu family till such time that the family again decides to confer the authority on specified members of the joint Hindu family to represent it. There is no material on the record to indicate the terms and scope of the authority conferred on the two plaintiffs by the joint Hindu family. We, therefore, consider the matter in appeal on the basis that the suit was brought by two persons as plaintiffs. They can at best be taken to represent the joint Hindu family which owned that firm Bansidhar Ganpat Rai. Any one of them cannot represent the joint family after the death of the other till his authority to represent the family is confirmed by the members of the family. There is no allegation or proof about such confirmation or fresh vesting of authority in the second plaintiff, viz., Sree Ram Bohra. For the purpose of the suit, there were two plaintiffs and on the death of one of them it was necessary for the opposite party to implead his heirs and legal representatives within time. It failed to do so and therefore the appeal against those heirs and representatives of Bilas Rai Bohra was rightly held to have abated. The result of such abatement makes this appeal against the other respondent incompetent as the decree against both the respon 836 dents viz., Bilas Rai Bohra and Sree Ram Bohra was a joint decree. There was nothing in the decree to indicate for whose benefit it was passed or in what proportions the two decree holders were to get the decretal amount. The appeal against Sree Ram Bohra was therefore incompetent. This view is supported by the decision of this Court in The State of Punjab vs Nathu Ram(1). It was held there that when the decree in favour of the respondents is joint and indivisible, the appeal against the respondents other than the deceased respondent cannot be proceeded with if the appeal against the deceased respondent has abated. We are, therefore, of opinion that the High Court was right in holding that the appeal against Sree Ram Bohra alone became incompetent. It has been further argued for the appellant that the High Court should have allowed the appellant 's application for setting aside the abatement. The High Court exercised its discretion judiciously, after taking into consideration the facts urged in support of the prayer that the abatement of the appeal be set aside. We do not find any reason to consider that the discretion was not properly exercised. We, therefore, do not consider this a fit case to interfere with the discretion exercised by the High Court in this regard. We, therefore, dismiss the appeal with costs. Appeal dismissed.

The respondent and B filed a suit and obtained a decree for a certain sum against the appellant. The appellant appealed to the High Court and subsequently B died. The High Court dismissed an application setting aside the abatement of the appeal against B and for substitution as it was of opinion that there had been gross negligence on the part of the appellant. when the appeal came up for hearing a preliminary objection was raised by the respondent that the appeal had abated entirely which was upheld by the High Court. On appeal by certificate, the appellants contended that there could be no abatement of the appeal as the had been brought by the respondent and B as the Kartas of the joint family and on the death of one of the Karta, the other Karta continued to represent the joint family, the real plaintiff respondent. HELD: The appeal against the respondent was incompetent. When two representatives of a joint Hindu family sued and obtained a decree in their favour for the benefit of the joint Hindu family, and an appeal was filed against both of them as respondents representing the joint Hindu family, the other representative would not continue to represent the joint family on the death of one of the representatives. [835 B D] Any one of them could not represent the joint family after the death of the other till his authority to represent the family was confirmed by the members of the family. [835 F G] The State of Punjab vs Nathu Ram, ; , relied on.

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Appeal No. 136 of 1964. 415 Appeal from the judgment and order dated February 24, 1961 of the Bombay High Court in Misc. Application No. 333 of 1960. A. V. Viswanatha Sastri, T. A. Ramachandra, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. R. Ganapathy lyer, R. H. Dheber and R. section Sachthey, for the respondent. The Judgment of the Court was delivered by Sikri, J. This is an appeal on a certificate granted by the High Court of Bombay against its judgment dated February 24, 1961, dismissing the petition filed by the appellant under article 226 of the Constitution of India. This appeal raises a short question as to the construction of section 49E of the Indian IncomeTax Act, 1922, hereinafter referred to as the Act. Before we deal with this question, it is necessary to set out the relevant facts. The appellant, at the material time, carried on business not only in India but also outside India, i.e. Ceylon, the former States of Kolhapur and Kapurthala and other places. It is not necessary to give the facts relating to the income in Ceylon and Kolhapur because if the facts relating to the income made in Kapurthala are stated, these will bring out the real controversy between the appellant and the Revenue. We may mention that it is common ground that the facts relating to Ceylon income and Kolhapur income are substantially similar. On July 9, 1954, the appellant wrote a letter to the Income Tax Officer, Companies Circle, Bombay, stating that for the assessment year 1949 50, it was entitled to refund on the income taxed in Kapurthala State. It attached an original certificate for tax showing payment of Rs. 37,828/11/ , and requested that a refund order be passed at an early date. On June 27, 1956, the Income Tax Officer rejected the claim on the ground that the claim filed by the appellant was not within the time limit of four years laid down in r. 5 of Income Tax (Double Taxation Relief) (Indian States) Rules 1939 hereinafter called the Indian States Rules. On December 18, 1956, the appellant filed a revision, under section 33A of the Act, against the said order, before the Com missioner of Income Tax, Bombay. The appellant stated in the petition that "unfortunately the Company 's assessment for the year in question was completed by the Income Tax Officer on 416 the last day of the financial year 1953 54, i.e., 31 3 1954 being the last date on which their claim for double income tax relief should have been lodged. In absence of the assessment order being received by the Company it was not physically practicable for the assessee to lodge its claim for double income tax relief and as such the time prescribed under Section 50 had already expired when the assessment order was received by the company. " The Commissioner made some enquiries. The appellant, in its letter dated June 30, 1958, replied that no provisional claim for double income tax relief was made by the appellant within the time prescribed. The appellant reiterated its own plea that it was not "physically practicable" for the assessee to lodge its claim for double tax relief within the time prescribed. The Commissioner, however, rejected the petition. He observed that "the assessment in the Kapurthala State was made on 20 3 1950, i.e., much before the assessment was completed by the Bombay Income tax Officer. Nothing prevented the petitioner, therefore, from filing a provisional claim before the period of limitation was over. At least, it should have made such a claim before the Income Tax Officer at the time of assessment. I regret I cannot condone the delay in filing the claim as there is no provision under Section 50 for such condonation. " The appellant then approached the Central Board of Revenue. The Central Board of Revenue, by its letter dated December 31, 1958, declined to interfere in the matter. The appellant did not take any steps to apply to the High Court under article 226 for quashing the above orders of the Commissioner of Income Tax or the Central Board of Revenue. On August 28, 1959, the Income Tax Officer issued three notices of demand under section 29 of the Act in respect of the Assessment years 1949 50, 1950 51 and 1951 52. The appellant then wrote a letter dated September 4, 1959, requesting the IncomeTax Officer to set off the refunds to which the appellant was entitled pursuant to the Provisions of Income Tax (Double Taxation Relief) (Ceylon) Rules, 1942, and read with the provisions of sections 49A and 48 of the Income Tax Act, in respect of the assessment years 1942 43, 1943 44 and 1944 45, relating to Ceylon, and the assessment year 1947 48 and 1949 50 relating to Kolhapur and Kapurthala, against the said demands. In this letter the appellant gave arguments in support of its request. In short, the argument was that although the applications claiming those refunds were submitted beyond the prescribed time limit, nevertheless the appellant had a right still, pursuant to the the provisions of section 49E, to call upon the Income Tax Officer to 417 set off the refunds found to be due to the appellant against the tax demands raised by the Income Tax Officer on the appellant. The appellant also approached the Central Board of Revenue,. urging similar points. The Central Board of Revenue, however, by its letter dated June 24, 1960, declined to interfere in the matter. The appellant then on October 7, 1960, filed a petition under article 226 of the Constitution. After giving the relevant facts and submissions, the appellant prayed that the High Court be pleased to issue a writ in the nature of Mandamits or a writ, direction or order under article 226 of the Constitution, directing the respondents to set off the refunds due to the petitioner under the aforesaid double taxation relief rules against the tax payable by it for the assessment year 1955 56. It appears that in the meantime the petitioner had paid tax for the assessment years 1949 50 and 1950 51, and the demand for Rs. 89,000.58 for the assessment year 1951 52 was kept in abeyance, and later when the assessment for 1955 56 was completed, the Income Tax Officers had agreed to keep in abeyance Rs. 79,430.19 out of the total demand relating to the assessment year 1955 56, till the decision of the Central Board of Revenue. The second prayer was that the High Court be pleased to issue writs in the nature of Prohibition or other direction or order under article 226 of the Constitution prohibiting the respondents, their officers, servants and agents from demanding or recovering from the petitioner the tax payable by it for the assessment year 195556 without first setting off against that tax the refunds due to the petitioner under the aforesaid double tax relief rules. It will be noticed that no prayer was made for quashing the order of the Commissioner, dated August 23, 1958, and the order of the Central Board of Revenue dated December 31, 1958. It was indeed contended by Mr. section P. Mehta, the learned counsel for the appellant before the High Court that the appellant was not challenging the orders of the Income Tax Officer rejecting his application for refund, but was only challenging the orders made by them rejecting its application for grant of set off. Mr. Viswanatha Sastri, the learned counsel for the appellant first urged that as compliance with r. 5 of the Indian States Rules, 1939 was physically impossible, r. 5 did not apply, and consequently the refund due to the appellant notwithstanding r. 5. But we cannot go into the question whether r. 5 was rightly or wrongly applied by the Income Tax authorities. The 418 orders dated August 23, 1958 and December 31, 1958, cannot be attacked in these proceedings. Therefore, we must proceed on the basis that those orders were validly passed. We express no opinion whether the view of the Income Tax authorities that r. 5 was applicable in the circumstances of the case was correct or not. This takes us to the construction of section 49E. Section 49E reads thus : "49E. Power to set off amount of refunds against tax remaining payable. Where under any of the provisions of this Act, a refund is found to be due to any person, the Income tax Officer, Appellant Assistant Commissioner or Commissioner, as the case may be may, in lieu of payment of the refund, set off the amount to be refunded, or any part of that amount against the tax, interest or penalty if any, remaining payable by the person to whom the refund is due. " The High Court held that section 49E of the Act did not give :any assistance to the appellant because, according to it, there ,must be prior adjudication in favour of the appellant. The High Court observed that "the expression found to be due" clearly means that there must, prior to the date set off is claimed, be an adjudication whereunder an amount is found due by way of refund to the person claiming set off." Mr. Sastri contends that it is not necessary that there should be a prior adjudication to enable a person to claim set off. He says that the Income Tax Officer can decide the question whether refund is due or not when an application for refund is made to him. On the facts, he says that it is clear that the appellant is entitled to refund under r. 3 of Indian States Rules, 1939, and the Income Tax Officer has only to calculate the relief due and then set it off. The learned counsel for the respondent, Mr. Ganapath lyer, on the other hand, contends that the orders of the Commissioner and the Central Board of Revenue having become final, there was no obligation on the Income Tax Officer to make any payment of refund, and he says that it is a condition precedent to the applicability of section 49E that the Income Tax Officer must be under an obligation to make a payment. He points out that the expression "in lieu of payment of the refund ' clearly indicates that the Income Tax Officer must be under an obligation to make a payment of refund. He further contends 419 that the refund is not due under the Act but under the said Rules, and therefore, section 49E does not apply. There is no difficulty in refuting the contention of the learned counsel for the Revenue that the refund, if due, was due under the provisions of the Act. Section 59(5) provides that the rules made under this section shall have effect as if enacted under this Act. This provision thus makes the Indian State Rules, 1939, part of the Act, and consequently if a refund is due under the Rules, it would be refund due under the Act within the meaning, of section 49E. The question then arises as to whether there should be a prior adjudication existing before a set off can be allowed under 49E, and whether there is any other condition which is necessary to be fulfilled before the section becomes applicable. We are of the opinion that it is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E.There is nothing to debar the Income Tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E. The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication. But this is not enough to sustain the claim of the, appellant. It must ,till show that a refund is due to it. The words "found to be due" in section 49E may possibly cover a case where the claim to refund has been held barred under r. 5 of the Indian State Rules but that this is not the correct meaning is made clear by the expression "in lieu of payment". This expression, according to us, connotes that payment is outstanding, i.e. that there is subsisting obligation on the Income Tax Officer to pay. If a claim to refund is barred by a final order, it cannot be said that there. is a subsisting obligation to make a payment. The expression "in lieu of" was construed in Stubbs vs Director of Public Prosecutions(1). It was held there that where a liability has to be discharged by, A in lieu of B, there must he a binding obligation on B to do it before A can be charged with it. In our opinion, there must be a subsisting obligation to make the payment of refund before a person is entitled to claim a set off under section 49E. In this case in view of the orders of the Commissioner and the Central Board of Revenue mentioned above there was no subsisting obli gation to pay, and therefore, the claim of the appellant must (1) 420 Therefore, agreeing with the High Court, we hold that section 49E of the Act is of no assistance to the appellant and that the petition was rightly dismissed by the High Court. The appeal accordingly fails and is dismissed, but in the circumstances of the case there will be no order as to costs. Appeal dismissed.

The appellant company made a claim under section 5 of the Income tax (Double Taxation Relief) (Indian States) Rules, 1939, for refund of the income tax paid by it in an Indian State. The claim was rejected by the Income tax Officer as time barred. The Commissioner of Income tax and the Central Board of Revenue refused to interfere and the appellant sought no further legal remedy against their orders. Subsequently on certain tax demands being made by the Income tax Officer, the appellant made representation that the amounts in respect of which application had earlier been made under r. 5 should be set off against the demand as provided by section 49E of the Indian Income tax Act, 1922. The Income tax authorities having rejected this claim also, the appellant went to the High Court under article 226 of the Constitution. The High Court held that the expression found to be due" in section 49E clearly meant that there must be, prior to the claim of set off, an adjudication whereunder an amount is found due by way of refund to the person claiming set off. Since there was no such adjudication in the appellant 's favour, the writ petition was dismissed. However a certificate of fitness under article 133(1) (c) was granted to the appellant. HELD : (i) It is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E. There is nothing to debar the Income tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E. The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication. [419 D E] (ii) The set off under section 49E must however be "in lieu of payment ' which expression connotes that payment is outstanding i.e. there is a subsisting obligation on the Income tax Officer to pay. If a claim to refund is barred by a final order, it cannot be said that there is a subsisting obligation to make the payment. [419 F G] Stubbs vs Director of Public Prosecutions , relied on. (iii) In the present case the orders of the Commissioner and the Central Board of Revenue rejecting the appellant 's claim under r. 5 of the Indian State Rules had become final. They were not challenged even in the petition under article 226. There was thus no subsisting obligation on the part of the Income tax Officer to make payment to the appellant, and the claim of the appellant under section 49E must therefore, fail. [419 G H]

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Appeal No. 216 of 1952. Appeal from the judgment and decree dated September 15, 1959 of the Bombay High Court in First Appeal No. 600 of 1955 from Original Decree. A.V. Viswanatha Sastri, Rameshwar Nath, S.N. Andley and P.k. Vohra, for the appellant. S.N. Pershad, M.H. Chhatrapati, 1. B. Dadachanji, O.C. Mathur and Ravinder Narain, for respondents Nos. 1 and 2. K.L. Hathi and R.H. Dhebar, for respondent No. 3. The Judgment of the Court was delivered by Raghubar Dayal, J. There is a temple known as Shri Chandraprabhu Khandelwal Jain Temple at Dhulia. Gulabchand Hiralal, father of appellant Hukumchand Gulabchand Jain, a leading member of the Khandelwal Jain Community at Dhulia, looked after the temple for over 40 years till his death sometime in 1950.The appellant looked after it after his father 's death. Two members of the community interested in the temple, held to be a public temple, instituted the suit against the appellant and the Charity Commissioner, Bombay, praying for the removal of the appellant from possession of the trust properties, for the rendering of true and faithful accounts of all the assets and income of the trust property and for the framing of the scheme for the administration of the trust. It was alleged in the plaint that the appellant 's father was maintaining all accounts of income and expenditure concerning the temple and that the funds of the temple were many times advanced at interest and that the temple had come to hold large properties, movable and immovable. It was further alleged that the temple had a large income from offerings, house rent etc., but the appellant and his deceased father had not been maintaining the accounts properly and that the. funds of the temple were being advanced at interest, though no such income was shown as received recently by the appellant. The appellant, in his written statement, denied that the amount was so advanced at interest as alleged by the plaintiffs and stated that his father had been keeping a ledger in the name of the temple in the accounts in which its income and expenditure had been duly entered since over 40 years and that the appellant himself had kept separate account books for the temple since October 30, 1951. He denied that any income recently received had not been shown in the accounts. The trial Court held that the appellant had committed minor irregularities in the maintenance of the accounts, that he was liable to render accounts and that the Commissioner was to ascertain the 93 amount due from the appellant on taking the accounts. It definitely held it not established that income, if any, derived by way of interest on loans advanced out of the funds of the temple had not been credited to the account of the temple and that no instance of fraudulent or dishonest misappropriation of temple funds on the part of defendant No. 1 or his father had been established. It found that the meeting of the community had passed a resolution on August 22, 1958, by an overwhelming majority, sanctioning the accounts submitted by the appellant and that only two persons who opposed against the resolution were the two plaintiffs of the suit. The Commissioner found that on the date of the institution of the suit, i.e. on February 17, 1954, Rs. 10.088 10 3 were due for principal and Rs. 16,853 6 0 were due for interest, from the appellant. The plaintiffs admitted the report to be correct but the appellant contended that under the rule of damdupat interest exceeding the amount of principal could not be allowed. The appellants contention was accepted and the trial Court passed a decree on April 23, 1955, for Rs. 20,177 4 6 against the appellant, with future interest at 6 per cent per annum. We are not now concerned with the other items of the decree and therefore we make no reference to them. The appellant deposited the amount due under the decree on July 18, 1955. The plaintiffs appealed and claimed a larger amount on various grounds, including the one that the principle of damdupat should not have been applied and that interest on the balance of the trust fund should have been calculated and compound interest allowed in place of simple interest on the amount of the trust fund in the hands of the defendant or his father. The appellant filed a cross objection against the allowing of interest on the balance of the trust funds with his father and himself. The High Court agreed with the plaintiffs that the principle of damdupat could not be applied in the circumstances of the case and that compound interest should have been charged against the appellant. It therefore set aside the decree passed by the trial Court in so far as it determined the amount due to the temple and referred the case back to the trial Court for reassessment of the amount due to the temple having due regard to the observations made in its judgment. On an application by the appellant, certificate under article 133(1) of the Constitution was granted. The appellant has then filed this appeal and questioned the correctness of the order of the High Court holding him liable to pay compound interest and holding that the principle of damdupat was not applicable in this case. The High Court said in its judgment that it was the contention of the plaintiffs that the appellant 's father and the appellant 3(D)2SCI 8 94 used the funds of the temple in their business and that they were therefore liable to account on that footing. There was no such allegation in the plaint or in the memorandum of appeal to the High Court. The High Court referred to the khulasa submitted to the Commissioner by the plaintiffs and stated that it was specifically alleged therein that the amount was being used by the defendant and his father in business. Support for such an allegation was found in the statement Exhibit 24 of the appellant 's father in 1931. Reference was also made to the fact that the appellant had nowhere denied the fact of the moneys of the temple being used for the purpose of the business and to the non production of certain books of account by the appellant. His statement that they were not available was not accepted. The High Court recorded the finding in this form (at p. 43 of the appeal record): "Under these circumstances it would not be an unreasonable inference to draw that the amounts belonging to the temple were being utilised by Defendant No. 1 (the appellant) and before him by his father in their business." Having come to this conclusion and to the view that the position of the appellant 's father and the appellant vis a vis the temple funds was that of a trustee, the High Court considered whether the plaintiffs could claim interest on equitable grounds and held that they could claim compound interest with yearly rests, as the money had been used in the business or had been so mixed up with their own funds that it was impossible to say that they had not so used it. The High Court did not apply the rule of damdupat as the liability of the appellant was not rounded on loans or on any contract. It is contended for the appellant that there was neither an allegation nor evidence to the effect that the trust funds had been used in his business by the appellant 's father or the appellant and that therefore the appellant was not liable to pay compound interest on the trust funds in his hands or in the hands of his father. It was further urged that if interest was payable by the appellant 's father or the appellant on the balance of trust funds, it should be simple interest and the amount of interest could not be more than the amount of principal due on the date of the institution of the suit on the principle of damdupat. It has not been established in this case that the trust funds with the appellant or his father were used in their trade or business. We have already referred to the finding Of the High Court in this respect. It is a very halting finding. The High Court has not definitely held it proved that the funds were used in the business. We say so, as the High Court has said (at p. 46 of the appeal record): "Since we are of the view that the defendant No. 1 and his father have used the monies of the temple in their business or have so mixed it up with their own funds that it is impossible to say that they have not so used it . " 95 This is not a clear cut definite finding that the funds had been used in business or trade. The earlier finding noted at p. 43 of the appeal record and quoted by us earlier, loses its force in view of what has been said later. There is no evidence about such use of the money. There was no such allegation in the plaint. It was said in the khulasa dated December 22, 4954 and included in the Additional Report of the Commissioner of even date: "Because the amount that was received by the defendant in respect of the temple could be utilised by the defendant in his business he used to pay interest thereon at the rate of annas 8. " This too, is not, as stated by the High Court, a specific allegation that the amount was being used in business. The plaint did not even say that the amount had been always advanced on loan. What it said in para l is that the funds of the temple were many times advanced at interest and that no income from interest recently received had been shown in the accounts. No evidence has been led about the regular advance of the trust funds as loans. On the other hand, the accounts show only a few entries about the receipt of interest on the trust funds. The statement, Exhibit 24, made by the appellant 's father on October 26, 1931, in Regular Suit No. 377 of 1931, was in a suit instituted by the appellant 's father for the recovery of money advanced on a mortgage at compound rate of interest. Gulabchand, father of the appellant, stated in examination in chief, that the funds lent were of the temple, the transactions of the temple were in his name and that interest at compound rate had been agreed upon. In cross examination he stated that he had with him funds of the temple and that he paid for them compound interest at 8 annas. This statement does not necessarily mean that the appellant 's father had been crediting the temple accounts with compound interest, at the rate of 8 annas, on the temple funds in his hands. Gulabchand made another statement on January 12, 1950. It is exhibit 23. This statement was made in proceedings on Miscellaneous Application No. 110 of 1949. He stated: "Suit No. 377 of 1931 had been filed. In the same my deposition has been recorded. I have made a statement that the amount was of the temple. But I gave a statement to that effect as that amount has been set apart for the temple. I have given a statement that after the mortgage deed was executed and before the suit was filed, I set apart this amount for the temple and that the transaction of the temple was in my name. That statement is correct, 96 If it is the amount of the Mandir, I credit it to the Khata of the Mandir. I do not pay interest for the amount of the Mandir. As there was interest in the mortgage deed, I have taken interest at eight annas from Mangilal. I have made a statement that I have with me the amount of the temple and that I pay interest for it at eight annas. " These statements, taken together, lead to the inference that Gulabchand was not crediting interest on the temple funds in the accounts except when he received interest on the amounts lent and that this statement made in 1931 was in connection with the amount lent on a mortgage deed. He charged compound interest from the mortgagor and therefore credited that interest in the accounts. It is significant to note that the four entries about interest were for the years 1927 to 1931 when Suit No. 377 of 1931 was filed. The fact that no interest appears to have been credited after 1931 bears out the inference we derive from the statements of Gulabchand. There is another matter which throws light on this question and tends to support our conclusion. The report submitted ' by the Commissioner on November 29, 1954 shows that the balance at the beginning of samvat year 1996, corresponding to 1939 40, was Rs. 7,649 14 3. The amount credited during the year was Rs. 573 12 0 and the amount debited was Rs. 769 3 6. If the opening balance be ignored, there would be a deficit of Rs. 195 7 0 and the accounts for the samvat year 1997 opened with a debit balance of Rs. 195 7 0. This shows that the opening balance of samvat year 1996, i.e. Rs. 7,649 14 3, had been taken out of the accounts. It appears that this amount was taken over to some Bhandara account and was credited again in the temple accounts for samvat year 2009, i.e., 1952 53, after being brought out from Bhandara account. Such dealing with this amount does not appear to be consistent with its being used in business. In view of the shaky finding of the High Court about the funds being used in business by the appellant 's father or the appellant and in view of what we have said above, we hold that it has not been proved that these funds had been used in business and that therefore the appellant is not liable to pay compound interest on the balance of the trust funds with his father or himself. We may now consider whether the appellant is liable to pay simple interest on the balance of trust money with his father or himself. Two questions arise for consideration and they are whether the trustee is liable to pay simple interest on the trust capital in his hands and if he is so liable what rate of interest be charged from him in the present case. Interest can be allowed on equitable grounds only as no statutes in force during the period in suit and dealing with public charitable trusts made the trustee liable to pay 97 interest. The Indian Trusts Act does not apply to public or private religious or charitable endowments and therefore the provisions of section 23 thereof cannot be used for charging interest from the appellant trustee. The Charitable and Religious Trusts Act has no provision which provides for charging the trustee with interest. Reference may therefore be made in this connection to what is stated in para 1691 of Halsbury 's Laws of England, III Edition. 38: "Subject to this, or unless a trustee is expressly otherwise authorised or required under the terms of his trust. he must duly and promptly invest all capital trust money coming to his hands, and all income which cannot be immediately applied for the purposes of the trust; and he is liable for any loss which may result from its being improperly invested or being left uninvested for an unreasonable length of time, and for interest during the period of its being so left. " This is so because the trustee has to conduct the affairs of the trust in the same manner as an ordinary prudent man of business would conduct his own affairs. In para 1812 are set out the circumstances in which a trustee, besides being required to account for the principal trust money, can also be charged with interest on it and one of the circumstances is when the Court considers that the trustee ought to have received interest. Such could be the case when the trustee, in breach of his duty, retains the trust money in his own hands uninvested or mixes it with his own money or property. It appears from the Commissioner 's report that the trustee in this case had over Rs. 10,000 in his hands from samvat year 1988 commencing from November 10, 1931, upto February 17, 1954, when this suit was instituted. The trustee kept such a large sum uninvested for a long time extending over 22 years. The accounts show that reasonably he could not have expected to require this amount for any current purpose of the trust during these years. He should have invested the amount. His failure to do so makes him liable to pay interest. It appears from what is said in para 1814 of Halsbury 's Volume 38 that where a trustee simply fails to invest trust money which he ought to have invested or there are no other special circumstances in the case, he is in general charged simple interest at the rate of 4 per cent per annum. We consider it reasonable to charge interest at 4 per cent per annum in this case. We have now therefore to decide what had been the amount of trust funds in the hands of the appellant 's father at different times and what would be the amount due from the appellant on the date of the institution of the suit, both for principal amount of trust money and for accumulated interest with him. We do not 98 consider it desirable that the case be sent back to the trial Court for these calculations, in the light of our finding, as this litigation has been pending for over 10 years and as the accounting is to be done for a period commencing from November 10, 1931, from which date the accounts are available to the Court. The Additional Report of the Commissioner, dated December 22, 1954, shows that the amount of principal on February 17, 1954, the date on which the suit was filed, was Rs. 10,088 10 3 and that the accumulated amount of interest due on that date was Rs. 16,853 6 0 at the rate of 6 per cent per annum. The plaintiffs respondents admitted this report to be correct. The defendant also admitted the correctness of the principal amount found due by the Commissioner. He, in fact, did not even dispute that the amount of interest at 6 per cent per annum would be what has been found by the Commissioner. What he contended was that he was not liable to pay interest in excess of the amount of principal found due, in view of the rule of damdupat. In these circumstances, these figures can be accepted as correct. When the Commissioner had submitted his first report on November 29, 1954. both the parties objected to the accounts prepared by him. The defendant had objected to the Commissioner 's including a sum of Rs. 7,648 14 3 twice over in his accounts. This sum represents the balance at the close of samvat year 1995 corresponding to 1938 39. It was not taken over in the accounts for the samvat year 1996. The Commissioner, in preparing the account, took this amount into consideration without making up the accounts for the samvat year 1996. He found and noted in his accounts that the amount credited to the temple during the samvat year 2009 corresponding to 1952 53 was Rs. 9,978 5 3 and that this amount included a sum of Rs. 7,648 14 3 which had been brought from the Bhandara account. He however did not consider this sum to be the sum which had been not included in the accounts of the temple from the samvat year 1996. The learned District Judge agreed with the objection of the defendant and held that this amount had been included twice in the Commissioner 's accounts. The respondents did not dispute the correctness of this finding in the High Court and therefore we do not consider it a sound contention that this sum of Rs. 7,648 14 3 be further added to the balance found due by the Commissioner. The appellant stated that the statement of the balance in hand submitted by him to the meeting on August 22, 1953 was arrived at by adding an amount of Rs. 7,000 to the balance shown in the accounts as he had found a sum of Rs. 7,000 in a bag marked 'Dharmadya ' inside a safe. The High Court has not considered the statement of the defendant about so finding a sum of Rs. 7,000 reliable. It was not urged before the High Court, as has been urged 99 before us, that this sum of Rs. 7,000 be included in the amount of trust money in the hands of the appellant on the date of the institution of the suit. The High Court merely dealt with the complaint for the respondents that the Commissioner had not taken this sum into account for the purpose of computation of interest on funds in possession of the defendant. The High Court considered this complaint to be justified. We therefore do not accept the respondent 's contention that Rs. 7,000 be added to the balance found due by the Commissioner and hold that the High Court was in error in ordering interest to be calculated on this amount as well. According to the report of the Commissioner, the amount of interest on the principal amount of trust money in the hands of the trustee worked out to Rs. 16,853 6 0 up to February 17, 1954 at 6 per cent annum. We have held that the interest be calculated at 4 per cent per annum. If follows that at this rate the amount of interest found due by the Commissioner would be reduced to Rs. 1 I,235 9 4. The principal due on that date was Rs. 10,088 10 3. The question now arises whether the amount of interest be limited 10 the amount of principal, on the basis of the principle of Damdupat, or not. The High Court has held that the principle of Damdupat will not apply in this case. We agree with that opinion. The rule of Damdupat applies to cases where a loan is advanced. This is clear from Colebrooke 's Digest on Hindu Law. Part I, Vol. I, of the Digest deals with Contracts. Book I of this Part deals with Loans and Payment. Section I of Chapter I of Book I deals with Loans in General and describes what may or may not be loaned by whom, to whom and in what form, with the rules for delivery and receipt. These matters are comprised under the title 'loans delivered (rinadana) ', which means the complete delivery of a loan or debt by whom, where and to whom made. Chapter II deals with Interest and states at the commencement of Section I: "Such interest, as may be taken without a breach of duty on the part of the creditor, is a rule (dherma) for delivery by the creditor. Or . for it is the nature of a loan, that it should produce to the lender the principal sum advanced, and interest in addition thereto. " The various Articles in this Section use the expressions 'creditor '. 'render '. 'Joan ', 'principal ', 'lent ', 'borrowers ' and thus make it amply clear that it deals with interest on the amounts advanced by a creditor to a debtor. Section I deals with the rates of interest to be charged. Section 1I deals with Special Forms of Interest. Paragraph 53 thereof states: "Interest on money, received at once, not year by year, month by month, or day by day, as it ought, must never be more than enough to double the debt, that is, more than the amount of the principal paid at the same time. " 100 This is what is known by the rule of Damdupat and has been rightly construed, as long ago as 1863, by the Bombay High Court in Dhondu Jagannath vs Narayan Ramchandra(1). Section III deals with Interest Specially Authorized and Specially Prohibited. Article II of this Section deals with Limits of Interest. Paragraph 59 thereof states: "The principal can only be doubled by length of time, after which interest ceases. " The limit of interest is different under other paragraphs for loans advanced in different circumstances. Paragraph 61 repeats what has been stated in paragraph 53 of Section II and adds a special rule to the effect: "On grain, on fruit, on wool or hair, on beasts of burden, lent to be paid in the same kind of equal value, it must not be more than enough to make the debt quintuple. " It is therefore clear, as stated earlier, that the rule of Damdupat applies in respect of interest due on amounts lent by a creditor to the borrower, the debtor. The question then is whether the funds in the hands of a trustee can be said to be such loans nationally advanced by the trustee to himself as an individual. If their character can be deemed to be such, there may be a case for applying the rule of Damdupat to the interest on such funds and that if it is not so, this rule of Damdupat will not apply to the interest ordered to be paid on such funds. It has been urged for the appellant that the trustee is a debtor with respect to the trust money in his hands. Reference has been made to Halsbury 's Laws of England, III Edition, Vol. 38, 1044 where it is stated at para 1801: "A breach of trust is, in equity, regarded as giving rise to a simple contract debt. " In the foot note is stated: "Strictly speaking, the relation of debtor and creditor does not subsist between a trustee and his cestui que trust (per Lindley, L.J. in Lewin on 'Trusts ', 15th Edition, states at p. 745: "The debt constituted by a breach of trust is, even after it has been established by a decree, an equitable debt only, and until the Bankruptcy Act, 1869, would not have supported a petition in bankruptcy. " It was said by the Earl of Halsbury, L.C., in Sharp vs Jackson(2): "It has been suggested that there was a proposition which could be maintained, as to which I confess I entertain grave doubts whether any decision goes to that extent, namely, that the relation between a cestui que trust 101 and a trustee who has misappropriated the trust fund is not that of debtor and creditor. That it may be something more than that is true, but that it is that of debtor and creditor. 1 can entertain no doubt. As that question has been mooted and brought before your Lordships ' House as one question for decision here, I certainly have no hesitation in saying that in my opinion no such proposition can properly be maintained, and that although there are other and peculiar elements in the relation between a cestui que trust and a trustee, undoubtedly the relation of debtor and creditor can and does exist." No other Lord expressed an opinion on this point. The correctness of this expression of the Earl of Halsbury has been doubted in Lake, in re. Dyer, Ex Parte( ') by Rigby L.J., who remarked at the hearing: "How is a trustee a debtor '? Can he be sued at common law '? I do not see how he can be a 'debtor ', for the money he is fraudulently dealing with is, at law, his own money. No doubt he can be called upon to replace the money, but that must be by a suit in equity, not at law. Notwithstanding the high authority of the statement that has been referred to, I confess I do not understand it. " We are of opinion that though a trustee., who has custody of trust funds, has a pecuniary liability to make good those funds if he has used them and may, on the basis of such a liability, be said to be a debtor of the trust, yet he, as an individual, is not a borrower of the funds from the trust and cannot be said to have taken a loan from himself as a trustee in charge of the trust funds. His liability to pay interest, when ordered by the Court on equitable grounds, does not come within the provisions dealing with interest in Hindu Law, as mentioned in Colebrooke 's Digest. There is no fixed rate of interest which a trustee be liable to pay as there is no contract between him as a trustee and as an individual to pay interest. He simply uses the money in his custody. It is only when the Court determines his liability to pay interest that interest is to be calculated on the principal amount due from him. It is not the case of a creditor letting interest accumulate and thus make the debtor pay interest much more than what he had borrowed as principal. The principle of Damdupat was evolved both as an inducement to the debtor to pay the entire principal and interest thereon at one and the same time in order to save interest in excess of the principal and as a warning to the creditor to take effective steps for realising the debt from the borrower within reasonable time so that there be not such accumulation of interest as would be in excess of the principal amount due, as in that case he would have to forego the excess amount. There may be justification for the (1) ,715. 102 principle of Damdupat applying in the case of an ordinary creditor and a debtor, but there seems no justification for extending that principle to the case of a trustee who has to pay interest on the funds in his hand with respect to which on certain grounds he is held liable to pay interest. We therefore hold that the rule of Damdupat will not apply with respect to the interest adjudged payable by a trustee on his committing breach of trust with respect to the trust funds in his hands . The result then is that the appellant is liable to pay Rs. 10,088 10 3 for principal and Rs. 11,235 9 4 as interest, upto the date of the institution of the suit, i.e. upto February 17, 1954. We therefore allow the appeal, set aside the decree of the High Court and modify the decree of the trial Court accordingly. The result will be that the suit temple will be entitled to get from defendant No. 1 a sum of Rs. 21,324 3 7 upto the date of the suit, together with future interest at 4 per cent per annum on Rs. 10,088 10 3 from the date of the suit till the date of payment. The appellant will bear his costs throughout. The costs of the respondents will come out of the estate. Appeal allowed.

The respondents who were interested in a public temple filed a suit against the appellant who was looking after the affairs of the temple. They prayed for his removal from possession of the trust properties, for the rendering by him of true and faithful accounts and for the framing of a scheme. The trial court held that the appellant was liable to render accounts. Having ascertained the amount of principal, it determined the interest payable at an amount equal to that of the principal on the basis of the rule of damdupat. The respondents appealed to the High Court and urged that the rule of damdupat should not have been applied and that compound interest should have been charged against the appellant. The High Court held that the appellant had used the trust moneys in his business and therefore agreed with the contention of the respondents and remanded the case to the trial court for ascertaining the amount due to the temple. In the appeal to the Supreme Court, it was contended that, (i) there were no grounds for making the appellant liable to pay compound interest, and (ii) even if there was liability to pay any interest, it was only for paying simple interest and that the rule of damdupat should be applied. HELD: (i) It had not been proved that the trust funds had been used in the appellant 's business and therefore the appellant was not liable to pay compound interest on the balance of the trust funds with him. [96 G] (ii) In the absence of statutes during the period of suit dealing with public charitable trusts making a trustee liable to pay interest, interest could be charged only on equitable grounds. One such circumstance is, when the Court considers that the trustee ought to have received interest, as when he retains trust money in his hands uninvested. Since the accounts, in the instant case, show that the appellant had retained the principal amount uninvested for over twenty years he would be liable to pay simple interest at the rate of 4 per cent per annum. Even though the interest calculated at that rate exceeded the principal, that entire interest would have to be paid, because, the rule of damdupat would not apply. The principle of damdupat was evolved both as an inducement to the debtors to pay the entire principal and interest at one and the same time in order to save interest in excess of the principal, and as a warning to the creditor to take effective steps for realising the debt from the borrower within a reasonable time, so that, there may not be accumulation of interest in excess of the principal amount. But that rule applies only to cases where a loan is advanced. Though a trustee who had custody of trust funds, has a pecuniary liability to make good those funds if he has used them and may, on the basis of such a liability, be said to be a debtor of the trust, yet he, as an individual, is not a borrower of the funds from the trust and cannot be said to have taken a loan from himself as a trustee in charge of the trust funds. [96 H; 97 E H; 99 D; E; 101 E F, H] 92 Sharp vs Jackson, (1899) A.C.419 and Lake, in re Dyer Ex Parte, (1901)1 K.B. 710, referred to.

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Criminal Appeal No. 191 of 1962. Appeal by special leave from the judgment and order dated April 9, 10 and 12 of 1962 of the Gujarat High Court in Criminal Appeal No. 426 of 1961. A. section R. Chari, and R. A. Gagrat, for the appellants. H. R. Khanna, R. H. Dhebar and B. R. G. K. Achar, for the respondent. The Judgment of the Court was delivered by Subba Rao J. This appeal by special leave raises an interesting question involving the construction of section 34, read with section 301 of the Indian Penal Code. The appellants who are 11 in number were accused Nos. 1 to 10 and 12 in the Sessions Court, Mehsana. The case of the prosecution may be stated thus : In the village of Aithor there are about 300 houses of Kadva Patidars and about 15 to 20 houses of Leva Patidars. On January 16, 1961, at about 8 P.m. seven persons, who are Leva Patidars, came to the chowk where there is a pan shop cabin of Girdhar Shanker. These seven persons were, Rama Bhupta, Lakha Madha, Hira Punja, Jetha Nagar, Parshottam Prabhuva, Manor Madha and Gova Shiva. At the same time the 12 accused also came to that place. Accused 1 to 6 were each armed with a muzzle loading gun; accused 7, 288 8, 11 and 12 were armed with sticks; accused 9 and 10 were armed with dharias. Accused I to 4 fired their guns and Rama Bhupta fell down and died near the door of the cabin of Girdhar. Accused 5 and 6 fired their guns and Lakha Madha was injured. Accused I fired his gun again and Jetha Nagar received injuries. Accused 5 and 6 fired again and Hira Punja was injured. Accused 7 to 12 were inciting accused 1 to 6 to kill all these persons. Other specific acts were attributed to some of the accused. The learned Sessions Judge held that Rama Bhupta was killed as a result of the firing by accused 1 to 4, that Lakha Madha was injured by the firing by accused 5 and 6, that Jetha Nagar was injured by the firing by accused 1, that Hira Punja was injured by the firing by accused 5 and 6, that accused 12 caused stick injuries to Lakha and that accused 8 caused injury on the tongue of Parshottam Prabhuva. The Sessions Judge also held that the 12 accused constituted an unlawful assembly, but their common intention was not to kill Rama Bhupta but only Madha who was not present in the chowk. He acquitted all the accused under section 302, read with section 149, of the Indian Penal Code, but convicted accused I to 4 under section 302, read with section 34, of the Indian Penal Code and sentenced them to imprisonment for life and to a fine of Rs. 2,000 each; lie convicted all the accused under section 324, read with section 149, of the Indian Penal Code for causing injuries to Hira Punja and others. Accused 5 to 12 were also convicted under section 326, read with section 34, and section 324, read with section 149 and section 148, of the Indian Penal Code and they were sentenced to various periods of imprisonment and fine. The accused preferred different appeals against their convictions and sentences and the State of Gujarat filed appeals against the acquittal of accused 5 to 12 under section 302, read with section 149, of the Indian Penal Code. The State of Gujarat also filed a criminal revision for enhancing sentences passed against all the accused, but it did not file any appeal against the acquittal of accused I to 4 on the charge under section 302, read with section 149, of the Indian Penal Code. The High Court convicted accused I to 4 under section 302, read with sections 301 and 34, of the Indian Penal Code and confirmed the sentence of life imprisonment passed on them, but set aside the fine imposed on them. So far as the other accused i.e., accused 5 to 12, are concerned, they were convicted under section 302, read with sections 301 and 34, of the Indian Penal Code and also under section 302, read with section 149, of the said Code. In the result, the High Court sentenced all the accused to imprisonment for life for the said offences. 289 It is common case that if the conviction of accused 1 to 4 tinder section 302, read with section 34 and section 301, of the Indian Penal Code, was set aside, all the accused would have to be acquitted in regard to the major offences. It is also not disputed that if the conviction of accused I to 4 under the said sections was confirmed, the appeal filed by the other accused would fail. The only question, therefore, is whether the conviction of accused I to 4 under section 302, read with sections 34 and 301, of the Indian Penal Code, was correct. In the appeal Mr. Chari, learned counsel for the appellants, contends that accused I to 4 could not be convicted under section 302, read with section 34, of the Indian Penal Code, as there was no common intention to kill Rama, but Rama was killed under the mistake that he was Madba. l A mistake by one or other of the accused, the argument proceeds, cannot possibly be "in furtherance of the common intention" of the accused. He further argues that the provisions of section 301 of the Indian Penal Code cannot be invoked in the circumstances of the case. To appreciate the argument of the learned counsel it would be convenient at this stage to note exactly the finding given by the High Court. The High Court found that the common intention of the accused was to kill Madha, that accused 1 to 4 shot at Rama mistaking him for Madha, as Rama had dressed himself in the habiliments similar to those in which Madha used to dress himself and, therefore, the accused shot at Rama under the mistaken belief that be was Madha. Section 34 of the Indian Penal Code reads "When a criminal act is done by several persons, in furtherance of the common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone." Section 34 was subject of judicial scrutiny in innumerable cases. The expression "in furtherance of the common intention of all" was not in the original section, but was inserted in the section by section 1 of Act XXVII of 1870. The Judicial Committee in Barendra Kumar Ghosh vs Emperor(1) defined the expression "criminal act" in the said section thus: "A criminal act means that united criminal behaviour which results in something for which an individual (1) Cal. 197 (P.C.) : L.R. 52 I.A. 40 290 would be punishable if it were all done by himself alone,that is, in a criminal offence. " The Judicial Committee in Mahbub Shah vs King Emperor(1) laid down the following 'conditions for its application: "To invoke the aid of section 34 successfully, it must be shown that the criminal act complained against was done by one of the accused persons in the furtherance of the common intention of all; if this is shown, then liability for the crime may be imposed on any one of the persons in the same manner as if the act were done by him alone. This being the principle, it is clear to their Lordships that common intention within the meaning of the section implies a pre arranged plan, and to convict the accused of an offence applying the section it should be proved that the criminal act was done in concert pursuant to the pre arranged plan. As has been often observed, it is difficult, if not impossible, to procure direct evidence to prove the intention of an individual; in most cases it has to be inferred from his act or conduct or other relevant circumstances of the case. " It is, therefore, clear that the criminal act mentioned in section 34 of the Indian Penal Code is the result of the concerted action of more than one person; if the said result was reached in furtherance of the common intention, each person is liable for the result as if he had done it himself. The question is what is the meaning of the expression "in furtherance, of the common intention". The dictionary meaning of the word "furtherance" is "advancement or promotion". If four persons have a common intention to kill A, they will have to do many acts in promotion or prosecution of that design in order to fulfill it. Some illustrations will clarify the point. Four persons intend to kill A, who is expected to be found in a house. All of them participate in different ways. One of them attempts to enter the house, but is stopped by the sentry and he shoots the sentry. Though the common intention was to kill A, the shooting of the sentry is in furtherance of the said common intention. So section 34 applies. Take another illustration. If one of the said accused enters the room where the intended victim usually sleeps, but somebody other than the intended victim is sleeping in the room, and on a mistaken impression he shoots him. The shooting of the wrong man is in furtherance of the common intention and so section 34 applies. Take (1) L.R. 72 I.A. 148, 153. 291 a third variation of the illustration. The intended victim has a twin brother who exactly resembles him and the accused who is entrusted with the part of shooting the intended victim, on a mistaken impression, shoots the twin brother. The shooting of the twin brother is also in furtherance of the common intention. Here also section 34 applies. If that much is conceded we do not see any justification why the killing of another under a mistaken impression of identity is not in furtherance of the common intention to kill the intended victim. When the accused were shooting at Rama believing him to be Madha, they were certainly doing a criminal act in furtherance of the common intention which was to kill Madha. They killed Rama because they believed that they were shooting at Madha. Mr. Chari argues, how can a mistake committed by one of the accused be in furtherance of a common intention ? For it is said that to commit a mistake was not a part of the common intention of the accused. But the question is not, as we have pointed out, whether the committing of a mistake was a part of the common intention, but whether it was done in furtherance of the common intention. If the common intention was to kill A and if one of the accused kills B to wreak out his private vengeance, it cannot possibly be in furtherance of the common intention for which others can be constructively made liable. But, on the other hand if he kills B bona fide believing that he is A, we do not see any incongruity in holding that the killing of B is in furtherance of the common intention. We, therefore, hold that without the aid of section 301 of the Indian Penal Code it can be held that when accused I to 4 shot at Rama they shot at him in furtherance of their common intention to kill Madha. Now let us see the impact of section 301 of the Indian Penal Code on section 34 thereof. Section 301 reads: "If a person, by doing anything which he intends or knows to be likely to cause death, commits culpable homicide by causing the death of any person, whose death he neither intends nor knows himself to be likely to cause, the culpable homicide committed by the offender is of the description of which it would have been if he had caused the death of the person whose death he intended or knew himself to be likely to cause. " This section deals with a different situation. It embodies what the English authors describe as the doctrine of transfer of malice or the transmigration of motive. Under the section if A intends to kill B, but kills C whose death he neither intends nor knows himself to be likely to cause, the intention to kill C is by law 292 attributed to him. If A aims his shot at B, but it misses B either because B moves out of the range of the shot or because the shot misses the mark and hits some other person C, whether within sight or out of sight, under section 301, A is deemed to have hit C with the intention to kill him. What is to be noticed is that to invoke section 301 of the Indian Penal Code A shall not have any intention to cause the death or the knowledge that he is likely to cause the death of C. In the instant case this condition is not complied with. The accused shot at a particular person with the intention of killing him though under a misapprehension of his identity. In that case, all the ingredients of sections 299 and 300 of the Indian Penal Code are complied with. The aid of section 301 of the Indian Penal Code is not called for. We are, therefore, of the opinion that section 301 of the Indian Penal Code has no application to the present case. For the foregoing reasons we hold that all the accused are liable under section 302, read with section 34, of the Indian Penal Code. If we reach this conclusion, it is conceded that no other point arises in this appeal. The appeal fails and is dismissed. Appeal dismissed.

Where four persons shot at the deceased with the intention of killing him but under a misapprehension that he was some one else they could be found guilty of an offence under section 302 of the Indian Penal Code, read with section 34 of the Code. It would be a case of killing the deceased in furtherance of their common intention to kill the other, and there would not be any necessity to invoke section 301 of the Code to find them guilty. In fact that section would apply only to cases where there was, no intention to cause the death, or knowledge that death was likely to be caused, of the deceased. [291D E, H; 292A B]. Barendra Kumar Ghosh vs Emperor, L.R. 52 I.A. 40 and Mahbub Shah vs King Emperor, L.R. 72 I.A. 148 referred to.

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minal Appeal No. 215 of 1963. Appeal from the judgment and order dated April 30, 1963 of the Madhya Pradesh High Court in Criminal Revision No. 24 of 1963. Ravinder Narain, O.C. Mathur and J. B. Dadachanji, for the appellants. I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Shah, J. Station House Officer, Gharsiwa filed an informa tion in the Court of the Magistrate, First Class, Raipur against the two appellants complaining that they had on March 10, 1962 allowed three passengers to occupy the front seat in a public carrier and had loaded goods in excess of the sanctioned weight, and had, 854 thereby committed offences punishable under sections 124 and 112 of the 4 of 1939. The Magistrate issued process against the appellants for their appearance in Court by pleader, but did not make any endorsement thereon in terms of section 130(1)(b) of the Act. The appellants submitted that the summonses served upon them were not according to law and the Magistrate by failing to make an endorsement on the summonses as required by cl. (b) of sub section (1) of section 130 of the Act had deprived them of the right conferred by the Act to intimate without appearing in Court their plea of guilty and remitting an amount not exceeding Rs. 25/ as may be specified. The Magistrate rejected this plea and directed that the case against the appellants be "proceeded further according to law". The Sessions Judge, Raipur in a petition moved by the appellants made a reference to the High Court of Madhya Pra desh recommending that the order passed by the Magistrate be set aside, for in his view the Trial Magistrate having failed to comply with the mandatory terms of section 130(1) (b) the proceeding against the appellants was unlawful. The High Court of Madhya Pradesh declined to accept the reference. Against that order, with certificate granted by the High Court, the appellants have preferred this appeal. Section 130 of the which occurs in Ch. IX which relates to "Offences, penalties and procedure" provides: " (1) A Court taking cognizance of an offence under this Act shall, unless the offence is an offence specified in Part A of the Fifth Schedule, state upon the summons to be served on the accused person that he (a) may appear by pleader and not in person, or (b) may by a specified date prior to the hearing of the charge plead guilty to the charge by registered letter and remit to the Court such sum not exceeding twenty five rupees as the Court may specify. (2) Where the offence dealt with in accordance with sub section (1) is an offence specified in Part B of the Fifth Schedule, the accused person shall, if he pleads guilty of the charge, forward his licence to the 855 Court with the letter containing his plea in order that the conviction may be endorsed on the licence. (3) Where an accused person pleads guilty and remits the sum specified and has complied with the provisions of sub section (2), no further proceedings in respect of the offence shall be taken against him, nor shall he be liable to be disqualified for holding or obtaining a licence by reason of his having pleaded guilty. " Offences under sections 112 & 124 of the Act with which the appellants were charged are not included in the first part of the Fifth Schedule to the Act, and the Magistrate was therefore bound to comply with the terms of section 130(1). There can be no doubt on the plain terms of section 130(1) that the provision is mandatory. But there was difference of opinion about the nature of the duty imposed by sub section (1) upon the Court taking cognizance of the complaint. The Sessions Judge held that a Magistrate taking cognizance of an offence of the nature specified had, by virtue of section 130(1), to make an endorsement on the summons in terms of cls. (a) & (b) and thereby to give an option to the person charged either to appear by pleader or to plead guilty to the charge by registered letter and remitting therewith the sum specified in the summons, and if the Magistrate failed to give that option, the proceedings initiated would be liable to be set aside as infringing the mandatory provision of the Act. The High Court was of the view that sub section (1) of section 130 left an option to the Magistrate exercisable on a consideration of the materials placed before him when taking cognizance of an offence to issue a summons without requiring the accused to appear by pleader to call upon him to plead guilty to the charge by registered letter and to remit the fine specified in the summons. According to the High Court therefore the Magistrate had the option to issue a summons with an endorsement in terms of sub section ( 1 ) (a) or of sub section (1) (b) and only if a summons was issued with the endorsement specified by sub section (1) (b) it was open to the accused to avail himself of the option to plead guilty and to claim the privilege mentioned in sub section In our judgment the High Court was right in the view it has taken. The Magistrate taking cognizance of an offence is bound to issue summons of the nature prescribed by sub section (1) of section 130. But there is nothing in that sub section which indicates that he must endorse the summons in terms of both the clauses (a) & (b): to hold that he is so commanded would be to convert the conjunc 4Sup./65 8 856 tion "or" into "and". There is nothing in the words used by the Legislature which justifies such a conversion, and there are strong reasons which render such an interpretation wholly inconsistent with the scheme of the Act. The procedure in sub section (1) of section 130 applies to cases in which the offence charged is not one of the offences specified in Part A of the Fifth Schedule, but applies to the other offences under the Act. The maximum penalty which is liable to be imposed in respect of these offences defined by the Act is in no case Rs. 25/ or less. It could not have been the intention of the Legislature that the offender, even if the case was serious enough to warrant the imposition of the maximum penalty which is permissible under the section to which the provision is applicable, to avoid imposition of a hi her penalty than Rs. 25/ by merely pleading guilty. Section 130, it appears, was enacted with a view to protect from harassment a person guilty of a minor infraction of the or the Rules framed thereunder by dispensing with his presence before the Magistrate and in appropriate cases giving him an option to plead guilty to the charge and to remit the amount which can in no case exceed Rs. 25/ . If the view which prevailed with the Sessions Judge were true, a person guilty of a serious offence meriting the maximum punishment prescribed for the offence may by pleading guilty under sub section (1) (b) escape by paying an amount which cannot exceed Rs. 25/ . Again the Magistrate is authorised under section 17 of the Act in convicting an offender of an offence under the Act, or of an offence in the commission of which a motor vehicle was used, in addition to imposing any other punishment to pass an order declaring the offender unfit for holding a driving licence generally, or for holding a driving licence for a particular class or description of vehicle. Such an order may be passed if it appears to the Court, having regard to the gravity of the offence, inaptitude shown by the offender or for other reasons, that he is unfit to obtain or hold a driving licence. But if the offender avails himself of the option given to him by the Magistrate of pleading guilty, no further proceeding in respect of the offence can in view of sub section (3) of section 130 be taken against him, and he will not be liable to be disqualified for holding or obtaining a licence, though he may otherwise eminently deserve to be disqualified for holding a licence. It is true that to an offence punishable with imprisonment in the commission of which a motor vehicle was used section 130(1) 857 does not apply: see Sch. Five Part A Item 9. But there are offences under the which do not fall within that description and also do not fall under other items, which are punishable with imprisonment e.g. section 113(2). There are also certain offences which, if repeated but not otherwise, are liable to be punished with imprisonment e.g. certain offences under sections 118A and under section 123 of the Act. It would be difficult to hold that the Legislature could have intended that irrespective of the seriousness or gravity of the offence committeed, the offender would be entitled to compound the offence by paying the amount specified in the summons, which the Magistrate would be bound to accept, if the contention raised by the appellants is correct. Having regard to the phraseology used by theLegislator which prima facie gives a discretion to the Magistrate exercisable at the time of issuing the summons, and having regard also to the scheme of the Act, we are of the view that the HighCourt was right in holding that the Magistrate is not obliged in offences not specified in Part A of the Fifth Schedule to make an endorsement in terms of cl. (b) of sub section (1) of section 130 of the Act. We are of the opinion that the view to the contrary expressed by the High Court of Allahabad in State of U.P. vs Mangal Singh(1) and the High Court of Assam in State of Assam vs Suleman Khan(2) on which the Sessions Judge relied is not correct. The appeal therefore fails and is dismissed. Appeal dismissed.

For offences under sections 112 and 124 of the , the Magistrate issued process against the appellants for their appearance in court by pleader, but did not make any endorsement thereon in terms of section 130(1)(b) of the Act. The appellants submitted that the summons served on them were not according to law and the failure to make this endorsement had deprived them of their right conferred by the Act to intimate without appearing in Court their plea of guilty and remitting an amount not exceeding Rs. 25 as may be specified. The trial Magistrate rejected this plea, but on being moved by the appellants, the Sessions Judge made a reference to the High Court recommending that the order passed by the Magistrate be set aside. The High Court declined to accept the reference. In appeal by certificate : HELD : The Magistrate was not obliged in offences not specified in Part A of the Fifth Schedule to make an endorsement in terms of section 130(1) (b) of the Act. [857 D] The Magistrate taking cognizance of an offence was bound to issue summons of the nature prescribed by sub section (1) of section 130. But there is nothing in that subsection which indicates that he must endorse the summons in terms of both cls. (a) & (b) : to hold that he was commanded would be to convert the conjunction "or" into "and". [855 H 856 All]

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Appeal No. 892 of 1963. Appeal by special leave from the judgment and order dated December 22, 1958, of the Assam High Court in Misc. (First) No. 39 of 1955. D.N. Mukherjee, for the appellant. P.K. Chatterjee, for the respondent. 112 The Judgment of RAGHUBAR DAYAL, R.S. BACHAWAT and V. RAMASWAMI, JJ. was delivered by BACHAWAT, J. MUDHOLKAR, J. delivered a separate Opinion. Bachawat, J. The respondcnt is a banking company now in liquidation. The appellant had a combined overdraft and deposit account with the Shillong branch of the respondent. On December 9, 1946, the appellant gave the respondent for collection two cheques for Rs. 8,200 and Rs. 600 respectively drawn on the Bharati Central Bank, Shillong. On receipt of the cheques, the respondent credited the appellant with the sum of Rs. 8,800 in the accounts. The respondent then sent the cheques to the Bharati Central Bank, Shillong for collection. Instead of paying cash, the Bharati Central Bank sent to the respondent a cheque dated December 9, 1946 for Rs. 8,800 drawn by the Bharati Central Bank on the Nath Bank, Shillong in favour of the respondent. The respondent accepted this cheque on its own responsibility without consulting the appellant. On December 10, 1946, the respondent presented the cheque to the Nath Bank for payment. The Nath Bank returned the cheque with the remark "full cover not received". The respondent orally informed the appellant of the non payment of the cheque on the Nath Bank, and on December II, 1946 under oral instructions from the appellant, represented the cheque to Nath Bank for payment. The Nath Bank again returned the cheque with the remark "full cover not received", and the respondent thereupon debited the appellant with the sum of Rs. 8,800 in the accounts. On the same day, the respondent wrote to the Bharati Central Bank demanding cash payment of the two cheques drawn on them and dated December 9, 1946. The respondent also contacted the appellant. Under instructions from the appellant, the respondent accepted from the Bharati Central Bank a demand draft for Rs. 8,800 dated December 13, 1946 drawn by its Shillong Branch on its Calcutta Head Office towards payment of the two cheques. The respondent presented the draft to the Bharati Central Bank, Calcutta for payment, but instead of making payment, the Bharati Central Bank wrote on December 16, 1946 requesting the respondent to obtain payment from its Shillong Branch. The respondent orally communicated this advice to the appellant. On several dates thereafter, the respondent presented the draft to the Bharati Central Bank for payment, but the draft was not paid. On January 2, 1947, the Bharati Central Bank closed its business. On January 11, 1947, the respondent wrote to the appellant stating that it was holding the demand draft as also the cheque on the Nath Bank and would be glad to receive further instructions in the matter for necessary action. As the appeilant refused to give any instructions, the respondent continued to hold the securities on account of the appellant. In respect of the draft, the respondent duly preferred a claim in the liquidation of the Bharati Central Bank, and was admitted as a preferential creditor for the amount 113 of the draft. On January 28, 1947, the appellant wrote to the respondent alleging that the respondent had accepted the demand draft at its own risk and responsibility and was bound to give credit to the appellant for the sum of Rs. 8,800. The dealings between the appellant and the respondent continued, and the last entry in the combined overdraft and deposit account is dated December 29, 1950. On February 26, 1953, a petition was presented in the Assam High Court for the winding up of the respondent. By order dated May 24. 1953, the respondent was ordered to be wound up. On June 28. 1954 the liquidator of the respondent Bank presented an application to the Assam High Court under section 45(D) of the Banking Companies Act, 1949 for settlement of the list of debtors, claiming a decree for Rs. 5,965 8 9 and interest against the appellant. The appellant resisted the claim. The two issues, which are now material, are: (1) Is the suit barred by limitation, and (4) Whether the respondent is bound to give credit to the appellant for the sum of Rs. 8,800? A learned single Judge of the Assam High Court answered both the issues in the negative, and decreed the claim. An appeal preferred to a Division Bench of the High Court was dismissed. The appellant now appeals to this Court by special leave. The main contention of the appellant in the Courts below was that the respondent had accepted the demand draft on its own responsibility. The High Court held that the respondent accepted the draft with the consent and sanction of the appellant. This finding is no longer challenged. But the appellant before us contends that the respondent having credited the appellant 's account with the amount of the two cheques on the Bharati Central Bank and having accepted on its own responsibility from the Bharati Central Bank the cheque dated December 9, 1945 on the Nath Bank ought not to be allowed to say that it received the cheque on account of and as agent of the appellant, and that in any event the respondent acted negligently and in breach of its duty as the collecting agent of the appellant and is bound to give credit for the sum of Rs, 8,800. These contentions in the present form were not raised in the Courts below. Nevertheless, we allowed the appellant to raise these contentions, but we think that there is no substance in them. According to the uncontradicted testimony of the witness called on behalf of the respondent, the two cheques on the Bharan Central Bank were entrusted by the appellant to the respondent for collection. In paragraph 2 of its objections, the appellant admitted that the cheques were entrusted to the responsible for realisation. Beyond doubt, on December 9. 1946 the respondent received the two cheques for collection in the usual way as agent of 114 the appellant and not with the intention of acquiring title to them. On the same day, the respondent credited the appellant 's account with the amount of the cheques before the cheques were cleared. But on December 11, 1946, before the appellant drew upon this amount and as soon as the cheque on Nath Bank received in course of collection of the two cheques was dishonored, the respondent debited the appellant 's account with the like amount. It does not appear that the credit entry in the accounts was contemporaneously communicated to the appellant. Nor does the appellant prove any arrangement that the appellant was entitled to draw against the amount of the cheques before they were cleared. In the circumstances. the fact that the appellant 's account was credited with the amount of the two cheques does not show that the respondent ceased to be an agent for collection of the cheques. The respondent duly presented the cheques on the Bharati Central Bank for payment. Instead of paying the cheques in cash, the Bharati Central Bank sent its own cheque on the Nath Bank. According to the uncontradicted testimony of the witness called on behalf of the respondent, it was not the usual practice of the banks at Shilling to collect cash in all cases in respect of cheques entrusted for collection. When the respondent found that the drawer Bank instead of paying cash offered to pay by a cheque, the respondent acting in good faith in the interests of the appellant, accepted the cheque on its own responsibility. On being informed of the dishonour of the cheque on Nath Bank, the appellant adopted and ratified the respondent 's acceptance of the cheque. and on that footing, asked the respondent to represent the cheque. Subsequently, the appellant instructed the respondent to accept a demand draft drawn by the Bharati Central Bank on the head office in lieu of its cheque on the Nath Bank, and approved of all steps taken by the respondent in the matter of collection of the draft. Instead of disowning the acts of the respondent in respect of the collection of the cheques on the Bharati Central Bank, the appellant ratified them. In the circumstances, it is not open to the appellant now to say that the respondent accepted the cheque on the Nath Bank or the draft of the Bharati Central Bank on the respondent 's own account and not as agent of the appellant. A banker entrusted by its customer with the collection of a cheque is bound to act according to the directions given by the customer, and in the absence of such directions, according to the usages prevailing at the place where the banker conducts his business and applicable to the matter in hand. The banker is also bound to use reasonable skill and diligence in presenting and securing payment of the cheque and placing the proceeds to his customer 's accounts and in taking such other steps as may be proper, to secure the customer 's interests. In the instant case, it is not shown that the respondent acted negligently or in breach of its duties or contrary to any instructions given by the appellant or any lawful usages prevailing amongst bankers at Shillong. 115 There is no substance in the further contention of the appellant that by preferring a claim as creditor in respect of the draft in the liquidation of the Bharati Central Bank, the respondent accepted the draft in satisfaction of its dues from the appellant. The respondent owed a duty to the appellant to take steps in the liquidation proceedings for the realisation of the amount of the draft. By preferring the claim the respondent preserved all rights in respect of the draft and acted in the best interests of the appellant. In the circumstances, the Courts below rightly gave appropriate directions on the respondent for giving credit to the appellant for all sums which may be realised by the respondent from the Official Liquidator of the Bharati Central Bank. The Courts below rightly answered issue No. 4 in the negative. The next point in issue is whether the proceedings are governed by article 85 of the Indian Limitation Act, 1908, and if so, whether the suit is barred by limitation. The argument before us proceeded on the footing that an application under section 45(D) of the Banking Companies Act is governed by the Indian Limitation Act, and we must decide this case on that footing. But we express no opinion one way or the other on the question of the applicability of the Indian Limitation Act to an application under section 45(D). Now, article 85 of the Indian Limitation Act, 1908 provides that the period of limitation for the balance due on a mutual, open and current account, where there have been reciprocal demands between the parties is three years from the close of the year in which the last item admitted or proved is entered in the account; such year to be computed as in the account. It is not disputed that the account between the parties was at all times an open and current one. The dispute is whether it was mutual during the relevant period. Now in the leading case of Hirada Basappa vs Gadigi Muddappa(1). Holloway, Acting C. J. observed: "To be mutual there must be transactions on each side creating independent obligations on the other, and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligations." These observations were followed and applied in Tea Financing Syndicate Ltd. vs Chandrakamal Bezbaruah(2) and Monotosh K. Chatterjee vs Central Calcutta Bank Ltd.(3), and the first mentioned Calcutta case was approved by this Court in Hindustan Forest Company vs Lal Chand(4). Holloway, Acting C. J. laid down the test of mutuality on a construction of section 8 of Act XIV of 1859, though that section did ' not contain the words "where there (1) [1871] Vl Madras High Court Reports. 142, 144. (2) [1931] L.L.R,. 55Cal. 642 (3) (4) 116 have been reciprocal demands, between the parties". The addition of those words in the corresponding article 87 of Act IX of 1871, article 85 of Act XV of 1877 and article 85 of the Act of 1908 adopts and emphasises the test of mutuality laid down in the Madras case. In the instant case, there were mutual dealings between the parties. The respondent Bank gave loans on overdrafts, and the appellant made deposits. The loans by the respondent created obligations on the appellant to repay them. The respondent was under independent obligations to repay the amount of the cash deposits and to account for the cheques, hundis and drafts deposited for collection. There were thus transactions on each side creating independent obligations on the other, and both sets of transactions were entered in the same account. The deposits made by the appellant were not merely complete or partial discharges of its obligations to the respondent. There were shifting balances; on many occasions the balance was in favour of the appellant and on many other occasions. the balance was in favour of the respondent. There were reciprocal demands between the parties, and the account was mutual. This mutual account was fairly active up to June 25, 1947. It is not shown that the account ceased to be mutual thereafter. The parties contemplated the possibility of mutual dealings in future. The mutual account continued until December 29, 1950 when the last entry in the account was made. It is conceded on behalf of the appellant that if the account was mutual and continued to be so until December 29, 1950, the suit is not barred by limitation, having regard to section 45 (O) of the Banking Companies Act. The Courts below, therefore, rightly answered issue No. 1 in the negative. The claim by the respondent on account of interest was contested in the Courts below, but that claim is no longer contested before us. The High Court discussed at length the legal characteristics of a demand draft as also questions relating to the interpretation of section 45(O) of the Banking Companies Act. In view of the contentions raised before us, those questions do not arise, and we do not propose to express any opinion thereon. In the result, the appeal is dismissed with costs. Mudholkar, J. I regret my inability to agree with the judgment of my learned brother Bachawat. This appeal arises out of a petition made under section 45 D of the Banking Companies Act, 1949 (10 of 1949) by the Liquidator of the respondent, the Shillong Banking Corporation for inclusion of the name of the appellant in the list of debtors of the Bank. The liquidator filed a list of 20 debtors of the Company with necessary particulars in Annexure A, to the application. One of the debtors mentioned therein is the appellant and the amount of debt due from him to the Bank is stated therein to be Rs. 5,965 5 9. Annexure A appears to have been prepared in accordance with the rules framed under the Banking Companies Act. The fourth item in the Annexure is "Description of 117 papers, writings and documents, if any, relating to each debt". In respect of this item the following particulars have been set out: "A cheque for Rs. 8,800 on Bharati Central Bank Ltd., Shillong was realised by the Bank 'on behalf of the party ' by a Demand Draft on Calcutta Branch of the Bharati Central Bank Limited, but the said Demand Draft could not be realised due to the suspension of business by Bharati Central Bank Ltd. The Bank 's claim to be treated as preferential Creditor has been admitted. " A notice of this claim having been served on the appellant he preferred an objection before the Court. There, the appellant had contended that the claim of the Bank is barred by time. Paras 2, 3, and 5 of the objection are material and it would be convenient to set them out in full. They run as follows: "2. That it is a fact that this opposite party did give a cheque for Rs. 8,800 to the Bank on the Bharati Central Bank Ltd., Shillong for realisation in 1947 and in normal course it realised the amount in cash but either for its own convenience or for remitting its own money to Calcutta it accepted a draft from the Bharati Central Bank Limited on its branch at Calcutta without any instruction or intimation to this opposite party and also this opposite party withdrew their amount by a cheque after this and if in the meantime the said bank stopped its business this opposite party cannot be held liable for the same. (3) That had the bank not received any cash payment in case of the opposite party 's cheque as it should have received it should have informed them in time. (5) That it is not a fact that the demand draft was accepted by the bank instead of cash payment with any knowledge of this opposite party and as such the claim of the Bank is false and frivolous." Deka J., who heard the application framed four issues one of which related to limitation and the fourth was as follows: "Issue No. 4, whether the plaintiff bank is bound to give credit to the defendant for a sum of Rs. 8,800 covered by a cheque or cheques on the Bharati Central Bank Limited, Shillong Branch?" The only oral evidence tendered was that of Narendra Nath Dutta, Assistant of the respondent Bank. Upon a consideration of the evidence of Dutta and the documents placed on ' record Deka J. found against the appellant on these issues and passed a decree in favour of the Bank for Rs. 5,965 5 9 in addition to Rs. 2,000 by way of interest. He further allowed Rs. 300 as costs and 6 per cent p.a. interest on the decretal amount till realisation. An appeal was preferred by the appellant under the Letters Patent 118 and that having been dismissed he has come up before this court by special leave. It is the case of the respondent Bank that the appellant had a mutual open and current account with the Bank. It is upon that basis that they have met the appellant 's contention that the suit was barred by time. On December 9, 1946 the respondent credited two cheques to the appellant 's account one for Rs. 8,200 and another for Rs. 600 and sent them for collection to the Bharati Central Bank Ltd., Shillong Branch upon which they were drawn. Instead of obtaining cash from the Bharati Central Bank the respondent obtained and accepted from that Bank a cheque on the Nath Bank Limited. This the respondent did, as admitted by Dutta, without consulting the appellant. Dutta has further admitted that the respondent Bank obtained the cheque on their own responsibility. They then presented the cheque to the Nath Bank on December 10, 1946. The Nath Bank returned the cheque with a note "full cover not received". According to the witness the Bank referred the matter to the appellant and with his specific instruction the cheque was presented the next day to the Nath Bank, when also it was returned. Thereafter, the witness proceeds, the respondent connected the appellant for instructions. On December 13, 1946 they accepted a demand draft from the Bharati Central Bank for an identical amount which they sent to their Calcutta Branch for collection. When the demand draft was presented to the Calcutta Branch of the Bharati Central Bank they requested by letter dated December 16, 1946 to present it to the Shillong Branch. Then, according to Dutta. on the advice of the appellant they presented the draft to the Shillong Branch of the Bharati Central Bank. In the meanwhile the Bharati Central Bank had applied for moratorium and this demand draft was not cashed. It would appear that in the proceedings for reconstructing the Bharati Central Bank the respondent asked to be treated as preferential creditors in respect of the amount for which the draft had been made out and have been so treated. It is contended on behalf of the appellant that the respondent having accepted the demand draft on their own responsibility and having sought to be treated as preferential creditors of the Bharat, Central Bank and having in fact been so treated cannot now turn round and say that the appellant 's cheques were not honoured and that, therefore, they are entitled to claim the sum of Rs.5,965 5 9 and interest from him. The question to which I would address myself is whether the respondent has to be regarded as the appellant 's agent only for the collection of these two cheques or whether they received these two cheques for being credited in the mutual and open current account between themselves and the appellant. It is no doubt that where a customer hands in a cheque to his banker for collection the banker accepting the performance of that duty becomes the agent of the customer for the purpose of collection. But if a banker credits a cheque in the customer 's account with the bank would the banker be necessarily deemed to be his agent when he takes the step of collecting the amount 119 payable under the cheque. If the customer makes an endorsement on the cheque to the effect that it is handed in for collection no difficulty would arise. But if there were no such endorsement what would be the position? The accepted position in banking law is that when a banker receives money from a customer he does not hold it in a fiduciary capacity. (see Practice and Law of Banking by H.P. Sheldon, 8th edn. p. 201). As the author points out : "To pay that money is 'deposited ' with a banker is likely to cause misapprehension. What really happens is that the money is not deposited with, but lent to the banker, and all that the banker engages to do is to discharge the debt by paying over an equal amount when called upon. " Sheldon has quoted the following observations of Lord Cottenham in Foley vs Hill (1948). "Money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who, is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into the banker 's is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker 's money; he is known to deal with it as his own; he makes what profit he can, which profit he retains to himself, by paving back only the principal, according to the custom of bankers in some places, or the principal and a small rate of interest, according to the custom of bankers in other places . . That being established to be the relative situations of banker and customer, the banker is not an agent or factor, but he is a debtor. " What would be the position if instead of paying in cash the customer hands in cheques or bills? With regard to this Sheldon has said as follows: "In Joachimson vs Swiss Bank Corporation, 1921 Lord Justice Atkin gave an admirable summary of the position. He stated that the banker undertakes to receive money and collect bills for his customer 's account, and that money so received is not held in trust for the customer but borrowed from him with a promise to repay it or any part of it . . against the customer 's written order addressed to the bank at such branch." (pp. 201 202). In the appeal before us the two cheques for Rs. 600 and Rs. 8,200 have not been placed on record and so we do not know in whose favour they were drawn and if they were drawn by the appellant in fayour of "self" what endorsement he had made on the back of the cheques. The cheques could have been drawn by the appellant either in his own favour or in favour of the bank. Whichever be the position the fact remains that these two cheques were credited by him in his account with the respondent. That is not all. Since the appellant had a mutual open and current account 120 with the respondent it may well be that money was owing by him to the respondent on that date and, therefore, he drew these two cheques on the Bharati Central Bank and credited them in his account with the respondent. Or it may be that the appellant merely credited ' the money in his own account even though nothing may have been owing from him to the respondent on that date. Whether it was one or the other the respondents would, with respect to the amounts for which the cheques were drawn, have become actual recipients of the money from the appellant, upon realisation of the cheques drawn by the appellant. Indeed. as the cheques were returned unpaid by the drawee bank the respondent have made a debit entry on December 11, 1960 of Rs. 8,800 against the appellant in his account with them. This would show that the respondent accepted the position that they were acting in this matter not as the appellant 's agents but as payee. This explains why, as admitted by Dutta. the respondent accepted from the Bharati Central Bank cheques on Nath Bank on their own responsibility instead of insisting upon cash. Indeed. as pointed out at p. 300 in Chalmers on Bills of Exchange (8th ed) "consequently an authority to an agent to receive a payment due to his principal is not in itself an authority to receive it by bill or cheque". Therefore, the respondents would not have acted in the way they did had they regarded themselves as merely agents of the appellant for collecting his cheques. Dutta has, in his evidence, stated that no formal note in writing was sent to the appellant by the respondents about the dishonouring of the cheque by the Nath Bank. Nor did they inform him of having debited his account with Rs. 8,800. No doubt, according to him. after a demand draft was issued to them by the Bharati Central Bank the respondents informed the appellant. But after that draft was dishonoured on presentation no information whatsoever was given to the appellant. This would further strengthen the conclusion that the respondents were acting for themselves at every stage after the cheques for Rs. 600 and Rs. 8.200 were credited in his account with them by the appellant. Therefore. though it is true that the sum of Rs. 8,800 was not received by the respondent in cash they must be deemed to have received the sum either by reason of the fact that they obtained from the Bharati Central Bank a cheque for Rs. 8,800 on the Nath Bank or by the acceptance by them of a demand draft drawn by the Bharati Central Bank, Shilling. on their Calcutta Branch. It is difficult to see how they can hold the appellant, whose account with the Bharati Central Bank has been debited by that Bank to the extent of Rs. 8,800, as being still liable upon those cheques. Whatever rights the respondents have. are against the Bharati Central Bank and not the appellant. Indeed, having claimed, as against the Bharati Central Bank to be treated as preferential creditors of that Bank to the rune of Rs. 8,800, particularly on their own showing what was owing to them from the appellant was something less than Rs. 6,000 they cannot now be heard to say that they merely acted as the appellant 's agents. 121 For these reasons, disagreeing with the High Court, I hold that the appellant 's name cannot be included in the list of the respondent 's debtors. I would, therefore, allow the appeal and dismiss the application of the Liquidator under section 45 D of the Banking Companies Act in so far as it relates to the appellant, with costs throughout and would direct further that the respondents pay the appellants costs both here and in the High Court. ORDER BY COURT In accordance with the opinion of the majority, this appeal is dismissed with costs.

The appellant had a combined overdraft and deposit account, also described as a mutual open and current account, with the respondent bank. In December 1946, the respondent credited two cheques to the appellant 's account one for Rs. 8,200 and the other for Rs. 600 and sent them for collection to the Shillong branch of the Bharati Central Bank, on which they were drawn. Instead of obtaining cash from that Bank, the respondent accepted a cheque on the Nath Bank. This the respondent did without consulting the appellant and on its own responsibility. When the respondent presented the cheque to the Nath Bank, it was returned with a note "full cover not received". The respondent thereupon debited the appellant with the sum of Rs. 8,800 in the accounts without informing him. On the instructions of the appellant, who was informed about the dishonouring of the cheque, the respondent accepted a demand draft from the Bharati Central Bank drawn on its Calcutta branch for the amount. The Calcutta branch of the Bharati Central Bank however requested the respondent to present it to the Shillong branch. The respondent presented the draft to the Shillong branch of the Bharati Central Bank, but the Bank applied for moratorium and closed its business, in January 1947 and the draft was not cashed. In the proceedings for the reconstruction of the Bharati Central Bank, the respondent asked to be treated as a preferential creditor in respect of the amount of the draft, and was so treated. The dealings between the appellant and respondent continued till December 1950. In May 1953, the respondent Bank was ordered to be wound up and the liquidator presented an application to the High Court under section 45D of the Banking Companies Act, 1949, for settlement of the list of debtors, claiming a decree for about Rs. 6,000 and interest, against the appellant. The appellant resisted the claim but the High Court decreed it. In the appeal to the Supreme Court, it was contended that (i) the respondent acted negligently and in breach of its duty as collecting agent of the appellant and was bound to give credit for the sum of Rs. 8,800 and (ii) the claim was barred by limitation. HELD: (per Raghubar Dayal, Bachawat and Ramaswami. JJ.) (i) It was not shown that the respondent acted negligently or in breach of its duties or contrary to any instructions given by the appellant or any lawful usages prevailing amongst bankers and therefore was not bound to give credit to the appellant for the sum of Rs. 8,800. [114 H] A banker entrusted by its customer with the collection of a cheque is bound to act according to the directions given by a customer, and in the absence of such directions, according to the usages prevailing at the place where the banker conducts his business 111 and applicable to the matter in hand. The banker is also bound to use reasonable skill and diligence in presenting and securing payment of cheques and placing the proceeds to his customers ' accounts and in taking such other steps as may be proper to secure the customer 's interests. The respondent in the instant case received the two cheques for collection in the usual way as agent of the appellant and not with the intention of acquiring title to them. The appellant, instead of disowning the various acts of the respondent in respect of the collection of the cheques, had ratified them. By preferring a claim as creditor in respect of the draft, in the liquidation proceedings of the Bharati Central Bank, the respondent was not accepting the draft in satisfaction of its dues from the appellant. It was only preserving all the rights in respect of the draft and was acting in his best interests. [114 A, F H; 115 A B] (ii) The respondent gave loans on overdrafts and the appellant made deposits. The loans and deposits created mutual obligations. Since the account was mutual and continued to be so until December 1950, the claim against the appellant was not barred by limitation having regard to section 45 (0) of the Banking Companies Act. [116 B, E] Per Mudholkar, J. (Dissenting), the appellant 's name could not be included in the list of the respondent 's debtors. [121 A] Where a customer hands in a cheque to his banker for collection, the banker accepting the performance of that duty becomes the agent of the customer for the purpose of collection. But if a banker credits a cheque in the customer 's account with the bank, the banker would not necessarily be deemed to be the customer 's agent, when he takes steps for collecting the amount payable under the cheque. The facts, that the cheques when paid in, were credited in the appellant s account with the respondent and that when the cheques were returned unpaid, the respondent made a debit entry against the appellant 's account without informing the appellant show mat the respondent accepted the position that it was acting in the matter not as the appellant 's agent but as a payee. Since the appellant had a mutual open and current account with the respondent, the respondent would, with respect to the amounts for which the cheques were drawn, have become upon realisation of the cheques drawn by the appellant an actual recipient of the money from the appellant. Therefore, though it is true that the amount was not received by the respondent in cash it must be deemed to nave received the sum either by reason of the fact that it obtained from the Bharati Central Bank a cheque for the amount on the Nath Bank, or by the acceptance of the demand draft. Having claimed as against the Bharati Central Bank to be treated as a preferential creditor for the sum of Rs. 8,800 whatever rights the respondent would be against that Bank and not against the appellant. [118 H; 120 A, C, F H]

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Appeal No. 1040/63. C.K. Daphtary, Attorney General, M.S.K. Sastri and R.H. Dhebar, for the appellant. C.B. Agarwala and A.G. Ratnaparkhi, for the respondent. The Judgment of the Court was delivered by Gajendragadkar, C.J. The short question of law which arises in this appeal is whether the appellant, the State of Bombay (now Maharashtra), shows that its predecessor State of Madhya Pradesh (hereinafter called the Government) had given a reasonable opportunity to. the respondent, Narul Latif Khan, to defend himself before it passed the final order on June 6, 1952 compulsorily retiring him under Article 353 of the Civil Service Regulations. By this order, the respondent was compulsorily retired and in relaxation of article 353, the Government was pleased to allow the respondent to draw a compassionate allowance equal to the pension which would have been admissible to him had he been invalidated. This order was challenged by the respondent by filing a suit in the Court of the first Additional District Judge at Nagpur. In his plaint, the respondent alleged that the impugned order whereby he was compulsorily retired, was invalid and he claimed a declaration that it was ultra vires and inoperative. He also asked for a declaration that he was entitled to be restored to the post which he held on July 6, 1950, and that he should be given all pay, allowances. increments and promotions to which he would have been entitled if he had been permitted to continue in service. In the result, the respondent asked for a decree for Rs. 62,237 with interest at 6 per cent per annum from the date of the suit till realisation. This claim was resisted by the appellant on several grounds. The principal ground on which the appellant challenged the respondent 's claim, however, was that he had been given a reasonable opportunity to defend himself, and so, the impugned order was perfectly valid, and legal. Several other pleas were also raised by the appellant. On these pleas, the learned trial Judge framed appropriate issues. The issue with which we are concerned in the present appeal, however, centered round the question as to whether the Constitutional provision prescribed by article 311 affording protection to the respondent had been contravened. The trial Judge made a finding against the respondent on this issue. He also recorded his findings on the other issues with which we are not directly concerned in the present appeal. In regard to the money claim made by the respondent, the learned trial Judge made a finding that in case he was held entitled to such relief, a decree for Rs. 37,237 may have to be passed in his favour. In view of his conclusion that the impugned order was valid, no question arose 137 for making such a decree in favour of the respondent. The respondent 's suit, therefore, failed and was dismissed. The respondent then took the matter in appeal before the High Court of Judicature at Bombay, Nagpur Bench. The High Court has, in substance, held that the constitutional provisions prescribed by article 311 have not been complied with by the appellant before it passed the impugned order against the respondent. It has found that the departmental enquiry which was held suffered from the serious infirmity that the enquiry officer did not hold an oral enquiry and did not allow an opportunity to the respondent to lead his oral evidence. It has also held that the second notice served by the appellant on the respondent calling upon him to show cause why the report made by the enquiry officer should not be accepted and appropriate punishment should not be inflicted on him, was defective, and that also made the impugned order invalid. The High Court appears to have taken the view that the impugned order does not show that the appellant had taken into account the explanation offered by the respondent in response to the second notice issued by the appellant. As a result of these findings, the High Court has reversed the conclusion of the trial Court on the main question and has found that the impugned order is invalid and inoperative. On that view, the High Court considered the money claim made by the respondent, and it confirmed the finding of the trial Court that the respondent would be entitled to a decree for Rs. 37,237. In fact, the alternative finding recorded by the trial Court in respect of the amount to which the respondent would be entitled in case he succeeded in challenging the validity of the impugned order, was not questioned before the High Court. In the result, the High Court allowed the appeal and passed a money decree for Rs. 37,237 in favour of the respondent in terms of prayer (A) of paragraph 31 of the plaint. The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that it has brought the present appeal before this Court. That is how the main question which falls for our decision is whether the constitutional provision prescribed by article 311 has been complied with by the appellant before it passed the impugned order. At this stage, it may be relevant to refer to some material facts. The respondent was appointed as Extra Assistant Commissioner in 1926 and since then he had been holding various offices in the State service of the then Madhya Pradesh Government. In 1950, he was holding the post of a Treasury Officer at Nagpur. It appears that privilege leave for over a year was due to him and he had applied for four months ' privilege leave. On June 12, 1950, Government informed him that his request for leave was rejected and he was told that no further application for leave would be entertained in future. On July 7, 1950, the respondent proceeded 138 on casual leave for two days, and on July 8, 1950 he renewed his application for four months ' leave on medical grounds. This application was accompanied by a certificate given by Dr. Dange. Government, therefore, decided to constitute a Medical Board for examining the respondent in order to .decide whether leave on medical grounds should be granted to him. Accordingly, the respondent appeared before a Special Medical Board on July 22, 1950. The Medical Board, however, could not come to a decision as to whether the respondent should be granted leave on medical grounds for four months. It recommended that the respondent should get himself admitted in the Mayo Hospital, Nagpur. for observation and investigation. In accordance with this report, Government asked the respondent to get himself admitted in the Mayo Hospital in time, so that the Board could examine him on August 8, 1950. The respondent refused to, go to the Mayo Hospital and pressed that he should be allowed to go to Calcutta to receive medical treatment from experts. It appears that on July 26, 1950, the respondent received a telegram from Raipur stating that his daughter was dangerously ill there. He, therefore, made another application on the same day requesting for ten days ' leave to enable him to go to Raipur and see his ailing daughter. On July 31, 1950, Government granted the respondent 's request. Accordingly, the respondent went to Raipur. From Raipur he renewed his application for four months ' leave on Medical grounds and produced certificates from Dr. Bhalerao and Dr. Kashyap. That led to a lengthy correspondence between the respondent and the Government which shows that Government insisted on his appearing before the Medical Board and the respondent was not prepared to go to. Nagpur because he alleged that he was seriously ill and could not undertake a journey to Nagpur. Ultimately, on September 9, 1950, Government called upon the respondent to resume his duties within three days from the receipt of the said letter failing which he was told that he would be suspended and a departmental enquiry would be started against him. On October 4, 1950, the respondent wrote a lengthily reply setting forth his contentions in detail. Since he did not resume his duties, Government decided to suspend him and start a departmental enquiry against him. Mr. S.N. Mehta, I.C.S., was accordingly appointed to hold the. enquiry. On November 29, 1950, Mr. Mehta wrote to the respondent that Government had directed him to conduct the departmental enquiry, and called upon the respondent to attend his office on December 7, 1950, at 11.00 a.m. The respondent, however. did not appear before him and wrote to Mr. Mehta that owing to his illness, he was unable to appear before him. He again pleaded that he was seriously ill. On January 15, 1951, Mr. Mehta served the respondent with a charge sheet. Three charges were framed against him. The first charge was that he had deliberately disobeyed the orders of Government when he was asked to get himself admitted in the Mayo 139 Hospital for observation and investigation. The second charge was that he had failed to report for duty even though no leave was sanctioned to him by Government and he was specifically ordered by Government to report for duty. The third charge was that he had persistently disobeyed the orders of Government and he had thereby shown himself unfit to continue as a member of the State Civil Service. Material allegations on which reliance was placed against the respondent in support of these charges were also specified under the respective charges. The respondent was, however, not prepared to appear before Mr. Mehta and he raised several technical contentions. Ultimately, he sent his written statement and denied all the charges. His case appears to have been that he had not deliberately disobeyed any of the orders issued by Government. In regard to his getting admitted in the Mayo Hospital, he seems to have taken the plea that when he was allowed to go on casual leave to see his ailing daughter at Raipur, it was clear that he could not have got himself admitted in the Mayo Hospital so as to enable the Medical Board to examine him on August 8, 1950. In respect of the charge that he had persistently refused to obey the orders of Government, his case was that he was dangerously ill and that he genuinely apprehended that if he undertook a journey to resume his duty, he might even collapse. He requested the enquiry officer to allow him to appear by a lawyer whom he would instruct to cross examine the witnesses whom the Government would examine against him. He also stated that he wanted to give evidence of his own doctors who would depose to his ailing condition at the relevant time. It appears that Mr. Mehta wanted to accommodate the respondent as much as he could and when he found that the respondent was not appearing in person before him, he in fact fixed a date for hearing at Raipur on September 21, 1951 where he happened to be camping. On that date, the respondent appeared before Mr. Mehta and Mr. Mehta made a note as to what transpired on that date. The note shows that "the whole case was discussed with the respondent. His plea was that he should be allowed to appear through a counsel, but it was explained to him in detail that as far as the case can be seen from Government side at present, it does not involve the taking up oral evidence. He agreed that he would not press for this facility. He would, however, like to give a detailed answer to the charge sheet. He also undertook to appear in person regularly in future". Thereafter, Mr. Mehta required the respondent to file his detailed written statement. and in fact, the respondent did file his detailed written statement containing the pleas to which we have already referred. On November 8. 1951, Mr. Mehta wrote to the respondent that he would be glad to hear him in person in case he wished to make an oral statement on November 20, 1951, and when the respondent did not 140 appear on the said date, Mr. Mehta proceeded to examine the documentary evidence showing the failure of the respondent to comply with the orders issued by Government and made his report on November 24, 1951. He found that the three charges framed against the respondent were proved. In his report, Mr. Mehta observed that "the conduct of the respondent and the language used by him from time to time in his communications .discloses an attitude of disobedience and insubordination which no Government can tolerate from its subordinate officers". We may incidentally observe that the comment thus made by Mr. Mehta in regard to the communications addressed by the respondent to him appears to us to be fully justified but, in our opinion, this aspect of the matter cannot have any material bearing on the question with which we are concerned. The validity of the impugned order must be judged objectively without considering the impropriety of the language used by the respondent or the reluctance shown by him to appear before Mr. Mehta. In his report, Mr. Mehta has also observed that when the respondent met him, he explained to him that the case did not involve recording of any oral evidence as it was based on documents only. Mr. Mehta adds that according to the impression he got at that time, the respondent was satisfied that in the circumstances, the assistance of a counsel was unnecessary. It is, however, plain from the several letters written by the respondent to Mr. Mehta that he was insisting upon an oral enquiry and that he wanted to examine his doctors to show that he was so iII at the relevant time that he could not have resumed his duties. On March 2, 1951, the respondent wrote to Mr. Mehta stating, inter alia, that he wished to put in the witness box a few high ranking Government officers and the doctors whom he had consulted about his illness. Earlier on January 20, 1951, he had written to Mr. Mehta requesting him to conduct an oral enquiry as laid down in paragraph 8(iv) G.B. Circular 13. Similarly, on April 23, 1951, he again informed Mr. Mehta that in his opinion the institution of the departmental enquiry after suspending him was illegal and had caused him grave injury, and he added that oral and documentary evidence will be produced in defence. It does appear that Mr. Mehta explained to the respondent that so far as Government was concerned, it rested its case merely on documents and did not think it necessary to examine any witnesses, and thereupon the respondent agreed that he need not have the facility of the assistance of a lawyer. But it is clear from the remarks made by Mr. Mehta in the order sheet on September 21, 1951, and the observations made by him in his report that the only point on which the respondent agreed with Mr. Mehta was that he need not be allowed the assistance of the lawyer in the departmental enquiry. We have carefully examined the record in 141 this case and we see no justification for assuming that the respondent at any time gave up his demand for an oral enquiry in the sense that he should be given permission to cite his doctors in support of his pica that his failure to resume his duties was due to his ill health. The charge against him was that he had deliberately disobeyed the Government orders, and it is conceivable that this charge could have been met by the respondent by showing that though he disobeyed the orders, the disobedience was in no sense deliberate because his doctors had advised him to lie in bed; and thus considered, his desire to lead medical evidence cannot be treated as a mere subterfuge to prolong the enquiry. It is true that the respondent did not give a list of his witnesses; but he had named his doctors in his communications to Mr. Mehta, and in fact Mr. Mehta never fixed any date for taking the evidence of the witnesses whom the respondent wanted to examine. If Mr. Mehta had told the respondent that he would take the evidence of has witnesses on a specified date and the respondent had failed to appear on the said date with his witnesses, it would have been an entirely different matter. Therefore, the position is that Mr. Mehta did net hold an oral enquiry and did not give an opportunity to the respondent to examine his witnesses and so, the question which arises for our decision is: does the failure of Mr. Mehta to hold an oral enquiry amount to a failure to give a reasonable opportunity to the respondent within the meaning of article 311 ? The requirements of article 311(2) have been considered by this Court on several occasions. At the relevant time, article 311(2) provided that no person to whom article 311 applies shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard t9 him. It is common ground that the impugned order of compulsory retirement attracts the provisions of article 311 (2). If it appears that the relevant statutory rule regulating the departmental enquiry which was held against the respondent made it obligatory on the enquiry officer to hold an oral enquiry if the respondent so demanded. then there would be no doubt that the failure of the enquiry officer to hold such an oral enquiry would introduce a serious infirmity in the enquiry and would plainly amount to the failure of the appellant to give a reasonable opportunity to the respondent. This position is not disputed by the learned Attorney General and is indeed well settled. So, the narrow question to which we must address ourselves is whether it was obligatory on Mr. Mehta to hold, an oral enquiry and give d reasonable opportunity to the respondent to lead oral evidence and examine his doctors. We will assume for the purpose of this appeal that in a given case, Government would be justified in placing its case against the charge sheeted officer only on documents and may be under no obligation to examine any witnesses, 142 though we may incidentally Observe that even in such cases, if the officer desires that the persons whose reports or orders are being relied upon against him should be offered for cross examination, it may have to be considered whether such an opportunity ought not to be given to the officer; but that aspect of the matter we will not consider in the present appeal. Therefore, even if it is assumed that Government could dispense with the examination of witnesses in support of the charges framed against the respondent, does the relevant rule make it obligatory on the Enquiry Officer to hold an oral enquiry and give the respondent a chance to examine his witnesses or not? This question falls to be considered on the construction of rule 55 of the Civil Services (Classification, Control and Appeal) Rules. This rule reads thus: "Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, no order of dismissal, removal or reduction shall be passed on a member of a service (other than an order based on facts which have led to the conviction in a Criminal Court or by a Court, Martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and. has been afforded an adequate opportunity of defending himself. The grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges, which shall be communicated to the person charged together with a statement of the allegations on which each. charge is based and of any other circumstances which it is proposed to take into consideration in passing orders on the case. He shall be required within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person. If he so desires or if the authority concerned so direct, an oral enquiry shall be held. At that enquiry oral evidence shall be heard as to such of the allegations as are not admitted, and the person charged shall be entitled to cross examine the witnesses, to give evidence in person and to have such witnesses called. as he may wish, provided that the officer conducting the enquiry may, for special and sufficient reason to be recorded in writing. refuse to call a witness. The proceedings shall contain a sufficient record of the evidence and a statement of the findings and the grounds thereof. " It appears that the Government of Madhya Pradesh had issued a Circular explaining this Rule. The Circular contained Rule 8 which is relevant. It provides that "particular attention is invited to the provisions regarding oral enquiry. In case the person charged desires that an oral enquiry should be held, the authority holding the departmental enquiry has no option to refuse it". The High 143 Court seems to have based its conclusion substantially, if not entirely, on this rule. We do not propose to adopt that course. The rule may be no more than a circular issued by Government and we do not propose to examine the question as to whether it has the force of a statutory rule. Our decision would, therefore, be based on the construction of Rule 55 of the Civil Services Rules which admittedly applied and which admittedly is a statutory rule. The relevant clause in this Rule provides that the officer charge sheeted shall be required within a reasonable time to put in a written statement of his defence and to state whether he desires to be heard in person. This clause has been complied with m the present proceedings. Mr. Mehta gave notice to the respondent to appear before him in person on the 20th November, 1951 and the respondent did net appear on that date. It is the next clause on which the decision of the present appeal depends. This clause lays down that if he, that is to say the charge sheeted officer, so desires or if the authority concerned so directs, an oral enquiry shall be held. In our opinion, it is plain that the. requirement that an oral enquiry shall be held if the authority concerned so directs. or if the charge sheeted officer so desires is mandatory. Indeed. this requirement is plainly based upon considerations of natural justice and fairplay. If the charge sheeted officer wants to lead his own evidence in support of his plea, it is obviously essential that he should be given an opportunity to lead such evidence. Therefore. we feel no hesitation in holding .that once the respondent expressed his desire to Mr. Mehta that he wanted to lead evidence in support of his plea that his alleged disobedience of the Government orders was not deliberate, it was obligatory on Mr. Mehta to have fixed a date for recording such oral evidence and give due intimation to the respondent in that behalf. It is true that the oral enquiry which the enquiry officer is bound to hold can well be regulated by him in his discretion. If the charge sheeted officer starts cross examining the departmental witnesses in an irrelevant manner, such cross examination can be checked and controlled. If the officer desires to examine witnesses whose evidence may appear to the enquiry officer to be thoroughly irrelevant, the enquiry officer may refuse to examine such witnesses; but in doing so, he will have to record his special and sufficient reasons. In other words, the right given to the charges heated officer to cross examine the departmental witnesses or examine his own witnesses can be legitimately examined and controlled by the enquiry officer; he would be justified in conducting the enquiry in such a way that its proceedings are not allowed to be unduly or deliberately prolonged. But, in our opinion it would be impossible to accept the argument that if the charge sheeted officer wants to lead oral evidence, the enquiry officer can say that having regard to the charges framed against the officer. he would not hold any oral enquiry. In the present case, the witnesse. 144 whom the respondent wanted to examine; would undoubtedly have given relevant evidence. If the doctors who treated the respondent had come and told the enquiry officer that the condition of the respondent was so bad that he could not resume work, that undoubtedly would have been a relevant and material fact to consider in deciding whether the charges framed against the respondent were proved. Even if we disapprove of the attitude adopted by the respondent in the course of this enquiry and condemn him for using extravagant words and making unreasonable contentions in his communications to the enquiry officer, the fact still remains that he wanted to examine his doctors, and though he intimated to Mr. Mehta that he desired to examine his doctors, Mr. Mehta failed to give him an opportunity to do so. That, in our opinion, introduces a fatal infirmity in the whole enquiry which means that the respondent has not been given a reasonable opportunity to defend himself within the meaning of article 311(2). On that view of the matter, it is unnecessary to consider whether the High Court was right in its other conclusions that the second notice served by the appellant on the respondent was defective and that the final order was also defective inasmuch as it did not appear that the appellant had taken into account the representation made by respondent. It is not disputed by the learned Attorney General that if we hold that the enquiry conducted by Mr. Mehta contravened the mandatory provision of r. 55, the decision of the High Court could be sustained on that ground alone. In the result. the appeal fails and is dismissed with cost. Appeal dismissed.

The appellant who was in the service of a State Government asked for long leave which was refused. Subsequently he asked for ten days ' leave which was granted. On the expiry of the leave period he did not join duty on the ground that he was seriously ill. The Government refused to accept the plea and instituted a departmental inquiry against him. The respondent wanted to produce oral evidence in support of his plea including the evidence of doctors who treated him, but the enquiry officer refused to record oral evidence on the ground that the case against the appellant rested on documents alone and therefore no oral evidence was necessary. On the report of the enquiry ' officer the State Government ordered the compulsory retirement of the respondent. The latter filed a suit in which he claimed inter alia that the constitutional provision in article 311 had been contravened. The trial judge held against him but the High Court decided in his favour. The State Government appealed to the Supreme Court with certificate. The narrow question to which the COurt had to address itself was whether it was obligatory on the enquiry officer to give a reasonable opportunity to the respondent to lead oral evidence and examine his doctors. HELD: (i) The Civil Services (ClassifiCation, Control and Appeal) Rules provide in r. 55 that if the charge sheeted Officer so desires or if the authority concerned so directs an oral enquiry shall be held. This provision is mandatory and is based on considerations of natural justice and fair play. Therefore when the respondent expressed his desire to the enquiry officer that he wanted to lead evidence in support of his plea, it was obligatory on the enquiry officer to have fixed a date for recording such oral evidence and give due intimation to the respondent in that behalf. [143 D F] (ii) Though an enquiry officer would be justified in conducting the enquiry in such a way that its proceedings are not allowed to be unduly or deliberately prolonged, it would be impossible to accept the argument that if the charge sheeted officer wants to lead oral evidence the enquiry officer can say that having regard to the charges against the officer he would not hold any oral enquiry [143 H] (iii) In the present case the witnesses whom the respondent wanted to examine would undoubtedly have given relevant evidence. He wanted to examine his doctors but the enquiry officer failed to give him an opportunity to do so. That introduced a fatal infirmity in the whole enquiry as the respondent had not been given a reasonable opportunity to de.fend himself within the meeting of article 311 (2). The appeal of the State Government had therefore to be dismissed. [144 A, C] 136

1919.txt

APPEAL No. 560 or 1964. Appeal from the judgment and order dated August 11, 1961 of the Madras High Court in Writ Petition No. 295, of 1958. A.V. Viswanatha Sastri. R. Thiagarajan for R. Ganapathy lyer, for the petitioner. A. Ranganadham Chetty and A.V. Rangam, for the respon dents. The Judgment of the Court was delivered by Gajendragadkar,C.J. On August 4, 1956, the Governor of Madras issued a notification in exercise of the powers conferred on him by sub section (4) of section 64 of the Madras Hindu Religious and Charitable Endowments Act. 1951 (Madras Act XIX of 1951) directing that notification No. 638, dated the 25th May, 1937. relating to Sri Thiyagarajaswami Temple, Tiruvarur, Nagapattanam Taluk, Tanjor District, be continued for a period of five years from September 30, 1956. The earlier notification which was thus continued had itself been issued by the respondent State of Madras in exercise of the powers conferred on it by clause (b) of sub section (5) of s.65A of the Hindu Religious Endowments Act, 1926 (Madras Act 1I of 1927). declaring that the temple in question and the specific endowments attached thereto shall be subject to the provisions of Chapter VI A of the said Act. In other words, the earlier notification which brought the temple of Sri Thiyagarajaswami at Tiruvarur under the purview of the earlier Madras Act has been extended by the notification issued on 4th August, 1956. for a further period ' of five years. By a writ petition filed by the appellant, Sri la Sri Subramania Desika Gnana Sambanda Pandarasannadhi, Hereditary Trustee of the Rajan Kattalai of the temple in question, in the High Court of Madras the validity of this latter notification was challenged. The High Court has rejected the pleas raised by the appellant in support of his case that the impugned notification is invalid, and has dismissed the writ petition filed by him. It is against this order that the appellant has come to this Court with a certificate granted by the High Court. The controversy between the parties as it has been presented before us in appeal. really lies within a very narrow compass. but in order to appreciate the points raised for our decision, it is necessary to set out very briefly the background of the present litigation. 19 In the town of Tiruvarur in Thanjavur Dist. there is an ancient temple. The Presiding Deity is Sri Thyagarajaswami. A distinguishing feature of this temple is that apart from an allowance called the Mohini allowance ', there is no other property which can be treated as devoted for its general maintenance. A large number of specific endowments called 'Kattalais ' with specific reference to special services in the temple, its festivities and several charities in glorification of the principal deity, have however been made in respect of this temple. It is said ' that there are 13 such Kattalais, the important amongst them being Rajan Kattalai, Ulthurai Kattalai, Abisheka Kattalai and Annadanam Kattalai. In respect of these Kattalais, large endowments have been made. According to the appellant, these endowments were made by the Indian Rulers who ruled Thanjavur before the establishment of the British Rule. It appears that the management of each one of these Kattalais is vested in a certain Trustee or Trustees hereditarily. The trusteeship of Rajan Kattalai vests in the head of the Dharmapuram mutt in the Thanjavur district. The Dharmapuram mutt itself has large endowments of lands in Thanjavur and Tirunelveli districts. The head of this mutt is known as Pandarasannadhi and under his management there are about 27 temples. Having regard to the nature of the duties of the head of a mutt of this importance and magnitude, it is not possible for the Pandarasannadhi to supervise all the temples personally, and so, Deputies are appointed on his behalf to supervise and look after the management of the various institutions. With regard to the services connected with the Rajan Kattalai in Sri Thyagarajaswami temple at Thiruvarur, the head of Dharmapuram mutt generally functions through a deputy known as Kattalai Thambiran. Ordinarily, a Kattalai is a specific endowment in respect of which it would be competent for the founder to prescribe the line of trustees for its management, and so, the property endowed for the performance of the Kattalai in question cannot be held to be transferred in trust to the trustee vesting the legal estate therein in him; such legal estate would vest in the deity itself. Thus, the position of the Kattalai trustee would normally be no more than that of a manager of a Hindu Religious Endowment. It, however, appears that Kattalais which are attached to Sri Thyagarajaswami temple at Thiruvarur have been treated as constituting a slightly different category by the Madras High Court in Vythilinga Pandara Sannadhi vs Somasundara Mudaliar(1) but with that aspect of the matter, we are not concerned in the present appeal. In practice, a scheme appears to have been evolved that in .regard to the various services in the temple in respect of which Kattalais had been endowed, the management of the allotted properties vested in separate trustees and in that sense, all the trustees administering separate Kattalais could be said to constitute a kind of corporation in which (1)[1894] I.L.R. 20 the management of the temple properties vested. each one of its members being in charge of particular items of properties the proceeds of which would be utilised for the performance of a specific Kattalai. In course, of time, however, this practice did not work harmoniously and coordination between the duties of the various trustees worked unsatisfactorily, because more emphasis came to be placed on the individuality of the Kattalais and that led to anomalies in the actual administration of the said Kattalais. As a result. in 1910, a suit was flied under s.92 of the Code of Civil Procedure for the settlement of a scheme to manage the affairs of the temple in the Sub Court at Thanjavur. A scheme was accordingly settled. and when the matter was taken in appeal, the High Court substantially confirmed the said scheme (vide Gnana Sambanda vs Vaithilinga Mudaliar). (1) The scheme thus framed governed the management of the temple thereafter. It appears that the affairs of the said temple again came up for consideration before the Madras High Court in Ramanathan Chettiar vs Balayee Ammal(2). In that case, the High Court rejected the contention of one of the Kattalai trustees that subject to the performance of services, the endowments in question had to be treated as his .property; the view taken by the High Court on this occasion was that all the Kattalais were appendages of the temple; though each Kattalaidar was a separate trustee, there was no question of private ownership. In the year 1931, there was another suit under s.92 of the Code on the file of the District Court, East Thanjavur for the modification of the scheme already framed. It was urged that certain defects in the scheme had been noticed in the actual working, and so, it was necessary to make some modifications. Accordingly, some modifications were made. Meanwhile, the Madras Legislature passed the Madras Hindu Religious Endowments Act, 1927. The object of this Act was to provide for the proper administration and governance of certain Hindu Religious Endowments. The Act contemplated the supervision of these endowments through a statutory body called the Madras Hindu Religious Endowments Board. It divided the temples into "excepted and non excepted temples". It also provided for the framing of a scheme for the management of the temples. This Act was amended by Madras Act IX of 1937. The result of the amendment was that Chapter VI A was added to the Act of 1927. The provisions .of this chapter laid down that notwithstanding that a temple, or specific endowment attached to a temple was governed by a scheme previously framed by the Board or settled by a Court, the Board if it were satisfied that the temple or endowment was being mismanaged and that in the interests of the administration of the temple or endowment it was necessary to take (1) [1928] 18 L.W. 247. (2) [1923] 27 L.W. 33. 21 proceedings under the said Chapter, might "notify" the temple or endowment. and on the publication of such notification, the administration of the temple or endowment would go under the control of the Board notwithstanding the scheme which might have been framed already. On taking management of a notified temple or endowment, the Board was authorised to appoint an Executive Officer and define his duties. In consequence, such Executive Officer would virtually displace the trustee and would function under the control of the Endowment Board. The result of the notification in substance would. be that the previously existing scheme would be suspended, and the management would vest in the Board. Soon after this Act was passed, proceedings were commenced by the Board for the purpose of notifying the temple with which we are concerned in the present appeal, and the Kattalais attached thereto. The Trustees of the various Kattalais naturally opposed this step, but their objections were over ruled, and on May 25, 1937, a notification was issued. To this notification we have already referred. In pursuance of this notification, an Executive Officer was appointed by the Board on July 12, 1937. On July 30, 1937, the Board defined the powers of the Executive Officer and directed him to take charge and be in possession of the temple and the various Kattalais attached thereto. As a result of this order, the Executive Officer began to exercise all the Dowers and discharge all the functions of a trustee of a non excepted temple, and that left very little powers in the hands of the trustees of the several Kattalais. The Pandarasannadhi of the Dharmapuram Mutt who was then the hereditary Trustee of the Rajan Kattalai instituted C.S. No. 20 of 1938 in the Madras High Court for a declaration that the said notification was illegal and for setting aside the orders issued by the Board in pursuance of the said notification. It appears that the suit did not proceed to a trial, because the parties entered into a compromise. In substance, as a result of the compromise, the notification was maintained, but the possession of the Kattalai properties was restored to the Trustee who was to manage the same by a staff under his control. and had to keep accounts. Certain other provisions were made to safeguard the efficient management of the said trust, and the overall control and supervision of the Executive Officer was maintained. One of the clauses of the compromise, clause (k) expressly reserved to the Board liberty to re define the powers and duties as specified above in case the trustee commits any wilful breach of the above terms and conditions or is guilty of wilful neglect of the duties specified above, provided that the Board shall not do so except on notice to the trustee and after giving reasonable opportunity to him to be heard in his defence. This compromise decree was passed on August 1, 1940, and since then, the administration of the Kattalai in question has been conducted jn accordance with the terms of this decree. 22 After the Constitution came into force on January 26, 1950,the Hindu Religious Endowments Act of 1927 was repealed and in its place Act XIX of 1951 was substituted. This latter Act came into force on September 30. 1951. Section 5 of this Act repealed the earlier Act of 1927. The Chapter relating to notification of temples and endowments was numbered as Chapter VI in the new Act. Section 64 of this new Act provided for the notification of a temple or a religious institution, and sub s.(4) laid down that every notification published under this section shall remain in force for a period of five years from the date of its publication; but the Government may at any time on an application made to them cancel the notification. This section had made provision for the notification of religious institutions after this new Act came into force. Section 103(c) dealt with cases where notifications had been made trader the previous enactment. That section provided that the notification published under s.65A. sub s.(3) or sub s.(5) of the said Act and in force immediately before the commencement of the new Act would be deemed to be a notification published under s.64 and would be in force for five years from the date of the commencement of the new Act (No. XIX of 1951). In 1956, another Amending Act (No. IX of 1956) was passed. Section 2 of this Amending Act substituted a new sub section in the place of s.64(4). Under that provision, every notification published or deemed to be published under that section shall remain in force for a period of five years. but it may by notification be cancelled at any time or continued from time to time for a further period or periods not exceeding five years at a time as the Government may by notification in each case think fit to direct. As a consequence, s.103(c) was also amended, and the words "and shall be in force for five years from the date of the commencement of this Act" were omitted. The result of this amendment was that the notification issued or deemed to be issued under the relevant provisions of the new Act would remain in force for a period of five years; it can be cancelled even before the said period expired, or it can be continued after the expiry of the said period from time to time for such further period or periods as the Government may deem fit. We have already seen that the impugned notification has been issued under s.64(4) of Act XIX of 1951. That, broadly stated, is the background of the present dispute between the appellant and the respondent State of Madras. Two principal contentions were urged before the High Court by the, appellant in support of his plea that the impugned notification is invalid. It was argued that the trusteeship of the Rajan Kattalai being hereditary in the head of the Dharmapuram Mutt. is a right of property under article 19(i)(f) of the Constitution, and since s.64 of the Act empowers the respondent State to take away that right of property in an arbitrary and capricious manner. that provision is Constitutionally invalid. The second ground which was urged by the appellant was that the notification was issued without 23 giving an opportunity to the appellant to show cause why the earlier notification should not be extended. and that made the notification invalid. The High Court has rejected the first contention,and we are really not called upon to consider that finding of the High Court in the present appeal, because the arguments urged before us covered a much narrower ground. In regard to the second contention raised by the appellant. the High Court has found in favour of the appellant that the proceedings authorised to be taken under s.64(4) are in the nature of quasi judicial proceedings. and the order which can be passed under the said provision is a quasijudicial order; and so, the High Court conceded that before making such an order, it was necessary that the appellant should have been given an opportunity to be heard, for that is the requirement of natural justice; but the High Court thought that this specific point had not been taken by the appellant in his writ petition; that is why it was not inclined to allow it. The High Court refused to uphold the said point for the other reason that the impugned notification would soon expire on September 30, 1961 and the Government would then have to consider whether it should be renewed or not. and the High Court thought that on that occasion, the Government would certainly hear the appellant before making up its mind on that issue. The judgment of the High Court was delivered on August 11. 1961, and since the High Court thought that the impugned order can last only for a short period thereafter, it would serve no purpose to issue a writ quashing the said order on the ground that the principles of natural justice had not been complied with before passing it. Mr. Viswanatha Sastri for the appellant contends that both the grounds given by the High Court in support of its refusal to issue a writ are plainly erroneous, and were satisfied that Mr. Sastri is right. Before dealing with these grounds, however, it is necessary to consider the argument urged by Mr. Raganathan Chetty on behalf of the respondent State that the High Court was in error in holding that the Order which has been passed under s.64(4) is a quasi judicial order and can be legitimately passed only after complying with the principles of natural justice. He argues that though the proceedings contemplated by s.63 and s.64(1), (2) and (3) are quasi judicial proceedings. the position in regard to the Order which can be passed under s.64(4) is entirely different. He concedes that in making the first order notifying an institution under s.64(3). principles of natural justice have to be complied with: in fact. express provisions have been made in that behalf, but he argues that the said principles do not apply where a notification validly issued under s.64(3) has merely to be cancelled or extended under 64(4). Chapter VI of Act XIX of 1951 which consists of sections 53 to 69, deals with the notification of religious institutions. Secion 63(1) in terms requires the issue of notice to show cause why a specific institution should not be notified. Sub section (2) requires 24 that the said notice shell state the reasons for the action proposed, and specify a reasonable time, not being less than one month from the date of the issue of the notice, for showing such cause. Subsection (3) allows objections to be filed by the trustee; and sub s.(4) requires that such objections shall be in writing and shall reach the Commissioner before the period specified. Having provided for the issue of a notice and for objections to be filed by the trustee, s.64 deals with the consideration of the objections, if any, and notification of institution. S.64(2) requires an enquiry to be held by the Commissioner at which the validity of the objections would have t9 be examined. Section 64(3) authorises the Commissioner to make, a report to the Government that in his opinion, the institution should be notified. Thereupon, the Government can issue the notification in question. Thus, it is plain that the issue of a notification has to be preceded by an enquiry and the trustee in question is entitled to urge his objections against issue of such a notification; and so, there can be no doubt that these proceedings are quasi judicial, and if a notification is issued under s.64(3) without complying with the requirements of the provisions of s.63 and s.64(1) and (2), it would be invalid. Mr. Cherry. however, contends that the position under s.64(4) is entirely different. We have already quoted this provision. According to Mr. Cherry, the decision as to whether a notification should be cancelled before the period of five years is over, or continued from time to time, is a purely administrative decision. The Government is already in possession of the material relevant for the purpose of deciding the question. This material has been placed before the Government at time of the enquiry which is held by the Commissioner under s.64(2) before the initial notification is issued, and all that the Government has to do on subsequent occasions is to consider whether the said notification should be cancelled or continued. Such a decision needs no further enquiry and cannot be characterised as quasi judicial. That is how Mr. Cherry supports the validity of the impugned notification, though it has been issued without giving notice to the appellant. In support of this contention, he has relied upon the decision of this Court in Shri Radeshyam Khare & Anr. vs The State of Madhya Pradesh and Others. (1) In that case, it was held that sections 53A and 57 of the C.P. and Berar Municipalities Act, 1922, differed materially in their scope and effect, and that the nature of the orders which can be passed under the two respective sections was not the same. That is why this Court found that whereas in taking action under s.53A the State Government was required to act judicially, the same could not be said to be true about s.57. We ' do not see how this decision can afford any assistance to Mr. Chetty in support of his argument that s.64(4) is entirely different (1)[1959] S.C.R. 1440. 25 in character from s.64(3). It is plain that just as while acting under s.64(3) the Government has ultimately to consider whether a case has been made out for the issue of a notification, so while acting under s.64(4), Government has to consider whether a case has been made out for cancelling the notification or for extending it. and on each occasion, where a decision has to be taken under s.64(4), the process of reaching the decision is exactly similar to the process in reaching a decision under s.64(3). All relevant facts in regard to the management of the endowment must be taken into account, and the question to be considered on each occasion would be whether or not supervision by the Executive Officer under the notification is required in the interests of public good. It is difficult to see how the Government can legitimately and satisfactorily consider the question as to whether the notification should be cancelled, unless it hears the party asking for such cancellation. Similarly, it is difficult to understand how Government can legitimately and reasonably decide to extend the notification, unless it gives an opportunity to the Trustee to show cause why it should not be continued. One can imagine several circumstances which may arise after the issue of the first notification and which would help the Trustee to claim that the notification should either be cancelled or should not be extended. The nature of the order which can be passed under s.64(4) and its effect on the rights of the trustee are exactly similar to the order which can be passed under s.64(3). We are. therefore, satisfied that the High Court was right in holding that it was obligatory on the respondent State as a matter of natural justice to give notire to the appellant before the impugned notification was passed by it. That takes us to the consideration of the question as to whether the two reasons given by the High Court in support of this decision are valid. The first reason, as we have already indicated, is that the High Court thought that the plea in question had not been raised by the appellant in his writ petition. This reason is no doubt, technically right in the sense that this plea was not mentioned in the first affidavit filed by the appellant in support of his petition; but in the affidavit in rejoinder filed by the appellant this plea has been expressly taken. This is not disputed by Mr. Chetty, and so, when the matter was argued before the High Court, the respondents had full notice of the fact that one of the grounds on which the appellant challenged the validity of the impugned Order was that he had not been given a chance to show cause why the said notification should not be issued. We are, therefore, satisfied that the High Court was in error in assuming that the ground in question had not been taken at any stage by the appellant before the matter was argued before the High Court. The second reason given by the High Court appears to be plainly erroneous. In assuming that the impugned Order would come to an end on September 30, 1961, the High Court appears to have ignored the fact that before it delivered its judgment, a 26 new Act had come into force (Madras Act XXII of 1959). This Act came into operation on January I, 1960. Section 72(7) of this Act provides that any notification published under sub s.(1) or sub s.(3) of section 64 of Act XIX of 1951 before the commencement this Act shall be as valid as if such notification had been published under this Act. This provision has again been subsequentlyamended by Act XL of 1961, and the amended provision is retrospectively brought into operation from January 1. 1960. We do not propose to consider in this appeal the effect of these amendments, because it is enough for our purpose to state that as a result of the subsequent Act which had already come into force on the date when the High Court delivered its judgment, it is obvious that the impugned notification would not automatically come to an end on September 30, 1961. This position is not disputed by Mr. Chetty and appears to be plain; so that the main reason which weighed with the High Court in not issuing a writ in favour of the appellant that the impugned notification would remain in operation for a very short period after it delivered its judgment, is found to be erroneous; and the impugned notification would continue in operation without the appellant getting an opportunity to show cause why it should not continue to be in operation. We are, therefore, satisfied that the High Court should have granted the prayer made by the appellant for the issue of an appropriate writ cancelling the impugned notification. Though the impugned notification has been issued in 1956 for five years, its life gets statutorily extended, and the only way in which the appellant. 'would be able to show cause why the said notification should not be extended .in respect of his Kattalai is to quash the said notification. In the result, we allow the appeal, set aside the order passed by the High Court, and direct that an appropriate writ or order be issued quashing the notification issued by the respondent State on August 4, 1956. The appellant would be entitled to his costs throughout. Appeal allowed.

By a notification issued in 1937 the respondent State of Madras had made Ch. VI A of the Hindu Religious Endowments Act, 1926, applicable to the Thiyagarajaswami temple at Tiruvarur. In 1956 the aforesaid notification was extended for a period of five years beginning on September 30, 1956. This was done in exercise of powers under section 64(4) of the Madras Hindu Religious and Charitable Endowments Act, 1951. The appellant challenged the issue of the notification under section 64(4) in a writ petition before the High Court. At the hearing it was urged that the impugned notification was invalid as it had been passed without giving a reasonable opportunity to the appellant to show cause against it. The High Court while accepting this contention, nevertheless refused to issue. the writ prayed for because: (1) the said plea had not been taken in the writ petition and (2) the period for which the notification had been extended was shortly due to expire. The appellant came to the Supreme Court with certificate of fitness. It was contended on behalf of the appellant that the two reasons given by the High Court for not issuing a writ were wrong. The respondent State on the other hand contended that no quasi judicial enquiry was necessary for extending an existing notification under section 64(4) although such an enquiry was necessary before issuing a notification for the first time under section 64(3). HELD: (i) ' Whether f,or issuing a notification under 64(3) or for extending an existing notification under section 64(4) the process of dec.ision is the same. In either case the Government had to satisfy itself whether supervision by the Executive Officer under the notification is required for public good. The Government cannot legitimately and satisfactorily consider the question as to whether the notification should be cancelled without hearing the party asking for cancellation; nor can it legitimately and reasonably decide to extend the notification without hearing the trustee. Circumstances could arise after the issue of the first notification which would help the Trustee to claim that the notification should either be cancelled or should not be extended. The nature of the order which can be passed under section 64(4) and its effect on the rights of the Trustee are exactly similar to the order which can be passed under section 64(3). [25 A E] The High Court was therefore right in holding that it was obligatory on the respondent State as a matter of natural justice to give, notice to the appellant before the impugned notication was passed by it. [25E] Shri Radeshyam Khare & Ant. vs State of Madhya Pradesh and Ors. , distinguished. 18 (ii) Although the plea of denial of natural justice had not been taken by the appellant in his writ petition, it had been taken in the rejoinder, and the respondent thereafter had full notice of the said plea. Therefore the first reason given by the High Court for refusing the writ was wrong. [25G H] (ii) The High Court ignored the fact that before it delivered its judgment a new Act had come into force, namely, Madras Act XXII of 1959, whereby the life of the impugned notification had been extended. Therefore the second reason which weighed with the High Court in not issuing a writ in favour of the appellant, that the impugned notification would remain in operation for a very short period after it delivered its judgment, was also wrong. [26C E]

1903.txt

Appeal No. 180 of 1962. Appeal by special leave from the judgment and decree dated January 28, 1959, of the Calcutta High Court from original Decree No. 226 of 1952. B. Sen and section N. Mukherjee, for the appellant. Hem Chandra Dhar, section section Khanduja and Ganpat Rai, for the respondent. The Judgment of the Court was delivered by Mudholkar, J. This appeal, like Satyabrata Ghose vs Mugnee ram Bangur & Co. and another(1) relates to the effect of requisitioning orders made by the Government during the last war under which they took possession of land belonging to the appellant company which had been divided into building plots by them in pursuance of what is known as the Lake Colony Scheme, by constructing roads and drains. The plaintiff respondent was one of the various persons who had entered into contracts with the company for purchase of plots, in pursuance of the public offers made by the company. This he did by addressing the following letter to the company and paying Rs. 202/ by way of earnest money. "To Mugneeram Bangur and Company Land Department. Russa Road, South, Tollygunge, Calcutta. No. 499, Phone: South 135. Through Babu Re : Plots Nos. New Nos. 245 and 246 on 30 feet road in the premises No. Lake Colony Scheme No. 1, Northern: Block. Area measuring 10 ks. x sqr. ft more or less. (1) ; 632 Dear Sir, I am willing to purchase the above plot of land from you at the average rate of Rs. 1,075/ (Rupees one thousand and seventyfive only) per katta irrespective of the condition of the soil and I am ready to deposit Rs. 202/ of the actual value as an earnest money at once. I undertake to complete the transaction within one month from the date on(?) (of) completion of road on payment of the balance of the consideration money and time must be deemed as essence of the contract. If I fail to do so within the said period the earnest money deposited by me will be forfeited and you will be free to resell the land and I shall be liable for all damages that may result thereby. I also agree to sign a formal agreement in the form required by you if you so desire. Yours faithfully, Name, Gurbachan Singh, Address: 48/ 1, Chakraberia Road, North. Dated the 19 . Witness : (Illegible) Address . . . N.B. I agree to pay half of the value at the time of registration of the deeds and the balance within 6 years bearing interest at the rate of 6 per cent per annum with half yearly rests and the said plots Nos : 245 and 246 purchased by me shall remain charged for the payment of the balance of the purchase money in manner as aforesaid and the necessary security deed charged should be executed and registered by me at my own cost. Name: Gurbachan Singh Address : Witness (Illegible) 4, Baktiar Shah Road, Tollygunge. The letter does not bear any date; but probably it was written on May 14, 1941 which is the date on which the company issued a receipt in his favour. Different portions of the land covered by the scheme were requisitioned by Government between November 12, 1941 and July 25, 1944. The plots which the respondents had contracted to purchase are said to form part of the land which was requisitioned by virtue of an order made by the Government on February 18, 1944. 633 According to the company, on December 24, 1943, a circular notice was sent to all those persons who had entered into contracts for purchase of plots from them stating that a considerable portion of the land comprised in the Lake Colony Scheme area had been requisitioned under the Defence of India Rules and was taken into possession by the Government. It was not possible to say how long the Government would continue to be in possession and, therefore, it was not possible for the company to carry on the work of the construction of roads and drains during the continuance of the war and possibly for many years even after the termination of the war. The circular then proceeded to state as follows : "In these circumstances we have decided to treat the agreement as cancelled and give you the option of taking of the refund of the earnest money deposited by you within one month from the receipt of this letter. In the event of your refusal to treat the contract as cancelled, we are offering you, in the alternative, to complete the registration of the conveyance of the sale deed within one month from the receipt of this letter. In such a case you have to take the lands as it is now, the road and drain will be made by us as soon as circumstance will permit after the termination of the War. If you do not exercise your option in any of the two ways mentioned above the agreement will be deemed to have been cancelled and your earnest money forfeited. " On May 8, 1946 the respondent 's attorneys, acting under instructions, wrote to the company saying that the respondent had learnt from the company 's office that the government would be de requisitioning lands taken over by them and inquiring of the company as to when it would be possible for the company to deliver possession of the plots to the respondent. In reply to that letter the company wrote on May 29, 1946 drawing his attention to their circular letter and said that by reason of the failure of the respondent to exercise the options given by them therein the agreement stood cancelled and the earnest money had been forfeited. On June 13, 1946, the respondent 's attorneys expressed sur prise at the company 's reply and stated that the respondent had not received the circular referred to in the company 's reply and ended by saying as follows : "That my said client, therefore, now hereby asks you as to when you are going to complete the roads, so that he may do the needful for completion of the conveyances 634 within one month from such date of completion of the roads. That my said client hereby calls upon you to intimate to him within seven days from date the expected exact date of completion of roads to enable him to complete the conveyance as per agreement, failing which he will be forced to take legal steps against you in the matter as he may be advised in the matter, without further reference which please note. " Apparently the company did nothing with the result that the present suit was instituted by the respondent on August 8, 1946 in the court of the Second Subordinate Judge at Alipore. The company resisted the suit on various grounds but only two are material for the purpose of this appeal because Mr. Sen has confined his argument only to those matters. One is that the contract has been discharged by reason of frustration and the second is that the suit was premature. The suit was decreed and that decree was upheld by the High Court in appeal. A certificate that the case was fit for appeal to this Court having been refused by the High Court the company sought and obtained from this court special leave to appeal. That is how the matter comes up before us. This case would really appear to be covered by the decision of this court to which we have referred at the outset. Mr. Sen, however, points out that the question as to whether the contract could be said to have been discharged because of the fact that its performance was rendered unlawful as a result of the requisitioning orders made by the Government which was sought to be raised before this Court in that case was not permitted to be raised by it and has been left open. He admits that certain observations made by this Court towards the concluding portion of the judgment would indicate that this Court was not prepared to accept the con tention sought to be urged before it. But, Mr. Sen says that as the contention was not permitted to be raised, the observations of this Court could be said to have been made merely in passing and at best be regarded as a tentative expression of its views. We think Mr. Sen is right in the sense that the question has been actually left open by this Court. But even so, we will have to consider whether the grounds upon which the previous decision rests would not be relevant for consideration in connection with the argument advanced by Mr. Sen. 635 In so far as discharge of contract by reason of frustration is concerned there is no question of implying a term in the contract a term fundamental for its performance, as is done by the courts in England because we have here the provisions of section 56 as well as those of section 32 of the Contract Act. This is what was held by this Court in the earlier case and that decision binds us. No doubt, a contract can be frustrated either because of supervening impossibility of performance or because performance has become unlawful by reason of circumstances for which neither of the parties was responsible. In the earlier case this Court has held that where the performance of an essential condition of the contract has become impossible due to supervening circumstances the contract would be discharged. This Court has further held that the impossibility need not be an absolute one but it is sufficient if further performance becomes impracticable by some cause for which neither of the parties was responsible. It, however, held that the mere fact that the performance of an essential term of the contract that is to say, of undertaking development of the area under the scheme could not be undertaken because the land had been requisitioned, did not have the effect of frustrating the contract. For though the term regarding development was an essential term of the contract, the requisitioning of the land was only for a temporary period. Further the parties had deliberately not placed any time limit within which roads and drains had to be made apparently because they were aware of the difficulties in carrying on the work on account of scarcity of materials and the various restrictions which the Government had placed on such activities. This Court also pointed out: "Another important thing that requires notice in this connection is that the war was already on, when the parties entered into the contract. Requisition orders for taking temporary possession of lands for war purposes were normal events during this period." (pp. 326 327). Though these observations were made while dealing with the argument that the contract has been frustrated by reason of impossibility of performance they would not be wholly out of place while considering the argument based upon the ground that continued performance of the contract had been rendered unlawful. What section 56 speaks of is a contract, the performance of which has become unlawful. Now, it is true that no order was made under the Defence of India Rules prohibiting the company from carrying on the work of construction of roads and drains. The 636 actual order served upon the company, among other things, provides : "The owner/occupier of the said land: (a) shall place the said land at the disposal and under the control of the Military Estates Officer Bengal Circle on and from the 14th November, 1941 at 1 P.M. Bengal time until six months after the termination of the present war unless relinquished earlier." In consequence of this order the company lost possession of the land and automatically lost access thereto. Without getting on to the land the company could not carry out its obligation to the purchasers of constructing the roads and drains. If, in disobedience of this order, the company 's servants, agents or contractors were to carry on the work of construction of the roads and drains by entering on the land of which the possession was with the government, they would have been liable to punishment under sub r. (7) of r. 75 (a) of the Defence of India Rules and also the company. We were informed that the land was used by the Government for military purposes. It is, therefore, possible that the land might have been declared as a protected place under r. 7 of the Defence of India Rules. Even, however, without such a declaration, we agree with Mr. Sen that it would not have been possible for the company, its agents, servants or contractors to go on the land during the continuance in force of the order of requisition without being rendered liable at law. Even so it is clear that all that had become unlawful was to construct roads and drains while the land was bound to be given up by the Government sometime or other and, therefore, in essence the activities which were rendered unlawful were not forbidden for all time but only temporarily. It may be that the duration of the embargo was uncertain but not permanent. It would, therefore, be relevant to enquire whether a contract could properly be held to be frustrated because for a certain period of time its performance has become unlawful. According to Mr. Sen the moment it became unlawful for one of the parties to the contract to continue with the performance, the contract was discharged and in this connection he referred us to certain observations of Lord Wright in Denny Mott & Diskson Ltd. vs james B. Fraser & Co. Ltd.,() and certain other portions of the report. We put to him the question as to what would be the. effect of a requisitioning, say, for a period of one month. Would that operate as &charge of the (1) ; , 274. 637 contract ? To that his answer was in the negative and we think that the answer was right. The question then would be : would it make any difference if unlawfulness would attach to the performance of the contract for an indeterminate period ? In our judgment if time is of the essence of the contract or if time for performance is set out in the contract it may be that the contract would stand discharged even though its performance may have been rendered unlawful for an indeterminate time provided unlawfulness attached to the performance of the contract at the time when the contract ought to have been performed. Thus, where the performance of a contract had been rendered unlawful by reason of some subsequent event the contract would stand discharged but such discharge will take place not necessarily from the date on which the further performance was rendered unlawful, unless further performance was rendered unlawful for all time. If the performance of the contract is rendered unlawful either for a determinate period of time or for an indeterminate period of time the contract would not stand discharged unless the ban on its performance existed on the day or during the time in which it has to be performed. Here it is pointed out by Mr. Sen that the respondent had made time the essence of the contract but that only applies to the grant of conveyance after the completion of the roads and drains. As already pointed out, parties were wholly silent as to the time within which the roads and drains were to be completed. Therefore, in so far as this aspect of the contract is concerned time was in no sense made the essence of the contract. According to Mr. Sen, however, where the parties have failed to specify in the contract time within which it has to be performed section 46 of the Contract Act comes in and the parties may be presumed to have agreed that the contract will be performed within reasonable time. To that the answer would be the same as that given in the earlier case, that is, the parties when they entered into the contract, knew the prevailing circumstances and must have home in mind the possibility that something like what actually happened may happen and, therefore, did not specify the time within which the land had to be developed. In other words, the parties intended to exclude from the computation of reasonable time such time as was taken up in procuring the necessary material which was not easy to obtain and such as may be taken up if the land were requisitioned by government. Thus, in our view it cannot be said that because of the requisitioning orders which had the effect of making the entry by or on behalf of the company on the land illegal during the subsistence of the period of requisitioning the contract stood discharged. p.55 7 638 Then remains the other point argued by Mr. Sen. He said that the suit for specific performance was premature because under the agreement the respondent did not get a right to obtain a sale deed till after the development of the land comprised in the scheme was completed. That is perfectly true. But the fact remains that this work had been completed when the appeal was heard by the High Court. The Court would in such a case be justified in taking notice of subsequent events in moulding its relief accordingly. In our judgment the courts below were right in upholding the respondent 's claim. The apeal is dismissed with costs. Appeal dismissed.

In May 1941, the respondent had entered into a contract with the appellant company for the purchase of a plot of land in a Colony Scheme. He had paid the earnest money and had undertaken to complete the transaction within on month from the date of completion of certain development work by the appellant. Thereafter, the land in question was requisitioned by the Government under the Defence of India Rules and the company was therefore unable to undertake the development work during the continuance of the war. On learning that the Government proposed to de requisition the lands taken over by them, in May 1946, the respondent approached the company to ascertain when it would complete development work after the de requisitioning of the land, so that he might complete the transaction within one month thereafter. The company claimed that the contract stood cancelled since the respondent had failed to comply with the terms of a circular letter issued by it in December 1943, offering all purchasers an option between accepting refund of the earnest money or completing the transaction immediately by accepting the land in an undeveloped state. The respondent denied having received the circular letter and filed a suit in August 1946, which was decreed by the trial court and the decree was upheld by the High Court in appeal. In the Supreme Court it was contended on behalf of the company that the contract was discharged by reason of frustration because its performance was rendered unlawful as a result of the requisitioning orders made by the Government, and furthermore, that the suit for specific per formance was premature,, because, under the contract the respondent did not get the right to obtain a sale deed till after the development work was complete. HELD : (i) It cannot be said that because of the requisitioning orders which had the effect of making the entry by or on behalf of the company on the land illegal, during the subsistence of the period of requisitioning, the contract stood discharged by frustration. [637 H] If time is of the essence of the contract, or if the time for the performance is set out in the contract, the contract would stand discharged even though its performance may have been rendered unlawful for an indeterminate time, provided unlawfulness attached to the performance at the time when the contract ought to have been performed. [637 A C] In the present case, it could not be said that time was of the essence of the contract or that the contract had been discharged because it had not been performed in a reasonable time within the meaning of section 46 of the Contract Act. When the parties entered into the contract, they knew the prevailing circumstances and must have borne in mind the possibility of difficulties in obtaining the necessary material or the possibility of the land being requisitioned by the Government. [637 E H] 631 Denny Mott & Dickson Ltd. vs James B. Frasser & Co. Ltd. ; and Satyabrata Ghose and Ors. vs Mugneeram Bangur & Co. & Anr. ; referred to. (ii) The contention that the suit was premature could not be accepted because the development work had been completed when the appeal was heard by the High Court. In such a case the court would be justified in taking notice of subsequent events in moulding its relief accordingly. [638 A B]

1886.txt

Appeal No. 503 of 1963. Appeal from the judgment and order dated January 31, 1962, of the Punjab High Court in I.T.R. No. 28 of 1960. B. N. Kripal and A. N. Kripal, for the appellant. Gopal Singh and R. N. Sachthey, for the respondent. April 9, 1964. The judgment of the Court was delivered by SUBBA RAO, J. This appeal by certificate granted by the High Court of Punjab raises the question whether interest paid under section 34 of the Land Acquisition Act, 1894, herein after called the Act, is of the nature 'of a capital receipt or of a revenue receipt. The relevant facts are not in dispute and they may be briefly stated. The appellant, Dr. Shamlal Narula, is the Manager of a Hindu undivided family, which owned, inter alia, 40 bighas and 11 biswas of land in the town of Patiala. The Patiala State Government initiated land acquisition proceedings for acquiring the said land under Regulation then prevailing in the Patiala State. It is common case that the State Regulations are in pari materia with the provisions of the Act. The State of Patiala first merged into the Union of Pepsu and later the Union of Pepsu merged into the State of Punjab. It is also common case that there was a Land Acquisition Act in the Union of Pepsu containing provisions similar to those obtaining in the Act. On October 6, 1953, the Act was extended to the Union of Pepsu. On September 30, 1955, the Collector of Patiala made an award under the Act ,as a result of which the appellant received on December 1, 1955, a sum of Rs. 2,81,822/ , which included a sum of 48,660/ as interest up to the date of the award. For the year 1956 57, the Income tax Officer included the said interest in the income of the Hindu undivided family of which the appellant is the manager, and assessed the same to income tax, after overruling the appellant 's contention that the said interest was a capital receipt and, therefore, not liable to tax. On June 14, 1957, the Appellate Assistant Commissioner confirmed the order of the Income tax Officer. The Appellant preferred an appeal to the Income tax Appellate Tribunal. The said Tribunal by its order dated July 9, 1957, held that 670 the said amount representing the interest was a capital re ceipt and on that finding the said amount was excluded from the total income of the assessee. At the instance of the Commissioner of Income tax the said Tribunal referred the following question to the High Court of Punjab under section 66 (1) of the Income tax Act, 1922: "Whether on a true interpretation of section 34 of the Land Acquisition Act and the Award given by the Collector 'of Pepsu on the 30th September, 1955, the sum of Rs. 48,660/ , was captital receipt not liable to tax under the Indian Income tax Act?" The said reference was heard by a Division Bench of the High Court and it held that the said amount was not a capital but a revenue receipt and as such liable to tax under the Indian Income tax Act. Hence the present appeal. Learned counsel for the appellant raised before us two contentions, namely, (i) the sum of Rs. 4.8,660/ received by the appellant under the award was compensation for deprivinl,7 him of his right to possession of his property and was therefore, a capital receipt not liable to tax; and (ii) whatever may be the character of the amount awarded under section 34 of the Act by way of interest in a case where possession of the land has been taken by the State after the award, in a case where possession of the land acquired has been taken before the award, it would be a capital receipt, for it is said that in the latter the interest necessarily takes the character of compensation for depriving the owner of the land his, right to possession. On behalf of the Revenue the order of the High Court is sought to be sustained for the reasons stated therein. The question raised turns upon the true meaning of the provisions of section 34 of the Act. It reads: "When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate 'of six per ~centum per ~annum from the time of so ~takin possession until it should have been so paid or deposited". The section itself makes a distinction between the amount awarded as compensation and the interest payable on the, amount so awarded. The interest shall be paid on the amount awarded from the time the Collector takes possession until the amount is paid or deposited. To appreciate the scope of the section it is necessary to notice briefly the scope of an award and the manner in which possession is taken under the Act. After the statutory notifications are issued and the 671 requisite notice is given to the persons interested in the land so acquired, the Collector, after holding the necessary enquiry, makes an award, inter alia, determining the amount of compensation payable for the land so acquired. Section 15 in of the Act says that in determining the amount of compensation the Collector shall be guided by the provisions contained in sections 23 and 24. Section 23 provides for the matters to be considered in determining compensation; section 24 describes the matters to be neglected in determining the compensation. A perusal of the provisions of section 23 shows that interest is not an item included in the compensation for any of the matters mentioned therein; nor is it mentioned as a consideration for the acquisition of the land. Under cl. (2) of section 23, the Legislature in express terms states that in addition to the market value of the land the court shall in every case award a sum of 15 per cent. of such market value in consideration of the compulsory nature of the acquisition. If interest on the amount of compensation determined under section 23 is considered to be a part of the compensation or given consideration of the compulsory nature of the acquisition, the Legislature would have provided for it in section 23 itself. But instead, payment of interest is provided for separately under section 24 in Part V of the Act under the heading "Payment". It is so ,done, because interest pertains to the domain of payment after the compensation has been ascertained. It is a consideration paid either for the use of the money or forbearance from demanding it after it has fallen due. Therefore, the Act itself makes a clear distinction between the compensation payable for the land acquired and the interest payable on the compensation awarded. Another approach to the problem leads to the same result. Under section 16 of the Act when the Collector has made an award under section 11 he may take possession of the land which shall thereupon vest absolutely in the Government free from all encumbrances. Under section 17 thereof: "In cases of urgency, whenever the appropriate Government so directs, the Collector, though no such award has been made, may, on the expiration of fifteen days from the publication of the notice mentioned in section 9, sub section (1), take possession of any waste land or arable land needed for public purposes or for a Company. Such land shall thereupon vest absolutely in the Government, free from all encumbrances". Under both the sections the land acquired vests absolutely in the Government after the Collector has taken possession in one case after the making of the award and in the other, even 672 before the making of the award. In either case, some time may lapse between the taking of possession of the acquired land by the Collector and the payment or deposit of the com pensation to the person interested in the land acquired. As the land acquired vests absolutely in the Government only after the Collector has taken possession of it, no interest therein will be outstanding in the claimant after the taking of such possession: he is divested of his title to the land and his right to possession thereof, and both of them vest thereafter in the Government. Thereafter he will be entitled only to be paid compensation that has been or will be awarded to him. He will be entitled to compensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government. It is as it were that from that date the Government withheld the compensation amount which the claimant would be entitled to under the provisions of the Act. Therefore, a statutory liability has been imposed upon the Collector to pay interest on the amount awarded from the time of the taking possession until the amount is paid or deposited. This amount is not, therefore, compensation for the land acquired or for deprivin the claimant of his right to possession, but is that paid to the claimant for the use of his money by the State. In this view there cannot be any difference in the legal position between a case where possession has been taken before and that where possession has been taken after the award, for in either case the title vests in the Government only after possession has been taken. The Legislature expressly used the word "interest" with its well konwn connotation under section 34 of the Act. It is, therefore, reasonable to give that expression the natural meaning it bears. There is an illuminating exposition of the expression "interest" by the House of Lords in Westminster Batik, Ltd. vs Riches(1). The question there was whettier where in an action for recovery of any debt or damages the court exercises its discretionary power under a statute and orders that there shall be included in the sum for which the judgment is given interest on the debt or damages, the sum of interest so included is taxable under the Income tax Acts. If the said amount was "interest of money" within Schedule D and the General Rule 21 of the All Schedules Rules of the Income Tax Act, 1918, income tax was payable thereon. that context it was contended that money awarded as damages for the detention of money was not interest and bad not the quality of interest. Lord Wright observed: "The general idea is that he is entitled to compensation for the deprivation. From that point of view (1) , 189. 673 it would seem immaterial whether the money was due to him under a contract express or implied, or a statute, or whether the money was due for any other reason in law. In either case the money was due to him and was not paid or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation, whether the compensation was liquidated under an agreement or statute, as for instance under section 57 of the Bills of Exchange Act, 1882, or was unliquidated and claimable under the Act as in the present case. The essential quality of the claim for compensation is the same, and the compensation is properly des cribed as interest". This passage indicates that interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered, because he had not that use. It is something in addition to the capital amount, though it arises 'out of it. Under section 34 of the Act when the Legislature designedly used the word "interest" in contradistinction to the amount awarded, we do not see any reason why the expression should not be given the natural meaning it bears. The scheme of the Act and the express provisions there,of establish that the statutory interest payable under section 34 is not compensation paid to the owner for depriving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired. We shall now proceed to consider the case law cited at the Bar. Where a Tribunal directed the Improvement Trust, under the provisions of section 28 of the Land Acquisition Act, to pay interest to the assessee from the date of taking possession ,of the property to the date of payment, a Division Bench of the Allahabad High Court held, in Behari Lal Bhargava vs Commissioner of Income tax, C. P. and U. P. (1), that the interest so awarded was in the nature of compensation for the loss of the assessee 's right to retain possession of the property acquired and, therefore, was no income liable to tax. The reason for the said conclusion is stated thus: "It is not the "fruit of a tree" to borrow the simile used in Shaw Wallace 's case (2) but was compensation or damages for loss of the right to re (1) , 24. (2) A.I.R. 1932 P.C. 138. LP(D)lSC 22 . 674 tain possession; and it seems to us that Section 28 was designed as a convenient method of measuring such damages in terms of interest". As we have pointed out earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter owner of the land so acquired ceases to have any title or right of possession to the land acquired. Under the award he gets compensation for both the rights. Therefore, the interest awarded under section 28 of the Act, just like under section 34 thereof, cannot be a compensation or damages for the loss of the right to retain possession but only compensation payable by the State for keeping back the amount payable to the owner. Adverting to the said decision a Division Bench of the Madras High Court in Commissioner of Income tax, Madras vs CT. N. Narayanan Chettiar(1) observed: ". . . with great respect we find ourselves unable to follow the reasoning. Certainly we are not prepared to accept the judgment as a guide to the decision in the present case". So was the interest granted to an assesse under section 18A of the Income tax Act on the advance payment of tax by him under the provision of that section held to be income taxable in his hand: see Commissioner of Income tax, Bihar and Orissa vs Maharajadhiraj Sir Kameshwar Singh(2). There when the decision of the Allahabad High Court in Behari Lal Bhargava 's case(3) was relied upon, the learned Judges,. refusing to follow it, observed thus: "It is not a matter of discussion for the Central Government but the duty to pay interest is imposed by statute. Apart from this I think (with great respect) that the Allahabad decision is of doubtful authority. The decision is not consistent with the principle laid down in Schulze vs Bensted(1) and Commissioners of Inland Revenue vs Barnato(5). The Madras High Court expressly declined to follow the Allahabad case in Commissioner of Income tax vs Narayanan Chettiar(1). " The Kerala High Court in P. V. Kurien vs Commissioner of Income tax, Kerala(6) held that interest paid on the enhanc ed amount of compensation directed to be paid by an appellate (1) , 477. (2) , 225. (3) (4) (5) (6) 675 court in an appeal against an award of compensation for compulsory acquisition of land under the Land Acquisition Act represented capital and was not income liable to be taxed under the Indian Income tax Act. It was argued there, sum estimated in terms of interest. In coming to the conclusion which they did, the learned Judges relied upon the decision of the Judicial Committee in Inglewood Pulp and Paper Co., Ltd. vs New Burnswick Electric Power Commission(1) and that of the Madras High Court in Revenue Divisional Officer, Trichinopoly vs Venkatarama Ayyar(2). In the former, the Judicial Committee directed the purchaser who had taken delivery and possession of the property he had purchased before the sale to pay interest to the vendor on the purchase money from the date he had taken possession on the ground that "the right to receive interest takes the place of the right to retain possession and is within the rule"; and in the latter, though it arose under the Land Acquisition Act, possession was taken by the Government under circumstances falling outside the scope of sections 16 and 17 of the said Act. In both the cases the title did not pass to the vendee in one case and to the State in the other when possession was taken by them and, therefore, it may be said that the owner was given interest in place of his right to retain possession of the property. But in a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which owner 'of the land might have made if he had the use of the money or the loss he suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owner 's right to retain possession, for he has no right to retain possession after possession was taken under section 16 or section 17 of the Act. We, therefore, hold that the statutory interest paid under section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income tax Act. The order of the High Court is, therefore, correct. In the result, the appeal fails and is dismissed with costs. Appeal dismissed. (1) (2) L/ P(D) ISCI 22(a) .

The State acquired the land of the appellant. The Collector made an award under the Land Acquisition Act as a result of which the appellant received Rs. 2,81,822/ , which included a sum of Rs. 48,660/ as interest upto the date of the award. 'The Income tax Officer included Rs. 48,660/ (the said interest) in the total income of the appellant on the ground that the said amount was not a capital receipt. The matter went upto the Income tax Appellate Tribunal. The Tribunal excluded the said interest from the total income of the assessee (appellant) on the ground that it was a capital receipt. On a reference the High Court held that the said interest was not a capital but a revenue receipt and as such liable to tax under the Indian Income tax Act. The High Court granted a certificate to the appellant to file an appeal to the Supreme Court. Hence the appeal. Held: (i) The scheme of the Land Acquisition Act and the express provisions thereof establish that the statutory in terest payable under section 34 is not compensation paid to the owner for depriving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired. In other words the statutory interest paid under section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income tax Act. Behari Lal Bhargava vs Commissioner of Income tax, C.P. and U.P., (1941), 9 I.T.R. and P. V. Kurien, vs Cmmissioner of Income tax, Kerala, , overruled. Westminister Bank Ltd. vs Riches, , Com missioner of Income tax, Madras vs CT. N. Narayanan Chettiar, and Commissioner of Income tax Bihar and Orissa vs Maharajadhiraj Sir Kameshwar Singh, , approved. Inglewood Pulp and Paper Co. Ltd. vs New Brunswaick Electric Power Commission, and Revenue Divisional Officer, Trichinopoly vs Venkatarama Ayyar, , distinguished. Shaw Wallace 's case, A.I.R. 1932 P.C. 138, Schulze vs Bensted, , and Commissioner of Inland Revenue vs Barnato, , referred to. (ii) The interest under section 34 of the Land Acquisition Act shall be paid on the amount awarded from the time the Collector take possession until the amount is paid or deposited. It 669 makes no difference in the legal position between a case where possession has been taken before and that where possession 'has been taken after the award, for in either case the title vests" in the Government only after possession has been taken. In no sense of the term can it (interest) be described as damages or compensation for the owner 's right to, retain Possession, for as he has no right to retain possession after possession was taken under section 16 or section 17 of the Act.

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Appeal No. 954 of 1963. On appeal. from the judgment and decree dated March 9, 1964, of the Allahabad High Court in Income tax Miscellaneous Case No. 143 of 1954. 991 K. N. Rajagopala Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant. A. V. Viswanatha Sastri, Z. section Meeratwal, B. P. Singh and Naunit Lal, for the respondent. The Judgment of the Court was delivered by Subba Rao J. This appeal by special leave is directed against the order of a Division Bench of the High Court of Judicature at Allahabad holding that the Income tax Officer, in the circumstances of the case, went wrong in initiating proceedings under section 34(1) of the Indian Income tax Act, 1922, hereinafter called the Act, in respect of the assessment year 1942 43. The facts may briefly be stated. The assessee was a holder of an impartible estate in the district of Ajmer. On March 25, 1944, the Income tax Officer assessed him to income tax for the year 1942 43. On April 5, 1945, on the ground that two items of the assessee 's income, namely, s year (forest) income and interest income, were not included in the original assessment, a notice under section 34 of the Act was issued to him. In response to the said notice, the assessee filed a return wherein he disclosed fully and completely the particulars of his interest income, but raised the plea that his forest income was not taxable. The Income tax Officer, by his order dated July 12, 1945, made a revised assessment including both the incomes. The respondent eventually,took the matter on appeal to the Income tax Appellate Tribunal, which, by it , order dated April 25, 1949, held that the Income tax Officer had no jurisdiction to initiate proceedings under section 34 of the Act in respect of the forest income on the ground that the Income tax Officer had knowledge that the assessee had such income when he made the original assessment. Though the Tribunal only dealt with the question of forest income, by inadvertence or by mistake, it set aside the entire order of reassessment dated July 12, 1945, made by the Income tax Officer and restored the original order passed by him. The Income tax Department did not take any steps to rectify the mistake under section 35 of the Act or make any attempt to have the question of the illegality referred to the High Court. Having allowed the order to become final, on January 3, 1950, the Income tax Officer after obtaining the sanction of the Commissioner initiated proceedings under section 34 of the Act with respect to the interest income. On January 19, 1950, the Income tax Officer issued to the assessee a fresh notice under the said section. On September 25, 1950, a 992 revised assessment order was made in regard to the assessment year 1942 43 in which the respondent 's interest income was also included. On appeal, the Appellate Assistant Commissioner confirmed the said order. On further appeal, the 'Income tax Appellate Tribunal held that since the assessee had failed to disclose his interest income in the return filed by him under section 22(2) of the Act in connection with the original assessment the said income had escaped assessment and, therefore, the provisions of section 34 (1 ) (a) of the Act were attracted. On application filed by the assessee, the Tribunal referred the following question to the High Court under section 66(1) of the Act: "Whether on the facts and in the circumstances of this case the provisions of section 34(1) were applicable in respect of the assessment year 1942 43 on 19th January, 1950, when the notice under that provision was issued for the purpose of assessing the escaped interest income." The High Court came to the conclusion that the Tribunal in its order dated April 25, 1949, committed a clear error in setting aside the assessment of tax on the interest income without going ,into the correctness of the imposition of tax thereon, but that order had become final; it further held that the said order ,did not invalidate the entire proceedings taken under section 34 of the Act and, therefore, the Income tax Officer could not take proceedings afresh under section 34 of the Act. In the result the High Court answered the question in the negative. Hence the appeal. Mr. Rajagopala Sastri, learned counsel for the Revenue, con tended that the interest income had escaped assessment and, therefore, the Income tax Officer was competent to initiate proceedings under section 34(1) (a) of the Act for assessing the same. Mr. Viswanatha Sastri learned counsel for the respondent, on the other hand, argued that the assessment made by the Income tax Officer pursuant to the notice issued under section 34 of the Act was in its entirety set aside by the Tribunal on the ground that there was no "discovery" within the meaning of section 34 of the Act and that order had become final and, therefore, the Income tax Officer could not initiate fresh proceedings under that section on the ,principle of res judicata. To appreciate the contentions of the parties it is necessary to ,notice the scope of the order of the Tribunal dated April 25, 1949. Before the Appellate Tribunal it was contended on behalf of the assessee that the Income tax Officer who issued the said notice had 993 no definite information which led to the discovery that the said income had escaped assessment within the meaning of the said section. Adverting to the said argument the Tribunal observed: "We do not agree with the contention of the department that the Income tax Officer who made the original assessment did not apply his mind to this fact, as there is no evidence to show that at the material time such income was considered taxable by the Department. Ordinarily one would expect that when an Income tax Officer makes the assessment he does according to law and on the facts as produced before him. If the fact is before him he refused to take it into account thinking that it was immaterial or even inadvertently takes no notice of it, it cannot be said that the Income tax Officer came in possession of a definite information within the meaning of section 34. We are, therefore, of the opinion that proceedings. under section 34 could not be initiated against the assessee for the four assessment years under reference. The orders passed by the Income tax Officer in respect of these four years are therefore set aside and the original orders under section 23(3) are restored. " We have extracted the order in extenso as the argument really turns upon the scope of the said order. The Appellate Tribunal in considering the validity of the notice under section 34 of the Act only discussed the question of the escape of the year income; it did not advert to the interest income at all. It came to the conclusion, having regard to the fact that the Income tax Officer at the time he made the original assessment had knowledge of the existence of the syar income, that the Income tax Officer did not come into possession of definite information within the meaning of section 34 of the Act. Though the finding was arrived at on the basis of the syar income alone the Tribunal set aside the entire order of reassessment and restored the original order of assessment made by the Income tax Officer under section 23 (3) of the Act. The legal effect of the order was that the are assessment of the entire income, including the syar income and interest income, was set aside on the ground that the Income tax Officer did not come into possession of definite information leading to a "discovery" and, therefore, he could not initiate proceedings under section 34 of the Act. It is true that the Tribunal had committed a mistake in setting aside the reassessment order in respect of the interest income 994 also; but, so long as that order stands, it comprehends both the incomes. The Income tax Officer did not take any further proceedings by way of reference to the High Court on any question of law arising out of the order of the Tribunal; nor did he take any proceedings under section 35 of the Act to have the order corrected on the ground of mistake. With the result the order has become final. The question, therefore, is not whether the order of the Tribunal in so far as it related to the interest income was made by inadvertence or under a mistake, but whether the Income tax Officer could initiate proceedings over again under section 34 of the Act in derogation of the finding given by the Tribunal that the Income tax Officer did not "discover" that the income had escaped assessment. The Income tax Act is a self contained one. It creates a hierarchy of tribunals with original, appellate and revisional jurisdictions. Section 31 gives, inter alia, right of appeal against some orders of the Income tax Officer to the Appellate Assistant Commissioner; section 33 provides for a further appeal to the Income tax Appellate Tribunal; and sub section (6) of section 33 says that save as provided in section 66 orders passed by the Appellate Tribunal on appeal shall be final. Section 66 provides for reference to the High Court on a question of law; and section 66 A provides for appeals in certain cases to the Supreme Court. It is clear from the said provisions that the order of the Tribunal made within its jurisdiction, subject to the provisions of section 66 of the Act, is final. Therefore, the decision of the Tribunal in respect of the subject matter under appeal before it is final and cannot be reopened by the assessee or the Department. The Judicial Committee in Commissioner of Income tar, Bombay & Aden vs Khemchand Ramdas(1) succinctly stated the legal position thus : "But it is not true that after a final assessment under those sections (sections 23 and 29) has been made, the Income tax Officer can go on making fresh computations and issuing fresh notices of demand to the end of all time. . But when once a final assessment is arrived at, it cannot in Their Lordships ' opinion be reopened except in the circumstances detailed in (1) , 424, 426. 995 Sections 34 and 35 of the Act and within the time limited by those sections. " Later on the same idea is restated thus "In Their Lordships opinion the provisions of the two sections are exhaustive, and prescribe the only circumstances in which and the only time within which such fresh assessments can be made and fresh notices of demand can be issued. " The Judicial Committee again in Commissioner of Income tax, West Punjab vs The Tribune Trust, Lahore(1), after noticing the relevant sections of the Act, reaffirmed the same position and held that assessments once made would be valid and effective until they were set aside in the manner prescribed by the Act and that, if not so set aside, they were final. If so, it follows that the order of the Tribunal on the said question, namely, that the whole order of reassessment under section 34 of the Act was invalid as there was no "discovery" that the relevant income escaped assessment, had become final. The only two sections that enable the Income tax Officer to reopen final assessments are sections 34 and 35. If the Appellate Tribunal committed a mistake, under section 35 it can be rectified within four years from the date of the order. In the present case it was a clear case of mistake, for the Tribunal set aside the order of reassessment in respect of the interest income, though its validity to that extent was not disputed. But, for one reason or other, the Revenue did not resort to the obvious remedy and allowed the mistake to remain uncorrected. In the se circumstances, can section 34 of the Act be resorted to ? Learned counsel for the Revenue says that section 34(1) (a), as amended in 1948, confers such a power on the Income tax Officer. The material part of section 34, before amendment, read: "(1) If in consequence of definite information which has come, into his possession the Income tax Officer discovers that income, profits or gains chargeable to income tax have escaped assessment in any year Section 34 (1 ) (a), as amended in 1948, reads : "If the Income tax Officer has reason to believe that by reason of the omission or failure on the part of in assessee to disclose fully and truly all material facts necessary for his assessment for that year. (1) 996 income, profits or gains chargeable to income tax have escaped assessment for that year. he may in cases falling under clause (a) at any time. . . . serve on the assessee a notice. . . " It is said that the words "has reason to believe that by reason of the omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year, income profits or gains chargeable to income tax have escaped assessment" are more comprehensive than the words "the Income tax Officer discovers that income etc., have escaped assessment in any year" and, therefore, though there was a finding by the Tribunal that the Income tax Officer did not "discover" that there was escape of assessment,. the Income tax Officer under the amended section 34 can initiate proceedings in spite of that finding. We cannot accept this argument. It could not have been the intention of the Legislature by amending the section to enable the Income tax Officer to reopen final decisions made against the Revenue in respect of questions that directly arose for decision in earlier proceedings. The Tribunal held in the earlier proceedings that the Income tax Officer knew all the facts at the time he made the original assessment in regard to the income he later on sought to tax. The said finding necessarily implies that the Income tax Officer had no reason to believe that because of the 'assessee 's failure to disclose the facts income has escaped assessment. The earlier finding is comprehensive enough to negative "any such reason" on the part of the Income, tax Officer. That finding is binding on him. He could not on the same facts reopen the proceedings on the ground that he had new information. If he did so, it would be a clear attempt to circumvent the said order, which had become final. We are not concerned in this appeal with a case where the Income tax Officer got new information which he did not have at the time when the Tribunal made the order. The finding of the Tribunal is, therefore, binding on the Income Officer and he cannot, in the circumstances of the case, reopen the assessment and initiate proceedings over again. If that was not the legal position, we would be placing an unrestricted power of review in the hands of an Income tax Officer to go behind the findings given by a hierarchy of tribunals and even those of the High Court and the Supreme Court with his changing moods. The decisions: cited by the learned counsel for the Revenue do not countenance such a contention. Chakraverti C.J., in 997 R. K. Das & Co. vs Commissioner of Income tax, West Bengal(1), speaking for the Division Bench, only decided that the Income tax Officer could not make a reassessment unless he issued the prescribed notice and issued it in a valid form. As the notice under section 34 of the Act issued therein was held to be bad inasmuch as the Income tax Officer did not take the sanction of the Commissioner, the learned Chief Justice held that the returns filed pursuant to such notice was also bad. We are not here concerned with that aspect of the case. The judgment of this Court in Commissioner of Income tax, Bihar & Orissa vs Maharaja Pratapsingh Bahadur of Gidhaur(2) held that, as the earlier notice issued under section 34(1) of the Act without the sanction of the Commissioner was bad, the entire proceedings for are assessment were illegal. There was an observation 'at the end of the judgment to the effect that "there was time enough for fresh notices to have been issued, and we fail to see why the old notices were not recalled and fresh ones issued". The point now raised before us, viz., how far and to what extent a final order made in earlier proceedings under section 34 of the Act would be binding on the Income tax Officer in subsequent proceedings under the said section was neither raised nor decided in that case. The said decisions, therefore, have no bearing an the question raised before us. For the foregoing reasons we hold that the answer given by the High Court to the question referred to it is correct. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

The Income tax Officer issued a notice to the assessee under section 34 on the ground that two items of the assessee 's income, namely forest income and interest income, were not included in the original assessment for the year 1942 43. In response the assessee filed a return fully disclosing his interest income but raised the plea that his forest income was not taxable. The, Income tax Officer however, assessed both items to tax. On appeal, the Appellate Tribunal in its order dated April 25, 1961, although dealing only with the forest income and holding that the Income tax Officer had no jurisdiction to initiate proceedings under section 34 in respect of such income, by inadvertence or by mistake, set aside the entire order of reassessment both in respect of forest income, as well as the interest income. The Department did not take any steps to rectify the mistake under section 35 or to have the question of illegality referred to the High Court. Having allowed the order of the Tribunal to become final, the Income tax Officer initiated fresh proceedings under section 34 in respect of the interest income and made a revised assessment order which included this income. The Appellate Tribunal confirmed the assessment but the High Court, on a reference to it under section 66(1), took the view that fresh proceedings under section 24 could not be taken for the reason, inter alia, that the Tribunal 's order dated April 25, 1949 had become final. HELD : The Tribunal had committed a mistake in setting aside the reassessment order in respect of interest income also, but the income tax Officer did not resort to the obvious remedy of having the mistake rectified as provided for under section 35 and allowed the Tribunal 's order dated April 25, 1949 to become final. He could not in the circumstances, reopen the assessment by initiating proceedings under section 34, as otherwise there would be an unrestricted power of review in the hands of the Income tax Officer to go behind the findings of a hierarchy of Tribunals and Courts. [995 E F; 996 F H] C.I.T. Bombay and Aden vs Khemchand Ramdas, (1938)6 I.T.R. 414 and C.I.T. West Punjab vs The Tribune Trust, Lahore, (1948)16 I.T.R. 214, referred to. R. K. Das & Co. vs C.I.T., West Bengal, (1956)30 I.T.R. 439 and C.I.T., Bihar & Orissa vs Maharaja Pratapsingh Bahadur of Gidhaur, distinguished.

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Appeal No. 45 of1964. Appeal from the judgment and order dated July 30, 1962, of the Bombay High Court in Special Civil Application No. 69 of 1962. G.S. Pathak, M. M. Gharekhan and 1. N. Shroff, for the appellant. 911 C.K. Daphtary, Attorney General, R. Ganapathy Iyer, Gopal Singh and R. N. Sachthey, for the respondent. The Judgments of P. B. GAJENDRAGADKAR C.J., K. N. WANCHOO, M. HIDAYATULLAH and J. R. MUDHOLKAR JJ. was delivered by GAJENDRAGADKAR C.J. RAGHUBAR DAYAL J. delivered a dissenting Opinion. Gajendragadkar C.J. This appeal arises from a writ petition filed by the appellant Navnit Lal C. Javeri in the Bombay High Court in which he challenged the validity of section 12(1B) read with section 2 (6A) (e) of the Indian Income tax Act, 1922 (No. 11 of 1922) (hereinafter called the Act) as it stood in 1955. The High Court has rejected the appellant 's contention that the said section is invalid, and the appellant has come to this Court with a certificate granted by the High Court. The appellant holds 11 out of 845 shares in a private limited company named the Malegaon Electricity Co., (Private) Ltd. (hereinafter referred to as the company). The value of each share is Rs. 100. The business of the company is to supply electricity to the residents of Malegaon. Some time during 1955, the appellant took a loan amounting to over Rs. 4 lakhs from the company. A notice was issued to the appellant by the 8th, Income Tax Officer under section 22(2) of the Act calling, upon him to make his return for the assessment year 1956 57. The Income tax Officer computed his income at Rs. 3,58,460. This amount included a sum of Rs. 2,83,126 representing the accumulated profits of the company. The Income tax Officer took the view that under section 2 (6A) (e) the said amount must be deemed to be dividend received by the appellant, and as such, must be included in the total income of the appellant as income from other sources within the meaning of section 12(1B) of the Act. This order was challenged by the appellant by preferring an appeal before the Appellate Assistant Commissioner. The appeal, however, failed and was dismissed. The appellant then preferred a second appeal before the Income Tax Appellate Tribunal. Whilst this appeal was pending, before the said Tribunal, the appellant moved the High Court under Articles 226 and 227 of the Constitution, and contended that the relevant section under which the department had purported to levy assessment against him on the sum of Rs. 2,83,126, was ultra vires. That is how the only question which the High Court had to decide in the present writ proceedings was whether section 12 (1B) read with section 2 (6A) (e) was constitutionally valid. 912 in order to deal with this point, it is necessary to read the two relevant provisions of the Act. Section 2(6C) defines "income" as including dividend. Section 2 (6A) defines "dividend" in an inclusive manner. Section 2 (6A) (e) provides "Dividend" includes (e) any payment by a company, not being a company in which the public are substantially interested within the meaning of section 23A, of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder, to the extent to which the company in either case, possesses accumulated profits; but dividend does not include (i) (ii) any advance or loan made to a shareholder by a company in the ordinary course of its business where the lending of money is a substantial part of the business ,of the company; (iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub clause (e), to the extent to which it is so set off." Thus, the inclusive definition of "dividend" takes in the payments to which clause (e) of section 2(6A) refers and makes them dividend for the purpose of the Act. Section 12(1) provides that the tax shall be payable by an assessee under the head "Income from other sources" in respect of income, profits and gains of every kind which may be included in his total income (if not included under any of the preceding heads). Section 12(lB) provides : "any payment by a company to a shareholder by way of advance or loan which would have been treated as a dividend within the meaning of clause (e) of subsection (6A) of section 2 in any previous year relevant to any assessment year prior to the assessment year ending on the 31st day of March, 1956, had that clause been in force in that year, shall be treated as a dividend received by him in the previous year relevant to the 913 assessment year ending on the 31st day of March, 1956, if such loan or advance remained outstanding on the first day of such previous year". Both these provisions viz., section 2(6A)(e) and section 12(lB) were introduced in the Act by the Finance Act 15 of 1955 which came into operation on the 1st of April, 1955. It is thus clear that the combined effect of these two provisions is that three kinds of payments made to the shareholder of a company to which the said provisions apply, are treated as taxable dividend to the extent of the accumulated profits held by the company. These three kinds of payments are: (1) payments made to the shareholder by way of advance or loan; (2) payments made on his behalf; and (3) payments made for his individual benefit. There are five conditions which must be satisfied before section 12(lB) can be invoked against a shareholder. The first condition is that the company in question must be one in which the public are not substantially interested within the meaning of section 23A as it stood in the year in which the loan was advanced. The second condition is that the borrower must be a shareholder at the date when the loan was advanced; it is immaterial what the extent of his shareholding is. The third condition is that the loan advanced to a shareholder by such a company can be deemed to be dividend only to the extent to which it is shown that the company possessed accumulated profit at the date of the loan. This is an important limit prescribed by the relevant section. The fourth condition is that the loan must not have been advanced by the company in the ordinary course of its business. In other words, this provision would not apply to cases where the company which advances a loan to its shareholder carries on the business of money lending itself ; and the last condition is that the loan must have remained outstanding at the commencement of the shareholder 's previous year in relation to the assessment year 1955 56. In dealing with the question about the constitutionality of the impugned provisions, it is necessary to bear in mind these respective conditions which govern the application of the said provisions. There is another material circumstance which cannot be ignored. It appears that when these amendments were introduced in Parliament, the Hon 'ble Minister for Revenue & Civil Expenditure save an assurance that outstanding loans and advances which are otherwise liable to be taxed as dividends in the assessment year 1955 56 will not be subjected to tax if it is shown that they had been genuinely refunded to the respective companies before the 30th June, 1955. It was realized by the Government 914 that unless such a step was taken, the operation of section 12(1B) would lead to extreme hardship, because it would have covered the aggregate of all outstanding loans of past years and that may have imposed an unreasonably high liability on the respective shareholders to whom the loans might have been advanced. In order that the assurance given by the Minister in Parliament should be carried out, a circular [No. 20(XXI 6)/55] was issued by the Central Board of Revenue on the 10th May, 1955. It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision. The officers were, therefore, asked to intimate to all the companies that if the loans were repaid before the 30th June, 1955 in a genuine manner, they would not be taken into account in determining the tax liability of the shareholders to whom they may have been advanced. In other words, past transactions which would normally have attracted the stringent provisions of section 12(lB) as it was introduced in 1955, were substantially granted exemption from the operation of the said provisions by making it clear to all the companies and their shareholders that if the past loans were genuinely refunded to the companies, they would not be taken into account under section 12(lB). Section 12(1B) would, therefore, normally Apply to loans granted by the companies to their respective shareholders with full notice of the provisions prescribed by it. Mr. Pathak for the appellant contends that the impugned provision is constitutionally invalid, because it is beyond the legislative competence of Parliament. He argues that Entry 82 in List I of the Seventh Schedule which deals with "taxes on income other than agricultural income" cannot justify the impugned provision, because a loan advanced to a shareholder by the company cannot, in any legitimate sense, be treated as his income; and so, the artificial manner in which such dividend is ordered to be treated as income by the impugned provision is not justified by the said Entry. He also contends that the said provision offends article 19(1) (f) & (g) and cannot be said to be justified by clause (5) or (6) of the said article. There is no doubt that if the impugned provision is beyond the legislative powers of Parliament, it would be bad. Similarly, it is now well settled that even tax 915 legislation must stand the scrutiny of the fundamental rights guaranteed by the Constitution, and so, there can be no doubt that if the impugned provision invades the fundamental rights of the appellant and the invasion is not constitutionally justified, it would be invalid. In dealing with this point, it is necessary to consider what exactly is the denotation of the word "income" used in the relevant Entry. It is hardly necessary to emphasis that the entries in the Lists cannot be read in a narrow or restricted sense, and as observed by Gwyer C.J. in the United Provinces vs Atiqa Begum(1). " each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. " What the entries in the List purport to do is to confer legislative powers on the respective Legislatures in respect of areas or fields covered by the said entries . and it is an elementary rule of construction that the widest possible construction must be put upon their words. This doctrine does not, however, mean that Parliament can choose to tax as income an item which in no rational sense can be regarded as a citizen 's income. The item taxed should rationally be capable of being considered as the income of a citizen. But in considering the question as to whether a particular item in the hands of a citizen can be regarded as his income or not, it would be inappropriate to apply the tests traditionally prescribed by the Income tax Act as such. In Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City(1), this Court had occasion to consider the question as to whether capital gains could be treated as income within the meaning of item 54 of List I of the Seventh Schedule to the Government of India Act, 1935. Section 12 B of the Indian Income tax Act, 1922 which had been inserted in the said Act by Act XXII of 1947, had imposed tax on 'capital gains '. The validity of this provision was challenged on the ground that capital gains cannot be treated as income within the meaning of entry 54. This plea was rejected by this Court on the ground that the words used in a constitutional enactment conferring legis lative powers ought to be construed most liberally and in their widest amplitude. Adopting this approach Das J. as he then was, speaking for the Court, observed that the word "income" used in the said entry must be given its ordinary, natural and grammatical meaning and that was, income is a thing that comes in. On this view, the Court found no difficulty in coming to the conclusion that income would include capital gains. If the traditional (1) (2) [1955]1 S.C.R. 829. Sup./65 916 sense of income had been accepted, then, of course, capital gains could not be treated as income. That, in fact, was the argument which was pressed by Mr. Kolah who appeared for the appellant. "If we hold", observed the learned Judge, "as we are asked to do, that the meaning of the word 'income ' has become rigidly crystallised by reason of the judicial interpretation of that word appearing in the Income tax Act, then logically no enlargement of the scope of the Income tax Act, by amendment or otherwise, will be permissible in future. " And he has significantly added that a conclusion so extravagant and astounding can scarcely be contemplated or countenanced. This decision, therefore shows that the word "income" used in entry 54 which corresponds to the present entry 82 in List I of the 7th Schedule to our Constitution, was liberally construed, and capital gains were deemed to be included within its scope. This aspect of the matter has also been clearly enunciated by Gwyer C.J. in In re: The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (No. 14 of 1938) (1). "I conceive", said the learned Chief Justice, "that a broad and liberal spirit should inspire those whose duty it is to interpret it (the Constitution); but I do not imply by this that they are free to stretch or pervert the language of the enactment in the interests of any legal or constitutional theory, or even for the purpose of supplying omissions or of correcting supposed errors". The next decision to which we ought to refer deals with section 23A of the Act. In Sardar Baldev Singh vs Commissioner of Income tax, Delhi & Ajmer(1) the validity of the said section was challenged. Section 23A(1) provides, inter alia, that subject to the provisions of sub sections (3) and (4), where the Income tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the twelve months immediately following the expiry of that previous year are less than sixty per cent of the total income of the company of that previous year as reduced by the amounts specified in clauses (a), (b) & (c) of the said sub section, the Income tax Officer shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable, make an order in writing that the company shall, apart from the sum (1) at p. 37. (2) ; 917 determined as payable by it on the basis of the assessment under section 23, be liable to pay super tax at the rate specified by the said sub section. The object of this section is to prevent avoidance of super tax by shareholders of a company in which the public are not substantially interested. As is well known, the rates,of super tax applicable to companies are much lower than the rates applicable to individual assessees. The legislature thought that individuals tried to avoid the payment of super tax at a higher rate by transferring to a private limited company it). return for shares the sources of their income, and then the profits made by the company were allowed to accumulate in the hands of the company, dividends not being declared, and the said profits would ultimately be distributed in a capital form by one device or another. The object of section 23A was to defeat such attempts. The main effect of the provisions of section 23A appears to be that a company should not accumulate more than 40 per cent of its net profits to build up reserves or to provide for capital expenditure. It will be recalled that section 2(6A) has taken within the definition of 'dividend" the accumulated profits of such companies, and so section 23A attempts to reach such accumulated profits for the purpose of taxation. The argument which was urged before this Court in the cast of Sardar Baldev Singh(1) was that a company and its share, holders are different persons, and so, section 23A was ultra vires inasmuch as it purported to tax the shareholders on the income of the company in which they hold shares. If the accumulated profits are distributed amongst the shareholders by way of dividends, the shareholders could legitimately be taxed in respect of the dividends received by them; but when section 23A attempts to tax the shareholders for accumulated profits even though they are not distributed as dividends, what, the section purports to do is to tax the share holders for the profits made by the company; and that, according to the appellant, made section 23A invalid. This argument was repelled by this Court on the ground that the obvious intention of section 23A was to prevent evasion of tax, and it was held that entry 54 should be read not only as authorising the imposition of a tax, but also as authorising an enactment which prevents the tax imposed being evaded; otherwise the power to tax a person on his income might often be made in fructuous by ingenious contrivances. It would be noticed that section 23A wanted to deal with a situation where shareholders did not deliberately distribute the accumulated profits as dividends amongst themselves. Section (1) ; 918 23A, therefore, provides that these accumulated profits will be deemed to have been distributed to the shareholders and tax levied against them on that basis. It is likely that in such a case, hardship may be caused in some honest cases; but this Court made it perfectly clear that considerations of hardship are irrelevant for determining questions of legislative competence. It is thus clear that the result of the decision of this Court in Sardar Baldev Singh(1) is that the income which technically belonged to the 'company, was treated, as income belonging to the share holders in proportion to the shares they held in the company, and on that footing tax was levied on them; and yet the said tax was held to be constitutionally valid. There is yet another case in which a similar question was considered. In Balaji vs Income tax Officer, Special Investigation Circle, (2) a person and his wife started business in partnership and admitted their three minor sons to it. In computing the total income of the said person for the purpose of assessment, the Income tax Officer included the share of the income of his wife and three minor sons under section 16 (3) (a) (i) & (ii) of the Act. The validity of this provision was challenged on the ground that the impugned section purported to tax a person for the income of other persons, namely, his wife and minor sons. In rejecting the contention raised against the validity of the impugned section, this Court held that the Entries in the Legislative Lists are not powers but fields of legislation and the widest import and significance should be attached to them. On this view, the conclusion reached by this Court was that Entry 54 of the Federal Legislative List covered legislation like section 16 (3) (a) (i) & (ii), because it was intended to prevent evasion of tax. It appears from the judgment that the validity of the said section was also challenged on the ground that it contravened Articles 14 and 19(1) (f) & (g) of the Constitution. This plea was also rejected. One of the considerations which weighed with the Court in repelling the said plea was that the additional payment of tax made on the income of the wife or the minor children would ultimately be home by them in the final accounting between them. Having regard to this con sideration and bearing in mind the fact that the mode of taxation authorised by the impugned section, though harsh, was thought to be necessary to prevent evasion of payment of tax, this Court held that the said section was valid. It is in the light of these decisions that we must proceed to consider Mr. Pathak 's argument that section 12(1B) of the Act is ultra wires. (1) ; (2) ; In dealing with Mr. Pathak 's argument in the present case, let us recall the relevant facts. The companies to which the impugned section applies are companies in which at least 75 per cent of the voting power lies in the hands of persons other than the public, and that means that the companies are controlled by a group of persons allied together and having the same interest. In the case of such companies, the controlling group can do what it likes with the management of the company, its affairs and its profit within the limits of the Companies Act. It is for this group to determine whether the profits made by the company should be distributed as dividends or not. The declaration of dividend is entirely within the discretion of this group. When the legislature realized that though money was reasonably available with the company in the form of profits, those in charge of the company deliberately refused to distribute it as dividends to the shareholders, but adopted the device of advancing the said accumulated profits by way of loan or advance to one of its shareholders, it was plain that the object of such a loan or advance was to evade the payment of tax on accumulated profits under section 23A. It will be remembered that an advance or loan which falls within the mischief of the 'impugned section is advance or loan made company which does not normally deal in money lending is made with full knowledge of the provisions contained impugned section. The object of keeping accumulated without distributing them obviously is to take the benefit lower rate of super tax prescribed for companies. This was defeated by section 23A which provides that in the case distributed profits, tax would be levied on the shareholders on the basis that the accumulated profits will be deemed to have been distributed amongst them. Similarly, section 12(1B) provides that if a controlled company adopts the device of making a loan or advance to one of its shareholders, such shareholder will be deemed to have received the said amount out of the accumulated profits and would be liable to pay tax on the basis that he hag received the said loan by way of dividend. It is clear that when such a device is adopted by a controlled company, the controlling group consisting of shareholders have deliberately decided to adopt the device of making a loan or advance. Such an arrangement is intended to evade the application of a. 23A. The loan may carry interest and the said interest may be received by the company; but the main object underlying the loan is to avoid payment of tax. It may ultimately be repaid to the company and when it is so repaid, it may or may not be treated as part of 920 accumulated profits. It is this kind of a well planned device which section 12(1B) intends to reach for the purpose of taxation. It appears that such a device is adopted by private companies in many countries. Simon has referred to this device in these words : "Generally speaking, surtax is charged only on individuals, not on companies or other bodies corporate. Various devices have been adopted from time to time to enable the individual to avoid surtax on his real total income or on a portion of it, and one method involved the formation of what is popularly called a 'one man company '. He individual transferred his assets, in exchange for shares, to a limited company, specially registered for the purpose, which thereafter received the income from the assets concerned. The individual 's total income for tax purposes was then limited to the amount of the dividends distributed to him as practically the only shareholder, which distribution was in his own control. The balance of the income, which was not so distributed, remained with the company to form, in effect, a fund of savings accumulated from income which had not immediately attracted surtax. Should the individual wish to avail himself of the use of any part of these savings he could effect this by borrowing from the company, any interest payable by him going to swell the savings fund; and at any time the individual could acquire the whole balance of the fund in the character of capital by putting the company into liquidation. "(1) What Simon says about one man company can be equally true about the controlled company whose affairs are controlled by a group of persons closely knit and having the same interest. The question which now arises is, if the impugned section treats the loan received by a shareholder as a dividend paid to him by the company, has the legislature in enacting the section exceeded the limits of the legislative field prescribed by the present Entry 82 in List I. As we have already noticed, the word "income" in the context must receive a wide interpretation; how wide it should be it is unnecessary to consider, because such an enquiry would be hypothetical. The question must be decided (1) Simon 's Income tax, 2nd Ed. 3, para 592, p. 341. 921 on the facts of each case. There must no doubt be some rational connection between the item taxed and the concept of income liberally construed. If the legislature realises that the private controlled companies generally adopt the device of making advances or giving loans to their shareholders with the object of evading the payment of tax, it can step in to meet this mischief, and in that connection, it has created a fiction by which the amount Ostensibly and nominally advanced to a shareholder as a loan is treated in reality for tax purposes as the payment of dividend to him. We have already explained how a small number of shareholders controlling a private company adopt this device. Having regard to the fact that the legislature was aware of such devices, would it not, be competent to the legislature to device a fiction for treating the ostensible loan as the receipt of dividend? In our opinion, it would be difficult to hold that in making the fiction, the legislature has traveled beyond the legislative field assigned to it by entry 82 in List 1. It is, however, urged by Mr. Pathak that while providing for such a fiction, the legislature should have required the Income tax Officer to consider in each case whether the loan was genuine, or was the result of a device; and he argues that since no such provision has been made and a uniform presumption by fiction is, sought to be raised, the legislature has gone beyond its legislative competence. In support of this argument, Mr. Pathak has referred to the fact that under section 108(1) of the Commonwealth Income tax Act it is provided that the amount paid to the shareholder by way of advance or loan can be taxed if in the opinion of the Commissioner it represents distributions of income, Such a provision would have made the impugned section valid, Mr. Pathak argues that omission of Parliament to exclude from the operation of section 12(lB) genuine loans or advances, and its failure to distinguish between such loans and advances and loans and advances made as a device shows, that it has acted blindly and must, therefore, be held to have exceeded its legislative power. We are not inclined to accept this argument. If the legislature thinks that the advances or loans are in almost every case the result of a device, it would be competent to it to prescribe a fiction and hold that in cases of such advances or loans, tax should be recovered from the shareholder an the basis that he has received the dividend. Therefore, we are satisfied that the High Court was right in coming to the conclusion that the impugned section is not beyond the legislative competence of the legislature. 922 Then it is argued by Mr. Pathak that the impugned provision contravenes the appellant 's fundamental rights under article 19(1) (f) & (g) and is not saved by clauses (5) & (6) of the said article. It is not easy to appreciate this argument. article 19(1) (f) recognises the right of a citizen to acquire, hold and dispose of property and article 19(1)(g) recognises the right to practice any profession, or to carry on any occupation, trade or business. The impugned provision does not contravene either of these rights. The shareholder 's right to borrow money from his own company cannot be said to be a fundamental right; besides all that the impugned section does is to provide that if a loan is borrowed by a shareholder from a company to which the said provision applies, it will be deemed to be a receipt by him of the dividend. This provision does not affect the appellant 's right to borrow money from any other source; and his company from which he borrows does not ordinarily do money lending business. That is why the restriction imposed by the section cannot be said to be unreasonable at all. In dealing with the question about the reasonableness of this provision, we cannot also overlook the fact that past transactions were excluded from its operation by the issue of a circular to which we have already referred. There is no element of unfairness in the fiction, because the other shareholders have deliberately agreed to make the loan or the advance and the shareholder to whom the loan is advanced deliberately takes it with a view to assist the company to evade the payment of tax and to have the benefit of the use of, the amount subject to the payment of interest. The company receives interest, the shareholder enjoys the use of the money, and in the process the payment of due tax is evaded. That is the assumption made by the legislature in making this provision. How can it be urged that either the shareholder who is taxed, or the other shareholders who deliberately make the advance to a colleague of theirs, are unfairly dealt with by the impugned provision. In our opinion, there is no scope for arguing that the fundamental rights of the shareholder under article 19 (1) (f ) & (g) have been contravened by the impugned provision. Therefore, we must reject Mr. Pathak 's argument that the impugned provision is invalid on the ground that it contravenes article 19(1)(f) & (g). There is obviously no scope for suggesting that the impugned provision contravenes article 14; and in fact Mr. Pathak has not raised this point before us. In that connection, he himself fairly invited our attention to the decision of the Madras High Court in K. M. section Lakshmana Aiyar vs Additional Income tax Officer, Special 923 Circle, Madras, (1) where the challenge to the validity of the impugned section on the ground that it contravened article 14 has been repelled. The result is, the appeal fails and is dismissed with costs. Raghubar Dayal J. I am of opinion that the appeal should be allowed as sections 12 (1B) and 2 (6A) (e), of the Indian Income tax Act, 1922, hereinafter called the Act, as they stood in 1955, are void. The two provisions were enacted by Parliament in view of Entry 82, List 1, Seventh Schedule of the Constitution which reads : "Taxes on income other than agricultural income". It is not disputed that whatever wide connotation the word 'income ' in this Entry may have, the item taxed should really be capable of being considered as income, that there be some rational connection between the item taxed and the concept of "income" and that it is not open to Parliament to choose to tax, as income, an item which in no rational sense can be regarded as income. It is also not disputed that Parliament can enact a law dealing with the evasion of payment of income tax. In Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City(1) this Court had to consider the content of the word "income" as used in Entry 54, List 1, Seventh Schedule to the Government of India Act, 1935 (which is identical with Entry 82. List 1, Seventh Schedule to the Constitution), in determining whether the imposition of a tax under the head "capital gains" by the Central Legislature, was ultra vires. Section 12 B inserted in the Income tax Act by the Indian Income tax and Excess Profits Tax (Amendment) Act, 1947 (Act XXII of 1947) provided for the imposition of a tax on capital gains arising from certain transactions mentioned in the section. This Court said that "income", according to the dictionary, means "a thing that comes in" and that in the United States of America and Australia, the word "income" was used in a wide sense so as to include "capital gains". It referred to certain cases of those countries in which a very wide meaning was ascribed to the word "income" as its natural meaning and held that "its natural meaning embraces any profit or gain which is actually received". In the United States, the word "income" was first defined in Stratton 's Independence vs Howhert(3) decided on December 1, 1913, as "gain derived from capital, from labour, or from both (1) (2) [1955] 1 S.C.R. 829. (3) L. Ed. 285. 924 combined". The court had to construe the word "income" as used in section 38 of the Corporation Excise Tax Act of August 5, 1909, which imposed an excise tax "equivalent to one per centum upon the entire net income . received by it from all sources during the year". In Eisner vs Macomber(1) referred to by this Court in Mafatlal 's case(1), the court had to construe the word "income" as used in the XVI Amendment of the Constitution of the United States, which is : "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." and observed, at p. 206: " Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised. For the present purpose we require only a clear definition of the term 'income, ' as used in common speech, in order to determine its meaning in the Amendment; and, having formed also a correct judgment as to the nature of a stock dividend, we shall find it easy to decide the matter at issue. After examining dictionaries in common use we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of August 5, 1909. 'Income may be defined as the gain derived from capital, from labour, or from both combined, ' provided it be understood to include profit gained through a sale or conversion of capital assets. to which it was applied in the Doyle case Brief as it is, it indicates the characteristic and distinguishing attribute of income, essential for a correct solution of the present controversy. " The definition of "income" given in this case has been followed in the other two cases referred to in Mafatlal 's case(2) ViZ., Merchants ' Loan & Trust Co. vs Smietanka(3) and United States (1)252 U.S. 189=64 L. Ed. 521. (2) [19551 1 S.C.R. 829. (3) ; L. Ed. 751. 925 vs Stewart(1), cases which dealt with the taxation of gains from the sale of capital assets. The question in the Australian case viz., Resch vs The Federal Commissioner of Taxation(1) was about the validity of the provinces in the income tax legislation to the effect that distribution of profits in the course of winding up of a company would be treated on the same footing as the distribution by the company as a going concern. The provision was held valid as Parliament possessed power to bring to charge in an income tax Act all profits and gains accruing to a tax payer, without distinguishing whether the profit or gain should be regarded as a receipt on capital or on income or revenue account. The word "income" has been interpreted in a natural sense in these cases and the definition given in Eisner 's case($) is much narrower and limited in content than the widest meaning which is now sought to be given to it by the respondent. In Mafatlal 's case (4) too, this Court has not given such a wide meaning to the word "income" as to include "anything which comes in" and therefore to include the amount of a loan which may be said to come in the hands of the borrower. Loans borrowed by a shareholder from the company do not, as such, come within the above general definition of "income". They do not represent gains from his labour or capital or profits gained through sale of capital assets. The borrower has to repay them. If a shareholder is really paid his share of the profits ostensibly as a loan, such a nominal loan but really a share of profits can be taxed as "income" under an appropriate enactment. We may now consider the nature of what had been taxed in this case and to which objection has been taken on the ground that sections 2 (6A) (e) and 12 ( 1 B) are invalid. The appellant holds 11 out of 845 shares in a private limited company. The value of each share is Rs. 100. In 1955 he took a loan of over Rs. 4,00,000 from the company. Rs. 2,83,126, the amount of accumulated profits the company had then, have been added to the appellant 's total income for the relevant assessment year, in view of sections 2(6A)(e) and 12(1B) of the Act. He appellant 's share in the accumulated profits, if distributed as dividend would be 11/845the of Rs. 2,83,126 i.e., Rs. 3,686. Rs. 2,79,440, the balance, would then be the dividend payable to the other co sharers. The appellant contends that Rs. 2,79,440 (1) ; = 85 Ed 40 (3) ; L. Ed. 521. (2) ; (4) [1955] 1 S.C.R. 829. 926 is not his income and that Parliament was not competent to enact sections 2 (6A) (e) and 12 ( 1B) which treat it as his "income" from dividend. Before dealing with the contention, reference may be made to what the impugned sections provide. Section 2 (6A) (e) defines "dividend", in the circumstances mentioned in that clause, to include any payment by a company of any sum by way of advance or loan to a shareholder, or any payment by any Such company on behalf of or for the individual benefit of a shareholder to the extent to which the company in either case possesses accumulated profits. Section 12(1B) provides that any such payment to a shareholder made by way of advance or loan in certain circumstances would be treated as dividend received by him in the previous year relevant to the assessment year ending March 31, 1956, if such loan or advance remained outstanding on the first day of such previous year. Now, the contention for the appellant is that though Parliament can enact a law dealing with evasion of payment of income tax, it cannot tax what is not "income", that the amount in excess of his proportionate share in Rs. 2,83,126, if it had been actually distributed as profits by the company, could not have been his income from dividend, that he could not have evaded payment of income tax on this amount from its being not distributed as dividend and that therefore Parliament could not enact that such excess amount be treated as dividend paid to him and, consequently, as his "income". The contention has force. The essence of an amount paid as dividend is that it has to represent the proportionate amount a particular shareholder is to get on the basis of the shares held by him out of the profits of the company set apart for payment of dividend to shareholders. Any ad hoc payment of money to a shareholder as advance or loan unrelated to his share in the accumulated profits cannot rationally come within the expression "dividend". I am therefore of opinion that it is not open to the legislature to describe any payment of money by a company to a shareholder by the word "dividend" and then provide that such payment (called dividend) will come within the expression "income" for the purposes of any law enacted by virtue of Entry 82, List 1, Seventh Schedule to the Constitution. The definition of "dividend" must have rational connection with the concept of "dividend" in the context of the profits of a company and its distribution amongst shareholders at any time after the profits have been earned. Clauses (a) to (d) of section 2 (6A) may be said to have such a connection. 927 It is conceivable, and not disputed for the appellant, I that attempts are made by persons to evade payment of income tax and that one mode of such attempts is that companies accumulate profits, do not use them for payment of dividends and later pay the amount to shareholders by way of profits but in the form of advance of moneys or loans to some shareholders who pass on the ratable share of the remaining shareholders and the shareholders thus escape payment of super tax at a higher rate as their receiving such amounts could not be treated as "dividends" and so could not be added to their "income '. At the same time, it is not disputed for the respondent that there can be genuine cases of loans taken by shareholders from a company when the company was in a position to lend money out of its funds. In fact, after the enactment of section 2(6A)(e), the Central Board of Revenue issued a Circular directing its officers to intimate to all companies that if loans advanced by them were repaid before June 30, 1955, in a genuine manner, they would not be taken into account in determining the tax liability of the shareholders to whom they had been advanced as it was likely that some companies might have advanced loans to their shareholders as a result of genuine transactions of loans and the idea was not to affect such transactions and not to bring them within the mischief of the new provision. The provisions of section 2 (6A) (e) take into account all cases of advances or loans made by companies to their shareholders, be they bona fide or be they for the purpose of evading payment of super tax, and make the borrower liable for the tax on even such amount of the loan as be in excess of his proportionate share in the accumulated profits up to the amount of the loan. Reference may be made to the fact that in other countries too, notice has been taken of attempts to evade payment of income tax by similar devices, and that enactments to defeat the devices have been made by the legislatures of those countries. We have been referred to section 108 of the Income Tax and Social Services Contribution Assessment Act 1936 53 (of the Commonwealth of Australia) which deals with loans to shareholders. Its provisions materially differ in one respect from those of the impugned sections. Only so much of the advances or loans are deemed to be dividends paid by the company as in the opinion of the Commissioner represents distributions of income. The entire amount of advance of loan is not treated as dividend received by the borrower shareholder. Imposition of a tax is a restriction on the, right of an assessee 928 to hold property and a particular tax can be justified only as a reasonable restriction on the exercise of that right in the interests of the general public. The shareholder who takes a loan or advance from a company which possesses accumulated profits is, under the impugned provisions, treated to have received the amount of the loan or advance to the extent of the accumulated profits, as dividend. As already stated, the amount of profits set apart for dividends is to be proportionately distributed among the various shareholders. If any enactment provides that certain profits of the company, though not distributed as dividend, be treated as used for the payment of dividends, it should necessarily follow that a particular shareholder be deemed to have received a proportionate amout of such profits as dividend. It would be unreasonable to provide that a particular shareholder should be deemed to have received an amount in excess of his proportionate share as dividend. The other shareholders should, in the circum stances, be deemed to have received their proportionate shares of the profits deemed to have been distributed as dividends. A reasonable law may provide for their assessment as wan on the amount of dividends deemed to have been distributed to them. It appears to me unreasonable that a particular shareholder who receives a loan or advance from a company be deemed to have received that entire amount as dividend when his proportionate share be much less. I would, for this reason also, consider the provisions of the impugned sections to amount to imposing unreasonable restrictions on the fundamental right to hold property under article 19(1)(f). I would now refer to certain cases on which reliance is placed for the proposition that this Court has held valid laws made to cover attempts for evasion of income tax and that therefore the impugned provisions enacted with the same object to cover attempts to evade payment of super tax should be held valid. These case are : Mafatlal 's case(1), already referred to; Sardar Baldev Singh vs Commissioner of Income tax, Delhi & Ajmer (2) ; and Balaji vs Income tax Officer, Special Investigation Circle(a). Mafatlal 's case(1) dealt with the validity of the tax on capital gains under section 12B of the Act. In that case what was taxed was what had been gained by the assessee as a result of some dealing in capital assets. The capital gain was to be computed after making certain deductions including the actual cost to the assessee of (1)[1955] 1 S.C.R. 829. (3) ; (2) ; 929 The capital assets, and did not represent the entire amount that came in as a result of the transaction. This case is therefore an authority for the simple proposition that the word "income" in Entry 82, List 1, Seventh Schedule 'to the Constitution, has wide connotation and is not to be restricted to have the same content as judicial decisions had given to that word as used in the Act. "Income", in the Act, has been construed in the context of the scheme of the Act and has been considered to mean generally what one earns mostly in a recurring form from some existing sources. The profits that one earns from the transfer of a capital asset could be rationally considered, as held by this Court, to be income, as it represented the amount in excess of what the transferor assessee had spent in acquiring that asset. Baldev Singh 's case(1) was concerned about the validity of the provisions of section 23A of the Act which authorised the Income tax Officer to order in writing that the undistributed portion of the ostensible income of a company calculated as profit therein shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid and that thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income. The Income tax Officer was to make such an order only when he was satisfied that the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for the previous year are laid before the company in general meeting, were less than 60% of the assessable income of the company and that payment of a larger dividend would not be unreasonable keeping in view the losses incurred by the company in the earlier years and of the smallness of the profits made. It will be noticed that the order of the Income tax Officer could not be to the effect that the undistributed profits would be deemed to be the dividend paid to any particular shareholder or shareholders but could be to the effect that they were distributed as dividends amongst all the shareholders. The validity of this provision was not questioned in the case. What was questioned in the case was that the proportionate share of Baldev Singh, assessee, in such undistributed profits, could not be added to his total income of the particular year to which it was added. It was held that in view of the deeming provision with respect to the distribution of profits as dividends amongst shareholders, the proportionate share of the dividends would be deemed to be (1) [1961]1 S.C.R. 482. 930 income of the assessee and that therefore, when it was not taxed, would be deemed to have escaped assessment for the purposes of section 34 of the Act. The case is distinguishable on several grounds. One is that the Income tax Officer is to make the order when he is satisfied that a larger dividend could have been justifiably distributed, a view necessarily leading to the inference that a lower dividend was distributed in order to escape payment of super tax by shareholders liable to pay such tax. The other is that the Income tax Officer was given power to make the order only when profits less than 60% of the assessable income were distributed as dividend. This indicates that the company could accumulate profits up to 40% of the assessable income for reasons which would be deemed to be genuine. This should lead to the inference that the accumulation of profits with respect to which no action has been taken under section 23A was justified and that therefore if in case a company could spare the money to advance to a shareholder for his needs, that alone should not lead to the inference that the advance was made to evade the payment of super tax by the shareholder. The third point of distinction, and of signi ficance, is that no individual shareholder is made liable for tax on an amount of the undistributed profits in excess of his proportionate share in those profits. The shareholder is not thereby prejudiced. His income is increased by an amount which he could have legitimately got from the company if the persons in control had acted reasonably and had retained such profits undistributed as were necessary for the purposes of the company. Another objection taken in Baldev Singh 's case(1) was about the constitutionality of section 23A on the ground that it purports to tax the shareholders on the income of the company in which they held shares, especially when it does not give a right to the shareholders to realise from the company the dividend which by the order is deemed to have been paid to them. The section was held to be constitutionally valid as it was enacted for preventing evasion of tax in view of the conditions of its applicability. In the circumstances of the cases covered by section 23A, there was a reasonable connection between the amount deemed to be distributed as dividend and the possible attempt for evading payment of super tax. The assessee could not have been prejudiced if the persons in control of the management of the company had acted reasonably or actually distributed that amount as profits subsequent to the order of the Income tax Officer. (1) ; 931 In Balaji 's case(1), the validity of section 16(3) (a), clauses (i) and (ii), came up for consideration. These clauses provide that in computing the total income of any individual for the purpose of assessment there shall be included so much of the income of his wife or minor child as arises directly or indirectly from the membership of the wife in a firm of which her husband is a partner or from the admission of the minor to the benefits of partnership in a firm of which such individual is partner. These provisions were held valid. The Court left open the question whether A could be taxed on the income of B and formulated the question for decision as whether section 16(3) (a), clauses (i) and (ii), is a provision made by the Legislature to prevent evasion of tax and answered it in the affirmative, as the husband or the father could nominally take his wife or minor child, in partnership with him, so that the tax burden may be lightened and as this device enabled the assessee to secure the entire income of the business and yet evade income tax which he would otherwise have been liable to pay. It was said at p. 999: "The scope of the provisions is limited only to a few of the intimate members of a family who ordinarily are under the protection of the assessee and are defendants of him. The persona selected by the provisions, namely, wife and minor children, cannot also be ordi narily expected to carry on their business independently with their own funds when the husband or the father is alive and when they are under his protection. " It is therefore clear that the basis for holding section 16(3) (a), clauses (i) and (ii), valid was that in effect the husband or the father was the real person who ran the firm and that the others were made partners nominally and therefore the partnership was not genuine. In this view, there could be no question of the provisions affecting the husband or the father prejudicially or including in his income amounts which were not his income. This, however, cannot be said in the present case or in cases which come within the purview of the impugned sections. In dealing with the contention that the provisions of section 16 (3) (a), clauses (i) and (ii), contravened article 14 of the Constitution, it was said at p. 991 : "We have held that the object of the legislation was to prevent evasion of tax. A similar device would not ordinarily be resorted to by individuals by entering (1) [1962) 2 S.C.R. 983. 1/65 932 into partnership with persons other than those mentioned in the sub section, as it would involve a risk of the third party turning round and asserting his own rights. The Legislature, therefore, selected for the purpose of classification only that group of persons who in fact are used as a cloak to perpetrate fraud on taxation. " Such a risk is always involved in a company making payments as advances or loans to a shareholder when it possesses accumulated profits as the other shareholders run the risk of not getting their proportionate share of profits which they would have got if they had been really distributed as dividends. This consideration, again, points to the conclusion that the probability of such an advance or loan being genuine would be dependent not so much on the existence of accumulated profits but on the number of shareholders in the company and the proportion of the number of shares the borrower has to the total number of shares held by the shareholders of the company. The lesser the proportion, the greater is the chance of the advance or loan being genuine, as there would in that case be greater risk of the other shareholders losing their share in the profits deemed to be distributed as dividends. I am therefore of opinion that the impugned sections viz., sections 2(6A) (e) and 12(1B) of the Act are void and that this appeal should be allowed. Appeal allowed.

The assessee was a share holder in a private limited company whose ordinary business was not money lending business. He took a loan amounting to over Rs. 4 lakhs from a company. The Income tax Officer computed the assessee 's income at Rs. 3 lakhs and odd, under section 12(1B) read with section 2 (6A) (e) of the Income tax Act, 1922. That amount included a sum of over Rs. 2 lakhs representing the accumulated profits of the company. The assessee 's share in the accumulated profits, if distributed as dividend, would be an amount proportionate to the number of shares held by him. He therefore contended, that the balance of the accumulated profits was not his income and that the Legislature was not competent to enact the two sections according to which that amount was also treated as his income. His writ petition in the High Court challenging. the constitutional validity of the two sections was dismissed. He appealed to the Supreme Court. HELD (Per Gajendragadkar, C. J., Wanchoo, Hidayatullah and Mudholkar JJ.) : (i) The sections are not beyond the legislative competence of Parliament. The companies to which section 12(1B) applies are companies in which at least 75% of the voting power lies in the hands of persons other than the public. They are controlled by a group of persons allied together and having the same interest. The controlling group can determine whether the profits made by the company should be distributed as dividends or not. When they deliberately refused to distribute the accumulated profits as dividends but adopted the device of advancing the profits by way of loan to one of the shareholders, it was with the object of evading the payment of tax by the company on the accumulated profits. Section 12(1B) provides that if a controlled company adopts the device of making a loan to one of its shareholders, he will be deemed to have received the amount out of the accumulated profits as dividend and would be liable to pay tax on his income. The word "income" in Entry 82 in List I of the 7th Schedule to the Constitution must receive a wide interpretation depending on the facts of each case. Having regard to the fact that the Legislature was aware of the devices to evade tax, it would be within its competence to devise a fiction for treating an ostensible loan as the receipt of the dividend. [919 A H. 920 H; 921 C D] (ii) The absence of a provision enabling the income tax officer to consider in each case whether the loan was genuine or the result of a device does not make the section go beyond the competence of the Legislature. [921 D E] If the Legislature thought that in almost every case the advances or loans were the result of a device to evade tax, it would be competent to 910 it to prescribe a fiction and hold that in cases of such advances or loans, tax should be recovered from the shareholder on the basis that he had received a dividend. [921 G H] (iii) Section 12(lB) does,not impose an unreasonable restriction on the appellant 's fundamental rights under article 19(1) (f) and (g) of the Constitution. [922 A] The section does not affect the appellant 's right to borrow money. There is no element of unfairness, because the other shareholders have deliberately agreed to make the loan or the advance and the shareholder to whom the loan is advanced deliberately takes it with a view to assist the company to evade the payment of tax and to have the benefit of the use of the amount subject to the payment of interest. The company receives interest, the shareholder enjoys the use of the money and in the process the payment of tax is evaded. Further, past transactions were excluded from the operation of the sections by the issue of a circular by the Central Board of Revenue. [922 B F] Per Raghubar Dayal J. (dissenting) : (i) Sections 2(6A) (e) and 12(lB) of the Income tax Act, 1922 as they stood in 1955 are void. [923 B] It is not open 'to the Legislature to describe any payment of money by a company to a shareholder by the word "dividend" and then provide that such payment will come within the expression "income" in item 82, List I of Schedule 7. The definition of dividend must have a rational connection with concept of dividend in the context of the profits of the company and its distribution amongst the shareholders. The essence of an amount paid as dividend is that it has to represent the proportionate amount a particular shareholder is to get on the basis of the shares held by him out of the profits of the company set apart for payment of dividend to shareholders. Any ad hoc payment of money to a shareholder as advance or loan unrelated to his share in the accumulated profits cannot rationally come within the expression dividend. [926 E H] (ii) The provisions of the impugned sections impose unreasonable restrictions on the fundamental right to hold property under article 19(1)(f) of the Constitution. [928 E] If any enactment provides that certain profits of the company, though not distributed as dividend, be treated as used for the payment of dividends it should necessarily follow that a particular shareholder be deemed to have received a proportionate amount of such profits. It would be unreasonable to provide that a particular shareholder should be deemed to have received an amount in excess of his proportionate share as dividend. It is unreasonable that a particular shareholder who receives a loan or advance from a company be deemed to have received that entire amount as dividend when his proportionate share would be much less. [928 B E] Navinchandra Mafatlal vs Commissioner of Income tax, Bombay City, [1955] 1 S.C.R. 829, Sardar Baldev Singh vs Commissioner of Income tar, Delhi and Agra [1961] 1 S.C.R. 482 and Balaji vs Income tax Officer, Special Investigation Circle, ; , referred to.

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minal Appeal No. 128 of 1962. Appeal from the judgment and order dated January 30, 1962, of the Calcutta High Court in Criminal Appeal No. 429 of 1960. section C. Mazumdar, for the appellant. P. K. Chakravarti and P. K. Bose, for the respondent No. 2. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Calcutta High Court. The appellant hired a westing house, 399 D. C. motor from the Modem Electrical Works (hereinafter referred to as the Works) on April 4, 1958 on a rent of Rs. 40 per month. The hiring period was to last for at least three months and it was agreed that if the motor or parts thereof were lost or damaged by the appellant, he would be bound to pay the whole cost of the motor and the parts. The motor remained in the use of the appellant and hire charges were paid by him from April 1958 to January 1959. Thereafter it is said that no hire charges were paid. On June 8, 1959, the appellant wrote a letter to the Works in which he said that he had purchased the motor in question for Rs. 600 on condition that the same would be tried for three months, and if it was found satisfactory the money would be paid and the purchase completed. The letter also stated that the agreement was that if the motor was not found satisfactory, the appellant would pay three months ' hire at Rs. 40 per month and the motor would be returned thereafter. Finally, the appellant said in the letter that the Works had been paid Rs. 620 in all and thus the purchase had been completed. The appellant therefore requested the Works to give him a slip saying that the motor had been sold to the appellant, as no further money was due to the Works. On June 15, 1959, the Works sent a reply to the appellant denying that any such agreement as was alleged by the appellant had been made. It was also denied that Rs. 620 had been paid, and therefore the purchase was complete. Finally it was said that the appellant had only paid Rs. 400 and Rs. 200 were still due from him for the months of February to June 1959. The appellant replied to this letter in which he reiterated his stand taken in the earlier letter and gave details of how the payment of Rs. 620 had been made. Thereafter the Works filed a complaint through its servant Mohd. Ayub on July 1, 1959 in which after stating its case it urged that the appellant had committed criminal breach of trust and was therefore guilty under section 406 of the Indian Penal Code. On this complaint the appellant was summoned by the Presi dency Magistrate 9th Court, Calcutta and after taking some evidence for the prosecution, the Magistrate discharged the appellant holding that there was no satisfactory evidence of dishonest misappropriation or conversion of the motor by the appellant to his own use and that the dispute between the parties was essentially of a civil nature. Mohd. Ayub then went in revision to the High Court. The High Court set aside the order of discharge and directed further enquiry in the matter by another Magistrate. The case then went back to the Third Presidency Magistrate, Calcutta, 400 who eventually found the appellant not guilty and ordered his acquittal on the ground that there was dispute between the parties as to the actual nature of the transaction and it could not be said that there was any dishonest intention on the part of the appellant to misappropriate the motor. Mohd. Ayub then filed an appeal before the High Court under section 417(3) of the Code of Criminal Procedure. Eventually the matter was heard by a Division Bench of the High Court, and it came to the conclusion that it was clear from the letter of June 8, 1959 (to which we have already referred) that the same could not have been written unless the appellant dishonestly in violation of the entrustment wanted to cause wrongful loss to the complainant and wrongful gain to himself. It was further held that the letter did not show that there was a bona fide claim of ownership over the property and the claim was merely a pretence which could not exonerate the appellant from being punished under section 406 of the Indian Penal Code. 'The appellant then applied for a certificate to enable him to file an appeal to this Court, which was granted; and that is how the matter has come up before us. We are of the opinion that this appeal must succeed. It is not in dispute between the parties that the motor was entrusted to the appellant by the Works for his use. The dispute was whether this entrustment was merely by way of hire (which was the case of the Works) or, as was the case of the appellant, was on the basis of an agreement between the parties that the appellant would purchase the motor if he found it satisfactory after trying it for .three months and pay Rs. 600 as the price and that he would return it if he found it unsatisfactory during this period of three months and pay Rs. 40 each month as hire for that period. The real dispute between the parties therefore was as to the nature of the agreement between them when the motor was entrusted to the appellant in April 1958. That dispute was clearly of a civil nature. The Works however contended that by writing the letter of June 8, 1959 the appellant committed breach of trust and was guilty under section 406 of the Indian Penal Code. Now in that letter the appellant put forward his side of the case as to the terms of the agreement when he took delivery of the motor in April 1958. The question is whether by writing that letter the appellant could be said to have committed the offence defined in section 405 of the Indian Penal Code and punishable under section 406 thereof. Now section 405 runs as follows : "Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly mis 401 appropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust. " It may be accepted that the appellant was entrusted with the motor by virtue of the agreement between him and the Works, the terms of which are seriously in dispute. The question however is whether the 'appellant dishonestly misappropriated or converted to his own use that motor. On the facts in the present case the motor was handed over to the appellant for his use even according to the case of the Works. Unless therefore it can be shown that the appellant by doing something to the motor which he was not entitled to do dishonestly misappropriated or converted the motor to his own use, he cannot be guilty of breach of trust under this part of section 405. Now the case of the Works is that the appellant must be deemed to have misappropriated or converted to his own use the motor by writing the letter of June 8th. It is clear however that the letter shows no change in the use of the motor, which, according to the Works, the appellant had hired for his own use. Therefore it cannot be said that merely by writing that letter of June 8, the appellant dealt with the motor in such manner as would amount to its misappropriation or conversion to his own use by him. Clearly the appellant was using the motor for his own purpose before that letter and continued to use it in the same way after the letter. That letter therefore cannot in our opinion result in the misappropriation or conversion of the motor to his own use by the appellant within the meaning of these words in section 405 in the circumstances of the present case. It is however urged that even if that be so, the appellant must be held to have dishonestly used or disposed of the motor in violation of the legal contract, express or implied, which he had made touching the discharge of such trust, because of the letter of June 8. Now it is clear from the receipt given by the appellant to the Works when he took the motor in April 1958 that he was taking it for his own use on certain terms. There is however nothing to show that by writing the letter of June 8 the appellant used the motor in violation of any legal contract, express or implied, which he bad made with respect to it for use of the motor was the same before the letter as well as after it. Nor can it be 402 said that the appellant had disposed of the motor in violation of any legal contract which he had made with respect thereto for it is not the case of the Works that the appellant had parted with the possession of the motor to somebody else. If, for example, the appellant had sold that motor, there might have been something to be said for the view that he had disposed of the motor in violation of the contract with respect to it even if it was a hirepurchase contract. But on the facts of this case all that the letter of June 8 does is to put forward the case of the appellant with respect to the transaction of April 4, 1958. So far as the use of the motor is concerned there has not been any change in it to indicate either misappropriation or conversion or disposal of it in any manner against the terms of the contract, express or implied. Clearly section 405 contemplates something being done with respect to the property which would indicate either misappropriation or conversion or its use or disposal in violation of the contract, express or implied. But where, as in the present case, nothing was done with respect to the use of the property which was not in accordance with the hiring agreement between the parties, it cannot be said that there was misappropriation or conversion of the property or its use or disposal in violation of the contract. We are not expressing any opinion as to the correctness of the case either of the appellant or of the Works in this behalf. All that we emphasise is that the letter of June 8 merely raises a ' dispute of civil nature between the parties and there is no question of any criminal breach of trust with respect to the motor on the basis of that letter. In this view of the matter we allow the appeal, set aside the conviction of the appellant and order his acquittal. The fine, if paid. will be refunded to him. Appeal allowed.

The appellant took an electric motor from an electrical Works in which the respondent was employed. Dispute arose about the terms on which the motor had been taken. The appellant wrote a letter to the Works that he had purchased the motor after paying its full price; on behalf of the works it was said that it had only been given on hire. The Works, through the respondent, filed a complaint against the appellant alleging breach of trust. The complaint was dismissed by the trying magistrate but in appeal under section 417(3) Criminal Procedure Code the High Court held that the claim of ownership made by the appellant in his letter was not bona fide and that by writing the said letter he had sought to cause wrongful gain to himself and wrongful loss to the works in violation of the entrustment, which made him guilty under section 406 of the Indian Penal Code. In appeal to the Supreme Court by special leave, HELD:The appeal must succeed. Clearly section 405 contemplates something being done with respect to the property which would indicate either misappropriation or conversion to the offender 's own use, or its use or disposal in violation of the contract express or implied. But when as in the present case nothing was done with respect to the use of the property which was not in accordance with the hiring agreement between the parties it cannot be said there was misappropriation or conversion of the property or its use or disposal in violation of the contract. The appellant did not part with the possession of the motor to any body else; he put it to his own use the purpose for which he had taken it. The use of the motor remained the same after the letter in question as before it. The said letter merely raised a dispute of a civil nature between the parties and there was no question of any criminal breach of trust punishable under section 406 with respect to the matter on the basis of that letter. [401 D F; 402 E]

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Appeal No. 844 of 1963. 169 Appeal by special leave from the judgment and decree date November 1, 1960 of the Madras High Court in Appeal No. 199 of 1957. A. Ranganadham Chetty and A.V. Rangam, for the appellant. A.V. Vishwanatha Sastri and R. Thiagarajan, for respondent Nos. 1 and 2. The Judgment of the Court was delivered by Shah, J. Venkatarama lyengar, Kasthuri Iyengar and Ranga lyengar, residents of the village Kariamanikam in Tiruchirappalli District, with the aid of contributions, subscriptions and donations set up a Samaradhanai Fund for feeding Brahmin pilgrims attending Sri Venkatachalapathiswami shrine at village Gunaseelam on the occasion of Rathotsavam festival. Between the years 1936 and 1940 seven acres of land were purchased for Rs. 10,500 to provide a permanent income for the Fund. It was found that the expenses incurred for the Rathotsavam festival did not exhaust the entire income and the balance was utilised for Vanabhojanam in Kariamanikam village in the month of Kartigai and on the Dwadesi following Vaikunta Egadesi day. The President, Hindu Religious and Charitable Endowments Board, sought to levy for the years 135 1 to 1354 Fasli contributions under section 69 of Madras Act 2 of 1927 in respect of the Fund. But in Suit No. 297 of 1947 of the file of the District Court at Tiruchirappalli that claim was disallowed. The District Court held that the charity was not a "specific endowment" within the meaning of Act 2 of 1927. After the Madras Hindu Religious and Charitable Endowments Act 19 of 1951 was enacted, the Deputy Commissioner of Hindu Religious and Charitable Endowments initiated a fresh proceeding under section 57(d) of that Act and held that the Samardhanai Fund was a "religious charity" within the meaning of section 6(13) of the Act. Against that order an appeal was carried by the trustees of the Fund to the Commissioner of Hindu Religious and Chartiable Endowments. The Commissioner held that feeding Brahmins in connection with the religious festival of Hindus was a public charity and also a religious charity within the meaning of section 6(13) of Madras Act 19 of 1951. The trustees of the Fund then instituted Suit No. 181 of 1954 in the Court of the Subordinate Judge. Tiruchirappalli to set aside the order of the Commissioner on the plea that the Samardhanai Fund was a private charity not associated with any Hindu festival or service in a temple and was not religious charity or a specific endowment or a public charity, and that it could in no manner become subject to control of the Commissioner, Madras Hindu Religious and Charity Endowments. The suit was resisted by the Commissioner contending that the Fund was held and administered for a religious charity viz. feeding Brahmin pilgrims on the occasion of a Hindu festival. The Subordinate Judge held 170 that the Fund was a public charity and that it was also "a religious charity" within the meaning of section 6(13) of the Act,. the charity being associated with the Hindu festival of Rathotsavam at the Gunaseelam temple. In appeal against the order of the Subordinate Judge dismissing the suit filed by the trustee_, the High Court of Madras held that the Samardhanai Fund was a public charity within the meaning of section 6(13) of the Act, but not being associated with any Hindu festival or observance of a religious character it was not a "religious charity" and the Commissioner had no jurisdiction to bring it under his control. The High Court accordingly allowed the appeal and decreed the suit filed by the trustees. With special leave, the Commissioner has appealed to this Court. The only question which falls to be determined in this appeal is whether on the facts found by the Court of First Instance and confirmed by the High Court, the Samardhanai Fund is a "religious charity" within the meaning of section 6(13) of Madras Act 19 of 1951. Clause (13) of section 6 defines "religious charity" as meaning "a public charity associated with a Hindu festival or observance of a religious character, whether it be connected with a math or temple or not". The definition prescribes two conditions which go to constitute a religious charity: there must be a public charity and that charity must be associated with a Hindu festival or observance, co of a religious character. If these be fulfilled, a public charity will be a religious charity, even if it is not connected with a math or temple. The Subordinate Judge held on the evidence that the "charity in question is a feeding charity conducted during the ten days of the Rathotsavam in the Prasanna Venkatachallapathiswami temple in Gunaseelam in the month of Purattasi. Only Brahmins are fed and not other community people. There are similar feeding charities for the different communities conducted by the respective community people. The charity in question has no connection with the Gunaseelam temple in the sense that the food "prepared is not offered to the deity, and feeding is done not in the temple premises but at a separate place originally in a specially erected pandal and now in Seshagiri Iyer 's choultry (Dharamshalla). The other communities are not fed at this charity. The temple authorities have no voice in the conduct of the feeding", and the High Court agreed with that view. The Subordinate Judge held on those findings that the Samardhanai Fund was a public charity within the meaning of section 6(13) and with that view also the High Court agreed. The Subordinate Judge also held that the charity was associated with the Hindu festival of Rathotsavam in Sri Prasanna Venkatachallapathiswami temple in Gunaseelam Rathotsavam being an observance of a religious character when the deity is taken out in procession in a chariot and therefore the charity in question was clearly one associated with a Hindu festival and also with the observance of a religious character. In disagreeing with that view, the High Court observed that the expression "associated with a Hindu festival or observance of a religious character" imported some unity of purpose or 171 common object or common endeavour between the festival and the charity and in the absence of such unity, common object or common endeavour, the charity could not be regarded as a religious charity within the meaning of section 6(13)of the Act. In the view of the High Court that feeding Brahmin pilgrims during the Rathotsavam festival of Sri Venkatachallapathiswami shrine at Gunaseelam did not constitute an association between the Fund and the Rathotsavam festival itself, for the trustees of the shrine conducting the festival "had no manner of check, control or supervision over the feeding charity or Samardhanai Fund", they could not insist upon the feeding being done during the festival, and "cessation or discontinuance of the feeding by the trustees of the feeding charity may constitute a breach of trust on their part but cannot in the least affect the due performance of the Rathotsavam festival itself". They further observed that belief of the founders of the charity that feeding Brahmins on the occasion of an important festival was meritorious. will not establish "any link or connection" between the festival and the charity. We are unable to agree with the view so expressed by the High Court. The expression "associated" in section 6(13) of Act 19 of 1951 is used having regard to the history of the legislation, the scheme and objects of the Act, and the context in which the expression occurs, as meaning "being connected with" or "in relation to". The expression does not import any control by the authorities who manage or administer the festival. A Hindu religious festival or observance may have a local significance, in that it is celebrated or observed in a particular locality in connection with a shrine, temple or math, or it may be a festival or observance celebrated generally without any connection with any temple or math. In the case of such general festivals or observances there is no one who can be so said to control the celebrations, and the definition of "religious charity" includes such general festivals and observances. It cannot be assumed that there must always be a set of persons who control the celebration of a festival or an observance. The test suggested by the High Court that in order that there should be, between the charity and the festival or observance such a relation that the administration of the charity must be controlled by those who celebrate the festival or observance in a temple or math, besides being inapt in the case of general festivals and observances can only be evolved if words which are not found in the definition of "religious charity" are added thereto. Mr. Vishwanatha Sastri appearing on behalf of the respondenttrutees contended that the expression "associated with a Hindu festival or observance of a religious character" in the definition of "religious charity" implies that the public charity must be an integral part of the Hindu religious festival or observance. But there is nothing in the Act which indicates any such intention on the part of the Legislature. Mr. Sastri sought to give diverse illustrations in support. of his contention that mere feeding of Brahmins on the occasion of a Hindu festival or observance will 172 not amount to association within the meaning of section 6(13). It is unnecessary to deal with these illustrations, for the definition contemplates a public charity which alone can be a religious charity if the other conditions are fulfilled. A voluntary celebration of an event of religious significance by feeding Brahmins does not make it a public charity. There must be an institution which may in law be regarded as a public charity, before it may by its association with a religious festival or observance be regarded as a religious charity. The association undoubtedly must be real and not imaginary, but to constitute association it is not predicated that the administration of public charity must be controlled by the persons responsible for celebrating the religious festival in a temple or math or be an integral part of the festival or observance. On the facts found, it is clear that on the occasion of the Rathotsavam festival of Sri Prasanna Venkatachalapathiswami shrine, pilgrims from many places attend the festival and the object of the charity is to feed Brahmins attending the shrine on the occasion of this festival. It is not disputed that setting up a Fund for feeding Brahmins is a public charity. The primary purpose of the charity is to feed Brahmin pilgrims attending the Rathotsavam. This public charity has therefore a real connection with the Rathotsavam which is a Hindu festival of a religious character, and therefore it is a religious charity within the meaning of section 6(13) of Madras Act 19 of 1951. Surplus income of the Fund is used in Vanabhojanam in the month of Kartigai, and on the day following the Vaikunta Ekadeshi. it is not suggested that on that account the Fund is not a "religious charity". We therefore set aside the order passed by the High Court and restore the order passed by the Trial Court. There will be no order as to costs throughout. Appeal allowed.

A Samaradhanai Fund was started for the purpose of feeding Brahmin pilgrims attending Sri Venkatachalapathiswami shrine at village Gunaseelam (in Madras State) on the occasion of Rathotsavam festival. On the enactment of the Madras Hindu Religious and Charitable Endowments Act 19 of 1951 the Deputy Commissioner of Hindu Religious and Charitable Endowments initiated proceedings under section 57(d) of the Act and held that the aforesaid fund was a religious charity ' within the meaning of section 6(13) of the Act. His order was upheld by the Commissioner. The Trustees of the Fund then filed a suit to set aside the order of the Commissioner contending that the Samaradhanai Fund was neither a public charity nor a religious charity '. In section 6(13), 'religious charity ' is defined as a "public charity associated with a Hindu festival or observance a religious character, whether it be connected with a math or temple or not". The trial court decided against the trustees but the High Court held in their favour. According to the High Court feeding the Brahmins was a public charity but it was not a 'religious charity in as much as those who conducted the celebration of the Rathotsavam at the shrine had no control over the feeding of Brahmins out of the Samaradhanai Fund. On appeal to the Supreme Court by the Commissioner, with special leave. HELD: Feeding of Brahmins out of the Samaradhanai fund was associated with the celebration of the Rathotsavam at the Venkatachalapathiswami shrine. The expression "associated" in section 13 of Act 19 of 1951 is used having regard to the history of the legislation the scheme and objects of the Act and the context in which it occurs, as meaning "being connected with" or "in relation to". The expression does not import any control by the authorities who manage or administer the festival. There are many Hindu festivals which are celebrated by the public generally without any connection with any temple or math. The definition of "religious charities" includes such general festivals and observances. It cannot be said that there must always be a set of persons who control the celebration of a festival or an observance. F171 D G] Nor can it be contended that the expression "associated with a Hindu festival or observance of a religious character" in the definition of "religious charity" implies that the public charity must be an integral part of the Hindu religious festival or observance. There is nothing in the Act which indicates any such intention on the part of the legislature. [171 H]

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Appeal No. 79 of 1965. Appeal from the judgment and order dated August 5, 1964. of the Rajasthan High Court, Jodhpur, in D.B. Civil Writ Petition No. 536 of 1964. L,/B(D)SCI 13 174 Sarjoo Prasad, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant. M.M. Tewari, K.K. Jain and R.N. Sachthey, for respondent No. 1. B.B. Tawakley and K.P. Gupta, for respondent No. 2. The Judgment of the Court was delivered by Raghubar Dayal, J. This appeal, on certificate granted by the Rajasthan High Court, is against the dismissal of the appellant 's writ petition under article 226 of the Constitution praying for the issue of a writ of certiorari to the State of Rajasthan, respondent No. 1. for the canceling and setting aside of its order dated April 1, 1964 granting the contract for collecting royalty on building stones excavated from certain area to respondent No. 2, Dharti Dan Shramik Theka Sahkari Samiti Ltd., a cooperative society. The appeal arises in these circumstances. The appellant offered the highest bid at the auction for the grant of royalty collection contract on January 21, 1964. Respondent No. 2 was also one of the bidders, but stopped after offering a bid of Rs. 33,000. The final bid of the appellant was for Rs. 42,200. The State Government made the order in favour of respondent No. 2 on an application made by it on March 5. stating therein that the appellant had not deposited 25 per cent of the bid amount as security immediately after the completion of the auction in accordance with r. 36(7) of the Rajasthan Minor Mineral Concession Rules, 1959, hereinafter called the rules, and as per the terms and conditions of the Auction Notification and that it was prepared to take the royalty collection contract on the highest bid of Rs. 42,200. It was further stated in the application that respondent No. 2 was a cooperative society of the laborers who themselves worked on the mines of the area and therefore in view of Government 's policy it should receive preference to an individual bidder. It was further stated that the benefit accruing out of the contract of royalty collection would be shared by the labourers and workers themselves which would go a long way to improve their socioeconomic conditions and thus ultimately would ameliorate the conditions of the workers who were working hard in quarries since long. The contention for the appellant is that the Government had merely to confirm the highest bid at the auction by way of formality and was not competent to sanction the contract in favour of someone who had not offered the highest bid at the auction. Rule 34 of the rules provides that royalty collection contracts may be granted by the Government by auction or tender for a maximum period of two years after which no extension was to be granted. The procedure for auction is provided by r. 36. Sub rule 175 (5) thereof provides that no bids shall be regarded as accepted unless confirmed by Government or the competent authority and sub rule (7) provides that on completion of the auction the result will be announced and the provisionally selected bidder shall immediately deposit 25 per cent of the amount of bid for one year and another 25 per cent as security for due observance of the terms and conditions of the lease or contract. It is admitted for the appellant that on completion of the auction he did not deposit 25 per cent of the bid as security in compliance with the provisions of sub r. He therefore lost whatever claim he could have had for the final acceptance of his bid by Government and therefore cannot question the grant of the contract to any other person by the Government. The appellant urges that he held such royalty collection contract for the year 1963 64 and had deposited Rs. 9,250 as security for the due performance of that contract. On February 12, 1964, over three weeks after the auction, he submitted an application to the Mining Engineer, Jaipur, stating that he had been continuously taking contract for the last three years and that he was depositing Rs. 1,300 and that the balance of the security amount required, i.e. Rs. 9,250 be adjusted against Rs. 9,250 with the Government in connection with the earlier contract. This letter was not replied to. The request made in this letter could not possibly be accepted. The earlier contract was to continue up to March 31, and the security money had to remain with the Government upto that date. It is only after March 31, that anything could be said with some definiteness as to how much of the security money in deposit would be available to the contractor. Paragraph 2 of the Form of Agreement of Collection of Royalty on Minor Minerals, prescribed under the rules, and set out in the Schedule to the rules, states that the agreement shall remain in force for a period commencing from first April of a year and ending on March 31 of the next year on which the period of the contract would expire and that the security would be refunded on the termination of the contract. Para 6 of the Form provides that for the due fulfillment of the terms and conditions of the contract the Contractor shall deposit 25 per cent of the contract money in advance as security which will be refunded on the termination of the contract. The appellant alleged that there was a practice of adjusting previous security amounts towards the security for the next contract. The practice is denied on behalf of respondent No. 1 and the practice against the provisions of the rules cannot be recognized as of any binding effect. It may be mentioned here that the representation which the appellant made to the State Government on April 6, 1964, made no reference to his depositing the security by depositing Rs. 1,300 and by making a request for the adjustment of the balance from the security amount already in deposit and indicates that he too did not consider the request for adjustment of the amount acceptable. 176 There is nothing in r. 36 of the rules which may lead to the conclusion that the Government has to accept the highest bid by formally confirming it or that it cannot grant the contract to any person other than one who had bid the highest. A bid is not regarded as accepted unless it is confirmed by Government. The Government has therefore discretion to confirm the bid or not to confirm it. Further, r. 59 provides for the relaxation of any provision of the rules in the interest of mineral development or better working of mines. There is the letter dated February 14, 1962 from the Director of Mines and Geology, to All Mining Engineers on the subject of encouragement of cooperative mines and states that cooperative societies ought to be encouraged for mining work also as per directive of the Government of India. Respondent No. 2 addressed a letter to the Director of Mines and Geology and referred to Government policy for the encouragement of cooperative societies in connection with royalty collection contracts. The order of Government dated April 1, 1964, after referring to the appellant 's offering the highest bid, stated that the Government was satisfied that the Society, respondent No. 2, was a suitable party for the grant of the said contract. The view taken by the Government in preferring respondent No. 2 to the appellant for the grant of the contract cannot be said to be arbitrary or without any justification. The cooperative society is of the labourers who work in the mines and it is obvious that any benefit arising out of the contract would go to the labourers and thus improve their economic position. In view of the spirit underlying r. 59, Government could therefore relax any such rule which could in any way come in the way of its granting the contract to respondent No. 2. We therefore hold that the Government was competent to give the contract to respondent No. 2 it being not bound to accept the highest bid at the auction, though usually it accepts such bids. Another consideration which is decisively against the appellant is that the contract for the collection of royalty for the year 1964 65 is shortly to come to an end and it would not be desirable, even if the appellant 's contentions were acceptable, to interfere with that contract. Reference, in this connection. may be made to the decision of this Court in K.N. Guruswamy vs State of Mysore(1) where the appellant was refused a writ solely on the ground that it would have been ineffective, the period of the impugned contract coming to an end after about a fortnight of the order of this Court. That was a case where on merits the Court was of opinion that the writ should have been issued. We therefore dismiss the appeal and order the parties to bear their own costs. Appeal dismissed.

The appellant offered the highest bid at the auction for the grant of royalty collection contract on January 21, 1964. Respondent No.2 a cooperative society of workers was also one of the bidders. Resportdent No. 2 made an application on March 5, 1964 to the Government stating therein that the appellant had not deposited 25 Dee cent of the bid amount as security within the time prescribed by Rule 36(7) of the Rajasthan Minor Mineral Concession Rules, 1959, and that it was prepared to take the royalty collection contract on the highest bid as made by appellant. On the above application the State Government made an order in favour of Respondent No. 2. The appellant thereupon filed a writ petition in the High Court which was dismissed. He was however granted a certificate of fitness. In appeal it was contended that the Government had merely to confirm the highest bid at the auction by way of formality and was not competent to sanction the contract in favour of someone who had not offered the highest bid at the auction. HELD: (i) The appellant had admittedly failed to deposit 25 per cent of the bid as security in compliance with the provisions of Rule 36(7). The rules did not contemplate adjustment of security deposited for an earlier period as the appellant claimed. He therefore lost whatever claim he could have had for the final acceptance of his bid by Government and therefore could not question the grant of the contract to any other person by the. Government. [175 B C] (ii) Nothing in Rule 36 requires the Government to accept the highest bid by formally confirming it. The Government has discretion to confirm the bid or not to confirm it. Further Rule 59 provides for the relaxation of any provision of the rules in the interest of mineral development or better working of the mines. [176 A B] (iii) The view taken by the Government in preferring Respondent No. 2 to the appellant cannot be said to be arbitrary or without any justification. The cooperative society is of the laborers who work in the mines and the benefit of the contract would go to the labourers. In view of the spirit underlying Rule 59, Government could therefore relax any such rule which could in any way come in the way of" its granting the contract to Respondent No. 2. [176 D F] (iv) The time for which the contract was granted was shortly to come to an end, and it would not be desirable even if the appellant was right to interfere with the contract. [176 G] K.N. Guruswamy vs State of Mysore, ; , relied on.

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Appeal No. 481 of 1965. Appeal from the judgment and order, dated April 30, 1965, of the Bombay High Court in Special Civil Application No. 447 of 1965. C. B. Agarwala, section N. Prasad, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. section V. Gupte, Solicitor General, and B. R. G. K. Achar, for respondent Nos. 2 to 4. The Judgment of the Court was delivered by Subba Rao J. This appeal by certificate raises the question of the true construction of the provisions of sections 19 and 25 of the Bombay Municipal Borough Act, 1925 (Bom. Act 18 of 1925), hereinafter called the Act, read with section 3 of the Maharashtra Municipalities (Postponement of General Elections Pending Unification of Municipal Laws) Act, 1964, hereinafter called the Maharashtra Act. The facts lie in a small compass. The last general election of the, members of the Bhusaval Borough Municipality was held 697 under the provisions of the Act in the year 1960. The first general meeting thereafter was held on February 18, 1961. Under the provisions of section 25 of the Act. in the normal course the life of the Municipality would have expired on February 17, 1965; but, under section 3 of the Maharashtra Act the term of the Councillors of the Municipality was, by fiction, extended to and inclusive of December 31, 1965. On July 18, 1964, the appellant was elected the President of the Municipality; and on the same day the Municipality passed a resolution to the effect that the term of the office of the President shall be "the residue of the term of office of the Municipality". On the assumption that the term of the President expired on February 17, 1965, the Collector of Jalgaon issued a notice on March 2, 1965, calling for a meeting of the Municipality on March 15, 1965, for electing a new President. Thereafter, the appellant filed an application under articles 226 and 227 of the Constitution in the High Court of Maharashtra for the issue of an appropriate order setting aside the notice issued by the Collector. There the appellant contended that, as the term of office of the Municipality had been extended by the Maharashtra Act up to December 31, 1965, he was entitled to continue in office as President till that date. A Division Bench of the said High Court rejected that contention and dismissed the petition. Hence the appeal. The short question in the appeal is whether the expression "the residue of the Municipality" in the resolution of the Municipality, dated July 18, 1964, means the residue of the Municipality that would have been if the Maharashtra Act had not been passed or whether it should be interpreted in the context of the extended term provided by the Maharashtra Act. Mr. Agarwala, learned counsel for the appellant, contended that the appellant would get the extended term provided in the Maharashtra Act, because in effect it was an "extension" under the Act within the meaning of the second proviso to section 19 of the Act or in any event he got the benefit because the Maharashtra Act in effect amended section 25 of the Act, with the result the "residue" of the "term" was extended to December 31, 1965. The learned Solicitor General, on the other hand, argued that the second proviso to section 19 of the Act had no application, for it dealt only with an extension by notification or otherwise under the provisions of the Act and the statutory extension given by the Maharashtra Act could not possibly be an extension under the Act; that even if the Maharashtra Act had the effect of amending section 25 of the Act with the result that the life of the 698 members of the Municipality was extended by the amendment of the Act itself, it would not help the appellant as the scope of the resolution passed by the Municipality should be construed on the basis of the circumstances existing at the time the resolution was passed, i.e., previous to the election of the President, and at that time the councillors of the Municipality could have only passed the resolution fixing the term of the President during the residue of the life the Municipality had at that time : to put it in other words, the intention of the Councillors, who passed the resolution, could be gathered only from the circumstances, statutory or otherwise, existing at the time the resolution was passed. The problem presented from different angles by the learned counsel can only be solved on a true interpretation of the said provisions. It will, therefore, be convenient at this stage to read the relevant provisions. Section 19 of the Act : (1) Save as otherwise provided in this Act a president or vice president, shall hold his office for such term, not less than one year or not less than the residue of the term of office of the municipality, whichever is less and not exceeding four years, as the municipality shall, previous to the election of the president or vicepresident determine, or until the expiry within the said term of his term of office, as councillor, but shall be eligible for reelection : Provided that. . . Provided further that where the term of office of a municipality :Is extended under this Act to a term not exceeding in the aggregate five years the president and vice president holding offices immediately before the date with effect from which such term is extended shall continue to hold their respective offices until the date on which the term so extended expires. Section 25 of the Act : (1) Councillors nominated or elected at a general election under this Act, shall, save as otherwise provided in this Act, hold office for a term of four years, extensible by order of the State Government to a term not exceeding in the aggregate five years, if on any occasion the State Government shall think fit, for 699 reasons which shall be notified together with the order in the Official Gazette so to extend the same Section 3 of the Maharashtra Act Postponement of municipal elections. Notwith standing anything in any Act by or under which any municipality is constituted or established, (a) (b) the term or extended term of office, of the Councillors or members of a municipality, who were in office on the date of the commencement of the Ordinance (and whose term or extended term will expire before the 31st day of December 1965), shall be deemed to be extended to and inclusive of the 31st day of December 1965. SCHEDULE (See section 2) 2. The Bombay Municipal Boroughs Act, 1925 (Bom. XVIII of 1925). The combined effect of these two Acts may be stated thus Under section 25 of the Act the term of the Councillors of the Municipality is 4 years. It may be extended by the State Government to a term not exceeding in the aggregate five years. If the term is so extended by the Government in the manner prescribed by section 25 of the Act, under the second proviso to section 19 of the Act the term of the President also is automatically extended to the date on which the term so extended expires. The expression " under this Act" in the second proviso to section 19 of the Act certainly attracts the extension of the term of the councillors under section 25, as it is an extension under the Act. The impact of section 3 of the Maharashtra Act on the provisions of the Act is that it not only extends the term prescribed under section 25 of the Act but also the term extended under section 25 or under any other section of the Act. If that be the legal effect of section 3 of the Maharashtra Act, the second proviso is not attracted to the instant case, as there was no order or notification issued under section 25 or any other relevant section of the Act extending the term of the councillors fixed under section 25 of the Act. Therefore for the present purpose we leave out of consideration the second proviso to section 19 and approach the problem on the basis of the fiction that the term of the 700 councillors prescribed under section 25 of the Act was extended up to December 31, 1965. If that be so, the next question is whether on July 18, 1964, when the Municipal councillors passed a resolution to the effect that the term of office of the appellant shall be the residue of the Municipality, their intention was that his term should extend only up to February 17, 1965, i.e., the date when the term of the Municipal councillors would have expired but for the statutory extension given by the Maharashtra Act. The intention of the Municipality can be gathered only from the circumstances, statutory or otherwise existing at the time when the resolution was passed and on the express terms of the said resolution. Under section 19 of the Act, the Municipality can fix the term of office of the President between one and four years, except when the residue of the term of the Municipality is less than one year. But the second proviso to section 19 also contemplates the extension of the term of office of the Municipality under the provisions of the Act. It is, therefore, not possible to predicate that at the time the resolution was passed the Municipality could not have contemplated a situation when the term of the Municipality would be extended under the provisions of the Act. With the knowledge of such a possible extension, when the members used the elastic expression "residue", it is not reasonable to attribute to them the intention that they meant only the residue of the term available to them at that time. If that was their intention they would have prescribed a definite date on which the term of the President would expire. That apart, there is sufficient material on the record which indicates that the councillors designedly used the word "residue" instead of fixing a precise date. It appears that it was in the contemplation of the councillors at the time of the election of the President that there was a possibility of the term of the Municipality being extended. In the Statement of Objects underlying the issuance of the Ordinance which culminated in the Maharashtra Act, it was observed as follows "In July, 1963, Government appointed a Committee for the purpose of considering the question of unification of the four Municipal Acts which are at present in force in the State. As substantial changes are envisaged in the unified municipal law, it is considered expedient that the advantages of the new and uniform pattern of administration should be available to all those municipalities concerned simultaneously with the holding of general election in accordance with the pro visions of the unified law. Consequently, the Munici 701 parties that are elected or may be elected under the existing Acts may be short lived, and the time, energy and expenditure incurred on holding any more general elections would be wasteful. It has, therefore, be on decided to postpone the general elections to such muni cipalities from the promulgation of the Ordinance until the 31st of December, 1965, by which time the new unified municipal law is expected to be enacted. " This indicates that the question of extension of the term of the municipalities was under serious consideration even in July 1963. Indeed, on or about July 18, 1964, when the term of the Presitent of the Municipality was extended, the Municipality passed a resolution recommending that the term of the Municipality be extended beyond 4 years. It is, therefore, clear that on the basis of statutory and other circumstances obtaining at the time the extension was made, the councillors clearly expected that the term of the Municipality would be or could be extended and with that knowledge they passed the resolution fixing the term of the President for the residue of the term of the Municipality; the intention appears to be that the term of the President should synchronize with the life of the Municipality existing or extended, as the case may be. In our view, therefore, the order of the High Court is not Correct and the same is set aside. A writ will issue prohibiting the Collector from holding the election of the President of the Municipality of the Bhusaval Borough till December 31, 1965. The controversy arose because the relevant provisions are not free from ambiguity. We, therefore, think that this is a fit case where the parties may be directed to bear their own costs; throughout. Appeal allowed.

The appellant was elected President of the Bhusaval Borough Municipality in Bombay State in July 1964. On the same day the Municipality passed a resolution to the effect that the term of office of the President would be "the residue of the term of office of the municipality". The four years ' term of the municipality as provided in section 25 of the Bombay Municipal Boroughs Act 1925 (Bombay Act 18 of 1925) was due to expire on February 17, 1965. However in the meanwhile the Maharashtra Municipalities (Postponement of General Elections Pending Unification of Municipal Laws Act, 1964 was passed, and under section 3 thereof the term of the councillors of the municipality was by fiction extended to December 31, 1965. The Collector of the area on the assumption that the term of the President ending on February 17, 1965, issued notice for a fresh election in March 1965. The appellant filed an application under articles 226 and 227 of the Constitution and contended that as the term of office of the municipality had been extended up to December 31, 1965 he was entitled to be President till that date under the resolution passed by the Municipality. The High Court ,. jetted the contention. The appellant, with a certificate of fitness granted by the High Court, came to this Court. The short question in the appeal was whether the expression "the residue of the municipality" in the resolution of the municipality meant the residue of the municipality that would have been if the Maharashtra Act had not been passed or whether it should be interpreted in the context of the extended term provided by the Maharashtra Act. On behalf of the appellant it was argued that the appellant would get the extended term provided by the Maharashtra Act, because in effect it was an extension under the Act within the meaning of the second proviso to section 19 of the Act or in any event he got the benefit because the Maharashtra Act in effect amended section 25 of the Act with the result that 'residue ' of the 'term ' was extended to December 31, 1965. HELD : (i) The impact of section 3 of the Maharashtra Act on the provisions of the Municipal Boroughs Act is that it not only extends the term prescribed under section 25 of the Act but also the term extended under section 25 or under any other section of the Act. If that was the legal effect of the Maharahtra Act, the second proviso to section 19 was not attracted to the instant case as there was no order or notification issued under section 25 or any other relevant section of the Act extending the term of the Councillors fixed under section 25 of the Act. Therefore for the present purpose the second proviso to section 19 had to be left out of consideration and the problem had 696 to be approached on the basis of the fiction that the term of the Councillors prescribed under section 25 of the Act was extended up to December 31, 1965. [699 G 700 A] (ii) The intention of the municipality could be gathered only from the tances statutory or otherwise existing at the time when the resolution was passed and on the express terms of the said resolution. The second proviso to section 19 contemplates the extension of the term of office of the Municipality under the Act. It was therefore not possible to predicate that at the time the resolution was passed the municipality could not have contemplated a situation when the term of the Municipality would be extended under the provisions of the Act. Moreover from the Statement of objects underlying the issuance of the Ordinance which culminated in the Maharashtra Act it appeared that the question of extension of the term of the municipalities in the State was under serious consideration even in July 1963. Indeed on or about July 18, 1964 when the term of the President was extended, the municipality passed a resolution recommending that the term of the Municipality be extended beyond 4 years. It was therefore clear that on the basis of the statutory and other circumstances obtaining at the time the extension was made, the councillors clearly expected that the term of the municipality would be or could be extended and with that knowledge they passed the resolution fixing the term of the President for the residue of the term of the Municipality; the intention appeared to be that the term of the President should syncbronise with the life of the municipality existing or extended as the case may be. [700 B 701 D] The order of the High Court was therefore not correct and had to be set aside.

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minal Appeal No. 107 of 1965. Appeal by special leave from the judgment and order, dated June 22, 1965 of the Bombay High Court in Criminal Applica tion No. 613 of 1965. Niren De, Additional Solicitor General and B. R. G. K. Achar, for the appellant. R. K. Garg, D. P. Singh, M. K. Ramamurthi and section C. Agar wala for respondent No. 1. The Judgment of the Court was delivered by Subba Rao J. Prabbakar Pandurang Sanzgiri, who has been detained by the Government of Maharashtra under section 30(1)(b) of the Defence of India Rules, 1962, in the Bombay District Prison in order to prevent him from acting in a manner pre judicial to the defence of India, public safety and maintenance$ of public order, has written, with the permission of the said Government, a book in Marathi under the title "Anucha Antarangaat" (Inside the Atom). The learned Judges of the High Court, who had gone through the table of contents of the book. expressed their opinion on the book thus : ". . we are satisfied that the manuscript book deals with the theory of elementary particles in in objective way. The manuscript does not purport to be a research work but it purports to be a book written with a view to educate the people and disseminate knowledge regarding quantum theory. " The book is, therefore, purely of scientific interest and it cannot possibly cause any prejudice to the defence of India, public safety or maintenance of public order. In September, 1964, the detenu applied to the Government of Maharashtra seeking permission to send the manuscript out of the jail for publication; but the Government by its letter, dated March 27, 1965, rejected the request. He again applied to the Superintendent, Arthur Road Prison, for permission to send the manuscript out and that too was rejected. Thereafter, he filed a petition under article 226 of the Constitution in the High Court of Maharashtra at Bombay 704 for directing the State of Maharashtra to permit him to send out the manuscript of the book written by him for its eventual publication. The Government of Maharashtra in the counter affidavit did not allege that the publication of the said book would be prejudicial to the objects of the Defence of India Act, but averred that the Government was not required by law to permit the detenu to publish books while in detention. The High Court of Bombay held that the civil rights and liberties of a citizen were in no way curbed by the order of detention and that it was always open to the detenu to carry on his activities within the conditions governing his detention. It further held that there were no rules prohibiting a detenu from sending a book outside the jail with a view to get it published. In that view the High Court directed the Government to allow the manuscript book to be sent by the detenu to his wife for its eventual publication. The State of Maharashtra has preferred the present appeal against the said order of the High Court. The contentions of the learned Additional Solicitor General may be briefly stated thus : When a person is detained he loses his freedom; he is no longer a free man and, therefore, he can exercise only such privileges as are conferred on him by the order of detention. The Bombay Conditions of Detention Order, 1951. which regulates the terms of the first respondent 's detention, does not confer on him any privilege or right to write a book and send it out of the prison for publication. In support of his contention he relies upon the observations of Das, J., as he then was, in A. K. Gopalan vs State of Madras(1) wherein the learned Judge has expressed the view, in the context of fundamental rights, that if a citizen loses the freedom of his person by reason of a lawful detention, he cannot claim the rights under article 19 of the Constitution as the rights enshrined in the said article are only the attributes of a free man. Mr. Garg, learned counsel for the detenu, raised before us the following two points : (1) a restriction of the nature imposed by the Government on the detenu can only be made by an order issued by the appropriate Government under cls. (f) and (h) of sub r. (1) of r. 30 of the Defence of India Rules, 1962, hereinafter called the Rules, and that too in strict compliance with section 44 of the Defence of India Act, 1962, hereinafter called the Act, and that as the impugned restriction was neither made by such an order nor did it comply with section 44 of the Act, it was an illegal restriction on his personal liberty; and (2) neither the detention order nor the (1) ; , 291. 705 conditions of detention which governed the first respondent 's detention enabled the Government to prevent the said respondent from sending his manuscript book out of the prison for publication and, therefore, the order of the Government rejecting the said respondent 's request in that regard was illegal. Article 358 of the Constitution suspends the provisions of article 19 of Part III of the Constitution during the period the proclamation of emergency is in operation; and the order passed by the President under article 3 5 9 suspended the enforcement, inter alia, of article 21 during the period of the said emergency. But the President 's order was a conditional one. In effect it said that the right to move the High Court or the Supreme Court remained suspended if such a person had been deprived of his personal liberty under the Defence of India Act, 1962, or any rule or order made thereunder. If a person was de lived of his personal liberty not under the Act or a rule or order made thereunder but in contravention thereof, his right to move the said Courts in that regard would not be suspended. The question, therefore. in this case is whether the first respondent 's liberty has been restricted in terms of the Defence of India Rules whereunder he was detained. If it was in contravention of the said Rules, he would have the right to approach the High Court under article 226 of the Constitution. In exercise of the Dower conferred on the Central Government by section 3 of the Act, the Central Government made the Defence of India Rules. Under section 30 of the Rules the Central Government or the State Government, if it is satisfied with respect to any person that in order to prevent him from acting in any manner prejudicial to the matters mentioned therein, it is necessary so to do, may make an order directing that he be detained. Under subr. 4 thereof he shall be liable to be detained in such place and under such conditions as to maintenance, discipline and the punishment of the offence and the breaches of discipline as the Central Government or the State Government, as the case may be, may from time to time determine. In exercise of the power con ferred under sub r. (4) of r. 30 of the Rules, the Government of. Maharashtra determined that the conditions as to maintenance, discipline and the punishment of offenses and breaches of discipline governing persons ordered to be detained in any place in the State of Maharashtra, shall be the same as those contained in the Bombay Conditions of Detention Order, 1951. The Bombay Conditions of Detention Order, 1951, does not contain any condition as regards the writing of books by a detenu or sending them out of jail for publication. Briefly stated, the scheme of the said p. C. and I./65 2 706 provisions is that a person can be detained if the appropriate Government is satisfied that in order to prevent him from doing the prejudicial acts mentioned in r. 30 of the Rules it is necessary to detain him in prison subject to the conditions imposed in the manner prescribed in sub r. (4) of r. 30 of the Rules. To put it in a negative form, no restrictions other than those prescribed under sub r. (4) of r. 30 can be imposed on a detenu. If the appropriate authority seeks to impose on a detenu a restriction not so prescribed, the said authority will be interfering with the personal liberty of the detenu in derogation of the law whereunder he is detained. If that happens, the High Court, in terms of Art 226 of the Constitution, can issue an appropriate writ or direction to the authority concerned to act in accordance with law. We have gone through the provisions of the Bombay Conditions of Detention Order, 195 1. There is no provision in that Order dealing with the writing or publication of books by a detenu. There is, therefore, no restriction on the detenu in respect of that activity. Sub rule (iii) of r. 17 of the said Order reads "All letters to and from security prisoners shall be censored by the Commissioner or the Superintendent, a% the case may be. If in the opinion of the Commissioner or the Superintendent, the dispatch or delivery of any letter is likely to be detrimental to the public interest or safety or the discipline of the place of detention, he shall either withhold such letter, or despatch or deliver it after deleting any objectionable portion therefrom. In respect of the censoring of letters of security prisoners, the Commissioner or the Superintendent shall comply with any general or special instructions issued by Government. " The Maharashtra Government has not relied upon this rule. In deed, in the counter affidavit its case was not that it prohibited the sending of the book for publication under the said sub rule, but that it was not required by law to permit the detenu to publish books while in detention; nor was it its case before the High Court that the publication of this book was detrimental to public interest or safety or the discipline of the place of detention. Prima facie the said sub rule applies only to letters to and from security priso ners and does not regulate the sending out of prison books for publication. Indeed, the learned Additional Solicitor General does not rely upon this provision. 707 Let us now consider the validity of the argument of the learned Additional Solicitor General. He relies upon the following observations of Das, J., as he then was, in A. K. Gopalan 's case(1), at p. 29 1. "If a man 's person is free, it is then and then only that he can exercise a variety of other auxiliary rights, that is to say, he can, within certain limits, speak what he likes, assemble where he likes, form any associations or unions, move about freely as his 'own inclination may direct, ' reside and settle anywhere he likes and practise any profession or carry on any occupation, trade or business. These are attributes of the freedom of the per son and are consequently attached to the person." ' Relying upon these observations it is argued that freedom to publish is only a component part of that of speech and expression and that in the light of the said observations, as the detenu ceased ' to be free in view of his detention, he cannot exercise his freedom to publish his book. In other words, as he is no longer a free man, his right to publish his book, which is only an attribute of personal liberty, is lost. The principle accepted by Das, J., as he then was, does not appear to be the basis of the conclusion arrived at by the other learned Judges who agreed with his conclusion. Different reasons are given by the learned Judges fro arriving at the same conclusion. As has been pointed out by this Court in the second Kochunni 's case(2) the views of the learned Judges may be broadly summarized under the following heads : (1) to invoke article 19(1) of the Constitution, a law shall be made directly infringing that right; (2) articles 21 and 22 constitute a self contained code; and (3) the freedoms in article 19 postulate a free man. Therefore, it cannot be said that the said principle was accepted by all the learned Judges who took part in A. K. Gopalan 's case("). The apart, there are five distinct lines of thought in the matter of reconciling article 21 with article 19, namely, (1) if one loses his freedom by detention, he loses all the other attributes of freedom enshrined in article 19; (2) personal liberty in article 21 is the residue of personal liberty after excluding the attributes of that liberty embodied in article 19; (3) the personal liberty included in article 21 is wide enough to include some or all of the freedoms mentioned in article 19, but they are two distinct fundamental rights a law to be valid shall not infringe both the rights; (4) the expression "law" in article 21 means a valid law and, therefore, even if a person 's liberty is deprived by law of detention, the said law (1) ; (2) 708 shall not infringe article 19; and (5) article 21 applies to procedural law, whereas article 19 to substantive law relating to personal liberty. We do not propose to pursue the matter further or to express our opinion one way or other. We have only mentioned the said views to show that the view expressed by Das, J., as he then was, in A. K. Gopalan 's case(1) is not the last word on the subject. In this case, as we have said earlier, we are only concerned with the question whether the restriction imposed on the personal liberty of the first respondent is in terms of the relevant provisions of the Defence of India Rules. Here, the first respondent 's liberty is restricted under the Defence of India Rule 's subject to conditions determined in the manner prescribed in Sub r. (4) of r. 30 thereof. We find it difficult to accept the argument that the Bombay Conditions of Detention Order, 1951, which lays down the conditions regulating the restrictions on the liberty of a detenu, conferred only certain privileges on the detenu. If this argument were to be accepted, it would mean that the detenu could be starved to death, if there was no condition providing for giving food to the detenu. In the matter of liberty of a subject such a construction shall not be given to the said rules and regulations, unless for compelling reasons. We, therefore, hold that the said conditions regulating the restrictions on the personal liberty of a detenu arc not privileges conferred on him, but are the conditions subject to which his liberty can be restricted. As there is no condition in the Bombay Conditions of Detention Order, 1951, prohibiting a detenu from writing a book or sending it for publication, the State of Maharashtra infringed the personal liberty of the first respondent in derogation of the law whereunder he is detained. The appellant, therefore, acted contrary to law in refusing to send the manuscript book of the detenu out of the jail to his wife for eventual publication. In the view we have taken, another argument advanced by Mr. Garg, namely, that the restriction can only be imposed by an order made under section 30 (f) or (h) of the Rules and that too in strict compliance with section 44 of the Act need not be considered. That question may arise if and when an appropriate condition is imposed restricting the liberty of a detenu in the matter of sending his books for publication. We do not express our view on this question one way or other. In the result, the order passed by the High Court is correct. The appeal fails and is dismissed. Appeal dismissed.

The first respondent was detained by the Government of Maharashtra under r. 30(1) (b) of the Defence of India Rules, 1962. The conditions of detention under sub rule 4 of r. 30 of the said rules were prescribed to be the same as those under the Bombay Conditions of Detention Order, 1951. While so detained the first respondent wrote a book of scientific interest and sought permission from The State Government to send it out of jail for publication. The request having been rejected he filed a writ petition under article 226 of the Constitution praying for a direction to the State Government to permit him to send out the manuscript for Publication. The High Court held that The book was in no way prejudicial to the defence of India etc., and allowed the petition. The State Government by special leave appealed to this Court. It was contended on behalf of the, appellant that the first respondent not being a free person could exercise only such privileges a, , were conferred on him by the order of detention, and the Bombay Conditions of Detention Order, 1951 which regulated the terms of the respondent 's detention did not confer on him any privilege or right to write a book and send it out of the prison for publication. HELD : (i) It cannot be said that the Bombay Conditions of Detention Order, 1951 which lays down the conditions regulating the restrictions on the liberty of a detenu, conferred only certain privileges on the detenu. If this argument were to be accepted it would mean that the detenu could be starved to death, if there was no condition providing for giving food to the detenu. In the matter of liberty of a subject such a construction shall not be given to the said rules and regulations unless for compelling reasons. [7O8 C D] (ii) The said conditions regulating the restriction on the personal liberty of a detenu are not privileges conferred on him, but are the conditions subject to which his liberty can be restricted. As there is no condition in the Bombay Conditions of Detention Order, 1951, prohibiting a detenu from writing a book or sending it for publication, the State of Maharashtra in refusing to allow the same infringed the personal liberty of the first Respondent in derogation of the law whereunder he was detained. [708 E] (iii) The effect of the President 's order under article 359 of the Constitution was that the right to move the High Court or the Supreme Court remained suspended during the period of emergency if a person was deprived of his personal liberty under the Defence of India Act, 1962, or any rule or order made thereunder. If a person was deprived of his personal liberty not under the Act or rule or order made thereunder but in contravention thereof his right to move the said courts in that regard would not be suspended. [705 C D] 703 Since the State Government 's refusal to allow publication of the first respondent 's book was in contravention and derogation of the 'law under which he was detained he had the right to move the High Court under article 226 and the said High Court was empowered to issue an appropriate writ or direction to the said Government to act in accordance with law.

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vil Appeals Nos. 568 and 757 of 1953. Appeals from the judgment and order dated October 10, 1960. of the Madhya Pradesh High Court, Indore Bench, Indore, in Civil Miscellaneous Appeals Nos. 33 of 1958 and 81 and 82 of 1957. G.S. Pathak, B. Dutta, 1. B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant. B.R.L. lyengar, S.K. Mehta and K.L. Mehta, for the respondent. The Judgment of the Court was delivered by Bachawat, J. The appellant is the Ruler of the former Indian State of Jaora. He had money dealings with the respondent. By an agreement dated February 23, 1957. the appellant and the respondent agreed to refer their disputes regarding those dealings to the arbitration of Lala Durgashankar. On the same date, the arbitrator made an award. By this award, the arbitrator found that a sum of Rs. 1,60,000 was due to the respondent from the appellant, and .directed that this sum would be payable in eight quarterly installments, the first four installments to be of Rs. 21,000 each and the next four instalments to be of Rs. 19,000 each, the amount of interest would be payable in another quarterly instalment, the respondent would have a first charge on the sums receivable by the appellant from the Government of India as privy purse, and would be entitled to realise those sums under a letter of authority issued by the appellant, and if the Government would raise any objection to the payment, the respondent would have the right to realise the dues from the personal property of the appellant. Some the items of the loans in respect of which the award was made were secured on lands and ornaments. The award therefore provided: "The documents relating to debts obtained on lands and ornaments shall remain as before till the payment of the debts and they shall also remain as securities till then, and the Nawab Sahab shall have no right to transfer the land. " The award was signed by the arbitrator and also by the appellant and the respondent. 203 On the same day, the arbitrator filed the award in the Court of the District Judge, Ratlam. Notice of filing of the award under section 14 of the Indian was duly served on the parties. On March 9, 1957, an agent of the appellant filed a written submission accepting the award and requesting the Court to pass a decree in terms of the award. But on the same day, an application was made by another agent of the appellant intimating that steps would be taken for setting aside the award. The Court fixed March 23, 1957 for firing the objection. The time was subsequently extended up to April 2, 1957. On that day, an application was filed on behalf of the appellant praying for setting aside the award. But on April 5, 1957, an application was filed on behalf of the appellant withdrawing the objections and asking the Court to pass a decree in terms of the award, subject to the modification that the amount of the award would be payable in quarterly instalments of Rs. 13,000 each. This application was signed by the respondent in token of his consent to the modification of the amount of the instalments. On April 30, 1957. the arbitrator filed the relevant papers. On the same day, an agent of the appellant filed an application praying for setting aside the compromise and the award. The case was fixed for hearing on June 19. 1957. On that date. the Court received by registered post an application from the appellant withdrawing the objections and praying for an order in accordance with the compromise application filed on April 5. 1957. In the circumstances, on June 19. 1957, the Court recorded the compromise and passed a decree in terms of the award as modified by the compromise. The appellant filed in the Madhya Pradesh High Court Appeal No. 81 of 1957 under section 39 of the Indian against the order dated June 19. 1957 treating it as an order refusing to set aside the award. The appellant also filed Appeal No. 82 of 1957 under 0.43(1)(m) of the Code of Civil Procedure against the order dated June 19, 1957 recording the compromise. In the meantime. the respondent started Execution Case No. 5 of 1957. and on September 9. 1957 obtained an ex parte order for transfer of the decree to the Court of the District Judge. Delhi. On November 1.1957. the Central Government gave a certificate under s 86(3) read with section 8713 of the Code of Civil Procedure. 1908 cpnsenting to the execution of the decree against the properties of the appellant. On November 8, 1957. the District Judge. Delhi passed a prohibitory order under O. 21. r. 46 of the Code of Civil Procedure in respect of sums payable to the appellant on account of the privy purse. By letter dated December 26. 1957, the Central Government informed the appellant of the prohibitory order. On January 8, 1958, the appellant applied to the Court of the District Judge. Ratlam praying for vacating the order of transfer of the decree and for cancellation of the certificate issued under O. 21. r. 6(b) of the Code of Civil Procedure. By order dated March 15, 1958. the Court recalled the decree and cancelled the certificate as prayed for. on the ground that the amount receivable by the appel 204 lant on account of his privy purse was not attachable. The respondent preferred Appeal No. 33 of 1958 before the High Court against order. By another order dated January 7, 1959, the District Judge, Ratlam dismissed certain objections of the appellant filed in Execution Case No. 2 of 1958. We are informed that the appellant flied before the High Court Appeal No. 13 of 1959 from this order. Appeals Nos. 81 and 82 of 1957, 33 of 1958 and 13 of 1959 were heard and disposed of by the High Court by a common judgment on October 10, 1960. The High Court dismissed Appeals Nos. 81 and 82 of 1957 and 13 of 1959 preferred by the appellant and allowed Appeal No. 33 of 1958 preferred by the respondent. The appellant has referred to this Court Civil Appeal No. 568 of 1963 against the order of the High Court passed in Appeal No. 33 of 1958. He has also preferred Civil Appeal No. 767 of 1963 from the order of the High Court passed in Appeals Nos. 81 and 82 of 1957. Civil Appeals Nos. 568 and 767 of 1963 were heard together, and are being disposed of by this common judgment. On behalf of the appellant, Mr. Pathak raised three contentions only. He argued that: (1) the award affected immovable property of the value of more than Rs. 100, and as it was not registered, no decree could be passed in terms of the award; (2)the proceedings under section 14 of the Indian were incompetent in the absence of the consent of the Central Government under section 86(1) read with section 87B, Code of Civil Procedure, and the decree passed in those proceedings is without jurisdiction and null and void; and (3) the amount receivable by the appellant from the Central Government as his privy purse is a political pension within the meaning of section 60(1)(g), Code of Civil Procedure, and is not liable to attachment or sale in execution of the .decree. These contentions are disputed by Mr. Iyengar on behalf of the respondent. The first two contentions of Mr. Pathak arise in Civil Appeal No. 767 of 1963 and the third contention arises in Civil Appeal No. 568 of 1963. The first contention raised by Mr. Pathak must be rejected. The award stated that the existing documents relating to. debts obtained on lands would remain as before, and they would remain as securities till payment of the debts and the appellant would have no right to transfer the land. This portion of the award stated an existing fact. It did not create, or of its own force declare any interest in any immovable property. Consequently, the document did not come within the purview of section 17 of the Indian , and was not required to be registered. The second contention of Mr. Pathak raises questions of construction of sections 86 and 87B of the Code of Civil Procedure. By reason of section 86(1) read with section 87B, no Ruler of any former Indian State "may be sued in any Court otherwise competent to try the suit except with the consent of the Central Government. " Section 205 86(2) provides that the requisite consent may be given with respect to a specified suit or with respect to several specified suits or with respect to all suits of any specified class or classes, Section 86 plainly deals with a special class of suits, and this conclusion is reinforced by the heading of Part IV, "Suit in Particular Cases", in which sections 86 and 87B appear. Order 4, rule 1, Code of Civil Procedure provides that every suit shall be instituted by presenting a plaint to the Court or such other officer as it appoints in this behalf. In the context of section 176 of the Government of India Act, 1935, Mahajan and Mukherjea, observed that the expression "sue" means the "enforcement of a claim or civil right by means of legal proceedings", see Province Bombay v .K.S. Advani and others(1). But in the context of the Indian Limitation Act, 1908, Lord Russell of Killowen observed in Hansraj Gupta vs Official Liquidator, Dehra Dun Mussorrie Electric Tramway Co.(2): "The word 'suit ' ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by the presentation of a plaint." And construing section 86 of the Code of Civil Procedure, Shah, J. speaking on behalf of this Court observed in Bhagwat Singh vs State Rajasthan(3): "The appellant is recognised under article 366(22) of the Constitution as a Ruler of an Indian State, but section 86 in terms protects a Ruler from being 'sued ' and not against the institution of any other proceeding which is not in the nature of a suit. A proceeding which does not commence with a plaint or petition in the nature of plaint, or where the claim is not in respect of dispute ordinarily triable in a Civil Court, would prima facie not be regarded as falling within section 86, Code of Civil Procedure. " Now, a proceeding under section 14 read with section 17 of the Indian for the passing of a judgment and decree on an award does not commence with a plaint or a petition in the nature of a plaint, and cannot be regarded as a suit and the parties to whom the notice of the filing of the award is given under section 14(2) cannot be regarded as "sued in any Court otherwise competent to try the suit", within the meaning of section 86(1) read with section 87B, Code of Civil Procedure. Accordingly, the institution of this proceeding against the Ruler of a former Indian State is not barred by section 86(1) read with section 87B. Section 141, Code of Civil Procedure does not attract the provisions of section 86(1) read with section 87B to the proceedings under section 14 of the Indian . Section 86(1) read with section 87B confers upon the Rulers of former Indian States substantive rights of im (1)[1950] S.C.R. 621, at pp. 661, (2)[1932] L.R. I.A.13,19. (3) ; at pp. 445, 446. 206 munity from suits. Section 141 makes applicable to other proceedings only those provisions of the Code which deal with procedure and not those which deal with substantive rights. Nor does section 41(a) of the Indian carry the matter any further. By that section, the provisions of the Code of Civil Procedure, 1908 are made applicable to all proceedings before the Court under the Act. Now, by its own language section 86(1) applies to suits only, and section 141, Code of Civil Procedure does not attract the provisions of section 86(1) to proceedings other than suits. Accordingly, by the conjoint application of section 41(a)of the Indian and sections 86(1) and 141 of the Code of Civil Procedure, the provisions of section 86(1) are not attracted to a proceeding under section 14 of the Indian . It follows that the Court was competent to entertain the proceedings under section 14 of the Indian and to pass a decree against the appellant in those proceedings, though no consent to the institution of those proceedings had been given by the Central Government. A sovereign foreign State and a Ruler of such State may enjoy a wider immunity from legal proceedings other than suits under the rules of International Law recognised by our Courts, but the appellant is not now a Ruler of a sovereign State, and cannot claim immunity from proceedings other than suits. The second contention of Mr. Pathak must, therefore, be rejected. The third contention of Mr. Pathak raises the question whether an amount payable to a Ruler of a former Indian State as privy purse is a political pension within the meaning of section 60(1)(g), Code of Civil Procedure. The word "pension" in section 60(1)(g), Code of Civil Procedure implies periodical payments of money by the Government to the pensioner. See Nawab Bahadur of Murshidabad vs Karnani ,Industrial Bank Ltd.(1) And in Bishambhar Nath vs Nawab Imdad Ali Khan(2), Lord Watson observed: "A pension which the Government of India has given a guarantee that it will pay, by a treaty obligation contracted with another sovereign power, appears to their Lordships to be, in the strictest sense, a political pension. The obligation to pay, as well as the actual payment of the pension, must, in such circumstances, be ascribed to reasons of State policy. " Now, the history of the integration and the ultimate absorption of the Indian States and of the guarantee for payment of periodical sums as privy purse to the Rulers of the former Indian States are well known. Formerly Indian States were semi sovereign vassal States under the suzerainty of the British Crown. With the declaration of Independence, the paramountly of the British Crown lapsed as from August 15, 1947, and the Rulers of Indian States 207 became politically independent sovereigns. The Indian States parted with their sovereignty in successive stages, firstly on accession to the, Dominion of India, secondly on integration of the States into sizable administrative units and on closer accession to the Dominion of India, and finally on adoption of the Constitution of India and extinction of the separate existence of the States and Unions of States. During the second phase of this political absorption of the States, the Rulers of the Madhya Bharat States including the Ruler of Jaora State entered into a Covenant on April 22, 1948 for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat). By article II of the Covenant, the Covenanting States agreed to unite and integrate their territories into one State. Article VI provided that the Ruler of each Covenanting State shall not later than July 1, 1948 make over the administration of the State to the Rajpramukh and thereupon all rights, authority and jurisdiction belonging to the Ruler and appertaining or incidental to the Government of the State would vest in the United . State of Madhya Bharat. Article XI(1) provided that "the Ruler of each Covenanting State shall be entitled to receive annually from the revenues of the United State for his privy purse the amount specified against that Covenanting State in Schedule I." In Sch. I, a sum of Rs. 1,75,000 was specified against the State of Jaora. Article XI(2) provided that the amount of the privy purse was intended to cover all the expenses of the Ruler and his family including expenses of the residence, marriage and other ceremonies and neither be increased nor reduced for any reason whatsoever. Article XI(3) provided that the Rajpramukh would cause the amount to be paid to the Ruler in four equal instalments at the beginning of each quarter in advance. Article XI(4) provided that the amount would be free of alI taxes whether imposed by the Government of the United State or by the Government of India. Article XIII of the Covenant secured to the Ruler of each Covenanting State all personal privileges, dignities and titles then enjoyed by them. Article XIV guaranteed the succession, according to law and custom, to the gadding of each Covenanting State and to the personal rights, privileges, dignities and titles of the Ruler. The Covenant was signed by all the Rulers of the Covenanting States. At the foot of the Covenant, it was stated that "The Government of India hereby concur in the above Covenant and guarantee all its provisions." In confirmation of this consent and guarantee, the Covenant was signed by a Secretary to the Government of India. On the coming into force of the Constitution of India, the territories of Madhya Bharat became an integral part of India. Article 291 of the Constitution provided: "Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free 208 of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse: (a) such sums shall be charged on, and paid out of, the Consolidated Fund of India; and (b) the sums so paid to any Ruler shall be exempt from all taxes on income." In view of the guarantee by the Government of the Dominion of India to the Ruler of Jaora State in the Covenant for the formation of the United State of Madhya Bharat, the payment of the sums specified in the covenant as privy purse to the Ruler became charged on the Consolidated Fund of India, and became payable to him free from all taxes on income. Article 362 provides that in the exercise of the legislative and executive powers, due regard shall be had to the guarantee given in any such covenant as is referred to in article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. Article 363(1) provides, that notwithstanding anything contained in the Constitution, the Courts would have no jurisdiction in any dispute arising, out of any provision in any covenant entered into by any Ruler of an Indian State to which the Government of the 'Dominion of India was a party, or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of the Constitution relating to any such covenant. Article 366(22) provides that the expression "Ruler" in relation to an Indian State means a person by whom the covenant referred to in article 299(1) was entered into and who for the time being is recognised by the President as the Ruler of the State, and includes any person who for the time being is recognised by the President as the successor of such Ruler. Now, the Covenant entered into by the Rulers of Madhya Bharat States was a treaty entered into by the Rulers of independent States by which they gave up their sovereignty over their respective territories and vested it in the new United State of Madhya Bharat. The Covenant was an act of State, and any violation of its terms cannot form the subject of any action in any municipal courts. The guarantee given by the Government of India was in the nature of a treaty obligation contracted with the sovereign Rulers of Indian States and cannot be enforced by action in municipal courts. Its sanction is political and not legal. On the coming into force of the Constitution of India, the guarantee for the payment of periodical sums as privy purse is continued by article 291 of the Constitution, but its essential political character is preserved by article 363 of the Constitution, and the obligation under this guarantee cannot be enforced in any municipal court. Moreover, if the President refuses to recognise the person by whom the covenant was entered into as the Ruler of the State, he would not be entitled to the amount payable as privy purse under article 291. 209 Now, the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly a political pension within the meaning of section 60(1)(g) of the Code of Civil Procedure. The use of the expression "privy purse" instead of the expression "pension" is due to historical reasons. The privy purse satisfies all the essential characteristics of a political pension, and as such, is protected from execution under section 60(1)(g), Code of Civil Procedure. Moreover, an amount of the privy purse receivable from the Government cannot be said to be a debt or other property over which or the proceeds of which he has disposing power within the main part of section 60(1),Code of Civil Procedure. It follows that the third contention of Mr. Pathak must be accepted, and it must be held that the amounts of the privy purse are not liable to attachment or sale in execution of the respondent 's decree. The third contention is raised in Civil Appeal No. 568 of 1963 arising out of Appeal No. 33 of 1958. It follows that Civil Appeal No. 568 of 1963 must be allowed. All the contentions raised in Civil Appeal No. 767 of 1963 arising from Appeals Nos. 81 and 82 of 1957 fail, and accordingly this appeal must be dismissed. In the result, Civil Appeal No. 568 of 1963 is allowed, the order of the High Court in Appeal No. 33 of 1958 is set aside and the order of the District Judge dated March 15, 1958 is restored with costs in this Court only. Civil Appeal No. 767 of 1963 is dismissed with costs. Appeal 568 of 1963 allowed. Appeal 767 of 1963 dismissed.

The appellant, who was a Ruler of a former Indian State, had money dealings with the respondent. They referred their disputes to an arbitrator who made his award directing the appellant to pay. a certain sum of money, in installments. The award also stated that the existing documents relating to debts on lands would remain as before and would remain as securities till the payment of debts The arbitrator filed the award into court and the court, after notice to the parties passed a decree in terms of a compromise modifying the award. The respondent started execution proceedings and the court passed a prohibitory order under O.XXI, r. 46 of the Civil Procedure Code, 1908, in respect of the sums payable to the appellant by the Central Government on account of the privy purse; but on the application of the appellant, that order was vacated. The appellant and respondent filed appeals in the High COurt, against the various orders, and the High Court decided all the appeals against the appellant. In the appeal to the Supreme Court, it was contended that, (i) as the award affected immovable property of the value of more than Rs. 100, and was not registered, a decree could not be passed in terms the award, (ii) the proceedings under the Indian , were incompetent in the absence of the consent of the Central Government under sections 86(1) and 87B of the Code, and therefore the decree passed in those proceedings was without jurisdiction and void and (iii) the amount receivable by the appellant as his privy purse was a political pension within the meaning of section 60(1)(g) of the Code, and not liable to attachment or sale in execution of a decree. HELD: (i)The award did not create or of its own force declare any interest in any immovable property and since it did not come within the purview of section 17 of the , was not required to be registered. [(204 H] (ii) A proceeding under section 14 read with section 17 of the , for the passing of a judgment and decree on an award, does not commence with a plaint or a petition in the nature of a plaint, and cannot be regarded as a suit and the parties to whom the notice of the filing of the award is given under section 14(2) cannot be regarded as "sued in any Court otherwise competent to try the suit" within the meaning of section 86.(1) read with section 87B of the Code. Neither are those provisions of the Code attracted by reason of section 41(a) of the or section 141 of the Code. It follows that the COurt was competent to entertain the proceedings under section 14 of the and pass a decree in those proceedings though no consent to the institution of the proceedings had been given by the Central Government. [205 G H; 206 B D] 202 (iii) The amounts of the privy purse of the appellant were not liable to attachment or sale in execution of the respondent 's decree. [209 C D] The periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly a political pension within the meaning of section 60(1)(g) of the Code. The privy purse satisfies all the essential characteristics of a political pension, and as such is protected from execution under section 60(1) (g). [209 A C]

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Appeal No. 123 of 1952. Appeal against the Judgment and Order, dated the 22nd March, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) , in Reference No. 2 of 1951 in Civil Rules Nos. 20 and 21 of 1950. December 11. The Judgment of the Court was delivered by PATANJALI SASTRI C.J. This is an appeal from a judgment, of the High Court of Judicature at Calcutta declaring certain provisions of the West Bengal Land Development and Planning Act, 1948, (hereinafter referred to as the "impugned Act ") unconstitutional and void. The impugned Act was passed on October 1, 1948, primarily for the settlement of immigrants who had migrated into the Province of West Bengal due to communal disturbances in East Bengal,and it 560 provides for the acquisition and development of land for public purposes ' including the purpose aforesaid. A registered Society called the West Bengal Settlement Kanungoe Co operative Credit Society Ltd., respondent No. 4 herein, was authorised to undertake a development scheme, and the Government of the State of West Bengal, the appellant herein, acquired and made over certain lands to the society for purposes of the development scheme on payment of the estimated cost of the acquisition. On July 28, 1950, the respondents I to 3, the owners of the lands thus acquired, instituted a suit in the Court of the Subordinate Judge, 11 Court at Alipore, District 24 Parganas, against the society for a declaration that the impugned Act was void as contravening the Constitution and that all the proceedings taken thereunder for the acquisition aforesaid were also void, and of no effect and for other consequential reliefs. The State of West Bengal was subsequently impleaded as a defendant. As the suit involved questions of interpretation of the Constitution respondents 1 to 3 also moved the High Court under article 228 of the Constitution to withdraw the suit and determine the constitutional question. The suit was accordingly transferred to the High Court and the matter was heard by a Division Bench (Trevor Harries C.J. and Banerjee J.) who, by their final judgment, held that the impugned Act as a whole was not .unconstitutional or void save as regards two of the provisions contained in section 8 which, so far as it is material here, runs as follows: "A declaration under section 6 shall be conclusive evidence that the land in respect of which the declaration is made is needed for a public purpose and, after making, such declaration, the Provincial Government may acquire the land and thereupon the provisions of the Land Acquisition Act, 1894, (hereinafter in this section referred to as%, the said Act), shall, so far as may be, apply: Provided that (b) in determining the amount of compensation to be awarded for land acquired in pursuance of this 561 Act the market value referred to in clause first of sub section (1) of section 23 of the said Act shall be deemed to be the market value of the land on the date of publication of the notification under sub section (1) of section 4 for the notified area in which the land is included subject to the following condition, that is to say if such market value exceeds by any amount the market value of the land on the 3 1 st day of December, 1946, on the assumption that the land had been at that date in the state in which it in fact was on the date of publication of the said notification, the amount of such excess shall not be taken into consideration. " The provision making the declaration of the Government conclusive as to the public nature of the purpose of the acquisition and the limitation of the amount of compensation so as not to exceed the market value of the land on December 31, 1946, were declared ultra vires the Constitution and void. The Attorney General, appearing for the appellant, rightly conceded that inasmuch as article 31(2) made the existence of a public purpose a necessary condition of acquisition the existence of such a purpose as a fact must be established objectively and the provision in section 8 relating to the conclusiveness of the declaration of Government as to the nature of the purpose of the acquisition must be held unconstitutional but he contended that the provision was saved by article 31(5)of the Constitution which provides: "Nothing in clause (2) shall affect (a) the provisions of any existing _ law other than a law to which the provisions of clause (6) apply, or. . . " Clause (6) reads thus: "Any law of the State enacted not more than eighteen months before the commencement of this Constitution may within three months from such commencement be submitted to the President for his certification; and, thereupon, if the President public notification so certifies, it shall not be called question in any court on the ground that it contract the provisions of clause (2) of this article, 562. contravened the provisions of sub section (2) of section 299 of the Government of India Act, 1935. " It was argued that the impugned Act having been passed within 18 months before the commencement of the Constitution and not having been submitted to the President for his certification, it was a law to which the provisions of clause (6) did not apply and, therefore, as an existing law, the impugned Act was not affected by clause (2) of that article. The argument is manifestly unsound. Article 31(6) is intended to save a State law enacted within 18 months before the commencement of the Constitution provided the same was certified by the President while, article 31(5) saves all existing laws passed more than 18 months before the commencement of the Constitution. Reading the two clauses together, the intention is clear that an existing law passed within 18 months before January 26, 1950, is not to be saved unless it was submitted to the President within three months from such date for his certification and was certified by him. The argument, if accepted, would reduce article 31(6) to ameaningless redundancy. The only serious controversy in the appeal centred round the constitutionality of the " condition " in proviso (b) to section 8 limiting the compensation payable so as not to exceed the market value of the land on December 31, 1946. The Attorney General, while conceding that the word " compensation " taken by itself must mean a full and fair money equivalent, urged that, in the context of article 31(2) read with entry No. 42 of List III of the Seventh Schedule, the term was not used in any rigid sense importing equivalence in value but had reference to what the legisla ture might think was a proper indemnity for the loss sustained by the owner. Article 31(2) provides: No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken sesion of or acquired for public purposes under law authorising the taking of such possession acquisition, unless the law provides for 563 compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given. and entry 42 of List III reads thus Principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given. It is argued that the term " compensation " in entry 42 could not mean full cash equivalent, for then, the power conferred on the legislature to lay down the principles on which compensation is to be determined and the form and the manner in which such compensation is to be given would be rendered nugatory. On the other hand, the entry showed that the compensation to be "given " was only " such compensation " as was determined on the principles. laid down by the law enacted in exercise of the power, and, as the concluding words used in article 31(2) are substantially the same as in the entry, the Constitution, it was claimed, left scope for legislative discretion in determining the measure of the indemnity. We are unable to agree with this view. While it is true that the, legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude matters which are 74 564 to be neglected, is a justiciable issue to be adjudicated by the court. This, indeed, was not disputed. Reference was made to certain Australian cases where the opinion was expressed that the terms of compulsory acquisition of property were matters of legislative policy and judgment. The decisions largely turned on the absence of any constitutional prohibition in regard to deprivation of private property without compensation as in the Fifth Amendment of the American Constitution and on the use of the words " just terms " instead of " compensation " in section 51 (xxxi) of the Commonwealth Constitution which conferred power on the Parliament to make laws with respect to " the acquisition of property on just terms from any State or person. . " (cf. Grace Brothers Pty. Ltd. vs The Commonwealth(1). Those decisions, therefore, are of no assistance to the appellant here. Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market value of the land on December 31, 1946, no matter when the land is acquired. Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came in. to force, the fixing of the market value on December 31,1946, as the ceiling on compensat I ion, without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirement of article 31 (2). The fixing of an anterior date for the ascertainment of value may not, in certain circumstances, be a violation of the constitutional requirement as, for instance, when the proposed scheme of acquisition becomes known before it is launched and prices rise sharply in anticipation of the benefits to be derived under it, but the fixing of an anterior date, which might have no relation to the value of the land when it is acquired, may be, many years later, cannot but be regarded as arbitrary. The learned Judges (1) ; 565 below observe that it is common knowledge that since the end of the war land, particularly around Calcutta, has increased enormously in value and might still further increase very considerably in value when the pace of industrialisation increases. Any principle for determining compensation which denies to the owner this increment in value cannot result in the ascertainment of the true equivalent of the land appropriated. We accordingly hold that the latter part of proviso (b) to section 8 of the impugned Act which fixes the market value on December 31, 1946, as the maximum compensation for lands acquired under it offends against the provisions of article 31 (2) and is unconstitutional and void. The appeal is dismissed with costs. Appeal dismissed. Agent for respondents Nos. 1, 2 and 3: section C. Banerjee. Agent for the intervener: G. H. Rajadhyaksha.

The West Bengal Land Development and Planning Act, 1948, passed primarily for the settlement of immigrants who had migrated into West Bengal due to communal disturbances in East Bengal provides for the acquisition and development of land for public purposes including the purpose aforesaid: Held, that the provisions of section 8 of the West Bengal Act XXI of 1948 making the declaration of the Government. conclusive as to the public nature of the purpose of the acquisition and the limitation of the amount of compensation so as not to exceed the market value of the land on December 31, 1946, are ultra vires the Constitution and void 559 (i)inasmuch as article 31(2) of the Constitution made the existence of a public purpose a necessary condition of acquisition, the existence of such a purpose as a fact must be established objectively ; (ii)that in view of the fact that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946, as the coiling on compensation without reference to the value of the land at the time of acquisition, is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirements of article 31(2) (iii)the Act is not saved by article 31(5) from the operation of article 31(2) as it was not certified by the President as provided for by article 31(6). Held, further, that while entry No. 42 of List III of the Seventh Schedule confers on the legislature the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner of the property appropriated, article 31(2) requires that such principles must ensure that what is determined as payable must be "compensation", that is, a just equivalent of what the owner has been deprived of. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected is a justiciable issue to be adjudicated by the Court.

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Appeal No. 738 of 1963. Appeal by special leave from the judgment and decree, dated December 16, 1960 of the Madhya Pradesh High Court in First Appeal No. 105 of 1957. 57 B. Sen. M. N. Shroff and I. N. Shroff, for the appellants. G. section Pathak and C. P. Lal, for respondents 1 (a) 1(c). K. L. Hathi and R. N. Sachthey, for respondents No. 2. The Judgment of the Court was delivered by Sarkar, J. This appeal arises out of a suit filed on August 10, 1956 by Shri Lal Saheb Bhargavendra Singh, now deceased and represented by his legal representatives, against the Union of India, the State of Vindhya Pradesh, now merged in the State of Madhya Pradesh, and the Collector of Satna, for a declaration that he was entitled to receive an allowance of Rs. 650 per month from the Union of India. There was another claim but that depended on the declaratory relief claimed and need not, therefore, be referred to further. Shri Lal Saheb was the brother of the Ruler of the former Indian State of Nagod and he contended that the Ruler had by a law passed on March 7, 1948 provided for an allowance for him at the rate of Rs. 650 per month and that law was binding on the defendants who had by an executive order illegally altered the amount of the maintenance. It was on this basis that the claim was made. The suit was dismissed by the trial Court but was decreed by the High Court of Madhya Pradesh on appeal by the plaintiff. Hence this appeal. Certain events that took place after March 7, 1948 when the allowance was fixed have now to be stated. On March 18, 1948, the Ruler of Nagod along with the Rulers of various neighbouring ruling States formed a new State called the United State of Vindhya Pradesh into which the component States were merged thereby losing their sovereign status. Thereafter the United State merged in India by an agreement and pursuant thereto the Government of India took over its administration on January 1, 1950. Its territories then became the Indian province of Vindhya Pradesh The United State ceased to exist. On the promulgation of the Constitution on January 26, 1950 the Province of Vindhya Pradesh became a Part C State of Independent India and later from November 1, 1956 it was merged with the State of Madhya Pradesh. By the agreement constituting the United State all laws in force in the constituent States were continued in force and likewise, the laws of the United State were by a statutory order continued in force when it merged in India. Article 372 of the Constitution continued in force all laws which were in force in the territories of India immediately before the commencement of the Constitution. 58 Each succeeding State could, of course, alter the laws which were so continued in force in spite of the change of sovereignty, by a law duly made by it. Neither the United State nor the Indian Province or States which successively administered the territories of the State of Nagod had made any law concerning any allowance to be paid to Shri Lal Saheb. The Rajpramukh (the head) of the United State and the President of India had passed orders 'from time to time fixing his allowance at amounts lower than that at which it had been fixed by the Ruler of Nagod on March 7, 1948. These were, however, executive orders and not laws. They could not reduce the amount of allowance to Shri Lal Saheb fixed by the Ruler of Nagod on March 7, 1948, if he had done so by a law. All this is not in controversy. The only question in this appeal is whether the order of the Ruler of Nagod of March 7, 1948 was a law. If it was, it is not in dispute that the claim made in the suit must be upheld. The High Court observed that this Court had in various cases ending with the case of Madhaorao Phalka vs State of Madhya Pradesh (1) '.held that the line between the legislative, executive and judicial functions of absolute Rulers like the Ruler of Nagod was not at all clear cut and an attempt to place an order of such a Ruler in one class or the other was of no practical importance. In this view of the judgments of this Court, the High Court said that it was futile to contend that the order of March 7, 1948 was an executive act of the Ruler and had not the force of law. The High Court, therefore, held that the allowance had been fixed by law and decreed the suit. The question whether, an order of a Ruler is law or not arises because an absolute Ruler combined in himself the capacities of the supreme executive, judicial and legislative authorities in the State; any particular action of his might have been in one or other of these capacities. Therefore, it becomes necessary to decide, when the question arises as it has done. in the present case, in what capacity the Ruler acted when he made a particular order. At times, the question has presented some difficulty. This Court had to discuss this question in many cases but, with respect, we think the High Court was under a misconception about the effect of the decisions in those cases. It would be unprofitable to discuss these cases for their result may be quoted from the judgment in the recent case of Narsing Pratap Deo vs State of Orissa (2) : "The true legal position is that whenever a dispute arises as to whether an Orders passed by an absolute monarch represents a legislative (1) ; (2) A. I. R. ,1798. 59 act. . all relevant factors must be considered before the question is answered; the nature of the order, the scope and effect of its provisions, its general setting and context, the method adopted by the Ruler in promulgating legislative as distinguished from executive orders, these and other allied matters win have to be examined before the character of the order is judicially determined. " It is, therefore, not correct to say as the High Court did, that this Court has held that every order of the Ruler is a law made by him. The question whether it is so or not, has to be determined in each case independently. We then proceed to discuss whether the order of the Ruler of Nagod was law. The question arises because, as earlier stated, the covenant constituting the United State, certain statutory orders made from time to time and lastly article 372 of the Constitution said that the existing laws would be so continued. Now, these are instruments dealing with sovereign States and rights. They are instruments based on legal ideas and notions founded on modern jurisprudence. It would, therefore, be legitimate to hold that the word "law" was used in them in a sense acceptable, to modern jurisprudence. The contention that the order of March 7, 1947 being a law could be set aside only by a law duly passed by the succeeding States, emphasises this view. A law made by these succeeding States, the last of which is the Union of India, is fully a law as understood in modem jurisprudence. A law which is to be set aside by such a law must, therefore, have been contemplated as a law of the same kind. This aspect of the matter has to be kept in mind in approaching the question. Many tests may be suggested for determining whether a parti cular thing would be considered law in modem jurisprudence. In the decisions of this Court on the point, several of them have been referred to. It may be that they are not all applicable, to every case. It may also be that it is not possible to give an exhaustive list of all these tests. None the less however the question is capable of decision in each case. The order of the Ruler of Nagod which is said to be a law, is addressed to the Chief Minister of the State and directs him to do certain things. It starts by reciting that Shri Lal Saheb 's financial position was deplorable and the Ruler felt it to be his duty to see that Shri Lal Saheb did not experience difficulties in his advancing years and as no permanent arrangement had been made for him till then, the ruler was making the order. Then follows the operative part of the order which is in these terms SUP. C.I/66 5 60 "Hence, I order that (the Kothi) (in which he is at present residing) be given to Shri Lal Saheb for generation to generation and an allowance of Rs ' 650 (Rupees six hundred and fifty), per month be granted, in addition to the same a tonga and a horse be given, the expenses for which shall be borne by himself and Rs. 5,000 (Rupees five thousand), be granted to him so that he may be able to make improvements in agriculture and satisfy his debts (partly). " We think it quite impossible that this order was a law. First, it is a direction to the Chief Minister. It is an order by which the Ruler required the Chief Minister to do certain things. It has not been shown to us, that a direction to an officer to be carried out by him, has ever been held to be a law or can be such. It cannot be so according to notions of modem jurisprudence. Then we find that a copy of the order was sent under the, direction of the Revenue Minister to Shri Lal Saheb and various parts of it, to the different departments of the Nagod Administration respectively concerned with them, obviously with the object that they might be carried out. This would indicate that even the Administration was not treating it as law for it would be difficult to imagine different parts of a law being communicated to different branches of the Administration. Further, it appears that the Revenue Minister directed the Accounts Officer to make a report regarding the provision to be made for the sum of Rs. 5,000 mentioned in the order. This is not how a law is carried out. The order was also an instrument granting something to Shri Lal Saheb. Under it a kothi (house), a tonga (carriage) and horse and Rs. 5,000 in a lump were to be made available to Shri Lal Saheb. In regard to these the order was only a grant; it gave him these things. A grant is, of course, not a law. That would follow from the decisions of this Court in Narsing Pratap Deo 's case(1) and State of Gujarat vs Vora Fiddali(2). Now if the rest of the order was a grant, it would be strange that one part of it only, namely, the part providing for the monthly allowance only, was a law. Obviously this was also intended to be a grant; the fact that the order provided for future payments cannot make it a law. The context is overwhelmingly against the view that it was a law. Again, the recitals in the order put it beyond doubt that the Ruler was only discharging what he considered his moral obligation. After referring to Shri Lal Saheb 's deplorable financial (1) A.T.R. (2) ; 61 position, he said, "I take it to be my duty to, see that Shri Lal should not experience difficulties in his old days". The Ruler was, therefore, providing for something out of his bounty and in discharge of his moral obligation. A law is never made for these reasons. It was said that the money was to be paid out of the State Exchequer. There is nothing to show, however, that it was so or that in Nagod the private funds of the Ruler were separate from the State Exchequer. But assume that the payment was to come from the State Exchequer. That cannot turn a directive or a grant into a law. Our attention was drawn to the decision of this Court in Promod Chandra Dev vs The State of Orissa(1) where a grant of an allowance was held to be law. That case is clearly distinguishable. There the nature and condition of allowances to be granted to persons entitled to them from the State had been laid down in Order 31 of the Rules, Regulations and Privileges of Khanjadars and Khorposhdars. It was held that "those rules, regulations of Talcher etc. (1937)" were the laws of the State and that the grants made by the Ruler in accordance with those laws became the absolute property of the grantee. What bad happened there was that earlier lands had been granted to a certain Khorposhdar (maintenance holder) under Order 31 aforesaid and Subsequently these were commuted into payments of monthly amounts. It was in those circumstances that it was held that the maintenance was payable under a law. No such circumstances exist in the present case. We should *fore concluding state that the Ruler of Nagod who made the order of March 7, 1948 himself gave evidence stating that lie had passed the order "under his legislative powers". This statement obviously does not conclude the matter. It was not relied upon in any of the Courts below. The internal evidence to which we have earlier referred shows that the order was not a Legislative act. For all these reasons we have come to the conclusion that the order of the Ruler of Nagod of March 7, 1948 was not a law. It was not continued in force after the State of Nagod lost its sovereignty in the circumstances earlier mentioned. The order was an executive act of the Ruler providing for certain allowance to Shri Lal Saheb. It was, therefore, competent to the President (1) (1962] Supp. 1 section C. R. 405 62 acting in his executive capacity to reduce it to a sum of Rs. 530 per month as he did by his order of September 24, 1951 which was challenged in the, suit. In the result, we hold that the appeal must be allowed and we direct accordingly. There will be no 'order as to costs. Appeal allowed.

On 7th March 1948, the Ruler of a former Indian State, out of his bounty and in discharge of his moral obligation, passed an order providing for an allowance to his brother respondent herein. He directed the Chief Minister of the State to do, certain things, and the various parts of the order were sent to the different departments of the State Administration for carrying them out. The order also granted to the respondent a house, conveyance etc. On 18th March 1948, the State along with other States formed the United State of Vindhya Pradesh, the component States losing their sovereign status. Later, the United State merged in India, and on the promulgation of the Constitution, the State became a Part of the Indian Union. On 24th September, 1951, the President of India, in his executive capacity reduced the amount of allowance. The respondent thereupon filed a suit for a declaration, against 'the State and Central Governments, that the allowance could not be reduced Because it was granted to him by a law passed by the former Ruler, which law was continued in force by the covenant constituting the United State, by certain statutory orders made from time to time and lastly by article 372 of the Constitution. The trial court dismissed the suit, but the High Court, on appeal, decreed it. In the appeal to this Court by the State and Central Governments, the question was whether the order of the former Ruler was a law. HELD : It wag not a law and was not continued in force after the State lost its sovereignty. The order was an executive act of the Ruler and it was competent to the President, in his executive capacity., to reduce the amount. [66 H] The nature of the order shows it cannot be a law according to notions of modern jurisprudence. It was a mere directive or grant, and even if the money was paid out of the State Exchequer, that fact would not turn the order into a law. [60 C; F] Narsing Pratap Deo vs State of Orissa; , , referred to. Promod Chandra Dev vs State of Orissa, [1962] Supp. 1 S.C.R. 405, explained.

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vil Appeals Nos. 89 93 of 1964. Appeals by special leave from the judgment and orders dated August 30, 1961 and June 13, 1961 in Special Civil Application Nos. 440, 441,509, 510 and 7 of 1961. K.S. Chawla and R.S. Sachthey, for the appellant (in C. As. 89/91 of 1964). 79 C.K. Daphtary, Attorney General, K.S. Chawla and R.N. Sachthey, for the appellant (in C.A. NO. 93/64). N.N. Keshwani, for the respondents in all the appeals. The Judgment of the Court was delivered by Sikri, J. These five appeals by special leave raise a common question of interpretation of r. 19 of the Displaced Persons (Compensation & Rehabilitation) Rules, 1955 (hereinafter referred to as the Rules). It is common ground that nothing turns on any dissimilarity in the facts of each appeal. It will accordingly suffice if facts in Civil Appeal No. 93 of 1964 are set out. The respondent, Lachman Hotchand Kriplani, is a displaced person from West Pakistan. He has three brothers. They owned 731 acres of agricultural land in District Nawabshah, Taluka Nawab Shah, Sind now in Pakistan. The respondent submitted a claim under the Displaced Persons (Claims) Act, 1950 (XLIV of 1950) hereinafter referred to as the Claims Act. The word 'claim ' was defined to mean "assertion of a right to the ownership of, or to any interest in (i) any immovable property in West Pakistan which is situated within an urban area, or (,ii) such class of property in any part of West Pakistan, other than an urban area as may be notified by the Central Government in this behalf in the official gazette". It is common ground that agricultural land in Sind was so notified. The respondent 's claim was that he owned 1/4 share of 731 acres and 14 ghuntas standing in the name, of Fatehehand. The Claim Officer, by order dated October 7, 1952, accepted the claim and assessed his claim as 94 3 standard acres. On July 2, 1955, the respondent applied for compensation under the (XLIV Of 1954) hereinafter referred to as the Compensation Act. In the application he stated that he was not a member of a Joint Hindu Family in Pakistan, but his claim was as a co sharer alongwith three others, who had filed separate claims. The Assistant Settlement Commissioner was, however, not satisfied with this assertion and after holding an enquiry, by order dated March 3, 1960, he held that the four alleged co sharers were members of a Joint Hindu Family, and the whole agricultural land claim was to be treated as joint property. On August 29, 1960, a statement of account was issued to the respondent. This statement showed that his claim was assessed as Rs. 10,701/ gross compensation. This figure was arrived at, as stated in the affidavit of the Assistant Settlement Commissioner, thus: "The claim was assessed for 376 standard acres and 12 units out of which the petitioner had 1/4th share. The compensation on 376 Standard Acres and 12 Units works out to 108 Standard Acres 0 3/10 Units as per 80 scale indicated in Rule 51. This converted in terms of money as per Rule 56 comes to Rs. 42,806/ The petitioner 's 1/4th share would be Rs. 10,701/ ". The respondent then on October 28, 1960, served a notice on the Regional Settlement Commissioner calling upon him to rectify the statement of account, failing which he will be constrained to move the High Court under articles 226 and 227 of the Constitution. In this notice he claimed that r. 20 applied to his case; in the alternative he asserted that at least r. 19 should be applied to him. In reply, the Assistant Settlement Commissioner informed him that the calculation had been done correctly. Thereupon, he filed a petition under articles 226 and 227, in the Bombay High Court. The High Court allowed the petition and set aside the statement of account furnished to the petitioner on August 29, 1960, and directed that the respondent shall give the benefit of r. 19 and determine the amount of compensation payable to him in accordance with the provisions of rr. 19, 51 and 56 and other rules of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955. The appellant having obtained special leave, the appeals are now before us. We may mention at the outset that in the High Court the respondent 's counsel did not challenge the finding of the Assistant Settlement Commissioner that the respondent and his brothers were members of a joint family. The High Court came to the conclusion that r. 19 applied to agricultural land. It found nothing in the scheme of the Rules, or in the language of r. 19, to support the claim of the Department that r. 19 applied only to nonagricultural land. The learned Attorney General, on behalf of the appellant, challenges the conclusion of the High Court. He has taken us through various sections of the Compensation Act of 1954 and various rules to substantiate his contention. Let us then look at the Compensation Act and the Rules. The Compensation Act was enacted to provide for payment of compensation and rehabilitation grant to displaced persons and for matters connected therewith. 'Verified claim" is defined to mean, inter alia, a claim registered under the Displaced Persons (Claims) Act (XLIV of 1950). It is not disputed that the claim of the respondent verified by order dated October 7, 1952, is a verified claim. Section 4 provides for an application for the payment of compensation in the prescribed form to be made by a displaced person having a verified claim within a certain period. Section 5 provides that on receipt of an application under section 4, the Settlement Officer shall determine the amount of public dues, if any, recoverable from the applicant and shall forward the application and the record to the Settlement Commissioner. It will be noticed that a verified claim registered under the Claim Act, 1950, includes claims to urban as well as certain agricultural land. Therefore, both sections 4 and 81 5 apply to such agricultural land as has been made the subjectmatter of claim and verification under the Claims Act of 1950. Section 6 was referred to by the learned Attorney General but we have not been able to appreciate how it advances his case. Section 6 gives relief to certain banking companies in this way. If a banking company held a mortgage of an immovable property belonging to a displaced person in west Pakistan, and that mortgage was subsisting at the date when the claim of the banking company was registered under the Claim Act, 1950, and the displaced person is entitled to receive compensation in respect of any such property, the banking company was entitled to various reliefs, the appropriate relief depending on whether the compensation to the displaced person is payable (1) in cash or (2) in the form of transfer of any property, or (3) in any other form. In this section immovable property would include agricultural land and it cannot be denied that the respondent is entitled to compensation at least in one of the three forms mentioned in sub. section (2). Section 7(1).directs the Settlement Commissioner on receipt of the application trader section 5 to ascertain the amount of compensation having due regard to the nature of the verified claim and other circumstances of the case. Section 7(2) provides for the deduction of certain dues and the Settlement Commissioner then makes an order under section 7(3) ascertaining the net amount of compensation. Section 8 provides the form and manner of payment of compensation of the net compensation determined under section 7(3) as being payable to a displaced person. Subject to any rules that may be made, the net compensation is payable in cash, in government bonds, or by sale to the displaced person of any property from the compensation pool and setting off the purchase money against the compensation payable to him, etc. Section 8(2) enables rules to be made by the Central Government on various matters, inter alia, the scales according to which, the form and the manner in which and the installments by which compensation may be paid to different classes of displaced persons. Section 40 enables rules to be made to carry out by the purposes of the Compensation Act. It is not necessary to refer to other sections of the Compensation Act. Before we deal with the 1955 Rules, it is apparent that sections 4, 5, 6, 7 and 8 do not in any manner distinguish between urban land and agricultural land as long as the agricultural land is the subject matter of a verified claim. If a person holding a verified claim in respect of agricultural land owes.public dues and "public dues" is defined very widely in section 2(d) to include all kind of loans not only from the Central Government but from a State Government also this has to be deducted under section 7(3). It is suggested that the expression "net amount of compensation" in section 7(3) means only cash compensation but we are unable to limit the expression thus in view of the scheme of sections 4 to 8. 82 The Central Government in exercise of the power conferred by section 40 of the Compensation Act made the Displaced Persons (Compensation and Rehabilitation) Rules, 1955. Chapter I contains various definitions; Chapter II deals with procedure for submission of compensation application and determination of public dues. Rule 3 enables a displaced person having a verified claim to make an application for compensation. Rule 4 deals with the form of application and Appendix I is the form prescribed, and Appendix II is the questionnaire which has to be answered. One question is important for our purpose. Under the heading "11. Particulars of claims under Displaced Persons Claims Act, 1950" is mentioned: "(a) agricultural land, index no; Village/Tehsil/District; value assessed in standard acres; cosharers in each property with respective shares; if any property is mortgaged state mortgage money and name of the mortgagees". The rest of the rules, upto r. 9, in this Chapter deal with the scrutiny of the application and the determination of public dues. It is only necessary to notice r. 6(2) which requires a Settlement Officer to send a duplicate copy of the application to the Office of the Chief Settlement Commissioner for verification of the assessed value of the claim in respect of which the application has been made. Under r. 10 the Settlement Officer is required to pass an order and send a copy of the order and the original application along with the records of the case to the Regional Settlement Commissioner. It will be seen that Chapter II does not distinguish between verified claims relating to urban property and rural property. Then we come to Chapter III which contains r. 11. Under this rule the settlement Commissioner deals with the duplicate copy sent to him under r. 6(2). He verities the assessed value of the claim, as stated in the application, with the final order in respect thereof, in the claims record and returns the duplicate copy to the Regional Settlement Commissioner with such remarks as may be relevant for the determination of the amount of compensation. Chapter IV deals with determination of compensation. It will be remembered that section 5 of the Compensation Act requires the Settlement Officer to determine the amount of public dues and forward the application and the record of the case to the Settlement Commissioner, and r. 11, which we have just noticed, requires the Settlement Commissioner (Headquarters) to send the duplicate copy to the Regional Settlement Commissioner. Rule 12 directs the Regional Settlement Commissioner to consolidate all these papers. Rule 12 obviously applies to application in respect of verified claims to agricultural land. As we have already said, section 5 and r. 11 applied to such verified claims. Rule 13 deals with determination of certain dues to banking companies under section 6 and any unsecured debt payable by an applicant in respect of which a communication has been received from any Tribunal under section 52 of the Displaced Persons (Debt Adjustment) Act, 1951 (LXX of 1951). Rule 14 directs that the public dues and the amounts referred to in Rule 13 83 shall be deducted from the amount of compensation in a certain order of priority. Rule 15 reads as follows: "Determination of net compensation; After deducting the amount referred to in rule 14, the Regional Settlement Commissioner or an Assistant Settlement Commissioner or a Settlement Officer, or an Assistant Settlement Officer, having jurisdiction and duly authorised by the Regional Settlement Commissioner, shall pass an order determining the net amount of compensation payable to the applicant in respect of his verified claim and shall prepare a summary in the form specified in Appendix VII (Abstract of particulars). It is significant that Appendix Vii has a column for agricultural land and a column for remarks regarding application of r. 19. Pausing here, it is difficult to hold that rr. 12, 13 and 14 do not apply to applications for compensation in respect of agricultural lands which are the subject matter of a verified claim. There fore, we must reject the contention that Chapter IV, in which r. 19 occurs, does not deal with agricultural lands at all. It may be conceded that r. 16 does not apply to agricultural lands. The scale compensation in respect of agricultural lands which are the subject matter of a verified claim is expressly dealt with else where. Rule 51 which provides that the scale of allotment of land as compensation in respect of a verified claim for agricultural land shall be the same as in quasi permanent land allotment scheme in the State of Punjab and Patiala, and the East Punjab States Union, as set out in Appendix XIV. The explanation further provides that if any public dues are recoverable the allocable area shall be reduced correspondingly. Rule 49 read with r. 56 enables the compensation due on the verified claim for agricultural land to be converted into cash if a person wishes to have his claim satisfied against property other than agricultural land. Rule 18 expressly excludes agricultural land from its purview. What emerges from a consideration of these rules in Chapter IV is that we must consider each rule and see whether it has application to a claim for compensation in respect of agricultural land. Rule 19 reads thus: "Special Provision for payment of compensation to Joint families Where a claim relates to properties left by the members of an undivided Hindu family in West Pakistan thereinafter referred to as the joint family) compensation shall be computed in the manner hereinafter provided in this rule. (2) where on the 26th Sept. 1955 (hereinafter referred to as the relevant date) the joint family consisted of: (a) two or three members entitled to claim partition, 84 the compensation payable to such family shall be computed by dividing the verified claim into two equal shares and calculating the compensation separately on each such share, (b) four or more members entitled to claim partition, the compensation payable to such family shall be computed by dividing the verified claim into three equal shares and calculating the compensation separately on each such share. (3) For the purpose of calculating the number of the member of a joint family under sub rule (2), a person who on the relevant date: (a) was less than 18 years of age, (b) was a lenial descendant in the main line of another living member of joint Hindu family entitled to claim partition shall be excluded: Provided that where a member of a joint family has died during the period commencing on the 14th August 1947 and ending on the relevant date leaving behind on the relevant date all or any of the following heirs namely: (a) a widow or widows, (b) a son or sons (whatever the age of such son or sons) but no lenial ascendant in the main line, then all such heirs shall, notwithstanding anything contained in this rule, be reckoned as one member of the joint Hindu family. Explanation For the purpose of this rule, the question whether a family is joint or separate shall be determined with reference to the status of the family on the 14th day of August, 1947 and every member of a joint family shall be deemed to be joint notwithstanding the fact that he had separated from the family after the date". The heading "Special Provision for payment of compensation to joint families" is general. So is sub rule (1). The word properties ' is general and would include agricultural land. That this is the meaning is also borne out if we consider the word "claim". The word "claim" must have reference to the claim in the application to be made under section 4 read with rr. 3 and 4, and as we have already noticed, the application would include a claim in respect of agricultural land if it is the subject matter of a verified claim. The learned Attorney General has not been able to point to any principle of construction which would enable us to limit the scope of the general words in r. 19(1). His main argument that no rule in Chapter IV applies to claims in respect of agricultural land we have already rejected. 85 The learned Attorney General then urges that the scheme of the Rules is to provide in separate chapters for compensation in respect of various classes of properties, and he says that Chapter VIII provides for compensation in respect of verified claim for agricultural land situated in rural area and the rules contained in the chapter are the only rules that govern the grant of compensation. But none of the rules in this chapter deals with what is t9 happen if the agricultural land was held by a joint family in West Pakistan or if the agricultural land was held by co owners in West Pakistan. Even if a Joint Hindu Family is treated as a unit for some purposes in some laws, co owners are very rarely treated as a unit and it would require express language to treat co owners as a unit an.d award compensation to them as a unit. However, r. 20 recognises the general rule and provides that where a claim relates to property left in West Pakistan, which is owned by more than one claimant as co owners, the unit for the assessment of compensation shall be the share of each co owner and the compensation shall be payable in respect of each such share as if a claim in respect thereof has been filed and verified separately. The learned Attorney General, when asked, said that even r. 20 ' would not apply to a claim in respect of agricultural land, but we are unable to accede to this contention. It would be the height of ' inequity to hold this. In other words, rr. 19 and 20 enable the authorities to determine the unit for assessment of compensation. This subject is not dealt with in Chapter VIII, which deals with how the unit, be it an individual, a member of Joint Hindu Family or a co owner, is to be compensated. There is nothing in Chapter VIII which modifies or overrides rr. 19 and 20. Accordingly, in agreement with the High Court, we hold that r. 19 will apply to the claim of the respondent in respect of agricultural land left by him as a member of the Joint Hindu Family. In the result, the appeal fails and is dismissed with costs. As stated in the beginning, it is common ground that if this appeal fails the other appeals must also fail. They are accordingly dismissed with costs. There will be one hearing fee in them. Appeals dismissed.

The respondent who had a "verified claim" applied for compensation under the . He alleged that he was a co sharer along with his brothers in agricultural property in West Pakistan and claimed his share of the compensation. The Assistant Settlement Officer held that the alleged co sharers were members of a joint Hindu family and that t.he agricultural property was joint property. He then calculated the compensation on the joint property as per rr. 51 and 56 of the Displaced Persons (Compensation and Rehabilitation) Rules 1955. The respondent thereupon filed a petition in the High Court under articles 226 and 227 of the Constitution contending that on the finding that the respondent and his brothers constituted a joint family, the unit for assessment of compensation should first be determined according to r. 19, which makes special provision for payment of compensation to joint families, before compensation was calculated. The High Court allowed the petition. In the appeal to this Court it was contended that r. 19 was inapplicable as that rule does not apply to agricultural land. HELD: The High Court was right in holding that the rule applied to the claim of the respondent in respect of the agricultural land. Chapter IV of the Rules in which r.19 occurs contains some rules which apply to applications for compensation in respect of agricultural lands also. Therefore it cannot be said that the Chapter does not deal with agricultural lands at all. Each rule must be considered to see whether it has application to a claim for compensation in respect of agricultural land. So considered, there is no principle of construction by which the scope of the general words in r. 19 could be limited, so as not to apply to agricultural land. Chapter VIII of the Rules provides for compensation in respect of verified claims for agricultural lands in rural areas and only deals with how a unit that has been determined is to be compensated. There is nothing in that Chapter which modifies or overrides r.19 which enables the authorities to determine the unit for assessment of compensation in the case of joint families. [83 D E; 85 A F]

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Appeal No. 435 to 437 of 1959. Appeals from the judgment and decree dated April 24, 1953 of the Patna High Court in First Appeals Nos. 119, 192 and 189 of 1948 respectively. section T. Desai, U. P. Singh and D. Goburdhan, for the appellants. G. section Pathak, B. Dutta & K. K. Singh, for the respondents Nos. 2, 3 (a), 3 (d), 4 (a) to 4 (c), 5, 6, 7 (a), 8 to 14, 15 (a) to 15 (c), 16, 18 to 20, 21 (a), 21 (b), 22, 23, 25 to 32, 33 (a), 33 (b), 34 to 38, 39(a) to 39(d), 40 to 42, 44, 45, 46(a) to 46(d), 47, 48, 49, 74 to 79 and legal representatives of respondent No. 1 (in C. As. 435 and 436 of 1959) and respondents Nos. 14 759 to 16, 18(a), 18(d), 19(a) to 19(c), 21, 23, 25, 26 and legal representatives of respondent No. 1 (in C.A. No. 437 of 1959). Sarjoo Prasad, Kanhaiyaji and A. G. Ratnaparkhi, for respon dent No. 80 (in C.As. 435 and 436/1959) and respondent No. 1 (in C.A. No. 437 of 1959). D. P. Singh, for respondent No. 81 (in C.As. 435 and 436 of 1959). The Judgment of the Court was delivered by Bachawat J. After stating the facts of the case and discussing the evidence his Lordship proceeded :] On the question of title also, the plaintiffs must fail. In the plaint, the basis of their claim of title was (a) occupation of 426 bighas 18 kathas and 9 dhurs of Dubha Taufir by their ancestor Naurang Thakur as occupancy tenant and the record of his rights in the survey papers of 1892 and (b) the oral arrangement with the Dumraon Raj. The first branch of this claim is obviously incorrect. The survey papers of 1892 do not record occupancy tenancy rights of Naurang Thakur in 426 bighas 18 kathas and 9 dhurs. In the High Court, counsel for the plaintiffs conceded that in the Khasra of 1892 1893 survey the plaintiffs ' branch was recorded as tenant for about 19 bighas only. The oral arrangement is not established, and the second branch of this claim also fails. The Subordinate Judge did not examine the basis of the plaintiffs ' claim of title. His finding in favour of the plaintiffs ' title was based chiefly on (1) oral evidence, (2) depositions of witnesses in previ ous litigations, (3) possession, (4) an admission of the Maharaja. The oral evidence on the point is not convincing. The claim is not supported by the documentary evidence. The survey papers of 1892, 1895, 1904, 1909 and 1937 do not support the plaintiffs ' claim of occupancy rights in the lands in suit. The depositions of witnesses in other litigations do not carry the matter further. The deposition of defendant No. 1 1, Ram Dass Rai, in Suit No. 217 of 1911 is of weak evidentiary value. Though admissible against him as an admission, it is not admissible against the other defendants. The other depositions relied upon do not satisfy the test of section 33 of the Indian Evidence Act, and are not admissible in evidence. We have already found that the plaintiffs and their ancestors were not in possession of the disputed land since 1909. The oral evidence as to their possession before 1909 is not convincing, and we are not inclined to accept it. The documentary evidence does not support the story of their possession before 1909. With 760 regard to the admission of the Maharaja in Suit No. 247/10 of 1913 relating to the plaintiffs ' title to 244 bighas, we find that in his written statement the Maharaja asserted his khas zeraiti rights and denied the alleged guzashta kastha rights of the plaintiffs ' ancestors. It seems that in Bihar 'guzashta kasht ' means a holding on a rent not liable to enhancement. Later, on June 10, 1913, a petition was filed on his behalf stating that the plaintiffs ' ancestors were tenants in occupation of the disputed land having guzashta kasht rights. The Maharaja was interested in the success of the suit, and it was necessary for him in his own interest to make this admission. The admission was made under somewhat suspicious circumstances at the end of the trial of the case when the arguments had begun. Though this petition was filed, the written statement of the Maharaja was never formally amended. In the circumstances, this admission has weak evidentiary value. In this suit, the plaintiffs do not claim tenancy right either by express grant or by adverse possession. Title cannot pass by mere admission. The plaintiffs now claim title under cl. (1) of section 4 of Regulation XI of 1825. The evidence on the record does not establish this claim. The claim of title based upon cl. (1) of section 4 of Regulation XI of 1825 was not clearly made in the pleading. It was clearly put forward for the first time in the High Court. It was contended that the decision in Suits Nos. 22 to 31 and 199 of 1937 conclusively established this claim. The High Court rightly pointed out that those suits did not relate to any portion of the subject matter in the present suit, and the decision in those suits cannot operate as res judicata. The plaintiffs now contend that the judgment is admissible to show that the plaintiffs ' ancestors asserted title to other Taufir lands as an accretion to frontier Dubha Mal plots under the Regulation and their claim was recognised. But the plaintiffs ' ancestors did not consistently assert such a title. In Attestation Dispute Cases Nos. 1 to 253 of village Dubha they claimed title to the lands in suit as an accretion to their 77 bighas, and this claim was negatived. The survey records of 1892, 1895, 1904 and 1909 disclose that the ancestors of the plaintiffs held some of the frontier plots of Dubha Mal. The High Court was, therefore, asked to draw the inference that their ancestors held those plots during 1845 to 1863 when the Taufir lands accreted. The question is whether such an inference should be drawn. Now, if a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and backwards may sometimes be drawn. The presumption of future continuance is noticed in Illustration (d) to section 114 of the . In 761 appropriate cases, an inference of the continuity of a thing or state of things backwards may be drawn under this section, though on this point the section does not give a separate illustration. The rule that the presumption of continuance may operate retrospectively has been recognished both in India, see Anangamanjari Chowdhrani vs Tripura Soondari Chowdhrani (1) and England, see Bristow vs Cormican(2), Deo vs Young(1). The broad observation in Manmatha Nath Haldar vs Girish Chandra Roy(4) and Hemendra Nath Roy Chowdhury vs Jnanendra Prasanna Bhaduri(5) that there is no rule of evidence by which one can presume the continuity of things backwards cannot be supported. The presumption of continuity weakens with the passage of time. How far the presumption may be drawn both backwards and forwards depends upon the nature of the thing and the surrounding circumstances. In the present case, the High Court rightly refused to draw the inference from the state of things during 1892 to 1909 that the ancestors of the plaintiffs held frontier plots of Dubha Mal in 1863. The High Court pointed out that even during 1894 to 1905 the ownership of some of the plots had changed, and also that the frontier Mal plots and the corresponding Taufir plots were not always held by the same person. In 1845, part of the Mal lands was under water. The frontier Mal lands reformed between 1845 to 1863 were subject to annual inundation. It is well known that settlements of char lands are seasonal and temporary. There is a considerable gap of time between 1892 and 1845. It is not safe to assume that the state of things during 1894 to 1905 existed during 1845 to 1863. In exhibit L 1 (13), the Khatian of Mauza Dubha published on January 2, 1912, the tenancies of serveral plots held by the ancestors of the plaintiffs are described as Sharah Moaiyan (at fixed rate of rent). The plaintiffs contend that this record read in conjunction with section 50(2) of the Bengal Tenancy Act, 1885 shows that the ancestors of the plaintiffs must have held those plots from the time of the, Permanent Settlement. The contention is based on fallacious reasoning. Section 50(2) of the Bengal Tenancy Act, 1885 raises in a suit or proceeding under the Act a presumption that a raiyat has held at the same rate of rent since the Permanent Settlement, if it is shown that the rate of rent has not been changed during the last 20 years. Fixity of rent may arise not only from this presumption but also from express grant. An entry in the 1. (1887) L.R. 14 I.A. 101, 110. 2. , 669 670. ; , 4. , 770. 5. 5, 117. 762 record of rights showin that the tenancy was at a fixed rate of rent does not necessarily mean that the tenant was holding the land from the time of the Permanent Settlement. The point based on the entries in exhibit L 1(13) was not taken in the Courts below, and the circumstances under which they came to be made and the question whether they relate to the frontier plots of Dubha have not been investigated. We think that this new point ought not to be allowed to be raised at this stage. The suit as framed must fail, even if we presume that the ancestors of the plaintiffs ' branch held some of the frontier plots in Dubba Mal between 1845 and 1863, when the Taufir lands accreted. The ancestors of the defendants third party 's branch also held numerous frontier plots of Dubha Mal between 1892 and 1909, and making the same presumption in their favour, it would appear that they also held numerous frontier plots of Dubha Mal between 1.845 and 1863. The ancestors of the plaintiffs ' branch and defendants 3rd party 's branch separately held and enjoyed the several frontier plots of Dubha Mal, and on the plain tiffs ' own case, the ancestors of the plaintiffs ' branch would be entitled to the alluvial accretions in front of their plots and similarly, the ancestors of the defendants 3rd party 's branch would be entitled to the alluvial accretions in front of their plots. The alluvial accretions of each plot must be apportioned by drawing perpendicular lines from its boundary points to the new course of the Ganges, so that each plot acquires a new river frontage in proportion to its old river frontage. The plaintiffs could claim no more than the alluvial accretions to the plots, held by the ancestors of their branch. In the Courts below, no attempt was made by the plaintiffs to apportion the accretions amongst the several frontier plots. Without further investigation, the alluvial accretions in respect of each plot cannot be ascertained. This is not a fit case for remand at this late stage. The further case of the plaintiffs that the defendants3rd party lost their title to their portion of the Taufir lands is not established. It is neither alleged nor proved that the plaintiffs and the defendants 3rd party jointly owned and possessed the Taufir lands. In the absence of pleading and proof of joint title and possession, the plaintiffs ' claim for recovery of the entire Taufir lands must fail. Realising this difficulty, counsel for the plaintiffs made an entirely new case before us. He submitted that Dihal Thakur. the common ancestor of the plaintiffs and defendants 3rd party owned all the frontier plots of Dubha Mal between 1845 and 76 3 1863 and consequently acquired occupancy rights in all the Taufir lands accreted in front of his plots, those rights have now devolved jointly upon the plaintiffs and defendants 3rd party, and the plaintiffs and defendants 3rd party are jointly entitled to the entire Taufir lands. There is no trace of this case in the pleadings and the judgment of the trial Court. This case was not made even in the High Court. On the contrary, the plaintiffs ' case all along has been that the branches of the plaintiffs and defendants 3rd party separately possessed and enjoyed their respective plots. Moreover, we are not inclined to draw the presumption that Dihal Thakur owned all the frontier plots of Dubha Mal between 1845 and 1863. Even if we assume that the descendants of Dihal Thakur owned the frontier plots in 1892 or even in 1882, we are unable to infer that Dihal Thakur held them between 1845 and 1863. The case is made here for the first time, and was not the subject matter of an enquiry in the Courts below. There is neither pleading nor proof that Dihal Thakur held any of the frontier plots of Dubha Mal at any time, or that the branches of the plaintiffs and defendants 3rd party inherited their respective holding from Dihal Thakur. To establish their claim based upon cl. (1) of section 4 of Regu lation XI of 1825, the plaintiffs must also prove that the Taufir lands were gained by gradual accession from the recess of the river. Having regard to our conclusions on the other points, we do not wish to express any opinion on this question. Even if the Taufir lands were gained by gradual accession, this gain did not accrue for the benefit of the plaintiffs. The plaintiffs have failed to establish that they or their ancestors held any plot or plots to which the accretions were annexed. The plaintiffs have failed to prove their title based upon cl. (1) of section 4 of Regulation XI of 1825. They have also failed to establish their claim of title based upon oral arrangements. Their claim of title based upon occupation of the disputed lands is also not established. They have failed to prove that they were in occupation of the disputed lands. Moreover, mere occupation does not confer tenancy rights. The result is that Civil Appeals Nos. 435 and 436 of 1959 must fail. C. A. Nos. 435 to 437 dismissed.

The appellants claimed title to the lands in dispute on the basis of section 4(1) of the Bengal Alluvion and Deluvion Regulation XI of 1825. To establish their claim based upon the clause, the appellants had to prove that the lands were gained by gradual accession from the recess of the river and that the lands were accretions to plots in the possession of the appellants or their ancestors. Since the survey records from 1892 to 1909 showed that appellants ' ancestors held some of the frontier plots, the High Court was asked to draw the inference that they held those plots during 1845 to 1863 when the lands in dispute accrcted. The High Court refused to draw the inference. In appeal to this Court, HELD : If a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and, in appropriate cases, backwards, may be drawn under section 114, Evidence Act. But it was not safe to assume in the present case that a state of things during 1892 to 1909 existed during 1845 to 1863 since the interval of time was too Inng. [760 H] Anangamanjari Chowdhrani vs Tripura Sundari Chowdhrani, (1887) L.R. 14 I.A. 101, 110, approved. Observation contra in Manmath Nath Haldar, vs Girish Chandra Roy, , 770 and Hemendra Nath Roy Chowdhury vs Jnendra Prasanna Bhaduri, , 117, disapproved.

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Appeals Nos. 206 to 210 of 1964. Appeals from the judgment and orders dated September 26, 1961 of the Calcutta High Court in income tax Reference No. 24 of 1957. Niren De, Additional Solicitor General, Ganapathy Iyer and R.N. Sachthey, for the appellants. Sampat lyengar, B.R.L. Iyengar and D.N. Gupta, for the respondents. The Judgment of the Court was delivered by Sikri, J. These appeals by certificate granted by the High Court of Calcutta under section 66(A)(2) of the Indian Income Tax Act, 1922, are directed against the judgment of the said High Court answering two questions referred to it against the Revenue. The questions are: (1) Whether the profit arising to the assessee company from miscellaneous insurance transactions of mutual character was assessable under the Indian Income Tax Act, and (2) If the answer to question No. (1) is in the affirmative, whether on the facts and in the circumstances of the case the balance of the profits as disclosed in the assessee company 's profit and loss account after deducting the various reserves should be the taxable profits within the meaning of Section 2(6C) read with Rule 6 of the Schedule of the Indian Income Tax Act. The relevant facts and circumstances are as follows: The respondent. the Calcutta Hospital and Nursing Home Benefits Association Limited, hereinafter referred to as the assessee, is a mutual insurance concern carrying on miscellaneous insurance business. The principal objects for which the Association was established were: (1) By means of insurance on the mutual principle to provide, or help towards providing, anywhere in the world for the expense of accommodation and treatment in hospitals 634 and nursing homes and of private nursing for members and their dependants; (2) To organise insurance on the mutual principle under Rules and Regulations to be framed for the purpose with the object of providing such hospital, medical, surgical, nursing and allied services as before mentioned, of supporting and assisting hospitals, in Calcutta or elsewhere; of relieving members or then dependants, in whole or in part from the payment of hospital and other charges while in receipt of such hospital, medical, surgical, nursing and allied services; and of reimbursing and repaying to members or their dependants in whole or in part, all payments for such hospital and other charges which they may have incurred or made which in receipt of such hospital, medical, surgical, nursing and allied services. The members were required to pay a monthly premium, but there was a waiting period of four months for all bench its other than maternity, for which the waiting period was one year. Benefits and privileges became available as from the first day of the fifth calendar month of registration (in respect of Maternity the 13th month) and continued to be available thereafter so long as the subscriptions were not in arrear. These appeals are concerned with the assessment years 1949 50 to 1953 54 and the relevant accounting years ended on December 31, 1948, December 31, 1949, December 31, 1950, December 31, 1951 and December 31, 1952, respectively. In the statement of the case, the Appellate Tribunal describes the accounts maintained by the assessee thus: "The assessee 's published revenue accounts contained three classifications, viz. (i) miscellaneous insurance business revenue account, (ii) profit and ' loss account and (iii) profit and loss appropriation account. In the miscellaneous insurance business revenue accounts were included subscriptions from the members, gross premia from the members and from such amounts were deducted general reserve and or contingency reserve. Reserve so made were transferred to the balance sheet as credit accounts. The claims paid or payable and the expenses of management were deducted from this revenue account. The balance of the miscellaneous insurance business revenue account was transferred to the profit and loss account to the credit of which was further added interest on investments and the debits included provision for taxation, interest on loan, contribution to provident fund and depreciation. The balance of this account being the balance of profit and loss account was transferred. to the profit and toss appropriation account. Therefrom, in one year, ended 635 31st December, 1949, further deduction was made against contingency reserve and the balance either loss or profit was carried forward. " We may now set out the facts regarding 1949 50 assessment. It is not necessary to state the facts regarding other assessment years. The Income Tax Officer for the assessment year 1949 50 added the reserve for taxation, Rs. 1000/ , to the net profit as per profit and loss account, which showed a profit of Rs. 1,653/ , and after deducting depreciation, he assessed the total income at Rs. 2,651/ . On appeal, the Appellate Assistant Commissioner upheld the order of the Income Tax Officer. Following the decision of the Bombay High Court in Bombay Mutual Life Assurance Society Ltd., vs Commissioner of Income Tax, Bombay City (1) he held that the income was assessable to income tax and that under Rule 6 of the Schedule to the Income Tax Act it was permissible for the Income Tax Officer to add the reserves to the income disclosed in the profit and loss account. On further appeal, the Appellate Tribunal found no difficulty in holding that section 2(6C) of the Income Tax Act, according to its true interpretation, included income or the profits of any insurance company of mutual assurance and the said profits shall be taken to be balance of the profits disclosed by the annual accounts. Regarding the reserve, the Tribunal held that the provision for reserve was not an expense to be deducted from the profits disclosed by the assessee company in order to arrive at the profits within the meaning of r. 6, and the Income Tax Officer was entitled to add back the reserve. The High Court held that the surplus, miscalled profit, arising to the assessee company from the miscellaneous insurance transactions of mutual character was not assessable under the Indian Income Tax Act and that, in any event, the assessee was entitled to deduct the reserve. The High Court distinguished Bombay Mutual Life Assurance Society, Ltd. vs Commissioner of Income Tax, Bombay City(1) on the ground that the Bombay decision was a life insurance decision and although it was a mutual life insurance society, nevertheless different and special rules applied to life insurance and the rules with which the Bombay decision was concerned were rules 2 and 3 which did not apply to mutual insurance other than life. The second point of distinction, according to the High Court, was the very distinctive clauses in the memorandum of objects and articles of association of the assessee. Section 2(6C) at the relevant time defined 'income ' to include " . . profits of any business of insurance carried on by a mutual insurance association computed in accordance with Rule 9 in Schedule. " We may mention that another section 2(6C) was substituted by Act XV of 1955, and the wording substituted by this Act in (1) 20 I.T.R.189. 636 sub clause (vii) is "the profits and gains of any business of insurance carried on by a mutual insurance association or by a co operative society computed in accordance with rule 9 in the Schedule. " But nothing turns on the change of the language as far as a mutual surance association carrying on business of insurance is concerned. Rule 9 of the Schedule reads thus ' "9. These rules apply to the assessment of the profits of any business of insurance carried on by a mutual insurance association . . Rule 6 with which we are concerned reads thus: "The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, copies of which are required under the , to be furnished to the Superinte ndent of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of Section 10 of this Act be allowed for in computing the profits and gains of a business. Profits and losses on the realisation of investments and depreciation and appreciation of the value of investments shall be dealt with as provided in Rule 3 for the business of life insurance. " The Additional Solicitor General, appearing on behalf of the appellant, contends that the Bombay High Court was right in holding that "section 2(6C) imports into the definition of 'income ', which is to be found in the charging section 3, these profits which may not be profits in the ordinary sense of the term but which are made profits by reason of Rule 2 of the Schedule because Rule 2 really gives an artificial extension to the meaning of the word 'profits ' when it says that 'profits and gains shall be taken to be '. Therefore a new class of artificial income is created by this rule and that artificial income is included into the meaning of Section 3 by reason of this rule. " Mr. Sampat Ayyangar, learned counsel for the assessee, relying on the decision of the House of Lords in Arvshire Employers Mutual Insurance Association Ltd. vs Commissioner of Inland Revenue,(1) contends that the Legislature has not made its intention clear because it has used the word 'profits ' in section 2(6C) under a misapprehension that the surplus of a mutual insurance company (1) 637 carrying on insurance business is profits. He says that in Arvshire Employers Mutual Insurance Association case(1) the Legislature had proceeded on a similar misapprehension and the House of Lords held that section 31(1) of the Finance Act, 1933 (23 & 24 Geo. V.c. 19) did not succeed in making the profits of a mutual insurance company taxable. He urges that we should follow this precedent. He relies on the following passage from the speech of Lord Macmillan at p. 347: "The structure of Section 31(1) is quite simple. It assumes that a surplus arising from the transactions of an incorporated company with its members is not taxable as profits or gains. To render such a surplus taxable it enacts that the surplus, although in fact arising from transactions, of the comp any with its members, shall be deemed to be something which it is not, namely, a surplus arising from transactions of the company with non members. The hypothesis is that a surplus arising on the transaction of a mutual insurance company with non members is taxable as profits or gains of the company. But unfortunately for the Inland Revenue the hypothesis is wrong. It is not membership or non membership which determines immunity from or liability to tax, it is the nature of the transactions. If the transactions are of the nature of mutual insurance the resultant surplus is not taxable whether the transactions are with members or with non members. " He further relies on the observations of Lord Macmillan that "the Legislature has plainly missed fire. Its failure is perhaps less regrettable than it might have been, for the Sub section has not the meritorious object of preventing evasion of taxation, but the less laudable design of subjecting to tax as profit what the law has consistently and emphatically declared not to be profit." He says that similarly in this case the Legislature has plainly missed fire. In order to appreciate the scope of that decision, it is necessary to set out the relevant part of section 31 of the Finance Act, 1933. Section 31(1) enacted: "31. (1) In the application to any company or society of any provision or rule relating to profits or gains chargeable under Case I of Schedule D (which relates to trades) . any reference to profits or gains shall be deemed to include a reference to a profit or surplus arising from trans (1)T. C. 331. 638 actions of the company or society with its members which would be included in profits or gains for the purposes of that provision or rule if those transactions were transactions with non members, and the profit or surplus aforesaid shall be determined for the purposes of that provision or rule on the same principles as those on which profits or gains arising from transactions with non members would be so determined. " The Section adopted the device of a deeming provision. The profits arising from the transactions of a company or society with its members were deemed to be profits arising from transactions with non members. Parliament assumed that the latter were taxable. As this hypothesis was wrong, Parliament failed in its objective. But the Indian Legislature did not adopt any deeming device. It defined 'income ' to include profits of any business of insurance carried on by a mutual insurance association. What are those profits is then explained by reference to the Schedule. The effect of this in substance is to incorporate r. 6 into the definition. If the legislature had defined income to include profits of insurance carried on by a mutual insurance association computed according to r. 6, very little would have remained arguable. It is, however, urged that in r. 6 also the word 'profits ' means taxable profits. But r. 6 speaks of balance of profits as disclosed in the accounts submitted to the Superintendent of Insurance. The Superintendent of Insurance is not concerned with taxable profits. What he is concerned with, inter alia, is the balance of profits for the purpose of the . It is then urged that in the definition the word 'surplus ' should have been used instead of profits. But the word 'surplus ' has a technical significance in the , and it seems to us that it would have been inexpedient to use the word 'surplus '. At any rate. r. 6 would then have been drafted differently. It is finally urged that this is a taxing statute and we should give a strict construction to the definition. The definition could still operate if we interpret it in a narrow sense as to include profits from investments and other activities of a mutual insurance company. It is said that this definition was inserted to make it clear that such profits would be taxable. We cannot accede to this contention. It was well established that such profits would be taxable apart from the new definition, We cannot understand why it was necessary 639 to make it doubly clear. Moreover, r. 6 deals with balance of profits, which would include profits arising from the business of insurance of a mutual character. It deals with balance of profits as a composite thing. It is impossible to dissect this composite thing. If we were to accede to the assessee 's contention, the definition would serve no purpose whatsoever. It seems to us that the Legislature has evinced a clear intention to include the balance of profits as computed under r. 6 within 'the word 'income ' in section 3 of the Income Tax Act, and ' accordingly such balance of profits is taxable. We are unable to agree with the High Court that the Bombay case is distinguishable in principle. It is true that the Bombay High Court was concerned with r. 2, but when we go to the schedule and find out what is the balance of profits or surplus that has been made taxable, it does not make any difference to the construction of section 2(6C) whether it is r. 2 that is applied or r. 6. Therefore, disagreeing with the High Court, we answer the first question in the affirmative. This takes us to the second question. The answer to this question depends on the true interpretation of r. 6. It seems to us that on its language the Income Tax Officer is bound to accept the balance of profits disclosed by the annual accounts, copies of which have been submitted to the Superintendent of Insurance. He can only adjust this balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 be allowed for in computing the profits and gains of a business. We are not concerned here with the latter part of r. 6 dealing with profits and losses on the realisation of investments, and depreciation and appreciation of the value of investments. This Court examined the provisions of the in connection with the Schedule in Pandvan Insurance Company Ltd., Madurai vs The Commissioner Income Tax, Madras(1) and arrived at the conclusion that the "makes detailed provisions to ensure the true valuation of assets and the determination of the true balance of profits of an insurance business" and that r. 6 should be construed in the light of this background. Examining r. 6 in the light of this background, it seems to us that the intention of the rule is that the balance of profits as disclosed by the accounts submitted to the Superintendent of Insurance and accepted ' by him would be binding on the Income Tax Officer, 640 except that the Income Tax Officer would be entitled to exclude expenditure other than expenditure permissible under the provisions of section 10 of the Act . It is common ground in this case that these serves which were added to the balance of profits were not expenditure. Accordingly, agreeing with the High Court, we answer the second question in the affirmative . In the result, the appeals are accepted in part. Parties will bear their own costs in this Court. Appeals partly allowed .

The respondent Association was a mutual insurance concern carrying on miscellaneous insurance business. The objects of the Association included provision of help anywhere in the world in respect of expenses of accommodation and treatment in nursing homes for members and their dependents. The members were required to pay a monthly premium. In the assessments for the assessment years 1949 50 to 1953 54 the Income tax Officer taxed the reserves for payment of income tax which had been debited to the profit and loss account. The Appellate Assistant Commissioner as well as the Appellate Tribunal upheld the Income tax Officer 's order. The questions arising in the proceedings were; (1) whether the balance of profits of a mutual insurance concern were included in the definition of the word 'income ' and if so (2) whether reserves for income tax could be taxed. At the instance of the respondent a reference was made to the High Court. That Court held that the surplus, miscalled profit, arising to the company from the miscellaneous insurance transactions of mutual character was not assessable under the Indian Income tax Act and that in any event, the assessee was entitled to deduct the reserves. The Revenue appealed to this Court with certificate. HELD: (i) In section 2(6C), the Legislature has evinced a clear intention to include the balance of profits under r. 6 within the meaning of the word 'income ' in 6. 3 of the Indian Income Tax Act, and accordingly such balance of profits is taxable. [639B C] Ayrshire Employers Mutual Insurance Association Ltd. vs Commissioner of Inland Revenue, , distinguished. "Profits." in r. 6 cannot be said to mean "taxable profits". Rule 6 refers to 'balance of profits ' as disclosed in the accounts submitted to the. Superintendent of Insurance. The Superintendent of Insurance is not concerned with taxable profits. What he is concerned with is the balance of profits under the Insurance Act. [638E F] Nor can the term 'profits ' in r. 6 be interpreted in the narrow sense of including only profits from investments and other activities of a mutual insurance company. Rule 6 deals with "balance of profits" as a composite thing. It is impossible to dissect this composite thing. [639A B] Bombay Mutual Life Assurance Society Ltd. vs Commissioner of Income tax, Bombay City, , affirmed. (ii) The Insurance Act makes detailed provisions to ensure the true valuation of assets and the determination of the true "balance of profits" of an insurance business and r. 6 should be construed in the light of this background. [639G H] 633 Pandyan Insurance Company Ltd. Madurai vs The Commissioner Income tax, Madras, ; , referred to. Examining r. 6 in the light of this background. the intention of the rule seems to be that the. balance of profits as disclosed by the accounts submitted to. the Superintendent of Insurance and accepted by him would be binding on the Income Tax Officer, except that the Income Tax Officer would be entitled to exclude expenditur.e other than expenditure permissible under the provisions of section 10 of the Act. In the present case it was common ground between the parties that the reserves which were added to the balance of profits were not expenditure. The High Court rightly held that the reserve for income tax could not be taxed. [639H 640B]

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Appeal No. 541 of 1963. Appeal by special leave from the order dated August 23, 1961 of the Punjab High Court in Civil Misc. No. 120 of 1961. Bhagwani Lal, E. C. Agarwala and P. C. Agarwalla, for the appellant. Deepak Dutt Chaudhry and B. R. G. K. Achar, for respondents Nos. 1 to 3. Janardhan Sharma, for respondent No. 4. The Judgment of SUBBA RAO and BACHAWAT, JJ. was delivered by BACHAWAT, J., MUDHOLKAR, J. delivered a separate but con curring Judgment. Bachawat, J. The appellant is a displaced person to whom 105 ordinary acres of land equivalent to 42 standard acres 11 units in village Jamalpur, Tehsil Hansi, District Hissar, were allotted by the Custodian on October 5, 1949 under the conditions published in the Notification of the East Punjab Government No. 4892/S dated July 8, 1949. The Punjab Security of Land Tenures Act, 1953 (Punjab Act No. 10 of 1953), hereinafter 513 ,referred to as the Act, came into force on April 5, 1953. On that date, the aforesaid land was equivalent to 42 standard acres II units, and having regard to proviso (ii) (b) to section 2 (3) of the Act, was permissible area in relation to the appellant, and as the appellant did not own any other land in the State of Punjab, he was a shall landowner within the meaning of section 2(2) of the Act. On October 22, 1955, as a result of consolidation proceedings, the appellant was granted 101.4/5 ordinary acres of land in exchange for the land originally allotted to him in 1949. Respondent No. 4 is a tenant of the appellant in respect of a portion of this land. On February 20, 1958, the appellant filed an application before the Assistant Collector, 1st Grade, Hissar for ejectment of respondent No. 4 under section 9 (1) (i) of the Act on the ground that he is a tenant of the appellant who is a small landowner. On that date, the aforesaid 101.4/5 acres of land owned by the appellant was equivalent to more than 50 standard acres. On February 17, 1960, the Assistant Collector dismissed the application. He held that the appellant was a big landowner, because on the date of the application the land owned by him was equivalent to more than 50 standard acres. On appeal, on May 2, 1960, the Collector of Hissar set aside the aforesaid order, and allowed the application for ejectment. He held that the appellant was a small landowner as he was a displaced person and an allotted of less than 50 standard acres. On August 30, 1960, the Commissioner, Ambala Division, dismissed a second appeal, and on January 2, 1961, the Financial Commissioner dismissed a revision petition filed by respondent No. 4. Following his previous ruling in Pat Ram vs Milawa Ram(1) and Har Chand Singh vs The Punjab State(2), the Financial Commissioner held that the status of the appellant must be determined on the date of the commencement of the Act and subsequent accretions to his holding arising out of consolidation of holdings and improvements due to good husbandry or advent of irrigation should be ignored. On August 22, 1961, the Punjab High Court allowed a petition preferred by respondent No. 4 under article 227 of the Constitution of India and set aside the orders of the Collector, the Commissioner and the Financial Commissioner. The High Court held that the status of the appellant must be determined by evaluating his land in terms of standard acres on the date of the application for ejectment. The appellant now appeals to this Court by special leave. (1) (1961) 40 Lahore Law Times, P. 28. (2) (1961) 40 Lahore Law Times, p. 9. 5 14 The question is whether the appellant is asmall landowner within the meaning of section 9 (1) (i) of the Act. On a combined reading of sections 2, 3, 4, 5, 5A, 5B, 5C, 10A,19A and 19D, the scheme of the Act appears to be as follows : The entire land held by the landowner in the State of Punjab on the date of the commencement of the Act must be evaluated as on that date and the status of the landowner and his surplus area, if any, must be then ascertained. If he is then found to be a small landowner, he continues to be so for the purpose of the Act, until he acquires more land, and on taking into account the value of the land in terms of standard acres on the date of the acquisition, he is found to be a big landowner. The landowner is required to make the necessary reservations or selections and to give the necessary declarations so that his status and the surplus area, if any, held by him may be so determined. If he is a small landowner at the commencement of the Act, his status is not altered by reason of improvements in the value of his land or re allotment of land on compulsory consolidation of holdings. In an unreported decision in Surja vs Financial Commissioner of Punjab and others(1), the Punjab High Court held that the status of the landowner for the purposes of an application under section 14A of the Act should be determined by evaluating his land on the date of the application. On the basis of this ruling, the improvements in the land subsequent to the commencement of the Act could not be ignored; but the legislature considered that this decision had the effect of defeating the purpose of the Act. It is well known that with a view to get rid of this decision, the legislature inserted section 19 F(b) in the Act by the Punjab Security of Land Tenures (Amendment and Validation) Act, 1962 (Punjab Act No. 14 of 1962). The object of this amendment will appear from the following passage in the statements of Objects and Reasons published in the Punjab Gazette (Extr.) dated April 27, 1962 : "Some of the recent judicial pronouncements have the effect of defeating the objectives with which the Punjab Security of Land Tenures Act, 1953 was enacted and amended from time to time. Under the scheme of the parent Act a specific period was allowed for filing of reservations by the landowners the object of which was to find out whether a person was a small landowner or not. Once that was found the intention was that such a person should continue to be treated as (1) Civil Writ No. 486 or 1961. 515 such for the purposes of the Act so long as he did not acquire more lands. In other words, his status was not to be altered on account of improvements made on the land or reallotment of land during consolidation. However, the High Court took a different view in Civil Writ No. 486 of 1961 (Surja versus Financial Com missioner, Punjab and others. ). Accordingly clauses 3, 6 and 7 of the Bill seek to neutralise the effect of the aforesaid decisions. " Clause 7 of the Bill related to sections 19 E and 19 F. The amending Act of 1962 was passed on July 4, 1962 during the pendency of the appeal in this Court. Section 19 F is retrospective in operation and is deemed to have come into force on April 15, 1953. Section 19 F(b) reads : "19 F. For the removal of doubts it is hereby declared, (b)that for evaluating the land of any person at any time under this Act, the land owned by him immediately before the commencement of this Act, or the land acquired by him after such commencement by inheritance or by bequest or gift from a person to whom he is an heir, shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such commencement, and that the land acquired by him after such commencement in any manner shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such acquisition. " On a reading of section 19 F(b), it would appear that for the purpose of determining the status of the landowner and evaluating his land at any time under the Act, the land owned by him immediately before the commencement of the Act must always be evaluated in terms of standard acres as if the evaluation was being made on the date of such commencement. It is not disputed that if the land held by the appellant immediately before the commencement of the Act is so evaluated, the appellant would be a small landowner. There is no scope for evaluating the subsequent improvements in the land due to consolidation operations or otherwise. The appellant did not acquire any land after the commencement of the Act. His status as a small landowner was not altered by reason of subsequent improvements or 516 re allotments of land on compulsory consolidation of holdings. On the date of the application for eviction, he, therefore, continued to be a small landowner. The High Court was in error in holding that the status of the appellant should be determined by evaluating his land in terms of standard acres on the date of the application for eviction. In the result, the appeal is allowed. We set aside the order of the High Court and restore that of the Financial Commissioner upholding the orders of the Commissioner and the Collector. We direct that costs throughout will be borne by the parties as incurred. Mudholkar, J. This is an appeal by special leave from a judgment of the High Court of Punjab allowing a writ petition under article 227 of the Constitution and setting aside orders of the Collector, the Commissioner and the Financial Commissioner made under certain provisions of the Punjab Security of Land Tenures Act, 1953 (hereafter referred to as the Act). The relevant facts are briefly these : The appellant Bhagwandas is a displaced person from West Pakistan. He owned 74 standard acres 133 4 units of agricultural land in certain villages in West Pakistan. On October 5, 1949 he was allotted 42 standard acres and 11 units of land in the village Jamalpur, Tehsil Hansi, District Hissar. Subsequently proceedings for consolidation of holdings were taken under the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (Act 50 of 1948). After those proceedings were finalised the appellant was granted an equivalent area of land in the same village as described in a sanad granted by the President on October 22, 1955 in exchange for the land earlier granted to him. Under the sanad the appellant was granted proprietary rights in the land. On February 20, 1958 the appellant, claiming to be a small holder made an application under section 14 A(i) of the Punjab Security of Land Tenures Act, 1953 before the Assistant Collector, I Grade, Hissar, for the ejectment of respondent No. 4 who was a tenant of the land. In his application the appellant alleged that as 'he held less than 50 standard acres of land he was a "small land owner" and as such had the right to evict the tenant and instead cultivate the land himself. The application was rejected by the Assistant Collector. Unfortunately neither party has placed the order of the Assistant Collector on the record of this appeal. It is, however, common ground that the reason for rejecting the application was that the Assistant Collector found that because of certain improvements the income from the lands 5 17 had risen considerably and that consequently the standard acreage of this land had risen from 42 standard acres to a standard acreage above 50 standard acres and that the appellant 's application was, therefore., untenable under section 14 A. In an appeal preferred by the appellant the Collector, Hissar held by his order dated May 2, 1960 that since the appellant was allotted only 42 standard acres and 11 units he is entitled to be treated as a small owner of the land and since the tenant had more than 5 standard acres under his cultivation in addition to the appellants land he was liable to be ejected from the land belonging to the appellant which was in his possession. The Collectors order was upheld by the Commissioner, Ambala Division by his order dated August 30, 1960. The tenant moved the Financial Commissioner, Punjab in revision against the order of the Commissioner but without success. He then preferred a writ petition before the High Court which, as already stated, was granted. According to the High Court the status of a landlord had to be ascertained as existing on the date of the application under section 14 A of the Act and not on the date of the allotment. Further, according to the High Court, what is "permissible area" available to a landlord under the Act has allow to be determined as obtaining on the date of the application for eviction made by the landlord. In coming to the conclusion the High Court followed a judgment of section B. Capoor J., in a similar matter. In order to appreciate the contentions urged before us on behalf of the par ties, it is necessary to refer to certain provisions of the Act. At the outset I must point out that the object of the Act was to provide to the tenants a security against ejectment by the landlords except for a just cause. The Act has, however, drawn a distinction between "small land owner" and a "large land owner". Sub section (2) of section 2 of the Act defines small land. owner to mean one whose entire land in the State of Punjab does not exceed the permissible area. Now, sub section (3) of section 2 defines permissible area. This definition draws a distinction between a land owner who is not a displaced person and one who, is a displaced person. In so far as the former is concerned the permissible area is 30 standard acres. In so far as the latter is concerned the second proviso to sub section (3) enacts "Provided that (ii) for a displaced person (a) who has allotted land in excess of fifty standard acres, the permissible area shall be fifty standard ip. Cl/66 3 518 acres or one hundred ordinary acres, as the case may be. (b) who has been allotted land in excess of thirty standard acres, but less than fifty standard acres, the permissible area shall be equal to his allotted area. (c) who has been allotted land less than thirty standard acres, the permissible area shall be thirty standard acres, including any other land or part thereof, if any, that he owns in addition. Explanation : For the purposes of determining the permissible area of a displaced person, the provisions of proviso (ii) shall not apply to the heirs and successors of the displaced person to whom land is allotted. " The expression 'standard acre ' is defined thus in sub section (5) of section 2 "Standard acre" means a measure of area convertible into ordinary acres of any class of land according to the prescribed scale with reference to the quantity of yield and quality of soil. " If a land owner is in possession of land in excess of the permissible area he is required to follow a certain procedure for indicating which particular land he wants to be treated as "reserved area". Land in excess of that area is treated surplus area. The former expression means the area lawfully reserved under the Punjab Tenants (Security of Tenures) Act, 1950 while the latter expression is defined in sub section (5 A) of the Act. It is not necessary to set out this definition for the purpose of the discussion of the question before us. Under section 27 of the Act rules have been framed for carrying out the purpose of the Act. There are two sets of rules, one is the Security of Land Tenures Rules, 1953 and the other is Punjab Security of Land Tenures Rules, 1956. The latter are supplementary to the rules of 1953. Rule 2 of the Rules of 1953, which is the relevant rule, is as follows : "Conversion of ordinary acres into standard acres. The equivalent, in standard acres, of one ordinary acre of any class of land in any assessment circle, shall be determined by dividing by 16, the valuation shown in Annexure 'A ' to these rules for such class of land in the said assessment circle 519 Provided that the valuation shall be (a) in the case of Banjar Qadim land, one half of the value of the class previously described in the records and in the absence of any specific class being stated, one half of the value of the lowest barani land; (b) in the case of Banjar Jadid land, seventh eighth of the value of the revelant class of land as previously entered in the records, or in the absence of specified class in the records, of the lowest barani land; and (c) in the case of cultivated that land subject to waterlogging, one eighth of the value of the class of land shown in the records or in the absence of any class, of the lowest barani land". In the table, Annexure A, land is classified under four heads which are: "Irrigated (nehri)", "Irrigated Chahi" "Irrigated" and "Sailab". Irrigated nehri is further classified as "perennial" and "non perennial". In Col. 3 is given the valuation for irrigated nehri land. For Hansi tehsil valuation of the land which is perennially irrigated by canals is given as 16 which means 16 annasing the rupee per acre and of non perennial as 10 annas in the rupee per acre. The valuation for irrigated chahi land in the entire tehsil is 10 annas in the rupee per acre and of un irrigated land as 5 annas in the rupee per acre. There is no valuation for sailab land which apparently means there is no land of this category in the tehsil. From Table, A it would appear that land which falls under one classification at the time of allotment or at the time of coming into force of the Act may well fall under some other head later on because the quantity of yield is liable to vary. For instance, if irrigation facilities come to be provided in land which is unirrigated at the time of coming into force of the Act or making the allotment the land may receive the benefit of irrigation later either perennially or non perennially and its yield therefrom may accordingly increase. Provisions relating to the valuation of lands under the Act are to be found in section 19F thereof which reads thus : "For the removal of doubts it is hereby declared, (a) that the State Government or any officer empowered in this behalf shall be competent and 520 shall be deemed always to have been competent, to determine in the prescribed manner the sur plus area referred to in section 10 A of a landowner out of the lands owned by such land owner immediately before the commencement of this Act; and (b) that for evaluating the land of any person at any time under this Act, the land owned by him immediately before the commencement of this Act, or the land acquired by him after such commencement by inheritance or by bequest or gift from a person to whom he is an heir, shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such commencement and that the land acquired by him after such commencement in any other manner shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such acquisition. " Now, surplus area would fall to be determined only where the land owner is in possession of land in excess of the permissible area. I have already given the definition of permissible area. Where, as here, the landlord is a displaced person and the land allotted to him is less than 50 acres the permissible area so far as he is concerned would be the area actually allotted to him. In the case of the appellant it would thus be 42 standard acres and II units. Out of this he alleges that he has sold 18 standard acres. As, however, no argument was advanced before us on this basis I leave this circumstance out of account and proceed on the footing that the appellant is in possession not of an area less than the permissible. area but of an area equal to the permissible area. Surplus area means an area other than the reserved area and, where no area is reserved, the area in excess of the permissible area. Where there is no reserved area or where the area hold by a person is not in excess of the permissible area the provisions of section 4 which deal with, the reservation of area or those of sections 5 A to 5C which deal with selection of permissible area or those of section 10 A which deal with the utilization of surplus area are not attracted. Therefore, the provisions of section 19F(a) which are attracted to a case falling under section 10 A will a so not apply. Moreover the provisions of section 10 A have no bearing on 521 a case like the one before us. For, they contemplate the ascertainment of surplus area held immediately before the commencement of the Act. Obviously, therefore, the determination must refer to the classification of the land at that time. Apart from that, the appellant does not possess any surplus area since what is in his possession is merely the permissible area. The question of utilization of any surplus area cannot thus arise in his case. That being so, no question can arise of evaluating his lands afresh. Indeed, fresh evaluation at any time is permissible only under section 19 F(b), but that provision deals with only special types of cases. It may be mentioned that sections 5 A to 5 C which deal with the selection of permissible area do not contemplate a case where the classification of land held by the landlord has undergone a change because of rise in the yield therefrom and the standard acreage of the land in his possession could be said to have increased. Section 19 A of the Act specifically prohibits the future acquisition by the landlord of land by transfer, exchange, lease., agreement or settlement any land which with or without the land already held by him exceeds the permissible area. Similarly the Act has made specific provisions to deal with a case of augmen tation to the land held by the landlord subsequent to the commencement of the Act by inheritance, bequest or gift. These are to be found in section 19 B. What is to be done in a case of that type is provided for by section 19 F(b). The power to evaluate land conferred by this provision is exerciseable at 'any time ' but obviously that power is exerciseable only in the context of the circumstances set out therein, that is to say where the landlord obtains land after the commencement of the Act by inheritance, bequestor gift and in no other circumstance. It would, therefore, seem that where the provisions of section 19F are not attracted the Revenue Assistant before whom an application under section 14 A for ejectment of a tenant is made by a landlord, is not entitled to evaluate the land of the landlord afresh for ascertaining whether he is in possession of land in excess of the permissible area. Elaborate rules have been framed under the Act and elaborate provisions are also contained in the Act with a view to extend its protection as far as possible to tenants cultivating land. The omission, therefore, to make any provision as to what has to be done, if as a result of improvements made by the landlord or by reason of the rise in the yield of the land through other causes would point only to one conclusion and that is that this circumstance is not to be taken into account for evaluating the land afresh and re calculating the standard acreage. If that is so, then it would follow that the High Court and the Assistant Commissioner were in error whereas 522 the Collector, Commissioner and the Financial Commissioner were right in deciding this case. For these reasons I set aside the order of the High Court and restore that of the Financial Commissioner upholding the orders of the Commissioner and the Collector. In the particular circumstances of the case 1, however, direct that costs throughout will be borne by the parties as incurred. Appeal allowed.

The appellant was a displaced person from West Pakistan. In 1949 he was allotted 42 standard acres and 11 units of land which were later consolidated. In 1958 claiming to be a small holder he made an application under section 14 A(1) of the Punjab Security of Land Tenures Act 1953 before the Assistant Collector for the ejectment of respondent No. 4 who was a tenant of the land. The Assistant Collector rejected application on the ground that because of improvements the income from the lands had risen considerably and consequently the land had become equivalent to more than 50 standard acres, and therefore the applica tion was untenable under section 14 A. In appeal the Collector held that since the appellant was allotted only 42 standard acres and 11 units he was entitled to be treated as a small land holder. The Collector 's order was upheld by the Commissioner and by the Financial Commissioner. The tenant thereupon filed a writ petition before the High Court. According to the High Court the status of a landlord had to be ascertained as existing on the date of the application under section 14 A of the Act and not on the date of the allotment. Farther according to the High Court what is 'permissible area ' available to a landlord under the Act had also to be determined as obtaining on the date of the application for eviction made by the landlord. On this view the High Court allowed the tenant 's writ petition. In appeal by special leave to this Court, HELD: Under the provisions of the Act the entire land held by the landowner in the State of Punjab on the date of the commencement of the Act must be evaluated as on that date and the status of the landowner and his surplus area must then be ascertained. If he is then found to be 'a small landowner, he continues to be so for the purpose of the Act, until he acquires more land and on taking into account the value of the land in terms of standard acres on the date of the acquisition, he is found to be a big landowner. The landowner is required to make the necessary reservations or selections and to give the necessary declarations so that his status and the surplus area, if any, held by him may be so determined. If he is a small landowner at the commencement of the Act, his status is not altered by reason of improvements in the value of his land or re allotment of land on compulsory consolidation of holdings. section 19 F(b) which was introduced into the Act during the pendency of the appeal clarified the position to the same effect. [514 B D; 515 F] The appellant did not acquire any land after the commencement of the Act. His status as a small landowner was not altered by reason of subsequent improvements or re allotments of land on compulsory consolidation of holdings. On the date of the application, he therefore continued to be a small landowner. The High Court was in error in holding that the status of the appellant should be determined by evaluating his 5 12 land in terms of standard acres on the dates of the application for eviction. [515 H; 516 A B] Per Mudholkar J : Provisions relating to the valuation of lands under the Act are to be found in section 19 F(a) and 19F(b). The former did not apply to the present case as it applies only to the ascertainment of ,surplus area ' held by a landowner at the commencement of the Act; the appellant held only 'permissible area ' and no 'surplus are at all. Under section 19 F(b) fresh evaluation of land can take place "at any time" but the power under that section is exercisable only in the context of special circumstances, that is to say, where the landlord owns land after the commencement of the Act by inheritance, bequest or gift. These special circumstances did not exist in the present case. [519 H; 520 H; 521 B, D] When the provisions of section 19F are thus not attracted, the Revenue Assistant before whom an application under section 14 A for ejectment of a tenant is made by a landlord, is not entitled to evaluate the land of the landlord afresh for ascertaining whether he is in possession of land in excess of the permissible area. [521 F] Elaborate rules have been framed under the Act and elaborate provisions are also contained in the Act with a view to extend its protection as far as possible to tenants cultivating land. The omission, therefore, to make any provision as to what has to be done, if as a result of improvements made by the landlord or by reason of the rise in the yield of the land through other causes would point only to one conclusion and that is that this circumstance is not to be taken into account for evaluating the land afresh and recalculating the standard acreage. [521 G H] It would follow that the High Court was in error and its order must be set aside.

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Criminal Appeal No. 53 of 1951. Appeal by special leave from the judgment and order dated November 25, 1960 of the Punjab High Court in Criminal Appeal No. 86 D of 1959. T.R. Bhasin, S.C. Malik, Sushma Malik and Rant Behja Lal Malik, for the appellant. R.N. Sachthey, for respondent No. 1. Ram Lal Anand, Ajit Singh Johar, S.K. Mehta, and K.L. Mehta, for respondent No. 2. The, Judgment of the Court was delivered by Gajendragadkar,C. J.,By this appeal, which has been brought to this Court by special leave, the appellant Harbhajan Singh challenges the correctness of his conviction for an offence under section 500 07 the Indian Penal Code, and the sentence imposed on him for the said offence. The criminal proceedings against the appellant were started on a complaint filed by Surinder Singh Kairon, son of section Partap Singh Kairon, who was at the relevant time the Chief Minister of the State of Punjab. In his complaint, the complainant Surinder Singh alleged that the appellant had published in the Press a statement against him which was highly defamatory of him. The said statement was published in the "Blitz", 237 which is a weekly magazine of Bombay, on July 23, 1957, and extracts from it were given publicity in the "Times of India" and certain other papers. According to the, complaint, the defamatory statement was, absolutely untrue and by publishing it, the appellant had rendered himself liable to be punished under section 500, I.P.C. It appears that on July 2,2/23, 1957, the punjab Government issued a Press note in which it was averred that certain Urdu Dailies from Jullundur were indulging in mischief and false propaganda, alleging complicity of a Minister 's son in smuggling on the border. The Press note alleged that this was done with a view to malign the Government and to cause suspicion in the mind of public. The Punjab Government categorically denied the said allegation. The Press note added that the papers which were publishing the said false reports should come out openly with the name of the son of the Minister instead of repeatedly publishing things in a vague and indirect manner, and that they should not take shelter behind anonymity and should net be afraid of the consequences of the publication of these allegations. The Press note concluded with the statement that the Punjab Government had already taken steps to curb smuggling and they were determined to put it down with a firm hand. It was in response to the challenge thus issued by the Punjab Government in its Press note that the appellant published impugned statement which reads: "My attention has been drawn to a Punjab Government Press Note categorically denying the complicity of a Minister 's son in smuggling. That Press Note also throws a challenge to some Urdu Dailies "to come out openly with the name of the son of the Minister" and then base the consequences. I don 't know whether the newspapers concerned will take up this is challenge of the Punjab Government or not, but as one of those who have been naming that son of the Minister as one of the leaders of the smugglers from Public platform, I hereby name that so, as Surinder Singh Kairon son of section Partap singh Kairon, Chief Minister. And I do so determined to faceless consequences of the charge being openly levied by me. I further allege that the son of our Chief Minister is not only a leader of smugglers but is responsible for a large number of crimes being committed in the Punjab. But because the culprit happens to be Chief Minister 's son the cases are always shelved up. If the Punjab Government accepts this challenge, it should do so by appointing an independent committee of impartial Judges from outside the Punjab and then let us see who has to face the consequences. If the Punjab Government dare not do so, I would not mind serving a term in Jail for having had the courage to come out with the 238 truth. May I bring it to the notice of Punjab Government that Chief Minister 's son is being discussed in almost every Punjabi house. but people are afraid of talking about him in public lest they be punished for that. " It is this statement which has given rise to the present criminal proceedings. After this statement was published, Mr. Ajaib Singh, Senior Superintendent of Police, Amritsar, issued a statement on the 25th July, 1957, which was published in the "Tribune" on the 26th July. By this statement, Mr. Ajaib Singh assured the people that persons concerned in smuggling cases had been interrogated and he was satisfied that the allegation that some Minister 's son was involved in smuggling was false and inaccurate. To this statement, the appelLant issued a rejoinder which was published in the "Hind Samachar", which is an Urdu Daily of Jullundur, on July 27, 1957. Then, followed the complaint which was filed by the complainant on August 17, 1957. That, shortly stated, is the background of the present criminal proceedings. The complaint was filed in the court of the Magistrate, First Class, Tar, Taran. Thereafter, the appellant moved this Court under section 527 of the Criminal Procedure Code for the transfer of the said case from the court of the Magistrate where it had been tiled. This Court directed on October 4, 1957, that the case in question should be remitted to the Punjab High Court so that it should be transferred by the said High Court from the court of the Magistrate at Tarn Taran to a court of Sessions in Delhi. That is how the case was transferred to the court of the Additional Sessions Judge, Delhi, and was tried by him. In support of his complaint, the complainant examined himself and led evidence of three other witnesses. The purport of the oral evidence led by the complainant was to show that the complainant was a person of status and good reputation, was carrying on business and had suffered in reputation and character by the defamatory statement published by the appellant. When the appellant was examined under section 342, Cr. P.C., he told the learned Judge that he would prefer to file a detailed written statement. Later, he did file his written statement and made several pleas against the charge levelled against him by the complainant. In substance, he alleged that the allegations made by him in his impugned statement were true and he had published the said allegations in the interest of public good. In other words, he claimed the protection of the First Exception to section 499, IPC. He also pleaded that the imputation which he had made against the complainant had been made in good faith and for public good. Thus, he also claimed the protection of the Ninth Exception to section 499, IPC. In support of his defence the appellant wanted to summon 328 witnesses and a large number of documents. The trial court allowed 239 him to summon 35 witnesses in all, but eventually he examined only 20 defence witnesses. He also produced several documents. After considering the oral and documentary evidence produced before him, the learned trial Judge came to the conclusion that the words used by the appellant in his statement, which was published in the Papers, were defamatory per se, and he held that the appellant had failed to make out a case either under the First Exception or under the Ninth Exception. In the result, he convicted the appellant and sentenced him to one year 's simple imprisonment. The appellant then preferred an appeal before the Punjab High Court, challenging the correctness and propriety of the order of conviction and sentence passed against him by the learned trial Judge. Before the appellate Court, the appellant claimed the protection of the Ninth Exception only and did not press his case that he was entitled to the protection of the First Exception as well. He also urged that he had been materially prejudiced inasmuch as the trial Judge had not given him a fair and proper opportunity to lead his evidence both oral and documentary. The learned single Judge, who heard his appeal, considered the arguments urged before him on behalf of the appellant and came to the conclusion that the appellant had failed to prove his claim that the impugned statement fell within the scope of the Ninth Exception to section 499, IPC. He took the view that the appellant had "completely failed to substantiate the plea of good faith. " The material which had been placed before the trial Judge in support of defence of good faith was, according to the High Court, of a very flimsy character and could not sustain the plea. It may be pointed out at this stage that the High Court found that in case the appellant had proved good faith, it would not have felt any difficulty in coming to the conclusion that the publication of the impugned statement was for the public good. But since, according to the High Court, good faith had not been proved, the appellant was not entitled to claim the protection of the Ninth Exception. Then, as regards the grievance made by the appellant that he had not been given a reasonable opportunity to lead his evidence, the High Court held that the said grievance was not well founded. In that connection, the High Court referred to the fact that though the trial Judge had allowed the appellant to examine 35 witnesses, the appellant examined only 20 witnesses, and it observed that the large mass of documentary evidence which had been produced by the appellant did not serve any useful or material purpose even for the defence of the appellant; and so the contention that prejudice had been caused to him by the failure of the learned trial Judge to give him a reasonable opportunity to lead evidence was rejected by the High Court. In the result, the High Court confirmed the order of conviction passed against the appellant by the trial Judge, but ordered that instead of undergoing one year 's simple imprisonment, the appellant shall undergo three months ' simple imprisonment and pay a fine of Rs. 2,000. In default of payment of fine, he was directed to 240 undergo three months ' simple imprisonment. It is against this order that the appellant has come to this Court by special leave. Norma1ly. we would not have examined the correctness of the finding recorded by the High Court in respect of the appellant 's plea of good faith. because that is a finding made by the High. Court on appreciating oral and documentary evidence and as it happens. the said finding confirms the view taken by the trial Judge himself. Whether or not good faith has been proved by an accused person who. pleads in his defence the Ninth Exception to a charge of defamation under section 500. would be a question of fact and even if it is assumed to be a mixed question of fact and law, if the courts below make a concurrent finding on such a question. this Court generally does not re examine the matter for itself while exercising its jurisdiction under article 136 of the Constitution. But in the present case. we cannot accept the finding of the High Court. because it is plain that in dealing with the question of good faith the High Court has misdirected itself materially on point of law. Section 499 of the Code defines defamation. It is unnecessary to set out the said definition. because it is common ground that the impugned statement published by the appellant is per se defamatory. and so. we must proceed to deal with the present appeal on the basis that the said statement would harm the reputation of the complainant. Exception 9 to section 499 provides that it is not defamation to make an imputation on the character of another. provided the imputation be made in good faith for the protection of the interest of the person making it. or for any other person. or for the public good. In the present case. the ingredient of public good is satisfied. and the only question which arose for decision in the court below and which arises before us. is whether the imputation can be said to have been made in good faith. There is no doubt that the requirements of good faith and public good have both to be satisfied. and so. the failure of the appellant to prove good faith would exclude the application of the Ninth Exception in his favour cven if the requirement of public good is satisfied. This position is not disputed by Mr. T.R. Bhasin who appears for the appellant. Mr. Bhasin, however. contends that in appreciating the evidence of the appellant and his arguments in respect of his good faith. the High Court has clearly misdirected itself. because it has expressly observed that in discharging the onus of providing good faith. it is necessary to remember that the pica of good faith must be proved "as strictly as if the complainant were being tried for the offenses imputed to him. " The High Court has added that the accused pleading justification virtually becomes the accuser. and that is why the burden has been placed by law upon him both in England and in India. The learned Judge of the High Court made his point still clearer with the observation that in cases of criminal defamation. an accused has not only to justify the whole of his libel. but the plea taken has to be proved as strictly as if the complainant 241 was being prosecuted for the offence. The same observations have been repeated by the learned Judge in several places in his judgment. Mr. Bhasin contends that the approach which the learned Judge has adopted in dealing with the plea raised by the appellant under Exception 9 is clearly erroneous. In cur opinion, Mr. Bhasin is right. It is true that under section 105 of the Evidence Act, if an accused person claims the benefit of Exceptions, the burden of proving his plea that his case falls under the Exceptions is on the accused. 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 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 required to discharge that burden by leading evidence to prove his case beyond a reasonable doubt. 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 falls under an Exception, law treats the onus as discharged 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 never shifts and the prosecution has at all stages of the case, to prove the guilt of the accused beyond a reasonable doubt. As Phipson has observed, when the burden of an issue is upon the accused, he is not. in general, called on to prove it beyond a reasonable doubt or in default to incur a verdict of guilty; it is sufficient if he succeeds in proving a preponderance of probability, for then the burden is shifted to the prosecution which has still to discharge its original onus that never shifts, i.e., that of establishing, on the whole case, guilt beyond a reasonable doubt. It will be recalled that it was with a view to emphasising the fundamental doctrine of criminal law that the onus to prove its case lies on the prosecution, that Viscount Sankey in Woolmington vs Director of Public Prosecutions(1) observed that "no matter what the charge or where the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained. " This principle of common law is a part of the criminal law in this country. That is not to say that if an Exception is pleaded by an accused person, he is not required to justify his plea; but the degree and character of proof which the accused is expected 242 furnish in support of his plea, cannot be equated with the degree and character of proof expected from the prosecution which is required to prove its case. In this connection, it may be relevant to refer to the observations made by Humphreys J. in R.v. Carr Braint(1): "Lord Hailsham, L.C., [in Sodeman vs R. [1936] 2 All E.R. 1138] was in agreement with the decision of the majority of the Supreme Court of Canada, in R.v. Clark [(1921) 61 S.C.R. 608] where Duff J. in the course of his judgment, expressed the view that the necessity for excluding doubt contained in the rule as to the onus upon the prosecution in criminal. cases might be regarded as an exception rounded upon considerations of public policy. There can be no consideration of public policy calling for similar stringency in the case of an accused person endeavoring to displace a rebuttable presumption. " In R.v. Corr Braint(1), a somewhat similar question arose before the Court. In that case, the appellant was charged with the offence of corruptly making a gift or loan to a person in the employ of the War Department as an inducement to show, or as a reward for showing, favour to him. This charge was laid under the Prevention of Corruption Act, 1916, and in respect of such a charge, section 2 of the Prevention of Corruption Act, 1916, had provided that a consideration shall be deemed to be given corruptly unless the contrary is proved. The question which arose before the Court was; what is the accused required to prove if he wants to claim the benefit of the exception? At the trial, the Judge had directed the jury that the onus of proving his innocence lay on the accused and that the burden of proof resting on him to negative corruption was as heavy as that ordinarily resting on the prosecution. In other words, the Judge in substance told the jury that the accused had to prove his innocence beyond a reasonable doubt. The Court of Criminal Appeal held that this direction did not correctly represent the true position in law. According to the Court of Appeal, the onus on the accused was only to satisfy the jury of the probability of that which he was called upon to establish, and if he satisfied the jury that the probability was that the gift was made innocently, the statutory presumption was rebutted and he was entitled to be acquitted. What the Court of Criminal Appeal held about the appellant in the said case before it is substantially true about the appellant before us. If it can be shown that the appellant has led evidence to show that he acted in good faith, and by the test of probabilities that evidence proves his case, he will be entitled to claim the benefit of Exception Nine. In other words, the onus on an accused person may well be compared to the onus on a party in civil proceedings. and just as in civil proceedings the court trying an issue makes its decision by adopting the test of probabilities, so must a criminal court hold that the plea made by the accused is proved if a pre 1 243 ponderance of probability is established by the evidence led by him. We are, therefore, satisfied that Mr. Bhasin is entitled to contend that the learned Judge has misdirected himself in law in dealing with the question about the nature and scope of the onus of proof which the appellant had to discharge in seeking protection of Exception Nine. There is another infirmity in the judgment of the High Court, and that arises from the fact that while dealing with the appellant 's claim for protection under the Ninth Exception, the learned. Judge has inadvertently confused the requirements of Exception One with those of Exception Nine. The First Exception to section 499 is available to an accused person if it is shown by him that the impugned statement was true and had been made public for the public good. In other words, the two requirements of the First Exception are that the impugned statement must be shown to be true and that its publication must be shown to be for public good. The proof of truth which is one of the ingredients of the First Exception is not an ingredient of the Ninth Exception. What the Ninth Exception requires an accused person to prove is that he made the statement in good faith. We will presently consider what this requirement means. But at this stage, it is enough to point out that the proof of truth of the impugned statement is not an element of the Ninth Exception as it is of the First; and yet, in dealing with the appellant 's case under the Ninth Exception, the learned Judge in several places, has emphasised the fact that the evidence led by the accused did not prove the truth of the allegations which he made in his impugned statement. The learned Judge has expressly stated at the commencement of his judgment that the appellant had not pressed before him his plea under the First Exception, and yet he proceeded to examine whether the evidence adduced by the appellant established the truth of the allegations made in his impugned statement as though the appellant was arguing before him his case under the First Exception. In dealing with the claim of the appellant under the Ninth Exception, it was not necessary, and indeed it was immaterial, to consider whether the appellant strictly proved the truth of the allegations made by him. That takes us to the question as to what the requirement of good faith means. Good faith is defined by section 52 of the Code. Nothing, says section 52, is said to be done or believed in 'good faith which is done or believed without due care and attention. It will be recalled that under the General Clauses Act, "A thing shall be deemed to be done in good faith where it is in fact done honestly whether it is done negligently or not. " The element of honesty which is introduced by the definition prescribed by the General Clauses Act is not introduced by the definition of the Code; and we governed by the definition prescribed by section 52 of the Code. So, in considering the question as to whether the appellant acted in good faith in publishing his impugned statement, we have to enquire whether he acted with due care and attention. There is /B(N)3SCI 3 244 no doubt that the mere plea that the accused believed that what he stated was true by itself, will not sustain his case of good faith under the Ninth Exception. Simple belief or actual belief by itself is not enough. The appellant must show that the belief in his impugned statement had a rational basis and was not just a blind simple belief. That is where the element of due care and attention plays an important role. If it appears that before making the statement the accused did not show due care and attention, that would defeat his plea of good faith. But it must be remembered that good faith does not require logical infallibility. As has held by the Calcutta High Court in the matter of the Petition of Shibo Prosad Pandah(1), in dealing with the question of good faith, the proper point to be decided is not whether the allegations put forward by the accused in support of the defamation are in. substance true, but whether he was informed and had good. reason after due care and attention to believe that such allegations were true. Another aspect of this requirement has been pithily expressed by the Bombay High Court in the case of Emperor vs Abdool Wadood A htned(2). "Good faith", it was observed "requires not indeed logical infallibility, but due care and attention. But how far erroneous actions or statements are to be imputed to want of due care and caution must, in each case, be considered with reference to the general circumstances and the capacity and intelligence of the person whose conduct is in question. " "It is only to be expected", says the judgment, "that the honest conclusions of a calm and philosophical mind may differ very largely from the honest conclusions of a person excited by sectarian zeal and untrained to habits of precise reasoning. At the same time, it must be borne in mind that good faith in the formation or expression .of an opinion, can afford no protection to an imputation which does not purport to be based on that which is the legitimate subject of public comment. " Thus, it would be clear that in deciding whether an accused person acted in good faith under the Ninth Exception, it is not possible to lay down any rigid rule or test. It would be a question to be considered on the facts and circumstances of each case what is the nature of the imputation made; under what circumstances did it come to be made; what is the status of the person who makes the imputation; was there any malice in his mind when he made the said imputation; did he make any enquiry before he made it; are there reasons to accept his story that he acted with due care and attention and was satisfied that the imputation was true? These and other considerations would be relevant in deciding the plea of good faith made by an accused person who claims the benefit of the Ninth Exception. Unfortu (1) I.L.R. (2) I.L.R. 31 Born. 245 nately, the learned Judge has rejected the plea of the appellant that he acted in good faith, at least partly because he was persuaded to take the view that the evidence led by him did not tend to show that the allegations contained in his impugned statement were true. This naturally has, to some extent, vitiated the validity of his finding. It also appears that the learned Judge was inclined to take the view that the elaborate written statement filed by the appellant nearly ten months after he had been examined under section 342, should not be seriously considered, and that the appellant failed to make out his case of good faith at the early stage of the trial. Indeed. the learned Judge has passed severe strictures against the contents of the written statement and has blamed the appellant 's lawyer for having advised him to make these contentions. In support of his finding that written statements of this kind should be discouraged and cannot be seriously taken into account, the learned Judge had referred to two decisions of this Court. One is the case of Tilkeshwar Singh and others vs The State of Bihar(1), where this Court was called upon to consider the validity of the argument urged before it that there had not been a proper examination of the appellants under section 342, and so, their conviction should be quashed. In rejecting this argument, this Court pointed out that when the appellants were examined under section 342, they said they would. file written statements, and in the statements subsequently tiled by them, they gave elaborate answers on all the points raised m the prosecution evidence. That is why this Court observed that the appellants had not at all been prejudiced by reason of the fact that all the necessary questions were not put to them under section 342. It is in this connection that this Court incidentally, observed that section 342 contemplates an examination in court and the practice of filing statements is to be deprecated. But that is not a ground for interference unless prejudice is established. The learned Judge has read this observation as laying down a general principle that the filing of a written statement by an accused person should be deprecated and the plea made by him in such a written statement need not, therefore, be seriously considered, because they are generally the result of legal advice and are no better than afterthoughts. We do not think that the observation on which the learned Judge has based himself in making this criticism justifies his view. In many cases, the accused person would prefer to file a written statement and give a connected answer to the questions raised by the prosecution evidence. Indeed, section 256(2)of the Cr. P.C., provides that if an accused person puts in a written statement, the magistrate shall file it with the record. If the written statement is filed after a long delay and contains pleas which can otherwise be legitimately regarded as matters of after thought, that no doubt would affect the value of the pleas taken in the (1) ; 246 written statement. But we do not think that it would be possible to lay down a general rule that the written statement filed by an accused person should not receive the attention of the court because it is likely to have been influenced by legal advice. In our opinion, such a distrust of legal advice would be entirely unjustified. The other decision the learned Judge has referred to is in the case of Sidheswar Ganguly vs State of West BengalC). In that case, this Court has observed that there is no provision in the Code of Criminal Procedure for a written statement of the accused being filed at the Sessions stage, and it is in respect of written statements filed at the Sessions stage that it has made the further cornmeal that in a case tried by the learned Sessions Judge with the help of the Jury, if such a statement is allowed to be used by the Jury, it may throw the door open to irrelevant and inadmissible matter and thus throw an additional burden on the presiding Judge to extricate matter which was admissible from a mass of inadmissible statements which may have been introduced in the written statement. In the present case, we are not dealing with a statement filed at the Sessions trial properly so called, and so, we need not pause to consider the effect of these observations. In the present case, the written statement is an elaborate document and it gives the version of the appellant in great detail. In considering the question as to whether the allegations made in the written statement could be dismissed as no more than an afterthought, we cannot ignore the fact that at the very commencement of the proceedings, the appellant gave a list of 328 witnesses and called for a large number of documents, and as we will presently point out the witnesses whom he examined and some of the documents which he had produced, tend to show that the appellant had received information at the relevant time which supported his plea that the allegations which he was making against the complainant appeared to him to be true; otherwise, it is not easy to understand how the appellant could have given a list of witnesses and called for documents to show either that the allegations made by him were true, or that in any event. in making the said allegations he acted in good faith and for the public good. If the evidence led by the appellant as well as the nature of the cross . examination to which he subjected the complainant and his witnesses are taken into account, it would be difficult. we think to reject his plea of good faith on the ground that the written statement was filed very late and the pleas taken in it are an after thought. It is because of these infirmities in the judgement under appeal that we allowed Mr. Bhasin to take us through the evidence in this case. We ought to add that Mr. Anand, who appeared for the complainant, fairly conceded that having regard to the fact that the learned Judge had misdirected himself in law, the appellant would be entitled to request this Court to examine the evidence for itself before it accepted the conclusion of the learned Judge on the question of appellant 's good faith. (1)[1958] S.C.R. 749. 247 Before we proceed to refer to the broad features of the evidence, it would be relevant to mention one fact. The appellant was at the relevant time the State Secretary of the Punjab Praja Socialist Party. He is a public worker and belongs to an active political party. He had stated that there was no animns in his mind against the complainant and his father, and that is not seriously disputed. Malice in that sense must, therefore. be eliminated in dealing with the appellant 's plea. It is quite true that even if the appellant was not actuated by malice, it would not be possible to sustain his plea of good faith merely because he made the impugned statement as a public worker and he can claim that he was not actuated by personal malice against the complainant. Absence of personal malice may be a relevant fact in dealing with the appellant 's plea of good faith, but its significance or importance cannot be exaggerated. Even in the absence of personal malice. the appellant will have to show that he acted with due care and attention. There is another fact which must also be borne in mind. The statement which the accused published was in response to the challenge issued by the Government of Punjab. It is not early to understand why the Punjab Government thought it necessary to issue a Press statement in regard to allegations which were made by the Urdu papers against a Minister 's son. But the Punjab Government appears to have entered the arena and issued a challenge to the newspapers in question, and it was in response to this challenge that the appellant published the impugned statement. In this statement, the appellant requested the Punjab Government to appoint an independent Committee of impartial Judges to investigate the matter, and he undertook to prove the truth of his charge if an independent committee was appointed. In that connections. he stated that he wished to bring it to the notice of the Punjab Government that the Chief Minister 's son is being discussed in almost every Punjabi house, but people were afraid of talking about him in public lest they be punished for that. That is the genesis of the impugned statement. The two defamatory statements made by the appellant are that the complainant is the person against whom the allegations are made in the Press, and that he is not only a "leader of smugglers but is responsible for a large number of crimes being committed in the Punjab. " The statement added that "because the culprit happens to be the Chief Minister 's son, the cases are always shelved up." The question which calls for our decision is: has the appellant shown that he acted in good faith when he made an imputation against the complainant that he was the leader of the smugglers and was responsible for a large number of crimes being committed in Punjab '? In dealing with this question, we ought to take a broad survey of the evidence led by the appellant and the background in which the impugned statement came to be made. It appears that before the impugned state 248 ment was made, newspapers had been publishing reports against a Minister 's son without naming him. Some Members of the Punjab Legislative Assembly had also made similar statements on the floor of the House. The appellant examined some witnesses. Jagat Narain, who is an M.L.A. was one of them. He stated that in the year 1956,gold smuggling had increased on the Amritsar border and that he derived his knowledge from the newspapers. He said he had received complaints orally and in writing about the gold smuggling on the border and these suggested the complicity of a Minister 's son in smuggling. When he was asked whether he could name the informants, he stated that he would not like to name them lest they get into trouble. Sajjan Singh is another witness whom the appellant examined He was the Parliamentary Secretary of the Praja Socialist Party. He stated that the appellant had visited Amritsar area in 1957 and he had told the appellant about the large scale smuggling in the border area. He had also told him that Hazara Singh, Shinghara Singh, Budha Singh and Tara Pandit were smugglers and some of the Members of the Legislative Assembly were helping the smugglers and that the police did not take any action against Hazara Singh because of his connection with the complainant This witness had seen Hazara Singh and the complainant moving together in connection with the election campaigns of 1952 and 1957. The election of 1957 took place some time in February,1957; and sO, the evidence of this witness shows that he had given the information about the complainant 's conduct in respect of Hazara Singh and other matters in about February, 1957. That takes us to the evidence of Kulwant Rai of village Sirhali, District Amritsar. Against this witness, cases were pending under section 8(1) of the Foreign Exchange Regulation Act, section 5(3) of the Land Customs Act and section 19 of the Sea Customs Act. It has also been alleged against him that 140 to las of smuggled gold had been found in his possession. He was also prosecuted by Mr. Dhir, Magistrate, Tarn Taran, under the Indian Arms Act. ,red prosecution under the Indian Opium Act was also pending against him. It appears that two cases against him were withdrawn because a communication dated May 18, 1957, was addressed by the Home Secretary to the Punjab Government to the District Magistrate Amritsar, directing him to withdraw the two cases pending against him. The letter required the District Magist:ate to take action in that behalf immediately. It is remarkable that an affidavit was filed by Kulwant Rai dated May 21, 1957, wherein he stated that the Chief Minister had passed an order on May 7, 1957, for the withdrawal of the cases against him and that the Government order in that behalf would be received by the court very soon. This means that Kulwant Rai knew about the decision of the Government to withdraw cases against him even before the said decision was communicated to the District Magis 249 trate and then to the trial Magistrate. It is also significant that on June 9, 1957, when the proceedings under section 514 Cr. P.C., were fixed for hearing against Kulwant Rai, he was absent from court and a telegram was received by the Magistrate that Kulwant Rai was ill and his absence should be excused. This telegram was sent not by Kulwant Rai but by the complainant. The complainant no doubt denied that he had sent such a telegram, but the High Court has found that in all probability, the telegram had been sent by the complainant. The complainant also did not admit that he was a friend of Kulwant Rai. There again, the High Court was not prepared to accept the complainant 's version. On this evidence, it seems plain that the complainant knew Kulwant Rai very well and did not stop short of helping him actively by sending a telegram to the Magistrate to excuse Kulwant Rai 's absence on the date of hearing of the case against him. From the evidence of Kulwant Rai whom the appellant had to examine to support his plea of good faith. it is not difficult to infer that Kulwant Rai was charge sheeted in respect of several offences, and an allegation had been made against him that he was connected with gold smuggling. If the appellant knew that the complainant was friendly with such a character, would he be justified in claiming that in giving expression to his belief that the complainant was hand in glove with Kulwant Rai, a gold smuggler, he was acting in good faith '? That is the question which has to be answered in the present case. In dealing with this aspect of the matter, the learned Judge no doubt found that the material on the record was enough to justify the conclusion that there was friendship between Kulwant Rai and the complainant and ' that the complainant had sent a telegram to the Magistrate on Kulwant Rai 's behalf, but he thought it had not been proved that in fact, Kulwant Rai had been engaged in gold smuggling. No doubt, a case was pending against him for gold smuggling; but the learned Judge held that the pendency of a criminal case does not necessarily prove that the charge levelled against Kulwant Rai was in fact true. It is this approach which is substantially responsible for the learned Judge 's conclusion that good faith is not proved in respect of the allegations made by the appellant that the complainant was a friend and leader of gold smugglers. The learned Judge overlooked the fact that in dealing with this aspect of the matter, the pertinent enquiry is not whether, in fact, the charge of gold smuggling had been proved against Kulwant Rai and whether it is shown satisfactorily that the complainant was assisting him in that behalf. What is pertinent to enquire is, if the appellant knew about this evidence at the relevant time and he believed that the complainant was assisting Kulwant Rai in respect of his gold smuggling activities, could he be said to have acted in good faith or not when he published the statement in that behalf? We may incidentally point out that we cannot overlook the 250 fact that the appellant experienced some difficulty in proving his case in the present proceedings, because witnesses were not willing to come out and give evidence, though they may have given that information to the appellant before he made his statement. Take for instance, the case of Hardin Singh of village Patti. It appears that this witness was arrested by the police on June 19, 1959 as a suspect smuggler and he was kept in the lock up from June 19 to June 25, 1959 and was thereafter let off. According to him, he was arrested because he had been summoned as a defence witness in the present case. Let us then consider the case of Hazara Singh and the association of the complainant with him. Hazara Singh comes from the same village to which the family of the complainant belongs, and yet, he was not prepared even to admit that he knew the complainant or his family. The learned Judge realised that Hazara Singh was not prepared to speak the truth at least on some points, and so, he observed that he was willing to accept the appellant 's case that the complainant, Sadhu Singh and Major Naurang Singh, Senior Superintendent of Police were on friendly terms. He, however, thought that it was not clearly shown on the record whether Hazara Singh was entered as a badminton in the police registers and that there was also no convincing evidence on record to show that Hazara Singh was a gold smuggler. The learned Judge referred to the evidence which showed that the complainant and Hazara Singh were moving together during the election days and were friendly with each other; but that. according to the learned Judge, did not prove the truth of the statement that Hazara Singh was a gold smuggler and that the complainant was his friend. This approach again is partly based upon importing into the discussion the consideration about the truth of the statement which would be relevant under the First Exception but which is not material under the Ninth Exception. In connection with Hazara Singh, and Kulwant Rai, there are two documents to which our attention has been invited by Mr. Bhasin. These documents show that Kulwant Rai was treated on the Police record as a notorious smuggler and habitual offender, and Hazara Singh was treated as a bad character and his name was borne on register No. 10, and his history sheet was opened at No. 110 A Basra Alif. There has been some argument before us at the Bar on the question as to whether these two documents are duly proved. Mr. Art and for the complainant has strongly urged that these documents are not proved. and in any event. no reliance was placed on them in the courts below. This latter contention is undoubtedly true; but the contention that the documents were not proved in the present case strikes us as none too strong, because these documents have been included in the paper book after the lists made by the respective advocates for the parties were exchanged and the index was finally settled with their approval in the Punjab High Court. The learned Advocate for the State or the complainant did not object to the inclusion of these two documents in 251 the record, and this showed that they were treated as duly forming part of the record. It does appear that Mr. Dhir, the Resident Magistrate, Kaithal (D.W. 27) has produced the whole file of the case in respect of the proceedings taken under s.5/4. Cr. P.C., and Mr. Bhasin contends that along with the file, the two documents in respect of Kulwant Rat were received. Mr. Anand no doubt suggested that it was not shown under what statutory provisions. these documents are kept; but since the admissibility of these documents does not appear to have been challenged in the courts below, we think oil is too late to raise this technical point at this stage. However. in dealing with the appeal. we are prepared to exclude from our consideration evidence furnished by these two documents. Even without them. there is enough evidence to show that the complainant was friendly with Kulwant Rat and Hazara Singh, and on the whole. we are inclined to take the view that if the appellant knew about the complainant 's friendship and active association with these two persons and had other information about the activities of these two persons. it cannot be said that he did not act in good faith when, in response to the challenge issued by the Punjab Government. he came up with the impugned statement and sent it for publication in the Press. Then, in regard to the other allegation that the complainant was concerned with the commission of offences in Punjab, we may refer to the evidence led by the appellant to show that in making this charge, he acted in good faith. The witness to whose evidence reference has been made by Mr. Bhasin in respect of this part of the case is Mr. K.K. Dewett, who was the Principal of the Punjab University College, Hoshiarpur, between June, 1952 and April, 1958. The incident to which this witness deposed ' took place in 1953. At this time. the complainant had left the college at Hoshiarpur. On January 19, he went to that college to get his certificate Principal Dewett in his evidence did not support the appellant in his suggestion that the complainant had behaved in a criminal way and had threatened to assault the students in the college on that occasion. But the confidential report made by him on January 22 shows that in the witness box Principal Dewett hesitated to disclose the whole truth. This report unambiguously indicates that the complainant threatened several students with a stick. and it speaks of two or three incidents that took place which created a considerable excitement and commotion among the student community in the college. In this report, the Principal, in fact, describes the situation as very ugly. and he refers to the fact that the students went on strike and passed resolutions, demanding the rustication of the complainant from the University and also protesting against inaction and partiality of the Principal himself. This confidential report was further inquired into, and the documents in respect of this enquiry are also on the record. The students seem to have demanded that the complainant should be arrested. because they were afraid ' that he would collect his friends and cause mischief to them. 'Ultimately, the Vice Chancellor made a report to the Chancellor 252 that having examined the matter, he came to the conclusion that the complainant was "a bit bumptious and throws his weight about in a way which fellow students find irritating". He added "How one wishes that the sons of men holding exalted offices in the State would behave in a way consistent with the dignity of their parents". The learned Judge does not appear to have taken into account these reports, but has substantially relied on the oral evidence of the Principal himself. Even so, he has recorded his conclusion that the evidence shows juvenile indiscretion on the part of the complainant but no juvenile delinquency and certainly no "crime in the sense of the libelous imputation made". In dealing with this part of the imputation again, the learned Judge should have asked himself the question as to whether on the material of the kind disclosed by the confidential report made by the Principal, would a person of ordinary prudence acting bonafide in good faith be not justified in coming to the conclusion that the complainant was not only throwing his weight about, but was also threatening assaults in the college, because he thought he would be immune from legal process by virtue of his position? The fact that the appellant called for several documents and gave a list of witnesses as soon as he entered on his defence, shows what he knew at the relevant time, and his plea that he acted in good faith has to be judged on the basis that he made the imputations because he had material of this kind in his possession. It is true that the appellant has stated in his written statement that several persons came and reported to him against the complainant, and amongst them were included some high police officials as well; but having regard to the fact that the complainant 's father occupied the position of the Chief Minister of Punjab. they were not willing to come forward and_ give evidence in court. In fact, the appellant had requested the Punjab Government in his impugned statement to appoint a commission of inquiry and had stated that if a commission of inquiry was appointed, he would prove his charges against the complainant. It is in the light of these circumstances, that we have to decide whether the appellant has proved that he acted in good faith or not. In dealing with this question. we cannot overlook or ignore the probabilities on which the appellant relies, the surrounding circumstances to which he has referred and the actual evidence which he has led. Incidentally, we may mention two other documents on which Mr. Bhasin has relied. On February 20, 1957. the complainant wrote a letter to 'Major Sahib ' (SSP). In that letter, he told the Major Sahib to grant leave to section Gurdial Singh No. 1725 posted at Chowki Khosa Burj, and he added that it was very urgent, and asked him to do it immediately. Similarly, on June 3, 1956, the complainant wrote a letter to the Executive Officer, Taran Taran, in which he stated "our 10/12 trucks loaded with wood will be reaching Taran Taran one or two daily. Therefore, you please instruct your Moharrir on the Jandiala Amritsar road that he 253. should not create any obstruction regarding octroi". It would be noticed that the complainant had been writing to Government servants in respect of matters falling within their authority as such servants; and that shows, according to Mr. Bhasin. that the complainant was throwing his weight about even in matters with which he had no connection at all. We have carefully considered the evidence to which our attention was drawn by Mr. Bhasin as well as Mr. Anand, and we have come to the conclusion that the High Court was in error in holding that the appellant had failed to show that he acted in good faith when he published the impugned statement. As we have already stated, it has been found by the High Court and it is not disputed before us that the publication of the impugned statement was for the public good; and so, our conclusion is that the appellant is entitled to claim the protection of the Ninth Exception. Before we part with this appeal, we ought to add that this matter came before this Court for hearing on the 1st September, 1964, and an interlocutory judgment was delivered by which certain documents were called for. On that occasion, Mr. Bhasin had pressed before this Court his contention that the trial Judge was in error in not calling for certain documents which the appellant wanted to rely on, and in upholding the plea of privilege made by State Govt. in respect of certain other documents. We wanted to satisfy ourselves whether the documents on which Mr. Bhasin wanted to rely were relevant and whether the plea of privilege claimed by the State was justified. Some of these documents have been received by this Court in pursuance of our interlocutory judgment. But we do not think it necessary to consider this matter, because the documents which Mr. Bhasin wanted to be produced or proved might at best. if they are admitted, be of help to him to show that the allegations made by the appellant are true. to him however is a plea which fails under the First Exception and since the appellant did not claim the benefit of that Exception in the High Court, we do not think it would be open to the appellant to press his point that we should examine the question as to whether the trial Judge erred in not allowing the appellant to bring these documents on the record. That is why we did ' not look at these documents and have not considered the question raised by Mr. Bhasin at the time when the interlocutory judgment was delivered in this case. In other words, the appellant is not allowed to raise his plea that the allegations made by him in the impugned statement are true. Even so. in view of our conclusion that the appellant has succeeded in showing that he is entitled to the protection of the Ninth Exception to section 499, the appeal must be allowed and the order of conviction and sentence passed .against the appellant set aside.the fine imposed on the appellant has been paid by him, the same should be refunded to him. Appeal allowed.

The Government of Punjab issued a press note stating that certain dailies in the States were publishing false reports alleging the complicity of a Minister 's son in smuggling, that the allegations were made with a view to malign the Government, and, that the name the son should be openly mentioned. In response to that challenge the appellant, who was a public worker, published a statement in the press, naming the Chief Minister 's son as the leader of the smugglers, and as also responsible for a large number of crimes. He also requested that the Government should appoint a committee of independent Judges to inquire into the matter. The Chief Minister 's son then filed a complaint of defamation against the appellant. After the complainant and his witnesses were examined, the appellant filed a detailed written statement in answer to the questions under section 342, Criminal Procedure Code, ten months after he was questioned under that section. He claimed therein the protection of both the First and Ninth Exceptions to section 449 of the Indian Penal Code, 1860. At the very commencement of the proceedings, he gave a list of 328 witnesses. to be examined on his behalf. He was allowed to summon only 35 and eventually he examined 20 defence witnesses. He also produced several documents. After considering the oral and documentary evidence, the trial Court convicted the appellant. In his appeal to the High Court, he claimed only the protection of the Ninth Exception that is, that he published the statement in good faith and for public good. The High Court dismissed the appeal, with a modification in the sentence. In his appeal to this Court, the appellant contended that, in appreciating his evidence in respect of good faith, the High Court had misdirected itself. HELD: A broad survey of the evidence led by the appellant and the background in which the impugned statement was made, show that the High Court was in error in holding that the appellant had failed to show that he acted in good faith when he published the statement. [253 B C] (ii) The High Court had misdirected itself in dealing with the question about the nature and scope of the onus of proof which the appellant had to discharge in seeking the protection of the Ninth Exception, because, it held that in discharging the onus, the plea should be proved by the appellant as strictly as if the complaints was being prosecuted for the offence. Where the burden of an issue lies upon the accused under section 105 of the Evidence Act, he is not required to discharge the burden by leading evidence to prove his case beyond a reasonable doubt. It is sufficient if he succeeds in proving a preponderance of probability, for then, the burden is shifted ' to the prosecution which has still to discharge its original onus that never shifts, that is, to establish on the whole case the guilt beyond a reasonable doubt. [240 H; 241 C G; 243A B] R.V. Carr Braint,, , referred (ii) While dealing with the appellant 's claim for protection under the Ninth Exception, the High Court had confused the requirements 236 of the First Exception with those of the Ninth. It was not necessary to consider whether the appellant had strictly proved the truth of the allegation made by him, because, proof of truth of the impugned statement is not an element of the Ninth Exception as it is of the First. What the Ninth Exception requires an accused person to prove is that he made the statement in good faith. The question as to whether the accused acted in good faith would depend on the facts and circumstances of each case, What is the nature of the imputation made; under what circumstances did it co.me to be made; what is the status of the person who makes the imputation; was there any malice in his mind when he made the imputation; did he make any ,enquiry before he made it; are there reasons to accept his: story that he acted with due care and attention and was satisfied that the imputation was true; these, and other considerations would be relevant in deciding the question. [243 B E; 244 G H] (iii) The High Court also erred in holding that the appellant 's written statement should not be seriously considered, as he did not make out his case of good faith at the early stage of the trial, and that the written statement was likely to have been influenced by legal advice. If the written statement filed after a long delay contained pleas which could otherwise be legitimately regarded as matters of after thought, that no doubt, would affect the value of the pleas taken in the written statement. But, the fact that at the very commencement of the proceedings, the appellant called for a large number of witnesses and documents, and the evidence led by him as well as the nature of the cross examination to which he subjected the complainant and his witnesses, make it difficult to reject his plea of good faith, on the ground that the written statement was filed very late and the pleas taken in it might be an after thought. [245 H. B C: 246 E F] Tilkeshwar Singh and others vs State of Bhar, A.I.R. 1956. section C.239 explaired

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vil Appeal Nos. 150 and 160 of 1964. Appeals by special leave from the award dated September 20, 1962, of the Industrial Tribunal, Ernakulam in Industrial Dispute Nos. 11 and 10 of 1962 respectively. 761 G.B. Pai, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant. M.R.K. Pillai, for the respondents. The Judgment of the Court was delivered by Gajendragadkar, C.J. The short question of law which these two appeals raise for our decision relates to the construction of sections 3 and 11 of the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958 (No. 47 of 1958) (hereinafter called the Act. That question arises in this way. Two complaints were filed against the appellant, the Tam Oil Mills Company Ltd., by the two groups of respondents, its workmen, respectively under section 33A of the . These applications alleged that the management of the appellant had contravened the provisions of section 33 of the said Act inasmuch as it had denied its employees leave with wages on Founder 's Day and Good Friday in 1962. According to the respondents, they were entitled to have holidays with pay on the said two days under the terms and cOnditions of service, and so, they claimed that the Tribunal should direct the appellant to give its employees holidays under the said existing arrangement and should pass other appropriate order 's for the payment of wages for the two holidays in question. The appellant disputed the correctness of the respondents ' contention. The Tribunal has rejected the appellant 's plea and has declared that the respondents are entitled to the privilege 'of paid holidays on Founder 's Day and Good Friday in 1962. It has also ordered that the appellant should pay the wages to the respondents for those two days and the proportionate salary of the staff members as soon as the award comes into force. It is against these orders passed by the Tribunal on the two complaints preferred before it by the respective respondents that the appellant has come to this Court by special leave; and on its behalf, Mr. Pai has contended that in making the award ', the Tribunal has misconstrued the effect of sections 3 and 11 of the Act. Standing Order 30 of the Standing Orders of the appellant company makes provision for leave of all categories. S.O. 30 (vi) provides for holidays. It lays down that the factory will be closed on the following days which will be considered as Company Holidays with pay, and will not be counted against the casual or privilege leave of an employee: 1. New Year Day (1st January). Founder 's 'Day (Saturday nearest to 3rd March) 3. Good 3 Friday 4. Onam 5. Christmas Day (25th December) There is a note appended to this:proVision which makes it clear that in the event 'of the Company being compelled to observe a holiday or holidays for reasons of State such day or days shall not be counted as against 'the privilege or casual leave of the employees but shall 762 be treated as a Company holiday or holidays. Thus, it is clear that under the relevant Standing Order, the respondents are entitled to 5 paid holidays every year. After the Standing Orders were framed and certified, there was an agreement between the appellant and the respondents ' Union as a result of which the appellant agreed to grant a further holiday, and ' this agreement raised the number of total paid holidays in a year to 6. The additional holiday which the appellant thus agreed to give to the respondents was to be given on the day when the respondents ' Union would celebrate its Union Day. Apparently, this holiday was analogous to the Founder 's Day, the idea underlying the agreement being that just as the appellant gave a paid holiday on the Founder 's Day, the respondents should be given a paid holiday on the Union Day. It appears that even after this agreement was reached, the respondents began to claim additional holidays; but the appellant was not prepared to make any addition to the list of holidays. It was prepared to leave the choice of the agreed holidays to the employees provided they submitted to the Company an agreed list of such holidays. In 1958, the Act was passed and it came into force on the 29th December, 1958. Section 3 of the Act provides "Grant of National and Festival Holidays Every employee shall be allowed in each calendar year a holiday of one whole day on the 26th January, the 15th August and the 1st May and four other holidays each of one whole day for such festivals as the Inspector may, in consultation with the employer and the employees specify in respect of any industrial establishment". The result of this provision was that every employer to whom the Act applied had to declare holidays on the 26th January, the 15th August and the 1st May and had to give four other holidays according to the decision of the Inspector, the requirement of the section being that the Inspector had to consult the employer and the employees before fixing such other holidays. In other words, section 3 statutorily fixed the number of paid holidays at 7; fixed three out of them and left the decision of the remaining four to the Inspector who had to consult the employer and the employees. In pursuance of this provision, the Inspector declared certain holidays for the year 1959. Not satisfied with the decision of the Inspector, one of the appellant 's employees Mr. Baskara Menon filed a writ petition in the Kerala High Court under article 226 of the Constitution challenging the validity of the Inspector 's decision. In that writ petition, the question about the construction of section 3 of the 763 Act was agitated. In the result, the High Court held that the complaint made by the petitioner against the validity of the decision of the Inspector was not well founded, and so, the writ petition was dismissed. In 1962, the appellant followed the same procedure and got a decision as to the festival holidays from the Inspector and declared that the said holidays would be observed as paid holidays in the year. At this time, certain industrial disputes were pending between the appellant and its employees belonging both to monthly and daily rated categories before the Industrial Tribunal at Ernakulam. The respondents felt that the declaration of the holidays made by the appellant for the year 1962 amounted to a contravention of section 33 of the , and so, they filed the two present complaints before the Industrial Tribunal under 33A of the said Act. That, in brief, is the genesis of the present complaints. We have already noticed the provisions of section 3 of the Act. The contention raised by the respondents before the Tribunal was that the statutory provision as to 7 paid holidays prescribes the minimum number of holidays which the employer has to give to his employees. This provision, according to the respondents, does not over ride or abrogate the existing arrangement as to paid holidays. In regard to paid holidays which are common to section 3 and the present arrangement they would, of course, have to be treated as paid holidays, but the four other festival holidays which the Inspector decides from year to year would be in addition to the holidays which the appellant is bound to give to the respondents under the existing arrangement, and since the appellant has limited the number of paid holidays to 7 for the year 1962, it has acted contrary to the terms of employment evidenced by the existing arrangement as to paid holidays and that constitutes the violation of section 33 of the . This contention has been upheld by the Tribunal; and Mr. Pai argues that the view taken by the Tribunal is plainly inconsistent with the true scope and effect of section 3 read with section 11 of the Act. That takes us to section 11 of the Act, because this section has to be read along with section 3 in determining the validity of the conclusion recorded by the Tribunal on the main point of dispute between the parties. section 11 reads thus: "Rights and privileges under other laws, etc., not affected Nothing contained in this Act shall adversely affect any rights or privileges which any employee is entitled to with respect to national and. festival holidays on the. date on which this Act comes into force under any other law, contract, custom or usage, if such rights or privileges are more favourable to him than those to which he would be entitled under this Act". D)5 SCI 10 764 This section gives an option to the employees, they can choose to have the paid ' holidays either as prescribed by section 3 or as are available to them under any other law, contract, custom or usage exercising this choice, it must, however, be borne in mind by the employees that the 26th January, the 15th August and the 1st May have to be taken as three holidays. That is the direction of section 3. In regard to the remaining 4. the Inspector decides which days should be paid holidays. In other words, the. statutory requirement is 7 paid holidays. If under the existing arrangement the employees are entitled to 'have more ,,than7 paid holidays, that right will not be defeated by section 3, because section 11 expressly provides that if the rights or privileges in respect of paid holidays enjoyed by the employees are more favourable than are prescribed by section 3, their existing rights and privileges as to the total number of holidays will not be prejudiced by section 3. The scheme of section 11 thus clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones, so that the respondents should be entitled to claim the seven holidays prescribed by section 3 plus the six holidays to which they are entitled under the existing arrangement. If in addition to the three holidays which are compulsory under section 3, the employees are getting, say 3 ' other paid holidays, then section 3 would step in and would require the employer to give his employees one more paid holiday, so as to make the number of paid holidays 7. In our opinion, if sections 3 and 11 are read together, there can be no doubt that the respondents ' claim that they should have 7 holidays as prescribed by section 3 plus 6 holidays as are available to them under the present arrangement is cleary untenable. In the present case, the respondents were having six paid holidayS. The statute has fixed the minimum number at 7 paid holidays, and so, since the existing arrangement was less favourable to the employees, the statutory provision will come to their help and they will be entitled to claim 7 paid holidays in a year, and that means that section 3 will be operative. If that be so, the procedure followed by the employer in consulting the Inspector and in fixing the list of 4 paid holidays for 1962 in addition to the three holidays fixed by the statute is perfectly consistent with the provisions of section 3 of the Act. The Tribunal was, therefore, in error in holding that the appellant had contravened section 33 of the . In the result, the appeals must be allowed, the orders passed by the Tribunal in the two respective complaints set aside, and the two complaints dismissed. There would be no order as to costs. Appeals allowed.

Under the Standing Orders of the appellant company, its employees were entitled to five holidays with pay on specified dates during each year. Furthermore, by an agreement with the respondents ' union, the company had agreed to grant an additional day 's holiday with pay, thus raising the total number of paid annual holidays to six. In 1958 the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958, was passed and section 3 of the Act required every employer to declare holidays on every 26th January, 15th August and 1st May, and to grant four additional festival holidays each year, on dates to be fixed by the Inspector after consulting the employer and the employees. The number of paid holidays was thus statutorily fixed at 7. In 1962, the company obtained the Inspector 's decision on the four festival holidays and declared the dates on which such holidays would be given. At that time, while an industrial dispute between the company and its employees was pending. the respondents filed applications under section 33A of the , before the Tribunal. It was contended in these applications that the statutory provision in section 3 for 7 paid holidays did not override or abrogate the existing arrangement as to paid holidays and that the holidays to be given under section 3 would be in addition, to the holidays which the appellant was bound to give the respondents under existing arrangements; and that the appellant 's attempt to limit the nUmber of paid holidays to 7 during 1962 was contrary to the terms of employment evidenced by the existing arrangement and therefore violative of section 33. This contention was upheld by the Tribunal. In appeal to this Court, HELD: Under section 3 the statutory requirement is 7 paid holidays each year. If under an existing arrangement the employees were entitled to more than 7 paid holidays, such more favourable right was protected by section 11. The scheme of section 11 clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones and, in the present case, would operate only to raise the total number of holidays from 6 under the existing arrangements to 7 paid holidays in accordance with section 3. [764 B E]

1981.txt

326 of 1953. Original Petition under article 32 of the Constitution of India. S.C. Isaacs (section K. Kapur, with him) for the petitioners. H. J. Umrigar for the respondents. January 11. The Judgment of the Court was delivered by MUKHERJEA J. This is an application presented by the petitioners under article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under article 14 and clauses (f) and (g) of article 19 (1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus. To appreciate the contentions that have been raised on behalf of the petitioners, it would be necessary to give a short narrative of the material facts. The petitioners are a firm of traders who had, prior to the cancellation of their licenee, been carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur. It is said that the District Magistrate of Kanpur as well as the District Supply Officer, who figure respectively as respondents Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc. It is stated that prior to the 14th of February, 1953, the prices that were fixed by the District Officers left the coal dealers a margin of 20 per cent profit upon the sale of soft coke and 15 per cent profit on the sales of hard coke and steam coal, such profits being allowed on the landed costs of the goods up to the depot. The landed costs 805 comprised several items and besides ex colliery price, the middleman 's commission and the railway freight, there were incidental expenses of various kinds including labour duty, loading and unloading charges, cartage and stacking expenses. After making a total of these cost elements, an allowance was given for shortage of weight at the rate of 5 rods and odd seers per ton in the case of soft coke and 3 rods and odd seers in the case of hard coke and steam coal, and it was on the basis of the net weight thus arrived at that the price was calculated. On the 14th of February, 1953, the District Supply Officer issued a directive reducing the selling prices of coke, coal, etc., much below the existing rates. This reduction was effected in a three fold manner. In the first place, the allowance for shortage of weight was made much less than before; secondly a sum of Rs. 4 12 0 only was allowed for all the incidental expenses, and thirdly, the margin of profit was cut down to 10 per cent. On the 22nd of May, 1953, a representative petition was filed by seven colliery depot holders of Kanpur including the present petitioners challenging the validity of the executive order, dated the 14th of February, 1953, mentioned above inter alia on the ground that it infringed the fundamental rights of the petitioners under articles 14 and 19 of the Constitution. There was an application for ad interim stay in connection with this petition which came up for hearing before the learned Vacation Judge of this court on the Ist of July, 1953. On that day an undertaking was given by the State of Uttar Pradesh to the effect that they would withdraw the order of the 14th February, 1953, and apparently the consideration that weighed with the State in giving this undertaking was that it was a purely executive order without any legislative sanction behind it. The order of the 14th February was in fact withdrawn, but on the 10th of July, 1953, the State of Uttar Pradesh promulgated by a notification an order intituled "The Uttar Pradesh Coal Control Order, 1953" purporting to act in exercise of the powers conferred upon it by_section 3(2) of the Essential Supplies Act, 1946, read with the notified order of the Government of India issued under 806 section 4 of the Act. As the constitutionality of this Coal Control Order is the main object of attack by the petitioners in the present proceeding, it would be convenient to set out the material provisions of the order in respect of which the controversy between the parties primarily centers: "THE UTTAR PRADESH COAL CONTROL ORDER, 1953. In this Order unless there is anything repugnant in the subject or context . (a) "Coal" includes coke but does not include cinder and ashes. (c) "The Licensing Licensing Authority" means the District Magistrate of the District or any other officer authorised by him to perform his functions under this Order and includes the District Supply Officer of the district. (d) "Licensee" means a person holding a licence under the provisions of this Order in Form 'A ' or in Form 'B '. (1) No person shall stock, sell, store for sale or utilise coal for burning bricks or shall otherwise dispose of coal in this State except under a licence in Form 'A ' or 'B ' granted under this Order or in accordance with the provisions of this Order. (2) Nothing contained in sub clause (1) (a) Shall in so far as it relates to taking out a licence for stocking or storing coal for their own consumption, apply to the stocks held by persons or undertakings obtaining coal on permits of the District Magistrate or the State Coal Controller for their own consumption. (b) Shall apply to any person or class of persons ' exempted from any provision of the above sub clause by the State Coal Controller, to the extent of their exemption. (1) Every application for licence under this Order shall be made in the form given in Schedule I appended to this Order. 807 (2) A licence granted under this Order shall be in Form 'A ' or Form 'B ' appended to this Order and the holder of a licence granted under this Order shall comply with any directions that may be issued to him by the Licensing Authority in regard to the purchase, sale, storage or distribution of coal. (3) The Licensing Authority may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded. Provided that every power which is under this Order exercisable by the Licensing Authority shall also be exercisable by the State Coal Controller or any person authorised by him in this behalf. The State Coal Controller may by written order likewise require any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provisions of clause (8). 8. (1) No licensee in Form 'B ' and no person acting on his behalf shall sell, agree to sell or offer for sale, coal at a price exceeding the price to be declared by the Licensing Authority in accordance with the formula given in Schedule III. (2) A licensee in Form 'A ' or any other person holding stock of coal or any other person acting for or on behalf of such licensees or person transferring or disposing of such stocks to any person in accordance with clause 6 or clause 7 shall not charge for the coal a price exceeding the landed cost, plus incidental and handling charges, plus an amount not exceeding 10 per cent of the landed cost as may be determined by the Licensing Authority or the State Coal Controller. Explanations: (1) Landed cost means the excolliery price of the coal plus the L.D.C.C. and Bihar. Sales tax plus middleman 's commission actually paid and railway freight. 808 (2) Incidental and handling charges mean the cost of unloading from wagons, transporting to stacking site, unloading at the stacking site, plus godown rent, plus choukidari charges, if any, not exceeding Rs. 8 8 0 per ton as may be determined by the Licensing Authority or the State Coal Controller according to local conditions. The District Magistrate shall within a week of the commencement of this Order prepare and publish in a local paper a list of persons carrying on the business of sale of coal in his district and upon the publication of the list, the persons included therein will be deemed for purposes of this Order to be licensee until three months next following the publication of the list in Form A or B as may be specified. If any person contravenes any of the provisions of this Order, or the conditions of licenee granted thereunder, he shall be punishable under section 7 of the Essential Supplies (Temporary Powers) Act, 1946, with imprisonment for a term which may extend to three 'years or with fine or with both and without prejudice to any other punishment to which he may be liable . . " ' Schedule III referred to in the Order is as follows: SCHEDULE III. (Formula for declaration of prices of soft coke/hard coke/steam coal). Ex colliery Price Actuals. L.D.C.C. and Bihar Sales tax Actuals. Middleman 's commission Actually Raid subject to the maximum laid down under clause 6 of the Government of India Colliery Order 1945 4. Railway freight Actuals. Incidental and handling chargers including Maximum of Rs. 8 8 0 per per ton as may be determ ined by the licensing (i) Unloading from wagons. Licensing Authority according to local condition (ii) Transport upto premises provided that at places 0of stacking which are extra oridenarily (iii) Unloading and stacking distant form the railway at the premises or depot. way head a higher rate may be allowed by the Licensing Authority. 809 (iv) Godown rent and chaukidari charges, if any (v) Weighing charges, if any. 6. Local taxes Octroi, etc. Actuals. Shortage Not exceeding 31/2 maunds per ton in the case of soft coke and 2 1/2 maunds in the case of hard coke and steam coal as may be determined by the Licensing Authority. Profit At 10 per cent on total items 1 to 6 above except item No.5 It is said that on the 16th of July, 1953, the respondent No. 2 issued a declaration whereby he fixed the retail rates for the sale of soft coke, coal, etc. at precisely the same figures as they stood in the directive issued on the 14th of February, 1953. The result, according to the petitioners, was that the selling prices were reduced so much that it was not possible for the coal traders to carry on their business at all. In accordance with the provision of clause 11 of the Control Order set out above, the petitioners ' name appeared in the list of B licence holders and they did apply for a licence in the proper form as required by clause (4). The licence, it is said, was prepared, though not actually delivered over to the petitioners. By a letter dated the 3rd of October, 1953, the Area Rationing Officer, Kanpur, accused the petitioners of committing a number of irregularities in connection with the carrying on of the coal depot. The charges mainly were that there were two other depots held and financed by the petitioners themselves in the names of different persons and that the petitioners had entered into agreements for sale of coal at more than the fixed rates. The petitioners submitted an explanation which was not considered to be satisfactory and by an order dated the 13th of October, 1953, the District Supply Officer, Kanpur, cancelled the petitioners 'licence. In the present petition the petitioners have challenged the validity of the Coal Control Order of the 10th of July, 1953, the declaration of prices made on the 16th of July following and also the order cancelling the petitioners ' licence on the 13th of October, 1953. 15 95 section C. I./59 The constitutional validity of the Uttar Pradesh Coal Control Order has been assailed before us substantially on the ground that its provisions vest an unfettered and unguided discretion in the licensing authority or the State Coal Controller in the matter of granting or revoking licenses, in fixing prices of coal and imposing conditions upon the traders; and these arbitrary powers cannot only be exercised by the officers themselves but may be delegated at their option to any person they like. It is argued that these provisions imposing as they do unreasonable restrictions upon the right of the petitioners to carry on their ' trade and business conflict with their fundamental rights under article 19 (1)(g) of the Constitution and are hence void. With regard to the order dated the 16th of July, 1953, by which the prices of coke, coal, etc. were fixed, it is pointed out that it was not only made in exercise of the arbitrary power Conferred upon the licensing authority by the Coal Control Order, but the prices, as fixed, are palpably discriminatory as would appear from comparing them with the prices fixed under the very same Control Order in other places within the State of Uttar Pradesh like Allahabad, Lucknow and Aligarh. The order of the 13th OCtober, 1953, cancelling the petitioners ' licenee is challenged on the ground that the charges made against the ,petitioners were vague and indefinite and that the order was made with the ulterior object of driving the petitioners out of the coal business altogether. It is said further that as a result of the cancellation order, the petitioners have been made incapable of disposing of the stocks already in their possession, though at the same time the holding of such,stock after the cancellation of their licence has become an offence under the Coal Control Order. It is not disputed before us that coal is an essential commodity under the Essential Supplies (Temporary ,Powers) Act of 1946, and by virtue of the delegation powers by the Central Government to the Provincial Government under section 4 of the Act, the Uttar Pradesh Government was competent to make provisions, by notified order, for regulating the supply and 811 distribution of coal in such a way as they considered proper with a view to secure the objects as specified in section 3 of the Act. All that is necessary is that these provisions should not infringe the fundamental rights of the citizens guaranteed under Part III of the Constitution and if they impose restrictions upon the carrying on of trade or business, they must be reasonable restrictions imposed in the interests of the general public as laid down in article 19 (6)of the Constitution. Nobody can dispute that for ensuring equitable distribution of commodities considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the controlling authorities. The power of granting or withholding licences or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretion in these matters. So far no exception can be taken; but the mischief arises when the power conferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority. A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable. As has been held, by this court in Chintamon vs The State of Madhya Pradesh(1), the phrase "reasonable restriction, ' connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper balance between the freedom guaranteed under (1) ; article 19 (1) (g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in reasonableness. It is in the light of these principles that we would proceed to examine the provisions of this control Order, the validity of Which has been impugned before us on behalf of the petitioners. The provision contained in clause 3(1) of the Order that "no person shall stock, sell, store for sale or otherwise utilise or dispose of coal except under a licence granted under this Order" is quite unexceptional as a general provision; in fact, that is the primary object which the control Order is intended to serve. There are two exceptions engrafted upon this general rule: the first is laid down in sub clause (2) (a) and to that no objection has been or can be taken. The Second exception, which is embodied in subclause (2)(b)has been objected to by the learned counsel ' appearing for the petitioners. This exception provides that nothing in clause 3 (1) shall apply to any person or class of persons exempted from any provision of the above sub clause by the State Coal Controller, to the extent of such exemption. It will be seen that the Control Order nowhere indicates what the grounds for exemption are, nor have any rules been framed on this point. An unrestricted power has been given to the State Controller to make exemptions, and even if he acts arbitrarily or from improper motives, there is no check over it and no way of obtaining redress. Clause 3 (2) (b) of the Cntrol Order seems to us, therefore, prima facie to be unreasonable. We agree, however, with Mr. Umrigar that this portion of the Control Order, even though bad, is severable from the rest and we are not really concerned with the validity or otherwise of this provision in the present case as no action taken under it is the subject matter of any complaint before us. The more formidable objection has been taken on behalf of the petitioners against clause 4 (3) of the Control Order which relates to the granting and refusing of licences. The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or 813 modify any licenee under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. It seems to us that such provision cannot be held to be reasonable. No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. Practically the Order commits to the unrestrained will of a single 'individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same. Mr. Umrigar contends that a sufficient safeguard has been provided against any abuse of power by reason of the fact that the licensing authority has got to record reasons for what he does. This safeguard, in our opinion, is hardly effective; for there is no higher authority prescribed in the Order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer. The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person. It was pointed out and with perfect propriety by Mr. Justice Matthews in the well known American case of Yick Wo vs Hopkins(1), that the action or non action of officers placed in such position may proceed from emmity or prejudice, from . partisan zeal or animosity, from favouritism and Other improper influences and motives which are easy of concealment and difficult to be detected and exposed and consequently 'the injustice capable of being wrought under 'cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation. In our opinion, the provision of clause 4(3) of the Uttar Pradesh Coal control Order must be must be held to void as imposing an unreasonable restriction upon the freedom (1) at 373. 814 of trade and business_guaranteed under article 19(1) (g)of the Constitution and not coming within the protection afforded by clause (6) of the article. As this provision forms an integral part of the entire structure of the Uttar Pradesh Coal Control Order, the order cannot operate properly unless the provision of clause 4 (3) is brought in conformity with the constitutional requirements indicated above. The licenee of the petitioners having been cancelled in pursuance with the above clause of the Control Order, the cancellation itself should be held to be ineffective and is not necessary for us to enquire further whether or not the grounds upon which the licensing authority purported to act were vague or idefinite or could constitute proper grounds for cancellation. The two other clauses of the Control Order to which exception has been taken on behalf of the petitioners are clauses (7) and (8). Clause (7) empowers the State Coal Controller to direct, by written order, any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provision of clause (8). Clause 8 (1) provides that no licensee in Form 'B ' shall sell or agree to sell coal at a price exceeding the price to be declared by the licensing authority in accordance with the formula given in Schedule III. With regard to both these clauses, the contention of the petitioners ' counsel, in substance, is that the formula for determining the price, as laid down in Schedule III, is per se unreasonable as it is made dependent on the exercise of an unfettered and uncontrolled discretion by the licensing authority. An unfair determination of the price by the licensing authority, it is argued, would be totally destructive of the business of the coal traders and the grievance of the petitioners is that that is exactly what has been done by the declaration of prices made on the 16th of July, 1953. We have examined the formula given in Schedule Iii to the Control Order with some care and on the materials that have been actually placed before us, we are 815 not in a position to say that the formula is unreasonable. 'The prices, as said already, are calculated on the basis of the landed costs of coke and coal up to the depot, 'to which a profit of 10 per cent is added. The landed costs comprise seven items in all which are enumerated ' in Schedule III. With regard to items 1, 2, 3, 4 and 6 of the Schedule the actual costs are taken into, account and to that no objection can possibly be taken. The entire dispute is with regard to incidental charges specified in item 5 and the allowance or shortage which forms item 7. So far as incidental charges are concerned, the Schedule allows a maximum of Rs. 8 8 0 per ton to be determined by the licensing authority according to local conditions. The rates undoubtedly vary according to local conditions and some amount of discretion must have to be left in such cases to the local authorities. The discretion given to the licensing authority in fixing these rates is, however, not an unlimited discretion, but has got to be exercised with reference to the condition prevalent in the locality with which the local officers, must be presumed to be familiar. The grievance of the petitioners is that in the declaration of 16th of July, 1953, the licensing authority allowed incidental charges only at the rate of Rs. 4 12 0 per ton and that is grossly unfair. It is pointed out that at Lucknow, Aligarh, Allahabad and other places much higher rates were allowed, 'though the local conditions of these places are almost identical; and there has been consequently a discrimination in this respect which makes the declaration void altogether. The statements that have been made by the petitioners in this connection are not supported by any affidavit of any person who is familiar with the local conditions in the other places and on the materials that we have got here we are unable to say that the rates fixed by the licensing authority of Kanpur are really discriminatory. It is certainly not open to us to substitute our own determination in tile matter of fixing the prices for that of the licensing authority and provided we are satisfied that the discretion that has been vested in a public officer is not an uncontrolled discretion and no unfair 816 discrimination has resulted from the exercise of it, we cannot possibly strike down as illegal any order or declaration made by such officer. The same reasons apply, in our opinion, to the seventh item of Schedule III which relates to allowances for shortage of weight. Here also the Control Order specifies a maximum and the determination of the allowance in particular cases has been left to the discretion of the licensing authority. We are not satisfied from the materials placed before us that this provision is unfair or discriminatory. The formula allows a profit of loper cent upon the cost items with the exception of item No. 5 which relates to incidental charges. We do not know why this item has been omitted and Mr. Umrigar, appearing for the respondents, could not suggest any possible reason for it. But even then, the result of this omission would only be to lower the margin of profit a little below 10 per cent and nothing more. If the other traders in the locality are willing to carry on business in coal with that amount of profit, as is stated on the affidavits of the respondents, such fixation of profit would undoubtedly be in the interests of the public and cannot be held to be unreasonable. The counsel for the petitioners is not right in his contention that the Control Order has only fixed the maximum profit at 10 per cent and has left it to the discretion of the licensing authority to reduce it in any way he likes. Schedule III fixes the profit at 10 per cent upon the landed costs with the exception of item No. 5 and as this is not the maximum, it would have to be allowed in all cases and under clause 8 (1), the 'B ' licensees are to sell their stocks of coal according to the prices fixed under Schedule III. Clause 8 (2) indeed is not very clearly worded, but we think that all that it provides is to impose a disability upon all holders of coal stocks to charge prices exceeding the landed costs and a profit upon the same not above 10 per cent as may be determined by the licensing authority. The determination spoken of here must be in accordance with what is laid down in Schedule III and that, as has been said above, does specify a fixed rate and not a maximum and does ' not 817 allow the licensing authority to make any reduction he: likes. On the whole we are of the opinion that clauses (7 is and (8) of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration. of the 16th of July, 1953, cannot I;e held to be invalid. The result is that, in our opinion, clause 4 (3) of the Control Order as well as the cancellation of the petitioners licence should be held to be invalid and a writ in the nature of mandamus would issue against the respondents opposite parties preventing them from enforcing the cancellation order. The rest of the prayers of the petitioners are disallowed. We make no order as to costs. Petition partly allowed. Agent for the petitioners: Ganpat Rai.

A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities must be held to be unreasonable. Under cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. Such provisions cannot be held to be reasonable: Held, therefore that the provision of cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, must be held to be void as 104 804 imposing an unreasonable restriction upon the freedom of trade and business guaranteed under article 19 (1) (g) of the Constitution and not coming within the protection afforded by cl. (6) of the article. Yick Wo vs Hopkins at 373) referred to.

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iminal Appeals Nos. 192 of 1961 and 183 of 1962. Appeals from the judgment and orders dated August 11, 1961 of the Calcutta High Court in Criminal Appeals Nos. 360 of 1959 and 345 of 1959 respectively. WITH Criminal Appeals Nos. 41 of 1964 and 42 of 1964. Appeals by special leave from the judgment and orders dated March 25, 1963 of the Bombay High Court in Criminal Appeals Nos. 1640 of 1962 and 1359 of 1962 respectively. Niren De, Additional Solicitor General, D. R. Prem, R. H. Dhebar and B. R. G. K. Achar, for the appellant (in Cr. 192 of 1961 and 183 of 1962). D. R. Prem, B. R. G. K. Achar, Yogeshwar Prasad, for appellant (in Cr. Nos. 123 of 1962 and 41 and 42 of 1964). section C. Mazumdar, for respondent No. 1 (in Cr. A. No. 123 of 1962). P. K. Chatterjee and section P. Varma, for respondent No. 1 (in Cr. A. No., 123 of 1962). B. M. Mistry, P. R, Vakil, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent (in Cr. A. No. 41 of 1964). B. R. Agarwala and H. K. Puri, for respondent (in Cr. A. No. 42 of 1964). P. R. Vakil, B. M. Mistry, J. B. Dadachanji, for the interveners (in Cr. A. Nos. 41 and 42 of 1964). SUBBA RAO J. delivered a dissenting Opinion. The Judgment of WANCHOO SHAH, SIKRI and PAMASWAMI JJ. was delivered by WANCHOO J. Subba Rao, J. I regret my inability to agree on the construction of section 167 (81) of the , 1 8 7 8. The Acts have been stated by my learned brother, Wanchoo, J., and need not restate them. Clause (81) of section 167 of the reads "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to 4 evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid or with respect to the importation or exportation of which 'any prohibition or restriction is for the time being in force as aforesaid";. . . The penalty clause thereof reads : "such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years or to fine, or to both". This clause introduces a criminal offence. It is triable by a Magistrate. The person con victed is liable to, imprisonment for a term not exceeding two years or to fine or to both. The rule of construction of such a clause creating a criminal offence is well settled. The following passage from the judgment of the Judicial Committee in The Gauntlet(1) may be quoted : "No doubt all penal statutes are to be construed strictly, that is to say, the court must see that the thing charged as an offence is within the plain meaning of the words used, and must not strain the words on any notion that there has been a slip, that there has been a casus omissus that the thing is so clearly within the mischief that it must have been intended to be included, and would have been included if thought of. On the other hand, the person charged has a right to say that the thing charged, although within the words, is not within the spirit of the enactment. But where the thing is brought within the words and within the spirit, there a penal enactment is to be construed, like any other instrument, according to the fair commonsense meaning of the language used, and the court is not to find or make any doubt or ambiguity in the language of a penal statute, where such doubt or ambiguity would clearly not be found or made in the same language in any other instrument." The clause, therefore, must be construed strictly and it is not open to the court to strain the language in order to read a casus omissus. The court cannot fill up a lacuna: that is the province (1) ,191. of the Legislature. The second rule of construction equally well settled is that a court cannot construe a section of a statute with reference to that of another unless the latter is in pari materia with the former. It follows that decisions made on a provision of a different statute in India or elsewhere will be of no relevance unless the two statutes are in pari materia. Any deviation from this rule will destroy the fundamental principle of construction, namely, the duty of a court is to ascertain the expressed intention of the Legislature. I am led to make these general remarks, as an attempt was made by the learned counsel for the appellant to persuade us to interpret the words of the clause in the light of the decisions of the English courts on an analogous provision in an Act intended to prevent smuggling. It is not possible to state that the English and the Indian Acts are in pari materia, though their general purposes are the same and though there is some: resemblance in the terminology used in them. The English decisions, therefore, must be kept aside in construing the relevant provisions of the Indian statute. Now coming to the relevant clause, the following material ' ingredients constitute an offence thereunder : (1) a person must have a knowledge that there is a prohibition or restriction against doing any of the enumerated acts with respect to goods imported or exported contrary to the restriction or prohibition imposed against their import or export; (2) he must have acted with an, intention to evade such a restriction or prohibition; there is no offence unless the said two elements of mens rea, namely, knowledge and intention, are established. It is not enough if a person has only knowledge of such a prohibition or restriction; in addition he shall have the intention to evade such a prohibition or restriction against the import or export of goods, as the case may be. A person who knowingly purchases smuggled goods from an importer cannot have an intention to evade a provision against import, for the prohibited goods have already been imported. A person who receives goods with the knowledge that they are stolen,. goods cannot possibly have an intention to commit theft, for the theft has already been committed, though he may have the intention to receive the stolen goods. Knowledge of an offence cannot be equated with an intention to commit the offence. Such a construction effaces the distinction between the two distinct elements of mens rea, knowledge and intention, laid down in the clause. The only possible way out of the inevitable effect of the plain words used in the said clause is to give a meaning to the expres 6 sion "import" which that word cannot bear. To accept the argument of the learned counsel for the appellant is to hold that the process of import continues through innumerable transactions between different persons without reference to time or place and whether the goods existed or ceased to exist. Ordinarily the process of import commences the moment the goods cross the customs barrier. That is the meaning given to that word by this Court in J. V. Gokal & Co. vs Assistant Collector or Sales Tax(1). But the said clause gives that expression a wider meaning. The enumerated dealings with the goods prohibited or restricted covered a field beyond the point of import normally understood by that expression. But all the said dealings have an intimate nexus with the import of goods under the Act. Goods may be imported through the machinery provided under the Act; yet, a person may evade the restrictions by fraud or otherwise. Goods may also be illegally imported into India outside the machinery so provided. This is done stealthily at different points of the vast sea line of our country. But in either case different persons may take part in carrying, removing, depositing, harbouring, keeping or concealing or in any other manner dealing with any goods so imported. They are the necessary acts to complete the process of import. Such acts may be done by persons between whom there was a prearranged plan before the goods were brought into India. Different persons may also take part in such dealings with the requisite knowledge or intention for the purpose of completing the import vis a vis the importer. Under the said clause, therefore, the process of import does not end immediately the prohibited goods are brought into India, but continues till the goods :are delivered to the importer, physically or constructively. The importer who smuggles the goods is certainly guilty under the clause, because he imports them in derogation of the prohibition or restriction. Any person who deals with the goods in the context of the import as explained above in any one of the connected ways with the requisite knowledge and intention would equally be guilty of the offence. But the subsequent transactions in regard to the said goods are outside the process of the enlarged definition of the expression, "import". It would be incongruous to hold that a purchaser from the importer or a purchaser from the said purchaser, and so on, has an intention to evade the prohibition or restriction, though he may have the intention to receive the smuggled goods. How does such a purchaser evade the prohi bition against import which has already been affected ? The contrary construction will lead to the anomaly of a purchaser, (1) ; , 857, 858. 7 even after 20 years of the import, being attributed the intention to evade the prohibition against import. Suppose before the purchase of the goods by a stranger the prohibition was lifted. In such a situation, does the purchaser commit an offence ? If the contention is sound, he does. This illustrates that the crux ' of the offence is the import of goods with the requisite intent contrary to the prohibition. For the said reasons the intention to contravene the prohibition cannot be imputed to subsequent dealers in the said goods after the importer parts with them. It is said that if the construction suggested by the learned counsel for the appellant be not accepted, many a person who purchases smuggled goods will escape punishment. A fair reading of the Act discloses that the Act makes a distinction between a customs offence and a criminal offence. The smuggled goods in the hands of whomsoever they are found can be confiscated and, therefore, the State can always trace the smuggled goods to their ultimate destination. The smuggler and the persons concerned in the smuggling are guilty of both customs and criminal offences. The Legislature, either intentionally or otherwise, has not made the dealings in such goods by persons other than those mentioned in cl. 81 of section 167 of the a criminal offence. When the clause does not bring them in, the court cannot, by construction, bring such a class of persons within the said clause. It is for the Legislature to do so and we are told that it has recently amended the section. I, therefore, agree with the High Court that it has not been established that the respondents have dealt with the goods with an intention to evade any restriction or prohibition imposed on the import of the said goods. In the result, all the appeals should be dismissed. Wanchoo, J. These two appeals on certificates granted by the Calcutta High Court arise out of the same trial of the two respondents for an offence under section 167 (81) of the ,. No. 8 of 1878, (hereinafter referred to as the Act) and will be dealt with together. The facts are not in dispute and have been found as below. On August 25, 1958, a constable attached to the Detective Department, noticed Sitaram Agarwala respondent and another person at the crossing of Hariram Goenka street and Kalakar street. The constable had certain information with respect to 8 these persons and decided to follow them. These two persons got into a bus and the constable also boarded the same bus. They got down at the unction of B. K. Pal Avenue and J. M. Avenue and so did the constable. They then went to Narendra Dev Square 'Which is a kind of park. The constable kept watch over them from a distance. After a short time these two men came out of the park and stood on the western foot path of J. M. Avenue. Shortly thereafter a small taxi came there from the South and stopped. Respondent Wang Chit Khaw (hereinafter referred to as the Chinese accused) was in that taxi. He came down and shook hands with Sitaram Agarwala and the three got into the taxi. When the taxi was about to start, the constable disclosed his identity to the driver and asked him to stop. He also asked the 'three persons to accompany him to the thana. Thereupon Sitaram Agarwala and the other man who was with him came out of the taxi and tried to run away. The constable caught hold of them and put them in the police wagon which happened to come up just then. The Chinese accused also tried to run away. The constable appealed to the members of the public to help him in securing the Chinese accused and he was secured with the help of two college students and one other youngman. As the Chinese accused was running away he threw away three packets which were picked up. In the meantime Sergeant Mukherjee came there on a motor cycle from the opposite direction and detained the Chinese accused. The three packets thrown away 'by him were also handed over. by the three youngmen to the 'Sergeant. Thereafter all the three persons who were arrested 'were taken to the police station along with the three packets. It was found in the police station that the three packets contained 23 gold bars of about sixteen tolas each with Chinese inscription thereon. On search of the person of Sitaram Agarwala, a sum of Rs. 49,320 in notes of various denomination was found on him. 'The Customs authorities were informed and took charge of the gold bars. Eventually, the gold bars were confiscated under section 167(8) of the Act and thereafter the police after investigation prosecuted the two respondents and the third man in respect of the offence under section 167(81) of the Act. These facts were held to be proved by the Magistrate so far as the Chinese accused and Sitaram were concerned. He therefore convicted them. The case against the third man was held to be doubtful and he was acquitted. Two convicted persons then filed separate appeals in the High Court. The High Court accepted the findings of fact recorded by the learned Magistrate and came to the conclusion that on the facts proved there was 9 no doubt that Sitaram had gone with a large sum of money to meet the Chinese accused in order to purchase the, gold bars which had been recovered from the, packets thrown away by the Chinese accused. The High Court then addressed itself to the question whether on the facts proved the conviction of the two respondents could be sustained in law. The charge against Sitaram Agarwala was that on the date in question and at the time and place which appeared in the evidence he had gone there by previous arrangement to purchase the smuggled gold bars from the Chinese accused and was therefore concerned in dealing with smuggled gold and thereby committed an offence under section 167(81) of the Act. The charge against the Chinese accused was that he had in his possession 23 smuggled gold bars which he wanted to sell to Sitaram Agarwala and another person by previous arrangement and as such he was concerned in dealing with smuggled gold and was guilty under section 167 (81) of the Act. So far as Sitaram Agarwala was concerned, the High Court held that by merely going to the park in order to purchase smuggled gold by previous arrangement, it could not be said that Sitaram Agarwala was in any manner dealing with smuggled gold. The High Court was of the view that there was a mere attempt to purchase smuggled gold on the part of Sitaram Agarwala, but as the purchase was not completed it could not be said that Sitaram Agarwala was concerned in dealing with the smuggled gold. The High Court therefore ordered the acquittal of Sitaram Agarwala, respondent. As to the Chinese accused, the High Court held that though he was found in possession of smuggled gold, which he knew to be such, and had attempted to sell that gold surreptitiously, section 167(81) required knowledge that the article in question was smuggled and intention to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the time being in force under or by virtue of the Act. In view of the intent necessary, the High Court was of the view that before a person could be convicted under section 167(81) it must be shown that he was either a direct importer or concerned in some way in the import of the smuggled article. In other words, the High Court thought that the section dealt with goods while they were being smuggled; it did not include in its scope a person who subsequently obtained the smuggled goods and then dealt with them, though the smuggled goods themselves might be liable to confiscation when seized. Consequently, the High Court ordered the acquittal of the Chinese accused also. As the inter 10 pretation of section 167(81) was involved, the High Court granted certificates; and that is how the two appeals have come up before us. The facts are not in dispute in this case and have been set out above. Thus the question that arises before us is the interpretation of section 167(81) and two aspects of that section have to be considered. The first aspect is the ambit of the words "in any way concerned in or in any manner dealing with any goods with respect to the importation of which any prohibition or restriction is for the time being in force as aforesaid". The second aspect is with respect to the intent necessary under the section and whether that intent can arise where smuggling is over and smuggled goods are the possession of persons other than those actually concerned in the smuggling and are then dealt with by them in some manner or other. We may briefly indicate the scheme of the Act in order to appreciate the purpose behind section 167(81). The object of the Act is to provide machinery for the collection inter alia of import duties and for the prevention of smuggling. With that object customs frontiers are defined, (Ch. 1); Customs officers are appointed with, certain powers, (Ch. 11); ports, wharves, customhouses, warehouses and boarding and landing stations are provided for, (Ch. III); prohibitions and restrictions of imports and exports are envisaged, (Ch. IV); levy of and exemption from custom duties and the manner in which it has to be done is provided, (Ch. V); drawbacks, i.e., refunds are provided in certain circumstances, (Ch. VI); arrival and departure of vessels is controlled, (Ch. VII and Ch. VIII); provision is made for the discharge of cargo, (Ch. IX), and clearance of goods for home con sumption (Ch. X); provision is also made for warehousing and transshipment, (Chapters XI, XII); provisions are also made for exportation or shipment and re landing (Ch. XIII); special provisions have been made relating to spirit (Ch. XIV) and coasting trade (Ch. XV). Then comes Ch. XVI dealing with offences and penalties. Offences enumerated in Ch. XVI are of two kinds; first there are contravention of the Act and rules thereunder which are dealt with by Customs officers and the penalty for which is imposed by them. These may be compendiously called customs offences. Besides these there are criminal offences which are dealt with by Magistrates and which result in conviction and sentence of imprisonment and/or fine. These two kinds of offences have been created to ensure that no fraud is committed in the matter of payment of duty and also to ensure that there is 11 no smuggling of goods, without payment of duty or in defiance of any prohibition or restriction imposed under Ch. IV of the Act. It is necessary for our purpose to set out two provisions of section 167 which is in Ch. These are section 167 (8) and 167 (81 Section 167 (8) is in these terms : "167. The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: (1) Offences "(8) If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction: or Etc. (2) Section of this Act to which offence has reference 18 & 19 (3) Penalties such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. " Section 167(81) with which we are particularly concerned reads thus (1) Offences (continue). "(81). If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any, prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods which have been unlaw fully removed from a warehouse or which are ' chargeable with a duty which has not been paid or with respect to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid; or (2) Section of this Act to which offence has reference General (3) Penalties such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years or to fine, or to both; L1sup. C.I/66 2 12 It will be seen that section 167 (8) deals with what we have called customs offences while section 167(81) deals with criminal offences. It is well settled by the decisions of this Court that goods which have been imported against the prohibition or restriction imposed under Ch. IV of the Act are liable to confiscation at any time after import and this liability extends even in the hands of third persons who may not have had anything to do with the actual import. So long as it is proved that the goods had been imported against the restrictions imposed under Ch. IV, the goods remain liable to confiscation whenever found even if this is long after the import is over and even if they are in possession of persons who had nothing to do with the actual import. It is also well settled by the decisions of this Court that the second part of the penalty relating to any person applies only to a person concerned in the importation or exportation of the goods and does not apply to a person found in possession of the smuggled goods who had nothing to do with the importation or exportation thereof: (see Shivanarayan Mahato vs Collector of Central Excise and Land Customs(1). The main contention of the respondents which has found favour with the High Court was that section 167(81) when it deals with persons and subjects them to imprisonment and fine on conviction by a Magistrate is also concerned with persons who are in some way or other actually concerned in the import and has no application to third persons who had nothing to do with the actual import but might have come in possession of smuggled goods even knowingly after they had been smuggled. Before however we consider this contention which has found favour with the High Court we should like to dispose of the other contention which was raised on behalf of Sitaram Agarwala and which also found favour with the High Court. It will be seen that section 1 67 (8 1 ) deals with persons who do certain things with the knowledge and intent therein specified and one such person with whom that pro vision deals is a person who is, in any way concerned in or in any manner dealing with any goods with respect to importation of which any prohibition or restriction is for the time being in force. The High Court has held on the facts in this case that Sitaram Agarwala cannot be said to have been concerned in or in any manner dealing with prohibited goods inasmuch as he was merely negotiating with the Chinese accused for their purpose but the deal had not been concluded. The view which found favour with the High Court thus was that if the deal had been completed, Sitaram Agarwala could be said to have been concerned in dealing with the prohibited goods but as the deal was not completed and he (1) C.A. 288 of 1964, decided on 14 8 65. 13 was merely attempting to purchase the goods it could not be said that he was in any way concerned in or in any manner dealing with them. We are of opinion that the view taken by the High Court is not correct. The words "in any way concerned in or in any manner dealing with prohibited goods" are of very wide import. It is neither desirable nor necessary to define all manner of connection with the prohibited goods which might come within the meaning of the words "in any way concerned in or in any manner dealing with such goods". It will depend on the facts found in each case whether it can be said that any person was concerned in dealing with such goods. We shall therefore confine ourselves to the facts of the present case and gee whether on these facts, it can be said that Sitaram was in any way concerned in or in any manner dealing with the goods. Now the evidence which has been accepted by both the courts is that Sitaram had gone with a large sum of money to purchase the gold which was known to, be smuggled and to have been imported into India against the restrictions imposed on the import of gold. It has also been proved that Sitaram did so after previous arrangement with the Chinese accused. If the constable who was following Sitaram had ' not interfered the deal would have gone through and Sitaram would have paid the money and purchased the smuggled gold. 'This was a case therefore where by means of previous arrangement with a person in possession of a smuggled article, the intending purchaser had gone to purchase it and the deal did not go, through only because the police intervened. In such circumstances where by previous agreement or arrangement a person goes to purchase an article which he knows to be smuggled it would in our opinion be a case where such a person must be held to be concerned in dealing with the prohibited goods. Where a person does any overt act in relation to prohibited goods which he knows to be such and the act is done in consequence of a previous arrangement or agreement it would in our opinion be a case were the person doing the act is concerned in dealing with the, prohibited goods. In other words any transaction relating to pro hibited goods which is done or attempted to be done after some kind of prior arrangement or agreement would in our opinion clearly amount to the person being concerned in dealing with the prohibited goods. Both the words "concerned" and "deal" have a wide connotation. The words "concerned in" mean "interested in,, involved in, mixed up with" while the words "deal with" mean "to have something to do with, to concern one self, to treat, to make arrangement, to negotiate with respect to something". Therefore when a person enters into some kind of transaction or attempts tee 14 enter into some kind of transaction with respect to prohibited goods and it is clear that the act is done with some kind of prior arrangement or agreement, it must be held that such a person is concerned in dealing with prohibited goods. The fact that the act stopped at an attempt to purchase as in the present case when the police intervened does not in any way mean that Sitaram was not concerned in dealing with the smuggled gold. The evidence shows that there must have been a previous arrangement with the Chinese accused to purchase the smuggled gold. Sitaram went to the appointed place and met the Chinese accused surreptitiously and had a large ' sum of money with him to pay for the gold. He had sat down with the Chinese accused in the taxi and there is no doubt that if the taxi had not been stopped, the transaction for the purchase of the smuggled gold would have gone through. In these circumstances even though Sitaram had not come into actual possession of the smuggled gold before the police intervened, there is no doubt that he was concerned in dealing with prohibited goods. We are therefore of opinion that the High Court was in error in holding simply because the purchase was not complete that Sitaram was not concerned in dealing with the smuggled gold which was found with the Chinese accused. The acquittal of Sitaram on this ground must therefore be set aside. This brings us to the main question which arises in the present appeal, namely, what is the intent required in a case coming under section 167(81) and whether such intent can be said to arise at all in a case where the import is complete and the prohibited goods are in the possession of a third person who had nothing; to do with the import. For this purpose we shall refer to that part of section 167(81) which deals with the acquisition of possession of prohibited goods and what we say about that part will equally apply to the other parts of section 167(81). We may add that we are dealing here with the first half of section 167(81) and not with the second half. This part of section 167(81) which we have taken for the purpose of finding out what is the knowledge and intent that section 167(81) requires would run thus : "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of the Act with respect thereto acquires possession of any goods with respect to which duty has not been paid or with respect to the importation of which any prohibition or restriction is for the time being in force. " The argument which has found favour with the High Court is that the section, requires knowledge on the part of the accused 15 that the goods were imported against the prohibition or restriction in force. This is undoubtedly so. The section further requires that the person who has this knowledge should also have the intention either to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the time being in force under or by virtue of the Act. Mere knowledge that the goods are prohibited goods or goods on which duty has not been paid would not be enough; the section further requires that there should be an intent to defraud the Government of the duty payable or to evade any prohibition or restriction. The argument on behalf of the respondents which has been accepted by the High Court is that once the goods have evaded the payment of duty or have evaded the prohibition or restriction. with respect to their import and the smuggling whether of dutiable or prohibited goods is complete, a third person who comes into possession of such goods thereafter and who had nothing to, do with the smuggling itself cannot be said to have the intent to defraud the Government of any duty payable (for such defrauding had already taken place) or to evade any prohibition or restriction (for such prohibition or restriction had already been evaded). In effect, the argument is that this part of section 167(81) corresponds to section 167(8) where a person has to be concerned, in the actual importation before he can be liable to a penalty. Now if the intention of the legislature was that the person guilty under section 167(81) could only be a person who was con cerned in some way or other with the actual importation or exportation it would have been easy for it to use the same words in section 167(81) as were used in the first part of section 167(8). But the legislature has not done so and the question is whether the words used in section 167(81) have a different meaning from those used in section 167(8). What section 167(81) requires is that the person who comes inter alia into possession of prohibited goods must know that there is some prohibition in force with respect thereto. But before he can be guilty under section 167(81) it has further to be shown that he intends to evade the prohibition. Where the case is not of prohibition but of duty, the person accused under section 167(81) must be shown to know that the duty has not been paid and also to have the intention to defraud the Government of the duty payable on the goods. The question that arises is whether the third person who has come into possession knowingly that the goods are prohibited or the goods are dutiable and the duty has not been paid can be said to have the intention of evading the prohibition or to defraud the Government of the duty 16 payable, even though he may not have anything to do with the smuggling of the goods. It seems to us (taking a case of prohibition) that if the prohibition is still in force, the person who acquires possession of prohibited goods knowing them to be prohibited intends to evade the prohibition by the action, even though he may not have been concerned in the actual smuggling of the goods. So long as the prohibition lasts any person who comes into possession of prohibited goods, though he may not be concerned in the actual smuggling would stiff in our opinion have the intent to evade the prohibition when he remains in possession of the goods which are prohibited. The prohibition in our opinion does not come to an end as soon as the Customs frontier is crossed. So long as prohibition is in force and the goods are prohibited goods any person in possession thereof, even though he may not be concerned with the actual smuggling would still be guilty of evading the prohibition by keeping the goods in his possession. If this were not so, it would mean that once the prohibition has been successfully evaded by the actual smuggler the goods would be free from the taint of prohibition and could be dealt with by any person as if there is no prohibition with respect to them. If that were to be the meaning of section 167(81) there would be a serious lacuna in this provision which is meant to prevent smuggling. Smuggling does not only stop at importing the goods in the face of prohibition; it envisages subsequent transactions like sale of the smuggled goods, for no one would take the risk of smuggling unless he can find a market for smuggled goods. Therefore the purchaser of smuggled goods though he may not be concerned in the smuggling would in our opinion be equally guilty of evading the prohibition by making the purchase. The same in our opinion applies to defrauding the Government of the duty. Where goods had been smuggled in without paying duty the smuggler in such a case also intends to sell the goods and make profit thereby. The purchaser of such smuggled goods even though he may have nothing to do with actual smuggling, usually acquires the goods at a lower price because the payment of duty has been evaded. Therefore when such goods reach even third hands there is always the intention to defraud the Government of the duty payable on the goods. This appears to us to be the true interpretation of section 167(81), which as we have said earlier is in different words from the first part of section 167(8), which deals with actual importation or exportation. Section 167(81) does not deal with actual importation or exportation; it deals with defrauding the Government of the duty payable or evading the prohibition or 17 restriction. So long as the duty is payable and has not been paid, or so long as the prohibition or restriction remains in force any person acquiring possession of goods on which duty has not been paid or restriction or prohibition has been evaded would have the intent either to defraud the Government of the duty payable for he acquires goods at a lower price or would have the intention to evade restriction or prohibition. If this were not so, there would be a premium on successful smuggling and once the goods have entered the country without paying 'duty or have entered the country after evading the prohibition or restriction, they can be dealt with as if they were duty paid goods or goods which had not evaded the prohibition or restriction. The purpose of section 167(81) is to punish smuggling and stop it if possible. That purpose in our opinion would be completely defeated if the interpretation which has found favour with the High Court were accepted. We cannot therefore accept that the words used in section 167(81) only apply up to the stage of actual importation and the person who is guilty thereunder must be somehow concerned in the actual importation. It seems to us that they apply in the case of prohibited or restricted goods so long as the prohibition or restriction lasts and whoever is in possession of such goods or comes into possession thereof, even after the smuggling is over must be attributed with the intention of evading the prohibition or restriction provided he knows that the goods were smuggled into the country in spite of the prohibition or restriction. Similarly where the goods are dutiable and the duty has not been paid on them any person acquires them with the knowledge that the duty thereon has not been paid would have the intention to defraud the Government of duty, even though he may not be the person actually concerned in the smuggling. We therefore hold that section 167(81) has a wider sweep than section 167(8) and it does not only apply to a person who may have been actually concerned in some way or other with smuggling but also inter alia to persons who may have come into possession of goods even after the smuggling was over. So long as the prohibition or restriction remains in force or the duty has not been paid even a third person coming into possession of such goods would have the intention either to evade the prohibition or restriction or to defraud the Government of the duty payable thereon. It remains now to refer to a few English cases because our Act of 1878 was modeled on the English Customs Consolidation Act, 1876. Decisions of English courts therefore with respect to corresponding provisions of the English Act would in our opinion be helpful in the matter of the interpretation of section 167(81). 18 Section 186 of the English Act corresponds to many of the provisions contained in section 167 of the Act. In particular, the provision corresponding to section 167(81) is in these terms: "Every person who. . shall be in any way knowingly concerned in carrying, removing, depositing, concealing, or in any manner dealing with any such goods with intent to defraud Her Majesty of any duties due thereon or to evade any prohibition or restriction of or application to such goods. . " Such goods" in the context of the section mean either prohibited or restricted goods or goods on which duty is leviable. The other clauses of section 186. of the English Act do not specifically contain words relating to intent. But in Frailey vs Charlton (1) it was decided that intent to defraud the revenue or to evade a restriction or prohibition would apply to other clauses of section 186 also. Thus the English Act by section 186 also requires that a person who was concerned in carrying, removing etc., or in any manner dealing with any prohibited or restricted goods or dutiable goods must do so knowingly and with intent to defraud His Majesty of any duty due thereon or to evade any restriction or prohibition. The interpretation of this provision in section 186 was considered in Beck vs Binks (2). In that case the facts were that a person was found in possession of uncustomed goods in London and it was urged, as was urged before the High Court in the present case, that the person concerned could not be said to be carrying the uncustomed goods with intent to defraud His Majesty of the duty because such an offence could only be committed by the actual smugglers or importers of goods or persons engaged in carrying the goods from the ship etc. at the port of importation with intent to evade the payment of duty or tax. This contention was nega tived and the court held that "the offence of knowingly carrying or in any manner dealing with uncustomed goods with intent to defraud His Majesty of the duty due thereon contrary to section 186 is not only committed at the port of entry or the place where the goods are actually landed; it is committed anywhere in the realm by a person acting in the manner described by the sub section". Lord Goddard C.J. made the following observations at p. 252 "If a person is knowingly carrying uncustomed goods, he is assisting in the smuggling of the goods; for while goods are no doubt smuggled when they are brought into (1) (2) 19 the country it is no good bringing smuggled goods into, the country unless something can be done with them" Such a person is intending to defraud His Majesty of the customs as much as anybody else. The intent is there : it is all part of one operation. . . Otherwise, a most extraordinary lacuna is left in the Act, for it can then be said that, once a man has got away from the port of entry or from the place where the goods were actually landed, no one dealing with the smuggled goods and carrying them inland will ever be guilty of an offence. I do not think that has ever been held, and I am certainly not prepared to hold it now, I think it clear that this appellant was dealing with that is, carrying uncustomed goods and that he was carrying them with intent to defraud His Majesty of the duties thereon. " The next case to which reference may be made is Rex vs Cohen(1). In that case 352 Swiss watches which were uncustomed were recovered from the accused and he was charged with being in possession of uncustomed goods with intent to defraud His, Majesty of the duties thereon contrary to section 186 of the English Act. Dealing with the question of intent to defraud, it was held ' that if the accused knew that the goods were uncustomed, the intention to defraud the revenue may be inferred. Here also the uncustomed goods were recovered from the house of the accused at Edgware and there was nothing to show that he was in any way concerned with actual smuggling. Even so, the court held that he must be held to be intending to defraud the revenue. The next case to which reference may be, made is Sayce, vs Coupe(2). In that case the accused was in possession of certain American cigarettes on which duty had not been paid. It was held that where a person has in his possession goods which are to. his knowledge uncustomed and which he intends to use or sell,, he is guilty of the offence of keeping uncustomed goods with intent to defraud the revenue of the duties thereon contrary to section 186. In that case there was nothing to show that the accused had anything to do with the importation or smuggling of the goods. Even so, it was held that he had the intent to defraud the revenue. The next case to which reference may be made is Schneider vs Dawson(3). That was a case where a civilian bought from American servicemen cigars and spirits which had been imported free of duty for the use of United States Servicemen under art (1) L.R. [1951]1 K.B. 505. (2) (3) L.R. [1960]2 Q.B. 106. 20 agreement between the British and American Governments and kept them for his own use. He was charged with knowingly and with intent to defraud Her Majesty of the duty payable thereon being concerned in keeping goods which were chargeable with duty on which duty had not been paid. It was held that the person 's conduct clearly amounted to keeping the smuggled goods and there was intent to defraud the revenue. This case was under the English Customs and Excise Act of 1952, but the principle under the English Act of 1876 was followed. These cases clearly indicate that the offence under the corresponding provision of the English Act can be committed long after the actual smuggling is over and even if the person found in possesSion of goods on which duty had not been paid had nothing to do with smuggling. These cases thus clearly support the interpretation we have put on the relevant words of section 167(81). Further the case of Schneider(2) shows that it has always been held in England that if dutiable goods have been brought into the country without paying the duty, the duty attaches to the goods brought into the country and though it may not have been paid at the moment of bringing the goods for some special reasons (as, for example, where it is meant for a foreign ambassador) the duty is leviable later on when the goods pass into the hands of persons other than the privileged person. The same in our view applies equally to goods which are smuggled into the country and the duty has been evaded. The duty always remains payable on goods which have been brought in without payment of duty and whoever deals with them even at a later stage after the operation of smuggling is over would still be liable to pay the duty and if he does not, he must have the intention to defraud the Government of revenue. The same applies to prohibition and restriction and so long as the prohibition or restriction remains in force, the person dealing with the smuggled goods which had evaded the prohibition or restriction must also be held to evade the prohibition or restriction. In the view that we have taken it is therefore unnecessary to consider when the import or smuggling ends, for section 167(81) hits not only persons concerned in smuggling or importing but also all others who come into possession of or deal with smuggled goods after the smuggling is over. Lastly learned counsel for the respondents refers us to section 135 of the Customs Act (No. 52 of 1962). That section provides for what was formerly provided in section 167 (81) of the Act. The argument is that it is in very different terms. That is undoubtedly so. (1) 21 But it does not follow from the fact that the corresponding section ' in the 1962 Act is differently worded that the provision in section 167 (81). cannot have the meaning which is being pressed before us on behalf of the appellant. The interpretation of section 167(81) must depend upon the language of that provision itself and on the language used in section 167(8) we have, no doubt that it applies not only to an actual smuggler or a person concerned in smuggling but also to all others who may be concerned with smuggled goods after the smuggling is over. In the view that we have taken of the meaning of section 167(81) it follows that on facts found Sitaram Agarwala was concerned in dealing with prohibited or restricted goods. It also follows on facts found that he had the necessary knowledge and intent to evade the prohibition or the restriction even though he dealt with the goods after the smuggling was over and was not in any way concerned with actual smuggling. He would therefore be guilty under section 167(81) of the Act. We therefore allow the appeal, set aside the order of acquittal made by the High Court, restore the order of the Presidency Magistrate and confirm the sentence passed on Sitaram Agarwala by the Magistrate. It also follows on facts found that Wang Chit Khaw is guilty under section 167 (81) inasmuch as he was dealing with prohibited or restricted goods and had the necessary knowledge and intent as required under that section. We therefore allow the appeal, set aside the order of the High Court, restore that of the Presidency Magistrate and confirm the sentence passed on him by the Magistrate. ORDER In accordance with the opinion of the majority the appeals are allowed, the orders of the High Court are set aside, the orders of the Presidency Magistrate are restored and the sentences on the respondents are confirmed.

The 1st respondent had gone to, the 2nd respondent after previous arrangement with him, with a large sum of money to purchase gold which was known to them to be smuggled and to have been imported into India against the restrictions imposed on the import of gold. The police intervened. recovered the gold and arrested them. The gold was confiscated under section 167(8) of the . The respondents were prosecuted for an offence under section 167(81) and they were convicted by the trial court. On appeal the High Court acquitted the 1st respondent because it was of the view that as the 1st respondent merely attempted to purchase the gold it could not be said that he was concerned in dealing with the smuggled gold within the meaning of the section. The High Court also acquitted the 2nd respondent because it held that before a person could be convicted under section 167(81), it must be shown that he was either a direct importer or concerned in some way in the import of the smuggled article,, and that the section did not include in its scope a person who subsequently obtained the smuggled goods and then dealt with them, though the smuggled goods themselves might be liable to confiscation. In appeal to this Court, HELD, (per Wanchoo, Shah, Sikri and Ramaswami, JJ.) : (i) The High Court was in error in holding that simply because the purchase was not complete the 1st respondent was not concerned in dealing with the smuggled gold which was with the 2nd respondent. [14 D] The words "in any way concerned or in any manner dealing with any goods" in the section, are of very wide import. The words "concerned in" mean "interested in, involved in, mixed up with", while the words "deal with" mean "to have something to do with, to concern one self, to treat, to make arrangement, to negotiate with respect to some thing." Therefore, when a person enters, into some kind of transaction or attempts to enter into some kind of transaction with respect to prohibited goods, and it is clear that the act was done with some kind of prior arrangement or agreement, it must be held that such a person is concerned in dealing with prohibited goods. [13 A B; H] (ii) On the language of the section, it applies not only to an actual smuggler or a person concerned in smuggling but also to all others who may be concerned with smuggled goods after the smuggling is over provided they know that the smuggled into the country in spite of a prohibition or restriction, or they knew that the duty thereon had not been paid. It follows that the 1st respondent had the necessary knowledge and intent or evade the prohibition or the restriction even though he dealt 2 with the gold after the smuggling was over and was not in any way concerned with the actual smuggling. He would therefore be guilty under the section. The 2nd respondent wag also guilty under the section inasmuch as he was dealing with prohibited or restricted good sand had the necessary knowledge and intent as required under the section.[21 B, C, E] If the intention of the legislature was that the person guilty under s.167(81) could only be a person who was concerned in some way or other with the actual importation or exportation it would have been easy for it to use the same words as were used in the first part of section 167(8) but it has not done so,. What section 167(81) requires is that the person who comes inter alia into possession of prohibited goods must know that there is some prohibition in force with respect thereto. But before he is found guilty it has further to be shown that he intends to evade the prohibition. Where the case is not of prohibition but of duty, the person accused under the section must be shown to know that the duty has not been paid and also to have the intention to, defraud the government of the duty payable on the goods. long as the duty is payable and has not been paid or so long as the prohibition or restriction remains in force, any person acquiring possession of goods, on which duty has not been paid or with respect to which the restriction or prohibition has been evaded, would have the intent either to defraud the government of the duty payable, for he acquires goods at a lower price, or would have the intention to evade the restriction or prohibition because no one would take the risk of smuggling unless he can find a purchaser for the smuggled 'goods. If this were not so, there would be a premium on successful smuggling and the purpose of the section to punish smuggling and stop it if possible, would be completely defeated, as there would be a serious lacuna in the provision. [15 E G; 17 A D] Cases under the English Act referred to. Per Subba Rao, J. (Dissenting) : it had not been establish ad that the respondents had dealt with the gold with an intention to evade any restriction or prohibition imposed on their import. [7 F] It is not open to the court to strain the language of a statute in order to read a causes omissus and the court cannot fill up a lacuna. Also, the court cannot construe the section with reference to the corresponding English Section and English decisions because, the Indian and English sections are not in pari materia. Under section 167(81) the material ingredients constituting an offence are; (i) a person must have a knowledge that there is a prohibition or restriction against doing any of the enumerated acts with respect to goods imported or exported contrary to the restriction or prohibition imposed against their import or export, and (ii) he must have acted with an intention to evade such a restriction or prohibition. That is, the two elements of mens rea, namely, knowledge and intention must be established, because, knowledge of an offence cannot be equated with an intention to commit the offence. The crux of the offence is the import of goods with the requisite intent contrary to the prohibition. The importer who smuggles the goods is certainly guilty under the section because he imports them in derogation of the prohibition or restriction. Also, any person who deals with the goods in the context of the import in any of the connected ways set out in the section, with the requisite knowledge and intention would equally be guilty of the offence, because, the enumerated dealings with the goods prohibited or restricted may be necessary to complete the import vis a vis the importer, even though they cover a field beyond the point of import as normally understood, that is, when the goods cross the customs barrier. But the intention to contravene the prohibition cannot be imputed to subsequent dealers in 3 the goods after the importer parts with them, though the good.% themselves can be confiscated in the hands of whomsoever they are found. [4H; 5C, E F; 6B C, H]

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Appeal No. 180 of 1963. Appeal by special leave from the judgment and decree dated February 19, 1958 of the Patna High Court in Appeal from Appellate Decree No. 919 of 1954. Sarjoo Prasad and B. P. tha, for the appellants, 159 A. V. Viswanatha Sastri, B. K. P. Sinha and A. G. Ratna parkhi, for the respondent. The Judgment of the Court was delivered by Bachawat, J. The plaintiffs appellants instituted Title Suit No. 91 of 1950, out of which this appeal arises, for redemption of two usufructuary mortgages created by plaintiff No. 1 and ancestors of plaintiffs Nos. 2 to 6 dated July 5, 1927 and April 15, 1928 in favour of the defendant for Rs. 1,000 and Rs. 1,300 respectively. The mortgage dated July 5, 1927 was in respect of 7.20 acres of occupancy raiyati lands, consisting of four plots Nos. 149, 155, 955 and 957, in village Hichapur under the Tikari Raj. The mortgaged lands were part of a larger holding of 23.69 acres under khata No. 59, and the annual rent of the entire holding was Rs. 153 3 0. The mortgage deed provided that the mortgagee would pay Rs. 33 14 9 out of the total rent payable to the landlord and the mortgagors would pay the balance rent. There was default in payment of rent for several years. The landlord obtained a, decree for arrears of rent, and at the rent sale held on June 18, 1934, the mortgagee defendant purchased the Hichapur lands in the farzi name of Dwarkalal. The mortgage dated April 15, 1928 was in respect of 7.20 acres of lands in village Utrain tinder kahas mahal. The mortgaged lands were part of a larger holding of 1988 1/2 acres in khata No. 269. The, rent of the entire holding was Rs. 155 4 0. The mortgage deed provided that the mortgagee would pay Rs. 68 10 9 out of the total rent and the balance rent would be payable by the mortgagors. There was default in payment of rent for several years. Certificate proceedings were started for the recovery of the arrears of rent, and at a certificate sale held on January 22, 1934, the Utrain lands were purchased by the defendant in the farzi name of Deonarain. It appears that out of the sum of Rs. 33 14 9 pay able by the mortgagee annually on account of the rent of the Hichapur lands, the mortgagee consistently paid Rs. 33 annually, but did not pay the balance sum of 14 annas 9 pies, whereas the mortgagors consistently defaulted in payment of the sum of Rs. 119 4 3 payable by them annually on account of the total rent. It also appears that out of the sum of Rs. 68 10 9 payable by the mortgagee annually on account of the rent of the Utrain lands, the mortgagee consistently paid Rs. 68 annually but did not pay the balance sum of 10 annas 9 pies, whereas the mortgagors consistently defaulted 160 in payment of the sum of Rs. 86 9 3 payable by them annually on account of the total rent. The trial Court decreed the suit. The first appellate Court allowed the appeal in part, passed a decree for redemption of 3.93 acres of plot No. 955 only on the ground that this portion of the land was not sold at the rent sale and gave leave to the defendant to withdraw Rs. 1,000 deposited by the plaintiff in respect of the mortgage dated July 5, 1927. The High Court dismissed a second appeal preferred by the plaintiffs. The plaintiffs now appeal to this Court by special leave. The plaintiffs contend that the purchases at the rent sale and the certificate sale were made by the mortgagee by availing himself of his position as such and having regard to section 90 of the and Illustration (c) to it, the purchases enured for the benefit of the plaintiffs and they are entitled to redeem the entire mortgaged lands. The defendant mortgagee disputes this contention, and claims that the aforesaid sales extinguished the equity of redemption. Section 90 of the and Illustration (c) to it are as follows : "Where a tenant for life, co owner mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage. (c) A mortgages land to B, who enters into possession. B allows the Government revenue to fall into arrears with a view to the land being put up for sale and his becoming himself the purchaser of it. The land is accordingly sold to B. Subject to the repayment of the amount due on the mortgage and of his expenses properly incurred as mortgagee, B holds the land for the benefit of A." 161 In Basmat Devi vs Chamru Sao(1), a part of one entire hold ing was mortgaged, both the mortgagor and the mortgagee were liable to pay the rent of the holding, both of them defaulted in payment of the rent, the default of both contributed to the passing of a rent decree and the sale of the holding in execution of, the decree, the default of the mortgagee being substantial, and the mortgagee purchased the holding at the execution sale. On these facts, this Court held that the mortgagee clearly gained an advantage by availing himself of his position as such, and having regard to section 90 of the his purchase must inure for the benefit of the mortgagor, and the mortgagor was entitled to redeem the mortcaged property. In that case, Das Gupta, J. observed "Whether this would be true even where the portion which the mortgagee is liable to pay is so very small that the property is not ordinarily likely to be brought to sale for that amount, it is unnecessary for us to decide in the present case. " The question left open by Das Gupta, J. arises for decision in the present case. This is a case where the mortgaged property is part of a larger holding, the mortgagee agreed to pay a portion of the rent of the entire holding, and the mortgagors agreed to pay the balance rent payable in respect of it. The mortgagors defaulted in payment of the rent payable by them. The mortgagee paid almost the entire amount of the rent payable by him but defaulted in payment of a trifling sum. The portion of the rent which the mortgagee failed to pay is so small that it is impossible to say that the property was brought to sale for it or that his default was in any real sense a contributory cause of the sale of the property. it is not shown that non payment of the trifling sums by the mortgagee was made mala fide or with the ulterior object of the property being put up for sale and his becoming the purchaser of it. The mortgagee did not gain any advantage by availing himself of his position as such or of a situation brought about by his own default. The real effective cause of the sale was the default of the mortgagors alone. In the circumstances, section 90 of the and Illustration (c) to it are not attracted, and the purchase by the mortgagee does not inure for the benefit of the mortgagors. The rent sale and the certificate sale extinguished the right of redemption. Consequently, the suit by the mortgagors for redemption of the mortgaged property is liable to be dismissed. The first appellate Court, however, gave a decree for redemption of 3.93 acres of plot No. 955 in Hichapur village and gave (1) ; 162 liberty to the mortgagee to withdraw the entire sum of Rs. 1,000 deposited by the plaintiffs in respect of the mortgage of the Hichapur lands. Before the High Court the plaintiffs contended, relying upon the last paragraph of section 60 of the , that they were entitled to redeem the aforesaid 3.93 acres of Utrain lands on payment of the proportionate amount of the mortgage money payable under the mortgage dated July 5, 1927. The High Court negatived this contention. The Courts below observed that 3.93 acres of plot No. 955 of the Hichapur lands were not sold at all at the sale held on June 18, 1934, but quite inconsistently, the Courts below also observed that the aforesaid sale held on June 18, 1934 was a rent sale and was made in execution of a rent decree. Learned counsel on behalf of both parties conceded before us that there could be no rent sale in respect of a portion of the holding. It may be that there was a rent sale, and by mistake, the sale certificate omitted to mention the 3.93 acres of plot No. 955. The relevant documents are not printed in the paper book. Having regard to the value of the subject matter in dispute, it is not worthwhile to call for a fresh finding on this point. We, therefore, indicated to counsel on both sides in course of the argument that we shall decide this appeal on the footing that the sale held on June 18, 1934 was a rent sale and the entire Utrain lands were purchased by the defendant at the rent sale. On this footing the last paragraph of section 60 of the can have no application. The plaintiffs appellants do not now own the equity of redemption in any portion of the Hichapur lands. The Courts below, therefore, should have dismissed the entire suit for redemption, and the question of redemption of a portion of the property on payment of a proportionate amount of the mortgage money does not properly arise in this case. However, the first appellate Court gave a decree for redemption of the aforesaid 3.93 acres of land. The High Court affirmed this decree, and there is no cross appeal by the defendant respondent. In the circumstances, the decree passed by the Court below must be maintained. In the result, the appeal is dismissed with costs. Appeal dismissed.

The ancestors of the appellants created usufructuary mortgages in favour of the respondent. The mortgaged property was a part of a larger holding. The mortgagee respondent had agreed to pay a portion of the rent of the entire holding and the mortgagors agreed to pay The balance rent payable in respect of it. The mortgagors defaulted for several years in payment of the rent. The mortgagee paid almost the entire amount of the rent but defaulted in the payment of a trifling sum. The landlord obtained a decree for arrears of rent, and at rent sales the mortgagee pur chased the lands. The appellant s mortgagors filed a suit for redemption of the mortgage, which was decreed by the trial court. The mortgagee appealed, which was allowed in part passing a decree for redemption of a small plot only on the ground that this portion of land was not sold at the rent sale. The mortgagors ' appeal to the High Court was dismissed. In appeal by special leave, the mortgagors contended that the purchases at the rent sale and the certificate sale were made by the mortgagee by availing himself of his position as such as having regard to section 90 of the and Illustration (c) to it. the purchases enured for the benefit of the mortgaors and they were entitled to redeem the entire mortgaged lands. HELD : The portion of the rent which the mortgagee failed to pay was so small that it was impossible to say that the property was brought to sale for it or that his default was in any real sense a contributory cause of the site of the property. It was not shown that non payment of the titling sum by the mortgagee was made mala fide or with the ulterior object of the property being put up for sale and his becoming the purchaser of it. The mortgagee did not gain any advantage by availing himself of his position as such or of a situation brought about by his default. The real effective cause of the sale was the default of the mortgagor& alone. L161 E G] In the circumstances, section 90 of the and Illustration (c) to it were not attracted, and the purchase by the mortgagee did not enure for the benefit of the mortgagors. The rent sale and the certificate sale extinguished the right of redemption. [161 G H] Basmat Devi vs Chamru Sao, ; , referred to.

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Civil Appeal No. 871 of 1964. Appeal from the judgment and order dated January 16, 17, 1961 of the Gujarat High Court in Special Civil Application No. 233 of 1960. N. D. Karkhanis, T. A. Ramachandran, 0. C. Mathur, Ravinder Narain and J. B. Dadachanii, for the appellant. A. V. Viswanatha Sastri, R. Ganapathy Iyer, B. R. G. K. A char and R. N. Sachthey, for the respondents. The Judgment of the Court was delivered by Shah, J. The appellants Company registered under the Indian Companies Act, 1913 was assessed in the assessment years 1948 49 to 1953 54 in respect of the profits earned in its business, and was allowed rebate under the appropriate provisions contained in the Schedules to the relevant Finance Acts on the undistributed profits of the previous years. On December 31, 1956 at an annual general meeting of the shareholders the Company declared an aggregate sum of Rs. 2,15,232/ as dividend for the year ending December 31, 1956. Thereafter a special resolution was passed for voluntary winding up of the Company with effect from October 1, 1957, and for appointing a liquidator to wind up the affairs of the Company. On October 20 & 21, 1957 the liquidator distributed to the shareholders thereafter on February 21 & 22, 1958; July 27, 1959 the liquidator distributed to the shareholders. In respect of each liquidator issued an "income tax refund that the amount was distributed out of accumulated profits of earlier years. The Income tax Officer, Special Investigation Circle B, Ahmedabad in exercise of the power under section 35(10) of the Indian Income tax Act, 1922, passed an order withdrawing the rebate, 734 granted in respect of each of the six assessment years 1948 49 to 1953 54 and demanded payment of tax on the amount of the rebate. The appellant then applied to the High Court of Bombay for writs quashing the orders of the Income tax Officer and the notice of demand and directing the Income tax Officer to withdraw and cancel the order and notice of demand. The petition was dismissed by the High Court. With certificate granted by the High Court, this appeal has been preferred. Two questions are raised for determination in this appeal (1) Whether section 35(10) authorises the Income tax Officer to bring to tax rebate granted in assessment years commencing prior to April 1, 1956; and (2) whether distribution by the liquidator of accumulated profits in the previous years could be regarded as declaration of dividend within the meaning of section 35(10) so as to attract the applicability of the provisions enabling withdrawal of rebate and demand for tax. The first question is concluded by a recent judgment of this Court in Ahmedabad Manufacturing and Calico Printing Co. Ltd. vs section G. Mehta, Income tax Officer and Another(1). In that case this Court held that section 35(10) applied even though dividend was declared before April 1, 1956. Counsel for the Company urged that in the Ahmedabad Manufacturing and Calico Printing Co. 's case it was held that power to withdraw rebate granted in the year before April 1, 1952 was not exercisable by the Incometax Officer under section 35(10) and consistently with that view withdrawal of rebate granted in the years ending on and before March 31, 1952 was unauthorised. In Ahmedabad Manufacturing and Calico Printing Co. 's case(1) declaration of dividend by the Com pany was made on April 20, 1953. The financial year in which the amount on which rebate of income tax was allowed was availed of by the Company for declaring dividends was 1953 54, and within four years from the end of that year an order calling upon the Company to show cause why action should not be taken under section 35(10) to recall the proportionate part of the rebate was issued. It was said by Hidayatullah, J. : "Since the power commenced on April 1, 1956, the utmost reach of the Income tax Officer would be the end of the assessment year 1952. Any declaration of (1) [1963] Supp. 2 S.C.R. 92. 735 dividend after 1st day of April, 1952, out of accumulated profits of any of the years in which rebate was earned would be within the time for the recall of any rebate. But a declaration prior to April 1, 1952, would be beyond the power of the Income tax Officer to recall." Power to withdraw rebate was in that case held exercisable within four years from the end of the financial year in which the amount of rebate was availed of : it was not held that the power was exercisable in respect of rebate granted only in respect of four years before April, 1956. The argument raised by counsel importing a limitation contrary to the plain words of the statute must therefore be rejected. Sub section (10) of section 35 was inserted in the Income tax Act by section 19 of the Finance Act, 19@6, with effect from April 1, 1956. It provides "Where, in any of the assessments for the years beginning on the 1st day of April of the years 1948 to 1955 inclusive, a rebate of income tax was allowed to a company on a part of its total income under clause (i) of the proviso to Paragraph B of Part I of the relevant Schedules to the Finance Acts specifying the rates of tax for the relevant year, and subsequently the amount on which the rebate of income tax was allowed as aforesaid is availed of by the company, wholly or partly, for declaring dividends in any year, the amount or that part of the amount availed of as aforesaid, as the case may be, shall, by reason of the rebate of incometax allowed to the company and to the extent to which it has not actually been subjected to an additional income tax in accordance with the provisions of clause (ii) of the proviso to Paragraph B of Part I of the Schedules to the Finance Acts above referred to,. be deemed to have been made the subject of incorrect relief under this Act, and the Income tax Officer shall recompute the tax payable by the company by reducing the rebate originally allowed, as if the recomputation is a rectification of a mistake apparent from the record within the meaning of this section and the provisions of sub section (1) shall apply accordingly, the period of four years specified therein being reckoned from the end of the financial year in which the amount on which rebate of 736 income tax was allowed as aforesaid was availed of by the company wholly or partly for declaring dividends. " It is urged by counsel for the Company that power under sub section (10) of section 35 cannot be exercised because distribution of accumulated profits by the liquidator is not distribution by the Company. The argument is wholly without substance. On the passing of a special resolution by the Company that it be wound up voluntarily under the Companies Act 1 of 1956, the Company does not stand dissolved. That is so expressly provided by section 487, of the Companies Act. A Company which has resolved to be voluntarily wound up may be dissolved in the manner provided by section 497(5) : till then the Company has corporate existence and corporate powers. The property of the Company does not vest in the liquidator : it continues to remain vested in the Company. On the appointment of a liquidator, all the powers of the Board of directors and of the managing or whole time directors, managing agents, secretaries and treasurers cease (section 491), and the liquidator may exercise the powers mentioned in section 512, including the power to do such things as may be necessary for winding up the affairs of the Company and distributing its assets. The liquidator appointed in a members ' winding up is merely an agent of the Company to administer the property of the Company for purposes prescribed by the statute. In distributing the assets including accumulated profits the liquidator acts merely as an agent or administrator for and on behalf of the Company. It is then urged that on the commencement of winding up, distinction between the capital and accumulated profits of the Company disappears, and what remains in the hands of the liquidator are the assets of the Company, and distributions made by the liquidator are distributions of capital, regardless of the source from which the funds are distributed is capital or accumulated profits. In distributing the surplus assets in his hands, the liquidator is therefore not "declaring dividends" within the meaning of section 35(10). In support of this contention, reliance was placed upon Inland Revenue Commissioners vs George Burrell(1). The Court in that case held that on the winding up of a limited company the undivided profits of the past year and the year in which winding up occurred were only assets of the company and on distribution amongst the shareholders supertax was not payable on the undivided profits as income. (1) 737 Under the , accumulated profits of the Company at the commencement of the winding up of the Company undoubtedly come into the hands of the liquidator as assets for the purpose of satisfying liability of the Company and for distribution among the shareholders. But the rule in Burrell 's cave(1) since the amendment of the definition of "dividend" in section 2(6A) by the Finance Act, 1956, no longer applies, when the liability to assessment of income tax in respect of amounts distributed out of accumulated profits by a liquidator in a winding up falls to be determined. The Parliament had devised by the Indian Income tax (Amendment) Act 7 of 1939, a special inclusive definition for the Income tax Act, 1922 of "dividend" in section 2(6A). Being an inclusive definition, the expression "dividend" means dividend as ordinarily understood under the and also the heads of payment or distribution specified therein. Clause (c) as originally enacted, included distributions made to the shareholders of a Company out of accumulated profits on the liquidation of the Company. This was clearly an attempt to supersede the rule in Burrell 's case(1). It was pointed out by this Court in Dhandhania Kedia & Co. vs Commissioner of Income tax(2) that section 2 (6A) (c) was enacted to remove the anomaly which was created by the judgment in Burrell 's case(1), and to assimilate the distribution of accumulated profits by a liquidator to a similar distribution by a Company which is working. But the language of the clause and the proviso thereto included only those accumulated profits which had not been capitalized, and which arose during the six previous years preceding the date of commencement of the year of account in which the liquidation commenced. By the Finance Act, 1955, the proviso to cl. (c) was omitted : thereby accumulated profits whether capitalized or not and without any restriction as to time were brought within the definition. By the Finance Act, 1956, cl. (c) was recast as follows : " any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalized or not. " Amendment to cl. (c) in section 2(6A) was made and section 35(10) was inserted in the Income tax Act simultaneously by the Finance Act, 1956. It would be reasonable to regard the provisions of section 35(10) and amended cl. (c) of sub section (6A) of section 2 as part of a (1) L3Sup. CI/66 18 (2) 738 single scheme to declare distribution of accumulated profits, capitalized or not, as dividends, and to bring the rebate granted on undistributed profits to tax if availed of by the company or by the liquidator of a company for distributing dividends. Counsel for the Company contended that the amount distributed out of accumulated profits by the liquidator is not dividend in the hands of the Company. For this distinction again there is no warrant. Distribution of accumulated profits by a Company not subject to winding up is distribution of dividend by virtue of section 2(6A) (a), and distribution of accumulated profits in the course of liquidation is dividend by virtue of section 2(6A)(c). It is true that the definition of "dividend" in section 2(6A)(c) win apply only if there is nothing repugnant in the subject or context in which the expression "dividend" occurs in section 35(10), but there is nothing in section 35(10) which suggests that the expression "dividend" was to have a meaning different from the meaning assigned to it by the interpretation clause. It was urged that assuming that accumulated profits of a Company distributed by the liquidator may be regarded as dividends, power under section 35(10) cannot be exercised in respect of those profits, because the liquidator is not in distributing the profits "declaring dividends". But the assumption underlying the argument that the provides that dividends may be deemed to be declared only if certain mandatory provisions are complied with is without substance. By section 205 of the Indian (before it was amended in 1960) it was provided that no dividend shall be declared or paid except out of the profits of the company or out of moneys provided by the Central or a State Government for the payment of the dividend in pursuance of a guarantee given by such Government. The Company in the present case was registered under the Indian Companies Act, 1913. The Articles of Association of the Company are not before us, but the Articles relating to distribution of dividend being under section 17(2) of the Companies Act, 1913, obligatory, articles 95, 96 and 97 in Table A of Act 7 of 1913 applied. By article 95 it was provided that a company in general meeting may declare divi dends, but no dividends shall exceed the amount recommended. But to the distribution of interim dividends, the condition that it must be declared in general meeting of the Company did not apply, and such interim dividends as appeared to the directors to be justified by the profits of the company could be distributed (article 96). The only other relevant condition was in article 97 that no dividend shall be paid otherwise than out of profits of the year or any other undistributed profits. 739 The liquidator of the appellant company did from time to time distribute accumulated profits, and within the meaning of section 2(6A)(c) read with the provisions of the Companies Act, they were distribution of interim dividends. It is true that power under section 35(10) may be exercised if accumulated profits are availed of by the Company "for declaring dividends in any year", but since the Companies Act does not in the matter of distribution of interim dividends set up any special machinery, nor impose any special condition before power in that behalf may be exercised, no artificial meaning can be attached to the word "declaring dividends". Distribution of accumulated profits by the liquidator together with the income tax refund certificate in the course of voluntary winding up may therefore, for the purpose of section 2(6A)(c), be regarded as declaration of dividend. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

The appellant company was assessed to tax in the assessment years 1948 49, to 1953 54, in respect of its profits, and was allowed rebate on the undistributed profits. It was resolved to voluntarily wind up the company with effect from October 1, 1957. The liquidator, during the years 1957 to 1959 distributed, from time to time, the accumulated profits to the shareholders and also issued income tax refund certificates. The Income tax Officer, under section 35(10) of the Income Tax Act, 1922, withdrew the rebate granted in respect of each of the assessment years 1948 49 to 1953 54 and demanded payment of tax. The company applied for a writ quashing the order, but the High Court dismissed the petition. In appeal to this Court, the company contended that : (i) Section 35(10) did not authorise the Income tax Officer to bring to tax the amount on which rebate tax was granted in assessment years commencing prior to 1st April 1956, and (ii) the distribution by the liquidator of accumulated profits could not be regarded as declaration of dividend by the company within the meaning of section 35(10). HELD : (i) The power to withdraw rebate was exercisable within 4 years from the end of the financial year in which the amount on which rebate was allowed was availed of by the company for declaring dividends. 1735 B C] Ahmedabad Manufacturing and Calico Printing Co. Ltd. vs S.G. Mehta, [1963] Supp. 2 S.C.R. 92, followed, (ii) Distribution of accumulated profits by the liquidator together with the income tax refund certificates, in the course of voluntary winding up, can be regarded as declaration of dividend, so as to attract the applicability of provisions enabling the withdrawal of rebate and demand for tax. [739 C] On the passing of a resolution for voluntary winding up the company does not stand dissolved and its property does not vest in the liquidator. lit distributing the assets, including accumulated profits, the liquidator acts merely as an agent or administrator for and on behalf of the company. Therefore, distribution by the liquidator is distribution by the company. [736 B C, E] There is nothing in section 35(10) which suggests that the expression dividend was to have a meaning different from the meaning assigned to it by section 2(6A) in the interpretation clause. By the omission of the proviso to section 2(6A)(c) by the Finance Act, 1955, distribution of accumulated profits, whether capitalised or not and without any restriction as to time, was brought within the definition of dividend. The provisions of sections 35(10) and 2(6A)(c) are part of a single scheme to declare distribution of accumulated profits, capitalized or not, as dividends, and 733 to bring the undistributed profits on which rebate was granted to tax, if availed of by the liquidator of the company for distributing dividends. [737 F, H; 738C D] Power under section 35(10) may be exercised if accumulated profits are availed of by the company "for declaring dividends in any year", that is, after following the procedure in article 95 of Table A of the Companies Act, 1913, under which the assessee was registered. But, the distribution made by the liquidator, was a distribution of interim dividend, and, in the matter of distribution of interim dividend, the Companies Act does not set up any special machinery nor does it impose any special condition before power in that behalf may be exercised. [739 A C]

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iminal Appeals Nos. 150 152 of 1965. Appeals by special leave from the judgment and order dated March 17, 1965 of the Mysore High Court in Criminal Appeals Nos. 93 to 95 of 1965. B. R. L. Iyengar and B. R. G. K. Achar, for the appellant. K. R. Chaudhury, for the respondents. 812 The Judgment of the Court was delivered by Mudholkar, J. This judgment will also govern Criminal Ap peals Nos. 151 and 152 of 1965. The respondent was at the relevant time a dealer at Bijapur in groundnuts, cotton seed and other commodities and was registered as a dealer under the Mysore Sales Tax Act, 1957. For the period between November 12, 1958 and October 31, 1959 he was assessed to sales tax amounting to Rs. 9,864 31 ps. by the Commercial Tax Officer, Bijapur in his order dated December 4, 1963. On January 3, 1964 the Commercial Tax Officer served on him a notice of payment requiring him to pay the tax assessed on him within 21 days. He was similarly assessed to pay tax for two subsequent periods by two separate orders passed by the Commercial Tax Officer. Two separate notices of demand were served on him requiring him to pay the tax assessed within 21 days. It is common ground that the respondent did not comply with any of the three notices. Three separate complaints were, therefore, preferred against him by the Commercial Tax Officer before the Judicial Magistrate, First Class, second court, Bijapur for offences punishable under section 29(1)(d) of the Act. The respondent had preferred appeals against each of the three orders ,of assessment under sub section (1) of section 20 of the Act. He did not, however, pay the tax assessed against him or any portion thereof as contemplated in the second proviso of sub section (1) of section 20 nor did he seek or obtain from the appellate authority any order under the proviso to sub section (5) of section 20. The learned Magistrate held that since the respondent had preferred appeals against the orders of assessment and those appeals were still pending when the complaints were made before him the respondent was not liable for offences under section 29 (1) (d). On this ground the learned Magistrate acquitted the respondent in all the three cases. Appeals preferred by the State of Mysore against the orders of acquittal passed in favour of the respondent were rejected by the High Court on the ground that as the State could avail itself of other remedies under the Act for enforcing the payment of tax levied on the respondent it did not think it fit to exercise its discretion under section 421 (1) of the Code of Criminal Procedure and entertain the appeals. Mr. Chaudhuri refers to the proviso to sub section (3) of section 13 and contends that unless the requirements of the proviso are satisfied he is not liable to be proceeded against under section 29 (1) (d). In order to appreciate his argument it is desirable to reproduce the provision relied upon by him. Sub section (3) of section 13 reads as follows "Any tax assessed, or any other amount due under this Act from a dealer, may without prejudice to any other mode of collection, be recovered (a) as if it were an arrear of land revenue, or 813 (b) on application to any Magistrate, by such Magistrate as if it were a fine imposed by him: Provided that no proceeding for such recovery shall be taken or continued as long as he has, in regard to the payment of such tax or other amount, as the case may be, complied with an order by any of the authorities to whom the dealer has appealed, or applied for revision, under sections 20, 21, 22 23 or 24. " The matter dealt with by section 13 is "payment and recovery of tax". The substantive part of the provision renders an assessee in arrears of tax liable to be proceeded against under either cl. (a) or cl. (b) of the provision. Mr. Chaudhury, however, contends that by virtue of the proviso an assessee will not be liable to be proceeded against unless it is shown that he has failed to comply with an order made by the appropriate authority under one of the sections refered to in the proviso. He points out that though he has preferred appeals under section 20 of the Act no order has been made by the appellate authority in any of the appeals dealing with the question of payment or otherwise of the tax and that,the refore,there has been no failure on the part of the respondent to comply with an order made by the appropriate authority. Mr. Chaudhury in effect wants us to construe the proviso as if it contemplated the creation of liability to pay the tax by an order of the appropriate authority under one of the sections specified in the proviso. There is no warrant for such a construction. The liability to pay tax is created by the order of assessment. Where tax so assessed is not paid despite service of notice of demand the substantive portion of sub section (3) of section 13 renders the assessee liable to be proceeded against under cl. (a) or cl. (b) of that provision. The assessee who has moved the appropriate authority under one of the provisions referred to in the proviso has, however, been afforded interim protection from action under cl. (a) or cl. (b) provided that he approaches the appropriate authority and obtains from that authority an order of stay of proceedings under cl. (a) or cl. That, however, is not enough. If the order of the appropriate authority lays down any condition the proviso requires that the assessee must comply with those conditions before he can obtain interim relief under the proviso. Apart from that, we fail to see how the proviso to sub section (3) of section 13 can at all be an answer to a prosecution under section 29 (1) (d). What is rendered an offence under section 29 (1) (d) is the failure of the assessee to pay the tax within the time allowed. But where, as here, the assessee has not paid the tax within the time allowed by a notice of demand he immediately renders himself liable to be proceeded against under section 29 (1) (d). Mr. Chaudhury then contended that in view of the fact that an appeal has been preferred the liability of the assessee to pay 814 the tax must be deemed to have been suspended during the pendency of the appeal. This argument ignores the specific provisions of sub section (5) of section 20 and the proviso thereto. They read thus : "Notwithstanding that an appeal has been preferred under sub section (1), the tax shall be paid in accordance with the assessment made in the case : Provided that the appellate authority may, in its discretion give such directions as it thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to its satisfaction in such form and in such manner as may be prescribed. " The provision we have just quoted is a complete answer to Mr. Chaudhuri 's contention. Mr. Chaudhury then contended that there was no wilful default on the part of the respondent. It is difficult to appreciate what he means by saying that there was no wilful default. The respondent knew that he was required to pay the tax within certain time and also knew that he had not complied with the notice of demand. His action in not paying the tax was quite clearly deliberate and, therefore, wilful. There is no substance in this contention. We are, therefore clear that the acquittal of the respondent for offences in the case was unwarranted. We would, therefore, have, after setting aside his acquittal in each of the three cases, convicted and sentenced him under section 29 (1) (d) of the Act but for the fact that when special leave was granted an undertaking was given by the State that irrespective of the result of the appeal the respondent would not be prosecuted. Probably what was meant was that the State would not press for conviction and sentence of the respondent. Therefore, though we allow the appeals and set aside the acquittal of the respondent in the three cases we leave the matter just there. Appeals allowed.

The respondent was assessed to sales tax and was served with a notice requiring him to pay the amount within 21 days. He preferred an appeal against the order of assessment but did not pay the tax, nor did he obtain an order of stay of proceedings from teh appellate authority. While the appeal was pending a complaint was filed against him under section 29(1)(d) of the Mysore Sales tax Act, 1957, because the demand was not complied with, but the trial court and the High Court acquitted In appeal to this Court by the State, HELD: The acquittal of the respondent was unwarranted as his action in not paying the tax within the time allowed, was deliberate and therefore wilful and such failure to pay is rendered an offence under section 29(1)(d). [814 D, E] The liability to pay tax is created by the order of assessment. Where the tax so assessed is not paid despite service of notice of demand, the tax may be recovered under section 13(3)(a) as an arrear of land revenue or under section 13 (3) (b) on an application to a magistrate as if it were a fine imposed on the assessee. Under the proviso to section 13(3), the assessee has been afforded interim protection from action under section 13 (3) (a) or (b), provided he obtains from the appropriate appellate or revisional authority mentioned in the proviso, an order of stat of proceedings. Merely because an appeal has been preferred, the liability of the assessee to pay the tax cannot be deemed to be suspended under section 20(5). This provision requires that if the order of such appropriate authority lays down any condition, the proviso requires that the assess must comply with it before he can obtain interim relief. Apart from these two methods of obtaining interim relief, the proviso to section 13(3) cannot be an answer to a prosecution under section 29(1)(d). (813 E G]

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minal Appeal No. 113 of 1963. Appeals by special leave from the judgment and order dated April 19, 1963, of the Bombay High Court in Criminal Appeal No. 988 of 1962. V.B. Ganatra and I. N. Shroff, for the appellant (Cr. A. No. 57 of 1963). Frank Anthony, E. C. Agarwala and P. C. Agrawal, for the appellant (in Cr. A. No. 113 of 1963). S.G. Patwardhan and B. R. G. K. Achar, for the respondent State (in both the appeals). The Judgment of the Court was delivered by Mudholkar, J. This appeal and Criminal appeal No. 113/63 arise out of a joint trial of the appellant Mangaldas and the two appellants Daryanomal and Kodumal in Crl. A. 113 of 1963 for the contravention of section 7(v) of The (hereinafter referred to as the Act) in which they were convicted and sentenced tinder section 16(1) (a) of the Act. The appellants Mangaldas and Daryanomal were each sentenced under section 16 ( 1 ) (a) (ii) of the Act to undergo rigorous imprisonment for six months and to pay a fine of Rs. 500 while the other appellant was sentenced under sub cl (1) to undergo imprisonment until the rising of the Court and to pay a fine of Rs. 200. On appeal they were all acquitted by the Additional Sessions Judge, Nasik. The State preferred an appeal before the High Court of Bombay which allowed it and restored the sentences passed on Mangaldas. and Daryanomal by the Judicial Magistrate but imposed only a fine of Rs. 200 on Kodumal. They have come up to this Court by special leave. The admitted facts are these. Mangaldas is a wholesale dealer, Commission agent, exporter, supplier and manufacturer of various kinds of spices doing business at Bombay. Dayanomal is engaged 896 in grocery business at Nasik while Kodumal is his servant. On November 7, 1960 Daryanomal purchased from Mangaldas a bag of haldi (turmeric powder) weighing 75 kg. which was despatched by the latter through a public carrier. It was received on behalf of Daryanomal at 11.45 A.M. on November 18, 1960 by Kodumal at the octroi post of Nasik Municipality. After he paid the octroi duty to the Nasik Municipality and took delivery of the bag the Food Inspector Burud purchased from him 12 oz. of turmeric powder contained in that bag for the purpose of analysis. The procedure in this regard which is laid down in section 11 of the Act was :followed by Burud. A portion of the turmeric powder was sent to the Public Analyst at Poona, whose report exhibit 16, shows that the turmeric powder was adulterated food within the meaning of section 2 (1) of the Act. Thereupon Burud, after obtaining the sanction of the Officer of Health of the Municipality, filed (a complaint against the appellants in the court of the Judicial Magistrate for offences under section 16(1) (a) read with section 7(v) of the Act. At the trial Kodumal admitted that he had taken delivery of the bag at the octroi post and sold 12 oz. of turmeric powder to the Food Inspector and that he had also received a notice from him under section 11 of the Act. It was contended at the trial on behalf of Daryanomal that actually no delivery had been taken but that point was not pressed before the High Court. While Mangaldas admitted that he had sold and despatched the bag containing turmeric powder he contended that what was sent was not turmeric powder used for human consumption but was "Bhandara" which is used for religious purposes or for applying to the forehead. This contention was rejected by the Judicial Magistrate as well as by the High Court but was not considered by the Additional Sessions Judge. It was sought to be challenged before us by Mr. Ganatra on his behalf but as the finding of the High Court on the point is upon a question of fact we did not permit him to challenge it. We will take Mangaldas 's case first. Mr. Ganatra had made an application on his behalf for raising a number of new points, including some alleged to raise constitutional questions. At the hearing, however, he did not seek to urge any question involving the interpretation of the Constitution. The new points which he 'Sought to urge were: (1) that the appellant was not questioned regarding the report of the Public Analyst; (2) the joint trial of Mangaldas with the other two appellants was illegal; and (3) that the sanction was not valid. 897 As regards the first of these points his contention is that he had raised it before the High Court also though it has not referred to in its judgment. The High Court has stated clearly that all the points raised in argument before it were considered by it. In the face of this statement we cannot allow the point to be urged before US. As regards the second point it is sufficient to say that it was not raised before the Magistrate. Section 537(b) of the Code of Criminal Procedure provides that no judgment, conviction or sentence can be held to be vitiated by reason of misjoinder of parties unless prejudice has resulted to the accused thereby. For determining whether failure of justice has resulted the Court is required by the Explanation to section 537 to have regard to the fact that the objection had not been raised at the trial. Unless it is so raised it would be legitimate to presume that the accused apprehended no prejudice. The point thus fails. As regards the alleged invalidity of sanction it is sufficient to point out that the contention was not raised in the High Court or earlier. We, therefore, decline to consider it. Mr. Ganatra urged that the trial court had no jurisdiction to try the appellant as the appellant had not committed any offence within its jurisdiction. With regard to this point the High Court has held that Mangaldas had distributed the commodity within the jurisdiction of the Magistrate and, therefore, the Magistrate had jurisdiction to try him. Apart from that we may point out that under section 182 of the Code of Criminal Procedure where it is uncertain in which of the local areas an offence was committed or where the offence is committed partly in one local area and partly in another or where an offence is a continuing one and continues to be committed in more local areas than one or where it consists of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas. Since Mangaldas actually sent the bag from Bombay to Nasik he could be said to have committed the offence partly in Bombay from where it was despatched and partly in Nasik to which place it had been consigned. Apart from that, the mere fact that pro ceedings were taken in a wrong place would not vitiate the trial unless it appears that this has occasioned a failure of justice (see section 531, Cr. P. C.). Mr. Ganatra, however, says that there was failure of justice in this case because had Mangaldas been prosecuted at Bombay, one of the samples taken from the bag of turmeric powder would have been sent to the Public Analyst at Bombay and not to the Public Analyst at Poona. We are wholly 898 unable to appreciate how this could make any difference whatsoever. Apart from that since the samples were actually taken at Nasik the one meant for analysis had, according to an administrative order of the Government, to be sent to the Public Analyst at Poona. Therefore, even if Mangaldas had been tried at Bombay tile report of the Public Analyst at Poona could be put in evidence. There is nothing in the Act which prevents that from being done. In view of the fact that the finding of the Judicial Magistrate and the High Court that the turmeric powder had been adulterated was based solely on the report of the Public Analyst, Mr. Ganatra raised three contentions before us. One is that such evidence is not by itself sufficient for the conviction of an accused person; the second is that the Public Analyst was not called as a witness in the case and the third is that unless notice is given to an accused person under section 11 of the Act after a sample had been taken of the allegedly adulterated commodity the report of the Public Analyst concerning that commodity is not admissible against him. In support of the contention that the conviction could not be based solely upon the report of the Public Analyst that the turmeric power was adulterated. Mr. Ganatra relied upon the decisions in State vs Bhausa Hanmatsa Patwar(1) and City Corporation Trivandrum vs Antony (2) . The first of these is a case under the Bombay Prohibition Act, 1949 (Bombay XXV of 1949). In that case a large quantity of angurasava, partly contained in two barrels and partly in three boxes containing 109 bottles was recovered from the house of the accused person. Samples taken from the barrels and boxes were sent for analysis to the Chemical Analyser and to the Principal, Podar Medical College, Bombay. The report of the former showed that three out of the four samples contained alcohol in varying degrees. Thereupon the accused was Prosecuted for offence , under sections 65, 66(b) and 83(1) of the Bombay Prohibition Act. His defence was that he manufactured a medical preparation called angurasava which contained Ayurvedic ingredients which generated alcohol. According to him, therefore, what was seized from him was outside the orbit of the Bombay Prohibition Act. Partly relying upon the certificate issued by the Principal of Podar Medical College, the trying Magistrate acquitted the accused holding that the Prosecution failed to discharge the onus of proof that angurasava was prohibited liquor. On appeal by the State of Maharashtra before the High Court reliance was placed upon the certificates issued by the Chemical Analyser as well as by the Principal, Podar Medical College. The certificate of (1) [ (2) I.L.R. [1962] 1 Kerala 430. 899 the former showed that three out of the four samples contained "2.2 and 6 per cent v/v of ethyl alcohol respectively and they contain yeast. No alkaloidal ingredient or metallic poison was detected in them. The certificate of the Principal of the Podar Medical College is as follows "Formula supplied is found to be similar to that given in the Ayurvedic Books. There are no easy methods to find out the herbal drugs dissolved in a liquid. It is not possible for us, to find out the herbal drugs used in the above liquids. The colour and smell of the samples supplied is not identical with the colour and smell of fermented Ayurvedic preparation like, Assam and Arishta. Hence it is very difficult to give any definite opinion in the matter. " On behalf of the accused it was urged that by virtue of sub section (ii) of section 24(a) of the Prohibition Act, the provisions of sections 12 and 13 thereof do not apply to any medicinal preparation containing alcohol which is unfit for use as intoxicating liquor. Section 12 of the Act prohibits the manufacture and possession of liquor and section 16 prohibits the possession of materials for the manufacture of liquor. It was, however, contended on behalf of the State that once it is established that what was seized from the possession of the accused contains alcohol the burden of proving that what was seized, falls under section 24(a) was on the accused person. The High Court, however, held that the burden of establishing that a particular article does not fall under section 24(a) rests on the prosecution. In so far as the certificate of the Chemical Analyser was concerned the High Court observed as follows : "It is beyond controversy that, normally, in order that a certificate could be received in evidence, the person who has issued the certificate must be called and examined as a witness before the Court. A certificate is nothing more than a mere opinion of the person who purports to have issued the certificate, and opinion is not evidence until the person who has given the particular opinion is brought before the Court and is subjected to the test of cross examination. " It will thus be clear that the High Court did not hold that the certificate was by itself insufficient in law to. sustain the conviction and indeed it could not well have said so in view of the provisions of section 510, Cr. What the High Court seems to have felt was that in circumstances like those present in the case 900 before it, a court may be justified in not acting upon a certificate of the Chemical Analyser unless that person was examined as a witness in the case. Sub section (1) of section 510 permits the use of the certificate of a Chemical Examiner as evidence in any enquiry or trial or other proceeding under the Code and sub section (2) thereof empowers the court to summon and examine the Chemical Examiner if it thinks fit and requires it to examine him as a witness upon an application either by the prosecution or the accused in this regard. It would, therefore, not be correct to say that where the provisions of sub section (2) of section 5 1 0 have not been availed of, the report of a Chemical Examiner is rendered inadmissible or is even to be treated as having no weight. Whatever that may be, we are concerned in this case not with the report of a Chemical Examiner but with that of a Public Analyst. In so far as the report of the Public Analyst is concerned we have the provisions of section 13 of the Act. Sub section (5) of that Section provides as follows : "Any document purporting to be a report signed by a public analyst, unless it has been superseded under sub section (3), or any document purporting to be a certificate signed by the Director of the Central Food Laboratory, may be used as evidence of the facts stated therein in any proceeding under this Act or under sections 272 to 276 of the Indian Penal Code : Provided that any document purporting to be a certificate signed by the Director of the Central Food Laboratory shall be final and conclusive evidence of the facts stated therein. " This provision clearly makes the report admissible in evidence. What value is to be attached to such report must necessarily be for the Court of fact which has to consider it. Sub section (2) of section 13 gives an opportunity to the accused vendor or the complainant on payment of the prescribed fee to make an application to the court for sending a sample of the allegedly adulterated commodity taken under section 1 1 of the Act to the Director of Central Food Laboratory for a certificate. The certificate issued by the Director would then supersede the report given by the Public Analyst. This certificate is not only made admissible in evidence under subs. (5) but is given finality of the facts contained therein by the proviso to that sub section. It is true that the certificate of the Public Analyst is not made conclusive but this only means that the court of fact is to act on the certificate or not, as it thinks fit. 901 Sub section (5) of section 13 of the Act came for consideration in Antony 's case(1) upon which the State relied. There the question was whether a sample of buffalo 's milk taken by the Food Inspector was adulterated or not. The Public Analyst to whom it was sent submitted the following report : "I further certify that I have analysed the aforementioned sample and declare the result of my analysis to be as follows : Solids not fat 9.00 per cent. Fat 5.4 per cent. Pressing point (Hortvet 's method) 0.49 degree C and am of the opinion that the said sample contains not less than seven per cent (7%) of added water as calculated from the freezing point (Hortvet 's method) and is therefore adulterated." The Magistrate who tried the accused persons acquitted them on the ground that it was not established that the milk was adulterated. Before the High Court it was contended that the certificate was sufficient to prove that water had been added to the milk and reliance was placed upon the provisions of section 13(5) of the Act. The learned Judge who heard the appeal observed that this provision only says that the certificate may be used as evidence but does not say anything as to the weight to be attached to the report. 'Me learned Judge then proceeded to point out what according to him should be the contents of such report and said: "In this case the court is not told what the Hortvet 's test is, what is the freezing point of pure milk and how the calculation has been made to find out whether water has been added. I cannot, therefore, say that the Magistrate was bound to be satisfied on a certificate of this kind, which contains only a reference to some test and a finding that water has been added. The prosecution could have examined the Analyst as a witness on their side. The learned Magistrate also could very well have summoned and examined the Public Analyst, but whatever that might be, I am not prepared to say that the finding of the Magistrate that the case has not been satisfactorily proved is one which could not reasonably have been reached by the learned Magistrate and (1) I.L.R. [1962] 1 Kerala 430. 902 that the acquittal is wrong and calls for interferences" (p. 436) All that we would like to say is that it should not have been difficult for the learned Judge to satisfy himself by reference to standard books as to what 'Hortvet 's method is and what the freezing point of milk is. We fail to see the necessity of stating in the report as to how the calculations have been made by the Public Analyst. Apart from that it is clear that this decision does not support the contention of learned counsel that a court of fact could not legally act solely on the basis of the report of, the Public Analyst. As regards the failure to examine the Public Analyst as a witness in the case no blame can be laid on the prosecution. The report of the Public Analyst was there nd if either the court or the appellant wanted him to be examined as a witness appropriate steps would have been taken. The prosecution cannot fail solely on the ground that the Public Analyst had not been called in the case. Mr. Ganatra then contended that the report does not contain adequate data. We have seen the report for ourselves and quite apart from the fact that it was not challenged by any of the appellants as inadequate when it was put into evidence, we are satisfied that it contains the Necessary data in support of the conclusion that the sample of turmeric powder examined by him showed adulteration. The report sets out the result of the analysis and of the tests performed in the public health laboratory. Two out of the three tests and the microscopic examination revealed adulteration of the turmeric powder. The microscopic examination showed the presence of pollen stalks. This could well be regarded as adequate to satisfy the mind of a Judge or Magistrate dealing with the facts. Mr. Ganatra then said that the report shows that the analysis was not made by the Public Analyst himself but by someone else. What the report says is "I further certify that the have caused to be analysed the aforementioned sample and declare the result of the analysis to be as follows. " This would show that what was done was done under the supervision of the Public Analyst and that should be regarded as quite sufficient. Now as to the necessity of notice under section 11 of the Act. Mr. Ganatra said that the report is admissible only against a person to whom notice is given tinder section 11 (1) (a) by the Food Inspector, that the object of talking the sample was to have it analysed. The law requires notice to be given only to the person from whom the sample is taken and to none else. The object of 903 this provision is clearly to apprise the person from whom the sample is taken of the intention of the Food Inspector so that he may know that he will have the right to obtain from the Food Inspector a part of the commodity taken by way of sample by the Food Inspector. This is with a view to prevent a plea from being raised that the sample sent to the analyst was of a commodity different from the one from which the Food Inspector has taken a sample. What bearing this provision has on the admissibility of the evidence of the Public Analyst is difficult to appreciate. Once the report of the Analyst is placed on record at the trial it is admissible against all the accused persons. What it shows in the present case is that the commodity of which Kodumal had taken possession contained turmeric powder which was adulterated. Therefore, since it is admitted and also established that the bag of turmeric powder from which sample was taken had been despatched by the appellant Mangaldas, the report of the Public Analyst could be properly used against him in regard to the quality or composition of the commodity. Mr. Ganatra then said that it was necessary to establish that the appellant had the mens rea to commit the offence. In support of his contention Mr. Ganatra pointed out that section 19(1) of the Act deprives only the vendor of the right to contend that he was ignorant of the nature, substance or quality of the food sold by him and not a person in Mangaldas 's position. According to him, the word vendor here means the person from whom the sample was actually taken by the Food Inspector. We cannot accept the contention. The word "Vendor", though not defined in the Act, would obviously mean the person who had sold the article of food which is alleged to be adulterated. Mangaldas having sold the bag to Daryanomal, was the original vendor and, therefore, though the sample was taken from Kodumal he will equally be barred from saying that he was not aware of the nature, substance or quality of the turmeric powder in question. Moreover, it is curious that a person who sought to get out by saying that what he had actually sent was not an article of food but something else should now want to say that he did not know that though it was an article of food it was adulterated. We may now refer to two decisions upon which learned counsel relied in support of his contention. The first is Municipal Board, Bareilly vs Ram Gopal(1). There the question was whether a shopkeeper who allowed the owner of adulterated ghee to sell on his premises was entitled to say in defence that he was ignorant of, (1) 42 Crr. L.J. 243. up./65 12 904 the quality of ghee which its owner was offering for sale. It was held by the Allahabad High Court that he was so entitled. We fail to appreciate how this case is of any assistance in the matter before us. For, here, the turmeric powder admittedly once belonged to Mangaldas and was in fact sold by him to Daryanomal. At one stage, therefore, Mangaldas was the vendor of the turmeric powder and, therefore, falls squarely within the provisions of section 13 (1) of the Act. The second case is Ravula Hariprasada Rao vs The State(1). What was held in that case is that unless a statute either clearly or by necessary implication rules out mens rea as a constituent part of the crime, a person should not be found guilty of an offence against the criminal law unless he has got a guilty mind. The proposition there stated is well established. Here section 19(1) of the Act clearly deprives the vendor of the defence of merely alleging that he was ignorant of the nature, substance or quality of the article of food sold by him and this places upon him the burden of showing that he had no mens rea to commit an offence under section 17(1) of the Act. In a recent case State of Maharashtra vs Mayer Hans George(2) this Court had to consider the necessity of proving mens rea in regard to an offence under section 23 (1) (a) of the Foreign Exchange Regulation Act (7 of 1947) read with a notification dated November 8, 1962 of the Reserve Bank of India. The majority of Judges constituting the Bench held that on the language of section 8 (1 ) read with section 24 (1) of the above Act, the burden was upon the accused of proving that he had the requisite permission of the Reserve Bank of India to bring gold into India and that there was no scope for the invocation of the rule that besides the mere act of voluntarily bringing gold into India any further mental condition or mens rea is postulated as necessary to constitute an offence referred to in section 23(1 A) of the above Act. We are, therefore, unable to accept the contention of learned counsel. The only other point which falls for consideration is the one raised by Mr. Anthony in the other appeal. Mr. Ganatra did not address any separate argument on this point but he adopted what was said by Mr. Anthony. That point is whether the transaction in question i.e., taking of a sample by a Food Inspector under section 11 amounts to a "sale" and, therefore, whether the person connected with the transaction could be said to have infringed section 7(v) of the Act. Mr. Anthony 's contention is that for a transaction to be a sale it must be consensus sale. Where a person is required by the Food Inspector to sell to him a sample of a commodity there is an element of compulsion and, therefore, it cannot be (1) ; (2) ; 905 regarded as sale. In support of the contention he has placed reliance upon the decision in Food Inspector vs Parameswaran(1) Raman Nayar J., who decided the case has observed therein: "As a sale is voluntary transaction and (sic) a seizure or compulsory acquisition in exercise of statutory power is not a sale within the ordinary sense of that word. Nor does the definition of 'sale in section 2(xiii) as including a sale of good for analysis make it one, for, the first requisite even under the definition is that there must be a sale. The definition apparently by way of abundant caution, merely states that the word 'sale ' means all manner of sales of food, whether for cash or on credit or by way of exchange and whether by wholesale or retail, for human consumption or use, or for analysis; and all that the definition means in relation to the question we are considering is that a We of food is nonetheless a sale, by reason of the fact that it was not for consumption or use, but only for analysis. In my view when a food inspector obtains a sample under section 10 of the Act there is no sale. of course, it is possible for a Food Inspector just like any other human being to effect a purchase in the ordinary course, and the transaction would be a sale notwithstanding that the purchaser is a Food Inspector and that his purpose is to have the article analysed with a view to prosecution. But, if he obtains the article not by a voluntary exchange for a price but in exercise of his statutory power under section 10 of the Act the transaction is not a sale notwithstanding that in obedience to sub section (3) of section 10 its cost and I think the sub section advisedly uses the long phrase, 'its cost calculated at the rate at which the article is usually sold to the public ' instead of the word ' price is paid to the person from whom the sample is taken. " In Sarjoo Prasad vs The State of Uttar Pradesh (2); M. V. Joshi vs M. U. Shimpi(3) and The State of Uttar Pradesh vs Kartar Singh (4) this Court has treated a transaction of the kind we have here as a sale. No doubt, no argument was addressed in any of these cases before this Court similar to the one advanced by Mr. Anthony in this case and as advanced in Parameswaran 's case(1). (1) (2) ; (3) (4) A.T.R. 906 A view contrary to the one taken in Parameswaran 's case(1) was taken in State vs Amritlal Bhogilal(1) and Public Prosecutor vs Dada Rail Ebrahim Helari(3). In both these cases the sale was to a sanitary inspector who had purchased the commodity from the vendor for the purpose of analysis. It was contended in these cases that the transaction was not of a voluntary nature and, therefore, did not amount to a sale. This contention was rejected. In Amritlal Bhogilal 's case(1) the learned Judges held: "There is also no reason why in such a case the article should not be held to have been sold to the inspector within the meaning of section 4 (1) (a). He has paid for the article purchased by him like any other customer. Moreover, section 11 itself uses the words "purchase ' and ' sell ' in regard to the inspectors obtaining an article for the purpose of analysis and paying the price for it. It is, therefore, clear that the Legislature wanted such a transaction to be regarded as a sale for the purposes of the Act." (p. 463) The learned Judges in taking this view relied upon several reported decisions of that Court. In Dada Haji Ebrahim Helari 's case(3) which was under the Madras Prevention of Adulteration Act, (3 of 1918) Ramaswami J., dissented from the view taken by Horwill J., in In re Ballamkonda Kankayya(4) and following the decisions in Public Prosecutor vs Narayan Singh(5) and Public Prosecutor vs Ramachandrayya(6) held the transaction by which a sample of an article of food was obtained by a sanitary inspector from the vendor amounts to a sale even though that man was bound to give the sample on tender of the price thereof. But Mr. Anthony contends that a contract must be consensual and that this implies that both the parties to it must act voluntarily. No doubt a contract comes into existence by the acceptance of a proposal made by one person to another by that other person. That other person is not bound to accept the proposal but it may not necessarily follow that where that other person had no choice but to accept the proposal the transaction would never amount to a contract. Apart from this we need not, however, consider this argument because throughout the case was argued on the footing that the transaction was a 'sale '. That was evidently because here we have a special definition of "sale" in 2(xiii) of the Act which specifically includes within its ambit a (1) (2) L.L.R. (3) A.I.R. 1953 Mad. (4) A.I.R. 1942 Mad. (5) 1944 M.W.N. Crl. (6) 1948 MW.N. Cri. 907 sale for analysis. It is, therefore, difficult to appreciate the reasons which led Raman Nayar J., to hold that a transaction like the present does not amount to a sale. We are, therefore, unable to accept that view. In the result we uphold the conviction and sentence passed on each of the appellants and dismiss these appeals. Appeals dismissed.

The three appellants were a wholesale dealer in spices, a dealer in groceries, and his servant respectively. The second appellant purchased a bag of turmeric powder from the first and the third appellant took delivery of it on behalf of the second appellant, his master. Immediately after it was taken delivery of, the food inspector purchased from the third appellant some turmeric powder contained in that bag for the purpose of analysis, and after issuing notice to the third appellant as required by section 1 1 of the , sent a portion of the powder purchased to the public analyst, who gave a report that it was adulterated food. The three appellants were then prosecuted under sections 6(1) (a) read with section 7(v) of the Act and convicted by the Magistrate. The conviction was confirmed by the High Court. In the appeal to this Court it was contended that, (i) the report of the public analyst, by itself was not sufficient to sustain the conviction, and the public analyst should have been called as a witness, (ii) the report of the public analyst could not be used as evidence against a person who was not given notice under section 11 of the Act, (iii) the first appellant could not be convicted without establishing that he had the mens rea, and (iv) the taking of the sample under section 10 by a food inspector, was not a "sale" within the meaning of section 2(xiii) and therefore section 7(v) of the Act was not infringed. HELD : (i) Section 13(5) of the Act, makes the report of the public analyst admissible in evidence and a Court of fact is free to act on it or not, as it thinks fit. The Court could therefore legally act solely on the basis of the report and the prosecution Could not fail on the ground that the public analyst was not called as a witness. If the appellant wanted the analyst to be examined, it was for the appellant to take appropriate steps. C D] (ii)The law requires notice under section 11 to be given only to the person from whom the sample was taken and none else. If that formality had been complied with and the report of the analyst is placed on record at the trial, it would be admissible against all the accused persons. [902 H ; 903 C] (iii)The word "vendor" in section 19(1) means the person who had add the article of food which was alleged to be adulterated. At one stage, the first appellant was the vendor of the turmeric powder. Since the section deprives the vendor of adulterated food of the defence of merely alleging that he was ignorant of the nature, substance or quality of the article of food sold by him the burden of showing that he had no mens rea to commit the offence would be upon the first appellant. [904 B D] State of Maharashtra vs Mayer Hans George, ; followed. 895 (iv)The definition of "sale" in section 2(xiii) of the Act, specificallY includes within its ambit a &,de for analysis. The transaction in the instant can would amount to sale inspite of the fact that where a person is required by the food inspector to sell him a sample of a commodity, there is an element of compulsion under section 10 of the Act. L906 H] Sarjo Prasad vs State of U.P., ; , M. Y. Joshi vs M. U. Shimpi, ; and State of Uttar Pradesh vs Kartar Singh, ; , referred to. Food Inspector vs Parameswaran, [1962] 1 Cr. L.J. 652, overruled.

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minal Appeal No. 177 of 1963. Appeal from the judgment and order dated May 14, 1963 of the Calcutta High Court in Criminal Appeal No. 380 of 1962. section C. Das Gupta and Sukumar Ghose, for appellants. C. K. Daphtary, Attorney General, A. N. Sinha and P. K. Mukherjee, for the respondent. The Judgment of MUDHOLKAR and SATYANARAYANA RAJU JJ. was delivered by MUDHOLKAR J. BACHAWAT J. delivered a separate Judgment. Mudholkar, J. This is an appeal by certificate from a judg ment of the High Court of Calcutta setting aside the acquittal of M/s. Baburally Sardar of Steward Hogg Market, Calcutta, appellant No. 1 and of Abdul Razzak, a partner of that firm, appellant No. 2, in respect of an offence under section 16 (1) (a) (i) of the read with section 7(1) of that act. The facts which are not in dispute are briefly these : On June 1, 1960 a Food Inspector of the Corporation of Calcutta visited the shop of the appellants. At that time Abdul Razzak was in charge. He took samples of Comela Brand condensed milk from the shop, one of which was sent to the Public Analyst. Upon an analysis made by the Public Analyst the milk fat content of the condensed milk was found to be 3.4% which did not conform to the prescribed standard in respect of condensed milk. A complaint was thereupon lodged against the firm before the Municipal Magistrate and Additional Chief Presidency Magistrate, 817 Calcutta. Apart from the firm five other persons, including Abdul ' Razzak were also named as accused persons. One of the accused persons, Mohd. Yasin did not appear but it was represented to the learned Magistrate that the person was not mentally fit. Thereupon the counsel for the Corporation gave him up. The other accused persons pleaded not guilty and were eventually acquitted by the Magistrate. Against that order an appeal was preferred before the High Court under section 417 of the Code of Criminal Procedure. The High Court, however, allowed the appeal only against the appellants but dismissed it against the remaining accused persons. The defence of the appellants was based upon section 19(2) of the Act and was briefly this : The tins of condensed milk were purchased by the firm on May 3, 1960 from Messrs section Choudhury Brothers under a document of sale exhibit A. At that time the firm had demanded a warranty from the traders, that is, Messrs. Choudhury Brothers, but they did not furnish a written guarantee on the ground that a certificate and a warranty had been given on each tin of condensed milk. The appellants further pleaded that the tins were in the same condition in which they were when they were purchased from Messrs Choudhury Brothers and that they had no reason to believe that there was any alteration in their nature, substance or quality subsequent to the purchase of the tins. It may be mentioned that an attempt was made to secure the appearance of section Choudhury of Messrs. Choudhury Brothers, but it failed because he could not be traced at the address given in the cash memo. Section 16(1) (a) (i) of the Act, amongst other things, pro vides that if any person, whether by himself or by any person on his behalf stores or sells any article of food in contravention of any provisions of the Act or of the rules made thereunder he shall 'be punishable for the first offence with imprisonment for a term which may extend to one year and/or with fine which may extend to Rs. 2000 or both. Section 2(i) defines the word "adulterated". According to the definition an article of food shall be deemed to be adulterated in various circumstances, one of which is where the quality or purity of the article falls below the pres cribed standard. In the Act "prescribed" means prescribed by the rules. Rule 5 of the Rules framed by the Central Government under section 23(1) of the Act read with section 4(2) thereof runs thus "Standards of quality of the various articles of food specified in Appendix B to these rules as defined in that appendix. " 818 The definition of standard of quality for condensed milk is give in A. 1 1.07 of Appendix B and runs thus : "Condensed milk means milk which has been con centrated from full cream milk by removal of part of its water with or without the addition of sugar, and includes the article commonly known as 'evaporated milk ' but does not include the article commonly known as 'dried milk ' or 'milk powder '. It shall be free from preservatives other than sugar and contain at least 31 per cent of milk solids of which at least 9 per cent shall be fat. " As already stated, the Public Analyst found that the fat content of the condensed milk was only 3.4% whereas the minimum prescribed in the Appendix is 9%. It is, therefore, clear that the condensed milk stored by the appellants for sale was adulterated and, therefore, there was a breach of the provisions of section 16(1)(a) (i) of the Act. In view of the provisions of section 19(1) it was not open to the appellants to contend that they were ignorant of the nature, substance and quality of the condensed milk sold by them. Subsection (2) of section 19, however, furnishes a defence to a vendor ignorant of the nature, substance and quality of food sold by him provided he satisfies the requirements of that provision. Omitting the second proviso thereto, which is not relevant in the present case, sub section (2) of section 19 reads thus : " (2) A vendor shall not be deemed to have committed an offence if he proves (i) that the article of food was purchased by him as the same in nature, substance and quality as that demanded by the purchaser and with a written warranty in the prescribed form, if any, to the effect that it was of such nature, substance and quality; (ii) that he had no reason to believe at the time when he sold it that the food was not of such nature, substance and quality; and (iii)that he sold it in the same state as he purchased it : Provided that such a defence shall be open to the vendor only if he has submitted to the food inspector or the local authority a copy of the warranty with a written notice stating that he intends to rely on it and 819 specifying the name and address of the person from whom he received it, and has also sent a like notice of his intention to that person. " The aforesaid defence was available to the appellants provided that they showed, in the first place, that what was stored by them for sale to purchasers demanding condensed milk was in fact milk which had been concentrated from full cream milk so as to conform to the standard of quality given in A. 1 1.07 of Appendix B. For, it would be milk which satisfies the standard prescribed therein which can be regarded as 'condensed milk ' under the Act. Upon analysis, however, it was found that the so called condensed milk contained in the samples taken by the Food Inspector from the appellants was far inferior to that prescribed for "condensed milk". It could, therefore, not be regarded as "the same in nature, substance and quality as that demanded by the purchaser". Nor again, had the appellant obtained a warranty in the prescribed form. Rule 12 A provides that every trader selling an article of food to a vendor shall deliver to the vendor a warranty in form 6 A, if required to do so by the vendor. No such warranty was demanded by the appellants, nor given by Messrs. section Chaudhury Brothers. No doubt, under the proviso to the aforesaid sub rule no warranty in the prescribed form is necessary if the label on the article of food or cash memo delivered by the trader to the vendor in respect of that article contains a warranty certifying that the food contained in the container or mentioned in the cash memo is the same in nature, substance and quality as demanded by the vendor. Mr. Das Gupta for the appellants, says that the labels on the tins satisfy the requirements of the proviso and faintly suggested that the cash memo also satisfies the conditions. The contents of the label upon which reliance is placed by him are as follows : " 'Comela ' Full Cream sweetened condensed milk made on formula of Holland Product. 'Comela Brand ' 'The contents of the tin are scientifically preserved, pure and produced from healthy Cow 's milk. Comela full cream condensed milk easily digestable and are ideal food for babies. Special care is taken to maintain freshness Prepared by Kwality Diary. " This label contains no warranty of the kind referred to in the proviso. Moreover, it is not even in the form given for a label 820 prescribed for "Sweetened condensed milk". Under r. 42 B(b) the label prescribed is as follows CONDENSED FULL CREAM MILK (Sweetened) This tin contains the equivalent of . litres of milk with sugar added. It may be that the inscription on the prescribed label "This tin contains an equivalent of. . litres of milk with sugar added" was meant to serve the purpose of a warranty though it is couched in different language. For, it may be possible to ascertain by reference to standard tables the quantity of milk solids and fat from the quantity of milk condensed and from the quantity of condensed milk contained in the tin. It would not be possible even to do this on the basis of the particulars given on the labels borne on the tins which were taken as samples by the Food Inspector from the appellants. Mr. Das Gupta strongly relied upon the words "Full Cream" and said that where condensed milk is said to have been obtained from full cream the requirements of law must be deemed to have been satisfied. For one thing "Full cream" has nowhere been defined in the Act or the rules. Moreover, without knowing the quantity of "Full cream" which was condensed in the milk contained in each tin it is impossible even to calculate the quantity of milk solids and fat in each tin. The label, therefore, is of little assistance to the appellants. Moreover, when a vendor accepts from the trader tins purported to be of condensed milk bearing a label of this kind he cannot be said to have "had no reason to believe" that it was not condensed milk of the prescribed nature, substance and quality. It may be that the appellants sold them in the same state as they purchased them. But this fact is by itself not sufficient to absolve them. As for the so called cash memo it is sufficient to point out that all that it specifies is : Quantity Description Rate Per Amount 1 C/C Comela Milk C 70/ Case Rs. 70 00 There is not a whisper of any warranty on it. In the circumstances, therefore, the High Court was right in setting aside the acquittal of the appellants and convicting them of the offence under section 1 6 (1) (a) of the Act and sentencing them to pay fine of Rs. 2,000 each. The appeal is without merit and is dismissed. 821 Bachawat, J. The defence under section 19(2) of the cannot succeed, as the appellants failed to prove that they purchased the articles of food with a written warranty in the prescribed form. The label on the tin container gave a description of the article of food, but it did not give a warranty certifying that the food is the same in nature, substance and quality as demanded by the vendor. In the absence of such a warranty, the appellants have failed to establish the defence under section 19 (2) read with R. 12 (a) and Form VI A. Had there been such a written warranty on the label, the appellants would have established the defence. I agree that the appeal be dismissed. Appeal dismissed.

Samples of a certain brand of tinned condensed milk were taken from the appellants ' shop by the Food Inspector. The Public Analyst found the fat content of the condensed milk below standard. When prosecuted under section 16(1) (a) (i) of the the appellants took a plea based on section 19(2) of the Act and claimed that the label on the tins was a warranty within the meaning of that section as well as of the proviso to Rule 12 A. The label on the tins described the milk as "Full cream sweetened condensed milk made on formula of Holland product ' and inter alia said : "The contents of the tin are scientifically preserved, pure and produced from healthy cow 's milk." The trial Magistrate accepted the appellants ' plea and acquitted them but on appeal by the State the High Court convicted them. They appealed to this Court with certificate. HELD : (i) Defence under section 19(2) of the Act was available to the appellants provided they showed in the first place, that what was stored by them for sale to the purchasers demanding condensed milk was in fact milk which had been concentrated from full cream milk so as to conform to the standard of quality given in A 11.07 of Appendix B. For, it would be milk which satisfies the standard prescribed therein which can be regarded as 'condensed milk ' under the Act. Since however the milk stored by the appellants was found to be below standard it could not be regarded as 'the same in nature, substance and quality as that demanded by the purchaser '. Nor again had the appellants obtained a warranty in the prescribed form. Thus the requirements of s.19 (2) (i) were not satisfied. [819 B C] (ii) No doubt, under the proviso to Rule 12 A no warranty in the prescribed farm is necessary if the label on the article of food or cash memo delivered by the trader to the vendor in respect of that article contains a warranty certifying that the food contained in the container or mentioned in the cash memo is the same in nature, substance and quality as demanded by the vendor. But the labels on the tins stared by the appellants contained no warranty of the kind referred to in the proviso. The labels were not in the form prescribed under r. 42B(b) and it was not possible from the matter printed thereon to ascertain by reference to standard tables the quantity of milk solids and fat from the quantity of milk condensed and from the quantity of condensed milk contained in the tin. [819 D 820 D] (iii)The words "Full cream" on the tin did not satisfy the requirements of the law either. 'Full cream ' has nowhere been defined in the Act or the rules. Without knowing the quantity of 'full cream ' which 816 was condensed in the milk contained in each tin it was impossible even to calculate the quantity of milk solids and fat in each tin. The label therefore was of little assistance to the appellants. [820 D E] Similarly the cash memos carried no warranty whatsoever. (iv) When a vendor accepts from the trader tins purported to be of condensed milk hearing a label of the above kind he cannot be said to have "had no reason to believe" that it was not condensed milk of the prescribed nature, substance and quality. It may be that the appellants sold the tins in the same state as they purchased them. But this fact was by itself not sufficient to absolve them. [820 F] Per Bachawat, J The defence under section 19(2) of the Act could not succeed as the appellants failed to prove that they purchased the articles of food with a written warranty in the prescribed form. The label on the tin container gave a description of the article of food but it did not give a warranty certifying that the food was the same in nature, substance and quality as demanded by the vendor. In the absence of such a warranty. the appellants had failed to establish the defence under section 19(2) read with r. 12 A and Form VI A. [821 A B.]

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CIVIL APPEALS Nos. 118 to 121 of 1952. (Appeals under article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 10th August, 1950, of the High Court of Judicature, Punjab at Simla (Khosla and Kapur JJ.) in Civil Miscellaneous Nos. 256, 260, 261 and 262 of 1950). Dr. Balkshi Tek Chand (T. N. Sethi, with him) for the appellants. M.C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondents. January, 22. The Judgment of the Court was delivered by MUKHERJEA J. These four consolidated appeals, which have come before us, on a certificate granted by the High Court of Punjab under article 133 (1)(c)of the Constitution, are directed against one common judgment of a Division Bench of that court dated the 10th August, 1950, by which the learned Judges dismissed four analogous petitions, presented on behalf of the different appellants, claiming reliefs under articles 226 and 227 of the Constitution, in respect of certain income tax investigation proceedings commenced against them under Act XXX of 1947. It appears that a partnership firm carrying on business under the name and style of K.S. Rashid & Son was started on the 5th of May, 1934, the partners being three in number to wit K.S. Rashid Ahmed, Saeed Ahmed, his son, and Mrs. Zafar Muhammed, his mother Mrs. Zafar Muhammed died on the 7th of January, 1946, and as a result of her death the partnership stood dissolved. Immediately on the day following, 740 that is to say on the 8th of January, 1946, a new firm was started bearing the same name, with the two surviving partners of the original firm and one Saeeda Begum, a daughter of K.S. Rashid, as the third partner. On the 31st of December, 71947, the Central Government referred the cases of this firm, as well as of the individuals constituting it, to the Income taxInvestigation Commission for enquiry and report under section 5of Act XXX of 1947, presumably on the ground that there had been substantial evasion of payment of income tax in these cases. The authorised official appointed under section 5 (4)(3) of the Act, who figures as respondent No. 2 in all these appeals, in due course started investigation in these cases and the appellants ' complaint is, that contrary to the provisions of the Act, he extended his investigations to a period subsequent to the 31st March, 1943, up to which date the income tax assessment in all these cases was completed. A petition embodying this complaint was made to the authorised official on the 8th of April, 1949, but no order was passed on the petition, as the Commission was expecting an early change of law in this respect. The law was amended by an Ordinance dated the 5th of July, 1949, but the appellants still contended that the amendment was neither retrospective in its operation, nor did it enable the authorised official to carry on his investigation beyond the 31st March, 1943. The account books, however, were shown to the official under protest. On the 17th September, 1949, three applications were filed before the Commission, one with regard to the affairs of Mrs. Zafar Muhammed stating that no investigation could take place in regard to her as she was already dead;the second with regard to the affairs of Saeeda Begum on the ground that she being a new partner and not having been assessed before, was not subject to 'the jurisdiction of the Commission; while the third application was to the effect that the new firm, which came into existence on the 8th of January, 1946, could not have its affairs enquired into at all under the provisions of the Act. After that, in June, 1950, four miscellaneous petitions were filed, (being C.M. Gases Nos. 259 to 262 741 of 1950) on behalf of the appellants, before the High Court of Punjab, and the prayers made therein were of a three fold character. It was prayed in the first place that a writ of prohibition might be issued to the Commission and the authorised official directing them not to proceed with the investigation of cases referred to the Commission under section 5 of Act XXX of 1947. The second prayer was for a writ in the nature of certiorari for quashing the proceedings already commenced. The third and the alternative claim was that the proceedings before the Commission might be revised under article 277 of the Constitution and suitable orders passed as the justice of the case would require. Upon these petitions, rules were issued on the 25th of July, 1950, after a report from the Investigation Commission had been called for. On behalf of the respondents, who resisted these petitions, certain preliminary points were raised in bar of the petitioners" claim. It was contended in the first place that the petitioners being assessees belonging to U.P., their assessments were to be made by the Income tax Commissioner of that State and the mere fact that the location of the Investigation Commission was in Delhi would not confer jurisdiction upon the Punjab High Court to issue writs under article 226 of the Constitution. The second objection was that the Act itself being of a special nature which created new rights and liabilities, the remedies provided for in the Act itself for any breach or violation thereof were the only remedies which could be pursued by the aggrieved parties and article 226 or 227 of the Constitution would not be available to the petitioners. The third ground taken was that the court could not give relief to the petitioners because of sections 5(3) and 9 of Act XXX of 1947. These contentions found favour with the learned Judges who heard the petitions, and although they did not express any final opinion on the third point raised they dismissed the applications of the petitioners on the first two grounds mentioned above. It is against these orders of dismissal that the present appeals have been taken to this court and Dr. Tek Chand, who appeared on behalf of the appellants, has assailed the 742 propriety of the decision of the High Court both the points. So far as the first, point is concerned, which relates to the question of jurisdiction of the Punjab High Court to issue writs of certiorari or prohibition in these cases, the learned Judges based their decision entirely upon the pronouncement of the Judicial Committee in the well known case of Ryots of Garabandho vs ' Zamindar of Parlakitnedi(1). The question for consideration in that case was, whether the High Court of Madras had jurisdiction to issue a writ of certiorari in respect of an order passed by the Collective Board of Revenue, as an appellate authority, in certain proceedings for settlement of rent between the Zamindar of Parlakimedi and the Ryots of certain villages within his estate situated in the district of Ganjam which was wholly outside the limits of the Presidency town of Madras. The question was answered in the negative. The Judicial Committee laid down that the three Chartered High Courts of Calcutta, Madras and Bombay had powers to issue, what were known as the high prerogative writs, as successors to the Supreme Courts which previously exercised jurisdiction over these Presidency Towns; but the exercise of the powers under the Charter was limited to persons within the ordinary original civil jurisdiction of the three High Courts, and outside that jurisdiction it extended only to 'British subjects ' as defined in the Charter itself. It was held that the Supreme Court of Madras had no jurisdiction under the Charter which created it to correct or control a country court of the the East India Company deciding a dispute between Indian inhabitants of the Ganjam district about the rent payable for land in that district; and no such power was given by any subsequent legislation to its successor, the High Court . A contention seems to have been raised on behalf of the appellants that the jurisdiction to issue writs could be rounded on the fact that the office of the Board of Revenue, which was the appellate authority in the matter of settlement of rents, was located within the town of Madras (1) 70 I.A. 129. 743 and the order complained of was made in that town and reliance was placed in this connection upon the case of Nundo Lal Bose vs The Calcutta Corporation (1), where a certiorari was issued by the Calcutta High Court to quash an assessment made by the Commissioners of the town of Calcutta on a certain dwelling house. This contention was repelled by the Judicial 'Committee with the following observations: "The question is whether the principle of that case can be applied in the present case to the settlement of rent for land in Ganjam, merely on the basis of the location of the Board of Revenue, as a body which is ordinarily resident or located within the town of Madras, or on the basis that the order complained of was made within the town. If so, it would seem to follow that the jurisdiction of the High Court would be avoided by the removal of the Board of Revenue beyond the outskirts of the town, and that it would never attach but for the circumstance that an appeal is brought to, or proceedings in revision taken by, the Board of Revenue. Their Lordships think that the question of jurisdiction must be regarded as one of substance, and that it would not have been within the competence of the Supreme Court to claim jurisdiction over such a matter as the present by issuing certiorari to the Board of Revenue on the strength of its location in the town. Such a view would give jurisdiction to the Supreme Court, in the matter of the settlement of rents for ryoti holdings in Ganjam between parties not otherwise subject to its jurisdiction, which it would not have had over the Revenue Officer who dealt with the matter at first instance. " It is on the basis of these observations of the Judicial Committee that the learned Judges have held that the mere location of the Investigation Commission in Delhi is not sufficient to confer jurisdiction upon the Punjab High Court to issue a writ in the present case. It is said that the petitioners are assessees within the U. P State and their original assessments were made by the Income tax Officers of that State. (1)I.L.R. II Cal. 275 744 The subsequent proceedings, which had to be taken in pursuance of the report of the Investigation Commission, would have to b.e taken by the Income tax authorities in the U.P., and if a case had to be stated, it would be stated to the High Court at Allahabad. Taking, therefore, as the Privy Council had said, that, the question of jurisdiction is one of substance, it was held that no jurisdiction in the present case could be vested in the Punjab High Court, for that jurisdiction could be avoided simply by removal of the Commission from Delhi to another place. This line of reasoning does not appear to us to be proper and we do not think that the decision in the Parlakimedi 's case(1) is really of assistance in determining the question of jurisdiction of the High Courts in the matter of issuing writs under article 226 of the Constitution. The whole law on this subject has been discussed and elucidated by this court in its recent pronouncement in Election Commission vs Venkata Rao(2 ) where the observations of the Judicial Committee in Parlakimedi 's case, upon which reliance has been placed by the Punjab High Court, have been fully explained. It is to be noted first of all, that prior to the commencement of the Constitution the powers of issuing prerogative writs could be exercised in India only by the High Courts of Calcutta,, Madras and Bombay and that also within very rigid and defined limits. The writs could be issued only to the extent that the power in that respect was not taken away 'by the Codes of Civil and Criminal Procedure(3) and they could be directed only to persons and authorities within the original civil jurisdiction of these High Courts. The Constitution introduced a fundamental change of law in this respect. As has been explained by this Court in the case referred to above, while article 225 of the Constitution preserves to the existing High Courts the powers and jurisdictions which they had previously, article 226 confers, on all the High Courts, new and very wide powers (1) 70 I.A. 139. (1) ; (3) Vide in this connection Besant vs Tire Advocate General of Madras. 46 I.A. 176. 745 in the matter of issuing writs which they never possessed before. "The makers of the Constitution" thus observed Patanjali Sastri C.J. in delivering the judgment of the court, "having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently thought it necessary to provide also a quick and inexpensive remedy for the enforcement of such rights, and, finding that the prerogative writs, which the courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the State 's sphere, new and wide powers on the High Courts of issuing directions, orders, or writs primarily for the enforcement of fundamental rights, the power to issue such directions, etc. 'for any other purpose ' being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King 's Bench in England. " There are only two limitations placed upon the exercise of these powers by a High Court under article 226 of the Constitution; one is that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued ' by the court cannot run beyond the territories subject to its jurisdiction. The other limitation is that the person or authority to whom the High COurt is empowered to issue writs "must be within those territories" and this implies that they must be amenable to its jurisdiction either by residence or location within those territories. It is with reference to these two conditions thus mentioned that the jurisdiction of the High Courts to issue writs under article 226 of the Constitution is to be determined. The observations of the Judicial Committee in Parlakimedi 's case(1) have strictly speaking no direct bearing on the point. It is true as the Privy Council said in that case that the question of jurisdiction must be regarded as one of substance, but the meaning and implication of this observation could be ascertained only with reference to the context of (1) 701. A. 129. 11 95 S.C. 1./59 746 the facts and circumstances of that case. As was pointed out by this court in the case referred to above(1): "Their Lordships considered, in the peculiar situation they were dealing with, that the mere location of the appellate authority alone in the town of Madras was not a sufficient basis for the exercise of jurisdiction whereas both the subject matter, viz., the settlement of rent for lands in Ganjam, and the Revenue Officer authorised to make the settlement at first instance were outside the local limits of the jurisdiction of the High Court. If the Court in Madras were recognised as having jurisdiction to issue the writ of certiorari to the appellate authority in Madras, it would practically be recognising the court 's jurisdiction over the Revenue Officer in Ganjam and the settlement of rents for lands there, which their Lordships held it never had. That was the 'substance ' of the matter they were looking at. " In our opinion, therefore, the first contention raised by Dr. Tek Chand must be accepted as sound and the view taken by the Punjab High Court on the question of jurisdiction cannot be sustained. So far as the second point is concerned, the High Court relies upon the ordinary rule of construction that where the legislature has passed a new statute giving a new remedy, that remedy is the only one which .could be pursued. It is said that the Taxation on Income (Investigation Commission) Act, 1947, itself provides a remedy against any wrong or ' illegal order of the Investigating Commission and under section 8 (5) of the Act, the aggrieved party can apply to the appropriate Commissioner of Income tax to refer to the High Court any question of law arising out of such .order and thereupon the provisions of sections 66 and and 66 A of the Indian Income tax Act shall apply with this modification that the reference shall be heard by a Bench of not less than three Judges of the High Court. We think that it is not necessary for us to express any final opinion in this case as to whether section 8 (5) of the Act is to be regarded as providing the only remedy available to the aggrieved party and that it excludes altogether the remedy provided for (1) A.I.R. z953 S.C. 310, 214; ; 747 under article 226 of the Constitution. For purposes of this case it is enough to state that the remedy provided for in article 226 of the Constitution is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. So far as the present case is concerned, it has been brought to our notice that the appellants before us have already availed themselves of the remedy provided for in section 8(5) of the Investigation Commission Act and that a reference has been made to the High Court of Allahabad in terms of that provision which is awaiting decision. In these circumstances, we think that it would not be proper to allow the appellants to invoke the discretionary jurisdiction under article 226 of the Constitution at the present stage, and on this ground alone, we would refuse to interfere with the orders made by the High Court. Dr. Tek Chand argues that the Income tax authorities have not referred all the matters to the High Court which the appellants wanted them to do. But for this there is a remedy provided in the Act itself and in case a proceeding occasions a gross miscarriage of justice, there is always the jurisdiction in this court to interfere by way of special leave. In the result, we dismiss the appeals but in the circumstances of the case make no order as to costs. ' Appeals dismissed.

The Punjab High Court has jurisdiction to issue a writ under article 226 of the Constitution to the Income tax Investigation Commission located in Delhi and investigating the case of the petitioner under 5 of the Taxation on Income (Investigation Commission) Act, 1947, although the petitioners were assessees within the U.P. State and their original assessments were made by the Income tax authorities of that State. Article 226 of the Constitution confers on all the High Courts new and very wide powers in the matter of issuing writs which they never possessed before. There are only two limitations placed upon the exercise of such powers by a High Court; one is that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued by the court cannot run beyond the territories subject to its jurisdiction. The other is that the person or authority to whom 739 the High Court is empowered to issue writs "must be within those territories" and this ,implies that they must be amenable to its jurisdiction either by residence or location within those territories. The remedy provided in article 226 of the Constitution is a discretionary one and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. Ryots of Garabandho vs Zamindar of Parlakimedi (70 I.A. 129) and Election Commission v; Saka Venkata Subba Rao ; referred to.

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Appeal No. 618 of 1964. Appeal from the judgment and decree dated November 29, 1960 of the Madras High Court in Appeal Suit No. 207 of 1957. Sarjoo Prasad and M. section Narasimhan, for the appellants. section V. Gupte, Solicit6r General and A. G. Ratnaparkhi, for respondents Nos. 1 and 2. R. Ganapathy Iyer, for respondent No. 3. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Madras High Court and arises in the following circumstances. One Rangaswami Chettiar was a man of considerable property and used to live in Poolathur village. He first married one Bappini and had a son by her. But both the son and Bappani died. He therefore married Ammathayee, who was defendant No. 2 in the suit and is appellant No. I before us. He had a son and two daughters by her. But unfortunately all the three children died. Thereafter Rangaswami Chettiar married Lakshmiammal in 1943. She was the first defendant in the suit. It appears that no child was born to Lakshmiammal for about three years and therefore Rangaswami Chettiar married a fourth time. His fourth wife was the sister of his second wife named Supputhayee. In February 1949 Lakshmiammal gave birth to a son. There is dispute as to the question whether Lakshmiammal had left her husband about 1945 or so because of frequent quarrels between the two. Anyhow the fourth wife had also no children. In June 1953 Rangaswami Chettiar fell ill. He was first treated as an out patient in Batlagundu hospital and later admitted as an in patient. On June 16, 1953 he executed a registered deed of gift in favour of his second wife Ammathayee of certain immovable joint family property. Lakshmiammal when she came to know of this gift published a notice in a newspaper accusing the second and fourth wife of trying to deprive her and her minor son of their due share in the joint family property by having the gift deed executed and claimed that the gift deed was not valid. On September 4, 1953, Rangaswami Chettiar sent a notice in reply to the notice published by Lakshmiammal. Ili that notice Rangaswami Chettiar accused Lakshmiammal of having left Wm a year and a half after the marriage after quarrelling with him. He also accused her of living a life of promiscuity thereafter. Finally 355 he said in the notice that the son born to Lakshmiammal in Feb ruary 1949 was not his son. Lakshmiammal gave a reply to this notice of Rangasmami Chettiar on September 15, 1953, in which she maintained that the child was Rangaswami Chettiar 'section She also claimed that Rangaswami Chettiar 's mind had been poisoned against her by his two other wives. She denied that she had any connection with any other man besides Rangaswami Chettiar. In, December 1963 Rangaswami Chettiar died. The present suit was filed a year later on January 3, 1955 on behalf of the minor son. He claimed half share in the joint family properties left by Rangaswami Chettiar. To this suit the three widows who between them have half share were defendants Nos. 1, 2 and 3. Three other defendants were made parties to the suit to whom we shall refer later as they are not concerned with the main controversy between the plaintiff and the two step mothers (i. e. second and third defendants). The main defence of the two step mothers, who are now appel lants before us, was that the, plaintiff though born to Lakshmiammal was not the son of Rangaswami Chettiar and was therefore not entitled to any share in his properties. Further Ammathayee pleaded that the gift deed in her favour was valid and that even if the plaintiff was the son of Rangaswami Chettiar he would be entitled to half share of the properties other than those gifted to her by R angaswami Chettiar before his death. There were other issues in the suit, but we are not concerned with them in the present appeal. On the main question, namely whether the plaintiff was the son of Rangaswami Chettiar, the trial court found in his favour. Further on the question whether the gift deed in favour of Ammathayee was valid, the trial court was of opinion that it was not competent for Rangaswami Chettiar to make a gift of immovable joint family property to his wife. The trial court therefore held the gift to be invalid and gave the plaintiff a decree for his half share in the pro perty left by Rangaswami Chettiar, including the properties gifted to Ammathayee before his death. Thereupon the two step mothers went in appeal along with two other defendants and contested the finding of the trial court on both these issues. The High Court however upheld both the findings. On a consideration of the evidence, the High Court came. to the conclusion that the heavy burden that lay on those who disputed the paternity of the plaintiff respondent in view of section 112 of the , No. 1 of 1872, had not been discharged in this case and it had not been proved that Rangaswami Chettiar had no access to Lakshmiammal on or about the time when the plaintiff respondent could have been conceived. On the question of the gift deed, the High Court held that Hindu law did not permit a husband to gift joint family immovable property to his wife in 3 56 the circumstances in which the gift was made in this case. The High Court therefore dismissed the appeal so far as the stepmothers of the plaintiff respondent were concerned. The High Court however allowed the appeal of defendants Nos. 4 and 5 who were the brothers of the two step mothers of the plaintiffrespondent and set aside the decree of the trial court with respect to them by which they were made accountable. There was also a crossobjection before the High Court with respect to certain properties which were in the possession of the sixth defendant. That crossobjection was dismissed on the ground that the plaintiff respondent had failed to prove that those properties were joint family properties left by Rangaswami Chettiar. Thereafter the two widows who are the appellants before us applied for and obtained a certificate to appeal to this Court as the decree of the High Court was that of variance, and that is how the matter has come before us. The two main questions which have been argued before us are (i) whether the plaintiff respondent was the son of Rangaswami Chettiar, and (ii) whether the deed of gift was valid. So far as the first question is concerned, there is a concurrent finding of the trial court as well as of the High Court that the plaintiffrespondent is the son of Rangaswami Chettiar. Ordinarily therefore this Court would not interfere with this concurrent finding of fact. But it is urged that the High Court did not accept the evidence on this point in the same measure as the trial court did, and that there are circumstances which should have led the High Court (when it did not accept the evidence in full) to hold that the plaintiffrespondent was not the son of Rangaswami Chettiar. It is also urged that the High Court was in error in holding on the basis of section 112 of the Evidence Act that the paternity of the plaintiff respon,dent had been proved. We are of opinion that there is no force in this contention. The main evidence on behalf of the plaintiffrespondent was that of his mother, Lakshmiammal. On the other hand the appellants relied on the notice sent by Rangaswami Chattiar to Lakshmiammal denying the paternity of the plaintiff respondent, and it is urged that a notice of this kind is very strong evidence rebutting the presumption that the plaintiff respondent is the son of Rangaswami Chettiar, and this is particularly so in the present case because Rangaswami Chettiar was keen on having a son and had married four times for that purpose. He would not have thus denied the paternity of the son ]born to his third wife in the circumstances if that was true. The High Court was not oblivious of the force of these circumstances. But the evidence of Lakshmiammal was that she never quarrelled with her husband and that her husband married again because she did not give birth to a 357 child for about three years, and the fourth marriage of Rangaswami Chettiar took place with her consent. She also said that she had not left the house of Rangaswami Chettiar and that the plaintiffrespondent was Rangaswami Chettiar 's son. She further said that her co wives became jealous after the birth of the plaintiffrespondent to her and that is why they influenced Rangaswami Chettiar against her. This evidence was relied upon by the trial court and the High Court has not disbelieved it. It is also in evidence that Lakshmiammal was living in her father 's house in the same village as Rangaswami Chettiar, even according to the appellants ' witnesses and that Lakshmiammal 's father 's house was only a furlong away from Rangaswami Chettiar 's house. It was in these circumstances that the High Court had to consider the question whether the heavy burden which lies on a person denying the paternity of a child born during wedlock had been discharged. It is true that Rangaswami Chettiar had given the notice to Lakshmiammal in which he denied the paternity of the plaintiff respondent; but that notice stands in no better position than would have been the statement of Rangaswami Chettiar even if he was alive when this suit was fought out in the trial court. Section 112 is in these terms "The fact that any person was born during the continuance of a valid marriage between his mother and any man, or within two hundred and eighty days after its dissolution, the mother remaining unmarried, shall be conclusive proof that he is the legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each other at any time when he could have been begotten. " It raises inter alia a conclusive presumption that a child born during the continuance of a valid marriage between his mother and any man is the legitimate son of that man, and this conclusive presumption can only be rebutted if it is shown that the parties to the marriage had no access to each other at any time when he could have been begotten. The appellants therefore had to prove, as Rangaswami Chettiar would have had to prove even if he was alive when the suit was fought out in the trial court, that he had no access to Lakshmiammal at any time when the plaintiff respondent could have been begotten. We have already said that even accord ing to the appellants Lakshmiammal was only living one furlong away in her father 's house from where Rangaswami Chettiar was living. In these circumstances the evidence produced in the present suit falls far short of proving that Rangaswami Chettiar had no access to Lakshmiammal at any time when the plaintiff respondent could have been begotten. We have therefore no hesitation in agreeing with the High Court, particularly taking into account the evidence of Lakshmiammal which has not been disbelieved by the High Court, that the appellants had completely failed to prove non 358 access of Rangaswami Chettiar to Lakshmiammal at any time when the plaintiff respondent could have been begotten. In these circumstances there is no reason for us to interfere with the concurrent finding of fact as to the paternity of the plaintiff respondent and we hold that he is the legitimate son of Rangaswami Chettiar. This brings us to the question of the validity of the gift deed ill favour of Ammathayee. The gift deed begins with the following recital: "As you happened to be my second wife and in accordance with the promise made to you by my father, K. K. Ramasami Chettiar at the time of my marriage with you, and according to the directions given to me also to execute a document in your favour and also in consi deration of the affection you are having for me, and your obedient nature" and then follow the words making the gift of certain immovable properties in her favour. According to the donee appellant, the value of this immovable property was about one tenth of the entire property left by Rangaswami Chettiar. The argument on behalf of the donee appellant is that the gift was valid as it was of a reasonable portion of the immovable property, firstly because it was made by a husband in favour of a wife out of love and affection, and secondly because it was made by her husband to carry out the pious obligation that lay on him to fulfil the wishes of his father to make some provision for Ammathayee, which his father had indicated at the time of her marriage. Hindu law on the question of gifts of ancestral property is well settled. So far as movable ancestral property is concerned, a gift out of affection may be made to a wife, to a daughter and even to a son, provided the gift is within reasonable limits. A gift for example of the whole or almost the whole of the ancestral movable property cannot be upheld as a gift through affection: (see Mulla 's Hindu Law, 13th Edn. p. 252, para 225). But so far as immovable ancestral property is concerned the power of gift is much more circumscribed than in the case of movable ancestral property. A Hindu father or any other managing member has power to make a gift of ancestral immovable property within reasonable limits for "pious purposes", (see Mulla 's Hindu Law, 13th Edn. para 226 p. 252). Now what is generally understood by "pious purposes" is gift for charitable and/or religious purposes. But this Court has extended the meaning of "pious purposes" to cases where a Hindu father makes a gift within reasonable limits of immovable ancestral property to his daughter in fulfilment of an antenuptial promise made on the occasion of the settlement of the terms of her 359 marriage, and the same can also be done by the mother in case the father is dead: [see Kamala Devi vs Bachu Lal Gupta. (1)] In Guramma Bhratar Chanbassappa Deshmukh vs Malappa,(2) it was observed by this Court that "the Hindu law texts conferred a right upon a daughter or a sister, as the case may be, to have a share in the family property at the time of partition. The right was lost by efflux of time. But it became crystallized into a moral obligation. The father or his representative can make a valid gift by way of reasonable provision for the maintenance of the daughter, regard being had to the financial and other relevant circumstances of the family. By custom or by convenience, such gifts are made at the time of marriage, but the right of the father or his representative to make such a gift is not confined to the marriage occasion . . Marriage is only a customary occasion for such a gift. But the moral obligation can be discharged at any time, either during the life time of the father or thereafter." But we have not been referred to a single case where a gift by a husband to his wife of immovable ancestral property if made, has been upheld. We see no reason to extend the scope of the words "pious purposes" beyond what has already been done in the two decisions of this Court to which reference has been made. The contention of the donee appellant that the gift in her favour by her husband of ancestral immovable property made out of affection should be upheld must therefore fail, for no such gift is permitted under Hindu Law insofar as immovable ancestral property is concerned. As to the contention that Rangaswami Chettiar was merely carrying out his father 's wishes when he made this gift in favour of his wife and that act of his was a matter of pious obligation laid on him by his father, we are of opinion that no gift of ancestral immovable property can be made on such a ground. Even the father in law, if he had desired to make a gift at the time of the marriage of his daughter in law, would not be competent to do so insofar as immovable ancestral property is concerned. No case in support of the proposition that a father in law can make a gift of ancestral immovable property in favour of his daughter in law at the time of her marriage has been cited. There is in our opinion no authority to support such a proposition in Hindu law. As already observed, a Hindu father or any other managing member has power to make a gift within reasonable limits of ancestral immovable property for pious purposes, and we cannot see how a gift by the father in law to the daughter in law at the time of marriage can by any stretch of reasoning be called a pious purpose, whatever may be the position of a gift by the father or his representative to a daughter at the time of her marriage. One can understand such a gift being made to a daughter when she is leaving the (1) ; (2) ; 360 family of her father. As it is the duty of the father or his representative to marry the daughter, such a gift may be and has been held by this Court to be for a pious purpose. But we see no pious purpose for such a gift by a father in law in favour of his daughter in law at the time of marriage. As a matter of fact the daughterin law becomes a member of the family of her father in law after marriage and she would be entitled after marriage in her own right to the ancestral immovable property in certain circumstances, and clearly therefore her case stands on a very different footing from the case of a daughter who is being married and to whom a reasonable gift of ancestral immovable property can be made as held by this Court. Learned counsel for the donee appellant further refers to the fact that gifts made in token of love by her father in law to a daughter in law are permitted and become her stridhan property. That is so. But that does not mean that a father in law is entitled to make a gift of ancestral immovable property to a daughter inlaw so as to convert it into her stridhan. Generally such gifts are of movable property. But even if gifts of immovable property in such circumstances are possible,the two provisions must be read harmoniously. If therefore Hindu law does not permit a father inlaw to make a gift of ancestral immovable property to his daughterin law, he cannot make such a gift for purposes of stridhan. Further if gifts by the father in law to the daughter in law which become stridhan include gifts of immovable property, they can only refer to such immovable property as is not ancestral immovable property, for that is the only way in which the two provisions can be reconciled. We have therefore no difficulty in holding that there is no warrant in Hindu law in support of the proposition that a father in4aw can make a gift of ancestral immovable property to a daughter in law at the time of her marriage. If that is so, we cannot see how what the father in law himself could not do could be made into a pious obligation on the son as is claimed in this case, for that would be permitting indirectly what is not permitted under Hindu law directly. Further in any case gifts of ancestral immovable property can only be for pious purposes, and we doubt whether carrying out the directions of the father in law and making a gift in consequence can be said to be a gift for a pious purpose, specially when the fatherin law himself could not make such a gift. We are therefore of opinion that this gift cannot be upheld on the ground that Rangaswami Chettiar had merely carried out the wishes of his father indicated on the occasion of the marriage of Ammathayee. The appeal therefore fails and is hereby dismissed with costs to to the plaintiff respondent. Before we part with this appeal, we should like to refer briefly to the case of Natarajan Chettiar who was defendant No. 6 in the 361 trial court and is respondent No. 3 before us. He was made a party with respect to certain properties in schedule D to the plaint. His case was that the properties in schedule D were not liable to be partitioned. This contention of his was upheld by the trial court. That is why the decree does not provide for partition of D schedule properties. It was therefore unnecessary for the appellants to make him a party to the present appeal unless the appellants claimed some relief against him. Learned counsel for the appellants has stated that no relief is being claimed against Natarajan Chettiar respondent No. 3. The appeal therefore must fail as against Natarajan Chettiar who will get his costs from the appellants but no hearing fee. Further among the properties to be divided where a gold chain (item 6) and certain promissory notes (items Nos. 2 to 4) of schedule B. The trial court held that there was no proof that these items existed. In the decree however this has not been made quite clear. We therefore direct that the trial court will correct the decree to bring it into line with its finding on these items. G. C. Appeal dismissed.

R was a man of considerable property. He married four times. The third wife bore him a son. When R made a gift of some joint family property to his second wife the third wife gave a notice that the gift was not valid. R, in his reply to the notice alleged, that she had deserted him and that the son born of her was not his. These allegations were denied by the third wife. After the death of R a suit was instituted by the said son claiming a half share of the property left by R. The two living step mothers, namely, the second and fourth wives of R contested the suit. The questions were whether the plaintiff was the son of R and whether the gift deed was valid. The trial court held on both points in favour of the plaintiff and the High Court also decided against the two step mothers who thereupon appealed to this Court. The appellants contended that (1) the courts below had wrongly held the Plaintiff respondent to be the legitimate son of R (2) R,s gift of ancestral immovable property was valid because it was a gift for 'pious purposes. HELD: (i) Section 112 of the Evidence Act raises, inter alia, a conclusive presumption that a child born during the continuance of a valid marriage between his mother and any man is the legitimate son of the man, and this conclusive presumption can only be rebutted if it is shown that the parties to the marriage had no access to each other at any time when he could have been begotten. The appellants had completely failed to prove the non access of R to his third wife at any time when the plaintiff respondent could have been begotten. In these circumstances there was no reason to interfere with the concurrent finding of the courts below that the plaintiff respondent was the legitimate son of R. [357 E F] (ii) The contention of the donee appellant that the gift in her favour by her husband of ancestral immovable property made out of affection should be upheld must fail because no such gift is permitted under Hindu Law insofar as immovable ancestral property is concerned. The scope of the expression 'pious purposes ' cannot be extended to include such gifts. [359 D] Kamala Devi vs Bachu Lai Gupta, ; and Guramma Bharatar Chanbassappa Deshmukh vs Malappa, ; , referred to. (iii) Nor can the proposition be accepted that a father in law can make a gift of ancestral immovable property in favour of his daughter in law at the time of her marriage. The case of a daughter in law who would become entitled to property in the father in law 's family in her own right stands on a very different footing from the case of daughter who is being married and to whom a reasonable gift of ancestral immovable property can be made. [360 A B] The rule of Hindu law that gifts made in token of love by a fatherin law to his daughter in law are permitted and become the stridhan pro 354 perty must be taken to refer to gifts of movable properties and such immovable properties as are not joint family properties. [360 C E] Ws gift of immovable ancestral property to his second wife could not therefore be considered to be valid even if it was in purported compliance with the wishes of his father at the time of her marriage. [360 G H]

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Appeal No. 512 of 1964. Appeal from the judgment and decree dated December 23, 1960 of the Allahabad High Court in Income tax Misc. Case No. 475 of 1954. A. V. Viswanatha Sastri, 4. Ganapathy lyer, R. H. Dhebar and R.N. Sachthey, for the appellant. section T. Desai, and J. P. Goyal, for the respondent. The Judgment of the Court was delivered by Shah, J. Under an agreement dated January 2, 1931, Lab Manmohan Das hereinafter called 'the assessee was appointed Treasurer of the Allahabad Bank Ltd. in respect of certain Branches, Sub Agencies and Pay Offices. The assessee was assessed to income tax as representing his Hindu undivided family, and the income received by the assessee under the terms of the agreement with the Allahabad Bank, was treated as income of the Hindu undivided family. In the previous year corresponding to the assessment year 1950 51 the assessee in performing his duties as a Treasurer suffered a net loss of Rs. 38,027. For the assessment year 1951 52, the profit and loss account of the assesses showed Rs. 73,815 as receipts, against which were debited outgoings amounting to Rs. 39,370 which included Rs. 20,000 being the loss suffered by the assessee as Treasurer of the Patna Branch of the Allahabad Bank arising from misappropriation by an Assistant Cashier. The Income tax Officer refused to allow the loss suffered in the previous year to be set off against the net profit of Rs. 34,445 and brought that amount of profit to tax as remuneration received by the assessee as Treasurer of the Allahabad Bank. The order of the Income tax Officer was conflrmed in appeal by the Appellate Assistant Commissioner. The 5 33 Income tax Appellate Tribunal held that the remuneration received by the assessee as Treasurer of the Allahabad Bank was income arising from pursuit of a profession or vocation within the meaning of section 10 of the Act and the loss suffered during the preceding year was liable to be set off against the assessee 's income from that source in the year under consideration. At the instance of the Commissioner of Income tax, U.P., the following questions were referred to the High Court of Allahabad under section 66(1) of the Income tax Act, 1922: "(1) Whether on a true interpretation of the deed of agreement dated 2nd January, 1931, appointing the assessee as Treasurer of the Allahabad Bank Limited, income earned by the assessee from his activities as such Treasurer fell to be computed under Section 10 of the Act or Section 7 or Section 12 of the Income tax Act ? If the answer to this question is that such income is liable to be computed under Section 10 of the Act, (2)Whether the assessee could claim a set off of the loss suffered by him in the preceding year 1950 51 against his profits in the year under consideration, i.e., 1951 52 having failed to prefer an appeal against the refusal by the Income tax Officer making the assessment for the year 1950 51 to allow the assessee to carry forward the loss under Section 24(2) of the Act ?" The High Court held that the remuneration received by the from the Allahabad Bank was income liable to be taxed under section 10 of the Income tax Act, and that the assessee could claim to set off the loss computed in the assessment year 1950 51 against the profit in the subsequent year. With certificate granted by the High Court, this appeal has been preferred by the Commissioner of Income tax. The second question presents little difficulty. In making his order of assessment for the year 1950 51 the Income tax Officer declared that the loss computed in that year could not be carried forward to the next year under section 24(2) of the Income tax Act, as it was not a business loss '. The Income tax Officer has under section 24(3) to notify to the assessee the amount of loss as computed by him, if it is established in the course of assessment of the total income that the assessee has suffered loss of profits. Section 24(2) confers a statutory right (subject to certain conditions which are not material) upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward L3Sup. Cl/66 4 5 34 the loss as is not set off under sub section (1) to the following year, and to set it off against his profits and gains, if any, from ',the same business, profession or vocation for that year. Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and against the same business, profession or vocation under section 24(2) has to be determined by the Income tax Officer who deals with,the assessment of the subsequent year. It is for the Income tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. A decision recorded by the Income tax Officer who computes the loss in the previous year under section 24(3) that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. The answer to the first question depends upon the true interpretation of the terms of the agreement between the Allahabad Bank and the assessee ' If under the terms of the agreement it is found that the assessee was carrying on a business, profession or vocation, the assessee would be entitled to carry forward the loss suffered therein and set it off against the profits in the subsequent year of the same business, profession or vocation under section 24(2). If the remuneration was received by the assessee as a servant of the Bank, and on that account has to be computed under section 7 of the Act, the right to set off the loss cannot be claimed under section 24(2). The fact that the assessee held an office is however not decisive of the question whether remuneration earned by him was as a servant of the. Allahabad Bank. Receipt of remuneration for holding an office does not necessarily give rise to a relationship of master and servant between the holder of the office and the person who pays the remuneration. The agreement is between the Allahabad Bank Ltd., and Lala Manmohan Das called in the agreement "Treasurer", and the expression Treasurer includes "his heirs and representatives".; By cl. 2 it is recited that the Treasurer is appointed for the Bank 's Branches and Sub Agencies and Pay Offices mentioned therein and such other offices in other parts of India for which he may be appointed, and that the Treasurer has agreed to provide security to the Bank for the discharge and performance of his duties and obligations to the Bank. The agreement I then proceeds to set out the conditions of the agreement, the following of which are relevant: (1) "The Treasurer shall serve, the Bank as Treasurer for its Branches,, Sub Agencies and: Pay 535 Offices until, this agreement is determined as hereinafter provided." (2)"The remuneration of the. Treasurer shall be a monthly allowance for each of the Branches, SubAgencies and Pay Offices the total of such monthly allowance to be Rs. 2,250 (Rupees two thousand two hundred and fifty) plus Rs. 350 (Rupees three hundred fifty) for travelling expenses. " (3)"The duties, liabilities and responsibilities of the Treasurer to the Bank shall be such as either by custom or contract usually devolve on a Treasurer in the service of the Bank including the duties, liabilities and responsibilities hereinafter mentioned and the Treasurer shall faithfully discharge his duties and duly perform his obligations to the Bank." (4)"The Treasurer shall with the approval of the Bank appoint at adequate salaries to be paid by the Bank all the Indian staff as may be con sidered sufficient by the Bank for the business of the Cash Department of the Bank 's Branches, Sub Agencies and Pay Offices . and shall dismiss any person or persons so appointed whom he shall be reasonably directed by the Bank to dismiss and shall with like approval appoint another or others in the place of person or persons so dismissed. The Treasurer shall be deemed to have appointed the present staff of the Cash Department of the Branches, Sub Agencies and Pay Offices aforesaid. Provided always that the Bank shall accept any proposal of the Treasurer for transfer, suspension or dismissal of any member of the Cash staff in the Bank." (5) "The Treasurer shall be responsible to the Bank for the work and conduct of every person to be appointed or employed on his staff and shall make good to the Bank any loss or damage sustained or incurred by the Bank from any embezzlement, theft, fraud, misappropriation, misconduct, mistake, omission, negligent act or default of any such person or persons." (6)"The Treasurer shall keep under his care and supervision or that of his staff the moneys, cash bullion, securities, cheques, notes, hundies, drafts, orders and 536 other documents or property which may from time to time be entrusted to him at the Branches, Sub Agencies and Pay Offices. . and shall whenever so required to do so transmit from one place to another place under such guard as may be provided by the Bank all such money, documents or properties and shall be responsible for the care and proper custody of the same while in transit. Thai the Bank shall for the efficient working of its Cash Department provide proper iron safes and a strong room in each of the said Branches, Sub Agencies and Pay Offices and the Treasurer shall be responsible to the Bank for any loss occasioned to the Bank through the negligence, malfeasance or misfeasance of any of his servants or agents by the payment or delivery of any money, document or property aforesaid to a wrong person whether owing to forgery, mistake, fraud or otherwise. " (7)"The Treasurer shall be responsible for the correctness and genuineness of all hundies, cheques, drafts, securities, vouchers, documents, writing and signature in an Indian language or character which the Treasurer or any of his staff may accept and certify as genuine and correct and shall make good to the Bank any loss or damage from any forged instrument or signature on a document as dealt with and shall also be liable for any loss occasioned to the Bank by receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note." (9)"The Treasurer shall not nor shall any substitute or any one of the staff of the Treasurer publish or divulgeany of the business affairs or transactions of the Bank or any of its constituents." (10) "The Treasurer 's employment. . may be determined at any time by either party giving to the other three calendar months written notice to that effect, and in case of the Treasurer 's death, this agreement as regards the Treasurer 's liabilities and obligations for the staff and other persons shall remain in force so as to bind his heirs, representatives and estate for any loss then accrued or accruing claim of the Bank hereunder but also for any future claim of the Bank in respect of any subsequent transaction or occurrence unless and 5 37 A until determined by his heirs or representatives giving like notice to the Bank. " The agreement contains certain peculiar covenants : for instance, the expression "Treasure" includes the heirs and representatives and except where the content may justify a contrary implication, the rights, obligations and liabilities of the Treasurer would apparently be enforceable by or be enforced against the heirs and legal representatives of the assessee. The Treasurer is entitled under the terms of cl. (4) to transfer, suspend and dismiss any member of the staff in the cash department of the Bank and his recommendation in that behalf has to be accepted by the Bank. The Treasurer has if reasonably directed by the Bank, but not otherwise, to dismiss any member of the Indian staff appointed by him, and to appoint another in the place of the person so dismissed. The staff in the Cash department is referred in cls. (5), (6) & (7) as the Treasurer 's staff. Under cl. (4) all the staff originally in the employment of the Bank at the date of the agreement and 3 the staff subsequently appointed were to be paid by the Bank, but the Treasurer was to stand responsible for any loss or damage which may be sustained not only for embezzlement, theft, fraud, misappropriation, misconduct, but even for mistake, omission, negligent act or de fault of any member of the staff. The Treasurer has by the agreement undertaken to keep the moneys, cash, bullion, securities, cheques, notes, hundies, drafts, orders, and other documents or property under his care and supervision through his staff, and is liable to protect the property of the Bank in his custody, and has to make good any loss occasioned to the Bank by the negligence, malfeasance or misfeasance of any of "his servants or agents" even though not belonging to the Cash Department. The Treasurer is responsible for the "correctness and genuineness" of all hundies, cheques, drafts, securities, vouchers, documents, writing and signature in an Indian language and he is responsible for any loss or damage from any forged instrument or signature on a document dealt with by his staff, and also for any loss arising from receipt, of any bad or base money coin or bullion or any forged or fraudulently altered currency note. It may be noticed that the liability imposed under that covenant is for the acts of the staff appointed by him or deemed to have been appointed by him within the meaning of cl. (4), and also for loss arising from the receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note by any person employed by the Bank. The agreement also contemplates that the Treasurer may appoint any substitute to carry on the work of the Bank. The Treasurer is under the agreement 538 responsible for the acts of the Indian staff at the Branches, SubAgencies and Pay. Offices as far apart as Calcutta, Lahore, Lucknow, Patna, Amritsar, Benaras and Secunderabad. On a fair reading of the terms of the agreement it appears that the Treasurer had to provide the staff for the cash section : he had power to suspend, transfer or dismiss any member of the staff or to appoint another person in his place: he had to perform the duties, liabilities and responsibilities which by custom or contract usually devolve upon a Treasurer and the duties specified in the agreement, and he was responsible for all acts of the staff so appointed which result in loss or damage to the Bank. The Treasurer was also responsible for the protection of the property of the Bank and was also responsible for receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note. Personal attendance by the Treasurer and supervision over the staff in the cash section in all the Branches and Pay Offices being in the very nature of things impossible, it was open to the Treasurer to appoint his own agents to supervise the work of the cash section. An office of Treasurer was undoubtedly created by the agree ment. It is recited in cl. (1) that the Treasurer shall serve the Bank and in cl. (3) that the duties, liabilities and responsibilities I of the Treasurer shall be such as by custom or contract usually devolve on a Treasurer in the service of the Bank. For performing these duties there is a fixed remuneration which is paid to the Treasurer, beside the travelling expenses. But the use of the expressions "serve. , the Bank" and "in the service of the Bank" have to be read in the setting of the other covenants. By them I selves they are not decisive of the ' intention of the parties to the agreement. The office of the Treasurer can be determined only by notice on either side of a duration of three months, and even on the death of the assessee, the Treasurer 's obligations accrued or accruing during his life time, and future claims in respect of any transactions, even subsequent to his death, remain enforceable. Express reference to liability of the Treasurer for future claims for subsequent transactions clearly indicates that the agreement does not come to an end by the death of the assessee : it is determined only by notice of three months ' duration. Liability for transactions subsequent to the death of the person for the time being acting as Treasurer remaining enforceable, it is reasonable to infer that the right to receive remuneration would tenure to the person who would step into the office of the Treasurer. 539 The office of Treasurer is therefore to be held by the assessee, and After his death by, his heirs and legal representatives. It is unnecessary to consider whether the agreement would be determined by any supervening disability of the Treasurer, which may render the contract impossible of performance. But the Treasurer holds the office not as a servant of the Bank. The Treasurer has unquestionably undertaken very onerous responsibilities. There is however no covenant which authorises the Bank to control the Treasurer in the due performance of duties undertaken by him under the terms of the agreement. Business of the Bank has undoubtedly to be carried on in the manner normally done by the Banks, and the duties, liabilities and responsibilities of the Treasurer are to be such as "either by custom or contract usually devolve on a Treasurer". The Bank pays the Indian staff in the Cash Department, but the control is of the assessee. He has control over the staff appointed by him or deemed to be appointed by him: he has therefore the power to initiate proposals for transfer, suspension or dismissal of any member of the cash staff. This Court in Dharangadhara Chemical Works Ltd. vs State of Saurashtra(1) observed "The principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled. The test which is uniformly applied in order to determine the relationship is the existence of a right of control in res pect of the manner in which the work is to be done. A distinction is also drawn between a contract for service and a contract of service and that distinction is put in this, .,way.: "In the one case the master can order or require what is to be done while in the other case he cannot only order or require what is to be done but how itself it shall be done"." After referring to a large number of cases the Court observed P. 160 "The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition. it is not necessary for holding that a person is an employee, that the employer should be proved to have exercised control over his work, that the test of control (1)[1957] S.C.R., 152, 157. 54 0 was not One of universal application and that there were many contracts in which the master could not control the manner in which the work was done. The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer or. to use the words of Fletcher Moulton, L.J., at page 549 in Simons vs Health Laundry Company [(1910)1 K.B. 543] ". it is impossible to lay down any rule of law distinguishing the one from the other. It is a question of fact to be decided by all the circumstances of the case. The greater the amount of direct control exercised over the person rendering the services by the person contracting for them the stronger the grounds for holding it to be a contract of service, and similarly the greater the degree of independence of such control the greater the probability that the services rendered are of the nature of professional services and that the contract is not one of service". " Under the contract the Treasurer had to procure due performance of the duties of the Cash Department by employees under his supervision and that he was to be responsible for all acts done by them and to make good the loss which may result from any embezzlement, theft, fraud, misappropriation, mistake, misconduct, omission, negligent act or default of any such person. In carrying out his duties under the contract apparently he was not to be controlled or supervised by the Bank. The contract was therefore ,one for service and the Treasurer could not be called a servant of the Bank. But Mr. Sastri on behalf of the Revenue contended relying upon Shivnandan Sharma vs The Punjab National Bank Ltd.(1) and Piyare Lal Adishawar Lal vs Commissioner of Income tax, Delhi(2), that under the contracts substantially similar to the contract in this case, Treasurers were held merely to be servants of the Banks, business whereof they attended. It is true that in each of these cases this Court in interpreting a contract in which a Treasurer was appointed to supervise the Cash Department of a Bank, held that the Treasurer was a servant of the Bank, and not an independent contractor. But unless the terms of the contracts (1) [1955]1 S.C.R. 1427. (2) ; 541 and the circumstances in which they are made are identical, interpretation of one contract cannot be regarded as a guide for determining the intention of parties to another contract. In Shivnandan Sharma 's case(1) the position of a Treasurer of a Bank fell to be determined somewhat indirectly. Shivnandan a head cashier in one of the branches of the Punjab National Bank appointed by the Treasurer who was in charge of the Cash Department of the Bank under an agreement between the Bank and the Treasurer, was dismissed from the service by the Bank. In a reference made to the Industrial Tribunal of certain industrial disputes including one for reinstatement of Shivnandan, it was held by this Court that under the terms of the agreement between the Treasurer and the Bank, the Treasurer was the servant of the Bank and not an independent contractor. In coining to that conclusion the Court was substantially guided by the covenants which reposed the direction and control over Shivnandan and of the ministerial staff in charge of the Cash Department in the Bank. The covenants of the agreement between the Treasurer and the Bank disclosed that the Treasurer had agreed to serve the Bank and to obey and observe all lawful orders and instructions of the Bank and to carry out such duties and to discharge such responsibilities as usually devolve upon a Treasurer in the employment of the Bank and in consideration thereof to receive remuneration mentioned in the Schedule. The Treasurer and his nominees were bound as expressly stipulated to obey all the orders, rules, and regulations prescribed by the Bank with regard to the discharge of their duties by the cashiers as well as with regard to the amount of balance they were allowed to keep with them. The Bank was also given power in case of gross negligence or misconduct or of any fraud, misappropriation or embezzlement by the Treasurer or any of the nominees in the discharge of their duties to dispense with the services of the Treasurer forthwith. The Treasurer was not to engage any person as his assistant or, peon about whose character, conduct or reliability the manager of the Board of Directors of the Bank may have any objection. Shivnandan was a nominee of the Treasurer, but from the terms of his employment it appeared that he was working directly under the control and supervision of the Punjab National Bank. This Court held that the Treasurer 's relation to the Bank was that of a servant to the master, and the ministerial staff of the Cash Department appointed by him were also the employees in the Cash Department. It is difficult to regard the agreement in Shivnandan Sharma 's case(1) as even substantially similar to (1) [1955]1 S.C.R. 1427. 542 the agreement in the present case between the Allahabad Bank and the Treasurer, so as to make the interpretation of the agreement a guide or a precedent in the interpretation of the agreement before us. In Piyare Lal Adishwar Lal 's case(1), one Sheel Chandra was appointed Treasurer of the Central Bank for various branches on a monthly salary. Under the agreement between Sheel Chandra and the Bank, Sheel Chandra had to engage and employ all subordinate staff. He had the power to control, dismiss and change the staff at his pleasure, but he could not engage or transfer any member of the staff except with the approval of the Bank and he had to dismiss any such member if so required by the managing director of the Bank or Agent of the office. The Treasurer was responsible for the acts and omissions of his representatives ' whom he was entitled to appoint at the various branches with the approval of the Bank, and he had agreed to indemnify the Bank against any loss arising from any neglect or omission on their part. But the Treasurer and his staff were under the direct control of the Bank. The agreement which was terminable by three calendar months ' notice in writing by either side, could in the event of any breach of any condition of the agreement by the Treasurer be terminated by the Bank forthwith. Having regard to the nature of his work and the control and supervision of the Bank over the Treasurer, it was held that the Treasurer was a servant of the Bank and the emoluments received by the Treasurer were in the nature of salary and assessable under section 7 of the Income tax Act and not profits and gains of business under section 10. Some of the covenants of the contract between the Central Bank and the Treasurer are similar to the agreement under consideration in this appeal, but in Piyarelal Adishwar Lars case(1) this Court founded its conclusion upon the existence of control and supervision of the Bank over the Treasurer and upon the power vested in the Bank to summarily dismiss the Treasurer in case of breach of any of the conditions of the agreement. In the present case there is no covenant which either expressly or impliedly confers upon the Bank such control and supervision over the work done by the Treasurer, and the agreement is not liable to summary determination. His duties, liabilities and responsibilities are to be such as either by custom or contract usually devolve upon the Treasurers and those which are specified in the agreement. It is true that under cl. (d) he has to transmit from one place to another place whenever so required, under such guard (1) [1960]1 S.C.R. 669. 543 as may be provided by the Bank, all such money, cash, bullion, securities, cheques, notes, hundies, drafts, orders and other documents, but that does not put the Treasurer under the general supervision of the Bank. On a careful consideration of the covenants, we are of the view that the Treasurer was not a servant of the Allahabad Bank under the terms of the agreement dated January 2, 1931, and the remuneration received by him was not "salaries" within the meaning of section 7 of the Income tax Act. But that is not sufficient to conclude the matter in favour of the assessee. The benefit of section 24(2) of the Indian Income tax Act may be availed of by the assessee only if the loss sought to be set off was suffered under the head "Profits and gains . in any business, profession or vocation". It is difficult to regard the occupation of the Treasurer under the agreement as a profession, for a profession involves occupation requiring purely intellectual or manual skill, and the work of the Treasurer under the contract cannot be so regarded. Occupation of a Treasurer is not one of the recognized professions, nor can it be said that it partakes of the character of a business or trade. In performing his duties under the agreement the assessee exercised his skill and judgment in making proper appointments and made arrangements for supervising the work done by the 'Staff in the Cash Department of the Bank 's Branches. The remuneration received by him was for due per formance of the duties and also for the guarantee against loss arising to the. Bank out of the acts or omissions of the Cash and other staff of the Bank. Taking into consideration the nature of the duties performed, and the obligations undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by him into the business of the Bank, the assessee may be regarded as following a vocation. The remuneration must therefore be computed under section IO of the Income tax Act and loss of profit suffered in that vocation in any year may be carried forward to the next year and be set off against the profit of the succeeding year. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

The respondent was appointed Treasurer of a Bank in respect of certain of its branches, sub agencies and pay offices. In the previous year corresponding to the assessment year 1950 51, he suffered a loss in performing his duties as Treasurer. But the Incometax Officer, in assessing the respondent to income tax, declared that the loss could not be carried forward to the next year under section 24(2) of the Income tax Act ' 1922, on the ground that it was not a business loss. For the assessment year 1951 52, the Income tax Officer refused Lo allow the loss to be set off against the net profit for the year and brought that amount of profit to tax as remuneration received by the respondent as Treasurer of the Bank. The order was confirmed by the Appellate Assistant Commissioner,. but the Appellate Tribunal held that the remuneration received by the respondent was income arising from the pursuit of a profession or vocation. within the meaning of section 10 of the Act and therefore the loss suffered during the preceding year could be set off against his income in the subsequent year. On a reference the High Court agreed with the Tribunal. In appeal to this Court, HELD:(i) The decision recorded by the Income tax Officer, who. computed the loss in the previous year under a. 24(3), that the loss could. not be set off against the income of the subsequent year was not binding on the respondent, as, under section 24(2), it is for the Income tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. [534 A C (ii)The use of the expressions "serve the Bank" and "in the service of the Bank" in the contract appointing the respondent as Treasurer of the Bank have to be read in the setting of the other covenants and are not decisive of the question whether the respondent was a servant of the Bank. Under the contract the respondent had to procure due performance of the duties of the cash department by employees under his supervision and he was to be responsible for all acts done by them and to make good the loss which might result from any embezzlements theft, fraud, misappropriation, mistake, misconduct, omission, negligent act or default of any such person. in carrying out his duties under the contract he was not to be controlled or supervised by the Bank and the agreement was not liable to summary determination. The contract was therefore for service and the respondent could not be called a servant of the Bank. Therefore, the remuneration received by him was not "salaries" within, the meaning of section 7 of the Act. [538 F 0; 540 E F; 543 B) Section 24(2) confers a statutory right upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward so much of the loss as is not set off under sub section (1) to the following year, and to set it off against his profits and gains, if 532 any, from the same business, profession or vocation for that year. The occupation of a Treasurer is not a profession, nor does it partake of the character of a business or trade. But taking into consideration the nature of the duties performed, and the obligati7on undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by 'him into the business of the Bank, the respondent could be regarded as following a vocation. His remuneration must therefore be computed under section 10 and loss of profit suffered in that location in any Vear could be carried forward to the next year and be set off against the profit of that year. [543 B, C D, F G] Dharangadhara Chemical Works Ltd. vs State of Saurashtra, ; , followed. Shivnandan Sharma vs The Punjab National Bank Ltd. ; and Piyare Lal Adishwal Lal vs Commissioner of Income tax, Delhi , distinguished.

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: Civil Appeal No. 33 of 1953. Appeal by special leave from the Judgment and Order dated the 16th May, 1951, of the High Court of Judicature at Patna in Miscellaneous Judicial Case No. 126 of 1950, arising out of the Order dated the 17th May, 1949, of the Income tax Appellate Tribunal, Calcutta Bench, Calcutta, in I.T.A. No. 147 of 1948 49. sukumar Mitra (section N. Mukherjee with him) for the appellant. C.K. Daphtary,. Solicitor General for India (Porus A. Mehta, with him) for the respondent 1954. February 9. The Judgment of the Court was delivered by DAS J. This is an appeal by special leave from the judgment of the Patna High Court delivered on a reference made by the Income tax Appellate Tribunal under section 66(1) of the Indian Income tax Act. The tribunal referred the following two questions for the opinion of the High Court: 769 1. On the facts and in the circumstances of this case is the surplus of Rs. 13,05,144 arising out of the sale of the plant and machinery of the sugar factory chargeable under section 10 (2) (vii) ? 2. Was the profit of Rs. 15,882 on the sale of stores of the factory taxable under the Income tax Act in the circumstances of this case ? The reference came up for hearing before a Division Bench consisting of Shearer and Sarjoo Prasad JJ. and after a prolonged hearing the learned Judges delivered separate judgments on the27th February. 1951, giving divergent answers to the questions, Shearer J. answering both the questions in the negative and Sarjoo Prasad J. giving an affirmative answer to both of them. The matter thereupon was placed before a third Judge, Ramaswami J. who, after a fresh hearing delivered his judgment on the 16th May, 1951, agreeing with Sarjoo Prasad J. on the first question and with Shearer J. on the second question. The result was that the High Court by a majority decision answered the first question in the affirmative, i.e., against the assessee, and the second question in the negative, i,e. in favour of the assessee. The assessee applied to the High Court for leave to appeal to this court against the High Court 's decision on the first question. The High Court having declined to grant the necessary certificate the assessee applied for and obtained the special leave of this court to prefer the present appeal. The department has not preferred any appeal against the High Court 's decision on the second question and nothing further need be said about that question. The controversy arose in course of the proceedings for the assessment of Pursa Ltd. to income tax for the assessment year 1945 46, the relevant accounting year covering the period between the 1st October, 1943, to 30th September, 1944. Pursa Ltd., was a company incorporated in 1905 under the Indian Companies Act but all its shareholders and directors were residents in the United Kingdom. The business of the 770 company was that of growers of sugarcane, manufacturers of sugar and dealers in sugar. It is common ground that the crushing season for the manufacture of sugar is from December to April of each year. It appears that towards the end of 1942 an attempt was made to sell the entire business of the company but such attempt did not succeed. It appears from the case filed by the respondent in tiffs appeal that in the middle of 1943 the directors of the company commenced negotiations for the sale of the factory and other assets of the company with the ultimate object of winding up the company. From the correspondence, affidavit and other materials placed before the tribunal and referred to by Sarjoo Prasad J. in his judgment it appears that on the 9th August, 1943, an inventory was prepared and a firm offer was received from Dalmia lain & Company Ltd., for the purchase of the factory and stores as on that date. This offer was on the 16th August, 1943, communicated by cable to the directors in England. On the 20th August, 1943, the directors, asked the local managers in India to proceed with the matter in anticipation of the sanction of the shareholders which the directors expected to obtain at an extraordinary general meeting to be held very shortly. That meeting, however, was held on the 8th October, 1943, i.e., 8 days after the accounting year had started. , At that meeting the firm offer of Dalmia lain & Company Ltd. was accepted and a concluded agreement for sale came into existence. Thereafter instructions were given to the solicitors to draw up the necessary documents. On the 7th December, 1943, a written memorandum of agreement was executed whereby the company agreed to sell and demise to Dalmia Jain & Company Ltd., free from all mortgages and charges at and for the price of rupees twenty eight lacs all the lands, buildings, machinery and plant and all vats, reservoirs, cisterns, pumps, machinery, engines, boilers, plant, implements, utensils, tramways, furniture, stores, articles and things as on the ninth day of August, one thousand nine hundred and forty three (subject to subsequent use and consumption in the ordinary course 771 of business) used in connection with the said sugar factory, but excepting stocks of manufactured sugar and stocks of grain in godown on the ninth day of August, one thousand nine hundred and forty three and all stores and other articles bought or received by the company after the date. Dalmia Jain & Company Ltd., paid the sum of rupees twenty eight lacs on the same day and on the 10th December, 1943, they got possession of the factory. On the date of the aforesaid sale, the company possessed sugar stock valued at rupees six lacs which was excluded from the sale. This stock of sugar the company continued to sell up to June, 1944. It is said that the said stock of sugar was excluded because at the time it was not possible to know at what date such a sale would be concluded and the sugar produced in 1943 had to be sold by and through the exclusive selling agents of the company under a contract entered into with them. It is, however, not disputed that between the 9th August, 1943, when the firm offer was obtained and the 10th December, 1943, when possession of the factory was made over to Dalmia Jain & Company Ltd., the company never used the machinery and plant for the purpose of manufacturing sugar or for any other purpose except that of keeping them in trim and running order. Indeed, throughout the accounting period the machinery and plant were not used by the company. The company went into voluntary liquidation on the 20th June, 1945. The reason for the delay in putting the company into liquidation is said to have been caused by considerable legal difficulties with regard to the transfer of certain mokarari lands belonging to the company. The liquidators appointed by the shareholders of the company represented the company in the matter of proceedings for assessment of the company for the assessment year 1945 46. In the course of these assessment proceedings the Income tax Officer on the 21st February, 1947, wrote a letter to the liquidators asking for elucidation on certain points. Amongst other things, the Income tax Officer wanted to know the liquidators ' objection why the company 's activities during the previous 772 year might not be treated as amounting to a realisation of assets on impending liquidation rather than to the carrying on of business within the meaning of the Income tax Act. To this letter an answer was sent by the liquidators . on the 19th March, 1947, pointing out that the company had gone into liquidation on the 20th June, 1945, and that in view of the date of liquidation the liquidators could not agree that the company was not carrying on business during the year ended 30th September, 1944, and they further pointed out that the various debits contained in the sugar factory accounts were those incurred in carrying on the company 's business. By his letter dated the 17th May, 1947, the Income tax Officer claimed that large profits which had been made by the company on the sale of their machinery and plant were taxable under the second proviso to section 10 (2)(vii)of the Income tax Act and called upon the liquidators to retain sufficient funds and assets in their hands to meet the heavy tax liabilities that might eventually arise and also to warn the shareholders accordingly. He also asked for certain information which, however, the liquidators did not furnish. The liquidators, in their letter in reply dated the 22nd May, 1947, did not agree that the profits were taxable, for the profits to which reference had been made were not profits arising from a business carried on by the company but were profits arising from the company ceasing to carry on business. The Income tax Officer, however, by his order dated the 21st June, 1947, held that the profits of the sale of machinery and plant were liable to assessment under section 10 (2)(vii)of the Act and added a sum of Rs. 13,05,144 to the profits. The Appellate Assistant Commissioner of Income tax having dismissed the liquidators ' appeal on the 30th January, 1947, the liquidators went up on further appeal to the Income tax Appellate Tribunal. By its order dated the 17th May, 1949, the tribunal dismissed that appeal. Upon an application under section 66(1) of the Act the tribunal stated a case to the High Court referring the two. questions herein before 773 set out. The subsequent history of the matter has already been mentioned and needs no reiteration. The relevant portion of section 10 of the Income tax Act as amended by Act VI of 1939was as follows : "10 (1) The tax shall be payable by anassessee under the head "Profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely : (i) . . . . . . . (ii) . . . . . . . (iii) . . . . . . . (iv) in respect of insurance against risk of damage or destruction of buildings, machinery, plaint, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid; (v) in respect of current repairs to 'such buildings, machinery, plant, or furniture, the amount paid on account thereof; (vi) in respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed: (vii) in respect of any machinery or plant which has been sold or discarded, the amount by which the written down value of the machinery or plant exceeds the. amount for which the machinery or plant is actually sold or its scrap value: Provided that such amount is actually written off in the books of the assessee: Provided further that where the amount for which any such machinery or plant is sold exceeds the written down value, the excess shall be deemed to be profits of the previous year in which the sale took place; . . . . . . . . . . . . . . . ." 774 It is necessary to bear in mind the meaning and import of the provisions of section 10 (2)(vii)in so far as they apply to the present case. Under section 10 tax is payable by an assessee "in respect of the profits or gains of any business, profession or vocation carried on by him." "Business" is defined by section 2, sub section (4) as "including any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture. " As pointed out by the Judicial Committee in Shaw Wallace & Co. 's case(1) the fundamental idea underlying each of these words is the continuous exercise of an activity and the same central idea is implicit in the words "carried on by him" occurring in section 10 (1)and those critical words are an essential constituent of that which is to produce the taxable income. Therefore, it is clear that the tax is payable only in respect of the profits or gains of the business which is carried on by the assessee. Sub section (2)permits allowances to be made before the taxable profits are ascertained. Proviso (2)to clause (vii) of that sub section on which the income tax authorities have relied makes the excess of sale proceeds over the written down value of "any such machinery or plant" to be deemed to be profits of the previous year in which the sale took place. Any such machinery or plant in the proviso clearly refers to the machinery or plant in respect of which the allowance is to be given under that clause. Although the word "such" was not used in the body of clause (vii), the scheme of sub section (2) which is apparent from the other clauses of allowances e.g., (iv), (v) and (vi), clearly indicates that the machinery or plant referred to in clause (vii) must be the same as those mentioned in the earlier clauses, i.e., such machinery or plant as were "used for the purposes of the business, profession or vacation." Indeed, the position has been made clear and placed beyond any doubt by the subsequent amendment of 1946 which added the word "such" in clause (vii). The words"used for the purposes of the business" obviously [1] L. R, 59 I.A. 206 at p. 213. 775 mean used for the purpose of enabling the owner to carry on the business and earn profits in the business. In other words, the machinery or plant must be used for the purpose of that business which is actually carried on and the profits of which are assessable under section 10 (1). The word "used" has been read in some of the pool cases in a wide sense so as to include a passive as well as active user. It is not necessary, for the purposes of the present appeal, to express any opinion on that point on which the High Courts have expressed different views. It is, however, clear that in order to attract the operation clauses (v), (vi) and (vii) the machinery and plant must be such as were used, in whatever sense that word is taken, at least for a part of the accounting year. If the machinery and plant have not at all been used at any time during the accounting year no allowance can be claimed under clause (vii) in respect them and the second proviso also does not come into operation. In its statement of the case, after referring to its decision that the profits on the sale of machinery and plant were assessable under section 10 (2)(vii), the tribunal proceeded to state: "This decision was based on two considerations. First, that as admitted by the applicant company the company had been carrying on its business up to the date of the sale of the machinery, namely, 7th December, 1943. 'The tribunal was of the opinion that as the applicant company had not ceased to carry on its business till the date of the sale of the machinery, it must be held that the sale of the 'machinery was a part of the applicant company 's carrying on of the business. The second reason for the decision of the tribunal was that the applicant company did not sell its sugar stocks amounting to over Rs.6,00,000, on 7th December, 1943. The applicant company s plea that the sugar stocks could not be sold as the applicant company had sole agents for the sale of sugar, was not accepted by the tribunal. The ' Income tax Appellate Tribunal found that sugar continued to be sold for more than 6 months 776 after the sale of the machinery and substantial expenses on establishment and general charges continued to be incurred. From this the Income tax Appellate Tribunal concluded that the sugar stocks had not been sold on 7th December; 1943, purposely in order to sell these to the best advantage later on. This, the Income tax Appellate Tribunal held, showed that the applicant company carried on business even subsequent to the sate of machinery on '7th December, 1943." Although the High Court will not disturb or go behind the finding of fact of the tribunal, it is now well settled that where it is competent for a tribunal to make findings in fact which are excluded from review, the appeal court has always jurisdiction to intervene if it appears either that the tribunal has misunderstood the statutory language because the proper construction of the statutory language is a matter of law or that the tribunal has made a finding for which there is no evidence or which is inconsistent with the evidence and contradictory of it. [See Lord Normand in Commissioners of Inland Revenue vs Fraser(1)]. It appears to us that the tribunal misdirected itself in law as to the meaning and import of the relevant provisions of section 10 of the Act. ]t completely overlooked the fact which is plainly in evidence on the record that the machinery and plant which were sold had not at all been used for the purposes of the business carried on in the accounting year and consequently the second proviso to section 10 (2) (vii) could have no application to the sale proceeds of such machinery and plant. In fact the entire decision of the tribunal was vitiated by its failure to keep in view the true meaning and scope of section 10 (2) (vii) and cannot, therefore, be supported. It further appears to us that in the statement of the case the tribunal was not merely stating something in the nature of a primary fact but was also drawing a conclusion which is to a certain extent contrary to the primary finding. As is stated clearly in the statement of the case, the decision of the tribunal was based on (1) at p. 501. 777 two considerations. The first consideration was rounded on an admission by the liquidators that the company had been carrying on its business up to the date of the sale of the machinery on the 7th December, 1943. This admission is quite consistent with the case that the company was only selling its stock of sugar and not doing any business of manufacture of sugar. Indeed, the manufacturing process does not begin until December of each year and the memorandum of agreement was made on the 7th December, 1943, and possession was delivered to the purchaser on the 10th December, 1943. It is nobody 's case and it has not been found that the company had manufactured any sugar during the whole of the accounting year. Therefore, this finding that the company carried on its business up to the 7th December, 1943, certainly does not indicate that the company was also carrying on any business of 'growing sugarcane or manufacturing sugar by the use of the machinery or plant in question. The second finding that the company carried on business even after the sale of the machinery and the plant clearly indicates that that business had nothing to do with the machinery or plant. Both the findings, therefore, are inconclusive. The matter, however, does not rest there. It appears to us that the findings of fact, taken literally, cannot support the decision of the tribunal. If, as held by the tribunal, "the sale of the machinery was a part of the applicant company 's carrying on of the business" then the sale must be regarded as an ordinary operation of such business and consequently the profits arising out of such ordinary business operation would be assessable under the provisions of section 10 (1) and it would not be necessary to have recourse to the statutory fiction created by the second proviso to clause (vii)under which the excess of the sale proceeds over the written down value is to be deemed to be profits of the business. If the profits on the sale of the machinery and plant are to be made assessable under the second proviso, as has ' been done by the tribunal, then it must be conceded that these deemed profits were not in reality the profits of the business carried on by the (2) 24 Tax Cases 498 at p. 501. 13 95 section C.I./59 778 company and, therefore, the sale transaction which brought in these profits was not in fact part of the company 's business, which conclusion again will be inconsistent with the finding of fact if the business is not understood as limited only to the selling of sugar. For reasons stated above, it appears to us that having misdirected itself in law as to the scope and effect of the relevant portions of section 10 of the Act the tribunal did not approach the facts from a proper angle and, further, that its findings cannot, in the circumstances of this case, be given such sanctity as would exclude the same from review by the High Court or this court. Turning to the facts to be gathered from the records it is quite clear that the intention of the company was to discontinue its business and the sale of the machinery and plant was a step in the process of the winding up of its business. The sale of the machinery and plant was not an operation in furtherance of the business carried on by the company but was a realisation of its assets in the process of gradual winding up of its business which eventually culminated in the voluntary liquidation of the company. Even if the sale of the stock of sugar be regarded as carrying on of business by the company and not a realisation of its assets with a view to winding up, the machinery or plant not being used during the accounting year at all and in any event not having had any connection with the carrying on of that limited business during the accounting year, section 10 (2) (vii) can have no application to the sale of any such machinery or plant. In this view of the matter, the answer to the first question should be in the negative and we answer accordingly. The result is that this appeal is allowed and the respondent shall pay the costs of the appellants both in this court and in the High Court. Appeal allowed. Agent for the appellant:B. N. Ghose.

The fundamental idea underlying the words used in the definition of "business" in section 2(4) of the Income tax Act the continuous exercise of an activity and the same central idea is implicit in the words "carried on by him" occurring in 10(1) and those critical words are an essential constituent that which is to be produce the taxable income, and therefore the 768 tax is payable only in respect of the profits or gains of the business which is carried on by the assessee. That under clause (vii) of section 10(2) the machinery and plant must be such as were used at least for a part of the accounting year. As the machinery and plant of the sugar factory which were sold had not at all been used for the purpose of business during the accounting year, the second proviso to s.10. (2) (vii) could have no application and the assessees were not liable. Although the High Court will not disturb or go behind a finding of fact of the Tribunal, it is well settled that where it is competent for a Tribunal to make findings of fact which are excluded from review, the appeal court has always jurisdiction to intervene if it appears either that the Tribunal has misunderstood the statutory language because the proper construction of the statutory language is a matter of law or that the Tribunal has made a finding for which there is no evidence or which is inconsistent with the evidence and contradictory of it. Commissioner of Income tax vs Shaw Wallace and Company (L.R. 59 I.A. 206), and Commissioners o/Inland Revenue vs Fraser (24 Tax Cases 498) referred to.

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riminal Appeals Nos. 65 and 66 of 1952, 5 and 19 of 1953 and Petitions Nos. 170 of 1952, 19 and 57 of 1953. Appeals from Orders, dated the 9th April, 1952, of the High Court of Judicature at Bombay in Criminal Applications Nos. 707 and 708 of 1951, from the Judgment and Order, dated the 15th December, 1952, of the High Court of Judicature at Bombay in Criminal Application No. 1310 of 1952; from the Judgment and Order, dated the 29th November, 1952, of the Judicial Commissioners Court Vindhya Pradesh, Rewa, in Criminal Miscellaneous No. 49 of 1952; and Petitions under article 32 of the Constitution of India. J.B. Dadachanji and Z. F. Bootwala for the appellants in Criminal Appeals Nos. 65 and 66 of 1952 and 5 of 1953. C.K. Daphtary Solicitor General for India(G. N. Joshi, with him) for respondents Nos. I and 2 in 121 934 Criminal Appeals Nos. 65 and 66 of 1952 and respondent No. 1 in Criminal Appeal No. 5 of 1953. K.B.Asthana, for the appellant in Criminal Appeal No. 19 of 1953. C.K. Daphtary, Solicitor General for India, (Porus A. Mehta and G. N. J08hi, with him) for the respondent in Criminal Appeal No. 19 of 1953. section P. Sinha (Sri Narain Andley, with him) for the petitioners in petition No. 170 of 1952. Gopalji Mehrotra for respondent No. I in petition No. 170 of 1952. C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for respondent No. 3 in petition No. 170 of 1952. section P. Sinha (section N. Mukherji, with him) for petitioner in petition No. 19 of 1953. Gopalji Mehrotra for respondent No. I in petition No. 19 of 1953. G. N. Joshi for respondent No. 3 in petition No. 19 of 1953. H.J. Umrigar, amicus curiae, for the petitioner in petition No. 57 of 1953. C. K. Daphtary, Solicitor General for India (G. N. J08hi, with him) for the respondents in petition No. 57 of 1953. February 15. The Judgment of Mahajan C.J., Mukherjea, Vivian Bose and Ghulam Hassan JJ. was delivered by Ghulam Hasan J. Das J delivered a seperate judgment. Criminal Appeals Nos. 65 and 66 of 1952. GHULAM HASAN J. This batch of appeals raises a common question of the constitutional validity of section 7 of the Influx from Pakistan (Control) Act (XXIII of 1949). Section 3 of the same Act is also assailed on behalf of some of the appellants but for the purpose of deciding these appeals it will not be necessary to deal with the latter question. Criminal Appeals Nos. 65 and 66 of 1952, which are directed against the judgment and order of the High Court of Judicature at, Bombay in two petitions under article 226 of the Constitution praying for the issue of 935 a writ of mandamus requiring the respondent not to remove them from India on the ground that the impugned section 7 is void may be treated as the leading case which will govern the other appeals. The facts of each of these appeals are slightly different but they proceed upon the common assertion that the appellants are citizens of the Indian Republic. This fact was assumed in the leading case but it is not, disputed that the status of the appellants as Indian citizens in all the cases has not been investigated and determined by any of the courts below against whose decision the appeals have been brought. Having heard the learned counsel appearing in support of the appeals and the learned Solicitor General we have reached the conclusion that section 7 is void in so far as it infringes the right of a citizen of India under article 19(1) (e) of the Constitution. The Act in question received the assent of the Governor General on April 22, 1949, and was published in the Gazette of India Extraordinary on April 23. It is a short Act containing nine sections. It is intituled an Act to " control the admission into, and regulate the movements in, India of persons from Pakistan ". The preamble opens with the words "Whereas it is expedient to control the admission into, and regulate the movements in, India of persons from Pakistan. " Section 2 (b) defines " officer of Government " as any officer of the Central Government and 2 (c) defines "permit" as a "Permit issued or renewed or the period whereof has been extended in accordance with the rules made under this Act. " Section 3 says II No person shall enter India from any place in Pakistan, whether directly or indirectly, unless (a) he is in possession of a permit or (b) being a person not domiciled in India or Pakistan, he is in possession of a valid passport as required by the Indian Passport Act, 1920 (XXXIV of 1920), or (c) he is exempted from the requirement of bein in possession of a permit by or in accordance with the rules made under this Act. " 936 Section 4 empowers the Central Government, by notification in the Official Gazette, to make rules: (a) prescribing the authorities by which and the conditions subject to which permits may be issued or renewed or the period thereof extended, the condition to be satisfied by the applicants for such permits and the forms and classes of such permits; (b) regulating the movements in India of any person who is in possession of a permit; (c) providing for the exemption, either absolutely or on conditions, of any person or class of persons from the requirement of being in possession of a permit or from the operation of any rule made under the section ; and (d). . . . . . . . . . . section 5 is the penal section which says " (a) Whoever enters India in contravention ' of the provisions of section 3, or having entered India contravenes the provisions of any rule made under section 4, or commits a breach of any of the conditions of his permit, shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both. " Section 6 confers power of arrest upon an,officer of Government. Section 7 is as follows: " Without prejudice to the provisions contained in section 5, the Central Government may, by general or special order, direct the removal from India of any person who has committed, or against whom a reason , able SUSPICION exists that he has committed, an offence under this Act, and thereupon any officer of Government shall have all reasonable powers necessary to enforce such direction. " Section 8 provides for protection to persons acting in good faith and section 9 repeals the Influx from, Pakistan (Control) Ordinance, XXXXIV of 1948. The use of the word 'person ' in section 7, read with the title and preamble of the Act leaves no doubt that. the Act applies to citizens and non citizens alike. So 937 far as a non citizen is concerned, it is not contended before us3 that the executive Government has no authority to direct his removal from India and the only contention raised before us is whether the Central Government has any power to direct the removal of an Indian citizen on either of the grounds mentioned in section 7. Section 7, it is contended, confers upon the Central Government unfettered power to direct the removal from India not only of a person who has committed an offence punishable under section 5 of the Act but also one against whom a reasonable suspicion exists that he has committed such an offence. That an Indian citizen visiting Pakistan for any purpose whatsoever and returning to India may be required to produce D, permit or passport as the case may be before he can be allowed to enter the country, may well be. regarded as a proper restriction upon entry but to say that if he enters the country without a permit or on an invalid permit, or commits a breach of any of the conditions of the permit he may, on conviction for such offence, be ordered to be removed from the country is tantamount to taking away his fundamental right guaranteed under article 19(1) (e), " to reside and settle in any part of the territory of India. " The order is sought to be supported by the learned Solicitor General on the ground that it falls within exception (5) of article 19. The proposition that the order imposes in the interest of the general public a reasonable restriction on the exercise of the. right conferred upon an Indian citizen to reside and settle in any part of the territory of India is hardly statable. It is possible to conceive of an Indian citizen being guilty of serious prejudicial Acts such as espionage and disloyalty to his country in which case he may render himself liable to the gravest penalty which the Government may think fit by law to impose upon him but it would be repugnant to all notions of democracy and opposed to the fundamental rights guaranteed in Part III of the Constitution to order his expulsion from the country, for to hold otherwise would be tantamount to destroying the right of citizenship conferred by Part II of the, Constitution. This 938 result is permissible only by recourse to article 11 of the Constitution. Again it will be noticed that section 7 imposes the penalty of removal not only upon a conviction under section 5 but goes further and brings about the same result even where there is a reasonable suspicion entertained by the Central Government that such an offence has been committed. The question whether an offence has been committed is left entirely to the subjective determination of the Government. The inference of a reasonable suspicion rests upon the arbitrary and unrestrained discretion of the Government, and before a citizen is condemned, all that the Government has to do is to issue an order that a reasonable suspicion exists in their mind that an offence under section 5 has been committed. The section does not provide for the issue of a notice to the person concerned to show cause against the order nor is he afforded any opportunity to clear his conduct of the suspicion entertained against him. This is nothing short of a travesty of the right of citizenship. The learned Solicitor General argued that the provision must be viewed in the back ground of the events which took place at the time of the partition and the unsatisfactory relations existing between India and Pakistan. up to the present day. Even so the penalty imposed upon a citizen by his own Government merely upon a breach of the permit Regulations, however serious it may be and, more, upon a reasonable suspicion only by the executive authority of his having violated the conditions of the permit is utterly disproportionate th the gravity of the offence and is in our opinion indefensible. A law which subjects a citizen to the extreme penalty of a virtual forfeiture of his citizenship upon conviction for a mere breach of the permit Regulations or upon a reasonable suspicion of having committed such a breach can hardly be justified upon the ground that it imposes a reasonable restriction upon the fundamental right to reside and settle in the country in the interest of the public. The Act purports to control admission into and regulate the movements in India of persons entering from Pakistan but section 7 oversteps the limits of control 939 and regulation when it provides for removal of a citizen from his own country. To use the language of this court in Chintaman Rao vs The State of Madhya Pradesh and Ram Krishna vs The State of Madhya Pradesh(1), " The effect of the provisions of the Act, however, has no reasonable relation to the subject in view but is so drastic in scope that it goes much in excess of that object. It may be said that the sentry on guard at any of the check posts on the frontier between the two countries can prevent not only unauthorised entry of a citizen by force but can also throw him out if the person has managed to enter surreptitiously. Exactly what the sentrys ' duties are was not argued before us. They would naturally vary according to the circumstances and the orders which be receives but ordinarily we apprehend that the duty of a sentry at the border would be to prevent as far as lay in his power un authorised entry into India. If any person claims to have the right to enter, the sentry 's duty would be to hand him over to the Commander of the Guard and normally it would be the duty of that Commander to hand him over to the proper authority empowered to determine the right which he claims. In the case of an unauthorised entry, ordinarily the duty of the sentry is to arrest a man and hand him over to the proper authority for punishment and in extreme cases he may have the right to shoot the person who does not halt on his command and explain his presence at the outpost. In normal circumstances we doubt if the sentry would have the right to forcibly expel a man who crosses the border. The learned Chief Justice (Chagla C. J.) took the view that section 7 is consequential to section 3 and held that if section 3 controlling admission by means of a permit is valid, section 7 must be held to be equally valid. This argument is fallacious. In the first place, section 7 is by no means wholly consequential to section 3. The first part no doubt renders the person concerned liable to removal upon conviction under section 5 but further empowers. the Central Government (1) ; 940 to pass the same order independently of these provisions even where there is no conviction and a reasonable suspicion exists that an offence has been committed. Assuming, however, that section 7 is consequential to section 3 it gives no opportunity to the aggrieved person to show cause against his removal. There is no forum provided to which the aggrieved party could have recourse in order to vindi cate his character or meet the grounds upon which it is based. Neither the Act nor the rules framed thereunder. indicate what procedure is to be followed by Government in arriving at the conclusion that a breach of section 3 or of the rules under section 4 has taken place, In Shabbir Hussain vs The State of Uttar Pradesh and Another(1) the Allahabad High Court held that a law allowing the removal from a territory of India of any citizen is in contravention of article 19 (1) (d) and(e) of the Constitution and is void in view of article 13(1). The order which was challenged before them was one passed under section 7 and was set aside. In Criminal Writ No. 147 of 1951 decided on December 11, 1951, a Bench of the Punjab High Court (Weston C. J. and Harnam Singh J.) while setting aside the order under section 7 against a citizen of India who had entered India without a permit and was first convicted and then ordered to be externed observed: "The powers of removal or banishment given by section 7 of the Influx from Pakistan (Control) Act, 1949, connot be invoked against citizens of India. No doubt, she committed an offence under section 3 of that Act which applied to all persons, but that cannot justify her removal even though her entry may have been contrary to the provisions of the Act. " We are not prepared to accede to the contention urged by the Solicitor General that a citizen of India who returns to the country without a permit or without a valid permit commits such a grave offence as to justify his expulsion from the country. The object of the Act is, not to deport Indian nationals (1) A.I.R. 1952 All. 941 committing a breach of the permit or passport Regulations but merely to control admission into and regulate movements in India of persons from Pakistan and therefore there is no substance in the argument that section 7 was intended to achieve the objective of expelling Indian citizens, by and large, if they brought themselves within the mischief of section 3. It was faintly contended that the order of physical, removal from India, in addition to the punishment imposed under section 5 of the Act, amounted to what may be called " double jeopardy " and is in conflict with article 20 (2) of the Constitution. The short answer to this contention is that there is no second prosecution for the same offence and therefore no question of double jeopardy arises. See Maqbool Hussain vs The State of Bombay etc.(1). As a result of the foregoing discussion we declare section 7 to be void under article 13(1) in so far as it conflicts with the fundamental right of a citizen of India under article 19(1) (e) of the Constitution and set it aside. The order will, however, operate only upon proof of the fact that the appellants are citizens of India. The case will, therefore, go back to the High Court for a finding upon this question. It will be open to the High Court to determine this question itself or refer it to the court of District Judge for a finding. Parties will be given full opportunity to file affidavits or give other evidence which they may wish to produce. Criminal Appeal No. 5 of 1953. GHULAM HASAN J. The appellant in this case is a resident of Godhra, District Panchmahals, in the State of Bombay. He went to Pakistan in Marc 1948, and returned to India on May 30, 1949, after obtaining a permit for permanent return to India from the High Commissioner for India. In January, 1950, he was prosecuted under section 5 of Act XXIII of 1949 for having obtained a permit which was not in accordance with the provisions of the Act. The prosecution was withdrawn after 21 years. Subsequently on December 5, 1952, he was served with a notice (1) ; 122 942 ordering him to leave India for Pakistan within 10 days else he would be bodily removed to the Indo Pakistan border. Thereupon the appellant filed a petition under article 226 contending that section 7 was contrary to his fundamental rights under articles 14 and 19 of the Constitution and that the same provided no opportunity to the appellant to put his case before the Government officers, nor was any such opportunity afforded to him. He asserted that he was a citizen of India. The application was summarily dismissed on December 15, 1952, whereupon leave to appeal to this court was granted under article 132(1) of the constitutional. As this appeal also raises the question of the constitutional validity of section 7, it will be governed by the decision which we have arrived at in appeals Nos. 65 and 66 of 1952. Criminal Appeal No. 19 of 1953. GHULAM HASAN J. The appellant, Haji Faqir Ahmad, is a resident of Rewa in Vindhya Pradesh and alleges that he is a citizen of India. He was prosecuted under section 5 of Act XXIII of 1949 on the ground that he entered India from Pakistan without a permit and convicted and sentenced. Thereafter he was by an order passed under section 7 bodily removed out of India. His father applied under article 226 of the Constitution and section 491 of the Code of Criminal Procedure for setting aside the order. The learned Judicial Commissioner dismissed the application summarily holding that section 7 was not ultra Vires the Constitution. Mr. Asthana, who appeared on behalf of the appellant, raised a further question that the order was void under article 14 inasmuch as it discriminated against members of a particular community coming from Pakistan. There is no warrant for this contention. The Act applies to citizens as well as non citizens. It applies to all communities irrespective of caste or creed. It is contended that the Act must be held to be discriminatory not only by virtue of its provisions but because of the discriminatory manner in which those provisions have been applied. This argument is 943 to be mentioned only to be rejected, for there is no material whatsoever placed before us to justify the statement. The case in Yick W o vs Peter Hopkins (1) is wholly inapplicable to the facts of the present case. We accordingly reject the contention. This case will also be governed by the decision in Appeals Nos. 65 and 66 of 1952. Petition No. 170 of 1952. AND Petition No. 19 of 1953. GHULAM HASAN J. These petitions under article 32 of the Constitution raise the constitutional validity of section 7 of the Influx from Pakistan (Control) Act, XXIII of 1949. Mr. section P. Sinha, who appears for the petitioners, withdraws these petitions and undertakes to file two petitions under article 226 of the Constitution within a fortnight from this day before the High Court. When these have been filed, they will automatically be governed by the decision given in Ap peals Nos. 65 and 66 of 1652. No other order is called for. The petitions are allowed to be withdrawn. Petition No. 57 of 1953. GHULAM HASAN J. This a petition under article 32 of the Constitution by Inamullah Khan alias Qamar Jamali for the issue of a writ in the nature of habeas corpus directing that the petitioner, who is illegally arrested and detained be brought before the court and set at liberty and for the issue of a writ of certiorari calling for the said order for arrest and detention and the relevant papers and for setting them aside as being void and in operative. It is further prayed that the State of Bhopal and the Superintendent of Central Jail,, Bhopal, where he was being detained be restrained from putting into effect the said order. The petition was made on March 11, 1953. It is stated that the petitioner is a citizen of India having been born in Bhopal in 1922. He was employed in Bhopal for 5 years immediately preceding (1) ; 944 the commencement of the Constitution of India. He also edited a weekly paper "Tarjuman" from Bhopal. His name appears as. a voter in the voters" list of the Bhopal Legislative Assembly (1951 52), as well as in the electoral roll of the Municipal Board, Bhopal. The was arrested on November 24, 1952 by the Sub Inspector of Police at lbrahimpura, Bhopal, under section 7 of the Influx from Pakistan (Control) Act XXIII of Pakistan. At the time of the arrest the petitioner was being tried under section 448, Indian Penal Code, in the court of 1st Class Magistrate, Bhopal, and was on bail. The petitioner alleges that he never went to Pakistan, nor entered India without a permit and was never tried and convicted under the Influx from Pakistan (Control) Act of 1949. He challenges the order under section 7 as being void under article 19(d) and (e) and articles 21 and 22. The fact that the petitioner is a resident of Bhopal and was employed in the State is not denied on behalf of the State. The affidavit on behalf of the State mentions that the petitioner had gone to Pakistan in may, 1952, and returned in August, 1952, without a permit. He was arrested on November 24, 1952, without any prior notice but was told at the time of the arrest that he was to be removed out of India. The petitioner filed an application through his uncle before the Judicial Commissioner, Bhopal, under article 226 on November 25, 1952, challenging. the order. The Judicial Commissioner granted an interim stay order on the same day. The petition was dismissed on February 23, 1953, and the interim order was vacated on March 10, 1953. It is admitted that an oral request was made to the Judicial Commissioner for leave to appeal to this court and it was prayed that pending the grant of leave the order of stay should continue. Leave was refused on the same day and the stay order was vacated. There is an affidavit by the Chief Secretary of the State admitting that the petitioner on, the same day banded an application to the Superintendent of Jail 945 addressed to this court. The Superintendent of Jail sent it to the Chief Secretary on March 13, 1953. It was put up before him on the 14th when he forwarded it to the Law Department for opinion on March 16. The petition was returned to him on the 19th with the remark that it should be forwarded to the Supreme Court. It was sent to this ' court on ;March 22. On the same day a telephonic communication was sent, by the Registrar of this court through the States Ministry directing that the petitioner should be detained if he was still in India, but it appears that the petitioner had been handed over to the Rajas than Police at Kotah on March 12, 1953, and a reply was received by the Inspector General of Police, Jaipur, that the petitioner had crossed the border on March 18, 1953. The Superintendent of Jail has also filed an affidavit supporting the Chief Secretarpand has admitted that it was wrong on his part not to have sent the, petition submitted by the prisoner immediately to this court and that he in good faith believed that as the order for stay had been vacated by the Judicial Commissioner, he should first send it to the Registrar of that court. It is obvious that the Superintendent was grossly in error and his action in not submitting the petition resulted in the unlawful removal of the petitioner out of the country. He, has made amends by tendering an unqualified apology and nothing further need be said about it. In Ebrahim Wazir Mavat vs The State of Bombay and Others and Noor Mohammad Ali Mohammad vs The State of Bombay and Others (Criminal Appeals Nos. 65 and 66 of 1952) in which we have just delivered judgment we have held that section 7 of the Act is void as against a citizen of India being. , an encroachment on his fundamental right under article 19 (1) (e) of the Constitution. Following that decision we hold that the order of removal of the petitioner is liable to be set aside. Mr. Umrigar, who appeared for the petitioner, pointed out that the Judicial Commissioner has already held that the petitioner is a citizen of India and that it will serve no useful purpose by remanding 946 the case to him for an inquiry into the question. The Solicitor General on behalf of the Union of India has read to us the order of the Judicial Commissioner and admits that this is so. It is, therefore, not necessary to adopt the course that we have taken in the aforesaid a peals involving the validity of section 7. We accordingly hold that the order passed against the petitioner is void and set it aside. Mr. Umrigar requests that the order should be communicated to the petitioner through the High Commissioner for India in Karachi to whom the petitioner sent a representation praying that he should be allowed to return to India. This request is granted. Criminal Appeals Nos. 65 and 66 of 1952, No, 5 of 1953 and No. 19 of 1953 and Petitions No. 170 of 1952, No. 19 of 1953 and No. 57 of 1953. DAs J. I regret I am unable to agree with the judgment just delivered. Four Criminal Appeals namely, Criminal Appeals Nos. 65 and 66 of 1952, No. 5 of 1953 and No. 19 of 1953 and three Criminal Miscellaneous Petitions, namely Petition No. 170 of 1952, No. 19 of 1953 and No. 57 of 1953, were posted for hearing and were heard by us one after another. In each one of those appeals and petitions the appellants or the petitioners, as the case may be, challenged the constitutional validity of the Influx from Pakistan (Control) Act,1949 (Act XXIII of 1949). Learned advocate appearing in support of petitions No. 170 of 1952 and No. 19 of 1953 asked for leave to withdraw them with liberty to file fresh ' petitions in the High Court. Such leave having been given nothing further need be said about those two petitions. The facts of each of the remaining appeals and the remaining petition have been set out in the judgment just delivered,, and need not be repeated. Suffice it to say that the appellants in Appeals Nos. 65 and 66 of 1952 first came to India from Pakistan on temporary permits issued by the High Commissioner for India in Pakistan but stayed on after the expiry of the 947 period and were convicted under section 5 of the Act. Later on they returned ' to Pakistan on a temporary permit issued by the High Commissioner for Pakistan in India and eventually came back to India on a permanent permit issued by the High Commissioner for India in Pakistan. That permanent permit was cancelled on the. allegation that it had been obtained on the strength of a "no objection" certificate which had been obtained by them by the suppression of material facts, namely, that they had previously come. to India on a temporary permit. The appellant in Appeal No. 5 of 1953 came to India from Pakistan on a permanent permit which was subsequently can celled on the allegation that it had been obtained by fraud. The appellant in Appeal No. 19 of 1953 came to India from Pakistan without any permit and was prosecuted and convicted under section 5 of the Act and later on arrested and sent back to Pakistan. The petitioner in Petition No. 57 came to India without any permit at all. On this petitioner as well as on the appellants orders had been made under section 7 of the impugned Act to the effect that unless they left India within the time specified in the respective orders they would be bodily removed from India. These orders were made on the ground that they had entered India in violation of section 3 of the Act and/ or the rules and order made thereunder. Each of these persons claimed that they were citizens of India and complained that the orders made against them violated their fundamental rights under Chapter III of the Constitution of India. It will be recalled that on the 15th August, 1947, there was a partition of India and two Dominions were formed under the Indian, Independence Act, 1947. A grave emergency arose on the partition of India resulting in mass migration of population from one Dominion to the other accompanied by riots, arson, murder, rape and loot. Intense bitterness and hatred were generated in the minds of the people of one Dominion against those of the other Dominion. Even in one Dominion there was suspicion in the 948 minds of the members of one community against those of the other. In those circumstances the uncontrolled and indiscriminate entry of persons, Hindu or Muslim, from Pakistan into India was naturally regarded as fraught with the possibility of espionage and sabotage the prevention of which was essential for the security of the Dominion of India. Further an uncontrolled entry of large numbers of people was calculated to place and in fact placed a tremendous strain on the economy of India and on the law and order situation in the country. It was in order to prevent such result that it was necessary to exercise some control over such influx of persons from Pakistan into India. Accordingly, the Influx from West Pakistan (Control) Ordinance (XVII of 1949) was promulgated on the 19th July 1948, by the Governor General in exercise of the powers conferred on him by section 42 of the Government of India Act, 1935. The preamble to that Ordinance recited that an emergency had arisen which made it necessary to control the admission into and regulate the movements in India of persons from Pakistan. Thereafter the Influx from Pakistan (Control) Ordinance (XXXIV of 1948) was issued on the 10th November, 1948, replacing the earlier Ordinance. This Ordinance applied to persons entering into India from both West Pakistan and East Pakistan. It substantially reproduced all the sections of the previous Ordinance . Finally, on the 22nd April, 1949, the Influx from Pakistan (Control) Act (XXIII of 1949) replaced the second Ordinance. Sections 3 and 7 of this Act substantially reproduced the provisions of sections 3 and 7 of the Ordinance. The Permit System Rules of 1948 were replaced on the 20th May, 1949, by the Permit System Rules of 1949. This Act, however, was repealed on the 15th October, 1952, by Act LXVI of 1952. Section 3 of this repealing Act, however, expressly preserved the application of section 6 of the . Although the Influx from Pakistan (Control) Act, 1949 has been repealed and the number of persons who, like the appellants and the petitioners before us. are affected by that Act is small, nevertheless the matter has to 949 be scrutinised closely, for our decision may conceivably affect the passport regulations which have replaced the permit system. The contention advanced in these appeals and the petition is that sections 3 and 7 of the Act have, since the commencement of the Constitution, become void in that they violate the fundamental rights guaranteed by articles 14 and 19(1) (d) and (e) of the Constitution. The provisions of these two sections, which have been sufficiently set out in the judgment just delivered, will at once show that they applied to all persons coming from Pakistan,, whether they were citizens or noncitizens and irrespective of the community to which they belonged or the religion which they professed. It will also appear that, as regards citizens, they did not touch all citizens but affected only such of them as came from Pakistan, whether they were Hindus, Muslims or Christians. It is, therefore, quite clear that the Act applied to a small well defined class of persons who were grouped together on an obviously reasonable basis of classification as explained in the previous decisions of this court. In this view of the matter no question of unconstitutional discrimination can arise at all and, indeed, the plea based on the equal protection clause of the Constitution has not been seriously pressed. The main contest has centred round the question whether these two sections offend against the provisions of article 19(1)(d) and (e) of the Constitution. The learned Solicitor General appearing for the respondents contends that those sections are protected by article 19(5) as being reasonable restrictions on the exercise of the rights guaranteed by sub clauses (d) and (e) of clause (1) of that article. In State of Madras vs V. G. Row (1) Patanjali Sastri C.J. observed: " It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as, applicable to all cases. (1) at p. 607. 123 950 The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the,judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment I in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives, of the people have, ' in authorising the imposition of the restrictions, considered them to be reasonable." The impugned sections have, therefore, to be examined in the light of the above observations. I find nothing unconstitutional about section 3 of the impugned Act It does not debar the entry of any person absolutely. It only requires that a person entering India from any place in Pakistan must be in possession of a permit or a valid passport or be exempted from such requirements. Passport regulations obtain in every civilized country including even those the constitutions whereof confer similar fundamental rights on their citizens, e.g., Switzerland (articles 43 45), Wiener Germany (article III), Czechoslovakia (article 108), Jugoslavia (article 10), Danzig (article 75) and Albania (section 202). Such regula tions serve to check up the persons who enter the territories of the State and are necessary for the safety of the State. Seeing that such regulations obtain everywhere and have a definite utility for the protection of the general public by securing the safety of the State, I have no manner of doubt in my mind that such restrictions as are. contemplated by section 3 must be regarded as reasonable restrictions permissible under 951 clause (5) of article 19 of the Constitution. Indeed, the objection of section 3 has not been seriously pressed before us. The main objection urged by learned counsel appearing in support of these appeals and petitions was directed to the question of the validity of section 7. In the ' first place, it is clear that no objection can be taken to section 7 in so far as it affected persons who were 'not citizens of India, for article 19 guarantees certain fundamental rights to the citizens of India only. In the next place, this section did not affect all citizens but touched only a well defined small class of citizens, namely, those who went to Pakistan and intended to return to India. The question is whether qua these citizens section 7 can also be regarded as a reasonable restriction within the meaning of clause (5) of article 19. The High Court of Bombay has held, and in my opinion quite correctly, that the provisions of section 7 cannot but be regarded as consequential to the provisions of section 3. Suppose at the check post a person from Pakistan, whether a, citizen or not, tried to cross the border without a permit. Surely, the officer at the check post would have been well within the law to prevent a violation of section 3 of the Act and with that end in view to prevent that person, who had no permit, from crossing the border and entering India. I have no doubt that the officer might also have prevented a person from Pakistan from crossing the border if he suspected that the permit produced by the person was forged or otherwise irregular and left him to take up the matter with the higher authorities from Pakistan. Suppose the man who sought to enter India without a permit or with a permit which was suspected to spurious forcibly crossed the border and took a step or two on our side of the line, the Indian officer would certainty have been entitled to throw him back to the other side of the line. Surely, such a person could not be permitted to take advantage of his own wrong and could not be heard to say that, in such circumstances, he had, by his wrong doing, acquired a better right than the person 952 who had not the temerity to violate the provisions of section 3. If this is so then, logically, I can see no difference if the man ran into the Indian territory for some distance and the Indian officer ran after him, overtook him and took him back to the check post and pushed him out of our side of the line. It is, futile,, in such a situation, to expect or to say that the officer should have held a judicial enquiry and come to a judicial decision after hearing an argument as to the validity of the permit or as to the status of the permit holder or the fundamental rights of a, citizen Of India to move freely in India and to settle anywhere he liked in India. The truth and substance of the matter are that in acting in the way indicated above the officer simply performed an executive act and prevented a person who held no permit or held a permit which appeared to the officer to be spurious from entering India from Pakistan in violation of section 3 of the Act. To throw out such a person was not. to inflict any punishment on him or to do him any greater injury than what was imposed on or done to a person who, not having a permit, was stopped at the check post and not allowed to enter India at all. The man thus thrown out was placed under no greater disability than the man who had initially been prevented from entering India at the check post barrier. In both cases such a person might, while staying in Pakistan, have taken steps to obtain a permanent permit upon proof of his status as an Indian citizen and if such permit was illegally withheld from him he might have through some agent in India taken proceedings in Indian courts ' for appropriate reliefs. To my mind the position of the person who,entered India on a temporary permit but who, in violation of the rules or order made under the Act stayed on after the period of the permit expired, was, as from that date, logically the same as that of the person who entered India without a permit. To arrest such a person, after the expiry of the period of the temporary permit, with a view to sending him back back to where he came from and to actually send him back there did not involve or 953 constitute a judicial act at all but Was a rough and ready executive act for enforcing and giving effect to the provisions of section 3 of the Act. To arrest and send such a person back to Pakistan was not to inflict a punishment but was only to restore the status quo and to put him back to the position he would have been in but for his illegal act. In my opinion the act, authorized by section 7 was in essence.a purely executive act for implementing the provisions of section 3. Without such a provision it would have been impossible for the State to control the admission into India of persons from Pakistan and to prevent the concomitant dangers referred to above. The act authorised by the section being an executive act, discretion had perforce to bib left to the executive Government which, by reason of the information available to it" was in a much better position than the courts to know and judge the antecedents of such a person and his ultimate purpose. ' Suppose an Indian, citizen, no matter whether he was a Hindu or a Muslim, had entered India from Pakistan without a permit and suppose he was, upon confidential reports which: could not be safely disclosed, suspected to be engaged in espionage in the interests of Pakistan, would it have been safe enough in those hectic days to have only prosecuted him under section 5 and inflicted on him a fine of rupees one thousand or a term of imprisonment not exceeding a year and then to have left him free, after the term of imprisonment was over, to surreptitiously carry on his nefarious activities of espionage and sabotage against our State while embarking upon a protracted judicial enquiry to ascertain the truth or* otherwise of his claim to Indian citizenship ? It cannot ,be overlooked that there are. long common borders between Pakistan and India both on the west and on the east. The Kashmir situation had also aggravated the emergency brought about by the partition of India. Having regard to all, the circumstances, the tension, bitterness and hatred between the two countries that were generated at,the time of the partition and all which must enter into the judicial verdict, the provisions of section 7 appear to me to have been eminently reasonable restrictions imposed in the interests of the 954 general public upon the exercise by Indian ' citizen coming from Pakistan without a permit of the rights conferred by article 19(1)(d) and (e) of the Constitution. The Indian citizen who was thrown out for not having the proper permit or who was suspected to have violated the provisions of the Act was placed in no worse position than an Indian citizen who, not having a permit, had not been permitted to enter into India at all. They were by no means without remedy. They could from the other side of the border take steps under the rules to obtain valid permanent permits upon proof of their citizenship of India and if such permits were. illegally withheld from them they could move the appropriate High Court under article 226 or even this court under article 32 while they were outside India and might, on proof of their citizenship, have got appropriate writs or orders directing the State or its officers to issue suitable permits and to desist from otherwise preventing them from entering India or interfering with their movement while in India. It is said that if such a person would have been entitled to a permit on proof of his status as an Indian citizen then why should he have Been thrown out at all unless and until he failed to establish his claim to Indian citizenship ? There occur to my mind several answers to this question. In the first place, it would have been putting a premium on wrong doing. In the second place, the person would have been left free to carry on his secret activities, if any, while judicial proceedings would have been going on for ascertaining his status. In the third place, if the person could not be thrown out before his status had been judicially determined there would have been no incentive on his part to take proceedings in court to establish his status and it would have thrown upon the State the duty of initiating proceedings and of discharging the onus of proving the negative fact, of his not being a citizen of India. In view of all the circumstances prevailing at the time the law was enacted and remained in force and in view of the considerations herein before alluded to I have no ' doubt in ray mind except What 955 arises out of my respect for the opinions of my Lord and other learned brothers that the provisions of section 7 were necessary and reasonable and fell within clause (5) of article 19. In my judgment the four appeals as well as Petition No. 57 of 1952 should be dismissed. Appeals allowed, cases remanded. Agents for the appellants and petitioners: section section Shukla, R. A. Govind, Sardar Bahadur and P. K. Chatterji. Agents for the respondents: G. H. Rajadhyaksha and C. P.Lal.

Held, (Per MEHR CHAND MAHAJAN 0. J., MUKEMRJFA, ViviAN BosE and GHULAM HASAN JJ. ; section R. DAs J. dissenting) that section 7 of the Influx from Pakistan (Control) Act, 1949 is void under article 13(1) in so far as it conflicts with the fundamental eight of a citizen of India under art.19(1) (a) of the Constitution and the order of physical removal of the citizen from in Is therefore liable to beset aside. Per DAB J. In view of the circumstances the provisions of section 7 of the Act were reasonable restrictions within the meaning of el. 5 of article 19 of the constitution imposed in the interests of the general public upon the exercise by Indian citizen coming from Pakistan without a permit of, the rights conferred by article 19(1)(d) and (e) of the Constitution.

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Appeal No. 365 of 1965. Appeal by special leave from the Judgment and order dated February 18, 1963 of the Madhya Pradesh High Court (Indore F Bench) in Second Appeals Nos. 68 and 70 of 1961. C. B. Agarwala, B. Dutta, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. K. B. Chaudhry, for the respondent. B. R. L. lyengar, G. L. Sanghi and A. G. Ratnaparkhi for Intervener No. 1. J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for interveiier No. 2. The Judgment of the Court was delivered by Shah, J. Ramgopal respondent in this appeal was a tenant F of certain Inam land situate in village Nanda Panth in Indore Tahsil. the appellant Rao Nihalkaran holder of the Inam 429 served a notice terminating the tenancy on the ground that he needed the land for personal cultivation, and commenced an action in the Court of the civil Judge, Class 11, Indore, on July 21, 1950, against Ramgopal for a decree in ejectment. The Trial Court decreed the suit. During the pendency of the appeal to the District Court, Indore, by Ramgopal against the decree, Madhya Bharat Muafi & Inam Tenants and Sub tenants Protection Act 32 of 1954 was enacted, and pursuant to the provisions thereof hearing of the appeal remained stayed till 1960. in the mean time the Madhya Pradesh Land Revenue Code (Act 20 of 1959) was brought into force. Ramgopal urged before the District Court that he had by virtue of section 185 of the Code acquired rights of an occupancy tenant and the appellant 's right to obtain an order in ejectment on the ground set up must be refused. The District Judge accepted the contention of the respondent and allowed the appeal. Against the decree passed by the District Court, Indore, the appellant appealed to the High Court of Madhya Pradesh, Indore Bench. Following their judgment in Rao Nihalkaran vs Ramchandra and Others (1), the High Court confirmed the decree of. the District Judge, and dismissed the appeal. With special leave granted by this Court, this appeal has been preferred. The dispute in the appeal centres round the meaning of the expression "tenant" used in section 185(i) cl. (ii) (a) of the Madhya Pradesh Land Revenue Code. The material part of the clause reads: "Every person who at the coming into force of this Code holds (i) (ii) in the Madhya Bharat region (a) any Inam land as a tenant, or as a sub tenant or as an ordinary tenant, shall be called an occupancy tenant, and shall have all the rights and be subject to all the liabilities conferred or imposed upon an occupancy tenant by or under this Code. " It is common ground that the tenancy of ran occupancy tenant may be determined under section 193 of the Madhya Pradesh Land Revenue Code by an order of the Sub Divisional Officer on the grounds specified in that section, and personal requirement of the land lord is not one of such grounds. But counsel, for the appellant urged that the rights of an occupancy tenant arise in favour of a person under section 185 (1) cl. (ii) (a) only if there is between him and the claimant to the land a subsisting relation under which he holds land (1) L. P. A. No. 14 of 1961 decided on Sept. 24, 1962. 430 as a tenant at the date when the Code came into force. The Code has, it is said, no retrospective operation, and the person who under the law in force before the commencement of the Code had ceased to be a tenant because, of termination of the contract between, him and the landlord is not invested with the rights of an occupancy tenant under section 185 (1) (ii) (a). In the alternative it is contended that by virtue of section 261 and section 262(2), operation of section 185 is expressly excluded, when a person against whom proceedings have been instituted prior to the commencement of the Code for ' a decree in ejectment in enforcement of a right acquired under the law then in force, claims the states of an occupancy tenant. The District Court held that the expression "tenant" within the meaning of section 185 (1)(ii)(a) of the Code includes a person whose tenancy stood determined before the commencement of the Code, and with that view the High Court agreed. Counsel for the appellant complained that in reaching this conclusion, the Courts below ignored the definition in section 2(y) of the Code that the expression "tenant" means a person holding land from a Bhumiswami as an occupancy tenant under Ch. XIV, and said that a person qua whom the contractual relation under which he was inducted as a tenant was determied prior to the commencement of the Code is not a tenant within the meaning of section 185(i)(ii)(a). To appreciate this argument it is necessary to examine the relevant legislative history culminating in the enactment of the Code in 1959. In 1948 twenty Indian States including the States of Gwalior, Indore and Malwa formed themselves into a Union. Five more States were later incorporated into this Union. Under the Constitution, Madhya Bharat was formed as a Part B State out of the territories of the United States of Gwalior, Indore & Malwa and certain enclaves merged therein and the Chief Commissioner 's Province of Panth Piploda. Under the a new State of Madhya Pradesh was formed as from November 1, 1956 consisting of the Part B State of Madhya Bharat, parts of the former State of 'Madhya Pradesh, the territories of the States of Bhopal and Vindhya Pradesh and Sironj sub division of Kotah in the former State of Rajasthan. Apparently the diverse land tenures prevalent in the covenanting States and the laws governing them remained in operation in their respective territories, even after the formation if the Part B State of Madhya Bharat. Attempts were made to evolve a uniform pattern of revenue administration in conformity with the directive principles of State Policy in the Constitution to bring the tiller of the soil into direct relation with the State. The Legislature of the Part B State of Madhya Bharat enacted Act 66 of 1950 to consolidate and declare the law relating to revenue administration in the United States of Gwalior, Indore and Malwa and land revenue, land tenure 431 and other matters connected with the land in the Ryotwari tracts or villages of the United States. Section 54 of Act 66 of 1950 defined "Pakka tenant", "ordinary tenant", "sub tenant" and prescribed the duties of a tenant by section 55. By section 73 a "Pakka tenant" was prohibited from sub letting for any period any land comprised in his holding, unless he belonged to any of the classes mentioned in section 74. By section 74 certain classes of disabled persons were permitted to sub let the whole or any part of their holding. But such a sub lease made in pursuance of the provisions of the Act was to cease to be in force after one year of the determination of the disability by death or otherwise. By section 75 it was provided that a sub lease of the whole or any part of the holding of a "Pakka tenant" effected "properly and legally" prior to the commencement of the Act was to terminate after the expiry of the period of sub lease or expiry of four years after the commencement of the Act, whichever period was less. By section 76 a sub lessee failing to hand over pos session after expiry of his right was to be deemed a tresspasser and liable to ejectment in accordance with the provisions of the Act. The Legislature with the object of improving the conditions of agriculturists and with a view to remove the middleman between the State and the tiller of the soil also enacted the Zamindari Abolition Act and the Abolition of Jagirs Act. Another statute which has a bearing on the dispute in this appeal the Madhya Bharat Muafi and Inam Tenants and Sub tenants Protection Act 32 of 1954 was enacted to provide, for the duration of the Act, for the protection of tenants or ordinary tenants and sub tenants of Muafidars, Inamdars and Istumurardars in Madhya Bharat against eviction by such Muafidars or Inamdars of their tenants, as the case may be, and for stay of suits and other proceedings relating to such eviction. By section 2(ii) the terms "tenant", "sub tenant", "ordinary tenant" and "rent" were given the same meaning as was assigned to them in sub sections (1) (7), (8) & (9) of section 54 of Act 66 of 1950. By section 1 a restriction was placed, upon eviction of any tenant, sub tenant. or ordinary tenant of Inam land during the continuance Act and it was declared that the tenant, sub tenant or ordinary tenant shall not pay rent higher than what he was 'paying in the agricultural year ending June 30, 1948. By section 4 all suits, proceedings in execution of decrees or orders and other proceedings for the eviction of Inam land tenants, sub tenants or ordinary tenants from Inam lands, or in which a claim for such eviction was involved, pending in the Court at the commencement of the Act or which may be instituted after such commencement, were to be stayed subject to the provisions contained in the Act. By sub section (II) of section 4 it was provided that if the Inamdar, Muafidar or Istumurardar had taken possession of the land illegally from a tenant, sub tenant or an ordinary tenant after August 15, 1947 such a tenant, sub tenant or an ordinary 432 tenant may apply to the Tahsildar to be restored to possession of such land and on such application the Tahsildar shall cause the land to be returned to such tenant, sub tenant or ordinary tenant from the Inamdar, Muafidar, or Istumurardar, as the ease may be. By section 6 it was provided that all suits and proceedings shall, after the expiration of the Act, be proceeded with subject to the provisions of any law which may then be in force from the stage which had been reached when the suit or proceeding was stayed. Act 32 of 1954 was intended initially to remain in force for a period of two years, but its life was extended by later enactments. Protection against eviction during the continuance of Act 32 of 1954 by enforcement of a decree passed in a suit or a proceeding either before or after the date on which the Act was brought into force was conferred upon tenants, sub tenants and ordinary tenants. It is clear from the terms of sections 3 & 4 of the Act that the Legislature did not seek to grant protection only to persons between whom and the claimants for protection there was a subsisting contractual relation. A person who was inducted into the land as a tenant, sub tenant or ordinary tenant and who continued to hold the land at the commencement of the Act was entitled to protection, notwithstanding that under the law in force prior to the Commencement of the Act the contractual relation was determined. The Madhya Pradesh Land Revenue Code was enacted in 1959. By section 157 of the Code it was declared that there shall be only one class of tenure holders of lands held from the State to be known as Bhumiswami, and by section 158 it was provided that every person, who at the time of coming into force of the Code, belongs to any of the four classes specified shall be called a Bhumiswami, and shall have all the rights and be subject to all the liabilities conferred or imposed upon a Bhumiswami by or under the Code, and among the persons specified is "every person in respect of land held by him in the Madhya Bharat region as a Pakka tenant or as a Muafidar, Inamdar or Concessional holder as defined in the Madhya Bharat Land Revenue and Tenancy Act Samvat 2007". The argument of counsel for the appellant is that the respondent not being a tenant at the commencement of the Code could not acquire the rights of an occupancy tenant, and that any proceeding instituted against the tenant must be heard and disposed of according to the law in force prior to the commencement of the Code. The definition of the expression "tenant" in section 2(y) postulates a subsisting tenancy, but that definition may be resorted to for interpreting section 185 (1) only if the context or the subject matter of the section does not suggest a different meaning. A tenant is by the definition a person who holds land as an occupancy tenant from a Bhurmiswami: but the status of a Bhumiswami is recognized 433 for the first time by the Code, and an occupancy tenant from a Bhumiswami would mean only a person belonging to that class who acquires rights of occupancy tenant after the Code comes into force. The position of a tenant prior to the date on which the Code was brought into force does not appear to have been dealt with in this definition. The definition which is specially devised for the purpose of the Act throws no light on the nature of the right which invests. the holder of land with the status of an occupancy tenant at the commencement of the Code. In the context in which the expression "tenant" occurs in section 185 the defi nition could not be intended to apply in determining the conditions which invest upon a holder of land the status of an occupancy tenant. If the expression "tenant" in section 185 (1) be released from the artificial definition as given in section 2(y), in view of the context in which it occurs, the expression "tenant" in section 185(1)(ii)(a), having regard to the object of the enactment would be ascribed the meaning that expression had in Act 32 of 1954. This view is strengthened by certain indications found in cl. (ii)(b) if section 185 (1) which provides that in the Madhya Bharat region every person who at the commencement of the Code holds any land as ryotwari sub lessee as defined in the Madhya Bharat Ryotwari Sub Lessee Protection Act 29 of 1955 shall be called an occupancy tenant. Unless a ryotwari sub lessee as defined in Act 29 of 1955 included a sub lessee whose tenure was terminated before the commencement of the Code, that clause would not apply to any concrete case. The Court would not unless compelled by unambiguous language impute to the Legislature an intention to enact a provision which was ineffective. By section 73 of Act 66 of 1950 a Pakka tenant could not sub let for any period any land comprised in his holding except in the cases provided for in section 74,, and by section 75 it was provided that all sub leases in force at the commencement of the Act were to terminate either on the expiry of the period of sub lease or expiry of four years whichever was earlier. All sub leases except those which were covered by section 74 i.e. sub leases granted by disabled persons before the commencement of Act 66 of 1950 stood terminated some time before the end of 1954 and by the express terms of section 76 the sublessees were to be deemed trespassers and liable to ejectment in accordance with the provisions of the Act. Notwithstanding these provisions, by another Act 29 of 1955, scheme of which was substantially the same as the scheme of Act 32 of 1954, ejectment of ryotwari sub lessees other than a sub lessee under section 74 of Act 66 of 1950 was suspended for the duration of the Act, and all suits and proceedings in execution for ejectment were to be stayed. By section 2(b) of Act 29 of 1955 "Ryotwari sub lessee" was defined as meaning "a person to whom a Pakka tenant of any ryotwari land has sub let on sub lease any part of his ryotwari land". By 434 section 3 a ban was imposed against ejectment of all ryotwari sub lessees other than sub lessees under section 74 of Act 66 of 1950. By section 4 provision was made for ejectment of ryotwari sub lessees and provisions similar to sections 5 & 6 of Act 32 of 1954 were made in this Act also. A ban was therefore imposed against eviction of ryotwari sub lessees and proceedings for eviction against them were stayed by Act 29 of 1955. Therefore ryotwari sub lessees who had ceased by determination of the sub leases to have right in the lands were still protected from eviction during the pendency of Act 29 of 1955, and by section 185(1)(ii)(b) of the Code upon the ryotwari sub lessees the rights of occupancy tenants were conferred. If the expression "ryotwari sub lessee" were to be construed to mean a ryotwari sub lessee between whom and his lessor there was a subsisting contract of sub letting, the protection for all purposes would be ineffective, for, by express statutory provision read with section 74 of Act 66 of 1950 all ryotwari sub leases stood determined before Act 29 of 1955 was brought into force, and by virtue of section 185 (3) of the code a holder of land from a disabled Bhumiswami belonging to a class mentioned in section 168(2) of the Code does not qualify for the status of an occupancy tenant. It may be noticed that in the class of disabled persons in sub s (2) of section 168 of the Code are included all persons who are declared disabled by sub section (2) of section 74 of Act 66 of 1950. If ryotwari sub lessees of disabled persons mentioned in subs. (2) of section 74 of Act 66 of 1950 cannot claim rights of occupancy tenants by virtue of section 185 (3) of the Code and other ryotwari sublessees cannot qualify for those rights because of the determination of their interest as sub lessees by virtue of sections 75 & 76 of Act 66 of 1950 section 185, (1)(ii)(b) of the Code will not apply to any class of ryotwari sub lessees. This is a strong ground in support of the view taken by the High Court that the expression "ryotwari sublessee" in section 185 (1)(ii)(b) of the Code include persons whose contractual relation has been det ermined either under the terms of contract of sub lease or statutorily under Act 66 of 1950. If that be the true meaning of the expression "ryotwari sub lessee ' there would be no reason to think that the Legislature sought to make a distinction between tenants, sub tenants and ordinary tenants of Inam land in section 185(1)(ii)(a) of the Code and ryotwari sub lessees of other lands in section 185(1)(ii)(b). A member belonging, to those classes would therefore be included in the protection provided at some time prior to the date on which the Code was brought into force, if he was in possession of land as a tenant, sub tenant or ordinary tenant and he continued to hold the land till the date of commencement of the Code. The alternative argument that section 185 of the Code has Po application in respect of pending proceedings for ejectment is without substance. By section 261 of the Code a large number of 435 statutes specified in Sch. II were repealed. By section 261 certain enactments specified in Sch. 11 including the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950 and the Madhya Bharat Muafi and Inam Tenants and Sub tenants Protection Act 32 of 1954 were wholly repealed. But it is expressly provided in section 261 that the repeat shall not affect(a) the previous operation of any law so repealed or anything duly done or suffered thereunder; or (b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed or (c ) any penalty, forfeiture or punishment incurred in respect of any offence committed against any law so repealed; or (d) any invest igation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the Act had not been passed. Section 262 which deals with transitory provisions by sub section (2) provides: "Any case pending in Civil Court at the coming into force of this Code, which would under this Code be exclusively triable by a Revenue Court, shall be disposed of by such Civil Court according to the law in force prior to the commencement of this Code." Relying upon these two provisions it was urged that persons who were tenants, sub tenants or ordinary tenants of Inam land prior to the date on which the Code was brought into for , whose rights have consistently with the law in force before that date been terminated, cannot set up rights of occupancy tenants acquired under section 185, for, within the meaning of section 261 the right to eject a tenant has accrued to the landlord before the commencement of the Code and a proceeding for enforcement of that right may be continued and the right enforced as if the Code had not been passed, and the Court in which the proceeding is pending would be bound to dispose of the proceeding according to the law in force prior to the commencement of the Code. The argument is misconceived. Act 66 of 1950 did not deal With the right of a landlord to evict a tenant from land. Act 66 of 1950 was expressly repealed by the Code, but since the right to evict a tenant was governed G by the general law of landlord and 'tenant the proviso to section 261 had no operation. In terms the proviso to section 261 protects a right, privilege, obligation, or liability which had been acquired, accrued or incurred under the law repealed by the Code. The right to obtain possession not having been acquired under the law repealed, a legal proceeding pending at the date of the commencement of the Code will be disposed of according to the law "then in force '. That was expressly provided by section 6 of Act 32 of 1954 and by section 6 of Act 29 of 1955. If at the date of the trial the tenant had acquired the right of an occupancy tenant, he could not be evicted 436 otherwise than in the manner and for reasons mentioned in section 19 3 of the Code. Personal requirement for cultivation of land is not, however, a ground on which claim, since the commencement of the Code, for ejectment may be maintained. Section 262(2) is a transitory provision which enables a Civil Court to hear and dispose of a suit notwithstanding that under the Code such a proceeding would be triable by a Revenue Court. It is expressly declared that such a proceeding shall be disposed of according to the law in force prior to the commencement of the Code. That however does not imply that the contract between the parties which was sought to be enforced unaffected by the statutory declaration of occupancy tenants under section 185 in favour of the tenant may be enforced. In our view sub section (2) is only procedural: it provides that a Civil Court will continue to have jurisdiction to dispose of a civil suit pending before it at the commencement of the Code, which if it had been instituted after the Code was passed, would have been tried by a Revenue Court, and in the disposal of such a suit the Civil Court will be governed by the procedural law applicable thereto prior to the commencement of the Code. There is nothing in section 262(2) which seeks to nullify the statutory conferment of occupancy rights upon persons in the position of tenants, sub tenants or ordinary tenants against whom proceedings were taken at the date when the Code was brought into force. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

The appellant (holder of an inam in Madhya Pradesh) served a notice an his tenant, the respondent, terminating to tenancy on the ground that he wanted the land for personal cultivation and filed a suit for ejectment. The trial court decreed the suit. During the pendency of the appeal in the District Court, article 32 of 1954 was enacted, and pursuant to its provisions the hearing of the appeal was stayed. After the Madhya Pradesh Land Revenue Code came into force in 1959, the District Court held that by virtue of section 185 of that Code the respondent acquired the rights, of an occupancy tenant and dismissed the suit. The High Court confirmed the judgment of the District Court. In appeal to this Court, it was contended that : (i) the rights of an occupancy tenant arise in favour of a personl under section 185(1) (i) (a) only if there was between him and the landlord a subsisting tenancy at the date when the Code came into force and since under the law in force before the commencement of the Code, the respondent had ceased to be a tenant because of the notice terminating the contract of tenancy the respondent was not invested with the rights of an occupany tenant; and (ii) bi virtue of sections 261 and 262(2), the operation of section 185 is expressly excluded when a person, against whom ejectment proceedings have been instituted prior to the commencement of the Code in enforcement of a right then acquired, claims the status of an occupancy tenant. HELD : (i) The respondent acquired the right of an occupancy tenant under the Code, because the expression "tenant" in section 185 (1) (ii) (a) includes a person whose tenancy was terminated before the commencement of the Code. The definition of the expression "tenant" in the Code postulates a subsisting tenancy, but the position of a tenant prior to the date on which the Code was brought into force is not dealt with in the definition. In the context in which the expression "tenant" occurs in section 185(1), that definition could not be intended to apply in deter ining the conditions which invest a holder of land with the status of an occupancy tenant at the commencement of, the Code. Therefore having regard to the object of the enactment the expression should be ascribed the meaning it 'has in Act 32 of 1954. Under sections 3 & 4 of that Act a person who was inducted into the land as a tenant and who continued 'to hold the land at the commencement of the Act was entitled to protection against eviction and continue as tenant, notwithstanding that under the law in force prior to the commencement of the Act. the contractual relationship of landlord and tenant was determined. [432 D; 432 14 433 C] 428 There is no reason to think that the Legislature sought to make a A distinction between tenants of Inam land in section 185 (1) (ii) (a) and ryotwari sub lessees of other lands in section 185(1)(ii)(b). Therefore, if the expression "ryotwari sub lessee ' in section 185(1)(ii)(b) includes a sub lessee whose tenaure was terminated before the commencement of the Code, a tenant of inam land, whose tenancy has been terminated would also be included in the protection, provided at some time prior to the date on which the Code was brought into force, he was in possession of the land as a tenant, and he continued to hold the land till the date of the commencement of the Code. [434 E H] (ii) The provisions of the Code appeal to tenants in proceedings for ejectment pending at the commencement of the Code. The proviso to section 261 protects a right which had been acquired under a law repeated by the Code and the right could be enforced as if the code had not been passed. But the right to evict a tenant was governed by the general law of landlord and tenant and was not acquired under any repealed law. The proviso had no operation and a legal proceeding pending at the date of the commencement of the Code will be disposed of according to the law enacted in the Code. Therefore, the tenant could not ' be evicted otherwise than in the manner and for reasons mentioned in a. 193 of the Code but, personal requirement for cultivation of land is not a ground on which a claim for ejectment could be maintained. [435 G436 A] Section 262(2) is only procedural it provides that a civil court will continue to have jurisdiction to dispose of a civil suit pending before it at the commencement of the Code, Which, if it had been instituted after the Code was passed would have been tried by a revenue court; and in the disposal of such a suit, the civil court will be governed by the procedural law applicable there to prior to the commencement of the Code. It does not nullify the statutory conferment of occupancy right upon persons in the position of tenants against whom proceedings were taken at the date when the Code was brought into force. [436 B D]

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Appeal No. 1222 of 1966. Appeal from the judgment and order dated March 14 1966 Appeal of the Punjab High Court (Circuit Bench), at Delhi in Civil Writ No. 832 D of 1965. section V. Gupte, Solicitor General, N. section Bindra, R. H. Dhebar and B. R. G. K. Achar, for the appellant. M. C. Setalvad, B. C. Dutt, Santosh Chatterjee, B. Partha sarathy, 0. C. Mathur, and Ravinder Narain, for respondent No. 1. B. C. Dutt, Santosh Chatterjee, Anand Prakash, 0. C. Mathur and Ravinder Narain, for respondent No. 2. The Judgment of the Court was delivered by Subba Rao, C. J. This appeal by certificate raises the question of the constitutional validity of the Metal Corporation of India ,(Acquisition of Undertaking) Act (No. XLIV of 1965), hereinafter called the Act. The relevant facts lie in a small compass. The 1st respondent, The Metal Corporation of India Limited, hereinafter called the ,Corporation, was a limited company constituted under the Indian Companies Act, having for its objects, inter alia, the development of zinc and lead mines at Zawar in the State of Rajasthan and the construction of a zinc smelter and other connected works for producing electrolytic zinc and by products. The Government was ,satisfied that it was necessary to acquire the said Corporation in public interest and on October 22, 1965, the President of India 257 promulgated an Ordinance (No. 6 of 1965) providing for the acquisition of the Corporation by the Central Government. Pursuant to the said Ordinance, on or about October 23, 1965, the Central Government took over the possession, control and administration of the said Corporation. The Corporation, the 1st respondent and its Managing Director, the 2nd respondent filed a Writ Petition under article 226 of the Constitution in the High Court of Judicature for the State of Punjab, Circuit Bench at New Delhi, being Petition No. 631 D of 1965, challenging the validity of the said Ordinance. In the meantime, the Parliament passed the Act on the same terms as contained in Ordinance No. 6 of 1965: it received the assent of the President of India on December 12, 1965. The respondent filed another writ petition in the said High Court, being Writ Petition No. 832 D of 1965, for a declaration that the Act was ultra vires the Constitution. The said High Court held that the Ordinance and the Act contravened the relevant provisions of article 31 of the Constitution and, therefore, were constitutionally void. The present appeal is preferred against the said judgment of the High Court. It will be convenient at this stage to read the relevant provisions of the Act. The preamble and the relevant provisions of the Act read: "Preamble. An Act to provide for the acquisition of the undertaking of the Metal Corporation of India Limited for the purpose of enabling the Central Government in the public interest to exploit, to the fullest extent possible, zinc and lead deposits in and around the Zawar area in the State of Rajasthan and to utilise those minerals in such manner as to subserve the common good Section 3. On the commencement of this Act, the undertaking of the company shall, by virtue of this Act, be transferred to, and vest in, the Central Government. Section 10. (1) The Central Government shall pay compensation to the company for the acquisition of the undertaking of the company and such compensation shall be determined in accordance with the principles specified in the Schedule and in the manner hereinafter set out, that is to say, (2) Notwithstanding that separate valuations are calculated under the principles specified in the Schedule in respect of the several matters referred to therein, the 258 amount of compensation to be given shall be deemed to be a single compensation to be given for the undertaking as a whole. (3) THE SCHEDULE Principles for determining compensation for acquisition of the undertaking. Paragraph I. The compensation to be paid by the Central Government to the company in respect of the acquisition of the undertaking thereof shall be an amount equal to the sum total of the value of the properties and assets of the company on the date of commencement of this Act calculated in accordance with the provisions of paragraph II less the sum total of the liabilities and obligations of the company as on the said date calculated in accordance with the provisions of paragraph 111. Paragraph II. (a) The market value of any land or buildings; (b) the actual cost incurred by the company in acquiring any plant, machinery or other equipment which has not been worked or used and is in good condition and the written down value (determined in accordance with the provisions of the Income tax Act, 1961 (XLIII of 1961), of any other plant, machinery or equipment; (c) the market value of any shares, securities or other investments held by the company; (d) the total amount of the premium paid by the company in respect of all leasehold properties reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term of the lease in respect of which such premium shall have been paid bears to the total term of the lease; (e) the amount of debts due to the company, whether secured or unsecured, to the extent to which they are reasonably considered to be recoverable. (f) the amount of cash held by the company, whether in deposit with a bank or otherwise; (g) the value of all tangible assets and properties other than those failing within any of the preceding clauses. Paragraph III. The total amount of liabilities and obligations incurred by the company in connection with 259 the formation, management and administration of the undertaking and subsisting immediately before the commencement of this Act. " The gist of the said provisions may be given thus. The Act was made to acquire in public interest the undertaking of the Corporation, On the commencement of the Act, the undertaking was transferred and vested in the Central Government. Under section 10 of the Act, the Government shall pay compensation to the undertaking as a whole: but, in the absence of an agreement between the Government and the Corporation, the compensation payable to the Corporation has to be ascertained under the principles specified in the Schedule in respect of the several matters referred to therein. Paragraph 1 of the Schedule lays down the manner in which the compensation to be paid to the Corporation for the acquisition of the undertaking is to be ascertained. The said compensation shall be an amount equal to the sum total of the value of the properties and assets of the Corporation on the date of the commencement of the Act calculated in accordance with the provisions of paragraph It less the liabilities on the said date calculated in accordance with the provisions of paragraph III of the Schedule. Broadly, the said paragraph lays down the principles for ascertaining the value of lands, buildings, machinery and equipment, amounts due to the undertaking and other tangible assets and properties. The different clauses of the paragraph adopt different principles for valuation. But what is important for the present purpose is the principle embodied in cl. (b) of para II. It is in two parts: the first provides for the valuation of plant, machinery or other equipment which has not been worked or used and is in good condition, and the second provides for the valuation of any other plant, machinery or equipment. The former has to be valued at the actual cost incurred by the Corporation in acquiring the same and the latter at the writtendown value determined in accordance with the provisions of the Indian Income tax Act, 1961. The High Court held, on a construction of the said provisions, that the principle contained in cl. (b) of paragraph 11 of the Schedule to the Act in respect of machinery etc. "cannot be called relevant to the determination of 'just equivalent ', as it takes no notice of the notorious fact that prices have been steadily rising during the past several years, particularly of imported machinery and plant". It also held, "that depreciation rule does not even pretend to determine the actual depreciation in a particular case and it is obvious that such depreciation has no real relationship with the actual value of any machinery at any particular point of time". On that reasoning, it came to the conclusion, having regard to the decision of this Court in Vajravelu vs Special Deputy Collector(1) that the said provision in respect of machinery did. (1) ; 260 not lay down a principle for fixing compensation i. e., a just equivalent to the machinery acquired. The reasoning of the High Court was attacked by the learned Additional Solicitor General on the ground that it did not appreciate the true scope of the said decision of this Court and that, in any view, it went wrong in applying the principle of the said decision to the provisions of the Act. He contended that the Act laid down the broad principle that compensation shall be paid for the entire undertaking as a unit, but provided different modes for the ascertainment of the value of different parts thereof in such a way that the deficiency in the valuation of one part was offset by the liberal valuation of the other part. In that view, he contended, the Act embodied a principle relevant to the ascertainment of compensation for the undertaking acquired and, therefore, the product worked out under the said principle pertained only to the realm ,of adequacy which was beyond the ken of judicial review. He added that compensation in article 31 of the Constitution meant that cornpensation which was regarded as just in the context of public acquisitions and that test was satisfied in the present case. Mr. M. C. Setalvad, learned counsel for the respondents, contended that though under the Act compensation was to be given to the undertaking as one unit, the Act laid down principles for arriving at the valuation of the parts to arrive at the valuation of the whole and that, therefore, every such principle should stand the test laid down by this Court. So judged, the argument proceeded, both the principles laid down in cl. (b) of para 11 of the Schedule had no nexus to the ascertainment of compensation for the machinery acquired, for in the case of unused machinery, its cost price was the guide and in the case of used machinery its written down value was the criterion and that both the methods were arbitrary. We find it difficult to appreciate the arguments of the learned Solicitor General. It is true that under section 10 of the Act the Central ,Government shall pay compensation for the acquisition of the undertaking to the Corporation and the said compensation arrived at in the manner prescribed in the Schedule to the Act shall be ,deemed to be a single compensation to be given to the undertaking as a whole. But it will be noticed that though a single compensation for the undertaking is given, the said compensation shall be deter mined in accordance with the principles specified in the Schedule. Under the Schedule, the compensation for the entire undertaking shall be the amount equal to the sum total of the value of the properties and assets of the Corporation calculated in accordance with the provisions of para II of the Schedule. Under the said para 11, different principles are laid down for ascertaining the value of different parts of the undertaking. If all the said principles laid ,down in para 11 of the Schedule do not provide for the just equivalent 261 of all the parts of the undertaking mentioned therein, the sum total also cannot obviously be a just equivalent of the undertaking. So too, if some of them do not provide for a just equivalent and others do so, the sum total cannot equally be a just equivalent to the undertaking. In the case of the undertaking in question, the machinery is the most valuable part of the undertaking. Apropos the unused machinery in good condition, how can the price for which the said machinery was purchased years ago possibly represent its price at the time of its acquisition? A simple illustration will disclose the irrelevance of the principle. Suppose in 1950 a machinery was purchased for Rs. 100 and, for some reasons, the same has not been used in the working of the undertaking but has been maintained in good condition. That machinery has not become obsolescent and still can be used effectively. If purchased in open market it will cost the owner Rs. 1,000. A compensation of Rs. 100 for that machinery cannot be said to be a just equivalent of it. It is common knowledge that there has been an upward spiral in prices of the machinery in recent years. The cost price of a machinery purchased about ten years ago is a consideration not relevant for fixing compensation for its acquisition in 1965. The principle must be such as to enable the ascertainment of its price at or about the time of its acquisition. Nor the doctrine of written down value accepted in the Income tax law can afford any guide for ascertaining the compensation for the used machinery acquired under the Act. Under the general scheme of the Income tax Act, the income is to be charged regardless of the diminution in the value of the capital. But the rigor of this hard principle is mitigated by the Act granting allowances in respect of depreciation in the value of certain assets such as machinery, buildings, plant, furniture etc. These allowances are worked out on a notional basis for giving relief to the income tax assessee. This artificial rule of depreciation evolved for income tax purposes has no relation to the value of the said assets. To illustrate: a machinery was purchased in the year 1950 for Rs. 1,000. The aggregate of all the depreciation allowances made year after year for ten years may exhaust the sum of Rs. 1,000 with the result, after the tenth year, the assessee will not be entitled to any depreciation. From this it cannot be said that after the tenth year the machinery has no value. Indeed, a machinery purchased for Rs, 1,000 in 1950, because of subsequent rise in. prices may be sold in 1965 for Rs. 10,000. But the application of the principle laid down in cl. (b) of para 11 of the Schedule to the Act in regard to used machinery gives the owner no compensation at all. Yet, the Government takes the machinery worth Rs. 10,000 gratis. This illustration exposes the extreme arbitrariness of the principle. It is, therefore, manifest that the two principles of valuation embodied in cl. (b) of para II of the Schedule to the Act are not relevant to the fixing of compensation for the machinery at. the time of its acquisition under the Act. The argument, of the 262 learned Additional Solicitor General that the working out of all the principles in respect of different parts of the undertaking would result in a product which would fairly represent, in the context of public acquisitions, the "just equivalent" to the undertaking acquired is purely based on a surmise for, it is not shown that the working out of any one or more of the principles would give a higher compensation to some parts of the undertaking so that the excess paid under one head would offset the deficiency under another head. Nor can the doctrine of inherent worth of a machinery has any relevance in the matter of giving compensation for its acquisition at a particular point of time, for the simple reason that the worth of an article depends upon the market conditions obtaining at the time of its acquisition. It is impossible to predicate, irrespective of such conditions, that a particular machinery has a fixed value. for all times. Four decisions of this Court laid down the principles applicable to the present case. Indeed, but for the said decisions, we would have posted this case before a Constitution Bench of five Judges. But, as this appeal involves only the application of the construction put upon article 31 of the Constitution by this Court in the said decisions, we did not resort to that course. The first of them is The State of West Bengal vs Mrs. Bela Banerjee (1). There, the validity of the West Bengal Land Development and Planning Act, 1948 was under scrutiny. Section 8 thereof provided that compensation to be awarded for compulsory acquisition to owners of land was not to exceed the market value as on December 31, 1946. This Court held that the said Act was ultra vires the Constitution and void under article 32(2) thereof. In that context, Patanjali Sastri, C.J., observed: "Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market value of the land on December 31, 1946, no matter when the land is acquired. Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946, as the ceiling on compensation, without reference. to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirement of article 31(2). " The above decision was followed by this Court in State of Madras vs D. Namasivaya Mudaliar(2). There the respondents were owners of certain lands which were to be compulsorily acquired under (1) ; , 564. (2) ; , 945 2 63 Madras Lignite (Acquisition of Land) Act, 1953. The Act came into force on August 20, 1953, before article 31 of the Constitution was amended by the Constitution (Fourth Amendment) Act, 1955. By the said Act compensation for the acquisition of lignite bearing bands under the Land Acquisition Act was to be assessed on the market value of the land prevailing on August 28, 1947, and not on he date on which the notification was issued under section 4(1) of the and Acquisition Act. It also provided that in awarding compensation, the value of non agricultural improvements commenced since April 28, 1.947 would not be taken into consideration. This Court held that the said Act was bad, because it contravened article 31(2) of the Constitution, as it stood before the Constitution (Fourth Amendment) Act, 1955. This Court, speaking through Shah, J., observed: "Assuming that in appropriate cases, fixation of a date anterior to the publication of the notification under section 4(1) for ascertainment of market value of the land to be acquired, may not always be regarded as a violation of the constitutional guarantee, in the absence of evidence that compensation assessed on the basis of market value on such anterior date, awards to the expropriated owner a just monetary value of his property at the date on which his interest is extinguished, the provisions of the Act arbitrarily fixing compensation based on the market value at a date many years before the notification under section 4(1) was issued, cannot be regarded as valid." Then the learned Judge proceeded to state: "To deny to the owner of the land compensation at rates which justly indemnify him for his loss by awarding him compensation at rates prevailing ten years before the date on which the notification under section 4(1) was issued amounts in the circumstances to a flagrant infringement of the fundamental right of the owner of the land under article 31(2) as it stood when the Act was enacted. " These two decisions turned upon the construction of article 31(2) of the Constitution before the Constitution (Fourth Amendment) Act, 1955. These cases laid down two propositions: (1) "Compensation" under article 31(2) of the Constitution means a "just equivalent" of what the owner has been deprived of ; and (2) the value of land at an anterior date is presumed to be no compensation within the meaning of the said Article. After the Constitution (Fourth Amendment) Act, 1955, this Court had to construe in two decisions he amended provision of article 31(2) vis a vis the expression "compensation" found therein. The first decision is that in Vajravelu 264 vs Special Deputy Collector(1). There, this Court observed at p. 625 626: "A scrutiny of the amended Article discloses that it accepted the meaning of the expressions "compensation" and "principles" as defined by this Court in Mrs. Bela Banerjee 's case(2)." .lm0 And it held that, if the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, it can be said that the Legislature committed a fraud on power and, therefore, the law is bad. One of the illustrations given at p. 627 is relevant to the present enquiry and that is as follows : if a law lays down principles which are not relevant ' to the property acquired or to the value of the property at or about the time it is acquired, it may be said that they are not principles contemplated by article 31(2) of the Constitution. If a law says. . that though it (house) is acquired in 1960 its value in 1930 should be given. . the principles do not pertain to the domain of adequacy but are principles unconnected to the value of the property acquired. " Applying these principles, this Court in Jeejeebhoy vs Assistant Collector(3), held that the fixation of an anterior date for the ascertainment of the value of the property acquired without reference to any relevant considerations which necessitated the fixing of an earlier date for the purpose of ascertaining the real value is arbitrary. On that ground this Court held that the Land Acquisition (Bombay Amendment) Act, 1948, did not provide for payment of just equivalent of what the owner was deprived of, as it provided for the ascertainment of compensation on the basis of the value of lands acquired as on January 1, 1948 and not as on the date on which the section 4 notification under the 1894 Act was issued. The relevant aspect of the legal position evolved by the said decisions may be stated thus: Under article 31(2) of the Constitution, no property shall be compulsorily acquired except under a law which provides for compensation for the property acquired and either fixes the amount of compensation or specifies the principles on which and the manner in which compensation is to be determined and given. The second limb of the provision says that no such law shall be called in question in any court on the ground that the compensation provided by the law is not adequate. If the two concepts, namely, "compensation" and the jurisdiction of the court are kept apart, the meaning of the provisions is clear. The law to (1)[1965] 1 S.C.R. 614. (2) ; (3) 6. 265 justify itself has to provide for the payment of a "just equivalent" to the land acquired or lay down principles which will lead to that result. If the principles laid down are relevant to the fixation of compensation and are not arbitrary, the adequacy of the resultant product cannot be questioned in a court of law. The validity of the principles, judged by the above tests, falls within judicial scrutiny, and if they stand the tests, the adequacy of the product falls outside its jurisdiction. Judged by the said tests, it is manifest that the two principles laid down in cl. (b) of Para 11 of the Schedule to the Act, namely, (i) compensation equated to the cost price in the case of unused machinery in good condition, and (ii) written down value as understood in the Income tax law as the value of used machinery, are irrelevant to the fixation of the value of the said machinery as on the date of acquisition. It follows that the impugned Act has not provided for "compensation" within the meaning of article 31(2) of the Constitution and, therefore, it is void. The mere fact that in regard to some parts of the undertakings the principles provide for compensation does not affect the real question, for, machinery is the major part of the undertaking and,, as the entire undertaking is acquired as a unit, the constitutional invalidity of cl. (b) of Para 11 of the Schedule to the Act affects the totality of the compensation payable to the entire undertaking. In the context of compensation for the entire undertaking, the clauses of Para 11 of the Schedule to the Act are not severable. In the result, the Act, not having provided for compensation, is unconstitutional and the conclusion arrived at by the High Court is, correct. appeal fails and is dismissed with costs. V.P.S. Appeal dismissed.

The Metal Corporation of India (Acquisition of Undertaking) Act, 1965, was enacted for acquiring in the public interest, the undertaking of the Metal Corporation of India. The Act provided that the Corp oration was to vest in the Central Government on the commencement of the Act; and that in the absence of an agreement between the Government and the Corporation, the compensation payable to the Corporation was to be an amount equal to the sum total of the value of the properties and assets of the Corporation on the date of the commencement of the Act calculated in accordance with the provisions of Paragraph 11 of the Schedule to the Act, less the liabilities on the said date, calculated in accordance with the provisions of Paragraph III of the Schedule. One of the clauses laying down principles of compensation, viz., clause (b) of para 11 is in two parts. The first part provides for the valuation of plant, machinery or other equipment which has not been worked or used and is in good condition, and the second part provides for the valuation of any other plant, machinery or equipment. The former have to be valued at the actual curt incurred by the Corporation in acquiring them 'and the latter, at the writtendown value determined in accordance with the provisions of the Income of the constitutional validity of the Act. HELD : The Act contravened article 31(2) of the Constitution and was therefore void. [265 C] Under article 31(2), no property shaft be compulsorily acquired except under a law which provides for compensation and either fixes the amount of compensation or specifies the principles on which and the manner in which the compensation is to be determined and given. If the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, the law is bad. The law, to justify itself, has to provide for the payment of a "just equivalent" to the property acquired, or lay down principles which are not arbitrary but which are relevant to the fixation of compensation. It is only when the principles stand this test, that the adequacy of the resultant compensation falls outside judicial scrutiny under the second limb of article 31(2). In the instant case, the two principles laid down in cl. (b) of Para 11 of the Schedule are irrelevant to the fixation of the value of the machinery as on the date of acquisition. In the case of unused machinery, if it was Purchased in 1950 for Rs. 100 and, for some reason, had not been used in the working of the Undertaking but had been maintained in good condition, it may cost Rs. 1000 in 1965. A compensation of Rs. 100 for that machinery could not be said to be a "just equivalent" of it. Similarly, in the case of used machinery, if it was purchased in 1950 for Rs. 1000, 256 the aggregate of all the depreciation allowances made year after year may exhaust the sum of Rs. 1000 in ten years, with the result that, under the Income tax Act, the assessee will not be entitled to any depreciation after the tenth year. It could not, however, be said that after the tenth year, the machinery had no value and that the owner was not to be given any compensation. Indeed, such a machinery, because of subsequent rise in prices, may be sold in 1965 for Rs. 10,000. Further the constitutional invalidity of cl. (b) of Para II of the Schedule affect& the totality of the compensation payable; for, machinery is the major part of the undertaking, the entire Undertaking is acquired as a unit, and, in the context of compensation for the entire Undertaking, the clauses of Para H of the Schedule to the Act are not severable. Therefore, the mere fact that in regard to some parts of the Undertaking, the principles laid down in Para H provide for compensation does no affect the question, especially when it has not been shown that the working out of any one or more of the principles would give a higher compensation to some parts of the Undertaking so that the excess paid under one head would offset the deficiency under another head. [261 F H; 262 B; 264 B C, F H; 265 A El Vajravelu vs Special Deputy Collector, ; and Jeejeebhoy vs Assistant Collector, ; , followed.

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Appeal No. 517 of 1964. Appeal from the judgment and decree, dated October 3, 1958 of the Bombay High Court in First Appeal No. 107 of 52. Vasant J. Desai, M. L. Bhalja and A. G. Ratnaparkhi, for the appellants. C. K. Daphtary, Attorney General, Atiqur Rehman and K. L. Hathi, for respondent No. 1. C. K. Daphtary, Attorney General, N. section Bindra and B. R. G. K. Achar, for respondent No. 2. section V. Gupte, Solicitor General, and B. R. G. K. Achar, for the intervener. The Judgment of the Court was delivered by Gajendragadkar, C.J. The principal question which arises in this appeal is whether the Bombay High Court was right in holding that the Swaminarayan Sampradaya (sect) to which the appellants belong, is not a religion distinct and separate from the Hindu religion, and that the temples belonging to the said sect do come within the ambit of the provisions of the Bombay Hindu Places of Public Worship (Entry Authorisation) Act, 1956 (No. 31 of 1956) (hereinafter called 'the Act '). The suit from which the present appeal arises was instituted by the appellants on the 12th January, 1948, in the Court of the Joint Civil Judge, Senior Division, Ahmedabad. Before the suit was instituted, the Bombay Harijan Temple Entry Act, 1947 (No. 35 of 1947) 245 (Hereinafter called 'the former Act ') had come into force on the 23rd November, 1947. The appellants are the followers of the Swaminarayan sect, and are known as Satsangis. They have filed the present suit on behalf of themselves and on behalf of the Satsangis of the Northern Diocese of the sect at Ahmedabad. They apprehended that respondent No. 1, Muldas Bhudardas Vaishya, who is the President of the Maha Gujarat Dalit Sangh at Ahmedabad, intended to assert the rights of the non Satsangi Harijans to enter the temples of the Swaminarayan sect situated in the Northern Diocese at Ahmedabad in exercise of the legal rights conferred on them by section 3 of the former Act of 1947. Section 3 of the said Act had provided, inter alia, that every temple to which the Act applied shall be open to Harijans for worship in the same manner and to the same extent as other Hindus in general. To this suit the appellants had impleaded five other respondents, amongst whom was included the Province of Bombay as respondent No. 4, under the order of the Court at a later stage of the proceedings on the 18th July, 1949. In their plaint, the appellants had alleged that the Swaminarayan temple of Sree Nar Narayan Dev of Ahmedabad and all the temples subordinate thereto are not temples within the meaning of the former Act. Their case, was that the Swaminarayan sect represents a distinct and separate religious sect unconnected with the Hindus and Hindu religion, and as such, their temples were outside the purview of the said Act. On the basis of this main allegation, the appellants claimed a declaration to the effect that the relevant provisions of the said Act did not apply to their temples. In the alternative, it was urged that the said Act was ultra vires. As a consequence of these two declarations, the appellants asked for an injunction restraining respondent No. 1 and other non Satsangi Harijans from entering the Swaminarayan temple of the Northern Diocese of the Swaminarayan sect; and they prayed that an appropriate injunction should be issued directing respondents 2 and 3 who are the Mahants of the said temples to take steps to prevent respondent No. 1 and the other non Satsangi Harijans from entering and worshipping in the said temples. Pending these proceedings between the parties, the former Act was amended by Bombay Act No. 77 of 1948; and later, the Constitution of India came into force on the 26th January, 1950. As a result of these events, the appellants applied for an amendment of the plaint on the 30th November, 1950, and the said application was granted by the learned trial Judge. In consequence of 24 6 this amendment, the appellants took the plea that their temples were not temples within the meaning of the former Act as amended by Act No. 77 of 1948; and they urged that the, former Act was ultra vires the powers of the State of Bombay inasmuch as it was inconsistent with the Constitution and the fundamental rights guaranteed therein. It was contended by them that the Swaminarayan sect was an institution distinct and different from Hindu religion, and, therefore, the former Act as amended could not apply to or affect the temples of the said sect. On this additional ground, the appellants supported the original claim for declarations and injunctions made by them in their plaint as it was originally filed. This suit was resisted by respondent No. 1. It was urged on his behalf that the suit was not tenable at law, on the ground that the Court had no jurisdiction to entertain the suit under section 5 of the former Act. Respondent No. 1 disputed the appellants ' right to represent the Satsangis of the Swaminarayan sect, and he averred. that many Satsangis were in favour of the Harijans ' entry into the Swaminarayan temples, even though such Harijans were not the followers of the Swaminarayan sect. According to him, the suit temples were temples within the meaning of the former Act as amended and that non Satsangi Harijans had a legal right of entry and worship in the said temples. The appellants ' case that the former Act was ultra vires, was also challenged by respondent No. 1. Respondents 2 and 3, the Mahants of the temples, filed purshis that they did not object to the appellants ' claim, while respondent No. 4, the State of Bombay, and respondents 5 and 6 filed no written statements. On these pleadings, the learned trial Judge framed several issues, and parties led voluminous documentary and oral evidence in support of their respective contentions. After considering this evidence, the learned trial Judge held that the suit was maintainable and was not barred under section 5 of the former Act. He found that the former Act was intra vires the legislative powers of the Bombay State and did not infringe any fundamental rights of the appellants. According to him, the Swaminarayan sect was not distinct and different from Hindu religion and as such, the suit temples were temples which were used as places of religious worship by the congregation of the Satsang which formed a section of the Hindu community. The learned trial Judge, however, came to the conclusion that it had not been established that the suit temples were used by non Satsangi Hindus as places of religious worship by custom, usage or otherwise, and consequently, they did not 247 come within the meaning of the word "temple" as defined by the former Act. Thus, the conclusion of the learned trial Judge on this part of the appellants ' case decided the fate of the suit in their favour, though findings were recorded by the trial Judge in favour of respondent No. 1 on the other issues. In the result, the trial court passed a decree in favour of the appellants giving them declarations and injunctions as claimed by them. This judgment was pronounced on the 24th September, 1951. The proceedings in the trial court were protracted and lasted for nearly three years, because interim proceedings which led to certain interlocutory orders, were contested between the parties and were taken to the High Court on two occasions before the suit was finally determined. The decision of the trial court on the merits was challenged by Respondent No. 4 and respondent No. 1 who joined in filing the appeal. The appeal thus presented by the two respondents was heard by the High Court on the 8th March, 1957. At this hearing, two preliminary objections were raised by the appellants against the competence and maintainability of the appeal itself. It was urged that the appeal preferred by respondent No. 4 was not competent, inasmuch as respondent No. 4 had no locus standi to prefer the appeal in view of the fact that the former Act in the validity of which respondent No. 4 was vitally interested had been held to be valid. This objection was upheld and the appeal preferred by respondent No. 4 was dismissed. In regard to the appeal preferred by respondent No. 1, the appellants contended that the Vakalatnama filed on his behalf was invalid and as such, the appeal purported to have been preferred on his behalf was incompetent. It appears that respondent No. 1 had authorised the Government Pleader to file an appeal on his behalf, whereas the appeal had actually been filed by Mr. Daundkar who was then the Assistant Government Pleader. The High Court rejected this objection and held that the technical Irregularity on which the objection was founded could be cured by allowing the Government Pleader to sign the memorandum of appeal presented on behalf of respondent No. 1 and endorse acceptance of his Vakalatnama. Having thus held that the appeal preferred by respondent No. 1 was competent, the High Court proceeded to consider the merits of the said appeal. It was urged before the High Court by respondent No. 1 that the declarations and injunctions granted to the appellants could not be allowed to stand in view of the Untouch 10Sup. CI/63 3 248 ability (Offences) Act, 1955 (Central Act 22 of 1955) which had come into force on the 8th May, 1955 and which had repealed the former Act. This contention did not find favour with the High Court, because it took the view that the declarations and injunctions granted by the trial court were not based on the provisions of the former Act, but were based on the view that the rights of the appellants were not affected by the said Act. The High Court observed that in dealing with the objections raised by respondent No. 1, it was unnecessary to consider whether on the merits, the view taken by the trial court was right or not. The only point which was relevant for disposing of the said objection was to consider whether any relief had been granted to the.appellants under the provisions of the former Act or not; and since the reliefs granted to the appellants were not under any of the said provisions, but were in fact based on the view that the provisions of the said Act did not apply to the temples in suit, it could not be said that the said reliefs could not survive the passing of the Untouchability (Offences) Act, 1955. The High Court, however, noticed that after the trial court pronounced its judgments, the Bombay Legislature had passed the Act (No. 31 of 1956) and respondent No. 1 naturally relied upon the material provisions of this Act contained in section 3. Thus, though the substance of the controversy between the parties remained the same, the field of the dispute was radically altered. The former Act had given place to the Act and it now became necessary to consider whether the Act was intra vires, and if yes, whether it applied to the temples in suit. Having regard to this altered position, the High Court took the view that it was necessary to issue a notice to the Advocate General under O.27A of the Code of Civil Procedure. Accordingly, a notice was issued to the Advocate General and the appeal was placed before the High Court on the 25th March, 1957 again. At this hearing, the High Court sent the case back to the trial court for recording a finding on the issue " whether the Swaminarayan temple at Ahmedabad and the temples subordinate thereto are Hindu religious institutions within the meaning of article 25 (2) (b) of the Constitution". Both parties were allowed liberty to lead additional evidence on this issue. After remand, the appellants did not lead any oral evidence, but respondent No. 1 examined two witnesses Venibhai and Keshavlal. Keshavlal failed to appear for his final cross examination despite adjournments even though the trial court had appointed a Commission to record his evidence. Nothing, however, turned upon this oral evidence. In the remand proceedings, 249 it was not disputed before the trial court that the temples in suit were public religious institutions. The only question which was argued before the court was whether they could be regarded as Hindu temples or not, The appellants contended that the suit temples were meant exclusively for the followers of the Swaminarayan sect; and these followers, it was urged, did not profess the Hindu religion. The learned trial Judge, however, adhered to the view already expressed by his predecessor before remand that the congregation of Satsang constituted a section of the Hindu community; and so he found that it was not open to the appellants to contend before him that the followers of the Swaminarayan sect were not a section of the Hindu community. In regard to the nature of the temples, the learned trial Judge considered the evidence adduced on the record by both the parties and came to the conclusion that the Swaminarayan temples at Ahmedabad and the temples subordinate thereto were Hindu religious institutions within the meaning of article 25 (2) (b) of the Constitution. This finding was recorded by the trial Judge on the 24th March 1958. After this finding was submitted by the learned trial Judge to the High Court, the Appeal was taken up for final disposal. On ' this occasion, it was urged before the High Court on behalf of the appellants that the members belonging to the Swaminarayan sect did not profess the Hindu religion and, therefore, their temples could not be said to be Hindu temples. It was, however, conceded on their behalf that in case the High Court came to the conclusion that the Swaminarayan sect was not a different religion from Hinduism, the conclusion could not be resisted that the temples in suit would be Hindu religious institutions and also places of public worship within the meaning of section 2 of the Act. That is how the main question which was elaborately argued before the High Court was whether the followers of the Swaminarayan sect could be said to profess Hindu religion and be regarded as Hindus or not. It was urged by the appellants that the Satsangis who worship at the Swaminarayan temple may be Hindus for cultural and social purposes, but they are not persons professing Hindu religion, and as such they do not form a section, class or sect or denomination of Hindu religion. Broadly stated, the case for the appellants was placed before the High Court on four grounds. It was argued that Swaminarayan, the founder of the sect, considered himself as the Supreme God, and as such. the sect that believes in the divinity of Swaminarayan cannot be assimilated to the followers of Hindu religion. It was also urged that the temples in suit had been established for the worship of 250 Swaminarayan himself and not for the worship of the traditional Hindu idols, and that again showed that the Satsangi sect was distinct and separate from Hindu religion. It was further contended that the sect propagated the ideal that worship of any God other than Swaminarayan would be a betrayal of his faith, and lastly , that the Acharyas who had been appointed by Swaminarayan adopted a procedure of "Initiation" (diksha) which showed that on initiation, the devotee became a Satsangi and assumed a distinct and separate character as a follower of the sect. The High Court has carefully examined these contentions in the light of the teachings of Swaminarayan, and has come to the conclusion that it was impossible to hold that the followers of the Swaminarayan sect did not profess Hindu religion and did not form a part of the Hindu community. In coming to this conclusion, the High Court has also examined the oral evidence on which the parties relied. While considering this aspect of the matter, the High Court took into account the fact that in their plaint itself, the appellants had described themselves as Hindus and that on the occasion of previous censuses prior to 1951 when religion and community used to be indicated in distinct columns in, the treatment of census data, the followers of the sect raised no objection to their being described as belonging to a sect professing Hindu religion. Having thus rejected the main contention raised by the appellants in challenging their status as Hindus, the High Court examined the alternative argument which was urged on their behalf in regard to the constitutional validity of the Act. The argument was that the material provision of the Act was inconsistent with the fundamental rights guaranteed by Articles 25 and 26 of the Constitution and as such was invalid. The High Court did not feet impressed by this argument and felt no difficulty in rejecting it. In the result, the finding recorded by the trial Judge in favour of the appellants in regard to their status and character as followers of the Swaminarayan sect was upheld; inevitably the decree passed by the trial Judge was vacated and the suit instituted by the appellants was ordered to be dismissed. It is against this decree that the present appeal has been brought to this Court on a certificate issued by the High Court. Before dealing with the principal point which has been posed at the commencement of this Judgment, it is necessary to dispose of two minor contentions raised by Mr. V. J. Desai who appeared 251 for the appellants before us. 'Mr. Desai contends that the High Court Was in error in treating as competent 'the appeal preferred by respondent No. 1. His case is that since the said appeal had not been duly and validly filed by an Advocate authorised by respondent No. 1 in that behalf, the High Court should have dismissed the said appeal as being incompetent. It will be recalled that the appeal memo as well as the Vakalatnama filed along with it were signed by Mr. Daundkar who was then the Asstt. Government Pleader; and the argument is that since the Vakalatnama had been signed by respondent No. 1 in favour of the Government Pleader, its acceptance by the Assistant Government Pleader was invalid and that rendered the presentation of the appeal by the Assistant Government Pleader on behalf of respondent No. 1 incompetent. O.41, r. 1 of the Code of Civil Procedure requires, inter alia, that every appeal shall be preferred in the form of a memorandum signed by the appellant or his Pleader and presented to the Court or to such officer as it appoints in that behalf. O. 3, r. 4 of the Code relates to the appointment of a Pleader. Sub r. (1) of the said Rule provides, inter alia that no Pleader shall act for any person in any court unless he has been appointed for the purpose by such person by a document in writing signed by such person. Sub r. (2) adds that every such appointment shall be filed in court and shall be deemed to be in force until determined with the leave of the Court in the manner indicated by it. Technically, it may be conceded that the memorandum of appeal presented by Mr. Daundkar suffered from the infirmity that respondent No. 1 had signed his Vakalatnama in favour of the Government Pleader and Mr. Daundkar could not have accepted It, though he was working in the Government Pleader 's office as an Assistant Government Pleader. Even so, the said memo was accepted by the office of the Registrar of the Appellate Side of the High Court, because the Registry regarded the presentation of the appeal to be proper, the appeal was in due course admitted and it finally came up for hearing before the High Court. The failure of the Registry to invite the attention of the Assistant Government Pleader to the irregularity committed in the presentation of the said appeal cannot be said to be irrelevant in dealing with the validity of the contention raised by the appellants. if the Registry had returned the appeal to Mr. Daundkar as irregularly presented, the irregularity could have been immediately corrected and the Government Pleader would have signed both the memo of appeal and the Vakalatnama. It is an elementary rule of justice that no party should suffer for the mistake of the court or its Office. Besides, one of the rules framed by the High Court 252 on its Appellate Side Rule 95 seems to authorise an Advocate practising on the Appellate Side of the High Court to appear even without initially filing a Vakalatnama in that behalf. If an appeal is presented by an Advocate without a Vakalatnama duly signed by the appellant, he is required to produce the Vakalatnama authorising him to present the appeal or to file a statement signed by himself that such Vakalatnama has been duly signed by the appellant in time. In this case, the Vakalatnama had evidently been signed by respondent No. 1 in favour of the Government Pleader in time; and so, the High Court was plainly right in allowing the Government Pleader to sign the memo of appeal and the Vakalatnama in order to remove the irregularity committed in the presentation of the appeal. We do not think that Mr. Desai is justified in contending that the High Court was in error in overruling the objection raised by the appellants before it that the appeal preferred by respondent No. 1 was incompetent. The next contention which Mr. Desai has urged before us is that section 3 of the Act is ultra vires. Before dealing with this contention, it is relevant to refer to the series of Acts which have been passed by the Bombay Legislature with a view to remove the disabilities from which the Harijans suffered. A brief resume of the legislative history on this topic would be of interest not only in dealing with the contention raised by Mr. Desai about the invalidity of section 3, but in appreciating the sustained and deliberate efforts which the Legislature has been making to meet the challenge of untouchability. In 1958, the Bombay Harijans Temple Worship (Removal of Disabilities) Act (No. 11 of 193 8) was passed. This Act represented a somewhat cautious measure adopted by the Bombay Legislature to deal with the problem of untouchability. It made an effort to feel the pulse of the Hindu community in general and to watch its reactions to the efforts which the Legislature may make, to break through the citadel of orthodoxy, and conquer traditional prejudices against Harijans. This Act did not purport to create any statutory right which Harijans could enforce by claiming an entry into Hindu temples; it only purported to make some enabling provisions which would encourage the progressive elements in the Hindu community to help the Legislature in combating the evil of untouchability. The basic scheme of this Act was contained in sections 3, 4 & 5. The substance of the provisions contained in these sections was that in regard to temples. the trustees could by a majority make a declaration that 253 their temples would be open to Harijans notwithstanding the terms of instrument of trust, the terms of dedication or decree or order of any competent court or any custom, usage or law for the time being in force to the contrary. Section 3 dealt with making of these declarations. Section 4 required the publication of the said declarations in the manner indicated by it, and section 5 authorised persons interested in the temple in respect of which a declaration had been published under section 4 to apply to the court to set aside the said declaration. such an application is received, the jurisdiction has been conferred on the court to deal with the said application. Section 5(5) provides that if the court is satisfied that the applicant was a person interested in the temple and that the impugned declaration was shown not to have been validly made, it shall set aside the declaration; if the court is not so satisfied, it shall dismiss the application. Section 5(7) provides that the decision of the Court under sub section (5) shall be final and conclusive for the purposes of this Act. The court specially empowered to deal with these applications means the court of a District Judge and includes the High Court in exercise of its ordinary Original Civil jurisdiction. The jurisdiction thus conferred on the court is exclusive with the result that section 6 bars any Civil Court to entertain any complaint in respect of the matters decided by the court of exclusive jurisdiction purporting to act under the provisions of this Act. This Act can be regarded as the first step taken by the Bombay Legislature to remove the disability of untouchability from which Harijans had been suffering. The object of this Act obviously was to invite cooperation from the majority of trustees in the respective Hindu temples in making it possible for the Harijans to enter the said temples and offer prayers in them. Then followed Act No. 10 of 1947 which was passed by the, Bombay Legislature to provide for the removal of social disabilities of Harijans. This Act was passed with the object of removing the several disabilities from which Harijans suffered in regard to the enjoyment of social, secular amenities of life. Section 3 of this Act declared that notwithstanding anything contained in any instrument or any law, custom or usage to the contrary, no Harijan shall merely on the ground that he is a Harijan, be ineligible for office under any authority constituted under any law or be prevented from enjoying the amenities described by clauses (b) (i) to (vii). The other sections of this Act made suitable provisions to enforce the statutory right conferred on the Harijans by section 3. 254 Next we come to the former Act No. 35 of 1947. We haveA already seen that when the present plaint was filed by the appellants, they challenged the right of the non satsangi Harijans to enter the temples under section 3 of this Act, and alternatively, they challenged its validity. This Act was passed to entitle the Harijans to enter and perform worship in the temples in the Province of Bombay. Section 2(a) of this Act defines a "Harijan" as meaning a member of a caste, race or tribe deemed to be a Scheduled caste under the Government of India (Scheduled Castes) Order, 1936. Section 2(b) defines "Hindus" as including Jains; section 2(c) defines "temples ' as meaning a place by whatever designation known which is used as of right by, dedicated to or for the benefit of the Hindus in general other than Harijans as a place of public religious worship; and section 2(b) defines "Worship" as including attendance at a temple for the purpose of darshan ' of a deity or deities installed in or within the precincts thereof. Section 3 which contains the main operative provision of this Act reads thus : "Notwithstanding anything contained in the terms of any instruments of trust, the terms of dedication, the terms of a sanad or a decree or order of a competent court or any custom, usage or law, for the time, being in force to the contrary every temple shall be open to Hari jans for worship in the same manner and to the same extent as to any member of the Hindu community or any section thereof and the Harijans shall be entitled to bathe in, or use the waters of any sacred tank, well, spring or water course in the same manner and to the same extent as any member of the Hindu Community or any section thereof. " Section 4 provides for penalties. Section 5 excludes the jurisdiction of Civil Courts to deal with any suit or proceeding if it involves a claim which if granted would in any way be inconsistent with the;provisions of this Act. Section 6 authorises the police officer not below the rank of Sub Inspector to arrest without warrant any person who ;is reasonably suspected of having committed an offence punishable under this Act. Section 2(c) of the former Act was later amended by Act 77 of 1948. The definition of the word "temple" which was thus inserted by the amending Act reads thus : "Temple, means a place by whatever name known and to whomsoever belonging, which is used as a place 2 5 5 of religious worship by custom, usage or otherwise by the members of the Hindu community or any section thereof and includes all land appurtenant thereto and subsidiary shrines attached to any such place. " It will be recalled that after this amended definition was introduced in the former Act, the appellants asked for and obtained permission to amend their plaint, and it is the claim made in the amended plaint by relation to the new definition of the word "temple" that parties led evidence before the trial court. This act shows that the Bombay Legislature took the next step in 1947 and made a positive contribution to the satisfactory solution of the problem of untouchability. It conferred on the Harijans a right to enter temples to which the Act applied and to offer worship in them; and we have already seen that worship includes attendance at the temple for the purpose of darshan of a deity or deities in the precincts thereof. On the 26th January, 1950 the Constitution of India came into force, and article 17 of the Constitution categorically provided that untouchability is abolished and its practice in any form is forbidden. The enforcement of any disability arising out of "Untouchability" shall be an offence punishable in accordance with law. In a sense, the fundamental right declared by Art, 17 afforded full justification for the policy underlying the provisions of the former Act. After the Constitution was thus adopted, the Central Legislature passed the Untouchability (Offences) Act, 1955 (No. 22 of 1955). This Act makes a comprehensive provision for giving effect to the solemn declaration made by article 17 of the Constitution. It extends not only to places of public worship, but to hotels, places of public entertainment, and shops as defined by section 2 (a), (b), (c) and (e). Section 2 (d) of this Act defines a "place of public worship" as meaning a place by whatever name known which is used as a place of public religious worship or which is dedicated generally to, or is used generally by, persons professing any religion or belonging to any religious denomination or any section thereof, for 'the performance of any religious service, or for offering prayers therein; and includes all lands and subsidiary shrines appurtenant or attached to any such place. The sweep of 'the definitions prescribed by section 2 indicates the very broad field of socio religious activities over which the mandatory provisions of this Act are intended to operate. It is not necessary for our purpose to refer to the provisions of this Act in detail. 'It is enough to state that sections 3 to 7 of this Act provide 25 6 different punishments for contravention of the constitutional guarantee for the removal of untouchability in any shape or form. Having thus prescribed a comprehensive statutory code for the removal of untouchability, section 17 of this Act repealed twenty one State Acts which had been passed by the several State Legislatures with the same object. Amongst the Acts thus repealed are Bombay Acts 10 of 1947 and 35 of 1947. That takes us to the Act No. 31 of 1956 with which we are directly concerned in the present appeal. After the Central Act 22 of 1955 was passed 'and the relevant Bombay statutes of 1947 had been repealed by section 17 of that Act, the Bombay Legislature passed the Act. The Act is intended to make better provision for the throwing open of places of public worship to all classes and sections of Hindus. It is a short Act contain 8 sections. Section 2 which is the definition section is very important; it reads thus : "2. In this Act, unless the context otherwise requir es, (a)"place of public worship ' means a place, whether a temple or by any other name called, to whomsoever belonging which is dedicated to, or for the benefit of, or is used generally by, Hindus, Jains, Sikhs or Buddhists or any section or class thereof, for the performance of any religious service or for offering prayers therein; and includes all lands and subsidiary shrines appurtenant or attached to any such place, and also any sacred tanks, walls, springs, and water courses the waters of which are worshipped, or are used for bathing or for worship; (b)"section" or "class" of Hindus includes any division, sub division, caste, sub caste, sect or denomination whatsoever of Hindus. " Section 3 is the operative provision of the Act and it is necessary to read it also : "3. Notwithstanding any custom, usage or law for the time being in force, or the decree or order of a court, or anything contained in any instrument, to the contrary, every place of public worship which is open to Hindus generally, or to any section or class thereof, shall be open to all sections and classes or Hindus; and no Hindu of whatsoever section or class, shall in any manner be prevented, obstructed or discouraged from entering such place of public worship, or from worship 257 ping or offering prayers threat, or performing any religious service therein, in the like manner and to the like extent as any other Hindu of whatsoever section or class may so enter, worship, pray or perform. " Section 4(1) provides for penalties for the contravention of the provisions of the Act and section 4(2) lays down that nothing in this section shall be taken to relate to offences relating to the practice of "untouchability". Section 5 deals with the abetment of offences prescribed by section 4(1). Section 6 provides, inter alia, that no Civil Court shall pass any decree or order which in substance would in any way be contrary to the provisions of this Act. Section 7 makes offences prescribed by section 4(1) cognisable, and compoundable with the permission of the Court; and section 8 provides that the provisions of this Act shall not be taken to be in derogation of any of the provisions of the Untouchability (Offences) Act 22 of 1955 or any other law for the time being in force relating to any of the matters dealt with in this Act. That in brief is the outline of the history of the Legislative efforts to combat and meet the problem of untouchability and to help Harijans to secure the full enjoyment of all rights guaranteed to them by article 17 of the Constitution. Let us now revert to Mr. Desai 's argument that section 3 of the Act is invalid inasmuch as it contravenes the appellants ' fundamental rights guaranteed by article 26 of the Constitution. Section 3 throws open the Hindu temples to all classes and sections of Hindus and it puts an end to any effort to prevent or obstruct or discourage Harijans from entering a place of public worship or from worshipping or offering prayers threat, or performing any religious service therein, in the like manner and to the like extent as any other Hindu of whatsoever section or class may so enter, worship, pray or perform. The object of the section and its meaning are absolutely clear. In the matter of entering the Hindu temple or worshipping, praying or performing any religious service therein, there shall be no discrimination between any classes or sections of Hindus, and others. In other words, no Hindu temple shall obstruct a Harijan for entering the temple or worshipping in the temple or praying in it or performing any religious service therein in the same manner and to the same extent as any other Hindu would be permitted to do. Mr. Desai contends that in the temples, in suit, even the Satsangi Hindus are not permitted to enter the innermost sacred part of the temple where the idols are installed. It is only the Poojaris who are authorised to enter the said sacred portion of the 258 temples and do the actual worship of the idols by touching the idols for the purpose of giving a bath to the idols, dressing the idols, offering garlands to the idols and doing all other ceremonial rites prescribed by the Swaminarayan tradition and convention; and his grievance is that the words used in section 3 are so wide that even this part of actual worship of the idols which is reserved for the Poojaris and specially authorised class of worshippers, may be claimed by respondent No. 1 and his followers; and in so far as such a claim appears to be justified by section 3 of the Act, it con travenes the provisions of article 26(b) of the Constitution. article 26(b) provides that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to manage its own affairs in matters of religion, and so, the contention is that the traditional conventional manner of performing the actual worship of the idols would be invaded if the broad words of section 3 are construed to confer on non Satsangi Harijans a right to enter the innermost sanctuary of the temples and seek to perform that part of worship which even Satsangi Hindus are not permitted to do. In our opinion, this contention is misconceived. In the first place it is significant that no such plea was made or could have been made in the plaint, because section 3 of the former Act which was initially challenged by the appellants had expressly defined " worship" as including a right to attend a temple for the purpose of darshan of a deity or deities in or within the precincts thereof, and the cause of action set out by the appellants in their plaint was 'hat they apprehended that respondent No. 1 and his followers would enter the temple and seek to obtain darshan of the deity installed in it. Therefore, it would not be legitimate for the appellants to raise this new contention for the first time when they find that the words used in section 3 of the Act are somewhat wider than the words used in the corresponding section of the former Act. Besides, on the merits, we do not think that by enacting section 3, the Bombay Legislature intended to invade the traditional and conventional manner in which the act of actual worship of the deity is allowed to be performed only by the authorised Poojaris of the temple and by no other devotee entering the temple for darshan. In many Hindu temples, the act of actual worship is entrusted to the authorised Poojaris and all the devotees are allowed to enter the temple up to a limit beyond which entry is barred :to them, the innermost portion of the temple being reserved only for the authorised Poojaris of the temple. If that 259 is so, then all that section 3 purports to do is to give the Harijans the same right to enter the temple for 'darshan ' of the deity as can be claimed by the other Hindus. It would be noticed that the right to enter the temple, to worship in the temple, to pray in it or to perform any religious service therein which has been conferred by section 3, is specifically qualified by the clause that the said right will be enjoyed in the like manner and to the like extent as any other Hindu of whatsoever section or class may do. The main object of the section is to establish complete social equality between all sections of the Hindus in the matter of worship specified by section 3; and so, the apprehension on which Mr. Desai 's argument is based must be held to be misconceived. We are, therefore, satisfied that there is no substance in the contention that section 3 of the Act is ultra vires. That takes us to the main controversy between the parties. Are the appellants justified in contending that the Swaminarayan sect is a religion distinct and separate from the Hindu religion, and consequently, the temples belonging to the said sect do not fall within the ambit of section 3 of the Act ? In attempting to answer this question, we must inevitably enquire what are the distinctive features of Hindu religion? The consideration of this question, prima facie, appears to be somewhat inappropriate within the limits of judicial enquiry in a court of law. It is true that the appellants seek for reliefs in the present litigation on the ground that their civil rights to manage their temples according to the religious tenets are contravened; and so, the Court is bound to deal with the controversy as best as it can. The issue raised between the parties is undoubtedly justiciable and has to be considered as such; but in doing so, we cannot ignore the fact that the problem posed by the issue, though secular in character, is very complex to determine; its decision would depend on social, sociological, historical, religious and philosophical considerations; and when it is remembered that the development and growth of Hindu religion spreads over a large period nearly 4,000 years, the complexity of the problem would at once become patent. Who are Hindus and what are the broad features of Hindu religion, that must be the first part of our enquiry in dealing with the present controversy between the parties. The historical and etymological genesis of the word "Hindu, ' has given rise to a controversy amongst indologists; but the view generally accepted by scholars appears to be that the word "Hindu" is derived from the river Sindhu otherwise known as Indus which flows from the Punjab. "That part of the great Aryan race", says Monier 260 Williams, "which immigrated from Central Asia, through the mountain passes into India, settled first in the districts near the river Sindhu (now called the Indus). The Persians pronounced this word Hindu and named their Aryan brethren Hindus. The Greeks, who probably gained their first ideas of India from the Persians, dropped the hard aspirate, and called the Hindus "Indoi". " The Encyclopaedia of Religion and Ethics, Vol. VI, has described "Hinduism" as the title applied to that form of religion which prevails among the vast majority of the present population of the Indian Empire (p. 686). As Dr. Radhakrishnan has observed; "The Hindu civilization is so called, since its original founders or earliest followers occupied the territory drained by the Sindhu (the Indus) river system corresponding to the North West Frontier Province and the Punjab. This is recorded in the Rig Veda, the oldest of the Vedas, the Hindu scriptures which give their name to this period Indian history. The people on the Indian side of the Sindhu were called Hindu by the Persian and the later western invaders".(2) That is the genesis of the word "Hindu". When we think of the Hindu religion, we find it difficult, if not impossible, to define Hindu religion or even adequately describe it. Unlike other religions in the world, the Hindu religion does not claim any one prophet; it does not worship any one God; it does not subscribe to any one dogma; it does not believe in any one philosophic concept; it does not follow any one set of religious rites or performances; in fact, it does not appear to satisfy the narrow traditional features of any religion or creed. It may broadly be described as a way of life and nothing more. Confronted by this difficulty, Dr. Radhakrishnan realised that "to many Hinduism seems to be a name without any content. Is it a museum of beliefs, a medley of rites, or a mere map, a geographical expression?"(3) Having posed these questions which disturbed foreigners when they think of Hinduism, Dr. Radhakrishnan has explained how Hinduism has steadily absorbed the customs and ideas of peoples with whom it has come into contact and has thus been able to maintain its supremacy and its youth. The term 'Hindu ', according to Dr. Radhakrishnan, had originally a territorial and not a credal significance. It implied residence in a well defined geographical area. Aboriginal tribes, (1) "Hinduism" by Monier Williams, p. 1. (2) "The Hindu View of Life" by Dr. Radhakrishnan, p. 12. (3) Ibid p. 11. 261 savage and half civilized people, the cultured Dravidians and the Vedic Aryans were all Hindus as they were the sons of the same mother. The Hindu thinkers reckoned with the striking fact that the men and women dwelling in India belonged to different communities, worshipped different gods, and practised different rites (Kurma Purana)(1). Monier Williams has observed that "it must be borne in mind that Hinduism is far more than a mere form of theism resting on Brahmanism. It presents for our investigation a complex congeries of creeds and doctrines which in its gradual accumulation may be compared to the gathering together of the mighty volume of the Ganges, swollen by a continual influx of tributary rivers and rivulets, spreading itself over an ever increasing area of country and finally resolving itself into an intricate Delta of tortuous steams and jungly marshes. . The Hindu religion is a reflection of the composite character of the Hindus, who are not one people but many. It is based on the idea of universal receptivity. It has ever aimed at accommodating itself to circumstances, and has carried on the process of adaptation through more than three thousand years. It has first borne with and then, so to speak, swallowed, digested, and assimilated something from all creeds. "(2) We have already indicated that the usual tests which can be applied in relation to any recognised religion or religious creed in the world turn out to be inadequate in dealing with the problem of Hindu religion. Normally, any recognised religion or religious creed subscribes to a body of set philosophic concepts and theological beliefs. Does this test apply to the Hindu religion ? In answering this question, we would base ourselves mainly on the exposition of the problem by Dr. Radhakrishnan in his work on Indian Philosophy. (3) Unlike other countries, India can claim that philosophy in ancient India was not an auxiliary to any other science or art, but always held a prominent position of independence. The Mundaka Upanisad speaks of Brahma vidya or the science of the eternal as the basis of all sciences, 'sarva vidyapratishtha '. According to Kautilya, "Philosophy" is the lamp of all the sciences, the means of performing all the works, and the support of all the duties. "In all the fleeting centuries of history", says Dr. Radhakrishnan, "in all the vicissitudes through which India has passed, a certain marked identity is visible. It has held fast to certain psychological traits which constitute its special (1) lbid p. 12. (2) "Religious Thought & Life In India" by Monier Williams, p. 57. (3) "Indian Philosophy" by Dr. Radhakrishrian, Vol. 1, pp. 22 23. 262 heritage, and they will be the characteristic marks of the Indian people so long as they are privileged to have a separate existence". The history of Indian thought emphatically brings out the fact that the development of Hindu religion has always been inspired by an endless quest of the mind for truth based on the consciousness that truth has many facets. Truth is one, but wise men describe it differently.(1) The Indian mind has, consistently through the ages, been exercised over the problem of the nature of godhead the problem that faces the spirit at the end of life, and, the interrelation between the individual and the universal soul. "If we can abstract from the variety of opinion", says Dr. Radhakrishnan, "and observe the general spirit of Indian thought, we shall find that it has a disposition to interpret life and nature in the way of monistic idealism, though this tendency is so plastic, living and manifold that it takes many forms and expresses itself in even mutually hostile teachings".(2) The monistic idealism which can be said to be the general distinguishing feature of Hindu Philosophy has been expressed in four different forms : (1) Non dualism or Advitism; (2) Pure monism: (3) Modified monism; and (4) Implicit monism. It is remarkable that these different forms of monistic idealism purport to derive support from the same vedic and Upanishadic texts. Shankar, Ramanuja, Vallabha and Madhva all based their philosophic concepts on what they regarded to be the synthesis between the Upanishads, the Brahmasutras and the Bhagavad Gita. Though philosophic concepts and principles evolved by different Hindu thinkers and philosophers varied in many ways and even appeared to conflict with each other in some particulars, they all had reverence for the past and accepted the Vedas as the sole foundation of the Hindu philosophy. Naturally enough, it was realised by Hindu religion from the very beginning of its career that truth was many sided and different views contained different aspects of truth which no one could fully express. This knowledge inevitably bred a spirit of tolerance and willingness to understand and appreciate the opponents point of view. That is how "the several views set forth in India in regard to the vital philosophic concepts are considered to be the branches of the self same tree. The short cuts and blind alleys are somehow reconciled with the main road of advance to the truth. "(3) When we consider this broad sweep of the Hindu philosophic concepts, it would be realised that under Hindu philosophy, there is no scope for ex (2) lbid, p. 32. (3) lbid P. 48. 263 communicating any notion or principle as heretical and rejecting it as such. Max Muller who was a great oriental scholar of his time was impressed by this comprehensive and all pervasive aspect of the s`weep of Hindu philosophy. Referring to the six systems known to Hindu philosophy, Max Muller observed: "The longer I have studied the various systems, the more have I become impressed with the truth of the view taken by Vijnanabhiksu and others that there is behind the variety of the six systems a common fund of what may be called national or popular philosophy, a large manasa (lake) of philosophical thought and language far away in the distant North and in the distant past, from which each thinker was allowed to draw for his own purposes".(1) Beneath the diversity of philosophic thoughts, concepts and ideas expressed by Hindu philosophers who started different philosophic schools, lie certain broad concepts which can be treated as basic. The first amongst these basic concepts is the acceptance of the Veda as the highest authority in religious and philosophic matters. This concept necessarily implies that all the systems claim to have drawn their principles from a common. reservoir of thought enshrined in the Veda. The Hindu teachers were thus obliged to use the heritage they received from the past in order to make their views readily understood. The other basic concept which is common to the six systems of Hindu philosophy is that "all of them accept the view of the great world rhythm. Vast periods of creation, maintenance and dissolution follow each other in endless succession. This theory is not inconsistent with, belief in progress; for it is not a question of the movement of the world reaching its goal times without number, and being again forced back to its starting point. It means that the race of man enters upon and retravels its ascending path of realisation. This interminable succession of world ages has no beginning(2) It may also be said that all the systems of Hindu philosophy believe in rebirth and pre existence. "Our life is a step on a road, the direction and goal of which are lost in the infinite. On this road, death is never an end of an obstacle but at most the beginning of new steps".(8) Thus, it is clear that unlike other religions and religious creeds, Hindu religion is not tied to any definite set of philosophic concepts as such. Do the Hindus worship at their temples the same set or number of gods ? That is another question which can be asked in this (1) "Six Systems of Indian Philosophy" by Max Muller p. xvii. (2) In Philosophy" by Dr. Radhakrishnan, Vol. IT., V. 26 (3)idib. L10 Sup. C.I./6" 2 64 connection; and the answer to this question again has to be in the negative. Indeed, there are certain sections of the Hindu community which do not believe in the worship of idols; and as regards those sections of the Hindu community which believe in the worship of idols, their idols differ from community to community and it cannot be said that one definite idol or a definite number of idols are worshipped by all the Hindus in general. In the Hindu Pantheon the first gods that were worshipped in Vedic times were mainly Indra, Varuna, Vayu and Agni. Later, Brahma, Vishnu and Mahesh came to be worshipped. In course ,of time, Rama and Krishna secured a place of pride in the Hindu Pantheon, and gradually as different philosophic concepts held sway in different sects and in different sections of the Hindu ,community, a large number of gods were added, with the result that today, the Hindu Pantheon presents the spectacle of a very large number of gods who are worshipped by different sections ,of the Hindus. The development of Hindu religion and philosophy shows that from time to time saints and religious reformers attempted to remove from the Hindu thought and practices elements of corruption and superstition and that led to the formation of different sects. Buddha started Buddhism; Mahavir founded Jainism; Basava became the founder of Lingayat religion, Dnyaneshwar and Tuk aram initiated the Varakari cult; Guru Nank inspired Sikhism; Dayananda founded Arya Samaj, and Chaitanya began Bhakti cult; and as a result of the teachings of Ramakrishna and Viveka nanda, Hindu religion flowered into its most attractive, progressive and dynamic form. If we study the teachings of these saints and religious reformers, we would notice an amount of divergence in their respective views; but underneath that divergence, there is a kind of subtle indescribable unity which keeps them within the sweep of the broad and progressive Hindu religion. There are some remarkable features of the teachings of these saints and religious reformers. All of them revolted against the dominance of rituals and the power of the priestly class with which it came to be associated; and all of them proclaimed their teachings not in Sanskrit which was the monopoly of the priestly class, but in the languages spoken by the ordinary mass of people in their respective regions. Whilst we are dealing with this broad and comprehensive ,aspect of Hindu religion, it may be permissible to enquire what, :according to this religion, is the ultimate goal of humanity? It 265 is the release and freedom from the unceasing cycle of births and rebirths; Moksha or Nirvana, which is the ultimate aim of Hindu religion and philosophy, represents the state of absolute absorption and assimilation of the individual soul with the infinite. What are the means to attain this end ? On this vital issue, there is great divergence of views; some emphasise the importance of Gyan or knowledge, while others extol the virtues of Bhakti or devotion; and yet others insist upon the paramount importance of the performance of duties with a heart full of devotion and mind inspired by true knowledge. In this sphere again, there is diversity of opinion, though all are agreed about the ultimate goal. Therefore, it would be inappropriate to apply the traditional tests in determining the extent of the jurisdiction of Hindu religion. It can be safely described as a way of life based on certain basic concepts to which we have already referred. Tilak faced this complex and difficult problem of defining or at least describing adequately Hindu religion and he evolved a working formula which may be regarded as fairly adequate and satisfactory. Said Tilak : "Acceptance of the Vedas with reverence; recognition of the fact that the means or ways to salvation are diverse and realisation of the truth that the number of gods to be worshipped is large, that indeed is the distinguishing feature of Hindu religion"(1). This definition brings out succinctly the broad distinctive features of Hindu religion. It is somewhat remarkable that this broad sweep of Hindu religion has been eloquently described by Toynbee. Says Toynbee : "When we pass from the plane of social practice to the plane of intellectual outlook, Hinduism too comes out well by comparison with the religions and ideologies of the South West Asian group. In contrast to these Hinduism has the same outlook as the pre Christian and pre Muslim religions and philosophies of the Western half of the old world. Like them, Hinduism takes it for granted that there is more than one valid approach to truth and to salvation and that these different approaches are not only compatible with each other, but are complementary"(2). The Constitution makers were fully conscious of this broad and comprehensive character of Hindu religion; and so, while guaranteeing the fundamental right to freedom of religion, Explanation II to article 25 has made it clear that in sub clause (b) of clause (2), the reference to Hindus shall be construed as (B.G.Tilak 's"Gitarahasya") (2) "The Present Day Experiment in Western Civilisation" by Toynbee, pp. 48 49. 266 including a reference to persons professing the Sikh, Jaina or Buddhist religion, and the reference to Hindu religious institutions shall be construed accordingly. Consistently with this constitutional provision, the ; the ; the Hindu Minority and Guardianship Act, 1956; and the have extended the application of these Acts to all persons who can be regarded as Hindus in this broad and comprehensive sense. Section 2 of the, , for instance, provides that this Act applies (a)to any person who is a Hindu by religion in any of its forms or developments, including a Virashaiva, a Lingayat or a follower of the Brahmo, Prarthana or Arya Samaj, (b)to any person who is a Buddhist, Jaina, or Sikh by religion, and (c)to any other person domiciled in the territories to which this Act extends who is not a Muslim, Christian, Parsi or Jew by religion, unless it is proved that any such person would not have been governed by the Hindu law or by any custom or usage as part of that law in respect of any of the matters dealt with herein if this Act had not been passed. The same provision is made in the other three Acts to which we have just referred. It is in the light of this position that we must now proceed to consider whether the philosophy and theology of Swaminarayan show that the school of Swaminarayan constitutes a distinct and separate religion which is not a part of Hindu religion. Do the followers of the said sect fall outside the Hindu brotherhood, that is the crux of the problem which we have to face in the present appeal. In deciding this question, it is necessary to consider broadly the philosophic and theological tenets of Swaminarayan and the characteristics which marked the followers of Swami narayan who are otherwise known as Satsangis. In dealing with this aspect of the problem, it would be safe to rely upon the data furnished by Monier Williams in his book "Religious thought and life in India" (1883). It is hardly necessary to emphasise that Monier Williams played a very important role in explaining the religious thought and life in India to the English speaking world outside India. "Having been a 2 67 student of Indian sacred literature for more than forty years," observed Monier Williams "and having twice travelled over every part of India, from Bombay to Calcutta, from Cashmere to Ceylon, I may possibly hope to make a dry subject fairly attractive without any serious sacrifice of scientific accuracy, while at the same time it will be my earnest endeavour to hold the scales impartially between antagonistic religious systems and as far as possible to do justice to the amount of truth that each may contain" (P. 1). It is remarkable tribute to the scholarship of Monier Williams and of his devotion to the mission which he had undertaken that though his book was written as early as 1883, it is still regarded as a valuable source of information in dealing with problems connected with the religious thought and life in India. Let us then refer briefly to the life story of Swaminarayan for that would help us to understand and appreciate the significance of his philosophic and religious teachings. The original name of Swaminarayan was Sahajananda. By birth, he was a high caste Brahaman. He was born at Chapai, a village 120 miles to the North west of Lucknow, about the year 1780. He was born to Vaishnava parents, but early in his career he was "disgusted with the manner of life of the so called followers of Vallabhacharya, whose precepts and practice were utterly at variance, and especially with the licentious habits of the Bombay Maharajas. " He was then determined to denounce these irregularities and expose the vices that had crept into the lives of the Bombay Maharajas. Swaminarayan was a celibate and he "lived an ascetical, yet withal a large hearted and philanthropic, life" and the showed a great aptitude for learning. In 1800, he left his home and placed himself under the protection of the chief Guru, named Ramananda Swami at a village within the jurisdiction of the Junagarh Nawab. When Ramananda Swami removed to Ahmedabad in 1804, Sahajananda followed him. Soon Sahajananda collected around him a little band of disciples, which rapidly grew "into an army of devoted adherents". That naturally provoked the wrath of the orthodox Brahmans and magnates of Ahmedabad who began to persecute him. That drove Sahajananda to Jetalpur, 12 miles south of Ahmedabad, which became the, focus of a great religious gathering. Thousands of people were attracted by this young religious teacher who now took the name of Swaminarayan. Swaminarayan then retired to the secluded village of Wartal, where he erected a temple to Narayana (otherwise Krishna, or Vishnu, as the Supreme Being) associated with the goddess Lakshmi. From this Central scene of his religious activities, Swaminarayan mounted a strong crusade 2 68 against the licentious habits of the gurus of the Vallabhacharya sect. His watchword was "devotion to Krishna with observance of, duty and purity of life". The two principal temples of the Swaminarayan sect are at Wartal, which is about four miles to the west of the Baroda railway station, and at Ahmedabad. In about 1826 27, a formal constitution of the sect appears to have been prepared; it is known as the 'Iekh ' or the document for the apportionment of territory (Deshvibhaga Lekh). By this document, Swaminarayan divided India into two parts by a national line running from Calcutta to Navangar and established dioceses, the northern one with the temple of Nar Narayan at Ahmedabad, and the southern one which included the temple of Lakshminarayan at Wartal. To preside over these two dioceses Swaminarayan adopted his two nephews Ayodhyaprasad and Raghuvir respectively. Subordinate to these Gadis and the principal temples, two score large temples and over a thousand smaller temples scattered all over the country came to be built in due course. The Constitution of the Swaminarayan sect and its tenets and practices are collected in four different scriptures of the faith viz., (1) the "Lekh" to which we have just referred; (2) the "Shikahapatri" which was originally written by Swaminarayan himself in about 1826 A.D.; the original manuscript does not appear to be available, but the Shikshapatri was subsequently rendered into Sanskrit verses by Shatanandswami under the directions of Swaminarayan himself. This Sanskrit translation is treated by the followers of Swaminarayan as authentic. This book was later translated into Gujarati by another disciple named Nityanand. This Shikshapatri is held in high reverence by the followers of the faith as a prayer book and it contains summary of Swaminarayan 's instructions and principles which have to be followed by his disciples in their lives; (3) the "Satsangijiwan" which consists of five parts and is written in Sanskrit by Shathnand during the lifetime of Swaminarayan. This work gives an account of the life and teachings of Swaminarayan. It appears to have been completed in about 1829. Shikshapatri has been bodily in corporated in this work; (4) the "Vachanamrit" which is a collection of Swaminarayan 's sermons in Gujarati. This appears to have been prepared between 1828 and 1830. Swaminarayan died in 1830. It is necessary at this stage to indicate broadly the principles which Swaminarayan preached and which he wanted his followers to adopt in life. These principles have been suscinctly sum 269 marised by Monier Williams. It is interesting to recall that before Monier Williams wrote his Chapter on Swaminarayan sect he visited the Wartal temple in company with the Collector of Kaira on the day of the Purnima, or full moon of the month of Karttik which is regarded as the most popular festival of the whole year by the Swaminarayan sect. On the occasion of this visit, Monier Williams had long discussions with the followers of Swaminarayan and he did his best to ascertain the way Swaminarayan 's principles were preached and taught and the way they were, practised by the followers of the sect. We will now briefly reproduce some of the principles enunciated by Swaminarayan. "The killing of any animal for the purpose of sacrifice to the gods is forbidden by me. Abstaining from injury is the highest of all duties. No flesh meat must ever be eaten, no spirituous or vinous liquor must ever be drunk, not even as medicine. My male followers should make the vertical mark (emblematical of the footprint of Vishnu or Krishna) with the round spot inside it (symbolical of Lakshmi) on their foreheads. Their wives should only make the circular mark with red powder or saffron. Those who are initiated into the proper worship of Krishna should always wear on their necks two rosaries made of `Tulsi wood, one for Krishna and the other for Radha. After engaging in mental worship, let them reverently bow down before the pictures of Radha and Krishna, and repeat the eight syllabled prayer to Krishna (Sri Krishnan saranam mama, 'Great Krishna is my soul 's refuge ') as many times as possible. Then let them apply themselves to secular affairs. Duty (Dharma) is that good practice which is enjoined both by the Veda (Sruti) and by the law (Smriti) founded on the Veda. Devotion (Bhakti) is intense love for Krishna accompanied with a due sense of his glory. Every day all my followers should go to the Temple of God, and there repeat the names of Krishna. The story of his life should be listened to with the great reverence, and hymns in his praise should be sung on festive days. Vishnu, Siva, Ganapati (or Ganesa), Parvati, and the Sun; these five deities should be honoured with worship. Narayana and Siva should be equally regarded as part of one and same Supreme Spirit, since both have been declared in the Vedas to be forms of Brahma. On no account let it be supposed that difference in forms (or names) makes any difference in the identity of the deity. That Being, known by various names such as the glorious Krishna, Param Brahma, Bhagavan, Puru shottama the cause of all manifestations, is to be adored by us as our one chosen deity. The philosophical doctrine approved by me is the Visishtadvaita (of Ramanuja), and the desired heavenly 270 abode is Goloka. there to worship Krishna and be united with him as the Supreme Soul is to be considered salvation. The twice born should perform at the proper seasons, and according to their means, he twelve purification rites (sankara), the (Six) daily duties, and the Sradha offerings to the spirits of departed ancestors. A pilgrimage to the Tirthas, or holy places, of which Dwarika (Krishna 's city in Gujarat) is the chief, should be performed according to rule. Almsgiving and kind acts towards the poor ,Should always be performed by all. A tithe of one 's income should be assigned to Krishna; the poor should give a twentieth part. Those males and females of my followers who will act according to these directions shall certainly obtain the four great objects of all human desires religious merit, wealth, pleasure, and beatitude"(1). The Gazetteer of the Bombay Presidency has summarised the teachings embodied in the Shikshapatri in this way : "The book of precepts strictly prohibits the destruction of animal life; promiscuous intercourse with the other sex; use of animal food and intoxicant liquors and drugs on any occasion, suicide, theft and robbery; false accusation against a fello wman, blasphemy; partaking of food with low caste people; caste pollution; company of atheists and heretics and other practices which might counteract the effect of the founder 's teachings".(2) It is interesting to notice how a person is initiated into the sect of Satsangis. The ceremony of initiation is thus described in the Gazetteer of the Bombay Presidency : "The ceremony of initiation begins with the novice offering a palmful of water which he throws on the ground at the feet of the Acharya saying : I give over to Swami Sahajanand my mind, body, wealth, and sins of (all) births, 'Man ', tan, dhan, and janmana pap. He is then given the sacred formula 'Sri Krishnastwam gatirmama, Shri Krishna thou art my refuge. The novice then pays at least half a rupee to the Acharya. Sometimes the Acharya delegates his authority to admit followers as candidates for regular discipleship, giving them the Panch Vartaman, formula forbiding lying, theft, adultery, intoxication and animal food. But a (1) "Religious thought and life in India" ' By Monier Williams pp. 155 58. (2) Gazetteer of the Bombay Presidency, Vol. IX, Part 1, Gujarat Population, 1901, p. 537. 2 7 1 .lm15 perfect disciple can be made only after receiving the final formula from one of the two Acharyas. The distinguishing mark, which the disciple is then allowed to make on his forehead, is a vertical streak of Gopichandan clay or sandal with a round redpowder mark in the middle and a necklet of sweet basil beads".(1) Now that we have seen the main events in the life and career of Swaminarayan and have examined the broad features of his teachings, it becomes very easy to, decide the question as to whether the Swammarayan sect constitutes a distinct and separate religion and cannot be regarded as a part of Hindu religion. In our opinion, the plea raised by the appellants that the Satsangis who follow the Swaminarayan sect form a separate and distinct community different from the Hindu community and their religion is a distinct and separate religion different from Hindu religion, is entirely misconceived. Philosophically, Swaminarayan is a follower of Ramanuja, and the essence of his teachings is that every individual should follow the main Vedic injunctions of a good, pious and religious life and should attempt to attain salvation by the path of devotion to Lord Krishna. The essence of the initiation lies in giving the person initiated the secret 'Mantra ' which is : "Lord Krishna, thou art my refuge : Lord Krishna, I dedicate myself to thee '. Acceptance of the Vedas with reverence recognition of the fact that the path of Bhakti or devotion leads to Moksha, and insistence on devotion to Lord Krishna unambiguously and unequivocally proclaim that Swaminarayan was a Hindu saint who was determined to remove the corrupt practices which had crept into the lives of the preachers and followers of Vallabhacharya, and who wanted to restore the Hindu religion to its original glory and purity. Considering the work done by Swaminarayan, history will not hesitate to accord him the place of honour in the galaxy of Hindu saints and religious reformers who by their teachings, have contributed to make Hindu religion ever alive, youthful and vigorous. It is, however, urged that there are certain features of the Satsangi followers of Swaminarayan which indicate that the sect is a different community by itself and its religion is not a part of Hindu religion. It is argued that no person becomes a Satsangi by birth and it is only by initiation that the status of Satsangi is conferred on a person. Persons of other religions and Harijans can join the Satsangi sect by initiation. Swaminarayan himself is (1) Gazetteer of the Bombay Presidency, Vol. IX Part 1, Gujarat Population, pp. 538 39. 2 72 . treated as a God and in the main temple, worship is offered to Swaminarayan pre eminently; and that, it is argued, is not consistent with the accepted notions of Hindu religion. Women can take Diksha and become followers of Swaminarayan though Diksha to women is given by the wife of the Acharya. Five vows have to be taken by the followers of the Satsang, such as abstinence from drinking, from non vegetarian diet, from illegal sexual relationship, from theft and from inter pollution. Separate arrangements are made for Darshan for women, special scriptures are honoured and special teachers are appointed to worship in the temples. Mr. Desai contends that having regard to all these distinctive features of the Swaminarayan sect, it would be difficult to hold that they are members of the Hindu community and their temples are places of public worship within the meaning of section 2 of the Act. We are not impressed by this argument. Even a cursory study of the growth and development of Hindu religion through the ages shows that whenever a saint or a religious reformer attempted the task of reforming Hindu religion and fighting irrational or corrupt practices which had crept into it, a sect was born which was governed by its own tenets, but which basically subscribed to the fundamental notions of Hindu religion and Hindu philosophy. It has never been suggested that these sects are outside the Hindu brotherhood and the temples which they honour are not Hindu temples, such as are contemplated by section 3 of the Act. The fact that Swaminarayan himself is worshipped in these temples is not inconsistent with the belief which the teachings of Bhagvad Gita have traditionally created in all Hindu minds. According to the Bhagvad Gita, whenever religion is on the decline and irreligion is in the ascendance, God is born to restore the balance of religion and guide the destiny of the human race towards salvation.(1) The birth of every saint and religious reformer is taken as an illustration of the principle thus enunciated by Bhagvad Gita; and so, in course of time, these saints themselves are honoured, because the presence of divinity in their lives inevitably places them on the high pedestal of divinity itself. Therefore, we are satisfied that none of the reasons on which Mr. Desai relies, justifies his contention that the view taken by the High Court is not right. It is true that the Swaminarayan sect gives Diksha to the followers of other religions and as a result of such initiation, they Gita 4 .7. 273 become Satsangis without losing their character as the followers of their own individual religions. This fact, however, merely shows that the Satsang philosophy preached by Swaminarayan allows followers of other religions to receive the blessings of his teachings without insisting upon their forsaking their own religions. The fact that outsiders are willing to accept Diksha or initiation is taken as an indication of their sincere desire to absorb and practice the philosophy of Swaminarayan and that alone is held to be enough to confer on them the benefit of Swaminarayan 's teachings. The fact that the sect does not insist upon the actual process of proselytising on such occasions has really no relevance in deciding the question as to whether the sect itself is a Hindu sect or not. In a sense, this attitude of the Satsang sect is consistent with the basic Hindu religious and philosophic theory that many roads lead to God. Didn 't the Bhagavad Gita say: "even those who profess other religions and worship their gods in the manner prescribed by their religion, ultimately worship me and reach me. "(1) Therefore, we have no hesitation in holding that the High Court was right in coming to the conclusion that the Swaminarayan sect to which the appellants belong is not a religion distinct and separate from Hindu religion, and consequently, the temples belonging to the said sect do fall within the ambit of section 2 of the Act. The present suit began its career in 1948 and it was the result of the appellants ' apprehension that the proclaimed and publicised entry of the non Satsangi Harijans would constitute a violent trespass on the religious tenets and beliefs of the Swaminarayan sect. The appellants must no doubt, have realised that if non Satsangi Hindus including Harijans enter the temple quietly without making any public announcement in advance, it would be difficult, if not impossible, to bar their entry; but since respondent No. 1 publicly proclaimed that he and his followers would assert their right of entering the temples, the appellants thought occasion had arisen to bolt the doors of the temples against them; and so, they came to the Court in the present proceedings to ask for the Court 's command to prevent the entry of respondent No. 1 and his followers. It may be conceded that the genesis of the suit is the genuine apprehension entertained by the appellants; but as often happens in these matters, the said apprehension is founded on superstition, ignorance and complete misunderstanding of the true teachings Gita 9.23. 27 4 of Hindu religion and of the real significance of the tenets and philosophy taught by Swaminarayan himself. While this litigation was slowly moving from Court to Court, mighty events of a revolutionary character took place on the national scene. The Constitution came into force on the 26th January, 1950 and since then, the whole social and religious outlook of the Hindu community has undergone a fundamental change as a result of the message of social equality and justice proclaimed by the Indian Constitution. We have seen how the solemn promise enshrined in article 17 has been gradually, but irresistibly, enforced by the process of law assisted by enlightened public conscience. As a consequence, the controversy raised before us in the present appeal has today become a matter of mere academic interest. We feel confident that the view which we are taking on the merits of the dispute between the parties in the present appeal not only accords with the true legal position in the matter, but it will receive the spontaneous approval and response even from the traditionally conservative elements of the Satsang community .Whom the appellants represent in the present litigation. In conclusion, we would like to emphasise that the right to enter temples which has been vouchsafed to the Harijans by the impugned Act in substance symbolises the right of Harijans to enjoy all social amenities and rights, for, let it always be remembered that social justice is the main foundation of the democratic way of life ,,enshrined in the provisions of the Indian Constitution. The result is, the appeal fails and is dismissed with costs. Appeal dismissed.

The appellants, who are the followers of the Swaminarayan sect and known at Satsangis, filed a representative suit: (i) for a declaration that the relevant provisions of the Bombay Harijan Temple Entry Act, 1947, as amended by Act 77 of 1948, did not apply to their temples, because, the religion of the Swaminarayan sect was distinct and different from Hindu religion and because, the relevant provisions of the Act, were ultra vires, and (ii) for an injunction restraining the 1st respondent and other non Satsangi Harijans from entering the Swaminarayan temple. The Trial Court decreed the suit. Pending the 1st respondent 's appeal in the High Court, the Bombay Hindu Places of Public Worship (Entry Authorisation) Act, 1956, was passed, and since the 1947 Act gave place to the 1956 Act, it became necessary to consider whether the 1956 Act was intra vires. The High Court allowed the appeal and dismissed the suit holding that the followers of the Swaminarayan sect professed Hindu religion and that the Act of 1956 was constitutionally valid. In appeal to this Court it was contended that : (i) the High Court erred in treating the 1st respondent 's appeal as competent when the vakalatnama filed on his behalf was invalid (ii) section 3 of the 1956 Act was ultra vires as it contravened article 26(b) of the Constitution; and (iii) the religion of the Swaminarayan sect was distinct and separate from Hindu religion and that therefore the temples belonging to that sect did not fall within the ambit of the 1956 Act. HELD: (i) The appeal to the High Court was properly presented. Technically the memorandum of appeal presented by the Assistant Government Pleader on behalf of the 1st respondent suffered from an infirmity, because, the 1st respondent signed the vakalatnama in favour of the Government Pleader. But, since the Registry had not returned the appeal for correcting the irregularity, and since r. 95 of the Appellate Side Rules of the High Court authorises an advocate to appear even without initially filing a vakalatnama, the High Court was right in allowing the Government Pleader to sign the memorandum of appeal and the vakalatnarna, in order to remove the irregularity. [251 E G; 252 A C] (ii) There is no substance in the contention that section 3 contravenes article 26(b) of the Constitution and is therefore ultra vires. 243 The right to enter temples which has been vouchsafed to the Harijans by the impugned Act substance symbolises the right of Harijans to enjoys all social amenities and rights, for, social justice is the main foundation of the democratic way of life enshrined in the provisions of the Indian Constitution. After the Constitution came into force, the whole social and religious outlook of the Hindu community has undergone a fundamental change as a result of the message of social equality and justice proclaimed by the Constitution; and the solemn promise in article 17, abolishing untouchability has been gradually, but irresistibly enforced by the process of law assisted by enlightened public conscience. All that section 3 of the 1956 Act purports to do is to give the Harijans the same right to enter the temple for darshan of the deity as can be claimed by the other Hindus. The act of actual worship of the diety is allowed to be performed only by the authorised poojaris of the temple and by no other devotee entering the temple for darshan. Therefore, it was nont intended to invade the tradition and conventional manner of performing the actual worship of the idol. (iii) The High Court was right in coming to the conclusion that the religion of the Swaminarayan sect is not, distinct and separate from Hindu religion, and consequently, the temples belonging to the sect did fall within the ambit of section 2 of the Act. The Indian mind has consistently through the ages, been exercised, over the problem of the nature of godhead, the problem that faces the spirit at the end of life, and the interrelation between the individual and the universal soul. According to Hindu religion the ultimate goal of humanity is release and freedom from the unceasing cycle of births and rebirths and a state of absorption and assimilation of the individual soul with the infinite. On the means to attain this and there is a great divergence of views; some emphasise the importance of Gyana, while others extol the virtue of Bhakti or devotion, and yet others insist upon the paramount importance of the performance of duties with a heart full of devotion and in mind inspired by knowledge. Naturally it was realised by Hindu religion from the very beginning of its career that truth was many sided and different views contained different aspects of truth which no one could fully express. This knowledge inevitably bred a spirit of tolerance and willingness to understand and appreciate the opponent 's point of view. Because of this broad sweep of Hindu philosophic concept under Hindu philosophy, there is no scope for excommunicating any notion or principle as heretical and rejecting it as such. The development of Hindu religion and philosophy shows that from time to time saints and religious reformers attempted to remove from Hindu thought and practices, elements of corruption and superstition, and revolted against the dominance of rituals and the power of the priestly class with which it came to be associated; and that led to the formation of different sects. in the teaching of these saintns and religious reformers is noticeable a certain amount of divergence in their respective views; but underneath that divergence lie certain broad concepts which can be treated as basic, and there is a kind of subtle indescribable unity which keeps them within the sweep of broad and progressive Hindu religion. The first among these basic concepts is the acceptance of the Vedas as the highest authority in religious and philosophic matters. This concept necessarily implies that all the systems claim to have drawn their principles from a common, reservoir of thought enshrined in the Vedas. Unlike other religions in the world, the Hindu religion does not claim any one prophet; it does no( worship any one God; it does not subscribe to any one dogma;it does 244 not believe in any one philosophic concept; it does not follow any one set of religious rites or performances; in fact, it does not satisfy the traditional features of a religion or creed. It is a way of life and nothing more. The Constitution makers were fully conscious, of the broad and comprehensive character of Hindu religion; and while guaranteeing the fundamental right to freedom of religion made it clear that reference to Hindus shall be construed as including a reference to persons professing the Sikh, Jaina or Buddhist religion. Philosophically, Swaminarayan was a follower of Ramanuja and the essence of his teachings is acceptance of the Vedas with reverence, recognition of the fact that the path of Bhakti or devotion leads to Maksha, insistence or devotion to Loard Krishna and a determination to remove corrupt practices and restore Hindu Religion to its original glory and purity. This shows unambiguously and unequivocally that Swaminarayan was a Hindu saint. Further, the facts that initiation is necessary to become a Satsangi, that persons of other religions could join the sect by initiation without any process of proselytising on such occasions, and that Swaminarayan himself is treated as a God, are not inconsistent with the basic Hindu religious and philosophic theory.

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Appeal No. 804 of 1963. Appeal by special leave from the judgment and decree, dated January 3, 1961 of the Orissa High Court in Appeal under Orissa High Court Order No. 3 of 1959. 25 K. R. Chaudhuri, for the appellant. C. B. Aggarwala, B. Parthasarathy, J. B. Dadachanji, O.C. Mathur, and Ravinder Narain, for respondent No. 1. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by special leave on behalf of the judgment debtor against the judgment of the Orissa High Court, dated January 3, 1961 in Letters Patent Appeal No. 3 of 1959. The deceased plaintiff filed Original Suit No. 500 of 1941 against the appellant defendant in the Court of the Additional Munsif, Aska claiming Rs. 970 on the basis of a promissory note. The suit was dismissed on August 17, 1942. The plaintiff preferred an appeal No. 178 of 1942 before the District Judge who allowed the appeal and set aside the decree of the Munsif and decreed the suit ex parte on March 9, 1943. Against this decree of the appellate Court, the appellant filed Second Appeal No. 100 of 1943 in the Orissa High Court which set aside the decree of the District Judge on November 11, 1946 and remanded the suit to the lower appellate court for disposal. The lower appellate court in its turn remanded the suit to the trial court by its judgment, dated April 11, 1947. In the meantime the original plaintiff died and the present respondents were brought on record as his legal representatives. The suit was again dismissed by the trial court on November 29, 1947 but on appeal the Additional Subordinate Judge set aside the judgment and decree of the Munsif on November 30, 1948. The appellant carried the matter in Second Appeal No. 12 of 1949 to the Orissa High Court which dismissed the appeal on August 27, 1954. After the ex parte decree was passed inappeal No. 178 of 1942 by the District Judge on March 9,1943, the plaintiff executed the decree, attached the propertiesin dispute and himself purchased the properties in Court auction. The plaintiff also took delivery of the properties on May 17, 1946 and since that date the respondents have been in possession of the properties and enjoying the usufruct. After the decree of the High Court, dated November 11. 1946 in Second Appeal No. 100 of 1943 the appellant made an application for restitution in the Court of the Additional Munsif in Miscellaneous Judicial Case No. 34 of 1947. The plaintiff obtained a stay of the hearing of the Miscellaneous Judicial Case from the Court of the Additional District Judge but on March 30, 1948 the order of stay was discharged. In Civil Revision No. 75 sup, Cl/66 3 2 6 of 1948 the High Court also granted interim stay in the proceedings in the Miscellaneous Judicial Case at the instance of the plaintiff but the order of stay was vacated by the High Court on April 28, 1949. Thereafter the present appellant got the Miscellaneous Judicial Case stayed till disposal of his Second Appeal after remand. On July 12, 1956 the Miscellaneous Judicial case was allowed by the Munsif and an order of restitution was made in favour of the appellant. The respondents filed an appeal before the Subordinate Judge of Berhampur who allowed the appeal and set aside the order of restitution. The appellant took the matter before the High Court in Miscellaneous Appeal No. 24 of 1958 which was allowed by P. V. Balakrishna Rao, J. on October 3, 1958 and it was ordered that the restitution of the properties should be made to the appellant subject to the condition that he must deposit the amount decreed in favour of the plaintiff decree holder. The order of the learned Single Judge was, however, set aside in Letters Patent appeal by a Division Bench which held that the appellant was not entitled to restitution of properties sold in the execution case. The question presented for determination in this case is whether the appellant was entitled to restitution of his properties purchased by judgment debtor in execution of the decree passed by the District Judge on the ground that the decree was set aside by the High Court and the suit was remanded for rehearing and fresh disposal under the provisions of section 144 of the Civil Procedure Code which states as follows 144 (1) Where and in so far as a decree or order is varied or reversed, the Court of first instance shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree or such part thereof as has been varied or reversed; and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation or reversal. " On behalf of the responds Mr. aggarwala made the submission that after the suit was re heard a decree was passed in favour of the respondents and that decree was eventually affirmed by the High Court., and the appellant was, therefore, not entitled to 27 restitution under the provisions of this section. We are unable to accept this argument as correct. The properties of the appellant were sold in execution at the instance of the respondents who were executing the ex parte decree passed by the District Judge on March 9, 1943. In this execution case, the properties of the appellant were sold and the respondents got delivery of possession on May 17, 1946. It is true that the suit was eventually decreed after remand on August 27, 1954 by judgment of the High Court, but we are unable to accept the argument of the respondents that the execution sale held under the previous ex parte decree which was set aside by the High Court, is validated by the passing of the subsequent decree and therefore the appellant is not entitled to, any restitution. It is evident that the application for restitution was filed by the appellant in 1947 in Miscellaneous Judicial Case, No. 34 of 1947 before the passing of a fresh decree by the High Court in the Second Appeal. At the time of the application for restitution, therefore, the appellant was entitled to restitution,. because on that date the decree in execution of which the properties. were sold had been set aside. We are of the opinion that the appellant is entitled to restitution notwithstanding anything which happened subsequently as the right to claim restitution is based upon the existence or otherwise of a decree in favour of the plaintiff ' at the time when the application for restitution was made. The principle of the doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. This obligation arises automatically on the reversal or modification of the decree and ' necessarily carries with it the right to restitution of all that has been done under the erroneous decree; and the Court in making restitution is bound to restore the parties, so far as they can berestored, to the same position they were in at the time when the Court by its erroneous action had displaced them from. It should be noticed, in the present case, that the properties were purchased ' by the decree holder himself in execution of the ex parte decree and not by a stranger auction purchaser. After the ex parte decree was set aside in appeal and after a fresh decree was passed on remand, the sale held in execution of the ex parte decree becomes invalid and the decree holder who purchased the properties in executions of the invalid decree is bound to restore to the judgment debtor what he had gained under the decree which was subsequently set aside. The view that we have expressed is borne out by the decision of the Judicial Committee in Zain Ul Abdin Khan vs 28 Muhammad Asghar Ali Khan(1) in which a suit was brought by the judgment debtor to set aside the sale of his property in execution of the decree against him in force at the time of the sales, but afterwards so modified, as the result of an appeal to Her Majesty in Council, that, as it finally stood, it would have been satisfied without the sales in question having taken place. The judgmentdebtor sued both those who were purchasers at some of the sales, being also holders of the decree to satisfy which the sales took place, and those who were bona fide purchasers at other sales, under the same decree, who were no parties to it. The Judicial Committee held that, as against the latter purchasers, whose position was different from that of the decree holding purchasers, the suit must be dismissed. At page 172 of the Report, Sir B. Peacock observed as follows "It appears to their Lordships that there is a great distinction between the decree holders who came in and purchased under their own decree, which was afterwards reversed on appeal, and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, and at a time when that decree was a valid decree, and when the order for the sale was a valid order." The same principle has been laid down by the Calcutta High Court in Set Umedmal and another vs Srinath Ray and another (2 ) where certain immovable properties were sold in execution of an exparte decree and were purchased by the decree holder himself. After the confirmation of the sale, the decree was set aside under section 108 of the Civil Procedure Code, 1882 at the instance of some of the defendants in the original suit. On an application unders. 244 of the Civil Procedure Code, 1882 having been made by adecree, to set aside the sale held in execution of the ex parte decree the defence was that the application could not come under section 244 of the Civil Procedure Code, 1882, and that the sale could not be set aside, as it had been confirmed. It was held by the Calcutta High Court that the ex parte decree having been set aside the sale could not stand, inasmuch as the decree holder himself was the purchaser. At page 813 Maclean, C.J. stated : "As regards the second point, viz., whether, notwithstanding the confirmation, the sale ought to be set aside, (1) I.L,R. 10 All, 166. (2) I.L.R. 29 the fact that the decree holder is himself the auction purchaser is an element of considerable importance. The distinction between the case of the decree holder and of a third party being the auction purchaser is pointed out by their Lordships of the Judicial Committee in the case of Nawab Zainal abdin Khan vs Mahommed Asghar Ali (I.L.R. 10 All., 166), and also in the case of Mina Kumari Bibee vs Jagat Sattani Bibee (I.L.R. , which is a clear authority for the proposition that where the decree holder is himself the auction purchaser, the sale cannot stand, if the decree be subsequently set aside. I am not aware that this decision, which was given in 1883, has since been impugned. " The same view has been expressed in Raghu Nandan Singh vs Jagdish Singh(1) where it was held that if an ex parte decree has been set aside, it cannot by any subsequent proceeding be revived and if a decree is passed against judgment debtors on re hearing, it is a new decree and does not revive the former decree. The same opinion has been expressed in Abdul Rahaman vs Sarafat Ali(2) in which it was pointed out that as soon as an ex parte decree was set aside, the sale, where the decree holder was the purchaser, falls through and was not validated by a fresh decree subsequently made. The same principle was reiterated by the Bombay High Court in Shivbai Kom Babya Swami vs Yesoo.(3). In that case, an ex parte decree was passed against the defendant, in execution of which the defendant 's house was sold and purchased by the plaintiff decree holder. The ex parte decree was subsequently set aside; but at the retrial, a decree was again passed in plaintiffs favour. In the meanwhile, the defendant applied to have the sale of the house set aside. It was held, in these circumstances, by the Bombay High Court that the previous sale of the house in execution under the previous decree which had been set aside should itself be set aside as being no longer based on any solid foundation; but subject in all the circumstances to the condition that the defendant should pay up the amount due under the second decree within a specified time. On behalf of the respondents reference was made to the decision of this Court in Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das. (4 ) But the ratio of that case has no application to the present case. It should be noticed that the decree in that case was affirmed at all stages of the litigation except that the amount of (1) 14 Calcutta Weekly Notes, 182. (3) I.L.R. (2) 20 Calcutta Weekly Notes, 667. (4) 30 the decree was slightly altered from Rs. 3,38,300 and odd to Rs. 3,76,790 and odd which amount was ultimately decreed by the Privy Council in the appeal which the judgment debtor preferred from the decision of the Oudh Chief Court which restored the decree of the trial Judge who decreed a sum of Rs. 3,88,300. It was held by this Court that the Privy Council had merely restored the amended decree without altering the provisions as to payment by instalments or extending the time for payment by instalments and its decree did not in any way alter the position of the parties as it stood under the amended decree, and, the sale was not in consequence of any error in a decree which was reversed on appeal by the Privy Council and so the judgment debtor was not entitled to restitution. In the present case the material.facts are manifestly very different. For the reasons expressed, we are satisfied that the appellant is entitled to restitution of the properties sold in execution of the export decree subject to equities to be adjusted in favour of the respondent decree holders. We order that the appellant should be restored back to possession of the properties sold in the execution case subject to the condition that he deposits the amount of Rs. 970 in the Court of the Munsif, Aska within two months from this date. If no deposit is made within this time this appeal will stand dismissed with costs. But if the appellant makes the deposit within the time allowed the sale of the properties in the execution case will be set aside and the respondents will make over the possession of the properties sold to the appellant. The appellant will not be entitled to any past mesne profits but if the respondents do not deliver the possession of the properties the appellant will be entitled to the future mesne profits from the respondents from the date of deposit till the actual date of delivery of possession. Learned Counsel for the appellant has informed us that the deposit has already been made by the appellant in pursuance of the order of the learned Single Judge of the High Court, dated October 3, 1958. If the deposit has already been made the appellant will be entitled to take possession of the properties through the executing court and to future mesne profits from the date of this judgment till the actual date of delivery of possession. We accordingly allow the appeal to the extent indicated above. In the circumstances of the case we do not propose to make any order as to costs. Appeal allowed in part.

A money suit against the appellant was dismissed by the trial court but the first appellate court passed an ex parte decree against him. The appellant 's property was sold in execution and purchased by the decreeholder. The appellant went to the High Court which set aside the exparte decree and remanded the suit. The appellant then filed an appli cation for restitution under section 144 of the Code of Civil Procedure. It was stayed pending proceedings in the main suit. 'Me suit was finally decided against the applicant, by the High Court. Thereafter the trial court allowed the appellant 's application for restitution. After intermediate proceedings the High Court decided in Letters Patent Appeal that the appellant was not entitled to restitution. He appealed to this Court by special leave. HELD: The application for restitution was filed by the appellant before the passing of a fresh decree by the High Court in second appeal. At the time of the application therefore the appellant was entitled to restitution because on that date the decree in execution of which the properties were sold had been set aside. The appellant was therefore entitled to restitution notwithstanding anything which happened subsequently. [27 C E] The principle of the doctrine of restitution is that on the reverse of a decree the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. The Court in making restitution is bound to restore the parties so far as they can be restored to the same position they were in at the time when the Court by its erroneous action had displaced them from. [27 E F] Zainal Abdin Khan vs Muhammad Asghar All Khan, I.L.R. 10 All 166, relied on. Set Umedmal & Anr. vs Srinath Ray & Anr. I.L.R. 27 Cal. 810, Raghu Nandan Singh vs Jagdish Singh, , Abdul Rahaman vs Sarafat Ali, and Shivbai Kom Babya Swam vs Yesoo, I.L.R. , referred to. Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das, , distinguished.

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Appeal No. 945 of 1965. Appeal by special leave from the judgment and order dated December 14, 1962 of the Gujarat High Court in Sales Tax Re ference No. 16 of 1961. N. section Bindra and R. H. Dhebar, for the appellant. M. V. Goswami, for the respondent. The Judgment of the Court was delivered by Bhargava, J. This appeal under special leave granted by this Court arises out of proceedings for assessment of sales tax under the Bombay Sales Tax Act III of 1953. Messrs. Kailash Engineering Co. (hereinafter referred to as "the respondent") was an engineering concern having their workshop at Morvi on the meter gauge section of the Western Railway. They obtained a contract from the Western Railway Administration for construction of III class passenger coaches on certain conditions described as the conditions of tender. Under that contract which was reduced to writing and was described as an agreement, the respondent constructed three coaches and submitted a bill which was properly certified in accordance with the agreement by the Railway Administration on October 4, 1958. The net value of the work done by the respondent was certified at Rs. 1,22,035/ . After receipt of this money, the respondent wrote to the Additional Collector of Sales Tax requesting him under section 27 of the Bombay Sales Tax Act, 1953, to hold that this was a works contract, and that the transaction, in respect of which the respondent received the money, did not amount to a sale, so that no sales tax was payable under that Act. The Additional Collector held that two questions fell for determination before him: (1) Whether the transaction covered by the bill dated 4th October, 1958, is a sale; and (2) if it is a sale, whether any tax is payable in respect of the same. The Additional Collector answered both the questions in the affirmative against the respondent. The appeal before the Gujarat Sales Tax Tribunal failed; and thereupon, the respondent sought a reference to the High Court of Gujarat. The Tribunal referred the following question for the opinion of the High Court: "Whether on a proper construction of the agreement as a whole and its general conditions and specification, the work done and covered by Contract Certificates No. M/60(1)/B PRTN, dated 4th October, 1958, for the perfor 545 mance of the works of building, erecting and furnishing 3 B. G. Coaches over the chassis supplied by the Railway is a works contract not amounting to sale, or whether it is a transaction of sale. " The High Court answered the question in favour of the respondent, holding that the transaction was a works contract carried out by the respondent and did not amount to a sale. Consequently, this appeal has been brought up by the State of Gujarat challenging the correctness of the decision of the High Court. The Tribunal, when dealing with the case, mentioned a few of the terms of the contract entered into between the respondent and the Western Railway Administration, and, though there was a provision in one of the clauses of the agreement that as soon as the plant and materials were brought on the site where the coaches were to be constructed, the ownership in them would vest in the Railway, the Tribunal held that the ownership in those materials never passed to the Railway because of the indication given by another clause which provided that on removal of contractor or on rescission of contract, the Railway Authorities would be entitled to take possession and retain all materials, tools, implements, machinery and buildings. On this basis, the Tribunal held that, from the general conditions of the contract, it appeared that the ownership of the coach bodies only passed to the Railway when completed and handed over to the Railway, so that the contract was for supply of coach bodies. It was on supply of these coach bodies that the respondent received the price of those bodies, and thus received the amount subjected to sales tax as sale consideration for those bodies. The High Court, however, in its judgment, reproduced the preamble of the contract as well as a large number of clauses of it to show that in the contract, at every stage, it was clearly mentioned that the contract was for performance of work of building, erecting and furnishing coach bodies on Broad Gauge underframes which already belonged to the Railway. The terms of the contract showed that as soon as the materials were taken by the respondent to the site of construction of the coaches, the ownership in those materials vested in the Railway and all that the respondent had to do was to carry out the work of erecting and furnishing the coach bodies. When the coach bodies were ready, the property in them vested in the Railway automatically without any further transfer of rights in it to the Railway. In fact, the ownership in the ready coach bodies did not vest in the respondent at all. No doubt, the materials for building the ' coach bodies had to be obtained by the respondent and brought to the site of construction, but the provision that the ownership in those materials would vest in the Railway as soon as those materials were brought to the site clearly indicated that the respondent, in purchasing those materials, was 546 acting more or less in the capacity of an agent for the Railway. While the materials were at site, the effect of vesting of their ownership in the Railway was that if they were destroyed or damaged, the risk had to be borne by the Railway, even though the Railway might have been entitled to reimburse itself, because those materials and goods were in the custody of the respondent on behalf of the Railway. In fact, under clause 29, there was a specific provision for the contingency that the materials or plant may be lost, stolen, injured or destroyed by fire, tempest or otherwise. This special provision was to the effect that the liability of the contractor was not to be diminished in any way, nor was the Railway to be in any way answerable for loss or damage on the happening of such contingency. This special provision had to be made, because the ownership in the materials vested in the Railway, though the contractor was in actual physical possession of the materials and plant in order to carry out the works contract. It was for this reason that a specific provision had to be made that the contractor would be liable to the Railway if any such loss occurred. Taking into account all the terms of the contract as a whole, the High Court came to the finding that the contract between the parties was one entire and indivisible contract for carrying out the works specified in full details in the agreement, and that it did not envisage either the sale of materials by the respondent to the Railway, or of the coach bodies as such. In this connection, learned counsel for the appellant relied on the decision of this Court in Patnaik & Company vs State of Orissa.(1) In that particular case, the contract in question was for the supply of bus bodies, and it was held that when the bus bodies were supplied by the contractor and money received by him, it amounted to a sale. It, however, appears that the facts and circumstances, on the basis of which the Court gave that opinion, do not find place in the case, Three main circumstances were relied upon in that case for holding that the transaction amounted to a sale and not to a works contract. The first circumstance was that the bus bodies were, throughout the contract, spoken of as a unit or as a composite thing to be put on the chassis, and this composite body consisted not only of things actually fixed on the chassis but movable things like seat cushions, and other things which could be very easily detached. In the contract, with which we are concerned, the coach bodies are not separately described as units or components to be supplied by the respondent to the Railway. The language used in the contract everywhere describes the duty of the respondent to be that of constructing, erecting and furnishing coach bodies on the underframes supplied. At no stage does the contract mention that ready coach (1) ; 547 bodies were to be delivered by the respondent to the Railway. In fact, even during the process of construction of the coach bodies, the unfinished bodies in process of erection were treated, under the terms of the contract, as the property of the Railway. The second circumstance found in that case was that if some work was not satisfactorily done and the body builder, on receipt of a written order, did not dismantle or replace the defective work or material at his own cost within seven days, the Controller was entitled to get the balance of the work done by another agency and recover the difference in cost from the body builder; and for this, purpose, the Controller was entitled to take delivery of the unfinished body. In the contract before us, as we have already mentioned in the preceding paragraph, the unfinished bodies of the coaches were from the earliest stage treated as the property of the Railway, and there was no question of ownership of the unfinished body passing to the Railway only after its seizure by it as was the case in the other contract in which the property in the unfinished body did. not pass to the Government till the unfinished body was seized. The third circumstance taken into account in that case was the liability for the loss, if a fire took place and the bus bodies were destroyed or spoiled. In that case, there was a provision for insurance of the chassis, but there was no such provision regarding. insurance of bus bodies, and the Court inferred that till delivery was made, the bus bodies remained the property of the appellant on whom the loss would fall. On the other hand, in the contract with which we are concerned, the terms envisaged the property in the unfinished bodies vesting in the Railway, and since those unfinished bodies were to be in charge of the respondent during construction, a special provision had to be made making the respondent responsible for the loss and throwing upon the respondent the liability to reimburse the Railway for loss by fire, etc. Thus, the terms of the contract in this case are markedly different from those which came up for consideration in that case. Here, we find that all the terms of the contract lead to the only inference that the respondent was not to be the owner of the ready coach bodies and that the property in those bodies vested in the Railway even during the process of construction. This was, therefore, clearly a works contract which did not involve any sale. The decision given by the High Court was correct. The appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

The respondent company, which was an engineering concern with a workshop at Morvi, obtained a contract from the Western Railway Administration for construction of third class coaches. Under the contract the respondent constructed three coaches and submitted a bill which was properly certified on October 4, 1958, in accordance with the agreement as to the work done by the respondent. After the bill had been paid, the respondent wrote to the Additional Collector of Sales tax requesting him under Section 27 of the Bombay Sales tax Act, 1953 to hold that the transaction was a works contract and not a sale, so that no sales tax was payable under the Act. The Additional Collector held however that the transaction was a sale on which tax was payable. Dismissing an appeal from this decision, the Sales tax Tribunal took the view that the general conditions of the contract showed the ownership of the coach bodies only passed to the Rail when they were completed and handed over to the Railway, so that way contract was for supply of coach bodies. Sales tax was therefore payable on the price of these coach bodies. Upon a reference made to it, the High Court held however that the contract clearly mentioned that the contract was for performance of work of building, erecting and furnishing coach bodies on Broad Gauge under frames which already be longed to the Railway. The terms of the contract further showed that as soon as the materials were taken by the respondent to the site of the construction of coaches, the ownership in those materials vested in the Railway and all that the respondent had to do was to carry out the work of erecting and furnishing the coach bodies. When the coach bodies .were ready, the property in them vested in the Railway automatically without any further transfer of rights in it to the Railway. The ownership in the ready coach bodies never vested in the respondent company at all and although materials for their construction had to be obtained by it and brought to the site, in purchasing those materials it was acting more or less in the capacity of an agent !or the Railway. Accordingly the High Court came to the finding that the contract between the parties was one entire and indivisible contract for carrying out the works specifi ed in the agreement and that it did not envisage either the sale of the materials by the respondent to the Railway, or of the coach bodies as such; no sales tax was therefore held leviable on the transaction. On appeal to this Court. HELD : The terms of the contract led to the only inference that the respondent was not to be the owner of the ready coach bodies and that the property in those bodies vested in the Railway even during the process of construction. The transaction was therefore clearly a works contract which did not involve any sale. [547 G] 544 Patnaik & Company vs State of Orissa, ; distinguished.

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Appeal No. 1065 of 1965. Appeal by special leave from the judgment and order dated February 27, 1963 of the Mysore High Court in Writ Petition No. 1096 of 1961. M. K. Ramamurthi, for the appellants. O. P. Malhotra, P. C. Bhathari and O. C. Mathur, for respondent No. 1. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the Mysore High Court in Writ Petition No. 1096 of 1961 by which the High Court allowed the Writ Petition and quashed the impugned award dated June 30, 1961, made by the Labour Court, Bangalore, in Reference No. 51 of 1960. In order to appreciate the points raised before us it is necessary to give the relevant facts. The second appellant before us, R. Mahalingam, was engaged as a Foreman in the workshop of Sri Rangavilas Motors (P) Ltd., the first respondent, hereinafter referred to as the Company, in the month of April, 1956. By an order dated January 21, 1960, Mahalingam was transferred from Bangalore to Krishnagiri where the head office of the Company is situated. Mahalingam entered into correspondence with the Company alleging that according to the conditions of his employment he could not be transferred from Bangalore to Krishnagiri. Ultimately, the Company framed charges against Mahalingam and removed him from service by an order dated April 7, 1960. On April 8, 1960, Mahalingam complained in writing to the Assistant Commissioner of Labour who was functioning as the Conciliation Officer at Bangalore. Later on, one Selvaraj took part in the conciliation proceedings on the authority of the resolution dated July 21, 1960, passed at the General Body 530 meeting of Krishnagiri Motor Workers ' Union, among whose members 112 out of 170 were employees of the Company. Selvaraj filed a statement of claims before the Conciliation Officer on September 1, 1960. The Conciliation Officer reported to the Government that the conciliation proceedings had failed, and thereupon the State Government by its order dated November 1, 1960, made in exercise of the powers conferred by cl. (c) of sub section (1) of section 10 of the (XIV of 1947) hereinafter referred to as the Act referred for adjudication by the Labour Court, Bangalore, the following points in dispute : " 1. Whether the order of the management of Sri Rangavilas Motor (Private) Ltd., in transferring the workman Sri It. Mahalingam, Foreman, from their branch at Fort, Bangalore, to Krishnagiri, is illegal or unjustified. If so, is the workman entitled to reinstatement in Bangalore Branch with benefits of back wages or to any other relief ? 2. Is Sri R. Mahalingam, Foreman, entitled to arrears of increments and overtime wages, if so, what is the amount he is entitled to ? Selvaraj, inter alia, prayed in his statement of claims, filed on behalf of Mahalingam, as follows ". it is prayed that the Hon 'ble Court may be pleased to direct the second party (the Company) to cause the payment of overtime wages due, increments due (as mentioned in the annexure to this statement) as also the arrears of wages from 1 2 60 to 15 3 1960 and order payment of back wages with effect from the date of termination of service by setting aside the said order of termination and to reinstate the workman with continuity of service. " The Company, in reply, contended that the reference was limited only to the question of transfer, and hence no question of reinstatement or back wages could be adjudicated upon. Further, the Company contended that the reference was bad because it did not fall under any of the items enumerated in the Second Schedule to the Act. It was also contended that the dispute was an individual dispute. One further objection was raised to the effect that the reference should have been made to the National Tribunal and not to the Labour Court The Labour Court overruled all the objections regarding jurisdiction raised by the Company and made the award holding that both the transfer as well as the removal from service of Mahalingam were illegal and that he Was entitled to overtime wages as well as 531 increments. The Labour Court made the following further direction: "The workman Sri Mahalingam should be reinstated in ore branch with full back wages in continuity of the past service and with same emoluments. The second party should also pay the arrears of Rs. 4629/27 towards the overtime wages and as well as the increments due. (sic.) As stated above, the Company filed writ petition challenging the award. The High Court formulated the points which arose out of the arguments addressed before it thus: 1. Whether the dispute referred by the State Government to the Labour Court is an industrial dispute ? 2. If it is such a dispute (a) Whether the State Government of Mysore was not the appropriate Government to make the reference ? and (b) Whether the reference should have been made by the Central Government to a National Tribunal 3. Whether any dispute relating to the termination of the service of the fourth respondent is included in the order of reference ? 4. Whether the points of dispute actually referred fall within the scope of the items enumerated in the second Schedule of the and are therefore within the competence of the Labour Court ? 5. Whether on the question of transfer there was any dispute at all for adjudication On the first point the High Court, agreeing with the Labour Court, held that on the facts what was originally an individual grievance of Mahalingam did assume at the time the reference was made by the Government the character of an industrial dispute. On the first part of the second point, the High Court held that the State Government of Mysore was the appropriate Government to make the reference. On the second par ' it held that it was for the Central Government to decide to refer or not to refer the dispute but the State Government which is the appropriate Government in relation to the dispute does not lose its power of making 'a reference. On the third point the High Court held that the question of legality or otherwise of the Company 's action in removing Mahalingam from service was not the subject matter of reference to the M2 Sup. CI/67 5 532 Labour Court and its award to the extent it dealt with that topic was without jurisdiction. On the fourth point, the High Court held that the first proviso to cl. '(d) to section 10 (1) of the Act did not apply and that the dispute relating to increments and overtime wages was beyond the jurisdiction of the Labour 'Court and could not have been validly referred to it. It also held that the dispute regarding transfer was included in the expression "rules of discipline" enumerated as item 8 of the Third Schedule, and was therefore pot within the, competence of the Labour Court to adjudicate upon in view of these findings the Award was quashed. Regarding point No. 5 formulated by it, the High Court observed that it was. unnecessary to examine that point, but as the matter had been, argued at some length, the High Court stated its opinion thereon. In its opinion, there was no scope far making the order of transfer the subject matter of any dispute. The same points that were formulated by the High Court were . argued before us. Mr. Ramamurti, appearing on behalf of the appellants, urged regarding point No. 3 that on its true interpretation the order of reference was quite clear and that the question of termination of services of Mahalingam was included in the order of reference. We have already reproduced the order of reference and, in our opinion, there is force in what Mr. Ramamurti urges It seems to us that the order of reference is quite clear if regard is: had to the words "reinstatement in Bangalore branch with benefits of back wages. " If the words with benefits of back wages" considered,and with respect,the High Court did not consider them, the High Court 's conclusion might possibly be justified. It seems to us that by the time the reference tame to be made everybody knew that Mahalingam had been removed from service. The words "with benefits of back wages" coup led with the word "reinstatement" are appropriate only to a case of removal and not to a case of transfer. On the facts of this case it is quite clear that the contention of Mahalingam was that the transfer was illegal and if the transfer as illegal, his removal from service would fall automatically with the finding that the transfer was illegal, and one of the appropriate reliefs that would be given would be reinstatement in the Bangalore Branch with benefits of back wales. In our view it is because of the above considerations that the word "removal" was not expressly mentioned. In this connection the High Court relied on the provisions of section 10(4) of the Act which reads as under "10(4) Where in an order referring an industrial dispute to a Labour Court, Tribunal or National Tribunal under this section or in a subsequent order, the appropriate Government has specified the 'points of dispute for adjudication, the Labour Court or the Tribunal or the National 533 Tribunal, as the case may be, shall confine its adjudication to those points and matters inidental thereto. " We are unable to appreciate how this sub section has any re levance to the question of construction of the order of reference made by the Government. It is true that he points in dispute must be specified, but the point with which we are concerned is, whether as a matter of construction the point in dispute has been specified or not, and according to us the dispute regarding removal has been specified. Regarding the fourth point, with respect, the High Court misinterpreted the first proviso to cl. (d) to s."10(1). This proviso reads as follows "Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it so thinks fit, make the reference to a Labour Court under clause (c) The High Court negative the, plea of Mahalingam on two grounds: First that there is nothing either in the order of reference. or in any, other material placed before it to indicate that the Government have applied their mind to the applicability of the proviso to the facts of this case or have actually acted pursuant to the proviso in making the references to the Labour Court and secondly, that there can be no doubt that more than one hundred. per sons are interested in, and are therefore likely to be affected by the dispute in question. In our view it is not necessary that the order of reference should expressly state that it is because of the proviso that a reference is, being made to the Labour Court, and if the reference can be justified on the facts, there is nothing in the Act which makes such a reference invalid. The second reason given by the High Court, with respect is erroneous because it seems to have equated, the words "interested ' and ",affected". It would be noticed that section 10(1A) uses both the words "interested" or "affected". Section 10(5) also uses both the words "interested" or "affected". It seems to us that there is a difference in the import of the words " interested" or, "affected". The Union which sponsors the cause of an individual workman is interested in the dispute but the workmen who are the members of the Union are not necessarily affected by the dispute. The dispute in this case was regarding the validity of the transfer and consequent removal of the appellant. The other workmen would naturally be interested in the dispute but they are not affected by this dispute. In our opinion, the High Court erred in holding that the first proviso to section 10(1)(d) did not apply to the facts of this case. In view of our decision on this point, it is not necessary to go into the question whether the points in dispute fell within the second or the third Schedule to the Act. 534 Therefore, the appeal must succeed unless the Company can satisfy us that the points decided against it should have been decided in its favour. This takes us to the other points. Mr. O. P. Malhotra strongly urges that the State Government of Mysore was not the appropriate Government to make the reference. He .says that although the dispute started at Bangalore, the resolution sponsoring this dispute was passed in Krishnagiri, and,, that the proper test to be applied in the case of individual disputes is where the dispute has been sponsored. It seems to us that on the facts of this case it is clear that there was a separate establishment at 'Bangalore and Mahalingam was working there. There were a number of other workmen working in this place. The order of transfer, it is true, was made in Krishnagiri at the head office, but the order was to operate on a workman working in Bangalore. In our view the High Court was right in holding that the proper question to raise is : Where did the dispute arise ? Ordinarily, if there is a separate establishment and the workman is working in that establishment, the dispute would arise at that place. As the High Court observed, there should clearly be 'some nexus between the dispute and the territory of the State and not necessarily between the territory of the State and the industry concerning which the dispute arose. This Court in Indian Cable Co. Ltd. vs Its Workmen(1) held as follows: "The Act contained no provisions bearing on this question, which must, consequently, be decided on the principles governing the jurisdiction of Courts to entertain actions or proceedings. Dealing with a similar question under the provisions of the Bombay Industrial Relations Act, 1946, Chagla, C. J., observed in Lalbhai Tricumlal Mills Ltd. vs Vin and Others , 558 'But What we are concerned with to decide is: where did the dispute substantially arise ? Now, the Act does not deal with the cause of action, nor does it indicate what factors will confer jurisdiction upon the labour court. But applying the well known tests of jurisdiction, a Court, or Tribunal would have jurisdiction if the parties reside within jurisdiction or if the subject matter of the dispute substantially arises within jurisdiction. ' In our opinion, those principles are applicable for deciding which of the States has jurisdiction to make a reference under section 10 of the Act". Applying the above principles to the facts of this case it is quite. clear that the subject matter of the dispute in this case substantially arose within the jurisdiction of the Mysore Government. (1) [1962] Supp. 3 S.C.R. 589 : 535 Mr. Malhotra further urges that the High Court erred in holding that it was an industrial dispute. We see no force in this contention. The High Court rightly observed that once the findings of fact recorded by the Labour; Court are accepted, there is no doubt in law that in the circumstances of this case, what was originally an individual grievance of Mahalingam did assume, at the time the reference was made by the Government, the character of an industrial dispute. Mr. Malhotra urges that the finding of the Labour Court that the transfer was illegal was perverse. It is not necessary to go into this question because once it is held that there is an agreement between the Company and Mahalingam that he could not be transferred from Bangalore, the transfer would be bad. The Labour Court had observed that one of the terms of agreement was that the Company had agreed not to transfer Mahalingam to any place out of Bangalore, for a period of ten years; the Company had transferred Mahalingam from Bangalore to the head office at Krishnagiri and this action of the Company was in contravention of the terms of the agreement. Then Mr. Malhotra tried to urge the fifth point formulated by the High Court. This point was not taken before the Labour Court and we did not allow him to raise this point. ' In the result the appeal is allowed, judgment of the High Court set aside and the Award of the Labour Court restored. The appellant will have his costs here and in the High Court.

The second appellant was a workman in the workshop of the first respondent dent company any in its Bangalore branch in the Mysore State. The head,office of the Company at Krishnagiri, in the Madras State, transferred him to Krishnagiri, contrary to the agreement that he would not be transferred .from Bangalore for ten years. On the workman raising objections, the Company removed him from service. The Krishnagiri Motor Workers ' Union, a majority of whose members numbering more than one hundred were employees of the Company, took up the workman 's grievance, and the Government of Mysore referred the industrial dispute to the Labour Court under section 10(1) (c) of the . One of the questions referred was : whether the order of transfer was illegal and if so" Whether the workman was entitled to "reinstatement in the Bangalore branch with benefits of back wages". The Labour Court ordered the reinstatement of the workman in the Bangalore branch. The Company challenged the award by a writ petition in the High Court. The High Court while holding that the Mysore Government was the appropriate Government to make the reference, quashed the award on the grounds : (1) that the legality of the removal of the workman was not the subject matter of reference, and (2) that the reference to the Labour Court could not be justified under section 10(1)(c), because the dispute fell within the Third and not the Second Schedule to the Act; nor under the first proviso to section 10(1)(d), because, the Government did not act under that proviso, and because, more than one hundred persons were interested in and therefore likely to be affected by the dispute. In appeal to this Court, the Company sought to support the judgment of the High Court also on the ground that the Mysore Government was not the appropriate Government to make the reference. HELD : (1) The legality of the termination of the service of the workman wag included in the order of reference. [532 D E] The words "with benefit of back wages" coupled with the word "reinstatement" are appropriate only to a case of removal. On the facts of the case, the transfer of the workman was illegal and so, his removal from service should be set aside and be should be reinstated with benefits of 'back wages. [532 F G] (2) The reference to the Labour Court was valid under the first proviso to section 10(1) (d). [533 H] (a) High Court misinterpreted the proviso by equating the two ,words interested and affected. The members of the Union which sponsored the cause of the workman were interested in the dispute, but they would not necessarily be affected by the dispute. [533 F G] 529 (b) It is not necessary that the order of reference should expressly state that it was because of the proviso that the reference was being made to the Labour Court. If it could be justified on the facts, there is nothing in the Act which makes such a reference invalid. [533 E F] (3) The Mysore Government was the appropriate Government to make the reference, because, the subject matter of the, dispute substantially arose within the jurisdiction of the Mysore Government. [534 H] The proper question to raise is : where did the dispute arise and not where was the dispute sponsored : that is, whether there is a nexus between the dispute and the territory of the State making the reference. Ordinarily if there is a separate establishment and the workman is working in that establishment, the dispute would arise at that place. [534 A E] Indian Cable Co. Ltd. vs Its Workmen, [1962] Supp. 3 S.C.R. 589,followed.

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Civil Appeal No. 70 of 1952. Appeal by special leave from the Judgment and Decree dated the 5th May, 1949, of the High Court of Judicature at Patna (Manohar Lall and Mahabir Prasad JJ.) in Appeal from Appellate Decree No. 2091 of 1946. C.K. Daphtary, Solicitor General far India (G. N. Joshi and Porus A. Mehta, with him) for the appellant. P. Sinha (Nuruddin Ahmed, with him) for the respondent. February 11. The undisputed facts of the case are:That the respondent was appointed a Sub Inspector of Police by the Inspector General of Police, Bihar and Orissa, in January, 1920. In the year 1937 departmental proceedings were taken against him and he was found guilty of cowardice and of not preparing search lists and was punished by demotion for ten years. On appeal; the Deputy Inspector General of Police held 788 that the respondent was guilty of cowardice but acquitted him of the other charge. By an order dated the 23rd July, 1940, which was communicated to the respondent on the 29th of July, 1940, the Deputy Inspector General of Police having found him guilty of cowardice made an order dismissing him from service. Further appeals by the respondent to the Inspector General of Police and to the Governor of Bihar were unsuccessful. Aggrieved by the departmental action taken against him, the respondent filed the suit out of which this appeal arises in the court of additional subordinate judge against the State of Bihar for a declaration that the order of the Deputy Inspector General of Police dismissing him from service was illegal and void and that he should be regarded as continuing in office. He also claimed a sum of Rs. 4,241 from 30th July, 1940, to the date of the suit on account of arrears of salary. The State contested the claim and pleaded that the plaintiff held his service at the pleasure of the Crown, and could not call in question the grounds or the reasons which led to his dismissal, and that in any case he had been reinstated in service from the 30th of July, 1940, and the order of dismissal therefore was no longer operative, and the suit had thus become infructuous. The additional subordinate judge by his judgment dated the 2nd February, 1945, dismissed the suit on the finding that the Government having reinstated the respondent he had no cause of action. As regards the arrears of salary, it was held that the claim to it could only be made according to the procedure prescribed under rule 95 of section 4 of Chapter IV of Bihar and Orissa Service Code. This decision was confirmed in appeal by the additional district judge. On further appeal the High Court reversed these decisions and decreed the claim for arrears of salary in the sum of Rs. 3,099 12 0. It was held that rule 95 of the Bihar and Orissa Service Code had no application because the respondent had never been dismissed within the meaning of that rule. It was further held that the plaintiff was entitled to maintain the suit for arrears of pay in view of the decision 789 of the Federal Court in Tara Chand Pandit 's case(1) the correctness o15 which was not affected by decisions of the Privy Council in cases of 1. M. Lall(2) and Suraj Narain Anand(3). The principal questions involved in this appeal are: (1) Whether the High Court correctly held that rule 95 above mentioned had no application to the case ? (2) Whether a suit 15or arrears of salary by a civil servant is competent in a civil court ? Rule 95 of the Bihar and Orissa Service Code provides: Rule 95 "When the suspension of a Government servant as a penalty for misconduct is, upon reconsideration or appeal, held to have been unjustiliable or not wholly justifiable; or when a Government servant who has been dismissed or removed, or suspended pending enquiry into alleged misconduct is reinstated; the revising or appellate authority may grant to him for the period of his absence from duty (a) if he is honourably acquitted, the full pay to which he would have been entitled if he had not been dismissed, removed or suspended and, by an order to be separately recorded, any allowance of which he was in receipt prior to his dismissal, removal or suspension; or (b) if otherwise, such proportion of such pay and allowances as the revising or appellate authority may direct. " The provisions of this rule enable an appellate or revising authority, when making an order of reinstatement to grant the reliefs mentioned in the rule. Obviously these provisions have no application to the situation that arose in the present case. The respondent here was dismissed by the Deputy Inspector General of Police, though he was appointed by the Inspector General of Police. This was clearly contrary to the (1) (2) 75 I.A. 225. (3) 75 I.A. 343. 790 provisions of section 240 (3) of the Government of India Act, 1935, which provides that no person shall be dismissed from the service of His Majesty by an authority subordinate to that by which he was appointed. But nevertheless the appeal preferred by him to the Inspector General of Police was rejected and his petition to the Government of the State met with the same fate, so that he was never reinstated by the order of any revising or appellate authority. It was only after the present suit was filed that the Government reinstated him. This was no proceeding in revision or appeal. In these circumstances the enabling provisions of rule 95 had no application whatsoever to the case of the plaintiff. What happened subsequently is a matter wholly outside the contemplation of the rule. After the institution of the suit, the Chief Secretary to the Government of Bihar realising the untenability of the Government 's position wrote to the Inspector General of Police that the order of dismissal should be treated as null and void and that the respondent should be reinstated. Thus the reinstatement of the plaintiff the telegram of the 30th December, 1943, was not made at the instance of any of the authorities mentioned in the rule in exercise of their jurisdiction, appellate, or revisional, but was made at the instance of the defendant in the suit who had realised that it was not possible to defend the order of dismissal. For the reasons given above we are of the opinion that the High Court was right in holding that rule 95 had no application to the facts and circumstances of this case and that the enabling provisions of this rule did not operate as a bar to the plaintiff 's action. The next contention of the learned Solicitor General that a suit by a public servant against the State for recovery of arrears of salary cannot be maintained in a civil court is again, in our opinion, without substance. We think that the matter is covered by the decision of the Federal Court in Tara Chand Pandit 's case(1) with which we find ourselves in respectful agreement. In that case the learned Attorney General had argued with great force all the points that were (1) 791 urged in this appeal before us by the learned SolicitorGeneral and were dealt with by the Federal Court in great detail. It was there held that the prerogative right of the Crown to dismiss its servants at will having been given statutory form in sub section (1)of section 240 of the Government of India Act, 1935, it could only be exercised subject to the limitations imposed by the remaining sub sections of that section and that it must follow as a necessary consequence that if any of those limitations was 'contravened the public servant concerned had a right to maintain an action against the Crown for appropriate relief and that there was no warrant for the proposition that that relief must be limited to a declaration and should not go beyond it. It was further held that even if apart from the prerogative of the Crown to terminate the service of any of its servant at will, the further prerogative could be invoked that no servant of the Crown could maintain an action against the Crown to recover arrears of pay even after the pay had been earned and had become due and that the prerogatives of the Crown had been preserved in the case of India by section 2 of the Constitution Act, it must be presumed that this further prerogative had been abandoned in the case of India by the provisions of ' the Code of Civil Procedure and that it was not possible to subscribe to the proposition that while a creditor of a servant of the Crown was entitled as of right to compel the Crown to pay to him a substantial portion of the salary of such servant in satisfaction of a decree obtained against him the servant himself had no such right. Mr. Justice Kania, as he then was, in a separate but concurring judgment, negatived the contention of the Attorney General in these terms: "The question whether the law in England and India is the same on this point should be further considered having regard particularly to the provisions found in the Civil Procedure Code. In this connection, section 60(1) and clauses (i) and (j) of the proviso, and explanation (2) should be noted. Under section 60 all property belonging to the judgment debtor is liable to be attached. In stating the 792 particulars of what may not be attached and sold, exemption to a limited extent is given in respect of the salary of a public servant. These provisions of the Code of Civil Procedure were not noticed in Lucas vs Lucas and High Commissioner for India(1 ), as the application was made in England and the Civil Procedure Code of 1908 did not apply there. The provisions of section 60 of the Civil Procedure Code give a right to the creditor to attach the salary of a servant of the Crown. There can be no dispute about that. If the contention of the appellant was accepted, the result will be that while the civil servant cannot recover the money in a suit against the Crown, his ,creditor can recover the same in execution of a decree against the civil servant. This right of the creditor to receive money in that manner has been recognised in innumerable decisions of all High Courts. There were similar provisions in the Civil Procedure Code of 1882 also. By reason of section 292 of the Constitution Act, the Code of Civil Procedure, 1908, continues in force, in spite of the repeal of the Government of India Act of 1915. Could the Imperial Parliament ' in enacting section 240 and being deemed aware of the provisions of section 60 of the Civil Procedure Code, have thought it proper to give this privilege to a creditor, while denying it to the officer himself ? To hold ' so, the words of section 240 of the Constitution Act will have to be unduly and unnaturally strained. Moreover in explanation (2) of section 60 the word 'salary ' is defined. In the proviso to section 60 clause (i) the word 'salary ' is used as applicable to private employees and to Government servants also. The word 'salary ' in respect of a private employee must mean an enforceable right to receive the periodical payments mentioned in the explanation. In that connection it is not used in the sense of a bounty. It will therefore be improper to give the same word, when used with regard to a civil servant under the Crown a different meaning in the same clause. It seems to me therefore that the Imperial Parliament has not accepted the principle that the Crown is not liable to pay its servant salary (1) 793 for the period he was in service, as applicable to British India or as forming part of the doctrine that service under the Crown is at His Majesty 's pleasure." The learned Solicitor General contended that the decision in Tara Chand Pandit 's case(1), was no longer good law and should be deemed to have been dissented from and overruled by the decision of their Lordships of the Privy Council in I. M. Lall 's case(2), and that in any event the view expressed in that decision should be preferred to the view expressed in Tara Chand Pandits case. We are unable to uphold this contention. It seems that during the arguments in Lall 's case attention of their Lordships was not drawn to the decision of the Federal Court in Tara Chand Pandit 's case because the point was not directly involved therein. In that case no claim had been made by the plaintiff for arrears of his pay. The plaintiff had sued for a declaration simpliciter that the order of his removal from the office was illegal and that he was still a member of the Indian Civil Service. The High Court granted that declaration. The Federal Court, on appeal, substituted for the declaration made by the High Court a declaration that the plaintiff had been wrongfully dismissed. The case was remitted to the High Court with a direction to take such action as it thought necessary in regard to any application by the plaintiff for leave to amend the claim for recovery of damages. On appeal to the Privy Council the decree and the order made by the Federal Court was modified and their Lordships held that in their opinion the declaration should be varied so as to declare that the purported dismissal of the respondent on the 10th August, 1940, was void and inoperative and the respondent remained a member of the Indian Civil Service at the date of the institution of the suit, 20th of June, 1942. The High Commissioner for India had also appealed against the order of the Federal Court remitting the case to the High Court for amendment of the plaint. The plaintiff did not want to maintain the order of the Federal Court to remit, before the (1) (2) 75 I.A. 225. 14 95 S.C.I./59 794 Privy Council. He however urged that he was entitled to recover in the suit his arrears of pay from the date of the purported order of dismissal up to the date of action, though this was not one of the reliefs claimed by him in the suit at all. This relief that was claimed by him before the Board was negatived by their Lordships on the ground that no action in tort could lie against the Crown and that such an action must either be based on contract or conferred by statute. Their Lordships approved of the judgment of Lord Blackburn in the Scottish case of Mulvenna vs The Admiralty(1), in which that learned Judge laid down the rule in the following terms after reviewing various authorities: "These authorities deal only with the power of the Crown to dismiss a public servant, but they appear to me to establish conclusively certain important points. The first is that the terms of service of a public servant are subject to certain qualifications dictated by public policy, no matter to what service the servant may belong, whether it be naval, military or civil, and no matter what position he holds in the service, whether exalted or humble. It is enough that the servant is a public servant, and that public policy, no matter on what ground it is based, demands the qualification. The next is that these qualifications are to be implied in the engagement of a public servant, no matter whether they have been referred to when the engagement was made or not. If these conclusions are justified by the authorities to which I have referred, then it would seem to follow that the rule based on public policy which has been enforced against military servants of the Crown, and which prevents such servants suing the Crown for their pay on the assumption that their only claim is on the bounty of the Crown and not for a contractual debt, must equally apply to every public servant. It also follows that this qualification must be read, as an implied condition, into every contract between the Crown and a public servant, with the effect that, in terms of their contract, they have no right to their remuneration which can be (1) 795 enforced in a civil court of justice, and that their only remedy under their contract lies in an appeal of an official or political kind '. " The observations made in Mulvenna vs The Admiralty(1), which is a Scottish case, could not have been made if in the law of that country there were provisions similar to the provisions made in various sections of the Code of Civil Procedure referred to by the Federal Court in Tara Chand Pandit 's case(2). It was further urged that the same view was taken by Pilcher J. inLucas vs Lucas and the High Commissioner for India(a).There the question for consideration was whether the sterling overseas pay of an Indian civil servant was a debt owing and accruing within the meaning of rule 1 of Order XLV of the Rules of the Supreme Court and which could be attached in satisfaction of an order for the payment of alimony. The real point for decision in that case was whether the whole or any portion of the salary of a member of the Indian Civil Service was liable to attachment in England in satisfaction of the judgment debt. It appears that the attention of the learned Judge was not invited to the provisions of section 60 and other relevant provisions of the Code of Civil Procedure and the learned Judge applied the dictum of Lord Blackburn in Mulvenna vs The Admiralty( 1 ), to the case of a civil servant from India. As the application was made in England and the Civil Procedure Code did not apply there, the provisions of the Code were not noticed in that case. We are therefore of the opinion that the rule laid down by their Lordships of the Privy Council in 1. M. Lall 's case(4), without a consideration of the provisions of the Code of Civil Procedure relevant to the inquiry and without a consideration of the reasoning of the Federal Court in Tara Chand Pandit 's case(2), cannot be treated, particularly because the matter was not directly involved in the suit, as the final word on the subject. We are in no way bound by the decision given either in Tara Chand Pandits case(2 ), or by the (1) (3) (2) (4) 75 I.A. 225. 796 decision given by the Privy Council in I. M. Lall 's case (1). But on a consideration of the reasons given in the two judgments we think that the rule of English law that a,civil servant cannot maintain a suit against the State or against the Crown for the recovery of arrears of salary does not prevail in this country and that it has been negatived by the provisions of the statute law in India. Reliance was also placed by the learned Solicitor General on the decision of the Federal Court in Suraj Norgin Anand vs North West Frontier Province(2). In that case Suraj Narain having been appointed a Sub Inspector of Police posted in the North West Frontier Province by the Inspector General of Police of the Province was subsequently dismissed by the Deputy Inspector General of Police. Failing to get relief by departmental proceedings he instituted a suit in the Court of the Senior Subordinate Judge, Peshawar. The subordinate judge dismissed the suit as being unsustainable. This decision was upheld by the Court of the Judicial Commissioner. The Federal Court held that the Courts below were not justified in dismissing the suit, that the plaintiff was at least entitled to a declaration that the order of dismissal passed against him was void. That court accordingly set aside the decree of the Judicial Commissioner and remitted the case with a declaration that there shall be substituted for the decree appealed against a declaration in the terms above stated, with such further directions as the circumstances of the case may require in the light of the observations of their judgment. The Province appealed to the Privy Council against the decision of the Federal Court. It was held by the Board in the first instance allowing the appeal of the North West Frontier 'Province and reversing the decision of the Federal Court of India, that the North West Frontier Province Police Rules, 1937, had become operative in 1938 at some date before April 25, 1938, when the respondent was dismissed, and that rule 16 (1)was a valid rule made under the authority conferred on the (1) 75 I.A. 225. (2) 797 appellant by section 243 of the Government of India Act, 1935, and that the respondent 's suit was rightly dismissed, but subsequently on the petition of the respondent asking the Board to reconsider ' their decision on the ground that it had been ascertained that the Police Rules of 1937 were in fact printed and published on April 29, 1938, that was, four days after the date of his dismissal, the Board heard the appeal further, when the respondent 's allegation was admitted and, :applying the reasoning in their previously delivered judgment, the Board reversed their former decision and affirmed the judgment of the Federal Court which had held that ' the respondent 's dismissal was void and :inoperative. During the arguments before the Privy ,Council reference was made to section 60 of the Code of Civil Procedure and to the decision of the Federal 'Court in Tara Chand Pandit 's case(1), and it was also noticed that following on the remit of the case to the Judicial. Commissioner by the order of the Federal Court, dated December 4, 1941, the respondent had ,obtained a decree for payment of Rs. 2,283 against the appellant in respect of arrears of pay from the date of dismissal to the institution of the suit. When the appeal came before the Board for further hearing their Lordships on the 6th August, 1948, caused a letter to 'be addressed to the solicitor representing the appellant, informing him that their Lordships now proposed 'humbly to advise His Majesty that the appeal should 'be dismissed, and stating that the order as to costs would not be varied. The letter pointed out that if this :advice were tendered, and if His Majesty were pleased to accept it, the effect would be that the declaratory 'judgment of the Federal Court would stand. Finally, 'the letter referred to the award of Rs. 2,283 to the respondent by the Court of the Judicial Commissioner 'which, according to a submission made by the appellant 's counsel, was open to challenge, and inquired whether the appellant wished to have an opportunity ,of satisfying their Lordships that the point was open, and of being heard on it. By their Lordships ' direction a copy of this letter was sent to the respondent. (1)[1947] F.C.R. 89. 798 An intimation was received by the Privy Council that the appellant did not wish to offer any further arguments on the case. The respondent also did not desire an opportunity of arguing that he should now beawarded arrears of pay from the date of the institution of the suit onwards. In these circumstances the Board refused to deal further with the matter and advised His Majesty that the declaratory judgment of the Federal Court be restored and proceeded to observe that it would be open to the respondent to pursue any remedy which flows from that declaratory judgment in an appropriate court. Their Lordships concluded the judgment with the following observations : "Their Lordships must not be understood, however, as expressing an opinion that the respondent was entitled as of right to recover the sum of Rs. 2,283 which was awarded to him, or that he has any claim to a further sum in respect of arrears of pay. It is unnecessary, owing to the very proper attitude of the appellant, to express any view as to the former question, and the latter question does not arise in this appeal which is from the decision of the Federal Court. If that decision is affirmed the respondent who did not himself enter an appeal, cannot now ask for anything more. " It is thus clear that in express terms in this decision their Lordships declined to give any opinion on the question whether the respondent was entitled as of right to recover arrears of pay awarded to him by the" Judicial Commissioner, in spite of the circumstance that their attention had been drawn to the decision of the Federal Court in Tara Chand Pandit 's case(1). This decision therefore cannot be said to support the view contended for by the learned Solicitor General. On the other hand, it must be assumed that in spite of their decision in 1. M. Lall 's case(1), their Lordships in this case, the judgment in which was delivered subsequent to the decision in 1. M. Lalls case(2), on November 4, 1948, did not reaffirm the propositions (1) (2) 75 I.A. 225. 799 laid down in that case but preferred to express no opinion on the point. It was suggested that the true view to take is that when the statute says that the office is to be held at pleasure, it means "at pleasure", and no rules or regulations can alter or modify that; nor can section 60 of the Code of Civil Procedure, enacted by a subordinate legislature be used to construe an Act of a superior legislature. It was further suggested that some meaning must be given to the words "holds office during His Majesty 's pleasure" as these words cannot be ignored and that they bear the meaning given to them by the Privy Council in 1. M. Lall 's case (1). In our judgment, these suggestions are based on a misconception of the scope of this expression. The expression concerns itself with the tenure of office of the civil servant and it is not implicit in it that a civil servant serves the Crown ex grati or that his salary is in the nature of a bounty. It has again no relation or connection with the question whether an action can be filed to recover arrears of salary against the Crown. The origin of the two rules is different and they operate on two different fields. The rule that a civil servant holds office at the pleasure of the Crown has its origin in the latin phrase" durante bene placito" ("during pleasure") meaning that the tenure of office of a civil servant, except where it is otherwise provided by statute, can be terminated at any time without cause assigned. The true scope and effect of this expression is that even if a special contract has been made with the civil servant the Crown is not bound thereby. In other words, civil servants are liable to dismissal without notice and there is no right of action for wrongful dismissal, that is, that they cannot claim damages for premature termination of their services. [See Fraser 's Constitutional Law, page 126; Chalmer 's Constitutional Law, page 186; Shenton vs Smith (2); Dunn vs The Queen(3) ]. This rule of English law has not been fully adopted in section 240. Section 240 itself places restrictions (1) 75 I.A. 225. (2) , 234. (3) 800 and limitations on the exercise of that pleasure and those restrictions must be given effect to. They are imperative and mandatory. It follows therefore that whenever there is a breach of restrictions imposed by the statute by the Government or the Crown the matter is justiciable and the party aggrieved is entitled to suitable relief at the hands of the court. As pointed out earlier in this judgment, there is no warrant for the proposition that the relief must be limited to the declaration and cannot go beyond it. To the extent that the rule that Government servants hold office during pleasure has been departed from by the statute, the Government servants are entitled to relief like any other person under the ordinary law, and that relief therefore must be regulated by the Code of Civil Procedure. Section 292 of the Government of India Act, 1935, provides that the law in force in British India immediately before the commencement of the Act shall continue in force until altered, repealed or amended by a competent legislature. Sections 100 to 104 of the Government of India Act. 1935, confer legislative powers on the different legislatures in the country. Item 4 of the concurrent list in the Seventh Schedule reads thus: "Civil Procedure and all matters included in the Code of Civil Procedure, at the date of the passing of this Act. " It is clear therefore that the Indian Legislatures were conferred by the Government of India Act, 1935, power to regulate the procedure in regard to actions against the Grown and to make provision for reliefs that could be granted in such actions. These provisions of the Government of India Act, 1935, stand by themselves independently of what is contained in section 240,and therefore no question arises that section 60 of the Code of Civil Procedure which has the sanction of the Government of India Act, 1935, itself is in status lower than the rule laid down in section 240. The rules of English law that the Grown cannot be sued by a civil servant for money or salary or for compensation has its origin in the feudal theory that the Crown cannot be sued by its vassals or subjects in its 801 own courts. From this theory the common law lawyers in England deduced two rules, namely, (1) that the King can do no wrong, and (2) that as a matter of procedure no action can lie in the King 's courts against the Crown. (See Ridge 's Constitutional Law, eighth edition, page 295, and Fraser 's Constitutional Law, page 164). The subject, in this situation, could only proceed by way of a petition of right which required the previous permission of the Crown. Permission was given by a fiat justitia issued by the Crown. It was not in practice refused to a petitioner who had any shadow of a claim, so that probably the disadvantages of this form of procedure were more theoretical that substantial. Petitions of right and various other special forms of English procedure applicable exclusively to actions by and against the Crown were abolished by the Crown Proceedings Act, 1947, which provides that in future claims against the Crown might be enforced as of right and without the fiat of His Majesty, and that they should be enforceable by ordinary procedure in accordance with the rules of the High Court or the County Court as the case might be. Arrears of salary were being actually recovered by the procedure of petition of right in England. '[See Bush vs R. (1)] There the judgment resulted in favour of the suppliant. The claim was in respect of the amount of salary due to him as Master of the Court of Queen 's Bench in Ireland. (Robertson 's Civil Proceedings by or against the Crown, page 338). In India, from the earliest times, the mode of procedure to proceed against the Crown has been laid down in the Code of Civil Procedure and the procedure of petition of right was never adopted in this country, and the same seems to have been the rule in Australia and other Colonies. Section 56 of the Judiciary Act, 1903, relating to the Commonwealth of Australia provides: "Any person making any claim against the Commonwealth, whether in contract or in tort, may respect of the claim bring a suit against the (1) [1869] Times News, May 29. 802 Commonwealth in the High Court or in the Supreme Court of the State in which the claim arose. " Under the New South Wales Act, 39 Vict. No. 38, the Government of the Colony is liable to be sued in an action of tort as well as in contract. Section 65 of the Government of India Act, 1858, conferred the right of suit against the Government. It provided that "all persons and bodies politic shall and may have and take the same suits, remedies and proceedings legal and equitable, against the Secretary of State in Council of India as they could have done against the said company" (the East India Company). This was replaced by section 32 of the Government of India Act, 1915. Sub section (2) of that section ran as follows : "Every person shall have the same remedies against the Secretary of State in Council as he might have had against the East India Company if the Government of India Act, 1858, and this Act had not been passed. " This was replaced by section 176(1)of the Government of India Act, 1935, which substantially reproduced these provisions. From these provisions it is clear that the Crown in India was liable to be sued in respect of acts, which in England could be enforced only by a petition of right. As regards torts of its servants in exercise of sovereign powers, the company was not, and the Crown in India was not, liable unless the act had been ordered or ratified by it. Be that as it may, that rule has no application to the case of arrears of salary earned by a public servant for the period that he was actually in office. The present claim is not based on tort but is based on quantum meruit or contract and the court is entitled to give relief to him. The Code of Civil Procedure from 1859 right up to 1908 has prescribed 'the procedure for all kinds of suits and section 60 and the provision of Order XXI substantially stand the same as they were in 1859 and those provisions have received recognition in all the Government of India Acts that have been passed since the year 1858. The salary of its civil servants in the 803 hands of the Crown has been made subject to the writ of civil court. It can be seized in execution of a decree attached. It is thus difficult to see on what grounds the claim that the Crown cannot be sued for arrears of salary directly by the civil servant, though his creditor can take it, can be based or substained. What could be claimed in England by a petition of right can be claimed in this country by ordinary process. For the reasons given above we are of the opinion that this appeal is without force and we accordingly dismiss it with, costs. Appeal dismissed.

Held, that the rule of English law that a civil servant cannot ' maintain a suit against the State or against the Crown for the 787 recovery of arrears of salary does not prevail in India and it has been negatived by the provisions of the statute law in India. Section 240 of the Government of India Act, 1935, places restrictions and limitations on the exercise of the pleasure of the Crown and these restrictions must be given effect to. They are imperative and mandatory. Therefore whenever there is a breach of restrictions imposed by the statute ' by the Government or the Crown the matter is justiciable and the aggrieved party is entitled to suitable relief at the hands of the court. Government servants are entitled to relief like any other person under the ordinary law, and that relief must be regulated by the Code of Civil Procedure. Punjab Province vs Pandit Tara Chand ([1947] F.C.R. 89) approved. High Commissioner OF India and Pakistan vs I.M. Lall ([1948] L.R. 75 I.A. 225) distinguished.

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l Appeal Nos. 2135 of 1966. Appeal from the judgment and order dated January 27, 1965 of the Rajasthan High Court in D. D. Election Appeal No. 93 of 1963. R. K. Garg, D. P. Singh and section C Agarwal, for the appellant. B.D. Sharma and L. D. Sharma, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal 'on a certificate granted by the Rajasthan High Court and arises in the following circumstances. There was an election to the Rajasthan Legislative Assembly from the Beawar constituency at the general election in 1962. A number of persons stood for election, two of whom were the appellant and the respondent. The appellant secured the highest number of votes while the respondent came second. The appellant was declared successful at the election and this led to an election petition by the respondent. A number of grounds were taken in the election petition for invalidating the election of the appellant; but in the present appeal we are concerned with one ground and shall refer to that only. That ground was that the appellant had commited a corrupt practice as defined in section 123(4) of the Representation of the People Act, No. 3 of 1951, (hereinafter referred to as the Act). The case of the respondent was that the appellant had published a statement of fact in relation to the respondent 's personal character or conduct and that statement of fact was false, and the appellant either believed it to be false or did not believe it to be true. The statement was reasonably calculated to prejudice the prospects of the respondent 's election. In consequence, the respondent prayed that the election of the appellant be set aside. It is unnecessary to refer to the reply of the appellant to the above contention, for learned counsel for the appellant does not dispute the findings of fact arrived at by the High Court. It will therefore be enough to refer to these findings with respect to the corrupt practice alleged by the respondent. The High Court found that the appellant was responsible for the publication of a poem entitled Mang raha hoon de bhai vote : (I am an applicant and request your vote). This poem was composed by one Avinash Chander of Beawar. It was not disputed before the High Court that the poem in question was aimed at the respondent and he was the target of the attack made therein. The High Court also found that the poem in question was read at an election meeting on February 21, 1962 at which the appellant himself was presiding. Avinash Chander had recited this poem at that meeting. It was also found 129 that the booklet containing the poem was printed at the instance of one Chand Mohammad, who was polling and counting agent of the appellant and who had also paid the author (Avinash Chander) something for it. The appellant had seen the booklet containing this poem sometime before the meeting of February 21, 1962 and had read it. Further the High Court held that the booklet containing the poem was printed with the knowledge and approval of the election agent of the appellant. Finally, the High Court held that the poem was recited at the meeting of February 21, 1962 by Avinash Chander and the appellant was presiding at that meeting and Kalyan Singh, his election agent, was also present in it, and thus there was sufficient publication within the meaning of section 123(4) of the Act, for which the appellant was responsible. The Tribunal had held that the appellant was responsible for the publication of the booklet containing this poem and it contained statements of fact which the appellant either believed to be false or did not believe to be true. These statements of fact were held to be in relation to the personal character or conduct of the respondent and were reasonably calculated to prejudice the prospects of the respondent 's election. In consequence the Tribunal had held the appellant guilty of the corrupt practice within the meaning of section 123(4) and allowed the election petition. The appellant then went in appeal to the High Court and three main points were urged on his behalf there. In the first place, it was contended that there was no statement of fact at all in the poem in question. Secondly, it was contended that even if there was any statement of fact in the poem it should have been proved that Avinash Chander who had recited it either believed it to be false or did not believe it to be true and that no attempt was made to prove this. Lastly, it was contended that the onus to prove that corrupt practice had been committed lay on the respondent and that had not been discharged. The High Court rejected all the three contentions and held that there was one statement of fact in the poem in question. That statement was either believed to be false or was not believed to be true by the appellant. The High Court also held that the belief of Avinash Chander was immaterial and the respondent had discharged the onus that lay on him. In the result the appeal was dismissed. The appellant then applied for and obtained a certificate from the High Court, and that is how the matter has come before us. The same three points which were raised before the High Court have also been raised before us in the appeal. The first question that we shall consider is whether there was a statement of fact at all in the poem in question. The contention on behalf of the appellant is that there was no statement of fact with respect to the character or conduct of the respondent in the poem and that it merely expressed opinions which did not come within the ambit of section 123(4 130 Now there is no doubt that the poem was aimed at the respondent which is made clear by the second stanza which starts with the words "Pakka Pandit Sharma Hoon": (I am pucca Pandit Sharma). It is not in dispute that the respondent was the only Sharma who contested the election. Considering the heading of the poem to which we have already referred it is obvious that the respondent was depicted therein as requesting for votes. In the sixth stanza, the respondent is made to say: sab choron ka sartaj: (I am the greatest of all thieves); and it is this phrase which the High Court has held to be a statement of fact. We are of opinion that this passage states as a fact that the respondent is the greatest of all thieves, though in the poem the statement is put as if it was coming from the mouth of the respondent. The question is whether a statement to the effect that one of the candidates standing for election is the greatest of all thieves is a statement of fact or is a mere expression of opinion about the candidate. It is not in dispute that if it is a statement of fact it is clearly in respect of the personal character or conduct of the candidate concerned. It seems to us that if a candidate is called the greatest 0 all thieves, the person saying so is making a statement of fact. The statement that a person is a thief or the greatest of all thieves cannot in our view be a mere opinion, and we agree with the High Court that when the respondent was called the greatest of all thieves a statement of fact was being made as to his personal character or conduct. It is however urged on behalf of the appellant that there are no details as to the time when the respondent committed thefts or the place where he committed them, and therefore a mere bald statement that the respondent was a thief or the greatest of all thieves could be an expression of opinion only and not a statement of fact. We are unable to accept this. Section 123(4) in our opinion does not require that when a statement of fact is made as to the personal character or conduct of a candidate details which one generally finds (for example) in a charge in a criminal case, must also be there and that in the absence of such details a statement to the effect that a person is (for example) a thief or murderer is a mere expression of opinion. To say that a person is a thief or murderer is a statement of fact and the mere absence of details as to time and place would not turn a statement of fact of this nature into a mere expression of opinion. Learned counsel for the appellant relies on a number of cases in support of his contention that such a bald statement without particulars could not be a statement of fact. The first case to which reference may be made is Ellis vs National Union of Conservative and Constitutional Association.(1) It has not been possible for us to get the report of this case. But in Parker 's Election Agent and 1. 109, Law Times Journal 493; & Times Newspaper, October 3rd, 1900:44 Sol. Journ. 131 Returning Officer, 6th Edition, p. 91, it has been mentioned. There it is stated that "a statement which imputed that the candidate was a traitor, and was one of certain persons who were in correspondence with the enemy shortly before the South African war broke out in 1899" was not held to be a statement of fact and did not come within the mischief of the relevant provision of English law relating to elections. But in Rogers on Elections, Vol. 11, 20th Edition, p. 368, the same case is referred and the facts given there seem to be different. It is stated there that a poster was published stating that Radical members of the House of Commons were in correspondence with the enemy, and this statement was held not to come within the ambit of the law on the ground that it did not state that the plaintiff was in correspondence with the Boers. As the report is not available it is very difficult to judge what exactly was decided in that case. If the facts are as given in Rogers, it seems that there was no statement of fact with respect to the candidate in that case and all that was said was that Radical members of the House of Commons were in correspondence with the Boers, and the candidate happened to be one of the Radical members. If that is so, it was not clearly a statement of fact with respect to the candidate in particular and that case would not be of any assistance to the appellant. The next case to which reference may be made is A. section Radha krishna Ayyar vs Emperor.(1) It was held there that for the purpose of section 171 G of the Indian Penal Code, something must be stated as a fact and not as a general imputation or as a matter of opinion. In that case, a candidate was prosecuted under section 500 of the Indian Penal Code, and he took the plea that he should have been prosecuted under section 171 G of the Indian Penal Code and that this could not be done without the sanction of government, which was not obtained. In that case a defamatory document was published with respect to the candidate. That document contained only one or two statements of fact, but the bulk of it consisted of mere general expression, and it was held that a prosecution under section 500 of the Indian Penal Code was not barred. But one of the statements which was held not to be a statement of fact was this, namely, they are misappropriating government money by committing forgeries. Now it must be remembered that the question there was whether prosecution under section 171 G would lie and the High Court was of the view that it would not and gave its reasons thus: "When it is alleged that a man does many kinds of harm to the poor, that he misappropriates government money, that he commits forgery and so forth, how would it be possible, in the absence of particulars, to prove prima facie that the allegations are false?" Consequently, the High Court held that the offending document on the whole was one to which section 171 G could not be applied. We (1) A.I.R. 1932 Mad. 132 are of opinion that the view taken by the High Court, at any rate, with respect to 'the allegation that the candidate in question was misappropriating government money was not a statement of fact is not correct. The next case to which reference may be made is Narayana swamy Naichker and Others vs D. Devaraja Mudaliar & Others.(1) There also the question was whether a person should be prosecuted under section 500 and not under section 171 G of the Indian Penal Code. This case does not seem to support the appellant, for it was held there that the statement that the candidate had committed fraud in respect of money in the fund office and was removed by the general body or by the department, was a statement of fact. The next case to which reference may be made is Hajee Moham mad Kadir Sheriff vs Rahimatullah Sahib.(2) In that case also the question was whether the prosecution should have been under section 500 or under section 171 G of the Indian Penal Code. The statement there was that the candidate was a leper, and the High Court held that this was not a case which fell within section 171 G but no reasons were given for the view. It seems to us that this case does not help the appellant for the allegation that a person is a leper cannot be said to relate to personal character or conduct of the candidate; it only mentions a physical defect. The last case to which reference may be made is V. P. Shan mugam and Another vs Thangavelu.(3) That also dealt with section 171 G of the Indian Penal Code. In that case, a printed notice was published containing a series of rhetorical questions viz. whether it was true or not that the candidate used to receive money and withdraw from contest in elections. The exact words used are not to be found in the report and the High Court seems to have held that as no particulars were mentioned it would not be a statement of fact. It seems to us however that if an allegation is made that a candidate had withdrawn from context at previous elections after taking money that would be a statement of fact and the view taken by the High Court is not correct. The question whether a particular statement with respect to a candidate at an election is a statement of fact or is a mere expression of opinion would depend on the facts of each case and will have to be judged in the circumstances in which the statement was made and in the context of the writing in which it appears, in case it is part of a writing. But it is not in our opinion correct to say that a statement with respect to a candidate can never be a statement of fact, unless it is accompanied by particulars as to time, place and date which one finds (for example) in a charge sheet in a crimi (1) A.I.R. [1936] Madras 360. (2) A.I.R. 1940, Madras 230. (3) A.I.R. 1958, Madras 240. 133 nal case. Whether in a particular setting a bald statement without particulars would be a mere expression of opinion or would amount to a statement of fact would depend upon the circumstances of each case and the court will have to consider the setting in which the statement was made and the entire writing in the context of which it appears and the nature of the statement itself before it comes to the conclusion that it is a statement of fact or an expression of opinion. Where particulars are given it may not be difficult to come to the conclusion that the statement is a statement of fact; but even a bald statement without particulars may be a statement of fact and not a mere expression of opinion. It seems to us that mere absence of particulars would not necessarily mean that a statement without particulars is always an expression of opinion. Take a case where a candidate is said to be a murderer. The mere fact that the name of the victim or the date when the murder took place or the place where it happened is not mentioned, would not detract from the statement being a statement of fact. At the same time a similar bald statement that a candidate is a murderer in the context in which it appears if it is in writing may not be a statement of fact and may be a mere matter of opinion, as, for, example, where it is said that a candidate is a murderer of all decencies in life. The question whether a bald statement amounts to a statement of fact or a mere expression of opinion would depend on the facts and circum stances of each case and also on the setting in which the statement appears whether it is in writing or oral. In the present case, taking the poem as a whole there can be no doubt that when the respondent was called the greatest of all thieves there was a clear statement of fact that he was a thief or the greatest of all thieves and not a mere expression of opinion. This is the impression that one gets from reading the poem as a whole, and we agree with the High Court that in the setting in which the statement was made in the poem and in the circumstances in which it came to be made, there is no question of the statement being a matter of opinion; it was undoubtedly a statement of fact. We may in this connection refer to Inder Lal vs Lai singh,(1) where this Court held that an allegation to the effect that a candidate was purchaser of the opponents of the Congress by means of money, ,without any particulars as to who was purchased and when, was taken as a statement of fact relating to the personal conduct or character of the candidate. It is true that in that case the question was whether the statement was with respect to personal conduct or character of the candidate and there was no dispute that it was a statement of fact. Even so we are of opinion that that case shows that particulars are not necessary before a bald statement with respect to personal character or conduct of the candidate can be said (1) [1962] Supp. 3 S.C.R. 114. 134 to be a statement of fact. As we have said already, presence of particulars will make it easier to come to the conclusion that it is a statement of fact; but the absence thereof does not necessarily mean that it is always an opinion and can never be a statement of fact. It will all depend, as we have said already, on the facts and circumstances of each case. Then it is said that the Madras Hi Court had already taken a certain view as to the meaning of the words "statement of fact" under the election law as it was before the Act, and as the words in section 123(4) of the Act are more or less similar to the earlier law it should be taken that the legislature had approved of the view taken by the Madras High Court which seems to suggest that particulars are necessary before a statement can be said to be a statement of fact. Reliance in this connection is placed on the following observations of Viscount Buckmaster in Barras vs Aberdeen Steam Trawling and Fishing Co. Ltd.(1) "It has long been a well established principle, to be applied in the consideration of Acts of Parliament that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or the same phrase in a similar context, must be construed so that the word or phrase is interpreted according to the meaning that has previously, been assigned to it. " We are of opinion that this principle does not apply in the present. We are here concerned with the meaning of the words "statement of fact". This is not a phrase of doubtful meaning and merely because one High Court took one view it does not follow that when the Act was passed in 1951 the legislature intended that no statement can be a statement of fact unless particulars were mentioned therein. We therefore agree with the High Court that the statement that the respondent was the greatest of all thieves is a statement of fact in the facts and circumstances of this case and in the context in which the words appear in the poem. This takes us to the next point, namely, that it should have been proved that Avinash Chander who recited the poem at the meeting believed the statement to be false or did not believe it to be true and that on this point Avinash Chander was not even questioned though he appeared as a witness. The High Court has held that the belief of Avinash Chander is immaterial, and that it is the belief of the appellant that matters. We are of opinion that this view of the High Court is correct section 123(4) runs thus (1) ; , 411. 135 "(4) The publication by a candidate or his agent or by any other person with the consent of a candidate or his election agent, of any statement of fact which is false, and which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate, or in relation to the candidature, or withdrawal of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidate 's election. The sub section requires; (i) publication of any statement of fact by a candidate, (ii) that fact is false, (iii) the candidate believes it to be false or does not believe it to be true, (iv) the statement is in, relation to the personal character or conduct of another candidate; and (v) the said statement is one being reasonably calculated to prejudice the prospects of the other candidate 's election : (see Sheopat Singh vs Ram Pratap.(1). This case thus lays down that the person with whose belief the provision is concerned is ordinarily the candidate who, if we may say so, is responsible for the, publication. The responsibility of the candidate for the publication arises if he publishes the thing himself. He is equally responsible for the publication if it is published by his agent. Thirdly he is also responsible where the thing is published by any other person but with the consent of the candidate or his election agent. In all three cases the responsibility is of the candidate and it is ordinarily the candidate 's belief that matters for this purpose. If the candidate either believes the statement to be false or does not believe it to be true he would be responsible under section 123(4). In the present case the poem was not actually read by the appellant, but it was read in his presence at a meeting at which he was presiding by Avinash Chander. In these circumstances the High Court was right in coming to the conclusion that the recitation of the poem by Avinash Chander at the meeting amounted to the publication of the false statement of fact contained in it by another person with the consent of the candidate, and in this case, even of his election agent who was also present at the meeting. But the responsibility for such publication in the circumstances of this case is of the candidate and it is the candidate 's belief that matters and not the belief of the person who actually read it with the consent of the candidate. What would be the position in a case where the candidate had no knowledge at all of the publication before it was made need not be considered for that is not so here. It is not disputed in this case that the statement that the respondent was the greatest of all thieves, was false. It is, also not seriously challenged that the appellant did not believe it to be true ' The contention that Avinash Chander 's belief should have been proved must therefore fail. (1) ; 136 Then we come to the question of onus. In this connection reliance is placed on Dr. Jagjit Singh vs Giani Kartar Singh(1). In that case it was held that the onus to prove the essential ingredients prescribed by sub section (4) of section 123 of the Act is on him who alleges publication of false statements of fact. The election petitioner has to prove that the impugned statement has been published by the candidate or his agent, or if by any other person, with the consent of the candidate or his election agent. He has further to show that the impugned statement of fact is false and that the candidate either believed that statement to be false or did not believe it to be true. It has further to be proved inter alia that the statement was in relation to the personal character or conduct of the complaining candidate. Finally, it has to be shown that the publication was reasonably calculated to prejudice the prospects of the complaining candidate 's election. But though the onus is on the election petitioner to show all these things, the main things that the election petitioner has to prove are that such a publication was made of a statement of fact and that that statement is false and is with respect to the personal character or conduct of the election petitioner. The burden of proving that the candidate publishing the statement believed it to be false or did not believe it to be true though on the complaining candidate is very light and would be discharged by the complaining candidate swearing to that effect. Thereafter it would be for the candidate publishing the statement to prove otherwise. The question whether the statement was reasonably calculated to prejudice the prospects of the election of the candidate against whom it was made would generally be a matter of inference. So the main onus on an election petitioner under section 123(4) is to show that a statement of fact was published by a candidate or his agent or by any other person with the consent of the candidate ,or his election agent and also to show that that statement was false and related to his personal character or conduct. Once that is proved and the complaining candidate has sworn as above indicated, the burden shifts to the candidate making the false statement of fact to show what his belief was. The further question as to prejudice to the prospects of election is generally a matter of inference to be arrived at by the tribunal on the facts and circumstances of each case. In the present case the main onus that lay on the respondent has been discharged. He has proved that there was a publication ,of the nature envisaged under section 123(4) of the Act. He has also proved that the statement of fact was made with respect to him. He has further proved that that statement was false and related to his personal character or conduct. There can be no doubt that a statement of this nature calling one candidate a thief or the greatest of all thieves is reasonably calculated to prejudice the prospects of (1) A.I.R. 1966 S.C. 773 137 this election. He further swore that the statement was false to the knowledge of the appellant and the latter did not believe it to be true. It was then for the appellant to show what his belief was. The burden having thus shifted we are of opinion that it was for the appellant to show either that the statement was true or that he believed it to be true. This the appellant has failed to do. The High Court therefore rightly held that the respondent had discharged the burden which lay on him. The appeal therefore fails and is hereby dismissed with costs. G.C. Appeal dismissed.

The appellant was the winning candidate In an election to the Rajasthan Legislative Assembly. The respondent who was one of the unsuccessful candidates filed an ' election petition and alleged therein that the appellant was guilty of corrupt practice within the meaning of a. 123(4) of the Representation of the People Act, 1951. The corrupt practice alleged was that at a meeting presided over by the appellant a poem was read out which represented the respondent to be the greatest of all thieves '. The Election Tribunal as well as the High Court gave their findings against the 'appellant who came to this Court with certificate. It was contended on behalf of the appellant that : (i) the statement in question was not a statement of fact but only of opinion, (ii) No attempt had been made to prove that the person who recited the poem containing the statement believed it to be false or did not believe that it was true, (iii) the onus to prove that corrupt practice had been committed lay on the respondent and that had not been discharged. HELD (i) The mere absence of details as to time and place would not turn a statement of fact into a mere expression of opinion. [130 F G] In the present case taking the poem as a whole there could be no doubt that when the respondent was called the greatest of all thieves there was a clear statement of fact about his personal character and conduct. [133 E F] (ii) The appellant presided and his election agent was present at the meeting at which the poem in question was read. The responsibility for the publication in the circumstances of the case was that of the appellant and it was the appellant 's belief that mattered and not the belief of the person who read it with the consent of the appellant. [135 E G] (iii) The onus on an election petitioner under section 123(4) is to show that a statement of fact was published by a candidate or his agent or by any other person with the consent of the candidate or his election agent and also to show that that statement was false and related to his personal character or conduct. This onus is very light and can be discharged by the complaining candidate swearing to that effect. Once that is done the burden shifts to the candidate, making the false statement of fact to show what his belief was. [136E F] It was for the appellant to show either that the statement was true or that he believed it to be true. The appellant had failed to do so. The High Court therefore rightly held that the respondent had discharged the burden which lay on him. [137 A B] Case law considered.

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Appeal No. 806 of 1964. Appeal by special leave from the judgment and decree dated July 13, 1962, of the Madras High Court in Appeal No. 347 of 1958. 449 C. B. Agarwala, B. Dutta, T. section Krishnaswamy Iyenr, P. L. Meyyappan and J. B. Dadachanji, for the appellant. A. K. Sen and R. Ganapathji Iyer, for respondent. No. 1. K. R. Chaudhuri and K. Rajendra Chaudhury, for respondent No. 2. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Madras High Court. The facts are not now in dispute and may be briefly narrated. A suit was brought by Nagappa Chettiar, respondent No. 1 (hereinafter referred to as the respondent) against Villiammi Achi appellant and Nachiammai Achi now dead and represented by her legal representative. The respondent claimed two thirds share of the properties left by his father, Pallaniappa and prayed for a decree for separate possession of that share after partition. The facts on which this claim was based are not now in dispute and are these. The respondent is the adopted son of Pallaniappa. having been adopted in 1941. The appellant is the widow of Pallaniappa and Nachiammai Achi was Pallaniappa 's mother. Pallaniappa 's father also named Nagappa had considerable properties. This Nagappa made a will on June 10, 1934 by which after making certain dis positions, in favour of certain persons including his own wife he gave the residue of his property absolutely to Pallaniappa and appointed him as the executor of the will. In one place the will stated that all the property except a small part was the exclusive and self acquired property of the testator while at the end the testator said that he had made the will with the full consent of his son Pallaniappa. After Nagappa 's death in July 1934 Pallaniappa obtained probate of the will and after providing for the legacies to others as indicated therein came into possession of the residue of the property. In 1941 the respondent was adopted by Pallaniappa. In the trial court there was a dispute between the parties whether Pallaniappa and his father were members of a joint Hindu family and whether properties left by Pallaniappa 's father were the joint family properties of both. But it has been found that all the properties left by Pallaniappa 's father were joint family properties of Pallaniappa and his father which Pallaniappa could acquire by survivorship on his father 's death. This finding was upheld by the High Court and is not now in dispute. We have to proceed on the basis that even though Pallaniappa 's father said in the will that the properties, except a small part, were his self acquired properties,. in fact all the properties mentioned in the will of Pallaniappa 's, father were joint family properties of Pallaniappa and his father. The case of the appellant was that even though the properties left by Pallaniappa 's father were joint family properties which MISup. CI/67 15 450 Pallaniappa could acquire by survivorship, the conduct of Pallaniappa in obtaining probate of the will and carrying out its terms amounted to election and thereafter Pallaniappa became absolute owner of the residue of the properties bequeathed to him by the will. The consequence of this was that when Pallaniappa adopted the respondent in 1941 long after he had become the absolute owner of the properties, the respondent acquired no interest in the properties left by his grand father by virtue of the adoption. Pallaniappa died. on September 16, 1956 after the Hindu Succession Act, (No. 30 of 1956) came into force. As there was no joint family property of Pallaniappa and the respondent at the time of Pallaniappa 's ,death, the respondent could not claim half the property on the ground that it was joint family property of himself and Pallaniappa, as Pallaniappa 's election to take under the will of his father would bind the respondent also. Reliance in this connection was placed ,on section 180 of the Indian Succession Act, (No. 39 of 1925) also. The reply on behalf of the respondent to this contention was two fold. In the first place, it was urged that there was no question of election even by Pallaniappa in this case and section 180 of the Indian Succession Act would not apply. It was further urged that even assuming that there could be election by Pallaniappa the respondent would not be bound by that election as the property left by his grandfather was joint family property and the respondent would acquire interest therein as soon ;is he was adopted by Pallaniappa, even though Pallaniappa might have been the sole co parcener for sometime i. e. between 1934 and 1941. This interest of the respondent in the joint family property was independent of his father Pallaniappa and even though Pallaniappa might be bound by any election that he might have made the respondent would not be so bound and would be entitled to treat the property as joint family property in the hands of, Pallaniappa in which he would acquire interest on being adopted. In the second place the respondent 's case was that in any case after his adoption Pallaniappa threw the ,entire property into the family hotch pot and therefore it became joint family property by blending. Two questions therefore arose for consideration in this case namely (i) whether there was election by Pallaniappa and if so whether the respondent would be bound by it, and (ii) whether Pallaniappa threw the entire property into the family hotch pot after adoption of the respondent and therefore it became joint family property in any case. The trial court accepted the case put forward on behalf of the respondent and decreed the suit passing a preliminary decree giving two thirds share to the respondent and one sixth each to the appellant,, and the mother of Pallaniappa. The appellant then appealed to the High Court. The High Court dismissed the appeal. On the question of election, the 451 High Court held that as Pallaniappa and his father were members of a joint Hindu family and as the entire property left by Pallanippa 's father was joint family property, Pallaniappa had interest in the residue as a survivor and in consequence there was no question of election by Pallaniappa for all the property he got by will would have come to him by survivorship. In such a case there could be no question of election, for Pallaniappa had title to the property irrespective of the will. The High Court also held that in any case the claim of the respondent as a member of the joint family was not under his father but independent of him and therefore the respondent would not be bound , even if Pallaniappa were held to have made an election. The High Court also found in favour of the respondent on the question whether the property was thrown into family hotch pot after the adoption of the respondent and in the result dismissed the appeal. The High Court having refused to grant a certificate to appeal to this Court, the appellant applied for and obtained special leave from this Court; and that is how the matter has come before us. The same two questions, as indicated above, arise for consi deration in this appeal. We shall first consider the question of election in the background of the fact that the entire property left by Pallaniappa 's father was joint family property of himself and Pallaniappa and that Pallaniappa had interest in that property as a member of a joint Hindu family. Section 180 of the Indian Succession Act which enunciates the doctrine of election as known to English law for this country is in these terms : "Where a person, by his will professes to dispose of something which he has no right to dispose of, the person to whom the thing belongs shall elect either to confirm such disposition or to dissent from it, and, in the latter case, he shall give up any benefits which may have been provided for him by the will. " It is urged on behalf of the appellant that section 180 would apply to the facts of the present case for the property willed by Pallaniappa 's father was not his which he could will away as it was joint family property in which Pallaniappa who was the residuary legatee had also equal interest. Therefore Pallaniappa had either to confirm the disposition or dissent from it, and his conduct showed that he had confirmed it for he took out probate. Therefore it must be held that after probate was taken out the residue became the absolute property of Pallaniappa and lost its character as joint Hindu family property. Now it is clear from section 180 that after the legatee elects to dissent from the will he must give up any benefits provided for him by the will. This shows that election under section 180 would only arise 452 where the legatee derives some benefit from the will to which he would not be entitled except for the will. In such a case he has to elect whether to confirm the will or dissent from it. But where there is no question of the legatee deriving any benefit from the will to which he would not be entitled except for the will, the fact that he confirms the will and accepts what the will provides would not amount to election, for he would have in any case got what the will gave him. Thus election only arises where the legatee has to choose between his own property which might have been willed away to somebody else and the property which belongs to the testator and which the testator has given to the legatee by the will. The matter is brought out in Halsbury 's Laws of England, Third Edition, Vol. 14, at p. 588, para 1091 in the following words "Where a testator by his will purports to give property to A which in fact belongs to B and at the same time out of his own property confers, benefits on B . in such cir cumstances B is not allowed to take the full benefit given him by the will unless he is prepared to carry into effect the whole of the testator 's dispositions. He is accordingly put to his election to take either under the instrument or against it. If he elects to take under the will he is bound and may be ordered to convoy his own property to A; if he elects to take against the will and to keep his own property, and so disappoints A, then, he cannot take any benefits under the will without compensating A out of such benefits to the extent of the value of the property of which A is disappointed. " Following this principle the High Court held that as the property which the will gave to Pallaniappa would in any case have come to him as a member of the joint family, there was no question of election even by Pallaniappa in this case. This view appears to us to be correct. But even assuming that there was some kind of election by Pallaniappa we cannot see how the nature of the property left by Pallaniappa 's father would change merely because Pallaniappa 's father made a will giving the residue absolutely to Pallaniappa and Pallaniappa took out probate of the will. The property being joint family property Pallaniappa 's father was not entitled to will it away and his making a will would make no difference to the nature of the property when it came into the hands of Pallaniappa. A father cannot turn joint family property into absolute property of his son by merely making a will, thus depriving sons of the son who might be born thereafter of their right in the joint family property. It is well settled that the share which a co sharer obtains on partition of ancestral property is ancestral property as regards his male issues. They take an interest in it by birth whether 453 they are in existence at the time of partition or are born subsequently : [see Hindu Law by Mulla, Thirteenth Edition p. 249, para 223 (2) (4)]. If that is so and the character of the ancestral property does not change so far as sons are concerned even after partition, we fail to see how that character can change merely because the father makes a will by which he gives the residue of the joint family property (after making certain bequests) to the son. A father in a Mitakshara family has a very limited right to make a will and Pallaniappa 's father could not make the will disposing of the entire joint family property, though he gave the residue to his son. We are therefore of opinion,that merely because Pallanappa 's father made the will and Pallaniappa probably as a dutiful son took out probate and carried out the wishes of his father, the nature of the property could not change and it will be joint family property in the hands of Pallaniappa so far as his male issues are concerned. Further it is equally well settled that under the Mitakshara law each son upon his birth takes an interest equal to that of his father in ancestral property, whether it be movable or immovable. It is very important to note that the right which the son takes at his birth in the ancestral property is wholly independent of his father. He does not claim through the father. " (see Mulla 's Hindu Law, Thirteenth Edition, p. 251, para 224). It follows therefore that the character of the property did not change in this case because of the will of Pallaniappa 's father and it would still be joint family property in the hands of Pallaniappa so far as his male issue was concerned. Further as soon as the respondent was adopted he acquired interest in the joint family property in the hands of Pallaniappa and this interest of his was independent of his father Pallaniappa. In such circumstances even if Pallaniappa could be said to have made an election there can be no question of the respondent being bound by that election, for he is not claiming through his father. In this view of the matter, it is unnecessary to consider the question whether Pallaniappa, after the, respondent 's adoption, threw the property into. the family hotch pot. The appeal therefore fails and is hereby dismissed with costs. Y.P. Appeals dismissed.

A Hindu died after making a will in respect of certain joint family properties and appointed his son as the executor. The son obtained pro. bate of the will, provided for the legacies indicated therein and came into possession of the residue of the property. Thereafter, he adopted the plaintiff. The adoptive father died after the Hindu Succession Act came into force and the plaintiff filed the suit claiming two thirds share of the properties left by his father. The defendants (viz., the widow and mother Of the plaintiffs adoptive father) contended that the conduct of the plaintiff 's adoptive father in obtaining the probate of the will and carrying out its terms amounted to an election and therefore the father became absolute owner of the residue of the properties bequeathed to him by the will, and as the election to take under the will, would bind the plaintiff also he could not claim half the property on the ground that it was joint family property of himself and his father. The trial Court decreed the suit, which in appeal was upheld by the High Court. The defendants appealed to this Court. HELD:The appeal must be dismissed. The character of the property did not change because of the will and it would still be joint family property in the hands of the plaintiff 's father as far as his male issue was concerned. Further, as soon as the plaintiff was adopted he acquired interest in the joint family property in the hands of his adoptive father and this interest of his was independent of that of his father. In such circumstances even if his father could be said to have made an election there could be no question of the plaintiff being bound by that election, for he was not claiming through his father. [453 C, E F] Election under section 180 of the Indian Succession Act, would only arise where the legate derives some benefit from the will to which he would not be entitled except for the will. In such a case he has to elect whether to confirm the will or dissent from it. But where there is no question of the legate deriving any benefit from the will to which he would not be entitled except for the will the fact at he confirms the will and accepts what the will provides would not account to election, for he would have in any case got what the will gave him. Thus election only arises where the legate has to choose between his own property which might have been testator and which the testator has given to the legate by the will. [451 H 452 C]

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minal Appeal No. 136 of 1966. Appeal by special leave from the judgment and order dated January 18, 1966 of the Madras High Court in Criminal Appeal No. 697 of 1965 and referred trial No. 90 of 1965. B. D. Sharma, for the appellant. V. P. Raman and A. V. Rangam, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against the judgment of the High Court of Judicature at Madras, January 18, 1962, by which the High Court confirmed the conviction of the appellant Periyasamy under section 302, Indian Penal Code, and the 12 3 sentence of death imposed on him. The facts of the case are as follows: Periyasamy was charged with the murder of his wife Kaveri Ammal on the morning of May 11, 1965, at 6 a.m., at a place in Kirambur where they were residing in what is called a shed. Opposite to this shed was another shed in which Periyasamy 's brother with his wife Pappayee (P. W. 1) was residing. Periyasamy and Kaveri Ammal had been married for a period of two years during which time Kaveri Ammal used to go away frequently to her parents ' place, and the motive suggested is that it used to enrage the appellant Periyasamy. On the morning of the day of occurrence, Pappayee heard the cry "Ayyo, ayyo", and she states that she saw Periyasamy striking his wife with a koduval. Pappayee raised an alarm. Periyasamy thereupon threw the koduval away and retired to his shed and taking hold of a rope climbed a tree. He tied one end of the rope to a limb of the tree and another round his neck and jumped, but meanwhile the neighbours had assembled there and they caught him and cut him down from the tree and laid him on a cot. Periyasamy did not die though there is evidence to show that he had some bruises round his neck. Meanwhile a brother of Periyasamy by name Chinna ran to their father and informed him about the occurrence. The father,. without going to verify what he had heard, went over to the police station House and lodged a report, saying that his younger son had informed him that Periyasamy had cut down his wife with a koduval and attempted to hang himself and that he was making the report. In the last sentence of this report, it was mentioned that Pappayee had witnessed the occurrence. The prosecution examined a number of witnesses but we are concerned only with one, namely, Pappayee, P. W. 1, who is the solitary eye witness in the case. It appears that Pappayee changed her statement in the Court of Session by leaving out the name of Periyasamy as the assailant of Kaveri Ammal. She was, therefore, declared hostile by the court and was allowed to be cross examined under section 145 of the Indian Evidence Act. Her previous statement was also brought on the record of the case. This statement of Pappayee forms the foundation of the case against Periyasamy, corroborated by the other evidence about his conduct and the motive for the commission of the offence. The High Court and the court below have acted upon the statement of Pappayee made in the committal court in preference to the statement she made in the Court of Session, and have based the conviction by accepting her previous version. In this appeal, Mr. B. D. Sharma naturally attacked the evidence of Pappayee from various angles and also, tried to establish that the judgment of the 124 High Court did not satisfy the standards for an appellate judgment as laid down by this Court, particularly in a case dealing with the confirmation of a death sentence. We shall, therefore, examine these contentions in detail. The first contention raised by Mr. Sharma is that the Sessions Judge did not comply with the provisions of section 288 of the Code of Criminal Procedure inasmuch as he did not pass any order transferring the earlier statement to the record of the Sessions trial. We have not been able to find in the original record of the case, which was brought to our notice, any order specifying the transfer of the earlier deposition to the record of the Sessions Court under section 288. It appears, however, that the practice of this Court is to ,contradict a witness with the earlier statement and parts there of, after declaring him hostile and then to use the record of the earlier statement as substantive evidence. It may be stated that it is highly desirable that the court should, before the transfer of the earlier statement to the record of the Sessions case under section 288, indicate in ,a brief order why the earlier deposition was being transferred to the record of the trial. This will make it quite clear to the accused that the earlier statement is likely to be used as substantive evidence against him. If the matter had rested with the use of the earlier statement without this notice to the accused, we would have found it difficult to rely upon the earlier deposition. We find, however, that Periyasamy was questioned with reference to the statement of Pappayee made before the Committing Magistrate which, the Judge informed him, was marked under section 288 of the Code of Criminal Procedure, and he was asked what he had to say about it. Therefore, although the technical requirement of the section, namely, that an order should be passed to indicate that the statement is transferred so as to be read as substantive evidence, was not complied with, there does not appear to be any substantial departure from the requirements of the law. There is also no likelihood of any prejudice to Periyasamy since he was informed. while he was being examined that the statement was being used under section 288, Criminal Procedure Code, and was invited to say what he wished to say in defence. We are, therefore, of the opinion that the High Court and the court below were right in using the statement as substantive evidence which undoubtedly the Code of Criminal Procedure does allow. Mr. Sharma next contended that it has been laid down in a series of cases that when the solitary witness in a case has made ,conflicting statements, it is very risky to rely upon any of the versions and has drawn our attention to a case reported in re Muruga Goundan(1) decided by a Division Bench in which the present Chief Justice of this Court delivered the judgment. We entirely agree. (1) A.I.R 1949 Mad. 125 But there are cases and cases. If the matter rests upon the statement of a witness, who has changed the version and there is nothing further to connect the accused with the offence with which he is charged, there is good ground for acquitting him. We do not think that this is such a case. The facts here go further. Pappayee 's two statements, when they are compared, disclose that the whole of her testimony as given in the court of the Committing Magistrate was again repeated in the Court of Session, except that she left out the name of Periyasamy as the assailant. This appears to have been the result of some pressure upon her. Although she was induced to say in the Court of Session that she had made the earlier statement under pressure of the police and the police threatened to involve her in the murder, we find other clear circumstances from which we can say that the statement made earlier by Pappayee, is definitely to be preferred in the circumstances of this case. We proceed now, to enumerate what those circumstances are. The two sheds are situated opposite to each other and the door of the shed in which Kaveri Ammal was done to death is a kind of matting which Pappayee had stated was then open. This would be so in May, which, being a hot month, makes the people open their doors early in the morning. Therefore, whatever happened inside the shed would be visible to persons living in a shed across the road and Pappayee states in both the statements that she was able to see the occurrence. The fact that she is a close relation must weigh considerably against Periyasamy and we must turn, therefore, to see whether he gave any reasonable explanation why Pappayee should have given the evidence at all against him. His version is that he had gone to fetch some kerosene oil for working a pump and when he came back he found that his wife had been cut to pieces, apparently by some one in his absence. He further added in answer to a question that he was "on talking terms" with Pappayee before he married, suggesting thereby that Pappayee was enraged on being neglected by him after he married Kaveri Ammal. This motive and the explanation about his absence are his explanations to avoid the implications of Pappayee 's incriminating statement. In our opinion, neither of these circumstances is clear enough to make us discard the evidence of Pappayee brought on the record under section 288 of the Code of Criminal Procedure. It seems too much of a coincidence that an unknown murderer lay in wait to kill Kaveri Ammal during the short time her husband was away to buy kerosene oil. Further, it seems difficult to believe that Pappayee was making this statement because she was jilted in some manner by Periyasamy. There is nothing to show that what Periyasamy alleged was at all the truth, and looking to the circumstances of the case, we feel that this is just something which he has thought out in defence without being true. This conclusion is further streng 126 thened by his subsequent conduct on the discovery by him of the murder. What did Periyasamy do? He does not seem to have questioned any one as to how this happened during the short time he was away. On the other hand, he snatched up a rope, tied it to the limb of a tree and tying the other end to his neck jumped down in an attempt to commit suicide. He was fortunate (but not quite so) that some neighbours arrived at the critical moment and saved him from hanging himself. This conduct clearly indicates a feeling of fear or, may be, of remorse. It induced him to attempt to take his own life after he had taken that of his wife. Mr. B. D. Sharma suggested a number of persons who might be the likely assailants of Kaveri Ammal, suggesting the father of Periyasamy or the uncles of the girl and even Pappayee herself. But these suggestions cannot be accepted in the light of the circumstances. If they had been true, the husband would have stood his ground and attempted to see that the right offender was brought to book and not attempted to commit suicide at the first sight of his wife lying murdered at the hands of some one else. Mr. B. D. Sharma argued that the judgment of the High Court had not taken into account all these circumstances. Per haps, the High Court thought that the case was clear enough and did not embark on a detailed judgment. After looking into the record of the appeal case and considering every aspect of the argument which has been advanced before us, we are satisfied that no other conclusion was possible and that the charge had been completely proved against Periyasamy. We, accordingly, order the appeal to be dismissed. R.K.P.S. Appeal dismissed.

In a prosecution for murder the only eye witness having named the appellant as the assailant in her deposition in the committal court, left out his name in her evidence in the Sessions Court. She was declared hostile and was allowed to be cross examined. The Sessions Judge questioned the appellant with reference to the statement of the witness in the committal proceedings and informed him, that it was marked under section 288, Cr. P.C. He however did not pass an order transferring the earlier deposition to the record of the Sessions Court. Treating the previous statement as substantive evidence and relying upon the other circumstances in the case, the Sessions Court and the High Court on appeal convicted the appellant. On appeal to this Court, HELD : The High Court and the Sessions Court were right in convicting the appellant. Although the technical requirement of section 288, namely, that an order should be passed to indicate that the statement is transferred so as to be read as substantive evidence, was not complied with there was no substantial departure from the requirements of the law and no prejudice was caused to the appellant since he was informed that the statement was being used under section 288. [124 E G] [Desirability of an order indicating why the earlier deposition was being transferred to the record of the trial court, pointed out. [124 C D]

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Appeal No.155 of 1953. Appeal by special leave from the Judgment and Order dated the 15th July, 1953, of the Election Tribunal, Nagpur, in Election Petition No. 3 of 1952.B. Sen and T. P. Naik for the appellant. Veda Vyas (section K. Kapur with him) for respondent No. 1. 1954. February 15. The Judgment of the Court was delivered by Bose J. This is an appeal against a decision of the Nagpur Election "Trbunal. The contest before the tribunal was about two seats in the Bhandara Parliamentary Constituency. The elections were held on five days 'in December, 1951, and January, 1952. 819 Thirteen candidates filed nomination papers, among them the petitioner. Of these, six contested the seat reserved for the Scheduled Castes. One of these was Gangaram Thaware who has since died. The Scheduled Caste in question is the Mahar caste. Objection was taken to Thaware 's nomination for the reserved seat on the ground that he was not a Mahar. It is admitted that he was born a Mahar, but later in life he joined the Mabanubhava Panth. This, according to the appellant, is a sect which does not believe in caste, and alternatively that it forms a separate caste in itself The contention was that when Gangaram Thaware joined the Panth he ceased to be a member of the Mahar caste ' The objection succeeded and his nomination was rejected. The nomination of another Scheduled Caste candidate was also rejected and five others were withdrawn before the election, among them was the present petitioner. That left six candidates of whom three were eligible for the reserved seat. The two who were elected were Tularam Sakhare, for the Scheduled Caste seat, and chaturbhuj, Jasani, nor the general seat. Jasani 's election was challenged on the ground that he was subject to the disqualifications set out in section 7 (d) of the Representation of the People Act (Act XLIII of 1951) as he was interested in a contract for the supply of goods to the Central Government. The Election Tribunal held that the rejection of Gangaram Thaware 's nomination was improper as he continued to be a member of the Mahar caste despite his conversion to the tenets of the Mahanubhava. Panth. It also held that Chaturbhuj Jasani had a contract with the Central Government, so he was disqualified. Accordingly it set aside the whole election. We will deal with Chaturbhuj Jasani 's election first. Section 7(d) is in these terms : "A person shall be disqualified for being chosen as, and for being, a member etc. * * * * 820 (d)if by himself he has any share or interest in a contract for the supply of goods to the appropriate Government." Chaturbhuj Jasani was, and still is, a partner in the firm of Moolji Sicka & Company, and it is said that at all material times the firm had a contract for the supply of bidis to the Government for the troops. Moolji Sicka & Company is a firm of bidi manufacturers. The Central Government was interested in stocking and purchasing bidis for sale to its troops through its canteens. Accordingly, it placed two of the brands of bidis manufactured by this firm on its approved list and entered into an arrangement with the firm under which the firm was to sell, and the Government was to buy from the firm, from time to time, these two brands of bidis. It was argued that this amounted to a contract for the supply of goods within the meaning of the section. It was said that the contract was embodied in four letters. We do not intend to analyse these letters in detail. It is enough to say that in our opinion no binding engagement can be spelt out of them except to this extent : Moolji Sicka & Company undertook to sell to the canteen contractors only through the Canteen Stores and not direct and undertook to pay a commission on all sales. This, in our opinion, constituted a Continuing arrangement under which the Canteen Stores, i.e., the Government, would be entitled to the commission on all orders placed and accepted in accordance with the arrangement ; and in fact the Canteen Stores did obtain a sum of Rs. 7,500 'in satisfaction of a claim of this kind. This money was paid long before the dates which are crucial here but the settlement illustrates that there was an arrangement of that nature and 'that it was a continuing one. In our opinion, it continued in being even after that and the mere fact that there was no occasion for any claim subsequent to the settlement does not indicate that it was no longer alive. But except for this, the; letters merely set out the terms on which the parties were ready to do business with 821 each other if and when orders were placed and executed. As soon as an order was placed and accepted a contract arose. It is true this contract would be governed by the terms set out in the letters but until an order was placed and accepted there was no contract. Also, each separate order and acceptance constituted a different and distinct contract: see Rose and Frank Co. vs J. R. Crompton & Bros. Ltd.(1) The crucial dates with which we are concerned are 15th November, 1951, the last date for putting in the nominations, and 14th February, 1952, the date on which the results were declared. The section runs "A person shall be disqualified for being chosen as. The words which follow, "and for being", need not be considered as it is enough for our purposes to use only the former. Now the words of the section are "shall be disqualified for being chosen. " The choice is made by a 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. The disqualification alleged in this case is that Chaturbhuj Jasani had an interest in a contract, or a series of contracts, for the supply of goods to the Central Government. He had this interest because the contracts were made with Moolji Sicka & Company a firm of which Jasani is one of the partners. The fact of partnership is admitted but the other facts are denied. We have therefore to see whether any contract for the supply of goods to Government by Moolji Sicka & Company existed at any 'time on or between the relevant dates. Exhibit C is a tabular statement which sets out the dealings between the parties during certain months. It is accepted as correct by both sides. The following extracts from this statement show that Moolji Sicka & Company had an interest in a series of contracts for the sale of bidis to the Canteen Stores at and between the relevant dates. (1) ; 822 Date of order Date of invoice Price of Date of by and goods pay Canteen Stores Despatch. supplied.ment. 8 10 1951 18 10 1951Rs. 1,684 13 919 12 1951. 8 10 195119 10 19513,373 9 3do 17 8;195126 10 195112,602 8 0do 12 9 195126 10 195111,426 14 6do 11 10 195126 10 19518,411 14 0do 21 10 195130 11 195110,125, 2 9do 9 8 195129 8 195125,812 12 024 12 1951 8 10 195118 10 19514,793 4 9do 14 11 195122 11 1951:1,887 9 95 I .1952 17 10 19518 11 195116,534 2 022 1 1952 12 11 195120 11 19514,205 15 0do 13 12 195110 1 195213,97,079 7 912. 2 1952 14 1 195222 1 19521,691 11 9do 21 12 195110 1 195216,983 8 018 2 1952 12 11 195122 11 19518,411 14 013 3 1952 9 1 195216 1 19525,888 4 9do 23 1 195228 1 19528,411 ,14 020 3 1952 This statement reveals that various contracts aggregating Rs. 15,39,345 6 0 less some small sums for railway freight, were outstanding at one time or another between the two crucial dates and that payments in discharge of these liabilities were made at various dates between 15th November, 1951, and 20th March, 1952. It also shows that orders were placed and accepted for goods priced at Rs. 84,659 14 3 before 15th November, 1951, and that payment was not made till after that date. Therefore, on 15th November, 1951, goods worth Rs. 84,659 14 3 had still to be paid for. Then between 15th November, 1951, and 14th. February, 1952, further orders for goods valued at Rs. 39,695 8 9 were placed And accepted and they were not paid for till after 14th February, 1952. It was argued that there is nothing to show that. the goods were, not supplied before 15th November, 1951, and before 14th February, 1952. It was said on behalf of 'the appellant that these are the only dates which are crucial, so if Moolji Sicka. & Company hid. fully 823 executed their part of the contracts before the two crucial dates the disqualification would not apply. That raises these questions: (1) Does a person who has fully executed his part of a contract continue to have an interest in it till the goods are paid for ?; and (2) were these contracts fully executed so far as Moolji Sicka & Company 's part was concerned? The parties are not agreed about this, so it will now be necessary to examine their letters in detail to determine the terms of the various contracts. The correspondence discloses that the Canteen Stores and Moolji Sicka & Company dealt with each other from time to time under various arrangements which they called " systems. The earliest letter we have about the transactions between these parties is one dated 30th March, 1951. It shows that the "system" which they called the " Direct Supply System " was in use at that time. The details of the " system " are set out in an order dated 17th April, 1951. Under it Moolji Sicka & Company had to send supplies of bidis direct to the Canteen Stores contractors as and when ordered. The value of the goods so supplied was to be recovered from the contractors direct and the Canteen Stores were to be informed of the sales and were to be paid a certain commission. This led to some friction and in their letter of 30th March, 1951, the Canteen Stores complain that information about some of the sales to the contractors had been suppressed with the result that the Canteen Stores lost their commission. Moolji Sicka & Company replied to this on 24th April, 1951, and suggested a slight change in the system, namely that all orders for the goods should in future be placed through the Canteen Stores and that there should be no dealings with the contractors direct except to supply them with the goods ordered by the Canteen Stores; then, ' they said, there would be no complaint about their having been kept in the dark. This appears to have been agreed to because such of the subsequent order& as are on record were placed by the Canteen Stores. 824 The order dated 17th April, 1951, to which we have referred above is a sample. This was considered unsatisfactory and it was felt that a change was called for. Moolji Sicka & Company 's letter of 24th April, 1951, shows that their complaint was that the Canteen Stores did not keep a sufficient stock of bidis on hand. They said " We feel that you can stock more of our bidis. And that will mean an added profit to you; since the rebate you get on supplies made under the Direct Supply System is Rs. 4 only, whereas on supplies made to you we have now offered a much higher rebate. . . We have therefore to request you to kindly 8stock more of our bidis. " In view of this, two representatives of Moolji Sicka & Company, met the Chairman of the Board of Administration, who was in charge of the Canteen Stores Department, on 10th July, 1951. They reached certain tentative conclusions which were reduced to writing by the Canteen Stores on 11th July, 1951. Their letter of that date shows that the Canteen Stores proposed to abolish the Direct Supply System in the near future but so far as Moolji Sicka & Company were. concerned they said that the system could be abolished. at once (" forthwith " is the word used) provided Moolji Sicka & Company would agree to supply bidis for the Bombay, Calcutta and Delhi Depots of the Canteen Stores under a new system which they called the " Consignment System ". Under this the Canteen Stores were to pay as they sold. But the new system was intended only for the Bombay, Calcutta and Delhi Depots of the Canteen Stores. The letter goes on to say that for the Pathankot and Srinagar Depots the supplies would have to be made on the " Outright Purchase Basis ". These proposals were embodied under the heading " Future Business RelationsThen there was a provision for what was called theTransition Period ". That said that Untilstocks could be placed in our depots, it was agreed that you would supply your bidis direct against our orders and on such supplies you would allow us rebate as at present. 825 These proposals were sent to Moolji Sicka & Company for confirmation. It will be seen that the ' letter makes four proposals: (1)That so far as Moolji Sicka & Company were concerned, " The Direct Supply System " should be terminated at once though, so far as other manufacturers were concerned, it should continue in force for some time longer; (2)That in its place the Calcutta, Bombay and Delhi Depots were to be supplied under a new system called the " Consignment System "; (3)That the Pathankot and Srinagar Depots were to be supplied under another new system called the Outright Purchase System "; (4)That during the "transition period" the "Direct Supply System" was to continue in operation " as at present " even with Moolji Sicka and Company. Moolji Sicka & Company replied on 16th July, 1951, saying that they were prepared to accept these terms provided the Canteen Stores confirmed certain modificatioins which Moolji Sicka & Company proposed. They were as follows: (1)Regarding the " Transition Period " they said" "We are pleased to note that you will soon be abolishing the Direct Supply System. But it should be applied to all suppliers at the same time. Till then we should be allowed to supply any orders received from the Canteen Contractors. You should inform us of the date on which Direct Supply System will be discontinued. (2) Regarding the new proposals under the heading Future Business Relations Moolji Sicka & Company said "Goods sent to your depot on consignment basis must be either returned to us or paid for fully within three months of the date of supply. We understand that the system. of supplying goods on consignment basis will be discontinued in about six months ' time. " 107 826 (3) They said " And for this purpose we have agreed to offer you Rs. 7,500 in full and final settlement of all your claims to date and upon the understanding of your acceptance of the terms for future business. They concluded " Upon receiving your confirmation we shall instruct our Bombay office to send you the cheque for the amount stated above. " The Rs. 7,500 was what the Canteen Stores claimed from Moolji Sicka & Company as compensation for breach of the agreement under which Moolji Sicka & Company had agreed not to sell to the Canteen Contractors without paying the Canteen Stores a commission. Neither side was able to produce exact figures but this was the estimate made by the Canteen Stores of the loss suffered by them by reason of that breach. It will be seen that the proposal about the " Consignment System " which the Canteen Stores made was that they would pay Moolji Sicka & Company only when they sold the stocks with which Moolji Sicka & Company were to supply them for stocking their depots at Calcutta, Bombay and Delhi. Moolji Sicka & Company were not satisfied with this and said that the Canteen Stores must either return or pay for all stocks supplied, within three months from the date of supply. The Canteen Stores replied on 19th July, 1951, as follows: (1) They accepted Moolji Sicka & Company 's suggestion that when the Direct Supply System was abolished the abolition would apply to all suppliers of bidis. (2) As regards the " Consignment Account System they did not turn down the proposals but observed that they were thinking of doing away with that too in favour of the " Outright Purchase System" and warned Moolji Sicka & Company that in view of that it might not be necessary to place any of Moolji Sicka & Company 's stocks in their depots. 827 (3) They wanted a six months ' guarantee period in place of three months. The letter concludes "Although under the system of provisioning,adopted by us, and as explained to you during our discussions, it may not be that we shall at any time have any stocks surplus to our requirements or stocks which have not been disposed of within the guarantee period, but should there be any solitary occasions will you please confirm that you will replace Such stock with fresh stock without any cost to us? We await your agreement by return. " They also said, "We now await your cheque for Rs. 7,500. Moolji Sicka & Company replied on 26th July, 1951, and commenced by saying " We agree to all you have said in page one of your letter under reply. " Regarding the guarantee they said they could not agree to six months but would agree to three provided the guarantee was limited to goods found to be defective because of faults in manufacture. They concluded "We have also to pay you Rs. 7,500 as per our ' letter, dated 16th July, 1951," and asked how the Canteen Stores would like the payment to be made. The Canteen Stores replied on 31st July, 1951, and explained what they meant by the " guarantee period ". Bidis deteriorate by keeping, so the idea was to have a system under which they could be returned within six months to prevent their deterioration. They explain that this is in the interests of the 'manufacturer because (1) it will not bring their brands into disrepute, for that would, be the inevitable result if stale bidis which had deteriorated were sold in the canteens and (2) if the period is made too short, then "the goods will not stay in our depots and in the stalls of our canteens and contractors long enough to sell and hence our depots will always be,, anxious to 828 return these stocks. The result will be obvious. Your sales will be, lower. They continue " We therefore consider that the period of six months should be the least before the expiry of which goods may be taken back by you and replaced. . . The period of three months within which you expect us to return your stocks, should we find them not moving, will be too short. " They conclude by saying that they hope Moolji Sicka & Company will agree to the six months. Now it will be seen that all this correspondence related to the proposals about the " Consignment System " which were first mooted on 11th July, 1951. Moolji Sicka & Company complained on 24th April, 1951, that the Canteen Stores were not keeping large enough stocks of their bidis and they asked the Canteen Stores to stop the Direct Supply System and purchase stocks direct. The Canteen Stores were naturally reluctant to keep large stocks on hand because bidis 'deteriorate and become unsaleable in course of time. Therefore they proposed the " pay as we sell " system, that is, they would keep stocks of bidis and pay for whatever they sold. But the problem of unsold stocks deteriorating still remained. Who was to be responsible? The obvious answer was that the manufacturers should take back the unsold stocks before they were too far gone and in their place send fresh consignments for sale on the " pay as we sell " basis. We say "obvious" because the manufacturers could use the stale tobacco by re curing and blending it, or could use it for other purposes provided it was not too far gone. The proposal therefore was that the, Canteen Stores were to keep stocks of Moolji Sicka & Company 's bidis in their depots and canteens, pay for what they sold and return all unsold stocks within six months. Moolji Sicka & Company were then to replace them with fresh stocks which would be paid for when sold. This was agreed to in the main but the point at which they were at issue was the six months. Mooli Sicka & Company proposed three months while the 829 Canteen Stores wanted six months. We think 'the argument used in the letter of 31st July, 1951, that " the result will be obvious. Your sales will be lower " can only have reference to an arrangement of this kind, otherwise no question of the sales being lower could arise. In the case of an outright sale, the sale would be complete when the order was executed, and except for bidis found to be defective due to manufacture Moolji Sicka & Company would have no further concern with them. The sentences the goods may be taken back by you and replaced and " should we find them not moving " can only refer to these proposals about the "Consignment System " In any case, it certainly includes this system. Moolji Sicka & Company 's reply is dated 9th August, 1951. They say "We are in receipt of your letter No. 7B/29/ 17 1299, dated 31st July, 1951, and are pleased to extend the guarantee period from three to six months. We are sure this will now enable you to keep adequate stocks of our bidis. Awaiting your esteemed orders. " This is an acceptance of the interpretation of the " guarantee period " as given by the Canteen Stores in their letter of 31st July, 1951. The words "now" and "adequate" relate to the dispute which started on 24th April, 1951, when Moolji Sicka & Company complained that the Canteen Stores were not keeping adequate.stocks of their bidis in their depots. The ,subsequent correspondence was aimed at finding out ways and means to meet this objection and at the same time satisfy both sides. It all ended by Moolji Sicka & Company accepting the terms set out in the letter of 31st July, 1951. We are accordingly of opinion, that Moolji Sick& & Company accepted the " Consignment System " on 9th August, 1951. That imported a "pay as we sell" arrangement with an obligation to take back stocks unsold within six months and replace them with fresh stocks which would be paid for when sold. in the "transition period " the Direct Supply System was also to continue. That meant that there would be two systems in force for a time in certain depots: the "Consignment 830 System " regarding stocks ordered for the stocking up of the Calcutta, Bombay and Delhi depots of the Canteen Stores and the " Direct Supply System " till such time as the depots were stocked. The third system of " Outright Purchase " was limited for the time being to the Pathankot and Srinagar depots. Both the "Direct Supply" and the "Consignment" systems were abolished together on list November, 1951 (see the Canteen Stores ' letter dated 24th November, 1951). But the obligation to take back unsold stocks within the six months ' period continued to attach to all contracts for consignment to the Calcutta, Bombay and Delhi depots made between 9th August, 1951, and 31st October, 1951. The tabular statement shows that the following contracts for consignment to one or other of these three depots were made during that period. The date of the invoice is the date of the execution of the order and thus of the acceptance of the proposal contained in the order. Date of Invoice Depot Price of goodsd date & despatch supplied payment. 1 10 1951 Bombay. Rs. 5,056 2 0 15 11 1951 13 10 1951 do. 13,536 4, 6 do 18 10 1951 Delhi 1,684 13 919 12 1951 19 10 1951 Calcutta 3,373 9 3 do 18 10 1951 Bombay 4,793 4 924 12 1951 The value of these orders comes to Rs. 28,444 2 3. The obligations under these several contracts continued from 1st April, 1952 to 18th April, 1952. It was argued that assuming that to be the case then there were no longer any contracts for the "supply of goods" in existence but only an obligation arising under the guarantee clause. We are unable to accept such a narrow construction. This term of the contract, whatever the parties may have chosen to call it, was a term in a contract for the supply of goods. When a contract consists of a number of terms and conditions, each condition does not form a separate contract but is an item in the one contract of which it is a part. The consideration for each 831 condition in a case like this is the consideration for the contract taken as a whole. It is not split up into several considerations apportioned between each term separately. But quite apart from that, the obligation, even under this term, was to supply fresh stocks for these three depots in exchange for the stocks which were returned and so even when regarded from that narrow angle it would be a contract for the supply of goods. It is true they are replacements but a contract to replace goods is still one for the supply of the goods which are sent as replacements. But even if all that be disregarded and it be assumed that Moolji Sicka & Company had fully performed their part of the contract by placing the goods on rails before 15th November, 1951, we are of opinion that the contracts were not at an end until the vendors were paid and the contracts were fully discharged. The words of the sections are "if. he has any share or interest in a contract for the supply of goods to. . the appropriate Government. " There can be no doubt that these various transactions were contracts and there can equally be no doubt that they were contracts for the supply of the goods. Whether they were contracts for the supply of goods to the Government is a matter which we shall deal with presently. But we have no doubt that they were contracts for the supply of goods. The question then is, does a contract for the supply of goods terminate when the goods are supplied or does it continue in being till payment is made and the contract is fully discharged by performance on both sides 9 We are of opinion that it continues in being till it is fully discharged by performance on both sides. It was contended, on the strength. of certain observations in some English cases, that the moment a contract is fully executed on one side and all that remains is to receive payment from the other, then the contract terminates and a new relationship of debtor and creditor takes its place. With the utmost respect we are unable to agree. There is always a possibility of the liability being disputed before actual payment is made and the vendor may 832 have to bring an action to establish his claim to payment. The existence of the debt depends on the contract and cannot be established without showing that payment was a term of the contract. It is true the contractor might abandon the contract and sue on quantum meruit but if the other side contested and relied on the terms of the contract, the decision would have to rest on that basis. In any case, as we are not bound by the dicta and authority of those cases, even assuming they go that far, we prefer to hold that a contract continues in being till it is fully discharged by both sides: see the observations of Gibson J. in O 'Carroll vs Hasting8(1). To use the language of O 'Brien L.C.J. in that case at page 599, these contracts have not been "merged, abandoned, rescinded, extinguished or satisfied; and if any demur was made as to payment before payment was actually made, he could have sued upon the contract specially; or if he sued for work done at the request of the defendants the contract would have been. a part of his necessary proofs" We agree with the learned Lord Chief Justice in thinking that "it is far fetched to contend that a man is not concerned in the contract or security by which he can enforce payment. " The same view was taken, by Costello J. in an Indian case in Satyendrakumar Das vs Chairman of the Municipal Commissioners8 of Dacca(2). Counsel for the appellant relied strongly on certain English cases. They were all examined and distinguished in the above decisions. They either turned on special facts or on the words of a statute which are not the same as ours. The leading case appears to be Royse vs Birley(3 ). But the decision turned on the language of the English statute which the learned Judges construed to mean that the contract must be executory on the contractor 's part before the English Act can apply. Tranton vs Astor(4) follows the earlier ruling. The statute with which Darling J. was dealing (1) at 608. (2) I.L.R. from p. 193 onwards. (3) (4) 833 in Cox vs Truscott(1) is nearer the language of our Act. He hesitatingly proceeded on the debtor and creditor basis. We need not go further than this because, as we have said, if these decisions cannot be distinguished, then we must with respect differ. We hold therefore that these contracts which Moolji Sicka & Company had entered into with the Government subsisted on 15th November, 1951, and on 14th February, 1952, and that as Chatturbhuj Jasani, the appellant, was a partner in the firm he also had both a share and an interest in them on the crucial dates. That brings us to article 299 (1) of the Constitution. It states: "All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President . and all such contracts. made in the exercise of that power shall be executed on behalf of the President . by such persons and in such manner as he may direct or authorise." The contention was that as these contracts were not expressed to be made by the President they are void. Cages were cited tons under the Government of India Acts of 1919 and 1935. Certain sections in these Acts were said to be similar to article 299. We do not think that they are, but in any case the rulings ,under section 30 (2) of the Government of India Act, 1915, as amended by the Government of India Act of 1919 disclose a difference of opinion. Thus, Krihsnaji Nilkant vs Secrtary of State(2) ruled that contracts with the Secretary of State must be by a deed executed on behalf of the Secretary of State for India and in his name. They cannot be made by correspondence or orally. Secretary of State vs Bhagwandas(3) and Devi Prasad Sri Krihhna Prasad Ltd. vs Secretary of State(1) held they could be made by correspondence. Secretary of State V. O.T. Sarin & Company(1) took an intermediate vie,* and held that though contracts in the prescribed form could not be enforced by either side, (1) (4) A.I.R. 1941 All. 377. (2) A.I.R. 1937 Bom. 449,451. (5) I.L.R. 11 Lah. (3) A.I.R. 1938 Bom. 108 834 a claim for compensation under section 70 of the Indian Contract Act would lie. Province of Bengal vs section L. Puri(1) took a strict view and held that even letters headed "Government of India" did not comply with, the rule in section 175 (3) of the Government of India Act, 1935. The Federal Court was called upon to construe section 40 (1) of the Ninth Schedule of the Government of India Act, 1935. It held that the directions in it were only directory and not mandatory, and the same view was taken of article 166 (1) of the present Constitution by this court in Dattatreya Moreshwar Pangarkar vs State of Bombay(2). None of these provisions is quite the same as article 299. For example, in article 166, as also in section 40(1) of the Government of India Act of 1935, there is a clause which says that "orders" and "instruments" and "other proceedings" "Made" and "expressed" in the name of the Governor or Governor General in Council and "authenticated" in the manner prescribed shall not be, called in question on the ground that it is not an "order" or "instrument" etc. 'made" or "executed" by the Governor or Governor General in Council. It was held that the provisions had to be read as a whole and when that was done it became evident that the intention of the legislature and the Constitution was to dispense with proof of the due "making" and "execution" when the form prescribed was followed but not to invalidate orders and instruments otherwise valid. Article 299(1) does not contain a similar clause, so we are unable to apply the same reasoning here. In our opinion, this is a type of contract to which section 236(3) of the Indian Contract Act would apply. This view obviates the inconvenience and injustice to innocent persons which the Federal Court felt in J. K. Gas Plant Manufacturing Co., Ltd. vs The King. Emperor (3)and at the same time protects Government. We feel that some reasonable meaning must (1) (2) ; at 632, 633. (3) at 156, 157, 835 be attached to article 299(1). We do not think the provisions were inserted for the sake of mere form. We feel they are there to safeguard Government against unauthorised contracts. If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded. On the other hand, an officer entering into a contract on behalf of Government can always safeguard himself by having recourse to the proper form. In between is a large class of contracts, probably by far the greatest in numbers, which, though authorised, are for one reason or other not in proper form. It is only right that an innocent contracting party should not suffer because of this and if there is no other defect or objection we have no doubt Government will always accept the responsibility. If not, its interests are safeguarded as we think the Constitution intended that they should be. In the present case, there can be no doubt that the Chairman of the Board of Administration acted on behalf of the Union Government and his authority to contract in that capacity was not questioned. There can equally be no doubt that both sides acted in the belief and on the assumption, which was also the fact, that the goods were intended for Government purposes, namely, amenities for the troops. The only flaw is that the contracts were not in proper form and so, because of this purely technical defect, the principal could not have been sued. But that is just the kind of case that section 230(3) of the Indian Contract Act is designed to meet. It would, in our opinion, be disastrous,to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effect ed by a ponderous legal document couched in a particular form. it may be that Government will not be bound by the contract in that case, but that is a very different thing from saying that the contracts as such are void and of no effect. It only means "that the principal cannot be sued ; but we take it there would 836 be nothing to prevent ratification, especially if that was for the benefit of Government. There is authority for the view that when a Government officer acts in excess of authority Government is bound if it ratifies the excess: see The Collector of Masulipatam vs Cavaly Venkata Narrainapah(1). We accordingly hold that the contracts in question here are not void simply because the Union Government could not have been,sued on them by reason of article 299(1). Now section 7(d) of the Representation of the People Act does not require that the contracts at which it strikes should be enforceable against the Government; all it requires. is that the contracts should be for the supply of goods to the Government. The contracts in question are just that and so are hit by the section. The purpose of the Act is to maintain the purity of the legislatures and to avoid a conflict between duty and interest. It is obvious that the temptation to place interest before duty is just as great when there is likely to be some difficulty in recovering the money from Government (for example, if Government were to choose not to ratify the contracts) as when there is none. In our opinion, the Election Tribunal was right in disqualifying Chatturbhuj Jasani. We now turn to Gangaram Thaware. He stood as a Scheduled Caste candidate and his nomination was rejected on the ground that he did not belong to the Scheduled Caste in question, namely the Mahars. The only question here is whether he ceased to be a Mahar when he joined the Mahanubhava Panth. This gave rise to much controversy and we have been presented with many conflicting opinions. Thus, the Imperial Gazetteer of India, Voluime XXI, page 3012 states that the founder of the sect repudiated the caste system as also a multiplicity of God7f3 and insisted on the monotheistic principle. At the same time it ,says that he taught his disciples to eat with none but (1) 8 M.I.A. 529 at 554. 837 the initiated and to break off all former ties of caste and religion. Russell in Volume IV of his Tribes and Castes of the Central Provinces says that the Manbhaos (Mahanubhau) is a religious sect,or order which has " now" (1911) become a caste. The Central Provinces Ethnographic Survey, Volume IX, says the same thing at page 107 and at page 110 and adds that members of the sect often act as priests or gurus to the Mahars. As against this, the Election Tribunal has quoted a number of opinions which tend the other way. Thus, V. B. Kolte says at page 247 of his Shri Chandradhar Charitra that no serious attempt has been made by them to abolish caste, and Ketkar says at page 76, Volume XVIII of the 1926 edition of his Maharashtriya Dhnyankosh that there are two divisions among the Mahanubhavas, one of Sanyasig who renounce the world and the other a secular one. The latter observe the caste system and follow the rituals of their own caste and carry on social contacts with their caste people and marry among them. Similar views are expressed by Bal Krishna Mohanubhav Shastri. But we are not really concerned 'with their theology. What we have to determine are the social and political consequences of such conversions and that, we feel, must be decided in a common sense practical way rather than on theoretical and theocratic grounds. Conversion brings many complexities in its train, for it imports a complex composite composed of 'many ingredients. Religious beliefs, spiritual experience and emotion and intellectual conviction mingle with more material considerations such as severance of family and social ties and the casting off or retention of old customs and observances. The exact proportions of the mixture vary from person to person. At one extreme there is bigoted fanaticism bitterly hostile towards the old order and at the other an easy going laxness and tolerance which makes the conversion only nominal. There is no clear out dividing line and it is not a matter which can be viewed from only one angle. 838 Looked at from the secular point of view, there are three factors which have to be considered: (1) the reactions of the old body, (2) the intentions of the individual himself and (3) the rules of the new order. If the old order is tolerant of the new faith and sees no reason to outcaste or ex communicate the convert and the individual himself desires and intends to retain his old social and political ties, the conversion is only nominal for all practical purposes and when we have to consider the legal and political rights of the old body the views of the new faith hardly matter. The new body is free to ostracise and outcaste the convert from its fold if he does not adhere to its tenets, but it can hardly claim the right to interfere in matters, which concern the political rights of the old body when neither the dld body nor the convert is seeking either legal or political favours from the new as opposed to purely spiritual advantage. On the other hand, if the convert has shown by his conduct and dealings that his break from the old order is so complete and final that he no longer regards himself as a member of the old body and there is no reconversion and readmittance to the old fold, it would be wrong to hold that he can nevertheless claim temporal privileges and political advantages which are special to the old order. In our opinion, broadly speaking, the principles laid down by the Privy Council in the case of a Hindu convert to Christianity apply here: not, of course, the details of the decision but the broad underlying principle. In Abraham vs Abraham(1), their Lordships say: " He " (the convert) " may renounce the old law by which he was bound, as he has renounced his old religion, or, if he thinks fit, he may abide by the old law, notwithstanding he has renounced the old religion. " The only modification here is that it is not only his choice which must be taken into account but also the views of the body whose religious tenets he has (1) 9 M.I.A. 199 at 242, 243, and 244. 839 renounced, because here the right we are considering is the right of the old body, the right conferred on it as a special privilege to send a member of its own fold to Parliament. But with that modification the observations which follow. apply in their broad outline. "The profession of Christianity releases the convert from the trammels of the Hindu law, but it does not of necessity involve any change of the rights or relations of the ' convert in matters with which Christianity has no concern, such as his rights and interests in, and his powers over, property. The convert, though not bound as to such matters, either by the Hindu law or by any other positive law, may by his course of conduct after his conversion have shown by what law he intended to be governed as to these matters. He may have done so either by attaching himself to a class which as to these matters has adopted and acted. upon some particular law, or by having himself observed some family usage or custom; and nothing can surely be more just than that the rights and interests in his property, and his powers over it, should be governed by the law which he has adopted, or the rules which he has observed. " Now what are the facts here ? Whatever the views of the founder of this sect may have been about caste, it is evident that there has been no rigid adherence to them among his followers in later years. They have either changed their views or have not been able to keep a tight enough control over converts who join them and yet choose to retain their old caste customs and ties. We need not determine whether the Mahanubhava tenets encourage a repudiation of caste only as a desirable ideal or make it a fundamental of the faith because it is evident that present day Mahanubhavas admit to their fold persons who elect to retain their old caste customs. That makes it easy for the old caste to regard the converts as one of themselves despite the conversion which for all practical purposes is only ideological and involves no change of status. 840 Now no witness has spoken of any outcasting, neither outcasting in general nor in this special case. No single instance has been produced in which any person who has joined this sect from the Mahar community has ever been outcasted from the Mahars for that reason; and as the sect is said to be over 1000 years old, therehas been time enough for such instances to accumulate. Further, no instance has been produced of a Mahanubhava marrying outside his or her old caste whereas there are instances of Mahanubhavas who have married non Mahanubhavas belonging to their own caste. Nene (P. W. 1), Sadasheo (P. W. 3), Sitaram (P. W. 4) and Haridas (P. W. 5) say that a Mahar 'convert does not lose his caste on conversion. He is admitted to all caste functions and can marry in the community. Of these, Sadasheo (P. W. 3) and Haridas (P. W. 5) are Mahars. There is no evidence to rebut this. The witnesses on the other side take refuge in theory and, when confronted with actual facts, evade the issue by saying that Mahanubhavas who do these things are not real Mahanubhavas. Harendra (R. W. 1) is a Mahanubhava Guru and so ought to know, but he affects an otherworldly indifference to mundane affairs and says that as he does not lead a worldly life he does not know whether converts retain their caste distinctions and whether there are inter dinings and inter marriages in the Mahanubhava fold itself among those who belonged to different castes before conversion. Shankar (R. W. 2) says that a convert loses his caste on conversion but gives no instance of ostracism from the old fold. In any case, his evidence is confined to the sanyasi order among the Mahanubhavas because he says that every person who becomes a convert to this sect must renounce the world and cannot marry. When pinned down in cross exami nation he had to admit that he did know two or three Mahanubhavas who were leading a worldly life but he meets that by saying that they are not real Mahanubhavas. Chudaman (R. W. 3) evades the issue in the same way. He is a Mahanubhava Pujari and so is 841 another person who ought to have special knowledge. Despite that he says he cannot give a single instance of a person belonging to one caste, initiated into the Mahanubhava sect, marrying a person of another caste initiated into the same Panth. When further pressed he said the question did not arise as a man lost his caste on conversion. On this evidence, and after considering the historical material placed before us, we conclude that conversion to this sect imports little beyond an intellectual acceptance of certain ideological tenets and does not alter the convert 's caste status, at any rate,, so far as the householder section of the Panth is concerned. So much for the caste consciousness on both sides. Now considering Gangaram Thaware the individual we find that he was twice married and on both occasions to Mahar girls who were not Mahanubhavas at the time of their respective marriages. His first wife was never converted. His second wife was converted after her marriage. The witnesses say ' he was still regarded as a Mahar after his conversion and always looked upon himself as a Mahar and identified himself with the caste. No one on the other side denies this. As we have shown, they took shelter behind generalities and evaded the issue by saying that in that case he cannot be a real Mahanubhava. If he was not, then he must have continued a Mahar even on their view. The evidence also discloses that Gangaram Thaware led Mahar agitations and processions as a member and leader of the Mahar caste. In 1936 he contested the election for the Provincial Assembly as a Mahar candidate. No one appears to have questioned his competency. And lastly, he declared himself to be a Mahar in the verification to his nomination form in the present election as also in an affidavit filed before the Returning Officer who rejected his nomination. The 'Returning Officer described that as a "cleverly, worded document. " We have read it and find nothing tricky or crooked in it., Therefore, applying the test in Abraham vs Abraham(1), we hold that despite his (1) 9 M.I.A. 199. 109 842 conversion he continued to be a Mahar and so his nomination form was wrongly rejected. That affects the whole election. The other points argued before the Election Tribunal were not pressed before us. We therefore uphold the decision of the Tribunal and dismiss the appeal with costs. Appeal dismissed.

A contract for the supply of goods does not terminate when the goods are supplied, it continues into being till payment is made and the contract is fully discharged by performance on both sides. O 'Carroll vs Hastings ( [1905] 2 I.H. 590) and Satyendrakumar Das vs Chairman of the Municipal Commissioners of Dacca (I.L.R.58 Cal. 180) relied upon. The firm Moolji Sicka and Company of which the candidate was a partner had entered into contracts with the Central 106 818 Government for the supply of goods. The contracts subsisted on ;he crucial dstes, November 15, 1951, and February 14, 1952. November 15, 1951, was the last date for putting in, nominations and February 14, 1952, was the date on which results were declared : Held, that the candidate had both a share and an interest in the contracts for the supply of goods to the appropriate Government on the crucial dates and was thus disqualified for being chosen as a member of Parliament by virtue of the disqualification set out in section 7(d) of the Representation of the People Act (XLIII of 1951). Held further, that the contention that the contracts in question were void because the Union Government could not be sued by reason of article 299(1) of the Constitution as the contracts were not expressed to be made by the President was without force because this was the type of case to which a. 230(3) of the Indian Contract Act would apply. When a Government officer acts in excess of authority Government is bound if it ratified the excess. The Collector of Masulipatam vs Cavaly Venkata Narrainapah (8 M.I.A. 529) reliecl upon. A member of the Mahar caste which is one of the Scheduled Castes continues to be a member of the Mahar caste despite his conversion to the tenets of the Mahanubhava Panth as such conversion imports little beyond @ an intellectual ' acceptance of certain ideological tenets and does not alter the convert 's caste status. Abraham vs Abraham (9 M.I.A. 199) relied upon.

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Criminal Appeals Nos. 244 246 of 1964. 829 Appeals from the judgment and order dated February 19, 1964 of the Allahabad High Court in Criminal Misc. Applications Nos. 1853, 3043 and 3044 of 1963. W.S. Barlingay, J. C. Jalwar and R. L. Kohli, for the appellant (in all the appeals). J.P. Goyal and R. B. Pathak, for respondent No. 1 (in all the appeals). The Judgment of the Court was delivered by Hidayatullah, J. Kamla Prasad Singh the appellant had filed three complaints in the Court of the Additional District Magistrate, (Judicial) Varanasi for the prosecution of Harinath Singh (respondent No. 1) under section 218 Indian Penal Code. In each of these complaints Harinath was a co accused with another. In one, it was Mangla Prasad Pandey, Ahlmad, Court of Tahsildar, Sadar Varanasi, in another it was Ramchander Lekhpal of Village Balua and in the third it was Ram Samravlal Lekhpal of Village Cholapore. In each case Harinath Singh was said to have abetted the offence committed by his co accused. The circumstances in which the complaints were lodged were common and may now be briefly stated. Certain Bhumidari lands in these villages were the property of Nankoo s/o Mehar Singh and Sumitra widow of one Ajudhia Singh. On December 4, 1962, Nankoo sold his half share to Kamla Prasad Singh and some others. Kamla Prasad 's com plaint is that Harinath Singh in conspiracy with the two Lekhpals got certain forged entries to be made in the Khasra after the sale in favour of Kamla Prasad, and applied for the correction of the Jamabandi. The Ahlmad in conspiracy with Harinath Singh ante dated the said application to November 9, 1962, to make it appear that it was made prior to the sale deed and to shield the Lekhpals. The application was entered in the register of Jamaband 's as Case No. 116 dated November 9, 1962 although the case bearing that number was one between Bhagwati Singh and Bhagwati of Birbalpura Kaswal Raja. After the complaints were in Court, Harinath Singh filed an application under section 561 A of the Code of Criminal Procedure stating that the offence, if any, was one under section 193 of the Indian Penal Code and the provisions of section 195 of the Code of Criminal Procedure barred the private complaints. The High Court accepted the application for the above reason and quashing the proceedings against Hari Nath Singh ordered his discharge. In these appeals by certificate, the order of the High Court is questioned. The first question is what are the distinct features of section 193 and section 218 of the Indian Penal Code. Section 193 states the 830 punishment for giving false evidence in any stage of a judicial peoceeding or fabricating false evidence for the purpose of being used in any stage of judicial proceeding. Section 191 defines the offence of giving false evidence and section 192 the offence of fabricating false evidence. We may ignore section 191 because here admittedly there is no giving of false evidence as defined in the Penal Code. The offence of fabricating false evidence comes into existence when a person causes any circumstances to exist or makes any false entry in any book or record or makes any document containing a false statement intending that such circumstance false entry or false statement may appear in evidence in a judicial proceeding etc. and so appearing cause an erroneous opinion be formed touching a point material to the result of such proceeding. The offence is a general one and does not specify the person, or the kind of document. It may be any person and the fabricated evidence may be in any form. Section 218 on the other hand deals with the intentional preparation of a false record by a public servant with the object of saving or injuring any Person or property. The difference between the two sect tons is clearly noticeable. Section 192 deals with judicial proceeding and the false evidence is intended to be used in a judicial proceeding. Section 218 deals with public servants and there the gist is the intentional preparation of a false record with a view of saving or injuring any person or property. This need not have relation to a judicial proceeding as such. The bar of section 195 of the Code of Criminal Procedure which was invoked by Hari Nath Singh arises thus. No Court can take cognizance of an offence under section 193 when such offence is alleged to have been committed in or in relation to any proceeding in any Court except on the complaint in writing of such Court. In these cases, Hari Nath Singh is charged with abetment of three offences committed by three public servants namely the two Lekhpals who have caused the preparation of an incorrect Khasra knowing it to be likely that they would thereby cause loss or injury to Kamla Prasad Singh and the other vendees. Hari Nath Singh is charged in the third case with abetment of the act of the Ahlmad who is alleged to have intentionally made a false entry about the case intending that the false entry should be used in a judicial proceeding and wrong opinion be formed about the date of the institution of the proceeding. It will appear from this that the alleged offence committed by the Ahlmad was clearly in or in relation to a proceeding, in Court. In fact he made an incorrect entry about a case actually in Court with the intention that the date of the institution of the proceeding may be taken to be November 9, 1962 although the case was alleged to be instituted after December 4, 1962. 83 1 His offence (if any be proved against him) would fall within section 192. Section 192 deals with fabrication of false evidence to be used in a judicial proceeding so as to cause an erroneous opinion to be formed on a material point. Section 192 therefore completely covers the case against Ahlmad, and must cover the case of Hari Nath Singh the alleged abettor. Section 218 Indian Penal Code does not apply in this case, because the record was not made with the object of saving or injuring any person or property. The offence of section 192 Indian Penal Code is punishable under section 193 Indian Penal Code and the latter section is one of the sections mentioned in section 195 (1 ) (b) of the Code of Criminal Procedure, the gist of which has been reproduced above. The decision of the High Court was therefore right that the Court could not take cognizance of the offence alleged against the Ahlmad and his abettor, because the offence was fabricating of false evidence in a case which was in fact pending and the false entry was made with the object that an erroneous opinion be formed on a material point. Such a case could only be instituted by a Court in which or in relation to which this offence was committed and a private complaint was therefore incompetent. The alleged offence against the Lekhpals and their abettor Hari Nath Singh in the other two cases is of a different order. The offence of section 218 Indian Penal Code is not a minor offence, included within section 192. It is a distinct offence which can be proceeded against without the bar of section 195 of the Code of Criminal Procedure. There is some resemblance between section 192 and section 21 8 Indian Penal Code, because both deal with the preparation of a false record. There the resemblance ceases. Whereas in section 192, the record is prepared for use in a judicial proceeding with the intention that an erroneous opinion be formed regarding a material point, the offence in section 218 is the preparation of a false record by a public servant with the intention of saving or injuring any person or property. The intention here was to save the property from the vendees namely Kamla Prasad Singh and others. The offence was complete the moment the false record was made with the said intention and it was not necessary for the completion of this offence that the record should be used in a judicial proceeding so as to cause an erroneous opinion to be formed touching on a point material to the result of such proceeding. In the Ahlmad 's case this latter condition was the most important ingredient. In the case of the Lekhpals, it was immaterial whether the record would be produced in a judicial proceeding or not so as to cause an erroneous opinion to be formed. The intention was to save the property from the effects of the sale and the preparation of the false record was therefore sufficient from this point of view. In other words, the offence of the Lekhpals (if any be proved against them) would fall within section 218 and not section 192/193 of the Indian Penal Code. It may fill in the latter sections if the entry 8 32 can be said to be in or in relation to a Court. This cannot be said of the entries in the Khasra. As section 218 is not named in section 195 of the Code of Criminal Procedure, the private complaint of Kamla Prasad Singh could be entertained by the Court and there was no bar. To hold that a record such as is contemplated in section 218 Indian Penal Code is always one intended for use in a Court would put section 218 Indian Penal Code in section 195 of the Code of Criminal Procedure which the Code of Criminal Procedure has not thought of. Therefore section 218 Indian Penal Code must be treated as an independent and distinct offence. There could be a private complaint in respect of an offence under section 218 Indian Penal Code. The result is that the case against Hari Nath Singh of abet ment of the act of the Ahlmad could not begin except on a complaint in writing of the Court concerned. There was no bar to the commencement of the case against Hari Nath Singh and the two Lekhpals on the private complaint of Kamla Prasad Singh. Accordingly Criminal Appeal No. 244 of 1964 shall be dismissed. Criminal Appeals Nos. 245 246 of 1964 shall be allowed and the concerned cases will be remitted to the Court of first instance for trial according to law. Y.P. Appeal No. 244 dismissed Appeals 245 246 allowed.

The appellant. a private person, filed three complaints under section 218 I.P.C. for the prosecution of respondent 1 charging him in each ease with abetment of offences committed by three public servants. In each complaint respondent 1 was a co accused with another in one with an Ahmad of Tahsildar 's Court. in another with one Lekhpal, and in the third with the another Lekhpal. The Ahmad was alleged 10 have intentionaIIy made a false entry about the case intending that the false entry should be used in a judicial proceeding and wrong opinion be formed, the Lekhpals were alleged to have caused the preparation of an incorrect Khasra knowing to be likely that they would thereby cause loss or injury to the appellant. The respondent 1 filed an application under 561 A Cr. P.C. slating that the offence, if any, was one under section 193 I.P.C. and the provisions of section 195 Cr. P.C. barred private complaints, which the High Court accepted. In appeal, this Court, HELD: The bar of private complaints applied 10 the case of Ahmad, but not to those of Lekhpals. 1832 C D] The difference between sections 192 and 218 I.P.C. is that the former deals with judicial proceeding and the false evidence is intended to be used in a judicial proceeding, while the latter deals with public servants, and there the gist is the international preparation of false record with a view of saving or injuring any person or property and need not have relation to a judicial proceeding as such. I830 D] Section 192 I.P.C. covers the case against the Ahmad and respondent 1 and the offence is punishable under section 193 I.P.C. which is mentioned in section 195(1)(b) Cr. P.C. No Court can take cognizance of an offence under section 193 except on the complaint in writing of such court. The alleged offence against the Lekhpals and respondent 1, their abettor, in the other two cases was of a different order. The offence of section 218 I.P.C. is not a minor offence included within section 192. It is distinct offence which can be proceeded against without the bar of section 195 Cr. The offence was complete the moment the false record was made with the said intention and it was not necessary for the completion of this offence that the record should be used in a judicial proceeding so as to cause an erroneous opinion to be formed touching on a point material to the result of such proceeding. In the Ahmad 's case this latter condition was the most important ingredient. [831 B C, D G]

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Appeal No. 604 of 1966. Appeal by special leave from the judgment and order dated August 5, 1964 of the Madras High Court in Tax Case No. 131 of 1963 (Revision No. 87). G. Ramanujam and A. V. Rangam, for the appellant. K. Srinivasan and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. M/s. R. Nand Lal & Company hereinafter called 'the assessee are dealers in wool at Vaniyambadi in North Arcot District in ' the State of Madras. In proceedings for assessment of sales tax for the year 1959 60 the assessees were assessed to pay tax at the rate, of seven per cent. on a turnover of Rs. 2,08,343 05 from sales effected by them to certain registered dealers in the State of Punjab. The assessing authority declined to assess the turnover at one per cent. as prescribed by section 8(1) of the , because in his view the assessees had submitted declarations in Form 'C ' covering two or more transactions contrary to the first proviso to r. 10(1) of the Central Sales Tax (Madras) Rules, 1957. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal, Madras confirmed the order of the assessing authority. The High Court of Madras, in exercise of its revisional jurisdiction, set aside the order of the Sales Tax Appellate Tribunal, and declared that the ass s were liable to pay tax on the turnover in dispute at the lower rate. The State of Madras has appealed to this Court with special leave. Section 8 of the (as amended by Act '31 of 1958) insofar as it is material provided "(1) Every dealer, who in the course of inter State trade or commerce (a) (b) sells to a registered dealer other than the Government goods of the description referred to in sub section (3); shall be liable to pay tax under this Act, which shall be one per cent. of his turnover. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods 647 in the course of inter State trade or commerce not falling within sub section (1) (a). . . (b) in the case of goods other than declared goods, shall be calculated at the rate of seven per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; (2A) (3) (4) The povisions of sub section 1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner (a) a declaration duly filed and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b). . . (5) It is common ground that the turnover was in respect of goods of the class specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the process of manufacture of goods for sale. A registered dealer selling goods in the course of inter State trade or commerce of the description referred to in sub section (3) is viable under section 8 ( 1 ) of the , to pay tax only if the rate of one per cent. on his turnover. But to qualify himself for that rate of tax he has to furnish to the prescribed authority a declaration duly filled and signed by the registered dealer to whom the goods are sold. Such a declaration must contain the Prescribed particulars in the prescribed form obtained from the Prescribed authority. If the selling dealer fails to furnish the declaration in the prescribed form, he is liable to pay tax at the higher rate mentioned in sub section (2) (b) of section 8. The respondents did furnish declarations in Form 'C ' pres cribed under the Rules framed ' by the Central Government in exercise of the, powers vested by section 1 3 (1) (d) of the . But each such declaration covered more transactions of sale than one and the aggregate value of the transactions recorded in each declaration exceeded Rs. 5,0001 The sales tax authorities and the Tribunal were of the view that these declarations contravened the express direction of the rule made by 648 the Madras State in exercise of the powers under section 13 (4) (e) of the . The High Court held that r. 10(1) of the Central Sales Tax (Madras) Rules, 1957, applied only to a transaction of purchase by a dealer in the State of Madras, and not to the purchasing dealer in the State of Punjab; that the Madras State was incompetent to frame rules governing the conduct of the purchasing dealers in the Punjab that since the corresponding rules framed by the State of Punjab under section 13 (4) (e) of the did not include a provision requiring separate form to be used for each sale transaction, the purchasing dealers were not obliged to comply with r. 10(1) of the Madras Rules, and that since the Madras selling dealers could not compel the purchasing dealers to comply with the rules relating to furnishing of separate declaration forms ordained by the Madras Rules, the declarations were not defective. In any event, the High Court held, r. 10(1) of the Madras Rules was directory and not mandatory. The assumption made by the High Court that no rule was framed by the State of Punjab under section 13 (4) (e) of the requiring the purchasing dealers in the State of Punjab to issue a separate declaration form in respect of each individual transaction is erroneous. It is conceded before us that the Punjab Government had in purported, exercise of the powers under sub sections (3) & (4) of section 13 of the Central Sales Tax, 1956, made r. 7(2 A) with effect from February 17, 1958 that: "No single declaration in Form 'C ' prescribed under the Central. Sales Tax (Registration and Turnover) Rules ' 1957, shall cover more than one transaction of sale except when the total amount of sales does not exceed five thousand rupees." But, for reasons which we will presently set out, the judgment of the High Court must still be, affirmed. Sub section (4) of section 8 of the provides that in order to, qualify himself for the lower rate of tax it, respect of sales in the course of inter State trade or commerce, the dealer selling goods has to furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold. The expressions "prescribed authority" and "prescribed manner" mean the authority and manner prescribed by rules under the Act. Section 13(1) of the , authorises the Central Government to make rules, providing, inter alia, the form in which and the particulars to be contained in any declaration of certificate to be given under the Act. By sub section (3) of section 13 the State Government is authorised to make rules not inconsistent with the provisions of the Act and the rules made under sub section (1) to 64 9 carry out the purposes of the Act, and by sub s (4) of section 13 the State Government is, in particular and without prejudice to the powers conferred by sub section (3), authorised to make rules for all or any of the purposes set out therein including "the authority from whom, the Conditions subject to which and the fees subject to payment of which any form of declaration prescribed under sub section (4) of section 8 may be obtained, the manner in which the form shall be kept in custody and records relating thereto maintained, the manner in which any such form may be used and any such declaration may be furnished." In exercise of the power conferred by section 131 (d) the Central Government has prescribed the form of declaration to be furnished by the purchasing dealer under section 8 (4). That is Form 'C '. The form is in three sections the "counterfoil", the "duplicate" and the "original". The "original" contains at the foot of the Form the following Note: "(To be furnished to the prescribed authority in accordance with the rules framed under section 13(4) (e) by the appropriate State Government.)" The Madras State Government presuming to act in exercise of authority under section 13(3) and section 13(4)(e) framed the Central Sales Tax (Madras) Rules, 1957, r. 10(1) of which reads as follows ': "A registered dealer, who wishes to purchase goods from another such dealer on payment of tax at the rate applicable under the Act to sales of goods by one registered dealer to another, for the purpose specified in the purchasing dealer 's certificate of registration, shall obtain from the assessing authority in the City of Madras and the registering authority at other places a blank declaration form prescribed under rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for furnishing it to the selling dealer. Before furnishing the declaration to the selling dealer, the purchasing dealer,or any responsible person authorized by him in this behalf shall fill in all the required particulars in the form and shall also affix his usual signature in the space provided in the form for this purpose. Thereafter the counterfoil of the form shall be retained by the purchasing dealer and the other two portions marked "original" and "duplicate" shall be made over by him to the selling dealer Provided that no single declaration shall cover more than one transaction of sales except 650 (a) in cases where the total amount covered by one declaration is equal to or less than Rs. 5,000 or such other amount as the State Government may, by a general order, notify in the Fort. St. George Gazette, and (b) Ex facie, this rule imposes no obligation upon a dealer in the State of Madras wishing to sell goods : it applies to a dealer wishing to purchase goods from another dealer. The argument that cl. (1) of r. 10 is intended to apply to a registered dealer in the State of Punjab is negatived by the scheme of the and the Rules framed thereunder. By section 7 of the , every dealer liable to pay tax under the Act has to make an application for registration under the Act to such authority in the appropriate State as the Central Government may by general order specify. The authority to be specified is designated in the Central Sales Tax (Registration and Turn over) Rules, 1957, framed by the Central Government under section 13(1), the "notified authority" : vide r. 2(c). Rule 3 provides that an application for registration under section 7 shall be made by a dealer to the notified authority in Form 'A '. In exercise of the powers conferred by sub section (1) of section 7 of the , the Central Government issued a notification No. S.R.O. 643 dated February 22, 1957, specifying the persons mentioned in Col. (3) of the Schedule thereto as the authorities to whom the dealers of the description in Col. (2) shall make the application for registration. Item 1 of the Schedule requires a dealer having a single place of business in a State to make an application to the authority competent to register him under the general sales tax law of the State if he were liable to, be so registered : and item 2 provides that the dealer having more than one place of business in a State shall make an application to the authority competent to register him in respect of the principal place of business under the general sales tax law of the State if he were liable to be so registered. A registered dealer contemplated by r. 10 is therefore registered in the State where he has his place of business. The expression "assessing authority" is defined in the Central Sales Tax (Madras) Rules, 1957, as meaning any person authorized by the State Government to make any assessment under the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959). The dealer has again to obtain the form of declaration from the assessing.authority in the State of Madras. These are clear indications that the rules framed by the Madras Government were intended to apply to dealers within the State of Madras. The High Court was, in our judgment, right in holding that under the scheme of the and the Rules framed under that Act by the State of Madras, the injunc 651 tion against the purchasing dealers in r. 10(1) did not apply to, dealers in the State of Punjab. It is unnecessary on that view to, express any opinion on the question whether the State Government could, in exercise of the powers under section 13 (4), impose upon dealers not within the State, obligations to comply with conditions relating to the contents of the 'C ' Form declarations. Since, r. 10 ( 1 ) requiring that a separate declaration form in respect of each individual transaction shall be furnished was intended only to apply to dealers in the State of Madras, and not to dealers outside the State, proviso to r. 10(1) which directs that no single declaration shall cover more than one transaction of sale except in certain cases has no application to a purchasing dealer outside the State of Madras. Rule 10(2), provides : "A registered dealer who claims to have made a sale to another registered dealer shall, in respect of such claim attach to his return in Form the portion marked "original" of the declaration received by him from the purchasing dealer. The assessing authority may, in its discretion, also direct the selling dealer to produce for inspection the portion of the declaration marked "duplicate". " But this rule does not direct that a declaration covering more than one transaction of sale shall not be given. The rules framed by the Madras Government do not otherwise impose any binding obligation upon the selling dealer in the State of Madras to obtain a separate declaration form in respect of each sale transaction, nor do the rules visit him with a penalty on failure to comply with the requirement. We are constrained to observe that the rule making authori ties have failed to appreciate the scheme of section 13 of the . We are of the opinion that it was not within the competence of the State authorities under section 13(3) & (4) of the to provide that a single declaration covering more than one transaction shall not be made. Authority to prescribe such an injunction cannot have its source in section 13(3) or section 13 (4) (e) : it can only be in the authority conferred by cl. (d) of section 13(1) by the Central Government. The Central Government has, in exercise of the power under section 1 3 (1) (d), prescribed the form of declaration and the particulars to be contained in them declaration. A direction that there shall be a separate declaration in respect of each individual transaction may appropriately be made in exercise of the power conferred under section 13 (1) (d). The State Government is undoubtedly empowered to make rules under sub sections (3) and (4) of section 13 but the rules made by them 652 State Government must not be inconsistent with the provisions of ,the Act and the rules made under sub section (1) of section 13 to carry out the purposes of the Act. If the authority to make a rule prescribing that the declaration shall not contain more than one transaction can be made only under section 13 (1) (d), the State Government cannot exercise that authority. The situation which has arisen in this case could have been avoided, if instead of each State making its rules requiring that no single declaration shall ,cover more than one transaction, the Central Government in exercise of the power under section 13 (1) (d) of the Act had made the rules. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

The assessee firm was a 'dealer ' in Madras State. For the year 1959 60 the firm was taxed at 7% on certain sales effected to registered dealers in the Punjab on the ground that the declarations taken from dealers in Punjab in Form 'C ' were not in accordance with r. 10(1) of the Central Sales Tax (Madras) Rules, 1957. The latter rule required ,that there must be a separate declaration in respect of each transaction whereas the declarations in the present case were in respect of several transactions each. The appellant firm claimed that on the turnover in question it should have been assessed at one Per cent only, as laid down in section 8(1) of the Central Sales Tax Act, 1056. The claim was turned down by the Sales tax Authorities and the Tribunal, but the High Court held that r. 10(1) of the Central Sales Tax (Madras) Rules, 1957 applied only to transactions of purchase by a dealer in the State of Madras and not to the purchasing dealer in the State of Punjab, that the Madras State was incompetent to frame rules governing the conduct of the chasing dealers in the Punjab, and that in any event r. 10(1) was tory and not mandatory. The State appealed. HELD: (i) Ex facie r. 10(1) imposes no obligation upon a dealer in the State of Madras wishing to sell goods : It applies to a clear wishing to purchase goods from another dealer. The High Court was further right in holding that under the scheme of the Central Sales Tax Act and the Rules framed under that Act by the State of Madras the injunction against the purchasing dealers in r. 10(1) did not apply to dealers in the State of Punjab. [650B 651A] Accordingly the proviso to r. 10(1) which,directs that no single declaration shall cover more than one transaction of sale except in certain cases has no application to a. purchasing dealer outside the State of Madras. Nor does r. 10(2). impose any binding obligation upon the selling dealer in Madras to obtain a separate declaration form in respect of each sale transaction. [651C F] The appellants were therefore to be taxed at the rate of one per cent and not seven per cent on the turnover in question. (ii) A rule prescribing that a declaration by a purchasing dealer shall not contain more than one transaction can only be made by the Central Government under section 13(1)(d) and the State Governments do not have 646 power under section 13(3) and section 13(4)(e) to make any such rule. The situation which had arisen in this case could have been avoided if instead of each State making its rules requiring that no single declaration shall cover more than one transaction, the Central Government in exercise of the power under section 13(1)(d) of the Act had made the rule. [651G H; 652A B]

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iminal Appeal No. 67 of 1951. Appeal by special leave from the Judgment and Order, dated 26th June, 1950, of the High Court of Judicature at Bombay (Dixit and Chainani JJ.) in Criminal Appeal No. 784 of 1949. N. C. Chatterjee (H. J. Umrigar and section P. Varma, with him) for the appellant. M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondent. March 11. The Judgment of the Court was delivered by GULAM HASAN J. This appeal is brought by special leave from the judgment and order of the High Court of Judicature at Bombay (Dixit and Chainani JJ.), dated June 26, 1950, whereby the High Court allowed the appeal of the State of Bombay, setting aside the order of acquittal of the appellant passed by the Sessions Judge of Kaira, dated May 7, 1949, and restoring the order of conviction and sentence of the appellant passed by the Sub Divisional Magistrate, Nadiad Prant, dated December 31, 1948. The appellant, Suleman Issa, who is an inhabitant of Natal in South Africa left Durban in August, 1947, by car for India to pay a visit to his native place Sarsa in District Kaira where his sister was living with her husband Alimahmad Issak. He was accompanied by, 978 Daud Hassam another brother in law and both travelled to Mombasa by car. From Mombasa they took a boat on August 30, and reached Colombo on September 1 1. They flew from Colombo to Madras on September 14, but shipped the car by a steamer. They stayed in Madras until the steamer arrived on September 20. The car was delivered to the appellant on October 1, after he had paid Rs. 2,700 as custom duty and a cash deposit of Rs. 10,000 by way of security as the appellant intended to take the car back to Durban on his return. The party motored to Nardana on October 7, passing through Bangalore, Poona, Nasik and Dhulia. From there they travelled by train and reached Sarsa on October 8. The car was booked in an open truck from Nardana to Anand where it was taken delivery of and then driven to Sarsa. One Ratansing Kalusing Raol, Senior Police Inspector of Nadiad town, having noticed the car bearing no Indian number passing in the town instructed policemen to keep a watch. The appellants ordered to appear before the Sub Inspector on October 12. On being questioned he stated that his family was the original inhabitant of Jamnagar State but for the last 60 years they were doing the business of contractors for purchasing and selling land in Durban. His brother Daud Issa was, however, serving in Bombay. He gave details of the journey performed by him and his companion and produced passports, as also the receipts for paying custom duty and the deposit. On October 15, Head Constable Ajit Singh, informed Raol that some unknown person had come to the shop of Umarbhai jeweller with a large quantity of gold. Accordingly the police visited the shop of the jeweller and his brother (also a jeweller) and came to know that gold had been given to him by the appellant to be melted. This gold along with some other gold kept at another place was seized by the police. The police also took possession of the car. The entire quantity of gold seized was 27731 tolas the value of which is roughly estimated at Rs. 3 lakhs. Proceedings under action 20 of the Indian Telegraph Act were instituted 979 against the appellant and others on the assumption that the wireless set in the car was a transmitter but they were dropped when it was found otherwise. The car was thoroughly examined but nothing incriminating was found. The appellant was also detained under the Public Securities Act but was released. Ultimately on January 2, 1948, he along with others was prosecuted on the complaint of Raol for an offence under section 61 E of the Bombay District Police Act (IV of 1890) read with section 109 of the Indian Penal Code. Section 61E says: " Whoever has in his possession or conveys in any manner, or offers for sale or pawn, anything which there is reason to believe is stolen property or property fraudulently obtained, shall, if he fails to account for such possession or act to the satisfaction of the Magistrate, be punished with imprisonment for a term which may extend to three months or with fine which may extend to one hundred rupees. " He was convicted by the Magistrate and sentenced to a fine of Rs. 100 and the gold was directed to be confiscated under section 517 of the Code of Criminal Procedure. The other accused who were charged with abetment were acquitted,. The Magistrate took the view that there wag no direct evidence to show that the accused had committed theft or had obtained property fraudulently but there were in his opinion circumstances which led to the reasonable belief that the gold in question was either stolen or was fraudulently obtained. The Sessions Judge held that although the possession of the gold was highly suspicious, nevertheless it did not constitute sufficient ground for a reasonable belief that the property was either stolen or was fraudulently obtained. He accordingly set aside the conviction and sentence and ordered the gold to be restored to the appellant. The High Court in appeal by the State did not accept the prosecution story that the gold was brought into India by the appellant in his motor car, but held agreeing with the Magistrate that from the circumstances there was reason to believe that he was in possession of gold which was either stolen property or property 980 fraudulently obtained. The High Court did not accept the explanation of the appellant that his father had brought the gold to Sarsa from time to time when he visited his native place. As regards the order of confiscation under section 517, the High Court held that it was not necessary that the property confiscated must be the property in relation to which an offence appears to have been committed but it was enough if ,the property is produced before the court. In this view the acquittal was set aside and the order of the Magistrate was restored. Mr. Chatterjee on behalf of the appellant stated at the outset that he was not prepared to concede that the appellant 's conviction was right but he proceeded on the assumption that even if it was so, section 517 had no application to the case and the court had no jurisdiction to pass the order of confiscation of the gold. He also urged that 'in any, view of the matter the order of confiscation was not a proper order in the circumstances of this case. Section 517(1) reads thus: When an inquiry or a trial in any criminal court is concluded, the court may make such order as it thinks fit for the disposal (by destruction, confiscation, or delivery to any person claiming to be entitled to possession thereof or otherwise) of any property or document produced before it or in its custody or regarding which any offence appears to. have been committed, or which has been used for the commission of any offence. " The section on a plain reading shows that upon the conclusion of an inquiry or trial the court is empowered to make an order for disposal of any property or document produced before it or in its custody, or regarding which any offence appears to have been committed, or which has been used for the commission of an offence. The section also shows that the power of the court extends to destruction, confiscation or delivery to any 981 person claiming to be entitled to possession of such property. Mr. Chatterjee contended that the gold after it was seized by the Police was sent to the Treasury and was never produced before the court. We do not think that the evidence on this point is clear and definite. This point does not appear to have been raised before the courts below. The High Court justified the order on the ground that the property was produced before the court and held that it was not necessary to find before passing the order that " any offence appears to have been committed " in respect of it. It is clear to us that the property was not one regarding which any offence appears to have been committed, or which has been used for the commission of any offence. Now the power of the court no doubt extends to confiscation of property in the custody of the court but it is not every case in which the court must necessarily pass an order of confiscation irrespective of the circumstances of the case. It is possible to conceive of cases where the subject matter of the offence may be property which under the law relating to that offence is liable to be confiscated as a punishment on conviction. Assuming therefore that the court had jurisdiction to pass an order regarding the disposal of the gold, it seems to us that the order of confiscation was not an appropriate order in the circumstances of this case. Section 517 contains a general provision for disposal of the property in the circumstances mentioned in the latter part of the section. Section 61E by itself does not empower the court to impose the penalty of confiscation and the sentence of imprisonment and fine authorized by the section is a nominal sentence for the obvious reason that the section proceeds upon the mere belief that the property in possession of the person is stolen property or property fraudulently obtained possession of which is not satisfactorily accounted for. It is an offence under the local Police Act and not under an Act which contains any substantive provision such as the Sea Customs Act imposing the penalty of confiscation. Confiscation is not the only mode of disposal under section 517 and is singularly 127 982 inappropriate in a case where the accused is prosecuted for an offence punishable with a maximum sentence of 3 months and a fine of Es. It was certainly open to the court to order the property to be delivered to the person claiming to be entitled to its possession. Here the gold was found from the possession of the appellant, and the court was not called upon to consider any rival claims about its possession. Admittedly ,there was no evidence to prove that it was stolen, or that it was fraudulently obtained and all that was found was that there was reason to believe that it was stolen or fraudulently obtained and that the appellant failed to account for its possession to the satisfaction of the court. The High Court thought that the gold was smuggled from Africa into India but assuming this to be so, its confiscation under section 517 upon the existence of a mere belief required to sustain a conviction under section 61 E was palpably harsh and unreasonable. We hold, therefore, that the order of confiscation of gold cannot be supported. We accordingly set aside the order of confiscation and direct that the, gold seized from the appellant 's possession shall be restored to him. Appeal allowed.

Under section 517 of the Code of Criminal Procedure the court is empowered on the conclusion of an enquiry or trial to make an 977 order for the disposal of any property or document produced before it or in its custody or regarding which an offence appears to have been committed or which had been used for the commission of any offence. The power of the court extends to the confiscation of the property in the custody of the court but it is not in every case in which the court must necessarily pass an order of confiscation irrespective of the circumstances of the case. Held, that the confiscation of gold worth about 3 lakhs of rupees was singularly inappropriate in a case like the present where the prosecution story that the gold in question was smuggled into India from Africa was not accepted by the court and the accused was convicted for an offence under a. 61 E of the Bombay District Police Act, 1890, which provides a maximum sentence of three months and a fine of Rs. 100 and which does not contain any substantial provision such as the Sea Customs Act imposing the penalty of confiscation.

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Appeal No. 2314 of 1966. Appeal from the judgment and order dated October 7, 1966 of the Punjab High Court in Circuit Bench at Delhi in Civil Writ Petition No. 790 D of 1966. M. C. Setalvad, Ravinder Narain, J. B. Dadachanji, for the appellants. section V. Gupte, Solicitor General, R. Ganapathy. Iyer, R. N. Sachthey, and R. H. Dhebar, for the respondent. The Judgment of the Court was delivered by Shah, J. The Punjab Reorganisation Act, 1966 hereinafter called 'the Act ' was enacted with the object of reorganising the State of Punjab. By the Act which came into force on November 1, 1966, the eastern hilly areas of the old State were transferred to the Union territory of Himachal Pradesh; the territory known as Chandigarh in Kharar tahsil was constituted into a Union territory; and the remaining territory was divided between the new State of Punjab and the Haryana State. The old State of Punjab had a bi cameral Legislature with 154 members in the Legislative Assembly and 51 members in the Legislative Council. Under section 13 of the Act as from November 1, 1966, the Legislative Assembly of the new State of Punjab consists of 87 members. and the Haryana Legislative Assembly consists of 54 members. The new State of Punjab has also a bi cameral Legislature. Out of the original membership of 51. 16 members whose names are set out in the Seventh Schedule to the Act ceased to be members of the Legislative Council, and the remaining members continued to be members of the Legislative Council of the new State of Punjab. Out of the 16 members who ceased to be members of the Legislative Council, 14 members, it is claimed by the appellants, belong to the Haryana area and 2 to the Himachal Pradesh Union territory. The Act was challenged as "illegal and ultra vires of the Constitution" on diverse grounds in a writ petition filed by the two appellants in the High Court of Punjab. The High Court rejected the petition. 111 In this Court two contentions were urged in support of the appeal: (1) Constitution of the Legislative Assembly of Haryana by section 1 3(1) of the , violates the mandatory provisions of article 170(1) of the Constitution; and (2) By enacting that. 8 members of the Legislative Council who are residents of the Union territory of Chandigarh shall continue to sit in the Legislative Council in the new State of Punjab, and by enacting that the members elected to the Legislative Council from the Haryana area shall be unseated, there is denial of equality. By section 24 of the Act it is provided that the total number of seats in the Legislative Assembly of Haryana "to be constituted at any time after the appointed day i.e. November 1, 1966 to be filled by persons chosen by direct election from territorial constituencies, shall be eighty one. " It is clear that section 13(1) which allocates fifty four sitting members out of the members elected to the Legislative Assembly of the old State of Punjab to the Haryana area Legislative Assembly on November 1, 1966, is a temporary provision. Constitution of the Legislative Assembly of Haryana on November 1, 1966, is, it is contended, violative of article 170 of the Constitution. In terms article 170 enacts that a Legislative Assembly shall be constituted by members chosen by direct elections from territorial constituencies, and that the Assembly shall consist of not more than five hundred and not less than sixty members. But article 170 is not the only provision having a bearing on the constitution of a Legislative Assembly. By article 2 the Parliament may by law admit into the Union or establish new States on such terms and conditions as it thinks fit; and article 3 provides that the Parliament may by law (a) form a new State by separation of territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State; (b) increase the area of any State; (c) diminish the area of any State; (d) alter the boundaries of any State; (e) alter the name of any State. Any law referred to in article 2 or article 3 shall, it is provided by article 4(1), contain such provision for the amendment of the First Schedule and the Fourth Schedule as may be necessary to give effect to the 112 provisions of the law and may also contain such supplemental, incidental and consequential provisions (including Provisions as to representation in Parliament and in the Legislature or Legislatures ,of the State or States affected by such law) as Parliament may deem necessary. BY cl. (2) of article 4 it is provided: "No such law as aforesaid shall be deemed to be an amendment of this Constitution for the purposes of articles 368. " The law referred to in articles 2 & 3 may therefore alter or amend the First Schedule to the Constitution which sets out the names of the States and description of territories thereof 'and the Fourth Schedule allotting seats to the States in the Council of States in the Union Parliament. The law so made may also make supplemental, incidental and consequential provisions which would include provisions relating to the setting up of the legislative, executive and judicial organs of the State essential to the effective State administration under the Constitution, expenditure and distribution of revenue, apportionment of assets and liabilities, provisions as to services, application and adaptation of laws, transfer of proceedings and other related matters. On the plain words of article 4, there is no warrant for the contention advanced by counsel for the appellants that the supplemental, incidental and consequential provisions, which by virtue of article 4 the Parliament is competent to make, must be supplemental, incidental or consequential to the amendment of the First or the Fourth Schedule. The argument that if it be assumed that the Parliament is invested with this wide power it may conceivably exercise power to abolish the legislative and judicial organs of the State altogether is also without substance. We do not think that any such power is contemplated by article 4. Power with which the Parliament is invested by articles 2 and 3, is power to admit, establish, or form new States which conform to the democratic pattern envisaged by the Constitution; and the power which the Parliament may exercise by law is supplemental, incidental or consequential to the admission, establishment or for mation of a State as contemplated by the Constitution, and is not power to override the constitutional scheme. No State can therefore be formed, admitted or set up by law under article 4 by the Parliament which has not effective legislative, executive and judicial organs. Power to reduce the total number of members of the Legis lative Assembly below the minimum prescribed by article 170(1) is, in our judgment, implicit in the authority to make laws under article 4. Such a provision is undoubtedly an amendment of the Constitution, but by the express provision contained in cl. (2) of article 4, no such law Which amends the First and the Fourth Schedule or which makes supplemental, incidental and consequential provisions is to be 113 deemed an amendment of the Constitution for the purposes of Art.368. Our attention was invited to article 371A(2)(h) of, the Constitution which makes an express provision in derogation to article 170(1) relating to the constitution of a Legislative Assembly for the State of Nagaland, and fixes"notwithstanding anything in this Constitution for a period of ten years from the date of the formation of the State of Nagaland or for such further period as the Governor may, on the recommendations of the regional Coun cil, by public notification specify in this behalf" the membership of the Legislative Assembly at 46. Power of the Parliament to make amendments in the Constitution by express enactment so 'as to reduce the number of members of a Legislative Assembly below the minimum prescribed having regard to the exigency of a special case may not be denied. But the Constitution also contemplates by article 4 that in the enactment of laws for giving effect to the admission, establishment or formation of new States, or alteration of areas and the boundaries of those States, power to modify provisions of the Constitution in order to tide over a temporary difficulty may be exercised by the Parliament. The High Court was, therefore, right in holding that section 13(1) was not invalid merely because it departed from, the minimum prescribed as the total membership of the Legislative Assembly for a State. Sections 20 & 22 of the Act deal with the constitution of the Legislative Council. By section 20 the Legislative Council of the new State of Punjab is to consist of 40 representatives and the Third Schedule to the Representation of the People Act, 1950, is to stand modified accordingly. By section 22 it is provided: "(1) On the appointed day, the sitting members of the Legislative Council of Punjab specified in the Seventh Schedule shall cease to be members of that Council. (2) On and from the appointed day, all sitting members of the Legislative Council of Punjab, other than those referred to in subsection (1), shall continue to be members of that Council. By the Seventh Schedule, 16 members, of whom it is claimed 14 are from the territory which is now in Haryana State, have been untreated. It was claimed by the appellants in their petition before the High Court that those 14 members of the Old Punjab Legislative Council "would cease to be members of the new Council" from November 1, 1966, whereas 8 members belonging to the newly constituted area of the Union territory of Chandigarh still continue to be members of the new Punjab Legislative Council, and that such discriminatory treatment of members from the Haryana region 114 amounted to denial of equality. In the affidavit on behalf of the Union of India it was submittedthat because Chandigarh is to be the capital of the existing Stateof Punjab and will continue to be the seat of new Government of the Punjab, the members from Chandigarh were admitted as members of the Legislative Council of the new State of Punjab,that the provision was consequential and incidental to the main provision constituting the State of Punjab, and that in theevent, the appellants were not persons aggrieved by the so called discriminatory treatment. By article 171(3) of the Constitution membership of the Legis lative Council is not from territorial constituencies: it is by nomination, indirect election or by election from teachers ' and graduates '. constituencies. Of the total number of members of the Legislative Council of a State, one third are to be elected by electorates consisting of members of municipalities, district boards and such other local authorities in the State, one twelfth are to be elected by electorates consisting of persons residing in the State who have been for at least three years graduates of any university in India ox possess equivalent qualifications, one twelfth are to be elected by electorates consisting of persons who have been engaged in teaching in educational institutions within the State, one third are, to be elected by the members of the Legislative Assembly of the State from amongst persons who are not members of the Assembly, and "the remainder" are to be nominated by the Governor in accordance with the provisions of cl. 5. These constituencies are not territorial constituencies. On the reorganisation of the old State of Punjab, adjustments had to be made in the membership of the Legislative Council. No such adjustment as would strictly conform to the requirements of article 171(3) could however be made without fresh elections. The Parliament therefore adopted an ad hoc test, and unseated members who were residents in the territory of Haryana and Himachal Pradesh. It is true, as admitted in the affidavit on behalf of the Union of India, that members belonging to the Union territory of Chandigarh will be members of the new Punjab Legislative Council, and members from the Haryana State territory will be unseated. Whether in unseating the members from Haryana area and allowing the members from the Chandigarh area to continue, a valid classification is made on the ground that Chandigarh is the capital of the two States need not detain us, because we are of the view that no discrimination by unseating members from the Haryana area can be deemed to be practised against the appellants of which they can complain. The appellants were not sitting members of the Legislative Council of the old State of Punjab and no personal right of the appellants is infringed by unseating the members whose names are set out in the Seventh Schedule. Again the new State of Punjab is a bi cameral Legislature. The new State of Haryana is uni cameral. It is not claimed,, 115 and cannot be claimed, that a resident of the State of Haryana is,. merely because of that character, entitled to sit in the Punjab Legislative Council. By allowing the members from the Chandigarh area to continue to remain members of the Legislative Council of the new State of Punjab, no right of the residents of Haryana is therefore violated.

The , carved out of the old State of Punjab two new States, Punjab and Haryana, transferred some areas to Himachal Pradesh and constituted Chandigarh, a territory of the old State, into a Union territory. The old State had a bicameral Legislature and so also has the new State of Punjab; but that of Haryana is to be unicameral. Under the Act the Legislative Assembly of Haryana is to consist of only 54 members; members of the Legislative Council of the old State belonging to Haryana area are unseated, while those members residing in the Union Territory of Chandigarh continue to be members of the Legislative Council of that new State of Punjab. The appellants, none of whom was a sitting member of the Legislative Council of the old State, challenged the legality of the Act in a writ petition, which the High Court rejected. In appeal to this Court, the appellants contended that (i) Constitution of the Legislative Assembly of Haryana by section 13(1) of the Act which departs from the minimum membership prescribed to the State Legislative Assembly violates the mandatory provisions of the Art 170(1) of the Constitution; and (ii) by enacting that members of the Legislative Council of the old State residing in the Union Territory of Chandigarh shall continue to sit in the Legislative Council in the new State of Punjab and by enacting that the members elected to the Legislative Council from the Haryana area shall be unseated, there was denial of equality. HELD : The appeal must be dismissed. (i) Power to reduce the total number of members of the Legislative Assembly below the minimum prescribed by article 170(1) is implicit in the authority to make laws under article 4 of Constitution. Such a provision is undoubtedly an amendment of the Constitution, but by the express provision provided in article 4(2),no such law which amends the First and the Fourth Schedule or which makes supplemental, incidental and consequential provision is to be deemed an amendment of the Constitution for, purposes of article 368. The Constitution also contemplates by article 4 that in the enactment of laws for giving effect to the admission, establishment or formation of new States or alteration of areas and the boundaries of those States power to modify provisions of the Constitution in order to tide, over a temporary difficulty may be exercised by the Parliament. [112,H] 1 13 C D] (ii) Parliament could not make adjustments as would strictly conform to the requirements of article 171(3) without fresh elections. It, therefore, adopted an ad hoe test and unseated members of the Council who were 110 residents of the Haryana area. There was, however, no discrimination in unseating members from the Haryana Area of which appellants could complain. The appellants were not the sitting members of the Legislative Council of the old State and no personal right of the appellants was in fringed by unseating those members. A resident of the State of Haryana merely because of that character, cannot claim to sit in the Punjab Legislative Council. By allowing the members from the Chandigarh area to continue to remain members of the new State of Punjab no right of the residents of Haryana was violated. [114 E H; 115 A]

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Appeals Nos. 1425 and 1426 of 1966. Appeals by special leave from the judgment and order dated October 29, 1962 of the Madras High Court in Tax Case No. 195 of 1960. section Swaminathan and R. Gopalakrishnan, for the appellant (in both the appeals). 654 T. V. Viswanatha Iyer, T. A. Ramachandran, section P. Nayyar for R. N. Sachthey, for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, J. The Income tax Appellate Tribunal submitted two questions for the opinion of the High Court of Madras : "1. Whether the sum of Rs. 1,28,716/ is assessable as income under any of the provisions of the Act ? 2. If the answer is in the affirmative, the assessment years in which the amount falls to be assessed by suitable apportionment. " The first question was answered by the High Court in the affirmative. The High Court declined to answer the second question because it did not, :in their view, arise out of the order of the Tribunal. The assessees have appealed to this Court. By order dated January 30, 1944, the Collector of Madras, ,,exercising power under r. 75A of the Defence of India Rules, 1939, requisitioned a property known as "Lutterals Gardens" belonging to the assessees. The property continued to remain under requisition till it vested in the Government of Madras absolutely in consequence of an order made on May 24, 1949 by the Collector of Madras under section 5 of the Requisitioned Land (Continuance of Powers) Act, 1947, declaring.the intention of the Government of Madras to acquire that property. The assessees declined the offer made by the Collector to pay Rs. 2,40,000/ as compensation for acquisition of the property and interest at the rate of 6% thereon from the date, of notification for acquisition, and the dispute relating to compensation payable to the assessees was referred to the Chief Judge of the Court of Small Causes, Madras. By order of the High Court of Madras in appeal from the order of the Chief Judge it was adjudged that the assessees be paid Rs. 5,00,0001 as compensation for the property. The High Court also awarded interest at the rate of 6% on the amount of compensation from the date of notification for acquisition. During the two previous years corresponding to the assessment years 1955 56 and 1956 57 the assessees received, pursuant to the ,order of the High Court, a total sum of Rs. 6,28,716/ . In proceedings for assessment of tax for the assessment years 1955 56 and 1956 57, the Income tax Officer apportioned the amount of Rs. 1,28,716/ on the basis of actual receipts in the two previous years and assessed the amounts so apportioned to income tax. The Appellate Assistant Commissioner held that the apportioned amounts were of the nature of revenue and not capital receipts, but ' in his view the income received was liable to be calculated on accrual basis year after year from the date of the notification for ac 655 quisition, and on that account the assessments of the previous years from 1950 51 to 1954 55 should be reopened and the interest which accrued in those years should be assessed. The Commissioner of Income tax and the assessees appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The assessees submitted that Rs. 1,28,716/received as interest being part of compensation were not assessable to tax, whereas the Commissioner claimed that the Income tax Officer was justified in assessing the amounts in the years in which they were received. The Income tax Appellate Tribunal accepted the contention of the assessees that the receipts were not assessable to tax because they were of the nature of capital receipts. At the instance of the Commissioner, the Tribunal referred the two questions set out here in before. Section 5 of the Requisitioned Land (Continuance of Powers) Act, 1947 authorises the Government by which or under the authority of which land has been requisitioned, to acquire the land subject to requisition, by publishing a notice to the 'effect that the Government has decided to acquire such land. Section 6 of the Act provides, inter alia, that compensation payable to the owner of the land shall be determined in accordance with the provisions of section 19 of the Defence of India Act, 1939, and the rules made thereunder. Section 19 of the Defence of India Act, 1939, sets out the principles for determining the compensation payable to a claimant. The amount of compensation may be fixed by agree ment between the owner and the Government : where no such agreement is reached the Central Government is enjoined to appoint an arbitrator having the qualifications prescribed therein. Under section 19(1) (e.) the arbitrator in making his award must have regard, inter alia, to the provisions of sub section (1) of section 23 of the Land Acquisition Act, 1894 in so far as the same can be made applicable. An appeal Res against the award of the arbitrator to the High Court. Sub sections (2) and (3) of section 19 confer upon the Central Government authority to frame rules for the purpose of carrying into effect the provisions of section 19. In exercise of that power, the Government of India framed "The Defence of India (Payment of Compensation and Arbitration) Rules, 1943" which amongst other provisions directed that the Collector shall pay compensation as soon as may be practicable. But neither section 19(1) of the Defence of India Act, nor the Rules framed under section 19(2) and (3) provide that interest shall be paid on the amount of compensation. In the present case, interest was, however, offered to be paid by the Collector; and the High Court also awarded interest on the amount of compensation from the date of the notification of acquisition. It was held by this Court in Dr. Shamlal Narula vs Commis sioner of Income tax, Punjab, Jammu and Kashmir, Himachal 656 Pradesh and Patiala(1) that the statutory interest paid under section 34 of the Land Acquisition Act, 1894, on the amount of compensation awarded from the date on which the Collector has taken possession of land compulsorily acquired under the Land Acquisition Act, 1804, is interest paid for delayed payment of the compensation and is a revenue receipt liable to tax under the Income tax Act. It was observed in that case at p. 156 ". interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had not that use. It is something in addition to the capital amount, though it arises out of it. Under section 34 of the Act when the legislature designedly used the word "interest" in contradistinction to the amount awarded, we do not see any reason why the expression should not be given the natural meaning it bears. The scheme of the Act and the express provisions thereof establish that the statutory interest payable under section, 34 is not compensation paid to the owner for de priving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired. " Counsel for the assessee however contended that the principle of Dr. Shamlal Narula 's case(1) is not applicable to this case, since there is no provision in the Requisitioned Land. (Continuance of Powers) Act, 1947 and the Defence of India Act, 1939, and the rules framed thereunder for payment of interest on the amount of compensation. Counsel said that under the Act, the owner is paid not the market value of the property, but compensation determined in accordance with a highly artificial scheme, and that the interest paid, in truth, bears the same quality as compensation for deprivation of property and is on that account a capital receipt not exigible to tax. In support of his.contention, counsel invited our attention to two decisions : The Commissioners of Inland Revenue vs Ballantine(2) and Simpson (H.M. Inspector of Taxes) vs Exe cutors of Bonner Maurice as Executor of Edward Kay(3). In Ballantine 's case(2) a claim of a firm of contractors against a railway company for "additional costs, loss and damage ' was referred to arbitration. The arbitrator awarded to the claimant a sum of money mainly as damages, together with interest thereon at 5 per cent. per annum from the date of lodgement of claim until payment. The Revenue sought to charge the interest paid by the (1) (3) (2) 657 railway company to tax under Case III of Sch. D of the Income tax Act, 1918. It was held that the sum added in the name of interest was part of damages, and was not "interest of money" chargeable to income tax under Case III of Sch. D. Lord President Clyde observed : "Now it is familiar that an assessment of the kind may contain as one of its constituent elements an allowance in respect that the claimant has lain for a long time out of his remedy. The propriety of such an allowance may depend on the character of the claim, and its amount may depend on many considerations of which time is only one. But an interest calculation is a natural and legitimate guide to be used by an arbiter in arriving at what he thinks would be a fair amount. In most cases in which such an allowance is a constituent of an award it does not separately appear, but is slumped along with other elements in the gross sum decerned for; but there is nothing to prevent an arbiter, if he thinks it just and reasonable in a particular case, to make the allowance in the form of an actual interest calculation from a past date until the sum fixed as at that date is paid. In all such cases, however whether the allowance is wrapped up in a slump award or is separately stated in the decree the interest calculation is used in modum aestimationis only. The interest is such merely in name, for it truly constitutes that part of the compensation decerned for which is attri butable to the fact that the claimant has been kept out of his due for a long period of time. It is not therefore "interest of money" chargeable under Case ITT of Schedule D." In Simpson vs Executors of Bonner Maurice as Executor of Edward Kay(1) the executors of Kay, a naturalised British subject, who died during the First World War received, as the result of the peace treaty claims, amounts representing partly capital of securities, stocks and shares in Banks in Germany deposited by Kay; partly interest and dividends; and partly compensation under the Peace Treaty. In a proceeding for assessment of the receipt to tax it was held that the compensation computed on the basis of interest was not income for the purposes of income tax. Lord Hanworth, M. R., observed at p. 601 "I want to add now one more word in reference to the sum which has been paid by way of compensation under Article 297. It is said in reference.to that 'that. at least, arose at the time when it was paid under the order of the Mixed Arbitral Tribunal '. It wag a sum (1) c. CI/67 12 658 which was calculated as interest" . 'and it is interest, and therefore it is within the words of the Schedule, which undoubtedly impose a tax upon interest which arises or accrues to a person liable to tax. ' But is it interest ? Is that its quality, or is it compensation estimated and measured in terms of interest ? It appears to me quite clear that, apart from Article 297, no such sum could have been recovered. " Lawrence, L.J., observed at p. 605 "Neither the fact that the compensation was measured by the amount of the interest, which but for the embargo placed upon the money by the German Government could have been earned by the Respondents, nor the fact that part of the compensation was described as "interest" in the decision of the Mixed Arbitral Tribunal in my judgment, has the effect of altering the character of the compensation paid to the Respondents. " But it must be noticed that liability to pay interest arose in Ballantine 's case(1) under the award of the arbitrator and in the Executors of Bonner Maurice as Executor of Edward Kay 's case (2) under the order of the Mixed Arbitral Tribunal, and in each case, it was held that what was paid, though called "interest", was in truth compensation for loss suffered on account of deprivation of property. According to the view taken by this Court in Dr. Shamlat Narula 's case(3), if the course of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the Court or the arbitrator gives effect to the terms of the agreement express or implied and awards interest which has been agreed to be paid. It is therefore necessary to determine whether the obligation to pay interest awarded under the order of the High Court of Madras arose out of the statute or out of the award. In Satinder Singh & Ors. V. Amrao Singh and Ors. (4) lands forming part of Cis Sutlej Jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948. The claimants to the lands claimed in addition to statutory compensation interest from the date from which they were dispossessed and till the date of payment of compensation. The arbitrator appointed under the Act awarded interest on the amount of compensation and the High Court of Punjab in appeal Confirmed the order. This Court held that the claimants were (1) , (2) (3) (4) ; , 659 entitled to interest on the compensation amount from the date of dispossession till the date on which 'the amount of compensation was paid to the claimants. Section 5 of the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948, set out the principles according to which compensation was to be paid in regard to the acquired property, and by cl. (e) thereof it was provided that the arbitrator in making the award shall have regard 'to the provisions, of sub section (1) of section 23 of the Land Acquisition Act, 1894 in so far as the same may be applicable. The Act contained no express provision for payment of interest on compensation determined by the arbitrator. This Court rejected the contention of the State of Punjab, that sections 28 and 34 of the Land Acquisition Act which dealt with the payment of interest were not intended to apply to the proceedings before the arbitrator. It was observed "Stated broadly the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property and it is oil this principle that a claim for interest is made against the State. " The Court further observed : "It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact that section 5(e) of the Act makes section 23(1) of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the, payment of interest. " The Court also observed "When a claim for payment of interest is made by a person whose Immovable property has been acquired compulsorily he is not making claim for damages properly or technically so called; he is basing his claim on the general rule that if be is deprived of his land he should be put in possession of compensation immediately; if not, in lieu of possession taken by compulsory acquisition interest should be paid to him on the said amount of compensation. " The scheme of the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948 is similar to the scheme of the Requisitioned Land (Continuance of Powers) Act, 1947. The Court in Satinder Singh 's case(1) held that be (1)[1961] 3 S.C.R. 676. 660 cause of the injunction expressly to apply the provisions of section 23(1) of the Land Acquisition Act, 1894, in the determination of compensation, the application of sections 28 and 34 dealing with the payment of interest on the amount awarded as compensation cannot be deemed excluded. The Court also held that when the owner of property is dispossessed pursuant to an order for compulsory ac quisition, an agreement that the acquiring authority will pay interest on the amount of compensation is implied. The reasoning on which the right of the owner of the lands acquired to interest was affirmed in Satinder Singh 's case(1), prima facie, applies in this case. Counsel for the assessees contended that the application of sections 28 and 34 of the Land Acquisition Act in proceedings for arbitration under the Requisitioned Lands (Continuance Powers) Act, 1947, was expressly excluded by section 19(1)(g) of the Defence of India Act which enacted that: "Save as provided in this section and in any rules made thereunder, nothing in any law for the time being in force shall apply to arbitration under this section." But cl. (g) is not susceptible of any such interpretation. Clauses (a) to (f) of section 19(1) are a Code relating to arbitration in determining the compensation payable to a person deprived of his property. Provisions relating to payment of interest are not, however, part of the law relating to arbitration and there is nothing in cl 1. (g) which excludes the application of the substantive law relat ing to payment of interest when the arbitration is determining the amount of compensation. We are therefore of the view that the principle on which The Commissioners of Inland Revenue vs Ballantine(2) and Simpson (H.M. Inspector of Taxes) vs Executors of Bonner Maurice as Executor of Edward Kay(3) were based has no application to this case. It may be recalled that in those cases the arbitrator and the Arbitral Tribunal were, in awarding interest, not seeking to give effect to, or to recognize a right to interest, conferred by statute or contract. The source of the right to interest in both the cases did not arise from the statute or agreement. In the case on hand, the right to interest arose by virtue of the provisions of sections 28 and 34 of the Land Acquisition Act, 1894, and the arbitrator and the High Court merely gave effect to that right in awarding interest on the amount of compensation. Interest received by the assessee was therefore properly held taxable. The appeals fail and are dismissed with costs. One hearing Y.P. Appeals dismissed. (1)[1961] 3S.C.R. 676.

The assesses& were offered compensation and interest on the amount of compensation in respect of their property which was first requisitioned under r. 75A of the Defence of India Act, 1939 and later acquired by the State under section 5 of the Requisitioned Land (Continuance of Powers) Act. The Requisition Act provided that. compensation payable shall be determined in accordance with the provisions of section 19 of the Defence of India Act and the rules thereunder, but neither section 19 nor the Rules provided that interest shall be paid on the amount of compensation. The assessee demanded more compensation and interest, and, the High Court in appeal enhanced the compensation and awarded interest on it The Revenue assessed to income tax the amount of interest, which was upheld, in reference, by the High Court. In appeal. this Court. HELD : Interest received by the assessee was taxable. If the source of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the court or the arbitrator gives effect to the terms of the agreement express or implied and awards interest which has been agreed to be paid Clauses (a) to, (f) of section 19(1) of the Defence of India Act are a Code relating to a arbitration in determining the compensation payable to a person depraved of his property. Provisions relating to payment of interest, are not, however, part of the law relating to arbitration and there is nothing in cl. (g) which excludes the application of the substantive law relating to payment of interest when the arbitration is determining the amount of compensation. In this case, the right to interest arose by virtue of the provisions of Ss. 28 and 34 of the Land Acquisition Act, 1894, and the arbitrator 'and the High Court merely gave effect to that right in awarding interest on the account of compensation. [658 E F; 660 D H] Dr. Shamtal Narula vs Commissioner of Income tax, Punjab, Jammu and Kashmir, Himachal Pradesh and Patiala, 53 I.T.R. 151, and Satinder Singh & Ors. vs Amrao Singh & Ors. ; , followed. The Commissioners of Inland Revenue vs Bellantine, 8 T.C. 59,5, and Simpson (H. M. Inspector of Taxes) vs Executors of Bonner Maurice as Executor of Edward Kay, , distinguished.

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Appeal Nos. 858 to 861 of 1964. Appeals by special leave from the judgment and order of the Andhra Pradesh High Court in Second Appeals Nos. 720 and 724 to 726 of 1957. C.B. Agarwala and T. V. R. Tatachari, for the appellants (in all the appeals). P. Ram Reddy and K. R. Sharma for the respondent (in all the appeals. ) The Judgment of the Court was delivered by Shelat, J. All these four appeals by special leave raise a common question regarding interpretation of section 11(1) of the Madras Commercial Crops Market Act, XX of 1933 and Rule 28 of the Rules made thereunder and therefore can be disposed of by a common judgment. The Act was originally enacted by the Madras Legislature. It was a law in force immediately before the constitution of the State of Andhra Pradesh and governed the territories now forming part of that State. By virtue of Andhra Pradesh Act of 1953 and the Adaptation of Laws Order passed on November 1, 1953 by the State Government of Andhra Pradesh it became applicable to the newly formed State of Andhra Pradesh. By a Notification dated June 27, 1949 the then Government of Madras, in exercise of the power conferred on it by section 2(1)(a), declared coconuts and copra to be commercial crops. Under section 4 of the Act, the State Government also declared the District of East Godavari as the "notified area" for purposes of the Act in respect of coconuts and copra. By a further notification dated December 5, 1950 issued under section 4(a) of the Act it established a Market Com 976 mittee at Rajahmundry for the said notified area. The said Market Committee levied the following fees, viz., (1) a licence fee under section 5(1) of the Act read with Rule 28(3); (2) a licence fee for storage, wharfage etc., under section 5(3) read with Rule 28(3); (3), a registration fee under section 18 read with Rule 37; (4) a fee on the said goods bought and sold within the notified area and under section II (1) read with Rule 28(1); and (5) a fee under the same section on consign ments of coconut oil. Contesting the levy of fees under items 2 to 5 as being illegal on the ground that they sold coconuts and copra to customers outside the notified area and in some cases outside the State, the appellants filed various suits in the court of the District Munsif, Amalapuram for refund of the said fees collected by the said Committee at different times. The Market Committee resisted the said suits claiming that the aforesaid provisions conferred power upon it to levy the said fees and that the said levy was valid and legal. The said suits were tried together and the District Munsif by his judgment dated October 17, 1955, inter alia, held that the levy under section 11(1) read with Rule 28(1) though called a "fee" was really a "tax", that the said provisions empowered the Committee to impose the said tax only when the said goods were bought and sold within the notified area, that the sales effected by the appellants were to customers outside the said area and in some cases outside the State, that the Committee had no power to levy and collect the said fees ' and therefore the appellants were entitled to refund of the said fees and accordingly passed decrees in all the suits. In appeals by the Committee, the Subordinate Judge, Amalapuram, held that though the appellants purchased the said goods within the notified area they exported them to their customers outside the notified area and outside the State and relying upon the decision in Kutti Koya vs State of Madras() he held that though section II (1) called the said levy as fee it was in substance a tax and that such a tax being oil sales completed at the places of their customers outside the State offended article 286 of the Constitution and was therefore illegal. The Subordinate Judge, except for deleting the relief granted in respect of licence fee under section 5(3) of the Act, dismissed the appeals and confirmed the judgment and decree of the Trial Court. The Market Committee thereupon filed Second Appeals in the High Court of Andhra Pradesh. Before the High Court the controversy centered round the question of fee under section 11 (1) only. By its common judgment dated November 8, 1961 the High Court relying upon the judgment of a Division Bench of that Court in Satyanarayana and Venkataraju Firm vs Godavari Market Committee(2) held that the word "fee" in section II (1) was in fact a fee and not a tax, The Division Bench also held that the said goods were pur (1) A.I.R., 1954 Mad. 621. (2) A.I.R. 1959 Andh. Pradesh 398. 977 chased by the appellants from producers or petty dealers within the notified area and then sold by them to customers outside the said area or the State, that the transactions which were the subjected matter of the levy under section 11(1) were transactions consisting of purchase of the said goods by the appellants and the corresponding sales to them by the producers and petty dealers and not the subsequent sales effected by them to their customers outside the notified area or the State, that therefore the transactions on which the said fee was levied were effected and completed inside the notified area and fell within the expression "bought and sold" in section 11 (1) and therefore the Market Committee rightly levied the said fee on those. transactions. In the result, the Division Bench allowed the appeals and dismissed the appellants ' suits. It is this judgment and decree against which these appeals are directed. The preamble of the Act states that the Act was passed for making provisions for better regulation of buying and selling of and the establishment of markets for commercial crops. As stated in M.C.V.S. Arunachala Nadar vs The State of Madras(1), the Act was the result of long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of Commmercial crops to provide suitable and regulated markets, to eliminate middlemen and bring face to face the producer and the buyer so that they meet on equal terms thereby eradicating or at any rate reducing the scope for exploitation of the producers. It therefore provided a machinery for regulating trade by providing a common place where facilities would be furnished by way of space, buildings and storage accommodation, and where market practices would be regularised and market charges clearly defined and unwarranted ones prohibited, where correct weighment would be ensured by licensed weighmen and all weights would be checked and stamped, where payment on hand would be ensured, where provision would be made for settlement of disputes, where daily prevailing prices would be made available to the grower and reliable market information provided regarding arrivals, stocks, prices etc., and where quality standards would be fixed when necessary and contract forms standardized for purchase and sale. The result of the implementation of the Act would be thus to give reasonable facilities to the growers of commercial crops ensuring proper price for their commodities. Section 4(a) (1) provides for the formation of a market com mittee for enforcing the provisions of the Act and the Rules and bylaws framed thereunder. Sub section (2) lays down that the Committee shall establish in the notified area such number of markets providing such facilities, as the State Government may from time to time direct, for purchase and sale of commercial crops. Section 5 (1) [1959] Suppl. 1 S.C.R. 92. 978 prohibits any person to set up, establish or use, continue or .allow to be continued any place within the notified area for the purchase or sale of commercial crops except under a licence and in accordance with the conditions thereof. The Market Committee, however, can exempt from the provisions of this sub section any person who carries on the business of purchasing or selling any .,commercial crop in quantities not exceeding those prescribed by the Rules. It also exempts from the provisions of this section a person selling a commercial crop which has been grown by him or a co operative society selling a commercial crop which has been grown by any of its members and also a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by the rules. Section 6 provides that every market committee shall consist of such number of members not exceeding twelve as may be fixed by the State Government and provides for representatives of licencees under section 5 and buyers, sellers and buyers and sellers registered under the Rules prescribed in that behalf. Section II (1) with which we are concerned in these appeals reads: "The Market Committee shall, subject to such rules as may be made in this behalf, levy fees on the notified commercial crop or crops bought and sold in the notified area at such rates as it may determine. " The Explanation to sub section (1) provides that all notified commercial crops leaving a notified area shall, unless the contrary is proved, be presumed to be bought and sold within such area. Sub section 2 provides that the fee chargeable under sub section(1) shall be paid by the purchaser of the commercial crop concerned provided that where such a purchaser cannot be identified the fee shall be paid by the seller. Section 12 provides that all monies received by a market committee shall be paid into a fund and all expenditure incurred by the market committee shall be defrayed out of the said fund. The expenditure which the committee can incur is for purposes set out in section 13 which incidentally reflect the object and purpose of the Act. Section 18 empowers the State Government to make rules including rules for licence fee under section, 5, the registration fee and the prohibition of buying and selling ,of commercial crops in the notified area by persons not so registered and the fee to be levied on commercial crops bought and sold in the notified area. Rule 28 lays down the maximum fee leviable on commercial crops under section 11 (I) as also the maximum fee payable for licences and registration. Rule 28 A provides that the fees referred to in sub rule (1), that is, "fees" under section 11 (1), shall not be levied more than once on a commercial crop in a notified area. These provisions clearly show the policy of safe_guarding the interests of the producers and of guaranteeing to them 979 reasonable return for the crops they would bring to sell without being exploited. Mr. Agarwala raised the following contentions: (1) that the fee charged by the Market Committee under s.11(1) was on sales effected by the appellants with their customers, some of whom were admittedly outside the notified area and the rest outside the State; (2) that that was the footing on which the parties proceeded with the suits but that case was given up in the High Court and the High Court was in error in permitting the Committee to shift its case and argue that the fee was levied not on those sales but on transactions of purchase entered into by the appellants with the producers and other petty dealers. It is true that in para 3 of their plaint the appellants averred that their business activities consisted of buying coconuts and copra in East Godavari District and selling them to customers outside the notified area and even the State and that those sales were completed at the respective places of those customers. The appellants ' case therefore was that in respect of these sales with customers some of whom were outside the notified area and the rest outside the State, the levy of fee was in the former case beyond the ken of section II (1) and in the latter case repugnant to article 286 of the Constitution. The written statement of the respondent committee denied these allegations. The Committee asserted that both the purchases and sales took place in the notified area and that though the fee levied by it was on sales by the appellants and though delivery of the said goods thereunder took place outside the notified area the sales in respect thereof were made within the notified area and therefore the question of the levy under section 11 (1) being repugnant to article 286 of the Constitution did not arise. Besides these pleadings Mr. Agarwala drew our attention to certain notices of demand and circulars issued by the Committee in which it was stated that the said fee was being levied on goods exported outside East Godavari District and that the traders were liable to pay it both on coconuts exported to outsiders and also consumed internally. That presumably was stated because if the goods were "bought and sold" within the notified area, even if they were subsequently exported outside, section 11(1) would apply. The practice followed by the appellants and not denied by the Committee was that they used to despatch these goods by rail to their customers. Railway receipts and hundies were then sent to their bankers at the destination and railway receipts were delivered to the customers on their honouring the hundies Thus the goods were delivered outside the notified area and the sales effected by the appellants to their customers were also completed at places outside the notified area and in some cases outside the State. On these facts the District Munsif held that property in the goods having passed at destination, sales took place outside the 980 notified area and therefore the fee charged by the Committee was illegal as section 11(1) permitted such a levy only on goods bought and sold within the notified area. On appeal by the Committee, the Subordinate Judge held that the said fee was a tax, that it was a tax on sales outside the notified area and the State and was not therefore warranted under section 11 (1) and was repugnant to article 286. It seems that in both the courts, the real issue was lost sight of, viz., whether the goods in respect of which the fee under section 1 1 (I) was levied were goods "bought and sold" within the notified area as envisaged by the section. In the High Court however the questions convassed were (1) whethe r the fee provided in section 11 (1) was a fee or a tax and (2) even if it was a fee whether the Committee had the power to levy it in respect of goods sold by the appellants outside the notified area. As already stated the Trial Judge and the Subordinate Judge had proceeded on the footing that the said fee was levied on sales entered into by the appellants with their customers who undoubtedly were outside the notified area. But the real question that ought to have been dealt with by the Trial, Judge and on appeal by the Subordinate Judge was not whether the appellant 's sales were to customers outside the notified area or the State but whether the fee which was levied was valid. The question of the validity of the levy entailed another question, viz., whether the levy was on transactions effected by the appellants before they sold those goods to their customers. Were the appellants entitled to a refund of the fees levied on them under section II (1) ?, was the principal question in the suits. To decide that question it was necessary for the court to go into the question whether the fee was charged on the sales by the appellants or on the transactions made between them and those from whom they purchased the goods in question. Since neither the Trial Court nor the Subordinate Judge had gone into that question, it was necessary for the High Court to go into it not only to do justice to the parties but also because that was the real issue arising in the suits and was the crux of the litigation. There was therefore no question of the High Court allowing the respondent Committee to make out a new case. The question from the very inception was whether the Committee was competent to levy the fee in question under section 11(1). To answer that question the court necessarily had to enquire on which transactions could the said fee be levied under section 11(1) and whether it was rightly levied by the Com mittee. The High Court answered these questions by holding that it was levied, on the transactions effected by the appellants with those from whom they bought the said goods, that section 11(1) dealt with those transactions and was not therefore concerned with the subsequent sales entered into by the appellants with their customers outside the notified area. Since, according to the High Court, those transactions were admittedly effected within the noti 981 fied area the levy was valid and warranted under section 1 1 (1). In our view the High Court approached the question from a correct angle and therefore there was no question of its having allowed the Committee to change its case or make out a new case. That being the position, the next question is whether the Committee could levy fee under section II (1) on the transactions effected by the appellants before they sold those goods to their customers. Mr. Agarwala 's contention was that the fee levied under section 11(1) could only be in respect of goods "bought and sold" and not in respect of transactions where goods were only "bought" or only "sold". According to him it is only when a person bought goods and sold those identical goods within the notified area that the fee under section 11(1) could be levied. According to him, the transactions effected by the appellants consisted in their purchasing the said goods; they stopped at the stage of goods "bought". Therefore, the other ingredient for a valid levy of the fee not being present the fee levied in the present case was not in accordance with the requirements of section 11 (1) and was unwarranted. This contention raises the question as to the meaning of the words "bought and sold" in section 11(1). At first sight they would appear to be susceptible of three meanings; viz., (1) that they mean duality of transactions where the same person buys goods and sells those identical goods in the notified area; (2) that they mean "bought" or "sold" the conjunctive "and" meaning in the context of the sub section the disjunctive "or" and (3) that they apply to a transaction of purchase as the concept of purchase includes a corresponding sale. When a person buys an article from another person, that, other person at the same time sells him that article and it is in that sense that section 11(1) uses the words "bought and sold. " The incidence of the fee under section 11(1) is on the goods thus "bought and sold". This last interpretation was favoured by the High Court of Madras in Louis Dreyfus & Co. vs South Arcot Groundnut Market Committee(1) which has been accepted by the High Court in the present case. If the construction commended to us for acceptance by Mr. Agarwala were to be correct, viz., that the appellant 's transactions stopped at the stage of goods "bought", they would not be transactions in respect of goods "bought and sold". If the fee was levied on sales effected by the appellants with their customers its levy would not be valid under section 1 1 (1) and would also be repugnant to article ' 286 where goods were delivered outside the State. But it is a well settled rule of construction that the court should endeavour as far as possible to construe a statute in such a manner that the construction results in validity rather than its invalidity and gives effect to the (1) 982 manifest intention of the legislature enacting that statute. The object in passing the Act was to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. The mischief to prevent which the Act was enacted was the exploitation of these producers by middlemen and those buying goods from them and therefore the Act provided facilities such as market place, place for storage, correct weighment etc., so that the producers and his purchasers come face to face in a regulated and controlled market and a fair price was obtained by them. If the construction suggested by Mr. Agarwala were to be accepted and the section were to be construed as being applicable to those transactions only which have a dual aspect, that is, buying by a dealer from a producer and the dealer selling those identical goods within the notified area, the object of the Act would be defeated, for in a large number of cases the transactions would halt at the stage of buying and the Committee in those cases would have no power to levy the fee on them. Why is a buyer or a seller or a buyer and seller required to be registered and why does the Act prevent those who have not registered themselves from effecting transactions in commercial crops unless the object was to regulate and control transactions in those commodities at all stages and in a manner preventing the exploitation of the producer ? The legislature had thus principally the producer in mind who should have a proper market where he can bring his goods for sale and where he can secure a fair deal and a fair price. The Act thus aims at transactions which such a producer would enter into with those who buy from him. The words "bought and sold" used in section 11(1) aim at those transactions where under a dealer buys from a producer who brings to the market his goods for sale. The transactions aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in section 11(1) but is consistent with the object of the Act as expressed through its various provisions. The construction on the other hand canvassed by the appellants is defeative of the purpose of the Act and should, unless we are compelled to accept it, be avoided. The construction which we are inclined to accept acquired some support from the fact that section II makes the purchaser and not the seller primarily responsible for payment of the fee and it is only when the purchaser cannot be identified that the seller is made liable. Mr. Agarwala at first also urged that the fee under section 11 (1) amounted to a tax and that it was in fact a sales tax. But at the last moment he stated that he did not wish to press that contention and requested us not to express any opinion thereon. Since the contention is not pressed we need not express any opinion on that ques 983 tion and confine ourselves to the question as to the interpretation of the words "bought and sold" in that section. In our view the construction placed by, the High Court on section 11(1) was a correct construction and therefore the respondent committee had rightly charged the appellants with said fee. The appeals therefore fail and are dismissed with costs. One hearing fee.

By a notification in June 1949, the State Government, in exercise of a power under section 2(1)(a) of the Madras Commerical Crops Market Act, 1933, declared coconuts and copra to be 'commercial crops ' within the meaning of the Act. The respondent Market Committee IL vied in respect of the declared commerical crops, a fee on the goods 'bought and sold ' within the notified area under section 11(1) of the Act, read with Rule 28(1) of the Rules made under the Act. The appellants filed various suits contesting the levy on the ground that they sold coconuts and copra to customers outside the notified area and in some cases outside the State; consequently, they sought refund of the fees collected by the respondent committee. The suits filed were tried together and the trial Judge held that the levy, though called a "fee", was really a "tax", and that the Committee was only empowered to impose such tax when the goods were bought and sold within the notified area. He therefore passed decrees in all the suits .for refund of the fees collected. The first appeal by the respondent Committee was dismissed by the Sub Judge who further held that the fee in substance being a tax, such tax on sales completed outside the State would also offend article 286 of the Constitution. However, a second appeal to the High Court was allowed on the view that the transactions which were the subject matter of the levy under Section 11(1) were transactions consisting of the purchase of the goods by the appellants and the corresponding sales to them by the producers and not the subsequent sales effected by the appellants to their cus tomers outside the notified area or the States; therefore the transactions on which the said fee was levied were effected and completed inside the notified area and fell within the expression "bought and sold" in section 11(1). In the appeal before this court it was contended on behalf of the appellants that the transactions effected by them consisted in their purchasing the goods and stopped at the stage of goods "bought" so that no fee could be levied in the absence of the other ingredient, i.e., sale within the notified area. HELD : The construction placed on section II (1) by the High Court was correct and the respondent Committee had therefore rightly charged the fee. [983 B] 975 The words "bought and sold" used in section 11(1) aim at those transactions where under a dealer buys from a producer who brings to the market his goods for sale. The transaction aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in section 11 (1) but is consistent with the object of the Act as expressed through its various provisions,, i.e., to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. [982 A B, E F] Kutti Koya vs State of Madras A.I.R. 1954 Mad. 621; Satyanarayana and Venkataraju Firm vs Godavari Market Committee A.I.R. 1959 Andh. Pra. 398; M.C.V.S. Arunachala Nadar vs The State of Madras [1959] Suppl. 1 S.C.R. 92; Louis Drevfus & Co. vs South Arcot Groundnut Market Committee ; referred to.

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l Appeals No. 1005 of 1964. Appeal by special leave from the judgment and order dated July 12, 1962 of the Bombay High Court, Nagpur Bench in appeal No. 16 of 1960 under the Letters Patent. A. section Bobde, G. L. Sanghi, and O. C. Mathur, for the appellant. N. C. Chatterjee and M. section Gupte, for respondents Nos. 1 and 2. W. section Barlingay and A. G. Ratnaparkhi, for respondent No. 4. The Judgment of the Court was delivered by Wanchoo, C.J. This is an appeal by special leave from the judgment of the Bombay High Court and arises in the following circumstances. The respondents were members of a Co operative Housing Society and had created a mortgage on their property in favour of the society. As the amount due under the mortgage was not paid, the matter was referred to the Registrar, Co operative Societies, and he made an order dated May 1, 1957 that the respondents should pay a sum of Rs. 9,000 and odd and interest at Rs. 12 per cent per annum from August 1, 1953 till satisfaction of the debt due to the Society. The Registrar further directed that if the amount was not paid in cash to the society, the property mentioned in his order would be sold in satisfaction of the amount. The order also provided that in case the amount due was not realised from the sale of the property, 'the society would have the right to proceed against the respondents for the balance. The amount was not paid as directed in the order. Consequently an application was made to the civil court as provided by law for recovery of the amount under the order of the Registrar which amounted to a decree. In consequence the property on which charge was created by the order of the Registrar was brought 'to 697 sale. The sale was held on April 7, 1958 and the appellant being the highest bidder, the sale was concluded in his favour. Normally the sale would have been confirmed after 30 days, if no application had been made under O. XXI r. 90 of the Code of Civil Procedure, for O. XXI r. 92 inter alia provides that "where no application is made under r. 89, r. 90 or r. 91, or where such application is made and disallowed, the court shall make an order confirming the sale and thereupon the sale shall become absolute". As an application had been made on May 3, 1958 under O. XXI r. 90, the sale could not be confirmed till that application was disposed of. Proceedings under O. XXI rule 90 seem to have gone on upto October 7, 1958. On that day it appears that one of the respondents gave evidence as a witness. Thereafter it was the turn of the Society decree holder to give evidence. But before the evidence of the society began, it appears that respondents requested for one month 's time to deposit the decretal amount along with the auction purchaser 's commission. They also appear to have stated that in that event they were prepared to withdraw their application under O. XXI r. 90. The society as well as the auction purchaser had no objection to time being allowed. The executing court therefore granted time to the respondents till November 21, 1958 to deposit the entire decretal amount along with the auction purchaser 's commission. After time was thus allowed with consent of the parties, the application under O. XXI r. 90 was dismissed as withdrawn with no order as to costs. On November 20, 1958, an application was made by he respondents in which they referred to what had been ordered on October 7, 1958. They further stated that November 21, 1958 was a holiday and it was not possible to deposit the amount on that day though they were prepared to do so. They consequently prayed for time for one day so that the deposit might be made on November 22, 1958. No order was passed on this application on November 20, 1958 though it bears an endorsement of the executing court to the effect that it had been filed on November 20, 1958. November 21, 1958 being a holiday it appears that the matter came before the executing court on November 22. On that day the court noted that no amount had been deposited. The order sheet also shows that counsel for the respondents prayed for time for a fortnight. The society decree holder as well 'as the auction purchaser (appellant) opposed the prayer for extension of time. The executing court held that as the society decree holder and the auction purchaser were not willing to extend time the court could not extend time which had been given under an agreement of the parties by way of compromise. The court therefore rejected the prayer for extension of time and thereafter confirmed the sale as required by 0 XXI r. 92 as the application under O. XXI r. 90 had already been dismissed on October 7, 1958. 698 The respondents went in appeal to the District Judge. He held that the court had always the power whether under section 148 of the Code of Civil Procedure or otherwise, to postpone passing of orders confirming sale of immovable properties. He, went on to hold that the executing court erred in holding that it had no power to grant further extension of time. The appeal was therefore allowed, the order of the executing court set aside and the case remitted to. the executing court for deciding the application for extension of time on merits. It may be mentioned that though the District Judge said in the order that the application presented on November 22, 1958 for granting further time would be disposed of after hearing parties and considering the merits of the case, there was in fact no written application on November 22, 1958 and there was only an oral prayer. That however makes no difference to the main question before us. There was then a second appeal 'by the appellant to the High Court. A question was raised in the High Court whether O. XXXIV r. 5 applied to the present case. The learned Single Judge seems to have held that O. XXXIV r. 5 did not apply. He further held that in view. of the provisions of O. XXI r. 92, the sale was rightly confirmed and section 148 of the Code of Civil Procedure could not under the circumstances be invoked. The appeal therefore was allowed and the order of the executing court restored. Then there was a Letters Patent Appeal by the respondents. The Division Bench appears to have held that O. XXXIV r. 5 would apply in a case of this kind. It also went on to say that even if O. XXXIV r. 5 did not apply, it was a fundamental principle that before a mortgagor could be prevented from making the payment and redeeming the property, his rights must have come to an end and they would come to an end only when his title was lost by confirmation of sale. It went on to hold that if the application for extension of time was wrongly rejected if the mortgagor had the right and the court had 'the power to grant adjournment it would be open in appeal to consider whether the executing court refused the adjournment properly or not. If in appeal the court came 'to the conclusion that the order of the executing court refusing extension of time was wrong, the confirmation which followed on such wrong order would fall and the mortgagor judgment debtor would be entitled to deposit the amount. It appears that as the respondents had deposited some money after the order of the District Judge in appeal, the Letters Patent Bench allowed the appeal, set aside the order of the learned Single Judge and restored the order of the District Judge and further set aside the order of confirmation made by the executing court on November 22, 1958. It also ordered that the amount lying in deposit should be paid to the decree holder mortgagee and the auction purchaser. It may be added that this deposit was not made before the confirmation 69 9 of sale on November 22, 1958 but long afterwards in 1959. It further directed that if on making up the accounts, it was found that any additional amount had to be deposited, the court would give reasonable time to the judgment debtors, namely, the present respondents before us. The High Court having refused leave to appeal, the appellant obtained special leave from this Court, and that is how the matter has come before us. The principal question that arises for decision in this case is whether the executing court was right in the view that it could not extend time which had been given by consent of parties on October7, 1958. If that view is correct, there would be no difficulty in holding, in view of O. XXI r. 92, that the order confirming sale was proper. We shall proceed on that assumption that O. XXXIV c. 5 applies in the present case and that the order of the Registrar which was under execution was a final decree in a mortgage suit. O. XXXIV r. 5(1) gives an opportunity to the judgment ' debtor in a mortgage decree for sale to deposit the amount due under the mortgage decree at any time before the confirmation of sale made in pursuance of the final decree, and if such a deposit is made the court executing the decree has to accept the payment and make an order in favour of the judgment debtor in terms of ' O. XXXIV r. 5 (1). Though O. XXXIV r. 5 (1) recognises the right of the judgment debtor to pay the decretal amount in an execution relating to a mortgage decree for sale at any time before, the confirmation of sale, that in our opinion does not mean that be said rule gives power to the court to extend time for payment on an application made by the judgment ;debtor. There is no pro vision in O. XXXIV r. 5 (1) like that contained in O. XXXIV r. 4 (2) to extend time for payment after the final decree is passed in a mortgage suit. As we read O. XXXIV r. 5 it only permits he judgment debtor to deposit the amount due. under the decree and such other amount as may be due in consequence of a sale having taken place, provided the deposit is made before the confirmation of sale. But there is no power in O. XXXIV r. 5 (1) to grant extension of time and postpone confirmation of sale there:or. The observation of the District Judge that the court has always the power to postpone passing orders confirming sale of immovable property is in our view incorrect, in the face of the provisions contained in O. XXI r. 92 (1). That provision makes it absolutely clear that if no application is made under r. 89, r. 90 or r. 91 or where such application is made and disallowed, the court has to make an order confirming the sale and thereupon the ,ale becomes absolute. It is not open to the court to go on fixing late after date and postponing confirmation of sale merely to accommodate a judgment debtor. If that were so, the court may go on postponing confirmation of sale for years in order to accommodate a judgment debtor. What O. XXI r. 92 contemplates is that where conditions thereunder are satisfied an order for confirmation 700 must follow. ' Further we have already indicated that O. XXXIV r. 5 does not give any power to court to rant time to deposit the money after the final decree has been passed. All that it permits is that a judgment debtor can deposit the amount even after the final decree is passed at any time before the confirmation of sale and if he does so, an order in terms of O. XXXIV r. 5 (1) in his favour has to be passed. With respect we cannot understand what the Letters Patent Bench meant by saying that before a mortgagor could be prevented from making payment and redeeming the property, his rights must have come to an end and that they could not come to an end unless his title to the property had been lost by confirmation of sale. It is true that so long as his right to redeem subsists the mortgagor may redeem the property. It is this principle which is recognised in O. XXXIV r. 5 which provides that the mortgagor judgment debtor can deposit the amount due even after the final decree has been passed but this deposit must be made at any time before confirmation of sale. It may be noted that there is no power under O. XXXIV r. 5 to extend time and all that it does is to permit the mortgagor judgment debtor to deposit the amount before confirmation of sale. It does not give any right to the mortgagor judgment debtor to ask for postponement of confirmation of sale in order to enable him to deposit the amount. We have to interpret O. XXXIV r. 5 and O. XXI r. 92 harmoniously and on a harmonious interpretation of the two provisions it is clear that though the mortgagor has the right to deposit the. amount due at any time before confirmation of sale, there is no question of his being granted time under O. XXXIV r. 5 and if the provisions of O. XXI r. 92 (1) apply the sale must be confirmed unless before the confirmation the mortgagor judg ment debtor has deposited the amount as permitted by O. XXXIV r. 5. We may in this connection refer to the decision of this Court in Janak Rai vs Gurdial Singh(1), where it has been laid down that once the conditions of O. XXI r. 92 (1) are complied with, the executing court must confirm the sale. It is on these principles that we have to decide whether the trial court was correct. We have already indicated that the sale was held on April 7, 1958, and in the normal course it would have been confirmed after 30 days unless an application under r. 89, r. 90, or r. 91 of O. XXI was made. Besides, this case is, as we have already assumed, analogous to the case of a final mortgage decree. The judgment debtor mortgagor had the right to deposit the amount at any time before confirmation of sale within 30 days after the sale or even more than 30 days after the sale under O. XXXIV r. 5 (1 ) so long as the sale was not confirmed. If the amount had been deposited before the confirmation of sale, the judgment debtors had the right to ask for an order in terms of (1) ; 70 1 O. XXXIV r. 5 (1) in their favour. In this case an application under O. XXI r. 90 had been made and therefore the sale could not be confirmed immediately after 30 days which would be the normal course; the confirmation had to await the disposal of the application under O. XXI r. 90. O Chat application was disposed of on October 7, 1958 and was dismissed. It is obvious from the order sheet of October 7, 1958 that an oral compromise was arrived at between the parties in court on that day. By that compromise time was granted to the respondents to deposit the entire amount due to the decree holder and the auction purchaser by November 21, 1958. Obviously the basis of the compromise was that the respondents withdrew their application under O. XXI r. 90 while the decree holder society and the auction purchaser appellant agreed that time might be given to deposit the amount up to November 21, 1958. If this agreement had 'not been arrived at and if the application under O. XXI r. 90 bad been dismissed (for example, on merits) on October 7, 1958, the court was bound under O. XXI r. 92(1) to confirm the sale at once. But because of the compromise between the parties by which the respondents were given time up to November 21, 1958, the court rightly postponed the question of confirmation of sale till that date by consent of parties. But the fact remains that the application under O. XXI r. 90 had been dismissed on October 7, 1958 and thereafter the court was bound to confirm the sale but for the compromise between the parties giving time upto November 21, 1958. Now let us see what happened about November 21, 1958. On November 20, 1958, an application was made by the respondents praying that they might be given one day more as November 21, 1958 was a holiday. No order was passed on that date, but it is remarkable that no money was deposited on November 20, 1958. When the matter came up before the court on November 22, 1958 no money was deposited even on that day. Now under O. XXXIV r. 5 it was open to the respondents to deposit the entire amount on November 22, 1958 before the sale was confirmed, but no such deposit was made on November 22, 1958. On the other hand, counsel for the respondents prayed to the executing court for extension of time by 14 days. The executing court refused that holding that time upto November 21, 1958 had been granted by consent and it was no longer open to it to extend that time. The executing court has not referred to O. XXI r. 92 in its order, but it is obvious that the executing court held that it could not grant time in the absence of an agreement between the parties, because O. XXI r. 92 required that as the application under O. XXI r. 90 had been dismissed, the sale must be confirmed. We are of the view that in the circumstances it was not open to the executing court to extend time without consent of parties for time between October 7, 1958 to November 21, 1958 was granted by consent of parties. Section 148 of the Code Civil Procedure would not apply 702 in these circumstances, and the executing court was right in holding that it could not extend time. Thereafter it rightly the sale as required under O. XXI r. 92, there being no question of the application of O. XXXIV r. 5, for the money had not been deposited on November 22, 1958 before the order of confirmation confirmed was passed. In this view of the matter, we are of opinion that the order of the executing court refusing grant of time and confirming the sale was correct. it is however urged that it does not appear that the time was , ranted on October 7, 1958 by consent of parties because the respondents had only asked for one month 's time and the court gave time for about six weeks. It appears however that the grant of 'time on October 7, 1958 was as a result of an oral compromise between the parties. This is quite, clear from the fact that the application under O. XXI r. 90 was withdrawn on the basis that time would be granted. The fact that time was actually granted for six weeks does not mean that that was done without the consent of the parties. It seems to us that the whole thing took place in the presence of the court and the order granting time upto November 21, 1958 must in the circumstances be read as a consent order. It is borne out by the fact that on November 22, 1958 the same presiding judge of the executing court said that time had been granted with the consent of the parties by way of compromise. We cannot therefore accept the contention that time was not granted by consent of parties and therefore the court had power under section 148 to extend time which had already been granted. We, allow the appeal, set aside the order of the Letters Patent Bench and of the District Judge and restore that of the executing court dated November 22, 1958. It follows that the sale stood confirmed in favour of the appellant on November 22, 1958. We direct that the respondents (judgment debtors) will pay the costs of the appellant throughout. The money deposited by the respondent can be taken back by them. R.K.P.S. Appeal allowed. L7 Sup/67 17 5 68 2,500 GIPF.

The respondents were members of a Cooperative housing society and 'had created a mortgage on their property in favour of the society. As an amount due under the mortgage was not paid, the matter was referred to the Registrar of Cooperative Societies and he made an order on May 1, 1957 directing the respondent to pay the amount due from August f. 1953 till the debt was discharged. He further directed that if the amount was not paid, the property could be sold in satisfaction of the amount. The amount was not paid as directed and the property was therefore sold on April 7, 1958 to the appellant. As an application was made by the respondents on May 3, 1958 under O. XXI, r. 90 the sale could not be confirmed under O. XXI, r. 92 until this application was disposed of. The proceedings on the application continued up to October 7, 1958 when an order was passed with the consent of the parties whereby the respondents were granted time till November 21, 1958 to deposit the amount due and the application under O. XXI r. 90 was dismissed as withdrawn. When the matter came up before the executing court on November 22, the court noted that no amount bad been deposited and although an application was made on behalf of the respondents for a further extension of time, the executing court held that as the society decree holder and the auction purchaser were not willing to extend time, the court could not extend time which had been given under an agreement of the parties by way of compromise. The court therefore confirmed the sale under O. XXI r. 92. After appeals to the District Judge and a single bench of the High Court, a Division Bench, in a Letters Patent Appeal, held that O. XXXIV r. 5 would apply in a case of 'this kind and that even if it did not apply. it was a fundamental principle that before a mortgagor could be pre vented from making the payment and redeeming 'the property. his rights must have come to an end and they would come to an end only when his title was lost by confirmation of sale. The court allowed the appeal holding that the application for extension of time was wrongly rejected by the executing court as it had the power to grant an extension. It further directed that as some amount had been paid by he respon dents, if on making up the accounts it was found that any additional amount was due the court would give reasonable time for this to be deposited. On appeal to this Court, HELD : The order of the executing court refusing extension of time and confirming the sale in favour of the appellant under O. XXI r. 92 was correct. [702B] 696 It was not open to the executing court to extend time without the consent of parties, for time between October 7, 1958 to November 21, 1958 was granted by consent of parties. Section 148 of the Code of Civil Procedure would not apply in these circumstances. [701H] Though O. XXXIV r. 5(1) recognises the right of the judgment debtor to pay the decretal amount in an execution relating to a mortage decree for sale at any time before the confirmation of sale, the rule does not give any power to the court to grant time to deposit the money after the final decree has been passed. It is not open to the court to go on fixing date after date and postponing confirmation of sale merely to accommodate a judgment debtor. A harmonious construction of O. XXXIV r. 5 and O. XXI r. 92 makes it clear that if the provisions of O. XXI r. 92(1) apply the sale must be confirmed unless before the confirmation the mortgagor judgment debtor has deposited the amount as permitted by O. XXXIV r. 5. [699D E. H; 700E] Janak Rai vs Gurdial Singh ; , referred to.

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Appeal NO. 437 of 1966. Appeal by special leave from the Award dated March 31, 1964 of the Industrial Tribunal, Maharashtra in Reference (IT) No. 40 of 1963. H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant. H. R. Gokhale and 1. N. Shroff, for respondent No. 1. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against the award dated March 31, 1964 of the Industrial Tribunal, Maharashtra in a Reference by Government under section 10(1)(d) of the . The appellant is a Trade Union established on January 1, 1962 by the employees of Ghatge & Patil (Transports) Private Ltd. and the respondent is the Company. The Company has its registered office at Kolhapur and is engaged in the transport and removal of goods by road. It operates on a large scale owning at the material time as many as 70 trucks and plies them from Kolhapur (where the registered office of the Com pany is situate) to far off places such as Bombay, Poona, Bangalore, Goa and Madras. On January 14, 1963, the Union served a notice of demand upon the Company asking for the abolition of a newly introduced contract system for the running of vehicles. This was referred first to the Conciliation Officer, but later the reference was made by Government as stated already. The dispute arose in the following circumstances: For the operation of its trucks the Company was previously employing 70 drivers and an equal number of cleaners. On January 8, 1963, the Company advertised in a local newspaper of Kolhapur that it had trucks in working condition for sale and also trucks in working condition to be given for plying on a contract system. As many as 54 drivers applied for obtaining contracts having resigned their service as drivers. The Company then entered into agreements with these drivers between January 9 and 31. Each driver received one motor truck for operation according to the terms of the agreement. A model agreement has been produced in the case in which the parties, after reciting that there were difficulties in operating motor transport vehicles, because of the passing of the , stated that the agreement was being entered into for the operation of the trucks. It is not necessary either to set out the agreement or to analyse all its terms. 302 For our purpose it is sufficient to say that the Company let to these former drivers (to whom we may refer as operators) a truck each on condition that they paid the Company Re. 1.00 per mile for its use. The Company on its part undertook to supply fuel, oil tyres, tubes, etc. for the purpose of running the vehicle. Under this agreement the operator was at liberty to canvass for goods and transport them but he was required to give the utmost priority to the goods entrusted to the Company for transport. In this way the goods booked with the Company were transported by the operator s in priority and they paid Re. 1.00 per mile for the use of the truck , all other expenses being borne by the Company. The operator s were required to bring all the gross receipts to the Company which deducted its own charges at Re. 1.00 per mile and handed over the balance. The operators were responsible for any damage to the vehicle, save normal wear and tear, and were required to observe the terms and conditions of the permit held by the Company. In this way, the Company continued to function as a transport undertaking while the trucks were not run through paid servants but through independent contractors. The above move by the Company was necessary (so the Company admits) because of the passing of the Motor Transport Wor kers Act, 1961, on May 20, 1961. This Act was passed to provide for the welfare of Motor Transport workers and to regulate the conditions of their work. It applies to Motor Transport Undertakings, by which is meant, among other things, undertakings engaged in carrying goods by road for hire or reward. Such undertakings are required to register under the Act and an inspecting staff is brought into existence for the purpose of seeing that the requirements of the Act are carried out. The fourth chapter of the Act (headed "Welfare and Health") requires the Motor Transport Undertakings to provide canteens in every place where 100 Motor Transport workers or more are employed , rest rooms for the use of such workers, uniforms, medical and First Aid facilities. The fifth chapter prescribes the hours of work for Motor Transport workers and in ordinary circumstances puts a ceiling of 48 hours in a week and a maximum of 8 hours a day and a daily interval for rest after 5 hours of work, with a spreadover of not more than 12 hours in every day. It also provides for a day of weekly rest. The sixth chapter prohibits the employment of children, enjoins the carrying of tokens by employees and provides for their medical examination. The seventh chapter applies the Payment of Wages Act and provides for annual leave with wages and extra wage for overtime. The eighth chapter provides for penalties and procedure and the ninth chapter gives power to the Government to grant exemptions, to make rules and to give directions. Section 37, which is in this last chapter, provides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service whether made before or after the commencement of this Act but not so as to take away from a Motor Trans 303 port worker an existing benefit which is more favourable than those under the Act or to prevent him from entering into an agreement for better rights and privileges than those given to him by the Act. The Company frankly admitted at all stages that it was impossible for it to implement all the conditions of the Act in respect of the drivers of motor vehicles. It stated that its motor drivers. while working in its employment, were required to go on long journeys and it was practically impossible to enforce the conditions of hours of work or of rest. Since this entailed penal consequences and the possibility of the permits being cancelled, the Company was forced to adopt a system under which it would not be requir ed to observe the Act because under it the truck drivers became independent contractors and were therefore not within the ambit of the Act. On the other hand, the Union contended that this arrangement was invented to nullify the beneficial legislation intended to improve the conditions of Motor Transport workers in general and truck drivers in particular. Under the system, the Union submitted, the drivers lost the benefit of leave of various kinds, over time payment, Provident Fund, gratuity and insurance and there was no control either in respect of hours of work or of rest which were the main objects of the Act to secure. "The matter of dispute referred to the Tribunal was: "The contract system for the running of vehicles which has been newly introduced, must be abolished immediately. Such ex employees of the Company who have been given this work on contract basis should be reinstated with back wages". The Tribunal held that the first part as also the second referred to the 54 drivers who had resigned their jobs and become operators. The Tribunal saw difficulty in acting on the second part because the drivers had resigned. In dealing with this problem the Tribunal considered the evidence and came to the conclusion that the drivers were not coerced or forced to take this action. The Tribunal then posed the question, how to re instate persons who had voluntarily resigned their services and could not be said to be dismissed, discharged or retrenched within the ? The Tribunal also held that the agreements were simple agreements for transport of goods and were essentially fair to the operators. Of course, there were advantages as well as disadvantages but the employees not being servants were free agents and could do the work as and when they liked and even accept work from others. They thus got, what they considered, more benefit from the contract system than from their contract of employment. None of the drivers had appeared to complain against the new system. There was also nothing to show that this system took unfair advantage of the former drivers. The Tribunal, therefore, held that the contract system could not be described as an unfair labour practice. The Tribunal also commented that under the agreements 304 themselves the contract was capable of being terminated by three days ' notice on either side and hence it was hardly necessary for the Union to take recourse to a Tribunal for getting it abolished. Holding that the new system could not be said to be an unfair or anti labour practice the Tribunal rejected the claim of the Union. The Union now appeals by special leave. The argument on behalf of the Union centres round two facts. Firstly, that the resignation of the drivers and cleaners and the setting up of the contract system amounts to an unfair labour practice and exploitation of labour because by this device these and other transport workers are being victimized; and, secondly, the salutary and beneficial legislation conceived in the best interest of the transport workers is being deliberately set at naught. According to the Union the operators continue to be workmen notwith standing that they are posed as independent contractors hiring the trucks. By this system many of the benefits secured to the Motor Transport workers including drivers and cleaners, have been made inapplicable to a section of Motor Transport workers, namely, the former drivers and cleaners employed by the Company. The argument on the side of, the Company is that the hiring out of trucks to the operators is not illegal and does not amount to exploitation of the former drivers or an unfair labour practice. According to the Company the operators are free agents and freely resigned their jobs and the Company points out that even the, office bearers of the Union were among those who resigned as drivers and entered into agreements to become operators. The Company further points out that many of the contracts were entered into after the, present reference was made to the Tribunal. There is no doubt that the Company is a Motor Transport ' Undertaking because it is engaged in carrying goods by road for hire or reward. Since the drivers have resigned their jobs they cannot be said to be employed in the Motor Transport Undertaking. The word "employed" in the definition of Motor Transport worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one 's service. The definition is, of course, made wide to take in all persons working in a professional capacity in an undertaking for running its affairs in any capacity and not only persons employed on wages. The word "wage" has the meaning given to the word in the Payment of Wages Act and takes in all paid employees and also persons who are employed in a professional. capacity although not in receipt of wages. Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Un dertaking in the sense of persons kept in service. The operators, therefore, are not Motor Transport workers within the definition. The Act is not only intended to confer benefits on Motor Transport workers but is also regulatory with penal consequences. 305 The apprehension of the Company is that some of the regulatory provisions of the Act are incapable of being observed properly in the case of drivers and cleaners going on long journeys because there is no means of enforcing them. For example, the provisions about hours of work, hours of rest etc. are not easy to enforce enroute or at far off places. Therefore, rather than run the risk of losing the permit for want of compliance with the , the Company has decided not to run transport trucks itself but to let them be run by independent hirers. There does not appear to be any bar in law to such action. Section 59 of the Motor Vehicles Act contemplates the transfer of permits with the permission of the Transport Authorities and this enables any person to whom a vehicle covered by the permit is transferred to get the right to use the vehicle in the manner authorised by the permit. Here the vehicle is not transferred but is only let out on hire and hence there is prima facie no need for permission. The Union made no attempt before us to establish that the inauguration of the contract system offended the Motor Vehicles Act or was prohibited under it. No objection to the system by the Authorities under the Motor Vehicles Act was proved in the case. The operators also seem to be happy because no operator appeared to complain and the only dissatisfaction has been registered by the Union which apparently lost the allegiance of some of its former members and even office bearers. In view of the findings of the Tribunal, which we see no reason to disapprove, it must be held that the drivers voluntarily resigned and entered into the agreements since they apparently considered them to be more favourable than the terms of their former employment. In this view of the matter it is difficult to hold that the Tribunal was wrong in its conclusion that there was no ex ploitation of the drivers. It is also equally true that there is no bar in law to the introduction of the system. The Union, however, contends that on the analogy of some cases of this Court in which contract labour was put down as unfair labour practice because it involved exploitation of labour, we should declare this system also to be harmful to the interests of labour. Contract labour was declared in this Court to be an unfair labour practice because the intention was to introduce a middle man to avoid observance of laws and to deny to labour the advantages it had acquired by bargaining or as a result of awards. Such is hardly the case here. The two systems were there for the drivers to choose. It is reasonable to think that the drivers must have chosen a system which was considered by them to be more beneficial to themselves. There was no compulsion for the drivers to resign their jobs and they did so voluntarily obviously thinking that the new system was more profitable to them. We cannot lose sight of the fact that some of the office bearers of the Union were among the first to resign. Many of the drivers resigned the jobs and entered into agreements even after the dispute was taken up by the Union. The present case is, therefore, not analogous to the case of 306 contract labour where employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury. The matter of dispute no doubt referred in the second part to ex drivers but it referred generally to the new system in the first. The Tribunal was wrong in thinking that the first part also referred to the ex drivers (now operators). On the whole, however, it is clear that the Company has not done anything illegal. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law. The Company has declared before us that it is quite prepared, if it was not already doing so, to apply and observe the provisions of the in respect of its employees proper where such provisions can be made applicable. In view of this declaration we see no reason to interfere, because Parliament has not chosen to say that transport trucks will be run only through paid employees and not independent operators. The appeal fails but in the circumstances of the case we make no order as to costs. G.C Appeal dismissed.

The respondent company carried on the business of transport and removal of goods by road. It owned a fleet of trucks and employed drivers and cleaners to run them. In 1963 the company, finding difficulty in observing the provisions of the , introduced a scheme whereby the trucks, instead of being run by the company itself were hired out to contractors at a fixed rate per mile. Employees of the company who were engaged in running the trucks resigned their jobs and most of them who had for merly been drivers became contractors under the scheme. The workmens ' Union however raised a dispute asking for the reinstatement of the ex employees who had been given work on contract basis. The Tribunal held that the contract system could not be said to be an unfair labour practice, for the ex employees were never coerced or forced to resign their jobs, and they got more benefits from the contract system than from their original contract of employment. In appeal to this Court the Union contended that the ex employees of the company continued to be workmen notwithstanding that they were posed as independent contractors, that the beneficent legislation conceived in the interests of transport workers was being set at naught by the company, and that the setting up of the contract system amounted to unfair labour practice. Held: (i) Since the drivers had resigned their jobs they could not be said to be employed in the Motor Transport undertaking. The word 'employed ' in the definition of Motor Transport. Worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one 's service. Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Undertaking in the sense of persons kept in service. The operators were therefore not Motor Transport Workers within the definition. [304F H] (ii) There was no bar in law to the introduction of the con tract system. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law. [306 B C] (iii) Those who resigned did so voluntarily and they got substantial benefits under the new system. The Tribunal was right in its conclusion that there was no exploitation of the ex employees. There 301 was thus no unfair labour practice. The present case was not analogous to the case of contract labour when employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury. , [305E 306A.]

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05 of 1953. Under article 32 of the Constitution of India for the enforcement of Fundamental Rights and APPELLATE JURISDICTION: Case No.1 of 1950 1047 Appeal under section 205 of the Government of India Act, 1935, from the Judgment and Decree, dated the 13th September, 1949, of the High Court of Judicature, Orion, in First Appeal No. 39 of 1949 arising out of the Judgment and Decree, dated the 11th September, 1945, of the Court of the District Judge, Cutback, in Original Suit No. 3 of 1943. N. C. Chattanooga (B. K. Saran and B. C. Pratt, with him) for the petitioners and appellants Nos. 1 to 13. section P. Sinclair (B. K. Saran and R. C. Pratt, with him) for appellants 14 to 16. M. C. Seth (G. N. Jose, with him) for respondents in both the matters. Agent R. H. Debar. March 16. delivered by MUKHERJEA J. These two connected matters are taken up together for the sake of convenience and may be,disposed of by one and the same judgment. Petition ;No. 405 of 1953 has been presented to this court under article 32 of the Constitution and the petitioners are the Mahants or superiors of two ancient and well known religiousinstitutions of Orissa, both of which have endowmentsof considerable value situated within and outside the Orissa State. An Act, known as the .Orissa Hindu Religious Endowments Act was passed by the Orissa Legislative Assembly functioning under the Government of India Act, 1935. in the vear 1939 and it received the assent of the Governor General on the 31st August, 1939. The object of the Act, as stated in the preamble, is "to provide for the better administration and governance of certain Hindu religious endowments" and ' the expression "religious endowment" has been defined comprehensively in the Act as meaning all property belongto or given orendowed for the support of Maths or temples or for the performance of any service orcharity connected therewith. The whole scheme of the Act is to vest the control and supervision of public temples and Maths in a statutory authority designated as the Commis. sioner of Hindu Religious Endowments and to confer 1048 upon him certain powers with a view to enable him to exercise effective control over the trustees of the Maths and the temples. The Commissioner is required to be a member of the Judicial or Executive Service of the Province and his actions are subject to the general control of the provincial Government. For the purpose, of meeting the expenses of the Commissioner and his staff, every Math or temple, the annual income of which exceeds Rs. 250, is required under section 49 of the Act to pay an annual contribution at certain percentage of the annual income which increases I progressively with the increase in the income. With this contribution as well as loans and grants made by the Government, a special fund is to be constituted as provided by section 50 and the expenses of administering the religious endowments are to be met out of this fund. In July, 1940, a suit, out of "which the Case No. 1 of 1950 arises, was instituted in the court of the District Judge of Cuttack by a number. of Mahants including .the two petitioners in the petition under article 32 before us. praying for a declaration that the Orissa Relig ious Endowments Act of 1939 was ultra vires the Orissa Legislature and for other consequential reliefs. The validity of the Act was challenged substantially on three grounds, namely, (1) that the subject matter of legislation was not covered by Entry 34 of List 11 in Schedule VII of the Government of India Act, 1935 ; (ii) that the, contribution levied under, section 49 was, in substance, a tax and could not have been imposed by the Provincial Legislature; and (iii) that as the provisions of the Act affected the income of properties situated outside the territorial limits of the Province, the Act was extra territorial in its operation and hence inoperative. All these contentions were overruled by, the District Judge of Cuttack, who by his judgment dated the 11 th September, 1945, dismissed the plaintiffs ' suit. Against that decision, an appeal was taken by the plaiitiffs to the High Court of Orissa and the appeal was heard by a Division Bench, consisting of Jagannedbadas and Narasimham JJ. The learned Judges by two separate but concurring judgments, dated the 13th September. 1949, affirmed the decision 1049 of the District Judge and dismissed the appeal. it is against this judgment that Case No. 1 of 1950 has come to this court. During the pendency of the appeal in this court the Constitution came into force on the 26th January , 1950, with its chapter on fundamental rights, and the Orissa Hindu Religious Endowments Act also has been amended recently by the State Legislature of Orissa by Amending Act II of 1952. In view of these changes, the present application under article 32 of the Constitution has been filed by two of the Mahants who figured as plaintiffs in the Declaratory Suit of 1940 and the application has been framed comprehensively so as to include all points that could be urged against the validity of the Orissa Hindu Religious Endowments Act on the basis of the provisions of the Constitution. It is conceded by both the parties that in these circumstances it is not necessary for us to deal separately with the appeal. The decision, which we would arrive at in the petition under article 32, will be our pronouncement on the validity or otherwise of the different provisions of the impugned Act. It may be stated at the beginning that the Orissa Hindu Religious Endowments Act of 1939 follows closely the pattern of the Madras Hindu Religious Endowments Act of 1927 which has been now replaced by a later Act passed by the State Legislature of Madras in 1951 and described as the Madras Hindu Religious and Charitable Endowments Act. The grounds upon which the validity of the Orissa Act has been attacked be fore us are substantially the same as were urged in assailing the constitutional validity of the Madras Act, in Civil Appeal No. 38 of 1953 (The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar), the judgment in which has just been delivered. The grounds urged can be classified conveniently under two heads. In the first place, some of the provisions of the impugned Act have been challenged as invalid on the ground that they invade the fundamental rights of the petitioners guaranteed under articles 19(1) (f), 25 26, and, 27 of the Constitution. The other branch of the contention (1) ; 1050 relates to. the provision for levying contribution on religious institutions under section 49 of the Act and this provision has been impeached firstly on the ground that the contribution being in substance a tax, it was beyond the competency of the Provincial Legislature to enact any such provision. The other ground raised is, that the payment of such tax or imposition is prohibited by article 27 of the Constitution. The general questions relating to the scope and ambit of the fundamental rights embodied in articles 19 (1) (f ), 25, 26 and 27 of the Constitution in connection with Maths and temples have been discussed fully in our judgment in the Madras appeal referred to above and ,it would not, be necessary to reiterate these discussions for purposes of the present case. We can straightaway proceed to examine the different provisions of the Act to which objections have been taken by the learned counsel appearing for, the petitioners in the light of the principles which this court has laid down in the Madras appeal. It may be said that many of the impugned provisions of the Orissa Act correspond more or less. to similar provisions in the Madras Act. Section 11 of the Act has been objected to on the ground that it vests almost , an uncontrolled and arbitrary power upon the Commissioner. This section corresponds to section 20 of the Madras Act and as has been pointed out in our Judgment, in the Madras appeal, the powers, though seemingly wide, can be exercised only to ensure that Maths and temples are properly maintained and the endowments are properly administered. As the object and purpose for which these powers could be exercised have been indicated preoisely we do not think that it, could be said that the authority vested in the Commissioner is in any way arbitrary.or unrestricted. The explanation attached to the section only makes it clear that the general power conferred upon the Commissioner extends to passing of interim orders as the Commissioner might think fit. Section 14 lays down the duties of the trustee and the care which he should exercise in the management 1051 of the affairs of the religious institutions. The care, which he has to exercise, is What is demanded normally of every trustee in charge of trust estate and the standard is that of a man of ordinary prudence dealing with his own funds or properties. This is a matter relating to the administration of the estate and and does not interfere with any fundamental rights of the trustee. For the same reason, we think, no objection could be taken to the provision of section 28 which lays down that the trustee of a temple shall be bound to obey all orders issued under the provisions of the Act by the Commissioner. if the orders are lawful and made in pursuance of authority properly vested in the officer, no legitimate ground could be urged for not complying with the orders. The sections of the Act, to which serious objections have been taken are sections 38, 39, 46, 47 and 49. Sections 38 and 39 relate to the framing of a scheme. A scheme can certainly be settled to ensure due administration of the endowed property but the objection seems to be that the Act provides, for the framing. of a scheme not by a civil Court or under its supervision but by the Commissioner who is a mete administrative or executive officer. There is also no provision for appeal against his order to the court. Under section 58 of the Madras Act, although the scheme is to be framed by the Deputy Commissioner, an appeal lies against his order to the Commissioner in the first place. A party aggrieved by the order of the Commissioner again has a right of suit in the ordinary civil court, with a further right of appeal to the High Court. It seems that sub section (4) of section 39 of the impugned Act, as it originally stood, allowed the, trustee or any person having an interest in the institution to file a suit in a civil court to modify or set aside an order framing a scheme; and under section 40, the order made under section 39 could be final only subject to the result of such suit. Subsection (4) of section 39, however, was deleted by the Amending Act of 1952, and under the new sub section (4), the order passed by the Commissioner has been made final and conclusive. Strangely, however, section 41 of the Act has still been retained in its 1052 original shape and that speaks of an order settling a scheme being set aside or modified by the court. Obviously, this is careless drafting and the Legislature did not seem to have adverted to the apparently contradictory provisions that it made. The learned Attorney General, appearing for the State of, Orissa, has also conceded that these sections require redrafting. We think that the settling of a scheme in regard to a religious institution by an executive officer without the intervention of any judicial tribunal amounts to an unreasonable restriction upon the right of property of the superior of the religious institution which is blended with his office. Sections 38 and 39 of the Act must, therefore, be held to be invalid. There is nothing wrong in the provision of section 46 itself but legitimate exception, we think, can be taken to the proviso appended to the section. Under the law, as it stands, the Mahant or the superior of a Math has very wide powers of disposal over the surplus income and the only restriction that is recognised is that he cannot spend the income for his own personal use unconnected with the dignity of his office. The purposes specified in section 46 are all conducive to the benefit of the institution and there is no reason why the discretion of the trustee in regard to the spending of surplus for such purposes also should be still further restricted by directions which the Commissioner may choose to issue. Section 47 (1) lays down how the rule of cy pres is to be applied not merely when the orginal purpose of the trust fails or becomes incapable of being carried out either in whole or in part by reason of subsequent events, but also where there is a surplus left after meeting the legitimate expenses of the institution. Objection apparently could be raised against the last provision of the sub section, but as subsection(4) of section47gives the party aggrieved by any order of the Commissioner in this respect to file a suit in a civil court and the court is empowered to modify or set aside such order of the Commissioner, we do not ,think that there is any reasonable ground for complaint. The only other section that requires consideration is sect ion 49 under which every Math or temple having 1053 an annual income exceeding Rs. 250 has got to make an annual contribution for meeting the expenses of the Commissioner and the officers and servants working under him. The first question that arises with regard to this provision is whether the imposition is a tax or a fee; and it is not disputed that if it is a tax, the Provincial Legislature would have no authority to enact such a provision. This question has been elaborately discussed in our judgment in the Madras appeal referred to above and it is not necessary to repeat the discussions over again. As has been pointed out in the Madras appeal, there is no generic difference between a tax and a fee and both are different forms in which the taxing power of a State manifests itself. Our Constitution, however, has made a distinction between a tax and a fee for legislative purposes and while there are various entries in the three lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees which could be levied in respect of every one of the matters that are included therein. A tax is undoubtedly in the nature of a complusory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the essential thing in a tax is that the imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax. The taxes collected are all merged in the general revenue of the State to be applied for general public purposes. Thus, tax is a common burden and the only return which the taxpayer gets is the participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded. Thus in fees there is always an element of quid pro quo which is absent in a tax. Two elements are thus essential in order that a payment may be regarded as a fee. It the first place,, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make 136 1054 the imposition a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State.to be spent for general public purposes. Judged by this test, the contribution that is levied by section 49 of the Orissa Act will have to be regarded as a fee and not a tax. The payment is demanded only for the purpose of meeting the expenses of the Commissioner and his office which is the machinery set up for due administration of the affairs of the religious institution. The collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They go to constitute the fund which is contemplated by section 50 of the Act and this fund, to which also the Provincial Government contributes both by way of loan and grant, is specifically set apart for the render ing of services involved in carrying out the provisions of the Act. We think, therefore, that according to the Principles which this court has enunciated in the Madras appeal mentioned above, the contribution could legitimately be regarded as fees and hence it was within the competence of the Provincial Legislature to enact this provision. The fact that the amount of levy is graded according to the capacity of the payers though it gives it the appearance of an income tax, is not by any means a decisive test. We are further of opinion that an imposition like this cannot be said to be hit by article 27 of the Constitution. What is forbidden by article 27 is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination. The object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it; the purpose is to see that religious trusts and institutions wherever they exist are properly administered. It is the secular administration of the religious institutions that the Legislature seeks to control and the object, as enunciated in the Act, is to ensure that the endowments attached to the religious institutions are properly administered and their income is duly appropriated for purposes for which they were founded or exist. As there is no question of favouring any particular religion or religious denomination, article 27 could not possibly apply. The result is that, in our opinion, the only sections of the Act, which are invalid, are sections 38, 39 and the proviso to section 46. The application under article 32 is, therefore, allowed to this extent that a writ in the nature of mandamus would issue restraining the Commisoner and the State Government enforcing against the petitioners the provisions of the sections mentioned above. The other prayers of the petitioners are disallowed. No separate order is necessary in Case No. I of 1950, which will stand dismissed. We make no order as to costs either in the petition or in the appeal.

Held, that sections 38 and 39 and the proviso to section 46 of the Orissa Hindu Religious: Endowments Act, 1939 as amended by the Amending Act II of 1952 are ultra vires articles 19(1) (f), 25 and 26 of the Constitution. The annual contribution provided in section 49 of the Act is in the nature of a fee and not a tax and therefore it was within the competence of the Provincial Legislature to enact such a provision. Further an imposition like this is not hit by article 27 of the Constitution because the object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it but the proper administration of religious trusts and institutions wherever they exist. Civil Appeal No. 38 of 1953 referred to.

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Appeal No. 2376 of 1966. 355 356 Appeal from the judgment and order dated January 18, 1963 of the Madhya Pradesh High Court in Miscellaneous Petition NO. 267 of 1962. R.V.S. Mani, E.C. Agarwala and P.C. Agarwala,.for the appellant. B. Sen, M.N. Shroff for I.N. Shroff for the respondent. Shelat, J. Prior to December 17, 1947 the appellant was serving as an Overseer in the Public Works Department of the Central Provinces and Berar Government. On December 17, 1947 he was suspended from service and prosecuted under section .161 of the Penal Code. The trial resulted in his conviction but that was set aside in appeal on the ground that no proper sanction for prosecution was obtained. He was again prosecuted on the same charge but the Special Judge trying him quashed the chargesheet on the ground that the investigation had not been carried out by the proper authorities. In revision the High Court of Nagpur held that the Special Judge was in error in so holding but recommended that the prosecution should not be proceeded with as nearly 10 years had gone by since it was launched against the appellant. Following the recommendation the prosecution was dropped but a departmental inquiry was held on the same charges. The Inquiry Officer found the appellant not guilty but the Government disagreed with that finding and served a notice to show cause why he should not be dismissed. By an order dated December 5, 1960 the Government held that the charges against the appellant were not proved beyond reasonable doubt. It also held that the suspension and the departmental inquiry "were not wholly unjustified". The order then directed that the appellant should be reinstated in service with effect from the date of the order and retired from that, date, he having already attained superannuation age on September 5, 1952 and that the entire period of absence from duty should be treated as period spent on duty under F.R. 54(5) for purposes of pension only, but that he should not be allowed any pay beyond what he had actually received or what was allowed to him by way of subsistence allowance during the period of his suspension. On a representation made by him against the said order hav ing been rejected the appellant filed a petition under article 226 of the Constitution in the High Court of Madhya Pradesh for quashing the said order and for an order directing the Government to treat the period of absence from duty as period spent on duty under cl. 2 of the said Fundamental Rule and to revise the pension payable to him under that clause. The High Court dismissed the petition but granted certificate to file this appeal and that is how this appeal has come up before us. 357 Fundamental Rule 54 on the interpretation of which this appeal depends is as follows: "(1) When a Government servant who has been dismissed, removed or suspended is reinstated; the authority competent to order the reinstatement shall consider and make a specific order , (a) Regarding the pay and allowance to be paid to the Government servant for the period of his absence from duty; and (b) whether or not the said period shall be treated as a period spent on duty , (2) Where the authority 'Mentioned in sub rule (1) is of opinion that the Government servant has been fully exonerated or in the case of suspension, that it was wholly unjustified, the Government servant shall be given the full pay and allowances to which he would have been entitled, had he not been dismissed, removed or suspended as the case may be. (3)In other cases, the Government servant shall be given such proportion of such pay and allowances as such competent authority may prescribe. Provided that the payment of allowances under clause (2)or clause (3) shall be, subject to all other conditions under which such allowances are admissible. Provided other that such proportion of such pay and allowances ' all not be less than the subsistence and other allowances admissible under Rule 53. (4) In a case falling under clause (2), the period of absence from by shall be treated as a period spent on duty for all Purposes. (5) In a case falling under clause (3) the period of absence from duty shall not be treated as a period spent on duty,unless such competent authority specifically directs that it shall be so treated for any specified purpose. Provided that if the Government servant so desired, such authority may direct that the period of absence from duty shall be converted into leave of any kind due and admissible to the, Government servant. " On behalf of the appellant two points were urged before the High Court; (1) that before passing the impugned order the appellant ought to have been given a reasonable opportunity to show cause against the action proposed and (2) that it was clause 2 and not clause 5 which applied to his case. The High Court rejected both the contentions and, as aforesaid, dismissed the petition. 358 Counsel for the appellant canvassed the same contentions before us. Mr. Sen on behalf of the State. however, argued that F.R. 54 does not in express terms lay down a duty on the part of the authority to give an opportunity to show cause to the government employee and therefore the question would be whether the Rule imposed such a duty by necessary implication. He urged that the Rule cannot be said to lay down such duty by implications inasmuch as the impugned order is only a consequential order. That it was passed following a departmental inquiry held against the appellant during the course of which opportunity to show cause was already afforded. He contended that the only duty laid down by FR. 54 was that the Government should, consider whether the appellant was fully exonerated and in case of suspension whether such suspension was wholly unjustified and that once the authority formed the opinion that it was not so cls. 3 and 5 would apply. The Government having formed the opinion that the suspension was not wholly unjustified clans 5 applied and the impugned order was not liable to be challenged. The first question which requires consideration is whether there was a duty on the competent authority to afford an opportunity to the appellant to show cause before that authority formed the opinion as to whether he was fully exonerated and whether his suspension was wholly unjustified. Under F.R. 54 where a Government servant is reinstated, the authority has to consider and make a specific order (i) regarding pay and allowances payable to him for the period of his absence from duty and (ii) whether such period of absence should be treated as one spent on duty. The consideration of these questions depends on whether on the facts and circumstances of the case the Government servant had been fully exonerated and in case of pension whether it was wholly unjustified. If the authority forms such an opinion the Government servant is entitled to full pay and allowances which he would have been entitled to had the order of dismissal, removal or suspension, as the case may be, not been passed. Where the authority cannot form such an opinion the Government servant may be given such proportion of pay an allowances as the authority may prescribe. In the former case the period of absence from duty has to be treated as period spent on duty for all purposes and in the latter case such period is not to be treated as period spent on duty. But the authority has the power in suitable cases to direct that such period of absence shall be treated as period spent on duty in which case the government servant would be entitled to full pay and allowances. It is true that the order under FR. 54 in a sense a con sequential order in that it would be passed aft an order of reinstatement is made. But the fact that it is a consequential order does not determine the question whether the government servant has to be given an opportunity to show cause or not. It is also true 359 that in. a case where reinstatement is ordered after a departmental inquiry the government servant would Ordinarily have had an opportunity, to show: cause. In such a case, the authority no doubt ,would have before him the entire record including the explanation given by the government servant from which all the facts and circumstances of the case would be before the authority and from which he can form the opinion as to whether he has been fully exonerated or not and in case of suspension whether such suspension was wholly unjustified or not. In such a case the order passed under a rule such as the present Fundamental Rule might be said to be a consquential order following a departmental inquiry. But there are, three classes of cases as laid down by the proviso in article 311 where a departmental inquiry would not be held, viz., (a) where a person is dismissed, removed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge, (b) where the authority empowered. to dismiss or remove person or to reduce him in rank is satisfied for reasons to be record in writing that it is not reasonably practicable to hold such an inquiry; and (c) where the President or the Governor as the case may be is satisfied, that in the interest of security of the State it is not expedient to hold such inquiry. Since there would be no inquiry in these classes of cases the authority would not have before him any explanation by the ' government servant. The authority in such cages would have to consider and pass the ' order merely on such facts which might be placed before him by the department concerned. The order in such a case Would be ex parte without the authority having the other side of the picture. In such cases the order that such authority would pass would not be a consequential order as where a departmental inquiry has been held. Therefore, aft order passed under Fundamental Rule 45 is not always a consequential order nor is such order a continuation of the departmental proceeding taken against the employee. It is true as Mr. Sen pointed out that F.R. 54 does not in express terms lay down that the authority shall give to the employee concerned the opportunity to show cause before he passes the order. Even so, the question is whether the rule casts such a duty on the authority by implication. The order as to whether a given case falls under cl. 2 or cl. 5 of the Fundamental Rule must depend on the examination by the authority of all the facts and circumstances of the case and. his forming the opinion therefrom of two factual findings; whether the employee was fully exonerated and in case of suspension whether it was wholly unjustified. Besides, an order passed under this rule would obviously affect the government servant adversely if it is one made under cls. 3 and 5. Consideration under this rule depending as it does on facts and circumstances in their entirety, passing an order on the basis of factual finding arrived at from such facts and circumstances and such an order resulting in pecuniary loss to the government servant must be held to be an objective rather than a subjective function. 360 The very nature of the function implies the duty to act judicially. In such a case if an opportunity to show cause against the action, proposed is not afforded, as admittedly it was not done in the present case, the order is liable to be struck down as invalid on the ground that it is one in breach of the principles of natural justice. In the State of Orissa vs Dr. (Miss) Binapani Devi and others(1) this Court held that an order fixing the date of birth of the government servant concerned there and declaring that she should be deemed to have retired on a particular date on the basis of the date so determined without giving an opportunity to show cause against the action proposed was invalid on the ground that the determination was in violation of the principles of natural justice. It was there observed: "The State was undoubtedly not precluded, merely because of the acceptance of the date of birth of the first respondent in the service register, from holding an inquiry if there existed sufficient grounds for holding such enquiry and for refixing her date of birth. But the decision of the State could be based upon the result of an enquiry in a manner consonant with the basic concept of justice. An order by the State to the prejudice of a person in derogation of his vested rights may be made only in accordance with the basic rules of justice and fairplay. The deciding authority, it is true, is not in the position of a Judge called upon to decide an action between contesting parties, and strict compliance with the forms of judicial procedure may not be insisted upon. He is however under a duty to give the person against whom an enquiry is held an opportunity to set up his version or defence and an opportunity to correct or to controvert any evidence in the possession of the authority which is sought to be relied upon to his pre judice. " We find that the High Court of Maharashtra has also taken in V. R. Gokhale vs State of Maharashtra(2) the same view which we are inclined to take of the nature of function under R. 152 of the Bombay Civil Service Rules, 1959, a rule in terms identical to those of F.R. 54 before us. In our view, F.R. 54 contemplates a duty to act in accord ance with the basic concept of justice and fairplay. The authority therefore had to afford a reasonable opportunity to the appellant to show cause why cls. 3 and 5 should not be applied and that having not been done the order must be held to be invalid. (1) ; (2) I.L.R. 361 The appeal is allowed and the High Court 's order is set aside. The competent authority is directed to consider the question de novo after giving to the appellant a reasonable opportunity to show cause against the action proposed against him. The respondent will pay to the appellant costs of this appeal as also the costs of the petition in the petition in the High Court. G.C Appeal allowed.

The appellant was an Overseer in the Public Works Department of the Central Provinces and Berar Government. In 1947 he was suspended from service and prosecuted under section 161 I.P.C. Ultimately, on orders from the High Court, the prosecution was dropped. In a departmental enquiry also the appellant was exonerated, By an order dated December 1960, the Government held that the suspension of the appellant and the ' departmental enquiry against him "were not wholly unjustified". The order then directed that the appellant should be reinstated in service with effect from the date of the order and retired from the date, he, having already attained superannuation age on September 5, 1952 and that the entire period of absence from duty should be treated as period spent on duty under F.R. 54(5) for purposes of pension only, but that he should not be allowed any pay beyond what he had actually received or what was allowed to him, by way of subsistence allowance during the period of his suspension. The appellant filed a petition under article 226 of the Constitution contending that F. Rule 54(2) governed his case and not F. Rule 54(5). The High Court decided against him but granted him certificate to appeal to this Court. It was contended on behalf of the appellant that before deciding which rule applied to his case the Government should have given him an opportunity to be heard. The respondent urged that in passing a consequential order a hearing is not necessary. Held: An order passed under F R. 54 is not always a consequential order nor is such order necessarily a continuation of the departmental proceeding taken against the employee. [359E F] Consideration under F.R. 54 depending as it does on facts and circumstances in their entirety, passing an order on the basis of factual finding arrived at from such facts and circumstances and such an order resulting in pecuniary loss to the Government servant must be held to be an objective rather than a subjective function. The very nature of the function implies the duty to act judicially. In such a case if an opportunity to show cause against the action proposed is not afforded, as admittedly it was not done in the pre sent case, the order is liable to be struck down as invalid on the ground that it was one in breach of the principles of natural justice. State of Orissa vs Dr. (Miss) Binapani Devi and Ors. ; , relied on. [359H; 360A B] V. R. Gokhale vs State of Maharashtra, I.L.R. [1963] Bom. 537, approved.

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Appeals Nos. 288 291 of 1966. Appeals by special leave from the judgment and order dated December 7, 1962 of the Assam High Court in First Appeals Nos. 16 19 of 1967. P. K. Goswami and R. Gopalakrishnan, for the appellants (in all the appeals). H. R. Gokhale, Naunit Lal and B. P. Singh, for respondent No.1 .(in all the appeals). The Judgment of the Court was delivered by Mitter, J. The central question in these appeals is, whether the civil court had jurisdiction to entertain the suits and grant the reliefs claimed. The facts are as follows: By a notification dated March 11, 1952 the Governor of Assam fixed the minimum wages which were to come into force with effect from March 30, 1952, consisting of basic wages and dearness allowance in terms of cl. (i), sub section (1) of section 4 of the , at the rates specified in the Schedule to the notification payable to the employees employed in tea plantations in the different districts of Assam. Under the notification, the rates were to be exclusive of concessions enjoyed by the workers in respect of supplies of food stuff and other essential commodities and amenities which were to continue unaffected. Further, the existing tasks and hours of work were to continue until further orders. The Schedule shows that the notification was to apply to "ordinary unskilled labour" which was again sub divided into three classes, namely, (a) adult male (16 years and above); (b) adult and female (16 years and above) and (c) working children (below 16 years and above 12 years). The rates were again to be different in the different districts of Assam which were, broadly speaking, divided into three sections. On April 16, 1952 the Government of Assam published the Minimum 'Wages Rules which fixed the number of hours in the case of an adult for a normal working day to nine hours, subject to a maximum of 48 hours in a, week, On June 2, 1953, the Deputy Commissioner of Lakhimpur served a notice on the manager of one 262 of the appellants, Borhapjan Tea estate to the effect that the minimum wages prescribed had not been paid to a number of employees in accordance with the prescribed rate. The addressee was required to pay the outstanding amount of wages with the requisite amount of delayed compensation to the employees in conformity with section 20(3) of the and report compliance on or before the 10th of June, 1953. The manager was further directed to show cause why prosecution should not be sanctioned for violation of the provision of the said Act. A list of the employees with their names was given showing 24 men labourers, 58 women labourers and one girl labourer. Similar notices were issued to the managers of the other tea estates. The managers submitted written replies to the authority denying liability for payment of the amount claimed in the notice. By order dated June 2, 1954 the above mentioned authority directed the different tea estates to pay the difference between the full minimum wages and the amounts actually paid to the labourers. It does not appear that the authority concerned held any inquiry or received any evidence beyond meeting the managers of the four tea estates at the premises of the Doom Dooma Club where the Government Labour Officer was also present. He however recorded an order dated June 2, 1954 to the effect that the contention of the managements of the tea estates that the Lettera Challans who by reason of their old age, infirmity and physical defects etc. were incapable of performing a full normal working day 's work could not be accepted. According to the order, "the point for decision was, whether a Lettera Challan worker was entitled to the same rate of wages as ordinary labour working full normal working days". From the order, it appears that the authority concerned knew of the employment of this kind of sub normal workers by various tea estates but he held that, in the absence of an order for exemption by the Government in terms of section 26 of the , he had to guide himself by the notification mentioned. He held further that under the Act and the Rules, Lettera Challan labour, in spite of the amount of work (time or task rate) performed by them was to be treated as ordinary labour entitled to wages for a full normal day. He therefore directed that the tea estates should pay the difference between the full minimum wages and the amount actually paid, together with compensation which he fixed at three times the amount payable to each worker. The tea estates filed four separate suits for a declaration that the orders of the Deputy Commissioner, Lakhimpur dated June 2, 1954 were illegal and void and without jurisdiction and a further declaration that the employees mentioned (sub normal workers) were not entitled to full minimum wages without performing a normal day 's task of without working the prescribed number of working hours. The Subordinate Judge framed a, number of issues including one regarding the maintainability of the suits, heard evidence and came to the conclusion that the decision or orders of the Deputy Com missioner were all final in terms of the and the suits were barred "under the provisions of the Act". The 263 learned Judges of the High Court of Assam, by a majority, upheld the decision of the Subordinate Judge. The evidence of the managers of the tea estates was to the effect that in each tea garden there was a number of workers described as Lettera Challans who were unwilling to perform the normal tasks which were available to them as normal labourers, that they worked for only half the day and were unwilling to work for the full day as other labourers. In order to determine whether a suit challenging the decision of the authority under the Act is maintainable or not, it is necessary to take a, note of the object of the Act and its provisions in general. The Act was clearly aimed at providing for fixing minimum rates of wages in certain employments which were defined as scheduled employments. An 'employee ' meant any person who was employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages had been fixed. section 3 empowered the appropriate government to fix the minimum rates Of Wages payable to, employees employed in an employment specified in Part I or Part II of the Schedule and in an employment added to either Part by notification under section 27. Under sub section (2) of section 3 Government might fix a minimum rate of wages for time work, a minimum rate of wages for piece work, a minimum rate of remuneration in the case of employees employed on piece work for the, purpose of securing to such employees a minimum rate of wages on a time work basis, and a minimum rate (whether a time rate or a piece rate) to apply in substitution for the minimum rate which would otherwise be applicable in respect of overtime work done by employees. The section also empowered the Government to fix different minimum rates in respect of different scheduled employments as also different classes of work in the same scheduled employment for adults, adolescents, children and apprentices as also for different localities. Under section 4 the minimum rate of wages fixed might consist of basic rate of wages and a special allowance at a rate to be adjusted or a basic rate of wages with or without the cost of living allowance. S.12 made it obligatory on the employer to pay to every employee engaged in a scheduled employment Wages at a rate not less than the minimum rate of wages fixed by the notification. Under s.13 it was open to the appropriate government to fix the number of hours of work which were to constitute a normal working day in regard to any scheduled employment. section 15 provided as follows: "If an employee whose minimum rate of wages has been fixed under this Act by the day works on any day on which he was employed for a period less than the requisite number of hours constituting a normal working day, he shall, save as otherwise hereinafter provided, be entitled to receive wages in respect of work done by him on 264 that day as if he had worked for a full normal working day: Provided, however, that he shall not be entitled to receive wages for a full normal working day (i) in any case where his failure to work is caused by his unwillingness to work and not by the omission of the employer to provide him with work, and (ii) in such other cases and circumstances as may be prescribed. " section 20 with the marginal note "claims" is divided into seven subsections. Sub section (1) empowers the appropriate government to appoint a person of the qualifications mentioned to be the authority to hear and decide all claims arising out of payment of less than the minimum rates of wages. Sub section (2) provides for the application to the said authority for a direction under sub section (3) in all cases where an employee has any claim of the nature referred to in sub section Such application may be made inter alia by the employee himself or any legal practitioner or any official of a registered trade union. Sub section (3) runs as follows: "When any application under sub section (2) is entertained, the Authority shall hear the applicant and the employer, or give them an opportunity of being heard, and after such further inquiry if any, as it may consider necessary, may, without prejudice to any other penalty to which the employer may be liable under this Act, direct (i) in the case of a claim arising out of payment of less than the minimum rates of wages, the payment to the employee of the amount by which the minimum wages payable to him exceed the amount actually paid, together with the amount of such compensation as the Authority may think fit, not exceeding ten times the amount of such excess , (ii) in any other case, the payment of the amount due to the employee, together with the payment of such compensation as the Authority may think fit, not exceeding ten rupees, and the Authority may direct payment of such compensation in cases where the excess or the amount due is paid by the employer to the employee before the disposal of the application. " Sub section (4) empowers the authority to levy a penalty not exceeding Rs. 50/ if he is satisfied that the application was either malicious or vexatious. Sub section (5) prescribes for the manner of recovery of the amount directed to be paid under the section. Under sub section (6) "every direction of the Authority under this section shall be final". 265 Sub section (7) clothes every Authority appointed under sub section (1) with the powers of a civil court under the Code of Civil Procedure for the purpose of taking evidence and of enforcing the attendance of witnesses and compelling the production of documents etc. section 24 contains an express provision for the bar of suits of certain kinds. It reads: "No Court shall entertain any suit for the recovery of wages in so far as the sum so claimed (a) forms the subject of an application under section 20 which has been presented by or on behalf of the plaintiff,or (b) has formed the subject of a direction under that section in favour of the plaintiff, or (c) has been adjudged in any proceeding under that section not to be due to the plaintiff, or (d) could have been recovered by an application under that section". Under section 25 any contract or agreement by which an employee relinquishes or reduces his right to a minimum rate of wages etc, is to be null and void. Sub section (1) of section 26 empowers the appropriate government, subject to such conditions as it may think fit to impose, to direct that the provisions of the Act shall not apply in relation to the wages payable to disabled employees. Our task is to ascertain whether the above provisions of the Act impose a bar on the institution of suits of the nature described in this case either expressly or impliedly. The question of maintainability of civil suits to challenge actions purported to have been taken under certain special statutes has engaged the attention of this Court in a number of cases in recent years as also of the Judicial Committee of the Privy Council before the establishment of this Court. Under section 9 of the Code of Civil Procedure "the courts have jurisdiction to try all suits. of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred". In Secretary of State vs Mask & Co.(1) the question was, whether the order of the Collector of Customs on an appeal under section 188 of the Sea Customs Act from a decision or an order passed by an officer of Customs as to rate of duty leviable under a tariff excluded the jurisdiction of the civil court to entertain a challenge on the merits of the decision of the Officer of Customs. It was pointed out that the determination of the question depended on the terms of the particular statute under construction and decisions on other statutory provisions were not of material assistance except in so far as general principles of construction were laid down. The Board relied upon the exposition of law by Willes, J. in Wolverhampton New Waterworks Co. vs Hawkesford(2) that "where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it" (1) 67 I.A. 222, 237. (2) ; 266 the party must adopt the form of remedy given by the statute. section 188 of the Sea Customs Act was one of a number of sections contained in Chapter XVII of the Act headed "Procedure relating to offences, appeals etc." and included sections 169 to 193. section 182 provided for liability to confiscation or increased rates of duty in certain cases. section 188 laid down that any person deeming him self aggrieved by any decision or order passed by an officer of Customs under the Act may, within three months from the date of such decision or order, appeal therefrom to the Chief Customs Authority, or, in such cases as the Local Government directs to any officer of Customs not inferior in rank to a Customs Collector and empowered in that behalf by name or in virtue of his office by the Local Government. Such officer or authority may thereupon make such further enquiry and pass such order as he thinks fit, confirming, altering or annulling the decision or order appealed against and every order passed in appeal under this section was to be, subject to the power of revision conferred by section 191, final. According to the Judicial Committee sections 188 and 191 contain ed a precise and self contained code of appeal in regard to obligations which were created by the statute itself, and it enabled the appeal to be carried to the supreme head of the executive government. The Board observed: "It is difficult to conceive what further challenge of the order was intended to be excluded other than a challenge in the civil courts." The well known dictum of this judgment to be found at p. 236 is that the exclusion of the jurisdiction of the civil courts is not to be readily inferred, but such exclusion must either be explicitly expressed or clearly implied and even if jurisdiction was excluded the civil courts would still have jurisdiction to examine into cases where the provisions of the Act had not been complied with, or the statutory tribunal had not acted in conformity with the fundamental principles of judicial procedure. In Pyx Granite Co. Ltd. vs Ministry of Housing and Local Government(1) Viscount Simonds observed: "It is a principle not by any means to be whittled down that the subject 's recourse to Her Majesty 's courts for the determination of his rights is not to be excluded except by clear words." In Raleigh Investment Co. Ltd. vs Governor General in Coun cil(2) where the plaintiff appellant had filed a suit claiming a declaration that certain provisions of the Indian Income tax Act purporting to authorise the assessment and charging to tax of a non resident in respect of dividends declared or paid outside British India, but not brought into British India, were ultra vires the legislative powers of the Federal Legislature and for repayment (1) , 286. (2) 74 I.A. 50, 62. 267 of the sums mentioned, the Judicial Committee observed, while dismissing the appeal, that "In construing the sections it is pertinent, in their Lordship 's opinion, to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the courts the question whether a particular provision of the Income tax bearing on the assessment made is or is not ultra vires. The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to inquire into the same subject matter." The Judicial Committee examined the different provisions of the Indian Income tax Act in some detail including section 67 of the Act and came to the conclusion that as the machinery provided by the Act could be effectively adopted by the assessee complaining of ultra vires assessment "jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. " It must be noted at once that the above extreme proposition of law has not found favour here. This Court was not prepared to accept the dictum in the judgment to the effect that even the constitutional validity of the taxing provision would have to be challenged by adopting the procedure prescribed by the Income tax Act see Firm and Illuri Subbayya Chetty & Sons vs The State of Andhra Pradesh(1). In this case, the Court had to examine whether section 18 A of the Madras General Sales Tax Act, 1939 excluded the jurisdiction of civil courts to set aside or modify any assessment made under the Act. section 18 A there provided that no suit or other proceeding shall, except as expressly provided in this Act, be instituted in any court to set aside or modify any assessment made under this Act. It was common ground that there was no express provision made in that Act under which the suit could be said to have been filed. It was there emphasised that: ". . . while providing for a bar to suits in ordinary civil courts in respect of matters covered by section 18 A, the legislature has taken the precaution of safeguarding the citizens ' rights by providing for adequate alternative remedies. Section 11 of the Act provides for appeals to such authority as may be prescribed; section 12 confers revisional jurisdiction on the authorities specified by it, section 12 A allows an appeal to the appellate Tribunal; section 12 B provides for a revision by the High Court under the cases specified in it; section 12 C provides for an appeal to the High Court; and section 12 D lays down that petitions, applications and appeals to High Court should be heard by a Bench of not less than two Judges. It could thus be seen that any dealer who (1) ; , 760. 268 is aggrieved by an order of assessment passed ' in respect of his transactions, can avail himself of the remedies provided in that behalf by these sections of the Act. It is in the light of these elaborate alternative remedies provided by the Act that the scope and effect of section 18 A must be judged. " In Kala Bhandar vs Municipal Committee(1) a suit for refund of excess tax purported to be recovered under the Central Provinces and Berar Municipalities Act (2 of 1922) this Court examined the principles laid down in the above cases and said: "Further, one of the corollaries flowing from the principle that the Constitution is the fundamental law of the land is that the normal remedy of a suit will be available for obtaining redress against the violation of a constitutional provision. The court must, therefore, lean in favour of construing a law in such a way as not to take away this right and render illusory the protection afforded by the Constitution. " The Court found that there was no machinery provided by the Act for obtaining a refund of tax assessed and recovered in excess of the constitutional limit and that the machinery actually provided by the Act was not adequate for enabling an assessee to challenge effectively the constitutionality or legality of assessment or levy of a tax by a municipality or to recover from it what was realised under an invalid law. In Kamala Mills Ltd. vs State of Bombay(2) this Court had to examine the question whether a suit filed by the Mills challenging assessments made under the Bombay Sales Tax Act, 1946 was barred under the provisions of section 20. The said section read as follows: "Save as is provided in section 23, no assessment made and no order passed under this Act or the rules made thereunder by the Commissioner or any person appointed under section 3 to assist him shall be called into question in any civil court, and save as is provided in sections 21 and 22, no appeal or application for revision shall lie against any such assessment or order. " After examining the various sections of the Act including section 5 the charging section, section 10 imposing an obligation on dealers to make returns, section 11 dealing with the assessment to tax and the procedure to be followed in respect thereof, section 11 A dealing with turnover which had escaped assessment and the right to prefer an appeal and a revision under sections 21 and 22 of the Act, the Court said: "It would thus be seen that the appropriate authorities have been given power in express terms to examine the (1) ; (2) ; , 75. 269 returns submitted by the dealers and to deal with. the question as to whether the transactions entered into by the dealers are liable to be assessed under the relevant provisions of the Act or not. In our opinion, it is plain that the very object of constituting appropriate authorities under the Act is to create a hierarchy of special tribunals to deal with the problem of levying assessment of sales tax as contemplated by the Act. If we examine the relevant provisions which conferred jurisdiction on the appropriate authorities to levy assessment on the dealers in respect of transactions to which the charging section applies, it is impossible to escape the conclusion that all questions pertaining to the liability of the dealers to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct; whether or not transactions which are not mentioned in the return, but about which the appropriate authority has knowledge, fall within the mischief of the charging section; what is the true and real extent of the transactions which are assessable; all these and priate authorities themselves. . The whole activity of assessment beginning with the filing of the return and ending with an order of assessment, falls within the jurisdiction of the appropriate authority and no part of it can be said to continue a collateral activity not specifically:and expressly included in the jurisdiction of the appropriate authority as such. " it was in the light of these provisions of the Act that section 20 had to be examined and this Court held that "the words used were so wide that even erroneous orders of assessment made would be entitled to claim its protection against the institution of a civil suit" see [1966] 1 S.C.R. at page 78. To quote the words of the judgment itself : "In every case, the question about the exclusion of the jurisdiction of civil courts either expressly or by necessary implication must be considered in the light of the words used in the statutory provision on which the plea is rested, the scheme of the relevant provisions, their object and their purpose. " The Court further said: "Whenever it is urged before a civil court that its jurisdiction is excluded either expressly or by necessary implication to entertain claims of a civil nature, the court naturally feels inclined to consider whether the remedy afforded by an alternative provision prescribed by a special 270 statute is sufficient or adequate. In cases where the exclusion of the civil courts ' jurisdiction is expressly provided for, the consideration as to the scheme of the statute in question and the adequacy or sufficiency of the remedies provided for by it may be relevant but cannot be decisive. But where exclusion is pleaded as a matter of necessary implication, such considerations would be very important, and in conceivable circumstances, might even become decisive. If it appears that a statute creates a special right or a liability and provides for the determination of the right and liability to be dealt with by tribunals specially constituted in that behalf, and it further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, it becomes pertinent to enquire whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. The relevance of this enquiry was accepted by the Privy Council in dealing with section 67 of the Income Tax Act in Raleigh Investment Co. 's case(1) and that is the test which is usually, applied by all civil courts. " We may also note the case of K. section Venkataraman & Co. vs State of Madras(2) where the above authorities were again examined at some length. Here too the main question was, whether the suit was not maintainable under section 18 A of the Madras General Sales Tax Act, 1939. It was held by a majority of this Court that the validity of an order by an authority acting under the provision of a statute which was ultra vires would be open to challenge in a civil court. Referring to the case of Firm Radha Kishan (Deceased) represented by Hari Kishan vs Administrator, Municipal Com mittee, Ludhiana(3) it was said that: " a suit in a civil court will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by necessary implication made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions. " There can be no question in this case that the minimum Wages Act cuts across the contract between the employer and the employee and wherever applicable the employer is obliged to pay the minimum wages or take the consequences of failure to pay it. Any employee who feels himself aggrieved by the refusal of the employer to pay the minimum wages fixed under the Act has the right to make a complaint either by himself or through the prescribed agents to the Authority mentioned in the Act. Under sub section (3) of section 20, the Authority has to hear the applicant and the employer or give them an opportunity of being heard and could ,straightaway give a direction as regards the alleged non payment (1) I.A. 50. (2) ; (3) ; 271 of the minimum rates of wages and such compensation as he thinks fit not exceeding ten times the amount of the excess of the minimum wages over that which was paid. It is true that the sub section provides for a further inquiry but such inquiry is to be at the discretion of the authority. The nature and scope of the inquiry would depend on the exact controversy raised in the case. If it be of a trivial nature, the tribunal can probably deal with it in a summary manner, but where it is alleged that the notification under the Act is not applicable to a. certain class of workers it is the duty of the authority to give a proper hearing to the parties allowing them to tender such evidence as they think proper before making an order which may have far reaching consequences. The authority in this case instead of recording any evidence and properly hearing the matter, disposed of it in a perfunctory manner which could hardly be called a hearing. As a matter of fact, the only inquiry which took place in this case was a, very informal one in the premises of the Doom Dooma club for the space of half an hour or so when the Authority had a talk with the managers of the tea estates. There is no provision for appeal or revision against the direction of the Authority although he may levy a penalty to the extent of ten times the amount by which the minimum wages overtop the payment actually made. Whatever he says is the final word on the subject. All this can but lead to the conclusion that section 20 was not aimed at putting a, seal on the adjudication, if any, under it. It was to be of a nature which suited the discretion of the officer concerned although he was given the powers of a civil court in certain respects. In such a situation, it is impossible to hold that the legislature meant to exclude the jurisdiction of civil courts to go into the question of non payment of minimum wages claimed as final. In our opinion, sub section (6) of section 20 merely shows that the discretion of the Authority could not be questioned under any provision of the Act. It does not exclude the jurisdiction of the civil court when the challenge is as to the applicability of the Act to a certain class of workers. It is pertinent to note that section 24 of the Act creates an express bar in respect of a particular kind of suits, namely, suits for recovery of wages in certain eventualities. The obvious intention was that a poor employee was not to be driven to fit a suit for the payment of the deficit of his wages but that he could avail himself of the machinery provided by the Act to get quick relief. It does not in terms bar the employer from instituting a suit when his claim is that he has been called upon to pay wages and compensation to persons who are not governed by the notification under the . On an analysis of the provisions of the Act, we find (1) suits of the nature to be found in this case are not expressly barred by the Act; (2) there is no provision for appeal or revision from the direction of the authority given under section 20(3) of the Act; and (3) the authority acting under section 20(3) might levy a penalty which might be as high as ten times the alleged deficit of payment which 272 again is not subject to any further scrutiny by any higher authority. In view of our findings as above, as also the fact that the authority in this case disregarded the provision as to hearing and inquiry contained in the Act for all practical purposes, we hold that the civil court had jurisdiction to entertain the suits. The question next arises as to whether the plaintiff 's made out any case for relief. In our view, the plaintiffs were clearly entitled to relief. The notification dated March 11, 1952 was clearly applicable only to "ordinary unskilled labour". The word 'ordinary ' has in our opinion, some significance. It means "usual, not exceptional". In other words, ordinary unskilled labour must mean unskilled labour prepared to work and working in the ordinary way. If under r. 24 of the rules framed under this Act the period of work is fixed at nine hours a day, a labourer who cannot work for more than half of it, does not fall within the category of ordinary unskilled labour. A lettera challan cannot work due to his incapacity, old, age, infirmity, etc. According to ' the evidence of the 'managers of the tea gardens, they were unwilling to work for more than half the day because of their physical condition. It was due to their want of physical strength to work for nine hours a day and not the inability or unwillingness of the employer to find employment for them for a full day. Take for instance the 'facts in Pabbojan Company 's case. According to the evidence of its manager, the labour force in the estate consisted of 1650 labourers while the number of sub normal workers was 83 before March 30, 1952. It cannot be suggested that if the tea garden could provide work for 1567 labourers working nine hours a day, it could not do so for an additional number of 83 persons. As the manager said, these persons were unwilling to perform the normal tasks which were available to them as normal labourers. The manager also said that lettera challans (sub normal workers) always go off at 11 or 12 midday. Take again the evidence of Bairagi, a worker of the Rupai Tea Estate. He said that some years before he was examined in court, he used to work as a carpenter. As a result of a fall from a house, he had pain on his chest and approached the doctor and requested him to enter his name as lettera challan. He frankly admitted that he got into lettera challan because he could not complete the full task. The evidence of the managers and of this the only witness on this point on behalf of labour establishes beyond doubt that lettera challan could not work a full day and as such they were not ordinary unskilled labour. As such their case would be covered by the proviso to section 15 and they would not be entitled to receive wages for a full normal working day, because of their unwillingness to work. It does not matter whether some of the lettera challans could also be said to be disabled employees who would come within the purview of section 26(1) of the Act. From the evidence of the managers, it is clear that the system of lettera challans had been in force for very many years. The record does not show nor are we in a position to guess why an exception was not made in their case in the notification. But 273 even in the absence of any mention of lettera challans in the notification, sub normal workers who are unwilling to work for more than half a day are not entitled to receive what ordinary unskilled labourers working nine hours a day get. The object of the Act is to ensure some sort of industrial peace and harmony by providing that labour cannot be exploited and must at least be provided with wages which are fixed at certain minimum rates. It would go against such a principle if the courts were to uphold that persons who cannot work for more than half a day should receive what others working a full day get. However, that is a matter which the appropriate government may consider. We therefore hold that the orders of the defendant No. 1 dated June 2, 1954 were not binding on the plaintiffs appellants. We declare that the subnormal workers of the tea estates (commonly known as Lettera challans) were not entitled to full minimum wages without performance of a normal day 's task or without working the prescribed number of hours. We also direct a perpetual injunction to issue against the defendant No. 1 restraining him from enforcing the orders dated June 2, 1954. The appeals are therefore allowed ' and the decrees passed by the Subordinate Judge and the High Court of Assam are set aside. There will be no order as to costs. Y.P. Appeals allowed.

By a notification under the minimum wages were fixed for 'ordinary unskilled labour ' in certain Tea Plantations in Assam. The respondent Deputy Commissioner issued notices to the appellants that a number of employees were not paid in accordance with the prescribed rate, and required them to pay the outstanding wages with requisite amount of delayed compensation to the employees in conformity with section 20(3) of the Act. The appellants denied the liability stating that these employees were Lettera Challan workers who were incapable of performing a full normal working day 's work, so they were 'not ordinary unskilled labour '. The authority did not hold any enquiry or receive any evidence beyond meeting the managers of the appellants where the Government, Labour Officer was present and it held that in the absence of an order of exemption under section 26, Lettera Challan Labour (in spite of the amount of work performed) was to be treated as ordinary labour. The appellants filed civil suits which the Subordinate Judge dismissed holding that under the the orders of the Authority. were final and suits were barred. The High Court upheld the decision of the Subordinate Judge. Held: The appeals must be allowed Determination of the question whether the jurisdiction of civil courts is excluded or not depends on the terms of the particular statute under construction. Exclusion of jurisdiction is not to be readily inferred but such exclusion must either be explicitly expressed or clearly implied. On an analysis of the provisions of the Act under consideration, it is clear that although the Act provides that it is the duty of the authority to give proper hearing to the parties . allowing them to tender such evidence as they think proper before making an order which may have far reaching consequences and which is final under section 20(6) of the Act, the Act is not a complete Code, as there no provision for appeal or revision from the direction of the, authority under section 20(3); nor is any further scrutiny provided by any higher authority against the imposition of penalty,. The Act in terms does not bar the employer from instituting a suit when his claim is that he has been called upon to pay wages and compensation to persons who are not governed by the notification under the Act. In such circumstances it is impossible to hold that the legislature meant to exclude the jurisdiction of civil court. [265B; 266E F; 271E; 271H 272H] Secretary of State vs Mask & Co. 67 I.A. 222 Wolverhampton New Water Works Co. vs Hawkesford, ; , Pyx Granite Co. Ltd. vs Ministry of Housing and Local Government , Raleigh Investment Co. Ltd. vs Governor General in Council, 74 I.A, 50, Firm and Illuri Subbayya Chetty & Sons vs The State of Andhra Pradesh ; , Kala Bhandar vs Municipal 260 261 Committee; , , Kamala Mills Ltd. vs State of Bombay, ; , K. section Venkataraman & Co. vs State of Madras; , and Firm Radha Kishan (deceased) represented by Hari Kishan vs Administrator, Municipal Committee, Ludhiana, ; , referred to. "Lettera Challan" workers do not fall within the expression "Ordinary unskilled workers" which means such unskilled workers as work for the prescribed period of a full day. On the evidence adduced it is clear that the "lettera challan" labour only works for half the day and is unwilling to work for the prescribed period of full day. Such a case is covered by the proviso to section 15 and such labour is not entitled to wages for a full normal working day. [272F G]

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Appeal No. 1028 of 1967. Appeal by special leave from the judgment and order dated May 24, 1967 of the Assam and Nagaland High Court in Civil Rule No. 425 of 1966. Sarjoo Prasad, Barthakur and R. Gopalakrishnan, for the appellant. Brief facts necessary for present purposes are these. It appears that the appellant was expelled from the Medical College, Gauhati on October 26, 1966. It is said that the appellant tendered unqualified apology on October 27, 1966 and attended, classes up to the end of October 1966. The Principal, however, does not seem to have accepted the apology and when the appellant went on, November 2, 1966, to deposit the fee for the examination which was to be held from November 4, 1966, he was told that as he had been expelled and as the order of expulsion stood no examination fee would be accepted from him It was thereafter that the 815 appellant filed the writ petition on November 3, 1966, out of which the present appeal has arisen. It may be mentioned that the High Court was in vacation from September 17, 1966 to November 19, 1966. Mr. Justice section K. Dutta was nominated as the Vacation Judge for the vacation and certain dates were fixed on which he was to sit and hear urgent civil and criminal appliciations. One of these dates was October 31, 1966 and another was November 10, 1966. It was also stated in the order that if there was any matter which was extremely urgent it would be heard on any other day by appointment through the Registrar. It appears that Mr. Justice Dutta was also working as a Commission of Enquiry during that time. For that purpose he had to go out of Gauhati, which is the seat of the High Court. It seems that Mr. Justice Dutta went Away to Sibsagar after the vacation sitting on October 31, 1966. Therefore on November 2, 1966 he was not available at Gauhati, even though he was the Vacation Judge and even though the order relating to vacation sittings said, that if any matter was extremely urgent it could be heard on any other day by appointment through the Registrar. As the examination was to be held from November 4, 1966, the filing of the writ petition against the order of expulsion was undoubtedly a very urgent matter, if any order was to be obtained before November 4, 1966. What the appellant is said to have done was this. He gave notice to the Gov ernment Advocate on November 2, 1966 at Gauhati as required by the Rules and thereafter went to Sibsagar where Mr. Justice Dutta was holding the Commission of Enquiry and pre sented the writ petition there. This petition was entertained by Mr. Justice Dutta and be passed interim orders thereon. A copy of the interim order was prepared at Sibsagar and given to the appellant to be taken to Gauhati where it was to be sealed. The appellant took the order to Gauhati and after getting it sealed served it on the university. He was thereupon allowed to sit at the examination subject to the result of the writ petition. It also appears that thereafter the papers relating to the writ petition were sent to Gauhati and the High Court had occasion to deal with the writ petition and passed miscellaneous orders thereon at Gauhati after the vacation was over. Eventually, the writ petition came up for hearing in May 1967. A preliminary objection was raised to the maintainability of the petition on behalf of the respondent. It was urged that as Mr. Justice, Dutta was holding a Commission of Enquiry he could not act as a Judge of the High Court. It was also urged in the alternative that even if he had the jurisdiction to. act as a Judge of the High Court, he could not exercise that jurisdiction while at Sibsagar for the seat of the High Court was at Gauhati. 816 The petition. was heard by a Bench consisting of the learned Chief Justice and Mr. Justice Goswami. The learned Chief Justice seems to have held that Mr. Justice Dutta while performing the duties of a Commission of Enquiry could not also perform the duties of a Judge of the High Court. He further held that in any case as the seat of the High, Court, was at Gauhati, Mr. Justice Dutta could not pass any order as a Judge of the High Court at Sibsagar, which, was not the seat of the High Court. Finally, the learned Chief Justice made certain remarks as to the "unholy haste and hurry exhibited in dealing with this matter by Dutta J." at Sibsagar and set aside the order of stay granted by Dutta J. on November 3, 1966 and also set aside the order issuing rule nisi, and dismissed the petition. Goswami J. did not fully agree with the learned Chief Justice, though, he agreed with the order setting aside 'the stay granted ' by Dutta J. and also agreed with. the order dismissing the writ petition. He observed that "I shall content ' myself in assuming that Dutta J. had no anxiety other than what prompted him to do in the interest of what his Lordship thought to be justice". when he passed the order in. question on November 3, 1966. But he was of the view. that a Judge of the High Court could not hold a sitting anywhere in Assam except at the seat of the High Court, namely, Gauhati, and therefore the order passed on November 3, 1966 by Dutta J. was without jurisdiction. The present appeal has been brought before us by special leave and it is urged on behalf of the appellant that it was not correct to hold that Dutta J. could not act as a Judge of the High Court while he was working as a; Commission of Enquiry and further that Dutta J. had no jurisdiction while at Sibsagar to entertain the petition and to pass the stay order. We shall deal with the two contentions in that order. We are of opinion that the learned Chief Justice was not right when he held that Dutta J.; could not act as a Judge of the High Court While he was working as a Commission of Enquiry ' Learned Attorney General appearing for the State of Assam did not support that view It also appears that Goswami J. has said nothing on this aspect of the matter; presumably he did riot agree with the view of the learned Chief justice. Often times, Judges 6f High Courts are appointed under the Commission 'of Enquiry Act to head Commissions for various purposes. These Commissions are temporary affairs and many a time their sittings are not continuous. A Judge of the High Court when he is appointed to head a Commission, of this kind does not demit his office as a Judge and when the Commission is not actually sitting he is entitled to sit as a Judge of the High Court. It is only where a Judge of the High Court is appointed to another post, which is a whole time post that it may be said that on such appointment he can no longer work as a Judge of the High 817 Court for the time being, though even in such a case, when the work is over, he reverts as a Judge of the High Court without fresh appointment. Such, for example, was the case of Incometax Investigation Commission where the appointments were whole time and a, Judge. of the High Court appointed as a member of the Investigation Commission could not at the same time work as a Judge of the High Court. But Judges appointed to head Commissions under the Commission of Enquiry Act stand in a different position altogether. As we have said, these. Commissions are temporary and are not whole time posts and their sittings are not even continuous. In such a case we, are of opinion that a Judge appointed to ' head a Commission of Enquiry remains as part of the High Court and if the Commission of Enquiry is not working continuously he is entitled to sit and ,act as a Judge of the High Court in the intervals. It is not disputed that Dutta J. was heading a Commission of Enquiry of this temporary nature, and as such we are of opinion that he was entitled to sit and 'act as a Judge of the High Court when ever he had time to do so. It is remarkable that Dutta J. was appointed Vacation Judge while he was working as Commis sion of Enquiry and that appointment was in our opinion quite in order. for by heading the Commission of Enquiry, Dutta J. did not demit his office as a Judge of the High Court. We cannot therefore agree with the observation of the learned Chief Justice that Dutta J. could not have assumed to himself the ' role and duties of a Judge of the High Court exercising jurisdiction as a Bench 'of the High Court. We also disagree with the view expressed by the learned Chief Justice that it was highly objectionable on the part of Dutta J. to work as a Judge of the High Court while be was heading the Commission of Enquiry. We are of opinion that where a Judge heads temporary Commissions of Enquiry under the Commission of Enquiry Act. he remains a part of the High Court and is entitled to sit and, act as a Judge of the High Court whenever be thinks fit. The appointment of a Judge as Commission of Enquiry does not deprive him of the rights and privileges of a Judge of the High Court. Whenever he finds time to attend to his duties as a Judge of the High Court while acting as a. Commission of Enquiry, he can do so. The next question is whether Dutta J. could act as a Judge of the High Court at Sibsagar when Gauhati is the seat of the High Court under the notification issued under article 10 of. the Assam High Court Order, 1948. We do not think it necessary to decide this question in the present appeal. We shall assume that Dutta J. could not pass orders as a Judge of the High Court anywhere else except at Gauhati which is the seat of the High Court. Even assuming that, all that can be said is that the presentation of the writ petition before Dutta J. at Sibsagar was irregular. As we have said already. he was still a Judge of the High Court while holding a Commission of Enquiry at Sibsagar, 818 and if he received the petition at Sibsagar, all that can be said is that the petition was irregularly presented there when it should have been presented at Gauhati. But assuming that the presentation of the petition at Sibsagar was irregular, the fact remains that the petition was sent to Gauhati later and was dealt with there. We do not see why the petition should have been dismissed because the ' presentation was irregular. There is in out opinion no difficulty in holding that the petition was repre sented when it was sent to Gauhati and was dealt with there in the High Court. The presentation should have been taken in such circumstances to have been made at Gauhati when the petition reached Gauhati and the petition should have been dealt with as such. Of course, if the presentation of the petition at Sibsagar was irregular, the order passed by Dutta J. would also be irregular, But when the petition came to the High Court thereafter, the irregularity in presentation must be held to have been cured. It was open to the High Court to, consider whether the irregular order of stay should be regularised. Apart from that even if the irregular stay could not be regularised, there was no reason why the petition should have been dismissed merely on the ground that it was irregularly presented, when it finally did reach the High Court at Gauhati. Whatever therefore may be said a:.bout the order under appeal setting aside the irregular order of stay, we are of opinion that the High Court was not right in dismissing the petition as it did on May 24, 1967. The petition must be held to have been represented to the High Court when it reached the seat of the High Court at Gauhati and should have been dealt with as such and could not have been thrown out merely on the ground that the original presentation on November 3, 1966 was irregular. We are therefore of opinion that the order dismissing the petition must be set aside and the High, Court should now go into the question whether the petition should be admitted and whether it should be set down for hearing. Finally we consider it our duty to refer to certain observations made by the learned Chief Justice with respect to Dutte, J.is handling of the petition. In this connection reference was made by the learned Cheif Justice to a decision of this Court in Principal, Patna College V. K. section Raman(1). It is enough to say that the facts of that case are very different from the facts of the present case and the observations on which the learned Chief Justice relies do not apply to the facts of the present case. In the present case, the petition was presented during vacation when no Judge was actually sitting at Gauhati and in the circumstances the action taken by the appellant in presenting the petition at Sibsagar before Dutta J. who was the Vacation Judge and the only Judge available, after giving notice to the Government Advocate on November 2, 1966 at Gauhati, seen* to have been the only course open to him in the circumstances, for the examination (1) ; 819 was to be held from November 4, 1966 and the appellant came to know on November 2, 1966 when the examination fee was not accepted that he would not be able to sit at the examination. In the circumstances the observation of the learned Chief Justice that there was "unholy haste and hurry exhibited in dealing with this ' matter by Dutta J." is entirely uncalled for. Assuming that Dutta J. wrongly took the view that he could entertain the petition and pass the stay order at Sibsagar, he could only act in the way he did in the view that he took, and ' it cannot be said that this was a case of "unholy haste and hurry". We also cannot agree with learned Chief Justice that the notion of sending a) copy to Gauhati for getting it sealed so that it might be properly authenticated was in any way objectionable. The situation being what it was, that seems to us to be the only way open, once it is clear that Dutta J. took the view that he could entertain the petition and pass orders thereon even though that view may not be correct. Nor do we think that the learned Chief Justice was justified in observing that "the whole thing discloses an unnecessary zeal on the part of Dutta J. to assist the appellant". Once Dutta J. took the view that he had jurisdiction to entertain the petition and pass orders thereon, the order he passed and the steps he took so that the order was served before November 4, 1966 (which was the date of the examination) appear to us to be the only steps that could have been taken, and such steps cannot be said to be opposed to the great traditions that obtain in a High Court; nor can it be said that Dutta J. 's action reflected adversely on the judicial independence and aloofness of that august institution. There is no reason to hold that any unnecessary zeal was shown by Dutta J. in assisting the appellant when he passed the order which he did, once Dutta J. took the view that he had the jurisdiction to entertain the petition and pass order thereon at Sibsagar. All that happened thereafter appears to us to be quite proper and cannot in any way reflect on the conduct of Dutta J. in this case. It is a matter of regret that the learned Chief Justice thought fit to make these remarks in his judgment against a colleague and assumed without any justification or basis that his colleague had acted improperly. Such observations even about Judges of subordinate courts with the clearest evidence of impropriety are uncalled for in a judgment. When made against a colleague they are even more open to objections We are glad that Goswami J. did not associate himself with these remarks of the learned Chief Justice and, was fair when he asaumed that Dutta J. acted as he did in his anxiety to do what he thought was required in the interest of justice. We wish the learned Chief Justice had equally made the same assumption and had I not made these observations castigating Dutta J. for they appear to us to be without any basis. It is necessary to emphasis that judicial decorum has to be maintained at all times and even where criticism is justified it must be in language of utmost restraint, keeping always in view that the person making the comment is L/P(N)78CI 13 820 also fallible. Remarks such as these made by the learned Chief Justice make a sorry reading and bring the High Court over which he presides into disrepute. Even when there is justification for criticism, the language should be dignified and restrained. But in this case we do not see any justification at an for such remarks. We therefore allow the appeal and) set aside the order of the High Court dismissing the writ petition and send it back to the High Court with the direction that the High Court should reconsider whether the petition should be admitted, taking it as represented on the day it reached Gauhati, and ' if so it should be set down for hearing in due course. In the circumstances we make no order as to costs. V.P.S. Appeal allowed.

One of the Judges of the High Court of Assam was nominated to be the Vacation Judge for hearing urgent civil and criminal applications when the High Court was closed for vacation from 17th September 1966 to 19th November 1966. Certain days were fixed as the vacation court days, and if there was an extremely urgent matter the Vacation Judge could hear it on any other day by appointment. At that time, the same Judge was heading a Commission of Enquiry under the Commission of Inquiry Act, and in connection with that work, on 2nd November 1966, the Vacation Judge went from Gauhati the seat of the High Court, to Sibsagar. The appellant was a student of a college at Gauhati. He was expelled from the college on 26th October 1966. He tendered an. unconditional apology the next day and attended classes till the end of the month; but, on 2nd November, when he wanted. to pay the fee for an examination to be held on 4th November, the fee was not received as the Principal of the College had not accepted the apology. As the Vacation Judge was not available at Gauhati, the appellant went to Sibsagar and presented a writ petition to the Vacation Judge. The Judge entertained the petition and passed an interim order. A copy of the interim order was prepared at Sibsagar and given to the appellant to be taken to Gauhati where it. was sealed and served on the University. The appellant was then allowed to sit for the examination subject to the result of the writ petition. Thereafter, the papers relating to the writ petition were sent to the High Court at Gauhati and after the vacation was over, certain miscellaneous orders were passed on the writ petition. Eventually, it came up for hearing and was dismissed by a Bench consisting of the Chief Justice of the High Court and another Judge. The Chief Justice held that: (1) the Vacation Judge, while performing the duties of a Commission of Enquiry, could not also Perform the duties of a Judge of the High Court (2) a Judge of the High Court could not hold a,sitting anywhere else except at the seat of the, High Court ' and (3) the Vacation Judge exhibited 'unholy haste and hurry ' and his I action disclosed 'an unnecessary zeal ' on his part to assist the appellant. The other Judge agreed with the order of dismissal only on the. second ground. In appeal to this Court, HELD: (1) Judges of the High Court are of appointed under the Commission of inquiry act to head commission for various head purposes. These Commissions are temporary affairs and usually their 814 sittings are not continuous. A Judge of the High Court when lie is appointed to head such a Commission does not demit his office as a Judge nor does the appointment deprive him of his rights and privileges as a Judge of the High Court. Therefore, there was nothing objectionable on the part of the Vacation Judge working as a Judge of the High Court while he was heading the Commission, for, when the Commission was not actually sitting; he was entitled to sit and act as a Judge of the High Court. [817 G H; 818 C]. (2) Assuming that a Judge of the High Court could not pass orders as a Judge anywhere else except at the seat of the High Court, the effect of such an assumption in the present case is,. that the presentation of the writ petition at Sibsagar was irregular and the interim order passed thereon was also irregular. But, as the petition was sent to Gauhati later and dealt with by the High Court there, the petition must be deemed to have been represented to the High Court, and the irregularity in presentation must be held to have been cured. It was open to the High Court to consider whether the irregular interim order should be regularised or to deal with the petition on merits. But it was not open to the High Court to throw out the petition merely on the ground that the original presentation was irregular. [818 H; 819 A E]. (3) Assuming that the Vacation Judge wrongly took the view that he could entertain the petition and pass the interim order at Sibsagar, he could only act in the way he did in the view that he took, and, in the circumstances, the observations of the Chief Justice were entirely uncalled for. There was no justification at all for such justification for criticism, the language should be dignified and rejustification for criticism, the language should be dignified and restrained. [820 B D, G; 821 A]. Principal, Patna College vs K. section Raman, [1966], 1 S.C.R. 974, distinguished.

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Appeal No. 503 of 1966. Appeal by special leave from the Award dated November 10, 1964 of the Industrial Tribunal, Andhra Pradesh in Misc. Petition No. 32 of 1964 in Industrial Dispute No. 4 of 1964. R. H. Gokhale, B. K. Seshu, Parameshwara Rao, Jyotana R. Melkote and R. V. Pillai, for the appellant. M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, is directed against the award, dated November 10, 1964, of the Industrial Tribunal, Andhra Pradesh, Hyderabad, accepting a complaint, filed by the respondent, under section 33A, of the (Act XIV of 1947) (hereinafter called the Act). The respondent was, at the material time, working in the main branch of the appellant, at Belgaum. By order dated March 8, 1963, the respondent was transferred to Bhatkal branch, as a 'C ' rank Officer, to work there, as an accountant. He was also informed that he was being relieved, so as to enable him to proceed to duty, at the place of transfer, by March 18, 1963. He was allowed three days ' joining time. On March 13, 1963, the Manager of the Branch at Belgaum informed the respondent that he was relieved, with effect from that date, to join duty at the Bhatkal branch, by March 18, 1963. The respondent, by letter dated March 14, 1963, after setting out the various matters therein, applied for privilege leave, for ninety days, from March 14, 1963 to June 11, 1963, so as to enable him to improve his health and also to attend to certain domestic matters. But the Bank, the appellant herein, desired him, by their letter dated March 23, 1963, to join duty and then apply for leave, if necessary. Some further correspondence ensued, between the Bank and the respondent, the respondent again making a request for sanction of his leave and the appellant Bank insisting upon his joining duty, according to the order of transfer, and then applying for leave. But, as the respondent did not join duty at the Bhatkal branch, though he was relieved from the Belgaum office, the appellant, by their communication, dated July 23, 1963, desired the respondent to offer explanation for not obeying the order of transfer. The respondent sent a reply, on July 29, 1963, stating what, according to him, were the reasons for his not joining duty at the transferred office. The appellant Bank, not satisfied with the explanation, given by the respondent, framed two charges against him, and communicated the same, on August 7, 1963. The charges were to the effect that (a) the respondent, by wilfully disobeying the lawful and reasonable transfer order of 329 the management, has committed gross misconduct, for which the punishment is dismissal from service; and (b) the respondent had absented himself from duty from March .14, 1963, without leave, which again, is a minor misconduct for which also punishment can be imposed. The respondent was also directed to submit his explanation, if any, to the charges, on or before August 25, 1963. The respondent offered his explanation to the charges, by his letter, dated August 21, 1963. The appellant informed the respondent, on October 1, 1963, that an enquiry would be conducted against him, in respect of the charges, on October 5, 1963 and desired him to be present at the enquiry, with the necessary evidence, in support of his defence. The inquiry was conducted by the Enquiry Officer, in which the respondent participated. The Enquiry Officer sent a report to the Managing Director of the Bank, dated October 28, 1963, substantially finding the respondent guilty of both the charges. In respect of the first charge of gross misconduct, for wilfully disobeying the order of transfer, the Enquiry Officer had proposed that the respondent should be dismissed and, in respect of the second charge, of absenting without leave, it was proposed in the report that the increment be stopped, for a period of six months, with effect from April 25, 1963. Certain consequential proposals were also made, as to how exactly the respondent 's absence, was to be dealt with. The Managing Director of the Bank, after considering the re port submitted by the Enquiry Officer, as well as the further explanation, offered by the respondent, in respect of the findings recorded in the said report, by his order dated November 12, 1963, agreed with the recommendation of the Enquiry Officer, dismissed the respondent from the service of the Bank with immediate, effect, for the offence of wilful disobedience of the order of transfer. The respondent was also informed that he might appeal, against the order of dismissal, to the working committee of the Directors of the Bank, within forty five days of receipt of the order. The respondent filed an appeal, ,on December 17, 1963, be fore the working committee of the Directors, wherein he attacked the various proceedings, culminating in the order of dismissal, passed against him. Intimation of the hearing of the appeal was given to the respondent. But, it is seen that on the date when the appeal was taken up for hearing, viz., March 20, 1964, the respondent was not present either in person or through authorised representative of his. In consequence, the working committee of the Directors dismissed the appeal on March 20, 1964. In the appellate order, the working committee has elaborately considered the various circumstances necessitating the conduct of the en quiry, the enquiry proceedings and the answers given by the respondent; and it has, ultimately, agreed with the findings recorded 330 in the enquiry proceedings that the respondent had wilfully disobeyed the lawful orders of the management transferring him. The result was that the order of dismissal, passed by the Managing Director on November 12, 1963, was confirmed. At this stage it may be mentioned that the Central Govern ment had referred, on January 8, 1964, for adjudication, to the Industrial Tribunal, of which Dr. Mir Siadat Ali Khan was appointed as the presiding officer, with headquarters at Hyderabad, the question as to whether action, by the appellant Bank, in discontinuing pigmy collection and payment thereof to the workmen, was justified. This was numbered as I. D. No. 4 of 1964, and the award, in this dispute, was given on August 26, 1964, and the Central Government published the same, in the Gazette of India, on September 7, 1964. The respondent filed a complaint, under section 33A of the Act, on June 4, 1964, before the Central Government Industrial Tribunal, at Hyderabad, attacking the enquiry proceedings, conducted against him, and the order of dismissal, passed by the appellant. Apart from attacking the inquiry proceedings, on merits, as mala fide, the respondent contended that the order of dismissal had been passed against him, without the appellant Bank complying with the provisions of the proviso to section 33(2)(b), of the Act. According to him, inasmuch as the order of dismissal had been passed, during the pendency of 1. D. No. 4 of 1964, the management should have asked the Industrial Tribunal for approval of their action, and they should have paid him one month 's wages. Therefore, inasmuch as these things were not done, the appellants have contravened the provisions of section 33 of the. The appellant Bank, in their counter statement, pleaded that the domestic enquiry, conducted by the management, was very fair and that the action of the management, in dismissing the respondent, was perfectly justified. In this connection, the appellant raised the contention that the respondent was not a 'workman ', and that, in any event, he was not a workman concerned with the dispute covered by I.D. No. 4 of 1964, and therefore he was not entitled to file an application, under section 33A. They further contended that there was no contravention 'of section 33 of the Act, because, at the time when the order dismissing the respondent was passed, on November 12, 1963, there was no industrial dispute pending, so as to make it obligatory on the part of the appellant, to take action, in accordance with the proviso to section 33(2)(b), of the Act. The Industrial Tribunal, by its order, under attack, has overruled all the objections, raised by the management. The Tribunal has held that the respondent was a 'workman ' and that he was also a workman concerned in 1. D. No. 4 of 1964, and therefore 331 he was competent to file an application, under section 33A. The Tribunal has also held that the dismissal of the respondent became effective only on March 20, 1964, when the working committee of the Directors of the appellant Bank disposed of the appeal, filed by the respondent. As this date fell within the period, between January 8, 1964 and October 8, 1964, (during which 1. D. No. 4 of 1964 was pending) the management was bound to comply with the proviso to section 33(2)(b) of the Act. As this proviso had not been complied with, the Tribunal held that there was a contravention of the provisions of section 33 of the Act, which gives a right to the respondent to invoke the jurisdiction of the Tribunal, under section 33A of the Act. After having held that there is a contravention, of section 33 of the Act, the Tribunal then considered the attack levelled, as against the domestic enquiry proceedings, by the respondent, and recorded a finding to the effect that it was not fair to consider that the, respondent had wilfully disobeyed the order of transfer, passed by the management. The tribunal, therefore held, on both the findings, that the respondent should be reinstated, with continuity of service and back wages. The same contentions, that were raised before the Industrial Tribunal, on behalf of the management, have been urged before us, by the appellants ' learned counsel, Mr. Gokhale. Counsel urged that the respondent is not a 'workman ' and, in any event, he is not a workman concerned with the dispute in I.D. No. 4 of 1964. Counsel further pointed out that even assuming that the findings of the Tribunal, recorded against the appellant, were correct, the application, under section 33A, was not maintainable, inasmuch as there was no contravention, by the management, of any of the provisions of s, 33, 'of the Act. In this connection, counsel pointed out, that the order of dismissal, having been passed by the Managing Director, on November 12, 1963, long before January 8, 1964, the date when I.D. No. 4 of 1964, was referred, there was no obligation, on the part of the management, to ask for approval of the Tribunal, in respect of their action, or of paying one month 's wages to the respondent. Counsel also urged that even if these questions were answered against the appellant, the award would have to be set aside, because the Industrial Tribunal had really constituted itself as a Court of appeal, when it set aside the order of dismissal, passed by the management, which was based on the findings recorded in a proper domestic enquiry. Mr. M. K. Ramamurthy, learned counsel, appearing for the respondent, has supported the views, expressed by the Tribunal, on all aspects. If the contention of the appellant, that there was no Indus trial dispute, pending at the time, when the order of dismissal was passed, is accepted, then, quite naturally, it follows that no question of contravention of section 33, of the Act, arises, in which 332 case, the complaint, under section 33A, is not maintainable, in law. In an enquiry, under section 33A, the first question that the Tribunal will have to consider, is regarding the contravention, by the employer, of the provisions of section 33 of the Act. If this issue is answered against the employee, nothing further can be done, under section 33A, of the Act. This position has been settled, by the decisions of this Court, in Equitable Coal, Ltd. vs Algu Singh (1) and The Punjab National Bank Ltd. vs Its Workmen (2). After hearing arguments, on this aspect, we are inclined, in the instant case, to accept the contention of the appellant, in this regard, and hence, no other questions arise, in the application filed, by the respondent under s.33A of the Act. There is no controversy, in this case, that the appellant did not seek the approval of the Industrial Tribunal concerned, nor did they offer or pay one month 's wages to the respondent. There is also no controversy that I.D. No. 4 of 1964, can in law be considered to be pending only from January 8, 1964, to October 8, 1964. The order of the Managing Director, dismissing the respondent from service, was made on November 12, 1963, which date, admittedly, falls outside the duration of the pendency of I.D. No. 4 of 1964. The order of the working committee of Directors, rejecting the respondent 's appeal, which was passed on March 20, 1964, certainly falls within the period when I.D. No. 4 of 1964 was pending. Therefore, the question that arises for con sideration, in this case, is as to when, it can be stated, that the respondent was dismissed, i.e., by the order of November 12, 1963, of the Managing Director, or by the appellate order of March 20, 1964, passed by the working committee of Directors. According to the appellant, the order which has to be taken into account, for considering whether there is a contravention of section 33 of the Act, is the original order passed, by the Managing Director, on November 12, 1963, whereas, according to the respondent, the appellate order, passed on March 20, 1964, is the effective order, dismissing him. The respondent 's contention, in this regard, is briefly as follows. Under the National Industrial Tribunal (Bank Disputes) Award, 1962 (known as the Desai Award), a workman, in such cases, has got a right of appeal, to the appropriate authority, and he has got a period of 45 days, for filing the appeal. In this case, the order of the Managing Director, dated November 12, 1963, also states that respondent is entitled to file an appeal, against that order, to the working committee of the Directors, within 45 days of receipt of that order. The respondent, admittedly, filed an appeal, on December 17, 1963, well within the time. The appeal was disposed of, on March 20, 1964. The language of section 33(2), counsel points out, is to the effect that the employer has (1) [1958] I L.L.J. 793. (2) ; 333 been enabled to take action, 'in accordance with the standing orders applicable to a workman concerned, in such dispute '. Inasmuch as the standing orders, in this case, give a right to appeal, to the workman, any order that is passed, by the management, in respect of which a right of appeal is given to a workman, cannot be considered to be an effective or operative order, till the appellate decision is made known. It will be open to the appellant to take action, in accordance with the proviso to section 33(2)(b), at the time when the appellate order was passed, on March 20, 1964, as the appellate order is the effective and binding order. So far as the par ties are concerned, the order of dismissal, in this case, must be considered to have been passed only on March 20, 1964, which date squarely falls within the period, during which I.D. No. 4 of 1964, was pending. We are not inclined to accept the contentions of the learned counsel, for the respondent, in this regard. It has been laid down by this Court, in Strawboard Manufac turing Co. vs Govind(1), in construing the proviso to section 33(2)(b) of the Act, that the three things contemplated, viz., dismissal or discharge, payment of the wages and making of the application, should be part of the same transaction. Therefore, in our view, there must be a fixed and certain point of time which will be applicable to all managements and workmen, when construing the provisions of section 33 of the Act. The management must definitely know, as to when they have to take the necessary action, under the proviso to section 33(2)(b), and the workman also should, likewise, know the definite time when the management should have complied with the requirements of the proviso to section 33(2)(b), so that he could approach the Industrial Tribunal, by way of a complaint,, under section 33A, of the Act. A reading of the material provisions of section 33 shows that the expressions used are 'discharge or punish, whether by dismissal or otherwise ', and they clearly indicate, in. our opinion, the point of time, when the order of discharge or dismissal is passed, by the authority concerned. An order of discharge or. dismissal, in our opinion, can be passed, only once; and, in this case, the order of dismissal is the one passed, by the Managing Director, on November 12, 1963. No doubt, either by virtue of the Standing Orders, or by virtue of a, contract, of service, a right of appeal may be given to a workman concerned, to challenge an order of dismissal. But the appellate authority only considers whether the order of dismissal has to be sustained, or whether it requires modification. Therefore, there is no question of the appellate authority passing, again, an order of dismissal. We are not concerned, in construing the provisions of section 33, as to the finality of the orders passed, by the authority concerned, in the first instance, in passing orders of dismissal or discharge. Further, the proviso to section 33(2)(b), when it, refers to payment of wages for one month, also indicates that it relates to an (1) [1962] Supp. 3 S.C.R. 618, 630. CI S 334 order of discharge or dismissal, which comes into effect immediately, which, in this case, is the order passed, on November 12, 1963. The payment of one month 's salary or wages, is to soften the rigour of unemployment that will face the workman, against whom an order of discharge or dismissal, has been passed. If the management has to wait for the minimum period prescribed for filing an appeal, and also await the termination of the appeal when one is filed, considerable time would have lapsed from the date of the original order, during which period the workman would not have received any salary. It will be anomalous to hold that even after the lapse of such a long time, the payment of one month 's salary would satisfy the requirements of the section. In this case, if the contention of the respondent is accepted, it will lead to very anomalous results, and the time when a management has to comply with the proviso to section 33(2)(b), will radically differ. For example, according to the respondent, the management, in this case, will have to wait for the minimum period of 45 days, which is the time given for the respondent, to file an appeal. If an appeal is filed, according to the respondent, the management will have to wait further, and await the disposal of the appeal. That means, in such a case, the proviso will come into effect only at the time when the appeal is disposed of. On the other hand. if, after the expiry of 45 days, the workman concerned does not file an appeal, the management, according to the respondent, will have to comply with the proviso immediately after the period of limitation is over. That is, the point of time when the proviso to section 33(2)(b) will have to be complied with, by the management, will depend upon the filing or non filing of an appeal, by the workman concerned. Further, if at the time, when the original order of dismissal is passed, there is no dispute pending, and when the appeal against the order of dismissal is pending, a dispute is referred for .adjudication, it will be open to the management to prolong its decision, in the appeal. till after the Industrial dispute 'has come to an end. It cannot be the intention of the Legislature that such variable and indeterminate periods are contemplated in construing the proviso to section 33(2)(b). The natural and reasonable in terpretation, to be placed on section 33, is, in our opinion, that the order of discharge or dismissal, is the original or the very first order passed by the management , which in this case is the one passed. by the Managing Director, on November 12, 1963. It follows that on that date, I. D. No. 4 of 1964. had not even been referred,. for adjudication, which, as we 'have already indicated. was by an order of Government, dated January 8, 1964. Hence there is no contravention of section 33, in this case. Before we close the discussion, it is necessary to state that Mr. Ramamurthy, learned counsel for the respondent, referred us to two decisions of this Court. in The Management of Hotel Imperial V. Hotel Workers ' Union (1) and Collector of Customs, (1) ; 335 Calcutta vs East India Commercial Co. Ltd.(1). In the first decision, this Court has recognised that a term should be implied, by Industrial Tribunals, in the contract of, employment, that, if the master has held a proper enquiry and come to the conclusion that the servant should be dismissed, and in consequence, suspends him, pending the permission, required under section 33 of the Act, he has the power to order suspension, thus suspending the. contract of employment temporarily, so that there is no obligation on him ' to pay wages, and no obligation on the servant, to work. In the second decision, this Court held that in cases where an authority reverses the order under appeal, or, modifies or merely dismisses the appeal and thus confirms the order appealed against without any modification, the operative order is the order of the appellate authority. :In our opinion, these decisions do not assist the respondent and the principles laid down. therein, have no bearing on the point to be determined in the instant case. The result is that the award of the Industrial Tribunal is set aside and the application, filed by the respondent before it, will stand dismissed. The appeal is, accordingly, allowed, but without costs. Y.P. Appeal allowed.

After holding a domestic enquiry the Managing Director of the appellant Bank dismissed the respondent employee with immediate effect. The employee was informed that he might appeal against this order to the working committee of the Directors within certain days. The respondent filed the appeal which the working committee dismissed. Subsequent to the filing of the appeal but prior to its dismissal, the Central Government referred to an Industrial Tribunal the question as to whether action, by the appellant Bank, in discontinuing pigmy collection and payment thereof to the workmen, was justified. The respondent filed a complaint to the Industrial Tribunal alleging that the appellant contravened section 33 of the Industrial Dispute Act as the order of dismissal had been passed during the pendency of an Industrial Dispute, the management should have asked the Industrial Tribunal for approval of their action, and they should have paid him one month 's wages. The Industrial Tribunal held that the dismissal of the respondent became effective only after the. working committee disposed of the appeal, and as during this period an Industrial Dispute was pending the management was bound to comply with the proviso to section 33 (2) (b) of the Act. In appeal to this Court. Held:There was no contravention of section 33. An order of discharge or dismissal, can be passed only once; and, in thus case, the order of dismissal was the original or very first passed by the Managing Director, on which date the Industrial Dispute had not even been referred, for adjudication. No doubt, either by virtue of the Standing Orders, or by virtue of a contract, of service, a right of appeal may be given to a workman concerned, to challenge an order of dismissal. But the appellate authority only considers whether the order of dismissal has to be sustained or whether it requires modification. Further, the proviso to section 33(2) (b) when it refers to payment of wages for one month, also indicates that it relates to an order of discharge or dismissal which comer, into effect immediately. The payment of one month 's salary or wages, is to soften the rigour of unemployment that will face the workman, against whom an order of discharge or dismissal, has been passed. If the management has to wait for the minimum period prescribed for filing an appeal, also await the termination of the appeal when one is filed, considerable time would have elapsed from the date of the original order, during which period the workman would not have received any salary. [333F 334B] Equitable Coal Ltd. vs Tlgu Singh The Punjab National Bank Ltd. vs Its Workmen [1960] 1 S.C.R. 806, and Straw. board Manufacturing Co. vs Gobind [1962] Supp. 3 S.C.R. 618 relied 328 The Management of Hotel Imperial vs Hotel Workers ' Union ; , and Collector of Customs, Calcutta vs East India Commercial Co. Ltd. held inapplicable.

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Appeals Nos. 2253 and 2254 of 1966. Appeals from the judgment and decree dated July 5, 1965 of the Calcutta High Court in Appeals from Original Decrees Nos. 490 and 489 of 1960 respectively. Sarjoo Prasad and R. Ganapathy Iyer, for the appellant (in C. A. No. 2253 of 1966). Devaprasad Chaudhury and Sukumar Ghove, for the appellant (In C. A. No. 2254 of 1966). A.K. Sen, section K. Gambhir and D. N. Gupta, for the respon dents (in both the appeals). The Judgment of the Court was delivered by Bachawat, J. The respondents are limited companies having their head offices in Calcutta. On May 15, 1953, the two Companies jointly purchased the premises known as King 's Court ' at No. 46B Chowringhee Road, Calcutta, for the purpose of providing residential accommodation for their staff. They instituted a suit against one B. M. Lall, since deceased, predecessor of the appellants in C. A. No. 2253/66 for recovery of possession of flat No. 8 in the aforesaid premises in his occupation as a tenant, and another suit against the appellant in C. A. No. 2254/66 for recovery of possession of flat No. 9 in his occupation as a tenant, on the ground that they reasonably required the flats for the occupation of their staff. By Sec. 13(1) of the West Bengal Premises Tenancy Act, 1956, (West Bengal Act XII of 1956), the tenants are protected from eviction except on one or more of the grounds specified in the sub section. The grounds mentioned in clause (f) of section 13(1) are: "Where the premises are reasonably required by the landlord either for purposes of building or re building 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;". . The respondents claim that they reasonably require the flats for their own occupation. The trial court dismissed the suits. From these decrees, the respondents filed appeals in the High Court at Calcutta. The High Court set aside the decrees passed by the trial court and decreed the suits. The present appeals have been filed under certificates granted by the High Court. 25 The High Court held that (1) a limited company can be a landlord within the meaning of section 13(1)(f) and can reasonably require the premises for its own occupation, and (2) where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within Sec. 13(1)(f). These findings are not challenged in this Court. Before us it is also conceded by all the appearing parties that the respondents are entitled to a decree for recovery of possession of the two flats under sec. 13(1)(f), if they establish that they reasonably require the flats for the occupation of respondent No. 2, Guest Keen and Williams Ltd. only. The two courts concurrently found that respondent No. 2 reasonably requires the flats for the occupation of its staff. The Company is under an obligation to provide free residential accommodation for its officers in properties either rented or owned by it. In view of the acute scarcity of accommodation in the city, it is not possible to find other convenient flats for officers who were transferred to the city from other stations. Suitable provision for the accommodation of officers visiting Calcutta on tour is a matter of necessity. The sole question is whether the occupation by its staff officers would be the company 's own occupation. The point of dispute on which the two courts differed is whether the officer to whom the flat would be allotted would occupy it as a tenant or as a licensee. It is common case before us that if he is a licensee his occu pation would be on behalf of the company and its requirement would be for its own occupation. On the other hand, if he is a tenant his occupation would be on his own account and the company 's requirement would not be for its own occupation. It appears that the officers provided with accommodation by the Company are required to execute agreements in a standard form. The terms and conditions of the agreement are as follows: 1 . The Licensee whilst in the employment of the Company at Calcutta and for the sole purpose of the Licensee being more conveniently situated in such employment is hereby permitted by the Company to occupy as a Licensee during the term of his employment at Calcutta Flat No. 25, situated in the Company 's property known as Kings Court, Calcutta, or such other flat as may be allotted to the Licensee at the company 's discretion (hereinafter referred to as "the said permises") subject to the terms and conditions hereinafter contained. In the event of the Company deciding to levy License fees and the Company reserves the right to do so without prior notice, the Licensee shall pay to the Company each month such License fees which may be varied by the 'Company from time to time at its discretion and the Company shall be entitled to deduct such License fees from the emoluments or to become due to the Licensee from Company. The occupation of the said premises by the Licensee is a condition of his employment at Calcutta with the company and such right of occupation shall forthwith cease upon his employment being terminated by the company or on his leaving such employment or on his transfer away from Calcutta or on his death whichever is earlier. Notice given by the Company to the Licensee of termination of employment or of transfer away from Calcutta shall be deemed to be sufficient notice of revocation of the licence. The Company shall be entitled to determine forthwith the licence hereby granted if the licensee shall fail to comply with any of the terms and conditions herein contained and on his part to be observed and non compliance with the terms and conditions herein contained may be deemed by the company to be misconduct. These presents shall not or shall not be deemed to create any relationship of landlord and tenant between the company and the licensee in respect of the said premises. The company shall pay all present and future revenue and municipal taxes payable in respect of the said premises and keep the said premises in repair during the continuance of these presents. Conditions to be complied with by the licensee: 1. The Licensee shall pay the cost of electricity and gas consumed within the said premises and the company may at its discretion deduct such charges from the emoluments due or to become due to the Licensee from the company. The Licensee shall not cause or permit to be cause any disturbance or nuisance in or in the vicinity of the said premises. No structure or alteration temporary or permanent, other than common ornaments shall be erected, fixed or carried out by the Licensee in the said premises or garden without prior written permission from the company. The Licensee shall not do or permit to be done any act or thing which causes damage or is liable to cause damage to the said premises. The cost of rectification of such damage will be recoverable in accordance with condition (1). Alterations of or extensions to the installed electrical circuit are strictly prohibited. No notice advertisement or placard other than the Licensee 's own name, which may be fixed to the main door of the said premises, shall be fixed or permitted to be fixed to any portion of the said premises. The said premises shall be used entirely as a dwelling place and no business or trade shall be carried out on the said premises or any part thereof without prior written permission from the company. The Licensee will not permit any persons other than his own personal servants to occupy the servants ' quarters allotted to him by the company and will not permit the garage allotted to him by the company to be used for residential purpose. The Licensee shall not take in any paying guest without prior written permission from the company and such permission shall be deemed to have been withdrawn when the paying guest ceases to reside. The Licensee shall not let or part with possession of the whole or any part of the said premises to any person, firm or company. During periods when the Licensee is absent from Calcutta the Company may assign the premises to any other employee or suitable person at its sole discretion. The question is whether the occupier under this agreement is a tenant or a licensee. The distinction between a lease and a license is well known. 105 of the Transfer of Property Act defines a lease. 52 of the Indian Easements Act defines a license. A lease. is the transfer of a right to enjoy the premises; whereas a license is a privilege to do something on the premises which otherwise would be unlawful. If the agreement is in writ ing, it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licen see. The transaction is a lease, if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant, is not decisive. The test of exclusive possession is not decisive, see Errington vs Errington and Woods,(1) Associated Hotels of India Ltd. vs R. N. Kapoor,(2) though it is a very important indication in favour of tenancy. See Addiscombe Garden Estates Ltd. and Anr. vs Crabbe and Ors.(3). A servant in occupation of premises belonging to his master may be a tenant or a licensee, see Halsbury 's Laws of England, Third Edition, Vol. 23, article 990. p. 411. A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties. Formerly, the occupation of the servant was regarded as a tenancy unless it was a service occu (1)[1952] 1 K.B. 290, 298. (2) [1260] 368, 381 5. (3) ,525. 28 pation, see Nippon Menkwa Kalmshiki vs F. Portlock(1). Now it is settled law that a servant may be a licensee though he may not be in service occupation. In Torbett vs Faulkner(2) Denning, L. J. said: "A service occupation is, in truth, only one form of licence. It is a particular kind of licence whereby a servant is required to live in the house in order the better to do his work. But it is now settled that there are other kinds of licence which a servant may have. A servant may in some circumstances be a. licensee even though he is not required to live in the house, but is only permitted to do so because of its convenience for his work see Ford vs Langford 1(1949) 65 The Times L.R. 1381, per Lord Justice Asquith, and Webb, Ltd. vs Webb (unreported, October 24, 1951) and even though he pays the rates, Gorham Contractors, Ltd. vs Field (unreported, March 26, 1952), and even though he has exclusive possession, Cobb vs Lane (1952) 1 The Times L.R. 1037)". The Lord Justice then continued: "If a servant is given a personal privilege to stay in a house for the greater convenience of his work, and it is treated as part and parcel of his remuneration, then he is a licensee, even though the value of the house is quan tified in money; but if he is given an interest in the land, separate and distinct from his contract of service, at a sum properly to be regarded as a, rent, then he is a tenant, and none the less a tenant because he is also a servant. The distinction depends on the truth of the relationship and not on the label which the parties choose to put upon it: see Facchini vs Bryson (1952 ) The Times L.R. 1386). " The last observation covers the present case. Under the standard form of agreement of respondent No. 2, the occupation of the officer ceases not only on the termination of his employment but also on his transfer from Calcutta and on his death. The company is at liberty to allot any other flat to the officer. During the absence of the servant from Calcutta, the company is at liberty to assign the premises to any other employee or other person. The accommodation is free, but the Company reserves the right to levy license fees. All the terms of the agreement are consistent with the expressed intention that the officer is permitted to occupy the flat as a licensee and nothing in the agreement shall be deemed to create the relationship of landlord and tenant. The agreement on its true construction read in the light of the surrounding circumstances operates as a license and not as a tenancy. It creates no interest in the land. It gives only a personal privilege or license (1)A.I.R. 1922 Botm. (2) [1952]2 T.L.R. 659,660, 29 of the servant to occupy the premises for the greater convenience of his work. The High Court rightly held that the respondents reasonably require the flats for respondent No. 2 's own occupation through officers holding the flats on its behalf as licensee. If so, it is conceded that it is not necessary for the respondents to establish the reasonable requirement by respondent No. 1 also for its own Occupation. The High Court decided this issue also in favour of the respondents. As the decision on this issue is not necessary for the disposal of this appeal, we express no opinion on it. The High Court rightly decreed the suits. In the result, the appeals are dismissed. There will be no order is to costs. R.K.P.S. Appeals dismissed.

The respondent limited companies purchased certain premises in Calcutta for the purpose of providing residential accommodation for their staff. They instituted suits against the appellants for the recovery of possession of two flats on the ground that as these flats were required for housing their officers, they were reasonably required for the occupation of the respondents within the meaning of section 13(1) (f) of the West Bengal Premises Tenancy Act, 1956. The Trial Court dismissed the suits but the High Court allowed an appeal and held that a limited company can be a landlord within the meaning of section 13(1) (f) and can reasonably require the premises for its own occupation; and that where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within section 13(1) (f). In the appeal before the Supreme Court the only question for determination was whether on the construction of the terms of an agreement which was normally signed between each of the respondents and any officer who was allotted a flat, the officer occupied the flat as a tenant or a licensee, and therefore whether the officer 's occupa tion would be the company 's own occupation within the meaning of clause (f). Held:Dismissing the appeal: The High Court nightly held that the respondent reasonably required the flats for the second respondent company 's own occupation through officers holding flats on its behalf as licensees. [29B] Under the standard form of agreement, the occupation of the officer ceased on the termination of his employment, upon his death, or on his transfer and the company was at liberty to allot him any other flat or to assign the premises to any other employee or other person during his absence. In view of these and its other terms the agreement operated as a license and not as a tenancy. It created no interest in the land and gave only a personal privilege or license to the servant to occupy the premises for the greater convenience of his work. [28F H] Under section 105 of the Transfer of Property Act, a lease is the transfer of a right to enjoy the premises whereas under section 52 of the Indian Easements Act a license is a privilege to do something on the premises which otherwise would be unlawful. The transaction is a lease if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. [27E F] Errington vs Errington and Woods, ; , 298: Associated Hotels of India Ltd. vs R. N. Kapoor. ; ; 3815. Addiscombe Garden Estates Ltd. and Anr, V. Crabe and Ors. , 525; referred to. 24 A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties. Now it is also settled law that a servant may be a licensee though he may not be in service occupation. [27H] Nippon Menkwa Kalmshiki vs F. Portlock, A.1.R. ; and Torbett vs Faulkner, , 560; referred to.

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Appeal No. 752 of 1966. Appeal by special leave from the Award dated February 18, 1965 of the Labour Court, Assam in Reference No. 38 of 1962. H. R. Gokhale, G. L. Sanghi and K. P. Gupta, for the appellants. section V. Gupte, Solicitor General and D. N. Mukherjee, for respondent No. 1. M. M. Kshatriya, G. section Chatterjee for P. K. Bose, respondents Nos. 2 and 3. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the workmen of Brahmputra Tea Estate, is directed against the award, dated February 18, 1965, of the Labour Court, Assam, in Reference No. 38 of 1962, holding that the Reference has become infructuous. The circumstances. under which the Reference was made, by the Government of Assam, may be stated. The Brahmputra Tea Estate (hereinafter called the Tea Company), comprised of three gardens, viz., Negheritting, Rangamati and Missamara Tea Estates, with their outer gardens, were owned and managed by Brahmputra Tea Co. (India) Ltd. The Tea Company had incurred very heavy liabilities; and hence, on November 6, 1956, it created an equitable mortgage, by deposit of title deeds, in favour of the Eastern Bank Ltd., (hereinafter called the Bank). The gardens, mentioned above, formed part of the security covered by the equitable mortgage. This memorandum of equitable mortgage was registered on November 26, 1956. As the Tea Company failed to make payment of the money due to the Bank, the latter filed Suit No. 21 of 1957, in the Court of the Subordinate Judge, Upper Assam, District Jorhat, for enforcing its rights, under the equitable mortgage. A preliminary decree was passed, on February 21, 1958; this was followed, by a final decree, on September 19, 1960. L/J(N)76SCI 14(a) 628 In the meantime, on September 16, 1958, the Calcutta High Court had ordered the winding up of the Tea Company, because of certain defaults made by it. Mr. D. A. Weatherson, of the Bank, who had been appointed, by.the,Jorhat Court, as Receiver of the Tea Gardens, by his letter. dated December 30, 1958, intimated the Superintendent of the Tea Gardens, about the windingup order, passed by the Calcutta High Court on September 16, 1958, and stated that the winding up order operated as a statutory 'notice of discharge, of all officers and employees of the Tea Company; nevertheless, the Receiver stated that he desired to offer employment to all the members of the staff who were employed in tile Tea Gardens on November 18. 1958, with the exception of fifteen employees, mentioned by him. The Superintendent was requested to obtain the consent of the members of the staff, regarding the offer made by the Receiver. It may be stated, at this stage, that the fifteen employees, who were excluded in the letter of the Receiver, were the persons, whose claims were referred, by the Government of Assam, to; the Labour Court. in Reference No. 38 of 1962. The Superintendent, in his turn, sent communication, dated January 19, 1959, to the various workmen, offering employment, on behalf of the Receiver, and requesting them to intimate acceptance; but, so far as the fifteen workmen, referred to above, were concerned, the Superintendent sent communication. to each of them on August 21, 1961, terminating their services, with one month 's notice. The workmen concerned were also promised to be paid the Provident Fund amounts that might stand to their credit. It was specifically stated, by the Superintendent, that the communication was being sent, by him. on behalf of tile Receiver of the Tea Company and that the termination of the services of the workmen was because of their age. The Assam Chah Karmachari Sangha (hereinafter called the Karniachari Sangha) complained to the Conciliation Officer, Assam, stating that the termination of the services of the fifteen workmen, concerned, was illegal and arbitrary. Though tile Conciliation Officer appears to have taken some steps to effect conciliation, he could not proceed further, because the Superintendent of the Tea Gardens regretted his inability to participate in the conciliation proceedings, as he had not been authorized to do so, by the Receiver of the Tea gardens. Nevertheless, the Conciliation Officer, on September 18, 1961, wrote to the Receiver, direct, suggesting payment of compensation to the workmen concerned; but that suggestion was riot accepted. by the Receiver. On February 18, 1961. the Bank assigned all its rights, under the mortgage dated November 6, 1956 and the decree in Suit No. 21 of 1957, in favour of M/s Shaw Wallace & Co. Ltd. The Registrar of Companies, West Bengal, Calcutta, in or about 1960, 629 had filed a petition, in the Calcutta High Court for the winding up of the Tea Company, as it had failed to comply with certain statutory requirements. By order dated June 16, 1961,the Calcutta High Court ordered the winding up of the Tea Company. and appointed Shri H. K. Ganguli, the Official Liquidator of the High Court, as the Official Liquidator of the Tea Company. On September 19, 1961. the Calcutta High Court passed an order, withdrawing to its file, suit No. 21 of 1957, from the Jorbat Court, and the said suit was numbered as Transfer, Company Suit No., 7 of 1962. On October 5, 1961. the Calcutta High Court directed the substitution of the name of M/s Shaw Wallace & Co. Ltd., in (lie place of the Eastern Bank Ltd., in the suit; and it also appointed Shri K. C. Ganguli as Receiver of the Tea Gardens in the place of the Receiver appointed by the Jorhat Court. The new Receiver, Shri K. C. Ganguli, was also put in possession and management of the said properties. Therefore, the position was that the Tea Company, whose windingup had been ordered, was with the Official Liquidator. and the Tea Gardens of the company, were in the possession and management of tile Receiver, appointed in the mortgage suit. On July 27, 1962, the Government of Assam referred to the Labour Court, Assam, an industrial dispute between the management of Brahmaputra Tea Estate (Receiver in Possession) and their workmen, represented by the Karamchari Sangh. The dispute that was referred, related to the justification, of the action of the management of the Tea Estate, in terminating the services of the fifteen employees, and, as to whether. those fifteen workmen were entitled to reinstatement, or any other relief, in lieu thereof. The fifteen workmen, referred to in this reference, are the identical workers whose services had been terminated, by the issue of the notice on August 21, 1961, by the Superintendent of the Tea Gardens, on behalf of the Receiver. This is the reference, which had been numbered as Reference No. 38 of 1962. We shall advert, later, to the claims made by the workmen, as well as the contest made, by the first respondent, before us. The Labour Court, on receipt of this reference. issued the necessary notices, on August 26, 1962. In the liquidation proceedings, the Calcutta High Court, on August 17, 1962, permitted the Official Liquidator to sell the Tea Gardens, which were the subject of mortgage, and also certain other items of moveables. The Official Liquidator, on the basis of this order, conveyed, by registered sale deed, dated August 11. 1962, in favour of Shri Ram Gopal Sahariya, the first respondent herein, the equity of redemption in the three Tea Gardens, and also certain tractors, lorries and other items of machinery, for a total consideration of Rs. 5,20,000. This total consideration was made Lip of Rs. 2,20,000, being the price of the moveables and 630 Rs. 3,00,000 stated to be the value of the equity of redemption. The sale, in favour of the first respondent, was specifically by the Official Liquidator, acting on behalf of the Tea Company, and what was conveyed in the Tea Gardens, was the equity of redemption, owned by the Tea Company, and the sale was subject to the mortgage decree and the liabilities payable to M/s Shaw Wallace & Co., Ltd. On September 18, 1962, the first respondent 's name was ordered, by the Calcutta High Court, to be included in Transfer Company Suit No. 7 of 1962. The Court further ' discharged Shri K. C. Ganguli, from his Receivership in the suit, and he was also directed to deliver possession of the three Tea Gardens belonging to the Tea Company, to the first respondent. The first respondent, on his own claim, by virtue of the purchase from the Official Liquidator, has become the sole proprietor of the Tea Gardens; he also got actual possession of the Tea Gardens, on September 21, 1962. To resume the narrative, regarding the proceedings in Refer ence No. 38 of 1962, the Labour Court, as we have stated earlier, had issued notices to the parties concerned, on August 26, 1962. The workmen filed a written statement, on February 23, 1963. In that statement, they had stated that the fifteen workmen, concerned, had completed service, ranging from 8 to 47 years, in the Tea Estates, and that the termination of their services, by the Superintendent of the Tea Gardens, on behalf of the Receiver, was absolutely illegal and arbitrary. They also referred to various other matters, which it is not necessary to advert, in this appeal. It is enough to note that the workmen required relief, by way of reinstatement On June 27, 1963, one K. A. Muddu, as Superintendent of the Tea Estates, filed a written statement, on behalf of the management. He has stated therein. that the services of the fifteen employees were terminated on account of their age, and also because some of them were too ill to be continued in service. He has adverted to the fact that two of the workmen had expressed a desire to retire voluntarily, from service. It is further stated therein, that, as the employees concerned were 60 years or more, of age, it was not possible to continue them in service. Again, the action of the Receiver, who was in management of the Tea Gardens, in terminating the services of the workmen, was also be justified. The workmen filed an additional written statement, on Sep tember 2, 1963, controverting the allegation that they were either too ill or they had completed 60 years of age. They again reiterated that the stand, taken by the management, was absolutely illegal and the Receiver bad no right to authorize the termination of their services. 631 On July 18, 1964/September 10, 1964, Shri R. G. Sahariya, as sole proprietor of the Tea Estates, filed an additional written statement, before the Labour Court, on behalf of the incoming management. He has referred therein to the fact that the Tea Estate was no longer in the hands of a Receiver, and its management had vested in him as sole proprietor. He has further referred to the fact that there is no continuity between the present management of the Tea Company, represented by him, and that of the past, when the Tea Gardens were owned by the Tea Company and were managed by the Receiver, appointed by the Court. He then refers to the purchase made by him, on August 18, 1962, from the Official Liquidator of the Tea Company, of the equity of redemption in the Tea Gardens. He has further stated that the services of the workmen concerned, had been terminated by the Superintendent of the Tea Gardens, acting on behalf of the Court Receiver, as early as August 21, 1961, long before the Tea Estates were purchased by him. Shri Sahariya has further stated that, on July 27, 1962, when the Government of Assam made the present Reference, the incoming management was nowhere in the picture and it was not, in any manner concerned with the claim of the workmen, inasmuch as it had no liability, whatsoever, towards them. He averred that he had not purchased the Tea Estates with the goodwill of the Tea Company, or, as a running concern. Therefore, on all those grounds, he urged, that he was, in no manner, bound to reinstate or to compensate for the loss of employment of the workmen, concerned. In fact, he has specifically prayed that an order may be passed, by the Labour Court, that the dispute, referred to it, by the Government of Assam, has lapsed. The Labour Court, in its order under attack, has taken the view that the services of the workmen concerned, have been terminated, under instructions of the Receiver of the Tea Gardens, appointed in the suit, long before the first respondent became owner of the Tea Gardens. It is also of the view that "the Brahmputra Tea Estate (Receiver in possession)". is the only party impleaded, and the new management, viz., the first respondent, has not been brought on record, nor was it a party to the reference, made by the State Government. The purchase of the Tea Gardens, by the first respondent, does not show that the latter has taken over any liabilities, of the previous management, with regard to the claims of the workmen, and that there has been no purchase of the goodwill of the Tea Company. On these grounds, the Labour Court held that no relief could be granted, as against the first respondent, and that the reference itself had become infructuous. Mr. Gokhale. learned counsel for the workmen appellants. raised two contentions before us: (i) that the view of the Labour Court, that the first respondent is not liable for the claims of the 632 workmen, is erroneous; and (ii) that even if it is held that the first respondent is not liable, the Labour Court, which had ample jurisdiction, in this regard, should have issued notice, either to the Receiver, appointed in the suit, or the Official Liquidator, to the both of them, and proceeded to investigate and adjudicate upon the claims of the workmen. In this connection, Mr. Gokhale pointed out that the document of purchase, by the first respondent, would clearly show that the Official Liquidator ha(1)realised a sum of Rs. 5,20,000, as sale consideration, and there might also be other assets of the company; if a proper adjudication, in the presence of those parties, had been made, and relief granted to the workmen, they would have been in a position to enforce their claims, as against these amounts and assets of the company. The learned Solicitor General. appearing on behalf of the first respondent, urged that his client was not, in any manner, answerable to the claims made, by the workmen. The first respondent was not the successor in interest of the Tea Company , nor did he claim through the Receiver, who wag one of the parties to the Reference, before the Labour Court. Even if the Tea Company could be considered to be a party to the Reference. his client Could not be considered to be a successor in interest of the Tea Company, because, he had purchased only some of the assets belonging to the said company, by virtue of the sale. The document of purchase, by the first respondent. would clearly show that he has not taken over any other liabilities of the Tea Com pany, in that regard . The learned Solicitor General further pointed out that the remedy. if any. of the appellant, if so advised, was only to proceed against the Receiver, or the Official Liquidator; even if it be held that the ownership or management of the undertaking had been transferred in favour of the first respondent, the rights of the workmen would have to be worked out, as against the Receiver, or the Official Liquidator, under section 25FF, of the (Act XIV of 1947) (hereinafter called the Act), inasmuch as there was nothing to show that the transfer, in this case, came within the proviso to that section. We are in agreement with the contentions of the learned Solicitor General that the view of the Labour Court, that the first respondent is not liable to answer any of the claims of the workmen concerned, is perfectly justified. From the various facts, given above, it will clearly be seen that the order terminating the services of the workmen, was made on August 21, 1961, by the Superintendent of the Tea Gardens, under instructions from The Receiver appointed by the Jorhat Court, in the mortgage suit. On October 5. 1961, the High Court had appointed a Receiver, for the Tea Gardens. as separate from the Tea Company, in the suit, Transfer Company Suit No. 7 of 1962. The order, referring the dispute to the Labour Court was made, by the Government, on July 27, 1962, The 1st respondent, admittedly, 633 was not in the picture, on these various dates. It cannot also be stated, having due regard to the various recitals, contained in the sale deed, dated August 11, 1962, and considered, in the light of the principles, laid down by this Court, in Anakapalla Cooperative Agricultural & Industrial Society Ltd., vs Workmen(1), that the first respondent is the successor in interest of the Tea Company. What was purchased, by the first respondent, was only the equity of redemption in a part of the assets of the Tea Com pany, in respect of which the Official Liquidator was still functioning. Therefore, the learned Solicitor General is perfectly justified in his contention that the first respondent cannot be considered to be a successor in interest of the Tea Company nor can he be considered to claim through the Receiver, or Liquidator. Even on the basis that the first respondent is considered to be a person, to whom the ownership of the undertaking has been transferred, it will be seen that the claims of the workmen will have to be considered. as against the Tea Company, in accordance with section 25FF of the Act, when its proviso cannot be invoked. Learned counsel, for the appellant, has not been able to satisfy us that the transfer, in this case, in favour of the respondent, comes within the proviso to section 25FF. The appellants, ,is laid down by this Court, under the circumstances, in the decision referred to above, will not be entitled to claim reinstatement, as against the first respondent. Section 25FF was first introduced in the Act, by the Industrial Disputes (Amendment) Act, 1956 (LXI of 1956), and, in its present form, it has been substituted, by the Industrial Disputes (Amendment) Act, 1957 (Act XVIII of 1957). Section 25F was in force, on August 21, 1961, when the services of the workmen were terminated, and s, 25FF had(1) come into effect long before the purchase, by the first respondent of the Tea Gardens; and, we have already shown, that there is no liability, so far as the first respondent is concerned. Therefore, the first contention of Mr. Gokhale, will have to be rejected. But we are impressed by the second contention of Mr. Gokhale, that the Labour Court should have issued notices to the Receiver, or Official Liquidator. or to both, as it was entitled to. and proceeded to consider, as to whether any reliefs Could be granted to the appellants. In this connection, counsel pointed out that section 18 of the Act clearly visualizes parties being summoned ', to appear, by the Labour Court, in proceedings, as parties to the disputes, in which case, the award made, will be binding on them also. In this appeal, before us. the Tea Company, in Liquidation, and the Official Liquidator of the Tea Company, figure as respondents Nos. 2 and 3, respectively, and are represented by same counsel. Learned counsel, appearing for those parties, pointed out that the Official Liquidator may have various defences, (1) [1963] Supp. 1 S.C.R. 730. 634 available to him, if any claim is sought to be enforced against the company, in liquidation, or the Official Liquidator. Those matters do not arise for consideration, at this stage, in this appeal, because the claim of the appellants, as against those persons, remains yet to be considered by the Labour Court. We are satisfied that, even after negativing the claims, of the workmen, as against the first respondent, the Labour Court should not have merely closed the proceedings, by holding that the reference has lapsed. On the other hand, the Labour Court should have issued notices to the Receiver, or the Liquidator. or to both, and, in their presence, should have considered the question as to whether the workmen were entitled to claim any relief. In fact, the order of reference also clearly shows that the Labour Court will have full jurisdiction to consider as to whether the termination, of the services of the workmen concerned, is justified and, whether they are entitled to either reinstatement, or any other relief, in lieu thereof. When the proceedings are being dealt with, afresh, as against the parties indicated above, the Tribunal will bear in mind the observations made above, and consider the nature of the relief, if any, that may be granted to the workmen concerned . We make it clear, that if and when either the Receiver, or the Tea Company, in liquidation, or the Official Liquidator, or all of them, are brought before the Labour Court, they will be entitled to raise any plea in defence of the claim of the workmen, that may be available to them, in law. In that adjudication, the first respondent herein, will be completely out of the picture, as no relief can be claimed by the workmen, against him. Further, if the claim of the workmen, is that their services have been dispensed with, by way of retrenchment, that claim will have to be adjudicated in accordance with section 25F, of the Act. If, on the other hand, their claim is based, on the event of a transfer having been effected, that claim will have to be adjudicated, under section 25FF of the Act. All these aspects will have to be properly considered, and adjudicated upon, by the Labour Court. In the result, while confirming the findings of the Labour Court, that the first respondent is not answerable for any of the claims of the workmen, the award, dated February 18, 1965, is set aside and the Labour Court is directed to take up the Reference, over again, for being dealt with, afresh, in the light of the directions contained above. The appeal is allowed, to the extent, indicated above, and in other respects, will stand dismissed as against 1st respondent. Parties will bear their own costs, in this appeal.

On reference of an industrial dispute, the Labour Court took, the view that the services of the workmen concerned had been terminated, under instructions of the Receiver of the Company appointed in a suit long before the first respondent became owner of the company; that the Receiver in possession was the only party impleaded and the new management, viz., the first respondent had not been brought on record, nor was it a party to the reference, made by the State Government; that the purchase of the company, by the first respondent, did not show that the latter had taken over any liabilities of the previous management, with regard to the claim of the workmen; and that there had been no purchase of the goodwill of the company. On these grounds, the Labour Court held that no relief could be granted, as against the first respondent, and that the reference itself had become infructuous. In appeal to this Court, the workmen appellants contended that (i) the view of the Labour Court that the first respondent was not liable for the claims of workmen was erroneous; and (ii) even if it be held that the first respondent was not liable, the Labour Court, which had ample jurisdiction, in this regard, should have issued notice, either to the Receiver appointed in the suit, or the Official Liquidator, or to both of them an proceeded to investigate and adjudicate upon the claims of the work men. HELD: (i) The first respondent was not liable to answer any the claims of the workmen. He was not in the picture when the order terminating their service was made, nor when the order referring the dispute to the Labour Court was made. Having due regard to the various recitals in the sale deed and considered in the light of the principles laid down by this Court, in Anakapalla Cooperative Agricultural & Industrial Society Ltd. vs Workmen, the first respondent was not the successor in interest of, the Company. What was, purchased, by the first respondent, was only the equity of redemption in a part of the assets of the Tea Company, with respect to whit the Official Liquidator was still functioning. Even on the basis that the first respondent was considered to be a person, to whom the ownership of the undertaking has been transferred, the claims of the workmen had to be considered, as against the Company, in accordance with section 25 FF of the Industrial Disputes Act, when its pro viso could not be invoked. Section 25F was in force when the se vices of the workmen were terminated and section 25FF had come in effect long before the purchase by the first respondent. [632G 633F] 627 Anakapalla Co operative Agricultural and Industrial Society Ltd. V. Its Workmen, [1963] Supp. 1 S.C.R. 730, followed. (ii) Even after negativing the claims of the workmen, as against the first respondent, the Labour Court should not have merely closed the proceedings, by holding that the reference had lapsed. On the other hand, the Labour Court should have issued notices to the Receiver, or the Liquidator or to both, and, in their presence, should have considered the question as to whether the workmen were en titled to claim relief. In fact, the order of reference also clearly showed that the Labour Court had full jurisdiction to consider as to whether the termination of the services of the workmen, was justified, and whether they were entitled to either reinstatement, or any other relief, in lieu thereof. [634B D]

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Appeal No. 128 of 1965. Appeal from the judgment and decree dated December 12, 1963 of the Judicial Commissioner 's court, Himachal Pradesh, in Civil Writ Petition No. 19 of 1963. Vikram Chand Mahajan and R.N. Sachthey, for the appellants. Rameshwar Nath and Mahinder Narain, for respondents. The Judgment of the Court was delivered by Sikri, J. This appeal by certificate granted by the Judicial Commissioner, Himachal Pradesh, is directed against his judgment allowing a petition filed by the respondents and issuing a writ of mandamus directing the Divisional Forest Officer. Sarahan Forest Division, and the Chief Conservator of Forests, Himachal Pradesh hereinafter referred to as the appellants to issue or get issued the necessary permission for felling the trees and the transit pass. in respect of certain khasra numbers. In order to appreciate. the points raised by the learned counsel for the appellants, it is necessary to set out the relevant facts. Land measuring 27 bighas and 16 biswas comprised in khasra Nos. 452/1,453, 453/1, 40, 100 and 440 and situated in village Kadiali, Tehsil Theog, District Mahasu, belonged to Government and was under the tenancy of Moti Ram. He filed an application under section 11 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953 hereinafter referred to as the Act and was granted proprietary rights in the land by the Compensation Officer by order dated August 30, 1957. Provisional compensation was assessed at Rs. 62.56 nP. The Compensation Officer held that "as the applicant is a cultivating tenant over the aforesaid land he is entitled to acquire right, title and interest of the said land owner on payment of Rs. 62.56 as compensation which should be deposited. " On September 9, 1957, a certificate of ownership was granted to Moti Ram on his depositing Rs. 62.56. Moti Ram died and the land was mutated in favour of his wife Smt. Besroo and his daughter Smt. The respondents applied for permission to sell the trees on their land, and the Divisional Forest Officer by order dated July 18, 1958, permitted them to sell the trees from their land on certain conditions. On November 15, 1958, the respondents deposited Rs. 1267.13 nP as government fee, but the Divisional Forest Officer failed to give clear orders for felling the trees and taking out the converted timber from the said ]and. The Chief Conservator Officer, by letter dated July 12, 1961, informed the respondents that the matter was being inquired from the Conservator of 114 Forests, Simla Circle. Thereupon, not hearing anything further, the respondents flied a petition under article 226 of the Constitution. It was urged before the Judicial Commissioner, on behalf of the Divisional Forest Officer that the respondents had No. interest in the trees standing on their land as. the trees were not 'land ' as defined in section 2(5) of the Act, and that the Compensation Officer was not competent to grant, and, in fact, did not grant proprietary rights in the trees to the deceased Moti Ram. The learned Judicial Commissioner, following Vijay Kumari Thakur vs H. P. Administration (1) held that the appellants were estopped from contending that the respondents had no interest in the trees. He further held that the respondents were granted permission to sell the trees standing on their land and they had, in fact, entered into an agreement to sell to a third party, and they had deposited Rs. 1267.13 nP and had 'thus acted to their detriment. As stated already, the learned Judicial Commissioner allowed the petition and issued a writ of mandamus. With certificate granted by the Judicial Commissioner the appellants have. flied this appeal. The learned counsel for the appellants contends that under section 11 of the Act the trees did not vest in the deceased Moti Ram. He says that what vested under section 11 of the Act was land, and 'land ' is defined in section 2 ( 5 ) as follows: "section 2(3). Land means land which is not occupied as the site of any building in a town or village and is occupied or has. been let for agricultural purposes or for purposes subservient to agriculture, or for pasture, and includes (a) the sites of buildings and other structures on such land;. (b) orchards; (c) ghasnies;" He relies on a number of decisions of the Punjab Chief Court and the Lahore High Court interpreting a similar definition existing in the Punjab Alienation of Land Act (XIII of 1900). In our opinion those cases are distinguishable inasmuch as they deal with the question whether trees could be sold or assigned under the Punjab Alienation of Land Act without infringing the prohibitions contained in that Act forbidding sale of land by agriculturists in favour of non agriculturists. For instance, in Achhru Mal vs Maula Bakhsh(2), under a deed of sale the vendee was entitled to cut and remove the trees within a period of ten years, and the plaintiff brought a suit asking for a perpetual injunction (1) A.I.R. 1961 H. P. 32. (2) 115 to issue to the defendants respondents to restrain them from preventing him from cutting and removing certain trees from the. land belonging to the defendants respondents The lower courts held that the trees growing on agricultural land were "land" within the ' meaning of the expression as defined in section 2(3) of the Punjab Alienation of Land Act, and, therefore, their sale to the plaintiff was unlawful having regard to the provisions of that Act. The ' Lahore High Court held that the sale did not infringe the provisions of that Act because the sale of trees was not a sale of land. The High Court was not concerned with the question whether on a transfer of land trees standing on it passed to the transferee or not. In Nasib Singh vs Amin Chand(1) it was held that the suit for possession of certain mango, shisham and jaman trees was not a suit between a landlord and his tenant under the Punjab Tenancy Act and consequently the Civil Court was competent to try the suit. There can. be no doubt that trees are capable of being transferred apart from land, and if a person transfers trees or gives a right to a person to cut trees and remove them it cannot be said that he has transferred land. But we are concerned with a different question and the question is whether under section 11 of the Act trees are included within the expression "right, title and interest of the land owner in the land of the tenancy". It seems to us that this expression "right, title and interest of the land owner in ' the ' land" is wide enough to include trees standing on the land. It is clear that under section 8 of the Transfer of Property Act, unless a different intention is expressed or implied, transfer of land would include trees standing on it. It seems to us that we should construe section 11 in the same manner. The learned counsel for the appellants contends that the trees standing on the land transferred to Moti Ram under section 11 of the Act are worth about Rs. 76,000, and it could not have been the ' intention to transfer Rs. 76,000 worth of trees for Rs. 62/56. He says. that the trees are really forest trees and it was never the intention of the legislature to vest forest trees in the tenants acquiring land under section 11 of the Act. But no such contention seems to have been raised in the written statement filed by the appellants. It might have been different if it had been proved that the portion of the area transferred to Moti Ram was a natural forest.[see Kaju Mal vs Salig Ram(2)]. The learned counsel referring to section 84 of the Act points out that one of the consequences of vesting of land in the State Government under section 83 is that trees expressly vest in the 'State. He says that if it was the intention to vest trees in the tenant acquiring land (1) A.I.R. 1942 Lah. 152 (2) (1919) Punj. Rec. 237. 116 under section 11 of the Act, it would have been similarly so expressed. We are unable to accede to this contention. Section 84(a)(i) reads as follows: "84. When a notification under section 83 has been published in the Gazette notwithstanding anything contained in any contract or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter setforth shall, from the beginning of the date of vesting ensue in respect of the land to which the notification applies, namely : (a) all rights, title and interest of all the landowners (i) in every such land including cultivable or barren land, ghasnis, charands, trees, wells, tanks, ponds, water channels, ferries, pathways, hats, bazars and melas;. " If the contention of the learned counsel were. correct, even cultivable land which is expressly mentioned in section 84(a) (i) would not vest in the tenant under section 11 of the Act. Section 11 is drafted very simply and under sub s.(6) the tenant becomes the owner of the land comprised in the tenancy on and from the date of grant of the certificate, and it is expressly provided that the right, title and interest of the landowner in the said land shall determine. In the context the word "owner" is very comprehensive indeed, and it implies that all rights, title and interest of the landowner pass to the tenant. Further, it seems to. us that it would lead to utter confusion if the contention of the learned counsel is accepted. There would be interminable disputes as to the rights of the erstwhile landowners to go on the lands of erstwhile tenants and cut trees or take the fruit. Moreover, under section 15 of the Act we would, following the same reasoning, have to hold that the trees on the land of the landowner did not vest in the State. This could hardly have been the intention. For the aforesaid reasons we must uphold the judgment of the Judicial Commissioner, although for different reasons. In the result the appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

Upon an application filed by a cultivating tenant M under section 11 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, the Compensation Officer held that as such tenant he was entitled to acquire "the right, title and interest" of the owner of the land in question. After payment by the tenant of a specified amount of compensation, a certificate of ownership was granted to him and, after his death, the land was mutated in favour of his wife and daughter, respondents in this appeal. The respondents applied to the Divisional Forest Officer for permission to sell the trees of their land and although that Officer granted permission for the sale, he failed to give the necessary orders for felling the trees and taking out the converted timber from the land. The respondents filed a petition under article 226 of the Constitution for the issue of a writ of mandamus directing the Divisional Forest Officer to issue or get issued the necessary permission for felling the trees and moving the timber. The Judicial Commissioner, following Vijay Kumari Thakur vs H.P. Administration. A.I.R. 1961 H.P. 32, held that the appellants were estopped from contending that the respondents had no interest in the trees and allowed the petition. In appeal to the Supreme Court it was contended on behalf of the appellants that under section 11 of the Act the trees did not vest in the deceased tenant but only the 'land ' as defend in section 2(5) of the Act, and that the Compensation Officer was not competent to grant and, in fact, did not grant proprietary rights in the trees to the deceased tenant. HELD : dismissing the appeal: Under sub section (6) of section 11, the tenant becomes the owner of the land comprised in the tenancy on and from the date of gram of the certificate, and it is expressly provided that the right, title and interest of the landowner in the said land shall determine. In the context the word 'owner ' is very comprehensive and implies that all rights, title and interest of the land owner passed to the tenant. [116E F] Furthermore, the expression "right, title and interest of the landowner in the land" is wide enough to include trees standing on the land. Under section 8 of the Transfer of Property Act, unless a different intention is expressed or implied, transfer of land would include trees standing on it; and section 11 of the Himachal Pradesh Act should be construed in the same manner. [115 E] Achhru Mal vs Maula Bakhsh, and Nasib Singh vs Amin Chand, A,I.R. , distinguished. Kaju Mal vs Salig Ram, [1919] Punj. Rec. 237, referred to. 113

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Appeals Nos. 147 & 148 of 1966. Appeals from the judgment and decree dated November 15, 1960 of the Patna High Court in Appeal from Original Decree No. 212 of 1961. D. P. Singh, K. M. K. Nair and section P. Singh, for the appel lants (in C.A. No. 147 of 1966) and respondent No. 2 (in C.A. No. 148 of 1966). A. K. Sen, K. K. Sinha and R. P. Katriar, for the appellant (in C.A. No. 148 of 1966). section T. Desai, R. Chaudhuri, P. K. Chatterjee and Arun Chandra Mitra, for respondent No. 1 (in both the appeals). The Judgment of the Court was delivered by Shah, J. Subodh Gopal Bose hereinafter called 'the plaintiff ' commenced an action in the Court of the Subordinate Judge, Sasaram, against four defendants the State of Bihar, the Collector of Shahabad, the Additional Sub Divisional Officer Sasaram, and Dalmia Jain & Company Ltd. , for a decree declaring that he was entitled to quarry limestone for trade purposes from the Murli Hills described in the Schedule annexed to the plaint, and for an injunction restraining the defendants from dispossessing the plaintiff or granting, a lease of the land to any other person. In the Schedule, the two properties in respect of which relief was claimed were: (i) the Upper Murli Hill admeasuring 137 acres together with subsoil and mineral rights situate in pargana Rohtas bearing Touzi No. 4769 Tahsil Circle Sasaram, and (ii) the Lower Murli Hill comprising an area of 250 bighas within the Banskati Mahal together with the surface, subsoil and mineral rights situate in pargana Rohtas, Touzi No. 4771 Tahsil Circle Sasaram. The trial Court dismissed the suit. In appeal the High Court of Patna modified the decree passed by the trial Court and declared that the plaintiff was entitled to quarry limestone for trade purposes from the Lower Murli 315 Hill, "subject to the right which the owner of the Banskati Mahal had therein as set out in the judgment", and restrained the defendants by a permanent injunction from dispossessing the plaintiff from the Lower Murli Hill described in the Schedule annexed to the plaint. With certificate granted by the High Court, the State of Bihar and the Dalmia Jain and Company Ltd. have separately appealed. By his plaint the plaintiff claimed that he was a tenant in possession of 250 bighas of land of the "Lower Murli Hill" within the Banskati Mahal and that he was in possession of the Upper Murli Hill as the local agent of the Kuchwar Company which held lease$ for twenty years from April 1, 1928 to March 31, 1948, for quarrying limestone and that under the covenant for renewal in the said leases, the Kuchwar Company had remained in possession of the upper Murli Hill and the State of Bihar had accepted rent from the Company and had otherwise assented to the Company remaining in possession. The plaintiff also claimed that by immemorial custom and usage recognized by the survey authorities the plaintiff as a tenant of land within the Banskati Mahal had a right to quarry and remove limestone for trade purposes. The Court of First Instance held that at the date of the suit, the plaintiff was in occupation of 250 bighas of land in the Lower Murli Hill, but he was proved to have derived tenancy rights from the Zamindar only in respect of plot No. 168 of Baknaur and plots Nos. 42, 128, 130 and 44 of Samahuta. The Court further held that 32.50 acres out of plot No. 44 of Samahuta were acquired for the Dehri Rohtas Light Railway Company and the plaintiff 's right derived from the Zamindar was pro tanto extinguished. The Court also held that the lease in favour of the Kuchwar Company was not renewed, that the customary right to excavate minerals for trade purposes claimed by the plaintiff in the Lower Murli Hill was not proved, that the minerals in the Lower and Upper Murli Hill were vested in the State of Bihar and the plaintiff was merely a licensee from the State in respect of the Upper Murli Hill and was not a tenant holding over. In appeal to the High Court of Patna the claim to excavate minerals from the Upper Murli Hill was not pressed by the plaintiff. It was also conceded by the plaintiff that he was, as found by the trial Court, a tenant from the Zamindar only of five plots one in Baknaur and the other four in Samahuta. The finding that at the date of the suit, the plaintiff was in occupation of 250 bighas of land was not challenged on behalf of the defendants. In the view of the High Court the right to the minerals in the Lower Murli Hill vested in the Zamindar and not in the State, and the Banskati right was merely an incorporeal right to levy tax on the removal of "various spontaneous products and minerals, and did not extend to a right of ownership in the products and. the minerals. " The High Court also held that the custom pleaded by the plaintiff of the right to take for trade purposes limestone from the quarries within the Banskati Mahal was prov 316 ed. The High Court confirmed the decree passed by the trial Court insofar as it related to the claim to excavate, limestone from the Upper Murli Hill and decreed the claim for a declaration that the plaintiff had the right to quarry limestone and manufacture lime from the Lower Murli Hill and to carry on trade in limestone, "subject to the right which the owner of the Banskati Mahal had of levying duty on the products removed", and for an injunction restraining the defendants from interfering with the plaintiffs possession of the Lower Murli Hill. [His Lordship after discussing the evidence, held that "It is sufficient to record that there is no evidence on the record of specific instances of the tenants of the villages having ever exercised the right to excavate limestone from the slopes of the Lower Murli Hill for domestic, agricultural or trade purposes" and proceeded]: The High Court placed very strong reliance upon the entries in the Custom Sheet prepared under the Bihar Tenancy Act, 1885. Section 102 of the Act, provides, inter alia. "Where an order is made under section 101, the particulars to be recorded shall be specified in the order, and may include, either without or in addition to other particulars, some or all of the following, namely: . . . . . . (h) the special conditions and incidents, if any, of the tenancy. " At the Cadastral Survey which was completed in 1913, a record of customs and practices was prepared. Exhibits 11, 11 (a) and 11 (b) are the "Custom Sheets" in respect of the three villages Baknaur, Samahuta and Murli Hill (Upper Murli Hill). In respect of the villages Baknaur and Upper Murli Hill the Custom Sheets are in the form of questions and answers. Questions 12 & 13 and the answers thereto in the Custom Sheet of Baknaur may be set out: "12. Whether or not the rai On obtaining free pass they yats have any right to can bring (stone) for construc take away stone, if there tion of house and well. is one, what is that? 13.Whether the raiyats have They can prepare lime for any right to take away cultivation work from the forests lime, lac, or any other in the Mahal. Nothing is forest product. If they realised for it. If they pre have one, what is that? pare lime for sale purposes, fee is realised according to Schedule vide Memo. No. 270 dated 14 12 1904; and lac jungle is made settlement. " By the Schedule of fees, "stone chips" were chargeable at rates varying between /4/ 4 and /1/1 per ton and big stones for construction of houses were chargeable at the rate of Rs. 1/2/ per hundred. In Ext. II (b) relating to the Upper Murli Hill in answer to question No. 12 it was recorded that the Hill "has been given in B settlement i.e. in thika: " only the tenants can get stone chips from the Hill. In answer to Question No. 13 it was recorded that "the 317 basti is unpopulated: the Hill has been let out in settlement: the people of the village cannot prepare lime from the Hill of this Mauza, but they can prepare lime from the Hill of other Mauzas of this Mahal for cultivation purposes. " In Ext. 11(a) which relates to the village Samahuta, the relevant entries which are in narrative form are as follows: "The residents take away stones for constructing houses and wells and prepare lime for their personal use without paying any fee and for sale they pay fees according to the rates entered in the Schedule. Thika settlement is made in respect of lac. " Relying upon these entries the High Court held that the right to trade in limestone was vested by custom in the tenants in the Banskati Mahal. We are unable to accept this interpretation of the Custom Sheets. 'The record is merely a catalogue of practices and privileges of the tenants in the villages within the Banskati Mahal,there is nothing to show that it was recorded that the practices and privileges were exercised as a matter of right by the villagers. Un doubtedly the record has presumptive value. But the revenue authorities were concerned to ascertain the existing state of affairs and not to determine whether the practices and privileges were ancient, certain, reasonable and continuous. As evidence of local custom, the custom sheets have therefore not much value. There are again inherent indications in the custom sheets that the exercise of the privileges recorded therein was permissive. Harbans Rai descenent of Raja Shah Mal had imposed duties on the removal of forest produce and the minerals. There is no record of the nature of the duties imposed in the days of Harbans Rai and of exemptions, if any. The entries in the custom sheets indicate that the forest produce and minerals taken by the tenants in the village were subject to certain duties. Imposition of duties upon forest produce and minerals was evidently in exercise of signorial rights. In the custom sheets of the villages Baknaur and Samahuta it is recorded that the tenants "take minerals and forest produce" for domestic and agricultural purposes, but if they prepare lime for sale they have to pay duties. Recognition of the practice of taking stone and forest produce for domestic purposes without payment of duty is easily explained. In a predominantly agricultural commuinity it would have been regarded as churlish, for the Zamindar who was for all practical purposes the local representative of the Ruler to deny to the tenants of lands the facility of taking articles of small value for domestic or agricultural purposes. Acceptance of liability to pay duties on forest produce and minerals taken for purposes other than domestic or agricul tural, is destructive of the claim of a right to take the articles: it indicates that the removal was permissive being only on payment of duty. The custom sheet of the Upper Murli Hill recites that because the Hill had been let out the tenants cannot prepare lime from 318 the Hill of the Mauza lends strong support to that view. Again the recitals in Exts. 11 and 11 (a) that a thika settlement was made in respect of "lac" also leads to that inference: it clearly implies that the tenants could not take "lac" from the forest because of the grant of a thika contract. The evidence therefore shows that even the practices recorded in the custom sheets were followed so long as the Government had not disposed of the corpus in favour of the contractors. The duties set out in the Schedules to the Custom Sheets are also not shown to be permanently fixed. The Schedule of fees mentioned in the Custom Sheets was apparently published on December 14, 1904, and there is no evidence that it was merely a record of fees levied since the days of Harbans Rai. From the answer to question No. 4 in the Custom Sheets it appears that the Government had treated the forest as a protected forest under a notification dated June 30, 1909, and that implies that restrictions were imposed upon the taking and disposal of forest produce. The report dated December 17, 1909 by Jagdum Sahai a Revenue Officer that "as the custom throughout the Rohtas Pargana has been that the Zamindars and the cultivators and raiyats in all the villages in which the Government had its Banskati rights could take free of Government duty any quantity of timber, lime and stone etc. for their domestic and agricultural purposes within the limits of their own village, it was difficult to prevent or check the people of Samahuta Gurmain, and Baknaur from entering into the pure Khas Mahal portion of this Hill to which they had no right for want of distinct marks of its boundary", does not even by implication support a right to take forest produce and limestone for trade purposes. The record of customs and practices is in respect of Banskati Mahal and the area which originally extended over 500 sq. miles, was later reduced to 200 sq. miles, and consisted of 108 villages. The Custom Sheets recorded that the villagers were accustomed to take dry wood, timber and bamboo for agricultural purposes Ind for construction of houses and that was permitted free of charge. Assuming that a customary right in that behalf is established, removal of forest produce for other purposes with permits and on payment of duty fixed by the authorities cannot be said to be in exercise of a right. The conditions of obtaining permit and payment of fee for removal of the forest produce and limestone for purposes other than domestic and agricultural indicate that the removal was not as of right, but depended upon the sanction of the authorities in whom the right to the Banskati was vested. In Ext. 11 (a) the privilege recorded is of "residents" to take away stones for constructing houses and wells and prepare lime for their personal use without paying any fee, and for sale they had to pay fees according to the rates entered in the Schedule. Granting that the expression "residents" means tenants, if the privilege to take forest produce and stone is being subject to conditions of obtaining permits and payment of fee it cannot be regarded as a right enforceable against the State. 319 In the plained it was it was claimed that by immemorial customs and usage, the tenants in the Banskati Mahal had a right to quarry and remove limestone and manufacture lime from the quarries and hills within the Mahal. The plea apparently was that all tenants within the Banskati Mahal had the right to quarry and remove limestone and manufacture lime from all the limestone quarries and Hills within the Mahal and to carry on trade therein. Counsel for the plaintiff in this Court did not press for acceptance of this somewhat audacious claim and conceded that the right which the plaintiff merely claimed, notwithstanding the unguarded phraseology used in the plaint, was that: a tenant of a village within Banskati Mahal is "entitled under customary law to carry on quarrying operations for trade purposes on any forest (waste land) of the village irrespective of whether" he is "a tenant in respect of such forest land or not. " Counsel said that the right claimed by the plaintiff is exercisable only by tenants in the quarries and hills in their village and belonging to the Zamindar and not in other villages of the Banskati Mahal. This case was not pleaded in the plaint. Even if it be assumed that the plaintiff intended to set up a right not as extensive as it was pleaded, and intended to restrict it only to the quarries and hills of the Zamindar in the village in which the tenant claiming the right resided, in our judgment, a customary right to quarry stone out of the Lower Murli Hill and to manufacture lime from limestone for trade proposes is not supported by the customsheets. We are not concerned in this case with the privilege of the tenants of taking for agricultural or domestic purposes pieces of stones either lying on the surface or even underneath the surface. Whether that would amount to a customary right enforceable against the owner of the surface and the minerals is a matter on which we do not feel called upon to express any opinion. The privilege of taking limestone for domestic and agricultural purposes is one privilege : the privilege of taking limestone for manufac turing lime by an agriculturist, even if it be for sale, with his primitive methods is another privilege, and the privilege of commercial exploitation of more than a hundred thousand tons 'of limestone a year to be extracted out of the Lower Murli Hill with the aid of machinery is quite a different privilege and even the most liberal interpretation of the custom sheets will not be evidence of the exercise or grant of the last privilege. Therefore, the customary right pleaded in the plaint that every tenant of any land covered by the Banskati Mahal was entitled to take limestone out of any quarry in any hill in Banskati Mahal and to trade in stone or lime manufactured out of the limestone is not supported by instances 320 of exercise of such right and is not supported by the entries in the Custom Sheets. The entries in the Custom Sheets contain on the other hand strong indications to the contrary. Even granting that the Custom Sheets recorded a local custom that the tenants in the villages of Baknaur and Samahuta excavated stones from the hills near their villages for purposes of trade, a claim of right founded on that custom must be held unreasonable and incapable of enforcement by the sanction of a Court 's verdict. The right exercisable by the tenants in the villages to excavate limestone for trade purposes was not claimed by the plaintiff as an easement: it could not be so claimed, for it is not a right which the owner or occupier of certain land possesses as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in, or upon, or in respect of, certain other land not his own: Section 4 of the Indian Easements Act, 5 of 1882. The Indian Easements Act no doubt makes no distinction for the purpose of acquisition by prescription between the right of easement strictly so called and the right which under the English common law is called a profit a prendre. By the Explanation to section 4 the expression "to do something" includes removal and appropriation by the dominant owner, for the beneficial enjoyment of the dominant heritage, of any part of the soil of the servient heritage, or anything growing or subsisting thereon. A profit a prendre is therefore included in the definition of "easement" in section 4 of the Indian Easements Act. But an easement being a right which is super added to the ordinary common law incidents of the ownership of a dominant tenement, and which connotes a corresponding burden on a servient tenement, can only be created by grant, or by statute. An apparent exception to this rule is a customary easement. But a customary easement is not an easement in the true sense of that expression. It is not annexed to the ownership of a dominant tenement, and it is not exercisable for the more beneficial enjoyment of the dominant tenement: it is recognised and enforced as a part of the common law of the locality where it obtains. A customary easement arises in favour of an indeterminate class of persons such as residents of a locality or members of a certain community, and though not necessarily annexed to the ownership of land, it is enforceable as a right to do and continue to do something upon land or as a right to prevent and continue to prevent something being done upon land. Sanction for its enforceability being in custom, the right must satisfy all the tests which a local custom for recognition by courts must satisfy. A profit a prendre in gross that is a right exercisable by an indeterminate body of persons to take something from the land of others, but not for the more beneficial enjoyment of a dominant tenement is not an easement within the meaning of the Easements 321 Act. To the claim of such a right, the Easements Act has no application. Section 2 of the Easements Act expressly provides that nothing in the Act contained, shall be deemed to affect, inter alia, to derogate from any customary or other right (not being a license) in or over immovable property which the Government, the public or any person may possess irrespective of other immovable property. A claim in the nature of a profit a prendre operating in favour of an indeterminate class of persons and arising out of a local custom may be held enforceable only if it satisfies the tests of a valid custom. A custom is a usage by virtue of which a class of persons belonging to a defined section in a locality are entitled to exercise specific rights against certain other persons or property in the same locality. To the extent to which it is inconsistent with the general law, undoubtedly the custom prevails. But to be valid, a custom must be ancient, certain and reasonable, and being in derogation of the general rules of law must be construed strictly. A right in the nature of a profit a prendre in the exercise of which the residents of locality are entitled to excavate stones for trade purposes would ex facie be unreasonable because the exercise of such a right ordinarily tends to the complete destruction of the subject matter of the profit. It is said in Halsbury 's Laws of England, 3rd Edn. 11, article 324 at p. 173: "If a right in alieno solo amounts to a profit a prendre it cannot be claimed under an alleged custom; for no profit a prendre and therefore no right of common can be claimed by custom except in certain mining localities; nor can there be a right to a profit a prendre in an undefined and fluctuating body of persons. " That view is supported by a considerable body of authority. In Lord Rivers vs Adams (1) it was held that the right claimed by inhabitants of a parish to cut and carry away for use as fuel in their own houses fagots or haskets of the under wood growing upon a common belonging to the lord of the manor is a right to a profit a prendre in the soil of another: such a right cannot exist by custom, prescription, or grant, unless it be a Crown grant which incorporates the inhabitants. The House of Lords in Harris and Another vs Earl of Chesterfield and Another(2) held that a prescription in a que estate for a profit a prendre in alieno solo without stint and for commercial purposes is unknown to the law. In the case of Harris and Another(2) the freeholders in parishes adjoining the river Wye were in the habit of fishing a non tidal portion of the river for centuries, openly, continuously, as of right and without interruption, not merely for sport or pleasure, but commercially in order to sell the fish and make a living by it. The riparian proprietors claiming to be owners of the bed of the river brought an action of trespass against the freeholders for (1) L.R. 3 exhibit Div. (2) 322 fishing. It was held by a majority of the House of Lords that the legal origin for the right claimed by the freeholders could not be presumed and that the action by the plaintiffs was maintainable. In Lutchhmeeput Singh vs Sadaulla Nushyo and Others(1) a Division Bench of the Calcutta High Court accepted the prin ciple in the case of Lord Rivers vs Adams(2). In that case the plaintiff sought to restrain the defendants from fishing in certain bhils belonging to his Zamindar. The defendants pleaded inter alia that they had a prescriptive right to fish in the bhils, under a custom, according to which all the inhabitants of the Zamindari had the right of fishing. It was held that no prescriptive right of fishery had been acquired under section 26 of the Limitation Act and that the custom alleged could not, on the ground that it was un reasonable, be treated as valid. Counsel for the plaintiff contended that the present case falls within the principle enunciated by the House of Lords in Henry Goodman vs The Mayor and Free Burgesses of the Borough of Saltash(3). The facts in Henry Goodman 's case(3) were peculiar. A prescriptive right to a several oyster fishery in a navigable tidal river was proved to have been exercised from time immemorial by a borough corporation and its lessees without any qualification except that the free inhabitants of ancient tenements in the borough had from times immemorial without interruption, and claiming as of right, exercised the privilege of dredging for oysters in the locus in quo from the 2nd of February to Easter Eve in each year, and of catching and carrying away the same without stint for sale and otherwise. This usage of the inhabitants tended to the destruction of the fishery, and if continued would destroy it. It was held by the House of Lords (Lord Blackburn dissenting) that the claim of the inhabitants was not to a profit a prendre in alieno solo that a lawful origin for the usage ought to be presumed if reasonably possible; and that the presumption which ought to be drawn. as reasonable in law and probable in fact, was that the original grant to the corporation was subject to a trust or condition in favour of the free inhabitants of ancient tenements in the borough in accordance with the usage. The case came before the Court of Common Pleas, as a special case on facts stated, that the mayor and corporation of Saltash as a corporation was the owner by prescriptive right of the bed and soil and several oyster fishery in the estuary of the River Tamar, and that the free inhabitants of the ancient tenements in the borough of Saltash had from time immemorial, without interruption and claiming as of right, exercised the privilege of dredging for oysters in the river. The House was called upon to reconcile two conflicting rights of the corporation to the several fishery and of the free inhabitants to take oysters. The House reconciled the rights by (1) I.L.R. Cal. 698. (2) L.R. 3 exhibit Div. (3) 7 A.C, 633 323 holding that the grant to the corporation of the soil and the oyster fishery, which must be taken to have been a grant before legal memory, was made by the Crown or the Duchy of Cornwall subject to a trust or condition binding on the grantee, the corporation, to allow the owners of ancient tenements within the borough the limited right to dredge for oysters notwithstanding that the right might lead to the destruction of the fishery. In Harris vs Earl of Chesterfield(1), Lord Ashbourne observed at p. 633, after referring to the judgment in Henry Goodman 's case(2) that: "It was a splendid effort of equitable imagination in furtherance of justice. The conception was reasonably possible and that sufficed. " In a recent case before the Court of Appeal in England: Alfred F. Beckett Ltd. vs Lyons(3) it was observed by Harman and Winn L.JJ., that the claim made on behalf of the inhabitants of the County Palatine of Durham that they were entitled by custom of the locality to collect sea borne coal from the foreshore being a profit a prendre, a fluctuating body such as the inhabitants of a county could not acquire by custom a right of that nature. Counsel for the plaintiff also relied upon the observations made by Farwell, J., in Mercer vs Denne(4) at p. 557, that the period for determining whether a custom is reasonable or not is its inception. In Mercer 's case(4) fishermen who were inhabitants of the parish Walves were accustomed to spread their nets to dry on the land of a private owner at all times seasonable for fishing. In an action on behalf of the firshermen of the parish for a declaration of right in terms 'of the custom and an injunction restraining the owner of the land from building on or dealing with the land so as to disturb the right of the fishermen, it was urged by the defendant that the, custom was unreasonable, because the sea may recede for a mile or more, and it was impossible to sup pose that any such extent of ground could ever have been intended to be appropriated to such a custom. Farwell, J., observed that as the event had not happened for upwards of 700 years, he could not see the unreasonableness of it. He also observed that the period for ascertaining whether a custom is reasonable or not is its inception. Counsel for the plaintiff relying upon those observations submitted that if the custom in its inception was unreasonable, a more extensive burden imposed by the exercise of the custom by the passage of time does not make it unreasonable. It is difficult in the very nature of things to ascertain, especially under the English law where proof by immemorial user must date back to the reign of Richard 1, i.e. 1,189 A.D., the conditions existing at the inception of a custom, assuming that one can trace its inception. It is (1) (2) 7 A.C. 633. (3) (4) , 557. 324 however, unnecessary to dilate upon that matter in this appeal; if by the exercise of a customary right in favour of an indefinite body of persons the property which is the subject matter of the profit a prendre is in danger of being destroyed the customary right will not be recognised: Arjun Kaibarta vs Manoranjan De Bhoumick(1). Counsel for the plaintiff contended that the Court may ignore the exaggerated claim appearing from the averments in the plaint and declare, relying upon the custom sheets, a right to excavate limestone and to utilise it for trade purposes limited to the tenants in the two villages. We are unable to accede to that request. In the present case the right to take "spontaneous produce of forest and minerals" for domestic or agricultural purposes by the tenants is not in issue. What is in issue is the right claimable by all the tenants of the two villages even on the restricted interpretation of the claim set up by counsel for the plaintiff to excavate stone from all lands in the, village for trade purposes by installing machinery. Such a custom would, if exercised in its amplitude as claimed, may lead to breaches of the peace, for it would be open to all tenants to claim to work any quarry simultaneously for trade purposes, and may also tend to the destruction of the subjectmatter. Such a custom would be unreasonable. The High Court was, in our judgment, in error in holding that the plaintiff had established the custom pleaded by him or that it was reasonable. The plaintiff had claimed in the plaint that he was at the date of the suit in possession of 250 bighas of land in the Lower Murli Hill. The trial Court held that the plaintiff established tenancy rights in respect of only five plots of land from the Zamindar plot No. 168 in village Baknaur, and four Plots Nos. 42. 44, 128 and 130 in village Samahuta. It does not appear that this finding was challenged before the High Court. It is true that the plaintiff claimed that he was in possession at the date of the suit of 250 bighas in the two villages of Baknaur and Samahuta and it was so found by the trial Court and the finding was not challenged before the High Court either by the State or by the Dalmia Jain & Co. Ltd. But that claim of possession was apparently founded on the plea that the plaintiff was the representative of the tenant holding over under the leases granted by the State of Bihar to the Kuchwar Company. It was held that the plaintiff 's occupation of the lands was not as a tenant holding over, but was merely permissive so long as no final decision was made by the Government of Bihar on the application by the Kuchwar Company for renewal of the leases which had expired. After the Government decided not to grant renewal of the leases, the plaintiff had no right as an agent of the Kuchwar Company to (1) I.L.R. , 325 remain in occupation of the lands other than those in which he had leasehold interest derived from the Zamindar. Counsel for the plaintiff has therefore restricted his claim to an injunction in respect of the land in which he establishes his interest as a tenant from the Zamindar. The claim of the plaintiff to a declaration in respect of the area of 32.50 acres of land out of plot No. 44 of Samahuta which was acquired for the Dehri Rohtas Light Railway Company between the years 1912 and 1917 remains to be considered. The right of the Zamindar in the land together with all encumbrances in the land acquired was extinguished when possession was taken by the State in exercise of the authority of the Land Acquisition Act. Thereafter no one could claim in that land title derived from the Zamindar. 30.933 acres out of the land after it was transferred by the acquiring authority to the Railway was leased out to the Kuchwar Company and under a grant from the Kuchwar Company the plaintiff obtained the leasehold rights. The lease granted by the Dehri Rohtas Light Railway Company to Kuchwar Company was in the first instance for one year, and determinable by notice expiring with the end of the year. It was the case of the State and of Dalmia Jain & Company Ltd. that by a notice served by the Dehri Rohtas Light Railway Company upon the Kuchwar Company the lease was determined. The plaintiff contended at the trial that the notice was not received by the Kuchwar Company and therefore there was no determination of the lease. Manifestly the plaintiff cannot seek to enforce his right to the land acquired from the Dehri Rohtas Light Railway Company as a tenant from the Zamindar, and at the date of the suit the plaintiff had no right in the land, for the conveyance by the Kuchwar Company in favour of the plaintiff was executed several months after the date of the suit. Neither the Kuchwar Company nor the Dehri Rohtas Light Railway Company is on the record, and it would be impossible in the circumstances to record any finding on the question whether the lease was terminated. But since the right of the Company was not transferred to the plaintiff before the date of the suit, his claim for a declaration of his right and for injunction restraining the defendants from interfering with his possession cannot be sustained. 'The plaintiff as a tenant of the surface rights of the five plots of land in villages Baknaur and Samahuta but excluding the area acquired for the Dehri Rohtas Light Railway Company is however entitled to protect his possession against unauthorised disturbance. We accordingly modify the decree passed by the High Court and declare that the plaintiff has no right by custom to excavate limestone for trade purposes out of the slopes of the Lower Murli Hill or from any other land of the villages in Baknaur and Samahuta for trade purposes. The decree passed in favour of the plaintiff restraining the State of Bihar, its agents and servants, and the 326 Dalmia Jain & Company Ltd. from interfering with the plaintiff 's possession is maintained in respect of plot No. 168 of Baknaur village and plots Nos. 42, 128, 130 and 44 (excluding the land acquired for the Dehri Rohtas Light Railway Company) of the village Samahuta so long as the tenancy rights vested in the plaintiff are not lawfully determined. The appeals will accordingly be partially allowed. In these appeals the plaintiff claimed primarily to enforce his customary right to take valuable minerals from the Lower Murli Hill, and he has failed to establish that right. The plaintiff will therefore pay the costs to the State of Bihar and the Dalmia Jain & Company Ltd. throughout. One hearing fee, in the two appeals in this Court. G.C. Appeals allowed in part.

Respondent No. 1 acquired tenancy rights in five plots in the villages of Biknaur and Samahuta situated in the area known as Lower Murli Hill in District Shahabad, Bihar. In 1949 he filed a plaint in the Court of the Subordinate Judge Sasaram, against the State of Bihar and others, claiming inter alia that as a tenant he had a customary right to quarry limestone for trade purposes from the Lower Murli Hill. The claim was based mainly on certain entries in the Custom sheets prepared at the time of the Cadastral Survey in 1913 under section 102 of the Bihar Tenancy Act, 1885. The trial court rejected the claim but the High Court held the custom to be established by the evidence of the Customs sheets. The defendants appealed. Held The High Court was in error in holding that the plain tiff had established the custom pleaded by him or that it was reasonable. (i) There was nothing to show that the practices and privileges recorded in the Custom Sheets were exercised as a matter of right. The record has presumptive value. But the revenue authorities were concerned to ascertain the existing state of affairs and not to determine whether the practices and privileges were ancient, certain, reasonable and continuous. As evidence of local custom, the custom sheets had therefore not much value. On the other hand there were indications that the exercise of the privileges recorded therein was permissive. Even on the most liberal interpretation they did not provide evidence of the exercise of the privilege of commercial exploitation of limestone from the area in question. [317D; 319G] (ii) Even granting that the Custom sheets recorded a local custom that the tenants in the villages of Baknaur and Samahuta excavated stones from the hills near the villages for purposes of trade, a claim of right founded on that custom must be held unreasonable and incapable of enforcement by the sanction of a court 's verdict, [320B] A claim in the nature of a profit a prendre operating in favour of an indeterminate class of persons and arising out of a local custom may be held enforceable only if it satisfies the tests of a valid custom. A custom is a usage by virtue of which a class of persons belonging to a defined section in a locality are entitled to exercise specific rights against certain other persons or property in the same locality. To the extent to which it is inconsistent with the general law undoubtedly the custom prevails. But to be valid a custom must be ancient, certain and reasonable, and being in derogation of the general rules of law must be construed strictly. A right in the nature of a profit a prendre in the exercise of which the residents of a locality are entitled to excavate stone for trade purposes would ex facie 313 314 be unreasonable, because the exercise of such a right ordinarily tends to the complete destruction of the subject matter of the profit. The custom, if exercised in its amplitude as claimed, may also lead to breaches of the peace, for it would be open to all tenants to work any quarry simultaneously for trade purposes. [321B D; 324D] Lord Rivers vs Adams, L.R.3 exhibit Div. 361, Harris & Anr. vs Earl of Chesterfield and Anr. , , Alfred F. Beckett Ltd. vs Lyons , referred to Lutchhmeeput Singh vs Sadaulla Nushyo & Ors., I.L.R. 9 Cal. 698 and Arjun Kaibarta vs Manoranjan De Bhoumick, I.L.R. , approved. Henry Goodman vs The Mayor and Free Burgesses of the Borough of Saltash. 7 A.C. 633 and Mercer vs Denne, , 557 distinguished.

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Appeal No. 246 of 1967. Appeal from the judgment and order dated October 19, 1966 of the Punjab High Court in Civil Writ No. 739 of of 1966. N. C. Chatterjee, section C. Agarwala, R. K. Garg, K.M.K. Nairand L. M. Singhvi, for the appellant. Niren De, Additional Solicitor General, Chetan Das Dewan, Deputy Advocate General for the State of Haryana and N. H. Hingorani, for the respondent. 436 The Judgment of the Court was delivered by Shah, J. The State of Madhya Pradesh held an enquiry against the appellant Dr. ' Bool Chand a member of the Indian Administrative Service on charges of "gross misconduct and indiscipline" in respect of the conduct of the appellant when he was Collector District Rajgarh. The Enquiry Officer held that in recording certain remarks "regarding association of tile Commissioner of Bhopal with one B.L. Gupta a pleader of Zirapur", the appellant was "actuated by malice" and his conduct "offended against official propriety, decorum and discipline", and that the appellant had without permission removed a safe from the Rajgarh Treasury. The President of India served notice upon the ap pellant requiring him to show cause against the order of compulsory retirement proposed to be passed in regard to him. The President also consulted the Union Public Service Commission. The Union Put", Service Commission was of the view that "in the light of the findings and conclusions stated by them and having regard to all the circumstances relevant to the case. the penalty of compulsory retirement on proportionate pension should be imposed upon" the appellant. and they advised the President accordingly. By order dated February 28, 1963. the President directed that the, appellant be compulsorily retired from the Indian Administrative Service with immediate effect. In March 1965 the appellant was appointed Professor and Head of the Department of Political Science in the Punjab Univer sity. On June 18, 1965, the appellant was appointed Vice Chancellor of the Kurukshetra University by order of Mr. Hafiz Mohd Ibrahim who was the Chancellor of the University. After Mr. Hafiz Mohd. Ibrahim vacated the office of Chancellor of the University, Sardar Ujjal Singh, Governor of Punjab. held the office of Chancellor. On March 31, 1966, the Chancellor Sardar Ujjal Singh ordered that the appellant be Suspended from the office of Vice Chancellor, and by another order the Chancellor issued a notice requiring the appellant to show Cause why his services as Vice Chancellor of the Kurukshetra University be not terminated. The appellant submitted his representation, and shortly thereafter filed a petition in the High Court of Punjab for a writ in the nature of mandamus quashing the order and the notice dated March, 31, 1966. On May. 8, 1966 the Chancellor passed an order in exercise of the power under sub cl. (vi) of cl. 4 of Sch. 1 to the Kurukshetra University Act, 1956, read with section 14 of the Punjab General Clauses Act, 1898, terminating with immediate effect "the services" of the appellant "from the office of Vice Chancellor of the Kurukshetra University". The petition was then amended by the appellant. and a writ of certiorari or appropriate writ calling for the record and quashing the order dated May 8. 1966, terminating the services of the appellant was also claimed. The High Court rejected the petition filed by the appellant. Against that 437 order, with certificate granted by the High Court, this appeal has been preferred. The first argument raised on behalf of the appellant is that the Chancellor had no power to terminate the tenure of office of a Vice Chancellor. It is necessary, in considering the validity of that argument, to read certain provisions of the Kurukshetra University Act 12 of 1956. By section 4 the University is invested with the power, inter alia, to do all such things as may be necessary, incidental or conducive to the attainment of all or any of the objects of the University. By section 7. amongst others, the Chancellor, the Vice Chancellor and the Registrar are declared to be officers of the University. By section 8 the powers, duties of officers, terms of office and filling of casual vacancies are to be prescribed by the statutes. Section 14(1) provides that the statutes in Sch. I shall be the statutes of the University and that the "Court of the University shall have the power to make new or additional statutes and to amend or repeal the statutes. By section 21 it is provided that every salaried officer and teacher of the University shall be appointed under a written contract, which shall be lodged with the University. By cl. 4 of Sch. I the Vice Chancellor is declared the principal executive and academic officer of the University, and also the ex officio Chairman of the Executive Council, the Academic Council, and the Finance Committee, and is invested with authority to see that the Act. the Statutes, the Ordinances and the Regulations are faithfully observed, and to take such action as he deems necessary in that behalf. The Vice Chancellor is also authorised to exercise general control over the affairs of the University and to give effect to the decisions of the authorities of the University. Sub clauses (vi) & (vii) of cl. 4 provide: "(vi) The 'Upa Kulapati ' (Vice Chancellor) shall be appointed by the 'Kulapati ' (Chancellor) on terms and conditions to be laid by the 'Kulapati ' (Chancellor). (vii) The 'Upa Kulapati ' (Vice Chancellor) shall hold office ordinarily for a period of three years which term may be renewed. '. '. From a review of these provisions it is clear that the Vice Chancellor is an officer of the University invested with executive powers set out in the Statutes and his appointment is to be made ordinarily for a period of three years and on terms and conditions laid down by the Chancellor. There is no express provision in the Kurukshetra University Act or the Statutes thereunder which deals with the termination of the tenure of office of Vice Chancellor. But on that account we are unable to accept the plea of the appellant that the tenure of office of a Vice Chancellor under the Act cannot be determined before the expiry of the period for which he is appointed. A power to appoint ordinarily implies a power to determine the 438 employment. In section R. Tiwari vs District Boarel, Agra,(1) it was observed by this Court at p. 67: "Power to appoint ordinarily carries with it the power to, determine appointment, and a power to terminate may in the absence of restrictions express or implied be exercised, subject to the conditions prescribed in that behalf, by the authority competent to appoint. " A similar view was also expressed in Lekhraj Sathramdas Lalvani vs N. M. Shah, Deputy Custodian cum Managing Officer, Bombay (2) . That rule is incorporated in section 14 of the Punjab General Clauses Act I of 1898. That section provides: "Where, by any Punjab Act, a power to make any appointment is conferred, then, unless a different intention appears, the authority having for the time being power to make the appointment shall 'also have power to suspend or dismiss any person appointed whether by itself or any other authority by it in exercise of that power." Counsel for the appellant urged that since the general rule is given a statutory form, the validity of the exercise of the power to determine the tenure of the office of the appellant must be found in section 14 of the, Punjab General Clauses Act. Counsel says that section 14 has no application to the interpretation of the Kurukshetra University Act, because cl. 4(vii) of the Statutes which prescribes that the appointment of a Vice Chancellor shall ordinarily be for a period of three years discloses a different intention. But cl. 4(vii) of the Statutes does not purport to confer upon a person appointed Vice Chancellor an indefeasible right to continue in office for three years: the clause merely places a restriction upon the power of the Chancellor, when fixing the tenure of the office of Vice Chancellor. Counsel also urged that under section 14 of the Act power to ap point includes power to dismiss, but not to determine employment. In support of that contention he urged that in relation to the tenure of service of a public servant, the expression "to dismiss" has come to mean to determine employment as a measure of punishment. But section 14 of the General Clauses Act is a general provision: it does not merely deal with the appointment of public servants. It deals with all appointments, and there is no reason to hold, having regard to the context in which the expression occurs, that the authority invested with the power of appointment has the power to determine employment as a penalty, but not otherwise. The expression "dismiss" does not in its etymological sense necessarily involve any such meaning as is urged by counsel (1) ; (2) ; 439 for the appellant. The implication that dismissal of a servant involves determination of employment as a penalty has been a matter of recent development since the Government of India Act, 1935, was enacted. By that Act certain restrictions were imposed upon the power of the authorities to dismiss or remove members of the civil services, from employment. There is no warrant however for assuming that in the General Clauses Act, 1898, the expression "dismiss" which was generally used in connection with the termination of appointments was intended to be used only in the sense of determination of employment as a measure of punishment. The expression "Punjab Act" is defined in section 2(46) of the Punjab General Clauses Act as meaning an Act made by the Lieutenant Governor of the Punjab in Council under the Indian Councils Acts, 1861 to 1909, or any of those Acts, or the Government of India Act, 1915, or by the Local Legislature or the Governor of the Punjab under the Government of India Act, or by the Provincial Legislature or the Governor of the Punjab, or by the Provincial Legislature or the Governor. of East Punjab under the Government of India Act, 1935, or by the Legislature of Punjab Linder the Constitution. By section 14(1) of the Kurukshetra University Act 12 of 1956, it was declared that on the commencement of the Act, the Statutes of the University shall be those as set out in the Schedule 1. The Statutes incorporated in the First Schedule were made by the Legislature and must for the purpose of section 14 of the Punjab General Clauses Act be regarded as "Punjab Act". They do not cease to be "Punjab Act" merely because they are liable to be altered by the University Court in exercise of the power conferred by section 14(2) of the University Act. It was also urged that whereas provision was made by cl. 6 of the Annexure to Ordinance XI that the services of the tea hers may be summarily determined on the ground of misconduct, .here was no such provision for determination of the employment of the Vice Chancellor and that also indicated an intention to the contrary within the meaning of section 14 of the Punjab General Clauses Act. We are unable to agree with that contention. It is true,. the office of the Vice Chancellor of a University is one of great Responsibility and carries with it considerable prestige and authority. But we are unable to hold that a person appointed a Vice Chancellor is entitled to continue in office for the full period of ' his appointment even if it turns out that he is physically decrepit, mentally infirm, or grossly immoral. Absence of a provision setting up procedure for determining the employment of the Vice Chancellor in the Act or the Statutes or Ordinances does not, in our judgment, lead to the inference that the tenure of office of Vice Chancellor is not liable to be determined. The first contention raised by counsel for the appellant must therefore fail. It was then urged by counsel for the appellant that the Chancellor was bound to hold an enquiry against the appellant before 440 determining his tenure, and the enquiry must be held in consonance with the rules of natural justice. The Additional Solicitor General submitted that since the claim for relief by the appellant was founded on an alleged breach of contract, the remedy of the appellant, if any, lay in an action for damages, and not in a petition for a high prerogative writ. The Additional Solicitor General invited our attention to the averments made in the petition filed by the appellant that the Chancellor "was bound by the letter of appointment which created a tenure of office for three years" and which the Chancellor could not unilaterally determine in the purported exercise of an assumed power, and that in any event no such circumstances had been disclosed which would entitle the Chancellor to avoid the contract of service which was binding on the University, and submitted that since it was the appellant 's case that his appointment as Vice Chancellor was purely contractual, and the Chancellor had no power unilaterally to determine the contract, no relief of declaration about the invalidity of the order of the Chancellor may be granted in exercise of the jurisdiction of the High Court to issue high prerogative writs, and the only remedy which the appellant is entitled to claim is compensation for breach of contract, in action in a Civil Court. It is true, as pointed out by the Judicial Committee of the Privy Council in A. Francis vs Municipal Councillors of Kuala Lumpur(1), that when there has been purported termination of a contract of service, a declaration that the contract of service still subsisted would rarely be made and would not be made in the absence of special circumstances, because of the principle that the Courts do not grant specific performance of contracts of service. The same view was expressed in Barber vs Manchester Regional Hospital Board and Anr(2) and in Vidyodaya University of Ceylon and Ors. vs Silva(3). In these cases the authority appointing a servant was acting in exercise of statutory authority but the relation between the person appointed and the employer was contractual, and it was held that the relation between the employer and the person appointed being that of master and servant, termination of relationship will not entitle the servant to a declaration that his employment bad not been validly determined. If the appointment of the Vice Chancellor gave rise to the relation of master and servant governed by the terms of appointment, in the absence of special circumstances, the High Court would relegate a party complaining of wrongful termination Of the contract to a suit for compensation, and would not exercise its jurisdiction to issue a high prerogative writ compelling the University to retain the services of the Vice Chancellor whom the University does not wish to retain in service. But the office of a (1) (2) (3) 441 Vice Chancellor is created by the University Act: and by his appointment the Vice Chancellor is invested with statutory powers and authority under the Act. The petition filed by he appellant in the High Court is a confused document. Thereby the appellant did plead that the relation between him and the University was contractual, but that was not the whole pleading. The appellant also pleaded, with some circumlocution that since he was appointed to the office, of Vice Chancellor which is created by the Statute, the tenure of his appointment could not be determined without giving him an opportunity to explain why his appointment should not be terminated. The University Act, the Statutes and the Ordinances do not lay down the conditions in which the appointment of the Vice Chancellor may be determined, nor does the Act prescribe any limitations upon the exercise of the power of the Chancellor to determine the employment. But once the appointment is made in pursuance of a Statute, though the appointing authority is not precluded from determining the employment, the decision of the appointing authority to terminate the appointment may be based only upon the result of an enquiry held in a manner consistent with the basic concept of justice and fairplay. This Court observed in State of Orissa vs Dr. (Miss) Binapani(1) it p. 1271: "It is one of the fundamental rules of our constitutional set up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would, therefore, arise from the every nature of the function intended to be performed, it need not be shown to be super added. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case. " The power to appoint a Vice Chancellor has its source in the University Act: investment of that power carries with it the power to determine the employment; but the power is coupled with duty. The power may not be exercised arbitrarily, it can be only exercised, for good cause, i.e. in the interests of the University and only when it is found after due enquiry held in manner consistent with the rules of natural justice, that the bolder of the office is unfit to continue as Vice Chancellor. In Ridge vs Baldwin and Others(1) a chief constable who was subject to the Police Acts and Regulations was, during the pendency of certain criminal proceedings in which he was arrested (1) ; (2) [1964] A.C. 41. 442 and charged together with other persons, with conspiracy to obstruct the course of justice, was suspended from duty by the borough watch committee. The chief constable was acquitted by the jury on the criminal charges against him and he applied to be reinstated. The watch committee at a meeting decided that the chief constable had been negligent in the discharge of his duties and in purported exercise of the powers conferred on them by section 191(4) of the Act of 1882 dismissed him from office. No specific charge was formulated against him, but the watch committee in arriving at their decision, considered his own statements in evidence and the observations made by the Judge who acquitted him. in support of the order of dismissal. The chief constable appealed to the Home Secretary who held that there was sufficient material on which the watch committee could properly exercise their power of dismissal under section 191(4). The decision of the Home Secretary was made final and binding on the parties by section 2(3) of the, Police Appeals Act, 1927. The chief constable then commenced ' an action for a declaration that the purported termination of his appointment as chief constable was illegal, ultra vires and void,, and for payment of salary. The action was taken in appeal to the House of Lords. The House of Lords (Lord Evershed dissenting) held that the decision of the watch committee to dismiss the chief constable was null and void, and that accordingly notwithstanding that the decision of the Home Secretary was made final and binding on the parties, that decision could not give validity to the decision of the watch committee. Lord Reid observed at p. 65: "So I shall deal first with cases of dismissal. These appear to fall into three classes: dismissal of a servant by his master, dismissal from office held during pleasure, and dismissal from an office where there must be something against a man to warrant his dismissal. The law regarding master and servant is not in doubt. There cannot be specific performance of contract of service, and the master can terminate the contract with his servant at any time and for any reason or for none. But if he does so in a manner not warranted by the contract he must pay damages for breach of contract. So the question in a pure case of master and servant does not at all depend on whether the master has beard the servant in his own defence: it depends on whether the facts emerging at the trial prove breach of contract. Then there are many cases where a man holds an office at pleasure. Apart from judges and others whose tenure of office is governed by statute, all servants and officers of the Crown hold office at pleasure, and this has been held even to apply to a colonial judge (Terrell vs Secretary of State for the Colonies It has always been held, I think rightly, and the reason is clear. As the person having the power of dismissal need 443 .lm15 not have anything against the officer, he need not give any reasons. So I come to the third class, which includes the present case. There I find an unbroken line of authority to the effect that an officer cannot lawfully be dismissed without first telling him what is alleged against him and hearing his defence or explanation. " The case of the appellant falls within the third class mentioned by Lord Reid, and the tenure of his office could not be interrupted without first informing him of what was alleged against him and without giving him an opportunity to make his defence or explanation. The Chancellor Sardar Ujjal Singh did issue a notice upon the appellant requiring him to show cause why the tenure of his service should not be terminated. The appellant made a representation which was considered, and his tenure was determined because in the view of the Chancellor it was not in the public interest to retain the appellant as Vice Chancellor. The appellant was informed of the grounds of the proposed termination of the tenure of his office and an order giving detailed reasons was passed by the Chancellor. But the appellant contended that in arriving at his decision. the Chancellor misread the order of the President and took into consideration evidence which was not disclosed to the appellant, and failed to consider evidence in his favour which was on the, record. It is true that the order of the President only recites that the appellant was compulsorily retired as an officer of the Madhya Pradesh Cadre of the Indian Administrative Service: it does not expressly state that the order of compulsory retirement was imposed as a penalty. But a review of the disciplinary proceedings against the appellant which culminated in the order of the President leaves no room for doubt. The order of compulsory retirement was passed against the appellant as a penal order. There is no substance in the plea that the order of the Chancellor was vitiated, since the Chancellor in ascertaining the true. effect of the order of the President took into consideration a letter from the Secretary (Services), Government of India, Ministry of ' Home Affairs, dated May 6, 1966. The letter which has been set out in the order of the Chancellor merely catalogues the various, steps taken by the different authorities which considered the case of the appellant before the order of compulsory retirement of the appellant from the Indian Administrative Service was passed by the President. That letter contains no new material. The plea that the Chancellor was influenced by evidence which was not disclosed to the appellant is also without substance. 444 It appears that before he passed the order of suspension the Chancellor had received letter from Prof. D.C. Sharma and Dr. A. C. Joshi in answer to enquiries made by him relating to the circumstances in which the appellant was appointed to the post of Professor of Political Science in the University of Punjab, and these letters were not disclosed to the appellant. Counsel for the appellant says that these letters indicate that the University authorities fully knowing that the appellant was compulsorily retired from the Indian Administrative Service, appointed him as Vice Chan cellor. But the appellant did not specifically plead or make out the case that the Chancellor Mr. Hafiz Mohd. Ibrahim was made aware of the order of compulsory retirement. The Chancellor Sardar Ujjal Singh in passing the impugned order considered the grounds set up in the representation and then posed the question whether his predecessor in office, when he made the appointment of the appellant was aware of the fact that the appellant had been compulsorily retired as a measure of punishment from the Indian Administrative Service, and came to the conclusion that there was nothing to show that he Mr. Hafiz Mohd. Ibrahim was aware of the order of compulsory retirement. In paragraph .13 of his order, the Chancellor Sardar Ujjal Singh observed: "At the time of his appointment as Vice Chancellor, the fact of his compulsory retirement was not known to the Chief Minister or the then Chancellor. The alleged knowledge of the fact of compulsory retirement on the part of the Chief Minister, Cabinet or the previous Chancellor is, therefore, without any basis. " Unless he was moved in that behalf by the appellant it was not the duty of the Chancellor Sardar Ujjal Singh, before he passed the order against the appellant determining the tenure of his appointment, to enquire of Mr. Hafiz Mohd. Ibrahim who passed the order of appointment and of the Chief Minister, Punjab, whether they had come to know of the order of the President. In the petition filed before the High Court the petitioner merely averred in ground (iv) (d) that "the order of the Chancellor was vitiated, inter alia, because the Chancellor had without any material come to a conclusion that there was no basis to allege knowledge of the fact of compulsory retirement on the part of the Chief Minister or the Cabinet or the previous Chancellor": he did not set up the case that the Chancellor had information about the order of the President. His principal plea was that he was under no obligation to disclose that he was compulsorily retired from the Indian Administrative Service. In the affidavit filed by Sardar Ujjal Singh, the assertion made in ground (iv) (d) is denied. Affidavits of Mr. Hafiz Mohd. Ibrahim and Mr. Ram Kishan. Chief Minister. Punjab, were also filed before the High Court. and it was averred that neither of them knew at the time when the appointment was made that the appellant bad been compulsorily retired by the President from the Indian Administrative Service. 445 Mr. Hafiz Mohd. Ibrahim further averred that "this information did not also come to his notice so long he remained Chancellor of the Kurukshetra University", and that if the fact of compulsory retirement of the appellant as a penalty had been within his know . ledge, he would not have appointed the appellant as Vice Chancellor. Even after the affidavits by Mr. Hafiz Mohd. Ibrahim and Mr. Ram Kishan were filed, the appellant by his supplementary affidavit which was filed on July 27, 1966, did not contend that, Mr. Hafiz Mohd. Ibrahim or the Chief Minister had information about the determination of his employment in the Indian Administrative Service. His plea was that the members of the syndicate. the members of the senate and the Vice Chancellor of the Punjab University had knowledge about determination of his employment. when lie was appointed Professor of Political Science; and that plea. we agree with the High Court, was wholly irrelevant. It is true that the Chancellor in his order recorded that Mr. Hafiz Mohd. Ibrahim did not know at the time of making the appointment of the appellant to the office of Vice Chancellor that he was compulsorily retired from the Indian Administrative Service. But no inference arises therefrom that Sardar Ujjal Singh before he passed the orders made any enquiries or had access to evidence which was not disclosed to the appellant. We are unable to agree with counsel for the appellant that before a conclusion could be recorded, it was the duty of Sardar Ujjal Singh to ascertain from Mr. Hafiz Mohd. Ibrahim and Mr. Ram Kishan whether they were aware before the appellant was appointed Vice Chancellor of the order passed by the President. The Chancellor, Sardara Ujjal Singh. was, in Our judgment, under no obligation. unless moved by the appellant, to hold such enquiry. It was for the appellant to take up the defence that Mr. Hafiz Mohd. Ibrahim was informed of the order of the President and to take steps to prove that fact. He did not take up that defence, and he cannot no,, seek to make out the case that the order was vitiated because the Chancellor Sardar Ujjal Singh did not make an enquiry which the Chancellor was never asked to make. The reference to the letter of Prof. D. C. Sharma in the order of the Chancellor has no bearing either on the true effect of the order of the President or on the question whether the Chancellor was cognizant of the order passed by the President. The argument that when considering the letter of Prof. D.C. Sharma, the Chancellor should have also considered the letter of Dr. A.C. Joshi requires no serious consideration. The letters of Prof. D. C. Sharma and Dr. A. C. Joshi are. in our judgment. irrelevant in considering whether the Chancellor Mr. Hafiz Mohd. Ibrahim was aware of the order passed by the President. It is impossible to raise an inference that because the order of the President was gazetted and certain members of the syndicate and senate were aware of tile order of the President, knowledge must also be attributed to the Chancellor. 446 The proceeding resulting in the order passed by the Chancel lor does not suffer from any such infirmity as would justify this Court in holding that the rules of natural justice were not complied with. It is unnecessary in the circumstances to consider the argument advanced by the Additional Solicitor General that even if Mr. Hafiz Mohd. Ibrahim was aware of the order passed by the President ordering compulsory retirement of the appellant from the Indian Administrative Service, it was still open to his successor Sardar Ujjal Singh to determine the tenure of office of the appellant as Vice Chancellor, if in his view it appeared, having regard to the antecedents of the appellant, that the appellant was unfit to continue as Vice Chancellor. We agree with the High Court that. the appellant had the fullest opportunity of making his representation and that the enquiry held by the Chancellor was not vitiated because of violation of the rules of natural justice. In the very scheme of our educational set up at the Univer sity level, the post of Vice Chancellor is of very great importance, and if the Chancellor was of the view, after making due enquiry, that a person of the antecedents of the appellant was unfit to continue as Vice Chancellor, it would be impossible, unless the plea that the Chancellor acted maliciously or for a collateral purpose is made out, for the High Court to declare that order ineffective. The plea that the Chancellor acted mala fide was raised, but was not pressed before the High Court. The appeal therefore fails. There will be no order as to costs. R. K. P. section Appeal dismissed.

The appellant was a member of the Indian Administrative Ser vice in the Madhya Pradesh Cadre and was compulsorily retired from the Service for misconduct by an order of the President in February, 1963. In June, 1965 he was appointed Vice Chancellor of the Kurukshetra University, by the then Chancellor of the University. On March 31, 1966 the new Chancellor who Was in office at the time, ordered the suspension of the appellant from the office of Vice Chan cellor and also issued to him a notice to show cause why his services I should not be terminated. The appellant filed a petition in the High Court seeking a writ in the nature of mandamus to quash the Chancellor 's order of suspension. In the meantime the Chancellor passed an order on May 8, 1966, in exercise of the power under Clause 4(vi). of Schedule I to the Kurukshetra University Act, 1956, read with s.14 of the Punjab General Clauses Act, 1898, terminating the services of the appellant with immediate effect. The appellant then amended his petition and sought a writ of certiorari to quash the order of May 8, 1966. The High Court rejected the petition. In appeal to this Court, it was contended on behalf of the appellant, inter alia, (i) that the Chancellor had no power under the Act or the Statutes to terminate the tenure of office of a Vice Chancellor; and (ii) that the Chancellor was bound to hold an enquiry in accordance with the rules of natural justice before determining the appellant 's tenure, but the appellant had not been given a proper opportunity to explain why his services should not be terminated and, furthermore, the Chancellor had taken into consideration evidence which was not disclosed to the appellant. On the other hand, it was contended for the respondent that since the claim for relief by the respondent was founded on an alleged breach of contract, the remedy of the appellant, if any, lay in an action for damages and not in a petition for a high prerogative writ. HELD, dismissing the appeal: (i)The absence of a provision setting up the procedure for determining the employment of the Vice Chancellor in the Act or the Statutes or Ordinances does not lead to the inference that the tenure of office of Vice Chancellor is not liable to be determined. [439H] A power to appoint ordinarily implies a power to determine employment and this rule is incorporated in s.14 of the Punjab General Clauses Act I of 1898. [437H 438A] S.R. Tiwari vs District Board, Agra, ; and Lekhraj Sathramdas Lalvani vs N. M. Shah, Deputy Custodian cum Managing Officer, Bombay; , ; referred to. 435 An intention contrary to the rule was not evidenced either by the fact that under Clause 4(vii) of the Statutes the appointment of a Vice Chancellor is for three years or because there was no express provision covering the determination of service of a Vice Chancellor for misconduct as there was in the case of teachers. Clause 4(vii) of the Statutes does not purport to confer upon a person appointed Vice Chancellor an indefeasible right to continue in office for three years; the clause merely places a restriction upon the power of the Chancellor, when fixing the tenure of the office of Vice Chancellor. It could not be held that a person appointed a Vice Chancellor is entitled to continue in office for the full period of his appointment even if it turns out that he is physically decrepit, mentally infirm, or grossly immoral. [438E F; 439G H] S.14 of the General Clauses Act is a general provision: it does not merely deal with the appointment of public servants. It deals with all appointments, and there is no reason to hold, having regard to the context in which the expression occurs, that the authority invested with the power of appointment has the power to determine employment as a penalty, but not otherwise. [438G H] (ii)The new Chancellor did issue a notice upon the appellant requiring him to show cause why the tenure of his service should not be terminated and the appellant made a representation which was considered; the appellant was informed of the grounds of the proposed termination of the tenure of his service and an order giving detailed reasons was passed by 'the Chancellor. The High Court had rightly held on the facts that the appellant had the fullest opportunity of making his representation and that the inquiry held by the Chancellor was not vitiated because of any violations of the rules of natural justice. [443D; 446C] (iii) The power to appoint a Vice Chancellor has its source in the University Act: investment of that power carries with it the power to determine the employment but that power may not be exercised arbitrarily; it can be only exercised for good cause, i.e. in the interests of the University and only when it is found after due enquiry held in a manner consistent with the rules of natural justice, that the holder of the office is unfit to continue as Vice Chancellor. [441G] A.Francis vs Municipal Councillors of Kuala Lumpur, ; Barber vs Manchester Regional Hospital Board and Anr., ; Vidyodaya University of Ceylon and Ors. vs Silva. ; State of Orissa vs Dr. (Miss) Binapani, ; ; Ridge vs Baldwin and Ors. [1964] A.C. 41; referred to.

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Appeal No. 143 of 1952. Appeal under article 132(1) of the Constitution of India from the Judgment and Order, dated the 997 11th December, 195 1, of the High Court of Judicature, Rajasthan at Jodhpur in D. B. Civil Miscellaneous Case No. 1 of 1951. M. C. Setalvad, Attorney Genaral for India and K. section Hajela, Advocate General of Rajasthan, (Porus A. Mehta, with them) for the appellant, N. C. Chatterjee. and U. M. Trivedi (Jiwan Sinha Chandra and Ganpat Rai, with them) for the respondent. March 15. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal filed on a certificate granted by the High Court of Rajasthan under article 132(1) of the Constitution arises from the judgment and order of the said High Court (Wanchoo C.J. and Bapna J.) in a petition under article 226 of the Constitution, whereby the High Court held that section 8 A inserted in Rajasthan Ordinance No. XXVII of 1948 by section 4 of Rajasthan Ordinance No. X of 1949, and the amendment to section 8 A by section 3 of Rajasthan Ordinance XV of 1949 are void under article 14 of the Constitution and issued a writ restraining the State of Rajasthan from collecting rents from the tenants of lands comprising the Jagir of Bedla held by the respondent. The respondent Rao Manohar Singhji is the owner of the Jagir of Bedla situate in the former State of Mewar, now included in the State of Rajasthan. The former State of Mewar was integrated in April, 1948, to form what was known as the former United State of Rajasthan. In April and May, 1949, the latter State was amalgamated with the former States of Bikaner, Jaipur, Jaisalmer and Jodhpur and the former Union of Matsya to form the present United State of Rajasthan. Three Ordinances, No. XXVII of 1948 and Nos. X and XV of 1949, were issued by the former State of Rajasthan in connection with State Jagirs. The management of the Jagirs including the Jagir of Bedla was assumed by the former State of Rajasthan in virtue of the powers under these Ordinances. After the final formation of the State of Rajasthan in May, 129 998 1949, the Ordinances remained in force in a part of the present area of Rajasthan with the result that while jagirs in a part of the area were managed by the State in that area, the Jagirs in the rest of the State were left untouched and remained with the Jagirdars. On 4th January, 1951, the respondent filed a petition under article 226 of the Constitution contending that the said Ordinances were ultra vires the Constitution and that they became void under article 13 (1) of the Constitution of India, read with articles 14 and 31. The respondent challenged the Ordinances firstly because they constitute an infringement of articles 14, 19 and 31 of the Constitution and secondly because the Jagirdars only of the former State of Rajasthan which was formed in 1948 are prejudicially affected, while Jagirdars of the States which integrated later on are not at all affected (Para 9, K and L). It was alleged that there was a denial of equality before the law and the equal protection of the laws by reason of these Ordinances and further that the State had taken possession of the property of the respondent without providing for compensation. The reply of the State was that the Jagir was a State grant held at the pleasure of the Ruler and that it reverted to the Ruler on the death of the holder of the Jagir and was regranted to his successor after the Ruler had recognized the succession. The rights of the Jagirdars were non heritable and nontransferable and the Jagirs could not be partitioned amongst the heirs of the Jagirdar. It was pleaded therefore that even if the State took possession of the Jagir, the Jagirdar was not entitled to compensation under article 31 (2). It was also alleged that the impugned Ordinances had merely the effect of transferring the management of the Jagirs to the Government and did not deprive the Jagirdars of their property and they were consequently not hit by article 31 (2). It was denied that there was any discrimination under article 14 of the Constitution. The High Court held on the first question that the pro I visions of Ordinances Nos. X and XV of 1949 are not void under article 31 (2) or 19 (1) (f ). On the second point they recorded the conclusion that section 8 A which was introduced in Ordinance No. XXVII of 1948, by section 999 4 of Ordinance No. X of 1949, and the amendment to section 8 A by section 3 of Rajasthan Ordinance No. XV of 1949, are void under article 13 (1) of the Constitution, read with article 14. The High Court accordingly, allowed the petition and prohibited the State from collecting rents from the tenants of the land comprising the Jagir of Bedla held by the respondent. This judgment was given on 11th December, 1951, but we understand that since then the State has passed Acts abolishing Jagirs throughout the State. The question however is of some importance to the respondent inasmuch as it affects his right of collecting the rents even though for a short period. In appeal it is contended by the learned AttorneyGeneral on behalf of the State of Rajasthan that the decision of the High Court that the impugned section 8 A as amended was hit by article 14 of the Constitution is erroneous. Before deciding the validity of this contention it will be necessary to refer briefly to the relative provisions of the Ordinances. Ordinance No. I of 1948 (the United State of Rajasthan Administration Ordinance, 1948) was made and promulgated on April 28, 1948, by the Rajpramukh of Rajasthan to provide for the administration of the United State ,of Rajasthan after the latter came into existence. On July 26, 1948, Ordinance No. XXVII of 1948, [the United State of Rajasthan Jagirdars (Abolition of Powers) Ordinance, 1948] was made and promulgated by the Rajpramukh providing for the abolition of judicial powers of Jagirdars and executive powers in connection with the judiciary and vesting them in the Government. Section 8 of this Ordinance authorised the Government to make orders with a view to carrying out and giving effect to the provisions and pur poses of the Ordinance and the various powers enumerated in that section. Then came section 8 A which was introduced by Ordinance X of 1949 [the United State of Rajasthan Jagirdars (Abolition of Powers) (Amendment) Ordinance, 1949]. It reads thus: "Without prejudice to the generality of the foregoing provisions, it is hereby enacted that the revenue which was heretofore collected by Jagirdars shall 1000 henceforward be collected by and paid to the Government; the Government will after deducting the collection and other expenses pay. it to the Jagirdar concerned. " It was amended by section 3 of Ordinance No. XV of 1949 [the United State of Rajasthan Jagirdars (Abolition of Powers) (2nd Amendment) Ordinance, 1949] by adding to section 8 A after the word 'Revenue ' the following: " Including taxes, cesses and other revenue from forests. " It is not denied that when the State of Rajasthan was formed in April and May, 1949, the Jagirdars of only a part of the present State of Rajasthan could not collect their rents while Jagirdars in other areas which were covered by Jaipur, Bikaner, Jaisalmer and Jodhpur and Matsya Union were under no such disability. It appears that in the former State of Rajasthan provisions regarding the management by Government of Jagirs and the right to collect rents already existed, whereas there was no such provision in the former States of Jaipur, Bikaner, Jaisalmer and Jodhpur and Matsya Union, but when the integration took place in April and May, 1949, the discrimination exhibited itself not by virtue of anything inherent in the impugned Ordinances but by reason of the fact that Jagirdars of one part of the present State of Rajasthan were already subjected to a disability in the matter of management of their Jagirs while the other parts were wholly unaffected. This discrimination, however undesirable, was not open to any exception until the Constitution came into force on January 26, 1950, when article 13 of the Constitution declared that "all laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. " It becomes therefore necessary to see whether the impugned provision which is discriminatory on the face of it is hit by article 14 which declares that "the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.," Such an obvious discrimination 1001 can be supported only on the ground that it was based upon,,,& reasonable classification. It is now well settled by the decision of this court that a proper classification must always bear a reasonable and just relation to the things in respect of which it is proposed. Judged by this criterion it seems to us that the discrimination is based on no classification at all and is manifestly unreasonable and arbitrary. The classification might have been justified if the State had shown that it was based upon a substantial distinction, namely that the Jagirdars of the area subjected to the disability were in some way different to those of the other area of Rajasthan who were not similarly situated. It was perfectly possible for the State to have raised a specific ground in order to get out of the mischief of article 14, that the discrimination was based upon what the learned Attorney General called geographical consideration, that the Jagirs of the particular area were governed by different laws of tenure and thus constituted a class by itself and that that was a good ground for differentiation. No such ground was ever put forward before the High Court, much less was any attempt made to substantiate such a ground. In the absence of any allegation supported by evidence we are unabe to find in favour of the State that the Jagirdars of the particular area to which category the respondent belongs were differently situated to other Jagirdars. The preambles of the Ordinances do not purport to show that the conditions in the former State of Rajasthan were such as to justify the imposition of the disability on the Jagirdars of that State while the conditions prevailing in the other States forbade such a course. The High Court held that the Ordinance abolishing the Police and the Judicial powers and the administrative powers of the Jagirdars in respect to revenue in forests was open to no objection but there was no reason for taking away from the Jagirdars by section 8 A the power to collect rents to which they were entitled. We agree with the High Court in holding that there was no real and substantial distinction why the Jagirdars of a particular area should continue to be 1002 treated with inequality as compared with the Jagirdars in another area of Rajasthan. We hold therefore that no rational basis for any classification or differentiation has been made out. Section 8 A of the impugned Ordinance as amended is a clear contravention of the respondent 's right under article 14 of the Constitution and must be declared void. The case of Frank J. Bowman vs Edward A. Lewis(1) relied upon by the learned Attorney General on behalf of the State is inapplicable to the facts and circumstances of the present case. By the Constitution and laws of Missouri the citizens residing in one hundred and nine counties of the State of Missouri had the right and privilege of an unrestricted appeal to the supreme Court of the State, while, at the same time the right of appeal was denied to the citizens of the State residing in four of the counties in the easterly portion of the State, as also to those residing in the City of St. Louis. It was contended that this feature of the judicial system of Missouri was in conflict with the 14th Amendment of the Constitution of the United States. Bradley J. held that the equality clause in the 14th Amendment contemplates the protection of persons against unjust discriminations by a State; it has no reference to territorial or municipal arrangements made for different portions of a State. He went on to say: " If a Mexican State should be acquired by treaty and added to an adjoining State or part of a State, in the United States, and the two should be erected into.a new State, it cannot be doubted that such new State might allow the Mexican 1aws and judicature to continue unchanged in the one portion, and the common law and its corresponding judicature in the other portion. Such an arrangement would not be prohibited by any fair construction of the 14th Amendment. It would not be based on any respect of persons or classes, but on municipal considerations alone, and a regard to the welfare of all classes within the particular territory or jurisdiction. " This passage which was strongly relied upon by the learned Attorney General does not advance his case (1) 1O1 U.S 22; ; 1003 for in the present cage there is no question of continuing unchanged @the old laws and judicature in one portion and a different law in the other. As we have already said there is nothing to show that there as any peculiarity or any special feature in the Jagirs of the former State of Rajasthan to justify differentiation from the Jagirs comprised in the States which subsequently integrated into the present United State of Rajasthan. After the new State was formed, there was no occasion to take away the powers of Jagirdars of a disfavoured area and to leave them intact in the rest of the area. The case in Ramjilal vs Income tax Officer, Mohindargarh (1) is distinguishable on the ground that that case proceeded upon the principle that "pending proceedings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceeding commenced was a reasonable law founded upon a reasonable classification of the assessees which is permissible under the equal protection clause. " Such is however not the case here. Reliance was also placed on the case of The State of Punjab vs Ajaib Singh and Another(1). In that case the Abducted Persons (Recovery and Restoration) Act of 1949 was not held to be unconstitutional under article 14 upon the ground that it extended only to the several States mentioned in section 1(2), for in the opinion of the court classification could well be made on a geographical basis. There the Muslim abducted persons found in those States were held to form one class having similar interests to protect and their inclusion in the definition of abducted persons could not be called discriminatory. ; The learned Attorney General referred to two cases decided by the same. Bench of the Rajasthan High Court, Thakur Madan Singh vs Collector of Sikar(3), and an unreported judgment delivered on November 10, 1953, In re, Raja Hari Singh vs Rajasthan and argued (1) (1951] S.C.R. 127. (2) ; (3) Rajasthan Law Weekly, 1954, P.1. 1004 that the Bench had not stuck to its view expressed in the judgment under appeal. A careful, perusal of the judgments in these cases will show that this is far from being the case. The former case was distinguished from the case under appeal on the ground that there was a reasonable basis for classification in that case, while no such basis existed in the case before us. It appears that before Jaipur State merged into the present United State of Rajasthan there were District Boards existing in that State. They were continued on the formation of the new State but there were no District Boards in the other States. The argument that the Jaipur District Boards Act was invalid under article 14 of the Constitution was repelled it being held that the existence of District Boards in Jaipur was for the welfare of all classes within Jaipur that Jaipur had reached a higher stage of development than many of the other States and it would have been a retrograde step to deprive the People living in the former Jaipur State of the benefits of Local Self Government conferred by the District Boards Act. Reliance was placed on the observations of Bradley J. in Frank J. Bowman vs Edward A. Lewis(1) in connection with the illustration of the Mexican State and* the learned Chief Justice referred with approval to the decision under appeal before us. In the second case the attack was on the alleged discriminatory provision contained in the Mewar Tenancy Act and the Land Revenue Act. Under these Acts the rent rates had been approved by the Board of Revenue and the Government and they were alleged to be detrimental to the interests of the Jagirdars. The Jagirdars had challenged those Acts by a petition under article 226. It appears that no such laws existed in the other parts of Rajasthan. The decision of the High Court proceeded on the ground that it was not shown that there were no similar tenancy and Land Revenue laws in other parts of Rajasthan and the impugned Acts being ameliorative legislation designed to raise the economic status of the agriculturists in Mewar could not be said to constitute any discrimination merely because no such legislation (1) ; ; 1005 existed in the other parts of Rajasthan . This difference between the two parts did not justify that such progressive and ameliorative measures for the welfare of the people existing in a particular area should be done, away with and the State be brought down to the level of the unprogressive States. The judgment shows that the Bench far from going back on its previous view adhered to it and expressly distinguished the case under appeal before us on its special facts. As a result of the foregoing discussion we hold that the view taken by the High Court is correct. We accordingly dismiss the, appeal with costs. Appeal dismissed.

Hold, that section 8 A inserted in Rajasthan Ordinance XXVII of 1948 by section 4 of Rajasthan Ordinance X of, 1949 and as amended by section 3 of Rajasthan Ordinance XV of 1949 is void under article 14 of the Constitution. Frank J. Bowman vs Edward A. Lewis ; ; 25 Law. Ed. 989), Ramjilal vs Income Tax Officer, Mohindargarh ([1951] S.C.R. 127), The State of Punjab vs Ajaib Singh ([1953] S.C.R. 254) and Thakur Madan Singh vs Collector of Sikar (Rajasthan Law Weekly, 1954, p. 1), referred to.

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Appeal No. 1040 of 1965. Appeal by special leave from the judgment and order dated November 11, 1963 of the Allahabad High Court in First Appeal No. 60 of 1960. C. B. Agarwala and 0. P. Rana, for the appellant. J. P. Goyal and Raghunath Singh, for the respondents. The Judgment of the Court was delivered by Hegde, J. This appeal by the Collector of Varanasi by special leave under article 136 of the Constitution, is directed against the decision dated 11 11 1963 of the High Court of Judicature at Allahabad, in First Appeal No. 60 of 1960 on its file, which in its turn arose from the award made by Shri section B. Malik, District Judge, Varanasi, in certain land acquisition proceedings under cl. (b) of sub section (1) of s . 19 of the Defence of India Act, 1939 (to be hereinafter referred to as the Act). Before considering the contentions urged on behalf of the parties, it is necessary to set out the salient facts. For the purpose of constructing the Babatpur aerodrome near Varanasi, the Government acquired in the year 1946 about 500 acres of land. Compensation in respect of most of the lands acquired was settled by agreement. But in respect of the lands with which we are concerned in this appeal, 48.01 acres in extent, no settlement was arrived at. Therefore, the question of compensation in respect of those lands was referred to the arbitration of Shri section B. Malik under cl. (b) of sub section (1) of section 19 of the Act. In view of section 19(1)(e), the claimants were entitled to get as compensation the market value of those lands as on the date of acquisition. Before the arbitrator as well as the High Court, the parties were agreed that on the material on the record, the market value in question had to be fixed either on the basis of the sale deeds produced by the claimants or by capitalising the annual profits accruing from those lands. The arbitrator rejected the sale deeds produced before him. He adopted the method of capitalising the annual profits. On the question of annual profits also he rejected the evidence adduced on behalf of the claimants. He determined the same on the basis of the revenue 374 records for Fasli 1355 read with the evidence of the Naib Tehsildar, Jawal Prasad. Aggrieved by the decision of the arbitrator, the claimants went up in appeal to the High Court of Allahabad under section 19(1)(f). The High Court differed from the arbitrator as to the value to be attached to the sale deeds produced. It opined that the sale deeds produced were reliable and that they evidenced genuine transactions. The High Court fixed the compensation payable on the basis of Exh. A 42 dated 3 4 1951. The arbitrator had fixed the compensation at Rs. 26,454 12 0. The High Court enhanced the same to Rs. 90,446 3 0. It is against that decision that the Collector of Varanasi has filed this appeal after obtaining special leave from this Court under article 186. Shri Goyal, learned counsel for the respondents has raised the preliminary objection that no special leave could have been granted by this Court under article 136 as the judgment appealed against was neither that of a court nor of a tribunal. According to him, the High Court while acting under section 19(1)(f) was a persona designata and not a court or a tribunal. His argument on this question proceeded thus: Sec. 19(1)(b) of the Act empowers the Central Government to appoint as arbitrator a person qualified to be appointed a judge of the High Court; Shri Malik who possessed the required qualifications was appointed by the Central Government to act as an arbitrator; it is true that Shri Malik was District Judge of Varanasi at the time of his appointment, but in law it was not necessary that the person appointed should have been a District Judge, and much less the District Judge of any particular District; therefore, Shri Malik acted as a designated person and not as a court; hence, the award given by him cannot be considered either as a judgment or as a decree or order; it was merely an award; when the matter was taken up in appeal to the High Court, the proceedings did not cease to be arbitration proceedings; its original character continued even before the High Court; therefore, the decision made by the High Court should also be considered as an award and further the High Court in making that award should be considered as having functioned as an arbitrator. In this case, it is not necessary to go into the question whether the decision of the High Court is a decree, judgment or final order. Even according to Shri Goyal, the decision of the High Court is a 'determination ' as contemplated in article 136. That position he had to concede in. view of the decision of this Court in Engineering Mazdoor Sabha and another vs The Hind Cycles Ltd.(1). In support of his contention that the High Court while acting under section 19 (1)(f) was not functioning as a court, he placed strong reliance on the decision of this Court in Hanskumar Kishanchand vs Union of India(2). That case dealt with two cross appeals arising from a decision of the Nagpur High Court under section 19(1)(f). Those appeals were brought on the strength of the certificates issued (1) [1963] Supp. ; 1 S.C.R. 625(2) 375 by the High Court on 25th August 1949 under sections 109 and 110 of the Civil Procedure Code. In those cases it was con tended that the appeals were not maintainable for two reasons viz. (a) the decision appealed against is neither a decree judgment or final order and (b) the decision in question was not that of a court. This Court upheld both these contentions. On the second ground taken, Venkatarama Aiyar, J., who spoke for the Court, observed thus: "Under the law no appeal would have lain to the High Court against the decision of such an arbitrator. Thus, the provision for appeal to the High Court under section 19 (1)(f) can only be construed as a reference to, it as an authority designated and not as a court. " If the conclusion that the appeal under section 19(1)(f) is only a reference to an authority designated and not an appeal to a court is correct then there is no doubt that this Court could not have granted special leave under article 136. Therefore the real question is whether that decision lays down the law correctly when it stated that a High Court while acting under section 19(1)(f) is not functioning as a court. There was no dispute that the arbitrator appointed under section 19(1)(b) was not a court. The fact that he was the District Judge, Varanasi, was merely a coincidence. There was no need to appoint the District Judge of Varanasi or any other District Judge as an arbitrator under that provision. 19(1)(f) provides for an appeal against the order of the arbitrator. The section reads : "An appeal shall lie to the High Court against an award of an arbitrator excepting in cases where the amount thereof does not exceed an amount prescribed, in this behalf by rule made by the Central Government. " It is not in dispute, that in the instant case, the amount fixed by the arbitrator exceeded the amount prescribed by the rules and therefore the claimants had a right to go up in appeal to the High Court. We were informed that neither the Act nor the rules framed thereunder, prescribe any special procedure for the disposal of appeals under section 19(1)(f). Appeals under that provision have to be disposed of just in the same manner as other appeals to the High Court. Obviously after the appeal had reached the High Court it had to be determined according to the rule of practice and procedure of that Court. The rule is well settled that when a statute directs that an appeal shall lie to a court already established, then that appeal must be regulated by the practice and procedure of that court. This rule was stated by Viscount Haldane L. C. in National Telephone Co., Ltd. vs Postmaster General(1) thus: "When a question is stated to be referred to an established Court without more, it, in my opinion, imports (1) 376 that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches. " This statement of the law was accepted as correct by this Court in National Sewing Thread Co., Ltd., vs James Chadwick and Bros. Ltd.(1). It may be noted that the appeal provided in section 19(1)(f) is an appeal to the High Court and not to any Judge of the High Court. Broadly speaking, Court is a place where justice is judicially administered. In Associated Cement Companies Ltd. vs P. N. Sharma and another(2) Gajendragadkar, C.J., speaking for the majority observed: "The expression 'court ' in the context denotes a tribunal constituted by the State as a part of the ordinary hierarchy of courts which are invested with the State 's inherent judicial powers. A sovereign State discharges legislative, executive and judicial functions and can legitimately claim corresponding powers which are described as legislative, executive and judicial powers. Under our Constitution, the judicial functions and powers of the State are primarily conferred on the ordinary courts which have been constituted under its relevant provisions. The Constitution recognises a hierarchy of courts and to their adjudication are normally entrusted all disputes between citizens and citizens as well as between the citizens and the State. These courts can be described as ordinary courts of civil judicature. They are governed by their prescribed rules of procedure and they deal with questions of fact and law raised before them by adopting a process which is described as judicial process. The powers which these courts exercise. , are judicial powers, the functions they discharge are judicial functions and the decisions they reach and pronounce are judicial decisions. " The hierarchy of courts in this country is an organ of the State through which its judicial power is primarily exercised. The fact that the arbitrator appointed under section 19(1)(b) is either a designated person or a tribunal as to whether he is a person designated or a tribunal we express no opinion does not in any way bear on the question whether the 'High Court ' referred to under section 19(1)(f) is a court or not. Our statutes are full of instances where appeals or revisions to courts are provided as against the decisions of designated persons and tribunals. See for example, Advocates Act, Trade Marks Act. Reference in this connection may usefully be made to the decisions in National (1) ; , (2) ; , 377 Sewing Thread Co., Ltd. vs James Chadwick and Bros., Ltd.(1) and the Secretary of State for India in Council vs Chelikani Rama Rao and others(2) Prima facie it appears incongruous to hold that the High Court is not a 'court '. The High Court of a State is at the apex of the State 's judicial system. It is a court of record. It is difficult to think of a High Court as anything other than a 'court '. We are unaware of any judicial power having been entrusted to the High Court except as a 'court '. Whenever it decides or determines any dispute that comes before it, it invariably does so as a 'court '. That apart, when section 19(1)(f) specifically says that an appeal against the order of an arbitrator lies to the High Court, we see no justification to think that the legislature said something which it did not mean. We may now turn our attention to the decision of this Court in Hanskumar Kishanchand vs Union of India(3) on which, as mentioned earlier, Shri Goyal placed a great deal of reliance in support of his preliminary objection. The principal question that arose for decision in that case was whether the decision rendered by the High Court under section 19(1)(f) was a judgment, decree or final order within the meaning of those words found in section 109 of the Code of Civil Procedure. The Court accepted the contention of the Solicitor General appearing for the respondent, the Union of India, that it was not a judgment, decree or final order, and that being so, no certificate under sections 109 and II 0 of the Code of Civil Procedure to appeal to the Federal Court could have been given by the High Court. In that case this Court was not called upon to consider the scope of article 136. Therefore, it did not go into the question whether the decision appealed against could be considered as a determination falling within the scope of article 136. In arriving at the conclusion that the decision in question is not a judgment, decree or final order, this Court relied on the decisions in Rangoon Botatoung Co. vs The Collector, Rangoon(4), Special Officer, Salsette Building Sites vs Dossabhai Bazonji Motiwala(5). Manavikraman Tirumalpad vs Collector of Nilgris(6), and Secretary of State for India in Council vs Hindustan Co operative Insurance Society Limited(7). The effect of those decisions is summed up in that very judgment at pp. 1186 and 1187, and this is how it is put: "The law as laid down in the above authorities may thus be summed up: It is not every decision given by a Court that could be said to be a judgment, decree or order within the provisions of the Code of Civil Procedure or the Letters Patent. Whether it is so or not will depend on whether the proceeding in which it was given came before (1) (2) 43 I.A. 192 (3) ; (4) 39 I.A. 197 (5) (6) I.L.R. (7) 58 IA. 378 the Court in its normal civil jurisdiction, or dehors it as a persona designata. Where the dispute is referred to the Court for determination by way of arbitration as in Rangoon Botatoung Company vs Collector, Rangoon (39 I.A 197), or where it comes by way of appeal against what is statedly an award as in The Special Officer Salsette Building Sites vs Dossabhai Bezonji (ILR , Manavikraman Tirumalpad vs The Collector of the Nilgris (ILR , and the Secretary of State for India in Council vs Hindustan Co operative Insurance Society Limited (58 IA 250), then the decision is not a judgment, decree or order under either the Code of Civil Procedure or the Letters Patent. " The decisions relied on by this Court merely lay down the proposition that the decision given by the High Court in an appeal against an award is neither a decree, judgment or final order. None of the aforementioned decisions lays down the 'proposition that the High Court while exercising its appellate power did not function as a 'court '. The observation in this Court 's judgment that the provision for appeal to the High Court under section 19(1)(f) can only be construed as reference to it as an authority designated and not as a court, does not receive any support from those decisions. Nor do we find any sound basis for that conclusion. With respect to the learned Judges who decided that case, we are unable to agree with that conclusion. In our judgment, while acting under section 19(1)(f), the High Court functions as a 'court ' and not as a designated person. Our conclusion in this regard receives support from the decision of the Judicial Committee in Secretary of State for India in Council vs Chelikani Rama Rao(1) and others referred to earlier. Dealing with the ratio of its decision in Rangoon Botatoung Co. case(2), this is what Lord Shaw of Dunfermline observed (at p. 198 of the report): "It was urged that the case of Rangoon Botatoung Co. vs The Collector, Rangoon(2) enounced a principle which formed a precedent for excluding all appeal from the decision of the District Court in such cases as the pre sent. Their Lordships do not think that that is so. In the Rangoon Case a certain award had been made by the Collector under the Land Acquisition Act. This award was affirmed by the Court, which under the Act meant "a principal civil Court of original jurisdiction. " Two judges sat as 'the Court ' and also as the High Court to which the appeal is given from the award of 'the Court '. The proceedings were however, from beginning to end ostensibly and actually arbitration proceedings. In view of the nature of the question to be tried and the pro (1) 43 I.A. 192. (2) 39 I.A. 197. 379 visions of the particular statute, it was held that there was no right 'to carry an award made in an arbitration as to the value of land ' further than to the Courts specifically set up by the statute for the determination of that value. " We have already come to the conclusion that the decision rendered by the High Court under section 19(1)(f) is a 'determination '. Hence, it was within the competence of this Court to grant special leave under article 136. But then it was urged on behalf of the respondents that in view of r. 2, 0.13 of the Rules of this Court, as it stood at the relevant point 'of time, this Court could not have granted special leave as the appellant had not applied for necessary certificate under article 133 of the Constitution. In support of this contention, reliance was placed on the decision of this Court in Management of the Hindustan Commercial Bank Ltd., Kanpur vs Bhagwan Dass(1). Under article 133, a certificate can be asked for filing an appeal against the judgment, decree or final order of a High Court. As seen earlier, this Court ruled in Hanskumar Kishanchand vs Union of India(2) that the decision rendered by the High Court under section 19(1)(f) is not a decree, judgment or final order. Hence, the provisions of article 133 are not attracted to the present case. Consequently, this case is taken outside the scope of the aforementioned r. 2 of Order 13. As a measure of abundant caution, the appellant has filed CMP 2325 of 1967, praying that this Court may be pleased to excuse him from compliance with the requirements of 0.13, r. 2. In view of the decision of this Court in Hanskumar Kishanchand vs Union of India(2), no useful purpose would have been served ' by the appellant 's applying for a certificate under article 133. Hence, even if we had come to the conclusion that the case falls within the scope of 0. 1 3, r. 2, we would not have had any hesitation in exempting the appellant from compliance with the requirement of that rule. This takes us to the merits of the case. The grievance of the appellant is that the High Court erred in law in awarding compensation on the basis of Exh. The sale evidenced by that deed was effected in the year 1951, nearly five years after the acquisitions with which we are concerned in this case were effected. The sale in question cannot be considered as a contemporaneous transaction. The arbitrator has found that after the close of the second world war, the price of landed property had gone up steeply. This finding does not appear to have been challenged before the High Court. Further, under the deed in question, the land sold was .26 acres in extent. The price fetched by such a tiny bit of land is of no assistance in determining the value of the lands acquired. On behalf of the respondents, we were asked to determine the compensation of the lands acquired on the basis of sale deed Exh. 35 which relates to a sale that took place on 10 6 1947 (1) ; (2) ; 380 which according to the respondents can be considered as a contemporaneous sale. We are unable to accept this contention. 35 relates to the sale of land measuring .28 acres. The vendee under that deed is one of the claimants. There is no evidence as to the nature of the land sold under that deed. Under these circumstances, very little value can be attached to that document. We are also of the opinion that none of the sale deeds produced in this case can afford any assistance in determining the compensation payable to the respondents. They do not evidence sales of lands similar to the acquired lands, at about the time of the acquisition. The High Court did not address itself to the oral evidence adduced in this case for finding out the annual profits for the purpose of capitalisation. It rejected the evidence of the Naib Tehsildar. For reasons not disclosed. the village papers of 1354 fasli were not produced by the appellant. On the other hand, the village papers of 1355 fasli were produced. In the first place, those records do not show the rent payable in the year in which the acquisitions took place. The acquisitions in question were made in fasli 1354. For the reasons mentioned in its judgment, the High Court felt un able to place reliance on the village papers of fasli 1355. We do not think that this Court should scan the evidence afresh for determining the just compensation payable. to the respondents. That question has to be gone into by the fact finding court. All that we need say is that the High Court was not right in determining the compensation payable to the respondents on the basis of Exh. Hence its decision cannot be sustained. For the reasons mentioned above, we allow this appeal and set aside the decision of the High Court and remit the case back to that Court for disposal according to law. Before deciding the case afresh the High Court will permit the parties, to adduce additional evidence on the question of compensation; in particular, they will be allowed to produce and prove contemporaneous sale deeds and the revenue records relating to fasli 1354. Costs of this appeal shall be costs in the cause. R.K.P.S. Appeal allowed.

The Government acquired about 500 acres of land from the respondents under the Defence of India Act, 1939, and a settlement was reached in respect of the compensation to be paid for all except about 48 acres of the land. The question of the compensation payable for the remaining land was referred to arbitration under section 19(1)(b) of the Act to be determined in accordance with section 19(1)(e) which entitled the respondents to compensation at the market value of the land. The arbitrator considered various sale deeds produced before him but rejected these and fixed the compensation by capitalising the annual profits from the lands. In an appeal against his award by the respondents under section 19(1)(f) of the Act, the High Court differed from the Arbitrator and enhanced the compensation payable by fixing it on the basis of a sale deed exhibited before the arbitrator. In appeal to the Supreme Court by special leave given to the appellant Collector, it was contended on behalf of the respondents by way of a preliminary objection that no special leave could have been granted by the Court under article 136 as the judgment appealed against % ,as neither that of a court nor of a tribunal; the High Court while acting under section 19(1)(f) was a persona designata and not a court or a tribunal; proceedings before the arbitrator appointed by the Central Government under section 19(1)(b) were arbitration proceedings leading to an award made by him, when the matter was taken up in appeal to the High Court, the appeal proceedings did not cease to be arbitration proceedings and their original character continued so that the decision made by the High Court should also be considered as an award and the High Court considered as having functioned as an arbitrator. Held: (i) While acting under section 19(1)(f), the High Court functions as a 'court ' and not as a designated person. [378E] Hanskumar Kishanchand vs Union of India, ; , disapproved. The High Court of a State is at the apex of a State 's judicial system. It is a court of record and it is difficult to think of a High Court as anything other than a 'court '. No judicial power was ever entrusted to the High Court except as a 'court ' and whenever it decides or determines any dispute that comes before it, it invariably does so as a 'court '. That apart, when section 19(1)(f) specifically says that an appeal against the order of an arbitrator lies to the High Court, there was no justification. for thinking that the legislature 373 said something which it did not mean. Furthermore, neither the Act, nor the rules framed thereunder prescribe any special procedure for the disposal of appeals under section 19(1)(f) and appeals under that provision have to be disposed of in the same manner as other appeals to the High Court according to its own rules of practice and procedure. [375F G. 377B C] Case law referred to. (ii) On the facts, the High Court was not right in determining the compensation payable on the basis of the one sale deed as this could not be considered a contemporaneous transaction; the decision of the High Court must therefore be set aside and the case remitted to that court for disposal according to law after giving the parties an opportunity to adduce fresh evidence. [380D E]

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Appeal No. 380 of 1966. Appeal by special leave from the judgment and order dated August 16, 1963 of the Kerala High Court in Tax Revision Case No. 17 of 1962. section V. Gupte, Solicitor General and A. G. Pudissery, for the appellant. O. P. Malhotra, P. C. Bhartar and 0. C. Mathur, for the respondent. Sardar Bahadur, for the intervener. The Judgment of the Court was delivered by Mitter, J. This appeal, by special leave, is from a judgment and order of the High Court of Kerala dated August 16, 1963 passed in Tax Revision Case No. 17 of 1962 filed by the respondent, Cochin Coal Co. Ltd. against the order of the Sales Tax Appellant Tribunal, Trivandrum. The facts necessary for the disposal of this appeal are as follows. The respondent assessee was a, non resident dealer (not resident in Travancore Cochin) during the year 1955 56. The period we are concerned with here ends on September 4, 1955. it used to supply coal to consumers in Travancore Cochin State which later became Kerala. For the assessment year in question (1955 56) the assessee was asked to file statements showing its turnover of supplies of coal made to purchasers in the State of Kerala and in reply to the notice under section 12(2)(b) of the Travancore Cochin General Sales Tax Act, it stated that the sales of coal to steamers arriving and berthed in Travancore Cochin State waters were not taxable because the goods were stored by the steamers for consumption on the high seas. The assessee however did not question its liability to pay tax in respect of supplies made to other consumers in the State of Kerala. On March 7, 1959 the Sales Tax Officer, Circle 1, Mattancherry assessed the respondent on a turnover of Rs. 1,29,352/ . The respondent filed an appeal therefrom and the Assistant Commissioner of Agricultural Income Tax and Sales Tax, Ernakulam allowed the appeal in part and reduced the turnover by omitting the portion of it after 6th September, 1955. In the result, the assessee 's turnover was reduced to Rs. 69,407/ . There was a further appeal to the Kerala Sales Tax Appellate Tribunal. This was disposed of on January 2, 1962 in favour of the assessee. The Tribunal held that the sales being inter State sales were, according to the decision of the Kerala, High Court in T. R. Cs. 1, 2 and 3 of 1961 (reported in 14 Sales Tax Cases 850) not taxable. The Tribunal held that section 26(1)(b) of the General Sales Tax Act, as amended by section 13(ii) of Act 12 of 1957, prohibited the taxation of inter State sales after March 31, 1951. The Deputy Commissioner of Agricultural Income Tax and Sales 417 Tax Central Zone, Ernakulam, went up to the High Court of Kerala under section 15 B(1) of the Act. The question of law raised for decision by the High Court was, "Whether in the light of the amending Act 9 of 1962 the finding of the Tribunal is correct '?" In rejecting the application, the High Court reasoned as follows: (1) Central Act 7 of 1956 was intended to validate State laws imposing or authorising the imposition of taxes on the sale or purchase of goods in the course 'of interState trade or commerce. (2) This Court has decided in the State of Kerala and others vs The Cochin Coal Co., Ltd.(1) that section 26 of the General Sales Tax Act, 1125 imposed a tax on the sale or purchase of goods in the course 'of inter State trade or commerce and taxation of such sales during the period between 1 4 1951 and 6 9 1955 was validated by the above Central Act. (3) section 26 of the General Sales Tax Act, 1125 prior to its amendment by Act 12 of 1957 was in pari materia with section 22 of the Madras General Sales Tax Act which came up for consideration in the case of M. P. V. Sundararamier & Co. and others vs The State of Andhra Pradesh and another(2). The Supreme Court held that section 22 of the Madras Act "intended to authorise taxation of sales falling within the Explanation, subject to authorisation by Parliament as provided in article 286(2)". (4) Act 12 of 1957 raised the controversy as to whether Central Act 7 of 1956 could be considered as sabaging the levy of tax on inter State sales after the amendment introduced in section 26. According to the decision in T.R. Cs. 1, 2 and 3 of 1961 inter State sales after 3 1st March, 1951 were not taxable. (5) The Constitution (Sixth Amendment) Act, 1956 made substantial changes as regards levy of tax in inter State sales. As a result of the amendment of article 269 taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter State trade or commerce were to be levied and collected by the Government of India and it was for Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter State trade or commerce. (6) The Validating Act 9 of 1962 was enacted subsequent to the Constitution (Sixth Amendment) Act which came into force on 11th September 1956. In (1) ; (2) ; 418 view of the amendment of the Constitution in 1956 the Legislature of Kerala had not the competence to pass any legislation on the subject of inter State sales whether prospective or retrospective or both in the year 1962 with the result that the State could not call in aid the provisions of Act 9 of 1962 to tax inter State sales. The appellant 's case was argued by the learned Solicitor General. One E. J. Mathew was allowed to intervene in this matter. In our view, the High Court failed to construe the effect of the relevant statutes and apply the decisions of this Court rendered before they heard the matter. Proceeding chronologically, the legal position developed as follows. Before the Constitution came into force, The Travancore Cochin State General Sales Tax Act, XI of 1125 levied a tax on sale of goods under section 3 of the Act. The tax was to be paid by the dealer on his turnover in each year. There was then no question of any exemption of inter State sales from taxation. section 26 was inserted in the main Act by Act 12 of 1951 and it ran as follows: "(1) Notwithstanding anything contained in this Act (a) a tax on the sale or purchase of goods shall not be imposed under this Act: (i) where such sale or purchase takes place outside the State; or (ii) where such sale or purchase takes place in the course of import of the goods into or export of the goods out of, the territory of India. (b) a, tax on the sale or purchase of any goods shall not, after the 31st day of March 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The explanation to clause (1) of article 286 of the Constitution of India shall apply for the interpretation of sub cl. (i) of cl. (a) of sub section (1)". This was to bring the Act into line with article 286 of the Constitution of India. Then came the judgment in the case of The, Bengal Immunity Company Ltd. vs The State of Bihar and others(1) on September 6, 1955. There it was decided that the sales or purchases made by the appellant company in that case which were sought to be taxed by the State of Bihar actually took place in the course of inter State trade or commerce and Parliament not having by law otherwise provided, no Bihar law could tax these sales or purchases although they fell within the Explanation to article 286(1) and other States could not tax the same by reason of both clause I (a) read with the Explanation and cl. (2) of article 286. This led to (1) 419 the passing of Central Act 7 of 1956. The object of the Act was to validate laws of States imposing, or authorising the imposition of taxes on the sale or purchase of goods in the course of interState trade or commerce. S, 2 of the Act provided that: "Notwithstanding any judgment, decree or order of any court, no law of a State imposing, or authorising the imposition of, a, tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the 1st day of April 1951 and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter State trade or commerce; and all such taxes levied or collected or purporting to have been validly levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law. A question here arises as to whether this statutory provision served to lift the ban imposed by section 26 of the General Sales Tax Act. Then came the Constitution (Sixth Amendment) Act, 1956 on September 11, 1956. It made substantial and important changes in article 286 of the Constitution by deleting the Explanation to article 286(1) and by substituting new article 286(2) and 286(3). It also amended article 269. It inserted item 92A in the Union List of the Seventh Schedule and substituted a new entry 54 in place of the old one in the State List of the said Schedule. As a result of these amendments, taxes on the sale or purchase of goods other than newspapers, where such sale or purchase took place in the course of interstate trade or commerce could be levied and collected by the Government of India which was empowered to assign the same to the States in terms of cl. (2) of article 269. article 269(3) empowered Parliament by law to formulate principles for determining when a, sale or purchase of goods takes place in the course of inter State trade or commerce. The new item 92A added to the Union List read: "Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter State trade or commerce." The old entry 54 in the State List was substituted by a new entry reading: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." It would therefore appear that after the amendment of the Constitution in 1956 the State Legislatures were not competent to legislate in respect of taxes on the sale or purchase of goods other than newspapers which took place in the course of inter State trade or commerce. 420 Next in order of date is the Travancore Cochin General Sales Tax (Amendment) Act, 1957 (12 of 1957) which came into force on August 7, 1957. section 13 of this Act introduced several changes in section 26 of Act XI of 1125. In the first place, it substituted the word 'State ' for the words "State of Travancore Cochin", in sub cl. (i) of cl. (a) of sub section (1) of section 26. It also deleted the words: "except in so far as Parliament may by law otherwise provide" in cl. (b) of sub section (1) and omitted sub section (2) of the section. By its terms the amendment was only prospective. It did not seek to disturb the position in law obtaining up to that date. It was argued before us that the State Legislature was not competent to legislate in this field after the Constitution (Sixth Amendment) Act. On March 11, 1958 Sundararamier & Co. 's case(1) was decided by this Court. That case dealt with the competence of the States to levy tax on inter State sales and to enact conditional legislation on the subject. The statute which came up for consideration was the Madras General Sales Tax Act, 1939 (Madras Act 9 of 1939) as adapted to Andhra read with section 2 of the Sales Tax Laws Validation Act (7 of 1956). section 22 of the Madras General Sales Tax Act was inserted in the statute by an Adaptation Order of the President issued on July 2, 1952 and cl. (a) thereof was substantially similar to section 26(1)(a) of the Travancore Cochin General Sales Tax Act XI of 1125. The effect of cl. (b) of section 22 was that nothing in the Act (Madras Act) was to be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may bylaw otherwise provide after 3 1st March 1951 and the provisions of the Act were to be read and construed accordingly. There was an Explanation to this section which is a verbatim reproduction of the Explanation to article 286(1)(a). It was held by this Court tat page 1453) that: "Taken along with the admitted power of the States to impose tax on sales under Entry 54, the true scope of section 22 is that it does impose a tax on the Explanation sales, but the imposition is to take effect only when Parliament lifts the ban. In other words, it is a piece of legislation imposing tax in praesenti but with a condition annexed that it is to come into force in futuro as and when Parliament so provides. . . . It would clearly be within the competence of the Madras Legislature to enact a, law imposing a tax on sales conditional on the ban enacted in article 286(2) being lifted by Parliamentary legislation, and that, in our opinion, is all that has been done in section 22. The Madras Act defines the event on which the tax becomes payable and the person from whom and the (1) ; , 421 rate at which it has to be levied and forms a complete code on the topic under consideration. It would have no immediate operation by reason of the ban imposed by article 286(2), but when once that is removed by a law of Parliament, there is no impediment to its being enforced. That satisfies all the requirements of a conditional legislation. " Discussing various authorities cited at the Bar this Court approved of the decision in Mettur Industries Ltd. vs State of Madras(1) and Dial Das vs P. section Talwalkar(2) and held that section 22 operated to impose a tax on sales failing within the Explanation subject to authorisation by Parliament as provided in Art, 286(2). At page 1463, the Court went on to observe: "If it is competent to the legislatures of the States to enact a law imposing a tax on inter State sales to take effect when Parliament so provides, there is nothing unconstitut ional or illegal either in section 22 of the Madras Act or in the corresponding provisions in the Acts of other States. If conditional legislation is valid, as we have held it is, then section 22 is clearly intro vires and the foundation on which this contention of the petitioners rests, disappears and it must fall to the ground. " The case of the State of Kerala & Others vs The Cochin Coal Company Ltd(") was decided on October 31, 1960. There, the respondent who stocked bunker coal at Candla Island in the State of Madras sold the coal to steamers calling at the port of Cochin in the State of Travancore Cochin and delivered it there. The respondent was assessed to sales tax on such sales for the years 1951 52 and 1952 53. The respondent contended inter alia that the sale being in the course of inter State trade was covered, by the ban contained in article 286(2) of the Constitution and was not taxable under the Travancore Cochin General Sales Tax Act, 1125. The State contended that this claim for exemption was not available in view of the Sales Tax Laws Validation Act, 1956. The High Court held that the Validation Act could not avail the State because on their construction of section 26 of the Act, no tax had been levied or was leviable on sales in the course of inter State trade or commence and that the Validation Act having validated only taxes already levied could not enable the State to levy tax which had not been imposed by the State Sales Tax Act. This Court rejected the view of the High Court (see 7 S.T.C. 731 at p. 738) and held that "the view of the learned Judges of the High Court regarding the construction of section 26 of the Travancore Cochin General Sales Tax Act must now be held to be incorrect in view of ' the decision of this Court in M. P. V. Sundararamier & Co. vs, The State of Andhra Pradesh(4). (1) A.T.R. (2) A.I.R. 1957 Bom. (3) ; (4) ; 422 The position which emerges from the above may be summarised below: (1)The enactment of the Travancore Cochin General Sales Tax Act as it stood prior to the coming into force of the Constitution, imposed a levy of sales tax on transactions of the nature disclosed in this case. (2)S. 26 of the General Sales Tax Act, as amended in 1951, imposed a ban on the levy of tax after March 31, 1951 subject to any exception which Parliament may by law provide. (3)Central Act 7 of 1956 was enacted for the purpose of validating the levy and collection of taxes between 1 4 1951 and 6 9 19 55 which would 'otherwise be invalid, by reason of the decision in the Bengal Immunity Co. 's case(1). (4)In Sundararamier 's case(2) it was held by this Court that section 22 of the Madras General Sales Tax Act operated to impose a tax subject to authorisation by Parliament as provided in article 286 (2). Further, this Court did not agree with the view of the Kerala High Court in Cochin Coal Co. Ltd. vs State of Travancore Cochin(3). (5)In the State of Kerala & Others vs The Cochin Coal Co. Ltd.(4) this Court overruled the decision of the Kerala High Court in the Cochin Coal Co. Ltd. vs The State of Travancore Cochin(3) regarding the construction ,of section 26 of the Travancore Cochin General Sales Tax Act : further the assessee 's claim to relief on the strength of article 286(2) of the Constitution was held not to be available to them after the coming into force of the Sales Tax Validation Act, 1956 (See [1961] 2 S.C.R. pp. 219, 223). The effect of this was that the levy of sales tax up to 4th September, 1955 being the last date with which we are concerned in this case, was valid. The validity and the scope of the amendment introduced in section 26 of the Travancore Cochin General Sales Tax Act by Act 12 of 1957 do not fall to be considered in this case inasmuch as the Act was only prospective and did not operate to invalidate any levy of tax imposed before. In this view of the matter, we are really not concerned to go into the question as to whether the State of Kerala had legislative competence to enact Act 9 of 1962 seeking thereby to amend section 26 of the Travancore Cochin General Sales Tax Act, 1125 by substituting the date 6th September, 1955 in place of 31st March 1951 and purporting to validate the levy and collection of taxes on sales and purchases falling within the purview of sub section (2A) of section 26 of the principal Act as inserted by the Act of 1962. The ban (1) (3) 7 S.T.C. 731. (2) ; (4) ; 423 imposed by section 26 of the General Sales Tax Act, 1125 having been lifted by the Central Sales Tax Validating Act, 1956, the State was competent to collect all taxes in respect of sales in the course of inter State trade and commerce up to September 5, 1955. In the result, we hold that sales tax was properly leviable by the State of Kerala on the transactions which formed the subject matter of this case up to the 4th September 1955; but the question raised in the application for revision was not correctly framed and should read as follows: "Whether in the light of the Sales Tax Laws Validation Act, 1956 (Central Act 7 of 1956) read with the Travancore Cochin General Sales Tax Act as amended up to 1956, the finding of the Tribunal is correct?" We amend the question accordingly. We allow the appeal and answer the question in the negative. The matter must now go back to the High Court and the High Court should remit the matter to the Appellate Tribunal with our opinion on the question as reframed. In the circumstances of this case, we make no order as to costs. V.P.S. Appeal allowed.

Before the Constitution came into force, the Travancore Cochin General Sales Tax Act, M.E. 1125, levied a tax on sale of goods and inter State sales were not exempt from such taxation. By Act 12 of 1951, section 26 was inserted in the Act to bring the Act into line with article 286 of the Constitution as it then stood, and imposed a ban on the levy of tax on inter State sales after March 31, 1951, unless Parliament otherwise provided under article 286(2). On September 6, 1955, this Court held in The Bengal Immunity Co. Ltd. case, [1955]2 S.C.R. 603, that inter State sales could not be taxed by a State, even if they were inside sales with respect to that State. This led to the passing, by Parliament, of the Sales Tax Laws Validation Act, 1956, for the purpose of validating the levy and collection of taxes on inside sales between April 1, 1951 and September 6, 1955. In Sundararamier & Co. case ; this Court decided that section 22 of the Madras General Sales Tax Act, 1939 which was in part materia with section 26 of the Travancore Cochin Act operated to impose a tax, subject to authorisation by Parliament as provided in article 286(2); in other words it was a piece of legislation imposing tax in praesenti but with a condition annexed that it was to come into force in futuro as and when Parliament so provided; and this view was re affirmed by this Court in the Cochin Coal Co. 's case ; with respect to section 26 of the Travancore Cochin Act. [418C; 422 B F] The respondent assessee was a dealer, not resident in Travancore Cochin State. It supplied coal to consumers within the State, the last of the transactions being on September 4, 1955. On the question whether the inter State sales during assess ment year 1955 56, were taxable under the provisions of the Travancore Cochin Act, the Sales Tax Appellate Tribunal and the High Court held in favour of the assessee. In appeal by the State to this Court, Held: The ban imposed by section 26 of the Travancore Cochin Act, having been lifted by the Sales Tax Laws Validation Act, sales tax could be levied and collected by the State for the period covered by that Act. The Amendment to the section by Kerala Act 12 of 1957 did not fall to be considered in the present case inasmuch as the Amending Act was only prospective and did not operate to invalidate any levy of tax imposed before. The question as to whether the State of Kerala had legislative competence to amend section 26 by Kerala Act 9 of 1962 which purported to validate, the levy and collection of taxes before September 6, 1955 is also irrelevant for the purpose of this appeal. [422G; 423A D] S5 SCI (a)13 416

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Appeals Nos. 31 and 32 of 1968. Appeals by special leave from the judgment and order dated January 25, 1967 of the Mysore High Court in Writ Petitions Nos. 774 and 2171 of 1965. R. H. Dhebar, Shyamala Pappu and section P. Nayar, for the appellants (in both the appeals). section section Javali and M. Veerappa for respondent No. (in both the appeals). 364 The Judgment of the Court was delivered by Bachawat, J. On the reorganisation of States on November 1, 1956, the services of Syed Mahmood and Bhao Rao were allotted to the State of Mysore and they were employed there as junior statistical assistants. On January 16, 1958 the Head of the Department of Statistics under the directions of the Government of State of Mysore prepared a tentative seniority list of nongazetted staff of that department treating junior statistical assistants and senior statistical inspectors of the former State of Hyderabad, junior statistical assistants and senior compilers of the former State of Mysore, statistical assistants and statistical inspectors from Bombay and the head compiler of Coorg as holding the equivalent posts of junior statistical assistants in the State of Mysore. In 1959, before revising this tentative seniority list the State Government directed that all the statistical assistants and statistical inspectors of Bombay State and the head compiler of Coorg, should be treated and promoted as senior statistical assis tants. As a result of this direction officers ranking below Syed Mahmood and Bhao Rao in the seniority list published on January 16, 1958 were promoted to the higher posts. In makintheir promotions, the State Government did not consider the fitness of Syed Mahmood and Bhao Rao for promotion at all. At a much later date, they were promoted as senior statistical assistants. On May 3, 1963, the State Government published a revised seniority list placing inspectors from Bombay and head compilers from Coorg in the catecory of senior statistical assistants. Syed Mahmood and Bhao Rao filed separate writ petitions in the High Court of Mysore asking for appropriate writs quashing the seniority list published on May 3, 1963, and directing the State Government to consider their case for promotion as senior statistical assistants with retrospective effect. As the .objections to the seniority list published on May 3, 1963 were still under consideration by the State Government the High Court refused to quash this seniority list but it directed the State Government to promote Syed Mahmood and Bhao Rao as from the respective dates on which respondents junior to them were promoted as senior statistical assistants and to treat such promotions as effective up to May 3, 1963. The State of Mysore has filed the present appeals from the orders directing the promotion of Syed Mahmood and Bhao Rao after obtaining special leave. Promotion to the posts of senior statistical assistants is made from the cadre of junior statistical assistants and progress assistants. Rule 4(3)(b) of the Mysore State Civil Services General Recruitment Rules, 1957 requires such promotions to be made by selection on the basis of seniority cum merit, that is seniority subject to the fitness of the candidate to discharge the duties of the post from among persons eligible for promotion. In 1959 365 the seniority of junior statistical assistants was governed by the seniority list published on January 16, 1958. Syed Mahmood and Bhao Rao were junior statistical assistants. While making selections for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted. But without considering their case at all, the State Government promoted junior statistical assistants ranking below them in point of senio rity. The promotions were irregularly made and they were, therefore , entitled to ask the State Government to reconsider their case. In the circumstances, the High Court could issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniority and fitness they should have been promoted on the relevant dates when officers junior to them were promoted. Instead of issuing such a writ, the High Court wrongly issued writs directing the State Government to promote them with retrospective effect. The High Court ought not to have issued such writs without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959. Mr. Javali submitted that Syed Mahmood and Bhao Rao by virtue of their seniority were entitled to promotion at the time when persons junior to them were promoted. The argument overlooks the fact that promotion to the post of senior statistical assistant was based on seniority cum merit. In spite of their seniority officers junior to them could be promoted if they were unfit to discharge the duties of the post. Promotion could not be claimed as a matter of right by virtue of seniority alone. Mr. Javali argued that even in the case of promotion based ,on seniority cum merit, an officer is entitled to promotion by virtue of seniority alone, and he relied on the decision in State of Mysore vs H. M. Bellary(1). In that cast, an officer of the Bombay Government was sent on deputation from his parent department to another department. After long and satisfactory service and a number of promotions in the new department, he was reverted to his parent department and was posted in a lower grade though in the meantime an officer next below him in the parent department had been promoted to a higher grade. The promotion to the higher grade was based on seniority cum merit. The Court held that under r. 50(b) of the Bombay Civil Services Rules and the circular of the Government of Bombay dated October 31, 1950, an officer on deputation in another department on reversion to his parent department was entitled to be restored to the position he would have occupied in his parent department had he not been deputed. Rule 50(b) treated the service of an (1) ; 366 officer on deputation in the new department as equivalent to service in the parent department. As he rendered satisfactory service and was considered fit for obtaining increments and promotions in the new department, he should be deemed to be fit for promotion in the parent department and was entitled to promotion in that department when an officer next below him there was getting promotion based on seniority cum merit. In official language, this is the "next below rule" under which an officer on deputation is given a paper promotion and shown as holding a higher post in the parent department if the officer next below him there is being promoted. In our opinion, this case is entirely distinguishable. It decided that under the relevant service rules the fitness for promotion of an officer on deputation in the new department was equivalent to fitness for promotion in the parent department and the officer was entitled to promotion in the parent department when the officer next below him there was obtaining promotion based on seniority cum merit. But it is not an authority for the proposition that the officer on deputation is entitled to promotion in either the new or the parent department as a matter of right by virtue of his seniority alone, or that he should be deemed to be promoted whenever the officer next below him is being promoted. Where the promotion is based on seniority cum merit the officer cannot claim promotion as a matter of right by virtue of his seniority alone. If he is found unfit to discharge the duties of the higher post, he may be passed over and an officer junior to him may be promoted. We are of the opinion that the State Government should be directed at this stage to consider the fitness of Syed Mahmood and Bhao Rao for promotion in 1959. If on such examination the State Government arbitrarily refuses to promote them, different considerations would arise. The State Government would upon such consideration be under a duty to promote them as from 1959 if they were then fit to discharge the duties of the higher post and if it fails to perform its duty, the Court may direct it to promote them as from 1959. In the result, we allow the appeals and set aside the orders passed by the High Court. We direct the State Government to consider whether Syed Mahmood and Bhao Rao should have been promoted to the posts of senior statistical assistants on the relevant dates when officers junior to them were promoted, and if so, what consequential monetary benefits should be allowed to them. While granting special leave, this Court directed that the appellants shall pay the costs of the respondents in any event. Accordingly, the appellants are directed to pay the costs of these appeals to the respondents. One hearing fee. Y.P. Appeals allowed.

Rule 4(3)(b) of the Mysore State Civil services General Recruitment Rules, 1957 requires promotion to be made by selection on the basis of seniority cum merit, that is seniority subject to the fitness of the candidate to discharge the duties of the Post from among persons eligible for promotion. While making selections for promotions to the posts of senior statistical assistants from the cadre of junior statistical assistants, the State Government did not consider the case of the respondents who were junior statistical assistants, and published a list promoting persons ranking below them in point of seniority. The respondents filed writ petitions, in which the High Court refused to quash the seniority list but directed the appellant State to Promote the respondents as from the dates on which their juniors were promoted and treat their promotion as effective from that date. Allowing the appeal, this Court, HELD : While making selections for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted. The promotions were irregularly made and they were, therefore, entitled to ask the State Government to reconsider their case. In the circumstances, the High Court could issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniority and fitness they should have been promoted on the relevant dates when officers junior to them were promoted. Instead of issuing such a writ, the High Court wrongly issued writs directing the State Government to promote them with retrospective effect. The High Court ought not to have issued such writs without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959. [365 B D] Promotion to the post of senior statistical assistant was based on seniority cum merit. In spite of their seniority, officers junior to them could be promoted if they were unfit to discharge the duties of the post. Promotion could not be claimed as a matter of right by virtue of seniority alone. [366 C D] State of Mysore vs H. M. Ballary, [1964] 7 S.C .R. 471, distinguished.

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minal Appeal No. 162 of 1965. Appeal by special leave from the judgment and order dated January 8, 1965 of the Gujarat High Court in Criminal Appeal No. 345 of 1964. Urmila Kapur and section P. Nayar, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by Hidayatullah C.J. This is an appeal by special leave against the judgment and order of a learned Single Judge of the High 448 Court of Gujarat, January 8, 1965, by which an order confiscating 1500 and odd bottles said to contain intoxicating liquor by the City Magistrate, 8th Court, Ahmedabad, has been set aside. The facts of the case are as follows. On January 9, 1963, Sub Inspector, Benot of Ahmedabad City raided a godown con sisting of two rooms in Serial No. 151010 and Survey No. 324/0. He found several deal boxes which were opened and each box was found to contain 144 bottles packed with grass, each bottle containing 4 oz. of some liquid. Bottles were of two kinds, one containing yellow liquid and the other a red liquid. The bottles containing Yellow liquid were labeled 'U. D. Colon Solvek Cosmetics Bombay, 28. , and the bottles containing red liquid were labeled 'Jasmine Batch No. 3. Solvek Cosmetics Bombay. From these bottles, two bottles, one of each kind, were selected and were sent to the Chemical Examiner. Baroda for test. Before sending them, the Panchas were allowed to seal the bottles with paper slips containing the signature of panchas pasted on them for identification. On analysis, they were found to contain alcohol and the respondent Chinubhai Gopaldas was prosecuted under section 66(b) of the Bombay Prohibition Act. The other bottles numbering 1584 containing 6336 oz. of alleged alcohol were kept intact. Gopal Das 's prosecution failed. He was, acquitted by the City Magistrate, because according to him, it was not proved beyond reasonable doubt that he was in possession of these bottles on his own. It was found 'that he possessed them as agents of a wholesale merchant. It is in evidence however that he did not possess a permit or licence for possessing alcohol. The Magistrate while acquitting him ordered the confiscation of the remaining bottles under section 98 of the Prohibition Act. The State Government did not appeal against the acquittal. Gopaldas went to the High Court 'in appeal against the order of confiscation. The learned Single Judge of the High Court ordered return of the bottles, because according to him it was not proved that the 1500 and odd other bottles also contained intoxicants. He therefore held that the confiscation of the bottles was illegal as no order under section 98 of the Bombay Prohibition Act could be passed. In this appeal by the State of Gujarat it is contended that section 98 applies to the case. That section reads as follows : "Whenever any offence punishable under this Act has been committed, (a) any intoxicant, hemp, shora, flowers, molasses, materials. still, utensil, implement or 449 apparatus in respect of which the offence has been committed, shall be confiscated by the order of the Court. " The short question therefore is whether it can be said that in respect of the 1500 and odd bottles, an offence punishable under the Prohibition Act had been committed. It is no doubt true that the person who was charged with committing an offence was found not guilty, but the question is not whether the accused has been successfully brought to book, but whether the offence in respect of the property has been committed or not. There is distinction between the two. An offence may be demonstrated to be committed although the accused who committed it may not be successfully prosecuted. We may give an example. Suppose in a house a vast quantity of contraband opium is found. The householder may get off because the opium was found from a place which was open and had access to strangers. He may get the benefit of doubt and be acquitted, but it is clear that in so far as the opium is concerned, an offence must be deemed to have been committed, and if it is proved that , the contraband article was opium, it would be remarkable that the order should be that the opium be returned to the householder. In these circumstances, on proof that the contraband article in respect of which an offence has been committed is proved to exist, the obvious course would be to confiscate it to the State. In the present case, the two bottles which were sent to the Chemical Examiner were said to contain alcohol although there was some doubt in the mind of the Magistrate as to whether there was no chance of any malpractice. Be that as it may, there are the other bottles intact. There is some evidence to show that they were in the original packing and were a proprietary product. The manufacturer came as a witness and deposed that the liquids were bottled by him as a proprietary manufacture. In these circumstances, it would be fair to assume that all of them were of the same kind as the ones which were sent for chemical examination. However an examination of random samples can be made and if they satisfy the court that the bottles contain contraband articles the bottles can be confiscated. The order of the High Court is thus set aside, but instead of restoring the order of confiscation we order that a few bottles at random should be, analysed and if contraband stuff against the Prohibition Act is found the whole stock shall be confiscated. The appeal is allowed and the case is remanded as ordered. G.C. Appeal allowed.

A stock of bottles apparently containing cosmetic preparations was found from the possession of the respondent. On analysis the bottles which were taken as samples were found to contain alcohol and as the respondent did not have any licence for possessing alcohol he was Pro secuted under section 66(b) of the Bombay Prohibition Act. The trying Magistrate acquitted him. on the ground that he did not hold the bottles on his own but only as the agent of a wholesale dealer who acknowledged his ownership. While acquitting the respondent the Magistrate ordered the confiscation of the remaining bottles under section 98 of the Prohibition Act. The respondent went to the High Court against the order of confiscation. The learned Single Judge ordered return of the bottles because according to him it was not proved that the 1500 and odd other bottles also con tained intoxicants, and therefore the order under section 98 of the Act was illegal. The State appealed, HELD : Under section 98 what has to be seen is whether an offence under the Prohibition Act in respect of the property in question has been committed or not. An offence may be demonstrated to be committed although the accused who committed it may not be successfully prosecuted. On proof that there is a contraband article in respect of which an offence has been committed the obvious course is to confiscate, it to the State. Therefore in the present case if the court was satisfied that the bottles contained contraband article the bottles could be confiscated.[449C E] [Order of the High Court set aside with the direction that a few bottles at random should be analysed and if contraband stuff against the prohibition act was found the whole stock should be confiscated.]

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ion No. 1 of 1967. Election Petition under Presidential and Vice Presidential Elections Act, 1952. R.V.S. Mani, for the petitioners. M.C. Setalvad, J.M. Mukhi and A.S. Nambiar, for respondent No. 1. E. Udayaratnam, for respondent No. 6. Janardan Sharma, for respondent NO. 10. O.P. Varma, for respondent No. 12. C.C. Patel and M.V. Goswami, for respondent No. 14. Bhimsena Rao and R.A. Gupta, for respondent No. 17. C.K. Daphtary, Attorney General, R.H. Dhebar and S.P. Nayar, for Election Petition of India and Returning Officer. Presidential Election, New Delhi. C.K. Daphtary, Attorney General, N.S. Bindra and R.H. Dhebar, for Attorney General for India. The Judgment of the Court was delivered by Wanchoo, C.J. The presidential election in India was held in May 1967. In that election, 17 candidates were nominated. The result of the election was declared on May 9, 1967, and Dr. Zakir Husain was declared elected. The present petition is against 137 The election of Dr. Zakir Husain as President and has been filed under article 71 of the Constitution read with the Presidential and Vice Presidential Elections Act, No. 31, 1952 (hereinafter referred to as the Act) by 13 members of Parliament. The attack on he validity of the election of Dr. Zakir Husain has been made on two grounds. The first ground is that no oath was taken by Dr. zakir Husain before his nomination as required by article 84 read with article 58 of the Constitution. In consequence he was not eligible for election as President and his election is liable to be set aside. Curiously enough, however, the petitioners pray for a declaration that Sri Subba Rao, who received the second highest number of votes should be declared elected, though he (like Dr. Zakir Husain) also did not take the oath before his nomination. The second ground on which the election of Dr. Zakir Husain s challenged is that the result of the election has been materially affected by reason of undue influence, thereat and in this connection reliance is placed on four matters to which reference will be made later. The petition has been opposed on behalf of Dr. Zakir Husain. It has been urged in reply that no oath was necessary under article 84 read with article 58 of the Constitution, and as such he was eligible to stand. It has also been said on behalf of Dr. Zakir Husain that in case his nomination is invalid on that ground, Sri Subba Rao 's nomination is equally invalid as he also did not take the oath. As to undue influence it is urged that no undue influence was exercised, nor was the result of the election materially affected by any exercise of undue influence. Of the four matters urged in support of the attack on the ground of undue influence, the truth of one of them was not accepted. But it is urged in the alternative that even accepting all that has been said by the petitioners in support of their case of undue influence, the allegations made by the petitioners do not in law amount to. undue influence and therefore there could be no question of the result of the election being materially affected by the exercise of any undue influence. On the pleading of the parties, the following issues were framed : 1. Whether the acceptance of the nomination papers of respondents Nos. 1 to 17 by the Returning Officer was illegal and contrary to law for the reason that Respondents Nos. 1 to 17 did not subscribe to the oath required under Article 84(a) of the Constitution read with Article 58(1)(c) thereof; 2. Whether the result of the election has been materially affected; L10Sup.(CI)/168 10 138 3. Whether the acts and conduct alleged in para 12 of the petition and set out under heads A, B, C and D thereof amount to undue influence within the meaning of section 18(1)(b) of the Act. Whether the allegations made under heads A, B, C and D in para 12 of the petition in so far as they are not admitted arc true; 5. Whether the petition is entitled to any relief, and if so, to what relief. It will be seen that issues Nos. 1 and 3 raise pure questions of law. We made it clear to learned counsel that we would try this petition in two parts. We shall first deal with the two issues of law, and then, if necessary, set the petition down for further hearing on evidence. We also indicated that if issue No. 1 is decided in favour of the petitioners, the election would have to be set aside and then there would be no question of any further hearing on evidence. We further indicated that if issue No. 3 is decided in favour of 1he petitioners, the petition would have to be set down for further hearing on evidence on matters of fact which were in dispute. Lastly, we indicated that if both these issues were decided against the petitioners, the petition would fail and it would not be necessary then to set it down for further hearing on evidence. We propose now to consider the two issues of law. Issue No. 1. In order to decide this issue, we have to see what the Constitution provided, before the Constitution (Sixteenth Amendment) Act, 1963 (hereinafter referred to as the Amendment Act). This Act was passed on October 5. Before that amendment article 58 (1) with which we are concerned in the present petition was in these terms : "(1) No person shall be eligible for election as President ', unless he (a) is a citizen of India, (b) has completed the age of thirty five years, and (c) is qualified for election as a member of the House of the People. " Article 84, which is also relevant read thus "A person shall not be qualified to be chosen to fill a seat in Parliament unless he (a) is a citizen of India; (b) is, in/he case of d seat in the Council of States, not less than thirty years of age and, in the ease 139 of the House of the People, not less than twenty five years of age; (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament. " The Representation of the People Act, No. 43 of 1951 provided some qualifications for membership of the House of the People, by section 4. Besides that article 102 of the Constitution provided for certain disqualifications for membership of either House of Parliament and thus indirectly provided for qualifications necessary for being a member of either House of Parliament, and these were (1) that the person should not hold any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law not to disqualify its holders; (2) the person should not be of unsound mind and should not have been so declared by a competent court; (3) the person should not be an undischarged insolvent; (4) the person should not have voluntarily acquired the citizenship of a foreign State, or be under any acknowledgement of allegiance or adherence to a foreign State; and (5) the person should not be disqualified by or trader any law made by Parliament. A perusal of these provisions show that there was no requirement of taking an oath at the time of nomination by the presidential candidate in article 58. Nor was there any requirement of taking any oath at the time of nomination by a candidate for election to the House of the People under article 84. There were however provisions in the Constitution for taking an oath after election. The oath of the President and its form was provided in article 60 while the oath for a member of the House of the People after 'election was provided in Schedule III to the Constitution. which a member of Parliament had to take before taking his scat in the House of the People or the Council of States, as the case may be. It is not disputed on behalf of the petitioners that this was the undoubted position in law before the Amendment Act. Then came the Amendment Act, which came into force from October 5, 1963. By that amendment, no change was made in article 58. which stood as it was: a change was however made in Cl. (a) of article 84, which after the Amendment Act read thus: "84. Qualification for membership of Parliament A person shall not be qualified to be chosen to fill a seat in Parliament unless he (a) is a citizen of India, and makes and subscribes before some person authorised in that behalf by the Elec 140 tion Commission an oath or affirmation according to the form set out for the purposes in the Third Schedule;" The Third Schedule was also amended and provided the following form of oath to be taken by a member of Parliament who stands for election to Parliament, namely "I, A. B, having been nominated as a candidate to fill a seat in the Council of States do House of the People swear in the name of God that I will bear true solemnly affirm faith and allegiance to the Constitution of India as by law established and that I will uphold the sovereignty and integrity of India. " At the same time amendment was made in the form of oath to be taken after election, the change being that the words "I will uphold the sovereignty and integrity of India" were added to the already existing oath to be taken by a member of Parliament after his election before he took his seat in the House of the People or the Council of States. The contention on behalf of the petitioners is that because of this change in cl. (a) of article 84 by which it became necessary to take. oath for a person standing for election to either House of Parliament in the form prescribed in the Third SChedule, a person standing for election as President had also to take a similar oath because article 58(1)(c) requires that a person to be eligible for election as President must be qualified for election as a member of the House of the People. It is urged that no one is qualified, after the amendment of cl. (a) of article 84, for election as a member of the House of the People unless he makes and subscribes an oath in the form set out for the purpose in the Third Schedule, and therefore this provision applied to a person standing for election as President, for without such oath he would not be qualified to stand for election to the House of the People. The argument looks attractive prima facie but must in our opinion be rejected. The qualifications for eligibility to stand for election as President are to be found in article 58(1). The main reliance on behalf of the petitioners is placed on cl. (c) of article 58 (1), which lays down that a candidate standing for election as President has to be qualified for election as member of the House of the People. A comparison however of article 58 with article 84 as it stood before amendment shows that el. (a) of article corresponded to cl. (a) of article 58(1), as both provided that the respective candidates should be citizens of India. It was therefore not necessary to go to cI. (a) of article 84 for the purpose of finding out whether a person was eligible for election as President for 141 the purpose of citizenship for that part of cl. (a) of article 84 was specifically provided for in cl. (a) of article 58 (i). Similarly, cl. (b) of article 84 corresponded to cl. (b) of article 58(1), with this difference that it provided a special qualification as to age and therefore one would not have to go to cl. (b) of article 84 for the purpose of finding out the qualification as to age Cl. (c) of article 38 (1) clearly corresponded to cl. (c) of article 84 and reading them together it would follow that a person standing for election as President would require such qualifications as may be prescribed in that behalf by or under any law made by Parliament. Further as cl. (c) of article 58(1) lays down that a person standing for presidential election has to be qualified for membership of the House of the People, article 102 (which lays down disqualifications for members of Parliament) would also be attracted except in so far as there is a special provision contained in article 58(2). Thus cl. (c) of article 58(1) would bring in such qualifications for members of the House of the People as may be prescribed by law by Parliament, as required by article 84(c). It will by its own force bring in article 102 of the Constitution, for that Article lays down certain disqualifications which a presidential candidate must not have for he has to be eligible for election as a member of the House of the People. But it is clear to us that, what is provided in clause (a) and (b) of article 58(1) must be taken from there and we need not travel to cls. (a) and (b) of article 84 in the matter of citizenship and of age of the presidential candidate. Clauses (a) and (b) of article 58(1) having made a specific provision in that behalf in our opinion exclude cls. (a) and (b) of article 84. This exclusion was there before the Amendment Act and we are of opinion that there is nothing in the Amendment Act which makes. any difference to that position. The Sixteenth Amendment was introduced on the recommendation of the Committee on National Integration and Regionalism, which was greatly concerned over the preservation and maintenance of the integrity and sovereignty of the Union. It therefore recommended that every candidate for the membership of a State legislature or Parliament, should pledge himself to uphold the Constitution and to preserve the integrity and sovereignty of the Union and for that forms of oath in the Third Schedule to the Constitution should be suitably amended. It also recommended that every candidate for the membership of Parliament or State Legislature, Union and State Ministers, Members of Parliament and State Legislatures, Judges of the Supreme Court and High Court and the Comptroller and Auditor General of India should take oath to. uphold the sovereignty and integrity of India. In consequence of these recommendations, the sixteenth amendment was made and article 84 (a) as well as article 173 which provides for qualifications for membership of State legislature were suitably 142 amended. Further two new forms were added in the Third Schedule, one relating to oath to be taken by candidates for elector to Parliament and the other relating to oath to be taken by candidates for election to State legislatures. Further other forms of oath in the Third Schedule were also amended by adding therein the words "I will uphold the sovereignty and integrity of India. " Now if the intention of Parliament was that an oath similar in form to the oath to be taken by persons standing for election 10 Parliament had to be taken by persons standing for election to the office of the President there is no reason why a similar amendment was not made in article 58(1)(a). Further if the intention of Parliament was that a presidential candidate should also take an oath before standing for election, the form of oath should also have been prescribed either in the Third Schedule or by amendment of article 60, which provides for oath by a person elected as President before he takes his office. But we find that no change was made either in article 58(1)(a) or in article 60 or in the Third Schedule prescribing the form of oath to be taken by the presidential candidate before he could stand for election. This to our mind is the clearest indication that Parliament did not intend, when making the Amendment Act, that an oath similar to the oath taken by a candidate standing for election to Parliament had to be taken by a candidate standing for election to the office of the President. So there is no reason to import the provision of article 84(a) as it stood after the Amendment Act into article 58(1)(a), which stood unamended. That is one reason why we are of opinion that so far as the election to the office of the President is concerned, the candidate standing for the same has not to take any oath before becoming eligible for election as President. Another reason which leads to the same conclusion is this. We have already indicated that no change was made in article 60 by introducing the form of oath 'to be taken by a person standing for election as President; nor was there any change made m the Third Schedule by the introduction of a form of oath to be taken by a person standing for election as President. In the absence of such a form, we fail to see how an oath would be necessary before a person could stand for election. as President. It is not as if a person standing for election as a member of Parliament can take any oath that he likes or that may be administered to him. The particular oath which a person standing for election as a member of Parliament has to take has been prescribed in the Third Schedule to the Constitution, and it is only that oath which such a person has to take. However no form of oath is prescribed for a person standing for election as President anywhere in the Constitution and in the absence of such form, it is impossible to hold that taking of oath before standing for election as President is a 143 necessary ingredient of eligibility for such election. Further a comparison of the form of oath under article 60 for the President with form III B of the Third Schedule which prescribes the oath for a member of Parliament before he takes his seat shows that even after election the President is not required to swear that he will uphold the sovereignty and integrity of India. The oath he takes is to preserve, protect and defend the Constitution and that he will devote himself to the service and well being of the people of India. Clearly therefore the form of oath introduced by the sixteenth amendment for persons standing for election to Parliament and even after election was not considered suitable for a person standing for election as President or elected as President and that is why we find no form prescribed by Parliament. It has been urged on behalf of the petitioners that, though no form of oath may be prescribed it was open to the Election Commission to prescribe an oath by making changes mutatis mutandis in form III A of the Third Schedule relating to candidates for election to Parliament, and that it was the duty of the Election Commission to appoint somebody to administer the oath in the form to be evolved by him by changing form III A in the Third Schedule mutatis mutandis. Reliance in this connection has been placed on article 324 of the Constitution. We are of opinion that there is no force in this contention. Article 324 inter alia provides for "the superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of President and Vice President". These words do not in our opinion give any power to the Election Commission to introduce a form of oath to be taken by a candidate for election whether it be for election as President or as a member of Parliament or of a State legislature. If an oath has to be taken by any.such person it has to be provided by law and the form thereof has also to be prescribed by law (we are using the word "law" in its broadest sense, including constitutional provisions) and that is what was done by the Sixteenth Amendment so far as election to Parliament and State legislatures was concerned. But as already observed, Parliament did not think it fit when it brought in the Amendment Act to make any change in article 58 (1) (a) or to introduce a form in article 60 or in, the Third Schedule to the Constitution with reference to candidates standing for election as President. If Parliament did not choose to do so, the Election,Commission cannot do so under the power it has been given under article 324 to superintendent, direct and control the preparation of the electoral rolls and the conduct of all elections. That power is very different from the power to prescribe, an oath before a candidate can stand for election. Such prescription can only be by law as indicated above. The Amendment Act having not made any such provision with 144 respect to those standing for election to the office of the President, it cannot be open to the Election Commission to prescribe a form of oath for such persons by changing form III A mutatis mutandis. Such power cannot be spelt out of article 324 on which reliance has been placed on behalf of the petitioners. It follows therefore that no form whatsoever having been prescribed by Parliament when it made the sixteenth amendment for taking an oath by a presidential candidate, article 84 (a) when it prescribed for taking an oath for candidates for election to the. House of the People has no application to candidates standing for election to Presidentship. So far as these candidates are concerned we must look to article 58 (1) (a) only and need not go to article 84(a). Another reason for coming to the same conclusion is that when article 58 (1) (c) lays down that a person standing for election as President has to be qualified for election as a member of the House of the People it only brings in qualifications other than those= which are specifically mentioned in article 58 (1) itself. Now specific qualifications provided in article 58 (1) are that a candidate for presidential election has to be a citizen of India and he must have completed the age of 35 years. So far as these qualifications are concerned, we need not go anywhere else in order to search for eligibility to contest election as President. For example, the specific qualification in cl. (b) of article 58.(1) is that the person concerned should have completed the age of 35 years. On the other Hand, el. (b) of article 84 lays down the age of 25 years for membership of the House of the People. Therefore when one has to look for the qualification of age one must only go to article 58 (1) (b) for the purpose of presidential election and need not look elsewhere. What is specifically provided for by article 58 (1) must be accepted as it stands and no addition can be made to that provision and no subtraction can be made therefrom. It will be seen therefore that though there may be some qualifications which may be necessary for election to the House of the People, they need not necessarily apply to the election for the office of the President, where there is a specific provision in article 58 (1) itself. We are therefore clearly of opinion that in view of the specific provision in article 58 (a) and (b) we cannot and should not apply clauses (a) and (b) of article 84, to persons standing for election as President. This conclusion is reinforced if we look at article 58 (2) and compare it with article 102 (1) (a). It is clear that when there is a specific provision with respect to an office of profit in article 58 (2); it is that provision which will apply and not article 102 (1) (a). We therefore hold that the acceptance of the nomination papers of respondents 1 to 17 by the Returning Officer was neither illegal nor contrary to law on the ground that these respondents did not subscribe to an oath under article 84 (a) read with article 58(1)(c). The issue is decided against the petitioners. 145 ISSUE No. 3. The petitioners rely on four allegations on the question of undue influence. Before we deal with those allegations it is necessary to understand what undue influence is in the context of the Act. Section 18 (1 ) (b) lays down that if the result of the election has been materially affected by reason of undue influence at the election committed by any person other than the returned candidate or a person acting in connivance with the returned candidate, the election will be liable to be declared void. Sub section (2) of section 18 lays down that undue influence would have the same meaning as in Chapter IX A of the Indian Penal Code. Section 171 C of the Indian Penal Code defines what "undue influence" is in these terms : "(1) Whoever voluntarily interferes or attempts to interfere with the free exercise of any electoral right commits the offence of undue influence at an election. (2) Without prejudice to the generality of the provisions of sub section (1), whoever (a) threatens any candidate or voter, or any person in whom a candidate or voter is interested, with injury of any kind, or (b) induces or attempts to induce a candidate or voter to believe that he or any person in whom he is interested will become or will be rendered an object of Divine displeasure or of spiritual censure, shall be deemed to interfere with the free exercise of the electoral right of such candidate or voter, within the meaning of sub section (1). (3) A declaration of public policy or a promise of public action, or the mere exercise of a legal right without intent to interfere with an electoral right, shall not be deemed to be interference within the meaning of this section. " It will be seen from the above definition that the gist of undue influence at an election consists in voluntary interference or attempt at interference with the free exercise of any electoral right. Any voluntary action which interferes with or attempts to interfere with such free exercise of electoral right would amount to undue influence. But even though the definition in sub section (1) of section 171 C is wide in terms it cannot take in mere canvassing in favour of a candidate at an election. If that were so, it would be impossible to run democratic elections. Further sub section (2)ors. 171 C shows what the nature of undue influence is though of course it does not cut down the generality of the provisions contained in sub section (1). Where any threat is. held out to any candidate or voter or any person in whom a candidate or voter is interested and 146 the threat is of injury of any kind, that would amount to voluntary interference or attempt at interference with the free exercise of electoral right and would be undue influence. Again where a person induces or attempts to induce a candidate, or voter to believe that he or any person in whom he is interested will become or will be rendered an object of Divine displeasure or of spiritual censure, that would also amount to voluntary interference with the free exercise of the electoral right and would be undue influence. What is contained in sub section (2) of section 1771 C is merely illustrative. It is difficult to lay down in general terms where mere canvassing ends and interference or attempt at interference with the free exercise of any electoral right begins. That is a matter to be determined in each case; but there can be No. doubt that if what is done is merely canvassing: it would not be undue influence. As sub section (3) of section 171 C shows, the mere exercise of a legal right without intent to interfere with an electoral right would not be undue influence. We may in this connection refer to section 123(2) of the Representation of the People Act 1951 which also defines "undue influence". The definition there is more or less in the same language as in section 171 C of the Indian Penal Code except that the words "direct or indirect" have been added to indicate the nature of interference. It will be seen that if anything, the definition of "undue influence" in the Representation of the People Act may be wider. It will therefore be useful to refer to cases under the election law to see how election tribunals have looked at the matter while considering the scope of the words "undue influence". The earliest case to which reference may be made is R.B. Surendra Narayan Sinha vs Amulyadhone Roy & 43 Others.(1) There the question raised before the Election Tribunal was whether by issuing a whip on the day of election requesting members to cast their preferences in a particular order, the leader of a Party, who was also the Chief Minister, could be said to have exercised undue influence. The Election Tribunal held that the leader the party was entitled to use his influence as a leader and he could not be deprived of that right because he happened to. be a minister. The issue of a whip of that kind was thus held to be no more than canvassing in. favour of the candidates of the party to which the leader or the Chief Minister belonged. In Linge Gowda vs Shivananjappa(2), the Election Tribunal held that a leader of a political party was entitled to declare to the public the policy of the party and ask the electorate to vote for his party without interfering with any electoral right and such declarations on his part would not amount to undue influence under (1) 1940 Indian Election Cases by Sen and Poddar, Case No. XXX at p. 188. (2) (1953) VI E.L.R. 288. 147 the Representation of the People Act. The fact of that such a leader happened to be a Minister or Chief Minister of the State would make no difference. It was further observed in that case that "the law cannot strike at the root of due influence and under the law of election, only undue influence is forbidden, and the leaders of ' a party will be deemed to exercise their due influence if they ask the electorate to vote for their party candidate, even if they happen to be Ministers." In Amirchand vs Surendra Lal Jha(1) it was held by the Election Tribunal that Ministers were prominent members. of their party and in that capacity they were entitled to address meetings and to tell people what their party had done, and what its programme was and to ask them to vote for the candidate set up by their party, and such action of the Ministers could not be held amount to exercising undue influence. It merely amounted to canvassing by the Ministers in favour of candidates belonging to their party. In Mast Ram vs section Iqbal Singh(2) it was held by the Election Tribunal that the legitimate exercise of influence by a political party or an association should not be confused with "undUe influence". It was further held that "Ministers in their capacity as members of their party are entitled to address meetings and to tell people what their party had done and what its. programme was and to ask them to vote for the candidate set up by their party. Such action of the Ministers cannot be held to amount to 'exercising undue influence ' ". It was further held ' that "if ' a political ' party passes a resolution of support to a candidate and asks its members to vote for him, it will be only a legitimate exercise of influence". In Radhakrishna Shukla vs Tara Chand Maheshwar.(3) the Election Tribunal held that even where Ministers conducting an electioneering campaign promised people, who put their grievances before them during the campaign, generally to redress their grievances, it could not be held that there was exercise of undue influence and their promise merely amounted to a promise of public action, which would not be for the benefit of merely those who voted for candidates of their party but for the public as a whole. The next case to which reference may be made is N. Sankara Reddi vs Yashoda Reddi(4). In that case the Election Tribunal held that "a political party is entitled to issue a manifesto to the ' voters requesting them to vote only for the candidate, set up by the party. The fact that the leader of the Congress Legislature Party who was also the Chief Minister of the State had written (1)(1954) X E L R 57. (2) (1955) XII E.L.R.34 (3)(1956) XII E.L.R. 378. (4) (1957) XIII E.L.R. 34. 148 letters to the members of the Congress Party to support the candidates set up by the party would not amount to undue influence within section 123(2) of the Representation of the People Act. " It was added that it was only where a Minister abused his position for furthering the prospects of the candidate belonging to his party that undue influence might arise; but where a leader merely used his influence in the form of canvassing for candidates of his party there would be no question of undue influence. In Dr. Y.S. Parmar vs Hira Singh Pal(1), the Judicial Commissioner of Himachal Pradesh held that "a leader of a political party is entitled to. declare to the public the policy of the party, and ask the electorate to vote for his party without interfering with any electoral right and such declarations on his part would not amount to undue influence under section 123(2) of the Representation. of the People Act. " In Triloki Singh vs Shivrajwati Nehru(2) it was held by the Election Tribunal that "the right to canvass must be conceded to Ministers as leaders of a political party Just as they have a right to vote and to stand as a candidate, they also have a right to canvass for themselves and for the other candidates set up by their party. " It was further held that though a Minister occupied a high position and commanded great influence, if he only solicited votes and tried to persuade the electors to vote for a candidate of his party and asked them not to vote for any other candidate or to remain neutral and did nothing more, he could not be said to interfere with the free exercise of the electoral right of the voters. The last case to which reference may be made is Jayalakshmi Devamma vs Janardhan Reddi(3). In that case the Andhra Pradesh High Court held that in a democratic set up where candidates contested elections on the basis of their affiliation to a particular political party, there was nothing intrinsically wrong in Ministers canvassing support for their party candidates. It was further held that a Minister merely by reason of his office did not suffer from any disability in this behalf and had the same rights and obligations as any other citizen in the matter of canvassing. It was also held that in their capacity as leaders of their party. they had to explain to the electors the policies and programmes which they sought to enforce and one way of doing that was to ask the electors to vote for those who were pledged to support them and their policies. It will be seen from the above review of the cases relating to undue influence that it has been consistently held in this country that it is open to Ministers to canvass for candidates of their party (1) (1958) 16 E.L.R.4 (2) (1958) XVI.E.L.R 234. (3) (1959) XVII E.L.R. 302. 149 standing for election. Such canvassing does not amount to undue influence but is proper use of the Minister 's right to ask the public to support candidates belonging to the Minister 's party. It is only where a Minister abuses. his position as such and goes beyond merely asking for support for candidates belonging to his party that a question of undue influence may arise. But so long as the Minister only asks the electors to vote for a particular candidate belonging to his party and puts forward before the public the merits of his candidate it cannot be said that by merely making such request to the electorate the Minister. exercises undue influence. The fact that the Minister 's request was addressed in the form of what *is called a whip, is also. immaterial so long as it is clear that there ' is no compulsion on the electorate to vote in the manner indicated. It is in the light of these principles that we have to see whether the four allegations made in this case, assuming them to be correct, make out a case of undue influence. The first allegation is that Shrimati Indira Gandhi, the Prime Minister, addressed a letter to all the electors in which she commended Dr. Zakir Husain and requested the electors to vote for him. A copy of that letter has been produced, and we have been taken through it. In our opinion there is nothing in that letter which may even remotely amount to undue influence. Most of the letter is concerned with commending the qualities of Dr. Zakir Husain and it ends by saying that Dr, Zakir Husain 's long and meritorious service in the cause of national freedom and national re construction after Independence makes him a candidate richly deserving universal support. It has been urged that the Prime Minister is a person of great influence and therefore Shrimati Indira Gandhi should not have written this letter because she was Prime Minister and the mere fact that she wrote this letter commending Dr. Zakir Husain 's election amounted to undue influence i.e. interference with the free exercise of the electoral right. We can not agree with this contention. Shrimati Indira Gandhi is certainly the Prime Minister, but she is also one of the leaders of the party to which Dr. Zakir Husain belonged. As a leader of party she was entitled to ask the electors to vote for Dr. Zakir Husain and the fact that she is the Prime Minister makes no difference to her right to make an appeal of this nature. It is said that the office of the President is a no party office and therefore an appeal of this nature should not have been made and must amount to undue influence. It is true that the office of the President is not a party office meaning thereby that after his election the President is no longer a party man. But that cannot take away the fact that in a democratic system, like ours, persons who stand for election are candidates sponsored by parties for without such support no one would have a chance of being elected, for the. electors are mostly members of one party or other. We have given 150 our earnest consideration to the letter written by Shrimati Indira Gandhi and have come to the conclusion that there is nothing in that letter which can be said to be improper or which can even remotely amount to interference with the free exercise of the electoral rights. It cannot therefore be said that Shrimati Indira Gandhi even though she is the Prime Minister exercised any undue influence in this presidential election. The next allegation is based on two letters written by Sri Ram Subhag Singh. In these letters. Sri Ram Subhag Singh signed himself as Chief Whip and they were addressed to all members of the Congress Party in Parliament. The fact that he signed the letters as Chief Whip is in our opinion of no consequence; even if he had not done so all members of the congress party in Parliament must be knowing that he was the Chief Whip. Just as a Minister has a right to canvass for support so has in our opinion the Chief Whip. In the first letter he pointed out that the Presidential and Vice Presidential elections were to be held on May. 6, 1967. He also pointed out that members of Parliament could vote for the presidential election at New Delhi or at State capitals but they had to come to Delhi in connection with the election of the Vice President. He therefore added that as the two elections were to be held on the same day and voting for the Vice Presidential election could only be at Delhi, every member of the party must be present in Delhi to participate in the elections. He finally requested the members of his party to reach New Delhi by May 4, 1967 and contact him on reaching. New Delhi. This letter merely explains to members of his party the situation with respect to the two elections which were to be held simultaneously and requested the members to come to Delhi, as otherwise they could not vote in the Vice Presidential election. The fact that he asked the members to contact him after reaching Delhi could only be to know who had come and who had not and cannot give rise inference of undue influence from that fact alone. In the second letter, Sri Ram Subhag Singh pointed out that the election to the office of the President would be in accordance with the system of proportional representation by means of single transferable vote. He also invited the attention of the members of the Congress Party in Parliament to r. 19 of the Election Rules. He then went on to say that it was their desire, i.e., of the congress party, that Dr. Zakir Husain should be returned with a thumping majority. He therefore requested the members to place figure '1 ' opposite the name of Dr. Zakir Husain. He also advised them not to mark the second or any other preference in favour of any other candidate. As we read this letter we only find in it a request to members of the party to vote for Dr. Zakir Husain There is nothing in that letter to show that undue influence was being exercised thereby. The two letters read together merely show 151 that Sri Ram Subhag Singh who happened to be the Chief Whip of the congress party was canvassing in favour of Dr. Zakir Husain. It is however urged that his advice to the members not to mark their second or any other preference in favour of any other candidate amounted to interference with the free exercise of their electoral right. We cannot agree with this contention. Sri Ram Subhag Singh asked the members of his party to give the first preference to Dr. Zakir Husain. He also asked them not to mark their second or any other preference, and that is a method to ensure that the candidate to whom the first preference is given should be in a strong position in case there is not a majority in the first counting. In the present election there was apparently a majority in the first counting and therefore the marking of the second or any other preference was immaterial. Apart from it. we see nothing improper in members of the party being told in the course of canvassing that it would be better if they only marked their first preference and no other preference in a system where voting is by single transferable vote. Such a request or advice does not in our opinion interfere with the free exercise of their electoral right for the electors still would be free to do what they desired in spite of the advice. We cannot agree. after going through the two letters written by Sri Ram Subhag Singh that there was any interference with the exercise of the electoral right by the electors. The third allegation is that the Prime Minister had deputed certain senior members of her cabinet to the various States to make doubly certain that Dr. Zakir Husain was elected. In consequence, Shri Fakhruddin Ali Ahmed was sent to Assam, Shri Y. B. Chavan to Bombay, Sri Jagjivan Ram to Bihar, Sri I.K. Gujral to Calcutta and Sri Dinesh Singh to Uttar Pradesh. It is further urged that sending of the Ministers to various States was to influence the members of the electoral college there to vote for Dr. Zakir Husain or attempt to do so. Such action it is urged. would amount to undue influence. We cannot agree with this contention. Assuming that these Ministers were asked to go to various States it was obviously to canvass support for Dr. Zakir Husain so that he may be certain to be elected. Even assuming that these Ministers canvassed support for Dr. Zakir Husain in various State capitals, their action cannot be said to amount to undue influence, for all that they can be said to have done was to canvass support for Dr. Zakir Husain and mere canvassing cannot possibly be; held to be undue influence. There is nothing 'in the allegation in para 12 C of the petition to show that there was any interference with the free exercise of electoral right by the electors. even if these Ministers were sent to. the various State capitals to canvass support for Dr. Zakir Husain ,red did so. Mere canvassing of support for a candidate can never amount to undue 152 influence, and all that para 12C shows is that there was mere. canvassing in favour of Dr. Zakir Husain. No case of undue influence can be made out on the basis of the allegations contained in para 12C of the petition. The last allegation in support of the case of undue influence is that the Chief Minister of Maharashtra had briefed members of the Legislative Assembly on May 5, 1967 on how to vote and whom to vote for. It is, urged that even if the leader of the party in the Maharashtra legislature could indicate the manner of voting the members of his party, he could not indicate to them whom they were to vote for, as that interfered with the free exercise of their electoral right. It is said that such a request amounted to a command from a person in authority, like the Chief Minister, and would be exercise of undue influence. We are of opinion that there is no substance in this contention either. There can possibly be no objection if the leader of the party indicates to the members of his party how to vote in order to ensure that votes may not become invalid for want of knowledge of the procedure of voting. Further if the leader of the party indicates to members of his party for whom to vote he is merely canvassing with his own party men to support the candidate of the party. The mere fact that the person who, canvasses is a Chief Minister does not mean that he is exercising undue influence in the sense of interfering with the free exercise of the electoral right. Once canvassing is permissible, and we have no doubt that in a democratic set up where ' parties put up candidates for election it is not only permissible but necessary, it follows that if a leader of the party asks members of his party for whom. to vote he is merely canvassing. The voting is after all secret and every elector is free to vote for whomsoever he likes, even though he may have been asked by the leader to vote for a particular candidate. There is nothing in para 12 (D) of the petition to suggest that anything improper was. done by the Chief Minister of Maharashtra, which could give rise to an inference that t.he free exercise of the electoral right was being interfered with. On a careful consideration of paragraphs 12(A) to 12(D) of the petition we have come to the conclusion that there is nothing in those paragraphs which even remotely suggests that there was any undue influence exercised by anybody in connection with the Presidential election of May 6, 1967. Our finding on the issue in question is that the acts. and conduct alleged in paragraph 12 of the petition and set out in sub paras A to D thereof do not amount to undue influence within the meaning of section 18(1 )(b) of the Act. The issue is decided against the petitioners. As we have indicated already if both these issues of law are decided against the petitioners as we do decide them the petition 153 must fail and it is unnecessary to set it down for hearing on evidence with respect to other issues. The petition is hereby dismissed but in the circumstances of the case we pass no order as to costs. Y.P. Petition dismissed.

As a result of the Presidential election held in May, 1967, respondent No. 1 was declared elected. The petitioners challenged the election on the following two grounds, namely (i) article 58(1)(c) required that a person to be eligible for election as President must be qualified for election as a member of the House of People. After the Sixteenth Amendment, under article 84(a), it was necessary for a person standing for election to either House of Parliament to take an oath in the form prescribed in the Third Schedule. Therefore, a person standing for election as President had also to take a similar oath; since the respondent had not taken the oath he was not eligible for election. (ii) As (a) the Prime Minister addressed a letter to all electors commending respondent No. 1 and requesting them to vote for him; '(b) the, Prime. Minister deputed Ministers 1 various State Capitals to make doubly certain that respondent No. 1 was elected; (c) a Minister who was also the chief whip of the Congress party wrote two letters to all members of his party in Parliament and signed them as Chief Whip, explaining the situation with respect to the election and requesting them to come to Delhi and contact him and also requesting them to give the first preference to respondent No. 1 and not to mark the second or any other preference in favour of the candidates; and (d) the Chief Minister of Maharashtra had briefed members of the Legislative Assembly as to how and for whom to vote, the result of the election has materially been affected by undue influence. HELD: The petition must be dismissed. (i) The candidate standing for election to the office of the President had not to take any oath before becoming eligible for election as President. A comparison of article 58 with article 84 as it stood before the amendment shows that el. (a) of article 84, corresponded to el. (a) of article 58(1), as both provided that the respective candidates should be citizens of India. It was therefore, not necessary to go to cl. (a) of article 84 for the purpose of finding out whether a person woks eligible for election as President for the purpose of citizenship for that part of el. (a) of article 84 was specifically provided for in el. (a) of article 58(1). Similarly, el. (b) of article 84 corresponded to el. (b) of article 58(1). with this difference that it provided a special qualification as to age and therefore 134 one would not have to go to cl. (b) of article 84 for the purpose of finding out the qualification as to age. Clause (c) of article 58(1) clearly corresponded to el. (c) of article 84 and reading them together it would follow that a person standing for election as President would require such qualifications as may be prescribed in that behalf by or under any law made by Parliament. Further as el. (c) of article 58(1) lays down that a person standing for Presidential election has to be qualified for membership of the House of the People, article 102 (which lays down disqualifications for members of Parliament) would also be attracted except in so far as there is a special provision contained in article 58(2), Thus cI. (c) or article 58(1) would bring in such qualifications for members of the House of the People as may as prescribed by law by Parliament, as required by article 84(c). It will by its own force bring in article 102 of the Constitution, for that Article lays down certain disqualifications which a presidential candidate must not have for he has to be eligible for election as a member of the House of the People. But it clear that what is provided in cl. (a) and (b) of article 58(1) must be taken from there and it is not necessary travel to cls. (a) and (b) of article 84 in the matter of citizenship and of age of the presidential candidate. Clauses (a)and (b) of article 58(1) having made a specific provision in that behalf exclude cls. (a) and (b) of article 84. There is nothing in the Amendment Act which makes any difference to that position, for. if the intention of Parliament was that an oath similar in form to the oath for membership of Parliament had to be taken by persons standing for election to the office of the President there is no reason why a similar amendment was not made in article 58(1) (a) and why the form: of oath not also prescribed either in the Third Schedule or by amendment of article 60. which provides for oath by a person elected as President before he takes his office. [140H 141E; 142B C] The particular oath which a person standing for election as a member of Parliament has to take has been prescribed in the Third Schedule to the Constitution, and it is only that oath which such a person has to take. However, no form of oath is prescribed for a person standing for election as President anywhere in the Constitution and in the absence of such form. it is impossible to hold that taking of oath before standing for election as President is a necessary ingredient of eligibility for such election. The Amendment Act having not made any such provision with respect to those standing for election to the office of the President, it cannot be open to the Election Commission to prescribe a form of oath for such persons by changing form III A mutatis mutandis. Such power cannot be spelt out of article 324 under which the Election Commission is conferred power to superintend direct, and control the preparation of the Electoral Rolls and the conduct of elections. [143G 144B] Further. a comparison of the form of oath under article 60 for the President with form III B of the Third Schedule which prescribes the oath for a member of Parliament before he takes his seat. shows that even after election the President is not required to swear that he will uphold the sovereignty and integrity of India. The oath he takes is to preserve. protect and! defend the Constitution and that he will devote himself to the service and well being of the people of India. the form of oath introduced by the sixteenth amendment for persons standing for election to Parliament and even after election was not considered suitable for a person standing for election as President or elected as President and that is why no form is prescribed by Parliament. [143A C] (ii) Any voluntary action which interferes with or attempts to interfere with the free exercise of electoral right would amount to undue 135 influence. It cannot take in mere canvassing in favour of a candidate at an election. If that were so, it would be impossible to run democratic elections. It is difficult to lay down in general terms where mere canvassing ends and interference or attempt at interference to with the tree exercise of any electoral right begins. That is a matter to be determined in each case; but there can be no doubt that if what is done is merely canvassing it would not be undue influence. [145G 146C] (a) There was nothing in the fetter of the Prime Minister which even remotely amounted to undue influence. As a leader of the party she was entitled to ask the electors to vote for respondent No. 1 and the fact that she is the Prime Minister makes no difference to her right make an appeal of this nature. It is. said that the office of the President is a no party office and therefore an appeal of this nature should not have been made and must amount to undue influence. It is true that the office of the President is not a party office meaning thereby that after his election the President is no longer a party man. But that cannot take away the fact that in a democratic system, persons who stand for election are candidates sponsored by parties for without such support no fine would have a chance of being elected. for the electors are mostly members of one party or other. [149G 1SOB] (b) Mere canvassing of support for a candidate can never amount to undue influence. There was no interference with the free exercise of electoral right by the electors, even if the Ministers were sent to the various Sate capitals to canvass support for respondent, No 1. [148H] (c) The fact that the Minister signed the letters as Chief Whip was of no consequence; even if he had not done so all members of the Congress party in Parliament must be knowing that he was the Chief Whip. Just as a Minister has a right to canvass for support, so has the Chief Whip. The fact that he asked the members to contact him after reaching Delhi could only be to know who had come and who had not and could not give rise to any inference of undue influence from the fact alone. There was nothing in the second letter also to show that undue influence was being exercised thereby. The two letters read together merely show that the Chief Whip of the Congress party was canvassing in favour of respondent No. 1. There was nothing improper in members of the party being told in the course of canvassing that it would be better if they only marked their first preference and no other preference in a system where voting is by single transferable vote. Such a request of advice does not interfere with the free exercise of their electoral for the electors still would be free to do what they desired inspite of the advice. [150B 151D] (d) There can be no objection if the leader of the party indicates to the members of his party how to vote in order to ensure that votes may not become invalid for, want of knowledge of the procedure of voting. Further if the leader of the party indicates to members of his party for whom to vote he is merely canvassing with his own party men to support the candidate of the party. The mere fact that the person who canvasses is a Chief Minister does not mean that he is exercising undue influence in the sense of interfering with the free exercise of the electoral right. Once canvassing is permissible, and in a democratic set up where parties put up candidates for election it is not only permissible but necessary. it follows that if a leader of the party asks members of his party for whom to vote he is merely canvassing. The voting is after all secret and every elector is free to vote for whomsoever he likes, even though he may have been asked by the leader to vote for a particular candidate. [152C F] 136 It is open to Ministers to canvass for candidates of their party standing for election. Such canvassing does not amount to undue influence but is proper use of the Minister 's right to ask the public to support candidates belonging to the Minister 's party. It is only where a Minister abuses his position as such and goes beyond merely asking for support for candidates belonging to his party that a question of undue influence may arise. But so long as the Minister only asks the electors to vote for a particular candidate belonging to his party and puts forward before the public the merit of his candidate it cannot be said that by merely making such request to the electorate the Minister exercises undue influence. The fact that the Minister 's request was addressed in the form of what it called a whip is also immaterial so long as it is clear that there is no compulsion on the electorate to vote in the manner indicated [ 149A C] R.B. Surendra Narayan Sinha vs Amulyadhone Ray & 43 Ors. 1940 Indian Election Cases by Sen and Poddar, Case No. XXX at p. 188. Linge Gowda vs Shivananjappa. (1953) VI E.L.R. 288, Amirchand vs Surendra Lal Jha, (1954) X E.L.R. 57, Mast Ram vs section lqbal Singh, (1955) XII E.L.R. 34, Radhakrishna Shukla vs Tara Chand Maheshwar, (1956) XII E.L.R. 378, N. Sankara Reddi vs Yashoda Reddi (1957) XIII E.L.R. 34, Dr. Y.S. Parmar vs Hira Singh Pal. (1958) XVI E.L.R. 45. Triloki Singh vs Shtvrajwati Nehru, (1958) XVI E.L.R. 234 and Jayalakshmi Devamma vs Janardhan Reddi, (1959) XVII E.L.R. 302, referred to

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Civil Appeal No. 145 of 1965. Appeal by special leave fro.m the judgment and order dated September 24, 1956 of Madhya Pradesh (Now Madhya Pradesh) High Court at Gwalior in Civil Misc. Application No. 91 of 1955. N.S. Bindra, P.W. Sahasrabudde and A.G. Ratnaparkhi, for the appellant. Rameshwar Nath and Mahinder Narain, for respondents Nos. 1 to 3. The Judgment of the Court was 'delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Madhya Bharat in Civil Miscellaneous Application No,. 91 of 1955, read with Civil Miscellaneous Application No. 92 of 1955, filed under article 227 of the Constitution by Rao Jagdish Singh and others. By this judgment the High Court accepted the applications and quashed the decision of the Board of Revenue and dismissed the claim of Lallu Yeshwant Singh, son of Nahar Singh, now deceased, represented by Babu Singh, appellant before us. The relevant facts for appreciating the points arising in the appeal are as follows. Yeshwant Singh and other sons of Lallu Nahar Singh, hereinafter referred to as the plaintiffs, filed a suit against Rao Jagdish Singh and 4 others (Revenue Case No. 24 of 2000 S.Y.) in the Court of Tehsildar, Pargana Pichhore, District Gwalior, for the possession of some agricultural land under section 326 of Qanoon Mal. The plaintiffs ' case, in brief, was that they were gairdakhilkar cultivators and that Rao Jagdish Singh, defendant No. 1, had forcibly prevented the plaintiffs from doing cultivation and got the disputed land cultivated by defendants Nos. 2 and 3, by interfering with the possession of the plaintiffs. The plaintiffs prayed that a decree for possession may be passed in their favour against all the defendants. The defendants ' case, in brief, was that the village in which the land in dispute iS situated is Ryotwari village and no suit could be instituted against Jagirdars under section 326. The defendants further alleged that the plaintiffs had failed to pay revenue and their rights had been extinguished under section 82 of Qanoon Ryotwari. The Tehsildar decreed the suit. The Collector on appeal upheld the order. The Commissioner on 205 further appeal also upheld the order. On revision, the Board of Revenue agreed with the Commissioner and dismissed ' the revision. On behalf of the appellant it is contended (1 ) that in a suit under section 326 Qanoon Mal, read with section 163, Qanoon Ryotwari, a plaintiff is entitled to recover _possession if he is dispossessed from prior juridical possession, within six months of the suit, and the question of title is irrelevant in such a suit; and (2) that a landlord cannot forcibly enter and drive out the tenant whose tenancy is alleged to have been extinguished. The relevant statutory provisions are as follows: "Qanoon Ryotwari section 82. The right of the pukhta Maurusi, Sakitul Milkiyat and Mamuli Maurusi will be extinguished under the following circumstances; (3) When the Khatedar keeps in arrears the ]and revenue of his khata excepting the case where the collection of land revenue is ordered to be postponed;. section 137. In case the land revenue for the whole year is not paid before one week of the date fixed for the last instalment the khatedar will be dealt with as follows : 1. By issue of process; 2. By arrest of the defaulter; 3. By attachment and sale of movable property; 4. By attachment and sale of immovable property; 5. By confiscation (Jupti) of the khata and ejectment of the defaulter; 6. By auctioning the khata; Provided if the arrears are due against such khatedar who has been a good payer (khush dehanda) and for some special reason for some years not by his own mischief but for reason beyond his control, the Suba (Collector) will be entitled to accept his instalments upto three years. S.163. Suits of trespass and obstruction 'between khatedars and between khatedars and other persons will be entertained in that Sega (Dept.) court and limitation which is described in Section 326 of Qanoon Mal Riyasat Gwalior Samvat 1983 and Sections 326, 206 327, 328, 330, 331, 332, 333, 334 and 335 so far as they are applicable or appendices of the. Qanoon Mal shall apply as may be applicable to the suits under section 326 of the said Act. Qanoon Mal section 325. If any person claiming to be in possession of any agricultural land desires his name to be entered in Revenue papers and papers of Patwari, then the Patwari, if in case of actual physical possession enter his name in accordance with procedure in Khasra and other papers and inform the Malguzar; in case of not being in possession, the cultivator not in possession shall have the right to file within three years of the date of dispossession a suit regular in Court of Tehsil on stamp paper, which may become payable on annual income of "Lagan" according to Scale in Schedule No. 4 prescribed. section 326. (1) Cases in respect of the return of possession which has been disturbed unlawfully (Beja Tot Par) or for prevention of obstruction about agricultural lands, thrashing grounds, (Khaliyan) road, forest, grass pastures, gardens, trees, wells, irrigation and tanks between Malguzars and cultivators or between cultivators will be entertained in the summary jurisdiction of the Pargana revenue Court or in the Tappa courts within six (6 ) months and in case of proof of trespass or obstruction, possession and damages will be awarded against the defendant and if the court thinks fit it may also take bonds, quantum whereof will be decided in view of the nature of the trespass or obstruction. (3) Suits beyond this duration will be entertained as per section 325 of the Qanoon Mal in the regular jurisdiction. " The Board of Revenue was of the view that in case land revenue remains in arrears, the fight of a tenant gets extinguished under section 82 of the Qanoon Ryotwari, but nevertheless the possession of the tenant whose right has been so extinguished is not put to an end automatically, and the tenant must be legally dispossessed, The Board observed: "This is a general principle of law that no act can be done by the strength of one 's own hands but help of the law should be taken and the procedure which is 207 prescribed for that act must be acted upon. In this case the petitioner has not obeyed any law regarding the dispossession of the opponent after the plaintiff lost his right and he himself went there and took possession. " The Board was further of the view that action for dispossession should have been taken according to section 137 of Qanoon Ryotwari, extracted above. The High Court, however, came to the conclusion that it was not obligatory on the defendant to have filed a suit under section 137 of Qanoon Ryotwari. The High Court felt that the proviso to section 137; which enabled the Collector to accept arrears for three years, did not militate against such a construction. The High Court was also of the view that under the general law applicable to a lessor and a lessee there was no rule or principle which made it obligatory for the lessor to resort to Court and obtain an order for possession before he could eject the lessee. The High Court interpreted section 163 of Qanoon Ryotwari to mean that in a proceeding under that section it is not sufficient to determine the question of de facto possession alone but it is also necessary to. enquire as to whether this possession is or is not wrongful. It seems to us that on a, true interpretation of the statutory provisions, extracted above, the Board of Revenue came to the. correct conclusion. Under section 82(3) Qanoon Ryotwari, the fight of a Khatedar is extinguished if the khatedar keeps in arrears the land revenue of his khata but there is no automatic extinguishment of his right because section 137 of Qanoon Ryotwari enables the Collector to accept arrears if the khatedar is a good payer (khush dehanda) and there are special reasons beyond his control for not paying the land revenue. The existence of the proviso instead of assisting the landlord 's contentions assists the tenant 's case because if the reasoning of the High Court is accepted to be correct, the proviso would become a dead letter for in every case where there are arrears of land revenue, the landlord would take. possession forcibly without trying to recover land revenue under section 137. Further, section 163 of Qanoon Ryotwari clearly provides for suits of the nature described in section 326 of Qanoon Mal. When we turn to section 326, it is very similar to section 9 of the and it seems to uS that the words "disturbed unlawfully" in section 326 mean "disturbed not in due course of law. " Otherwise, there is no reason why a shorter period of limitation and summary procedure is provided in section 326 while section 325 provides a longer period of three years for a suit for possession. Some stress was laid on the words "in case of proof of trespass" in section 326 by the learned counsel for the respondent. According to him, a landlord does not commit trespass when he forcibly enters on land in the possession of a tenant whose tenancy 208 has expired. In our view, in the context, the word "trespass" here would include forcible entry and dispossession by the landlord. Reference was made to a number of English authorities in this behalf but it is not necessary to deal with them because the law in India on this subject is different. Under section 9 of the it is well settled that question of title is irrelevant in a suit under that section. As the structure of section 326 of Qanoon Mal, read with section 163 of Qanoon Ryotwari, is similar to section 9 of the , there is No. reason why section 326 should be interpreted differently. In Midnapur Zamindary Company Limited vs Naresh Narayan Roy(1), the Privy Council observed: "In India persons are not permitted to take forcible possession; they must obtain such possession as they are entitled to through a Court." In K.K. Verma vs Naraindas C. Malkani(2), Chagla, C.J., stated that the law in India was essentially different from the law in England. He observed: "Under the Indian law the possession of a tenant who has ceased to be a tenant is protected by law. Although he may not have a right to continue in possession after the termination of the tenancy his possession is juridical and that possession is protected by statute. Under section 9 of the a tenant who has ceased to be a tenant may sue for possession against his landlord if the landlord deprives him of possession otherwise than in due course of law, but a trespasser who has 'been thrown out of possession cannot go to Court under section 9 and claim possession against the true Owner. " In Yar Mohammad vs Lakshmi Das(3), the Full Bench of the Allahabad High Court observed: "No question of title either of the plaintiff or of the defendant can be raised or gone into in that case (under. section 9 of the ). The plaintiff will be entitled to succeed without proving any title on which he can fall back upon and the defendant cannot succeed even though he may be in a position to establish the: best of all titles. The restoration of possession in such a suit is, however, always subject to a regular (1) 51 I A.293 at 299. (2) I.L.R. [1954] Born. 950 at 957. (3) I.L.R. [1958] 2 All. 394 at 4e4. 209 title suit and the person who has the real title or even the better title cannot, therefore, be prejudiced in any way by a decree in such a suit. It will always be open to him to establish his title in a regular suit and to recover back possession. " The High Court further observed: "Law respects possession even if there is no title to support it. It will not permit any person to take the law in his own hands and to dispossess a person in actual ' possession without having recourse to a court. No person can be allowed to become a judge in his own cause. As observed by Edge, C.J., in Wali Ahmed Khan vs Ayodhya Kundu(1): "The object of 'the section was to drive the person who wanted to eject a person into the proper court and to prevent them from going with a high hand and ejecting such persons. " Our attention was invited to the decision of the Calcutta High Court in State of West Bengal vs Birendra Nath Basunia(2)* In that case the High Court refused to issue an order under Art 226 of the Constitution prohibiting the Government from forcibly taking possession of lands which had been validly resumed by Government. We are not concerned with that question here But we do not agree with the conclusion of the High Court that a lessor is entitled in India to use force to throw out his lessee. In Hillaya Subbaya Hegde vs Narayanappa Timmaya(3) in was observed: "No doubt, the true owner of property is entitled to retain possession, even though he has obtained it from a trespasser by force or other unlawful means: Lillu bin Raghushet vs Annaji Parashram(4) and Bandu vs Naba(5). " We are unable to appreciate how this decision assists the respondent It was not a suit under section 9 of the . 1n Lillu bin ' Raghushet vs Annaji Parashram(4), it was recognised that "if there is a breach of the peace in at:tempting to take possession, that affords a ground for criminal prosecution, and the attempt is successful, for a summary suit also for a restoration to possession under section 9 of the 1 of 1877 Dadabhai Narsidas vs The Sub Collector of Broach" (6) In Bandu vs Naba(5) it was observed by Sargent, C.J., as follows (1) All. 537 556. (2) A.I.R. 1955 Cal. (3) (4) 387 391 (5) Bom. (6) 7 Bom. H.C. Rep. 82 A.C.J. 210 "The Indian Legislature has, however, provided for the summary removal of any one who dispossesses another, whether peaceably or otherwise than by due course of law; but subject to such provision there is no reason for holding that the rightful owner so dispossessing the other is a trespasser, and may not rely for the support of his possession on the title vested in him, as he clearly may do by English law. This would also appear to be the view taken by West, J., in Lillu vs Annaji(1). " In our opinion, the law on this point has been correctly stated by the Privy Council, by Chagla, C.J., and by the Full Bench of the Allahabad High Court, in the cases cited above. For the aforesaid reasons we hold that the High Court erred in quashing the order of the Board of Revenue. The appeal is accordingly allowed with costs, judgment of the High Court set aside and the order of the Board of Revenue restored. G.C. Appeal allowed (1) Bom. 387 391.

Certain tenants of ryotwari land in Gwalior district filed a suit under 'section 326 of the Qanoon Mal alleging dispossession by the landlords and praying for restoration of possession. On behalf of the defendants it was urged that by not paying land revenue the plaintiffs ' rights had been ,extinguished under section ' 82 of the Qanoon Ryotwari. The Revenue authorities decreed the suit on the view that even when land revenue was not paid the landlord could not take possession without recourse to a suit under section 137 Qanoon. Ryotwari. The High Court however allowed landlords ' petition under article 227 of the Constitution holding that it was not obligatory on the landlord to resort to Court in order to eject a defaulting lessee, and that in a proceeding under section 163 of Qanoon Ryotwari it was not sufficient to determine the question of de facto possession alone but it was also necessary to enquire as to whether ' this possession was or was not wrong. The appellant, who was one of the tenants came to this Court. Held: (i) Under section 82(3) Qanoon Ryotwari, the right of a Khatedar extinguished if the khatedar keeps in arrears the land revenue of his khata but there is no automatic extinguishment of his right because the proviso to section 137 of the Qanoon Ryotwari enables the Collector to accept arrears if the khatedar is a good payer (khush dehanda) and there are special reasons beyond his control for not paying land revenue. The proviso would become a dead letter if in every case when there are arrears of land revenue the landlord could take possession forcibly without trying to recover the land revenue under section 137. [207 E G] Further section 163 of Qanoon Ryotiwari clearly provides for suits of the nature described in section 326 of Qanoon Mat. Section 326 is very similar 10 section 9 of the , and the words 'disturbed unlawfully '. in section 326 mean "disturbed not in due course of law". Otherwise. there is no reason why a shorter period of limitation and summary procedure is provided in section 326 while section 325 provides a longer period of three years for a suit for possession. The word 'trespass ' in section 326 would include forcible entry and dispoSsession by the landlord. [207 G 208A] (ii) Under section 9 of the the question of title is irrelevant under that section. Section 326 of Qanoon Mal read with Qanoon Ryotwari being similar to that section must be similarly interpreted. [208B] Midnapur Zamindary Company Limited vs Naresh Narayan Roy, 5t I.A. 293, K.K. Verma vs Naraindas C. Malkani. I.L.R. [1954] Born. 950, Yar Mohammad vs Lakshmi Das. I.L.R. [1958] 2 All. 394. Wali 204 Ahmad Khan vs Ayodhya Kundu, All. 537, State of West Bengal vs Birendra Nath Basunia, A.I.R. , Hillaya Subbaya Hegde vs Narayanappa Timmaya, , Lillu bin Raghushet vs Annaji Parashram,. 387, Bandu vs Naba, Bom. 238 and Dadabhai Narsidas vs The Sub Collector of Broach. 7 Bom. H.C. Rep. 82 ACJ, referred to.

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Appeal No. 47 of 1965. Appeal from the judgment and decree dated December 12, 1962 of the Patna High Court in Appeal from Original Decree No. 433 of 1959. H. R. Gokhale, section N. Prasad and B. P. Singh, for the appellant. 883 emption and not of renewal was granted to the appellant Com pany. The High Court of Patna confirmed the decree passed by the Trial Court but on different grounds. The High Court held that the right granted by cl. 29 gave rise to an "encumbrance" which was extinguished when the interest of the owners in the land vested in the State. With certificate granted by the High Court, this appeal has been preferred by the Company. A notification under section 3(1) of the Bihar Land Reforms Act, 1950, on June 27, 1953 was issued in respect of the land of the owners. Section 4 of the Act prescribes the consequences of the publication of the notification under section 3(1) : it provides, insofar as it is relevant : "Notwithstanding anything contained in any other law for the time being in force or in any contract, on the publication of the notification under sub section (1) of section 3, or sub section (1) or (2) of section 3A the following consequences shall ensue, namely : (a) Such estate or tenure including the interests of the proprietor or tenure holder in any building or part of a building comprised in such estate or tenure and used primarily as office or cutchery for the collection of rent of such estate or tenure, and his interests in trees, forests, fish eries, jalkars, hats, bazar, mela and ferries and all other sairati interests as also his interest in all sub soil including any rights in mines and minerals, whether discovered or undiscovered, or whether being worked or not, inclusive of such rights of a lessee of mines and minerals comprised in such estate or tenure (other than the interests of raiyats and under raiyats) shall, with effect from the date of vesting, vest absolutely in the State free from all encumbrances and such proprietor or tenure holder shall cease to have any interests in such estate or tenure, other than the interests expressly saved by or under the provisions of this Act. " The opening words of this clause "Subject to the subsequent provisions of this Chapter" were omitted by Bihar Act 16 of I 959, but that omission has no practical significance in this case. Section 10 of the Act provides : "(1) Notwithstanding anything contained in this ,Act, where immediately before the date of vesting of the estate or tenure there is a subsisting lease of mines or minerals comprised in the estate or tenure or any part thereof, the whole or that part of the estate or tenure 884 comprised in such lease shall, with effect from the date of vesting, be deemed to have been leased by the State Government to the holder of the said subsisting lease for the remainder of the term of that lease, and such holder shall be entitled to retain possession of the leasehold property. (2) The terms and conditions of the said lease by, the State Government shall mutatis mutandis be the same as the terms and conditions of the subsisting lease referred to in sub section (1), but with the additional condition that, if in the opinion of the State Government the holder of the lease had not, before the date of the commencement of this Act, done any prospecting or developing work, the State Government shall be entitled at any time before the expiry of one year from the said date to determine the lease by giving three month 's notice in writing Provided (3) Counsel for the appellant Company contended that cl. 29 created an interest in the demised land in favour of the Company and the State of Bihar as successor in title of the original owners took the land subject to that interest. In the alternative, counsel contended, the Company acquired immediately on execution of the indentures of lease an indefeasible right to obtain renewal and that right was enforceable against the owners and their successors in interest alike. We are unable to agree with those contentions. The covenant granting an option of renewal of the lease on the expiry of the period of the lease outstanding is a covenant running with the land : it creates no interest in land. In The, State of Bihar vs Indian Copper Corporation Ltd.(1) the High Court of Patna held that a clause for renewal of a lease on the expiry of it% period has not the effect of a present demise nor does it operate to create an interest in land on the date on which the original lease was executed : a covenant for renewal is not tantamount to an actual demise and therefore "no leasehold interest is created for the renewed term when the original lease is granted. " Under the terms of the lease dated September 30, 1940, the appellant Company became entitled to a lease for a period of fifteen years. On the expiry of that period the Company could have entorced their right to get a renewal of the lease for a period of fifteen years against the owners if their interest had not been extinguished. If the owners declined to carry out their obligation, the Company could sue for specific performance and claim a right to remain I ) I.L.R. 38 Pat. 1160, 885 in possession for a period of fifteen years stipulated in cl. 29. But the provisions of the Bihar Land Reforms Act intervened. By the express terms of section 4 (a) of the Act all the interests of the owners in all sub soil including any rights in mines and minerals, whether discovered or undiscovered or whether being worked or not, inclusive of such rights of the lessee of mines and minerals comprised in such estate or tenure became vested in the State with effect from the date of vesting absolutely and free from all encum branches. Even the interest of the lessees of the mines and minerals comprised in the estate therefore ceased, and all encumbrances on the interest of the owners ' estate were extinguished and the State took the estate free from all the rights of the lessees. The original contractual lease came to an end by the operation of section 4 (1 )(a,) of the Act, and a fresh statutory lease for the remainder of the term of that lease in favour of the lessee came into being under s.1 0 ( 1 ) of the Act. The appellant Company therefore acquired the rights of a statutory lessee for the period between June 27, 1953 and September 30, 1955, with terms and conditions mutatis mutandis the same as the conditions of the original lease granted by the owners on September 30, 1940. But by virtue of section 4 that covenant by which ,he owners had agreed to renew the lease at the option of the lessee being merely of the nature of an encumbrance and not an interest in the land was extinguished, the land vested in the State free from the obligation created by the renewal clause. We agree with the High Court that "a clause for renewal of the lease at a future date was a limitation imposed upon the lessor. His freedom as an absolute owner was sought to be curtailed by such agreement. It was thus an encumbrance and all encumbrances were wiped out by section 4. . . . Taking all these provisions into consideration, an agreement for renewal of a lease in future cannot be binding upon the State Government after the vesting of the estate". Counsel for the appellant relied upon r. 40 of the Mineral Concession Rules, 1949, and contended that under the scheme of the Rules a lessee of a mining lease is entitled to at least one renewal. Rule 40, insofar as it is material, provides : "(1) The period for which a mining lease may be granted shall be 30 years in the case of coal, iron ore and bauxite for manufacture of aluminium, and 20 years in the case of any other minerals, unless the applicant himself asks for a shorter period. The lease shall be renewable at the option of the lessee, for one or two periods, each not exceeding the duration of the original lease, in the case of iron ore and bauxite for manufacture of aluminium, and one period not exceeding the 8 8 6 duration of the original lease in the case of other minerals. " But r. 40 has no application. Manifestly, the rule applies to grants made by the Government : it has no application to statutory leases arising by virtue of section 10 of the Bihar Land Reforms Act. Even assuming that r. 40 applies to such a statutory lease, the duration of the "original lease" may be deemed to be no longer than the period between the date of vesting and September 30, 1955. That period for which renewal may have been claimed has expired many years ago, and recognition of the rights of the appellant Company will be of no practical significance in this appeal. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellant company obtained a lease of certain mica bearing land from the owners for a period of fifteen years. The lease deed provided for a renewal of the lease on the expiry of the period at the option of the lessee. The land was within an estate and by virtue of a notification under the Bihar Land Reforms Act, 1950, the estate vested in the State Government under section 4, free from all encumbrances and free from all rights of the lessees. But the appellant continued in occupation for the remaining period of the contractual lease, under a statutory lease deemed to have been granted by the State under section 10 of the Act. On the question whether the appellant was entitled to specific performance of the covenant of renewal, HELD : The agreement of renewal of the lease infuture was not binding upon the State Government after the vesting ofthe estate. (1) The Original contractual lease came to an endby the operationof section 4 and under section 10 a fresh statutory lease for theremainder of the term of that lease, in favour of the lessee, came into being with terms and conditions mutatis mutandis the 'same as the conditions of the original lease. But the covenant granting an option of renewal of the lease on the expiry of the period of the lease is merely a covenant running with the land, and does not create any interest in land. It being in the nature of an encumbrance and by virtue of section 4 it was extinguished and the land vested in the State free from the obligation created by the renewal clause. [885 C E] The State of Bihar vs Indian Copper Corporation Ltd. I.L.R. 38 Pat. 1160, approved. (2) Rule 40 of the Mineral Concession Rules, 1949, under which a lessee of a mining lease is entitled to at least one renewal for a period not exceeding the duration of the original lease, applies to grants made by Government and not to statutory leases. Therefore, the rule has no application. Even assuming the rule was applicable, the duration of the original lease in the case of such a statutory lease must be deemed to be no longer than the period between the date of vesting and the date of expiry of the original lease and that period, for which renewal may have been claimed, expired many years ago. [885 G; 886 A B]

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Appeal No. 240 of 1967 Appeal from the judgment and order dated December 22, 1966 of the Delhi High Court in Letters Patent Appeal No. 1 of 1966. Appellant in person. Avadh Behari, for respondents Nos. 1 and 2. P. Ram Reddy, and A. V. Rangam, for respondent No. 3. Purshottam Trikamdas and 1. N. Shroff, for respondent No. 4. Purshottam Trikamdas and section P. Nayar, for respondent No. 5. The Judgment of the Court was delivered by Shelat, J. This appeal by certificate raises the question as to ,he scope of entries 77 and 78 in List I and entry 26 in List III of the Seventh Schedule to the Constitution. The question arises in the following manner On a complaint by the Subordinate Judge that the appellant, while taking inspection of the Court record in an arbitration matter pending before his Court, had mutilated the copy of a notice in that record by wilfully tearing a portion thereof, the District Judge, Delhi filed a report against the appellant before the Delhi 711 State Bar Council for taking action under the , 25 of 1961 (hereinafter referred to as the Act). The Disciplinary Committee of the said Council after hearing the appellant found him guilty of professional misconduct and ordered his suspension for one year under section 35 (3) (c) of the Act. An appeal filed by the appellant under section 37 before the Bar Council of India failed. Thereupon he filed an appeal against the said order under section 38 in this Court. The appeal was placed for preliminary hearing and summarily rejected at that stage. The appellant thereafter filed a writ petition in the High Court of Punjab (Delhi Bench) for quashing the said order of suspension, the order of the appellate authority confirming the said order and the order of this Court dismissing the appeal. He thereafter filed a review petition against the dismissal of his appeal contending, inter alia, that rule 7 of O. 5 of the Supreme Court Rules, was ultra vires section 38 of the Act. The review petition also was dismissed. At the hearing of his writ petition, the appellant, inter alia, contended that section 38 of the Act was ultra vires article 138(2) of the Constitution inasmuch as the appellate jurisdiction conferred on this Court by section 38 fell under entry 26 in List III and that there being no special agreement between the Government of India and the Government of any State as required by clause 2 of article 138 sec. 38 was invalidly enacted. He also contended that O. 5 r. 7 of the Supreme Court Rules under which the appeal was placed for preliminary hearing was Ultra vires section 38 as the said rule cut down and impaired his right of appeal under section 38. Lastly, he contended that the decision of the Bar Council of India was bad for the several grounds alleged by him in his writ petition. The learned Single Judge who heard the writ petition rejected these contentions and dismissed it. As regards the first contention he held that clause 2 of article 1 38 did not apply and that it was clause 1 of that Article which was applicable as the subject matter of the fell under entry 77 of the Union List. As to the other two contentions he held that rule 7 of the O. 5 was valid and did not contravene section 38; that the Bench before which the appeal came up for preliminary hearing had heard the appellant 's counsel and in addition had called for production of a document desired by him. There was no affidavit by Counsel appearing for him that he was not heard on any point which he desired to contend. He also held that the appellant had specifically raised the contention as to the vires of the said rule in his review petition and that that contention having been rejected, the appellant could not reagitate it in the writ petition. He also held that the appellant was similarly not entitled to reagitate the question as to the merits of the said order of suspension. the same having been considered and rejected at the time of the preliminary hearing of his appeal. Aggrieved by the order of the learned Single Judge, 712 the appellant filed a Letters Patent Appeal. At the hearing of that appeal the appellant 's counsel conceded that he could not raise, any contention on the merits of the case in view of this Court having disposed of those very contentions and that therefore he would confine his arguments only to the question of the vires of section 38. The learned Judges who heard that appeal were of the view (1) that the Act was a composite piece of legislation. that it did not, as held by the learned Single Judge, fall exclusively under entries 77 and 78 of List I but that it fell partly under those entries and partly under entry 26 of List 111; (2) that article 138 had no application as the jurisdiction to entertain and try appeals under section 38 was not 'further jurisdiction ' within the meaning of that Article; that the jurisdiction to hear such appeals was already vested in this Court under article 136 even without section 38 as the Bar Councils of Delhi and of India were quasi judicial tribunals and that therefore this Court had jurisdiction to entertain and try appeals against their orders; and (3) that the only effect of section 38 was that by providing for an appeal Parliament removed the hurdle of an appellant having to obtain special leave under article 136. On this reasoning the learned Judges dismissed the contention as to the vires of section 38. Dismissing the appeal the learned Judges observed : "There is no bar to the Parliament legislating with respect to jurisdiction and powers of the Supreme Court subject to the express provisions of the Constitution like articles 132 and 134. When a provision for appeal to the Supreme Court is made in a statute, within the sphere covered by articles 132 to 136 it is not conferment of further power and jurisdiction as envisaged by article 138, such power would be exercisable by reason of entry 77 of List I". In this appeal the appellant challenges the correctness of this view. The question which falls for consideration is one of inter pretation of entries 77 and 78 of List I and entry 26 of List 111. If it is held that it is entry 26 of List III under which the Act was enacted, clause 2 of article 138 would apply and in that case a special agreement with the State Government becomes a condition precedent to the enactment of section 38 of the Act. In that case the difficulty would be to reconcile entries 77 and 78 of List I with entry 26 of the List III. It is a well recognised rule of construction that the Court while construing entries must assume that the distribution of legislative powers in the three Lists could not have been intended to he in conflict with one another. A general power ought not to 713 be so construed as to make a nullity of a particular power conferred by the same instrument and operating in the same field when by reading the former in a more restricted sense, effect can be given to the latter in its ordinary and natural meaning. It is, therefore, right to consider whether a fair reconciliation cannot be effected by giving to the language of an entry in one List the meaning which, if less wide than it might in another context bear, is yet one that can properly be given to it and equally giving to the language of another entry in another List a meaning which it can properly bear. Where there is a seeming conflict between one entry in one List and another entry in another List, an attempt should always be made to avoid to see whether the two entries can be harmonised to avoid such a conflict of jurisdiction. (C.P. & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938(1); Citizens Insurance Company of Canada vs Parsons (2) Bhola Prasad vs Emperor(3); Governor General in Council vs Province of Madras(4), and State of Bombay vs Balsara(5). It is in the background of these principles of construction that we must proceed to examine the content of the various relevant entries dealing with the constitution and Organisation of courts and their jurisdiction and powers and the scheme envisaged thereunder. Entries 77 and 78 of List I read as under : "77. Constitution, Organisation, jurisdiction and powers of the Supreme Court (including contempt of such Court) . persons entitled to practise before the Supreme Court." "78. Constitution and Organisation (including vacations) of the High Courts . ; persons entitled to practice before the High Courts. " Entry 95 of List I reads as follows "95. Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List; admiralty jurisdiction. " Entry 65 of List II reads "65. Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List. " Entry 46 in List III reads "46. Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List. " (1) (2) [1881] 7 A.C. 96. (3) (4) (1945] 72 I.A. 91. (5)[1951] S.C.R. 68 ' ). 714 The scheme for conferring jurisdiction and powers on courts is (a) to avoid duplication of Courts, Federal and State Courts as. in the Constitution of the United States, (b) to enable Parliament and the State Legislatures to confer jurisdiction on courts in respect of matters in their respective lists except in the case of the Supreme Court where the legislative authority to confer jurisdiction and powers is exclusively vested in Parliament. In the case of the Concurrent List both the legislatures can confer jurisdiction and powers on courts except of course the Supreme Court depending upon whether the Act is enacted by one or the other. Entry 3 in List 11 confers legislative powers on the States in the matter of "Administration of Justice; constitution and organisation of all courts, except the Supreme Court and the High Courts; officers and servants of the High Court; procedure in rent and revenue courts; fees taken in all courts except the Supreme Court. " It is clear that except for the constitution and the Organisation of the Supreme Court and the High Courts the legislative power in the matter of administration of justice has been vested in the State Legislatures. The State Legislatures can, therefore enact laws, providing for the constitution and organisation of courts except the Supreme Court and the High Courts and confer jurisdiction and powers on them in all matters, civil and criminal, except the admiralty jurisdiction. It would, of course, be open to Parliament to bar the jurisdiction of any such court by special enactment in matters provided in Lists I and III where it has made a law but so long as that is not done the courts established by the State Legislatures would have jurisdiction to try all suits and proceedings relating even to matters in Lists I and 111. Thus, so far as the constitution and organisation of the Supreme Court and the High Courts are concerned, the power is with Parliament. As regards the other courts, Entry 3 of List 11 confers such a power on the State Legislatures. As regards jurisdiction and powers, it is Parliament which can deal with the jurisdiction and powers of the Supreme Court and the admiralty jurisdiction. Parliament can confer jurisdiction and powers on all courts in matters set out in List I and List III where it has passed any laws. But under the power given to it under entry 3 in List 11, a State Legislature can confer jurisdiction and powers on any of the courts except the Supreme Court in respect of any statute whether enacted by it or by Parliament except where a Central Act dealing with matters in Lists I and II otherwise, provides. That these entries contemplate such a scheme was brought out in State of Bombay vs Narothamdas(1), where it was contended that the Bombay City Civil Court Act, 40 of 1948, constituting the said Civil Court as an additional court was ultra vires the Provincial Legislature as it conferred jurisdic (1) ; 715 tion on the new court not only in respect of matters in List 11 of the Seventh Schedule of the Government of India Act, 1935 but also in regard to matters in List I such as promissory notes in item 8 of List I, Rejecting the contention it was held that the impugned Act was a law with respect to a matter enumerated in List 11 and was not ultra vires as the power of the Provincial Legislature to make laws with respect to "administration of justice" and ."constitution and Organisation of all courts" under item 1 of List II was wide enough to include the power to make laws with regard to the jurisdiction of courts established by the Provincial Legislature; that the object of item 53 of List I, item 2 of List 11 and item 15 of List III was to confer such powers on the Central and the Provincial Legislatures to make laws relating to the jurisdiction of courts with respect to the particular matters that are referred to in List I and II respectively and the Concurrent List, and that these provisions did not in any way curtail the power of the Provincial Legislature under item 1 of List 11 to make laws with regard to jurisdiction of courts and to confer jurisdiction on courts established by it to try all causes of a civil nature subject to the power of the Central and Provincial Legis latures to make special provisions relating to particular subject,,. referred to in the Lists. It may be mentioned that item 53 in ,List 1, items 1 and 2 in List 11 and item 15 in List III in the Seventh Schedule to the 1935 Act more or less correspond to entries 77, 78 and 95 in List 1, entries 3 and 65 in List 11 and entry 46 in List III of the Seventh Schedule to the Constitution. This being the scheme with regard to the constitution and Organisation of courts and their jurisdiction and powers let us next proceed to examine entry 26 in List III. Entry 26, which is analogous to Item 16 in List III of the Seventh Schedule to the 1935 Act, deals with legal, medical and other professions but is not concerned with the constitution and Organisation of courts or their jurisdiction and powers. These, as already stated, are dealt with by entries 77, 78 and 95 in List 1, entries 3 and 65 in List II and entry 46 in List III Enactments such as the , the , the , the and the , all Central Acts, would fall under the power to deal with professions under entry 26 of List III in the Seventh Schedule to the Constitution and item 16 of List III of 1935 Act. It will, however, be noticed that entries 77 and 78 in List I are composite entries and deal not only with the constitution and Organisation of the Supreme Court and the High Courts but also with persons en titled to practise before the Supreme Court and the High Courts. The only difference between these two entries is that whereas the jurisdiction and powers of the Supreme Court are dealt with in 716 entry 77, the jurisdiction and powers of the High Courts are dealt with not by entry 78 of List I but by other entries. Entries 77 and 78 in List I apart from dealing with the constitution and Organisation of the Supreme Court and the High Courts also deal with persons entitled to practise before the Supreme Court and the High Courts. This part of the two entries shows. that to the extent that the persons entitled to practise before the Supreme Court and the High Court are concerned, the power to legislate in regard to them is carved out from the general power relating to the professions in entry 26 in List III and is made the exclusive field for Parliament. The power to legislate in regard to persons entitled to practise before the Supreme Court and the High Courts is thus excluded from entry 26 in List III and is made the exclusive field for legislation by Parliament only [Re : Lily Isabel Thomas(l) and also Durgeshwar vs Secretary, Bar Council, Allahabad 2 ) ]. Barring those entitled to practise in the Supreme Court and the High Courts, the power to legislate with respect to the rest of the practitioners would still seem to be retained under entry 26 of List III. To what extent the power to legislate in regard to the legal profession still remains within the field of entry 26 is not the question at present before us and therefore it is not necessary to go into it in this appeal. The was passed to amend and consolidate the law relating to legal practitioners and to provide for the constitution of Bar Councils and an All India Bar. Section 2(a) and (i) define an 'advocate ' and a 'legal practitioner '. Chapter II deals with the establishment of Bar Councils and their functions, viz., to admit persons on its roll, to prepare and maintain such roll, to entertain and determine cases of misconduct against advocates on its roll etc. Section 7 lays down the functions of the Bar Council of India, that is, to prepare and maintain a common roll of advocates, to lay down the standard% of professional conduct and etiquette, to lay down procedure to be followed by its disciplinary committee and the disciplinary committee of each State Bar Council, to exercise general supervision and control over State Bar Councils etc. Chapter III deals with admission and enrolment of advocates. Section 16(1) provides that there shall be two classes of advocates, senior advocates and other advocates. Chapter IV deals with the right,to practise. Section 29 provides that subject to the provisions of this Act and the rules made thereunder, there shall, as from the appointed day, be only one class of persons entitled to practise the profession of law, namely, the advocates. Section 30 provides that subject to the provisions of this Act, every advocate whose name is entered in the common roll shall be entitled as of right to practise throughout the terri (1) ; ,236. (2) A.I.R. 1954 All. 717 tories to which this Act extends in all courts including the Supreme Court and before any tribunal or any other authority before whom such advocate is by or under any law for the time being in force entitled to practise. Chapter V deals with the conduct of advocates. Section 35 lays down that where on receipt of a complaint or otherwise a State Bar Council has reason to believe that any advocate on its roll has been guilty of professional or other misconduct, it shall refer the case for disposal to its disciplinary committee. The disciplinary committee has to fix a date for the hearing of the case and give a notice thereof to the advocate concerned and to the Advocate General of the State. (3) provides that such committee after giving the advocate concerned and the Advocate General an opportunity of being heard, may make, inter alia, an order suspending the advocate from practice as it may deem fit. Similar powers are also conferred on the Bar Council of India under section 36 in relation to an advocate on the common roll. Section 37 gives a right of appeal to the Bar Council of India by any person aggrieved by an order of the disciplinary committee of a State Bar Council. Section 38 confers a right of appeal to the Supreme Court on any person aggrieved by an order by the disciplinary committee of the Bar Council of India under section 36 or section 37 and empowers the Supreme Court to pass such orders thereon as it deems fit. The object of the Act is thus to constitute one common Bar for the whole country and to provide machinery for its regulated functioning. Since the Act sets up one Bar, autonomous in its character, the Bar Councils set up thereunder have been entrusted with the power to regulate the working of the profession and to prescribe rules of professional conduct and etiquette, and the power to punish those who commit breach of such rules. The power of punishment is entrusted to the disciplinary committees ensuring a trial of an advocate by his peers. Sections 35, 36 and 37 lay down the procedure for trying complaints, punishment and an appeal to the Bar Council of India from the orders passed by the State Bar Councils. As an additional remedy section 38 provides a further appeal to the Supreme Court. Though the Act relates to the legal practitioners, in its pith and substance it is an enactment which concerns itself with the qualifications, enrolment, right to practise and discipline of the advocates. As provided by the Act once a person is enrolled by any one of the State Bar Councils, he becomes entitled to practise in all courts including the Supreme Court. As aforesaid, the Act creates one common Bar, all its members being of one class, namely, advocates. Since all those who have been enrolled have a right to practise in the Supreme Court and the High Courts, the Act is a piece of legislation which deals with persons entitled to practise before the Supreme Court and the High Courts. There L3 Sup. CI/68 2 718 fore the Act must be held to fall within entries 77 and 78 of List I. As the power of legislation, relating to those entitled to practise in the Supreme Court and the High Courts is carved out from the general power to legislate in relation to legal and other professions in entry 26 of List 111, it is an error to say, as the High Court did, that the Act is a composite legislation partly falling under entries 77 and 78 of List I and partly under entry 26 of List 111. In this view, the right of appeal to this Court under section 38 of the Act creates a jurisdiction and power in relation to a matter failing under entries 77 and 78 of the Union List and the Act would, therefore, fall under clause I and not clause 2 of article 138. The argument that section 38 falls under article 138(2) and is invalid on account of its having been enacted without a special agreement with the State Government is, therefore, without merit. As regards the validity of rule 7 of O. 5 the contention, as already pointed out, was raised and rejected in the said review petition filed by the appellant. The contention having thus been concluded could not obviously be raised in the writ petition filed by the appellant, nor would he be entitled to any writ or order from the High Court as against the said decision. The rule, in any event, merely provides for the placing of an. appeal filed under section 38 for a preliminary hearing and enables this Court to dismiss at that stage an appeal if it finds it has no substance. The appellant in such an appeal is heard; if the court finds that there is nothing in the appeal, the court declines to issue notice on the opposite side and disposes of the appeal there and then. Section 38 confers no doubt a right of an appeal on a person aggrieved by an order passed under sections 36 and 37 and the appellant does not have to obtain any special leave under article 136. But the fact that under rule 7 the appeal is placed for preliminary hearing and is liable to be disposed of at that stage does not mean that the content of the right of appeal under section 38 is in any way curtailed as the party filing the appeal has to be heard on all points raised by him therein. There is, therefore, no substance in the argument that rule 7 contravenes section 38, and is therefore ultra vires the section. On the express terms of article 145(1) (b), the rule is within the rule making power of this Court as it merely lays down how and in what manner an appeal filed under section 38 is to be dealt with and does not deal with or affect the right of appeal. The validity of the rule cannot, therefore, be impeached. The decision in Prem Chand Carg vs Exercise Commissioner (1) cannot assist the appellant. In that decision rule 12 (1) [1963] Supp. 1 S.C.R. 885. 719 of O. xxxv of the Supreme Court Rules was declared void in so far as it related to the furnishing of security on the ground that the right to move the, Supreme Court under article 32 was absolute and the rule by providing security for costs impaired such an absolute right. Furnishing of security in the case of persons without means to do so would obviously obstruct such persons from vindicating their rights under article 32 and would, therefore, curtail the right under that Article. That obviously is not so in the case of the rule with which we are concerned in this appeal. The contention, therefore, that rule 7 curtails the right of appeal under section 38 or contravenes that section must be rejected. The appellant cited a number of authorities but it is not necessary to deal with them as they have no bearing on the questions before us. He also tried to question the correctness of the order passed against him by the Bar Council of India but we did not allow him to reagitate it as it stood concluded on the dismissal of the appeal and the review petition filed by him in this Court. The appeal fails and is dismissed with costs. V.P.S. Appeal dismissed.

The appellant filed a writ. petition in the High Court for quashing, (a) the order of suspension passed against him by the State Bar Council under s.4. 35 of the , (b) the order of the Bar Council of .India in appeal under section 37 of the Act, confirming the order of suspension, and (c) the order of this Court summarily rejecting his appeal to this Court under section 38, under O.V., r, 7 of the Supreme Court Rules, 1966. He contended that : (1) the jurisdiction conferred on this Court by section 38 related to a matter under Entry 26 of List III of the Constitution, that it therefore fell under article 138(2), and as there was no special agreement between the Government of India and the Government oaf a State as required by article 138(2), section 38 was not validly enacted; and (2) O. 5, r. 7 of the Supreme Court Rules under which the appeal was placed for preliminary hearing was ultra vires section 38, as the rule cut down and im paired the right of appeal under the section. The writ petition was dismissed. In appeal to this Court, HELD : (1) While Entry 26 of List III deals with the legal, medical and other professions, Entry 77 of List I, deals with the constitution, organisation, jurisdiction and powers of the Supreme Court, and also with persons entitled to practise before the Supreme Court. Since there is a seeming conflict between the two entries they have to be harmonised by reading the, general power in Entry 26 in a restricted sense. That is, the power to legislate in regard to persons entitled to practise before the Supreme Court under Entry 77 of List I should be held to be carved out from the general power relating to the professions in Entry 26 of List III, and made the exclusive field of Parliament. [715 E F, H; 716 A C] The object of the is to constitute one common bar for the whole country and to provide machinery for its regulated functioning Though the Act relates to legal practitioners, in its pith and substance it is an enactment dealing with the qualifications, enrolment, right to practise and discipline of Advocates. Since the Act provides that once a person is enrolled by any State Bar Council he becomes entitled to practise in all court , including the Supreme Court, the Act is a piece of legis lation dealing with persons entitled to practise before the Supreme Court. Therefore, the Act, including the right of appeal to this Court under section 38, deals with a matter relating to Entry 77 of List I and falls under article 138(1) and within the exclusive field of Parliament. The Act is not 710 a composite legislation partly failing under Entry 77 of List I and partly tinder Entry 26 of List 111. It does not fall under article 138(2) and a special agreement with a State Government, is therefore not necessary. [717 E, F H; 718 A C] State of Bombay vs Balsara, ; , State of Bombay V. Narothamdas, ; and In re : Lily Isabel Thomas; , followed. C. P. & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 , Citizens Insurance Co. of Canada vs Parsons, [1881] 7 A.C. 96, Bhola Prasad vs Emperor, , G. G. in Council vs Province of Madras, (1945) 72 ].A. 91 and Durgeshwar vs Secretary, Bai Council, Allahabad, A.I.R. 1954 All. 728, referred to. (2) On the express terms of article 145(1)(b) of the Constitution, 7 of O. 5 of the Supreme Court Rules is within the rule making power of this Court, as it merely lays down how and in what manner an appeal filed under section 38 is to be dealt with and does not deal with or affect the right of appeal. The fact that under the rule the appeal is placed for preliminary hearing and is liable to be disposed of at that stage does not mean that the content of the right of appeal under the section is in any way curtailed, because, the party filing the appeal is heard on all points raised by him even at that stage. [718 F M] Prem Chand Garg vs Excise Commissioner, [1963] Supp. 1 S.C.R. 885, distinguished.

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ivil Appeals Nos. 621 to 626 of 1965. Appeals by special leave from the judgment and order dated March 6, 1964 of the Allahabad High court in Civil Misc. Writs Nos. 1428 to 1433 of 1961. J. P. Goyal and Sobhag Mal Jain, for the appellants (in all the appeals). section P. Sinha and M. 1. Khowaja, for respondents Nos. 2 to 4 (In all the appeals). The Judgment of the Court was delivered 'by Mitter, J. These six appeals by special leave arise from a common judgment of the Allahabad High Court rejecting six writ petitions filed by the appellants in that court for quashing the orders of the Board of Revenue arising out of cases filed under section 232 of the U.P. Zamindari Abolition and Land Reforms Act. The relevant facts are as follows. ' In 1945 one Ram Dhari Singh who was the kadar of the proprietary rights of. a village sued the appellants and the respondents other than the Board of Revenue for their ejectment under section 171 of the U.P. Tenancy Act alleging that the appellants had illegally sublet the lands to the,said respondents. The appellants and the respondents made a common cause denying the alleged subletting and stating that the entries in the village records about. the respondents being subtenants were erroneous. On 3rd March 1946 i.e., towards the end of 1353 F. the suit was dismissed on the ground that there had been ' no ' subletting and that the, entries regarding the sub letting in the village records were not correct. No attempt was however made by anyone to bring the village records in harmony with the said decision with the result that the said respondents continued to figure therein as sub tenants as before. On his attention being drawn to this fact, the Lekhpal on his own authority removed the entries in favour of the said respondents s lowing them as sub tenants from the records of the year ending 1358 F. 500 The entries in the year 1356 F. were left undisturbed and it was not within the jurisdiction of the Lekhpal to make any alterations therein. The U.P. Zamindari Abolition and Land Reforms Act (here inafter referred to as the 'Act) came into force with the commencement of 1360 F. i.e. last July, 1952. Under section 20(b)(i) every person who was recorded as occupant in the Khasra or Khatauni of 1356 F. prepared under sections 28 and 33 respectively of the U.P. Land Revenue Act was to be called an "adhivasi" and was subject to the provisions of the Act, to be entitled to take or retain possession of the land (unless he would become a bhumidar or an asami). The second Explanation to the section provided that where any entry in the records referred to in clause (b) of section 20 had been corrected before the date of vesting under or in accordance with the provisions of the U.P. Land Revenue Act, 1901, the entry so corrected was to prevail for the purposes of the said clause. The third Explanation provided that for the purposes of the second Explanation an entry shall be deemed to have been corrected before the date of vesting if an order or decree of a competent court requiring any correction in the records had been made before the said date, and had become final even though the correction may not have been incorporated in the records. On the strength of the Khasra and Khatauni of 1356 F. the respondents claimed adhivasi rights under section 20(b) (i) of the Act. They filed six suits praying for recovery of possession under section 232 of the Act. According to their case, the appellants were never. in possession of the lands in dispute at any time. They lost the suits before the Sub Divisional Officer and the Additional Commissioner of Varanasi but they ultimately succeeded in appeals to the Board of Revenue. The appellants filed the writ petitions for quashing the orders: of the Board of Revenue. The Hi Court went elaborately into the procedure for making entries in the records of rights and examined the question as to whether an entry recording a person as a sub tenant was equivalent to an entry recording him as occupant for the purpose of the Act. The High Court concluded that the impugned orders of the Board of Revenue were wrong but held that the Board had jurisdiction to interpret section 2 it thought proper and as the orders passed by it were final without being subject to any appeal ', they could not be quashed by certiorari as being mere errors of law. It is from this judgment that the present appeals have been launched. Learned counsel for the appellants raised the following points in his address 501 (1) The correctness of the entry in the record of rights of 1356 F. can be gone into and is capable of challenge in a court of law exercising jurisdiction under article, 226. (2) In the present case there was an adjudication in March,, 1946 and the respondents were not sub tenants : consequently, unless they showed that they had hereafter become sub tenants the benefit of the entry in their favour in 1 3 5 6 F. could not be availed of by them. (3) Under rule 183 of the rules framed under the Act it was incumbent on the respondents to state in their applications the dates of their dispossession and the failure to do so rendered their petitions defective. (4) In the Khasra of 1356 F. the respondents were only recorded as sub tenants but not as occupants and hence they cannot get the benefit of section 20(b) (i) of the Act. Before entering into a discussion as to the merits of the points raised, it is worthy of note that before the Board of Revenue ie. the ultimate fact finding authority the contention on behalf Of the respondents who were the appellants before the Board, was that they had been recorded as occupants in the revenue papers of 1356 F. and hence they were entitled to be reinstated to possession, it being unnecessary for them to prove that they were in actual possession in 1356 F. The arguments before the Board of Revenue on behalf of the present appellants were : (1) as the appellants were not in possession, they were not sub tenants either in 1356, F. or before and hence they could not be regarded ' as occupants in 1356 F: in support of this proposition reliance was placed on a decision, of this Court in The Upper Ganges Sugar Mills Ltd. vs Khalil ulRahman and others( ') which will be discussed later : (2) as both the courts below and the Board of Revenue, had concurrently found that there was no contract of sub tenancy, the respondents could not be regarded as sub tenants and could not rely on an entry in the year 1356 F. in their favour, and (3) a sub tenant was not an occupant and as such not, entitled ' to maintain an application under section 232 of the Act. All these contentions were turned down by the Board of ' Revenue. As regards the first point the Board took the view that the Upper Ganges Sugar Mills (1) case did not lay down that a, person had to be in actual possession before he could get the, benefit of the entry in the record of rights of 1356 F. With regard to the second point, the Board held that even if the respondents had failed to prove that they were sub tenants they could" (1) ; 502 still be treated as trespassers. The third point was disposed of by the Board placing reliance on an earlier decision of its own to the effect that the entry of sub tenancy should be held to be an entry of a recorded occupant. There are two decisions of this Court which negative the points canvassed before us. In the Upper Ganges Sugar Mill?(") case, the appellant company, a thekadar up to 1355 F. (June 1948) had retained possession of the lands in dispute by virtue of stay orders granted although the landlord had succeeded in the ejectment suit under the U.P. Tenancy Act in all the courts up to the Board of Revenue. During the pendency of the company 's appeal to this Court, the Act came into ' force. The company star proceedings to recover actual possession under section 232 of the Act read with sections 12 and 20. The trial court decided in favour of the company and ordered delivery of possession under both the sections. The landlords lost in appeal. Thereupon there was a Second Appeal to the Board of Revenue which was dismissed in January 1956. The landlords came to this Court on special leave, The appeals were remanded by this Court for a finding whether the company had acquired any rights under section 20 of the Act. The Board held that the company was entitled to such benefit and had acquired Adhivasi rights thereunder. Before this Court at the final hearing, there was a good deal of discussion as to the meaning of the expression "a person in occupation". It was held, that in order that the company could take the benefit of section 20 it should have been recorded as in occupation of the land in dispute in the year 1356 F. and the only limitation. placed by judicial decisions on the meaning of the word occupant" was that a person should be in occupation in his own right and not on behalf of some cane else. On behalf of the landlords it was argued that the company was not in possession in its own right firstly because there was an order for ejectment in November 1948 and thereafter it retained in possession only on account of the stay orders; and secondly, as a , thekadar the possession of the company was on behalf of the landlords. This Court held that on the landlords" own showing the company was not in possession as a thekadar is the theka had expired before 1356 F. and consequently the nature of occupation of the company was on its own behalf and not on behalf of the court or of the landlords. In the result, the company was held entitled to Adhivasi rights. This case establishes that a person recorded as an occupant on the relevant date although found by courts of law to have no right to I possession even prior thereto, is not to be denied Adhivasi rights. (1) ; 503 The case of Amba Prasad vs Abdul Noor Khan and others( ') is more in point. Amba Prasad was a zamindar of a village before the coming into operation of the Act. The opposite parties were persons whose names had been recorded in column 23 (miscellaneous) in the Khasra for the year 1356 F. as persons in possession and they claimed to be recorded as occupants of the fields in dispute and to have obtained adhivasi rights under section 20. The case of the respondents was that they were in occupation of the land, and had been dispossessed after June 30, 1948 by the appellant and as they were recorded occupants in 1356, F. they were not required to prove actual possession. The appellants stand was that the entry was fraudulently made after July, 1949. The suits were dismissed by the Sub Divisional Officer but in appeal the Additional Commissioner held that the respondents had ' acquired Adhivasi rights. This was upheld by the Board of Revenue. The appellant then filed appeals to this Court. The real dispute , as noted by this Court was whether a person who was recorded as 'Qabiz ' but not as a tenant or Subtenant would get the advantage of section 2O of the Act and claim Adhivasi rights. Examining the scheme of section 20 along with its. Explanations, it was observed: "The section, speaking generally, says that certain persons "recorded" as "occupants" of lands (other than grove lands or lands to which section 16 applies) shall be known as adhivasis and shall be entitled to retain or to regain possession of them after the date of vesting which was July 1, 1952 . Such persons. must be recorded as occupants, in the khasra or Khatauni for 1356 F. (1 7 48 to 13O 6 49). If such a., person is in possession , he continues in possession. If he is evicted after June 30, 1948 he is to be put back in possession notwithstanding anything in any order or decree. By fiction such persons are deemed to be entitled to regain possession (Explanation I). The emphasis has been laid on the record ' of khasra or khatauni of 1356 F. and June 30, 1948 is the datum line. The importance of an entry in these two documents is further apparent from Explanations II and III. Under the former if the entry is corrected before the date of vesting (1 7 52) the corrected entry is to prevail and under the latter the entry is deemed to be corrected (even though not actually corrected) if an order or decree of a competent court ordering the correction had been made before the date of vesting and the order or decree had become final. There are thus two date lines. They are June 30, (1) ; 504 1948 and July 1, 1952, and the title to possession as adhivasi depends on the entries in the khasra or khatauni for the year .1356 F." The Court went on to add that the word 'occupant ' had not been defined in the Act and said. : "Since khasra records possession and enjoyment the word 'occupant ' must mean a person holding the Ian( in possession or actual enjoyment. The khasra, however, may mention the proprietor, the tenant, the subtenant and other. person in actual possession, as the case may be. If by occupant is meant the person in actual possession it is clear that between a proprietor and a tenant, the tenant, and between a tenant and the subtenant the latter and between him and a person recorded in ' the remarks column as "Dawedar qabiz" the dawedar qabiz are the occupants. . The section eliminates inquiries into disputed possession by accepting the records in the kha or khatauni of 1356 F. or its correction before July 1. 1952. It was perhaps thought that all such disputes would have solved them selves in the four years between June 30, 1948 and June 30, 1952. " With regard to the question as to whether a mere entry in 1356 F. without possession in that year was sufficient, reference ,was made by this Court to the Full Bench decision of the Allahabad High Court in Ram. Dular Singh and another vs Babu Sukh Ram & others(1) which had endorsed the earlier view in Nanakchand vs Board of Revenue, U.P. (16). In the last mentioned case the Allahabad High Court had observed that the words in the section were not "every person who was an occupant in 135,6 F." nor were the words "every person who was recorded as an occupant in the year 1356F. and who was in possession in that year. " According to the Allahabad High Court there was no warrant for introducing words in the section which were not there. This Court felt that .in view of the long established line, of cases, there was no justification for reopening this question and the decision of the Board of 'Revenue was right. These decisions negative the first, second and the fourth points sought to be raised on behalf of the appellants. The record of rights for the year 1356 F. had not been corrected afterwards. We 'have, to go by the entry in the record of rights and no enquiry need be made as to when the respondents became sub tenants after the decision in favour of the landlord,, Ram Dhani Singh. The last decision of this Court also shows, that as between the tenant and the sub tenant the entry in the record of Tights in favour of the (1) (2) 505 sub tenant makes him the occupant entitled to the adhivasi rights under section 20 of the Act. With regard to the point as to the violation of rule 183 it is enough to say that the point was not canvassed before the Board of Revenue and as such we need not look into it. In the result, the appeals fail and are dismissed with costs. One hearing fee. R.K.P.S. Appeals dismissed.

In 1945 one R who was the thekadar of the proprietary rights of a village, sued the appellants and the respondents, other than the first respondent Board of Revenue, for their ejectment under section 171 of the U.P. Tenancy Act. alleging that the appellants had illegally sub let the lands to the respondents. The appellants and the respondents made a on cm denying the alleged 'sub letting and stating that the entries in the village records about the respondents being sub tenants were erroneous. The suit was dismissed in March, 1946, I.e., towards the end of 1353 F on the ground that there was no sub letting and the entries were not correct No attempt was made by anyone to bring the village records in harmony with this decision and the respondents continued to figure as sub tenants in these records. On his attention being drawn to this, the Lekhpal, on his own authority, removed the entries in favour of the respondents from the records for the year ending 1358 F but the entries for the year 1356 F were left undisturbed as it was not within the Lekhpal 's jurisdiction to alter these. After the U.P. Zamindari Abolition and Land Reforms Act came into force in 1952 i.e., at the beginning of 1360 F, on the strength of the Khasra and Khatauni of 1356F, the respondents claimed Adhivasi rights under section 20(b)(i) of the Act and. file six suits praying for the recovery of possession of the lands under 'section 232 of the Act. They lost the suits before the sub Divisional Officer and Additional Commissioner of Varanasi but succeeded in appeals to the Board of Revenue. The appellants thereafter filed writ petitions for quashing the orders of the Board; and the High Court although of the view that the impugmed orders of the Board of Revenue were wrong, held that the Board had jurisdiction to interpret section 20(b) as it thought proper; and as the orders passed by it were final without being subject to any appeal. they could not be quashed by certiorari as being mere errors of law. In appeal to this Court, it was contended, inter alia, on behalf of the appellants that (i) the correctness of the entry in the record of rights of 1356 F could be gone into and was capable of challenge in a court of law exercising jurisdiction under article 226; (ii) in the present case there was an adjudication in March 1946 that the 'respondents were not subtenants; consequently, unless they showed that they had thereafter become sub tenants, the benefit of the entry in their favor in 1356 F could not be availed of by them; (iii) in the Khasra of 1356 F the respondents were only recorded as sub tenants but not as occupants and could not therefore get the benefit of section 20 (b) (i) of the Act. HELD: Dismissing the appeals. The record of rights for the year 1356F had not been corrected afterwards. The court had to go by the entry in the record of rights and 499 no enquiry need be made as to when the respondents became sub tenants after the decision in the suit filed by R. As between the tenant and the sub tenant, the entry in the record of rights in favour of the sub tenant made him the occupant entitled to the adhivasi rights under section 20 of the Act. [5O4 G H] The Upper Ganges Sugar Mills Ltd. vs Khalil ul Rahman and others; , ; Amba Prasad vs Abdul Noor Khan Sukh Ram & Ors. , ; and Nanakchand vs Board of Revenue U.P. ; applied.

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Appeals Nos. 356 and 357 of 1966. Appeals by special leave from the Award of the Industrial Tribunal, Rajasthan in Case No. 9 of 1961. Niren De, Addl. Solicitor General, Sobhag Mal fain an( B. P. Maheshwari, for the appellant (in C. A. No. 356 of 1966 and respondent (in C. A. No. 357 of 1966). 782 M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the appellants (in C. A. No. 357 of 1966) and respondents (in C.As. No. 356 of 1966). The Judgment of the Court was delivered by, Shelat, J. These two appeals by special leave, one by the appellant company and the other by, its workmen are directed against the award dated May 4, 1964 of the Industrial Tribunal, Rajasthan to which reference was made under section 10(1)(d) of the . The dispute referred to the Tribunal related to the workmen 's demand for bonus for the years 1956 57 to 1959 60. By the said award the Tribunal disallowed the claim for 1956 57 on the ground that it was belated and allowed the demand for the rest of the years 1957 58 to 1959 60. In working out the available surplus for distribution as bonus the Tribunal in general followed the Full Bench formula evolved by the Labour Appellate Tribunal in Millowners ' Association, Bombay vs Radhtriya Mill Mazdoor Sangh, Bombay(1) and approved by this Court in the Associated Cement Co. Ltd. vs Its Workmen.(2) The Tribunal worked out first the gross profits for the said years and the prior charges deductible therefrom and arrived at the available surplus. For the year 1957 58 gross profits found were Rs. 28.29 lacs, Rs. 25.36 lacs for 1958 59 and Rs. 34.92 lacs for 1959 60. There is no dispute about these figures. The Tribunal then ascertained the prior charges deductible from the gross profits. There is no dispute with regard to the figures for depreciation, income tax and wealth tax. As regards interest allowable on paid up capital, the Tribunal allowed 6%. per annum tax free interest for 1957 58 and the Company remanded interest at the rate of 8.57% by reason of a change in he Income tax law having been made during the year. The Union, on the other hand, claimed that only 6 % interest should be allowed. The Tribunal allowed a mean between the two, viz., 7 1/4. There was no question of interest on working ;capital as it was not the Company 's case that any reserve was utilised as working capital similarly there is no dispute with regard to the rehabilitation charge for buildings allowed by the Tribunal. Apart from the question. as to interest allowable on paid up capital for the year 959 60, the main dispute. in these appeals is with regard to the rehabilitation allowances in respect of plant and machinery for he three years in question and the method followed by the Tribunal in calculating them. (1) [1950] I.I.J. 1247. (2) 783 The Company ever since its commencement has been purchasing new and also old reconditioned machinery. As regards new machinery the Company furnished, (a) cost to the Company, (b) the current price during the year 1963 64 and (c) percentage in the rise in prices. The Company also furnished in respect of reconditioned machinery (a) cost to the Company and (b) estimated cost which its vendors would have paid if they had purchased it as new in the years in which the Company installed the old machinery. In respect of the old machinery the cost to the Company and the estimated cost to the sellers according to the Company were as follows: Year Cost to the Estimated cost to Company the sellers (In lacs) (In lacs) Upto 1952 53 13.87 20.05 1953 54 to 1955 56 3.49 5.23 1956 57 1 40 2.10 9157 58 1 77 2.65 Total 20.03 30 03 The difference between the cost to the Company and the estimated cost to the sellers thus come to 150%. No old machinery was purchased during 1958 59 and 1959 60. The Company also produced quotations of prices for equivalent machinery current in year 1963 64. The Union did not dispute (a) the figures of cost to the Company of the new machinery as given in its statement exhibit M2, (b) the figures of cost of old machinery to the Company and its estimated cost to the sellers as given in exhibit M 3 and (c) the quota tions of prices received by the Company in 1963 64 from manufacturers of these machines, both old and new, "except in the case of machinery installed, during the bonus years. " The Tribunal worked out the rehabilitation requirements for the years 1957 58 to 1959 60 in a Chart which is Annexure A to the award. Since the controversy in these appeals mainly centers round the figures of rehabilitation requirements allowed by the Tribunal it is expedient to set out that Annexure: 784 784(a) Period Cost Cost as Multi Total Less Balance shown by plier break Co. in down EX. M. value 5% 1 2 3 4 5 6 7 1050 51 New 16.30 16.30 3.36 54.77 0.81 53.96 Old 13.37 20.05 67.37 Nil 67.37 1951 52 New 1.43 1.43 1.87 2.67 0.07 2.60 1952 53 New 2.18 2.18 1.47 3.21 0.11 3.10 1953 54 New 1.12 1.12 2.28 2.55 0.06 2.49 Old 1.24 1.86 2.28 4.24 . . 4.24 1954 55 New 3.71 3.71 1.86 6.90 0.19 6.71 Old 1.95 2.93 1.86 5.45 Nil 5.45 1955 56 New 6.93 6.93 2.18 15.11 0.35 14.76 Old 0.30 0.45 2.18 0.98 Nil 0.98 1956 57 New 13.11 13.11 2.35 30.80 0.66 30.14 Old 1.40 2.10 2.35 4.93 Nil 4.93 1957 58 Now 3.39 3.39 1 3.39 0.17 3.22 Old 1.77 2.65 1 2.65 Nil 2.65 1958 59 New 12.95 12.95 1 12.95 0.65 12.30 1959 60 New 30.76 30.76 1 30.76 1.54 29.22 784(b) Minus deprociation Balance Divisor Annual Require ment 8 9 10 11 (Rupees in lakhs) Total cost as new & old Machy30.03 24.35 7 3.48 Depre written off upto 31 3 57 48.83 2.60 8 0.32 3.10 9 0.34 Investment as on 31 3 57 2.49 10 0.25 18.22 4.24 7 0.61 Total 96 98 6.71 11 0.61 . 5.45 7 0.78 14.76 12 1.23 0.98 7 0.14 30.14 1 3 2.32 4.93 7 0.70 3.22 14 0.23 2.65 7 0.38 11.39 12.30 14 0.88 12.27 29.22 14 2.08 14.35 785 It will be observed from Annexure A that the Tribunal accepted as regards new machinery the Company 's figures of cost and quotations as cost of replacement and dividing the cost of replacement by the original cost to the Company I worked out multipliers for each year. This dispute, however, is with regard to the multipliers arrived at by the Tribunal in respect of old machinery. In Annexure A, the Tribunal adopted 3.36 multiplier in res pect of old machinery installed in 1950 51, i.e., the same multiplier which it worked out in respect of new machinery installed during that year. For the years 1953 54 to 1957 58 the Tribunal accepted the Company 's figures which were agreed to by the Union, viz., of cost to the Company and the estimated cost to their vendors if the latter had purchased that machinery as new in the respective years of installation. The Company also produced quotations from manufacturers of machinery itemwise in its Confi Annex. I and 2. These quotations were for some machines for 1959 60, for some for 1960 61 and the rest for 1961 62. It would be safe to say that the average cost of these machines was the cost prevalent in 1960 61. Though the average cost of the machinery was thus available, the Tribunal in the case of old machinery worked out multiplier for each of these years and then arrived at the figure of Rs. 85.62 lacs as the total replacement cost of that machinery by multiplying the estimated cost to the seller with the multiplier. The Company 's contention was that since the Company had fur nished quotations for all machinery including the old machinery, the Tribunal ought to have accepted those quotations as equivalent to replacement cost as it did in the case of new machinery instead of adopting the notional method of working out multipliers and then arriving at replacement cost by multiplying that multiplier with the estimated cost to the sellers. A multiplier is the ratio between the original cost and the cost of replacement. It is one of the methods of arriving at the hypothetical cost of replacement at a future date. But where the cost of replacement is available through quotations and these quotations are not disputed by the Union it would not be necessary to resort to a hypothetical multiplier or if the multiplier must be ascertained it must be the ratio of the cost to the employer and the estimated cost of replacement actually proved through the quotations. According to the Company in the case of old machinery the multiplier so calculated would be 1950 51 . 3.98 1953 54 . 7.83 1954 55 . 3.49 1955 56 . 2.47 1956 57 . 4.75 1957 58 . 2.29 786 The total cost of replacement of old machinery on the basis of these multipliers or in the alternative on the basis of the quotations would then come to Rs. 121.70 lacs instead Rs. 85.62 lacs, the difference being of Rs. 36.08 lacs. Therefore, even if the divisor of 7 uniformly_ applied by the Tribunal in Annex. A were to be accepted, as correct, Rs. 36.08/7=Rs. 5.16 lacs would have to be added for rehabilitation requirement for each of the bonus years. If that is done the entire available surplus found by the Tribunal would be wiped out. It will be seen from the Tribunal 's Annex. A that so far as new machinery is concerned the Tribunal accepted the figures of original cost and the quotations furnished by the Company and worked out multipliers for/all the years from 1950 51 to 1959 60 by simply dividing the quotations by the original cost. The question is, should not the Tribunal have also followed the same method in the case of old machinery when it had before it the estimated cost to the seller, i.e., the cost of old machinery if purchased as new in the year of installation and the quotations for that machinery. If that were done there would be no necessity of finding out a notional multiplier. In that event as seen above there would be a difference of Rs. 36.08 lacs which would have to be added to the figure of Rs. 85.62 lacs worked out by the Tribunal as total rehabilitation cost in respect of old machinery. Mr. Ramamurti however argued that though the Union had not disputed the quotations those quotations were for the year 1963 64 when the Tribunal was adjudicating the dispute, that it is always necessary to first find out the multiplier and then work out the rehabilitation cost and that the cost of machinery in the bonus year or years must be reflected while working out the rehabilitation cost even if the year of replacement worked out from the average life of machinery is later. It is now well established that in the case of old machinery the employees cannot insist that such machinery should be replaced by old machinery. For working out rehabilitation cost of such machinery it is the cost of new machinery that is to replace the old which has to be taken into consideration. The Company as aforesaid produced two kinds of figures both accepted by the Union and the Tribunal: (1) the estimated cost to the seller if he had purchased the old machinery as new in the respective years of its installation and (2) quotations of prices of machinery which would replace it. The Tribunal had before it thus the cost of the machinery if it were new in the year of installation and the cost of its replacement by new machinery. There was therefore no particular reason in distinguishing the old from the new machinery for the figures of costs and replacements in both the cases were on the footing that the old machinery was new machinery. Therefore since the Tribunal accepted the quotations and worked out the multiplier in the case of new machinery by dividing the quotations by the original 'cost it ought to have 787 followed the same method in the case of old machinery as it had before it the cost of the old machinery as new and the cost or replacement, both unchallenged by the Union. The question still is whether the quotations can be the sole criterion for working out rehabilitation cost. The principle accepted in the Full Bench formula and approved by this Court in the case of Associated Cement Co. Ltd (1) was that payment of bonus is in recognition of the contribution of labour in the profits earned by the industry and to assist labour to overcome as far as possible the difference between the actual wage and the living wage. The Formula at the same time accepted the point of view of the industry that investment made by it must imply a legitimate expectation of securing recurring returns and that could only be ensured by machinery being continuously kept in good working order. Such maintenance would necessarily be to the advantage of the labour, for, the better the machinery the larger the earnings and the brighter the chance of earning bonus. It is on this twin consideration that the amount necessary for rehabilitation is recognised as a prior charge on the gross profits when surplus profit for distribution as bonus is being worked out. It is true that depreciation is allowed by the tax laws but that is only to the extent of a percentage on the written down value. The depreciation fund set apart on that basis would obviously be insufficient for rehabilitation and therefore an extra amount would have to be annually set apart notionally to make up the deficiency. That is the reason for the Full Bench formula having accepted the industry 's claim to rehabilitation in addition to the admissible depreciation. While ascertain in the claim of rehabilitation the Tribunal has first to ascertain the cost of the machinery to the employer and then to estimate its probable future life. It then becomes possible to anticipate approximately the year when the machinery would need replacement and it is the probable price of such replacement at such future date that ultimately decides the amount to which the industry is entitled by way of replacement cost. The question is how to estimate the probable price of machinery at such future date? As observed in the Associated Cement Company 's case(1) such probable price can be considered itemwise where the industry does not own too many factories and In itemwise study of machinery is reasonably possible. It is when the industry owns several factories and the number of plant and machinery is so large that it becomes difficult to make an estimate of replacement cost itemwise that the estimate has to be block wise. In either case the Tribunal has to estimate the probable cost of replacement at the time when such replacement would become due. Such in estimate depends obviously on several uncertain factors. The estimate of the probable life of machinery is itself a matter of anticipation and (1) L/p(N)7SCI 11 788 the estimate of the probable trend of price during the In tervening period is also to a degree a matter of conjecture. However, the entire process of ascertaining replacement cost is hypothetical depending largely on expert evidence. It would appear therefore that whenever it is possible. to estimate itemwise the probable cost of machinery in the year of replacement, such a method is not only permissible but is more desirable. The block wise estimate has to be resorted to when item wise estimate is not possible. Where therefore there is clear evidence of the probable price of each piece of machinery itemwise when replacement is to become due, it would be more accurate to proceed on the basis of such price and it would not be necessary to find out multipliers, such multipliers being after all the ratio between the: cost, and the probable cost of replacement, ascertained from the trend of prices during the intervening years. The multiplier thus is at best an approximation arrived at from the trend of price level during the intervening period. But where the cost of replacement is ascertained from quotations of prices for the year of replacement such cost is more accurate than a notional one worked out from the multiplier. It is therefore not always necessary to arrive at a multiplier for estimating the probable cost of replacement. In the instant case the Tribunal estimated the life for old machinery at 10 years and that for new machinery at 15 years after taking into consideration the fact that the machinery was worked at least since 1955 56 on three shifts a day and the fact that it is being used for manufacturing precision machines. On this basis the old machinery installed in 1950 51 became due for replacement in 1960 61 and the rest of it installed in succeeding years would become due after 10 years from the respective years of its installation. It is in evidence that though the average life of the old machinery was exhausted it was still being worked though uneconomically. It was agreed that the entire machinery needed immediate replacement and this fact was accepted by the Tribunal. It is well established that an employer cannot be allowed to postpone the date of replacement on the footing that he has operated the machinery in fact beyond its average life and thus boost the cost of replacement taking advantage of the rise in price every year. In the instant case however 'that cannot be said to be the position. As stated earlier, the quotations produced by the Company represented an average price as near as possible prevailing during the period for replacement. Since they were not disputed by the Union they were the best available data. There was therefore all the more reason for the Tribunal to have worked out the cost of replacement from these undisputed quotations instead of working: out the multipliers and then arriving at the total re. placement cost. On the basis of these quotations even if the multipliers were to be worked out the multipliers and the cost of replacement of old machinery would be as follows: 789 Old machinery esti Replacement cost Multiplier Year mated cost to the proved byquota seller if he had pur tions disputedby chased as new in the the Union year of its installa tion not disputed by the Union (Rs. in lacs.) (Rs. in lacs) 1950 51 20.05 79.72 3.98 1953 54 1.86 14.57 7.83 1954 55 2.93 10.25 3.49 1955.56 0.45 1.11 2.47 1956 57 2.10 9.97 4.75 1957 58 2.65 6.08 2.29 30.04 121.70 The replacement cost thus arrived at would be Rs. 121.70 lacs as against Rs. 85.62 lacs as worked by the Tribunal. Indeed, where the cost of replacement is proved itemwise from price quotations and they are undisputed it becomes difficult to appreciate how the total cost of replacement can be less than the cost proved through quotations. Counsel for the Union, however, urged that while working out the replacement cost it is the cost during the bonus year which is relevant and therefore though the Union had accepted the quotations they would not be the proper criterion and the price prevalent during each of the bonus years would be the relevant price. He also argued that. even if the quotations were to be accepted as cost of replacement the prices of only those machines which are required for replacement and not for expansion which can be the basis of estimation. As regards the first argument, a similar contention was raised in Associated Cement Co. 's case(1) and was rejected. At p. 967 of the report the Court said: "What the Tribunal has to do in determining such cost (i.e., probable cost of replacements) is to project the price level into the future and this can Be more satisfactorily done. if the price level which has to be projected in future is determined not only in the light of the prices prevalent during the bonus year but also in the light of subsequent price levels. " The submission that it is the price level during the bonus year which is the criterion therefore is not correct,. The test is the probable cost of replacement when rehabilitation becomes due, If the bonus year and the year of rehabilitation coincide the price (1) 790 level during the bonus year would no doubt be the relevant basis. But where they do not coincide and the due year of rehabilitation is the year beyond the bonus year that which is relevant is the probable cost of replacement during that year and the Tribunal therefore would have to consider all relevant evidence necessary to estimate the cost during that future year. Where there is tangible evidence through quotations of prices for that year and such quotations are not in dispute the Tribunal does not have to conjecture what the trend of price level would be by taking into consideration the price level during the intervening period which would include the bonus year. However this does not mean that the Tribunal must mecha nically accept the quotations. The rehabilitation cost allowed under C the Full Bench formula is the probable cost of rehabilitation which while including modernization does not include expansion. But the distinction between modernization and expansion may in some cases be subtle and not capable of clear distinction. The question therefore would always be whether replacement of one machine by a new one is the introduction of modem machinery or one which is an item of expansion. If it is an item of expansion its cost naturally has to be excluded. The test is whether by the introduction of the new machinery the production capacity is likely to be significantly augmented, If that is found the Tribunal would have to apportion the cost on the basis that replacement is partly modernization and partly expansion. On the other hand, E if the increased production is not significantly on the higher side it would be a case of modernization incidental to replacement. The question is on whom is the burden of proving whether a given replacement amounts to.expansion,or modernization. It seems to us that since it is the employer who seeks replacement cost, it is for him to satisfy the Tribunal as to what will be the overall cost of replacement and in doing so it is he who must satisfy that the cost is of replacement only and does not include any expansion of machinery. Counsel for the Union was therefore right in saying that the Tribunal has to satisfy itself that no cost of expansion is injected in the rehabilitation cost. In the present case, however, it does not appear from the record that any question of expansion Garose as the Union accepted the quotation as equivalent to the replacement cost. Consequently, the Tribunal proceeded on the footing that the entire machinery had become due for replacement and the prices proved by quotations were of machines to be replaced in the process of replacement and modernisation and not expansion. According to Rajendra Mills Ltd(1) the employer has to discharge this burden by adducing proper evidence and giving the other party an opportunity to, test the correctness of that evidence by cross examination and merely bringing on record balance sheets, for instance, would not be enough. (see also the Workmen vs The National Tobacco Co.(2). (1) (2) [1966] II L.L.J. 200. 791 But in the present case there is no question of the Company not having properly discharged the burden, for, it not only produced balance sheets but also produced statements, quotations and examined two expert witnesses, Jones and Desai. These witnesses were cross examined on the statements relied on by the Company in regard to the cost to the Company, the estimated cost of replacement, the average life of machinery etc. The Union also the Confidential Annexs. 1 and 2 which showed itemwise the cost of replacement as proposed by the Company and quotations of prices therefor. These Annexs. also indicated that where a machine was to be replaced not by the same kind but by a modern one it was to be substituted for two or more of the old machines. This was presumably done to avoid expansion. It is true that in respect of the old machinery installed in 1953 54 and 1956 57 the multiplier calculated on the basis of the quotations comes to 7.83 and 4.75 respectively while it ranges from 2.29 to 3.98 for the rest of the years. At first sight the multiplier might suggest that there might be an element of expansion in the case of those machines. But it was pointed out that the prices of those particular machines had gone unusually high and furthermore that in the process of replacement the modern machines which were to replace the old ones were in the approximate proportion of one for two. It cannot therefore be validly said that the Company had not placed sufficient materials to enable the Union to check up by cross examination whether this was a, case of expansion or not. Mr. Ramamurti 's contention next was that even though the quotations were not disputed by the Union, taking them as the sole basis for estimating the replacement cost was not satisfactory as the Union had qualified its acceptance by a reservation that it did so except for machinery installed in the bonus 1 years. This argument does not appear to be tenable. Exhibit M2 shows that so far as the bonus years are concerned old machinery was installed in 1956 57 and 1957 58 only. The cost of such machinery for 1956 57 was Rs. 1,39,871 and that for 1957 58 was Rs. 1,76,730. On the basis of the Union 's reservation the Tribunal did not accept the quotations for machinery installed in those years and fixed the replacement cost on the basis of multipliers calculated by it de hors the quotations. It is difficult to comprehend such an approach by the Tribunal. The Tribunal accepted the quotations in regard to the rest of the machinery and worked out the multiplier on the basis of those quotations. The Union did not challenge those quotations and the multiplier calculated therefrom. If the quotations for the new machinery for all the years and for old machinery for the years, except the bonus years, were accepted by the Union and the Tribunal also, there is no reason why the quotations for the bonus years could be said to be unacceptable. , No objection to the replacement cost of the new machinery was taken even in regard to the bonus years. As regards the old. machinery the Union accepted the Company 's figures both as to cost to the Company and the estimated cost to the seller if he had 792 purchased it as new. Even if a multiplier has to be calculated it would be the ratio between the estimated sellers cost and the probable cost of replacement. So calculated both the old and new machinery stand on the same footing because it is the seller 's estimated price if he had purchased it new in the year of its installation that was taken by the Tribunal for arriving at the multiplier. That being so, the multiplier in both the cases would he the ratio between the cost in the case of new machinery and the estimated cost to the seller in the case of old machinery and the cost of replacement proved by the Company through quotations. If the quotations were acceptable to the Union in regard to new machinery and the old machinery installed in the years except the bonus years it is difficult to understand how quotations for the old machinery installed in bonus years could be questioned especially as the Union did not produce any data, to prove them incorrect. , In these circumstances, we are of the view that the multipliers arrived at by the Tribunal in the case of old machinery ,were not correct. The Tribunal should have either calculated the replacement cost from the quotations proved by the Company itemwise or if it had to work out the multiplier it should have done so by finding out the ratio between the estimated cost to the seller accepted by the Union and the quotations proved by the Company. The deficiency in following this method comes to Rs. 36 lacs and odd as stated earlier. Regarding the new machinery purchased during the bonus years the Tribunal held that the price rise for such machinery cannot be taken to be more than zero. In exhibit M2 the Company has given the quotations for this machinery and has worked out therefrom the multiplier for each of the bonus years, viz., 2.35 for 1956 57, 3.37 for 1957 58, 1.48 for 1958 59 and 1.66 for 1959 60. Presumably the Tribunal thought that though the prices for this machinery in 1963 64 were available, considering that its life was 15 years it was too early to find out with any precision the trend of prices during the intervening years. With the gradual growth of indigenous production and corresponding availability of these machines it would be difficult to say whether the same trend would continue or not by the time the year for its replacement was reached. It is not possible to say therefore that the Tribunal 's view that the price rise of such machinery should be taken as zero was unreasonable. In the case of machinery purchased in 1950 51 and onward its period of replacement would commence from 1965 and onwards. It was possible from the quotations produced by the Company to predicate for such machinery the trend of price but not so in the case of machinery purchased in very recent years. In their case the quotations may not be taken for granted as showing any definite trend in price level. As stated earlier, the Tribunal has given in Annex. A a uniform remainder life of 7 years to old machinery irrespective of the year of its installation. in our view, is not correct. Taking 793 the life of old machinery to be 10 years, the old, machinery purchased in 1950 51 would require replacement in 1960 61 and so on. 'In. that case the remainder life in the bonus year 1957 58 of old machinery installed in 1950 51 would clearly be 3 years, of old machinery installed in 1953 54, 6 years, of old machinery installed, in 1955 56 8 years, of machinery installed in 1956 57 9 years and that installed in 1957 58 10 years. The divisor therefore could not be the uniform 7 for all these years but a graduated one on the basis that the estimated life of old machinery was 10 In estimating the rehabilitation requirement of each year the graduated divisor should have been used. The question which raises a serious controversy is with regard to the figure of Rs. 24.35 lacs found, by the Tribunal as the total cost of rehabilitation in respect of machinery both old and new installed in 1950 51. Dividing this figure by 7 as the remainder life for both the types of machinery the Tribunal allowed Rs. 3.48 lacs as the rehabilitation requirement for that year. Counsel for the Company objected to the Tribunal 's calculations on various grounds. It will be seen from column 7 of Annex. A that whereas the Tribunal accepted the Company 's quotations for new machinery it did not do so in the case of old machinery and calculated instead the replacement cost by means of a multiplier. It is difficult to say on what principle the multiplier 3.36 for old machinery was adopted except that the Tribunal adopted the same multiplier which it calculated in the case of new machinery by working out the ratio between the cost to the Company and the price of replacement as appearing from the quotations. Since the Tribunal adopted that principle for new machinery it would be logical that it should similarly do so in the case of old machinery also as the basic cost adopted was the cost price to the seller if he had bought that machinery as new in 1950 51. The total cost of machinery old and new would in that case be Rs. 54.77 lacs plus Rs. 75 lacs, i.e. Rs. 133.77 lacs instead of Rs. 54.77 lacs less 5 % break down i.e., Rs. 53.96 lacs for new and Rs. 67.37 lacs for old machinery as calculated by the Tribunal. The figure of Rs. 67.37 lacs was arrived at by multiplying Rs. 20.05, the estimated cost to the seller by the multiplier 3.36. According to the Tribunal the gross replacement cost would be Rs. 121.33 lacs instead Rs. 133.77 lacs. The figure of Rs. 121.33 lacs arrived at by the Tribunal cannot be sustained as it was not justified in calculating replacement cost for the new machinery in one way and that for the old machinery in another way. The next miscalculation said to have been committed by the Tribunal was in deducting the depreciation for the entire old machinery installed during 1950 51 to 1957 58, i.e., Rs. 30 lacs from the total replacement cost for 1950 51. The Tribunal took the whole of the cost of old machinery to the seller, i.e., Rs. 30 lacs, as depreciation. For that the Tribunal derived support from the 794 decision in South India Millowners ' Association and Ors. vs Coimbatore District Textile Workers ', Union and Ors.(1) where while dealing with old machinery. this Court has said that where purchase price is determined but it is difficult to ascertain the depreciation amount thereafter then at the highest the whole of the purchase money would be taken as depreciation amount. Assuming that the Tribunal was entitled to treat the price of the old machinery, viz., Rs. 30 lacs as depreciation it was not correct on its part to deduct it from the replacement cost. The reason is that it also deducted Rs. 48.8 3 lacs (to which we. shall presently refer to) which amount includes depreciation of Rs. 30 lacs. The Tribunal thus deducted Rs. 30 lacs as depreciation twice over. The deduction of Rs. 30 lacs was thus clearly an error. Counsel for the Company next objected to the sum of Rs. 48.83 lacs having been deducted from rehabilitation cost in respect of machinery, old and new, installed in 1950 51. The objection was two fold: (1) that the Tribunal erred in deducting the whole of this amount from the rehabilitation cost in respect of 1950 51 machinery, and (2) that the said amount represents total deprecation, i.e., the notional Written down value of all machinery up to the year 1956 57 and is shown as such in the balance sheet for 1956 57. It was urged that, since this amount represents depreciation on various kinds of assets, viz., bungalows, plants and machinery, cars and trucks, furniture and tools and implements, the whole of this amount should not be deducted when calculating rehabilitation provision for the machinery of 1950 51 and should be deducted only when calculating rehabilitation provision for each item in respect of which this depreciation has been included in the accounts. We do not think that this submission can be accepted. No doubt, the sum of Rs. 48.83 lacs represents depreciation up to 31 3 1957 in respect of plant, machinery, buildings, as well as other items of property, but there is no principle which requires that depreciation fund in respect of a particular item must only be utilised in rehabilitating the same item. The Tribunal held that the entire depreciation fund must be utilised for rehabilitation of those items of property which require rehabilitation at the earliest point of time, that is the machinery of 1950 51 which needed replacement earlier than the other items of property. We do not think that this decision of the Tribunal was in any way unreasonable as would justify interference. As regards the second objection the principle is that while arriving at the rehabilitation cost deduction should be made of all available funds. It was argued that an amount which is a notional depreciation mentioned in the accounts for the purpose only of showing the true Value of fixed assets would not be a reserve which in point of fact can be said to be available for replacement, and that it is on account of this that the decisions mention reserves including (1) 765 depreciation reserve which, if available, are liable to be deducted from rehabilitation cost. The contention is that this amount being merely a notional depreciation is a mere paper entry and does not represent any available reserve. Reliance was placed on G. F. Mills vs Its Workmen(1) where the Court set aside deduction of Rs. 30 lacs; the Company had raised a debenture loan of Rs. 50 lacs on credits on the ground that that amount was locked up in Pakistan and could not be brought to India for the Company 's use. it was argued that the principle thus is that the amount to be deducted must in reality be available to the employer for replacement. As found by the Tribunal the Company 's fixed assets were of the value of about Rs. 110 lacs. The Union 's contention was that as against this amount the Company 's subscribed capital was Rs. 60 lacs; the Company had raised a debenture loan of Rs. 50 lacs on the security of its fixed assets and thus the subscribed capital and the debenture loan were sufficient to meet the whole cost of the fixed assets. On this basis the Tribunal upheld the Union 's contention that Rs. 48.83 lacs shown as depreciation were available towards replacement cost as no part of it could have gone in the investment of fixed assets. Counsel for the Company, however, pointed out that the debenture loan was raised in ' 1958 59 and therfore that amount cannot be said to be available at any rate during the year 1956 57. But this fact taken in isolation does not furnish a correct picture of the fund available to the Company during the bonus years. The balance sheets show that besides the said loan of Rs. 50 lacs the Company had obtained 'a, secured loan of Rs. 6.50 lacs in 1956 57 and another loan of Rs. 24.68 lacs in 1957 58. Except producing the balance sheets the Company led no evidence to show as to how these loans had been utilised, whether as working capital, or in acquiring fixed assets. Apart from this fact, we do not see how the fact that the debenture loan was raised in 1958 59 makes any difference. Though the life of a large part of the machinery had run out the Company had not replaced any of it and was carrying on its work with the worn out machinery even though its working was uneconomical. The Tribunal has found and the parties also were agreed that the entire machinery required immediate replacement. Therefore, the question was how much rehabilitation cost the Company would require. In calculating such cost the Tribunal was entitled to take note of the fact of Rs. 50 lacs having been raised as debenture loan on the security of its fixed assets presumably because that loan was required for rehabilitating the fixed assets. Even so, Counsel argued, the question would still be whether Rs. 48.83 lacs represented an available fund for rehabilitation or whether they represented a mere paper entry for showing the true value of machinery in 1956 57. In our view. it is not necessary for us to go into the question whether a sum shown as notional depreciation without its being shown as reserve can be treated or (1) A.I.R. 1958 S.C. 382. 796 not as a fund available for rehabilitation nor whether such depreciation is or is not deductible even if it is not available as a fund. The Company produced, exhibit M 4 showing the, amount which according to it was required for rehabilitation for the bonus years. According to that statement the Company would require Rs. 110.20 lacs, Rs. 127.06 lacs, Rs. 149.87 lacs and Rs. 155.91 lacs for the four bonus years respectively. In working out these amounts the Company itself deducted Rs. 48.25 lacs from the rehabilitation requirement for the year 1956 57 and pointed out in a footnote that that amount was comprised of an investment of Rs. 18.22 lacs in stocks and shares and Rs. 30.03 lacs as depreciation, taking the entire estimated cost to the seller of old machinery if such seller had purchased it as new. In face of this admission it is difficult to appreciate how the Tribunal can be said to have erred in treating Rs. 48.83 lacs as available fund. We may also mention that before the Tribunal the argument was not that the amount of Rs. 30.03 lacs was merely a notional depreciation and not a fund actually available to the Company. The Company 's contention on the contrary was that the whole of Rs. 48.83 lacs was utilised in fixed assets and therefore was not available for replacement. The Tribu nal rejected that contention on the ground that except for the balance sheet which did not give precise information as to how that amount was deployed by it. the Company had not produced. its accounts to show that that amount was utilised towards acquiring fixed assets. Counsel argued that if that was the view of the Tribunal the Company ought to have been given an opportunity of showing its sources of fixed assets. There is no merit in this contention. It was the Company who had the necessary information. The onus was on the Company to explain from its accounts and other data that the amount of Rs. 30 lacs and odd was not available. As regards Rs. 18.22 lacs the amount being an investment in liquid assets it is difficult to say why the Tribunal was not justified in treating it as available for rehabilitation. But the Company 's contention was that the investment of Rs. 18.22 lacs in shares can either be treated as a, trading transaction carried out in the ordinary course of business or as a capital asset. If it was treated as a trading transaction the Tribunal ought to have allowed Rs. 1.72 lacs which was the loss in 1957 58 in these shares as trading expenditure and the Tribunal ought not have added that amount to the gross profits for that year. In doing so, the Tribunal treated the investment as capital asset and it could not therefore deduct Rs. 18.22 lacs as a fund available for rehabilitation cost. We fail to see any contradiction on the part of the Tribunal. The balance sheet for the year 1956 57 contains two Schedules , Sche dule A shows fixed assets and Schedule B shows trade investments of the value of Rs. 18,21,571 / . The Company not being an investment Company the investment of Rs. 18.22 lacs in shares of other joint stock Companies prima facie represents extra capital not required as working capital for otherwise the Company could not have spared this amount for investment in the stocks of other 797 companies. The Tribunal was right in treating this investment as a capital asset and in refusing to treat the loss therefrom as trading expenditure. The Tribunal at the same time could deduct this amount from the rehabilitation cost because that amount was available to meet the rehabilitation cost. The investment in shares could easily, if the Company was so minded, be converted into cash and utilised for replacement of its worn out machinery. But it was said that even if the amount of Rs. 18.22 lacs could be held deductible that figure was not correct, for the value of investment was ,Rs. 11.23 lacs at the close of the year 1957 58 as shown in the balance sheet for that year. This contention is not correct. What appears to have been done in 1957 58 was that instead of showing the entire investment of Rs. 18.22 lacs as trade investments as in the previous year, the investments, were classified into investments and current assets. The value of investments at the beginning of the year is shown at, Rs. 18.22 lacs but at the close of the year the shares of companies other than the National Bearing Company (Jaipur) Ltd., a subsidiary of the appellant company, were regrouped and shown as current assets and their cost was shown at Rs. 6.57 lacs instead of Rs. 13.71 lacs as shown at the close of the preceding year. Except producing the balance sheet for 1957 58 the Company gave no explanation before the Tribunal as to why these investments were re grouped and on what footing they were revalued. Besides, the figure of Rs. 18.22 lacs does not appear to have been disputed before the Tribunal and the Tribunal was never told that the investments during that year were reduced to 'Rs. 11.23 lacs. It would not therefore be, right to say that the Tribunal erred in taking Rs. 18.22 lacs as a, fund available for rehabilitation. The next contention was as to 7 1/4 % interest allowed by the Tribunal on paid up capital instead of 8.57% claimed by the company. By the Finance Act of 1959 the provision in the Income tax Act that the Income tax paid on dividend distributed to the shareholders was deemed to have been paid on behalf of the shareholders was abrogated. The contention was that though the corporation tax was reduced in that year from 51.5% to 45% the Company since 1959 had on the whole to bear at larger burden of tax and therefore the Company would not get a net tax free 6 % interest unless interest at 8.75% was granted. It is true that the Full Bench formula, provided for payment of net interest at 6% per annum on paid up capital, but as pointed out in the Associated Cement Co. 's cave(1) and subsequent decisions of the Tribunals the rate of 6 % interest is not to be regarded as something inflexible. In awarding interest on paid up capital and also on working capital the proper approach is that the industry is entitled to a reasonable return on investments made in establishing and running concerns it its risk. At the same time the claim for bonus is no longer treated as an ex gratia payment. It is recognised on the consideration that (1) 798 labour is entitled to claim a share in the trading profits of the industry as it partially contributes to the same. Since the industry and labour both contribute to the ultimate trading profits both are entitled to a reasonable share. While awarding interest if the Tribunal were to find that if it were to grant 6 % interest on paid up capital, nothing or no appreciable amount would be left for bonus, it can adjust the rate of interest so as to accommodate reason ably the claim for bonus and thus meet the demands of both as reasonably as possible. If the Tribunal were to award interest at a rate lower than 6% after considering all the relevant facts we do not think that the employer can legitimately claim that it has erred in doing so. If the Tribunal has exercised its discretion after consideration of all the relevant facts this Court would not ordinarily interfere with such exercise of its discretion. These were all the contentions raised by Counsel for the Company in the Company 's appeal To the extent that we Accept as hereinabove the Company 's contentions, Annexure A to the award will have to be modified. These modifications are shown in the charts thereto annexed and collectively "A". We now proceed to consider the Workmen 's appeal. Counsel for the Union argued that the Tribunal ought to have fixed the life of the Dew machinery at 25 years as is usually done and not at 15 years. In some cases, it is true that Tribunals have fixed 25 years as the machinery 's average life. There can however no rigidity in fixing the life of machinery, since it differs from industry to industry. Consequently, there can be no hard and, fast rule applicable to all sorts of machinery. The Millowners ' Association, Bombay(1) and South India Millowners ' Association(2). In the present case the Tribunal had before it evidence showing that the industry required machinery of special precision and was therefore not comparable with machinery such as that in textile mills for which 25 years ' life was fixed. In suggesting the life of 25 years for this machinery Counsel for the Union did not give any specific reason except that 25 years of life has been fixed in some cases. He could not also show any instance where in a similar industry life of machinery was fixed for more than 15 years. The principle that the Tribunal has to bear in mind is that the life of machinery is the period during which it is estimated to work with reasonable efficiency and not the period during which it has actually been operated, that is, till it becomes too deteriorated for use. (Pierce Leslie & Co. vs Its Workmen.)(3) Since the Tribunal fixed the period of 15 years after considering the evidence and the nature of industry there is no reason why its determination need be interfered with. (1) (2) [1962] Suppl, 2 S.C.R. 926. (3) ; at 200. 799 Counsel 's next contention was that the Tribunal ought not to have accepted the quotations which were for 1963 64 as the basis for calculating the total rehabilitation cost. But the quotations were never disputed by the Union. Even so. argued Mr. Ramamurti, they contained the cost of spares which at any rate ought to have been excluded. We confess it is difficult to appreciate this part of the argument. The machinery in question is in a large way imported machinery. It is common knowledge that when such machinery is purchased spares are generally included in such purchase and their cost must be included in the purchase price, the reason being that in case of breakdown the Company would not have to wait for an indefinite period for ordering and obtaining, the spares. It was then said that the new machinery which would replace the old might well contain items of expansion which the Tribunal ought to have reckoned and excluded. While dealing with the Company 's appeal we have already dealt with this aspect and for the reasons stated there this argument must be rejected We must also reject the argument that the Tribunal had disregarded the increasing trend of indigenous manufacture of machinery. In fact; Confidential Annexs. 1 and 2 produced by the Company contain quotations wherever possible of a number of machines of indigenous manufacture. The next contention related to old machinery and the argu ment was that the Company had discarded machinery worth about Rs. 18 lacs in respect of which the Company ought not to get any rehabilitation cost. The argument appears at first sight attractive but loses its force when the actual position is ascertained. The balance sheet for the year 1959 60 shows that machinery worth Rs. 17.62 lacs was discarded during that year. Similarly tools and implements of the value of Rs. 8.57 lacs were also discarded. To that extent deductions were made in the total value of fixed assets. In showing depreciation of plant and machinery Rs. 10.91 lacs. being the depreciation of these machines were also deducted from the total depreciation so far shown in the previous balance sheets. The result was that the total depreciation including depreciation for machinery added during the year was brought down from Rs ' 48.37 lacs to Rs. 44.20 lacs. The evidence of Desai shows that the machines ' Ledger maintained by the Company shows only the list of machines in actual operation , which means that the discar ded ones are 'not shown in that list. The machinery discarded during this year was thus taken out from the fixed assets as if it did not exist. The depreciation in respect of it was also deducted from the total depreciation and therefore no rehabilitation was in fact claimed for such machinery. Mr. Ramamurti next urged that the Tribunal ought to have allowed only 30% of rehabilitation cost for old machinery as was done in South India Millowners ' Associations 's Case(1). That case (1) [1962] Spp. 2 S.C.R. 926. 800 does not lay down any such rule. 30% only was allowed in that case as an ad hoc figure because the Association there had failed to produce materials showing the original price and subsequent depreciation and this Court refused to interfere with that figure as the Tribunal had no other alternative except to adopt an ad hoc basis. The Court however made it clear that in the case of old machinery the cost price of such machinery must be ascertained and this can be done by enquiring for how much the machinery could be originally purchased when new. There is therefore no warrant for saying that only 30% of the rehabilitation cost can be allowed in the case of old machinery. We cannot also agree with Mr. Ramamurti 's contention that the Tribunal in calculating the rehabilitation requirement for the bonus years was wrong in taking only the notional normal depreciation and not the statutory depreciation including development rebate permissible under the Income tax Act. In Associated Cement Co. 's Case(1) at p. 994, in the Chart prepared by this Court only. the notional normal depreciation was deducted while the rehabilitation requirement. It was when the Court calculated the Income tax payable by the Company that it deducted the statutory depreciation from the gross profits (see also Bengal Kagazkal Mazdoor Union & Ors. vs Titagarh Paper Mills Co. Ltd. & Ors.(2) The last contention was that the Tribunal should not have rejected the bonus claim for 1956 57. The balance sheet for the year 1956 57 was published in December 1957, the Company 's accounts were closed and appropriations of profits for that year were made latest by the end of 1957. The claim for bonus was raised for the first time by the Union 's resolution of July 24, 1959, that is, more than 18 months after the closure of accounts. The claim for 1956 57 was thus clearly belated and the Tribunal was right in refusing to compel the Company to reopen its accounts and to readjust appropriations made long before the demand was raised. It has to be remembered that a claim, for bonus is not one for deferred wages. Its recognition in industrial adjudication is based on the desirability of a balance of adjustments of the different interests concerned in the industrial structure of a country in order to promote harmony amongst them on an ethical and economic foundation. Industrial adjudication therefore is bound to take into consideration delay and laches before it calls upon the other side to reopen its accounts closed long ago. We do not think that the Tribunal was in any error in rejecting the claim on the ground of laches. The principle that aches are fatal to such a claim has long been accepted in a series of decisions both by the Tribunals and by this Court. (1) (2) [1963] II L.L.J. 358 801 Calculation of annual requirement for rehabilitation of old machinery 801(a) Period Cost Cost as Multi Total Less Balance shown by plier Break Co. in down exhibit M. Value 5% 1 2 3 4 5 6 7 1950 51 13.37 20.05 3.97 79.72 1.00 78.72 1953 54 1.24 1.86 7.85 11.57 0.0914.48 1954 55 1.95 2.93 3.50 10.25 0.15 10.10 1955 56 0.30 .45 2.47 1.11 0.02 1.09 1956 57 1.40 2.10 4.75 9.97 .11 9.96 1957 58 1.77 2.65 2.29 6.08 .13 5.95 801(b) Deductions Balance Divisor Annual Require ment 8 9 10 11 (i) 48.83 Depreciation 11.67 3 3.89 (ii)18.22 Available Resourcess 67.05 14.48 6 2.41 10.10 7 1.44 1.09 8 0.14 9.86 9 1.10 0.95 10 0.59 Total 9.57 802 (a) Period Cost cost as Multi Total Less Balance shown by plier Break Co.in down exhibit M. value 5% 1 2 3 4 5 6 7 1950 51 16.30 16.30 3.36 54.77 0.81 53.96 1951 52 1.43 1.43 1.87 2.67 0.07 2.60 1952 53 2.18 2.18 1.47 3.21 0.11 3.10 1953 54 1.12 1.12 2.28 2.55 0.06 2.49 1954 55 3.71 3.71 1.96 6.90 0.19 6.71 1955.56 6.93 6.93 2.18 15.11 0.35 14.76 1956.57 13.11 13.11 2.35 30.80 0.66 30.14 1957 58 3.39 3.39 1 3.39 0.17 3.22 1958 59 12.95 12.95 1 12.95 0.65 12.30 1959 60 30.76 30.76 1 30.76 1.54 29.22 802(b) Deductions Balance Divisor Annual Require ment 8 9 10 11 53.96 8 6.75 2.60 9 0.29 3.10 10 0.31 2.49 11 0.23 6.71 12 0.56 14.76 13 1.14 30.14 14 2.15 3.22 15 0.21 12.30 15 0.82 29.22 15 1.95 802(c) TOTAL ANNUAL, REQUIREMENT FOR OLD) AND NEW MACHINERY Old New Total 1957 58. 9.57 11.64 21.21 1958 59. (additional) 0.82 22.03 1959 60. . (additional) 1.95 23.98 803(a) Years Machinery Building Total 1957 58 21.21 0.72 21.93 1958 59 22.03 0.77 22.80 1959 60 23.98 0.82 24.80 803(b) (Figures in lacs) National Normal Depre Balance to be provided ciation allowed during out of profits the year to be deducted 9.10 12.83 9.00 13.80 10.83 13.97 803(c) Detailed Calculations of available surplus for the three bonus years (Figures in lacs) 1957 58 1958 59 1959 60 Gross Profits 28.34 25.36 34.92 Less Notional Normlal Depreciation 9.10 9.00 10.83 19.24 16.36 24.09 Less Income tax 8.18 7.48 7.31 11.06 8.88 16.78 Less Wealth Tax 0.28 0.29 . 10.78 8.59 16.78 Less return on paid up capital 3.60 3.60 4.35 7.18 4.99 12.43 Less additional provision for rehabilitation for plant, machinery and buildings 12.8313 8013.97 vailable Surplus Nil Nil Nil 804 The, Chartst showing calculations of available surplus for the A three bonus years show that in all these years no surplus remains available for distribution of bonus after making provision for rehabilitation. As a result, the appeal by the Company must be allowed and the direction made by the Tribunal for payment of bonus for these three years has to be set aside. In the circumstances of this case, the parties will bear their own costs. The appeal by the Union is dismissed. There will be no order as to costs. G.C. Appeal dismissed.

The workmen of the appellant company demanded bonus for the years 1956 57 to 1959 60. The Tribunal disallowed the claim for 1956 57 on the ground that it was belated and allowed the demand for the rest of the years 1957 58 to 1959 60. In working out the available surplus for distribution as bonus the Tribunal in general followed the Full Bench formula evolved by the Labour Appellate Tribunal. Against the Tribunal 's award the company as well as the workmen appealed to the Supreme Court by special leave under article 136 of the Constitution. Both sides raised contentions with regard to the rehabilitation allowances in respect of plant and machinery for the three years in question and the method followed by the Tribunal in calculating them. The main question for decision arose out of the company 's contention that since it furnished quotations for all machinery including the old machinery, the Tribunal ought to have accepted those quotations as equivalent to replacement cost as it did in the case of new machinery instead of adopting the notional method of working out multipliers and then arriving at replacement cost by multiplying that multiplier with the estimated cost to the sellers. HELD: (i) The multiplier is at best an approximation arrived at from the trend of price level during the ascertained intervening period. But when the cost of replacement is ascertained from quotations of prices for the year of replacement such cost s more accurate than a notional one worked out from the multiplier. It is therefore not always necessary to arrive at a multiplier for estimating the probable cost of replacement. [789 C D]. In the present case since the Tribunal accepted the quotations ' and worked out the multiplier in the case of new machinery by dividing the quotations by the original cost it ought to have followed the same method in the case of old machinery as it had before it the cost of the old machinery as new and the cost of replacement, both unchallenged by the union. If the rehabilitation cost was calculated in this manner there would be no available surplus with the company and hence no bonus would be payable. ' [787 H 788A; 787 A B]. (ii) It is well established that in the case of old machinery the employees cannot insist that such machinery should be replaced by old machinery. For working out the rehabilitation cost of such. machinery it ' is the cost of new machinery that is to replace the old which has to be taken into consideration. [787 F G]. (iii). Whenever it is possible to estimate itemwise the probable cost of machinery in the year of replacement such a method is not only permissible but is more desirable. The blockwise estimate has. 780 to be resorted to when itemwise estimate is not possible as when the industry owns several factories and the number of plant and machinery is so large that it becomes difficult to make an estimate of replacement cost itemwise. [789 B C; 788 G H]. (iv) The contention on behalf of the workmen that the replacement cost should be worked out on the basis of the price level during the bonus year could not be accepted. The test is the probable cost of replacement when rehabilitation becomes due. If the bonus year and the year of rehabilitation coincide, the price level during the bonus year would no doubt be the relevant basis. But when they do not coincide and the due year of rehabilitation is the year beyond the bonus year that which is relevant is the probable cost of replacement during that year. [790 H; 791 A B]. (v) Ordinarily, the Tribunal has to satisfy itself that no cost of expansion is injected in the rehabilitation cost. In the present case, however, it did not appear from the record that any question of expansion arose as the Union accepted the quotations as equivalent to the replacement cost, [791 F G]. (vi) The Tribunal was justified in taking the price rise in respect of the machinery installed in the bonus, years as zero. Though the prices for such machinery in 1963 64 were available, considering that its life was 15 years, it was too early to find out with any precision the probable trend of prices during the intervening years. [793 EG]. (vii) The Tribunal was wrong in giving a uniform remainder life of 7 years to old machinery irrespective of the year of its installation. Taking the life of old machinery to be 10 years, the old machinery purchased in 1950 51 would require replacement in 1960 61 and so on. In that case the remainder life in the bonus year 1957 58 of old machinery installed in 1950 51 would clearly be 3 years, of old machinery installed in 1955 56 8 years, of machinery installed in 1956 57 9 years and that installed in 1957 58 10 years. The divisor therefore could not be the uniform 7 for all the three years but a graduated one on the basis that the estimated life of the old machinery was 10 years. [793 H; 794 B.] (viii) The Tribunal was justified, in view of the decision of this Court in the South India Millowners ' Association 's case, in taking the whole cost of the old machinery as depreciation, but it made a mistake in deducting it twice over. [795 B C]. (ix) The company not being an investment company, its investments in shares of other joint state companies prima facie represented extra capital not required as working ' capital, for otherwise the company could not have spared this amount for investment in the stocks of other companies. The Tribunal was right in treating this Investment as a capital asset and in refusing to treat the loss therefrom as trading expenditure. The Tribunal at the same time could deduct this amount from the rehabilitation cost because that amount was avilable to meet the rehabilitation cost. [797 H; 798 A]. (x) Though the Full Bench formula provided for payment of net interest at 6 per cent annum on paid up capital. that rate is not to be regarded as something inflexible. While awarding interest if 781 the Tribunal were to find that if it were to grant 6 per cent interest on paid up capital. nothing or no appreciable amount would be left for bonus, it can adjust the rate of interest so as to accommodate reasonably the claim for bonus and thus must meet the demands of both as reasonably as possible. [798 G; 799 B]. (xi) In fixing the life of machinery the principle that the Tribunal has to bear in mind is that the life of machinery is the period during which it is estimated to work with reasonable efficiency and not the period during which it has actually been operated, that is, till it becomes too deteriorated for use. In the present case the Tribunal fixed the period of 15 years after considering the evidence and the nature of the industry. There was no reason why its determination should be interfered with. [799 G H]. (xii) The Tribunal was right in not excluding the cost of spares from the price of machinery for the purpose of calculating rehabilitation cost. In the case of imported machinery spares are generally included in the purchase and their cost must be included in the purchase price, the reason being that in case of breakdown the company would not have to wait for an indefinite period for ordering and obtaining the spares. [800 B]. (xiii) The statutory depreciation and development rebate allowable under the Income tax Act are not relevant for the purpose of calculating rehabilitation requirement. Only the notional normal depreciation need be deducted. [801 C D]. (xiv) The claim for bonus in respect of 1956 57 was made more than 18 months after the closure of accounts. Industrial adjudication. ;Is bound to take into consideration delay and laches before it calls, upon the other side to reopen its accounts closed long ago. The Tribunal was therefore right in rejecting the claim on the ground of laches. [801 F G]. Millowners ' Association. Bombay vs Rashtriya Mill Mazdoor, Sangh, Bombay , Associated Cement Co: Ltd. vs Its Workmen , Management of Rajendra Mills Ltd. vs Their Workmen , The Workmen vs The National Tobacco Co. , South India Millowners ' Association & Ors. vs Coimbatore District Textile Workers ' Union and Others [1962] 1 L.L.L. 223, G. F. Mills vs Its Workmen., A.I.R. 1958 S.C. 382. South India Millowners ' Association and Ors. vs Coimbatore District Textile Workers ' Union and Or,,;.,, [1962] Supp. 2 S.C.R. 926, Pierce Leslie & Co. vs Its Workmen, ; and Bengai. Kagazkar Mazdoor Union & Ors. vs Titagarh Paper Mills Co. and Ors. , referred to;

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Appeal No. 1805 of 1967. Appeal by special leave from the judgment and order dated the 20th October 1967 of the Allahabad High Court in Special Appeal No. 864 of 1967. R. K. Garg, section C. Agarwala, Anil Kumar, Shiv Punjan Singh N. M. Ghatate, for the appellant. C. B. Agarwala and 0. P. Rana, for the respondents. The Judgment of the Court was delivered by Hidayatullah C.J. This is an appeal against the judgment of a division Bench, October 20, 1967, in a Special Appeal (No. 864 of 1967) of the High Court of Allahabad affirming the dis 435 missal of 61 writ petitions by a learned single Judge of the High Court. This appeal arises from one such petition. The appellant was elected Pramukh of Sarwan Khera Kshettra Samiti and his term of office which was co terminus with the term of the Samiti, extended to five years. He challenges in this appeal, (as he did in the High Court), two Government notifications issued by the Government of Uttar Pradesh under the Uttar Pradesh Kshettra Samities and Zila Parishads Adhiniyam 1961 (Act 33. of 1963). By these notifications the Government of Uttar Pradesh has redivided the rural area In the district to which the matter relates into new Khands specifying the limits and constituents of their areas and as a consequence has abolished a few khands and created new Khands in their Place. The Khand relating to the appellant 's Samiti has been abolished by the first notification and by the second notification ' the term of the Samiti has also been brought to a close,. Both the notifications are of July 1, 1966. The appellant challenges these notifications as also sections 3 and 8 of the Act on various grounds. To understand his contentions we may begin by setting out how the Act is constructed. The Act was passed in 1961 for the establishment of Kshettra Samities and Zila Parishads in Uttar Pradesh. It was intended to make democracy broad based and to give training in the art of administration and running democracy to the rural population. It is a long Act of 274 sections and 8 schedules. It is not possible to give more than a brief idea of the constitution of the Samitis and their functions and Organisation. The preamble of the Act states as follows "Whereas it is expedient to provide for the establishment of Kshettra Samitis and Zila Parishads in the districts of Uttar Pradesh to undertake certain govermental functions at Kshettra and district levels respectively in furtherance of the principle of democratic decentralisation of governmental functions and for ensuring proper municipal government in rural areas, and to correlate the powers and functions of Gaon Sabhas under the United Provinces Panchayat Raj Act, 1947, with Kshettra Samitis and Zila Parishads;" The Act goes on to define a Kshettra Samiti as a Kshettra Samiti established under section 5 of the Act and a Khand as an area of the district specified as such by the State Government under section 3 Chapter II of the Act deals inter alia with the establishment of Kshettra Samitis and section 3 provides as follows "The State Government shall by notification in the Gazette divide the rural area of each district into khands 436 specifying each Khand by a name and the limits or constituents of its area and may likewise change the names or make modifications in the areas and limits of the Khands by including therein or excluding therefrom areas or create new Khands. " This section allows the State Government to divides the rural area of each district into Khands. It also enables the Government to change the name of a Kshettra Samiti and to make modifications in the areas and limits of the Khands and to create new Khands. Section 4 specifies the effect of change in Khands and the temporary and permanent consequences thereof are provided for. Section 5 then deals with the establishment and incorporation of Kshettra Samitis for each Khand bearing the name of the Khand for which it is established. It says inter alia that every Kshettra Samiti is a body corporate having perpetual succession and common seal and subject to any restrictions or qualifications imposed by any other enactments, possesses the power to acquire, hold and dispose of property and to enter into contracts and may by its corporate name sue and be sued. Section 6 details the composition of Kshettra Samitis providing for elections and cooptions. Section 7 lays down the procedure for the election of the Pramukhs and the Up Pramukhs of the Kshettra Samitis and its members and section 9 in the same way deals with the term of the Pramukhs and the UP Pramukhs. Section 10 then enables the Government to arrange for the constitution of the first Kshettra Samiti for every Khand and for the reconstitution thereof on the expiry of the first and each subsequent term or when otherwise required under the Act having regard to the provisions of section 6. Sections 11 16 deal with the resignation of Pramukhs, Up Pramukhs and members, filling of casual vacancies, disqualifications for being, chosen or co opted as members, disputes as to membership or disqualification and motion of non confidence in Pramukh or Up Pramukh and removal of Pramukh or Up Pramukh. In this way complete local self government is established. In 1965 by a Sanshodan Adhiniyam, 1965 certain changes were introduced in the parent Act. In section 8 a second proviso was inserted which read: "Provided further that where the State Govern ment is of opinion that it is necessary or expedient so to do with a view to re organisation of Khands, it may by notification in the Gazette determine the term of all or any Kshettra Samitis. " The Amending Act also added section 8A of which the second sub section is material for our purpose and may be read here. 437 "where on account of changes in the areas of the Khands under section 4, a Khand ceases to exist, or where under the second proviso to sub section (1) of Section 8 the term of the Kshettra Samiti of any Khand is determined, the Pramukh and the member of the Kshettra Samiti of such Khand who are members of the Zila Parishad under clauses (i) and (ii) respectively of sub section (1) of Section 18 shall, notwithstanding anything contained in Sections 1 81 and 20, continue to be members of the Parishad for the residue of the term of the Parishad. " When the Kshettra Samitis were formed Khands were estab lished and the appellant was the Pramukh of Kshettra Samiti relating to a Khand called Sarwan Khera. By the impugned notifications, the Khand and its Kshettra Samiti have been abolished and the appellant loses the office of Pramukh of the Kshettra Samiti concerned. He challenged in the High Court the two notifications as ultra vires and repugnant to the scheme and the purpose of the Act. He challenged also sections 3 and 8 as suffering from excessive delegation of legislative functions and involving a violation of article 14 of the Constitution. These arguments were repelled concurrently in the High Court and his further allegation that the action was mala flde was also discountenanced. He urged the same arguments before us. Mr. R. K. Garg on behalf of the appellant took us through the provisions of the Act pointing out that the Samiti once constituted had a corporate existence with perpetual succession and it was not possible for the State Government to destroy a corporation so set up and which owned property and a fund and whose existence for five years was contemplated under the Act with possibility of further continuance. It is not necessary to refer to these sections because they are to be found in all legislation dealing with the establishment of corporate local self Government bodies. The question is not whether Kshettra Samitis enjoy perpetual succession. The question is whether the Kshettra Samitis once established enjoy perpetual existence. The scheme of the Act clearly indicates that the area of the district is required to be divided into many Khands with a Kshettra Samiti in each Khand. Sections 3, 4, 8 and 8A confer power upon the State Government to alter the area of the Khand , constitute new Khands and re establish old ones. This power is. given by the legislature advisedly so that the working of democracy in the rural areas in the Kshettra Samitis and Zila Parishads may be ' smooth and without difficulty. The reorganisation of the Khands may become necessary because of circumstances too numerous to mention here. Power has, therefore, been reserved to Govern 438 ment to make the alterations as stated above. It will be seen that the latter part of section 3 gives specific power to create new Khands in addition to the change of areas of the existing Khands which means that new Khands may be brought into existence and old Khands abolished. In fact, sections 4 and 8A and the newly added proviso to section 8 bear upon the abolition of existing Khands. In other words, what the State Government did was by, an express grant from the legislature. The other provisions of the Act to which our attention was drawn merely indicate what Kshettra Samiti is required to do as long as the kshettra Samiti exists. Similarly the term of the Kshettra Samitis is to apply to a Kshettra Samiti which is not abolished but continues. The perpetual succession in this context means successions of one Kshettra Samiti to another but in fact it does not entail perpetual existence of any Samiti or any Khand notwithstanding the inadvisability of continuing it for administrative or other valid reason. The power, exercised by the Government in issuing the two notifications flow clearly from the provisions of the law under which Government was acting. It is for this reason that the attack of Mr. Garg was next directed against sections 3 and 8 of the Act. He compared the power to make new Khands and to reorganise the old ones with the other scheme of the Act under which the Kshettra Samitis are required to function with right to hold property, to possess fund and to carry on administration. All this does not show that the power given by the act to reconstitute Khands is ' any way impaired or frustrated. The two powers are quite distinct. The first power exists when the Samitis are established and continue. The second power comes into play when the need for reconstitution of the Khand emerges. The provisions of sections 3 and 8 cannot thus. be said to negative the other _provisions to which our attention was drawn. It was next contended by Mr. Garg that sections 3 and 8 were in valid because they involved excessive delegation of legislative functions to the State Government and being not supported by adequate safeguards or guides, most be struck down. This argument is not valid. The Act speaks for itself and is self contained. Its policy is stated in clear, terms and the power to create Khands must be read with the I power to abolish Khands and create new Khands in their place. The details of how big a Khand should be, what territory it should involve and so on and so forth cannot be the subject of detailed legislation. The Act gives ample indication of what the purpose of making a Khand is and the duties which the Kshettra Samitis must perform. On this subject the legislative will has been sufficiently expressed and must, therefore, guide the State Government in making its notifi 439 cations. This case is analogous to the one reported in State of Bhopal and others vs Champalal and others( '). In that case it was observed that the preamble and long title of the Act made clear that the enactment was "for the reclamation and the Development of the land by the eradication of Kans weed 'in certain areas in the State. " The purpose being specified as the radication of kans in area infested with it, the Act was said to be valid although the selection of the land was left to the Executive. The legislative policy behind the provisions of law were held to be writ large on it, and what remained or was left to the Executive was to carry out the mandate and give effect to the law to achieve the purpose of the Act. In present case also the underlying policy and the objective of the legislation is clearly set out and the details of the duties of the Kshettra Samitis are indicated. It has, however, been left to :he State Government to determine what the Khands should be and how many Kshettra Samitis should be constituted in each district. This is not a subject for detailed legislation because it s eminently a matter which can be left to the determination of 'he Executive which is to act in conformity with the wishes of ,he local people, the political exigency of the situation and the requirements of administrative control. In our opinion, the Act as not erred by conceding unfettered or uncanalised power to he State Government as is contended. On the other hand, it has itself spoken on the relevant subject in full detail so as to outline its own will which alone the Executive is supposed to Implement. It was next contended that sections 3 and 8 violate article 14 because 'hey furnish an indirect method of removal of the Pramukh, the Up Pramukh and the Members of a Kshettra Samiti without having to take recourse to the provisions for their removal as laid down in the Act. Reliance in this connection is placed upon decision of this Court in Ram Dial and others vs State of Punjab(2). That case is easily distinguishable. There the Punjab Municipalties Act contained two Provisions for the removal of a member in the public interest. By one provision he was entitled to a hearing and by 'he other not. This Court held that as it was open to choose. one method rather than the other and that there was room for arbitrary action. Here the provision on the subject of removal of members of the Kshettra Samitis are not congruous with the subject of reorganisation of Khands. The two provisions operate In entirely different fields. One is concerned directly with the removal of the Pramukh, Up Pramukh and the members. The other is directly concerned with the abolition of the Khands and (1) ; (2) ; 440 reconstitution of different Khands These are two different powers and cannot be compared at all. It may be that by abolishing a Khand and its Kshettra Samiti the members also must go, but that is a consequence of the exercise of quite a different power. Of course, if the action in abolishing the Khand could be shown to be directly connected with the removal of the Pramukh, Up Pramukh or a member of the Kshettra Samiti the action of the Executive Government can be struck down as mala fide. It was for this purpose that the appellant pleaded in the, High Court mala fides on the part of the Government. The two judgments now under appeal negative the existence of any mala fide intention. No material was placed before us to establish mala fides nor could the findings be attacked since they were concurrently reached. In this view of the matter we must hold that the State Government in exercising its powers acted honestly and within the four corners of its jurisdiction. , In the result the appeal must be held to be without substance. It will be dismissed with costs. V.P.S. Appeal dismissed.

The appellant was elected Pramukh of a Kshettra Samiti and his term of office which was co terminus with that of the Samiti, was for five years The Government of Uttar Pradesh issued two notifications under sections i and 8 of the Uttar Pradesh Kshettra Samities and Zila Parishads Adhiniyam, 1961, by which the rural areas in the district were redivided into new Khands, the Khand relating to the appellant 's Samiti was abolished and the term of the Samiti was brought to a close. As a consequence, the appellant lost the office of Pramukh of the Samiti. His writ petition in the High Court challenging the notifications was dismissed. In appeal to this Court it was contended that : (1) The two notifications are repugnant to the scheme of the Act; (2) Sections 3 and 8 are contrary to the other provisions of the Act under which a Samiti once constituted had a corporate existence with perpetual succession owning property and a fund, and whose existence for 5 years was contemplated under the Act with the possibility of further continuance; (3) Sections 3 and 8 were invalid because they involved excessive delegation of legislative functions to the State Government, and (4) The sections violate article 14 of the Constitution because they furnish an indirect method of re moving the Pramukh, Up pramukh and members of a Kshettra Samiti without resorting to the appropriate provisions in the Act. HELD : (1) The notifications flow from an express grant of power to the Executive by the Legislature. [438 B] The Act was intended to make democracy broad based and to give training, in the art of administration and running democracy, to the rural population. Its scheme indicates that the area of the district is required to be divided into many Khands with a Kshettra Samiti in each Khand. The power to create Khands must be read with the power to abolish Khads and create new Khands in their place. Sections 3, 4, 8 and 8A confer power upon the State Government to alter the area of the Khand, abolish old Khands, constitute new Khands and re establish old ones; and this power is given by the Legislature advisedly, so that the working of democracy in the rural areas in Kshettra Samities and Zila Parishads may be smooth and without difficulty. [435 D E; 437 G H; 538 G] (2) The provisions of sections 3 and 8 cannot be said to negative the other provisions of the Act, which merely indicate what a Kshettra Samiti is required to do as long as it exists. Perpetual 'succession only means succession of one Samiti to another, but does not entail perpetual existence of any Samiti or any Khand notwithstanding the inadvisability of continuing it for administrative or other valid reasons. Similarly, the fact that the Samities are required to function with right to hold property, to 434 possess fund and to carry on administration, does not show that the power given by the Act to reconstitute Khands is in any way impaired or frustrated. The first power exists when the Samities are established and continue; and the second comes into play when the need for the reconstitution of a Khand emerges. [438 B F] (3) The Act has not erred by conceding unfettered or uncanalized power to the State Government. [439 D E] The underlying policy and the objective of the legislation is set out in the preamble and other provisions of the Act and the Act gives ample indication of what the purpose of making a Khand is and the duties which the Samiti must perform. The details of how big a Khand should be, what territory it should involve and how many Samities should be constituted in each district, etc. cannot be the subject of detailed legislation and they are eminently matters which can be left to the determination of the Executive which is to act in conformity with the wishes of the local people, the political exigency of the situation and the requirements of administrative control. On this subject the legislative will has been expressed in sufficient detail giving guidance to the State Government in making its notifications to implement it [438 G H; 439 C E] State of Bhopal & Ors. vs Champalal & Ors., [1964] 6 S.C.R. 35, followed. (4) Sections 3 and 8 do not violate article 14. The provision in the Act on the subject of removal of members of a Samiti and that dealing with the subject of reorganisation of Khands deal with different powers and cannot be compared at all. One is concerned directly with the removal of Pramukh, Up Pramukh and other members, while the other is concerned directly with the abolition and reconstitution of Khands. It may be that by abolishing a Khand and its Kshettra Samiti the members, including the Pramukh, must also go; but, that is the consequence of the exercise of a different power. If, however the action in abolishing the Khand is for the direct purpose of the removal of a Pramukh, Up Pramukh or member of a Samiti, the action of the Executive Government can be struck down as mala fide. In the present case, there is no evidence of any mala fides. [439 G H; 440 A C] Rani Dial and Ors. vs State of Punjab, ; distinguished.

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Appeal No. 495 of 1965. Appeal by special leave from the judgment and decree dated December 22, 1959 of the Punjab High Court, Circuit Bench at Delhi in Regular First Appeal No. 78 D of 1953. Rameshwar Dayal and A. D. Mathur, for the appellants. Veda Vyasa,K. K. fain and H. K. Puri, for respondent No. 6. The Judgment of the Court was delivered by Bhargava, J. The first appellant, Messrs. Delhi Motor Com pany, is a partnership firm (hereinafter referred to as "the firm"), of which the other four appellants Nos. 2 to 5 are partners. Respondent No. 6, New Garage Ltd., is a private limited company (hereinafter referred to as "the Company"), of which respondent 722 No. 1 was the Managing Director, and respondents Nos. 2 to 5 were members of the Board of Directors. The firm brought a ' suit against the Company for possession of part of the building known as "Scindia House" situated in Connaught Circus, New Delhi, on the basis of an agreement of subleases Possession was claimed of a portion of the Show Room on the ground floor, of 1/2 portion of the Balcony, and another portion of the premises which were, in the year 1950, in the possession of Messrs. Kanwar Brothers Ltd. The case put forward by the firm was that the Company was the tenant of Scindia House and was in occupation of the Show Room and other parts of the building, while a, part of it was occupied by Messrs. Kanwar Brothers Ltd. as sub lessee of the Company. According to the firm, the agreement to sub lease, or the sub lease on the basis of which possession was claimed by the firm from the Company, is evidenced by three documents, the first one of which is letter, Ext. P. 1, dated 20th February, 1950, written by K. section Bhatnagar, appellant No. 2, on behalf of the firm, to U. A. Basrurkar, respondent No. 1, who was the Managing Director of the Company. The second document is letter, Ext. P. 2, dated 22nd February, 1950, written by respondent No. 1 Basrurkar to appellant No. 2 Bhatnagar; and the third document is Ext. P. 3, which purports to be notes on agreement arrived at between Basrurkar and Bhatnagar on 22nd February, 1950. The case of the firm was that, though these documents did not purport in so many words to be an agreement of sub lease. to be granted by the Company to the firm, in substance and in fact, the agreement arrived at was of a sub lease in respect of the premises mentioned above. Since, under the Delhi and Ajmer Merwara Rent Control Act 19 of 1947, if a sub lease had been granted by the Company to the firm without the consent of the landlord, the Company would have been liable to ejectment from the premises, the agreement was not made as directly evidencing a sub lease, so that the landlord should not have an opportunity of suing the Company for ejectment. In February, 1950, when the agreement evidenced by these three documents was arrived at, respondent No. 1, U. A. Basrurkar as Director did not have the authority to enter into this transaction on behalf of the Company with the firm and, consequently on 22nd March, 1950, the Board of Directors of the Company, by a resolution Ext. P. 9, authorised the Managing Director to enter into this transaction. Thereafter, the firm came into possession of two portions of the leased property and started its business in them with effect from 1st April, 1950. The two portions of the leased property, which came into the possession of the firm, were a portion of the ShowRoom on the ground floor and a half portion of the Balcony on the first floor. The agreement contained in these letters and, 723 documents also required parties to carry out some other obligations and, according to the firm, it complied with them. In order to avoid the, liability of the Company for ejectment under the Delhi and Ajmer Merwara Rent Control Act, 1947, the agreement was sought to be given the. form of a partnership; and in order to enable the Company to enter into such a transaction, a special resolution Ext. P. 4 was passed on 24th November, 1950 at an Extra ordinary General Meeting of the Share holders of the Company amending the Memorandum of Association of the Company. This amendment was subsequently approved by the District Judge and was registered with the Registrar of Companies. So far as the landlord is concerned, lie was not a party to these t ransactions, though, on 5th April, 1951, the landlord gave a letter Ext. P. 22 recognising the possession of the firm, but he specifically stated in that letter that the firm would be a licensee and not a sub lessee. One other term in the, agreement arrived at was that appellant No. 2, K. section Bhatnagar, was to be taken as a Director of the Company and he was in fact included in the Directors of the Company thereafter. The further case of the firm was that when Messrs. Kanwar Brothers Ltd. vacated the portion of the premises which was included in the sub leases the Company did not give possession of that portion of the leased property to the firm and also started obstructing the use of those portions of the property by the firm of which the firm had secured possession by 1st April, 1950. A stage came when the firm was completely dispossessed from the property ]eased and, ultimately, after giving notices, the firm instituted a suit on 18th June, 1952. The principal prayer in the suit was for delivery of possession in respect of all the three portions of the leased property. Then, there was a claim for damages to the extent of Rs. 10,000/ in respect of loss incurred on account of dispossession and obstruction in use of the leased property at the instance of the Company. Injunctions were also sought restraining the Company from interfering with the rights of the firm and with their uninterrupted use of the leased property. There were further prayers for other consequential injunctions which need not be described in detail. On behalf of the Company and its Directors, the plea put forward was that there was no agreement of sub lease or a completed sub lease between the Company and the firm and that, in fact, all that took place were negotiations for entering into a partnership. Even the agreement for partnership was never completed, so that the firm was not entitled to any relief at all. The trial Court held that the contract evidenced by these documents was an agreement for a sub lease and, since this agreement did not require registration, the firm was entitled to the 724 reliefs claimed on the basis of this agreement. The Company and its Directors appealed to the High Court of Punjab and that Court held that these documents constituted a completed lease or at least an agreement to lease falling within section 2(7) of the Indian Registration Act and, since the lease or the agreement to lease was evidenced by documents in writing and they were unregistered, the lease or the agreement to lease could not be enforced. On this sole ground, the High Court allowed the appeal and dismissed the suit of the firm. The firm has now come up in, appeal to this Court by special leave. The first point urged on behalf of the firm was that, in this case, there was a completed sub lease, but it did not require registration for Iwo reasons. The first reason advanced was that the lease was not evidenced by the documents Exts. P. and P. 3 only, but was, in fact, completed subsequently when, after the resolution of the Board of Directors of the Company, the Company gave possession of the leased property to the firm on or about the 1st April, 1950. The second reason was that, in any case, this lease was not a lease from year to year or for any term exceeding one year or reserving a yearly rent, so that section 107 of the was not applicable and registration was not compulsory. These submissions fail, because the lease, as relied upon by the firm, has to be held to be a lease of immovable property for a term exceeding one year, and such a lease is fully governed by section 107 of the . The firm itself came forward with the case that the rights that were being claimed were under a lease and the lease was in respect of immovable property consisting of the three portions of the Scindia House which have been mentioned above. It was, however, urged that this lease was not for any fixed term at all and was for an indefinite period, so that it could not be held to be a lease from year to year either. It was further submitted that yearly rent had not been reserved in respect of this lease. Even these submissions were made on the basis that the terms of the lease have to be ascertained from the three documents Exts. P. and P. 3 which were relied upon by the firm to claim the relief in the suit. It appears to us that, if these documents are properly interpreted, an inference necessarily follows that the lease, if any, brought into existence by these documents was certainly for a period exceeding one year. Since reliance was placed on these documents on behalf of the firm to urge that there was a completed lease, learned counsel for the firm was asked to point out the provision which fixed the rent payable in respect of the leased property. The only provision, on which he relied to show that rent had, in fact, been agreed upon the fixed, was para 1 of Ext. P. 3 which 725 contains notes on agreement, dated 22nd February, 1950. That paragraph is as follows : "Profit share of party No. 1 would be 10% of net profit of New Delhi business only and will be settled at the end of the 1st closing of the financial year which would be 30th June, 1951. " Accepting this submission that this paragraph lays down the rent payable, it is clear that, under it, the rent payable for the first time would be 10 % of the net profits earned by the firm in its New Delhi business up to 30th June, 1951. The period would naturally begin on the date on which the lease commenced. That date, according to the firm itself, was 1st April, 1950. From these facts it follows that when the rent is to be paid for the first time, it would be an amount of 10% of the net profits earned by the firm in its New Delhi business between 1st April, 1950 and 30th June, 1951, and, naturally enough, the rent will be in respect of the same period. This term, therefore, clearly laid down that the very first payment of rent was to be for a period of one year and three months, so that, even though so further period for the continuance of the lease after 30th June, 1951 was laid down, the lease at least made rent pay able for the first period of fifteen months. The lease was, therefore, at least for a period of fifteen months and, consequently, for a period exceeding one year. Section 107 of the was, thus, clearly applicable and such a lease could not have been validly made, except under a registered instrument. Admittedly, there was no registration of the documents which constituted the lease and consequently, the firm could not claim any rights on the basis of this lease evidenced by unregistered documents. Learned counsel tried to urge that, since in these documents no definite period for the lease was mentioned, we should hold that section 106 of the was applicable and the lease being in respect of immovable property for purposes other than agricultural or manufacturing must be deemed to be a lease from month to month. We are unable to accept this submission, because none of the documents, on which reliance has been placed on behalf of the firm to prove the lease, contains any clause indicating that the tenancy was to be from month to month or the rent was payable monthly. In fact, the indication from para 1 of Ext. P. 3 quoted above is that the rent was to be payable annually, so that the contract itself seems to give an indication that it was to be a lease from year to year and annual rent was payable. These circumstances, however, are immaterial, because we have already indicated earlier our 726 finding that this lease was at least for a minimum period of 15 months and, consequently, section 107 of the becomes applicable, irrespective of the question whether it was a lease from month to month or from year to year. The High Court was, therefore, quite correct in holding that on the basis of this lease the reliefs claimed by the firm could not be granted to it. In these circumstances, an argument was put forward on behalf of the firm that, though this contract to lease had not been registered, the firm could claim possession under it in view of the provisions of section 53A of the , because, in this case, the Company would be debarred from enforcing against the firm any right in respect of that property of which the firm had already taken possession, viz., part of the Show Room and a portion of the Balcony. In our opinion, this argument proceeds on an incorrect interpretation of section 53A. because that section is only meant to bring about a bar against enforcement of rights by a lessor in respect of property of which the lessee had already taken possession, but do not give any right to the lessee to claim possession or to claim any other rights on the basis of an unregistered lease. Section 53A of the is only available as a defence to a lessee and not as conferring a right on the basis of which the lessee can claim rights against the lessor. is interpretation of section 53A was clearly laid down by their Lordships of the Privy Council in Probodh Kumar Das and Others vs Dantra Tea Company Limited & Others(1). Learned counsel for the firm, however, relied on a decision of the Allahabad High Court in Ram Chander vs Maharaj Kunwar and Others(2). In that case. the lessee, under a registered lease which was detective and (lid not comply with the requirement of section 107 of the , brought a suit against a subsequent purchaser of the house of the lessor on the allegation that the purchaser ha(], in collusion with the Municipal Board, procured the demolition or a portion of the house, and claimed a relief of perpetual injunction retraining the purchaser from demolishing the house or otherwise interfering with the lessee 's rights as such. and for restoration of the demolished portion at the purchaser 's cost. The High Court, in allowing the claim of the lessee, held "Now, in the present case, what is it that the plaintiff is attempting to do ? He is not attempting to set up a transfer which is he has not instituted a suit for the declaration of the validity of the transfer; (1) I.L.R. [1939] All. (1) 66 I.A. 293. 727 he has not instituted a suit in which he claims an order against the defendant directing him to perform any convenant of the transfer. What he is seeking to do is to debar the defendants from interfering with his possession into which he has entered with the consent of his transferor after the execution of a transfer in his favour. He is, in other words, seeking to defend the rights to which he is entitled under section 53A of the . The defendants Nos. 1 and 2 in demolishing part of the property of which the plaintiff had obtained possession were acting suo motu with the aid of the Municipal Board of Moradabad. It is the defendants who are seeking to assert rights covered by the contract. The plaintiff seeks merely to debar them from doing so; the plaintiff is seeking to protect his rights. In a sense, in the proceedings he is really a defendant and we see nothing in the ;terms of section 53A of the to disentitle him from maintaining the present suit. " Without expressing any opinion as to the correctness of the view taken by the Allahabad High Court, we have to point out that the interpretation put on section 53A of the even by that Court is of no assistance to the firm in the present case. In this case, the firm is seeking to enforce rights under the unregistered lease and to seek a decree for possession against the lessor. The Allahabad High Court in that case proceeded on the basis that the plaintiff of that suit was in the position of a defendant and was only seeking to protect his right,; by resort to the provisions of section 53A of the , so that no principle was laid down by the High Court that section 53A is available to a lessee otherwise than as a defence. We are unable to accept the submission that the judgment in that case should be read as recognising a right of a lessee to enforce rights on the basis of an unregistered lease by resort to that provision, of law. In, fact, if that case be interpreted as laying down such a principle, it must be held that it. has been directly over ruled by the decision of the Privy Council in the case of Probodh Kumar Das and Others(1) and is not correct. 'Mat decision may be justified, if at all, on the basis that, though the lessee in that case was a plaintiff, he was actually seeking protection under section 53A of the by being in the real position of a defendant. On the question whether a person, who sues as a plaintiff, may still be regarded as defending the rights 'Sought to be conferred upon him by an unregistered deed, we need express no opinion. In the present case before us, the claim, which was put forward by the firm in the plaint, can by (1) 66 I.A. 293. 728 no means be construed as a mere defence of the firm 's rights. What the firm is actually seeking to do is to enforce the rights under the lease and, in such a case, section 53A of the is clearly inapplicable. Reliance was also placed on behalf of the firm on the deci sion of this Court in Ram Kumar Das vs Jagadish Chandra Deb Dhabal Deb and Another(1), in which case also, a registered Kabuliyat executed by the lessee did not comply with the requirements of section 107 of the , and on the facts of the case it was held that, though under the Kabuliyat the land was leased out for a period of ten years, the lease in fact must be presumed to be from month to month under section 106 of that Act. The facts of that case were, however, quite different. In that case, the terms of the lease were not ascertained from the Kabuliyat in which the period of lease was fixed at 10 years. The terms of the lease were ascertained from other documents, including receipts for rent paid by the lessee to the lessor, and on the basis of that evidence it was found that a lease had come into existence under which rent was being paid monthly. No such circumstances appear in the case before us. In fact, it was at no stage pleaded and no evidence was led to show that, independently on the three documents Exts. P. 1, .P. 2 and P. 3, there was material from which it could be inferred that a lease from month to month had come into existence between the firm and the Company. No such point was urged either in the trial Court or before the High Court and no such finding of fact exists. In these circumstances, section 106 of the would clearly be inapplicable, and the lease has to be held to be for a period exceeding one year for the reasons given by us above. In the alternative, learned counsel for the firm urged that the firm was entitled to contend that these documents Exts. P. 1 to P. 3 constituted an agreement in writing to lease the property in suit and could claim specific performance of this contract. There are three reasons why we are unable to accept this submission. The first is that, in the plaint itself, no specific performance of contract was claimed on behalf of the firm. Though the pleadings included averments about this contract, the relief claimed was for a decree for possession, damages and injunctions. These reliefs could only be claimed on the basis of a completed lease and could not be the reliefs in a suit for specific performance of a contract to lease. The second reason is that, as mentioned by us earlier, the firm itself came forward with the case that the entire contract was not included within these three documents Exts. P. 1 to P. 3, because, at the stage when (1) ; 729 these documents came into existence, the Managing Director of the Company had no authority to enter into such a contract on behalf of the Company and that the contract was only completed subsequently when the Board of Directors passed a resolution authorising the Managing Director to enter into such a contract and actual possession of part of the property was given on or about the 1st April, 1950. The contract being a contract to lease immovable property and unregistered, specific performance of it could not be sought, except under section 27A of the Specific Relief Act. That section, however, applies only if the entire contract is made in writing, while, according to the case put forward on behalf of the firm itself, ' the entire contract was not in writing. The third reason why specific performance of the contract cannot be claimed by the firm under section 27A of the Specific Relief Act is that such a claim under that provision of law is only available to a lessee, when the lessee, in part performance of the contract, has taken possession of the property, or, being already in possession, continues in possession in part performance of the contract. In the present case, the pleas put forward on behalf of the firm itself show that the firm never got possession of the entire property to which the contract related. Possession was taken by the firm of only two items of property, while the firm never obtained possession of the third item of property which was in possession of Messrs. Kanwar Brothers ' Ltd. Clause (b) of section 27A can apply only if possession of the entire property, which is the subject matter of the contract of lease, has been taken by the lessee. The pleadings in the plaint show that, even though the third item of property was vacated by M/s. Kanwar Brothers Ltd. in December, 1950, possession of that property was never obtained by the firm. To meet this objection, it was urged by learned counsel on behalf of the firm that we should interpret section 27A of the specific Relief Act as being applicable even if possession of part of the property, which is the subject matter of the contract, is obtained by the lessee; but we are unable to accept this submission. The language used makes it clear that possession must be obtained of the entire property to which the contract relates. In this connection, it is significant to note that under section 53A of the , a transferor is barred from interfering with the rights of the transferee, even if the transferee gets possession of any part of the property sought to be trans ferred by the unregistered document of transfer. That section specifically uses the expression "taken possession of the property or any part thereof", whereas the words used in section 27A of the Specific Relief Act are : "taken possession of the property". The omission of the words "any part thereof" in section 27A of the Specific Relief Act when compared with the provision in section 53A of the 730 clearly brings out the position that the former section is only applicable when possession of the entire property, which is the subject matter of the contract, has been taken, while the latter section is made applicable even if the lessee takes possession of any part of the property. Consequently, on the facts of the present case, the firm could not claim specific performance of the contract under section 27A of the Specific Relief Act, even if such a claim had been put forward in the plaint. This alternative contention also, therefore, fails. The appeal is, consequently. dismissed, but, in view of the cirucumstances of this case and the conduct of the parties relating to the contract, we direct parties to bear their own costs of the appeal. G.C. Appeal dismissed.

Certain documents were executed between the appellant firm and the respondent company in respect of premises of which the latter was a tenant. According to the appellant these documents were intended to effect a sublease of three portions of the premises in question though in order to avoid consequences under the Delhi and Ajmer Merwara Rent Control Act 10 of 1947 they apparently purported to create a partnership. The firm was actually given possession of two of the three portions thus given to it. After some time the firm was dispossessed by the company of the premises occupied by it and it therefore filed a suit claiming delivery of possession. In defence the company contended that the documents relied upon by the firm did not evidence either a sub lease or a partnership. According to it there were negotiations for a partnership which never fructified. The trial court held that the documents executed by the parties evidenced an agreement for a sub lease and since the agreement did not require registration the firm was entitled to the reliefs claimed by it on the basis of the agreement. In appeal by the company the High Court held that the documents constituted a completed lease of at least an agreement to lease falling within section 2(7) of the Indian Registration Act, and since the lease or the agreement to lease was evidenced by documents in Writing and they were unregistered, the lease or the agreement to lease could not be enforced. On this sole ground, the High Court allowed the appeal and dismissed the suit of the firm, which thereupon, appealed to this Court. HELD : (i) The three documents in question were relied on by the appellant firm itself as evidence of the lease and the terms thereof; the firm could not therefore be heard to say that these documents did not represent the completed lease and did not, for that reason, require registration. [724 C H] (ii) According to the firm 's case based on the said documents rent in the first instance was payable to. the company in the shape of 10% of the profits of the firm for the period 1st April 1950 to 30th June 1951. Therefore the lease that came into existence through these documents was certainly for more than a year. Section 107 of the was thus clearly applicable and such a lease could not have been validly made except under a registered instrument. Admittedly there was no registration of the documents which constituted the lease, and, consequently, the firm could not claim any rights on the basis of this lease evidenced by unregistered documents. [725 B F] (iii) Merely because the ]case was for an indefinite period and related to immovable property which was not used for agricultural or manufacturing purposes it could not be held to be a lease from month to month 721 to which section 106 of the was applicable. There was nothing in the terms of the lease which showed that it was from month to month. [725 F H] Ram Kumar Das vs Jagadish Chandra Deb Dhabal Deb & Anr. ; , distinguished. (iv) Section 53A of the is only meant to bring about a bar against enforcement of rights by a lessor in respect of property of which the lessee had already taken possession, but does not give any right to the lessee to claim possession or to claim any other right on the basis of an unregistered lease. Section 53A is only available PA a defence to a lessee and not as conferring a right on the basis of which the lessee can claim rights against the lessor. [726 C E] In the present case the claim which was put forward by the firm in the plaint, could by no means be construed as a mere defence of the firm 's rights. What the firm was actually seeking to do was to enforce the rights under the lease and, in such a case, section 53A of the was clearly inapplicable. [727 H 728 A] Probodh Kumar Das & Ors. vs Dantmara Tea Company Ltd.,& Ors. I.A. 293, relied on. Ram Chander vs Maharaj Kunwar & Ors., I.L.R. 1939 All. distinguished. (v) Specific performances of the lease could not be enforced because (a) In the plaint no specific performance was claimed by the appellant, (b)The appellant 's own case was that the entire contract was not included in the three written documents, and section 27A of the Specific Relief Act under which only the contract could be enforced requires the whole contract to be in writing; (c) The difference between the words of section 53A of the and section 27A of the Specific Relief Act brings out clearly that the latter is applicable when the entire property under contract has been taken possession of by the lessee in part performance of the contract. In the present case only two out of the three portions of the premises leased out to it were taken possession of by the appellant. [728 G H, 729 H, 730 A B]

2343.txt

ivil Appeals Nos. 1148, 1656 and 2341 of 1966. Appeals by special leave from the judgment and decree dated July 27, 1965 of the Punjab High Court in Letters Patent Appeals Nos. 13 to 15 of 1965. Prem Chand Jain and Janardan Sharma, for the appellants (in all the appeals). D.D. Sharma, for respondents Nos. 1 (iv to xiii) in all the appeals). The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought by special leave on behalf of the defendants against the judgment of the Punjab High Court dated 27th July, 1965 in Letters Patent Appeals Nos. 13 and 14 of 1965. Dhara Singh, respondent No. 2, executed three sale deeds with regard to lands at village Bhadani, 'Tehsil Jhajjar, Rohtak in favour of the appellants in all the three appeals. The first sale was of land measuring 27 kanals and 4 marlas dated September 20, 1960, the second was of land measuring 36 kanals and 19 marlas dated November 23, 1960 and the third was of land measuring 33 kanals and 18 marlas dated March 6, 1961. Neki deceased, who was the father 's brother of Dhara Singh, vendor, instituted three suits in the court of Subordinate Judge at Jhajjar for possession of the aforesaid lands covered by the three sales on the ground that he had a superior right of pre emption on the basis of his relationship with the vendor as against the appellants under section 15(1)(a) of the Punjab Pre emption Act, 1913 (Punjab Act 1 of 1913). These suits were contested by the appellants. After hearing the contentions of the rival parties, the Subordinate Judge granted decrees in ail the three suits in favour of the plaintiffs. In suit No. 311 of 1961 the decree stipulated that the plaintiff should deposit the amount of Rs. 3,500/ in court on or before 15 1 1963. In suit Nos. 368 and 369 of 1961 the condition was that the plaintiffs should make the deposit of Rs. 5,000/ and Rs. 7,000/ respectively in court on or before 15 1 1963. The appellants took the matter in appeal before the Senior Subordinate Judge who by his judgment dated 30th January, 1963 dismissed the appeals against the decrees in 835 suits Nos. 313 and 369 of 1961 and modified the decree in suit No. 368 of 1961 to the extent that the plaintiff was called upon to deposit a further sum of Rs. 2,000/ on or before 1 3 1963. The appellants preferred regular Second Appeals Nos. 280, 281 and 282 of 1963 in the High Court against the decrees and judgment of the Senior Subordinate Judge, Rohtak. The plaintiffs also preferred in the High Court appeal No. 830 of 1963 against the increase made in the price of the land by the Senior Subordinate Judge Rohtak in the appeal arising out, of decree in suit No. 368 of 1961. While the appeals were pending in the High Court, Neki plaintiff died on April 7, 1963. After his death, the appellants vendors in the three regular appeals moved applications under 0.22, r. I of the Civil Procedure Code to bring on record of the appeals the legal representatives of Neki, deceased plaintiff, namely, Dhara Singh, Ramkishan and Balbir Singh. All the four appeals were heard and dismissed by Mr. Justice Khanna by his judgment dated 17th September, 1964. The appellants preferred appeals under the Letters Patent which were dismissed by a Division Bench of the Punjab High Court by a common judgment dated 27th July, 1965. The claim of Neki for pre emption was based on sections 14 and 15 (1) (a) of the Punjab Pre emption Act 1913 (Punjab Act 1 of 1913). Section 14 states : "No person other than a person who was at the date of sale a member of an agricultural tribe in the the same group of agricultural tribes as the vendor shall have a right of pre emption in respect of agricultural land sold by a member of an agricultural tribe". "Section 15 (I) (a) reads as follows "The right of pre emption in respect of agricultural land and village immovable property shall vest (a) where the sale is by a sole owner: FIRST, in the son or daughter or son 's son or daughter 's son of the vendor; SECONDLY, in the brother or brother 's son of the vendor; THIRDLY, in the father 's brother or father 's brother 's son of the vendor; FOURTHLY, in the tenant who holds under tenancy of the vendor the land or property sold or a part thereof . " The Punjab Pre emption Act, 1913 was amended by Punjab Act 10 of 1960 and section 6 of the amending Act inserted a new section 31 in the Principal which states as follows: 836 "No court shall pass a decree in a suit for pre emption whether instituted before or after the commencement of the Punjab Pre emption (Amendment) Act, 1960, which is inconsistent with the provisions of the said Act". It is necessary also to refer at this stage to the provisions of 0.22, r.1 and 0.22, r. 1 1 which are to the following effect : "0.22, r. 1 : The death of a plaintiff or defendant shall not cause the suit to abate if the right to sue survives". "0.22, r. I I : In the application of this Order to appeals, so far as may be, the word 'plaintiff ' shall be held to include an appellant the word 'defendant ' a respondent, and the word 'suit an appeal". In support of these appeals, learned counsel put forward the argument that the right of pre emption claimed by Neki deceased plaintiff was a personal right which died with him upon his death and the legal representatives of Neki were not entitled to be granted a decree for pre emption. The argument was that the statutory right of pre emption under the Punjab Act was not a heritable right and no decree for pre emption should have been passed by the lower court in favour of ',he legal representatives as representing the estate of Neki. We are unable to accept the argument put forward by the appellants. It is not correct to say that the right of pre emption is a personal right on the part of the pre emptor to get the re transfer of the property from the vendee who has already become the owner of the same. It is true that the right of pre emption becomes enforceable only when there is a sale but the right exists antecedently to the sale, the foundation of the right being the avoidance of the inconveniences and disturbances which would arise from the introduction of a stran (Ter into the land. The correct legal position is that the statutory law of pre emption imposes a limitation or disability upon the ownership of a property to the extent 'that it restricts the owner 's right of sale and compels him to sell the property to the person entitled to pre emption under the statute. In other words, the statutory right of pre emption though not amounting to an interest in the land is a right which attaches to the land and which can be enforced against a purchaser by the person entitled to pre empt. In the present case, Neki obtained decrees for pre emption in all the three suits against the appellants and these decrees were confirmed by the first appellate Court. While the second appeals were pending in the High Court, Neki died and the question is whether under the provisions of 0.22, r. I and 0.22, r. I I of the Code of Civil Procedure, the right to sue survived after the death of Neki. In this context, it is necessary to consider the provisions of section 306 of the Indian 837 Succession Act XXIX of 1925. This section expresses a qualification of the maxim actio personalis mortiur cum persona to the extent that the section indicates that, amongst causes of action which survive, are included some actions of a personal nature, that is to say personal actions other than those expressly excluded by the section itself. It is true that the right of pre emption under section 15(1)(a) of the Punjab Act of 1913 is a personal right in the sense that the claim of the pre emptor depends upon the nature of his relationship with the vendor. But under section 14 of the Act, the pre emptor must be a member of an agricultural tribe in the same group of agricultural tribes as the vendor and the land of which pre emption is sought must be in respect of agricultural land sold to a member of the agricultural tribe. We are of opinion that if an involuntary transfer takes place by inheritance the successor to the land takes the whole bundle of the rights which go with the land including the right of pre emption. The view which we have taken is supported by the language of section 306 of the Indian Succession Act and it follows therefore that the claim of Neki for pre emption did not abate upon his death and that the legal representatives of Neki were properly brought on record of the second appeals under the provisions of 0.22, r. 1 read with 0.22, r. 10 of the Code of Civil Procedure. The view that we have expressed is borne out by a decision of the Punjab High Court in Faqir Ali Shah vs Ram Kishan & Ors.(1). The question that arose for determination in that case was whether the right to sue for pre emption under s.12 of the Punjab Laws Act upon a cause of action which accrued to a person in his life time passed at his death to his successor who inherited the property through which the right had accrued. The view of the Full Bench as regards the transfer by inheritance was that the general principle applied and that the right of pre emption passed with the land and the learned Judges distinguished the transfer by inheritance from the transfer of property by some voluntary act of the par ties. At p. 641 of the Report, Clark, C.J. observed : "While, therefore, there is good reason why volun tary transfers should not pass a right of pre emption as regards properties previously sold, those reasons do not apply to transfers by inheritance. As regards transfers by inheritance, the general principle should apply that the right of pre emption passes with the land. Mr. Grey laid great stress on sections 13 and 16 of the, Punjab Laws Act urging that the father was the person on whom the notice had to be served, and that it was he who had the right to sue and that the right was thus a personal one that could not (1) 133 P. R. 1907. 838 be inherited by the son. The right was no doubt a personal one in the father based on his land, but I can see no reason why such right cannot be inherited by the son. If the father had waived or otherwise disposed of his right this would no doubt be binding on the son, as the father was representing the whole estate. Where, however, the father has done nothing of the kind, but has simply taken no steps in the matters, there seems to me no reason why the son should not step into the shoes of his father and take the same action as the father could have done. The son inherits the other causes of 'action belonging to his father and why not this one ? Nor do I see why the son cannot come in under Section 16, simply alleging that no notice as required by section 13 was served on his father". A similar view was expressed by the Full Bench of the Allahabad High Court in Wajid Ali & Ors. vs Shaban & Ors. It was held that where a right of pre emption exists by custom as recorded in the village wajib ul arz, the right having once accrued did not of necessity lapse by the death of the pre emptor before making a claim, but descended along with the property in virtue of which it subsisted to the heir of the pre emptor. It is necessary to emphasize that we are dealing in this; case with the statutory right of pre emption under Punjab Act 1 of 1913 and its subsequent amendment and not with the right of preemption under the Mohammedan Law. In regard to the latter right it has been held that according to the Mohammadan law applicable to the Sunni sect if a plaintiff in a suit for pre emption has not obtained his decree for pre emption in his life time the right to sue does not survive to his heirs. (See Muhammad Husain vs Niamet un nissa and Ors.) (2). It is not necessary for us to express any opinion on this point in the present case. On behalf of the respondent it was also pointed out that after the passing of the decree by the, trial court, Neki complied with the terms of the decree and made payments within the time given. It was said that under the terms of section 14 and section 1 5 (1 ) (a) the title to the land in the pre emption suits must be deemed to have accrued to Neki from the date of such payment. It was argued that before his death, Neki became the owner of the lands which were the subject matter of pre emption and the legal representatives of Neki were substituted in his place as representing the estate of Neki. In support of this proposition counsel relied upon the language of 0.20 r. 14(1) which states : "Where the court decrees a claim to pre emption in respect of a particular sale of property and the pur (2) 1. L. R. 20 All. 88. 839 chase money has not been paid into Court, the decree shall (a) specify a day on or before which the purchasemoney shall be so paid, and (b) direct that on payment into Court of such purchase money, together with the costs (if any) decreed against the plaintiff, on or before the day referred to in clause (a) the defendant shall deliver possession of the property to the plaintiff, whose title thereto shall be deemed to have accrued from the date of such payment, but that, if the purchase money and the costs (if any) are not so paid, the suit shall be dismissed with costs. " In this connection counsel referred to the decision of the Punjab High Court in Ganga Ram & Ors. vs Shiv Lal(1) where it was held that the title to the preempted property passes to the pre emptor under a pre emption decree on deposit of the purchase money in terms of the decree and was deemed to. pass to him from the date of the deposit. So far suit No. 368 is concerned, there is a dispute as to whether or not Neki deposited the amount under the decree within the time prescribed but as regards suits Nos. 311 and 369 of 1961, it is admitted that the deceased Neki made the payment of the amount under the two decrees within the time prescribed. So far as these two decrees are concerned, the deposit of the purchase money is an additional reason for holding that the legal representatives of Neki were properly substituted in his place in the proceedings of the second appeals. It was finally urged on behalf of the appellants that, in any vent, section 31 of the Punjab Act 1 of 1913 as amended by Punjab Act 10 of 1960 stood as a bar to the granting of a decree in favour of the substituted respondents. The argument was stressed that section 31 of the Punjab Act 1 of 1913 was in plain words retrospective in character and Dhara Singh and his two sons as legal representatives of Neki could not be granted a decree for pre emption. In our opinion, this argument is wholly irrelevant. The reason is that the Amending Act came into force on February 4, 1960 and Neki instituted the present suits for pre emption long after this date. Even the three sales of land were effected after the promulgation of the Amending Act. Reliance was placed on behalf of the appellants on the decision of this Court in Ram Sarup vs Munshi & Ors.(1) but the material facts of that case are quite different. It appears that the claim of pre emption in that case was based upon section 15(c) 'thirdly ' of the Punjab Pre emption Act 1913 which states: (1) 66 P. L. R. (1964), 251. (2) 840 "Subject to the provisions of section 14 the right of preemption in respect of agricultural land and village immoveable property shall vest (a) where the sale is by a sole owner or occupancy tenant or, in the case of land or property jointly owned or held, is by all the co sharers jointly, in the persons in order of succession, who but for such sale would be entitled, on the death of the vendor or vendors, to inherit the land or property sold; (b) where the sale is of a share out of joint land or property, and is not made by all the co sharers jointly, firstly, in the lineal descendants of the vendor in order of succession; secondly, in the co sharers, if any, who are agnates, in order of succession; (c) If no person having, a right of pre emption under clause (a) of clause (b) seeks to exercise it: thirdly, in the owners of he estate;. . " By section 4 of the amending Act (Act 10 of 1960) section 1 5 of the parent Act was repeated and in its place was substituted a new provision which omitted to confer a right of pre emption in the case of persons 'owning land in the estate ' as the original section 15(c) 'thirdly ' had done. Retrospective effect was given to the provision by the insertion of a new section 31 in the. parent Act. The question for consideration was that whether by reason of this amendment in the law the respondent was entitled to the benefit of the decree which he obtained under the previously existing enactment. It was the case of the plaintiff that he owned land in the 'estate ' whereas the vendee did not own land there. The defendant while not disputing that the plaintiff owned land in the village or the correctness of the allegation that the land was in an 'estate ', sought to prove that he too owned land in the same village and 'estate ' but in this he failed. As the case of the plaintiff was directly covered by the terms of the statute his suit was decreed by the trial court on Novber 8, 1951, and an appeal and second appeal therefrom were also dismissed. The question was whether the respondent was entitled to a decree in view of section 31 of the Punjab Pre emption Act 1913 as amended by Punjab Act 10 of 1960 which came into force on February 4, 1960. It was held by this Court that in view of the plain language of section 3 1, the substantive law enacted by the legislature in the amended section 15 of the Pre emption 841 Act should be applied and the decree for pre emption in favour of the first respondent should be set aside. It is manifest that the material facts of the present case are different and the ratio of the decision of this Court in Ram Sarup vs Munshi & Ors. (1) has no application to the present case. In Ram Sarup 's case(1) the right of the plaintiff to pre empt was extinguished retrospectively; in the present case Neki 's right to sue has not been extinguished Neki had the right of pre emption under the Amended Act at the time he, instituted the suit and Neki 's right was not extinguished on his death but passed to his legal representatives. For the reasons expressed above, we hold that these appeals have no merit and must be dismissed with costs. There will be one set of hearing fee. Y.P. (1) ; Appeals dismissed.

By section 4 of the Amending Act (Punj. Act 10 of 1960) section 15 of the Punjab Pre emption Act, 1913 was repealed and in its place was substituted a new provision which omitted to confer a right of pre emption in the case of persons 'owning land in the estate ' as the original section 15(c) 'thirdly ' had done. Retrospective effect was given to the provisions by the insertion of new section 31 in the parent Act. In respect of sales effected after the promulgation of the Amending Act, one N filed suits and obtained decrees for pre emption in all suits against the appellants under section 15(1)(a) of the Punjab Pre emption Act. These decrees were confirmed by the first appellate court. While the second appeals were pending in the High Court, N died, and his legal representatives were brought on record. The High Court dismissed the appeals. In appeals to this Court, it was contended that (i) the statutory right of pre emption under the Punjab Preemption Act, was not a 'heritable right ' and no decree for pre emption should have been passed by the lower court in favour of the legal representatives; and (ii) section 31 of the Act as amended retrospectively by Punjab Act 10 of 1960, stood as a bar to the granting of a decree in favour of substituted legal representatives. HELD : The appeals must be dismissed. (i) The statutory right of pre emption though not amounting to an interest in the land is a right which attaches to the land and which can be enforced against a purchaser by the persons entitled to pre empt. The right of pre emption under section 15(1) (a) of the Punjab Act of 1913 is a personal right in the sense that the claim of the pre emptor depends upon the nature of his relationship with the vendor. But under section 14 of the Act, the pre emptor must be a member of an agricultural tribe in the same group of agricultural tribes, as the vendor and the land of which preemption is sought must be in respect of agricultural land sold to a member of the agricultural tribe. If an involuntary transfer takes place by inheritance the successor to the land takes the whole bundle of the rights which go with the land including the right of pre emption. This view is sup ported by the language of section 306 of the Indian Succession Act and therefore, the claim of N for pre emption did not abate upon his death and his legal representatives were properly brought on 'record of the second appeals under the provisions of 0. 22, r. 1 read with 0. 22, r. 10 of the Code of Civil Procedure. (836 G; 837 B D] Faqir Ali Shah vs Rani Kishan & Ors. 133 P.R. 1907 and Wajid Ali & Ors. vs Shaban & Ors. 1.L.R. 31 All 623, approved. Muhammad Husain vs Niamat un nissa & Ors. I.L.R. 20 All, 88, referred to. 834 (ii) The Amending Act came into. force long before N instituted the present suits. Even the sales of land were effected after the promulgation of the Amending Act. In Ram Sarup 's case, the right of the plaintiff to pre empt was extinguished retrospectively; in the present case N 's right to sue has not been extinguished. N had the right of pre emption under the Amended Act at the time he instituted the suit and N 's right was not extinguished on his death but passed to his legal representatives. [839 G] Ram Sarup vs Munshi & Ors. [196.3] 3 S.C.R. 858, distinguished.

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135 of 1950. Application under article 32 of the Constitution for a writ in the nature of a writ of certiorari and prohibition. Dr. Tek Chand (Hardayal Hardy and Jindra Lal, with him) for the petitioner. M.C. Setalvad, Attorney. General for India, (section M. Sikri, with him) for the respondent. january 12. This is said to be a test case, for, on its decision, we are told, depend the rights of numerous other persons whose interests are similar to those of the petitioner. There is no serious controversy as to the facts material for the purposes of this application. They are shortly as follows: On May 5, 1948, the then Rulers of eight Punjab States including. Patiala and Nabha with the concurrence and guarantee of the Government of India entered into a covenant agreeing to unite and integrate their territories in one State with a common executive, legislature and judiciary by the name of Patiala and East Punjab States Union, hereinaf ter compendiously referred to as the Pepsu. By article III (6) of the covenant the then Ruler of Patiala became the first President or Raj Pramukh of the Council of Rulers and he is to hold the office during his lifetime. Article VI of the covenant is as follows : "(1) The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event not later than the 20th of August, 1948, make over the administration of his State to the Raj Pramukh, and thereupon, (a) all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Govern ment of the Covenanting State shall vest in 130 the Union and shall thereafter be exercisable only as pro vided by this Covenant or by the Constitution to be framed thereunder; (b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the Union, and (d) the military forces, if any, of the Covenanting State shall become the military forces of the Union. " Article X provides for the formation of a Constituent Assembly to frame a constitution of a unitary type for the Union within the framework of the Covenant and the Constitu tion of India. This Constituent Assembly was also to func tion as the interim Legislalature of the Union until an elected legislature came into being. The proviso to clause (2) of that Article runs as follows : "Provided that until a Constitution framed by the Con stituent Assembly comes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinances for the peace and good government of the Union or any part thereof, and any Ordi nance 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 Constituent Assembly;but any such Ordinance may be controlled or superseded by any such Act. " This Union was inaugurated on July 15, 1948, and the Raj Pramukh thereafter took over the administration of the different Covenanting States. The Administration of Nabha State was taken over by the Raj Pramukh on August 20, 1948. On the same day the Raj Pramukh, in exercise of the powers vested in him, promulgated an Ordinance (No. 1 of 2005) called the Patiala and East Punjab States Union (Administra tion) 131 Ordinance, 2005. The following provisions of this Ordi nance are relevant for our purpose: "1. (2) It shall extend to the territories included in the Covenanting States on and from the date on which the administration of any of the said State or States has been or is made over to the Raj Pramukh. * * 3. As soon as the administration of any Covenanting State has been taken over by the Raj Pramukh as aforesaid, all laws, Ordinances, Acts, Rules, Regulations, Notifica tions, Hidayats and Firrnans i Shahi having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the Courts or offices of any such Covenanting State shall, notwithstanding anything contained in this Ordinance or any other Ordinance, be disposed of in accordance with the laws governing such proceedings in force for the time being m any such Covenanting State. " Section 6 provides for the adaptation of the laws etc. enforced under section 3 and, amongst other things, any reference in these laws etc. to the Patiala State and the like was to be construed as a reference to the State of the Union. A notification (No.35 dated 27 5 05/11 9 1948) was issued over the signature of the Revenue Secretary notifying that the Patiala Income tax Act of 2001 and the Rules there under had come into force in the various Covenanting States from August 20, 1948, thereby repealing the law or laws in force in that behalf in those States before that date, except as to pending proceedings. It may be mentioned here that prior to that date there was no law in the Nabha State imposing income tax on the subjects of that State. On November 14, 1948, the Commissioner of Income tax issued a Notification (No. 4, dated 132 29 7 2005) intimating that persons belonging to the Cove nanting States of Nabha and Nalagarh would be assessed to income tax under the Patiala Income Tax Act, 2001. It was mentioned that persons of those States whose income reached the taxable limit ' 'should henceforward keep regular and proper accounts for purposes of audit by the Income Tax Department" on February 2, 1949, Ordinance 1 of 2005 was repealed and replaced by Ordinance No. XVI of 2005 promul gated by the Raj Pramukh and called the Patiala and East Punjab States Union General Provisions (Administration) Ordinance, 2006. Section 3 (1) runs as follows: "3. (1) As from the appointed day, all laws and rules, regulations, bye laws and notifications made thereunder, and all other provisions having the force of law, in Patiala State on the said day shall apply mutatis mutandis to the territories of the Union and all laws in force in the other Covenanting States immediately before that day shall cease to have effect; Provided that all suits, appeals, revisions applica tions, reviews, executions and other proceedings, or any of them, whether Civil or Criminal or Revenue, pending in the Courts and before authorities of any Covenanting States shall, notwithstanding anything contained in this Ordinance, be disposed of in accordance with the laws governing such proceedings in force in any such Covenanting State immedi ately before the appointed day. " By section 2 (a) the "appointed day" was defined as meaning the 5th day of Bhadon, 2005, corresponding to August 20, 1948. There was a section providing for adaptation similar to section 6 of the Ordinance 1 of 2005. There was another Ordinance to which reference has to be made, namely, Ordinance No. 1 of 2006 called the Finance Ordinance promul gated on April 13, 1949, which came into force on that very date. Section 5 of that Ordinance introduced several amend ments to the Patiala Income Tax Act, 2001. It recast 133 sections 3 and 34 of that Act and introduced a new section as section 23B. Section 6 of that Ordinance runs thus: "6. For the assessment year beginning on the 1st day of Baisakh, 2006, that is to say, in respect of the accounting the income, profits and gains of the previous year ending on the last day of Chet, 2005, (a) income tax shall be charged at the rates specified in Part I of the Second Schedule to this Ordinance, and (b) rates of super tax shall, for the purposes of sec tion 55 of the Patiala Income Tax Act, 2001, be specified in Part II of the Second Schedule to this Ordinance. " It is in this setting that the facts leading to the present petition have to be considered. The petitioner is a resident of Ateli in the district of Mohindargarh now in Pepsu but which formerly formed part of the Nabha State. The petitioner has been carrying on his business at Ateli for a number of years under the ' name and style of Raghunath Rai Ram Parshad. He never paid any income tax as no such tax was imposed by any law in the Nabha State. On October '20, 1949, the petitioner was served with a notice under sections 22(2) and 88 of the Patiala Income Tax Act, 2001, requiring him to submit a return for the Income Tax year 2006 (13 4 1949 to 12 4 1950) disclosing his income during the previous year (13 4 1948 to 12 4 1949). The petitioner, on December 4, 1949, filed his return for the year 2006 and on February 14, 1950, he was assessed to income tax. On May 23, 1950, the petitioner received a notice under section 34 calling upon him to file his return for the year ending the last day of Chet 2005, i.e., for the year 13 4 1948 to 12 4 1949. In this return he had to specify his income of the previous year, namely, 2004 (i.e., 13 4 1947 to 12 4 1948). It ap pears that the petitioner along with other assessees of Ateli and Kanina submitted a petition before the Income Tax Officer on July 9, 1950, asking him not to 134 proceed with the assessment for the year 2005 but on July 13, 1950, the Income Tax Officer assessed him to the best of his judgment under section 34(4) read with section 22(4) of the Income Tax Act. The petitioner along with other asses sees similarly situated moved the Income Tax Commissioner and the Central Board of Revenue, New Delhi, but without any success. No formal appeal under the Patiala Income Tax Act appears to have been filed by the petitioner against assess ments for either of the two years 2005 and 2006. On August 10, 1950, the petitioner filed his present petition before this Court under article 32 of the Constitution praying that a writ in the nature of a writ of certiorari be issued for quashing the assessments of the petitioner 's income accrued in the years 2004 and 2005 and other ancillary reliefs. During the pendency of this petition the income tax authori ties have issued a notice under section 46 intimating that penalty will be imposed if the tax was not paid up. The contention of the petitioner in the first place is that he has been denied the fundamental right of equality before the law and the equal protection of the laws guaran teed to him by article 14 of the Constitution. His griev ances are formulated in paragraphs 10 and 11 of his peti tion. It is said that while the people of Kapurthala which is included in Pepsu have been asked to pay income tax for the period prior to August 20, 1948, at the old rate fixed by the Kapurthala Income Tax Act which was lower than the rate fixed by the Patiala Income Tax Act, 2001, the people of Nabha who had not to pay any income tax prior to August 20, 1948, at all have been made liable to pay at the higher Patiala rate and that such discrimination offends against the provisions of article 14. This charge is refuted by paragraph 10 of the affidavit of Sardar Gurbax Singh, the Additional Director of Inspection (income Tax), New Delhi, who was formerly the Commissioner of Income Tax, Punjab and Pepsu, which has been filed in opposition to the present petition. It is there stated that for the assessment year 2005, in Kapurthala the assessees whose cases were pending on 135 August 20, 1948, were assessed under the Kapurthala Income Tax Act at rates fixed thereunder but that for the assess ment year 2006 the provisions of the Patiala Income Tax Act and the rates prescribed thereunder were uniformly applied in all areas of the Pepsu, including Kapurthala This alle gation which is not denied in the affidavit filed by the petitioner in reply must be taken as correct. The assess ment of Kapurthala assessees for the year 2005 at the old Kapurthala rate was obviously made under the proviso to section 3 of Ordinance No. 1 of 2005, which was reproduced in the proviso to section 3(1)of the Ordinance No. XVI of 2006 and both of which required all pending proceedings to be completed according to the law applicable to those pro ceedings when they were initiated. No case of assessment was pending as against any Nabha assessee on August 20, 1948, for there was no Income Tax Act in Nabha prior to that date and, therefore, there could be no occasion for completing any pending proceedings against any of such assessees. In the premises, there can be no grievance by them on the score of discrimination. The discrimination, if any, was not brought about by the two Ordinances, but by the circumstance that there was no Income Tax Act in Nabha and consequently there was no case of assessment pending against any Nabha assessees. In any case the provision that pending proceed ings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceedings commenced is a reasonable law rounded upon a reasonable classification of the assessees which is permis sible under the equal protection clause and to which no exception can be taken. In our opinion the grievance of the alleged infringement of fundamental right under Article 14 is not well founded at all. Dr. Tek Chand appearing in support of the petition next contends that the administration of Nabha State having been taken over by the Raj Pramukh only on August 20, 1948, and the Patiala law including the Patiala Income Tax Act, 2001, having been brought 136 into operation on and from August 20, 1948, the assessment of the tax on the petitioner 's income which accrued prior to August 20, 1948, was wholly illegal and not authorised by the said Ordinances and the State by insisting on collecting the tax so illegally assessed was threatening to invade the petitioner 's fundamental right to property guaranteed by article 31(1) of the Constitution. Article 31(1) runs as follows: "(1) No person shall be deprived of his property save by authority of law. " It will be noticed that clause (1) reproduces subsection (1) of section 299 of the Government of India Act, 1935, without the words "in British India. " Reference has 'next to be made to article 265 which is in Part XII, Chapter I, dealing with "Finance." That article provides that no tax shall be levied or collected except by authority of law. There 'was no similar provision in the corresponding chapter of the Government of India Act, 1935. If collection of taxes amounts to deprivation of property within the meaning of article 31(1), then there was no point in making a sepa rate provision again as has been made in article 265. It, therefore, follows that clause (1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, for otherwise article 265 becomes wholly redundant. In the United States of America the power of taxation is regarded as distinct from the exercise of police power or eminent domain. Our Constitution evidently has also treated taxation as distinct from compulsory acquisition of property and has made inde pendent provision giving protection against taxation save by authority of law. When Dr. Tek Chand was asked if that was not the correct position, he did ,not advance any cogent or convincing answer to refute the conclusion put to him. In our opinion, the protection against imposition and collec tion of taxes save by authority of law directly comes from article 265, and is not secured by clause (1) of article 31. Article 265, 137 not being in Chapter IIi of the Constitution, its protection is not a fundamental right which can be enforced by an application to this court under article 32. It is not our purpose to say that the right secured by article 265 may not be enforced. It may certainly be enforced by adopting proper proceedings. All that we wish to state is that this application in so far as it purports to be rounded on arti cle 32 read with article 31(1) to this Court is misconceived and must fail. The whole of Dr. Tek Chand 's argument was rounded on the basis that protection against imposition and collection of taxes save by authority of law was guaranteed by article 31(1) and his endeavour was to establish that the Pepsu Ordinances could not, in law, and did not, on a correct interpretation of them, impose any income tax retrospective ly; that the Income Tax Officer on an erroneous view of the law had wrongly assessed the tax on income accrued prior to August 20, 1948, and that consequently the petitioner was being threatened with deprivation of property otherwise than by authority of law. In the view we have taken, namely, that the protection against imposition or collection of taxes save by authority of law is secured by article 265 and not by article 31(1), the questions urged by Dr. Tek Chand do not really arise and it is not necessary to express any opinion on them on this application. Those questions can only arise in appropriate proceedings and not on an applica tion under article 32. In our judgment this application fails on the simple ground that no fundamental right of the petitioner has been infringed either under article 14 or under article 31(1) and we accordingly dismiss the petition with costs. Petition dismissed.

Section 3 (1) of the Patiala and East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2005) which came into force on February 2, 1949, and re enacted section 3 of an earlier Ordinance which was in force from August 20, 1948, provided that as from the appointed day (i.e., August 20, 1948) all laws in force in the Patiala State shall apply muutatis mutandis to 17 128 the territories of the said Union, provided that all pro ceedings pending before courts and other authorities of any of the Covenanting States shall be disposed of in accordance with the laws governing such proeeedings in force in such Covenanting State immediately before August 20, 1948. In one of the Covenanting States, viz., Kapurthala, there was a law of income tax in force on the said date, the rate of tax payable under which was lower than that payable under the Patiala Income tax Act, and in another Covenanting State, Nabha, there was no law of income tax at all. For the ac counting year ending April 12, 1948, assessees of Kapurthala State were assessed at the lower rates fixed by the Kapur thala Income tax Act, in accordance with the proviso in section 3 of the Ordinance relating to pending proceedings, and the assessees of Nabha were assessed at the higher rates fixed by the Patiala Act as there was no income tax law in Nabha on August 20, 1948, and no income tax proceedings were therefore pending in Nabha. The petitioner who was an asses see residing in Nabha and who was assessed under the Patiala Act applied under article 32 of the Constitution for a writ in the nature of a writ of certiorari quashing the assessment on the ground (i) that he had been denied the fundamental right of equality before the law and equal protection of the laws guaranteed by article 14 of the Constitution inasmuch as he was assessed at a higher rate than that at which asses sees of Kapurthala were assessed, (ii) that, as the Ordi nance bringing the Patiala Income tax Act into force in Nabha was enacted only on August 20, 1948, it cannot operate retrospectively and authorise the levy of tax on income which had accrued in the year ending April 12, 1948, and therefore he was threatened with infringement of the funda mental right guaranteed by article 31 (1) of the Constitution that no one shall be deprived of his property save under authority of law: Held, (i) that the discrimination, if any, between the assessees of Kapurthala and Nabha was not brought about by the Ordinance but by the circumstance that there was no income tax law in Nabha and consequently there was no case of assessment pending against any Nabha assessees; and in any case the provision that pending proceedings should be concluded according to the applicable at the time when the right is or liabilities accrued and the proceedings com menced, was a reasonable law rounded upon reasonable classi fication of the assessees which is permissible under the equal protection clause; (ii) that, as there is a special provision in article 965 of the Constitution that no tax shall be levied or collected except by authority of law, cl. (1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, and inasmuch as the right conferred by article 265 not a right conferred by Part III of the Constitution, it could not be enforced under article 129

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Appeal No. 322 of 1965. Appeal from the judgment and decree dated December 5, 1960 of the Mysore High Court in Regular Appeal No. 81 of 1956. A. K. Sen and R. Gopalakrishnan, for the appellants. H. R. Gokhale, K. R. Chaudhuri and K. Rajendra Chaudhri for respondent No. 1. The Judgment of the Court was delivered by Ramaswami, J. This, appeal is brought by certificate from the judgment of the Mysore High Court dated December 5, 1960 in R. A. No. 81 of 1956. 120 The appellants and respondent No. 4 are the daughters and legal representatives of Savoy Ranganna who was the plaintiff in O.S. 34 of 1950 51 instituted in the court of the District Judge, Mysore. The suit was filed by the deceased plaintiff for partition of his share in the properties mentioned in the schedule to the plaint and for granting him separate possession of the same. Respondent No., 1 is the brother 's son of the Plaintiff. The rela tionship of the parties would appear from the following pedigree: Savoy Ranganna (Sr) Rangamma Savoy Ranganna Chikka Ranganna (Died 45 Alamma (plaintiff) (Died in 1947 years ago (Deft. 2) Dodda Rangamma M. section R. Ranganna, 3 (Deft. 2 (a) (Deft. 1) Lakkamma Kenchanna (suppl, (D. W. 10) Def). Chikka Rangamma PuttaRangamma Rangathayamma Chinnathayyamma (Deft. 3) (1st L. R. of (2nd L. R. of (3rd I R. Of plaintiff) plaintiff) plaintiff) The case of the plaintiff was that he and the defendants lived together as members of a Joint Hindu family till January 7, 1951, Plaintiff being the karta. The plaintiff had no male issue but had only four daughters, Chikka Rangamma, Putta Rangamma, Rangathayamma and Chinnathayamma. The first 2 daughters were widows. The fourth daughter Chinnathayamma was living with her husband. Except Chinnathayamma, the other daughters with their families had been living with the joint family. The plaintiff became ill and entered 'Sharda Nursing Home for treatment as an in patient on January 4, 1951. In order to safeguard the interests of his daughters the plaintiff, Savoy Ranganna issued a notice on January 8, 1951 to the defendants declaring his unequivocal intention to separate from them. After the notices were registered at the post office certain well wishers of the family intervened and wanted to bring about a settlement. On their advice and request the plaintiff notified to the post office that he intended to withdraw the registered notices. But as no agreement could be subsequently reached between 'the parties the plaintiff.instituted the present suit on January 13 The 951 'for partition 'of his share of the joint family properties. The suit was contested mainly by 121 respondent No. 1 who alleged that there was. no separation of status either because of the notice of January 8, 1951 or because of the institution of the, suit on January 13, 1951. The case (if respondent No. 1 was that Savoy Ranganna was 85 years of age and in a weak state of health and was not in a position to understand the contents of the plaint or to affix his signature or thumb impression thereon as well as on the Vakalatnama. As regards the notice of January 8,1951, respondent No. 1 asserted that there was no communication of any such notice to him and, in any case, the notices were withdrawn by Savoy Ranganna unconditionally from the post office. It was therefore contended that there was no disruption of the joint family at the time of the death of Savoy Ranganna and the appellants were not entitled to a decree for partition as legal representatives of Savoy Ranganna. Upon the examination of the evidence adduced in the case the trial court held that Savoy Ranganna had properly affixed his thumb impression on the plaint and the Vakalatnama and the presentation of the plaint was valid. The trial court found that Savoy Ranganna was not dead by the time the plaint was presented. On the question whether Savoy Ranganna was separate in status the trial court held that the notices dated January 8, 1951 were a clear and unequivocal declaration of the intention of Savoy Ranganna to become divided in status and there was sufficient communication of that intention to respondent No. 1 and other members of the family. The trial court was also of the opinion that at the time of the issue of the notices dated January 8, 1951 and at the time of execution of the plaint and the Vakalatnama dated January 13, 1951 Savoy Ranganna was in a sound state of mind and conscious of the consequences of the action he 'Was taking. The trial court accordingly granted a decree in favour of the appellants. Respondent no took the matter in appeal to the Mysore High Court which by its judgment dated December 5, 1960 reversed the decree of the trial court and allowed the appeal. Hegde, J. one of the members of the Bench held that the suit could not be said to have been instituted by Savoy Ranganna as it was not proved that Savoy Ranganna executed the plaint. As regards the validity of the notice exhibit A, and as to whether it caused any disruption in the, joint family status, Hegde, J. did not think it necessary to express any opinion. The other member of the Bench, Mir. lqbal Husain, J., held that the joint family of which the deceased Savoy Ranganna was a member had not been disrupted by the issue of the notice dated January 8, 1951. The view taken by Mir lqbal Husain, J. was that there was no proof that the notice was communicated either to respondent No. 1 or other members of the family and, in any event, the notice had been withdrawn by Savoy Ranganna and so there was no severance of joint status from the date of the notice. L4Sup. C.1/68 9 122 The first question to be considered in this appeal is whether Savoy Ranganna died as a divided member of the joint family as alleged in the plaint. It is admitted that Savoy Ranganna was very old, about 85 years of age and was ailing of chronic diarrhoea. He was living in the family house till January 4, 1951 when he was removed to the Sharda Nursing Home where he died on January 13, 1951 at 3 p.m According to the case of respondent No. 1 Savoy Ranganna had a paralytic stroke in 1950 and was completely bed ridden thereafter and his eyesight was bad for 5 to 6 years prior to his death. It was alleged in the written statement that Savoy Ranganna was unconscious for some days prior to his death. The case of respondent No. 1 on this point is dis proved by the evidence of D.W. 6, Dr. Venkata Rao who was in charge of the Sharda Nursing Home on the material dates. This witness admitted that the complaint of Savoy Ranganna was that he was suffering from chronic diarrhoea for over five months. He was anaemic but he was not suffering from any attack of paralysis. As regards the condition of Savoy Ranganna on January 8, 1951, the evidence of P.W. 1, Dr. Subbaramiah is important. This witness is the owner of the Sharda Nursing Home and he has testified that the notice exhibit A was read over to Savoy Ranganna and after getting it read the latter affixed his thumb mark thereon. The witness asked Savoy Ranganna whether he was able to understand the contents of the notice and the latter replied in the affirmative. The witness has certified on the notice, exhibit A 1 that Savoy Ranganna was conscious when he affixed his left thumb mark, to the notice in his presence. No reason was suggested on behalf of the respondents why the evidence of this witness should be disbelieved. The trial court was highly impressed by the evidence of this witness and we see no reason for taking a different view. The case of the appellants is that respondent No. 1 had knowledge of the notice, exhibit A because he was present in the Nursing Home on January 8, 1951 and he tried to snatch away the notice from the hands of P.W. 1 but he was prevented from. so doing. P.W. 5, Chinnanna stated in the course of the evidence that after P.W. 1 had signed the certificate in all the three copies, respondent No. 1 and one Halappa came to the ward and tried to snatch away the notices. The first respondent tried to snatch away the copy exhibit A 1 that was in the hands of Dr. Subbaramiah and attempted to tear it. Dr. Subbaramiah somehow prevented respondent No. 1 from taking away exhibit A and handed it over to P.W. 5. The evidence of P.W. 5 with regard to the "snatching incident" is corroborated by Dr. Subbaramiah who stated that after Savoy Ranganna had executed the notices and he had signed the certificates, one or two persons came and tried to snatch the document. P.W. 1 is unable to identify the first respondent as one of the persons who had taken part in the "snatching incident". The circumstance that P.W. 1 was unable to identify respondent No. 1 123 is not very material, because the incident took place about three years before he gave evidence in the court, but his evidence with regard to the "snatching incident ' strongly corroborates the allegation of P.W. 5 that it was respondent No. 1 who bad come into the Nursing Home and attempted to snatch the notice. There is also another circumstance which supports the case of the appellants that respondent No. 1 had knowledge of the contents of exhibit A and of the unequivocal intention of Savoy Ranganna to become divided in status from the joint family. According to P.W. 5 res pondent No. 1 and his wife and mother visited Savoy Ranganna in the Nursing Home later on and pressed him to withdraw the notices promising that the matter will be amicably settled. Sowcar T. Thammanna also intervened on their behalf. Thereafter the deceased plaintiff instructed his grandson P.W. 5 to withdraw the notice. Accordingly P.W. 5 prepared two applications for the withdrawal and presented them to the postal authorities. The notice, exhibit A meant for the first respondent and exhibit E meant for the original second defendant were withheld by the postal autho rities. These notices were produced in court by the postal authorities during the hearing of the case. In our opinion, the evidence of P.W. 5 must be accepted as true, because it is corroborated by the circumstance that the two notices, Exs. A and E were intercepted in the post office and did not reach their destination. This circumstance also indicates that though there was no formal. communication of the notice, exhibit A to the first respondent, he had sufficient knowledge of the contents of that notice and was fully aware of the clear and unequivocal intention of Savoy Ranganna to become separate from other members of the joint family. It is now a settled doctrine of Hindu Law that a member of a joint Hindu family can being about his separation in status by a definite, unequivocal and unilateral declaration of his intention to separate himself from the family and enjoy his share in severalty. It is not necessary that there should be an agreement between all the coparceners for the disruption of the joint status. It is immaterial in such a case whether the other coparceners give their assent to the separation or not. The jural basis of this doctrine has been expounded by the early writers of Hindu Law. The relevant portion of the commentary of Vijnaneswara states as follows [And thus though the mother is having her menstrual courses (has not lost the capacity to bear children) and the father has attachment and does not desire a partition, yet by the will (or desire) of the son a partition of the grandfather 's wealth does take place]" 124 Saraswathi Vilasa, placitum 28 states [From this it is known that without any speech (or explanation) even by means of a determination (or resolution) only, partition is effected, just an appointed daughter is constituted by mere intention without speech.]" Viramitrodaya of Mitra Misra (Ch. 11. 23) is to the following effect: [Here too there is no distinction between a partition during the lifetime of the father or after his death and partition at the desire of the sons may take place or even by the desire (or at the will) of a single (coparcener)]. " Vyavahara Mayukha of Nilakantabhatta also states [Even in the absence of any common (joint family) property, severance does indeed result by the mere declaration 'I am separate from thee ' because severance is a. particular state (or condition) of the mind and the declaration is merely a manifestation of this mental state (or condition).]" (Ch. IV, section iii I). Emphasis is laid on the "budhi visesha" (particular state or condition of the mind) as the decisive factor in producing a severance in status and the declaration is stated to be merely "abhivyanjika" or manifestation which might vary according to circumstances. In Suraj Narain vs Iqbal Narain(1) the Judicial Committee made the following categorical statement of the legal position : "A definite and unambiguous indication by one member of intention to separate himself and to enjoy his share in severalty may amount to separation. But to have that effect the intention must be unequivocal and clearly expressed. . Suraj Narain alleged that he separated a few months later; there is, however, no (1) I.L.R. 35 All. 80. (P.C.) 125 .lm15 writing in support of his allegation, nothing to show that at that time he gave expression to an unambiguous intention on his part to cut himself off from the joint undivided family. " In a later case Girja Bai vs Sadashiv Dhundiraj(1) the Judicial Committee examined the relevant texts of Hindu Law and referred to the well marked distinction that exists in Hindu law between a severance in status so far as the separating member is concerned and a de facto division into specific shares of the property held until then jointly, and laid down the law as follows : "One is a matter of individual decision, the desire on the part of any one member to sever himself from the joint family and to enjoy his hitherto undefined or unspecified share separately from the others without being subject to the obligations which arise from the joint status; whilst the other is the natural resultant from his decision, the division. and separation of his share which may be arrived at either by private agreement among the parties, or on failure of that, by the intervention of the Court. Once the decision has been unequivocally expressed and clearly intimated to his co sharers, his right to his right to have his share allocated separately from has a title is unimpeachable; neither the co sharers can question it nor can the Court examine his conscience to find out whether his reasons for separation were well founded or sufficient; the Court has s imply to give effect to his right to have his share allocated separately from the others. In Syed Kasam vs Jorawar Singh (2), Viscount Cave, in delivering the judgment of the Judicial Committee, observed "It is settled law that in the case of a joint Hindu family subject to the law of the Mitakshara, a severance of estate is effected by an unequivocal declaration on the part of one of the joint holders of his intention to hold his share separately, even though no actual division takes place : and the commencement of a suit for partition has been held to be sufficient.to _effect a severance in interest even before decree." These authorities were quoted with approval by this Court in Addagada Raghavamma vs Addagada Chenchamma(3), and it was held that a member of a joint Hindu family seeking to separate himself from others will have to make known his intention to other members of his family from whom he seeks to separate. The (1) I.L.R. (2) I.L.R. (3) ; 126 correct legal position therefore is that in a case of a joint Hindu family subject to Mitakshara law, severance of status is effected by an unequivocal declaration on the part of one of the jointholders of his intention to hold the share separately. It is, how.ever, necessary that the member of the joint Hindu family seeking to separate himself must make known his intention to other member of the family from whom he seeks to separate. The process of communication may, however, vary in the circumstances of each particular case. It is not necessary that there ' should be a formal despatch to or receipt. by other members Of the family of the communication announcing the intention to divide on the part of one member of the joint family. The proof of such a despatch or receipt of the communication is not essential, nor its absence fatal to the severance of the status. It is, of course, necessary that the declaration to be effective should reach the person or persons affected by some process appropriate to the given situation and circumstances of the particular case. Applying this principle to the facts found in the present case, we are of opinion that there was a definite and unequivocal declaration of his intention to separate on the part of Savoy Ranganna and that intention was conveyed to respondent No. 1 and other members of the joint family and respondent No. 1 had full knowledge of the intention of Savoy Ranganna. It follows therefore that there was a division of status of Savoy Ranganna from the joint Hindu family with effect from January 8, 1951 which was the date of the notice. It was, however, maintained on behalf of the respondents that on January 10, 1951 Savoy Ranganna had decided to withdraw the two notices, Exs. A & E and he instructed the postal authorities not to forward the notices to respondent No. 1 and other members of the joint family. It was contended that there could be no severance of the joint family after Savoy Ranganna had decided to withdraw the notices. In our opinion, there is no warrant for this argument. As we have already stated, there was a unilateral declaration of an intention by Savoy Ranganna to divide from the joint family and there was sufficient communication of this intention to the other coparceners and therefore in law there was in consequence a disruption or division of the status of the joint family with effect from January 8, 1951. When once a communication of the intention is made which has resulted in the severance of the joint family status it was not thereafter open to Savoy Ranganna to nullify its effect so as to restore the family to its original joint status. If the intention of Savoy Ranganna had stood alone without giving rise to any legal effect, it could, of course, be withdrawn by Savoy Ranganna, but having communicated the intention, the divided status of the Hindu joint family had already come into existence and the legal consequences had taken effect. It was not, therefore, possible for Savoy Ranganna to get back 127 to the old position by mere revocation of the intention. It is, of course, possible for the members of the family by a subsequent agreement to reunite, but the mere withdrawal of the unilateral declaration of the intention to separate which already had resulted in the division in status cannot amount to an agreement to reunite. It should also be stated that the question whether there was a subsequent agreement between the members to reunite is a question of fact to be proved as such. In the present case, there is no allegation in the written statement nor is there any evidence on the part of the respondents that there was any such agreement to reunite after January.8, 1951. The view that we have expressed is borne out by the decision of the Madras High Court in Kurapati Radhakrishna vs Kurapati Satyanarayana(1) in which there was a suit for declaration that the sales in respect of certain family properties did not bind the plaintiff and for partition of his share and possession thereof and the plaint referred to an earlier suit. for partition instituted by the 2nd defendant in the later suit. It was alleged in that suit that 'the plaintiff being unwilling to remain with the defendants has decided to become divided and he has filed this suit for separation of his one fifth share in the assets remaining after discharging the family debts separated and for recovery of possession of the same '. All the defendants in that suit were served with the summons and on the death of the 1st defendant therein after the settlement of issues, the plaintiff in that action made the following endorsement on the plaint : "As the 1st defendant has died and as the plaintiff had to manage the family, the plaintiff hereby revokes the intention to divide expressed in the plaint and agreeing to remain as a joint family member, he withdraws the suit. ' It was held by the Madras High Court that a division in status had already been brought about by the plaint in the suit and it was not open to the plaintiff to revoke or withdraw the unambiguous intention to separate contained in the plaint so as to restore the joint status and as such the members should be treated as divided members for the purpose of working Out their respective rights. We proceed, to consider the next question arising in this appeal whether the plaint filed on January 13, 1951 was validly executed by Savoy Ranganna and whether he had affixed his thumb impression thereon after understanding its contents. The case of the appellants is that Sri M. section Ranganathan prepared the plaint and had gone to the Sharda Nursing Home at about 9 30 or 10 a.m. on January 13, 1951. Sri Ranganathan wrote out the plaint which was in English and translated it to Savoy Ranganna who approved the same. P.W. 2, the clerk of Sri Ranganathan has deposed to this effect. He took the ink pad and affixed the left thumb impression of Savoy Ranganna on the plaint and also on the Vakalatnama. There is the attestation of Sri M. section Ranganathan on the (1) (1948)2M.L.J.331. 128 plaint and on the Vakalatnama. The papers were handed over to P.W. 2 who after purchasing the necessary court fee stamps filed the plaint and the Vakalatnama in the court at about 11.30, a.m. or 12 noon on the same day. The evidence of P.W. 2 is corroborated by P.W. 5 Chinnanna. Counsel on behalf of the respondents. , however, criticised the evidence of P.W. 2 on the ground that the doctor, D.W. 6 had said that the mental condition of the patient was bad and he was not able to understand things when he examined him on the morning of January 13, 1951. D.W. 6 deposed that he examined Savoy Ranganna during his usual rounds on January 13, 1951 between 8 and 9 a.m. and found "his pulse imperceptible and the sounds of the heart feeble". On the question as to whether Savoy Ranganna was sufficiently conscious to execute the plaint and the Vakalatnama, the trial court has accepted the evidence of P.W. 2, Keshavaiah in preference to that of D.W. 6. We see no reason for differing from the estimate of the trial court with regard to the evidence of P.W. 2. The trial court has pointed out that it is difficult to accept the evidence of D.W 6 that Savoy Ranganna was not conscious on the morning of January 13, 1951. In cross examination D.W. 6 admitted that on the night of January 12, 1951 Savoy Ranganna was conscious. He further admitted that on January 13, 1951 he prescribed the same medicines to Savoy Ranganna as he had prescribed on January 12, 1951. There is no note of the necessary data in the case sheet, exhibit I to suggest that Savoy Ranganna was not conscious an January 13, 1951. It is therefore not unreasonable assume that the condition of Savoy Ranganna was the same on January 13 ', 1951 as on January 12, 1951 and there was no perceptible change noticeable in his condition between the two dates. In these circumstances it is not possible to accept the evidence of D.W. 6 that Savoy Ranganna was unconscious on the morning of January 13, 1951. It was pointed out on behalf of the respondents that D.W. 7, Miss Arnold has also given evidence that the condition of Savoy Ranganna became worse day by day and on the last day his condition was very bad and he could not understand much, nor could he respond to her calls. The trial court was not. impressed with the evidence of this witness. In our opinion, her evidence suffers from the same infirmity as of D.W. 6, because the case sheet, exhibit I does not corroborate her evidence. It is also difficult to believe that D.W. 7 could remember the details of Savoy Ranganna 'section case after a lapse of three years without the help of any written case sheet There is also an important discrepancy in the evidence of D.W. 7. She said that on January 13, 1951 she called D.W. 6 at 12 noon since the condition of the patient was very bad, but D.W. 6 has said that he did not visit Savoy Ranganna after 8 or 9 a.m. on that date. Comment was made by Counsel on behalf of the respondents that Sri Ranganathan was not examined as a witness to prove that he had prepared 129 the plaint and Savoy Ranganna had affixed his thumb impression in his presence. In our opinion, the omission of Sri Ranganathan to give evidence in this case is unfortunate. It would have been proper conduct on his. part if he had returned the brief of the appellants and given evidence in the case as to the execution of the plaint and the Vakalatnama. But in spite of this circumstance we consider that the, evidence of the appellants or, this aspect of the case must be accepted as true. It is necessary to notice that the plaint and the Vakalatnama are both counter signed by Sri Ranganathan a responsible Advocate and it is not likely that he would subscribe his signatures to these documents if they had been executed by a person who was unable to understand the contents thereof. As we have already said, it is unfortunate that the Advocate Sri Ranganathan has not been examined as a witness, but in spite of this omission we are satisfied that the evidence adduced in the case has established that Savoy Ranganna validly executed the plaint and the Vakalatnama and that he was conscious and was in full possession of his mental faculties at the time of the execution of these two documents. It follows therefore that the, appellants and respondent No. 4 who are the daughters and legal representatives of Savoy Ranganna are entitled to a decree in the terms granted by the District Judge of Mysore. For the reasons expressed, we hold that this appeal should be allowed, the judgment of the Mysore High Court dated December5, 1960 in R.A. No. 81 of 1956 should be set aside and that of ' the District Judge, Mysore dated October 31, 1955 in O.S. No. 34 of 1950 51 should be restored. The appeal is accordingly allowed with costs. V.P.S. Appeal allowed.

The karta of a joint Hindu family fell ill. He had no male issue arid in order to safeguard the interests of the appellant and fourth respondent, who were his daughters, he issued registered notices to the other members of the joint family declaring his unequivocal intention to separate from them. Later, he decided to withdraw the notices and instructed the postal authorities not to forward them, but, the unequivocal declaration of his intention to separate was conveyed to the other members, of the joint family and they had full knowledge of such intention. A few days thereafter he instituted a suit for partition and possession of his share of the Property. The plaint was prepared by a responsible advocate, who explained the contents to the plaintiff (the karta), who was conscious and in full possession of his mental faculties, had his thumb impression affixed on the plaint and Vakalatnama, signed them both and had them filed in court. After the suit was filed on the same day, the plaintiff died. The trial court decreed (the suit, but the High Court, in appeal, reversed the decree. In appeal to this Court, HELD: The mere withdrawal of the Plaintiffs unilateral declaration of intention to separate, which already had resulted in his division in status because of the communication of the intention to the other members, did not nullify its effect so as to restore the family to its original joint status, or amount to an agreement to reunite; and (the appellant and the fourth respondent, as the legal representatives of the plaintiff, were entitled to the decree. [126 G H; 127 A B; 129 D] Radhakrishna vs Satyanarayana, , approved.

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Appeal Nos. 2523 and 2524 of 1966. Appeals from the judgment and order dated October 26, 1964 of the Gujarat High Court in Expenditure Tax Reference No. 1 of 1963. B.Sen, R. N. Sachthey and section P. Nayar, for the appellant (in both the appeals). S.T. Desai and I. N. Shroff, for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, J. One Surendra had by his wife Rameshchandrika (who died in 1947) three children Darshan, Ranna and Rajeshri. By his second wife Pratima he had two sons and one daughter. Surendra, his wife Pratima and his children formed a Hindu undivided family. Surendra executed three deeds settling certain assets belonging to the Hindu undivided family in favour of his children Darshan, Ranna and Rajeshri, and appointed trustees to manage the assets and to collect the income arising therefrom. The three children also owned some property which they had inherited from their mother. Separate books of account were maintained in respect of the two sets of properties and of income received therefrom. Surendra was also possessed of separate property. Expenditure for the education of the three children was, it appears, defrayed out of the income received from the trust estates. In a proceeding for assessment of tax under the Expenditure tax Act, 1957, of the Hindu undivided family for the assessment year 1958 59 the Expenditure Tax Officer brought to tax Rs. 20,508/ being the aggregate of the following heads of expenditure less the basic allowance of Rs. 30,000/ : Rs. 11,504/ Expenditure of the Hindu undivided family; Rs. 10,321/ Expenditure for the minors out of the separate properties; Rs. 28,683/ Expenditure incurred by Surendra out of his separate property. The order of the Tax Officer was confirmed by the Appellate Assistant Commissioner and the Appellate Tribunal. The Tribunal referred to the High Court of Gujarat under section 25(1) of the Act, three questions, out of which only two survive for consideration: "1. Whether on the facts of the case,, in computing the taxable expenditure of the assessee H.P.F. the sum 592 of Rs. 28,683/ being the expenditure incurred by Shri Surendra, the Karta of the H.U.F. out of his own self acquired and separate property was includible in law ? 2. Whether on the facts of the case in computing the taxable expenditure of the assessee H.U.F. the sum of Rs. 10,321/ being the amount spent by the trustees was includible in law?" The High Court answered the two questions in favour of the assessee. Appeal No. 2523 of 1966 arises out of that order. The relevant provisions of the Act may be briefly noticed. Clause (c) of section 2 defines an "assessee" as meaning "an individual or a Hindu undivided family by whom expenditure tax or any other sum of money is payable under this Act, and includes every individual or Hindu undivided family against whom any proceeding under this Act has been taken for the assessment of his expenditure". Section 2(g) defines "dependent" as meaning "(i) where the assessee is an individual, his or, her spouse or child wholly or mainly dependent on the assessee for support and maintenance; (ii) where the assessee is a Hindu undivided family (a) every coparcerner other than the karta; and (b) any other member of the family who under any law or order or decree of a court, is entitled to maintenance from the joint family property". Section 2(h) defines "expenditure" as meaning "any sum in money or money 's worth, spent or disbursed or for the spending or disbursing of which a liability has been incurred by an assessee, and includes any amount which under the provisions of this Act is required to be included in the taxable expenditure". Section 3 which imposes the charge of expenditure tax provides "Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April, 1958, a tax (hereinafter referred to as expenditure tax) at the rate or rates specified in the Schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year: Provided Section 4 deals with the amount to be included in the taxable expenditure. The section as applicable to the year of assessment 1958 59 read as follows "Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely 593 (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependents which, but for the expenditure having been incurred by that other person, would have been incurred by the assessee, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000/ in any year; (ii) any expenditure incurred by any dependants of the assessee for the benefit of the assessee or of any of his dependants out of any gift, donation or settlement on trust or out of any other source made or created by the assessee, whether directly or indirectly. Explanation. Section 5 sets out certain exemptions and section 6 sets out certain deductions in the computation of taxable expenditure. In computing the taxable expenditure of an assessee under the Act, the expenditure actually incurred by an assessee is increased by certain specific items of expenditure incurred by persons other than the assessee, and reduced by the amounts exempted under section 5 or permitted to be deducted under section 6 of the Act. The dispute in the appeal relates to the inclusion of the expenditure incurred by Surendra out of his separate estate, and the expenditure incurred out of the estate beneficially vested in his children under the deeds of trust. The Tax Officer brought to tax the first item under section 4 (i) read with cl. (ii) (b) of section 2 (g), and the second item under section 4(ii) of the Act. The Appellate Assistant Commissioner and the Tribunal were of the view that both the items were chargeable to tax under section 4 (i) of the Act. The High Court held that the two items were not chargeable to tax. Counsel for the Revenue contended that a karta in a Hindu undivided family is a "dependant", and any expenditure incurred by the karta even out of his separate estate for his own needs or pleasures is expenditure incurred by a person other than the assessee for the personal requirement of a dependant, and is liable to be included in the taxable expenditure of the Hindu undivided family under section 4(i) of the Act. In the definition of the expression "Dependant" in section 2(g) (ii)(b) the expression "other member of the family" does not include a coparcener: it means wives and unmarried daughters of coparceners and widows in the family. A karta of a Hindu family being expressly excluded from cl. (a), he is not within 2Sup. CI/68 8 594 the meaning of cl. (b) "other member of the family". To in clude him in the expression "other member of the family" would make the exclusion of the karta in cl. (a) meaningless. A karta of a Hindu undivided family is therefore not a "dependant" within the meaning of section 2(g) (ii) of the Act. Under the Act a Hindu undivided family is a taxable entity distinct from its coparceners and other members. A coparcener or other member of a Hindu undivided family is for purposes of assessment of the family to expenditure tax a person other than the assessee. Expenditure incurred out of the family estate, by the karta for and on behalf of the family is undoubtedly expenditure by the Hindu undivided family and taxable accordingly. Expenditure incurred by a coparcener or other member of the family out of his separate property is liable to be included in the taxable expenditure of the family, only if it is incurred in respect of the obligations of the family, or for the personal requirements of the coparceners or other members of the family, which if not incurred would have been incurred by the family. But every item of expenditure incurred by a corparcener or other member of the .Hindu undivided family for his own purposes out of his separate property is not expenditure in respect of an obligation of the Hindu undivided family; nor is it expenditure to meet the personal requirements of the coparceners or other members of the family. For an item to be included under section 4(i) within the taxable expenditure of a Hindu undivided family, it must be incurred for the collective obligation of the family, or for the separate personal requirements of the coparceners or other members of the family in their capacity as members of the family The karta of a Hindu undivided family assessed to tax under the Expenditure tax Act is by the express words of section 2(g)(ii)(b). not a dependant, and when expenditure is incurred by a karta out of his separate estate for his own purposes, even though the family would have been liable to meet that expenditure if the expenditure were not incurred, the expenditure will, prima facie, not be liable to be included in the taxable expenditure of the family. Counsel for the Revenue contended that the Parliament could not have intended, in the computation of the taxable expenditure of a Hindu undivided family, to exclude the expenditure for the personal requirement of the karta, when expenditure for the personal requirement of other coparceners and members of the family is liable to be included. He submitted that the distinction between expenditure for personal requirement of the karta and ,of other coparceners of the family, from property not belonging to the family is based on no rational principle, and on that account the definition of dependant in section 2(g) must be held 595 inapplicable in the interpretation of the Act. Undoubtedly the definitions in section 2 of words and expressions used in the Act apply unless the context otherwise requires, and if the context in section 4 requires that the expression " dependant" should not be given the meaning which is assigned thereto by the definition in cl. (g) of section 2, the Court would be justified in discarding that definition. It is a settled rule of interpretation that in arriving at the true meaning which is assigned thereto by the definition in cl. (g) of to be viewed isolated from its context; it must be viewed in its whole context, the title, the preamble and all the other enacting parts of the statute. It follows therefrom that all statutory definitions must be read subject to the qualifications expressed in the definition clauses which create them, such as "unless the context otherwise requires"; or "unless a contrary intention appears"; or "if not inconsistent with the context or subject matter". But there is nothing in the scheme of the Act which suggests that the expression "dependant" in section 4(i) of the Act was used in a different sense. Section 4(i) is intended to include expenditure incurred directly or indirectly by a person other than the assessee for discharging any obligation or for personal requirement of the assessee or dependant of the assessee. The clause applies in the computation of the expenditure of an individual as well as a Hindu undivided family. It is not claimed that the definition in section 2 (g) (i) does not apply to the computation of the taxable expenditure under section 4 of an individual assessee : it is only contended that a part of the definition in section 2 (g) (ii) does not apply to the interpretation of section 4 (i). When a karta of a Hindu undivided family incurs expenditure out of the joint family property to discharge an obligation of the family the expenditure is clearly by the Hindu undivided family, for in that case the karta must be deemed to be acting in incurring the expenditure for and on behalf of the Hindu undivided family. When the karta incurs expenditure for the coparceners or other members out of his separate estate and for that expenditure the family would have been liable if it had not been incurred, the expenditure will be included in the taxable expenditure of the family. But when the expenditure is incurred by the karta out of his separate estate for his personal requirements it will not be included even if the family would have been liable to incur that expenditure if it had not been incurred. This may apparent ly be anomalous. But that is not a ground for attributing to the expression "dependent" a wholly artificial meaning different from its statutory definition. No coparcener in a Hindu undivided family is a dependant of the family: he is an owner of the entire property of the family in common with the other coparceners. His rights arise on birth into the family, and so long as the family remains joint, his interest in the property is no whit less than the interest of any other coparcener. 596 The Parliament in devising a special definition of the expression "dependant" has included therein all coparceners except the karta. If it be that the definition given in section 2 (g) is not to apply in interpreting section 4 of the Act, expenditure incurred for the personal requirements of all the coparceners would have to be excluded. But that is not the contention of the revenue. No rule of interpretation permits for the purpose of section 4(i) of the Act the application of the statutory definition of "dependant" to bring within the net of taxation, expenditure incurred for coparceners other than the karta, and of a special meaning of that expression inconsistent alike with the personal law of the parties, and the statutory definition to bring within the net the expenditure for the karta. The Court cannot attribute two different meanings to a single expression in its application to two different situations contemplated by a single clause. The case is one clearly of defective draftsmanship. In sections 5 & 6 wherever it was thought necessary, having regard to the special relation between members of a Hindu undivided family, the Parliament has restricted the use of the expression "dependant" to individual assessees, and has used different phraseology in defining exclusions and deductions in computing the taxable expenditure of assessees : see section 5 (r); section 6(c)(ii); section 6(f)(ii); section 6(g) and section 6(h). In section 4, however, the Parliament has in seeking to attain undue brevity failed to make provision for inclusion in computing the ,taxable expenditure of a Hindu undivided family expenditure incurred by the karta out of his separate estate, which expenditure would have been incurred by the family if it was not incurred by the karta. Expenditure incurred by Surendra out of his separate pro perty cannot therefore be taken into account in computing the taxable expenditure of the Hindu undivided family, in the absence of a finding that expenditure was incurred either for the obligation of the family, or for the personal requirements of the other coparceners or members of the family, which would have been incurred by the family if it had not been incurred by Surendra. The amount of Rs. 10,321/ consists of two components expenditure incurred out of the trust estate of the children of Surendra, and out of their personal estate. It is not clear from the finding recorded by the Tribunal whether the expenditure was incur red by the children of Surendra from the income received from the trust estate, or whether it was incurred on behalf of the children by the trustees. Clause 2(b) which is common to all the three deeds of trust provides that the trustees shall ,,pay, spend or apply the residue of the trust income to and after the beneficiary until the beneficiary attain the age of twenty one 597 years for or towards the maintenance, education, advancement in life, religious ceremonies, marriage, welfare and benefit of the beneficiary in such manner as the trustees shall in their absolute and uncontrolled discretion deem fit. " The Tribunal has in the statement of the case stated that in accordance with the terms of the trust settlement, the "trustees had paid, spent or applied the income in the account year 1957. " That finding of the Tribunal is vague. But the position in law in any one of the three alternatives is plain. If the trustees incurred the expenditure for the education, maintenance, advancement in life. or for religious ceremonies, the case would clearly fall within the terms of section 4 (i), for there can be no doubt that the ex penditure would be deemed to be incurred by a person other than the assessee the Hindu undivided family, for the dependants to discharge obligation which the family was bound to discharge. If it be held that the expenditure was incurred by or on behalf of the children after it was received from the trustees, the case, in our judgment, would, even if it be assumed that it does not fall within cl. (i), fall within the terms of cl. The trusts were created by Surendra out of the family funds; the children were dependants within the meaning of section 2(g); and the expenditure was incurred for the benefit of the dependants of the family. We arc unable to agree with the High Court that the dependant who incurs expenditure, to bring the case within the terms of section 4(ii), must be other than the dependant who obtains the benefit of that expenditure. In our view, the High Court was in error in observing that the expenditure contemplated under cl. (ii) of section 4 is one which enures for the benefit of a person other than the person who incurs the expenditure. If expenditure was incurred by a dependant for his own purposes or benefit out of any gift, donation or settlement on trust or out of any other source made or created by the Hindu undivided, family, the case clearly fell within the terms of section 4(ii) before the clause was amended by the Finance Act, 1959. There is nothing in the Act to show that the application of the clause was restricted to cases in which the dependant incurred expenditure for another dependant. Turning now to Civil Appeal No. 2524 of 1966 which arises out of the reference to the High Court on two questions framed in language identical with the language of the questions in the main appeal, but with different amounts of expenditure relating to the assessment year 1959 60, it is unnecessary to set out the different components of the taxable expenditure incurred by the Hindu undivided family, expenditure incurred from the trust estate, and the expenditure incurred by Surendra in his individual capacity. The questions raised are only about 598 the liability to tax: the figures are not in dispute. Section 4, as it stood in the year of assessment 1959 60 read as follows: "Unless otherwise provided in section 5, the following amount shall be included in computing the expenditure of an assessee liable to tax under this Act, namely : (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependants, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,0001in any year; (ii) where the assessee is an individual, any expenditure incurred by any dependent of the assessee, and where the assessee is a Hindu undivided family, expenditure incurred by any dependant from or out of any income or property transferred directly or indirectly to the dependant by the assessee. " Clause (i) is a reproduction of the original clause, subject the deletion of the words "which but for the expenditure having been incurred by that other person, would have been incurred by the assessee. " In our view, the words which were deleted did not add to the meaning of the expression "obligation or personal requirement of the assessee or any of his dependants". Expenditure which was not related to any obligation or personal requirement of the dependants in their capacity as dependants did not fall within the terms of section 4(i) before it was amended. The words to which we have already referred, were a surplusage: by deleting them no intention to alter the meaning of the original cl. (i) may be attributed to the Legislature. We are of the view, for the reasons already set out in dealing with the assessment year 1958 59, that the expenditure incurred by Surendra out of his personal estate is not liable to be included in the taxable expenditure for the year 1959 60. If the amount expended from out of the trust estate be held, for reasons already set out to be expended by the trustees, the case falls within the terms of cl. (i): if it be held that the expenditure was incurred by or on behalf of the children after the income was received from the trustees it would fall within cl. The Legislature has by the amended clause (ii) expressly provided that where the assessee is a Hindu undivided family, any expenditure incurred by any dependant of the assessee from or out of any income or property transferred directly or indirectly to the depen 599 dant by the assessee, is liable to be included. The words are not susceptible of the interpretation that the dependant who incurs the expenditure must be other than the dependant to whom the property is transferred by the assessee. Expenditure incurred for his own purposes by the dependant to whom the property is transferred by the Hindu undivided family clearly falls within section 4 (ii) as amended. We therefore modify the order of the High Court. The answer to the first question for each year will be in the negative. The answer to the second question will be in the affirmative. It must, however, be understood that this answer does not imply that the amount of Rs. 10,321/ in respect of the assessment year 1958 59 was the amount spent by the trustees. In disposing of the appeal under section 25(6) of the Expenditure tax Act, the Tribunal must make appropriate adjustments in declaring the liability of the assessee to pay tax in respect of the expenditure incurred from the trust estate by the trustees after making the per missible deductions under sections 5 & 6 of the Act. In view of the partial success, there will be no order as to costs in this Court and in the High Court. V.P.S. Order modified.

Section 4(i) of the Expenditure Tax Act, 1957, is intended to include in the taxable expenditure of an assessee, the expenditure incurred directly or indirectly by a person other than the assessee for discharging any obligation of the assessee, or for the personal requirement of the assessee or of any of the assessee 's dependents, which, but for the expenditure havingbeen incurred by that other person would have been incurred by thesee; and, section 4(ii) is intended to include any expenditure incurred byany dependent of the assessee for the benefit of the assessee or of any of his dependents out of any settlement on trust or other source made or created by the assessee. A Hindu, his children by his first wife, his second wife, and children by her, formed a Hindu undivided family, with himself as the karta. By deeds of trust he settled certain assets belonging to the joint family in favour of the children by the first wife and appointed trustees to manage the assets, to collect the income and to defray the expenses of the children. The karta was also possessed of separate property. In computing the taxable expenditure of the assessee family for the years 1958 59 and 1959 60, under the Expenditure Tax Act, the department included two items : (1) the expenditure incurred by the karta, out of his own separate property for his own purposes; and (2) the sum spent out of the trust estate for the children. On a reference, the High Court held that the two items were not chargeable to tax. In appeal to this Court it was contended that the first item was liable to be included in the expenditure of the assessee family under s 4(i) because, the karta in a Hindu undivided family is a 'dependent ' and the expenditure incurred was by a person other than the assessee for the personal requirement of a 'dependent ' and the family would have been liable to meet the expenditure if it were not incurred by the Karta, and the second, either under section 4(i) or (ii). HELD : (1) The expression 'other member of the family ' in section 2(g) (H) (b) does not include a coparcener : it means wives and unmarried daughters of coparceners and widows of the family. A karta, is expressly excluded from cl. (a) and is not within the expression 'other member of the family ' in cl. Therefore, the karta is not a 'dependent '. The facts that when a karta incurs expenditure for the coparceners or other members out of his separate estate the expenditure is liable to be included in the taxable expenditure of the family, and that the expenditure incurred by a coparcener or other member of family out of his separate property in respect of the obligations of the family, or for the personal requirements of the coparceners or other members of the family, is also liable to 590 ,be included in the taxable expenditure of the family, are not grounds for attributing to the expression 'dependent ' a wholly artificial meaning different from its statutory definition. There is nothing in the scheme of the Act which suggests that the expression 'dependent ' in section 4(1) of the Act was used in a sense different from that of the definition. No rule of interpretation permits, for the purpose of section 4(i) of the Act, the application of the statutory definition of 'dependent ' to bring within the net of taxation, expenditure incurred for coparceners other than the karta, and of .a special meaning of that expression, inconsistent alike with the personal law of the parties, and the statutory definition, to bring within the net of taxation, the expenditure for the karta. The Court cannot attribute two different meanings to a single expression in its application to two different situations contemplated by a single clause. [593 H; 594 C D, F; 595 C E; 596 B C] For the year 19591 60, s.4(i) was amended by the deletion of the words 'which but for the expenditure having been incurred by that other person, would have been incurred by the asses see '. But these words were a surplusage : by deleting them no intention to alter the 'meaning of the original clause (i) could be, attributed to the Legislature [598 E F] Therefore, for both the years, the expenditure incurred by the karta out of his separate property for his own purposes could not be taken into account in computing the taxable expenditure of the assessee family, even if the family would have been liable to incur that expenditure [596 F] (2)The Appellate Tribunal found that as regards the children of the karta, the trustees 'had paid, spent or applied the income. If the finding meant that the trustees incurred the expenditure for necessary expenses of the children, the case would fall under section 4(i) for, the expenditure would be deemed to be incurred by a person other than the assesseefamily for discharging an obligation of the family. If it meant that the ,expenditure was incurred by or on behalf of the children after it was received from the trustees, the case would fall under cl. (ii). 'no trusts were created by the karta out of the family funds; the children were dependants within the meaning of section 2(g); and the expenditure was incurred for the benefit of the dependents of the family. The High Court was in error in observing that the expenditure contemplated by section 4(ii) is one which enures for the benefit of a person other than the person who incurs the expenditure. If expenditure was incurred by a dependent for his own benefit out of any gift, donation or settlement on trust or out of any other source made or created by the undivided family, the case falls within the terms of section 4(ii). [597 B F] For the year 19,59 60, the Legislature amended s.4(ii) and expressly provided that where the assessee is a Hindu undivided family, any expenditure, incurred by any dependent of the assessee from or out of any income or property transferred directly or indirectly to the dependent by the assessee, is liable to be included in the taxable expenditure of the assessee. Thus the dependent who incurs the expenditure need not be other than the dependent to whom the property is transferred by the assessee, and, the expenditure incurred for his own purposes by the defendant to whom the property is transferred by the assessee family falls within s.4(ii) as amended. Therefore, if the amount expended from out of the trust estate be held to be expended by the trustees, the case falls within the terms of cl. (i): if it be held that the expenditure was incurred by or on behalf of the children after the income was received from the trustees it would fall within the amended cl. [598 F H; 599 A B] 591

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Appeal No. 37 of 1966. Appeal by special leave from the judgment and order dated February 14, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Revision No. 228 D of 1962. B. C. Misra and M. V. Goswami, for the appellant. M. C. Chagla, Daya Krishan, section C. Javali and Ravinder Narain, for respondent No. 1. The Judgment of the Court was delivered by Ramaswami, J. The sole question involved in this appeal is whether a plaintiff suing for a declaration that a certain contract against him is void and inoperative having been obtained by undue influence, can in the same suit in the alternative ask for the relief of specific performance of the same contract. On October 26, 1956 Pt. Prem Raj, the appellant entered into an agreement with Shri Moti Ram Bhalla, respondent No. 2 for the purchase of lands from Shri Lila Ram, father of the appellant at the price of Rs. 1025/ perbigha on the terms and conditions mentioned therein. On December 18, 1956, the appellant and respondent No. 2 entered into a partnership to carry on the business of buying and selling lands and developing, the same under the name and style of "L.M.G. Colonisers & Traders". Subsequently, on January 2, 1957 the said firm "L.M.G. Colonisers & Traders" entered into a deed of partnership with D.L.F. Housing & Construction (P) Ltd., respondent No. 1 herein to carry on the business of purchasing and developing the lands into a residential 1 colony and to sell the same in plots either by auction or by tenders or in any other manner as the company, respondent No. 1 may find expedient after getting the scheme for development approved by the competent authority. On the same day i.e., January 2, 1957 the newly formed partnership between the respondent No. 1 and L.M.G. Colonisers & Traders entered into an agreement for the purchase of the same land with Pt. Lila Ram on the terms and conditions set out therein. On June 11, 1958 the parties cancelled the new partnership and agreement dated January 2, 1957 and entered into a fresh arrangement and executed the following four documents 650 " (1) A deed of dissolution of the new partnership between L.M.G. Colonisers and Traders (consisting of the appellant and respondent nos. 2 and I entered into on 2nd January 1957 (exhibit P. I). (ii) A deed of cancellation of agreement of sale of land between Lila Ram and the said new partnership firm of L.M.G. Colonisers and respondent No. 1. (iii) A new Agreement of sale of these same lands by Lila Ram in favour of respondent No. 1. (iv) An agreement to sell 22 plots out of the land agreed to be purchased from Lila Ram under the agreement stated in (iii) above by respondent No. 1 in favour of the appellant. " By virtue of these documents the new partnership dated January 2, 1957 'between L.M.G. Colonisers & respondent No. 1 came to an end as also the agreement dated January 2, 1957 by which Lila Ram had agreed to sell his lands to the said new partnership firm and there was a fresh agreement by Lila Ram to sell the same lands to D.L.F. Housing and Construction (Private) Ltd., respondent No. 1 at a certain price and out of the land thus to be bought, respondent No. I agreed to sell 22 plots of land to the appellant. After about 3 years, on or about June 8, 1961, the appellant gave notice to respondent No. 1 repudiating the arrangement dated June 11, 1958 as void and claimed that the documents were not binding upon him. The appellant alleged that the deeds executed on June, 11, 1958 were unlawful and void and inoperative against him as they were executed as a result of undue influence and coercion exercised upon him. In the alternative the appellant prayed for a decree for specific performance of the agreement dated June 11, 1958 to sell the aforesaid 22 plots of land and for damages in addition thereto. A preliminary objection was raised by the contesting respondent No. 1, D.L.F. Housing and Construction (P) Ltd. to the effect that the appellant having claimed that the agreement dated June 11, 1958 was void and inoperative, cannot in the same suit pray for specific performance of the same agreement. The Subordinate Judge, First Class, Delhi rejected the preliminary objection by his order dated February 26, 1962. Respondent No. 1 filed a Civil Revision Application No. 228 D of 1962 in the Circuit Bench of the Punjab High Court at Delhi. By his order dated February 14, 1964, Dulat, J. allowed the Revision Application holding that the appellant having sued for a declaration that the agreement of June 11, 1958 was void, cannot in the alternative be permitted to sue for specific performance of the agreement and therefore the suit must fail so far as the relief for specific performance was concerned. 6 51 This appeal is brought by special leave from the order of the Punjab High Court dated February 14, 1964 in Civil Revision Application No. 228 D of 1962. In support of this appeal it was argued, in the first place, that under 0.7 r. 7, Civil Procedure Code the appellant was entitled to claim a relief in the alternative on the facts stated in the plaint and it was open to him to pray to the Court that a decree for specific performance should be granted if the Court did not accept his case that the impugned agreement dated June 11, 1958 was illegal and void. It is true that under 0. 7, r. 7, Civil Procedure Code it is open to a plaintiff to pray for inconsistent reliefs. But it must be shown by the plaintiff that each of such pleas is maintainable. So far as the relief of specific performance is concerned, the matter must be examined in the light of the provisions of the Specific Relief Act. In this connection reference may be made to section 37 of the Specific Relief Act (Act No. 1 of 1877) which is to the following effect : "A plaintiff instituting a suit for the specific performance of a contract in writing may pray in the, alternative that, if the contract cannot be specifically enforced, it may be rescinded and delivered up to be cancelled; and the Court, if it refuses to enforce the contract specifically may direct it to be rescinded and delivered up accordingly. " It is expressly provided by this section that a plaintiff suing for specific performance of the contract can alternatively sue for the rescission of the contract but the converse is not provided. It is therefore not open to a plaintiff to sue for rescission of the agreement and in the alternative sue for specific performance. Section 35 of the states the principles upon which the rescission of a contract may be adjudged. But there is no provision in this section or any other section of the Act that a plaintiff suing for rescission of the agreement may sue in the alternative for specific performance. In our opinion, the omission is deliberate and the intention of the Act is that no such alternative prayer is open to the plaintiff. This view is borne out by the following passage in "Fry on Specific Performance, 6th Edn. ', p. 493" : "It remains to remark that the plaintiff, bringing an action for the specific performance of a contract, may claim in the alternative that, if the contract cannot be enforced, it may be rescinded and delivered up to be cancelled, provided that the alternative relief is based on the same state of facts, 'though with different conclusions as to law. When the action is brought by the 652 vendor, and the purchaser has been in possession, this alternative claim may embrace an account of the rents and profits. Bu t, for the reason already stated, a suit to set aside a transaction for fraud or, in the alternative, for specific performance of a compromise could not be sustained in the Court of Chancery. And notwithstanding the provisions of the Rules of the Supreme Court as to alternative claims for relief, it seems probable that the same conclusion would still be arrived at, on the ground that the claims were inconsistent and embarrassing. " The same principle is enunciated in Cawley vs Poole(1) in which it was held by the Court of Chancery that in a case where a bill alleges a judgment obtained by fraud, and a subsequent compromise, and seeks to set aside the whole transaction on the ground of fraud, or in default to have the compromise carried out, and the Court is of opinion that the case of fraud fails, it will not enforce the compromise, but the whole bill must be dismissed. There is also another reason for holding that the appellant has made out no cause of action with regard to the relief of specific performance of the contract. It is well settled that in a suit for specific performance the plaintiff should allege that he is ready and willing to perform his part of the contract. In the present case, no such averment is made in the plaint. On the other hand, the plaintiff has alleged that the agreement was a result of fraud and undue influence and was not binding upon him. For these reasons it must be held that so far as the relief of specific performance is concerned, the plaintiff has no cause of action. The legal position has been stated 'by Lord Blanesburgh in pronouncing the opinion of the Judicial Committee in Ardeshir Mama vs Flora Sassoon(2) as follows : "Where the injured party sued at law for a breach, going, as in the present case, to the root of the contract, he 'thereby elected to treat the contract as at an end and himself as discharged from its obligations. No further performance by him was either contemplated or had to be tendered. In a suit for specific performance, on the other hand, he treated and was required by the Court to treat the contract as still subsisting. He had in that suit to allege, and if the fact was traversed, he was required to prove a continuous readiness and willingness, from the date of the contract to the time of the hearing, to perform the contract on his part. Failure to make good that averment brought with it the inevitable dismissal of his suit. Thus it was that the commencement (1) ; (2) 55 1. A. 360, at p. 372. 653 of an action for damages being, on the principle of such cases as Clough vs London and North Western Rly. Co. (1871) L.R. 7 exhibit 261, and Law vs Law [(1904) 1 Ch. 140], a definite election to treat the contract as at an end, no suit for specific performance, whatever happened to the action, could thereafter be maintained by the aggrieved plaintiff. He had, by his election precluded himself even from making the averment just referred to, proof of which was essential to the success of his suit. The effect upon an action for damages for breach of a previous suit for specific performance will be apparent after the question of the competence of the Court itself to award damages in such a suit has been touched upon. " It was pointed out by Lord Blanesburgh that the Indian law on the subject as contained in the is not different from the English law. At page 375 of the same Report Lord Blanesburgh states : "Although, so far as the Act is concerned, there is no express statement that the averment of readiness and willingness is in an Indian suit for specific performance as necessary as it always was in England [section 24(b) is the nearest, it seems invariably to have been recognized, and, on principle, their Lordships think rightly, that the Indian and the English requirements in this matter are the same : see, e.g., Karsandas vs Chhotalal , 1050). " In the present case there is absence of an averment on the part of the plaintiff in the plaint that he was ready to perform his part of the contract. In the absence of such an averment it must be held that the plaintiff has no cause of action so far as the relief for specific performance is concerned. It was next contended on behalf of the appellant that in any event the High Court should have given the appellant an option to elect either of the two reliefs and ought not to have dismissed the suit at a preliminary stage so far as relief for specific performance was concerned. We do not think there is any substance in this argument. The question of election between the two reliefs would have arisen only if the appellant could have shown that in respect of specific performance he had a cause of action. As we have already pointed out, the appellant has not made out a cause of action so far as the relief of specific performance is concerned and hence the appellant is not entitled to be put to election with regard to the two alternative reliefs. We accordingly reject the argument of the appellant on this aspect of the case. 654 Lastly, it was argued on behalf of the appellant that the High Court had no jurisdiction to interfere with the order of the trial court under section 115 of the Civil Procedure Code. It was said that the finding of the trial court did not involve any question of jurisdiction and the High Court has fallen into an error in reversing the finding of the trial court on issue No. 4, whether the relief for specific performance was open to the appellant in the alternative. In our opinion, there is no warrant for the argument put forward on behalf of the appellant. It is manifest that in holding that the appellant was entitled in the alternative to ask for the relief of specific performance, the trial court had committed an error of. law and so had acted with material irregularity or illegality in the exercise of its jurisdiction within the meaning of section 1 15 (c) of the Civil Procedure Code. It was therefore competent to the High Court to interfere, in revision, with the order of the trial court on this point. To put it differently, the decision of the trial court on this question was not a decision on a mere question of law but it was a decision on a question of law upon which the jurisdiction of the trial court to grant the particular relief depended. The question was therefore one which involved the jurisdiction of the trial court; the trial court could not, by an erroneous finding upon that question, confer upon itself a jurisdiction which it did not possess and its order was therefore liable to be set aside by the High Court in revision. For these reasons we hold that there is no merit in this appeal which is accordingly dismissed with costs. Y.P. Appeal dismissed.

The appellant find a suit for a declaration that a certain contract against him was void and inoperative having been obtained by undue influence, and in the alternative prayed For a decree for specific performance of certain terms in the same contract. The first respondent objected that the appellant having claimed the agreement to be void and inoperative could not in the same suit pray for specific performance of the same agreement. The trial court rejected the preliminary objection, but the High Court, in revision, held that the appellant could not in the alternative be permitted to sue for specific performance of the agreement, and therefore the suit must 'fail so far as the relief for specific performance was concerned. Dismissing the appeal, this Court : HELD : Under 0. 7, r. 7, Civil Procedure Code it is open to a plaintiff to pray for inconsistent 'reliefs. But it must be shown by the plaintiff that each of such pleas is maintainable. So far as the relief of specific performance is concerned, the matter must be examined in the light of the provisions of the Specific Relief Act. Section 37 of the Act provides that a plaintiff suing for specific performance of the contract can alternatively sue for the rescission of the contract but the converse is not pro vided. Section 35 of the Act states the principles upon which the rescission of a contract may be adjudged. But there is no provision in this ,section or any other section of the Act that a plaintiff suing for rescission of the agreement may sue in the alternative for specific performance. The omission is deliberate and the intention of the Act is that no such alternative prayer is open to the plaintiff. It was therefore not open to the appellant to sue for rescission of the agreement and in the alternative sue for specific performance. [651 C G] Cawley vs Poole, ; , applied. Further, in a suit for specific performance, the plaintiff should allege that be is ready and willing to perform his part of the contract. In the present case no such averment is made in the plaint. On the other hand, the appellant has alleged that the agreement was a result of fraud and undue influence and not binding upon him. [652 D E] Ardeshir Mama vs Flora Sassoon, 55 I.A. 360, referred to. The appellant had not made out a cause of action so far as the relief of specific performance was concerned and hence the appellant was not entitled to be put to election with regard to the two alternative reliefs. [653 H] 649 In holding that the appellant was entitled in the alternative to ask for the relief of specific performance the trial court had committed an error of law and so had acted with material irregularity or illegality in the exercise of its jurisdiction within the meaning of section 115(c) of the Code of Civil Procedure. It was therefore competent to the High Court to interfere, in revision, with the order of the trial court on ' this point. [1654 B D]

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iminal Appeal No. 38 of 1965. 141 Appeal by special leave from the judgment and order dated July 28, 1964 of the Punjab High Court (Circuit Bench) in Criminal Appeal No. 40 D of 1963. section N. Prasad, for the appellant. H. R. Khanna and section P. Nayyar, for the respondent. The Judgment of the Court was delivered by Bachawat, J. The Additional Sessions Judge, Delhi, convicted the appellant under sec. 302 of the Indian Penal Code and sentenced him to undergo imprisonment for life. The Judge also convicted the appellant under sec. 324 of the Indian Penal Code, sentenced him to undergo six months rigorous imprisonment and directed that the two sentences would run concurrently. An appeal was filed in the High Court of Punjab. The High Court dismissed the appeal. The appellant has filed this appeal after obtaining special leave. The appellant lives at Sat Nagar in Delhi. On November 25, 1961 at 1.45 p.m. he entered the house of his neighbour Somawati and stabbed her daughter Leela aged 1 1/2 years with a knife. He inflicted five stab wounds, one on the back trunk, one on the right gluteal region, two on the right thigh and one on the chest. The injury on the back of trunk, proved fatal. Leela died in the hospital at 4 p.m. The appellant then returned to his house and bolted the front door. A crowd collected near the front door and raised an alarm. After some time the appellant went out by the back door and stabbed another neighbour Parbati and then Raghubir who tried to intervene on her behalf. The injuries were simple incised wounds Rabhubir and others tried to apprehend him. He then ran back to his house, bolted the door and started throwing brickbats from the roof. He was later arrested by the police. All these facts are proved by unimpeachable evidence. One Dhani Ram was the father of Leela. Dhani Ram, his wife Somawati, his daughter Leela and his brother Baburam lived together in the same house. Indra is the appellant 's sister. The, appellant and his father suspected that Baburam was prone to making illicit approaches to Indra. On this account, the appellant had a long standing grudge against Baburam. This enmity is said to be the motive of the attack by the appellant on Leela, a member of the family of Baburam. The motive for the attack on Parbati is not clear. Raghubir was attacked because he tried to intervene. The defence plea was of insanity. The Additional Sessions Judge and the High Court concurrently rejected this defence. 142 We may briefly notice the evidence bearing on the plea of insanity. Since 1958 the appellant was an employee in the Stores Branch of the Northern Railway Headquarters in Baroda House, New Delhi. In 1958 and 1959 he had altercations with other clerks in the office. On May 20, 1959 his superior officer observed that he was prone to, lose temper in no time. In his moments of excitement he became dangerous and used to hit his colleagues with anything that he could lay his hands on. But at the time of his greatest excitement he could distinguish between right and wrong. After May 1959 he worked at his desk as a normal man. In March 1960 he again quarrelled with another clerk. He was suspended and sent for medical examination. At this stage he was suffering from mental illness. On October 12. 1960 he was examined by a psychiatrist who found that he exhibited symptoms of acute schizophrenia and showed disorder of thought, emotion and perception of external realities. The psychiatrist said that he was harbouring certain delusions. The nature of the delusions is not stated. It is not proved that the appellant suffered from any particular delusion or hallucination. The appellant was put on a drug named largactil and was given convulsive electrotherapy treatment. On January 12, 1961 he was cured of his illness and was advised to join his duties. On resuming his duties the appellant worked in the office in the normal manner. There is some evidence that on the morning of November 25. 1961 and the preceding night, the appellant complained that he was unwell and took medicine. But on the morning of November 25, he went to his office as usual. He was late in attendance and was marked absent. He applied in writing for one day 's casual leave stating that he had an urgent piece of work at home. Nobody noticed any symptoms of mental disorder at that time. He left the office at about 11.30 a.m. and returned home alone. At 1.45 p.m. he stabbed Leela, Parbati and Raghubir with a knife. He concealed the knife and a search for it has proved fruitless. At 2.45 p.m. the investigating officer arrived on the spot, arrested the appellant and interrogated him. He was then found normal and gave intelligent answers. On the same date he was produced before a Magistrate. His brother was then present but the Magistrate was not informed that he was insane. On November 27, he was interrogated by an Inspector. It does not appear that he was then insane. On November 30, the appellant 's brother filed an application before the committing magistrate stating that the appellant was insane at the time of the occurrence. The appellant was later remanded to judicial custody. On receipt of another application from his brother he was kept under medical observation from December 16 to December 23. On December 19 the medical 143 officer noted that the appellant was indifferent to his surroundings and personal cleanliness, preoccupied in his thoughts muttering to himself, making meaningless gestures, losing track of conversations, given to delayed and repetitive answers and unable to give detailed account of incidents leading to his arrest. On Decemher 23, he was declared to be a lunatic though not violent. The psychiatrist noted that the appellant had a relapse of schizophrenia and was suffering from disorder of thought, emotion and loss of contact with realities. From his attitude and manner of talk he was found to be aggressive. On September 6, 1962 the psychiatrist reported that the appellant was cured and was in a position to understand proceedings in court. The commitment order was made on January 4, 1963. The trial started in February 1963. The appellant was sane at the time of the trial. The group of ailments dubbed schizophrenia is discussed in James D. Page 's Abnormal Psychology, Ch. XI, pages 236 to 261 and Modi 's Medical Jurisprudence and Toxicology, 14th ed., pages 349 to 401. Schizophrenia is a general term referring to a group of severe mental disorders marked by a splitting or disintegration, of the personality. The most striking clinical features include general psychological disharmony, emotional impoverishment, dilapidation of thought processes, absence of social rapport, delusions, hallucinations and peculiarities of conduct. The question is whether the appellant is criminally responsible for the acts done on November 25, 1961. Section 84 of the Indian Penal Code says : "Nothing is an offence which is done by a person who, at the time of doing it, by reason of unsoundness of mind, is incapable of knowing the nature of the act, or that he is doing what is either wrong or contrary to law." To establish that the acts done are not offences under sec. 84 it must be proved clearly that at the time of the commission of the act the appellant by reason of unsoundness of mind was incapable of either knowing that the acts were either morally wrong or contrary to law. The question is whether the appellant was suffering from such incapacity at the time of the commission of the acts. On this question, the state of his mind before and after the crucial time is relevant. There is evidence of a medical character that between October 12, 1960 and January 12, 1961 he was suffering from schizophrenia. He was completely cured of this disease, on January 12, 1961 when he resumed his normal duties. He had another attack of this disease in the middle of December 1961. The attack lasted till September 1962 when he was found to be normal again. But it is to be observed that the defence witnesses do not say that even during these two periods the appellant was incapable of discriminating between right and 144 wrong or of knowing the physical nature of the acts done by him. After the appellant was cured of the disease on January 12, 1961 he was found to be normal. He had a highly strung tem perament and was easily excitable. But there is positive evidence that even at the moment of his greatest excitement he could distinguish between right and wrong. From January 12, upto November 24, 1961 he attended his office and discharged his duties in a normal manner. On the morning of November 25, 1961 his mind was normal. He went to and from his office all alone. He wrote a sensible application asking for casual leave for one day. At 1.45 p.m. he stabbed and killed a child and soon thereafter he stabbed two other persons. On his arrest soon after 2.45 p.m. he gave normal and intelligent answers to the investigating officers. Nothing abnormal in him was noticed till December 16, 1961. The thing in favour of the appellant is that though he had a motive for attacking Baburam, no clear motive for attacking the child Leela or Parbati is discernible. But there is clear evidence to show that he knew that his act of stabbing and killing was wrong and contrary to law. He concealed the weapon of offence. The knife could not be recovered in spite of searches. He bolted the front door of his house to prevent arrest. He then tried to run away by the back door. When an attempt was made to apprehend him he ran back to his house and bolted the door. He then tried to disperse the crowd by throwing brickbats from the, roof. His conduct immediately after the occurrence displays consciousness of his guilt. He knew the physical nature of stabbing. He knew that the stabbing would kill and maim his victims. On a comprehensive review of the entire evidence the two courts below concurrently found that the defence of insanity under sec. 84 was not made out. We are unable to say that the verdict of the courts below is erroneous. If a person by reason of unsoundness of mind is incapable of knowing the nature of the act or that he is doing what is either wrong or contrary to law he cannot be guilty of any criminal intent. Such a person lacks the requisite mens rea and is entitled to an acquittal. But it is not established in the present case that the appellant was suffering from this incapacity. The general burden is on the prosecution to prove beyond reasonable doubt not only the actus reus but also the mens rea. The prosecution satisfactorily discharged this burden. The appellant was not insane at the time of the killing and stabbing and he knew the consequences of those acts. We must hold that he is criminally responsible for the acts. In the result, the appeal is dismissed. R.K.P.S. Appeal dismissed.

From 1958 the, appellant was a Railway employee and often lost his temper and had altercations with other clerks in the office. In October 1960 he was found to be suffering from a mental illness as he exhibited symptom of acute schizophrenia and showed disorder of thought, emotion and perception of external realities. He was treated for and was cured of this illness by July 1961 when he resumed his duties. On the morning of November 25, he went to office as usual but as he was late in attendance, he was marked absent. 'He applied in writing for one day 's casual leave and returned home. No one noticed any symptoms of any mental disorder at that time. Just after 1 o 'clock he entered his neighbour 's house and stabbed and killed a girl 1 1/2 year old and later also stabbed and injured two other persons with a knife. He was thereafter arrested and interrogated on the same day when he gave normal and intelligent answers. After his arrest and upon a medical examination, the appellant was declared to be lunatic though not violent and the psychiatrist found that he had had a relapse of schizophrenia. On September 6, 1962, he was ,reported as cured and was thereafter committed for trial ,in February 1963. The trial court convicted him under sections 302 ' and 324 of the Indian Penal Code and sentenced him to life imprisonment. During the trial and in the subsequent appeal to the High Court, the ,defence plea was one of insanity which was concurrently rejected by both Courts. On appeal to this Court by special leave. HELD: dismissing the appeal: The appellant was not insane at the time of the killing and stabbing and knew the consequences of his acts. He must therefore be held ,criminally responsible for his acts.[144 H] To establish that the acts done were not offences under section 84 it must be proved clearly that at the time of the commission of the acts the appellant, by reason of unsoundness of mind, was incapable of knowing that the acts were either morally wrong or contrary to law. There was clear evidence that on the morning of November 25 the appellant 's mind was normal and also that he knew that his act of stabbing and killing was contrary to law. He concealed the weapon of offence. He bolted the front door of his house to prevent arrest. He then tried to run away by the back door. When an atttempt was made to apprehend him he an back to his house and bloted the door. He then tried to disperse the crowd by throwing brickbats from the roof. His conduct immediately after he occurrence displaced consciousness of his guilt.

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Appeal No '. 741 of 1965. Appeal by special leave from the judgment and decree dated April 1, 1963 of the Kerala High, CourT in Appeal Suit No. 480 of 1958. Sarjoo Prasad and M. R. K. Pillai, for the appellant. section V. Gupte and A. G. Pudissery, for the respondent. The Judgment of the Court was delivered by Shah, J. On October 9, 1950, a deed styled an "indenture of mortgage" was executed by the Cochin Chemicals and Refineries Ltd., hereinafter called 'the Company ' and N. C. John a Director of the Company, in favour of I the State of Travancore Cochin. The relevant terms of the indenture were "In consideration of the sum of Rupees 2.5 lakhs (2,50,000) borrowed by the mortgagor No. I from the mortgagee (the receipt of which sum mortgagor No. 1 doth hereby admit and acknowledge) mortgagor No. I hereby covenants with the mortgagee as follows : (a) That the mortgagor No. I shall supply to the mortgagee 3,000 tons of groundnut cake at the rate of 600 tons per month within a period of five months commencing with the first day of November 1950 and ending with the last day of March 1951. (b)That the account for the groundnut cakes supplied by mortgagor No. I to the mortgagee will be settled and adjusted against the loan amount of Rs. 2.5 lakhs: and interest thereon at 41 % per annum at the end of March 1951, the groundnut cakes supplied being valued at the average, price fixed by the Government during the period for purchases from other sources. If 'on such adjustment any amount is found due to the mortgagor No. I the same will be paid by the mortgagee. If how 558 ever it is found that the price of the groundnut cakes supplied is not sufficient to make up the loan amount with the interest thereon, mortgagor No. I shall pay the deficit amount to the,mortgagee immediately after the settlement of account. (c)That mortgagor No. 1 shall deliver the groundnut cakes. at any, depot in the Travancore Cochin State as may from time to time be required by the Director of Agriculture from the mortgagee free of transport charges. " II."For the consideration aforesaid the mortgagor No. 1 hereby transfers by way of simple mortgage to the mortgagee" all the assets described in Sch. 1, "and mortgagor No. 2 hereby transfers by way of simple mortgage to the mortgagee" the assets described in Sch. 11, "to the intent that the said premises shall remain and be charged as security for the payment to the mortgagee of the said principal money, interest and costs in accordance with the Covenants herein before contained. " III."The mortgagors hereby covenant with the mortgagee as follows: The indenture was executed by the Company and N. C. John. and also by the Secretary to the Government of Travancore Cochin on behalf of His Highness the Rajpramukh. A supplementary deed was executed on November 7, 1950, whereby it was agreed that Without prejudice to the right to recover the amount secured or any portion thereof as I stipulate , it shall also be recoverable under the Revenue Recovery Act for the time being in force or in other manner as the mortgagee may deem fit. It is common ground that the amount acknowledged in the indenture was not advanced at the date of the indenture and was never advanced thereafter. The Company arranged for the supply of goods agreed to be sold under the terms of paragraph I(a) and wrote from time to time letters to the appropriate officers of the State asking them to give instructions about the depots where the supplies were to be made. In reply to the letter Ext. H, the Assistant Director of Agriculture by Ext. M, dated January 3, 1951, replied that "I write to invite your attention to my letter of even No. dated 12 12 1950 and to inform you that I shalt be placing orders for the supply of groundnut cake as soon as I get orders from Government providing the necessary funds for paying you the advance of Rs. 2 and 1 2 lakhs." 559 No instructions for supply were however given to the Company to supply the goods agreed to be purchased by the State. The Company instituted on March 9, 1953, an action against the State of Travancore Cochin for a decree for Rs. 3,600/ being damages for failure to advance the loan of Rs. 2,50,000/ , and Rs. 1,68,600/ as damages for breach of contract to purchase 3,000 tons of groundnut cake under the indenture. The Trial Court decreed the suit for Rs. 3,600/ being damages for failure. to advance the loan, and for Rs. 1,23,000/ being damages for breach of contract to purchase groundnut cake. In appeal to the High Court, the liability of the State to compensate the Company for failure to take delivery of the goods offered to be delivered alone was challenged. The High Court confirmed the decree passed by the Trial Court negativing the contention raised on behalf of the State that the obligation to take delivery of the goods agreed to be purchased was contingent on the Government 's advancing Rs. 2,50,000/ . The State has appealed to this Court with special leave. Two questions arise for determination in this appeal (1) Whether under the terms of the indenture the State by refusing to advance the loan of Rs. 2,50,000/was absolved from the obligation to purchase the goods referred to in paragraph I(a) of the indenture; and (2) Whether in the circumstances of the case, the Company was not entitled to claim damages for breach by the State to purchase the goods agreed to be purchased. The indenture incorporated two transactions: (1) a mortgage in favour of the State by the Company and N. C. John charging properties belonging to the two mortgagors for repayment of Rs. 2,50,0001/ ; and (2) the Company agreeing to sell and the State agreeing to purchase 3,000 tons of groundnut cake at the rate of 600 tons per month for five Months to be supplied at any of the depots in the Travancore Cochin State as may from time to time be designated, by. the Director of Agriculture. The indenture expressly recited that the amount of Rs. 2,50,000/ was ad vanced to the Company but the supplementary deed dated Nov ember 7, 1950, and the correspondence make it clear that though the money was recited to have been actually advanced, it was :pot in fact advanced but it was intended by the State Government to advance it. For some reason where it is difficult to 'ascertain from the record, the State Government did not carry out its obligation to advance the money, after obtaining the indenture and the supplementary deed from the Company and its Director. But even as late as January 3, 1951, as is clear from Ext. M the Assistant Director of Agriculture reiterated the promise that the money 560 will be advanced and delivery of goods offered by the Company will be accepted. Counsel for the State contended that so long as the loan was not advanced by the State, the mortgage was not in law effective, and the Company could not enforce the contract relating to groundnut cake agreed to be purchased by the State, for the obligation undertaken was in consideration of the loan of Rs., 2,50,000/ and arose only when the loan was advanced. But the assumption, that if the State did not advance the loan which it had undertaken to advance, the indenture was ineffective, cannot be accepted. There is no such express term in the deed, and none can be implied from the covenants and the surrounding circumstances. A transaction of mortgage formally, executed does not become void or ineffective merely because the mortgagee fails to advance the amount of money undertaken to be advanced by him. If without advancing the *mount agreed to be advanced, he sues on the title created under the deed of mortgage, the Court will not award him a decree for anything more than what he has But that is not to say that the mortgage is invalid In Tatia vs Babaji(1),Farran, C.J., observed : "I am not, however,. . .prepared to assent to the train of thought which puts conveyances of lands in the mofussil perfected by possession or registration where the consideration expressed in the conveyance to have been aid has not in act been paid in the same category as contracts void for want of consideration. " Similar observations were made in Rashik Lal vs Ram Narain and others( '), where Karamat Hussain, J., observed at p. 276 ". . Mortgage under the Transfer of Property Act is a transfer of an interest in the land mortgaged, and not a mere contract. It therefore follows that no sooner a valid mortgage deed is registered, an interest in the property mortgaged, in the absence of any contract to the contrary, vests in the mortgagee notwithstanding the fact that the mortgage money has not been paid by the mortgagee to the ' mortgagor. The mere non payment of the mortgage money cannot have the effect of rendering the mortgage invalid. " Sulaiman, J., in Dip Narain Singh vs Nageshar Prasad and others(2) observed that once a. document transferring immovable property has been registered, the transaction passes out of the domain of a mere contract and into one of a conveyance. Such a completed transaction is governed by the provisions of the (1) I.L.R. (3) I.L.R. 52 All. (2) I.L.R. 34 All. 273, 561 Transfer of Property Act and so much of the Contract Act as is applicable thereto. The argument that because the amount was not advanced by the State to the Company, the mortgage was void or ineffective therefore cannot be accepted. Nor do the terms of the indenture justify the plea that the liability of the State to purchase 3,000 tons of groundnut cake from the Company was conditional upon the State advancing Rs. 2 50,000/ . The two transactions incorporated in the indenture were undoubtedly inter related. The price payable for the supplies of groundnut was to be adjusted towards the amount advanced or to be advanced by the State. But by failing to advance the amount the State could not avoid liability to carry out the obligation to purchase the, goods contracted to be purchased. Even if it be assumed that the indenture incorporated reciprocal promises the State to advance Rs. 2,50,000/ and the Company to deliver 3,000 tons of groundnut cake in the absence of any express provision to that effect the contract could not be terminated by the default of the State. Breach of contract by one party does not automatically terminate the obligation under the contract : the injured party has the option either to treat the contract as still in existence, or to regard himself as discharged. If he accepts the discharge of the contract by the other party, the contract is at an end. If he does not accept the discharge, he may insist on performance see the judgment of the House of Lords White and Carter (Councils) Ltd. vs McGregor(1). The case before the House was a Scottish case, but the law of Scotland is not different on the matter under consideration from the English law, and the Indian Contract Act closely follows the English Common Law in that matter. It cannot, therefore, be said that by refusing to advance the loan which the State had undertaken to advance, the obligation to purchase groundnut cake from the Company came to an end. Nor is there any substance in the, second contention that the State was by its default liable to compensate the Company only for loss arising out of its failure to advance the money, and not out of its failure to purchase the goods. The State had undertaken to advance Rs. 2,50,000/ to the Company. It had also undertaken to take delivery of 3,000 tons of groundnut cake offered by the Company under the terms of contract of sale. These were two independent, though inter related transactions, and by committing a breach of its own, obligation to advance the sum of Rs. 2,50,000/the State did not absolve itself from liability for the breach arising from the refusal to take delivery of the goods offered. The cause, of action arising out of the refusal to take delivery of the goods offered was independent of the cause of action arising out of the (1) [1962] A.C.413=[1961] 3 AII. E.R.1178. 562 breach committed by the State in not advancing the loan. The two causes of action were cumulative and not alternative. There is therefore no warrant for the plea that by claiming damages for loss suffered by it as a result of the failure to advance the loan, the Company elected to give up its claim for damages for breach of the contract to take delivery of 3,000 tons ' of groundnut cake by the State. The appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

A mortgage deed was executed by the respondent company and one of its directors in favour 'of the State of Kerala. It was provided inter alia by the terms of the deed that in consideration of the State granting a loan of a sum of Rs. 2.5 lakhs to the company, the latter would supply to the State 3,000 tons of ground ,nut cake within a specified period and make deliveries in accordance with instructions to be given by the State, and the account for this supply will be adjusted against the loan amount and the interest thereon. It was common ground however that the loan amount, though acknowledged in the mortgage deed as received by the company, was never in fact advanced by the State. The respondent company arranged for the supply of goods as agreed and sought the necessary instructions for delivery, but, these we 're never given. The company instituted a suit in March 1953 against the appellant State for damages for failure to, advance the loan amount and for breach of contract to purchase the groundnut cake. The trial court decreased the suit for Rs. 36,000 being damages for failure to advance the loan and for Rs. 1,23,000 as damages for breach of contract. An appeal to the High Court challenging the liability of the State to compensate the company for failure to take delivery of the goods was dismissed. It was contended on behalf of the State that the obligation to take delivery of the goods agreed to be purchased was contingent upon the Government 's advancing the loan amount, so long as the amount was not advanced by the State, the mortgage was not in law effective and the Company could not enforce the contract relating to ground nut cake a. reed to be purchased by the State. , HELD : Dismissing the appeal) A transaction of mortgage formally executed does not become void or ineffective merely because the mortgagee fails to advance the amount of money undertaken to be advanced by him. Under the terms of the mortgage deed liability of the State to purchase the groundnut cake. from the Company was not made conditional upon the State advancing the loan. By failing to advance the loan amount the State could not avoid liability to carry out the obligation to purchase the goods contracted to be purchased. Even if it be assumed that the indenture incorporated reciprocal promises, in the absence of any express provision to that effect the contract could not be terminated by the default of the State. Breach of contract by one party does not automatically terminate the obligation under the contract : the injured party has the option either to treat the contract as still in existence, or to regard himself as discharged. If he accepts the discharge of the contract by the other party, the contract is 557 at an end. If he does not accept the discharge, he may insist on performance. [560 C D; 561 D]. Tatia v Babaji, I.L.R. , Rashik Lal vs Ram Narain and Others, I.L.R. 34 All. 273, Dip Narain Singh V. Nageshar Prasad and Others, I.L.R. 52 All. 338, White and Carter (Councils) Ltd., vs Mc Gregor, ; referred to. There was no substance in the, contention, that the State was by its default liable to, compensate the Company only for loss arising out of its failure to advance the money, and not out of its 'failure to purchase the goods. The State 's undertakings to advance the loan and to take delivery of ground nut cake were two independent, though inter related transactions; and by committing a breach of its own obligation to advance the loan, the State did not absolve itself from liability for the breach arising from its refusal to take delivery of the goods offered [561 F H].

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Appeal No. 37 of 1965. Appeal from the judgment and order dated August 12, 1958 of the Bombay High Court at Rajkot (now Gujarat High Court) in special civil Application No. 55 of 1957. B. Sen, P.V. Hathi, K.L. Hathi and Atiqur Rehman, for the appellant. M.V. Goswami, for respondents Nos. 1, 2, 3, 6 and 7. N.S. Bindra and S.P. Nayar, for respondents Nos. 26 and 27. The Judgment of the Court was delivered by Bachawat, J. This appeal raises questions of interpretation of certain provisions of the Saurashtra Land Reforms Act 1951 (Act No. XXV of 1951). On June 1, 1947 Narendrasinghji the then ruler of the Virpur State granted certain agricultural lands situate within the State to the appellant, his paternal uncle. On February 11, 1948 Narendrasinghji and the appellant effected an exchange under which the appellant returned the lands at Matiya and Guda to Narendrasinghji and in lieu thereof was granted certain lands in Kharedi. The lands in Kharedi are the subjectmatter of dispute in this litigation. On February 17, 1948 the grant was recorded in the "Hak Patrak ' of the Virpur State. On March 8, 1948 the administration of the Virpur State was assumed by the United State of Saurashtra. The grant to the appellant was questioned by the Saurashtra Government. Thereafter at a conference called the Jamnagar Conference, it was arranged between Narendrasinghji and the Government of India that the lands 407 in Kharedi should be regarded as lawfully granted to the appellant subject to the condition that the grantee would not evict the cultivators from the land. The arrangement was set out in a letter dated November 2, 1949 from the officer on special duty (Integration) Political Dept., to the Secretary, Revenue Department United State of Saurashtra. The letter stated: "According to the Jamnagar Conference decision as this grant was an exchange, it was acceptable after verification regarding reasonableness of the exchange. It having been decided on enquiry that the exchange was reasonable, the grant is accepted subject, however, to the liability of the grantee (a) to pay 121/2 % as assessment (b) to see that no cultivator shall be evicted from the land . The grantee K.S. Digvijaysinghji may kindly be informed of this assessment charge and the other contents of this letter and may be put in possession of the land and allowed to be retained by him subject to the liabilities specified in this letter. " Though the appellant was not a party to the arrangement, he was: aware of and accepted the arrangement and the condition upon which his grant was confirmed by the Government of India. Had ' he not accepted those conditions, it was likely that the government would have resumed the grant under the Saurashtra Land Resumption Ordinance No. 84 of 1949 which came into force on January 13, 1950. The Saurashtra Land Reforms Act came into force on September 1, 1951. On January 29, 1954 the Government of Saurashtra issued a notification under sec. 15(2) of the Act declaring the appellant to be a Girasdar for purposes of the Act subject to the provisions of sec. 18 thereof. By a notification dated July 20, 1954 the Saurashtra Government clarified the earlier notification stating that the appellant was a Girasdar subject to the provisions of sec. 18 of the Act, i.e., the condition imposed by the government at 'the time of his recognition that he cannot evict the tenants. In the meantime the appellant had applied to the Mamlatdar, Kalawad, for an order of allotment of land for personal cultivation under sec. 18 of the Act. The application was resisted by the tenants who are the respondents in this appeal. The tenants claimed that they had "char" rights and that in any event the appellant was not entitled to eject them. The Mamlatdar allowed the application and allotted to the appellant lands out of the holding of four tenants. An appeal from his order was dismissed by the Deputy Collector, Eastern Division, Halar. On a revision application filed by the tenants the Bombay Revenue Tribunal set aside these orders and dismissed the application filed under sec. All the tribunals concurrently found that the tenants did not hold "char" rights. The Mamlat dar allowed the application under sec. 19 on the ground that the 408 conditions imposed upon the appellant before 'the passing of the Act did not debar him from taking the benefits under the Act. The Deputy Collector affirmed this order on the ground that by obtaining the order of allotment of lands for personal cultivation the appellant was not seeking to evict tenants 'by exercising his rights as a landlord. The Tribunal disagreed with the views of the Mamlatdar and the Deputy Collector and observed that as ,the, appellant was aware of and accepted the conditions imposed by the arrangement incorporated in the letter dated November 2. 1949, he was bound by them and his rights in the land were limited by the condition that he could not evict the tenants. The Tribunal held that the tenants were entitled to ,take advantage the conditions under sec. 18 of the Act and the application under sec. 19 was therefore not maintainable. The appellant then applied to the High Court of Bombay at Rajkot under article 227 of the Constitution challenging the correctness of the order of the Revenue Tribunal. The High Court dismissed ,the application. It held that the conditions incorporated in the letter of November 2, 1949 having been accepted by the :appellant endured for the benefit of the tenants under sec. 18 of the Act. It also held that the rights of the appellant as Girasdar were restricted by the notification under sec. 2(15) of the Act declaring him to be a "Girasdas" and the appellant was bound by those restrictions. The present appeal has been preferred by 'the appellant under a certificate granted by the High Court. It is not disputed that the Government of India had the power to impose upon the appellant the conditions incorporated in the letter dated November 2, 1949 and that the appellant is bound by them. The government could refuse to recognise the grant made to the appellant by the ruler of ,the Virpur State and to annul the grant. Had the government annulled the grant, the annulment would have been an Act of State and could not be questioned before the municipal tribunals [see State of Saurashtra vs Jamadar Mohamad Abdulla(1)]. Instead of annulling the grant the government elected to confirm it subject to the conditions incorporated in the letter dated November 2, 1949. The appellant accepted the grant subject to those conditions and is bound by them. The question is whether in spite of the conditions incorporated in the letter dated November 2, 1949 the appellant is entitled to allotment of land under sec. 19 of the Saurashtra Land Reforms Act 1951. The Act was passed for the improvement of land revenue administration and for ultimately putting an end to the Girasdari system. It makes provisions to regulate the relationship between the Girasdars and their tenants, to enable the latter (1) 409 to become occupants of the land held by them and to provide for the payment of compensation to the Girasdars for the extinguishment of their rights. Girasdar means any talukdar, bhagdar, bhayat, cadet or mul girasia and includes any person whom the government may by notification in the official gazette declare to be a Girasdar for the purposes of the Act, [section 2( 15)]. It is common case that the appellant is a Girasdar by virtue of the notification of the Saurashtra Government declaring him to be a Girasdar. The Act overrides other laws. Save as otherwise provided in the Act, its provisions have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law or any usage, agreement, settlement, grant sand or any decree or order of any court or other authority, (section 3). Chapter III regulates the relationship of Girasdar with their tenants. Subject to certain exceptions any person who is lawfully cultivating any land belonging to a Girasdar is for the purposes of the Act deemed to be the tenant, (section 6). Sections 6 to 17 ' confer on the tenants certain benefits, privileges and immunities in respect of rent, cess, rate, hak, tax, service, termination of tenancy and eviction from dwelling houses. Particularly section 12 provides that no tenancy can be terminated except in accordance with the provisions of Chapter IV or except on certain specified grounds. Section 18 provides: "Nothing contained in this Act shall be construed to limit or abridge the rights or privileges of any tenant under any usage or law for the time being in force or arising out of any contract, grant, decree or order of a court or otherwise howsoever." Section 18 shows that the Act is intended to confer on the tenant fights and privileges which he does not otherwise enjoy or possess under any usage or law in force or any contract, grant, decree or order of a court or arising in any other way. If the tenant has any fight or privilege apart from the provisions of the Act, he needs no protection under the Act. He can claim protection under his existing rights and privileges. His existing rights and. privileges are not limited or abridged by anything in the Act. The conditions incorporated in the letter dated November 2, 1949 were intended for the benefit of the tenants. The tenants can claim the benefit of the condition that the appellant would not evict them. The condition is annexed to the grant to the appellant. The right or privilege of the tenant arising out of this condition is a right or privilege arising out of a grant within the meaning of sec. Tht expression "grant" in sec. 18 is wide enough to take within its sweep a grant by the government to the Girasdar and is not limited to a grant by the Girasdar to the tenant. 410 The next question is whether the rights and privileges of the tenant arising out of the conditions incorporated in the letter dated November 2, 1949 is limited or abridged by an order for allotment of land to the appellant under sec. 19 for personal cultivation. Chapter IV enables Girasdars to obtain allotment of land for personal cultivation. Any Girasdar may file an application for such allotment before the Mamlatdar under sec. 19 within certain time. On making the necessary enquiries the Mamlatdar may pass an order making an allotment of land to ,the Girasdar, [section 20(2)]. After making the order the Mamlatdar has to issue an occupancy certificate to the Girasdar in respect of the deed. [section 20(3)]. No Girasdar can obtain possession of any land held by a tenant except in accordance with such order, [section 20(4)]. Nothing contained in Chapter IV applies to any land in respect of which a tenant has acquired char or buta hak, (section 27). Under section 39 the Girasdar may obtain an occupancy certificate in respect of land allotted to him under Chapter IV Section 50(2) provides for execution of orders of the Mamlatdar awarding possession. Chapter V provides for acquisition of occupant. y rights by tenants. Having regard to sec. 30(1) and the proviso to sec. 32(b) the acquisition of occupancy rights by tenants is subject to an order of allotment to the Girasdar under Chapter IV and any occupancy certificate issued to a tenant ceases to be effective as soon as any agricultural land or any portion thereof is allotted to a Girasdar under Chapter IV either before or after the date on which the occupancy certificate issued to the tenant has become effective. On the strength of the order of allotment of land for personal cultivation under sec. 20(2) the Girasdar is entitled to evict the tenants from ,the land allotted to him. When the Girasdar applies under sec. 19 for allotment of land for personal cultivation, he seeks to evict the tenants from the land. Therefore when the appellant filed his application under sec. 19 he sought an order which would enable him to evict the tenants in contravention of the condition of his grant that he would not evict the tenants. In view of see. 18 nothing in Chapter IV enables him to obtain an order limiting or abridging the rights and privileges of the tenants arising under the condition. The Mamlatdar could not under sec. 20 ' pass an order which would have the effect of limiting or abridging those fights and privileges. The appellant had no right to evict the tenants and the Mamlatdar could not pass an order which would enable the appellant to evict them. The application filed by the appellant under sec. 19 was therefore incompetent. The appellant as a Girasdar was subject to the provisions of sec. The declaration in the notification dated January 29, 1954 that he was subject to the provisions of sec. 18 stated what followed from the express provisions of the Act. Because of sec. 411 18, the appellant was subject to the conditions imposed by the Government at the time of his recognition that he cannot evict the tenants. The notification dated July 20, 1954 declared the existing disability of the appellant in respect of eviction of tenants. The application filed by the appellant under sec. 19 was rightly dismissed by the Revenue Tribunal and the High Court rightly refused to interfere with this decision under article 227 of the Constitution. The appeal is dismissed with costs. G.C. Appeal dismissed.

In 1947 the Ruler of Virpur State in Saurashtra granted certain agricultural lands to the appellant. Later these lands were exchanged for others. In 1948 the administration of Virpur State was assumed by the United State of Saurashtra. The Saurashtra Government questioned the grant but the Government of India at a conference with the Ruler recognize it as having been lawfully made to the appellant, with the condition that he would not evict the tenants from the lands. The arrangement was set out in a letter dated November 2, 1949 from the Political Department the Government of India to the Revenue Department, United State of Saurashtra. Though the appellant was not a party to the arrangement he was aware of and accepted the arrangement and the conditions upon which his grant was confirmed by the Government of India. The Saurashtra Land Reforms Act came into effect on September 1, 1951.E On January 29, 1954 the Government of Saurashtra issued a notification under section 15(2) of the Act declaring the appellant to be a Girasdar for purposes of the Act subject to the provisions of section 18 thereof, and this was later by another notification, clarified to mean that he was a Girasdar subject to the condition imposed by the Government at the time of his recognition, that he could not evict the tenants. In the meantime the appellant made an application to. the Mamlatdar for an allotment of.land for personal cultivation under section 19 of the Act. This application was allowed by the Mamlatdar but the Revenue Tribunal in revision held that the application under section 19 was not maintainable. The appellant 's petition before the High Court under section 227 of the Act was dismissed on the grounds that (i) the conditions incorporated in the letter of November 2, 1949 having been accepted by the appellant enured for the benefit of the tenants under section 18 of the Act; (ii) the rights of the Girasdar were restricted by the notification under section 2(15) of the Act declaring him to be a Girasdar and tile appellant was bound by those restrictions. Against the High Court 's judgment the appellant came to this Court. HELD: (i) Had the Government of India annulled the grant made to the appellant the annulment would have been an Act of State and could not be questioned before the Municipal Tribunals. Instead of annulling the grant the government elected to confirm it subject to the conditions incorporated in the letter dated November 2, 1949. The appellant accepted the grant subject to those conditions and was bound by them. [408 F] State of Saurashtra vs Jamadar Mohamad Abdulla, , referred to. 406 (ii) The conditions incorporated in the letter dated November 2, 1949 were intended for the benefit of the tenant. The tenants could claim the benefit of the condition that the appellant could not evict them. The condition was annexed to the grant to the appellant. The right or privilege of the tenant arising out of this condition was a right or privilege arising out of a grant within the meaning of section 18. The expression 'grant ' in section 18 is wide enough to take within its sweep a grant by the Government to the Giraffes and is not limited to a grant by the Girasdar to the tenant. [409 G H] (iii) On the strength of the order of allotment of land for personal cultivation under section 20(2) the Girasdar is entitled to evict the tenants. from the land allotted to him. When the Girasdar applies under section 19 for allotment of land for personal cultivation, he seeks to evict the tenant from the land. Therefore when the appellant filed his application under section 19 he sought an order which would enable him to evict the tenants in contravention of the condition of his grant that he would not evict the tenants. In view of section 18 nothing in Chapter IV of the Act enabled him to obtain an order limiting or abridging the rights and privileges of the tenants arising under the condition. The Mamlatdar could not under section 20 pass an order which would enable the appellant to evict them. The application filed by the appellant under section 19 was therefore incompetent. [4 10 F G]

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