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Appeal No. 4916 of 1991 From the Judgment and Order dated 5.4.1991 of the Alla habad High Court in Second Appeal No. 3395 of 1978. Manoj Swarup and Ms. Lalita Kohli for the Appellants. 571 B.S. Nagar for Goodwill Indeevar for the Respondent. The Judgment of the Court was delivered by VENKATACHALIAH, J. Special leave 'is granted and the appeal taken up for final hearing and disposed of by this judgment. We have heard Sri Manoj Swamp, learned counsel for the Appellant and Shri Goodwill Indeevar for the Respondent. Appellant was Defendant in a suit for specific performance. He seeks special leave to appeal to this Court from the judgment and order dated 5.4.1991 of the High Court of Allahabad in Second Appeal No.3395 of 1978 decreeing, in reversal of the decrees of dismissal entered by the two courts below, specific performance of an agreement for sale of land. 3. On 3.7.1973 Respondent Natthu Singh sold Plot No.195 measuring 5 bighas and 18 biswas and Plot No.196 measuring 9 bighas and 8 biswas of Gulistapur Village, Pargana Dadri to the appellant for a consideration of Rs. 15,000. On the very day, i.e., 3.7.1973, another agreement was entered into between the parties whereunder Appellant agreed to reconvey the said properties to the Respondent against payment of Rs. 15,000/ within two years. On 2.6.1975, well within the period of two years stipulated for the performance of the agreement to re sell, Respondent instituted the suit for specific performance alleging that despite offer of performance and tendering the price, Appel lant, with the dishonest intention of appropriating the properties to himself refused reconveyance. The Appellant contested the suit principally on the ground that Respondent was never ready and willing to perform the contract and that Respondent himself was in breach. The trial court framed the necessary and relevant issues stemming from the pleadings and on its own apprecia tion of the evidence on record came to find against the Respondent that he was ready and willing to perform the contract; and that the agreement, being one of reconveyance, time was of its essence. The suit was accordingly dismissed. Respondent 's first appeal before the learned IInd Additional District Judge, Bulandshahar was also unsuccessful. However, in Respondent 's second appeal, the High Court reversed the findings of the two courts below and allowing the appeal held that Respondent Plaintiff was ready and willing to perform the contract; that the Appellant was the party in breach; and that, therefore, Respondent was entitled to a decree. This decree is assailed in this ap peal. 572 6. Sri Manoj Swarup appearing in support of the appeal urged two contentions; the first is that the High Court was in error in embarking upon a re appraisal of the evidence in a second appeal to distrub concurrent findings of fact that Respondent was not willing and ready to perform the con tract. The second contention is that contract itself became incapable of specific performance in view of the fact that during the pendency of second appeal the State had initiated proceedings for compulsory acquisition of the suit proper ties and the subject matter of the suit itself ceased to be available. Counsel says the power to give compensation as an alternative to specific performance did not extend to a case in which the relief of specific performance had itself become impossible. On the first question, as to the readiness of the Respondent to perform his obligations, the High Court no ticed that on 30th January, 1974 even before institution of the suit Respondent and his brother had sold another proper ty belonging to them for a price of Rs. 30,000 and that Respondent had the necessary wherewithal to perform his part of the bargain. The High Court held: ". Thus, the plaintiff admittedly had re ceived Rs. 15,000/ on 30.1. 1974 and soon thereafter the first notice was issued to the defendant asking him to indicate a date for executing the saledeed and also expressing his readiness and willingness. There is no evi dence on the record that between 30.1.1974 and the date of suit or thereafter the plaintiff had parted with this money. " The High Court also noticed that the two notices dated 23.3. 1974 and 6.5. 1975 respectively issued by the Respond ent to the Appellant before the suit contained the averments that he was ready and willing to perform the contract. The notices were, no doubt, not actually served on the appellant as they had come back unserved upon the alleged refusal by the appellant to accept them. The High Court relied upon the averments in the notices which could be treated as a part to the plaint having been referred to and relied upon therein. In our opinion, the High Court was right in its view. The notices must be presumed to have been served as contemplated by Section 27 of the General .Clauses Act. As to the jurisdiction of the High Court to reappreciate evi dence in a second appeal it is to be observed that where the findings by the Court of facts is vitiated by non considera tion of relevant evidence or by an essentially erroneous approach to the matter, the High Court is not precluded from recording proper findings. We find no substance in the first contention. 573 9. The second contention is, however, not without its interesting aspects. During the pendency of the second appeal, the properties were acquired by the State for a public purpose. This is not disputed. It would appear that a compensation of Rs. 4 lakhs or thereabouts has been deter mined. That sum, along with the generous solatium and the rates of interest provided by the statute would now be a much larger amount. Before the High Court, Appellant sought to rely upon the decision of this Court in Piarey Lal vs Hori Lal, [1977] 2 S.C.R. 915. That was a case where in proceedings of consolidation the subject matter of an agree ment to sell was allotted to a person other than the vendor, the relief of specific performance was held not to survive. The High Court rightly held that pronouncement was distin guishable and inapplicable to the present controversy. As to the relief available to a plaintiff where the subject matter was acquired during the pendency of a suit for specific performance the High Court said: ". The learned counsel for the respondent has vehemently urged that after the land has been acquired its corpus has ceased to exist and no decree for specific performance can now be granted. In my opinion with the acquisition of)the land plaintiffs rights do not get extinguished in totality. The appellate court always suitably mould the relief which the circumstances of the case may require or permit. The power in this regard is ample and wide enough. However, in the present case the property has not been totally lost. What happens in the case of the acquisition is that for the property compensation payable in lieu there of is substituted. " The High Court issued these consequential directions: "If the decree for specific performance of contract in question is found incapable of being executed due to acquisition of subject land, the decree shall stand suitably substi tuted by a decree for realisation of compensa tion payable in lieu thereof as may be or have been determined under the relevant Act and the plaintiff shall have a right to recover such compensation together with solatium and inter est due thereon. The plaintiff shall have a right to recover it from the defendant if the defendant has already realised these amounts and in that event ' ;the defendant shall be further liable to pay interest at the rate 574 of twelve per cent from the date of realisa tion by him to the date of payment on the entire amount realised in respect of the disputed land. " We are afraid the approach of the High Court is perhaps somewhat an over simplification of an otherwise difficult area of law as to the nature of relief available to a plain tiff where the contract becomes impossible of specific performance and where there is no alternative prayer for compensation in lieu or substitution of specific perform ance. While the solution that has commended itself to the High Court might appear essentially just or equitable, there are certain problems both of procedure and of substance in the administration of the law of specific relief particular ly in the area of award of an alternative relief in lieu or substitute of specific performance that require and compel consideration, especially in view of some pronouncements of the High Courts which have not perceived with precision, the nice distinctions between this branch of the law as adminis tered in England and in India. Section 21 of the corre sponding to Section 19 of 1877 Act enables the plaintiff in a suit for specific performance also to claim compensation for its breach either in addition to or in substitution of, such performance. Sub sections (2), (4) and (5) of Section 21 are material and they provide: "(2). If, in any such suit, the Court decides that specif ic performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensa tion for that breach, it shall award his such compensation accordingly. (3) [ Omitted as unnecessary.] (4) In determining the amount of any compensation awarded under this section, the Court shall be guided by the princi ples specified in Section 73 of the , 9 of 1872. (5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint: Provided that where the plaintiff has not claimed any such compensation in the plaint, the Court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation. Explanation The circumstance that the contract has become 575 incapable of specific performance does not preclude the Court from exercising the jurisdiction conferred by this section." (emphasis added) So far as the proviso to sub section (5) is concerned, two positions must be kept clearly distinguished. If the amendment relates to the relief of compensation in lieu of or in addition to specific performance where the plaintiff has not abandoned his relief of specific performance the court will allow the amendment at any stage of the proceed ing. That is a claim for compensation failing under Secion 21 of the and the amendment is one under the proviso to sub section (5). But different and less liberal standards apply if what is sought by the amend ment is the Conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract Act is invoked. This amendment is under the discipline of Rule 17 Order 6, C.P.C. The fact that sub section (4), in turn, invokes Section 73 of the for the principles of quantification and assessment of compensation does not obliterate this distinc tion. The provisions of Section 21 seem to resolve certain divergencies of judicial opinion in the High Courts on some aspects of the jurisdiction to award of compensation. Sub section (5) seeks to set at rest the divergence of judicial opinion between High Courts whether a specific claim in the plaint is necessary to grant the compensation. In England Lord Cairn 's (Chancery Amendment) Act, 1858 sought to confer jurisdiction upon the Equity Courts to award damages in substitution or in addition to specific performance. This became necessary in view of the earlier dichotomy in the jurisdiction between common law and Equity Courts in the matter of choice of the nature of remedies for breach. In common law the remedy for breach of a contract was damages. The Equity Court innovated the remedy of specific perform ance because the remedy of damages was found to be an inade quate remedy. Lord Cairn 's Act, 1858 conferred jurisdiction upon the Equity Courts to award damages also so that both the reliefs could be administered by one court. Section 2 of the Act provided: "In all cases in which the Court of Chancery has jurisdiction to entertain an application for specific performance of any covenant, contract or agreement it shall be lawful for the same Court if it shall think fit to award damages to the party injured either in addi tion to or in substitution for such specific performance and such damages may be assessed as the Court shall direct. " 576 This is the historical background to the provisions of Section 21 of the and its prede cessor in Section 19 of the 1877 Act. In Mohamad Abdul Jabbar & Others vs Lalmia &Others. A.I.R (34) 1947 Nagpur 254 specific performance of an agree ment of sale dated 16th January, 1934, was sought by the institution of a suit on 15th January, 1937. During the pendency of the suit, on 20th April, 1937, the provincial Government started land acquisition proceedings respecting the subject matter of the suit and the same was acquired. The High Court upheld the dismissal of the suit for specific performance and referred an amendment for award of damages. On the obvious impermissibility of specific performance the Nagpur High Court said: "We accordingly conclude that specific per formance is now impossible and we cannot decree it for "equity like nature does nothing in vain. " We cannot hold the plaintiffs appel lants entitled to the compensation money into which the property was converted because they had no right or interest in that property. " Refusing the amendment for the relief for payment of money the High Court held: "We would not allow amendment also because on the facts found by the trial Court (with which we see no reason, whatever, to differ) we would have refused specific performance, and the claim for damages on this account would also have been negatived because damages could have been awarded only if specific performance could rightly have been claimed. The appeal, therefore, fails and is dismissed with costs." .llm0 Support for these conclusions was sought from the oft quoted, but perhaps a little misunderstood, case of Ardeshir H. Mama vs Flora Sassoon A.I.R. 1928 Privy Council 208. The passage in Sassoon 's case relied upon by the Nagpur High Court is this: "In a series of decisions it was consistently held that just as its power to give damages additional was to be exercised in a suit in which the Court had granted specific perform ance, so the power to give damages as an alternative to specific performance did not extend to a case in which the plaintiff had debarred himself from claiming that form of relief, nor to a case in which that relief had become impossible. 577 The case of 52 Bombay 597 fell within the first category of cases described above under the alternative relief of damages. This case fails within the second part where the relief of specific performance has become impossible." (emphasis supplied) The second part of the observation of the Nagpur High Court, with great respect to the learned Judges proceeds on a fallacy resulting from the non perception of the specific departure in the Indian law. In Lord Cairn 's Act. 1858 damages could not be awarded when the contract had, for whatever reason, become incapable of specific performance. But under the Indian law the explanation makes a specific departure and the jurisdiction to award damages remains unaffected by the fact that without any fault of the plain tiff, the contract becomes incapable of specific perform ance. Indeed, Sassoon 's case is not susceptible of the import attributed to it by the Nagpur High Court. Sassoon 's case itself indicated the departure made in Indian Law by the Explanation in Section 19 of the 1877 Act, which is the same as the Explanation to Section 21 of the 1963 Act. The Judicial Committee, no doubt, said that Section 19 of the 1877 Act "embodies the same principle as Lord Cairn 's Act and does not, any more than did the English Statute enable the court in a specific performance suit to award 'compensa tion for its breach ' where at the hearing the plaintiff debarred himself by his own action from asking for a specif ic decree" ', But what was overlooked was this observation of Lord Blanesburgh, "except as the case provided for in the expla nation us 10 which there is introduced an express divergence from Lord Cairn 's Act as expanded in England" (emphasis supplied ) Indeed the following illustration of the Explanation appended to Section 19 of makes the position clear" "Of the Explanation A, a purchaser, sues B, his vendor, for specific performance of a contract for the sale of a patent. Before the hearing of the suit the patent expires. The Court may award A compensation for the non performance of the contract, and may, if necessary, amend the plaint for that purpose When the plaintiff by his option has made specific performance impossible, Section 21 does not entitle him to seek damages. That position is common to both Section 2 of Lord Cairn 's Act, 1858 and Section 21 of the . But in Indian Law where the contract, 578 for no fault of the plaintiff, becomes impossible of per formance section 21 enables award of compensation in lieu and substitution of specific performance. We, therefore, hold that the second contention of Sri Manoj Swarup is not substantial either. Learned counsel were not specific on the point whether the Respondent had actually asked for compensation in lieu of specific performance. We may assume that it was not so specifically sought. In order that formality in this behalf be completed, we permit the amendment here and now so that complete justice is done. The measure of the compensation is by the standards of Section 73 of the Indian Contract. Here again the English Rule in Bain vs Fothergill, (1874) L.R. 7 House of Lords 158 that the purchaser, on breach of the ,contract, cannot recover, for the loss of his bargain is not applicable. In Pollock & Mulla on Contract (10th Edn.) the law on the matter is set out thus : "Where, therefore, a purchaser of land claims damages for the loss of his bargain, the question to be decided is whether the damages alleged to have been caused to him 'naturally arose in the Usual course of things from such breach '; and in an ordinary case it would be difficult to hold otherwise." [p. 663] Learned Authors adopt the following observation of Farran C.J. in Nagardas vs Ahmedkhan, : "The Legislature has not prescribed a differ ent measure of damages in the case of con tracts dealing with land from that laid down in the case of contracts relating to commodi ties" In the present case there is no difficulty in assessing the quantum of the compensation. That is ascertainable with reference to the determination of the market value in the land acquisition proceedings. The compensation awarded may safely be taken to be the measure of damages subject, of course, to the deduction therefrom of money value of the services, time and energy expended by the appellant in pursuing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award. We accordingly confirm the finding of the High Court that Respondent was willing and ready to perform the con tract and that it was the 579 Appellant who was in breach. However, in substitution of the decree for specific performance, we make a decree for compensation, equivalent to the amount of the land acquisi tion compensation awarded for the suit lands together with solatium and accrued interest, less a sum of Rs.1,50,000 (one lakh fifty thousand only) which, by a rough and ready estimate, we quantify as the amount to be paid to the appel lant in respect of his services, time and money expended in pursuing the legal claims for compensation. We may here notice one other submission of Sri Manoj Swarup. He found fault with the operative part of the judg ment of the High Court, Which, according to Sri Manoj Swa rup, had not even provided for the payment to the appellant of Rs. 15,000 the stipulated consideration for reconveyance. There is this apparent omission in the operative part of the High Court 's judgment. But this is only a technicality. The operative part granting relief should be read with the relevant prayers in the plaint itself. But that is not of any practical significance here in as much as we have also taken this amount of Rs. 15,000 into account in somewhat generously quantifying the litigation expenses at Rs. 1,50,000 as payable to the appellant out of the sums awarded for the acquisition. Therefore, there is no need for Re spondent to pay the sum of Rs. 15,000 additionally. In the result there will be a decree awarding 10 the Respondent compensation in lieu and substitution of one for specific performance which but for the acquisition Respond ent would have been entitled to the quantum and the measure of the compensation being take entire amount of compensation determined for take acquisition of the suit. properties to gather with all the solatium, accrued interest and all other payments under the law authorising the acquisition, less a sum of Rs. 1,50,000 (Rupees one lakh fifty thousand only) which shall go to the Appellant towards his services, time and amounts spent in pursuing the claims for compensa tion as well as the consideration stipulated for reconvey ance . The sum of Rs.1,50,000 is allowed to be. paid to the Appellant on his assurance that he has not received any part of the compensation earlier. If any amount has been received by the Appellant out of compensation awarded for the acqui sition, such sums shall go in reduction of the sum of Rs.1,50,000, the difference being for the benefit of and be paid to the Respondent additionally. This order shall be sufficient authority for the land acquistion authorities or the Courts wherever the matter may be pending for the apportionment and payment of the compen sation for the acquisition of the suit 580 property between the Appellant and the Respondent in the manner indicated above. These directions shall, of course, not affect or prejudice the claim of other claimants, if any, whose claims are to be determined in the said land acquistion proceedings, the assumption implicit in this apportionment being. that there are no other claimants in the land acquisition proceedings. If such apportionment and withdrawal is not possible, the decree in terms of this judgment shall be worked out in execution proceedings. The decree under appeal is modified accordingly. No costs. T.N.A. Decree modified.

By an agreement dated 3.7.1973 the respondent sold two plots to the appellant for a consideration of Rs. 15,000. By another agreement, entered into between the parties on the same day, the appellant agreed to reconvey the said proper ties to the respondent against payment of Rs. 15,000 within two years. Within the stipulated period the respondent (Plaintiff) instituted a suit for specific performance alleging that despite offer of performance and tendering the price, the Appellant (Defendant) refused reconveyance of the properties. The Trial Court dismissed the suit by holding that the Respondent was not ready and willing to perform the con tract, and 568 that the time was essence of the reconveyance agreement. The first Appellate Court dismissed the respondent 's appeal. The respondent preferred second appeal before the High Court. Relying upon the two notices issued by the Respondent to the appellant before filing of the suit which contained the averments that he was willing and ready to perform the contract, the High Court reversed the findings of the two courts below and allowed the appeal and held that Respond ent Plaintiff was willing to perform the contract and that the Appellant was the party in breach. Accordingly it passed a decree of specific performance of an agreement for sale of land. During the pendency of the Second Appeal, suit proper ties were acquired by the State for public purposes and the High Court rejected the plea that after the land has been acquired by the State corpus of the Land had ceased to exist and no decree for specific performance can be granted. In defendant 's appeal to this Court it was contended on his behalf (1) that the High Court erred in reappreciating the evidence in second appeal and in disturbing the concur rent findings of fact that Respondent was not willing and ready to perform the contract; (2) that in view of the acquisition of the suit properties the contract itself became incapable of specific performance and to such a case the power to give compensation as an alternative to specific performance did not extend. Modifying the decree of the High Court, this Court, HELD:1. Where the findings by the Court of facts are vitiated by non consideration of relevant evidence or by an essentially erroneous approach to the matter, the High Court is not precluded from recording proper findings. [572 H] 1.1 The notices issued by the respondent to the appel lant containing the averments that he was ready and willing to perform the contract which were not actually served on the appellant because of his refusal to accept them must be presumed to have been served as contemplated by Section 27 of the General Clauses Act. Therefore the High Court was right in relying upon the averments in the notices which could be treated as part to the plaint. Accordingly the finding of the High Court that Respondent was willing and ready to 569 perform the contract and that it was the Appellant who was in breach is accordingly confirmed. [572 F G, 578 H, 579 A] 2. Section 21 of the enables the Plaintiff in a suit for specific performance also to claim compensation for its breach either in addition to or in substitution of, such performance. However, when the plaintiff by his option has made specific performance impos sible, Section 21 does not entitle him to seek damages. That position is common under the English and Indian Law namely under Section of Lord Cairn 's Act, 1858 and Section 21 of the . But under the Indian Law the explanation to sub section (5) of Section 21 makes a specif ic departure and the jurisdiction to award damages remains unaffected by the fact that without any fault of the plain tiff, the contract becomes incapable of specific perform ance. [574 D, 577, H C] Piarey Lal vs Hori Lal, [1977] 2 S.C.R. 915, distin guished and held inapplicable. Mohamad Abdul Jabbar & Ors. vs Lalmia & Ors., A.I.R. (34) 1947 Nagpur 254, disapproved. Ardeshir H. Mama vs Flora Sessoon, A.I.R. 1928 Privy Council 208, explained. However, so far as the proviso to sub section (5) of Section 21 is concerned, two positions must to kept clearly distinguished. If the amendment relates to the relief of compensation in lieu of or in addition to specific perform ance where the plaintiff has not abandoned his relief of specific performance the Court will allow the amendment at any stage of the proceeding. That is a claim for compensa tion failing under section 21 of the and the amendment is one under the proviso to sub section (5). But different and less liberal standards apply if what is sought by the amendment is the conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract is invoked. This amendment is under the discipline of Rule 17, Order 6, C.P.C. The fact that sub section (4), in turn, invokes Section 73 of the Indian Contract Act for the prin ciples of quanlification and assessment of compensation does not obliterate this distinction. [575 B C] 570 3.1 In the instant case, assuming that the Respondent had not specifically sought for compensation in lieu of specific performance the amendment is permitted in order that complete justice is done. [578 B] 3.2 The measure of the compensation is by the standards of Section 73 of the Indian Contract Act. Here the English Rule in Bain vs Fothergill that the purchaser, on breach of the contract, cannot recover for the loss of his bargain is not applicable. [578 C] Bain vs Fothergill, 1874 L.R. 7 House of Lords 158, held inapplicable. Pollock & MuHa on Contract (10th edn.) p.663; Nagardas vs Ahmedkhan, , referred to. 3.3 In the instant case, the quantum of the compensation is ascertainable with reference to the determination of the market value in the land acquisition proceedings. The com pensation awarded may safely be taken to be the measure of damages subject, of course, to the deduction therefrom of money value of the services, time and energy expended by the appellant in pursuing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award. [578 G] 4. Accordingly there will be a decree awarding to the Respondent compensation in lieu and substitution of one for specific performance which but for the acquisition Respond ent would have been entitled to; the quantum and the measure of the compensation being the entire amount of compensation determined for the acquisition of the suit properties to gether with all the solatium, accrued interest and all other payments under the law authorising the acquisition less a sum of rupees one lakh fifty thousand only which shall go to the Appellant towards his services, time and amounts spent in pursuing the claims for compensation as well as the consideration stipulated for reconveyance. [579 E F]

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Appeal Nos. 182 and 183 of 1993. From the Judgment and Order dated 6.6.86 of the Central Ad ministrative Tribunal, Chandigarh in O.A./T.A. Nos.49 & 102 of 1986. Raj Birbal for the Appellant. Rajinder Sachher, Mahabir Singh and A.K Mahajan for the Respondents. The Judgment of the Court was delivered by KULDIP SINGH, J. Kamlesh Baboo and V.K. Bhardwaj were promoted as Executive Engineer (Civil) with effect from January 21, 1986 in the Engineering Department of the Chandigarh Administration. The promotion was made on the basis of merit and suitability as determined under the provisions of the Punjab Service of Engineers, Class I (Buildings and Road Branch) Rules, 1960 (Rules) as applicable to the Chandigarh Administration. Both of them approached the Central Administrative 123 Tribunal, Chandigarh Bench seeking a direction to the effect that their 'seniority in the cadre of Executive Engineers be determined from the date when they became eligible to be considered for promotion under the Rules. In other words, they claimed January 1, 1985 the eligibility date as the date of their promotion to the post of Executive Engineer instead of January 21, 1986 when they were actually promoted. The Tribunal by its order dated June 6, 1986 granted the relief asked for by Kamlesh Baboo and V.K. Bhardwaj in the following terms: "In view of the above discussion, we direct that the applicant, who was promoted as Executive Engineer from 21.1.1986 (vide Office Order dated 20.1.1986 and 2.5.1986) shall be continued as Executive Engineer even if the approval of the U.P.S.C. is not received within six months from the date of his promotion. For the purposes of seniority, the applicant shall be considered from the date when he became eligible. The promotion of the applicant as Executive Engineer, shall however, be subject to the approval by the U.P.S.C. and without prejudice to the decision of the competent court in the matter of seniority, which is in dispute. " These two appeals by the Chandigarh Administration are against the order of the Tribunal. Kamlesh Baboo joined service as Section Officer under the Chandigarh Administration on March 8, 1971. He was promoted to the post of Sub Divisional Engineer on December 29, 1976 and was confirmed as such on August 13, 1985. The service particulars of V.K. Bhardwaj are identical. The conditions of service of the respondents are governed by the Rules. Rules 6(b) and 8 (1)(3)(4)(8)(9)(10)(11) which are relevant are reproduced hereunder: "6 (b) in the case of an appointment by promotion from Class 11 Service has 8 years completed service, in that class and has passed the departmental examination, as provided in rule 15; 8(1) A committee consisting of the Chairman of the Public 124 Service Commission or where the Chairman is unable to attend, any other member of the Commission representing it, the Secretary, P.W.D. (Buildings and Roads Branch), and the Chief Engineers, Punjab, P.W.D. Buildings and Roads Branch, shall be constituted. (3)The Committee shall meet at intervals, ordinarily not exceeding one year, and consider the cases of all eligible officers for promotion to the senior scale of the Service, as on the first day of January of that year. (4)The Committee shall prepare a list of officers suitable for promotion to the senior scale of the Service. The selection for inclusion in such list shall be based on merit and suitability in all respects with due regard to seniority. (8)The fist prepared or revised in accordance with subrules (4), (5) and (6) shall then be forwarded to the Commission by Government along with (i) the records of all officers included in the list; (ii) records of all officers proposed to be superseded as a result of the recommendations made by the Committee; (iii)the reasons, if any, recorded by the Committee for the proposed supersession of any officer; (iv) the observations, if any of the State Government on the recommendation of the Committee. (9) The Commission shall consider the list prepared by the Committee along with other documents received from the State Government and,unless it considers any change necessary, approve the list. (10) If the Commission considers it necessary to make any, changes in the list received from Government, the 'Commission shall make the changes it proposes and forward the list it considers suitable to the State Government. 125 (11) Appointments to the Service shall be made by Government from this list in the order in which names have been placed by the Commission. " It is not disputed that the respondents in these two appeals completed eight years of service in Class 11 cadre, by the end of December 1984 and as such they were eligible to be considered for promotion to the post of Executive Engineer on January 1, 1985. The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Rules, reproduced above. Rule 8 of the Rules envisages a Selection Committee presided over by Chairman/Member of the Public Service Commission. The Committee considers the cases of eligible officers on the basis of merit and suitability, the list of the selected officers is sent to the Commission for final approval and thereafter the appointments are made out of the approved list in accordance with the merit assigned therein. It is thus obvious that eligibility under Rule 6(b) of the Rules by, itself does not give a right to a member of Class II service to be promoted to the post of Executive Engineer in Class I service. The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules. No member of Class 11 service can claim promotion to the post of Executive Engineer on the ground of eligibility alone. Unless a Class 11 officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer. The question of Assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service. The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules. Both the respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986. Their seniority has to be determined in class I service keeping in view the date of their appointments as January 21, 1986. The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the respondents from the date of their eligibility. The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date. The directions of the Tribunal in this respect are patently violative of the Rules and cannot be sustained. Even otherwise both Kamlesh Baboo and V.K. Bhardwaj were working as 126 Sub Divisional Engineer on January 1, 1985 and as such treating them to have been appointed to Class I service from that date and giving them benefit towards seniority on that basis would be wholly erroneous. The question as to whether the deputationists from Punjab and Haryana should be permitted to continue to serve the Chandigarh Administration has no relevance to the controversy involved in these appeals. That is a matter of policy between the States of Punjab, Haryana and Union Territory of Chandigarh. The Tribunal was wholly unjustified in seeking support from the non existent fact that because of the presence of many deputationists the respondents in these appeals were not being considered for promotion. As a matter of fact the respondents got their promotion at the earliest possible opportunity. They became eligible on January 1, 1985 and thereafter within a period of one year the procedure under Rule 8 was completed and they were promoted with effect from January 21, 1986. We allow the appeals, set aside the order of the Tribunal dated June 6, 1986 and dismiss the applications filed by respondents Kamlesh Baboo and V.K. Bhardwaj before the Tribunal. No costs. V.P.R. Appeals allowed.

The respondent in C.A. No.182 of 1993 joined service as Section Officer under the appellant on 83.1971. On 29.12.1976 he was promoted to the post of Sub Divisional Engineer and was confirmed on 13.8.1985. With effect from 21.1.1986, the. respondent was promoted as Executive Engineer (Civil). The service particulars of the respondent in C.A. No.183 of 1993 were identical. The respondents approached the Central Administrative Tribunal to determine their seniority in the cadre of Executive Engineers from the date of eligibility, ie. 1.1.1985 and not from 21.1.1986. The Tribunal allowed the applications of the respondents, against which the present appeals were riled by the Administration. Allowing the appeals, this Court, HELD:1.01. The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Punjab Service of Engineers, Class I (Buildings and Roads Branch) Rules 1960. Eligibility under Rule 6(b) of the Rules by itself does not give a right to a member of Class 11 service to be promoted to the post of Executive Engineer in Class I service. The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules. No member of Class 11 service can claim 122 promotion to the post of Executive Engineer on the ground of eligibility alone. Unless a Class II officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer. [125C E] 1.02. The question of assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service. The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules. [125F] 1.03. The respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986. Their seniority has to be determined in Class I service keeping in view the date of their appointments as January 21, 1986. [125F G] 1.04 The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the Respondents from the date of their eligibility. The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date. The directions of the Tribunal in this respect are patently violative of the Rules. [125G H]

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minal Appeal No. 554 of 1984. From the Judgment and Order dated 27.9.1984 of the Allahabad High Court in Government Appeal No. 1634 of 1977 M.R. Sharma, Ms. Anjana Sharma and R.D. Upadhayaya for the Appellant. Arvind K. Nigam, Ms. Kamini Jaiswal and A.S. Pundir for the Respondent. The Judgment of the Court was delivered by G.N. RAY, J. This appeal is directed against the Judgment dated September 27, 1984 passed by the Division Bench of the Allahabad High Court setting aside the judgment dated April 30, 1977 passed by the learned Additional Sessions Judge, Second Court, Kanpur (Dehat). By the impugned Judgment, the Division Bench of the Allahabad High Court allowed the appeal preferred by the State of Uttar Pradesh against the judgment of acquittal. in Sessions Trial No. 235 of 1976 and convicted the accused/appellant Mohd. Aslam under Section 302 I.P.C. and sentenced him to imprisonment for life. The prosecution story in short is that there is long standing enmity between Abdul Salem and Abdul Hamid Kham Pradhan on one side and the complainant Abdul Hamid on the other. Such enmity arose out of rival claim in placing 'sawai 'on the Akbara of Tajias at the time of Moharram. Sawai is a kind of flag which is put on Tajias at the time of Moharram. Over such dispute a civil litigation was going on between the said parties and there were also criminal proceedings under Section 107 read with Section 117 of the Code of Criminal Procedure between the said parties. Shamim Raza was nephew and son in law of Abdul Hamid, the complainant and the said Shamim Raza was doing pairvi of the said cases on behalf of Abdul Hamid. For the aforesaid reasons, Abdul Salem and Abdul Hamid Khan Pradhan, became inimical towards Shamim Raza and Abdul Hamid. Mohd. Aslam, the accused/appellant is the son of Abdul Salem. Both the parties were residents of village Bara, 448 within Police Station Akbarpur in the District of Kanpur. On December 25, 1975 at about 6.00 P.M. Shamim Raza was sitting on a wooden bench in front of a hair cutting shop of Iiyas in village Raza. Mohd. Umar and Abdul Khaliq (P.W.1) were also sitting with him and the said three persons were talking. The Gumti of one Mohd. Laiq was at a short distance towards the east of that place. Bhurey (P.W.2), Qamruddin (P.W.3) and Abdul Hamid were standing near the said Gumit and had also been talking. There was light coming from electric bulbs at that place. At that time, the accused/appellant, Mohd. Aslam came there armed with a double barrel gun. He challenged Shamim Raza and threatened to kill anyone who would come forward. Thereafter, he fired two shots. By said shots, Shamim Raza and Mohd. Umar sustained gun shot injuries and both of them fell down. Shamim Raza died on the spot and the condition of Mohd. Umar also became serious. Such occurrence was seen by Mohd. Umar, Abdul Hamid, Bhurey and Qamruddin. Peer Mohammed (P.W.10) took Mohd. Umar to Lala Lajpatrai Hospital at Kanpur for treatment and at 7.50 PM. R.C. Asthana (P.W.8) examined Mohd. Umar. Abdul Hamid went to his house and got a report of the occurrence written by Mohd. Raizwan (P.W.4) and took the said report to Akbarpur Police Station which was about 4 miles away and lodged the F.I.R. at 7.15 P.M. Station Officer incharge of the Akbarpur Police Station, Mr. Jagdamba Prasad Misra, took up the investigation of the case and he interrogated Abdul Hamid at the Police Station and thereafter reached the scene of occurrence at about 7.55 P.M. He found the dead body of Shamim Raza lying at the scene of occurrence and he prepared inquest report and other connected papers. He also interrogated Bhurey, Qamruddin and Abdul Khaliq who were the eye witnesses, He, also prepared the site plan and found blood on the wooden bench and also on the ground and collected portion of the blood stained wooden bench and blood stained bricks. The injured Mohd. Umar was interrogated in the hospital on January, 1976. The post mortem examination on the body of Shamim Raza was performed by Dr. Prakash (P.W.6). Mohd. Umar died in the hospital on January 4, 1976 and his post mortem examination was performed by Dr. B.D. Misra at Kanpur on January 5,1976. The accused/appellant Mohd. Aslam denied the prosecution allegations against him and alleged that he was falsely implicated on account of enmity and party faction. He also denied that he had been absconding from the village and he examined two witnesses in defence. The learned Additional Sessions Judge did not find the prosecution case and the evidences acceptable. Accordingly, he acquitted the accused/appellant. The State 449 thereafter preferred an appeal before the Allahabad High Court and as aforesaid, the Allahabad High Court allowed the said appeal, set aside the judgment of acquittal passed by the learned Sessions Judge and convicted the accused/appellant under Section 302 I.P.C. and sentenced him to suffer rigorous imprisonment for life. Learned counsel appearing for the accused/appellant has strenuously contended that the High Court did not appreciate the salutory principles governing the judgment of acquittal. He has contended that the learned Sessions Judge had taken pains in analysing in detail the evidences adduced in the case and gave reasonings for each of the findings as to why the prosecution case could not be accepted and what were the intrinsic deficiency in the evidences adduced in the case in support of the prosecution. The learned counsel has contended that the law is well settled that in a case of acquittal, the appellate Court should not interfere with the judgment of acquittal if such judgment is based on consideration of the evidences adduced in the case and there is no perversity in coming to the finding for passing the judgment of acquittal. In such a case of acquittal, the High Court in exercise of its appellate power should not endeavour to appreciate the evidence on its own in order to come to different finding unlike in an appeal arising from the judgment of conviction. The learned counsel has contended that it has been established convincingly that there was party faction between the two groups over a dispute to place Sawai on Tajias and both civil and criminal proceedings were instituted between the two groups. The learned counsel has contended that Abdul Hamid, the father in law of the deceased, Shamim Raza, was the principal man with whom Abdul Salem and Abdul Hamid Khan Pradhan had disputes and differences. There was no earthly reason to bear malice and grudge against Shamim Raza who was only a son in law of Abdul Hamid Khan Pradhan. Accordingly, there was no reason to kill him particularly in the presence of eye witnesses as alleged. Such fact was taken note of by the learned Sessions Judge in analysing the acceptability of the prosecution case and credibility of the witnesses examined in support of the prosecution case. The learned counsel for the appellant has also submitted that there was no reason for injuring Mohd. Umar by the accused/appellant. He has contended that the alleged incident of gun shot injuries had not happened in the manner alleged by the prosecution but after such incident, the complainant and the other alleged eve witnesses falsely implicated the ac 450 cused/appellant because of the old enmity between the two groups. The learned counsel has contended that in a very short time, a written complaint was lodged in the Akbarpur Police Station which is admittedly four miles away from the place of occurrence. The prosecution story is that after the incident the said written complaint was reduced in writing by a person other than the complainant and thereafter the complainant went to the Police Station to file the written complaint. If the incident had taken place at about 6.00 P.M. as alleged by the prosecution, it is practically impossible to lodge the said written F.I.R. at Akbarpur Police Station by 7.15 P.M., particularly when Abdul Hamid, the complainant did not straightaway go to the Akbarpur Police Station but he had been to his house and got a report of the occurrence written by Mohd. Raizwan (P.W.4) and then lodged the F.I.R. at the Akbarpur Police Station. The learned Sessions Judge had taken note of this very important fact in not accepting the prosecution case. Unfortunately, the High Court failed to appreciate the strong reasonings given by the learned Sessions Judge in not accepting the prosecution case. The learned counsel has also submitted that there is serious discrepancy so far as the injury of Mohd. Umar is concerned. Admittedly, Mohd. Umar got injured by a gun shot at the back but the manner in which the injured was sitting and the direction from which the gun was fired by the appellant, could not have caused gun shot injuries at the back of Mohd. Umar. The learned Sessions Judge having noted such discrepancies had rightly rejected the prosecution case implicating the accused/appellant. He has also submitted that the doctor had noted that Mohd. Umar sustained gun shot injuries from a bullet but the injuries sustained by the other deceased, namely, Shamim Raza was a gun shot injury from pellets. It was nobody 's case that different guns had been used by the accused/appellant for injuring the said two persons differently. Because of such discrepancy, the learned Sessions Judge was not inclined to accept the prosecution case and the suggestion.given by the prosecution witnesses that Mohd. Umar might have turned his back in a reflex and received the gun shot injuries at the back was not accepted by the learned Sessions Judge. The learned counsel for the appellant has also contended that the alleged eye witness were in the faction of the complainant Abdul Hamid and they were partisan witnesses. Accordingly, their testimonies were required to be considered with extreme care and caution. The learned Sessions Judge, therefore, after noting the various discrepancies in the prosecution case, was not inclined to place reliance on the evidences adduced by the alleged eye witnesses and acquitted the accused/appellant. 451 Such order of acquittal, in the facts of the case and the reasons indicated by the learned Sessions Judge, was not required to be interfered with in appeal by the High Court. We are, however, unable to accept the submissions made by the learned counsel for the appellant. In an appeal arising from an order of acquittal, the appellate Court is not precluded from appreciating the evidences on its own if the reasons given by the learned trial Judge in passing the order of acquittal, do not stand scrutiny and are against the weight of the evidences adduced in the trial. The appellate Court, will be quite justified in setting aside the order of acquittal if it appears to the court of appeal that improper consideration of the materials and evidences on record was made and the reasonings of the trial Judge are wholly unjustified. It is only necessary that the court of appeal should weigh the reasonings of the learned trial Judge with care and caution in the light of the evidences adduced in the case by giving cogent reasons as to why such findings are unreasonable and against the evidence. In the instant case, the High Court has taken care in analysing each and every finding of the learned Sessions Judge in the light of the evidences adduced in the case and has given cogent reasons as to why such findings were unreasonable and not acceptable. It is an admitted position that the two persons suffered gun shot injuries on December 25, 1975 in the evening and one of the injured persons died on the spot and the other was removed to hospital. He got serious injuries and later on sccummbed to such injuries. The mere fact that there was enmity and bitterness between the two groups, by itself, does not establish that the eye witnesses falsely implicated the accused/appellant. Shamim Raza was the son in law of Abdul Hamid and it was established in evidence that he was looking after the cases between the parties and making 'pairvi 'in civil and criminal cases. In our view, the High Court is justified in holding that because of such positive role taken by Shamim Raza, he had incurred displeasure of the other group which acted as a motive for the gun shot injuries. The learned Sessions Judge doubted the prosecution case because of lodging the F.I.R. at 7.15 p.m. at Akbarpur Police Station which was about four miles away from the place of occurrence where the incident, according to the prosecution, had taken place at about 6.00 P.M. We do not think that such F.I.R. could not have been lodged by that time. The High Court has considered the reasonings of the learned Sessions Judge on the question of lodging the F.I.R. at Akbarpur Police Station within a short time and has, in our view, given very good 452 reasons in not accepting the views entertained by, the learned Sessions Judge. In our view, the learned Sessions Judge was also not justified in holding that the gun shot injuries suffered by Mohd. Umar had not been property explained by the prosecution because the doctor had noted that such injuries were caused by bullet and not by pellets. The injuries suffered by Mohd. Umar as noted by the doctor do not run counter to the prosecution case that such injuries were caused by the gun used by the accused/ap pellant. The High Court is right, in our view, in holding that the size of the pellet depends on the type of cartridge used in a gun. It cannot be held as a matter of course that simply because the pellets injuring the deceased Shamim Raza were smaller in size than the size of the pellets used in injuring Mohd. Umar, both the injuries could not have been inflicted by the same gun. The High Court, in our view, is also justified in not accepting the reasonings of the learned Sessions Judge that the injuries caused at the back of Mohd. Umar were not possible and run counter to the evidences adduced by the prosecution. There was interval though very short between the two shots and it is not at all unlikely or highly improbable that because of the inherent reflex, the other injured, Mohd. Umar, had turned his side and received the injuries at the back portion. In the instant case, there are eye witnesses to the occurrence and there are no intrinsic discrepancies in their evidences. Even if it is assumed that such eye witnesses belong to the group of the complainant, their evidences are not liable to be discarded on that score if such evidences otherwise inspire confidence and get corroborated by other evidences and from the nature of injuries, sustained by the deceased persons. The High Court is right in holding that although Abdul Khaliq (P.W.1) belonged to a group and appeared to be a partisan witness, his evidence was not required to be discarded on that ground but was required to be closely scrutinised. The High Court, in our view, is also justified in holding that Qamruddin (P.W.3) was not related to Shamim Raza, deceased or the complainant and he did not belong to any of the rival groups. This witness had no enmity with the accused/appellant or his father. Qamruddin (P.W.3) has been rightly held by the High Court, as an independent and reliable witness. It appears to us that all the findings made by the learned Sessions Judge were considered in detail by the High Court and the findings of the learned Sessions Judge were not accepted by the High Court by indicating that such findings were against the weight of the evidences and the same were wholly unreasonable. In the aforesaid circumstances, we do not find 453 any reason to take a contrary view in this appeal and set aside the order of conviction made by the High Court. The appeal therefore fails and is dismissed. By the Order dated April 8, 1986, this Court granted bail to the accused/appellant. In view of the dismissal of this appeal the bail stands cancelled and the accused/appellant is directed to surrender and serve out the sentence. V.P.R. Appeal dismissed.

The prosecution case was that there was long standing enmity between appellant 's father and one Khan on one side and the complainant on the other, which rose out of rival claim in placing 'sawai ' on the Akhara of Tajias. A Civil litigation was pending between the parties over the dispute. Criminal proceedings under section 107 read with section 117 of the Code of Criminal Procedure were also pending between them. The nephew and son in law of the complainant was doing pairvi of the cases on behalf of the complainant and because of that the father of the appellant and one Khan became inimical to the son in law of the complainant. At about 6.00 P.M. on the date of the occurrence namely 25.12.1975, the son in law of the complainant was sitting on a wooden bench in front of a hair cutting shop of his village. One Umar and P.W.1 were also sitting with him and all the three were talking. P.Ws. 2 and 3 and the complainant were standing near a Gumti, at a short distance and were talking. At the time, the appellant armed with a double barrel gun came there. He challenged the complainants son in law and threatened to kill anyone who would come forward. He fired two shots which hit the complainant 's son in law add one Umar. Both of them fell down. Complainant 's son in law 445 died on the spot. P.W. 10 took Umar to Hospital. The Complainant went to his home and got a report of the occurrence written by P.W.4 and taking the report to the Police Station, about 4 miles away, he lodged the F.I.R at 7.15 P.M. Investigation of the case was immediately commenced. Umar died on 4.1.1976, prior to his death on 1.1.1976, the Police had interrogated the deceased. The case of accused appellant was that he was falsely implicated on account of enmity and party faction. He denied all the allegations of the prosecution. The Sessions Court acquitted the accused appellant, as it did not rind the prosecution case and the evidence acceptable. Allowing the State 's appeal against acquittal, the High Court convicted the appellant under section 302 I.P.C. and sentenced him to imprisonment for life. In the appeal before this Court, the accused contended that the High Court did not appreciate the salutory principles governing the judgment of acquittal; that the Sessions Judge had taken pains in analysing in detail. the evidences adduced in the case and gave reasonings for each of the finding as to why the prosecution case could not be accepted and what were the intrinsic deficiency in the evidences adduced in the case in support of the prosecution; that the law was well settled that in a case of acquittal, the appellate Court should not interfere with the judgment of acquittal if such judgment was based on consideration of the evidences adduced in the case and there was no perversity in coming to the finding for passing the judgment of acquittal and in such a case of acquittal, the High Court in exercise of its appellate power should not endeavour to appreciate the evidence on its own in order to come to different finding Unlike in an appeal arising from the judgment of conviction: that it has been established convincingly that there was party faction between the two groups over a dispute to place Sawai on Tajias and both civil and criminal proceedings were instituted between the two groups: that the eye witnesses were in the faction of the complainant and they were partition witnesses; that the Sessions Judge, therefore, after nothing the various discrepancies in the prosecution case, was not inclined to place reliance on the evidences adduced by the alleged eye witnesses and acquitted the accused/appellant; 446 and that such order of acquittal, in the facts of the case and the reasons indicated by the Sessions Judge, was not required to be interfered with in appeal by the High Court. Dismissing the appeal, this Court, HELD: 1. In an appeal arising from an order of acquittal, the appellate Court is not precluded from appreciating the evidences on its own if the reasons given by the learned trial Judge in passing the order of acquittal, do not stand scrutiny and are against the weight of the evidences adduced in the trial. The appellate Court, will be quite justified in setting aside the order of acquittal if it appears to the court of appeal that improper consideration of the materials and evidences on record was made and the reasonings of the trial Judge are wholly unjustified. It is only necessary that the court of appeal should weigh the reasonings of the learned trial Judge with care and caution in the light of the evidences adduced in the case by giving cogent reasons as to why such findings are unreasonable and against the evidence. [451B C] 2.01. In the instant case, the High Court has taken care in analysing each and every finding of the learned Sessions Judge in the light of the evidences adduced in the case and has given cogent reasons as to why such findings were unreasonable and not acceptable. It is an admitted position that two persons suffered gun shot injuries and one of the enjured persons died on the spot and the other was removed to hospital. He got serious injuries and later on sccummbed to such injuries. The mere fact that there was enmity and bitterness between the two groups, by itself, does not establish that the eye witnesses falsely implicated the accused/appellant. [451D E] 2.02. There are no intrinsic discrepancies in the evidences of the eye witnesses. Even if it is assumed that such eye witnesses belong to the group of the complainant, their evidences are not liable to be discarded on that score if such evidences otherwise inspire confidence and get cor roborated by other evidences and from the nature of injuries, sustained by the deceased persons. [452E] 2.03. All the findings made by the Sessions Judge were considered in detail by the High Court and the findings of the learned Sessions judge were not accepted by the High Court by indicating that such findings were 447 against the weight of the evidences and the same were wholly unreasonable. In the circumstances, there is no reason to take a contrary view in this appeal. [452H]

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eal No. 10 of 1950. Appeal by special leave from a judgment of the High Court of Punjab (Falshaw and Soni JJ.) dated 30th December, 1949, upholding the conviction of the appellant under sections 302 and 307 read with section 34 of the Indian Penal Code and confirming the sentence of death passed against him by the Sessions Judge of Ferozepore on the 20th July, 1949, in Criminal Appeal Case No. 325 of 1949. Jai Gopal Sethi (R. L. Kohli, with him) for the appel lant. B.K. Khanna, Advocate. General of the Punjab, (section M. Sikri, with him) for the respondent. October 17. The judgment of the court was deliv ered by FAZL ALI J. This is an appeal by special leave from the judgment of the High Court of Punjab upholding the convic tion of the appellant. Mohinder Singh, under sections 302 and 307 read with section 34 of the Indian Penal Code, and confirming the sentence of death passed against him by the Sessions Judge of Ferozepore. The case for the prosecution which has been substantial ly accepted by the trial Judge and the High Court is briefly as follows. Sometime in January, 1949, one Bachittar Singh, brother of Dalip Singh who is said, to have been murdered, lodged a complaint before the NaibTehsildar at Zira to the effect that a tree belonging to him had been cut by 7 per sons including Mohinder Singh, the appellant. On the 28th February, 1949, which was the date fixed for the hearing of the case before the Naib TehsiIdar, Jita Singh and Dalip Singh, the two brothers of Bachittar Singh, were attacked by the appellant and one Gurnam Singh, a lad of 17, near a Gurdwara at about mid day, when 823 they were returning from their field. Jita Singh was then carrying a load of fodder on his head while Dalip Singh had sickles in his hand. Jita Singh was the first to be at tacked near a tailor 's shop by Mohinder Singh who fired at him from behind hitting him on the neck whereupon he fell down together with the bundle of fodder. Dalip Singh, who was following Jita Singh, then ran backwards and he was chased by Gurnam Singh round the outer boundary of a tank which was close by. Mohinder Singh ran on the other side of the tank in the opposite direction and confronted him and shot him with a gun on the chest whereupon he fell down. Meanwhile, Gurnam Singh had also reached the spot and he fired with his rifle from a distance of about 4 or 5 feet near about Dalip Singh 's ear while he was lying sideways. The injuries proved fatal and Dalip Singh died on the spot. The same day at 3 p.m., Jita Singh went to the police station at Dharamkot, which is at a distance of 3 miles from village Augar, where the occurrence had taken place, and lodged a first information report, charging Mohinder Singh, with having caused injury to him, and Mohinder Singh and Gurnam Singh with the murder of Dalip Singh; and the police after investigating the case sent up a charge sheet against the two accused persons. Thereafter they were tried by the Sessions Judge of Ferozepore under sections 302 and 307 read with section 34 of the Indian Penal Code. The appellant was sentenced to death under section 302 and Gurnam Singh was sentenced to transportation for life under that section in view of his youth. They were also sentenced to 3 years ' rigorous imprisonment each under section 307 read with section 34 of the Indian Penal Code. It appears that Dalip Singh had 6 injuries altogether which are described by the doctor who performed the post mortem on his body in these words: " 1. An irregularly round gun shot wound on the left temporal region, 1" diameter. The wound is 22" behind outer canthus of left eye, its upper portion is at a level with the top of the pinna of the left ear, 824 behind it commences at the cartilages of the ear which are broken. Brain is visible in the gap of the wound. An area 4 " x 4 " is blackened, the wound being situated in the middle of this area. A gun shot wound 3/4" X 1/2" on the back of right mastoid region, upper end of the wound is 1" behind the root of the right ear. Direction is vertically oblique. On dissection the left temporal bone under injury No. 1 is, hole and its petrous portion shattered. A linear fracture extends upwards and backwards, from the hole into the left parietal and occipital bones. After piercing through the left temporal lobe of the brain the projectile has pierced through the brainstem, and emerged out as injury No. 2, holding the mastoid region of the skull on the right side. A gun shot wound 3/4" X 5/8" on the left side of chest 21/2" above and behind the left nipple and 1/2" behind the anterior axillary fold as area 1" below the wound is bruised. A gun shot wound 1/2"X 3/4" on the right side of chest in the mid axillary line. The top of the wound being 1 3/4" from the apex of right axilla and 4 3/4" above and behind the right nipple. A gun shot wound 1/2"x 1/4" on the inner aspect of the right arm, upper end of the wound is 11/4" from the top of the anterior axillary fold. A gun shot wound 3/4"X 1/2" on the front of the right arm. Its upper end being 21/2" from the top of the anterior axillary fold. Its distance from injury No. 5 being 1" and it is inter connected with injury No. 5 under the skin. " The doctor has stated in his evidence that in all two projectiles appeared to have hit Dalip Singh, and injuries Nos. 1 and 2 were caused by one of them, injury No. 1 being the wound of entrance and injury No. 2 being the wound of exit, With regard to the other 4 injuries, his evidence is as follows : "Injury No. 3 is the wound of entrance of another projectile and No. 4 is the wound of its exit. Wound 825 No. 5 is the wound of its re entrance and wound No. 6 the wound of its final exit from the body." Jita Singh had 4 slight injuries on the back of the neck which are said to have been caused by pellets and two abra sions below the right elbow and right knee said to have been caused by blunt weapons. It may be stated here that when the investigating police officer arrived at the scene of occurrence, he found an empty cartridge case at the place where Jita Singh is said to have been fired at, and 2 empty cartridge cases and a blood stained cap of a cartridge case near the place where the dead body of Dalip Singh was lying. Later, when Mohinder Singh appeared before the police, he was asked whether he possessed a gun and he produced a 12 bore gun (exhibit P 16) for which he held a licence. The gun and the empty cartridges were thereupon sent to Dr. Goyle, Director of the C.I.D. Laboratory, Phillaur, and the opinion that he submitted may be summed up as follows : The gun had signs of having been fired but he could not say when it was fired last. The cartridge cases P 10 and P 15 could have been fired through the gun P 16, but he could not say wheth er they were actually fired from that particular gun or a similar gun or guns. He did not make any experiment by firing any cartridge from the gun P 16, nor did he compare the markings on the empty cartridges P 10 and P 15. A notable feature of the case is that the occurrence is said to have taken place in the vicinity of a Gurdwara and some houses, but in spite of this fact, not a single person of the locality has been cited or examined as a witness by the prosecution. The whole case rests on the evidence of 3 witnesses, viz., Jita Singh, Harnam Singh and Buta Singh. Jita Singh, who had been shot at from behind, claims to have seen the two accused firing at his brother. Harnam Singh admittedly lives at a considerable distance from the place of occurrence but has stated that he was coming from another village where he had gone to fetch some medicine for his maternal cousin, when he 826 saw the occurrence. Buta Singh, who is a tonga driver, belongs to a distant village and is somewhat remotely related to Harnam Singh, and accounts for his presence near the scene of occurrence by saying that he had come to see Harnarn Singh the evening before. Harnam Singh admitted in his evidence that there was a dispute between him and Mohinder Singh nearly a month before the occurrence about a wall, but he also says that the dispute ' had been amicably settled by the panchayat". There is nothing before us to show what the award of the panchayat was and whether or not it left any ill feeling behind. But, on the argu ments of the counsel and the apparently trivial motive for which Dalip Singh is said to have been murdered, it would appear that among the class of persons with which we are concerned petty quarrels give rise to enmity which does not die soon or easily. After the close of prosecution evidence in the Ses sions Court, the appellant was examined under section 342 of the Criminal Procedure Code, and he denied that he had fired at Jita Singh and Dalip Singh with the gun P 16 and that Gurnam Singh had fired at Dalip Singh with a rifle. He added that he was not present in village Augur at the time of the alleged occurrence but had gone to Zira to attend the Naib Tehsildar 's court. To establish his plea of alibi, he examined 3 witnesses in the court of the Sessions Judge. The first witness was the Naib Tehsildar before whom Bachittar Singh had lodged the complaint, and he stated that when the case was called on the 28th February, 1949, 6 or 7 persons appeared in court. He also proved an application for a taccavi loan which purports to have been filed by the appel lant on the 28th February, 1949, and bears his thumb impres sion. He further stated in his evidence that he had passed orders on that application on the 28th February but he did not know Mohinder Singh and therefore could not say who had produced that application before him on that date. The second witness for the appellant was his brother in law, Jogindar Singh, who had written the application. exhibit D C. He has stated that 827 Mohinder Singh himself was present in the court of the Naib Tehsildar on the 28th February, 1949, that he had signed the application (exhibit D C) and that he was also one of the persons who had appeared before the Tehsildar when Bachittar Singh 's case was called out. The third defence witness is a hand writing and fingerprint expert. He has proved that the application (exhibit D C) alleged to have been presented to the Naib Tehsildar on the 28th February bore the thumb impression of the appellant, and he has also given evidence to show that certain handwritings which he was asked to compare did not tally. The evidence given by him with regard to these handwritings has a bearing on the assertion made by the appellant in a petition filed before the committing Magistrate to the effect that the original service report of the process peon showing that the appellant also was one of the persons served for appearance before the Naib Tehsildar on the 28th February, 1949, had been suppressed and another report with forged handwriting had been substituted in its place. Both the courts below have held that the alibi has not been proved by satisfactory evidence and that the charges against the appellant have been made 'out. It seems that the learned Judges of the High Court were not at all impressed by the evidence of Dr. Goyle which they characterized as unsatisfactory and they were not also confident that the gun, exhibit P 16, had been used in causing the injuries to Dalip Singh. This appears from the folio.wing observations made by them in their judgment: "The gun P 16 was identified by Jita Singh as the gun with which Mohinder Singh fired at him and Dalip Singh but he identified the gun because of a brass plate at its butt end. We have seen the gun. Its brass plate could be of no use for the identification of the gun. " Again, commenting on the nature of the injuries, the learned Judges observed as follows : 828 "Another difficulty which is created in this case is the nature of injuries found on the body of Dalip Singh . What kind of bullet it was which, though it had blackened the area where it entered the brain showing that it had been fired from not far away, did not shatter the brain we do not know. What kind of projectile it was which entered the body (which if the evidence as to be believed was fired at from a few feet at Dalip Singh) and passed through the body without shattering the inside of the chest or causing extensive damage therein is also not known. Mr. Sethi (counsel for the accused) quoted Taylor 's book on medical jurisprudence and Hateher 's book on ballistics and argued that the firing must have been from a place between 600 and 1,200 yards away in order that the projectile may pass through and through the body and not shatter it. That of course pre supposes that the barrel of the gun, using the word 'gun ' m ' a generic sense, is grooved which causes a projectile to go forward with a rotatory motion of something under a quarter of a million revolutions a minute and travelling at the rate of about 2,000 miles an hour when it leaves the gun . . We do not know whether the barrel of this gun (exhibit P 16) is grooved or not. is a single bar relled gun and is country made. The likelihood is that the barrel is not grooved. " On a careful reading of the judgment under appeal, it appears that the learned Judges of the High Court strongly felt that they had no adequate explanation in the oral evidence before them for certain puzzling features of the injuries on Dalip Singh. This is exactly what we also feel in this case, and it seems to us that the evidence which has been adduced falls short of proof in regard to a very mate rial part of the prosecution case. in a case where death is due to injuries or wounds caused by a lethal weapon, it has always been considered to be the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which and in the manner in which they are al leged to have been caused. It is 829 elementary that where the prosecution has a definite or positive case, it must prove the whole of that case. In the present case, it is doubtful whether the injuries which are attributed to the appellant were caused by a gun or by a rifle. Indeed, it seems more likely that they were caused by a rifle than by a gun, and yet the case for the prosecu tion is that the appellant was armed with a gun and, in his examination, it was definitely put to him that he was armed with the gun P 16. It is only by the evidence of a duly qualified expert that it could have been ascertained whether the injuries attributed to the appellant were caused by a gun or by a rifle and such evidence alone could settle the controversy as to whether they could possibly have been caused by a fire arm being used at such a close range as is suggested in the evidence. It is clear, and it is also the prosecution case, that only 2 shots were fired at Dalip Singh and one of the crucial points which the prosecution had to prove was that these shots were fired by two persons and not by one man, and both the shots were fired in such manner and from such distance as is alleged by the eye witnesses. There is, in our opinion, a gap in the prosecu tion evidence on a most fundamental point and the error which has been committed by the courts below is to ignore the gap and decide the case merely upon the oral evidence of 3 witnesses, two of whom are mere chance witnesses and not altogether independent persons, and the evidence of the third witness is open to criticism on the ground of his partisanship as well as the improbability of his having been able to see the firing at his brother after he had himself been shot at the back of the neck. The learned Judges of the High Court, after commenting upon the entire evidence, say in their judgment: " We are thus left with the evidence of the three wit nesses of the prosecution together with the state of wounds as shown by the medical evidence and an unsatisfactory statement of Dr. Goyle. " 106 830 They reject the evidence of Dr. Goyle and they consider the nature of the wounds to have created a serious dificulty in the case. Having arrived at these conclusions, it was a serious thing to rest the appellant 's conviction wholly upon the oral testimony in the case which has remained unchecked and unconfirmed by expert evidence. The real position ap pears to be that the prosecution case cannot be said to be wholly proved but only partly proved if it is permissible to use such an expression. This Court, as was pointed out in Pritam Singh vs The State (1), will not entertain a criminal appeal except in special and exceptional cases where it is manifest that by a disregard of the forms of legal process or by a violation of the principles of natural justice or otherwise substantial and grave injustice has been done. It seems to us that the present case comes within the rule laid down, because the appellant has been convicted notwithstand ing the fact that the evidence is wanting on a most.material part of the prosecution case. This is enough to dispose of this appeal, but we are constrained to say that we are not altogether happy about the manner in which the plea of alibi put forward by the appellant has been disposed of by the courts below. Ordi narily tiffs court will not look beyond the findings of fact arrived at by the courts below, but we find that in the present case the decision on the plea of alibi has been arrived at in disregard of the principle that the standard of proof which is required in regard to that plea must be the same as the standard which is applied to the prosecution evidence and in both cases it should be a reasonable stand ard. It is common ground in this appeal that the appellant was summoned to appear before the Naib Tehsildar on the 28th February, 1949, which was the date fixed for dealing with Bachittar Singh 's complaint. Ordinarily and without looking at anything else, there should have been nothing improbable about his appearance before the Naib Tehsildar on that date, but in the present case there is positive (1) 831 evidence that an application for a taccavi loan bearing that date and also bearing the thumb impression the appellant was put up before the Naib Tehsildar and that was dealt with by him on that very day. There is also affirmative evidence of a witness to prove that the appellant was present in the Naib Tehsildar 's court. This witness is undoubtedly closely related to the appellant but his evidence is supported by probability and a written document. One of the points raised by the prosecution was that the summons for appear ance on the 28th February was not served upon Mohinder Singh, but such evidence as there is on the record bearing on this point has certain peculiar features. The prosecu tion having cited the Naib Tehsildar and the Ahlmad (Bench Clerk) as witnesses in the case gave them up and stated that the former had been won over by the appellant. This allega tion could have been substantiated in the cross examina tion of the Naib Tehsildar who was examined as a defence witness, but nothing was elicited from him to support such a charge. From the evidence of the Naib Tehsildar, it appears that on the 5th July, 1949, the Public Prosecutor showed him exhibit P.S. (which is an order directing the appearance of the seven persons including the appellant mentioned by Bachittar Singh in his complaint, before the Naib Tehsildar on the 28th February, 1949). and that he told the Public Prosecutor that 6 or 7 persons appeared in his court. on that date. After this incident, on the 6th July, 1949, the Public Prosecutor informed the Court that he would "give up the Naib Tehsildar as he has been won over ". The evidence of the process peon is of a somewhat suspicious character, because he has conveniently forgotten every material detail. The appellant asserted at the trial that the original report of the process peon had been suppressed and another report had been fabricated and substituted in its place. An application to this effect was made by him before the committing Magistrate, and he also examined a handwriting expert to prove some of his allegations. Neither of the courts below has dealt with the evidence 832 of this expert. The evidence of the Investigating Officer as recorded by the Sessions Judge is to the following effect : "P.B. and P.C. were obtained by me from the headquar ters. Along with P.B. and P.C. the Parvana P.S. was also received by me. After going through the zimnis, the witness states that the aforesaid documents P.B., P.C. and P.S. were summoned by the committing Magistrate and were not sent for by the witness. On 16th March, 1949, a Foot Constable was certainly sent to Zira to bring the said file. But since the file had been sent to the headquarters, therefore, the said constable returned quite blank. I never inspected this file at the headquarters. " The most material document with which we are concerned is P.S. which should have contained an endorsement of serv ice of summons on the persons against whom Bachittar Singh had complained. It is clear from the first part of the evidence of the Investigating Officer that he had received the report of the process peon which was endorsed on the back of P.S., from the headquarters, but he says later that the papers were sent for but they did not arrive. It is surprising that when a document was the subject of so much controversy he should have said by mistake that he had received it. One of the comments made by the learned Ses sions Judge in dealing with the application alleged to have been made by the appellant on the 28th February, 1949, for a taccavi loan is that after producing the application before the Naib Tehsildar on that date, Mohinder Singh could have reached his village by noon time, but on this point the learned Sessions Judge seems to have wholly ignored the evidence of the Naib Tehsildar that he usually dealt with such applications between 12 and 4 P.M. on working days, and also the affirmative evidence of Joginder Singh. In our opinion, there has been in substance no fair and proper trial in this case, and we are constrained to allow this appeal, set aside the conviction of the appellant under sections 302 and 307 read with section S4 833 of the Indian Penal Code, and direct that he be set at liberty forthwith. In ordinary circumstances, we might have remanded the case for a flesh trial, but we consider that such a course would, in the present case, be unfair and contrary to settled practice, seeing that the appellant has been in a state of suspense over his sentence of death for more than a year. Appeal allowed.

In a case where death is due to injuries or wounds caused by a lethal weapon, it has always been considered to be the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which, and in the manner in which, they are have been caused. Where in a case of murder, the prosecution case was that the accused shot the deceased with a gun, but it appeared likely that the injuries on the deceased were inflicted by a rifle and there was no evidence of a duly qualified expert to prove that the injuries were caused by a gun, and the nature of the inajuries was also such that the shots must have been fired by more than one person and not by one person only, and the prosection had no evidence to show that another person also shot, and the High Court, though realis ing that there was thus a gap in the prosecution evidence, convicted the accused placing reliance on the oral evidence of 3 witnesses which was not, disinterested: Held, that, the present case fell within the rule laid down in Pritam Singh vs The State ([1959] S C R. 453) inas much as the appellant had been convicted notwithstanding the fact that evidence was wanting on a most material part of the prosecution case, and the conviction could not therefore be upheld, 822 Held also, that the standard of proof which is required in regard to the plea of alibi must be the same as the standard which is applied to the prosecution evidence and in both cases it should be a reasonable standard.

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Appeals Nos. 220 to 223 of 1953. Appeals from the Judgment and decrees dated April 14,1943, of the Bombay High Court in Appeals Nos. 183, 184, 185 and 186 of 1942, arising out of the judgments and decrees dated February 16, 1942, of the Court of the 1st Class Sub Judge, Poona, in Suits Nos. 900/37, 392/35, 875/36 and 1202/33. V. P. Rege and Naunit Lal, for the appellants. N. C. Chatterjee, K. V. Joshi and Ganpat Rai, for respondents Nos. 1 to 6 (In all the Appeals). 478 1959. March 26. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. These four appeals represent the last stage of a long and tortuous litigation between the appellants Waghmares (also called Guravs) who claim the rights of hereditary worshippers in the Shree Dnyaneshwar Maharaj Sansthan, Alandi, and respondents 1 to 6 who are the trustees of the said Sansthan. Alandi , which is a small town situated on the banks of the river Indrayani at a dis tance of about 14 miles from Poona, is regarded as a holy place of pilgrimage by thousands of Hindu devotees. In the last quarter ' of the 13th century Shree Dnyaneshwar Maharaj, the great Maharashtra Saint and Philosopher, lived at Alandi. He was a spiritual teacher and reformer; by his saintly life and his inspiring and illuminating commentary on the Bhagvad Gita, known as Dnyaneshwari, he helped to create a popular urge and fervour for religious and social revolution which led to the foundation of a devotional cult; the followers of this cult are known as Warkaris in Maharashtra. They refuse to recognise any barriers of caste or class; and amongst them prevails a feeling of real and genuine spiritual brotherhood. Every year, in the months of July and November, thousands of them proceed on pilgrimage on foot and accompany the annual palanquin procession from Alandi to Pandharpur. Pandharpur is the chief centre of pilgrimage in Maharashtra and it is regarded by devotees as the Banares of Southern India. About 1300 A. D. Shree Dnyaneshwar Maharaj took Samadhi at Alandi and since then Alandi also has become a place of pilgrimage. In or about 1500 A. D. a big temple was erected in front of the idol of Shiva called Siddeshwar where the said Shree Dayaneshwar Maharaj took his Samadhi. In due course the Mahratta Kings and the Peshwas of Poona granted the village of Alandi in inam for the upkeep of the temple and the Samadhi. About 1760 A. D. Peshwa Balaji Baji Rao framed a budget called Beheda or Taleband in order to regulate the management and worship of the shrine and provided for proper 479 administration of its annual revenue amounting to Rs. 1,725. The appellants claim that their ancestors were then in possession of the temple and management of its affairs especially the worship of the shrine. The budget framed by the Peshwa shows that out of the sum of Rs. 1,725 an amount of Rs. 361 was assigned to the worshippers for some of their services. After the fall of the Mahratta power the management of Alandi passed into the hands of the East India Company which continued the old arrangement without any interference. In 1852, under orders from the Government of Bombay the Collector of Poona drew up a yadi or memorandum appointing six persons as Punchas (trustees) with directions to them for the management of the temple in accordance with the old tradition and practice as well as for the administration of the revenue of the village subject to the control and sanction of the Collector. This arrangement came to be described as " the scheme of 1852". In 1863 the Religious Endowment Act was passed, and inconsequence, in 1864 the Government of Bombay withdrew their superintendence over the affairs of the Alandi Sansthan; and the trustees continued to manage the affairs of the temple without any supervision on the part of the Government. It was during this period that the appellants ' ancestors began to assert that they were the owners of the shrine while the trustees insisted on treating them as the servants of the shrine. This conflict inevitably led to several disputes between the worshippers and the trustees. Matters appear to have come to a crisis in 1911 when the trustees dismissed eleven Guravs from the temple service on the ground that they were found guilty of gross misconduct. The Guravs nevertheless asserted that they were the owners of the shrine and that the trustees had no authority or power to dismiss them. Taking their stand on their ownership of the shrine some of the dismissed Guravs filed Civil Suit No. 485 of 1911 in the Court of the Subordinate Judge, Poona, against the trustees and this was the beginning of the long drawn out litigation which followed between the parties. In that suit the Guravs 480 claimed a declaration that they were the owners of the temple and not the servants of the temple committee; and as owners they were entitled to perform the worship at the shrine and to appropriate the offerings made to the idol of the Saint. This claim was resisted by the trustees who pleaded that the Guravs were merely the servants of the temple committee and not the owners at all. On April 20, 1917, the learned trial judge dismissed the suit because he held that the Guravs were not the owners of the shrine and were not entitled to the declarations claimed by them. Against this decision the Guravs preferred several appeals but these appeals were dismissed on August 3, 1921. While dismissing their appeals the High Court incidentally expressed the view that it was open to the Guravs to come to terms with the temple committee and that the terms on which the Guravs could be reinstated can be decided appropriately in a suit filed under section 92 of the Code of Civil Procedure. It was also observed by the High Court in its judgment that the temple committee did not dispute the fact that the Guravs were the hereditary pujaris and that they had some rights in that capacity. No doubt the committee claimed that under the scheme framed in 1852 it was competent to dismiss hereditary servants for a substantial cause such as gross misconduct. It appears that instead of adopting the course indicated in the judgment of the High Court and filing a suit under section 92 of the Code, the Guravs chose to take the law into their own hands, and obtained forcible possession of the temple premises on July 25, 1922, and began to perform the puja and to take the offerings placed before the deity as they had been doing prior to their dismissal. This was followed by a suit filed by the trustees on September 12, 1922 (Suit No. 1075 of 1922) under section 9 of the Specific Relief Act. This suit terminated in a decree in favour of the committee on November 4, 1922. In pursuance of this decree the committee recovered possession of the temple on November 16, 1922. Thus the Guravs had occupied the temple precincts for about three and a half months. 481 When the Guravs were thus dispossessed by the committee in execution of the decree obtained by it, some of them proceeded to file Suit No. 19 of 1922 in the District Court of Poona; this suit purported to be one under section 92 of the Code but it claimed the same reliefs as had been claimed by the Guravs in theirs earlier suit of 1911. On April 25, 1927, the District A Court dismissed this suit on the ground that the Guravs could not reagitate the same questions over again. it was held that their claim was barred by the deci sion of the earlier Suit No. 485 of 1911. Against this decision the Guravs appealed to the High Court (First Appeal No. 507 of 1927); but the High Court agreed with the conclusion of the District Court and dismissed the Guravs" appeal on June 20, 1933. It was held by the High Court that the suit as framed was not properly constituted under section 92 of the Code. It was at this stage that a properly constituted suit, No. 7 of 1934, was filed under section 92 of the Code by the general public of Alandi along with two Guravs in the District Court at Poona. This suit claimed that a proper scheme should be framed for the management of the temple. Even so, one of the allegations made in the plaint referred to the Guravs ' rights as hereditary worshippers. It was apparently apprehended that this allegation would be treated as outside the scope of a scheme suit under section 92 and so the Guravs took the precaution of filing four separate suits on behalf of four branches in the Waghmare family one after the other. These suits were numbered as 1202 of 1933, 392 of 1935, 875 of 1936 and 900 of 1937; the plaintiffs in these suits were respectively the members of the third, the fourth, the first and the second branch of the Waghmare family '. It appears that the hearing of these suits were stayed by an order of the District Judge pending the final decision of the scheme suit which was being tried by him. The scheme suit was taken, up for hearing in 1937. As many as 22 issues were framed in this suit and voluminous evidence Was recorded. In the result the learned judge substantially confirmed the original 61 482 scheme of 1852, though he issued certain directions modifying it. This decree was passed on December 11, 1937. The trustees felt aggrieved by this decree and challenged its propriety by preferring an appeal, No. 92 of 1938, in the Bombay High Court. On November 16, 1939, the High Court dismissed the appeal though it made some amendments in the scheme framed by the District Judge by consent of the parties. After the scheme suit was thus disposed of by the High Court, the four suits filed by the pujaris were taken up for trial by the learned Subordinate Judge, First Class, Poona. In all these suits the appellants claimed their rights as hereditary vatandar Pujari Gurav Servants of the Sansthan. They alleged that they were under a duty to perform worship according to certain rites in Shree Dayaneshwar Sansthan and that they were also under an obligation to perform other incidental duties enumerated by them in their plaints. Likewise they claimed that for remuneration they were entitled to receive coins and perishable articles offered by the devotees and the committee as well as yearly emoluments from the committee. On these allegations the appellants claimed a declaration about their respective rights and an injunction permanently restraining the trustees from obstructing the appellants in the exercise of the said rights. They also claimed accounts from the trustees in regard to the offerings prior to the institution of the suit as well as those made after the institution of the suit and before the passing of the decree. These allegations were denied by respondents 1 to 6. Their case was that the appellants were the servants of the temple committee and as such had no hereditary rights set up, by them. In the alternative, it was pleaded by them that even if the appellants had any hereditary rights the same had been lost by their misconduct and had been otherwise extinguished by limitation. Against the appellants ' claim pleas of res judicata and estoppel were also raised. On these pleadings as many as 21 issues were framed in the trial court. The trial court found in favour 483 of the appellants on all the issues. The learned judge held that the Guravs had established the hereditary rights set out by them and he was inclined to take the view that the respondents could not deprive the appellants of their hereditary rights of service because of the misconduct of some of their ancestors. He also found that there was no substance in the plea of estoppel or res judicata and that the suits were not barred by limitation. In the result the appellants ' suits were decreed on February 16, 1942. Thereupon the respondents challenged these decrees by preferring appeals against them in the Bombay High Court. The four suits accordingly gave rise to First Appeals Nos. 183, 184, 185 and 186 of 1942 respectively. In these appeals the High Court agreed with the trial court in holding that on the merits the appellants had established their case and that their claim was not barred either by res judicata or by estoppel. However, on the question of limitation the High Court took the view that the appellants ' suits were governed by article 120 of the Limitation Act and that they had been filed beyond the period of six years prescribed by the said article. That is why the High Court set aside the decrees passed by the trial court, allowed the respondents ' appeals and dismissed the appellants ' suits. However, in view of the special facts of the case the High Court directed that each party should bear its own costs throughout. This judgment was pronounced on April 14, 1943. Like the trial court the High Court also dealt with all the four cases by one common judgment. It appears that after this judgment was pronounced by the High Court but before it Was signed, the appellants moved the High Court on July 2, 1943, for a rehearing of one of the appeals (No. 186 of 1942). It was urged before the High Court that even if article 120 applied the claim made by the appellant in the said appeal (which arose from Suit No. 1202 of 1933) could not be held to be barred by limitation. The High Court was not impressed by this plea and so the motion for rehearing was discharged. Subsequently a Civil Application, No. 1039 of 1944, 484 was made by the appellant in the said appeal seeking to raise the same point over again but this application was rejected by the High Court on September 12, 1944. The appellants then applied for leave to appeal to the Privy Council on August 15, 1944. Their applications were heard together and were disposed of by an order passed on March 26, 1946, whereby leave was granted to them to appeal to the Privy Council and their prayer for consolidating all the appeals was also allowed. These appeals could not, however, be disposed of by the Privy Council before the jurisdiction of the Privy Council to deal with Indian appeals came to an end and so they ultimately came to this Court and were numbered as Appeals Nos. 220 to 223 of 1953. It may be convenient to state that these appeals arise respectively from Suits Nos. 907 of 1937, 392 of 1935, 875 of 1936 and 1202 of 1933. It would thus be seen that the litigation which began between the parties in 1911 has now reached its final stage before us in the present appeals. As we have already indicated, both the courts below have found in favour of the appellants on most of the issues that arose in the present litigation; but the appellants have failed in the High Court on the ground of limitation. In the trial court the respondents had urged that the present suits were governed by article 124 of the Limitation Act and that since the Guravs had been dismissed from service in 1911 and other Guravs refused to serve in 1913 and 1914 limitatation began to run against them at least from 1914 and so the suits were beyond time. The learned trial judge held that article 124 was inapplicable. He also found alternatively that, even if the said article applied, the trustees did not have continuous possession of the suit properties from 1911 or 1914 for twelve years and so the suits were not barred by time. According to him the case was really covered by section 23 of the Limitation Act, and so the plea of limitation could not succeed. The High Court has agreed with the trial court in holding that article 124 is inapplicable. It has, however, 485 come to the conclusion that the suits are governed by article 120 of the Limitation Act, and, according to its findings, limitation began to run against the appellants either from September 12, 1922, when the trustees filed their suit under section 9 of the Specific Relief Act, or, in any case from November, 1922 when, in execution of the decree passed in the said ' suit, the appellants were driven out of the temple precincts by the trustees. The High Court has also held that section 23 can have no application to the present case. That is how the High Court has reached the conclusion that the appellants ' suits are barred by time under article 120. The question which arises for our decision in the present appeals, therefore, is one of limitation; it has to be considered in two aspects: Was the High Court right in holding that article 120 applies and that the cause of action accrued more than six years before the dates of the institution of the present suits ?; Was the High Court also right in holding that section 23 does not apply to the suits ? On behalf of the appellants Mr. Rege has contended that in substance, in their present suits the appellants have made a claim for possession of an hereditary office and as such they would be governed by article 124 of the Limitation Act. In this connection he has referred us to the relevant allegations in the plaint to show that the appellants ' prayer for a declaration about their hereditary rights and for a consequential permanent injunction amount to no more and no less than a claim for possession of the said hereditary office. In support of this argument reliance has been placed on the decision of the Bombay High Court in Kunj Bihari Prasadji vs Keshavlal Hiralal (1). In that case the plaintiff had made a claim to the gadi of the Swaminarayan temple at Ahmedabad and had asked for a declaration that the will of the last Acharya which purported to appoint defendant 14 as his adopted son and successor was null and void. As a consequence a perpetual injunction was also claimed restraining the defendants from offering any obstruction to the plaintiff in occupying the said gadi. The (1) Bom. 567. 486 principal point which was decided in the case had reference to the effect of the provisions of section 42 of the Specific Relief Act. , The plaintiff 's suit had been dismissed in the courts below on the ground that he had omitted to ask for further relief as he was bound to do under section 42 of the said Act and the High Court held that the section did not empower the court to dismiss the suit under the said section. In considering the nature of the claim made by the plaintiff Jenkins, C. J., observed that " in the plaintiff 's view the suit was not one of possession of land appertaining to the gadi but to determine who was to occupy the gadi and thus as gadinishin become the human agent of the deity. If that was so, then the injunction restraining all interference with the occupancy by the plaintiff of the gadi secures in the most complete manner to him the rights he claims ". The learned Chief Justice also observed that " the plaintiff might in terms have asked for possession of the office he said was his ", but be asked " how would practical effect be given to an award of possession of office otherwise than by preventing interference with the rights of which it was made up ". Even so, having reversed the decree passed by the courts below, when the High Court remanded the case for retrial, the plaintiff was advised to amend his plaint and to define more precisely the terms of the injunction he sought. It is urged that, in the present appeals also, by asking for a declaration of their rights and for an appropriate injunction against the respondents, the appellants were in effect asking for possession of the hereditary office. It is doubtful if the claims made by the appellants in their respective suits are exactly analogous to the claim made by the plaintiff in Kunj Bihari Prasad 's case (1). The appellants have not only asked for an injunction but also for an account of the income received by the trustees from July 23, 1933, up to the date of the suit as well as for similar account from the date of the suit until the date of the decree. A claim for accounts in the form in which it is made may not be quite consistent with the appellants ' contention that their suits are for nothing more than possession (1) Bom. 567. 487 of the hereditary office ; but in dealing with the present appeals we are prepared to assume that they have in substance claimed possession of the office. The question which then arises is: Does this claim for possession attract the application of article 124 of the Limitation Act ? Article 124 governs suits for possession of an hereditary office. The period of limitation prescribed by the article is twelve years and the said period begins to run when the defendant takes possession of the office adversely to the plaintiff. This is explained to mean that the hereditary office is possessed when the profits thereof are usually received or (if there are no profits) when the duties thereof are usually performed. It is clear that before this article can apply it must be shown that the suit makes claim for possession of an office which is hereditary; and the claim must be made against the defendant who has taken possession of the said hereditary office adversely to the plaintiff. Unlike article 142 the fact that the plaintiff, is out of possession of the hereditary office for more than twelve years before the date of his suit would not defeat his claim for possession of the said office. What would defeat his claim is the adverse possession of the said office by the defendant for the prescribed period. As the explanation makes it clear usually the receipt of the profits may amount to the possession of the office; but if the defendant merely receives the profits but does not perform the duties which are usually performed by the holder of the office, the receipt of the profits by itself may not amount to the possession of office. The cause of action for possession in suits falling under article 124 is the wrongful dispossession of the plaintiff and the adverse possession by the defendant of the office in question. Claims for possession of hereditary offices which attract the application of this article are usually made by holders of the said offices against persons who claim adverse possession of the said offices; in other words, in suits of this kind, the contest is usually between rival claimants to the hereditary office in question. In the present appeals the claim for possession is 488 made by the appellants against the trustees of the Sansthan. It is significant that the persons who are actually performing the duties of the worshippers are not impleaded ; and they do not claim to hold office as hereditary officers either. They have been appointed by the trustees as servants of the institution and they perform the duties of worship as such servants. The trustees, on the other hand, cannot be said to have taken possession of the office themselves adversely to the appellants. They do not take the profits themselves nor do they perform the duties associated with the said office. They have, in exercise of their authority and power as trustees, dismissed the appellants ' predecessors from office and have made fresh appointments of servants to perform the worship at the Sansthan; and in making the said appointments, have in fact destroyed the hereditary character of the office. The dispute in the present appeals is between the worshippers who claim hereditary rights and the trustees of the institution who claim to have validly terminated the services of some of the predecessors of the appellants and to have made valid appointments to the said office. It is, therefore, impossible to accept the argument that the claim made by the appellants in their respective suits attracts the provision& of article 124. It is conceded by Mr. Rege that if article 124 does, not apply, the suits would be governed by article 120 which is a residuary article. It may prima facie appear somewhat strange that whereas a suit against a person claiming to hold the hereditary office adversely to the plaintiff is governed by a period ' of twelve years, a claim against the trustees like the respondents in the present appeals who have dismissed the hereditary worshippers should be governed by a period of six years. It may be possible to suggest that there is a substantial difference in the nature of the two disputes ; but apart from it, it is well known that the artificial provisions of limitation do not always satisfy the test of logic or equity. Mr. Rege, however, argued that in determining the scope of article 124 we need not consider the provisions of col. 3 to the said article. His contention appears 489 to be that once it is shown that the suit is for possession of an hereditary office, article 124 must apply though the claim for possession may not have been made ,against a person who has taken possession of the office adversely to the plaintiff. He also urged alternatively that the trustees should be deemed to have, taken possession of the office adversely to the appellants. We have already held that the conduct of the trustees shows that they have not taken possession of the office adversely within the meaning of col. 3 of article 124; and we do not think it is possible, to ignore the provision of col. 3 in deciding whether or not article 124 applies. It is true that in Jalim Singh Srimal vs Choonee Lall Johurry (1), while holding that the adjustment on which the plaintiff 's claim was based in that case was in time both under articles 115 and 120, Jenkins, C. J, has observed that the function of the third column of the second schedule is not to define causes of action but to fix the starting point from which the period of limitation is to be counted ; but this observation does not support the appellants ' case that article 124 would govern the suit even though the third column is wholly inapplicable to it. That obviously is not the effect of the observations made in Jalim Singh 's case (1). The question about the nature and scope of the provisions of article 124 has been considered by the Madras High Court in Thathachariar vs Singarachariar (2). " If we take into consideration the terminology used in the three columns of article 124 ", observed Srinivasa Aiyangar, J., in that case, " it is clear that the nature of the suit intended to be covered by that article must be a suit filed by a plaintiff who claims the office from a person who at that time holds the office himself ". In our opinion this view is correct. We may also refer to another decision of the Madras High Court in which this question has been considered. In Annasami vs Adivarachari (3) a Full Bench of the Madras High Court was dealing with a suit in (1) (2) A.I.R. 1928 Mad, 377. (3) I.L.R. 62 490 which the plaintiff had claimed an injunction restraining the trustee and the archakas of the Sri Bhuvarabaswami temple at Srimushnam from interfering with the performance of the duties of his office of mantrapushpam of the temple. This suit had been filed in 1929. The office of mantrapushpam was a hereditary office and the plaintiff had succeeded to it on the death of his father in 1906. The emoluments of the office consisted of a ball of cooked rice per them and twelve annas per month. It appears that the plaintiff was a Vadagalai while the archakas of the temple were Thengalais and there was animosity between them; and as a result of this animosity the plaintiff bad never been able to perform the duties of his office. It was common ground that the plaintiff was the lawful holder of the office and that he had been receiving its emoluments month by month until 1927. The archakas who resisted the plaintiff 's claim did not claim that they were in possession of the office or that they had performed the duties of the said office. The Full Bench held that, where a person is admittedly the lawful holder of the office and he is enjoying its emoluments, he must in law be regarded as being in possession of the office itself, especially where no one else is performing the duties of the said office; and so under article 124 it was enough for the plaintiff to show that he had been in receipt of the emoluments of the office to save his claim from the bar of limitation. The Full Bench also rejected the contention that under article 120 the suit was barred because it was held that every time the trustee and the archakas prevented the plaintiff from performing his duties as a hereditary officer a. fresh cause of action arose and so there can be no bar of limitation under article 120. It would be noticed that the basis of this decision was that, in the eyes of law, the plaintiff was in possession of the hereditary office since he was receiving the emoluments of the said office month by month, and so every act of obstruction on the part of the archakas and the trustee was in the nature of a continuing wrong which gave rise to a fresh cause of action to the plaintiff from time to time. In other words, on the facts the Full Bench held that 491 s.23 helped the plaintiff and saved his suit from the bar of limitation. As we will presently point out there is no scope for applying section 23 to the facts of the present cases, and so the decision in Annasami Iyengar 's case (1) cannot assist the appellants. In this connection it is relevant to consider the decision of the Privy Council in Jhalandar Thakur vs, Jharula Das (2) in which it was held that article 124 was inapplicable. The defendant Jharula Das had obtained a decree for money on a mortgage which bad been executed in his favour by Mst. Grihimoni, the widow of the shebait of the temple. In execution of the said decree the defendant had caused 3 1/2 as. share of the judgment debtor including her right in the nett income of the daily offerings made before the idol to be put up for sale and had himself purchased it at the auction sale. As such purchaser he was in possession of the income of the said share. The judgment debtor attempted to challenge the said sale by two suits but her attempts failed and the ' auction purchaser continued to be in possession of the income. On the death of Mst. Grihimoni, Bhaiaji Thakur, who succeeded to the office of the shebait, sued the defendant for possession of certain lands and claimed a declaration that he was entitled to receive the 3 1/2 as. share of the nett income from the offerings to the temple with other reliefs. This claim was resisted by the defendant Jharula Das. In regard to the plaintiff 's claim in respect of the said 3 1/2 as share, the High Court had held that article 124 applied and that the claim was barred under the said article. That is why the decree passed by the trial court in favour of the plaintiff in respect of the said income was reversed by the High Court. This decision was challenged by the plaintiff before the Privy Council and it was urged on his behalf that article 124 did not apply. The Privy Council upheld this contention. It was clear that the office of the shebait of the temple was a hereditary office which could not be held by anyone who was not a Brahmin Panda. Jharula Das was not a Brahmin Panda. He was of an inferior caste and was not (1) I.L.R. (2) Cal. 492 competent to hold the office of the shebait of the temple, or to provide for the performance of the duties of that office. On these facts the Privy Council held that the appropriation from time to time by Jharula Das of the income derivable from the said 3 1/2 as share did not deprive Mst. Grihimoni, and after her death, Bhaiaji Thakur, of the possession of the office of the shebait although that income was receivable by them .in right of the shebaitship. The basis of this decision is that, on each occasion on which Jharula Das received and wrongfully appropriated to his own use a share of the income to which the shebait was entitled, he committed a fresh actionable wrong in respect of which a suit could be brought against him by the shebait; but it did not constitute him a shebait for the time being or affect in any way the title of the office. Thus this decision emphasises that for the application of article 124 it is essential that the defendant to the suit must be in adverse possession of the hereditary office in question. We must, therefore, hold that article 124 does not apply to the suits filed by the appellants; and as we have already observed, if. article 124 does not apply, article 120 does. The next point which arises for our decision is whether under article 120 the suits are barred by limitation. Under article 120 time begins to run against the plaintiffs when the right to sue accrued to them, and that naturally poses the question as to when the right to sue accrued to the appellants. In deciding this question it would be necessary to recall briefly the material facts in regard to the past disputes between the appellants and the trustees. These disputes began in 1911. On January 31, 1911, the trustees wrote a yadi (memorandum) to the Collector of Poona asking his permission to dismiss eleven Guravs from service. They set out in detail several items of misconduct of which the said Guravs were guilty; and they expressed their opinion that for the proper management of the affairs of the institution it was necessary to terminate the services of the off ending Guravs (exhibit 407). On April 1, 1911, the Collector sent a reply to the trustees and told them that, as a result of the Government 493 Resolution No. 4712 passed on November 29,1864, it was unnecessary for the trustees to obtain the Collector 's sanction because it was competent to the trustees to settle their own affairs without any such sanction. The trustees then met in a committee on September 18, 1911, and decided to dismiss from service the said eleven Guravs. In its resolution the committee stated that the Guravs were violent and arrogant and it was likely that they may commit riot at the time when the committee would seek to take charge from them. The committee also apprehended that the rest of the Guravs would make a common cause with those who had been dismissed from service and would refuse to serve the Sansthan. Even so the committee decided to appoint six Brahmins temporarily to perform the service, because the committee was prepared to allow the rest of the Guravs to render service to the Sansthan if they were ready to act according to the orders of the committee and were willing to enter into a formal agreement in that behalf. In accordance with this resolution the committee served notice on the eleven Guravs on October 13, 1911, terminating their services and calling upon them to hand over to the committee all articles in their charge and forbidding them from entering the temple in their capacity as servants. Notice was likewise served on the rest of the Guravs calling upon them to agree to serve the Sansthan on conditions specified in the notice. These terms were not acceptable to the Guravs and so, on behalf of two Guravs Eknath and his brother Ramachandra, notice was served on the trustees on October 26, 1911, complaining against the trustees ' conduct in forcibly removing the Guravs from the temple and thereby wrongfully denying their rights. The notice warned the trustees that unless they retraced their steps and gave possession to the Guravs as claimed in the notice legal steps would be taken against them. This notice was followed by the Guravs ' Suit No. 485 of 1911. In the suit the plaintiffs claimed declaration about their rights of ownership and asked for consequential reliefs. This claim was denied by the 494 trustees who claimed the right to dismiss the Guravs. It was alleged on their behalf that some of the plaintiffs had been dismissed and others had resigned their employments and so all of them had lost their rights. This suit was seriously contested but in the end the Guravs lost and their suit was dismissed on January 31, 1918. The Guravs then preferred appeals in the High Court but these appeals were also dismissed on August 3, 1921. We have already pointed out that, while dismissing the said appeals, the High Court made certain observations about the Guravs ' hereditary rights of worship and suggested that these rights could be adjudicated upon in a suit filed under section 92 of the Code. Thus at the time when the Guravs ' appeals were dismissed the position was that the claim of ownership set up by them had been rejected; but the question as to whether they were entitled to the lesser rights of hereditary worshippers was left open. The Guravs then obtained forcible possession of the temple and that led to the trustees ' suit under section 9 of the Specific Relief Act, No. 1075 of 1922, on September 12, 1922. In this suit the trustees specifically alleged that the relationship of the defendants as servants of the Sansthan had ceased as from September, 1911, and they averred that the defendants had therefore no right to obtain possession of the temple. The defendants no doubt disputed this claim and pleaded that they were the hereditary vatandar pujari servants but their claim was negatived and a decree for possession was passed on November 4, 1922. In execution of this decree the defendants were dispossessed. On these facts the High Court has held in favour of the appellants, and rightly we think, that it was difficult to accept the respondents ' contention that the cause of action for the present suits which were expressly based upon the status of the Guravs as hereditary servants arose in 1911. But, the High Court felt no doubt that the cause of action to file the present suits had accrued either on September 12, 1922, when the trustees filed their suit under section 9 of the Specific Relief Act or in any event on November 4, 495 1922, when the said suit was decreed and the Guravs were consequently dispossessed. In our opinion this conclusion is also right. One of the Guravs who was examined in the present litigation has stated that, " if in any year when it is the turn of any takshim to serve, if a person outside the Gurav family is appointed by the trustees, all the takshims have a right to , object ". There is also no dispute that since the dismissal of eleven Guravs in 1911 till the institution of, the present suits none from the Gurav family has served the temple except for 3 1/2 months in 1922 when the Guravs had wrongfully obtained possession of the temple. In 1922 the Guravs knew that their claim of ownership had been rejected and that the only right which they could set up was as hereditary worshippers of the temple and not its owners. This right was specifically denied by the trustees in their plaint while it was specifically set up in defence by the Guravs in their written statement; and the decree that followed upheld the trustees ' case and rejected the defendant 's claim. On these facts the conclusion is irresistible that the right to sue accrued to the Guravs at the latest on November 4, 1922, when a decree was passed under section 9 of the Specific Relief Act. If not the plaint in the suit, at least the decree that followed clearly and effectively threatened the Guravs ' rights as hereditary worshippers and so the cause of action to sue on the strength of the said rights clearly and unambiguously arose at that time. If that be the true position it follows that the present suits which have been filed long after the expiration of six years from 1922 are barred by time under article 120. It is then contended by Mr. Rege that the suits cannot be held to be barred under article 120 because section 23 of the Limitation Act applies; and since, in the words of the said section, the conduct of the trustees amounted to a continuing wrong, a fresh period of limitation began to run at every moment of time during which the said wrong continued. Does the conduct of the trustees amount to a continuing wrong under section 23 ? That is the question which this contention raises for our decision. In other words, did the 496 cause of action arise de die in them as claimed by the appellants ? In dealing with this argument it is necessary to bear in mind that section 23 refers not to a continuing right but to a continuing wrong. It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the 'doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that section 23 can be invoked. Thus considered it is difficult to hold that the trustees ' act in denying altogether the alleged rights of the Guravs as hereditary , worshippers and in claiming and obtaining possession from them by their suit in 1922 was a continuing wrong. The decree obtained by the trustees in the said litigation had injured effectively and completely the appellants ' rights though the damage caused by the said decree subsequently continued. Can it be said that, after the appellants were evicted from the temple in execution of the said decree, the continuance of their dispossession was due to a recurring act of tort committed by the trustees from moment to moment ? As soon as the decree was passed and the appellants were dispossessed in execution proceedings, their rights had been completely injured, and though their dispossession continued, it cannot be said that the trustees were committing wrongful acts or acts of tort from moment to moment so as to give the appellants a cause of action de die in diem. We think there can be no doubt that where the wrongful act complained of amounts to ouster, the resulting injury to the right is complete at the date of the ouster and so there would be no scope for the application of section 23 in such a case. That is 497 the view which the High Court has taken and we see no reason to differ from it. We would now like to refer to some of the decisions which were cited before us on this point. The first case which is usually considered in dealing with the application of section 23 is the decision of the Privy Council in Maharani Rajroop Koer vs Syed Abdul Hossein (1) In order to appreciate this decision it is necessary to refer, though briefly, to the material facts. The plaintiff had succeeded in establishing his right to the pyne or an artificial watercourse and to the use of the water flowing through it except that which flowed through the branch channel; he had, however, failed to prove his right to the water in the tal except to the overflow after the defendants as owners of mouzah Morahad used the water for the purpose of irrigating their own land. It was found that all the obstructions by the defendants were unauthorised and in fact the plaintiff had succeeded in the courts below in respect of all the obstructions except two which were numbered No. 3 and No. 10. No. 3 was a khund or channel cut in the side of the pyne at a point below the bridge whereas No. 10 was a dhonga also below the bridge and it consisted of hollow palm trees so placed as to draw off water in the pyne for the purpose of irrigating the defendants ' lands. It was in regard to these two obstructions that the question about the continuing wrong fell to be considered; and the Privy Council held that the said obstructions which interfered with the flow of water to the plaintiff 's mehal were in the nature of continuing nuisance as to which the cause of action was renewed de die in them so long as the obstructions causing such interference were allowed to continue. That is why the Privy Council allowed the plaintiff 's claim in respect of these two obstructions and reversed the decree passed by the High Court in that behalf. In fact the conduct of the defendant showed that whenever he drew off water through the said diversions he was in fact stealing plaintiff 's water and thereby committing fresh wrong every time. Thus this is clearly not a case of exclusion or ouster. (1) (1880) L.R. 7 I.A. 240. 63 498 Similarly, in Hukum Chand vs Maharaj Bahadur Singh (1) the Privy Council was dealing with a case where the defendants ' act clearly amounted to a continuing wrong and helped the plaintiff in getting the benefit of section 23. The relevant dispute in that case arose because alterations had been made by the Swetambaris in the character of the charans in certain shrines and the Digambaris complained that the said alterations amounted to an interference with their rights. It had been found by the courts in India that the charans in the old shrines were the impressions of the footprints of the saints each bearing a lotus mark. "The Swetambaris who preferred to worship the feet themselves have evolved another form of charan not very easy to describe accurately in the absence of models or photographs which shows toe nails and must be taken to be a representation of part of the foot. This the Digambaris refused to worship as being a representation of a detached part of the human body ". The courts had also held that the action of the Swetambaris in placing the charans of the said description in three of the shrines was a wrong of which the Digambaris were entitled to complain. The question which the Privy Council had to consider was whether the action of the Swetambaris in placing the said charans in three of the shrines was a continuing wrong or not; and in answering this question in favour of the plaintiffs the Privy Council referred to its earlier decision in the case of Maharani Rajroop Koer (2 ) and held that the action in question was a continuing wrong. There is no doubt that the impugned action did not amount to ouster or complete dispossession of the plaintiffs. It was action which was of the character of a continuing wrong and as such it gave rise to a cause of action de die in diem. In our opinion, neither of these two decisions can be of any assistance to the appellants. On the other hand the decision of the Patna High Court in Choudhury Bibhuti Narayan Singh vs Maharaja Sir Guru Mahadev Asram Prasad Sahi Bahadur(3) (1) (1933) L.R. 60 I.A. 313. (2) (1880) L.R. 7 I.A. 240. (3) Pat. 208. 499 as well as that of the Full Bench of the Punjab High Court in Khair Mohammad Khan vs Mst. Jannat support the respondents ' contention that where the s, impugned act amounts to ouster there is no scope for the application of section 23 of the Limitation Act. We are, therefore, satisfied that there is no substance in the appellants ' contention that section 23 helps to save limitation for their suits. The result no doubt is unfortunate. The appellants have succeeded in both the courts below in proving their rights as hereditary worshippers; but their claim must be rejected on the ground that they have filed their suits beyond time. In this court an attempt was made by the parties to see if this long drawn out litigation could be brought to an end on reasonable terms agreed to by them, but it did not succeed. In the result the appeals fail and are dismissed. We would, however, direct that the parties should bear their own costs throughout. Appeals dismissed.

The appellants who were the hereditary worshippers, called Guravs, of the Shree Dnyaneshwar Sansthan of Alandi, claimed to be its owners. The respondents as trustees of the said Sansthan dismissed eleven of the Guravs in 1911, served a notice on the rest calling upon them to agree to act according to the orders of the Temple committee and appointed six Brahmins to carry on the services of the Sansthan. The Guravs did not agree and sued the respondents for a declaration of their rights of ownership and consequential reliefs. That litigation ended in the High Court in 1921 with the result that their claim of ownership stood rejected but their rights as hereditary worshippers were left open. Thereafter the Guravs took forcible possession of the temple on July 25,1922. The trustees brought a suit under section 9 of the Specific Relief Act on September 12, 1922, and obtained a decree on November 4, 1932. In execution of that decree the Guravs were dispossessed. The suits, out of which the present appeals arise, were filed by the appellants against the trustees for declaration of their rights as hereditary servants of the Sansthan, a permanent injunction restraining the trustees from obstructing them in the exercise of the said rights and accounts. The respondents claimed that the appellants were servants of the Temple committee and had no hereditary rights as claimed by them; even if they had, their claim to such rights was barred by limitation. The trial Court decreed the suits. In appeal the High Court, while agreeing with the trial court on the merits, disagreed on the question of limitation, held the suits to be barred by limitation under article 120 Of the Limitation Act, the cause of action arising either on the filing of the section 9 suit by the respondents or, in any event, on the date when the said suit was decreed, section 23 of the Act having no application, and allowed the appeals. It was contended on behalf of the appellants in this Court that the suits were governed by article I24 Of the Limitation Act, and even if article 120 applied, section 23 saved limitation. Held, that the High Court was right in holding that article 120 and not article 124, of the Limitation Act applied and that section 23 had no application to the suits in question. 477 Article 124 Of the Limitation Act applies only where the cause of action for the suit is wrongful dispossession of the plaintiff and adverse possession by the defendant in respect of the hereditary office in question. In such suits, the contest usually is between rival claimants to the hereditary office and not between such claimants and trustees. It is impossible to ignore the provision Of Col. 3 to that article in deciding its applicability. Kunj Bihari Prasadji vs Keshavlal Hiralal, Bom. 567 and jalim Singh Srimal vs Choonee Lall Johurry, , held inapplicable. Thathachariar vs Singarachariar, A.I.R. 1928 Mad. 377, ap proved. Annasami vs Advarachari, I.L.R. , distin guished. Jhalandar Thakur vs jharula Das, Cal. 2444, referred to. Section 23 Of the Limitation Act refers not to a continuing right but to a continuing wrong. A continuing wrong is essentially one that creates a source of continuing injury as opposed to one that was complete and makes the doer liable for such continuance. A completed inJury would not be a continuing wrong even though it might give rise to continuing damage. Thus tested, the injury to the appellants resulting from the decree obtained by the trustees in the section 9 suit, which amounted to a ouster, was complete at the date of the ouster and section 23 Of the Limitation Act could not apply so as to save limitation. Choudhury Bibhuti Narayan Singh vs Maharaja Sir Guru Mahadeu Asram Prasad Saki Bahadur, Pat. 208 and Khair Mohammad Khan vs Mst. jannat, Lah. 22, referred to. Maharani Rajroop Koer vs Syaed Abdul Hossein, [1880] L.R. 7 I.A. 240 and Hukum Chand vs Maharaj Bahadur Singh, [1933] L.R. 60 I.A. 313, distinguished and held inapplicable.

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minal Appeal No. 818 of 1985. From the Judgment and Order dated 4.7.1985 of the Kerala High Court in Criminal Appeal No. 251 of 1982. P.S. Poti and Ms. Malini Poduval for the Appellant. M.T. George for the Respondent. The Judgment of the Court was delivered by N.P. SINGH, J. The appellant along with others was put on trial for offenses under sections 302 read with 149, 148, 323 of the Penal Code on the charge of committing the murder of Moideen Kutty (hereinafter referred to as the deceased). The Trial Court on consideration of the 695 materials on record came to the conclusion that the charges leveled against the accused persons have not been established, beyond all reasonable doubt and on that finding acquitted the appellant as well others. On appeal being filed on behalf of the State of Kerala the High Court convicted the appellant under section 302 of the Penal Code and sentenced him to undergo rigorous imprisonment for life. So far another accused Alavi who had been acquitted by the Trial Court was also convicted by the High Court under section 323 of the Penal Code and sentenced to pay a fine of Rs. 250 and in default thereof to suffer simple imprisonment for a term of one month. The acquittal of other accused persons was affirmed by the High Court by dismissal of the appeal against them. The case of the prosecution is that on 16.9.1980 Mammed Kutty at 6.00 A.M. in the morning pelted stones at the house of the deceased. At about 12.00 in the noon while Mammed Kutty and his brother Abdulla Kutty were passing in front of the house of the deceased, a protest was made by the deceased in respect of the morning incident. They denied that any stone had been pelted by them. It is the further case of the prosecution that at about 2 P.M. while the deceased was sitting with his wife (PW4) and others on the varandah of his house, five persons including the appellant came to his courtyard and challenged him to come out, if he wanted to beat aforesaid Mammed Kutty and Abdulla. The deceased stepped out into his courtyard and asked the accused persons not to create a scene. At this the appellant and the other accused (since acquitted) gave some blows to the deceased on his hand. Thereafter the deceased raised his hand to give a blow to the appellant. At this very moment, the appellant took out a dagger from his waist and gave an injury on the upper part of the chest of the deceased near the left shoulder and above the armpit. The deceased ran towards the house of PW1 and fell on the varandah. Thereafter the accused persons escaped. The victim was removed to the Medical Hospital Calicut, where he was examined by PW9. But soon thereafter he expired. The First Information Report was lodged at 7.15 P.M. After investigation the charge sheet was submitted against five accused persons. At the trial prosecution examined four eye witnesses PW1 to PW4. The doctor who held the post mortem examination was examined as PW8. He found only one incised penetrating wound vertically placed on the front of left shoulder above the left armpit 'tailing 6 cm. in length running towards from the lower sharp end. " According to his opinion, "The an 696 died because the artery was cut. . This injury became dangerous only because it cut the artery. . In the cross examination PW8 stated that it was impossible to cause an injury like one which was found on the person of the victim by the assailant standing in front of the victim. He also stated that the tailing of the injury show that either the knife was dragged after stabing or that the injury was caused during the course of the struggle. According to him, if the accused had given a direct blow, as is normally done, there would not have been the tailing of the injury. The learned counsel appearing for the appellant placed the statement made in the First Information Report, the evidence of the eye witnesses, in connection with the morning incident of pelting of stones, to show that it was a concoction and none had pelted any stone on the house of the deceased. According to the learned counsel, if this part of the prosecution case is disbelieved then it shall have a bearing on the main occurrence itself. It was also pointed out that the prosecution has suppressed real manner of occurrence in as much as one Abdulla on the side of the accused persons was first assaulted by the prosecution party on the same day at about 1.30 P.M. and he was hospitalised after having received the injuries. That incident was an integral part of the occurrence which has not been disclosed by the prosecution. In this connection our attention was drawn to the evidence of DW1 who has stated that he had examined the injuries on the person of one Abdulla on 16.9.1980 at 4.30 P.M. and found three injuries on his person, (i) A contusion on the left shoulder 4 x 2 cm, (ii) abrasion below the right collar bone 3 x 5 cm. and (iii) injury on the outer side of the left ankle 4 x 3 cm. He has also stated that the said Abdulla had alleged that he had been assaulted with a wooden stick at 1.30 P.M. the same day. The Trial Court while acquitting the accused persons has attached great importance to the injury found on the person of aforesaid Abdulla and has drawn adverse inference against the prosecution case. The High Court has rightly pointed out that merely non disclosure of the aforesaid superficial injuries on the person of Abdulla even if those injuries had been caused in the same occurrence, shall not in any manner affect the prosecution case: It is well settled that if the evidence of the eye witnesses are held to be reliable and inspire confidence then the accused cannot be acquitted solely on the ground that some superficial injuries found on the person of the accused concerned, had not been explained by the prosecution. 697 According to us, if the evidence of four eve witnesses including the evidence of the son and the wife of the deceased are accepted as reliable and trust worthy then the prosecution case cannot be rejected merely on .the ground that the incident of pelting of the stones on behalf of the accused in the early morning had not been proved or established or that some minor injuries on the person of Abdulla caused in the same occurrence had not been disclosed and explained by the prosecution. So far the four eve witnesses are concerned they have been named in the First Information Report. The First Information Report was lodged at 7.15 P.M. the same evening, within two hours of the death of the victim. In the First Information Report the details of the occurrence was men tioned. The version disclosed in the First Information Report has been supported by the eye witnesses before the Court. The learned counsel appearing for the appellant could not point out any reason why their evidence against the appellant should not be accepted. It may be pointed out that in the First Information Report itself PW1, the informant, stated that this appellant came to the house of the deceased and challenged him as to who was there to beat Abdulla and Muhammed Kutty. He further stated that having heard this the deceased moved towards them and asked them to go back. At that very moment this appellant and the other co accused Alavi gave him blows on his hand. Thereafter the deceased tried to give counter blow to the appellant. Then the appellant took out a knife from his waist and gave a blow from the said knife, to the deceased at his left collar bone. The prosecution very fairly admitted that accused persons were not carrying any weapon in their hands and during the protest made, a sudden quarrel and fight took place between the prosecution party and the accused persons. Even at trial evidence the eve witnesses have admitted this part of the version and have stated that first the appellant and the other co accused gave blows on the hand of the deceased. The knife blow was given by the appellant when the deceased was trying to give a counter blow to the appellant. There is no dispute that the appellant suddenly took out the knife during the course of the quarrel and fight from his waist. From the evidence of doctor PW8 referred to above it appears that injury aforesaid could not have been caused by the assailant standing in front of the victim. It could have been caused only during the struggle. In view of the admitted position that a sudden fight and quarrel preceded the giving of the knife 698 blow by the appellant to the victim which in all probabilities was given not while the victim and the appellant were standing face to face but during a struggle between them, causing tailing of the injury, it shall not be just and proper to hold that appellant had an intention to cause the death of the victim. Taking the evidence of the witnesses along with circumstances of the case, according to us, the appellant had the knowledge that injury which he was causing was likely to cause death but he had no intention to cause the death of the victim. In such a circumstances it is not possible to uphold the conviction of the appellant under section 302 of the Penal Code. Accordingly, the conviction and sentence passed against the appellant under section 302 of the Penal Code are set aside. The appellant is convicted under section 304 part 11 of the Penal Code and sentenced to undergo rigorous imprisonment for seven years. The appeal is allowed in part to the extent indicated above. The bail bond is cancelled. N.V.K. Appeal partly allowed.

The appellant along with others was tried for offences under Section 302 read with Sections 148, 149 and 323 of the Indian Penal Code. The case of the prosecution was that on 16.9.80 Mammed Kutty at 6.00 a.m. in the morning pelted stones at the house of the deceased. At about 12.00 noon while Mammed Kutty and his brother Abdulla Kutty were passing in front of the house of the deceased, a protest was made by the deceased in respect of the morning incident which was denied. At about 2.00 p.m. when the deceased was sitting with his wife (PW 4) and others on the varandah of his house, 5 persons including the appellant came to his courtyard and challenged him to come out, if he wanted to beat Mammed Kutty and Abdulla. The deceased stepped out into his courtyard and asked the accused persons not to create a scene, when the appellant and the other accused gave some blows to the deceased on his hand. Thereafter the deceased raised his hand to give a blow to the appellant, when the appellant took out a dagger from his waist and gave an injury on the upper part of the chest of the deceased near the left shoulder and above the armpit. The deceased ran towards the house of PW1 and fell on the varandah. Therefore, the accused persons escaped. The victim was removed to the Medical Hospital where he was examined by PW 9, but soon thereafter expired. The F.I.R. was lodged at 7.15 p.m. and after investigation the chargesheet was submitted against the five accused persons. At the trial the prosecution examined 4 eye witnesses, PW1 to PW4, and PW8 the doctor who held the post mortem examination. 693 The trial court on consideration of the materials on record came to the conclusion that the charges leveled against the accused persons had not been established beyond all reasonable doubt, and on that finding acquitted all the accused including the appellant. Great importance was attached to the injury found on the person of Abdulla and adverse inference was drawn against the prosecution case. On appeal by the State, the High Court convicted the appellant under Section 302 and sentenced him to undergo rigorous imprisonment for life. Another accused (Alavi) was convicted under Section 323 of the Penal Code and sentenced to payment of fine of Rs. 250. The acquittal of the remaining 3 accused persons by the Trial Court was affirmed. The High Court held that mere non disclosure of the superficial injuries on the person of Abdulla even if those injuries had been caused in the same occurrence, do not in any manner affect the persecution case. In the appeal to this court it was contended on behalf of the appellants that the statements made in the First Information Report, the evidence of the eye witnesses in connection with the morning incident of pelting of stones, show that it was a concoction and that none had pelted any stone on the house of the deceased, and that if this part of the prosecution case is disbelieved then it has a bearing on the main occurrence itself. It was further submitted, that the prosecution had suppressed the real manner of occurrence in as much as Abdulla was first assaulted by the prosecution party on the same day at about 130 p.m. and that he was hospitalised after receiving the injuries, reliance being placed on the evidence of DW1 who had stated that he had examined the injuries on the person of Abdulla on 16.9.80 at 430 p.m. Allowing the appeal in part, this Court, HELD:1. It is well settled that if the evidence of the eye witnesses is held to be reliable and inspires confidence then the accused cannot be acquitted solely on the ground that some superficial injuries found on the person of the accused concerned, had not been explained by the prosecution. [696 H] In the instant case, so far as the four eye witness are concerned they have been named in the FIR. The FIR was lodged at 7.15 p.m., the same evening, within two hours of the death of the victim. The FIR mentions the 694 details of the occurrence, and the version disclosed therein had been supported by the eye witness before the Court. No reason has been shown as to why the evidence of these P.Ws should not be accepted. [697 C] 2.The prosecution has admitted that the accused persons were not carrying any weapon in their hands and during the protest made, a sudden quarrel and fight took place between the prosecution party and the accused persons. This part of the version had been admitted at the trial by the eye witnesses in their evidence, who also stated that first the appellant and the other co accused gave blows on the hand of the deceased and that the knife blow was given by the appellant when the deceased was trying to give a counter blow to the appellant. [697 F] In view of the admitted position that a sudden right and quarrel preceded the giving of the knife blow by the appellant to the victim which in all probability was given not while the victim and the appellant were standing face to face but during struggle between them, causing tailing of the injury, it shall not be just and proper to hold that the appellant had an intention to cause the death of the victim, but only knowledge that injury which he was causing was likely to cause death. In such a circumstance it is not possible to uphold the conviction of appellant under Section 302 of the Indian Penal Code. It is therefore set aside, and the appellant convicted under Section 304 Part 11 of the Indian Penal Code and sentenced to undergo rigorous imprisonment for 7 years. [697 H,698 A C]

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ivil Appeal No. 3284 of 1992 From the Judgement and Order dated 18.2.1992 of the Delhi High Court in Civil Writ Petition No. 2259 of 1991. R.K. Garg, K.L. Vohra, Rajeev Sharma and D.K. Garg for the Appellants. Arun Jaitley, V.B. Saharya, Ashok Bhan and B.K. Prasad for the Respondents. The Judgement of the Court was delivered by SHARMA,J. Heard the learned counsel for the parties. Special leave is granted. The respondents in this appeal have successfully invoked the jurisdiction of the High Court under Article 226 of the Constitution for enforcement of a private right to immovable property against the appellants who are two brothers and who are resisting the claim. The question is as to whether the writ jurisdiction in the High Court is available for the enforcement of such a right claimed by and against private individuals. 906 3. The dispute relates to a house property in Delhi. A suit for eviction of the appellants from the building is pending in the trial court. According to the case of the respondent No. 1, who is the owner of the property, she had let out the same to one Shri B.K. Pandey who later illegally handed over the possession thereof to the appellant no.1. According to the further case of the respondent, the portion of the said house property which is subject matter of the present case is beyond the purview of the pending suit. The occasion for initiating the present proceeding with respect to this portion arose, it is said, on account of the high handedness of the appellants who illegally trespassed beyond the area which is the subject matter of the pending suit, and indulged in several illegal activities. In other words, the appellants are trespassers and are guilty of mischievous conduct. However, instead of filing a suit in the civil court or making an appropriate prayer for amendment of her plaint in the pending suit, she through respondent no.2 holding power of attorney, approached the High Court directly by a writ petition under Article 226 for issuance of appropriate direction restraining the appellants from disturbing the lawful possession of the respondents. The Delhi Administration and the Commissioner of Police, Delhi, were also impleaded as parties with a prayer that appropriate order should be issued against them also and they should be directed not to register any further false and vexatious complaint against them at the instance of the appellants. It is her case that the appellants have been getting undue police help and are being encouraged to commence frivolous criminal cases against respondent no.1 and her agent. The appellants denied the allegations of fact made against them and also challenged the maintainability of the writ petition. Although the fact that a suit between the parties was already pending in the civil court was known to the High Court, it proceeded to pass a short order stating: "There is already a civil suit pending between the parties. Except the prayer in regard to access to the backyard, no other relief can be granted in this writ petition. We direct respondents 3 and 4 to remove the grill for access 907 to the backyard in the presence of the police and representatives of the petitioners on Sunday, 23rd February 1922 at 11.00 a.m. so that the access of the petitioner to the servants quarters is not stopped." 6. Mr. Arun Jaitley, the learned counsel appearing on behalf of respondent No. 1 has supported the impugned judgement on the ground that prayer for issuing a direction against Delhi Administration and Commissioner of Police who were respondent nos. 1 and 2 was also made. It has to be appreciated that the present appellants were respondent nos. 3 and 4 before the High Court; and the High Court has by the impugned order, considered it fit to allow the prayer of the respondents against them for removal of the grills for access to the backyard. According to the stand of the landlord respondent, since the police were taking a partisan attitude against her, the filing of a writ petition became necessary. We are unable to follow this argument. There is no doubt that the dispute is between two private persons with respect to an immovable property. Further, a suit covering either directly a portion of the house property which is in dispute in the present case or in any event some other parts of the same property is already pending in the civil court. The respondent justifies the step of her moving the High Court with a writ petition on the ground of some complaint made by the appellants and the action by the police taken thereon. We do not agree that on account of this development, the respondent was entitled to maintain a writ petition before the High Court. It has repeatedly been held by this court as also by various High Courts that a regular suit is the appropriate remedy for settlement of disputes relating to property rights between private persons and that the remedy under Article 226 of the constitution shall not be available except where violation of some statutory duty on the part of a statutory authority is alleged. And in such a case, the court will issue appropriate direction to the authority concerned. If the grievance of the respondent is against the initiation of criminal proceedings, and the orders passed and steps taken thereon, she must avail of the remedy under the general law constitutional jurisdiction to be used for deciding disputes, for which remedies, under the general law, civil or criminal, are available. It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant. 908 The jurisdiction is special and extra ordinary and should not be exercised casually or lightly. We, therefore, hold that the High Court was in error in issuing the impugned direction against the appellants by their judgement under appeal. The appeal is accordingly allowed, the impugned judgement is set aside and the writ petition of the respondents filed in the High Court is dismissed. There will be no order as to costs. G.N. Appeals allowed.

During the pendency of a suit for eviction of the appellants from the property of Respondent No.1, the appellants were alleged to have trespassed beyond the area which was the subject matter of the suit and indulged in several illegal activities. Thus according to Respondents, the appellants were guilty of mischievous conduct. The Respondents instead of filing a suit in the Civil Court or making appropriate prayer for amendment of the plaint in the pending suit field a Writ Petition before the High Court for issuance of appropriate direction retraining the appellants from disturbing the lawful possession of the respondents. The Administration and Commissioner of Police were also impleaded as parties and a direction sought against them not to register any further false and vexatious complaints against the Respondents since undue Police help to the appellants was apprehended. The High Court gave certain directions to the appellants as regards Respondents ' access to the backyard. The present appeal by special leave, is against the said orders of the High Court. On the question whether the Writ jurisdiction of High Court would be available for enforcement of a private right to immovable property claimed by and against private individuals: Allowing the appeals, this Court HELD: 1. A regular suit is the appropriate remedy for settlement 905 of disputes relating to property rights between private persons and that the remedy under Article 226 of the Constitution shall not be available except where violation of some statutory duty on the part of statutory authority is alleged. And in such a case, the Court will issue appropriate direction to the authority concerned. [907 E, F] 2. If the real grievance of Respondent No.1 is against the initiation of criminal proceeding and the orders passed and steps taken thereon, she must avail of the remedy under the general law including the Criminal Procedure Code. The High Court cannot allow the constitutional jurisdiction to be used for deciding disputes, for which remedies under the general law, civil or criminal, are available. It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant. The jurisdiction is special and extra ordinary and should not be exercised casually or lightly, [907 F H]

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l Leave petition (c) No. 4748 of 1991. From the Judgment and Order dated 21.1.91 of the Bombay High Court in W.P. No. 3481 of 1990. N.B. Shetye, P.M. Pradhan and A.M. khanwilkar for the petitioner. Dushyant Dave, Beliram Vakil, Abrar Ali, Ajit Yogi, Gajender Lal, Mukul Gupta and Ms. Sonia Khan for the Respondents. The Judgment of the court was delivered by SAWANT, J. The petitioner is diploma holder in Engineering and holds the post of Executive Engineer in the respondent Corporation. Till 1974, the promotion post of the superintending Engineer was available both for diploma holders and degree holders according to merit cum seniority. This was so according to the practice followed by the Corporation without making any rules or regulation in that behalf. In 1974, the corporation made regulation by passing a resolution by passing a resolution and continued the same practice. Admittedly, the regulation were not made under section 64 of the Maharashtra Industrial Development Act, 1961 [hereinafter referred to as the 'Act '] under which the respondent corporation was created. Thereafter in 1988, the corporation passed a resolution, for the first time,. making 75 per cent of the posts of superintending engineers available to the executive Engineers holding degrees and 25 per cent to the Executive Engineers who were diploma holders. This resolution was also admittedly not a regulation made under the said section 64. But for this resolution, the petitioner who was senior to respondent NO. 2 would have been promoted to the post of Superintending Engineer on 31st October, 1990. However, since respondent No.2 was a degree holder, he got the said resolution and was promoted to the said post on that date. It is this promotion which was challenged by the petitioner by a writ petition in the High Court. The High Court by the impugned judgment dismissed the said petition. Two contentions were raised before us. (i) that no classification could be made among the Executive Engineers on the basis of their educational qualification for the purpose of promotion to the post of superintending Engineer, since they belong to the same cadre of Executive Engineers and do the same work. There was also a common seniority of the Executive Engineers maintained. hence the classification was discriminatory in nature and violative of Articles 14 and 16 of the Constitution . (ii) that if at all such a discrimination was permissible, it could be made only be a statutory rule or regulation framed under Section 64 of the said Act. A mere resolution or an executive instruction could not effect such discrimination. We find not merit in either of the two contentions. It is now well settled that for the purpose of promotion, a valid classification can made among the members holding the same post on the basis of their qualification. In state of Jummu & Kashmir vs Triloki Nath Khosa & Ors., ; , a Constitution Bench of his court has clearly held that such a classification is permissible and does not violate Articles 14 and 16 of the Constitution the Court has observed there that in state of Mysore & Anr. vs P. Narasing Rao, ; and The Union of India and others vs Dr.(Mrs.) S.B. Kholi; , , it was already held that classification on the basis of educational qualification was permissible. The Court then referred to Roshan Lal Tandon vs Union of India, ; and distinguished it on the facts by pointing out that it was a case of the direct recruits and promotees integrated into one cadre. Once they were integrated they lost their birth birth marks, viz. the different sources from which they were recruited. [Emphasis supplied]. The court pointed out that Roshan Lal 's case [supra] was thus no authority for the proposition that if direct recruits and promotees are integrated into one class they cannot be classified for purposed of promotion on a basis other than that in the case before the them the classified for purpose of promotion on a basis other than that they were drawn from different sources. The court also pointed out that the very Bench which decided Roshan Lal 's case [supra] held about a fortnight later in Narsingh Rao 's case [supra t] that higher educational qualifications were a relevant consideration for fixing higher pay scale and , therefore, matriculates Tracers could be given a higher scale than non matriculate Tracers thought their duties were identical . The court, further on the same reasoning distinguished Mervyn Coutindo & Ors. Collector of Customs Bombay & Ors.,[1966] 3 SCR 600 and S.M. Pandit and others, etc. vs state of Gujarat and others, AIR 1972 SC 252 by pointing out that both the cases related to the classification made on the basis of the sources of recruitment and not on the basis of educations. The court then concluded : "We are therefore of the opinion that though persons appointed directly and by promotion were integrated into a common class of Assistant Engineers, they could, for purposes of promotion to the cadre of Executive Engineers, be classified on the basis of educational qualification. The rule providing that graduates shall be eligible for such promotion to the exclusion of diploma holders does not violate Articles 14 and 16 of the Constitution and must be upheld. " The reliance placed by Shri Shetye appearing for the petitioner on a later decision of a Bench of two learned judges of this Court in H.C. Sharma and others vs Municipal Corporation of Delhi and others; , 372 is, we are afraid, not justified. It was a case where no separate quota for promotion to the post of Assistant Engineer was kept for degree holder Junior Engineers and diploma holder Junior Engineers. The degree holders Junior Engineers had sought a relief that such a quota be kept. It is while dealing with this relief claimed, that this Court had observed that it could not be don e except by carving out two classes in the same category of junior Engineers. It may be observed that it was not a case where the classification was already made which was challenged before the Court. It was case where the writ petitioners wanted such a classification to be made. It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work and the necessity for making such a classification that quotas could be prescribed on the basis of educations. It is true that the following observation made in that case while dealing with the relief claimed, do support the petitioner: " Prayer No. 4 is to declare the petitioner Graduate Engineers as a separate category amongst Junior Engineers and give them equal quota like the Diploma holder Junior Engineer`s out of the 50% quota for promotion a Assistant Engineers. This cannot be done except by carving out two classes in the same category of Junior Engineers o the basis merely of their qualification which is not permissible in law though the creation of selection grade in the same category on the basis of merit and on seniority is well known and permissible. The Junior Engineers do the same kind of work and bear the same responsibility whatever their qualification, whether they are Degree holders or Diploma holders. " However , these observations have been made without noticing the decision in Khosa 's case (supra). Hence, the observation are per incuriam as regards the next contention, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 nor the resolution passed in accordance with section 64 of the Act. It is well settled that in the absence of rule or regulation the authority can prescribe service conditions by executive instructions and this is what was done till the year 1988 and is also sought to be done since 1988 by the impugned resolution. The proposition that in the absence of the rules and regulations, the authority can act by executive instruction finds direct support in Mysore state Road Transport Corporation vs Gopinath Gundachar char, {1968] 1 SCR 767 and vs Balasubramaniam and others vs Tamil Nadu housing Board and others; , In view of the above, the petition stands dismissed. G.N Petition dismissed.

The petitioner, a diploma holders in Engineering, was Executive Engineer in the respondent Corporation. He would have been promoted as superintending Engineer, but for a Resolution passed in 1988 making 75% of the posts of Superintending Engineers available to Executive Engineers with diploma in Engineering degrees and 25% to Executive Engineers with diploma in Engineering Respondent No.2 who junior to petitioner but had engineering degree was promoted as superintending Engineer. The petitioner challenged the promotion of Respondent No. 2 before the High court by way of a writ petition. The High court having dismissed the same, the petitioner preferred the present special Leave petition. On behalf of the petitioner, it was contended that since there was a common seniority list of Executive Engineers, any classification on the basis of education qualification was discriminatory and violative of Articles 14 and 16 of the Constitution; and that in the absence of any statutory rule or regulation, a mere resolution could not effect such discrimination. Dismissing the petition, this court, HELD: 1.1. It is now well settled that for the purpose of promotion, a valid classification can be made among the members holding the same post on the basis of their qualification. Such a classification is permissible and does not violate Articles 14 and 16 of the Constitution. [99 A B] 1.2. It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work, and the necessity for making a classification, to prescribe quotas on the basis of educational qualification. [99 D] State of Jammu & Kashmir vs Triloki Nath Khosa & ors., [1974]1 SCR 771, followed. H.C. Sharma & ors. vs municipal corporation of Delhi & ors. ; , , referred to. In the instant case, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 was a regulation passed in accordance with section 64 of the Act. However, it is well settled that in the absence of a rule or regulation, the authority can prescribe service conditions by executive instructions and this is what was done till year 1988 and is also sought to be done since 1988 by the resolution under challenge. [100 A,B] Mysore state Road Transport Corporation vs Gopinath Gundachar char; , and V. Balasubramaniam and others vs Tamil Nadu Housing Board and others, [1987]4 SCC 738, relied on.

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Appeal No. 5086 of 1985. From the Judgment and Order dated 31.1.1985 of the Punjab and Haryana High Court in Civil Revision No. 1847 of 1984. A.B. Rohtagi, R.C. Mishra and Dr. Meera Aggarwal for the Appellant. M.S. Gujaral and R.S. Sodhi for the Respondents. The Judgment of the Court was delivered by ' VERMA, J. The appellant, Gulraj Singh Grewal, took the suit premises situate in Ludhiana on monthly rent of Rs. 800 from respondent No. 1, Dr. Harbans Singh, in March 1980. Respondent No. 2, Dr. Ravinder Singh, is son of respondent No. 1, Dr. Harbans Singh. Both the respondents are medical practitioners. The respondents filed a petition for eviction of the appellant tenant on three grounds, namely, personal need of the respondents under Section 13(3) (a) (i) (a), change of user under section 13(2) (ii) (b) and impairment of value and utility of the rented building under section 13(2) (iii) of the East Punjab Urban Rent Restriction Act, 1948. The appellant contested the petition denying the existence of any of these grounds for eviction. The Rent Controller dismissed the petition holding that none of the three grounds had been proved. On appeal by the respondents, the appellate authority held that the personal need of respondent No. 2, Dr. Ravinder Singh, one of the landlords, was proved and the ground of change of user of the rented building by the appellant had also been proved. The third ground relating to impairment of value and utility of the rented building was rejected. The appellate authority further held that the building though let out for residential purpose was used by the appellant, a consultant engineer, partly for his profession on account of which it had become 153 a 'scheduled building ' as defined in Section 2(h) of the Act and, therefore, the ground for eviction based on personal need was not available for evicting the tenant from a 'scheduled building. However, an order of eviction was made on the ground of change of user of the rented building. The appellant then preferred a revision to the High Court which has been dismissed the findings and order of eviction made by the appellate authority. Hence, this appeal by special leave. The submissions of Shri Avadh Behari, learned counsel for the appellant are several. The first contention is that there was no change of user by the appellant tenant to justify the order of eviction on that ground. The second submission is that the finding on the question of personal need of the landlord is erroneous. The last submission is that no order of eviction can be made on the ground of personal need contained in section 13(3) (a) (i) (a) in respect of a 'scheduled building ' since that ground is available for eviction only from a 'residential building ' as defined in section 2(g) of the Act, a 'scheduled building ' defined in section 2(h) of the Act being a different kind of building. In reply, Shri M.S. Gujral, learned counsel for the respondents submitted that the order of eviction is justified and there is no ground to interfere in this appeal. His submission is that a 'scheduled building ' defined in section 2(h) continues to be a 'residential building ' as defined in section 2(g), so that the ground for eviction based on personal need contained in section 13(3) (a) (i) (a) is available in the present case. He also submitted that the finding of fact relating to personal need of the landlord is not open to challenge. His submission in the alternative is that in case a 'scheduled building ' is not 'residential building ', then the ground of change of user is available since the building was let out for residential purpose and its user has been changed unilaterally by the tenant without the consent of the landlord. The first question for our decision is: whether learned counsel for the appellant is right in contending that a 'scheduled building ' is not a "residential building ' for the purpose of the ground of eviction contained in section 13(3) (a) (i) (a) ? In case it is held that this ground for eviction of the tenant is available in the present case and the finding of fact on the question of personal need of the landlord is not open to challenge, the order of eviction can be sustained on this ground alone and it is unnecessary to decide the question relating to the ground of change of user contained in section 13(2) (ii) (b) of the Act. We would, therefore, consider 154 this question first. Admittedly, the appellant is a consultant engineer and the suit premises, a 'building as defined in section ' '(a) of the Act, was let out to him solely for residential purpose. He has been using it as his residence while a part thereof is used by him as his professional office without the consent of the landlord. It is on the basis of use of a part of the building as appellant 's office that the appellant claims it to be a 'scheduled building ' as defined in section 2(h) of the Act. Apart from the question of change of user which is a separate ground for eviction, the question is whether the suit premises being treated as a 'scheduled building, the ground for eviction contained in section 13(3) (a) (i) (a) is not available, that ground being available only in respect of a 'residential building ' as defined in section 2(g) of the Act. The contention of learned counsel for the appellant is that the word 'scheduled ' which occurred along with 'residential ' in section 13(3) (a) (i) of the Act having been omitted by the amendment made in the principal Act in 1956, the obvious legislative intent is to exclude a 'scheduled building ' from the scope of that provision with the result that the grounds for eviction contained in section 13(3) (a) (i), of which personal need of the landlord is one, are not available for eviction of a tenant from ,scheduled building ' thereunder after that amendment. To buttress this argument, learned counsel referred to section 4 of the principal Act and Section 13A, inserted therein by an amendment made in 1985, wherein the expression 'scheduled building ' is expressly used in addition to the expression 'residential building ' and the separate definition of 'scheduled building ' in section 2(h) while defining 'residential building ' in section 2(g) in the principal Act from the very inception. The question is whether this contention can be accepted. Before dealing with the above question, it would be appropriate to dispose of the challenge made to the finding of fact of landlord 's personal need, on which this question arises. The finding on this question of fact recorded by the appellate authority has been affirmed by the High Court. Can this finding be reopended now? Learned counsel for the appellant submitted that the personal need found proved is only of respondent No. 2, son of respondent No. 1, who did not enter the witness box and, as stated in an affidavit filed in this 155 Court, even he is carrying on his profession at a place about 25 kms, away from Ludhiana. In our opinion, this finding of fact is unassailable. The High Court has clearly observed that no meaningful argument could be advanced on behalf of the appellant to challenge this finding of the appellate authority. Respondent No. 1 who is the father of respondent No. 2, has supported and proved the need of respondent No. 2, who also is a landlord. The fact that for want of suitable accommodation in the city of Ludhiana, respondent No. 2 is at present carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlord 's need. In these circumstances, the non examination of respondent No. 2 also, when respondent No. 1 has examined himself and proved the need of the landlord, is immaterial and, at best, a matter relating only to appreciation of evidence, on which ground this finding of fact cannot be reopened. This is more so when no serious challenge to this finding was made in the High Court. We must, therefore, proceed on the basis that the personal need of the landlord is proved to make out the ground of eviction contained in section 13(3)(a)(i)(a) of the Act in case that ground of eviction is applicable to the suit premises treating it as a 'scheduled building. In order to fully appreciate the arguments of learned counsel for the appellant, the legislative history would be useful. The Punjab Urban Rent Restriction Act, 1941 was enacted to restrict the increase of rents on certain premises situated within the limits of urban areas in the Punjab. That Act was primarily to control the increase of rents and did not relate to eviction of tenants. Then came the Punjab Urban Rent Restriction Act, 1947 which was enacted to restrict the increase of rent of certain premises situated within the limits of urban areas and the eviction of tenants therefrom. Provision was made in Section 4 of the Act for determination of fair rent, for which purpose 'non residential building ', 'residential building ' and 'scheduled building ' were treated as three different categories prescribing different formula for each of these three categories. For this reason, separate definition of each of them was given in section 2 containing the definitions. However, for the purpose of eviction, in section 13 (3), a 'residential building or a 'scheduled building ' were clubbed together and treated similarly by providing the same grounds for eviction while a 'non. residential building ' or 'rented land ' were clubbed together and provided for separately. The scheme of the Act clearly shows that a 'residential building ' and a 'scheduled building ' were treated as different categories only for the determination of fair rent but were treated alike while prescrib 156 ing the grounds for eviction of a tenant therefrom. The definition of 'scheduled building ' in section 2(h) of that Act also took care to provide that a 'scheduled building ' means a residential building which was being used partly for a specified purpose. In this manner, the definition of a 'scheduled building ' given in the Act was in consonance with the scheme of the Act treating it differently from a 'residential building ' for the purpose of determination of fair rent and similarly for eviction of the tenant. Then came the East Punjab Urban Rent Restriction Act, 1948 which repealed the 1947 Act and replaced it. The same scheme was retained in the 1949 Act which is the principal Act for our purpose. It is the relevant provisions of this Act, as amended from time to time, which are material for deciding the point raised by the appellant. The East Punjab Urban Rent Restriction Act, 1948 (East Punjab Act No. 111 of 1948) was amended by the Amendment Acts of 1956, 1957, 1966 and 1985 whereby section 13 of the principal Act was amended and in 1985 the new section 13A was inserted. It is the amendments made in section 13 at the principal Act providing for eviction of tenants which are material for our purpose. The material provisions of the Act, including the amendments made in section 13 from time to time are mentioned hereafter. In the principal Act as originally enacted, the material provisions are as under : '2. Definitions. In this Act, unless there is anything repugnant in the subject o r context, (a) 'building ' means any building or part of a building let for any purpose whether being actually used for that purpose or not, including any land, godowns out houses or furniture let therewith, but does not include a room in a hotel, hostel or boarding house; xxx xxx xxx (d) 'non residential building means a building being used solely for the purpose of business or trade; xxx xxx xxx (g) "residential building" means any building which is not a 157 non residential building; (h) "scheduled building means a residential building which is being used by a person engaged in one or more of the professions specified in the Schedule to this Act, partly for his business and partly for his residence; xxx xxx xxx "4. Determination of fair rent. (1) The Controller shall on application by the tenant or landlord of a building or rented land fix the fair rent for such building or rented land after holding such inquiry as the Controller thinks fit. (2) In fixing the fair rent under this section, the Controller may first fix a basic rent taking into consideration xxx xxx xxx (3) In fixing the fair rent of a residential building the Controller may allow. If the basic rent xxx xxx xxx (4) In fixing the fair rent of a scheduled building the Controller may allow, if the basic rent xxx xxx xxx (5) In fixing the fair rent of a non residential building or rented land the Controller may allow, if the basic rent xxx xxx xxx '11. Conversion of a residential building into a nonresidential building No person shall convert a residential building into a non residential building except with the permission in writing of the Controller." "13. Eviction of tenants. (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement 158 of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this section. (2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf. If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii)that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased. or (iii)that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application : Provided that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building or rented land and may extend such time so as not to exceed three months in the aggregate. (3) (a) A landlord may apply to the Controller for an order directing tenant to put the landlord in possession (i) in the case of a residential or a scheduled building if (a) he requires it for his own occupation; 159 (b) he is not occupying another residential or a scheduled building, as the case may be, in the urban area concerned; and (c) he has not vacated such a building without sufficient cause after the commencement of this Act in the said urban area: (ii) in the case of a non residential building or rented land, if (a) he requires it for his own use; (b) he is not occupying in the urban area concerned for the purpose of his business any other such building or rented land, as the case may be, and xxx xxx xxx "19. Penalties. (1) If any person contravenes any of the provisions of sub section (2) of section 9, sub section (1) of section 10, section 11 or section 18, he shall be punishable with fine which may extend to one thousand rupees. ' The East Punjab Urban Rent Restriction (Amendment) Act, 1956 (Punjab Act No. 29 of 1956) amended section 13 in the following manner: 2. Amendment of section 13 of East Punjab Act III of 1949. In clause (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, hereinafter referred to as the principal Act (i) (a) In sub clause (i), the words 'or a scheduled" shall be omitted. (b) In sub paragraph (b), the words "or a scheduled" and the words "as the case may be" shall be omitted. (ii) (a) In sub clause (ii) the words 'a non residential building or ' shall be omitted. (b) In sub paragaph (b), the words "building or" and the words Was the case may be ' shall be omitted" 160 (c) In sub paragraph (c), the words 'a building or" shall be omitted. (iii)For sub clause (iii), the following shall be substituted, namely: (iii)In the case of any building or rented land, if he requires it to carry out any building work at the instance of the Govern ment or local authority or any improvement Trust under some improvement of development scheme or if it has become unsafe or unfit for the human habitation. (iv) In sub clause (iv), for the words 'any building", where they first occur, the words 'any residential building shall be sub stituted. (v) In the second proviso, for the words "a residential a scheduled or non residential building or rented land ', the words "a residential building or rented land" shall be substituted. Section 13 was again amended by the Punjab Urban Rent Restriction ,Amendment) Act, 1957 (Punjab Act No. 21 of 1957) as under '2. Amendment of section 13 of the East Punjab Act No. 111 of 1949. After clause (c) of sub paragraph (i) of paragraph (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, the following shall be added, namely : "(d) it was let to the tenant for use as a residence by reason of his being in the service or employment of the landlord, and the tenant has ceased, whether before or after the commencement of this Act, to be in such service or employment: Provided that where the tenant is a workman who has been discharged or dismissed by the landlord from his service or employment in contravention of the provisions of the Industrial Disputes Ad, 1947, he shall not be liable to be evicted until the competent authority under that Act confirms the order of discharge or made against him by the landlord." 161 Thereafter, the East Punjab Urban Rent Restriction (Amendment) Act, 1966 (Punjab Act No. 6 of 1966) further amended section 13 of the principal Act as under "2. Amendment of section 13 of punjab Act 3 of 1949. In section 13 of the East Punjab Urban Rent Restriction Act, 1949, (i) in sub section (3), (a) after sub paragraph (i) of paragraph.(a), the following sub paragraph shall be inserted, namely : "(i a) In the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under special conditions within the meaning of section 3 of that Act. Explanation. For the purposes of this sub paragraph (1) the certificate of the prescribed authority shall be conclusive evidence that the landlord is serving under special conditions; and (2) "family ' means such relations of the landlord as ordinarily five with him and are dependent upon him;"; (c) in the first proviso in paragraph (a), for the words "shall not be entitled, the words 'shall not, except under sub paragraph (i a), be entitled ' shall be substituted; and (c) after paragraph (b), the following new paragraph shall be added, namely : '(c) where an application is made under sub paragraph (i a) of paragraph (a), it shall be disposed of, as far as may be, within a period of one month and if the claim of the landlord is accepted, the Controller shall make an order 162 directing the tenant to put the landlord in possession of the building on a date to be specified in the order and such date shall not be later than fifteen days from the date of the order."; and (2)In sub section (4), for the words 'does not himself occupy it or, if possession, the words 'does not himself occupy it or, if possession was obtained by him for his family in pursuance of an order under sub paragraph (i a) of paragraph (a) of sub section (3), his family does not occupy the residential building, or, if possession" shall be substituted." Then the East Punjab Urban Rent Restriction (Amendment) Act, 1985 (Punjab Act No. 2 of 1985) further amended section 13 and inserted new section 13A in the principal Act as under 'Amendment of section 13 of Punjab Act 3 of 1949. In the principal Act, in section 13, after sub section (4), the following sub section shall be inserted, namely : '(4 A) Where a tenant is evicted from a residential or scheduled building in pursuance of an order made under section 13 A and the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law of such specified landlord : (a) does not occupy it for a continuous period of three months from the date of such eviction; or (b) within a period of three years from the date of such eviction of the tenant, lets out the whole or any part of such building, from which the tenant was evicted, to any person other than the tenant; such evicted tenant may apply to the Controller, for an order directing that the possession of the building shall be restored to him and the Controller shall make an order accordingly. ' Insertion of new section 13 A in Punjab Act 3 of 1949. In the principal Act, after section 13, the following section shall 163 be inserted, namely: Right to recover immediate possession of residential or scheduled building to accrue to certain persons. "13 A. Where a specified landlord at any time, within one year prior to or within one yea after the date of his retirement or after his retirement but within one year of the date of commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985, whichever is later, applies to the Controller alongwith a certificate from the authority competent to remove him from service indicating the date of his retirement and his affidavit to the affect that he does not own and possess any other suitable accommodation in the local area in which he intends to reside to recover possession of his residential building or scheduled building, as the case may be, for his own occupation, there shall accrue, on and from the date of such application to such specified landlord, notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force or in any contract (whether expressed or implied), custom or usage to the contrary, a right to recover immediately the on of such residential building or scheduled building or any part or parts of such building if it is let out in part or parts : Provided that in case of death of the specified landlord, the widow or widower of such specified landlord and in the case of death of such widow or widower, a child or a grandchild or a widowed daughter in law who was dependent upon such specified landlord at the time of his death shall be entitled to make an application under this section to the Controller, (a)in the case of death of such specified landlord, before the commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985 within one year of such commencement: (b)In this case of death of such specified landlord, after such commencement, but before the date of his retirement, within one yew of the date of his death; 164 (c)in the case of death of such specified landlord, after such commencement and the date of his retirement, within one year of the date of such retirement; and on the date of such application the right to recover the possession of the residential building or scheduled building, as the case may be, which belonged to such specified landlord at the time of his death shall accrue to the applicant: Provided further that nothing in this section shall be so construed a. , conferring a right on any person to recover possession of more than one residential or scheduled building inclusive of any part or parts thereof if it is let out in part or parts: Provided further that the controller may give the tenant a reasonable period for putting the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law in possession of the residential building or scheduled building, as the case may be, and may extend such time so as not to exceed three months in the aggregate. Explanation. For the purpose of this section the expression "retirement" means termination of service of a specified landlord otherwise than by resignation." Further by this Amendment Act of 1985, special procedure for disposal of applications under section 13A was prescribed and some other ancillary amendments were also made. The definitions in clauses (a), (d), (g) and (h) of Section 2 and the material part of section 4 quoted above remain the same in the principal Act as originally enacted even after these amendments, section 13, in so far as it is material for the present case, as it stands amended in the above manner now reads as under: "13. Eviction of tenants (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the 165 provisions of this section, or in pursuance of an order made under section 13 of the Punjab Urban Rent Restriction Act, 1947, as subsequently amended. (2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf. If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii) that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased, or (iii) that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or xxx XXK xxx (3) (a) A landlord may apply to the controller for an order directing the tenant to put the landlord in possession (i) in the case of a residential building if (a) he requires it for his own occupation; (b) he is not occupying an other residential building, in the urban area concerned; and xxx xxx xxx (i a) in the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under 166 special conditions within the meaning of section 3 of that Act. XXK xxx xxx (ii) in the case of rented land, if (a) he requires it for his own use: (b) he is not occupying in the urban area concerned for the purpose of his business any other such rented land; and (c) he has not vacated such rented land without sufficient cause after the commencement of this Act, in the urban area concerned: xxx xxx xxx (iv) in the case of any residential building, if he requires it for use as an office, or consulting room by his son who intends to start practice as a lawyer or as a "registered practitioner" within the meaning of that expression as used in the Punjab Medical Registration Act, 1916, or for the residence of his son who is married, if (a) his son as aforesaid is not occupying in the urban area concerned any other building for use as office, consulting room or residence, as the case may be; and (b) his son as aforesaid has not vacated such a building without sufficient cause after the commencement of this Act, in the urban area concerned xxx xxx xxx The main argument of learned counsel for the appellant is that omission of the words "or a scheduled ' after the word 'residential ' in section 13(3) (a) (i) by the 1956 Amendment while using those words in addition to the word 'residential in section 13A, subsequently inserted in 1985, is a clear indication that the ground of eviction contained in section 13(3) (A) (i) (a) of _personal need of the landlord.is no longer available to landlords in general after the 1956 Amendment, awn though a more expeditious remedy on that ground has been provided by 13A from 167 1985 to the category of specified landlords alone. The retention of the separate definition of 'scheduled building ' in section 2(h) and use of that expression elsewhere in the Act, including section 4 and section 13, is referred in support of this submission. The question is whether this construction is proper. In section 2 which contains the definitions, clause (a) defines 'building '. Clause (d) then defines 'non residential building ' to mean a building being used solely for the purpose of business or trade. Thus, to be a non residential building, it must be used solely for the purpose of business or trade. Clause (g) defines 'residential building ' to mean any building which is not a non residential building. These definitions make it clear that all buildings are divided into two categories : 'non residential ' and 'residential '. Buildings used solely for the purpose of business or trade are 'non residential ' and the remaining buildings are all 'residential '. Accordingly, no building to which the Act applies is outside the classification of 'non residential ' and 'residential '. Then comes clause (h) which defines 'scheduled building ' to mean a residential building which is being used partly for a scheduled purpose. The definition of 'scheduled building ' in clause (h) itself makes it clear that it is a residential building as defined in clause (g) with the qualification that such a residential building is one which is used partly for a specified purpose. In other words, 'scheduled building ' as defined in clause (h) is merely a kind of 'residential building ' as defined in clause (g), its characteristic being its part user for a scheduled purpose. The reason to defined 'scheduled building ' separately in clause (h) is also evident from some provisions of the Act itself. The Act makes a distinction for the purpose of determination of fair rent between a residential building which is being used partly for a scheduled purpose and is, therefore, treated as a 'scheduled building ' and the remaining residential buildings which are not so used. This is clear from the scheme of section 4 itself providing for determination of fair rent. This is also clear from the fact that from the definition of 'building ' given in section 2(a), the only category excluded is a 'non residential building ' as defined in section 2(d) for the purpose of section 2(g) and not also 'scheduled building ' defined in section 2(h) and in section 2(h), a 'scheduled building" is defined to mean a residential building used partly for a scheduled purpose. A separate definition of 'scheduled building ' in clause (h) while making it 168 clear therein that it means a residential building used partly for a specified purpose does not, therefore, indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act. This is the only manner in which a harmonious construction can be made of these provisions. The question now is of the effect of the 1956 Amendment which omitted the words 'or a scheduled ' in section 13(3) as indicated earlier. The Statement of Objects and Reasons of the Amendment Act of 1956 clearly says that the provision allowing eviction on the ground of personal need has been misused by certain landlords and according to the Act applicable to Delhi the tenants of industrial and commercial premises cannot be ejected on the ground of personal need, while in the Punjab, such tenants can be evicted therefrom also on the ground of personal need. To avoid hardship to such tenants, it was considered necessary that the tenants of non residential property in the Punjab should be placed at par with tenants of such property in Delhi. Thus, the object of this enactment was to equate the Punjab tenants with Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property. To achieve this object deletion was made of the words other than 'residential ' from section 13(3) providing for eviction of tenants from buildings on the ground of landlord 's personal need. Obviously, in view of the definition of 'scheduled building ' in section 2(h) being clear to indicate that 'scheduled building ' is a 'residential building, retention of the words ,or a scheduled ' after 'residential ' was considered superfluous while omitting the words 'non residential building ' in other parts of section 13(3) relating to the ground of personal need for eviction of the tenants from buildings. Subsequently, in section 13A, when inserted by 1985 Amendment, the word 'scheduled ' was also used after 'residential ', may be, in view of the controversy like the present raised on the basis of the 1956 Amendment, to avoid any such controversy therein. That does not, however, mean that section 13 which must be construed in the manner indicated by us should be read differently for that reason. In fact, insertion of section 13A further reinforces the view we have taken. There would be no occasion to provide an expeditious remedy for eviction of tenants of a category of 169 landlords and to also provide for a special summary procedure for them unless the remedy of eviction on the ground of personal need was already available generally to the landlords in section 13. It is significant that section 13 was also amended by the 1985 Amendment by inserting sub section (4 A) therein as a result of insertion of the new section 13A in the principal Act. Thus, the 1985 Amendment itself shows that section 13A is not a separate and distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential. The construction we have made of section 13(3)(a)(i), as it stood after the 1956 Amendment, is the only construction which can be made to harmonise with the definitions in section 2 which continue to remain as originally enacted and the other provisions of the Act which have been referred. The contention of learned counsel for the appellant on this point is, therefore, rejected. The result of the above discussion is that the respondent landlord 's personal need being found proved, the ground of eviction contained in section 13(3) (a) (i) (a) is available and the order of eviction passed against the appellant can be sustained on this ground alone. The construction made by the High Court of Section 13(3) (a) (i) that it does not apply to a scheduled building is, therefore, erroneous. The only surviving question is the availability of the ground of change of user contained in section 13(2) (ii) (b) on which the order of eviction has been passed by the High Court. In view of the above conclusion reached by us that the ground in section 13(3)(a)(i)(a) is made out, the consideration of this question in the present case appears unnecessary. We have considered and decided that question in a connected matter Bishamber Das Kohli (Dead) by Lrs. vs Smt. Satya Bhalla. However, a brief reference to the general principle may be apposite. If the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased. That, however, is a question of fact in each case. In that case while the ground of eviction in section 13(3)(a)(i)(a) would remain available to the landlord 170 for eviction of the tanant, in view of the express covenant against user of any part of the residential building even for a scheduled purpose. It may make available also the ground of change of user under section 13(2) (ii) (b) of the Act. In the present case, it is unnecessary to go into this further question since the order of eviction can be sustained on the ground contained in section 13(3)(a)(i)(a) alone as already indicated. Consequently, the appeal is dismissed with costs. Counsel 's fee Rs. 3,000. U.R. Appeal dismissed.

The appellant took the suit premises situate in Ludhiana on a monthly rent of Rs. 800 from respondent 1. Both the respondents are medical practitioners. The respondent riled a petition for eviction of the appellant tenant on three grounds: their personal need under Section 13(3)(a)(i)(a); change of user under Section 13(2)(ii)(b) and impairment of the value and utility of the rented building under Section 13(2) (iii) of the East Punjab Urban Rent Restriction Act 1948. The Rent Controller dismissed the petition. The appellate authority held that the personal need of the respondents and the ground of change of user was proved. Since the building though let out to the tenant for a residential purpose was used partly for his profession and had become a 'scheduled building ' under Section 2(h), he could not be evicted on the ground of personal need. The order of eviction was, however, made on the ground of change of user of the building. Ile High Court on revision affirmed the finding and order of eviction made by the appellate authority. 150 In the Supreme Court, it was argued for the appellant that there was no change of user to justify the order of eviction on that ground and that the finding on the question of personal need was erroneous. Relying on legislative intent evidenced in amendments to the Act, it was further contended that no order of eviction can be made on the ground of personal need contained in Section 13(3)(a)(i)(a) in respect of a 'scheduled building ' since that ground is available for eviction only from a residential building. The omission of the words 'or a scheduled ' after the word 'residential ' in Section 13 (3) (a) (i) (a) in 1956 and their addition in Section 13A in 1985 were referred to advance the argument The respondents submitted that there was no ground to interfere with the order of eviction; that 'scheduled building ' In section 2(h) continues to be a 'residential building ' in section 2(g) and that personal need in section 13(3) (a) (i) (a) is available as a ground for eviction; and that the finding of fact relating to personal need of the landlord in not open to challenge. In the alternative, if a "scheduled building ' is not a "residential building" then the ground of change of user, unilaterally was available. Dismissing the appeal, this Court HELD: 1. The finding of fact of personal need is unassailable. That respondent 2 is carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlords ' need. [155B] Non examination of respondent 2 is immaterial when respondent 1 has examined himself and proved the need of the landlord; it Is at best a matter relating to appreciation of evidence, on which ground this finding of fact cannot be assailed particularly when it was not seriously challenged in the High Court. (pp.6/7) [155C] 2. All buildings are divided into two categories: "non residential" and "residential". Building, * used for the purpose of business or trade are " non residential" and the remaining buildings are all 'residential '. This is clear from the definitions in section 2(a), (d) and (g). (pp.23/24) [167D] 3. 'Scheduled building as defined in section 2(h) is merely a kind of 'residential building, as defined in section 2(g), its characteristic being its part user for a scheduled purpose. (p.24) [167E] 151 4. 'The Act makes a distinction between a residential building which is being partly used for a scheduled purpose, i.e. a scheduled building, for the purpose of determination of fair rent. A separate definition of 'scheduled building ' in clause (h) while making it clear therein that it means a residential building used partly for a specific purpose does not, therefore indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act This is the only manner in which a harmonious construction can be made of these provisions. (pp.24/25) [167H, 168A] 5. The object of the 1956 amendment was to equate the Punjab tenants with the Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property. Obviously the definition of 'scheduled building ' in section 2(h) clearly indicating that scheduled building is residential building, the words 'or a Scheduled" after "residential" were considered superfluous. The use of the word "scheduled" after "residential ' in section 13A inserted in 1985 may have been used to avoid any controversy like the present raised on the basis of the 1956 Amendment. (p.26) [168D E] 6. Section 13A which provides for an expeditious remedy is not a separate distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential. (p.27) [168H] 7. This construction of section 13(3) (a) (i) as it stood after the 1956 amendment, is the only construction which can be made to harmonise with the definitions in section 2. (p.27) [169C] 8. The question of change of user is not necessary to be considered. However, the general principle is that if the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased. That, however, is a question of fact in each case. In that case while the ground of eviction in section 13 (3) (a) (i) (a) would remain available to the landlord for eviction of the tenant, in view of the express 152 covenant against user of any part of the residential building even for a scheduled purpose, it may make available also the ground of change of user under section 13(2) (ii) (b) of the Act. (pp.28/29) [169G 170A] Bishamber Dass Kohli (dead) by L.rs. vs Smt. Satya Bhalla, referred to.

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Appeal No. 313 of 1993. From the Judgment and Order dated 9.10.1992 of the Karnataka High Court in Election Petition No. 8 of 1991. P.N. Misra for the Appellants. R.N. Narasimha Murthy, E.C. Vidyasagar and Gopal Singh for the Respondents. The Judgement of the Court was delivered by B.P. JEEVAN REDDY, J. Heard the counsel for the parties. Leave granted. This appeal raises the question whether Section 5 of the is applicable to a recrimination notice given under Section 97 of the Representation of People Act, 1951. The learned Single Judge of the, Karnataka High Court has held that it does not. His ,view is questioned by the returned candidate (first respondent in the election petition) before us. The first respondent in the Election Petition who shall hereinafter be referred to as "appellant ', was declared elected from Koppal parliamentary constituency during the general elections held for the 10th Lok Sabha. He contested on the Congress (1) ticket. The election petitioner, referred to hereinafter as "the first respondent" had also contested from the said constituency on the ticket of Janata Dal. Having lost the election, the first respondent filed an election petition No. 8 of 1991 for a declaration that the election of the appellant from the said parliamentary constituency was void and for a further declaration that he himself has been duly elected therefrom. Since the appellant and some other respondents to the election petition could not be served in the ordinary course, the High Court directed publication of notice in a Kannada Daily Newspaper. It was so published on 4.11.1991 fixing the date of appearance of the respondents on 25.11.1991. The appellant (first respondent in the election petition) ap peared before the High Court on 4.11.1991 and sought time for filing his written statement which he did on 6.11.1992. Thereafter, on 21.1.1992 he submitted the recrimination notice under Section 97 of the Act. By the said notice, the appellant expressed his intention to give evidence to prove that 316 the election of the first respondent would have been void if he had been . he returned candidate and a petition had been presented calling in question his election. Along with the recrimination notice he filed an application under Section 5 of the requesting the High Court to condone the delay in filing the same for the reasons stated therein. According to the proviso to Section 97(j) notice of such intention should have been given to the High Court "within 14 days from the date of commencement of trial". Admittedly, the appellant gave notice under Section 97(1) beyond the period of 14 days and hence the application under Section 5. For a proper appreciation of the question arising herein, it would be appropriate to notice the relevant provisions of the Representation of People Act besides Section 29(2) of the . First the provisions of the Representation of People Act. Section 97 reads as follows: "97. Recrimination when seat claimed. (1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election: Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the High Court of Ins intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively. (2)Every notice referred to in sub section (1) shall be accompanied by the statement and particulars required by section 83 in the case of an election petition and shall be signed and verified in like manner. " Sub section (1) of Section 97 permits the returned candidate or any other party to give evidence (in an election petition seeking a declaration that any candidate other than the returned candidate has been duly elected) to 317 prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. Sub section (2) says that such a notice shall be accompanied by a statement and particulars required by Section 83 in the case of an election petition and shall also be signed and verified in the same manner. Proviso to sub section (1) says that such a notice shall be given within fourteen days from the date of "commencement of trial" and the security and further security referred to in Sections 117 and 118 respectively is furnished. The expression "commencement of trial" has been defined in Explanation to Sub section(4) of Section 86. The Explanation reads: "For the purposes of this sub section and of Section 97, the trial of a petition shall be deemed to commence on the date fixed for the respondents to appear before the High Court and answer the claim or claims made in the petition." According to the said definition, the notice of the recrimination should have been given in this case within fourteen days of 4.11.91. Admittedly, it was submitted beyond the said period. Section 83 deals with "contents of petition". According to sub section (1) an election petition (a) shall contain a concise statement of the material facts on which the petitioner relies; (b) shall set forth particulars of any corrupt practice that the petitioner alleges including as full a statement as possible of all the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each of such practice and (c) shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 for the verification of pleadings. The proviso to sub section (1) says that where a petitioner alleges any corrupt practice, the petition shall also be accompanied by an affidavit in the prescribed form in support of the allegation of such practice and particulars therein. Sub section (2) says that any schedule or annexure to the petition shall also be signed by the petitioner and verified in the same manner as the petition. Section 117 requires the election petitioner to deposit in the High Court, at the time of presenting an election petition, a sum of Rs. 2,000 as security for the costs of the petition in accordance with the rules of the High Court. Section 118 says that no person shall be entitled to be joined as a respondent under Sub section (4) of Section 86 unless he has given such security for costs as the High Court may direct. Section 86(1) declares that "the 318 High Court shall dismiss an election petition which does not comply with the provisions of section 81 or section 82 or section 117. " There is no provision in the Representation of People Act, 1951 making all or any of the provisions of the applicable to the proceedings under the Act. The appellant, however, relies upon Section 29(2) of the . According to him by virtue of the said provision, all the provisions contained in Sections 4 to 24 (both inclusive) apply to the proceedings under the Act including the recrimination notice under Section 97. Sub section(2) of Section 29, which alone is relied upon before us reads: "Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law." In H.N. Yadav vs L.N. Misra, ; , this court held that the words "expressly excluded ' occurring in Section 29(2) of the do not mean that there must necessarily be express reference in the special or local law to the specific provisions of the , the operation of which is sought to be excluded. It was held that if on an examination of the relevant provisions of the Special Act, it is clear that the provisions of the are necessarily excluded then the benefits conferred by the cannot be called in aid to supplement the provisions of the Special Act. That too was a case arising under the Representation of People Act and the question was whether Section 5 of the is applicable to the filing of the election petition. The test to determine whether the provisions of the applied to proceedings under Representation of People Act by virtue of Section 29(2) was stated in the following words "The applicability of these provisions has, therefore, to be judged not from the terms of the but by the provisions of the Act relating to the fifing of election 319 petitions and their trial to ascertain whether it is a complete code in itself which does not admit of the application of any of the provisions of the mentioned in Section 29(2) of that Act." On an examination of the provisions of the Representation of People Act and the earlier decisions of the Court, it. was held that the Representation of People Act is a self contained code and accordingly, it was concluded that "the provisions of section 5 of the do not govern the filing of election petitions. or their trial. " This decision, in our view, practically concludes the question before us inasmuch as the Act equates a recrimination notice to an election petition. The language of Section 97 makes the said fact abundantly clear. The relevant words are: "the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. " The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice. It may be noticed that for non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of section 86. Sub section (2) of Section 97 further says that the "notice referred to in sub section (1) shall be accompanied by the statement and particulars required by Section 83 in the case of an election petition and shall be signed and verified in like manner. " We may also say that the proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within fourteen days of the "date fixed for the respondents to appear before the High Court to answer the claim or claims" (reading the definition of "commencement of trial" into it) has also a particular meaning and object behind it. The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time. The recrimination notice is thus comparable to an election petition. If Section 5 does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice. In view of the above position, we do not think it necessary to deal with the several decisions cited before us relating to the interpretation of Sub section (2) of Section 29 of the . The counsel for the appellant brought to our notice a decision of this 320 Court holding that the provisions of the Section 12(2) of the Limitation Act, 1908 are applicable to an appeal under Section 116(A) of the Representation of People Act, 1951 viz., V.C Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R.129. It is also brought to our notice that certain High Courts have taken the view that both Section 5 and Section 12(2) of the Limitation Act are applicable to the proceedings under the Act. Reference is to , 1968 Calcutta 69 and (1976) 89 Madras La. Weekly 32. So far as the decision of this court in V.C Shukla is concerned, it is a decision dealing with the applicability of the provision in Section 12(2) of the Limitation Act to an appeal preferred under Section 116(A) and not with the filing of an election petition. The said decision was considered and distinguished in H.N. Yadav on the above basis. At page 42 of the S.C.R., the Division Bench which decided H.N. Yadav distinguished the decision in V.C. Shukla in the following words : "Vidyacharan Shukla 's case (supra) is one which dealt with an appeal under the Act while what we have to consider is whether the Limitation Act is at all applicable to elec tion petitions under the Act. Thirdly, section 29(2) of the new Limitation Act does not now give scope for this controversy whether the two limbs of the old section are independent or integrated. No doubt section 5 would now apply where section 29(2) is applicable to even applications and petitions, unless they are expressly excluded. Even assuming that the Limitation Act applies to election petitions under the Act, what has to be seen is whether section 5 is excluded from application to such petitions. " The Division Bench then proceeded to examine whether the applicability of Section 5 is excluded in the matter of filing of an election petition and came to the conclusion that it was so excluded. This aspect has already been dealt with hereinabove. So far as the decisions of the High Courts are concerned, we cannot agree with them in so far as the applicability of Section 5 to filing on election petition and/or recrimination notice is concerned in view of the decision of this Court in H.N. Yadav. For the above reasons, the appeal fails and is accordingly dismissed with costs. N.P.V. Appeal dismissed.

The first respondent, a defeated candidate, riled an election petition before the High Court for a declaration that the election of the appellant was void and that he himself had been duly elected. Since the notice could not be served on the appellant, and some other respondents in the ordinary course, it was published in a vernacular daily newspaper, as directed by the High Court, fixing the date of appearance of the respondents therein. The appellant appeared before the High Court on the date of publication of the notice and sought time for filing the written. statement and after doing so submitted a recrimination notice under Section 97 of the Representation of People Act, 1951. Along with the recrimination notice he flied an application under Section 5 of the requesting the High Court to condone the delay in filing the same, since the appellant had given notice beyond the period of 14 days from the date of commencement of trial, prescribed under the proviso to Section 97(1). The High Court held that Section 5 of the was not applicable to a recrimination notice. Aggrieved, the appellant riled the appeal, by special leave, before this Court. It was contended that by virtue of Section 29(2) of the , all the provisions contained in sections 4 to 24 (both inclusive) of the Act applied to the proceedings under the Representation of the People Act, 1951, including the recrimination notice under Section 97. 314 Dismissing the appeal, this Court, HELD : 1.1. There is no provision in the Representation of People act 1951 making all or any of the provisions of the placable to the proceedings under the Act. [318A] 1.2. The Act equates a recrimination notice to an election petition. The language of Section 97 makes the said fact abundantly clear. It provides that returned candidates or any other party may give evidence to prove that the election of such candidate would have been void If he had been the returned candidate and a petition had been presented calling in question his election. The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice. For non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of Section 86. Sub section (2) of Section 97 further provides that the notice referred to in sub section (1) should be accompanied by the statement and particulars as required by Section 83 in the case of an election petition and should be signed and verified in like manner. [319C E] 1.3. The proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within 14 days of the date fixed for the respondents to appear before the High Court to answer the claim or claims (reading the definition of 'commencement of trial ' into it) has also a particular meaning and object behind it. The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time. [319F] The recrimination notice is thus comparable to an election petition. If Section 5 of the does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice. [319G] H.N Yadav vs L.N. Misra, ; , relied on. Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R. 129, distinguished. Bhogilal Pandya vs Maharawal Laxman Singh, AIR , Bhakti Bh. Mondal vs Hhagendra K Bandhopandhya, 1968 Calcutta 315 69, overruled.

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minal Appeal No. 277 of 1993. From the Judgment and Order dated 14.10.1991 of the Bombay High Court in Crl. Application No. 2260/91 in Crl. Revision Application No. 123 of 1991. Altaf Ahmed, Addl. Solicitor General, B.R. Handa, Mrs. Manjula Rao, S.M. Jadhav, A.S. Bhasme and A.M. Khanwilkar for the Appellant. Dr. B. Subha Rao Respondent in person. The Judgment of the Court was delivered by R.M. SAHAI, J. The short question that arises for consideration in this appeal is if the High Court was justified in allowing the application filed by the accused for declaring that the charges framed by the Additional Sessions Judge by order dated 24/27th July, 1990 were null and void as they were obtained by fraud, practised by the State. Merits or otherwise of the application, alleging fraud against the State, apart, what has left us completely surprised is not so much the entertaining of the application filed by the accused, for declaration that the charges framed against him were nullity having been procured by fraud as the procedure adopted by the learned Single Judge of granting the prayer 332 merely for failure of the State to file any reply by way of counter affidavit than by recording any finding that the State was guilty of procuring the order framing the charges by fraud. One of the objections raised by the State was that since the High Court by its order passed on 25/26th March 1991 in Criminal Writ Petition No. 966 of 1990 had specifically held that the question of framing charge had become final, therefore, it could not be re opened, cannot be said to be without substance as the Division Bench had clearly held that it was not open to go behind the order passed by the learned Single Judge on 3rd/4th April 1990 directing that the charges be framed against the accused not only under Section 3 but under Section 5 as well. Nor can any exception be taken to the finding of the Bench that the said order could not be said to have been passed without jurisdiction in as much as the learned Single Judge had jurisdiction to decide the revision application preferred under the provisions of the Code. Even the question of fraud raised by the accused was negatived by the Division Bench and it was held that it was not capable of being gone into as it did not form part of the substratum of the case of the prosecution and was not germane to the question of deciding as to whether he was entitled to be discharged or not. However, it is not necessary to rest the decision on this ground as the learned Single Judge having allowed the application as being vitiated by fraud it appears necessary to examine if the pleading on fraud in the application filed by the accused was sufficient in law to empower the High Court to take cognizance of it and even if it was, did the accuse succeed in proving it as even if the State did not file any counter affidavit the application could not be allowed unless it was found as a fact that the State by its acts or omissions acted ,deceitfully or it misled the court. 'Fraud ' is false representation by one who is aware that it was untrue with an intention to mislead the other who may act upon. it to his prejudice and to the advantage of the representor. It is defined in Oxford Dictionary as, ` using of false representations to obtain an unjust advantage or to injure the rights or interests of another '. In Webster it is defined as, 'deception in order to gain by another 's loss; craft; trickery , guile; any artifice or deception practiced to cheat, deceive, or circumvent another to his injury. It has been defined statutorily in Section 17 of the Contract Act as including certain acts committed with connivance or with intent to deceive another. In Administrative Law it has been extended to failure to disclose 333 all relevant and material facts which one has a positive duty to disclose. It is thus understood as deliberate act or omission to mislead other to gain undue advantage. 'It consists of some deceitful practice of wilful device, resorted to with intent to deprive another of his right or in some manner to do him an injury ' (Black 's Law Dictionary). Effect of fraud on any proceeding, or transaction is that it becomes nullity. Even the most solemn proceedings stand vitiated if they are actuated by fraud. Such being the nature and consequence of it the law requires not only strict pleading of it but strict proof as well. Did the averments in the application made out case of fraud ? Were the statements of fact capable of giving rise to an inference in law that the State was guilty of misleading the court ? From the charge sheet it is clear that it complied with the requirements of law and mentions not only the offence and the section but the particulars as to time, place and person. Whether prosecution was possessed of sufficient evidence to prove each of the charges is different matter, but they were framed on basis of documents seized from possession of the accused at the airport, search of his residence, on the next day, interrogations of the accused and examination of prosecution witnesses. In the connected appeal No. 276 of 1993 [Arising out of S.L.P. (Crl.) No. 986 of 1992] directed against the discharge of the accused for failure to obtain sanction a very brief summary has been given of various attempts made by the accused to get an order of discharge, on merits, without success. It is not necessary to recount all that here. Ul timately when the accused was discharged for failure of the State to obtain sanction under Section 197 of the Criminal Procedure Code (in brief 'the Code ') and the State challenged the correctness of the order by way of revision the accused filed the application for the declaration that the charge sheet be declared null and void. In paragraph 3 of the application it was stated that the charges were vitiated by fraud as the Punchnama dated 30th May 1988 was fabricated as it did not contain his signature and it was ante dated. It was further averred that three months even the copies of the remand application filed by the police were denied to the applicant and the orders thereon were not supplied to him. It was also claimed that the complaint was in contradiction with the statement of witnesses. May or may not be so but that could be relevant when the merits were gone into. It certainly, could not be taken as a ground for claiming that the framing of charge was fraudulent, especially, when these aspects had been thrashed out once before the learned Single Judge who by his order dated 3rd/4th 334 April 1990 held that the charges against the accused were made out not only under Section 3 but under Section 5 of the Act. In the same paragraph the accused extracted certain observations made by a learned Single Judge, in one of the orders and claimed that they furnished guidelines to distinguish between offences under Sections 3 and 5 of the O.S. Act. According to him if honest and fair answer to the question, if any charge was made out, Was given by the State it would have exonerated the applicant but the State committed fraud by keeping the Trial Judge in the dark of real facts and induced him to entertain erroneous opinion and pass order on 24th July framing charges against him. In paragraphs 4 to 8 various sentences from one or the other judgment rendered for or against the accused by different courts at one or the other stage were extracted and it was claimed that the State either knowingly did not place correct facts to substantiate those observations or deliberately concealed the truth and made fraudulent submissions inducing the Trial Judge thereby to frame the charges. Emphasis was laid on the submissions advanced by the State and it was stated that it was result of fraudulent submissions that the Trial court was induced to frame charges against the accused. No foundation giving rise to fraud was laid. Facts which could be fished out from paragraphs averring fraudulent submissions could not in our opinion be said to be relevant for alleging fraud. For instance in paragraph 4 it was stated, "the Ld. Addl. Session Judge was deceived by the aforesaid fraudulent and false submission of the Respondent in February 1989 during the judicial proceedings and the Ld. Addl. Session Judge was induced to believe that the applicant was also found and caught carrying books on 30 5 1988 at the Sahar Airport Bombay which books, as alleged by the Respondent, could not have come into possession of the Applicant even in the ordinary course, when the applicant was holding the office of the Captain of Navy. The respondent knew very well that in the record of the Sessions Case No. 1084/88 there were no books as alleged by the Respondent and moreover the disputed documents were not deposited in the Sessions Court in February 1989 when the Learned Addl. Session Judge was induced to believe the fraudulent submissions of the 335 Respondent in February 1989. The above mentioned fraudulent submissions of the Respondent were clearly meant to deceive the Session Court in February 1989 and to see that the applicant was not discharged under Section 227 Cr. P.C. ' Similarly in paragraph 5 it was stated, "It is significant to note that in February 1989 the documents were not deposited in the Session Court though it was mandatory under Section 209(c) Cr. P.C. to deposit the documents in the Session Court after the Case was committed to the Sessions on 22.9.1988 by the Ld Magistrate. Thus in actual position , there were no documents in February 1989 for 'consideration ' of the Ld. Addl. Session Judge as prescribed under the provisions of Sec. 227 Cr. P.C. and the Respondent took advantage of that situation and intentionally made the aforesaid fraudulent submissions in Feb. 1989 during the judicial proceedings before the Ld. Addl. Session Judge Shri Patel and caused circumstances to induce the Ld. Session Judge Shri Patel to entertain erroneous opinions and pass orders resulting in miscarriage of justice '. In paragraph 7 it was stated as under "The Ld. Addl. Session Judge Shri Patel passed two orders dated 11 9 1989 and 11 10 1989 to compel the Respondent to deposit the documents in the Session Court and accordingly the Documents were deposited in the Session Court only on 11 10 1989; which conclusively establishes that in February 1989 when "Charges" were framed the "Documents" were not with the Session Court and the fraudulent and false evidence advanced in February 1989 by the Respondent alone became the basis to frame 'Charges ' in February 1989. " We must confess our inability to appreciate the worth of such averments to establish fraud. Legal submissions cannot be equated to misrepresentation. In our opinion the pleadings fell short of legal requirements 336 to establish fraud. Various sentences extracted from different judgments between the accused and State in various proceedings could not give rise to an inference either in law or fact that the state was guilty of fraud. Suffice it to say that it was complete misapprehension under which the accused was labouring and it was indeed unfortunate that the High Court not only entertained such application but adopted a course which amounted to reviewing and setting aside orders of his predecessor without sufficient material and accept the claim that all earlier judgments were, liable to be ignored under Section 44 of the Evidence Act as the proceedings were vitiated by fraud. We are constrained to say that the learned Judge not only committed an error of procedure but misapplied the law. In the result, this appeal succeeds and is allowed. The order dated 14th October 1991 in Criminal Miscellaneous Application No. 2260 of 1991 is set aside and the application of the accused for declaring the order dated 24/27th February 1990 framing the charges against him as vitiated by fraud, is dismissed. N.V.K. Appeal allowed.

The respondent, an ex Naval Officer and Computer Science graduate was accused of leaking Atomic Energy Secrets and charged for violating the provisions of the and the official Secrets Act. Ultimately when he was discharged for failure of the State to obtain the necessary sanction under Section 197 Cr. P.C., and the State challenged the correctness of the order by way of revision, the respondent filed an application for the declaration that the charge sheet be declared null and void. In para 3 thereof it was stated that the charges were vitiated by fraud as the Panchnama dated May 30, 1988 was fabricated as it did not contain his signature and it was ante dated. It was further averred that for three months even the copies of the remand application filed by the police were denied to him, and that orders thereon were not supplied to him, and that the complaint was in contra on wit the statement of witnesses. The High Court allowed this application. In the State 's appeal to this Court on the question whether the High Court was justified in allowing the application flied by the respondent for declaring that the charges framed by the Additional Sessions Judge by his order dated 24/27th July, 1990 were null and void as they were obtained by fraud, practised by the state. 330 Allowing the appeal, setting aside the order of the High Court dated 14th October, 1991, and dismissing the application of the accused for declaring the order of the Additional Sessions Judge framing the charges against him as vitiated by fraud, this Court, HELD:1. The High Court by its order passed on 25/26th March, 1991 in Criminal Writ Petition No. 966 of 1990 had specifically held that the question of framing charge had become final. It could not be, therefore, re opened. The Division Bench had clearly held that it was not open to go behind the order passed by the Single Judge on 3.4.1990 directing that the charges being framed against the accused not only under Section 3 but under Section 5 as well. Nor can any exception be taken to the finding of the Bench that the said order could not be said to have been passed without jurisdiction in as much as the Single Judge had jurisdiction to decide the revision application preferred under the provisions of the Code. [332B C] 2. The question of fraud raised by the accused was negatived by the, Division Bench and it was held that it was not capable of being gone into as it did not form part of the substratum of the case of the prosecution and was not germane to the question of deciding as to whether he was entitled to be discharged or not. [332D] 3. 'Fraud ' is false representation by one who is aware that it was untrue with an intention to mislead the other who may act upon it to his prejudice and to the advantage of the representor. It has been defined statutorily in Section 17 of the Contract Act as including certain acts committed with connivance or with intent to deceive another. In Ad ministrative Law it has been extended to failure to disclose all relevant and material facts which one has a positive duty to disclose. [332G H] 4. Even the most solemn proceedings stand vitiated if they are actuated by fraud. Such being the nature and consequence of it the law requires not only strict pleading of it but strict proof as well. [333B] 5. Facts which could be fished out from paragraphs averring fraudulent submissions could not be said to be relevant for alleging fraud. [334E] 6. Legal submissions cannot be equated to misrepresentation. The pleadings in the instant case fall short of the legal requirements to estab 331 lish fraud. Various sentences extracted from different judgments between the accussed and State in various proceedings could not give rise to an inference either in law or fact that the State was guilty of fraud. [335H, 336A] In the instant case the averments in paragraphs 3 and 4 to 8 of the application do not establish fraud. No foundation giving rise to fraud was laid. It was complete misapprehension under which the accused was labouring and it was indeed unfortunate that the Single Judge of the High Court not only entertained the respondent 's application but adopted a course which amounted to reviewing and setting aside orders of his predecessor without sufficient material and accepting the claim that all earlier judgments were liable to be ignored under Section 44 of the Evidence Act as the proceedings were vitiated by fraud. The Single Judge not only committed an error of procedure but misapplied the law. [336B]

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ivil Appeal No. 65 of 1956. Appeal from the judgment and order dated August 31, 1954, of the Calcutta High Court in Income tax Ref. No. 57 of 1953. N. C. Chatterjee and B. P. Maheshwari, for the appellant. K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent. March 26. The Judgment of the Court was delivered by HIDAYATULLAH, J. Messrs. Howrah Trading Company, Ltd., Calcutta (hereinafter called the assessee) obtained on April 28, 1955, a certificate under section 66A(2) of the Indian Income tax Act from the Calcutta High Court, to appeal to this Court against the judgment dated August 31, 1954, in Income tax Reference No. 57 of 1953. The Divisional Bench (Chakravarti, C. J., and Lahiri, J.) in the judgment under appeal merely followed their earlier judgment delivered the same day in Income tax Reference No. 22 of 1953, since reported as Hindustan Investment Corporation vs Commissioner of Income tax (1). It is the latter judgment which gives the reasons for the decision. The facts of the case have been stated with sufficient fulness, yet briefly, in the statement of the case submitted by the Income tax Appellate Tribunal (Calcutta Bench) and may be conveniently set out in its own words: (1) 57 450 " The applicant had received sums of Rs. 3,831, Rs. 6,606, Rs. 7,954 and Rs. 8,304 in the four assessment years, 1944 45, 1945 46, 1946 47 and 1947 48 as income from dividends. The shares in respect of which this dividend income was received were the property of the Applicant but in the books of the various companies these stood in the names of other persons. It appears that these shares were purchased by the Applicant from other persons under a blank transfer but the transfers had not been registered with the various companies. The Applicant 's claim in these income tax proceedings was that these shares although not registered in the name of the applicant were the property of the applicant. It was further claimed that this dividend income should be grossed up under section 16(2) and credit for the tax deducted should be allowed to the Applicant under section 18(5). " The Income tax Officer did not accept this claim, and the appeals of the assessee were rejected by the Appellate Assistant Commissioner of Income tax, Calcutta, " A " Range and by the Appellate Tribunal. The Tribunal, however, on being moved, referred the following question to the High Court: " Whether in the facts and circumstances of this case, the Applicant (the assessee) was entitled to have this dividend income grossed up under section 16(2) and claim credit for tax deducted at source under section 18(5) of the Income tax Act? " The High Court answered the question in the negative, thus affirming the decisions of the Department and the Appellate Tribunal. The assessee contends that the decision of the High Court is erroneous, and that it is entitled to have the dividend income I grossed up ' under section 16(2) and also to claim credit for tax deducted at source, under s.18(5) of the Income tax Act. The relevant sections are as follows: " 16(2) : For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or distributed or deemed to have been 451 paid, credited or distributed to him, and shall be increased to such amount as would, if income tax (but not super tax) at the rate applicable to the total income of the company without taking into account any rebate allowed or additional income tax charged for the financial year in which the dividend is paid, credited or distributed or deemed to have been paid, credited or distributed, were deducted therefrom, be equal to the amount of the dividend: (proviso omitted). 18 (5): Any deduction made and paid to the account of the Central Government in accordance with the provisions of this section and any sum by which a dividend has been increased under sub section (2) of section 16 shall be treated as a payment of incometax or super tax on behalf. . of the shareholder and credit shall be given to him therefor on the production of the certificate furnished under. .section 20 . in the assessment, if any, made for the following year under this Act: (proviso omitted). 49B(1): Where any dividend has been paid, credited or distributed or is deemed to have been paid, credited or distributed to any of the persons specified in section 3 who is a shareholder of a company which is assessed to income tax in the taxable territories or elsewhere, such person shall, if the dividend is included in his total income, be deemed in respect of such dividend himself to have paid income tax (exclusive of super tax) of an amount equal to the sum by which the dividend has been increased under sub section (2) of section 16. " It was contended in the High Court that inasmuch as section 16(2) referred to an I assessee, the assessee company was entitled to have the dividend 'grossed up ' by the addition of income tax paid by the various companies at source and consequently to have the benefit of the credit allowed under the two remaining sections. In the opinion of the High Court, an assessee whose name was not in the register of members of the companies was not entitled to the benefit of these provisions. The learned Judges of the High Court were of the opinion that the word " shareholder " in 452 s.18(5) had the same signification as the word " member " used in the Indian Companies Act; and that the assessee was not qualified to be considered as a shareholder, even though by a blank transfer it had ,purchased the relevant shares. In our opinion, the High Court was right in its conclusion. A company when it pays income tax, does not do so on behalf of the shareholders. It is itself chargeable under the Act, In Cull vs Inland Revenue Commissioners (1), Lord Atkin stated the law (which in substance is also the law in our country) thus: My Lords, it is now clearly established that in the case of a limited company the company itself is chargeable to tax on its profits, and that it pays tax in discharge of its own liability and not as agent for its shareholders. . At one time it was thought that the company, in paying tax, paid on behalf of the shareholder; but this theory is now exploded by decisions in this House, and the position of the shareholders as to tax is as I have stated it. " When the company pays its own income tax and declares a dividend from the balance of its profits, it deducts from such dividend a proportionate part of the amount of the tax paid by it. This principle is explained in another English case, and it is substantially also the law in this country. In Inland Revenue Commissioners vs Blott (2), Viscount Cave stated the law in these words: " Plainly, a company paying income tax on its profits does not pay it as agent for its shareholders. It pays as a tax payer, and if no dividend is declared, the shareholders have no direct concern in the payment. If a dividend is declared, the company is entitled to deduct from such dividend a proportionate part of the amount of the tax previously paid by the company; and, in that case, the payment by the company operates in relief of the shareholder. But no agency, properly so called, is involved. " The share holders, however, get the benefit of the payment of the tax by the company. Though under (1) , 56 ; , 636. (2) , 201. 453 s.16(2) of the Act their dividend is increased by a proportionate amount of tax paid by the company, the payment of the tax by the company is deemed tinder sections 18(5) and 49B(1) to be payment by the shareholders. The rates of income tax applicable to the company are, in most instances, higher than the rates applicable to the individual shareholders, and by this process of 'grossing up ', as it is commonly called, the recipient of the dividend gets some benefit. The position of a shareholder who gets dividend when his name stands in the register of members of the company causes no difficulty whatever. But transfers of shares are common, and they take place either by a fully executed document such as was contemplated by Regulation 18 of Table A of the Indian Companies Act 1913, or by what are known as blank transfers '. In such blank transfers, the name of the transferor is entered, and the transfer deed signed by the transferor is handed over with the share scrip to the trans feree, who, if he so chooses, completes the transfer by entering his name and then applying to the company to register his name in place of the previous holder of the share. The company recognises no person except one whose name is on the register of members, upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the company is legally payable. Of course, between the transferor and the transferee, certain equities arise even on the execution and handing over of 'a blank transfer ', and among these equities is the right of the transferee to claim the dividend declared and paid to the transferor who is treated as a trustee on behalf of the transferee. These equities, however, do not touch the company, and no claim by the transferee whose name is not in the register of members can be made against the company, if the tranferor retains the money in his own hands and fails to pay it to him. A glance at the scheme of the Indian Companies Act, 1913, shows that the words " member ", " shareholder " and " holder of a share " have been used interchangeably in that Act. Indeed, the opinion of most of the writers on the subject is also the same. 454 Buckley on the Companies Act, 12th Edition, page 803 has pointed out that the right of a transferee is only to call upon the company to register his name and no more. No rights arise till such registration ,takes place. Section 2(16) of the Indian Companies Act, 1913, defines " share " as " share in the share capital of the company Section 5 deals with the mode of forming incorporated companies, and in the case of companies limited by shares, the liability of the members is limited to the amounts, if any, unpaid on the shares respectively held by them. By section 18, Table A is made applicable to companies, unless by the Articles of any company the terms of Table A have been excluded or modified. Regulation 18 of Table A reads as follows: " The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register of members in respect thereof. " The words " holder of a share " are really equal to the word shareholder and the expression " holder of a share denotes, in so far as the company is concerned, only a person who, as a shareholder, has his name entered on the register of members. A similar view of the Companies Clauses Consolidation Act, 1845, was taken in Nanney vs Morgan(1). The learned Lord Justices held that under section 15 of that Act, the transferee bad not the benefit of a legal title till certain things were done, which were indicated by Lopes, L.J., in the following passage: " Therefore the transferor, until the delivery of the deed of transfer to the secretary, is subject to all the liabilities and entitled to all the rights which belong to a shareholder or stockholder, and, in my opinion until the requisite formalities are complied with, he continues the legal proprietor of the stock or shares subject to that proprietorship being divested, which it may be at any moment, by a compliance with the requisite formalities. (1) , 356. 455 The same position obtains in India, though the completion of the transaction by having the name entered in the register of members relates it back to the time when the transfer was first made. See Nagabushanam vs Ramachandra Rao (1). During the period that the transfer exists between the transferor and the transferee without emerging as a binding document upon the company, equities exist between them, but not between the transferee and the company. The transferee can call upon the transferor to attend the meeting, vote according to his directions, sign documents in relation to the issuance of fresh capital, call for emergent meetings and inter alia, also compel the transferor to pay such dividend as he may have received. See E. D. Sassoon & Co. Ltd. vs Patch (2) approved in Mathalone vs Bombay Life Assurance Co. Ltd. (3 ). But these rights though they, no doubt, clothe the transferee with an equitable ownership , are not sufficient to make the transferee a full owner, since the legal interest vis a vis the company still outstands in the transferor; so much so, that the company credits the dividends only to the transferor and also calls upon him to make payment of any unpaid capital, which may be needed. The cases in Black vs Homersham (4) or Wimbush, In re Richards vs Wimbush (5) hardly advance the matter further than this. The position, therefore, under the Indian Com panies Act, 1913, is quite clear that the expression " shareholder " or " holder of a share " in so far as that Act is concerned, denotes no other person except a " member ". The question that arises in the present case is whether by reason of sections 16(2) and 18(5) the assessee, who was a transferee on a blank transfer ' is entitled to the benefits of the grossing up of the dividend income. Learned counsel for the assessee strenuously contends that the assessee being an owner in equity of the shares and thus also of the dividend is entitled to this benefit. He refers to the use of the word I assessee in section 16(2). The Department, on the (1) Mad. 537. (3) ; (2) (4) (1878 79) L. R. (5) 456 other hand, says that the dividend can be increased under section 16(2) and credit allowed under section 18(5) if the assessee is a 'shareholder ', because the benefit of section 18(5) can go only to the shareholder, i. e., a person with his name on the register of members, and not to a person holding an equity against such shareholder. The assessee contends that the word " shareholder " includes even a person who holds a share as a result of a blank transfer, and does not necessarily mean a member of the company, whose name is on the register of members. Authorities on this point are not wanting, and indeed, in the judgment of the Calcutta High Court they have all been referred to. They are all against the assessee. See Shree Shakti Mills Ltd. vs Commissioner of Income tax (1), Jaluram Bhikulal vs Commissioner of Income tax (2), Arvind N. Mafatlal vs Incometax Officer (3) and Bikaner Trading Co. vs Commissioner of Income tax (4). The question that falls for consideration is whether the meaning given to the expression "shareholder" used in section 18(5) of the Act by these cases is correct. No valid reason exists why " shareholder " as used in section 18(5) should mean a person other than the one denoted by the same expression in the Indian Companies Act, 1913. In In re Wala Wynaad Indian Gold Mining Company (5), Chitty, J., observed: " I use now myself the term which is common in the Courts, I a shareholder ', that means the holder of the shares. It is the common term used, and only means the person who holds the shares by having his name on the register. " Learned counsel for the assessee cited a number of authorities in which the ownership of the dividend was in question, and it was held that the transferee whose name was not registered, was entitled to the dividend after transfer had been made. These cases are Commissioners of Inland Revenue vs Sir John Oakley (6), Spence vs Commissioners of Inland Revenue (7) (1) (3) (5) , 854. (2) (4) (6) , (7) 457 and others cited at page 367 in Multipar Syndicate, Ltd. vs Devitt (1). No one can doubt the correctness of the proposition in these cases, but from an equitable right to compel the transferor to give up the dividend to the transferee, to a claim to the dividend by him as a " shareholder " against the company is a wide jump. In so far as the company is concerned, it does not even issue the certificate under section 20 of the Income tax Act in the name of an unregistered transferee but only in the name of the transferor whom it recognises, because his name is borne on its books. Section 20 lays down: " The principal officer of every company shall, at the time of distribution of dividends, furnish to every person receiving a dividend a certificate to the effect that the company has paid or will pay income tax on the profits which are being distributed, and specifying such other particulars as may be prescribed. " The meaning of section 20 as also of section 18(5) is clear if they are read with section 19A, under which information regarding dividends has to be supplied by the company when demanded by the Income tax Officer. It lays down: " The principal officer of every company . shall, on or before the 15th day of June in each year, furnish to the prescribed officer a return in the prescribed form and verified in the prescribed manner of the names and of the addresses, as entered in the register of shareholders maintained by the company, of the shareholders to whom a dividend or aggregate dividends exceeding Such amount as may be prescribed in this behalf has or have been, distributed during the, preceding year and of the amount so distributed to each such shareholder. " (Italics supplied). Section 19A makes it clear, if any doubt existed, that by the term " shareholder " is meant the person whose name and address are entered in the register of " shareholders " maintained by the company. There is but one register maintained by the Company. There (1) 58 458 is no separate register of " shareholders " such as the assessee claims to be but only a register of " members ". This takes us immediately to the register of members, and demonstrates that even for the purpose of the Indian Income tax Act, the words ',member and " shareholder " can be read as synonymous. The words of section 18(5) must accordingly be read in the light in which the word " shareholder " has been used in the subsequent sections, and read in that manner, the present assessee, notwithstanding the equitable right to the dividend, was not entitled to be regarded as a "shareholder" for the purpose of section 18(5) of the Act. That benefit can only go to the person who, both in law and in equity, is to be regarded as the owner of the shares and between whom and the company exists the bond of membership and ownership of a share in the share capital of the company. In view of this, we are satisfied that the answer given by the Calcutta High Court on the question posed by the Tribunal was correct. The appeal fails, and is dismissed with costs. Appeal dismissed.

The assessee acquired shares in certain companies under "blank transfers " without getting the transfers registered with the companies and it received dividends in respect of these shares. It claimed that the dividend income should be grossed up under section 16(2) Income tax Act and that it should be allowed credit under section 18(5) for the tax deducted at source on the dividend in the hands of the companies. Held, that, the assessee was not entitled to the benefits of sections 16(2) and 18(5) as its name was not in the register of members of the companies. The benefit of section 18(5) could only go to a shareholder; and a shareholder in that section meant the same thing as in the Indian Companies Act, 1913, i. e., a " member having his name on the register. The scheme of the Indian Companies Act, 1913, shows that the words " member ", " shareholder " and " holder of a share " have been used interchangeably. The words "holder of a share" are really equal to the word "shareholder" and the expression " holder of a share " denotes only a person who, as a shareholder, has his name entered on the register of members. In re Wala Wynaad Indian Gold Mining Company, (1882) 21 Ch. D. 849, Shree Shakti Mills Ltd. vs Commissioner of Income tax, , jaluram Bhikulal vs Commissioner of Income tax, , Arvind N. Mafatlal vs Incometax Officer, [1957] 32 I.T . R. 350, Bikaner Trading Co. vs Commissioner of Income tax, , referred to. A company when it pays income tax does not do so on behalf of the shareholders, but the shareholders get the benefit of such payment. The rates of income tax applicable to the company are, in most instances, higher than the rates applicable to individual shareholders and by the process of grossing up the recipient of the dividend gets some benefit. Cull vs Inland Revenue Commissioners, and Inland Revenue Commissioners vs Blott, , referred to. 440 In blank transfers the transfer deed signed by the transferor is handed over with the share scrip to the transferee who may complete the transfer by entering his name and applying to the company for registration of his name. The company only recognises those persons whose names are on the register of members and they alone are legally entitled to the dividend declared. In the case of a blank transfer equities exist between the transferor and the transferee and the transferee has a right to claim the dividend from the transferor who holds it in trust for him, but the company is only liable to the transferor and not to the transferee. Though the transferee is clothed with an equitable ownership he is not a full owner, since the legal interest vis a vis the company still outstands in the transferor.

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Civil Appeal No. 3047 of 1992. From the Judgement and Order dated 30.7.1984 of the Patna High Court in Civil Writ Jurisdiction Case No. 373 of 1977. M.L. Verma and S.K. Sinha for the Appellant. A.K. Srivastava for the Respondents. The Judgement of the Court was delivered by SHARMA, J. The question arising in this case is whether a matter, if it comes within the scope of section 40 of the Bihar and Orissa Co operative Societies Act, 1935 (hereinafter referred to as the Act) has to be excluded from the purview of Section 48 of the Act. Special leave is granted. 3. The facts relevant for the decision of this appeal are in a short 894 compass. The respondent No.1 was Depot Manager under the appellant Marketing Union Limited and during his tenure as such, a shortage of coal was detected. A claim was accordingly made for the said loss by the appellant and a reference was made to the Assistant Registrar, Co operative Societies respondent No.3, under Section 48 of the Act. The Assistant Registrar absolved the respondent No.1 from the alleged liability and an appeal was filed by the appellant under Section 48(6) of the Act before the Joint Registrar, Co operative Societies, respondent No.2, who are accepted the appellant 's case, rejected the defence and made an award accordingly. This was challenged before the Patna High Court by a writ application under Article 226 of the Constitution of India. The High Court held that since the matter was covered by the provisions of Section 40, Section 48 could not apply. Consequently the award was held to be illegal. So far section 40 was concerned, it was pointed out that the claim had to be rejected on the ground of limitation. Thus without considering the other questions raised by the parties, the High Court allowed the writ petition by the impugned judgement which is under challenge in the present appeal. It has been contended on behalf of the appellant that the provisions of Section 48 are wide enough to embrace the dispute which has been the subject matter of the present case and they cannot be given a narrow interpretation so as to exclude their application to cases which may also be covered by Section 40. In reply reliance has been placed on behalf of the respondent No.1 on the decision in Purnea Ministerial Government Officer 's Co operative Society Ltd.v. Abdul Quddus, (1969) B.L.J.R. Vol. 11 969 which has found favour with the High Court. Section 40 pertaining to surcharge, provides that if as a result of an audit or inquiry it appears to the Registrar that any person who has taken part in the organisation or management of the society or any past or present officer of the society has either made a payment contrary to law or has been guilty of misappropriation or of having committed similar acts detailed therein, the Registrar may inquire into the matter and make an order requiring him to contribute an appropriate sum by way of compensation to the assets of the society. The second Proviso to sub section (1) of the said section says that no such order shall be passed in respect of any act or ommission which had occurred more than six years earlier. The provisions of sub section (1) of Section 48 (omitting the explanations which are not relevant for the present issue) dealing with Disputes are in the 895 following terms: "(1) If any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the society or its managing committee against a paid servant of the society) arises (a) amongst members, past members, persons claiming through members, past members or deceased members, and sureties of members, past members or deceased members, whether such sureties are members or non members; or (b) between a member, past member, persons claiming through a member, past member or deceased member, or sureties of members, past members or deceased members, whether such sureties are members or non members and the society, its managing committee or any officer, agent or servant of the society; or (c) between the society or its managing committee and any past or present officer, agent or servant of the society; or (d) between the society and any other registered society; or (e) between a financing bank authorised under the provisions of sub section (1) of Sec. 16 and a person who is not a member of a registered society; such dispute shall be referred to the Registrar: Provided that no claim against a past member or the estate of a deceased member shall be treated as a dispute if the liability of the past member or of the estate of the deceased member has been extinguished by virtue of Sec. 32 or Sec. 63". The claim of the appellant against the respondent No.1 is clearly covered by clause (c) of sub section (1) above and, therefore, could have been validly referred to the Registrar under Section 48. The argument, however, is that since the matter is covered by Section 40, Section 48 should be held to be inapplicable. The High Court agreed and made the following observations: 896 "It is well known proposition of law that when a matter falls under any specific provision then if must be governed by that provision and not by general provisions (Generalia specialibus non derogant)". The High Court has in its judgement assumed that whenever a specific remedy is made available in law the other remedy, more general in nature, necessarily gets excluded. Validity of plural remedies, if available under the law, cannot be doubted. If any standard book on the subject is examined, it will be found that the debate is directed to the application of the principle of election, where two or more remedies are available to a person. Even if the two remedies happen to be inconsistent,they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly. In the present case there is no such problem as no steps under Section 40 were ever taken by the appellant. The provisions of Section 48 must, therefore, be held to be available to the appellant for recovery of the loss. 7.Our view that a matter which may attract Section 40 of the Act will continue to be governed by Section 48 also if the necessary conditions are fulfilled, is consistent with the decision of this Court in Prem Jeet Kumar V. Surender Gandotra and others, [1991] Supp. 2 S.C.C. 215, arising under the Delhi Co operative Societies Act, 1972. The two Acts are similar and Sections 40 and 48 of the Bihar Act and Sections 59 and 60 of the Delhi Act are in pari materia. The reported judgement followed an earlier decision of this Court in Pentakota Srirakulu vs Co operative Marketing Society Ltd.; , We accordingly hold that the High Court was in error in assuming that the application of provisions of Section 48 of the Bihar Act could not be applied to the present case for the reason that Section 40 was attracted. So far the question of limitation is concerned it is true that as in the Delhi Act, a period of six years was fixed under the Bihar Act also by second Proviso under Section 40 (1), which reads thus: "Provided further that no order shall be passed under this sub section in respect of any act or omission mentioned in clauses (a), (b), (c) or (d) except within six years of the date on which such act or omission 897 occurred. " It will be observed that the six years rule of limitation, however, is limited for the purpose of section 40, and cannot govern the reference under section 48. The relevant provision of section 48 is to be found in the Proviso to section 48(1) which has been quoted above. For determining its impact on the present case it is necessary to examine the Proviso closely. Firstly, both the Proviso and section 63 of the Act are concerned only where the claim is against a member. Even if the Proviso be assumed to govern a dispute between the society and its past or present officer or servant it cannot come to the aid of the present respondent No.1 because he was dismissed from service on 15.10.1966 and he was directed to deposit the disputed amount within 30 days therefrom. The dispute was referred for adjudication under section 48 on 12.12.1966 and the reference was registered as Award Case No. 25 of 1968 on 03.08.1968. Thus all these steps were taken within a period of two years. No reliance, therefore, can be placed on either section 32 or 63. The case of Putnea Ministerial government Officers ' Co operative Society Ltd. (Supra) is clearly distinguishable. The respondent there was a member of the Society in question and had taken a loan which was the subject matter of the dispute. As was pointed out by the High Court the claim had stood barred by limitation and, therefore, it was held that the reference was incompetent in view of the Proviso to section 48(1). The High Court in the present case was, in the circumstances, not entitled to rely on this decision and its conclusions must be set aside as being erroneous in law. However, since in the judgement it is stated that several other questions were also raised on behalf of the respondent No.1 (who was the writ petitioner) which remained undecided, the case requires reconsideration by the High Court on the remaining points. Accordingly the impugned judgement is set aside and the writ petition is remitted to the High Court for fresh decision in accordance with the observations in the present judgement. The appeal is allowed but in the circumstances without costs. U.R. Appeal allowed.

During the tenure of respondent 1 as Depot Manager of the Bihar State Cooperative marketing Union Ltd., a shortage of coal was detected. The appellant Cooperative Union made a claim for the loss, and a reference was made to the Assistant Registrar, cooperative societies under section 48 of the Bihar and Orissa Cooperative Societies Act 1935. section 48(1)(c) deals with disputes between the Society. and a past or present officer or agent of the Society. Section 40 provides for investigation by the Registrar where upon an audit or enquiry such officer has been found guilty of misappropriation or similar acts. The Assistant Registrar in an enquiry under Section 48 absolved respondent 1. This was reversed by the Joint Registrar and an award made accordingly. The Patna High Court in a writ application under Article 226 by respondent 1 held that since the matter was covered by Section 40, Section 48 could not apply and set aside the award. The High Court relied on the maxim generalia specialibus non derogant. The claim under section 40 was rejected on the ground of limitation under second proviso to Section 40 which prescribe a period of six years. Allowing the appeal, this Court, HELD : 1. Validity of plural remedies, if available under the law, cannot be doubted. Even if the two remedies are inconsistent, they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly. A matter which may attract Section 40 will continue to be governed by Section 48 also if the necessary conditions 893 are fulfilled. In the present case no steps under Section 40 were ever taken by the appellant. The provisions of Section 48 are available to the appellant for the recovery of the loss. [896C D] Prem Jeet Kumar vs Surender Gandotra & Ors., [1991] Supp. 2 SCC 215 and Pentakota Srirakulu vs Co operative Marketing Society Ltd., ; , followed. The claim of the appellant against respondent 1 is clearly covered by Section 48(1)(c) and therefore was validly referred to the Registrar under Section 48. [895G] 3. The six year rule of limitation in Proviso under Section 40(1) is limited for the purpose of Section 40, and cannot govern a reference under Section 48. Even otherwise, on facts the claim is not barred by limitation. [897B] Purnea Ministerial Government Officers ' Co operative Society Ltd. vs Abdul Quddus, , distinguished. Matter remitted to the High Court for decision on the remaining issues. [897F]

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minal Appeal No. 781 of 1985. From the Judgment and Order dated 8.8.1984 of the Kerala High Court in Crl. R.P.No. 459 of 1981. T.S.K. Iyer, Ms. Prasanthi Prasad and N. Sudhakaran for the Appellant. M.T. George for the Respondents. ANAND, J. The appellant was convicted for an offence under Section 7(1) read with Section 16 (1 A) (i) of the (hereinafter the Act) by the Additional Judicial Magistrate, 1st Class, Trivandrum on 17.7.1981 and sentenced to suffer one year R.I. and to pay a fine of Rs. 2000 and in default to undergo imprisonment for three months. The conviction and sentence were upheld by the Additional Sessions Judge, Trivandrum who dismissed his appeal on 28.10.1981. Criminal Revision Petition No. 459 of 1981 filed in the High Court of Kerala also failed on 8th August, 1984. It is, thereafter, that he has come up to this court by appeal on special leave being granted. On 12.2.1980, the Food Inspector of the Corporation of Trivandrum after disclosing his identity purchased from the appellant 600 gms. of 'ice stick ' and paid Rs. 1.25. One of the samples was sent to the Public Analyst at Trivandrum, who vide report dated 6.3.1980 opined that the "said sample contains artificial sweeteners saccharin and dulcin and is therefore adulterated". The Public Analyst also stated in his report that the use of dulcin in food articles is not permitted on account of the fact that "its consumption is injurious to health". According to the report of the Public Analyst, dulcin to the extent of 100.0 parts per million and saccharin to the extent of 90.0 parts per million was found present in the sample sent for analysis. A complaint was accordingly filed before the Additional Judicial 1st Class Magistrate, Trivandrum. The appellant pleaded not guilty and also exercised his right to have the sample analysed from the Central 710 Food Laboratory. The sample was then set to the Central Food Laboratory and after analysis of the sample, it opined that "the sample does not conform to the standards laid down for ice candy under the provisions of PFA Act 1954 and the Rules thereunder '. It was found by the Central Food Laboratory that the sample contained "an artificial sweetener" identified as saccharin to the extent of 190 parts per million. The sample had also tested positive for presence of cane sugar. Before the trial court, it was urged that the 'ice stick ' sold by the appellant to the Food Inspector PWl could not be treated as ice candy and since no standard for 'ice stick ' had been prescribed in the Act, the conviction of the appellant was not warranted. It was also argued that for the offence committed by the appellant the sentence imposed was not justified. The trial court, negatived both the contentions and recorded a finding of fact to the effect that the appellant had sold an article of food ice stick to PWl for purposes of analysis and that the ingredients of the ice candy and the ice :;tick were the same and the standards prescribed for ice candy etc. were applicable to the article sold by the appellant also. It was further held that since the sample did not conform to the standards laid down for ice candy under the provisions of the Act and the Rules framed thereunder, as per the certificate of the Public Analyst, the sample was adulterated and in view of presence of dulcin, "the adulterant was injurious to health". The trial court held that the offence of the appellant squarely fell under Section 7 read with Section 16 (I A) (i) of the Act. The sentence imposed is the minimum prescribed for the said offence. Similar arguments were raised in the appeal before the Sessions Court also. It was once again found, on facts, that the ice stick sold by the appellant was an article of food and that the ingredients of the ice candy and the ice stick were the same. It was also found that since the sample contained the prohibited artificial sweetener, saccharin it was adulterated and the conviction and sentence were justified. Similar grounds were once again raised before the High Court which also found: "In this case, therefore, from the evidence available especially Ext. P9 report, it is clear that the petitioner sold ice candy which is described as ice stick for, it was frozen ice containing sugar. In this view, it did not conform to the standard prescribed under the Rules . . . . . 711 Undeterred by the finding of fact recorded by all the three courts below to the effect that the 'ice stick ' sold by the appellant was covered by the articles mentioned in Item A.07.04 of Appendix B and was required to conform to the standards laid therein, a strenuous argument was once again raised before us to the effect that the 'ice stick ' sold by the appellant could not be treated to be 'ice candy ' and, therefore, the standards prescribed in Item A.07.04 of Appendix B were not applicable to it. We are afraid, we cannot agree with this submission. All the three courts hive carefully gone into the matter and found that the article sold by the appellant was an article of food covered by the Item A.07.04 of Appendix B. Their finding is supported by the entry itself. Item A.07.04 of Appendix B, as it stood at the relevant time, reads thus: "A.07.04 'Ice candy or Ice Lollies or Edible Ice ' by whatever name it is sold, means the frozen ice produce which may contained the permitted flavors and colors, sugar, syrup, fruit, fruit juice, nuts, cocoa, citric acid, stabilizers or emulsifiers not exceeding 0.5 per cent. It shall not contain any artificia l sweetener. " Considering the nature of the article sold, we have no doubt in our mind that the 'ice stick ' was edible ice and sold as frozen ice in the shape of a stick. It admittedly contained sugar and coloring as is evident from the report of the Central Food Laboratory. It was, therefore, required to conform to the standards prescribed in Item A.07.04 of Appendix B and since according to the report of the Public Analyst as also the Central Food Laboratory the article contained an artificial sweetener, saccharin, it did not conform to the standard laid down in the entry which specifically prohibits the use of any artificial sweetener. Faced with this situation, learned counsel for the appellant then submitted that since the report of the Public Analyst, Trivandrum, which had found the presence of dulcin in the sample stood superseded by the report of the Central Food Laboratory, which had not found the presence of dulcin, an article the consumption of which is "injurious to health", under the Rules, the conviction of the appellant for an offence under Section 16 (1 A) was not justified. Learned counsel submitted that the mere presence of artificial sweetener like saccharin in the sample, which has not been declared as "injurious to health", could not attract the provisions of Section 712 16 (1 A) of the Act. We find force in this submission. The report of the Central Food Laboratory definitely excluded the presence of dulcin in the sample. It only found presence of the prohibited artificial sweetener, saccharin. Section 16 (1 A) provides: "(1A) If any person whether by himself or by any other person on his behalf imports into India or manufactures for sale, or stores, sells or distributes (i)any article of food which is adulterated within the meaning of any of the sub clauses (e) to (1) (both inclusive) of clause (ia) of section 2; or (ii) any adulterant which is injurious to health, he shall, in addition to the penalty to which he may be liable under the provisions of section 6, be punishable with imprisonment for a term which shall not be less than one year but which may extend to six years and with fine which shall not be less than two thousand rupees. " It would be seen from the above provision that in order to maintain a conviction under the said provision, the article of food which is adulterated should fall either in one of the sub clauses (e) to (1) of clause (ia) of Section 2 or should contain an adulterant which is injurious to health. The adulterated article of food sold in this case admittedly does not fall in any of the sub clauses (e) to (1) of Section 2 (ia). According to the report of Central Food Laboratory, it also does not contain any adulterant declared as "injurious to health". Thus, on the face of it is not possible to hold that the appellant had committed an offence punishable under Section 16(1 A) of the Act and the conviction of the appellant for an offence under Section 16(1 A) of the Act cannot be sustained. The article of food sold by the appellant, however, has been found by the Central Food Laboratory to contain an artificial sweetener, the use whereof in such article of food is prohibited. It, therefore, does not conform to the standards prescribed in Item A.07.04 of Appendix B. Section 16(1)(a)(i) of the Act makes a person liable to punishment if whether by himself or by any other person on his behalf, he inter alia, manufactures for sale, or stores or sells any article of food which is 713 adulterated within the meaning of sub clause (m) of clause (ia) of Section 2 of the Act. Section 2 (ia) (m) reads thus: "2(ia) "adulterated ' an article of food shall be deemed to be adulterated "(m) if the quality or purity of the article falls below the prescribed standard or its constituents are. present in quantities not within the prescribed limits of variability but which does not render it injurious to health:" Keeping in view the fact that the article of food, 'ice stick ' sold by the appellant did not conform to the standard prescribed for it in Appendix B and contained an artificial sweetener saccharin, it is obvious that the article of food sold by the appellant was adulterated within the Meaning of Section 2(ia)(m) of the Act and the same would, therefore, be punishable under Section 16 (1)(a)(i) of the Act. We are unable to accept the argument of the learned counsel for the appellant that since the appellant had been charged for an offence under Section 16 (I A) of the Act, he could not be convicted for an offence under Section 16(1)(ai) of the Act. There is no basis for such an argument. The penalty for an offense under Section 16(1)(ai) is admittedly less than the penalty prescribed for the offence under Section 16(1 A), which is a graver offence and therefore, there is no impediment in the way of the court, on the findings of the fact recorded by it, to convert the conviction of the appellant from the one under Section 16(1 A) to the one under Section 16(1)(ai) of the Act, notwithstanding the fact that the appellant had been charge sheeted for an offence under Section 16(1 A) of the Act. In view of our findings recorded above, we alter the conviction of the appellant from the one under Section 7(1) read with Section 16(1 A) of the Act to the one under Section 7(1) read with Section 16(1)(a)(i) of the Act. The argument of the learned counsel for the appellant that since the appellant has been on bail in this court and the occurrence took place more than a decade ago, a sympathetic view be taken and his appeal be accepted and he be acquitted, is to say the least, a rather ambitious submission and we cannot agree. Indeed, there has been some lapse of time since the offence was committed in 1981 but that lapse of time alone cannot come to the aid of the appellant because having found the appellant guilty of an 714 offence under Section 16(i)(a)(i) read with Section 7(1) of the Act, this Court is obliged 'to convict the appellant and not let the crime go unpunished. The appellant has been prosecuting the case in appeal and revision and the High Court dismissed his revision petition in 1985. The appeal has remained pending in this Court ever since and as the appellant had obtained an order of bail, he, obviously was not interested in an early disposal of the appeal and took no steps in that behalf. The pendency of the appeal in this Court for about six years does not by itself render the conviction bad or raise any other equity in his favour. We can take even a judicial notice of the fact that the type of adulterated article sold by the appellant is the one generally consumed by children and it is not only illegal but even immoral to serve them with articles containing artificial sweeteners use whereof has been prohibited by the statute. Just because the appeal has remained pending here since 1985 the society cannot be made to suffer for this delay by letting the criminal go unpunished as a crime of this nature, being a crime against the society at large, cannot be ignored. Sympathy in such cases is totally misplaced. As a result of the above discussion, the conviction of the appellant is altered from the one under Section 16(1 A) read with Section 7(1) of the Act to the one under Section 16(1)(a)(i) read with Section 7(1) of the Act and the sentence is reduced from one year R.I. and a fine of Rs. 2000 to the minimum prescribed for the said offence i.e. to six months R.I. and a fine of Rs. 1000. In default of payment of fine the appellant shall further suffer imprisonment for one month more. The appeal succeeds and is partly allowed to the extent indicated above. The appellant is on bail. His bail bonds shall stand cancelled. He shall be taken into custody to suffer the remaining period of the sentence. G.N. Appeal partly allowed.

The appellant was selling ice sticks. The Food inspector took samples and sent one sample to the Public Analyst, who opined that it contained artificial sweeteners viz. saccharin and dulcin and was therefore adulterated. A complaint was filed before the Judicial Magistrate. Appellant pleaded not guilty and exercised his right to have the sample analysed by the Central Food Laboratory. According to the report of the Central Food Laboratory the sample contained artificial sweetener identified as saccharin. The Magistrate convicted the appellant for an offence under sec. 16(1) (a) read with see. 7(1) of the Act, sentenced him to suffer one year rigorous imprisonment and to pay a fine of Rs. 2,000 and in default to undergo imprisonment for three months. The appeal preferred by the appellant was dismissed by the Sessions Judge. The Criminal Revision petition riled before the High Court was also dismissed. Hence the present appeal. On behalf of the appellant it was contended that since the report of the Public Analyst which had found the presence of dulcin in the sample stood superseded by the report of the Central Food Laboratory which had not found the presence of dulcin, the consumption of which was injurious to health under the Rules, the conviction of the appellant for an offence under Section 16(1 A) of the was not justified; and that the presence of artificial sweetener like saccharin, which has not been declared as injurious to health could not attract the provisions of S.16(1A) of the Act. Partly allowing the appeal, this Court 708 HELD:1. It would be seen from Section 16(1 A) of the that in order to maintain a conviction under the said provision, the article of food which is adulterated should fall either in one of the sub clauses(e) to (1) of clause (ia) of Section 2 or should contain an adulterant which is injurious to health. The adulterated article of food sold in this case admittedly does not fall in any of the sub clauses (e) to (1) of Section 2(ia). According to the report of Central Food Laboratory, it also does not contain any adulterant declared as 'injurious to health '. [712 E, F] 2.However, keeping in view the fact that the Article of food, 'ice stick ' sold by the appellant did not conform to the standard as prescribed in Item A.07.04 of Appendix B and contained an artificial sweetener saccharin it is obvious that the article of food sold by the appellant was adulterated within the meaning of Section 2(ia)(m) of the Act and the same would, therefore, be punishable under Section 16(1) (a) (i) of the Act. [713 C] 3.It cannot be said that since the appellant had been charged for an offence under Section 16(1 A) of the Act, he could not be convicted for an offence under Section 16(1) (a) (i) of the Act. The penalty for an offence under Section 16(1) (a) (i) admittedly is less than the penalty prescribed for the offence under Section 16(1 A), which is a graver offence and therefore, there is no impediment in the way of the court, on the findings of the fact recorded by it, to convert the conviction of the appellant from the one under Section 16(1 A) to one under Section 16(1) (a) (i) of the Act, notwithstanding the fact that the appellant had been charge sheeted for an offence under Section 16(1 A) of the Act. [713 E, F] 4.Judicial notice is taken of the fact that the type of adulterated article sold by the appellant is the one generally consumed by children and it is not only illegal but even immoral to serve them with articles containing artificial sweeteners use whereof has been prohibited by the statute. Just because the appeal has remained pending here since 1985 the society cannot be made to suffer for this delay by letting the criminal go unpunished as a crime of this nature, being a crime against the society at large, cannot be ignored. Sympathy in such cases is totally misplaced. [714 B D] 5.The conviction of the appellant is altered from the one under Section 16(1 A) read with Section 7(1) of the Act to the one under Section 16(1) (a) (i) read with Section 7(1) of the Act and the sentence is reduced from one year 709 R.I. and a fine of Rs. 2,000 to the minimum prescribed for the said offence ie. six months R.I. and a fine of Rs. 1,000 in default of which the appellant shall suffer imprisonment for one month more. [714 E]

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ial Leave Petition (c) No.17098 of 1992. From the Judgment and Order dated 23.10.1992 of the Allahabad High Court in Civil Misc. Writ Petition No.473 of 1992. R.B. Misra for the Petitioners. Ms. Shalmi Soni, Mrs. P.S. Shroff (For M/s S.A. Shroff & Co.) for the Respondents. The following Order of the Court was delivered: Heard counsel for the petitioners as well as the counsel for the respondents. We see no reason to entertain this special leave petition. It is established by the decision of this Court in Synthetics and Chemicals Ltd. and Ors. vs State of U.P. and Ors. , ; that so far as the industrial alcohol is concerned, the power of licencing vests in the Union of India alone. At the same time it is held that the power of the State Government to legislate with respect to potable liquor referable to Entry 6 of List II remains unaffected. It is also held that the State has the power to make regulations and to take appropriate action to ensure that nonpotable alcohol is not diverted and misused as a substitute for potable alcohol. Another principle enunciated in the said decision is that the State can, not only charge excise duty on potable alcohol and sales tax on sales of such potable alcohol, but also entitled, in cases it renders any service, 293 as distinct from its claim of grant of privilege, to charge fees based on quid pro quo. The High Court in this case has merely reiterated the said principles. It has held "that the Central Government has the exclusive power to grant a licence for the the manufacture of Industrial Alcohol. It is not necessary for the petitioner to obtain a PD 2 licence from the Excise Commissioner, U.P., Allahabad before starting its distillery for the manufacture of Industrial Alcohol. The provisions in the U.P. Excise Manual relating to taking of PD 2 licence are not applicable to a case where a person wants to manufacture industrial alcohol. The other provisions of the Act and Rules of the U.P. Excise Act and Manual are applicable in order to ensure that Industrial alcohol is not converted into potable alcohol. " The final order of the High Court is to the following effect: "In view of the above, we allow the writ petition and direct the respondents not to interfere with the petitioner 's manufacturing industrial alcohol in the distillery for which licence had been granted. This is, however, subject to the right of the State Government to ensure that industrial alcohol is not converted into potable alcohol." In our opinion the said observations must be understood as reiterating the principles enunciated by this Court in the decision afore cited. Mr. Salve, learned counsel for the State of Uttar Pradesh submitted that before manufacturing industrial alcohol, the Respondent company has to manufacture rectified spirit and that rectified spirit can be coverted into potable liquor by merely adding water. May be so. The observations made by the High Court and the law laid down by this Court recognise and safeguard the power of the State Government to guard against such abuse. We affirm it. Shri Salve questioned the direction given by the High Court to the following effect: "We further direct that the respondents shall allot molasses to the petitioner in accordance with the assurance given to the petitioner vide order of the Government dated 23.3.1989. " The proceeding dated 23.3.1989 of course pertaints to the year 1989. But Mr. F.S. Nariman, leanred counsel for the Respondent Company says that the said order has been extended from time to time for the subsequent years as well. Mr. Salve points out that in the body of the Judgment of the High Court no reasons 294 are given in support of the aforesaid direction. We are, however, of the opinion that the said direction cannot be construed and shall not be understood, as calling upon or directing the Government to do anything, or to make any supplies, contrary to the Provisions of the Molasses control order or any other law governing the supply of molasses. The supply of molasses to the Respondent shall be made in accordance with law. Mr. Salve raised certain other contentions but we did not allow him to do, so in view of the fact that those contentions were not urged before the High Court. We need express no opinion thereon. Special Leave Petition is accordingly dismissed subject to the above observations. V.P.R. Petition dismissed.

The High Court reiterating the principles enunciation in Synthetics and Chemicals Ltd. and Ors. vs State of U.P. and Ors. , ; held that the Central Government had the exclusive power to grant a licence for the manufacture of industrial alcohol and it was not necessary for the Company respondent to obtain a PD 2 licence from the Excise Commissioner before starting its distillery for the manufacture of industrial alcohol. The High Court directed the State of U.P. and another not to interfere with the respondent Company 's manufacturing Industrial alcohol in the distillery for which licence was granted but subject to the State Government 's right to ensure that industrial alcohol was not converted into potable alcohol. The State of U.P. filed a special leave petition against the judgment of the High Court, in this Court contending that before manufacturing industrial alcohol, the respondent company was to manufacture into rectified spirit and that rectified spirit Could be converted potable liquor by merely adding water, that the High Court did not give any reason in support of the High Court 's direction. "We further direct that the respondents shall allot molasses to the, petitioner in accordance with the assurance given to the petitioner vide order of the Government dated 23.3.1989." The respondent Company submitted that the High Court order was extended from time to time for the subsequent years as well. Dismissing the Special Leave Petition, this Court, HELD: 01. The law laid down by this court and the observations of 292 the High Court in the impugned judgment recognise and safeguard the right of the State Govt. to guard against any abuse and to ensure that rectified spirit is not diverted for human consumption. That power is affirmed. [293F] 02. The direction of the High Court cannot be construed and shall not be understood as calling upon or directing the Government to do anything, or to make any supplies, contrary to the provisions of the provisions of the Molasses Contral Order or any other law governing the supplies of molasses. The supply of molasses to the respondent shall be made in accordance with law. [294A B] Synthetics and Chemicals Ltd. and Ors. vs State of U.P. and Ors. , ; , referred to. [292F]

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Appeal No. 236 of 1954. Appeal from the judgment and order dated October 9,1953, of the Patna High Court in Misc. Judicial Case No. 181 of 1953. Mahabir Prasad, Advocate General for the State of Bihar, Bhagwat Prasad and section P. Varma, for the appellants. P. R. Das, A. C. Roy and R. R. Biswas, for the respondent. April 15. The Judgment of the Court was delivered by 79 615 section K. DAS, J. This is an appeal from the judgment and order of the High Court of Patna dated October 9, 1953, in Miscellaneous Judicial Case No. 181 of 1953 of that Court. It relates to a temple commonly known as the Baidyanath temple situate in the town of Deoghar within the limits of Santal Parganas in the State of Bihar. For the purposes of this appeal it will be necessary to refer to some earlier litigation about this temple. The history 'of this temple, it is not disputed, goes back to remote antiquity. According to Hindu tradition referred to in the Siva Purana and Padma Purana, extracts from which, with translations, are given by Dr. Rajendra Lal Mitra in his paper on the Temples of Deoghar (see Journal of the Asiatic Society of Bengal, Part 1, 1883, quoted in the Bihar District Gazetteer relating to Santal Parganas, 1938 edition ' pp. 373 376), the origin of the temple is traced to the Treta Yuga, which was the second age of the world by Hindu mythology. Side by side with Hindu tradition, there is a Santal tradition of the origin of the temple given by Sir William Hunter (see the Annals of Rural Bengal, p. 191 ; Satistical Account of Bengal, Vol. XIV,, p. 323). But these materials afford no evidence as to when and by whom the idol was established or the temple was built. The temple sheltering the " lingam " and dedicated to Mahadeva stands in a stone paved quadrangular courtyard. The courtyard contains eleven other temples, smaller in size and of less importance than that of Baidyanath. Pilgrims visit the temples in large numbers and make offerings of flowers and money in silver or gold; rich people offer horses, cattle, palanquins, gold ornaments and other valuables and sometimes, rent free land in support of the daily worship. There is a high or chief priest (Sardar Panda) who it appears used to pay a fixed rent to the Rajas of Birbhum during the Muhammadan regime, and the administration of the temple was then left entirely in the hands of the high priest. It may be here stated that about 300 families of " pandas ", who belong to a branch of Maithil Brahmins, were attached to the 627 temple and earned their livelihood by assisting pilgrims in performing the various ceremonies connected with the worship of the God. When the British rule began, it was decided to take over the management of the temple, and with this object an establishment of priests, collectors and watchmen was organised in 1787 at Government expense. The revenue soon fell off, as the chief priest beset the avenues to the tem ples with emissaries, who induced the pilgrims to make their offerings before approaching the shrine. (See the District Gazetteer, ibid, p. 383). In 1791 Government relinquished its claim to a share of the offerings and entrusted the management of the temple to the head priest on his executing an agreement to keep the temples in repair and to perform all the usual ceremonies. This agreement was entered into by Ram Dutt (the ancestor of the present respondent), then high priest of the temple and Mr, Keating who was then Collector of the district. According to Mr. Keating the income of the temple in 1791 consisted of the offerings of the proceeds of 32 villages and 108 bighas of land which he estimated at Rs. 2,000 a year; some years later the total income was estimated at Rs. 25,000 a year. Under the system introduced by the agreement of 1791, the mismanagement of the temple was a source of constant complaint; the temple and " ghats " were frequently out of repair and the high priest was charged with alienating villages from the temple and treating his situation as a means of enriching himself and his family. On the death of the high priest in 1820 a dispute over the succession arose between an uncle and a nephew. The nephew Nityanand was eventually appointed, but neglected to carry out the terms of his appointment. Finally, Nityanand was charged with malversation of the funds and the uncle Sarbanand was appointed in his stead in 1823. There was a faction which was opposed to Sarbanand 's retention in office and asked for Government interference in the internal management of the temple. In 1835 Government declined all interference in the matter and the parties were left to have recourse to the established courts of law. Sarbanand 628 died in 1837 and Iswaranund Ojha, son of Sarbanand Ojha, was subsequently elected Sardar Panda. Iswaranund was succeeded by his grand son, Sailajanund Ojha. There were, however, frequent disputes between the high priest and the " pandas " regarding the control of the temple and in 1897 a suit was filed under section 539 (now section 92) of the Code of Civil Procedure in the Court of the District Judge of Burdwan. This was Suit No. 18 of 1897 which was decided by the learned Additional District Judge of Burdwan by his judgment dated July 4, 1901. Sailajanund Ojha was dismissed by the order of the court, as he by his conduct and behavior and by causing loss to the Debutter properties rendered himself unfit and disqualified to hold the post of Sardar Panda and trustee of the temple of Baidyanath. It was further ordered by the learned Additional District Judge in the decree granted by him that some fit person be elected as Sardar Panda by the " pandas " of the temple and that the affairs of the temple be managed under a scheme which was framed by the learned Additional District Judge and formed a part of the decree. Under this scheme three persons were to be appointed to look after the temple and its properties and for a proper administration of the same. One of these three persons was to be elected from amongst the descendants of Ram Dutt Jha. After this Umesbanund Dutt Jha, second son of Iswaranund Ojha, was elected Sardar Panda. On the death of Umeshanund Dutt Jha, Bhabapritananda Ojha, who was the petitioner in the High Court and is now respondent before us, was appointed Sardar Panda. Bhabapritananda is the grand son of Sailajanund Ojha, and we. shall hereinafter refer to him as the respondent. The scheme which was framed as a result of the decision in Civil Suit No. 18 of 1897 was confirmed by the Calcutta High Court and the decision of the High Court is reported in Shailajananda Dut Jha vs Umeshanunda Dut Jha (1). This scheme was modified in a subsequent litigation in 1909, when one of the members of the committee applied to the District Judge (1) (19O5) 2 C.L.J. 460. 629 for a modification of the scheme. The application was first dismissed, but the matter was taken to the Calcutta High Court, and on September 8, 1910, that Court on the authority of the decision of the Judicial Committee in Prayag Doss vs Tirumala (1) and with the consent of counsel on both sides, directed the insertion of two clauses in the decree ; by one of these clauses, liberty was reserved to any person interested to apply to the District Court of Burdwan with reference to the carrying out of the directions of the scheme and by the other clause, liberty was reserved to any person interested to apply from time to time to the Calcutta High Court for any modification of the scheme that might appear necessary or convenient. Under these two clauses the members of the committee subsequently applied to the District Judge of Burdwan that certain directions might be given to the high priest ; the high priest opposed the application on the ground that it was in essence an application for modification of the scheme and could be entertained only by the High Court. The learned District Judge overruled this objection. The matter was again taken to the Calcutta High Court and that Court directed (1) that the committee must prepare ail annual budget of the income and expenditure; (2) that provision must be made for quarterly audit and annual inspection of the accounts; (3) that provision should be made for joint control of the temple funds after they have been realised ; (4) that there must be no undue interference on the part of the committee with the high priest in the internal management of the temple; and (5) that no one who has any pecuniary interest in the temple properties or is a creditor of the endowment should serve on the committee. The High Court further directed that clauses embodying the aforesaid five directions should be inserted in the scheme. This decision of the High Court is reported in Umeshananda Dutta Jha vs Sir Ravaneswar Prasad Singh (2). We now come to more recent events which gave rise to Miscellaneous Judicial Case No. 181 of 1953 in the (1) (196) I.L.R. (2) 630 Patna High Court. The Bihar Hindu Religious Trusts Act, 1950 (Bihar I of 1951), hereinafter referred to as the Act, received the President 's assent on February 21, 1951, and came into force on August 15. 1951. This Act established the Bihar State Board of Religious Trusts to discharge the functions assigned to the Board by the Act. Sometime in August 1952 the President of the Bihar State Board of Religious Trusts acting under section 59 of the Act asked the respondent to furnish a statement in respect of the Baidyanath temple and the. properties appertaining thereto. The respondent wrote back to say that the administration of the temple and its properties was in the hands of a committee constituted under a scheme made by the District Judge of Burdwan and approved by the Calcutta High Court, and these Courts being outside the jurisdiction of the Bihar Legislature, the Act did not apply to the temple and the respondent was not in a position to carry out the directions of the President of the Bihar State Board of Religious Trusts which might be in conflict with those of the Calcutta High Court. The Board, however, proceeded to assess and demand payment of Rs. 1,684 6 6 as fee payable by the respondent in respect of the Baidyanath temple to it under section 70 of the Act. The respondent then made an application under article 226 of the Constitution to the High Court of Patna, which application gave rise to Miscellaneous Judicial Case No. 181 of 1953. On various grounds stated therein, the respondent con. tended that the Act was ultra vires the Bihar Legislature ; he further contended that even if intra vires, the Act properly construed did not apply to the Baidyanath temple and the properties appertaining thereto by reason of the circumstance that the said temple and its properties were administered under a scheme made by the court of the District Judge of Burdwan and approved by the Calcutta High Court both of which are situate outside the territorial 'limits of Bihar. The State of Bihar, the Bihar State Board of Reli. gious Trusts and the President thereof, now appellants before us, contested the application. Relying on the 631 principles (1) that there should be as far as possible no conflict or clash of jurisdiction between two equally competent authorities and (2) that no intention to exceed its own jurisdiction can be imputed to the Bihar Legislature and of two possible constructions of the Act, the one that would make it intra vires should be preferred, the High Court came to the conclusion that the expression " religious trust " as defined in section 2 (1) of the Act must be construed not in the plain and grammatical sense but must be cut down so as to exclude such religious trusts as are administered under a scheme made by a court situate outside the territorial limits of Bihar and, therefore, the Act did not apply to the Baidyanath temple and the President of the Bihar State Board of Religious Trusts constituted under the Act had no jurisdiction to take any proceedings against the respondent under the provisions of the Act. Accordingly, the High Court allowed the application of the respondent, quashed the proceedings taken against him by the Bihar State Board of Religious Trusts, and issued a writ prohibiting the said Board from taking any further proceedings against the respondent under any of the provisions of the Act. The State of Bihar, the Bihar State Board of Religious Trusts and its President obtained a certificate under article 132 of the Constitution from the High Court and the present appeal has been filed by them in pursuance of that certificate. We shall hereinafter refer to them compendiously as the appellants. We have had before us a number of appeals in which the validity of the Act has been challenged on several grounds and in some of these appeals, further questions were raised as to the application of the Act to private religious trusts and even to public trusts some properties of which are situate outside the State of Bihar. These appeals we put in four categories. They have been heard one after another and though we are delivering judgment in each category separate ly, it has been made clear that the reasons for the decision on points which are common to all or some of the appeals need not be repeated in each judgment. In Civil Appeals Nos. 225, 226, 228, 229 and 248 of 632 1955 (1), which fall in the first category, we have con sidered the questions if the Act is bad on the ground that its several provisions infringe the appellants ' fundamental rights guaranteed under article 14, article 19 (1) (f), and/or articles 25, 26 and 27 of the Constitution, or on the ground that it imposes an unauthorised tax. We have given reasons for our conclusion that the Act is not bad on any of the aforesaid grounds. These reasons we do not wish to repeat here; they govern the present appeal also in so far as the Act is challenged on the self same grounds. In Civil Appeal No. 343 of 1955 (2), which is in the second category, we have dealt at length with the definition clause of the expression " religious trust " in the context of other provisions of the Act, and have come to the conclusion that the Act does not apply to private trusts. In the appeal under consideration in this judgment the admitted position is that the Baidyanath temple is a public trust; so it was held in the earlier litigation to which we have already referred and the scheme was formulated on that footing in Suit No. 18 of 1897. In Civil Appeal No. 230 of 1955 (3), which is the third category, we have considered the question if the Act suffers from the vice of extra territoriality by reason of the provisions in section 3, which says that the Act shall apply to all religious trusts, whether created before or after the commencement of the Act, any part of the property of which is situate in the State of Bihar. We have held therein that two conditions must be fulfilled for the application of the Act (a) the religious trust or institution itself must be in Bihar and (b) part of its property must be situated in the State of Bihar. Those two conditions are fulfilled in this case; the Baidyanath temple is in Bihar and it is admitted that the properties belonging to the temple lie mainly in Bihar though there are some properties in the districts of Burdwan, Murshidabad and Birbhum in the present State of West Bengal. Now, we come to the points which have been (1) Mahant Moti Das vs section P. Sahi, see p. 563, ante. (2) Mahant Ram Saroop Dasji vs section P. Sahi, see P. 583, ante. (3) State of Bihar vs Charusila Dasi, see p. 601, ante. 633 specially raised in this appeal, which is in the fourth or last category. On behalf of the appellants it has been very strongly contended that the High Court was in error in relying on the doctrine of comity of jurisdictions and cutting down the scope of the Act on such a doctrine. It has been submitted that the doctrine of comity of jurisdictions has no application to the facts of the present case and there is no possibility of any conflict or clash of jurisdiction between two equally competent authorities. It is pointed out that item 28 of the Concurrent List in the Seventh Schedule to the Constitution of India is " Charities and charitable institutions, charitable and religious endowments and religious institutions ". It is argued that the Bihar Legislature has, therefore, full legislative competence to enact the statute in question, and it has been submitted that if the Act does not suffer from the vice of extra territoriality, then it is good and all courts must obey it. Under section 4 (5) of the Act, section 92 of the Code of Civil Procedure, 1908, has ceased to apply to any religious trust as defined in the Act ; therefore, no action under section 92, Code of Civil Procedure, can be taken, after the commencement of the Act, in respect of religious trusty in Bihar which are governed by the Act and there can be no question of any conflict of jurisdiction in respect of such trusts as between the Bihar State Board of Religious Trusts and a court in. Bihar on one side and the courts outside the State of Bihar on the other. On these submissions, learned counsel for the appellants has argued that the real question for decision is if the Act or any of its provisions suffer from the vice of extra territoriality and if that question is answered in favour of the appellants, then the High Court was in error in cutting down the scope and ambit of the Act by invoking the doctrine of comity of Jurisdictions. At this stage it is convenient to set out in brief the argument which Mr. P. R. Das, learned counsel for the respondent, has advanced in support of the judgment of the High Court. In one part of its judgment, the High Court has referred to the principle that every 80 634 statute should be so interpreted and applied, in so far as its language admits, as not to be inconsistent with the comity of nations or with the established rules of international law, and has referred to certain decisions in support of that principle. Mr. P. R. Das has frankly conceded before us that no question of any inconsistency with, ' the comity of nations or with the established rules of international law arises in the present case and he does not contend that the Act or any of its provisions violate any established rule of international law. Therefore, it is unnecessary to consider this part of the judgment of the High Court. Before us Mr. P. R. Das has developed his argument in the following way. He has first submitted that Suit No. 18 of 1897 which was instituted in the court of the District Judge of Burdwan in respect of the Baidyanath temple and its properties is still pending and the administration of the temple and its properties is being carried on by a committee appointed under a scheme made by the District Judge of Burdwan and later approved and modified by the Calcutta High Court; therefore, the District Judge of Burdwan and the Calcutta High Court are in full seizin of the trust and its properties, and the Bihar Legislature cannot take away or interfere with the jurisdiction of either the District Judge of Burdwan or the Calcutta High Court. In this connection he has referred to cl. 39 of the Letters Patent of the Patna High Court, particularly to item (a) of the first proviso thereto. That clause is in these terms: " And We do further ordain that the jurisdiction of the High Court of Judicature at Fort William in Bengal in any matter in which jurisdiction is by these presents given to the High Court of Judicature at Patna ' shall cease from the date of the publication of these presents, and that all proceedings pending in the former Court on that date in reference to any such matter shall be transferred to the latter Court: Provided, first, that the High Court of Judicature at Fort William in Bengal shall continue to exercise jurisdiction (a) in all proceedings pending in that Court on 635 the date of the publication of these presents in which any decree or order, ' other than an order of an interlocutory nature, has been passed or made by that Court, or in which the validity of any such decree or order is directly in question; and (b) in all proceedings (not being proceedings referred to in paragraph (a) of this clause) pending in presents under the 13th, 15th, 22nd, 23rd, 24th, 25th, presents under the 13th, 15th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 32nd, 33rd, 34th or 35th clause of the Letters Patent bearing date at Westminster the Twenty eighth day of December, in the year of Our Lord One thousand eight hundred and sixty five, relating to that Court; and (c) in, all proceedings instituted in that Court, on or after the date of the publication of these presents, with reference to any decree or order passed or made by that Court: Provided, secondly, that, if any question arises as to whether any case is covered by the first proviso to this clause, the matter shall be referred to the Chief Justice of the High Court of Judicature at Fort William in Bengal and his decision shall be final ". His argument is that the scheme made by the District Judge of Burdwan and later approved by the Calcutta High Court can be modified only by the Calcutta High Court and that High Court continues to exercise jurisdiction in respect of the scheme under item (a) of the first proviso to clause 39 referred to above, and cl. 41 of the Letters Patent does not empower the Bihar Legislature to amend any of the clauses of the Letters Patent. He has also submitted that on February 9, 1917, the Calcutta High Court decided that any application for enforcement of the scheme would lie to the District Judge of Burdwan and not to the Deputy Commissioner of Dumka. It may be stated here that Burdwan is in the State of West Bengal and Dumka in the State of Bihar. Mr. P. R. Das has contended that in so far as the provisions of the Act interfere with the jurisdiction of courts outside Bihar, they have extra territorial operation and must be held to be bad 636 on that ground; because under article 245 of the Constitution, the Bihar Legislature may make laws for the whole or any part of the State of Bihar, but it cannot make any law which will have extra territorial operation. He has drawn our attention to the provisions of sections 3, 4 (5) and 28 of the Act, and has laid particular emphasis on the provisions of section 29 of the Act, which provisions, according to him, have extra territorial operation. Having set out in some detail the arguments which have been advanced before us on behalf of the appellants and the respondent, we proceed now to consider them on merits. We agree with learned counsel for the parties that no question arises in this case of any conflict or inconsistency with the doctrine of comity of nations or with any established rule of international law. The question which really arises for decision is if any of the provisions of the Act have extra territorial operation. This question has two aspects. First, there is section 3 which says inter alia that the Act shall apply to all religious trusts, any part of the property of which is situated in the State of Bihar. The argument is that the Bihar Legislature has no power to legislate about trust property which is outside the territorial limits of Bihar and section 3 of the Act in so far as it seeks to operate on trust property outside Bihar makes the Act bad on the ground of extra territorial operation. This part of the argument has been fully dealt with and rejected in the decision relating to the Charusila Trust, Civil Appeal No. 230 of 1955 (1). The second facet of the argument is what Mr. P. R. Das has specially emphasised before us in this appeal. His argument in substance is that the Act by some of its provisions seeks to interfere with the jurisdiction of courts which are outside Bihar, and this in effect is the vice of extra territorial operation from which, according to him, the Act suffers. We are unable to agree with him in this contention. Section 3 we have already referred to. Sub section (5) of section 4 states inter alia that section 92 of the Code of Civil Procedure, 1908, shall not apply to any religious trust (1) State of Bihar vs Charusila Dasi, see p. 601, ante. 637 in the State of Bihar as defined in the Act. We have considered the effect of this sub section in the decision relating to the Charusila Trust (ibid) and have held that the Act applies when the trust itself, temple or deity or math, is situate in Bihar and also some of its property is in Bihar. We have pointed out therein that the trust being situatedin Bihar, that State has legislative power over it and over its trustees and their servants or agents who must be in Bihar to administer the trust ; therefore, there is really no question of the Act having extra territorial operation. In our opinion, this reasoning is equally valid in respect of the argument of Mr. P. R. Das. If, as we have held, it is open to the Bihar Legislature to legislate in respect of relgious trusts situate in Bihar, then that Legislature can make a law which says, as in sub section (5) of section 4 of the Act, that section 92 of the Code of Civil Procedure shall not apply to any religious trust in the State of Bihar. If sub section (5) of section 4 of the Act is valid as we hold it is, then no question really arises of interfering with the jurisdiction of the District Judge of Burdwan or of the Calcutta High Court in respect of the Baidyanath temple, inasmuch as those courts exercised that jurisdiction under section 92, Code of Civil Procedure, which no longer applies to the Baidyanath temple and the properties appertaining thereto, after the commencement of the Act. It is true that the Act does put an end to the jurisdiction under section 92, Code of Civil Procedure, of all courts with regard to religious trusts situate in Bihar, but that it does by taking these trusts out of the purview of section 92. In other words, the Act does not take away the jurisdiction of any court outside Bihar but takes the religious trusts in Bihar out of the operation of section 92 so that a court outside Bihar in exercise of its jurisdiction under section 92 will decline to deal with a religious trust situate in Bihar just as it will decline to entertain a suit under that section regarding a private trust of religious or charitable nature. Civil Procedure, including all matters included in the Code of Civil Procedure at the commencement of the Constitution, is item 13 of the Concurrent List. It has not been disputed before us that it is open to the Bihar 638 Legislature to amend the Code of Civil Procedure while legislating in respect of religious endowments and religious institutions in Bihar, and the President 's assent having beep received to the Act, the law made by the Bihar Legislature shall prevail in that State, under. article 254(2) of the Constitution, in respect of all religious trusts situate in Bihar. In this view of the matter, it is unnecessary to consider the further questions if Suit No. 18 of 1897 is still pending, the proper scope and effect of cl. 39 of the Letters Patent of the Patna High Court, and which authority can amend the Letters Patent. Even if Suit No. 18 of 1897 is deemed to be still pending, though we do not so decide, any further action under the scheme in respect of the Baidyanath temple and its properties can be taken either by the District Judge of Burdwan or the Calcutta High Court only if the jurisdiction under section 92, Civil Procedure Code, is still preserved in respect of it. If that jurisdiction has come to an end in respect of the Baidyanath temple and its properties, then no question of any conflict of jurisdiction between two equally competent authorities arises at all, apart altogether from the more debatable question as to whether the Bihar Legislature on one side and the courts in Bengal on the other can be said at all to be equally competent authorities in respect of a religious trust situate in Bihar. The question really boils down to this. Is the Act bad on the ground of extra territorial operation, because it takes certain religious trusts situate in Bihar out of the purview. of section 92, Code of Civil Procedure ? If the answer to this question is in the negative, then all the hurdles created by the argument of Mr. P. R. Das must disappear; because if the Act is good, it must be bindingonall courts and no question of any conflict of jurisdiction can arise. Learned counsel for the respondent has made a pointed reference to sections 28 and 29 of the Act. Section 28 deals with the general powers and duties of the Board. We have examined these powers and duties in our decision in connected Civil Appeals Nos. 225, 226, 228, 229 and 248 of 1955 (1) and have held that (1) Mahant Moti Das vs S.P. Sahi, see P. 563, ante. 639 there is nothing in these powers and duties which can be said to have extra territorial operation. Our attention has been drawn to el. (j) of section 28 (2) which empowers the Board to sanction on the application of a trustee or any other person interested in the religious B trust the conversion of any property of such trust into another property, if the Board is satisfied that such conversion is beneficial for the said trust. We have pointed out that these powers and duties are really for the fulfillment of the trust and they do not in any way contravene the rights of the trustees. Section 29 states : " 29(1). Where the supervision of a religious trust is vested in any committee or association appointed by the founder or by a competent Court or authority, such committee or association shall continue to function under the general superintendence and control of the Board, unless superseded by the Board under subsection (2). (2) The Board may supersede any committee or association referred to in sub section (1) which in the opinion of the Board, is not discharging its funetions satisfactorily and, if the Board does so, any decree or order of a Court or authority by which such committee or association was constituted shall be deemed to have been modified accordingly: Provided that before making any order under this sub section, the Board shall communicate to the committee or association concerned the grounds on which they propose to supersede it, fix a reasonable period for the committee or association to show cause against the proposal and consider its explanations and objections, if any. (3) Such committee or association or any other person interested in the religious trust may, within thirty days of any order of the Board under sub section (2), make an application to the District Judge for varying, modifying or setting aside such order, but, subject to the decision of the District Judge on any such application, the order of the Board shall be final and binding upon the applicant and every person interested in such trust. 640 (4) Where such committee or association has been superseded under sub section (2), the Board may make such arrangements as may be necessary for the administration of the religious trust concerned. " It has been argued that section 29 in terms gives the Bihar State Board of Religious Trusts power to interfere with a committee appointed by the founder or by a competent court or authority. The argument is that the Bihar State Board of Religious Trusts can now interfere with the committee appointed under the scheme made by the District Judge of Burdwan and approved by the Calcutta High Court, and can even supersede it. The answer to this argument is the same as that given before. Either the Act is bad on the ground of extra territorial operation or it is not. If the Act is bad on the ground of extra territorial operation, then there is good reason for cutting down the scope and ambit of section 29 of the Act so that it will apply only to committees appointed by a competent court or authority in Bihar. If, however, ' in respect of a religious trust in Bihar, the Bihar Legislature can amend the Civil Procedure Code and take the trust out of the purview of section 92, Civil Procedure Code, then there is no good reason why the ambit of section 29 should be out down in the manner suggested by the High Court. It is true that the legislation of a State is primarily territorial and the general rule is that extra territorium jus dicenti impune non paretur. There is, however, no departure from that general rule when the trust itself is in Bihar and in legislating about that trust, the legislature lays down what should be done to fulfil the objects of the trust and for that purpose puts an end to an old jurisdiction in the sense explained above and creates a new one in its place. The doctrine of territorial nexus which arises in this connection has been commented on before us at great length by, learned counsel for the respondent. That doctrine *and the decisions bearing on it we have considered at some length in our decision relating to the Charusila Trust, Civil Appeal No. 230 of 1955. We do not wish to repeat what we have said therein. 641 The conclusion at which we have arrived is that the Act and its several provisions do not suffer from the vice of extra territoriality in the sense suggested by B learned counsel for the respondent and there is no such conflict of jurisdiction as learned counsel for the respondent has suggested. Accordingly, the Act is good and applies to the Baidyanath temple and the properties a pertaining thereto. The result, therefore, is that the appeal succeeds and is allowed with costs. The judgment and order of the High Court dated October 9, 1953, are set aside and the petition under article 226 of the Constitution made by the respondent must stand dismissed with costs. Appeal allowed.

In respect of an ancient temple situate in the State of Bihar, disputes arose in I897 between the high priest and the " pandas " regarding the control of the temple which ultimately led to a suit being filed under section 539 (now section 92) Of the Code of Civil Procedure, in the Court of the District judge of Burdwan and a decree was passed by the Additional District judge, under which a scheme was framed for the proper management of the temple. The decree was confirmed by the Calcutta High Court and the scheme itself was later modified from time to time by the said High Court. After the coming into force of the Bihar Hindu Religious Trusts Act, 1950, the President of the Bihar State Board of Religious Trusts, acting under section 59 of the Act, served a notice on the respondent, who had been appointed Sardar Panda for the temple under the scheme, asking him to furnish a statement in respect of the temple and the properties appertaining thereto. The respondent made an application under article 226 of the Constitution to the High Court of Patna challenging the validity of the action taken against him on the grounds (1) that the Bihar 625 Hindu Religious Trusts Act, 1950, was ultra vires the Bihar Legislature, (2) that the Bihar Legislature did not have legislative competence to deal with the temple in question as some of the properties appertaining to the temple were situate outside Bihar, and (3) that, in any case, the Act did not apply to the temple by reason of the fact that the temple and its properties were administered under a scheme made by the Court of the District Judge of Burdwan and approved by the Calcutta High Court both of which were situate outside the territorial limits of Bihar, as otherwise the Act by some of its provisions would seek to interfere with the jurisdiction of courts which are outside Bihar and thereby get extra territorial operation. Held: (1) that the Bihar Hindu Religious Trusts Act, 1950, is intra vires the Bihar State Legislature Mahant Moti Das vs section P. Sahi, [1959] SUPP. 2 S.C.R. 563 followed. (2) that it is competent to the Bihar Legislature to legislate in respect of religious trusts situate in Bihar though some of the properties belonging to the trust may be outside Bihar; State of Bihay vs Charusila Dasi, [1959] SUPP. 2 S.C.R. 601 followed. (3) that the provision of law in sub section (5) of section 4 Of the Act by which section 92 Of the Code of Civil Procedure shall not apply to any religious trust in the State of Bihar, is valid; and (4) that as under section 4(5) Of the Act religious trusts in Bihar are taken out of the purview of section 92 Of the Code of Civil Procedure, the jurisdiction of the District judge of Burdwan or the Calcutta High Court to deal with the temple in question under section 92 comes to an end; consequently the Act and its several provisions do not suffer from the vice of extra territoriality and the Act applies to the temple in question and the properties appertaining thereto.

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l Leave Petition (Civil) No. 4460 of 1993. From the Judgment and Order dated 15.1.1993 of the Himachal Pradesh High Court in Civil Writ Petition No. 566 of 1990. Arun Jaitley and Maninder Singh for the Petitioner. The following Order of the Court was delivered: How statutory bodies waste public money in fruitless litigation to satisfy 479 misplaced ego is demonstrated by this petition. The opposite party was appointed as Sales Girl by the petitioner, a cooperative society registered under Cooperative Societies Act, running a Super Bazar in Shimla. When one of the managers came there on transfer, her trouble started. Apart from insult, humiliaton and harassment thrust on her, that manager terminated her services illegally without being authorised to do so and without obtaining permission of the Administrator and without giving any notice or hearing her. The opposite party who had been apprising her superiors of that manager 's misbehaviour and of her apprehensions that he was out to get rid of her although was assured not only of his good behaviour and security of her services, immediately took recourse to legal action. To her misfortune the Assistant Registrar decided her case after seven years. It was held by him that the order of termination was illegal, arbitrary and was passed without obtaining approval of the Administrator. He directed the petitioner to reinstate her but did not grant any back wages. Even with this order which was prejudicial to her the opposite party was satisfied but the ego of petitioner was hurt. For eight months the order was not implemented by the petitioner as it was contemplating to file the appeal. And when the petitioner succeeded in obtaining the order it informed the opposite party that her Joining Report could not be entertained. Since then the opposite party has been knocking at the door of the petitioner but she was made to approach the appellate authority, the revising authority, the High Court, the Labour Court and finally the High Court again as the petitioner did not succeed anywhere but went on filing appeal and revision forcing the opposite party to file cross appeal or revision or even writ for her back wages and other benefits. Not one authority, even in the cooperative department found in favour of petitioner. Yet the petitioner had the obstinacy not only to approach this Court but to place the blame of inordinate delay on adjudicatory process. Such obstinacy without the least regard of the financial implications could only be indulged by a public body like the petitioner as those entrusted to look after public bodies affairs do not have any personal involvement and the money that they squander in such litigation is not their own. Sri Arun Jaitley the learned senior counsel attempted to assail the finding recorded by the High Court and the Labour Court. Suffice it to say that the conclusions arrived at are not only well reasoned but are based on material on record and could not be demonstrated to be vitiated by any error of Law. Having failed to persuade us on merits the Learned counsel attempted to highlight the financial difficulty of the petitioner and placed reliance on Surendra Kumar Verma & Ors. vs Central Government Industrial Tribunal cum Labour Court New, Delhi & Another [1980]4 SCC 443 in support of the submission that 480 the Courts while directing payment of back wages should exercise discretion considering the financial viability of the employer. It was urged that the respondent has been pursuing her remedy for 16 years therefore the petitioner whose profit margin is very low and the overhead expenses are very high resulting in accumulation of losses for which financial assistance has been granted by State as well as the Central Government for rehabilitation subject to the condition that the amount shall not be utilised towards past debts, shall be rendered in serious predicament brought upon it by the respondent for which it is not responsible. Nothing is farther than truth. It was other way round. In fact it was the petitioner who had disputed, the finding of the Registrar, directing reinstatment without back wages, and made respondent to run from court to court. When the petitioner did not reinstate her and filed an appeal she too filed a cross appeal for back wages. It is more than apparent that it was the petitioner who was not complying with the orders passed by the authorities from time to time and was leaving no stone unturned to see that an illegal order passed by its officer was upheld. We, therefore, do not see any justification for exercising discretion in favour of such a litigant. Public money has been wasted due to adamant behaviour not only of the officer who terminated the services but also due to cantankerous attitude adoped by those responsible for pursuing the litigation before the one or the other authority. They have literally persecuted her. Despite unequal strenght the opposite party has managed to survive. We are informed that the opposite party has been reinstated. This was put forward as bonafide conduct of petitioner to persuade us to modify the order in respect of back wages. Facts speak otherwise. Working life of opposite party has been lost in this tortuous and painful litigation of more than twenty years. For such thoughtless acts of its officers the petitioner society has to suffer and pay an amount exceeding three lakhs is indeed pitiable. But considering the agony and suffering of the opposite party that amount cannot be a proper recompense. We, therefore, dismiss this petition as devoid of any merit and direct the petitioner to comply with the directions of the High Court within the time granted by it. We however leave it open to the society to replenish itself and recover the amount of back wages paid by it to the opposite party from the personal salary of the officers of the society who have been responsible for this endless litigation including the officer who was responsible for terminating the services of the opposite patty. We may clarify that the permission given, shall have nothing to do with the direction to pay the respondent her back wages. Step if any to recover the amount shall be taken only after payment is made to the opposite party as directed by the High Court. SLP dismissed.

The private respondent was appointed as sales girl with the petitioner. The new manager not only insulted, humiliated and he her, he also terminated her services. On ber plea, the Assistant Registrar who decided the case after seven years, held the Impugned order as Illegal, arbitrary and passed without obtaining the requisite approval. He ordered reinstatement of the private respondent but did am grant back wages. The petitioner Informed the private respondent that her joining report could not be entertained. The letter was forced to approach the appellate and revising authorities the labour court and finally the High Court for back wages and other benefits. The petitioner approached this court to assail well reasoned finding recorded by the High Court, without the least regard of the financial implications. Meanwhile as the petitioner was unable to persuade this courtes of the case, the petitioner made attempt to highlight the financial difficulties in payment of back wages. Surendra Kumar Varma and others vs Central Government Industrial Tribunal Cum Labour Court, New Delhi & Anr. ; , referred to. The petitioner urged that the private respondent had been pursuing the 478 ` remedy for 16 years. And the profit margin of the petitioner being very low and the overhead expenses high. The State and the Centre who granted financial assistance for rehabilitation subject to the condition that the amount be not paid towards past debts, would be rendered in serious predicament. On facts this court found that it was the petitioner who was not complying with the orders passed by the authorities from time to time, so there was no justification for exercising discretion in favour of the petitioner. Dismissing the SLP and upholding the order of the High Court, this Court, HELD: Public money has been wasted due to adamant behaviour not only of the Officer who terminated the services of the private respondent but also due to cantankerous attitude adopted by those who were responsible for pursuing the litigation, and literally persecuted her. Working life of the private respondent has been lost for more than twenty years. While considering the agony and suffering, the amount of back wages exceeding three lakhs could not be a proper recompense. And the reinstatement of the private respondent could not be considered as bonafide conduct for modification of the order of back wages. (480 D) Leaving it open to the petitioner to replenish itself and recover the amount of back wages from personal salary of its officers who were responsible for the endless litigation and for terminating the services of the private respondents this Court clarified that this permission shall have nothing to do with the direction and the step for recovery be taken only after payment of back wages to the private respondent. (480 G)

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iminal Appeal No.397 of 1993. From the Judgment and Order dated 11.7.90 of the Calcutta High Court in Crl. Revision No. 1453 of 1987. D.N. Mukherjee, D. Sinha and J.R. Das for the Appellant. Sukumar Guha and A.K. Sengupta for the Respondents. The Judgment of the Court was delivered by AHMADI, J. Special leave granted. In this appeal by special leave two questions arise for our consideration, namely, (i) whether a Special Court constituted under Section 12A of the (hereinafter called 'the Act ') is empowered to exercise powers under sub section (5) of Section 167 of Code of Criminal Procedure, 1973 ( 'the Code ' for short) in relation to an accused person forwarded to it under clause (b) of sub section (1) of section 12AA of the Act? and (ii) whether a Special Court can, notwithstanding the fact that the charge sheet has been filed after the expiry of the period of six months from the date of arrest of the accused person or the extended period, take cognizance of the offence and proceed to try and punish the accused person? These two questions arise in the backdrop of the following facts. A police party headed by an Inspector of Police raided the business premise 574 and godown of the respondents on March 16, 1984 and in the presence of respondent Faguni Dutta seized certain essential commodities stored in contravention of certain orders issued under section 3 read with section 5 of the Act. The accused Falguni Dutta was arrested on the same day for the commission of an offence punishable under section 7(1) (a) (ii) of the Act but the charge sheet was submitted after the expiry of the period of six months from the date of arrest on September 30, 1986. The learned Judge presiding over the Special Court Constitute of under section 12A of the Act took cognizance of the offence on March 13, 1987 on the basis of the charge sheet submitted under section 173 of the Code. Thereupon the accused persons moved an application before the learned Special Judge for quashing the proceedings on the ground that since the case was triable as a summons case in view of section 12AA(1) (f) of the Act, clause (5) of section 167 of the Code was attracted which enjoined that the proceedings be dropped. The learned Special Judge relying on a decision of a learned Single Judge of the High Court in Kanta Dev vs The State of West Bengal (1986) Calcutta Criminal Law Reporter 158 = (1986) 1 CHN 267 rejected the application on July 24, 1987 holding that the provision of section 167 (5) of the Code had no application to a case initiated for the commission of an offence punishable under section 7 (1) (a) (ii) of the Act. We may incidentally point out that the same view was expressed in Babulal Agarwal vs State (1987) 1 CHN 218. Being aggrieved by the rejection of the application the accused preferred a Revision Application to the High Court challenging the legality of the said order. A learned single Judge of the High Court placing reliance on a Division Bench decision of the High Court of Andhra Pradesh in the case of Public Prosecutor, High Court of Hyderabad & etc. vs Anjaneyulu and etc. held that sub section (5) of section 167 of the Code stood attracted and the learned Special Judge ought to have stopped the further investigation on the expiry of six months and ought to have discharged the accused. He, therefore, set aside the order of the learned Special Judge and also quashed the prosecution and discharged the accused. It is against this order of the High Court that the present appeal is preferred. We may incidently mention that when the learned Single Judge was disinclined to follow the earlier two decisions of other learned single Judges of the High Court the proper course was to refer the matter to a Division Bench for decision. however, has now lost significance in view of the subsequent decision of the Division Bench in Jnan Prakash Agarwala vs State of WestBengal (1992) 1 CHN 213 taking a contrary view. In the said case the Division Bench has taken the view which the learned Single Judge has taken in the present case. We will deal with these decisions in some detail hereafter. At the outset we deem it appropriate to notice the relevant provisions of the 575 concerned statutes. The Act was enacted to provide, in the interest of the general public for the control of production, supply and distribution of, and trade and commerce in, certain commodities. Section 3, inter alia, lays down that if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may, by order, provide for regulating and prohibiting the production, supply and distribution thereof and trade and commerce therein. By section 4 it is provided that an order made under section 3, may, confer powers and impose duties upon the Central Government or the State Government or officers and authorities of the Central Government or State Government and may contain directions any State Government or to officers and authorities thereof as to the exercise of any such powers or the discharge of any such duties. The Central Government is empowered by section 5 to direct that the power to make orders or issue notifications under section 3, shall, in relation to such matters and subject to such conditions, if any, as may be specified in the direction, be exercisable, inter alia, by such State Government, as may be specified in the direction. In exercise of the power so conferred certain orders were issued by the State Government in regard to certain essential commodities from time to time. Section 7 prescribes the penalties for the contravention of any order made under section 3. The relevant portion of section 7 with which we are concerned reads as under: "7 (1) If any person contravenes any order made under section 3, (a) he shall be punishable, (i) in the case of an order made with reference to clause (i) of subsection (2) of that section, with imprisonment for a term which may extend to one year and shall also be liable to fine, and (ii)in the case of any other order, with imprisonment for a term which shall not be less than three months but which may extend to seven years and shall also be liable to fine. In the present case the accused came to be charged under section 7 (1) (a) (ii) of the Act. Having regard to the fact that the punishment prescribed for the said offence extends to seven years and fine, the case would fall within the definition of warrant case under section 2(x) of the Code. This becomes evident if we read the definitions of 'summons case ' and ' warrant case ' together. They are as under: 576 2 (w) Summons case means a case relating to an offence, and not being a warrant case. 2(x) Warrant case means a case relating to an offence, punishable with death, imprisonment for life or imprisonment for a term exceeding two years. " However, by Amending Act 18 of 1981 the Legislature, for dealing more effectively with persons indulging in antisocial activities like hoarding and blackmarketing and for combating the evil of inflationary prices, considered it necessary to make special provisions for a temporary period of five years (extended by another five years),namely, to provide: (i) for the control, in a summary way of all offences under the Act; and (ii)for the constitution. for the purposes of such trial, of Special Courts, consisting of a Single Judge. To achieve this objective section 12A was amended with a view to empowering the State Government for the purpose of providing speedy trial of the offences under the Act to constitute as many Special Courts as may be necessary for such area or areas to be to be specified in the notification. Section 12AA which too was inserted by the said Amending Act begins with a non obstance clause and provides that all offences under the Act shall be triable only by the Special Court constituted for the area in which the offence was committed or where there are more Special Courts than one in such area by one of them as may be specified in this behalf by the High Court. Clause (b) of sub section (1) of section 12AA next provides that where a person accused of or suspected of the commission of an offence under this Act is forwarded to a Magistrate under sub section (2) or subsection (2A) of Section 167 of the Code, such Magistrate may authorise the detention of such person such custody as he thinks fit for a period. not exceeding 15 days in the whole where such Magistrate is a Judicial Magistrate and 7 days in the whole where such Magistrate is an Executive Magistrate unless his detention for such period is unnecessary. Clause (c) of that sub section is relevant for our purpose and may be extracted: "(c) The Special Court, may, subject to the provisions of clause (d) of this Section, exercise, in relation to person forwarded to it under clause (b), the said power which a Magistrate having jurisdic 577 tion to try a case may exercise under section 167 of the Code in relation to an accused person in such case who has been forwarded to him under this section. " Sub clause (d)provides that no court other than the Special Court or the High Court shall release an accused on bail. Sub clause (f) of this sub section is also relevant and reads as under: "(f) All offences under this Act shall be tried in a summary way and the provisions of sections 262 to 265 (both inclusive) of the Code shall. as far as may be. apply to such trioal; Provided that in the case of any conviction in a summary trial under this section it shall be lawful for the Special Court to pass such sentence of imprisonment for a term not exceeding two years. " It will thus be seen that while the penalty provided for an offence under section 7(1) (a) (ii) extends to seven years and fine, by virtue of clause (f) of subsection (1) of section 12AA if the offence is tried in a summary way applying the provisions of sections 262 to 265 of the Code the penalty would be restricted by the proviso to a maximum of two years, which would, it is argued, bring the case within the meaning of a 'summons case ' as defined in section 2(w) of the Code, thereby attracting sub section (5) of section 167 of the Code. It would be advantageous to reproduce sub section (5) of section 167 of the Code. It reads as under: "If in any case triable by a Magistrate as a summons case, the investigation is not concluded within a period of six months from the date on which the accused was arrested, the Magistrate shall make an order stopping further investigation into the offence unless the officer making the investigation satisfies the Magistrate that for special reasons and in the interest of justice the continuation of the investigation beyond the period of six months is necessary. " To complete reference to the provisions of the Act we may also state that section 10A posits that notwithstanding anything contained in the Code, every offence punishable under the Act shall be cognizable and non bailable. Section 11 provides that cognizance of an offence under the Act shall be taken only on a written report. Section 12AC makes the provisions of the Code applicable to proceedings be fore a Special Court unless otherwise provided. These, in brief are 578 the relevant provisions of the Act and the Code with which we are concerned. It may here be mentioned that section 12A was first inserted by Amendment Act of 1964. It then empowered the Central Government to specify any order under section 3 to be a special order the contravention whereof may be tried summarily to which the provisions of sections 262 to 265 of the Code were made applicable. The proviso stipulated that in the case of conviction in a summary trial it shall be lawful for the Magistrate to pass a sentence of imprisonment not exceeding one year, Subsequently by Amendment Act 18 of 198 1. section 12A was substituted by the present provisions and new sections 12AA to 12AC were inserted. The avowed object of these legislative changes was expeditious disposal of offences under the Act by Special Courts employing summary procedure and applying the provisions of the Code to such trials save as otherwise provided. This enabled the Special Courts to take cognizance of the offences under the Act without a formal order of commitment. It thus becomes clear from the plain language of the provisions introduced by Act 18 of 1981 that the legislature desired to ensure that all offences under the Act were tried by the Special Court Constituted under Section 12A in a summary manner applying the provisions of sections 262 to 265 of the Code and further provided that in case of conviction the sentence shall not exceed two years, bringing the offence within the definition of a summons case under the Code. But for the insertion of section 12A in its present form and section 12AA, the offence under section 7 (1) (a) (ii) of the Act would have attracted the definition of a warrant case. It is, therefore, obvious that the Amending Act 18 of 1981 has brought about a substantial change. The position in law as emerging after the amendment of the Act by Act 18 of 1981 is crystal clear, namely, that on the constitution of special Courts all offences under the Act are triable only by the Special Court for the Area in which the offence has been committed. Section 12AA (1) (b) provides that where a person accused of an offence under the Act is forwarded to a Magistrate under subsection (2) or sub section (2A) of section 167 of the Code, such Magistrate is empowered to authorise the detention of such person in such custody as he thinks fit for a period not exceeding 15 days in the whole where such Magistrate is a Judicial Magistrate and 7 days in the whole where he is Executive Magistrate. Clause (c) of that sub section provides that the Special Court may exercise in relation to the person forwarded to it under clause (b), the same power which a Magistrate having jurisdiction to try a case may exercise under section 167 of the Code in relation to an accused person in such case who has been forwarded to him under that section. Section 12AC says that the provisions of the Code shall apply to proceedings before a Special Court save as otherwise provided in the Act. A conjoint reading of these provisions makes it clear, that after the constitution of 579 Special Courts all offences under the Act have to be tried by that court in a summary way by applying the provisions of sections 262 to 265 (both inclusive) of the Code. The proviso places a fetter on the power of the Court in the matter of passing a sentence on conviction, namely, that notwithstanding the fact that section 7 (1) (a) (ii) prescribes a punishment extending upto seven years and fine, Special Court shall not pass a sentence of imprisonment for a term exceeding two years. It is this proviso which attracts the definition of a summons case, the trial whereof must be undertaken in accordance with the procedure out lined in Chapter XX of the Code. Chapter XXI of the Code deals with Summary Trials. Section 262 of the Code which outlines the procedure for summary trials in terms states that the procedure specified in the Code for the trial of summons case shall be followed, except otherwise provided. Section 16.7 (5) says that if in any case triable as a summons case, the investigation is not concluded within a period of six months from the date on which the accused came to be arrested. the Magistrate shall make an order stopping further investigation into the offence unless the Magistrate, for special reasons and in the interests of justice considers it necessary to permit continuation of the investigation. The prosecution in question being a summons case triable in a summary manner as per procedure outlined in sections 262 to 265 of the Code, which in turn attracts the procedure meant for summons case, it is obvious that the power conferred by sub section (5) of section 167 can be invoked by the Special Court by virtue of clause (c) of section 12AA (1) of the Act which in terms states that the Special Court may exercise the same powers which a Magistrate may exercise under section 167 of the Code. Thus a special Court is expressly empowered by clause (c) of section 12AA (1) to exercise the same powers which a Magistrate having jurisdiction to try a case may exercise under section 167 of the Code in relation to an accused person who has been forwarded to him under that provision. We have, therefore, no manner of doubt that the High Court was right in concluding that section 167 (5) of the Code was attracted in the present case and the Special Court was entitled to exercise the power conferred by that sub section. That being so the view taken by the Division Bench of the Calcutta High Court in the case of Jnan Prakash (supra) insofar as it relates to the application of section 167 (5) to an offence under section 7 (1) (a) (ii) of the Act triable by the Special Court constituted under section 12A of the Act cannot be doubted. That is also the view of the High Court of Andhra Pradesh in the case of Public Prosecutor, High Court of Hyderabad (supra). Therefore, the Special Court can stop further investigation into the offence if the investigation is not concluded within a period of six month from the day of arrest of the accused person unless for special reasons and in the interest of justice the continuation of the investigation beyond that period is necessary. In the present case the officer making the investigation had not sought the permission of the Special Court to continue with the investigation even after the expiry of six months. The object of 580 this sub section clearly is to ensure prompt investigation into an offence triable as summons case to avoid hardship and harassment to the accused person. Both the High Courts of Calcutta and Andhra Pradesh have taken the view that after the amendment of the Act by Act 18 of 1981 and the introduction of section 12AA the power conferred on the Magistrate under section 167 (5) of the code is exercisable by the Special Court constituted under section 12A of the Act. We also concur with the High Court of Calcutta that the two decisions rendered by the learned Single Judges of that Court earlier in point of time did not lay down the correct law. Similarly the Division Bench of the High Court of Andhra Pradesh was also right in holding that sub section (5) of section 167 of the Code would be applicable to prosecutions under the Act triable by the Special Court. The taxes us to the question whether the Special Court can,beside directing stoppage of investigation, entertain and act on a charge sheet or a police report submitted under section 173 (2) of the Code in such cases. The expression 1 police report ' has been defined under the Code to mean a report forwarded by a police officer to a Magistrate under sub section (2) of section 173 [section 21. Section 173 lays down that every investigation under Chapter XII shall be completed without unnecessary delay and as soon as it is completed, the officer incharge of the police station shall forward to a Magistrate empowered to take cognizance of the offence on a police report, a report in the form prescribed by the State Government. It will thus be seen that the police report under section 173(2) has to be submitted as soon as the investigation is completed. Now, if the investigation has been stopped on the expiry of six months or the extended period, if any by the Magistrate in exercise of power conferred by sub section (5) of section 167 of the Code, the investigation comes to an end and, therefore, on the completion of the investigation section 173(2) enjoins upon the officer in charge of the police station to forward a report in the prescribed form. There is nothing in sub section (5) of section 167 to suggest that if the investigation has not been completed within the period allowed by that sub section, the officer in charge of the police station will be absolved from the responsibility of filing the police report under section 173(2) of the Code on the stoppage of the investigation, The High Court of Andhra Pradesh rightly observed in paragraph 13 of the Judgment as under: "Under the new Code in addition to definition for investigation ' in section 2(h), a separate definition for 'police report ' is given by section 2(r). This coupled with the newly introduced sub section (5) of section 167 brings out the distinction between investigation by the police and the police report on which a court is to take cognizance. The report cannot now be said to be an integral part of 581 investigation. The introduction of section 167 (5) in the Code, cannot have the effect of invalidating the investigation done within the period of six months or enabling the court to stopping the filing of police report under section 173 (2). If the investigation done during the period of six months discloses an offence, a police report may be founded on it and the court can take cognizance of the same." in Hussainara Khantoon & Ors. vs Home Secretary State of Bihar, Patna 1 9791 3 SCR 760 this Court held that the investigation done within the period of six months is not rendered invalid merely because the investigation is not completed and further investigation is stopped. The exact words used are: ". . in such a case the Magistrate is bound to make an order stopping furthe r investigation in that event, only two courses would be open: either the police must immediately proceed to file a chargesheet, if the in vestigation conducted till then warrants such a course, or if no case for proceeding against the under trial prisoner is disclosed by the investigation, the undertrial must be released forthwith from detention. " We, therefore ,concur with the view taken by the Andhra Pradesh High Court in this regard. In the result we partly allow this appeal. While we agree with the view taken by the High Court of Calcutta that in the case of an offence punishable under section 7(1) (a) (ii) of the Act which is tried by a Special Court constituted under section 12A, the provision of sub section (5) of section 167 of the Code gets attracted if the investigation has not been completed within the period allowed by that sub section but we find it difficult to sustain that part of the order of the High Court by which the order of the Special Court taking cognizance of the offence on the police report, i.e., charge sheet submitted under section 173 (2) of the Code came to be quashed. We set aside that latter part of the order and hold that the Special Court was competent to entertain the police report restricted to six months investigation and take cognizance on the basis thereof. We, therefore, direct that the Special Court will proceed with the trial from that stage onwards and complete the same as early as possible in accordance with law. Appeal partly allowed.

On 16.3.1984, the police raided the business premise and godown of the respondents and sized certain essential commodities which were stored there in contravention of certain orders issued under section 3 read with section 5 of the . On the same day the respondents were arrested for the commission of an offence punishable under section 7(1) (a) (ii) of the Act. But chargesheet was submitted under section 173, Code of Criminal Procedure on 30.9.1986, after expiry of the period of six months. The Special Court constituted under section 12A took cognizance of the offence on 13.3.1987 on the basis of the charge sheet. The respondent No. 1 moved an application before the Special Court to quash the proceeding since the case was triable as a summon case in view of section 12AA (1) (f) of the , sub section (5) of Section 167 of Code of Criminal Procedure was attracted. Relying on the decision in Kanta Dey vs The State of West Bengal (1986) Calcutta Criminal Law Reporter 158, the Special Court rejected the application holding that the provision of section 167 (5) of the Code had no application to a case initiated for the commission of an offence punishable under section 7(1) (a) (ii) of the Act. 571 Respondents ' revision application against the order of Special Court was allowed by single judge of the high Court. The High Court relying on the decision in public Prosecutor, High Court of Hyderabad vs Anjaneyulu, , held that sub section (5) of section 167 of the Code stood attracted. On the High court quashing the prosecution, the respondents were discharged. The present appeal by special leave was filed by the State against the order of the High Court. On the questions, 1 whether a Special Court constituted under "Section 12A of the is empowered to exercise powers under section 167 (5) of the Code of Criminal Procedure, 1973 in relation to an accused person forwarded to it under section 12AA (1) (b) of the Act and (ii) whether a Special Court can take cognizance of the offence and proceed to try and punish the accused person, notwithstanding the fact that the charge sheet is filed after expiry of the period of six months from the date of arrest of the accused person?", partly allowing the appeal, this Court, HELD: 1.1. From the plain language of the provisions, introduced by Act 18 of 1981 the legislature desired to ensure that all offences under the Act were tried by the Special Court constituted under section 12A in a summary manner applying the provisions of sections 262 to 265 of the Code and further provided that in case of conviction the sentence shall not exceed two years, bringing the offence within the definition of a summons case under the Code. But for the insertion of section 12A in its present form and section 12AA, the offence under section 7 (1) (a) (ii) of the Act would have attracted the definition of a warrant case. (578 D) 1.2. The avowed object of these legislative changes was expeditious disposal of offences under the Act by Special Courts employing summary procedure and applying the provisions of the Code to such trials save as otherwise provided. This enabled the special Courts to take cognizance of the offences under the Act without a formal order of commitment. (578 C) 1.3. After the constitution of Special Courts all offences under the Act have to he tried by that court in a summary ways by applying the provision,% of section. . 262 to 265 (both inclusive) of the Code. The proviso places a fetter on the power of the Court in the matter of passing a sentence on conviction, namely, notwithstanding the fact that section 7(1) (a ) (ii) prescribes a punishment extending upto seven years and fine, Special Court shall not pass a sentence of imprisonment for a term exceeding two years . It is this proviso which attracts the definition of a summon case, the trial whereof must he 572 undertaken in accordance with the procedure outlined in Chapter XX of the Code. (579 A B) 1.4.Section 167 (5)says that if in any case triable as a summons case,the investigation is wit concluded within a period of six months from the date on which tile accused came to he arrested, the Magistrate shall make an order stopping further investigation into the offence unless the Magistrate for special reasons and in the interest of justice considers it necessary. to permit continuation of the investigation. (579 C) 1.5. The object of sub section clearly (5) of Section 167 is to ensure prompt investigation into all offence triable as summons case to avoid hardship and harassment to the accused person. (646 C) 1.6. The prosecution in question being a summons case triable in a summary manner as per procedure outlined in sections 262 to 265 of the Code which in turn attracts tile procedure meant for summons case, it is obvious that the power conferred by sub section (5) of section 167 can be invoked by the Special Court by virtue or clause (c) of section 12AA (1) of the Act which in terms states that the Special Court may exercise the same powers which a Magistrate may exercise under section 167 of the Code. Thus a special Court is expressly empowered by clause (c) of section 12AA (1) to exercise the same powers which a Megistrate having jurisdiction to try a cast may exercise under section 167 of the Code in relation to an accused person who has been forwarded to him under that provision. (579 1)) 1.7. The High Court was right in concluding that section 167(5) of the Code was attracted in the present case and the Special Court was entitled to exercise the power conferred by that sub section. (579 F) 1.8. In the case of an offence punishable under section 7(i) (a) (ii) of the Act which is tried by a Special Court constituted under section 12A, the provision (of sub section (5) of section 167 of the Code get attracted if tile investigation has not been completed within the period allowed by that sub.section. (582 F) 1.9. The Special Court was competent to entertain the police report restricted to six months investigation and take cognizance on the basis thereof Therefore the Special Court is directed to proceed with the trial from that stage on wards and complete the same as early as possible in accordance 573 with law. (582 G) Kanta Dev vs The State of west Bengal, (1986) Calcutta Criminal Law Reporter 158 (1986) 1 CHN 267 and Babulal Agarwal vs State, (1987) 1 CHN 218, overruled. (639 B C) Jnan Prakesh Agarwala vs State of West Bengal, (1992) 1 CHN 218 and Public Prosecution High Court of Hyderabad & etc. vs Ajnaneyulu and etc. , , approved. Hussainara Khantoon & Ors. vs Home Secretary State of Bihar, Patna, ; , referred to. (639 H, 647 F)

7098.txt

minal Appeal No. 724 of 1985. From the Judgment and Order dated 21.8.1985 of the Rajasthan High Court in D.B. Criminal Appeal No. 494 of 1974. Mahabir Singh for the Appellant. Aruneshwar Gupta for the Respondent. ANAND, J. This appeal under Section 2(a) of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970 is directed against the judgment and order of the High Court of Rajasthan dated 21.8.1985 in Criminal Appeal No.494/1974 convicting the appellant for an offence under Section 302 of the Indian Penal Code and sentencing him to suffer im prisonment for life by reversing an order of his acquittal recorded by the Additional Sessions Judge, Ganganagar vide judgment and order dated 13.2.1974. 853 According to the prosecution case, Mani Ram appellant and his brother Hari Ram had removed the fencing over the field of Hazur Singh deceased about 20 22 days prior to the occurrence, which took place on 22.6.1972 at about 12.30 noon, and that action of the appellant and his brother had resulted in a quarrel between the brothers and Hazur Singh and had created ill feelings between the parties. On the fateful day of 22.6.1972, Hazur Singh deceased had gone to his field. His wife Surjeet Kaur PW1 and his Son Jaskaran PW2 later on went to the field carrying meals for Hazur Singh. After, Hazur Singh had taken his meal, all the three were returning to their village from the field at about 12.30 p.m. Hazur Singh was ahead of Surjeet Kaur and Jaskaran PWs by about one Kila. When Hazur Singh reached near the water course of the village, the appellant Mani Ram was seen coming from the village side. He gave a 'lalkara ' to Hazur Singh and immediately fired a shot from his pistol at him. His brother Hari Ram who was also armed with a gun exhorted Mani Ram appellant to kill Hazur Singh so that the enemy may not escape. Mani Ram thereupon fired three more shots from his pistol at Hazur Singh, who fell down and died at the spot. At some distance away, Sukh Ram PW4 was present and he also witnessed the occurrence. Surjeet Kaur PW1 accompanied by Ganpatram went to police station Tibi and lodged the first information report, exhibit P/1, at about 3.00 p.m. A case was accordingly registered and the investigating officer, Nisar Ahmed, PW13, visited the spot. He prepared the site plan, the site inspector note and effected recovery of the empty cartridges vide memo exhibit P/6 from the spot. The body of the deceased was sent for port mortem examination, which was conducted by Dr. K.C. Mittal PW9. The autopsy report was prepared. The following injuries found of the dead body of Hazur Singh deceased: (i)Gun shot wound oval in shape with inverted margins, bleeding size 3/4" x 1/2" in the mid right hypochendrium wound is traced upward and backward by the probe. Shirt is torn over the wound. (ii)Gun shot would size 13/4" at the lower and of the left side of chest in midaxillary size. The edges are inverted. Wound is continued downwards and posteriorly as he is identified by probe. Shirt is torn. (iii) Gun shot wound with inverted margin ,, Size 3/4" x 854 1/2" with ulterior medical size of lower and of left arm. Little bleeding. Wound is printing upward and posterior through bone. Shirt over wound is torn. (iv) Gun shot wound 1 1/4" x 2/4" with margins averted ragged with severe bleeding on the posterior lateral size of the upper fifth of left arm. Shirt over wound is torn. (v) Gun shot wound in intra scapular region right side 1" x 1/4" x 3/4" circular averted and tagged margins with severe bleeding. (vi) Gun shot wound mid back left side 11/2" x 1" ragged and averted margins with severe bleeding. According to the Doctor, the death was caused due to rupture of vital organs like liver, lung and big blood vessels causing severe hemorrhage and shock as a result of the gun shot injuries and the same were sufficient in the ordinary course of nature to cause death. After completion of the investigation, the appellant alongwith his brother Hari Ram were sent up for trial. While the appellant was charged for an offence under Section 302 IPC, Hari Ram was charged for the offence under Section 302/114 IPC. Both, the appellant and Hari Ram, were also charged for an offence under Section 27 of the Arms Act. After the trial, the learned Sessions Judge found that there was no case made out against Hari Ram at all and that the prosecution had also not been able to prove the case against the appellant beyond a reasonable doubt. As a consequence, both Hari Ram and the appellant were acquitted of all the charges by the trial court. On the State filing an appeal against the judgment and order of acquittal passed by the Trial Court, the High Court allowed the appeal of the State in part and while it set aside the acquittal of the appellant and convicted him for an offence under Section 302 IPC and sentenced him to suffer imprisonment for life, the acquittal of Hari Ram was maintained. While the State has not questioned the acquittal of Hari Ram, the appellant, as already noticed, has filed this appeal. Mr. Mahabir Singh, learned counsel for the appellant, submitted that the judgment of the Trial Court could neither be styled as perverse nor even as unreasonable and there were no other substantial and compelling reasons which could justify the setting aside of the order of acquittal and, 855 therefore, the High Court should not I have interfered with the order of acquittal. Learned counsel urged that the presence of undigested food in the stomach of the deceased belied the prosecution case and that the Trial Court was right in holding that Hazur Sigh Could not have taken the meals at the time stated by his wife Surjeet Kaur PW1 and his son Jaskaran PW2 or murdered at 12.30 p.m. as alleged. The learned counsel also submitted that the inordinate delay in sending the empty cartridges to the ballistic expert went to show that the possibility that the same had been substituted by the investigating agency could not be ruled out and therefore the conviction of the appellant by the High Court was not justified. In reply, Mr. Aruneshwar Gupta, learned counsel appearing for the State of Rajasthan, submitted that since it was an appeal under Section 2 of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970, this Court could itself appreciate the evidence to determine the guilt or otherwise of the appellant. Learned counsel stated that the findings recorded by the Trial Court were based on surmises and conjectures and the High Court was perfectly justified in reversing the order of acquittal. Learned counsel emphasised that the evidence of PW1 Surjeet Kaur and PW4 Jaskaran conclusively established that the crime had been committed by the appellant by his pistol and their testimony has received ample corroboration not only from the statement of Dr. K.C. Mittal PW9 but also from the evidence of Shri G.R. Prasad PW11, the ballistic expert, who had opined that the four empty cartridges had been fired from the licensed pistol of the appellant and could not have been fired from any other weapon. Replying to the submission regarding the presence of undigested food, learned counsel submitted that being rustic villagers much importance could not be attached to the time given by PW1 and PW2 during their depositions about the exact time when the deceased may have had his meals and therefore it could not be said that the medical evidence had in any way belied the prosecution case. We have given our thoughtful consideration to the submissions made at the Bar and have with the assistance of learned counsel for the parties examined the judgments of the courts below as also the material evidence in the case. We are in agreement with the High Court that the evidence of PW1 Surjeet Kaur and PW2 Jaskaran has not been viewed and considered in 856 the correct and proper prospective by the trial court and undue and unwarranted emphasis had been attached to certain minor discrepancies. Our independent appraisal of the evidence of both the witnesses PW1 and PW2, the widow and son of the deceased, shows that they are consistent in their versions not only about the assailants but also about the manner of assault, as has been noticed by us in the earlier part of this judgment. Both the witnesses have given a vivid description of the occurrence. The statement of PWl Surjeet Kaur that Hazur Singh took his meals at about 10.30 a.m. and that the occurrence had taken at about 12 12.30 in the noon cannot be taken to have been contradicted by the medical evidence. Indeed, in the postmortem examination, Dr. K.C. Mittal PW9 found semi solid undigested food in the stomach of the deceased". The doctor opined that digestion begins in 1 or 1 1/2 hours. From this testimony, what was sought to be made out by the defence was that had the occurrence taken place at 12.30 noon, the deceased would have had his meals before 11.00 a.m. as semi digested food was found in the stomach of the deceased. The emphasis on this aspect of the case by the Trial Court, in our opinion, is misplaced not only because the medical evidence is only an evidence of opinion and is hardly decisive but also because when Dr. K.C. Mittal PW9 stated that digestion begins in 1 or 1.1/2 hours, he did not clarify as to what was the extent of the undigested food in the stomach of the deceased. The process of digestion depends upon the digestive power of the an individual and varies from an individual to an individual. It also depends upon the type and amount of food taken. The period of digestion is different for different types of food. Some food articles like mutton, chicken etc. would take more time for being digested as compared to vegetarian food. No questions at all were asked from the wife of the deceased about the type of food served to her husband or the amount of food taken by the deceased. That apart, the time stated by the witnesses as to when the deceased took his food was only an approximate time as it was not even suggested to PWl that she had a wrist watch and had actually seen the time when her husband took his food. Too much play on such slippery factors goes against realism and is not enough to discredit the otherwise reliable testimony of PW1. In our opinion, the evidence of PWs 1 and 2 does not stand contradicted by the medical evidence at all and as a matter of fact, the presence of semi solid undigested food in the stomach lends support of the testimony of the two witnesses that they had gone to the field latter on with the food for the deceased and had actually served meal to him. It lends assurance to their 857 presence in the field with the deceased. Despite the lengthy cross examination nothing was brought out in the cross examination of either of these two witnesses which could effect the veracity of their testimony. The first information report was lodged by Surjeet Kaur PWl at 3.00 p.m. at a distance of about 15 miles from the place of occurrence and was therefore lodged with great promptitude and the entire version of the occurrence finds mention in that report. The testimony of both the witnesses has impressed us and they appear to us to be truthful witnesses and being the close relations of the deceased would, in the ordinary course of things, be the last persons to screen the actual offender and implicate the appellants falsely. Their testimony also receives ample corroboration from the medical evidence and the testimony of ballistic expert Shri G.R. Prasad PWII. Dr. Mittal PW9, as already noticed, found six injuries on the deceased and opined that the same were sufficient in the ordinary course of nature to cause the death. In the FIR exhibit PI lodged soon after the occurrence PWI Surjeet Kaur had stated that Mani Ram appellant had fired 3 4 shots after he had fired the first shot on her husband. At the trial, she however could not state exactly as to how many shots had been fired by the appellant from his pistol. That is no surprising because she could not be expected to keep an exact account of the shots fired by the appellant, when she found her husband being shot at and having fallen down dead. She categorically attributed the gun shot injuries to the appellant and did not attribute any injury to the acquitted accused Hari Ram. Since, it has been found that the recovered empties had been fired from the pistol of the appellant, it lends sufficient corroboration to her tes timony. We may ignore the testimony of Sukh Ram PW4 as a matter of abundant caution but that would not in any way detract from the reliability of the testimony of PWI and PW2. The pistol, weapon of offence, was taken into possession from the appellant by PW6 SHO Bhim Singh. It is a licensed pistol of the appellant. According to the evidence of ballistic expert PW11, the empty cartridges sent to him for examination had been fired from that pistol and that pistol alone and from no other similar weapon. Of course, the sealed packets containing the pistol and the cartridges were sent to the ballistic expert after a long delay and that could have created some doubts about the possibility of substitution of the cartridges, while the packets remained with the police but the evidence on the record rules out any possibility of such 858 a substitution. The three sealed packets, one, containing pistol, the second, containing the empty cartridge recovered from the spot and the third, containing the three empty cartridges recovered from the appellant alongwith the pistol, were deposited in the malkhana of the police station. They had been received by Head Constable Mani Ram PW10 on 23.6.1972, the very next day after the occurrence. He had sent the same to the Police lines at Ganganagar. The prosecution examined PW12 Amar Singh who had carried the three packets from the police station to the police lines at Ganganagar. He categorically stated that while the packets remained with him, they were not tampered with at all. PW10 Mani Ram also deposed that during the period, the sealed packets remained in the malkhana, they were not tampered with by anyone and that they were handed over to Amar Singh PW12 in the same condition. According to PW7 Ram Chandra, he received the three packets from Amar Singh and after taking them into custody he made an entry in the register and that while the packets remained in his custody, nobody tampered with them. The packets were sent to the ballistic expert and received there by Jaswant Singh PW8 and Mamraj Singh. Jaswant Singh, appearing as PW8, deposed that he delivered the packets to the ballistic expert on the very next day after receiving them and while the packets remained in his custody, nobody tampered with them. According to the Ballistic expert, PW11, the packets when received by him were properly sealed and the seals were intact and tallied with the specimen of the seal sent to him. None of these witnesses were at all cross examined. No suggestion even was made to anyone of them that the sealed packets had allegedly been tampered with while in their custody. No such suggestion was even made to SHO Bhim Singh PW6 that he had either substituted the cartridges sent to the ballistic expert or other wise tampered with the sealed packets. It is, therefore, futile to contend that the possibility of the substitution of the cartridges could not be ruled out. There is no basis for such an argument. The evidence of the ballistic expert, Shri G.R. Prasad PW11, read with the medical evidence of PW9 and the testimony of the eye witnesses PWs1 and 2 clearly establishes that the appellant had fired from his licensed pistol at the deceased and that the deceased dies as a result of the pistol shot injuries received by him. We agree with learned Judge of the High Court that there are no suspicious features at all appearing in the evidence which may cast any doubt on the prosecution version that the deceased was shot at with the pistol by the appellant and that he died as a result of the injuries so received. 859 Thus, in view of what we have discussed above, we find that the prosecution has successfully established the case against the appellant beyond any reasonable doubt and since the Trial Court had passed an order of acquittal on wholly erroneous grounds, the High Court after a proper appraisal of the evidence was right in setting aside the order of acquittal and convicting the appellant for an offence under Section 302 IPC as well for an offence under Section 27 Arms Act. Our independent analysis of the evidence on record shows that the order of conviction and the sentence of life imprisonment and two years rigorous imprisonment recorded by the High Court against the appellant for the offence under Sections 302 IPC and 27 Arms Act respectively is well merited and does not call for any interference. Both the sentences shall, however, run concurrently. Consequently, the appeal fails and is dismissed. The appellant is on bail. His bail bonds shall stand cancelled and he shall be taken into custody to suffer the remaining period of the sentence. V.P.R. Appeal dismissed.

The prosecution case was that about 20 22 days prior to the occurrence the appellant and his brother removed the fencing over the field of the deceased. This resulted in a quarrel and created ill feelings between the deceased and the appellant and his brother. On the date of occurrence, the deceased went to his field. Later on his wife, P.W.1 and his son, PW2 went to the field carrying meals for the deceased. The deceased took his meal and at about 12.30 p.m., all the. three were returning to their village from the field, near at the water course of the village, the appellant, who was coming from the village side, gave a 'lalkara ' to the deceased and he fired a shot from his pistol at the deceased. The appellant 's brother exhorted him to kill the deceased. Thereupon the appellant fired three more shots from his pistol. The deceased fell down and died at the spot. PW1 accompanied by one Ganpatram went to police station and lodged the first information report at about 3 p.m. and the police investigation was commenced. The appellant and his brother were sent up for trial, charging the former under section 302 IPC and the latter under section 302/114 IPC. Both were also charged under section 27 of the Arms Act. The Trial Court acquitted the appellant and his brother of all the 850 charges, as it found that the prosecution was unable to prove the case against them. The State 's appeal was partly allowed by the High Court. The High Court set aside the acquittal of the appellant and convicted him for an offence under section 302 IPC and sentenced him to undergo life imprisonment. The High Court maintained the acquittal of the appellant 's brother. Under section 2(a) of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970 the present appeal was riled, contending that the judgment of the Trial Court could neither be styled as perverse nor even as unreasonable and that there was no other substantial and compelling reasons which could justify the setting aside of the order of acquittal and, therefore, the High Court should not have interfered with the order of acquittal; that the presence of undigested food in the stomach of the deceased belied the prosecutions, case and that the Trial Court was right in holding that the deceased could not have taken the meals at the time stated by his wife PW1 and his son, PW2 or murdered at 12.30 p.m., as alleged; that the inordinate delay in sending the empty cartridges to the ballistic expert went to show that the possibility that the same had been substituted by the investigating agency could not be ruled out and therefore the conviction of the appellant by the High Court was not justified. The State submitted that since it was an appeal under Section 2 of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970, this court could itself appreciate the evidence to determine the guilt or otherwise of the appellant; that the findings recorded by the Trial Court were based on surmises and conjectures and the High Court was perfectly justified in reversing the order of acquittal; that the evidence of PW1 and PW2 conclusively established that the crime had been committed by the appellant by his pistol and their testimony had received ample corroboration not only from the statement of the doctor, PW9, but also from the evidence of PW11l the ballistic expert, who had opined that the four empty cartridges had been fired from the licenced pistol of the appellant and could not have been fired from any other weapon; that being rustic villagers much importance could not be attached to the time given by PW1 and PW2 during their depositions about the exact time when the deceased may have had his meals and therefore it could not be said that the medical 851 evidence had in any way belied the prosecution case. Dismissing the appeal, this Court, HELD: 1.01. The process of digestion depends upon the digestive power of an individual and varies from in individual to an individual. It also depends upon the type and amount of food taken. The period of digestion is different for different types of food. Some food articles like mutton, chicken etc. would take more time for being digested as compared to vegetarian food. No question at all were asked from the wife of the deceased about the type of food served by her to her husband or the amount of food taken by the deceased. That apart, the time stated by the witnesses as to when the deceased took his food was only an approximate time as it was not even suggested to PW1 that she had a wrist watch and had actually seen the time when her husband took his food. Too much play on such slippery factors goes against realism and is not enough to discredit the otherwise reliable testimony of PW1. [856E F] 1.02. The doctor opined that digestion begins in 1 or 1 1/2 hours. From this testimony, what was sought to be made out by the defence was that had the occurrence taken place at 1230 noon, the deceased would have had his meals before 11.00 a.m. as semi digested food was found in the stomach of the deceased. The emphasis on this aspect of the case by the Trial Court, is misplaced because the medical evidence is only an evidence of opinion and is hardly decisive. [856 D] 1.03. The evidence of both the witnesses PW1 and PW2, the widow and son of the deceased, shows that they are consistent in their versions not only about the assailants but also about the manner of assault. Both the witnesses have given a vivid description of the occurrence. The statement of PW1 that the deceased took his meals at about 1030 a.m. and that the occurrence had taken at about 12 1230 in the noon cannot be taken to have been contradicted by the medical evidence. [856 B] 1.04. The first information report was lodged by PW1 at 3.00 p.m. at a distance of about 13 miles from the place of occurrence and was therefore lodged with great promptitude and the entire version of the occurrence rinds mention in that report. [857 B] 1.05. The testimony of the PWs 1 and 2 has impressed the Court and 852 they appear to be truthful witnesses and being the close relations or the deceased would, in the ordinary course of things, be the last person to screen the actual offenders and implicate the appellants falsely. Their testimony also receives ample corroboration from the medical evidence and the testimony of ballistic expert, PW11. [857 B C] 1.06. No suggestion even was made to anyone of the PWs. 6, 7, 8, 10, 12 that the sealed packets had allegedly been tampered with while in their custody. No such suggestion was even made to PW6 that he had either substituted the carriages sent to the ballistic expert or otherwise tampered with the sealed packets. There is no possibility of the substitution of the cartridges. [859 F] 1.07. Thus there are no suspicious features at all appearing in the evidence which may cast any doubt on the prosecution version that the deceased was shot at with the pistol by the appellant and that he died as a result of the injuries so received. The prosecution had successfully established the case against the appellant beyond any reasonable doubt. [858 H, 859 A]

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Appeal No. 2198 of 1986. From the Judgment and order dated 17.12.1985 of the Punjab and Haryana High Court in R.S.A No. 1155 of 1977. S.M. Ashri for the Appellant. Ms. Kawaljit Kochar for J.D. Jain for the Respondents. The Judgment of the Court was delivered by BHARUCHA,J. This appeal by special leave challenges the judgment and 591 order of the Punjab & Harvana High Court dismissing the appeal filed before it by the appellant. The suit relates to 9 Kanals 13 Marlas of land at village Qayampur. The said land was owned by Rajinder Singh and Baldev Singh, the respondents, and was sold while they were still minors by their mother Gurkirpal, acting as their guardian, to the appellant under a registered sale deed dated 30th July, 1964. Upon attaining majority the respondents sued the appellant for possession of the said land on the ground that the sale thereof having been made without the permission of the court was void. The appellant in his written statement and at the time of hearing of the suit relied heavily upon the fact that the sale deed had been attested by the father of the respondents and that the sale should. therefore, be deemed to have been a sale by the legal guardian of the respondents. It was also contended that the sale had been for legal necessity and the benefit of the respondents. The suit, it was also alleged, was barred by limitation because, the sale being voidable and not void, it had not been brought within three years of each of the respondents attaining majority. The trial court framed appropriate issues and came to the conclusion that it had not been proved that the sale was for legal necessity or for the benefit of the respondents; that the sale by the respondent 's mother without the permission of the court was void; and that the sale was void and not voidable and the suit was, therefore, in time. The appeals filed by the appellant before the Additional District Judge. Ambala and the High Court failed. Learned counsel for the appellant placed great reliance upon the fact that the sale deed had been attested by the father of the respondents and submitted that the sale deed should, therefore, be taken to have been entered into by the natural guardian of the respondents for legal necessity and their benefit. Section 8 of the Hindu Minority and Guardianship Act sets out the powers of the natural guardian of a Hindu minor. The natural guardian of a Hindu Minor has power, subject to the provisions of section 8, to do all acts which are necessary or reasonable and proper for the benefit of the minor or his estate. The natural guardian, however, may not without the previous permission of the court sell any part of the immovable property of the minor. Any disposal of immovable property which is not necessary or reasonable and proper for the benefit of the minor or is without the previous permission of the court is voidable at the instance of the minor. In the instant case, there, is, as found by the trial court and affirmed in appeal, no evidence beyond the bare word of the appellant that the sale deed had been made for the benefit of the minor respondents and his evidence had been eroded in cross 592 examination so that there was no "reliable evidence on record to show that the alienation in dispute had been made for the legal necessity or for the benefit of the plaintiffs. That the sale was effected without the permission of the court is not dispute. The sale is, therefore, in any event, voidable. The question is whether, in the circumstances of the case, it may be said that the sale was effected by the father and natural guardian of the respondents because he had attested the sale deed executed by the mother of the respondents. In this behalf our attention was invited to this Court 's judgment in Jijabai Vithalrao Gajre vs Pathankhan and ors. ; , This was a case in which it was held that the position in Hindu law was that when the father was alive he was the natural guardian and it was only after him that the mother became the natural guardian. Where the father was alive but had fallen out with the mother of the minor child and was living separately for several years without taking any interest in the affairs of the minor, who was in the keeping and care of the mother, it was held that, in the peculiar circumstances, the father should be treated as if nonexistent and, therefore, the mother could be considered as the natural guardian of the minor 's person as well as property, having power to bind the minor by dealing with her immovable property. In the present case, there is no evidence to show that the father of the respondents was not taking any interest in their affairs or that they were in keeping and care of the mother to the exclusion of the father. In fact, his attestation of the sale deed shows that he was very much existent and in the picture. If he was, then the sale by the mother, notwith standing the fact that the father attested it, cannot be held to be a sale by the father and natural guardian satisfying the requirements of section 8. The Provisions of section 8 are devised to fully protect the property of a minor, even from the depredations of his parents. Section 8 empowers only the legal guardian to alienate a minor s immovable property provided it is for the necessity or benefit of the minor or his estate and it further requires that such alienation shall be effected after the permission of the court has been obtained. It is difficult, therefore, to hold that the sale was voidable, not void, by reason of the fact that the mother of the minor respondents signed the sale deed and the father attested it. In the result, the appeal is dismissed with no order as to costs. G.S. Appeal dismissed.

The mother of the respondent minors, acting as their guardian, sold their land, while they were still minors, to the appellant under a registered sale deed dated July 30,1964. The respondents, upon attaining majority, sued the appellant for possession of the said land on the ground that the sale thereof, having been made without the permission of the court, was void. The appellant in his written statement and at the time of hearing of the suit contended that the sale deed had been attested by the father of the respondents and the. .ale should, therefore, he deemed to have been a sale by the legal guardian of the respondents. It was also pleaded that the sale had been for legal necessity and the benefit of the respondents. It was also alleged that the suit was barred by limitation because the sale was voidable and not void and the suit had not been brought within three years of each of the respondents attaining majority. The trial court framed appropriate issues and came to the conclusion that it had not been proved that the sale was for legal necessity or for the benefit of the respondents, that the sale by the respondent 's mother without the permission of the court was void, and the sale was void and not voidable and the suit was, therefore, in time and was decreed. 590 The appeal filed by the appellant before the Additional Distt. Judge and the High Court failed. The appellant, therefore, preferred this appeal by special leave. Dismissing the appeal, this court, HELD : 1. The provisions of section 8 of the Hindu Minority and Guardianship Act, 1956 are devised to fully protect the property (.if a minor, even from the depredations of his parents. Section 8 empowers only the legal guardian to alienate a minor 's immovable property provided it is for the necessity or benefit of the minor or his estate and it further requires that such alienation shall be effected after the permission of the Court has been obtained. It was difficult, therefore, to hold that the sale, by reason of the fact that the mother of the minor respondents signed the sale deed and the father attested it, was voidable, not void. (592 G) 3. The attestation of the sale deed by the father showed that he was very much existent and in the picture. If he was, then the sale by the mother, notwithstanding the fact that the father attested it, cannot he held to be sale by the father and natural guardian satisfying the requirements of section 8. (592 E) Jijabai Vithalrao Gajre vs Pathankhan & Ors. ; , distinguished. (662 A)

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ON: Civil Appeal Nos. 1454 56 of 1993 etc. From the Judgment and Order dated 15.2.1991 of the Karnataka High Court in Writ Appeal Nos. 2083, 2084 and 2085 of 1989. K.Madhava Reddy, P.P. Rao, N.D.B. Raju, Guntur Prabhakar, Dr. Sumand Bhardwaj, Yatish Mohan Verma and Ranjit Kumar for the Appellants. Soli J. Sorabjee, N.B. Shetye, R.N. Narasimha murthy, S.Ganesh, Vineet Kumar, M. Veerappa, Nobin Singh, P.R. Ramasesh, P. Mahale (NP), S.K. Kulkarni and Surya Kant for the Respondents. The Judgment of the Court was delivered by SAWANT, J. Leave granted. 2.These appeals arise out of the same facts and judgments of the Karnataka High Court and are being disposed of by this common judgment. For the sake of the narration of events Civil Appeal Nos. 1461 72/ 1993 arising out of SLP (Civil) Nos. 7230 41 of 1991 may be referred to. The 2nd respondent M/s Naryanaswamy & Sons is a partnership firm. While it was carrying on the business of manufacturing and selling of polished granites, it acquired on 30.9.1953, 6 acres and 4 gunthas of land in Survey Nos. 6/1 and 6/2 of Dasarahalli in the heart of Jayanagar Exten sion of the city of Bangalore. Out of the said land, 1 acre and 2 gunthas had already been acquired by the 1st respondent State Government under notification dated 1.4.1948. The acquisition proceedings had culminated in an award, granting compensation to the land owner on 3.3.1955. In a small portion of the said land, the 2nd respondent firm (hereinafter referred to as the 'firm '), established a granite factory and the rest of the land was vacant when the Urban Land (Ceiling and Regulation) Act, 1976 (the 'Act ') was made applicable to the Bangalore Agglomeration consisting of the area within the jurisdiction of the Bangalore City Municipal Corporation and the Trust Board, and the peripheral area of 5 kms. 3.On 9.6.1983, the firm preferred an application to the State Government for exemption of the vacant land from the provisions of Chapter III of the Act. By an order of 17.7.1985, the State Government granted 725 exemption under Section 20 of the Act for industrial use of a granite factory. The exemption related to 16194 sq. mtrs. of land and was granted on the following conditions: [i] The entire land utilisation shall be completed within a period of two years from the date of the order. [ii] The exempted land shall be exclusively used for the purpose for which the exemption was granted and for the purposes related thereto. [iii] The land shall not be transferred by way of sale, mortgage, gift, lease or otherwise without prior permission of the Government and that such permission, when given, shall be subject to such conditions as the Government may deem fit to impose. 4.The 3rd respondent partnership firm M/s. Reevajethu, Builders and Developers [the 'builders '] was constituted on 6.1.1987 with Smt. Shobha Makhija as the major partner with 50% share and other 18 partners, mainly "to develop the immovable property to be acquired by the firm of an extent of 5 acres and 24 gunthas situated at Survey Nos. 6/1 and 6/2 of Dasarahalli of Bangalore City and to carry on the business as builders and developers of flats, shops, commercial complexes and other types of buildings, dealers in real estate and all other allied business and activities" and to "carry on any other business as may be mutually agreed upon by all the partners". It is not in dispute that Smt. Shobha Makhija is the sister of the son in law of the 4th respondent who was then the Chief Minister of the State of Karnataka. 5.On 9.1.1987, the competent authority under the Act came to the conclusion that the excess vacant land out of the said Survey Nos. 6/1 and 6/2 after the grant of exemption by the Government Order dated 17.7.1985, was 3444 sq. mtrs. The competent authority accordingly directed the publication of a notification under Section 10 [1] of the Act for the acquisition of the said excess vacant land. 6.On the same day, i.e., 9.1.1987, the firm made an application to the State Government for permission to sell land to the extent of 5 acres and 24 gunthas comprised in the said Survey Nos. 6/1 and 6/2 to the 726 builders. The grounds made out in the application were that due to stiff competition, and nationalisation of black and pink granite by the southern States including Karnataka, the firm was running under losses; that its Woodlands Hotel at Madras was also not making profits since the hotel building had become very old and there were no funds for modernising it; that its theaters in Madras were also not yielding profits due to unhealthy competition by the video piracy and the advent of the television; that the partners of the firm individually and jointly were indebted to Andhra Bank, of India, State Bank of Mysore and Dena Bank; that the said debts were of more than Rs. 1 crore 65 lakhs; that suits had been filed in the High Court of Madras against the partners; that the business of the partners had been suffering huge losses specially due to continuing heavy interest burden; that the families of the seven partners of the firm had no other source of income and had been over drawing from the firms for their maintenance; and that one of the partners was seriously ill in a hospital at Bangalore and he had to borrow money for taking medical treatment. 7.On 6.3.1987, the State Government under Section 20 [1] of the Act permitted the firm to sell land to the extent of 16194 sq. mtrs. to the builders subject to certain conditions. 8.On 23.3.1987, the firm filed another application before the State Government seeking permission to transfer the remaining 3444 sq. mtrs. of vacant land from Survey Nos. 6/1 and 6/2 to the builders on the ground of undue hardship since the firm had incurred debts. On 18.4.1987 the State Government under Section 20 [1](a) of the Act granted exemption for the said land from the purview of Chapter Ill of the Act and also permitted the firm to sell the said 3444 sq. of vacant land from Survey Nos. 6/1 and 6/2 subject to certain conditions. 9.By a sale deed of 30.9.1987, i.e., a day before the extension of Chapter XXC of the Income tax Act providing for preemptive purchase by the Central Government of immovable property in certain cases on transfer, the firm entered into a deed of absolute sale for the sale of the property consisting of land to the extent of 5 acres and 24 gunthas situated in the said Survey Nos. 6/1 and 6/2. 10.On this undisputed factual matrix, writ petitions were filed by way of public interest litigation, under Article 226 and 227 of the Constitution before the High Court for issue of a writ of mandamus [a] directing the respondent Government to take action for forfeiture of the land for con 727 travention of Section 79 of the Karnataka Land Reforms Act; [b] for acquiring the land for the purpose of weaker sections under the provisions of the Act; [c] for quashing the orders dated 63.1987. and 18.4.1987 granting exemption to the land in question from the purview of the Act under Section 20 111(a) & (b) of the Act and for declaring the sale deeds dated 30.9.1987 executed by the firm in favour of the builders as void and inoperative; (d). for directing the State Government to take action under Section 6 of the Karnataka Parks, Play fields, and Open Space [Reservation and Regulation] Act, 1985 and for other reliefs. The learned Single Judge by his judgment and order dated 8.9.1989allowed the writ petition, and among others, [1] quashed the Group Housing Policy of the State Government as embodied in the decision of the Committee held on 22.10.1986 and communicated under letter dated 24.11.1986 insofar as it encouraged the Group Housing Scheme through individuals and partnership of individuals by transferring vacant land to such persons; [ii] restrained the State Government from enforcing the said Policy through individuals and partnership of individuals against the vacant land; [iii] declared as null and void and quashed the orders dated 6.3.1987 and 18.4.1987 granting exemption; [iv] declared the sale deed dated 30.9.1987 executed by the firm in favour of the builders as nun and void so far as it related to the extent of land admeasuring 19368 Sq. covered by the exemption orders of 6.3.1987 and 18.4.1987. The validity of the sale deed so far as it related to the remaining land mentioned therein was, however, saved by the said declaration; [v] directed the State Government, the Special Deputy Commissioner under the Act, the Bangalore Development Authority and the Municipal Corporation of Ban galore to identify the extent of 1 acre, 2 gunthas and 58 square yards which was acquired in 1948 out of the said Survey No. 6/1 and to set them apart for the purpose of road and Boulevard and use it only for said purpose; [vi] remitted the applications dated 9.1.1987 and 24.3.1987 made by the firm to the State Government with the direction to consider them in accordance with law under Section 20 [1](b) of the Act and to exempt them in the light of the extent of the debt owed by the firm to the creditors prior to the coming into force of the Act; [vii] directed that even if after examining the, application in the aforesaid light the State Government granted permission, to the firm to sell the vacant land on the ground of hardship, the Government should see that, in the vacant land, sites are formed of various dimensions not exceeding 60 ' x 90 ' keeping in view the sites already formed 728 in the locality. The learned Judge further directed that each such site should be sold by public auction by the competent authority with the condition that no person is entitled to purchase in public auction more than one site, and to credit the sale proceeds in the office of the competent authority under the Act who would pay the amount to the creditors of the firm. The learned Judge also further directed that only such number of sites should be sold which are necessary to discharge the debts and the remaining portion of the vacant land should be acquired under the Act. It may be noted here that the learned Judge held that the allegations of mala fides in granting exemptions by the orders of 6.3.1987 and 18.4.1987 against respondents 4 and 8, were not proved. 12.Against the said decision of the learned Single Judge, appeals were preferred before the Division Bench of the High Court, among others, by writ petitioners as well as the firm and the builders. All the appeals were heard together and the learned Judges of the Division Bench gave separate but concurring judgments and set aside the findings as well as the directions given by the learned Single Judge and dismissed the writ petitions. 13.The precise questions which arise for our consideration in these appeals are: [i] Were the permissions granted by the State Government to sell land admeasuring 16194 sq. mtrs. and 3444 sq. mtrs. by its orders of 6.3.1987 and 18.4.1987 respectively valid under the Act? [ii] Were the said orders motivated by mala fides ? and [iii] Is the sale deed executed by the firm in favour of the builders on 30.9.1987 void and inoperative? 14.In order to appreciate the answer to the first and the third question, it is necessary to understand the scheme of the Act which came into force on 17.2.1976. As the preamble of the Act states, it has been placed on the statute book [i] to provide for the imposition of a ceiling on vacant land in urban agglomerations;, [ii] to provide for the acquisition of which vacant land in excess of the ceiling limit; and [iii] to regulate the construction of buildings on such land and for matters connected therewith with a view to [a] preventing the concentration of urban land in the hands 729 of a few persons and speculation and profiteering therein and [b] bringing, about an equitable distribution of land in urban agglomerations to subserve the common good. These objects which are otherwise clear from the preamble of the Act have been explained in the statement of objects and reasons accompanying the Bill which, among other things, states as follows: "There has been a demand for imposing a ceiling on urban property also, especially after the imposition of a ceiling on agricultural lands by the State Governments . With the growth of population and increasing urbanisation, a need for orderly development of urban areas has also been felt. It is, therefore, considered necessary to take measures for exercising social control over the scarce resource of urban land with a view to ensuring its equitable distribution amongst the various sections of society and also avoiding speculative transactions relating to land in urban agglomerations. xx xx xx The Bill is intended to achieve the following objectives: [i] to prevent concentration of urban property in the hands of a few persons and speculation and profiteering therein; [ii]to bring about socialisation of urban land in urban agglomerations to subserve the common good by ensuring its equitable distribution; [iii] to discourage construction of luxury housing leading to conspicuous consumption of scarce building materials and to ensure the equitable utilisation of such materials; and [iv] to secure orderly urbanisation. The Bill mainly provides for the following: [i] imposition of a ceiling on both ownership and posses 730 sion of vacant land in urban agglomerations, the ceiling being on a graded basis according to the classification of the urban agglomeration; [ii] acquisition of the excess vacant land by the State Government with powers to dispose of the vacant land to subserve the common good; [iii] payment of an amount for the acquisition of the excess vacant land, in cash and in bonds; [iv] granting exemptions in respect of certain specific categories of vacant land; [v] regulating the transfer of vacant land within the ceiling limit; [vi] regulating the transfer of urban or urbanisable land with any building [whether constructed before or after the commencement of the proposed legislation], for a period o f 10 years from the commencement of the legislation or the construction of the building whichever is later; [vii] restricting the plinth area for the construction of future residential buildings; and [viii] other procedural and miscellaneous matters. " It is needless to emphasise that while interpreting the various provisions of the Act the said objects will have to be kept in view, constantly. However, only those provisions of the Act which have a bearing on the controversy before us may be referred to. The 'vacant land" has been defined in Section 2 (q) as follows: "vacant land ' means land, not being land mainly used for the purpose of agriculture,, in an urban agglomeration, but does not include [i] land on which construction of a building is not permissible under the building regulations in force in the area in which such land is situated, 731 [ii]in an area where there are building regulations, the land occupied by any building which has been constructed before or is being constructed on, the appointed day with the approval of the appropriate authority and the land appurtenant to such building; and [iii] in an area where there are no building regulations, the land occupied by any building which has been constructed before, or is being constructed on, the appointed day and the land appurtenant to such building; Provided. . . . " The "land appurtenant ', in relation to any building, has been defined in Section 2(g) 'as follows: " land appurtenant", in relation to any building, means [i] in an area where there are building regulations, the minimum extent of land required under such regulations to be kept as open space for the enjoyment of such building, which in no case shall exceed ' five hundred square metres; or [ii] in an area where there are no building regulations, an extent of five hundred square metres contiguous to the land occupied by such building, and includes, in the case of any budding constructed before the appointed day with a dwelling unit therein, an additional extent not exceeding five hundred square metres of land, if any, contiguous to the minimum extent referred to in sub clause [i] or the extent referred to in sub clause [ii], as the case may be". Section 3 states that except as provided in the Act, on and from the commencement of the Act, no person shall be entitled to hold any vacant land in excess of the ceiling limit. The "ceiling limit" is prescribed in Section 4. The provisions of Section 4, so far as they are relevant for our purpose, 732 may be reproduced verbatim: "4. Ceeling Limit. [1] Subject to the other provisions of this section, in the case of every person, the ceiling limit shall be, [a] x x x x x x [b] where such land is situated in an urban agglomeration falling within category B specified in Schedule 1, one thousand square metres; [c] x x x x x x x [d] x x x x x x x 2. x x x x x x x 3.Notwithstanding anything contained in sub section [1], where in respect of any vacant land any scheme for group housing has been sanctioned by any authority competent in this behalf immediately before the commencement of this Act, then, the person holding such vacant land at such commencement shall be entitled to continue to hold such land for the,purpose of group housing: Provided that no more than one dwelling unit in the group housing shall be owned by one single person; Provided further, that the extent of vacant land which such person shall be entitled to hold shall, in no case, exceed [a] the extent required under any building regulations governing such group housing; or [b] the extent calculated by multiplying the number of dwelling units in the group housin g and the appropriate ceiling limit referred to in sub section [1], whichever is less." 733 Section 5(3) prohibits transfer of the vacant land in excess of the ceiling limit or any part thereof by way of sale, mortgage, gift, lease or otherwise until the land holder has furnished a statement under Section 6 of the Act and a notification regarding the excess vacant land held by him, has been published under sub section [1] of Section 10. Any such transfer is deemed to be null and void. Section 6(1) requires every person holding vacant land in excess of the ceiling limit at the commencement of the Act, to file a statement before the competent authority under the Act. Read with Section 7, it is clear that the statement to be filed under Section 6(1) has to include vacant land not only situate in the same State but also in other States to which the Act applies. In the present case, admittedly, the firm held land also in Madras in addition to the land in dispute in the city of Bangalore. It is not known whether the firm had vacant land in its possession in Madras in addition to the land in dispute and whether it had shown such land in its return. However, that is not the subject matter of dispute before us. Section 8 provides for a draft statement to be prepared by the competent authority, as regards the vacant land held by the person concerned and calculated on the basis of the statement filed by him under Section 6 after holding an inquiry into the matter. The draft statement is to be served on the person concerned with the notice requiring him to prefer his objections, if any. Section 9 provides for the final statement with regard to the vacant land in excess of the ceiling limit to be prepared by the competent authority and to be served on the person concerned. After the service of the final statement under Section 9, on the person concerned, the competent authority is required by Section 10(1) to cause a notification to be published in Official Gazette giving the particulars of such vacant land and stating therein [i] that such land is to be acquired by the concerned State Government and [ii] the claims of all the persons interested in such vacant land be made by them giving particulars of the nature of their interest in the land. Under Section 10(2), the competent authority is required to determine the nature and extent of such claims and pass such orders as it deems fit. Section 10(3) provides that at any time after the publication of the notification under Section 10(1), the competent authority may by another notification published in the Official 734 Gazette of the State concerned, declare that the excess vacant land referred to in the notification published under Section 10(1) shall with effect from such date as may be specified in the declaration, be deemed to have been acquired by the State Government. Upon the publication of such declaration, the vacant land is deemed to have been vested absolutely in the State Government free from all encumbrances with effect from the date so specified. Section 10 (4) then prohibits transfer of the excess vacant land and also the alteration of the use of such land between the date of notification published under Section 10(1) and that of the notification published under Section 10(3). Section 10(5) enables the competent authority to pass an order requiring the person in possession of the excess vacant land to surrender the same to the State Government. Section 11 requires the State Government to pay compensation to the person or persons having interest in the vacant land acquired under Section 10(3), at the rates mentioned therein. Section 19 exempts certain lands from the provisions of Chapter III of the Act which comprises Sections 3 to 24. Then come the provisions of Section 20 to 24 of Chapter 111. We are directly concerned in the present appeals with the said sections along with the provisions of chapter IV of the Act. Section 20 permits the State Government to give exemption to any vacant land in excess of the ceiling limit, from the provisions of Chapter III, for two distinct purposes. It is necessary to reproduce here the said section: 20.Power to exempt. (1) Notwithstanding anything contained in any of the foregoing provisions of this Chapter, (a) where any person holds vacant land in excess of the ceiling limit and the State Government is satisfied, either on its own motion or otherwise, that, having regard to the location of such land, the purpose for which such land is being or is proposed to be used and such other relevant factors as the circumstances of the case may require, it is necessary or expedient in the public interest so to do, that Government may, by order, exempt, subject to such con 735 ditions, if any as may be specified in the order, such vacant land from the provisions of this Chapter; (b) where any person holds vacant land in excess of the ceiling limit and the State Government, either on its own motion or otherwise, is satisfied that the application of the provisions of this Chapter would cause undue hardship to such person, that Government may by order, exempt subject to such conditions, if any, as may be specified in the order, such vacant land from the provisions of this Chapter: Provided that no order under this clause shall be made unless the reasons for doing so are recorded in writing. [2] If at any time the State Government is satisfied that any of the conditions subject to which any exemption under clause (a) or clause (b) of sub section (1) is granted is not complied with by any person, it shall be competent for the State Government to withdraw, by order, such exemption after giving a reasonable opportunity to such person for making a representation against the proposed withdrawal and thereupon the provisions of this Chapter shall apply accordingly. It would be apparent from clause (a) of sub section [1] of the section that under it, the State Government is given power to exempt the excess vacant land from the operation of Chapter III only if the State Government is satisfied that having regard to [i] the location of the land and [ii] the purpose for which it is being or is proposed to be used, it is necessary or expedient in the public interest to exempt it. The paramount consideration is the public interest. The exemption granted under this provision may be subject to certain conditions. But, it does not appear that it is obligatory to impose such conditions. Nor is it necessary to record reasons when exemption is granted under this clause. The power to exempt such land under clause (b) of sub section [1] can be exercised by the State Government, if it is satisfied that the application of Chapter III would cause undue hardship to the landholder. The exemption may be granted under this clause subject to such conditions, if 736 any, as may be specified in the order. But, unlike under clause (a), there is no obligation to prescribe the conditions. The 'permission given under this clause, however, has to be supported by reasons to be recorded in writing. Sub section [2] of the section enables the government to withdraw the exemption granted either under clause (a) or (b), if is satisfied that any of the conditions subject to which the exemption is given, is not complied ' with. Clauses (a) and (b) of sub section [1] read with subsection [2] make it clear that the exemption may either be conditional or absolute. Where it is conditional, it may be withdrawn, if any of the conditions are not complied with. The very fact, however, that the legislature has con templated imposition of conditions on exemptions granted under both the clauses, shows that the purpose of the exemption under either of the clauses cannot be the transfer of the land. The exemption under clause (a) is obviously for the land being put to a particular use which use is also necessary or expedient in the public interest, while exemption under clause (b) is for relieving the person concerned from any undue hardship which may be caused to him personally, by the withdrawal of the excess land from his possession probably such as when the person may require the land for the expansion of the use to which he has already put it, such as his growing business or activities or to accommodate his growing family. The clause unfortunately is completely silent on what it intends to convey by the expression "undue hardship". Section 21 also contemplates exemption of the excess vacant land from the operation of the said Chapter but for a purpose other than for the use of the holder of the land. The purpose contemplated there is the construction of dwelling units of the plinth area of not more than 80 sq. mtrs. for accommodation of the weaker sections of the society and in accordance with a scheme approved by such authority as the State Government may specify in that behalf. The person desiring exemption under this Section has further to declare his intention for construction of such dwelling units for weaker sections within such time, in such form and in such manner as may be prescribed. Such declaration is to be made before the competent authority. The competent authority, after receiving such declaration may, after making such inquiry as it deems fit, declare such land not to be excess land for the purposes of the said Chapter and permit such person to continue to hold such land for the aforesaid purpose subject to 737 such terms and conditions as may be prescribed. Where any such condition is contravened, the competent authority has been given power to declare the land to be excess land and on such declaration, the, provisions of Chapter III of the Act are to apply. The distinction between Sections 20 and 21 may be noticed at this stage. In the first instance, the power given under Section 20 is to the State Government and not to the competent authority. The power given is to exempt the land, and the exemption is to be granted to a person. The purpose of exemption is either public interest or relief from personal undue hardship. It does not appear to be obligatory on the State Government to prescribe any conditions while granting the exemption. However, if any conditions are specified and if the State Government later satisfied that there is non compliance of any of the conditions, the State Government is given power to withdraw the exemption. As far as Section 21 is concerned, the power conferred by it is not to exempt the land but to declare it not to be excess for the purposes of Chapter III. The power is given to the competent authority itself. It is to be exercised by it only under one circumstance. That circumstance is that the holder of the vacant land should declare before it within a specified time and in the prescribed form and manner, that he desires to utilise the land for the construction of the dwelling units of not more than the particular size mentioned therein for accommodating the weaker sections and in accordance with any scheme approved by the specified authority. it is the competent authority which is required to make inquiry as it deems fit into such a declaration, and if it is satisfied, to declare that such land shall not be excess within the meaning of the said Chapter. However, it appears that the competent authority is required to prescribe certain terms and conditions while declaring the land not to be an excess land, including a condition with regard to the time limit within which such buildings are to be constructed, and on the breach of any of the conditions, the competent authority is also given power to declare the land to be an excess land. Section 22 enables a person to hold the vacant land on which there stood a building which he demolished or destroyed or which was demolished or destroyed on account of natural causes. The holder of such land is required to file a statement in that behalf within the specified time 738 and if the competent authority is satisfied that such land is required by the holder for the purpose of redevelopment in accordance with the master plan, the authority may, subject to such conditions and restrictions, permit the holder to retain such land for such purpose. However, if the competent authority is not so. satisfied and does not therefore, give permission for redevelopment, the provisions of Sections 6 to 14 of the Act become applicable even to such land. Section 23 provides for the disposal by the State Government of the vacant land acquired under the Act or acquired under any other law. The State Government may allot such land to any person for any purpose relating to or in connection with any industry or for providing residential accommodation, of such type as may be approved by the State Government, to the employees of any industry. The 'industry ' is defined for the purpose to mean any business, profession, trade, undertaking or manufacture. While making such allotment, the State Government may impose such conditions as may be specified in the order of allotment. A breach of any of the conditions imposed enables the State Government to cancel the allotment, and on such cancellation the land revests in the State Government free from all encumbrances. Sub section [4] thereof also enjoins the State Government to dispose of the vacant lands to subserve the common good on such terms and conditions as the State Government may deem fit to impose. Sub section 15] thereof gives the State Government an overriding power and enables it to retain or reserve any vacant land acquired under the Act for the benefit of the public, notwithstanding anything contained in sub sections [1] to [4]. Section 24 enables the State Government to assign a part or whole of the acquired land to those persons who had leased out or mortgaged with possession, of the said land or had given such land under a hire purchase agreement and as a consequence of which they are left with no vacant land or. are left with vacant land which is less in extent than the ceiling limit. Chapter IV of the Act deals with the regulation of transfer and use of urban property. Section 26 prohibits the sale of vacant land within the ceiling limit except after giving notice in writing to the competent authority, of the intended transfer. Where the notice is given, the competent authority shall have the first option to purchase the land on behalf of the State 739 Government at a price calculated in accordance with the provisions of the Land Acquisition Act, 1894 or of any other corresponding law for the time being in force. The option has, however, to be exercised within a period of sixty days from the date of the receipt of the notice and if no such option is exercised, it will be presumed that the competent authority has no intention to purchase the land, and it shall then be lawful for such person to transfer the land to whomsoever, he may like. Section 27 prohibits transfer of any urban or urbanisable land by way of sale, mortgage, gift, lease for a period exceeding ten years, or otherwise, if such land is with a building, whether constructed before or after the commencement of the Act. It also prohibits a similar transfer of the land with a portion only of such building. The restriction on the transfer of Such land is for a period of ten years of the commencement of the Act or from the date on which the building is constructed whichever is later, except with the previous permission of the competent authority. The competent authority is given power to grant or refuse permission to transfer, after holding an inquiry. If the permission is not refused within sixty days of the receipt of the application, the permission is deemed to have been granted. If the permission applied for is for the transfer of such land by way of sale, the competent authority is given the first option to purchase such land with the building or a portion of the building, as the case may be, and if the option is not exercised within sixty days, the applicant is free to sell the land to any person he may like. For the purpose of calculating the price, where the purchase is made by the authority, the provisions of the Land Acquisition Act, 1894 or of the corresponding law are made applicable. This Section has since been, struck down by this Court in Maharao Sahib Shri Bhim Singhji etc. vs Union of India & Ors. , to the extent it operates on the vacant lands within the ceiling limit. In other words, as the law stands today, the section applies only to transfer of the urban and urbanisable lands in excess of the ceiling limit and which have a building or a portion of building constructed thereon. Section 29 prohibit s construction of buildings with dwelling units with a plinth area exceeding particular dimensions, depending upon the category to which the urban agglomerations belong. Section 30 gives power to the competent authority to stop or demolish construction which is being made or made in contravention of 740 Section 29. Section 35 gives power to the State Government to issue orders and directions of a general character as it may consider necessary in respect of any matter relating to the powers and duties of the competent authority and the competent authority has to give effect to such orders and directions. Section 36 gives power to the Central Government to. give such directions to any State as may appear to it to be necessary for carrying into execution in the State concerned, any of the provisions of the Act or of any rules made thereunder. The Central Government may also under this Section require any State Government to furnish such returns, statistics, accounts and other information as may be deemed necessary. 15.The examination of the aforesaid relevant provisions of the Act shows a clear intention of the legislature and reveals a definite scheme. It has to be admitted that the provisions of the Act as are drafted have not succeeded in translating into, words the clear intention of the legislature and to that extent the Act is an inelegant and confused piece of drafting. However, since the intention is clear, a harmonious reading of all the provisions consistent with that intention is necessary to interpret and understand each of the said provisions. The intention of the legislature is to acquire all vacant land in excess of the ceiling limit prescribed by the Act and the main purpose of the Act, as stated earlier, is three fold, viz., [i] to prevent concentration of the urban land in the hands of a few persons and to prevent speculation and profiteering therein; [ii] to distribute the urban land equitably and [iii] to regulate the construction of buildings on the urban lands. Consistent with these objectives, the Act provides for acquisition of all urban vacant land in excess of the ceiling limit and prohibits its transfer in any form absolutely. All that the Act permits in the case of such excess vacant land is either express exemption from the operation of Sections 3 to 19 of Chapter III of the Act by the State Government under Section 20 or non declaration of such land as an excess vacant land by the competent authority under Section 21 or the retention of such land with the land holder to be permitted by the competent authority under Section 22 of the Act. The effect of exemption of the land from the provisions of Sections 3 to 19 or of the non declaration of the land as excess land or of the 741 retention of the land with the land holder under Sections 20, 21 and 22 respectively, is not to permit the land holder to deal with it as he likes including to transfer it. In fact, the exemption, the non declaration an the retention permitted, is on certain conditions which are required to be prescribed by the State Government or the competent authority as the case may be. If those conditions are not complied with or are contravened, the State Government or the competent authority is given power to withdraw the exemption or to declare the land as excess. This power given to the State Government and the competent authority itself negatives either power to permit the transfer or the right to transfer. What is more, Chapter IV which alone makes provisions for transfer and use of urban property, makes provision for transfer of vacant land within the ceiling limit subject to certain conditions. It also makes provisions for the transfer of land in excess of the ceiling limit with a building thereon or with a portion of such building. It makes, however, no provision for transfer of land in excess of the ceiling limit without a building or a portion of a building thereon. That is consistent with the object of the Act since the Act does not contemplate transfer of the vacant land in excess of the ceiling limit. It only provides for exemption of such land from being acquired and vested in the State` Government or for non declaration of it as an excess land or for the retention of the same with the holder and that too subject to certain conditions which may be prescribed, as stated earlier. 16.It is against the background of the aforesaid provisions of the Act that we have to consider whether the two permissions given by the State Government to the firm on 6.3.1987 and 18.4.1987 to sell land admeasuring 16194 sq.mtrs. and 3444 Sq. mtrs. respectively under Section 20 (1), are legal. 17.Taking, first, the order dated 6.3.1987, it does not mention under which provision of Section 20 (1) the exemption is granted, viz., whether under clause (a) or (b) thereof It is, however, conceded before us on behalf of the respondents that the exemption is not under clause (a) but. is under clause (b). We have, therefore, to examine the said exemption with reference to the provisions of clause (b). Section 20 (1)(b), as stated earlier, permits the State Government to exempt the vacant land from the provisions of Chapter III of the Act, if either on its own motion or otherwise, it is satisfied that the application of the said Chapter "would cause undue hardship to such person". The order of exemption may further 742 be subject to such conditions, if any, as in any be specified in it. The reasons for passing the order have further to be recorded in writing. The preamble of the present order states that by the earlier order dated 17.7.1985, the firm was granted exemption of the very same land for locating industry on conditions contained in it. One of the conditions was that the declarant shall not transfer the land in question without prior permission of the Government. The order then proceeds to refer to a letter dated 20.1.1987 of the Special Deputy Commissioner, Bangalore recommending the grant if permission to sell the said land on certain conditions. The order states that the Government has considered the undue hardship of the applicants and agrees to grant permission to sell the said land. The order does not discuss the undue hardship of the applicants. It is possible that the Government for that purpose relied upon the report of the Special Deputy Commissioner. It appears from the record that the report of the Special Deputy Commissioner is of 29.1.1987 and not of 20.1.1987. It is possible that there is a typographical error either in the record or in the order. Be that as it may. The said report of the Special Deputy Commissioner refers to the application made by the firm for grant of permission for the sale of the land "for their undue hardship '. The report then mentions the properties declared by the firm. All the properties, which are four in number and one of which is the land in dispute, are situate in Bangalore. There is no mention of the properties which admittedly the appellants had in Madras. What is necessary to note here is that it is also stated in the report that the land in dispute has a building of dwelling units and non dwelling units over a plinth area of 1618.80 sq. mtrs. constructed prior to the commencement of the Act. It also states that there is a factory on. the land running since 50 years which manufactures the polished stones. exported to foreign countries. The report then refers to what the firm had stated in its application for permission to sell the land. The application had mentioned among other things, as follows "[a] due to lot of competition and nationalisation of the black and pink granites by southern States including Karnataka, the firm had been suffering losses in the abovesaid business; [b] the partners of this firm are the partners of a firm known as "Woodlands" which has been carrying business in hoteliers and the said hotel is not making profits due 743 to the fact that the buildings are very old and due to paucity of funds; [el that firm has constructed twin theatres on the front side of the hotel just to diversify the business. [d] that they have incurred heavy loans from banks and private parties for the purpose of construction of theaters and the partners who are the partners of the applicant firm are responsible to liquidate the loans; [e] the Madras firm has suffered heavy loss to a tune, of Rs. 22,23,016.26 as on 31.3.1986." [The firm has under this head shown term loan (if Rs. 57.57 lakhs from the Andhra Bank and Rs. 19.03 lakhs from the Bank of India and Rs. 17.29 lakhs from the State Bank of Mysore. They have also mentioned Rs. 51.80 lakhs from private parties but their names are not disclosed. They have also mentioned other liabilities to the tune of Rs. 3.87 lakhs but their details are not given.] "[f] that the net capital and current accounts show a debit balance of Rs. 47.94 lakhs". [They also further state that if the loan from 1.4J986 to 31.12.1986 is taken into account, the debit balance of the partners would b e about Rs. 68 lakhs.] "[g] that the bank authorities have filed suits in the High Court of Madras to attach their properties both in Bangalore and Madras; [h] that a private party by the name of Sri P.L. Narayanaswamy Reddivar has also filed a suit in the Karnataka High Court to recover the loan due to them from, the Madras firm;" The application had further stated that the Madras firm is not able even to pay the interest as it is running at a huge loss. It had also been stated that it had become a mental torture to clear the liabilities and to 744 face the court cases pending for attachment. It had then gone on to state that there was no other way to dispose of the property in Bangalore, i.e., the disputed property to clear the above debts and that even the amount derived from the sale of the land in question would not be sufficient to liquidate the liabilities. The report further states that the firm had produced the statement of profit and loss account and balance sheet as on 31.3.1986 and copies of suits filed by the Bank of India in Madras and by the said Sri P.D. Narayanaswamy Reddiyar in the High Court of Karnataka. After only reciting the above facts but without mentioning even the price at which the land in dispute was proposed to be sold, the Special Deputy Commissioner has proceeded to recommend the permission to sell the land to the builders under Section 20 of the Act. The application for permission itself had not mentioned the price. The recommendation is in respect of not only 16194 sq. mtrs. but also in respect of 3444 sq. mtrs. It may be mentioned here that the firm had not made any application for exemption or permission to sell the said 3444 sq. mtrs. till at least 24th March, 1987. Yet, the Special Deputy Commissioner recommended in his report of 20/29.1.87 that the earlier exempted land of 16194 sq. mtrs. may be permitted to be sold along with the said 3444 sq. mtrs. He has of course recommended conditions to be imposed while granting the permission to sell. The State Government has also not independently enquired into the genuineness of the debts, the value of all the assets of the firm held by it in Bangalore, Madras or elsewhere, and whether the debts were as on the date of the commencement of the Act and whether any of the debts were incurred subsequent to the said date, what was the price at which the land was proposed to be sold, whether the assets other than the land in question could not have been sold to meet the debts and if at all it was necessary to sell the land in question, whether the sale only of a part of the land would not have relieved the firm of its obligations. Without such inquiry, the Government by its order in question granted permission to sell 16194 sq. of land. Close on the heels, however, followed another order dated 18.4.1987 by which the balance of 3444 sq. mtrs. was permitted to be sold relying upon another report of the Special Deputy Commissioner. The record before us shows that the said report is of 27.3.1989. We may, however, presume a typographical error and construe it as a report of 27.3.1987.However, what is worth nothing is that the application for 745 permission to sell the said 3444 sq. was filed by the firm allegedly on 24.3.87. It seems that with commendable alacrity the Special Deputy Commissioner made his report on the said application, on 27.3.1987 [if we are to read the year as 1987 instead of 1989 as the document shows]. What he has stated in his report may be summarised as under: That the Government by its order dated 6.3.1987 had already accorded permission to sell excess vacant land admeasuring 16194 sq. mtrs. The remaining excess vacant land held by the firm is 3444 sq. Orders had been passed as required under Section 8(4) of the Act on 9.1.1987 confirming the said excess vacant land. In the meanwhile, the firm presented another application on 24.3.1987 to the Government requesting for grant of exemption under Section 20 with permission to sell the said excess land admeasuring 3444 sq. mtrs. and another land admeasuring 5,648 sq. which consisted of land with building as per Section 4 (1)(b) of the Act, to the builders. That the firm stated that they had got the liabilities to the private parties [who were for the first time named there]. They are 13 in number. The liabilities were shown as having arisen between 20.1.1975 and 7.12.1977 with a specific mention that the liabilities were from a date prior to the coming into force of the Act. These liabilities to the private parties amounted to Rs. 4,11,279.56. In addition to 13 private creditors, Dena Bank is the 14th and the last editor shown there to whom Rs. 65,420.44 were owed from 15.4.1969. The firm had produced certificates from the creditors and a certificate from the auditors in support of the said liabilities. The report ends by stating that "in the cir cumstances explained above, the requests of the firm to grant exemption under Section 20 with permission to sell the said balance vacant land of 3444 sq. mtrs. to the builders may be considered. " It is not known when the reference of the said application was made to the Special Deputy Commissioner for giving his report. All that is known is that on 18.4.1987, the Government passed an order permitting the firm to sell the land admeasuring 3444 sq. mtrs. on the conditions mentioned therein. This order also does not discuss, like the earlier order of 6.3.1987, the various factors which need to be considered while granting permission to sell. It is, however, not necessary to discuss this aspect of the matter since we are allowing the appeals on the primary ground that the State Government had no power to grant permission to the firm to sell the land in question. If, however, it was necessary to go into the said question, it must be stated that there is much force in the contention of the appellants that the State Government had 746 not applied its mind to the relevant factors relating to the alleged indebtedness of the firm and hence the permission granted to the firm to sell the land was liable to be struck down on that ground also. 18.The first question that arises is whether the provisions of Section 20111 (b) permit the State Government to permit the sale of the excess vacant land to a third party. According to us, the answer has to be in the negative for reasons more than one. In the first instance, the central object of the Act, as is evident both from the preamble as well as the statement of objects and reasons, is to acquire vacant land in excess of the ceiling area and to prevent speculation and profiteering in the same and also to distribute the land equitably to subserve the common good. It is, therefore, per se against the said object to permit the sale of the excess vacant land for whatever reasons, including the undue hardship of the ' land holder. To construe the provisions of Section 20 [1] (b) so as to read in them the conferment of such power on the State Government for whatever reasons, is to distort and defeat the whole purpose of the legislation. Further, neither the plain language of the clause nor its context and intendment merit such construction. Section 20 itself is titled "Power to exempt". The power given to the State Governments under the Section is only to exempt certain excess vacant lands from the operation of the provisions of Sections 3 to 19 of Chapter III, none of which refers to the subject of transfer or restrictions on transfer. Those provisions relate to the calculation, declaration, acquisition and vesting of the excess vacant land. It is Chapter IV which relates to the transfers of vacant lands and the restrictions thereon. Further, from the scheme of the Act, it is evident that the transfers of the vacant land were to be regulated by the specific provisions made in it. They were not to be left to be governed by the unguided discretion of any authority including the State Government. The specific provisions for regulating the transfer have been incorporated in Sections 20 to 28 of the Act. Those provisions permit transfer of only vacant lands within the ceiling limit but without buildings, and of vacant lands in excess of the ceiling limit but with buildings thereon and subject to the conditions laid down there. It cannot be suggested that in defiance of the said provisions, Section 20 [1](b) vests power in the State Government to sanction sales of excess vacant lands with or without building thereon. Under Section 20 [1](b), the State Government can only exempt such excess vacant land from being acquired by it. The Government 747 cannot permit its transfer when the Act does not even by implication authorises it to do so but permits the transfer subject only to the conditions prescribed by Section 27. The legislature cannot be presumed to have prescribed different conditions for transfer of the same or similar lands. Secondly, Section 20 begins with the non obstante clause "notwithstanding anything contained in any of the foregoing provisions of this Chapter", meaning thereby Chapter III of the Act. The foregoing provisions of Chapter III viz. , Sections 3 to 19, as stated earlier, do not contain any provision permitting or restricting the transfer of the vacant land in excess of the ceiling limit. The provisions relating to the transfer of the vacant land are contained in Sections 26 to 28 of Chapter IV. Section 26 lays down restrictions on the transfer of the vacant land even if it is within the ceiling limit, while Section 27 places restriction on the transfer of any urban or urbanisable land with a building or portion of such building thereon for a period of ten years from the commencement of the Act or from the date on which the building is constructed, whichever is later, except with the previous permission of the competent authority. Section 27 as couched is wide in its implication and hence this Court by its decision in Bhuimsinghji 's case Supral restricted its operation to lands with buildings which are above the ceiling limit. However, the court has upheld the validity of the rest of the Act including that of Section 26. The result is, the restriction on transfer even of vacant land within the ceiling limit but without building is deemed to be valid. Thus the transfer of the vacant land without building even if it is within the ceiling limit and of the vacant land in excess of the ceiling limit with a building or a portion of the building are subject to the restrictions placed by the Act. Section 20, as pointed out earlier, is subject to the provisions of sections which follow it including Sections 26 to 28. Hence no construction can be placed on clause (b) of sub section [1] thereof which will be in conflict with the provisions of Sections 26 to 28. Thirdly, the provisions of clauses (a) and (b) of sub section [1] of Section 20 make it clear that what the legislature has in mind is an exemption for the purposes of the use of the land and not for the purposes of selling it. Sub section Ill (a) speaks of exemption of such land having regard to its location, the purposes for which the land is being or is proposed to be used and such other relevant factors as the circumstances of the case may require. The said provisions further require that even after taking into consideration the said circumstances, the State Government has to examine, before giving ex 748 emption, whether it is necessary or expedient in the public interest to do so. The Government is also empowered under the said provisions to grant such exemption conditionally. Sub section [1] (b) similarly, speaks of the undue hardship caused on account of the application of the provisions of Chapter III. Since as per the definition of "person" in Section 2 [i], the said provision is applicable not only to individuals, but also to a family, a firm, a company or an association or body of individuals whether incorporated or not, the hardship spoken of there is obviously one related to the user of the land. In fact, it is difficult to understand the precise purpose for which clause (b) has been enacted and the meaning of the expression "undue hardship" there. We are left only to speculate on the subject. The speculation itself may not be valid. The lands are held by companies, trusts and associations for industrial and commercial use, for the use of medical and educational institutes, sports, clubs, cultural activities, gardens, exhibitions etc. There is no special provision made in the Act to protect or take care of such users. The only provision under which a relief can be given to preserve and safeguard such user is Section 20 [1] (a). But that provision can be pressed into service only on the basis of the location of the land and its present or prospective user and only if it passes the test of public interest. However, all lands in excess of the ceiling limit may not strictly be necessary for such user, even if the user is in the public interest. Nevertheless, the withdrawal of a part of the land found to be in excess may cause an avoidable hardship to the land holder which may be disproportionate to the benefit that is to accrue to the public on account of such withdrawal. The excess of land may be meager or the severance of such excess land itself may result in unnecessary hardship. The hardship further has to be undue and not merely an ordinary hardship which is bound to be caused on account of the application of the Act to every holder of the excess vacant land. The undue hardship must be one which cannot be avoided except by granting a relief of exemption as contemplated by the said provision. The relief from financial hardship or from indebtedness to the land holder of such land is alien both to the object and the scheme of the Act. Even the debates in the Parliament do not refer to financial hardship or to the power of the State Government to exempt the land to permit its transfer on that account. To hold that indebtedness and financial hardship would entitle the landholder to get exemption for sale of the excess vacant land in his possession is to place the holders of land with debts in an advantageous position as against those who were unwise enough to manage their affairs with financial discipline. The classification of the owners of land for this purpose between debtors and 749 non debtors is itself irrational and has no plausible nexus with the object of the Act. Such a classification is, therefore, discriminatory and violative of Article 14 of the Constitution. It is not, therefore, possible to agree with the view taken by the Gujarat High Court in Thakorbhai Dajibhai Desai vs State of Gujarat, AIR 1980 Guj. 189 that the indebtedness of the land holder on the date of the commencement of the Act can be a ground for exemption under Section 20 [1] (b). Much less can such a ground vest the State Government with the power to permit the sale of the land. As has been explained earlier, under the Act no transfer of vacant land in excess of the ceiling limit is permitted whether with or without condition, if it is not encumbered with a building or a portion of a building. It can either be acquired by the State Government under Section 10 [3] of the Act or exempted from being acquired or permitted to be retained under Sections 20, 21 and 22 respectively. It can in no case be transferred. However, if it is so encumbered, the provisions of Section 27 become ap plicable to the transfer of the land and no transfer of such land can be effected in contravention of the provisions of the said section. There is nothing either in Section 20 or Section 27 which exempts the transfer of such land from the operation of the provisions of Section 27, assuming that Section 20 (1) (b) gives power to the State Government to permit the sale of such land. Fourthly, the exemption which is granted under Section 20 [1] (b) has to be supported by reasons to be recorded in writing. This requirement also contemplates an exemption which is related to and prompted by the use or better use of the land. If it is the financial hardship which was under the contemplation of the legislature, there was nothing easier than to make a reference to the same in clause (b) itself and to lay down guidelines for the inquiry into such hardship. Fifthly, the provisions of sub section [2] of Section 20, directly negative either exemption on account of financial hardship or for the purpose of the transfer of the land, since that sub section empowers the State Government to withdraw the exemption already granted if the State Government is satisfied that any of the conditions subject to which the exemption is granted either under clause (a) or clause (b) of sub section [1] is not complied with. It is inconceivable that the legislature had in mind the cancellation of the transfer including sale, which cannot be done when it has already taken place. Sixthly, as pointed out earlier, when the legislature wanted to provide 750 for sale or transfer of the vacant land, it has done so specifically in Chapter IV which exclusively deals with the "Regulation of transfer and use of urban property '. Sections 26,27 and 28 of the said Chapter together provide for sales of vacant land and for the registration of such sales. Section 26 restricts the sale of land even if it is within the ceiling limit except after giving notice in writing of the intended transfer to the competent authority. When such notice is given, the competent authority has the first option to purchase the land on behalf of the State Government and at a price calculated in accordance with the provisions of the Land Acquisition Act, 1894 or of any other corresponding law for the time being in force. It is only when the competent authority does not exercise its option to purchase the land within sixty days from the date of receipt of the notice, that it is lawful for the holder of the land to transfer the same to whomsoever he may like. The provisions of Section 26 further show that the price to be calculated for the purchase of the land when the competent authority exercises its option is on the basis that the notification under sub section [1] of Section 4 of the Land Acquisition Act or under the relevant provision of any other corresponding law had been issued on the date on which the notice was given of the intended transfer by the holder of the land, to the competent authority. This provision makes it abundantly clear that the exemption to be granted under Section 20 1 11 (b) is not for the sale of the excess vacant land. It is difficult to hold that the legislature which places restrictions on the transfer of the land within the ceiling limit would at the same time give a carte blanch for the sale of the land in excess of the ceiling limit. For it would mean, firstly, that the State Government cannot have an option to purchase such land and secondly the sale can be made by the holder of the excess land at any price that he chooses. In the first instance, such a reading of Section 20 Ill (b) would militate against one of the objects of the Act, viz., to prevent speculation and profiteering in the sale and purchase of land. Secondly, it would be patently discriminatory. Whereas the holder of vacant land within the ceiling limit would have to suffer the restrictions placed by Section 26, the holder of the vacant land in excess of the ceiling limit has not to do so. He would in fact be in a better position. The provisions with regard to granting such exemption subject to certain conditions contained in Section 20 [1] (b) do not in any way mitigate the discrimination. Firstly, when the statute itself places specific restrictions under Section 26 on the sale of land within the ceiling limit, it is not possible to hold that the conditions on which the State Government is empowered to permit the sale can be left to the discretion of the State Government. In fact, such discretion given to the State Government 751 would itself be violative of Article 14 of the Constitution the same being unguided and untrammeled. This also shows that the legislature has not given power to the State Government under Section 20 ill (b) to permit exemption for sale of the land. Otherwise it would have provided in the section itself for the conditions on which the permission to sell can be given and such conditions could not be less onerous than those provided under Section 26 of the Act. Secondly, if the power to permit sale of the land was intended to be given only for relieving the land holder of his financial hardship, the section could very well have provided for sale of such land under Section 26 of the Act or made provision in Section 20 ill (b) itself for the first option of the State Government to purchase it. It is not suggested that by not making such provision either in Section 20 111 (b) or Section 26, the legislature intended to permit the sale of such land at a price above the fair market price payable under the Land Acquisition Act, 1894 or the corresponding law and thereby encourage speculation and profiteering, the very evils which the Act intended to curb. Seventhly, section 27 in Chapter IV is another provision which prohibits the transfer of any urban or urbanisable land with a building whether constructed before or after the commencement of the Act or a portion only of such building, for a period of ten years from the commencement of the Act or from the date on which the building is constructed, whichever is later, except with the previous permission of the competent authority. Sub section 151 thereof again gives the first option to the competent authority to purchase such land and at a price either as agreed upon between the competent authority and the land holder or where there is no such agreement at a price to be calculated in accordance with the provisions of the Land Acquisition Act, 1894 or any other corresponding law for the time being in force. It is only if the option is not exercised within sixty days or the competent authority has not refused permission to sell the land that the holder of the land can legally transfer the same to whomsoever he may like. These provisions of Section 27 also militate against the conferment of the power on the State Government to permit exemption of land for the purpose of its transfer for the same 'reasons as are based on the provisions of Section 26 discussed above. The provisions of Section 27 refer to any urban or urbanisable land with a building. The vacant land in excess of the ceiling limit may be with or without a building. In fact, the provisions of Section 27 directly negative the conferment of such power, for the said provisions show, firstly, that the legislature did not want the 752 sale of any urban or urbanisable land with a building whether it is within or without the ceiling limit except in accordance with the provisions of Section 27. For Section 27 speaks of transfer of any urban or urbanisable land with a building or a portion only of such building, only with the permission of the competent authority and on the terms mentioned therein. This Court, as stated earlier, has invalidated the provisions of the said section to the extent they apply to the vacant land with a building when the land is within the ceiling limit. But it does apply to land in excess of the ceiling limit and with a building or a portion of it thereon. It is not possible to hold that there are two provisions, viz. Section 20 ill (b) and Section 27 operating at the same time in the same area. For the land permitted to be transferred under Section 20 [1] (b) may also be a land with a building or a portion of a building thereon. In one case the restriction imposed by Section 27 on the transfer would not apply and the State Government will be deemed to have been given power to permit the sale even in contravention of the provisions of Section 27. In another case, the holder of similar land will have to suffer the restrictions placed by Section 27. There is nothing either in Section 20 [1] (b) or Section 27 to exclude the operation of the section, as pointed out earlier. Eighthly, the provisions of Section 28 require a special procedure to be followed by the registering officer under the while registering documents under Section 17 [1] (a) to (e) of that Act when the transfer of the land is either under Section 26 or Section 27. Section 28 does not make any reference to the transfer permitted by the State Government under Section 20 [1] (b). In other words, the holder of the vacant land in excess of the ceiling limit has not to face the restriction on the registration of the document of transfer of his land provided under Section 28 when such transfer is permitted by the State Government under Section 20 [1] (b), whereas the holder of similar lend who does not approach the State Government has to suffer the same when he transfers the land held by him. The discrimination between the transfers under the different provisions is irrational and has no nexus with the object ought to be achieved by the classification. Lastly, if the power to exempt the land for sale is read in Section 20 [1] (b) with such conditions as the State Government may choose to place and if either the State Government chooses not to place any conditions or to place such conditions as are inconsistent with the provisions of Sections 29 and 30, it would create two sets of lands one where no restriction are applicable to the 753 construction thereon or only such restrictions as the State Government may choose to impose, and the other where the restrictions on constructions as provided by Sections 29 and 30 would be applicable. It is, therefore, more than clear that the provisions of Section 20 (11 (b) do not permit the State Government to exempt vacant land in excess of the ceiling limit for the purposes of transfer. N.P. SINGH, J. I agree with brother Sawant, J. that it is not possible to hold that State Government can grant exemption under Section 20 [1] (b) of the Act, to the holder of the excess vacant land, so that he may transfer the same in the manner he desires. The object of the Act being imposition of ceiling on vacant land in urban agglomerations and for acquisition of such land in excess of ceiling limit, with a view to prevent the concentration of urban land in the hands of a few persons, speculations and profiteering therein, will that object be not defeated if it is held that power under Section 20(1) of the Act can be exercised by the State Government to exempt the excess vacant lands, from the application of Chapter III of the Act, so that the holder thereof can transfer such lands? Sub section (1) of section 20 is in two parts. The exemption under clause (a) of the said sub section is to be granted in the public interest whereas under clause (b) the exemption is to be granted taking into consideration the "undue hardship" of the holder of the land in excess of the ceiling limit. Both the expressions "public interest" and "undue hardship" are com prehensive in nature. But at the same time, it is not easy even for courts to say as to whether under different circumstances the exemption was in the "public interest" or was necessary in the interest of the holder of the .land because of his "undue hardship". Under Indian conditions expression "undue hardship" is normally related to economic hardship. That is why from time to time many holders of lands in excess of the ceiling limit, while claiming exemption under clause (b) put forth their bad economic condition and indebtedness to claim exemption along with permission to sell such excess lands. In the modern set up many holders of such excess lands having undertaken commercial or industrial ventures with the help of the loans from the Banks and other financial institutions, put the plea of repayment of such loans as undue hardship for claiming exemption under clause (b) of section 20(1) aforesaid. How the holders of excess lands having incurred losses or having failed to discharge their debts can 754 claim exemption on the ground of "undue hardship" in such a situation? Section 4 while fixing the ceiling limit, under subsection (3) takes note of the fact that "where in respect of any vacant land any scheme for group housing has been sanctioned by an authority competent in this behalf immediately before the commencement of this Act, then, the person holding such vacant land at such commencement shall be entitled to continue to hold such land for the purpose of group housing". But at the same time under sub section (4) of section 4 it has been specified that "if on or after the 17th day of February, 1975, but before the appointed day, any person has made any transfer by way of sale, mortgage, gift, lease or otherwise (other than a bona fide sale under a registered deed for valuable consideration) of any vacant land held by him and situated in such State to any other person, whether or not for consideration, then, for the purposes of calculating the extent of vacant land held by such person the land so transferred shall be taken into account, without prejudice to the rights or interests of the transferee in the land so transferred". Similarly in section 5 it has been provided that "where any person who had held vacant land in excess of the ceiling limit at any time during the period commencing on the appointed day and ending with the commencement of this Act, has transferred such land or part thereof by way of sale, mortgage, gift, lease or otherwise, the extent of the land so transferred shall also be taken into account in calculating the extent of vacant land held by such person". When different provisions take into consideration the lands already transferred by the holder, (i) between the period 17th February, 1975 and the appointed day; (ii) as well as between the period commencing from the appointed day and ending with the commencement of the Act, it should not be easily inferred that the framers of the Act desired that after the commencement of the Act while exercising the power of exemption under section 20(1)(b) permission should be granted to holders of such excess lands to transfer such lands to third parties in order to meet their financial liabilities. Section 21 is yet another provision in the Act under which excess vacant land is not to be treated as excess. Under the said Section exemption is to be granted in respect of such excess vacant land, if the holder undertakes to utilise the same for the constructions of dwelling units for accommodation of the weaker sections of the society in accordance with the scheme approved by the competent authority or the State Government subject to such terms and conditions as may be prescribed. If Section 21 provides for granting exemption in respect of excess land held by the holder only on a specific condition that the holder shall utilise the same 755 for the construction of dwelling units for weaker section, to serve a public cause, how the framers of the Act could have conceived the grant of exemption under Section 20(1) (b) to the holder of the excess land, only to serve his interest, by selling such excess lands. If it is held that the State Government can exempt the vacant land held by the land holder in excess of the ceiling limit, from the applicability of the provisions of Chapter III of the Act, in order that the said holder sells such land to liquidate his debts which amounts to an "undue hardship", then there will be an apparent conflict between the interest of the land holder and the public interest. In the interest of the land holder the maximum price fetched by sale of such land will be the solution of his hardship, whereas that will run counter to the object of the Act to prevent " speculations and profiteering". It is futile to urge that even in such transfers the dominant purpose of the legislation to prevent "the concentration of urban land in hands of few persons" is none the less served. The concentration of urban land in hands of few persons has to be prevented with a view to bring about "an equitable distribution of land in urban agglomerations to subserve the common good". Section 23 prescribes the priorities for disposal or distribution of excess vacant lands after such lands vest in the State under the provisions of the Act. In the case of Bhim Singhji vs Union of India, , it has been said: "The definition of the word 'industry ' in clause (b) of the Explanation to that section is undoubtedly unduly wide since it includes "any business, profession, trade, undertaking or manufacture". If sub section (1) of Section 23 were to stand alone, no doubt could have arisen that the Urban Land Ceiling Act is a facade of a social welfare legislation and that its true, though concealed, purpose Is to benefit favored private individuals or associations of individuals. But the preponderating provision governing the disposal of excess vacant land acquired under the Act is the one contained in sub section (4) of Section 23 whereby all vacant lands deemed to have been acquired by the State Government under the Act "shall be disposed of . to subserve the common good". The provisions of sub section (4) are "subject to the provisions of sub sections (1), (2) and (3)" but the provisions of sub section (1) 756 are enabling and not compulsive and those of sub sections (2) and (3) are incidental to the provisions of sub section (1). The disposal of excess vacant lands must therefore be made strictly in accordance with the mandate of sub section (4) of Section 23, subject to this, that in a given case such land may be allotted to any person, for any purpose relating to, or in connection with, any 'industry ' or for the other purposes mentioned in sub section (1), provided that by such allotment, common good will be subserved. The governing test of disposal of excess land being 'social good ', any disposal in any particular case or cases which does not subserve that purpose will be liable to be struck down as being contrary to the scheme and intendment of the Act. " If the vacant lands which have vested in the State are also to be disposed of strictly keeping in view the spirit and object of the Act, how under section 20(1)(b) exemption can be granted to holders of such lands to dispose of such lands in the manner they like, the persons they prefer, the price they dictate, for clearing their debts? If it is conceded that indebtedness amounts to an undue hardship, then it may cover the debts incurred even after the commencement of the Act. The ceiling limit has been fixed by section 3 with reference to the date of the commencement of the Act, but exception can be granted till such excess lands vest in the State Government under sub section (3) of section 10, after publication of the notification, in terms of the said sub section. Although it was not possible even for the framers of the Act to exhaustively indicate as to what shall be deemed to be "undue hardship" within the meaning of section 20(1)(b) but it would have been better, if it had been illustratively indicated, leaving the rest for the courts to decide. 20.1 have made no reference to Section 26 or Section 27 of the Act, while considering the question whether on the ground of "undue hardship" the holder of the excess vacant land can be granted exemption and then permission to sell such excess land, because he is financially crippled or burdened with liabilities. In the case of Blim Singhji vs Union of India (supra) this court held that Section 27(1) in so far as it imposes restriction on transfer of any urban or urbanisable land with a building or of a portion of such building which is within ceiling area, was invalid. The said sub section (1) of Section 27 757 was struck down being unconstitutional. Section 26 of the Act also imposes certain restrictions on transfer of vacant land even within ceding limit. It can be urged that Section 26(1) suffers from the same vice which was pointed out in respect of sub section (1) of Section 27 of Act, in the aforesaid case of bhim Singhji vs Union of India (supra) by this Court. But neither in the aforesaid case nor in this case this court was or is concerned with Section 26 and as such, according to me, it is not necessary to express any opinion in respect of Section 26 of the Act, while considering the issue involved in the present appeals. ORDER 21.For the reasons given by us above, we are of view that the provisions of Section 20 [1] (b) of the Act do not permit the State Government to give exemption to the vacant in excess of the ceiling limit for the purposes of transferring the same. 22.In view of our conclusion as above, it is not necessary to go into the further question, viz., if the State Government has such power, in which circumstances it can be exercised and whether financial hardship such as the indebtedness of the land holder is sufficient to warrant such exemption or not and with respect to which date such indebtedness is to be assessed and in what manner, and whether in the present case, the said aspects of the indebtedness were investigated or properly investigated or not. For this very reason, we also do not propose to go into the other question regarding the mala fides on the part of the authorities while granting permission to the firm to sell the land to the builders in question. 23, Since we have come to the conclusion that the State Government has no power to grant permission to sell the land under Section 20 [1] (b), the orders dated 6.3.87 and 18.4.87 granting exemption and permission to the firm for sale of the land are void ab initio having been passed without jurisdiction. Accordingly, the sale deed dated 30.9.1987 executed by the 2nd respondent firm in favour of the 3rd respondent builders is held invalid and inoperative, as the respondent firm had no legal right to transfer the land in favour of the builders. We accordiigly allow the appeals and set aside the impugned order of the High Court. The respondents State of Karnataka, M/s. Narayanaswamy & Sons and M/s. Reevajethu, Builders & Developers will pay the costs to the appellants in one set. G.N. Appeals allowed.

The second respondent, a partnership firm was carrying on the business of manufacturing and selling polished granites. It was running its factory in a small portion of the land owned by it and the rest of the land was vacant when the Urban Land (Ceiling & Regulation) Act, 1976 was made applicable to that area. The firm made an application to. the State Government for exemption of the vacant land from the provisions of 715 716 the said Act, and the exemption was granted subject to certain conditions. The Competent Authority under the Act came to the conclusion that there was some excess vacant land and directed the publication of a notification u/s 10(1) of the Act for acquisition of the same. Later, the firm made an application to the State Government for permission to sell the vacant land to the third respondent (builders) mainly on the ground that the firm had been incurring huge losses in its business. On 6.3.1987 the State Government permitted the firm to sell the land to the builders, only to the extent of 16194 sq. mtrs. Again the firm riled another application to transfer the remaining 3444 sq. mtrs. of land to the builders, and on 18.4.1987 the State Government permitted the same subject to certain conditions. Consequently, by a sale deed dated 30.9.1987 the firm entered into a deed of absolute sale with the builders for sale of the entire vacant land. Writ Petitions by way of Public Interest Litigation were riled in the High Court challenging the exemptions granted by the State Government, for declaring the sale deed void and inoperative and for acquiring the land for the weaker sections. A Single Judge allowed the Writ Petitions and gave certain directions including sale of plots to be carved out from the land and only such number of plots as would be necessary to discharge the debts of the firm were to be sold and the remaining portion of the vacant land was to be acquired under the Act. He also held that there were no mala fides in the State Government granting exemptions by its orders date 63.1987and 18.4.1987. Against the decision of the Single Judge, appeals were preferred before the Division Bench of the High Court and the Division Bench set aside the findings as well as the direction given by the Single Judge. Aggrieved by the Judgment of the Division Bench, the appellants preferred the present appeals. Allowing the appeals, this Court, HELD: BY THE COURT. I.I.The provisions of Section 20(1)(b) of the Urban Land (Ceiling and Regulation) Act, 1976 do not permit the State Government to give exemption to the vacant land in excess of the ceiling limit for the purposes 717 of transferring the same. [757 C] 1.2.The orders dated 63.1987 and 18.4.1987 granting exemption and permission to the firm for sale of the land are void ab initio having been passed without jurisdiction. Accordingly, the sale deed dated 30.9.1987 executed by the 2nd respondent firm in favour of the 3rd respondent. builders is invalid and inoperative, as the respondent firm had no legal right to transfer the land in favour of the builders. [757 F, G] 13.In view of the above conclusions, it is not necessary to go into the questionsas to whether the State Government has the power to grant exemption; thecircumstances in which it can be exercised; and whether financial hardship such as the indebtedness of the land holder is sufficient to warrant such exemption or not; and the date on which such indebtedness is to be assessed and in what manner; and whether in the present case, the said aspects of the indebtedness were properly investigated or not for this very reason, there is no need to go into the other question regarding the mala fide on the part of the authorities while granting permission to the firm to sell the land to the builders in question. [757 D, E] Per Sawant, J. 1.The provisions of Section 20(1)(b) of the Urban Land (Ceiling & Regulation) Act, 1976 do not permit the State Government to exempt vacant land in excess of the ceiling limit for the purposes of transfer. [753 B] 2.The central object of the Act, as is evident both from the preamble as well as the statement of objects and reasons, is to acquire vacant land in excess of the ceiling area and to prevent speculation and profiteering in the same and also to distribute the land equitably to subserve the common good. It is, therefore, per se against the said object to permit the sale of the excess vacant land for whatever reasons, including the undue hardship of the land holder. To construe the provisions of Section 20 (1) (b) so as to read in them the conferment of such power on the State Government for whatever reasons, is to distort and defeat the whole purpose of the legislation. Further, neither the plain language of the clause nor its context and intendment merit such construction. Section 20 itself is titled "Power to exempt". The power given to the State Government under the Section is only to exempt certain excess vacant lands from the operation of the provisions of Sections 3 to 19 of Chapter 111, none of which refers to the subject of transfer or 718 restrictions on transfer. Those provisions relate to the calculation. declaration, acquisition and vesting of the excess vacant land. It is Chapter IV which relates to the transfers of vacant lands and the restrictions thereon. Further, from the scheme of the Act. it is evident that the transfers of the vacant land were to be regulated by the specific provisions made in it. They were not to be left to be governed by the unguided discretion of any authority including the State Government. The specific provisions for regulating the transfer have been incorporated in Sections 26 to 28 of the Act. Those provisions permit transfer of only vacant lands within the ceiling limit but without buildings, and of vacant lands in excess of the ceiling limit but with buildings thereon and subject to the condition s laid down there. It cannot be suggested that in defiance of the said provisions, Section 20(1)(b) vests power in the State Government to sanction sales of excess vacant lands with or without building thereon. Under Section 20(1) (b), the State Government can only exempt such excess vacant land from being acquired by it. The Government cannot permit its transfer when the Act, does not even by implication, authorise it to do so but permits the transfer subject only to the conditions prescribed by Section 27. The legislature cannot be presumed to have prescribed different conditions for transfer of the same or similar lands. [746 C H; 747 A] 3. The restriction on transfer even of vacant land within the ceiling limit but without building is deemed to be valid. Thus the transfer of the vacant land without building even if it is within the ceiling limit and of the vacant land in excess of the ceiling limit with a building or a portion of the building are subject to the restrictions placed by the Act. Section 20 is subject to the provisions of sections which follow it including Sections 26 to 28. Hence no construction can be placed on clause (b) of sub section (1) thereof which will be in conflict with the provisions of sections 26 to 28. [747 E, F] Maharao Sahib Shri Bhim? Singhji vs Union of India, , referred to. Since as per the definition of "person" in Section 2(i), the said provision viz. S.20(1) (a) is applicable not only to individuals, but also to a family, a firm, a company or an association or body of individuals whether incorporated or not, the hardship spoken of there, is obviously one related to the user of the land. In fact, it is difficult to understand the precise purpose for which clause (b) has been enacted and the meaning of the expression "undue hardship" there. One is left only to speculate on the subject. The 719 speculation itself may not be valid. The lands are held by companies, trusts and associations for industrial and commercial use, for the use of medical and educational institutes, sports, clubs, cultural activities, gardens, exhibitions etc. There is no special provision made in the Act to protect or take care of such users. The only provision under which a relief can be given to preserve and safeguard such user is Section 20(1) (a). But that provision can be pressed into service only on the basis of the location of the land and its present or prospective user and only if it passes the test of public interest However, all lands in excess of the ceiling limit may not strictly be necessary for such user, even if the user is in the public interest. Nevertheless, the withdrawal of a part of the land found to be in excess may cause an avoidable hardship to the land holder which may be disproportionate.to the benefit that is to accrue to the public on account of such withdrawal. The excess of land may be meager or the severance of such excess land itself may result in unnecessary hardship. The hardship further has to be undue and not merely an ordinary hardship which is bound to be caused on account of the application of the Act to every holder of the excess vacant land. The undue hardship must be one which cannot be avoided except by granting a relief of exemption as contemplated by the said provision. The relief from financial hardship or from indebtedness to the land holder of such land is alien both to the object and the scheme of the Act. The classification of the owners of land for this purpose between debtors and non debtors is itself irrational and has no plausible nexus with the object of the Act. Such a classification is, therefore, discriminatory and violative of Article 14 of the Constitution. (748 B H; 749 Al Thakorbhai Dajibhai Desai vs State of Gujarat, AIR 1980 Guj. 1891, overruled. 5.The exemption which is granted under Section 20(1)(b) has to be supported by reasons to be recorded in writing. This requirement also contemplates an exemption which is related to and promoted by the use or better use of the land. If it is the financial hardship which was under the contemplation of the legislature, them was nothing easier than to make a reference to the same in clause (b) itself and to lay down guidelines for the inquiry into such hardship. The provisions of sub section (2) of Section 20, directly negative either exemption on account of financial hardship or for the purpose of the transfer of the land, since that sub section empowers the State Government to withdraw the exemption already granted If the 720 State Government is satisfied that any of the conditions subject to which the exemption is granted either under clause (a) or clause (b) of sub section (1) is not complied with. It is inconceivable that the legislature had in mind the cancellation of the transfer including sale, which cannot be done when it has already taken place. [749 E G] 6.It cannot be said that the legislature which places restrictions on the transfer of the land within the ceiling limit would at the same time give a carte blanche for the sale of the land in excess of the ceiling limit. For it would mean, that the State Government cannot have an option to purchase such land and that the sale can be made by the holder of the excess land at any price that he chooses. Such a reading of Section 20(i)(b) would militate against one of the objects of the Act, viz., to prevent speculation and profiteering in the sale and purchase of land. Moreover, it would be patently discriminatory. Whereas the holder of vacant land within the ceiling limit would have to suffer the restrictions placed by Section 26, the holder of the vacant land in excess of the ceiling limit has not to do so. He would in fact be in a better position. The provisions with regard to granting such exemption subject to certain conditions contained in Section 20(1)(b) do not in any way mitigate the discrimination. When the statute itself places specific restrictions under Section 26 on the sale of land within the ceiling limit, it is not possible to reach a conclusion that the conditions on which the State Government is empowered to permit the sale can be left to the discretion of the State Government. In fact, such discretion given to the State Government would itself be violative of Article 14 of the Constitution, the same being unguided and untrammeled This also shows that the legislature has not given power to the State Government under Section 20(1)(b) to permit exemption for sale of the land. Otherwise it would have provided in the section itself for the conditions on which the permission to sell can be given and such conditions could not be less onerous than those provided under Section 26 of the Act. If the power, to permit sale of the land was intended to be given only for relieving the land holder of his financial hardship, the section could very well have provided for sale of such land under Section 26 of the Act or made provision in Section 20(1)(b) itself for the first option of the State Government to purchase it. It cannot be said that by not making such provision either in Section 20(1)(b) or Section 26, the legislature intended to permit the sale of such land at a price above the fair market price payable under the Land Acquisition Act, 1894 or the corresponding law and thereby encourage 721 speculation and profiteering, the very evils which the Act intended to curb A [750 E H; 751 A C] 7.The provisions of Section 27 also militate against the conferment of the power on the State Government to permit exemption of land for the purpose of its transfer. The provisions of Section 27 refer to any urban or urbanisable land with a building. The vacant land in excess of the ceiling limit may be with or without a building. In fact, the provisions of Section 27 directly negative the conferment of such power, for the said provisions show that the legislature did not want the sale of any urban or urbanisable land with a building whether it is within or without the ceiling limit except in accordance with the provisions of Section 27. For Section 27 speaks of transfer of any urban or urbanisable land with a building or a portion only of such building, only with the permission of the competent authority and on the terms mentioned therein. This Court has invalidated the provisions of the said section to the extent they apply to the vacant land with a building when the land is within the ceiling limit. But it does apply to land in excess of the ceiling limit and with a building or a portion of it thereon. It is not possible to accept that there are two provisions, viz. Section 20(1)(b) and Section 27 operating at the same time in the same area. Also there is nothing either in Section 20(1)(b) or Section 27 to exclude the operation of Section 27. [751 G, H; 752 A] Maharao Sahib Shri Bhim Singhji etc. vs Union of India 8.Section 28 does not make any reference to the transfer permitted by the State Government under Section 20(1) (b). The holder of the vacant land in excess of the ceiling limit has not to face the restriction on the registration of the document of transfer of his land provided under Section 28 when such transfer is permitted by the State Government under Section 20(1)(b), whereas the holder of similar land who does not approach the State Government has to suffer the same when he transfers the land held by him. The discrimination between the transfers under the different provisions is irrational and, has no nexus with the object ought to be achieved by the classification. [752 E G] 9.If the power to exempt the land for sale is read in Section 20 (1) (b) with such conditions as the State Government may choose to place and if either the State Government chooses not to place any conditions or to 722 place such conditions as are inconsistent with the provisions of Sections 29 and 30, it would create two sets of lands one where no restrictions are applicable to the construction thereon or only such restrictions as the State Government may choose to impose, and the other where the restrictions on constructions as provided by Section 29 and 30 would be applicable. [752 G H; 753 A] Per N.P. Singh, J. (Concurring): 1.The object of the Act being imposition of ceiling on vacant land in urban agglomerations and for acquisition of such land in excess of ceiling limit, with a view to prevent the concentration of urban land in the hands of a few persons, speculations and profiteering therein, that object will be defeated if the power under Section 20(1) of the Act is exercised by the State Government to exempt the excess vacant lands, from the application of Chapter III of the Act, so that the holder thereof can transfer such lands. [753 C, D] 2.Under Indian conditions the expression "undue hardship" is normally related to economic hardship. That is why from time to time many holders of lands in excess of the ceiling limit, while claiming exemption under clause (b) put forth their bad economic condition and indebtedness to claim exemption along with permission to sell such excess lands. In the modern set up many holders of such excess lands having undertaken commercial or industrial ventures with the help of the loans from the Banks and other financial institutions, put the plea of repayment of such loans as undue hardship for claiming exemption under clause (b) of section 20(1) aforesaid. When different provisions take into consideration the lands already transferred by the holder, between the period 17th February, 1975 (as specified in sub. (4) of S.4; and the appointed day as well as between the period commencing from the appointed day and ending with the commencement of the Act, it should not be easily inferred that the framers of the Act desired that after the commencement of the Act while exercising the power of exemption under section 20(1) (b) permission should be granted to holders of such excess lands to transfer such lands to third parties in order to meet their financial liabilities. [753 G, H; 754 A F] 3.If Section 21 provides for granting exemption in respect of excess land held by the holder only on a specific condition that the holder shall utilise the same for the construction of dwelling units for weaker section, to 723 serve a public cause, the framers of the Act could not have conceived the grant of exemption under Section 20(1)(b) to the holder of the excess land, only to serve his interest, by selling such excess lands. [754 H; 755 A F] 4.If the State Government can exempt the vacant land held by the land holder in excess of the ceiling limit, from the applicability of the provisions of Chapter III of the Act, in order that the said holder sells such land to liquidate his debts which amounts to an "undue hardship", then there will be an apparent conflict between the interest of the land holder and the public interest. In the interest of the land holder the maximum price fetched by sale of such land will be the solution of his hardship, whereas that will run counter, to the object of the Act to prevent speculations and profiteering". It cannot be said that even in such transfers the dominant purpose of the legislation, to prevent "the concentration of urban land in hands of few persons" is nonetheless served. The concentration of urban land in hands of few persons has to be prevented with a view to bring about "an equitable distribution of land in urban agglomerations to subserve the common good". [755 B D] 5.If the vacant lands which have vested in the State are also to be disposed of as stipulated under S.23 strictly keeping in view the spirit and object or the Act, exemption u/s20(1)(b) cannot be granted to holders of such lands to dispose of the lands in the manner they like, to the persons they prefer, at the price they dictate, for clearing their debts. If it is conceded that indebtedness amounts to an undue hardship, then it may cover the debts incurred even after the commencement of the Act. [756 D, E] 6.This Court has already held that Section 27(1) in so far as it imposes restriction on transfer of any urban or urbanisable land with a building or of a portion of such building which is within ceiling area, was invalid. The said sub section (1) of Section 27 was struck down being unconstitutional. Section 26 of the Act also imposes certain restrictions on transfer of vacant land even within ceiling limit. It can therefore be stated that Section 26(1) suffers from the same vice. But neither in that case nor in this case, this court was or is concerned with Section 26. As such, it is not necessary to express any opinion in respect of Section 26 of the Act, while considering the issue involved in the present appeals. [756 G, H; 757 A, B] Maharao Sahib Shri Bhim Singhji etc. vs Union of India & Ors., , referred to.

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Appeal No. 372 of 1979. From the Judgement and Order dated 25.5.1978 of the Delhi High Court in Civil Writ Petition No. 1494 of 1973. Dr. N.M. Ghatate and D.N. Mishra (for J.B.D. & Co.) for the Appellant. V.C. Mahajan, C. Ramesh and C.V. Subba Rao for the Respon dents. The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J. The appeal is preferred against the judgment of the Delhi High Court allowing the writ petition filed by the second respondent M/s Ferro Alloys Corporation Ltd. The writ petition was directed against the judgment and order of the Government of India, Ministry of Finance, dated September 19, 1973 in an appeal preferred under paragraph (9) of the Tax Credit Certificate (Exports) Scheme, 1965. The second respondent is the manufacturer cxportcr of ferro manganese and chrome concentrates. During the year 1964 65 (from February 28, 1965 to June 5, 1965) the second respondent entered into a number of agreements with the foreign buyers for the sale of the aforesaid two commodities. The export was routed through the M. M.T.C. the appellant herein, to bring it within the system of private barter introduced by the Government of India with a view to encourage exports. It would be appropriate to notice the essential features of the barter system in vogue during the relevant period at this stage. The main objective behind the system was to provide a mechanism which would result in increased export of particular commodities which were ordinarily difficult to sell abroad and to destinations, in which the selling countries were not able to _Pet a foot hold. This objective was sought to be achieved by linking them to imports of an equivalent or 15 lesser value of essential commodities, which, in any event, the country had to import. All barter proposals were scrutinized in the first instance by the M.M.T.C. and then by the Barter Committee. The essential stipulations were: "(i) All imports made under barter deals were subject to such sale price and distribution control as were laid down by the Government and (ii)All barter deals were to be routed through S.T.C./ M.M.T.C. unless otherwise decided upon by barter committee." As and when approval was given by the Government of India, a letter of indent used to be issued by the M.M.T.C. to the bartering firm or the local supplier, as the case may be. (In this case, there was no bartering firm. Ferro Alloys was directly sending the goods). As far as purchase and sale contracts were concerned, the M.M.T.C. insisted that there should be one contract of sale between the local supplier and the M.M.T.C. and another contract of sale by the M.M.T.C. to the foreign buyer on principal to principal basis. The foreign exchange so generated under this arrangement was the basis for issue of import licences, which were issued in the name of M.M.T.C. with the letter of authority in favour of the bartering firm or the local supplier, as the case may be. This enabled the bartering firm/local supplier to import the approved commodity under its approval barter and thus he in a position to recoup the losses incurred by it in arranging the supply or in supplying, as the case may be of export commodities to the M.M.T.C. It was agreed and understood that the ferro alloys should intimate the foreign buyer to enter into a direct contract with the M.M.T.C. treating it as the seller. It was also agreed that G. R.I. Form prescribed by the Reserve Bank of India under the Rules framed under the Foreign Exchange Regulation Act (for accounting the receipt of foreign exchange) was to be signed by the M.M.T.C. showing it as the exporter and seller vis a vis the foreign buyer. Letters of credit was also to be opened in the name of M.M.T.C.? which was to be assigned to the Feffo alloys. This was done with a view to enable the Ferro alloys to receive the payment directly for the goods supplied to M.M.T.C. The Shipping Bill, which is a document prescribed under the Customs Act, was also to be made out 16 showing M.M.T.C. as the exporter. The transactions were gone through. Dispute arose between the parties when the question of issuance of a tax credit certificate under Section 280 (Z) (C) of the Income Tax Act arose. Sub section (1) of section 280 (Z) (C), as in force at the relevant time, read as follows "Tax Credit Certificate in relation to exports (1) Subjects to the provisions of this section. a person who exports any goods or merchandise out of India after the 28th day of February, 1965, and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and the rules made thereunder, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding fifteen per cent on the amount of such sale proceeds. " A reading of the sub section shows that the tax Credit Certificate is issued to the person "who exports any goods or merchandise out of India after the 28th day of February, 1965, and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947 and the Rules made thereunder. " Question, therefore, arose who is the person, in the case of this transaction, who can be said to have exported the goods and received the sale proceeds in the shape of foreign exchange. The matter was taken in appeal before the Government of India under paragraph (9) of the Tax Credit Certificate Exports Scheme, 1965. On an elaborate consideration of the bartering scheme and the several documents which came into existence in connection with the transactions between the parties, the Government of India held that the M.M.T.C. must be held to be the exporter for the purpose of Section.280(Z)(C) and not the Ferro alloys. This order was challenged by Ferro alloys by way of a writ petition in the High Court. The High Court allowed the writ petition on the following reasoning: "While the terms of the scheme of barter and the 17 arrangement between the exporter and the Corporation visualizes in theory that the contracts to be entered into between the exporter and the foreign buyers would be duly substituted by principal to principal contracts between the foreign buyer and the Corporation as well as the Corporation and the Indian supplier of the goods, so that the Corporation virtually gets substituted for the exporter for all external appearance, in actual practice, however, it appears that the substituted contracts are rarely executed and were, in any event, not executed in the present case at either of the two ends although the letter of credits were opened by the foreign buyers in favour of the Corpo ration and the shipments were made in some cases in the name of the Corporation on account of the exporter while in the others in the name of the exporter on account of the Corporation. No consideration, however, passed between the Corporation and the exporter on account of any sale of the commodity to the Corporation. The letters of credit being transferable are endorsed immediately on receipt in favour of the exporter by the corporation and the sale proceeds are directly realized by the exporters through their bankers and the commission of the Corporation agreed to is paid by the exporter to the Corporation. The declaration under Section 12 of the Foreign Exchange (Regulations) Act in Form GR I contains the name of the Corporation as the exporter. But the form lists the name of the exporters ' banker as the banker concerned. " In other words, the High Court 's approach was that while for external appearances, the corporation was given out as the exporters, Ferro alloys was the real exporter for all purposes and it was Ferro alloys which earned and received the foreign exchange. M.M.T.C. got only its commission of 2% and nothing more. Alternatively held the High Court even if it is held that the documents executed between the parties had the legal effect of transferring title in the goods to and in favour of the Corporation, even so Ferro alloys must be deemed to be 18 the real exporter for the purposes of Section 280(Z)(C), having regard to the objective underlying the said section viz., providing an additional incentive to the real exporter. The correctness of the said view is questioned in this appeal. Though the second respondent, Ferro alloys Corporation Ltd., has been served, no one appears on its behalf. We are, therefore, obliged to dispose of this appeal only with the assistance of the counsel for the M.M.T.C. May be that there are factors in this case supporting the contentions of both the parties. In such a case, we have to decide the question on a totality of relevant factors applying the test of predominance. It is true that there was initially an agreement or contract between Ferro alloys and the foreign buyer for export of manganese and other goods but that was substituted and superseded by the two contracts entered into with respect to the very same goods. One contract was between Ferro alloys and M.M.T.C. for sale of the said goods to and in favour of M.M.T.C. and the other was a sale by M.M.T.C. to the foreign buyer. It is significant to notice that these contracts were on principal to principal basis. Apart from this fact all the statutory documents viz., G. R.I. Form prescribed under the Foreign Exchange Regulation Act, 1947 and the shipping bill prescribed by the Customs Act were made out in the name of M.M.T.C. showing it as the exporter. We have perused the Form G.R.I.Column 1 pertains to exporter 'sname. Against this column is shown Minerals and Metals Trading Corporation of India Limited '. The Form contains a declaration to be signed by the exporter declaring that he is the seller/consignor of goods and a further undertaking that they will deliver to the Bank mentioned in the said Form, the foreign exchange resulting from the export of the goods mentioned therein. It was signed by the M.M.T.C. Letters of credit were opened in the name of M.M.T.C. All this was done as required by the system of barter. Ferro alloys availed of this system presumably because it was to its advantage. In fact, it appears that it was not able to sell the said goods otherwise. Be that as it may, whether by choice or for lack of alternative, it chose to route its goods through M.M.T.C. Is it open to the Ferro alloys now to say that all this must be ignored in the name of "external appearances" and it must be treated as the real exporter for the purposes of Section 280(Z)(C). It wants to be the gainer in both the events. A case of "heads I win, tails you lose. " As against the above circumstances, the factors appearing in favour of the 19 Ferro alloys are the following: The contract between the parties spoke of "commission" of two per cent payable to the M.M.T.C. Use of the expression "commission", it is pointed out, is indicative of the fact that M. M.T.C. was only an agent. For the M.M.T.C., it is explained that it was one way of describing the difference between the export price and the sale price. It is submitted that the said feature must be understood in the context of the totality of the scheme, which was not a mere commercial scheme but a scheme conceived in the interest of foreign trade, economy and balance of payments. Ferro alloys also relied upon a certificate given by the foreign buyer stating that the goods in question were sold to it by Ferro alloys. But as rightly pointed out by the Government of India, this certificate was obtained long after the relevant transactions were over and evidently to buttress its case with respect to the tax credit certificate. Not much significance can be attached to it, also because it is in the teeth of the contracts signed by the foreign buyer with the M.M.T.C. with respect to the very same It is also pointed out that some of the documents required to be executed according to (he system of barter were not actually executed between the parties. May be so. The fact yet remains that the entire export was done through M.M.T.C. in accordance with the system of barter. There is no half way house; either it is no '? barter system or it is. This is an undisputed fact as are the several statutory documents made out in the name of M.M.T.C., referred to here in before. On a consideration of all the relevant factors and circumstances, we are of the opinion that the M.M.T.C. must be held to be the exporter for the purpose of Section 280(Z)(C). The entire system of barter and the several documents executed in that behalf including those required by statutory provisions cannot be explained away as mere "external appearances". The Ferro alloys cannot come to M.M.T.C. when it is profitable to it and disavow it when it is not profitable to it. It cannot have it both ways. The title to goods passed to M.M.T.C. by virtue of the several documents executed between the parties. Indeed, that was the fulcrum of the entire scheme of Barter. We are also not convinced with the alternative reasoning of the High Court that even if it is held that the title to the goods passed to M.M.T.C., even so Ferro alloys must be held to be the real exporter, in view of the objective underlying Section 280(Z)(C). If M.M.T. C. has acquired the title to the goods and is the exporter for all other purposes it equally the exporter 20 for the purposes Section 280(Z)(C). There can he no dichotomy of the nature propounded by the High Court. We are, therefore of the opinion that the High Court was not right in holding to the contrary. The appeal is allowed. The judgment and order of the High Court of Delhi is set aside and the order of the Government of India dated September 19, 1973 is restored. The writ petition filed by the second respondent in the Delhi High Court is dismissed. No costs. G. N. Appeal allowed.

The Second Respondent (Ferro Alloys Corporation), manufac turer exporter of ferro maganese and chrome concentrates, entered into a number of agreement . with foreign buyers for sale of the said commodity. The export was routed through the appellant to bring it within the system of private barter introduced by the Government of India with a view to encourage exports. The main objective of barter system was to provide a mechanism which would result in increased export of particular commodities which were ordinarily difficult to sell abroad where the selling countries were not able to get a foot hold. This objective was sought to he achieved by linking them to exports of an equivalent or lesser value of essential commodities which in any event had to he imported. As for as purchase and sale contracts were concerned, M.M.T.C. insisted that there should be one contract of sale between the local supplier and the M.M.T.C. and another contract of sale by the M.M.T.C. to the foreign buyer on principal to principal basis. It was agreed that Ferro Alloys should intimate the foreign buyer to enter into a direct contract with M.M.T.C. treating it as the seller. , Also, the G.R.I. form prescribed by the Reserve Bank of India under the Rules framed under FERA was to be signed by M.M.T.C. showing it as the exporter and seller. Letters of credit was opened in the name of M.M.T.C. which was to be assigned to Ferro Alloys so that Ferro Alloys could receive the payment directly. for the goods supplied to 13 M.M.T.C. The shipping documents also showed M.M.T.C. as the exporter. The transactions were gone through. Dispute arose between the parties when the question of issuance of Tax Credit Certificate u/S 280ZC of the Income tax arose as to who could be said to have exported the goods and received the sale proceeds in the shape of foreign exchange. The matter was taken in appeal before the Government of India. It held that M.M.T.C. was the exporter for the purpose of S.280ZC. Ferro Alloys challenged the said order before the High Court by way of a Writ Petition. The High Court allowed the Writ Petition, and held that the real exporter was Ferro Alloys which earned and received the foreign exchange and M.M.T.C. got only its commission of 2% and nothing more. Aggrieved by the judgment of the High Court, M.M.T.C. preferred the present appeal. Allowing the appeal. this Court, HELD: 1. The entire export was done through M.M.T.C. in accordance with the system of barter. There is no half way house; either it is not barter system or it is in accordance with the system of barter. This is an undisputed fact as , are the several statutory documents made out in the name of M.M.T.C. Thus M.M.T.C. is the exporter for the purpose of Section 280ZC of the Income tax Act, 1961. The entire system of barter and the several documents executed in that behalf including those required by statutory provisions cannot be explained away as mere "external appearances". Ferro alloys cannot come to M.M.T.C. when it is profitable to it and disavow it when it is not profitable to it. It cannot have it, both ways. The title to goods passed to M.M.T.C by virtue of the several documents executed between the parties. Indeed,that was the fulcrum of the entire scheme of Barter. (19 E F). This Court is not convinced with the alternative reasoning of the High Court that even if it is viewed that the title to the goods passed to M.M.T.C., even so Ferro alloys must be held to be the real exporter, in view of the objective underlying Section 280ZC. If M.M.T.C. has acquired the title to the goods and is the exporter for all other purposes it is equally the exporter for the purpose of Section 14 280ZC. There can be no dichotomy of the nature propounded by the High Court. (19 H, 20 A).

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DICTION: Civil Appeal No. 8670 of 1983. From the JudGment and Order dated 3. 9. 1982 of the Punjab and Haryana HiGh Court in ReGular First Appeal No. 1 105 of 198 1. WITH C.A. Nos. 8634 to 86 58/83 and 8660 62/83, 8665 to 8669/83 and 8671 72/ 83 Prem Prasad Juneja and R.S. Sodhi for the Appellants. H.M. Singh for G.K. Bansal for the Respondents. 648 The Judgment of the Court was delivered by K. RAMASWAMY, J. The common questions of law arose for decision in these appeals. Hence they are disposed of together. Notification under section 4 (1) of the Land Acquisition Act 1 of 1984 was published in the Punjab State Gazette on January 27, 1978 acquiring 89 acres 4 canals and 12 marlas of land situated in Dhuri village for public purpose, namely to set up new Mandi Township. The. appellants claimed at the rate of Rs. 30.000 per Bighabut Land Acquisition Officer after classifying the lands into six blocks A to F, awarded market value ranging between Rs. 30,000 to Rs. 6,000 acre. On reference under section 18 of the Act, the District Judge, Sangrur in his judgment dated May 13, 1981 disagreed with the classification and found that all the lands are possessed of the same quality. Relying on sale deeds, exhibit p 3 dated September4,1972, p 5 dated June 14,1976, p 2 dated February 23, 1977 and p 4 dated July 15, 1977, all small extents, he calculated at an average of Rs. 1300 per Biswa and awarded to the lands belonging to Jaswant Kaur Baldev Singh and Gurdev Singh at the rate of Rs. 1,000 per Biswael finding that their lands are abutting Abadi (village) and for the rest awarded at the rate of Rs. 800 per Biswa with statutory solatium at 15% and interest of 6% per annum on enhanced compensation. Dissatisfied therewith the State filed the appeals and against disallowed claims, the claimants in one batch filed appeals and in another batch filed cross objections. The learned Single Judge relied on exhibit p3 and p 5 filed by the claimants and exhibit R 4 and R 6 filed by the State as comparable instances and calculated the average which worked out at Rs. 750 per Biswa. He found that the lands are possessed of potential value for further building purposes. Therefore, he carved out belting at a depth of 100 ft. from the main road to those lands, deducted 1/3rd towards developmental charges and awarded the market value at the rate of Rs. 750 to the land situated abutting to the main road to the depth of 100 ft. and for the balance lands at the rate of Rs.500 per Biswa. The State appeals were allowed and of the claimants and cross objection were dismissed. The Division Bench confirmed the judgment of the learned Single Judge. The claimants filed these appeals by special leave. In the first batch no witness has been examined, but in the second batch witnesses were said to have been examined in proof of these documents but their evidence was not made part of the record. Equally of the sale deeds. It is seen that the documents in the second batch p top 1 include those filed in the first batch. exhibit p 5 is dated Sept. 4, 1972, in which 20 Biswas of land was sold for Ice Factory. It was situated in the town itself. The price fetched therein was Rs. 20,000 Therefore, it worked out at the rate of Rs. 1,000 per Biswa. exhibit p10 is dated August 25, 1975, 7 Biswas of land in Dhaula village was sold for Rs. 649 75,000 which works out at rate of Rs. 1071 per Biswa. exhibit p 7 is dated June 14,. 1976,3 Bighas 16 Biswas of land situated at Dhularoad side was sold for Rs. 4,500 which works out at the rate of Rs. 1285 per Biswa. Ex.p 8 dated June 15, 1977 is for 4 Biswas of land at Dhula road sold for Rs. 4,000 which works out at Rs. 1,000 per Biswa. exhibit p 4 is dated Feb. 23, 1977,3 Biswas of land in the heart of the town Dhuri was sold for Rs. 6,000 which works out to Rs. 2,000 per Biswa. exhibit p 6 is dated may 18,1977, one Bigha7 Biswas were sold for Rs. 1,000, which works out to Rs. 370 per Biswa. This land is away from the town and also from the acquired land. exhibit p 9 is dated July 12, 1977, 15 Biswas of land were sold for Rs. 24,000 working out at the rate of Rs. 1,600 per Biswa. Based thereon it was contended that exhibit p 9 fetches the highest market value and is nearer to the date of notification and would offer comparable price. The High Court ought to have fixed market value at that rate. The High Court committed illegality in relying on two sale deeds of the claimants and two mutation entries on behalf of the state in working out the average. Therefore, fixation of the market value is illegal. The mutations are not admissible as neither sale deeds were filed not any body connected with them are examined. The question, therefore, is whether these sale transactions would reflect the prevailing market value of the land of the total extent of 90 acres. It is seen that in the first batch no one was examined to prove the documents. In the second batch though witnesses were said to have been examined, the evidence is not on record. Neither the reference court nor the High Court discussed the evidence and no finding was given. So we do not have the advantage of any findings in that behalf. The state filed 5 mutation entries which were marked. The sale entries exhibit R 6 is of October 4,1977 and exhibit R 5 of November 13, 1977. The rates of lands in Saledeeds executed between March 7, 1977 to November 13, 1977, i.e. R 2 on 7.3.77, R 3 on 8.6.77, R 4 on 31.8.77 and R 5 on 30.11.77 work out between Rs. 83 to Rs. 450 per Biswa. It is settled law that to determine the market value of the land under section 23(1) of the Act the sales of the land under requisition, if any, or the sales in the neighbourhood lands that possessed of same or similar potentialities or fertility or other advantageous features would furnish basis to determine just and fair market value on the premise of hypothetical willing vendor and willing vendee. The willing vendor who would offer the land and willing vendee who would agree to purchase the land as a prudent man in normal market conditions as on the date of the notification or near about the date of the notification is the acid test. It is also settled law that the sale and purchase of lands at a throw away price at arm 's length or depressed sales or fecal of sales brought into existence in quick succession to inflate the market value would not offer any basis to determine just market value. In order to adjudge whether sales are bonafide sales between willing vendor and 650 willing vendee and whether the consideration mentioned in deed was, in fact and really passed on under transaction '. whether the lands covered by sale deeds and relied on, possessed of same or similar potentialities or fertilities or advantageous features would be brought on record only by examining the vendor or the vendee or if neither of them is available, the attesting witness who has personal knowledge of the bargain and passing of the consideration are mandatory. Vide Periyar & Pareekanni Rubbers Ltd. vs State of Kerala wherein this court surveyed the entire case Law in that respect. Since none has been examined in the first batch the sale transactions referred to either by the state or by the claimants cannot be relied upon. In the second batch since the evidence has not been referred to by the courts below nor discussed by them nor we have the advantage to go through the same, we cannot rely on the same to further enhance the market value. Therefore, we are left with no option. but to reject those sale deeds. Moreover, except exhibit p 9 all other sale deeds are of very small extents. This court consistently has taken the view in Collecior of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015 Mirza Naushery voan Khan & Anr. vs Collector (Land Acquisition). Hyderbad ; ; Rain Rattan & Ors. vs State of U. P. Smt. Kaushalya Devi Bogra & Ors.v. Land Acquisition officer, Aurangabad & Anr. ; ; Padma. Uppal vs State of Punjab & Ors. ; , Administrator General of West Bengal vs Collector. Varanasi ; and Special Tehsildar, Land Acquisition vs A. Mangala Glowri [1991]4 SCC 218 that sale deeds of small extents being retail price do not offer comparable basis to fix compensation when large block of land is acquired. To an intending bonafide purchaser if such block of 90 acre is offered for sale, would he agree to purchase at retail price or far less value? Under no circumstance he would agree to purchase at retail prices mentioned above. In view of the settled legal position the saledeeds, sought to be relied upon, do not give us any basis to determine the market value. Every endeavour would be made to fix fair and reasonable market value. If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transaction between willing vendor and vendee then it may be considered but reasonable margin must be given in fixing whole sale price. Therefore, all the documents except p 9 are rejected. The next contention is that the sale deed exhibit p 9 by which 15 Biswas were sold for Rs. 24,000 which works out at the rate of Rs. 1,600 per Biswa and whether this hiohest price should be given to the appellants. As stated earlier we have no evidence before us as to under what circumstances this document came to be executed and what is the distance between the lands and for what purpose the land was sold and what is the 651 comparable nature of the land, fertility and potentialities of the land, etc. The contention relying on state of Madras v.A.M.Ranjan & Anr. [1976] 3SCR35 that highest value should be fixed cannot be accepted in view of the consistent late. view of this court. In Collector of lakhimppur 's case (supra), this court accepted the principle of average, but however, rejected the small extent of the lands arid enhancement based on the average at Rs. 15,000 per Bigha was reduced to Rs. 10.000 per Bicha. In Smt. Kausalya Devi 's case (supra), this court noted that large extent of land in the developed Aurangabad town was acquired for Medical College, accepted the principle of average worked out by the reference court, varying between Rs. 2.25 to Rs. 5.00 per sq. yard and this court ultimately fixed the market value at the rate of Rs. 1.50 per sq. yard. In Administrator General of West Bengal 's case (supra) this court upheld rejection of the small plots of lands and accepted two sale deeds of large extent working out the average rate at Rs. 500 per Decimal and ultimately reference court fixed the market value at the rate of Rs. 200 per Decimal. It is, therefore, clear that the court in the first instance has to determine as to which of the sale deeds are relevant, proximate in point of time and offer comparable base to determine market value. Thereafter the average price has to be worked out. It would be seen that this court has taken consistent view of working out average and further deductions have been made in fixing just and fair market value when large chunk of the land was acquired. We respectfully agree and adhere to the principle and we find no compelling reason to divert the stream or arrest the consistence. The question then is whether the reduction of the market value by the learned Single Judge is warranted on facts and under law. In his judoment the learned Judge found that the acquired lands are situated between railway line on the one side and link road going from Dhuri to Sarona on the other side. On the third side it is surrounded by the in habited area of Dhuri town. A small portion in Khasra No. 2585 was abutting the Dhola road and the rest of the acquired land is just behind the inhabited area. While acquiring these lands the Govt. have excluded the built up area. He also found that there is tendency of extension of Abadi village towards acquired lands. Therefore, he found that the lands arepossessed of "Potential value for being housed for urban purpose in the near future and, therefore, had to be valued as such" Thus we have the evidence that the lands are possessed of potential value for being used for building purposes. In fact, the acquisition itself is for construction of Mandi Township. The principle of belting is perfectly legal and unexception 652 ble as the lands abutting the main road upto a specified depth, depending on actual material on record, would fetch higher market rate than the lands situated a interior area. However, on facts of this case the belting is not warranted for the reason that as seen on three sides there exist roads and abutting the village. As per the plan as found by the High Court there exists a road cutting across the acquired lands. Therefore, there is not only access on three sides but also to interior lands. Thus in our view belting and fixation of differential rates of value is not justified. The next question is what would be the reasonable and just market value the lands were likely to fetch. In view of the fact that there is no evidence available and since the High Court found that the lands are possessed of potential value the rate of Rs. 1,000 per Biswa as awarded by civil court to the lands abutting abadi and the lands upto a depth of 100 ft is upheld. In view of the preceding finding we hold that the fixation of uniform rate of Rs. 1,000 per Biswa is legal. It is seen that this acquired land of 90 acres is undoubtedly undeveloped area and necessarily requires development by laying the roads, parks, drainage, lighting and other civic amenities. In Brig. Sahib Singh Kalha & Ors. vs Amritsar Improvement Trust & Ors. and Administrator General of West, Bengal 's case (supra) this court deducted 53% of the undeveloped lands towards developmental charges while fixing market value at decimal rate etc. towards amenities. In Special Tehsildar Land Acquisition, Vishakapatnam 's case,(supra) this court made deduction at 1/3rd. The appellant placed reliance on Bhagwathula Swamnana & Ors. vs Special Tahsildar Land Acquisition. Visakhapatnam ; where this court did not deduct any land towards developmental charges. But in that case it was found that the lands acquired are situated in fully developed area. On those circumstances this court did not deduct any land towards developmental charges. It is seen that the consistent view of this court now is that deduction of at least 1/3rd is necessary towards developmental charges. Therefore, we uphold deduction of 1/3rd towards development charges from the market value and determine the market value at Rs. 670 per Biswa. The learned judge while deducting 1/3rd fixed market value at Rs. 759 of frontage lands and Rs. 500 to interior land. Rs. 750 is obvious mistake, but the state did not take any action to have itch corrected not filed appeals. Fixation of Rs. 750 per Biswa of lands from road upto a depth of 100 ft. became final. So we cannot interfere or correct it in claimants appeal. But for the rest of the lands we award Rs. 670 per Biswa. with solatium at 15% and interest at 6% on the enhanced market value from the date of taking possession till date of payment. 653 The appeals are accordingly allowed to the above extent. In the circum stances parties are directed to bear their own costs.

Notification under section 4 for acquisition of 89 Acres 4 Kanals and 12 Marlas of land in a village in Punjab, published on January 27, 1978. Appellants claimed compensation Rs. 30,000 per Bigha i.e. Rs. 1500 per Biswa, on the ground that 15 Biswas of land situated near the acquired land had been sold on July 12,1977, for Rs. 24,000 which works out to Rs. 1600 per Biswa. Land Acquisition Collector classified the acquired land In 6 blocks and awarded Market Value ranging between Rs. 30,000 to Rs, 6000 per acre. In reference under Section 18, the District Judge disagreed with classification. The learned Judge, relying on sale deeds dated September 4,1972, June 14, 1976, February 23, 1977 and July 15, 1977, all for small extents, awarded compensation @ Rs. 800 for the rest of land, besides solatium and interest. Appeals filed in the High Court by State of Punjab and by one batch of claimants. Another batch of claimants filed cross objections. The learned Single Judge allowed appeals filed by the State and dismissed appeals and cross objections of the claimants. Market Value was determined, on working out average price on the basis of sale deeds dated September 4,1972 and June 14, 1976 filed by claimants and mutation entries dated August 31, 1977 and October 4,1977 filed by the State. Belting was carved at depth of 100 Ft. from main road and deduction of 1/3rd was made towards development charges. Consequently market value determined @ Rs. 750 per Biswa for land abutting main road and @ Rs. 500 per Biswa for the rest of land. Judgment and order of the learned Single Judge was confirmed by Division Bench. Claimants, by special leave petition filed appeals for higher compensation. This court determined market value at Rs. 1000 per Biswa and allowing the appeals to that extent, HELD It is settled law that to determine market value of the land, the sales of land under requisition if any or the sales in the neighborhood lands, 646 that possessed of same or similar features or fertility or other advantageous features would furnish basis to fix just and fair market value. (649 E) The price for which the willing vender would offer the land and willing vendee would agree to purchase it, as a prudent man in normal market conditions, as on date of notification or near about the date, is acid test to fix market value. Sales and purchases of land at throw away price at arms length or depressed sales or facade of sales made in quick succession to inflate market value do not offer any basis to determine just Market Value. (649 F) In order to adjudge, whether sales are bonafide, whether consideration mentioned in the deed was infect and really passed, whether the lands covered by sale deeds and relied on possessed of same or similar potentialities or fertilities or advantageous features would be brought out on record only by examination of the vendor or the vendee or if neither of them is available, the attesting witness, who has personal knowledge of the bargain and passing of consideration. Hence it is mandatory. (650 A) Periyar & Pareekanni Rubbers Ltd. vs State of Kerala: Sale deeds of small extents being retail price do not offer comparable basis to fix compensation, when large block is acquired. If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transactions, then it may be considered but reasonable margin must be given in fixing wholesale price. (650 E) Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015; Mirza Nausherwoan Khan & Another vs Collector (Land Acquisition) Hyderabad ; ; Ram Rattan & Others vs State of Uttar Pradesh ; Smt. Kaushalya Devi Bogra & Others vs Land Acquisition Officer, Aurangabad Others ; ; Administrator General of West Bengal vs Collector Varanasi ; and Special Tehsildar Land Acquisition vs A Mangal Gowri Court in the first instance has to determine as to which of the sale deeds are relevant, proximate in point of time and offer comparable base to 647 determine market value. The after average price has to be worked out and the contention that highest value should be fixed cannot he accepted. (651 D) State of Madras vs A.M. Ranjan & Another ; ; Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015; Sint. Kaushalva Devi Bogra & Others vs Land Acquisition Officer, Aurangabad & Another ; and Administrator General of West Bangal vs Collector, Varanasi ; The Principle of belting is perfectly legal and unexceptionable, as the lands abutting the main road up to a specified depth depending on factual material on record, would fetch higher market value than lands situated in interior area. (652 A) If the acquired land is undeveloped, deduction of at least 1/ 3rd, is necessary towards development charges. (652 F) Brig. Sahib Singh Kalha & Others vs Amritsar Improvement Trust & Others ; Administrator General of West Bengal vs Collector Varanasi ; ; Special Tehsildar, Land Acquisition vs A. Mangal Gowri ; and Bhagwathula Swamnanna & Others vs Special Tehsildar Land Acquisition Visakhapatnam ;

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minal Appeal Nos. 420 22 of 1993. From the Judgment and Order dated 31.8.1992 of the Kerala High Court in Crl. R.P. Nos. 665/91 and 666/91 and Crl. M.C. 832 of 1992. AND Criminal Appeal No. 423 of 1993. From the Judgment and Order dated 15.12.1992 of the Kerala High Court in Crl. M.C. No. 1192 of 1992. T.S. Krishna Murthy Iyer and M.T. George for the Petitioner in C.A. Nos. 420 22/93 and for the Respondents in C.A. No. 423/93. G. Ramaswamy, John Joseph, P.S. Nayar, K.V. Sree Kumar, K. Raghunath and T.G.N. Nair for the Appellant in C.A. No. 423/93 and for the Respondents in C.A. Nos. 420 422/93. J.: Special Leave granted. Untramelled by questions of fact the learned Senior counsel on both sides neatly presented question of law whether "sandlewood oil" is forest produce within the meaning of Section 2 (f) (1) of the Kerala Forest Act, 1961 for short the Act '. When proceedings were laid under section 51 (1) of the Act against the respondents in Special Leave Petition (Crl.) Nos. 27 29 of 1992, they questioned the jurisdiction of the court in C.C. Nos. 145 and 148 of 1988. Eschewing delineation of intermediary proceedings went on from the start of prosecution, the High Court in exercise of its power under section 482 of the Code of Criminal Procedure, 1973 for short 'the Code ' by order dated August 31, 1992, reported in Mohammed Aliv. Forest Range Officer, quashed the complaint holding that Sandal Wood Oil is not 'wood oil ' as defined in s.2 (f) (i) of the Act. So it is not a forest produce. Thus these appeals by Special leave. When same question subsequently arose, other learned Single Judge doubting the correctness of aforesaid judgment referred the matter to the division bench which by order dated December 15, 1992, reported in Khushboo Enterprises vs Forest Range officer, held that Sandalwool Oil is a forest produce within the meaning of S.2 (f) (1) of the Act. Thus the appeal in the other case. The Forest Conservation Act, 1980 aims to prevent depleting forests, conservation thereof and protection of wild life in the country to maintain ecological balance. The State, Acts regulate preservation of forest and forest produce to supplement the Central Act. The Act prescribes procedure for preservation of the forest and regulates possession of the forest produce, failing of trees in the forest area and removal from the forest or reserved forest area by transit permits etc. When Sandalwood Oil either was found in transit or in possession of the manufacturers, it was seized in the respective cases and laid the complaints under section 5 1 (1) (or contravention thereof. As said earlier the jurisdictional question was raised on the premise that Sandal Wood Oil is not a wood oil as defined under section 2(f) (1) of the Act. The question, therefore, emerges whether Sandalwood Oil is a wood oil. S.2(f) defines forest produce thus: "Section 2(f) 'forest produce ' includes: (i)the following whether found in or brought from, a forest or not 502 that is, to say timber, charcoal, wood oil, gum, resin, natural varnish, bark, lac, fibres and roots of sandalwood and rosewood; and (ii)the following when found in or brought from aforest, that is to say a)trees and leaves, flowers and fruits and all other parts or produce not here in before mentioned, of trees. b)plants not being trees including grass, creapers, reeds and moss and all parts or produce of such plants; c) silk cocoons, honey and wax, and d) peat, surface soil, rock and minerals (including lime stone, laterite), mineral oils and all products of mines or quarries". A reading thereof do indicate that the forest produce whether found in or ,brought from a forest or not is a forest produce which include, that is to say, the 'enumerated items in Clauses 1 and 11 "wood oil" is one of the enumerate items as well as roots of sandalwood and rosewood. The contention of Sri G. Ramaswami, the learned Senior counsel for the accused is that technical Dictiontries, Botanical Tax Books and expert opinion would bring out a demonstrable distinction between wood oil and sandalwood oil. The wood oil is a natural produce of the forest directly derived as an exudation from living trees in the forest belonging to the family of the Dipterocarpucoae trees while sandal wood oil is a bye product from sandalwood (Santalum Album) by industrial process. Wood oil is produced by making a hole on the trunk of the living tree commonly known as "oil trees" or "wood oil trees". This family of trees are variously known in different parts of South India but they relate to Dipterocarpucoae family. Wood oil is gathered by heating the hole in the trunk to induce exudation of the olec resin from the tree and commercially dealt with as wood oil which is a cheap substance in the commercial world used solely for the purpose of painting planks of wood or wooden vessels floating in the sea. The physio chemical properties of wood oil are distinct and different from other oil. Sandal wood oil would be produced only at factory level and that too by mechanised process utilising the heart wood and roots of sandal wood trees removed from the forest as a raw material. Sandal wood oil is having very high commercial value and it is mainly used in manufacturing perfumery and 503 cosmetic items of different types and grades. The production of sandal wood oil is being carried out as industry, either by licence by the individuals or the state government as its monopoly like Karnataka State, in a larger scale or as a small scale business. It is further contended that the meaning of the word "wood oil" defined in section 2 (f) (1) must receive its colour from its context and connotation. When the legislature used the word 'that is to say 'the wood oil and other natural growth referred to in the definition it would only mean natural bye product directly drawn from the trees. The Learned Single Judge had rightly construed the meaning of the word 'wood oil ' and held that sandal wood oil being the bye product derived commercially manufacturing process is not wood oil. The division bench committed manifest error in its construction of the word 'wood oil 'to include sandal wood oil. Sri Krishna Murthy Iyer, the learned Senior counsel for the respondents on the other hand, refuted the contention arguing that inclusive definition of forest produce must receive extended meaning. It must also be construed in the context in which it is used and the purpose the Act seeks to serve and the family to which sandal wool oil belongs being an essential oil would include wood oil. The expression wood oil being a technical and part of inclusive definition has to be construed in its technical sense and in an exhaustive manner. It cannot be restricted in a narrow circumference as was done by the learned Single Judge so as to defeat the object and purpose of the Act. Extraction of sandal wood oil even by mechanised process would nonetheless be a wood oil. He laid emphasis on the word 'timber ' defined in section 2(k) which include 'Sandal wood ', being a forest produce the oil extracted therefrom would also be within the meaning of the word `wood oil '. The restricted meaning canvassed by the counsel would defeat the purpose of the Act and the literal interpretation giving narrow meaning to the word wood oil ' should be excluded. Ex facie the argument of Sri Ramaswami backed by material, though is alluring, deeper probe denied its acceptance. Undoubtedly, the Karnataka Forest Act, 1963 incorporated in its definition of forest produce Sandalwood oil after the word "wood oil" and the legislature in Andhra Pradesh and Tamilnadu, like the Act, do not specifically incorporate Sandalwood oil in the definition of forest produce. From this could it be concluded, if it be otherwise interpretable, that wood oil would not include Sandalwood oil as well. Undoubtedly Stedman 's Medical Dictionary (23rd Edition) defined at page 1576, wood oil as gurjan balsam and gurjan balsam defined at p. 156 to mean wood oil oleo resin from Dipterocarpus alatus (family Dipterocarpuceae), a tree of India and other regions of Southern Asia. Similar meaning was given in Concise Chemical and Technical Dictionary edited by H. Bennett (Fourth Edition) at page 1217; Scientific Treatises on the subject by Ernest Guenther in volume 6; Edward Balfour in his 'Cryclopaedia of India ' and of Eastern and Southern Asia; R.N. Khori in his 'Materia Medica of 504 India and their Therapeutics ' and ' Pharmacographia Indica ' by Willim Dymock defined wood oil in the same strain. All these technical literatures were concerned in finding out physio chemical properties contained in wood oil and the source from which they are drawn for use in industrial purposes. The literal interpretation given therein if given acceptance would lead to manifest frustration of the purpose of the Act. In its interpretation we have to keep at the back of our mind the purpose which the Act and the Parent Act (Forest Conservation Act) seek to subserve. J.F. Dastru equally in his 'Medical Plants of India and Pakistan 'tread into the same path and given construction to wood oil in the context of its exudation obtained from the trunk of the trees belonging to the family of Dipterocarpaceae as an oleoresin or gurjan balsam. There would be no quarrel on that behalf. It must be noted in this context that there are several types of essential oils in India, the important being Sandalwood oil, agar wood oil, deodar oil and pine oil, apart from oleo resin and wood oil derived from exudation from living trees in the forest area. These essential oils are obtained from any of forest wood. Sandalwood as observed by the High Court is forest produce. Even its roots thereof are also included as forest produce. They are also timber within the meaning of Section 2(k) of the Act. The purpose of the Act is to conserve forest wealth which is very dear for preservation to maintain ecology. Forest produce defined under section 2(f) is an inclusive definition. It is settled law that the word 'include ' is generally used as a word of extension. When used in an interpretation clause, it seeks to enlarge the meaning of the words or pharases occuring in the body of the Statute. Craies on Statute Law, Seventh Edition at p. 64 stated the construction to be adopted to the meanings of the words and pharases that "The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intention expressed in the Acts themselves. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the law giver",. At p. 214 it is stated that an interpretation clause which extends the meaning of a word does not take away its ordinary meaning. An interpretation clause of the inclusive definition is not meant to prevent the word receiving its ordinary, popular and natural sense whenever that word that would be properly applicable, but to enable the word as used in the Act, when there is nothing in the context or the subject matter to the contrary, to be applied to some things to which it would not ordinarily be applicable. . An interpretation clause should be used for the purpose of interpreting word which are ambiguous or equivocal, and not so as to disturb the meaning of such as are plain. At p. 216 it is stated that another important rule with regard to the effect of an interpretation clause is, that an interpretation clause is not to be taken as substituting one set of words for another, or as strictly defining what the meaning 505 of the term must be under all circumstances, but rather as declaring what may be comprehended within the term where the circumstances require that it should be so construed. This Court in Babu Manmohan Das Shah & Ors. vs Bishun Das [ ; adopting the ordinary rule of construction stated that "the provisions of a statute must be construed in accordance with the language used therein unless there are compelling reasons such as where the literal construction would reduce the Act to absurdity or prevent manifest legislative purpose from being carried out". The question therein was the interpretation of the phrase "materially altered the accommodation or is likely substantially to diminish its value" in the construction to a shop. In that context this court laid that cardinal principle of statutory construction referred to hereinbefore would apply. In State of Madhya Pradesh vs M. V. Narasimhan; , the definition of 'public, servant ' in S.21 I.P.C. was amended and clause 12 thereof was brought on statute. The Prevention of Corruption Act, 1947 created its own provisions as specific offences of criminal misconduct which is different from the offence of bribery defined in the Indian Penal Code. When similar definition was not given under the P.C. Act, 1947 the contention was raised that the respondent cannot be prosecuted not being a public servant under the P.C. Act. This court while holding that definition of public servant was incorporated in P.C. Act by necessary implication of public servant defined in Cl. 12 of S.21 I.P.C. and held that P.C. Act is supplemental to I.P.C. and that, therefore, both would deal with the same offence. Accordingly, the respondent was held to be public servant coming within the definition of P.C. Act. This court adopted the doctrine of purposive interpretation to prevent corruption, a penal offence. In Municipal Corporation of Greater Bombay vs Indian Oil Corporation; , this Court adopted purposive construction in the definition of the word 'building ' for the purpose of levy of property tax under the Bombay Municipal Corporation Act to include oil storage tanks to be "building" and held that the language of a statutory provision is not static vehicle of ideas and concepts and as ideas and concepts change, as they are bound to do in any country like ours with the establishment of a democratic structure based on agalitarian values, the meaning and content of the statutory provision undergo a change. The law does not operate in a vaccum. It cannot be interpreted without taking into account the social, economic and political setting in which it is intended to operate. The Judge has to inject flesh and blood in the dry skeleton provided by the legislature and invest it with a meaning which will harmonise the law with the prevailing concepts and values and make it an effective instrument for delivering justice. The word include in the definition under section 2(f) would show that it did 506 not intened to exclude what was ordinarily and in common parlance be spoken of wood oil. The expression being technical and being part of an inclusive definition has to be construed in its technical sense but in an exhaustive manner, it cannot be restricted in such a manner so as to defeat the principle object and purpose of the Act. The process by which the oil is extracted is not decisive as oil may be extracted by natural process of exudation or it may be extracted by subjecting to chemical or mechanical process and Sandalwood (Santalum Album) are cut into pieces. Its heart wood and roots of Sandalwood trees removed from the forest are used as a raw material at a factory level that too by mechanised process to extract sandalwood oil. The purpose for which the oil is used is not decisive. Therefore, the word wood oil used in the Act will require purposive interpretation drawing the context in which the words are used and its meaning will have to be discovered having regard to the intention and object which legislature seeks to subserve. The restricted meaning sought to put up by the accused would frustrate the object and the literal interpretation would defeat the meaning. The Legislature does not intend to restrict the word wood oil nor we find any compelling circumstances in the Act to olive restricted meaning that only oil derived from Dipterocarpus trees to be wood oil as contended for the accused and found acceptance to the learned single Judge. The purposive interpretation would aid conservation of sandle wood, a valuable forest wealth, prevent illicit failing and transportation of them and makes the manufacturers of sandlewood oil accountable to the possession of sandlewood trees or chips or roots etc. Incorporation of sandlewood oil abundentecatela in Karnataka Act and absence thereof in sister Acts operating in South India does not detract from giving its due meaning. The expert opinion is only an opinion evidence on either side and does not aid us in interpretation. This court in Adity Mills vs Union of India, ; did not adopt the dictionary meaning as it may be to some extent delussive guide to interpret entries in Central Excise and Salt Act. In Kishan Lal vs State of Rajasthan, ; to which one of us, Sahai, J, was member, this court was to consider the word 'Sugar ' whether under Rajasthan Agricultrual Produce Marketing Act, 1961 an agricultural produce. It was contended that the Khandsari Sugar was not an agricultural produce. Repelling that contention, this Court held that the word agricultural produce include all produce whether agricultural, horticultural, animal husbandary or otherwise as specified in the schedule. The legislative power to add or include and define a word even artificially, apart, the definition which is not exhaustive but inclusive neither exclude any item produced in mills or factories nor it confines its width to produce from soil. If that be the construction then all items of animal husbandry shall stand excluded. It further overlooks the expression "or otherwise as specified in the Schedule". Accordingly it was held that Khandsari Sugar is an agricultural produce under that Act. In State of Bombay & Ors. vs The Hospital Mazdoor Sabha & Ors. ; this court adopted purposive approach 507 in interpreting the word 'industry ' in section 2(j) of the Industrial Disputes Act, and held that the Legislature in defining the word 'industry ' in s.2 (j) of the Act deliberately used term of wide import in its first clause and referring to several other industries in the second in an inclusive way obviously denoting extention. The conventional meaning attributed to trade or business was eschewed even in the absence of profit motive. It was held that hospital was an industry. Therefore, the ratio, far from helping the accused, is consistent with the view we have expressed above. In South Gujarat Roofing Tiles Manufacturers Association and Anr. vs State of Gujarat and Anr. , ; the inclusive definition was construed in the context of the explanation given to Entry 22. It was held, therefore, that the word 'pottery ' does not include tiles industry for the purpose of Minimum Wages Act. The ratio therein renders little assistance to the accused. In Rathi Khandsari Udyog and Ors. vs State of U.P. and Ors. ; , , this court held that the words not defined may be construed in the popular sense in which it is being commonly used in commercial parlance. The ratio is not apposite to the fact situation. Similarly the construction placing reliance on the passage at p. 164 of Craies on Statute Law that the word is to be construed in the sense in which it is being understood in trade, business or transaction known to the trade is also inapplicable to the factual context. In Fatesang Gimba Vasava and Ors. vs State of Gujarat and ors. , the division bench construed whether bamboo would include in its ambit cut pieces in the context and the purpose the Act sought to serve the tribals in the forest area. Privilege was granted to the tribals to remove certain forest produce from forest area for sale to supplement their livelihood. When toplas, supdas and palas made out of bamboo chips were being taken out for sale, they were sought to be prosecuted. It was challenged by the tribals. In that context the division bench held that though bamboo is a forest produce, the Bamboo chips of the specified description do not fall within the definition of forest produce. Accordingly it was interpreted, from the context and purposive approach of the word 'forest produce '. Accordingly the ratio therein does not assist the accused. The Andhra Pradesh High Court, relied for the accused, had not correctly laid the law in Kangundi Industrial works, Kuppam vs The Govt. of A.P. Accordingly we hold that Sandalwood oil is wood oil within the meaning of section 2 (f) (i) of the Act. Therefore, it is a forest produce. Necessary conclusion is that the Trial Court has jurisdiction to proceed with the trial. It is for the Trial Court to find whether the offence as imputed to the accused has been made out the trial. We need express no opinion at this stage. The appeals of the State are allowed and the appeal of the accused is dismissed. R.P. Appeals dismissed/allowed.

The Kerala Forest Act, 1961 regulates preservation of forests and forest produce. Section 2(f) (i) defines forest produce which includes wood oil. The respondents in Crl. Appeals Nos. 420422 of 1993 were found manufacturing/in possession of sandalwood oil. Proceedings under section 52 (1) of the Act were initiated against them. They filed applications under section 482, Cr. P.C. before the High Court challenging the jurisdiction of the trial court on the premise that sandalwood oil was not wood oil as defined under section 2(f) (i) of the Act The High Court allowed the case of the respondents and quashed the complaint*. Subsequently in another case involving the same controversy, a Division Bench of the High Court held that sandalwood oil was a forest produce within the meaning of section 2(f) (i) of the Act. **The State and tile accused challenged the respective judgments in the appeals by special leave. It was contended on behalf of the accused that sandalwood oil is not a forest produce inasmuch as there is a distinction between wood oil and sandalwood oil wood oil is a natural produce of forest directly derived as an exudation from living trees in the forest whereas sandalwood oil is a bye product from sandalwood by industrial process utilising the heart wood and 497 498 roots of sandalwood trees removed from the forest as a raw material. The State contended that extraction of sandalwood oil even by mechanical process would nonetheless be a wood oil; and that since the word 'timber ' defined under section 2 (k) of the Act includes 'sandalwood ' being a forest produce, the oil extracted therefrom would also he within the meaning of the word 'wood oil '. On the question: whether sandalwood oil is a forest produce within the meaning of section 2(f) (i) of the Kerala Forest Act, 1961. Allowing the appeals of the State and dismissing the other appeal, this Court, HELD: 1.1 Sandalwood oil is wood oil within the meaning of s.2(f) (i) of the Kerala Forest Act, 1961. Therefore, it is a forest produce. (507 G) * Mohammed Ali vs Forest Range Officer: , overruled **Khushboo Enterprises vs Forest Range Officer. , approved. Kangundi Industrial Works. Kuppam vs The Govt. of A.P. , disapproved. 1.2 Sandalwood is forest produce. Even its roots are also included as forest produce. They are also 'timber 'within the meaning of section 2(k) of the Act. (504 D) 1.3 Forest produce as defined in s.2 (f) of the Act, whether found in or brought from a forest or not is a forest produce which include, that is to say, the enumerated items in clauses (1) and (ii). "Wood oil" is one of the enumerated items as are roots of sandalwood and rose wood. (502 E) 2.1 The word "wood oil" used in the Act will require purposive interpretation drawing the context in which the words are used and its meaning will have to be discovered having regard to the intention and object which legislature seeks to subserve. The purposive interpretation would aid conservation of sandal wood, a valuable forest wealth, prevent illicit felling and transportation of them and makes the manufacturers of sandalwood oil 499 accountable to the possession of sandalwood trees or chips or roots etc. (506C D) Municipal Corporation of Greater Bombay vs Indian Oil Corporation, ; ; State of Bombay & Ors. vs The Hospital Mazdoor Sabha & Ors, ; and State of Madhya Pradesh vs M. V Narasimhan, 1197512 SCC, relied on. 2.2 The Legislature does not intend to restrict the word 'wood oil ' nor are there any compelling circumstances in the Act to give restricted meaning that only oil derived from Dipterocarpus trees would be wood oil. The literal interpretation if given acceptance would lead to manifest frustration of the purpose of the Act. (506 D) Aditya Mills vs Union of India, [1988] 4SCC315, and Babu Manmohan Das Shah & Ors. vs Bishun Das, ; , referred to. Rathi Khandsari Udyog and Ors vs State of U.P. & Ors, [1985]2SCC 485, inapplicable. Craies on Statute law. Seventh Edition, referred to. Stedman 's Medical Dictionan, (23rd Edition), Concise Chemical and Technical Dictionary (Fourth edition); 'Scientific Treatises ' (Vol. 6) by Ernest Guenther; 'Cyclopaedia of India and of Eastern and Southern Asia ' by Edward Balfour; 'Materia Medica of India and their Therapeutics ' by R.N. Khori, Pharma cographia Indica by William Dymock and 'Medical Plants of India and Pakistan ' by J.F. Dastru, referred to. 2.3 The expert opinion is only an opinion evidence on either side and does not aid in interpretation. (506 E) 3.1 Forest produce defined under section 2(f) of the Act is an inclusive definition. It is settled law that the word 'include ' is generally used as a word of extension. When used in an interpretation clause, it seeks to enlarge the meaning of the words or phrases occurring in the body of the statute. (504 D) 3.2 The word 'include ' in the definition under section 2(f) would show that it did not intend to exclude what. was ordinarily and in common parlance to be spoken of wood oil. The expression being technical and being part of an 500 inclusive definition has to be construed in its technical sense but in an exhaustive manner, it cannot be restricted in such a manner so as to defeat the principal object and purpose of the Act (505 H, 506 A) Kishan Lal vs State of Rajasthan, ; and South Gujarat Roofing Tiles Manufacturers Assn. & Anr. vs State of Gujarat and Anr. , ; , referred to. Fatesang Gimba Vasava & Ors vs State of Gujarat & Ors., , distinguished. The process by which the oil is extracted is not decisive as oil may be extracted by natural process of exudation or it may be extracted by subjecting to chemical or mechanical process. The purpose for which the oil is used is also not decisive. (506 B) 5. The trial court has jurisdiction to proceed with the trial. It is for the trial court to find whether the offence as amputed to the accused has been made out at the trial. (507 G)

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(c) No. 715 of 1990. Under Article 32 of the Constitution of India. Gobinda Mukhoty, R.K. Jain, Yusuf H. Machhale, Ms. K. Amreswari, (N.P) R.N. Sachthey, N.N. Goswamy, Ashwani kumar, Mukesh K.Giri, A.K. Sharma, B.K. Prasad, (N.P) Ms. Anil Katiyar, Ms. Niranjana Singh, section Wasim A. Qadri, B.K. Prasad,Nafis Ahmad Siddiqui,Asoar Ali Khan,A.S. Bhasme, E.M.S. Anam, Sakil Ahmed Syed, Anil K. Jha, Raj Kumar Mehta, S.K. Agnihotri, B.R. Jad, Anip Sachthey, Syed Ali Ahmed, Syed Tanweer Ahmad, Mohan Pandey, M. Veerappa, K.H. Nobin Singh section K. Mehta, Dhruv Mehta, Aman Vachher, P. K. Manohar, B. B. Singh, Aruneshwar Gupta and R.Mohan for the appearing parties. The Judgment of the Court was delivered by R.M. SAHAI, J. Imams,incharge of religious activities of the mosque '(1) have approached this court by way of this, representative, petition under Article 32 of the Constitution for enforcement of fundamental right against their exploitation by Wakf Boards. Relief sought is direction to Central and State Wakf Boards to treat the petitioner as employees of the Board and to pay them basic wages to enable them to survive. Basis of claim is glaring disparity between the nature of work and amount of remuneration. Higher pay scale is claimed for degree holders. Imams perform the duty of offering prayer (Namaz) for congregation in mosques. 'Essentially the mosque is a centre of community worship where Muslims perform ritual prayers and where historically they have also gathered for political, social and cultural functions '. (2) The functions of the mosque is summarised by the 13th Century jurist Ibn Taymiyah 'as a. place of fathering where prayer was celebrated and when public affairs were conducted '. (3) 'All mosques are where Muslim men on an equalitarian basis rich or poor, noble or humble, stand in rows to perform their prayers behind the imam (4) Imams are expected to look after the cleanliness of mosque, call azans from the balcony of the minarets to the whole religious meetings and propagate the Islamic faith. They are expected to be 745 well versed in the Shariat, the holy Quran, the Hadiths, ethics, philosophy, social, economic and religious aspects. "Imam or prayer leader is the most important appointee. In the early days the ruler himself filled this role; he was leader (imam) of the government of war, and of the common salat ("ritual prayer"). Under the Abbasids, when the caliph no longer conducted prayers on a regular basis, a paid imam was appointed. While any prominent or learned Muslim can have the honor of leading prayers, each mosque specifically appoints a man well versed in theological matters to act as its imam. He is in charge of the religious activities of the mosque, and it is his duty to conduct prayers five times a day in front of Mihyab '. (5) On nature of the duties performed by the imams there is no dispute. But both the Union of India and various State Wakf Boards of different States which have put in appearance in response to the notice issued by this Court have seriously disputed the manner of their appointment, right to receive any payment and absence of any relationship of master and servant. It is stated that the imams or muazzins are appointed by the Mutwallis. According to them the Wakf Boards have nothing to do either with their, appointment or working. It is claimed that under lslamic religious practice they are not entitled to any emoluments as a matter of right as the Islamic law ordains the imams to offer voluntary service. They are said to be paid some money out of the donations received in mosques or by the Mutwallis of the Boards. Their job is stated to be honorary and not paid. Nature of duty under Islamic Sharjat is stated to lead prayers which is performed voluntarily by any suitable Muslim without any monetary benefit. Some of the affidavits claim that they are appointed by people of the locality. The Union Government has specifically stated that the Islam does not recognise the concept of priesthood as in other religions and the selection of imams is the sole prerogative of the members of the local community or the managing committee, if any, of the mosque. According to Karnataka Wakf Board Imamate in the mosque is not considered to be employment. The allegation of the petitioners that due to meagre payment they are humiliated or insulted in the society, is denied and it is claimed that they are respectable persons who carry on the duty of Imamate as a part of religious activity and not for earning bread and butter. The Delhi Wakf Board pointed out that the honorarium is paid to an imam as a consideration for his five time presence in the mosque regularly and punctually. The Board has denied any right to exercise an authority over the mosque where imams and muazzins are appointed by the mutwallis or by the managing committees. It is stated that holding of a certificate from a registered institution to enable a person to lead the prayer is not necessary as the only requirement for being an imam under the Sharjat is to (1) to (5) The Encyclopedia of Religion Vol. 10 p 121 122 746 have a thorough knowledge of the holy Quaran and the rites, rules and obligations required for offering prayers according to the principles laid down by the Kuran and Sunnah. The affidavit filed on behalf of Wakf Board has pointed out that mosque can be categorised in five categories, one, which are under direct control or management of the Government such as Mecca Masjid or the mosque situated in public garden which are not governed or regulated by the Muslim Wakf Board ', second, mosques which are under the direct management of Wakf Board , third, mosques which are under the control of mutwallis under various Wakfs according to the wishes of the Wakf as the creator of the Wakf, fourth, mosques which are not registered with the Wakf Board and are managed by local inhabitants and are under the management of the public who offer prayers regularly in a particular mosque , and fifth, mosques which are not managed by mutwallis or the Muslin is of the locality. It is claimed that imams of fourth and fifth category are not regular and any Muslim can lead the prayers, whereas under the third category mosques are having regular imams. Financial difficulty of the Wakf Board to meet the demand has also been pointed out. The Pondicherry Wakf Board has pointed that there is not even one employee except a peon working therein and, therefore, it is not possible to meet the demand of the imam. It is also claimed that the Board has no control over the pesh imams as they are considered to be well dignified personality of the society and they are given due respect by the Muslim community as a whole. In the counter affidavit filed by the Punjab Wakf Board it has been stated that imams of mosques in Punjab were being paid on basis of their qualification. Imam: Nazara (Muntaii grade) are in the scale of Rs. 380 20 58O25 830 30 980, whereas Imams Hafiz (Wasti grade),are paid Rs. 445 20 645 25895 30 1045, and Imam Alim (Muntaii grade) are paid Rs. 520 20 720 25 97030 1120. They are also paid Rs.30 per month medical allowance and muazzins are paid Rs. 310 per month. These scales were revised in 1992. According to them imams of all the mosques in Punjab, Haryana and Himachal Pradesh which come under the Punjab Wakf Board are being paid regularly and they are treated as regular employees. The Sunni Central Wakf Board of 'Uttar Pradesh filed only a Written submission stating that all the sunni mosques were managed by mutwallis of the concerned managing committees and not by the Wakf Board. The mosque differs from a church or a temple in many respects. Ceremonies and service connected with marriages and birth are never performed in mosques. Tile rites that are important and integral functions of many churches such as confessions, penitencies and confirmations do not exist in the mosques. (6) Nor any offerings are made as is common in Hindu temples. 'In Muslims countries mosques are subsidized by the States, hence no collection of money from the community is permitted. The Ministry of Wakf (Endowments) appoints the 747 servant, preachers and readers of the Koran. Mosques in non Muslim countries are subsidised by individuals. They are administered by their founder or by their special fund. A caretaker is appointed to keep the place clean. The muazzin cells to prayer five times a day from the minaret. (7) In our country in 1954 was passed by the Parliament for better administration and supervision of Wakfs. To achieve the objective of the Act Section 9 provides for establishment of a Wakf Board the functions of which are detailed in Section 15. Sub section (1) of it reads as under "(1) Subject to any rules that may be made under this Act, the (general superintendence of all wakfs in State in relation to all matters, except those which are expressly required by this Act to be dealt with by the Wakf Commissioner, shall vest) in the Boar d established for the State; and it shall be the duty of the Board so to exercise its powers under this Act as to ensure that the Wakfs under its superintendence are properly maintained controlled and administered and the income thereof is duly applied to the objects and for the purposes for the objects and for the purposes for which such wakfs were created or intended: Provided that in exercising its powers under this Act in respect of any wakf, the Board shall act in conformity with the directions of the Wakf, the purposes of the wakf and any usage or custom of the wakf sanctioned by the Muslim law". Clause (b) of Sub section (2) obliges the board "to ensure that the income and other property of a wakf are applied to the objects and for the purposes for which that wakf was created or intended". The board is vested not only with supervisory and administrative powers over the wakfs but even the financial power vests in it. One of its primary duties is to ensure that the income from the wakf is spent on carrying out the purposes for which wakf was created. Mosques are wakfs and are required to be registered under the Act over which the board exercises control. Purpose of their creation is community, worship. Namaz or Salat is the mandatory practice observed in every mosque. "(Among the Five Pillars (arkan; so., rukn) of Islam, it holds the second most import, position, immediately after the declaration of faith (shahadah) (8). The ' (6) & (7) Encyclopedia, Britannica Vol. (8) The Encyclopedia of Religion Vol. 748 principal functionary to undertake it is the Imam. The objective and purpose of every mosque being community worship and it being the obligation of board under the Act to ensure that the objective of the wakf is carried on the Board cannot escape from its responsibility for proper maintenance of religious service in a mosque. To say, therefore, that the Board has no control over the mosque or Imam is not correct. Absence of any provision in the Act or the rules providing for appointment of Imam or laying down condition of their service is probably because they are not considered as employees. At the same time it cannot be disputed that due to change in social and economic set up they too need sustenance. Nature of their job is such that,they may be required to be present in the mosque nearly for the whole day. There may be some who may perform the duty as part of their religious observance. Still others may be ordained by the community to do so. But there are large number of such persons who have no other occupation or profession or service for their livelihood except doing duty as Imam. What should be their fate? Should they be paid any remuneration and if so how much and by whom? According to the Board they are appointed by the mutwallis and, therefore, any payment by the board was out of question. Prima.facie it is not correct as the letter of appointments issued in some states are from the Board. But assuming that they are appointed by the Mutwallis the Board cannot escape from its responsibility as the mutwallis too section 36 of the Act are under the supervision and control of the Board. In series of decisions rendered by this Court it has been held that right to life enshrined in Article 21 means right to live with human dignity. It is too late in the day, therefore, to claim or urge that since Imams perform religious duties they are not entitled to any emoluments. Whatever may leave been the ancient concept but it has undergone change and even in Muslim countries mosques are subsidised and the Imams are paid their remuneration. We are, therefore, not willing to accept the submission that in our set up or in absence of any statutory provision in the the imams who look after the religious activities of mosques are not entitled to any remuneration. Much was argued on behalf of Union and the Wakf Boards that their financial position was not such that they can meet the obligations of paying the imams as they are being paid in the State of Punjab. It was also urged that the number of mosques is so large that it would entail heavy expenditure which the boards of different States would not be able to bear. We do not find any co relation between the two. Financial difficulties of the institution cannot be above fundamental right of a citizen. If the boards have been entrusted with the responsibility of supervision and administering the wakf then it is their duty to harness resources to pay those persons who perform the most important duty namely of leading community prayer in a mosque the very purpose or which it is created. 749 In the circumstances we allow this petitions and issue following directions (i) The Union of India and the Central Wakf Board will prepare a scheme within a period of six months in respect of different types of mosques some detail of which has been furnished in the counter affidavit filed by the Delhi Wakf Board. (ii) Mosques which are under control of the Government shall not be governed by this order. But if their imams are not paid any remuneration and they have no independent income. The Government may fix their emoluments on the basis as the Central Wakf Board may do for other mosques in pursuance of our order. (iii) For other mosques, except those which are nonregistered with the Board of their respective States or which are not manned by members of Islamic faith the scheme shall provide for payment of remuneration to such Imams taking guidance from the scale of pay prevalent in the State of Punjab and Haryana. (iv) The State Board shall ascertain income of each mosque the number and nature of Imams required by it namely full time or part time. (v) For the full time Punjab Wakf Board may be treated as a guideline. That shall also furnish guideline for payment to part time imam, (vi) In all those mosques where full time Imams are working they shall be paid the remuneration determined in pursuance of this order. (vii) Part time and honorary Imam shall be paid such remuneration and allowance as is determined under the scheme. (viii) The scheme shall also take into account those mosques which are small or are in the rural area or are such as mentioned in the affidavit of Pondichery Board and have no source of income and find out ways and means to raise its income. (ix) The exercise should be completed and the scheme be enforced within six months. (x) Our order for payment to Imams shall come into operation from 1st Dec., 750 1993. In case the scheme it not prepared within the time allowed then it shall operate retrospectively from 1st December, 1993. (xi) The scheme framed by the Central Wakf Board shall be implemented by every State Board. The Writ Petition is decided accordingly. Parties shall bear their own costs. U.R. Petition allowed.

A petition was filed in this court by Imams for enforcing their fundamental right against exploitation by Wakf Boards. Their claim was based on the glaring disparity between the nature of work and the amount of remuneration. The petitioners sought a direction to the Central and State Wakf Boards to pay them basic wages. A higher pay scale was claimed for degree holders. The Union of India and various State Wakf Boards disputed the manner of their appointment, their right to receive any payment, and absence of any relationship of master and servant. It was variously contended that they were appointed by Mutwallis, or in some cases by the people of the locality where the mosques were situated, and not by the Wakf Boards; that under Islamic religious practice it is voluntary service and there is no entitlement to emoluments; that a certificate from a registered institution is not a necessary requirement for leading in prayer. It was further contended that the Wakf Boards faced financial difficulties. The Punjab Wakf Board stated that Imams of mosques in Punjab, Haryana and Himachal Pradesh were paid on the basis of their qualification. A pay scale was indicated, and the Imams were paid regularly and treated as regular employees. Allowing the petition, this Court, HELD:(1) By Section 15 of the , the Wakf Board is vested not only with supervisory and administrative powers over the Wakfs but even the financial power vests in it. One of the primary duties is to ensure that the income from the Wakf is spent on carrying out the purposes for which the 743 Wakf was created. Mosques are Wakfs and are required to be registered under the Act, over which the Board exercises control. Purpose of their creation is community worship. The principal functionary to undertake it is the Imam. It is the responsibility of the Wakf Board to ensure proper maintenance of religious service in a mosque. To say, therefore, that the Board has no control over the mosque or Imam is not correct. (747 G H, 748A) (2) In a series of decisions rendered by this Court it has been held that right to life enshrined in Article 21 means right to live with human dignity. It is too late in the day to urge that since Imams perform religious duties, they are not entitled to emoluments. (748 E) (3) Financial difficulties of the institution cannot be above fundamental right of a citizen. If the Boards have been entrusted with the responsibility of supervising and administering the Wakf then, it is their duty to harness resources to pay those persons who perform the most important duty namely of leading community prayer in a mosque, the very purpose for which it is created. (748 H) (4) The Union of India and the Central Wakf Board are to prepare a scheme within a period of six months in respect of different types of mosques: (7497 H) The scheme shall take guidance from the scale of pay prevalent in the State Punjab and Haryana. (749 D) Mosques under control of the government will not he governed by this order except if their Imams are not paid any remuneration and have no independent means of income. The Government may then fix their emoluments on the basis as the Central Wakf Board may do for other mosques. (749 C) The State Boards shall ascertain the income of each mosque and the number and nature of Imams required full time or part time and their payment is directed. (749 E) The scheme shall take account of mosques which are small, or in the rural area, or which have no source of income and find 744 ways to raise income. (749 G) The order for payment to Imams shall come into operation from 1 December 1993. Every State Board shall implement the scheme. (749 H, 750 A)

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on (c) Nos. 9835 38 of 1983. (Under Article 32 of the Constitution of India) WITH W.P.(C)Nos.7468 7469/81,3838 39/83,5398/85,5435/85,386/84, 1489/ 86, 12691/85, 489 90/83, 81/83, 68/86 & 1065/87 Lakshmi Chandra Goyal, B.B. Sahni and Serve Mitter for the Petitioners D.P. Gupta, Solicitor General, Ms. Indu Malhotra, Ms. Aysha Khatri, Ms. V. Mohana and Ms. Nisha Bagchi for the Respondents. The Judgment of the Court was delivered by B.P. JEEVAN REDDY J. A common question arises in this batch of writ petitions. We may take the facts in writ petition (C) No. 9835 of 1983 filed by M/s K. B. Handicrafts Emporium & Ors., as representative of the facts in all the cases. The petitioners are firms engaged in the manufacture and sale of handicrafts items. They are registered Sales Tax Dealers in the State of Haryana. They purchased raw material within the State against declaration forms ST 15 prescribed under Rule 21 of the Haryana General Sales Tax Rules read with Section 24 of the Act. By issuing Form ST. 15, the petitioners undertook that the goods manufactured by them out of the said raw material would be sold by them either within the State or in the course of inter state trade and commerce or in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act. A dealer issuing the said Form need not pay the purchase tax on such raw material. After manufacturing the items of handicrafts, the petitioners say, they sold them to dealers in Delhi who, in turn, exported them out of India. At the time of sale of handicrafts to Delhi dealers, the Delhi dealers issued Form H, prescribed under the Central Sales Tax Rules which means that the goods purchased were meant for export. Neither party paid tax on the said sale/purchase. 457 For the assessment years in question, the Sales Tax Authorities of Haryana levied purchase tax on the purchase of raw material made by the petitioner, following the decision of the Punjab and Haryana High Court in M/s. Murli. Manohar and Company Panipat & Ors. V. State of Haryana & 0rs. (Civil Writ., Petition No. 1227 of 1980), under section 9 of the Haryana General Sales Tax. Act, 1973. However, the assessing authority computed the tax with reference to the purchase value of the goods exported against Form H. The petitioners. did not choose to file an appeal but directly approached this Court by way of this writ petition on the ground that in view of the decision of the Punjab and Haryana. Hig h Court in Murli Manohar there was no point in their pursuing the remedies under the Act in that State. Appeals were preferred in this court against the decision of the Punjab and Haryana High Court in Murli manohar which have been disposed of by this Court on October 25, 1990 (reported in ; This. Court allowed the appeal and set aside the judgment of the High Court. When these writ petitions came up for hearing, it was, urged by the learned counsel for the petitioners that in view of the decision of this Court in Murli Manohar the writ petitions must be allowed stria ghtway. This was demurred to by the learned Solicitor General appearing for the respondent State. We are of the opinion that the decision of this Court in Murli Manohardoes cover the point raised in these appeals but it is necesary to add a clarification. Before we do that, it is necessary to state a little background. Earlier to the. rendering of the decision in Murli Manohar, a Bench of this. Court comparising Sabyasachi Mukharji and Ranganathan, JJ. held in Good year India Ltd. and Ors. vs State ofHaryana and Anr. [1990] 2 S.C.C.71 that where the goods manufactured are taken out of Haryana (without effecting a sale) to the branch office or depot of the Manufacturer or to the office or depot of his agent, no purchase tax can be levied under section 9 of the Act on the raw material purchased within the State and used in the manufacture of such goods. It was held that imposing such ta would amount to levying tax on consignment, which the State Legislature was not ' competent to do. Section 9 as it then stood, stated expressly that no such purchase tax on raw material was leviable, if the goods manufactured out of such raw material were sold either within the State or were sold in the course of inter state Trade and Commerce or were sold in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act. MurliManohar was decided in the light. of the law declared,in Goodyear. Later, However, a Bench of three. Judges comprising S.Ran anathan, vs Ramaswami, JJ. and one of us(B.P.Jeevan Reddy, J.) held that. Goodyear does not lay down the correct law vide Hotel Balaji and 458 Ors. vs State of Andhra Pradesh & Ors. etc. JT It was held in Hotel Balaji that having regard to the scheme of and the objective underlying section 9 it was competent for the State Legislature to levy purchase tax on raw material purchased within the State where the goods manufactured out of such raw material are taken out of the State (without effecting a sale within the State or otherwise than by way of aninter state sale or by way of an export sale within 'the meaning of Section 5(1) of the Central Sales Tax Act). It was held that such a tax does not amount to consignment tax. It is this decision in Balaji that calls for a certain clarification of the principles enunciated in Murli Manohar. The facts in Murli Manohar Were substantially similar to the facts herein. The dealers within the State of Haryana purchased raw material without paying tax, manufactured goods out of the same and sold the manufactured goods to dealers who in turn exported those goods out of India. On these facts it was held by the Punjab and Haryana High Court that inasmuch as the sale to exporters was a penultimate sale falling under section 5(3) of the Central Sales Tax Act and further inasmuch as Section 9 of the State Act exempted only export sales within the meaning of section 5(1) of the Central Sales Tax Act but not the penultimate sale falling under Section 5(3), tax under Section 9 was leviable. On appeal, this court affirmed that Section 9 of the Haryana Act (before it was amended by Haryana Act 1 of 1988) did not exempt as sale falling under Section 5(3) but exempted only a sale failing under section 5(1). Even so, the appeal was allowed on the following reasoning "the sales made by the assesses can only fall within one of the three categories. They are either local sales or inter state sales or export sales. . . We are unable to conceive of a fourth category of sale which could, be neither a local sale nor an interstate sale nor an export sale. " In other words, the decision says that there can be only three types of sales, namely, intrastate sales, inter :state sales,and export sales and no other. A sale to an exporter would be either an intrastate sale or an inter state sale; in either case, it does not attract the purchase tax (on raw material) under Section 9 of the Haryana Act, says the decision: It is on this reasoning that the appeals were allowed inspite of the clear enunciation that the sales failing under Section 5(3) of the Central Sales Tax Act were not exempt under Section 9 of the Haryana Act, as it then stood. The above holding is evidently influenced by the decision in Goodyear, which was good law at the time Murli Manohar was decided. However, in the light of the decision of Hotel Balaji, it must be held that there is one more category in addition to the three categories mentioned above. The fourth category is where a dealer in Haryana takes, his goods out of the Haryana without effecting a sale. An illustration would serve to highlight what we say: a Haryana manufacturer takes his goods to Delhi without effecting a sale. In Delhi. if he finds it more profitable, 459 he will sell it to a dealer in Delhi. Or if he finds it more profitable to sell it to an exporter in Delhi he will sell the same to such exporter. These two sales are neither intrastate sales nor inter state sales, nor export sales within the meaning of Section 5(1) of the Central Sales Tax Act. In one Case, it is a sale in Delhi and. the other, it is a punultimate sale within the meaning of Section 5(3) of the Central Sales Tax Act. According to Section 9 of the Haryapa Act, as explained in Hotel Balaji and Murli Manohar purchase tax can be levied and collected on the raw. material purchased by the manufacturer within Haryana, which was utlised for manufacturing the goods so sold in these two situations. We must make it clear that in a petition under Article 32 of the Constitution, it is not our province to go into facts. As repeatedlly emphasised by this court, the. question whether a particular sale is an intra state sale,an inter state sale ,an export sale within the meaning of section 5(1) or a penultimate sale within the meaning of section 5(3), or otherwise, is always a question of fact to be decided by the apporiate authority in the light of the principles enunciated by Courts. In these circumstances, we content ourselves by declaring the law and leave it to be applied by the appropriate authorities. Counsel for the petitioners says that all the sales effected by all the petitioners are inter State sales. May be,or may not be. We leave the matters to be, disposed of by the authorities under the Act in the light of the law declared by &.Is Court in Murli Manohar, Hotel Balaji and in this judgment. The writ petitions are disposed of with the aforementioned clarification and, observations. No costs. V.P.R. Petitions disposed of.

Petitioners firms were registered sales tax dealers. They manufactured and sold handicraft items. As they purchased raw material within the State against declaration forms ST 15 prescribed under Rule 21 of the Haryana general Sales Tax Rules read with Section 24 of the Haryana General Sales tax Act, purchase tax was not paid. The petitioners sold the items of handicrafts to dealers in Delhi who exported the same out of India. As the Delhi dealers issued Form H, prescribed under the Cectral Sales Tax Rules, they did not pay tax on the said sale/purchase. Following the High court decision in M/s. Murli Manohar and company, Panipat & ors. vs State of Haryana & Ors. C.W. P. No. 1227 of 1980. The Sales Tax Authorities levied purchase tax u/s 9 of the Haryana General Sales Tax Act for the assessment years in question on the purchase of raw material made by the petitioners, computing the tax with reference ' to the purchase value of the goods exported against Form H. Hence the present writ petition before this Court was filed challenging 454 155 the impugned order of levying purchase tax. Meanwhile this court allowed the appeals preferred against the decision of the High Court in Murli Manohar and Company 's case, setting aside the judgment of the High Court. As a common question arose in this batch of writ petitions, all petitions heard together. The petitioners contended that in view of the decision of this Court in Murli Manohar 1991 [1] SCC 377, the writ petitions were to be allowed. Disposing of the writ petitions, this Court, section HELD: 1.1,. The decision in Murli Manohar says that there can be only three types of sales, namely, intra state sales, inter state sales and export sales a nd no other. A sale to an exporter would be either at% intrastate sale or an inter state sale; in either case, the decision says, it does not attract the purchase tax(on raw material) under Section 9 of the Haryana General Sales Tax Act. However, in the light of the decision in Hotel Balaji, it must be held that there is one more category in addition to the three categories mentioned above. The fourth category is where a dealer in Haryana takes his goods (out of Haryana (without effecting a sale, within the State), and effects the sale in the other State. According to Section 9 of the Haryana Act, as explained in Hotel Balaji, purchase tax can be levied and collected on the raw material purchased by the manufacture within Haryana, which was utilised for manufacturing the goods so sold in the other State. (458 D F) Murli Manohar case. ; , followed. Good year India Lid. and Ors. vs State of Haryana and Anr. ; , referred to. Hotel Balaji and Ors. vs State of Andhra Pradesh & ors. J.T. explained 2.1. In a petition under article 32 of the Constitution it is not the province of the Supreme Court to go into facts. As repeatedly emphasised by this Court, the question whether a particular sale is an intra state sale, an inter state sale, an export sale within the meaning of Section 5(1) or a 456 penultimate sale within the meaning of section 5(3), or otherwise, is always a question of fact to be decided by the appropriate authority in the light of the principles enunciated by Courts. (459 C) 2.2. In these circumstances, it is directed that the matters be disposed of by the authorities under the Act in the light of the law declared by this Court in Murli Manohar, Hotel Balaji and in this judgment. (459 D)

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Appeal No. 1240 of 1993. From the Judgment and Order dated 27.2.1992 of the Delhi High Court in C.W.P. No. 877 of 1991. Arun Jaitley, Ms. Ayesha Khatri and Ms. Indu Malhotra (NP) for the Appellant. P.P. Khurana and Arun K. Sinha for the Respondent. The Judgment of the Court was delivered by VERMA, J. The respondent, H.C. Khurana, was employed as Execu 1037 tive Engineer in the Delhi Development Authority (D.D.A.). A preliminary memo was served on the respondent on 6.11.1985, alleging some irregularities by him in the construction works, and they were being investigated. A chargesheet was framed on 11.7.1990 against the respondent on the basis of irregularities in the constructions made in a housing colony. On 13.7.1990, the chargesheet was despatched for being served on the respondent. However, the respondent proceeded on two months ' medical leave and, therefore, on 17.7.1990 another Executive Engineer R.K. Sood, working in the same Wing as the respondent, received it and gave the intimation that the respondent was on leave, adding that the same would be handed over to the respondent on his return from leave. On 28.11.1990, the Departmental Promotion Committee (D.P.C.) met, and in view of the earlier decision to initiate disciplinary proceedings against the respondent, it followed the 'sealed cover procedure ' in the case of respondent. It appears, that the effort to effect personal service of the chargesheet on the respondent on account of his non availability continued, and the same could be served personally on the respondent only on 25.1.1991. As a result of the selection made by the D.P.C., certain persons were promoted to the post of Superintending Engineer, while the respondent 's matter was kept in obeyance to await the outcome of the disciplinary proceedings. In these circumstances, the respondent filed Writ Petition No. 877 of 1991 in the Delhi High Court claiming a mandamus directing the D.D.A. to promote him as Superintending Engineer with effect from the date on which his juniors had been promoted to the post of Superintending Engineer, on the basis of selection made by the D.P.C. The High Court has allowed that writ petition taking the view, that 'the framing of charge would carry with it the duty to issue and serve the same on the employee, there was no justification for the respondent to follow the sealed cover procedure in this case on 28.11.1991 when the Departmental Promotion Committee met ', since actual service of the chargesheet on the respondent was made only after the date on which the D.P.C. met. According to the High Court, issuance of the chargesheet to the employee means its actual service on him, and this should be complete before following the sealed cover procedure. The High Court has read Union of India and Others vs K.V Jankiraman and Others, ; , to this effect, for taking the view, that on these facts, the disciplinary proceedings cannot be said to have been initiated prior to 29.11.1990, when the D.P.C. followed the sealed cover procedure. Accordingly, the High Court has directed the D.D.A. to 1038 open the sealed cover; to promote the respondent as Superintending Engineer, if he has been otherwise found suitable by the D.P.C.; and, in that event, lo give him seniority with all consequential benefits from the date on which his juniors were so promoted. The judgment of the High Court is challenged by special leave, in this appeal. The short question for consideration, is: Whether, in the present case, the High Court has correctly applied the decision in Jankiraman? Learned counsel for the appellant contended that Jankiraman cannot be read to hold, in a case like the present, where the disciplinary proceedings had been initiated by framing the chargesheet and despatching the same, that the chargesheet had not been issued; and, therefore, the 'sealed cover procedure ' could not be followed by the D.P.C. on 28.11.1990. On the other hand, learned counsel for the respondent strenuously urged that Jankiraman holds that without effective service of the chargesheet on the employee, the disciplinary proceedings cannot be said to have been initiated against him. Learned counsel for the respondent referred to the Office Memorandum No. 22O `11/4/91 Estt. (A) dated 14.9.1992 of the Department of Personnel & Training, Ministry of Personnel, Public Grievances and Pensions, Government of India, issued in supersession of the earlier. Office Memorandum No. 220 11/2/86 Estt. (A) dated 12.1.1988, consequent upon the judgment in Jankiraman, to support his submission that even though mere issuance or despatch of a chargesheet without the further requirement of its actual service on the employee would now be sufficient according to the O.M. dated 14.9.1992 for following the sealed cover procedure, yet the same was not sufficient earlier according to the O.M. dated 12.1.1988, which required actual service and not mere issuance of the chargesheet for initiating the disciplinary proceedings. Admittedly, the guidelines in the O.M. dated 12.1.1988 were in force, in the present case. The subject of the two memoranda, containing the guidelines, is the same, as under: "Promotion of Government servants against whom disciplinary/court proceedings are pending or whose Conduct is under investigation Procedure and guidelines to be followed" (emphasis supplied) 1039 Para 2 is the relevant portion in these memoranda. In 0.M. dated 12.1.1988, para 2 is as under : "Cases of Government Servants, to whom Sealed Cover Procedure will be applicable. 2.At the time of consideration of the cases of Government servants for promotion, details of Government servants in the consideration zone for promotion falling under the following categories should be specifically brought to the notice of the Departmental Promotion Committee : (i) Government servants under suspension; (ii)Government servants in respect of whom disciplinary proceedings are pending or a decision has been taken to initiate disciplinary proceedings; (iii)Government servants in respect of whom prosecution for a criminal charge is pending or sanction for prosecution has been issued or a decision has been taken to accord sanction for prosecution. (iv)Government servants against whom an investigation on serious allegations of corruption, bribery or similar grave misconduct is in progress either by the CBI. or any other agency, departmental or otherwise." (emphasis supplied) The substituted clause (ii) in para 2, in O.M. dated 149.1992, is as under : "(ii) Government servants in respect of whom a Chargesheet has been issued and the disciplinary proceedings are pending; and" (emphasis supplied) It is the change made in clause (ii) of para 2 in the O.M. dated 14.9.1992, from which learned counsel for the respondent tried to find 1040 support for his submission. Before we refer to Jankiraman, we may advert to clause (ii) of para 2 of O.M. dated 12.1.1988 which was the guideline applicable at the material time, in the present case, and is as under : "(a) Government servants in respect of whom disciplinary proceedings are pending or a decision has been taken to initiate disciplinary proceedings," (emphasis supplied) These words clearly indicate that the sealed cover procedure was applicable, in cases where the 'disciplinary proceedings are pending ' in respect of the government servant; or a decision has been taken to initiate disciplinary proceedings '. Thus, on a decision being taken to initiate disciplinary proceedings, the guidelines attract the sealed cover procedure. The reason is obvious. Where a decision has been taken to initiate the disciplinary proceedings against a government servant, his promotion, even if he is found otherwise suitable, would be incongruous, because a government servant under such a cloud should not be promoted till he is cleared of the allegations against him, into which an inquiry has to be made according to the decision taken. In such a situation, the correctness of the allegation being dependent on the final outcome of the disciplinary proceedings, it would not be fair to exclude him from consideration for promotion till conclusion of the disciplinary proceedings, even though it would be improper to promote him, if found otherwise suitable, unless exonerated. To reconcile these conflicting interests, of the government servant and public administration, the only fair and just course is, to consider his case for promotion and to determine if he is otherwise suitable for promotion, and keep the result in abeyance in sealed cover to be implemented on conclusion of the disciplinary proceedings; and in case he is exonerated therein, to promote him with all consequential benefits, if found otherwise suitable by the Selection Committee. On the other hand, giving him promotion after taking the decision to initiate disciplinary proceedings, would be incongruous and against public policy and principles of good administration. This is the rationale behind the guideline to follow the sealed cover procedure in such cases, to prevent the possibility of any injustice or arbitrariness. 1041 The question now, is: What is the stage, when it can be said, that 'a decision has been taken to initiate disciplinary proceedings '? We have no doubt that the decision to initiate disciplinary proceedings cannot be subsequent to the issuance of the chargesheet, since issue of the chargesheet is a consequence of the decision to initiate disciplinary proceedings. Framing the chargesheet, is the first step taken for holding the enquiry into the allegations, on the decision taken to initiate disciplinary proceedings. The chargesheet is framed on the basis of the allegations made against the government servant; the chargesheet is then served on him to enable him to give his explanation; if the explanation is satisfactory, the proceedings are closed, otherwise, an enquiry is held into the charges , if the charges are not proved, the proceedings are closed and the government servant exonerated; but if the charges are proved, the penalty follows. Thus, the service of the chargesheet on the government servant follows the decision to initiate disciplinary proceedings, and it does not precede or coincide with that decision. The delay, if any, in service of the chargesheet to the government servant, after it has been framed and despatched, does not have the effect of delaying initiation of the disciplinary proceedings, inasmuch as information to the government servant of the charges framed against him, by service of the chargesheet, is not a part of the decision making process of the authorities for initiating the disciplinary proceedings. This plain meaning of the expression used in clause (ii) of para 2 of O.M. dated 12.1.1988, also promotes the object of the provision. The expression refers merely to the decision of the authority, and knowledge of the government servant, thereof, does not form a part of that decision. The change made in clause (ii) of para 2 in O.M. dated 14.9.1992, merely clarifies this position by using the expression 'chargesheet has been issued ' to indicate that service of chargesheet is not necessary; and issue of the chargesheet by its despatch indicates beyond doubt that the decision to initiate disciplinary proceedings was taken. In our opinion, Jankiraman takes the same view, and it is not possible to read that decision otherwise, in the manner suggested by learned counsel for the respondent. The decision in Jankiraman is based, inter alia, on O.M. dated 12.1.1988. The facts of the cases dealt with in the decision in Jankiraman do not indicate that the Court took the view, that even though the chargesheet against the government servant was framed and direction given to despatch the same to the government servant as a result of the decision to 1042 initiate disciplinary proceedings taken prior to the meeting of the D.P.C., that was not sufficient to attract the sealed cover procedure merely because service of the chargesheet was effected subsequent to the meeting of the D.P.C. Moreover, in Jankiraman itself, it was stated thus : "14. To bring the record up to date, it may be pointed out that in view of the decision of this Court in Union of India vs Tejinder Singh, , decided on September 26, 1986, the Government of India in the Deptt. of Personnel and Training issued another Office Memorandum No.22011/2/86. (A) dated January 12, 1988 in supersession of all the earlier instructions on the subject including the Office Memorandum dated January 30,1982. . A further guideline contained in this Memorandum is that the same sealed cover procedure is to be applied where a government servant is recommended for promotion by the DPC, but before he is actually promoted, he is either placed under suspension or disciplinary proceedings are taken against him or a decision has been taken to initiate the proceedings or criminal prosecution is launched or sanction for such prosecution has been issued or decision to accord such sanction is taken. 10.These differences in the two Memoranda have no bearing on the questions to be answered. " (emphasis supplied) (PP. 117 118) Thereafter, in Jankiraman, the conclusions of the Full Bench of the Tribunal, under consideration, were quoted, and then while restating that the conclusions of the Tribunal could be reconciled, it was further stated, thus: '17. There is no doubt that there is a seeming contradiction between the two conclusions. But read harmoniously, and that is what the Full Bench has intended, the two conclusions can be reconciled with each other. The conclusion No.1 should be read to mean that the promotion etc. cannot be withheld merely because some disciplinary/criminal proceedings are pending against the employee. To, deny the said benefit, they must be at the relevant time pending at the stage when charge memolcharge sheet has 1043 already been issued to the employee. Thus read, there is no inconsistency in the two conclusions. ' (emphasis supplied) PP. 119) It will be seen that in Jankiraman also, emphasis is on the stage when a decision has been taken to initiate the disciplinary proceedings ' and it was further said that 'to deny the said benefit (of promotion), they must be at the relevant time pending at the stage when charge memo/charge sheet has already been issued to the employee '. The word 'issued ' used in this context in Jankiraman it is urged by learned counsel for the respondent, means service on the employee. We are unable to read Jankiraman in 'this manner. The context in which the word 'issued ' has been used, merely means that the decision to initiate disciplinary proceedings is taken and translated into action by despatch of the chargesheet leaving no doubt that the decision had been taken. The contrary view would defeat the object by enabling the government servant, if so inclined, to evade service and thereby frustrate the decision and get promotion in spite of that decision. Obviously, the contrary view cannot be taken. 'Issue ' of the chargesheet in the context of a decision taken to initiate the disciplinary proceedings must mean, as it does, the framing of the chargesheet and taking of the necessary action to despatch the chargesheet to the employee to inform him of the charges framed against him requiring his explanation; and not also the further fact of service of the chargesheet on the employee. It is so, because knowledge to the employee of the charges framed against him, on the basis of the decision taken to initiate disciplinary proceedings, does not form a part of the decision making process of the authorities to initiate the disciplinary proceedings, even if framing the charges forms a part of that process in certain situations. The conclusions of the Tribunal quoted at the end of para 16 of the decision in Jankiraman which have been accepted thereafter in para 17 in the manner indicated above, do use the word 'served ' in conclusion No.(4), but the fact of 'issue ' of the chargesheet to the employee is emphasised in para 17 of the decision. Conclusion No.(4) of the Tribunal has to be deemed to be accepted in Jankiraman only in this manner. The meaning of the word 'issued ', on which considerable stress was laid by learned counsel for the respondent, has to be gathered from the 1044 context in which it is used. Meanings of the 'word issue ' given in the Shorter Oxford English Dictionary include 'to give exit to; to send forth, or allow to pass out; to let out; . to give or send out authoritatively or officially; to send forth or deal out formally or publicly , to emit, put into circulation '. The issue of a chargesheet, therefore, means its despatch to the government servant, and this act is complete the moment steps are taken for the purpose, by framing the chargesheet and despatching it to the government servant, the further fact of its actual service on the government servant not being a necessary part of its requirement. This is the sense in which the word 'issue ' was used in the expression 'chargesheet has already been issued to the employee ', in para 17 of the decision in Jankiraman. In view of the above, we are unable to accept the respondent 's contention, which found favour with the High Court, that the decision in Jankiramnan, on the facts in the present case, supports the view that the decision to initate the disciplinary proceedings had not been taken or the chargesheet had not been issued to the respondent prior to 28.11.1990, when the D.P.C. adopted the sealed cover procedure, merely because service of the chargesheet framed and issued earlier could be effected on the respondent after 28.11.1990, on account of his absence. Consequently, the appeal is allowed and the judgment of the High Court is set aside, with the result that the writ petition of the respondent stands dismissed. No costs. N.V.K. Appeal allowed.

The respondent who was employed as an Executive Engineer in the DDA appellant was served on 6.11.85 a preliminary memo alleging irregularities committed by him in the construction works, and that they were being investigated. On 11.7.90 a chargesheet was framed on the basis of these irregularities, and on 13.7.90 the chargesheet was despatched for being served on him. The respondent, however, proceeded on two months medical leave and, therefore, on 17.7.90 another Executive Engineer workIng in the same Wing as the respondent, received It and gave intimation that the respondent was on leave and adding the same would be handed over to the respondent on his return from leave. A Departmental Promotion Committee met on 28.11.90, and in view of the earlier decision to Initiate disciplinary proceedings against the respondent, It followed the 'sealed cover procedure ' in the case of the respondent. Efforts to effect personal service of the chargesheet on the respondent on account of his non availability continued and the same could be served personally on him only on 25.1.91. As a result of the selection made by the D.P.C. certain persons were promoted to the post of Superintending Engineer, while the respondent 's matter was kept In abeyance to await the result of the disciplinary proceedings. The respondent riled a writ petition In the High Court for a writ of 1034 mandamus directing the. DDA to promote him as Superintending Engineer with effect from the date on which his juniors had been promoted to the said post on the basis of the selection by the D.P.C. The High Court allowed the writ petition relying on Union of India and Others vs K V. Jankiraman and Others, ; , and taking the view that the framing of charge would carry with it the duty to issue and serve the same on the employee, that there was no justification for the DDA to follow the sealed cover procedure in this case on 28.11.91 when the Departmental Promotion Committee met since actual service of the chargesheet was made only after the date on which the D.P.C. met. Accordingly, the High Court directed the DDA to open the sealed cover, and to promote the respondent as Superintending Engineer if otherwise found suitable by the D.P.C., and to give him seniority and all consequential benefits from the date on which his juniors were so promoted. The DDA appellant challenged the aforesaid, decision by special leave in this Court, and contended that fankiraman cannot be read to hold, in a case like the present one where the disciplinary proceedings have been initiated by framing the chargesheet and despatching the same that the chargesheet had not been issued and, therefore, the sealed cover procedure could not be followed by the D.P.C. on 28.11.90. On behalf of the respondent official it was urged that Jankiraman holds that without effective service of the chargesheet on the employee the disciplinary proceedings cannot be said to have been initiated, and reliance was also placed on the Office Memorandum dated 12.1.88 which required actual service and not mere issuance of the chargesheet for initiating the disciplinary proceedings. Allowing the appeal, and setting aside the judgment of the High Court, this Court, HELD : 1. The 'sealed cover ' procedure is applicable, in cases where the 'disciplinary proceedings are pending ' in respect of the government servant; or 'a decision has been taken to initiate disciplinary proceedings '. Thug, on a decision being taken to initiate disciplinary proceedings, the guidelines contained in OMs dated 14.9.92 and 12.1.88 attract the sealed cover procedure. [1040 D] 2. The decision to initiate disciplinary proceedings cannot be sub 1035 sequent to the issuance of the chargesheet, since issue of the chargesheet is a consequence of the decision to initiate disciplinary proceedings. The service of the chargesheet on the government servant follows the decision to initiate disciplinary proceedings, and it does not precede or coincide with that decision. The delay, if any, if service of the chargesheet to the government servant, after it has been framed and despatched, does not have the effect of delaying initiation of the disciplinary proceedings, inas much as information to the government servant of the charges framed against him, by service of the chargesheet, is not a part of the decision making process of the authorities for initiating the disciplinary proceedings. [1041 B D] 3.The plain meaning of the expression 'a decision has been taken to initiate disciplinary proceedings ' used in clause (ii) of para 2 of O.M. dated 12.1.88, also promotes the object of the provision. The expression refers merely to the decision of the authority, and knowledge of the government servant, thereof, does not form a part of that decision. The change made in clause (ii) of para 2 in O.M. dated 14.9.92, merely clarifies this position by using the expression 'chargesheet has been issued ' to indicate that service of chargesheet is not necessary; and issue of the chargesheet by its despatch indicates beyond doubt that the decision to initiate disciplinary proceedings was taken. Jankiraman takes the same view, and it is not possible to read that decision otherwise. [1041 E F] 4. The decision in Janiraman is based, interalia, on O.M. dated 12/1/88. The facts of the cases dealt with in the decision in Jankiraman do not indicate that the court took the view, that even though the chargesheet against the government servant was framed and direction given to despatch the same to the government servant as a result of the decision to initiate disciplinary proceedings taken prior to the meeting of the D.P.C., that was not sufficient to attract the sealed cover procedure merely because service of the chargesheet was effected subsequent to the meeting of the D.P.C. [1041 H, 1042 A] 5. 'Issue ' of the chargesheet in the context of a decision taken to initiate the disciplinary proceedings must mean, as it does, the framing of the chargesheet and taking of the necessary action to despatch the chargesheet to the employee to inform him of the charges framed against him requiring his explanation; and not also the further fact of service of the 1036 chargesheet on the employee. It is so, because knowledge to the employee of the charges framed against him, on the basis of the decision taken to initiate disciplinary proceedings, does not form a part of the decision making process of the authorities to initiate the disciplinary proceedings, even if framing the charges forms a part of that process in certain situations. [1043 E F] 6. The meaning of the word 'issued ' has to be gathered from the context in which it is used. The issue of a chargesheet, therefore, means its despatch to the government servant, and this act is complete the moment steps are taken for the purpose, by framing the chargesheet and despatching it to the government servant, the further fact of its actual service on the government 'servant not being a necessary part of its requirement. This is the sense in which the word 'issue ' was used in the expression 'chargesheet has already been issued to the employees ', in para 17 of the decision in Janakiraman. [1044 B C] 7. The decision to initiate the disciplinary proceedings against the respondent had been taken and chargesheet had also been issued to the respondent prior to 28.11.90 when the D.P.C. adopted the sealed cover procedure. It cannot be held otherwise merely because service of the chargesheet framed and issued earlier could be effected on the respondent after 28.11.90, on account of the absence of the respondent. [1044 D] Union of India and Others vs K.V Jankiraman and Others, ; , referred to and relied on. [1037 G]

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Appeal No. 228 (NT) of 1987. From the Judgment and Order dated 8.4.1982 of the Karnataka High Court in S.T.R.P.No. 100/81. M. Veerappa and K.H. Nobin Singh for the Appellant. The judgment of the Court was delivered by KULDIPSINGH,J. The question for consideration in this appeal is whether the mandate, under Section 20 (3) of the Karnataka Sales Tax Act, 1957 (the Act), to pay the undisputed tax before the appeal is entertained, is also applicable to the additional tax payable under Section 6B of the Act. In other words whether it is obligatory under the Act to deposit the tax and the additional tax before the appeal is entertained. The respondent assessee challenged the best judgment assess ment made against him for the year 1972 73 before the First Appellate Authority which was dismissed in limine on the ground that the respondent failed to pay the tax "not disputed in appeal". The second appeal filed by the assessee before the Karnataka Appellate Tribunal was also dismissed. On a revision petition under the Act the Karnataka High Court reversed the findings of the authorities below on the ground that unpaid "not disputed ' tax was the additional tax which was different than the tax envisaged under Section 20 (3) of the Act. The High Court allowed the revision petition of the assessee and remanded 83 the matter to the appellate authority to dispose of the appeal in accordance with law. This appeal by way of special leave against the judgment of the High Court is by the State of Karnataka. Before the appellate authority it was the admitted case of the parties that no part of the undisputed tax levied under Section 5 (1) of the Act had remained unpaid. It was only the undisputed additional levy under Section 6B of the Act which had not been paid. Section 20 (1) of the Act confers a right of appeal. Sub section 2 of Section 20 refers to the period of limitation. Sub Section 3 (A) of section 20 is as under: "No appeal against an order of assessment shall be entertained by the appellate authority unless it is accompanied by satisfactory proof of the payment of the tax and penalty not disputed in the appeal." The High court on the interpretation of various provisions of the Act came to the conclusion that the additional tax under Section 613 is a levy distinct from the impost under section 5 (1) of the Act. The High Court thus came to the conclusion that the nonpayment of the additional tax would not bar the entertainment of the appeal under the Act. The findings of the High Court are based on the following reasoning: "Though the tax under section 6B is and impost of a similar nature, it is a levy distinct from the impost under Section 5(1) or under Section 6. This is the clear outcome of the scheme of Section 6B and the effect of Section 6B(2) of the Act. Section 6B(2) by providing for the application of the provisions of the 'Act ' to the tax under Section 6B as they apply to the sales or purchase tax under the Act, recognises the distinction between the additional tax on the one hand and the other imposts under the 'Act ' on the other. . Section 20(1) creates and confers a right of appeal. Sub Section (3) of Section 20 seeks to restrict that right and subject it to certain conditions. It appears us 84 that the "tax" in Section 20 (3) on the payment of which the right of appeal is mad e dependent should receive a construction which would advance that right and one which would not make that right dependent upon or subject to payment of a "tax" which is distinct from the tax constituting the subject matter of the appeal. . . In the present case, the appeal is one directed against the main impost and no part of the assessment relating to the additional tax, is the subject matter of the appeal. That being so, the view that non payment of the additional tax would bar the entertainment of the appeal is not unjustified. " We are not inclined to agree with the view taken by the High Court, Section 6B of the Act as it stood at the relevant time reads as under: "6 B. Levy of additional tax. (1) There shall be levied and collected from every dealer liable to pay tax under section 5 or under section 6 (and from every dealer liable to pay tax under Section 25 B) an additional tax at the rate of ten paise in the rupee on the sales tax or purchase tax or both payable by such dealer; Provided that in respect of the sale or purchase of any of the declared goods mentioned in the Fourth Schedule, the tax together with the additional tax shall not exceed four percent of the sale or purchase price thereof. (2)The provisions of this Act and the rules made thereunder including those relating to refund or exemption from tax shall, so far as may be, apply in relation to the levy, assessment and collection of the additional sales tax or purchase tax or both, as they apply in relation to the levy assessment and collection of sales tax or purchase tax under this Act. " 85 It is obvious that the additional tax is leviable at the rate of ten paise in the rupee on the sales tax or purchase tax or both, payable by such dealer. The additional tax is computed with reference to the tax payable by the dealer. When once the assessing authority determines the sales tax or purchase tax under the Act the additional tax is levied automatically and becomes part and parcel of the assessment order. The expression "tax" has been defined to mean a tax leviable under the provisions of the Act and as such includes the additional tax levied under section 6B of the Act. When Section 20(3) talks of "payment of the tax and penalty not disputed in the appeal" it obviously includes the additional tax. On the plain language of Section 20(3) of the Act it is not possible to make any distinction between the tax and the addition tax and the only conclusion which can be drawn is that the undisputed "tax" which includes additional tax has to be deposited before the appeal is entertained. The fact that the quantum of the additional tax is determined with reference to the sales tax/purchase tax impost would not alter its character. The additional tax is nothing but an enhancement in the rate of the sales tax/purchase tax under the Act. As soon as the assessing authority determines the levy of sales tax/purchase tax the additional tax under Section 6B become part of the assessment order. Similarly if the main impost under Section 5 (1) is successfully challenged, the reasoning sustaining the challenge would also ipso facto affect the validity of the additional impost under Section 6B of the Act. We are, therefore, of the view that the High court was not justified in holding that additional tax under Section 6B was not a tax for the purposes of Section 20 (3) of the Act. We allow the appeal , set aside the judgment of the High court and dismiss the revision petition filed by the assessee before the High Court. No costs. U.R. Appeal allowed.

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

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ION: Criminal Appeal No. 66 of 1954. Appeal from the judgment and order dated the 31st December, 1953 of the Punjab High Court in Criminal Appeal No. 540 of 1953, arising out of the judgment and order dated the 14th September, 1953, of the Court of Special Judge, Amritsar, in Corruption Case No. 13/1 10/3 of 1953. Shaukat Hussain, for the appellant. Gopal Singh and T. M. Sen, for the respondent. October 25. The following judgment of the Court was delivered by 763 KAPUR J. The sole point in this appeal against the judgment and order of the Punjab High Court pronounced on December 31, 1953, is the validity and effect of the sanction given under section 6(1) of the Prevention of Corruption Act (Act 2 of 1947), hereinafter termed the Act. The appellant was prosecuted for receiving illegal gratification and the charge against him was in the following terms: "That, you, Jaswant Singh, while employed as a Patwari, Fatehpur Rajputan habitually accepted or obtained for yourself illegal gratification and that you received in the sum of Rs. 50 on 19 3 1953 at Subzi Mandi Amritsar from Pal Singh P. W. as a reward for forwarding the application Es. P. A. with your recommendation for helping Santa Singh father of Pal Singh in the allotment of Ahata No. 10 situate at village Fatehpur Rajputan and thereby committed an offence of Criminal misconduct in the discharge of your duty mentioned in section 5(1)(a) of the Prevention of Corruption Act, 1947, punishable under sub section 2 of section 5 of the aforesaid Act and within my cognizance. " The Special Judge found that the appellant had accepted illegal gratification from Pal Singh, Hazara Singh, Harnam Singh, Joginder Singh, Atma Singh, Hari Singh and Ganda Singh and that he had received Rs. 50 from Pal Singh on March 19, 1953, at Subzi Mandi, Amritsar. He then held: "The charge under section 5 (1)(a) of the Prevention of Corruption Act, 1947, has been established against him beyond reasonable doubt. He is guilty of an offence punishable under sub section (2) of section 5 of the said Act. " The appellant took an appeal to the High Court of the Punjab and Dulat J. held that taking into consideration the sanction which will be quoted hereinafter: " The appellant could neither have been charged nor convicted of what is probably a much graver offence of habitually accepting bribes. " 97 764 But he held that sanction was valid qua the charge of accepting illegal gratification of Rs. 50 from Pal Singh. The conviction was therefore upheld but the sentence was reduced to the period already undergone and the sentence of fine maintained. The argument raised by the appellant in this court is that as the sanction was confined to illegal gratification of Rs. 50 paid by Pal Singh and the charge was for habitually accepting illegal gratification the trial was without jurisdiction and the appellant could not be convicted even for the offence which was mentioned in the sanction. The sanction was in the following terms: " Whereas I am satisfied that Jaswant Singh Patwari son of Gurdial Singh Kamboh of village Ajaibwali had accepted an illegal gratification of Rs. 50 in 5 currency notes of Rs. 10 denomination each from one Pal Singh son of section Santa Singh of village Fatehpur Rajputan, Tehsil Amritsar for making a favorable report on an application for allotment of an ahata to section Santa Singh father of the said section Pal Singh. And whereas the evidence available in this case clearly discloses that the said section Jaswant Singh Patwari had committed an offence under Section 5 of the Prevention of Corruption Act. Now therefore, 1, N. N. Kashyap, Esquire I.C.S. Deputy Commissioner, Asr, as required by Section 6 of the Prevention of Corruption Act of 1947, hereby sanction the prosecution of the said section Jaswant Singh Patwari under section 5 of the said Act. " Section 6(1) of the Act provides for sanction as follows: " No Court shall take cognizance of an offence punishable under Section 161 or Section 165 of the Indian Penal Code or under sub section (2) of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction. " Section 5 (1)(a) relates to a case of a public servant if he habitually accepts illegal gratification and section 5(1)(d) 765 if he obtains for himself any valuable thing or pecuniary advantage. The contention comes to this that as the sanction was only for receiving Rs. 50 as illegal gratification from Pal Singh and therefore an offence ' under section 5 (1)(d) the prosecution, the charge and conviction should have been under that provision and had that been so there would have been no defect in the jurisdiction of the court trying the case nor any defect in the conviction but as the appellant was tried under the charge of being a habitual receiver of bribes and the sanction was only for one single act of receiving illegal gratification the trial was wholly void as it was a trial by a court without jurisdiction. The sanction under the Act is not intended to be nor is an automatic formality and it is essential that the provisions in regard to sanction should be observed with complete strictness; Basque Agarwala vs King Emperor (1). The object of the provision for sanctions is that the authority giving the sanction should be able to consider for itself tile evidence before it comes to a conclusion that the prosecution in the circumstances be sanctioned or forbidden. In Gokulchand Dwarkadas Morarka vs The King (2) the Judicial Committee of the Privy Council also took a similar view when it observed: " In their Lordships ' view, to comply with the provisions of cl. 23 it must be proved that the sanction was given in respect of the facts constituting the offence charged. It is plainly desirable that the facts should be referred to on the face of the Sanction, but this is not essential, since cl. 23 does not require the sanction to be in any particular form, nor even to be in writing. But if the facts constituting the offence charged are not shown on the face of the sanction ' the prosecution must prove by extraneous evidence that those facts were placed before the sanctioning authority. The sanction to prosecute is an important matter; it constitutes a condition precedent to the institution of the prosecution and the Government have an absolute discretion to grant or withhold their sanction. (1)[1945] F.C.R. 93,98 (2) [1948] L.R. 75 I.A.30, 37 766 It should be clear from the form of the sanction that the sanctioning authority considered the evidence before it and after a consideration of all the circumstances of the case sanctioned the prosecution, and therefore unless the matter can be proved by other evidence, in the sanction itself the facts should be referred to indicate that the sanctioning authority had applied its mind to the facts and circumstances of the case. In Yusofalli Mulla Noorbhoy vs The King (1) it was held that a valid sanction on separate charges of hoarding and profiteering was essential to give the court jurisdiction to try the charge. Without such sanction the prosecution would be a nullity and the trial without jurisdiction. In the present case the sanction strictly construed indicates the consideration by the sanctioning authority of the facts relating to the receiving of the illegal gratification from Pal Singh and therefore the appellant could only be validly tried for that offence. The contention that a trial for two offences requiring sanction is wholly void, where the sanction is granted for one offence and not for the other, is in our opinion unsustainable. Section 6(1) of the Act bars the jurisdiction of the court to take cognizance of an offence for which previous sanction is required and has not been given. The prosecution for offence under section 5(1)(d) therefore is not barred because the proceedings are not without previous sanction which was validly given for the offence of receiving a bribe from Pal Singh, but the offence of habitually receiving illegal gratification could not be taken cognizance of and the prosecution and trial for that offence was void for want of sanction which is a condition precedent for the courts taking cognizance of the offence alleged to be committed and therefore the High Court has rightly set aside the conviction for that offence. In Hori Ram Singh vs The Crown(1) the charges against a public servant were under sections 409 and 477A, Indian Penal Code, one for dishonestly converting and misappropriating certain medicines entrusted to the public servant and the other for wilful omission with intent to defraud to record certain entries in the (1)(1949) L.R. 76 I.A.158 (2)[1939] F.C.R.159. 767 account books of the hospital where he was employed. Thus two distinct offences were committed in the course of the same transaction in which the one, under section 477A, Indian Penal Code, required sanction under,s. 270(1) of the Government of India Act and the other under section 409, Indian Penal Code, did not. But the bar to taking cognizance of the former offence was not considered a bar to the trial for an offence, for which no sanction was required and therefore the proceedings under section 477A were quashed as being without jurisdiction but the proceedings under section 409 Indian Penal Code were allowed to proceed. Similarly the Supreme Court in Basir ul Huq vs The State Of West Bengal (1) held section 195, Criminal Procedure Code to be no bar to the trial for a distinct offence not requiring sanction although disclosed by the same facts if the offence is not included in the ambit of an offence requiring such sanction. The want of sanction for the offence of habitually accepting bribes therefore does not make the taking of cognizance of the offence of taking a bribe of Rs. 50 from Pal Singh void nor the trial for that offence illegal and the court a court without jurisdiction. The submission next raised is that the evidence in support of being habitually a receiver of bribes has caused serious prejudice to the defence of the appellant but no such prejudice has been shown nor does the judgment of the High Court which has proceeded on the evidence in support of the charge of Pal Singh 's transaction, indicate the existence of any prejudice and there was nothing indicated before us leading, to the conclusion of prejudice or to consequent failure of justice. The High Court came to the conclusion that the trial for the offence of habitually accepting illegal gratification could not be validly tried and evidence led on that charge could not be considered but the conviction of receiving a bribe of Rs. 50 from Pal Singh is well founded and also that the appellant has not been prejudiced in the conduct of his defence. (1) ; 768 No arguments were addressed to this court on the correctness of the finding of the High Court in regard to the conviction for receiving illegal gratification from Pal Singh. We agree with the opinion of the High Court that the offence under section 5(1) (d) of receiving illegal bribe of Rs. 50 has been made out and would therefore dismiss this appeal. Appeal dismissed.

Sanction was given under section 6 of the Prevention of Corruption Act, 1947, for the prosecution of the appellant for having received illegal gratification from one Pal Singh. He was charged with and tried for two offences under section 5(1)(a) of the Act for habitually accepting or obtaining illegal gratification and under section 5(1)(d) for receiving illegal gratification from Pal Singh. The Special judge found both charges proved and convicted the appellant. On appeal, the High Court held that the appellant could neither be tried nor convicted of the offence under section 5(1)(a) as no sanction had been given in respect of it but upheld the conviction for the offence under section 5(1)(d) for which sanction had been given. It was argued that the conviction even for the offence under section 5(1)(d) was illegal as the trial was wholly void and without jurisdiction : Held, that the contention that the trial for two offences requiring sanction is wholly void, where the sanction is granted for only one offence and not for the other, is unsustainable. The want of sanction for the offence of habitually accepting bribes does not make the taking of cognizance of the offence of taking a bribe from Pal Singh void nor the trial for that offence illegal and the Court a Court without jurisdiction. Hori Ram Singh vs The Crown, and Basirul Huq vs The State of West Bengal, ; , referred to.

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Appeal Nos. 2863 65 of 1993. From the Judgment and Order dated 21.2.91 of the Kerala High Court in C.M.P. No. 2170/90, 596/91, 597/91 in M.F.A. No. 518 of 1981. WITH Civil Appeal No. 2960 of 1993. K.K. Venugopal, G. Ramaswamy, M.N. Krishnamani, K.P. Dandapani E.M.S. Anam, P.N. Puri, A.T.M. Sampath, Pravir Choudhary for the Petitioner/ Appellant. Shanti Bhushan. Joshph Vellapall vs R.K.Jain, A Mariarputham, for M/s A. Mariarputham and Mrs. Aruna Mathur for Mrs. Aruna Mathur & Co. for the respondents. The Judgment of the Court was delivered by R.M. SAHAI, J. How far could we protect the interests of subscribers who had subscribed to a chit run by a subsidiary company of the appellant ordered to be wound up when allegedly subscriptions were made good by them not merely out of their hard savings but also of sums got by even, pledging and selling the jewelleries and ornaments of their wives, in the fond hope of getting a lumpsum amount on a future date, to meet the expenses of marriages in the family or health hazards of family members and the like, is the issue that really bothered us at the hearing of the appeals. About 15 years ago the subsidiary company under winding up, diverted the amount of rupees ten crores received by it by way of chit subscriptions to its holding, company (the appellant) resulting in its inability to pay the subscribers, when they became entitled to (yet the prize amounts. When some of the subscribers approached the High Court and succeeded in getting the subsidiary company wound up, the appellant holding company appeared in Court and prayed for an opportunity to be given to it to revive its subsidiary company. That prayer was accepted by a Division Bench of The Kerala High Court in the case of Suarshan Chits (India) Ltd., vs G.S. Pilai ILR 1983 vol. 1 Kerala p. 700. The Division 906 Bench approved the scheme of compromise and arrangement under Sec. 391 of the . Consequently, it ordered the winding up order to be held in abeyance on condition that the holding company shall execute a security bond to cover subsidiary company 's liability to the extent of a sum of Rs. 10.40 crores owed to its subscribers. It also directed the holding company to pay off that amount within a period of five years. Restriction was also placed on alienation of any property by tile holding, company without obtaining prior permission of the Court. Arrangement was made for managing, affairs of the appellant company as well. Apart from the Board of Directors an Additional Director was nominated to supervise and keep a watch on the affairs of the company. Since than the appellant company is run as directed by the High Court but neither the subscribers are paid, as a body of creditors, not the entire amount of rupees ten crores and odd is paid by the appellant to the subsidiary company. True, that out of nearly one lakh subscribers. twenty nine thousand and odd subscribers only remain unpaid. But, that is hardly satisfactory. Regret is that more than one third of the subscribers remain unpaid even after ten years from the date the High Court ordered the winding up to be in abeyance. Payment of rupees two crores and odd by the holding company which had the benefit of ten crores and odd rupees for the last 15 years, which amount by any standard is equivalent to fifty crores of rupees of today, we must state, is a poor consolation, for the holding company to claim that all steps to discharge its obligations is taken. Having noticed in brief, how matters have proceeded, we shall advert to the dispute which has arisen in respect of an offer now made by the holding company to sell 20.79 acres of land for paying the creditors. Whatever that be, one situation which has been brought about is, its successful attempt in involving, many subscribers who had formed themselves into a creditors association and an owner of a factory adjoining the disputed land, in litigation which has reached this Court more than once. It is unfortunate that a company which had volunteered to pay ten crores of rupees with in a period of five years has successfully evaded the payment by offering a pittance. From the date of offer in 1987 six ears have elapsed but no amount worth consideration, appears to have been paid to the subscribers. We consider it unnecessary to recount in detail the offer made by Ramaswamy Udayar, the appellant in the other appeal, counter offer made by the creditors association, delay in payment by the association, extension of time by this Court for payment by the association, withdrawal of offer by the holding company in the meantime as the High Court had after detailed examination accepted the offer of creditors association for purchase of disputed land and rejection of the claim of Udayar. Nor do we consider it necessary to deal with rival submission made by learned senior counsel appearing for respective parties, although we heard them at length, as in our opinion that rupees fifty two lakhs and odd the total amount for which the land 907 has to be sold could hardly be sufficient to relieve the agony of the body of subscribers for whose benefit the entire exercise was undertaken by the High Court. As we have understood the matter, there may be a grain of truth in the allegation that it is Estate Dealers with vested interests who are interfering and in fact the amount paid by the creditors association is of estate dealers. It may also. be true that the total membership of the association is not even 5% of the unpaid subscribers. In the said circumstances and taking into consideration the board consensus reached among learned counsel as to what needs to be done, we decide the two appeals, one filed by the holding company for release of the land and other by Udayar for accepting his bid on the following terms and conditions: (1)The holding company shall deposit with the official Receiver or Assignee concerned a sum equivalent to the deposited sum on which the High Court was pleased to direct sale deed to be executed in favour of the creditors association together with 25% interest minus the interest, if any earned by the deposit made, calculated on the deposited amount, from the date of deposit till 31st July, 1993, within a period of three months from today. (2) Out of the amount of sale price of the land already deposited by the creditors Association and the interest if any earned thereon plus the sums of money to be deposited by the holding company under the above term and condition (1), a sum equivalent to the amount deposited by creditors Association, together with interest at 25% thereon from the date of deposit upto 31s t July, 1993 shall be refunded to the creditors association in lieu of their claim for disputed land being, given up. The balance amount shall remain the benefit of general body of creditors of the subsidiary compa (3) The holding company shall pay the entire outstanding de (amounts) payable to the subscribers who were members of creditors association on the date when their claim applications w decided by the Kerala High Court, together with interest there of 12 percent from the date of decision till 31st July, 1993, within same period, namely, three months. This amount too shall deposited with the receiver for immediate payment to those cre 908 tors subscribers for giving discharge of their claims against the subsidiary company. (4) In case the above terms and conditions as to deposits to be made by the holding company are complied with. within the period allowed, for which no extension of time shall be granted, then the disputed land offered for sale by the holding company and purchased by creditor 's associations shall stand released in its holding company 's) favour. If such deposits are not made, the sale in favour of creditors company shall stand confirmed. (5) An offer was made by the appellant in Appeal No. 6614 of 1991 that the land being adjacent to its factory he was willing to pay even rupees five lakhs per acre. Therefore, on release if the land is sold, it shall be sold, as and when such occasion arises, for a price not less than five lakhs per acre. The amount so realised shall also be deposited by the holding company with the receiver for distribution among general body of creditors of the subsidiary company in discharge of its obligations to pay of the creditors of the subsidiary company. (6) (a) The receiver shall further take steps to see that the holding company fulfils its obligations and pays the entire balance within a period of one year from 31st August, 1993. (b) In case of failure to clear the dues of all the subscribers it shall be open to any unpaid subscriber to approach the High Court for recalling the order passed by the High Court in 1983 directing the winding up to be put in abeyance. (c) It shall also be open to the unpaid subscribers to approach the High Court for th e aforesaid reasons mentioned in clause (b) to take steps to get the amount realised from assets of the holding company. If such an application is made it shall be disposed of by the High Court expeditiously in accordance with law after hearing, parties concerned. Both the appeals are decided accordingly. The parties shall bear their own costs. R.P Appeals disposed of.

A subsidiary company of the appellant holding company (C.A. No. 2866 of 1993) diverted to the appellant rupees ten crores received by it by way of chit subscriptions. It failed to pay the subscribers the prize money. When some of the subscribers initiated winding up proceedings against the subsidiary company the appellant appeared before the High Court and undertook the liability of the subsidiary company to an extent of a sum of Rs 10.40 Crores to the subscribers. The High Court approved the scheme of compromise and arrangement under section 391 of the and directed the winding up order to be held in abeyance on the condition that the appellant holding company would pay off the amount or Rs. 10.40 Crores to the subscribers, within five years. It also restricted alienation (of any property by the holding company. Without obtaining prior permission (of the Court. Even ten %,Cars after the order of the High Court, more than one third of the subscribers remained unpaid. Meanwhile the appellant company took steps to sell 20.79 acres of land to pay the Creditors. The appellant in C.A.No. 2863 65 (if 1973 made an offer where as the respondent creditors ' association made a counter offer. The High Court accepted the (offer of Creditors ' association. Hence the appeals by special leave. Disposing of the appeals, this Court gave the following 904 Directions : 1. The holding company shall deposit with the official Receiver fir Assignee concerned a sum equivalent to the deposited sum on which the High Court had directed sale deed to be executed in favour of the creditors association together with 25% interest minus the interest, if any earned by the deposit, made, calculated (in the deposited amount, from the date of deposit till 31st. July, 1993, within a period of three months. Out of the amount mentioned in condition (1) above, a sum equivalent to the amount deposited by creditors Association, together with interest at 25% thereon from the date of deposit upto 31st July, 1993 shall be refunded to the creditors association in lieu of their claim for the disputed land being given up. The balance amount shall remain for the benefit of general body of creditors of the subsidiary company. Tile holding company shall pay through the receiver the entire outstanding debts payable to the subscribers who were members of the creditors association on the date when their claim applications were decided by the High Court, together with interest thereon at 12 per cent from the date of decision till 31st July, 1993. In case the above terms and conditions are complied with, within the period allowed then the disputed land offered for sale by the holding company and purchased by creditors ' associations shall stand released in holding company 's favour. If such deposits are not made, the sale in favour of creditors company shall stand confirmed 5. In view of the offer made by the appellant in Appeals No. 2863 65 of 1993, the land on its release shall be sold, for a price not less titan five lakhs per acre. The amount so realised shall also be deposited of the holding company with the receiver for distribution among general body of creditors of the subsidiary, company. The receiver shall further take steps to see that the holding company fulfils its obligations and pays the entire balance within a period of one year from 31st August, 1993. In case of failure to clear the dues of all tile subscribers it shall he open to an%. unpaid subscriber to approach the High Court for recalling the order passed by the High Court for in 1983 direction the winding up to be plot in abeyance, as well as to the steps to get the amount realised front assets of 905 the holding company. If such an application is made it shall be disposed of by the High Court expeditiously in accordance with law after hearing parties concerned.

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Appeal No. 2221 of 1993. From the Judgment and Order dated.5.5. 1993 of the Madhya ' Pradesh High Court in M.P. No. 4420 of 1991. Harish N. Salve and L.R. Singh for the Appellant. Anoop Choudhary, A.K. Sanghi, S.V. Deshpande and section K. Agnihotri for the Respondents. The Judgment of the Court was delivered by Mohan, J. Leave granted in SLP filed by Indian Medical Council, Jabalpur. All these appeals are dealt with under a common judgment since they arise out of the same judgment passed in Misc. Petition No.4420 of 1991 by the Madhya Pradesh High Court, Jabalpur Bench. One Dr. Nelson ,father of respondent1 was serving in Madhya Pradesh State Public Health in the Department of Surgery in the Medical College at Jabalpur. His wife, Dr. (Mrs.) Shobha Nelson was also working as a Lecturer in the Department of Obstetrics and Gynecology in Medical College in a purely temporary capacity. Nelson applied for foreign assignment. He was selected for the same. Therefore. a request was made by the Government of India (Department of Personnel and Administrative Reforms) vide its letter dated 2nd of January. 1975 790 requesting the State Government to spare the services of Dr . S.K. Nelson for foreign assignment with Zanzibar Government. The Under Secretary to the Government of Madhya Pradesh, Department of Public Health and Family Planning replied on 15.4.1975 that it was not possible for the State Government to spare his services. However, Dr. Nelson proceeded on two months ' vacation with effect from 1.5.75.He wrote a letter to the Dean of Medical College Jabalpur that he was proceeding, on long leave owing, to unavoidable family circumstances. Even after the expiry of the period of leave he did not rejoin the post. His request for further extension of leave was rejected. Notwithstanding the same Dr. Nelson and his wife proceeded to Tanzania and the first respondent, Silas Nelson, also accompanied them. It also requires to be mentioned in passing that a request was made to the Government of madhya Pradesh to spare the services of Dr. Shobha Nelson. It was pointed out by tile State Government that she being ;A temporary servant she had no lien and she will have to resign the State service before joining her duties in Zanzibar. She also absented unauthorisedly and proceeded to Tanzania along with her husband. The first respondent claimed to have passed G.C.E. 'O ' level as well as 'A ' level examinations from the University of London conducted by the Education Council of the Government at Dar es Salam in Tanzania. He also claimed that he had obtained credits in 'A ' level in three subjects i.e. Biology, Physics and Chemistry and 'O ' level in six subjects i.e. Biology, Chemistry, English language. English Literature, Mathematics and Physics. On this basis he claimed that he was entitled to admission in any Medical College in India. According to him these examinations are considered to be equivalent qualifying examinations and pre requisite for admission to any Medical College. It was also stated that Rani Durgawati University of Jabalpur had given an equivalence certificate. He obtained admission in Muhmbili Medical College in the Faculty of Medicine. which is affiliated to the University of Dar es Salam, in the year 1989. lie had completed one year at the same college and University. Thereafter he was pursuing his study in the second year. Having regard to the fact that he had studied the subjects in Anatomy, Physiology, Biochemistry, Preventive and Social Medicine including, Behavioural Science and Biostatistics, Medical Psychology and Developmental Studies and Medical Surgery, he had undergone a wider course. Therefore, according to him, he possesses the eligibility criteria for admission to the MBBS Degree Course at Jabalpur. A request was made by the father of the first respondent to nominate the first respondent to MBBS Course directly under Central Government quota. This request related not only to the first respondent but also his sister. However, the Central Government advised Dr. Nelson to approach the Medical Council oflndia 791 and the concerned University in jabalpur seeking their concurrence to the migration of his two children from the University of Dar es Salam. Tanzania to Medical College in jabalpur. On 20th December, 1989, Dr. nelson approached the appellant, Medical Council of India (hereinafter referred to as the Council) for grant of no objection to the transfer. This request was turned down on 12.1.90 as migration was not permissible under the Rules. The position was further made clear by the letter of the appellant dated 28.12.90. Aggrieved by this the first respondent and his sister Kumari Divya Nelson filed Writ Petition Misc. Petition No. 2535 of 1990 before the Madhya pradesh high Court at Jabalpur. The prayer was for a writ of mandamus to direct the respondents to grant admission to them to the 2nd year of MBBS Degree Course at Medical College jabalpur. It was contended that the Council had not authority to object or refuse the issue of no objection certificate since its primary function is to prescribe minimum standards of medical education. It is the University alone which should be concerned about the admission. The High Court by its judgment dated 12.7.91 allowed the writ petition. It directed the appellant and other authorities to consider the case of respondent 1 and his sister within a period of two months for their admission in the Medical College, jabalpur in the light of clause 'E ' of the mandatory recommendations approved under Section 33 of the . It was also held that though the Council had considered the case of the candidates yet it had not looked into the individual merits regarding their eligibility for transfer to Medical College,jabalpur which affiliated to Rani Durgawati Vishwa vidyalaya, jabalpur. Besides teh impugned letter of the council does not show any application of mind as it is not speaking order. In complete with the above directions the Executive Committee of the appellant (Council) reconsidered the case on 20.8.91. The question was whether the migration of the respondent on individual merit to Medical College. jabalpur under clause v 'e ' of the Migration Rules was permissible. It was concluded that the migration could not be allowed since the ground were not sufficient for such migration. It was also of the view that the facts stated for considering the individual case on merits were not relevant. What is important to be considered is the course of study the student had already undergone vis a vis the course being taught in the Medical College in Which the migration is sought. The candidate had not also finished enough materials to make comparison with 792 the course of study conducted in medical College at jabalpur. For these reasons the request for migration was rejected. The same was reiterated by a letter dated 4.1.92. After this, a review petition was filed to recall the order dated 12.7.91 of the High Court. However the review petition was dismissed by the High Court. An application for contempt was also dismissed. There upon Misc, Petition No. 4420 of 1991 came to be filed seeking admission in the 2nd year or the 1st professional M.B.B.S. Course at Medical College, Jabalpur on the same grounds as were alleged previously. direction was issued on 23.12.1991 to give provisional admission. After admission of the writ petition the same order was continued. Though an application was preferred by the respondents 2 to 4 to have the order vacated on the ground that migration from an unrecognized Medical College to a recognised Medical College was not permissible, the same was dismissed. Some interesting development took place during this stage. The candidates did not produce the required document. Hence provisional admission was not granted to them by the respondents 2 to 4. That led to the filing of Interlocutory Application No. 2805 of 1992 for further direction. Respondents 2 to 4 also filed an application for direction on 26.3.92 inter alia pointing out that before grant of provisional admission, the writ petitioners were required to submit proof of their having passed 1st year course at Tanzania. In the absence of such proof the admission was impossible. Further in which year of the MBBS course the first respondent was to be admitted, was not free from difficulty. it was averred that even without passing the first year from the university of Dar es Salam the claim is made for admission to the second year. This is nothing but fraud the High Court strangely permitted the writ petitioner. Kumari Divya Nelson to withdraw herself from the petition and it directed respondent 1 alone could prosecute his studies. The authorities were directed to grant provisional admission his filing necessary forms and depositing admission fees without insisting on the production of any other certificate or testimonials or syllabus of Dar es Salam University. For non compliance with this direction a contempt application was taken but by the first respondent. On peril of contempt the Dean (Respondent 4) had not other option but to comply with the order of provisional admission. Against this order directing provisional admission without insisting on the production of any other documents SLP (C) No. 10498 of 1992 was preferred. Leave was granted on 7.9.92 by this court staying the operation of the order dated 18.5.92 of the High Court. This Court directed that the interim order well subsist 793 till the disposal of the writ petition before the High Court and requested the High Court to dispose of the writ petition of the respondent I expeditiously. By the impugned judgment dated 5th March, 1993 the writ petition was allowed The resolution dated 20th August, 1991 refusing to accede to the request of the writ petitioner respondent (1) for migration was quashed holding that there was no application of mind by the Council. lt is under these circumstances these appeals by special leave to appeal have come to be preferred. Mr. harish N. Salve, learned counsel for the appellant would submit the following grounds attacking the impugned judgment: The High court erred in directing admission to respondent I in recognised medical college in India from an unrecognized college by way of migration/ transfer. WI the more so. when such impermissibility has been recognised by this Court in Medical Council of India, New Delhi vs Rajendra section Sankpal and Ors. (C. A Nos. 3 4 of 1991 dated 21.10.92) and order dated 6.12.1990 of this Court passed in Medical Council of India vs Ms. Sunita Anant Chavan & Ors. (I.A. Nos. 2 7 in Transfer Petition (Civil) Nos. 230 235 of 1989). The High Court misread Regulation V. Under that Regulation migration is allowed from a recognised medical college to another recognised college and that too within three moths after passing of the first professional examination. In so far as the first respondent has neither undergone study in a medical college recognised by the Council nor has he passed the first professional examination, he could not he admitted to the second year. The first respondent failed in the subject of Anatomy which is one of the papers taught in the first year at Dar es Salam University. Under the Examination Regulation of the said University he was required to sit in the supplementary examination in the failed subject before the beginning of the next academic year. Thus he was required to clear the said paper within six weeks. Should he fails in the supplementary examination he ceases to be a student of the College/University. In so far as the first respondent did not take the supplementary examination he ceased to be a student of Dar es Salam University. Therefore, the question of migration could not arise at all. The first yen course of Dar es SalamlJniversitv is not equivalent to the first phase of MBBS Examination in India. 794 Equivalence has to be decided by only an expert body, that too, on technical and academic matters. It is not in the domain of assessment or evaluation by the Court. The High Court should not have embarked on the determination of equivalence on the basis of sketchy materials placed before it. The High Court erred in relying on. Minakshi Malik, vs University of Delhi; , There, the candidate was not, in any matter, ineligible while here, the first respondent is ineligible. The High Court erred overlooking that an administrative authority like the appellant is not required to pass reasoned orders. The decree awarded by Dar es Salam University is not recognised and :Is not included under any of the Schedules of the Medical Council of India Act, 1956. Therefore, there was no occasion for the appellant to decide the equivalence. Should the first respondent be anxious he should have placed all the materials. In opposition to this, learned counsel for the respondents, argues that the Council has taken a self contradictory stand. In one breath, it will contend that there are no materials to decide the equivalence and in the other breath it would say it is not equivalence. Under these circumstances, in view of the cryptic order passed, the High Court itself decided finding that the Council had not applied its mind. The High Court was satisfied on the basis of documents there is equivalence. The High Court is well entitled to do so. More so, having regard to the ruling of Minakshi Malik 's case (supra) Equity also must weigh in favour of the first respondent. In any event, the first respondent had passed his pre Medical test successfully in the year 199 1. He also belong s to scheduled tribe. Therefore, on the basis of these two documents his candidature could be considered for admission to first year MBBS Course for the ensuing academic year of 1993 94 as otherwise, the career of a young man would be completely ruined. The factual position with regard to study of the first respondent in Dar es Salam University requires to be carefully analysed. The claim of the first respondent is that he has passed G.C.E. 'O ' level as well as 'A ' level examinations from the University of London conducted by the Education Council of the Government at Dar es Salam in Tanzania. He claims to have obtained credits in 'A ' level in the following three subjects (i) Biology, (ii) Physics; and 795 (iii) Chemistry In `O ' level he claim. ,; to have obtained credits in the following six subjects (i) Biology, (ii) Chemistry, (iii) English Language, (iv) English Literature, (v) Mathematics; and (vi) Physics On this basis, he claims admission to any Medical College in India as these are considered to be equivalent qualifying examinations and prerequisite for admission to any Medical College. It is claimed on behalf first respondent at Rani Durgawati University of Jabalpur has given an equivalence certificate. That is extracted below "With reference to your above cited letter, it is to inform you that students have passed in five subjects at least at the G.C.E. (Ordinary Level) and two subjects at the (Advanced Level) from University of London, are treated as having successfully completed the 12 year Pre University/Higher Secondary in India. Hence, if your son Shri Silas Supragya Nelson has passed above examination then he may appear in Pre Medical test examination as desired by you." According to first respondent, he was admitted in Muhmbili Medical College in the Faculty of Medicine which is affiliated to the University of Dar es Salam in the year 1989 and has completed one year at the same College and University. In the First year he had studied subjects in Anatomy, Physiology Biochemistry, Preventive and Social Medicine which includes Behavioural Science and Bio statistics, Medical. Psychology and Development Studies & Medical Surgery whereas at Rani Durgawati University, the subjects taught in the first year are Anatomy, Physiology, and Biochemistry. Thus the courses followed at Dar es Salam University are much wider. It was further claimed that his course in the said Medical College is equivalent to first year course of MBBS Degree awarded by Rani Durgawati University, Jabalpur and, therefore, he possesses the eligibility criteria for admission to the MBBS Degree Course at Jabalpur. 796 On the said basis migration is sought. Dar es Salam University is not recognised by the Medical Council of India. Therefore, front all unrecognised institution admission is sought to a recognised institution. With the object of maintaining and regulating, standards of medical education in the country, the Parliament enacted "the ". Under Section 6 of the Act. the Medical Council of ' India has been incorporated, which is a body corporate having a perpetual succession and a common seal Section 12 of the Act makes provisions for recognition of medical qualifications granted by medical institutions in countries with which there is a scheme of reciprocity. Under this section, the schedules are given providing list of recognised medical institutions & qualifications. The first schedule gives list of recognised medical qualifications granted by universities/medical institutions in India; whereas schedule second gives the list of recognised medical qualifications granted by medical institutions outside India. University of Dar es Salam & its medical institution is not included in the second schedule and therefore the qualifications imparted by that institution are not recognised. That apart, section 14 of the Act makes provisions for recognition of medical qualifications (granted by countries in which there is not scheme of reciprocity. The Central Government has not considered Dar es Salam University for such recognition. It was in this context the following order came to be passed by the appellant "The Director, Medical Education, Madhya Pradesh, Bhopal Subject: Migration of Silas Nelson and Divya Nelson from Dar es Salam Medical College, Tanzania to Medical Collage, Jabalpur. Sir, With reference to your letter No. 6151/DME/IV dated 12.5.1990 I am to state that the matter regarding, Migration of Silas Nelson and Divya Nelson from Dar es Salam Medical College, Tanzania to Medical College,Jabalpur was duly placed before the Executive Committee of this Council at its meeting held on 20th August, 1991 for consideration. The Committed decided as under: 797 The Executive Committee considered the matter with regard to the migration of the above candidates on individual merit to Medical College Jabalpur under Clause V(e) of the migration rules and did not allow these migration since the grounds are not sufficient for migration and the facts stated in the individual cases are not very relevant for grant of permission for migration. For considering any such cause of migration, it is important to consider the cause of study the student has already undergone vis a vis the course being taught in the Medical Colleges in which the migration is sought. Further it is observed that the candidates seeking their migration have also brought no records to show the course of study being conducted at their medical college for making comparison with the study being conducted in Medical College, Jabalpur. Hence the applications for migration of the above candidates are rejected. Your faithfully, (Mrs. M. Sachdeva) Off. Secretary. " Concerning migration the rule also is to the effect that the same can be allowed by the University concerned within three months after the passing of the first professional examination. Then, the question of equivalence arises. The equivalence came to be decided in the following manner: "Reference Letter dated 28.12.1991 of Dy. Registrar (General) R.D. University, Jabalpur. Regarding letter of ku. Divya Nelson and 2/ Silas Nelson to the University. I have gone through prospectus of University of Dar es Salam (1990 90) For M.D. degree which is equivalent to M.B.B.S. of Universities abroad (as per letter No. H/Q/G.N/17862 dated 2nd May, 1990 of Director of Training and Occupational Health Service, attached in the file). For examination at the end of first year in Dar es Salam University the subjects are: 798 Anatomy/Histology Behavioural Sciences Only one Biochemistry Year study. Physiology Development studies Where in Indian Universities the First MBBS Course which is of 18 months the subjects examined are (As premedical Council of India) Anatomy Physiology one and half, Biochemistry Year study As the detailed syllabus of the 5 subjects taught in one year at Dar es Salam University is not given in the Prospectus, it is difficult to know whether the course is equal as only three subjects are taught in Indian University for one and half years indicating that these subjects are taught in more detail here in our University. However, in general the subjects taught there in first year included Anatomy, Physiology and Biochemistry (along with other two subjects) which are also the subjects of first M.B.B.S. (one and half years course) here also. For mote clarification, the Medical Council of India may be consulted because they are the main authority in India in this respect. Dean, Faculty of Medicine of our University was also consulted in this matter/ sd/ Protessor & Head. Dept. of Biochemistry Medical College & Chairman Board of Studies for Anatomy, Physiology & Biochemistry. This may be put up before the standing for confirmation. " We cannot understand when this was the position with reference to equivalence how the High Court had donned the role of an expert body and would say as follows "The petitioner has filed documents showing that Dr. R.K. Gupta, Reader in Pharmacology of the Medical College, Jabalpur was sent on deputation for teaching in the medical college affiliated to Dar es Salam University. The petitioner, by filing the documents, wants to show that persons having requisite qualifications for teaching in the Medical College, Jabalpur were posted or appointed at the medical college affiliated to Dar es Salam University. The documents filed by the petitioner show that the subjects taught in the first year M.B.B.S. at Muhibili Medical 799 College, Dar es Salam University and the subjects taught at the Medical College, Jabalpur are the same. to us the material consideration is the qualifications necessary for admission to the first year M.B.B.S. course. The documents on record show that the educational qualifications for admission to the Medical College, Jabalpur and the Muhbili Medical College of Dar es Salam University are the same and there is equivalence of courses. As there is equivalence of courses required for admission to the first year M.B.B.S. courses in Muhibili Medical College and the Medical College, Jabalpur, the petitioner is entitled to be transferred to the first year M.B.B.S. course of the Medical College, Jabalpur and should be permitted to appear in the examination conducted by the Rani Durgawati University, Jabalpur. " This is totally unwarranted because the High Court does not have the necessary expertise in this regard. As to the equivalence we have already extracted the opinion of the Chairman of Board of Studies for Anatomy, Physiology and Biochemistry. From the above extract it is clearly seen that the Council is the main authority in this respect. Then again, the High Court had gone wrong in concluding that the individual cases are relevant for the grant of permission for migration. In our considered view, as rightly concluded by the Council, what is material is the course of study which a student has undergone vis a vis the courses being taught in the Medical College in which the migration is sought. What the Council was endeavouring to point out was the materials placed before it by the present first respondent were not sufficient to decide the equivalence. The criticism of the Council, by the High Court, is also not warranted. First of all, no certificate was produced by the first respondent that he had completed the first year course in Dar es Salam. Unless and until that is done the question of admission to the second year MBBS could not arise. The first respondent had not appeared in the supplementary examination. If that is so, according to the Regulations of Dar es Salam University, he is deemed to have discontinued from that Course. In such a case the question of giving admission to Medical College at Jabalpur could never arise. Therefore, looked at from any point of view, the Medical Council of India which is the authority to decide the equivalence, has come to the correct conclusion, in that, there cannot be a migration from unrecognised institution to a recognised Medical College. The judgment of the High Court is wholly unsupportable. Once we have arrived at this conclusion the question arises whether the case of the first respondent could be considered for the academic year 1993 94 based on his performance in the pre Medical test for the year 1991. The statement of 800 marks obtained in pre Medical Test, 1991 is as under: "Subjects Max. Marks Marks Obtained Physics 300 127 Chemistry 300 220 Botany 300 160 Zoology 300 214 English 300 217 1200 721" He also claims that he belongs to Scheduled Tribe. We do not have material to show as to whether he was granted admission to any Medical College on the basis of his performance in the pre Medical test for the year 199 1. However, in the petition for special leave to appeal the appellant has made the following averments "In the said Count er affidavit, on oath the respondent no.1 deliberately, knowingly an d willfully made a false statement that he had never appeared in the Pre Medical Test held in the year 1991 and failed. It was further stated that in fact it was his younger brother Sushrut who had appeared in the T.M.T Examination of 1992. The petitioner herein has made an inquiry and has come to know that the respondent no.1 appeared in the Pre Medical Test, 1991 vide application No. 27811 and was allotted Roll No. 624227 but failed to qualify and complete in the said test. . Since the writ petitioner respondent no.1 appeared in the Pre Medical Test, 1991 vide application No. 27811 and was allotted Roll No. 624227 but failed to qualify and complete, he was not at all eligible for admission to the undergraduate medical course in India. " If this be the correct position, he would not be entitled to be considered for admission for the academic year 1993 94 on the basis of his performance in the Pre Medical test held in the year 199 1. It is for the concerned authority to verify the factual situation and decide the matter. 801 We make it clear that if his case has already been considered for admission on the basis of performance in the Pre Medical test 1991 and rejected there is no need to consider his case once again for the year 1993 94. Otherwise, it may be considered on the basis of performance in the pre Medical test for the year 1991 as against the quota intended for Scheduled Tribe, if his status as belonging to Scheduled Tribe is established provided there is no legal impediment in doing so. Subject to the above directions, civil appeals will stand allowed. However, there shall be no order as to costs. I.A. No. 1 of 1993 in SLP (C) 6161 of 1993 is also allowed. U.P. Appeal allowed.

In 1989, respondent 1 and his sister applied for migration from Mumbili Medical College in the Faculty of Medicine, affiliated to the University of Dar es Salam to a recognised medical college in India. The Medical Council of India turned down this application. A writ petition was filed in the Court at Jabalpur. The High Court directed that the appellant and other authorities consider the case of the petitioners. Thereafter the Executive Committee of the Medical Council reconsidered the case on 20th August, 1991. It found that the grounds for migration were not sufficient; that it was. the course of stud already undergone vis a vis that being taught in the medical college in which migration was sought, and not the facts of individual case, which was relevant. Also the candidate had not furnished enough materials to make the comparison. The Council therefore rejected the application. A review petition and contempt petition filed in the High Court were dismissed. Thereupon, in a miscellaneous petition filed on the same grounds seeking admission in the second year or the 1 year professional MBBS Course at Medical College, Jabalpur the High Court directed that the petitioners be given provisional admission. The petitioners however, did not produce the required documents and the college did not provisionally admit them. In an interlocutory application, the High Court permitted one of the petitioners to withdraw herself from the petition and directed that the other petitioner 788 (respondent I before this Court) he granted provisional admission on his filing necessary forms and depositing the fees without insisting ton the Production of any other certificate or testimonials or syllabus (of Dar es Sala in University On fear of contempt, the Dean had to comply with this order. On an application before it, this Court stayed the interim order and requested the High Court to dispose of the main petition expeditiously. The High Court allowed the %Tit petition and quashed the resolution dated 20th August, 1991. refusing migration, holding that there was no application of mind by the Council. On appeal before this Court, it was contended that the High Court erred in directing admission of respondent in a recognised medical college from an unrecognised medical college by way of migration , that Regulation V had been misread and that not having under gone study in a recognised medical college nor having passed the first professional examination, he could not be admitted to the second year; that he had failed in anatomy and had not sat for his supplementary examination and had therefore ceased to be a student of Dar es Salam University and that the first year course at Dar es Salam University and in India were not equivalent. Equivalence in any case, it was urged, is to be decided by an expert body and is not in the domain of the Court. For respondent 1, it was argued that the self contradictory stand of the Council on equivalence had led to the High Court deciding the issue; that equity was in his favour; that he had in any event passed his pre medical test in 1991; and that he belongs to a scheduled tribe. Allowing the appeal, this Court, HELD: 1. The Medical Council has come to the correct conclusion that there cannot he migration from unrecognised institution to a recognised medical college. (799 G) Dar es Salam University has not been recognised as provided in the Indian Medical Council Act, 1956.(7% A) 2. The High Court does not have the necessary expertise to determine equivalent. The Medical Council is the main authority in this respect. (799 C) 789 3. what is material for grant of permission for migration is the course of study which a student has undergone vis a vis the courses being taught in the medical college in which the migration is sought, and not the individual case. (799 D) The material placed before the Council was not sufficient to decide equivalence. The concerned authority is to verify the disputed factual position concerning his performance in the 1991 pre Medical test and decide on considering him for admission for the academic year 1993 94. (800 E G)

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

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

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Appeal No. 205 of 1958. Appeal by special leave from the judgment and order dated October 23, 1956, of the Industrial Tribunal, Assam in Reference No. 16 of 1956. M.C. Setalvad, Attorney General for India, section N. Mukherjee and B. N. Ghosh, for the appellant. C.B. Agarwala and K. P. Gupta, for the respondents. May 6. The Judgment of the Court was delivered by WANCHOO J. This is an appeal by special leave in an industrial matter. The appellant is the Phulbari Tea Estate (hereinafter called the company). The case relates to the dismissal of one workman namely, B. N. Das (hereinafter called Das), which had been taken up by the Assam Chah Karmchari Sangh. which is a registered trade union. A reference "Was made by the Government of Assam on March 8, 1956, to the Industrial Tribunal on the question whether the dismissal of Das was justified; and if not, whether he was entitled to reinstatement with or without compensation or any other relief in lieu thereof. Das was dismissed by the company on March 12, 1955. The charge against him was that on the night of February 6/7, 1955, he along with one Samson, also an employee of the company, committed theft of two wheels complete with tyres and tubes from the company 's lorry, 5 34 which amounted to gross misconduct under the Standing Orders. The case was reported to the police and 'Das as well as Samson were arrested. Das remained in jail up to February 25, 1955, when he was released on bail. He reported for duty on February 28 ; but the manager suspended him for ten days from March 1. Thereafter, he was served with a charge sheet on March 10, 1955, asking him to show cause why he should not be dismissed for gross misconduct as mentioned above. He gave a reply on March 11, that as the case was sub judice in the criminal court, the question of dismissal did not arise at that stage and the allegations against him would have to be proved in the court. On March 12, the manager held an enquiry, which was followed by dismissal, on that very day. We shall mention later in detail what happened at the enquiry, as that is the main point which requires consideration in this appeal. To continue the narrative, however, the police submitted a final report and the magistrate discharged Das on March 23, 1955. Thereafter, his case was taken up by the union and eventually reference was made to the Tribunal on March 8, 1956. The Tribunal came to the conclusion that the dismissal of Das was not justified on the ground of proper procedure not having been followed and also for want of legal evidence. It went on to say that normally Das would have been entitled to reinstatement but in the peculiar circumstances of this case it was of opinion that he should be granted the alternative relief for compensation. Consequently, it ordered that Das would be entitled to his pay and allowances from February 28, to March 11, 1955 and full pay and allowances from March 12, till the date of payment. It also ordered that he would be entitled to fifteen day 's pay for every completed year of service along with all benefits that accrued to him till the date of final payment. This award, was given on October 23, 1956, and was in due course published and came into force. Thereupon, there was an application to this Court for special leave to appeal, which was granted; and that is how the matter has come up before us. 35 Two points have been urged before us on behalf of the company, namely (1)the Tribunal was not a competent tribunal under section 7 of the , No. XIV of 1947 (hereinafter called the Act) as it then stood; and (2)the award of the Tribunal is not sustainable in law as it shows as if the Tribunal was sitting in appeal on the enquiry held by the company, and this it was not entitled to do. Reference in this case was made on March 8, 1956, before the amending Act No. XXXVI of 1956 came into force. At the relevant time, therefore, section 7 of the Act, which provided the qualifications of a tribunal, required that where it was one member tribunal, he (a) should be or should have been a Judge of a High Court, or (b) should be or should have been a district judge, or (c) should be qualified for appointment as a Judge of a High Court. The contention is that Shri Hazarika who was the tribunal in this case, was not qualified under this provision. This contention was not raised before the Tribunal and therefore the facts necessary to establish whether Shri Hazarika was qualified to be appointed as a tribunal or not were not gone into. Shri Hazarika was an Additional District & Sessions Judge, Lower Assam Division, at the time the reference was made. Assuming that he was not qualified under clause (a) above, he might well have been qualified under clause (b), if he had been a District Judge elsewhere before he became an Ad ditional District Judge in this particular division. Further even if he had never been a District Judge, he might be qualified for appointment as Judge of a High Court. These matters needed investigation and were not investigated because this question was not raised before the Tribunal. In the circumstance, we are not prepared to allow the company to raise this question before us for the first time and so we reject the contention under this head. The Tribunal gave two reasons for holding that the dismissal was unjustified; namely (1) that 36 proper procedure had not been followed, and (2) that legal evidence was wanting. So far as the second reason is concerned, there is force in the criticism on behalf of the company that the Tribunal had proceeded as if it was sitting in appeal on the enquiry held by the company. But considering that the Tribunal Was also of opinion that proper procedure had not been followed we have still to see whether that finding of the Tribunal justifies the conclusion at which it arrived. We may in this connection set out in detail what happened at the enquiry on March 12, as appears from the testimony of the manager and the documents produced by him before the Tribunal. They show that when the enquiry was held on March 12, certain persons, whose statements had been recorded by the manager in the absence of Das during the course of what may be called investigation by the company were present. The first ques tion that Das was asked on that day was whether he had anything to say in connection with the disappearance of two lorry wheels and tyres from the garage. He replied that he had nothing to say, adding that he knew nothing about the theft. He was then told that the people who had given evidence against him were present and he should ask them what they had to say. He replied that he would put no questions to them. Then the witnesses present were asked whether the evidence they had given before the manager was correct or not; and if that was not correct, they were at liberty to amend it. They all replied that the evidence they had given before the manager was correct. This was all that had happened at the enquiry on March 12, and thereafter the order of dismissal was passed by the manager. The manager 's testimony shows that the witnesses who were present at the enquiry were not examined in the presence of Das. It also does not show that copies of the statements made by the witnesses were supplied to Das before he was asked to question them. Further his evidence does not show that the statements which had been recorded were read over to Das at the enquiry before he was asked to question the witnesses. It is 37 true that the statements which were recorded were produced on behalf of the company before the Tribunal; but the witnesses were not produced so that they might be cross examined even at that stage on behalf of Das. The question is whether in these circumstances it can be said that an enquiry as required by principles of natural justice was made in this case. We may in this connection refer to Union of India vs T. R. Varma (1). That was a case relating to the dismissal of a public servant and the question was whether the enquiry held under article 311 of the Constitution of India was in accordance with the principles of natural justice. This Court, speaking through Venkatarama Ayyar J. observed as follows in that connection at p. 507: " Stating it broadly and without intending it to be exhaustive, it may be observed that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross examining the witnesses examined by that party, and that no materials should be relied on against him without his being given an opportunity of explaining them. " It will be immediately clear that these principles were not followed in the enquiry which took place on March 12, inasmuch as the witnesses on which the company relied were not examined in the presence of Das. It is true that the principles laid down in that case are not meant to be exhaustive. In another case New Prakash Transport Co. Ltd. vs New Suwarna Transport Co. Ltd. (2), this Court held that "rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the legislature under which they have to act, and the question whether in a particular case they have been contravened must be judged not by any preconceived notion of what they may be but in the light of the provisions of the relevant Act ". In that case, it (1) [1958] S.C.R. 499. (2) 38 was held that " the reading out of the contents of the police report by the Chairman at the hearing of the appeal was enough compliance with the rules of natural justice as there was nothing in the rules requiring a copy of it to be furnished to any of the parties. That was, however, a case in which the police officer making the report was not required to be crossexamined; on the other hand, the party concerned was informed about the material sought to be used against him and was given an opportunity to explain it. The narration of facts as to what happened on March 12, which we have given above, shows that even this was not done in this case, for there is no evidence that copies of the statements, of witnesses who had given evidence against Das were supplied to him or even that the statements made by the witnesses to the manager were read out in extensor to Das before he was asked to question them. In these circumstances one of the basic principles of natural justice in an enquiry of this nature was not observed, and, there fore, the finding of the Tribunal that proper procedure had not been followed is justified and is not open to challenge. The defect in the conduct of the enquiry could have been cured if the company had produced the witnesses before the Tribunal and given an opportunity to Das to cross examine them there. In Messrs. Sasa Musa Sugar Works (Private) Ltd. vs Shobrati Khan (1), we had occasion to point out that even where the employer did not hold ail enquiry before applying under section 33 of the Act for permission to dismiss an employee, he could make good the defect by producing all relevant evidence which would have, been examined at the enquiry, before the tribunal, in which case the tribunal would consider the evidence and decide whether permission should be granted or not. The same principle would apply in case of adjudication under section 15 of the Act, and if there was defect in the enquiry by the employer he could make good that defect by producing necessary evidence before the tribunal. But even that was not done in this case, for all that the company did (1) C. As. 746 & 747 Of 1957 decided on 29 4 1059. 39 before the Tribunal was to produce the statements recorded by the manager during what we have called investigation. This left the matters where they were and Das had never an opportunity of questioning the witnesses after knowing in full what they had stated against, him. In these circumstances we are of opinion that the finding of the Tribunal that the enquiry in this case was not proper is correct and must stand. We therefore dismiss the appeal. We should, however, like to make it clear that the order of the Tribunal fixing grant of compensation till the date of payment must be taken to be limited to the sum of Rs. 11,125, which has been deposited in this Court in pursuance of this Court 's order of April 22, 1957 and Das will not be entitled to anything more, as further stay of payment was pursuant to the order of this Court. In the circumstances we are of opinion that the parties should bear their own costs of this Court. Appeal dismissed.

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

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: Civil Appeals Nos. 14 and 15 of 1955. Appeals by special leave from the decision dated September 30, 1953, of the Labour Appellate Tribunal of India, Lucknow in Civil Appeals Nos. 111 198 of 1953 and III 321 of 1953. section section Dhawan, G. C. Mathur and C. P. Lal, for the appellants and respondent No. 2 (Unions) in both the Appeals. H. N. Sanyal, Additional Solicitor General of India, and section P. Varma, for the respondent No. I in C. A. No. 14 of 1955. N. C. Chatterjee and Radhey Lal Aggarwala, for the respondent No. 1 in C. A. 15 of 55. November 20. The following Judgment of the Court was delivered by IMAM J. These two appeals by special leave have been heard together as they arise out of a single judgment of the Labour Appellate Tribunal of India, Lucknow, dated September 30, 1953, passed in seven appeals before it. As the question for consideration in the appeals before this Court is the same, this judgment will govern both the appeals before us. Civil Appeal Nos. 14 and 15 of 1955 arise out of Appeal Nos. 111 198 of 1953 and 111 321 of 1953 respectively before the Labour Appellate Tribunal. The question for consideration before the Labour Appellate Tribunal was whether the awards from which the seven appeals had been filed before that Tribunal were valid in law and made with jurisdiction. It is this very question which arises in the appeals before us. Before dealing with the question raised in these appeals it is necessary to state certain facts. On March 15, 1951, the Governor of Uttar Pradesh made a, General Order consisting of numerous clauses under 974 powers conferred on him by cls. (b), (c), (d) and (g) of section 3 and section 8 of the Uttar Pradesh (Act XXVIII of 1947), hereinafter referred to as the Act, in supersession of the general Order No. 781 (L)/XVIII dated March 10, 1948. The Order of March 15, 1951, was numbered 615 (LL)/ XVIII 7 (LL) of 1951, hereinafter referred to as Order No. 615. Under cl. 16 of Order No. 615, the decision of the Tribunal or Adjudicator was to be pronounced within 40 days, excluding holidays but not annual vacations observed by courts subordinate to the High Court, from the date of reference made to it by the State Government concerning any industrial dispute. The proviso to it authorised the State Government to extend the period for the submission of the award from time to time. On February 18, 1953, this clause was amended and the time of 40 days was altered to 180 days. On December 17, 1952, the judgment of this Court in the case of Strawboard Manufacturing Co., Ltd. vs Gutta Mill Workers ' Union (1), was pronounced. In consequence of this decision the Act was amended by the Uttar Pradesh Industrial Disputes (Amendment) Ordinance, 1953 (Ordinance No 1 of 1953), hereinafter referred to as the Ordinance, promulgated by the Governor of Uttar Pradesh. The Ordinance came into force on May 22, 1953. By the provisions of section 2 of the Ordinance section 6 A was introduced into the Act. Section 2 of the Ordinance states "After section 6 of the U. P. (hereinafter referred to as the Principal Act), the following shall and be deemed always to have been added as section 6 A "6 A. Enlargement of time for submission of awards. Where any period is specified in any order made under or in pursuance of this Act referring any industrial dispute for adjudication within which the award shall be made, declared or submitted, it shall be competent for the State Government, from time to time, to enlarge such period even though the period originally fixed or enlarged may have expired." (1)[1953] section C. R. 439. 975 Section 3 of the Ordinance states : "Removal of doubts and validation For the removal of doubts it is hereby declared that : (1)any order of enlargement referred to in section 6A made prior to the commencement of this Ordinance under the Principal Act or any order passed thereunder which would have been validly and properly made under the Principal Act if section 6 A had been part of the Act shall be deemed to be and to have been validly and properly made thereunder; (2)no award whether delivered before or after the commencement of this Ordinance in any industrial dispute referred prior to the said commencement for adjudication under the Principal Act shall be invalid oil the ground merely that the period originally specified or any enlargement thereof had already expired at the date of the mkaing, declaring or submitting of the award and any action or proceeding taken, direction issued or jurisdiction exercised in pursuance of or upon such award be good and valid in law as if section 6 A had been in force at all material dates; (3)every proceeding pending at the commencement of this Ordinance before any court or tribunal against an award shall be decided as if the provisions of section 6 A bad been in force at all material dates. " The following chart will show the date of reference, the date on which the period of 40 days expired, the dates and the periods of enlargement, the date of submission of the award and the date of filing of the appeal, in the seven appeals before the Labour Appollate Tribunal: 124 976 Date on which 40 Appeal No. Date of days, available for Date & Period reference the initial sub of enlargement mission of the if any award expired * $ 111 186/53 13 2 1953 3 4 1953 Nil 6 4 1953 5 5 1953 111 187/53 28 1 1953 18 3 1953 Nil 13 4 1953 5 5 1953 111 321/53 28 1 1953 18 3 1953 Nil 26 6 1953 18 7 1953 111 183/53 28 1 1953 18 3 1953 Nil 13 4 1953 4 5 1953 111 323/53 9 2 1953 29 3 1953 Nil 22 6 1953 20 7 1953 111 209/53 15 1 1953 5 3 1953 13 3 1953 9 4 1953 8 5 1953 (up to 31 3 1953) 17 4 1953 111 198/53 19 8 1952 10 10 1953 (i) 4 11 1952 13 5 1953 up to 11 11 1952 (ii) 26 12 1952) (up to 31 12 1952) (iii) 13 1 1953 (up to 31 1 1953) (iv) 11 2 1953 (up to 10 3 1953) *) Date of submission of the award. $) Date of filing of the appeal. 125 977 The Labour Appellate Tribunal found that the award in appeal No. 111 198 of 1953 was made not only on the expiry of the period of enlargement but also long after the expiry of 180 days from the date of reference. In the case of the other appeals the awards were made on the expiry of 40 days but within 180 days of the reference. Appeals Nos. 111 321 and 323 of 1953 were filed after the commencement of the Ordinance and the others before its commencement. In the case of the Swadeshi Cotton Mills Co., Ltd. (Civil Appeal No. 14 of 1955), the Governor by an order dated August 19, 1952, referred the dispute between the said Mills and its workmen to the Additional Regional Conciliation Officer, Kanpur for adjudication, on the issue stated therein, in accordance with the provisions of Order No. 615. In the case of Kamlapat Motilal Sugar Mills (Civil Appeal No. 15 of 1955), the Governor by his order dated January 28, 1953, referred the dispute between the said Mills and its workmen, on the issue mentioned therein, to the Regional Conciliation Officer, Lucknow for adjudication in accordance with the provisions of Order No. 615. In both these orders of reference no date was specified within which the Regional Conciliation Officers of Kanpur and Lucknow were to submit their awards. All that was stated in these orders was that they shall adjudicate the dispute in accordance with the provisions of Order No. 615. It is only by reference to cl. 16 of Order No. 615 that it is possible to say that the decisions of these Conciliation Officers were to be pronounced within the time specified in the Orders of reference and that would be 40 days from the date of reference. In the case of the Swadeshi Cotton Mills, there were several periods of enlargement of time but in the case, of the Kamlapat Motilal Sugar Mills there was no enlargement of time, as will appear from the above mentioned chart. Under section 3 of the Act the State Government, for the purposes mentioned therein, could, by general or special order, make provisions for appointing Industrial Courts and for referring any industrial dispute for conciliation or adjudication in the manner provided 978 in the order. Order No. 615 was a general order made by virtue of these provisions. Clause 10 of that Order authorized the State Government to refer any dispute to the Industrial Tribunal or if the State Government, considering the nature of the dispute or the convenience of the party, so decided, to any other person specified in that behalf for adjudication. Clause 16 specified the time within which the decision of the Tribunal or the Adjudicator had to be pronounced, provided the State Government could extend the period from time to time. Section 6(1) of the Act specifically stated that when an authority to which an industrial dispute had been referred for award or adjudication had completed its enquiry, it should, within such time as may be specified, submit its award to the State Government. It would appear therefore, that the Act required the submission of the award to be made within a specified time, which time, in the absence of a special order of reference of an industrial dispute for conciliation or adjudication under section 3 of the Act, would be determined by the provisions of a general order made by the Government in that behalf. An order of reference of an industrial dispute for adjudication without specifying the time within which the award had to be submitted would be an invalid order of reference. In fact, the orders of reference in the cases under appeal specified no time within which the award had to be submitted. All that they directed was that the dispute shall be adjudicated in accordance with the provisions of Order No. 615. If these orders of reference are read along with cl. 16 of Order No. 615, then it must be deemed that they specified the time within which the award had to be submitted as 40 days from the dates of reference. The proviso to cl. 16 of Order No. 615 empowering the State Government to extend the period from time to time within which the award had to be submitted was found to be an invalid provision, having regard to section 6(1) of the Act, by this Court in the case of Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers ' Union (1). If the matter had stood there (I) ; 979 only, the awards, having been submitted beyond forty days from the dates of reference, would be invalid as the periods of extension granted from time to time by the State Government for their submission could not be taken into consideration. The Act, however, was amended by the Ordinance and section 6 A was added to the Act and according to the provisions of section 2 of the Ordinance, section 6 A of the Act must be deemed to have formed a part of the Act at the time of its enactment. Section 6(1) and section 6 A of the Act must therefore be read together. Section 6(1) of the Act specifically stated that the award must be submitted within a specified date in an industrial dispute referred for adjudication after the completion of the enquiry. Under section 6 A, however, the State Government was empowered from time to time to enlarge the period even though the period originally fixed or enlarged might have expired. The orders of reference in these appeals, as stated above, specified 40 days within which the awards had to be submitted. The State Government could, however, enlarge the periods within which the awards had to be submitted under section 6 A by issuing other orders in the case of each reference extending the time within which the awards had to be submitted. Admittedly, .no such order was, in fact, passed in the case which is the subject of Civil Appeal No. 15 of 1955, and in the case which is the subject of Civil Appeal No. 14 of 1955, although orders extending the time for the submission of the award were made and the last order extended the time to March 10, 1953, yet the award was submitted on May 13, 1953. The awards in these cases were, therefore, made in the one case beyond the time specified in the order of reference and in the other beyond the extended period within which the award had to be submitted. It was urged on behalf of the appellant, the State of Uttar Pradesh, that as cl. 16 of Order No. 615 had been amended whereby 180 instead of 40 days had been provided as the period within which an award had to be submitted, the orders of reference in the cases before as must be construed as specifying 980 180 days within which the awards had to be submitted. In other words, cl. 16, although amended on February 18, 1953, was retrospective in operation. Order No. 615 is a general order under which conciliation boards and industrial tribunals may be set up to deal with industrial disputes. It is true that el. 16 enjoins that the decisions by the tribunal or the adjudicator must be pronounced within a specified number of days but this is a general direction. An order of reference is a special order. It could have stated the manner in which the industrial dispute was to be adjudicated and it could also have specified the time within which the decision had to be pronounced. As the orders of reference in the cases before us merely stated that they were to be decided in accordance with the provisions of Order No. 615, the disputes had to be adjudicated in the manner so provided and the orders of reference must, accordingly, be read as having specified 40 days as the time within which the awards had to be submitted. Subsequent amendment of cl. 16, whereby 180 days instead of 40 days was provided as the time within which the award had to be submitted, could not affect an order of reference previously made according to which the award had to be submimitted within 40 days. We cannot agree with the submission made on behalf of the appellant that cl. 16, as amended, must be given retrospective effect and the orders of reference previously issued must be regarded as specifying the time of 180 days for the submission of the awards. Section 6(1) of the Act is to the effect that the authority to which an industrial dispute has been referred for adjudication must submit its award within such time as may be specified. This section read with section 6 A of the Act, on a proper interpretation of their provisions, makes it clear that the time within which the award shall be submitted is the period specified in the order of reference. Mere amendment of cl. 16 would not, therefore, affect the period already specified in the order of reference. It seems to us, therefore, that the amendment to el. 16 did not materially affect the position and the awards in the cases before us had to be submitted within 981 40 days from the dates of the orders of reference or within the enlarged time for the submission of the awards. What is the effect of section 3 of the Ordinance is a matter which now remains to be considered. This section purported to remove doubts and to validate orders of extension of time for the submission of an award. It also purported to validate certain awards. There is no difficulty in construing cl. (1) of this section. It validates all orders of extension made prior to the commencement of the Ordinance as if section 6 A of the Act had been a part of the Act always. In other words, orders of extension of time made under the general order, promulgated under section 3 of the Act, would be regarded as made under section 6 A. Clause (3) of section 3 of the Ordinance also does not present any difficulty in construing its provisions. It directs that every proceeding pending before any Court or Tribunal at the commencement of the Ordinance against an award shall be decided as if section 6 A of the Act had been in force at all material dates. Clauses (1) and (3) of this section merely re emphasise the provisions of section 6 A of the Act, which, in our opinion, are clear enough even in the absence of the aforesaid clauses. It is cl. (2) of section 3 of the Ordinance which requires careful examination. Learned Counsel for the appellants contended that el. (2) was sufficiently wide in its terms to include all awards and not merely awards which bad become final as held by the Labour Appellate Tribunal. The words at the end of the clause " as if section 6 A had been in force at all material dates " were redundant and they should be ignored. Indeed, according to him, there was no need for the existence of el. (3) in view of the provisions of cl. Clause (2) validated all awards whether made before or after the commencement of the Ordinance even if the period specified within which they were to be submitted or any enlargement thereof had already expired in so far as they could not be questioned merely on that ground alone and this would cover even a proceeding pending in any Court or Tribunal at the commencement of the Ordinance against an award, 982 Mr. N. C. Chatterjee, appearing for respondent No. 1, in Civil Appeal No. 15 of 1955, contended that the Labour Appellate Tribunal took the correct view that cl. (2) of section 3 of the Ordinance covered cases where the awards had become final. He further developed his argument in support of the decision of that Tribunal on the following lines. Such clarification, as was sought to be made, by section 3 of the Ordinance must be construed in relation to section 6 A of the Act and not independently of it. If an award were made outside the ambit of section 6 A then the whole of section 3 of the Ordinance could not apply to such a case. Section 3(1) of the Ordinance validated all orders of enlargement of time which were made prior to the commencement of the Ordinance. Such orders should be deemed to have been validly made as if section 6 A had been a part of the Act. Section 3(2) of the Ordinance was enacted to prevent the validity of an award being questioned when it had been submitted after the specified period for its submission or any enlargement thereof. The words " as if section 6 A had been in force at all material dates " merely connote that there must be an order of enlargement made by the Government in the exercise of its powers under section 6 A of the Act. Section 3(2) of the Ordinance had no application to a case where an award was made independently of the exercise of the powers of the Government under section 6 A. Section 3(2) and (3) of the Ordinance were subservient to section 6 A of the Act. The Tribunal apparently took the view that there was repugnance between sub sections (2) and (3) of section 3 of the Ordinance and so it made an attempt to avert that repugnance by putting an artificial restriction on the scope of sub section (2) of section 3. In holding that section 3(2) applied only to awards that have become final, the Tribunal overlooked the fact that this sub section referred to awards which may be made even after the commencement of the Ordinance and it is not easy to appreciate how finality could be said to attach to these awards on the date when the Ordinance was promulgated. The Tribunal also felt impressed by the argument that if section 6 A applied to appeals or 983 proceedings against awards pending at the date of the commencement of the Ordinance, there was no reason why the same provision should not apply to appeals or proceedings which may be taken against the awards after the commencement of the Ordinance. In giving expression to this view, however, the Tribunal clearly overlooked the fact that section 3 (3) is deliberately confined to proceedings against an award pending at the commencement of the Ordinance and no others. There can be little doubt, in our opinion, that the main purpose of the Ordinance was to validate orders of extension of time within which an award had to be submitted as well as to prevent its validity being questioned merely on the ground that it had been submitted beyond the specified time or any enlargement thereof. Apart from an order of extension of time the Ordinance purported to deal with at least three situations so far as the submission of an award was concerned. One was where an award was submitted before the commencement of the Ordinance and against which no proceeding was pending before any Court or Tribunal at the commencement of the Ordinance; another was where an award was submitted after the Ordinance came into force. These cases were dealt with by cl. (2) of section 3 of the Ordinance. The third was the case where an award was submitted before the commencement of the Ordinance against which a proceeding was pending before a Court or a Tribunal before the Ordinance came into force. Section 3(3) of the Ordinance was so drafted that it should not interfere with judicial proceedings already pending against an award. It merely directed that such a proceeding must be decided as if section 6 A had been a part of the Act from the date of its enactment. Where, however, no judicial proceedings against an award were pending it was the intention of the Ordinance that the award shall not be questioned merely on the ground that it was submitted after the specified period for its submission or any enlargement thereof. Although section 3(2) of the Ordinance is not happily worded and appears to have been the result of hasty legislation, we think, that upon a reasonable construction of 125 984 its provisions its meaning is clear and there is no real conflict between its provisions and the provisions of cl. (3) of the section. The words " as if section 6 A had been in force at all material dates " have to be given some meaning and they cannot be regarded as redundant as suggested on behalf of the appellants. Grammatically they should be regarded as referring to any action or proceeding taken, direction issued or jurisdiction exercised in pursuance of or upon an award. Section 6 A of the Act, however, has nothing to do 'With this and these words car not apply to that part of the clause. These words also cannot refer to a case where the award has been made beyond the specified period and in which there has been no order of enlargement of time as section 6 A of the Act does not apply to such a lase. The words in question, therefor, can only apply to that part of the clause which refers to an enlargement of time for the submission of the award, which is the only purpose of section 6 A of the Act. In our opinion, if section 3(2) of the Ordinance is read in this way an intelligible meaning is given to it which is consistent with section 6 A of the Act and not in conflict with section 3(3) of the Ordinance. The awards referred to in section 3(2) are awards against which no judicial proceeding was pending at the commencement of the Ordinance. In our opinion, the provisions of section 3(2) and (3) are not in conflict with each other. We cannot accept the view of the Labour Appellate Tribunal that section 3(2) refers only to awards that had become final. Having construed the provisions of section 3 of the Ordinance, it is now necessary to deal specifically with the appeals before us. Appeal No. III 198/53 of the Labour Appellate Tribunal, out of which Civil Appeal No. 14 of 1955 arises, was filed before the commencement of the Ordinance and by virtue of section 3(3) of the Ordinance the appeal had to be decided as if the provisions of section 6 A had been in force at all material dates. To such an appeal the provisions of cl. (2) of section 3 of the Ordinance would not apply. This appeal would, therefore, be governed by cl. As in this case, the award had been submitted on May 13, 1953, 985 and the last date of enlargement gave time for the submission of the award up to March 10, 1953, the award was submitted beyond time and, therefore, was invalid as having been made without jurisdiction. In Civil Appeal No. 15 of 1955, arising out of Appeal No. 111 321 of 1953 of the Labour Appellate Tribunal, the appeal was filed before that Tribunal after the commencement of the Ordinance. The award was submitted long after the period, namely, 40 days, within which it had to be submitted and there were no orders of enlargement of time. Section 3(2) of the Ordinance and not section 3(3) would, therefore, apply to this appeal. The award in this case consequently has been validated by virtue of the provisions of section 3(2) of the Ordinance and its validity cannot be questioned merely on the ground that it was submitted after the period within which it should have been submitted. In the result, Civil Appeal No. 14 of 1955 is dismissed with costs and Civil Appeal No. 15 of 1955 is allowed with costs and the decision of the Labour Appellate Tribunal in Appeal No. 111 321/53 before it is set aside. Appeal No. 14 of 1955 dismissed. Appeal No. 15 of 1955 allowed.

Clause 16 of the General Order No. 6,5 made by the Governor on March I5, 195,, under the Uttar Pradesh , 947, provided that the decision of the Tribunal or 972 Adjudicator shall be pronounced within 4o days from the date of reference. By orders dated August 19, 1952, and January 20, 1953, the Governor referred two industrial disputes for adjudication. The references did not specify the time within which the awards were to be submitted but stated that the disputes were to be adjudicated in accordance with the provisions of Order No. 615. In the first reference the period for making the award was extendad from time to time up to March 10, 1953, but in the second reference the time was not extended. On February 18, 1953, before the awards were made, cl. 16 of Order No. 615 was amended and the time Of 4o days was altered to 18o days. The award in the first case was made on April 17, 1953, beyond 180 days of the reference, and in the second case on June 26, 953, beyond 40 ,lays of the reference but within 180 days thereof. On May 22, 1953, the Uttar Pradesh Industrial Disputes (Amendment) Ordinance, 1951, came into force which conferred, with retrospective effect, power on the State Government to enlarge, from time to time, the period for making an award and which also validated certain awards not made within the time originally fixed for making them. The Labour Appellate Tribunal held that the two awards were not valid in law as they had not been made within time. It was contended by the appellant that as cl. 16 of the Order No. 6I5 had been amended the orders of reference must be construed as specifying 180 days within which the awards were to be submitted, and that, in any case, the awards were validated by section 3 of the Ordinance. Held, that the award in the first case was submitted beyond time and was invalid and could not be validated by section 3 Of the Ordinance but that the award in the second case, though submitted beyond time, was validated by section 3(2) of the Ordinance. The Act required the awards to be submitted within a speci fied time and although the orders of reference specified no time it was stated therein that the references were to be decided in accordance with the provisions of Order No. 615, and as such the orders must be read as specifying 4o days as the time within which the awards had to be submitted. The subsequent amendment of cl. 16 whereby 180 days were substituted for 4o days could not affect an order of reference previously made as cl. 16, as amended, could not be held to have retrospective operation. On a true construction Of section 3 Of the Ordinance cl. (1) must be held to validate all orders of extension of time for submission of awards made prior to the commencement of the Ordinance, cl. (3) applies to proceedings pending at the commencement of the Ordinance and makes section 6 A of the Act, introduced by the Ordinance, applicable to such proceedings and cl. (2) validatesawards against which no judicial proceedings were pending at the commencement of the Ordinance and not only awards which had become final. Consequently, the award in the first case against which an appeal had been filed before the commencement of the 973 Ordinance and to which cl. (3) Of section 3 of the Ordinance applied was bad as it was made beyond the last date of the enlargement of time. But the award in the second case against which the appeal was filed after the commencement of the Ordinance was validated by el. (2) Of section 3 of the Ordinance.

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minal Appeal No. 738 of 1992. From the Judgment and Order dated 16.11.1992 of the Bombay High Court in Crl. A. No. 148 of 1989. A.N. Mulla, Ms. Shefali Khanna and J.M. Khanna for the Appellant. S.B. Bhasme, S.M. Jadhav and A.S. Bhasme for the Respondents. The Judgment of the Court was delivered by YOGESHWAR DAYAL, J. This is an appeal by the four accused persons against the judgment of the Bombay High Court dated 16th November. Appellant No. 1 who was accused No. 1 was tried for the offence of having 880 committed the murder of his daughter in law Sangita, wife of appellant No. 2 who was accused No.2, during the night between 14th September, 1984 and 15th September, 1984 at the residential house of the appellants at Murtizapur with common intention and also for having treated her with cruelty on account of dowry amount. In the alternative the appellants were also charged for the offence of having abetted the deceased Sangita in commission of suicide by subjecting her to cruelty. Appellant no.3, who was accused No.3, is the wife of accused No.1 and appellant No.4, who was accused No. 4. is their daughter. Appellants 1 to 4 are hereinafter called accused Nos. 1 to 4. The story of the prosecution was as follows: The accused run a printing press at their residence. Marriage of accused No. 2 was settled with the 5th daughter of Madan lal (PW. 8). Few days prior to the settlement of the marriage. marriage of her elder sister was also settled. As such marriages of both the daughters i.e. Sangita and Hemlata were celebrated at Paratwada on 28th April, 1994. Talk over the marriage had taken place about a month prior to the marriage and the same was finalised after about 2 or 3 days of such talks. At the time of finalisation, accused No. 1 demanded Rs. 20,000 by way of hard cash as dowry, besides other articles, add he himself had given such demands in writing vide Ext. Though agreed, Madan Lal, father of the deceased could not give Rs. 20,000 at the time of marriage. He also could not give the gold agreed, though he assured to comply with the demands later on getting the crops. After the marriage, on account of the month of Shrawan, and as per custom, Sangita resided with her parents. It was during her stay after the marriage that she was found disturbed and sullen. Though she herself did not give out the reason therefore, but on insistence by the father to know the reason she told him that accused No. 1 had an evil eve on her and that other members of the family used to beat and ill treat her because of the failure on the part of Madan Lai to pay the dowry amount. Though Madan lal assured that he would come down to Murtizapur and pursued the accused, but he could not visit Murtizapur. After the month of Shrawan, Sangita returned to Murtizapur but not communication was made about her safe return by the accused persons to her father. The accused persons had a telephone connection and Madan Lal (PW.8), two three days prior to the date of the incident contacted accused No. 1 on telephone. Accused No. 1 talked angrily with Madan Lal. Madan Lal then requested accused No. 1 to call Sangita on telephone. Sangita came on phone and in answer to his query she broke down and Stated weeping and told Madan lal as to why he did not send Ganesh Chaturthi Neg ', 'Neg ' means a customary offer that the father of the bride has to pay on an auspicious day. It varies according to financial capacity of the father. He told 881 Sangita that he had committed it mistake and assured that he would be sending it immediately. On the next day lie had got drawn a draft of Rs. 101/ on State Bank of India. 74 A is the said draft. It was thereafter when Madan Lai was on a visit to Amravati that Madan Lal received a message about Sangita having got burnt on 15th September, 1984. During the night between 14th and 15th September. 1984 at about midnight the accused found Sangita not in her bed and smell of burning. They found that in the rear side open space Sangita was burning and lying down. According to the defence the doors were closed from inside and there was no access to the said open space. Accused No. 1 informed the police about the occurrence that he had seen through the window opening on the )pen space. Accused No. 1 at about 3.45 a.m. on 15th September, 1994 submitted it report (Ext.82) to the police wherein he had stated that about 2. 10 a.m. in the night Sangita was found to be burnt and died in the bath room. Mundheh. the investigating Officer gave instructions to the accused persons not to disturb the situation. Initially on the report of the accused, accidental death was registered. PW9 when reached the spot on 15th September. 1984 at about 10.00 a.m. he made spot Panchnama vide ext.63. He also found a postcard. half burnt, (Ext. 62) by the side of the dead body. He thereafter drew inquest panchnama (Ext.64). PW. 1 Bhanudas acted as a panch. PW.9 having convinced that it was a case of murder, lodged it report on behalf of the State registering the offence punishable under Section 302 read with Section 34 of the Indian Penal Code. Dr. Lande, PW.3, on 15th September, 1994 at about 5.00 p.m. conducted the post mortem. The Additional Sessions Judge on the basis of the material filed with the challan. on 30th September, 1994 trained a charge under Sections 302.499 A and 201 read with Section 34 of the Indian Penal code and thereafter recorded the evidence of PWs. 1 to 9. Thereafter by an order dated 22nd August, 1988 the trial court framed an additional charge for the offence punishable under Section 306 read with Section 34 of the Indian Penal Code. The accused persons challenged the framing of the additional charge before the High Court but the challenge was defeated. The accused persons were accordantly tried. Their defence through out was a total denial. It appears that during arguments the Prosecutor did not think it proper to press for the diffence punishable under Section 302 read with Section 34 of the Indian penal Code. According to the Prosecutor the only case made out was for the offences punishable under Sections 306, 498 A read with Section 34 of the Indian Penal Code. The trial court endorsed the view of the Public Prosecutor and did not 882 discuss the relevant evidence it all on the charge of Section 302 and recorded a finding of acquittal in that behalf. He also held that the charge of Section 201 also did not survive. The learned trial Judge also held that the prosecution hits not been able it) prove that the accused persons with their common intention treated Sangita with cruelty or thereby abetted her to commit suicide. He accordingly acquired all the accused persons for the offence punishable under Section 306 read with Section 34 of the Indian Penal Code. The State filed all appeal against their order of acquittal and the High Court on appeal castigated the trial judge for having gone merely oil the statement of the public Prosecutor without applying his own mind on the evidence. The High Court examined the evidence afresh. The High Court posed a question is to whether the nature of death of Sangita was suicidal or homicidal and ultimately gave a finding that it was a case of homicidal death and found all the accused guilty under Section 302 read With Section 34 and Section 201 read with Section 34. The accused were also find guilty under Sections 498 A read with Section 34. For the offence under Section 302 read with Section 34 all of them were sentenced to rigorous imprisonment `for life and different fines. For the offence under Section 201 read with Section 34 all the accused persons were sentenced to rigorous imprisonment for three years and each of them was fined Rs.1,000/ . For the offence under Section 498 A read with Section 34 all of them were sentenced to one year rigorous imprisonment and a fine of Rs.2,000. Learned counsel for the defence, however, submitted before the High Court that the charge under Section 302 read with Section 34 did not survive tit view of the concession made by the Prosecutor and also in view of the framing of the additional charge under Section 306 read with Section 34. It was also submitted that the framing of the additional charge negated the theory of murder in pith and substance. The High Court, however negatived this submission and on consideration of the evidence convicted all the accused persons as stated above. Body of Sangita suffered 100% burn injuries and smell of kerosene was even noticed in the spot panchanama. The description 1005 burn does not really fully 883 convey the condition of the body. Asper the inquest report the dead body was lying on its back in the open court yard at the back side of the house of the accused. Both the legs were partly stiffen. Both the hands were partly bent and lying at side. Hairs on the head burnt and even fleshy portion is also burnt at some places. There was slight hair at some portion of head. Complete body was burnt and skin on it also peeled up. Face had became red and black. Eyes were closed and burnt. Nose was burnt and blood was cozing from the nose and mouth. Tongue was slightly protruding out. Brassier of the left side was totally burnt and right side was partly burnt. Ash of burnt cloth was visible on stomach. A partly burnt small piece of the border of saree was lying there. Some pieces of saree, burnt and sticking each other, were lying on the stomach. Skin on palm of both hands was peeled up and was appearing reddish. Skin on the complete body was burnt and peeled up. On observing the body by turning its upside down, the complete body was burnt from back side. On observing the private parts of the deceased through Pancha No.3 it was stated that private parts were burnt and there was no injury and to ascertain the actual cause of death, the dead body was sent to the Civil Surgeon, Murtizapur for post mortem. According to Dr. Lande, who conducted the postmortem, on opening of trachea black particles were found. He recorded that probable cause of death was 100% burn with bum shock with asphysix. On the basis of medical evidence the High Court again felt the necessity to ascertain whether the act of pouring kerosene oil was voluntarily by the victim or the act of a third person. The High Court felt that the trial court has not even discussed the medical evidence or the inquest report and hastily reached the conclusion that it was a case of suicidal death. According to the High Court the entire approach of the trial court was thoroughly unsatisfactory and grossly erroneous. After going through the evidence the High Court gave the following findings: That the deceased could not control her emotional out burst even during the presence of her father in law while talking on telephone. The deceased was a young girl of 20 years. A determination to suffer extreme pain in silence could not be a matter of speculation. "In third degree injuries, as per Dr. Lande, the victim suffers extreme pain. Such injuries will make the person to give out cries and shouts for help." The shouting and crying of the deceased was not only obvious but inevitable. Undisputedly, none had heard the cries or shouts of the deceased while she was in flames. This circumstance alone does not support the probability of suicidal death. 884 The trial court has wrongly read the contents of letter Ext. 62 and its interpretation is highly illegal. Undisputedly Sangita returned from Paratwada after "Shrawani Mass" just a week before the incident, probably by 7th September, 1984. She was subjected ' to insinuation and accused used to refer her as "awara", "loafer". "badmash", She wanted to convey this to her father through post card (Ext.62) which seemingly not delivered. By this letter she requested her father not to visit Murtizapur. This letter never reached post off ice and the message could not be passed to Madan Lai, PW. 8. Before accomplishing her design to convey this message, she could not bring an end to her life. Sangita could not simply think of committing suicide while in possession of Ext.62. Sangita at the time of incident, as per the post mortem report. was having, a pregnancy of 3 4 months and this is also not in tune with the act of commission of suicide. The Sessions Judge omitted to discuss the complete evidence of Dr. Lande and the post mortem report Ext.50. As per post mortem report the eye ball and tongue of the deceased were protruding. Dozing of the blood was found from the nose and mouth. In case of death due to burning such injuries cannot be sustained. Sangita was assaulted before she was set on fire. There might be a definite attempt to cause death by strangulation before pouring kerosene oil on her person. Relying of the evidence of PW.1, Shivraj, a neighbour who heard a shriek of ' woman as a result of strangulation coming from the house of the accused. Taking into account tile medical evidence read with the testimony of PW.1, Shivraj, Sangita met with tile homicidal death. A ball of cloth half burnt was also found by the side of the body. The ball was used for gagging her mouth as a precautionary measure to handicap her from raising cries or shouts. PW.5, Bhanudas, had also noticed dragging marks in the court yard and the deceased after assault was dragged and kept at the spot. While in flames Sangita did not make any movement. She was completely motionless. The latching of doors of the compound was not accepted as an act of the deceased. Latching of doors and pouring of kerosene after assault was a farcical venture skilfully and conveniently made to bring colour of suicide to the incident. 885 The High Court then posed the question as to who is responsible for homicidal death of Sangita. It was held that it could not be an act of an individual It was joint venture. There is no direct evidence. Undisputedly the payment of Rs.20,000/ was not made nor the tither items mentioned in Ext. 73 were given till the date of incident. On her second visit, the deceased had disclosed to her father, Madan Lal. that the members of in laws ' family had beaten and ill treated her for the reason of non fulfillment of dowry and other articles. A reading of the letter indicates that the accused persons had very serious grievance against Sangita and her parents for non fulfillment of dowry demands. Recovery of handkerchief at the instance of accused No. 1 in pursuance of a disclosure statement and the seizure thereof vide Ext.69 from a drawer of the table of the office. The handkerchief was smelling, kerosene oil. It was concealed at a place which was not normally or ordinarily used for keeping the handkerchief. This handkerchief was used at the time of the incident. None of the accused persons made any attempt to reach the spot even though they noticed the death of Sangita. They merely allowed the body to be burnt. Accused persons had quoted exact time of death in Ext.82 which means that they were mentally alert and conscious of the happening in the house. The refusal to disclose the death of Sangita to the chowkidar of the locality, PW.2, Rahadursingh. The meeting with chowkidar Bahadursingh was falsely denied in the statement under Section 313 of the Code of Criminal Procedure. Homicidal death occurred by Sangita while she was in their custody. The incident with its gravity and extent cannot in any manner go unnoticed. As such the accused persons were duty bound to offer plausible explanation. Their action was concerted. well thought out. well planned. With the aforesaid findings all the accused persons were found guilty by the High Court and the appellants have come up in appeal before this Court. This court on application of appellant Nos. 3 and 4 i.e. another in law and sister in law of the deceased, admitted them to be on hail. Apart from the inferences noticed by the High Court there are certain other features in the post mortem report Ext. 15 which may also be noticed at this state. It is stated in paragraph 13 of the post mortem report that the whole (if skin of face 886 was burnt and Covered at places with black soot. Eye ball slightly protruding Tongue was protruding from mouth. Blood stained discharge from nose and mouth. In paragraph 17 it is noticed heirs of the scalp, eye lashes, both ears, eyes, whole neck. whole chest. whole abdomen suffer from burns. Buttock and pubic hairs also burnt. Black soot was present over burnt area of face, chest, abdomen. In paragraph 19 it is stated Brain & Meninges congested. In paragraph 20 it is stated Larynx. Trachea and Bronchi congested, on opening, troches. black particles seen inside human. Right lung left lung congested. Right ventricle of the heart was full whereas left was empty. In paragraph 21 it is stated liver and gall bladder congested. pancreas and suprarenals congested. spleen congested, kidneys congested and bladder empty, i.e. parenchymatous organs show intense venous congestion. Dr. K.S. Narayan Reddy, M.D. D.C.P., M.I.A.F.M., F.I.M.S.A.,F.A.F.Sc., Professor of Forensic Medicine, Osmania Medical College Hyderabad in his well known treatise THE ESSENTIALS OL FFORENSIC MEDICINE AND TOXICOLOGY. Sixth Education at page 255 gives descriptions of internal as well as external symptoms of manual strangulation. At page 255 while dealing with signs of asphyxia. the learned author observes : "The face may be livid, blotchy and swollen, the eyes wide open, bulging and suffused, the pupils dialated, the tongue swollen, dark cloured and protruded. Petechial hemorrhages are common into the skin of the eyelids, face, forehead, behind the cars and scalp. Bloody froth may escape front the mouth and nostrils and there may he bleeding from the nose and cars. The hands are usually clenched. The genital organs may be congested and there may be discharge of urine, faeces and seminal fluid. " While internal injuries described little later included as under "The larynx. trachea and bronchi are congested and contain frothy. often blood stained mucus. The lungs are markedly congested and show ecchymoses and larger subaerial hemorrhages. Dark fluid blood exudes on section. Silvery looking spots under the pleural surface due to rupture of the air cells which disappear on pricking. are seen in more than 505 cases. The parenchymatous organs show intense venous congestion and in young persons ecchymoses are usually seen on the heart and kidneys. The brain is contested and shows petechial hemorrhages. The right side of the heart is full of dark fluid blood and the left empty. Both the cavities are full if the heart stopped during diastole. " Whereas in burn injuries the learned author at pages 237 238 observes. "the 887 brain is usually shrunken, firm and yellow to light brown due to cooking. The dura matter is leathery." (dura matter is meninges of the brain). If the death has occoured from suffocation. aspirated blackish coal particles are seen in the nose, mouth and whole of the respiratory track. Their presence is proof that the victim was alive %,.hen tile fire occurred. The pleurae are contested or inflamed. The lungs are usually congested. may be strunken and rarely anemic. Visceral congestion is marked in many cases. The heart is usually filled with clotted blood. 'The adarme;s (glands above kidneys) may he enlarged and congested. Some of these symptoms or internal and external injuries are common in case of strangulation and burn like face is swollen and distorted, the tongue protruded. the lungs are usually congested visceral congestions is marked in many cases. What is to he noticed in the present case is that there are hardly "any cries" as per the defence also by the deceased. This is not possible even in case of suicide. Even if the burns ,ire inflicted with suicidal intent tile victim is bound to cry out of pain. Admittedly there was no cries and, therefore, it was not a Case of suicidal burn but the deceased was put in a condition where she could not cry and yet get burnt by third party. As is clear from the aforesaid commentary of Dr. K.S. Narayan Reddy that if it was a case of merely burns the blood of the heart would have got clotted. Even the postmortem report does not say that asphvsix was due to burn. Coupled with all the internal injuries which occur in the case of strangulation. are present in this case. As pointed out by the High Court there is no direct evidence to connect the appellants with the offence of murder and the prosecution entirely rests its case only on circumstantial evidence. There is a series of decisions of this Court propounding the cardinal principles to be followed in cases in which the evidence is of circumstantial nature. It is not necessary to repapitulate all those decisions except stating the essential ingredients as noticed by Pandian, J. in the case reported as The State of Uttar Pradesh vs Dr. Ravindra Prakesh J. in the case 2 SC 114 at 121, to prove quilt of an accused person by circumstantial evidence. They are: (1) The circumstance from which tile conclusion is drawn should be fully proved; (2) the circumstances should he conclusive in nature; 888 (3)all the facts so established should he consistent only with the hypothesis of guilt and inconsistent with innocence: (4)the circumstances should. to a moral certainty, exclude the possibility of guilt of any person other than the accused. " Now let us examine the impelling circunistances attending the case and examine whether tile cumulative effect of those circumstances negatives tile innocence of tile appellants and serves a definite pointer towards their guilt and unerringly leads to the conclusion that with all human probability the offence was committed by the appellants and none else. There is no doubt that when the incident occurred there was no outsider its the house. The circumstances which ire establislied its having closely linked up with one another may be noticed 1) The motive for the occurrence. 2) The place where the tragic incident occurred was in possession and occupation of the appellants. 3) The occurrence had happened in the wee hours when body else would have had ingress at the place where the incident allegedly occurred. 4) The appellants admit their presence. The positive features, which occurred, had it been it pure case of burning, there would he evidence of vomiting. 6) The positive opinion of the doctor that the death was due to asphysix as well apart from 100% burns. 7) The deceased was carrying fetus of 3 4 months 8) The extensive use of kerosene as seen from the burn shows that the deceased was practically 889 drenched as sort of a bath with kerosene. 9) Total absence of any shout or cries except one which was heard by way o f strangulation by PW. 1. 10) Blood in heart was not found clotted. Right ventricle heart was full of blood but left ventricle wits empty. 11) Besides total burning of neck was to destroy evidence of attempted strangulation. 12) In burn brain is usually shrunken and firm whereas in strangulation it is congested. As noticed by Pandian, J. in the aforesaid decision, opinion of Taylor in Medical Jurisprudence is quoted below. It reads thus: "Not uncommonly the victim who inhales smoke also vomits and inhales some vomit, presumably due to bouts of coughing, and plugs of regur gitated stomach contents mixed with soot may be found in the smaller bronchi, in the depths of the lungs. " By the time a person could take a bath of kerosene she is likely to get fainted and would not be in a position thereafter to burn herself. A total burning, of the face and the neck shows that even at portions where she was not wearing any clothes were not burnt. It could only be possible if she had poured kerosene on her head and face also. It is not understood as to how the unposted post card found near the dead body was not burnt when the whole body had got burnt. It in fact indicates that the planting of the post card was to show that it was a case of suicidal death. In passes all human probabilities that the appellants have satisfied themselves by watching through the window the burning of daughter in law without any due and cry or without and serious attempt to save her. We are thus satisfied that it was a case of murder and not suicidal death. So far as the accomplicity of appellants 1 and 2 are concerned, there is no doubt. But 890 it is not necessary if appellant Nos. 3 4 i.e. mother in law and sister in law of the deceased have also participated in the murder of the deceased. For the aforesaid reasons we dismiss the appeal on behalf of appellant. Nos. 1 and 2 but give benefit of doubt to appellant Nos. 3 and 4 and accept the appeal on their behalf. They are accordingly acquitted. The convictions and sentences of appellant Nos. 1 and 2 are upheld. U. R. Appeal dismissed.

Sangita was married to accused 2 on 28th April, 1984. In the intervening night of 14115 September 1984, the accused found Sangita burning. Sangita 's body suffered 100% burns and the smell of kerosene was noticed even in the spot panchnama. There had been problems relating to dowry, and she had complained of ill treatment and of being beaten because of failure to pay the dowry amount. The trial judge acquitted accused 1 4 her father in law, husband, mother in law and sister in law respectively. The High Court examined the evidence a fresh, while castigating the trial judge for having gone merely on the statement of the Public Prosecutor that only a case under Ss. 306, 498 A and 34 was made out. The High Court Convicted the accused under S.302 r/w 34, S.201 r/w 34 and 498 A r/w 34. Partly dismissing the appeal, this Court. HELD: 1. It was a case of murder and not suicidal death. It is not possible that there were no 'cries ' from the deceased while she was burning. This is not possible even in a case of suicide. Some of the symptoms of internal and external injuries are common in 879 case (if strangulation and burns. But some symptoms that occur in the case of strangulation, and not in case of burns, are present in this case. Dr. K.S. Narayan Reddy, The Essentials of Forensic Medicine and Toxicology 6th edn. p. 55, relied on. The prosecution rests its case only on circumstantial evidence. Therefore, it is necessary to examine the impelling circumstances attending the case and examine whether the cumulative effect of those circumstances negatives the innocence of the appellant ,; and serves a definite pointer towards their guilt and unerringly leads to the conclusion that with all human probability the offence was committed by the appellants and none else. State of U.P. vs Dr. Ravindra prakash Mittal, JT(1992) 2 SC 114 at 121. applied. Taylor, Medical jurisprudence, relied on. On an appreciation of the circumstances which arc established as being closely linked to one another, the complicity of appellants 1 and 2 is not in doubt. But it is not necessary that appellants 3 and 4 also participated in the murder of the deceased. They are given the benefit of doubt and accordingly acquitted.

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Appeal No.396 of 1957. Appeal from the Judgment and Order dated the 21st February, 1956, of the Bombay High Court in Income tax Reference No. 32 of 1954. , R. J. Kolah, J. B. Dadachanji and section N. Andley, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. May 5. The Judgment of the Court was delivered by DAS, C. J. This is an appeal brought on a certificate granted on September 19, 1956, by the High Court of Bombay under section 66(A)(2) of the Indian Income Tax Act (hereinafter referred to as " the said Act ") against its order dated February 21, 1956, in Income tax Reference No. 32 of 1954 answering in the negative two questions of law referred to it under section 66(1) of the said Act at the instance of the appellants. The appellants are the trustees of a charity fund known as " The Charity Fund Founded by Sir Sassoon David, Baronet of Bombay ". The said Sir Sassoon David, Bart. and four other persons, who were holding certain securities of the value of Rs. 24,25,000 for the purpose of charity and had been applying the same for and towards charitable purposes, executed, on June 8, 1922, a Deed of Declaration of Trust declaring that the said trust fund would be held by them on trusts more specifically therein mentioned. Clause 13 of the said deed, on the true construction of which depends the answer to the referred questions, runs as follows: " 13. The Trust Fund shall be held by the Trustees upon the Trusts to apply the net income thereof 926 after providing for all necessary expenses in relation to the management of the Trust Funds for all or any of the following purposes, that is to say, (a) the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and clothes and/or lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or. . (b) the institution maintenance and support of hospitals and schools, colleges or other educational institutions or. . . (c) the relief of any distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other such calamity or. . . . . (d) the care and protection of animals useful to mankind or. . . (e) the advancement of religion or. . . . (f) other purposes beneficial to the community not falling under any of the foregoing purposes. . . . Provided always that in applying the income as aforesaid the Trustees shall give preference to the poor and indigent relations or members of the family of the said Sir Sassoon David, Bart., including therein distant and collateral relations; provided further that in the application of the income of the said Charitable Trust Fund the said Trustees for the time being shall observe the following proportions, viz.: that not less than half the income of the said funds shall at all times be applied for the benefit of the members of the Jewish Community of Bombay only (including the relations of Sir Sassoon David, Bart. as aforesaid) and Jewish objects and particularly in giving donations to the members of the Jewish Community of Bombay on the anniversary of the death of the said Sir Sassoon David, Bart. and his wife Lady Hannah David which falls on the Twenty second day of June and the remaining income for the benefit of all persons and objects including Jewish persons and objects and in 927 such proportions as the said Trustees may think proper. Provided further that if the income of the Trust Funds for any year shall not be wholly applied during that year on the Trusts aforesaid such surplus income may be carried forward to the subsequent year or years and be applied as the income arising during that year or years. Provided also that during the life time of Sir Sassoon David, Bart., in the application of the said income the Trustees shall have regard to the wishes of the said Sir Sassoon David, Bart., who shall also be entitled to direct if he so desires that the income of the time being of the Trust Funds or any part thereof may be applied to such charitable object or objects as the said Sir Sassoon David, Bart., shall direct and in such case the Trustees shall so apply the income ". This Deed of Declaration of Trust was, on June 4, 1953, registered under the Bombay Public Trusts Act, 1950. The Trust fund had been invested by the trustees in inter alia 3 1/2% Government Securities. In the year 1930 a certificate was issued by the Income tax Officer, A Ward, Bombay, whereby the Reserve Bank of India was authorised not to deduct at source the tax on the interest on the said securities so held by the trustees. It was mentioned in the said certificate that it was to enure till its cancellation. In 1946 the 3 1/2% Government Securities were redeemed by the Government of India and were converted into 3% Con version Loan, 1946. Accordingly in February, 1948, the said certificate of exemption was cancelled, as the securities covered thereby had been redeemed by the Government. The trustees thereupon asked for a fresh certificate of exemption from the Income tax Officer, Bombay Refund Circle in respect of the 3% Conversion Loan, 1946. But the said Income tax Officer refused to issue such certificate on the ground that the income from the trust fund in question was not exempt from taxation under section 4(3)(i) of the said Act which, at the material time, was as follows: "4(1). . . . . . . . . . 928 (2) . . . . . . (3) Any income, profits or gains falling with in the following classes shall not be included in total income of the person receiving them: (i) Any income, derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto: Upon the fact of the withholding of the certificate by the Income tax Officer, Refund Circle, being intimated to the Income tax Officer, A V Ward, Bombay, the latter Officer started proceedings against the appellants under section 34 of the said Act in respect of the assessment years 1944 45 to 1947 48. He also started regular proceedings for the assessment year 1948 49 and the succeeding years up to 1952 53. In the assessment proceedings for those nine years the Income tax Officer took the view that the income from the trust fund was not exempt from taxation under section 4(3)(i) and accordingly he assessed the appellants for the first four assessment years (1944 45 to 1947 48) on the ground that the income for those years had escaped assessment. He also assessed the appellants to tax for the subsequent five years (194849 to 1952 53). On appeal the Appellate Assistant Commissioner confirmed the said assessments. On further appeal by the appellants, the Income tax Appellate Tribunal set aside the assessments for the first four years (1944 45 to 1947 48) holding that section 34 had been wrongly invoked, for it was only a case of difference of opinion of one Income tax Officer from his predecessor on the same set of facts. The department did not take any further steps in the matter and accepted that view of the Tribunal as regards the assessments of those years and we are not in this appeal concerned with them. As regards the assessments for the five years (1948 49 to 1952 53) the Tribunal upheld the decision of the Appellate Assistant 929 Commissioner who had confirmed the assessments made by the Income tax Officer. On application being made by the appellants, under section 66(1) of the said Act, the Tribunal drew up a statement of case and referred two questions of law arising out of its order to the High Court for its opinion. The said questions are as follows : (1) Whether the Trust property is held wholly for religious or charitable purposes within the meaning of section 4(3)(i) of the Indian Income tax Act ? (2) If the answer to question (1) is in the negative, whether the trust property is held in part only for religious or charitable purposes ? The said reference came up for hearing before the said High Court and both the referred questions were answered in the negative. The High Court, however, gave the appellants a certificate of fitness for appeal to this Court and the present appeal has been filed on the strength of such certificate. A perusal of cl. 13 of the deed shows that the trust fund is declared to be held by the trustees upon trusts to apply the net income thereof for all or any of the six purposes enumerated therein. It was conceded before the High Court and it has not been disputed before us that if there was nothing else in this clause, then each of these six purposes would have to be upheld as a charitable purpose involving an element of public utility and consequently within the protection of section 4(3)(i). The fact that the trustees could expend the net income on any of the six purposes to the exclusion of the other five purposes would not, it is also conceded, have made the slightest difference in the matter of such exemption from income tax. For instance, if the trustees spent the net income solely and wholly for the purposes mentioned under sub cl. (a) to the exclusion of those mentioned in sub cls. (b) to (f)such income would still be exempt from taxation under section 4(3)(i). The High Court, however, took the view that cl. 13 should be read as a whole along with the provisos and that so read the trust is primarily for the benefit of the relations or members of the family 117 930 of Sir Sassoon David, Bart. It is pointed out that in applying the net income for the purposes mentioned in sub cl. (a), the trustees are bound, under the first proviso, to give preference to the poor and indigent relations or members of the family of the said Sir Sassoon David, Bart. including therein distant and collateral relations. The second proviso, it is urged, makes it further clear that in the application of the income for the said purpose, the trustees are enjoined to apply not less than half the income for the benefit of the members of the Jewish community of Bombay only " including the relations of Sir Sassoon David, Bart. , as aforesaid " and the Jewish objects. Emphasis is laid on the words not less than half " as indicating that it is permissible for the trustees to spend more than half and indeed the whole of the net income for the benefit of the said relations or members of the family of the said Sassoon David, Bart. It is also pointed out that, although the remaining income, if any, has to be spent for the benefit of all persons and objects including Jewish persons and objects, the trustees could, if they so wished, spend the same also for the relations or members of the family of Sir Sassoon David, Bart. as Jewish persons. The argument, which found favour with the High Court, is that the provisos impose a mandatory obligation on the trustees (i) to give preference to the poor and indigent relations or members of the family of Sir Sassoon David, Bart. and (ii) to spend not less than half the income, which may extend to the entire income, for the benefit of the relations or members of the family of Sir Sassoon David, Bart. The High Court points out that in view of the language of el. 13 of the deed read as a whole, it is open to the trustees, without being guilty of any breach of trust, to spend the entire net income of the trust fund for the purpose of giving relief to the poor and indigent relations or members of the family of the said Sir Sassoon David, Bart., including therein the distant and collateral relations and such being the position, the High Court came to the conclusion that it could not be said that the property was held wholly or partly for religious or 931 charitable purposes involving an element of public utility. The High Court accordingly held that the income from the trust fund was not exempt from taxation under section 4(3)(i) and answered both the questions in the negative. The problem before us is whether the High Court was right in so answering the questions. In coming to the decision that it did, the High Court relied on its own earlier decision in the case of Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax (Central), Bombay (1). The facts in that case, however, were somewhat different from the facts now before us. In that case the trust was significantly enough described as " Gordhandas Govindram Family Charitable Trust ". Clause 2 of that trust deed provided for the application of tile net income in giving help or relief to such poor Vaishyas and other Hindoos as the trustees might consider deserving of help in the manner and to the extent specified in the said trust deed and subject to the conditions and directions stated in the next following clauses. Sub clause (a) of cl. 3 provided that Vaishya Hindoos who were members of Seksaria family should be preferred to poor Vaishyas not belonging to the said family. Maintenance had to be provided under sub cl. (b) for the poor male descendants of the settlor and under sub cl. (c) for the poor female descendants of the settlor. Marriage expenses were provided under sub el. (d) for the poor male descendants and under sub cl. (e) for the poor female descendants of the settlers There were other subclauses providing for payment of money to the poor male or female descendants of the other members of the Seksaria family. In the present judgment now under appeal, the High Court recognises that the particular trust they were dealing with in the earlier case " was a fairly blatant illustration of a settlor trying to benefit his own family and his own relations " and states that in the earlier case it had pointed out " that the benefit to the public was too remote and too illusory and accordingly held that was (1) 932 not a trust which had for its object a general public utility ". Such, however, cannot be said of the provisions of the present Deed of Declaration of Trust. Under el. 13 the trustees are at liberty to hold the trust fund and to apply the net income thereof for all or any of the six purposes mentioned therein. The relations or members of the family of the said Sir Sassoon David, Bart., including therein distant and collateral relations do not figure as direct recipients of any benefit under sub cls. (b) to (f) and, therefore, in so far as those purposes are concerned the trust certainly involves an element of public utility. We are not unminaful of the fact that it is open to the trustees to spend the net income entirely for the purpose referred to in sub cl. (a) to the exclusion of the other clauses. But the very fact that the relations or members of the family do not come in directly under any of those latter sub clauses cannot be ignored, for they certainly have some bearing on the question as to who or what were the primary objects of the trust as a whole. In the next place, the purpose of sub cl. (a) is the "relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world ". It is conceded by learned counsel that this sub clause clearly expresses a general charitable intention involving an element of public utility. It follows, therefore, that sub cl.(a) constitutes a valid public charitable trust having as its beneficiaries the several classes of persons referred to therein. This is the first position. We then pass on to the provisos. The first proviso opens with the words " in applying the income as aforesaid ". This takes us back to sub cl. The meaning of the proviso obviously is that in applying the income for the purpose of sub el. (a), the trustees shall give preference to the poor and indigent relations or members of the family of Sir Sassoon David, Bart. The proviso does not operate independently but comes into play only " in applying the income as aforesaid". The provision for giving preference involves the idea of selection of some persons out of a bigger class envisaged in subel. The poor and indigent relations or members of 933 the family can claim to participate in the benefits under the trust only if they come within one of the several classes enumerated in sub el. To take an extreme example: If a poor and indigent relation of Sir Sassoon David, Bart. abjures the faith held by the Jewish community and does not adopt any other faith and thus ceases to be a member of the Jewish community but does not become a member of any other community, he will certainly not be entitled to the benefits of sub el. (a) although he is a poor and indigent relation or member of the family of Sir Sassoon David, Bart. within the meaning of the first proviso. In other words, sub cl. (a) prescribes the primary class of beneficiaries out of which the actual beneficiaries are to be selected by the application of the provisions of the provisos, that is to say, by giving preference to the relations or members of the family of the said Sir Sassoon David, Bart. The case of In re Koettgan 's Will Trusts (1) appears to us, on the facts, to be more in point than the case of Gordhandas Govindram Family Charity Trust case (2) relied on by the High Court. In the last mentioned English case the testatrix bequeathed her residuary estate upon trust for the promotion and furtherance of commercial educa tion. The persons eligible as beneficiaries under the fund were stated to be ,persons of either sex who are British born subjects and who are desirous of educating themselves or obtaining tuition for a higher commercial career but whose means are insufficient or will not allow of their obtaining such education or tuition at their own expense. " The testatrix further directed that in selecting the beneficiaries " it is my wish that the . trustees shall give preference to any employees of John Batt & Co. (London) Ltd. or any members of the families of such employees; failing a sufficient number of beneficiaries under such description then the persons eligible shall be any persons of British birth as the trustees may select provided that the total income to be available for benefiting the pre ferred beneficiaries shall not in anyone year be more than 75% of the total available income for that (1) , 257. (2) 934 year". It was held, on a construction of the will, that the gift to the primary class from which the trustees could select the beneficiaries contained the necessary element of benefit to the public and that it was when that class was ascertained that the validity of the trust had to be determined, so that the subsequent direction to prefer, as to the 75% of the income, a limited class did not affect the validity of the trust which was accordingly a valid and effective charitable trust. Referring to the first part of the will Upjohn, J., at p. 257 said: " If the will concluded there, the trust would clearly be a valid charitable trust, having regard to the admission that a gift for commercial education is for the advancement of education. " Then after stating that the next task was to make a selection from that primary class of eligible persons, the learned Judge continued: " It is only when one comes to make a selection from that primary class that the employees of John Batt & Co. and the members of their families come into consideration, and the question is, does that direction as to selection invalidate the primary trust ? In my judgment it does not do so. " Further down he said: "In my judgment it is at the stage when the primary class of eligible persons is ascertained that the question of the public nature of the trust arises and falls to be decided, and it seems to me that the will satisfies that requirement and that the trust is of a sufficiently public nature. " The learned Judge then concluded: " If, when selecting from that primary class the trustees are directed to give a preference to the employees of the company and members of their families, that cannot affect the validity of the primary trust, it being quite uncertain whether such persons will exhaust in any year 75%. On the true construction of this will, that is not (as to 75%) primarily a trust for persons connected with John Batt & Co., and the class of persons to benefit is not " confined " to them, and in my judgment the trust contained in clauses 7 935 and 8 of the will of the testatrix is a valid charitable trust. " It is true that this is a judgment of a Single Judge but it does not appear to have been departed from or over ruled in any subsequent case and appears to us to be based on sound principle. Applying this test, there can be no question indeed it has been conceded that the earlier part of el. 13, omitting the provisos, constitutes a valid public charitable trust. The circumstance that in selecting the beneficiaries under subel. (a) preference has to be given, under the provisos, to the relations or members of the family of Sir Sasoon David, Bart., cannot affect that public charitable trust. In our judgment, the facts of this case come nearer to the facts of the English case referred to above than to the facts of the earlier decision of the Bombay High Court in Gordhandas Govindram Family Charity Trust case (1). As we have already stated the relations of members of the family are clearly not the primary object contemplated by sub cls. (b) to (f). The first part of sub cl. (a), omitting the provisos, is not said to be too wide or vague and unenforceable. The provision for giving preference to the poor and indigent relations or the members of the family of Sir Sassoon David, Bart., cannot affect the public charitable trust constituted under sub cl. In our opinion the income from the trust properties comes within the scope of section 4(3)(i) and is, therefore, entitled to exemption. Therefore the negative answer given by the High Court to question No. I cannot be supported and that question should be answered in the affirmative. In this view of the matter, question No. 2 does not arise and needs no answer. The result is that this appeal must be allowed and the question No. I must be answered in the affirmative. The appellants will have the costs of the reference in the High Court and of this appeal in this Court. Appeal allowed.

The appellants were the trustees of a charity fund known as The Charity Fund founded by Sir Sassoon David, Baronet of Bombay ". Clause 13 Of the deed of trust, after declaring that the trustees should apply the net income for all or any of the following purposes, namely, (a) the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and 924 clothes and/or lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or (b) the institution maintenance and support of hospitals and schools, colleges or other educational institutions or (c) the relief of any distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other such calamity or (d) the care and protection of animals useful to mankind or (e) the advancement of religion or (f) other purposes beneficial to the community not falling under any of the foregoing purposes I added by way of provisos (i) that in applying the net income for the purposes mentioned in sub cl. (a) the trustees must give preference to the poor and indigent relations or members of the family of Sir Sassoon David, including distant and collateral relatives, (2) that for the said purpose the trustees must apply not less than half of the income for the benefit of the members of the Jewish community of Bombay only, including the said relatives of Sir Sassoon David and Jewish objects. The question for determination was whether the income from the trust fund was exempt from taxation under section 4(3)(i) Of the Indian Income tax Act. The High Court came to the conclusion that the trust fund could nut be said to be held, wholly or partly, for religious or charitable purposes involving an element of public utility and answered the question in the negative. Held, that there could be no doubt that each one of the pri mary purposes mentioned in the deed of trust, including the one mentioned in sub cl. (a), properly construed, involved an element of public utility and thus they constituted a valid charitable trust. Although it was open to the trustees to spend the entire income for the purpose mentioned in sub cl. (a), that could not detract from the validity of the trust since the relations or family members of the founder did not come in directly under any of the other purposes and could do so only under sub cl. (a) as preferential beneficiaries to be selected from out of the class of primary beneficiaries prescribed by it, in terms of the provisos. The test of the validity of such a public charitable deed of trust should be whether or not at the primary stage of eligibility it could be said to possess that character. In re Koettgan 's Will Trusts, , applied. Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax (Central), Bombay, [1952]21 I.T.R.231, distinguished and held inapplicable. The circumstance that in selecting the actual beneficiaries 925 from the primary class of beneficiaries under sub cl. (a), the trustees had to give preference under the provisos, to the relations or members of the family of Sir Sassoon David, could not therefore affect the public charitable trust constituted under sub cl. (a) and the income from the trust properties was entitled to exemption under section 4(3)(i) Of the Indian Income tax Act.

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

The appellant who was the holder of a permit to run a stage carriage, which was about to expire, made an application to the State Transport Authority for its renewal for a further period. The respondent made a representation against the renewal of the appellant 's permit and also applied for the grant of the permit to himself. The State Transport Authority made an order in the terms " Renewed for three years " in respect of the appellant 's permit but no express order was made on the respondent 's application for the grant of the permit to him. On appeal by the respondent, the Appellate Tribunal cancelled the appellant 's permit and granted the permit to the respondent. The appellant then moved the judicial Commissioner, Vindhya Pradesh, for a 693 writ of certiorari quashing the order of the Appellate Tribunal on the ground that it disclosed an error on the face of it because under the Act no appeal lay from the order that was passed by the subordinate authority. The learned judicial Commissioner held that the appeal was competent and dismissed the application for the writ. It was contended for the appellant that the respondent 's appeal to the Appellate Tribunal was not maintainable on the grounds (1) that no express order was made against the respondent by the State Transport Authority, and so section 64(a) of the Act did not give him a right of appeal and (2) that in view Of sections 47, 57 and 58 Of the Act, the State Transport Authority had no jurisdiction to consider the respondents application or to make an order in respect of it after the appellant 's permit was renewed, and therefore could not make an order rejecting it. It was also contended that section 64 of the Act did not provide for an appeal by a person aggrieved by the renewal of a permit unless he was one of those mentioned in cl. (f) of that section which the respondent was not, and therefore even if an appeal by the respondent was competent under section 64(a) in such an appeal, the Appellate Authority could not set aside the order of renewal. Held: (1) that the order made by the State Transport Authority in the present case did amount, infact, to a refusal to grant the permit to the respondent. The respondent 's appeal to the Appellate Authority was therefore maintainable under section 64(a) of the Act. section Gopala Reddi vs Regional Transport Authoyity, North Arcot,[1955] , approved. V. C. K. Bus Service Ltd. vs Regional Transport Authoyity,Coimbatore, , distinguished. (2) that section 58(2) Of the Act shows that an application for the renewal of a permit and a fresh application for the same permit have to be heard together, and that there was nothing in sections 47 and 57, indicating a contrary course. (3) that cl. (f) of section 64 Of the Act does not in any way restrict the power of the Appellate Tribunal to grant all reliefs in an appeal under cl. (a) of the section. Consequently, the order of the Appellate Tribunal setting aside the order of renewal was valid. Dholpur Co operative Transport Etc. Union Ltd. vs The Appellate Authority, Rajasthan, A.I.R. , in so far as it decided to the contrary, disapproved.

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Civil Appeals Nos. 679 and 680 of 1957. Appeals by special leave from the judgment and decree dated the January 5, 1955, of the Patna High Court, in M.J.C. Nos. 374 & 375 of 1952. 303 R. J. Kolah and R. Patnaik, for the appellant. A. N. Kripal and D. Gupta, for the respondent. May 14. The Judgment of the Court was delivered by BHAGWATT J. These are two connected appeals with special leave granted by this Court under article 136 of the Constitution and arise out of the appellant 's assessment to Income tax for the assessment year 1946 47 and Excess Profits Tax for the chargeable accounting period January 9, 1945, to February 2, 1946. The appellant is a Hindu undivided family carrying on extensive business in grain as merchants and commission agents. It is one of the premier grain merchants and wholesalers of Sahibganj in the District of Santhal Parganas in the State of Bihar. It has branches at Nawgachia in the District of Bhagalpur and at Dhulian in the District of Murshidabad in West Bengal. The appellant filed its Income tax Return for the assessment year 1946 47 showing a loss of Rs. 46,415 in the business. The Income tax Officer, Patna, however, in the course of the assessment noticed that the appellant had encashed high denomination notes of the value of Rs. 2,9 1,000 on January 19, 1946. The Income tax Officer asked for an explanation which the appellant gave stating that these notes formed part of its cash balances including cash balance in the Almirah account. The cash balances of the appellant on January 12, 1946, on which date the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, was promulgated were Rs. 29,284 3 9 in its Rokar and Rs. 2,81,397 10 0 in the Almirah account. The Almirah account was an account for moneys withdrawn and kept at home. The appellant sought to prove the fact that the high denomination notes eneashed by it formed part of its cash balances from certain entries in its accounts wherein the fact that moneys were received in high denomination notes had been noted. Portions of these entries to the effect that moneys had been received in high denomination notes were found 304 by the Income tax Officer to be subsequent interpolations made by the appellant with a view to advance its case that the cash balances contained the high denomination notes encashed by it. The Income tax Officer found that the appellant 's food grains licence at Nawgachia had been cancelled for the accounting year for its failure to keep proper stock accounts and that the appellant was prosecuted under the Defence of India Rules but had been acquitted having been given the benefit of doubt. The Income tax Officer also had regard to the fact that the appellant was a speculator and that as a speculator the appellant could easily have earned amounts far in excess of the value of the high denomination notes encashed. He con. sidered that even in the disclosed volume of business in the year under consideration in the Head Office and in the branches, there was possibility of his earning a considerable sum as against which it showed a net loss of about Rs.46,000. The Income tax Officer also noticed that notwithstanding the fact that the period was very favourable to food grains dealers, the appellant had declared a loss for the assessment year 194445 up to 1946 47, though it had the benefit of a large capital on hand. The Income tax Officer further took into consideration the circumstances that Nawgachia and Dhulian were very important business centers and Sahibganj, the principal place of business, had gained sufficient notoriety for smuggling foodgrains and other commodities to Bengal by country boats. Dhulian which was just on the Bengal, Bihar border was also reported to be a great receiving centre for such commodities. Having regard to all these circumstances, the Income tax Officer rejected the appellant 's explanation that the high denomination notes formed part of its cash balances and treated the sum of Rs. 2,91,000 as the appellant 's secreted profits from business and included it in its total income and assessed the appellant for the said assessment year on the income of Rs. 1,39,117. Dealing with the Excess Profits Tax assessment, he also held that the said income was derived from the business of the appellant and hence it was liable to excess profits tax also, 305 The appellant preferred an appeal to the Appellate Assistant Commissioner against both these assessment orders and by his orders dated February 28, 1951, the Appellate Assistant Commissioner upheld the orders of the Income tax Officer and dismissed the appeals. On further appeals from the said orders of the Appellate Assistant Commissioner to the Income tax Appellate Tribunal, the Tribunal by its order dated April 29, 1952, dismissed both the appeals as regards the Incometax as well as Excess profits tax. Even though before the Income tax Officer and the Appellate Assistant Commissioner the case of the appellant was that the account book which contained the entries in regard to the receipts of moneys in high denomination notes were genuine and correct, this position was abandoned by the appellant before the Tribunal. Before the Tribunal, the appellant stated that the said entries were made in sheer nervousness after coming into force of the High Denomination Bank Notes (Demonetization) Ordinance, 1946, on January 12, 1946, as the appellant did not know that it had specific proof in its possession of having the high denomination notes as part of its cash balances. The Tribunal held that there was no other reason to suspect the genuineness of the account books in which these interpolations were made. If the entire account books were fabricated to serve its purpose, there would be no need for the appellant to make interpolations between the lines already written in a different ink and in such an obvious manner as to catch one 's eye on the most cursory perusal. The Tribunal, however, examined the cash book and taking into consideration all the circumstances which had been adverted to by the Income tax Officer held that the appellant might be expected to have possessed as part of its business cash balance of at least Rs. 1,50,000 in the shape of high denomination notes on January 12, 1946, when the Ordinance above mentioned was promulgated. A copy of the statement of large amounts received by the appellant from a single constituent had been filed by the appellant which showed that sums aggregating to Rs. 5,04,713 had been received by the appellant in large amounts 39 306 exceeding Rs. 1,000 between February 6, 1945, and January 11, 1946. As to large payments made by the appellant, no statement was filed, but the Tribunal examined the accounts with a view to ascertain the payments which could have been made in high denomination notes. The Tribunal came to the conclusion that the nature of the source from which the appellant derived the remaining 141 high denomination notes of Rs. 1,000 each remained unexplained to its satisfaction. It accordingly ordered that the addition made by the authorities be reduced from Rs. 2,91,000 to Rs. 1,41,000. The Income tax Officer was also directed to make the necessary consequential adjustment in the Income tax assessment based upon the result of the connected Excess Profits Tax appeal. In regard to the Excess Profits Tax appeal the Tribunal after taking into account the preceding and succeeding assessments and the nature of the appellant 's business and the opportunities that it had to make substantial business profits outside the books held that the add back of Rs. 1,41,000 must be made to the business profits disclosed by the appellant. Consequential relief was accordingly given in the Excess Profits Tax appeal also. The appellant thereafter applied to the Tribunal for stating a case and raising and referring to the High Court the following questions of law arising from the said order of the Tribunal both as regards the Incometax and the excess profits tax assessments : (1) " Whether there is any material to justify the conclusion that Rs. 1,41,000 is secreted profit for the purpose of assessment, this amount being a part of section 2,91,000 and which was the amount represented by high denomination notes encashed by the Petitioner. (2) " Whether there is any material for a finding that the sum of Rs. 1,41,000 is the secreted value of the high denomination notes was business income liable to excess profits tax. " By its order dated August 15, 1952, the Tribunal dismissed these applications stating that the finding of the taxing authorities was a pure finding of fact based 307 on evidence before them and that no question of law arose out of the said order of the Tribunal. The appellant thereupon made applications to the High Court under section 66(2) for directing the Tribunal to state a case and raise and refer the said questions of law to the High Court for its decision. By its order dated January 21, 1953, the High Court directed the Tribunal to state a case and raise and refer the following question of law to the High Court I for its decision in both the applications: Whether there is any material to support the finding of the Appellate Tribunal that a sum of Rs. 1,41,000 is secreted profit liable to be taxed in the hands of the assessee under the Indian Incometax Act and under the Excess Profits Tax Act " The tribunal accordingly stated a case and raised and referred the aforesaid question of law to the High Court. The said Reference was heard by the High Court and judgment was delivered on January 5, 1955, whereby the High Court answered the referred question in the affirmative. The High Court was of the opinion that the onus of proving the source of the said amount was on the appellant which the appellant did not discharge and that there was evidence before the Tribunal to come to the conclusion it did. The finding arrived at by the Tribunal was therefore a pure finding of fact and it could not be urged that it was based on no evidence. The High Court further held that as the appellant itself claimed that the said amount of Rs. 2,91,000 formed part of the cash balance of its business, the said profits were profits of the business and as such liable to excess profits tax. The appellant then applied to the High Court for a certificate under section 66A (2) of the Income tax Act for leave to appeal to this Court. These applications were rejected by the High Court on August 25, 1955, observing that it had answered the question of law not on the academic principles of onus but on the material from which it was open to the Income tax authorities to arrive at the conclusion at which they arrived. 308 The appellant thereupon on October 22, 1955, applied to this Court for special leave to appeal which was granted by this Court on November 28, 1955, in both the appeals arising out of the assessment for Income tax as well as the excess profits tax. Both the appeals arising out of these orders being Civil Appeals Nos. 679 and 680 of 1957 are now before us. The main question to determine in these two appeals is whether there was any material to support the finding of the Tribunal that the sum of Rs. 1,41,000 represented the secreted profits of the appellant 's business and as such liable to be taxed in the hands of the appellant under the Indian Income tax Act and the Excess Profits Tax Act ? The contention of the Revenue all throughout has been that it is a finding of fact reached by the authorities competent in that behalf and this Court should not interfere with such findings of fact. The contention of the appellant on the other hand, has been that even though it may be a finding of fact to be reached by the authorities concerned on the materials on the record before them, such finding is vitiated by reason of the authorities indulging in conjectures, suspicions and surmises and basing the same on no material whatever which goes to support the same. It is also contended that the finding reached by them is a perverse one which a reasonable body of men could not have arrived at on the material on the record. The limits of our jurisdiction to interfere with finding of fact reached by the courts or tribunals of facts have been laid down by us in various decisions of this Court. In Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay (1) we observed that when a Court of fact arrives at its decision by considering material which is irrelevant to the enquiry, or acts on material, partly relevant and partly irrelevant, where it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its decision, a question of law arises: Whether the finding of the Court of fact is not vitiated by reason of its having (1) 309 relied upon conjectures, surmises and suspicions not supported by any evidence on record or partly upon evidence and partly upon inadmissible material. We also observed in Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Benyal (1) that an assessment so made without disclosing to the assessee the information supplied by the departmental representative and without giving any opportunity to the assessee to rebut the information so supplied and declining to take into consideration all materials which the assessee wanted to produce in support of the case constituted a violation of the fundamental rules of justice and called for interference on our part. In Messrs. Metha Parikh and Co. vs The Commissioner of Income tax, Bombay( ') this Court observed that the conclusions based on facts proved or admitted may be conclusions of fact but whether a particular inference can legitimately be drawn from such conclusions may be a question of law. Where, however, the fact finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, the Court is entitled to interfere. In our decision in Meenakshi Mills, Madurai vs Commissioner of Income tax, Madras (3) after discussing the various authorities on the subject we laid down that: (3) A finding on a question of fact is open to attack under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse. " The latest pronouncement of this Court in Omar Salay Mohamed Sait vs The Commissioner of Income tax, Madras (4) summarises the position thus,: " We are aware that the Income tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this Court will not (1) [1955] I S.C.R. 941. (3) [19561 S.C.R. 69i. (2) ; (4) C.A. No. 15 Of 1958 decided on March 5, 1959. 310 interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures and surmises and if it does anything of the sort, its findings even though on questions of fact will be liable to be set aside by this Court. " It is in the light of these observations that we have to determine the question arising before us in the present appeals. It is clear on the record that the appellant maintained its books of account according to the mercantile system and there were maintained in its cash books two accounts: one showing the cash balances from day to day and other known as " Almirah account " wherein 'Were kept large balances which were not required for the day to day working of the business. Even though the appellant kept large amounts in bank deposits and securities monies were required at short notice at different branches of the appellant. There were also collections made from various Beoparies or merchants and monies were also required for doing the grain purchase work on behalf of the Government. These monies were credited in the Almirah account which showed heavy cash balances from time to time. In the books of account for previous years it was the practice of the appellant to give details of the notes of high denominations giving the distinctive numbers of these notes received or paid 311 or at least other description e.g., " So many notes " of Rs. 1,000 each. In the assessment year, however, this practice does not appear to have been followed but entries continued to be made of monies thus received from the banks, different branches, Beoparees etc. , without any such details being filled therein. A statment of these cash balances viz., the balance in the Rokar and the balance in the Almirah from September 1, 1945, to January 31, 1946 was filed before the Income tax authorities and this statement showed that apart from the balance in the Rokar the balance in the Almirah rose from Rs. 1,36,397 10 0 on September 1, 1945, to Rs. 1,97,397 10 0 on September 30, 1945, to Rs. 2,23,397 10 0 on October 13, 1945, to Rs. 2,65,397 10 0 on November 27, 1945, to Rs. 2,91,397 10 0 on December 29, 1945, and remained at Rs. 2,81,397 10 0 on January 10, 1946. The balance in the Rokar fluctuated considerably but on the relevant date January 10, 1946, it stood at Rs. 26,092 10 9.It was Rs. 24,976 13 3 on January II, 1946, and Rs. 29,284 3 9 on January 12, 1946, when the High Denomination Bank Notes (Demonetization) Ordinance, [1946, was promulgated. These entries showed that there was with the appellant on on January 12, 1946, an aggregate sum of Rs. 3,10,681 13 9 and it was highly probable that the High Denomination notes of Rs. 2,91,000 were included in this sum of Rs. 3,10,681 13 9. The books of account of the appellant were not challenged in any other manner except in regard to the interpolations relating to the number of high denomination notes of Rs. 1,000 each obviously made by the appellant in the accounts for the assessment year in question in the manner aforesaid and even in regard to these interpolations the explanation given by the appellant in regard to the same was accepted by the Tribunal. Even though the Income tax Officer made capital out of the interpolations and subsequent insertions in the books of account and styled the evidence furnished by them as created or manipulated evidence thus discounting the story of the appellant in regard to the source of these high denomination notes, the Tribunal 312 was definitely of opinion that there was no other reason to suspect the genuineness of the account books in which these interpolations were found. As a matter of fact the Tribunal accepted these books of account as genuine and worked up its theory on the basis of the entries which obtained in these books of account. The Tribunal had before it the statement of large amounts received by the appellant from the banks, different branches of the appellant and its Beoparees or merchants which showed that between February 6, 1945, and January 11, 1946, amounts exceeding Rs. 1,000 aggegrating to Rs. 5,04,713 had been received by the appellant. Even though large amounts may have been paid out by the appellant in this manner between the said dates, the entries of the balance in Rokar and the balance in Almirah showed that on January 12, 1946, the balance in Rokar was Rs. 26,234 3 9 and the balance in Almirah was Rs. 2,81,397 10 0 the total cash balance thus aggregating to Rs. 3,10,681 13 9. Nobody had any inkling of the promulgation of the High Denomination Bank Notes (Demonetization) Ordinance, 1946, on January 12, 1946, and if in the normal course of affairs and situated as the appellant was, the appellant kept these large cash balances in High Denomination Notes of Rs. 1,000 each, there was nothing surprising or improbable in it. If the appellant had to disburse such large sums of monies at short notices at the different branches of the appellant and also to its Beoparees apart from financing the Government for grain purchase work which it used to carry on, it would be convenient for it to handle these large sums of monies in high denomination notes of Rs. 1,000 each and the most natural thing for it to do was to keep these cash balances in as many high denomination notes as possible. The Tribunal in fact took count of this position and after giving due weight to all the circumstances arrived at the conclusion that the appellant might be expected to have possessed as part of its business cash balance at least Rs. 1,50,000 in the shape of high denomination notes on January 12, 1946, when the Ordinance above mentioned was promulgated. This conclusion 313 of the Tribunal could only be arrived at on the basis that the entries in the books of account in regard to the balance in Rokar and the balance in Almirah were correct and represented the true state of affairs, in spite of the interpolations and subsequent insertions which had been made to bolster up the true case. If these were the materials on record which would lead to the inference that the appellant might be expected to have possessed as part of its cash balance at least Rs. 1,50,000 in the shape of high denomination notes on January 12, 1946, when the Ordinance was promulgated, was there any material on record which would legitimately lead the Tribunal to come to the conclusion that the nature of the source from which the appellant derived the remaining 141 high denomination notes of Rs. 1,000 each remained unexplained to its satisfaction. If the entries in the books of account in regard to the balance in Rokar and the balance in Almirah were held to be genuine, logically enough there was no escape from the conclusion that the appellant had offered reasonable explanation as to the source of the 291 high denomination notes of Rs. 1,000 each which it encashed on January 19, 1946. It was not open to the Tribunal to accept the genuineness of these books of account and accept the ex planation of the appellant in part as to Rs. 1,50,000 and reject the same in regard to the sum of Rs. 1,41,000 0 0. Consistently enough, the Tribunal ought to have accepted the ' explanation of the appellant in regard to the whole of the sum of Rs. 2,91,000 and held that the appellant had satisfactorily explained the encashment of the 291 high denomination notes of Rs. 1,000 each on January 19, 1946. The Tribunal, however, appears to have been influenced by the suspicions, conjectures and surmises which were freely indulged. in by the Income tax Officer and the Appellate Assistant Commissioner and arrived at its own conclusion, as it were, by a rule of thumb holding without any proper materials before it that the appellant might be expected to have possessed as part of its business, cash balance at least Rs. 1,50,000 in the shape of high denomination notes on January 40 314 12, 1946, a mere conjecture or surmise for which there was no basis in the materials on record before it. The Income tax Officer had indented in support of his conclusion the surrounding circumstances, viz., that the appellant was one of the premier Arhatdars and grain merchants of Sahibgan1 with branches, doing similar business, at Nawgachia and Dhullian and all these places were very important business centres and Sahibganj, the principal place of business, had gained sufficient notoriety for smuggling foodgrains and other commodities to BenLal by country boats, and Dhulian which was just on the Bihar Bengal border was reported to be a great receiving centre for such commodities, that the foodgrains licence of the appellant at Nawgachia was also cancelled during the accounting year for not keeping proper stock accounts and the appellant was prosecuted under the Defence of India Rules but was given the benefit of doubt and was acquitted, that the accounting year and the year preceding it as also the year succeeding it were very favourable for the foodgrain dealers but the appellant though he had large capital in hand declared losses all through from 1944 45 assessment year up to 1946 47 assessment year, the loss according to its books in the year under consideration being to the tune of about Rs. 46,000, that the appellant was in very favourable circumstances in which there was a pos sibility of its earning a considerable amount in the year under consideration, that it also indulged in speculation (a loss of about Rs. 40,000 shown in Nawgachia branch (in Kalai account)), in which profit in a single transaction or in a chain of transactions could exceed the amounts involved in the high denomination notes, that even in the disclosed volume of business in the year under consideration in the Head Office and in branches there was possibility of its earning a considerable sum as against which showed a net loss of about Rs. 45,000 and that the appellant had all these probable source or sources from which the appellant could have earned the sum of Rs. 2,91,000 which was represented by the high denomination notes of Rs. 1,000 315 The Appellate Assistant Commissioner also emphasized the said aspect but based his conclusion mainly on the ground that the appellant had failed to prove that the high denomination notes had their origin in capital and not in profit and held that the Income tax Officer was justified in treating the sum of Rs 2,91,000 as secreted profits. This was the background against which the Tribunal came to its own conclusion. Even though it recognised that it was not improbable that when very large sums, say in excess of Rs. 10,000 at a time were received, a fairly good portion thereof consisted of high denomination notes and as high denomination notes were valid tender and nobody could have foreseen that they would be demonetised suddenly in January 1946, there was nothing out of the way in persons dealing with tens of thousands of rupees and whose balances ran to lakhs, being in possession of a fair proportion of their balances in the shape of high denomination notes. While recognizing this probability of the appellant having been in possession of a fair proportion of its balances in the shape of high denomination notes, the Tribunal unconsciously though it was, fell into an error when it held that the appellant might be expected to have possessed at least Rs. 1,50,000 in the shape of high denomination notes as part of its cash balance, thus treating the remaining Rs. 1,41,000 in the high denomination notes of Rs. 1,000 each as outside the purview of these cash balances. Unless the Tribunal had at the back its mind the various probabilities which had been referred to by the Income tax Officer as above it could not have come to the conclusion it did that the balance of Rs 1,41,000 comprising of the remaining 141 high denomination notes of Rs. 1,000 each was not satisfactorily explained by the appellant. If the entries in the books of account were genuine and the balance in Rokar and the balance in Almirah on January 12, 1946, aggregated to Rs. 3,10,681 13 9 and if it was not improbable that a fairly good portion of the very large sums received by the appellant from time to time, say in excess of Rs. 10,000 at a time 316 consisted of high denomination notes, there was no basis for the conclusion that the appellant had satisfactorily explained the possession of Rs. 1,50,000 in the high denomination notes of Rs. 1,000 each leaving the possession of the balance of 141 high denomination notes of Rs. 1,000 each unexplained. Either the Tribunal did not apply its mind to the situation or it, arrived at the conclusion it did merely by applying the rule of thumb in which event the finding of fact reached by it was such as could not reasonably be entertained or the fact found were such as no person acting judicially and properly instructed as to the relevant law could have found, or the Tribunal in arriving at its findings was influenced by irrelevant considerations or indulged in conjectures, surmises or suspicions in which event also its finding could not be sustained. Adverting to the various probabilities which weighed with the Income tax Officer we may 'observe that the notoriety for smuggling foodgrains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every Arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidenec in that behalf. The cancellation of the foodgrain licence at Nawgachia and the, prosecution of the appellant under the Defence of India Rules was also of no consequence inasmuch as the appellant was acquitted of the offence with which it had been charged and its licence also was restored. The mere possibility of the appellant earning considerable amounts in the year under consideration was a pure conjecture on the part of the Income tax Officer and the fact that the appellant indulged in speculation (in Kalai account) could not legitimately lead to the inference that the profit in a single transaction or in a chain of transac tions could exceed the amounts, involved in the high denomination notes, this also was a pure conjecture or surmise on the part of the Income tax Officer. As regards the disclosed volume of business in the year 317 under consideration in the Head Office and in branches the Income tax Officer indulged in speculation when he talked of the possibility of the appellant earning a considerable sum as against which it showed a net loss of about Rs. 45,000. The Income tax Officer indicated the probable source or sources from which the appellant could have earned a large amount in the sum of Rs. 2,91,000 but the conclusion which he arrived at in regard to the appellant having earned this large amount during the year and which according to him represented the secreted profits of the appellant in its business was the result of pure conjectures and surmises on his part and had no foundation in fact and was not proved against the appellant on the record of the proceedings. If the conclusion of the Income tax Officer was thus either perverse or vitiated by suspicions, conjectures or surmises the finding of the Tribunal was equally perverse or vitiated if the Tribunal took count of all these probabilities and without any rhyme or reason and merely by a rule of thumb, as it were, came to the conclusion that the possession of 150 high denomination notes of Rs. 1,000 each was satisfactorily explained by the appellant but not that of the balance of 141 high denomination notes of Rs. 1,000 each. The position as it obtained in this case was closely analogous to that which obtained in Messrs. Mehta Parikh & Co. vs The Commissioner of Income tax, Bombay (1). In that case the assessee had to satisfactorily explain the possession of 61 High Denomination Notes of Rs. 1,000 each and the Tribunal came to the conclusion that the assessee had satisfactorily explained the possession of 31 of these notes and not of the remaining 30. The High Court had treated the finding of the Tribunal as a finding of fact. It was held by this Court that the entries in cash book and the statements made in the affidavit in support of the explanation, which were binding on the Revenue and could not be questioned, clearly showed that it was quite within the range of possibility that the assessee had in their possession the 61 High denomination notes on the relevant date and their explanation in that (1) ; 318 behalf could not be assailed by a purely imaginary Calculation of the nature made by the income tax officer or the Appellate Assistant Commissioner. It further held that the Tribunal made a wrong approach and while accepting the assessee 's explanation with regard to 31 of the notes, it had absolutely no reason to exclude the rest as not covered by it in the absence of any evidence to show that the excluded notes were profits earned by the assessee from undisclosed sources. The assessee having given a reasonable explanation the Tribunal could not, by applying a rule of thumb discard it so far as the rest were concerned and act on mere surmise. In arriving at its decision this Court referred to the case of Chunilal Ticamchand Coal Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa (1) and stated that the case before it should also have been similarly decided by the High Court in favour of the assessee. A decision of the Allahabad High Court reported in in Kanpur Steel Co. Ltd. vs Commissioner of Incometax, Uttar Pradesh( ') may also be noted in this context. The assessee there encashed 32 currency notes of Rs. 1,000 each on January 12, 1946, when the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, came into force, and when the Income tax Officer called upon it to explain how these currency notes came into its possession, the assessee claimed that the notes represented part of its cash balance which, on that date, stood at Rs. 34,313. The Income tax Officer rejected the explanation and assessed the amount of Rs. 32,000 represented by these currency notes as suppressed income of the assessee from some undisclosed source. The Tribunal took into account the statement of sales relating to a few days preceding the date of encashment and found that the highest amount of any one single transaction was only Rs. 399. The Tribunal also referred to another statement of the daily cash balances of the assessee from December 20, 1945, to January 12, 1946, and noted that the cash balance of the assessee was steadily increasing. The Tribunal, however, estimated that high denomination (1) (2) 319 currency notes to the value of Rs. 7,000 only could form part of the cash balance of the assessee. It therefore upheld the assessment to the extent of Rs. 25,000. On a reference to the High Court it was held (1) that the burden of proof lay upon the Department to prove that the sum of Rs. 32,000 represented suppressed income of the assessee from undisclosed sources, and the burden was not on the assessee to prove how it had received these high denomination currency notes; for, until the Demonetisation Ordinance came into force high denomination currency notes could be used as freely as notes of any lower denomination and no one had any idea that it should be necessary for him to explain the possession of high denomination currency notes, the assessee had naturally not kept any statement regarding the receipt of these currency notes, and it was for the first time on January 12, 1946, when the Ordinance came into force, that it became necessary for the assessee to explain its possession of these currency notes and (ii) that the explanation given by the assessee that the notes formed part of the cash balance of Rs. 34,000 and odd was fairly satisfactory and was not found by the Tribunal to be false; the statement of sales was hardly relevant to the question; the Department, in relying on the entries relating to the bills of each day committed an error and no inference should have been drawn from them; that any one single transaction did not exceed Rs. 399 did not preclude the possibility of payment in high denomination notes for such transaction; therefore, the Tribunal rejected the explanation of the assessee on surmises, and there was no material for the Tribunal to hold that the sum of Rs. 25,000 represented suppressed income of the assessee from undisclosed sources. In arriving at the above decision the High Court referred to the cases of Mehta Parikh & Co. vs Commissioner of Income tax, Bombay (1) and Chunilal Ticamchand Coal Co., Ltd. vs Commissioner of Incometax, Bihar and Orissa (2). It is, therefore, clear that the Tribunal in arriving at the conclusion it did in the present case indulged in (1) [1956) S.C,R. 626, (2) 320 suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and this Court is entitled to interfere. We are therefore of opinion that the High Court was clearly in error in answering the referred question in the affirmative. The proper answer should have been in the negative having regard to all the circumstances of the case which we have adverted to above. The appeals will accordingly be, allowed, the judgment and order passed by the High Court will be set aside and the referred question will be answered in the negative. The appellant will be entitled to its costs of the reference in the High Court and of these appeals in this Court as against the respondent. Appeals allowed.

The appellant a Hindu undivided family carrying on business in grain kept its books of account according to the mercantile system and maintained in its cash books two accounts: one showing the cash balances from day to day and the other known as " Almirah account " wherein were kept large balances which were not required for the day to day working of the business. On January 12, 1946, on which date the High Denomination Bank Notes (Deinonetisation) Ordinance, 1946, was promulgated, the cash balances of the appellant were RS. 29,284 in its Rokar and Rs. 2,81,397 in the Almirah account. For the assessment year 1946 47 the appellant filed its Income tax Return showing a loss of Rs. 46,4I5 in the business. The Income tax Officer, in the course of the assessment, noticed that the appellant encashed high denomination notes of the value of RS. 2,g1,000 on January 19, 1946, and the explanation given by the appellant was that these notes formed part of its cash balances including cash balance in the Almirali account, but it was rejected by the Income tax Officer relying on the following circumstances: (1) that the appellant 's food grains licence had been cancelled for the accounting year for its failure to keep proper stock accounts, (2) that the appellant was prosecuted under the Defence of India Rules but had been acquitted having been given the benefit of doubt, (3) that the appellant was a speculator, and as such could easily have earned amounts far in excess of the value of the high denomination notes encashed, (4) that notwithstanding the fact that the period was very favourable to the food grains dealers the appellant had declared a loss for the assessment year I944 45 UP to 1946 47, though it had the benefit of a large capital on hand, and (5) that the appellant was one of the premier grain merchants of Sahibganj, a place which had gained sufficient notoriety for smuggling foodgrains. The Income tax Officer came to the conclusion that the appellant had all these probable sources from which it could have earned the sum of Rs. 2,91,000, and accordingly he treated the sum as the appellant 's secreted profits from business and included it in its total income. The Appellate Tribunal accepted the account books produced by the appellant 302 and examined the cash book and taking into consideration all the circumstances which had been adverted to by the Income tax Officer took the view that the appellant might be expected to have possessed as part of its business cash balance of at least Rs. 1,50,000 in the shape of high denomination notes on January 12, 1946, when the Ordinance was promulgated, but that the nature of the source from which the appellant derived the remaining 14i high denomination notes of Rs. 1,000 each remained unexplained to its satisfaction. It accordingly reduced the amount considered as the secreted profits from Rs. 2,91,000 to Rs. 1,41,000. On reference, the High Court held that the finding arrived at by the Tribunal was one of fact and that it could not be urged that it was based on no evidence. On appeal to the Supreme Court it was contended for the appellant that the finding arrived at by the authorities concerned, though it be one of fact, was vitiated by reason of the authorities indulging in conjectures, suspicions and surmises and basing the same on no material whatever which would go to support the same, and that, in any case, it was a preverse one which a reasonable body of men could not have arrived at on the material on the record. Held, that the Tribunal had been influenced by the suspicions, conjectures and surmises which were freely indulged in by the Income tax Officer, and had arrived at its conclusion, as it were by a rule of thumb, without any proper materials before it and that its finding could not be sustained; that having accepted the appellant 's books of account it was not open to the Tribunal to accept the explanation of the appellant in part as to Rs. 1,50,000 and reject the same in regard to the sum of Rs. 1,41,000. Messrs. Mehia Parikh & Co. vs The Commissioner of Income tax, Bombay; , and Kanpur Steel Co. Ltd. vs Commissioner of Income tax, Uttar Pradesh, [1957] 32 I.T.R. 56, relied on. Where a Tribunal has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, the court is entitled to interfere. Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay, ; Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal, [1955] i S.C.R. 941; Messrs. Mehta Parikk and Co. vs The Commisioner of Income tax, Bombay, ; and Meenakshi Mills, Madurai vs Commissioner of rncome tax, Madras, [19561 S.C.R. 69i, followed.

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Appeals Nos. 519 to 521 of 1958. Appeal by special leave from the decision dated January 4,1955, of the Labour Appellate Tribunal of India, Calcutta, in Appeals Nos. 69152 and Cal. 70/52. AND Civil Appeal No. 521 of 1958. Appeal by special leave from the decision dated January 4, 1955, of the Labour Appellate Tribunal of India, Calcutta in Appeal No. Cal 70/52. Ram Lal Anand and Naunit Lal, for the appellant in C.A. No. 519 of 58. H. N. Sanyal, Additional Solicitor General of India, Ram Lal Anand and Naunit Lal, for the appellants in C.A. No. 520/58 and respondents in C.A. NO. 521 of 58. M. C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General, M. K. Ramamurthi, Syed Mahummud, B. K. Garg, Miss. A. B. Varma and Janardan Sharma, for respondent No. 1 in C.A. Nos. 519 and 520 of 58 and appellant in C.A. No. 521 of 58. Hardyal Hardy and M. B. Krishna Pillai, for respondent No. 2 in C.As, Nos. 519 & 520 of 58. September 24. The judgment of Sinha and Gajendragadkar, JJ., was delivered by Gajendragadkar, J. Subba Rao, J., delivered a separate judgment. J.GAJENDRAGADKAR J. These three appeals arise out of an industrial dispute between the Punjab National Bank, Ltd. (hereinafter called the Bank) and two sets of its employees represented by the. All India Punjab National Bank Employees ' Federation (hereinafter called the Federation) and the U.P. Bank Employees ' Union hereinafter called the Union) respectively. 811 On July 2, 1951, this dispute was referred by the Central Government for adjudication to the industrial tribunal of which Mr. A. N. Sen, a retired Judge of,, the Calcutta High Court, was the sole member. It raised two issues. The first was whether the 150 workmen mentioned in Sch. 11 attached to the reference had been wrongfully dismissed by the Bank, and the second had reference to the claim for reinstatement and payment of wages and allowances from the date of dismissal to the date of reinstatement. The reference thus made has gone through a long and protracted career and the final decision of the dispute would be reached after we dispose of the present appeals. In order to appreciate the points raised for our decision in these appeals it is necessary to indicate briefly at the outset the salient points of controversy between the parties, the findings made by the original tribunal, the conclusions reached by the Labour Appellate Tribunal in its interlocutory and final judgments and the decision of this Court in the appeal which had been brought before it by the Bank against the interlocutory judgment of the Labour Appellate Tribunal. The 150 employees, whose dismissal has given rise to the present dispute are spread over several branches of the Bank. 52 of them work at its head office in Delhi, 15 in Bombay, 73 in East Punjab and 10 in U.P. 140 workmen in the first three areas are represented by the Federation while the last 10 in U.P. are represented by the Union. All of these employees took part in strike which, according to the Bank, were illegal. The strikes in which the two respective groups of workmen took part were, however, for different reasons. The strike in which the Federation took part was the result of the suspension by the Bank of its typist Sabharwal employed in the Delhi Branch of the Bank on April 17, 1951. It appears that Sabharwal, who was the Secretary of the Punjab National Bank Employees ' Union, Delhi, had applied for leave for seven days on April 3, 1951, but his application was rejected; even so he absented himself from duty and went to Bombay. As soon as he resumed his duties on 812 April 14, 1951, he was supplied with a written chargesheet for absence without leave which he refused to accept. It was then sent to him by registered post, and on April 17 he was suspended. This suspension was followed by an immediate pen down strike at the head office of the Delhi Branch subsequent to which the Bank suspended 60 other employees. This led to a general strike in Delhi and many other branches and it commenced at different dates from April 18 to 20, 1951. On April 21 22, 1951, the Bank issued notices calling upon all striking members of the staff to report for duty by 10 a. m. on April 24, 1951, and it warned them that if they did not comply with the notice it would be taken that they had voluntarily ceased to be its employees and their services would be deemed to have terminated from that date. This was followed by another notice on April 24 which announced that the strikers who had failed to report for duty as aforesaid had ceased to be the employees of the Bank from April 24, 1951. An option was, however, given to the strikers who were still willing to rejoin duty to apply in that behalf and explain their action in staying away. It is common ground that the 140 employees represented by the Federation who had taken part in the strike were dismissed by the Bank for absence due to the strike. That is the genesis of the dispute between the Bank and the Federation in relation to the 140 employees of the Bank. The strike in which the remaining 10 employees of the Bank from the U.P. branches are concerned commenced on April 23, 1951. This strike was in pursuance of the strike notice served by the Union on the Bank on April 22, 1951. This pen down strike was a part of the general strike which affected not only the Bank but also the Allahabad Bank and other banks in the U.P. region. The Regional Labour Commissioner of the U.P. Government who intervened suggested that the general strike should be called off and recommended that some of the demands made by the strikers should be referred to the industrial tribunal for adjudication; in accordance with this request, on April 30, 1951, the strike committee decided to call off the strike and 813 Advised workmen to join duty from May Is 1951. This advice, however, did not reach all the branches in time with the result that some of the employees of the Bank offered to resume work on May 3,1951. The other banks in the U.P. region took back their employees who rejoined on May 3, but the Bank refused to take back its employees on the ground that they ' had not offered to rejoin on or before the date fixed; and so it proceeded to dismiss them. The dismissal of the said 10 employees is also the subject matter of the present reference. That is bow the reference is concerned with the dismissal of 150 employees of the Bank in all. The strikes in question which affected the head office and the large number of branches of the Bank operating in more than one State and a very large number of its employees caused public concern, and so the Prime Minister and the Labour Department of the Central Government thought it necessary to intervene; and a conference was arranged at New Delhi between the officers of the Government and the Bank. To this conference the representatives of the Federation or the Union were, however, not invited. This conference led to an agreement as a result of which the Bank undertook to reinstate all its employees who had taken part in the strikes except those to whose reinstatement it had " positive objections". This, however, was subject to the reservation that the number of such employees was not to exceed 150 and that their case, , would be referred by the Central Government for adjudication by a tribunal. This agreement was the result of several meetings between the representatives of the Bank and the Labour Department of the Central Government and it was reached on or about May 9, 1951. Thereafter the head office of the Bank sent a circular letter to all its branches calling for names of the employees who according to the branch managers could not be considered for reinstatement. The list of such employees received by the head office from the respective managers of its branches was examined by the head office and the Bank then compiled the 103 814 list of 150 workmen whom it was not prepared to reinstate. This list was in due course communicated by the Bank to the Central Government; and in pursuance of the agreement aforesaid the Central Government referred the dispute in respect of the said 150 workmen for adjudication before the tribunal by its notification issued on July 2, 1951. Before the tribunal the case for the Federation and the Union was that the refusal of the Bank to take back the 150 workmen in question was a part of the concerted and deliberate plan adopted by the management of the Bank for victimising the President, the Vice President, the General Secretary and Secretaries and Treasurer of the Federation and of the working committees of the different trade unions of workers and the members of the strike committees, and it showed that the sole object of the Bank in refusing to take back those employees was to teach a lesson to the Federation and the Union and to penalise all active trade union workers who supported the cause of the employees. On the other hand, the Bank contended that the strikes in which the 150 employees had participated were illegal and had been resorted to not with a view to obtain relief for the employees but with a view to paralyse the business of the Bank and to scare away its customers. The Bank further alleged that the said 150 employees were guilty of " unpardonable acts of violence, intimidation, coercion and victimisation. " The tribunal gave two interim awards by which it directed the Bank to make some payments to the 150 employees by way of allowance pending the final disposal of the dispute. On February 2, 1952, the tribunal pronounced its final award. It held that the strikes were illegal and that the ' Bank was entitled to dismiss the employees solely on the ground that the said employees had participated in an illegal strike. On this view the tribunal did not think it necessary to allow evidence to be given on the question as to whether some of the strikers were guilty of specific subversive or violent acts. It also did not allow 815 evidence to be led by workmen in support of their plea that their dismissal was the result of victimisation. It decided the dispute on the sole ground, that the strikes were illegal and participation in illegal strikes justified the dismissal of the employees. Even so the tribunal made an order directing the Bank to pay certain amounts to the said employees on compassionate grounds. The direction issued by the tribunal for the payment of the said amount was challenged by the Bank by its appeal (No. 25 of 1952) before the Labour Appellate Tribunal (hereinafter called the appellate tribunal), whereas the decision of the tribunal that the 150 employees were not entitled to reinstatement was challenged by the two sets of employees by two different appeals (Nos. 69 and 70 of 1952). The appellate tribunal recorded its interlocutary decision on September 22, 1952. As a result of this decision the dispute was set down for further hearing on the points indicated by it. It was urged by the Bank before the appellate tribunal as a preliminary objection that the appeals preferred by the employees were incompetent. This objection was overruled. The appellate tribunal then proceeded to consider two questions of law, (1) whether an employer has the right to dismiss a workman for his absence from duty by reason of his mere participation in an illegal strike, and (2) if he has, can the tribunal scrutinise the exercise of that right and grant relief to such a workman when it comes to the conclusion that the right has been exercised capriciously or by unfair labour practice. The appellate tribunal held that the strike started by the Federation was illegal under section 23 (b) read with section 24 (1) of the (14 of 1947) (herein after called the Act). It appears that on February 21, 1950, an industrial dispute between the Bank and the Federation had been referred to the arbitration of Mr. Campbell Puri, and whilst the proceedings in the said reference were pending before the tribunal the strike was commenced on or about April 17, 1951. That is why the strike was illegal. The appellate tribunal, however, held that, even if mere participation 816 in an illegal strike by workmen is assumed to give the employer certain rights against the striking workmen, the employer can waive these rights, that is to say, rafrain from exercising those rights against the workmen. According to the appellate tribunal such waiver or relinquishment can be inferred from conduct, and it thought that the conduct of the Bank evidenced by the agreement which it reached with the Central Government on or about May 9, 1951, unambi guously proved that it had waived or relinquished its rights to take any penal action against its employees merely for their participation in the illegal strike. In other words, the effect of the findings of the appellate tribunal was that, though the strike was illegal, by its conduct the Bank had precluded itself from exercising its alleged right to dismiss its employees for their participation in such an illegal strike. The appellate tribunal also considered the general question of law as to whether participation in an illegal strike can be said to deserve dismissal of the striking workmen. It took the view that an illegal strike absolves the liability of the employer to pay to its employees wages during the period of absence of the striking workmen, but that it cannot be stated as a general proposition that participation in an illegal strike would by itself necessarily involve the penalty of dismissal. The Bank attempted to justify the dismissal in the present case by urging that the 150 employees were guilty of violent or subversive acts but the appellate tribunal held that it was not open to the Bank at that stage to plead in justification of their dismissal any such acts of violence or subversive acts. " There is abundant authority ", observed the appellate, tribunal, " for the proposition that an employer can justify before the tribunal a dismissal only on the ground on which he purported to dismiss him and not a ground different from it ". That is why in the end the appellate tribunal held that the dismissals were wrongful. The appellate tribunal had no doubt that mere participation by a workman in an illegal strike or his absence due to such participation does not entitle an employer to dismiss him and that it is 817 open to a tribunal to order reinstatement in a proper case. Having reached this conclusion the appellate tribunal observed that "though in the case of wrongful dismissals the normal rule is that the employees wrongfully dismissed should be reinstated, it would nevertheless be necessary to consider the question of reinstatement in the case of each individual employee in the light of requirements of social justice and fair play for which the employee claims and industrial peace and discipline which the employer emphasizes. " In order to decide the cases of the several employees from this twofold point of view the appellate tribunal thought it was necessary to allow the parties to lead additional evidence on relevant points. The employees wanted to lead evidence in support of their case of victimisation and they were allowed to do so by the appellate tribunal. The Bank wanted to lead evidence on five points. The appellate tribunal held that evidence on items (3) and (5) would be irrelevant and it thought that item (4) was too vague. That is why 'the Bank was allowed to lead evidence only in respect of item (2) and some heads mentioned in item (1). In the result opportunity was given to the parties to lead evidence on the following points: (1) victimisation, (2) past service records of the 150 employees, (3) conduct of those 150 employees or any of them during the strike confined to acts of violence, intimidating loyal workers and acts subversive of the credit of the Bank, (4) employment which any of those 150 persons got after this dismissal, the period during which they were in employment and the wages or emoluments they received. The appellate tribunal then directed the Bank to file a statement within a month giving particulars of the acts confined to the matters on which the Bank was allowed to lead evidence in respect of each one of the 150 employees after supplying a copy of the same, one to the Federation and one to the Union. In the meanwhile the appellate tribunal directed the Bank to make interim payments to the employees as indicated in its order. This interlocutary judgment was challenged by the Bank before this Court by its appeal under article 136 818 of the Constitution. On behalf of the Bank it was urged that the conclusion of the appellate tribunal that the Bank had condoned the illegal strike by its workmen was unjustified and that it was open to the Bank to rely upon the illegal strike as justifying the dismissal of the said workmen. The case of the Bank thus was that the order passed by the appellate tribunal setting down the dispute for further enquiry was illegal and should be set aside. The judgment of this Court delivered by Patanjali Sastri, C. J., shows that this Court thought it unnecessary to express any opinion on the question of condonation or waiver of the illegal strike because, in its opinion, even if there was no such condonation or waiver and even if it was open to the Bank to rely upon the illegal strike as a valid ground for dismissing its employees, there was no doubt that the order of dismissal was illegal having regard to the provisions of section 33 of the Act. The said section furnished a short answer to the Bank 's contention that the appellate tribunal had no jurisdiction to order reinstatement of the 150 workmen. In other words, just as the strike of the employees was illegal so was the order of dismissal passed by the Bank illegal and for a similar reason. section 23(b) of the Act made the strike illegal while section 33 of the Act made the dismissal also illegal. In the result the appeal preferred by the Bank was dismissed; and it was held that there was no substance in the plea of the Bank that the appellate tribunal had no jurisdiction to direct reinstatement of the employees. This judgment was pronounced on April 10, 1953. The proceedings before the appellate tribunal were subsequently resumed and they terminated on January 4, 1955, when the appellate tribunal directed the reinstatement of the 136 employees and passed incidental orders about the payment of their wages. It refused to reinstate the remaining 14 employees but passed orders in regard to payment of compensation even in their cases. Before the appellate tribunal four general points were sought to be raised at this subsequent hearing. The first was in regard to the invalidity of the reference itself. The second was in regard to 819 the ultra vires character of the relevant provisions of the Act. Both these contentions were not allowed to be raised by the appellate tribunal and they have not been urged before us either. The third contention ' raised was that both the strikes were not bona fide and so the striking workmen were not entitled to reinstatement; and the last contention was that the pen down strike was illegal and participation in it should be considered as a circumstance disqualifying the strikers from reinstatement. The appellate tribunal has held that the strikes in question were bona fide and that mere participation in the pen down strike cannot be treated as a valid ground for refusing reinstatement to the strikers. It considered the evidence led by the parties in regard to the character of the strike, and it held that the definite instruction issued to the employees was to continue occupation of their seats till the police intervened and threatened to arrest and so it was not prepared to accept the employees ' case that the pen down strikers "vacated their seats on the mere asking by the management" According to the finding, the persons who took part in the pen down strike not only ceased to work but continued to occupy their seats. The appellate tribunal also found that the pen down strikers were quiet and peaceful, that no slogans were shouted, no attempt at violence or coercion was made and that they simply occupied their seats without doing any work. It was conceded before the appellate tribunal that pen down strike falls within the definition of strike prescribed by section 2(q) of the Act; but it was urged that the act of not vacating their seats when asked by the management to do so introduced an element of illegality and made the strikers liable in a civil court for trespass. The appellate tribunal was not impressed with this argument but it held that even if the striking workmen are assumed to have made themselves liable for civil trespass that itself would not be sufficient ground for refusing reinstatement. It appears that the Bank relied upon several documents to show that the employees were guilty of subversive actions during the course of the strike. The 820 appellate tribunal was not satisfied that these documents were genuine and could be effectively pressed into service by the Bank in support of its case. It was also urged by the Bank that during the course of the strike posters and circulars were issued which were clearly subversive of the credit of the Bank and it was contended that employees who were guilty of issuing such posters and circulars did not deserve reinstatement. The appellate tribunal examined these documents and held that three of them amounted to sub versive acts. They are Exs. 255(a), 255(c) and 302. In regard to exhibit 302 the findings recorded by the appellate tribunal in two places of its decision are somewhat inconsistent; but the operative portion of the decision shows that the appellate tribunal was inclined to hold that exhibit 302 was also objectionable and that it amounted to a subversive act. The rest of the documents no doubt used strong and intemperate language but the appellate tribunal was not prepared to treat them as constituting subversive activity. On this finding a question which arose before the appellate tribunal was : Who should be held responsible for the offending documents ? The appellate tribunal was not prepared to hold all the 150 employees responsible for them. In this connection it considered the statement made by H. N. Puri in this evidence and it field that since Puri had admitted that he consulted 11 specified persons in preparing Exs. 255(a) and 255(c) as well as other documents they must share the responsibility for the said documents along with Puri. Similarly the appellate tribunal held that the persons who were shown to have been responsible for exhibit 302 must be treated on the same basis. It was as a result of this finding that the appellate tribunal refused to direct reinstatement of 14 employees. In regard to the remaining 136 employees the appellate tribunal held that it would not be right to impute the responsibility for the publication of the three subversive documents to them merely because they were members of the working committee or were otherwise active leaders of the Union. The appellate tribunal the considered the voluminous evidence led by the parties in respect 821 of each one of the 150 employees, and it held that in regard to the 136 employees no case had been made out by the Bank for refusing them reinstatement. It is clear from the decision of the appellate tribunal that it was not at all satisfied with a substantial part ,of the documentary evidence adduced by, the Bank. It held that the affidavits filed by the Bank were sometimes prepared en masse and the deponents simply put their signatures on them. In most of the affidavits there were blank spaces for the name, parentage and age of the deponents and they have been subsequently filled up in ink. Some of them, though sworn at different places, used identical language; while in some others material additions and alterations have been made which do not bear the initials either of the deponents or of the oath commissioner. It appeared to the appellate tribunal that some of the statements made by the witnesses of the Bank showed that their affidavits had been prepared by the Bank 's lawyers and they simply put their signatures thereon and affirmed them before the oath commissioner. Indeed the appellate tribunal apparently thought that there was some force in the contention raised by the employees that some of the documents produced by the Bank had been manufactured or tampered with long after the strike was over, It has noticed the argument urged by the Bank that even if it was so the Bank cannot be condemned for the act or acts of its branch managers in that behalf. This argument did not appeal to, the appellate tribunal. Thus the decision of the appellate tribunal substantially upheld the case made by the employees in that it directed the rein statement of the 136 out of the 150 ' employees and ordered payment of compensation to the remaining 14 whose reinstatement was not granted. This decision has given rise to the three present appeals before us. Civil Appeal No. 519 of 1958 has been filed by the Bank against the order of reinstatement in respect of 126 employees represented by the Federation. Similarly Civil Appeal No. 520 of 1958 has been filed by the Bank against the order directing 104 822 the reinstatement of 10 employees represented by the Union; and Civil Appeal No. 521 of 1958 has been filed by the Federation on behalf of the 14 employees the claim for whose reinstatement has been rejected. In regard to the first two appeals preferred by the Bank special leave was granted to the Bank on February 21, 1958, limited to grounds (b), (c), (d), (f) and (g) set out in paragraph 162 of its petitions. These grounds are: (b) Whether employees, who have been propagating against the stability and solvency of the Bank by propaganda oral as well as written through open letters, posters, leaflets and hand bills amongst the customers and constituents of the Bank and the public at large before, during and after an illegal strike are entitled to an order of reinstatement ? (c) Whether after the declaration of an illegal strike, forcible occupation of the seats and refusal to vacate them, when ordered to do so by the Management, does not constitute as act of criminal trespass, it having been held by the appellate tribunal that the employees formed a large riotous assembly in and outside the premises of the Bank and delivered fiery and provocative speeches to accompaniment of scurrilous slogans directed against the institution and its high officers with a view to render impossible the business of the institution, are entitled to an order of reinstatement ? (d) Whether a 'pen down ' strike of such a character does not contravene the provisions of the law of the land and is exempted under the Trade Unions Act or the ? (f ) Whether employees, who, notwithstanding the fact that they resorted to an illegal strike and were guilty of rioting, had been invited by the Management to come back and resume work and who spurned at this offer and in so many words treated it with contempt and whose places had, therefore, to be replaced by fresh recruits are entitled to an order that those fresh recruits be dismissed and replaced by the strikers ? 23 (g) Whether it is open to the employees of a concern to raise with their Employers a question as to whether the Employers should employ in their service employees of a concern other than their own and whether such a question constitutes an 'industrial dispute ' within the meaning of the ? It may be mentioned that the Bank 's petitions had raised several other grounds in paragraph 162 but leave has not been granted to the Bank to raise any of them. Almost a month and a half after limited leave was thus granted to the Bank the Federation filed its petition for special leave on April 4, 1955, and it applied for condonation of delay made in presenting the petition. On April 9, 1956, this Court granted the employees ' application for condonation of delay and gave special leave to them to prefer their appeal. This leave has not been limited to any particular grounds. Broadly stated these are the relevant facts which give rise to the three present appeals. Before dealing with the merits of these appeals we must consider two preliminary objections raised by the learned Attorney General on behalf of the employees. He has claimed that if these objections are upheld the Bank 's appeals would have to be dismissed and the employees ' appeal allowed without considering the merits of the orders under appeal. In pressing these objections he urged that the questions raised were of considerable importance, and, though he conceded that some aspects of the matter were covered by the previous decisions of this Court, he requested us to examine the whole question afresh once more. We would accordingly deal with these contentions at some length. The first contention is that as a result of the decision of this Court in the appeal preferred by the Bank against the interlocutary judgment of the appellate tribunal, the whole of the enquiry held by the said tribunal pursuant to the said interlocutary judgment is invalid and infructuous. This Court has held that the dismissal of the 150 employees is illegal having 824 regard to the provisions of section 33 of the Act; if the dismissal is illegal it is void and inoperative and as such it cannot be said to have terminated the relationship of master and servant between the Bank and its employees. Despite the said order of dismissal the employees continued to be in the employment of the, Bank and are entitled to reinstatement without any further enquiry. That, it is said, is the effect of the Bank 's failure to comply with the provisions of section 33. It is next contended that the Bank does not dispute the fact that it had held no enquiry into the alleged misconduct of its employees before it passed the impugned: orders of dismissal against them. It is well established that even where an employer is justified in terminating the services of his employees he is bound to give them a charge sheet and hold a proper enquiry at which they would have, a chance to meet the said charge sheet. This requirement is universally treated as,consistent with natural justice and fairplay and since the Bank has not complied with it the impugned orders of dismissal are wholly invalid for this additional reason; and the result again would be that the said orders are inoperative and void and the employees are entitled to reinstatement as a matter of course. In support of this argument reliance has been placed on the decision of the Privy Council in the case of The High Commissioner for India and High Commissioner for Pakistan and I.M. Lall (1). This decision holds that the order of dismissal passed against a person who is a member of the Civil Service of the Crown in India without complying with the mandatory relevant provisions of section 240 of the Government of India Act, 1935, is void and inoperative, and that the Civil Servant against whom such an order is passed is entitled to a declaration that he remained a member of the Indian Civil Service at the date of the institution of the suit in which he challenged the validity of the impugned order. Similarly in Khem Chand vs The Union of India(2), this Court has held that an order of dismissal passed against a public servant specified in article 311(a)with out complying with the mandatory (1) 75 1. A. 225. (2) ; 825 provisions of article 311 (2) is void and that the public servant sought to be dismissed by such an invalid order continued to be a member of the service at the date of the institution of the suit. It is in the light of these decisions that the learned Attorney General asks us to hold that the relationship between the Bank and its employees remains wholly unaffected by the ' orders of dismissal passed by the Bank against them; and so, as soon as the orders are held to be void nothing more remains to be done but to make a declaration about the the continuance of the relationship of master and servant between the parties and to direct reinstatement. Thus presented the argument no doubt appears prima facie to be attractive; but in our opinion, a careful examination of the relevant sections of the Act shows that it is not valid. The three sections of the Act which are relevant are sections 33, 33A and 10. Let us first consider section 33. This section has undergone several changes but we are concerned with it as it stood in 1951. It provides inter alia that during the pendency of any proceedings before a tribunal in respect of any industrial dispute no employer shall discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute save with the express permission in writing of the tribunal. It is clear that in cases to which this section applies a ban has been imposed on the power of the employer to dismiss his employees save with the express permission in writing of the ,tribunal. The object of the Legislature in enacting this section is obvious. By imposing the ban section 33 attempts to provide for the continuance and termination of the pending proceedings in a peaceful atmosphere undisturbed by any causes of friction between the employer and his employees. In substance it. insists upon the maintenance of the status quo pending the disposal of the industrial dispute between the parties; nevertheless it recognises that occasions may arise when the employer may be justified in discharging or punishing by dismissal his employees; and so it allows the employer to take such action subject to the condition that before doing so he must obtain the 826 express permission in writing of the tribunal. It is true that the ban is imposed in terms which are mandatory and section 31(1) makes the contravention of the provisions of section 33 an offence punishable as prescribed therein. But the question which calls for our decision is: What is the effect of such contravention on the decision of the industrial dispute arising from it ? Where an application is made by the employer for the requisite permission under section 33 the jurisdiction of the tribunal in dealing with such an application is limited. It has to consider whether a prima facie case has been made out by the employer for the dismissal of the employee in question. If the employer has held a proper enquiry into the alleged misconduct of the employee, and if it does not appear that the proposed dismissal of the employee amounts to victimisation or an unfair labour practice, the tribunal has to limit its enquiry only to the question as to whether a prima facie case has been made out or not. In these proceedings it is not open to the tribunal to consider whether the order proposed to be passed by the employer is proper or adequate or whether it errs on the side of excessive severity; nor can the tribunal grant permission, subject to certain conditions, which it may deem to be fair. It has merely to consider the prima facie aspect of the matter and either grant the permission or refuse it according as it holds that a prima facie case is or is not made out by the employer. But it is significant that even if the requisite permission is granted to the employer under section 33 that would not be the end of the matter. It is not as if the permission granted under section 33 validates the order of dismissal. It merely removes the ban; and so the validity of the order of dismissal still can be, and often is, challenged by the union by raising an industrial dispute in that behalf. The effect of compliance with the provisions of section 33 is thus substantially different from the effect of compliance with section 240 of the Government of India Act, 1935, or article 311(2) of the Constitution. In the latter classes of cases, an order of dismissal passed after duly complying with the 827 relevant statutory provisions is final and its validity or propriety is no longer open to dispute; but in the case of section 33 the removal of the ban merely enables the employer to make an order of dismissal and thus avoid incurring the penalty imposed by section 31(1). But if an industrial dispute is raised on such a dismissal, the, order of dismissal passed even with the requiste permission obtained under section 33 has to face the scrutiny of the tribunal. The decisions of this Court show that this position is well established. In Atherton West & Co. Ltd. vs Suti Mills Mazdoor Union (1) this Court was dealing with the provisions of cl. 23 of the relevant U. P. Government notification which is similar to the provisions of section 33 of the Act. " The enquiry to be conducted by the Regional Conciliation Officer under the said clause ", observed Bhagwati, J., " was not an enquiry into an industrial dispute as to the non employment of workmen who was sought to be discharged or dismissed which industrial dispute would only arise after an employer, his agent or manager discharged or dismissed the workman in accordance with the written permission obtained from the officer concerned. The only effect of obtaining permission from the officer concerned was to remove the ban imposed on the employer. But the order of dismissal passed after obtaining the requisite permission can still become the subject matter of an industrial dispute under section 2(k) of the Act and the workman who has been dismissed would be entitled to have the industrial dispute referred to the appropriate authority. " In The Automobile Products of India, Ltd. vs Rukmaji Bala & Ors. (2), this Court was dealing with a similar problem posed by the provisions of section 22 of Act 48 of 1950, and section 33 of the Act. Dealing with the effect of these sections this Court held that the object of section 33 was to protect the workmen against the victimisation by the employer and to ensure the termination of the proceedings in connection with the industrial disputes in a peaceful atmosphere. That being so, all that the tribunal, exercising its jurisdiction under section 33, is (1) ; , (2) ; 828 required to do is to grant or withhold the permission, that is to say, either to lift or to maintain the ban. This section does not confer any power on the tribunal 'to adjudicate upon any other dispute or to impose conditions as a prerequisite for granting the permission asked for by the employer. The same view has been ,expressed in Lakshmi Devi Sugar Mills Ltd. vs Pt. Ram Sarup (1). In cases where an industrial dispute is raised on the ground of dismissal and it is referred to the tribunal for adjudication, the tribunal naturally wants to know whether the impugned dismissal was preceded by a proper enquiry or not. Where such a proper enquiry has been held in accordance with the provisions of the relevant standing orders and it does not appear that the employer was guilty of victimisation or any unfair labour practice, that tribunal is generally reluctant to interfere with the impugned order. The limits of the tribunal 's jurisdiction in dealing with such industrial disputes have been recently considered by this Court in the Indian Iron & Steel Co. Ltd. vs Their Workmen (2 ) and it has been held that the powers of the tribunal to interfere with cases of dismissal are not unlimited because the tribunal does not act as a court of appeal and substitute its own judgment for that of the management. In this judgment this Court has indicated the classes of cases in which the tribunal would be justified in interfering with the impugned order of dismissal. It would and should interfere when there is want of good faith, when there is victimisation or unfair labour practice, when the management has been guilty of a basic error or violation of the principle of natural justice, or when, on the materials, the finding of the management is completely baseless or perverse. The same view has been again expressed by this Court in O. McKenzie & Co., Ltd., and Its Workmen (3). There is another principle which has to be borne in mind when the tribunal deals with an industrial dispute arising from the dismissal of an employee. We have already pointed out that before an employer can (1) ; (2) ; (3) 829 dismiss his employee he has to hold a proper enquiry into the alleged misconduct of the employee and that such an enquiry must always begin with the supply of a specific charge sheet to the employee. In Lakshmi Devi Sugar Mills, Ltd. (1), it has been held by this Court that in dealing with the merits of the dismissal of an employee the employer would be confined to the ' charge sheet given by him to his employee when an enquiry was held into his conduct. It would not be open to the employer to add any further charges against the employee and the case would have to be considered on the original charge sheet as it was framed. It is significant that in the case of Lakshmi Devi Sugar Mills, Ltd. (1), this Court was apparently inclined to take the view that the additional acts of insubordination on which the appellant mills wanted to rely would have justified the employee 's dismissal; but even so it was not allowed to raise that plea because the said plea had not been included in the original charge sheet. It, therefore, follows that where a proper enquiry has been held by the employer and findings are recorded against the employee that the principles laid down by this Court in the case of Indian Iron & Steel Co. Ltd. (2)would be applicable; and in applying the said principles the employer would be confined to the grounds set out by him in his charge sheet against the employee. This position is not disputed before us. Indeed the learned Attorney General contends that the principles applicable to the decision of an industrial dispute arising from the dismissal of an employee to which we have just referred serve to emphasise the obligatory character of the limitation imposed on the employer by section 33 of the Act and by the requirements of natural justice that every dismissal must be preceded by a proper enquiry. Where the ban imposed by section 33 of the Act has been defied and/or where a proper enquiry has not been held at all the action of the employer in dismissing his employee must be treated as void and inoperative. Such a case (1) ; (2) ; , 105 830 stands outside the principles which we have discussed, so far. That in brief is the main contention raised by the employees. This contention is, however, untenable in view of the decisions of this Court where the provisions of section 33A have been construed and considered, and so we must now turn to section 33A. This section was inserted in the Act in 1950. Before it was enacted the only remedy available to the employees against the breach of section 33 was to raise an industrial dispute in that behalf and to move the appropriate Government for its reference to the adjudication of a tribunal under section 10 of the Act. The trade union movement in the country complained that the remedy of asking for a reference under section 10 involved delay and left the redress of the grievance of the employees entirely in the discretion of the appropriate Government; because even in cases of contravention of section 33 the appropriate Government was not bound to refer the dispute under section 10. That is why section 33A was enacted for making a special provision for adjudication as to whether section 33 has been contravened. This section enables an employee aggrieved by such contravention to make a complaint in writing 'in the prescribed manner to the tribunal and it adds that on, receipt of such complaint the tribunal shall adjudicate upon it as if it is a dispute referred to it in accordance with the provisions of the Act. It also requires the tribunal to submit its award to the appropriate Government and the provisions of the Act shall then apply to the said award. It would thus be noticed that by this section an employee aggrieved by a wrongful order of dismissal passed against him in contravention of section 33 is given a right to move the tribunal in redress of his grievance without having to take recourse to section 10 of the Act. After this section was thus enacted the scope of the enquiry contemplated by it became the subject matter of controversy between the employers and the employees. This Court bad occasion to deal with this controversy in the case of the Automobile Products of India Ltd. (1). Das, J., as he then was, who delivered (1) ; 831 the judgment of the Court construed section 33A of the Act and the corresponding section 23 of Act 48 of 1950, which applied to the Labour Appellate Tribunal then in existence, and observed that " the scheme of the section clearly indicates that the authority to whom the complaint is made is to decide both the issues, viz., (1) the effect of contravention, and (2) the merits of the act or order of the employer ". " The provision in the section that the complaint shall be dealt with by the tribunal as if it were a dispute referred to or pending before it quite clearly indicates ", said the learned Judge, "that the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to go into the merits of the complaint and grant appropriate reliefs (p. 1253) ". It was urged before this Court that in holding an enquiry under section 33A the tribunal 's duty was only to find out whether there had been a contravention of section 33, and if it found that there was Such a contravention to make a declaration to that effect. The argument was that no further question can or should be considered in such as enquiry. This contention was, however, rejected. The same question was raised before this Court in Equitable Coal Co. Ltd. vs Algu Singh (1) and following the previous decision of this Court in the case of the Automobile Products of India Ltd. (2) it was held that in an enquiry under section 23 two questions fall to be considered: Is the fact of contravention of the provisions of section 22 proved ? If yes, is the order passed by the employer against the employee justified on the merits ? Thus there can be no doubt that in an enquiry under section 33A the employee would not succeed in obtaining an order of reinstatement merely by proving contravention of section 33 by the employer. After such contra vention is proved it would still be open to the employer to justify the impugned dismissal on the merits. That is a part of the dispute which the tribunal has to consider because the complaint made by the employee is treated as an industrial dispute and all the relevant (1) A.I.R. 1958 S.C. 761. (2) ; 832 aspects of the said dispute fall to be considered under 3. Therefore, we cannot accede to the argument that the enquiry under section 33A is confined only to the determination of the question as to whether the alleged contravention by the employer of the provisions of section 33 has been proved or not. In the present case the impugned orders of dismissal have given rise to an industrial dispute which has been referred to the tribunal by the appropriate Government under section 10. There can be no doubt that if under a complaint filed under section 33A a tribunal has to deal not only with the question of contravention but also with the merits of the order of dismissal, the position cannot be any different when a reference is made to the tribunal like the present under section 10. What is true about the scope of enquiry under section 33A is a fortiori true in the case of an enquiry under section 10. What is referred to the tribunal under section 10 is the industrial dispute between the Bank and its employees. The alleged contravention by the Bank of section 33 is no doubt one of the points which the tribunal has to decide; but the decision on this question does not conclude the enquiry. The tribunal would have also to consider whether the impugned orders of dismissal are otherwise justified; and whether, in the light o the relevant circumstances of the case, an order of reinstatement should or should not be passed. It is only after all these aspects have been considered by the tribunal that it can adequately deal with the industrial dispute referred to it and make an appropriate award. In this connection it would be relevant to remember that in dealing with industrial disputes arising out of dismissal of employees the tribunal undoubtedly has jurisdiction to direct reinstatement in proper cases. The question about the jurisdiction of an industrial tribunal to direct reinstatement was raised as early as 1949, before the Federal Coort in Western India Automobile Association vs Industrial Tribunal, Bombay (1). In this case the Federal Court considered the larger question about the powers of industrial tribunals in (1) 833 all its aspects and rejected the argument of the employer that to invest the tribunal with jurisdiction to order re employment amounts to giving it authority to make a contract between two persons when one of them is unwilling to enter into a contract of employment at all. " This argument ", observed Mahajan, J., as he then was, "overlooks the fact that when dispute arises about the employment of a person at the instance of a trade union or a trade union objects to the employment of a certain person, the definition of industrial dispute would cover both those cases. In each of those cases, although the employer may be unwilling to do so, there will be jurisdiction in the tribunal to direct the employment or non employment of the person by the employer ". The learned Judge also added that " the disputes of this character being covered by the definition of the expression 'industrial disputes, ' there appears no logical ground to exclude an award of reinstatement from the jurisdiction of the industrial tribunal." Since this judgment was pronounced the authority of the industrial tribunals to direct reinstatement in appropriate cases has never been questioned. In exercising its jurisdiction to direct reinstatement of dismissed employees industrial tribunals have indicated certain general considerations for their own guidance. In the case of a wrongful dismissal the normal rule adopted in industrial adjudication is that reinstatement should be ordered. "But", observed the Full Bench of the Labour Appellate Tribunal in Buckingham & Carnatic Mills Ltd., And Their Workmen (1), " in so ordering the tribunal is expected to be inspired by a sense of fair play towards the employee on the one hand and considerations of discipline in the concern on the other. The past record of the employee, the nature of his alleged present lapse and the ground on which the order of the management is set aside are also relevant factors for consideration. " It is obvious that no hard and fast rule can be laid down in dealing with this problem. Each case must be considered on its own merits, and, in reaching the (1) [1951] 11 L.L.J.314. 834 final decision an attempt must be made to reconcile the conflicting claims made by the employee and the employer. The employee is entitled to security of service and should be protected against wrongful dismissals, and so the normal rule would be reinstatement in such cases. Nevertheless in unusual or exceptional cases the tribunal may have to consider whether, in the interest of the industry itself, it would be desirable or expedient not to direct reinstatement. As in many other matters arising before the industrial courts for their decision this question also has to be decided after balancing the relevant factors and without adopting any legalistic or doctrinaire approach. No such considerations can be relevant in cases where in civil courts the validity of dismissals is challenged on the ground of non compliance with section 240 of the Government of India Act, 1935 or article 311(2) of the Constitution. There is one more point which still remains to be considered and that is the effect of the Bank 's default it not holding an enquiry in the present case. If the Bank has not held any enquiry it cannot obviously contend before the tribunal that it has bona fide exercised the managerial functions and authority in passing the orders of dismissal and that the tribunal should be slow to interfere with the said orders. It is true as we have already pointed out that if the employer holds a proper enquiry, makes a finding in respect of the alleged misconduct of the employee and then passes an order of dismissal the tribunal would be glow to interfere with such an order and would exercise its jurisdiction within the limits prescribed by this Court in The case of Indian Iron & Steel Co. Ltd. (1). But it follows that if no enquiry has in fact been held by the employer; the issue about the merits of the impugned order of dismissal is at large before the tribunal and, on the evidence adduced before it, the tribunal has to decide for itself whether the misconduct alleged is 'roved, and if yes, what would be proper order to make. In such a case the point about the exercise of managerial functions does not arise at (3) ; , 835 all. This answers the argument which Mr. Sanyal has raised before us in his appeal. Mr. Sanyal, however, seeks to derive support to his argument from the decision of the Labour Appellate Tribunal in The Madras Electric Tramways (1904) Ltd. Madras And Their Workers (1). In that case the order of reinstatement passed by the tribunal was reversed in appeal by the appellate tribunal which observed that in dealing with cases of dismissal where the management had acted bona fide and with knowledge and experience of the problems which confronted in the daily work of the concern it should be considered to be well qualified to judge what sentence would be appropriate, and the sentence imposed by the management should normally stand subject to the qualification that it must not be unduly severe. It is obvious that in that case the management had held a proper enquiry and the question which arose for decision was what are the limits of the jurisdiction of the tribunal in dealing with an industrial dispute arising from an order of dismissal passed by an employer after holding a proper enquiry. The principles applicable to such a case have been already considered by us; but they can have no application to the present case where the employer has held no enquiry at all. Therefore, this decision on which Mr. Sanyal relies is irrelevant. The position then is that the effect of the double default committed by the employer is not to limit the enquiry to the decision of the sole question as to the commission of the said default, and so, despite the said default the subsequent enquiry held by the appellate tribunal pursuant to its interlocutory judgment was proper and legal. The two preliminary objections raised by the learned Attorney_General must, therefore, fail. Let us now deal with the two appeals filed by the Bank (Civil Appeals Nos. 519 and 520 of 1958). We have already indicated that in dealing with these appeals we have to bear in mind the limitations imposed by the nature of the limited leave granted to (1) 836 the Bank; it is only the grounds specifically covered by the leave which fall to be considered, and even these grounds will necessarily have to be dealt with in the light of the findings already recorded by the appellate tribunal which are no longer open to challenge. The subsequent enquiry held by the appellate tribunal was limited to the question as to whether the Bank was able to prove any specific circumstances which disentitled the employees from claiming reinstatement. In other words, the object of the said enquiry was to ascertain the nature of the "positive objections" which the Bank had against each one of them. The rest of the matters in dispute between the parties are concluded by the other findings which have become final. Considered in the light of these limitations the grounds on which leave has been granted to the Bank must first be examined. A bare perusal of the said grounds would show that some of them are vague and they are urged on assumptions of fact which run counter to the findings recorded by the appellate tribunal. That is why when those appeals were urged before us, Mr. Anand and Mr. Sanyal have recast their contentions within the frame, work of the grounds in respect of which leave has been granted and have urged the following points before us: (1) that participation in a pen down strike is itself an activity of such a subversive character that it disqualifies the employees who took part in it from claiming the relief of reinstatement, (2) that the publication and circulation of subversive documents was the result of a concerted plan and represent a collective activity of all the strikers and as such all the employees before us should be held responsible for it and on this ground reinstatement should be refused to them, (3) that the finding recorded by the appellate tribunal that only 14 persons were directly and actively concerned with the preparation and publication of the subversive documents is opposed to the weight of evidence and is perverse, (4) that the appellate tribunal erred in law in not taking into account the fact that after the 150 employees were dismissed the Bank has engaged fresh hands and the order of reinstatement would, therefore, be unjust and 837 unfair, and (5) that the appellate tribunal was also in error in not taking into account the fact that some of the employees have in the meanwhile taken employment elsewhere. It is these five grounds which we are asked to consider by the Bank in its present appeals. Before dealing with these contentions we would like to make one general observation. Though not in the, same form, in substance these contentions were raised before the appellate tribunal in support of the plea that the dismissed employees should not be reinstated. As we have already emphasized whether or not reinstatement should be ordered in cases of wrongful or illegal dismissals is normally a question of fact and in deciding it several relevant factors have to be borne in mind. If the appellate tribunal applied its mind to those relevant factors and came to the conclusion that 14 employees did not deserve to be reinstated while the remaining 136 did, we would be reluctant to interfere with the said order under article 136 unless it is shown that the order suffers from an error which raises a general or substantial question of law. The first contention raised by the Bank is in regard to the conduct of the employees in entering upon a pen down strike and its effect on their claim for reinstatement. The finding of the tribunal on this point is that the persons who took part in the pen down strike not only ceased to work but continued to occupy their seats. A tumultuous crowd had gathered outside the premises of the Bank and some persons in the crowd were shouting slogans in support of the strike. The strikers had been definitely instructed to stick to their seats until the police intervened and threatened arrest or until orders of discharge or suspension were served on them. There has been some argument before us as to the number of persons who actually took part in this kind of pen down strike. For the Bank Mr. Anand has urged that the finding, of the appellate tribunal suggests that most of the strikers took part in this strike; and in any event, according to him, at least 52 persons took part in it. He has filed in this Court a list of these 52 employees. On the other hand, 106 838 the learned Attorney General has contended that on the findings recorded by the appellate tribunal not more than 10 persons can be said to have taken part in it. In dealing with the present contention of the Bank we are prepared to assume that most of the strikers participated in the pen down or sit down strike as generally found by the tribunal. Is this pen down strike a strike within section 2(q) of the Act or not? section 2(q) defines a strike as meaning a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment. It was conceded before the appellate tribunal that a pen down strike falls within this definition, and this position is not seriously disputed before us either. On a plain and grammatical construction of this definition it would be difficult to exclude a strike where workmen enter the premises of their employment and refuse to take their tools in hand and start their usual work. Refusal under common understanding to continue to work is a strike and if in pursuance of such common understanding the employees entered the premises of the Bank and refused to take their pens in their hands that would no doubt be a strike under section 2(q). The main grievance of the Bank is that these employees not only sat in their places and refus ed to work but they would not vacate their seats when they were asked to do so by their superior officers. Such conduct may introduce an element of insubordination but that is a different matter. In our opinion, therefore, the pen down strike in which the employees participated in the present case cannot be said to be outside section 2(q) of the Act. It was, however, urged that the entry of the strikers in the premises of the Bank amounted to civil trespass. The argument is that by virtue of their employment the employees had a licence to enter the premises of the Bank but this licence is subject to the condition that the employees are willing to carry out their obligation of the contract and do their allotted work during the, 839 office hours. If the employees had decided not to work they were not entitled to the licence in question and so their entry into the Bank itself constituted a civil trespass. On their hand, the employees contend that during the continuance of their employment they are entitled to enter the premises of the Bank and having thus entered they were also entitled to exercise their right of going on strike. They entered the premises as employees of the Bank and having taken their seats they exercised their right of striking work. If the Bank had suspended the employees it would have been another matter; but so long as the relationship of master and servant continued the employees could not be said to have committed civil trespass when they entered the premises at the time. In support of its case the Bank has relied on the proposition that " even if a person has a right of entry on the land of another for a specific purpose he commits a trespass if he enters for any other purpose or under any other claim or title apart from that under which he might lawfully enter. As an illustration of this proposition it is stated that if a person having a licence for entry on land enters the land not by virtue of the said licence but in order to contest the licensor 's title, he commits a trespass " (1). " But this proposition is subject to the exception that if a person enters for a lawful purpose he is not a trespasser unless the case is one to which the doctrine of trespass ab initio applies " (2). So the decision of this technical point would depend on whether or not the employees are given a limited or conditional licence to enter the premises and that if they have decided to go on strike the said conditional or limited licence is no longer available to them. We do not think it necessary to consider this academic question in the present proceedings because, in our opinion, the appellate tribunal was obviously right in holding that even if civil trespass was involved in the conduct of the employees that by itself cannot justify the rejection of their claim for reinstatement. Incidentally we may add that even (1) Salmond on Torts, 12th Ed., p. 158. (2) Salmond on Torts, 12th Ed., p. 159. 840 in America " the simple act of trespassing upon the employer 's property is no bar to reinstatement nor is the act which at most a civil tort " (1). Does the conduct of the strikers as found by the appellate tribunal constitute criminal trespass unders. 441 of the Indian Penal Code?That is the next point which calls for decision. It is argued that the conduct of the employees amountsto criminal trespass which is an offence and as suchthose who committed criminal trespass would not be entitled to reinstatement. According to the Bank the employees committed the criminal trespass inasmuch as they either entered unlawfully or having lawfully entered continued to remain there unlawfully with intent thereby to insult or annoy their superior officers. It would be noticed that there are two essential ingredients which must be established before criminal trespass can be proved against the employees. Even if we assume that the employ ees ' entry in the premises was unlawful or that their continuance in the premises became unlawful, it is difficult to appreciate the argument that the said entry was made with intent to insult or annoy the superior officers. The sole intention of the strikers obviously was to put pressure on the Bank to concede their demands. Even if the strikers might have known that the strike may annoy or insult the Bank 's officers it is difficult to, hold that such knowledge would necessarily lead to the inference of the requisite intention. In every case where the impugned entry causes annoyance or insult it cannot be said to be actuated by the intention to cause the said result. The distinction between knowledge and intention is quite clear, and that distinction must be borne in mind in deciding whether or not in the present case the strikers were actuated by the requisite intention. The said intention has always to be gathered from the circumstances of the case and it may be that the necessary or inevitable consequence of the impugned act may be one relevant circumstance. But it is impossible to accede to the argument that the likely consequence of the act and its possible knowledge (1) Ludwig Teller 's "Labor Disputes and Collective Bargaining" Vol. 11, p.855 841 must necessarily import a corresponding intention. We think it is unnecessary to elaborate this point; we would only like to add that the decision of the Patna High Court, in T. H. Bird vs King Emperor (1) on which reliance was placed by the Bank is wholly inconsistent with the contention raised by it. Thus our conclusion is that the Bank has failed to prove that the conduct of the strikers as found by the appellate tribunal amounted to criminal trespass under s.441 of the Code. In resisting the employees ' claim for reinstatement on the ground that participation in a pendown strike creates a bar against such a claim the Bank has strongly relied on the decision of the Supreme Court of America in National Labor Relations Board vs Fansteel Metallurgical Corporation(2). Both Mr. Anand and Mr. Sanyal have contended that this decision is an authority for the proposition that participation in pen down strikes necessarily disqualifies the strikers from claiming reinstatement. It is, therefore, necessary to examine this case carefully. In this case, the National Labor Relations Board bad directed the reinstatement of participants in a sit down strike whom, upon their refusal to leave the employer 's plant, the employer declared to be discharged. The Board had held that despite the illegal strike and the consequent order of discharge the status of the employees continued by virtue of the definition of the term " employee " in section 2, sub section (3) of the National Labor Relations Act. It had also taken the view that it had jurisdiction to direct reinstatement of the said employees under section 10(c) of the said act with a view to effectuate the policies of the Act. Both these conclusions were reversed by the Supreme Court by a majority judgment. According to the majority view, when the Congress enacted the National Labor Relations Act it " did not intend to compel employers to retain persons in their employ regardless of their unlawful conduct, to invest those who go on strike with an immunity from discharge for acts of trespass or violence against the employer 's property, which they (1) (1934) I.L.R. XIII Pat. (2) ; 306 U.S. 238; 842 would not have enjoyed had they remained at work. " It was also held that " the Congress was intent upon ,.protection of employees ' right to self organisation and to the selection of representatives of their own choosing for collective bargaining without restraint or coercion. " On the facts the conclusion of the majority was that the strike was illegal in its inception and prosecution. This was really not the exercise of the right to strike to which the Act referred. It was an illegal seizure of the building in order to prevent their use by the employer in a lawful manner, and thus by acts of force and violence compel the employer to submit. The conclusion, therfore, was that to provide for the reinstatement or re employment of employees guilty of the acts which even according to the Board had been committed would not only not effectuate any policy of the Act but would directly tend to make abortive its plan for peaceable procedure. Mr. Justice Reed, who delivered a dissenting judgment thought that both labour and management had erred grievously in their respective conduct and so it would not be unreasonable to restore both to their former status. That is why he was not prepared to reverse the order of reinstatement passed by the Board. The Bank naturally relies upon the majority decision in support of its contention that its employees who participated in the pen down strike are not entitled to reinstatement. In considering the question as to whether the principle underlying the majority decision should be, applied to a pen down strike in India it is necessary to remember that the pen down strike properly so called is recognised as a strike under section 2(q) of the Act and so it would not be safe to extend the principles of American decisions bearing on this question without a careful scrutiny of the relevant provisions of the American statute and the facts on which the said decisions are based. Let us then consider the facts on which the majority decision was based. It appears that an acrimonious dispute had been going on between the Corporation and its employees for some time before February 17,1937 when the pen down strike commenced. The Corporation was not prepared to recognise the 843 outside union and had employed a labor spy to engage in espionage within the union and continued the employment of the said spy. It also appears that the, super intendant of the Corporation when requested to meet the deputation of the union required that the deputation should consist only of employees of five years ' standing. Subsequently the superintendent ' refused to confer with the committee in which the outside Organisation had been included; and as a punitive measure he required the president of the union to work in a room adjoining his office with the purpose of keeping him away from the other workers. It was in this background of bitter relationship that the strike commenced. In the afternoon of February 17 the union committee decided upon a sit down strike by taking over and holding two of the respondent 's key buildings. These were then occupied by about 95 employees, as a result of which work in the plant stopped. In the evening the superintendent accompanied by police officials went to each of the building and demanded that the men leave. They, however, refused whereupon the respondent 's counsel who had accompanied the superintendent announced in loud tone that all the men in the plant were discharged for the seizure and detention of the buildings. Even so the men continued to occupy the buildings until February 26. Their fellow members brought them food, blankets, stoves, cigarettes and other supplies. Meanwhile on February 18, the respondent obtained from the state court an injunction requiring the men to surrender the premises. The men refused to obey the order and a writ of attachment for contempt was served on them on February 19. When the men refused to submit a pitched battle ensued and the men successfully resisted the attempt by the sheriff to evict and arrest them. Efforts at mediation failed. Ultimately on February 26, the sheriff with An increased force of deputies made a further attempt and this time, after another battle, the men were ousted and placed under arrest. They were subsequently prosecuted and most of them were fined and given jail sentence for violating 844 the injunctions. A bare statement of these facts would clearly bring out the true character of the strike with which the Supreme Court was dealing. It was not merely an illegal but violent strike, ; it was a strike which began with the wrongful seizure of the employer 's property and his exclusion from it; a strike accompanied by violence which led to pitched battles between the strikers and the sheriff 's men; a strike continued by the strikers even after they were formally discharged from the employment and against an order of injunction by a competent court. It is difficult to accede to the argument that the majority decision in that case can be extended to the facts before us. As Teller has observed " the strike in question can be more accurately defined as a strike in the traditional sense to which is added the element of trespass of the strikers upon the property of the employer ". (1) Therefore, in our opinion, this decision does not assist the Bank in support of its case that mere participation in the illegal strike in the present case can by itself defeat the claim of the employees for reinstatement. In this connection we may point out that, according to Teller the Fansteel decision marks " what is hoped to be an end of an unfortunate chapter in the history of American labor activity"; he has added that " there is danger, however, in viewing the sitdown strike solely as the reflection of lawless labour leadership. The causes of its emergence are deeper. Indeed labour has contended that capital and labor share equal responsibility for its rise and development. No analysis of a sit down strike can claim a broad view of the subject, says labor, without a full measure of consideration of the infamous Mohawk Valley methods used by Remington Rand to break strikes, nor to the facts elicited in the recent Rand Bergoff trial under the Byrnes Act. . The anarchy of law which resulted from unlawful employer utilisation of instruments of violence and chicanery in disregard of law needed the sit down (1) Ludwig Teller 's "Labour Disputes and Collective Bargaining", Vol 1, p. 311, section 106. 845 strike as an effective counterpoise " ; and so the author significantly concludes that " it is no coincidence that statistics show a precipitate drop in the prevalence of sit down strikes immediately upon validation by the United States Supreme Court of the National Labor Relations Act. " It is in the light of this background that the Supreme Court had been( called upon to decide the question of reinstating employees in the Fansteel case (1). The history of the trade union legislation in England shows that the trade union movement had to wage a long and bitter struggle to secure recognition for the workmen 's right to organise themselves into unions and to exercise their right of collective bargaining if necessary by the use of the weapon of strikes. In America a similar struggle took place, and, as we have just pointed out, it was marked by violence on the part of both capital and labour, because the employer 's theory of " hire and fire " offered relentless resistence to the workmen 's claim to form unions and to resort to strikes for trade union purposes. In Williams Truax vs Michael Corrigan(2) Mr. Justice Brandeis, in his dissenting judgment, has given a, very illuminating account of the history and progress of the trade union movement in the United States, in England and the Colonies. " Practically every change in the law ", observed Mr. Justice Brandeis, " governing the relation of the employer and the employees must abridge in some respect the liberty or property of one of the parties, if liberty and property is measured by the standard of the law theretofore prevailing. If such changes are made by acts of the Legislature we call the modification an exercise of the police power, and although the change may involve an interference with existing liberty or property of individuals, the statue will not be declared a violation of the due process clause unless the court finds that interference is arbitrary or unreasonable, or that, considered as a means, the measure has no real or substantial relation of cause to a permissible end". (1) ; 306 U.S. 238; (2) 66 Law. Edn. 311 ; 107 846 In that case the validity of the prohibition of Ariz. Civil Code 1913, cl. 1464 against the interference ,.by injunction between employers and employees in cases growing out of a dispute concerning terms or conditions of employment was challenged; and the challenge was upheld by a majority of the learned judges who took the view that the said provision was contrary to the 14th Amendment of the Constitution. Holmes, Pitney, Clarke and Brandeis, JJ., however, dissented. The main decision in that case is not of direct assistance in the present appeals. No doubt Mr. Anand has attempted to contend that the acts of which the strikers were held guilty in that case are similar to the acts alleged against the employees in the present appeals; but this argument would be relevant only if it is shown by the Bank that the specific subversive acts alleged have been committed by the specific individual employees. To that point we will refer later on. Incidentally the present decision is of some importance because the dissenting opinion delivered by Mr. Justice Brandeis has been subsequently treated as an authoritative exposition of the problem of trade unionism and the history of its growth and development. Fortunately, as the Indian , (16 of 1926), the (20 of 1946), and the (14 of 1947) show, our Legislature has very wisely benefitted by the experiences of other countries in the matter of the development of trade union movement, and has made progressive, just and fair provisions governing the important problem of industrial relationships, the formation of trade unions, and the settlement of industrial disputes, It can be justly claimed that though we have witnessed capital labour conflicts in our country, on the whole neither party has departed from the pursuit of peaceful methods, and both parties submit their disputes to be resolved in accordance with the provisions of the Act. In dealing with industrial disputes like the present, we must, therefore, primarily consider the relevant statutory provisions and the material Indian decisions, 847 Thus considered the conclusion is inevitable that the pen down strike is a strike within section 2(q) and so per se it cannot be treated as illegal; it has been found to be illegal in this case because it was commenced in contravention of section 23(b) of the Act; but, as has been held by this Court in M/s. Burn & Co. Ltd. vs Their Workmen (1) mere participation in such an illegal strike cannot necessarily involve the rejection of the striker 's claim for reinstatement. As we have already indicated, on the findings of the appellate tribunal nothing more than such participation has been proved against the employees whose reinstatement has been ordered; and so, unless the said finding is reversed, the first contention raised by the Bank must fail. It has been strenuously urged before us that in the case of a Bank which is a credit institution a pen down strike, if continued for a long period, is likely to affect prejudicially the credit of the Bank. It is also pointed out that, even in regard to industrial concerns, if strikers entered the premises of the factory and sit around the plant in large numbers, in the heat of the moment unfortunate and ugly incidents are likely to happen, and so such pen down or sit down strikes should be positively discouraged. We are prepared to concede that in the surcharged atmosphere which generally accompanies strikes and when passions are aroused, a large scale and continuous pen down strike may lead to untoward consequences. But, on the other hand, even in the case of such a strike, the employer is not without a remedy. He may bar the entry of the strikers within the premises by adopting effective and legitimate methods in that behalf as in fact the Bank did in the present case from April 23. He may call upon the employees to vacate, and, on their refusal to do so, take due steps to suspend them from employment, proceed to hold proper enquires according to the standing orders, and pass proper orders against them subject to the relevant provisions of the Act. If the Bank had been properly advised to adopt such a course, many of the difficulties which it had to face in the present proceedings would not (1) A.I.R. 1959 S.C. 529. 848 probably have arisen. Therefore, we do not think that the general hypothetical consideration that pendown strikes may in some cases lead to rowdy demonstrations or result in disturbances or violence or shake the credit of the Bank would justify the conclusion that even if the strikers are peaceful and non violent and have done nothing more than occupying their seats during office hours, their participation in the strike would by itself disqualify them from claiming reinstatement. Let us then consider the second contention raised by the Bank. It is urged on behalf of the Bank that it is really unnecessary to examine which particular employee was directly associated with the preparation and circulation of the subversive circular or posters. The offensive posters and circulars had been drafted, printed and circulated in pursuance of the common object of the strikers, and each one of them must, therefore, share the responsibility for the said act. It is really an argument based on the theory of conspiracy which makes all conspirators liable for the act of any one of them. This argument is countered by the employees with the contention that the activities of the Union do not fall to be considered in the present enquiry. It is the acts of individual strikers who have been dismissed that have given rise to the dispute and the enquiry must be confined to that dispute alone. The learned Attorney General seriously asked us to bear in mind that the application of the doctrine of conspiracy to the decision of the present dispute may have far reaching consequences on the future of the trade union movement itself, and he suggested that since the Union and its activities were not the subject matter of the present enquiry we need not consider the argument of conspiracy at all. Besides, according to him, if the theory of conspiracy was upheld it would mean that if any office bearers of the Union were guilty of any subversive acts the whole membership of the Union would be constructively responsible and that is plainly unreasonable. In this connection he also referred us to sections 17, 18 and 19 of the Indian 849 (16 of 1926). We have indicated this argument at this place by anticipation. In fact this argument has been raised by the employees in their appeal but we thought it would be convenient to deal with both these aspects of the matter in one place. Now the answer to both these technical and academic contentions is the same. In industrial adjudication tribunals should be slow to adopt any doctrinaire or legalistic approach. They should as far as is reasonably possible avoid the temptation of formulating general principles and laying down general rules which purport to cover all cases. Let us recall the nature of the enquiry which the appellate tribunal had directed as a result of its interlocutary judgment. This enquiry is confined to the question as to whether in ' regard to the case of each one of the dismissed employees, the Bank has shown any positive circumstances as a result of which reinstatement, which is the normal rule, should not be directed. Thus considered we do not think it necessary to deal with the academic points raised by both the parties before us. The third argument urged by the bank is in regard to the finding of the tribunal that only 14 employees named by it are responsible for the subversive posters and hand bills. It is urged that this finding is perverse. We are not impressed by this argument. There is no doubt that the three posters Exs. 255 (a), 255 (c) and 302, to which strong exception has been taken by the Bank are subversive of the credit of the Bank. They make imputations about the honesty of the management of the Bank and in terms suggest improper use of the funds of the Bank for personal purposes. It is also true that a large number of other documents issued by the Union before and during the strike have used exaggerated, and unduly militant intemperate, language, and in our opinion the appellate tribunal was justified in expressing its disapproval of the use of such language; but the appellate tribunal thought that none of these documents could really be taken to be subversive of the credit of the Bank and with that conclusion we are in full agreement. Therefore the only question which we have to consider is whether 850 the view taken by the appellate tribunal that 14 persons were actively concerned with these offensive documents can be successfully challenged by the Bank before us. In making its finding on this point the appellate tribunal has substantially relied on the statement made by H. L. Puri. He was asked whether the drafts of the letters issued by him had been approved at the meeting of the working committee or on his individual responsibility and he replied that they were never written on individual responsibility but were based on consultation with the members of the working committee. Then he was asked whether he could name the persons whom he consulted in drafting the poster dated July 5, 1949 (exhibit 222). In reply to this he enumerated the names of 9 persons and added the word " so on. " It appears that the appellate tribunal asked him several questions on the same topic and the effect of his admissions clearly was to show that most of the documents were issued by the secretary or the president after he had consulted the persons named by Puri. In this connection Puri gave the names of the office bearers of the Federation at Delhi. It was in the light of these admissions that the appellate tribunal came to the conclusion that 14 persons named by him can be safely taken to have been actively associated with the drafting and the publication of the subversive documents. Mr. Anand contends that the list of office bearers separately supplied by Puri includes a much larger number of active workers of the Union and on the evidence of Puri all these active workers should have been held responsible for the said documents. In this connection he has relied on the affidavit filed by Amar Singh on behalf of the Bank. We do not think that this argument is wellfounded. It is significant that though the appellate tribunal had directed the Bank by its interlocutary judgment to file a statement giving particulars of the acts alleged against each one of the employees no such statement was filed. Besides it is fairly conceded before us by Mr. Anand that most 851 of the employees who made affidavits in the subsequent enquiry were not asked any general question about their alleged subversive activities and no particular question was put to them in regard to the relevant subversive documents. The judgment of the appellate tribunal shows that it first considered the general points and the evidence relied upon by the parties in that behalf; and then it exhaustively dealt with the whole of the evidence bearing on the case of each individual employees. We are satisfied that the Bank is not justified in contending that in excluding 136 employees from the responsibility of direct participation in the drafting and publication of the subversive circulars and hand bills the appellate tribunal has ignored any important evidence. The argument that the said finding is opposed to the weight of evidence and as such perverse must therefore be rejected. Then Mr. Anand has invited us to consider some individual cases. According to him the case against Joshi had not been properly considered by the appellate tribunal. It does appear that Joshi admitted that he had taken part in the drafting of documents P. 272, 274, 279, 280 and 286; but none of these documents has been found to be subversive and so it is idle to contend that Joshi 's connection with any of the three subversive documents is established. So there is no substance in the argument that Joshi 's case should be reconsidered. Then our attention has been drawn to the cases of five other employees Narain Das, Chuni Lal, Som Datt, Trilok Chand and Charan Singh. ' In regard to these persons the appellate tribunal has found that the Bank had failed to prove any subversive acts against them, and that undoubtedly is a question of fact and the finding of the appellate tribunal cannot be reopened. But Mr. Anand has attempted to challenge the correctness of this finding on the ground that it is entirely inconsistent with one material document on the record. This document is the report made by Dina Nath on April 24 in which the incidents that took place on April 23 and 24 have been set out and the names of persons who took prominent part in the said incidents 852 have been enumerated. This list includes the names of the five persons in question. Dina Nath had, however, died at the date of the enquiry and so he could not give evidence. Jagan Nath, who was then the Superintendent of Police, proved this report. Mr. Anand 's grievance 'is that though the evidence of Jagan Nath had been accepted by the appellate tribunal in a part of its judgment it has failed to consider his testimony in dealing with the cases of these five persons. In our opinion this argument is entirely misconceived. It is not correct to say that the appellate tribunal has accepted the whole of Jagan Nath 's evidence in any part of its judgment; while dealing with the question about the conduct of the crowd the appellate tribunal considered the evidence of Rajinder Nath, Mehta, Ram Pratap and Amar Singh and held that part of their evidence which was corroborated by Jagan Nath and also partially by Puri must be believed; that is all. Besides, the evidence of Jagan Nath itself does not carry the Bank 's case any further against the five persons. No doubt, while proving the report of Dina Nath, Jagan Nath first stated that the facts narrated therein were correct; but in crossexamination when he was asked about some details mentioned in the report he added that the report was written by Dina Nath and he could not say anything about it. Further he also admitted that during the course of his visit and stay at the Bank when the strike was going on he only knew three persons who took part in the activity which was described by Dina Nath in his reports Thus the evidence of Jagan Nath does not show that he clearly knew any of the five employees and the same comment obviously falls to be made about Dina Nath himself who made the report. Therefore it is not accurate to say that the conclusion of the appellate tribunal in regard to these, five cases suffers from any infirmity on which it can be successfully challenged before us; besides the Bank apparently relied upon other evidence against these five persons, and not the report of Dina Nath, and that evidence has been disbelieved, 853 Mr. Anand has then urged that in directing reinstatement of 136 employees the appellate tribunal failed to consider the fact that in the meanwhile the Bank has employed additional hands and it would be unfair to the Bank to direct that these dismissed employees should be taken back. The reinstatement order would lead to complications and the Bank may have to face the claims of those who have been employed in the meanwhile. Mr. Anand wanted to prove that the Bank had employed a large number of hands in the meanwhile by referring to the statement made by the Union in the bulletin and posters issued during the strike. These statements seem to indicate that the Union complained that pending the strike the Bank was employing new hands. But if the Bank wanted to urge this plea seriously it should have proved the relevant facts, e.g., how many employees have been appointed and on what terms. These are matters within the special knowledge of the Bank and they could have been proved very easily. The Bank did not choose to prove these facts. Indeed it does not appear that this plea was urged as a separate plea against the order of reinstatement before the appellate tribunal. In any case, in the absence of satisfactory materials it would be difficult to deal with this plea on the merits. Besides, if the Bank has failed to establish its specific case against any of the 136 employees, there is no reason why the normal rule should not prevail and the employees should not get the relief of reinstatement. The mere fact that the Bank may have employed some other persons in the meanwhile would not necessarily defeat such a claim for reinstatement. As has been held by this Court in the National Transport and General Co. Ltd. vs The Workmen (1), however much the court may sympathise with the employer 's difficulty caused by the fact that after the wrongful dismissals in question he had engaged fresh hands, the court cannot " overlook the claims of the employees who, on the findings of the tribunals below, had been wrongly dismissed. " In the case of such wrongful (1)Civil Appeal No. 312 of 1956 Decided by this Court on January 22, 1957. 108 854 dismissal the normal rule would be that the employees thus wrongfully dismissed must be reinstated. " The hardship in question ", observed this Court, " has been brought about by the precipitate action of the appellants themselves who dismissed their workmen without holding the usual enquiries after framing a proper charge against them. If they had proceeded in the usual way and given a full and fair opportunity to the workmen to place their case before the enquiring authority, the result may not have been so bard. " These observations are equally applicable to the conduct of the Bank in the present appeals. The last argument urged by Mr. Anand is that a large number of employees who are clamouring for reinstatement have secured employment on a fairly permanent basis and so it is unnecessary that they should be forced on the Bank. This argument cannot be entertained because it has not been urged before the appellate tribunal, and though it was sought to be raised before us, Mr. Anand fairly conceded that in the absence of any material it would not be possible for him to press this point. Indeed it is the first two general points which were seriously pressed before us by Mr. Anand and Mr. Sanyal on behalf of the Bank. Mr. Anand no doubt raised three additional subsidiary points in Civil Appeal No. 519 of 1958, in which he appeared, but as we have pointed out there is no substance in any one of them. In Civil Appeal No. 520 of 1958, in which Mr. Sanyal appeared for the Bank he did not challenge the findings recorded by the appellate tribunal in respect of the 10 employees concerned in the said appeal. In the result both the appeals preferred by the Bank fail and are dismissed with costs.

The employees of the appellant Bank commenced pen down strikes, which were followed by a general strike, pending arbitration of an industrial dispute between them. The Government of India intervened and as the result of an agreement that followed the Bank reinstated all the employees except 150, against whom it had positive objections, and the Government referred their cases under section 10 of the Industrial Disputes Act, 1047, to the Industrial Tribunal for adjudication. The two issues before the Industrial Tribunal were whether the 150 employees had been wrongly dismissed and what wages and allowances would the 807 employees be entitled to on reinstatement. The case of the employees was that the Bank wanted to penalise the active trade union workers by the said dismissals while the Bank maintained that the employees were guilty of participation in illegal strikes intended to paralyse its business and scare away its customers. The Industrial Tribunal did not hear evidence and, by its final award, held that, the strikes being illegal, the Bank was, on that ground alone, justified in dismissing the employees. Even so, it directed the Bank to make certain payments to the employees on compassionate grounds. The Bank as well as the employees appealed. The Labour Appellate Tribunal held that even though the strikes were illegal under section 23(b) read with section 24(1) of the , the Bank had, by entering into the agreement with the Government of India, waived its right to take penal action against the employees for joining the illegal strikes and that, therefore, an enquiry should be held on additional evidence to decide the disputes on merits. Against this interlocutory order the Bank appealed to this Court and it was held by this Court that while the strikes were no doubt illegal under section 23(b) of the Act, the orders of dismissal passed by the Bank were no less so under section 33 of the Act, and it dismissed the appeal. The Appellate Tribunal, thereafter, heard the cases on merits, directed the reinstatement of 136 of the said employees, but refused to reinstate the rest whom it found guilty of issuing posters and circulars subversive of the credit of the Bank. Both the parties appealed to this Court. Preliminary objections were raised on behalf of the said employees that, (1) in view of the decision of this Court dismissing the Bank 's appeal against the said interlocutory order the subsequent inquiry by the Tribunal and the orders of dismissal must be held to be void and, (2) no charges having been admittedly framed nor any proper enquiry held by the Bank against the employees, the orders of dismissal were wholly invalid. It was urged, inter alia, on behalf of the Bank in the appeals that participation in a pen down strike by itself amounted to misconduct sufficient to disentitle an employee to reinstatement and that the entire body of strikers, being collectively responsible for the publication of the subversive documents in question, the dismissed employees could by no means escape liability. Held (per curiam), that the preliminary objections must be negatived and the decision of the Appellate Tribunal affirmed with this modification that, in view of its inconsistent findings, the appeal of one of the employees must be allowed. Per Sinha and Gajendragadkar, JJ. The purpose the Legislature had in view in enacting section 33 of the , was to maintain the status quo by placing a ban on any action by the employer pending adjudication. But the jurisdiction conferred on the Industrial Tribunal by section 33 of the Act was a limited one. Where a proper enquiry had been held and no victimisation or unfair labour practice had been 808 resorted to, the Tribunal in granting permission had only to satisfy itself that there was a Prima facie case against the employee and not to consider the propriety or adequacy of the ,proposed action. But to such permission, when granted, the Tribunal could attach no conditions; it can either grant or refuse it. The effect of such permission was only to remove the ban imposed by section 33 of the Act. It could neither validate a dismissal nor prevent it from being challenged in an industrial dispute; but in such a dispute, when raised, the employer could justify its action only on such grounds as were specified in the original charge sheet and no others. There was substantial difference between non compliance with section 33 of the Act and that with article 311(2) of the Constitu tion. Compliance with section 33 only avoided the penalty under section 31(1) of the Act, while compliance with article 311(2) of the Constitution made the order of dismissal final. Atherton West & Co. Ltd. V. Suti Mills Mazdoor Union, ; , The Automobile Products of India Ltd. vs Rukmaji Bala; , , Lakshmi Devi Sugar Mills Ltd. vs Pt. Ram Sarup, ; , Indian lron and Steel Co. Ltd. vs Their Workmen, ; and McKenzie & Co. Ltd. vs Its Workmen, referred to. It was not, therefore, correct to contend that non compliance with section 33 of the Act could render the orders of dismissal wholly void or take away the jurisdiction of the Tribunal to hold the enquiry. Nor could the failure to hold a proper enquiry have that effect. Under section 33A of the Act, as construed by this Court, the jurisdiction of the Tribunal was not limited to an enquiry as to the contravention of section 33 of the Act. Even if such contravention was proved, the employer could still justify the impugned dismissal on merits and there was no difference in this regard between a reference under section 10 of the Act and a dispute raised under section 33A of the Act. The Automobile Products of India Ltd. vs Rukmaji Bala, ; and Equitable Coal Co.Ltd. vs Algu Singh, A.I.R. 1958 S C. 761, referred to. Although there can be no doubt that in proper cases the Industrial Tribunal has the power to direct reinstatement in disputes arising out of dismissal of employees, it is not possible to Jay down any hard and fast rule to be applied to such cases. In coming to its decision, the Industrial Tribunal has to reconcile the conflicting claims of the employer and the employee, the latter 's right to protection against wrongful dismissal, and in such a case the normal rule is reinstatement, and the interest and safety of the industry itself. Its approach to such a problem cannot, therefore, be legalistic or doctrinaire or as is permissible 809 in a civil court deciding the validity of dismissals under section 240 of the Government of India Act, 1935, or article 311(2) of the Constitution. Western India Automobile Association vs Industrial Tribunal, Bombay, and Buckingham & Carnatic Mills Ltd. vs Their Workmen, , referred to. If no enquiry is held by the employer before it passes an order of dismissal, the propriety of such dismissal can be adjudged by the Tribunal on evidence and no employer can be allowed to object to it on the ground that it interferes with the exercise of its managerial function. The Madras Electric Tramways, (1904) Ltd. Madras vs Their Workers, , distinguished and held inapplicable. The propriety of reinstatement in a case of wrongful or illegal dismissal is normally a question of fact and where the Industrial Tribunal on a proper consideration of the relevant factors refuses to pass such an order this Court would be reluctant, in absence of any general or substantial question of law, to interfere under article 136 of the Constitution. A pen down strike falls within the definition of a strike contained in section 2(q) of the Industrial Disputes Art, 1947, and is not Per se illegal. Even if it might involve an element of civil trespass as in the present case, that cannot disentitle an employee to reinstatement. M/s. Burn & Co. Ltd. vs Their Workmen, A.I.R. 1959 S.C. 529, referred to. It is not safe to extend principles of American decisions to such a strike without a careful scrutiny of the relevant provisions of the American Statute and the facts on which the said decisions are based. National Labour Relations Board vs Fansteel Metallurgical Corporation, 306 U.S. 238, considered and held inapplicable. William Truax vs Michael Corrigan, , referred to. Since in the instant case, the peaceful and non violent conduct of the strikers, as found by the Appellate Tribunal, could not amount to criminal trespass within, the meaning of section 441 of the Indian Penal Code, mere participation in the pen down strike did not disentitle them to reinstatement. T. H. Bird vs King emperor, (1934) L.R. XIII Pat. 268, held inapplicable. The mere fact that the employer had engaged new hands during the strike, was not sufficient to defeat the claim to reinstatement of such employees as were subsequently found to have been wrongfully dismissed. National Transport and General Co. Ltd. vs The Workmen, C.A. NO. 312 of 1956, decided on January 22, 1957, referred to. 810 But where, as in the instant case, the Appellate Tribunal took a common sense view of the matter of evidence and held certain office bearers and leaders of the union liable for subversive acts and refused to extend such liability to the entire body of strikers on theoretical and academic grounds, no principles of natural justice could be said to have been contravened by it.

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126 of 1958. Petition under Article 32 of the Constitution of India, for enforcement of Fundamental Rights. N. C. Chatterjee and B. V. section Mani, for the petitioners. B. Sen and R. H. Dhebar, for the respondent. November 20. The Judgment of the Court was delivered by DAS GUPTA J. The petitioners who describe them selves as Road side Station Masters challenge in this petition under article 32 of the Constitution the constitutionality of the channel of promotion for Guards to higher grade Station Masters ' posts as notified in the issue of the Central Railway 'Weekly Gazette No. 3 dated November 23, 1951. Under this Notification Guards have two lines of promotion open to them. One is that by promotion, C grade Guards may become B grade Guards on Rs. 100 185 and thereafter by further promotion A grade Guaids on Rs. 150 225. The second line of promotion open to them is that by an examination described curiously enough as Slip 45 examination C grade Guards are eligible for promotion to posts of Station Masters on RS. 150 225 scale and thereafter to all the further promotions that are open to the Station Masters, viz., higher ,cales of Rs. 200 to Rs. 300, Rs. 260 to Rs. 350, Rs. 300 to Rs. 400 and finally Rs. 360 to Rs. 500; B grade Guards and A grade Guards are also on passing Slip 45 examination eligible for promotion to posts of Station Masters on Rs. 200 300 pay scale and thereafter to further promotions to the higher scales in the Station Masters ' line. The Road side Station Masters on pay scale of Rs. 80 to Rs. 170 313 (the scale was formerly Rs. 64 170) can also reach by promotion the grade of Rs. 150 225 but only after going through an intermediate stage of Rs. 100 185. Similarly Station Masters on Rs. 100 185 scale may also reach the stage of Rs. 200 300 but only after passing through the intermediate stage of Rs. 150 225. Obviously the provisions enabling Guards to become Station Masters on the pay scale of Rs. 150 225 places the Station Masters of Rs. 80 170 scale at a disadvantage as against Guards on that pay scale and also puts the Road side Station Masters on the pay of Rs. 100 185 pay scale at a disadvantage as against Guards on that scale of pay. The petitioners contend that the channel of promotion in so far as it enables Guards to be promoted as Station Masters in addition to the other line of promotion open to them as Guards amounts to a denial of equal opportunity as between Road side Station Masters and Guards in the matter of promotion and thus contravenes the provisions of article 16(1) of the Constitution. It was further alleged in the petition that taking advantage of this channel of promotion, Guards become Station Masters on Rs. 150 225 at a very much younger age than Road side Station Masters and thus block the chances of higher promotion to Road side Station Masters who reach the Rs. 150 225 scale when they are much older. As instances of how the impugned provisions in the channel of promotion are harmful to the Road side Station Masters, the petitioners state: that while the petitioner No. 2 even after completing 32 years of service has remained in the grade of Rs. 100 185 as Station Master, Guards of equal status and standing have reached gazetted rank within the same period of service; that whereas the petitioner No, 3 has come by promotion to the grade of Rs. 150225 after putting in 21 years of service, Guards of his standing have risen to the grade of Rs. 360 500 by virtue of the impugned channel of promotion and several of his juniors who entered the Railway service long after him as Guards have superseded him and are working in the grade of Rs. 360 500; that while the 314 petitioner No. 4 having entered into service as Telegraph Candidate and having passed all the requisite examinations prescribed for the higher grade of Station Master within a period of 2 1/2 years after putting in 6 1/2 years of service is still in the grade of Rs. 80 170, Guards of his length of service and departmental qualification are entitled for promotion as an Assistant Station Master in the grade of Rs. 150 225 within about the same length of service. The respondents the General Manager, Central Railways, Bombay, V.T., the Chairman Railway Board, New Delhi and the Union of India, who contest the application contend that the channel of promotion providing these opportunities to Guards does not in any way contravene the provisions of article 16(1) of the Constitution. They also deny the correctness of the allegation that as a result of these opportunities Guards become Station Masters on Rs. 150 225 pay scale at a Younger age than Road side Station Masters. On the material before us it is not possible to come to a firm conclusion as regards the relative age at which Guards or Road side Station Masters ordinarily reach the pay scale of Rs. 150 225. Assuming, however, the position to be as stated in the petition, that may only evoke some sympathy for the Road side Station Masters, but does not in any way affect the decision of the question whether article 16(1) of the Constitution is contravened by this channel of promotion. article 16(1) of the Constitution is in these words: There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State '. " The impugned provisions of the channel of promotion are in respect of promotion of persons already employed under the State and not in respect of the first employment under the State. If the "equality of opportunity " guaranteed to all citizens by article 16(1) does not extend to matters of promotion the petitioners ' contention that the provisions are void must fail at once. If, however, matters of promotion are 315 also " matters relating to employment" within the meaning of article 16(1) of the Constitution, the next question we have to consider is whether the impugned provisions amount to denial of equality of opportunity within the meaning of that Article. We propose to consider the second question first, on the assumption that matters of promotion are Cc matters relating to employment ". So multifarious are the activities of the State that employment of men for the purpose of these activities has by the very nature of things to be in different departments of the State and inside each department, in many different classes. For each such class there are separate rules fixing the number of personnel of each class, posts to which the men in that class will be appointed, questions of seniority, pay of different posts, the manner in which promotion will be, effected from the lower grades of pay to the higher grades, e.g., whether on the result of periodical examination or 'by seniority, or by selection or on some other basis and other cognate matters. Each such class can be reasonably considered to be a separate and in many matters independent entity with its own rules of recruitment, pay and prospects and other conditions of service which may vary considerably between one class and another. A member joins a particular class on recruitment; he leaves the class on retirement or death or dismissal, discharge, resignation or other modes of termination of service, or by joining another class of employees whether by promotion thereto or direct recruitment thereto on passing some examination or by selection in some other mode. It is clear that as between the members of the same class the question whether conditions of service are the same or not may well arise. If they are not, the question of denial of equal opportunity will require serious consideration in such cases. Does the concept of equal opportunity in matters of employment apply, however, to variations in provisions as between members of different classes of employees under the State? In our opinion, the answer must be in the 316 negative. The concept of equality can have no existence except with reference to matters which are common as between individuals, between whom equality is predicated. Equality of opportunity in matters of employment can be predicated only as between persons, who are either seeking the same employment, or have obtained the same employment. It will, for example, plainly make no sense to say that because for employment as professors of colleges, a higher University degree is required than for employment as teachers of schools, equality of opportunity is being denied. Similarly it is meaningless to say that unless persons who have obtained employment as school teachers, have the same chances of promotion as persons who have obtained employment as teachers in colleges, equality of opportunity is denied. There is, in our opinion, no escape from the conclusion that equality of opportunity in matters of promotion, must mean equality as between members of the same class of employees, and not equality between members of separate, independent classes. The Petitioners ' Counsel did not seriously challenge the correctness of the above proposition. They contended however that Road side Station Masters and Guards really form one and the same class of employees. In our opinion, there is no substance in this contention. It has to be noticed first that Appendix 11 of the Indian Railway Establishment Code (Vol. 1) which prescribe rules for the recruitment and training of subordinate staff of Indian Railways classify the subordinate staff governed by the rules into 7 branches: (1) Transportation (Traffic); (2) Commercial; (3) Transportation (Power); (4) Civil Engineering ; (5) Store department Staff; (6) Office clerks and (7) Medical. Each branch again has been divided into groups. The first branch, i.e., the Transportation (Traffic) is shown as having 3 groups: (i) Station Masters, (ii) Guards, (iii) Outdoor Clerical Staff. Rule 2, the definition section defines a " group " to mean a series of classes which form a normal channel of promotion. Rule 8 shows the classes of posts 317 included in the Station Masters ' group and the normal channels of their promotion which are as follows: Signaller Assist. Head Signallers Assist. Station Masters (lower grade) Head Signallers Station Masters (lower grade) Telegraph Inspectors Assist. controllers Assist. Yard Foreman Station Masters Controllers Yard Foremen Transportation Inspectors Rule 9 lays down the qualifications necessary for the recruitment to this "group". Rule 10 says that the recruitment will be initially made as students and further provides that the recruits may be (a) persons to be trained in telegraphy in railway telegraph training schools and (b) persons who have completed a training in telegraphy in recognized private telegraph training schools. Note 2 of this Rule provides that recruits in either, category will on the satisfactory completion of their training, be eligible for appointment as signallers and will remain on probation for one year after such appointment. Provisions for training appear in Rule 11. Rule 12 provides for Refresher and Promotion Courses. Rules 13 to 17 are in respect of Guards. Rule 13 states the classes included in this group and the normal channels of their promotion thus: Probationary Guards Goods or passengers guards Assistant Station Masters (higher grades) Assistant controllers Assist. Yard Foremen Station Masters Controllers Yard Foremen Transportation Inspectors Rule 14 lays down the qualifications necessary for recruitment in this line. Rule 15 provides that the 41 318 recruitment will normally be to the lower grade of Guards. Rule 16 provides that during the one year period of probation recruits will undergo training for a period to be fixed by the administration. Rule 17 provides for the periodical refresher courses at stated intervals and promotion courses as necessary may be prescribed. In deciding the question whether Road side Station Masters and Guards belong to one and the same class of employees or not, we must not be misled by the words " groups " or " classes of posts " used in the above rules. The crux of the question is the nature of the differentiation between Road side Station Masters and Guards in recruitment, prospects and promotion. We find that Road side Station Masters and Guards are recruited separately, trained separately and the several classes of posts which are ordinarily open to them are also distinct and separate. The only point of contact between them is provided by the rule that Guards may become Station Masters by passing the Slip 45 examination. If after becoming Station Masters these Guards could continue also as Guards there might be some scope for suggesting that the two classes have coalesced. It is not disputed however that Guards once they become Station Masters cease to be Guards and continue as Station Masters. The fact that the qualifications necessary for recruitment as Guards or Station Masters are approximately or even wholly the same can in no way affect the question whether they form one and the same class, or form different classes. As on the admitted facts the Roadside Station Masters and Guards are, as already stated, recruited separately and trained separately and have separate avenues of promotion, the conclusion is irresistible that they form two distinct and separate classes as between whom there is no scope for predicating equality or inequality of opportunity in matters of promotion. In view of this conclusion it is unnecessary for the purpose of the present case to decide the other question: whether matters of promotion are included in the words " matters relating to employment in 319 Article 16(1) of the Constitution. For even assuming that they are so included, the present application must be rejected on the simple ground that the petitioners belong to a wholly distinct. and separate class from Guards and so there can be no question of equality of opportunity in matters of promotion as between the petitioners and Guards. The learned Counsel for the petitioners stated before us that this channel of promotion for Guards is peculiar to the Central Railways, and is not now to be found in the other Zones of Indian Railways. If that be the position, the matter may well deserve the attention of the Government; but this has nothing to do with the merits of the petition before us. For the reasons mentioned above, we dismiss the application, but in view of all the circumstances, we order that parties will bear their own costs. Petition dismissed.

The Roadside Station Masters of the Central Railway challenged the constitutionality of promotion for guards to higher grade station masters ' posts. The petitioners contended that the channel of promotions amounted to a denial of equal opportunity as between Roadside Station Masters and Guards in the matter of promotion and thus contravened the provisions of article 16(1) of the Constitution, as taking advantage of this channel of promo tions, guards become station masters at a very much younger age than Roadside Station Masters and thus block the chances of higher promotion to Roadside Station Masters who reach the scale when they are much older. The appellant contended that Roadside Station Masters and Guards really formed one and the same class of employees. Held, that the Roadside Station Masters belong to a wholly distinct and separate class from Guards and so there can be no question of equality of opportunity in matter of promotion as between the Roadside Station Masters and Guards. The question of denial of equal opportunity requires serious consideration only as between the members of the same class. The concept of equal opportunity in matters of employment, does not apply to variations in provisions as between members of different classes of employees under the State. Equality of opportunity in matters of employment can be predicated only 312 between persons who are either seeking the same employment, or have obtained the same employment. Equality of opportunity in matters of promotion, must mean equality as between members of the same class of employee and not equality between members of separate, independent classes. The fact that the qualifications necessary for recruitment of one post and another are approximately or even wholly the same can in no way affect the question whether they form one and the same class, or form different classes.

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Civil Appeal No.28 of 1958. Appeal from the judgment and order dated April 17, 1956, of the Allahabad High Court, in Special Appeal No. 20 of 1954, arising out of the judgment and order dated February 10, 1954, of the said High Court (Company Jurisdiction), in Application No. 29 of 1953/Company case No. 24 of 1949. October 30. H. N. Sanyal, Additional Solicitor General of India, and N. C. Sen, for the appellant. Rule 97 of the High Court Company Rules merely gives the landlord the right to claim payment of rent and nothing more. It does not give any priority to him. The question of priority is dealt with in section 230 which gives no priority to the landlord. [Shah, J. Top priority is given to costs and expenses of winding up under sections 193 and 203(3). 191 We offered possession to the landlord and we never used the premises for the purpose of liquidation after the winding up order. Therefore the rent claimed by the landlord cannot he treated to have been incurred as costs and expenses of winding up. The real question for decision is whether we used the premises for the purpose of liquidation. It has been found by the High Court that we did not do so. There is a rule under the English Companies Act which is identical to our r. 97 but none of the English cases have gone so far as to make the liquidators liable for the rent claimed by the landlord even if the premises were not used for the purpose of liquidation. In re Silkstone and Dodworth Coal and Iron Company, 17 Ch. D. 158, In re Oak Pits Colliery Company, and In re Levy and Company, , cited. The Oak Pits case definitely holds that the landlord is not entitled to full rent accruing since the commencement of the winding up if the liquidator has done nothing except abstain from trying to get rid of the property. This principle should be applied in this case and r. 97 should not be so interpreted as to give any priority to the landlord. A. V. Viswanatha Sastri, Mrs. E. Udayaratnam and section section Shukla, for the respondent. By a previous order Mootham, J., who was then dealing with company matters in the High Court, passed an order to the effect that the landlord was entitled to recover rent from the bank from the date of winding up to the date when the liquidators would give him possession and thus terminate the tenancy. This order was virtually passed under section 45B of the Banking Companies Act and the respondent was entitled to payment according to the tenor of the order which is that he should be paid in full. [Shah, I. How can a decree drawn up as a result of that order be executed ? The amount has to be proved.] H. N. Sanyal, Additional Solicitor General of India, and N. C. Sen, in reply. Mootham, J 's order simply purports to declare the liability of the liquidators but does not decide the question of priority. November 10. The Judgment of the Court was delivered by SHAH J. The U. P. Union Bank Ltd. (which will 'hereinafter be referred to as the Bank) was in occupation as a tenant of a building in Agra town belonging to the respondent. at a monthly rental of Rs. 325 and Rs. 10 as municipal taxes. The Bank made default in paying the rent accruing due and the respondent filed suit No. 810 of 1949 in the court of the Munsiff 192 at Agra for a decree for rent for three months and obtained an order of attachment before judgment on the movable property of the Bank. The Munsiff by his decree dated December 2, 1949, decreed the suit, and confirmed the order of attachment before judgment. In the meanwhile, on a petition dated September 13, 1949, the Bank was ordered to be wound up by the High Court of Judicature at Allahabad and the appellants were appointed liquidators of the Bank. The employees of the Bank had vacated the premises on September 10, 1949, but the property of the Bank which was attached was with the consent of the respondent stored by the Commissioner appointed by the Munsiff 's court in the Banking hall which was sealed by that officer. A part of the premises was, it appears, occupied by some trespassers. The Official Liquidators called upon the respondent to take possession of the premises, but the latter declined to do so unless vacant possession of the entire premises was given to him. On November 30,1950, the respondent applied to the High Court for permission to file a suit for ejectment and for arrears of rent due since September 30, 1949. Mr. Justice Mootham, who heard the application declined to grant permission holding that the claim which the respondent intended to put forward against the Official Liquidators in the course of the proposed suit may be adjudicated upon in the winding up proceeding, and with the consent of parties, the learned Judge proceeded to decide that claim. By order dated August 30, 1951, Mr. Justice Mootham I hold that the petitioner is entitled to recover rent from the Bank at the rate of Rs. 325 per mensem from 1st October, 1949, upto the date on which the Official Liquidators give the petitioner (the landlord) such possession of the premises as will, in law, terminate the Bank 's tenancy. " Against this order, the Official Liquidators preferred an appeal being special appeal No. 17 of 1952, to a Division Bench of the High Court. 193 On April 23, 1953, the respondent applied to the Joint Registrar of the High Court to issue a certificate of non satisfaction and to transfer the order to the court of the Civil Judge of Allahabad for execution. The Joint Registrar issued a certificate of non satisfaction of the order and directed that the same be transmitted to the District Judge, Allahabad, for execution. The respondent filed an application for execution in the court of the Civil Judge, Allahabad, and obtained an order for attachment of an amount of Rs. 12,000 lying to the credit of the Official Liquid ators in the Allahabad Bank. The Official Liquidators thereupon applied to the High Court praying that the execution proceedings pending in the court of the Civil Judge, Allahabad, be declared void and the order of attachment of the fund in the account of the Official Liquidators passed by the Civil Judge be quashed. Mr. Justice Brij Mohan Lall, who heard the application held that the proceeding commenced against the Official Liquidators, without the sanction of the court under sections 171 and 232, cl. I of the Indian Companies Act, 1913, and the attachment ordered thereunder were void and directed that the certificate of non satisfaction be recalled. Against this order. the respondent preferred a special appeal to the High Court being appeal No. 20 of 1954. Appeals Nos. 17 of 1952 and 20 of 1954 were then heard. Appeal No. 17 of 1952 was dismissed and by an order passed on April 17, 1956, the High Court partially modified the order of Mr. Justice Brij Mohan Lall, and directed the Official Liquidators to pay to the respondent in full the amount that had fallen due to him after October 1, 1949. The High Court was of the view that the Official Liquidators having retained the Bank 's premises in their occupation, by virtue of the proviso to r. 97 framed by the High Court, the respondent was entitled to receive the rent due to him in full and was not liable to share the assets of the Bank pro rata with the other ordinary creditors. Against the order passed by the High Court, this appeal has been preferred with the certificate of the High Court. 25 194 By his order Mr. Justice Mootham, merely declared the liability of the Bank to pay the rent accrued due since October 1, 1949: there is no direction for payment of the amount, and it is not necessary to consider the plea raised by counsel for the respondent that the order being virtually one under section 45 B of the Banking Companies Act, the respondent was entitled to payment according to the tenor of the order. The order in terms declares the liability and does not decide any question of priority between the respondent and other creditors of the Bank. By section 647 of the Companies Act No. 1 of 1957, the winding up of the Bank having commenced before that Act was enacted, the provisions with respect to the winding up contained in the Indian Companies Act No. VII of 1913, continue to apply to the Bank in the same manner and in the same circumstances as if Act 1 of 1957 had not been passed. By section 230 of the Indian Companies Act, 1913, provision is made for payment of specified categories of debts in the winding up in priority to all other debts; but rent due to the landlord is not one of such debts to which priority is given by section 230. The High Court held that in as much as by r. 97 of the Company Rules, it was provided, " When any rent or other payment falls due at stated periods, and the order or resolution to wind up is made at any time other than one of such periods the persons entitled to the rent or payment may prove for a proportionate part thereof up to the date of the winding up order or resolution as if the rent or payment grew due from day to day: Provided that where the Official Liquidator remains in occupation of premises demised to a company which is being wound up, nothing herein contained shall prejudice or affect the right of the landlord of such premises to claim payment by the company, or the Official Liquidator of rent during the period of the company 's or the Official Liquidator 's occupation; " for the rent accruing due in respect of the premises which remained in the occupation of the Official 195 Liquidators, the respondent was entitled to preferential payment. The operative part of the rule deals with the rent or other payment in arrears till the date of winding up. By the proviso, it is declared that the right of the landlord to claim payment by the company of the rent accruing due thereafter is not to prejudiced. The proviso merely affirms the right of the landlord to claim payment of, rent accruing due since the date of winding up. It does not deal with any question of priority in payment of debts. By section 246 of the Indian Companies Act, 1913, power is conferred upon the High Court to make rules consistent with the Act, and the Code of Civil Procedure concerning the mode of proceedings to be had for winding up of the company and certain other matters. The Legislature has by section 230 prescribed that certain specified categories of debts shall rank for priority over other debts due by the company and it is not within the competence of the High Court to prescribe by rule a category for priority in payment which is not included in that section. By section 193 of the Act, the court has, in the event of the assets being insuffiicient to satisfy the liabilities, indisputably power to make an order for payment out of the assets, of the costs, charges and expenses incurred in the winding up in such order of priority as the court thinks fit, and in exercise of the power conferred by section 230 sub cl. 3, the court may direct the company to retain such sums as may be necessary for the costs and expenses of the winding up of the company before discharging even the debts in respect of which priority is prescribed by section 230. If therefore, there is a debt which may reasonably fall within the description of costs and expenses of winding up of the company, the court may provide for priority in payment of that debt as it thinks just. In the winding up of the company, it is open to the liquidators to disclaim land burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts or of any other property that is unsaleable or not readily saleable. The disclaimer operates to determine as from the date of disclaimer 196 the rights, interests and liabilities of the company and the property of the company, in or in respect of the property disclaimed. By section 230 A, cl. 4, liberty is reserved to persons interested in the property requirng the liquidator to decide whether he will or will not disclaim. It is also open to the court under sub section 5 of section 230 A on the application of any person entitled to the benefit or subject to the burden of a contract made with the company to make an order rescinding the contract on such terms as to payment of damages for non performance of contracts. It is evident that on the winding up outstanding contracts of the company do not become ipso facto inoperative. The contracts remain binding until disclaimed or rescinded in the manner provided by section 230 A; but the liability incurred under these contracts is merely an ordinary debt which ranks for claim to payment pro rata along with other creditors. If the debt be regarded reasonably as falling within the description of costs and expenses of winding up of the company, it is open to the court to direct that preferential payment in respect thereof be made; otherwise the debt will be claimable out of the assets of the company pro rata with other ordinary creditors. Distinction has been made by the courts in England where the relevant provisions of the Companies Act are substantially the same that if the liquidator continues in possession of leaseholds for the purpose of the better realization of assets, the lessor will be entitled to payment of the rent in full, as part of the expenses properly incurred by the liquidator; but as observed by Lord Justice Lindley, In re Oak Pits Colliery Companys (1). " No authority has yet gone the length of deciding that a landlord is entitled to distrain for or be paid in full rent accruing since the commencement of the winding up, where the liquidator has done nothing except abstain from trying to get rid of the property which the company holds as lessee. " Evidently a distinction is made between property which remains in the occupation of the liquidator (1) 1882 Ch. D 321, 331. 197 after the winding up when the occupation is shown to be for the purpose of liquidation and property which merely remain with the liquidator, he having abstained from trying to got rid of the same and It does not appear or is not shown that the property was used for the purpose of winding up. The High Court held on the fact that the liquidators had remained in occupation of the premises not for the purpose of winding up but " because they could not think of any suitable method of getting rid of the premises in spite of all their desire to do so. " It was pointed out that the Bank had closed its business and the liquidators were not carrying on any business after the winding tip and the properties were not used by the liquidators for the purpose of liquidation. This conclusion of the High Court on the evidence has not been challenged. The property not having remained with the liquidators for the purpose of liquidation, unless the court passes an order holding that the debt incurred was part of the costs and expenses of liquidation, the rent accruing due since the date of the winding cannot be claimed in priority over other ordinary debts. We are therefore unable to agree with the High Court that under r. 97 of the Company Rules, if the premises remained in the occupation of the liquidators, not for the purpose of winding up, the landlord is entitled to priority in respect of payment of rent. On the view taken by us, the appeal will be allowed, the order passed by the High Court set aside and the order passed by Mr. Justice Brij Mohan Lall restored with costs in this Court and in the High Court. Appeal allowed.

The U. P. Union Bank was in occupation of a building belonging to the respondent as a tenant. After the passing of the winding up order of the bank the Official Liquidators removed the offices of the bank from the premises and called upon the respondent landlord to take possession thereof. The respondent refused to do so as part of the premises was occupied by some trespassers. Thereafter the Official Liquidators did not do any business in the building in connection with the winding up of the bank. The respondent claimed the entire rent from the date of the winding up order up to the date on which the Official Liquidators would give him vacant possession of the premises. The High Court held that in view of the proviso to r. 97 of the Rules framed by the High Court under the Companies Act the respondent was entitled to recover the entire rent claimed by him and not pro rata with the other creditors of the bank. The proviso to r. 97 of the Company Rules runs thus: " Provided that where the official liquidator remains in occupation of premises demised to a company which is being wound up, nothing herein contained shall prejudice or affect the rights of the landlord of such premises to claim payment 190 by the Company or the Official Liquidator of rent during the period of the company 's or the Official Liquidator 's occupation." On appeal by the Official Liquidators by a certificate of the High Court: Held, that the landlord respondent was not entitled to claim priority in respect of payment of rent because the proviso to r. 97 of the Company Rules framed by the High Court affirms the right of the landlord to claim payment of rent accruing due since the date of winding up but does not deal with the question of priority in payment thereof, and further because the building in question did not remain in the possession of the liquidators for the purpose of liquidation. In re Oak Pits Colliery Company, , followed. Held, further, that section 230 of the Companies Act, 1913, which specifies categories to which priority in payment should be given, does not give priority to rent due to landlord and it is not within the competence of the High Court to give priority by its rules to a category which is not included in that section. Under section 193 the Court has power to order payment of the costs and expenses of winding in such priority as it thinks fit in cases where the assets are insufficient to discharge the liabilities, and section 230(3) empowers the Court to direct the company to retain such sums as may be necessary for the costs and expenses of winding up even before discharging the debts for which priority is given by section 230. If a debt can reasonably be described as costs and expenses of winding up the court may direct preferential payment thereof, otherwise only pro rata payment with the other ordinary creditors can be claimed out of the assets of the company.

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Civil Appeals Nos.159 and 160 of 1958. Appeals by special leave from the Award dated September 4, 1958, of the Industrial Tribunal, Bombay, in Reference (IT) Nos. 138 and 35 of 1958. N. A. Palkhivala, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant. C. L. Dudhia and K. L. Hathi, for respondents No. 1 and 2. 1959. October 16. The Judgment of the Court was delivered by WANCHOO J. These two appeals by special leave arise out of two references made by the Government of Bombay in connection with a dispute between the appellant company and two sets of its workmen, namely, clerical staff and staff other than clerical. The clerical staff had raised four questions which were referred to the Industrial Tribunal, Bombay for adjudication. of these, only two points survive in the present appeal, namely, retirement age and gratuity. The non clerical staff had raised two questions of which only one relating to gratuity arises before us. It appears that the appellant company is an all India concern but the major part of its business is concentrated in Calcutta. The number of non clerical staff outside Calcutta is very small as compared to the 53 non clerical staff in Calcutta while the clerical staff outside Calcutta is much less than the clerical staff in Culcutta. The company had a gratuity scheme in force which applied to both clerical and non clerical staff, though there were differences in the scale of payment depending upon whether the basic salary drawn by workmen other than operatives was more than Rs. 100 or less. In case of operatives, there was a uniform scale equal to the scale for workmen other than operatives drawing less than Rs. 100 per mensem. The clerical and non clerical staff in Bombay raised disputes and their main contention was that the scale fixed by the scheme in force was low and should be raised. As for the retirement age, the clerical staff claimed that it should be raised from 55 years to 60. The case of the appellant company before the tribunal was that as the large majority of the staff both clerical and non clerical was in Calcutta and as the gratuity scheme and the retirement age were enforced by virtue of an agreement arrived at between the appellant company and its workmen both clerical and others in Calcutta who are a large majority of its total workmen, they should not be changed at the instance of a small minority of workmen both clerical and others in Bombay. The tribunal did not accept this contention and raised the age of retirement from 55 years to 60. It also made changes in the gratuity scheme by which the scale was raised and made uniform both for clerical staff and others. Thereupon the appellant applied for and obtained special leave from this Court; and that is how the matter has come up before us. Shri Palkhivala appearing for the appellant has raised only two points before us, relating to the raising of the retirement age and the change in the scale of gratuity, and we shall confine ourselves to these two points only. It is conceded by him that the Industrial Tribunal has jurisdiction to order the changes which it has ordered. But his contention is that though the jurisdiction may be there, the tribunal should take into account the special position of an all India concern and should not make changes particularly at the 54 instance of a small minority of workmen as that would lead to industrial unrest elsewhere. He further contends that the scale of gratuity and the age of retirement are matters which are independent of local conditions and therefore should be uniform thought India in concerns which have an all India character. He points out that the conditions of service in the appellant company are uniform throughout India and were arrived at by agreement with the unions of workmen at Calcutta where the large majority of the workmen are employed, and in these special circumstances, the tribunal at Bombay should not have made any changes in the retiring age or in the gratuity scheme at the instance of the small minority of workmen in Bombay. There is no doubt that in the case of an all India concern it would be advisable to have uniform conditions of service throughout India and if uniform conditions prevail in any such concern they should not be lightly changed. At the same time it cannot be forgotten that industrial adjudication is based, in this country at least, on what is known as industry cumregion basis and cases may arise where it may be necessary in following this principle to make changes even where the conditions of service of an all India concern are uniform. Besides, however desirable uniformity may be in the case of all India concerns, the tribunal cannot abstain from seeing that fair conditions of service prevail in the industry with which it is concerned. If therefore any scheme, which may be uniformity in force throughout India in the case of an all India concern, appears to be unfair and not in accord with the prevailing conditions in such matters, it would be the duty of the tribunal to make changes in the scheme to make it fair and bring it into line with the prevailing conditions in such matters, particularly in the region in which the tribunal is functioning irrespective of the fact that the demand is made by only a small minority of the workmen employed in one place out of the many where the all India concern carries on business. Before we come to consider the two questions raised before us, we may as well point out that the 55 scale of gratuity and the retirement age were originally fixed by an agreement arrived at in 1956, between the appellant company and its workmen in Calcutta who form a large majority. That agreement was for a period of two years ending with December, 31, 1957. Thereafter it was replaced by another agreement also for two years beginning from 1st January, 1958. In that agreement it was specifically provided that no further major issues would be raised excepting those relating to medical aid, retirement age, and retirement benefits. It is clear therefore that even the workmen in Calcutta had reserved the right to raise a dispute with respect to retirement age and gratuity, if necessary. The reason for this is that the references out of which those appeals have arisen were pending before the tribunal in Bombay and the unions in Calcutta wished to await the decision of the Bombay tribunal before finally agreeing to continue the rules relating to retirement age and gratuity. The appellant company also agreed to make this reservation in the said agreement arrived at between it and the unions in Calcutta. Therefore, strictly speaking, it cannot be said in this case that there was a final agreement in force with respect to these two matters between the appellant and large majority of its workmen in September, 1958 when the Bombay Tribunal gave its award. In any case the Bombay Tribunal was bound to go into the merits of the matter with respect to these two items, namely, retirement age and gratuity, keeping in mind the all India character of the concern and the previous agreement of 1956, and this is what the tribunal has actually done. We shall first take the question of retirement age. The tribunal found that retirement age was fixed between 55 years and 60 in various concerns in Bombay. It was also of opinion that 55 years was too low an age to be fixed for retirement for the clerical staff and that the trend in all the awards had in recent times been to fix it at 60 years. It, therefore, ordered that so far as the clerical staff was concerned retirement age should be fixed at 60 years instead 56 of 55. We may in this connection refer to a recent decision of this Court in Guest Keen, Williams (Private) Limited, Calcutta vs P. J. Sterling and Others (1), where the age of superannuation of employees in service before the Standing Orders came into force, in that concern was fixed at 60 years. In these circumstances if the tribunal thought that it would be fair to fix 60 years as the age of retirement for clerical staff in spite of the fact that in the agreement of 1956 the retirement age was fixed at 55 years, it cannot be said that the tribunal 's order was not in accord with the prevailing conditions in many concerns in that region. In these circumstances we are of opinion that no interference is called for in this matter. We now come to the question of gratuity. The gratuity scheme in force in the appellant company on the basis of the agreement of 1956, provided for threequarters of one month 's average basic salary for each completed year of continuous service for staff other than operatives drawing up to Rs. 100 per menses and thereafter half a month 's average basic salary for each year. It also provided three weeks ' average basic wages for each completed year of continuous service for operatives. Three years service was the minimum period for eligibility to gratuity under special circumstances like death, physical and mental incapacity and 15 years service in all other cases. There was also a provision for "deducting some amount in lieu of provident fund credited by the company in 1941 in respect of service prior to 1st July, 1941. The tribunal was of the opinion that the scheme was not adequate and contained features which were not usual in other prosperous concerns it pointed out that the scale of gratuity for clerks was on a lower basis than for operatives and that this was against the general conditions of things prevailing in that region. It further pointed out that the clerical and the supervisory staff had a higher standard of living, and had to meet heavier expenses of education of their children who get employment at a late age as compared to operatives. It was, therefore, of opinion that a uniform scale of gratuity should be fixed for all (1) ; 57 including those getting wages above Rs. 100 per menses. It also pointed out that the requirement of a minimum service of three years in case of death and physical and mental incapacity was another unusual feature of this scheme and held that it should be changed. It was further of opinion that the usual provision in such schemes was a scale of one month 's basic salary for each completed year of continuous service in case of death, physical and mental incapacity and after 15 years ' continuous service and that some gratuity at a lower scale was provided usually even in case of termination of service before the completion of 15 years ' service. It therefore provided for half a month 's basic salary for each completed year of continuous service after 5 years but upto ten years and three fourths of basic monthly salary for each year of completed service after ten years but less than fifteen years continuous service and one month 's basic salary for each year for the rest. Finally, it took into account the fact that there was a supplementary gratuity scheme in force in the company with respect to the employees in the employ of the company from before September 1, 1946, and with respect to them it provided that those employees should either opt for the scheme as framed by it or continue in the gratuity scheme of the company along with the supplementary gratuity scheme. It appears therefore from the gratuity scheme finally sanctioned by the tribunal that it removed those features from the scheme in force in the appellant company which were unusual and unfair and not in consonance with the prevailing conditions for such schemes in that region. In these circumstances we are of opinion that the tribunal was not bound merely because this is an all India concern to refrain from altering the gratuity scheme which in its opinion had certain unusual features and was not in accord with the prevailing conditions in that region. The appellant 's contention therefore on this head also fails. The appeals are hereby dismissed with one set of costs.

The appellant company was an all India concern and carried on the major part of its business in Calcutta. Its clerical and non clerical staff in Bombay raised disputes relating to gratuity and age of retirement and contended that the scale of gratuity for both the clerical and non clerical staff provided by the existing scheme of the company was low and should be raised and that the age of retirement for the clerical staff should be raised from 55 to 60. The company resisted the claim on the ground that the existing scheme having been enforced on the basis of an agreement between the company and the large majority of its staff, both clerical and non clerical, working in Calcutta, the same could not be changed at the instance of a small minority. The tribunal rejected this contention and raised the age of retirement to 60. It also raised the scale of gratuity and made it uniform for the clerical and non clerical staff. The appellant reiterated its contention in this Court. Held, that although it was advisable for an all India concern to have uniform conditions of service 'throughout the country, that were not to be lightly changed, industrial adjudication in 52 India being based on an industry cum region basis, cases might arise where it would be necessary to change the uniform scheme so that it might accord with the prevailing conditions in the region where the Industrial Tribunal functioned, in order to ensure fair conditions of service. Consequently, in the instant case, where the Industrial Tribunal found that the existing scheme was neither adequate nor in accord with the prevailing conditions in the region, it was not bound to refrain from altering either the age of retirement or the gratuity scheme on the ground the appellant 's concern was an all India one. Nor could the decision of the Tribunal to raise the age of retirement of the clerical staff to 60 be said to be an improper one. Guest, Keen, Williams (Private) Limited, Calcutta vs P. J. Sterling and Others, ; referred to.

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Civil Appeal No.16 of 1955. Appeal from the judgment and decree dated February 14, 1952, of the former Nagpur High Court, in First Appeal No. 10 of 1945, arising out of the judgment and decree dated September 25, 1944, of the Second Additional District Judge, Amraoti, in Civil Suit No. 11 A of 1943, Tr. Civil Suit No.5A of 1944. 119 C. B. Agarwal and A. G. Ratnaparkhi, for the appellants. W. section Barlingay, section N. Andley and Rameshwar Nath, for respondents Nos. 2 7. 1959. November 3. The Judgment of the Court was delivered by SHAH J. This is an appeal against the decree of the High Court of Judicature at Nagpur in Civil Appeal No. 10 of 1945 reversing the decree passed by the Second Additional District Judge, Amraoti in Civil Suit No. 5 A of 1944. The High Court has by its decree directed the court of first instance to pass a decree for redemption. The appeal raises a question as to the true effect of a deed dated September 10, 1931, executed by Shri Narayan Rambilas Aggarwal and his two sons Sadan Gopal and Murli Dhar in favour of two brothers Bhaskar Waman Joshi and Trimbak Waman Joshi. The deed ostensibly conveys an absolute title to certain properties described therein. The transferors under the deed contend that the property transferred by the deed was intended to be mortgaged under a deed of conditional sale. The transferees contend that by the deed an absolute conveyance of the property thereby conveyed was intended and that the conveyance was subject to a condition of repurchase to be exercised within a period of five years from the date of the deed. The court of first instance dismissed the suit holding that the transaction in the deed dated September 10, 1931, was of the nature of an absolute conveyance with a condition of repurchase and the period limited by the deed for reconveyance had expired long before the date of the suit. The High Court held that the transaction was a mortgage by conditional sale and on that view reversed the decree and directed that a redemption decree be passed. The properties in dispute are three in number: (1) a house in Amravati outside the Amba Gate bearing Municipal No. 5/98, (2) A Chawl in Amravati bearing old Municipal Nos. 6/857, 6/858 and 6/859, and (3) a house situated in Dhanraj Lane Amravati bearing old 120 Municipal No. 3/459. By the deed the properties were separately valued. The house at Amba Gate was valued at Rs. 11,500, the Chawl was valued at Rs. 26,000 and the house at Dhanraj Lane was valued at Rs. 2,000. At the date of this transaction, the transferors were indebted to the Imperial Bank of India in the sum of Rs. 30,000 and Rs. 9,500 were due to the transferees and their relations and friends, and to satisfy this liability of Rs. 39,500 the deed was executed. Possession of the property transferred was delivered by calling upon the tenants in occupation to attorney to the transferees. The transferees constructed eight shops in the compound of the Amba Gate house in the year 1940 1941 and made certain other constructions in the compound of the Chawl, and they sold the Dhanraj Lane house to one Suraj Mal Salig Ram. On the August 26, 1943, the transferors served a notice upon Bhaskar Waman Joshi and the representatives in interest of Trimbak Waman Joshi stating that they were willing to redeem the mortgage created by the deed dated September 10, 1931, and called upon the transferees " to render full, true and proper account " of the amount claimable under the deed. By their reply Bhaskar Waman Joshi and the representatives of Trimbak Waman Joshi denied that the transferors had any right to redeem the property conveyed by the deed and asserted that the claim " to treat the sale as a mortgage was an afterthought " in view of the abnormal rise in prices which had lately taken place. On September 9, 1943, the three transferors and other members of their joint Hindu family filed suit No. 5 A of 1943 in the court of the Additional District Judge, Amravati against Bhaskar Waman Joshi and the representatives in interest of Trimbak Waman Joshi and Suraj Mal Salig Ram for a decree for redemption alleging that the transfer incorporated in the deed dated September 10, 1931, was in the nature of a mortgage by conditional sale. exhibit D 1 which is the deed in question recites that the transferors were indebted, that they needed Rs. 39,500 to discharge their liability, that Rs. 2,320 were due to the transferees and that amount was set 121 off and the balance of Rs. 37,180 was paid by eight cheques drawn on the Imperial Bank of India. It was then recited that the immovable properties described in the deed were conveyed in full ownership and that possession was delivered to the transferees. The deed then proceeded to recite the conditions " in respect of this sale " : " If our heirs or ourselves demand reconveyance of one, two or all the three houses of the above estate at any time within 5 (five) years of this date (this time limit shall be followed very strictly it has been finally settled that we will lose this right if one more day expires), you or your heirs shall reconvey to us at our expenses the respective houses for their respective prices mentioned in this deed of sale. With a view that both sides should have equal rights in respect of this condition, it has been agreed between us that if our heirs or ourselves do not exercise this right of reconveyance in respect of all the three houses or any one of them within four and a half years of this day and if for any reasons you or your heirs do not deem it proper to retain anyone or all these houses hereafter, you and your heirs have a right to take back from us or our heirs the amount of consideration of this deed of sale and to return all the three houses or any of them in the condition in which the same may be at that time and if you or your heirs express such a desire and if we or our heirs fail to comply with it shall be tantamount to our breaking the agreement of reconveyance and we and our heirs will be liable to pay damages. It has been (further) agreed between us that in the event of such a reconveyance, our heirs and ourselves will pay full prices (as mentioned in this deed of sale) of the estate in the condition in which it may be at that time, that is, in the condition in which it may be on account of heavenly mishap or Government action, on account of any reason whatsoever or on account of fall in prices. " The courts below differed in their interpretation of the true effect of these conditions. In the view of the learned Trial Judge, the intention of the parties was to effect an absolute sale and not a mortgage. The High Court did not agree with that view. 16 122 By cl. (c) of section 58 of the Transfer of Property Act,mortgage by conditional sale is defined as follows: "Where the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgage money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee, a mortgagee by conditional sale ; provided that no such transaction shall be deemed to be a mortgage unless the condition is embodied in the document which effects or purports to effect the safe. " The proviso to this clause was added by Act XX of 1929. Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed. The Legislature resolved this conflict by enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale. But it does not follow that if the condition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended. The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The circumstance that the condition is incorporated in the sale deed must undoubtedly be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transaction. The definition of a mortgage by conditional sale 123 postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. What distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The form in which the deed is clothed is not decisive. The definition of a mortgage by conditional sale itself contemplates an ostensible sale of the property. As pointed out by the Judicial Committee of the Privy Council in Narasingerji Gyanagerji vs Panuganti Parthasarathi and Others (1), the circumstance that the transaction as phrased in the document is ostensibly a sale with a right of repurchase in the vendor, the appearance being laboriously maintained by the words of conveyance needlessly reiterating the description of an absolute interest or the right of repurchase bearing the appearance of a right in relation to the exercise of which time was of the essence is not decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of surrounding circumstances. If the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their true legal effect. It there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts. Oral evidence of intention is not admissible in interpreting the covenants of the deed but evidence to explain or even to contradict the recitals as distinguished from the terms of the documents may of course be given. Evidence of contem poraneous conduct is always admissible as a surrounding circumstance; but evidence as to subsequent conduct of the parties is inadmissible. (1) (1924) L.R. 51 I.A. 305. 124 In the light of these principles the real character of the document exhibit D 1 may be ascertained. The conditions of reconveyance may be analysed: (1) that the transferees shall reconvey the proper within five years from the date of the conveyance to the transferor at the expense of the transferors for the price mentioned in the deed; (2) that if within four years and six months from the date of the conveyance, the right of reconveyance in respect of the three houses or any of them is not ' exercised by the transferors and if the transferees do not desire to retain all or any of the houses, they have the right to recall from the transferors the amount of the consideration and to return all or any of the three houses in the condition in which they may be; (3) that in the event of failure on the part of the transferors to comply with the request to take back the houses, a breach of agreement of reconveyance rendering the transferors liable to pay damages shall be committed; (4) that in the event of reconveyance the transferors shall pay the full price set out in the sale deed and take back the houses in the condition in which by vis major, Government action or any reason whatsoever they may be. Evidently the transferors bave under the deed a right to call upon the transferees to reconvey the properties within five years from the date of the conveyance; but after the expiry of four years and six months the transferees are given the option to call upon the transferors to take back all or any of the properties for the prices mentioned in the deed ; and if such right was exercised the transferors were bound to take back the properties and return the price even if on account of vis major or action of the public authorities the property was prejudicially affected. The deed does not set out the period within which this right is to be exercised by the transferees. Granting that the option of reconveying the properties against the price mentioned in the deed was to be exercised by the transferors before the expiry of five years from the date of the deed, the covenant that damage to property even on account of circumstances over which the transferees had no control was in the 125 event of reconveyance to be borne by the transferors, is strongly indicative of a mortgage. By this covenant the transferees were invested with the right to call upon the transferors to " take back " all or any of the houses and to return the price therefor, indicating thereby that the price paid is in truth charged upon the property, By calling upon the tenants to attorn to the transferees, possession of the property transferred was delivered and pursuant to the transfer, it was mutated in the names of the transferees. By an express covenant the period of five years was also made of the essence of the contract, but as observed in Narasingerjis case (1) the description of the document as one of an absolute sale and the right of repurchase bearing the appearance of a right in relation to the exercise of which time is of the essence are not decisive of the true nature of the transaction. The circumstances surrounding the deed at the date of the execution of the deed also support the view that the transaction incorporated in exhibit D 1 was intended to be a mortgage. Before the execution of the deed exhibit D 1 a draft sale deed was prepared. By the draft sale deed exhibit P 13, only two properties, the Amba Gate house valued at Rs. 10,000 and the Chawl valued at Rs. 25,000 were to be conveyed. By the final sale deed, the Dhanraj Lane house was also agreed to be conveyed and that house was valued at Rs. 3,500. The transferors were evidently in straitened circumstances and immediately needed Rs. 30,000 to discharge their liability to the Imperial Bank; and the liability to the transferees and their relations and ,friends amounted to Rs. 9,500. It is for this amount of Rs. 39,500 that the properties were conveyed. On the date on which the deed was executed, also an agreement exhibit D 3 was executed by the three transferors. That agreement recited that the sale deed was to be executed for past debts and for paying off the debts cheques were taken from the transferees and the transferees were put in possession of the houses sold. A request was then made that the transferees should not get the deed registered for two months or at least for eight to fifteen days, because the transferees had (1) 126 to make arrangements for payments to the creditors and in the event of the deed being registered, other creditors may make demands for their dues. It was then stated, " you want that you should get an income of nine per cent per annum from these houses till reconveyance but it is evident that after meeting repairing or insurance charges thereof, there will not remain so much profit in balance. Therefore, we have already agreed before that the agreement of reconveys mentioned in the deed of sale shall be brought into effect only when ourselves or our heirs pay to you all the expenses incurred by you as found due according to your account books and complete your (nine) per cent." This agreement and the sale deed were executed on the same day. Evidently by this agreement the transferors undertook to pay the difference between the net rent to be recovered and interest at the rate of nine per cent, on the price till the date of reconveyance, and that the right of reconveyance was to be enforceable only when the difference between the interest at nine per cent on the price and the rent recovered less repairs, insurance charges according to the books of account of the transferees was paid. Prima facie this is a personal covenant whereby the transferors agreed to pay interest at the rate of nine per cent, on the price paid till the date of reconveyance. This agreement strongly indicates that the parties regarded the arrangement incorporated in the deed dated September 10, 1931, as a mortgage. The contention raised by the transferees that by this covenant they were to erect additional structures at their own expense upon the land and collect rent which may be equivalent to interest at the rate of nine per cent, on the price paid and the amounts spent by them is on the language used in the deed unwarranted. There is in the deed no reference to any additional amount to be spent by the transferees for erecting buildings upon the land conveyed; and the books of the transferees are referred to in the agreement only to make the accounts maintained by them binding upon the transferors. Counsel for the transferees urged that this agreement not being registered was inadmissible 127 in evidence. Ex facie the document does not purport to create, declare, limit or extinguish any right, title or interest in immovable property; it incorporates a mere personal covenant and it is difficult to appreciate the plea that the document wholly inadmissible for want of registration. This agreement indisputably contains a condition relating to reconveyance incorporated in a registered instrument and may not be admissible in the absence of registration as evidencing any alteration of the terms of reconveyance. But this agreement in so far as it evidences a personal covenant to pay interest at the rate specified, is admissible. It is a somewhat singular circumstance that before the High Court, when counsel for the contending parties were were invited by the court to argue whether the document was by law required to be registered counsel urged that the document was admissible in evidence without registration and insisted upon arguing the case on that footing. The question whether the price paid was adequate may also be adverted to. The court of first instance held that the consideration for the properties was not inadequate; but in the view of the High Court the consideration was wholly inadequate. Counsel for the transferees contended that the monthly rent received from the tenants occupying the properties was Rs. 270 and deducting therefrom Rs. 48 for municipal taxes and an amount equal to rent for two months as properly chargeable for repairs, insurance and collection charges, there remained only a balance of Rs. 186 per month available to the transferees and capitalizing the net rent at 6% the value of the, property conveyed could not exceed Rs. 30,000, and even capitalising the net rent at 5% counsel contended that the value of the property may be approximately equal to the consideration paid. There is, however, no clear evidence as to what municipal taxes were payable in respect of the houses, and whether the taxes were payable by the tenants or by the landlord. Dr. Trimbak Joshi one of the transferees in his evidence in Suit No. 112 of 1932 deposed " that the tax came to Rs. 48 on the date of purchase ", but he did not state that this amount was 128 payable monthly. There is again evidence of witness Balkrishna examined by the transferees that the water tax was paid by the tenants. In their written statement, the transferees had set out a statement of income and expenditure for the years 1931 40 and in that statement for the year 1933 the expenses debited against income were Rs. 426 11 0, for 1934 Rs. 346 15 6 and for 1935 Rs. 542 2 6, for 1936 Rs. 1,666 7 0, for 1937 Rs. 1,160 1 3, for 1938 Rs. 529 2 3, for 1939 Rs. 570 11 3 and for 1940 Rs. 46 2 0. If Rs. 48 were payable as municipal tax every month, the liability on account of taxes alone far exceeded the expenses debited against the rent received. This statement of account abundantly shows that the municipal taxes were borne by the tenants and not by the landlords. The High Court in para. 34 of its judgment proceeded to estimate the rental of the properties at Rs. 245 per month and capitalised the same at 5%. The High Court is not shown to be in error in accepting the net monthly rental at Rs. 245 per month. The area of the land of the Amba Gate house is 9,037 square feet, the area of the land at Chawl is 23,805 square feet, and the area of land of Dhanraj Lane house is 817 square feet, There is no clear evidence on the record about the precise area of the lands covered by the structures, but it is conceded that the structures stood on an area less than one half of the total area of the land. From the evidence especially of the valuation reports, it appears that of the Amba Gate house 5,800 square feet of land were open and of the Chawl 12,000 square feet of land were open, Valuation of building land with structures by capitalising the rental may yield a reliable basis for ascertaining the value of the land together with the structures only if the land is developed to its full capacity by erection of structures. If the land is not fully developed by raising structures, valuation of houses together with lands by capitalising the rent received may not furnish reliable data for assessing the market value. By aggregating the value of the land and the value of the structure separately estimated, a scientifically 129 accurate value of the land with the structure may not be obtained. But where the land is relatively valuable and the structures are old and` comparatively of small value, this method may afford a rough basis in the absence of other reliable data for ascertaining the value of the land and the structure. D 52 and D 53 are the reports prepared by a valuer, of the market value of the Chawl and the Amba Gate house. According to the report exhibit D 52, the value of the superstructure of the Chawl was Rs. 31,708. Out of this amount the valuer sought to deduct 20% " as per Superintending Engineer 's letter dated the 21st August, 1931". On what basis that deduction has been made has not been explained. He again proceeded to deduct 20% as depreciation on the cost of the building and estimated at Rs. 20,293 the value of the superstructure. It is evident that a deliberate attempt was made by the valuer to depreci ate the value of the super structure by making at least one deduction of 20% for which there is no warrant. Even assuming that this valuation of Rs. 20,293 is accurate, the value of the Chawl together with the land considerably exceeds Rs. 26,000. The valuer has valued the site at 4 as per square foot, but no reliable evidence has been led to support that estimate. Similarly for the Amba Gate house the valuer estimated the value at Rs. 18,556 for the super structure and he deducted 20% " with effect from the 22nd August, 1931 according to the Superintending Engineer 's letter dated the 21st August 1931 " and 25% as depreciation charges on building and arrived at the figure of Rs. 11,134 and added thereto the value of the land at the rate of 4 as. per square foot. The evidence on the record does not warrant the assumption that the land was worth only annas four per square foot. As pointed out by the High Court in view of the sale deeds Exs. P 9 and P 21 the price of the land fluctuated between Rs. 1 and Rs. 2 4 as per square foot. Even if the lower of the two rates be adopted, the value of the Chawl at the Amba Gate house will considerably exceed the price embodied in the sale deed. 17 130 The house in Dhanraj Lane was valued in the draft sale deed at Rs. 3,500 and in the sale deed at Rs. 2,000. No explanation has been given for this disparity between the prices mentioned in the draft and the deed and there is substance in the contention strongly pressed by counsel for the transferors that the value of Rs. 2,000 for a house with a ground floor and two stories is artificial. The evidence discloses that the house was let out on a monthly rent of Rs. 20 and capitalising that rent at 5% on the assumption that by the construction the land was fully developed, the price thereof was more than double the price set out in the deed. It is clear that this house was included in the deed to make up the total value of Rs. 39,500, the amount required by the transferors to tide over their immediate difficulties. Counsel for the transferees sought to rely upon the evidence of subsequent conduct of the transferors as indicative of the character of the transaction as a sale, but as already observed, that evidence is inadmissible. In our view, the High Court was right in holding that the real transaction incorporated in exhibit D 1 was a mortgage and not a sale. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

A deed dated September 10, 1931, described as a sale deed, recited that the transferors were indebted and that to discharge the liability three items of immovable properties, described in the deed and separately valued, were conveyed in full ownership and that possession was delivered to the transferees. The deed further provided, inter alia (1) that if the transferors demanded reconveyable of any or all of the items of the properties within 5 years, the transferees shall reconvey to them at their expense for the price mentioned in the deed, (2) that if within four years and six months the transferees did not exercise the right of reconveyance as aforesaid and the transferees did not desire to retain all or any of the properties, they had a right to get back the amount of consideration of the deed and return all the three or any of the properties in the condition in which by vis major, Government action or any reason whatsoever they may be, and 118 (3)that if the transferors failed to comply with the transferees ' request to take back the properties a breach of agreement of reconveyance rendering the transferors liable to pay damages shall be committed. There was also a clause that the transferors shall lose the right of getting a reconveyance after the expiry of the period of 5 years. On the same date as the deed of sale the transferors executed an agreement by which they undertook to pay the difference between the net rent to be recovered by the transferees from the properties and interest at the rate of nine per cent on the price till the date of reconveyance. In a suit for redemption brought by the transferors on August 26, 1943, on the footing that the deed dated September 10, 1931, was A, mort gage by conditional sale, the transferees contended that by the transaction an absolute conveyance of the properties was intended and that the conveyance was subject to a condition of repurchase to be exercised within a period of five years from the date of the deed. The evidence showed that the price paid for the properties under the deed was wholly inadequate. Held, that the question whether a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties which has to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. In a mortgage by conditional sale a relation of debtor and creditor is created, the transfer being a security for the debt. Oral evidence of intention is not admissible in interpreting the convenants of the deed but evidence to explain or even contradict the recitals as distinguished from the terms of the document may be given. Evidence of contemporaneous conduct is admissible as a surrounding circumstance, but evidence as to subsequent conduct of the parties is inadmissible. Narasingerji Gyangerji vs Panuganti Parthasarathi and Others, (1924) L.R. 51 I.A. 305, relied on. Held, further, that in the present case, the deed dated September 10, 1931, on a true construction in the light of the surrounding circumstances showed that the transaction was one of mortgage enabling the transferors to redeem the properties.

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Appeal No. 54 of 1958. Appeal by special leave from the Award dated January 14, 1957, of the Industrial Tribunal at Bombay in Reference (I. T.) No. 75 of 1956. M. C. Setalvad, Attorney Generalfor India and I. N. Shroff for the appellants. N. V. Phadke, T. section Venkataraman K. R. Sharma and K. R. Chaudhury, for respondent No. I and the Intervener. May 5. The Judgment of the Court was delivered by 950 BHAGWATI, J. This appeal with special leave challenges the award made by the Industrial Tribunal, Bombay, in Reference (IT) No. 75 of 1956 between the appellant and the respondents whereby the Industrial Tribunal awarded to the respondents 4 1/2 months ' basic wages as bonus for the year 1954 55 (year ending June 30, 1955). The appellant is a subsidiary of the Premier Construction Co., Ltd., and manufactures Hume Pipes. It has factories in different parts of India, Pakistan and Ceylon. The respondents are the workers employed in the appellant 's factory at Antop Hill, Wadala, Bombay. In October 1955, respondent I who are workmen represented by the Engineering Mazdoor Sabha made a demand for the payment of six months ' wages as bonus for the year 1954 55. The matter was also referred to the Conciliation Officer requesting him to initiate Conciliation Proceedings. The Conciliation Proceedings went on before the Conciliation Officer upto March 23, 1956, on which date both the parties arrived at and executed an Agreement to refer the matter to an Industrial Tribunal for adjudication. Accordingly, on April 30, 1956, both the parties drew up and signed a joint application for referring the dispute for adjudication to a Tribunal and the Government of Bombay thereupon in exercise of the powers conferred by sub section (2) of section 10 of the , by its order dated June 11, 1956, referred the following dispute to the Tribunal : " DEMAND: Every Workman (daily rated) should be paid bonus for the year 1954 55 (year ending 30th June, 1955) equivalent to six months ' wages without it attaching any condition thereto ". Respondent No. I filed their statement of claim before the Tribunal on June 29, 1956. They alleged that the profits of the appellant during the year 195455 were higher than those during the year 1953 54 for which year the appellant had paid four months ' basic wages as bonus. They also alleged that the wages paid to them by the appellant fell short of the, living wage and therefore the appellant should pay the in six months ' basic wages as bonus for the relative year. 951 The appellant filed its written statement in answer on August 14, 1956. The appellant submitted that, after providing for " the prior charges " according to the formula laid down by the Labour Appellate Tribunal the profits made during the year under consideration did riot leave any surplus and tile, respondents were not entitled to any bonus. It denied that it bad made huge profits during the year in question and submitted that the profits made were not even sufficient to provide for " the prior charges ", etc. The Tribunal after hearing the parties came to the conclusion that even if payment of a bonus equal to 4 1/2 months ' basic wages were made a fair surplus would be left in the hands of the appellant to the tune of Rs. 3.30 lacs and therefore awarded the same subject to the following conditions: (a) Any employee who has been dismissed for misconduct resulting in financial loss to the company shall not be entitled to bonus to the extent of the loss caused. (b) Persons who are eligible for bonus but who are no longer in the service of the company on the date of the payment shall be paid the same provided that they make a written application for the same within three months of publication of this award. Such bonus shall be paid within one month of receipt of application provided that no claim can be enforced before six weeks from the date this award becomes enforceable. Being aggrieved by the said award of the Tribunal, the appellant applied for and obtained from this Court special leave to appeal against the same under article 136 of the Constitution and hence this appeal. The formula evolved by the Full Bench of the Labour Appellate Tribunal in Millowners ' Association, Bombay vs Rashtreeya Mill Mazdoor Sangh, Bombay(1) is based on this idea that " as both labour and capital contribute to the earnings of the industrial concerti, it is fair that labour should derive some benefit, if there is a surplus after meeting " prior or necessary charges ". The following were prescribed as the first charges on (1) 952 gross profits, viz., (1) Provision for depreciation ;(2) reserves for rehabilitation ; (3) a return at 6%on the paid up capital; (4) a return on the working capital at a lesser rate than the return on paid up capital and (5) an estimated amount in respect of the payment of income tax. The surplus that remained after making the aforesaid deductions would be available for distribution among the three sharers, viz., the shareholders, the industry and the workmen [See Muir Mills Co., Ltd. vs Suti Mills Mazdoor Union, Kanpur (1) and Sree Meenakshi Mills Ltd. vs Their Workmen (2)]. This Full Bench Formula has been working all throughout the country since its enunciation as aforesaid and has been found to be, in the main, fairly satisfactory. It is conducive to the benefit of both labour and capital and even though certain variations have been attempted to be made therein from time to time the main features thereof have not been substantially departed from. We feel that a formula which has been thus adopted all throughout the country and has so far worked fairly satisfactorily should be adhered, ' to, though there is scope for certain flexibility in the working thereof in accordance with the exigencies of the situation. In the working of the said formula, however, regard must be had both to the interests of capital and labour. In any given industry there are three interests involved, viz., the shareholders, the Company and the workmen and all these interests have got to get their proper share in the surplus profits ascertained after due provision is made for these " prior charges ". The shareholders may look to larger dividends commensurate with the prosperity of the industrial concern, the company would, apart from rehabilitation and replacement of buildings, plant and machinery, look forward to expansion and satisfaction of other needs of the industry and the workmen would certainly be entitled to ask for a share in the surplus profits with a view to bridge the gap between the wages earned by them and the living wages. All these interests (1) [1955]1 1,s. C.R. 991, 998. (2) ; , 884, 953 have, therefore, got to be duly and properly provided for having regard to the principles of social justice and once surplus profits available for distribution amongst these respective interests are determined after making due provision for the " prior charges " as aforesaid the Industrial Tribunal adjudicating upon the dispute would have a free hand in the distribution of the same having regard, of course, to the considerations mentioned hereinabove. But so far as the determination of the surplus profits is concerned the formula must be adhered to in its essential particulars as otherwise there would be no stability nor uniformity of practice in regard to the same. It maybe noted, 'however, that in regard to the depreciation which is a prior charge on the gross profits earned by a concern there is always a difference in the method of approach which is adopted by the income tax authorities and by the industrial tribunals. It was pointed out by us in Sree Meenakshi Mills Ltd. vs Their Workmen (1) that the whole of the depreciation admissible under the Income tax Act was not allowable in determining the available surplus. The initial depreciation and the additional depreciation were abnormal additions to the income tax depreciation and it would not be fair to the workmen if these depreciations were rated as prior charges before the available surplus was ascertained. Considerations on which the grant of initial and additional depreciations might be justified under the Income tax Act were different from considerations of social justice and fair apportionment on which the Full Bench Formula in regard to the payment of bonus to workmen was based. This was the reason why we held in that case that only normal depreciation including multiple shift depreciation, but not initial or additional depreciation should rank as prior charge. We approved of the decision of the Labour Appellate Tribunal in U. P. Electric Supply Co., Ltd. vs Their Workmen (2) in arriving at the above conclusion and disallowed the claim of the company there to deduct the initial or additional depreciation as prior charge in bonus calculations. (1) ; 120 (2) 954 When this decision was reached we had not before us the decision of the Labour Appellate Tribunal in Surat Electricity Company 's Staff Union vs The Surat Electricity Co., Ltd. (1) where a Bench of the Labour Appellate Tribunal had negatived the contention that if only the " normal " depreciation allowed by the Income tax law were allowed a company would be able to recoup the original cost of the assets and observed that: " For the purpose of bonus formula the initial and additional depreciation, which are disallowed by that formula, must be ignored in fixing the written down value and in determining the period over which the normal depreciation will be allowed. The result will be a notional amount of normal depreciation ; but, as we have said repeatedly the bonus formula is a notional formula. " We have already expressed in the judgment delivered by us in Associated Cement Co., Ltd. vs Its Workmen (1) that for the purpose of the bonus formula the notional normal depreciation should be deducted from the gross profits calculated on the basis adopted in Surat Electric Supply Co. Staff Union vs Surat Electricity Co., Ltd. (1) and not merely the normal depreciation including multiple shift depreciation allowed by the income tax authorities as stated in U. P. Electric Supply Co., Ltd. vs Their Workmen (3). It is well settled that the actual income tax payable by the company on the basis of the full statutory depreciation allowed by the income tax authorities for the relevant accounting year should be taken into account as a prior charge irrespective of any set off allowed by the Income tax authorities for prior charges or any other considerations such as building up of income tax reserves for payment of enhanced liabilities of income tax accruing in future. It is also well settled that the calculations of the surplus available for distribution should be made having regard to the working of the industrial concern in the relevant (1) (2) (3) 955 accounting year without taking into consideration the credits or debits which are referable to the working of the previous years, e.g., the refund of excess profits tax paid in the past or loss of previous years carried forward but written off in the accounting year as also any provision that may have to be made to meet future liabilities, e.g., redemption of debenture stock, or provision for Provident Fund and Gratuity and other benefits, etc., which, however, necessary they may be, cannot be included in the category of prior charges. If regard be had to the principles enunciated above it is clear that the items of Rs. 1.14 lacs representing the Lahore factory balance written off, Rs. 0.34 lacs being patents written off, and Rs. 0.09 lacs shown as loss on sale of Tardeo property cannot be allowed as proper deductions from the gross profits for the purposes of bonus calculations. The first two items represented debits in connection with the working of previous years. Loss of the Lahore factory had been incurred during the three previous accounting years and had been carried forward from year to year and the only thing which was done during the year under consideration was that it was then written off as irre coverable. The patents also had been worked off in previous years and the amounts spent in the purchase thereof were therefore to be written off but had reference to the working of the company during the previous years. The last item of Rs. 0.09 lacs was trivial and was therefore not pressed with the result that all these three items were rightly added back in the calculations of the gross profits of the appellant and the figure of gross profits taken at Rs. 36.21 lacs was correctly arrived at by the Tribunal. The depreciation allowed by the Tribunal was Rs. 9.82 lacs which was the full statutory depreciation allowed by the Income tax authorities. That should not have been done and the only depreciation allowed should have been the notional normal depreciation which was agreed between the parties before us at Rs. 6.23 lacs. Working the figure of income tax deducted by the 956 appellant on the basis adopted in Shree Meenakshi Mills Ltd. vs Their Workmen (1) the income tax on the gross profits of Rs. 36.21 lacs less the statutory depreciation allowed by the income tax authorities, viz., Rs. 9.82 lacs would be equivalent to 7 annas in the rupee on Rs. 26.39 lacs, i.e., Rs. 11.55 lacs thus leaving a balance of Rs. 16.82 lacs from which the other prior charges would have to be deducted in order to ascertain the distributable surplus. 6% return on the ordinary share capital and 5% return on the preference share capital would come to Rs. 4.30 lacs. The appellant, however, claimed that even on the preference shares 6% return should be allowed and not 5% even though preference shareholders were not entitled to anything beyond 5% under the terms of issue. The appellant obviously relied upon the wording of the formula: " return at 6% on the paid up capital " and contended that the preference shares also being paid up capital it would be entitled to a return of 6% on the preference shares for the purposes of the bonus formula even though in fact it would have to pay only 5% return on the same. We cannot accept this contention. Even though the bonus formula is a notional one we cannot ignore the fact that in no event would the appellant be bound to pay to the preference shareholders anything beyond 5% by way of return. The Full Bench Formula cannot be so literally construed. There is bound to be some flexibility therein, the 6% which is prescribed there as the return on paid up capital is not inexorable, and the Tribunals could if the circumstances warrant vary the rate of interest either by increasing or decreasing the same. On the facts of this case however there is no warrant for allowing anything beyond 5% return on preference share capital and the amount of Rs. 4.30 lacs should therefore be deducted as another prior charge from the grsos profits of the appellant. 4% return on reserves used as working capital was calculated merely at a figure of Rs. 0.29 lacs worked out on a total figure of Rs. 7,42,139. The Tribunal (1) 957 did not take into consideration another sum of Rs. 41,81,196 which represented the depreciation fund which according to the appellant had been used as working capital during the year. If that had been allowed a further sum of Rs. 1.67 lacs should have been added to Rs. 0.29 lacs and the total amount of 4% return on reserves used as working capital would have amounted to Rs. 1.96 lacs. Two arguments were advanced against this contention of the appellant. One was that there was nothing like a depreciation fund, that it merely represented a credit item introduced in the balance sheet as against the value of the fixed capital at its original cost and would have disappeared as such if the proper accounting basis had been adopted, viz., the fixed block bad been showed at its depreciated value after deducting the amount of depreciation from the original cost. Such book entries, it was contended, did not convert that credit item into a depreciation fund available to the company and there was therefore no basis for the contention that such a depreciation fund ever existed and could be used as working capital in the business. The other was that there was nothing on the record to show that such a depreciation fund, if any, had been, in fact, used as working capital in the business during that year. The answer furnished by the appellant in regard to both these contentions was that on a true reading of the balance sheet Rs. 41,81,196 were reserves used as working capital, vide calculations in Exhibit C 12. Provision for depreciation was Rs. 1,10,29,954 and the paid up capital was Rs. 80,00,000 thus totaling to Rs. 1,90,29,954. The total capital block as shown in page 5 of the balance sheet for the year ending June 30, 1955, was Rs. 1,48,48,758 and the working capital therefore was Rs. 41,81,196. This was apart from Rs. 7,42,139 which was the total of the three items at page 4 of the balance sheet: Rs. 98,405 capital reserves, Rs. 4,73,734 other reserves and Rs. 1,70,000 provision for doubtful debts as also the investments, cash and bank balance. This being the true position it follows on the facts of the present case that this 958 amount was available for use as working capital and the balance sheet showed that it was in fact so used. Moreover, DO objection was urged in this behalf nor was any finding to the contrary recorded by the Tribunal. We are, therefore, of the opinion that the reasoning adopted by the Tribunal was not correct and the appellant was entitled to 4% return on the reserves used as working capital including the sum of Rs. 41,81,196. The appellant was thus entitled to Rs. 1.96 lacs as the 4% return on reserves used as working capital and not merely Rs. 0.29 lacs as allowed by the Tribunal. The provision for rehabilitation bad been claimed by the appellant at Rs. 1.10 lacs on the basis of 10% of the net profits relying upon para. 20 of the Report of the Committee on Profit Sharing in which the Committee had proposed that 10% of the net profits should compulsorily be set aside for reserves to meet emergencies as well as for rehabilitation, modernization and reasonable expansion. No evidence was at all led by the appellant before the Tribunal showing the cost of the machinery as purchased, the age of the machinery, the estimate for replacement etc. , in order to substantiate this claim for rehabilitation and the appellant was content merely to rely upon this recommendation of the Committee on Profit sharing. This was rightly considered by the Tribunal as insufficient to support the appellant 's claim, though it allowed for rehabilitation, in addition to the statutory depreciation, the amount for which the appellant had actually made provision, viz., the sum by which the depreciation written off for the year exceeded the statutory depreciation (i. e., Rs. 10,00,000 minus Rs. 9,82,799Rs. 17,201). The amount was really small and did not affect the bonus to be awarded. The Tribunal, in fact, allowed the same, though it appears that in the absence of evidence of the nature above referred to even that sum of Rs. 0.17 lacs ought not to have been allowed. In this state of affairs it is really impossible for us to allow the appellant 's claim for rehabilitation in anything beyond the sum of Rs. 0.17 lacs actually 959 allowed by the Tribunal and the claim of the appellant for any further provision for rehabilitation must be disallowed for the purpose of the bonus calculations for the year under consideration. It will however be open to the appellant to claim higher rehabilitation for subsequent years if it can substantiate its claim by adducing proper evidence. In addition to these various sums allowed to the appellant by way of prior charges against the gross profits earned during the accounting year the Tribunal also allowed to the appellant Rs. 2.50 lacs by way of provision for debenture redemption fund. The claim of the appellant was for a sum of Rs. 3.50 lacs for the same and it arose under the following circumstances. The appellant had issued debentures of the value of Rs. 30 lacs in the year 1942 43 and they were redeemable in the year 1962 63. No annual provision had been made from profits for redemption of the same inasmuch as until the year 1949 the appellant was not working at a profit. Such provision was made only thereafter. For the year 1950 51, the appellant made a provision for Rs. 75,000 for debenture redemption fund, for 1951.52, Rs. 1,50,000, for 1952 53 Rs. 1,50,000, for 1953 54 Rs. 75,000 and further provision had to be made for redemption of debentures in a sum of Rs. 24,50,000. In so far as 7 more years were left before the due date for redemption the appellant claimed Rs. 3,50,000 as the annual sum to be set apart, though as a matter of fact in the balance sheet only a provision of Rs. 2,50,000 had been made by it for debenture redemption reserve. The Tribunal pointed out that when the appellant had in its accounts appropriated Rs. 2,50,000 for the debenture redemption fund the claim to have Rs. 3,50,000 for the purposes of bonus formula was clearly untenable. It however was of the opinion that a reasonable provision for redemption fund should be allowed as a prior charge and actually allowed the sum of Rs. 2,50,000 which had been actually provided for the purpose in the balance sheet, negativing the contention of the respondents that no provision should be allowed for debenture redemption fund in the bonus formula. 960 We are of the opinion that the Tribunal was not justified in allowing the sum of Rs. 2,50,000/ for debenture redemption fund as a prior charge in the bonus calculations. The Full Bench Formula does not envisage any such prior charge. It is no doubt true that capital is shy and it would not be practicable for the industrial concern to raise large amounts by way of fresh debentures when they become due. It is also true that the debentures do not stand on a par with other debts of a concern because the debentureholders would in a conceivable situation be able to enforce their security by bringing the industry to a stand still by taking over charge of the whole concern. It would therefore appear that the redemption of these debentures would be one of the primary obligations of the industrial concern and due provision has of necessity to be made for redemption thereof on due date. This however does not mean that in the calculations of the distributable surplus the provision for such redemption should be given the status of a prior charge, though of course that would be a relevant con sideration while distributing the available surplus between the various interests entitled thereto. We are therefore of opinion that the Tribunal was wrong in allowing Rs. 2,50,000/ as a prior charge in the bonus calculations. This disposes of all the contentions which have been urged on behalf of both the parties and calculating the figure on that basis we arrive atthe following Rs. in lacs. Gross Profit as per Tribudal 's calculations 36.21 Less: Notional Normal Depreciation 6.23 29.98 Less: Tax @ 7 as. in a rupee 11.55 18.43 Less: 6% return on ordinary share capital and 5% on preference share capital 4.30 14.13 961 Less: 4% Return on reserves used as working capital: 7,42,139 29 + 41,81,196 1.67 49,23,335 1.96 12.17 Less:Provision for Rehabilitation 0.17 Available Surplus 12.00 This would bring the available surplusfor distribution to a sum of Rs. 12 lacs and this would be distributable amongst the shareholders, the company and the workmen concerned. It is not feasible to lay down any rigid formula as to what the proportion of such distribution amongst these various interests should be. The shareholders as well as the company would both be naturally interested inter alia in providing the debenture redemption reserves as also meeting the needs of the industry for further expansion. The workmen would no doubt be interested in trying to bridge the gap between their actual wage and the living wage to the extent feasible. This surplus of Rs. 12 lacs would have to be distributed amongst them having regard to the facts and circumstances of the case, of course bearing in mind the various considerations indicated above. Before we arrive at the figure of the actual bonus which it will be appropriate in the circumstances of this case to allow to the workmen, we may advert to one argument which was pressed before us. on their behalf and that was that the bonus calculations should not be made on the basis of the All India figures which were adopted by the Tribunal but on the basis of the actual amounts which the appellant had paid and would have to pay to the workmen concerned. It was pointed out that the respondents here were only the workmen in the Wadala Factory of the appellant. The appellant had, however, paid to the various workmen elsewhere as and by way of bonus sums varying between 4% and 29% of the basic wages for the year in question. The sum of Rs. 1,23,138/ only had been 121 962 paid in full and final settlement to the workmen in some of the factories and the bonus calculations on an All India basis would thus work to the advantage of the appellant in so far as they would result in saving to the appellant of the difference between the amounts to which those workmen would be entitled on the basis of the All India figures adopted by the Tribunal and the amounts actually paid to them as a result of agreements, conciliation or adjudication. It was therefore contended that the calculations should be made after taking into account the savings thus effected by the appellant and only a sum of Rs. 1,23,138 / which was the actual sum paid to those workmen should be taken into account and no more. We are afraid, we cannot accept this contention. If this contention was accepted the respondents before us would have an advantage over those workmen with whom settlements have been made and would get larger amounts by way of bonus merely by reason of the fact that the appellant had managed to settle the claims of those workmen at lesser figures. If this contention of the respondents was pushed to its logical extent it would also mean that in the event of the non fulfilment of the conditions imposed by the Tribunal in the award of bonus herein bringing in savings in the hands of the appellant, the respondents would be entitled to take advantage of those savings also and should be awarded larger amounts by way of bonus, which would really be the result of the claimants entitled to the same not receiving it under certain circumstances an event which would be purely an extraneous one and unconnected with the contribution of the respondents towards the gross profits earned by the appellant. The Tribunal was, therefore, right in calculating the bonus on an All India basis. By our order dated April 12, 1957, the appellant was ordered to pay to the respondents within a fortnight from the date thereof bonus for the year 1954 55 equivalent to two months ' basic wages; that amount has already been paid and works out at Rs. 3.39 lacs on an All India basis. The only question which therefore survives is what further bonus, if any, would the respondents be entitled 963 to from the distributable surplus of Rs. 12 lacs. The sum of Rs. 3.50 lacs required for building up the debenture redemption reserve is an all engrossing need of the appellant and that is a factor which must of necessity be taken into consideration while arriving at the ultimate figure, particularly because such redemption of the debentures would enure not only for the benefit of the Company and its shareholders but also of the workmen employed therein. Having regard to all the circumstances of the case, we feel that an award of four months ' basic wages as aggregate bonus for the year 1954 55 (which by the way was the bonus awarded for the previous year 1953 54 also) would give a fair share to the labour in the distributable surplus, leaving to the shareholders and the company a balance of Rs. 5.22 lacs to be utilised by them not only towards building up of the debenture redemption reserve but also for building up other reserves, which would be utilised for various other purposes indicated above. The appellant would no doubt get also the refund of the income tax on the bonus payments made by it. This rebate would also go towards the fulfilment of the very same objectives, which would ultimately enure both for the benefit of the capital as well as labour. We have, therefore, come. to the conclusion that the appellant should pay to the respondents, in addition to the two months ' basic wages already paid to them in pursuance of this Court 's order dated April 12, 1957, an additional sum equivalent to two months ' basic wages by way of bonus for the year 1954 55 subject to the same conditions as were laid down in the award of the Tribunal above referred to, all the dates mentioned therein being calculated from the date of this judgment. We accordingly allow the appeal, modify the award of the Industrial Tribunal to the extent mentioned above, but in the circumstances of the case we make no order as to costs, each party bearing and paying its own costs thereof. Appeal allowed.

The appellant manufactured hume pipes and had factories in different parts of India, Pakistan and Ceylon. For determining the available surplus for the payment of bonus for the year 1954 55 the appellant claimed deductions as prior charges on account of (i) losses suffered on the Lahore factory written off, (ii) expenditure on patents written off, and (iii) debenture redemption reserve. It also claimed 6% return on the preference shares as return on paid up capital. The losses on the Lahore factory had been incurred in the previous years which had been carried forward from year to year and had been written off as irrecoverable in the bonus year. The amounts spent on the purchase of the patents which had been worked off in the previous years had also been written off in the bonus year. The appellant had issued debentures in 1942 43 redeemable in 1962 63 and claimed Rs. 3,50,000 as the annual contribution towards the redemption reserve. The appellant bad issued preference shares on which the shareholders, under the terms of the issue, were not entitled to more than 5%, but the appellant claimed a return of 6% on these hatres also as return on paid up 949 capital as provided in the Full Bench formula. The dispute regarding bonus had been raised by the workmen of the Wadala factory alone, the workmen of other factories having settled the matter had been paid the agreed bonus. The respondents claimed that the bonus calculations should not be made on the basis of All India figures but on the basis of the actual amounts paid or payable by the appellant under the settlements. Held, that the losses on the Lahore factory and the patents written off could not be allowed as prior charges as they were merely debits in connection with the working of previous years. Nor could the amount on account of the debenture redemption reserve be allowed as a prior charge as no such charge was envisaged by the Full Bench formula of the Labour Appellate Tribunal ; but this amount could be taken into consideration when distributing the available surplus among the various interests entitled thereto. In determining the available surplus the Full Bench formula must be adhered to in its essential particulars as otherwise there would be no stability or uniformity of practice. A deduction of more than 5% return on the preference shares could not be allowed as that was the maximum return which the shareholders could get on these shares. Even though the Full Bench formula mentioned 6% return on paid up capital it was not to be literally construed and the Tribunal could, if the circumstances warranted, increase or decrease the rate. In calculating the actual amount of bonus to be paid calcu lations had to be made on the basis of All India figures otherwise the respondents would have an advantage over those workmen with whom settlements had been made and would get larger amounts of bonus merely by reason of the fact that the appellant had managed to settle the claims of those workmen at lesser figures.

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Civil Appeal No. 250 of 1955. 495 Appeal by special leave from the judgment and order dated February 11, 1953, of the Calcutta High Court, in Award No. 254 of 1949. H. N. Sanyal, Additional Solicitor General of India,B. Sen, R. H. Dhebar and T. M. Sen, for the appellant. C. B. Aggarwala and Sukumar Ghose, for the respondent. May 21. The judgment of Jafer Imam and Subba Rao, JJ., was delivered by Subba Rao, J. Sarkar, J., delivered a separate judgment. SUBBA RAO J. This appeal by special leave raises the question of survival of an arbitration clause in a contract after the said contract is superseded by a fresh one. The respondent ' firm, styled as " Kishorilal Gupta & Brothers ", entered into the following three contracts with the Governor General in Council through the Director General of Industries and Supplies, hereinafter called the Government: (i) contract dated April 2, 1943, for the supply of 43,000 "Ladles Cook"; (ii) contract dated September 15, 1944, for the supply of 15,500 "Bath Ovals"; and (iii) contract dated September 22, 1944, for the supply of 1,00,000 "Kettles Camp " Each of the said contracts contained an arbitration clause, the material part of which was as follows : " In the event of any question of dispute arising under these conditions or any special conditions of contract or in connection with this contract (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the purchaser and an arbitrator to be nominated by the contractor. . Under the terms of the said three contracts, the Government supplied certain raw materials to the respondents and the latter also delivered some of the goods to the former. On May 21, 1945, the contract dated April 2, 1943, hereinafter called the first contract, was cancelled by the Government. The Government 496 also demanded certain sums towards the price of the ;materials supplied by them to the respondents. On the same day, the Government cancelled the contract dated September 15, 1944, hereinafter called the second contract, and made a claim on the respondents for the price of the raw materials supplied to them. The respondents made a counter claim against the Government for compensation for breach of the contract. On March 9, 1946, the Government cancelled the contract dated September 22, 1944, hereinafter called the third contract. Under that contract there were mutual. claims by the Government for ' the raw material supplied to the contractors and by the latter for compensation for breach of contract. The disputes under the three contracts were amicably settled. 'The outstanding disputes under the first and the second contracts were settled on September 6, 1948, and two separate documents were executed to evidence the said settlement. As the decision, to some extent, turns upon the comparative study of the recitals in the said documents of settlement, it will be convenient to read the material part of the recitals contained therein. The settlement in respect of the first contract contained the following recitals: " (1) The contractor expressly agrees to pay the Government the sum of Rs. 3,164 8 as. only on this contract. (2) The contract on payment of the amount mentioned in clause (1) shall stand finally determined. " The recitals in the settlement of the second contract are as follows: " (1) The contractor expressly agrees to pay to the Government the sum of Rs. 36,276. If D. G. 1. & section has recovered any amount under the contract out of the sum due credit will be given to the contractor. (2) The contract stands finally determined and no party will have any further claim against the other. " One prominent difference in the phraseology used in the two settlements may be noticed at this stage. 497 While under the settlement of the first contract, 'the contract should stand finally determined Only payment of the amount agreed to be paid to the Government by the contractor, under the settlement of the second contract, the contract stood finally determined on the date of the settlement itself. The third contract was settled on February 22, 1949, and the material part of the recitals therein is as follows: " (1) The firm will pay a sum of Rs. 45,000 in full and final settlement of the amount due to the Government in respect of raw materials received against the contract and their claims for compensation for cancellation of the same contract. (2) The firm will retain all surplus partly fabricated and fully fabricated stores lying with them. (3) The firm agrees to pay the abovementioned sum of Rs. 45,000 only together with the sums owing by them to the Government under the settlements reached in two other cases A/T Nos. MP/75762/R 61/ 78 dated 15th September 1944 and MP/50730/8/R I/ 90 dated 2nd April 1943 in monthly instalments for Rs. 5,000 only for the first three months, first instalment being payable on 10th March, 1949, and further instalments of Rs. 9,000 per month till the entire dues payable to Government are paid. (4) In the event of default of any monthly instalments interest will be charged by Government on the amount as defaulted at the rate of 6% per annum from the first day of the month in which the instalment shall be due. If the instalments defaulted exceed two in number the Government will have the right to demand the entire balance of the money payable by the firm together with interest thereon at the rate abovementioned on that balance and take such steps to recover from them from the security to be offered. (5) In order to provide cover for the money pay. able to the Government the firm undertakes to hypothecate their moveable and immoveable property in Bamangachi Engineering Works together with all machinery sheds and leasehold interest in 498 land measuring about 5.75 acres in Mouja Bamungachi in Howrah. The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Government Solicitor at Calcutta., (6) The contracts stand finally concluded in terms of the settlement and no party will have further or other claim against the other. " Broadly speaking, this settlement was a comprehensive one including therein the earlier settlements and providing for the recovery of the amounts agreed to be paid under the said two earlier settlements. The concluding paragraph is more analogous to that of the settlement of the second contract rather than that of the first. Under the final settlement, between October 28, 1948, and January 17, 1949, the respond ents paid a, total sum of Rs. 9,000 to the Government under the first two settlements of the contracts. Between March 10, 1949, and October 31, 1949, the respondents paid a total sum of Rs. 1 1,000 in instalments to the Government, though the amounts paid were less than the amount payable in accordance with the agreed instalments. Some correspondence passed between the Government and the respondents, the former demanding the balance of the amount payable under the instalments and the latter putting it off on one ground or other. Finally on August 10, 1949, the Government wrote a letter to the respondents demanding the payment of Rs. 1,51,723 payable to them under the three original contracts, ignoring the three settlements. The Government followed that letter with another one of the same date informing the respondents that they had appointed Bakshi Shiv Charan Singh as their arbitrator and calling upon the respondents to nominate their arbitrator. The respondents did not co operate 'in the scheme of arbitration and instead Kishori Lal Gupta as sole proprietor of the respondent firm made an application under section 33 of the , in the Original Side of the High Court of Calcutta for a declara tion that the arbitration agreement was no longer in existence. That application was dismissed by 499 Banerjee, J., of the said High Court on the ground that it was not maintainable as the two other partners of the respondent firm were not made parties to the said proceeding. But in the course of the judgment, the learned Judge made some observation on the merits of the case. Thereafter the Government filed their statement of facts before the arbitrator and the respondents filed a counter affidavit challenging the arbitrator 's jurisdiction and also the correctness of the claims made by the Government. On July 31, 1951, the arbitrator made an award in favour of the Government for a total sum of Rs. 1,16,446 11 5 in respect of the first and the third contracts and gave liberty to the Government to recover the amount due to them under the second contract in a suit. The award was duly filed in the High Court, and, on receiving the notice, the respondents filed an application in the High Court for setting aside the award and in the alternative for ' declaration that the arbitration clause in the three contracts ceased to have any effect and stood finally determined by the settlement of the disputes between the parties. Bachawat, J., held that the first contract was to be finally determined only on payment in terms of the settlement, and, as such payment was not made, the original contract and its arbitration clause continued to exist. As regards the third contract, the learned Judge came to the conclusion that by the third settlement, there was accord and satisfaction of the original contract and the substituted agreement discharged the existing cause of action and therefore the arbitrator had no jurisdiction to entertain any claim with regard to that contract. As the award on the face of it was a lump sum award, the learned Judge held that it was not severable and therefore the whole award was bad. In the result, he gave the declaration that the arbitration clause contained in the contract dated September 22,1944, for "Kettles Camp" had ceased to exist since the settlement contract dated February 22, 1949, and that the entire award was void and invalid. The present appeal by special leave was filed by the Government against the said order of the High Court. 500 At the outset, a preliminary objection taken by Shri Aggarwal, the learned Counsel for the respondents, may be disposed of The learned Counsel contends that the special leave granted by this Court should be revoked on the ground that an appeal lay against the order of the learned Judge to an appellate bench of the same High Court both under cl. 15 of the Letters Patent and section 39 of the . It is not, and cannot be, contended that this Court has no jurisdiction to entertain an appeal against the order of a Court when an appeal lies from that order to another Court. The provisions of article 136 of the Constitution are not ' circumscribed by any such limitation. But what is argued, in our view legitimately, is that when an appeal lay to the appellate bench of the Calcutta High Court, this Court should not have given special leave and thereby short circuited the legal procedure prescribed. There is much force in this argument. If the application for revoking the special leave had been taken at the earliest point of time and if this Court was satisfied that an appeal lay to an appellate bench of the Calcutta High Court, the leave obtained without mentioning that fact would have been revoked. But in the present case, the special leave was granted on March 29, 1954, and the present application for revoking the leave was made five years after the grant of special leave and the learned Counsel could not give any valid reason to explain this inordinate delay. In the circumstances, if we revoked the special leave, the appellant would be prejudiced, for if this objection had been taken at the earliest point of time, the appellant would have had the opportunity to prefer a Letters Patent appeal to the appellate bench of the Calcutta High Court. The appellant cannot be made to suffer for the default of the respondents. In the circumstances, we did not entertain that application for revoking the special leave and did not express our opinion on the merits of the question raised by the learned Counsel. Now coming to the merits, the main contentions of the parties may be stated at the outset. The argument of the Additional Solicitor General for the 501 appellant may be summarized in the following propositions: (1) The jurisdiction of the arbitrator depends upon the scope of the arbitration agreement or submission; (2) its scope would depend upon the language of the arbitration clause; (3) if the arbitration agreement in question is examined, it indicates that the dispute whether the original contracts have come to an end or not is within its scope; (4) on the facts of the case, there had been no novation or substitution of the original contracts; and (5) if there had been a novation of the original contracts, the non perform ance of the terms of the new contract revived the original contracts and therefore the parties to the original contracts could enforce their terms including the arbitration clause. The submission of Shri Aggarwal, Counsel for the respondents,may be stated thus : (1) Upon the facts of the case, there had been a recession of the old contracts and substitution of a new, legally enforceable and unconditional contract, which came into immediate effect; (2) the new contract can be legally supported either under section 62 or section 63 of the Indian Contract Act or under the general law of contracts; (3) the non performance of the terms of the new contract did not have the effect of reviving the rights and obligations under the old contracts as they did not remain alive for any purpose; and (6) even if the arbitration clause did not remain alive after the new contract, the arbitrator was bound to decide the case in terms of the new contract, and he having not done so, the error is apparent on the face of the record and therefore the award is liable to be set aside. So stated the controversy covers a much wider field than that necessary to solve the problem presented in this case. It would, therefore ' be convenient at this stage to clear the ground. Subtle distinctions sought to be made between the provisions of section 62 and section 63 of the Indian Contract Act need not detain us; nor need we consider the question whether the settlement contract in question falls under section 62 or is covered by section 63 of the Indian Contract Act, or is governed by the general principles of the law of contracts, for the validity of the said contract is not questioned. by either 64 502 party and indeed both rely upon it one to contend ,that it wholly superseded the earlier ones and the other to rely upon its terms to bring out its contingent character. If so, the only two outstanding questions are: (i) what is the legal effect of the contract dated February 22, 1949, on the earlier contracts ? ; and (ii) does the arbitration clause in the earlier contracts survive after the settlement contract ? The law on the first point is well settled. One of the modes by which a contract can be discharged is by the same process which created it, i.e., by mutual agreement; the parties to the original contract may enter into a new contract in substitution of the old one. The legal position was clarified by the Privy Council in Payana Reena Saminathan vs Pana Lana Palaniappa (1). Lord Moulton defined the legal incidents of a substituted contract in the following terms at p. 622: " The 'receipt ' given by the appellants, and accepted by the respondent, and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the 'receipt '. It is a clear example of what used to be well known in common law plea ding as " accord and satisfaction by a substituted agreement ". No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all of a new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchanged for the new rights; and the new agreement becomes a new departure, and the rights of all the parties are fully represented by it. " The House of Lords in Norris vs Baron and Company (2) in the context of a contract for sale of goods brought out clearly the distinction between a contract which varies the terms of the earlier contract and a contract which rescinds the earlier one, in the following passage at p. 26: "In the first case there are no such executory clauses in the second arrangement as would enable (1) 622. (2) 26. 503 you to sue upon that alone if the first did not exist; in the second you could sue on the second arrangement alone, and the first contract is got rid of either 2 by express words to that effect, or because, the second dealing with the same subject matter as the first but in a different way, it is impossible that the two should be both performed. " Scrutton, L.J., in British Russian Gazette and Trade Outlook Limited vs Associated Newspaper, Limited (1), after referring to the authoritative text books on the subject, describes the concept of 11 accord and satisfaction " thus at p. 643: " Accord and satisfaction is the purchase of a ,release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative. Formerly it was necessary that the consideration should be executed Later it was conceded that the consideration might be executory The consideration on each side might be an executory promise, the two mutual promise making an agreement enforceable in law, a contract I An accord, with mutual promises to perform, is good, though 'the thing be not performed at the time of action; for the party has a remedy to compel the performance ', that is to say, a cross action on the contract of accord if, however, it can be shown that what a creditor accepts in satisfaction is merely his debtor 's promise and not the performance of that promise, the original cause of action is discharged from the date when the promise is made. " The said observations indicate that an original cause of action can be discharged by an executory agreement if the intention to that effect is clear. The modern rule is stated by Cheshire and Fifoot in their Law of Contract, 3rd Edn., at p. 453: "The modern rule is, then, that if what the creditor has accepted in satisfaction is merely his (1) , 643, 644. 504 debtor 's promise to give consideration, and not the performance of that promise, the original cause of action is discharged from the date when the agreement is made. This, therefore, raises a question of construction in each case, for it has to be decided as a fact whether it was the making of the promise itself or the performance of the promise that the creditor consented to take by way of satisfaction. " So too, Chitty in his book on Contracts, 31st Edn., states at p. 286: " The plaintiff may agree to accept the performance of a substituted consideration in satisfaction, or he may agree to accept the promise of such performance. In the former there is no satisfaction until performance, and the debtor remains liable upon the original claim until the satisfaction is executed. In the latter, if the promise be not performed, the plaintiff 's remedy is by action for the breach of the substituted agreement, and he has no right of resort to the original claim. " From the aforesaid authorities it is manifest that a contract may be discharged by the parties thereto by a substituted agreement and thereafter the original cause of action arising under the earlier contract is discharged and the parties are governed only by the terms of the substituted contract. The ascertainment of the intention of the parties is essentially a question of fact to be decided on the facts and circumstances of each case. We have already given the sequence of events that led to the making of the contract dated February 22, 1949. To recapitulate briefly, the original three contracts were cancelled. by the Government on May 21, 1945, May 21, 1945, and March 9, 1946, respectively. Under the first contract, the Government made a claim for the price of the raw materials supplied and there was no counter claim by the respondents. Under the second and third contracts, there were counter claims the Government claiming amounts for the raw materials supplied and the respondents claiming damages for the breach thereof. 505 The disputes under the first two contracts were settled on the same day. As the claim was only on the part of the Government, the amount due to them was ascertained at Rs. 3,164 8 0 and the first contract was expressly agreed to be finally determined on payment of that amount. The express terms of the settlement leave no room to doubt that the contract was to be determined only after the payment of the ascertained amount. But under the second settlement, which was a compromise of disputed claims, a sum of Rs. 36,276 was fixed as the amount due from the respondents to the Government, presumably on taking into consideration the conflicting claims and on adjusting all the, amounts ascertained to be due from one to the other. The parties in express terms agreed that the earlier contract stood finally determined and that no party would have any claim thereunder against the other. A comparative study of the terms of the said two settlement contracts indicates that under the first settlement the original contract continued to govern the rights of the parties till payment, while under the second settlement contract, the original contract was determined and the rights and liabilities of the parties depended thereafter on the substituted contract. Coming to the third settlement, it was in the pattern of the second settlement. On the breach of the third contract, there were mutual claims, the Government claiming a large amount for raw materials supplied to the respondents, and the latter on their side setting up a claim for damages. Further, though the earlier two contracts were settled on September 6, 1948, the amounts payable under the said two settlements were not paid. A comprehensive settlement, therefore, of the outstanding claims was arrived at between the parties, and the rights and liabilities were attempted to be crystallized and a suitable procedure designed for realising the amounts. In full and final settlement of the amounts due to the Government in respect of the raw materials received against the contracts and the respondents ' claim for compensation for cancellation of the contracts, it was agreed that the respondents should pay a sum of Rs. 45,000 to the Government 506 and that the respondents should retain all the material, partly fabricated and fully fabricated stores lying with them. Clauses 3, 4 and 5 provide for the realisation of the entire amounts covered by the three settlements. Under cl. 3 the respondents agreed to pay the total amount payable under the three settlements in monthly instalments for the first three months commencing from March 10, 1949, at a sum of Rs. 5,000 and thereafter at a sum of Rs. 9,000 per month till the entire amount was paid. Clause 4 prescribed that in case of default of any monthly instalment interest would be charged at the rate of 6% per annum and if the instalments defaulted exceeded two in number the Government was given the right to realise the entire amount payable under the three contracts with interest not only from the security but also otherwise. Under cl. 5 it was stipulated that the respondents should hypothecate their moveable and immoveable properties described thereunder to provide cover for the moneys payable to the Government. Clause 6 in express terms declared that the contracts should be finally concluded in terms of the settlement and no party would have any claim against the other. Is there any justification for the contention that the substituted contract should either come into force after the hypothecation bond was executed or that it should cease to be effective if the said bond was not ' executed within a reasonable time from the date of the settlement? We do not find any justification for this contention either in the express terms of the contract or in the surrounding circumstances whereunder the document came to be executed. It was a self contained document; it did not depend upon the earlier contracts for its existence or enforcement. The liability was ascertained and the mode of recovery was provided for. The earlier contracts were superseded and the rights and liabilities of the parties were regulated thereunder. No condition either precedent or subsequent was expressly provided; nor was there any scope for necessarily implying one or either. The only argument in this direction, 507 namely, that it is impossible to attribute any intention to the Government to take a mere promise on. the part of the respondents to hypothecate their properties " ' as satisfaction " and therefore it should be held that the intention of the parties was that there would be no satisfaction till such a document was executed, does not appeal to us. We are concerned with the expressed intention of the parties and when the words are clear and unambiguous they are undoubtedly clear in this case there is no scope for drawing upon hypothetical considerations or supposed intentions of the parties; nor are we attracted by the argument that the description of the properties intended to be hypothecated was not made clear and therefore the presumed intention was to suspend the rights under the new contract till a valid document in respect of a definite and specified property was executed. Apart from the fact that we are not satisfied with the argument that the description was indefinite, we do not think that such a flaw either invalidates a document or suspends its operation till the defect is rectified or the ambiguity clarified. The substituted agreement gave a new cause of action and obliterated the earlier ones and if there was a valid defence against the enforcement of the new contract in whole or in part, the party affected must take the consequences. We have, therefore, no doubt that the contract dated February 22, 1949, was for valid consideration and the common intention of the parties was that it should be in substitution of the earlier ones and the parties thereto should thereafter look to it alone for enforcement of their claims. As the document does not disclose any ambiguity, no scrutiny of the subsequent conduct of the parties is called for to ascertain their intention. If so, the next question is whether the arbitration clause of the original contracts survived after the execution of the settlement contract dated February 22, 1949. The learned Counsel for the appellant contends that the terms of the arbitration clause are wide and comprehensive, and any dispute on the question whether the said contract was discharged by any of the ways known to law came within its fold. 508 Uninfluenced by authorities or case law, the logical outcome of the earlier discussion would be that the arbitration clause perished with the original contract. Whether the said clause was a substantive term or a collateral one, it was none the less an integral part of the contract, which had no existence de hors the contract. It was intended to cover all the disputes arising under the conditions of, or in connection with, the contracts. Though the phraseology was of the widest amplitude, it is inconceivable that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement. The fact that the new contract not only did not provide for the survival of the arbitration clause but also the circumstance that it contained both substantive and procedural terms indicates that the parties gave up the terms of the old contracts, including the arbitration clause. The case law referred to by the learned Counsel in this connection does not, in our view, lend support to his broad contention and indeed the principle on which the said decisions are based is a pointer to the contrary. We shall now notice some of the authoritative statements in the text books and a few of the cases bearing on the question raised: In Chitty on Contract, 21st Edn., the scope of an arbitration clause is stated thus, at p. 322: " So that the law must be now taken to be that when an arbitration clause is unqualified such a clause will apply even if the dispute involve an assertion that circumstances had arisen whether before or after the contract had been partly performed which have the effect of discharging one or both parties from liability, e.g., repudiation by one party accepted by the other, or frustration. " In " Russel on Arbitration ", 16th Edn., p. 63, the following test is laid down to ascertain whether an arbitration clause survives after the contract is deter mined: " The test in such cases has been said to be whether the contract is determined by something outside itself, in which case the arbitration clause 509 is determined with it, or by something arising out of the contract, in which case the arbitration clause. remains effective and can be enforced. " The Judicial Committee in Hirji Mulji vs Cheong Yue Steamship Company (1) gives another test at p. 502: "That a person before whom a complaint is brought cannot invest himself with arbitral jurisdiction to decide it is plain. His authority depends on the existence of some submission to him by the parties of the subject matter of the complaint. For this purpose a contract that has determined is in the same position as one that has never been concluded at all. It founds no jurisdiction. " A very interesting discussion on the scope of an arbitration clause in the context of a dispute arising on the question of repudiation of a contract is found in the decision of the House of Lords in Heyman vs Darwine Ltd .(2 ) There a contract was repudiated by one party and accepted as such by the other. The dispute arose in regard to damages under a number of heads covered by the contract. The arbitration clause provided that any dispute between the parties in respect of the agreement or any of the provisions contained therein or anything arising thereout should be referred to arbitration. The House of Lords held that the dispute was one within the arbitration clause. In the speeches of the Law Lords a wider question is discussed and some of the relevant principles have been succinctly stated. Viscount Simon L.C. observed at p. 343 thus: " An arbitration clause is a written submission, agreed to by the parties to the contract, and, like other written submissions to arbitration, must be construed according to its language and in the light of the circumstances in which it is made. If the dispute is as to whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to (1) ,502. 65 (2) , 343 345, 347, 350. 510 the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself is also void. If, however, the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them as to whether there has been a breach by one side or the other, or as to whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen " in respect of ", or " with regard to ", or " under " the contract, and an arbitration clause which uses these, or similar, expressions, should be construed accordingly. By the law of England (though not, as I understand, by the law of Scotland) such an arbitration clause would also confer authority to assess damages for breach even though it does not confer upon the arbitral body express power to do so. I do not agree that an arbitration clause expressed in such terms as above ceases to have any possible application merely because the contract has "come to an end", as, for example, by frustration. In such cases it is the performance of the contract that has come to an end." The learned Law Lord commented on the view expressed by Lord Dunedin at p. 344 thus: " The reasoning of Lord Dunedin applies equally to both cases. It is, in my opinion, fallacious to say that, because the contract has " come to an end " before performance begins, the situation, so far as the arbitration clause is concerned, is the same as though the contract had never been made. In such case a binding contract was entered into, with a valid submission to arbitration contained in its arbitration clause, and, unless the language of the arbitration clause is such as to exclude its application until performance has begun, there seems no reason why the arbitrator 's jurisdiction should not cover the one case as much as the other. " 511 Lord Macmillan made similar observations at p. 345: " If it appears that the dispute is as to whether, there has ever been a binding contract between the parties, such a dispute cannot be covered by an arbitration clause in the challenged contract. If there has, never been a contract at all, there has never been as part of it an agreement to arbitrate; the greater includes the less. Further, a claim to set aside a contract on such grounds as fraud, duress or essential error cannot be the subject matter of a reference under an arbitration clause in the contract sought to be set aside. Again, an admittedly binding contract containing a general arbitration clause may stipulate that in certain events the contract shall come to an end. If a question arises whether the contract has for any such reason come to an end, I can see no reason why the arbitrator should not decide that question. It is clear, too, that the parties to a contract may agree to bring it to an end to all intents and purposes and to treat it as if it had never existed. In such a case, if there be an arbitration clause in the contract, it perishes with the contract. If the parties substitute a new contract for the contract which they have abrogated, the arbitration clause in the abrogated contract cannot be invoked for the determination of questions under the new agreement. All this is more or less elementary. " These observations throw considerable light on the question whether an arbitration clause can be invoked in the case of a dispute under a superseded contract. The principle is obvious; if the contract is superseded by another, the arbitration clause, being a component part of the earlier contract, falls with it. The learned Law Lord pin points the principle underlying his conclusion at p. 347: " I am accordingly of opinion that what is commonly called repudiation or total breach of a contract, whether acquiesced in by the other party or not, does not abrogate a contract, though it may relieve the injured party of the duty of further fulfilling the obligations which he has by a contract undertaken 512 to the repudiating party. The contract is not put out of existence, though all further performance of the obligations undertaken by each party in favour of the other may cease. It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract." Lord Wright, after explaining the scope of the word " repudiation " and the different meanings its bears, proceeded to state at p. 350: " In such a case, if the repudiation is wrongful and the rescission is rightful, the contract is ended by the rescission; but only as far as concerns future performance. It remains alive for the awarding of damages, either for previous breaches, or for the breach which constitutes the repudiation. That is only a particular form of contract breaking and would generally, under an ordinary arbitration clause, involve a dispute under the contract like any other breach of contract. " This decision is not directly in point; but the principles laid down therein are of wider application than the actual decision involved. If an arbitration clause is couched in widest terms as in the present case, the dispute, whether there is frustration or repudiation of the contract, will be covered by it. It is not because the arbitration clause survives, but because, though such repudiation ends the liability of the parties to perform the contract, it does not put an end to their liability to pay damages for any breach of the contract. The contract is still in existence for certain purposes. But where the dispute is whether the said contract is void ab initio, the arbitration clause cannot operate on those disputes, for its operative force depends upon the existence of the contract and its validity. So too, if the dispute is whether the contract is wholly superseded or not by a new contract between the parties, such a dispute must fall outside the arbitration clause, for, if it is superseded, the arbitration clause falls with it. The argument, therefore, that the legal position is 513 the same whether the dispute is in respect of repudiation or frustration or novation is not borne out by these decisions. An equally illuminating judgment of Das, J., as he then was, in Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd.(1) is strongly relied upon by the learned Counsel for the appellant. There the question was whether an arbitration clause which was expressed in wide terms would take in a dispute raised in that case. It was contended on one side that the contract was void ab intio and on the other side that, even on the allegations in the plaint, the contract was not ab initio void. The learned Judge, on the facts of that case, held that no case had been made out for staying the suit and therefore dismissed the application filed by the defendant for stay of the suit. The learned Judge exhaustively considered the case law oil the subject and deduced the principles and enumerated them at p. 187. The learned Judge was not called upon to decide the present question, namely, whether an arbitration clause survived in spite of substitution of the earlier contract containing the arbitration clause by a fresh one, and therefore we do not think that it is necessary to express our opinion on the principles culled out and enumerated in that decision. The following principles relevant to the present case emerge from the aforesaid discussion: (1) An arbitration clause is a collateral term of a contract as distinguished from its substantive terms; but none the less it is an integral part of it; (2) however comprehensive the terms of an arbitration clause may be, the existence of the contract is a necessary condition for its operation; it perishes with the contract; (3) the contract may be non est in the sense that it never came legally into existence or it was void ab initio; (4) though the contract was validly executed, the parties may put an end to it as if it had never existed and substitute a new contract for it solely governing their rights and liabilities thereunder; (5) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void ; in the latter case, as the (1) I.L.R. 514 original contract is extinguished by the substituted one, the arbitration clause of the original contract perishes with it; and (6) between the two falls many categories of disputes in connection with a contract, such as the question of repudiation, frustration, breach etc. In those cases it is the performance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. As the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes. We have held that the three contracts were settled and the third settlement contract was in substitution of the three contracts; and, after its execution, all the earlier contracts were extinguished and the arbitration clause contained therein also perished along with them. We have also held that the new contract was not a conditional one and after its execution the parties should work out their rights only under its terms. In this view, the judgment of the High Court is correct. This appeal fails and is dismissed with costs. SARKAR J. On different dates in 1943 and 1944, a firm of contractors of the name of Kishorilal Gupta & Brothers entered into three contracts with the appellant to fabricate and supply certain military stores. The first contract was for 43,000 ladles cook, the second for 15,500 bath ovals and the third for 1,00,000 kettles camp. Each of these contracts contained an arbitration clause. The last mentioned contract provided that the appellant would supply materials for the fabrication of the articles to be delivered under it. Before the contracts had been finally executed, disputes arose between the parties. These disputes were settled by mutual agreements which were contained in three separate documents. The settlement in respect of the ladles cook contract which was made on September 6, 1948, provided that the contractors would pay to the appellant a sum of Rs. 3,164 8 0 and on such payment that contract would stand finally determined. Under the settlement in respect of the, bath ovals contract which also was made on 515 September 6, 1948, the contractors agreed to pay to the appellant Rs. 36,276 and it provided that " the contract stands finally determined and no party shall have any further claim against the other ". The terms of the settlement of the kettles camp contract are set out below in full, for, this case depends on them: Dated the 22nd February 1949. Messrs. Kishorilal Gupta & Bros., Calcutta. Subs: A.T. No. MP/75442/R 11397 dated the 22nd September 1944. Dear Sir, Reference discussion held on 5th February 1949 between your Proprietor Mr. Kishorilal Gupta and General Manager J. B. Breiter and the Claims Committee of the Directorate General. I hereby confirm the following terms of settlement arrived at in the meeting. The settlement has received the approval of Director General of Industries and Supplies, New Delhi. The firm will pay a sum of Rs. 45,000 in full and final settlement of the amount due to the Government in respect of raw materials received against the contract and their claims for compensation for cancellation for the same contract. The firm will retain all surplus partly fabricated and fully fabricated stores, lying with them. The firm agree to pay the above mentioned sum of Rs. 45,000 only together with the sums owing by them to the Government under the settlements reached in two other cases A/T Nos. MP/75762/R 61/78 dated 15th September 1944 and MP/50730/8/R 1/90 dated 2nd April 1943 in monthly instalments for Rs. 5,000 only for the first three months, first instalment being payable on 10th March 1949 and further instalments of Rs. 9,000 per month till the entire dues payable to Government are paid. In the event of default of any monthly instalments interest will be charged by Government on the amount as defaulted at the rate of 6% per annum from the first day of the month in which the instalment shall due. If the instalments defaulted 516 exceed two in number, the Government will have the right to demand the entire balance of the money payable by the firm together with interest thereon at the rate abovementioned on that balance and take such steps to recover from the Security to be offered by the firm, in terms of the settlement or otherwise. In order to provide cover for the monies payable to the Government the firm undertakes to hypothecate their movable and immoveable property in Bamangachi Engineering Works, together with all machinery sheds and lease hold interest in land measuring about 5.75 acres at Mouja Bamangachi in Howrah. The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Government Solicitor at Calcutta. The contracts stand finally concluded in terms of the settlement and no party will have any further or other claim against the other. Please acknowledge receipt. Yours faithfully, Sd. R. B. L. Mathur Director of Supplies (Claims) for and on behalf of the Governor General. " The contract referred to in cl. (1) of this document is the contract No. MP/75442/R 1/397 mentioned at the top of the letter and concerned the kettles camp. The contracts referred to in cl. (3) are the contracts concerning ladles cook and bath ovals which had been settled earlier but the amounts due in respect of the settlements concerning them had not been paid in full. After the settlement of February 22, 1949, the contractors made certain payments aggregating Rs. 1 1,000, the last payment made being on October 31, 1949. These payments had not been made as provided in el. The contractors also failed to execute the hypothecation deed mentioned in el. Certain correspondence appears to have taken place but with no tangible result. The appellant was unable to obtain payments or the hypothecation deed in terms of the settlement. 517 In these circumstances the appellant made a claim against the contractors under the three original con , tracts amounting to Rs. 1,52,723 and referred it to ' arbitration under the arbitration clauses contained in them. The appellant nominated an arbitrator and called upon the contractors to nominate the other, the arbitration clause providing that the arbitration shall be by two arbitrators, one to be nominated by each party. The contractors did not nominate any arbitrator, contending that the matter had " already been negotiated to a settlement " and that there were " no outstanding disputes to be referred to arbitration ". The appellant then appointed the person nominated by it as the sole arbitrator under the provisions of the and an arbitration was held by him in which the contractors joined. In the arbitration proceedings, for reasons with which we are not concerned, the appellant abandoned its claim in respect of the bath ovals contract. On July 31, 1951, the arbitrator made an award in favour of the appellant in the sum of Rs. 1,16,446 11 5 in respect of its claim on the ladles cook and kettles camp contracts. Being aggrieved by the award, the respondent Kishorilal Gupta, who is a partner of the contractors ' firm, made an application to the High Court at Calcutta in its Original Jurisdiction for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlements earlier referred to and for an order setting aside the award as void and a nullity. I wish to draw attention here to the fact that the application was really concerned with the contracts for ladles cook and kettles camp. It had nothing to do with the bath ovals ' contract for the appellant withdrew its claim under it from arbitration and no award was made in respect of it. So in this appeal we are not really concerned with that contract. Bachawat, J., who heard the application held that the contract for ladles cook had not been abrogated by the settlement in respect of it for reasons which it is unnecessary to state here as this part of the decision 518 of the learned Judge has not been challenged before us. a We have therefore to proceed on the basis that the arbitration clause contained in the ladles cook contract continued in force in spite of the settlement in respect of it. The learned Judge however held that the contract for kettles camp including the arbitration clause contained in it had ceased to exist as a result of the settlement of February 22, 1949, and the arbitrator had consequently no jurisdiction to make any award purporting to act under that arbitration clause. He then proceeded to hold that as the award was a single and inseverable award in respect of the claims under the ladles cook as well as the kettles camp contracts, the whole award became invalid. In the result the learned Judge made an order declaring that the arbi tration clause contained in the kettles camp contract had ceased to exist and setting aside the award as a whole. It is against this judgment that the present appeal has been filed with leave granted by this Court. It was contended on behalf of the respondent that the leave should not have been granted as the appellant had a right of appeal to the High Court itself. We were on this basis asked to revoke the leave. It appears that there are some cases of the Calcutta High Court which create a good deal of doubt as to whether an appeal lay to that High Court from an order of the kind made in this case. The appellants therefore were legitimately in difficulty in deciding whether an appeal lay to the High Court. Again, leave was granted by this Court as far back as March 29, 1954, and the respondent at no stage earlier than the hearing of the appeal before us took any objection to that leave. It is too late now to allow him to do that. So to do would leave the appellant entirely without remedy as an appeal to the High Court would in any event be now barred. I feel therefore that no question of revoking the leave should be allowed to be raised. It is useful to remind ourselves before proceeding further that what was referred to arbitration in this case was a claim by the appellant for damages for 519 breach of the contracts said to have been committed by the contractors. That indeed is the respondent 's, case. With regard to the merits of this claim the ' Court has no concern. But it is important to note that those claims were clearly within the arbitration clause in the contracts; about this there does not appear to be any dispute. No question therefore arises in this appeal that the claims referred to arbitration were not within the arbitration clauses. What is in dispute in this case is whether the 'arbitration clause had ceased to exist as a result of settlement. In considering the question it is not necessary however to concern ourselves with the settlements regarding the ladles cook contract or the bath ovals contract. The bath ovals contract is not the subject matter of the award. As regards the ladles cook contract, the Court below has held that settlement did not affect the relative arbitration clause and that decision has not been challenged before us. The real question that we have to consider is whether the settlement of February 22, 1949, altogether put out of existence the arbitration clause in the kettles camp contract. If it did, the arbitration in this case was clearly without jurisdiction and the award resulting from it a nullity, for on that basis there would be no arbitration agreement under which an arbitration could be held. An arbitration agreement, of course, is the creature of an agreement and what is created by agreement may be destroyed by agreement. Lord Macmillan considered it elementary " that the parties to a contract may agree to bring it to an end ' to all intents and purposes and to treat it as if it had never existed " and that " In such a case if there be an arbitration clause in the contract it perishes with the contract " : Heyman vs Darwins (1). Now it is clear that the settlement of February 22, 1949, does not expressly make the arbitration clause nonexistent. It is however said that the settlement of February 22, 1949, operated as an accord and satisfaction and therefore the arbitration clause in the relative original contract was brought to an end by it. (1) , 371. 520 It if; said that such a settlement amounts to a substituted agreement which abrogated the original contract and the arbitration clause contained in it perished with it. I venture to think that this view is wrong and originates from a misapprehension of the real nature of accord and satisfaction and an arbitration clause in a contract. It must here be stated that the appellant disputes that the settlement of February 22, 1949, amounted to an accord and satisfaction. I will examine the appellant 's contention later and shall for the present assume that the settlement constituted an accord and satisfaction. Now what is an accord and satisfaction ? It is only a method of discharge of a contract. It only means that the parties are freed from their mutual obligations under the contract : see Cheshire and Fifoot on Contracts, 3rd edn., p. 433. " It is a good defence to an action for the breach of any contract, whether made by parol or specialty, that the cause of action has been discharged by accord and satisfaction, that is to say, by an agreement after breach whereby some consideration other than his legal remedy is to be accepted by the party not in fault ": Chitty on Contracts, 21st edn., p. 286. In British Russian Gazette and Trade Outlook. Ltd. vs Associated Newspapers Ltd. (1) Scrutton, L.J., said, " Accord and satisfaction is the purchase of the release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative. " The effect of an accord and satisfaction is therefore to secure a release from an obligation arising under a contract. Now it is difficult to conceive of an obligation arising from a contract unles the contract existed. An accord and satisfaction which secures a release from such an obligation is really based on the existence of the contract instead of treating it as non existent. (1) , 643 4. 521 The contract is not annihilated but the obligations under it cease to be enforceable. Therefore it is that when an action is brought for the appropriate remedy for nonperformance of these obligations, that an accord and satisfaction furnishes a good defence. The defence is not that the contract has come to an end but that its breach has been satisfied by accord and satisfaction and therefore the plaintiff in the action is not entitled to the usual remedy for the breach. It would clearly appear from the terms of the settlement that it dealt with remedies for the breach of the kettles camp contract. Clause (1) shows that the parties were making cross claims against each other for breach of that contract and these were settled by mutual agreement upon the term that the contractors would pay to the appellant Rs. 45,000. Clauses (3), (4) and (5) state how this sum was to be paid and how the payment of it was to be secured. Clause (6) provides that the contract stands finally concluded in terms of the settlement. The parties therefore were only intending to decide the dispute as to cross claims made on the basis of the breach of the contract. So they were assuming the existence of the contract, for there could be no breach of it unless it existed. Now I come to the nature of an arbitration clause. It is well settled that such a clause in a contract stands apart from the rest of the contract. Lord Wright said in Heyman 's case (1) that an arbitration clause " is collateral to the substantial stipulations of the contract. It is merely procedural and ancillary, it is a mode of settling disputes. . . . All this may be said of every agreement to arbitrate, even though not a separate bargain, but one incorporated in the general contract." Lord Macmillan also made some very revealing observations on the nature of an arbitration clause in the same case. He said at pp. 373 4: " I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract. It is quite distinct from the other clauses. The other clauses (1) , 371. 522 set out the obligations which the parties undertake towards each other hinc inde, but the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both the parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution. And there is this very material difference, that whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Act. The appropriate remedy for breach of the agreement to arbitrate is not damages, but its enforcement. " It seems to me that the respective nature of accord and satisfaction and arbitration clause makes it impossible for the former to destroy the latter. An accord and satisfaction only releases the parties from the obligations under a contract but does not affect the arbitration clause in it, for as Lord Macmillan said, the arbitration clause does riot impose on one of the parties an obligation in favour of the other but embodies an agreement that if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by arbitration. A dispute whether the obligations under a contract have been discharged by an accord and satisfaction is no less a dispute regarding the obligations under the contract. Such a dispute has to be settled by arbitration if it is within the scope of arbitration clause and either party wants that to be done. That cannot be unless the ' arbitration clause survives the accord and satisfaction. If that dispute is not within the arbitration clause, there can of course be no arbitration, but the reason for that would not be that the arbitration clause has ceased to exist but that the dispute is outside its scope. I am not saying that it is for the arbitrator to decide whether the arbitration clause is surviving ; that may in many cases have to be decided by the Court. That would 523 depend on the form of the arbitration agreement and on that aspect of the matter it is not necessary to say anything now for the question does not arise. In my view therefore an accord and satisfaction does not destroy the arbitration clause. An examination of what has been called the accord and satisfaction in this case shows this clearly. From what I have earlier said about the terms of the settlement of February 22, 1949, it is manifest that it settled the disputes between the parties concerning the breach of the contract for kettles camp and its consequences. All that it said was that the contract had been broken causing damage and the claim to the damages was to be satisfied " in terms of the settlement ". It did not purport to annihilate the contract or the arbitration clause in it. I feel no doubt therefore that the arbitration clause subsisted and the arbitrator was competent to arbitrate. The award was not, in my view, a nullity. The position is no different if the matter is looked at from the point of view of section 62 of the Contract Act. That section is in these terms: " Section 62. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. " The settlement cannot be said to have altered the original contract or even to have rescinded it. It only settled the dispute as to the breach of the contract and its consequences. For the same reason it cannot be said to substitute a new contract for the old one. As 1 have earlier stated it postulates the existence of the contract and only decides the incidence of its breach. It remains now to express my views on the question whether the settlement of February 22,1949, amounted to an accord and satisfaction. I have earlier stated that an accord and satisfaction is the purchase of a release from an obligation under a contract. This release is purchased by an agreement which is the accord. But this agreement like all other agreements must be supported by consideration. The satisfaction 524 is that consideration. It was formerly thought that the consideration had to be executed. In other words, the consideration for which the release was granted had to be received by the releaser before the release could become effective. The later view is that the consideration may be executory; that the release may become effective before the consideration has been received by the releaser if he has agreed to accept the promise of the release to give the consideration. Whether it is the one or the other depends on the agreement of the parties. It is a question of intention. And where, as in the present case, the agreement is expressed in writing, the question is one of construction of a document. So much is well settled. The question then is, Is it the proper construction of the settlement of February 22, 1949, that the appellant agreed to accept the promise of the contractors to pay the moneys and create the security in discharge of their obligations ? Or is it the proper construction that the contractors were not to be discharged till they had carried out their promises contained in the settlement. The High Court held, accepting the respondent 's contention, that el. (6) of the settlement showed that the appellant had accepted the promise of the contractors to pay the moneys and to execute a hypothecation bond in full discharge of their obligations under the contract. That clause states that " The contracts stand finally concluded in terms of the settlement. " It is said that these words show that it was intended to accept the promise of the contractors and thereupon to give them a discharge from their obligations under the contract. Now it seems to me that the words " stands finally concluded in terms of the settlement " do not necessarily mean concluded by the promise of the contractors contained in the settlement. It appears to me to be capable of the meaning that the contract is to stand concluded when its terms have been carried out. The words are not, " stand finally concluded by the terms of the settlement" but they are, "stand finally concluded in terms of settlement ". These terms are that the contractors would pay certain 525 moneys by certain instalments and would secure these payments by a hypothecation bond. So it would appear that the contract was not to be concluded till the terms had been carried out, for otherwise it would not be a conclusion " in terms of the settlement. " That seems to me to be also the reasonable interpretation to put on the document in view of the circumstances of the case. The appellant was to receive a substantial sum under the settlement. It gave the contractors quite a long time in which to pay it. It bargained for a security to be furnished to be sure of receiving the payments. The discharge was to be by the payments. The promise to make these payments may conceivably in proper circumstances, itself amount to a discharge. But I wholly fail to see that when there is an additional promise to secure the payments by a hypothecation, the parties could have intended that there would be a discharge before the hypothecation had been made. It does not seem reasonable to hold that the parties so intended. Nor do I think that the words " stand finally concluded in terms of the settlement " are so strong as to impute such an intention to the parties. These words are capable of the meaning that the contract was to stand concluded upon the terms of the settlement being carried out and, for the reasons just mentioned, that is the proper meaning to give to those words. In my view, therefore, the settlement did not amount to an accord and satisfaction. Till the terms of it had been carried out, the appellant retained all its rights under the contract. There was one other point argued on behalf of the respondent which I think I should notice. It was said that the award was in any event liable to be set aside inasmuch as it disclosed an error on the face of it. This error, it was said, consisted in awarding damages larger than those which the appellant had agreed to take by the settlement. Now this depends on whether the settlement amounted to an accord and satisfaction; if it did not, the appellant 's claim for damages could not be confined to the amount mentioned in the settlement, 67 526 I have already said that in my opinion it did not amount to an accord and satisfaction. So there was no error apparent on the face of the award. It further seems to me that it is not open to the respondent to contend that the award is liable to be set aside as disclosing the error mentioned above on the face of it. I do not find that such a case was made in the application out of which this appeal arises. It was said that the case had been made in paragraphs 34 and 35 of the respondent 's petition to the High Court. I do not think it was there made. These paragraphs refer to the arbitrator 's decision that he had jurisdiction to arbitrate as the settlement had not destroyed the arbitration clause and the contention there made was that this decision was erroneous on the face of it. This has nothing to do with the question that the award was wrong on the face of it as it awarded a sum in excess of the amount fixed by the settlement. Whether the arbitrator was right or not in his decision that the arbitration clause had not been superseded is irrelevant for that is the question that the Court was called upon to decide in the application. In my view therefore the appeal should succeed and the order of the High Court set aside. I would order accordingly and award the costs here and below to the appellant. ORDER In accordance with the opinion of the majority this appeal fails and is dismissed with costs.

The respondents entered into three several contracts with the appellant, for the fabrication and supply of diverse military stores, each of which contracts contained an arbitration clause. Before the contracts had been fully executed disputes arose between the parties, one alleging that the other was committing a breach of the contract. The parties then entered into three fresh contracts on successive dates purporting to settle these disputes on the terms therein contained. By the first two of these settlement contracts the respondents agreed to pay to the appellant certain moneys in settlement respectively of the disputes relating to the first two original contracts. By the last of these settlement contracts the respondents agreed to pay to the appellant in specified instalments certain moneys in settlement of the disputes relating to the third original contract as also the moneys which had then become due on the first two settlement contracts and had not been paid and further undertook to hypothecate certain properties to secure the due repayment of these moneys. The third settlement contract provided: " The contracts stand finally concluded in terms of the settlement and no party will have any further or other claim against the other." The respondents paid some of the instalments but failed to pay the rest. They also failed to create the hypothecation. The appellant then referred its claims for breach of the three original contracts to arbitration under the arbitration clauses contained in them. On this reference an award for a total sum of Rs. 1,i6,446 iI 5 was made against the respondents in respect of the appellant 's claim on the first and the third original contracts, the claim in respect of the second original contract having been abandoned by the appellant, and this award was filed in the High Court at Calcutta. The respondents applied to the High Court for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlement contracts and for an order setting aside the award as void and nullity. The High Court held that the first original contract had not been abrogated by the settlement in respect of it, but the third original contract and the arbitration clause contained in it had ceased to exist as a result of the last settlement and, the arbitrator had no jurisdiction to arbitrate under that arbitration clause. It further 63 494 held that as the award was a single and inseverable award the whole of it was null and void. In this view the High Court set aside the award. Held (per Imam and Subba Rao, JJ., Sarkar J., dissenting), that the third settlement, properly construed, left no manner of doubt that it was for valid consideration and represented the common intention of the parties to substitute it for the earlier contracts between them. It gave rise to a new cause of action by obliterating the earlier contracts and the parties could look to it alone for the enforcement of their claims. There could, therefore, be no question that the arbitration clause which, whether a substantive or a collateral term, was nevertheless an integral part of the said contracts, must be deemed to exist along with them as a result of the said settlement. Hirji Mulji vs Cheong Yue Steamship Company, [1926] A.C. 502 and Heyman vs Darwin Ltd., , referred to. Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd., I.L.R. , distinguished. Held, further, that it was well settled that the parties to an original contract could by mutual agreement enter into a new contract In substitution of the old one. Payana Reena Saminathan vs Pana Lana Palaniappa, [19I4] A.C. 618: Norris vs Baron and Company, [1918] A.C. i and British Russian Gazette and Trade Outlook Ltd. vs Associated Newspaper, Limited, , referred to. Per Sarkar, J. The award was valid and could not be set aside as the third settlement neither expressly put an end to the arbitration clause nor, considered as an accord and satisfaction, did it have that effect. An accord and satisfaction is only a method of discharge of a contract. It does not annihilate the contract but only makes the obligation arising from it unenforceable. An arbitration clause stands apart from the rest of the contract in which it is contained. It does not impose on the one party an obligation in favour of the other; it only embodies an agreement that if any dispute arises with regard to any obligation which one party has undertaken to the other, such dispute shall be settled by arbitration. An accord and satisfaction, which is concerned with the obligations arising from the contract, does not affect an arbitration clause contained in it. Heyman vs Darwins and British Russian Gazette and Trade Outlook Ltd. vs Associated Newspapers Ltd. , referred to. The settlement of February 22, 1949, did not, in the circum stances of the case, amount to an accord and satisfaction.

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171 of 1958. Petition under Article 32 of the Constitution of India, for enforcement of fundamental rights. Purshottam Tricumdas, Porus A. Mehta, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioners. C. K. Daphtary, Solicitor General of India, N. section Bindra, B. H. Dhebar and T. M. Sen, for the respondents. December 9. The judgment of Sinha, C.J., Gajendragadkar, Das Gupta and Shah, JJ., was delivered by Das Gupta, J. Subba Rao, J., delivered a separate judgment. DAS GUPTA J. The first petitioner is a Company registered under the Indian Companies Act having its registered office in Bombay and is engaged in the business of dyes, chemicals, plastics, and various other goods. The second petitioner is the Chairman and a Director of the first petitioner Company. In this petition for enforcement of fundamental rights under the Constitution they pray for the issue of a writ of certiorari or other appropriate writ, direction or order quashing an order made by the first respondent, the Chief Controller of Imports and Exports, Government of India, New Delhi, by which he cancelled five import licences which had been granted to the first petitioner by the Joint Chief Controller of Imports and Exports, Bombay. There is also a prayer for an order on the second respondent, the Collector of Customs, Bombay, directing him to assess the goods of the petitioner Company which have been landed in Bombay having been imported on the strength of these licences and allow the petitioner company to clear them. Of these five licences, two were dated July 24, 1958, two dated August 16, 1958, and the fifth 411 dated September 4, 1958. The total value of the imports authorised by these five licences was Rs. 25,75,000. The petitioners contend that these five licences were granted to the petitioner Company on five applications sent by them by registered post to the Chief Controller of Imports and Exports, Government of India, New Delhi three sent on June 17, 1958, one on June 26, 1958, and the last on July 22, 1958. It is further stated that in respect of each of these applications a letter was received by the Company from the office of the Chief Controller of Imports and Exports, Government of India, New Delhi, intimating that their application had been forwarded to the Joint Chief Controller of Imports and Exports, Bombay with the necessary comments and asking the Company to contact this officer, the Joint Chief Controller of Imports and Exports, Bombay, direct in the matter. The petitioner Company wrote in each case to the Chief Controller of Imports and Exports, New Delhi, acknowledging receipt of these letters and at the same time to the Joint Chief Controller of Imports and Exports, Bombay, requesting that the licences should be issued to them at an early date. After the licences were received by the Company from the office of the Joint Chief Controller of Imports and Exports, Bombay, the Company placed orders for the goods covered by these licences and some of the goods actually arrived at Bombay. Before however any of these goods could be cleared the Company received a notice dated September 24, 1958, stating that whereas there was reason to believe that these five licences had been obtained fraudulently, the Government in the exercise of the powers specified in para. 9 of the Imports Control Order, 1955, proposed to cancel the said licences unless sufficient cause against that was furnished to the Chief Controller of Imports and Exports, New Delhi, within 10 days of the date of the issue of the said notice '. On September 26, the petitioner Company 's solicitors sent a telegram to the Chief Controller of Imports and Exports, New Delhi, requesting him to give particulars of the alleged fraud and to give them an appointment for inspection of papers 412 and documents relied upon by him. On September 27, Company wrote a letter to the same officer in which they gave a written explanation pointing out various facts and stating that they were victims of foul play by some person interested in causing damage to them and involving their reputation and in order to bring them in bad books with the authorities. In the concluding portion of this letter the Company stated: " We also reserve our right to add to, amend or alter the explanations contained in this letter hereafter and to submit such further explanations as may become necessary after taking inspection of all the papers and after getting the particulars of the alleged fraud. We shall thank you to give us also an opportunity of a personal hearing in the matter. " This written explanation was handed over to the first respondent by the Company 's representatives at an interview with him on September 30. At that interview also, it is said, the representatives of the Company pointed out to Mr. Bilgrami that in the absence of any particulars of the alleged fraud and without inspection of the papers relied upon by him it was not possible for the petitioners to give a complete explanation and that they reserved their right to give further explanation on getting the said particulars and inspection of the said papers. The Company 's representatives had another interview with Mr. Sundaram, Director (Administra tion) in the Chief Controller 's Office on October 14, 1958. At this interview the petitioners again requested Mr. Sundaram to give them particulars and that they might be permitted to inspect the papers. No particulars were however furnished and no inspection was allowed; but on that very date when they had this interview with Mr. Sundaram the first respondent made the order of cancellation. The ten grounds set out in Cls. A to L of para. 15 of the petition as the basis for the relief resolve on analysis into four only. These are: (1) Clause 9(a) of the Import Control Order under which the order of cancellation has been made is itself unconstitutional, being violative of the petitioners ' 413 rights under article 19(1)(f) & (g) and article 31 of the Constitution ; (2) The Order of cancellation has been made without compliance with the mandatory requirement of cl. 10 of the Imports Control Order to give the licensee "a reasonable opportunity of being heard "; (3) The first respondent, Mr. Bilgrami, bad no authority in law to make any order under cl. 9 of the Import Control Order; (4) The petitioners have been denied equal protection of laws under article 14 of the Constitution inasmuch as other persons similarly situated have been given a proper opportunity and a personal hearing before taking any action against them, while the petitioners have been denied a proper opportunity to show cause for the cancellation of licences and personal hearing in the matter. Of these four grounds, the third ground, viz., that Mr. Bilgrami had no authority in law to make an order under cl. 9 of the Imports Control Order was made in apparent ignorance of the fact that the Chief Controller of Imports and Exports, became competent to make an order thereunder in consequence of an amendment made in the Order, in 1958. As the clause originally stood the relevant words were: " The Central Government or any other officer authorised in this behalf may cancel any licence granted under this order. . By the amendment made on February 27, 1958,the words ,or the Chief Controller of Imports and Exports " were inserted after the words "the Central Government " in this clause. The position on the relevant dates in September and October, 1958, therefore was that the Chief Controller of Imports and Exports, New Delhi, had authority to cancel any licence granted under the Imports Control Order without being specially authorised in that behalf. It was apparently in view of this position which was pointed out by Mr. Bilgrami in his affidavit in opposi tion that the ' learned Counsel for the petitioners did not press this ground at all. Nor did he press the fourth ground, viz., that the petitioners ' right under 53 414 article 14 of the Constitution has been infringed. It is obvious that if the order has been made without the petitioners having been given a reasonable opportunity of being heard that itself would entitle them to the relief prayed for. The question whether or not other persons were given a fair opportunity of being heard is entirely irrelevant. In opposition to this application, Mr. Bilgrami, the first respondent, contends inter alia that the provision for cancellation of a licence under cl. 9 of the Order does not contravene any of the fundamental rights granted under article 19(1)(f) and (g) and Art 31 of the Constitution and that the petitioners were given adequate and reasonable opportunity of being heard before the order of cancellation was made. Mr. Bilgrami has stated in the affidavit that while it is true that four applications for licence three dated June 17, arid one dated June 26, 1958, were received in his office, the fact is that all these four applications were rejected and that it is now found that while these four rejected applications were lying in his office, four similar applic ations bearing the same dates and containing the same particulars and a fifth application bearing the date July 22, 1958, somehow made their appearance in the office of the Joint Chief Controller of Imports and Exports, Bombay, along with five separate letters, one in respect of each application, containing recommendations for issue of licences purporting to have been issued from the office of the Chief Controller of Imports and Exports, New Delhi, under the signature of one Shri M. L. Gupta, Deputy Chief Controller of Imports and Exports. The respondent contends that the purported signatures of Shri M. L. Gupta on these letters were not genuine. Mr. Bilgrami also contends that though these letters purported to state that the issue of licences was authorised by him he did not in fact give any authority, and that when the petitioners ' representatives interviewed him on September 30, 1958, they were told of the " general nature of the fraud " and that he further told them that the issue of the licences had not been authorised by him as they purported to be and that they had been obtained 415 fraudulently. The respondents further contend that when again on October 14, 1958, the petitioners had an interview with Mr. Sundaram, the Director of Administration in the office of the Chief Controller of Imports and Exports, Mr. Sundaram told them expressly that the recommendations against which the disputed licences were granted to the petitioners were not genuine. The first contention on behalf of the petitioners is that cl. 9(a) of the Imports Control Order is itself invalid as it violates a licensee 's rights under article 19(1)(f) and (g) and article 31 of the Constitution. Clause 9(a) is in these words : Cancellation of Licence: The Central Government or the Chief Controller of Imports and Exports or any other officer authorised in this behalf may cancel any licence granted under this order or otherwise render it ineffective : (a) If the licence has been granted ' through inadvertence or mistake or has been obtained by fraud or misrepresentation. . . As in the present case there is no question of the licences having been granted through inadvertence or mistake it is not necessary for us to consider whether the provision for cancellation of licences on the ground that they have been granted through mistake or inadvertence is invalid. The question in the present case is whether the provision for cancellation of licences on the ground that they have been obtained by fraud or misrepresentation is " a reasonable restriction in the interests of the general public " on the exercise of the petitioners ' right under article 19(1)(f) and It has to be noticed first that here is no case of unbridled authority to cancel a licence nor is there any scope for arbitrary action. If a provision for giving a reasonable opportunity of being heard bad not been made in the Order itself, it would have been necessary to consider whether this had still to be given, because rules of natural justice required it. No discussion about the requirements of the rule of natural justice is however called for here, as cl. 10 of the Order provides that no action shall be taken under clauses 7, 8 or 9, 416 unless the Licensee/Importer has been given a reasonable opportunity of being heard. It is proper to state that the learned Counsel for the petitioners does not attack the validity of the, provisions on the ground that it gives unbridled authority to cancel a licence, or that the requirements of natural justice have not been sufficiently fulfilled by clause 10. His argument is that though it may not be unreasonable that a licence should be cancelled if the licensee himself has practised fraud in obtaining it, cancellation is wholly unreasonable if it is made merely on the ground that it has been obtained by fraud, without it being further shown that the licensee himself has been a party to the fraud. It appears to us that in most cases, if not in all cases, where a licence is obtained by fraud or misrepresentation it would be reasonable to think that the person in whose favour the licence has been obtained, cannot but be a party to the fraud or misrepresentation. The petitioners ' Counsel submitted that it is possible to imagine a case where an enemy of the person in whose favour the licence is granted procures such grant by means of fraud with the deliberate motive of accusing this person later on of fraud and thereby subjecting him on the one hand to criminal prosecution and on the other hand damaging his reputation and ruining his business. It is unnecessary for us to decide in the present case whether this may ever happen. Clearly however the fact that fraud by which the grant of the licences has been induced by an enemy is wholly immaterial on the present question. The entire scheme of control and regulation of imports by licences is on the basis that the licence is granted oil a correct statement of relevant facts. That basis disappears if grant of the licence is induced by fraud or misrepresentation. Whether the licensee himself or some others party is responsible for the fraud or misrepresentation, the fact remains that in such cases the basis of the grant of licence has disappeared. It will be absolutely unreasonable that such a licence should be allowed to continue. We are therefore of opinion that the provision that licence may be cancelled, if it is found, after giving a 417 reasonable opportunity to the licensee to be heard, to have been obtained by fraud or misrepresentation is a reasonable restriction in the interests of the general public on the exercise of the fundamental right of a citizen guaranteed under article 19(1)(f) and (g) of the Constitution. The cancellation being under a valid law there can be no question of any right under article 31 of the Constitution having been infringed. This brings us to the main contention pressed on behalf of the petitioners, viz., that the licensee has not been given a reasonable opportunity of being heard before the order of cancellation was made. There can be no doubt that if a reasonable opportunity to be heard as against the proposed order of cancellation has not been given the order would be an unjustified interference with the petitioners ' right. It is necessary therefore to examine the material on the record to see whether the petitioners have succeeded in showing that no reasonable opportunity has been given. The requirement that a reasonable opportunity of being heard must be given has two elements. The first is that an opportunity to be heard must be given; the second is that this opportunity must be reasonable. Both these matters are justiciable and it is for the Court to decide whether an opportunity has been given and whether that opportunity has been reasonable. In the present case, a notice to show cause against the proposed order was given; it was stated in the notice that the ground on which the cancellation was proposed was that the licences had been obtained fraudulently; and later on, a personal hearing was given. It must therefore be held that the requirement that an opportunity to be heard must be given was satisfied. What the petitioners ' Counsel strenuously contends however is that though an opportunity was given that opportunity was not reasonable. In making this argument he had laid special stress on the fact that particulars of the fraud alleged were not given and an opportunity to inspect the papers though repeatedly asked for was not given. It is now necessary to consider all the circumstances in order to arrive at a conclusion whether the omission to give particulars of fraud and 418 inspection of papers deprived the petitioners of a reasonable opportunity to be heard. There can be no invariable standard for " reasonableness" in such matters except that the Court 's conscience must be satisfied, that the person against whom an action is proposed has bad a fair chance of convincing the authority who proposes to take action against him that the grounds on which the action is proposed are either non existent or even if they exist they do not justify the proposed action. The decision of this question will necessarily depend upon the peculiar facts and circumstances of each case, including the nature of the action proposed, the grounds on which the action is proposed, the material on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause against such proposed action, the nature of the plea raised by him in reply, the requests for further opportunity that may be made, his admissions by conduct or otherwise of some or all the allegations and all other matters which help the mind in coming to a fair conclusion on the question. The action proposed in the present case viz., the cancellation of the five licences was proposed on a tentative conclusion by Mr. Bilgrami on the basis of the material in his possession that the five licences bad been obtained fraudulently. The main grounds on which this tentative conclusion appears to have been based were that four applications three dated June 17 and one dated June 26, 1958, similar in all particulars to the four which are now found in the office of the Joint Controller of Imports and Exports, Bombay, had been actually received but had been rejected and were lying in the Chief Controller 's Office; that four similar applications, bearing the same dates and same particulars which were lying in the Bombay Office and also a fifth application dated July 22, were accompanied by five forwarding letters purporting to have been signed by Mr. M. L. Gupta recommending the prayer for licence and containing a statement that the first respondent had authorised such issue of licences on those applications but these signatures purporting to have been of Mr. M. L. Gupta were not really his 419 signatures ; that while the forwarding letters purported to state that the issue of these licences prayed for had been authorised by Mr. Bilgrami as the Chief Controller of Imports and Exports, New Delhi, he himself knew that such issue had not been authorised by him. We find that in the very notice that was given to the petitioners ' company to show cause against the proposed action of cancellation, it was stated that these licences appeared to have been obtained by fraud. On the question of particulars of fraud, it has been stated by the first respondent in his affidavit that at that stage no particulars of the fraud could be given by him as they were unknown to him, but that be did inform the petitioners ' representatives Mr. Parikh, a director of the Company the second petitioner Mr. Rangwala, who is the Chairman of the Company and the Company 's solicitor, Mr. Hussaini Doctor of the " general nature of the fraud ". In para 23 of his affidavit Mr. Bilgrami has made the following statement: " I say that the Director of the petitioners ' Company, Shri B. K. Parekh and Shri Rangwala and their attorney 's partners, Mr. Huseni Doctor saw me on the 30th September, 1958. I told them that the issue of the licences had not been authorised by me as they purported to be and that they had been obtained fraudulently, though at that stage I was unable to say how exactly and by whom the fraud was committed. As also the investigation by the Police was already in progress, it was not possible to give minute particulars of the fraud. When the petitioners were told as above, the petitioners ' chairman started raising contentions suggesting that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti Muslim feeling amongst the employees of his firm. " The affidavit in reply was sworn by Mr. Rangwala himself. We find therein repeated denials of Mr. Bilgrami 's assertion that the Company 's representatives were told of the " general nature of the fraud ". It was worth noting however that as regards the categorical statement made in para. 23 as to what 420 Mr. Bilgrami told Mr. Rangwala and others and what they told him there is no clear denial. Dealing with para. 23 of Mr. Bilgrimi 's affidavit in para. of his own affidavit in reply Mr. Rangwala after saying that the first respondents, statement does not say anything as to how exactly and by whom the fraud was committed but simply added that the first respondent did not say anything beyond the fact that the licences had been obtained by fraud. It is significant that no specific denial was made of Mr. Bilgrami 's assertion that to Mr. Rangwala, Mr. Parekh and Mr. Huseini Doctor he had himself stated that the " issue of the licences had not been authorised by him as they purported to be ". No less important is the fact that Mr. Rangwala does riot deny the assertion made by Mr. Bilgrami that he (Mr. Rangwala) in the course of that interview on September 30, suggested that the fraud might have been committed by reason of certain feelings amongst the employees of his firm. It is reasonable therefore to believe that besides stating that the licences had been obtained fraudulently Mr. Bilgrami definitely informed the Company 's representatives on September 30, 1958, that though issue of the licences had been purported to be authorised by him with apparent reference to the forwarding letters recommending the issue of the licences this had not actually been authorised and further that on receipt of this information the Company 's representatives instead of saying that no fraud had been practised and that Mr. Bilgrami was making a mistake in thinking that he had not authorised the issue of the licences and that perhaps his memory had failed him took refuge behind the plea that it was not the Company but some enemy of the Company who had perpetrated the fraud. The petitioners ' representatives had also an interview with Mr. Sundaram on October 14, 1958. While we have not got any statement of Mr. Sundaram himself as to what happened in that interview we find apart from Mr. Bilgrami 's affidavit in para. 24 that Mr. Sundaram also informed the petitioners ' representatives at that interview that the recommendations 421 against which the disputed licences were granted to the petitioners were not genuine, (which assertion was repeated in slightly different words in para. 29), the fact that the first respondent 's letter dated December 18, 1958, a copy of which Mr. Rangwala annexed to his affidavit in reply concluded with the following words: " It may be stated that the fact that the following letters referred to above were not genuine were mentioned to the representatives of your firm when they interviewed Shri D. R. Sundaram, Director, (Administration) on October 14, 1958. " Though annexing a copy of this letter to his affidavit in reply Mr. Rangwala did not state that this statement in the concluding portion of the letter was not true. This justifies the conclusion that Mr. Bilgrami 's assertion that Mr. Sundaram told the Company 's representatives that the forwarding letters containing the recommendations on the basis of which the licences had been issued were not genuine is true. Mr. Bilgrami 's statement in para. 29 of his affidavit is that when Mr. Sundaram informed the Company 's representatives of this they had no explanation to give. Dealing with para. 29 of this affidavit in para. 23 of his own affidavit Mr. Rangwala did not state that Mr. Sundaram did not tell them that the licences issued were on the basis of documents which were not genuine, or that on being so told they had no explanation to offer. On a consideration of the entire background in which the notice for cancellation was issued, what was stated by the petitioners in their letter dated September 27, and what we find to have taken place at the interviews on the 30th September and the 14th October, specially the fact that the Company 's reprepresentatives appeared to have been more concerned to show that the Company was not a party to the fraud than to show that there was no fraud practised at all, we are of opinion that the omission to give further particulars or inspection of papers did not deprive the petitioners of a fair chance of convincing Mr. Bilgrami that the grounds on which cancellation of the licences was proposed did not exist, or even if they existed, 54 422 they did not justify cancellation of the licences. We are therefore of opinion that the opportunity that was given to the petitioners in the present case amounted to a reasonable opportunity of being heard against the action proposed. The petitioners are therefore not entitled to any relief. The petition is accordingly dismissed with costs. SUBBA RAO J. I have had the advantage of perusing the judgment of my learned brother, Das Gupta, J. I regret my inability to agree with his conclusion. The facts are fully stated in the judgment of my learned brother and I shall, therefore, briefly restate only the material facts. The first petitioner, M/s. Fedco (Private) Limited (hereinafter called the Company) is a Company registered under the Indian Companies Act having its registered office in Bombay. It is engaged in the business of dyes, chemicals, plastics and various other goods. The second petitioner is the Chairman and a Director of the first petitioner Company. The Company sent five applications by registered post to the Chief Controller of Imports and Exports, New Delhi, (hereinafter called the Chief Controller). Three of the applications were dated June 17, 1958, one was dated June 26, 1958, and the last was dated July 22, 1958. In the said applications the Company prayed for the issue of import licences to enable them to place orders and import different types of goods from West In regard to each of these applications, received a letter purporting to be from the Chief Controller intimating them that their applications had be en forwarded to the Joint Chief Controller of Imports and Exports, Bombay, (hereinafter called the Joint Controller) with the necessary comments. The Company acknowledged the receipt of these letters, Thereafter five licences were received from the Office of the Joint Controller, Bombay, and two of them were dated July 24, 1958, another two were dated August 16, 1958, and the fifth was dated September 4, 1958. On the basis of the said licences, orders were 423 placed with a foreign company in West Germany and goods of considerable value actually arrived in the Bombay port. By letter dated September 23, 1958, the Joint Controller asked the Company to return the said five licences granted to them without entering into any commitments. After some correspondence between the Company and the Chief Controller, the former received a notice dated September 24, 1958, from the latter to the effect that the Government had reason to believe that the said licences were obtained fraudulently and therefore they proposed to cancel the said licences unless sufficient cause was shown against such action being taken within ten days of the issue of the said notice. On October 16, 1958, the Company received an undated order from the Chief Controller purporting to cancel the said five licences. The Com. pany and their manager filed the present petition under Act. 32 of the Constitution praying for a writ of certiorari or other appropriate writ quashing the order of the Chief Controller cancelling the said five licences and directing the Collector of Customs, Bombay, to assess the goods of the Company which had been imported into India and allow them to clear the same. Mr. Purshottam Trikamdas, learned Counsel for the petitioners in support of his contentions raised before us two points, viz., (1) cls. 9 and 10 of the Imports Control Order, 1955, (hereinafter called the Order) where under the licences were cancelled infringe the fundamental rights of a citizen under article 19(1)(f) and (g) of the Constitution inasmuch as the said provisions constitute an arbitrary and unreasonable restriction on the said rights; and (2) the Chief Controller has not complied with the provisions of cl. 10 of the Order as he failed to give the Company reasonable opportunity of being heard before the licences granted to them were cancelled and therefore the act of the Chief Controller in cancelling the licences infringes the rights of the Company under article 19(1)(f) and (g) of the Constitution. The first point need not be considered as I am clearly of the view that no " reasonable opportunity " within the meaning of cl. 10 of the Order was given to the 424 petitioners by the Chief Controller. The material parts of cls. 9 and 10 of the Order read: clause 9. "Cancellation of Licences. The Central Government or any other Officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective (a) if the licence has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation;". Clause 10. " Applicant or Licensee to be heard. No action shall be taken under Clauses 7, 8 or 9, unless the licensee/Importer has been given a reasonable opportunity of being heard. " It is not disputed that the Central Government delegated its powers to act under these clauses to the Chief Controller. The first question is, what is the scope of the enquiry under cl. 10 of the Order ? Is it purely an administrative act or is it a quasi judicial act ? The criteria to ascertain whether a particular act is a quasijudicial act or an administrative one have been laid down with clarity by Lord Justice Atkin in Rex vs Electricity Commissioners, Ex Parte London Electricity Joint Committee Co.(1), elaborated by Lord Justice Scrutton Rex vs London County Council, Ex Parte Entertainments Protection Association Ltd. (2) and authoritatively restated by this Court in Province of Bombay vs Khusaldas section Advani (3). They laid down the following conditions: (a) the body of Dersons must have legal authority; (b) the authority should be given to determine questions affecting the rights of subjects and (c) they should have a duty to act judicially. All the three conditions are satisfied in this case. Under the ,said clauses authority is conferred on the Central Government or any other officer authorized in this behalf to cancel any licence granted under the Order and the cancellation of a licence certainly affects the rights of subjects. A clear duty to act judicially is imposed by cl. 10 on the said authority. He has to give to the affected party " reasonable opportunity of of being heard ". It is therefore clear that under (1) (2) (3) ; 425 cls. 9 and 10 of the Order, the Chief Controller performs a quasi judicial act and is therefore bound to follow the principles of natural justice in cancelling a licence. Clause 10 clearly and without any ambiguity describes the principles of natural justice by using the three well known words and phrase, viz., ' reasonable opportunity " and " of being heard They imply that when the charge is one of fraud the affected party is entitled to know the particulars of fraud alleged, to inspect the documents on the basis of which fraud is imputed to him and to a personal hearing to explain his case and to absolve himself of the charge made against him. Without these elementary safeguards provided by the authority, the opportunity to be heard given to the licensee becomes an empty formality. With this background I shall scrutinize the relevant facts to ascertain whether any such reasonable opportunity was given to the petitioners in this case. The question falls to be decided only on the affidavits filed by the parties. I shall assume for the purpose of this petition that the affidavit filed by the Chief Controller represents what all had taken place between him and the representatives of the Company. The notice dated September 24, 1958, issued to the petitioners laconically states that 'the licences granted by the Joint Controller to the Company were fraudulently obtained and therefore it was notified that the Government of India, in exercise of the powers specified in paragraph 9 of the Order proposed to cancel the said licences unless sufficient cause against the proposed action was furnished to the Chief Controller within ten days of the date of the issue of the notice. On receipt of the said notice, the petitioner Company sent a telegram through their Solicitors requesting the Chief Controller not to publish the said notification. On September 26, 1958, the Company 's Solicitors sent another telegram to the Chief Controller requesting him to give them the particulars of the alleged fraud and to give them an appointment for inspection of papers and documents relied upon by the Chief Controller. On September 27, 1958, the Company sent a letter to 426 the Chief Controller pointing out the relevant facts and stating that the petitioner Company had accepted the licences honestly and had at no time any reason to doubt the bona fides of the grant of the licences to them; that they suspected they were victims of foulplay by some persons interested in causing damage to them and to their reputation; that Mr. B. K. Parekh, a Director of the petitioner Company, and the Company 's Solicitor, Mr. Hooseini Doctor, met the Chief Controller on September 30, 1958, and handed over the explanation to him and also personally told him that in the absence of any particulars of the alleged fraud and without inspection of the papers relied upon by the Chief Controller, it was not possible for the petitioner Company to give a complete explanation and that the petitioners reserved their right to give further explanation on getting the said particulars and inspection of the said papers. They also requested the Chief Controller to give the Company a personal hearing to meet the charges after giving the necessary particulars and the inspection of papers asked for. The Chief Controller told them that the issue of the licences had not been authorized by him as they purported to be and that they had been obtained fraudulently, though at that stage he was not able to say how exactly and by whom the fraud was committed. He also did not give them the particulars of fraud. The Director of the Company suggested that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti Muslim feeling amongst the employees of the Company. On behalf of the petitioner Company, the Chief Controller was told that it was not possible for the Company to give a complete explanation and that they reserved their right to give further explanation. The petitioners were not allowed inspection of the papers. By their letter dated October 3, 1958, the Company recorded what took place at the said interview and sent it to the Chief Controller. The petitioners again wrote another letter to the ' Chief Controller reminding him that they had not received any particulars of the alleged fraud. This letter was personally handed over to Mr. Sundaram, 497 the Director of Administration in the Office of the Chief Controller on October 14, 1958. At that interview, Mr. Sundaram, told the petitioners that the recommendations against which the disputed licences were granted were not genuine. On October 16, 1958, the Chief Controller cancelled the said five licences issued to the petitioner Company. On the aforesaid facts, which we have assumed for the purpose of this petition, can it be said that the Chief Controller gave the petitioners a "reasonable opportunity of being heard " to enable them to establish that no fraud had been committed in getting the said licences ? The learned Solicitor General, appearing for the respondents, contended that the Company admitted the fraud, that their only defence was that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti Muslim feeling amongst the employees of the Company and that therefore the fact that the Chief Controller told the petitioners that the issue of the licences had not been authorized by him and the fact that Mr. Sundaram told the petitioners on October 14, 1958, that the recommendations against which the disputed licences were granted to the petitioners were not genuine, were, in the circumstances, sufficient disclosure of the particulars of fraud and that, therefore, reasonable opportunity within the meaning of cl. 10 of the order had been given to the petitioners. I find it very difficult to accept this argument. The argument assumes that the petitioner Company accepted the version given by the Chief Controller or by Mr. Sundaram. For the purpose of this petition it must be assumed that the petitioners were innocent. The notice was given to them to show cause why the licences given to them should not be cancelled on the ground of fraud. By letters and in person they requested the Chief Controller to give them the particulars of the fraud, and to allow them to inspect the relevant documents so that they might give a further explanation to show cause against the cancellation of the licences. The affidavit filed by the Chief Controller only discloses that he, in his conversations with the Solicitor and the Director of 428 the Company, mentioned to them that he did not issue the licences. In the affidavit he admits that they asked for particulars and for the inspection of the documents; but he says that the petitioners were told sufficiently what was against them and their demand for the inspection of the papers was mischievous. But what he told them about the particulars of the alleged fraud is, in his own words: " I told them that the issue of the licences had not been authorised by me as they purported to be and that they had been obtained fraudulently, though at that stage I was unable to say how exactly and by whom the fraud was committed. " The conversation with Mr. Sundaram on October 14, 1958, does not carry the matter further. He has not been authorized by the Central Government to make an enquiry and the fact that he told the petitioners that the recommendations against which the disputed licences were granted were not genuine, even if true, does not carry the matter any further. The fact, therefore, remains that notwithstanding specific request by the petitioners no particulars were furnished to them, no facilities for inspection of the relevant documents given and no date was fixed for the enquiry in regard to the alleged fraud. The learned Solicitor General asked, what was that that the petitioners could have gained if the particulars were given and if they were allowed to inspect the relevant documents? This is a lopsided way of looking at things. The question should have been, what reasonable opportunity to be heard was given to the petitioners to establish their innocence ? That apart, without apportioning any blame either on the petitioners or on the respondents, many possibilities can be visualized, viz., (i) the petitioners were guilty of fraud; they knew that their applications were rejected by the Chief Controller, they got similar applications surreptitiously introduced in the Bombay Office with forged recommendations under the signature of the Deputy Chief Controller, New Delhi, Mr. M. L. Gupta, and obtained the licences by practising fraud on the Joint Chief Controller, Bombay; (ii) a third party, 429 presumably a rival businessman or members of the staff of the Company, evolved a complicated scheme of fraud to cause damage to the Company and their reputation. the Company 's enemies came to know that the applications of the Company were rejected, then forged fresh applications, got them surreptitiously introduced in the Bombay Office and got the licences issued in favour of the petitioners: this is a rather far fetched theory; (iii) after the applications were rejected, fresh applications were filed in the New Delhi Office, got forwarded to the Joint Chief Controller, Bombay, with the directions issued by the Deputy Chief Controller, New Delhi; (iv) the original applications filed by the Com pany were ordered, and not rejected, by the Chief Controller or his Deputy and they were sent in due course along with the recommendations duly signed by the Deputy Chief Controller to the Joint Controller, Bombay, and that the licences were issued in the usual course: the Office of the Chief Controller New Delhi, after realizing that licences were issued contrary to rules or orders that licences should not be issued in respect of goods to be imported from soft currency areas, set up a false case of the original applications being rejected and the fresh applications substituted in the Bombay Office. The aforesaid are some of the possibilities and there may be many others. When notice was issued to the petitioners on the ground of fraud, they were certainly entitled to the particulars thereof. The Chief Controller could have given the following particulars: (i) the petitioners ' applications were rejected on a particular date; (ii) the orders of rejection were communicated to them on a particular date; (iii) that he did not issue any letters to the petitioners as regards the forwarding of their applications or the recommendations to the Joint Chief Controller, Bombay; (iv) after the rejection of their applications, the Office of the Chief Controller did not receive any letters from the petitioners; (v) that the applications on which the licences were issued were not the same applications sent to the Delhi Office; (vi) that the signature of Mr. 55 430 M. L. Gupta was forged; and (vii) that there is nothing in the Bombay Office to show that they received any applications from the Delhi Office. If these particulars were given to the petitioners, they might have by inspecting the documents proved that there was no fraud, that there was no order rejecting the applications, that the despatch book showed that the applications were forwarded to the Bombay Office and that the original applications were not in that Office, that the despatch book and the receipt book showed the correspondence that passed between the Chief Controller and the petitioners, and that the signature of Mr. Gupta on the recommendations was genuine. It is not as if the petitioners admitted that they committed the fraud. When they were confronted with the notice, unless the particulars were given to them and the documents shown to them, it was not possible for them to know whether a fraud was committed at all and, if committed, how was it committed. Only for the purpose of explaining that no fraud was committed by them, they asked for the particulars, for inspection of the relevant documents and for a personal hearing: all these were denied to them. In the circumstances, I find it not possible to hold that the petitioners were given reasonable opportunity of being heard within the meaning of cl. 10 of the Order. The stakes are high and the order of cancellation was made arbitrarily and in utter disregard of the principles of natural justice. I should not be understood to have expressed any opinion on the merits of the case. It may be, or it may not be, that the petitioners were guilty of fraud; but they should have been given a reasonable opportunity of being heard before they were condemned as having committed the fraud and their licences were cancelled. 1, therefore, direct the issue of a writ of certiorari quashing the order of the Chief Controller cancelling the licences granted to the petitioners. ORDER OF COURT In accordance with the opinion of the majority the Petition is dismissed with costs.

The petitioner company applied to the Chief Controller of Imports and Exports, Government of India, New Delhi, for five import licences and obtained them from the joint Chief Controller of Imports and Exports, Bombay, purporting to grant the same on the authority of the former, and placed orders for goods covered by these licences, some of which actually arrived in Bombay. Before the goods could be cleared, the company received a notice from the Chief Controller stating that whereas there were reasons to believe that these five licences had been obtained by fraud, the Government, in exercise of the power specified in cl. 9 of the Imports Control Order, 1955, proposed to cancel them unless sufficient cause was shown before the Chief Controller. The petitioner company by a telegram requested the Chief Controller to furnish particulars of the alleged fraud and give an opportunity to inspect the relevant papers and documents relied upon by him. By a letter it gave an explanation stating that the petitioners were the victims of foul play by some one bent upon causing damage to them and bringing them in the bad books of the authorities. In that letter the company reserved to itself the right to add to, amend or alter the explanation after it had obtained inspection of the said papers and the particulars of the alleged fraud. The representatives of the company met the Chief Controller as also the Director of Administration of his office and renewed the request for the said particulars and the inspection. No particulars were furnished, nor was inspection allowed, but the Chief Controller told the representatives that the issue of the licences had not been authorised by him and the same had been fraudulently obtained and the Director of Administration told them that the recommendations against which the disputed licences were granted by the joint Controller were not genuine, but the said representatives, instead of denying the fraud alleged, ascribed it to some other party as they had done before. It was contended on behalf of the petitioners that cl. 9(a) of the Imports Control Order, 1955, infringed articles 19(1)(f) and (g) and 31 of the Constitution and that no reasonable opportunity was given to the petitioners of being heard as required by cl. 10 of the Imports Control Order. 409 Held (per Sinha, C.J., Gajendragadkar, Das Gupta and Shah, JJ.), that cl. 9 of the Imports Control Order does not give unbridled authority to cancel a licence nor is there any scope for arbitrary action in this regard in view of the provision of cl. 10 of the Order which amply fulfils the requirement of natural justice. It is not correct to contend that before a licence can be cancelled under cl. 9, it must be shown not merely that fraud was committed but that the licensee was also a party to the fraud. The entire scheme of control and regulation of imports by licences being based on the grant of licences on a correct statement of fact, that basis disappears if the grant is obtained by fraud or misrepresentation, and it is wholly immaterial whether the licensee is or is not a party to such fraud or misrepresentation. The provision for cancellation of a licence under cl. 9, therefore, constitutes. a reasonable restriction on the rights conferred by article 19(1)(f) and (g) of the Constitution and, being imposed by a valid law, cannot contravene article 31. There can be no absolute standard of reasonableness and what constitutes reasonable opportunity of being heard in the peculiar facts and circumstances of each case is a matter to be decided by the Court. The Court has to satisfy itself that the person against whom action was proposed had a fair chance of convincing the authority that the grounds on which such action was proposed were either non existent or did not justify it. So judged, it could not be said that the omission to give the petitioners, in the instant case, who were more concerned to show that the company was not a party to the fraud than that no fraud had at all been committed, further particulars or inspection of the papers amounted to a denial of reasonable opportunity of being heard. Per Subba Rao, J. Judged in the light of well recognised principles, there can be no doubt that the Chief Controller of Imports, acting under cls. 9 and 10 of the Imports Control Order, 1955, performs a quasi judicial function and is bound to follow the principles of natural justice in cancelling a licence. Rex vs Electricity Commissioners, Ex Parte London Electricity joint Committee Co., , Rex vs London County Council, Ex Parte Entertainments Protection Association Ltd., and Province of Bombay vs Khusaldas section Advani, ; , referred to. The language of cl. 10 clearly indicates that when the charge is one of fraud, the affected party is entitled to know the particulars of the alleged fraud and to inspect the documents on which it is based and to a personal hearing. It was impossible, in the facts and circumstances of this case, to hold that the petitioners, who did not admit having committed the fraud and must be assumed to be innocent, were afforded reasonable opportunity of being heard within the meaning of 410 cl. 10 of the Order to prove their innocence. Unless the particulars were given to them and the documents shown to them it was not possible for them to know if any fraud was at all committed and if so by whom. The order of cancellation of the licences was, therefore, arbitrary and must be quashed.

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: Civil Appeal No. 213 of 1955. Appeal from the judgment and order dated June 26, 1953 of the Calcutta High Court in I.T.R. No. 34 of 1952. A.V. Viswanatha Sastri, Y. C. Talukdar and Sukumar Ghose, for the appellant. K.N Rajagopal Sastri and. D. Gupta, for the respondent. May 12. The Judgment of the Court was delivered by BHAGWATI J. This appeal with a certificate under article 135 of the Constitution read with section 66A(2) of the Indian Income tax Act raises the question as to whether the appellant ",as entitled to a deduction of Rs. 24,809 in the computation of its profits and gains for the assessment year 1948 49. The appellant deals in land and property and carries on land developing business and in the course of the said business, it buys land, develops it so as to make it fit for building purposes and sells it at a profit in plots. The developments undertaken are in the main, 187 that roads are to be laid out, a drainage system to be provided and street lights installed and they are to be maintained till the sample are taken over by the Muncipality. The whole of the development is not carried out before the land is sold, nor the whole of the sale price received in cash at the time of the sales. The procedure followed is that when a plot is sold, the purchaser pays about 25 % of the purchase price in cash and undertakes to pay the balance with interest at a certain rate in ten annual installments which he secures by creating a charge on the land purchased. The appellant, in its turn, undertakes to carry out the developments within six months from the date of the, sale but this time is not of the essence of the contract and what the appellant undertakes is to carry out the 'developments within a reasonable time. The tinderbox is incorporated in the deed of sale itself, whereas the security is given by the purchaser by means of a separate document. In the accounting year relating to the assessment year 1948 49 the appellant sold a number of plots and received a portion of the sale price from the purchasers according to the scheme mentioned above. The appellant maintains its accounts in the mercantile method under which money not actually received but only treated as received on the basis that it was due and receivable is entered in the books of account on the credit side. Even though the appellant did not receive the whole of the price, viz., Rs. 43,692 11 9, it entered in the credit side of its books of account the whole of that sum representing the full sale price of the lands sold during the accounting year though only a sum of Rs. 29,392 11 9 was actually received in cash from the purchaser and the balance of Its. 14,300 represented the unpaid balance retained by the purchasers the payment of which was secured by creating charge on the said lands as also the interest received or receivable in the year of account tinder the deeds of charge. The whole of this sum of Rs. 43,692 11 9 was, however, credited in the books of account by the appellant according to the mercantile system of accounting adopted by it. 188 In so far as under the terms of the deeds of sale the appellant had undertaken to carry out the developments within six months from the date of sale it estimated a sum of Rs. 24,809 as the expenditure for the developments to be carried out in respect of the plots which had been sold during the year and debited the same in its books of account on the ground that the liability for the said sum of Rs. 24,809 had actually arisen, the appellant being bound to provide the facilities it had undertaken to do, even though no part of that amount represented any expenditure actually made during that year. In the course of its assessment to income tax for the year 1948 49, the appellant claimed a deduction of the said sum of Rs. 24,809 in the computation of the profits and gains of its business. The Income tax Officer disallowed that claim on the ground that the expenses had not been actually incurred in the year of account and also on the ground that the estimate had not been proved to be based on a consideration of the real expenses which the Company would have to incur for the purpose. The Appellate Assistant Commissioner, on appeal, confirmed the disallowance by the I.T.O. on the ground that there was as yet no accrued liability and on the further ground that as the development would be carried out in the future, the expenditure estimated at current prices could not be allowed. On appeal taken by the appellant before the Income. tax Appellate Tribunal, the Tribunal, held that it was by no means certain what the actual cost would be when the developments were carried out and that although the appellant had undertaken to carry out certain developments, it could bring expenses into account only when the expenses were actually incurred. The Tribunal accordingly dismissed the appeal. The appellant thereafter made an application before the Tribunal requiring it to refer to the High Court under section 66(1) of the Income tax Act certain questions of law arising out of its order. The Tribunal thereupon stated a case and referred the following question to the High Court for its decision: 189 Whether on the facts and circumstances stated above, the sum of Rs. 24,809 can legally be allowed as an expense of the year under consideration. " The statement of case drawn by the Tribunal was severely criticized by the High Court as under: " Unfortunately, the treatment of the question by the authorities below has been of a somewhat summary character, presumably because it was raised and argued before them in a superficial form. But even if such was the case, there is hardly any justification for the Tribunal failing to realise it least what facts were required to be found and stated. The statement of case is sketchy and bare and like most of the statements we have to deal with during this session, has hardly any appearance of a case seriously stated. " In spite of the above observations the High Court dealt with the question and after dealing exhaustively with the arguments which were urged be fore it by the learned Counsel for the appellant answered the question in the negative. On an application made by the appellant, however, the High Court granted the requisite certificate under article 135 of the Constitution to appeal to this Court and lience, this appeal. The question which really arises for our determination in this appeal is whether having regard to the fact that the appellant 's method of accounting, viz., the Mercantile method was accepted by the Income Tax Officer and the receipts appearing in the books of account included the unpaid balance of the sale price of the plots in question, the amount of liability undertaken by the appellant to earn those receipts was to be deducted even if there had not been actual disbursement made by it during the accounting year. Put in other words, the question was whether in view of the fact that the sum of Rs. 43,692 11 9 had been entered on the credit side in the books of account even though it was not money actually received but only money treated as received on the basis that it. was due and receivable, the sum of Rs. 24,809 which had been entered as debit, being the liability of the appellant 190 undertaken by it to earn those receipts, should be deducted in determining the taxable profits and gains of the appellant. The mercantile system of accounting is well known and this method has been explained in a judgment of this Court in Keshav Mills Ltd. vs Commissioner of Income tax, Bombay (1). " That system brings into credit what is due, immediately it becomes legally due and before it is actually received and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. " The main ground on which the claim of the appellant for deducting this sum of Rs. 24,809 ",as disallowed by all the authorities below was that the expenditure was not actually incurred in the year of account, it was by no means certain what the actual cost would be when the developments " are carried out and that there was as yet no accrued liability but only a contingent liability undertaken by the appellant, even though the undertaking was incorporated in the deeds of sale themselves. The following were the developments undertaken to be carried out by the appellant as appears from the order of the Appellate Assistant Commissioner: " There was a condition in the Conveyance deeds that the appellant does hereby covenant with the purchaser that the appellant shall complete the construction of roads, drains, provide suitable pucca surface drains on both sides of the roads and shall also make arrangements for lighting up the said roads and shall maintain the said roads, drains, lights till the same are taken over by the Municipal Besides provision for roads, drains, etc. , t~he ~Deed provides for filling u~p of low lands and there is a clause in the Conveyance Deed which shows that the ~appellant 's shall at his own cost ~fi.11 the low lands and tank with earth and bring the same to road level. " (~1) II9531 ~S.C.R. ~95o, 958~ 191 This undertaking having been incorporated in the deeds of sale themselves there was certainly a liability undertaken by the appellant to carry out these developments within six months from the dates of those deeds. Time was of course not of the essence of the contract and the appellant therefore was at liberty to carry out that undertaking within a reasonable time. That, however, did not absolve it in any manner whatever from carrying out the undertaking and the purchasers were in a position to enforce the undertaking by taking appropriate proceedings in that behalf. Reliance was placed on behalf of the Revenue on the case of Peter Merchant Ltd. vs Stedeford (Inspector of Taxes) (1) in which a distinction was drawn between an actual i.e., legal liability, which is deductible, and a liability which is future or contingent and for which no deduction can be made. The facts of that case were that the Company which carried on the business of managing factory canteens, had contracted with a factory owner to maintain the crockery, cutlery and utensils used in the canteen otherwise known as the light equipment in its original quantity and quality. The cost of replacement was admittedly a proper deduction in computing profits, as was also any sum paid to a factory owner in settlement of the value of shortages on termination of the contract. Owing to war and. other circumstances it was impossible or impracticable for the Company to obtain replacements in some cases, and the obligations under the contracts with the factory owners in those cases still remained to be performed. in the accounts for the year deductions had been made both of the amounts actually expended on replacements and the amounts which the company was liable to expend when the equipment became available. The Company claimed to be entitled to deduct in computing its profits amounts representing at current prices, the liability to effect replacements as soon as the required equipment became obtainable. The former amounts were allowed as deductions, and the latter the Court of Appeal (reversing the decision (1) 192 of the Court below) held not to be deductible. The basis of the decision was that the real liability under the contract was contingent, not actual, since the obligations of the company were not such that it might be sued for the cost of 'replacements at current prices, but only for possible damages for breach of contract in the event of the factory owner preferring a claim under the contract, and since no legal liability could arise until such a claim was made, the liability had to be regarded as contingent and not deductible. It is clear from the above that on the facts and circumstances of that case the Court held that it was not an accrued liability but was merely a contingent one and if that was the case only the sums actually expended could be deducted and not those which the company was liable to expend in the future. Simon in his " Income tax ", Second Edition, Vol. II, at p. 204 under the caption " Accrued Liability " observes as under, after citing the case mentioned above: . "In cases, however, where an actual liability exists, as is the case with accrued expenses, a deduction is allowable; and this is not affected by the fact that the amount of the liability and the deduction will subsequently have to be varied. A liability, the amount of which is deductible for income tax purposes, is one which is actually existing at the time of making the deduction, and is distinct from the type of liability accruing in Peter Merchant8 Ltd. vs Stedeford (lnspector of Taxes) which although allowable on accountancy principles, is not deductible for the purpose of income tax. " Approaching the question before us in the light of the observations made above we have got to determine what was the nature of the liability which was undertaken by the appellant in regard to the development of the lands in question, whether it was an accrued liability or was one which was contingent on the happening of a certain event in the future. There is no doubt that the undertaking to carry out the developments within six months from the dates of 193 the deeds of sale was incorporated therein and that undertaking was unconditional, the appellant binding itself absolutely to carry out the same. It was not dependent on any condition being fulfilled or the happening of any event, the only condition being that it was to be carried out within six months which in view of the fact that the time was not of the essence of the contract meant a reasonable time. Whatever may be considered a reasonable time under the circumstances of the case, the setting up of that time limit did not prescribe any condition for the carrying out of that undertaking and the undertaking was absolute interms. If that undertaking imported any liability on the appellant the liability had already accrued on the dates of the deeds of sale, though that liability was to be discharged at a future date. It was thus an accrued liability and the estimated expenditure which would be incurred in discharging the same could very well be deducted from the profits and gains of the business. Inasmuch as the liability which had thug accrued during the accounting year was to be discharged at a future date the amount to be expended in the discharge of that liability would have to be estimated in order that under the mercantile system of accounting the amount could be debited before it was actually disbursed. The difficulty in the estimation thereof again would not convert an accrued liability into a conditional one, because it is always open to the Income tax authorities concerned to arrive at a proper estimate thereof having regard to all the circumstances of the case. That it can be so done is illustrated by Gold Coast Selection Trust Ltd. v Humphrey (Inspector of Taxes) (1) where a particular asset which could not be immediately realised in a commercial sense was valued in money for income tax Purposes in the year of its receipt and it was observed by Viscount Simon: " It seems to me that it is not correct to say that an asset, such as this block of shares, cannot be valued in money for income tax purposes in the (1) , 469. 25 194 year of its receipt because it cannot, in a commercial sense, be immediately realized. That is no reason for saying that it is incapable of being valued, though, 'if its realization cannot take place promptly, that may be a reason why the money figure set against it at the earlier date should be reduced in order to allow for an appropriate interval. Supposing, for example, the contract conferring the asset on the taxpayer included a stipulation that the asset should not be realized by the transferee for five years, and that if an attempt was made to realise it before that time, the property in it should revert to the transferor. This might seriously reduce the value of the asset when received, but it is no reason for saving that when received it must be regarded as having no value at all. The Commissioners, as its seems to me, in fixing what money equivalent should be taken as representing the asset, must fix an appropriate money value as at the end of the period to which the appellant 's accounts are made up by taking all the circumstances into consideration. " As in the case of assets received during the accounting year which could not be immediately realized in a commercial sense, so in the case of liabilities which have already accrued during the accounting year, though they may not have to be discharged till a later date. It will be always open to the Income tax authorities to fix an appropriate money value of that liability as at the end of the accounting period by taking all the circumstances into consideration and the estimate of expenses given by the assessee would be liable to scrutiny at their hands having regard to all the facts and circumstances of the case. The High Court was, therefore, clearly in error when it stated: " In view of all the circumstances of the case it must in my opinion, be held that the amounts of sale price, not received in cash, were also received and for the purpose of earning the receipts the assessee spent, besides giving the lands, nothing more than a promise. Since the whole amount was actually received in the year of account before and 195 without making the promised expenditure, no question of allowing a deduction of any expenditure from such receipts of the year arises. " If then the estimated expenses which would have to be incurred in duly discharging that liability which was undertaken by the appellant and was incorporated in the deeds of sale could be deducted in accordance with the mercantile system of accounting adopted by the appellant and accepted by the I.T.O., is there anything in the Income tax Act which would prevent this debit being allowed as a deduction in the computation of the profits and gains of the appellant 's business? The appellant, had, it appears, claimed this deduction as and by way of expenditure wholly laid out for the purposes of its business under section 10(2)(xv) of the Income tax Act. On an interpretation of that provision, the High Court was inclined to hold, though it did not decide the question, that to the extent that a definite liability had accrued about which all preliminary proceedings causing the accrual of the liability in a concluded form had already been gone through although the actual disbursement had not yet taken place, section 10(2)(xv) would cover accrued liabilities though the amount may not actually have been expended on the footing that the liability being certain, the amount was as good as spent and on that basis there would be room in the clause for debits which are proper debits under the mercantile system of accounting. It, however, distinguished the present case on the ground that the liability here was a floating liability, the measure of which depended upon the will of the appellant and the discharge of which rested only in a promise and that the expenses were entirely at large and the development work itself merely so. Apart, however, from the question whether section 10(2) (xv) of the Income tax Act would apply to the facts of the present case, the case is in our opinion, well within the purview of section 10 (1) of the Income tax Act. The appellant here is being. assessed in respect of the profits and gains of its business and the profits and gains of the business cannot be determined unless and until he expenses or the obligations which have been incurred are set off against the receipt 's The expression profits and gains has to be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipts is deducted therefrom whether the expenditure is actually incurred or the liability in respect thereof has accrued even though it may have to be discharged at some future date. As was observed by Lord Herschell in Bussel vs Town and County Bank, Ltd.( '): " The duty is to be charged upon I a sum not less than the full amount of the balance of the profits or gains of the trade, manufacture, adventure, or concern '; and it appears to me that that language implies that for the purpose of arriving at the balance of profits all that expenditure which is necessary for the purposes of earning the receipts must be deducted, otherwise you do not arrive at the balance of profits, indeed, otherwise you do not ascertain, and ' cannot ascertain, whether there is such a thing as profit or not. The profit of a trade or business is the surplus by which the receipts from the trade or business exceed the expenditure necessary for the purpose of earning those receipts. That seems to me to be the meaning of the word " profits " in relation to any trade or business. Unless and until you have ascertained that there is such a balance, nothing exists to which the name " profits can properly be applied. " A similar opinion was expressed in the Gresham Life Assurance Society V. Styles (2) : " When we speak of the profits or gains of a trader we mean that which he had made by his trading. Whether there be such a thing as profit or gain can only be ascertained by setting against the receipts the expenditure or obligations to which they have given rise. " These are no doubt observations from the English cases dealing with English statutes of Income tax, but the general principles which can he deduced therefrom (1) , 424 (2) 197 are, nevertheless, applicable here and it was stated by Lord Macmillan in Pondicherry Railway Co., Ltd. vs Commissioner of Income tax, Madras (1) " English authorities can only be utilised with caution in the consideration of Indian Income tax cases owing to the difference in the relevant legislation, but the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society vs Styles (supra), is of general application unaffected by the specialities of the English Tax system. " The thing to be taxed", said his Lordship, "is the amount of profits or gains ". The word " profits ", I think, is to be understood in its natural and proper sense in a sense which no commercial man would misunderstand. " ' It may be useful to observe at this stage that prior to the amendment of the Indian Income tax Act in 1939, bad and doubtful debts were not treated as deductible allowance for the purpose of computation of profits or gains of a business, The Privy Council in the Income tax Commissioner vs Chitnavis observed: " Although the Act nowhere in terms authorises the deduction of bad debts of a business, such a deduction is necessarily allowable. What are chargeable to income tax in respect of a business are the profits and gains of a year; and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred otherwise you would not arrive at the true profits and gains. " The High Court in disallowing the claim of the appellant in the present case only considered the provisions of section 10 (2)(xv) of the Act and came to the conclusion that on a strict interpretation of those provisions the sum of Rs. 24,809 was not an allowable deduction. Its attention was drawn by the learned Counsel for the appellant to the provisions of section 10(1) of the Act also but it negatived this argument observing that under the Indian Act, the profits must be (1) (193i) L. R. 58 1. A. 239, 252. (2) (1932) L. R. 59 I. A. 290, 296. 198 determined by the method of making the statutory deductions from the receipts and any deduction from the business receipts, if it was to be allowed, must be brought under one or the other of the deductions mentioned in section 10(2) and that there was no scope for any preliminary deduction under general principles. It was, however, held by this Court in Badridas Daga vs The Commissioner of Income tax(1) " It is to be noted that while section 10(1) imposes a charge on the profits or gains of a trade, it does not provide how those profits are to be computed. Section 10(2) enumerates various items which are admissible as deductions, but it is well settled that they are not exhaustive of all allowances which could be made in ascertaining profits taxable under section 10(1). " Venkatarama Aiyar, J., who delivered the Judgment of this Court then proceeded to discuss the cases of Commissioner of Income tax vs Chitnavis(2), Gresham Life Assurance Society vs Styles (3) and Pondicherry Railway Co. vs Income tax Commissioner(4), and observed:" The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it. If that is established, then the deduction must be allowed, provided of course there is no prohibition against it, express or implied, in the Act. Turning now to the facts of the present case, we find that the sum of Rs. 24,809 represented the estimated expenditure which had to be incurred by the appellant in discharging a liability which it had already undertaken under the terms of the deeds of sale of the lands in question and was an accrued liability which according to the mercantile system of accounting the appellant was entitled to debit in its books of account (1) , 14. (2) (1932) L.R. 59 I.A. 290, 296. (3) (4) (1931) L.R. 58 I.A. 239, 252. 199 for the accounting year as against the receipts of Rs. 43,692 11 9 which represented the sale proceeds of the said lands. Even under section 10(2) of the Income tax Act, it might. possibly be urged that the word " expended was capable of being interpreted as " expendable "or to be expended " at least in a case where a liability to incur the said expenses had been actually incurred by the assessee who adopted the mercantile system of accounting and the debit of Rs. 24,809 was thus a proper debit in the present case. We need not however base our decision on any such consideration. We are definitely of opinion that the sum of Rs. 24,809 represented the estimated amount which would have to be expended by the appellant in the course of carrying on its business and was incidental to the same and having regard to the accepted commercial practice and trading principles was a deduction which, if there was no specific provision for it under section 10(2) of the Act was certainly allowable deduction, in arriving at the profits and gains of the business of the appellant under section 10(1) of the Act, there being no prohibition against it, express or implied in the Act. It is to be noted that the appellant had led evidence before the Income tax authorities in regard to this estimated expenditure of Rs. 24,809 and no exception was taken to the same in regard to the quantum, though the permissibility of such a deduction was questioned by them relying upon the provisions of s.10(2) of the Act. It therefore follows that the conclusion reached by the High Court in regard to the disallowance of Rs. 24,809 was wrong and it should have answered the referred question in the affirmative. Before we conclude, we are bound to observe that having accepted the receipts of Rs. 43,692 11 9 in their totality even though a sum of Rs. 29,392 11 9 only was actually received by the appellant in cash, thus making the ' appellant liable for income tax on a sum of Rs. 14,300 which had not been received by it during the accounting year, it was hardly open to the Revenue to urge that the sum of Rs. 24,809 should not have been allowed as a permissible deduction before 200 arriving at the profits or gains of the appellant which were liable to tax. Consistently enough with this attitude, the Revenue ought to have expressed its willingness to treat only a sum of Rs. 29,392 11 9 as the actual receipt of the appellant during the accounting year and made up the computation of the profits and gains of the appellant 's business on that basis. The Revenue, however, did nothing of the sort and insisted upon having its pound of flesh, asking us to delete the whole of the item of Rs. 24,809 from the debit side of the account which it was certainly not entitled to do. We accordingly allow the appeal, set aside the judgment of the High Court and answer the referred question in the affirmative. The respondent will of course pay the appellant 's costs throughout. Appeal allowed.

The appellant company carried on land developing business and sold land after development on a profit. The whole of the development was not carried out before the land was sold nor the whole of the sale price received in cash at the time of the sale. In the accounting year in question the appellant sold a number of plots and received a portion of the sale price but as it maintained its accounts in the mercantile method it entered the whole price receivable, viz., Rs. 43,692 11 9, in credit side though only Rs. 29,392 11 9 was actually received and debited a sum of Rs. 24,809, being the estimated expenditure for the developments it had, by terms incorporated in the deeds of sale, under taken to carry out within six months thereof, although no part of it was actually spent during that year. The appellant claimed a deduction of the said sum of RS. 24,809 in computation of the profits and gains of its business during the assessment year. The Income tax Officer, while accepting the method of accounting adopted by the appellant, disallowed the 'claim on the ground that no expenses had actually been incurred and the estimate was only a probable one. The Appellate Assistant Commissioner as well as the Income tax Appellate Tribunal confirmed the disallowance on appeals and the High Court, on a reference under section 66(1) of the Income tax Act held against the appellant. The question was whether the deduction claimed was a legally allowable expense of the year in question. Held, that the liability which was undertaken by the appel lant under the deeds of sale was an accrued liability and not a contingent one. Although the time of six months was not of the essence of the contract, the undertaking it had given was unconditional and absolute in terms and the liability must be held to have accrued on the execution of the deeds of sale though it was to be discharged at a future date. Keshav Mills Ltd. vs Commissioner of Income tax, Bombay, [1953] S C.R. 950, referred to. Peter Meychant Ltd. vs Stedeford (Inspector of Taxes), distinguished. 24 186 The difficulty in estimating such a liability for purposes of debit under the mercantile system of accounting could be no ground for treating an accrued liability as a conditional one, since it was always open to the Income tax authorities to arrive a proper estimate thereof having regard to all the circumstances of the case. Gold Coast Selection Trust Ltd. vs Humnphrey (Inspector Taxes), [19481 A.C. 459, referred to. Regard being had, therefore, to the accepted commercial practice and trading principles, the estimated deduction, even if it did not come under any of the specific provisions Of section 10(2) of the Act, was certainly an allowable deduction under section 10(1) of the Act, there being no prohibition, either express or implied, against it in the Act and, consequently, the question must be answered in the affirmative. Badridas Daga vs The Conimissioncr of Income tax, ; Russel vs Town and Country Bank Ltd., ; Gyesham Life Assurance Society, vs Styles, ; Pondichcry Railway co Ltd. vs Commissioner of Income tax, Madras, (1913) L.R. 58 .A. 239 and Income tax Commissioner vs Chitnavis, (1932) L.R. 59 I.A. 290, referred to.

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Civil Appeal No. 254 of 1954. Appeal by special leave from the judgment and order dated February 19, 1952, of the Patna High Court in Misc. Case No. 244 of 1949. B. Sen, section K. Majumdar and I. N. Shrojj, for the appellant. M. C. Setalvad, Attorney General for India, B. K. Saran and R. C. Prasad, for the respondent. May 15. The Judgment of the Court was delivered by HIDAYATULLAH J. This appeal, with the special leave of this Court, has been filed by Maharajadhiraja 334 Sir Kameshwar Singh of Darbhanga (hereinafter referred to as the assessee) against the judgment of the High Court of Patna dated February 19, 1952, by which the High Court answered in the affirmative the following: two questions referred to it under section 25(1) of the Bihar Agricultural : (1) " Whether in view of the circumstances of the case, and particularly the manner in which, after due consideration, the learned Agricultural Incometax Officer in his first judgment dated the 5th January, 1946, had held that the assessee was not liable to be assessed for the receipt on account of the zarpeshgi lease, the learned Agricultural Incometax Officer has jurisdiction to revise his own order under section 26 of the Act; and (2) Whether if he had the jurisdiction to revise his own order, under section 26 of the Act, the income from the zarpeshgi lease of the assessee was taxable under the Act. " The facts of the case lie within a very narrow com. For the assessment year 1944 45 which corresponded to the year of account 1351 Fasli, the assessee returned Rs. 37,43,520 as his agricultural income. He claimed a deduction of Rs. 9,42,137 3 10 1/2 on account of land revenue, rent etc., including a sum of Rs. 2,82,192 shown to have been paid to the Tekari Raj from which two leasehold properties were taken on zarpeshgi lease by indentures dated August 15, 1931, and January 31, 1936, respectively. The amount was sought to be deducted as a capital receipt. The Agricultural Income tax Officer of Darbhanga by his order dated December 28, 1945 accepted this contention, and exempted the amount from payment of agricultural income tax. He observed: " Out of Rs. 9,42,137 3 10 1/2 claimed on account of Land Revenue and rent, Rs. 2,82,192 is shown as payment to Tekari Raj and then taken towards the realisation of Zarpeshgi Loan to self. I have gone through the bond of Gaya Zarpeshgi Lease. This payment is allowed to the assessee, as it is a capital income according to the terms of the bond. At the 335 same time, I think, this amount of Rs. 2,82,192 should be treated as income to Tekari Raj and assessed in Gaya Circle along with other income of Tekari Raj as it is credited to that Raj by the assessee and then set off against the Zarpeshgi loan advanced to Tekari Raj. " The assessment was approved by the Assistant Commissioner of Agricultural Income tax on January 4, 1946, and on the day following, the Income tax Officer passed his formal order and issued a demand notice. The assessee paid two instalments out of three, when on March 22, 1946, the Agricultural Income tax Officer recorded the following order : " It appears that some agricultural income from Gaya Zarpeshgi lease which should have been taxed for the year 1944 45 (1351 Fasli) has escaped assessment. Issue notice under section 26 fixing the 20th May 1947. " After the assessee appeared, a supplementary assessment order was passed and Rs. 39,512 6 0 were assessed as tax on Rs. 2,52,879. In deciding the matter, the Agricultural Income tax Officer gave the following reasons: According to the terms of the lease the assessee is to remain in possession and enjoy the usufruct of the lands given in lease for a fixed number of years on payment of an annual thica rent of Rs. 1,000 to the lessor and thus satisfy himself for the entire amount of consideration money of the zarpeshgi lease in question. In fact, by this zarpeshgi lease the assessee has been given the grant of lands for a fixed term on a fixed rent. Whatever income is derived from these lands during the tenure of this lease, is the income of the assessee and as such it should be taxed in the hands of the assessee and not in the hands of the lessor." The Agricultural Income tax Officer purported to act under section 26 of the Bihar Agricultural (hereinafter referred to as the Act). The assessee appealed. The Commissioner of Agricultural Income tax reversed the decision. He pointed 336 out that the agricultural income from Tekari Raj property was returned by the assessee but was held to be exempt and thus could not be said ' to have escaped assessment so as to bring the case within section 26 of the Act. The Province of Bihar (as it was then called) ,moved the Board of Revenue, Bihar which by a resolution dated February 7, 1948, referred the two questions to the High Court of Patna. The Board did not express any opinion on the two questions. In the High Court, both the questions were answered in favour of the State of Bihar. Leave having been refused by the High Court, the assessee applied for, and obtained special leave from this Court. Section 26 of the Act, under which the Agricultural Income tax Officer purported to act is substantially the same as section 34 of the Indian , prior to its amendment. Necessarily, therefore, the rulings on the interpretation of the latter section were freely cited by the contending parties. Section 26 of the Act reads as follows: " If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year, or has been assessed at too low a rate, the Agricultural Income tax Officer may, at any time within one year of the end of that financial year, serve on the person liable to pay agricultural income tax on such agricultural income or, in the case of a company, on the principal officer thereof, " a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 17, and may proceed to assess or re assess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection: Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment, as the case may be. " For facility of reference, the previous section 34 before the amendment in 1948 of the Indian may likewise be quoted here. It read: 337 If in consequence of definite information which has come into his possession the Income tax Officer discovers that income, profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income tax Officer may, in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22, and may proceed to assess or re assess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits or gains not escaped assessment, or full assessment, as the case may be:. . The short question is whether income which was returned but was held to be exempt from tax could be said to have " escaped assessment " so that the Agricultural Income tax Officer could exercise his powers under section 26 of the Act to tax it. This question arising under section 34 of the Indian has been considered on many an occasion by the High Courts and also by the Privy Council and this Court. The Patna High Court has correctly pointed out that the preponderance of opinion is in favour of holding that such income can be said to have escaped assessment. The High Court in deciding that the Agricultural Income tax Officer had jurisdiction to revise his earlier assessment referred to the opening words of section 26, namely, " for any reason " and observed that it was 43 338 not necessary to give a restricted meaning to the word "escaped ", and that if an item of income was not charged to tax due to a mistake or oversight on the part of the taxing authorities, that item could well come within the term " escaped ". According to the High Court, the phrase " escaped assessment " was not confined to cases where there had been an inadvertent omission, but in view of the later part of the section "where income . has been assessed at too low a rate", included a case where there was a deliberate action. Learned counsel for the assessee contends that the generality of the words " any reasonhas no bearing upon the construction of the wordsescaped assessment ", that the word " assessment "does not connote the final determination to tax income but the entire process by which the result is reached, and that inasmuch as the income was actually returned and held to be exempt, there was no question of an "escaped assessment " because it passed through the processing of income. He also contends that the later part of the section which deals with assessment at too low a rate cannot be called in aid to decide when income can be said to have escaped assessment. He submits that the section has no application to cases where income is returned but is held to be not liable to tax and relied upon the following cases; Maharaja Bikram Kishore vs Province of Assam (1), Commissioner of Income tax vs Day Brothers (2), Madan Mohan Lal vs Commissioner of Income tax (3) (per Dalip Singh, J.) and Chimanram Motilal (Gold and Silver), Bombay vs Commissioner Of Income tax (Central), Bombay (4) (per Kania, J., as he then was). The learned Attorney General drew the attention of the Court to other cases in which the view has been taken that even if income is returned and deliberately not charged to tax, the condition required for the application of the section is fulfilled. He cited the following cases in support of his contention: AngloPersian Oil Co. (India) Ltd. vs Commissioner of IncometaX (5), P. C. Mullick and D. 0. Aich, In re( '), The (1)[1949] (2)[1936] (3)[19351 (4) BOM. (5) [1933] [ I.T.R. 129. (6) 339 Commissioner of Income tax vs Raja of Parlakimedi (1) Chimanram Moti Lal (Gold and Silver), Bombay vs Commissioner of Income tax (Central), Bombay (2) and Madan Mohan Lal vs Commissioner of Income tax (3). The learned Attorney General also relied strongly upon a recent decision of this Court in Kamal Singh vs Commissioner of Income tax, Bihar and Orissa (4), where Gajendragadkar, J., after a review of all the authorities, held that section 34 of the Indian Income tax Act was applicable to a case where an item of income was returned but deliberately and after consideration, was held to be not liable to tax. Learned counsel for the assessee contends that the point was left open in that case, and refers to Messrs. Chatturam Horilram Ltd. vs Commissioner of Income ' tax, Bihar and Orissa(5) as having held the contrary. Before referring to the other authorities of the High Courts, it will be proper to see if the two cases of the Supreme Court are in point or not, and if so, which of them. In Kamal Singh 's case (4), the point arose under the following circumstances. The father of the appellant in that case was assessed to income tax for the year 1945 46. The total income assessed to incometax was Rs. 1,00,000 which included a sum of RE;. 93,604 received by him on account of interest on arrears of rent due to him after deduction of collection charges. It was urged before the Income tax Officer that this interest was not assessable to income tax being agricultural "income, in view of the decision of the Patna High Court in Kamakshya Narain Singh vs Commissioner of Income tax(6). The Income tax Officer did not accept this contention on the ground that an appeal was pending against the Patna High Court 's decision, before the Privy Council. On appeal, the Appellate Assistant Commissioner held that the Income tax Officer was bound to follow the decision of the High Court, and he set aside the order and directed the Income tax Officer to make a fresh assessment. The Income tax Officer thereupon deducted the amount (1) Mad. (2) Bom. (3) (4) ; (5) [1955] 2 S C.R. 290. (6) [I946] 340 and brought only the remaining income (after some minor adjustments) to tax. His order was passed on August 20, 1946. In the year 1948, the Privy Council reversed the Patna High Court 's decision. The judgment of the Privy Council is reported in Commissioner of Income tax vs Kamakshya Narain Singh( '). The Income tax Officer then issued a notice under section 34 of the Indian , and after hearing the party assessed the sum of Rs. 93,604. After sundry procedure which it is not necessary to detail, the matter reached this Court, and the question which was before it was " whether in the circumstances of the case, the assessment order under section 34 of the Act of the interest on arrears of rent is legal. " Two questions were involved. The first was whether the word " information " was wide enough to include knowledge about the state of the law or about a decision on a point of law. With that point we are. , not concerned in this case. The second was, when income could be said to have escaped assessment. Emphasis was laid on the word " assessment " in the arguments, and it was contended that it denoted not merely the order of assessment, but included " all steps taken for the purpose of levying of tax and during the process of taxation. " It was also contended that " escaped " meant that the income must have eluded observation, search etc., or, in other words, eluded the notice of the Income tax Officer. Gajendragadkar, J., however, did not confine the phrase to such a narrow meaning. He observed; " Even if the assesse has submitted a return of his income, cases may well occur where the whole of the income has not been assessed and such part of the income as has not been assessed can well be regarded as having escaped assessment. In the present case, the rents received by the assessee from his agricultural lands were brought to the notice of the Income tax Officer; the question as to whether the said amount can be assessed in law was considered and it was ultimately held that the relevant decision of the Patna High Court 'Which was binding on (1)[1948) 341 the department justified the assessee 's claim that the said income was not liable to be assessed to tax. There is no doubt that a part of the assessee 's income had not been assessed and, in that sense, it has clearly escaped assessment. Can it be said that, because the matter was considered and decided on ' the merits in the light of the binding authority of the decision of the Patna High Court, no income has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council? We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been ,submitted, if the Income tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment. The appellant 's attempt to put a very narrow and artificial limitation on the meaning of the word "escape ' in section 34(1)(b) cannot therefore succeed. " The assessee seeks to distinguish that case on the ground that this Court,laid down the law in the special circumstances where ' a new interpretation to the law was given, and that it was not a case of the Incometax Officer changing his mind. He contends that there was at least some information which had come to the Income tax Officer, on which his subsequent action could be rested. The learned counsel argued that Gajendragadkar, J., had expressly left the question open, where there was no information but the Incometax Officer merely changed his mind without any information from an external source. Reference in this connection is made to the following observations in the judgment: " It appears that, in construing the scope and effect of the provisions of section 34, the High Courts have had occasion to decide whether it would be open to the Income tax Officer to take action under a. 34 on the ground that he thinks that his original decision in making the order of assessment was 342 wrong without any fresh information from an external source or whether the successor of the Income tax Officer can act under section 34 on the ground that the order of assessment passed by his predecessor was erroneous, and divergent views have been expressed on this point. Mr. Rajagopala Sastri, for the respondent, suggested that under the provisions of section 34 as amended in 1948, it would be open to the Income tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the conclusion that, in a particular case, he had erroneously allowed an assessee 's income to escape assessment. We do not propose to express any opinion on this point in the present appeal. " We may say at once that the words of section 26 of the Act do not involve possessing of or coming by some fresh information. The section says: " If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year the Agricultural Income tax Officer may proceed to assess such income The use of the words "any reason" which are of wide import dispenses with those conditions by which section 34 of the Indian is circumscribed. The point which was thus left over by Gajendragadkar, J., cannot arise in the context of the Act we are dealing with. In view of this clear opinion, it is hardly necessary for us to consider again the cases which Preceded the decision of this Court. The most important of them are considered in the judgment of Gajendragadkar, J. Most of the cases are also considered in the judgment of Harries, C. J., and Mukherjea, J. (as he then was) in Maharaja Bikram Kishore vs Province of Assam (1). In all the cases where a contrary view was taken, reliance was placed upon the decision of the Privy Council in Rajendra Nath Mukerjee vs Income tax Commissioner( ') particularly a passage wherein it was observed: (1) , (2) (1933) L.R. 61 I.A. 10, 16. 343 "The fact that section 34 requires a notice to be served calling for a return of income which had escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have 'escaped ' assessment within the statutory meaning. " The facts of the case were entirely different. The income was returned, and was not yet processed when the notice under section 34 was issued. The key to the case is furnished by the approval by their Lordships of the observations of Rankin, C.J., in In re: Lachhiram Basantlal (1) that: " Income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessees ' income which have not yet terminated in a final assessment thereof. " Their Lordships held that the expression "has escaped assessment" should not be read as equivalent to "has not been assessed" because so to do "gives too arrow a meaning to the word 'assessment ' and too wide a meaning to the word escaped '." That those observations were related to the facts then before their Lordships is clear from the following passage: " To say that the income of Burn & Co., which in January, 1928, was returned for assessment and which was accepted as correctly returned, though it was erroneously included in the assessment of Martin & Co. ', has escaped ' assessment in 1927 28 seems to their Lordships an inadmissible reading. . Their Lordships find it sufficient for the disposal of the appeal to hold, as they do that the income of Burn & Co., did not 'escape assessment ' in the year 1927 28 within the meaning of section 34. " It was in the context of the pendency of assessment proceedings that the remarks were made, and the matter is decisively cleared of any doubt by the following passage: " It may be that if no notice calling for a return under section 22 is issued within the tax year then section Cal. 909, 912. 344 provides the only means available to the Crown of remedying the omission, but that is a different matter. " In our opinion, the error in the cases relied upon by the assessee arises in using the dicta in the above case, shorn of the context in which they were made and applying them to facts, where they cannot. The judgment of Gajendragadkar, J., has dealt with the matter, if we may say so respectfully, very adequately and we do not consider it necessary to cover the same ground again. The preponderance of opinion in the High Courts is also to accept the contrary view, and we think rightly. The learned counsel for the assessee argued that the decision of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income tax, Bihar& Orissa (1) discloses a different view, and that we should follow it in preference to the later view of Gajendragadkar, J. We do not think that in the case last cited the point was the same. The same case was relied upon before the Bench of Venkatarama Aiyar, Gajendragadkar and Sarkar, JJ., and Gajondragadkar, J., distinguished it This is what he observed: Mr. Sastri has also relied on the decision of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income tax, Bihar & Orissa (1) in support of his construction of section 34. In Chatturam 's case (1) the assessee had been assessed to income tax which was reduced on appeal and was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939, was not in force during the assessment year in Chota Nagpur. On a reference the decision of the tribunal was upheld by the High Court. Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939, in Chota Nagpur retrospectively as from March 30, 1939. This ordinance was assented to by the Governor General. On February 8, 1944, the Income Tax Officer passed an order in pursuance of which proceedings were taken against (1)[1955] 2 S.C.R. 290. 345 the assessee under the provisions of section 34 and they resulted in the assessment of the assessee to incometax. The contention which was raised by the assessee in his appeal to this Court was that the notice issued against him under section 34 was invalid. This Court held that the income, profits or gains sought to be assessed were chargeable to income tax and that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax. So far as the decision is concerned, it is in substance inconsistent with the argument raised by Mr. Sastri. He, however, relies on the observations made by Jagannadhadas, J., that 'the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to non assessment simpliciter is not without force ' and he points out that the reason given by the learned Judge in support of the final decisions was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities notwithstanding the chargeability of income to the tax. Mr. Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that section 34 can be invoked. We do not think that a fair reading of the judgment can lead to this conclusion. The observations on which reliance is placed by Mr. Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the context of those facts. It would be unreasonable to suggest that these observations were intended to confine the application of section 34 only to cases where income escapes assessment owing to reasons other than those attributable to the assessing authorities. Indeed Jagannadbadas J., has taken the precaution of adding that it was unnecessary to lay down what exactly constitutes escapment from assessment and that it would be sufficient to place their decision on 44 346 the narrow ground to which we have just referred. We are satisfied that this decision is of no assistance to the appellant 's case. " For the reasons we have given, we are of opinion that the Agricultural Income tax Officer was competent under section 26 of the Act to assess an item of income which he had omitted to tax earlier, even though in the return that income was included and the Agricultural Income tax Officer then thought that it was exempt. The answer given by the High Court was therefore correct. This brings us to the second question. The income was received from the leasehold properties, and was agricultural income. The contention of the assessee is that it may be agricultural income in the hands of the Tekari Raj but in his hands it was capital receipt and in repayment of the loan of about Rs. 17,00,000 paid to Ram Bhuwaneshwari Kuer. The State of Bihar, however, denies that there was a loan or a mortgage at all. The assessee, it is contended, was placed in possession for a number of years on a rent of Rs. 1,000 per year and the amount paid was premium and not a loan. The documents in question are two. They are plainly indentures of lease between the Rani and the. assessee. From these documents it is clear that in consideration of a payment of Rs. 17,16,000 the lessee was placed in possession of the leasehold property for 28 years. There is no express term which makes the sum a loan returnable either by repayment or by the enjoyment of the usufruct. There is no interest fixed or right of redemption granted. There is no provision for any Personal liability in case any amount remained outstanding at the end of the term of 28 years. These are the tests to apply to find out whether the transaction was one of zarpeshgi lease or a lease with a mortgage. See Mulla 's ' Transfer of Property Act, 4th Edition, page 352. The learned counsel for the assessee in his careful argument took us through the two documents and endeavoured to prove that the relation of debtor and creditor subsisted between the parties. He referred 347 us to cl. 4, which embodies a provision entitling the lessee to deduct 12 1/2 per cent. of the gross aggregate amount payable by the mokarraridars as expenses of collection and other charges incidental thereto after payment of rent reserved to the I lessor ' and to appropriate to himself the remainder. He submitted that the payment to the lessor was not a premium but a loan and the intention was that the lessee or creditor would be thus repaid. The clause by itself may admit of diverse constructions, and possibly one such construction may be the one suggested, but that is not the true purport of the clause read in the context of the rest of the instrument. To interpret this clause the instrument must be read as a whole, and when so viewed, it is found that it provides for an exemption of the lessor from the liability for collection charges. It places beyond doubt that the collection charges were not to be debited to the lessor but were to be borne by the lessee. Unless such a provision was included in the instrument, it might have been a matter of some dispute as to who was to be responsible for this expenditure. The learned counsel for the assessee next drew our attention to the last clause of the instrument of January 31, 1936. That, however, was a special covenant, and the provision therein was in relation to matters not covered by the instrument. That the income from this leasehold property which was land, would fall within the definition of " agricultural income " was not seriously contested before us. The case of the assessee rests upon the claim that this was a money lending transaction and the receipts represented a capital return. If, however, the payment to the lessor was premium and not a loan, the income, being agricultural, from these leasehold properties was assessable under the Act. We are of opinion that it was so, and that the Agricultural Income tax Officer was right when he assessed it to agricultural income tax. The income was not the income of money lending, and this does not depend upon the character of the recipient. The Thika 348 profits were clearly agricultural income being actually derived from land. The answer to the question by the High Court was thus correct. The result is that the appeal must fail, and it is accordingly dismissed with costs. Appeal dismissed.

In his return of agricultural income for the assessment year I944 45 the appellant showed a sum of Rs. 2,82,192, which he had paid to the Tekari Rai for two lease hold properties taken on Zarpeshgi lease, as one of the items of the total amount of deduction claimed by him as capital receipt. The Agricultural Income tax Officer accepted his claim and exempted the amount from Payment of agricultural income tax. The Assistant Commissioner of Agricultural Income tax affirmed the decision. A demand notice was issued and the assessee paid two instalments. Thereafter, the Agricultural Income tax Officer served on the assessee a notice under section 26 of the Bihar Agricultural , to the effect that income from the said Zarpeshgi lease had escaped assessment and after he appeared, passed a 333 supplementary assessment order and assessed Rs. 39,5I2 6 o as tax. The assessee appealed. The Commissioner of Agricultural Income tax reversed the said decision. The Province of Bihar moved the Board of Revenue and the two questions it referred to the High Court under section 25(1) Of the Act were, (1) whether in the facts and circumstances of the case, the Agricultural Income tax Officer had jurisdiction to revise his own order under section 26 of the Act and (2) if so, whether the income from the Zarpeshgi lease was taxable under the Act. The High Court answered both the questions in favour of the State of Bihar. Hence this appeal by the assessee by special leave. Held, that under section 26 of the Bihar Agricultural , the Agricultural Income tax Officer had the power to revise his own order and assess an item of income which, even though shown in the return, he had earlier omitted to tax under a misapprehension that it was not taxable. The use of the words " any reason " in section 26 of the Act made the section wider than section 34 Of the Indian by dispensing with the conditions which circumscribed the section. Kamal Singh vs Commissioner of Income tax, Bihar & Orissa, ; , applied. Messrs. Chatturam Hoyilyam Ltd. vs Commissioner of Income tax, Bihar and Orissa, ; , distinguished. Case law discussed. Since the appellant had failed to prove his case that the income in question was income from his money lending business or that the payment made to the lessor was not by way of premium but as a loan, the income from the lease hold property which was admittedly agricultural in character, must be held to be liable to tax under the Act, irrespective of the character of the recipient.

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vil Appeal No. 539 of 1958. Appeal by special leave from the judgment and order dated March 13, 1958 of the Andhra Pradesh High Court in Special Appeal No. 4 of 1957, arising out of the judgment and order dated November 18, 1957, 428 of the Election Tribunal, Hyderabad in Election Petition No. 83 of 1957. N. C. Chatterjee, A. N. Sinha and T. Satyanarayana, for the appellant. P. Banta Reddy and R. Mahalingaiyer, for respondent No. 1. section section Shukla, for respondent No. 2. 1959. May 20. The judgment of B. P. Sinha, Jafar Imam, P. B. Ganjendragadkar and K.N. Wanchoo, JJ. was delivered by P. B. Gajendragadkar, J. J. L. Kapur, J. delivered a separate judgment. GAJENDRAGADKARJ. This appeal by special leave, arises from an election petition filed by Mr. V. V. Giri (hereinafter called the appellant) in which the validity of the election of Mr. Dippala Suri Dora (hereinafter called respondent 1) was challenged. The Parliamentary Constituency of Parvatipuram in the State of Andhra Pradesh is a double member constituency; one seat is reserved for the scheduled tribes and the other is general. In the General Election to the House of the people held in 1957 four candidates had been nominated from the said constituency. The appellant and Mr. B. Satyanarayana Dora (hereinafter called respondent 2) were adopted by the Congress Party, while respondent 1 and Mr. 'V. Krishnamoorthy Naidu (hereinafter called respondent 3) were the candidates of the Socialist Party. For this constituency polling took place between February 25 and March 19, 1957, and the counting of votes disclosed that the appellant and the three respondents had secured 1,24,039, 1,24,604, 1,26,792 and 1,18,968 votes respectively. The result of the election was declared on March 19, 1957. It was announced that respondent 2 had been, elected to fill the reserved seat and respondent 1 the general seat. On April 16, 1957, the appellant filed the present election petition No. 83 of 1957 challenging the validity of respondent 1 's election. He alleged that respondent I had offered himself as a candidate for the reserved seat and as such he was not entitled to be elected for the general seat. In the alternative he urged that 429 respondent 1 was not a member of the scheduled tribe ' at the material time and so the declaration made by him in that behalf was false. According to the appellant respondent 1 's nomination had, therefore, been L improperly accepted and it had materially affected the election. That is why the appellant claimed a twofold declaration. He wanted the tribunal to declare that the election of respondent I under the Representation of the People Act, 1951 (Act 43 of 1951) (hereinafter called the Act) was void and that he had himself been duly elected to the House of the People from the Parvatipuram Parliamentary Constituency for the general and non reserved seat. These allegations were denied by respondent 1. Broadly stated the main part of the appellant 's case rested on two grounds. He relied on the fact that both the Congress and Socialist Parties had adopted two candidates each, one for the reserved seat and the other for the general seat. Respondent I had been adopted for the reserved seat and in the nomination forms filed on his behalf he had made the requisite declaration that he was a member of the scheduled tribe. # He conducted his election campaign on the basis that he was a candidate for the reserved seat and the voters must have voted for him on the same basis. If it is found that his rival candidate for the said reserved seat (respondent 2) secured a larger number of votes and so he was declared elected to fill the said seat, it is not open to respondent to claim election for the general seat. If a candidate offers himself for one seat, how can he claim to be elected for the other, asks the appellant. The appellant concedes that the reservation of seats for the scheduled castes or tribes is a special concession shown to the members of the said castes and tribes in view of the fact that they are educationally socially and financially very backward; it is also conceded that members of the scheduled castes or tribes are entitled to contest election for the general seat; but the argument is that a member of a scheduled tribe must make up his mind and decide which seat he wishes to contest. If he wants to contest the general seat he 430 may do so and in that event he should not make the prescribed declarations on his nomination form; on the other hand, if he wants to contest the reserved seat he should elect to do so, make the necessary declaration and then concentrate his attention on the reserved seat. Having once made his election he cannot subsequently fall back upon his right to be elected for the general seat. Thus presented the argument no doubt appears to be plausible and even attractive. Respondent 1, however, dispute the validity of this contention. His case is that the reservation of seats is intended as an additional and special concession to the scheduled castes or tribes. That, however, does not affect the right of the members of the said castes or tribes to claim along with the other citizens of the country the right to be elected to the general seat. In other words, according to respondent 1, a member of the scheduled tribe is entitled to claim election either to the reserved seat or to the general seat in a double member constituency, where one seat is reserved for the scheduled tribes or castes. When a member of the scheduled tribe makes a declaration about his status on his nomination form it merely means that he claims the additional benefit of being eligible for election to the reserved seat. If in the fight for the reserved seat his rival candidate defeats him, that cannot detract from, or affect, his right to claim election to the general seat; and if the voters in the constituencies have expressed their confidence in him by putting him at the top amongst the remaining candidates, he is entitled to claim election to the said general seat. The object of reserving seats obviously is to create confidence in the minds of the backward castes and tribes and to give them an assurance about their welfare and future in the political set up of the country. This object necessarily implies that the members of the said castes and tribes should have a double opportunity of seeking election from a double member constituency. Respondent 1 does not concede that he contested the election solely for the reserved seat. It is admitted on his behalf that he did make the necessary declaration and he may have brought it to the notice of the voters 431 that he was a member of the scheduled tribe. That was inevitable since he was claiming to be elected for the reserved seat. It is, however, urged that if in law election took place for the constituency as a whole, and not for separate seats, the fact that his nomination paper referred to " the reserved constituency " and some of his statements during the course of his ' election campaign mentioned the fact that he was t member of the scheduled tribe would not prejudicially affect his right to claim election for the general seat. Incidentally respondent I claimed that the declaration of his election to the general seat in fully consistent with the express provisions of section 54(4) of the Act, whereas the appellant pleaded in reply that the construction sought to be placed upon the provisions of section 54(4) by respondent I was unreasonable and if not the said provision was ultra vires. On the three major points which thus arose for decision in the present election petition the Election Tribunal at Hyderabad and the High Court of Andhra Pradesh have differed. The Tribunal upheld the appellant 's contentions, made the two declarations claimed by him and allowed his election petition with costs. On appeal to the High Court the points made by respondent I have been accepted, the findings made by the tribunal and the declarations granted by it have been reversed and the appellant 's election peti tion dismissed with costs throughout. The appellant 's application for a certificate was dismissed by the High Court. Thereupon he applied to this Court and obtained special leave to appeal. That is how this appeal has come before us. What then is the true constitutional and legal position with regard to the election to the House of the People from a double member constituency where one seat is reserved for the members of the scheduled tribes or castes? The answer to this question would depend upon the effect of the relevant provisions of the Constitution and the Act respectively. Let us first examine the relevant articles of the constitution. Article 325 provides that there shall be one general electoral roll for every territorial constituency for 432 election to either House of Parliament and that no person shall be ineligible for inclusion in any such roll or claim to be included in any such electoral roll for any such constituency on grounds only of religion, race, caste, sex or any of them. Article 326 which deals inter alia with the elections to the House of the People lays down that the said elections shall be on the basis of adult suffrage, that is to say, every person who is a citizen of India and who is not less than 21 years of age at the relevant date and is not otherwise disqualified under the Constitution or any law made by the appropriate Legislature on the grounds specified shall be entitled to be registered as a voter at any such election. It is thus clear that the electoral roll is prepared on a purely secular basis without any reference to religion, race, caste or sex and that the qualification for being included as a voter on the said electoral roll is likewise wholly secular and of general application to all citizens in the country. Let us then refer to the articles that deal with the composition of the House of the People and qualification for membership of Parliament. Article 81 (1) provides that subject to the provisions of article 331 the House of the People shall consist inter alia of not more than 500 members chosen by direct election from territorial constituencies in the States. This article contemplates the division of the States into territorial constituencies and it provides for the election of 500 members from these constituencies to the House of the People. Article 84 deals with the question of qualification and it provides that a person shall not be qualified to be chosen to fill a seat in the Parliament unless he is (a) a citizen of India, (b) in the case of a seat in the House of the People not less than 25 years of age, and (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament. It is by virtue of article 84(c) that the Parliament has passed the two relevant statutes. They are the Re presentation of the People Act, 1950 (Act 43 of 1950) and the Act. We will presently refer to the relevant provisions of the Act. Meanwhile we would like to 433 refer to another article of the Constitution which is very important. It is article 330. It occurs in Pt. XVI of the Constitution which deals with special provisions relating to certain classes. It provides for the reservation of seats for scheduled castes and scheduled tribes in the House of the People. Article 331 lays down that seats shall be reserved in the House of the People for the three categories enumerated in (a), (b) and (c). In the present case we are concerned with the second category which deals with the scheduled tribes. Article 330(2) provides inter alia that the number of seats reserved in any State for the scheduled tribes under sub Art.(1) shall bear as nearly as may be the same proportion to the total number of seats allotted to that State in the House of the People as the population of the scheduled tribes in the State or part of the State as the case may be in respect of which seats are so reserved bears to the population of the State. In providing for the members of the scheduled tribes the special concession by way of reservation of seats the Constitution has adopted the fair, just and equitable method of fixing the number of the said reserved seats on the basis of the proportion mentioned in article 330(2). Whilst we are referring to this article we may incidentally mention article 334 which provides that the reservation of seats provided by article 330 shall cease to have effect on the expiration of a period of ten years from the commencement of the Constitution subject to the proviso. Thus it is clear that election to the House of the People even from a double member constituency where one seat is reserved for the members of the scheduled tribes in one, and though the Constitution shows just anxiety to afford necessary protection to the members of the scheduled tribes, it deliberately refused to adopt the system of separate electorates. The constituency is one and election is held to the said constituency from one joint electoral roll prepared on the basis of qualifications which are of general and uniform application. In regard to double member constituencies like Parvatipuram the Constitution has not even adopted the course of providing for a special constituency 55 434 confined to the members of the scheduled tribe. All that is done is to provide for the reservation of seats for the members of the said tribes or castes in the manner already indicated. Even for the reserved seat all voters in the constituency are entitled to vote. The reservation of a seat in a double member constituency cannot, therefore, affect the main basic position that the constituency is one and for returning representatives to the House of the People it is the same joint electorate that goes to the poll. Let us now proceed to consider the position under the relevant provisions of the Act. It is necessary to begin with the definitions of parliamentary constituency and election. Section 2(f) of the Representation of the People Act, 43 of 1950, defines a " parliamentary constituency " as meaning a constituency provided by law for the purpose of elections to the House of the People; whereas section 2(d) of the Act defines "election " to mean an election to fill a seat or seats inter alia in House of Parliament. These definitions show that it is a parliamentary constituency that sends the representatives to fill the seats in the House of the People. Elections are held from such constituencies and candidates declared duly elected fill the seats in the House of Parliament to which they are elected. Section 4 prescribes qualification for membership of the House of the People. Section 4(b) provides that a person shall not be qualified to be chosen to fill a seat in the House of the People unless in the case of a seat reserved for the scheduled tribes he is a member of any of the scheduled tribes and is an elector for any parliamentary constituency. This section expressly provides what was clearly implicit in the relevant articles of the Constitution that before a person can claim to be elected to fill a seat reserved for the scheduled tribes he must be a member of the said tribes besides being an elector for the parliamentary constituency in question. Section 32 deals with the nomination of candidates for election and it provides that any person may be nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill a seat under the provisions of the Constitution and the Act. The next section 435 to consider is section 33. It deals with the presentation of nomination papers and prescribes the requirements for a valid nomination. Section 33(2) is relevant for our purpose. It provides that any constituency where any seat is reserved a candidate shall not be deemed to be qualified to be chosen to fill that seat unless his nomination paper contains a declaration by him specifying the particular tribe of which he is a member and the area in relation to which the tribe is a scheduled tribe of the State. Section 33(6) lays down that nothing in this section shall prevent any candidate from being nominated by more than one nomination paper for election in the same constituency. The effect of section 33(2) is that unless a member of the scheduled tribe makes the required declaration he would not be entitled to claim election to the reserved seat. In other words, if a member of the scheduled tribe does not want to be considered for election to the reserved seat be need not make the said declaration; and in that case be would be entitled to contest the election only for the general seat. But it does not follow that if a scheduled tribe candidate makes the said declaration he forfeits his right to contest for the general seat. It is necessary to point out at this stage that the prescribed nomination paper (Form 24) is common to all the candidates. In regard to the candidates contesting for the reserved seat, however, the form prescribes the declaration which they are required to make. In the matter of deposits required by section 34 another concession is made in favour of the members of the scheduled castes or tribes; whereas 'in the case of an election from a parliamentary constituency a candidate is required to make a deposit of Rs. 500 the amount is fixed at Rs. 250 in the case of members of scheduled castes or tribes. It is significant that this concession is not confined to members of the scheduled tribe contesting the election only for the reserved seat. It is available to them even if they want to contest only for the general seat. Section 35 requires a notice of nominations and a time and place for their scrutiny to be published; and section 38 requires a list of contesting candidates to be published, The two prescribed forms for 436 the said notices are Forms 3A and 4 ;_they make no reference to the two respective seats and give the particulars about all the candidates in the respective columns. It is true that in col. (6) of Form 3A particulars of caste or tribe of candidates belonging to scheduled castes or tribes are required to be mentioned. That is consistent with the requirement of section 33(2). It would thus be seen that the scheme of the relevant provisions of the Act, like the scheme of the relevant articles of the Constitution, is clear. The election to the House of the People from a double member constituency is held as an election from the whole of the constituency as such. It is on that basis that the nomination papers are required to be filed. The notifications about the nominations are published and the list of the validly nominated candidates is announced on the same basis. The counting of votes is similarly made by reference to all the candidates. It is only when the result of the election is prepared for declaration that the votes of candidates who have made the prescribed declarations are first taken into account and the result of the election in respect of the reserved seat is first determined, and then the votes secured by the remaining candidates are taken into account and the result of the election for the other general seat is determined and declared. Section 63 of the Act would also assist us in deciding the point in dispute between the parties. Section 63 (1) provides for the method of voting and it lays down that in plural member constituencies other than Council constituencies every elector shall have as many votes as there are members to be elected but no member shall give more than one vote to any one candidate. It is not disputed that voters in a double member constituency are not bound to vote in reference to the two seats. If the Act had intended that the election in such a constituency should take place by reference to the two respective seats, it would have provided for voting by the electors on that basis, and would have required the voters to cast their two votes respectively by reference to the two seats. Section 63(1) on the other hand allows voters to cast their two 437 votes to any two candidates of their choice whether both of them claim to be elected to the general seat or to the reserved seat or one of them claims one seat and other claims the other. This method of voting is inconsistent with the appellant 's case that the election to the double member constituency is held seat wise. Section 54(4) emphatically brings out the same position. Section 54 (1) provides that it shall apply in relation to any election in a constituency where the seats to be filled include one or more seats reserved for the scheduled castes or scheduled tribes. Subsection (4) reads thus: " If the number of contesting candidates qualified to be chosen to fill the reserved seats exceeds the number of such seats, and the total number of contesting candidates also exceeds the total number of seats to be filled, a poll shall be taken ; and after the poll has been taken, the returning officer shall first declare those who, being qualified to be chosen to fill the reserved seats, have secured the largest number of votes, to be duly elected to fill the reserved seats, and then declare such of the remaining candidates as have secured the largest number of votes to be duly elected to fill the remaining seats. " On a fair and a reasonable construction of this provision there can be no doubt that in a case like the present, after respondent 2 was declared duly elected to the reserved seat, the votes secured by the remaining three candidates had to be considered before declaring the election for the unreserved seat and that is precisely what the returning officer has done when he declared that respondent I had been duly elected to the said seat. The illustration to this sub section makes this position absolutely clear. This is how the illustration reads: " At an election in a constituency to fill four seats of which two are reserved there are six contesting candidates A, B, C, D, E and F, and they secure votes in descending order, A securing the largest number, B, C and D are qualified to be chosen to fill the reserved seats, while A, E and F 438 are not so qualified. The returning officer will first declare B and C duly elected to fill the two reserved seats, and then declare A and D (not A and E) to fill the remaining two seats. " In our opinion section 54(4) and the illustration are wholly consistent with the relevant provisions of the Constitution and of the Act. Whilst we are dealing with section 54 we may incidentally refer to the appellant 's argument based on section 6(2) (c) of the (81 of 1952) which provides that in every two member constituency one seat shall be reserved either for the scheduled castes or for the scheduled tribes, and the other seat shall not be so reserved. It is urged that in view of this provision the case contemplated by the illustration to section 54 (4) is not likely to occur any more and in that sense the illustration has become otiose. That may be true. But even so the significance of the illustration lies in the fact that it clarifies and explains concretely how the reservation of seats for the depressed castes and tribes will actually work out in elections in the relevant constituencies. There is another argument which nay be noticed. It was faintly suggested by the appellant that section 54(4) is ultra vires since it is inconsistent with articles 14 and 330 of the Constitution. One has merely to recall the provisions of article 15 (3) and (4) to reject the argument that section 54(4) offends against article 14. As regards Art 330 it is obvious that the reservation of seats as therein specified is intended to guarantee a minimum number of seats to the scheduled castes and tribes; therefore if members of the said castes and tribes secure additional seats by election to general unreserved seats there would be no repugnancy at all. There is no substance in the contention that section 54 (4) is ultra vires. There is one more section of the Act to which reference must be made. It is section 55. For the avoidance of doubt this section declares that a member of the scheduled castes or scheduled tribes shall not be disqualified to hold the seat not reserved for members of those castes or tribes if he is otherwise qualified to 439 hold such seat under the Constitution and the Act. If the appellant 's contention is upheld then the provisions of section 55 would be inapplicable to a member of the scheduled tribe solely because he has made the. prescribed declaration in his nomination form in order to claim the benefit of the concession of the reserved seat in his constituency. We see no justification for adopting such an artificial and restricted construction of section 55. In our opinion section 55, like section 54(4), is consistent with the other relevant provisions of the Constitution and the Act. A member of the scheduled tribe is entitled to contest for the reserved seat and for that purpose he can and must make the prescribed declaration; but it does not follow that because he claims the benefit of the reserved seat and conforms to the statu tory requirement in that behalf, he is precluded from contesting the election, if necessary, for the general seat. Once it is realised that the election is from the constituency as a whole and not by reference to two separate and distinct Beats there would be no difficulty in accepting the view taken by the returning officer when he declared respondent I to have been duly elected for the general seat. It is true that some articles of the Constitution and some sections of the Act refer to seats in connection with election to the House of the People. For instance, when article 81 (2) (b) provides for the same ratio throughout the State between the population of each constituency and the number of seats allotted to it, it does refer to seats, but in the context the use of the word " seats " was inevitable. Similarly article 84 which lays down the qualification for the members of Parliament begins by saying that a person shall not be qualified to be chosen " to fill a seat " in Parliament unless he satisfies the tests prescribed by its cls. (a), (b) and (c). Here again the expression " to fill a seat " had to be used in the context. The same comment can be made about the use of the word " seat " in articles 101 (2) and in 330. There is no doubt that when a candidate is duly elected from any constituency to the House of the People he fills a seat in the House as an elected representative of the said constituency; 440 and so the expression " filling the seat " is naturally used whenever the context so requires. The position in regard to the sections of the Act which use the word " seat " or the expression "fill the seat" is exactly similar. Section 32 of the Act says that any person may be nominated as a candidate for election to "fill a seat" if he is qualified in that behalf. This section does not mean that the nomination of a person as a candidate for election is for a seat; such nomination is for the constituency. After the election is over the elected candidate is qualified to fill a seat in the House of the People to which he is elected. It is in that sense that the expression " a candidate for election to fill a seat" is used in this section. The use of the same expression in sections 33(2), 53(2), 54 and 55 bears the same interpretation. The use of the said expression or the reference to "seat" in some of the articles of the Constitution or the sections of the Act does not, therefore, mean that election to the House of the People from a double member constituency is held not for the constituency as a whole but by reference to the two seats. There is. no doubt that in the case of double member constituencies recognised political parties usually adopt two candidates, one for the general seat and the other for the reserved seat; and it does appear that under the relevant statutory order issued by the Election Commission the symbol reserved for the party is allotted to both such candidates with the only difference that the symbol allotted to the scheduled caste or the scheduled tribe candidate of the party is the particular symbol enclosed within a thick black circle. This order has been issued for convenience in order to enable the very large number of illiterate and uneducated voters to identify the political affiliations of the candidates for election; and to show which of the candidates are eligible for the reserved seat; but the said order cannot affect the nature of the election nor does it purport to do so. Similarly a candidate who has made the prescribed declaration under section 33 may withdraw his candidature under section 37 which would mean that he is no longer contesting any seat in the 441 constituency; but that again cannot justify the inference that his candidature was in regard to a reserved seat for which election was separately intended to be held. In fact, in regard to a double member constituency election recognises no compartments at all; it is one general election with reservation of seats; that is all. It was then contended by the appellant that even if it may be open to a member of the scheduled tribe to seek election either for the reserved seat or failing that for the general seat he ought to file two. nomination papers in that behalf. In our opinion this contention is not wellfounded. It is conceded that there is no provision for the presentation of two nomination papers for two different seats in the same constituency. Indeed such an assumption would be inconsistent with the basic character of the election from a double member constituency. In our opinion, the true posi tion is that a member of a scheduled caste or tribe does not forego his right to seek election to the general seat merely because he avails himself of the additional concession of the reserved seat by making the prescribed declaration for that purpose. The claim of eligibility for the reserved seat does not exclude the claim for the general seat; it is an additional claim; and both the claims have to be decided on the basis that there is one election from the double member constituency. In this connection we may refer by way of analogy to the provisions made in some educational institutions and universities whereby in addition to the prizes and scholarships awarded on general competition amongst all the candidates, some prizes and scholarships are reserved for candidates belonging to backward communities. In such cases, though the backward candidates may try for the reserved prizes and scholarships, they are not precluded from claiming the general prizes and scholarships by competition with the rest of the candidates. We are, therefore, satisfied that the High Court was right in rejecting the appellant 's contention that respondent 1 could not have been validly elected 56 442 for the general seat from the constituency of Parvatipuram. That takes us to the alternative contention raised by the appellant against the validity of respondent 1 's election. That contention is that respondent I had ceased to be a member of the scheduled tribe at the material time because he had become a kshatriya. In dealing with this contention it would be essential to bear in mind the broad and recognized features of the hierarchical social structure prevailing amongst the Hindus. It is not necessary for our present purpose to trace the origin and growth of the caste system. amongst the Hindus. it would be enough to state that whatever may have been the origin of Hindu castes and tribes in ancient times, gradually castes came to be based on birth alone. It is wellknown that a person who belongs by birth to a depressed caste or tribe would find it very difficult, if not impossible, to attain the status of a higher caste amongst the Hindus by virtue of his volition, education, culture and status. The history of social reform for the last century and more has shown how difficult it is to break or even to relax the rigour of the inflexible and exclusive character of the caste system. It is to be hoped that this position will change, and in course of time the cherished ideal of casteless society truly based on social equality will be attained under the powerful impact of the doctrine of social justice and equality proclaimed by the Constitution and sought to be implemented by the relevant statutes and as a result of the spread of secular education and the growth of a rational outlook and of proper sense of social values; but at present it would be unrealistic and utopian to ignore the difficulties which a member of the depressed tribe or caste has to face in claiming a higher status amongst his coreligionists. It is in the light of this background that the alternative plea of the appellant must be considered. The evidence adduced by respondent I shows that all the documents from 1885 to 1928 consistently described him as a Mukka Dora or a member of the scheduled tribe. The appellant has, however, produced documentary evidence which indicates that from 1928 443 onwards respondent 1 has described himself and the members of his family as belonging to the kshatriya caste. Oral evidence led by the appellant is intended to show that respondent 1 has for some years past adopted the customs and the rituals of the kshatriya caste. It shows that marriages in the family of respondent I are celebrated as they would be amongst the kshatriyas, and homa is performed on such occasions. It is also attempted to be shown that the family of respondent is connected by marriage ties with some kshatriya families, that a Brahmin priest officiates at the religious ceremonies performed by respondent 1, and that he wears a sacred thread. The High Court has held that even if the documentary and oral evidence adduced by the appellant is accepted at its face value, it falls far short of establishing his plea that respondent had become a kshatriya at the material time. The caste status of a person in the context would necessarily have to be determined in the light of the recognition received by him from the members of the caste into which he seeks an entry. There is no evidence on this point at all. Besides the evidence produced by the appellant merely shows some acts by respondent 1 which no doubt were intended to assert a higher status; but unilateral acts of this character cannot be easily taken to prove that the claim for the higher status which the said acts purport to make is established. That is the view which the High Court has taken and in our opinion the High Court is absolutely right. Therefore the alternative plea made by the appellant cannot succeed. In the result the appeal fails and is dismissed with costs in favour of respondent 1. KAPUR J. I regret I am unable to agree with the judgment prepared by my learned brother Gajendragadkar and I shall proceed to give my reasons for my dissent. In an election for Parliament the candidate asks for the votes of the electors by offering himself for a seat in a parliamentary constituency and it is a fundamental principle of elections that the. voters exercise their suffrage in favour of a candidate who is standing 444 for a particular seat in a single or in a two member constituency. The language used in the Constitution as well as in the Election Laws tends to show that the election though in a constituency is for the filling of a seat and it is for the filling of that seat that the voters in a constituency exercise their right to vote. The Constitution itself shows that the election is for filling a seat in a constituency. The scheme of the Constitution itself when it deals with Parliament and election to Parliament supports this view. Parliament, its composition and qualification for membership of Parliament are dealt with in Chapter 11 of Part V of the Constitution. Article 81 deals with the composition of the House of the People. Sub cl. (a) of cl. (1) of article 81 lays down that there shall be not more than 500 Members chosen by direct election from territorial constituencies and not more than 20 Members to represent Union territories. Clause (2) of article 81 provides that to each State shall be allotted a certain number of seats in the House of the People in such manner that the ratio between the number and population of the State is the same for all States and sub cl. (b) provides that the State shall be divided into territorial constituencies in such manner that the ratio between the population of each constituency and the number of seats allotted to it is the same throughout the State. Article 84 provides for the qualifications of persons to be chosen to fill a seat in Parliament and in el. (c) it is laid down that the qualifications shall be such as may be prescribed by an Act of Parliament. Part XV deals with Elections. Under article 324 there is one general electoral roll for every territorial constituency and there is no exclusion from such roll on the ground only of religion, race, caste, creed, sex or any of them. Article 327 confers on Parliament the power to make provision with respect to elections to Legislatures. Part XVI of the Constitution make special provision relating to certain classes and under article 330 seats are reserved in the House of the People for Scheduled Castes and Scheduled Tribes and it also provides for the proportion that these seats shall bear to the 445 total number of seats allotted to any State and the reservation of seats and special representation are to cease after 10 years (article 334). These provisions show that the emphasis is on seats. The number seats is fixed so also reserved seats and election is to fill a seat and for that purpose qualifications of candidates are prescribed by Parliamentary legislation. A perusal of those various articles mentioned above shows that there is no separate electoral roll and that the elections are on the basis of joint electorate. Although there is reservation of seats for the Scheduled castes there is no exclusion of Scheduled Castes or Scheduled Tribes from what are called general seats and every citizen without any consideration of caste, creed or sex is entitled to vote as well as stand for election provided he is otherwise qualified. The reservation of seats was a concession given to the Scheduled Castes and Tribes because of their social and educational backwardness and it had to have only a temporary existence and it must be conceded that although there is a reservation of a certain number of seats for the Scheduled Castes and Tribes the members of these castes or tribes are not excluded from contesting general seats. In order to carry out the intention of the Constitution in regard to elections two Acts were enacted by the Parliament. The Representation of People 's Act, 1950, (43 of 1950) (hereinafter called the 1950 Act) and the Representation of People 's Act 1951, (43 of 1951), (hereinafter called the 1951 Act). The object of the 1950 Act was to provide for allocation of seats and delimitation of constituencies for election and the object of the 1951 Act was to provide for the conduct of elections to the Houses of Parliament etc. and the qualifications and disqualifications for membership. In section 2(f) of the 1950 Act a Parliamentary constituency is defined as a constituency provided for the purpose of election to the House of the People. In Part II of that Act provision is made for the allocation of seats in the House of the People and for reservation of seats in that House for Scheduled Castes and Tribes for filling up of seats in that House and all these provisions 446 show that the seats in the House of the People allotted to the various States have to be filled by direct elections. It is significant that in all these provisions the word used is 'seat ' and the election is to fill a seat. Coming to the 1951 Act, election is defined in section 2(d) to mean an election to fill a seat or seats in either House of Parliament. . . In section 2(e) an elector means the person whose name is entered in the electoral roll of a constituency. Section 4 of the 1951 Act lays down the qualifications for membership of the House of the People and a person is not qualified to be chosen to fill a reserved seat in the House unless he is a member of a Scheduled Caste or Tribe and he is an elector for any Parliamentary constituency. In the case of any other seat the only qualification required is that he is an elector in a Parliamentary constituency. Part V of 1951 Act deals with nomination of candidates. Section 31 provides for public notice of elections and section 32 for nomination of candidates for election. Under this section no person may be nominated as a candidate for election to fill a seat unless he is qualified to fill that seat. Section 33 deals with presentation of nomination papers and the requirements for a valid nomination. Under sub section (1) a nomination paper completed in the prescribed form and signed as required under that provision has to be presented to the Returning Officer and under sub section (2) where in a constituency any seat is reserved the candidate is not qualified to be chosen to fill that seat unless his nomination papers contain a declaration by him specifying the caste or tribe to which he belongs and sub section (6) provides that a candidate can file more than one nomination paper for election in the same constituency. Under section 34 for a valid nomination for election a deposit has to be made which in the case of members of Scheduled Castes or Tribes is Rs. 250 and in other cases Rs. 500. The contention raised on behalf of the appellant was that these various provisions of the 1951 Act show that the election is for filling a seat and therefore when a member of the Scheduled Caste or Tribe contests an election he has to make a choice as to which seat he is 447 contesting. There is no prohibition against his standing for election for the general constituency but if he wants to do so he has to indicate to the electors that he is so standing because when the electors vote they vote for the election of the candidate to that particular seat and to no other. This is made further clear by the fact that only one vote out of the two which every elector has the right to cast can be polled in favour of one candidate. Every candidate has to have a symbol the necessity for which arises because of the illiteracy of the general electorate. Each party has allotted to it a symbol. In the present case the successful candidate Mr. Dippala Suri Dora was standing for the reserved seat on behalf of the Socialist Party and had been allotted the symbol of a tree which was his party symbol. In the case of a reserved seat the distinguishing feature is the black circle round the symbol so that the electors would know where to cast their vote in the case of a Scheduled Caste or Tribe candidate. It is true that the Form 2A is the same whether the candidate is contesting a reserved seat or a general seat but in the case of a person contesting a reserved seat there is a further declaration to be made that he belongs to Scheduled Caste or Tribe. It is also true that in Form 3A when notice of nomination is given the Form used is the same for both the seats but in column (6) of this Form the particulars of the caste or tribe are to be given presumably to show which of the candidates belongs to a Scheduled Caste or Tribe otherwise indicating the caste is meaningless. Similarly in Form 7A which is for the final list of contesting candidates after withdrawals have taken place the names of candidates are given along with their addresses and symbols allotted to them but candidates belonging to members of the Scheduled Castes or Tribes are distinguished by separate special marks against their names. All these distinguishing features have been provided so that electors when they cast votes for the various candidates know which of them is contesting the reserved seat and which is contesting the general seat. If that is not the object the giving of the caste would be meaningless, if not against the ideal of castelessness, 448 it was contended that section 32 only deals with nominations for election to fill a seat but it has nothing to do with qualifications which are laid down in section 33 and that sub sections (2) and (6) of section 33 showed that the election was for a constituency and not for a seat but this argument ignores the definition of election which means election to fill a seat and therefore where the word 'election ' in a constituency is used it is to be construed as election to fill a seat in a constituency. Besides sub section 2 of section 33 makes it clear that a candidate cannot be qualified to be chosen to fill a reserved seat in a constituency unless he makes a particular declaration. The emphasis is again on a seat. It is true that a candidate has to make a deposit for due nomination for election from a constituency but here again the word 'election ' must be read as election to fill a seat from a constituency. These various sections indicate therefore and particularly the definition of the word election in section 2(d) of the 1951 Act that when a candidate offers himself for election in a constituency he does so to fill a particular seat in a constituency. At a pole every elector can cast one vote in favour of one candidate and another in favour of another. It was contended that it was open to an elector to cast both his votes in favour of the two candidates standing for a general seat or the two candidates for the reserved seat or one for the general seat and the other for reserved seat and that there was no law which enjoins an elector to cast one vote for the general seat and the other for the reserved seat. But this will lead us nowhere because if there are only four candidates as they were in the present case two belonging to Scheduled Castes or Tribes and two non Scheduled Caste candidates then the voter who casts both his votes one for one Scheduled Caste and the other for the other or one for the non Scheduled Caste and the other for the other non Scheduled Caste candidate would be wasting his votes. One has to presume that the elector when he takes the trouble of going to the polling booth and to vote is not going to waste his votes. 449 In the present case the party which set up Mr. Dippala Suri Dora set him up as a candidate for the Scheduled Caste constituency which is clear from the application on behalf of the party setting him up. The final list of candidates for Parliament Ext. P3(c) also shows that Mr. Dippala Suri Dora was a candidate for the reserved seat in Parvatipuram double member constituency. The nomination papers filed by him also show that he was being nominated for election from the Parvatipuram reserved parliamentary constituency. Thus as far as Mr. Dippala Suri Dora was concerned he had made it quite clear to the electorate that he was seeking their suffrage for filling a reserved seat in the constituency and in this view of the matter as far as he and the electors were concerned the contest was for the reserved seat and not the general seat and the people voted for him for filling the reserved seat and not the general seat. Counsel for the respondent Mr. Dippala Suri Dora submitted that the mere fact that respondent filed his nomination papers in a particular manner does not give a different interpretation to the various provisions of the law and if under the law a nomination like that of the respondent Mr. Dippala Suri Dora was a nomination for both the seats the mere fact that he had filled his form differently would make no difference. This contention is correct but as I have indicated above the election is to fill a seat in the constituency and the nomination must be taken to fill that seat and no, other. Reliance was next placed on sections 53, 54 and 55 of the 1951 Act to support the case put forward on behalf of the respondent Mr. Dippala Suri Dora. No doubt in sub s.(4) of section 54 it is laid down that in a case where the number of contesting candidates qualified to be chosen to fill the reserved seat exceeds the number of such seats and the total also exceeds the total number of seats to be filled, then after the poll has been taken the qualified candidate receiving the largest number of votes for the reserved seat has to be declared elected and then such of the remaining candidates as have secured the largest number of votes have to be declared 57 450 elected to fill the remaining seats and there is an illust ration added to the section which supports the case of the respondent. But in view of section 8 of the , which makes provisions for readjustments and delimitations it is doubtful if the provisions of section 54(4) retain their efficacy. Under section 8 cl.(2) of Delimitation Act it is provided that all constituencies have to be single member constituencies or two member constituencies and wherever practicable seats may be reserved for Scheduled Caste or Tribe in a single member constituency but in every two member constituency one seat has to be reserved for Scheduled Caste or Tribe. This provision destroys the effect of section 54. If in a single member constituency a seat can be reserved which means that only a Scheduled Caste candidate can be elected to that seat the effect of reservation of seat in the double member constituency will also be that when a member of the Scheduled Caste offers himself for election to a reserved seat he can be elected only to that seat and to no other. This is also supported by the definition of electoral rights in section 79 of the 1951 Act which is defined as a right of a person to stand or not to stand as a candidate at an election, i.e., an election to fill a seat in either House of Parliament. The electoral right which a citizen has is to stand for election to fill a seat and a successful candidate is one who is elected by securing the largest number of votes cast for that seat. This necessarily leads to the conclusion that the respondent Mr. Dippala Suri Dora who offered himself for election to fill a reserved seat could only be elected to that seat and not to the general seat. The next contention raised on behalf of the appellant was that if a member of the Scheduled Caste or Tribe wants to contest both the seats, i.e., general and reserved he would have to file two nomination papers and pay two deposits. In view of what has been said above and in view of sections 32 and 33 and the definition of the word ' election ' such candidate has to file two nomination papers one for the general seat and the other for the reserved seat setting out the necessary qualifications which are required under the law 451 Similarly he will have to make two deposits under section 34 for the same reason. A question of some importance has been raised as to whether a member of Scheduled Caste or Scheduled Tribe can by his own act transform himself into different and higher. caste. That depends upon the view one takes of the caste system and whether cast is dependent upon birth or it varies as a consequence of Guna, Karma and Subhavana that is merit on qualities, actions and character. In Hinduism caste had its origin in vocation and was not dependent upon birth. Birth as the sole criterion of caste is a much later development and caste became rigid and hereditary when vocations became hereditary. Caste was nothing but division of labour. There is a high authority to support the view that in Hinduism caste was dependent upon actions and not on birth. In Bhagwat Gita in the fourth Discourse it is stated: "The four castes were created by me in accordance with their aptitude and actions; know me the author of these castes, though I am actionless and inexhaustible. " There are Verses in the Mahabharta also which go to support this. One such Verse is given as follows: " Truth, Charity, fortitude, good conduct, gentleness, austerity and compassion he in whom these, are observed is a Brahmana. If these marks exist in a Sudra and are not found in a twice born, the Sudra is not a Sudra nor the Brahmana a Brahmana" (Teaching given by Yudhisthira) Even in Bhagwata Purana it is stated: " One becomes a Brahmana by his deeds and not by his family or birth; even a Chandala is a Brahmana, if he is of pure character". In the Chandogya Upanisad there is the interesting incident of Satyakama who was raised to the position of a Brahmana because he had spoken the truth. Thus it was his character and not his birth which deter. mined his caste. Amongst the Hindus many have raised themselves to the position of Brahmana by their good qualities and one such instance is of Sage 452 Matanga who was a Chandala. Vishva Mitra was a Kshtriya and became a Brahman. Hinduism might have become static at one stage but its modern history shows that this is not so now and it would not be wrong to say that caste in Hinduism is not dependent upon birth but on actions. The whole theory of karma is destructive of the claim of caste being dependent upon birth. In my opinion Mr. Dippala Suri Dora had by his actions raised himself to the position of Kshtriya and he was no longer a member of the Scheduled Caste or Tribe and on that ground also his election cannot be supported. I would therefore allow this appeal, set aside the order of the High Court and restore that of the Tribunal. The appellant will be entitled to costs of this Court as well as of the Courts below. ORDER. In view of the majority judgment of the Court the appeal is dismissed with costs in favour of Respondent No. 1. Appeal dismissed.

In a double member Parliamentary constituency one seat was reserved for the scheduled tribes and the other was general. Four persons filed their nominations for the election, G 1 and G 2 for the general seat and S1 and S2 for the reserved seat. At the polls the number of votes received by the candidates were in the following order: S1, S2, G1 and G2. In accordance with the provisions of section 54(4) of the Representation of the People Act, 1951, S1 was declared elected to the reserved seat and S2, who had received the largest number of votes out of the remaining candidates, was declared elected to the general seat. G1 filed an election petition for a declaration that the election of S2 was void and for a further declaration that he had himself been duly elected to the general seat. The petition was based on three grounds, viz., (i) that upon a proper interpretation Of section 54(4) a candidate who had filed his nomination for the reserved seat could not be declared elected to the general seat ; (ii) that if the interpretation be otherwise then section 54(4) was ultra vires; and (iii) that S2 had ceased to be a member of a scheduled tribe at the relevant time and his nomination was improperly accepted. Held, (Kapur, J., dissenting) that, S2 was properly and validly declared elected. The provisions of the Constitution and of the Act show that the election in a double member constituency was held for the whole constituency and not for the seats and a candidate who had filed nomination as a member of the scheduled tribes was entitled to contest for both the seats. On a fair and reasonable construction Of section 54(4) Of the Act there could be no doubt that in a case like the present, after S1 was declared duly elected to the reserved seat, the votes secured by the remaining three candidates had to be considered before declaring the election for the general seat. A member of the scheduled tribe or caste did not forego his right to seek election to the general seat merely because he availed himself of the additional concession of standing for the reserved seat by making the prescribed declaration for that purpose. It was not necessary for him to file two nomination papers for the two seats. Section 54(4) of the Act did not offend article 14 or article 330 Of the Constitution and was not unconstitutional. 427 Held, further, that the appellant had failed to establish that S2 had ceased to be a member of the scheduled tribe and had become a Kshatriya. Whatever may have been the origin of Hindu castes and tribes in ancient times, gradually castes came to be based on birth alone. A person who belonged by birth to a depressed caste or tribe would find it very difficult, if not impossible, to attain the status of a higher caste by virtue of his volition, education, culture and status. The caste status of a person had to be determined in the light of the recognition received by him from the members of the caste into which he sought an entry ; unilateral acts of such a person asserting a higher status were not enough to establish the higher status. It is to be hoped that this position will change, and in course of time the cherished ideal of castless society truly based on social equality will be attained under the powerful impact of the doctrine of social justice and equality proclaimed by the Constitution and sought to be implemented by the relevant statutes and as a result of the spread of secular education and the growth of a rational outlook and of proper sense of social values ; but at present it would be unrealistic and utopian to ignore the difficulties which a member of the depressed tribe or caste has to face in claiming a higher status amongst his co religionists. Per Kapur, J. The election Of S2 to the general seat was not valid. When a member of the scheduled tribe or caste offered himself for election to a reserved seat he could be elected only to that seat and not to the general seat. The provisions of the Constitution and of the Act show that the election in a constituency was for filling of a seat in the constituency and not for a constituency. When a candidate offers himself for election in a constituency, he does so for election to fill a seat in the constituency. Therefore, if a candidate wanted to contest both the seats he had to file two nomination papers one for the general seat and the other for the reserved seat and he had to make two deposits. Section 8(2) Of the destroyed the effect of section 54 of the Act. Caste in Hinduism had its origin not on the basis of birth but of guna, karma and subhavana (quality, actions and character). Caste is nothing but division of labour. Hinduism might have become static at one time; it is no longer so and it is wrong to say that caste is dependent upon birth and not on kayma i.e. action. section 2 had by his actions raised himself to the position of a Kshatriya and he was no longer a member of the scheduled tribe or caste.

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Appeal No. 693 of 1957. Appeal from the judgment and Order dated the 25th May, 1956 of the Punjab High Court in F.A.C. No. 89/D of 55. N. C. Chatterjee, section K. Kapur, N. H. Hingorani and Ganpat Rai, for the appellants. H. J. Umrigar and T. M. Sen, for the respondent. January 20. The Judgment of the Court was delivered by SHAH J. On May 3, 1937, M/s. Alopi Parshad and Sons Ltd., who will herinafter be referred to as the Agents, were, under an agreement in writing, appointed by the Governor General for India in Council, as from October 1, 1937, agents for purchasing ghee required for the use of the Army personnel. The Government of India, by cl. 12 of the agreement, undertook to pay to the Agents the actual expenses incurred for purchasing ghee, cost of empty tins, expenses incurred on clearance of Government tins from the railway, export land customs duty levied on ghee purchased and exported from markets situated in Indian States, octroi duty, terminal tax or other local rates on ghee, and certain other charges incurred 796 by the Agents. The Government also agreed to pay to the Agents at rates specified in the agreement: (1) the financing and overhead (mandi) charges incurred in the buying markets. (2) the cost of establishments and contingencies provided by the Agents on the Government 's account for carrying out the purchase and supply of ghee, and (3) the buying remuneration. In consideration of the Government paying to the Agents a sum of rupee one and anna one only per one hundred pounds nett weight of finally accepted ghee, as combined financing and overhead (mandi) charges, the Agents by cl. 13 undertook to provide the working capital and also to bear the costs, charges and expenses, including financing and overhead charges incurred by them in buying ghee in the market. The Agents also undertook, by cl. 14, to bear the establishment and contingency charges for the duo performance by them of the terms of the agreement, and the Government agreed to pay in consideration thereof annas 14 and pies 6 per every hundred pounds of ghee accepted. The Government also agreed to pay to the Agents remuneration for services rendered in purchasing ghee, at the rate of one rupee per one hundred pounds nett weight of accepted ghee. Pursuant to the agreement, the Agents supplied from time to time ghee to the Government of India, as required. In September, 1939, the World War 11 broke out, and there was an enormous increase in the demand by the Government of ghee. On June 20, 1942, the original agreement was, by mutual consent, revised, and in respect of the establishment and contingencies, the uniform rate of annas 14 and 6 pies per hundred pounds of accepted ghee, was substituted by a graded scale: for the first 5 thousand tons, the Agents were to be paid at the rate of Re. 0 14 6 per hundred pounds, for the next five thousand tons, at the rate of annas 8 per hundred pounds, and at the rate of annas 4 per hundred pounds, for supplies exceeding ten thousand tons. Even ill respect of 797 remuneration for services, a graded scale was substituted: for the first five thousand tons, remuneration was to be paid at the rate of Re. 1 per hundred pounds, at the rate of annas 8 per hundred pounds, for the next five thousand, and annas 4 per hundred pounds, for supplies exceeding ten thousand tons. This modification in the rates became effective from September 11, 1940. By their communication dated December 6, 1943, the Agents demanded that the remuneration, establishment and contingencies, and mandi and financing charges, be enhanced. In respect of the buying remuneration, they proposed a 25 per cent increase; in respect of establishment and contingencies, they proposed an increase of 20 per cent., and in respect of mandi and financing charges, an increase of 112 per cent. This revision of the rates was claimed on the plea that the existing rates, fixed in peace time, were "entirely superseded by the totally altered conditions obtaining in war time. " To this letter, no immediate reply was given by the Government of India, and the Agents continued to supply ghee till May, 1945. On May 17, 1945, the Government of India, purporting to exercise their option under cl. 9 of the agreement, served the Agents with a notice of termination of the agreement. On May 22, 1945, the Chief Director of Purchases, on behalf of the Government of India, replied to the letter dated December 6, 1943, and informed the Agents that normally no claim for revision of rates could be entertained during the currency of the agreement and especially with retrospective effect, but a claim for ex gratia compensation to meet any actual loss suffered by an agent, might be entertained, if the Agents established circumstances justifying such a claim. The Chief Director of Purchases called upon the Agents to submit the report of their auditors on the agency accounts, for the ghee supplied, as also a statement in detail, showing the actual expenditure incurred. The notice dated May 17, 1945, was waived by mutual consent, and under an arrangement dated May 16, 1946, the Agents agreed to supply five 798 thousand tons of ghee by October 31, 1946, on which date, the agreement dated May 3, 1937, was to come to an end. By their letter dated July 1, 1946, the Agents claimed that a dispute had arisen under the contract, and appointed one Nigam to be arbitrator on their behalf to adjudicate upon the dispute, pursuant to cl. 20 of the terms of the agreement dated May 3, 1937, and. called upon the Government of India to appoint their arbitrator. The Government of India, by their letter dated July 10, 1946, nominated one Rangi Lal to be arbitrator on their behalf. Before the arbitrators, the Agents made their claim under four heads: (1) The Agents claimed that the agreement dated June 20, 1942, was not binding upon them, and they were entitled to Rs. 23,08,372 8 0 being the difference between the buying remuneration, establishment and contingency charges due under the agreement dated May 3, 1937, and the amount actually received. The details of this claim were set out in Sch. A. (2)In the event of the arbitrators holding the agreement dated June 20, 1942, was binding, a revision of the rates for establishment and contingencies, and an additional amount of Rs. 6,91,600 4 0 at such revised rates as set out in Sch. B. (3)Revision of the rates fixed under the agreement dated June 20, 1942, of the mandi charges, and an additional amount of Rs. 14,47,204 6 3, at the revised rates as set out in Sch. C. (4)Damages for wrongful termination of the agreement in the month of October, 1946, amounting to Rs. 2,41,235, as set out in Sch. The arbitrators did not arrive at any agreed decision, and the dispute was referred to Lala Achru Ram who was nominated an umpire. The umpire was of the view that the agreement dated June 20, 1942, was valid, and the claim as set out in Sch. A was untenable; that the claims set out in Sch. B and Sch. C, did not arise out of the agreement, and he had no jurisdiction to adjudicate upon the same; and that as the claim set out in Sch. D, was outside the scope of 799 the Reference, he was incompetent to give any finding on that claim. This Award was filed in the court of the Sub ordinate Judge, First class, Delhi. The Agents applied to set aside the Award on the grounds that the umpire was guilty of misconduct in that he failed to give an adequate opportunity to the Agents to present and substantiate their case before him, and that in holding that the claims as described in Schedules B, C and D, either did not arise out of the agreement or were outside the scope of the Reference, the umpire erred. The learned Subordinate Judge held that the umpire was in error in leaving undetermined claims described in Sch. B and Sch. D, which were within the scope of the Reference, and that the claim described in Sch. C was properly left undecided as it was outside the scope of the Reference. He also held that the Award was vitiated on account of judicial misconduct, because the Agents were not allowed by the umpire sufficient opportunity to place their case. The learned Subordinate Judge, in that view, proceeded to set aside the Award, but he declined to supersede the Reference, and left it to the parties to "appoint other arbitrators in view of cl. 20 of the agreement, for settling the dispute. " Against the order of the Subordinate Judge, the Union of India appealed to the High Court of East Punjab. Khosla, J., who heard the appeal, confirmed the order passed by the court of first instance. The learned Judge agreed with the view of the Subordinate Judge that the umpire bad been guilty of judicial misconduct. The learned Judge observed in his judgment that the claim of the Agents, as described in Schedules B and C, was not beyond the arbitration agreement. In so observing, presumably, the learned Judge committed some error. The Subordinate Judge had come to the conclusion that the claim described in Sch. C, was beyond the arbitration agreement, and no reasons were given by Khosla, J., for disagreeing with that view. Appeal 31 of 1953 under the Letters Patent, against the judgment of Khosla J., was dismissed by a 102 800 Division Bench of the High Court of East Punjab, observing that the claim detailed in Sch. B arose out of the contract, but that it was unnecessary to decide whether the claim described in Sch. C for an increase in the financing and overhead mandi charges, was properly ruled out by the umpire. In the meantime, by letter dated August 9, 1952, the Agents called upon the Government of India to appoint their arbitrator under cl. 20 of the agreement dated May 3, 1937, for a fresh adjudication of the dispute, and intimated that they had again appointed Nigam to be their arbitrator. The Government of India informed the Agents by their letter dated August 14, 1952, that they had filed an appeal against the judgment of the Subordinate Judge, Delhi, and in the circumstances, the question of appointing an arbitrator, did not arise until the final disposal of the appeal. The Government, however, without prejudice to their rights, including the right to prosecute the appeal, again appointed Rangi Lal to be arbitrator on their behalf. After the Appeal under the Letters Patent, was decided by the East Punjab High Court on Decemher 16, 1953, the arbitrators entered upon the reference. On March 1, 1954, the Agents submitted their claim, contending that the supplementary agreement dated June 20, 1942, was void and not binding upon them, and that, in any event, on the representations made on December 6, 1943, and from time to time thereafter, they were assured by the Chief Director of Purchases that the claim made by them would be favourably considered by the Government of India, and relying on these assurances, they continued to supply ghee in quantities demanded by the Government after incurring " heavy extra expenditure". They also claimed that they were constantly demanding an increase in the mandi and financing charges, but the Chief Director of Purchases, who was duly authorized in that behalf by the Government, gave repeated verbal assurances that their demands would be satisfied, and requested them to continue supplies for the successful prosecution of the war. Contending 801 that the Government of India was estopped from repudiating their claim set out in Schedules B and C, in view of all the facts and circumstances stated in the petition, the Agents prayed for a declaration that the supplementary agreement dated June 20, 1942, was void and not binding upon them, and for a decree for payment of Rs. 27,48,515 with interest at the rate of 6 per cent. per annum from March 1, 1954, and, in the, alternative, for a decree for Rs. 25,63,037 7 3, with interest at the rate of 6 percent. per annual from March 1, 1954, till recovery. This claim of the Agents was resisted by the Government of India. Inter alia, it was denied that any assurances were given by the Director of Purchases, or that the Agents continued to supply thee relying upon such alleged assurances. It was asserted that the Agents continued to supply thee without insisting upon any modification of the agreement, because they found, and it must be presumed that they found, it profitable to do so under the terms fixed under the supplementary contract dated June 20, 1942. The claims made for the additional buying remuneration, for mandi charges and for establishment and contingency charges, were denied. It was urged that, in any event, the claim for additional buying remuneration and for mandi charges and for reimbursement of establishment and contingencies, was not covered by cl. 20 of the agreement, under which the submission to arbitration was made, and the arbitrators had no jurisdiction to adjudicate upon those claims. On the claim made by the Agents, and the denial thereof, the arbitrators incorporated the points of contest in the form of certain issues. On May 2, 1954, the arbitrators made an award rejecting the primary claim on the view that the supplementary agreement dated June 20, 1942, was for consideration and the same was valid and binding upon the Agents. On the alternative claim, they awarded, under the head of establishment and contingencies, Rs. 80,994 12 6, being the actual loss which, in their view, the Agents had suffered, and Rs. 11,27,965 11 3, in addition to the amounts received by the Agents from the Government 802 for mandi and financing charges. The arbitrators accordingly awarded an amount of Rs. 13,03,676 12 6 with future interest from November 15, 1949, till the V. date of realization, and costs. The Union of India The award was filed in the court of the Commercial Subordinate Judge, Delhi, on June 2, 1954. The Government of India applied under sections 30 and 33 of the Indian Arbitration Act, to set aside the award on the grounds that it was invalid, that it had been improperly procured, and that it was vitiated on account of judicial misconduct of the arbitrators. The Commercial Subordinate Judge held that the arbitrators had committed an error apparent on the face of the award in ordering the Union to pay to the Agents additional remuneration and financing and overhead charges, but, in his view, specific questions having been expressly referred for adjudication to the arbitrators, the award was binding upon the parties and could not be set aside on the ground of an error apparent on the face thereof. The learned Judge, accordingly, rejected the application for setting aside the award. Against the order made by the Subordinate Judge, an appeal was preferred by the Union of India to the High Court of East Punjab at Chandigarh. At the hearing of the appeal, counsel for the Agents sought to support the award on the plea that certain questions had been specifically referred to the arbitrators, and it was open to the arbitrators to make the award which they made, on the basis of quantum meruit. The High Court held that there was no specific reference of any questions of law to the arbitrators, and the decision of the arbitrators was not conclusive and was open to challenge, because it was vitiated by errors apparent on the face of the award. The High Court reversed the order passed by the Subordinate Judge, and set aside the award of the arbitrators, holding that there was no "legal basis for awarding any compensation" to the Agents for any loss which they might have sustained. This appeal has been filed with leave of the High Court under el. 133 (1)(a) of the Constitution. 803 The extent of the jurisdiction of the court to set aside an award on the ground of an error in making,,,,,,. the award is well defined. The award of an arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous Champsey Bhara and Company vs Jivaraj Balloo Spinning and Weaving Company, Limited (1). If, however, a specific question is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law does not make the award bad on its face so as to permit of its being set aside In the matter of an arbitration between King and Duveen and Others (2 ) and Government of Kelantan vs Duff Development Company Limited (3). Was the reference made by the parties to the arbitrators a specific reference, that is, a reference inviting the arbitrators to decide certain. questions of law submitted to them? If the reference is of a specific question of law, even if the award is erroneous, the decision being of arbitrators selected by the parties to adjudicate upon those questions, the award will bind the parties. In the reference originally made to the arbitrators by the letter of the Agents on July 1, 1946, and the reply of the Government dated July 10, 1946, a general reference of the dispute was made in terms of el. 20 of the agreement. Even though the award made on that reference, was set aside by the Subordinate Judge, the arbitration was not superseded, and the reference was expressly kept alive, reserving an opportunity to the parties to appoint fresh arbitrators pursuant to the agreement, for settling the dispute; and by letters respectively dated August 2, 1952, and August 14, 1952, a general reference was again made to the arbitrators. Paragraph 14 of the letter written by the Agents on August 2, 1952, evidences an intention to serve the notice under cl. 20 (1) L.R. 5o I.A. 324. (2) L.E. (1913) 2 K.B.D. 32. (3) L.R. 1923 A.C. 395. 804 of the agreement. Issues were undoubtedly raised by the arbitrators, but that was presumably to focus the attention of the parties on the points arising for adjudication. The Agents had made their claim before the arbitrators, and the claim and the jurisdiction of the arbitrators to adjudicate upon the claim, were denied. The arbitrators were by the terms of reference only authorized to adjudicate upon the disputes raised. There is no foundation for the view that a specific reference, submitting a question of law for the adjudication of the arbitrators, was made. We agree, therefore, with the view of the High Court that the reference made, was a general reference and not a specific reference on any question of law. The award may, therefore, be set aside if it be demonstrated to be erroneous on the face of it. The original agreement dated May 3,1937, was modified by the supplementary agreement dated June 20, 1942, and the arbitrators have held that the modified agreement was binding upon the Agents. By the agreement as modified, a graded scale was fixed for the establishment and the contingencies to be paid to the Agents, and also for the mandi charges and overhead expenses. The arbitrators still proceeded to award an additional amount for establishment and contingencies and an additional amount for mandi charges. By el. 14(a), read with el. 12(b) (2) of the agreement, the rate at which establishment and contingency charges were to be paid, was expressly stipulated, and there is no dispute that the Government of India have paid to the Agents those charges at the stipulated rate for thee actually purchased. The award of the arbitrators shows that the amount actually received from the Government, totalled Rs. 6,04,700 9 0, whereas, according to the accounts maintained by the Agents, they had spent Rs. 6,77,542 0 3. Granting that the Agents had incurred this additional expenditure under the head ` establishment and contingencies ', when the contract expressly stipulated for payment of charges at rates specified therein, we fail to appreciate on what ground the arbitrators could ignore the express 805 covenants between the parties, and award to the Agents amounts which the Union of India had not agreed to pay to the Agents. The award of the arbitrators, awarding additional expenses under the head of establishment and contingencies, together with interest thereon, is on the face of it erroneous. Before the arbitrators, a number of arhatias who supplied thee to the Agents, appeared and produced extracts from their books, showing the amounts actually due to them from the latter. Detailed charts, showing the total amount due under each head of expenditure to each arhatia, were produced. The arbitrators were satisfied that the statements produced, reflected a general rise in prices and cost of labour. Taking into consideration the fact that the other persons were buying thee at rates considerably in excess of the stipulated rates, the arbitrators held that the Agents were entitled to be reimbursed to the extent of Rs. 11,27,965 11 3. But the terms of the contract, stipulating the rate at which the financing and overhead charges were to be paid under el. 13(a) read with cl. 12(b), remained binding so long as the contract was not abandoned or altered by mutual agreement, and the arbitrators had no authority to award any amount in excess of the amount expressly stipulated to be paid. Mr. Chatterjee, on behalf of the Agents, submitted that the circumstances existing at the time when the terms of the contract were settled, were "entirely displaced" by reason of the commencement of hostilities in the Second World War, and the terms of the contract agreed upon in the light of circumstances existing in May, 1937, could not, in view of the turn of events which were never in the contemplation of the parties, remain binding upon the Agents. This argument is untrue in fact and unsupportable in law. The contract was modified on June 20, 1942, by mutual consent, and the modification was made nearly three years after the commencement of the hostilities. The Agents were fully aware of the altered circumstances at the date when the modified schedule for payment of overhead charges, contingencies and buying remuneration, was agreed 806 upon. Again, a contract is not frustrated merely because the circumstances in which the contract was made, are altered. Section 56 of the Indian Contract Act provides " A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promiser could not prevent, unlawful, becomes void when the act becomes impossible or unlawful." Performance of the contract had not become impossible or unlawful; the contract was in fact performed by the Agents, and they have received remuneration expressly stipulated to be paid therein. The Indian Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. " The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. Yet this does not in itself affect the bargain they have made. If, on the other hand, a consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situa tion which has now unexpectedly emerged, the contract ceases to bind at that point not because the court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation. When it is said that in such circumstances the court reaches a conclusion which is 'just and reasonable ' (Lord Wright in Constantine 's case(1) or one 'which justice demands ' (Lord Sumner in Hirji Mulji vs Cheong Yue Steamship Co. Ltd. (2) this result is arrived at by putting a just construction upon the contract in accordance with an 'implication. . from the (1) , 186. (2) , 510 807 presumed common intention of the parties ' speech of Lord Simon in British Movietonews Ltd. vs London and District Cinemas Ltd. (1). There is no general liberty reserved to the courts to absolve a party from liability to perform his part of the contract, merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous. That is the law both in India and in England, and there is, in our opinion, no general rule to which recourse may be had as contended by Mr. Chatterjee, relying upon which a party may ignore the express covenants on account of an uncontemplated turn of events since the date of the contract. Mr. Chatterjee strenuously contended that in England, a rule has in recent years been evolved which did not attach to contracts the same sanctity which the earlier decisions had attached, and in support of his contention, he relied upon the observations made in British Movietonews Ld. vs London and District Cinemas Ld. In that case, Denning, L.J., is reported to have observed : ". . no matter that a contract is framed in words which taken literally or absolutely, cover what has happened, nevertheless, if the ensuing turn of events was so completely outside the contemplation of the parties that the court is satisfied that the parties, as reasonable people, cannot have intended that the contract should apply to the new situation, then the court will read the words of the contract in a qualified sense; it will restrict them to the circumstances contemplated by the parties; it will not apply them to the uncontemplated turn of events, but will do therein what is just and reasonable. " But the observations made by Denning, L.J., upon which reliance has been placed, proceeded substantially upon misapprehension of what was decided in Parkinson & Co. Ld. vs Commissioners of Works (3), on which the learned Lord Justice placed considerable reliance. The view taken by him, was negatived in (1) L.R. 1052 A.C. 166 at pp. 185 & 186. (2) (1951) 1 K.B.D. 19O, 201, (3) (1949) 2 K.B. D. 632. 103 808 appeal to the House of Lords in the British Movietonew 's case (1952) A.C. 166 already referred to. In lndia, in the codified law of contracts, there is nothing which justifies the view that a change of circustamences, " completely outside the contemplation of parties" at the time when the contract was entered into, will justify a court, while holding the parties bound by the contract, in departing from the express terms thereof. Parkinson and Co. Ld. vs Commissioners of Works (1) was a case in which on the true interpretation of a contract, it was held, though it was not so expressly provided, that the profits of a private contractor, who had entered into a contract with the Commissioners of Works to make certain building constructions and such other additional constructions as may be demanded by the latter, were restricted to a fixed amount only if the additional quantity of work did not substantially exceed in value a specified sum. The Court in that case held that a term must be implied in the contract that the Commissioners should not be entitled to require work materially in excess of the specified sum. In that case, the Court did not proceed upon any such general principle as was assumed by Denning, L.J., in the British Movietonews Ld. vs London and District Cinemas Ld. We are, therefore, unable to agree with the contention of Mr. Chatterjee that the arbitrators, were justified in ignoring the express terms of the contract prescribing remuneration payable to the Agents, and in proceeding upon the basis of quantum meruit. Relying upon section 222 of the Indian Contract Act, by which duty to indemnify the agent against the consequences of all lawful acts done in exercise of the authority conferred, is imposed upon the employer, the arbitrators could not award compensation to the agents in excess of the expressly stipulated consideration. The claim made by the Agents was not for indemnity for consequences of acts lawfully done by them on behalf of the Government of India; it was a claim for charges incurred by them in excess of those stipulated. Such a claim was not a claim for (1) (1949) 2 K.P.D. 632. (2) (1951) 1 K.B.D. 190, 201. 809 indemnity, but a claim for enhancement of the rate of the agreed consideration. Assuming that the Agents relied upon assurances alleged to be given by the Director in charge of Purchases, in the absence of an express covenant modifying the contract which governed the relations of the Agents with the Government of India, vague assurances could not modify the contract. Ghee having been supplied by the Agents under the terms of the contract, the right of the Agents was to receive remuneration under the terms of that contract. It is difficult to appreciate the argument advanced by Mr. Chatterjee that the Agents were entitled to claim remuneration at rates substantially different from the terms stipulated, on the basis of quantum meruit. Compensation quantum meruit is awarded for work done or services rendered, when the price thereof is not fixed by a contract. For work done or services rendered pursuant to the terms of a contract, compensation quantum meruit cannot be awarded where the contract provides for the consideration payable in that behalf Quantum meruit is but reasonable compensation awarded on implication of a contract to remunerate, and an express stipulation governing the relations between the parties under a contract, cannot be displaced by assuming that the stipulation is not reasonable. It is, therefore, unnecessary to consider the argument advanced by Mr. Chatterjee that a claim for compensation on the basis of quantum meruit, is one which arises out of the agreement within the meaning of cl. 20. Granting that a claim for compensation on the basis of quantum meruit, may be adjudicated upon by the arbitrators in a reference made under el. 20 of the agreement, in the circumstances of the case before us, compensation on that basis could not be claimed. The plea that there was a bar of res judicata by reason of the decision in the Letters Patent Appeal No. 31 of 1953, has, in our judgment, no force. The Subordinate Judge set aside the award on the ground that there had been judicial misconduct committed by the umpire and also on the view that the claims made, as described in Schedules B and D, were not outside 810 the competence of the arbitrators. The High Court in appeal under the Letters Patent, did confirm the order, setting aside the award; but there was no binding decision between the parties that the claim described in Sch. B, that is, the claim for establishment and contingency charges, was within the competence of the arbitrators in reference under el. 20.It may be observed that according to the High Court of East Punjab in the Appeal No. 31 of 1953, under the Letters Patent, it was not necessary to express any opinion whether the claim in Sch. C was within the competence of the arbitrators, and the claims described in Sch. D does not appear to have been agitated in the second arbitration proceeding. We, accordingly, agree with the view of the High Court that the Award of the arbitrators was liable to be set aside because of an error apparent on the face of the award. In this view, the appeal fails and is dismissed with costs. Appeal dismissed.

The appellants were appointed under an agreement in writing by the Governor General as agents for purchasing and supplying ghee required for the Army personnel with effect from October 1, 1937. After the outbreak of the World War 11 there was an enormous increase in the demand of ghee by the Government and the agreement was revised by mutual consent on June 20, 1942, and the original rates of payment were scaled down. On December 6, 1943, the appellants made a representation to the Government for enhancing the rates as conditions had become 794 abnormal. According to the appellants they were given assu rances that their, claims would be favourably considered by the Government and relying on these assurances they continued to supply ghee in quantities demanded by the Government incurring heavy extra expenditure. The Government did not enhance the rates and the matter was referred to arbitration under the agreement of 1937. Before the arbitrators the appellants contended that the agreement Of 1942 was not binding upon them and claimed payment on the basis of the agreement Of 1937; and in the alternative claimed payment on the basis of increased rates of mandi charges, additional buying remuneration and contingency charges. These claims were resisted by the Government and it was denied that any assurances were given by the Government to enhance the rates. The arbitrators incorporated the points of contest in the form of issues. By an award dated May 2, 1954, the arbitrators rejected the primary claim of the appellant holding that the agreement of 1942 was binding. On the alternative claim they awarded a sum of money for loss suffered by the appellants on account of establishment and contingencies, and another sum for mandi and financing charges. The award was filled in the Court of the Commercial Sub judge, Delhi, and the Government applied to have it set aside. The Sub judge held that though there was an error on the face of the award in ordering the payment of additional remuneration and financing and overhead charges the award could not set aside as specific questions had been expressly referred for adjudication to the arbitrators and the award was binding on the parties. On appeal the High Court held that no specific questions of law had been referred to the arbitrators and that the award was vitiated by errors apparent on the face of the award. Held, that the award was liable to be set aside because of an error apparent on the face of the award. An arbitration award may be set aside on tile ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. But where a specific question is referred, the award is not liable to be set aside oil the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law. In the present case there was a general reference and not a specific reference on any question of law. Champsey Bhara and Co. vs Jivraj Balloo Spinning & Weaving Co., Ltd., L. R. 50 1. A. 324, In the matter of a arbitration between King and Duveen L.R. 1913 2 K.B.1). 32, and Government of Kelantan vs Duff Development Co., Ltd., L. R. , relied on. The contract provided for payment of charges at rates specified therein and the arbitrators could not ignore the express covenants between the parties and award amounts not agreed to be 795 paid. A contract is not frustrated merely because the circumstances in which it was made are altered. The courts have no general power to absolve a party from the performance of his part of the contract merely because its performance has become onerous on account of an unforseen turn of events. Constantine 's case , Hirji Mulji vs Cinemas Ltd. Steamship Co., Ltd., , British Movietonews Ltd. vs London and District Cinemas, L. R. and Parki son &Co., Ltd. vs Commissioners of Works. (1949) 2 K. B. D. 632, referred to. British Movietonews Ltd. vs London and District Cinemas Ltd. (1951) 1 K.B.D. 190, disapproved. The award which ignored the express terms of the contract prescribing the remuneration payable could not be justified as proceeding upon the basis of quantum meruit. Compensation quantum meruit may be awarded for work done or services rendered only when the price thereof is not fixed by a contract. For work done or service rendered pursuant to the terms of a contract, compensation quantum meruit cannot be awarded where the contract provides for the consideration payable in that behalf.

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: Civil Appeals Nos. 143 & 144 of 1959 and 545 of 1958. Appeals by special leave from the Award dated December 14, 1957, of the State Industrial Court at Nagpur in Industrial References Nos. 18 of 1956 and I of 1957 respectively. C. B. Aggarwala, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants (in all the appeals). A. V. Viswanatha Sastri, W.S. Barlingay, section W. Dhabe, Shanker Anand and A. G. Ratnaparkhi, for respondent No. 2 (in C. A. No. 144/59 and respondent (in C. A. No. 143 of 1959). H. R. Khanna and R. H. Dhebar, for respondent No. 3 (in C.A. No. 144/59.) 945 A. V. Viswanatha Sastri, W. section Barlingay, Shankar Anand and A. G. Ratnaparkhi, for the respondents (in C.A. No. 545 of 1958). 1960 Feb. 10. The Judgment of the Court was delivered by SUBBA RAO, J. This batch of three connected appeals raises the question whether and to what extent the activities of the Corporation of the City of Nagpur come under the definition of "industry" in section 2(14) of the C.P. & Berar Industrial Disputes Settlement Act, 1947 (hereinafter called the Act). The appellant is the Corporation of the City of Nagpur constituted under the City of Nagpur Corporation Act, 1948 (Madhya Pradesh Act No. 2 of 1950). Disputes arose between the Corporation and the employees in various departments of the Corporation in respect of wage scales, gratuity, provident fund, house rent, confirmation, allowances etc. The Government of the State of Madhya Pradesh by its order dated October 23, 1956, referred the said disputes under section 39 of the Act to the State Industrial Court, Nagpur and the reference was numbered as Industrial Reference No. 18 of 1956. The appellant filed a statement before the Industrial Court questioning the jurisdiction of that Court, inter alia, on the ground that the Corporation was not an industry as defined by the Act. On February 13, 1957, the Industrial Court made a preliminary order holding that the Corporation was an industry and that the further question whether any department of the Corporation was an industry or not, would be decided on the evidence. The appellant challenged the correctness of that order by filing a petition under article 226 of the Constitution in the High Court of Bombay at Nagpur, but that petition was dismissed, as the award was made before its hearing. On June 3, 1957, the Industrial Court made an award holding that the Corporation was an industry and further that all departments of the Corporation were covered by the said definition. It also revised the pay scales of the employees and accepted the major demands made by them. On July 15, 1957, the appellant again filed a petition in the High Court of Bombay at Nagpur, 946 questioning the validity and the, correctness of the aid award. A division bench of the said High Court, by its order dated September 11, 1957, rejected the contention of the appellant that the, Corporation was not an industry as defined by the Act and remanded the case to the State Industrial Court to decide the activities of which departments of the Corporation fell within the definition of "industry" given in the Act and to re examine the schedules and categories of persons and to restrict the award to the persons concerned within the definition of the word "industry" in the Act. On remand, the said Industrial Court scrutinized the activities of each of the departments of the Corporation and hold that all the departments of the Corporation, except those dealing with (i) assessment and levy of house tax, (ii) assessment and levy and pulling down of dilapidated houses, (iv) prevention and control of food adulteration and (v) maintenance of cattle pounds, were covered by the definition of "industry" under the Act. It further gave findings in regard to the disputes between be parties and also as to the persons entitled to the reliefs. It is not necessary to give the particular . of the findings arrived at or the relief given by the Industrial Court, as nothing turns upon them in this appeal. The appellant by special leave filed in this Court Civil Appeal No. 143 of 1959 against the award of the Industrial Court. It also filed in this Court by special leave Civil Appeal No. 144 of 1959 against the order of the High Court holding that the activities of the Corporation came under the definition of "industry" in the Act and remanding the case to the Industrial Court for decision on merits in respect of each of the activities of the Corporation. Civil Appeal No. 545 of 1958, the third appeal in this batch, arises out of a reference made by the State Government of Madhya Pradesh in regard to the disputes between the appellant, i.e. the Corporation of the City of Nagpur, and the employees of the Corporation in the Fire ]Brigade Department, representing themselves and other employees. The said reference was numbered as Industrial Reference No. 1 947 of 1957. As there was overlapping of the disputes raised in Industrial Reference No. 18 of 1956 and Industrial Reference No. 1 of 1957, the Industrial Court heard both the references together and, by consent, the evidence in Reference No. 18 of 1956 was treated as evidence in Reference No. 1 of 1957. On December 14, 1957, an award was made in Reference No. 1 of 1957 and it was based on the findings in the award made in Reference No. 18 of 1956. The Industrial Court held that the Fire Brigade ]Department was an industry within the meaning of the Act and, on that basis, gave the necessary reliefs to the employees. Mr. Aggarwala, learned counsel appearing for the appellant in the first two appeals, raised before us the following points: (1) No service rendered by the Corporation would be an industry as defined by section 2(14) of the Act. (2) Assuming that some of the services of the Corporation are comprehended by the definition of " industry " in the Act, the said services, in order to satisfy the definition, must 'be analogous to a business or trade. (3) Even otherwise, the activities of the Corporation to be called industry must partake the common characteristics of an industry. (4) The, finding of the Industrial Court holding that the various departments of the Corporation are industries is not correct, as the services rendered by the said departments do not satisfy either of the aforesaid two tests. The first question need not detain us, for it has now been finally decided by two decisions of this Court against the appellant. In D. N. Banerji vs P. R. Mukherjee (1), the chairman of a municipality dismissed two of its employees, namely, the Sanitary Inspector and the Head Clerk, and the Municipal Workers ' Union questioned the propriety of the dismissal and claimed that they should be reinstated and the matter was referred by the Government to the Industrial Tribunal for adjudication under the . In that case two questions were raised before this Court one was whether the said dispute was industrial dispute within the 948 meaning of section 2(j) of the and the other was whether the was invalid inasmuch as it allowed the Tribunal to reinstate employees and to that extent trenched on the power of the chairman to appoint and dismiss employees. This Court held that the Act was not invalid, as it was in pith and substance a law in respect of industrial and labour disputes and that the conservancy service rendered by the municipality was an industry and the dispute between the municipality and the employees of the conservancy department was an industrial dispute within the meaning of the . This decision was followed by this Court in Baroda Borough Municipality vs Its Workmen (1). In that case the effect of the earlier decision was summarized thus, at p. 38: " It is now finally settled by the decision of this Court in D. N. Banerji vs P. R. Mukherjee (2) that a municipal undertaking of the nature we have under consideration here is an " industry " within the meaning of the definition of that word in section 2(j) of the , and that the expression " industrial dispute " in that Act includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business. " In that case the workmen employed in the electricity department of the Baroda Municipality demanded bonus. The electricity undertaking of the Baroda Municipality was held to be an industry and the dispute between the Municipality and its employees an industrial dispute. Bonus was refused on other grounds and we are not concerned with that aspect of the case here. These two cases, therefore, have finally and authoritatively held that municipal undertakings could be " industry " within the meaning of the . A faint argument is attempted to sustain a distinction between the definition of an "industry" in the and the definition of the same word in the Act in question. Section 2(j) of the (1) ; (2) ; 949 defines " industry " to mean any business, trade, undertaking, manufacture or calling of employers and to include any calling service, employment, handicraft, or industrial occupation or avocation of workmen ". Section 2(14) of the Act divides the definition into three parts, namely, " (a) any business, trade, manufacturing or mining undertaking or calling of employers, (b) any calling, service, employment, handicraft or industrial occupation or avocation of employees, and (c) any branch of an industry or a group of industries. " A comparative study of these two sections brings out the following differences: While the definition of " industry " in the means certain things and includes others, the definition of " industry " in the Act includes the three categories described therein; while the definition in the former Act places 'undertaking ' in a category different from ' manufacturing or mining ' , in the latter Act it is qualified by the words 'manufacturing or mining '. In our view these differences do not justify us in taking a different view from that accepted by this Court in the foregoing decisions. Clause (a) of the definition defines industry with reference to the employers and cl. (b) with reference to the employees. Excluding the words "manufacturing or mining undertaking " from cl. (a) of the definition, the other words in cls. (a) and (b) thereof are comprehensive enough to take in all the categories which the definition of "industry" in the will take in. That apart, a perusal of the decision of this Court in D. N. Banerji vs P. R. Mukherjee (1) does not indicate that this Court would have come to a different conclusion if the word " undertaking " in the was qualified by the words " manufacturing or mining ". The decision was founded on a broader basis, having regard to the history of the legislation, the cognate definitions in the Act and the inclusive part of the definition corresponding to section 2(14)(b) of the Act. We, therefore, hold that a service rendered by a corporation, if it complies with the conditions implicit in the definition which we would consider at a later stage (1) ; 950 of the judgment will bean " industry " within th meaning of the definition in the Act. The next question is whether activity of the Corporation is not " industry " unless it shares the common characteristics of an industry. The following five characteristics are stated to be the conditions implicit in the definition: (i) the activity must concern the production or distribution of good or services; (ii) it must be to serve others but not to oneself; (iii) it must involve co operative effort between employer and employer between capital an labour; (iv) it must be done as a commercial transaction and (v) it must not be in exercise of pure governmental functions. We have considered this aspect in State of Bombay vs The Hospital Maazdoor Sabha (1) in the context of the definition of " industry " in the and formulated certain broad principles. But as this case is concerned with the definition of "industry" in a different Act, we shall briefly resurvey the law on the subject with specific reference to a corporation. Let us scrutinize the definition of " industry " to ascertain whether all or some of the conditions are implicit in the definition and whether the said conditions constitute the necessary basis for it. The true meaning of the section must be gathered from the expressed intention of the Legislature. Maxwell in his book "On the Interpretation of Statutes", 10th Edn., rightly points out at p. 2 that " If the words of the statute are in themselves precise and unambiguous no more is necessary than to expound those, words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature ". The words used in the section are clear and unambiguous and they prima facie are of the widest import. We have pointed out that the section is in two parts: cl. (a) defines " industry " with reference to employers and cl. (b) defines it with reference to employees. Clause (c) extends the definition to any branch of an industry or a group of industries, i.e., industries Coming within the definition of cls. (a) and (b). It is said that in (1)[1960] 2 S.C.R. 866. 951 construing the definition we must adopt the rule of construction noscuntur a sociis. Maxwell explains this doctrine at p. 332 thus: " When two or more words which are susceptible of analogous meaning are coupled together noscuntur a sociis. They are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is, the more general is restricted to a sense analogous to the less general. " On the basis of this doctrine, it is argued that the words following the words " any business, trade, manufacturing or mining undertaking " shall partake the characteristics of any business, trade, manufacturing or mining undertaking, and the words " any calling, service, employment, handicraft or industrial occupation or avocation of employees " shall share the qualities of an industrial occupation or avocation. In other words, the general word " calling " in cl. (a) is controlled by the words preceding it, and the general words " calling, service etc." in cl. (b) are restricted by the succeeding words " industrial occupation or avocation ". This doctrine was dealt with by this Court in State of Bombay vs The Hospital Mazdoor Sabha (1). Therein this Court has considered the scope of this doctrine and has observed thus: " It must be borne in mind that noscuntur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service. The said doctrine, therefore, cannot be invoked in cases where the intention of the Legislature is clear and free of ambiguity. The phraseology used in the (1) ; 952 section is very clear and it is not susceptible of any ambiguity. The words used in the first part of cl. (b) are unqualified; and the qualification is introduced only in the later part. If the words " calling, service, employment, handicraft " are really intended to be qualified by the adjective " industrial ", one should expect the Legislature to affix the adjective to the first word " calling " rather than to the last word " occupations. " The inclusive definition is a wellrecognized device to enlarge the meaning of the word defined, and, therefore, the word , "industry " must be construed as comprehending not only such things as it signifies according to its natural import but also those things the definition declares that it should include: see Stroud 's Judicial Dictionary, Vol. 2, p. 1416. So construed, every calling, service, employment of an employee or any business, trade or calling of an employer will be an industry. But such a wide meaning appears to overreach the objects for which the Act was passed. It is, therefore, necessary to limit its scope on permissible grounds , having regard to the aim, scope and the object of the whole Act. To arrive at the real meaning of the words, Lord Coke in Heydon 's case, (1) says that the following matters are to be considered: (1) What was the law before the Act was passed ; (2) What was the mischief or defect for which the law had not provided; (3) What remedy Parliament hap, appointed; and (4) The reason of the, remedy. The word " employers " in el. (a) and the word " employees " in cl. (b) indicate that the fundamental basis for the application of the definition is the existence of that relationship. The cognate definitions of "industrial dispute", "employer", " employee ", also support it. The long title of the Act as well as its preamble show that the Act was passed to make provision for the promotion of industries and peaceful and amicable settlement of disputes between employers and employees in an organized activity by conciliation and arbitration and for certain other purposes. If the preamble is read with the historical background for the passing of the Act, it is manifest that the Act was introduced as an (1)[1584] b. 953 important step in achieving social justice. The Act seeks to ameliorate the service conditions of the workers, to provide a machinery for resolving their conflicts and to encourage co operative effort in the service of the community. The history of labour legislation both in England and India also shows that it was aimed more to ameliorate the conditions of service of the labour in organized activities than to anything else. The Act was not intended to reach the personal services which do not depend upon the employment of a labour force. Before considering the positive aspects of the definition, what is not an industry may be considered. However wide the definition of " industry " may be, it cannot include the regal or sovereign functions of State. This is the agreed basis of the arguments at the Bar, though the learned counsel differed on the ambit of such functions. While the learned counsel for the Corporation would like to enlarge the scope of these functions so as to comprehend all the welfare activities of a modern State, the learned counsel for the respondents would seek to confine them to what are aptly termed " the primary and inalienable functions of a constitutional government ". It is said that in a modern State the sovereign power extends to all the statutory functions of the State except to the business of trading and industrial transactions undertaken by it in its quasi private personality. Sustenance for this contention is sought to be drawn from Holland 's Jurisprudence, wherein the learned author divides the general heading "Public Law " into four sab heads and under the sub head "Administrative Law " he deals with a variety of topics including welfare and social activities of a State. The treatment of the subject " Public Law " by Holland and other authors, in our view, has no relevancy in appreciating the scope of the concept of regal powers which have acquired a definite connotation. Lord Watson, in Coomber vs Justices of Berks (1), describes the functions such as administration of justice, maintenance of order and repression of crime, as among the primary and inalienable functions of a constitutional Govern (1)(1883 84) 9 App. Cas, 61, 74 954 ment. Isaacs, J., in his dissenting judgment in The Federated State School Teachers ' Association of the Australia vs The State of Victoria (1), concisely states thus at p. 585 Regal functions are inescapable and inalienable. Such are the legislative power, the administration of laws, the exercise of the judicial power. Non regal functions may be assumed by means of the legislative power. But when they are assumed the State .acts simply as a huge corporation, with its legislation as the charter. Its action under the legislation, so far as it is not regal execution of the law is merely analogous to that of a private company similarly authorised. " These words clearly mark out the ambit of the regal functions as distinguished from the other powers of a State. It could not have been, therefore, in the contemplation of the Legislature to bring in the regal functions of the State within the definition of industry and thus confer jurisdiction on Industrial Courts to decide disputes in respect thereof. We, therefore, exclude the regal functions of a State from the definition of industry. This leads us to the question whether the Corporation can be said to exercise regal functions by legislative delegation. The Corporation functions under a statute and its powers, duties and liabilities are regulated by it. It is a juristic person and it can sue and be sued in its name. The statute constituting it may confer upon it some strictly regal functions and other municipal functions. In County Council of Middlesex vs Assessment Committee of St. George 's Union (2), certain premises were used for the administration of justice and also for municipal purposes. The question raised was whether the said premises were rateable and the Court held that they were rateable in so far as they were occupied for municipal purposes and not rateable in so fares they were occupied for the administration of justice, which was held to be a function of the Crown. So too, the Supreme Court of America in Verisimo Vasquez Vilas (1) ; (2) 955 vs City of Manila (1) expounded the dual character of a municipal corporation thus: " They exercise powers which are governmental and powers which are of a private or business character. In the one character a municipal corporation is a governmental sub division, and for that purpose exercises by delegation a part of the sovereignty of the State. In the other character it is a mere legal entity or juristic person. In the latter character it stands for the community in the administration of local affairs wholly beyond the sphere of the public purposes for which its governmental powers are conferred. " Isaacs and Rich, JJ., in The Federated Municipal and Shire Council Employees ' Union of Australia vs Melbourne Corporation (2) in the context of the dual functions of State say much to the same effect at p. 530: " Here we have the discrimen of Crown exemption. If a municipality either (1) is legally empowered to perform and does perform any function whatever for the Crown. , or (2) is lawfully empowered to perform and does perform any function which constitutionally is inalienably a Crown function as, for instance, the administration of justice the municipality is in law presumed to represent the Crown, and the exemption applies. Otherwise, it is outside that exemption, and, if impliedly exempted at all, some other principle must be resorted to. The making and maintenance of streets in the municipality is not within either proposition. " A corporation may, therefore, discharge a dual function : it may be statutorily entrusted with regal functions strictly so called, such as making of laws, disposal of certain cases judicially etc., and also with other welfare activities. The former, being delegated regal functions, must be excluded from the ambit of the definition of "industry". The next head of exclusion from the definition is put by the learned counsel for the appellant thus : A municipality in the modern polity is also a trading (1) ; 356; ; , 495. (2) ; , 530 531. 956 and industrial corporation and in that capacity is empowered to carry on undertakings partaking the Character of business and trade, and that the definition of "industry" in the Act only takes in such undertakings and no other statutory activities. To state it differently, the contention is that activities which partake the character of trade and business in the hands of a private individual would be an industry if undertaken by a corporation. Some observations made by this Court in D. N. Banerji vs P. R. Mukherjee (1) are relied upon in support of this contention. Chandrasekbara Aiyar, J., speaking for the Court made the following observations at p. 317: "Having regard to the definitions found in our Act, the aim or objective that the Legislature had in view and the nature, variety and range of disputes that occur between employees and employees, we are forced to the conclusion that the definitions in our Act include also disputes that might arise between municipalities and their employees in branches of work that can be said to be analogous to the carrying out of a trade or business. " Emphasis is laid upon the words " analogous to the carrying out of a trade or business" and an argument is built upon those words to the effect that this Court held that only such activities of municipalities analogous to trade or business would be industry within the meaning of the definition of "industry" in the Act. This argument, if we may say so, is the result of an incorrect reading of the decision. There the question was whether the sanitary department of a municipality was an industry within the meaning of the and whether the dispute between the municipality and its employees in that department was an industrial dispute thereunder. At p. 311, the learned Judge specifically deals with a contention based upon the collocation of the words in the section and observes : "Though the word "undertaking" in the definition of "industry" is wedged in between business and trade on the one hand and manufacture on the other, and though therefore it might mean only a business or trade undertaking, still it must be (1) ; 957 remembered that if that were so, there wag no need to use the word separately from business or trade. The wider import is attracted even more clearly when we look at the latter part of the definition which refers to "calling, service, employment, or industrial occupation or avocation of workmen. " "Undertaking" in the first part of the definition and "industrial occupation. or avocation" in the second part obviously mean much more than what is ordinarily understood by trade or business. The definition was apparently intended to include within its scope what might Dot strictly be called a trade or business venture. " This passage leaves no room for doubt that this Court construed the terms of the definition of "industry" in a way which takes in activities which are not strictly called trade or business. Therefore the words "not strictly be called a trade or business venture" and the words "analogous to the carrying out, of a trade or business" emphasize more the nature of the organised activity implicit in a trade or business than to equate the other activities with trade or business. This is made more clear by the learned Judge when be expressly reserves the Court 's opinion on a wider question in the following words at p. 318: "It is unnecessary to decide whether disputes arising in relation to purely administrative work fall within their ambit. " We cannot, therefore, agree with the contention that the said decision, when it expressly accepted the comprehensive meaning which the words of the section naturally bear, intended to circumscribe the wide sweep of the section to business or trade and activities in the nature of trade or business. Nor a fair reading of the section bears out such a construction. We have already indicated our view on the construction of the section, having regard to the clear phraseology used therein, that the section cannot be confined to trade or business or activities analogous to trade or business. A more workable and reasonable test is laid down in an Australian decision cited at the Bar, and that test has also been accepted and applied by this Court. In Federated Engine Drivers and Firemen 's Association 958 of Australia, and Others vs The Broken. Hill Proprietory Company Limited and Others (1) a distinction was drawn between trading and non trading operations, but the question as to how far non trading operations attracted the definition of "industry" was left undecided. That question fell to be decided in The Municipal and Shire Council Employees ' Union of Australia vs Melboure Corporation (2 ) and that decision, if we may say so, is illuminating and throws considerable light on the question to be decided in the present appeal. It was held by the High Court of Australia that the Commonwealth Court of Conciliation and Arbitration had authority to determine by award a dispute between an organization of employees registered in connection with "municipal and shire councils, municipal trusts and similar industries", and municipal corporations constituted under State laws. The dispute there related to those operations of municipal corporations which consisted of the making, maintenance, control and lighting of public streets. The learned Judges discussed at length the meaning of the word "industrial dispute" in section 51 (XXXV) ofthe Constitution of Australia. It is manifest from this decision that even activities of a municipality which cannot be described as trading activities can be the subject matter of an industrial dispute. Isaacs, J.,in his dissenting judgment in The Federated State School Teachers ' Association of Australia vs The State of Victoria (3), has concisely expressed this idea at p. 587 thus: "The material question is: What is the nature of the actual function assumed is it a service that the State could have left to private enterprise, and, if so fulfilled, could such a depute be "industrial" ?" This test steers clear of the argument that to be an industry the activity shall be a trading activity. If a service performed by an individual is an industry, it will continue to be so notwithstanding the fact that it is undertaken by a corporation. Another test suggested by the learned counsel may be scrutinized. It is said that unless there is a (1) ; (2) ; , 530 531 (3) ; 959 quid pro quo for the service, it cannot be an industry. This is the same argument, namely, that the service must be in the nature of trade in a different garb. This Court in D. N. Banerji vs P. B. Mukherjee (1) has held that neither the investment of capital or the existence of profitearning motive seems to beta sine qua non or necessary element in the modern conception of industry. The conception that unless the public who are benefited by the services pay in cash for the services rendered to them, the services so rendered cannot be industry is based upon an exploded theory. As observed by Chandrasekhara Aiyar, J., "the conflicts between capital and labour have now to be determined more from the standpoint of status than of contract". Isaac and Rich, JJ., in The Fede rated Municipal and Shire Council Employees ' Union of Australia vs Melbourne Corporation (2) formulated the modern concept of industry at p. 554 thus: " Industrial disputes occur when, in relation to operations in which capital and labour are contributed in co operation for the satisfaction of human wants or desires, those engaged in co operation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the product or any other terms and conditions of their cooperation. The learned Judges proceeded to state at p. 564: " The question of profit making maybe important from an income tax point of view, as in many municipal cases in England; but, from an industrial dispute point of view, it cannot matter whether the expenditure is met by fares from passengers or from rates. In each case the 'municipality is performing a function; and in the one case it performs it with a variation in contrast with the other. Isaac, J., elaborated the theme in his dissenting judgment in The Federated State School Teachers ' Association of Australia vs The State of Victoria (3) at p. 577 thus: " The contention sounds like an echo from the dark ages of industry and political economy. . . Such disputes are not simply a claim to share (1) ; (2) ; , 539 531. 122 (3) ; 960 the material wealth jointly produced and capable of registration in statistics. At heart they are a struggle, constantly becoming more intense on the part of the employed group engaged in co operation with the employing group in rendering services to the community essential for a higher general human welfare, to share in that welfare in a greater degree. All industrial enterprises contribute more or less to the general welfare of the community, and this is a most material consideration when we come to determine the present question apart from the particular contention raised at the Bar. Monetary considerations for service is, therefore, not an essential characteristic of industry in a modern State. The learned counsel then sought to demarcate the activities of a municipality into three categories, namely, (i) the activities of the department which performs the services; (ii) those of the department which only impose taxes, collect them and administer them; and (iii) those of the departments which are purely in administrative charge of other departments. We do not see any justification for this artificial division of municipal activities. Barring the regal functions of a municipality, if such other activities of it, if undertaken by an individual, would be industry; then they would equally be industry in the hands of a municipality. It would be unrealistic to draw a line between a department doing a service and a department controlling or feeding it. Supervision and actual ,performance of service are integral part of the same activity. In other words, whether these three functions are carried out by one department or divided between three departments, the entire organizational activity would be an industry. This aspect of the question was incidentally touched upon by this Court in Baroda Borough Municipality vs Its Workmen and the following passage at p. 49 reads thus: " We have already pointed out that under the Municipal Act a municipality may perform various functions, some obligatory and some discretional. The activities may be of a composite nature,: some (1) ; 961 of the departments may be mostly earning departments and some mostly spending departments. For example, the department which collects municipal taxes or other municipal revenue, is essentially an earning department whereas the sanitary department or other service department is essentially a spending department. There may indeed be departments where the earning and spending may almost balance each other. " We have extracted this passage only because the observations are apposite to the discussion on hand but not to express our concurrence with the conclusion drawn in that case. The question of bonus does not fall to be considered in the present appeal. These observations and support to our view that integrated activities of a municipality cannot be separated to take in some under the definition of " industry " and exclude others from it. We can also visualize different situations. A particular activity of a municipality may be covered by the definition of "industry". If the financial and administrative departments are solely in charge of that activity, there can be no difficulty in treating those two departments also as part of the industry. But there may be cases where the said two departments may not only be in charge of a particular activity or service covered by the definition of "industry" but also in charge of other activity or activities falling outside the definition of "industry". In such cases a working rule may be evolved to advance social justice consistent with the principles of equity. In such cases the solution to the problem depends upon the answer to the question whether such a department is primarily and predominantly concerned with industrial activity or incidentally connected therewith. The result of the discussion may be summarized thus: (1) The definition of " industry " in the Act is very comprehensive, It is in two parts: one part defines it from the standpoint of the employer and the other from the standpoint of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act. 962 (2) The history of industrial disputes and the legisla tion recognizes the basic concept that the activity shall be an organized one and not that which pertains to private or personal employment. (3) The regal functions described as primary and inalienable functions of State though statutorily delegated to corporation are necessarily excluded from the purview of the definition. Such regal functions shall be confined to legislative power, administration of law and judicial power. (4) If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a corporation. (5) If a service rendered by a corporation is an industry, the employees in the departments connected with that service, whether financial administrative or executive, would be entitled to the benefits of the Act. (6) If a department of a municipality discharges many functions, some pertaining to industry as defined in the Act and other non industrial activities, the predominant functions of the department shall be the criterion for the purposes of the Act. The following are the various departments of the Nagpur City Corporation: (1) General Administration Department; (2) Octroi Department; (3) Tax Department; (4) Public Conveyance Department; (5) Fire Brigade Department; (6) Lighting Department; (7) Water Works Department; (8) City Engineer Department; (9) Enforcement (encroachment) Department: (10) Sewage Pumping Station Department; (11) Sewage Farm Department; (12) Health Department; (13) Market Department; (14) Cattle Pound Department; (15) Public Gardens Depart ment; (16) Public Works Department; (17) Assessment Department; (18) Estate Department; (19) Education Department; (20) Printing Press Department; (21) Workshop Department; and (22) Building Department. Out of these departments, the State Industrial Court has held that all the departments except those pertaining to (i) assessment and levy of house tax, (ii) assessment and levy of octroi, (iii) removal of encroachment and pulling down of dilapidated houses, (iv) maintenance of cattle pounds, 963 and (v) prevention and control of food adulteration, are industries. Even in regard to the departments which the State Industrial Tribunal held to be industries it denied relief to persons who are not covered by the definition of " employees " in the Act. As the employees have not preferred any appeal against the award in so far as it went against them, nothing further need be said in regard to the aforesaid five departments. Before we consider whether all or any of the departments of the Corporation fall within the definition of " industry " in the Act, it will be convenient to notice the scheme of the City of Nagpur Corporation Act, 1948 (Madhya Pradesh Act No. 2 of 1950). Section 7 makes the Corporation a body corporate with perpetual succession and a common seal. Section 6 describes the municipal authorities charged with the execution of the Act and they are: (a) the Corporation; (b) the Standing Committee; and (c) the Chief Executive Officer. Chapter II of Part II contains the aforesaid sections and it further provides for the constitution of the Corporation and the mode of election to the said body. Chapter III of the said Part prescribes the procedure for the conduct of business of the Corporation. Chapter IV thereof provides for the appointment of municipal officers and servants and for their punishment and removal. Chapter V deals with powers, duties and functions of the municipal authorities; it gives the obligatory and discretionary duties of the Corporation. Under section 57, the Corporation shall make adequate provision, by any means or measures which it may lawfully use or take, such as for lighting public streets, cleaning of public streets,disposal of nightsoil and rubbish, maintenance of firebrigade and other welfare activities in the interest of the public. Section 58 confers a discretionary power on the Corporation to provide for other amenities not covered by section 57, and which are comparatively not absolutely essential but are necessary for the happiness of the people of the State. Provisions of Ch. VI enable the municipality to hold and acquire properties, to manage public institutions maintained out of municipal funds. Section 79 enjoins on the 964 municipality to apply the fund available with it to discharge its statutory duties and pay salaries and allowances of its various servants. Chapter IX enables the municipality to raise loans on the security of its properties for discharging debts and for meeting the capital expenditure. Part IV empowers the municipality to impose taxes for the purposes of this Act and also describes the procedure for collecting the same. Part V confers powers and imposes duties on the Corporation and its officers in respect of public health, safety and convenience. This Part deals with public convenience, drains and privies, conservancy, sanitary provisions, water supply and drainage, regulation of factories and trades, markets and slaughter places, food, drink, drug and dangerous articles, prevention of infectious diseases and disposal of the dead. Part VI empowers the Corporation to draw up townplanning schemes, to regulate erection and re erection of buildings, to close public streets, to remove obstruction in streets, to regulate laying of new streets, to dispose of mad and stray dogs, to control public begging, to prohibit brothels etc. Part VIII lays down the general provisions for carrying on the municipal administration and also enabling the Corporation to make by laws for carrying out the provisions and intentions of the Act. Shortly stated, the Act creates the Corporation a juristic person capable of holding and disposing of property, confers power on it to impose and collect taxes and licence fees, to borrow money, to decide disputes in the first instance in respect thereof, constitutes the amounts so collected as the fund of the municipality from and out of which the liabilities of the Corporation are met and the salaries of its employees are paid, imposed on it duties to carry out various welfare activities in the interest of the public, confers on it powers for, implementing their duties satisfactorily and also powers to make by laws for regulating its various functions. In short, a corporation is analogous to a big public company carrying out most of the duties which such a company can undertake to do with the difference that certain statutory powers have been conferred on the corporation for carrying out its functions more satisfactorily. 965 With this background let us take each of the departments of the Corporation held by the State Industrial Court to be governed by the Act. (i) Tax Department: The main functions of this department are the imposition and collection of conservancy, water and property taxes. No separate staff has been employed for the assessment and levy of property taxes: the same staff does the work connected with assessment and collection of water rates as well as scavenging taxes. It is not disputed that the work of assessment and levy of water rate and scavenging rate for private latrines is far heavier than the other works entrusted to this department. No attempt has been made to allocate specific proportion of the staff for different functions. We, therefore, must accept the finding of the State Industrial Court that the staff of this department doing clerical or manual work predominantly does the work connected with scavening taxes and water rate. The said rates are really intended as fees for the service rendered. The services, namely, scavenging and supply of water, can equally be undertaken by a private firm or an individual for remuneration and the fact that the munici pality does the same duty does not make it any the less a service coming under the definition of "industry". We would, however, prefer to sustain the finding on a broader basis. There cannot be a distinction between property tax and other taxes collected by the municipality for the purpose of designating the tax department as an industry or otherwise. The scheme of the Corporation Act is that taxes and fees are collected in order to enable the municipality to discharge its statutory functions. If the functions so discharged are wholly or predominantly covered by the definition of " industry ", it would be illogical to exclude the tax department from the definition. While in the case of private individuals or firms services are paid in cash or otherwise, in the case of public institutions, as the services are rendered to the public, the taxes collected from them constitute a fund for performing those services. As most of the services rendered by the municipality come under the definition of industry ", we should hold that the employees of the 966 tax department are also entitled to the benefits under the Act. (ii) Public Conveyance Department: This is a tax which is a wheel cum road tax. Conveyance department is meant to regulate the using of cycles, rickshaws, bullock carts etc. This department recovers registration fees for rickshaws, licence fee from rickshaw drivers and wheel tax from bullock carts. It also recovers cycle tax on every cycle used in Corporation limits. (See the evidence of Witness No 1 for Party No. 1). These taxes are therefore really fees collected by the Corporation for the services rendered to the owners of cycles and other conveyances by way of maintenance and construction of roads. These services can equally be performed by a private individual or a firm for remuneration. It satisfies the tests laid down by us. This department, therefore, is 'an industry within the meaning of the definition in the Act. (iii) Fire Brigade Department: exhibit N. A. 22 gives the duties of the driver cum fitter of the Fire Brigade Department. This exhibit indicates that the function of this department is to attend to fire calls. Witness No. 3 for Party No. 1 says that it is the duty of the firebrigade to supply water at marriage functions and other public functions. The firebrigade employees are not paid any extra amount for supplying water at public or private functions. Though the department renders some extra services, the main function of the department is to attend to " fire calls". Private bodies also can undertake this service. It is said that under section 333 of the City of Nagpur Corporation Act powers are conferred on specified officers to remove or order the removal of any person who interferes with or impedes the operation for extinguishing the fire, to close any street or passage in or near which any fire is burning, to break into or pull down or use for the passage of hoses or other appliances, any premises for the purpose of extinguishing the fire and generally to take such measures as may appear necessary for the preservation of life or property, and that the services of the firebrigade cannot be satisfactorily rendered without such powers and that no private individual 967 can perform the same. Here 'the argument tends to be fallacious as it ignores the distinction between he services and the statutory powers conferred to satisfactorily discharge the said services. A private person or a firm can equally do the same services and nothing prevents the legislature from conferring similar powers on an individual or a firm. These services also satisfy all the tests laid down by us and therefore we hold that this department is also an industry. (iv) Lighting Department: Lighting Department looks after the arrangements for lighting the streets in the Corporation area. There are two systems of lighting streets, namely, (1) by electricity, and (2) by kerosene oil lamps. Electric street lighting is given on contract to Nagpur Light and Power Co., Nagpur, by the Corporation. Kerosene oil street lighting is done departmentally by the lighting department. Electric Light and Power Co., is responsible to the Corporation for street lighting. The said Company has to fix electric lights according to the programme given to it by the Corporation. The burning hours are also fixed by the Corporation. The Corporation does not charge the public for street lighting. (See the evidence of Witness No. 5 for Party No. 1). We have already indicated that quid pro coin the shape of payment of money for particular services rendered is not a necessary condition for the application of the definition of "industry ". The services rendered by the department satisfy the terms of the definition. They also satisfy both the positive and negative tests laid down by us. We, therefore, hold that this department is an indus try. (v) Water Works Department: This department maintains three head works, Kanhan, Gorewara, and Ambazeri. There are pumping stations at Kanhan and Gorewara. At the pumping stations the water is filtered and pumped into service reservoir at Nagpur. The Corporation has a separate staff at each pumping station. It has also a separate staff for distribution. In addition it maintains an assessment. department to assess water cess for the distribution of water. (See the evidence of Witness No. 9 for Party No. 1). These three branches of the department have an 123 968 administrative and an executive staff. Whether the services rendered by the department are concerned With manufacturing process or not, they are certainly covered by the wide definition of " industry" in the Act. They also satisfy both the positive and negative tests laid down by us. None of them comprises delegated regal functions of State and they are such that a private individual can equally undertake to do. We, therefore hold that the said department comes under the definition of "industry". (vi) City Engineers Department: The function of this department is to exercise supervisory an ad ministrative control over, its subordinate departments. The City Engineer is the head of this department. (See the evidence of Witness No. 5 for Party No. 1). As we are of the view that the departments subordinate to this department come under the definition of "industry", this department, which has administrative control Over those subordinate departments, must be considered a part of those departments. If so, it follows that this department is also an industry. (vii) Enforcement (encroachment) Department: The function of this department is to remove encroachment and unauthorised constructions and dilapidated houses. This department is a section of the Estate Department. (See the evidence of Witness No. 5 for Party No. 1). It is contended that the functions of this department are all statutory and that no private individual can perform them. Statutory powers are conferred on the Corporation to remove encroachment and unauthorised construction and dilapidated houses. These powers are necessary for the Corporation to protect its properties and to prevent encroachment thereon and to remove dilapidated houses in the interest of the public. But if a distinction is made between the powers and the nature of the services rendered, it would be obvious that the services rendered are not peculiar to a corporation. A private firm may undertake to manage the properties of others. It will have to. appoint persons to detect encroachment and to take steps to recover possession of lands encroached upon. The only difference between a firm and a municipal corporation is that the corporation 969 can, in exercise of its statutory powers, remove the encroachment, but it does not prevent the aggrieved party from going to a civil court to establish his title to the property : but in the case of a firm, it cannot take the law into its own hands: it has to get the encroachment removed through a court of law. So far as the nature of the service is concerned, namely, protecting its properties in the interest of the public from encroachment and to recover possession of the lands encroached upon, there is no essential distinction between the said service of the Corporation and a similar service performed by a private firm. The service satisfies not only the terms of the definition, but also the tests laid down by us. Even so, it is contended that, the said reasoning cannot be invoked in the case of the service rendered by the municipality in removing dilapidated houses and it is said that the said service is rendered in exercise of a governmental function which a private individual cannot himself discharge. Here again the incidental power is confused with the service. To illustrate, a firm may undertake to remove dilapidated houses and render the said service to those who engage it. It may not have the power to remove dilapidated houses of persons other than those who employed its services. The difference does not in any way affect the ' character of the service. We, therefore, hold that this department is also an industry. (viii) Sewage Department; The sewage pumping station is meant for pumping sewage at the outfall of the underground sewers. The sewage is utilised on the land on broad irrigation system, and some crops are also grown on the farm. (See the evidence of Witness No. 8 for Party No. 1). In the cross examination of the said witness it was elicited that whatever sewage is left after irrigating the farm maintained by the Corporation will be sold to the neighbouring farms. For the said reasons, it must be held that this department is also an industry. (ix) Health Department: This department looks after scavenging, sanitation, control of epidemics control of food adulteration and running of public dispensaries. Private institutions can also render 970 these services. It is said that the control of food the adulteration and the control of epidemics cannot be done by private individuals and institutions. We do not see why. There can be private medical units to help in the control of food adulteration and in the control of epidemics for remuneration. Individuals may get the food articles purchased by them examined by the medical unit and take necessary action against guilty merchants. So too, they can take advantage of such a unit to prevent epidemics by having necessary inoculations and advice. This department also satisfies the other tests laid down by us, and is an industry within the meaning of the definition of "industry" in the Act. (x) Market Department: The function of the Market Department is to issue licences, collect ground rent and registration fee and to detect short weights and measures. Rents are collected for permitting persons to enter the Corporation land and transact business thereon. Detection of short weights and measures is a service to the people to prevent their being cheated in the market. The setting apart of market places, supervision of weights and measures are services rendered to the public and the fees collected are remuneration for the services so rendered. 'These services can equally be done by any private individual. This department; also satisfies the tests laid down by us. We, therefore, hold that this department is an industry within the meaning of the Act. (xi) Public Gardens Department: The functions of this department are the maintenance of public parks and gardens and laying of new gardens and parks; and planting of trees on road sides. (See the evidence of Witness No. 5 for Party No. 1). This service is covered by the definition of " industry" Any private individual can certainly perform the functions stated above and the fact that the municipality has undertaken those duties does not affect the nature of the service. This also satisfies the tests laid down by us. We, therefore, hold that this Department is an industry. (Xii) Public Works Department : This department is in charge of construction and maintenance of public 971 works such as roads, drains, buildings, markets, public latrines etc. For the convenience of the public this department is divided into zones and every zone has its office. The outdoor staff in the P.W.D. consists of assistant engineer, overseers, sub overseers, time keepers, mates, carpenters, masons, blacksmiths and coolies. The other staff, consisting of clerks and peons performs indoor duties. (See the evidence of Witness No. 5 for Party No. 1). This department performs both administrative and executive functions. The services rendered are such that they can equally be done by private individuals and they come under the definition of "industry) ', satisfying both the positive and negative tests laid down by us in this regard. We, therefore, hold that this department is an industry. (xiii) Assessment Department: This department deals with the assessment of taxes, fees and rates. The same staff does the assessment work connected not only with taxes strictly so called but also other fees and rates. As the services rendered, namely, scavenging and supply of water can be done by private individuals, the State Industrial Court held that they come under the definition of "industry" and therefore the department assessing fees and rates is also part of that industry. There is no reason why a distinction should be made in regard to the assessment of taxes so called and that of fees and rates. The taxes are collected only for enabling the Corporation to render service to the public and, as most of the services come under the definition of "industry", this department also, in our view, is an industry within the meaning of the Act. That apart, the State Industrial Court has held that the same staff does the work of assessment of house tax as well as other fees and rates and the work of this department is predominantly connected with the assessment of scavenging tax and water rate. Applying the test of "paramount and predominant duty ", this department falls within the definition of " industry " in the Act. (xiv) Estate Department : This department maintains the record of property acquired, vested or transferred to the Corporation and all buildings and roads constructed by the P.W.D. This department 972 lets out lands and houses belonging to the Corporation by public auction and gets income therefrom, which no doubt is credited to the common fund. A department like this is equally necessary in a private company which carries out functions similar to the Corporation. Maintenance of records of the properties acquired, buildings and roads constructed and properties leased, is a necessary administrative function correlated to the corresponding services. If the service such as construction of buildings, roads etc., is an industry, its administrative wing is also an industry. The department as a whole, both with its administrative and executive wings, for reasons stated in connection with the other departments, is an industry. (xv) Education Department: This department looks after the primary education, i.e., compulsory primary education. within the limits of the Corporation. (See the evidence of Witness No. 1 for Party No. 1). This service can equally be done by private persons. This department satisfies the other tests. The employees of this department coming under the definition of " employees " under the Act would certainly be entitled to the benefits of the Act. (xvi) Printing Press Department: The printing press is maintained by the Corporation for printing passes. It is also used for printing of by laws and the rules and proceedings and forms, and the by laws and the rules so printed are sold to the public. For the reasons stated supra in the case of the Water Works Department ' this department is also an industry. (xvii) Building Department: This department is really a " building permission department ". The function of this department is to regulate construction of buildings by private individuals and to take action against those who violate the by laws and the provisions of the Corporation Act pertaining to this department. It is said that the functions of this department are statutory and no private individual can discharge those statutory functions. The question is not whether the discharge of certain functions by the Corporation have statutory backing, 973 but whether those functions can equally be performed by private individuals. The provisions of the Corporation Act and the by laws prescribe certain specifications for submission of plans and for the sanction of the authorities concerned before the building is put up. The same thing can be done by a co operative society or a private individual. Cooperative societies and private individuals can allot lands for building houses in accordance with the conditions prescribed by law in this regard. The services of this department are therefore analogous to those of a private individual with the difference that one has the statutory sanction behind it and the other is governed by terms of contracts. This department functions in the interest of the public and the services rendered by this department satisfy both the positive and negative tests laid down by us. We, therefore, hold that this department is covered by the definition of "industry ". (xviii) General Administration Department : This department co ordinates the functions of all the other departments. The State Industrial Court describes the functions of this department thus: " This department consists of treasury, accounts section, records section in which are kept records of all the different departments and public relations section. It also consists of a committee section the duty of which is to look after the convening of meetings, to draw up agenda, minutes of proceedings and to draft by laws. In the record section are kept records of most of the departments including health and engineering. " Every big company with different sections will have a general administration department. If the various departments collated with this department are industries, this department would also be a part of the industry. Indeed the efficient rendering of all the services would depend upon the proper working of this department, for, otherwise there would be confusion and chaos. The state Industrial, Court in this case has held that all except five of the departments of the Corporation come under the definition of "industry" and if so, it follows that this department, dealing predominantly 974 with industrial departments, is also an industry. Hence the employees of this department, are also entitled to the benefits of this Act. The State Industrial Court held that five of the departments of the Corporation did not fall within the terms of the definition of "industry " in the Act. The employees of these departments did not file any appeal against the finding of the State Industrial Court and we do not propose to express our final opinion on the correctness of the decision of the Industrial Court in regard to these activities. In the result the appeals fail and are dismissed with costs. Appeal dismissed.

The question for determination in these appeals was whether and to what extent the municipal activities of the Corporation of 943 Nagpur City fell within the term 'industry ' as defined by section 2 (14.) of the C.P. and Berar Industrial Disputes Settlement Act, 1947. Disputes having arisen between the said Corporation and its employees in its various departments, the State Government referred them for adjudication to the State Industrial Court under section 39 of the Act and that Court by its award held that the Corporation and all its departments were covered by the said definition. Against that award the Corporation made an application to the High Court under article 26 of the Constitution. The High Court rejected its contention that the Corporation was not an industry within the meaning of the said section and remanded the case to the Industrial Court for determination as to which of its departments fell within the definition and making an award accordingly. Thereafter The Industrial Court found all the departments of the Corporation except those dealing with (1) assessment and levy of house tax (2) assessment and levy of Octroi, (3) removal of encroachment and removal and pulling down of dilapidated houses, (4) prevention and control of food adulteration, and (5) maintenance of cattle pounds, to be industries within the meaning of the definition and passed its award accordingly. The Corporation appealed to this Court by special leave but there was no appeal on behalf of the employees of the five departments excluded from the definition. Held, that the decision of the Industrial Court except so far as it related to the five departments in respect of which the re was no appeal, must be affirmed. The definition of the word 'industry ' in section 2 (14) of the C.P. and Berar Industrial Disputes Settlement Act, 1947, although in a language somewhat different from that of section 2 (1) of the , is very comprehensive. It is in two parts, cl. (a) defines it from the standpoint of employers and cl. (b) from that of the employee. An activity that falls within any of the two clauses must be ,in industry. D.N. Banerji vs P. R. Mukherjee ; and Baroda Borough Municipality vs Its Workmen. ; , applied. It is not necessary that an activity of the Corporation must share the common characteristics of an industry before it can come within the section. The words Of section 2 (14) of the Act are clear and unambiguous and the maxim noscitur a socii can have no application. The history of industrial disputes and the legislation, however, recognises the basic concept that the activity must be an organised one and not one that pertains to private or personal employment. State of Bombay vs The Hospital Mazdoor Sabha. ; and Heydon 's Case b., referred to. But the definition, however wide, cannot include the regal, primary and inalienable, functions of the State though statutorily delegated to a corporation and the ambit of such functions cannot be extended so as to include the welfare activities of a modern state and must be confined to legislative power, administration of law and judicial power. 120 944 Richard Coomber vs The Justices of the County of Berks, Berks.(1883 84) 9 A.C. 61 and The Federated State School Teachers ' Association of Australia vs The State of Victoria. ; , County Council of Middlesex vs Assessment Committee of St. George 's Union. (1896) 2 Q.B.D. 143, Verisimo Vasquez Vilas vs City of Manila, 220 U. section 345, and The Federated Municipal and Shire Council Employees ' Union of Australia vs Mclbourne Corporation. ; , referred to. The real test as to whether a service undertaken by a corporation is an industry must be whether that service, if ' performed by an individual or a private person, would be an industry. Monetary cosideration cannot be an essential characteristic of industry in a modern State. It was, therefore, incorrect to say that only such activities as were analogous to trade or business could come within section 2 (14) of the Act. D. N. Banerji vs P.R. Mukherjee, ; , explained. The Federated Municipal and Shire Council Employees ' Union of Australia vs Melbourne Corporation. (19l8 19) ; , Federated Engine Drivey and Fireme 's Association and Ors. vs The Broken Hill Proprietary Company Limited and Ors. 5 and The Federated State School Teachers ' Association Australia vs The State of Victoria; , , referred to. Where a service rendered by a Corporation is an industry, the employees of the departments connected with that service, whether financial, administrative or executive, would be entitled to the benefits of the Act. Baroda Borough Municipality vs Its Workmen. [1957] S.C.R. 33, referred to. If a department of a municipality discharges many functions, some within and some without the definition of industry given by the Act, the predominant functions of the department shall be the criterion for the purposes of the Act.

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Appeal No. 231 of 1956. Appeal from the judgment and order dated September 11, 1953, of the Rajasthan High Court (Jaipur Bench) at Jaipur in Writ Application No. 141 of 1952. M. section K. Sastri and T. M. Sen, for the appellants. The respondent did not appear. August 18. The Judgment of the Court was delivered by RAJAGOPALA AYYANGAR, J. This appeal raises for consideration the constitutional validity of one paragraph of a notification issued by the State of Rajasthan under section 15 of the (V of 1861), under which " the Harijan " and " Muslim " inhabitants of the villages, in which an additional police force was stationed, were exempted from the obligation to bear any portion of the cost of that force. It is stated that the inhabitants of certain villages 223 in the district of Jhunjhunu in the State of Rajasthan, harboured dacoits and receivers of stolen property, and were besides creating trouble between landlords and tenants as a result of which there were serious riots in the locality in the course of which some persons lost their lives. The State Government therefore took action under section 15 of the . This Section provides : " Quartering of additional police in disturbed or dangerous districts (1) It shall be lawful for the State Government, by proclamation to be notified in the official Gazette, and in such other manner as the State Government shall direct, to declare that any area subject to its authority has been found to be in a disturbed or dangerous state, or that, from the conduct of the inhabitants of such area, or of any class or section of them, it is expedient to increase the number of police. (2) It shall thereupon be lawful for the Inspector General of Police, or other officer authorised by the State Government in this behalf, with the sanction of the State Government, to employ any police force in addition to the ordinary fixed complement to be quartered in the areas specified in such proclamation as aforesaid. (3) Subject to the provisions of sub section (5) of this section, the cost of such additional police force shall be borne by the inhabitants of such area described in the proclamation. (4) The Magistrate of the district, after such enquiry as he may deem necessary, shall apportion such cost among the inhabitants who are, as aforesaid, liable to bear the same and who shall not have been exempted under the next succeeding sub section. Such apportionment shall be made according to the Magistrate 's judgment of the respective means within such area of such inhabitants. (5) It shall be lawful for the State Government by order to exempt any persons or class or section of such inhabitants from liability to bear any portion of such cost. " Sub section (6) is omitted as not relevant. 224 The notification by which these provisions were invoked and which is impugned in these proceedings was in these terms: " Whereas the Rajpramukh is satisfied that the area shown in the schedule annexed hereto has been found to be in a disturbed and dangerous state; Now, therefore, in the exercise of the authority vested in him under Section 15(1) of the (V of 1861), the Rajpramukh is pleased to declare that the 24 villages included in the said schedule shall be deemed to be disturbed area for a period of six months from the date of this notification. Under sub section 2 of the said section 15 of the (V of 1861), the Rajpramukh is pleased to authorise the Inspector General of Police to employ, at the cost of the inhabitants of the said area any Police force in addition to the ordinary fixed complement quartered therein. Under sub section 5 of section 15 of the said Act the Rajpramukh is further pleased to exempt the Harijan and Muslim inhabitants of these villages from liability to bear any portion of the cost on account of the posting of the additional Police force. " Then followed the names of the 24 villages. The respondent Thakur Pratap Singh being an inhabitant of Baragaon one of these 24 villages, moved the High Court of Rajasthan for the issue of a writ or direction under Act. 226 of the Constitution impugning the validity of section 15 of the and in particular of sub section 5 thereof and of the notification and praying for appropriate reliefs. The High Court repelled the wider contentions urged regarding the invalidity of section 15 of the in general as also of the powers conferred on the State Government to order the exemption of " any person or classes or sections of such inhabitants " from liability to bear the cost of the additional police force. But the learned Judges hold that Para 4 of the notification which exempted " Harijan and Muslim inhabitants of the villages " from the levy, was violative of the guarantee in article 15(1) of the Constitution against discrimination on the ground of caste or religion etc. which reads. 225 " The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them." and struck it down as unconstitutional. The State of Rajasthan who felt aggrieved by this order applied to the High Court for a certificate under article 132(1) to enable it to file an appeal to this court and this having been granted, the appeal is now before us. Learned Counsel for the State made a strenuous effort to show that the exemption of the Harijan & Muslim inhabitants of the villages, was, in the impugned notification, not based " only " on the ground of 'caste or religion ' or the other criteria set out in article 15(1), but on the ground that persons belonging to these two communities were found by the State not to have been guilty of the conduct which necessitated the stationing of the additional police force. It was the same argument as was addressed to the High Court and was rejected by the learned Judges who observed : " Now this is a very strange argument that only persons of a certain community or caste were law abiding citizens, while the members of other communities were not. Disturbing elements may be found among members of any community or religion just as much as there may be saner elements among members of that community or religion. " The view here expressed by the learned Judges is, in our opinion, correct. Even if it be that the bulk of the members of the communities exempted or even all of them were law abiding, it was not contended on behalf of the State that there were no peaceful and law abiding persons in these 24 villages belonging to the other communities on whom the punitive levy had been directed to be made. In para 5(f) of the petition filed before the High Court the respondent had averred : " That the aforesaid Notification is ultra vires of the Constitution of India as it discriminates amongst the Citizens of a village on the basis of religion, race or caste, in as much as it makes a distinction between 29 226 persons professing the Mohammadan religion and others and also between persons who are Muslims and Harijans by caste and the rest. It, therefore, contravenes the provisions of Article 15 of the Constitution of India. " The answer to this by the State was in these terms: " The Harijan and Muslim inhabitants of these villages have been exempted from liability to bear any portion of the cost of the additional force not because of their religion, race or caste but because they were found to be peace loving and law abiding citizens, in the 24 villages additional force has been posted. " It would be seen that it is not the case of the State, even at the stage of the petition before the High Court that there were no persons belonging to the other communities who were peace loving and law abiding, though it might very well be, that according to the State, a great majority of these other communities were inclined the other way. If so, it follows that the notification has discriminated against the law abiding members of the other communities and in favour of the Muslim and Harijan communities, (assuming that every one of them was "peace loving and law abiding") on the basis only of " caste " or "religion ". If there were other grounds they ought to have been stated in the notification. It is plain that the notification is directly contrary to the terms of article 15(1) and that para 4 of the notification has incurred condemnation as violating a specific constitu tional prohibition. In our opinion, the learned Judges of the High Court were clearly right in striking down this paragraph of the notification. The appeal fails and is dismissed. As the respondent has not appeared there will be no order as to costs. Appeal dismissed.

By para 4 of a notification issued under section 15 of the Police Act the Rajasthan Government exempted the Harijan and Muslim inhabitants of certain villages from payment of the cost of additional police force stationed therein. The notification was challenged as being violative of the guarantee contained in article 15(i) of the Constitution of India. Held, that since para 4 of the notification had discriminated against the law abiding members of other communities and in favour of the Muslims and Harijans on the grounds of caste and religion, it was directly hit by the provision of article 15(i) of the Constitution and as such must be declared to be invalid.

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Appeal No. 404 of 1958. Appeal by special leave from the decision dated March 10, 1958, of the Industrial Tribunal, Rajkot, in Adjudication Case No. 67 of 1955. M. C. Setalvad, Attorney General for India, R. J. Kolah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. Janardan Sharma, for respondent No. 2. 1960. March, 3. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. Can a registered trade union representing a minority of workmen governed by an award give notice to the other party intimating its intention to terminate the award under section 19(6) of the XIV of 1947 (hereinafter called the Act)? That is the short question which arises for decision in the present appeal. In answering the said question it would be necessary to examine the scheme of the Act and to ascertain the true meaning. and effect of section 19(6) on its fair and reasonable construction. The controversy thus raised undoubtedly lies within a narrow compass; but before addressing ourselves to the merits of the dispute, it is necessary to state the material facts which led to the present proceedings. The present appeal has been brought before this Court by the Associated Cement Companies Limited (hereinafter called the appellant) against their workman (hereinafter called the respondents), and it arises from an industrial dispute between them which was referred for adjudication to the Industrial Tribunal for the State of Saurashtra by the Saurashtra Government under section 10(1) of the Act. Several items of demand presented by the respondents constituted the subject matter of the reference. When the tribunal began its proceedings the appellant raised four preli 159 minary objections against the competence of the reference itself. The tribunal heard parties on these preliminary objections, and by its interlocutory judgment delivered on March 10, 1958, it has found against the appellant on all the points. In the result it set down the reference for further hearing on the merits. It is against this interlocutory judgment and order that the appellant has come to this Court by special leave. Out of the four points urged by the appellant as preliminary objections we are concerned with only one in the present appeal, and that relates to the incompetence of the reference on the ground that the award in question by which the parties were bound has not been duly terminated under section 19(6) of the Act inasmuch as the union which purported to terminate the said award represents only a minority of workmen bound by it. The circumstances under which this contention was raised must now be stated in some detail. The appellant is a limited company and owns and runs a number of cement factories spread out in different States in India as well as in Pakistan. It has a factory at Porbandar in Saurashtra. The factory is known as the Porbandar Cement Works. An industrial dispute arose between the appellant and the respondents in 1949 and it was referred for adjudication to the industrial tribunal on March 22, 1949. This reference ended in an award made on September 13, 1949. Thereafter the said award was terminated by the appellant; and on disputes arising between it and the respondents another reference was made to the same tribunal for adjudication of the said disputes. A second award was made on July 24, 1951, by which the earlier award with slight modifications was ordered to continue in operation. In the proceedings in respect of both the references the appellant 's workmen were represented by their Union called Kamdar Mandal, Cement Works, Porbandar. It appears that the registration of the said union was cancelled on July 2,1954, and that led to the formation of two unions of the appellant 's workmen, the Cement Kamdar Mandal which was registered on 160 July 7, 1954, and the Cement Employees ' Union which was registered on September 18, 1954. The Cement Kamdar Mandal gave notice to the appellant 's manager on September 23, 1954, purporting to terminate the first award pronounced on September 13, 1949, at the expiration of two months ' notice from the date of the said communication. By another letter written on December 20,1954, the same union purported to terminate the second award pronounced on July 24, 1951, in a similar manner. On November 22, 1954, the said Mandal presented fresh demands most of which were covered by the two previous awards. The said demands were referred to the Conciliation Officer for conciliation but the efforts at conciliation failed., and on receiving a failure report from the officer the Saurashtra Government made the present reference purporting to exercise its jurisdiction under section 10(1)(c) of the Act. The appellant 's case is that the Cement kamdar Mandal was not authorised to terminate either of the two awards under section 19(6) of the Act, that the second award is thus still in operation, and so the reference is invalid. Meanwhile it appears that the Cement Employees ' Union, which represents the majority of the appellant 's workmen at Porbandar, instead of giving notice of termination under section 19(6) raised disputes with the appellant and the same were referred to the Conciliation Officer. Efforts at conciliation having failed the conciliation officer made a failure report to the Government of Saurashtra; the Saurashtra Government, however, did not refer the ' said dispute for adjudication. In the present proceedings this Union has been impleaded and it has supported the demands made by the Cement Kamdar Mandal; in other words, notwithstanding the rivalry between the two Unions, the demands made by the minority union were supported by the majority union, and in fact, in the appeal before us, it is the latter union that has appeared to contest the appeal. The tribunal has dealt with the point of law raised by the appellant under section 19(6) on the assumption that the Cement Kamdar Mandal which purported to terminate the awards under the said section represents the minority 161 of the workmen employed at Porbandar, and we propose to deal with the point raised in the appeal on the same assumption. The main sections which fall to be considered in dealing with the dispute are sections 18 and 19 as they stood in 1954. Section 18 provides, inter alia, that an award which has become enforceable shall be( binding on (a) all parties to the industrial dispute, (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board or tribunal, as the case may be, records the opinion that they were so summoned without proper cause, (c) where a party referred to in cl. (a) or cl. (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates, and (d) where a party referred to in cl. (a) or cl. (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute, and all persons who subsequently became employed in that establishment or part. It is thus clear that though an industrial dispute may be raised by a group of workmen who may not represent all or even the majority of workmen, still, if the said dispute is referred to the industrial, tribunal for adjudication and an award is made, it binds not only the parties to the dispute or other parties summoned to appear but all persons who were employed in the establishment or who would be employed in future are also governed by the award ; in other words, the effect of section 18 is that an award properly made by an industrial tribunal governs the employer and all those who represent him under section 18(c) and the employees who are parties to the dispute and all those who are included in section 18(b) and (d). Section 19 prescribes the period of operation of settlements and awards. Section 19(3) provides that an award shall, subject to the provisions of this section, remain in operation for a period of one year. This is subject to the provisos to suubs. (3) as well as to sub section (4) but we are not concerned with the said provisions. Section 19(6) provides that notwithstanding the expiry of the period of operation under 21 162 sub section (3) the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which the notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award. The effect of this sub section is that unless the award is duly terminated as provided by it shall continue to be binding notwithstanding the expiration of the period prescribed by sub section This position is not in dispute. The dispute between the parties centers round the question as to who can issue the notice terminating the award on behalf of workmen who are bound by the award as a result of section 18 of the Act. What the sub section requires is that a notice shall be given by any party bound by the award to the other party or parties. To whom the notice should be given may not present much difficulty. Where the award is sought to be terminated on behalf of the employees the notice has to be given to the employer and that is the party entitled to receive notice. Then, as to " the parties " to whom also notices are required to be given, it may perhaps be that the parties intended are those joined under section 10, sub section (5) or under section 18, sub section (2) or are otherwise parties to the dispute; but with that aspect of the question we are not concerned in the present appeal, because notice has been given to the appellant and all the workmen concerned in the dispute have appeared before the tribunal through the two respective unions. The question with which we are concerned and which is not easy to determine is the true interpretation of the word " any party bound by the award ". We have already noticed the effect of section 18, and we. have seen how wide is the circle of persons who are bound by the award as a result of the said section. , Literally construed, any party bound by the award may mean even a single employee who is bound by the award, and on this literal construction even one dissatisfied employee may be entitled to give notice terminating the award. On the other hand, it may be possible to contend that any party in the context must mean a party that represents the majority of the persons bound by the award. 163 Terminating the award is a serious step and such a step can be taken by a party only if it can claim to represent the will of the majority on that point. It is for this construction that the appellant contends before us. In construing this provision it would be relevant to remember that an industrial dispute as defined by section 2(k) of the Act means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen which is connected with the employment or non employment, or the terms of employment, or with the conditions of labour of any person. This definition emphatically brings out the essential characteristics of the dispute with which the Act purports to deal. The disputes must relate to the terms of employment or with the conditions of labour and they must arise, inter alia, between workmen and their employer. Ordinarily, an individual dispute which is not sponsored by the union or is otherwise not supported by any group of workmen is not regarded as an industrial dispute for the purposes of the Act. A provision like that contained in section 33A is of course an exception to this rule. The basis of industrial adjudication recognised by the province of the Act clearly appears to be that disputes between employers and their employees would be governed by the Act where such disputes have assumed the character of an industrial dispute. An element of collective bargaining which is the essential feature of modern trade union movement is necessarily involved in industrial adjudication. That is why industrial courts deal with disputes in relation to individual cases only where such disputes assume the character of an industrial dispute by reason of the fact that they are sponsored by the union or have otherwise been taken up by a group or body of employees. In The Central Provinces Trans port Services Limited vs Raghunath Gopal Patwardhan (1) this Court has observed that " the preponderance of judicial opinion is clearly in favour of the view that an individual dispute cannot per se be an industrial dispute but may become one if taken up by a (1) [ ; 164 trade union or a number of persons ". These observations have been cited with approval by this Court in the case of The Newspapers Limited vs The State Industrial Tribunal, U. P. Having regard to this aspect of the matter it would be difficult to hold that "any party bound by the award " can include an individual workman, though speaking literally he is a party bound by the award. In our opinion, there fore, the said expression cannot include an individual workman. We oughtto add that this position is fairly conceded by '.Sharma for the respondents. That takes us tothe question as to whether the expression " any party bound by the award " must mean a union representing the majority of the workmen bound by it or a group of workmen constituting such majority acting otherwise than through the union. The expression " any party bound by the award " obviously refers to, and includes, all persons bound by the award under section 18. The learned Attorney General has urged before us that we should construe section 19(6) so as to preclude a minority of workmen bound by the award from disturbing the smooth working of the award and thereby creating an industrial dispute. When an award is made it binds the parties for the statutory period under section 19(3); and even after the expiration of the said period it continues to be binding on the parties under section 19(6) unless it is duly terminated. The policy of the Act, therefore, appears to be that the smooth working. of the award even after the prescribed statutory period should not be disturbed unless the majority of the workmen bound by it feel that it should be terminated and fresh demands should be made. If a minority of workmen or a minority union is allowed to terminate the award it would lead to the anomalous result that despite the willingness of the majority of workmen to abide by the award the minority can create disturbance and raise an industrial dispute and that cannot be within the contemplation of the Legislature when it enacted section 19(6) of the Act. That in substance is the argument urged before us; thus presented the argument no doubt appears prima facie attractive; (1) ; 165 but, in our opinion, it would be unreasonable to accept this construction and impose the limitation of the majority vote in the matter of the termination of the award. The effect of imposing such a limitation would, in our opinion, seriously prejudice the interests of the employees. It is well known that the trade union movement in this country cannot yet claim to cover all employees engaged in several branches of industry. Membership of the important trade unions no doubt shows an appreciable increase and progress, but the stage when trade unions can claim to have covered all employees or even a majority of them has still not been reached. If the majority rule for which the appellant contends is accepted and section 19(6) is accordingly construed, termination of the award would, we apprehend, become very difficult, if not impossible, in a very large number of cases. It is in this context that the effect of section 18 has to be borne in mind. As we have already indicated the class of employees bound by the award under section 18 is very much wider than the parties to the industrial dispute in which the award is made; the said class includes not only all the persons employed in the establishment at the date of the award but it covers even the subsequent employees in the said establishment. It is, therefore, obvious that if the majority rule is adopted very few awards, if any, could be terminated because very few unions would be able to claim a majority of members on their rolls, and in their present stage of Organization in very few cases would a majority of workmen be able to meet, decide and act together otherwise than through their unions. That is why the majority rule would very seriously prejudice the rights of employees to terminate awards when they feel that they need to be modified or changed. That is one aspect of the matter which cannot be ignored in construing the material words in section 19(6). There is another aspect of the question which is also relevant and which, in our opinion, is against the construction suggested by the appellant. We have already noticed that an industrial dispute can be raised by a group of workmen or by a union even 166 though neither of them represent the majority of the workmen concerned; in other words, the majority rule on which the appellant 's construction of section 19(6) is based is inapplicable in the matter of the reference of an Industrial dispute under section 10 of the Act. Even a minority group of workmen can make a demand and thereby raise an industrial dispute which in a proper case would be referred for adjudication under section 10. It is true that an award pronounced on such reference would bind all the employees under section 18; but logically, if an industrial dispute can be raised by a minority of workmen or by a minority union why should it not be open to. a minority of workmen or a minority union to terminate the award which is passed on reference made at their instance ? The anomaly to which the learned Attorney General refers has no practical significance. If the majority of workmen bound by the award desire that the award should continue and needs no modification, they may come to an agreement in that behalf with their employer, and adopt such course as may be permissible under the Act to make such agreement effective. However that may be, we are satisfied that both logic and fairplay would justify the conclusion that it is open to a minority of workmen or a minority union to terminate the award by which they, along with other employees, are bound just as much as it is open to hem to raise an industrial dispute under the Act. hat is the view taken by the industrial tribunal in he present case and we see no reason to differ from it. It appears that when this question was argued before the tribunal the appellant strongly relied on rule 83 framed by the Government of Bombay under section 38 of the Act; and it was urged that the said rule is consistent with the construction sought to be placed by the appellant on section 19(6). It is conceded that at he relevant time this rule was not in force; and so it s strictly not applicable to the present proceedings. hat being so, we do not propose to consider the argument based on the said rule and to examine the question as to whether the rule really supports the appellant 's construction, and, if yes, whether it would be valid. The question raised before us must obvi 167 ously be decided on a fair and reasonable construction of section 19(6) itself, and the rule in question, even if applicable would not be material in that behalf. We accordingly hold that, on a fair and reasonable construction of section 19(6) the true position is that, though the expression "any party bound by the award" refers to all workmen bound by the award, notice to terminate the said award can be given not by an individual workman but by a group of workmen acting collectively either through their union or otherwise, and it is not necessary that such a group or the union through which it acts should represent the majority of workmen bound by the award. In the result the appeal fails and is dismissed with costs. Appeal dismissed.

The appellant 's workmen were represented by a Union called Kamdar Mandal Cement Works, Porbandar. The registration of the said union was cancelled and that led to the formation of two Unions, the Cement Kamdar Mandal and Cement Employees Union. The Cement Kamdar Mandal gave two notices one after another to the appellant, purporting to terminate two previous awards, wherein the defunct union represented the workmen. Thereafter the Mandal presented fresh demands and the dispute was referred to the Tribunal. The second union, the Cement Employees ' Union which represented the majority of the appellant 's workmen at Porbandar had been impleaded in the proceedings. The appellant raised preliminary objections before the Tribunal against the competency of the reference inter alia on the ground that the award in question by which the parties were bound had not been duly terminated under section 19(6) of the Act in as much as the union which purported to terminate the said award represented only a minority of workmen bound by it. The Tribunal by its interlocutory judgment found against the appellant. The dispute between the parties centres round the question as to who can issue the notice terminating the award on behalf of workmen who are bound by the award as a result of section 18 of the Act. The question therefore for decision is whether a registered trade union representing a minority of workmen governed by an award can give notice to the other party intimating its intention to terminate the award under section 19(6) of the . Held, that the effect of section 18 is that an award properly made by an industrial tribunal governs the employer and all those who represent him under section 18(c) and the employees who are parties to the dispute and all those who are included in section 18(b) and (d). On a fair and reasonable reading of section 19(6), the true position is that, though the expression "any party bound by the award" refers to all workmen bound by the award, notice to terminate the said award can be given not by an individual workman but by a group of workmen acting collectively either through their union or otherwise, and it is not necessary that such a group of workmen acting collectively either through their union or otherwise, should represent the majority of workmen bound by the award. Thus it is open to a minority of workmen or a minority union to terminate 158 the award by which they, along with other employees, are bound just as much as it is open to them to raise an industrial dispute under the Act. The Central Provinces Transport Services Limited vs Raghunath Gopal Patwardhan; , and The Newspapers Limited vs The State Industrial Tribunal, U. P.; , , referred to.

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Appeal No. 236 of 1955. Appeal from the judgment and order dated August 3, 1953, of the Punjab High Court in Civil Reference No. 7/1952. M. C. Setalvad, Attorney General for India, K. N. Rajagopal Sastri and D. Gupta, for the appellant. N. C. Chatterjee and section K. Sekhri, for the respondent. July 27. The Judgment of the Court was delivered by 76 section K. DAS J. This is an appeal on a certificate of fitness granted under the provisions of sub section 2 of section 66A of the Indian Income tax Act, 1922, by the High Court of Judicature for the State of Punjab then sitting at Simla. The certificate is dated December 28, 1953, and was granted on an application made by the Commissioner of Income tax, Punjab, appellant herein The relevant facts are shortly stated below. For the assesment year 1946 47, one Pandit Thakurdas Bhargava, an advocate of Hissar and respondent before us, was assessed to income tax on a total assessable income of Rs. 58,475/ in the account year 1945 46. This sum included the amount of Rs. 32,500/stated to have been received by the respondent in July, 1945 for defending the accused persons in a case known as the Farrukbnagar case. The assessee claimed that the said amount of Rs. 32,500/ was not a part of his professional income, because the amount was given to him in trust for charity. This claim of the assessee was not accepted by the Income tax Officer, nor by the Appellate Assistant Commissioner who heard the appeal from the order of the Income tax Officer. Both these officers held that the assessee had received the amount of Rs. 32,500/ as his professional income and the trust which the assessee later created by a deed of Trust dated August 6, 1945, did not change the nature or character of the receipt as professional income of the assessee; they further held that the persons who paid the money to the assessee did not create any trust nor impose any obligation in the nature of a trust binding on the assessee, and in fact and law the trust was created by the assessee himself out of his professional income ; therefore, the amount attracted tax as soon as it was received by the assessee as his professional income, and its future destination or application was irrelevant for taxing purposes. From the order of the Appellate Assistant Commissioner a further appeal was carried to the Income tax Appellate Tribunal, Delhi Branch. We shall presently state the facts which the Tribunal found, but its conclusion drawn from the facts found was expressed in the following words:"The income in this case did not at 77 any stage arise to the assessee. Keeping in mind the express stipulation made by the assessee when he accepted the brief there was a voluntary trust created, which had to be and was subsequently reduced into writing after the money was subscribed. The payments received from the accused and other persons were received on behalf of the trust and not by the assessee in his capacity as an individual. In this view, we delete the sum of Rs. 32,500/ from the assessment. " The appellant then moved the Tribunal for stating a case to the High Court on the question of law which arose out of the order of the Tribunal. The Tribunal was of the opinion that a question of law did arise out of its order, and this question it formulated in the following terms: " Whether the sum of Rs. 32,500/ received by the assessee in the circumstances set out in the trust deed later executed by him on August 6, 1945, was his professional income taxable in his hands, or was it money received by him on behalf of a trust and not in his capacity as an individual. " It appears that in stating a case the Tribunal framed an additional question as to whether the trust was created at or before the payment of Rs. 32,500/ , but expressed the view that this additional question was implicit in the principal question formulated by it. A case was accordingly stated to the High Court under section 66 of the Indian Income tax Act, and the High Court by its judgment dated August 3, 1953, answered the question in favour of the assessee, hold ing that " the sum of Rs. 32,500/ received by the assessee was not received by him as his professional income but was received on behalf of the trust and not in his capacity as an individual ". The appellant then moved the High Court and obtained the certificate of fitness referred to earlier in this judment. We shall presently state the facts found by the Tribunal in connection with the receipt of the sum of Rs. 32,500/ by the assessee, from which the Tribunal drew its inference. But the question as framed by the Tribunal and answered by the High Court, was 78 whether in the circumstances set out in the trust deed dated August 6, 1945, the amount of Rs. 32,500/received by the assessee was professional income in his hand. It is, therefore, appropriate to refer first to the recitals in the trust deed. The respondent stated in the trust deed that he had "decreased" his legal practice for the last few years and had reserved his professional income accruing after June 1944 for payment of taxes and charity. He then said: " accordingly, I have been acting on that. In the Farrukh Dagar, district Gurgaon case, Crown vs Chuttan Lal etc., the relatives and the accused expressed a strong desire to get the case conducted by me during its trial. At last on their persistence and promise that they would provide me with Rs. 40,000/ for charitable purposes and I would create a public charitable trust thereof I agreed to conduct the case. The case is now over. The accused and their relatives have given me Rs. 32,500/ for charity and creating a trust. The said amount has been deposited in the Bank. If they pay any other amount that will also be included in that. Accor dingly, I create this trust with the following conditions and with the said amount and any other amount which may be realized afterwards or included in the trust;". (then followed the name and objects of the trust, etc.). The Tribunal accepted as correct the statements of the respondent that he was at first unwilling to accept the brief in the Farrukhnagar case; he was then persuaded to accept it at the request of some members of the Bar and some influential local people on the understanding, as the respondent put it, that the accused persons of that case would provide Rs. 40,000/ for a charitable trust which the respondent would create. Eventually, the sum of Rs. 32,500/ was paid by or on behalf of the accused persons, and as the Tribunal has put it, a charitable trust was created by the respondent by the trust deed dated August 6, 1945, the recitals whereof we have q noted above. The question before us is what is the proper legal inference from the aforesaid facts found by the Tribunal. Both the Tribunal and the High Court have drawn the inference that a charitable trust was created 79 by the persons who paid the money to the assessee, and all that the assessee did under the deed of trust dated August 6, 1945, was to reduce the terms of the trust to writing. The High Court, therefore, applied the principle laid down by the Privy Council in Raja Bejoy Singh Dudhuria vs Commissioner of Income tax, Bengal (1) and observed that by the overriding obligation imposed on the assessee by the persons who paid the money, the sum of Rs. 32,500/ never became the income of the assessee; and the amount became trust property as soon as it was paid, there being no ques tion of the application of part of his income by the assessee. On behalf of the appellant it has been contended that the inference which the Tribunal and the High Court drew is not the proper legal inference which flows from the facts found, and according to the learned Attorney General who appeared for the appellant the proper legal inference is that the amount was received by the assessee as his professional income in respect of which he later created a trust by the deed of trust dated August 6, 1945. He has submitted that there was no trust nor any legal obligation imposed on the assessee by the persons who paid the money, at the time when the money was received, which prevented the amount from becoming the professional income of the assessee. He has also contended that even the existence of a trust will make no difference, unless it can be held that the money was diverted to that trust before it could become professional income in the hands of the assessee. We think that the question raised in this case can be decided by a very short answer, and that answer is that from the facts found by the Tribunal the proper legal inference is that the sum of Rs. 32,500/ paid to the assessee was his professional income at the time when it was paid and no trust or obligation in the nature of a trust was created at that time, and when the assessee created a trust by the trust deed of August 6, 1945, he applied part of his professional income as trust property. If that is the true conclusion as we hold it to be, then the principle laid down (1) 80 by the Privy Council in Bejoy Singh Dudhuria 's case (1) has no application. It is indeed true, as has been observed by the High Court, that a trust may be created by any language sufficient to show the intention and no technical words are necessary. A trust may even be created by the use of words which are primarily words of condition, but such words will constitute a trust only " where the requisites of a trust are present, namely, where there are purposes independent of the donee to which the subject matter of the gift is required to be applied and an obligation on the donee to satisfy those purposes. " The findings of the Tribunal show clearly enough that the persons who paid the sum of Rs. 32,500/ did not use any words of an imperative nature creating a trust or an obligation. They were anxious to have the services of the assessee in the Farrukhnagar case; the assessee was at first unwilling to give his services and later he agreed proposing that he would himself create a charitable trust out of the money paid to him for defending the accused persons in the Farrukhnagar case. The position is clarified beyond any doubt by the statements made in the trust deed of August 6, 1945. The assessee said therein that he was reserving his professional income as an advocate accruing after June, 1944 for payments of taxes and charity and, accordingly, when he received his professional income in the Farrukhnagar case he created a charitable trust out of the money so received. The clear statement in the trust deed, a statement accepted as correct by the Tribunal, is that the assessee created a trust on certain conditions etc. It is not stated anywhere that the persons who paid the money created a trust or imposed a legally enforceable obligation on the assessee. Even in his affidavit the assessee had stated that " it was agreed that the accused would provide Rs. 40,000/ for a charitable trust which I would create in case I defend them, on an absolutely clear and express understanding that the money would not be used for any private and personal purposes. " Even in this affidavit there is no suggestion that the persons who paid the money created the (1) 81 trust or imposed any obligation on the assessee. It was the assessee 's own voluntary desire that he would create a trust out of the fees paid to him for defending the accused persons in the Farrukhnagar case. Such a voluntary desire on the part of the assessee created no trust, nor did it give rise to any legally enforceable obligation. In the circumstances the Appellate Assistant Commissioner rightly pointed out that " if the accused persons had themselves resolved to create a charitable trust in memory of the professional aid rendered to them by the appellant and had made the assessee trustee for the money so paid to him for that purpose, it could, perhaps, be argued that the money paid was earmarked for charity ab initio but of this there was no indication anywhere". In our opinion the view taken by the Appellate Assistant Commissioner was the correct view. The money when it was received by the assessee was his professional income, though the assessee had expressed a desire earlier to create a charitable trust out of the money when received by him. Once it is held that the amount was received as his professional income, the assessee is clearly liable to pay tax thereon. In our opinion the correct answer to the question referred to the High Court is that the amount of Rs. 32,500/ received by the assessee was professional income taxable in his hands. Learned Counsel for the respondent has referred us to a number of decisions where the principle laid down in Bejoy Singh Dudhuria 's Case (1) was applied, and has contended that where there is an allocation of a sum out of revenue as a result of an overriding title or obligation before it becomes income in the hands of the assessee, the allocation may be the result of a decree of a court, an arbitration award or even the provisions of a will or deed. In view of the conclusion at which we have arrived, the decisions relied upon can hardly help and it is unnecessary to consider them. Our conclusion is that there was no overriding obligation imposed on the assessee at the time when the sum of Rs. 32,500/ was received by him. (1) 82 Accordingly, we allow this appeal and set aside the judgment and order of the High Court. The answer to the question is in favour of the appellant, namely, that the sum of Rs. 32,500/ received by the assessee was his professional income taxable in his hands. The appellant will be entitled to his costs throughout. Appeal allowed.

The assessee, an advocate, accepted a case on condition that the clients would provide him with Rs. 40,000 for charitable purposes and that he would create a public charitable trust with the money. The clients gave the assessee Rs. 32,500 and he created a trust therewith. The assessee claimed that the said amount of Rs. 32,500 was not his professional income as the amount had been given to him in trust for charity. Held, that the said amount was the professional income of the assessee and was liable to income tax. At the time when this money was paid to the assessee no trust or obligation in the nature of trust was created. The clients who paid the money did not create any trust nor imposed any legally enforceable obligation on the assessee. The money when it was received by the assessee was his professional income though he had expressed a desire earlier to create a charitable trust out of the money when received. The assessee 's own voluntary desire to create a trust out of the fees paid to him did not create a trust or a legally enforceable obligation. Raja Bejoy Singh Dudhuria vs Commissioner of Income Tax, Bengal, , referred to.

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on No. 62 of 1956. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. N.H. Hingorani and A. N. Sinha, for the petitioner. R. Ganapathy Iyer and T. M. Sen, for the respondent. April 14. The Judgment of the Court was delivered by KAPUR, J. Prior to the integration of the Indian States with the Union of India on the promulgation of the Constitution of India there was in Kathiawad a State of the name of Vadia, succession to the Rulership of which was by primogeniture. Its Ruler then was Darbar Saheb Shri Surag Vala Bavavala. He had two sons Kumar Shri Krishan Kumar and the petitioner Kumar Shri Vira Vala Surag Vala. Kumar Shri Krishan Kumar being the elder son was the heir apparent. On July 5, 1943, the Ruler Darbar Saheb Shri Surag Vala executed two documents in favour of the petitioner granting him in perpetuity and in heredity a village called ' Mota Pithadia ' in the State for enjoyment as ' Kapal Giras ' as ' Bhayat '. The word ' Bhayat ' means a cadet or the descendant of a younger branch of a Talukdar 's family where the State followstheruloofprimogeniture. 'Kapal Giras 'means a grant in appanage as a birthright to a share in the patrimony. Sometime in or about August, 1947,the State of Vadia acceded to the Dominion of India on the terms contained in an instrument of accession then executed. Thereafter, on January 23, 1948, various States in the Kathiawad area entered into a covenant forming the United State of Kathiawad, also called the United State of Saurashtra. In terms of this covenant the 523 assets of each State excepting the private properties of the Ruler, became the assets of the United State. The covenant also provided that the Ruler of each State shall be entitled to receive a certain sum as his privy purse from the revenues of the United State, to retain ownership of all private properties to be determined in the manner provided and to all personal privileges, dignities and titles. The Government of India concurred in the covenant and guaranteed all its provisions. The State of Vadia was a party to this covenant and its assets therefore became vested in the United State. On September 13, 1948, the United State of Kathiawad executed a fresh instrument of accession to the Dominion of India cancelling the instrument of accession executed by the covenanting States in or about August, 1947. On November 13, 1949, the United State of Kathiawad agreed to adopt the Constitution to be framed by the Constituent Assembly of India and further that the Constitution of India as from the date of its commencement would supersede and abrogate all other constitutional provisions inconsistent therewith in force in the United State. On the promulgation of the Constitution of India on January 26, 1950, the United State merged in the Union of India and became Saurashtra, a Part B State mentioned in the Constitution. The United State and therefore its component States since then lost all separate existence. It is not in dispute that upon such merger all the assets of the United State became vested in the Union of India. On January 27, 1950, Kumar Shri Krishan Kumar, the elder son of the Ruler Darbar Saheb Shri Surag Vala died and thereafter on May 16, 1950, the Ruler himself died. On February 12, 1951, the President of India issued a notification recognising the petitioner as the Ruler of Vadia with effect from May 16,1950, and he became entitled to the rights of the Ruler which the Government of India had agreed to recognise. These were the rights reserved to the Ruler under the covenant constituting the United State of kathiawad, namely, the right to a privy purse, to the private properties and to the personal privileges, dignities and titles. 524 On July 2, 1951, the Government of the State of Saurashtra issued a notification declaring that as the petitioner had succeeded his father as Ruler, the village Pithadia should, pending final orders be treated as Khalsa or Khas village of the State of Saurashtra. The petitioner was then a minor and his mother submitted a representation to the Government protesting against the notification. No reply was received to this protest. On May 23, 1952, the Government of Saurashtra issued a further notification which stated: " Whereas the village Pithadia in Vadia Taluka of the Madhya Saurashtra District was granted, by Lekh No. 194 dated 5th July, 1943, as Kapal Giras by the late Ruler Darbar Saheb Suragwala of the former Vadia State to his second son Shri K. section Viravala in the latter 's capacity as a cadet, in appanage grant; and Whereas, the late Ruler and his eldest son Shri K. section Krishna Kumarsinghji predeceased this second son Shri K. S.Viravala, the latter has been recognised as the Ruler of the former State of Vadia with effect from 16th May, 1950, by the Government of Saurashtra and the President of India as per Notification No. PD/MS/20 dated 12th February, 1951, of the Government of Saurashtra Revenue Department (Political) published in the Gazette of Saurashtra and Whereas, pending the recognition the Government of Saurashtra had ordered, by Notification No. PD/148/20, dated 2nd July, 1951, of the Revenue Department (Political) that village should be treated as Khalsa village of the State of Saurashtra and whereas Shri K. section Viravala 's status as a Cadet has ceased and the object of the grant in appanage has terminated in consequence of his being recognised as the Ruler. Now, therefore, the grant is deemed to have lapsed and reverted to the former Vadia State now integrated with the State of Saurashtra at present known as the State of Saurashtra with effect from the date of Shri K. section Viravala having been recognised as the Ruler of the former Vadia State in succession to the late Ruler Darbar Shri Suragwala of Vadia State, viz., 16th of May, 1950 ". 525 The petitioner again lodged a protest against this latter notification but this time also received no reply. On March 9, 1956, he filed the present petition under article 32 of the Constitution asking for the issue of a writ directing the respondent, the State of Bombay, in which State State of Saurashtra had earlier merged, to withdraw or cancel the notification and to restore the village Pithadia with all collections and realisations made by it to the petitioner and restraining the respondent from giving effect to the notification. The petitioner 's contention is that the village had been granted to him absolutely and unconditionally for permanent enjoyment from generation to generation and the State could not resume it so long as any of the descendants of the petitioner was alive. He contends that President 's recognition of him as Ruler of Vadia did not affect his rights to the village. The respondent 's contention is that the grant was not absolute or unconditional but it was to remain in force so long as the petitioner continued to be a cadet of the family and that as on his being recognised as the Ruler he ceased to be a cadet, the grant lapsed and the village reverted to the State. It is said that the Union of India being entitled to all the assets of the State of Vadia, the village has become its property since the date of the petitioner 's recognition as the Ruler. The question therefore is whether the grant lapsed on the grantee becoming the Ruler. That is a question depending on the terms of the grant. Webb in his compilation called " Political Practice in Kathiawad " has defined a ' Bhayat ' as a cadet or the descendant of a younger branch of a Talukdar 's family where the estate follows the rule of primogeniture. The grant was made by a document called a Lekh or a writing to which was attached a Hakpatrak which is a Statement of rights created by the Darbar to a Bhayat. Both these documents were registered before the Agency. The main portions of the. Lekh were in these terms: " Passed by Shree Vadia Darbar Shree Suragvala Bavavala, to long lived Kumar Shree Viravala. To wit: the Rule of primogeniture (i.e., the system 69 526 of Heir apparent and cadets) having been applied to this State, and you being our Kumar (SOD) younger than our eldest Kumar, long lived Yuvaraj Shree Krishna Kumar Saheb, you are, by this Lekh, given, as Bhayat, for permanent enjoyment as Kapal Giras, from generation to generation, the village " Mota Pithadia ", a village of exclusive jurisdiction of this State, which is of our possession, enjoyment and ownership, with its village, Tal (village site), and Sim with all their boundaries, fields, Vadis, Kharo, Kharabo, etc., i.e., with all the boundaries of ' the said village, as Giras. You may enjoy the revenues thereof from the beginning of the Year Samvat 2000. as Bhayat, a Hakpatrak (statement of rights) thereof, according to procedure has been given. The same has been attached herewith. You and your heirs and successors may enjoy the same. Map and Field Book of this village have been made, true copies whereof have been got prepared and given to you ". The lekh conferred various other dignities, privileges, amenities and rights on the petitioner. Thus it is stated that the petitioner 's marriage will be celebrated at the State expense and the State will arrange for his education, that no duties or taxes will be levied on the petitioner on account of his residence in Vadia proper, that the petitioner 's complaint regarding Giras, i.e., the village granted, or any other civil matter would be heard without charging any court fee and he would be exempt from personal attendance in court in civil matters and that no process will be issued against him in criminal cases without the permission of the Ruler himself. All these dignities, rights and privileges are appropriate to a cadet of the Ruler 's family, but have no meaning when applied to a Ruler. In the Hak Patrak it is stated: " In future even if your descendants are joint or may have divided, any one Bhayat surviving from amongst your descendants shall enjoy the Sudharo Giras and it Shall not 527 revert to the State till any one Bhayat from amongst your descendants is living ". It also states that the grantee will not sell or mortgage the Giras without the permission of the State. The grant and the Hak Patrak read together lead to the inescapable conclusion that in its true natures the grant is a grant to a cadet of the family and the grant enures for his benefit as long as he remains a cadet. The expression " given as Bhayat " is not merely descriptive of the grantee, but indicates the true nature of the grant. Nor do we agree that the expression " given as Bhayat " merely indicates the purpose for which the grant is made but describes the nature of the tenure. The grant states in express terms that it is given as Bhayat for permanent enjoyment as Kapal Giras, which means that the grant is to a cadet as an appanage and continues from generation to generation as long as any of the descendants of the grantee is alive. But if the grantee ceases to be the younger branch and becomes heir apparent by reason of the rule of primogeniture or ceases to be a cadet or Bhayat for any reason whatsoever, then the grant must come to an end. This is what the rights and liabilities mentioned in the grant itself and also in the Hak Patrak show; for example, with regard to the right of succession, the Hak Patrak states that even if one Bhayat from amongst the descendants survives he shall enjoy the Giras and there will be no reversion to the State. This, in our opinion, shows that the grant enures as long as there is a Bhayat. If there is no Bhayat the grant lapses. If on a true construction the grant is of the nature indicated above, then no question of reading an implied term in the grant arises; nor is there any necessity of determining whether the petitioner has become a ruler in the sense in which his father was a ruler of the Vadia State. Whatever be the reason for which the petitioner has ceased to be a Bhayat, either by reason of the death of his elder brother or by reason of his becoming a ruler in the limited sense of the Constitution, he has ceased to be a Bhayat and the grant being given as Bhayat for 528 permanent enjoyment as Kapal Giras, it has come to an end. In that view of the matter the petitioner must be held to have failed to make out any infringement of his fundamental : 'right by reason of the notification dated May 23, 1952. The infringement which the petitioner complains of is deprivation of his property by State action and he bases his right on the terms of the grant. If the grant is not an absolute grant in the sense in which the petitioner contends, but is a grant which by its very nature contains a defeasance clause, then the petitioner cannot found his claim on any violation of his fundamental right. The petition is therefore dismissed with costs. Petition dismissed.

In the, Indian State of Vadia succession was governed by primogeniture. The Ruler in 1943 granted to his younger son, the petitioner, a village in the State in perpetuity and in heredity for enjoyment as 'Kapal Giras ' as ' Bhayat '. In 1947 the State of Vadia acceded to the Dominion of India and by subsequent constitutional developments it became merged in the State of Saurashtra. After the coming into force of the Constitution the elder son of the Ruler and then the Ruler died, and the petitioner was recognised as the Ruler. Thereupon the State of Saurashtra issued a notification resuming the grant as it was deemed to have lapsed and reverted to the former Vadia State. The petitioner contended that the grant was absolute and unconditional for 522 permanent enjoyment from generation to generation and the State could not resume it: Held, that the grant lapsed on the petitioner becoming the Ruler and the State could resume it. The grant was to the petitioner as a " Bhayat ", which word meant a cadet or the descendant of a younger branch of a Talukdar 's family where the estate followed the rule of primogeniture; as such if enured for his benefit as long as he remained a cadet. But when the grantee became the Ruler and ceased to be a " Bhayat ", the grant came to an end.

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Appeal No. 190 of 1955. 682 Appeal from the judgment and order dated July 31, 1953, of the Hyderabad High Court in Reference Case No. 302/5 of 1951 52. N. A. Palkhivala and B. Ganapathy Iyer, for the appellants ' H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and D. Gupta, for the respondent. April 26. The Judgment of Kapur and Hidayatullah, JJ., was delivered by Hidayatullah, J.S. K. Das, J., delivered a separate Judgment. S.K. DAS, J. This is an appeal by the assessee with leave of the High Court of Hyderabad granted under section 66A(2) of the Indian Income tax Act, 1922. The short facts are these. The appellant is a private limited company carrying on the business, inter alia, of sale of Shahabad stones (flag stones) which had to be extracted from quarries, dressed and then sold. For the purpose of its business, the appellant took on contract the right to excavate stones from certain quarries in six villages in Tandur taluk for a period of twelve years under a Quolnama dated 9th March, 1343F, from the then jagirdar of the taluk, named Nawab Mehdi Jung Bahadur. The contract provided that the jagirdar should be paid annually a sum of Rs. 28,000 as consideration for extracting the stones till the end of the contract period, as per a plan prepared, within the six villages specified therein. The appellant had no right or interest in the land; nor did he have any other interest in the quarries apart from excavating stones therefrom. The contract specifically provided that the appellant, called the contractor, had no right to manufacture cement from the stones; he had only the right to excavate stones from the quarries till the end of the contract period. I may here quote some of the relevant provisions of the Quolnama as to how the annual consideration of Rs. 28,000 was to be paid. It said: " 1. The period of contract for excavating stones from the quarries of the villages noted above is for 12 years from 1st Ardibehisht 1346 Fasli to the end of the Farwardi, 1358 Fasli and the contractor will be given possession from 1st Ardibehisht 1346 Faisli. 683 2. The annual contract amount would be Rs. 28,000. For the surety of the contract the sum of Rs. 96,000 0. section has been received and deposited in the treasury of the Jagir towards the advance and earnest money and the security, a receipt for the same has been issued separately. 4.The remaining annual balance sum of Rs. 20,000 may be deposited in the Jagir Treasury by instalment every month of Rs. 1,667 10 8; if there be any default in paying the instalment regularly, interest at the rate of one rupee per cent. per mensem will be charged to the contractor till the full payment. There was another lease or contract taken from Government for a period of five years for which the appellant was required to pay Rs. 9,000 per year in monthly instalments of Rs. 750. That was also in respect of stone quarries. The terms of the said contract with Government have not been printed in the paper book, presumably because they were similar in nature to those of the Quolnama referred to above. ,The Income tax Appellate Tribunal found, and there is no dispute as to this, that under the aforesaid two contracts the appellant had merely the right to extract Shahabad stones. The Tribunal said: " Flag stones of required thickness are found in layers in those mines or quarries. Before one gets these flag stones of the required thickness, one has also to extract flag stones of greater thickness. The assessee sells these flag stones both of the usual thickness and thickness greater than usual one, after working on them, if necessary. " There was no finding as to how deep the quarrying bad to be done to extract the stones of required thickness. According to the appellant 's books of account, it paid each year of account Rs. 37,000 as lease or contract money to extract the stones under the two contracts and it claimed an allowance in respect thereof under section 12(2)(xv) of the Hyderabad Income tax Act, corresponding to section 10(2)(xv) of the Indian Income tax Act, 1922. The Tribunal stated that the Income tax Officer was under some misapprehension or error while examining the appellant 's books of account, and held for the assessment year 1357F that the expenditure 684 of Rs. 27,054 as lease or contract money was capital expenditure, in respect of which the appellant was not entitled to claim any allowance under the relevant provision of the Hyderabad Income tax Act. For the assessment year 1358F he similarly held that the sum of Rs. 28,158 was capital expenditure and not revenue expenditure. There were two appeals to the Appellate Assistant Commissioner who also held that the expenditure was capital expenditure. Then, there was an appeal to the Income tax Appellate Tribunal, Bombay. The Accountant member of the Tribunal held that the payments in question stood on the same footing as royalties and dead rent which are allowable as working expenses in cases of mines and quarries. The President Of the Tribunal expressed his finding thus: " In the present case, the assessee purchased his stock in trade. Instead of paying so much for so many cubit feet, he pays a lump sum every year. Parties might as well agree that the so called lessee shall pay a sum of money bearing a proportion to the sales or quantum of material extracted or a lump sum for the purpose of convenience. Because these quarry leases are called leases, the assessee does not get an asset of an enduring benefit. In fact, I find that the leases are renewed from time to time. The lease money is, therefore, in my opinion, not capital expenditure but revenue expenditure and should be allowed in computing the assessee 's income from the quarries." In the result, the Tribunal allowed the claim of the appellant that the payment of the two sums of Rs. 27,054 and Rs. 28,158 for the assessment years 1357F and 1358F respectively was in its true nature a revenue expenditure rather than capital expenditure. On being satisfied that a question of law arose out of its order, the Tribunal stated the following question for the decision of the High Court: " Whether the lease money paid by the assessee company to Nawab Mehdi Jung Bahadur and to Government is capital expenditure or revenue expenditure. " The High Court answered the question against the appellant. Hence the present appeal. 685 My learned brethren have come to the conclusion that the expenditure in question was capital expenditure. Reluctantly and much to my regret I have come to a different conclusion, and I proceed now to state the reasons for my conclusion as briefly as I can. It is not disputed that if the expenditure was capital expenditure, then the appellant was not entitled to the benefit of section 12(2)(xv) of the Hyderabad Income tax Act in the relevant years. It is equally undisputed that if the expenditure was revenue expenditure, then the appellant could claim an allowance in respect thereof. Therefore, it is unnecessary to read the provisions of section 12(2)(xv) of the Hyderabad Income tax Act or the corresponding provisions of section 10(2)(xv) of the Indian Income tax Act, 1922. 1 plunge at once in medias res to a consideration of the crucial /question in this case: were the two payments in question of the nature of capital expenditure or revenue expenditure ? This distinction between capital and revenue, either on the receipt or expenditure side, is almost a perennial problem in Income tax law. In general the distinction is well recognised and is based on certain principles which are easy of application in some cases; but from time to time cases arise which make the distinction difficult of application. A large number of decisions were cited before us, but no infallible criterion of universal application emerges therefrom and each case must turn on its own facts, though the decisions are useful as illustrations and as affording indication of the kind of considerations which may relevantly be borne in mind in approaching the problem. I shall refer in this judgment to such decisions only as have a bearing on the real controversy between the parties. In view of the submissions made before us, the real controversy in this case appears to me to be this : in the context of the terms of the contract between the parties, was the expenditure incurred intended to create or bring into existence an asset or advantage of an enduring character or was it intended to get only the stock in trade or the raw materials for the business ? If it was the former, then it was capital 89 686 expenditure; if latter, then revenue expenditure. There is no doubt that receipts and payments in connexion with acquiring or disposing of leaseholds of mines or minerals are usually on capital account (Kamakshya Narain Singh vs Commissioner of Income tax (1)). The reason why the price paid for the purchase of mining rights is a capital expenditure as explained by Channel J., in Alianza Co. vs Bell (2) ,in the, following words: "In the ordinary case, the cost of the material worked up in a manufactory is not a capital expendture; it is a current expenditure and does not become a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum down secures a supply of the raw material for a period extending over several years. . . If it is merely a manufacturing business, then the procuring of the raw material would not be a capital expenditure. But if it is like the working of a particular mine or bed of brick earth and converting the stuff worked into a marketable commodity, then the money paid for the prime cost of the stuff so dealt with is as much capital as the money sunk in the machinery or buildings. " Learned counsel for the Department has strongly relied on these observations and has contended that the ,appellant had no manufacturing business in the present case and the price he paid for working the quarries was as much capital expenditure as money sunk in machinery or buildings. But this contention ignores the absence of one very important circumstance in this case. The acquisition of a mine or a mining right is an enduring asset, because it is not a mere purchase of minerals but is ail acquisition of a source from which flows the right to extract minerals; in other words, the acquisition provides the means of obtaining the raw material rather than the raw material itself ; therefore, it relates to fixed capital, and in a business sense the acquiring of a leasehold of a mine is not the purchase of raw materials only. It is something more than that. In the case before us except the stones, nothing else was acquired. Clauses 5 and 7 of the Quolnama said: (1) (2) 687 " 5. The contractor shall have no right to excavate stones from other places of the Jagir Ilaqa except the villages specified within the prescribed period of contract. The Jagir authorities will not allow any other person to excavate these stones within the jurisdiction of villages other than the villages specified above." . . . . . . . . . . . . . . . . . . . 7.The contractor shall have to excavate stones from the quarries as per the plan. In case he requires a further area of land in the village for excavation of stones, this will be done on his application four months in advance. The contractor will have no right to manufacture cement from the stones in the villages noted above." In view of these clauses and the recital in the Quolnama that it was a quarry contract for excavating stones only, it is in my view not reasonable to hold that what the appellant acquired in the present case was the means of obtaining raw material rather than the raw material itself. It is, I think, an accepted position now that the expression " capital expenditure " must normally be construed in a business sense and emphasis should be placed upon the business aspect of the transaction rather than on the purely legal and technical aspect. It is not, therefore, necessary to determine whether the Quolnama in the present case was in law a lease, or a license, or a license coupled with a grant. What we have to consider is the nature of the transaction from the business point of view, and it seems to me that having regard to the terms of the Quolnama, the transaction in its true nature and quality was a sale of raw materials coupled with a license to the appellant to come on the land and remove the materials sold; the purchase price was to be paid partly in a lump sum and partly in monthly instalments. If that is the true nature of the transaction, there is no difficulty in answering the question raised. The only answer then is that the payments in question were revenue expenditure. 688 I now refer to four decisions which in my opinion come closest to the controversy before us. (1) In re: Benarsi Das Jagannath (1); (2) Mohanlal Hargovind of Jubbulpore vs Commissioner of Income tax, C. P. and Berar, Nagpur (2) ; (3) Abdul Kayoom vs Commissioner of Income tax, Madras (3 ) and (4) Stow Bardolph Gravel Co. Ltd. vs Poole (Inspector of Taxes) (4). The first is a decision of the Full Bench of the Lahore High Court, the second, a decision of the Privy Council, the third, a decision of the Full Bench of the Madras High Court and the last a decision of the Court of Appeal in England. The facts in Benarsi Das Jagannath (1) were these. The assessee, who was a manufacturer of bricks, obtained certain lands on leases for the purpose of digging out earth for the manufacture of bricks. Under the deeds he had the right to dig earth up to three to three and a half feet. He had no interest left in the lands as soon as the earth was dug out and removed. The periods of the leases varied from six months to three years. The Income tax authorities and the Appellate Tribunal held that the consideration paid by the assessee to the owners of the lands was a capital expenditure and was therefore not an allowable deduction under section 10(2)(xv) of the Indian Income tax Act. It was held by the Full Bench that the main object of the agreement was the procuring of earth for manufacturing bricks and not the acquisition of an advantage of a permanent nature or of an enduring character, that the payments made were the price of raw material and that the assessee was therefore entitled to claim them as business expenditure under section 10(2)(xv). It was worthy of note that this decision was approved by this Court in Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax, West Bengal (5). Bhagwati, J., delivering the judgment of this Court said: " This synthesis attempted by the Full Bench of the Lahore High Court truly enunciates the principles which emerge from the authorities. In cases where the expenditure is made for the initial outlay or for (1) Lah. (3) I.L.R. (2) [1949] L.R. 76 I.A. 235. (4) (5) 689 extension of a. business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure. A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure. The question, however, arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment. Such expenditure can be looked at either from the point of view of what is acquired or from the point of view of what is the source from which the expenditure is incurred. If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence of any asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be of the nature of revenue expenditure. These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated. It has been rightly 690 observed that in the great diversity of human affairs and the complicated nature of business operations it is difficult to lay down a test which would apply to all situations. One has therefore got to apply these criteria one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2)(xv) of the Income tax Act. The question has all along been considered to be a question of fact to be determined by the Income tax authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of fact if they have been arrived at on a proper application of those principles. " I do not read these observations as merely indicating an approval of certain general principles, but not necessarily an approval of the actual decision in Benarsidas Jagannath (1). In cases of this nature it is the application of the principles to the facts of a case which presents difficulties, and I do not think that this Court would have made the observations it made, unless it was approving the actual decision in Benarsidas Jagannath (1) in so far as it applied the general principles to the facts of that case. I see no significant distinction between that case and the one before us. In both cases, what was acquired was raw material earth in one case and stone in the other and the payments made were the price of the raw material. The only distinction pointed out is the difference in the period of the contracts; that is a relevant factor but not determinative of the problem before us. Even in our case the contract in favour of Government was for five years only. Surely, it cannot be argued that three years in one case and five years in the other will make all the difference. I think that the real test is, in the context of the controversy before us, what was acquired au enduring asset or advantage, or raw materials for running the business ? Judged by that test the present case stands on the same footing as the case of Benarsidas Jagannath (1) (1) Lah. 307, 691 In Mohanlal Hargovind (1) the facts were these. The assessees carried on business at several places as manu factures and vendors of country made cigarettes known as bidis. These cigarettes were composed of tobacco rolled in leaves of a tree known as tendu leaves, which were obtained by the assessees by entering into a number of short term contracts with the Government and other owners of forests. Under the contracts, in consideration of certain sum payable by instalments, the assessees were granted the exclusive right to pick and carry away the tendu leaves from the forest area described. The assessees were allowed to coppice small tendu plants a few months in advance to obtain good leaves and to pollard tendu trees a few months in advance to obtain better and bigger leaves. The picking of the leaves however had to start at once or practically at once and to proceed continuously. The Privy Council distinguished Alianza Co. vs Bell (2) and overruling the decision in Income tax Appellate Tribunal vs Haji Sabumiyan Haji Sirajuddin (3) held that the expenditure was to secure raw material and was allowable as being on revenue account. Lord Greene delivering the judgment of the Board said: " It appears to their Lordships that there has been some misapprehension as to the true nature of these agreements and they wish to state at once what in their opinion is and what is not the effect of them. They are merely examples of many similar contracts entered into by the appellants wholly and exclusively for the purpose of their business, that purpose being to supply themselves with one of the, raw materials of that business. The contracts grant no interest in land and no interest in the trees or plants themselves. They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which, of course, implies the right to appropriate them as their own property." " In the present case the trees were not acquired: nor were the leaves acquired until the appellants had reduced them into their own possession and ownership by picking them. If the tendu leaves had been stored (1) (1949) L.R. 76 I.A. 235. (2) (3) 692 in a merchant 's godown and the appellants had bought the right to go and fetch them and so reduce them into their possession and ownership it could scarcely have been suggested that the purchase price was capital expenditure. Their Lordships see no ground in principle or reason for differentiating the present case from that supposed. " I also see no ground in principle or reason for differentiating the present case from that of Mohanlal Hargovind (1). In K. T. M. T. M. Abdul Kayoom and Hussain Sahib vs Commissioner of Income tax, Madras (2 ) a Full Bench of the Madras High Court dissenting from its earlier decisions held that rent paid by a dealer in chank under an agreement in the form of a ,lease" with the Government under which he had an exclusive right " to fish for, take and carry away all the chank shells in the sea off the coast line " of a certain district, was allowable as revenue expenditure. It was further held there that it made no difference whether what was acquired was raw material for a manufacturing busi ness or stock in trade which was intended to be sold without being subjected to any manufacturing process. This decision is the subject of Civil Appeal No. 64 of 1956 which has been heard along with this appeal. I do not see how the present case can be distinguished from the Madras case without holding that the Madras decision was incorrect. Last, I come to Stow Bardolph Gravel Co. Ltd.(3) That was a case in which it was held that sums paid by a dealer in gravel as consideration for the right to excavate and take away deposits of gravel represented capital expenditure. The decision rested on the fact that the subject matter of the agreement consisted of a deposit of gravel living some feet beneath the surface of the land and requiring to be won from the land by a process of excavation. I find it difficult to reconcile this decision with the decision in Benarsidas Jagannath (4) and Abdul Kayoom (2) in both of which also excavation or exploration was necessary to win the raw material. If, as I hold, the decision in Benarsidas Jagannath (4) was approved by this Court then we (1) (1949) L.R. 76 I.A. 235. (2) I.L.R. (3) (4) Lah. 693 must accept that decision as correct in preference to the decision of the Court of Appeal in England. I may point out here what Evershed, M. R., said in the course of his judgment in that case: " The Commissioners for the General Purpose of the Income Tax were of opinion that these claims to make deductions were not admissible, but Harman, J., was of opinion that the deductions were admissible. I have myself reached a different conclusion from that reached by Harman, J., and I have reached it, I confess, with some slight feeling of regret and misgiving on two grounds: first, I think the result bears a little hardly on the taxpayers for reasons which will, I think, emerge without any necessity for empha sis as I recite the facts; second, I am not for my own part satisfied that if close investigation were made of the method whereby the taxpayers and others in the same line of business carry on their businesses, it might not emerge I say no more than that that the Commissioners would find as a fact, notwithstanding the apparent legal consequences of the agreement to which I have referred, there was here in truth such a taking possession of the deposit of gravel in question that it could sensibly for tax purposes and rightly and fairly be said that once the consideration money had been paid under the agreement the deposit was in truth the stock in trade of the taxpayer. However, I have felt compelled to say that there is no finding of fact to support such a conclusion, nor indeed is there before us any evidence sufficient to warrant it. It is in that respect, "apprehend, that I find myself at variance with Harman, J." . . . . . . . . . . "If the facts were as the judge intimated, the General Commissioners might find, and might justifiably find, that a case such as this is not really distinguishable as a matter of law and common sense from a sale of loose objects lying on the surface of the ground, such as windfalls from apple trees, or even from cases like those I have mentioned, which are concerned with crops or leaves growing on trees. But my difficulty is that I can find no justification for that conclusion in the material before us. " 90 694 In view of these observations I have considerable hesitation, and I say this with great respect, in accepting the decision as a decision on a general question of law. The decision proceeded on the findings of the Commissioners and on the basis that there were no materials for the conclusion reached by Harman, J. If we proceed on the findings of the Tribunal in the present case, there are enough materials to support the finding that the appellant acquired nothing but raw materials by the transactions in question. I find nothing in the decision in Stow Bardolph Gravel Co. Ltd. (1) which need lead me to the conclusion that the decisions in Benarsidas Jagannath (2) and Abdul Kayoom (3) were wrong and require reconsideration. If I may again say so with great respect, the learned Master of the Rolls distinguished the Privy Council decision in Mohanlal Hargovind (4) by saying that decision rested upon the particular circumstances of the case and upon the fact that the Board was able to say that from the moment the contract was entered into and before the leaves had actually been picked, the tendu leaves were part of the raw material of the appellant. He added that he could not say the same of sand and gravel, which were part of the earth itself and which could only become part of the stock in trade of the gravel merchant 's business when it had, in the true sense, been won, been excavated and been taken into their posses sion. I do not, however, think that the decision in Mohanlal Hargovind (4) proceeded on the basis suggested by the learned Master of the Rolls. In clear and express terms Lord Greene said: "nor were the leaves acquired until the appellant reduced them into their possession and ownership by picking them." This shows that the decision of the Privy Council did not proceed on the ground alleged, namely, that even before the leaves had actually, been picked, they were part of the raw material of the appellant of that case. The decision proceeded on the footing that the leaves became part of the raw material when they were reduced into possession and ownership by picking (1) (3) (2) Lah. (4) (1949) L.R. 76 I.A. 235. 695 3 S.C.R. SUPREME COURT REPORTS them. If that is the correct ratio of Mohanlal Hargovind (1), then where is the distinction between that case and the case of the gravel merchant in Stow, Bardolph Gravel Co. Ltd. (2) and the stone merchant in the present case ? In my opinion there is none. In the result and for the reasons given above, I hold that the expenditure in question was on revenue account and the appellant was entitled to the allowance he claimed. The answer given by the High Court was wrong and the appeal should be allowed with costs. HIDAYATULLAH, J. This is an assessee 's appeal on a certificate of the High Court granted under section 66A(2) of the Indian Income tax Act. Pingle Industries Ltd. (hereinafter called the assessee) is a private limited Company which carries on, among other businesses, the business of extracting stones from quarries, which, after dressing, it sells as flag stones. In the year 1343 Fasli, the assessee obtained from Nawab Mehdi Jung Bahadur of Hyderabad the right to extract stones from certain quarries belonging to the Nawab. A quolnama (con. tract) was executed, and it has been produced in the case. Under this quolnama, the assessee was granted the right to extract stones from quarries situated in six named villages for a period of 12 years (1346 Fasli to 1358 Fasli) on annual payment of Rs. 28,000. To safeguard payment Rs. 96,000 representing a part of the annual payments at Rs. 8,000 per year were paid in advance as security, and the balance of Rs. 20,000 was payable each year in monthly instalments of Rs. 1,666 10 8 each. In default of punctual payment of these instalments, interest at Re.1 per cent was to be charged. Some other conditions of the quolnama may also be briefly mentioned here. The assessee undertook not to manufacture cement and also to be ,responsible for the payment of the money in spite of " any celestial or terrestrial or unexpected calamity or unforeseen event ", while the Nawab on his part undertook not to allow any other person to excavate stones in the area of the six villages. It was agreed that in case of default of instalment, the contract (1) (1949) L.R. 76 I.A. 235. (2) 696 would be re auctioned after One month 's notice to the contractor, who would be responsible for any shortfall but would not have the benefit of any extra amount. The assessee was assessed in the Fasli years 1357 and 1358 for the account years 1356 and 1357 Fasli. It claimed deduction respectively of Rs. 27,054 and Rs. 28,159 paid to the Nawab in those years, as expenditure under section 12(2)(xv) of the Hyderabad Income tax Act, which is the same as the corresponding pro. vision under the Indian Income tax Act. The claim for deduction was refused by the Income tax Officer, who held that the amount in each year represented a capital expenditure though the whole sum was being paid in instalments. The assessee appealed against the two orders of assessment to the Appellate Officer of Income tax, and questioned this decision. The appeals involved other matters also, with which we are not now concerned. The appeals were dismissed. The assessee appealed further to the Income tax Appellate Tribunal, Bombay, and raised the same contention. The Appellate Tribunal accepted the appeals. Different reasons were given by the President and the Accountant Member. According to the latter, the payment of these sums was similar to the payment of royalties and dead rent which is allowable as working expense in the case of mines and quarries. The President relied upon Mohantal Hargovind vs Commissioner of Income tax (1), and held that the payments represented the purchase of the stock in trade of the assessee, and that the leases did not create an asset of an enduring character. The Commissioner of Income tax, Hyderabad Division, then asked for a reference of the case to the High Court at Hyderabad, and the Appellate Tribunal referred the following question of law under section 66(1) of the Hyderabad Income tax Act: " Whether the lease money paid by the assessee Company to Nawab Mehdi Jung Bahadur and to Government is capital expenditure or revenue expenditure. " The reference to Government in the question arises in this way. It appears that there was yet another (1) (1949) L.R. 76 I.A. 235. 697 lease which was taken from Government for 5 year. and under which the assessee was required to pay Rs. 9,000 per year in instalments of Rs. 750 per month. It does not appear that the terms of this lease were ascertained and the amount does not figure in the order of assessment, though apparently it was assumed that what applied to the payment to the Nawab held equally good in regard to the payment to Government. In any event, the books of the assessed kept in mercantile system showed both the sums each year as lease money. The High Court of Hyderabad after an examination of several decisions rendered in India and the United Kingdom, held that the payments in each year of account were of a capital nature, and that no deduction could be given under section 12(2) (xv) of the Hyderabad Income tax Act. The assessee then applied, and obtained the certificate as stated, and this appeal has been filed. The arguments in the case involved the interpretation of the quolnama as to the right conveyed there and the nature of the payments with reference to the provision of the law under which the deduction was claimed. That section reads as follows: " 12 (1). The tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profits and gains of any business, profession or vocation carried or by him. (2) Such profits or gains shall be computed after making the following allowances, namely: . . . . . . . . . (XV) Any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. " While the Appellate Tribunal looked to the periodicity of the payments, the High Court held that the amount payable was Rs. 3,36,000 divided into annual and redivided into monthly instalments. The Tribunal also considered the payments as of the nature of rent or royalty or as price for raw materials. The High 698 court, on the other hand, disagreed, and held that here being no manufacturing business, the money expended could not be regarded as price of raw materials or even as rent but as spent to acquire a capital asset of enduring benefit to the assessee. The High court referred to numerous decisions in which the question whether a receipt or expenditure is on capital or revenue account has been considered in India and the United Kingdom. Before us also, many of them were again cited as illustrating, if not laying down, certain general principles. We shall refer to some of the leading cases later, but we may say at once that no conclusive tests have been laid down which can apply to all the cases. The facts of one case differ so much from those of another that the enquiry is often somewhat fruitless. If, however, the distinguishing features are not lost sight of, the decided cases do afford a guide for the solution of the problem in hand. The arguments of Mr. Palkhivala for the assessee may be shortly stated. He contends that the quolnama is a licence and not a lease, because it creates no interest in land and no premium is payable for the right, but what is paid is periodic compensation corresponding to rent. He contends that the payments can only be regarded as periodic compensation or periodic royalty or licence fees and thus revenue in character. He further argues that even if held to be a lump sum payment broken up into instalments, it is still allowable as expenditure because it represents the price for the acquisition of raw materials, viewed from the business angle. According to him, all cases of mines and quarries fall into three classes which are: (i) in which mines and quarries are purchased outright; (ii)in which ownership is not acquired but only an interest in land; and (iii) in which there is not even an interest in land but there is an arrangement in praesent and de futuro to ensure supply of raw materials. He contends that this being evidently not a case within the first category, it matters not which of the other two categories it belongs to, because in his submission, both the remaining categories exclude a case 699 of capital expenditure. He, however, seems inclined to put his case in the third category. The learned Additional Solicitor General on his side enumerates the tests which determine whether an expenditure bears a capital or revenue character. According to him, decided cases show that capital expenditure is ordinarily once and for all and not of a periodic character, but contends that even a single sum chopped up into instalments is not a payment of a periodic character. He submits that capital expenditure is one which brings into existence an enduring advantage, which, he maintains, is the case here, because the money was spent on the initiation of the business and to obtain a permanent source of raw materials and not only the materials. The quolnama shows that the agreement was for 12 years. The assessee paid an initial sum of Rs. 96,000 a,% security for the whole contract. He was required to pay Rs. 28,000 per year. The security which was given was being diminished at the rate of Rs. 8,000 per year. It was a guarantee against. failure to pay the monthly instalments, but there was no condition that the short payments were to be debited to it. It was rather a guarantee for the overall payment and to reimburse the jagir for any loss occasioned by a re auction of the lease after default by the assessee. Further, the payments were to be made even if no stones were extracted or could not be extracted due to force majeure. There was no limit to the quantity to be extracted. There was also a condition that none but the assessee was allowed to work the quarries, which means that the right was exclusive and in the nature of a monopoly. The payment, though divided into instalments of Rs. 1,666 10 8 per month, was really one for the entire lease and of Rs. 3,36,000. Nothing, however, turns upon it. It is pertinent to say that the assessee in its petition for leave to appeal to this Court filed in the High Court, viewed the amount as being Rs. 3,36,000 divided into various parts. This is what it said: " Under the terms of the said lease, the Company was required to pay a sum of H. section Rs. 28,000 per annum to the lessor. The total amount payable for 700 the entire period amounted to IRS. 3,36,000 out of which a sum of Rs. 96,000 was paid at the time of the execution of the lease deed and the balance of Rs. 2,40,000 was agreed to be paid at the rate of Rs. 20,000 per annum in twelve years. It was also agreed that this sum of Rs. 20,000 per annum should be paid in equal instalments of Rs. 1,66 10 8 every month. On the expiry of the period of lease, it was renewed for a further period of five years and seven months at an annual rent of Rs. 35,000. " These being, the terms of the lease, the question is whether the payments in the account years can be regarded as capital or revenue expenditure. The question whether an expenditure is capital or revenue in character is one of common occurrence. Its frequency, however, has not served to elucidate the tests with any degree of certainty and precision. It has now become customary to start with two propositions which appear to have been received without much argument. The first was laid down in Vallambrosa Rubber Co. Ltd. vs Farmer (1), where Lord Dunedin observed that "in a rough way" it was " not a bad criterion of what is capital expenditure as against what is income expenditure to say that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year ". This proposition was further qualified by Lord Cave in Atherton vs British Insulated and Helsby Cables Ltd. (2) in the following words: " When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think there is very good reason (in the absence of special circumstances leading to the opposite conclusion) for treating such an expenditure as properly attributable, not to revenue, but to capital. " The words " enduring benefit of a trade " have been further explained as meaning not " everlasting ", but in the way capital endures ", see Du Pareq, L. J., in (1) (1910) S.T.C. 529. (2) , 213 701 Henriksen vs Grafton Hotel Ltd. (1) and Rowlatt, J., in Anglo Persian oil Co. vs Dale (2). Another test propounded by Viscount Haldane in John Smith & Son vs Moore (3) is to distinguish, as economists do, between fixed and circulating capital. This appears to have appealed to Lord Hanworth, M. R.,, in Golden Horse Shoe (New) Ltd. vs Thurgood (4); but in Van Den Berghs Limited vs Clark (5), Lord Macmillan observed that he did not find it very helpful. Often enough, where the character of the expenditure shows that what has resulted is something which is to be used in the way of business, the test may be useful; but in cases close to the dividing line, the test seems useless. A third test was laid down by the Judicial Committee in Tata Hydro Electric Agencies Ltd., Bombay vs Commissioner of Income tax (6). There, it was stated that if the expenditure was part of the working expenses in ordinary commercial trading it was not capital but revenue. The Judicial Committee observed: "What is money wholly and exclusively laid out for the purposes of the trade ' is a question which must be determined upon the principles of ordinary commercial trading. It is necessary, accordingly, to attend to the true nature of the expenditure, and to ask oneself the question, is it a part of the company 's working expenses; is it expenditure laid out as part of the process of profit earning ? " In addition to these three tests, the last of which was applied again by the Judicial Committee in Mohanlat Hargovind 's case (7), there are some supplementary tests, which have frequently been alluded to. Lord Sands in Commissioners of Inland Revenue vs Granite City Steamship Co. Ltd. charaeterised as capital an outlay made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment. In that case, there was extensive damage to a ship, and repairs were necessary to resume trading, such expense being held to be capital expend (1) , 462, C A.(2) , 262. (3) , 282.(4) , 298. (5) ; (1937) L.R. 64 I.A. 215. (7) (1949) L.R. 76 I.A. 235.(8) 14. 91 702 iture. The questions which Lord Clyde posed in Robert Addie & Sons Collieries Ltd. vs Commissioners of Inland Revenue(1), namely: " Is it part of the Company 's working expenses, is it expenditure laid out as part of the process of profit earning ? or, on the other hand, is it capital outlay, is it expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which is a condition of carrying on its trade at all ? " influenced the Privy Council in Tata Hydro Electric Agencies Ltd., Bombay vs Commissioner of Income tax (2) (at p. 209), and the latter part of the question is the test laid down by Lord Sands, to which we have referred. There is then the test whether by the expenditure the taxpayer was ensuring supplies of raw material or purchasing them. This test is adverted to by Channell, J., in Alianza Co. Ltd. vs Bell (3 ) and approved by the House of Lords. Says Channell, J.: " In the ordinary case, the cost of the material worked up in a manufactory is not a capital expenditure, it is a current expenditure and does not become a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum secures a supply of the raw material for a period extending over several years. If it is merely a manufacturing business, then the procuring of the raw material would not be a capital expenditure. But if it is like the working of a particular mine, or bed of brick earth and converting the stuff into a marketable commodity, then the money paid for the prime cost of the stuff so dealt with is just as much capital as the money sunk in machinery or buildings. " The application of this proposition finds an example in Mohanlal Hargovind 's case (4), where tendu leaves were the subject of expenditure. The firm in that case had paid for purchasing a right to collect tendu leaves from forest, which right included the right of (1) , 676. (3) (2) (1937) L.R. 64 I.A. 215. (4) (1949) L.R. 76 I.A. 235. 703 entry and coppicing and pollarding. No right in the land or the trees and plants was conveyed, and the Judicial Committee laid emphasis on the nature of the business of the firm, and equated the expenditure to one for acquiring the raw materials for the manufacturing business. The cases to which we have referred and many more of the High Courts in India where the principles were applied with the exception of the one last cited, were all considered by this Court in Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax(6). In that case, Bhagwati, J., referred to a decision of the Punjab High Court in Benarsidas Jagannath, In re (2), where Mahajan, J. (as he then was), summarised the position and the various tests. This Court quoted with approval this summary, and observe at p. 45: " In cases where the expenditure is made for the initial outlay or for extension of a business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure. A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure. The question however arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment. Such expenditure can be looked at either from the point of view of what is acquired or from the point of view of what is the source from which the expenditure is incurred. If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is (1) [1935] 1.S.C.R. 972. (2) (1046) I.L.R. 704 thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be of the nature of revenue expenditure. These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated. " Learned counsel in the present case rested his case upon the decision of the Punjab High Court in Benarsidas case (1), and stated that after its approval by this Court, the expenditure here could not but be held as on capital account. He relied strongly also upon the decision of the Judicial Committee in Mohanlal Hargovind 's case (2 ). Reference was made to other decisions, which we will briefly notice later. In Benarsidas case (1), the person sought to be assessed was a manufacturer of bricks. He obtained certain lands for digging out earth for his manufacture. Under the deeds which gave him this right, he could dig up to a depth of 3 feet. to 31 feet. He had no interest in the land, and as soon as the earth was removed, his right was at an end. It was held in that case that the main object of the agreements was the procuring of earth as raw materials and by the expenditure the lessee had not acquired any advantage of a permanent or enduring character. It is, however, to be noticed that the duration of the leases was from six months to three years. The Full Bench referred to (1) Lah. (2) (1994) L.R. 76 I.A. 235. 705 some other leases in which the duration was longer,and observed: " There are other agreements which are not before us and it seems that the items mentioned in the question referred relate to those agreements as well. We do not know the nature of the agreements, but the question can be answered by saying that expenses incurred during the year of assessment for purchase of earth on basis of agreements of the nature mentioned in the case of Benarsidas or of the nature like Exhibit T. E. are admissible deductions, while sums spent for obtaining leases for a substantially long period varying from 10 to 20 years cannot be held to be valid deductions if they amount to an acquisition of an asset of an enduring advantage to the lessee. " It appears that the Full Bench was persuaded to this view from two considerations. The first was that what was acquired was earth with no interest in land, and the other was the short term of the leases. The approval given to Benarsidas case (1) by this Court does not extend beyond the summary of the tests settled in it, and the tests have to be applied to the facts of each case in the manner indicated by this Court. But the actual decision was not before this Court, and cannot be said to have been approved. The agreements in the present case are long term contracts. They give the right to extract stones in six villages, without any limit by measurement or quantity. They give the right exclusively to quarry for a number of years. This case is thus very different on facts. Further, the duration of the right which seems to have weighed with the Full Bench in the Punjab High Court has little to do with the character of the expenditure even if it be a relevant factor to consider. In Henriksen 's case(2) the right was only for 3 years, but monopoly value having been paid for it, the result was a capital asset of an enduring character. In Mohanlal Hargovind 's case (3), the person assessed was a bidi manufacturer who had obtained short term (1) Lah. (2) , 462, C.A. (3) (1949) L.R. 76 I.A. 235. 706 contracts with Government and other forest owners to obtain tendu leaves from the forests. These tendu leaves with tobacco are used to roll into cigarettes. The contracts gave a right of entry into forests to collect the leaves and also to coppice the plants and to pollard the tendu trees, but beyond this gave no interest in land. The Judicial Committee held that these contracts were in a business sense for the purpose of securing supplies to the manufacturers of one of the raw materials of his business. They granted no interest in land or the plants or trees. The small right of cultivation and the exclusive nature of the grant were of no significance. Then, the Judicial Committee observed as follows: " Cases relating to the purchase or leasing of mines, quarries, deposits of brick earth, land with standing timber, etc. do not appear to their Lordships to be of assistance. " The Board distinguished Alianza Co. Ltd. vs Bell which was said to be a case analogous to purchase or leasing of a mine and Kauri Timber Company 's case (2), which was a case of acquisition of land or of standing timber which was an interest in land. In either case, it was a capital asset. Their Lordships finally observed: " In the present case the trees were not acquired; nor were the leaves acquired until the appellants had reduced them into their own possession and ownership by picking them. The two cases can, in their Lordships ' opinion, in no sense be regarded as comparable. If the tendu leaves had been stored in a merchant 's godown and the appellants had bought the right to go and fetch them and so reduce. them into their possession and ownership it could scarcely have been suggested that the purchase price was capital expenditure. Their Lordships see no ground in principle or reason for differentiating the present case from that supposed. " It is to be noticed that the Privy Council case was not applied but distinguished by the Court of Appeal in England in Stow Bardolph Gravel Co. Ltd. V. Poole (3). (1) (2) [1913] A.C. 771. (3) 707 In that ease, the Company was doing the business of selling sand and gravel. It purchased two unworked deposits, and it claimed that the payment should be deducted from its profits as being expenditure for acquiring its trading stock. It was held that the Company had acquired a capital asset and not a stock in trade. Harman, J., before whom the appeal came from the decision of the General Commissioners, said that the case was indistinguishable from the Golden Horse Shoe case (1), where the tailings were regarded as the stock in trade of the taxpayer. He observed : " Now, it is said here that the opposite conclusion should be reached, and I think in substance the reason is because this gravel had never been raked off the soil upon which it was lying. There is no question, in any true sense, of extracting gravel; there is no process, as I understand it, gone through here. It is not even suggested that a riddle or sieve is used; you merely dig it up or rake it up where it lies, put it on the lorry and sell it wherever you can. It is said what was bought was a mere right to go on the place and win the gravel, but, in effect, in the Golden Horse Shoe case (1) what was bought was the licence to go on the land and take away the tailings, and 'myself think that it is a distinction without difference to suggest that, because nobody had ever applied a rake to this gravel before, it should be treated as capital, whereas if somebody had raked it into little heaps before the contract was made then its purchase would constitute a different form of adventure. It is the same situation; it is no more and ,.no less attached to the land. " In dealing with this case on appeal, Lord Evershed, M. R. (then Sir Raymond Evershed), felt that the case was a little hard upon the taxpayer, and further that it might, if proper enquiry bad been made, have been possible to hold that after the price was paid, the sand and gravel become, in truth, the stock in trade of the taxpayer. Taking the facts, however, as found, he held that what was purchased was a part of the (1) , 298. 708 land itself, namely, the gravel in situ. He held that there was a distinction between the purchase of a growing crop or leaves and the purchase of gravel. Lord Evershed then analysed the agreement, and observed as follows: " I think that, once it has to be conceded that there was no sale of the gravel in the way the Judge said there was, then it must follow that what was here acquired was the means of getting the gravel by excavating and making it part of the stock in trade. " Reference was then made by him to cases in which what was purchased or taken on lease was land or an interest in land, and Mohanlal Hargovid 's case (1) was distinguished on the ground that in that case it was possible to say of tendu leaves that they were acquired as the raw material for manufacture. The argument of Mr. Magnus in the case described as ail attempt to substitute sand and gravel for tendu leaves was not accepted, Lord Evershed observing: " But I cannot say the same of the sand and gravel, part of the earth itself, which was the subject of the contract here in question and which I think only could sensibly become part of the stock in trade of this gravel merchants ' business when it had in the true sense been won, had been excavated and been taken into their possession. " We are in entire agreement that such a distinction is not only palpable but also sensible. The present case is a fortiori. Here, the stones are not lying on the surface but are part of a quarry from which they have to be extracted methodically and skilfully before they can be dressed and sold. These deposits are extensive, and the work of the assessee carries him deep under the earth. Such a deposit cannot be described as the stock in trade of the assessee, but stones detached and won can only be so described. Before we deal with the other cases, we wish to state the distinguishing features of the cases already mentioned, and which have not often been viewed together. In the Alianza case (2), the sale was not of the caliche as such but of the right to win it from a (1) (1949) L.R. 76 I.A. 235. (2) , 709 deposit thereof, and it was treated as an expenditure of a capital nature. In the Stow Bardolph case(,), the finding was that sand and gravel had to be won, and it was held that they could not be treated as stock in trade till they were actually won. The doubt expressed by Lord Evershed was that if the taking of sand and gravel involved merely taking them up and putting them into trucks, the finding could have been otherwise. Harman, J., made this distinction, but in view of the finding, the Court of Appeal came to a different conclusion. Indeed, Harman, J., himself would have decided differently if there was, in any true sense, a question of extracting gravel. He, therefore, thought that the case resembled the Golden Horse Shoe case (2) where the " tailings " were bargained for and paid for, and became the stock in trade of the tax payer. In Mohanlal Hargovind 's case (3), there being no interest in land or trees or plants and the right of cultivation and the exclusiveness of the right to the leaves being insignificant, the contracts were treated as leading to acquisition of the raw materials. The leaves on trees were treated as equal to leaves in a shop. It was on this ground that case was distinguished from the Kauri Timber Company case (4), in which land and interest in land in the shape of standing timber were involved. The case in Hood Barrs vs Commissioners of Inland Revenue (5) was similar to the last cited. In the present case, the assessee acquired a right to extract stones and his lease included not only the stones on the top but also those buried out of sight under Tons of other stones, which he could only reach after extracting those above. This case is thus within the rule of those cases in which the right acquired is to a source from which the raw materials are to be extracted. The doubt expressed by Lord Evershed does not apply to the facts here, because the reasons given by Harman, J., cannot be made applicable at all. In Kamakshya Narain Singh vs Commissioner of Income tax(6), the case involved payment of certain annual sums by way of salami for mining rights, and (1) (3) (5) (2) (4) [1913] A.C. 771. (6) P.C. 710 these were regarded as capital income. There were also two other payments, namely, royalty on coal raised and a provision for minimum royalty. These were regarded as not capital receipts but as assessable income. In dealing with the nature of the working of a mine, certain observations were made. It was contended that the payments amounted to conversion of a capital asset into cash. The argument was repelled by the Judicial Committee in these words: These are periodical payments, to be made by the lessee under his covenants in consideration of the benefits which he is granted by the lessor. What these benefits may be is shown by the extract from the lease quoted above, which illustrates how inadequate and fallacious it is to envisage the royalties as merely the price of the actual tons of coal. The tonnage royalty is indeed payable when the coal or coke is gotten and despatched; but that is merely the last stage. As preliminary and ancillary to that culminating act, liberties #are granted to enter on the land and search, to dig and sink pits, to erect engines and machinery, coke ovens, furnaces and form railways and roads. All these and the like liberties show how fallacious it is to treat the lease as merely one for the acquisition of a certain number of tons of coal, or the agreed item of royalty as merely the price of each ton of coal. The contract is in truth much more complex. The royalty is 'in substance a rent; it is the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows ' to quote the words of Lord Denman in R. vs Westbrook (1). He was referring to leases of coal mines, clay pits and slate quarries. He added that in all these the occupation was only valuable by the removal of portions of the soil. It is true that he was dealing with occupation from the point of view of rating, but compensation has the same meaning in its application to matters of taxation such as are involved in this case. " Thus, the contention of the learned counsel for the assessee that we should treat this quolnama as merely (1) 711 showing a licence and not a lease creating interest in land is not correct. A lease to take out sand was described in Kanjee and Moolji Bros. vs Shanmugam Pillai (1) as amounting to a transfer of interest in immovable property and also so, in connection with the Registration Act in Secretary of State for India vs Kuchwar Lime and Stone Co. (2). It is thus clear that what the assessee acquired was land, a part of which in the shape of stones he was to appropriate under the covenants. He was not purchasing stones, and the price paid could not in any sense be referable to stones as stock in trade. The stones extracted might have become his stock in trade, but the stones in situ were not so. Nor do we agree that the periodicity of payments has any significance. As was pointed out by Lord Greene, M. R., in Henriksen 's case (3) : "If the sum payable is not in the nature of revenue expenditure, it cannot be made so by permitting it to be paid in annual instalments. These payments by instalments in respect of monopoly value have not the annual quality of the payments for the grant of the annual excise licence, but are of a different character altogether. Here the Appellants were minded to acquire as asset in the shape of a licence for a term of years. " The learned Master of the Rolls added that the annual payments gave " a false appearance of periodicity ". Applying the above test to the present case, it is obvious that the monthly payments of Rs. 1,666 10 8 did not represent the lease amount for a month. This was a case in which the assessee bad acquired an asset of an enduring character for which he had to put his hand in his pocket for a very large sum indeed. He paid Rs. 96,000 down, but for the rest he asked for easy terms. The amount paid every month was not in any sense a payment for acquisition of the right from month to month. It was really the entire sum chopped into small payments for his convenience. Nor can the amount be described as a business expense, because the outgoings every month were not (1) Mad. 169. (2) (1937) L.R. 65 I.A. 45, 5, (3) , C.A, 712 to be taken as spent over purchase of stones but in discharge of the entire liability to the jagir. Some of the cases to which we were referred may now be briefly noted. Hakim Ram Prasad, In re (1) was a case of renting of a cinema projector for 10 years. The amount paid was thus hire for the machine. 'In Commissioner of Income tax vs Globe Theatres Ltd. (2) the assessee advanced Rs. 10,000 to a company for the construction of a cinema house which was never built. Since the amount was not salami or premium but only advance rent, it was held deduct ible. Commissioner of Income tax vs Kolhia Hirdagarh Co. Ltd. (3) was a case of commission on every ton of coal raised, and it was held to be revenue expenditure. These cases are entirely different, and can be of no authority for payments, such as we have. Reliance was also placed upon Parmanand Haveli Ram In re (4), Nand Lal Bhoj Raj, In re (5) and Commissioner of Income tax vs Tika Ram & Sons (6). In the first two, expenditure to acquire lands bearing certain salts in the earth, which could be converted into potassium nitrate, sodium chloride or saltpetre, was regarded as revenue expenditure. They follow the line of reasoning which the same Court adopted in the Full Bench case of Benarsidas (7), which we have considered in detail earlier. They involved shortterm contracts, and in the Full Bench case it was stated that the case of long term leases was on a different footing, though, in our opinion, the decisive factors in such cases will be the nature of the acquisition and the reason for the payment. Cases on the other side of the line where payments were regarded as capital expenditure are Commissioner of Income tax vs Chengalroya Mudaliar (8) and Chengalvaroya Chettiar vs Commissioner of Income tax (9). There the expenditure was for a lease for excavation of lime shells. Since the lease conferred exclusive privilege and a new business regarded not as the right to win shells. (1) (3) (5) (7) (2) (4) (6) (8) Mad. (9) 713 All these cases turned on different facts, and it is not necessary to decide which of them in the special circumstances were correctly decided. This enquiry will hardly help in the solution of the case in hand. We are, however, satisfied that in this case the assessee acquired by his long term lease a right to win stones, and the leases conveyed to him a part of land. The stones in situ were not his stock in trade in a business sense but a capital asset from which after extraction he converted the stones into his stock in trade. The payment, though periodic in fact, was neither rent nor royalty but a lump payment in instalments for acquiring a capital asset of enduring benefit to his trade. In this view of the matter, the High Court was right in treating the outgoings as on capital account. In the result, the appeal fails, and will be dismissed with costs. BY COURT: In accordance with the majority judgment of the Court, the appeal is dismissed with costs. Appeal dismissed.

Under a quolnama the assessee company was granted exclusive rights in the nature of a monopoly to extract Shahabad Flag Stones without limit to quantity or measurement from quarries situated in six villages for a period of 12 years on annual payment of Rs. 28,000 but not to manufacture cement. The stones had to be extracted methodically and skilfully before they could be dressed and sold. The assessee company paid an initial sum of Rs. 96,000 as security and the balance of Rs. 20,000 was payable each year in monthly instalments of Rs. 1,666 10 8 each. The payments were to be made even if no stones were extracted or could not be extracted. The question was whether the amounts paid were allowable as business expenditure under section 12(2)(xv) of the Hyderabad Income Tax Act: Held (Per Kapur and Hidayatullah, jj. section K. Das, J., dissenting), that under the quolnama the assessee acquired by his long term lease a right to win stones and the lease conveyed to him a part of land. The stones in situ were not his stock intrade in a business sense but a capital asset from which after extraction he converted the stones into his stock in trade. The payment though periodic in fact was neither rent nor royalty but a lump sum payment in instalments for acquiring a capital asset of enduring benefit to his trade. The right acquired is to a source from which the raw material was to be extracted. The expenditure was outgoings on capital account and was not allowable as deductions under section 12(2)(XV) Of the Hyderabad Income Tax Act. Per section K. Das, J. That on its true construction the trans action was the sale of raw materials coupled with a licence to the assessee to come on the land and remove the materials sold, the purchase price being paid partly in a lump sum and partly in monthly instalments, that the object was the procuring of the stones for making flag stones and not the acquisition of an enduring asset or advantage, that the payments made were the price of raw materials and that the assessee was therefore entitled to claim them as business expenditure under section 12(2)(xv) of the Hyderabad Income Tax Act. Assam Bengal Cement Works Ltd. vs Commissioner of Income Tax, West Bengal, , distinguished.

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Appeal No. 235 of 1958. 12 90 Appeal from the judgment and decree dated October 18,1956, of the former PEPSU High Court in Regular First Appeal No. 11 of 1954, arising out of the judgment and decree dated November 21, 1953, of the Additional District Judge, Patiala. Gopal Singh and K. B. Krishnaswamy, for the appellant. N. section Bindra and D. Gupta, for the respondent. July 28. The Judgment of the Court was delivered by DAS GUPTA J. The appellant Dalip Singh entered the service of the Patiala State in 1916 and rose to the rank of Inspector General of Police of the State in June 1946. After the formation of the State of Pepsu he was absorbed in the Police Service of the newly formed State and was appointed and confirmed as Inspector General of Police thereof. While holding that post he proceeded on leave from October 18, 1949, till August 17, 1950. On August 18, 1950, an order was made by the Rajpramukh of the State in these words: " His Highness the Rajpramukh is pleased to retire from service Sardar Dalip Singh, Inspector General of Police, Pepsu (on leave) for administrative reasons with effect from the 18th August, 1950. " A copy of this order was forwarded to the appellant. Thereupon on August 19, 1950, the appellant wrote to the Chief Secretary of the State stating that by his retirement he would be put to heavy loss, i.e., about Rs. 50,000 which he would have earned as his pay and allowances etc., during this period and that his pension was also being affected and that this decision of the Government tantamounts to his removal from service. He requested that the Government should let him know the grounds which had impelled the Government to take this decision about his removal. Ultimately on March 30, 1951, the Government mentioned the charges against him on the basis of which the Government had decided to retire him on administrative grounds. After service of notice under 91 s.80 of the Code of Civil Procedure the appellant brought a suit in the Court of the District Judge, Patiala, against the State of Pepsu asking for a declaration that the orders of August 16, 1950, and August 18, 1950, whereby " the plaintiff has been removed from the post of Inspector General of Police, Pepsu, are unconstitutional, illegal, void, ultra vires and inoperative and that the plaintiff still continues to be in the service of the defendant as Inspector General of Police and is entitled to the arrears of his pay and allowances from August 18, 1950, and is also entitled to continue to draw his pay and allowances till his retirement at the age of superannuation ; and a decree for the recovery of Rs. 26,699 130 and full costs of this suit and future interest. " The main plea on which the suit was based was that the order of August 18, 1950, amounted to his removal from service within the meaning of article 311(2) of the Constitution and the provisions of that article not having been complied with the termination of his service was void and inoperative in law. The respondent State contended that the plaintiff had been retired from service and had not been removed from service and so article 311 of the Constitution had no application. On this question the trial Court came to the conclusion that the order compulsorily retiring the plaintiff amounted to his removal within the meaning of article 311 of the Constitution and as the requirement of that Article had not been complied with it held that the termination of service effected by that order was void in law. The Court accordingly decreed the suit in favour of the plaintiff declaring that the orders of the Government dated August 18, 1950, whereby the plaintiff had been remo ved from the post of Inspector General of Police, Pepsu, are unconstitutional, illegal, void and ultra vires and inoperative and that the plaintiff still continued to be in the service of the defendant as Inspector General of Police and he his entitled to the arrears of his pay and allowances from August 18, 1950 and is also entitled to continue to draw his pay and allowance 92 till his retirement at the age of superannuation and a decree for the recovery of Rs. 26,699 13 0. On appeal by the State the Pepsu High Court disagreeing with the Trial Court held that the order of compulsory retirement did not amount to removal from service within the meaning of article 311 of the Constitution and accordingly allowed the appeal and dismissed the plaintiffs suit. The main contention of the plaintiff before us was that the order of retirement did amount to his removal from service within the meaning of article 311 of the Constitution. The learned counsel also wanted to argue that Rule 278 of the Patiala State Regulations under which the Government apparently made the order of compulsory retirement was no longer operative. It appears that the Patiala State Regulations which continued to govern the members of the services of that State after they became integrated into the Pepsu State Services were revised from time to time. It was suggested by the learned counsel that the revised rules do not contain any rules similar to Rule 278. Rule 278 of the Patiala State Regulations was in the following words: " 278. For all classes of pensions the pet son who desires to obtain the pension is required to submit his application before any pension is granted to him. The State reserves to itself the right to retire any of its employees on pension on political or on other reasons. " The learned counsel though wanting to persuade us that the Rule about the State reserving to itself the right to retire any of its employees on pension on political or on other reasons was not present in the new rules was unable to show us however that before August 18, 1950, there had been any revision of Rule 278. It appears that revised rules for Travelling Allowance were published in 1946 as Vol. II of the new ruler,; and Rules relating to pay and allowances were published as Vol. I in 1947. Thereafter in 1952 we find that the first volume of the Pepsu Service Regulations as regards pay and leave rules was published. In the same year the third volume of the Pepsu State 93 Regulations containing rules relating to pensions was published. In the preface to this volume we find this statement : " The Revised Edition of the Patiala State Regulations relating to pay, allowances, leave, pension and travelling allowance was published in the year 1931. Subsequently the travelling allowance rules were revised and issued as Patiala Service Regulations, Vol. II, in the year 1946. Similarly the pay, allowances and leave rules were taken out from the Revised Edition (1931) and printed as Patiala Services Regulations, Volume 1, in the year 1947. The other rules relating to pensions continued to remain in the Revis ed Edition (1931) and kept upto date by the issue of correction slips. On the formation of the Patiala & East Punjab States Union on 20 8 48, these rules were made applicable to the entire territories of the Union by Ordinance No. 1 of 2005. The number of copies of this publication available for official use had run out of stock and great difficulty has been experienced in Government offices for want of it for reference. It was. therefore found necessary to revise and reprint this publication to make it available to all offices. " This makes it clear that upto the publication in 1952 of Volume III of the Pepsu Service Regulations the pension rules appearing in the 1931 edition of the Patiala State Regulations continued to be applicable to Pepsu. On August 18, 1950, therefore it is reasonable to hold that Rule 278 in its entirety remained in force and was applicable to Pepsu. It is interesting to mention that in this 1952 edition also this reservation by the Government of the " right to retire any of its employees on pension on political or on other reasons " has been maintained (Vide Chapter V, Rule 10). The contention of the learned counsel that Rule 278 was not applicable to the case of the appellant on August 18, 1950, is therefore totally without foundation. This brings us to the main contention in the case. viz., that the compulsory retirement of the appellant under Rule 278 of the Patiala State Regulations was a removal from service within the meaning of article 311 of the Constitution. The question whether the 94 termination of service by compulsory retirement in accordance with Service Rules amount to removal from service was considered by 'his Court in Shyamlal vs The State of U. P. and the Union of India (1) and again recently in State of Bombay V. Subhagchand D08hi (2). The Court decided in Shyam Lal 's Case (1) that two tests had to be applied for ascertaining whether a termination of service by compulsory retirement amounted to removal or dismissal so as to attract the provisions of article 311 of the Constitution. The first is whether the action is by way of punishment and to find that out the Court said that it was necessary that a charge or imputation against the officer is made the condition of the exercise of the power; the second is whether by compulsory retirement the officer is losing the benefit he has already. earned as he does by dismissal or removal. In that case in fact a charge sheet was drawn up against the officer and an enquiry held but ultimately the order of compulsory retirement was not based on the result of the enquiry. The Court pointed out that the enquiry was merely to help the Government to make up its mind as to whether it was in the public interest to dispense with his services so that the imputation made in the charge sheet was not being made the condition of the exercise of the power. These tests were applied in Doshi 's Case (2) and it was held that the provisions of compulsory retirement under Rule 165.A of the Saurashtra Civil Service Rules under which the order of retirement was made there was not violative of article 311(2). It was pointed out that " while misconduct and inefficiency are factors that enter into the account where the order is one of dismissal or removal or of retirement, there is this difference that while in the case of retirement they merely furnish the background and the enquiry, if held and there is no duty to hold an enquiry is only for the satisfaction of the authorities who have to take action, in the case of dismissal or removal, they form the very basis on which the order is made and the enquiry thereon must be formal, and must satisfy (1) ; (2) ; 95 the rules of natural justice and the requirements of article 311(2) ". In the case before us the order of the Rajpramukh does not purport to be passed on any charge of misconduct or inefficiency. All it states is that the compulsory retirement is for " administrative reasons. " It was only after the appellant 's own insistence to be supplied with the grounds which led to the decision that certain charges were communicated to him. There is therefore no basis for saying that the order of retirement contained any imputation or charge against the officer. The fact that considerations of misconduct or inefficiency weighed with the Government in coming to its conclusion whether any action should be taken under Rule 278 does not amount to any imputation or charge against the officer. Applying the other test, viz., whether the officer has lost the benefit he has earned, we find that the officer has been allowed full pension. There is no question of his having lost a benefit earned. It may be pointed out that Rule 278 itself provides for retirement on pension. If the provision had been for retirement without pension in accordance with the rules there might have been some reason to hold that the retirement was by way of punishment. As however the retirement can only be on pension in accordance with the rules in the present case full pension has been granted to the officer the order of retirement is clearly not by way of punishment. In Doshi 's Case (1) there is at p. 579 an observation which might at first sight seem to suggest that in the opinion of this Court compulsory retirement not amounting to dismissal or removal could only take place under a rule fixing an age for compulsory retirement. We do not think that was what the Court intended to say in Doshi 's Case(2). In Doshi 's Case(3) there was in fact a rule fixing an age for compulsory retirement, at the age of 55, and in addition another rule for compulsory retirement after an officer had completed the age of 50 or 25 years of service. It was in that context that the Court made the above (1) ; 96 observation. It had not in that case to deal with a rule which did provide for compulsory retirement, at any age whatsoever irrespective of the length of service put in. It will not be proper to read the observations in D08hi 's Case referred to above as laying down the law that retirement under the rule we are considering must necessarily be regarded as dismissal or removal within the meaning of article 311. We are therefore of opinion that the High Court was right in holding that the order of compulsory retirement made against the appellant was not removal from service so as to attract the provisions of article 311 of the Constitution and that the suit was rightly dismissed. The appeal is accordingly dismissed with costs. Appeal dismissed.

The appellant was compulsorily retired from service by the Rajpramukh of Pepsu by an order dated August 18, 1950, which was as follows: His Highness the Rajpramukh is pleased to retire from 89 service Sardar Dalip Singh, Inspector General of Police, Pepsu (on leave) for administrative reasons with effect from the 18th August, 1950." No charges Were framed against him and it was on his insist ence that certain charges were communicated to him. Rule 278 of the Patiala State Regulations, 1931 which was then in force, provided as follows : " 278. For all classes of pensions of person who desires to obtain the pension is required to submit his application before any pension is granted to him. The State reserves to itself the right to retire any of its employees on pension on political or on other reasons. " The question for determination in the appeal was whether the compulsory retirement of the appellant amounted to removal or dismissal from service within the meaning of article 311(2) of the Constitution. The trial Court held in favour of the appellant and the High Court against him, Held, that the two tests laid down by this Court for deter mining whether an order of compulsory retirement amounted to removal or dismissal from service were (1) whether it was by way of punishment, a charge or imputation against the officer, being made the basis of the exercise of the power, and (2) whether the officer was deprived of any benefit already earned as in a case of dismissal or removal. Shyamlal vs State of U. P., ; and State of Bombay vs Subhagchand Doshi, ; , referred to. So judged, the order passed against the appellant could not amount to dismissal or removal from service within the meaning of article 311(2) of the Constitution. The order was not one purported to have been made on any charge of misconduct or inefficient and the fact that any such considerations might have weighed with the Government in passing the order under Rule 278 did not amount to any imputation or charge against the officer, and there could be no question of losing any benefit earned since the Rule itself provided for retirement on pension and the officer had in fact been allowed full pension. It would not be correct to say that since the Rule did not fix any age for compulsory retirement, an order of compulsory retirement passed under it must necessarily be regarded as dismissal or removal within the meaning of article 311(2) of the Constitution. State of Bombay vs Subhagchand Doshi, ; , ex plained.

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Appeal No. 1 of 1959. Appeal by special leave from the award dated September 16, 1957, of the Industrial Court, Bombay, in Misc. Application (IC) No. 20 of 1957. M. C. Setalvad, Attorney General for India, I. M. Nanavati, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar and K. L. Hathi, for the respondent. C. K. Daphtary, Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for the Intervener. March 17. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave is directed against the award passed by the Industrial Court, Bombay, by which a scheme for gratuity has been framed in favour of the workmen represented by the respondent, Textile Labour Association, Ahmedabad, who are employed by the textile mills in Ahmedabad including the twenty appellant mills before us. In order to appreciate the points of law raised by the appellants in the present appeal we ought to state at the outset the material facts leading to the present dispute in which the impugned scheme for gratuity has been framed. On June 13, 1950, the respondent gave notice under section 42(2) of the Bombay Industrial Relations Act, 1946 (Bom. XI of 1947) (hereinafter called the Act), intimating to the Mill Owners ' Association at Ahmedabad (hereinafter called the Association) that it desired a change as specified in the annexure to the communication. The annexure showed that the respondent wanted a change in that a scheme for gratuity should be framed wherever services of an employee are terminated by the mills on grounds of old age, invalidity, 'incapacity or natural death. It was further claimed that the payment of gratuity in the said cases should be at the rate of one month 's wages (including dearness allowance) per every year of service. Some incidental demands were also specified in the annexure. The 332 demand thus made was not accepted by the Association, and so it was referred to the Industrial Court. Pending the reference the Employees ' Provident Funds Act, 1952 (19 of 1952), came into operation on March 4, 1952, and it was urged before the Industrial Court on behalf of the Association that since the statutory scheme of provident fund would soon become compulsory it would not be advisable to adjudicate upon the respondent 's claim for the specified items of gratuity at that stage. This argument was accepted by the Industrial Court; it held that when the scheme envi saged by the new Act is introduced it would be possible to see from what date it would be operative, and that, if after the introduction of the said scheme it be found that a sufficient margin is left, it would then be open to the respondent and the Association to make a fresh application for the institution of a gratuity fund either for all the employees or for the benefit of such of them as will have to retire within the next few years. It was on this ground that the demand made by the respondent was rejected on April 18, 1952. It appears that the prescribed scheme under the Provident Funds Act came into operation on October 1, 1952. In June 1955, a fresh notice of change was given by the respondent to all the mills in respect of the demand for gratuity and the said demand became the subject matter of certain references to the Industrial Court at Bombay under section 73A of the Act. At that time the association and the respondent had entered into an agreement to refer all their disputes to arbitration, and in accordance with the spirit of the said agreement the references pending before the Industrial Court in respect of gratuity were withdrawn and referred to the Board of Arbitrators. Before the Board it was, however, urged by the Association that, so long as the award passed by the Industrial Court on the earlier reference was subsisting and in operation, a claim for gratuity which was the subject matter of the said reference and award could not be properly or validly considered by the Board. This objection was upheld by the Board, and so it made no provision for gratuity. The decision of the Board of Arbitrators in the said proceedings was published on July 25, 1957. 333 After the said decision was made and before it was published the respondent made the present application for modification of the earlier award under section 116A of the Act on July 6, 1957. In this application the respondent alleged that there was sufficient justification for modifying the previous award and for introducing a scheme of gratuity as claimed by it. In this application a demand for gratuity was made on the following lines: (1) In the case of One month 's basic wages and death while in average Dearness Allow service or becom ance per completed year of ing physically or service. mentally unfit for further service : (2) On voluntary re After 10 continuous years of tirement or re service in the company signation of an same as in (1) employee : (3) On termination For less than 10 but more of service by the than 7 years at 3/4 rate of company: (1), For less than 7 years but 5 years or more than 5 years at the 1/2 rate of (1) For more than 10 years ' continuous service as in (1) above. It appears that in the application thus made a typing mistake had crept in which failed to type properly the third category of cases. The respondent applied on August 21, 1657, for amendment of the said typing mistake and the said amendment was naturally allowed. It is the demand made by this application that is the subject matter of the present proceedings under section 116A of the Act. In the present proceedings the Association did not file a written statement and in fact withdrew leaving it open to each mill to file a separate written statement of its own. It appears that there was a difference of opinion amongst the constituents of the Association. Accordingly written statements were filed on 43 334 behalf of the 65 constituent mills and the large majority of the said written statements raised some preliminary objections against the competence of the present proceedings and disputed the respondent 's claim for gratuity also on the merits. The industrial Court has overruled all the preliminary objections and on the merits it has framed a scheme for gratuity on industry cum region basis. The award framing the said scheme was pronounced on September 16, 1957. It is against this award that 21 out of the 65 mills have come to this Court by special leave. One of the appellant mills has subsequently withdrawn from the appeal with the result that out of 65 mills 45 mills do not feel aggrieved by the award but 20 mills do; and the contentions raised by them fall to be considered in the present appeal. Before dealing with the merits of the points raised by the appellants it would be relevant to refer very briefly to the relevant provisions of the Act. The Act has been passed by the Bombay Legislature because it thought that " it was expedient to provide for. the regulation of the relations of employers and employees in certain matters, to consolidate and amend the law relating to the settlement of industrial disputes and to provide for certain other purposes ". With this object the Act has made elaborate provisions for the regulation of industrial relationships and for the speedy disposal of industrial disputes. An " industrial dispute " under section 3, sub section (17), means "any dispute or difference between an employer and employer, or between employers and employees, or between employees and employees and which is connected with any industrial matter ". The expression " industrial matter has been inclusively defined in a very wide sense. Approved Union " in section 3(2) means " a union on the approved list " " primary union " under section 3(28) means "a union for the time being registered as a primary union under the Act registered union " under section 3(30) means " a union registered under the Act ", while " representative union "under section 3(33) means " a union for the time being registered as a representative union under the Act.". Section 3(39) defines " wages " as meaning " remuneration of all 335 kinds capable of being expressed in terms of money and payable to an employee in respect of his employment or work done in such employment, and includes, inter alia, any gratuity payable on discharge ". Section 42, sub section (2), provides that an employee desiring a change in respect of an industrial matter not specified in Schedule I or II shall give notice in the prescribed form to the employer through the representative of employees but shall forward a copy of the same to the Chief Conciliator, the Conciliator of the industry concerned for the local area, the Registrar, the Labour Officer, and such other person as may be prescribed. Section 66(1) provides, inter alia, that if an employer and a representative union or aNy other registered union which is the representative of the employees by a written agreement agree to submit any present or future industrial dispute or class of such disputes to the arbitration of any person, whether such arbitrator is named in such agreement or not, such agreement shall be called submission. We have already noticed that the Association and the respondent had entered into a submission in respect of several disputes which were referred to the Board of Arbitrators. Section 73A is important for our purpose; it deals with reference to arbitration by unions, and provides that " notwithstanding anything contained in this Act, a registered union which is a representative of employees, and which is also an approved union, may refer any industrial dispute for arbitration to the industrial court subject to the proviso prescribed under it. " It is under section 73A that the reference was made on the earlier occasion to adjudicate upon the respondent 's claim for a gratuity as specified in its notice of change. That takes us to sections 116 and 116A. Section 116 provides, inter alia, for the period during which an award would be binding Section 116(1) lays down in regard to an award that it shall cease to have effect on the date specified therein, and if no such date is specified, on the expiry of the period of two months from the date on which notice in writing to terminate such an award is given in the prescribed manner by any of the parties thereto to the other party, provided 336 that no such notice shall be given till the expiry of three months after the award comes into operation; in other words, the award cannot be terminated at least for three months after it has come into operation; thereafter it may be terminated as prescribed by section 116(1). With the rest of the provisions of section 116 we are not concerned in the present appeal. SeCtion 116A(1) prescribes, inter alia, that any party who under the provisions of section 116 is entitled to give notice of termination of an award may, instead of giving such notice, apply after the expiry of the period specified in sub section (2) to the industrial court making the award for its modification. It is unnecessary to set out the other provisions of section 116A. The award under appeal has been made by the industrial court on the application made by the respondent under section 11 6A. The first contention raised before us by the learned Attorney General on behalf of the appellant is that the application for modification made by the respondent under section 116A is incompetent, because what the respondent seeks is not any modification of the earlier award which is permissible under section 116A, but a reversal and a revision of the said award which is not permissible under the said section. The expression " modification of the award " may include alteration in the details of the award or any other subsidiary incidental matters. In this connection it must be borne in mind that there is a radical difference between the meaning of the word " change " as distinguished from the meaning of the word " modification ". Section 116(2) allows for a change or modification of the registered agreement, settlement or award in terms of the agreement, and that clearly brings out the difference between the two concepts of " change " and " modification ". In cases falling under section 116(2) the agreements or settlements can be wholly revoked and fresh ones substituted in their place by consent, or by consent they may be modified in subsidiary or incidental details. Where the Legislature wanted to provide for change it has expressly done so in section 116(2) by using both the words " changed " or " modified 337 Section 116A, however, is confined only to modification of the award and not its change. The same argument is placed in another form. It is contended that it was not the intention of the Legislature to permit the proceedings under section 116A for change of policy underlying the Award or its essential framework. Such a result can be achieved only by terminating the award under section 116(1) and raising an industrial dispute as provided by the Act. In support of this contention reliance has been placed on the observations made by Mukherjea, J., as he then was, in the case of Be: Delhi Laws Act, 1912(1) where the learned judge stated that " the word 'modification ' occurring in section 7 of the Delhi Laws Act did not mean or involve any change of policy but was confined to alteration of such a character which keeps the policy of the Act intact and introduces such changes as are appropriate to local conditions of which the executive government is made the judge ". In the same case Bose, J. observed that "the power to restrict and modify does not import the power to make essential changes ". On the other hand, the learned Solicitor General has contended that the context in which the word ` modification ' has been used in section 116A does not justify tne adoption of the limited meaning of the word " modify " for which the appellants contend. The policy of the Act and the reason why section 116A has been enacted show that the word " modification " has been used in a sense larger than its ordinary meaning. The Legislature realised that the procedure prescribed by section 116, sub section (1), for terminating the award which necessitates the other subsequent steps was apt to be dilatory and involved and so it has purported to provide for an effective alternative speedy remedy for the change of the award under section 116A. In support of this argument reliance has been placed on the meaning assigned to the word " modified " in " Words and Phrases " where it is stated that " though one of the primary meanings of the word ` modify ' is no doubt ` to limit ' or ` restrict 'it also means 'to vary ', and there is authority that it may even mean 'to extend ' or 'enlarge " ' (2). (1) , 1006. (2) " Words and Phrases" by Roland Burrows, Vol. 338 It is common ground that the modification permissible under section 116A does not mean that the provisions of the award must always be reduced; it may mean even increasing the provisions, and so it is urged by the respondent that the word "modification" should receive a wider denotation in the context of section 116A. This construction no doubt receives some support from the provision of section 116A that a party may apply for the modification of the award instead of giving notice for its termination; and the latter clause tends to show that the procedure prescribed by section 116A is an alter native to the procedure prescribed by section 116. The industrial court was apparently inclined to put a wider denotation on the word " modification " used in section 116A. We do not think it is necessary to decide this larger question of the construction of section 116A because, in our opinion, in the present case, even if the limited and narrow construction suggested by the appellant is put on the word " modification ", the respondent 's application cannot be said to be outside the purview of the said section. There is no doubt that the claim for gratuity made by the respondent in the earlier proceedings has been rejected by the industrial. court and that is an award; but, whether or not the present application seeks for a modification of the said award within the meaning of section 116A would depend on what the industrial court had decided on the earlier occasion. It is clear that the industrial court did not then consider the merits of the claim at all. It upheld the Association 's contention that the matter should not be decided then but may be considered later in view of the fact that the Employees ' Provident Funds Act had already been passed and the statutory scheme for provident funds was about to come into force. It was on this ground alone that the industrial court rejected the claim as it was then made but it took the precaution of expressly adding that after the introduction of the provident funds scheme it would be open to the res pondent or the Association to make a fresh application for the institution of a gratuity fund as it may deem expedient to claim. It would not be unreasonable, we think, to assume, that when liberty was thus reserved 339 to the parties to make a fresh application the industrial court had presumably section 116A in mind. In substance, the effect of the order then passed was that the application was regarded as premature and liberty was reserved to the parties to renew the application if the statutory scheme was thought to be insufficient or unsatisfactory by either of them. In such a case, if the respondent applies to the industrial court for modification of its award it is difficult to accept the argument that the respondent seeks to alter the framework of the award or to change any principle decided in the award. The true position is that by the present application the respondent is asking the court to consider the demand now that the scheme has come into force and is, according to the respondent, insufficient to meet the workmen 's grievance. What the industrial court then promised to consider after the scheme came into force is brought before it for its decision again. That being the true nature of the award and the true scope of the prayer made by the respondent in its present application it is difficult to hold that the application is incompetent under section 116A. The next argument which is pressed before us by the learned Attorney General is that the application for modification is incompetent in regard to matters not covered in the earlier proceeding. We have already referred to the items covered in the earlier proceedings as well as those which are the subject matter of the present application. It is true that the notice served by the respondent prior to the earlier reference specifically set out the claim for gratuity in four categories of cases of termination of services of the employees, whereas in the present proceedings some other categories are included. The objection raised against the competence of the present application purports to treat the earlier notice in a very technical way and confines the subsequent proceedings taken before the industrial court to the said four categories only. The argument is that the cases of termination of services which were not specified in the earlier notice cannot now be brought before the industrial court tinder the guise of the modification of the award. 340 If the modification of the award can be claimed under section 116A it must be claimed only in regard to the said four categories and no more. This argument has been rejected by the industrial court, and it has been held that in substance the earlier notice should be construed as constituting a claim for the scheme of gratuity in general. The validity of this conclusion has been seriously challenged by the appellant. There is no doubt that disputes in regard to industrial matters not covered by an award do not fall within the scope of section 116 of the Act; and so if the claim for gratuity in regard to categories not specified in the earlier notice is deemed to be outside the said notice and the relevant reference proceedings, could the respondent have made a claim in that behalf and ask for industrial adjudication without terminating the award? It is difficult to answer this question in the affirmative. It is well known that a scheme for gratuity is an integrated scheme and it covers all classes of termination of service in which gratuity benefit can be legitimately claimed. Therefore, when the industrial court refused to ' frame a gratuity scheme in regard to the four categories brought before it on the earlier occasion, in substance its refusal amounted to a rejection of any scheme for gratuity at all; otherwise it is very difficult to assume that having rejected the claim for gratuity in respect of the said four categories it would still have entertained a claim for gratuity on behalf of other categories not included therein. That is why we are inclined to think that though in form the rejection of the demand for gratuity on the earlier occasion was in regard to the four categories specified in the notice, in effect it was rejection in regard to the claim for a gratuity scheme itself. It cannot be disputed that if the earlier demand had been for a gratuity scheme pure and simple and no categories had been specified in connection therewith the present application for the modification of the award coupled with a claim for a gratuity scheme in respect of all the categories specified in the application would be within the purview of section 116 of the Act. That in substance is what has happened in this case 341 according to the finding of the industrial court on this point, and having regard to the unusual circumstances of this case we see no reason to interfere with it. Then it is urged that the industrial court has erred in law in framing a gratuity scheme even though the statutory scheme under the Employees ' Provident Funds Act has been in operation since 1952. The provident fund guaranteed by the statute under the statutory scheme is one kind of retirement benefit and since this retirement benefit is now available to the workmen it was not open to the industrial court to provide an additional gratuity scheme; that in sub stance is the contention. This contention has been frequently raised before the industrial courts and has been generally rejected. The Employees ' Provident Funds Act has no doubt been passed for the institution of provident funds for employees covered by it; and the statutory scheme for provident funds is intended to afford to the employees some sort of a retirement benefit; but it cannot be ignored that what the statute has prescribed in the scheme is the minimum to which, according to the Legislature, the employees are entitled; and so in all cases where the industrial courts are satisfied that a larger and higher benefit can be afforded to the employees no bar can be pleaded by virtue of the Provident Funds Act. it is true that after the Act came into force, the industrial courts would undoubtedly have to bear in mind the benefit of the statutory scheme to which the employees may be entitled; and it is only after bearing that factor in mind and making due allowance for it that any additional scheme for gratuity can and must be framed by them; but it is not open to an employer to contend that the Act excludes the jurisdiction of industrial courts to frame an additional scheme. In this connection it may be pertinent to point out that section 17 of the Employees ' Provident Funds Act empowers the appropriate government to exempt from the operation of all or any of the provisions of the statutory scheme to establishments as specified in section 17(1)(a) and (b). Under section 17(1)(b), for instance, any establishment may apply, for exemption if its employees are in enjoyment of benefits in the nature of 44 342 provident fund, pension or gratuity which, in the opinion of the appropriate government, are on the whole not less favourable to such employees than the benefits provided under the Act or any scheme in relation to employees in any other establishment of a similar characters This provision brings out two points very clearly. If the benefits provided by the employer are not less favourable than the statutory benefits he may apply for exemption and the appropriate government may grant him such exemption. If, on the other hand, the benefits conferred by him are less favourable than the statutory benefits he may not be entitled to any exemption, in which case both the benefits would be available to the employees. These provisions clearly indicate that the statutory benefits which in the opinion of the Legislature are the minimum to which the employees are entitled, cannot create a bar against the employees '. claim for additional benefits from their employers. In this connection we may incidentally refer to the decision of this Court in the case of Indian Hume Pipe Co. Ltd. vs The Workmen (1) where this Court has held that the statutory provision for the payment of retrenchment compensation under section 25F is no bar to a claim for gratuity. The argument urged that the statutory retrenchment partook the character of gratuity and thus constituted a bar for the additional claim for gratuity was rejected. We must accordingly hold that the Industrial Court was right in rejecting the appellants ' contention that the statutory provision for provident fund under the Employees ' Provident Funds Act is a bar to the present claim for a gratuity scheme. The learned Attorney General has then challenged the validity of the scheme on the ground that the Industrial Court was in error in dealing with the problem on industry wise rather than unit wise basis. He contends that the claim for gratuity is more allied to a claim for bonus and must, therefore, be dealt with on unit wise basis. It is not disputed that the benefit of gratuity is in the nature of retiral benefit and there can be no doubt that before framing a scheme for gratuity industrial adjudication has to take into (1) 343 account several relevant facts; the financial condition of the employer, his profit making capacity, the profits earned by him in the past, the extent of his reserves and the chances of his replenishing them as well as the claims for capital invested by him, these and other material considerations may have to be borne in mind in determining the terms of the gratuity scheme. This position has always been recognised by industrial courts (Vide: Arthur Butler & Co. (Muzaffarpur) Ltd. And Arthur Butler Workers ' Union (1). It appears also to be well recognised that though the grant of a claim for gratuity must depend upon the capacity of the employer to stand the burden on a long term basis it would not be permissible to place undue emphasis either on the temporary prosperity or the temporary adversity of the employer. In evolving a long term scheme a long term view has to be taken of the employer 's financial condition and it is on such a basis alone that the question as to whether a scheme should be framed or nit must be decided, and if a scheme has to be framed the extent of the benefit should be determined (Vide: Boots Pure Drug Co. (India) Ltd. And Their Workmen (2) For our present purpose it is really not necessary to embark upon the academic question as to whether gratuity is a part of deferred wage or not; we will assume that it is not. Even so it would not be reasonable to assimilate the character of the scheme for gratuity to that of a profit bonus and to seek to import the considerations of the Full Bench formula which governs the grant of bonus. A claim for profit bonus is based on the assumption that the employees contribute at least partially to the profits made by the employer and that they are entitled to ask for a share in the said profits in order to bridge the gulf between the wages actually received by them and a living wage to which they are ultimately entitled. A claim for gratuity is a claim for retiral benefit and it is strictly not a claim to receive a share of the profits at all; and so there would be no scope for importing the several considerations which are relevant in determining the claim for profit bonus. That is the view taken by the Labour Appellate Tribunal in Indian (1) (2) 344 Oxygen and Acetylene Co. Ltd. Employees ' Union And Indian Oxygen and, Acetylene Co. Ltd. (1) and the said decision has been cited with approval by this Court in Express Newspapers (Private) Ltd. vs The Union of India (2 ). Therefore, we are not prepared to accept the argument that the claim for gratuity is essentially similar to a claim for profit bonus, and like profit bonus it must always be considered on unit wise basis. Incidentally we may add that even a claim for profit bonus can and often is settled on industry wise basis. That still leaves the larger question to be considered whether the industrial court was in error in dealing with the claim for gratuity on industry wise basis. It is urged for the appellants that an industry wise basis is wholly inappropriate in dealing with gratuity and it should not have been adopted by the industrial court. It may be conceded that when an industry wise basis is adopted in dealing with a claim like gratuity often enough stronger units of the industry get a, benefit while the weaker units suffer a disadvantage. Take the case of a gratuity scheme. If such a scheme is based on industry wise basis employees working under the stronger units do not get that amount of benefit of gratuity which they would have got if the question had been considered unit wise, whereas employees working in weaker units get a better scheme than they would have got if the matter had been considered unit wise. Such a result is inevitable in an industrywise approach. This possible mischief can, however, be mitigated by taking a fair cross section of the industry or by working on a rule of averages after collecting the relevant facts of all the constituent units of the industry. Even so, if some of the units of the industry are very weak they are apt to suffer a disadvantage just as the very strong units in the industry are likely to get an undue advantage in the process; but the question which calls for our decision is: does this possible result mean that a scheme for gratuity should on principle not be framed on an industry wise basis but must always be framed on a unit wise basis? There are several factors which militate against the appellants ' suggestion that unit wise basis is the only (1) (2) at P. 156. 345 basis which should be adopted in such a case. Equality of competitive conditions is in a sense necessary from the point of view of the employers themselves; that in fact was the claim made by the Association which suggested that the gratuity scheme should be framed on industry wise basis spread over the whole of the country. Similarly equality of benefits such as gratuity is likely to secure contentment and satisfaction of the employees and lead to industrial peace and ' harmony. If similar gratuity schemes are framed for all the units of the industry migration of employees from one unit to another is inevitably checked, and industrial disputes arising from unequal treatment in that behalf are minimized. Thus, from the point of view of both employers and employees industry wise approach is on the whole desirable. It is well known that the Committee on Fair Wages which had examined this problem in all its aspects had come to the definite conclusion that " in determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all the industries in the country. The relevant criterion should be the capacity of a particular industry in a specified region", and it recommended that as far as possible the same wages should be prescribed for all units of that industry in that region. This approach has been approved by this Court in the case of Express Newspapers (Private) Ltd. (1) (p. 19). What is true about the wages is equally true about the gratuity scheme. In the present economic development of our country we think industrial adjudication would hesitate to adopt an all India basis for the decision of an industrial dispute like that of gratuity; and so, on principle, it would be difficult to take exception to the approach adopted by the industrial court in dealing with the present dispute. In this connection it may be relevant to take notice of the fact that the wages of textile employees have been standardised on an industry wise basis. Similarly, dearness allowance has been fixed on the same basis, and unsubstituted holidays have been prescribed on a like basis. The Employees ' State Insurance (1) at P. 156. 346 Scheme (Act 34 of 1948) is industry wise and retrenchment compensation has been statutorily standardised on the same basis (Section 25F of Act XIV of 1947). What is more remarkable is the fact that the Association and the respondent had entered into an agreement regarding bonus for a period of five years and the gratuity scheme for the clerical and supervisory staff between the said parties is also based on the same industry wise approach by agreement between them. The Association and the respondent can justly claim with some pride that in the past most of their disputes had been amicably settled. It is only on the present occasion that owing to a difference of opinion amongst its constituent members that the Association withdrew from the proceedings and left it to the members to appear individually before the industrial court. Even so 45 out of the 65 mills have accepted the award. Under these circumstances the question which we have to decide is: Did the industrial court err in law in adopting an industry wise basis in deciding the present proceedings ? It would no doubt have been open to the industrial court to deal with the dispute unit wise just as it was open to the court to deal with it on an industry wise basis. As we have already indicated there are several factors in favour of adopting the latter approach though it may be conceded that by adopting the said course some hardship may conceivably be caused to the weakest units in the industry. Having carefully considered this question in all its aspects we are,_however, not prepared to hold that the scheme of gratuity under appeal should be set aside on the ground that the industrial court ought to have adopted a unit wise approach. In this connection it may not be out of place to observe that the cotton textile industry is the premier industry of our country and there is a concentration of a large number of mills in Ahmedabad. A good many of them have capitalised large portions of reserves and documents produced in the present proceedings show that the production has steadily increased and has found a responsive market. There is a gratuity scheme framed on an industry wise basis in operation in Bombay and a similar scheme appears to have been extended to 347 Nadiad and Khandesh. In fact an award for gratuity has been made on an industry wise basis even in respect of the textile industry at Coimbatore. Having regard to these facts we think the industrial court was right in observing that " there was no justification why an important textile centre like Ahmedabad should not have a gratuity scheme when the needs of the labour require it and the industry can afford it ". It is true that in dealing with industrial disputes on industry cum region basis, if the region covers the whole of the country industrial adjudication sometimes takes resort to the classification of the constituent units of the industry in question. Industrial adjudication in regard to the fixation of wage structure in respect of newspapers and banks in the country is an illustration in point. The need for such a classification is not as great when the region happens to be limited in area, though, even in respect of a limited area, in a proper case industrial adjudication may adopt the course of classification. In the present case the industrial court took the view that classification was not possible and would be inexpedient. No classification was made in dealing with the textile mills in Bombay, and the industrial court did not feel called upon to make a departure in respect of Ahmedabad. We do not think that this conclusion suffers from any infirmity. The scheme has been further attacked on the ground that before framing it the industrial court has not considered the extent of the liabilities already imposed on the industry. It has been strenuously argued before us that in assessing the extent of the liabilities the acutual liabilities accrued as the result of the scheme has not been taken into account and the serious strain imposed on the industry by the imposition of excise duty has also been overlooked; on the other hand, undue importance has been attached to bonus shares and no account has been taken of the industry 's obligation to contribute to the State Insurance Scheme. We are not impressed by these arguments. The argument about the actual liability accrued is really the oretical and cannot have much practical significance. If it is suggested that in 348 framing a scheme of gratuity the capacity to pay should be determined only if the employer can set apart a, fund to cover the whole of the liability theoretically accrued, then gratuity schemes can be very rarely framed. Such schemes are long term schemes and a fund to cover the total liability in that behalf must inevitably be built up in course of time year by year. In regard to the excise duty, the industrial court has rightly pointed out that the imposition of a higher duty was the conseqence of the excessive increase in prices of mill cloth and in fact it was levied " to mop off those extra profits ". When the prices fall down it is not unlikely that the excise duty may be reduced. In any case the obligation to pay excise duty or to contribute to the insurance scheme, though perhaps relevant, may not have a material bearing on the framing of the scheme of gratuity. Then, as to the bonus shares, it is not right to contend that the industrial court has attributed undue importance to them. All that it has observed is that the issue of bonus shares by a large majority of the mills in addition to good dividends during the war and post war period is an index to the prosperity enjoyed by the cotton textile industry in Ahmedabad. In our opinion, no criticism can be made against this statement. In this connection it may perhaps be pertinent to observe that the statutory ceiling placed on the agent 's commission may in due course assist the mills to some extent in meeting their liability under the scheme. The last argument urged against the validity of the scheme is based on the assumption that in working out the preliminary figures before framing the scheme the industrial court has committed an error. What the industrial court has done is to take the information collected by the Association on the earlier occasion, to compare it with the statement prepared by the respondent, and to make a rough estimate about the extent of the industry 's liability under the scheme. In considering these statements it is important to emphasise that the Association 's calculations have been made not on the basis of basic pay but on the basis of pay including dearness allowance, and that naturally has made considerable, additions to the 349 amounts involved. The scheme framed is by reference to the basic wages. This position is not disputed. The other material point which deserves to be mentioned is that the calculations made by the Association proceed on the assumption that most of the employees would seek to retire from employment as soon as they complete fifteen years service. Such an assumption seems to us to be not warranted at all. It is common ground that employee,% generally seek employment in textile industry between 18 and 20 years and the age of superannuation is 60. On an average each emp loyee would work 35 to 40 years and so it would be unrealistic to make calculation on the basis that each one of the employees retires as soon as he completes 15 years of service. In the absence of better employment in Ahmedabad it is quite likely that most of the employees would stick on to their jobs until the age of superannuation. The figures collated are in respect of the years 1953, 1954 and 1955. They are collated in seven different columns, and ultimately the percentages of persons who retired during the three respective years are worked out as at 3.13%, 4.13% and 3.84%. The industrial court has observed that the largest number of persons retired voluntarily on payment of gratuity because there was an agreement between the Association and the respondent whereby the respondent agreed to rationalisation which involved retrenchment of staff on condition that the surplus staff retrenched would be given gratuity. It also appears that the retired workmen included a number of employees who voluntarily resigned because they had not completed 1,5 years of service and were not entitled to gratuity. It is on a consideration of all the relevant facts that the industrial court came to the conclusion that the number of persons who would have been entitled to gratuity under a normal gratuity scheme would probably not have exceeded 2% of the labour force. If it is assumed, as we think it can be safely assumed, that on an average an employee works 35 to 40 years with his employer the said percentage deduced by the industrial court cannot be said to be erroneous. Even so the scheme framed by the industrial court has provided, inter alia, one month 's basic 45 350 wage for each completed year of service for the period before the coming into force of the Employees ' Provident Funds Act, 1952, and half a month 's basic wage for each completed year of service thereafter, subject to a maximum of fifteen months ' basic wages to be paid to the employee or his heirs or executors or nominees as the case may be. This provision which amounts to a departure from the Bombay scheme of gratuity brings out the fact that the provisions made by the Employees ' Provident Funds Act have been duly taken into account by the industrial court. We are, therefore, satisfied that the scheme framed by the industrial court does not suffer from any infirmities as alleged by the appellants. The result is the appeal fails and is dismissed with costs. Appeal dismissed.

This was an appeal by certain textile mills of Ahmedabad against a scheme for gratuity awarded by the Industrial Court. The Labour Association, the respondent, gave a notice of change under section 42(2) of the Bombay Industrial Relations Act, 1946 (Bom. XI of 1947), intimating the Mill Owners ' Association that they wanted a scheme for gratuity and mentioned four categories of termination of service in the annexure. This demand was refused and so referred to the Industrial Court under section 73A of the Act. Pending the reference the Employees ' Provident Funds Act, 1952 (19 of 1952), came into operation and the Industrial Court, on an objection by the Mill Owners ' Association, held that it was inadvisable to proceed with the reference and that a fresh application should be made, if necessary, after the scheme envisaged by the Act is introduced and rejected the respondent 's demand. Thereafter a fresh notice of change was given by the respondent and there were certain references to the Industrial Court in respect of the demand. The parties came to an agreement to refer all their disputes to arbitration, the references were withdrawn and the disputes were referred to the Board of Arbitrators. Before the Board the Mill Owners ' Association took the objection that so long as the award of the Industrial Court dismissing the earlier reference subsisted, the claim for gratuity could not be considered by it. That objection was upheld by the Board and it made no provision for gratuity. Thereupon the respondent applied for the modification of the award under section 116A of the Act, and the Industrial Court by its award, which is the subject matter of the present appeal, framed a scheme for gratuity on an industry cum region basis: Held, that the decision of the Industrial Court was correct and must be upheld. Regard being had to the true nature of its earlier award and the scope of the application for its modification, it could not be said that the respondent was seeking to alter the framework or change any of the principles of that award and the application under section 116A of the Act must be held to be competent. 330 A scheme for gratuity is by its nature an integrated scheme and covers all classes of termination of service where gratuity benefit can be legitimately claimed and the refusal of the Industrial Court in the earlier award amounted to a refusal to frame any scheme at all. The statutory provident fund created by the Employees ' Provident Funds Act, 1952, could be no bar to the respondent 's claim for a gratuity scheme although there can be no doubt that in awarding such a scheme Industrial Courts must make due allowance for it. Provisions of section 17 of the said Act clearly indicate that the statutory benefits under the Act are the minimum to which the employees are entitled and that they are no bar to additional benefits claimed by the employees. Indian Hume Pipe Co. Ltd. vs Their Workmen, [1960] 2 S.C.R. 32, referred to. It was not correct to say that the claim for gratuity was essentially similar to a claim for profit bonus and must always be considered on unitwise basis. The benefit of gratuity is in the nature of a retiral benefit and before framing such a scheme industrial adjudication has to, take into account such relevant factors as the financial condition of the employer, his profit making capacity, the profits earned by him in the past, the extent of his reserves and the chances of his replenishing them as well as the claims for capital invested by him, and in evolving a long term scheme a long view of the employer 's financial condition should be taken and on that basis alone the feasibility of a scheme and the extent of the benefit to be given should be determined. Arthur Butler & Co. (Muzaffarpur) Ltd. and Arthur Butler Workers Union, and Boots Pure Drug CO. (India) Ltd. vs Their Workmen, , referred to. Even assuming that gratuity is no part of deferred wage, it would not be reasonable to assimilate the scheme for gratuity to that of profit bonus or to apply the principles of the Full Bench formula applicable to the latter. A claim for gratuity is strictly not a claim to receive a share of the profits at all. Express Newspapers (Private) Ltd. vs The Union of India, and Indian Oxygen and Acetylene Co. Ltd. Employees ' Union vs Indian Oxygen and Acetylene Co. Ltd., , referred to. It was not correct to say that an industry wise basis is wholly inappropriate in dealing with gratuity or that the Industrial Court was in error in adopting that basis. Although some hardship to the weaker units in the industry may not be avoided, there were several factors in its favour both from the point of view of employers and employees. Since in the present state of economic development in the country the propriety of the adoption of an all India basis for a scheme of gratuity may be open to doubt no exception can on principle be taken to the industry cum region basis adopted in the instant case. 331 Express Newspapers (Private) Ltd. vs The Union of India, , applied.

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Appeal No. 14 of 1959. Appeal by special leave from the Award dated February 21, 1958, of the Central Government Industrial Tribunal, Nagpur at Bombay, in Reference CGIT No. 12 of 1957. Sachin Chaudhury, section N. Andley, J. B. Dadachanji and, Rameshwar Nath, for the appellant. A. section R. Chari and Y. Kumar, for the respondents. April 4. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. The appellant is The Chartered Bank, Bombay (hereinafter called the Bank). There was a dispute between the Bank and its workmen regarding the termination of the service, of one Colsavala (hereinafter called the respondent) who was working as an assistant cashier in the Bank. The system of working in the cash department of the Bank is that there is a chief cashier and under him are about thirty assistant cashiers. The Chief Cashier has to give security for the work of the cash department. Consequently all assistant cashiers are employed upon the introduction of the Chief Cashier who guarantees each such employee. By virtue of this guarantee the Chief Cashier alone is unconditionally responsible to the Bank for any shortage which might occur in the cash department and no security is taken from the assistant cashiers working therein. In view of this guarantee by the Chief Cashier there has been a longstanding practice in the Bank that at the end of the day when the cash is locked up under the supervision of the Chief Cashier, all the assistant cashiers have to be present so that the cash may be checked before 443 being locked up. Assistant Cashiers therefore can only leave the Bank before the locking up of the cash after obtaining permission of the Chief Cashier. On January 4, 1957, the Chief Cashier reported to the management that the respondent had been leaving the Bank without his permission for some time past before the cash was checked and locked up in spite of the issue of a departmental circular in that behalf on December 24, 1956, by which all assistant cashiers (including the respondent) were reminded of the longstanding practice that no assistant cashier should leave the Bank without the permission of the Chief Cashier before the cash was checked and locked tip. The Chief Cashier therefore stated that he was unable to continue to guarantee the respondent and that unless the respondent 's service was dispensed with his conduct will affect the security of the cash department. As the Bank was not prepared to change the system in force in the cash department, the management decided to dispense with the service of the respondent in accordance with the mode of termination prescribed by paragraph 522(1) of the All India Industrial Tribunal (Bank Disputes) Award of March, 1953 (hereinafter referred to as the Bank Award). The Bank was also unable to employ the respondent in any other department. It therefore informed the respondent on March 29, 1957, that as the guarantee covering his employment had been withdrawn by the Chief Cashier the Bank was unable to continue to employ him. The notice required under paragraph 522(1) was given and the amount due to the respondent including retrenchment compensation was paid to him and his service was terminated. Thereupon a dispute was raised by the workmen of the Bank and a reference was made by the Central Government to the Industrial Tribunal with respect to the "alleged wrongful termination of the services of Shri N. D. Colsavala by the Chartered Bank, Bombay, and the relief, if any, to which he is entitled. " The case on behalf of the respondent was that he had been working in the Bank since September 1, 1937, honestly and efficiently as an assistant cashier in the cash department The previous Chief Cashier who 444 was the father of the present Chief Cashier however became hostile to him since 1943, because he claimed his legitimate dues for overtime work and leave which the then Chief Cashier was not prepared to allow. Further the respondent 's letter of appointment did not oblige him to give any security or to procure any guarantee and if the Chief Cashier had given any guarantee to the Bank, the respondent was not concerned with it and had even no knowledge of it. He was given no opportunity to contest the reasons for the withdrawal of the guarantee by the Chief Cashier; nor was he asked to furnish security or give a fidelity bond, even if the Chief Cashier had withdrawn the guarantee. In consequence the discharge of the respondent from service on the ground given by the Bank was entirely illegal, wrongful and unjustified and he was entitled to reinstatement or in the alternative to full compensation for loss of employment. The case of the Bank was that it was entitled to terminate the service of the respondent under paragraph 522(1) of the Bank Award and it was not incumbent on it to state the reasons for such termination and the reasons could not be inquired into or examined by the tribunal. In the alternative it was submitted that if the tribunal was of the opinion that it was open to it to inquire into the reasons, the Bank 's case was that the respondent was not dismissed or discharged by way of punishment for any misconduct and that the Bank merely terminated his service under paragraph 522(1) of the Bank Award, as his guarantee had been withdrawn by the Chief Cashier and it was impossible to continue to employ him in the circumstances, the Bank being. unprepared to change its system of working which has already been mentioned above. It was also said that the Bank was not bound to transfer the respondent to another department and in any case the respondent 's training, experience, ability or record did not fit him for work in any other department of the Bank. The tribunal held that even though the Bank had chosen to follow the procedure laid down in paragraph 522(1) of the Bank Award which provides for termination of employment "in cases not involving 445 disciplinary action for misconduct, by three months ' notice or on payment of three months ' pay and allow. ances in lieu of notice", this did not preclude it from inquiring into the reasons for the termination of service and into the legality and/or propriety of the action taken by the bank and that paragraph 522(1) did not give a free hand to the Bank to dispense with the service of a permanent employee at will. It also held that it was always open to the tribunal to inquire into the bona fides as well as justifiability of the action taken. It then went into the circumstances in which the termination of service took place and was of opinion that this was in fact and in reality a case of termination of service for misconduct, and that it was the duty of the Bank to follow the procedure for taking disciplinary action for the alleged insubordination and persistent disobedience of the orders of the Chief Cashier by the respondent with respect to leaving the Bank without his prior permission before the cash was checked and looked up and inasmuch as the Bank failed to follow the requisite procedure as was laid down in paragraph 521 of the Bank Award, the termination of the service of the respondent was illegal and improper and he was entitled to reinstatement with full back wages and other benefits. It is this order which is being challenged before us by the Bank. The main contention on behalf the Bank is that the view taken by the tribunal that in every case where there may be some misconduct the Bank is bound to take disciplinary action under paragraph 521 of the Bank Award makes paragraph 522(1) completely otiose and is erroneous. Further it is contended that in the peculiar position obtaining in the cash department of the Bank whereby the Chief Cashier guarantees all the assistant cashiers working under him, the Bank did not want to go into the squabble between the Chief Cashier and the respondent and as the Chief Cashier had withdrawn the guarantee of the respondent, the Bank decided without apportioning any blame between the Chief Cashier and the respondent to act under paragraph 522(1) of the Bank Award. It is urged that paragraph 522(1) of the Bank Award is 57 446 particularly meant to meet situation,,; like this which may arise in a banking concern. The first question that arises therefore is the scope of the power of the Bank to act under paragraph 522(1) of the Bank Award, particularly in the peculiar situation prevailing in the cash department of the Bank. The position in the cash department of the banks was considered by the Bank Award in Chapter XXI with respect to giving of security. In para graphs 417 and 418, the existing practice in various banks is summarised and it takes one of three forms, namely (i) every member of the staff is to give security, (ii) the head cashier gives a guarantee on behalf of all the cashiers working under him, and (iii) where the treasurer system prevails, the treasurer enters into a contract with the bank and recommends the employees for employment in the cash department and guarantees their fidelity and they are thereupon appointed by the bank. The tribunal was not right in saying that the system which was prevailing in the Bank was peculiar to it and was not mentioned in the Bank Award. It will be seen that the system in the Bank is of the second kind noticed in the Bank Award where the Chief Cashier guarantees all those working under him. It is also mentioned in the Bank Award that the Chief Cashier generally takes security deposits from persons working under him but that did not appear to be the invariable rule, and in the Bank the Chief Cashier does not take any security from his subordinates. In such a system the Bank has to depend upon the security given by the Chief Cashier and his guarantee of the employees working under him. It is impossible to accept that this way of working was not known to the respondent. The Bank has produced the respondent 's application for employment and it is significant that it is addressed to the Chief Cashier and not to the management of the Bank and this bears out the contention of the Bank that the subordinates in the cash department are employed on the recommendation of the Chief Cashier who gives guarantee for them. Nor does the Bank 's contention that no one employed in the cash department leaves without permission till the cash is checked and locked up appears 447 improbable, for the practice seems necessary for the security of the cash department. Therefore when the Bank was faced with the report of the Chief Cashier dated 4 1 1957, it had to decide in the special circumstances of this case what action should be taken on that report. Two courses were open to it: it could have taken disciplinary action under paragraph 521 of the Bank Award or it could have acted under paragraph 522(1). The submission on behalf of the Bank is that it did not want to go into the squabble between the Chief Cashier and the respondent and as the Chief Cashier had withdrawn his guarantee with respect to the respondent it acted bona fide in proceeding under paragraph 522(1) and thus no question arose of its taking disciplinary action against the respondent. There is no doubt that an employer cannot dispense with the services of a permanent employee by mere notice and claim that the industrial tribunal has no jurisdiction to inquire into the circumstances in which such termination of service simpliciter took place. Many standing orders have provisions similar to paragraph 522(1) of the Bank Award, and the scope of the power of the employer to act under such provisions has come up for consideration before labour tribunals many a time. In Buckingham and Carnatic Company Ltd., Etc., vs Workers of the Company, etc. (1), the Labour Appellate Tribunal had occasion to consider this matter relating to discharge by notice or in lieu thereof by payment of wages for a certain period without assigning any reason. It was of opinion that even in a case of this kind the requirement of bona fides is essential and if the termination of service is a colourable exercise of the power or as a result of victimisation or unfair labour practice the industrial tribunal would have the jurisdiction to intervene and set aside such termination. Further it held that where the termination of services is capricious, arbitrary or unnecessarily harsh on the part of the employer judged by normal standards of a reasonable man that may be cogent evidence of victimisation or unfair labour practice. We are of opinion that this correctly lays down the scope of the power of the tribunal to (1) 448 interfere where service is terminated simpliciter under the provisions of a contract or of standing orders or of some award like the Bank Award. In order to judge this, the tribunal will have to go into all the circumstances which led to the termination simpliciter and an employer cannot say that it is not bound to disclose the circumstances before the tribunal. The form of the order of termination is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of dismissal for misconduct. It is therefore always open to the tribunal to go behind the form and look at the substance; and if it comes to the conclusion, for example, that though in form the order amounts to termination simpliciter it in reality cloaks a dismissal for misconduct it will be open to it to set it aside as a colourable exercise of the power. It is on these principles therefore that we have to judge the action taken by the Bank in this case. In the statement of claim put in by the workmen there was no allegation of victimisation or unfair labour practice. An affidavit was filed by the respondent later before the tribunal in which it was said that the Bank had acted mala fide in removing him from service. But in this affidavit nothing was said as to how the management of the Bank as distinct from the Chief Cashier had any reason to act mala fide against the respondent. The tribunal also has not recorded any finding that the action of the Bank in terminating the service of the respondent was mala fide or amounted to unfair labour practice or was a case of victimisation. It ordered reinstatement on the ground that this was a case where disciplinary action must and should have been taken and that was not done. In one part of the award the tribunal has remarked that if it is found that the Bank has merely in colourable exercise of the power made the order under paragraph 522(1) of the Bank Award, the order would not be sustainable. But there is no finding that the action taken in this case was a colourable exercise of the power under paragraph 522(1). It is, however, urged on behalf of the respondent that even though there is no such finding by the tribunal a perusal of the entire award seems 449 to show that this was what the tribunal thought inasmuch as it has said that this was a case in which disciplinary action must and should have been taken. However, as we read the award of the tribunal, the impression that we get is that its view was that where there is an allegation which may amount to misconduct against an employee of a bank, the procedure under paragraph 521 must always be followed and that the procedure under paragraph 522(1) can never be followed; and that is why the tribunal did not give any finding that the action of the Bank was a colourable exercise of the power under paragraph 522(1). But as learned counsel for the respondents has urged before us that the action in this case is in any case a colourable exercise of the power under paragraph 522(1) we propose to look into this aspect of the matter ourselves. It is true that there was some kind of allegation by the Chief Cashier which may amount to misconduct in this case and if we were satisfied that the termination of service of the respondent was due to that misconduct and that the form of the order was merely a cloak to avoid holding a proper enquiry under paragraph 521, no doubt there would have been no case for interference with the order of the tribunal. But this is a peculiar case depending upon a peculiar system prevalent in the cash department of the Bank. That system is that the Chief Cashier gives security for the entire working of the cash department and is unconditionally responsible for any loss that might be occasioned to the Bank in that department. The appointments in that department are made on the recommendation of the Chief Cashier and he gives a guarantee about each employee and is unconditionally responsible to the Bank for any shortage which might occur. It is in these circumstances that the Bank was faced with the report of the Chief Cashier by which for the reason given by him he withdrew the guarantee so far as the respondent was concerned. The security of the cash department was thus involved and if the Bank decided as it seems to have done in this case that it would not go into the squabble between the Chief Cashier and the respondent and would use paragraph 522(1) of the 450 Bank Award to terminate the service of the respondent it cannot be said that the Bank was exercising its power under paragraph 522(1) in a colourable manner. It may have honestly come to the conclusion that in this situation, as it was not possible for it to change its system in the cash department, there was no option for it but to dispense with the service of the respondent under paragraph 522(1) of the Bank Award without going into the rights and wrongs of the dispute between the Chief Cashier and the respondent. In the peculiar circumstances therefore obtaining in the cash department of the Bank it cannot in our opinion be said that the use of the power under paragraph 522(1) by the Bank in the present case was a colourable exercise of that power. Nor do we think that the failure of the Bank to provide alternative employment for the respondent would lead to any such inference,, for the Bank may very well be right when it says that it is a specialised institution and considering that the respondent has been working in one department for the last twenty years he was not fit to be absorbed in another department. In the circumstances of this case therefore we are not prepared to hold that the termination of the service of the respondent was a colourable exercise of the power under paragraph 522(1) of the Bank Award. The mention of the fact that the service was being terminated because the Chief Cashier had withdrawn the guarantee of the respondent in the notice of. discharge will not change the nature of the termination, for the reason was given obviously to avoid the charge that the termination was entirely capricious or arbitrary, and therefore not bona fide. We therefore allow the appeal and set aside the order of the tribunal by which the respondent was ordered to be reinstated with full back wages and other benefits. In the circumstances we pass no order as to costs. Appeal allowed.

The system of working in the cash department of the appellant Bank was that there was a Chief Cashier and there were about thirty Assistant Cashiers under him. The Chief Cashier had to give security for the work of the cash department; the Assistant Cashiers were employed upon being introduced by the Chief Cashier who guaranteed each such employee. There was long standing practice in the Bank that at the end of the day when the cash was locked up under the supervision of the Chief Cashier, all the assistant cashiers had to be present so that the cash could be checked before being locked up. In spite of reminders C, an Assistant Cashier, had been leaving the Bank without the permission of the Chief Cashier for some time before the cash was checked and locked up. The Chief Cashier reported the matter to the management, withdrew his guarantee in respect of C and stated that unless the services of C were dispensed with his conduct would affect the security of the cash department. The Bank terminated the services of C in accordance with the provisions of para. 522(1) of the All India Industrial Tribunal (Bank Disputes) Award, 1953, without holding any enquiry against C. The Industrial Tribunal to which the dispute was referred held that this was in fact and in reality a case of termination of services for misconduct and the Bank ought to have followed the procedure laid down in para. 521 of the Bank Award for taking disciplinary action, that the termination of service was illegal and improper and that C was entitled to reinstatement with full back wages and other benefits : Held, that the services of the Assistant Cashier were properly terminated by the Bank. There was no doubt that an employer could not dispense with the services of a permanent employee by mere notice and claim that the industrial tribunal had no jurisdiction to inquire into the circumstances of such termination. Even in a case of this kind the requirement of bona fides was essential and if the termination of service was a colourable exercise of the power or as a result of victimisation or unfair labour practice the tribunal had jurisdiction to interfere. Where the termination of service was capricious, arbitrary or unnecessarily harsh that may be cogent evidence of victimisation or unfair labour practice. In the present case the security of the 442 Bank was involved and if the Bank decided that it would not go into the squabble between the Chief Cashier and C and would use para. 522(1) of the Bank Award to terminate the services of C it could not be said the Bank was exercising its power under para. 522(1) in a. colourable manner. It was not necessary that in every case where there was an allegation of misconduct the procedure under para. 521 for taking disciplinary action should be followed. Buckingham and Carnatic Company Ltd. vs Workers ' of the COmpany, , approved.

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section 86, 147, and 155 of 1952) under article 32 of the Constitution for writs in the nature of habeas corpus. Petitioners in person in ,petitions Nos. 86, 147 and 157 of 1952. Rajani Patel for the petitioner in petition No. 155. M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the respondents. R. Ganapathi Iyer for the intervener (State of Hydera bad). May 26. The Judgment of the Court was delivered by BOSE J. This petition and three others, namely peti tions Nos. 147, 155 and 157 of 1952, raise issues regarding the vires and applicability to these cases of section 3 of the Preventive Detention (Amendment) Act, 1952. This judg ment is confined to those points and will govern these cases only in so far as they raise those points. The remaining points which do not touch these issues will be dealt with by another Bench. The only exception is a point raised in petition No. 155 of 1952 with which the other petitions are not concerned. We will deal with that separately. The present petition (No. 86 of 1952) was argued very ably and with commendable conciseness by the petitioner in person. The fact that he has not been able to persuade us to his view is not due to any defect in his presentation of the case. The petitioner was arrested on the 15th of November, 1951, and an order of detention under the Preventive Deten tion Act of 1950 was served on him the same day, and he was given the grounds of detention on the following day, the 16th. His case was placed before an Advisory Board and on the 8th of February, 1952, the Bombay Government "confirmed and continued" the detention under section 11 (1) of the Preventive Detention Act of 1950. This Act, as it originally stood, was due to expire on the 1st of April, 1951, but in that year an amending 686 Act was passed which, among other things, prolonged its life to the 1st of April, 1952. The order of detention in this case was passed under the Act of 1950 as amended by the ,Act of 1951. According to past decisions of this Court, the detention would have expired on the 1st of April, 1952, when the Act of 1950 as amended in 1951 would itself have expired. But a fresh Act was passed in 1952 (Act XXXIV of 1952), the Preventive Detention (Amendment) Act, 1952. The effect of this Act was to prolong the life of the Act of 1950 for a further six months, namely till the 1st of Octo ber, 1952. The question is whether that Act also prolonged the detention and whether it had the vires to do so. It was contended that the mere prolongation of the life of an Act does not, by reason of that alone, prolong the life of a detention which was due to expire when the Act under which it was made expired. Therefore, as the Act under which the present detention was made was due to expire on the 1st of ApriL, 1952, the mere prolongation of its life by the amending Act did not affect a prolongation of the detention. Accordingly, the petitioner should have been released on the 1st of April, 1952, and as there is no fresh order of detention he is entitled to immediate release. We need not express any opinion on that point because there is present in the amending Act something more than a mere prolongation of the life of the old one. There is section a which is in these terms: "Validity and duration of detention in certain cases Every detention order confirmed under section 11 of the principal Act and in force immediately before the commence ment of this Act shall have effect as if it had been con firmed under the provisions of the principal Act as amended by this Act; and accordingly, where the period of detention is either not specified in such detention order or specified (by whatever form of words) to be for the duration or until the expiry of the principal Act or until the 31st day of March, 1952, such detention order shall continue to 687 remain in force for so long as the principal Act is in force, but without prejudice to the power of the appropriate Government to revoke or modify it at any time. " It will be noticed that the concluding part of this section states that the detention order shall remain in force "for so long as the principal Act is in force." Sec tion 2 of the amending Act defines the "principal Act" to mean the Act of 1950. Therefore, it was argued, as the Act of 1950 was due to expire on the 1st of April, 1952, the present detention also came to an end on that date and so, in the absence of a fresh order of detention, the petition er 's detention after that date was illegal. This argument, though ingenious, is fallacious. The construction of an Act which has been amended is now governed by technical rules and we mast first be clear regarding the proper canons of construction. The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. This is the rule in England:see Craies on Statute Law, 5th edition, page 207; it is the law in Amenca: see Crawford on Statutory Construc tion, page 110; and it is the law which the Privy Council applied to India in Keshoram Poddar vs Nundo Lal Mallick(1). Bearing this in mind it will be seen that the Act of 1950 remains the Act of 1950 all the way through even with its subsequent amendments. Therefore, the moment the Act of 1952 was passed and section 2 came into operation, the Act of 1950 meant the Act of 1950 as amended by section 2, that is to say, the Act of 1950 now due to expire on the 1st of October, 1952. (1)(1927) 54 I.A. 152 at 155. 688 Turning now to section 3, whose vires is questioned, and examining it clause by clause we first get these words: "Every detention order confirmed under section 11 of the principal Act and in force immediately before the commencement of this Act. " According to the rule of construction just examined, the words "principal Act" mean the Act of 1950 as amended by the Acts of 1951 and of 1952, 'that is to say, the Act of 1950 due to expire on the 1st of October, 1952. Incidental ly, in the particular context it could not mean the Act of 1950 as it stood in 1950 because no order confirmed under it as it then stood could have been alive "at the commencement of this Act", namely on the 15th of March, 1952. The section contin ues "shall have effect as if it had been confirmed under the provisions of the principal Act as amended ' by this Act. " The underlined words "as amended by this Act" were relied on to show that wherever the words "the principal Act" were referred to they meant the unamended original Act of 1950, otherwise these words would have been unnecessary. In our opinion, they were unnecessary in the sense that their absence would not have made any difference to the interpretation though it would have made the section harder to follow and understand. We say that for this reason. Without the underlined words the section paraphrased would read "Every detention order confirmed under the original Act shall have effect as if confirmed under its provisions. " If this were to be read literally it would lead to an absurdity, for if the order is actually confirmed under the original unamended Act it would be pointless to introduce a fiction and say that the order shall be deemed to be con firmed under that Act as unamended. But even apart from a strictly technical construction, the language of the section is accurate because, as we 689 have said, the rule is that an amended Act must be read as if the words of amendment had been written into the Act except where that would lead to an inconsistency, and this would be one of those cases unless the words are construed in a sensible and commonsense way. The draughtsman there fore had either to leave the words as they were, with an apparent inconsistency, or make his meaning clear by adding the words he did. But we do not think the addition made any difference to the result. We now turn to the second half of section 3, that is to say, to the words following the semi co]on. It is important to note here that this part is consequential on the first and merely explains the effect of the first half. It is also relevant to note that it deals with four different kinds of orders, different, that is to say, in the form of the words used though in the end they all come to the same thing. It deals with the following kinds of order: (1) an order in which the period of detention is not specified at all; in that event the detention would end at midnight on the night of the gist of March, 1952. It is clear that in this context the words "the principal Act" cannot mean the Act expiring on the 1st of October, 1952, because it envisages an order made before the Act of 1952 was in being and so on the date of its making the order could only refer to the Act then in being; (2) an order in which the period is stated to be "for the duration of the principal Act", that is to say, till the 31st of March, 1952 , (3) an order in which the period is specified to be until the expiry of the principal Act, which again brings us back to the 31st of March, 1952, as the last day of deten tion; (4) an order in which the period is specified to be till the 31st of March, 1952. In all these four cases the section says that the detention order shall "continue to remain in force, for so long as the principal Act is in force", that , is to say, till the 1st October, 1952. 690 That follows from the first part of the section because that is the meaning which the law directs shall be placed on these words unless the context otherwise directs and the context does not direct otherwise here. This part of the section is only explanatory. But we wish to found deeper than this. It is the duty of Courts to give effect to the meaning of an Act when the meaning can be fairly gathered from the words used, that is to say, if one construction will lead to an absurdity while another will give effect to what common sense would show was obviously intended the construction which would defeat the ends of the Act must be rejected even if the same words used in the same section, and even the same sentence, have to be construed differently. Indeed, the law goes so far as to require the Courts sometimes even to modify the grammatical and ordinary sense of the words if by doing so absurdity and inconsistency can be avoided. See the speech of Lord Wens leydale in Grey vs Pearson (1) quoted with approval by the Privy Council in Narayana Swami vs Emperor (2); also Salmon vs Duncombe(3). The rule is also set out in the text books: See Maxwell on the Interpretation of Statutes, 9th edition, page 236, and Craies on Statute Law, 5th edition, pages 89 to 93. The meaning of section 3 is quite plain and only desperate hair splitting can reduce it to an absurdity. Courts should not be astute to defeat the provisions of an Act whose meaning is, on the face of it, reasonably plain. Of course, this does not mean that an Act, or any part of it, can be recast. It must be possible to spell the meaning contended for out of the words actually used. We hold that there is no difficulty of construction. It was next argued that in any event the extended deten tion became a fresh detention (because of the Act of 1952) from the date the Act came into force, and reliance was placed upon the judgments of two of us, Mahajan and Das JJ. in section Krishnan vs The State of Madras(4). It is enough to say that was not the (1) r at 106. (3) 11 App. 627 at 634. (2) A.I.R. 1939 P.C. 47. (4) ; at 635 and 640. 691 decision of the Court in that case, and further, that the two Judges who held it was a fresh detention nevertheless considered that a fresh order with its concomitant fresh grounds and a fresh reference to the Advisory Board were not required; therefore, either way the petitioner must fail. Reference was made to the equality clause in article 14 of the Constitution but that argument is easily met because the classification which section 3 makes is reasonable. In one class it places all those whose cases have already been considered by the Advisory Board and in the other those whose cases have yet to go before it; also the law is fair, or at any rate as fair as detention laws can be, despite this distinction because power is left to the appropriate Government to revoke or modify these orders, or any of them, at any time. Substantially therefore there is no differenti ation. Article 14 was considered at length in The Slate of West Bengal vs Anwar Ali Sarkar (1), and according to the law laid down there, the Court must be satisfied on two points before it can strike at a law on the ground of unlawful discrimination. It must be satis fied (1) that the law in fact discriminates and (2) that such discrimination is not permissible on the principle of a rational classification made for the purposes of the legislation. The argument here was that section a discriminated against those detenus whose cases had been referred to the Advisory Board and whose detention was confirmed, on the strength of its report, under section 11 (1) before the amending Act of 1952 was passed. The reason given was that these detentions are automatically extended up to the 1st of October, 1952, by section 3 without further reference to an Advisory Board, whereas in other cases, that is to say, in the case of those who were detained before the amending Act but whose cases had not been referred at the date it came into force, and in the case of those detained after the (1)[1952] S.c.R.284 692 amending Act, the Advisory Board is called into play and individual attention is given to each case with the result that many of those detentions might not be for as long as six months. They might, for example, be only for one month or two. It was urged that this was discrimination of a kind which cannot be supported by any principle of permissible classification because classification into the above catego ries has no reasonable relation to the objects of the legis lation, such as security of the State, maintenance of public order and so forth. We are unable to accept this line of reasoning. To say that section. 3 automatically extends the detention of persons in the petitioner 's position to the 1st of October, 1952, and stops there, is only to make a partial statement of the effect of section 3 because the extension is subject to the power of the appropriate Government to revoke or modify it at any time. In other words, the automatic con tinuation of the detention till the 1st of October is not absolute and irrevocable but is made dependent on the power of the appropriate Government to revoke or modify it at its discretion under section 13 of the Act. The State may or may not continue the detention for the whole of the extended period. In both classes of cases the duration the deten tion within the overall limit of the life of the Act is left to the discretion of the State. The only difference is that in the one class of cases the discretion is exercised after the period has been extended by the amending Act, in the other the appropriate Government fixes the period itself in its discretion and can again at its discretion revoke or modify it. In both cases, the substance of the law is that the period of detention is left to the discretion of the State, and so there is no substantial discrimination. It was argued that however fair this may look on paper, in practice there will be grave discrimination because, as a matter of fact, the State will not apply its mind in the majority of cases like the petitioner 'section That is an argument we cannot accept and no material Was placed before us t0 justify such a conclusion, 693 We turn now to the next point. It was contended that sec tion 3 offends the Constitution because article 22 (4) and (7) do not envisage the direct intervention of Parliament in a whole batch of cases. The protection guaranteed is that there shall be individual attention and consideration to each separate case by some duly specified and constituted authority. In our opinion, this is not accurate. Article 22 (4) guarantees that there shall be no preven tive detention for more than three months unless the law authorising it makes provision for an Advisory Board and the Board after considering each individual case separately reports that there is in its opinion sufficient cause for such detention. To that extent there must be individual consideration of each case, but once the report is made and is unfavourable to the detenu, then the detention can be for a longer period provided it does not exceed "the maximum period prescribed by any law made by Parliament under sub clause (b) of clause (7). " Sub clause (b) of clause (7) empowers Parliament to prescribe "the maximum period for which any person may in any class or . . . of cases be detained under any law providing for preventive deten tion. " Parliament is accordingly empowered to specify a class. It has done so. The class is all persons whose cases have already been considered by an Advisory Board. It is empowered to prescribe a maximum period. That also it has done. The extended detention (that is to say, for more than three months) can then be "under any law providing for preventive detention. " A law made by Parliament falls within these words. Parliament is equally authorised to say who shall determine the period of detention, and as there is nothing in the Constitution to prevent it can itself exer cise the authority it is empowered to delegate to others. Stress was laid on the words "any person" in subclause (b) of clause (7) and it was contended that this contem plates individual attention in each case. But 694 if that is so, then it means that Parliament must itself direct the maximum period for each separate person falling within the class individually. The words are, we think, reasonably plain and we hold that Parliament can prescribe the maximum for a class taken as a whole as it has done in section 3. It was next argued that once the power given under clause (7) to fix a maximum period has been exercised the power exhausts itself and cannot be exercised again in respect of the same detention. In our opinion, no such limitation is imposed upon Parliament by the Constitution. Then it was said that section 3 stands on a footing different from section 12 of the amending Act of 1951 as it introduces the idea of potentially indefinite detention and accordingly is repugnant to the Constitution, and in any event is a fraud upon it. In so far as this means that section a fixes no time limit, the contention is unsound because the section specifies the exact period of the deten tion, namely till the expiry of the Act of 1950, that is to say, till the 1st of October, 1952. In so far as it means that Parliament is enabled to continue detentions indefi nitely by the expedient of periodic amendments in the Act of 1950, the answer is that Parliament has the power. This was precisely the power exercised in the amending Act of 1951 and upheld by this Court in section Krishnan vs The State of Madras(1). The present Act is no different from that in this respect. So far, we have dealt with the facts in petition No. 86 of 1952. The facts in the other three petitions naturally differ in their details but they all conform to the same general pattern so far as the points discussed above are concerned, so there is no need to discuss them individually. We hold that section 3 of the amending Act of 1952 is intra vires and that the detentions are not bad on any of the grounds discussed above. The rest of the points raised in each individual case are left open except for one point which (1) ; 695 arises in petition No. 155 of 1952. That point is as fol lows. The first ground of detention given to the petitioner in this case reads: "Being the President of Jamat of Agris you have used your position as such to increase your influence over the residents of Uran Peta, have created a band of obedient and trusted associates, have inflicted heavy fines on villagers in Uran Peta who have disregarded your wishes and have imposed on them boycott or excommunication in cases of their refusal to pay the fines. " It was argued that at the very outset 'these allegations import nothing more than an exercise of functions such as the infliction of fines and excommunication which the peti tioner as head of the caste had authority to do. They do not touch any of the matters covered by section 3 (1) (a) of the , under which the petitioner is detained. For example, they do not touch the security of the State or the maintenance of public order or any of the other matters specified in section 3. They are therefore irrelevant to the detention, and as it is impossible to say how far these irrelevant matters influenced the detention, the petitioner is entitled to release. Reliance was placed upon certain observations of the Federal Court in Rex vs Basudev(1). We think it unnecessary to examine this point because we do not think the ground is irrelevant nor do we agree that it means what the petitioner says. In our opinion, the grounds of detention must be regarded as a whole and when that is done the relevance of the first ground becomes plain. The gravamen of the charge against the petitioner is that he aimed at setting up a parallel government in the Uran Peta area and that in order to achieve that end he did various acts such as intimidating the workers in the salt pans with threats of murder, and his own workers with threats of death, unless they carried out his (1) at 651. 696 orders; and among the lesser instances given to illustrate the exercise of parallel governmental authority are the ones set out in the first ground, namely the infliction of fines with the sanction of excommunication and boycott to ensure their payment and due obedience to his orders. This point has no force and is decided against the petitioner. It will not be open to him to re agitate this afresh when his case is reheard on the remaining issues. All the four cases will now be set down for hearing on the remaining points which arise in them. As they do not involve constitutional issues they need not go before a Constitution Bench. Agent for the petitioner in Petition No. 155: M.S.K. Sastri for P.G. Gokhale. Agent for the respondents and Intervener:P. A. Mehta.

An order directing the detention of the petitioner was made on the 15th of November, 1951, under the Preventive Detention Act of 1950 as amended by the Amending Act of 1951, which prolonged the duration of the Act of 1950 up to the 1st April, 1952. The Preventive Detention (Amendment) Act of 1952 extended the duration of the Act of 1950 for a further period of six months, that is to say, until the 1st October, 1952. Section 3 of the Act of 1952 provided further that detention orders confirmed under the principal Act and in force immediately before the commencement of the Act of 1952, shall, where the period of detention is not specified in the order, remain in force "for so long as the principal Act (which was defined as the Act of 1950) was in force. " It was contended on behalf of the petitioner that his detention after 1st April, 1952, was illegal. Held, (i)When a subsequent Act amends an earlier one in such a way as to incorporate itself or a part of itself into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repug nancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that there is no need to refer to the amending Act at all. After the passing of the Act of 1952 the expressions "the Act of 1950" and "the principal Act" meant the Act of 1950 as amended by the Act of 1952, and the effect of section 3 of the Act of 1952 was that the detention of the petitioner would remain in force until the 1st October, 1952, without prejudice to the power of the Government to modify or revoke it; (ii) section 3 did not contravene article 14of the Constitu tion as there was a rational classification of the cases of detention orders in the section, and the period of detention was left in every case to the discretion of the State; (iii) the words "any person" in sub cl. (b) of c1.7 of article 22 of the Constitution do not contemplate that individ ual attention should be paid to each case; on the contrary, the words used in the said sub clause empower the Parliament to prescribe the maximum for a class taken as a whole as it has done in section 3, and section 3 does not therefore offend cl. (4) or cl. (7) of article 22; (iv) the power of the Parliament to fix a maximum period does not exhaust itself once it has exercised that power but can be exercised again in respect of the same detention; (v) section 3 is not repugnant tO the Constitution on the ground that it does not fix a time limit, for it speci fies the period as until the expiry of the Act; nor on the ground that it introduces the idea of potentially indefinite detention by periodical amendments; for the Parliament has the power to do that: 685

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Appeal No. 216 of 1954. Appeal from the judgment and decree dated September 26,1946, of the former Chief Court of Avadh at Lucknow, in First Appeal No. 7 of 1940. Naunit Lal, for the appellant. section N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra, for respondent No. 1. 1960. August 5. The Judgment of the Court was delivered by DAS GUPTA J. This appeal raises the question of interpretation of section 15 of the United Provinces Encumbered Estates Act, 1934. On March 1, 1924, Sardar Nihal Singh, the predecessor of the appellant before us, borrowed a sum of rupees one lakh from Raja Durga Narain Singh, predecessor of the respondents, on mortgage of a house in Butlergunj, Lucknow and also the entire Zamindari interest in a village Parsera. Interest was 8 per cent. per annum compound with six monthly rests. In 1932 Raja Durga Narain Singh brought a suit for recovery of Rs. 1,83,791 5 9 on account of principal and interest due on the mortgage, by sale of the mortgaged property. In this suit the Subordinate Judge, Lucknow, made a preliminary decree declaring the amount due to the plaintiff on the mortgage calculated up to March 29, 1935, to be Rs. 1,83,791 5 9 up to the date of the suit, Rs. 49,280 2 6 as the amount due on account of interest thereupon from March 19, 1932, the date of the suit to March 29, 1935, the date fixed for payment. A sum of Rs. 4,314 2 9 was awarded as the cost of the suit. The defendant was ordered to pay this total sum of Rs. 2,37,385 11 0 before the 29th day of March, 1935, with future interest at 6 per cent. per annum simple on the principal sum of rupees one lakh. The amount not having been paid on that date, the Court on an application made by the mortgagee decree. holder made a final decree on May 9, 1935, directing sale of the property for recovery of the sum of Rs. 2,37,503 5 6 with future interest as in the preliminary decree,(this sum being the total of Rs. 2,37,305 11 0 120 of the preliminary decree, Rs. 116 10 1 the interest from March 30, 1935, and rupee one the cost of the final decree). An application for revision under section 115 of the Code of Civil Procedure in connection with this decree was rejected by the Chief Court of Oudh on April 20,1937. Before this, on October 26, 1936, an application had been made by Sardar Nihal Singh under section 4 of the U. P. Encumbered Estates Act, requesting the provisions of the Act to be applied to him. After this application came before the Special Judge in accordance with the provisions of section 6, the mortgagee decreeholder Raja Durga Narain Singh filed a written state ment of his claim on September 30,1937, and stated that the amount due to him on the basis of his decree was Rs. 2,51,904 8 6 including Rs. 14,300 as interest subsequent to the final decree till September 30, 1937, and a sum of Rs. 51 3 0 the decree for costs in his favour by the Oudh Chief Court when rejecting the mortgagor 's application for revision. He prayed that a decree for Rs. 2,51,904 8 6 be passed in his favour against the applicant Sardar Nihal Singh and his property. The applicant contested this claim pleading that the principal amount borrowed from the claimant being rupees one lakh the claimant was not entitled to recover any sum as interest thereupon in excess of the principal amount under section 14 of the Encumbered Estates Act. This plea was rejected by the Special Judge who held that the claimant was entitled to Rs. 2,37,503 5 6 for which the final decree was passed, and also Rs. 51 3 0 as costs in the matter of revision application and further to 6 per cent. per annum interest on rupees one lakh from May 29, 1935, the date of the final decree till the date of the application under the Encumbered Estates Act, i.e., October 26, 1936. Accordingly he gave the claimant a simple money decree for Rs. 2,46,338 8 6 with proportionate costs and future interest at the rate of 4 per cent. per annum simple from the date of application till realisation. On appeal, the Cheief Court of Oudh rejected the appellant 's contention that the Special Judge was bound by section 14 of the Act to limit the decree to a sum 121 of rupees two lakhs only and held that in so far as the preliminary decree found Rs. 1,83,791 5 9 as the amount due on the mortgage on March 29, 1932, it was not inconsistent with section 14 of the Encumbered Estates Act, and so the Special Judge was bound to accept this finding under section 15. It held however that in so far as this decree allowed interest pendente lite on the above amount from March 19, 1932, to March 29, 1935, at 8% per annum, it was inconsistent with sub section 7 of section 14. The Chief Court accordingly held that this interest pendente lite must be reduced to 4 1/4% simple. After saying that a sum of Rs. 4,314 2 9 would be added on account of costs, rupee one should be added on account of the costs of the final decree and Rs. 51 3 0 as costs of a revision application, the Court held that the principal amount of Rs. 1,00,000 shall carry interest from March 29, 1935, till the date of application under section 4 of the Encumbered Estates Act, viz., October 26, 1936, and that the aggregate of these figures shall carry interest from October 27, 1936, till realisation at 4 per cent. per annum. It directed a decree for the sum thus found to be substi tuted for that passed by the Subordinate Judge. An application for leave to appeal to the Privy Council against this decree was made on January 13, 1947. This application was disposed of on April 14, 1953. Holding that the valuation of the suit was well over Rs. 20,000 and the value of the appeal to the Supreme Court was Rs. 41,971 2 9 the Chief Court gave, in view of the modification made by it in the lower court 's decree, a certificate that the case fulfils the requirements of section 110 of the Code of Civil Procedure and that the applicant had a right to appeal to the Supreme Court. On the strength of that certificate the present appeal was filed When the appeal came up for hearing before a Bench of four judges of this Court Mr. Andley, on behalf of the respondents stated that in this case he was raising a constitutional point. Thereupon the Court directed that the matter be posted before the Constitution Bench. That is how the appeal has come up for hearing and final disposal before us. 16 122 Mr. Andley stated before us that the Constitutional point which he had wanted to raise was whether the judgment of the Chief Court was one of affirmance under article 133(1) of the Constitution but that be did not wish to pursue this point. As Mr. Andley does not press his constitutional point, no further discussion of this is necessary. The real controversy in the case between the parties is, as already indicated, as regards the interpretation of section 15 of the Encumbered Estates Act. The relevant portion of section 15 is in these words: "In determining the amount due on the basis of a loan which has been the subject of a decree the Special Judge shall accept the findings of the Court which passed the decree except in so far as they are inconsistent with the provisions of section 14. " A later amendment by which after the words and figures " section 14 ", the words " or section 4 of the U. P. Zamindars Debts Reduction Act, 1952 " were added is not relevant for our purpose. Section 14 runs as follows: " 14. (1) The Special Judge shall, by an order in writing, fix a date for enquiring into the claims made in pursuance of the notice published in accordance with section 9 and give notice of such date to all the claimants and the person who made the application under section 4. (2) The Special Judge shall examine each claim and after hearing such parties as desired to be heard and considering the evidence, if any, produced by them shall determine the amount, if any, due from the landlord to the claimant on the date of the application under section 4. (3) All evidence recorded in any suit or proceeding which is stayed under sub section (1) of section 7 may be taken by the Special Judge as evidence recorded before himself. (4) In examining each claim the Special Judge shall have and exercise all the powers of the Court in which a suit for the recovery of the money due would lie and shall decide the questions in issue on the principles as those on which such court would decide them, subject to the following provisions, namely: 123 (a) the amount of interest held to be due on the date of the application shall not exceed that portion of the principal which may still be found to be due on the date of the application: (b) the provisions of the United Provinces Agriculturists Relief Act, 1934, shall not be applicable to proceedings tinder this Act. (5) For the purpose of ascertaining the principal under clause (a) of subsection (4) the Special Judge shall treat as principal any accumulated interest which has been converted into principal at any statement or settlement of account or by any contract made in the course of the transaction on or before December 31, 1916. Explanation: Interest which on or before December 31, 1916, became part of the principal under the express terms of original contract shall, for the purposes of this section, be deemed to be principal. (6) For the purposes of ascertaining the principal under clause (a) of sub section (4) the Special Judge shall not treat as principal any accumulated interest which has been converted into principal at any statement or settlement of accounts or by any contract made in the course of the transactions after December 31, 1916. (7) If the Special Judge finds that any amount is due to the claimant he shall pass a simple money decree for such amount, together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in section 27, and if he finds that no amount is due he may pass a decree for costs in favour of the landlord. Such decree shall be deemed to be a decree of a civil court of competent jurisdiction but no decree against the landlord shall be executable within Uttar Pradesh except under the provisions of the Act: Provided that no pendente lite interest shall be allowed in the case of any debt where the creditor was in possession of any portion of the debtor 's property in lieu of interest payable on such debt. " 124 Obviously there can be no question of any inconsistency in a finding of a court which has passed a decree on the basis of a loan, with the provisions mentioned in sub sections 1, 2 & 3 of section 14; nor is there any question of any inconsistency with the provisions of sub section 7 of section 14, as those provisions apply only after the Special Judge has found the amount due to the claimant and the question of inconsistency of any finding in the decree with the provisions of section 14 arise under section 15 at the stage when the amount due is being determined. Sub sections 4, 5 and 6 of section 14 however require careful consideration of the Special Judge, when examining a decree of a Civil Court, to ' find whether any of the findings of the court is inconsistent with those provisions. If they are inconsistent with any of those provisions he has to reject the findings to the extent of such inconsistency. Thus, if for example, the provisions of the , would be beneficial to the applicant landlord and have not been taken into consideration by the court which passed the decree the Special Judge will have to give effect to section 14(4)(b) of the Act to modify the finding of the Court as regards the amount due, after applying the provisions of the Usurious Loans Act. On the other hand, if the provisions of the U. P. Agriculturists Relief Act, 1934, have been applied by the Civil Court, the finding as regards the amount due in so far as the same was based on those provisions cannot, in view of its inconsistency with sub section 4(c) of section 14 be accepted by the Civil Court and he will have to modify the same, leaving out the provisions of the U. P. Agriculturists Relief Act. Similarly if in arriving at the amount due, the Court which passed the decree has acted inconsistently with sub sections 5 and 6 of section 14, the finding will have to be modified by the Special Judge by applying the provisions of sub sections 5 and 6. So, also if the finding of the Court which passed the decree is " inconsistent with " the provisions of sub section 4(a) of section 14 of the Encumbered Estates Act the finding will have to be rejected in so far as it is inconsistent. The question that has arisen in this case and may as well arise in other cases, is whether when in ascertaining 125 the amount due on the basis of a loan, at the date of the suit, the Court which passed the decree did not allow interest exceeding the portion of the principal which was still due at the date of the suit, the finding as regards the amount due is inconsistent with section 14(4) (a) because the consequence of that finding as regards the amount due, together with interest allowed thereupon, is that on the date of the application the amount of interest due exceeds the portion of the principal remaining unpaid on the date of the application. On behalf of the decree holder claimant it is contended that all that is necessary to save inconsistency with sub section 14(4)(a) is that the principle that the amount of interest shall not exceed the amount of the unpaid principal has been followed, in passing the decree and the fact that the result of the finding would be that on the date of the application section 4 of the Act the interest due would exceed the portion of the principal unpaid on such date is of no consequence. This contention cannot in our opinion be accepted. The requirement of sub section 4(a) of section 14 is that " the amount of interest held to be due on the date of the application shall not exceed that portion of the principal which may still be found to be due on the date of the application. " The words " on the date of the application " cannot be ignored. There can be no doubt that these words " on the date of the application " were deliberately used in the sub section for the purpose of benefiting the landlord applicant to this extent that whatever interest due on the contract may amount to, it will be limited to the amount of the principal found still remaining due, on the date of the application. When the Legislature goes further and provides that if prior to the application a decree has been made on the basis of the loan the findings of the Court which passed the decree shall be accepted but forbids such acceptance if such finding is inconsistent with the provisions of section 14, the intention clearly is that the fact that there has been a decree will not make any difference as regards the duty of the Special Judge to give the applicant the benefit of the provisions of section 14. When the Court passed the decree, there was 126 no application under the Encumbered Estates Act, and so, there could be no question of the Court then complying with the provisions of section 14(4)(a). Even so, when the Special Judge has to reject such of the findings as are " inconsistent " with section 14, he must find out the effect of the several findings of the court to ascertain whether there is such inconsistency. Where the consequence of the finding of the court which passed the decree is that the provisions of section 14(4)(a) about the amount of interest due on the date of the application not exceeding the unpaid principal on that date are contravened, the finding should be held to be inconsistent with these provisions. In saying that if in the decree the court did not allow interest as on the date of the suit to exceed the principal then remaining due there is no inconsistency with section 14(4)(a), the respondent 's counsel is in effect asking us to read for the words " in so far as they are inconsistent with the provisions of section 14 " the words " in so far as they would have been inconsistent with the provisions of section 14, if the date of the institution of the suit be deemed to be the date of the application under section 4. " For this we cannot find any justification. Not only would this defeat the beneficial purpose of the legislation under section 14(4)(a); but this will also not be the natural meaning of the words " in so far as they are inconsistent with the provisions of section 14." The Chief Court 's view that the Special Judge has merely to see whether the Civil Court that passed the decree could have passed the decree which it did pass if that court had had to apply the provisions of section 14, treating the date of the institution of the suit as the date of the application cannot therefore be accepted as correct. The same view had been taken by the Chief Court of Oudh in an earlier decision, of Pandit Ramsagar Prasad vs Mst. Shayama (1). A Full Bench of the Allahabad High Court had in Rukun uddin vs Lachhmi Narain (2) to consider the question whether a finding in a decree made by a civil court that the creditor is entitled to interest only at the rates specified in U. P. Agriculturists Relief Act was inconsistent with the (1) A.I.R. 1939 Oudh 75. (2) I.L.R. [1945] All. 307. 127 provisions of section 14 of the U. P. Encumbered Estates Act and was therefore not binding on the Special Judge hearing an application under the U. P. Encumbered. Estates Act. They held that such a finding must be held to be inconsistent with the provisions of section 14 and could therefore not be binding on the Special Judge. There can be no doubt about the correctness of this view, for, as has been pointed out above section 14(4)(c) provides that the provisions of the U. P. Agriculturists Relief Act shall not be applicable to proceedings under the Encumbered Estates Act. One of the learned judges Mr. Justice Verma referred with approval in the course of his judgment to the view taken in Ramsagar Prasad 's Case (1). For the reasons mentioned earlier how ever we are of opinion that the view in Ramsagar Prasad 's Case (1) which has been followed by the Chief Court in the present case is wrong. Our conclusion therefore is that the Special Judge is even where there has been a decree by a civil court in respect of a loan bound to follow the provisions of section 14(4)(a) of the Act so that the amount of interest which he can hold to be due on the date of the application must not exceed the portion of the principal found to be due on the date of the application. Accordingly in the present case the Special Judge should have held the amount of interest due oil the date of the application, i.e., October 26, 1936, to amount to rupees one lakh only, that being the principal which was still due on that date. Under the provisions of sub section 7 of section 14 the Special Judge has to "pass a simple money decree for such amount, together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in section 27. " It was in view of this provision that the special Judge and the High Court allowed interest at the rate of 4% per annum. The proper decree the Special Judge should have passed therefore was one for rupees two lakhs for the loan with permissible interest, plus Rs. 4,314 2 9, Rs. 51 3 0 and rupee (1) A.I.R. 1939 Oudh 75. 128 one on account of costs, that is, for a total sum of Rs. 2,04,366 5 9 with proportionate costs with interest pendente lite and future interest at the rate of 4 per cent per annum simple from the date of the application, i.e., October 26, 1936, till realisation. Accordingly, we allow the appeal, set aside the decree passed by the courts below and order that in place of the decree made by the Trial Court be substituted a money decree in the terms as mentioned above. The appellant will get his costs in the appeal. Appeal allowed.

N borrowed rupees one lakh from D on mortgage of a house and Zamindari interest on March 1, 1924. Interest was 8% per annum compoundable with six monthly rests. In 1932 the mortgagee filed a suit on the mortgage and a decree was passed for the recovery of Rs. 1,83,781/5/9 principal and interest upto the date of the suit and Rs. 49,280/ 2/6 interest from date of the suit upto the date fixed for payment, with future interest at 6% per annum simple on the principal sum. On the failure of the mortgagor to pay by the date fixed a final decree was passed on May 9, 1935 for sale of the property for recovery of a sum of Rs. 2,37,503/5/6 which had become due. On October 26, 1936, N made an application under section 4 of the U. P. Encumbered Estates Act, 1934, requesting that the provisions of the Act be applied to him. Section 14(4)(a) of the Act provided that " the amount of interest held to be due on the date of application shall not exceed that portion of the principal which may still be found to be due on the date of the application ". N contended that in view of section 14(4)(a), D was not entitled to recover any sum as interest in excess of the principal sum of rupees one lakh. D contended that it was not necessary to reopen the decree as the principle of section 14(4)(a) had not been violated in passing the decree. Held, that the proper decree that should have been passed on the application was for rupees two lakhs for the principal and interest plus costs and interest pendente lite and future interest at 4% per annum. The words " on the date of the application " in section 14(4)(a) of the Act had been deliberately used to benefit the applicant by reducing the interest to the amount of the principal found still due on the date of the application, whatever amount of interest may be due under the contract. The fact that there had been a decree did not make any difference in giving the benefit of the section to the applicant. Pandit Ramsagar Prasad vs Mst. Shayama, A.I.R. 1939 Oudh 75, disapproved. Rukun uddin vs Lachhmi Narain, I.L.R. 1945 All. 307, referred to. 119

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Appeal No. 419 of 1956. Appeal by special leave from the decision dated January 17, 1955, of the Labour Appellate Tribunal, of India, Bombay, in Appeal (Bom.) No. 61 of 1954. N.C. Chatterjee, D. H. Buch and I. N Shroff, for the appellants. R. J. Kolah, B. Narayanaswami, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents. March 10. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal with the special leave of this Court against a decision dated January 17,1955, of the Labour Appellate Tribunal (hereinafter called the Appellate Tribunal) by which it reversed a decision of the Industrial Court, Bombay, dated January 20, 1954, in a matter referred to the Industrial Court under section 73 of the Bombay Industrial Relations Act, 1946, by the Government of Bombay. The appellant is the Rashtriya Mill Mazdoor Sangh, representing the employees of the cotton textile mills in the city of Greater Bombay. The respondents are the Apollo Mills, Ltd., and other companies owning cotton textile mills specified in the annexure to the Special Leave Petition and the Mill Owners ' Association, Bombay, representing the cotton textile mill industry. The dispute relates to the compensation which the workers claimed for loss of wages and dearness allowances due to the short working or closure of the Textile Mills on certain days during the period between November 1, 195 1, and July 13, 1952. The facts of the case are as follows: In the year 1951 monsoon failed, and caused scarcity of water in the catchment area of the Tata Hydro Electric system, from which the Mills obtained their supply of power. It was, therefore, found necessary to reduce the consumption of electricity, and Government, after consulting the various Mills and also the appellant Sangh, decided that the Mills should work, instead of 233 48 hours, for 40 hours per week during a period of 30 weeks from November 1, 1951. It was also agreed that if the Mills could reduce their consumption of electricity to 5/6th of their normal consumption, then they could work for 48 hours per week as before. Some of the Mills installed their own generators, but many others were compelled to reduce the working time to 40 hours in a week, working at 8 hours per day. As a result, the working of some of the Mills was reduced by one day in the week, and the Mills lost a maximum number of 38 days, some more and some less. One of the Mills (the Ragbuvanshi Mills) remained closed only on one day. The order of the Bombay Government was made under section 6A(1) of the Bombay Electricity (Special Powers) Act, 1946. While this short working continued, the workers claimed their wages and dearness allowances or compensation in lieu thereof. Negotiations followed, but when they did not result in anything to the advantage of the workers, the matter was referred for arbitration to the Industrial Court by the Bombay Government on October 30, 1952, under section 73 of the Bombay Industrial Relations Act, 1946. The Mills raised the objection that the matter was covered by Standing Orders 16 and 17, and inasmuch as the partial closure of the Mills was due to force majeure, they were not liable. They contended that the Industrial Court had thus no jurisdiction, as these Standing Orders were determinative of the relations between the workmen and their employers under section 40(1) of the Bombay Industrial Relations Act, 1946. They also submitted that the orders of the Government issued under the Bombay Electricity (Special Powers) Act, 1946, had to be obeyed and therefore no compensation was payable. They pointed out that the employees were receiving fair wages, and that the Mills were not in a position to bear an additional burden, in view of the fact that they had lost their profits due to short working. They relied upon the decision of the Bombay High Court in Digambar Ramachandra vs Khandesh Mills (1), where it was held that though an arbitrator to whom a dispute (1) 30 234 falling under B. 49A of the Bombay Industrial Disputes Act, 1938, was referred had jurisdiction to decide the disputes within the terms of the Standing Orders framed under section 26 of that Act, he had no jurisdiction to determine the liability of the employers on grounds outside the Standing Orders. The Industrial Court, after hearing the parties, made an award on January 20, 1954, and directed all the respondent Mills to pay to the employees compensation, holding that Standing Orders 16 and 17 were not applicable, and were, therefore, no bar. The Industrial Court held that in view of the provisions of sections 3, 40(2), 42(4), 73 and 78 of the Bombay Industrial Relations Act read with Sch. 111, item 7, and having regard to the decision of the Federal Court in Western India Automobile Association v Industrial Tribunal, Bombay (1), it had jurisdiction to grant compensation. The Industrial Court, therefore, held that on principles of social justice the workers were entitled to compensation, which it assessed at the rate of 50 per cent. of the wages and dearness allowances which the workers would have drawn, if the Mills had worked on the days they remained closed. Against that award, the Mill Owners ' Association and two of the Mills appealed to the Appellate Tribunal, Bombay. All the contentions which were raised before the industrial Court were once again raised before the Appellate Tribunal. Two new contentions were raised, viz., that the claim for compensation was barred under section 1 1 of the Bombay Electricity (Special Powers) Act, 1946, and was also barred by the decision of the Supreme Court in the Muir Mills Co., Ltd. vs Suti Mills Mazdoor Union, Kanpur (2). The Appellate Tribunal by its decision now impugned before us, allowed the appeal, and set aside the award of the Industrial Court, and dismissed the claim of the employees. It held that even if Standing Orders 16 and 17 covered the case, the decision in Digambar Ramachandra 's case (1) could not now be applied because of the provisions of section 40(2) and the addition of Sch. 111, item 7 in the Bombay Industrial Relations Act, which provisions did not find place in the Bombay (1) (2) ; (3) 235 Industrial Disputes Act, 1938, under which the decision of the Bombay High Court was given. The Appellate Tribunal referred to the Federal Court decision cited earlier, and observed that there was no doubt that the award of compensation to workmen equal to half of their wages and dearness allowances was fair and just. The Tribunal, however, felt compelled by the decision of this Court in the Muir Mills case (1) to reject the claim of the workers, and allowed the appeal. In this view of the matter, the Appellate Tribunal did not decide whether section II of the Bombay Electricity (Special Powers) Act, 1946, barred the grant of compensation. The appellant in this case first contended that the Muir Mills case (1) did not apply, and further that if that case was out of the way, then in view of the other findings of the Appellate Tribunal and section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950, the appeal ought to have failed, since no question of law survived and the Appellate Tribunal was incompetent to reverse the decision. The Mill Owners ' Association, on the other hand" contended that the opinion of the Appellate Tribunal that the Muir Mills case (1) applied, was correct, that section II of the Bombay Electricity (Special Powers) Act barred these proceedings, and that, in view of the fact that the closure was due to force majeure for which the Milks were not responsible, Standing Orders 16 and 17 were determinative of the relations between the parties and the claim for compensation was not entertainable. Other objections raised before the Appellate Tribunal were not pressed before us. We begin first with the question whether section 11 of the Bombay Electricity (Special Powers) Act, 1946 barred the reference. That section reads as follows: " 11 (1). No suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done in pursuance of any order, direction or requirement made or deemed to have been made under section 3, 4, 5, 6, 6A, 6B or 6C." (1) ; 236 The order which was made in this case by the Government of Bombay was under sub section (1) of section 6A, which reads: " 6A(1). Notwithstanding anything contained in any law for the time being in force, or any permission granted under sub section (3) of section 5 or any instrument having effect by virtue of any law, the Provincial Government may with a view to controlling distribution, supply, consumption or use of electrical energy make an order (a)for prohibiting or regulating subject to such conditions as it may specify in the, order, the distribution or supply of electrical energy by a licensee or use of such energy by a consumer for any purpose specified in such order; (b) for determining the order of priority in which,or the period or periods during which, work shall be done by an undertaking to which the supply of electrical energy is made by a licensee. " It was contended by the respondents that sub section (1) of section 11 quoted above barred the remedy of arbitration, because the closure of the Mills was in good faith, and was in pursuance of a direction or order made under section 6A(1). Mr. Kolah referred to the scheme of the Bombay Electricity (Special Powers) Act, and specially to the sections dealing with penalties and offenses and contended that the Mills were helpless and were compelled to close down their esta blishments for part of the time. He claimed that the protection of section 11(1) was available ' to them., and argued that it gave immunity from action of any kind. The present proceedings are for compensation for, the period during which the Mills remained closed. This claim is made by the workers against the Mills. The section which confers immunity bars proceedings &rising from the interference with the supply of electrical energy and its consumption. It is a protection to the supplier of electrical energy against the consumer and vice versa, and protects also those who act to enforce the order. There is no complaint here about the reduction of electricity or even about the closure of the Mills for part of the time. Neither the 237 Mills nor the workers have raised any such contention. Further, the sub section is a protection clause which is usually introduced in an Act, where it gives new or unusual powers, and is designed to give immunity to persons acting under or enforcing it. The ambit of the protection is in relation to the supply and consumption of electricity which alone are curtailed by the order issued under section 6A(1) of the Act. The protection conferred by the first subsection of section 11 does not, therefore, prevent the raising of an industrial dispute resulting in an award for the equitable sharing of loss which had been occasioned to. , both the employers and the employees by the observance of the order. The contention that the Industrial Court had no jurisdiction to hear the reference because the State Government could not make it, was not pressed by the respondents, and nothing need, therefore, be said about it. It was raised in another form, as will appear in the sequel. Both the parties, however, criticised the order of the Appellate Tribunal, the respondents challenging the findings adverse to them. It is now necessary to deal with these contentions. The case of the appellant was that the Appellate Tribunal had no jurisdiction to interfere with the order of the Industrial Court, because the appeal before it did not involve a ',.Substantial question of law and did not fall within any of the eight matters mentioned in section 7(1)(b) of the Industrial Disputes (Appellate Tribunal) Act, 1950, which gave appellate jurisdiction to the Appellate Tribunal. The appellant referred to cases in which it has been held that the Appellate Tribunal could not interfere on facts. It is not necessary to analyse those cases for reasons which we proceed to state. The Industrial Disputes (Appellate Tribunal) Act conferred appellate powers on the Appellate Tribunal, if there was a substantial question of law arising from the award, or the matter fell within eight enumerated subjects. The respondents attempted to bring the matter within cl. (1) of section 7(1)(b) that is to say ' " wages ", which is one of the eight subjects. But there is no question here of wages as such but of 238 compensation. Learned counsel for the respondents also argued that a conclusion drawn without adverting to the evidence involved a question of law and a legal inference from proved facts and an appeal thus lay. He relied upon Anglo Iranian Oil Co. (India) Ltd. vs Petroleum Workers ' Union (1) and Crompton Parkinson (Works) vs Its Workmen (2). It may not be necessary to discuss the matter at length, because even if the subject matter did not fall within any of the eight enumerated topics, there was a substantial question of law involved, inasmuch as it was necessary to decide whether a claim for compensation was not admissible in view of the provisions of the Bombay Industrial Relations Act and the Standing Orders. It has been pointed out already that the failure to continue to employ labour was due to the short supply of electrical energy, and the question is whether in these admitted circumstances, Standing Orders 16 and 17 read with section 40(1) and item 9 of Sch. 1 of the Bombay Industrial Relations Act rendered the employers immune from a claim for compensation for loss of wages and dearness allowances. The respondents claimed that they did, while the appellant maintained that they did not, and referred to sections 40(2), 42(4), 73 and 78(1)(A) and item 7 of Sch. III of the same Act. This is a substantial question of law, and the appeal was thus competent. The crux of the matter is the provisions of Standing Orders 16 and 17, which are to be read with section 40(1) of the Bombay Industrial Relations Act. Standing Orders 16 and 17 read as follows 16.The Company may, at any time or times, in the event of a fire, catastrophe, breakdown of machinery or stoppage of the power supply, epidemic, civil commotion or other cause, beyond the control of the Company, stop any machine or machines or department or departments, wholly or partially for any period or periods, without notice and without compensation in lieu of notice. In the event of a stoppage of any machine or department under this Order during working hours, the operatives affected shall be notified by notices (1) (2) [1959] SUPP. 2 S.C.R. 936. 239 put upon notice boards in the department concerned and at the time keeper 's office, as soon as practicable, when work will be resumed and whether they are to remain or leave the mill. The period of detention in the mill shall not ordinarily exceed one hour after the commencement of the stoppage. If the period of detention does not exceed one hour, operatives so detained shall not be paid for the period of detention. If the period of detention in the mill exceeds one hour, operatives so detained shall be entitled to receive wages for the whole of the time during which they are detained in the mill as a result of the stoppage. In the case of pieceworkers, the average daily earnings for the previous month shall be taken to be the daily wages. 17.Any operative played off Linder Order 16 shall not be considered as dismissed from service, but as temporarily unemployed, and shall not be entitled to wages during such unemployment except to the extent mentioned in Order 16. Whenever practicable a reasonable notice shall be given of resumption of normal work and all operatives playedoff under Order 16, who present themselves for work, when the normal working is resumed, shall have prior right of reinstatement. " The argument of the respondents was two fold: (1) that these two Standing Orders fully covered a closure due to stoppage of power, and (2) that under section 40(1) of the Bombay Industrial Relations Act, 1946, the Standing Orders were determinative of the relations between the employer and the employees in regard to all industrial matters specified in Sch. 1, which contains the following items : " 4. Closure or reopening of a department or a section of a department or the whole of the undertaking" and " 9. Temporary closures of work including playing off and rights and liabilities of employers and employees. . " They also invoked the decision in Digambar Ramachndra 's case (1), and added that the position had not been altered even by the addition of the second sub (1) 240 section to section 40 in the Bombay Industrial Relations Act. We may at this stage read section 40: " 40. (1) Standing orders in respect of an employer and his employees settled under this Chapter and in operation, or where there are no such standing orders, model standing orders, if any, applicable under the provisions of sub section (5) of section 35 shall be determinative of the relations between the employer and his employees in regard to all industrial matters specified in Schedule I. (2)Notwithstanding anything contained in subsection (1) the State Government may refer, or an employee or a representative union may apply in respect of any dispute of the nature referred to in clause (a) of paragraph A of section 78, to a Labour Court. " The respondents contended that only the first subsection applied, and that under Standing Orders 16 and 17 quoted above, no compensation was claimable. The appellant pointed out that the second sub section excluded the first sub section, because of the nonobstructive clause with which it is prefaced and in view of the position of the Industrial Court as the appellate authority from awards of the Labour Court, the former was not also bound by the first sub section or the Standing Orders. There is some force in the contention of the appellant, but, in our opinion, Standing Orders 16 and 17 do not, in terms, apply to a claim for compensation such as is made here. Standing Order 16 speaks of stoppage "without notice and without compensation in lieu of notice. " The compensation which is claimed by the workers in this case is not in lieu of notice, that is to say, for a period equal to that in respect of which notice would have had to be given. That period would be before the date of closure. The Standing Order contemplates those cases in which a notice has to be dispensed with and then no compensation in lieu of notice is payable. There is, however, here a question of quite a different sort, and it is not covered by Standing Order 16, even though the closure was by reason of stoppage of power. Standing Order 17 speaks of "wages", and 41 241 we are not concerned with wages here but with compensation which is not the same thing as wages. In this view of the matter, Standing Orders 16 and 17 cannot be said to cover the present facts, and they are not, therefore, determinative of the relations between the parties. The present dispute was referred to the Industrial Court under section 73(2) of the Bombay Industrial Relations Act, 1946. That section reads as follows:"Notwithstanding anything contained in this Act, the State Government may, at any time, refer an industrial dispute to the arbitration of the Industrial Court, if on a report made by the Labour Officer or otherwise it is satisfied that (2)the dispute is not likely to be settled by other means;". The non obstante clause clearly shows that in spite of the other provisions of the Bombay Industrial Relations Act, an industrial dispute may be referred to the Industrial Court. An industrial dispute as defined in that Act means inter alia any dispute or difference between an employer and employee or between employers and employees, which is connected with an industrial matter, which includes all matters pertaining to non employment of any person. That these workmen were not employed on certain days goes without saying, and thus, there was an industrial dispute concerning their claim for compensation for the period of non employment. Item 9 of Sch. 1 gave the power to frame Standing Orders in relation to temporary closures. The Standing Orders made covered only compensation in lieu of notice and wages for the period of closure, but not compensation for closure. In the view which we have taken of the Standing Orders, it is not necessary to decide whether item 7 of Sch. III relates only to compensation for permanent closure, or whether item 9 of Sch. 1 gave the power to make a Standing Order relating to compensation for temporary closure. It is enough to say that Standing Orders 16 and 17, as they stand, do not cover a case of compensation for closure. 242 The powers of the Industrial Court under section 73 of the Bombay Industrial Relations Act are very wide, inasmuch as the State Government can refer an industrial dispute to it, notwithstanding anything contained in the Act. It was in view of this that the objection to the jurisdiction of the Industrial Court was not pressed. But the argument was advanced in another form to show that Standing Orders 16 and 17 were determinative and did not enable the Industrial Court to decide in any manner except in accordance with those Standing Orders. Reliance was also placed upon Digambar Ramachandra 's case (1), where Chagla, C.J., and Bhagwati, J., decided that the arbitrator was bound by the Standing Orders and could not go outside them. We are of opinion that Standing Orders 16 and 17 do not apply to the present facts for reasons already stated, and we express our dissent from that decision in so far as it held that the Standing Orders covered a case of compensation for closure also. We note further that in the Bombay Industrial Disputes Act, 1938, there was no item similar to the one in Sch. III of the Bombay Industrial Relations Act. In Textile Labour Association, Ahmedabad vs Ahmedabad Millowners ' Association, Ahmedabad (2), Sir H. V. Divatia, Rajadhyaksha, J., and Mr. D. V. Vyas (later, Vyas, J.) correctly held that the Standing Orders did not cover a case of compensation for loss of earnings. The head note adequately summarises the decision, and may be quoted. It reads: " Although the workers are not entitled to demand their wages during the period of stoppage of work as that matter has been (sic) covered by the Standing Orders there is nothing to prevent them from giving any notice of change demanding compensation for the loss of their earnings. It cannot be said that the jurisdiction of the Court is barred by the provisions of Standing Orders Nos. 16 & 17.". No doubt, the reference there was under section 43 of the Bombay Industrial Disputes Act, 1938; but the provisions of section 73 of the Bombay Industrial Relations Act are wide enough to cover a reference on the same topic. We are, therefore, of opinion that the claim (1) (2) 1946 47 Industial Court Reporter 87. 243 for compensation was not barred by Standing Orders 16 and 17 read with a. 40(1) of the Bombay Industrial Relations Act. The respondents further contended that the principle of social justice applied by the Industrial Court and accepted by the Appellate Tribunal could not apply because of the decision of this Court in the Muir Mills case (1). They also contended that the case for bonus was decided along with the present case and both bonus and dearness allowances were increased by the Appellate Tribunal in respect of 38 Mills and even the remaining 15 Mills which had ,suffered loss had given minimum bonus to their workers. They argued that wages were fair and bonus was awarded and dearness allowance was increased, and that the Appellate Tribunal took all this into account in refusing compensation. They submitted that the Mills suffered heavy losses due to short working, and that it was sheer injustice to make them pay wages or compensation for days on which the Mills remined closed and lost their profits through stoppage of normal working. The Muir Mills case (1) was concerned with the award of bonus, which is linked with profits. It was there laid down that inasmuch as the labour employed in an industrial undertaking is ever changing, the award of bonus can only be from the profits to which labour in any particular year contributed and labour cannot claim that profits and reserves of some other years should be used for the purpose of giving them bonus. We are not concerned in this case with the award of bonus as such, and we need not, therefore, make use of the reasons which appealed to this Court in that case. The narrow sphere in which social justice demands that workmen going into forced unemployment should receive compensation is quite different. Social justice is not based on contractual relations and is not to be enforced on the principles of contract of service. It is something outside these principles, and is invoked to do justice without a contract to back it. Mahajan, J. (as he then was), observed in Western India Automobile Association vs Industrial Tribunal, Bombay (2) as follows: (1) ; (2) 244 " Adjudication does not, in our opinion, mean adjudication according to the strict law of master and servant. The award of the Tribunal may contain provisions for settlement of a dispute which no Court could order if it was bound by ordinary law, but the Tribunal is not fettered in any way by these limitations. In Volume 1 of I Labour Disputes and Collective Bargaining ' by Ludwig Teller, it is said at page 536 that industrial arbitration may involve the extension of an existing agreement or the making of a new one, or in general the creation of a, new obligation or modification of old ones, while commercial arbitration generally concerns itself with the interpretation of existing obligations and disputes relating to existing agreements. In our opinion, it is a true statement about the functions of an Industrial Tribunal in labour disputes. " Here, what better measure could have been adopted by the Industrial Court (which is approved by the Appellate Tribunal) than to divide the loss into two parts, one to be borne by the industrial concerns and the other by the workmen ? There is no other basis suggested by the one side or the other. It was contended that the loss to labour went into the consideration of the grant of bonus, and that the two cases were heard together. The Appellate Tribunal says so. But bonus is to come out of profits and is the share of labour in the profits it has helped to earn, to bridge the gap between wages as they are and the living wage. Compensation in the present context is for loss of wages and dearness allowance, and the two cannot be considered together on any principle. There is nothing to show that in spite of the formula which the Appellate Tribunal had evolved for itself, it took into account some other factors quite alien to the said formula. It appears to us that what the Appellate Tribunal really meant to say was that inasmuch as the workers were paid bonus they should not make a grievance if they lost wages on some of the days, because if compensation were paid bonus would have had to be reduced. If that is the meaning, as it obviously is, then the question of compensation was not decided at all. In our opinion, this reasoning was 245 beside the point. It was wholly immaterial whether profits were made or losses were incurred in the year, if the employers continued to retain the labour force so as to be available for the days on which the Mills worked. In our opinion, the Appellate Tribunal after giving a finding that a claim for compensation equal to half the wages and dearness allowances was just and proper, erred in holding that it was not admissible because of the decision of this Court in the Muir Mills case (1). That case had no application to the facts here. The Appellate Tribunal also erred in declining to grant compensation on the ground that since bonus was granted the claim for compensation could not be entertained. The case of badli workers does not appear to have been separately raised, and we see no reason not to award them compensation ; but payment of such compensation will be subject to the same condition, as was imposed by the Industrial Court. In the result, the appeal will be, allowed, the order of the Appellate Tribunal set aside and the order of the Industrial Court restored. The respondents shall bear the costs here and in the Tribunals below. Appeal allowed.

In 1951 on account of the failure of the monsoon, generation of electricity from the Hydro Electric System was affected and it was found necessary to reduce the consumption of electricity. The Government of Bombay passed an order under section 6A(1) of the Bombay Electricity (Special Powers) Act, 1946, regulating the use of electrical energy and the respondent Mills were compelled to reduce the working time. For the period during which the short working continued the workers claimed their wages and dearness allowances or compensation in lieu thereof. ' The Industrial Court to which the matter was referred for arbitration under section 73 Of the Bombay Industrial Relations Act, 1946, made an award directing all the respondent Mills to pay compensation to the employees. The Mills pleaded that no compensation was payable because (1) the closure of the Mills was in pursuance of the directions made by the Government under the Bombay Electricity (Special Powers) Act, 1946, and, therefore, section 11(1) of that Act barred the reference, (2) the Industrial Court had no jurisdiction to entertain the claim for compensation as the matter was covered by Standing Orders 16 and 17 which were determinative of the relations between the workmen and their employers under section 40(1) of the Bombay Industrial Relations Act, 1946, and (3) in any case, no compensation was payable in view of the decision in Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; Held, (1) that section 11 (1) of the Bombay Electricity (Special Powers) Act, 1946, barred only proceedings arising from the interference with the supply of electric energy and protected those who acted in pursuance of orders passed under that Act; the section did not prevent the raising of an industrial dispute. (2)that Standing Orders 16 and 17 contemplated only cases of compensation in lieu of notice and wages for the period of closure, and did not cover cases of compensation for closure ; that the provisions of section 73 of the Bombay Industrial Relations Act, 1946, were wide enough to cover the reference in the present case and that the claim for compensation was not barred by Standing Orders 16 and 17, read with section 40(1) of the Act. Digambar Ramachandra vs Khandesh Mills, (1949) 52 Bom. L.R. 46, disapproved. 232 (3)that the decision in Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, was concerned only with the award of bonus and was not applicable to the present case.

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Appeals Nos. 307 to 309 of 1958. Appeals from the judgment and order dated August 1, 1956, of the Orissa High Court in O. J. C. Nos. 16, 19, 137 and 61 of 1954. C.B. Aggarwala and P. C. Aggarwala, for the appellant (In C. As. 307 to 309 of 58). N.C. Chatterjee, J. H. Umrigar and T. M. Sen, for the respondents (In all the appeals). September 21. The Judgment of the Court was delivered by SHAH J. This is a group of three appeals filed with certificate of fitness under article 132 of the Constitution issued by the High Court of Judicature, Orissa. The Legislature of the Province of Orissa enacted the Orissa Agricultural Income tax Act XXIV of 1947 hereinafter referred to as the Act providing for the levy of income tax on agricultural income derived from lands situated in the Province of Orissa. This Act was brought into operation from July 10, 1947. By section 3, agricultural income tax at the rate or rates specified in the schedule was made payable for each financial year on the total income of the previous year of every person. By the proviso to that section, agricultural income of the Central Government or of the State Government or of any local authority was exempt from 'taxation. Section 2, cl. (1), defined a " person " as inclusive of a Ruler of an Indian State. The appellant in these three appeals is the former Ruler of the State of Sonepur. After 781 the establishment of the Dominion of India on August 15, 1947, the appellant as the Ruler of the State of Sonepur executed an instrument of accession to the., Dominion restricted to three subjects Defence, External Affairs and Communications. On December 15, 1947, he executed a merger agreement whereby the territory of the State of Sonepur became merged with the territory of the Dominion of India. By virtue of the merger agreement, the Government of India acquired full sovereign rights over the territory of the State, but ownership of private properties belonging to the appellant and full enjoyment thereof were under the agreement guaranteed to him under article 3. In exercise of the powers conferred by the Extra Provincial Jurisdiction Act 47 of 1947, the Government of India by notification dated March 23, 1948, delegated to the Provincial Government of Orissa full powers to administer the merged States of Orissa including the State of Sonepur. The Government of the Province of Orissa applied to the merged States section 1 of the Act as from January 19, 1949, and by notification dated April 1, 1949, the remaining provisions of the Act. In the meantime, by amendment, two new sections, section 290(A) and section 290(B) were incorporated in the Government of India Act, 1935. The Governor General of India was thereby given power to direct by order that a merged State shall be administered in all respects as if it formed part of the Governor 's Province specified in the order. The Governor General of India exercising authority under sections 290(A) and 290(B) issued on July 27, 1949, an order providing that the merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa with effect from August 1, 1949. On December 30, 1949, the Governor of Orissa promulgated Ordinance No. IV of 1949 providing inter alia that the Agricultural Income tax Act, 1947, be applied to the merged Orissa States. This Ordinance was later replaced by the Orissa Merged States (Laws) Act, XVI of 1950. The appellant was then called upon by the Agricultural 782 Income tax Officer to furnish a return of his agricultural income. The appellant disputed his liability to pay the agricultural income tax and declined to furnish the return. The Agricultural Income tax Officer then proceeded to make enquiries about the income received from the lands held by the appellant and assessed him to pay tax for the years 1949 50 to 1953 54. He also imposed a penalty upon the appellant for failure to submit his returns for the years 1949 50 and 1950 51. Against the order assessing him to tax and directing him to pay penalty, the appellant preferred appeals to the Assistant Collector of Agricultural Income tax, Sambalpur. The appeals were dismissed by that officer. Revision applications to the Collector of Commercial Taxes, Cuttack and to the Board of Revenue were unsuccessful. The appellant filed four petitions in the High Court of Orissa, being petitions Nos. 17, 16, 19 and 137 of 1954 challenging the assessments made by the taxing authorities for the years 1949 50, 1950 51, 1951 52 and 1952 53 respectively, and two more petitions being petitions Nos. 18 and 138 of 1954 against orders imposing penalty for the years 1949 50 and 1950 51 respectively. These six petitions and certain other petitions were heard by a Division Bench of the Orissa High Court. The High Court held that by the guarantee of full ownership, use and enjoyment of the private properties under the merger agreement the Properties of the appellant were not rendered immune from liability to pay tax imposed by the Act and that in the absence of an express provision, his income from lands was liable to pay agricultural income tax. The High Court also held that even though the appellant was the Ruler of a former Orissa State, he was a " person " within the meaning of the Act and was liable to pay agricultural income tax. The learned Judges therefore dismissed the petitions challenging the liability of the appellant for the assessment years 1950 51, 1951 52 and 1952 53 to pay agricultural income tax, and they cancelled the order of assessment in respect of the year 1949 50 and the orders imposing penalty in respect of years 1949 50 and 783 1950 51. Against the orders dismissing the applications for setting aside the assessments in respect of years 1950 51, 1951 52 and 1952 53, these appeals have been preferred with certificate granted by the High Court under article 132 of the Constitution. The appellant was undoubtedly the Ruler of an Indian State before August 15. 1947, but by reason of the merger agreement executed by him on December 15, 1947, his sovereignty was extinguished. By article 1 of the terms of the merger agreement, the appellant ceded to the Dominion of India full and exclusive authority, jurisdiction and power for and in relation to the governance of the State and agreed to transfer the administration of the State on the appointed day and as from the said day, the Dominion Government became competent to exercise the power, authority and jurisdiction in relation to the governance of the State in such matters and through such agency as the Government thought fit. By article 3, the appellant remained entitled to full ownership, use and enjoyment of all private properties (but not of the State properties) belonging to him on the date of the merger. By article 5, the Dominion Government gua ranteed the succession according to law and customs, to the gadi of the State and to the personal rights, privileges, dignities and titles of the appellant. It was provided by article 4 that " the Raja, the Rani, the Rajmata, the Yuvraja and the Yuvrani shall be entitled to all personal privileges enjoyed by them whether within or outside the territories of the State, immediately before the 15th day of August, 1947 ". The appellant contends that as a Ruler of the State of Sonepur, he was, before merger of his State, immune from liability to taxation in respect of his private property both within his territory and outside. He claims that he was so immune in respect of his property within his State as a Ruler and in respect of his property outside the State by the rules of International Law which, he submits, protect from taxation the properties of a Ruler of a State, situate in a foreign State. The appellant says that by articles 4 and 5, the Dominion Government guaranteed to him all 784 his personal rights, privileges, dignities and titles enjoyed within or without the territory immediately before the 15th August, 1947, and that any attempt to tax his private property by the State of Orissa or by the Union Government violates that guarantee. The appellant submits that to give effect to this guarantee, all legislation must be interpreted in the light of the merger agreement which he claims is incorporated in article 362 of the Constitution and he must be held exempt from liability to pay tax even though no express provision in that behalf has been made by the Legislature. In our view, there is no force in the contentions raised by the appellant. The privileges guaranteed by articles 4 and 5 are personal privileges of the appellant as an ex Ruler and those privileges do not extend to his personal property. In dealing with a similar contention raised on the interpretation of article 4 of the merger agreement entered into by the Ruler of Khairagarh (which was in material terms identical with the terms of article 4 of the agreement executed by the appellant), section R. Das, J., (as he then was), observed in Visweshwar Rao vs The State of Madhya Pradesh(1): " The guarantee or assurance to which due regard is to be had is limited to personal rights, privileges and dignities of the Ruler qua a Ruler. It does not extend to personal property which is different from personal rights ". The Act imposes on the agricultural income of "every person " liability to pay agricultural income tax. By the proviso to section 3, agricultural income of the Central Government, State Government and of local authorities is exempt from tax, but this exemption is not extended to any other body or person. It is true that in the definition of the expression " person " as originally enacted in section 2, cl. (1), a Ruler of an Indian State was expressly included and by the Adaptation of Laws Order, 1950, reference to Rulers of Indian States was deleted as from January 26, 1950. But by that amendment, an intention to exclude the Rulers of Indian States from liability to pay (1) , 1054. 785 agricultural income tax was, in our judgment, not evinced. Between the dates on which the Act wag enacted and the Adaptation of Laws Order, 1950. several political events of far reaching effect had taken place, in consequence of which the appellant bad ceased to be a Ruler of an Indian State. On January 26, 1950, the date on which the Adaptation of Laws Order, 1950, became operative, there were in, existence no Indian States. The sovereign rights of the erstwhile Rulers of the Indian States were extinguished, and their territories were merged in the, Indian Union. The amendment in the definition of "person " in section 2, cl. (i), of the Act was made not with) the object of excluding the Rulers of former Indian States from liability to pay tax: it was only made to; delete a clause which, in view of political changes, had no practical significance. Liability to pay tax is imposed by the Act and there is in the Act no express exemption in favour of the appellant. The claim of the appellant to exemption on the ground that he is not a " person " cannot therefore be sustained. Article 362 of the Constitution provides: "In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be bad to the guarantee or assurance given tinder any such covenant or agreement as is referred to in article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State ". Article 291 of the Constitution deals with the privy purse of the Rulers under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of the Constitution payment whereof is free from tax as has been granted or assured by the Government of the Dominion of India. Article 362 recommends to the Parliament and the State Legislatures in making laws after the Constitution " to have due regard to the guarantee or assurance given under any covenant or agreement ". Even though article 362 is not restricted in its recommendation to agreements relating to the privy purse and 786 covers all agreements and covenants entered into by the Rulers of Indian States before the commencement of the Constitution whereby the personal rights, privileges and dignities of the Ruler of an Indian State were guaranteed, it does not import any legal obligation enforceable at the instance of the erstwhile Ruler of a former Indian State. If, despite the recommendation that due regard shall be had to the guarantee or assurance given under the covenant or agreement, the Parliament or the Legislature of a State makes laws inconsistent with the personal rights, privileges and dignities of the Ruler of an Indian State, the exercise of the legislative authority cannot, relying upon the agreement or covenant, be questioned in any court, and that is so expressly provided by article 363 of the Constitution. The plea of the appellant that he was not seeking to enforce the terms of the merger agreement and that be was merely resisting the claim made by the authority appointed by the State of Orissa to levy a tax inconsistently with the terms of the merger agreement, has no substance. In truth, the appellant sought by his petitions under article 226 of the Constitution to enforce the terms of article 4 of the merger agreement. By his petitions, the appellant contended that in enacting the Agricultural Income tax Act and in seeking to enforce it against him, the State of Orissa acted contrary to the terms of the merger agreement and he asked the High Court to enforce the terms of the merger agreement. On the grounds therefore that liability to pay agricultural income tax in respect of his private property is imposed upon the appellant by section 3 of the Act, and the immunity claimed by the appellant is not one of the personal rights or privileges within the meaning of the merger agreement and that the claim made by the appellant is not justiciable, the objection raised by the appellant to liability to pay agricultural income tax assessed under the Act cannot be sustained. Two subsidiary contentions which were sought to be raised before us may be briefly referred to. It was urged that of the forty two villages of which the 787 appellant is held by the assessing authority to be the holder, two were in the year 1945 transferred by him to the Yuvrani (the appellant 's son 's wife) and on that,, account, the income of those villages was not liable to be taxed in his hands. It appears from the assessment order that this contention was raised before the Agricultural Income tax Officer and that officer rejected the contention relying upon section 14, cl. (1), of the Act. It is unnecessary for the purpose of these appeals to decide whether the assessing officer was right in the view which he took. In the petitions filed by the appellant in the High Court, this plea was not raised and no relief was claimed by him in respect of the income of the two villages. The question was never mooted before the High Court and the State of Orissa had no opportunity of meeting the claim now sought to be made by the appellant. On the ground that the question was never raised in the High Court, we reject this contention. It was also urged that whereas the assessing officer has found that the appellant had lands in forty two villages, in the inventory of properties submitted by the appellant to the Government, only eighteen villages were set out and this inventory was accepted by the Government of India. Relying upon this premise, the appellant contends that he is liable to pay tax in respect of his income from these eighteen villages and no more. But even this plea was never raised in the High Court and we cannot, in dealing with these appeals, enter upon an enquiry into a question which was never raised on which no evidence was led, and on which no finding was given by the High Court. On the view taken by us, appeals Nos. 307, 308 and 309 of 1958 fail and are dismissed with costs. There will be one hearing fee. Appeals dismissed.

On December 15, 1947, the Ruler of the erstwhile State of Sonepur, the appellant, executed a merger agreement whereby the Government of India acquired full sovereign rights over the territory of the State, but ownership and full enjoyment of private properties belonging to the appellant and the personal rights, privileges, dignities etc., enjoyed by him immediately before August 15, 1947, were guaranteed to him under articles 4 and 5. On July 27, 1949, the Governor General of India issued an order providing that the merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa. The Orissa Agricultural Income tax Act, 1947, had in the meantime been enacted by the Legislature of the Province of Orissa and by virtue of an Ordinance promulgated by the Governor of Orissa on December 30, 1949, the Act became applicable to the merged Orissa States. Section 2(1) of the Act defined a " person " as inclusive of a Ruler of an Indian State, but by the Adaptation of Laws Order, 195o, reference to Rulers of Indian States was deleted as from January 26, 195o. The appellant contended that he was not liable to be assessed to tax on agricultural income under the provisions of the Act because (1) as a Ruler of the State of Sonepur, he was, before merger of his State, immune from liability to taxation in respect of his private property and that his immunity from taxation was Guaranteed by articles 4 and 5 of the agreement of merger; and (2) that by virtue of the amendment of section 2, cl. (1), of the Act, he was not a "person" within the meaning of the Act and therefore he was not liable to pay agricultural income tax. Held: (i) that the amendment in the definition of "person" in section 2, Cl. (i), of the Act was made not with the object of excluding the Rulers of former Indian States from liability to pay tax, but only to delete a clause which in view of political changes which had taken place since the Act was enacted had no practical significance. The appellant could not claim exemption from taxation on the ground that he was not a " person ", in the absence of an express exemption clause in the Act. 780 (2)that the privileges guaranteed by articles 4 and 5 of the agreement of merger were only personal privileges of the appellant as an ex Ruler and that these privileges did not extend to his private property. Vishweshwar Rao vs The State of Madhya Pradesh, , followed. (3)that the claim made by the appellant of immunity from taxation relying upon the agreement of merger was not justiciable.

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Appeal No. 498 of 1958. Appeal from the judgment and order dated February 11, 1955, of the Andhra Pradesh High Court in T. R. C. No. 120 of 1953 arising out of the judgment and order dated December 29, 1952, of the Sales Tax Tribunal, Madras, in Tribunal Appeal No. 857 of 1951. A. V. Viswanatha Sastri, M. Ranganatha Sastri and M. section K. Sastri, for the appellants. D. Narasaraju, Advocate General for the State of 15 Andhra Pradesh., T. V. R. Tatachari, D. Venkatappayya Sastri and T. M. Sen, for the respondent. October 18. The Judgment of the Court was delivered by AYYANGAR J. This appeal on a certificate under article 133 of the Constitution granted by the High Court of Andhra Pradesh raises for consideration principally the question whether hardened or hydrogenated groundnut oil (commonly called Vanaspati) is " groundnut oil " within the meaning of Rule 18(2) of the Madras General Sales Tax (Turnover and Assess ment) Rules, 1939. Tungabhadra Industries Ltd. the appellant in this appeal has a factory of considerable size at Kurnool in the State of Andhra Pradesh. The company purchases groundnuts and groundnut kernels within the State and manufactures groundnut oil and also refined oil as well as hydrogenated oil all of which it sells. The appeal is concerned with the assessment to salestax of this company for the year 1949 50. Section 3 of the Madras General Sales Tax Act, 1939, enacts: " 3. (1) Subject to the provisions of this Act, (a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover. (2). . . . . . . . (3). . . . . . . . (4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed: Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly. (5) The taxes under sub sections (1) and (2) shall be assessed, levied and collected in such manner and in such installments, if any, as may be prescribed: Provided that (i) in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by 16 (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him. " Rules were made by virtue inter alia of these provisions entitled " The Madras General Sales Tax Turnover and Assessment Rules, 1939 ". Of these, those relevant to the present context are Rules 4 & 5. Rule 4 reads: "4.(1) Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by the dealer. (2) In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are bought by the dealer (a) groundnut ". The result of the combined operation of section 4(1)&(2) in the ' case of those who purchased groundnut and having crushed them sold the oil obtained was, that they had to pay tax on both their purchases of groundnut and their sales of oil produced therefrom. This was considered by the rule making authority to be an unfair burden and relief was accordingly provided by Rules 5 and 18 of the same rules, the material portions of which ran: " 5. (1) The tax or taxes under section 3. shall be levied on the net turnover of a dealer. In determining the net turnover the amounts specified in clauses (a) to (1) shall, subject to the conditions specified therein, be deducted from the gross turnover of a dealer. Clause (k) of this rule reads: (k) in the case of a registered manufacturer of groundnut oil and cake, the amount which he is entitled to deduct from his gross turnover under rule 18 subject to the conditions specified in that rule." (This rule was amended by a notification dated November 9, 1951, by the addition of the words 17 " groundnut oil ", but this modification of the rule is not relevant to the present case which is concerned with the assessment of a period anterior to the modification). Rule 18 referred to here reads, to quote only the material words: " 18. (1) Any dealer who manufactures groundnut oil and cake from groundnut and/or kernel purchased by him may, on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of groundnut oil and cake. (2) Every such registered manufacturer of groundnut oil will be entitled to a deduction under clause (k) of sub rule (1) of rule 5 equal to the value of the groundnut and/or kernel, purchased by him and converted into oil and cake if he has paid the tax to the State on such purchases: Provided that the amount for which the oil is sold is included in his net turnover: Provided further that the amount of the turnover in respect of which deduction is allowed shall not exceed the amount of the turnover attributable to the groundnut and/or kernel used in the manufacture of oil and included in the net turnover. Explanation. For the purpose of this sub rule(a) 143 lb. of groundnut shall be taken to be equivalent to 100 lb. of kernel; (b) 143 lb. of groundnut or 100 lb. of kernel when converted into oil will normally be taken to yield 40 lb. of oil; and (c) one candy of oil shall be taken to be equivalent to 500 lb. of oil." Then follow other provisions not relevant for the purposes of the present appeal. The appellant was registered as a manufacturer of groundnut oil under r. 18(1). That the appellant purchased the groundnuts, the value of which was claimed as a deduction in the turnover within the State and paid tax on such purchase to the State was not in dispute. Nor was there any controversy that the sale 18 price of the oil expressed out of and sold either as raw groundnut oil, refined oil or hydrogenated oil was, included in the turnover of the appellant. The Deputy Commercial Tax Officer, Kurnool, who completed the assessment of the appellant accepted the figures of purchases and sales submitted by it, and dealing with the claim for the deduct ion of the purchase price of. the groundnuts from the proceeds of the sale of all oil by the company raw, refined and hydrogenated granted a deduction in respect of the purchase price of the groundnuts attributable to the unrefined oil sold by the appellant, but held that the appellant was not entitled to the deduction claimed in respect of the refined and hydrogenated oil for the reason that it was only unrefined or unprocessed groundnut oil that was connoted by the expression groundnut oil ' in rule 5(1)(k) read with rule 18(1) and (2) of the Turnover and Assessment Rules. This order of the Deputy Commercial Tax Officer was affirmed by the Commercial Tax Officer on appeal and the appellant filed a further appeal to the Sales Tax Appellate Tribunal. The second appellate authority upfield the contention of the appellant in regard to the sale of refined oil but rejected it in so far as it related to the sales of hydrogenated oil. The matter was thereafter brought up before the High Court of Andhra Pradesh by a Tax Revision Case filed under section 13(b)(1) of the Act and the learned Judges upheld the view of the Tribunal and disallowed the claim of the appellant to the deduction claimed in regard to the sales turnover of hydrogenated oil. They granted the certificate under article 133 which has enabled the appellant to file an appeal to this Court. The claim of the appellant to the deduction under r. 18(2) on the sales of refined groundnut oil is no longer in dispute. The ground upon which both the Tribunal as well as the High Court decided against the allowance of the deduction in respect of the sales of hydrogenated oil, while upholding the appellants ' case as regards refined oil may be briefly stated thus: The exemption or deduction from the sale turnover under r. 18(2), is on its terms applicable only to the sale of the oil in the form in which it is when extracted 19 out of the kernel. When raw groundnut oil is converted into refined oil, there is no doubt processing, but this consists merely in removing from raw groundnut oil that constituent part of the raw oil which is not really oil. The elements removed in the refining process consist of free fatty acids, phosphotides and unsaponifiable matter. After the removal of this nonoleic matter therefore, the oil continues to be ground. nut oil and nothing more. The matter removed from the raw groundnut oil not being oil cannot be used, after separation, as oil or for any purpose for which oil could be used. In other words, the processing consists in the non oily content of the raw oil being separated and removed, rendering the oily content of the oil 100 per cent. For this reason refined oil continues to be groundnut oil within the meaning of rules 5(1)(k) and 18(2) notwithstanding that such oil does not possess the characteristic colour, or taste, odour, etc. of the raw groundnut oil. But in the case of hydrogenated oil which is prepared from refined oil by the process of passing hydrogen into heated oil in the presence of a catalyst (usually finely powdered nickel), two atoms of hydrogen are absorbed. A portion of the oleic acid which formed a good part of the content of the groundnut oil in its raw state is converted, by the absorption of the hydrogen atoms, into stearic acid and it is this which gives the characteristic appearance as well as the semi solid condition which it attains. In the language of the Chemist, an inter molecular or configurational chemical change takes place which results in the hardening of the oil. Though it continues to be the same edible fat that it was before the hardening, and its nutritional properties continue to be the same, it has acquired new properties in that the tendency to rancidity is greatly removed, is easier to keep and to transport. Both the Tribunal as well as the learned Judges of the High Court held that the hydrogenated oil (or Vanaspati) ceased to be groundnut oil by reason of the chemical changes which took place which resulted in the acquisition of new properties including the loss of its fluidity. In other words, 20 they held that Vanaspati or hydrogenated oil was not " groundnut oil " but a product of groundnut oil, manufactured out of groundnut oil and therefore not entitled to the benefit of the deduction under r. 18(2). The arguments of Mr. Visvanatha Sastri for the appellants were briefly two: (1) The reasons behind the rules 5(k) & 18(2) which were designed to afford relief against what would amount practically to double taxation of the same assessee both when he purchased and when he sold the goods, required that the appellants ' claim should be allowed. (2) Hydrogenated groundnut oil was no less groundnut oil than either refined or even unrefined oil. The fact that the quality of the oil had been improved does not negative its continuing to be oil and the materials before the departmental authorities and the Court established that it continued to be oil and was nothing more. The argument based on the reason of the rule can. not carry the appellant far, since in the present case it is an exemption from tax which he invokes and of which he seeks the benefit. If the words of the rule are insufficient to cover the case, the reason behind the rule cannot be availed of to obtain the relief Nor could it be said to be a case of double taxation of the same goods at the purchase and sale points which is forbidden by section 3(5) of the Act. If the view adopted by the learned Judges of the High Court that hydrogenated groundnut oil is not " groundnut oil " but a product of groundnut oil were correct, learned Coun. sel cannot urge that he would still be entitled to the deduction for which provision is made in r. 18(2). Consequently it is the second of the submissions alone which really requires to be examined. In doing so it would be convenient to consider the reasoning on the basis of which the view ' that hydrogenated oil was not " groundnut oil " was sought to be sustained before us. The learned Advocate General of Andhra Pradesh who appeared for the respondent Commercial Tax Officer sought to support the decision of the High Court by two lines of reasoning. The first was that 21 the exemption applied only to the sale of the oil as it emerged from the presser and that any processing of the oil including refining, in order to remove even ' the impurities and free fatty acids, took it out of the category of " groundnut oil " as used in the rule. In support of this submission he referred us to the Table of Conversion of groundnuts and kernel into oil set out in the Explanation to r. 18(2), extracted earlier, and submitted that the 40 lb. of oil for every 100 lb. of kernel was based on the yield of raw groundnut oil and that this was an indication that nothing other than raw groundnut oil was intended to be covered by the expression " groundnut oil " in the rule. We must however point out that this last submission has no factual basis to support it. It is not known whether the proportion of 40 lb. of oil for every 100 lb. of kernel represents the average weight of oil extractable from different varieties of groundnut kernels or is the average of the different types of oils which may be produced out of different varieties of kernels. In the absence of any definite data in this regard it is impossible to accept the argument that the Table of Conversion justifies any particular construction of what was meant by " groundnut oil " in the main part of the rule. Nor is the learned Advocate General well founded in his submission that the processing of the oil in order to render it more acceptable to the customer by improving its quality would render the oil a commodity other than " groundnut oil " within the meaning of the rule, For instance, if the oil as extracted were kept still in a vessel for a period of time, the sediment normally present in the oil would settle at the bottom leaving a clear liquid to be drawn out. The learned Advocate General cannot go so far as to say, that if this physical process was gone through, the oil that was decanted from the sediment which it contained when it issues out of the expresser, ceased to be di groundnut oil " for the purposes of the rule. If the removal of impurities by a process of sedimentation does not render groundnut oil any the less so, it follows that even the process of refining, by the 22 application of chemical methods for removing impuri ties in the oil, would not detract from the resulting oil being " groundnut oil " for the purpose of the rule. It may be mentioned that processes have been discovered by which even on extraction from the oil mill, the oil issues without any trace of free fatty acids. It could hardly be contended that if such processes were adopted what comes out of the expresser is not groundnut oil. The submission of the learned Advocate General based on a contention that the Tribunal and the learned Judges of the High Court erred in holding that even refined groundnut oil was " groundnut oil " for the purpose of the rule, must be rejected. The next question is whether if beyond the process of refinement of the oil, the oil is hardened, again by the use of chemical processes it is rendered any the less groundnut oil ". In regard to this, the learned Advocate General first laid stress on the fact that while normally oil was a viscous liquid, the hydrogenated oil was semi solid and that this change in its physical state was itself indicative of a substantial modification of the identity of the substance. We are unable to accept this argument. No doubt, several oils are normally viscous fluids, but they do harden and assume semi solid condition on the lowering of the temperature. Though groundnut oil is, at normal temperature, a viscous liquid, it assumes a semi solid condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid state is an essential characteristic of a vegetable oil and that if the oil is not liquid, it ceases to be oil. Mowrah oil and Dhup oil are instances where vegetable oils assume a semi solid state even at normal temperatures. Neither these, nor cocoanut oil which hardens naturally on even a slight fall in temperature, could be denied the name of oils because of their not being liquid. Other fats like ghee are instances where the physical state does not determine the identity of the commodity. The next submission of the learned Advocate General was that in the course of hydrogenation the oil 23 absorbed two atoms of hydrogen and that there was an inter molecular change in the content of the substance. This however is not decisive of the matter. The question that has still to be answered is whether hydrogenated oil continues even after the change to be " groundnut oil ". If it is, it would be entitled to the benefit of the deduction from the turnover, or to put it slightly differently, the benefit of, the deduction from the turnover cannot be denied, unless the hydrogenated groundnut oil has ceased to be " groundnut oil ". To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnut and secondly the commodity must be " oil ". That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids or rather a glyceride of a mixture of fatty acids principally oleic, linoleic, stearic and palmitic, the proportion of the particular fat varying in the case of the oil from different oil seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change has occurred and it remains an oil a glyceride of fatty acids that it was when it issued out of the press. In our opinion, the learned Judges of the High Court laid an undue emphasis on the addition by way of the absorption of the hydrogen atoms in the process of hardening and on the consequent inter molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving its quality and utility. But neither mere absorption of other matter, nor inter molecular changes necessarily affect the identity of a substance as ordinarily understood. Thus for instance there are absorptions of matter and inter molecular changes which deteriorate the quality or utility of the oil and it might be interesting to see if such additions and alterations could be taken to 24 render it any the less " oil ". Groundnut oil when it issues out of the expresser normally contains a large proportion of unsaturated fatty acids oleic and linoleic which with other fatty acids which are saturated are in combination with glycerine to form the glyceride which is oil. The unsaturated fatty acids are unstable, i. e., they are subject to oxidative changes. When raw oil is exposed to air particularly if humid and warm, i.e., in a climate such as obtains in Madras, oxygen from the atmosphere is gradually absorbed by the unsaturated acid to form an unstable peroxide (in other words the change involves the addition of two atoms of oxygen) which in its turn decomposes breaking up into aldehydes. It is this oxidative change and particularly the conversion into aldehydes that is believed to be responsible for the sharp unpleasant odour, and the characteristic taste of rancid oil. If nothing were done to retard the process the rancidity may increase to such extent as to render it unfit for human consumption. The change here is both additive and inter molecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil. Both the Tribunal as well as the High Court have pointed out that except for its keeping quality without rancidity and ease of packing and transport without leakage, hydrogenated oil serves the same purpose as a cooking medium and has identical food value as refined groundnut oil. There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be used, nor is there any use to which the hydrogenated oil could be put for which the raw oil could not be used. Similarly we consider that hydrogenated oil still continues to be " groundnut oil " notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for 25 those who desire to consume groundnut oil. In our opinion the assessee company was entitled to the,, benefit of the deduction of the purchase price of the kernel or groundnut, under r. 18(2), which went into the manufacture of the hydrogenated groundnut oil from the sale turnover of such oil. One other point which is involved in the appeal relates to the claim of the appellant to a deduction in respect of the freight charges included in the price of the commodity. Under r. 5(1)(g) of the Turnover and Assessment Rules, in determining the net turnover of a dealer he is entitled to have deducted from his gross turnover " all amounts falling under the following two heads, when specified and charged for by the dealer separately, without excluding them in the price of the goods sold : (i) freight; (ii). . . . The appellant claimed exemption on a sum of Rs. 3,88,377 13 3 on the ground that it represented the freight in respect of the goods sold by the appellant asserting that they had been charged for separately. The assessing officer rejected the claim and this rejection was upheld by the departmental authorities and by the High Court in Revision. It would be seen that in order to claim the benefit of this exemption the freight should (1) have been specified and charged for by the dealer separately, and (ii) the same should not have been included in the price of the goods sold. The learned Judges of the High Court held that neither of these conditions was satisfied by the bills produced by the appellant. We consider, the decision of the High Court on this point was correct. In the specimen bill which the learned Counsel for the appellants has placed before us, after setting out the quantity sold by weight (23,760 lb.) the price is specified as 15 annas 9 pies per lb. and the total amount of the price is determined at Rs. 23 388 12 0. From this the railway freight of Rs. 1,439 12 0 is deducted and the balance is shown as the sum on which sales tax has been computed. 26 From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of r. 5(1)(g) which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold. The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight. The result therefore is that the appeal is allowed in part and the order of the High Court in so far as it denied to the appellant the benefit of the deduction in the turnover provided by r. 18(2) of the Turnover and Assessment Rules is set aside. In view of the appellant having succeeded only in part, there will be no order as to costs in this appeal. Appeal allowed in part.

The appellant purchased groundnuts out of which it manu factured groundnut oil ; it also refined the oil and hydrogenated it converting it into Vanaspati. It sold the oil in all the three states. Under the Madras General Sales Tax Act, 1939, and the Turnover and Assessment Rules, for determining the taxable turnover the appellant was entitled to deduct the purchase price of the groundnuts from the proceeds of the sale of all groundnut oil. The High Court held that the appellant was entitled to the deduction in respect of the sales of unrefined and refined groundnut oil but not in respect of the sales of hydrogenated oil on the ground that Vanaspati was not " groundnut oil " but a product of groundnut oil. Held, that the appellant was entitled to the deduction in respect of the sales of hydrogenated groundnut oil also. The hydrogenated groundnut oil continued to be " groundnut oil " notwithstanding the processing which was merely for the purpose of rendering the oil more stable. To be groundnut oil two conditions had to be satisfied it must be from groundnut and it must be " oil ". The hydrogenated oil was from groundnut and in its essential nature it remained an oil. It continued to be used for the same purposes as groundnut oil which had not undergone the process. A liquid state was not an essential characteristic of a vegetable oil ; the mere fact that hydrogenation made it semisolid did not alter its character as an oil.

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Appeal No. 271 of 1956. Appeal from the judgment and order dated August 2, 1955, of the former Nagpur High Court in Misc. Petition No. 249 of 1955. M. Adhikari, Advocate General for the State of Madhya Pradesh, B. K. B. Naidu and I. N. Shroff, for the appellants. R. Patnaik, for the respondent. October 3. This appeal with a certificate issued by the Nagpur High Court under article 132(1) of the Constitution raises a question about the validity of the Central Provinces and Berar Goondas 972 Act X of 1946 as amended by Madhya Pradesh Act XLIX of 1950. It appears that against the respondent Baldeo Prasad the State of Madhya Pradesh, appellant 1, passed an order on June 16, 1955, under section 4 A of the Act. Subsequently the District Magistrate, Chhindwara, appellant 2, passed another order dated June 22, 1955, communicating to the respondent the first externment order passed against him. The respondent then filed 'a writ petition in the High Court (No. 249 of 1955) under article 226 challenging the validity of the said orders, inter alia, on the ground that the Act under which the said orders were passed was itself ultra vires. The appellants disputed the respondent 's contention about the vires of the Act. The High Court, however, has upheld the respondent 's plea and has held that sections 4 and 4 A of the Act are invalid, and since the two sections contain the main operative provisions of the Act, according to the High Court, the whole Act became invalid. It is the correctness of this conclusion which is challenged before us by the appellants. It would be convenient at this stage to refer briefly to the scheme of the Act and its relevant provisions. The Act was passed in 1946 and came into force on September 7, 1946. It was subsequently amended and the amended Act came into force on November 24, 1950. As the preamble shows the Act was passed because it was thought expedient to provide for the control of goondas and for their removal in certain circumstances from one place to another. Section 2 defines a goonda as meaning a hooligan, rough or a vagabond and as including a, person who is dangerous to public peace or tranquillity. It would thus be seen that the definition of the word " goonda " is an inclusive definition, and it includes even persons who may not be hooligans, roughs or vagabonds if they are otherwise dangerous to public peace or tranquillity. Section 3(1) empowers the State Government to issue a proclamation that disturbed conditions exist or are likely to arise in the areas specified in such proclama tions if the State Government is satisfied that public peace or tranquillity in any area is disturbed or is 973 likely to be disturbed. The area in respect of which a proclamation is thus issued is described in the Act as the proclaimed area. Section 3(2) limits the operation of the proclamation to three months from its date and provides that it may be renewed by notification from time to time for a period of three months at a time. The first step to be taken in enforcing the operative provisions of the Act thus is that a proclamation has to be issued specifying the proclaimed areas, and the limitation on the power of the State Government to issue such a proclamation is that the proclamation can be issued only after it is satisfied as required by section 3(1), and its life will not be longer than three months at a stretch. Section 4 reads thus: " 4(1). During the period the proclamation of emergency issued or renewed under Section 3 is in operation, the District Magistrate having jurisdiction in or in any part of the proclaimed area, if satisfied that there are reasonable grounds for believing that the presence, movements or acts of any goonda in the proclaimed area is prejudicial to the interests of the general public or that a reasonable suspicion exists that any goonda is committing or is likely to commit acts calculated to disturb the public peace or tranquillity may make an order (i) directing such goonda to notify his residence and any change of or absence from such residence during the term specified and to report his movements in such manner and to such authority as may be specified ; (ii) directing that he shall not remain in the proclaimed area within his jurisdiction or any specified part thereof and shall not enter such area; and (iii) directing him so to conduct himself during the period specified as the District Magistrate shall deem necessary in the interests of public order: Provided that no order under clause (ii) which directs the exclusion of any goonda from a place in which he ordinarily resides shall be made except with the previous approval of the State Government: Provided further that no such order shall be 124 974 made directing exclusion of any goonda from the district in which he ordinarily resides. (2) No order under sub section (1) shall be made by a District Magistrate in respect of a goonda without giving to such goonda a copy of the grounds on which the order is proposed to be made and without giving an opportunity to be heard : Provided that where the District Magistrate is of opinion that it is necessary to make an order without any delay he may for reasons to be recorded in writing, make the order and shall, as soon as may be within ten days from the date on which the order is served on the goonda concerned, give such goonda a copy of the grounds and an opportunity to be heard. (3) After hearing the goonda, the District Magistrate may cancel or modify the order as he thinks fit. " This section confers on the District Magistrate jurisdiction to make an order against a goonda if there are reasonable grounds for believing that his presence, movements or acts in any proclaimed area is likely to be prejudicial to the interests of the general public, or it there is a reasonable suspicion that a goonda is committing or is likely to commit prejudicial acts. Sub clauses (i), (ii) and (iii) indicate the nature of the directions and the extent of the restrictions which can be placed upon a goonda by an order passed under section 4. Sub section (2) requires the District Magistrate to give the goonda a copy of the grounds on which an order is proposed to be made, and to give him an opportunity to be heard why such an order should not be passed against him. The proviso to the section deals with an emergency which needs immediate action. After hearing the goonda the District Magistrate may under sub section (3) either cancel or modify the order as he thinks fit. Section 4 A reads thus: " (1) Where the District Magistrate considers that with a view to maintain the peace and tranquillity of the proclaimed area in his district it is necessary to direct a goonda to remove himself outside the district in which the proclaimed area is comprised or 975 to require him to reside or remain in any place or within any area outside such district, the District Magistrate may, after giving the goonda an opportunity as required by sub section (2) of Section 4 forward to the State Government a report together with connected papers with a recommendation in that behalf (2) On receipt of such report the State Government may, if it is satisfied that the recommendation made by the District Magistrate is in the interests of the general public, make an order directing such goonda (a) that except in so far as he may be permitted by the provisions of the order, or by such authority or person as may be specified therein, he shall not remain in any such area or place in Madhya Pradesh as may be specified in the order; (b) to reside or remain in such place or within such area in Madhya Pradesh as may be specified in the order and if he is not already there to proceed to that place or area within such time as may by specified in the order : Provided that no order shall be made directing the exclusion or removal from the State of any person ordinarily resident in the State." Thus an order more stringent in character can be passed under this section. The safeguard provided by the section, however, is that the District Magistrate is required to give the goonda an opportunity to be heard and further required to make a report to the State Government and forward to the State Government papers connected with the recommendation which the District Magistrate makes. Sub section (2) of section 4 A then requires the State Government to consider the matter and empowers it to make an order either under cl. (a) or cl. (b) of the said sub section. The proviso to this section lays down that Do order shall be made by which the goonda would be excluded or removed from the State where he ordinarily resides. The last section to which reference may be made is section 6. It gives a goonda aggrieved by an order made against him, inter alia, under section 4 or section 4 A to make a representation to the State Government within the 976 time prescribed, and it requires the State Government to consider the representation and make such orders thereon as it may deem fit. That in brief is the scheme of the Act. At this stage it would be material to state the relevant facts leading to the writ petition filed by the respondent. Appellant 1 issued a proclamation under section 3 on August 10, 1954, specifying the limits of Police Stations Parasia and Jamai and Chhindwara Town as proclaimed area. This proclamation was renewed in November, 1954 and February, 1955. Thereafter on May 9, 1955, appellant 1 issued afresh proclamation specifying the whole of the Chhindwara District as the proclaimed area. This proclamation was to remain in force till August 8, 1955. Whilst the second proclamation was in force the second appellant received reports from the District Superintendent of Police, Chhindwara, against the respondent, and he ordered the issue of a notice to him to show cause why action should not be taken against him under section 4; this notice required the respondent to appear before the second appellant on April 29, 1955. The respondent, though served, did not appear before the second appellant. Thereupon the second appellant sent a report to appellant 1 on April 30, 1955, and submitted the case against him with a draft order for the approval of the said appellant under the first pro viso to section 4(1). In the meantime the third notification was issued by appellant 1. The second appellant then issued a fresh notice against the respondent under section 4 on May 24, 1955. The respondent appeared in person on May 30, 1955, and was given time to file his written statement which he did on June 4, 1955. The case was then fixed for hearing on June 22, 1955. Meanwhile the State Government passed an order on June 16, 1955, directing that the respondent shall, except in so far as he may be permitted by the second appellant from time to time, not remain in any place in Chhindwara District. This order was to remain in force until August 8, 1955. On June 22, 1955, the second appellant communicated the said order to the respondent and directed him to leave the District 977 before 10 a. m. on June 23, 1955. The respondent appealed to appellant 1 to cancel the order passed against him. The first appellant treated the appeal as a representation made by the respondent under section 6 and rejected it on July 9, 1955. A day before this order was passed the respondent filed his writ petition in the High Court from which the present appeal, arises. The respondent challenged the validity of the Act on the ground that it invades his fundamental rights under article 19(1)(d) and (e) and as such it becomes invalid having regard to the provisions of article 13 of the Constitution. This plea has been upheld by the High Court. On behalf of the appellants the learned Advocate General of Madhya Pradesh contends that the High Court was in error in coming to the conclusion that the restrictions imposed by the Act did not attract the provisions of article 19(5). The legislative competence of the State Legislature to pass the Act cannot be disputed. The Act relates to public order which was Entry I in List II of the Seventh Schedule to the Constitution Act of 1935. There can also be no doubt that the State Legislature would be competent to pass an act protecting the interests of the general public against the commission of prejudicial acts which disturb public peace and order. Section 3 of the Act indicates that it is only where the public peace or tranquillity is threatened in any 'given area of the State that the State Government is authorised to issue a proclamation, and as we have already noticed, it is in respect of such proclaimed areas and for the limited duration prescribed by section 3(2) that orders can be passed against goondas whose prejudicial activities add to the disturbance in the proclaimed areas. Therefore, broadly stated the purpose of the Act is to safeguard individual rights and protect innocent and peaceful citizens against the prejudicial activities of goondas, and in that sense the Act may prima facie claim the benefit of article 19(5). This position is not seriously disputed. The argument against the validity of the Act is, however, based on one serious infirmity in section 4 and 978 s.4 A which contain the operative provisions of the Act. This infirmity is common to both the sections, and so what we will say about section 4 will apply with equal force to section 4 A. It is clear that section 4 contemplates preventive action being taken provided two conditions are satisfied ; first, that the presence, movements or acts of any person sought to be proceeded against should appear to the District Magis trate to be prejudicial to the interests of the general public, or that a reasonable suspicion should exist that such a person is committing or is likely to commit acts calculated to disturb public peace or tranquillity ; and second that the person concerned must be a goonda. It would thus be clear that it is only where prejudicial acts can be attributed to a goonda that section 4 can come into operation. In other words, the satisfaction of the first condition alone would not be enough ; both the conditions must be satisfied before action can be taken against any person. That clearly means that the primary condition precedent for taking action under section 4 is that the person against whom action is proposed to be taken is a goonda; and it is precisely in regard to this condition that the section suffers from a serious infirmity. The section does not provide that the District Magistrate must first come to a decision that the person against whom he proposes to take action is a goonda, and gives him no guidance or assistance in the said matter. It is true that under section 4 a goonda is entitled to have an opportunity to be heard after he is given a copy of the grounds on which the order is proposed to be made against him; but there is no doubt that all that the goonda is entitled to show in response to the notice is to challenge the correctness of the grounds alleged against him. The enquiry does not contemplate an investigation into the question as to whether a person is a goonda or not. The position, therefore, is that the District Magistrate can proceed against a person without being required to come to a formal decision as to whether the said person is a goonda or not; and in any event no opportunity is intended to be given to the person to show 979 that he is not a goonda. The failure of the section to make a provision in that behalf undoubtedly constitutes a serious infirmity in its scheme. Incidentally it would also be relevant to point out that the definition of the word " goonda " affords no assistance in deciding which citizen can be put under that category. It is an inclusive definition and it does not indicate which tests have to be applied in deciding whether a person falls in the first part of the definition. Recourse to the dictionary meaning of the word would hardly be of any assistance in this matter. After all it must be borne in mind that the Act authorises the District Magistrate to deprive a citizen of his fundamental right under article 19(1)(d) and (e), and though the object of the Act and its purpose would undoubtedly attract the provisions of article 19(5) care must always be taken in passing such acts that they provide sufficient safeguards against casual, capri cious or even malicious exercise of the powers conferred by them. It is well known that the relevant provisions of the Act are initially put in motion against a person at a lower level than the District Magistrate, and so it is always necessary that sufficient safeguards should be provided by the Act to protect the fundamental rights of innocent citizens and to save them from unnecessary harassment. That is why we think the definition of the word " goonda " should have given necessary assistance to the District Magistrate in deciding whether a particular citizen falls under the category of goonda or not; that is another infirmity in the Act. As we have already pointed out section 4 A suffers from the same infirmities as section 4. Having regard to the two infirmities in sections 4, 4 A respectively we do not think it would be possible to accede to the argument of the learned Advocate General that the operative portion of the Act can fall under article 19(5) of the Constitution. The person against whom action can be taken under the Act is not entitled to know the source of the information received by the District Magistrate; be is only told about his prejudicial activities on which the satisfaction of the District Magistrate is based that action 980 should be taken against him under section 4 or section 4 A. In such a case it is absolutely essential that the Act must clearly indicate by a proper definition or otherwise when and under what circumstances a person can be called a goonda, and it must impose an obligation on the District Magistrate to apply his mind to the question as to whether the person against whom complaints are received is such a goonda or not. It has been urged before us that such an obligation is implicit in sections 4 and 4 A. We are, however, not impressed by this argument. Where a statute empowers the specified authorities to take preventive action against the citizens it is essential that it should expressly make it a part of the duty of the said authorities to satisfy themselves about the existence of what the statute regards as conditions precedent to the exercise of the said authority. If the statute is silent in respect of one of such conditions precedent it undoubtedly constitutes a serious infirmity which would inevitably take it out of the provisions of article 19(5). The result of this infirmity is that it has left to the unguided and unfettered discretion of the authority concerned to treat any citizen as a goonda. In other words, the restrictions which it allows to be imposed on the exercise of the fundamental right of a citizen guaranteed by article 19(1)(d) and (e) must in the circumstances be held to be unreasonable. That is the view taken by the High Court and we see no reason to differ from it. In this connection we may refer to the corresponding Bombay statute the material provisions of which have been examined and upheld by this Court. Section 27 of the City of Bombay Police Act, 1902 (4 of 1902), which provides for the dispersal of gangs and bodies of persons has been upheld by this Court in Gurbachan Singh vs The State of Bombay (1) whereas section 56 and section 57 of the subsequent Bombay Police Act, 1951 (22 of 1951), have been confirmed respectively in Bhagubhai Dullabhabhai Bhandari vs The District Magistrate, Thana (2) and Hari Khemu Gawali vs The Deputy Commissioner of Police, Bombay (3). It would be (1) ; (2) ; (3) ; 981 noticed that the relevant provisions in the latter Act the validity of which has been upheld by this Court indicate how the mischief apprehended from the activities of undesirable characters can be effectively checked by making clear and specific provisions in that behalf, and how even in meeting the challenge to public peace and order sufficient safeguards can be included in the statute for the protection of innocent ' citizens. It is not clear whether the opportunity to be heard which is provided for by section 4(2) would include an opportunity to the person concerned to lead evidence. Such an opportunity has, however, been provided by section 59(1) of the Bombay Act of 1951. As we have already mentioned there can be no doubt that the purpose and object of the Act are above reproach and that it is the duty of the State Legislature to ensure that public peace and tranquillity is not disturbed by the prejudicial activities of criminals and undesirable characters in society. That, however, cannot help the appellants ' case because, as we have indicated, the infirmities in the operative sections of the Act are so serious that it would be impossible to hold that the Act is saved under article 19(5) of the Constitution. There is no doubt that if the operative sections are invalid the whole Act must fall. In the result the order passed by the High Court is confirmed and the appeal is dismissed with costs. Appeal dismissed.

By an order passed under section 4 A of the Central Provinces and Berar Goondas Act, 1946 (X of 1946), as amended by the Madhya Pradesh Act XLIX of 950, the State of Madhya Pradesh directed the respondent to leave the district of Chhindwara, which had been specified as a proclaimed area under the Act, and the District Magistrate by another order communicated the same to the respondent. The respondent challenged the said orders under article 226 of the Constitution on the ground that the Act violated his fundamental rights under article i9(i)(d) and (e) of the Constitution and was, therefore, invalidated by article 13 Of the Constitution. The High Court held that sections 4 and 4 A of the impugned Act were invalid and since they were the 971 main operative provisions of the Act, the whole Act was in valid. Held, that when a statute authorises preventive action against the citizens, it is essential that it must expressly provide that the specified authorities should satisfy themselves that the conditions precedent laid down by the statute existed before they acted thereunder. If the statute fails to do so in respect of any such condition precedent, that is an infirmity sufficient to take the statute out of article 19(5) Of the Constitution. Although there can be no doubt that sections 4 and 4 A of the impugned Act clearly contemplated as the primary condition precedent to any action thereunder that the person sought to be proceeded against must be a goonda, they fail to provide that the District Magistrate should first find that the person sought to be proceeded against was a goonda or provide any guidance whatsoever in that regard or afford any opportunity to the person proceeded against to show that he was not a goonda. The definition of a goonda laid down by the Act, which is of an inclusive character, indicated no tests for deciding whether the person fell within the first part of the definition. Gurbachan Singh vs The State of Bombay, ; , Bhagubhai Dullabhabhai Bhandari vs The District ' Magistrate, Thana, ; and Hari Khenu Gawali vs The Deputy Commissioner of Police, Bombay, ; , referred to. Although the object of the impugned Act was beyond reproach and might well attract article 19(5) of the Constitution, since the Act itself failed to provide sufficient safeguards for the protection of the fundamental rights and the operative sections were thus rendered invalid, the entire Act must fail.

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Appeal No. 387 of 1960. Appeal by special leave from the judgment and order dated February 12, 1960, of the Andhra Pradesh High Court, in Writ Petition No. 5 of 1960. P. A. Choudhuri and K. R. Choudhuri, for the appellants. P. Ram Reddy, for respondents Nos. 1, 2 and 6 to 11. 1960. November 7. The Judgment of Gajendragadkar, Subha Rao, Wanchoo and,. Mudholkar, JJ., 38 298 was delivered by Subba Rao, J. Sarkar, J., delivered a separate judgment. SUBBA RAO J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Hyderabad dismissing the petition filed by the appellants under article 226 of the Constitution to issue a writ of quo warranto against respondents 1 to 10 directing them to exhibit an information as to the authority under which they are functioning as members of the Vicarabad Municipal Committee and to restrain them from selling certain plots of land belonging to the Municipality to third parties. Vica rabad was originally situate in the Part B State of Hyderabad and is now in the State of Andhra Pradesh. The Municipal Committee of Vicarabad was constituted under the Hyderabad Municipal and Town Committees Act (XXVII of 1951). In the year 1953 respondents 1 to 10 were elected, and five others, who are not parties before us, were nominated, to that Committee. On November 27, 1953, the Rajpramukh of the State of Hyderabad published a notification under the relevant Acts in the Hyderabad Government Gazette Extraordinary notifying the above persons as members of the said Committee. Presumably with a view to democratize the local institutions in that part of the country and to bring them on a par with those prevailing in the neighbouring States, the Hyderabad District Municipalities Act, 1956 (XVIII of 1956), (hereinafter referred to as the Act), was passed by the Hyderabad _ Legislature and it received the assent of the President on August 9, 1956. Under section 320 of the Act the Hyderabad Municipal and Town Committees Act, 1951 (XXVII of 1951) and other connected Acts were repealed. As a transitory measure, under the same section any Committee constituted under the enactment so repealed was deemed to have been constituted under the Act and the members of the said Committee were to continue to hold office till the first meeting of the Committee was called under section 35 of the Act. Under that provision respondents 1 to 10 and the five nominated members continued to function as members 299 of the Municipal Committee. In or about the year 1958 the said Committee acquired land measuring acres 15 7 guntas described as " Varad Raja Omar Bagh " for Rs. 18,000 for the purpose of establishing a grain market (gunj). For one reason or other, the Municipal Committee was not in a position to construct the grain market and run it departmentally. The Committee, therefore, after taking the permission of the Government, resolved by a requisite majority to sell the said land to third parties with a condition that the vendee or vendees should construct a building or buildings for running a grain market. There after the Committee sold the land in different plots to third parties ; but the sale deeds were not executed in view of the interim order made in the writ petition by the High Court and subsequently in the appeal by this Court. In the writ petition the appellants contended, inter alia, that the respondents ceased to be members of the Municipal Committee on the expiry of three years from the date the new Act came into force and that, therefore, they had no right to sell the land, and that, in any view, the sale made by the Committee of the property acquired for the purpose of constructing a market was ultra vires the provisions of the Act. The respondents contested the petition on various grounds. The learned Judges of the High Court dismissed the petition with costs for the following reasons: 1. The old Committee will continue to function till a new Committee comes into existence. " Section 76 contemplates that property vested in it under section 72(f), 73 and 74 should be transferred only to Government. Here, the transfer is not in favour of the Government. That apart we are told that in this case sanction of the Government was obtained at every stage. It cannot be predicated that the purpose for which the properties are being disposed of is not for a, public purpose. It is not disputed that the properties are being sold only to persons who are required to build grain market ". The act now opposed is not in any way in conflict with the provisions of sections 244, 245 and 247. 300 4. " It looks to us that the petitioners lack in bona fides and that this petition is not conceived in the interests of the public ". The present appeal, as aforesaid, was filed by special leave granted by this Court. Mr. P. A. Chowdury, learned counsel for the appellants, canvassed the correctness of the findings of the High Court. His first argument may be summarized thus: Under section 320 of the Act any Committee constituted under the repealed enactment shall be deemed to have been constituted under the Act and the members of the said Committee shall continue to hold office till the first meeting of the Committee is called under section 35 of the Act. Under section 35 of the Act, the first meeting of the Committee shall not be held on a date prior to the date on which the term of the outgoing members expires under section 34. Section 34 of the Act provides that the members shall hold office for a term of three years. Therefore, the term of the members of the Committee deemed to have been constituted under section 320 is three years from the date on which the Act came into force. If the term fixed Under section 34 does not apply to the members of the said Committee, the result will be that the said members will continue to hold office indefinitely, for the first meeting of the Committee could not be legally convened under the Act as section 16 which enables the Collector to do so imposes a duty on him to hold a general election within three months before the expiry of the term of office of the members of the Committee as specified in section 34, and, as no definite term has been prescribed for the members of the Committee under section 320, the election machinery fails, with the result that the members of the " deemed " Committee would continue to be members of the said Committee indefinitely. On this inter pretation learned counsel contends that the section would be void for the following reasons: (1) section 320(1)(a) of the Act would be ultra vires the powers of the State Legislature under article 246 of the Constitution, read with entry 5, List II, VII Schedule; (2) the said section deprives the appellants of the right to equality and protection of the laws guaranteed under article 14 301 of the Constitution; (3) section 320 would be void also as inconsistent with the entire scheme of the provisions of the Act. Let us first test the validity of the construction of section 320 of the Act suggested by the learned counsel. The material part of section 320 reads: " (1) The Hyderabad Municipal and Town Committees Act, 1951, (XXVII of 1951). . . . (is) hereby repealed ; provided that: (a) any Committee constituted under the enactment so repealed (hereinafter referred to in this section as the said Committee) shall be deemed to have been constituted under this Act, and Members of the said Committee shall continue to hold office till the first meeting of the Committee is called under section 35;". The terms of the section are clear and do not lend any scope for argument. The section makes a distinction between the " said" Committee and the Committee elected under the. Act and says, " Members of the said Committee shall continue to hold office till the first meeting of the Committee is called under section 35 ". Though the word " Committee" is defined in section 2(5) to mean a Municipal or Town Committee established or deemed to be established under the Act, that definition must give way if there is anything repugnant in the subject or context. As the section makes a clear distinction between the " said " Committee and the Committee elected under the Act, in the context, the Committee in section 320 cannot mean the Committee elected under the Act. The term fixed for the members of the Committee constituted under the Act cannot apply to the members of the Committee deemed to have been constituted under the Act. Section 32 which provides for the culminating stage of the process of election under the Act says that the names of all members finally elected to any Committee shall be forthwith published in the official Gazette. Section 34 prescribes the term of office of the members so elected. Under it, " except as is otherwise provided in this Act, members shall hold office for a term of three years." Section 320(1)(a) provides a different term for the 302 members of the Committee deemed to have been constituted under the Act. Thereunder, the term is fixed not by any number of years but by the happening of an event. The Committee constituted under section 320 clearly falls under the exception. But it is suggested that the exception refers only to section 28 whereunder a member of a, Committee ceases to be one by a supervening disqualification. Firstly, this section does not fix a term but only imposes a disqualification on the basis of a term fixed under section 34; secondly, assuming that the said section also fixes a term, the exception may as well cover both the deviations from the normal rule. That apart, sub section (2) of section 34 dispels any doubt that may arise on the construction of sub section (1) of the section. Under sub section (2), the term of office of such members shall be deemed to commence on the date of the first meeting called by the Collector under section 35. Section 35 directs the Collector to call a meeting after giving at least five clear days notice within thirty days from the date of the publication of the names of members under section 32. This provision clearly indicates that the members of the Committee mentioned in section 34 are only the members elected under the Act and not members of tile Committee deemed to have been elected under the Act, for, in the case of the latter Committee, no publication under section 32 is provided for and therefore the provisions of section 35 cannot apply to them. It is, therefore, manifest that the term prescribed in section 34 cannot apply to a member of the deemed " Committee. Let us now see whether this interpretation would necessarily lead us to hold that the members of the " deemed " Committee under section 320(1)(a) would have an indefinite duration. This result, it is suggested, would flow from a correct interpretation of the relevant provisions of section 16 of the Act. The judgment of the High Court does not disclose that any argument was addressed before that Court on the basis of section 16 of the Act. But we allowed the learned counsel to raise the point as in effect it is only a link in the chain of his argument to persuade us to hold in his favour on the construction of section 320. 303 Before we consider this argument in some detail, it will be convenient at this stage to notice some of the well established rules of Construction which would help us to steer clear of the complications created by the Act. Maxwell " On the Interpretation of Statutes", 10th Edn., says at p. 7 thus: ". . . if the choice is between two inter pretations, the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility and should rather accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result. " It is said in Craies on Statute Law, 5th Edn., at p. 82 Manifest absurdity or futility, palpable injustice, or absurd inconvenience or anomaly to be avoided. ') Lord Davey in Canada Sugar Refining Co. vs R. provides another useful guide of correct perspective to such a problem in the following words: " Every clause of a statute should be construed with reference to the context and the other clauses of the Act, so as, so far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject matter. " To appreciate the problem presented and to give an adequate answer to the same, it would be necessary and convenient to notice the scheme of the Act as reflected in the relevant sections, namely, sections 16, 17, 18, 20, 32, 34 and 320. The said scheme of the Act may be stated thus: Under the Act, there are general elections and elections to casual vacancies. The general elections may be in regard to the first election after the Act came into force or to the subsequent elections under the Act. Section 5 imposes a duty on the Government to constitute a Municipal Committee for each town and notify the date when it shall come into existence. Section 17 enjoins on the Government to issue a notification calling upon all the constituencies to elect members in accordance (1) 304 with the provisions of the, Act on or before such date or dates as may be specified in the said notification. Section 16 imposes a duty upon the Collector to hold a general election in the manner prescribed within three months before the expiry of the term of office of the members of the Committee as specified in section 34 of the Act. Sub section (2) of section 16 provides for a bye election for filling up of a casual vacancy. Section 18 enables the Collector with the approval of the Government to designate or nominate a Returning Officer. Section 19 imposes a duty upon such an officer to do all such acts and things as may be necessary for effectually conducting the election in the manner provided by the Act and the rules made there under. Section 20 authorizes the Collector to issue a notification in the Official Gazette appointing the dates for making nominations, for the scrutiny of nominations, for the withdrawal of candidatures and for the holding of the poll. After the elections are held in the manner prescribed, the names of all the members finally elected to any Committee shall be published in the Official Gazette. Except as other,wise provided in the Act, section 34 prescribes the term of three years for a member so elected. As a transitory provision till such an election is held, section 320 says that the members of the previous Committee constituted under the earlier Act shall be deemed to be constituted under the Act and the members thereof shall hold office till the first meeting of the Committee is called under section 35 of the Act. It is clear from the aforesaid provisions that the Government notifies the dates calling upon all the constituencies to elect the members before such date or dates prescribed; the Collector holds the election and fixes the dates for the various stages of the process of election ; the Returning Officer appointed by the Collector does all acts and things necessary for effectually conducting the election. On the general scheme of the Act we do not see any legal objection to the Collector holding the first elections under the Act. The legal obstacle for such a course is sought to be raised on the wording of section 16(1). 305 Every general election requisite for the purpose of this Act shall be held by the Collector in the manner prescribed within three months before the expiry of the term of office of the members of the Committee as specified in section 34. " The argument is that the Collector 's power to hold a general election is confined to section 16(1) and, as in the case of the members of the Committee deemed to have been constituted under the Act the second limb of the section cannot apply and as the Collector 's power is limited by the second limb of the section, the Collector has no power to hold the first general election under the Act. If this interpretation be accepted, the Act would become a dead letter and the obvious intention of the Legislature would be defeated. Such a construction cannot be accepted except in cases of absolute intractability of the language used. While the Legislature repealed the earlier Act with an express intention to constitute new Committees on broad based democratic principles, by this interpretation the Committee under the old Act perpetuates itself indefinitely. In our view, section 16(1) does not have any such effect. Section 16(1) may be read along with the aforesaid other relevant provisions of the Act. If so read, it would be clear that it could not apply to the first election after the Act came into force, but should be confined to subsequent elections. So far as the first general election is concerned, there is a self contained and integrated machinery for holding the election without in any way calling in aid the provisions of section 16(1). Section 17 applies to all elections, that is, general as well as bye elections. It applies to the first general election as well as subsequent general elections. The proviso to that section says that for the purpose of holding elections under sub section (1) of section 16 no such notification shall be issued at any time earlier than four months before the expiry of the term of office of the members of the Committee as specified in section 34. The proviso can be given full meaning, for it provides only for a case covered by section 16(1) and, as the first general election is outside the scope of section 16(1), 39 306 it also falls outside the scope of the proviso to section 17. Under section 17, therefore, the Government, in respect of the first general election, calls upon all the constituencies to elect members before the date or dates fixed by it. Under section 20, the Collector fixes the dates for the various stages of the election. The Returning Officer does all the acts and things necessary for conducting the election and when the election process is completed, the names of the members elected are published. All these can be done without reference to section 16(1), for the Collector is also empowered under section 20 to hold the elections. In this view, there cannot be any legal difficulty for conducting the first election, after the Act came into force. If so, the term of the members of the Committee deemed to have been elected would come to an end when the first meeting of the Committee was called under section 35. The Legislature in enacting the law not only assumed but also expected that the Government would issue the requisite notification under section 17 of the Act within a reasonable time from the date when the Act came into force. The scheme of the Act should be judged on that basis; if so judged, the sections disclose an integrated scheme giving section 320 a transitory character. It is conceded by learned counsel that if section 320(1)(a) is constructed in the manner we do, the other points particularised above do not arise for consideration. Before leaving this part of the case we must observe that the difficulty is created not by the provisions of the Act but by the fact of the Government not proceeding under section 17 of the Act within a reasonable time from the date on which the Act came into force. This is a typical case of the legislative intention being obstructed or deflected by the inaction of the executive. Mr. Ram Reddy, learned counsel for the respondents, states that there are many good reasons why the Government did not implement the Act. There may be many such reasons, but when the Legislature made an Act in 1956, with a view to democratize municipal administration in that part of the country so as to bring it on a par with that obtaining in other 307 States, it is no answer to say that the Government had good reasons for not implementing the Act. If the Government had any such reasons, that might be an occasion for moving the Legislature to repeal the Act or to amend it. If the affected parties had filed a writ of mandamus in time, this situation could have been avoided ; but it was not done. We hope and trust that the Government would take immediate steps to hold elections to the Municipal Committee so that the body constituted as early as 1953, under a different Act could be replaced by an elected body under the Act. Even so, learned counsel for the appellants contends that the Municipal Committee had no power to sell the land acquired by it for constructing a market. To appreciate this contention it would be convenient to notice the relevant provisions of the Act. Under section 72(f) all land or other property transferred to the Committee by the Government or the District Board or acquired by gift, purchase, or otherwise for local purposes shall vest in and be under the control of the Committee. Section 73 enables the Government, in consultation with the Committee, to direct that any property, movable or immovable, which is vested in it, shall vest in such Committee. Section 74 empowers the Government on the request of the Committee to acquire any land for the purposes of the Act. Under section 76, the Committee may, with the sanction of the Government, transfer to the Government any property vested in the Committee under sections 72(f), 73 and 74, but not so as to affect any trust or public right subject to which the property is held. Learned counsel contends that, as the land was acquired by the Committee for the construction of a market, the Committee has power to transfer the same to the Government only subject to the conditions laid down in section 76, and that it has no power to sell the land to third parties. This argument ignores the express intention of section 77 of the Act. Section 77 says: " Subject to such exceptions as the Government may by general or special order direct, no Committee shall transfer any immovable property except in pursuance of a resolution passed at a meeting by a 308 majority of not less than two third of the whole number of members and in accordance with rules made under this Act, and no Committee shall transfer any property which has been vested in it by the Government except with the sanction of the Government: Provided that nothing in this section shall apply to leases of immovable property for a term not exceeding three years ". This section confers on the Committee an express power couched in a negative form. Negative words are clearly prohibitory and are ordinarily used as a legislative device to make a statute imperative. If the section is recast in an affirmative form, it reads to the effect that the Committee shall have power to transfer any immovable property, if the conditions laid down under the section are complied with. The conditions laid down are: (1) there shall be a resolution passed at a meeting by a majority of not less than two third of the whole number of members of the Committee; (2) it shall be in accordance with the rules made under the Act; (3) in the case of a property vested in it by the Government, the transfer can be made only with the sanction of the Government; and (4) the sale is not exempted by the Government, by general or special order, from the operation of section 77 of the Act. It is not disputed that the relevant conditions have been complied with in the present case. If so, the power of the Committee to alienate the property cannot be questioned. Learned counsel contends that the provisions of section 76 govern the situation and that section 77 may apply only to a property vested in the Committee under provisions other than those of sections 72(f), 73 and 74, and that further, if a wider interpretation was given to section 77, while under section 76 the transfer in favour of the Government would be subject to a trust or public right, under section 77 it would be free from it if it was transferred to a private party. The first objection has no force, as there are no sections other than sections 72, 73 and 74 whereunder the Government vests property in a Committee. The second objection also has no merits, for the trust or public right mentioned in section 76 309 does not appear to relate to the purpose for which the property is purchased but to the trust or public right existing over the property so alienated by the Committee. Further the proviso to section 77, which says, " nothing in this section shall apply to leases of immovable property for a term not exceeding three years ", indicates that the main section applies also to the property vested in the Committee under the previous section, for it exempts from the operation of the operative part of section 77 leases for a term not exceeding three years in respect of properties covered by the preceding section and other sections. This interpretation need not cause any apprehension that a Com mittee may squander away the municipal property, for section 77 is hedged in by four conditions and the conditions afford sufficient guarantee against improper and improvident alienations. In this context learned counsel for the appellants invoked the doctrine of law that an action of a statutory corporation may be ultra vires its powers without being illegal and also the principle that when a statute confers an express power, a power inconsistent with that expressly given cannot be implied. It is not necessary to consider all the decisions cited, as learned counsel for the respondents does not canvass the correctness of the said principles. It would, therefore, be sufficient to notice two of the decisions cited at the Bar. The decision in Elizabeth Dowager Baroness Wenlock vs The River Dee Company (1) is relied upon in support of the proposition that when a corporation is authorised to do an act subject to certain conditions, it must be deemed to have been prohibited to do the said act except in accordance with the provisions of that Act which confers the authority on it. Where by Act 14 & 15 Viet. a company was empowered to borrow at interest for the purposes of the concerned Acts, subject to certain conditions, it was held that the company was prohibited by the said Act from borrowing except in accordance with the provisions of that Act. Strong reliance is placed on the decision in Attorney General vs Fulham Corporation (1) (2) 310 There, in exercise of the powers conferred under the Baths and Wash houses Acts the Metropolitan Borough of Fulham propounded a scheme in substitution of an earlier one whereunder it installed a wash house to which persons resorted for washing their clothes bringing their own wash materials and utilised the facilities offered by the municipality on payment of the prescribed charges. Sarjant, J., held that the object of the legislation was to provide for persons who became customers facilities for doing their own washing, but the scheme provided for washing by the municipality itself and that, therefore, it was ultra vires the statute. In coming to that conclusion the learned Judge, after considering an earlier decision on the subject, applied the following principle to the facts of the case before him : " That recognises that in every case it is for a corporation of this kind to show that it has affirmatively an authority to do particular acts; but that in applying that principle, the rule is not to be applied too narrowly, and the corporation is entitled to do not only that which is expressly authorised but that which is reasonably incidental to or consequential upon that which is in terms authorized. " The principle so stated is unobjectionable. The correctness of these principles also need not be canvassed, for the construction we have placed on the provisions of the Act does not run counter to any of these principles. We have held that section 77 confers an express power on the Municipal Committee to sell property subject to the conditions mentioned therein. Therefore, the impugned sales are not ultra vires the powers of the Committee. In view of the said express power, no prohibition can be implied from the provisions of section 76. Learned counsel further contends that the statutory power can be exercised only for the purposes sanctioned by the statute, that the sales of the acquired land to private persons were not for one of such purposes, and that, therefore, they were void. The principle that a statutory body can only function within the statute is unexcecutionable; but the 311 Legislature can confer a power on a statutory corporation to sell its land is equally uncontestable. In this case we have held that the statute conferred such a power on the Municipal Committee, subject to stringent limitations. Many situations can be visualized when such a sale would be necessary and would be to the benefit of the corporation. of course the price fetched by such sales can only be utilised for the purposes sanctioned by the Act. The last point raised is that the learned Judges of the High Court were not justified in holding on the materials placed before them that the appellants lacked bona fides and that the petition filed by them was not conceived in the interests of the public. We do not find any material on the record to sustain this finding. Indeed, but for the petitioner appellants the extraordinary situation created by the inaction of the Government in the matter of implementing the Act, affecting thereby the municipal administration of all the districts in Telangana area, might not have been brought to light. We cannot describe the action of the appellants either mala fide or frivolous. In the result, the appeal fails and is dismissed but, in the circumstances, without costs. SARKAR, J. The first question is whether the first ten respondents are still members of the Municipal Committee of Vicarabad. These persons had been elected to the Committee in the elections held in 1953 under the Hyderabad Municipal and Town Commit tees Act, 1951 (Hyderabad Act XXVII of 1951), hereafter called the repealed Act. That Act was repealed by the Hyderabad District Municipalities Act (Hyderabad Act XVIII of 1956), hereafter called the new Act, which came into force in August 1956. The appellants, who are rate payers of the Municipality, contend that on a proper reading of the new Act, it must be held that these ten respondents have ceased to be members of the Committee, and they seek a writ of quo warranto against the respondents. Section 320 of the new Act provides that any Committee constituted under the repealed Act shall be deemed to have been constituted under the new Act 312 and its members shall continue to hold office till the first meeting of the Committee is called under section 35 of the new Act. The ten respondents contend that as admittedly the meeting under section 35 has not been called, their term of office has not yet expired. Now section 35, so far as is material, provides that the first meeting of the Committee shall be called by the Collector within thirty days of the date of publication of the names of members under section 32. Section 32 states that the names of members finally elected to any Committee shall be forthwith published in the official Gazette. It is quite clear, therefore, that the Committee mentioned in this section, is a Committee constituted by an election held under the new Act. It would follow that the meeting contemplated in section 35 is a meeting of a Committee constituted by an election held under the new Act. The provisions of that section put this beyond doubt. In order, therefore, that a meeting of the Committee contemplated in section 35 may be held, there has first to be an election under the new Act to constitute the Committee. No such election has yet been held. It is the provision concerning election in the new Act that has given rise to the difficulty that arises in this case. Section 16, sub section (1), gives the power to hold the general elections. It is in these words: Every general election requisite for the purpose of this Act shall be held by the Collector in the manner prescribed within three months before the expiry of the term of office of the members of the Committee as specified in section 34 ". Section 34 in substance states that except as other. wise provided members of the Committee shall hold office for a term of three years and that term of office shall be deemed to commence on the date of the first meeting called under section 35. It would therefore appear that the members whose term of office is sought to be specified by section 34 are members elected under the new Act, for their term is to commence on the date that they first meet under section 35 and as earlier stated, the meeting under section 35 is a meeting of members elected under the new Act. 313 The contention for the appellants is that if a. 34 is construed in the way mentioned above, the first general election under the new Act cannot be held under section 16, for an election can be held under that section only within three months before the expiry of the term of office of members elected under the new Act and in the case of first election there are ex hypothesi, no such members. It is said that as there is no other provision in the new Act for holding a general election, the Act would then become unworkable, for if the first general election cannot be held no subsequent election can be held either. , The result, it is contended, is that the Committee elected under the repealed Act would continue for ever by virtue of section 320. Such a situation, it is said, could not have been intended by the new Act. It is therefore suggested that section 34 should be construed as specifying a term of office of three years from the commencement of the new Act for members elected under the repealed Act who are under section 320, to be deemed to form a Committee constituted under the new Act. If section 34 is so construed, then the first general election under the new Act can properly be held under section 16. It is on this basis that the appellants contend that the ten respondents ' term of office expired in August, 1959, and they are in possession of the office now without any warrant. There is no doubt that the Act raises some difficulty. It was certainly not intended that the members elected to the Committee under the repealed Act should be given a permanent tenure of office nor that there would be no elections under the new Act. Yet such a result would appear to follow if the language used in the new Act is strictly and literally interpreted. It is however well established that " Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or in justice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. . . 40 314 Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman 's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. Nevertheless, the courts are very reluctant to substitute words in a Statute, or to add words to it, and it has been said that they will only do so where there is a repugnancy to good Bense.": see Maxwell on Statutes (10th ed.) p. 229. In Seaford Court Estates Ltd. vs Asher (1), Denning, L. J., said, " when a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament. . . and then he must supplement the written word so as to give " force and life " to the intention of the legislature. . . A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out ? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases. " I conceive it my duty, therefore, so to read the new Act, unless I am prevented by the intractability of the language used, as to make it carry out the obvious intention of the legislature. Now there does not seem to be the slightest doubt that the intention of the makers of the new Act was that there should be elections held under it and that the Municipal Committees should be constituted by such elections to run the administration of the municipalities. The sections to which I have so far referred and the other provisions of the new Act make this perfectly plain. Thus section 5 provides for the establishment of municipal committees and section 8 states that the committees shall consist of a certain number of elected members. The other sections show that the Committees shall have charge of the administration of the municipalities for the benefit of the dwellers within them. It is plain (1) ,164. 351 that the entire object of the new Act would fail if no general election could be held under it. The question then is, How should the Act be read so as to make it possible to hold general elections under it ? I agree with the learned advocate for the appellants that the only section in the new Act providing for general elections being held, is section 16(1). In my view, section 20 does not authorise the holding of any general election; it only provides for a notification of the date on which the poll shall, if necessary, be taken. There is no doubt that under section 16(1) the second and all subsequent general elections can be held ; in regard to such general elections, no difficulty is created by the language of the section. It would be curious if section 20 also provided for general elections, for then there would be two provisions in the Act authorising general elections other than the first. Then I find hat all the sections referring to general elections refer to such elections being held under section 16(1) and not under section 20. Thus section 31 provides that if at a general election held under section 16, no member is elected, a fresh election shall be held. It would follow that if in an election under section 20, assuming that that section authorises an election, no member is elected, no fresh election can be held. There would be no reason to make this distinction between elections held under section 16 and under section 20. Again the proviso to section 17 requires a certain notification to be issued within a prescribed time for holding elections under section 16(1). If an election can be held under section 20, no such notification need be issued for there is no provision requiring it. This could not have been intended. For all these reasons it seems to me that section 20 does not confer any power to hold any election. I have earlier said that the suggestion for the appellants is that the best way out of the difficulty is to read section 34 as specifying a term of office of three years commencing from the coming into force of the new Act, for the members elected under the repealed Act who are to be deemed under section 320 to be a committee constituted under the new Act. It seems to me that this is not a correct solution of the problem. First, 316 the object of continuing the members elected under the repealed Act in office is clearly to have, what may be called a caretaker committee to do the work of the Municipality till a committee is constituted by election under the new Act. It could not have been intended that the committee of the members elected under the repealed Act would function for three years after the new Act has come into operation nor that such members would have the same term of office as members elected under the new Act. Secondly, I do not find the language used in section 34 sufficiently tractable to cover by any alteration, a member elected under the repealed Act. To meet the suggestion of the appellants, a new provision would have really to be enacted and added to section 34 and this I do not think is permissible. It would be necessary to add to the section a provision that in the case of members elected under the old Act the term of office of three years would start running from the commencement of the new Act, a provision which is wholly absent in the section as it stands. Lastly, so read, section 34 would come into conflict with section 320 which expressly provides that the term of office of the members elected under the repealed Act would continue till the first meeting of the committee constituted under the new Act is held under section 35. This portion of section 320 would have to be completely struck out. It seems to me that the real solution of the difficulty lies in construing section 16(1) so as to authorise the holding of the first general election under it and remove the absurdity of there being no provision directing the first general election to be held. Now that section applies to ,every general election requisite for the purpose of this Act. " It therefore applies to the first and all other general elections. The clear intention hence is that the first general election will also be held under this provision. But such election cannot be held within the time mentioned therein for that time has to be calculated from the expiry of the term of office of the Committee elected under the Act and in the case of the first general election under the new Act, there is no such Committee. The requirement 317 as to time cannot apply to the first general election. The section has therefore to be read as if there was no such requirement in the case of the first general election. It will have to be read with the addition of the words " provided that every general election excepting the first general election shall be held " between the words " prescribed " and " within ". That would 'carry out the intention of the legislature and do the least violence to the language used. So read, there would be clear power under the Act to hold the first general meeting. There would of course then be no indication as to when this election is to be held but that would only mean that it has to be held within a reasonable time of the commencement of the new Act. The course suggested by me is not without the support of precedents. Thus in Salmon vs Duncombe (1), the Judicial Committee in construing a statute omitted from it the words " as if such natural born subject resided in England " because the retention of those words would have prevented the person contemplated getting full power to dispose of his immovable property by his will which it was held, the object of the statute was, he should get. With regard to the other point argued in this .appeal, namely, whether the Municipal Committee even if properly constituted, has power to sell the land mentioned in the petition, I agree, for the reasons mentioned in the judgment delivered by the majority of the members of the bench, that it has such power and have nothing to add. The appeal therefore fails. Appeal dismissed.

The respondents were the elected members of the Vicarabad 296 Municipal Committee, constituted in 1953, under the Hydera bad Municipal and Town Committees Act, 1951 That Act was repealed by section 320 of the Hyderabad District Municipalities Act, 1956, which came into force in 1956. That section provided that the committee constituted under the repealed enactment was to be deemed to have been constituted under the Act and the members thereof should hold office till the first meeting of the committee was called under section 35 of the Act. No election was held under the new Act; the old committee, which continued to function, after duly passing a resolution and obtaining the necessary sanction from the Government, sold certain municipal lands to third parties. The appellants, who were rate payers of the said Municipality, moved the High Court for the issue of a writ of quo warranto challenging the said sales under article 226 of the Constitution. The High Court dismissed the petition. The contention of the appellants in this Court was that the members of the said committee were functus officio on expiry of three years from the commencement of the Act for section 34 of the Act prescribed a term of three years and section 320 of the Act did not provide any definite term for them. But if section 34 was held to be inapplicable, neither could the first general election under the Act, for which section 16 of the Act was the only provision, be held, nor could the first meeting of the committee called under section 35 of the Act and the result would be that the old committee would continue indefinitely. Held, that the contention must be negatived. The word 'committee ' in section 320 of the Hyderabad District Municipalities Act, 1956, did not mean a committee elected under the Act and the term of three years prescribed by section 34 of the Act could not, therefore, apply to it. Construed in the light of well recognised principles of interpretation of statutes and the scheme as envisaged by sections 16, 17, 18, 20, 32, 34, and 320 of the Act, section 320 of the Act could be no more than a transitory provision and it would be unreasonable to suggest that the Legislature which repealed the earlier Act with the express intention of constituting committees on broad based democratic principles, intended to perpetuate old committees constituted under the repealed Act. Section 16(1) of the Act, properly construed, was clearly inapplicable to the first general election under the Act and could apply only to subsequent elections. So far as the first general election under the Act was concerned, sections 17 and 20 of the Act provided a self contained and integrated machinery therefor independent of section 16(1) of the Act. Canada Sugar Refining Co. vs R., , referred to. The Legislature in enacting the new Act assumed and expected that the Government would, within a reasonable time issue notifications for holding the first general election under section 17 of the Act and its failure to do so and thus implement the 297 Act, and not any inherent inconsistency in the Act itself, prolonged the life of the old committee. Since section 77 of the Act expressly authorised the Municipal Committee to sell municipal property subject to the conditions specified therein, no prohibition could be implied from the provisions of s 76 of the Act and the impugned sales, effected in conformity with the conditions precedent laid down by section 77 of the Act, could not be said to be ultra vires the powers of the committee. Elizabeth Dowager Baroness Wenlock vs The River Dee Company, and Attorney General vs Fulhan Corpora tion, , considered. Per Sarkar, J. It is well settled that where the language of a statute leads to manifest contradiction of the apparent purpose of the enactment, as the language of section 16(i) does in the present case, the Court has the power so to read it as to carry out the obvious intention of the Legislature. The intention of the Legislature in enacting the new Act clearly was that elections should be held and committees constituted under it. Seaford Court Estates Ltd. vs Asher, , referred to. Section 16(1) is the only section of the Act which authorises the holding of a general election but, since the requirements as to time in section 16(i) of the Act could not apply to the first general election, that section must be read to carry out the obvious intention of the Legislature as if there was no such requirement in the case of the first general election under the Act. Although this would not indicate when that election was to be held, the obvious implication would be that it must be held within a reasonable time of the commencement of the Act. Section 20 of the Act does not authorise the holding of a general election. Salmon vs Duncombe, , referred to.

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Civil Appeal No. 114 of 1951. Appeal from the Judgment and Decree dated the 5th Sep tember, 1947, of the High Court of Judicature at Allahabad (Waliullah and Sapru JJ.) in First Appeal No. 516 of 1942 arising out of Judgment and Decree dated the 3rd October, 1942, of the Court of the Civil Judge of Shahjahanpur in Original Suit No. 10 of 1941. Achhru Ram (N. C '. Sen, with him) for the appel lants. C.K. Daphtary (K. B. Asthana, with him) for the re spondents. October 20. The Judgment of the Court was deliv ered by BHAGWATI J. This is an appeal by the heirs and legal representatives of the deceased plaintiff against the decree of the High Court of Judicature at Allahabad allowing ' the appeal of the defendants against the decree passed by the Court of the Civil Judge of Shahjahanpur in favour of the plaintiff allowing the plaintiff 's claim in part. One Kailashi Nath Kapoor, the plaintiff, was employed by the District Board of Shahjahanpur, the defendants, as their Secretary in the year 1924. He 1124 was also entrusted in 1929 with the additional duties of doing assessment work for the defendants. The work done by the plaintiff did not find favour with some members of the Board and on the 9th November, 1939, six members of the Board tabled a resolution asking the Chairman to convene a special meeting of the Board to consider a resolution for the dismissal of the plaintiff. A special meeting of the Board was convened on the 17th December, 1939. Twelve charges were framed against the plaintiff and he was re quired to furnish his answers to them. A special meeting of the Board was thereafter convened on the 20th January, 1940. The resolution for the dismissal of the plaintiff was on the agenda but the meeting had to be adjourned for want of quorum to the 29th January, 1940. At the adjourned meeting of the 29th January, 1940, twenty five out of the twentyseven members of the Board were present. The charges against the plaintiff were gone into and eleven out of the twelve charges were held proved. Two resolutions were consequently passed by the Board at this meeting, one being a resolution for his dismissal, and the other being a reso lution for his suspension till the matter of his dismissal was decided under section 71 of the U.P. District Boards Act, X of 1922, on an appeal if any preferred by the plain tiff to the Government. The plaintiff preferred an appeal to the Government against the resolution for his dismissal and this appeal was dismissed by the Government on the 19th December, 1940. The plaintiff thereafter commenced in the Court of the Civil Judge at Shahjahanpur the suit out of which this appeal arises against the defendants for a declaration that the two resolutions passed by the Board on the 29th January, 1940, were illegal and ullra vires of the Board and that he continued to be the Secretary and Assessing Officer of the Board, for an injunction restraining the Board from prevent ing him from discharging his duties as such Secretary and Assessing Officer, for arrears of his salary with interest and contribution to his provident Fund and in the alterna tive 1125 for damages and compensation for illegal dismissal and suspension and for costs. The defendants contended that the said resolutions were valid and binding on the plaintiff and that the plaintiff was not entitled to any relief as claimed. The learned trial judge held that the two resolutions passed by the Board on the 29th January, 1940, were properly passed and that there was no irregularity in the procedure. He held that the resolution for dismissal of the plaintiff was valid and binding on the plaintiff but the resolution for suspension was not legal. In the result he decreed the plaintiff 's claim for arrears of salary, and the contribu tion towards the provident fund against the defendants for the period of suspension and awarded to the plaintiff a sum of Rs. 6,629 4 0 with proportionate costs, the rest of the plaintiff 's claim was dismissed. The defendants appealed to the High Court against this decree and the plaintiff filed cross objections in regard to his claim which had been disallowed. The plaintiff died during the pendency of the appeal and his heirs and legal representatives, being his widow and his four sons, were brought on the record. The High Court concurred with the trial court in the finding that there was no irregularity, impropriety or illegality in the procedure followed and the steps taken before the meet ing or at the meeting of the Board when the two resolutions were considered and passed. It however disagreed with the conclusion reached by the trial Court that the resolution for suspension was ultra vires the Board. It held that the resolution for suspension also was valid and binding on the plaintiff and thus dismissed the plaintiff 's suit with costs throughout. The crossobjections of the plaintiff were of course dismissed with costs. The heirs and legal repre sentatives of the plaintiff obtained leave to appeal to the Federal Court against this decision of the High Court and the appeal was admitted on the 5th November, 1948. Both the Courts below having found that there was no irregularity, impropriety or illegality in the procedure followed and the steps taken when the two 1126 resolutions in question were passed by the Board the only question that survived for consideration by this Court was whether the resolution for suspension of the plaintiff was valid and binding on the plaintiff or in other words whether it was competent to the Board to pass the resolution for the suspension of the plaintiff after it had passed the resolu tion for his dismissal under section 71 of the Act. Section 71 of the Act provides for the dismissal and punishment of the secretary: "A board may by special resolution punish or dismiss its secretary: Provided, firstly, that such resolution is passed by a vote of not less than two thirds of the total number of members of the board for the time being: Provided, secondly, that the secretary of a board shall have a right of appeal to the State Government against such resolution within one month from the date of the communica tion of the resolution to him, and that the resolution shall not take effect until the period of one month has expired or until the State Government have passed orders on any appeal preferred by him. " It will be relevant at this stage to note that this section 71 was amended by U.P. Act I of 1933. Section 71 as it originally stood ran thus: "A board may by special resolution punish or dismiss its secretary provided, (a) that such a resolution is passed by a vote of not less than two thirds of the total number of members of the board for the time being, or (b) that it is passed by a vote of not less than one half of the total number of members. and is ' sanctioned by the Local Government ' . It may be noted that in the original section 71 provi sion was made for the sanction of the Local Government in certain cases. No such provision is to be found in the amended section 71 of the Act. The resolution according to the amended section 71 is to be passed by a vote of not less than two thirds of the 1127 total number of members of the Board and such a resolution is not to take effect until the period of one month has expired within which the secretary can exercise his right of appeal or until the Government have passed orders on the appeal if any preferred by him. There is no question of the sanction of the Local Government to any resolution for dismissal the only provision being that the resolution is to take effect after the expiration of the period of one month or after the Government have passed orders on the appeal if any preferred by the secretary within that period of one month. Once that period of one month expires without the secretary preferring any appeal against the resolution of the Board or the Government passes final orders on the appeal preferred by him, the resolution takes effect without anything more in the nature of a sanction by the Government. The power of suspension is conferred and regulated in section 90 of the Act : "(1) Suspension may be of two kinds: (a) suspension as a punishment, and (b) suspension pending inquiry or orders. (2) Where a general power to punish is conferred by this Act, it shall be deemed to include a power to suspend as a punishment for a period not exceeding three months. (3) Where a power of dismissal, whether subject to the sanction of any other authority or not, is conferred by this Act, it shall be deemed to include a power to suspend any person against whom the power of dismissal might be exer cised, pending enquiry into his conduct or pending the orders of any authority whose sanction is necessary for his dismissal. (4) Where suspension is ordered pending inquiry or or ders, and the officer suspended is ultimately restored, it shall be at the discretion of the authority ordering his suspension whether he shall get any, and, if so what, allow ance during the period of suspension; but in the absence of any order to the contrary he shall be 1128 entitled to the full remuneration which he would have re ceived but for such suspension. " The suspension which has been thus provided for is of two categories, (1) suspension as a punishment and (2) suspension pending enquiry or orders. In the case of a suspension falling within the latter category the only power of suspension which is provided is that of suspending any person against whom the power of dismissal might be exer cised pending enquiry into his conduct or pending the orders of any authority whose sanction is necessary for his dis missal. The power of suspension pending enquiry into the conduct of the person can only be exercised if an enquiry against him has been started and before any order is made for his dismissal as a result of such enquiry. The power of suspension pending the orders of the authority whose sanc tion is necessary for his dismissal can similarly be exer cised provided the order of dismissal is made but that dismissal could be effective only after the orders of the authority whose sanction is needed for effectuating the same. The section does not provide for any other case where as on the facts before us the order of dismissal does not require the sanction of any authority but has got to await either the expiry of a particular period after such order of dismissal has been made or the result of an appeal which may be preferred to the Government within the period prescribed in that behalf. A decision of an authority to which an appeal is provided is not the same thing as a sanction by the authority. A perusal of sub section (4) of section 90 makes this position quite clear. The authority ordering the suspension is vested with the discretion to determine whether the officer suspended would get any or if so what allowance during the period of suspension where suspension is ordered pending enquiry or orders and the officer sus pended is ultimately restored. There is no provision for any allowance where the officer having been dismissed is also suspended for the period which has of necessity to expire before his appeal is time barred or before the Gov ernment passes 1129 orders on the appeal if any preferred by him within the prescribed period. Such a case is not at all provided for in sub section 4 of section 90 and the officer so suspended would be without any remedy whatever and would not be able to get any allowance at all from the authority ordering his suspension during such period of suspension. It is necessary to bear in mind the provisions of these sections 71 and 90 of the Act in order to determine whether it was competent to the Board to pass a resolution for suspension of the plaintiff after it had passed the resolu tion for his dismissal on the 29th January, 1940. On a construction of these sections 71 and 90 of the Act the trial Court came to the conclusion that the provisions of section 90 of the Act were exhaustive, that no other category of suspension apart from those specified could be ordered and that therefore the resolution for suspension of the plaintiff was ultra rites the Board. The High Court in appeal realised the difficulty of the position. It came to the conclusion that section 90 as it stood was in close conformity with the provisions of the old section 71 of the Act which provided for the resolution for dismissal passed by a vote of not less than one half of the total number of members being required to be sanctioned by the Local Govern ment. The sanction was expressly provided there. But when that section came to be amended by the U.P. Act I of 1933, the provision for sanction was deleted and it provided for the resolu tion not taking effect until the period of one month had expired within which the secretary could exercise his right of appeal or until the Government had passed orders on the appeal ii any preferred by him. When this amendment was made in the old section 71 of the Act the provision made in section 90 in regard to the power of suspension was lost sight of and no corresponding amendment was made in section 90, sub section (1)(b), sub section (3) or subsection (4) which would bring the provisions of 145 1130 section 90 in conformity with the amended section 71 of the Act. The High Court was therefore at pains to place what it called a liberal construction on the provisions of section 71 and section 90 of the Act trying to read in the power of suspension provided in section 90 also a power of suspension during the period that the secretary preferred an appeal to the Government against the order of his dismissal and the Government passed orders on such appeal. Apart from placing this so called liberal construction on the expression "the orders of any authority whose sanc tion is necesssary" in section 90 subsection 3, the High Court also brought to its aid the provisions of Section 16 of the U.P. General Clauses Act of 1904 which provides that "unless a different intention appears the authority having power to make the appointment shall also have power to suspend or dismiss any person appointed by it in exercise of that power ". It came to the conclusion that nothing in the terms of section 71 or section 90 of the Act controlled or negatived an intention to sustain the general power of suspension, i.e. suspension pending orders on an appeal. The High Court thus justified the resolution for the suspen sion of the plaintiff passed by the Board on the 29th January, 1940. We are afraid we cannot agree with this line of reason ing adopted by the High Court. The defendants were a Board created by statute and were invested with powers which of necessity had to be found within the four corners of the statute itself. The powers of dismissal and suspension given to the Board are defined and circumscribed by the provisions of sections 71 and 90 of the Act and have to be culled out from the express provisions of those sections. When express powers have been given to the Board under the terms of these sections it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act. Even under the terms of section 16 of that Act, the powers which are vested 1131 in the authority to suspend or dismiss any person appointed are to be operative only "unless a different intention appears" and such different intention is to be found in the enactment of sections 71 and 90 of the Act which codify the powers of dismissal and suspension vested in the Board. It would be an unwarranted extension of the powers of suspen sion vested in the Board to read, as the High Court pur ported to do, the power of suspension of the type in ques tion into the words "the orders of any authority whose sanction is necessary". It was unfortunate that when the Legislature came to amend the old section 71 of the Act it forgot to amend section90 in conformity with the amendment of section 71. But this lacuna cannot be supplied by any such liberal construction as the High Court sought to put upon the expression "orders of any authority whose sanction is necessary". No doubt it is the duty of the court to try to harmonise the various provisions of an Act passed by the Legislature. But it is certainly not the duty of the Court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act. Reading the present, section 71 of the Act along with section 90 of the Act we are of the opinion that the power of suspension of the nature purported to be exercised by the Board in the case before us was not the power of suspension contemplated in section 90 sub section (3) of the Act. If the plaintiff allowed the period of one month to expire without preferring an appeal against the resolution to the Government or if the Government passed orders dismissing his appeal, if any, the resolution for ' his dismissal would become effective without any sanction of the Government. The words used therefore in section 90, sub section (3) "pending the orders of any authority whose sanction is necessary for his dismissal" are inappropriate to the present facts and could not cover the case of a suspension of the nature which was resorted to by the Board on the 29th January, 1940. We are therefore of the view that the resolution for suspension which was 1132 passed on the 29th January, 1940, was ultra vires the powers of the Board. We have accordingly come to the conclusion that the decision reached by the High Court that the resolution for suspension which was passed by the Board on the 29th Janu ary, 1940, was valid and binding on the "plaintiff was erroneous and that the conclusion reached by the trial Court was correct. The learned Solicitor General appearing for the defendants has however informed us that the sum of Rs. 6,629 4 0 and the proportionate costs which were awarded by the trial Court to the plaintiff have already been paid to the plaintiff. Nothing therefore remains to be recovered by the heirs and legal representatives of the plaintiff even on the basis that the decree of the trial Court is restored as a result of this judgment of ours. The only thing which therefore survives is the question of the costs of this appeal. The trial Court had already awarded to the plaintiff proportionate costs. The High Court in reversing the judgment of the trial Court dismissed the plaintiff 's suit with costs throughout including the costs of the cross objections which were filed by the plain tiff. The heirs and legal representatives of the plaintiff filed the present appeal in regard to the whole claim of the plaintiff as laid in the plaint. That claim could not be sustained before us by the heirs and legal representatives of the plaintiff and they only succeeded before us in regard to the claim of the plaintiff which had been allowed by the trial Court. If an order for proportionate costs of this appeal were made it would certainly work to the prejudice of the heirs and legal representatives of the plaintiff. We are not disturbing the order which had been made by the High Court in regard to the costs of the appeal before it. No time was taken up before us in arguing the appeal on other points except the one in regard to the resolution for the suspension of the plaintiff being ultra rites and we think that under the circumstances of the case the proper order to pass in regard to the costs of this appeal before us should be that each party should bear its own costs. 1133 The only order which we need pass in this appeal before us under the circumstances is that the appeal is allowed, the decree of the trial court is restored, and each party do bear and pay its own costs of this appeal. Appeal allowed.

Section 71 of the U.P. District Boards Act, 1922, as amended in 1933 provided that a resolution of the Board for the dismissal of its secretary shall not take effect until the period of one month has expired or until the State Government have passed orders on any appeal preferred by him. A District Board passed a resolution for dismissal of its secretary and also for his suspension till the matter of his dismissal was decided under section 71 of the Act on an appeal if any preferred by the secretary: Held, that under section 90 of the Act a secretary could be suspended only as a punishment or pending inquiry or 1123 pending the orders of any authority whose sanction is neces sary for his dismissal. The words "pending the orders of any authority whose sanction is necessary for his dismissal" could not appropriately cover the case of a suspension like the present one and the resolution for suspension was 'therefore ultra vires. Held further, that since the Board was created by stat ute, and its powers of dismissal and suspension are defined and circumscribed by sections 71 and 90 of the Act it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act;and even under section 16 of that Act powers which are vested in an authority to suspend or dismiss any person appointed, are to be operative only "unless a different intention appears" and such a different intention is to be found in sections 71 and 90 of the Act which codify the powers of dismissal and suspension vested in the Board.

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In the matter of maintainability of appeal in the Supreme Court of India. Mohan Lal Agarwala, for the petitioner. G. C. Mathur and C. P. Lal, for the respondent No. 1. 1960. September 14. The Judgment of the Court was delivered by RAGHUBAR DAYAL J. Narain Das filed a civil writ petition under article 226 of the Constitution in the High Court of Judicature at Allahabad. He subsequently moved an application under section 476 of the Code of Criminal Procedure (hereinafter called the Code) for making a complaint under section 193, Indian Penal Code, against Phanish Tripathi alleging that a certain statement in an affidavit filed by the latter was false. The learned Judge who heard this application, holding that the appellant had not succeeded in showing that any portion of the affidavit of Tripathi filed on May 14, 1959, was false, dismissed the same. It is against this order of the learned Judge of the High Court that Narain Das has filed this memorandum of appeal under section 476B of the Code. The Registry has submitted the memorandum of appeal with a report for determining the question whether the appeal is competent in this Court. Section 476 of the Code is to be found in Ch. XXXV which is headed 'Proceedings in case of certain Offences Affecting the Administration of Justice '. Section 476 empowers any Civil, Revenue or Criminal Court, when it is of the opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to in section 195(1) (b) or (c) which appears to have been committed in or in relation to a proceeding before it, to file a complaint, after such inquiry as it thinks necessary, before a Magistrate of Class having jurisdiction. It is clear therefore that where an offence referred to in section 195(1) (b) or (c) is committed in or in relation to a proceeding in a Civil Court, an inquiry under section 476 and. the action taken 678 on that inquiry by the Civil Court, are in relation to that proceeding itself. Any person aggrieved by an order of a Court under section 476. of 'the Code may appeal in view of section 476B to the Court to which the former Court is subordinate within the, meaning of section 195(3), which provides that for the purposes of the section a Court shall be deemed to be subordinate to the Court to which appeals ordinarily lie from the appealable decrees or sentences of such former Court, or, in the case of a Civil Court from whose decrees no appeal ordinarily lies, to the,, principal Court having ordinary original civil jurisdiction within the local limits of whose jurisdiction such Civil Court is situate. The decrees of a single Judge of the High Court exercising civil jurisdiction are ordinarily appealable to the High Court under el. 10 of the Letters Patent of the Allahabad High Court read with el. 13 of the United Provinces High Courts (Amalgamation) Order, 1948. It is true that the decision of a single Judge of the High Court is as much a decision of the High Court as the decision of the appellate Bench hearing appeals against his decrees. But the Court constituted, by the single Judge is a Court subordinate to the appellate Bench of the High Court in view of the artificial judicial subordination created by the provisions of section 195(3) to the effect ' ' a Court shall be deemed to be subordinate to the Court to which appeals ordinarily lie from the appeal. able decrees. '. In the case of a Civil Court which passes appealable decrees, that Court is deemed to be subordinate to the Court to which appeals ordinarily lie from its decrees. In ' the case of a Civil Court from whose decrees no appeal ordinarily lies, that Court is deemed subordinate to the principal Court having ordinary original civil jurisdiction within the local limits of whose jurisdiction the former Court is situate, even though normally such a Court will not be subordinate to the principal Court having ordinary original civil jurisdiction within whose local limits it is situate. It was urged by the learned Advocate for Narain Das that the order of the learned single Judge under 679 s.476 did not amount to a decree and that therefore the provisions of section 195(3) were not applicable. It is not necessary for us to express an opinion on the question whether the order of the learned single Judge under section 476 is appealable under cl. 10 of the Letters Patent or not. A right of appeal against that order is given by the provisions of section 476 B. The forum of appeal is also determined by the provisions of section 476B read with section 195(3), and the only relevant consideration to determine the proper forum for an appeal against such an order of the single Judge is as to which Court the appeals against appealable decrees of the single Judge ordinarily lie. Such appeals lie to the High Court under cl. 10 of the Letters Patent of the Allahabad High Court, and therefore this appeal lies to ' the High Court. Learned counsel for the appellant relied on the decision of this Court in M. section Sheriff vs The State of Madras (1) in support of his contention that an appeal under section 476B lay to this Court from the decision of a single Judge of a High Court refusing to file a complaint under section 476 of the Code. That case is distinguishable as the question considered in that case was whether an appeal lay to this Court under section 476B of the Code from an order of a Division Bench of a High Court. It did not deal with the question whether an appeal lay to this Court under section 476B of the Code from an order of a single Judge of the High Court. No appeal lies to the High Court against the decision of a Division Bench of the High Court and therefore an appeal under section 476B from an order of the Division Bench of the High Court must lie to this Court. The fact that an appeal lies to this Court from the order of a single Judge of the High Court where the High Court certifies, under article 132 of the Constitution, that the case involves a substantial question of law as to the interpretation of the Constitution, is of no assistance to the appellant 's contention 'that this appeal is competent in this Court. It cannot be said that an appeal ordinarily lies to this Court from the (1) [1954] S.C.R. 1144. 87 680 judgment of a single Judge of a High Court because such an appeal lies with a certificate granted under article 132. We therefore hold that the present appeal does not lie to this Court and that it lies to the High Court of Judicature at Allahabad. We therefore direct that the memorandum of appeal be returned for presentation. to the proper Court. Appeal incompetent.

During the pendency of a civil writ petition in the Allahabad High Court, one N moved an application under section 476, Code of criminal Procedure, for making a complaint under section 93, Indian Penal Code, against T. A single judge who was seized of the case rejected the application. Thereupon N presented an appeal against the order of rejection of his application before the Supreme Court under section 476 B, Code of Criminal Procedure. Held, that the appeal did not lie to the Supreme Court but that it lay to the Appellate Bench of the High Court. The decrees of a single judge of the High Court exercising civil jurisdiction were ordinarily appealable to the High Court under cl. 1o of the Letters Patent of the Allahabad High Court read with cl. 13 of the U. P. High Courts (Amalgamation) Order, 1948, and as such the Court constituted by the single judge was a court subordinate to the Appellate Bench of the High Court within the meaning of section 195(3) of the Code. M. section Sheriff vs The State of Madras, [1954] S.C.R. 1144, distinguished.

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Appeal No. 83 of 1956. Appeal from the judgment and order dated June 30, 1954, of the Patna High Court in Appeal from Original Order No. 255 of 1952. Lal Narayan Sinha and section P. Varma, for the appellant. A. V. Viswanatha Sastri, B. K. Saran, D. P. Singh and K. L. Mehta, for the respondent. September 20. The Judgment of the Court was delivered by AYYANGAR J. The State of Bihar is the appellant in this appeal which comes before us on a certificate granted by the High Court of Patna under article 133(1) (c) of the Constitution. The principal point of law raised for decision in the appeal is whether a State is liable to be proceeded against under 0. 39, r. 2(3) of the Code of Civil Procedure, when it wilfully disobeys an order of temporary injunction passed of nomine against it. There is little controversy regarding the facts, but they have to be set out to appreciate some of the matters debated before US. 730 The Bihar Land Reforms Act, 1950 (which we shall refer to as the Act), which provided for the transference to the 'State of the interests of proprietors and ,tenure holders in estates within the State, received the assent of the President on September 11, 1950, and was published in the Bihar Gazette on September 25, 1950. Thereupon Rani Sonabati Kumari, the respondent, who was the proprietress of the Ghatwali Estate of Handwa situated within the State, instituted against the State of Bihar, in the Court of the Subordinate Judge, Dumka, on the 20th November, 1950, Title Suit 40 of 1950, inter alia for a declaration that the Act was ultra vires of the Bihar Legislature and was therefore " illegal, void, unconstitutional and inoperative " and that the defendant had " no right to issue any notification under the said Act or to take possession or otherwise meddle or interfere with the management of the estate in suit " and for a permanent injunction " restraining the defendant, its officers, servants, employees and agents from issuing any notification under the provisions of the Bihar Land Reforms Act, in respect of the plaintiff 's estate " and also " from taking possession of the said estate and from meddling or interfering in any way with the management thereof ". Along with the plaint, the respondent filed a petition for a temporary injunction in which the prayer ran: " It is therefore prayed that a temporary injunction be issued against the defendant, its officers, employees, servants or agents restraining them from issuing any notification with regard to the plaintiff 's estate under the Bihar Land Reforms Act, 1950 (Act XXX of 1950) and from meddling or interfering with the possession of the plaintiff to the properties in suit, till the disposal of this suit ". The Court issued an ex parte ad interim injunction presumably in terms of the prayer in the petition, and directed notice of the petition to be served on the State of Bihar who filed their counter affidavit on December 9, 1950, opposing the grant of any interim injunction and praying that the petition be dismissed 731 with costs. The petition was heard in the presence of both the parties on March 19, 1951, and the Subordinate Judge made the ad interim injunction absolute and the order went on to add " and it is ordered that the defendant shall not issue any notification for taking over possession of the suit properties under the Land Reforms Act and shall not interfere with or disturb in any manner the plaintiffs possession over these properties under any of the provision of the aforesaid Act until this suit is finally disposed of by this Court ". The order was appealable under 0. 43, r. (1) (r) of the Code, but the State preferred no appeal and so it became final. On May 17, 1952, an application was filed by the State for vacating the order, on the ground that the validity of the Act had been upheld by this Court in another case involving the same points and that thereafter the plaintiff had no prima facie case to sustain the injunction. Before however this application invoking the powers of the Court under 0. 39, r. 4 of the Code came on for hearing (it was actually heard on May 30, 1952, when it reserved it for orders to be pronounced on June 2, 1952) the State of Bihar issued on May 19, 1952, a notification under section 3(1) of the Act declaring that the Handwa Raj Estate belonging to the respondent, had passed to and became vested in the State under the provisions of the Act. The notification ran: "In exercise of the powers conferred by sub. section (1) of section 3 of the Bihar Land Reforms Act, 1950 (Bihar Act XXX of 1950), the Governor of Bihar is pleased to declare that the Estates described in the First Schedule and the tenures described in the Second Schedule hereto annexed belonging to the proprietor and the tenure holder named in the respective schedules have, with effect from the date of the publication of this notification in the Bihar Gazette, passed to and became vested in the State under the provisions of this Act ". The Handwa Raj Estate with the name of the respondent as the tenure holder was specified in the Second Schedule. 732 This was followed by an authentication in these terms: By order of the Governor of Bihar, K. K. Mitra, Additional Secretary to Government. " On coming to know of this notification the respondent moved the Subordinate Judge on June 2, 1952, for taking action against the defendant in the suit, for contempt under 0. 39, r. 2(3) of the Code of Civil Procedure. When notice of this petition was served on the State it submitted an answer in these terms: "That in obedience to the said order, the defendant begs to submit that in view of the Article 31B of the Constitution, the aforesaid Notification, dated 19 5 52, and published in Bihar Gazette, dated 21.5.52 is valid, legal and authorised and the publication of the same does, not constitute contempt of court. " The only matter here set out, viz., that the constitutional validity of the Act had been affirmed by an amendment of the Constitution, could obviously afford no defence to the breach of an injunction order and indeed this was not sought. to be supported before us. The learned Subordinate Judge passed an order on July 31, 1952, which ran " that in view of the notification constituting a breach of the injunction, the property of the defendant State of Bihar shall be attached to the value of Rs. 5,000. The plaintiff is directed to file the list of properties of this value and necessary requisites for issue of the attachment with in seven days of this order. " From this order the State preferred an appeal to the High Court. The appeal was, however, dismissed by the High Court by judgment rendered on June 30, 1954, and by reason of a certificate granted by the learned Judges under article '133(1)(c) the State has preferred this appeal. The arguments addressed to us by Mr. Lal Narayan Sinha who appeared for the appellant State, when closely analysed resolved themselves into five points: 733 (1) That the order of the Subordinate Judge dated March 19, 1951, did not on its ' plain language, interdict the issue of a notification under section 3(1) of the Act, but merely directed the State, not to disturb the possession of the plaintiff. It was common ground that beyond the issue of the notification, neither the State, nor its officers or servants had done anything by way of interfering with the possession of the plaintiff. (2) That at the worst the order of the Subordinate Judge, having regard to the language employed, was reasonably capable of two interpretations (a) that the direction to the State included a prohibition against issuing a notification under section 3(1), and (b) that there was no interdiction against notifications under section 3(1) but only against notifications which directly involved or authorised interference with the plaintiff 's possession of her Estate. Proceedings for, contempt even for the enforcement of orders of Civil Courts being quasi punitive in their nature, it was urged that a party who bona fide conducted himself on the basis of one of two possible interpretations could not be held guilty of contempt. (3) That the rule that the Crown or the State could not be proceeded against for a tort or wrong doing applied to the present case, since disobedience of an order of injunction is virtually a wrong for which 0. 39, r. 2(3) provides the punishment or compensation. (4) That a State is not bound by a Statute unless it is named therein expressly or by necessary implication, and as there is no mention of a State in specific terms in 0. 39, r. 2(3), a State cannot, as such, be proceeded against for disobedience of an order of Court. (5) Even if a State could be proceeded against for willful disobedience of an order, the publication of the notification under section 3(1) which was the contempt alleged, was not proved with certainty, to be an act of the State Government, and that in the absence of a definite proof of this fact, the liability of the State could not arise ; and that if the notification dated May 19, 1952, constituted the act of disobedience, 734 then only the Additional Secretary, Mr. K. K. Mitra who authenticated the notification could, if at all, be made liable. It would be convenient to deal with these 'matters in that order. The first point urged was that the order of the Subordinate Judge dated March 19, 1951, did not in terms or in substance prohibit the State from issuing a notification under section 3(1). Section 3(1) of the Act runs: " The State Government may, from time to time, by notification, declare that the estates or tenures of a proprietor or tenure holder, specified in the notification, have passed to and become vested in the State. " It was urged that the Subordinate Judge by his order directed the State " not to issue any notification for taking possession " and as the notification under section 3(1) does not proprio vigore affect or interfere with the possession of the proprietor or tenure holder, the issue of such a notification was not within the prohibition. The same argument was addressed to the High Court and was repelled by the learned Judges and in our opinion correctly. In the first place, the only "notification" contemplated by the provisions of the Act immediately relevant to the suit, was a notification under section 3(1). Such a notification has the statutory effect of divesting the owner of the notified estate of his or her title to the property and of trans ferring it to and vesting it in the State. The State is enabled to take possession of the estate and the properties comprised in it by acting under section 4, but the latter provision does not contemplate any notification, only executive acts by authorized officers of the State. Of course, if action had been taken under section 4, and the possession of the respondent had been interfered with, there would have been a further breach of the order which directed the State. not to interfere with or disturb in any manner, the plaintiff 's possession. What we desire to point out is that the order of the Court really consisted of two parts the earlier directed against the defendant publishing a notification which in the context of the relevant statutory 735 provisions could only mean a notification under section 3(1) and that which followed, against interfering with the plaintiff 's possession and the fact that the second part of the order was not contravened is no ground for holding that there had been no breach of the first part. In the next place, the matter is put beyond the pale of controversy, if the order were read, as it has to be read, in conjunction with the plaint and the application for a temporary injunction. Mr. Sinha did not seriously contend that if the order of the Court were understood in the light of the allegations and prayers in these two documents, the reference to the " notification " in it was only to one under section 3(1) of the Act, and that the injunction therefore was meant to cover and covered such a notification. We, therefore, hold that this objection must fail. (2) The second contention urged was that even if on a proper construction of the order, read in the light of the relevant pleadings, the State Government was directed to abstain from publishing a notification under section 3(1) of the Act, still, if the order was ambiguious and equivocal and reasonably capable of two interpretations, a party who acted on the basis of one of such interpretations could not be held to have wilfully disobeyed the. order. Stated in these terms, the contention appears unexceptionable. For its being accepted in any particular case, however, two conditions have to be satisfied: (1) that the order was ambiguous and was reasonably capable of more than one interpretation, (2) that the party being proceeded against in fact did not intend to disobey the order, but conducted himself in accordance with his interpretation of the order. We are clearly of the view that the case before us does not satisfy either condition. In dealing with the first contention urged by learned Counsel, we have pointed out the true construction of the order and in our opinion that is the only construction which it could reasonably bear. But this apart, even if the order was equivocal as learned Counsel puts it, still, it is of no avail to the appellant, unless the State Government understood it 94 736 in the sense, that the order was confined to acts by which the possession of the plaintiff was directly interfered with and the notification was issued on that understanding and belief. There are two pieces of conduct on the part of the State Government which are wholly inconsistent with the theory that the order was understood by them as learned Counsel suggested. The first is that before the notification under section 3(1) was issued they applied to the Court to vacate the order of injunction so that they might issue notification, and it was during the pendency of this application that the notification was issued without waiting for the orders of the Court on their petition. The second is even more significant. When notice was issued to the defendant to show cause why it should not be committed for contempt, one would naturally expect, if the point urged has any validity, the defence to be based on a denial of disobedience, by reference to the sense in which the order was understood. We have already extracted the relevant paragraph of the counter affidavit and in this there is no trace of the plea now put forward. Even in the memorandum of appeal to the High Court against the order of the learned Subordinate Judge under 0. 39, r. 2(3) there is no indication of the contention now urged and though a faint suggestion of inadvertence on the part of some officer appears to have been put forward during the stage of argument before the High Court, the point in this form was not urged before the learned Judges of the High Court, as seen from the judgment. The question whether a party has understood an order in a particular manner and has conducted himself in accordance with such a construction is primarily one of fact, and where the materials before the Court do not support such a state of affairs, the Court cannot attribute an innocent intention based on presumptions, for the only reason, that ingenuity of Counsel can discover equivocation in the order which is the subject of enforcement. The argu ment being in effect that a party who had bona fide misconstrued the order and acted on that basis, could not be held to have wailfully and deliberately disobeyed 737 the order, such a plea could obviously be urged only when it is proved that a party was in fact under a misapprehension as to the scope of the order, but this was never the plea of the Government right up to the stage of the hearing before the High Court. Besides, if the case of the State was, that acting bona fide it had committed an error in construing the order, one would expect an expression of regret for the unintentional wrong, but even a, trace of contrition is singular lacking at any stage of the proceedings. We are clearly of the opinion that there is no factual basis for sustaining the second ground urged by learned Counsel. (3) Turning to the next point urged, learned 'Counsel amplified it in these terms. No doubt, having regard to article 300 of the Constitution which practically reproduces the earlier statutory provisions in that behalf going back to 1858, States are not immune from liability to be sued. Learned Counsel added that he would not dispute that Title Suit 40 of 1950 was properly laid and that the Court had jurisdiction to entertain it, as also jurisdiction to pass the order of temporary injunction against the defendant State pending. the decision of the suit. But learned Counsel urged that it did not automatically follow that the State was amenable to proceedings, for disobedience of the injunction. Proceedings for contempt even for enforcing an order of a Civil Court, he submitted, were really a punishment for wrong doing and in essence, therefore, quasi criminal. For this reason he contended that article 300 which permitted suits to be filed against the Union and the States could not be held to authorise proceedings of such a quasi criminal nature, and that as a result the Common Law rules, that the King could do no wrong and that the Crown could not be sued for a tort, were attracted. In this connection learned Counsel invited our attention to the decisions in District Board of Bhagalpur vs Province of Bihar(1) and Tarafatullah vs section N. Maitra (2). In the first of these cases, a large number of English and Indian decisions on the liability of the Crown in (1) A.I.R. 1954 Pat. 529. (2) A.I.R. 1952 Cal. 919, 927. 738 tort were discussed. The question for consideration before the learned Judges was whether the suit before the Court against the Government could be legally maintainable and as to the scope and limits of the rule,, respondent superior" in such actions against the State but both these matters are far removed from the pale of the controversy before us. In regard to the other ruling of the learned Judges of the Calcutta High Court, learned Counsel relied not so much on the decision itself but on the following observations of Mukerji, J. (1): " A State as such cannot be said to commit contempt. In the case of the State the allegation must be against a particular officer or officers of the State. Where as in this case an order was obtained against the State. in a civil proceeding restraining certain acts of the State, and it is alleged by the complainant or the petitioner that there has been a contempt by breach of that order, the petitioner for contempt will have to take out the Rule for contempt against the particular officer or officers who has or have disobeyed that order. In such a petition for contempt the Rule must be asked against an individual and not against the State. Article 300 of the Constitution of India provides for proceedings by way of suit against the State or the Union of India and cannot be extended to apply to contempt proceedings ". In order however to appreciate the observations it is necessary to consider briefly the facts of the case. The decision was concerned with an application to commit the respondents for contempt for disobedience to an order of ad interim injunction granted by a single Judge of the High Court on a petition for the issue of a writ of Certiorari under article 226 of the Constitution. No doubt, the order of temporary injunction was issued against the Government, but the disobedience complained of was not any act of the Government as such, but of certain officers. Not with. standing this, the Secretary to Government who had been formally impleaded as representing the Government, was sought to be proceeded against personally (1) A.I.R. 1952 Cal. 927. 739 for contempt and the prayer being that he as representing the Government should be committed to prison. As Chakravartti, C. J., pertinently pointed out, a more ridiculous prayer could not be imagined. The learned Judges further found that as a fact no disobedience of the order had been proved. The question therefore whether the Government could be liable to be proceeded against for contempt for disobedience of an order which a Court has jurisdiction to pass and which bound the Government, the act constituting the contempt being unmistakably an act for which Government could not as such disclaim responsibility did not arise for consideration in that case. Having regard to the findings of fact reached by the Court, the observations regarding the scope of the liability of Government were wholly orbiter. In regard to the passage relied on we need only say that observations about the ambit of article 300 of the Constitution are too widely expressed and do not take into account, the provisions of the Civil Procedure Code 0. 21, r. 32 & 0. 21, r. 39(2)(3) which directly bear on the matter and which we shall discuss presently. Further, they cannot also apply to those cases where the disobedience takes the form of a formal Government order as in this case. In this connection we prefer the approach to the question indicated by the learned C. J., who said: " I do not say that in fit cases a writ for contempt may not be asked for against a corporation itself, or against a Government. In what form, in such a case, any penal order, if considered necessary, is to be passed and how it is to be enforced are different matters which do not call for decision in this case. In England, there is a specific rule providing for sequestration of the corporate property of the party concerned, where such party is a corporation. I am not aware of any similar rule obtaining in this country, but, I do not consider it impossible that in a fit case a fine may be imposed and it may be realised by methods analogous to sequestration which would be a distress warrant directed against the properties of the Government or the Corporation 740 Learned Counsel laid considerable stress on the proceedings under 0. 39, r. 2(3) being quasi criminal, in an attempt to establish that the State could not be proceeded against for such a criminal wrong. Though undoubtedly proceedings under 0. 39, r. 2(3), Civil Procedure Code, have a punitive aspect as is evident from the condemner being liable to be ordered to be detained in civil prison, they are in substance designed to effect the enforcement of or to execute the order. This is clearly brought out by their identity with the procedure prescribed by the Civil Procedure Code for the execution of a decree for a permanent injunction. Order 21, r. 32 sets out the method by which such decrees could be executed and cl. (1) enacts " where the party against whom a decree. . . for an injunction has been passed, has had an opportunity for obeying the decree and has willfully failed to obey it, the decree may be enforced, in the case of a decree . . . for an injunction by his detention in the civil prison, or by the attachment of his property or by both Clauses 2 and 3 of this rule practically reproduce the terms of cls. 4 and 3 respectively of 0. 39, r. 2, and the provisions leave no room for doubt that 0. 39, r. 2(3) is in essence only the mode for the enforcement or effectuation of an order of injunction. While on the provisions of 0. 21, r. 32, it may be pointed out that learned Counsel for the State does not contend that a State Government against whom a decree for a permanent injunction has been passed is not liable to be proceeded against under this provision of the Code in the event of the decree not being obeyed by them. No doubt the State Government not being a natural person could not be ordered to be detained in civil prison, On the analogy of Corporations; for which special provision is made in 0. 39, r. 5, but beyond that,, both when a decree for a permanent injunction is executed and when an order of temporary injunction is enforced the liability of the State Government to be proceeded against appears to us clear. The third point urged lacks substance and is rejected. Some point was sought to be made of the fact that 741 as the State was a juristic entity merely, the wrong which constituted the disobedience, must have been the act of some servant or agent of the Government and that except on the principle of vicarious liability the State could not be liable. This argument which is partly based on the observations of Mukherji, J., in the passage already extracted would if accepted deny that there could be any action by the State at all, is really part of the last submission and could conveniently be dealt with along with it. Besides, it need only be mentioned that the fact that officers and servants of Government could be dealt with as individuals bound by the orders passed against the defendant Government, nor the fact that they would be liable in ' contempt is no ground at all for holding that the State Government itself would not be liable for their own act. (4) The invocation of the rule of construction that the Crown was not bound by a statute unless by express words or by necessary implication the intention so to bind was manifested, was the next submission of learned Counsel, reliance being placed for the position, on the recent decision of this Court in Director of Rationing & Distribution vs Corporation of Calcutta (1). We shall proceed to consider the soundness of the contention that on a proper construction of the Civil Procedure Code the State of Bihar is not within 0. 39, r. 2(3). Article 300 of the Constitution permits suits, which before the Constitution could have been filed against the Central and Provincial Governments respectively, to be filed against the Union and the State. As already stated, there is no dispute that ' having regard to the cause of action alleged in the plaint, Title Suit 40 of 1950 could be properly laid against the State and the plaintiff could, if she was able to make good her allegations of fact and law, be entitled to be granted the reliefs prayed for in her suit including the relief for a permanent injunction restraining the State from issuing a notification under a. 3(1) of the Act and from interfering with her possession of (1) ; 742 the estate of Handwa. It is also admitted that the Subordinate Judge had jurisdiction to pass the order of temporary injunction against the State Government and that the order bound them. What is contended however is that the method of enforcing that order provided for in 0. 39, r. 2(3) of the Code is not available against the State Government, because the State Government is not named in that sub rule expressly or even by necessary implication. An examination however of the provisions of the Code and the Scheme underlying it in relation to proceedings against Government establishes that this submission is wholly untenable. The Code of Civil Procedure does not determine whether any particular suit or class of suits could be filed against the Government or not, these being matters of substantive law. But when in law a suit could be properly filed against Government be it the Union or the State, it makes a complete provision for the procedure applicable to such suits and the type of orders which Courts could pass in such suits and how these orders could be enforced. Part IV of the Code comprising sections 79 to 82, sets out the details of the pro cedure to be followed in suits against Government. Section 79 prescribes what, the cause title of suits against Government should be, the expression 'Government ' being used to designate both the Union as well as the State Governments. Section 80 provides making a special provision not applicable to suits against private parties, for a two months ' notice prior to suit. If Government were a party to a suit, it necessarily follows that where the plaintiff succeeds there might be a decree against the Government the Union or the State and section 82 lays down special rules for the execution of such decrees. In the 1st Schedule to the Code, there is a separate chapter Chapter XXVII, dealing with suits against Government, in which provision is specially made for adequate time being granted to it for conducting the various stages of the proceedings before Courts. The foregoing, in our opinion, makes it clear that the State is bound by the Code of Civil Procedure, the 743 scheme of the Code being that subject to any special provision made in that regard, as respects Governments, it occupies the same position as any other party to a proceeding before the Court. We are further satisfied that even apart from the Scheme of the Code, the State, as a party defendant is plainly within the terms of 0. 39, r. 2(3) of the Code. There is here no controversy that the Subordinate Judge had jurisdiction to pass the interim order of injunction against the State on the terms of 0. 39, r. 2(1) which reads: "In any suit for restraining the defendant from committing injury of any kind, whether compensation is claimed in it or not, the plaintiff may at any time after the filing of the suitapply to the Court for a temporary injunction to restrain the defendant from committing the injury complained of. . . . ." The reference to the " defendant " in the sub rule precludes any argument against the State being exempt from or being outside the statute. The entire argument on this part of the case was based on the difference between the language employed in cl. (1) extracted above and cl. (3) of the rule making provision for the manner in which disobedience to orders passed under cl. (1) could be dealt with. Clause (3) runs: "In case of disobedience, or of breach of any such terms, the Court granting an injunction may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding six months, unless in the meantime the Court directs his release." Learned Counsel urged that cl. (3) discarded the use of the expression " defendant " employed in cl. (1) which would have included the " State" in cases where the State was a party defendant, and had designated the party against whom the injunction order could be enforced as "the person guilty of the disobedience " and with a further provision empowering the 95 744 Court to order the detention of such person " in Civil prison. The word " person it was urged was at the best a neutral expression, which in the absence of compelling indication, was not apt to include " a State " and particularly so in the light of the rule of Construction approved by this Court in The Director of Rationing vs Corporation of Calcutta (1). It was further pressed upon us that the construction suggested would not render injunction orders passed on the State when it was a defendant brutum fulmen, because, the State as a juristic person could act only through human agency and there would always be some officer a natural " person guilty of disobedience " in every case where orders passed against a State were disobeyed. We are clearly of the opinion that the entire argument should be rejected. We feel wholly unable to accept the construction suggested of the expression " person guilty of disobedience " in the clause. The reason for the variation in the phraseology employed in cls. (1) and (3) of 0. 39, r. 2 is not far to seek. Under the law when an order of injunction is passed, that order is binding on and enforceable not merely against the persons eo nomine impleaded as a party to the suit and against whom the order is passed but against " the agents and servants, etc." of such a party. If such were not the law, orders of injunction would be rendered nugatory, by their being contravened by the agents and servants of parties. For that reason, the law provides that in order that a plaintiff might seek to enforce an order against a servant or an agent of the defendant, these latter need not be added as defendants to the suit and an order obtained specifically against the man order against the defendant sufficing for this purpose. If such agents or servants, etc., are proved to have formal notice of the order and they disobey the injunction, they are liable to be proceeded against for contempt, without any need for a further order against them under 0. 39, r. 2(1). This legal position is brought out by the terms of an injunction order set out in Form 8 of Appendix F to the Code which (1) ; 745 reads:"The Court doth order that an injunction be awarded to restrain the defendant C. D., his servants, agents and workmen, from. . . . It is not suggested that the form which the order of the Subordinate Judge took in this case, departed from this model. If such is the scope of an order for injunction, it would be apparent that the expression " person " has in 0. 39, r. 2(3) been employed merely compendiously to designate everyone in the group " Defendant, his agents, servants and workmen " and not for excluding any defendant against whom the order of injunction has primarily been passed. It would therefore follow that in cases where the State is the defendant against whom an order of injunction has been issued, it is " expressly " named in the clause and not even by necessary implication, and the rule of construction invoked does not in any manner avail the appellant. The matter may also be approached from a broader angle. Where a Court is empowered by statute to issue an injunction against any defendant, even if the defendant be the State the provision would be frustrated and the power rendered ineffective and unmeaning if the machinery for enforcement specially enacted did not extend to every one against whom the order of injunction is directed. Apart, therefore, from a critical examination of the phraseology of 0. 39, r. 2(3), the obligation on the part of the State to obey the injunction and be proceeded against for disobedience if it should take place would appear to follow by necessary implication. As Maxwell (1) puts it " The Crown is sufficiently named in a statute when an intention to include it is manifest ". The only point remaining for consideration is as to whether the publication of the notification under section 3(1) which was treated by the Subordinate Judge to be the disobedience, had been established to be " the act " of the State. The entirety of the argument on this part of the case was rested on the terms of article 154(1) of the Constitution reading: (1) Maxwell on Interpretation of Statutes, 10th Edition, P. 140. Moore V. SMith, ; 746 " The executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution". It was urged that the publication of the notification was " an executive act " an exercise of the executive power of the State and since such a power could be exercised either by the Governor directly or through officers subordinate to him, it could not be predicated, from the mere fact that the notification was purported to be made in the name of the Governor, in Conformity with the provisions of article 166(1) that it was the Governor who was responsible for the notification and not some officer subordinate to him. On this reasoning the further contention was, that unless the respondent proved that it was the Governor himself who had authorised the issue of the notification, the State or the State Government could not be fixed with liability therefore, so as to be held guilty of disobedience of the order of injunction. The submission of learned Counsel is correct to this extent that the process of making an order precedes and is different from the expression of it, and that while article 166(1) merely prescribes how orders are to be made, the authentication referred to in article 166(2) indicates the manner in which a previously made order should be embodied. As observed by the Privy Council in King Emperor vs Sibnath Banerji (1)with reference to the term " executive power " in Ch. 2 of Part 3 of the Government of India Act, 1935, corresponding to Part VI, Ch. 11 of the Constitution) " the term 'executive ' is used in the broader sense as including both a decision as to action and the carrying out of the decision ". Section 3(1) of the Act confers the power of issuing notifications under it, not on any officer but on the State Government as such though the exercise of that power would be governed by the rules of business framed by the Governor under article 166(3) of the Constitution. But this does not afford any assistance to the appellant. The order of Government in the (1) (1945) L. R. 72 I. A. 241 747 present case is expressed to be made " in the name of the Governor " and is authenticated as prescribed by article 166(2), and consequently " the validity of the order or instrument cannot be called in question on the ground that it is not an order or instrument made or executed by the Governor ". Authorities have, no doubt, laid down that the validity of the order may be questioned on grounds other than those set out in the Article, but we do not have here a case where the order of the Government is impugned on the ground that it was not passed by the proper authority. Its validity as an order of Government is not in controversy at all. The only point canvassed is whether it was an order made by the Governor or by someone duly authorised by him in that behalf within article 154(1). Even assuming that the order did not originate from the Governor personally, it avails the State nothing because the Governor remains responsible for the action of his subordinates taken in his name. In Emperor vs Sibnath Banerji (1), already referred to, Lord Thankerton pointing out the distinction between delegation by virtue of statutory power therefore and the case of the exercise of the Governor 's power by authorized subordinates under the terms of a. 49(1) of the Government of India Act, 1935 (corresponding to article 154(1) ), said: " Sub a. 5 of section 2 (of the Defence of India Act, 1939) provides a means of delegation in the strict sense of the word, namely, a transfer of the power or duty to the officer or authority defined in the sub. section, with a corresponding divestiture of the Governor of any responsibility in the matter, whereas under section 49(1) of the Act of 1935, the Governor remains responsible for the action of his subordinates taken in his name. " This last point also is therefore without force and has to be rejected. Before concluding, we consider it proper to draw attention to one aspect of the case. It is of the essence of the rule of law that every authority within the State (1) (1945) L.R. 72 I.A. 241. 748 'including the Executive Government should consider itself bound by and obey the Law. It is fundamental to the system of polity that India has adopted and which is embodied in the Constitution that the Courts of the land are vested with the powers of interpreting the law and of applying it to the facts of the cases which are properly brought before them. If any party to the proceedings considers that any Court has committed any error, in the understanding of the law or in its application, resort must be had to such review or appeals as the law provides. When once an order has been passed which the Court has jurisdiction to pass, it is the duty of all persons bound by it to obey the order so long as it stands, and it would tend to the subversion of, orderly administration and civil Government, if parties could disobey orders with impunity. If such is the position as regard private parties, the duty to obey is all the more imperative in the case of Governmental authorities, otherwise there would be a conflict between one branch of the State polity, viz., the executive and another branch the Judicial. If disobedience could go unchecked, it would result in orders of Courts ceasing to have any meaning and judicial power itself becoming a mockery. When the State Government obeys a law, or gives effect to an order of a Court passed against it, it is not doing anything which detracts from its dignity, but rather, invests the law and the Courts with the dignity which are their due, which enhances the prestige of the executive Government itself, in a democratic set up. We consider that on the facts of this case there was no justification, legal or otherwise for the State Government to have rushed the notification under section 3(1), when its application to modify or vacate the order for interim injunction was pending before the Subordinate Court. But more than that, when possibly by failure to appreciate their error, the notification had been published, and the propriety and legality of its action was brought up before the Court by an application under 0. 39, r. 2(3), the attitude taken up by the State Government and persisted in upto hearing before us, has been one which we can 740 hardly commend. If the Government had deliberately intended to disobey the order of the Court, because for any reason they considered it wrong, their conduct deserves the severest condemnation. If on the other hand it was merely a case of inadvertence and arose out of error, nothing would have been lost and there was everything to be gained, even in the matter of the prestige of the Government, by a frank avowal of the error committed by them and an expression of regret for the lapse, and it is lamentable that even at the stage of the hearing before us, there was no trace of any such attitude. The appeal fails and is dismissed with costs. Appeal dismissed.

The respondent sued the State of Bihar for a declaration that the Bihar Land Reforms Act, 1950, was ultra vires, void and unconstitutional and for a permanent injunction restraining the State and its officers or agents from issuing any notification thereunder in respect of her estate or taking possession thereof and on a petition filed along with the plaint obtained an order of temporary injunction against the State in terms of her prayer, pending the hearing of the suit. More than a year thereafter, the State made an application under 0. 39, r. 4 of the Code for a discharge of the order of temporary injunction on the ground that the impugned Act had in another case been declarer valid by the Supreme Court. Before that application could, however, be heard, the State of Bihar, on May 19, 1952 issued a notification under section 3(1) of the Act, authenticated by the Additional Secretary to the Government, declaring that, amongst others, the respondent 's estate had vested in the State of Bihar under the provisions of the Act. Thereupon the respondent moved the trial Court for taking action against the State under 0. 39, r. 2(3) of the Code. The contention on behalf of the State was that in view of article 31 B of the Constitution the issue of the notification was lawful and could not constitute contempt of Court. The Subordinate judge held that this was no defence to the application by the respondent and directed attachment of the appellant 's property to the value of Rs. 5,000 and the High Court on appeal affirmed that decision. Held, that the courts below took the correct view of the matter and that the appeal must be dismissed. The procedure laid down by 0. 39, r. 2(3) of the Code of Civil Procedure is remedial and essentially one for the enforcement or execution of an order of temporary injunction passed under 0. 39, r. 2(1) and is available against the State although the provision for detention may not apply to it. It is wrong to say that it is either contrary to article 300 of the Constitution or hit by the rule that no action lies against the State in tort or for a wrong doing entailing punishment or compensation. District Board of Bhagalpur vs Province of Bihar, A.I.R. 1954 729 Pat. 529 and Tarafatullah vs section N. Maitra, A.I.R. 1952 Cal. gig, distinguished. There is also no basis for the contention that the State is not expressly or by necessary implication mentioned in 0. 39, r. 2(3). The word 'person ' used by it, properly construed, includes the defendant against whom the order of injunction is primarily issued as also the defendant 's agents, servants and workmen. Since the court 's power to issue an order of temporary injunction against the State under 0. 39, r. 2(1) cannot be in doubt, disobedience of such an order when issued necessarily attracts 0. 39, r. 2(3) of the Code. Director of Rationing & Distribution vs Corporation of Calcutta, ; , held inapplicable. Held, further, that when once an order is passed which the Court has jurisdiction to pass, it is the duty of the State no less than any private party to obey it so long as it stands, and the conduct of the State Government in the instant case in issuing the notification at a time when its application for vacating the injunction was still pending and the attitude taken up by it after the application under 0. 39, r. 2(3) was made and persisted in till the end must be disapproved.

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l Appeals Nos. 152, 167 and 167 A of 1951. Appeal from the Judgments dated April 25, and May 1, 1950, of the High Court of Judicature for Patiala and East Punjab States Union at Patiala (Teja Singh C. J. and Chopra J.) in T. P. A. R. I. A. O. No. 34 of 1950 and Civil Appeals Nos. 493/494 of Samwat 2005. Rang Behari Lal (Ram Nivas Sanghi, with him) for the appellants in Civil Appeals Nos. 167 and 167 A. Udai Bhan Chaudhuri for the appellant in Civil Appeal No. 152. Lachhman Das Kaushal for the respondent in Civil Appeals Nos. 167 and 167 A. Ram Nivas Sanghi for the respondent in Civil Appeal No. 152. October 24. The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J. These appeals are connected and raise a common question of law. They come before us on special leave granted by the Pepsu High Court at Patiala under sub clause (e) of clause (1) of article 133 of the Constitution, 754 The facts in Civil Appeal No. 152 of 1951 are different from those in the other two appeals, and the consequences are different also. The proceedings arise out of the liquidation of two companies called the Marwari Chamber of Commerce Ltd., (in Civil Appeal No. 152 of 1951) and the Aggarwal Chamber of Commerce Ltd., (in the other two appeals). The Official Liquidator settled the list of contributories, and after various steps taken before the Liquidation Judge of the High Court by way of objection on grounds of law as well as on merits, there were payment orders on 4th June, 1946, in Civil Appeal No. 152 of 1951 and on 18th January, 1949, in the latter two appeals. The correctness and the validity of the payment order in Civil Appeal No. 152 of 1951 was challenged in appeals taken to the High Court by the Official Liquidator and the contributory. The order of the Liquidation Judge was modified in favour of the Liquidator, and as against a sum of Rs. 4,762 13 3 ordered to be paid, there was an order for the payment of Rs. 24,005 7 3. On further appeal by the contributory to the Judicial Committee, it was held that the appeal to the Division Bench was barred by time, and consequently the judgment of the Bench was set aside, and that of the Liquidation Judge restored. This was on 6th December, 1949. In the other two appeals, an application for removal of the name of the contributory was granted by the Liquidation Judge, but on appeal a Division Bench of the High Court reversed this order. On further appeal taken by the company, the Judicial Committee, Patiala, remanded the case for retrial, and the Liquidation Judge made an order for payment of Rs. 8,191 0 9 on 18th January, 1949, as aforesaid. On 2nd February, 1950, the firm Murari Lal Hari Ram, appellant in Civil Appeal No. 152 of 1951, filed an application under section 152, Civil Procedure Code, for amendment of the order of the Liquidation judge, Kartar Singh J., alleging that there was a 756 clerical or arithmetical error arising from an accidental slip or omission in that a sum of Rs. 24,005 7 3 was taken as due by the firm instead of the correct figure of Rs. 21,805 7 3. This application was dismissed by the learned Judge on 16th March, 1950. The firm applied to him for a certificate for leave to appeal, but this again was dismissed. An appeal was preferred from the order dismissing the amendment petition, but it was thrown out on the ground of want of a certificate from the Single Judge. This order is dated 1st May, 1950, and is couched in these, terms " We have recently held in Ganpat Rai Hira Lal vs Aggarwal Chamber of Commerce, Ltd., L.P.A. Nos. 493 and 494 of Samvat 2005 (Pepsu) that no appeal lies from an order of a Single Bench to a Division Bench without a certificate by the Single Judge that the case is a fit one for further appeal. In this case it is admitted that the appellants made an application for a certificate to the Single Bench, from whose decision he is appealing, but the same was refused. The appeal is. therefore not competent and is dismissed in limine. " The reference in the order to the case of Ganpat Rai Hira Lal vs Aggarwal Chamber of Commerce Ltd., L.P. A. Nos. 493 and 494 of Samvat 2005 (Pepsu) is to the order made by the High Court in the connected matter which has given rise to the two Appeals Nos. 167 and 167 A of 1951. There, an appeal was lodged from the payment order of the Liquidation Judge, but it was dismissed on the same ground, namely, want of a certificate from the Single Judge. In Civil Appeal No. 152 of 1951, the argument for the appellant is that no certificate front the Single Judge is necessary, as the matter is governed not by Ordinance X of 2005 of the Patiala State but by the Patiala States Judicature Farman Shahi, 1999 Bikarmi, under which no certificate is necessary. It is true that under section 44 of the earlier Farman a certificate that the case is a fit one for appeal is required only if the judgment, decree, or order sought to be appealed is wade in the exercise of civil 98 756 appellate jurisdiction. It is, however, clear that we are not governed by this provision. The amendment application was made on 2nd February, 1950, as stated already. No appeal is provided under the Civil Procedure Code from an order amending or refusing to amend a judgment, decree or order, though an appeal would lie from the amended decree or order. There is no warrant for the view that the amendment petition is a continuation of the suit or proceedings therein. It is in the nature of an independent proceeding, though connected with the order of which amendment is sought. Such a proceeding is governed by the law prevailing on its date, which admittedly is Pepsu. Ordinance X of 2005, and which provides in section 52 for a certificate. The section is in the following terms: " Subject to any other provision of law, an appeal shall lie to the High Court from a judgment, decree or order of one Judge of the High Court and shall be heard by a Bench consisting of two Judges of the High Court: Provided that no such appeal shall lie to the High Court unless the Judge who decides the case or in his absence the Chief Justice certifies that the case is a fit one for appeal. " So far as the appellant firm is concerned, there is no question of any right of appeal vested in it which is sought to be taken away by giving retrospective effect to the Ordinance which came into force in August, 1948. The order of the High Court holding that no appeal lies from an order of a single Judge without a certificate by him that the case is a fit one for appeal, is, in our opinion, right. In the other two Appeals Nos. 167 and 167 A, of 1951, different considerations come into play. The payment order of the Liquidation Judge was on 18th January, 1949, and the appeal was preferred on 19th February, 1949. In the meantime, as there was some doubt on the question, the appellants took the precaution of applying to the Judge for a certificate, but this was dismissed on 3rd March, 1949. On the relevant dates, the Patiala States Judicature Farman, 1999, was in force, and the appellants hood a, right of 757 appeal from the payment order without a certificates They could not be deprived of this right by a subsequent change in the law, unless the later enactment provides expressly or by necessary implication for retrospective effect being given. The learned Judges of the High Court conceded this in their order, but they thought 'that section 116 of Ordinance X of 2005 (1948 49) contained an express provision to the contrary. The section is in these terms: Notwithstanding anything contained in this Ordinance, all suits, appeals, revisions, applications, reviews, executions and other proceedings, or any of them, whether civil or criminal, pending in the Courts and before judicial authorities in any Covenanting State shall be continued and concluded respectively in Courts or before judicial authorities of the like status in the Union ; and the Courts or authorities in the Union shall have the same jurisdiction in respect, of all such suits, appeals, revisions, reviews, executions, applications and other proceedings, or any of them, as if the same had been duly commenced and continued in such Courts or before such authorities. " It is fairly obvious that this is a transitory regula tion, providing for a change over of proceedings from one set of Courts in the Covenanting State to others of like status in the Union and for their continuance etc. in the latter Courts. It does not say that the proceedings must be treated as having freshly commenced. What is contemplated in the latter part of the section is a notional commencement, if such a term could be used. The section obviously means that all rights which arose or are likely to arise in the future shall remain intact notwithstanding the new set up, and that they would be dealt with by the Union Courts in place of the Courts of the Covenanting State. There is nothing in the section to justify the view that any taking away of a vested right of appeal retrospectively was intended. The decision in Colonial Sugar Refining Co. vs Irving(1) clearly applies to the facts, and the order of the High Court that (1) 758 the appeals are not competent is, in our opinion, erroneous. The result is that Appeal No. 152 of 1951 is dismissed with costs throughout, while Appeals Nos. 167 and 167A of 1951 are allowed with costs throughout. Appeal No. 125 dismissed. Appeals Nos. 167 and 167A allowed. Agents for the appellants in Appeals Nos. 167 and 167A: Mohan Behari Lal. Agent for the appellant in Appeal No. 152: Kundan Lal Mehta. Agent for respondents in Appeals Nos. 167 and 167A: Naunit Lal. Agent for respondent in Appeal No. 152: Mohan Behari Lal.

Section 116 of the Pepsu Ordinance X of 2005 (1948 1949) is a transitory regulation providing for a change over of proceedings 'from one set of courts in the covenanting State to others of like status in the Union, and for their continuance etc. in the latter courts. It does not mean that the proceedings must be treated as having freshly commenced. What is contemplated in the latter part of the section is a notional commencement, and the section means that all rights which arose or are likely to arise in future shall remain intact not with standing the new set Lip and that they would be dealt with by the Union courts in place of the courts of the covenanting State. There is nothing in the section to justify the view that any taking away of a vested right of appeal retrospectively was intended. Under the Patiala States Judicature Farman of 1999 a certificate was necessary for an appeal to a Division Bench from an order of a single Judge of the Patiala High Court only in respect of judgments and orders made in the exercise of civil appellate jurisdiction. Under the Pepsu Ordinance X of 2005 (1948 49) a certificate was necessary in all cases. In Appeal No. 152 an application made on 2nd February, 1950, for amendment of an order made by a Liquidation Judge in 1946 was dismissed and an appeal from the order of dismissal to a Division Bench was dismissed on 1st May, 1950, for want of a certificate. In appeals Nos. 167 and 167A, the payment orders were made on the 18th January, 1949, and appeals from those orders were dismissed on 3rd March, 1949, for want of a certificate: Held, (i) that as a petition for amendment was not a continuation of the earlier proceedings but was in the nature of an 753 independent proceeding though connected with the order sought to be amended, it was governed by the law prevailing on its date, viz., the Pepsu Ordinance of 2005 under which a certificate was, necessary, and in Appeal No. 152 the dismissal of the appeal to the Division Bench for want of a certificate was right; (ii)that with regard to Appeals Nos. 167 and 167 A, as the law in force on the relevant dates was the Patiala States Judicature Farman of 1999 the appellants had a right to appeal from the payment order without a certificate; this vested right could not be taken away by a subsequent change in the law unless the later enactment expressly or by necessary implication was retrospective in operation and deprived them of such a right, that there was nothing in section 116 of the Ordinance to show that it was intended to have retrospective effect and the order of the High Court dismissing the appeals as incompetent was, therefore, erroneous. Colonial Sugar Refining Company vs Irving referred to.

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Appeal No. 388 of 1960. Appeal by special leave from the judgment and order dated February 3, 1959, of the Patna High Court in Election Appeal No. 10 of 1958. section P. Varma, for the appellant. L. K. Jha and D. Govardhan, for respondent No. 1. L. K. Jha and K. K. Sinha, for respondent No. 2. 1960. November 17. The Judgment of the Court was delivered by 471 GAJENDRAGADKAR, J. Is the appellant Ram Padarath Mahto disqualified for membership of the Bihar Legislature under section 7(d) of the Representation of the People Act, 1951 (hereafter called the Act)? That is the short question which arises for our decision in the present appeal by special leave. The appellant was one of the candidates for the Dalsinghsarai Constituency in the District of Darbhanga in Bihar for the State Legislature. The said Constituency is a Double Member Constituency; it was required to elect two members, one for the general and the other for the reserved seat for scheduled castes in the Bihar Legislative Assembly. It appears that the said Constituency called upon voters to elect members on January 19, 1957. January 29, 1957 was fixed as the last date for the filing of the nomination papers. The appellant filed his nomination paper on January 28, 1957, and on the next day seven other members filed their nomination papers. On February 1, 1957, the nomination paper filed by the appellant was rejected by the returning officer on two grounds; he held that the appellant being an Inspector of Co operative Societies was a Government servant at the material time and so was disqualified from standing for election. He also found that the appellant was a member of a joint and undivided Hindu family which carried on the business of Government as stockiest of grain under a contract between the Government of Bihar and a firm of the joint family known as Nebi Mahton Bishundayal Mahto. Thereafter the election was duly held, and Mr. Mishri Singh and Mr. Baleshwar Ram, respondents 1 and 2 were declared duly elected to the general and reserved seat respectively. The validity of this election was challenged by the appellant by his Election Petition No. 428 of 1957. To this petition he impleaded the two candidates declared to have been duly elected and five others who had contested in the election. Before the Election Tribunal the appellant urged that he was not in the employ of the Government of Bihar at the material time. He pointed out that he had resigned his job on January 13, 472 1957, and his resignation had been accepted on January 25, 1957, relieving him from his post as from the later date. He also contended that there was a partition in his family and that he had no share or interest in the contract in question. Alternatively it was argued that even if the appellant had an interest in the said contract it did not fall within the mischief of section 7(d) of the Act. These pleas were traversed by respondents 1 and 2 who contested the appellant 's election petition. The Election Tribunal found that the petitioner was not a Government servant on the day he filed his nomination paper, and so according to it the returning officer was wrong in rejecting his nomination paper on the ground that he was a Government servant at the material time. The Election Tribunal rejected the appellant 's case that there was a partition in the family, and held that at the relevant time the appellant continued to be a member of the joint Hindu family which had entered into the contract in question with the Government of Bihar. However, in its opinion, having regard to the nature of the said contract it was not possible to hold that the appellant was disqualified under section 7(d), and so it came to the conclusion that the returning officer was in error in rejecting the appellant 's nomination paper on this ground as well. In the result the Tribunal allowed the election petition, declared that the nomination paper had been improperly rejected, and that the election of the two contesting respondents was void. Against this decision the two contesting respondents filed two appeals in the High Court at Patna (Election Appeals Nos. 9 and 10 of 1958). The High Court has confirmed the finding of the Tribunal that the appellant was not a Government servant at the material time. It has also agreed with the conclusion of the Tribunal that at the relevant time the appellant was a member of the undivided Hindu family. On the construction of the contract, however, it differed from the view adopted by the Tribunal, and it has held that as a result of the said contract the appellant was disqualified under section 7(d) of the Act. This finding 473 inevitably led to the conclusion that the appellant 's nomination paper had been properly rejected. On that view the High Court did not think it necessary to consider whether the Tribunal was right in declaring void the election of not only respondent 1 but of respondent 2 as well. It is against this decision of the High Court that the appellant has come to this Court by special leave; and the only question which is raised on his behalf is that the High Court was in error in coming to the conclusion that he was disqualified under section 7(d). The decision of this question naturally depends primarily on the construction and effect of the contract in question. Section 7 of the Act provides for disqualification for membership of Parliament or of State Legislatures. Section 7(d), as it stood at the material time and with which we are concerned in the present appeal provides,, inter alia, that a person shall be disqualified for being chosen as, and for being, a member of the Legislative Assembly of a State, if whether by himself or by any person or body of persons in trust for him or for his benefit or on his account, he has any share or interest in a contract for the supply of goods to, or for the execution of any works or the performance of any services undertaken by, the appropriate Government. On the concurrent findings recorded by the High Court and the Tribunal it cannot now be disputed that the appellant has interest in the contract in question; so that the first part of section 7(d) is satisfied. The High Court has found that the contract attracts the last part of section 7(d) inasmuch as according to the High Court the Government of Bihar had undertaken to discharge the service of supplying grain to the residents of Bihar and the firm of the appellant 's family had entered into a contract for the performance of the said services. The last part of section 7(d) postulates that the appropriate Government has undertaken to perform certain specific services, and it is for the performance of such services that the contract had been entered into by a citi zen. In other words, if a citizen has entered into a contract with the appropriate Government for the 60 474 performance of the services undertaken by the said Government he attracts the application of section 7(d). This provision inevitably raises two questions: what are the services undertaken by the appropriate Government? Has the contract been entered into for the performance of the said services? At this stage it is necessary to consider the material terms of the contract. This contract was made on February 8, 1956, between the Governor of Bihar who is described as the first party and the firm which is described as the second party. The preamble to the contract shows that the first party had to stock and store foodgrains in Darbhanga District for sale in pursuance of the Grain Supply Scheme of the Government for which a proper custodian and bailee for reward was necessary. It also recites that the second party had applied to become such custodian and bailee of such stock of foodgrains as the first party shall deliver to the second party in one lump or from time to time on terms and in the manner expressly specified under the contract, or as may be necessarily implied. Clause 1 of the contract provides that the second party shall, at the direction of the first party, take over foodgrains from the railway wagons or from any place as directed by the first party; thereafter the second party had to cause the grains to be stored in his godown at Dalsinghsarai and had to redeliver the same to the first party after weighing either at the second party 's godown approved by the first party or at any other place as directed by the first party. The movement of the grain had to be done by the second party himself or by a transport contractor appointed by the first party. Clause 2 imposed on the second party the liability to maintain a register and keep accounts as prescribed thereunder. Under cl. 3 the second party undertook to keep such stocks and establishments as may be necessary at his own expense. Clause 4 imposed upon the second party the obligation to protect the stock of foodgrains or to make good the losses except as thereinafter provided: Clauses 5 to 8 are not material for our purpose. Clause 9 provides that the second party shall deposit the sum of 475 Rs. 5,000 in a Savings Bank account which has been pledged to the District Magistrate, Darbhanga, and comply with the other conditions specified in the clause. Clause 10 deals with the remuneration of the second party. It provides that the first party shall be liable to pay to the second party remuneration for the undertaking in this agreement at the rate of Re. 1 per( cent on the value of the stocks moved or taken over from his custody under the orders or directions of the first party or his agent calculated at the rate fixed by the Government from time to time for wholesale sales of grain. The clause adds that no remuneration shall be payable to the second party if the first party takes over the whole of the balance stock lying with the second party for reasons of the termination of the agreement. The rest of the clauses need not be recited. It would thus be seen that the agreement in terms is one of bailment. The State Government wanted to entrust the work of stocking and storing foodgrains to a custodian or bailee. In that behalf the appellant 's firm made an application and ultimately was appointed a bailee. There is no doubt that by this contract the firm has undertaken to do the work of stocking and storing foodgrains belonging to the State Government; and if it can be reasonably held that the service undertaken by the State Government in the present case was that of stocking the foodgrains the contract in question would obviously attract the provisions of section 7(d). Mr. Varma, however, contends that the service undertaken by the State Government is the sale of foodgrains under its Grain Supply Scheme; and he argues that unless the contract shows that it was for sale of the said goods it cannot attract the provisions of section 7(d). Unfortunately the scheme adopted by the State Government for the supply of grain has not been produced before the Election Tribunal, and so the precise nature and extent of the services undertaken by the State Government fall to be determined solely by reference to the contract in question. It is true that the contract relates to the stocking and storing of foodgrains which the State Government wanted to sell to the residents of Bihar; but can it be said 476 that stocking and storing of foodgrains was such an integral or essential part of the selling of goods that a contract for stocking and storing foodgrains should necessarily be regarded as a contract for their sale? In our opinion, it is difficult to accept the argument that stocking and storing of foodgrains is shown to be such an essential and integral part of the supply scheme adopted by the State Government. Theoretically speaking stocking and storing foodgrains cannot be said to be essential for the purpose of carrying out the scheme of sale of foodgrains, because it would conceivably be possible for the State Government to adopt a scheme whereby goods may be supplied without the State Government having to store them; and so the work of stocking and storing of foodgrains may in some cases be conceivably incidental to the scheme and not its essential part. It is significant that sale of goods under the contract was never to take place at the godown of the firm. It had always to take place at other selling, centers or shops; and thus, between the stocking and storing of goods and their sale there is an element of time lag. The only obligation that was imposed on the firm by this contract was to be a custodian or bailee of the goods, keep them in good order and deliver them after weighment as directed by the first party. It cannot be denied that the remuneration for the bailee has been fixed at the rate, of Re. 1 per cent on the value of the stocks moved or taken over from his custody; but that only shows the mode or method adopted by the con tract for determining the remuneration including rent of the godowns; it cannot possibly show the relationship of the contract with the sale of goods even indirectly. Can it be said that the contract entered into by the State Government for purchasing foodgrains from agriculturists who grow them or for transporting them after purchase to the godowns are contracts for the sale or supply of goods? Purchase of goods and their transport are no doubt preparatory to the carrying out of the scheme of selling them or supplying them, and yet it would be difficult to hold that contracts entered into by the State Government with the agriculturists or the transport agency is a contract for the 477 sale of goods. We have carefully considered the material terms of this contract, and on the record as it stands we are unable to accept the conclusion of the High Court that a contract of bailment which imposed on the bailee the obligation to stock and store the foodgrains in his godown can be said to be a contract for the purpose of the service of sale of grain which the State Government had undertaken within the meaning of section 7(d). It appears that before the High Court it was not disputed by the appellant that the service whose performance had been undertaken by the State Government consisted in the supply of grain to the people of the State of Bihar; and the High Court thought that from this concession it inevitably followed that the firm had a share and was interested in the contract for the performance of the service undertaken by the Government of Bihar. It seems to us that the concession made by the appellant does not inevitably or necessarily lead to the inference drawn by the High Court. If the service undertaken by the State Government is one of supplying grain how does it necessarily follow that a contract by which the bailee undertook to store the grain was a contract for the supply of grain? It may sound technical, but in dealing with a statutory provision which imposes a disqualification on a citizen it would be unreasonable to take merely a broad and general view and ignore the essential points of distinction on the ground that they are technical. The narrow question is: if the State Government undertook the work of supplying the grain, is the contract one for the supply of grain?; in our opinion, the answer to this question must be in the negative; that is why we think the High Court did not correctly appreciate the effect of the contract when it held that the said contract brought the appellant 's case within the mischief of section 7(d). In coming to its conclusion the High Court thought that its view was supported by a decision of this Court in N. Satyanathan vs K. Subramanyan (1). In that case the appellant who was a contractor had entered into an agreement with the Central Government (1) ; 478 whereby he had offered to contract with the Governor General for the provision of a motor vehicle service for the transit and conveyance of all postal articles for the period specified in the contract, and the Governor General had accepted the offer. As a consideration for the same the Government had agreed to pay to the contractor Rs. 200 per month during the subsistence of the agreement "as his remuneration for the service to be rendered by him". It appears that on this contract two questions were raised before this Court. First it was urged that it could not be said that the Central Government had undertaken any service within the meaning of section 7(d) of the Act when it made arrangements for the carriage of mailbags and postal articles through the contractor. This contention was rejected on the ground that though the Government was not bound in the discharge of its duties as a sovereign State to make provision for postal mail service, it had in fact undertaken to do so under the Indian Post Offices Act for the convenience of the public. "It cannot be gainsaid", observed Sinha, J., as he then was, "that the postal department is rendering a very useful service, and that the appellant has by his contract with the Government undertaken to render that kind of service on a specified route"; and he added, "the present case is a straightforward illustration of the kind of contract contemplated under section 7(d) of the Act". This straightforward illustration, in our opinion, clearly brings out the class and type of contracts which fall within section 7(d) of the Act. Government must undertake to render a specified service or specified services and the contract must be for the rendering of the said service or services. That was precisely what the contract in the case of N. Satyanathan (1) purported to do. It is difficult to see how this case can be said to support the conclusion of the High Court that the contract for stocking and storing of goods is a contract for rendering the service of supplying and selling the same to the residents of the place. In this connection Mr. Jha, for the respondents, has drawn our attention to a decision of the Madras High (1) ; 479 Court in V. V. Ramaswamy vs Election Tribunal, Tirunelveli (1). In that case the Court was concerned with four contracts by which the contracting party agreed "to hold the reserve grain stock belonging to the Government of Madras, safely store it, and dispose of it according to the directions of the Government". In other words, it was a contract not only for the stocking and storing of foodgrains but also of disposing of it, and that naturally meant that the contract was for service which the State Government had undertaken to perform. This decision cannot assist the respondents in the present appeal. In the result we hold that the High Court was not justified in reversing the finding of the Tribunal that the contract in question did not attract the provisions of section 7(d) of the Act. The appeal must, therefore, be allowed and the order passed by the High Court set aside. We cannot finally dispose of the matter, because one question still remains to be considered, and that is whether the conclusion that the appellant 's nomination paper had been improperly rejected would lead to the decision that the election of not only respondent 1 but also respondent 2 should be declared to be void. The Election Tribunal has declared the whole election to be void, and in their respective appeals filed before the High Court both the respondents have challenged the correctness of that finding. The High Court, however, thought that since in its opinion the nomination paper of the appellant had been properly rejected it was unnecessary to deal with the other point. The point will now have to be considered by the High Court. We would, therefore, set aside the order passed by the High Court and remand the pro ceedings to it in order that it may deal with the other question and dispose of the appeals expeditiously in accordance with law. In the circumstances of this case we direct that the parties should bear their own costs in this Court. Costs in the High Court will be costs in the appeal before it. Appeal allowed.

The appellant was a member of a joint Hindu family which carried on the business of Government stockists of grain under a contract with the Government of Bihar. His nomination for election to the Bihar Legislative Assembly was rejected on the ground that he was disqualified under section 7(d) of the Representation of the People Act, 195T, as he had an interest in a contract for the performance of services undertaken by the Bihar Government. The appellant contended that the service undertaken by the Government was the sale of foodgrains under the Grain Supply Scheme and the contract was not for the sale of such foodgrains and did not attract the provisions of section 7(d). Held, that the contract was not one for the performance of any service undertaken by the Government and the appellant was not disqualified under section 7(d). A contract of bailment which imposed on the bailee the obligation to stock and store the foodgrains in his godowns was not a contract for the purpose of the service of sale of grain which the Government had undertaken. The Government had undertaken the work of supplying grain but the contract was not one for the supply of grain. N. Satyanathan vs K. Subramanyam, ; and V. V. Ramaswamy vs Election Tribunal, Tirunelveli, , distinguished.

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Appeal No. 328 of 1959. Appeal by special leave from the judgment and order dated 23rd February, 1956, of the Bombay High Court in Income tax Reference No. 34 of 1955. K. N. Rajagopala Ayyangar and D. Gupta, for the appellant. Rameshwar Nath, section N. Andley, J. B. Dadachanji and P. L. Vohra, for the respondent. December 1. The Judgment of the Court was delivered by HIDAYATULLAH, J. The Commissioner of Incometax has filed this appeal, with special leave, against the judgment and order of the High Court of Bombay, by which the High Court answered two questions referred to it in favour of the respondents, Messrs. Dwarkadas Khetan & Co., Bombay. These questions were: "(1) Whether the instrument of partnership dated 27 3 1946 created a deed of partnership? (2). If the answer to question No. 1 is in the affirmative, whether the fact that on 1 1 1946 there was no firm in existence would be fatal to the application for registration of the firm under Section 26A of the Indian Income tax Act or whether the firm could be registered with effect from 26 3 1946 if it is held that the firm was genuine?" Prior to January 1, 1945, there was a firm called Dwarkadas Khetan & Co. On that date, the firm ceased to exist, because the other partners had previously withdrawn, and it came to be the sole proprietary concern of Dwarkadas Khetan. On February 12, 1946, Dwarkadas Khetan obtained the selling agency of Seksaria Cotton Mills, Ltd. On March 27, 1946, he entered into a partnership, with three others 823 by an instrument of partnership executed that day. Those three others were Viswanath Purumul, Govindram Khetan and Kantilal Kasherdeo. Dwarkadas Khetan 's share in the partnership was 7 annas in the rupee, while the remaining 9 annas ' share was divided equally among the three others. Though Kantilal Kasherdeo was a minor, he was admitted as a full partner and not merely to the benefits of the partner ship, as required by section 30 of the Indian Partnership Act. To the instrument of partnership, Kantilal Kasherdeo was also a signatory, though immediately after his signature there was the signature of one Kasherdeo Rungta, the natural guardian of the minor. In the instrument, Kantilal Kasherdeo was described as a full partner entitled not only to a share in the profits but also liable to bear all the losses including loss of capital. It was also provided that all the four partners were to attend to the business, and if consent was needed, all the partners including the minor had to give their consent in writing. The minor was also entitled to manage the affairs of the firm, including inspection of the account books, and was given the right to vote, if a decision on votes had to be taken. In short, no distinction was made between the adult partners and the minor, and to all intents and purposes, the minor was a full partner, even though under the partnership law he could only be admitted to the benefits of the partnership and not as a partner. The deed of partnership was produced before the Registrar of Firms showing the names of the four partner,%. The Registrar of Firms granted a registration certificate, and in the certificate, Kantilal Kasherdeo was shown as a full partner and not as one entitled merely to the benefits of the,, partnership. Banks were also informed about the four partners, and. it does not appear that to them intimation was sent that one of the named partners was a minor. Though the partnership came into existence on March 27, 1946, the firm was stated to have started retrospectively from January 1, 1946. It may be pointed out that the firm has the calendar year as its account year, and the matter before us refers to the account year, 1946 corresponding to the assessment year, 1947 48. 824 For purposes of that year, registration of the firm was sought under section 26A of the Indian Income tax Act. The Income tax Officer refused to accord registration on the ground that a minor had been admitted as a partner contrary to law, and that the deed could not, therefore, be registered. The appeal to the Appellate Assistant Commissioner also failed, the Commissioner holding that registration could only be of a legal or valid document and not of a document which was invalid in law. An appeal was then taken to the Tribunal, and it was contended that the document must be construed as showing only that the minor was admitted not as a full partner but to the benefits of the partnership. The Accountant Member hold that the order of the Appellate Assistant Commissioner was correct, giving two reasons. The first was that the construction sought to be placed upon the document was not open, and the second, that since retrospective operation was given to the firm even though no firm existed from January 1, 1946, registration could not be granted. The Judicial Member differed from the Accountant Member, holding, as was contended, that the document must be construed as showing merely that the minor had been admitted to the benefits of the partnership. The appeal was then placed before the President, who agreed with the conclusion of the Accountant Member, with the result that the refusal to register the firm under section 26A by the authorities was upheld. Two questions were then posed for the decision of the High Court. The High Court differed from the Tribunal, and answered both the questions in favour of the assessee. In so far as the second question is concerned, the matter is now settled by the decision of this Court in B. C. Mitter & Sons vs Commissioner of Income tax (1). But, in our opinion, the decision of the High Court on the first question was not correct, and the correct answer does not leave the second quest ion open at all. There is a distinct cleavage of opinion among the High Courts on this point. The Bombay, Madras and (1) 825 Patna High Courts have held that where a minor is admitted as a full partner by adult partners, the document can be registered after interpreting it to mean that the minor has been admitted to the benefits of partnership and not as a full partner. The Calcutta, Allahabad and Punjab High Courts have taken a contrary view. The Bombay case is the one which is under appeal, and the Patna High Court followed that decision and the two earlier decisions of the Madras High Court. The Madras High Court decisions are of the same Divisional Bench, and were pronounced on the same day. The leading case in support of the respondents is the Madras decision reported in Jakka Devayya and Sons vs Commissioner of Income tax (1), and that case alone needs to be considered, because all the reasons on which the cases on this side have proceeded are given there. In that case, there were three partners, one of whom was a minor. They formed a Hindu undivided family; later, a deed of partnership was executed in which the minor was represented by his father in law. It was held that the fact that the minor was included as a partner did not make the partnership as between the two adult partners invalid, and that the minor must be deemed to have been admitted to the benefits of the partnership by the two adults. The learned Judges referred to the provision of section 2 (6 B) of the Income tax Act, where it is provided: " "Partner" includes any person who being a minor has been admitted to the benefits of partnership;", and observed that in view of this definition and the fact that a minor could be admitted to the benefits of partnership under section 30, the document was not invalid, but must be read as giving to the minor the rights laid down by the Partnership Act. They also observed that too rigid a construction need not be put upon the deed, and referred to Lindley on Partnership, 11th Edn., p. 87 and A. Khorasany vs C. Acha and Others (2). The other cases which we need not examine are Vincent and Others vs Commissioner of (1) (2) Ran. 826 Income tax and Sahai Brothers vs Commissioner of Income tax On the other hand, there is a decision of the Calcutta High Court reported in Hoosen Kassam Dada vs Commissioner of Income tax, Bengal (3), in which Costello and Panckridge, JJ. have held that under section 26A of the Income tax Act and the Rules, the Income tax Officer is only. empowered to register a partnership which is specified in the instrument of partnership and of which registration is asked for. The learned Judges, therefore, hold that it is not open to the Department to 'register partnership different from that which is formed by the instrument. In Hardutt Ray Gajadhar Ram vs Commissioner of Income tax(4) Malik, C. J. and Seth, J. hold that where a minor is admitted as a full partner with equal rights and obligations with adults, the deed is invalid. It is pointed out that the English law on the subject is different. In that case, however, there was one other ground for invalidating the deed, because the minor had been adopted into another family and his natural father who had signed as his guardian in the deed could not do so, as he had ceased to be the natural guardian. The decision, however, supports the case of the Commissioner. In Banka Mal Lajja Ram & Co. vs Commissioner of Income tax (5), it is held that a minor cannot be a partner, and that the partnership which admits a minor as full partner cannot be registered. It is true that in that case the High Court did not consider the question whether the partnership should have. been taken to be a valid partnership consisting of the adult partners, because no such question was referred. The decision, however, is against a claim for registration of such a document. In our opinion, the Calcutta vie ' is preferable to the view taken by the Madras High Court. The error in the Madras view is in using the definition to show that a deed including a minor as a competent partner (1)[1952] (3)[1937] (2)[1950] (4)[1950] (5)[1953] 827 is valid. What the definition does is to apply to a minor admitted to the benefits of partnership all the 2 provisions of the Income tax Act applicable to partners. The definition cannot be read to mean that in every case where a minor has, contrary to law, been admitted as a full partner, the deed is to be regarded as valid, because, under the law, a minor can be admitted to the benefits of partnership. The Rules which have been framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration. The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application. The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner. For that purpose, the law of Partnership must be considered, apart from the definition in the Income tax Act. Section 30 of the Indian Partnership Act clearly lays down that a minor cannot become a partner, though with the consent of the adult partners, he may be admitted to the benefits of partnership. Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the Income tax Authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is not open to the Income tax authorities to register a document which is different from the one actually executed and asked to be registered. In our opinion, the Madras view cannot be accepted. The judgment under appeal has followed the Madras view, and, in our opinion, it falls into the same error in which the Madras High Court had fallen earlier. The answer to the first question should, therefore, have been in favour ;of the Department. The answer given by the High Court is vacated, and 828 the question will now be answered in the negative. As already stated, there is no need to answer the second question, which does not arise. The appeal is allowed with costs here and in the High Court. Appeal allowed.

One of the persons who entered into a partnership was a minor and in the instrument of partnership he was described as a full partner with equal rights and obligations with the other adult partners. The deed of partnership which was signed by the minor was produced before th e Registrar of Firms f or registration and he granted a certificate showing the minor as a full partner and not as one entitled merely to the benefits of the partnership. The Income tax Officer, however, refused to register the firm under section 26A of the Indian Income tax Act and his decision was upheld by the Income tax Authorities and the Income tax Appellate Tribunal. The High Court differed from the Tribunal and held that the firm should be registered. On appeal by the Commissioner of Income tax, Held, that the Rules framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration. The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application. The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner. For that purpose, the law of Partnership must be considered, apart from the definition in the Income tax Act. Section 30 of the Indian Partnershi Act clearly lays down that a minor. cannot become a partner, I tough with the consent of the adult. .partners, he may be admitted to the benefits of partnership. . .Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the Income tax Authorities register the:partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is tot open to the Incometax Authorities to register a document which is different from the one actually executed and asked to be registered. Hoosen Kassam Dada vs Commissioner of Income tax, Bengal, [1937]5 I.T.R. 182, Hardutt Ray Gajadhar Ram vs Commissioner of 104 822 Income tax, , Banka Mal Lajja Ram and Co. vs Commissioner of Income tax, , approved. Jakka Devayya and Sons vs Commissioner of Income tax, [1952) , disapproved.

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Appeal No. 790 of 1957. Appeal from the judgment and decree dated February 10, 1954, of the Allahabad High Court in Civil Misc. Writ No. 280 of 1950. C. B. Aggarwala, G. C. Mathur and C. P. Lal, for the appellants. G. section Pathak and D. N. Mukherjee, for the respondent No. 1. 1960. November 11. The Judgment of the Court was delivered by MUDHOLKAR J. This is an appeal by the State of Uttar Pradesh against the decision of the Full Bench of the Allahabad High Court in a writ petition. In the writ petition the respondents challenged certain orders made by the Government of Uttar Pradesh under section 3, cl. (b) of the United Provinces , (XXVIII of 1947) requiring the respondents to pay bonus at certain rates for the years 1947 48 and 1948 49 to their workers and also payment of retaining allowances to the skilled seasonal workmen and clerical staff. The circumstances under which the orders were made are briefly these: 333 The Indian National Sugar Mills Workers ' Federation, Lucknow, served notices on various sugar factories in Uttar Pradesh on December 15, 1949, in which they made six demands. We need, however, mention only one of them as that alone is in controversy in this appeal. That demand related to the bonus for the year 1948 49 and to the restoration of the reduction which had been made in the previous year 's bonus. By that notice the Federation threatened a strike in the industry with effect from January 16, 1960, if the demands were not met by the sugar factories. Since this situation brought into existence an industrial dispute, the Government of Uttar Pradesh, in exercise of the power conferred by sections 6 and 10 of the , (XIV of 1947) appointed a Court of Inquiry and referred the dispute to it. The notification also stated the points which were referred to the Court of Inquiry. That notification was twice amended but nothing turns on those amendments. A full enquiry was held by the Court of Inquiry at which the representatives of both the employers as well as the employees were represented and material was placed before the Court of Inquiry by both the sides. The Court of Inquiry submitted its report to the Government on April 15, 1950. On receipt of this report the Government of Uttar Pradesh published the report in the Uttar Pradesh gazette on May 8, 1950, as provided for in section 17 of the . On July 5, 1950, the Government of Uttar Pradesh, in exercise of the powers conferred by section 3(b) of the Uttar Pradesh , issued a notification directing the various sugar factories to pay bonus to their workmen for the year 1948 49 as well as to pay certain amounts as bonus for the year 1947 48. A further direction was made in the notification for payment of retaining allowance to the skilled seasonal workmen and clerical staff with effect from the off season in the year 1950. Thereupon the Indian Sugar Millers Association, which is an Association of sugar factories in India and is registered under the Trade Union Act made a petition before the High Court at Allahabad under 334 article 226 of the Constitution for the issue of a writ against the Government of Uttar Pradesh prohibiting the Government from enforcing the notification. The writ petition was dismissed by the High Court on September 14, 1950, on the ground that the Association had no legal interest in the matter. Thereupon various sugar mills preferred separate writ petitions before the High Court, the respondents before us being one of them. As many as fourteen grounds were taken on their behalf in their writ petition. We are, however, concerned with only three of them to which Mr. G. section Pathak, who appears for the respondents confined his arguments. Before we refer to those grounds we would complete the narration of facts. The High Court of Allahabad allowed the writ petitions, in so far as the question of payment of bonus was concerned, though Sapru, J., one of the judges constituting the Full Bench, expressed a doubt as to the correctness of the view that the order of the State Government as regards the payment of bonus was invalid. After the decision of the High Court, the State of Uttar Pradesh applied for a certificate under article 133(1)(b) and article 133(1)(c) of the Constitution. The High Court having granted the certificate, the present appeal has been brought to this Court. In order to appreciate the points raised by Mr. G. section Pathak, it is necessary to set out the provisions of section 3 of the Uttar Pradesh . They are as follows: " If, in the opinion of the State Government, it is necessary or expedient so to do for securing the public safety or convenience, or the maintenance of public order or supplies and services essential to the life of the community, or for maintaining employment, it may, by general or special order, make provision (a) for prohibiting, subject to the provisions of the order, strikes or look outs generally, or a strike or lock out in connection with any industrial dispute; (b) for requiring employers, workmen or both to observe for such period, as may be specified in the order, such terms and conditions of employment as may be determined in accordance with the order; 335 (c) for appointing industrial courts; (cc) for appointing committees representative both of the employer and workmen for securing amity and good relations between the employer and workmen and for settling industrial disputes by conciliation; for consultation and advice on matters relating to production, organization, welfare and efficiency; (d) for referring any industrial dispute for conciliation or adjudication in the manner provided in the order ; (e) for requiring any public utility service, or any subsidiary undertaking not to close or remain closed and to work or continue to work on such conditions as may be specified in the order; (f) for exercising control over any public utility service, or any subsidiary undertaking, by authorising any person (hereinafter referred to as an authorised controller) to exercise, with respect to such service, undertaking or part thereof such functions of control as may be specified in the order; and, on the making of such order the service, undertaking or part thereof such functions of control as may be specified in the order; and, on the making of such order the service, undertaking or part, as the case may be, shall so long as the order continues to be carried on in accordance with any directions given by the authorised controller in accordance with the provisions of the order and every person having any functions of management of such service, undertaking or part thereof shall comply with such directions; (g) for any incidental or supplementary matters which appear to the State Government necessary or expedient for the purposes of the order: Provided that no order made under clause (b) (i) shall require an employer to observe terms and conditions of employment less favourable to the workmen than those which were applicable to them at any time within three months preceding the date of the order; (ii) shall, if an industrial dispute is referred for adjudication under clause (d), be enforced after the decision of the adjudicating authority is announced be or with the consent of, the State Government. " 336 The view taken by the High Court was that clause (b) of section 3 of the Uttar Pradesh , is prospective in operation in that thereunder it is open to the State Government to ask an employer or an employee to observe a term or a condition of employment in future and that consequently it is not competent thereunder to require an employer to pay bonus to workmen in respect of a period of employment which is already past. The view of the High Court was challenged before us on behalf of the State. According to the State the provisions of the aforesaid clause are wide enough to permit the making of such a direction to the employer because by doing so the State Government would only be imposing a condition of employment in future. In answer to this contention Mr. Pathak has, as already stated, raised three points and they are as follows: (1) Clause (b) of section 3 does not operate retrospectively and must be construed as having a prospective operation only. (2) This clause does not apply at all where an industrial dispute has arisen and that the appropriate provision under which the State Government can take action where an industrial dispute has arisen is cl. (3) If cl. (b) is susceptible of the interpretation that it is applicable even when an industrial dispute has arisen then it is ultra vires in as much as it would enable the State Government to discriminate between an industry and an industry or an industrial unit and another industrial unit or between a workman and a workman by referring some cases for adjudication to an industrial court under cl. (d) and passing executive order itself in respect of others. The provisions of cl. (b), according to him, are violative of article 14 of the Constitution. Further, according to him, they are also violative of the provisions of article 19(1)(g) of the Constitution in as much as they confer an arbitrary power on the State Government to require an employer to pay whatever it thinks fit to an employee and thus place an unreasonable restriction on the rights of the employer to carry on his business. 337 We entirely agree with the learned judges of the Allahabad High Court that cl. (b) of section 3 cannot be given a retrospective effect. But we are unable to agree with them that the State Government in making a direction to the employers to pay bonus for the years in question purported to give a retrospective operation to the provisions of that clause. The order made by the State Government in regard to bonus is to the effect that it shall be paid for the year 1947 48 to those persons who worked during that year and for the year 1948 49 to those persons who worked in that year. This payment was directed to be made within six weeks of the making of the order. By giving this direction the State Government did no more than attach a condition to the employment of workmen in the year 1950 51 in sugar factories affected by the order. That is all that it has done. Mr. Pathak contended that bonus has certain attributes of a wage and wage being a matter of contract can only be a term of employment agreed to between the employer and the employee but could not be a condition of employment which could be imposed by a statute or which could be imposed by a Government acting under a statute. We agree that normally wage is a term of contract but it would be futile to say that it cannot be made a condition of employment. The Minimum Wages Act provides for the fixation of a statutory minimum wage payable to a worker in respect of certain types of employments and is an instance of wage being made a condition of employment. That apart, whether wage or bonus is a term of a contract or a condition of employment it is clear that section 3 empowers the State Government to require the employers and workmen or both to observe any term or condition of employment for a specified period. Since the law enables the State Government to impose a term it is apparent that the legislature which enacted that law did not import into that word a con. sensual sense. We cannot, therefore, accept the argument that under cl. (b) it was not open to the State Government to make the payment of bonus to 338 workmen a condition of their employment in future and thus augment their past wages. Mr. Pathak then referred to the following observations in the judgment of Bhargava, J. s " Obviously there can be no question of requiring any one to observe for a future period terms and conditions of employment which have already remained effective and have already been carried out by those persons ". According to Mr. Pathak the effect of the order of the Government is to add a new term or a condition with regard to employment for a period which is already over. We would again point out that this is not the effect of the order of the Government. The effect of that order is merely to require the employer to pay an additional sum of money to his employees as a term and condition of work in future. Mr. Pathak, however, said that this would involve payment of bonus even to new employees, that is, those who had not participated in earning the profits in the past and that this would be contrary to the very conception of bonus. The answer to that is that under the order of the Government such bonus is payable only to those workers who had worked during the years in question and not to new employees. It is further to be borne in mind that in the dispute in question the employees were bargaining in their collective capacity and, therefore, the question whether the personnel forming the employees of the factories in July, 1950, when the order was made by the Government, and in the years 1947 48 and 1948 49 to which the dispute relates was the same is quite immaterial. As has been rightly pointed out by Sapru, J., " The employees might well have taken in the industrial dispute the line that the payment of bonus in respect of the years 1947 48 and 1948 49 to the workmen employed in those years was regarded by those who were employed in future as a preliminary and essential condition for not only the settlement of the industrial dispute in progress but also for carrying on their future work in sugar factories ". We also concur with the observations of the learned judge that by coming 339 conceded the State Government was not passing an order which will have retrospective effect but was passing an order which was to ensure that the work. men to be employed in the year 1950 would work in a contented manner. It must not be forgotten that the dispute was in the present, that is, it existed when the impugned order was made, though its origin was in the past. What the order did was to resolve that dispute and this it could only do by removing its cause. Mr. Pathak then relied upon the following observations of Bhargava, J., in L. D. Sugar Mills vs U. P. Government (1): " The expression 1 to observe for such period as may be specified, such terms and conditions of employment as may be determined ' gives an indication that clause (b) of section 3 of the U. P. , is meant for the purpose of passing orders by which the Government gives directions about what the terms and conditions of employment should be and not how a particular term and condition of employment already in existence should be acted upon. " Bhargava, J. 's decision was, however, reversed in Ram Nath Koeri and Another vs Lakshmi Devi Sugar Mills and Ors. (2) by a division bench of the Allahabad High Court in Letters Patent Appeal brought against Bhargava, J. 's decision. We agree with the view taken by the Appellate Bench. In our opinion, therefore, there is nothing in cl. (b) of section 3 of the Act which prohibited the State Government from making a direction to the sugar factories with regard to the payment of bonus for the years 1947 48 and 1948 49 in their order of July 7, 1950 and that by making such a direction the State Government was not giving a retrospective effect to the provisions of that clause. In this connection it is relevant to remember that any direction as to payment of bonus must inevitably be based on the available surplus, and such surplus can be determined only at the end of a given year. Therefore, what the impugned (1) A.I.R. 1954 All. 705, 714. (2) (1956) II L. L. J. 11. 340 order purports to do is to require the employers to pay specified amounts in future, though the said ,amounts are fixed by reference to the profits made in the two preceding years. If a direction as to payment ;of bonus can be issued under section 3(b) it cannot, therefore, be said to be retrospective. The next argument of Mr. Pathak appears, at first sight, to be more formidable. He points out that undoubtedly an industrial dispute had arisen, and indeed it is upon that basis that the State Government proceeded to appoint a Court of Inquiry. Therefore, according to Mr. Pathak resort could be taken by the State Government only to the special provisions of cl. (d) and not to the more general provisions of cl. (b) of section 3. In other words, where there is an industrial dispute, the appropriate thing for the Government to do is to refer it for conciliation or adjudication under the provisions of cl. (d) and not to deal with the matter by an executive order as it has done in this case. Mr. Pathak then refers to a further passage from the judgment of Bhargava, J., just cited which is as follows: " It appears from the language that this provision was not meant for the purpose of dealing with individual disputes arising out of the application of a term or condition of employment and no power was granted to the State Government under this provision of law, to sit as an adjudicator to decide a dispute that might have arisen relating to the working and actual application of terms and conditions of employment already in force. The provision was for the purpose of enabling the State Government to vary the agreed terms and conditions of employment for purposes specified in a. 3 of U. P. , under the pressing necessities or expediency justifying such course of action. " We entirely agree with Mr. Pathak that the normal way of dealing with an industrial dispute under the Act would be to have it dealt with judicially either by conciliation or by adjudication and that judicial process cannot be circumvented by resort to executive action. The proceeding before a conciliator or an 341 adjudicator is, in a sense, a judicial proceeding because therein both the parties to the dispute would have the opportunity of being heard and of placing the relevant material before the conciliator or adjudicator. But there may be an emergency and the Government may have to act promptly " for securing the public safety or convenience or the. maintenance of public order or supplies and services essential to the life of the community or maintaining employment. " It was, therefore, necessary to arm it with additional powers for dealing with such an emergency. Clause (b) of section 3 was apparently enacted for this purpose. An order made thereunder would be in the nature of a tempor ary or interim order as would be clear from the words " for such period as may be specified " appearing therein and from the second proviso to section 3. Under this proviso where an industrial dispute is referred for adjudication under cl. (d) an order made under cl. (b) cannot be enforced after the decision of the adjudicating authority is announced by or with the consent of the State Government. It would, therefore, follow from this that where the Government has made an executive order, as it did in this case, under cl. (b) of section 3, it is open to the aggrieved party to move the Government to refer the industrial dispute for conciliation or adjudication under cl. (d) of section 3. Mr. Pathak, however, stated that under this section, the Government has a discretion whether or not to refer a dispute for conciliation or adjudication under cl. But in our opinion where once the Government has acted under cl. (b) on the ground that it was in the public interest to do so, it would not be open to the Government to refuse to refer the dispute under cl. (d) for conciliation or adjudication. Mr. C. B. Agarwal, who appeared for the State of Uttar Pradesh conceded, and we think rightly, that this would be so and added that in case the State Government was recalcitrant it could be forced to do its duty by the issue of a writ of mandamus by the High Court under article 226 of the Constitution. There is a further argument of Mr. Pathak which must be noticed and that argument is that there is 342 nothing in cl. (b) which limits its operation to an emergency and that it is, therefore, not open to us to place a construction thereon of the kind we are placing. The opening words of section 3 themselves indicate that the provisions thereof are to be availed of in an emergency. It is true that even a reference to an arbitrator or a conciliator could be made only if there is an emergency. But then an emergency may be acute. Such an emergency may necessitate the exercise of powers under cl. (b) and a mere resort to those under cl. (d) may be inadequate to meet this situation. Whether to resort to one provision or other must depend upon the subjective satisfaction of the State Government upon which powers to act under section 3 have been conferred by the legislature. No doubt, this result is arrived at by placing a particular construction on the provisions of that section but we think we are justified in doing so. As Mr. Pathak himself suggested in the course of his arguments, we must try and construe a statute in such a way, where it is possible to so construe it, as to obviate a conflict between its various provisions and also so as to render the statute or any of its provisions constitutional. By limiting the operation of the provisions of cl. (b) to an emergency we do not think that we are doing violence to the language used by the legislature. Further, assuming that the width of the language could not be limited by construction it can be said that after the coming into force of the Constitution the provisions can, by virtue of article 13, have only a limited effect as stated above and to the extent that they are inconsistent with the Constitution, they have been rendered void. In our view, therefore, the provisions of cl. (b) of section 3 are not in any sense alternative to those of cl. (d) and that the former could be availed of by the State Government only in an emergency and as a temporary measure. The right of the employer or the employee to require the dispute to be referred for conciliation or adjudication would still be there and could be exercised by them by taking appropriate steps. Upon the construction we place on the 343 provisions of cl. (b) of section 3 it is clear that no question of discrimination at all arises. Similarly the fact that action was taken by the Government in an emergency in the public interest would be a complete answer to the argument that that action is violative of the pro visions of article 19(1)(g). The restriction placed upon the employer by such an order is only a temporary one and having been placed in the public interest would fall under cl. (6) of article 19 of, the Constitution. Upon this view we hold that the High Court was in error in issuing a writ against the State Government quashing their order in so far as it related to payment of bonus. The appeal is allowed and order of the High Court is set aside. Costs of this appeal will be paid by the respondents. Appeal allowed.

The Government of U. P. appointed a Court of enquiry under sections 6 and 10 of the United Provinces , and referred to it the present dispute. The Court of enquiry submitted its report to the Government, whereupon the Government issued a notification in July, 1950, directing the various sugar factories to pay bonus to their workmen for the years 1948 49 as well as to pay certain amounts as bonus for the years 1947 48. 331 Court against the Government, prohibiting it from enforcing the notification. The State Government came up in appeal, urging, that the provisions of cl. (b) of section 3 of the United Provinces , were wide enough to permit it to issue such a direction to the employer because by doing so the State Government would be imposing a condition of employment in future. The respondents, inter alia, contended that (1) clause (b) of section 3 of the Act does not operate retrospectively ; (2) bonus could only be a term of employment by agreement and could not be imposed by statute ; (3) where there was an industrial dispute cl. (d) and not cl. (b) of section 3 of the Act would apply and (4) if cl. (b) was applicable it was ultra vires being discriminatory and violative of article 14 of the Constitution and also violative of article 19(i) of the Constitution as it confers arbitrary powers on the State Government. Held, that (i) though cl. (b) of section 3 of the United Provinces , could not be given a retrospective effect, yet there was nothing therein which prohibited the State Government from giving a direction with regard to the payment of bonus and by giving such a direction the State Government was not giving retrospective effect to the provisions of that clause nor did it add a new term or a condition for a period which was over, it merely required the employer to pay an additional sum of money to their employees as a term and condition of employment in future; (ii) though normally wage is a term of contract it can be made a condition of employment by statute, and it was open to the State Government under cl. (b) of section 3 to make the payment of bonus to workmen a condition of their employment in future; (iii) where the employees bargained in their collective capacity, the fact that the personnel of the factory when the order for the payment of bonus was made by the Government and in the year to which dispute related were not the same, did not affect the power of the Government as the order would apply only to those employees who had worked during the period in question and not to new employees ; (iv) the normal way of dealing with an industrial dispute would be to have it dealt with judicially and not by resort to executive action, but cl. (b) of section 3 empowers the Government to act promptly in case of an emergency and arms it with additional powers to deal with such an emergency in the public interest; (v) when the Government had made an executive or per under cl. (b) of section 3 on the ground that it was in the public interest to do so it was open to the aggrieved party to move the Government to refer the industrial dispute for conciliation or adjudication under cl. (b) of section 3 of the Act. 332 (vi) the provisions of cl. (b) of section 3 are not in any sense alternative to those of cl. (d) and the former could be availed of by the State Government only in an emergency and as a temporary measure. The right of the employer or the employee to require the dispute to be referred for conciliation or adjudication would still be there and could be exercised by them by taking appropriate steps; (vii) clause (b) of section 3 of the Act is not violative of the provisions of article 19(1)(g) of the Constitution as it permits action to be taken thereunder by the Government only in an emergency and in the public interest. The restriction placed upon the employer is only a temporary one and having been placed in the public interest falls under cl. (6) of article 19 of the Constitution. Ram Nath Koeri and Anr. vs Lakshmi Devi Sugar Mills and Ors., , approved. L. D. Mills vs U. P. Government, A.I.R. 1954 All. 705, overruled.

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Appeal No. 303 of 1958. Appeal from the judgment and order dated August 3, 1956, of the Bombay High Court in Incometax Reference No. 10 of 1956. K. N. Rajagopal Sastri and D. Gupta, for the appellant. N. A. Palkhivala, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents. May 4. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal against the judgment and order of the High Court of Bombay dated August 3, 1956, in a reference under section 66 (1) of the Indian Income tax Act by the Appellate Tribunal, Bombay. The Tribunal referred four questions for the decision of the High Court. The High Court did not answer the first question because it was not pressed, and answered the remaining in the negative, after modifying them. It has certified this case as fit for appeal to this Court, and hence this appeal. The Com missioner of Income tax, Bombay City, is the appellant, and the Khatau Makanji Spinning and Weaving Co. Ltd., Bombay, (the assessee Company), is the respondent. The assessee Company has its year of account ending June 30 every year. At the close of the account year 1951, it carried forward profits amounting to Rs. 30,680. In that year, it appears it had earned a rebate by declaring dividends below the limit fixed by the Finance Act. For the account year 1952 its book profits were Rs. 28,67,235 less allowances for depreciation and tax. After these and other sundry adjustments, the balance available for distribution was Rs. 5,02,915. It may be pointed out that the Incometax Officer on processing the income found the total income to be Rs. 5,26,681. For the account year 1952, the assessee Company declared dividends amounting to Rs. 4,78,950 and carried forward the balance of Rs. 23,965. We are concerned with the assessment year 1953 54, and the Finance Act, 1953, is applicable. That Finance 875 Act applied the Finance Act, 1951, with some changes. The Finance Act, 1953, with the modifications will be referred to briefly, hereinafter, as the Finance Act. The Income tax Officer found that the assessee Company had declared excess dividends amounting to Rs. 1,87,691. He calculated additional income tax on it at 5 annas in the rupee after deducting income tax borne by the profits of the previous year at 4 annas per rupee, a surcharge of 5 per cent. less rebate of one anna in the rupee as allowed by the Finance Act. This additional tax amounted to Rs. 21,115 4 0. The appeals of the assessee Company under the Income tax Act failed. The Tribunal held that the excess dividends were deemed to be paid out of undistributed profits of earlier year ending June 30, 1951, amounting to Rs. 6,60,720 on which a rebate of 1 anna in the rupee was given in the assessment year, 1952 53. Tile Tribunal observed that additional incometax was also a tax on income, and that the Finance Act could say that the tax would be payable on the income of any year preceding the previous year. The Tribunal, however, referred four questions to the High Court, of which the first need not be quoted because it was abandoned before the High Court. The other questions were: " (ii) If the answer to question No. 1 is in the negative whether the said provisions go beyond the ambit and scope of the Indian Income tax Act ? (iii) Whether additional income tax can be levied, assessed and recovered under the provisions of the Indian Income tax Act ? (iv) Whether at any rate the additional incometax has been legally charged under the Indian Finance Act, 1953, read with the Indian Incometax Act?" The High Court compressed the three questions into one, and it reads: " Whether additional income tax has been legally charged under clause (ii) of the proviso to paragraph B of Part 1 of the. First Schedule to the Indian Finance Act, 1951, as applied to the assessment year 1953 54 by the Indian Finance Act, 1953, read with Section 3 of the Indian Income tax Act?" 876 This question was answered by the High Court in the negative. In the opinion of the High Court, section 3 of the Indian Income tax Act lays down the liability to tax, and it puts the tax on the total income of the previous year. The method of computing this total income is also to be found in the Finance Act. The Finance Act merely provides the rate applicable to the income so found. According to the High Court, the Finance Act in providing that additional income tax should be paid upon the accumulated profits of the previous years goes beyond the purpose for which the Central Act is passed every year, and cannot stand by itself without the support of section 3 of the Indian Income tax Act. The High Court held that the Finance Act had ' misfired ', because it did not resort to legislation which would have conformed to the object for which the Finance Act was passed every year. The learned Chief Justice, who delivered the judgment of the High Court, stated that there were several methods open to the legislature to achieve that purpose but that it had not resorted to any of them. This is what the learned Chief Justice observed: " The Legislature could have achieved this object by one of three methods. It could have treated the excess dividend declared by the company as a notional income and made it apart of the total income of the previous year. It could have provided for rectification of the assessment of the year in which these profits were charged at a lesser rate, and we now find that Parliament has actually provided for this in the Finance Act, 1956. Or, finally, it could have provided for a penalty imposed upon a company which transgressed the direction of Parliament that it should not pay dividend beyond a particular ceiling . The ambit of Section 3 is clear and the ambit is that the tax to be levied must be a tax on income and the power of Parliament is equally clear and that is to fix the rate at which income tax is to be charged upon the total income of the previous year of the assessee. In our opinion, the provision of the Finance Act travels beyond the ambit of Section 3, and if Parliament 877 has done so then no effective charge can be made on the total income of the previous year of the assessee under the provisions of the Finance Act which deals with additional tax on excess dividend. " It may be pointed out that before the High Court it was conceded that in order that the provisions of the Finance Act might be effective, the Finance Act had to come within the scope of section 3 of the Incometax Act. The point that was argued here was that it was not necessary to look only to section 3 of the Indian Income tax Act but also to the provisions of the Finance Act, through which Parliament could impose a new tax, if it so pleased. Other arguments involved modifications of language suitable to sustain the tax independently of section 3 of the Indian Income tax Act, a procedure which we do not think is open, for reasons which we have given in Civil Appeal No. 427 of 1957, decided today. These modifications, which were suggested, involve a recasting of the entire relevant paragraph of the Finance Act to make it independent of section 3 of the Indian Income tax Act, a course which is only open to a legislature and not to a Court. We need not give all the modifications suggested, because, in our opinion, the words of the Finance Act must be given their due meaning, and must be construed as they stand. The learned Chief Justice, with respect, very rightly pointed out that the Income tax Act puts the tax on income or something which it deems to be income. In other words, the tax deals with income and income only. It further provides that this tax shall be collected at a particular rate on the total income for which provision shall be made in an yearly Central Act. The Finance Act also follows the same scheme, and lays down the rate at which the tax is to be collected. In the Finance Act, the tax is laid on the total income, but two provisos modify the rate under certain circumstances. We may at this stage read the relevant provision (Part 1, First Schedule): 878 B. In the case of every company Rate. Surcharge. On the whole of Four annas One twentieth of total income. in the rupee. the rate specified in the preceding column: Provided that in the case of a company which, in respect of its profits liable to tax under the Income tax Act for the year ending on the 31st day of March, 1953, has made the prescribed arrangements for the declaration and payment within the territory of India excluding the State of Jammu and Kashmir, of the dividends payable out of such profits, and has deducted super tax from the dividends in accordance with the provisions of subsection (3D) or (3E) of section 18 of the Act (i) Where the total income, as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax, exceeds the amount of any dividends (including dividends payable at a fixed rate) declared in respect of the whole or part of the previous year for the assessment for the year ending on the 31st day of March, 1953, and no order has been made under sub section (1) of section 23A of the Income tax Act, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess; (ii) Where the amount of dividends referred to in clause (i) above exceeds the total income as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax, there shall be chargeable on the total income an additional income tax equal to the sum, if any, by which the aggregate amount of income tax actually borne by such excess (hereinafter referred to as ' excess dividend ') falls short of the amount calculated at the rate of five annas per rupee on the excess dividend. For the purpose of clause (ii) of the above proviso, the aggregate amount of income tax actually borne by the excess dividend shall be determined as follows : 879 (i) the excess dividend shall be deemed to be out, of the whole or such portion of the undistributed profits of one or more years immediately preceding; the previous year as would be just sufficient to cover the amount of the excess dividend and as have not likewise been taken into account to cover an excess dividend of a preceding year; (ii) such portion of the excess dividend as is deemed to be out of the undistributed profits of each of the said years shall be deemed to have borne tax, (a) if an order has been made under sub section (1) of section 23A of the Income tax Act, in respect of the undistributed profits of that year, at the rate of five annas in the rupee, and (b) in respect of any other year, at the rate applicable to the total income of the company for that year reduced by the rate at which rebate, if any, was allowed on the undistributed profits. " By the first Proviso, a rebate of one anna per rupee is given to a company which pays dividends less than 9 annas in the rupee out of its profits. By the second Proviso, the rebate disappears, and an additional income tax has to be paid on dividends in excess of that limit, paid in the year. The explanation says that " the excess dividend shall be deemed to be out of the whole or such portion of the undistributed profits of one or more years immediately preceding the previous year as would be just sufficient to cover the amount of the excess dividend and as have not likewise been taken into account to cover an excess dividend of a preceding year ". This fiction, as we have already pointed out, provides only that the dividends shall be deemed to be out of the profits not of the previous year under assessment but of some other years. What the Finance Act fails to do is to make them " total income ", so as to take in the rate which is prescribed for the total income in the Proviso. Unless the Finance Act stated that after the working out of the fiction the profits of the back year or years shall be deemed to be a part of the total income of the previous year under assessment, the purpose of the Act clearly fails. Income tax is a tax on income 880 of the previous year, and it would not cover something which is not the income of the previous year, or made fictionally so. The Finance Act could have gone further, as pointed out by the learned Chief Justice in the extract quoted, and made the profits a part of the total income of the previous year under assessment, but it did not do so. The Finance Act could have also resorted to some other fiction, which might conceivably have met the case; but it has failed to do so. Even if one considers the dividends as having come out of the profits of preceding years, they do not become the income of the relevant previous year, and unless the Finance Act expressly laid down that it should be taxed as part of the total income, the purpose is not achieved. Indeed, the Finance Act continues to say that the tax shall be on the total income, as defined in the Indian Income tax Act and as determined under that Act. It is impossible to say that the additional income tax was properly laid upon the total income, because what was actually taxed was never a part of the total income of the previous year. For these reasons, we are of opinion that the High Court was right in answering the question which it had framed, in the negative. In the result, the appeal fails, and is dismissed with costs. Appeal dismissed.

The Income tax Officer found that in the assessment year 1953 54 the respondent assessee company had declared excess dividends amounting to Rs. 1,87,691 and he levied additional income tax on it at 5 annas in the rupee after deducting incometax borne by the profits of the previous year at 4 annas per rupee, a surcharge of 5 per cent. less rebate of one anna in the rupee as allowed by the Finance Act, 1953. The Income tax Tribunal held that the excess dividends were deemed to be paid out of undistributed profits of the earlier year ending June 30, 1951 on which a rebate of one anna in the rupee was given in the assessment year 1952 53. It further observed that additional income tax was also a tax on income, and that the Finance Act could say that the tax would be payable on the income of any year preceding the previous year. The Tribunal, however, referred three questions to the High Court which the High Court compressed into one as below : " Whether additional income tax has been legally charged under Clause (ii) of the proviso to paragraph B of Part 1 of the First Schedule :to the Indian Finance Act, 1951, as applied to the assessment year 1953 54 by the Indian Finance Act, 1953, read with section 3 of the Indian Income tax Act? " The High Court held that section 3 of the Indian Income tax Act put the liability to tax on the total income of the previous year or what can be deemed to be income. The Finance Act provided the rate applicable to the income so found and a method of computing the total income. The Finance Act in providing that additional income tax should be paid upon the accumulated profits of the previous years went beyond the purpose for which the Finance Act was passed every year, and the Finance Act could not stand by itself without the support Of section 3 of the Indian Income tax Act. On appeal by the Commissioner of Income tax on certificate of the High Court: Held, that the High Court was right in answering the ques tion framed by it, in the negative. The Finance Act provided that the tax should be levied on the " total income " as defined in and determined under the Indian Income tax Act. The Additional income tax was not properly laid upon the total income because what was actually taxed was never a part of the total income of the previous year, nor deemed to be so. 874

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Appeal No. 517 of 1958. Appeal from the judgment and order dated October 31, 1957, of the Kerala High Court in O. P. No. 215 of 1957. G. B. Pai and Sardar Bahadur, for the appellant. Hardyal Hardy and D. Gupta, for the respondents. November 29. The Judgment of the Court was delivered by SHAH, J. C. A. Abraham hereinafter referred to as the appellant and one M. P. Thomas carried on business in food grains in partnership in the name and style of M. P. Thomas & Company at Kottayam. M. P. Thomas died on October 11, 1949. For the account years 1123, 1124 and 1125 M.E. corresponding to August 1947 July 1948, August 1948 July 1949 and August 1949 July 1950, the appellant submitted as a partner returns of the income of the firm as an unregistered firm. In the course of the assessment proceedings, it was discovered that the firm had carried on transactions in different commodities in fictitious names and had failed to disclose substantial income earned therein. By order dated November 29, 1954, the Income Tax Officer assessed the suppressed income of the firm in respect of the assessment year 1124 M.E. under the Travancore Income Tax Act and in respect of assessment years 1949 50 and 1950 51 under the Indian Income Tax Act and on the same day issued notices under section 28 of the Indian Income Tax Act in respect of the years 1949 50 and 1950 51 and 767 under section 41 of the Travancore Income Tax Act for the year 1124 M.E., requiring the firm to show cause why penalty should not be imposed. These notices were served upon the appellant. The Income Tax Officer after considering the explanation of the appellant imposed penalty upon the firm, of Rs. 5,000 in respect of the year 1124 M. E., Rs. 2,O00 in respect of the year 1950 51 and Rs. 22,000 in respect of the year 1951 52. Appeals against the orders passed by the Income Tax Officer were dismissed by the Appellate Assistant Commissioner. The appellant then applied to the High Court of Judicature of Kerala praying for a writ of certiorari quashing the orders of assessment and imposition of penalty. It was claimed by the appellant inter alia that after the dissolution of the firm by the death of M. P. Thomas in October, 1949, no order imposing a penalty could be passed against the firm. The High Court rejected the application following the judgment of the Andhra Pradesh High Court in Mareddi Krishna Reddy vs Income Tax Officer, Tenali (1). Against the order dismissing the petition, this appeal is preferred with certificate of the High Court. In our view the petition filed by the appellant should not have been entertained. The Income Tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed 'by the Income Tax authorities, and the appellant could not be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Tribunal. But the High Court did entertain the petition and has also granted leave to the appellant to appeal to this court. The petition having been entertained and leave having been granted, we do not think that we will be justified at this stage in dismissing the appeal in limine. On the merits, the appellant is not entitled to relief. The Income Tax Officer found that the appellant had, with a view to evade payment of tax, (1) 768 deliberately concealed material particulars of his income. Even though the firm was carrying on transactions in food grains in diverse names, no entries in respect of those transactions in the books of account were posted and false credit entries of loans alleged to have been borrowed from several persons were made. The conditions prescribed by section 28(1)(c) for imposing penalty were therefore fulfilled. But says the appellant, the assessee firm had ceased to exist on the death of M. P. Thomas, and in the absence of a provision in the Indian Income Tax Act whereby liability to pay penalty may be imposed after dissolution against the firm under section 28(1)(c) of the Act, the order was illegal. Section 44 of the Act at the material time stood as follows: "Where any business,. carried on by a firm. has been discontinued . every person who was at the time of such discontinuance . a partner of such firm,. shall in respect of the income, profits and gain of the firm be jointly and severally liable to assessment under Chapter IV for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment. " That the business of the firm was discontinued because of the dissolution of the partnership is not disputed. It is urged however that a proceeding for imposition of penalty and a proceeding for assessment of income tax are matters distinct, and section 44 may be resorted to for assessing tax due and payable by a firm business whereof has been discontinued, but an order imposing penalty under section 28 of the Act cannot by virtue of section 44 be passed. Section 44 sets up machinery for assessing the tax liability of firms which have discontinued their business and provides for three consequences, (1) that on the discontinuance of the business of a firm, every person who was at the time of its discontinuance a partner is liable in respect of income, profits and gains of the firm to be assessed jointly and severally, (2) each partner is liable to pay the amount of tax payable by the firm, and (3) that the provisions of Chapter, so far as may be, apply to such assessment. The liability declared by section 44 is 769 undoubtedly to assessment under Chapter IV, but the expression "assessment" used therein does not merely mean computation of income. The expression "assessment" as has often been said is used in the Income Tax Act with different connotations. In Commissioner of Income Tax, Bombay Presidency & Aden vs Khemchand Ramdas (1), the Judicial Committee of the Privy Council observed: "One of the peculiarities of most Income tax Acts is that the word "assessment" is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer. The Indian Income tax Act is no exception in this respect. . ". A review of the provisions of Chapter IV of the Act sufficiently discloses that the word "assessment" has been used in its widest connotation in that chapter. The title of the chapter is "Deductions and Assessment". The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18A deals with advance payment of tax and imposition of penalties for failure to carry out the provisions there in. Section 23A deals with power to assess individual members of certain companies on the income deemed to have been distributed as dividend, section 23B deals with assessment in case of departure from taxable territories, section 24B deals with collection of tax out of the estate of deceased persons; section 25 deals with assessment in case of discontinued business, section 25A with assessment after partition of Hindu Undivided families and sections 29, 31, 33 and 35 deal with the issue of demand notices and the filing of appeals and for reviewing assessment and section 34 deals with assessment of incomes which have escaped assessment. The expression "assessment" used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding (1) 770 that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, "all the provisions of Chapter IV shall so far as may be apply to such assessment" a restricted content: in terms it says that all the provisions of Chapter IV shall apply so far as may be to assessment of firms which have discontinued their business. By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest contumacious conduct of the assessee. It is true that this liability arises only if the Income tax Officer is satisfied about the existence of the conditions which give him jurisdiction and the quantum thereof depends upon the circumstances of the case. The penalty is not uniform and its imposition depends upon the exercise of discretion by the Taxing authorities; but it is imposed as a part of the machinery for assessment of tax liability. The use of the expression "so far as may be" in the last clause of section 44 also does not restrict the application of the provisions of Chapter IV only to those which provide for computation of income. By the use of the expression "so far as may be" it is merely intended to enact that the provisions in Ch. IV which from their nature have no application to firms will not apply thereto by virtue of section 44. In effect, the Legislature has enacted by section 44 that the assessment proceedings may be commenced and continued against a firm of which business is discontinued as if discontinuance has not taken place. It is enacted manifestly with a view to ensure continuity in the application of the machinery provided for assessment and imposition of tax liability notwithstanding discontinuance of the business of firms. By a fiction, the firm is deemed to continue after discontinuance for the purpose of assesment under Chapter IV. The Legislature has expressly enacted that the provisions of Chapter IV shall apply to the assessment of 771 a business carried on by a firm even after discontinuance of its business, and if the process of assessment includes taking steps for imposing penalties, the plea that the Legislature has inadvertently left a lacuna in the Act stands refuted. It is implicit in the contention of the appellant that it is open to the partners of a firm guilty of conduct exposing them to penalty under section 28 to evade penalty by the simple expedient of discontinuing the firm. This plea may be accepted only if the court is compelled, in view of unambiguous language, to hold that such was the intention of the Legislature. Here the language used does not even tend to such an interpretation. In interpreting a fiscal statute, the court cannot proceed to make good deficiencies if there be any: the court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer. But where as in the present case, by the use of words capable of comprehensive import, provision is made for imposing liability for penalty upon tax payers guilty of fraud, gross negligence or contumacious conduct, an assumption that the words were used in a restricted sense so as to defeat the avowed object of the Legislature qua a certain class will not be lightly made. Counsel for the appellant relying upon Mahankali Subbarao vs Commissioner of Income Tax (1), in which it was held that an order imposing penalty under section 28(1)(c) of the Indian Income Tax Act upon a Hindu Joint Family after it had disrupted, and the disruption was accepted under section 25A(1) is invalid, because there is a lacuna in the Act, submitted that a similar lacuna exists in the Act in relation to dissolved firms. But whether on the dissolution of a Hindu Joint Family the liability for penalty under section 28 which may be incurred during the subsistence of the family cannot be imposed does not fall for decision in this case: it may be sufficient to observe that the provisions of section 25A and section 44 are not in pari materia. In the absence of any such phraseology in section 25A as is used in section 44, no real analogy between the content of that section and section 44 may be assumed. Undoubtedly, (1) 772 by section 44, the joint and several liability which is declared is liability to assessment in respect of income, profits or gains of a firm which has discontinued its business, but if in the process of assessment of income, profits or gains, any other liability such as payment of penalty or liability to pay penal interest as is provided under section 25, sub section (2) or under section 18A sub sections (4), (6), (7), (8) and (9) is incurred, it may also be imposed, discontinuation of the business notwithstanding. In our view, Chief Justice Subba Rao has correctly stated in Mareddi Krishna Reddy 's case (supra) that: "Section 28 is one of the sections in Chapter IV. It imposes a penalty for the concealment of income or the improper distribution of profits. The defaults made in furnishing a return of the total income, in complying with a notice under sub section (4) of section 22 or sub section (2) of section 23 and in concealing the particulars of income or deliberately furnishing inadequate particulars of such income are penalised under that section. The defaults enumerated therein relate to the process of assessment. Section 28, therefore, is a provision enacted for facilitating the proper assessment of taxable income and can properly be said to apply to an assessment made under Chapter IV. We cannot say that there is a lacuna in section 44 such as that found in section 25A of the Act. We are unable to agree with the view expressed by the Andhra Pradesh High Court in the later Full Bench decision in Commissioner of Income Tax vs Rayalaseema Oil Mills (1), which purported to overrule the judgment in Mareddi Krishna Reddy 's case (supra). We are also unable to agree with the view expressed by the Madras High Court in section V. Veerappan Chettiar vs Commissioner of Income Tax, Madras (2). In the view taken by us, the appeal fails and is dismissed with costs. (1) Appeal dismissed.

The appellant who was carrying on business in food grains in partnership with another person submitted the returns of the income of the firm for the accounting years even after his partner 's death. It was found that certain income of the firm was concealed and the Income tax Officer not only assessed the firm to tax for the suppressed income but also imposed penalties for concealing the said income. Appeals to the higher income tax authorities failed and the appellant then applied to the High Court for a writ of certiorari quashing the orders of assessment and imposition of penalty on the ground inter alia that the firm was dissolved by his partner 's death and no penalty could be imposed after dissolution of the firm, The High Court rejected the petition. On appeal with the certificate of the High Court, Held, that by virtue of section 44 and other provisions of the Income Tax Act a partner of a dissolved partnership firm may not only be made liable to assessment for income tax for the accounting years but despite dissolution of the firm he may be made liable to pay penalty for concealing the income of the firm under section 28(1)(c) of the Act. The analogy of dissolution of a Hindu joint Family does not apply to dissolution of a partnership. Mareddi Krishna Reddy vs Income tax Officer, Tenali, , approved. Commissioner of Income tax vs Ravalaseema Oil Mills, and section V. Veerappan Chettiar vs Commissioner of Income tax, Madras, , disapproved. Mahankali Subbarao vs Commissioner of Income tax, , distinguished. The Legislature intended that the provisions of Ch. IV of the Act shall apply to a firm even after discontinuance of its business. In interpreting a fiscal statute the Court cannot proceed to make good deficiencies if there be any. In case of doubt it should be interpreted in favour of the tax payer. The expression "assessment" has different connotations an has been used in its widest connotation in Ch. IV and section 44 97 766 he Act. It is not restricted only to computation of tax but includes imposition of penalty on tax payers found in the process of assessment guilty of concealing income. Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas, , referred to. The Income tax Act provided a complete machinery for obtaining relief against improper orders passed by the Income tax Authorities and the appellant could not be permitted to abandon that machinery, and invoke the jurisdiction of the High Court under article 226 of the Constitution against the orders of the taxing authorities.

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Appeal No. 364 of 1957. Appeal from the judgment and order dated February 22, 1956, of the former Bombay High Court in I.T.R. No. 31/1955. N. A. Palkhivala and I. N. Shroff, for the Appellants. A. N. Kripal and D. Gupta, for the Respondent. 1960. November 22. The Judgment of the Court was delivered by SHAH, J. This is an appeal by seven appellants with leave granted by the High Court of Judicature at Bombay certifying that it involves a question of importance. The appellants held 570 out of a total issue of 800 shares of the Navjivan Mills Ltd., Kalol, a public limited company hereinafter referred to as the Mills. Between the years 1943 47, the Mills purchased 5,000 shares of the Bank of India Ltd. At an extraordinary general meeting of the shareholders of the Bank of India held on May 6, 1948, a resolution was passed increasing the share capital of the Bank and for that purpose offering new shares to the existing shareholders in the proportion of one new share for every three shares held by the shareholders. The face value of the new shares was to be Rs. 50, but the shares were issued at a premium of Rs. 50. The shareholders had to pay Rs. 100 for each new share. The Mills as the holder of 5,000 shares became entitled to receive 1,6662 shares of the Bank of India at the rate of Rs. 100 per share. The Bank of India communicated its resolution by letter dated May 25, 1948 and enclosed therewith three forms, form A for acceptance, form 586 B for renunciation and 'form C which may compendiously be called a form for allotment to nominees. On receiving the circular letter, the Directors of the Mills passed the following resolution: "Resolved that the company having a holding of 5,000 ordinary shares in the capital of the Bank of India Ltd. having now received an intimation from the said Bank that this company is entitled to get 1,6662 more ordinary shares on payment of Rs. 50 as capital and Rs. 50 as premium per each share and it is considered proper to invest in the said issue of the said Bank the funds of this company to the extent of 66 shares only and to distribute the right of this company to the remaining 1,600 shares of the said issue amongst the shareholders of this company in the proportion of the shares held by them in this company. IT IS HEREBY RESOLVED that the funds of this company may be invested in the 66 shares out of 1,666 shares offered by 'the Bank of India Ltd., and the right to the remaining 1,600 shares is hereby distributed among 800 shares of this company in the proportion of right to two shares of the Bank per one ordinary share held in this company. The Managing Agents may take steps to intimate the shareholders to exercise the right if they like to do so. " Accordingly, the Mills exercised the right to take over only 66 shares out of the shares offered and resolved that the right to the remaining 1,600 shares be distributed amongst its 800 share holders. The seven appellants as holders of 570 shares of the Mills became entitled to 1,140 shares of the Bank of India. The appellants agreed to the allotment of these shares and ultimately transferred them to a private company Jesinghbai Investment Co. ' Ltd. The assessment of the seven appellants and of other shareholders of the Mills was reopened under section 34(1)(a) of the Indian Income Tax Act by the Income Tax Officer on the footing that, the release by the Mills of the shares of the Bank of India amounted to a distribution of "dividend" and the value of the right released in favour of the shareholders though taxable 587 under section 12 of the Act, had escaped tax. The order of the Income Tax Officer reassessing the income of the seven appellants was confirmed in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal. At the instance of the appellants, the i following question was submitted by the Tribunal to the High Court at Bombay under section 66(1) of the Income Tax Act: "Whether on the facts and circumstances of the case the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend" within the meaning of section 2(6A) of the Indian Income Tax Act. " The High Court reframed the question as follows: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd., in favour of the assessees amounted to a distribution of "dividend"?" and answered it in the affirmative. The High Court observed that the definition of "dividend" in section 2(6A) was an inclusive and not an exhaustive definition, and even if the distribution of the right to the shares of the Bank of India could not be regarded as dividend within the extended meaning of that expression in section 2(6A), it was still dividend within the ordinary meaning of that expression and was taxable as income in the hands of the appellants. Counsel for the appellants contended that the High Court was not justified, having regard to the form of the question which expressly related to the distribution of the right to the Bank of India shares being dividend within the meaning of the definition in section 2(6A) of the Income Tax Act, in enlarging the scope of the question and in answering it in the light of its ordinary meaning. There is no substance in this contention. "Dividend" is defined in section 2(6A) as inclusive of various items and exclusive of certain others which it is not necessary to set out for the purpose of this appeal. "Dividend" in its ordinary meaning is a 588 distributive share of the profits or income of a company given to its shareholders. When the Legislature by section 2(6A) sought to define the expression "dividend" it added to the normal meaning of the expression several other categories of receipts which may not otherwise be included therein. By the definition in section 2(6A), "dividend" means dividend as normally understood and includes in its connotation several other receipts set out in the definition. The Tribunal had referred the question whether the distribution of the right to apply for the Bank of India shares amounted to distribution of dividend within the meaning of section 2(6A) and in answering that question, the High Court had to take into account both the normal and the extended meaning of that expression. In the question framed by the Tribunal, there is nothing to indicate that the High Court was called upon to advise on the question whether the receipts by the appellants amounted to dividend only within the extended definition of that expression in section 2(6A). It was also urged that in nominating its shareholders to exercise the option to purchase the new issue of the Bank of India, the Mills did not distribute any dividend. The Mills were, it is true, not obliged to accept the offer made by the Bank of India, however advantageous it might have been to the Mills to accept the offer: it was open to the Mills to renounce the offer. The Mills had three options, (1) to accept the shares, (2) to decline to accept the shares, or (3) to surrender them in favour of its nominee. It is undisputed that when the shares were offered by the Bank of India to its shareholders, the right to apply for the shares had a market value of Rs. 100 per share. The face value of the new share was Rs. 50 but the shareholders had to pay a premium of Rs. 50, thus making a total payment of Rs. 100 for acquiring the new share. The new shares were quoted in the market at more than Rs. 200: and the difference between the amount payable for acquiring the shares under the right offered by the Bank of India and the market quotation of the shares was indisputably the value of the right. The Mills could not be compelled to obtain 589 this benefit if it did not desire to do so: it could accept the shares or decline to accept those shares or exercise the option of surrendering them in favour of its nominees. This last option could be exercised by nominating the persons who were to take over the shares and that is what the Mills did. The Mills requested the Bank of India to allot the shares to its nominees, and the request for allotment to its nominees amounted to transfer of the right. By its resolution, the Mills in truth transferred a right of the value of Rs. 200 for each share held by its shareholders. This was manifestly not distribution of the capital of the Mills. It was open to the Mills to sell the right to the shares of the Bank of India in the market, and to distribute the proceeds among the shareholders. Such a distribution would undoubtedly have been distribution of dividend. If instead of selling the right in the market and then distributing the proceeds, the Mills directly transferred the right, the benefit in the hands of the shareholders was still dividend. Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value. The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend. It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value. But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered. We are therefore of the view that the High Court was right in holding that the distribution of the right to apply for and obtain two shares of the Bank of India (at half their market value) for each share held by the shareholders of the Mills amounted to distribution of dividend. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellants were shareholders of a company known as Navjivan Mills Ltd. which held a large number of shares of the Bank of India. The Bank with the object of increasing their share capital offered some more shares to the Mills for a price including premium which was about half the market value. The Mills purchased a small number of the shares so offered with their own funds and distributed their right to acquire the remaining shares to their shareholders in the proportion of two shares of the Bank for one share held by them. The assessment of the appellant was reopened by the Income Tax Officer under section 34(1)(a) of the Income tax Act on the footing that the release of the right to the shares of the Bank of India amounted to distribution of dividend. Appeals against the order of the Income Tax Officer having failed, the High Court at the instance of the appellants framed the following question: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend"? 585 The High Court answered the question in the affirmative. On appeal with a certificate of the High Court, Held, that the view taken by the High Court was correct. The distribution to the shareholders of the Mills of the right to obtain two shares of the Bank of India for each share held by them at half the market value amounted to distribution of "dividend" which was liable to be taxed.

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o. 273 of 1951. Appeal under articles 132 (1) and 134 (1)(c) of the Constitution of India from the Judgment and Order dated I3th October, 1950, of the High Court of Judicature at Patna (Shearer, Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous Judicial Case No. 220 of 1949. S.K. Mitra (K. Dayal, with him), for the appellant. Basant Chandra Ghosh and Arun Chandra Mitra for the respondent. May 26. The Court delivered judgment as follows: MAHAJAN J. This appeal has been preferred by the State of Bihar against the judgment of a Special Bench of the High Court of Judicature at Patna allowing the application of the respondent under section 23 of the Indian Press (Emergency Powers)Act, XXIII of 1931. It appears that the petition was argued by both the sides as it was one made under article 926 of the Constitution. The respondent was the keeper at all relevant times of the Bharati Press at Purulia, A pamphlet under 85 656 the heading "Sangram" was printed at the said press and is alleged to have been circulated in the town of Purulia in the district of Manbhum. The Government of Bihar considered that the pamphlet contained objectionable matter of the nature described under section 4 (1) of the Indian Press (Emergency Powers) Act and required the press to furnish security in the sum of Rs. '2,000, under section 3(3) of the Act by the 19th September, 1949. On the 26th September, 1949, the respondent applied to the High Court under section 23 for setting aside the above order. This application was allowed by the majority of the Judges constituting the Bench. Shearer J. was of the view that the application should be dismissed. Several objections were raised to the validity of the order passed by the Bihar Government but it is unnecessary to mention all of them. The two points which were seriously pressed before the High Court were that the leaflet did not contain any words or signs or visible representation of the nature described in section 4 (1) of the Act, and that the provisions of section 4 (1) of the Act were inconsistent with article 19 (1) of the Constitution and as such void under article 13. The High Court reached the conclusion that the pamphlet did come within the mischief of the Act. Sarjoo Prosad J., with whom Ramaswami J. concurred, on a construction of the decisions of this Court in Romesh Thapar vs The State of Madras(1), and Brij Bhushan V. The State of Delhi(2), found, though with some reluctance, that section 4 (1) (a) of the Act was repugnant to the Constitution and therefore void. Mr. Justice Shearer, however, held that the pamphlet was a seditious libel and that there was nothing in the two decisions of the Supreme Court referred to above which compelled the court to hold the provisions of section 4 (1) (a) of the Act to be void. In my opinion, Shearer J. was right in the view that there is nothing in the two decisions of this Court which bears directly or indirectly on the point at issue in the present case and that both Sarjoo Prosad (1) [1950] S.C.R.594. (2) ; 657 and Ramaswami JJ. were in error in holding that these deci sions were conclusive on the question of the invalidity of clauses (a) and (b) of section 4 (1) of the Act. Towards the concluding part of his judgment Sarjoo Prosad J. ob served as follows: "I am compelled to observe that from the above discus sions of the Supreme Court judgments, it follows logically that if a person were to go on inciting murder or other cognisable offences either through the press or by word of mouth, he would be free to do so with impunity inasmuch as he would claim the privilege of exercising his fundamental right of freedom of speech and expression. Any legislation which seeks or would seek to curb this right of the person concerned would not be saved under article 19 (2) of the Constitution and would have to be declared void. This would be so, because such speech or expression on the part of the individual would fall neither under libel nor slander nor defamation nor contempt of court nor any matter which of fends against decency or morality or which undermines the security of or tends to overthrow the State. I cannot with equanimity contemplate such an anomalous situation but the conclusion appears to be unavoidable on the authority of the Supreme Court judgments with which we are bound. I, there fore, wish that my decision on the point would sooner than ever come to be tested by the Supreme Court itself and the position reexamined in the light of the anomalous situation pointed out above. It seems to me that the words used in the Constitution Act should be assigned a wide and liberal connotation even though they occur in a clause which pro vides an exception to the fundamental right vouchsafed under article 19 (1)(a) of the Constitution Act." These observations I speak with great respect disclose a complete lack of understanding of the precise scope of the two decisions of this Court referred to above. Section 3 (3) of the Act under which the notice was issued in the present case enacts as follows: "Whenever it appears to the Provincial Government that any printing press is used for the purpose 658 printing or publishing any newspaper, book or other document containing any words, signs or visible representation of the nature described in section 4,sub section (1), the Provin cial Government may, by notice in writing to the keeper of the press . .order the keeper to deposit with the Magis trate security . " Clause (a) of section 4 (1) deals with words or signs or visible representations which incite to or encourage, or tend to incite to or encourage the commission of any offence of murder or any cognizable of fence involving violence. It is plain that speeches or expressions on the part of an individual which incite to or encourage the commission of violent crimes, such as murder, cannot but be matters which would undermine the security of the State and come within the ambit of a law sanctioned by article. 19(2) of the Constitution. I cannot help observing that the decisions of this Court in Romesh Thapar 's case(1), and in Brij Bhushan 's case(2) have been more than once misapplied and misunderstood and have been construed as laying down the wide proposition that restrictions of the nature imposed by section 4(1)(a) of the Indian Press (Emergency Powers) Act or of similar character are outside the scope of article 19(2) of the Constitution inasmuch as they are conceived generally in the interests of public order. Sarjoo Prosad J. also seems to have fallen into the same error. The question that arose in Romesh Thapar 's case(1) was whether the impugned Act (Madras Maintenance Public Order Act, XXIII of 1949) in so far as it purported by section 9 (1 A) to authorise the Provincial Government "for the purpose of securing the public safety and the mainte nance of public order, to prohibit or regulate the entry.into or the circulation, sale or distribution in the Province of Madras or any part thereof any document or class of documents" was a law relating to any matter which under mined the security of or tended to overthrow the State, and it was observed that whatever ends the impugned Act may have been intended to subserve and whatever (1)[1950] section C.R. 594. (2) [1950] S.C.R. 605. 659 aims its framers may have had in view, its application and scope could not, in the absence of delimiting words in the statute itself, be restricted to those aggravated forms of prejudicial activity which are calculated to endanger the security of the State, nor was there any guarantee that those authorized to exercise the powers under the Act would in using them discriminate between those who act prejudical ly to the security of the State and those who do not. Sec tion 4(1)(a) of the impugned Act, however, is restricted to aggravated forms of prejudicial activity. It deals specifi cally with incitement to violent crimes and does not deal with acts that generally concern themselves with the mainte nance of public order. That being so, the decision in Romesh Thalbar 's case(1) given on the constitutionality of section 9(1 A) of the Madras Maintenance of Public Order Act has no relevancy for deciding the constitutionality of the provi sions of section 4(1)(a) of the Indian Press (Emergency Powers) Act. Towards the concluding portion in Romesh Tha par 's judgment(1) it was observed as follows : "We are therefore of opinion that unless a law restrict ing freedom of speech and expression is directed solely against the undermining of the security of the State or the overthrow of it, such law cannot fall within the reservation under clause (2) of article although the restrictions which it seeks to impose may have been conceived generally in the interests of public order. It follows that section 9(I A) which authorizes imposition of restrictions for the wider purpose of securing public safety or the maintenance of public order falls outside the scope of authorized restric tions under clause (2), and is therefore void and unconsti tutional. " The restrictions imposed by section 4(1)(a) of the Indian Press (Emergency Powers) Act on freedom of speech and expression are solely directed against the undermining of the security of the State or the overthrow of it and are within the ambit of article 19(2) (1) 94. 660 of the Constitution. The deduction that a person would be free to incite to murder or other cognizable offence through the press with impunity drawn from our decision in Romesh Thapar 's case(1) could easily have been avoided as it was avoided by Shearer J. who in very emphatic terms said as follows: " I have read and re read the judgments of the Supreme Court, and I can find nothing in them myself which bear directly on the point at issue, and leads me to think that, in their opinion, a restriction of this kind is no longer permissible. " Be that as it may, the matter is now concluded by the language of the amended article 19(2) made by the Constitu tion (First Amendment) Act which is retrospective in opera tion, and the decision of the High Court on this point cannot be sustained. Basant Chander Ghosh contended that the amendment made in article 19 (2) of the Constitution with retrospective operation was repugnant to article 20 of the Constitution inasmuch as it declared a certain act an offence which was not an offence at the time when the act was committed. This contention is untenable. The respondent is alleged to have violated the provisions of section 4(1)(a) of the Indian Press (Emergency Powers) Act which was a law in force in the year 1949 when the offending pamphlet was published. She has not been convicted of any offence so far and is not being again convicted for the same by reason of the amend ment in article 19(2). Article 20 has no application whatev er to the present case. Article 19(2) empowers a legislature to make laws imposing reasonable restrictions on the funda mental rights conferred under article 19(1) of the Constitu tion. It does not declare any acts which were not offences before as offences with retrospective effect. Moreover, in the year 1949 the respondent was not possessed of any funda mental right which could be said to have been contravened by the amendment. Though, as I have said above, the High Court is in error in the finding that the provisions of section ,4(1)(a) (1) [1950] S.C.R. 594, 661 of the Indian Press (Emergency Powers) Act are repugnant to the Constitution, its judgment has to be maintained as it is also in error in holding that the pamphlet in question fell within the mischief of section4 (1)(a) of the Indian Press (Emergency Powers) Act. The document is written in high flown Bengali language and contains a good deal of demagogic claptrap with some pretence to poetic flourish. It enunciates certain abstract propositions in somewhat involved language and it cannot be followed except with considerable effort. The High Court held that the document offended against the provisions of section 4(1)(a) inasmuch as certain parts of it contemplate a bloody and violent revolution and that the central theme that runs through the whole gamut of the offending pamphlet is that the author is anxious to bring about a bloody revo lution and change completely the present order of things by causing a total annihilation of the persons and the policies of those who according to him are in the opposite camp. Particular reference was made to the following passages in the writing which in the opinion of the learned Judges support that conclusion. The first of these passages is in these words : "Oh thou foolish oppressor, you want to cause abject terror in me with your red eyes and full throated voice do that, I am not afraid . . My pro test is against parochial national politics. "Another passage reads thus : `` Death is my secret love; poison is my drink the flames of fire are my sweet breeze; the wailing of a hundred be reaved childless mothers is just a tune in my flute; the weeping of widows at their widowhood is just a rhythm of my song. " The next passage referred to is in these terms : "I am the cremation ground. I am the bloodthirsty goddess Kali who lives and moves about in the cremation ground. Plague or famine is my great joy . . I am thirsty, I want blood, I want revolution,. 662 I want faith in the struggle. Tear, tear the chain of wrongs; Break thou the proud head of the oppressor. " Reference was also made to a passage in which the writer desires that his cries should be heard by people far and near, that his call should be hearkened far far away across the hills, the jungles, across the rivers and rivulets and all those who hear should come forward to join the ranks in destroying the oppressor and in which he claims that he is the messenger of death, that his revolutionary song signals the door of each of the listeners and signals to them to come out if they have life, if they have health, if they have courage to come and dash to pieces those who commit oppression on the mother, and he says that with the blood of those followers let the revolution grow. It winds up with an invocation to the readers in these terms : "If you are true, if you are the gift of God, if you are not a bastard, then come forward with a fearless heart to struggle against the oppressors ' improper conduct, oppres sion and injustice. We should not tolerate wrongful oppres sion. Oh, thou the people with the burning pain of thine heart burn the heart of the oppressive, high handed oppres sor. Let all wrongs, all high handedness, all oppressions, all tyrannies be burnt in the flame. " It seems to me that the learned Judges of the High Court took this writing too seriously. It did not deserve that consideration. It is some kind of patch up work, with no consistency or cohesion between its different parts. Por tions of it are unmeaning nonsense and in other parts it talks of revolution in the abstract. There is no appeal to anybody in particular or for any known or specific cause. No mention is made of any specific kind of oppression or injus tice that is intended to be remedied. The desire is. to change the face of the earth by ending all oppression, tyranny and injustice. Their is no evidence whatsoever for connecting this pamphlet with any agitation or movement at the time it was written in that locality. I have read the writing several times and I think that Mr. Ghosh is 663 right when he says that the pamphlet contains merely empty slogans, carrying no particular meaning except some amount of figurative expression or language borrowed at random from various authors with a touch of poetic flourish about it. Writings of this characters at the present moment and in the present background of our country neither excite nor have the tendency to excite any person from among the class which is likely to read a pamphlet of this nature. They will necessarily be educated people. Such writings leave their readers cold and nobody takes them seriously. People laugh and scoff at such stuff as they have become too familiar with it and such writings have lost all sting. Any non descript person who promises to change the order of things by bloody revolution and assumes the role of a new Messiah is merely the laughing stock of his readers and creates an adverse impression against himself, rather than succeed in stirring up any excitement in the minds of the readers. Rhetoric of this kind might in conceivable circumstances inflame passions as, for example, if addressed to an excited mob, but if such exceptional circumstances exist it was for the State Government to establish the fact. In the absence of any such proof we must assume that the pamphlet would be read by educated persons in the quietness of their homes or in other places where the atmosphere is normal. I would therefore hold, in the words of my brother Bose in Bhagwati Charan Shukla vs Government of C.P. & Berar(1), that though the pamphlet in question uses extravagant language and there is in it the usual crude emotional appeal which is the stock in trade of the demagogue as well as a blundering and ineffective attempt to ape the poets, that is all, and there is nothing more in it. The time is long past when writings of this kind can in normal circumstances excite people to commit crimes of violence or murder or tend to excite any body to commit acts of violence. Again the language employed is full of mysticism and (I) I.L.R. 664 cannot be easily understood and it creates no impression of any kind on any person. In order to determine whether a particular document falls within the ambit section 4(1), the writing has to be considered as a whole and in a fair and free and liberal spirit, not dwelling too much upon isolated passages or upon a strong word here and there, and an endeavour should be made to gather the general effect which the whole composi tion would have on the mind of the public. Expressions which are the stock in trade of political demagogues and have no tendency to excite anybody, and exaggerations in language cannot lead to that result. The learned Government Advocate placed reliance on the decision of Harries C.J. in Badri Narain vs Chief Secretary, Bihar Govermnent(2). The learned Chief Justice therein held that in order to show that cer tain words fall under section 4 (1) (a) it is not necessary to show that the words tend to incite or to encourage the commission of a particular offence or offences and that it is sufficient if they tend to incite to or to encourage the commission of cognizable offences of violence in general. In that case, a poem entitled "Labourers, the mainstay 'of the world" began by emphasising that labourers are the mainstay of the present world and then proceeded to describe their unfortunate and pitiful lot. In a subsequent portion the author stated that though speechless today, when organized, the labourers will be as powerful as millions and this portion of the poem ended with these words: "Why are you helplessly tolerating the exploitation of your masters." The remaining lines were as follows: "Labourers, raise now the cry of revolution. The heavens will tremble, the Universe will shake and the flames of revolution will burst forth from land and water. You who have been the object of exploitation, now dance the fearful dance of destruction on this earth; truly, labourers, only total destruction will (2) A.I.R. 1941 Pat.132 665 create a new world order and that will bring happiness to the whole world. " It is quite clear that here an appeal was made to la bourers inciting and encouraging them to commit acts of violence. The words used certainly tended to achieve that result. They were no empty slogans or abstract propositions. It had one consistent and coherent purpose, i.e., to excite labourers and to bring them into action. Any observation made about this writing can have no apt application for the determination of the present case. The learned Chief Justice in the concluding part of the judgment very pertinently pointed out that a commonsense interpretation must be given to the document complained of, the question to be answered always being, what impression will the documents or words give to a man of ordinary commonsense. My answer to this query in the present case is that the document read at first sight is not intelligible unless it is explained to that man of ordinary commonsense by a learned person and hence it can by itself create no impression of any kind on such a person. After the writing is explained to such a man, he will merely laugh at it and throw it in the waste paper basket without taking it seriously. He will refuse to believe that a person of this kind can create a new world order by appealing to a bloody revolution. As I pointed out in my judgment in Harkrishan Singh vs Emperor(1), the use of such words as appear in this document creates no impression on the mind of any reasonable reader. That case dealt with clause (d) of section 4 (1), but the principle underlying it also applies to the construction of writings which are alleged to fall under section 4 (1) (a). I do not mean to suggest or to lay down as a general propo sition that some of the words used in the pamphlet in ques tion in the context of any other writing would not fall within the mischief of section 4 (1) (a). Certain parts of the pamphlet, if read as isolated passages, may have the tendency to excite people to commit (I) A,I.R, 666 crimes of violence but that is not the effect if the pam phlet is read in its entirety. The result is that I would dismiss the appeal but in the circumstances would make no order as to costs. The State Government has succeeded in its contention that sec tion 4 (1) (a) of the Act is constitutional and that was the real ground on which it came to this Court. PATANJALI SASTRI C.J. I agree with the judgment just delivered by my learned brother Mahajan J. and have nothing to add. MUKHERJEA J. I concur in the judgment delivered by my learned brother Mahajan J. and I would like to say a few words, regarding the publication itself which led to the demand of security by the Government under the provision of the Indian Press (Emergency) Act. The point that requires consideration is, whether the words contained in the impugned publication are of the nature described in section 4 (1) (a) of the Act; or in other words whether they incite to or encourage or tend to incite to or to encourage the commission of any offence of murder or any cognizable offence involving violence. It is well settled that to arrive at a decision on this point, the writing is to be looked at as a whole without laying stress on isolated passages or particular expressions used here and there, and that the court should take into consideration what effect the writing is likely to produce on the minds of the readers for whom the publication is intended. Account should also be taken of the place, circumstances and occa sion of the publication, as a clear appreciation of the background in which the words are used is of very great assistance in enabling the court to view them in their proper perspective. The leaflet in question is entitled "Sangram" or struggle. It is written in high flown Bengali prose with a large mixture of poetic expressions borrowed at random from the writings of some well known 667 poets of Bengal. The object of the writing as far as could be gathered from the document is to give a poetic or ideal istic picture of what is meant and connotated by "struggle"or revolution. The aim and end of "struggle ", as stated in the leaflet, is to wipe outs, "oppression, injus tice or wrong" which is "pervading all over the world from the past to the future"; and it is only after all wrongs, injustice and oppression have perished that a new world could be built up. This seems to be the main or central theme of the composition, clothed, though it is, under much incoherent talk and seemingly meaningless utterances. There is no indication throughout the writing as to what kind of oppression, injustice or wrong the author had in mind. Far from referring to grievances of any specific character, the writer does not even hint at such general causes of discon tent as political inequality, economic exploitation or class warfare which are the subject matter of agitation in many parts of the world. The leaflet does not give indication also of any unpopular measure or act of injustice affecting the minds of the people in the particular area where it was published and within which it was intended to be circu lated. In one part of the document the following words are found to occur: "If mother be true, let no disgrace spread in the name of the mother. If mother tongue be equal to mother, then the said language is your most revered goddess. Do not allow disgrace to spread in her name". It is not the case of the Government and there is no statement or affidavit to that effect, that the passages here have any reference to the language controversy which agitated and probably is still agitating this particular district. In another part of the document the expression "narrow parochial politics" has been used, but here again the Government has not made any attempt to explain, what this expression could, in the particular context, mean or refer to. As no acts of injustice or oppression are actually mentioned in the document, it is difficult to say who the "oppressors" are, whose "proud heads" the author asks his 668 readers to break. It is quite clear that the "oppressor" mentioned here is neither the Government nor the party in power, nor has it any relation to any particular class of persons or a sect or community which might be harassing others and trampling upon their rights. It may be, that to attract the operation of section 4 (1) (a) of the Indian Press Act, the incitement to murder or violence need not be specifically directed against particular individuals or class of persons; but when the whole talk is about injustice or oppression in the abstract, which is stated by the author to be in existence from the beginning of time and when in hyperbolic language a hope is expressed of establishing a better and a cleaner world through struggle, sweat and blood, the words used may not improperly be looked upon as an effusion of poetic fancy which, having no relation to actual facts can have very little potency for doing mis chief. I will now proceed to examine the contents of the pamphlet in detail. The writer begins in an affected poetic vein and de scribes, in language, to which it is difficult to attach any rational meaning, what "struggle" or revolution is. The "struggle" which is personified in the article introduces itself in the following manner: "I am not wealth, nor popular strength, not the people nor fame;. I am not joy nor a brag, nor the timid look of the beloved 's eyes . I am not mother 's affection, nor sister 's love". If these words convey any sense, they can only mean that the struggle or revolution which the writer wants to depict is something different from what we ordinarily associate with our social life and happiness; it is a negation of all natural human feelings and sentiments. The next paragraph says in equal enigmatical language what "Sangram" or "strug gle" actually is. "I am old antiquated history" thus the article proceeds; " I am time eternal, I am the future, the present and the past, in my heart is written the story of the past, the problems of the present and the voice of the 669 future". I do not know whether this is a poetic way of depicting the entire life process which is said to lie through struggle and guide our evolution in this planet. Struggle, according to the author, is coeval with time and eternity. In the next paragraph the writer passes on to say with many repetitions of the word "wrong" that "it is wrong which is pervading all over from the past to the future", and it is this wrong that is to be righted by the struggle. The struggle here is likened for reasons best known to the author to a piece of torn grass in the middle stream of a turbulent river, and to a grain of dust thrown in the face of a cyclone. "It is dishonour, Unhappiness, endless pain. " It is again likened successively to the frown of the be loved, to famine, storm and evil days. The call is sent to everybody to come on "where the sky is cracking and the endless rough and thorny path is shrouded in darkness" and assist in building up a new world. Many of the expressions used here are taken verbatim from the writings of some well known Bengalee authors, though they sound nothing but a rigmarole in the present context. The next paragraph begins with the word "revolution". Struggle is revolution and through struggle and revolution the world is to be built anew. It is then said that "death is my darling and death is the only truth in this world". If one has to die, there is no sense in dying of illness. Let a man choose an honourable death by standing against oppressors. Quite abruptly the author brings in the name of Sri Subhas Chandra Bose in the midst of this talk and asks his readers to listen "far far away across the hills, across the jungle, across the rivers and rivulets the call of Subhas Chandra Bose, the greatest revolutionary leader of the world". The people are asked not to stop until the objective is attained. Again it is said "I am struggle, I am revolution . I am a Hindu, I am a Mussalman, I am a Christian, I am a Jew, I am a Keduin, I am severed from all religions by the fruits of my action in previous births". Without the least attention to any sequence of thought, immediately 670 after this, the imaginary oppressor is addressed by the author as follows: "Oh you foolish oppressor you want to terrify with your red eyes, I fear not." The author, or rather the personified "struggle" which purports to speak, then repeats the well known words of poet Tagore and says that he does not seek salvation through renunciation; he wants that salvation which lies in joy amidst innumerable dangers and difficulties. The idea of finding joy in all that is hated, avoided and dreaded in this world is elaborated in the passages that follow. "Death" it is said "is my secret love, poison is my drink, the flames of fire are my sweet breeze, the cry of childless mothers a tune in my flute and the weeping of widows a rythm of my song". In this vein the author goes on conjuring up all the uncanny and weird things in the world and associat ing them with struggle. "I am not joy, I am the remnant of the dying cries . I am the bloodthirsty goddess Kali who lives and moves about in the cremation ground. I want blood . . Break the proud head of the oppressor. I bathe in flames . . . Thunder is my kiss of affection . . I do not understand myself. I do not know myself. I do not recognise myself still I want revo lution, still I want struggle". The learned Judges of the High Court laid very great stress on these passages which in their opinion constitute a direct incitement to bloody revolution; and that is also the line of argument adopted by Mr. Mitter who appeared before us on behalf of the State. It has been argued by Mr. Ghosh appearing for the respondent that the "struggle" which the author has depicted and which he aims at is a non violent struggle and the blood that is to be shed is the blood of those who are called upon to resist oppression and injustice. On the other hand, it is argued on behalf of the State that the passages quoted above can only mean that it is a bloody and violent revolution which could carry men to their desired end. In my opinion, neither of these contentions furnish to us the proper method of approach to the question which requires 671 decision in the present case. We would have to look at the article as a whole and focus our attention on what can be regarded to be its central theme or purpose. As has been said already, what the writer wants is to draw an ideal picture of "struggle" or revolution quite unconnected with any particular place, or any particular political or social environment. Injustice or oppression exists, according to the author, from the very dawn of time and so also does struggle or revolution. It is an integral part of the world process and is a sort of irrational or blind impulse. This is expressed by saying "I do not understand myself,I do not recognise myself, still I want revolution". In painting death or war, the artist would naturally choose some uncanny associations. The trappings of revolution, as the author paints it, are all the fearful and hideous things in this world. It is linked up with thunder and storm, fire and devastation, cataclysm, famine, danger, destruction and death. It is immaterial so far as this ideal picture is concerned whether the blood that is spoken of is the blood of the oppressor or of the oppressed, and whether the strug gle is violent or pacific. The goddess Kali in the Hindu mythology is the goddess of destruction and death, but she is the benign goddess also whose protecting hands ward off all oppressions, danger and calamity. That is the reason why revolution or struggle is assimilated to this goddess. It cannot be denied that in painting this picture of "strug gle" or revolution the author has used very strong words; but they would not be unnatural if it is only an ideal picture that the author really desired to paint. If howev er, it can be shown that under the cloud of these general enigmatical words something concrete and tangible lies hidden, that the "oppression" and "oppressor" are not imagi nary abstractions but are real things not unknown to the people to whom the article is addressed and there is in fact a grievance agitating the popular mind, no matter whether it is well or ill founded, against which the author desires to inflame public opinion;then even though he uses veiled or covert language, there 672 can be no doubt that the article would come within the purview of section 4 (1) (a) of the Indian Press Act. But the difficulty is that the Government has not made any attempt to establish any of these facts. Without knowing the attendant circumstances and the actual background of the publication, it is not possible for us to ascertain the real intention that lies behind the writing; and absolutely no materials have been placed before us by the Government which might enable us to find out what in reality was the sub stance behind this camouflage of words, if camouflage it actually is. The rest of the article proceeds in the same hyperbol ic and enigmatical style There is repetition ad nauseam of the same stock phrases and expressions. It goes on to say "I am the messenger of death. I am untouchable, I am vague, I am queer, 1 am nightmare, I am robber, I am enemy, I am un known. 1 am not Falgoon with its sweet smelling flowers; I am eternal separation, I am restlessness". I am extremely doubtful whether expressions like these would not, to an ordinary reader, appear to be anything better than the ravings of a mad man. I will cull a few more expressions which occur subsequently and which loftily this impression. "I see struggle on my darling 's face, I see struggle in the honey of flowers. I am storm, I am the Deepak Ragini. I am misfortune. I am cry of distress, I am jealousy, I am evil days. " The concluding portion of the article reads as follows: `` Let me speak the last word: If you are true, if you are gift of God, if you are not a bastard. then come forward with a fearless heart, struggle against the oppressor 's improper conduct, oppression and injustice. We shall not tolerate wrongful oppression. Oh, the people, with the pain of your heart burn: the heart of the oppressive high handed oppressor, let all wrongs, all high handedness, all oppres sions, all tyrannies be burnt in the flame. " 673 There was a good deal of discussion before us as to whether these passages hint at a violent or a non. violent struggle. It may be capable of either interpretation. but as I have said already, that by itself would not afford a decisive solution of the question before us. It is also not much material to consider whether the author wants that "Jealousy and malice" which he has referred to at the end of the article, are to develop and spread or they are to be transformed into innocuous and sweet smelling flowers. This is certainly a matter upon which difference of opinion is possible. After all, we are to see what impres sion the article read as a whole would produce upon ordinary people. An ordinary reader is not expected to seek the assistance of an interpreter in trying to find out the true meaning of the words used. As has been said already, many of the expressions used here have been taken verbatim from the writings of certain noted Bengalee authors. They are stock phrases current in Bengal and amongst the Bengali speaking community elsewhere. If it strikes the reader that what the author wanted was to pass himself off as a noted writer by sheer plagiarism, then whatever else may be said about the article, it certainly does not come within the purview of section 4 (1) (a) of the Press Act. Taking the article as it is, it is nothing but a tissue of high sounding and meaningless words and whether the author wanted to imitate some of the welt known poets of Bengal in attempting to give a poetic description of "strug gle"or revolution or wanted to give himself the pose of a liberator of mankind, out to wipe out the last vestiges of oppression and injustice from the face of the earth, no rational person would take him seriously and would look upon this composition as the vapourings of a deranged brain. If, on the other hand, the whole thing is a clever ruse resorted to with the object of inflaming the popular mind against certain persons or authorities, and although only general and vague words are used, the words have their meaning and significance to those 674 who are acquainted with the actual situation, it was incum bent upon the Government to clear up these matters and present before us the background and the context without which no meaning could be attributed to this species of empty verbiage. As Government did not discharge the duty that lay upon them, I am clearly of opinion that no security order could be passed against the respondent under the provision of section 4 (1) (a) of the Press Emergency Act. DAS J. During the course of the arguments I enter tained some doubt as to the innocence of the meaning and implication of the pamphlet in question, but, in the light of the judgments of my learned brothers Mahajan J. and Mukherjea J., which I have had the advantage of perusing since, I do not feel that I would be justified in dissenting from the construction they have put upon the language used in the pamphlet. I accordingly concur in their conclusion. Bose J. I agree with my brothers Mahajan and Mukher jea. Appeal dismissed.

Section 4 (1) (a)of the Indian Press (Emergency Pow ers) Act (XXIII of 1931) is not unconstitutional as the restrictions imposed on freedom of speech and expression by the said section are solely directed against the undermining of the security of the State or the overthrow of it and are within the ambit of article 19(2) of the Constitution. Romesh Thapar 's case ([1950] 655 S.C.R. 594]) and Brij Bhushan 's case ([1950] S.C.R. 605)do not lay down any wide proposition that restrictions of the nature imposed by section 4 (1) (a) are outside the scope of article 19 (2) as they are conceived generally in the interests of public order. At any rate, the amendment made to article 19 (2) by the Constitution (First Amendment) Act which is retro spective in operation makes the matter clear. In order to determine whether a particular document falls within the ambit of section 4(1) the writing has to be considered as a whole in a fair, free and liberal spirit, not dwelling too much on isolated passages or upon a strong word here and there, and an endeavour should be made to gather the general effect which the whole composition would have on the minds of the public. Expressions which are the stock in trade of political demagogues and have no tenden cy to excite anybody, and exaggerations in language, cannot lead to that result. Rhetoric of this kind might in con ceivable circumstances inflame passions, as for example, if addressed to an excited mob, but if such circumstances exist it is for the Government to establish the fact.

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Appeal No. 119 of 1959. Appeal by special leave from the judgment and order dated January 9, 1958, of the Allahabad High Court (Lucknow Bench), Lucknow, in Civil Misc. Application No. 115 of 1955. 683 C. B. Agarwala and C. P. Lal, for the appellants. G. section Pathak, Achru Ram, section N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra for the respondent. November, 25. The Judgment of Sarkar, Subba Rao and Mudholkar, JJ., was delivered by Subba Rao, J., and that of Gajendragadkar and Wanchoo, JJ., was delivered by Wanchoo, J. SUBBA RAO, J. This is an appeal by special leave against the judgment of the High Court of Judicature at Allahabad, Lucknow Bench, allowing the petition filed by the respondent under article 226 of the Constitution. The respondent was appointed a Sub Inspector of Police in December, 1948, and was posted at Sitapur in June, 1953. On September 6, 1953, the respondent went to village Madhwapur in connection with an investigation of a case of theft. On the evening of the said date when he was returning, accompanied by one Lalji, an ex patwari of Mohiuddinpur, he saw one Tika Ram coming from the side of a canal and going hurriedly towards a field. As the movements of Tika Ram appeared to be suspicious and as he was carrying something in the folds of his dhoti, the respondent searched him and found a bundle containing currency notes. The respondent counted the currency notes and handed them over to Lalji for being returned to Tika Ram, who subsequently got them and went his way. Subsequently when Tika Ram counted the currency notes at his house, he found that they were short by Rs. 250. Tika Ram 's case is that the bundle when taken by the respondent contained notes of the value of Rs. 650, but when he counted them in his house they were only of the value of Rs. 400. On September 9, 1953 Tika Ram filed a complaint to the Superintendent of Police, Sitapur, to the effect that the respondent and one Lalji had misappropriated a sum of its. There is dispute in regard to the interpretation of the complaint. On receipt of the said complaint, the Superintendent of Police made enquiries 684 and issued a notice to the respondent to show cause why his integrity certificate should not be withheld, upon which the respondent submitted his explanation on October 3, 1953. Thereafter the Superintendent of Police forwarded the file of the case to the Deputy Inspector General of Police, Central Range, U. P., who directed the Superintendent of Police to take proceedings under section 7 of the Police Act against the respondent. The departmental proceedings were started against the respondent; on November 2, 1953, a charge sheet was served upon the respondent under section 7 of the Police Act stating that there were strong reasons to suspect that the respondent misappropriated a sum of Rs. 250 from the purse of Tika Ram; the respondent filed his explanation to the charge made against him; and ultimately the Superintendent of Police held an enquiry and found on the evidence that the respondent was guilty of the offence with which he was charged. On January 2, 1954, the Superin tendent of Police issued another notice to the respondent to show cause why he should not be reduced to the lowest grade of Sub Inspector for a period of three years. In due course the respondent showed cause against the action proposed to be taken against him on a consideration of which the Superintendent of Police, Sitapur, by his order dated January 16, 1954 reduced the respondent to the lowest grade of Sub Inspector for a period of three years. When this order came to the notice of the D. 1. G., U. P., on a consideration of the entire record, he came to the con clusion that the respondent should be dismissed from service and on October 19, 1954 he made an order to that effect. On February 28, 1955 the Inspector General of Police confirmed that order; and the revision filed by the respondent against that order to the State Government was also dismissed in August 1955. Thereafter the respondent filed a petition under article 226 of the Constitution before the High Court of Judicature at Allahabad, Lucknow Bench, for quashing the said orders and the same was heard by a division bench consisting of Randhir Singh and Bhargava, JJ. The learned judges held that the provisions of para. 685 486 of the Police Regulations had not been observed and, therefore, the proceedings taken under section 7 of the Police Act were invalid and illegal. On that finding, they quashed the impugned orders; with the result that the order dismissing the respondent from service was set aside. The State Government, the Deputy Inspector General of Police, Lucknow, and the Inspector General of Police, Uttar Pradesh, Lucknow, have preferred the present appeal against the said order of the High Court. We shall now proceed to consider the various contentions raised by learned counsel in the order they were raised and argued before us. At the outset Mr. C. B. Agarwala, learned counsel for the appellants, contended that there was no breach of the provisions of para. 486 of the Police Regulations. If this contention be accepted, no other question arises 'in this case; therefore, we shall deal with the same. The material part of para. 486 of the Police Regulations reads thus: "When the offence alleged against a police officer amounts to an offence only under section 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. In such cases, and in other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the following rules: I.Every information received by the police relating to the commission of a cognizable offence by a police officer shall be dealt with in the first place under Chapter XIV, Criminal Procedure Code, according to law, a case under the appropriate section being registered in the police station concerned. . . . This provision expressly lays down that every information received by the police relating to the commission of a cognizable offence by a police officer shall be dealt with in the first place under Ch. XIV of the Criminal Procedure Code. This provision will not apply if the information received by the police does not 87 686 relate to the commission of a cognizable offence. Learned counsel contends that the information received in the present case does not relate to any offence committed by the respondent, much less to a cognizable offence. This is a point raised before us for the first time. This does not find a place even in the statement of case filed by the appellants. In the High Court it was not contended that the information did not disclose any offence committed by the respondent. Indeed, it was common case that the information disclosed an offence committed by the respondent, but it had been contended by the appellants that the misappropriation of the part of the money amounted to an offence under section 403 of the Indian Penal Code, which is not a cognizable offence; and it was argued on behalf of the respondent that it amounted to an offence under section 409 of the Indian Penal Code. The learned judges accepted the contention of the respondent. Even so, it is said that whatever might been the contentions of the parties, the information given by Tika Ram to the Superintendent of Police clearly disclosed that no offence was alleged to have been committed by the respondent and that this Court would, therefore, be justified, even at this very late stage, to accept the contention of the appellants. But the contents of the said information do not in any way support the assertion. Paragraph 3 of the application given by Tika Ram to the Superintendent of Police, Sitapur, reads thus: "That on Sunday last dated 6th September, 1953 the applicant had with him the currency notes of Rs. 650. The opposite party as well as Shri Babu Ram met the applicant on the west of Rampur near the Canal. The opposite party said to the Sub Inspector "This man appears to be clad in rags but is possessed of considerable money." After saying this the person of the applicant was searched. The Sub Inspector, having opened the bundle of notes, handed over the (notes) one by one to the opposite party. " This statement clearly indicates that either the Sub . Inspector or both the Sub Inspector and Lalji searched the person of Tika Ram, that the Sub Inspector took 687 the bundle of notes and handed the same over, one by one, to Lalji for being returned to the applicant, and that out of Rs. 650 a sum of Rs. 250 was not returned to him. The facts alleged make out an offence against both the Sub Inspector as well as Lalji. The mere fact that the respondent is not shown as one of the opposite parties in the application does not affect the question, for the information given in the application imputed the commission of an offence to both the respondent and Lalji. The notice issued by the Supe rintendent of Police on November 2, 1953 to the respondent also charges him with an offence of misappropriation. It is stated that the said notice only says that the Superintendent of Police had good reasons to suspect that the respondent misappropriated the sum of money and that it does not aver that he committed the offence of misappropriation. But what matters is 'that the Superintendent of Police also understood from the information given and the enquiry conducted by him that the respondent had committed the offence. Reliance is placed upon paragraph 3 of the writ petition wherein the respondent herein stated that Tika Ram filed a complaint against Lalji and not against the respondent. As a fact that is correct in the sense that the respondent was not shown in that application as the opposite party though in the body of that application definite allegations were made against the respondent. In the counter affidavit filed by the Superintendent of Police on behalf of the State it was clearly averred that on September 9, 1953 Tika Ram appeared before him and filed a petition to the effect fiat one Lalji and the respondent had misappropriated a sum of Rs. 250. Whatever ambiguity there might have been in the information we do not find any this allegation dispels it and it is not open to the appellants at this stage to contend that the petition did not disclose any offence against the respondent. In the circumstances, we must hold that the information received by the police related to the commission of an offence by the respondent. Even so, it is contended that the said offence is not a cognizable offence. It is said that there was no 688 entrustment made by Tika Ram to the respondent and that, therefore, the offence did not fall under section 409 of the Indian Penal Code, which is a cognizable offence, but only under section 403 of the Indian Penal Code, which is not a cognizable offence. Section 405 of the Indian Penal Code defines "criminal breach of trust" and section 409 thereof prescribes the punishment for the criminal breach of trust by a public servant. Under section 405 of the Indian Penal Code, "Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates 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 person so to do, commits "criminal breach of trust". To constitute an offence under this section, there must be an entrustment of property and dishonest misappropriation of it. The person entrusted may misappropriate it himself, or he may wilfully suffer another person to do so. In the instant case the respondent, being a police officer, was legally entitled to search a person found under suspicious circumstances; and Tika Ram in handing over the bundle of notes to the police officer must have done so in the confidence that he would get back the notes from him when the suspicion was cleared. In these circumstances, there cannot be any difficulty in holding that the currency notes were alleged to have been handed over by Tika Ram to the respondent for a specific purpose, but were dishonestly misappropriated by the respondent or at, any rate he wilfully suffered Lalji to misappropriate the same. We, therefore, hold that if the currency notes were taken by the respondent in discharge of his duty for inspection and return, he was certainly entrusted with the notes within the meaning of section 405 of the Indian Penal Code. If so, the information discloses a cognizable offence. We reject the first contention. The second objection of learned counsel for the appellants is that sub para. (3) of para. 486 of the 689 Police Regulations enables the appropriate police authority to initiate the departmental proceeding without complying with the provisions of sub para. (1) of para. The relevant portion of para. 486 of the Police Regulations reads: "When the offence amounts to an offence only under section 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. In such cases, and in other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the following rules:. . " Rule I relates to a cognizable offence, r. II to a non cognizable. offence, including an offence under section 29 of the Police Act, and r. III to an offence under section 7 of the Police Act or a non cognizable offence, including an offence under section 29 of the Police Act. Rule III says: "When a Superintendent of Police sees reason to take action on information given to him, or on his own knowledge or suspicion, that a police officer subordinate to him has committed an offence under section 7 of the Police Act or a non cognizable offence (including an offence under section 29 of the Police Act) of which he considers it unnecessary at that stage to forward a report in writing to the District Magistrate under rule II above, he will make or cause to be made by an officer senior in rank to the officer charged, a departmental inquiry sufficient to test the truth of the charge. On the conclusion of this inquiry he will decide whether further action is necessary, and if so, whether the officer charged should be departmentally tried, or whether the District Magistrate should be moved to take cognizance of the case under the Criminal Procedure Code. " The argument is that the words "an offence under section 7 of the Police Act" take in a cognizable offence and that, therefore, this rule provides for a procedure alternative to that prescribed under r. I. We do not think that this contention is sound. Section 7 of the Police Act empowers certain officers to dismiss, suspend 690 or reduce any police officer of the subordinate rank whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same. The grounds for punishment are comprehensive: they may take in offences under the Indian Penal Code or other penal statutes. The commission of such offences may also be a ground to hold that an officer is unfit to hold his office. Action under this section can, therefore, be taken in respect of, (i) offences only under section 7 of the Police Act without involving any cognizable or noncognizable offences, that is, simple remissness or negli gence in the discharge of duty, (ii) cognizable offences, and (iii) non cognizable offences. Paragraph 486 of the Police Regulations makes this clear. It says that when the offence alleged against a police officer amounts to an offence only under section 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. This part of the rule applies to an offence only under section 7 of the Police Act i. e., the first category mentioned above. Rule I refers to a cognizable offence i. e., the second category, rule 11 to a non cognizable offence i. e., the third category, and rule III applies to an offence under section 7 of the Police Act and to a noncognizable offence. Though the word "only" is not mentioned in rule 111, the offence under section 7 of the Police Act can, in the context, mean an offence only under section 7 of the said Act i.e., an offence falling under the first category. So understood, the three rules can be reconciled. We, therefore, hold that, as the offence complained of in the present case is a cognizable offence, it falls under rule I and not under rule 111. We, therefore, reject this contention. The third contention advanced by learned counsel for the appellants raises a constitutional point of considerable importance. The gist of the argument may be stated thus: In England, the service under the Crown is held at the Crown 's pleasure, unless the employment is for good behaviour or for a cause. But if there is a statute prescribing the terms of service and the mode of dismissal of the servant of the Crown, the statute would control the pleasure of the Crown. In India, the Constitution as well as the 691 earlier Constitution Acts of 1915, as amended in 1919, and 1935 embodied the incidents of "tenure at pleasure" of His Majesty, or the President or the Governor, as the case may be, but did not empower the Legislatures under the earlier Acts and the Parliament and the Legislatures under the Constitution to make a law abrogating or modifying the said tenure; therefore, any law made by appropriate authorities conferring a power on any subordinate officer to dismiss a servant must be construed not to limit the power of His Majesty, the President or the Governor, as the case may be, but only to indicate that they would express their pleasure only through the said officers. The rules made in exercise of a power conferred on a Government under a statute so delegating the power to a subordinate officer can only be administrative directions to enable the exercise of the pleasure by the concerned authorities in a reasonable manner and that any breach of those regulations cannot possibly confer any right on, or give a cause of action to, the aggrieved Government servant to go to a court of law and vindicate his rights. Mr. Pathak, learned counsel for the respondent, in countering this argument contends that the constitution Acts in India embodied the incidents of the tenure of the Crown 's pleasure in the relevant provisions and what the Parliament can do in England, the appropriate Legislatures in India also can do, that is, "the tenure at pleasure" created by the Constitution Acts can be abrogated, limited or modified by law enacted by the appropriate legislative bodies. Alternatively he contends that even if the Police Act does not curtail the tenure at pleasure, the Legislature validly made that law and the Government validly made statutory rules in exercise of the powers confered under that Act and that, therefore, the appropriate authorities can only dismiss the respondent in strict compliance with the provisions of the Act and the Rules made thereunder. To appreciate the problem presented and to afford a satisfactory answer it would be convenient to consider the relevant provisions. The Act we are concerned with in this case is the (Act V 692 of 1861). Its constitutional validity at the time it was ,made was not questioned. Under section 7 of the , as it originally stood, "the appointment of all police officers other than those mentioned in B. 4 of this Act shall, under such rules as the local Government shall from time to time sanction, rest with the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendents of Police, who may, under such rules as aforesaid, at any time, dismiss, suspend or reduce any police officer. " That section was substituted by the present section in 1937 and later on some appropriate amend ments were made to bring it in conformity with the Constitution. Under the amended section, "Subject to such rules as the State Government may from time to time make under this Act, the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendent of Police may at any time dismiss, suspend or reduce any police officer of the subordinate ranks whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same". In exercise of the powers conferred on the Government by section 46 of the Act, the Government made the U. P. Police Regulations prescribing the procedure for investigation and inquiry. We shall ' deal with the Regulations at a later stage. In the Government of India Act, 1915, as amended by the Act of 1919, for the first time, the doctrine of "tenure at pleasure" was introduced by section 96 B. In exercise of the power conferred under sub section (2) certain classification rules were framed by the local Government. This Act was repealed by the Government of India Act, 1935, and the section corresponding to section 96 B was section 240(1) in the latter Act. Section 241(2) empowered, except as expressly provided by the Act, the Governor General and the Governor to prescribe the conditions of service of the servants they were empowered to appoint. The main difference between the Act of 1919 and that of 1935 was that in the former Act there was only one limitation on the Crown 's pleasure, namely, that no person in the service might be dismissed by 693 an authority subordinate to that by which he was appointed, whereas in the latter Act a second limitation was imposed, namely, that no such person should ' be dismissed or reduced in rank until he had been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him: see section 240, sub sections (2) and (3). Another difference between the said two Acts was that while under the former Act all the services were placed in the same position, under the latter Act special provision was made for the police force prescribing that the conditions of service of the subordinate ranks of the various police forces should be such as might be determined by or under the Acts relating to those forces respectively vide section 243. By the Constitution, the Act of 1935 was repealed, and, with certain changes in phraseology, cls. (1) and (2) of article 310 took the place of sub sections (1) and (4) of section 240 respectively, and article 309 took the place of section 241(2). Under article 313, "Until other provision is made in this behalf under this Constitution, all the laws in force immediately before the commencement of this Constitution and applicable to any public service or any post which continues to exist after the commencement of this Constitution, as an all India service or as service or post under the Union or a State shall continue in force so far as consistent with the provisions of this Constitution". The result is that the and the Police Regulations, made in exercise of the powers conferred on the Government under that Act, which .were preserved under section 243 of the Government of India Act, 1935, continue to be in force after the Con stitution so far as they are consistent with the provisions of the Constitution. It is common case, as the contentions of learned counsel disclose, that the Act and the Regulations framed thereunder were constitutionally valid at the inception and that they are also consistent with the provisions of the Constitution. The difference between the two contentions lies in the fact that according to one His Majesty 's pleasure cannot be modified 88 694 by a statute, according to the other it is subject to statutory provisions. The relevant provisions of the Constitution read thus: Article 309: "Subject to the provisions of this Constitution, Acts of the appropriate Legislature may regulate the recruitment, and conditions of service of persons appointed, to public services and posts in connection with the affairs of the Union or of any State: Provided that it shall be competent for the President or such person as he may direct in the case of services and posts in connection with the affairs of the Union, and for the Governor of a State or such person as he may direct in the case of services and posts in connection with the affairs of the State, to make rules regulating the recruitment, and the conditions of service of persons appointed, to such services and posts until provision in that behalf is made by or under an Act of the appropriate Legislature under this article, and any rules so made shall have effect subject to the provisions of any such Act. " Article 310: "Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service or holds any post connected with defence or any Civil Post under the Union holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State." Under article 309 the appropriate Legislature may regulate the recruitment and conditions of service of persons appointed to public services. Under article 310 every person who is EC member of a public service described therein holds office during the pleasure of the President or the Governor, as the case may be. The words "conditions of service" in article 309 in their comprehensive sense take in the tenure of a civil servant: see N. W. F. Province vs Suraj Narain (1). Therefore, "the tenure at pleasure" is also one of the conditions of service. But article 309 opens out with a (i) A.I.R. (1949) P.C. 112. 695 restrictive clause, namely, "Subject to the provisions of this Constitution", and if there is no restrictive, clause in article 310, there cannot be any difficulty in holding that article 309 is subject to the provisions of ' Art 310; with the result that the power of the Legislature to lay down the conditions of service of persons appointed to public services would be subject to "the tenure at pleasure" under article 310. In that event, any law made by the Legislature could not affect the over riding power of the President or the Governor, as the case may be, in putting an end to the tenure at their pleasure. Would the opening words of the clause in article 310, namely, "Except as expressly provided by this Constitution", make any difference in the matter of interpretation? It should be noticed that the phraseology of the said clause in article 310 is different from that in article 309. If there is a specific provision in some part of the Constitution giving to a Government servant a tenure different from that provided for in article 310, that Government servant is excluded from the operation of article 310. The said words refer, inter alia, to articles 124, 148, 218 and 324 which provide that the Judges of the Supreme Court, the Auditor General, the Judges of the High Courts and the Chief Election Commissioner shall not be removed from their offices except in the manner laid down in those Articles. If the provisions of the Constitution specifically prescribing different tenures were excluded from article 310, the purpose of that clause would be exhausted and thereafter the Article would be free from any other restrictive operation. In that event, articles 309 and 310 should be read together, excluding the opening words in the latter Article, namely, "Except as expressly provided by this Constitution". Learne counsel seeks to confine the operation of the opening words in article 309 to the provisions of the Constitution which empower other authorities to make rules relating to the conditions of service of certain classes of public servants, namely, articles 146(2), 148(5) and 229(2). That may be so, but there is no reason why article 310 should be excluded therefrom. It follows that while article 310 provides for a tenure at pleasure 696 of the President or the Governor, article 309 enables the Legislature or the executive, as the case maybe, to make any law or rule in regard, inter alia, to conditions of service without impinging upon the overriding power recognized under article 310. Learned counsel for the respondent contends that this construction is inconsistent with that prevailing in the English law and that the intention of the framers of the Constitution could not have been to make a radical departure from the law of England. The law of England on the doctrine of "tenure at pleasure" has now become fairly crystallized. In England, all servants of the Crown hold office during the pleasure of the Crown; the right to dismiss at pleasure is an implied term in every contract of employment of the Crown, this doctrine is not based upon any prerogative of the Crown, but on public policy; if the terms of appointment definitely prescribe a tenure for good behaviour or expressly provide for a power, to determine for a cause, such an implication of a power to dismiss at pleasure is excluded, and an Act of Parliament can abrogate or amend the said doctrine of public policy in the same way as it can do in respect of any other part of common law. The said propositions are illustrated in the following decisions: Shenton vs Smith (1), Gould vs Stuart (2), Reilly vs The King(3), Terrell vs Secretary of State (4). This English doctrine was not incorporated in its entirety in the Indian enactments vide State of Bihar vs Abdul Majid (5), Parshotam Lal Dhingra vs Union of India (6). Section 96 B of the Government of India Act, 1915, for the first time in 1919, by amendment, statutorily recognized this doctrine, but it was made subject to a condition or s qualification, namely, that no person in that service might be dismissed by any authority subordinate to that by which he was appointed. Section 240 of the Act of 1935 imposed another limitation, namely, that a reasonable opportunity of showing cause against the action proposed to be taken in (i) (3) (5) ; (2) (4) (6) ; 697 regard to a person must be given to him. But neither of the two Acts empowered the appropriate Legislature to make a law abolishing or amending the said doctrine. The Constitution of India practically incorporated the provisions of sections 240 and 241 of the Act of 1935 in articles 309 and 310. But the Constitution has not made "the tenure at pleasure" subject to any law made by the appropriate Legislature. On the other hand, as we have pointed out, article 309 is expressly made subject to "the tenure at pleasure" in article 310. Nor the attempt of learned counsel for the respondent to discover such a power in the Legislature in the Entries of the appropriate Lists of the Seventh Schedule to the Constitution can be legally sustained. He referred, inter alia, to Entry 70 of List I and Entry 41 of List II. It is not disputed that Parliament can make law for the organization of the police and for the prevention and detection of crime. But under article 245 of the Constitution such a power is subject to the provisions of the Constitution and, therefore, is subject to the provisions of article 310. Nor can we imply such a power in Parliament or the Legislatures from article 154(2)(b) of the Constitution. Under article 154, "the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution", and under el. 2(b) thereof, "nothing in this Article shall prevent Parliament or the Legislature of the State from conferring by law functions on any authority subordinate to the Governor. " The argument is that a power to terminate the service at pleasure under article 310 is a part of the executive power of the State, that power under article 154 can be exercised by the Governor directly or through officers subordinate to him, and that under article 154(2)(b) the Parliament or the Legislature of the State can confer the same power on any authority subordinate to the Governor or, at any rate, can make a law prescribing that the Governor shall exercise the said pleasure through a particular officer. 698 We cannot agree either with the premises or the conclusion sought to be based on it. The first question is whether the power of the Governor under article 310 to terminate the services of a Government servant at pleasure is part of the executive power of the State under article 154 of the Constitution. Article 154 speaks of the executive power of the State vesting in the Governor; it does not deal with the constitutional powers of the Governor which do not form part of the executive power of the State. Article 162 says that, subject to the provisions of the Constitution, the executive power of the State shall extend to matters with respect to which the Legislature of the State has power to make laws. If the Legislature of the State has no power to make a law affecting the tenure at pleasure of the Governor, the said power must necessarily fall outside the scope of the executive power of the State. As we will presently show, the Legislature has no such power and, therefore, it cannot be a part of the executive power of the State. That apart, if the said power is part of the executive power in its general sense, article 162 imposes another limitation on that power, namely, that the said executive power is subject to the provisions of the Constitution and therefore, subject to article 310 of the Constitution. In either view, article 310 falls outside the scope of article 154 of the Constitution. That power may be analogous to that conferred on the Governor under articles 174, 175 and 176. Doubtless the Governor may have to exercise the said power whenever an occasion arises, in the manner prescribed by the Constitution, but that in itself does not make it a part of the executive power of the State or enable him to delegate his power. Even on the assumption that the power under article 310 is executive power within the meaning of article 154, it does not make any difference in the legal position so far as the present case is concerned. Article 310 of the Constitution says that unless expresssly provided by the Constitution to the contrary, every civil servant holds office during the pleasure of the Governor subject to the limitations prescribed under 699 article 311. Can it be said that article 154(2)(b) expressly provides for a different tenure? Can it be said that the said Article confers on the Parliament or the Legislature a power higher than that conferred on them under article 245 of the Constitution ? It only preserves the power of the Legislature, which it has under the Constitution, to make a law conferring functions on an authority subordinate to the Governor. That power under article 245 is not unlimited, but is subject to the provisions of the Constitution and there fore subject to article 310 thereof. It is then said that if the appellants ' contention were not accepted, it would lead to conflict of jurisdiction: while the Governor has the power under article 310 to dismiss a public servant at his pleasure, a statute may confer a power on a subordinate officer to dismiss a servant only subject to conditions; a subordinate officer functioning under an Act may not be able to dismiss a servant, but the Governor may be able to do so under similar circumstances; a subordi nate officer may dismiss a servant, but the Governor may order his continuance in office. This argument is based upon the misapprehension of the scope of article 309 of the Constitution. A law made by the appropriate Legislature or the rules made by the President or the Governor, as the case may be, under the said Article may confer a power upon a particular authority to remove a public servant from service; but the conferment of such a power does not amount to a delegation of the Governor 's pleasure. Whatever the said authority does is by virtue of express power conferred on it by a statute or rules made by competent authorities and not by virtue of any delegation by the Governor of his power. There cannot be conflict between the exercise of the Governor 's pleasure under article 310 and that of an authority under a statute, for the statutory power would be always subject to the overriding pleasure of the Governor. This conclusion, the argument proceeds, would throw a public servant in India to the mercy of the executive Government while their compeers in England 700 can be protected by legislation against arbitrary actions of the State. This apprehension has no real .basis, for, unlike in England, a member of the public service in India is constitutionally protected at least in two directions: (i) he cannot be dismissed by an authority subordinate to that by which he was appointed; (ii) he cannot be dismissed, 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 to him. A condition similar to the first condition in article 311 found in section 96 B of the Government of India Act, 1919, was hold by the Judicial Committee in R. T. Bangachari vs Secretary of State for India (1) to have a statutory force, and the second condition, which is only a reproduction of that found in sub section (2) of section 240 of the Government of India Act, 1935, was held in High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall (2) as mandatory qualifying the right of the employer recognized in sub section (1) thereof. These two statutory protections to the Government servant are now incorporated in article 311 of the Constitution. This Article imposes two qualifications on the exercise of the pleasure of the President or the Governor and they quite clearly restrict the operation of the rule embodied in article 310(1) vide the observations of Das, C.J., in Dhingra 's case (3). The most important of these two limitations is the provision prescribing that a civil servant shall be given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. As this condition is a limitation on the "tenure at pleasure", a law can certainly be made by Parliament defining the content of "reasonable opportunity" and prescribing the procedure for giving the said opportunity. The appropriate High Court and the Supreme Court can test the validity of such a law on the basis whe ther the provisions prescribed provide for such an opportunity, and, if it is valid, to ascertain whether the reasonable opportunity so prescribed is really given to a particular officer. It may be that the (1) (1936) L.R. 64 I.A. 40. (2) (1948) L.R. 75 1.A. 225. (3) ; , 839. 701 framers of the Constitution, having incorporated in our Constitution the "tenure at pleasure" unhampered by legislative interference, thought that the said limitations and qualifications would reasonably protect the interests of the civil servants against arbitrary actions. The discussion yields the following results: (1) In India every person who is a member of a public service described in article 310 of the Constitution holds office during the pleasure of the President or the Governor, as the case may be, subject to the express provisions therein. (2) The power to dismiss a public servant at pleasure is outside the scope of article 154 and, therefore, cannot be delegated by the Governor to a subordinate officer, and can be exercised by him only in the manner prescribed by the Constitution. (3) This tenure is subject to the limitations or qualifications mentioned in article 311 of the, Constitution. (4) The Parliament or the Legislatures of States cannot make a law abrogating or modifying this tenure so as to impinge upon the overriding power conferred upon the President or the Governor under article 310, as qualified by article 311. (5) The Parliament or the Legislatures of States can make a law regulating the conditions of service of such a member which includes proceedings by way of disciplinary action, without affecting the powers of the President or the Governor under article 310 of the Constitution read with article 311 thereof. (6) The Parliament and the Legislatures also can make a law laying down and regulating the scope and content of the doctrine of "reasonable opportunity" embodied in article 311 of the Constitution; but the said law would be subject to judicial review. (7) If a statute could be made by Legislatures within the foregoing permissible limits, the rules made by an authority in exercise of the power conferred thereunder would likewise be efficacious within the said limits. What then is the effect of the said propositions in their application to the provisions of the and the rules made thereunder? The of 89 702 1861 continues to be good law under the Constitution. Paragraph 477 of the Police Regulations shows that the rules in Chapter XXXII thereof have been framed under section 7 of the . Presumably, they were also made by the Government in exercise of its power under section 46(2) of the . Under para. 479(a) the Governor 's power of punishment with reference to all officers is preserved; that is to say, this provision expressly saves the power of the Governor under article 310 of the Constitution. "Rules made under a statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act, and are to be judicially noticed for all purposes of construction or obligation": see Maxwell "On the Interpretation of Statutes", 10th edn., pp. 5051. The statutory rules cannot be described as, or equated with, administrative directions. If so, the and the rules made thereunder constitute a self contained code providing for ' the appointment. of police officers and prescribing the procedure for their removal. It follows that where the appropriate authority takes disciplinary action under the or the rules made thereunder, it must conform to the provisions of the statute or the rules which have conferred upon it the power to take the said action. If there is any violation of the said provisions, subject to the question which we will presently consider whether the rules are directory or mandatory, the public servant would have a right to challenge the decision of that authority. Learned counsel for the appellants relied upon the following decisions of the Privy Council and this Court in support of his contention that the said rules are administrative directions: R. T. Rangachari vs Secretary of State for India (1), R. Venkata Rao vs Secretary of State for India (2), High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall (3), section A. Venkataraman vs The Union of India(4), and Khem Chand vs The Union of India(5). In Venkata Rao 's (1) (1936) L.R. 64 I.A. 40. (3) (1948) L.R. 75 I.A. 225. (2) (1936) L.R. 64 I.A. 55. (4) ; (5) ; 703 case (1) a reader of the Government Press was dismissed and in the suit filed by him against the Secretary, of State for India he complained, inter alia, that the dismissal was contrary to the statute inasmuch as it was not preceded by any such inquiry as was prescribed by rule XIV of the Civil Services Classification Rules made under section 96B(2) of the Government of India Act. Under section 96B of the said Act, every person in civil service holds office during the pleasure of His Majesty. Sub section (2) of that section empowers the Secretary of State for India to make rules laying down, among others, the conditions of service, and sub section (5) declares that no rules so made shall be construed to limit or abridge the power of the Secretary of State in Council to deal with the case of any person in the civil service of the Crown in India in such manner as may appear to him to be just and equitable. On a construction of these provisions the Judicial Committee held that His Majesty 's pleasure was paramount and could not legally be controlled or limited by the rules. Two reasons were given for the conclusion, namely, (i) section 96B in express terms stated that the office was held during the pleasure and there was no room for the implication of a contractual term that the rules were to be observed; and (ii) sub section (2) of section 96B and the rules made careful provisions for redress of grievances by administrative process and that sub section (5) reaffirmed the superior authority of the Secretary of State in Council over the civil service. It may be noticed that the rules framed in exercise of the power conferred by the Act was to regulate the exercise of His Majesty 's pleasure. The observations were presumably coloured by the doctrine of "tenure at pleasure" obtaining in England, namely, that it could only be modified by statute, influenced by the princi ple that the rules made under a statute shall be consistent with its provisions and, what is more, based upon a construction of the express provisions of the Act. These observations cannot, in our opinion, be taken out of their context and applied to the provisions of our Constitution and the Acts of our Legislatures in derogation of the well settled principles of (1) (1936) L. R. 64 I. A. 55. 704 statutory construction. In Bangachari 's case (1) a police officer was dismissed by an authority subordinate to that by which he had been appointed. The appeal was heard along with that in Venkata Rao 's case (2) and the judgments in both the appeals were delivered on the same day. The Judicial Committee distinguished Venkata Rao 's case (2) with the following observations at p. 53: "It is manifest that the stipulation or proviso as to dismissal is itself of statutory force and stands on a footing quite other than any matters of rule which are of infinite variety and can be changed from time to time. " These observations do not carry the matter further an our remarks made in connection with Venkata Rao 's case (2) would equally apply to this case. I.M. Lall 's case (3) turns upon sub section (3) of section 240 of the Government of India Act, 1935. Again the Judicial Committee made a distinction between the rules and the provisions of the Act and ruled that sub sections (2) and (3) of section 240 indicated a qualification or exception to the antecedent provisions in sub section (1) of section 240. This decision only adopted the reasoning in the earlier decision. The remarks made by us in connection with Venkata Rao 's case (2) would equally apply to this decision. This Court in section A. Venkataraman 's case (4) incidentally noticed the observations of the Judicial Committee in Venkata Rao 's case (2) and observed that the rules, which were not incorporated in a statute, did not impose any legal restriction upon the right of the Crown to dismiss its servants at pleasure. This Court was not laying down any general proposition, but was only stating the gist of the reasoning in Venkata Rao 's case (2). Das, C.J., if we may say so, correctly stated the scope of the rule in Venkata Rao 's case (2) in the decision in Khem Chand 's case (5), when he stated at p. 1091 "The position of the Government servant was, therefore, rather insecure, for his office being held during the pleasure of the Crown under the Government of India Act, 1915, the rules could not override (1) (1936) L.R. 64 I.A. 40. (3) (1948) L.R. 75 I.A. 225. (2) (1936) L.R. 64 I.A. 55. (4) ; (5) ; 705 or derogate from the statute and the protection of the rules could not be enforced by action so as to nullify the statute itself." To state it differently, the Government of India Act, 1915, as amended in 1919, and that of 1935 expressly and clearly laid down that the tenure was at pleasure and therefore the rules framed under that Act must be consistent with the Act and not in derogation of it. These decisions and the observations made therein could not be understood to mark a radical departure from the fundamental principle of construction that rules made under a statute must be treated as exactly as if they were in the Act and are of the same effect as if contained in the Act. There is another principle equally fundamental to the rules of construction, namely, that the rules shall be consistent with the provisions of the Act. The decisions of the Judicial Committee on the provisions of the earlier Constitution Acts can be sustained on the ground that the rules made in exercise of power conferred under the Acts cannot override or modify the tenure at pleasure provided by section 96B or section 240 of the said Acts, as the case may be. Therefore, when the paramountcy of the doctrine was conceded or declared by the statute, there might have been justification for sustaining the rules made under that statute in derogation thereof on the ground that they were only administrative directions, for otherwise the rules would have to be struck down as inconsistent with the Act. In such a situation, if the statute was valid it would be valid in so far as it did not derogate from the provisions of article 310, read with article 311 the rules made thereunder would be as efficacious as the Act itself. So long as the statute and the rules made thereunder do not affect the power of the Governor in the present case the Governor 's pleasure is expressly preserved they should be legally enforceable. In this context the decisions of the different High Courts in India are cited at the Bar. It would not serve any purpose to consider every one of them in detail. It would suffice if their general trend be noticed. They express two divergent views: one line relies upon the observations 706 of the Privy Council in Venkata Rao 's case (1) and lays down that all statutory rules vis a vis the disciplinary proceedings taken against a Government servant are administrative directions, and the other applies the well settled rules of construction and holds that the appropriate authority is bound to comply with the mandatory provisions of the rules in making an inquiry under a particular statute. A close scrutiny of some of the decisions discloses a distinction implied, though not expressed, between statutory rules defining the scope of reasonable opportunity and those governing other procedural steps in the disciplinary process. In our view, subject to the overriding power of the President or the Governor under article 310, as qualified by the provisions of article 311, the rules governing disciplinary proceedings cannot be treated as administrative directions, but shall have the same effect as the provisions of the statute whereunder they are made, in so far a, , they are not inconsistent with the provisions thereof We have already negatived the contention of learned counsel that the Governor exercises his pleasure through the officers specified in section 7 of the , and therefore, it is not possible to equate the Governor 's pleasure with that of the specified officers ' statutory power. If so, it follows that the inquiry under the Act shall be made in accordance with its provisions and the rules made thereunder. Then learned counsel contends that even if the said rules have statutory force, they are only directory and the non compliance with the rules will not invalidate the order of dismissal made by the appropriate authority. Before we consider the principles governing the question whether the rules are mandatory or directory, it would be convenient at this stage to notice broadly the scope and the purpose of the inquiry contemplated by the rules. Section 2 of the constitutes the police establishment; section 7 empowers specified officers to (1) [1936] L.R. 64 I.A. 55. 707 punish specified subordinate officers who are remiss or negligent in discharge of their duties or unfit for the same; section 46 enables the Government to make rules. to regulate the procedure to be followed by the magistrate and police officers in discharge of any duty imposed on them by or under the Act; under section 7, read with section 46 of the , the Police Regulations embodied in chapter XXXII were framed. Paragraph 477 of the Regulations says that the rules in that chapter have been made under section 7 of the and apply only to officers appointed under section 2 of the and that no officer appointed under that section shall be punished by executive order otherwise than in the manner provided in that chapter. Paragraph 478 prescribes the nature of the punishment that can be imposed on the delinquent officers. Paragraph 479 empowers specified officers to punish specified subordinate officers. Paragraph 483 gives the procedure to be followed in the matter of the inquiry against a police officer. It reads: "Subject to the special provision contained in paragraph 500 and to any special orders which may be passed by the Governor in particular cases a proceeding against a police officer will consist of A A magisterial or police inquiry, followed, if this inquiry shows the need for further action, by B A judicial trial, or C A departmental trial, or both, consecutively." Paragraph 484 declares that the nature of the inquiry in any particular case will vary according to the nature of the offence. If the offence is cognizable or non cognizable, the inquiry will be according to Schedule II of the Criminal Procedure Code. If the information is received by the District Magistrate, he may in exercise of his powers under the Criminal Procedure Code either, (1) make or order a magisterial inquiry; or (2) order an investigation by the Police. Paragraph 485 reads: "When a magisterial inquiry is ordered it will be made in accordance with the Criminal Procedure Code and the Superintendent of Police will have no direct 708 concern with it until the conclusion of judicial proceedings or until and unless the case is referred to him for further disposal, but he must give any assistance to the inquiring magistrate that he may legally be called upon to give and he must suspend the accused should this become necessary under paragraph 496." Paragraph 486 says that there can be no magisterial inquiry under the Criminal Procedure Code when the offence alleged against a police officer amounts to an offence only under section 7 of the , and it provides further that in such cases, and in, other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the rules given thereunder. Under rule I thereof, "Every information received by the police relating to the commission of a cognizable offence by a police officer shall be dealt with in the first place under Chapter XIV, Criminal Procedure Code, according to law, a case under the appropriate section being registered in the police station concerned". There are six provisos to that rule. Rule II provides for the inquiry of a non cognizable offence; and rule III prescribes the procedure in regard to an offence only under section 7 of the or a non cognizable offence of which the Superintendent of Police considers unnecessary at that stage to forward a report in writing to the District Magistrate. Paragraph 488 deals with a judicial trial and para. 489 with a departmental trial. Paragraph 489 says: "A police officer may be departmentally tried under section 7 of the (1) after he has been tried judicially; (2) after a magisterial inquiry under the Criminal Procedure Code; (3) after a police investigation under the Criminal Procedure Code or a departmental enquiry under paragraph 486,III above. " There are other provisions dealing with the manner of conducting the inquiries and other connected matters. The rules provide for the magisterial and police inquiry followed, if the inquiry showed the need for further action, by a judicial trial or a departmental 709 trial, or both, consecutively. In the case of cognizable offences the Superintendent of Police is directed to investigate under chapter XIV of the Criminal Pro p, cedure Code and in the case of non cognizable offences in the manner provided in rule II of para. 486, and in the case of an offence only under section 7 of the or a non cognizable offence in the manner provided under rule III of para. After one or other of the relevant procedure is followed, the Superintendent of Police is empowered to try a police officer departmentally. The question is whether rule I of para. 486 is directory. The relevant rule says that the police officer shall be tried in the first place under chapter XIV of the Criminal Procedure Code. The word "shall" in its ordinary import is "obligatory"; but there are many decisions wherein the courts under different situations construed the word to mean "may". This Court in Hari Vishnu Kamath vs Syed Ahmad Ishaque (1) dealt with this problem at p. 1125 thus: "It is well established that an enactment in form mandatory might in substance be directory and that the use of the word "shall" does not conclude the matter. " It is then observed: "They (the rules) are well known, and there is no need to repeat them. But they are all of them only aids for ascertaining the true intention of the legislature which is the determining factor, and that must ultimately depend on the context. " The following quotation from Crawford "On the Construction of Statutes", at p. 516, is also helpful in this connection: "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the (1) ; 90 710 consequences which would follow from construing it the one way or the other. " This passage was approved by this Court in State of U. P. vs Manbodhan Lal Srivastava (1). In Craies on Statute Law, 5th edition, the following passage appears at p. 242: "No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of Justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed. " A valuable guide for ascertaining the intention of the Legislature is found in Maxwell on "The Interpretation of Statutes", 10th edition, at p. 381 and it is: "On the other hand, where the prescriptions of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the duty is imposed, or, in other words, as directory only. The neglect of them may be penal, indeed, but it does not affect the validity of the act done in disregard of them. " This passage was accepted by the Judicial Committee of the Privy Council in the case of Montreal Street Railway Company vs Normandin (2 ) and by this Court in State of U. P. vs Manbodhan Lal Srivastava (1). The relevant rules of interpretation may be briefly stated thus: When a statute uses the word "shall", prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the Legislature the Court may consider, inter alia, the nature and the design of the statute, and the consequences which (1) ; , 545. (2) L.R. [1917] A.C.770. 711 would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non compliance with the provisions, the fact that the non compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. Now what is the object of rule I of para. 486 of the Police Regulations? In our opinion, it is conceived not only to enable the Superintendent of Police to gather information but also to protect the interests of subordinate officers against whom departmental trial is sought to be held. After making the necessary investigation under chapter XIV of the Criminal Procedure Code, the Superintendent of Police may as well come to the conclusion that the officer concerned is innocent, and on that basis drop the entire proceedings. He may also hold that it is a fit case for criminal prosecution, which, under certain circumstances, an honest officer against whom false charges are framed may prefer to face than to submit himself to a departmental trial. Therefore,the rules are conceived in the interest of the department as well as the officer. From the stand point of the department as well as the officer against whom departmental inquiry is sought to be intiated, the preliminary inquiry is very important and it serves a real purpose. Here the setting aside of the order of dismissal will not affect the public in general and the only consequence will be that the officer will have to be proceeded against in the manner prescribed by the rules. What is more, para. 487 and para. 489 make it abundantly clear that the police investigation under the Criminal Procedure Code is a condition precedent for the departmental trial. Paragraph 477 emphasizes that no officer appointed under section 2 of the shall be punished by executive order otherwise than in the manner provided under chapter XXXII of the Police Regulations. This is an imperative injunction prohibiting 712 inquiry in non compliance with the rules. Paragraph 489 only empowers the holding of a departmental trial in regard to a police officer only after a police investigation under the Criminal Procedure Code. When a rule says that a departmental trial can be held only after a police investigation, it is not permissible to hold that it can be held without such investigation. For all the foregoing reasons, we hold that para. 486 is mandatory and that, as the investigation has not been held under chapter XIV of the Criminal Procedure Code, the subsequent inquiry and the order of dismissal are illegal. For the foregoing reasons we hold that, as the respondent was dismissed without complying with the provisions of para. 486(1), the order of dismissal is illegal and that the High Court is right in setting aside the order of dismissal. In the result, the appeal fails and is dismissed with costs. WANCHOO, J. We regret we are unable to agree that the appeal be dismissed. Babu Ram Upadhya (respondent) was a sub inspector of police who was appointed in December, 1948. In 1953, he was posted at Sitapur. On September 6, 1953, he was returning from a village called Madhwapur, when he saw a man who was subsequently found to be Tika Ram coming from the side of a canal and going hurriedly into a field. The movements of Tika Ram roused his suspicion. One Lalji, an ex patwari, was also with the sub inspector. Tika Ram was called and searched, and a bundle containing currencynotes was found on him. The sub inspector took the bundle and counted the notes and handed them over to Lalji. Lalji in his turn handed over the notes to Tika Ram. Thereafter Tika Ram, who is an old man, almost blind, went away. When he reached his house, he found that there was a shortage of Rs. 250. He then made a complaint to the Superintendent of Police on September 9, 1953, in which he gave the above facts. An inquiry was made by the Superintendent of Police and ultimately, departmental proceedings under section 7 of the were taken 713 against the respondent. These proceedings resulted in his dismissal and thereupon the respondent applied to the High Court under article 226 of the Constitution. The main contention of the respondent was that r. 486 of the Police Regulations framed under section 7 of the was not observed and therefore the departmental proceedings taken against him were illegal. The reply of the appellant was two fold: in the first place, it was urged that r. 486 did not apply as there was no report of a cognizable offence against the sub inspector; and in the next place, it was urged that the rules contained in the Police Regulations were only administrative rules and even if there was non compliance with any of them, it would not affect the departmental proceedings taken against the respondent, provided there was no breach of the guarantees contained in article 311 of the Constitution. The High Court held that there was a report of a cognizable offence under section 409 of the Indian Penal Code against the respondent and therefore the procedure provided by r. 486 ought to have been followed. It further held that r. 486 had been framed under section 7 of the and was a statutory provision, which had the force of law. As such, following the earlier view taken by the High Court in two other cases it held that a dismissal as a result of departmental proceedings which took place without complying with r. 486 would be illegal. In consequence, the writ petition was allowed. The appellant then applied for a certificate to enable it to appeal to this Court, which was refused. Thereupon special leave was prayed for from this Court, which was granted; and that is how the matter has come up before us. Mr. C. B. Aggarwala on behalf of the appellant urges the same two points before us. So far as the first point is concerned, we are of opinion that there is no force in it. There is no doubt that in the complaint made by Tika Ram, the name of the respondent was not shown in the heading; but from the facts disclosed in the body of the complaint it is clear that the sub inspector searched the person of Tika Ram and recovered a bundle containing currency notes. He 714 did so obviously under the authority vested in him as a police officer. When therefore he was satisfied that there was no reason to take any further action against Tika Ram, it was his duty to see that the entire amount taken by him from Tika Ram on search was returned to him (Tika Ram). The High Court was right in the view that where property is taken away with the intention that it will continue to be the property of the person from whose possession it has been taken away, there will be an entrustment of the property to the person taking it away, and if. subsequently the person taking it away converts it to his own use or suffers some other person to do so, there will be criminal breach of trust and not merely criminal misappropriation. Thus an offence under section 409 of the Indian Penal Code appears to have been committed prima facie on the facts of this case. As an offence under section 409 is a cognizable offence, r. 486 of the Police Regulations would apply. This brings us to the main point in the present appeal. Sec. 7 of the under which r. 486 has been framed is in these terms: "Subject to such rules as the State Government may from time to time make under this Act, the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendents of Police may at any time dismiss, suspend or reduce any police officer of the subordinate ranks whom they shall think remiss or negligent in the discharge of his duty or unfit for the same; or may award any one or more, of the following punishments to any police officer of the subordinate ranks, who shall discharge his duty in a careless or negligent manner, or who, by any act of his own shall render himself unfit for the discharge thereof, name (a) fine to any amount not exceeding one month 's pay; (b) confinement to quarters for a term not exceeding fifteen days, with or without punishment, drill, extra guard, fatigue or other duty; (c) deprivation of good conduct pay; 715 (d) removal from any office of distinction or special emolument;". It gives power to four grades of police officers to dismiss, suspend or reduce any police officer of the subordinate ranks whom they think remiss or negligent in the discharge of his duty or unfit for the same. It also provides for infliction of four other kinds of punishment by these four grades of officers on any police officer of the subordinate ranks who discharges his duty in a careless or negligent manner or who by any act of his own renders himself unfit for the discharge thereof. In the present case we are concerned with dismissal and what we shall say hereafter should be taken to be confined to a case of dismissal. Sec tion 7 shows that the power of dismissal conferred by it on the four grades of police officers is to be exercised subject to such rules as the State Government may from time to time make under the . The contention on behalf of the respondent is that the power of dismissal has to be exercised subject to rules and therefore, when r. 486 of the Police Regulations (framed under section 7) provided a certain procedure to be followed with respect to cases in which a cognizable offence was involved it was not open to the authority concerned to disregard that procedure. In effect, it is urged that r. 486 is a mandatory provision and non compliance with it would invalidate the departmental proceedings. It is not in dispute in this case that the procedure provided by r. 486 was not followed. That procedural provision is that where a report of a cognizable crime is made against a police officer belonging to the subordinate ranks, it has to be registered as provided in Chapter XIV of the Code of Criminal Procedure and investigated as provided thereunder. Thereafter the authority concerned has to decide whether to send the case for trial before a court of law or to take departmental proceedings. In this case no report was registered as provided under Chapter XIV of the Code of Criminal Procedure and no investigation was made as provided in that Chapter. All that happened was that the Superintendent of Police to whom Tika Ram had complained inquired into the 716 complaint of Tika Ram and thereafter decided to hold a departmental inquiry under section 7 of the against the respondent. The main contention on behalf of the appellant is that the Rules framed under section 7 of the are administrative rules and in any case they are only directory and non compliance with them would not vitiate the subsequent proceedings unless there is a breach of the guarantee contained in article 311 of the Constitution, as all public servants hold their office at the pleasure of the President or the Governor, as the case may be, other than those expressly excepted under the Constitution. Reliance in this connection is placed on the case of R. Venkata Rao vs Secretary of State for India in Council (1). This brings us to a consideration of the tenure on which public servants hold office. The position in England is that all public servants hold office at the pleasure of His Majesty, that is to say, their service was terminable at any time without amuse: (see Shenton vs Smith (2 )). By law, however, it is open to Parliament to prescribe a different tenure and the King being a party to every Act of Parliament is understood to have accepted the change in the tenure when he gives assent to such law: (see Gould vs Stuart (3)). This principle applied in India also before the Government of India Act, 1915, was amended by the addition of section 96 B therein. Section 96 B for the first time provided by statute that every person in the civil service of the Crown held office during His Majesty 's pleasure, subject to the provisions of the Government of India Act and the rules made thereunder and the only protection to a public servant against the exercise of pleasure was that he could not be dismissed by any authority subordinate to that by which he was appointed. It was this section, which came for consideration before the Privy Council in Venkata Rao 's case (1) and the Privy Council held that in spite of the words ".subject to the rules made under the Government of India Act," Venkata Rao 's employment was not of a (1) (1936) L.R. 64 I.A. 55 (2) (3) 717 limited and special kind during pleasure with an added contractual term that the procedure prescribed, by the Rules must be observed; it was by the express terms of section 96 B held "during His Majesty 's pleasure" and no right of action as claimed by Venkata Rao existed. The Privy Council further held that the terms of section 96 B assured that the tenure of office, though at pleasure, would not be subject to capricious or arbitrary action but would be regulated by the rules which were manifold in number, most minute in particularity and all capable of change; but there was no right in the public servant enforceable by action to hold his office in accordance with those rules and he could therefore be dismissed notwithstanding the failure to observe the procedure prescribed by them. The main point which was urged in Venkata Rao 's case (1) was that under r. XIV of the Civil Services Classification Rules no public servant could be dismissed, removed or reduced in rank except after a properly recorded departmental inquiry. In Venkata Rao 's case (1) the departmental inquiry prescribed by the rules was found not to have been held. Even so, the Privy Council held that the words used in section 96 B could not and did not cut down the pleasure of His Majesty by rules though it was observed that the terms of the section contained a statutory and solemn assurance, that the tenure of office, though at pleasure., would not be subject to capricious or arbitrary, action, but would be regulated by rule. It was further added that supreme care should be taken that this assurance is carried out in the letter and in the spirit. The Privy Council further held that in ' the case before it, there had been a serious and complete failure to adhere to important and indeed fundamental rules, and mistakes of a serious kind had been made and wrongs had been done which called for redress; even so; they were of the view that as a matter of law that redress was not obtainable from courts by action. ,. This was the position under the Government of India Act 1915. There was however a material change in the Government of India Act, 1935. So far, there (1) (1936) L.R. 64 I. A. 55. 91 718 was one protection to a public servant, namely, that he could not be dismissed by an authority subordinate to that by which he was appointed. In the Government of India Act, 1935, section 240(1) laid down that " except as expressly provided by this Act, every person who is a member of a civil service of the Crown in India. holds office during His Majesty 's pleasure. " The words of this section are different from those of section 96 B and the tenure of all public servants other than those expressly provided for was to be during His Majesty 's pleasure. There were, however, two safeguards provided by sub sections (2) and (3) of section 240. The first was the same (namely, that no public servant will be dismissed by an officer subordinate to that who appointed him); but a further exception was added to the pleasure tenure, namely, no public servant shall be dismissed until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. This protection came to be considered by the Privy Council in High Commissioner for India and High Commissioner for Pakistan vs 1. M. Lall (1) and it was held that it was a mandatory provision and qualified the pleasure tenure and provided a condition precedent to the exercise of power by His Majesty provided by sub section (1) of section 240. Thus by the Government of India Act, 1935, there were two statutory guarantees to public servants against the exercise of the pleasure of his Majesty; but it is clear from section 240 of the Government of India Act, 1935, that the pleasure of His Majesty to dismiss was not otherwise subject to rules framed under the subsequent provisions of the Government of India Act appearing in Chapter 11 of Part X dealing with public services. This position continued till we come to the Constitution. Article 310(1) of the Constitution provides for what was contained in section 240(1) of the Government of India Act, 1935, and is in these terms: "(1) Except as expressly provided by this Constitution, every person who is a member of a defence (1) (1948) L.R. 75 I.A. 225. 719 service or of a civil service of the Union or of an all India service or holds any post connected with defence, or any civil post under the Union, holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State. " It will be clear therefore that all public servants except as expressly provided by the Constitution hold their office during the pleasure of the President or the Governor, as the case may be. Article 311 then provides for two guarantees and is similar in terms to section 240(2) and (3) of the Government of India Act, 1935 and the two guarantees are the same, (namely, (i) that no person shall be dismissed or removed by an authority subordinate to that by which he was appointed, and (ii) no such person shall be dismissed or removed or reduced in rank until he has been given a reason able opportunity of showing cause against the action proposed to be taken in regard to him). In Parshotam Lal Dhingra vs Union of India (1), this Court held that article 311 was in the nature of a proviso to article 310, that it provides two constitutional guarantees cutting down the pleasure of the President or the Governor, as the case may be, and that it was a mandatory provision which had to be complied with before the pleasure provided in article 310 can be exercised. Mr. Pathak for the respondent urges that in view of the words of article 310 statute or statutory rules can also cut down the nature of the pleasure tenure provided by article 310 in the same way as in England an Act of Parliament cuts down the ambit of His Majesty 's pleasure in the matter of dismissal. He relies on the words "as expressly provided by this Constitution" and urges that it is open to the legisla ture to cut down the pleasure tenure by law or to provide for its being affected by statutory rules. In this connection he relies on article 309 as well as article 154 of the Constitution. Now, article 309 begins with the words "subject to the provisions of this Constitution" land lays down that "Acts of the appropriate Legislature may regulate the recruitment, and conditions of (1) ; 720 service of person appointed, to public services and posts in connection with the affairs of the Union or of any State". The proviso to article 309 lays down that "it shall be competent for the President or the Governor as the case may be to make rules relating to recruitment and conditions of service until provision in that behalf is made by or under an Act of the appropriate Legislature". It will be clear immediately that article 309 is subject to the provisions of the Constitution and therefore subject to article 310 and therefore, any law passed or rules framed under article 309 must be subject to article 310 and cannot in any way affect the pleasure tenure laid down in article 310. The words "except as expressly provided by this Constitution" appearing in article 310 clearly show that the only exceptions to the pleasure tenure are those expressly contained in the Constitution and no more. These exceptions, for example, are contained inter alia in articles 124. 148, 280 and 324 and also in article 310 (2). Therefore, unless there is an express provision in the Constitution cutting down the pleasure tenure, every public servant holds office during the pleasure of the President or the Governor, as the case may be. We cannot accept the argument that a law passed under article 309 prescribing conditions of service would become an express provision of the Constitution and would thus cut down the pleasure tenure contained in article 310. As the Privy Council pointed in Venkata Rao 's case (1), the rules framed under article 309 or the laws passed thereunder amount to a statutory and solemn assurance that the tenure of office though at pleasure will not be subject to capricious or arbitrary action but will be regulated by rule. But if the rules or the law define the content of the guarantee contained in article 311 (2) they may to that extent be mandatory but only because they carry out the guarantee contained in article 311 (2). Excepting this, any law or rule framed under article 309 cannot cut down the pleasure tenure as provided in article 310. The same in our opinion applies to a law passed under article 154 (2)(b) which authorises Parliament or the legislature of a State to confer functions on any (1) (1936) L.R. 64 I.A. 55. 721 authority subordinate to the Governor. If any law is passed conferring on any authority the power to dismiss or remove or reduce in rank, that law cannot cut down the content of the pleasure tenure as contained in article 310; that law would be passed under article 245 and that article also begins with the words "subject to the provisions of this Constitution". Therefore, the law passed under article 154 (2) (b) would also in the same way as the law under article 309 be subject to the pleasure tenure contained in article 310 and cannot cut down the content of that tenure or impose any further fetters on it except those contained in article 311. The position therefore that emerges from the examination of the relevant Articles of the Constitution is that all public servants other than those who are excepted expressly by the provisions of the Constitution hold office during the pleasure of the President or the Governor, as the case may be, and that no law or rule passed or framed under article 309 or article 154 (2) (b) can cut down the content of the pleasure tenure as contained in article 310 subject to article 311. With this basic position in our Constitution, let us turn to the with which we are concerned. Section 7 thereof lays down that four grades of officers will have power to dismiss, suspend or reduce any police officer of the subordinate ranks subject to such rules as the State Government may from time to time make under the . Though the is a pre constitutional law which has continued under article 372 of the Constitution, it cannot in our opinion stand higher than a law passed under article 309 or article 154 (2) (b) and out down the content of the pleasure tenure as contained in article 310. The police officers of the subordinate ranks are not expressly excluded from the operation of the pleasure tenure by any provision of the Constitution; they, therefore, hold office during the pleasure of the Governor and the only protection that they can claim are the two guarantees contained in article 311. It is true that section 7 lays down that the four grades of officers empowered to dismiss will act according to rules framed by the State Government; but that does not in our opinion mean that 722 these rules could introduce any further fetter on the pleasure tenure under which the police officers of the subordinate ranks are in service. It was necessary to provide for the framing of rules because the section envisages conferment of, powers of punishment of various kinds on four grades of officers relating to various cadres of police officers in the subordinate ranks. It was left to the rules to provide which four grades of officers would dismiss police officers of which subordinate rank or would give which punishment to a police officer of which subordinate rank. Such rules would in our opinion be mandatory as they go to the root of the jurisdiction of the four grades of police officers empowered to act under section 7. But further rules may be framed under section 7 to guide these police officers how to act when they proceed to dismiss or inflict any other punishment on police officers of the subordinate ranks. These rules of procedure, however, cannot all be mandatory, for if they were so they would be putting further fetters than those provided in article 311 on the pleasure of the Governor to dismiss a public servant. of course, if any of the rules framed under section 7 carry out the purposes of article 311(2), to that extent they will be mandatory and in that sense their contravention would in substance amount to contravention of article 311 itself. If this were not so, it would be possible to forge further fetters on the pleasure of the Governor to dismiss a public servant and this in the light of what we have said above is clearly not possible in view of the provisions of the Constitution. On the other hand, it will not be possible by means of rules framed under section 7 to take away the guarantee provided by article 311(1), which lays down that no public servant shall be dismissed by an authority subordinate to that by which he was appointed. If any rule under section 7, for example, lays down otherwise it will clearly be ultra vires in view of article 311(1). The rules therefore that are framed under section 7 would thus be of two kinds, namely (1) those which define the jurisdiction of four grades of officers to inflict a particular kind of punishment on a particular police officer of the subordinate rank they will be mandatory 723 for they go to the root of the jurisdiction of the officer exercising the power, but even these rules cannot go against the provisions of article 31 1 (1); and (2) procedural rules, which again may be of two kinds. Some of them may prescribe the manner in which the guarantee contained in article 311 (2) may be carried out and if there are any such rules they will be mandatory. The rest will be merely procedural and can only be directory as otherwise if they are also mandatory further fetters on the power of the Governor to dismiss at his pleasure contained in article 310 would be forged and this is not permissible under the Constitution. It is from this angle that we shall have to consider 486. Before, however, we come to r. 486 itself, we may dispose of another argument, namely, that the four grades of officers who have the power to dismiss under section 7 are exercising the statutory authority vested in them and are not exercising the Governor 's pleasure of dismissal under article 310 and therefore their action in dismissing an officer is subject to all the rules framed for their guidance. We are of opinion that this argument is fallacious. Article 310 defines the pleasure tenure and by necessary implication gives power to the Governor to dismiss at pleasure any public servant subject to the exceptions contained in article 310 and also subject to the guarantees contained in article 311. This power of the Governor to dismiss is executive power of the State and can be exercised under article 154(1) by the Governor himself directly or indirectly through officers subordinate to him. Thus it is open to the Governor to delegate his power of dismissal to officers subordinate to him; but even when those officers exercise the power of dismissal, the Governor is indirectly exercising it through those to whom he has delegated it and it is still the pleasure of the Governor to dismiss, which is being exercised by the subordinate officers to whom it may be delegated. Further though the Governor may delegate his executive power of dismissal at pleasure to subordinate officers he still retains in himself the power to dismiss at pleasure if he thinks fit in a particular case in spite 724 of the delegation. There can be no question that where a delegation is made, the authority making the delegation retains in itself what has been delegated. Therefore, even where a subordinate officer is exercising the power to dismiss he is indirectly exercising the power of the Governor to dismiss at pleasure and so his power of dismissal can only be subject to the same limitations to which the power of the Governor would be subject if he exercised it directly. But it is said that in the present case the power has not been delegated by the Governor under article 154(1) and that it had been conferred on those police officers by law. In our opinion, that makes no difference to the nature of the power, which is being exercised by these four grades of officers under the . As we have already said article 154(2)(b) gives power to Parliament or the legislature of a State by law to confer functions on any authority subordinate to the Governor. When the function of dismissal is conferred by law on any authority subordinate to the Governor it is nothing more than delegation of the Governor 's executive power to dismiss at pleasure by means of law and stands in no better position than a delegation by the Governor himself under article 154(1). Whether it is delegation by the Governor himself or whether it is delegation by law under article 154(2)(b) or by an existing law, which must be treated as analogous to a law under article 154(2)(b), the officer exercising the power of dismissal is only indirectly exercising, the Governor 's power to dismiss at pleasure and his order of dismissal has the same effect as the order of the Governor to dismiss at pleasure. Therefore, his order also is only subject to the two fetters provided in article 311 of the Constitution and cannot be subjected to any more fetters by procedural rules other than those framed for carrying out the object of article 311(2). Therefore, when the four grades of officers proceed to dismiss any police officer of the subordinate rank under section 7 of the , they are merely exercising. the power of the Governor to dismiss at pleasure indirectly; and the only fetters that can be placed on that power are those contained in the Constitution, namely, article 311. 725 We may in this connection refer once again to the case of Venkata Rao (1) where the dismissal was by an, officer subordinate to the Governor of Madras; but ' that dismissal was also held to be an indirect exercise I of His Majesty 's pleasure to dismiss, and that is why it was held that if r. XIV of the Classification Rules was not complied with, a public servant had no right of action against an order dismissing him at His Majesty 's pleasure. Therefore, whenever a subordinate officer exercises the power to dismiss, whether that power is delegated by the Governor, or is delegated under a law made under article 154(2)(b) or under an existing law analogous to that, he is merely exercising indirectly the power of the Governor to dismiss at pleasure and his action is subject only to the two guarantees contained in article 311. The fact therefore that the police officer in this case made the order of dismissal by virtue of section 7 will make no difference and he will be deemed to be exercising the power of the Governor to dismiss at pleasure by delegation to him by law of that power. We may add that even where there is delegation by law of the power of the Governor to dismiss at pleasure, the power of the Governor himself to act directly and dismiss at pleasure cannot be taken away by that law, for that power he derives from article 310 of the Constitution. The present case therefore must be judged on the same basis as any case of dismissal directly by the Governor and would only be subject to the two limitations contained in article 311. We now come to r. 486. This rule, as we have already indicated, provides that if there is any complaint of the commission of any cognizable crime by a police officer, it must be registered in the relevant police station, under Chapter XIV of the Code of Criminal Procedure and investigated in the manner provided by that Chapter. After the investigation is complete, it is open to the authority concerned, be it the Superintendent of Police or the District Magistrate, to decide whether to proceed in a court of law (1) (1936) L.R. 64 I.A. 55. 92 726 or to hold a departmental inquiry or do both, though in the last case the departmental inquiry must take place only after the judicial trial is over. The first question then that arises is whether r. 486 is meant to carry out the purpose of article 311(2). As we read r. 486, we cannot see that it is meant for that purpose; it only provides for a police investigation under Chapter XIV of the Code of Criminal Procedure. The police officer making an investigation under Chapter XIV is not bound to examine the person against whom he is investigating, though there is nothing to prevent him from doing so. Nor is the person against whom an investigation is going on under Chapter XIV bound to make a statement to the police officer. In these circumstances, the purpose of an investigation under Chapter XIV is not relevant under article 311(2) which says that a public servant shall not be dismissed without giving him a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Therefore, r. 486 not being meant for the purpose of carrying out the object of article 311 (2) cannot be mandatory and cannot add a further fetter on the exercise of the power to dismiss or remove at the pleasure of the Governor over and above the guarantees contained in article 311. It appears to us that the object of r. 486 is that the authority concerned should first make a preliminary inquiry to find out if there is a case against the officer complained against either to proceed in a court or to take departmental action. The investigation prescribed by r. 486 is only for this purpose. Incidentally it may be that after such an investigation, the authority concerned may come to the conclusion that there in no case either ' to send the case to court or to hold a departmental inquiry. But that in our opinion is what would happen in any case of complaint against a public servant in any department of Government. No authority entitled to take action against a public servant would straightaway proceed to put the case in court or to hold a departmental inquiry. It seems to us axiomatic if a complaint is received against any public servant of any department, that the authority 727 concerned would first always make some kind of a preliminary inquiry to satisfy itself whether there is any case for taking action at all; but that is in our opinion for the satisfaction of the authority and has nothing to do with the protection afforded to a public servant under article 311. Rule 486 of the Police Regulations also in our opinion is meant for this purpose only and not meant to carry out the object contained in article 311(2). The opportunity envisaged by article 311(2) will be given to the public servant after the the authority has satisfied itself by preliminary inquiry that there is a case for taking action. Therefore, r. 486 which is only meant to gather materials for the satisfaction of the authority concerned, whether to take action or not, even though a statutory rule cannot be considered to be mandatory as that would be forging a further fetter than those contained in article 311 on the power of the Governor to dismiss at pleasure. We are therefore of opinion that r. 486 is only directory and failure to comply with it strictly or otherwise will not vitiate the subsequent proceedings. We may incidentally indicate two further aspects of the matter. In the first place, if the argument is that the Governor must exercise the pleasure himself so that only the two limitations provided in article 311 may come into play; it appears that the Governor has exercised his pleasure in this case inasmuch as he dismissed the revisional application made to him by the respondent. There appears no reason to hold that the Governor exercises his pleasure only when he passes the original order of dismissal but not otherwise. Secondly the fact that r. 486 contains the word "shall" is not decisive on the point that it is mandatory: (see Crawford on Statutory Construction, p. 519, para. 262). In view of what we have said already, the context shows that r. 486 can only be directory. If so, failure to observe it strictly or otherwise will not invalidate the subsequent departmental proceedings. This brings us to the last point which has been urged in this case; and that is whether there was substantial compliance with r. 486. We have already 728 pointed out that there was no strict compliance with r. 486 as no case wag registered on the complaint of Tika Ram and no investigation was made under Chapter XIV of the Code of Criminal Procedure. But there is no doubt in this case that before the Superintendent of Police gave the charge sheet to the respondent in November, 1953, which was the beginning of the departmental proceedings against the respondent, he made a preliminary inquiry into the complaint of Tika Ram and was satisfied that there was a case for proceeding against the respondent departmentally. In these circumstances it appears to us that the spirit of r. 486 was substantially complied with and action was only taken against the respondent when on a preliminary inquiry the Superintendent of Police was satisfied that departmental action was necessary. Even if r. 486 had been strictly complied with, this is all that could have happened. In these circumstances we are of opinion that r. 486 which in our opinion is directory was substantially complied with in spirit and therefore the subsequent departmental proceedings cannot be held to be illegal, simply because there was no strict compliance with r. 486. The High Court therefore in our opinion was wrong in holding that the subsequent departmental inquiry was illegal and its order quashing the order of dismissal on this ground alone cannot be sustained. We would therefore allow the appeal. BY COURT In accordance with the opinion of the majority, this appeal is dismissed with costs.

The respondent was a sub Inspector of Police. A complaint was received by the Superintendent of Police that the com plainant was carrying currency notes of Rs. 650 in a bundle when he was stopped by the respondent and his person was searched, that the respondent opened the bundle of notes and handed over the notes one by one to one Lalji, who was with him and that Lalji returned the notes to him but on reaching home he found the notes short by Rs. 250. Proceedings under section 7 of the Police Act were taken against the respondent on the charge of misappropriation of Rs. 250 and he was dismissed from service by an order of the Deputy Inspector General of Police. The respondent filed a writ petition before the High Court challenging the order of the dismissal on the ground that the authorities had acted in violation of Rule I of Para. 486 of the U. P. Police Regulation. This rule required that every information received by the police relating to the commission of a cognizable offence by a Police Officer shall be dealt with in the first place under Ch. XIV, Code of Criminal Procedure. The High Court held that the provisions of para. 486 of the Police Regulations had not been observed and that the proceedings taken under section 7 of the Police Act were invalid and illegal and accordingly quashed the order of dismissal. The appellant contended (i) that the complaint did not make out any cognizable offence against the respondent and r. I of Para. 486 was not applicable in this case, (ii) that r. III of Para. 486 enabled the authorities to initiate departmental proceedings without complying with the provisions of r. I, (iii) that the Police Regulations made in exercise of the power conferred on the Government under the Police Act delegating the power of the Governor to dismiss at pleasure to a subordinate officer were only administrative directions for the exercise of the pleasure in a reasonable manner and any breach of the regulations did not confer any right or give a cause of action to the public servant, and (iv) that the regulations were only directory and the non compliance with the rules did not invalidate the order of dismissal. 680 Held, (per Sarkar, Subba Rao and Mudholkar, JJ.) that the order of dismissal was illegal as it was based upon an enquiry held in violation of r. I of Para 486 of the Police Regulations. The facts alleged in the complaint made out a cognizable offence under section 405 Indian Penal Code against the respondent, and the provisions of r. I of Para . 486 were applicable to it. A Police Officer making a search of a person was 'entrusted ' with the money handed over by the person searched. Rule III of Para. 486 did not deal with cognizable offences, it dealt with offences falling only under section 7 Police Act and to non cognizable offences. Rule III did not provide an alternative procedure to that prescribed under r. I. The position with regard to the tenure of public servants and to the taking of disciplinary action against them under the present Constitution was as follows: (i) Every person who was a member of a public service described in article 310 of the Constitution held office during the pleasure of the President or the Governor. (ii) The power to dismiss a public servant at pleasure was outside the scope of article I54 and, therefore, could not be delegated by the Governor to a subordinate officer, and could be exercised by him only in the manner prescribed by the Constitution. (iii) This tenure was subject to the limitations or qualifi cations mentioned in article 311. (iv )Parliament or the Legislature of States could not make a law abrogating or modifying this tenure so as to impinge upon the overriding power conferred upon the President or the Governor under article 310, as qualified by article 311. (v) Parliament or the Legislatures of States could make a law regulating the conditions of service of such a member which included proceedings by way of disciplinary action, without affecting the powers of the President or the Governor under article 310 read with article 311. (vi) Parliament and the Legislatures also could makea law laying down and regulating the scope and content of the doctrine of "reasonable opportunity" embodied in article 311 but the said law was subject to judicial review. (vii) If a statute could be made by Legislatures within the foregoing permissible limits, the rules made by an authority in exercise of the power conferred thereunder would likewise be efficacious within the said limits. N. W. F. Province vs Suraj Narain, A.I.R. 1949 P. C. 112, Shenton vs Smith, , Gould vs Stuart, , Reilly vs The King, , Terrell vs Secretary of State, , State of Bihar vs Abdul Majid; , , Parshotam Lal Dhingra vs Union of India, , R. T. Rangachari vs Secretary of State for India, (1936) L.R. 64 I.A. 40 and High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall, (1948) L.R. 75 I.A. 225, referred to. The Police Act and the rules made thereunder constituted a self contained code providing for the appointment of police officers and prescribing the procedure for their removal. Any authority taking action under the Police Act or the rules made thereunder must conform to the provisions thereof and if there was any violation of those provisions the public servant had a right to challenge the order of the authority if the rules were mandatory Paragraph 486 of the Police Regulations was mandatory and not directory. The rules were made in the interests of both the department and the police officers. The word used in para 486 was "shall" and in the context it could not be read as "may". Hari Vishnu Kamath vs Syed Ahmed Ishaque, , State of U. P. vs Manbodhan Lal Srivastava, [1958] S.C.R. 533 and Montreal Street Railway Company v Noymandin, L.R. ; , referred to. Subject to the overriding power of the President or the Governor under article 310, as qualified by article 311, rules governing disciplinary proceeding could not be treated as administrative directions, but had the same effect as the provisions of the statute whereunder they were made, in so far as they were not inconsistent with the provisions thereof. The Governor did not exercise his pleasure through the officers specified in section 7 of the Police Act, and the Governor 's pleasure. could not be equated with the statutory power of the officers specified An inquiry under the Act had to be made in accordance with the provisions of the Act and the rules made thereunder. R. T. Rangachari vs Secretary of State for India, L.R. 64 I.A. 40, High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall, (1948) L.R. 75 I.A. 225, R. Venkata Rao vs Secretary of State for India, (1936) L.R. 64 I.A. 55, section A. Venkataraman V. Union of India, [1954] S.C.R. 1150 and Khem Chand vs The Union of India, [1958] S.C.R. 1080, referred to. Per Gajendragadkar and Wanchoo, JJ. The provisions of para 486 were merely directory and a non compliance therewith did not invalidate the disciplinary action taken against the respondent. All public servants, other than those excepted expressly by the Constitution, held office during the pleasure of the President or the Governor, and no law or rule framed under article 300 or article I54(2)(b) could cut down the content of the pleasure tenure in article 310 subject to article 31i. The Police Act could not stand higher than a law passed under article 309 or article 154(2)(b) and could not cut down the content of the pleasure tenure in article 310 682 The Police officers held office during the pleasure of the Governor and the only protection they could claim was the two guarantees contained in article 311. The rules framed under section 7 Police Act would be of two kinds, namely (1) those which defined the jurisdiction of the four grades of officers specified in section 7 to inflict particular kind of punishment on particular police officers of the subordinate ranks such rules would be mandatory but they could not go against the provisions of article 311, and (2) procedural rules. The procedural rules could be of two kinds: (i) those that prescribed the manner in which the guarantee contained in article 311(2) May be carried out such rules would be mandatory, and (ii) other merely procedural rules they could only be directory. The power of the Governor to dismiss was executive power of the State and could be exercised under article 154(i) by the Governor himself directly or indirectly through officers subordinate to him. The officers specified in section 7 of the Police Act were exercising the powers of the Governor to dismiss at pleasure and their powers were subject to the same limitations to which the Governor was subject. Whether it was delegation by the Governor himself or whether it was delegation by law under article 154(2)(b) or by the existing law, which must be treated as analogous to a law under article 154(2)(b), the officer exercising the power of dismissal was only indirectly exercising the Governor 's power to dismiss at pleasure. His order also was subject to the two fetters under article 311 and could not be subjected to any more fetters by procedural rules other than those framed for carrying out the objects of article 311(2). R. Venkata Rao vs Secretary of State for India in Council, [1936] 64 I.A. 55, referred to. Paragraph 486 was not meant for the purpose of carrying out the object of article 311(2) and could not be mandatory and could not add a further fetter on the exercise of the power to dismiss at the pleasure of the Governor over and above the fetters contained in article 311. This rule was only meant to gather materials for the satisfaction of the authority concerned, whether to take action or not. As such para 486 was merely directory and a failure to comply therewith strictly or otherwise did not vitiate the disciplinary action.

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Appeal No. 119 of 1959. Appeal by special leave from the judgment and order dated January 9, 1958, of the Allahabad High Court (Lucknow Bench), Lucknow, in Civil Misc. Application No. 115 of 1955. 683 C. B. Agarwala and C. P. Lal, for the appellants. G. section Pathak, Achru Ram, section N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra for the respondent. November, 25. The Judgment of Sarkar, Subba Rao and Mudholkar, JJ., was delivered by Subba Rao, J., and that of Gajendragadkar and Wanchoo, JJ., was delivered by Wanchoo, J. SUBBA RAO, J. This is an appeal by special leave against the judgment of the High Court of Judicature at Allahabad, Lucknow Bench, allowing the petition filed by the respondent under article 226 of the Constitution. The respondent was appointed a Sub Inspector of Police in December, 1948, and was posted at Sitapur in June, 1953. On September 6, 1953, the respondent went to village Madhwapur in connection with an investigation of a case of theft. On the evening of the said date when he was returning, accompanied by one Lalji, an ex patwari of Mohiuddinpur, he saw one Tika Ram coming from the side of a canal and going hurriedly towards a field. As the movements of Tika Ram appeared to be suspicious and as he was carrying something in the folds of his dhoti, the respondent searched him and found a bundle containing currency notes. The respondent counted the currency notes and handed them over to Lalji for being returned to Tika Ram, who subsequently got them and went his way. Subsequently when Tika Ram counted the currency notes at his house, he found that they were short by Rs. 250. Tika Ram 's case is that the bundle when taken by the respondent contained notes of the value of Rs. 650, but when he counted them in his house they were only of the value of Rs. 400. On September 9, 1953 Tika Ram filed a complaint to the Superintendent of Police, Sitapur, to the effect that the respondent and one Lalji had misappropriated a sum of its. There is dispute in regard to the interpretation of the complaint. On receipt of the said complaint, the Superintendent of Police made enquiries 684 and issued a notice to the respondent to show cause why his integrity certificate should not be withheld, upon which the respondent submitted his explanation on October 3, 1953. Thereafter the Superintendent of Police forwarded the file of the case to the Deputy Inspector General of Police, Central Range, U. P., who directed the Superintendent of Police to take proceedings under section 7 of the Police Act against the respondent. The departmental proceedings were started against the respondent; on November 2, 1953, a charge sheet was served upon the respondent under section 7 of the Police Act stating that there were strong reasons to suspect that the respondent misappropriated a sum of Rs. 250 from the purse of Tika Ram; the respondent filed his explanation to the charge made against him; and ultimately the Superintendent of Police held an enquiry and found on the evidence that the respondent was guilty of the offence with which he was charged. On January 2, 1954, the Superin tendent of Police issued another notice to the respondent to show cause why he should not be reduced to the lowest grade of Sub Inspector for a period of three years. In due course the respondent showed cause against the action proposed to be taken against him on a consideration of which the Superintendent of Police, Sitapur, by his order dated January 16, 1954 reduced the respondent to the lowest grade of Sub Inspector for a period of three years. When this order came to the notice of the D. 1. G., U. P., on a consideration of the entire record, he came to the con clusion that the respondent should be dismissed from service and on October 19, 1954 he made an order to that effect. On February 28, 1955 the Inspector General of Police confirmed that order; and the revision filed by the respondent against that order to the State Government was also dismissed in August 1955. Thereafter the respondent filed a petition under article 226 of the Constitution before the High Court of Judicature at Allahabad, Lucknow Bench, for quashing the said orders and the same was heard by a division bench consisting of Randhir Singh and Bhargava, JJ. The learned judges held that the provisions of para. 685 486 of the Police Regulations had not been observed and, therefore, the proceedings taken under section 7 of the Police Act were invalid and illegal. On that finding, they quashed the impugned orders; with the result that the order dismissing the respondent from service was set aside. The State Government, the Deputy Inspector General of Police, Lucknow, and the Inspector General of Police, Uttar Pradesh, Lucknow, have preferred the present appeal against the said order of the High Court. We shall now proceed to consider the various contentions raised by learned counsel in the order they were raised and argued before us. At the outset Mr. C. B. Agarwala, learned counsel for the appellants, contended that there was no breach of the provisions of para. 486 of the Police Regulations. If this contention be accepted, no other question arises 'in this case; therefore, we shall deal with the same. The material part of para. 486 of the Police Regulations reads thus: "When the offence alleged against a police officer amounts to an offence only under section 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. In such cases, and in other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the following rules: I.Every information received by the police relating to the commission of a cognizable offence by a police officer shall be dealt with in the first place under Chapter XIV, Criminal Procedure Code, according to law, a case under the appropriate section being registered in the police station concerned. . . . This provision expressly lays down that every information received by the police relating to the commission of a cognizable offence by a police officer shall be dealt with in the first place under Ch. XIV of the Criminal Procedure Code. This provision will not apply if the information received by the police does not 87 686 relate to the commission of a cognizable offence. Learned counsel contends that the information received in the present case does not relate to any offence committed by the respondent, much less to a cognizable offence. This is a point raised before us for the first time. This does not find a place even in the statement of case filed by the appellants. In the High Court it was not contended that the information did not disclose any offence committed by the respondent. Indeed, it was common case that the information disclosed an offence committed by the respondent, but it had been contended by the appellants that the misappropriation of the part of the money amounted to an offence under section 403 of the Indian Penal Code, which is not a cognizable offence; and it was argued on behalf of the respondent that it amounted to an offence under section 409 of the Indian Penal Code. The learned judges accepted the contention of the respondent. Even so, it is said that whatever might been the contentions of the parties, the information given by Tika Ram to the Superintendent of Police clearly disclosed that no offence was alleged to have been committed by the respondent and that this Court would, therefore, be justified, even at this very late stage, to accept the contention of the appellants. But the contents of the said information do not in any way support the assertion. Paragraph 3 of the application given by Tika Ram to the Superintendent of Police, Sitapur, reads thus: "That on Sunday last dated 6th September, 1953 the applicant had with him the currency notes of Rs. 650. The opposite party as well as Shri Babu Ram met the applicant on the west of Rampur near the Canal. The opposite party said to the Sub Inspector "This man appears to be clad in rags but is possessed of considerable money." After saying this the person of the applicant was searched. The Sub Inspector, having opened the bundle of notes, handed over the (notes) one by one to the opposite party. " This statement clearly indicates that either the Sub . Inspector or both the Sub Inspector and Lalji searched the person of Tika Ram, that the Sub Inspector took 687 the bundle of notes and handed the same over, one by one, to Lalji for being returned to the applicant, and that out of Rs. 650 a sum of Rs. 250 was not returned to him. The facts alleged make out an offence against both the Sub Inspector as well as Lalji. The mere fact that the respondent is not shown as one of the opposite parties in the application does not affect the question, for the information given in the application imputed the commission of an offence to both the respondent and Lalji. The notice issued by the Supe rintendent of Police on November 2, 1953 to the respondent also charges him with an offence of misappropriation. It is stated that the said notice only says that the Superintendent of Police had good reasons to suspect that the respondent misappropriated the sum of money and that it does not aver that he committed the offence of misappropriation. But what matters is 'that the Superintendent of Police also understood from the information given and the enquiry conducted by him that the respondent had committed the offence. Reliance is placed upon paragraph 3 of the writ petition wherein the respondent herein stated that Tika Ram filed a complaint against Lalji and not against the respondent. As a fact that is correct in the sense that the respondent was not shown in that application as the opposite party though in the body of that application definite allegations were made against the respondent. In the counter affidavit filed by the Superintendent of Police on behalf of the State it was clearly averred that on September 9, 1953 Tika Ram appeared before him and filed a petition to the effect fiat one Lalji and the respondent had misappropriated a sum of Rs. 250. Whatever ambiguity there might have been in the information we do not find any this allegation dispels it and it is not open to the appellants at this stage to contend that the petition did not disclose any offence against the respondent. In the circumstances, we must hold that the information received by the police related to the commission of an offence by the respondent. Even so, it is contended that the said offence is not a cognizable offence. It is said that there was no 688 entrustment made by Tika Ram to the respondent and that, therefore, the offence did not fall under section 409 of the Indian Penal Code, which is a cognizable offence, but only under section 403 of the Indian Penal Code, which is not a cognizable offence. Section 405 of the Indian Penal Code defines "criminal breach of trust" and section 409 thereof prescribes the punishment for the criminal breach of trust by a public servant. Under section 405 of the Indian Penal Code, "Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates 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 person so to do, commits "criminal breach of trust". To constitute an offence under this section, there must be an entrustment of property and dishonest misappropriation of it. The person entrusted may misappropriate it himself, or he may wilfully suffer another person to do so. In the instant case the respondent, being a police officer, was legally entitled to search a person found under suspicious circumstances; and Tika Ram in handing over the bundle of notes to the police officer must have done so in the confidence that he would get back the notes from him when the suspicion was cleared. In these circumstances, there cannot be any difficulty in holding that the currency notes were alleged to have been handed over by Tika Ram to the respondent for a specific purpose, but were dishonestly misappropriated by the respondent or at, any rate he wilfully suffered Lalji to misappropriate the same. We, therefore, hold that if the currency notes were taken by the respondent in discharge of his duty for inspection and return, he was certainly entrusted with the notes within the meaning of section 405 of the Indian Penal Code. If so, the information discloses a cognizable offence. We reject the first contention. The second objection of learned counsel for the appellants is that sub para. (3) of para. 486 of the 689 Police Regulations enables the appropriate police authority to initiate the departmental proceeding without complying with the provisions of sub para. (1) of para. The relevant portion of para. 486 of the Police Regulations reads: "When the offence amounts to an offence only under section 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. In such cases, and in other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the following rules:. . " Rule I relates to a cognizable offence, r. II to a non cognizable. offence, including an offence under section 29 of the Police Act, and r. III to an offence under section 7 of the Police Act or a non cognizable offence, including an offence under section 29 of the Police Act. Rule III says: "When a Superintendent of Police sees reason to take action on information given to him, or on his own knowledge or suspicion, that a police officer subordinate to him has committed an offence under section 7 of the Police Act or a non cognizable offence (including an offence under section 29 of the Police Act) of which he considers it unnecessary at that stage to forward a report in writing to the District Magistrate under rule II above, he will make or cause to be made by an officer senior in rank to the officer charged, a departmental inquiry sufficient to test the truth of the charge. On the conclusion of this inquiry he will decide whether further action is necessary, and if so, whether the officer charged should be departmentally tried, or whether the District Magistrate should be moved to take cognizance of the case under the Criminal Procedure Code. " The argument is that the words "an offence under section 7 of the Police Act" take in a cognizable offence and that, therefore, this rule provides for a procedure alternative to that prescribed under r. I. We do not think that this contention is sound. Section 7 of the Police Act empowers certain officers to dismiss, suspend 690 or reduce any police officer of the subordinate rank whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same. The grounds for punishment are comprehensive: they may take in offences under the Indian Penal Code or other penal statutes. The commission of such offences may also be a ground to hold that an officer is unfit to hold his office. Action under this section can, therefore, be taken in respect of, (i) offences only under section 7 of the Police Act without involving any cognizable or noncognizable offences, that is, simple remissness or negli gence in the discharge of duty, (ii) cognizable offences, and (iii) non cognizable offences. Paragraph 486 of the Police Regulations makes this clear. It says that when the offence alleged against a police officer amounts to an offence only under section 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. This part of the rule applies to an offence only under section 7 of the Police Act i. e., the first category mentioned above. Rule I refers to a cognizable offence i. e., the second category, rule 11 to a non cognizable offence i. e., the third category, and rule III applies to an offence under section 7 of the Police Act and to a noncognizable offence. Though the word "only" is not mentioned in rule 111, the offence under section 7 of the Police Act can, in the context, mean an offence only under section 7 of the said Act i.e., an offence falling under the first category. So understood, the three rules can be reconciled. We, therefore, hold that, as the offence complained of in the present case is a cognizable offence, it falls under rule I and not under rule 111. We, therefore, reject this contention. The third contention advanced by learned counsel for the appellants raises a constitutional point of considerable importance. The gist of the argument may be stated thus: In England, the service under the Crown is held at the Crown 's pleasure, unless the employment is for good behaviour or for a cause. But if there is a statute prescribing the terms of service and the mode of dismissal of the servant of the Crown, the statute would control the pleasure of the Crown. In India, the Constitution as well as the 691 earlier Constitution Acts of 1915, as amended in 1919, and 1935 embodied the incidents of "tenure at pleasure" of His Majesty, or the President or the Governor, as the case may be, but did not empower the Legislatures under the earlier Acts and the Parliament and the Legislatures under the Constitution to make a law abrogating or modifying the said tenure; therefore, any law made by appropriate authorities conferring a power on any subordinate officer to dismiss a servant must be construed not to limit the power of His Majesty, the President or the Governor, as the case may be, but only to indicate that they would express their pleasure only through the said officers. The rules made in exercise of a power conferred on a Government under a statute so delegating the power to a subordinate officer can only be administrative directions to enable the exercise of the pleasure by the concerned authorities in a reasonable manner and that any breach of those regulations cannot possibly confer any right on, or give a cause of action to, the aggrieved Government servant to go to a court of law and vindicate his rights. Mr. Pathak, learned counsel for the respondent, in countering this argument contends that the constitution Acts in India embodied the incidents of the tenure of the Crown 's pleasure in the relevant provisions and what the Parliament can do in England, the appropriate Legislatures in India also can do, that is, "the tenure at pleasure" created by the Constitution Acts can be abrogated, limited or modified by law enacted by the appropriate legislative bodies. Alternatively he contends that even if the Police Act does not curtail the tenure at pleasure, the Legislature validly made that law and the Government validly made statutory rules in exercise of the powers confered under that Act and that, therefore, the appropriate authorities can only dismiss the respondent in strict compliance with the provisions of the Act and the Rules made thereunder. To appreciate the problem presented and to afford a satisfactory answer it would be convenient to consider the relevant provisions. The Act we are concerned with in this case is the (Act V 692 of 1861). Its constitutional validity at the time it was ,made was not questioned. Under section 7 of the , as it originally stood, "the appointment of all police officers other than those mentioned in B. 4 of this Act shall, under such rules as the local Government shall from time to time sanction, rest with the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendents of Police, who may, under such rules as aforesaid, at any time, dismiss, suspend or reduce any police officer. " That section was substituted by the present section in 1937 and later on some appropriate amend ments were made to bring it in conformity with the Constitution. Under the amended section, "Subject to such rules as the State Government may from time to time make under this Act, the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendent of Police may at any time dismiss, suspend or reduce any police officer of the subordinate ranks whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same". In exercise of the powers conferred on the Government by section 46 of the Act, the Government made the U. P. Police Regulations prescribing the procedure for investigation and inquiry. We shall ' deal with the Regulations at a later stage. In the Government of India Act, 1915, as amended by the Act of 1919, for the first time, the doctrine of "tenure at pleasure" was introduced by section 96 B. In exercise of the power conferred under sub section (2) certain classification rules were framed by the local Government. This Act was repealed by the Government of India Act, 1935, and the section corresponding to section 96 B was section 240(1) in the latter Act. Section 241(2) empowered, except as expressly provided by the Act, the Governor General and the Governor to prescribe the conditions of service of the servants they were empowered to appoint. The main difference between the Act of 1919 and that of 1935 was that in the former Act there was only one limitation on the Crown 's pleasure, namely, that no person in the service might be dismissed by 693 an authority subordinate to that by which he was appointed, whereas in the latter Act a second limitation was imposed, namely, that no such person should ' be dismissed or reduced in rank until he had been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him: see section 240, sub sections (2) and (3). Another difference between the said two Acts was that while under the former Act all the services were placed in the same position, under the latter Act special provision was made for the police force prescribing that the conditions of service of the subordinate ranks of the various police forces should be such as might be determined by or under the Acts relating to those forces respectively vide section 243. By the Constitution, the Act of 1935 was repealed, and, with certain changes in phraseology, cls. (1) and (2) of article 310 took the place of sub sections (1) and (4) of section 240 respectively, and article 309 took the place of section 241(2). Under article 313, "Until other provision is made in this behalf under this Constitution, all the laws in force immediately before the commencement of this Constitution and applicable to any public service or any post which continues to exist after the commencement of this Constitution, as an all India service or as service or post under the Union or a State shall continue in force so far as consistent with the provisions of this Constitution". The result is that the and the Police Regulations, made in exercise of the powers conferred on the Government under that Act, which .were preserved under section 243 of the Government of India Act, 1935, continue to be in force after the Con stitution so far as they are consistent with the provisions of the Constitution. It is common case, as the contentions of learned counsel disclose, that the Act and the Regulations framed thereunder were constitutionally valid at the inception and that they are also consistent with the provisions of the Constitution. The difference between the two contentions lies in the fact that according to one His Majesty 's pleasure cannot be modified 88 694 by a statute, according to the other it is subject to statutory provisions. The relevant provisions of the Constitution read thus: Article 309: "Subject to the provisions of this Constitution, Acts of the appropriate Legislature may regulate the recruitment, and conditions of service of persons appointed, to public services and posts in connection with the affairs of the Union or of any State: Provided that it shall be competent for the President or such person as he may direct in the case of services and posts in connection with the affairs of the Union, and for the Governor of a State or such person as he may direct in the case of services and posts in connection with the affairs of the State, to make rules regulating the recruitment, and the conditions of service of persons appointed, to such services and posts until provision in that behalf is made by or under an Act of the appropriate Legislature under this article, and any rules so made shall have effect subject to the provisions of any such Act. " Article 310: "Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service or holds any post connected with defence or any Civil Post under the Union holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State." Under article 309 the appropriate Legislature may regulate the recruitment and conditions of service of persons appointed to public services. Under article 310 every person who is EC member of a public service described therein holds office during the pleasure of the President or the Governor, as the case may be. The words "conditions of service" in article 309 in their comprehensive sense take in the tenure of a civil servant: see N. W. F. Province vs Suraj Narain (1). Therefore, "the tenure at pleasure" is also one of the conditions of service. But article 309 opens out with a (i) A.I.R. (1949) P.C. 112. 695 restrictive clause, namely, "Subject to the provisions of this Constitution", and if there is no restrictive, clause in article 310, there cannot be any difficulty in holding that article 309 is subject to the provisions of ' Art 310; with the result that the power of the Legislature to lay down the conditions of service of persons appointed to public services would be subject to "the tenure at pleasure" under article 310. In that event, any law made by the Legislature could not affect the over riding power of the President or the Governor, as the case may be, in putting an end to the tenure at their pleasure. Would the opening words of the clause in article 310, namely, "Except as expressly provided by this Constitution", make any difference in the matter of interpretation? It should be noticed that the phraseology of the said clause in article 310 is different from that in article 309. If there is a specific provision in some part of the Constitution giving to a Government servant a tenure different from that provided for in article 310, that Government servant is excluded from the operation of article 310. The said words refer, inter alia, to articles 124, 148, 218 and 324 which provide that the Judges of the Supreme Court, the Auditor General, the Judges of the High Courts and the Chief Election Commissioner shall not be removed from their offices except in the manner laid down in those Articles. If the provisions of the Constitution specifically prescribing different tenures were excluded from article 310, the purpose of that clause would be exhausted and thereafter the Article would be free from any other restrictive operation. In that event, articles 309 and 310 should be read together, excluding the opening words in the latter Article, namely, "Except as expressly provided by this Constitution". Learne counsel seeks to confine the operation of the opening words in article 309 to the provisions of the Constitution which empower other authorities to make rules relating to the conditions of service of certain classes of public servants, namely, articles 146(2), 148(5) and 229(2). That may be so, but there is no reason why article 310 should be excluded therefrom. It follows that while article 310 provides for a tenure at pleasure 696 of the President or the Governor, article 309 enables the Legislature or the executive, as the case maybe, to make any law or rule in regard, inter alia, to conditions of service without impinging upon the overriding power recognized under article 310. Learned counsel for the respondent contends that this construction is inconsistent with that prevailing in the English law and that the intention of the framers of the Constitution could not have been to make a radical departure from the law of England. The law of England on the doctrine of "tenure at pleasure" has now become fairly crystallized. In England, all servants of the Crown hold office during the pleasure of the Crown; the right to dismiss at pleasure is an implied term in every contract of employment of the Crown, this doctrine is not based upon any prerogative of the Crown, but on public policy; if the terms of appointment definitely prescribe a tenure for good behaviour or expressly provide for a power, to determine for a cause, such an implication of a power to dismiss at pleasure is excluded, and an Act of Parliament can abrogate or amend the said doctrine of public policy in the same way as it can do in respect of any other part of common law. The said propositions are illustrated in the following decisions: Shenton vs Smith (1), Gould vs Stuart (2), Reilly vs The King(3), Terrell vs Secretary of State (4). This English doctrine was not incorporated in its entirety in the Indian enactments vide State of Bihar vs Abdul Majid (5), Parshotam Lal Dhingra vs Union of India (6). Section 96 B of the Government of India Act, 1915, for the first time in 1919, by amendment, statutorily recognized this doctrine, but it was made subject to a condition or s qualification, namely, that no person in that service might be dismissed by any authority subordinate to that by which he was appointed. Section 240 of the Act of 1935 imposed another limitation, namely, that a reasonable opportunity of showing cause against the action proposed to be taken in (i) (3) (5) ; (2) (4) (6) ; 697 regard to a person must be given to him. But neither of the two Acts empowered the appropriate Legislature to make a law abolishing or amending the said doctrine. The Constitution of India practically incorporated the provisions of sections 240 and 241 of the Act of 1935 in articles 309 and 310. But the Constitution has not made "the tenure at pleasure" subject to any law made by the appropriate Legislature. On the other hand, as we have pointed out, article 309 is expressly made subject to "the tenure at pleasure" in article 310. Nor the attempt of learned counsel for the respondent to discover such a power in the Legislature in the Entries of the appropriate Lists of the Seventh Schedule to the Constitution can be legally sustained. He referred, inter alia, to Entry 70 of List I and Entry 41 of List II. It is not disputed that Parliament can make law for the organization of the police and for the prevention and detection of crime. But under article 245 of the Constitution such a power is subject to the provisions of the Constitution and, therefore, is subject to the provisions of article 310. Nor can we imply such a power in Parliament or the Legislatures from article 154(2)(b) of the Constitution. Under article 154, "the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution", and under el. 2(b) thereof, "nothing in this Article shall prevent Parliament or the Legislature of the State from conferring by law functions on any authority subordinate to the Governor. " The argument is that a power to terminate the service at pleasure under article 310 is a part of the executive power of the State, that power under article 154 can be exercised by the Governor directly or through officers subordinate to him, and that under article 154(2)(b) the Parliament or the Legislature of the State can confer the same power on any authority subordinate to the Governor or, at any rate, can make a law prescribing that the Governor shall exercise the said pleasure through a particular officer. 698 We cannot agree either with the premises or the conclusion sought to be based on it. The first question is whether the power of the Governor under article 310 to terminate the services of a Government servant at pleasure is part of the executive power of the State under article 154 of the Constitution. Article 154 speaks of the executive power of the State vesting in the Governor; it does not deal with the constitutional powers of the Governor which do not form part of the executive power of the State. Article 162 says that, subject to the provisions of the Constitution, the executive power of the State shall extend to matters with respect to which the Legislature of the State has power to make laws. If the Legislature of the State has no power to make a law affecting the tenure at pleasure of the Governor, the said power must necessarily fall outside the scope of the executive power of the State. As we will presently show, the Legislature has no such power and, therefore, it cannot be a part of the executive power of the State. That apart, if the said power is part of the executive power in its general sense, article 162 imposes another limitation on that power, namely, that the said executive power is subject to the provisions of the Constitution and therefore, subject to article 310 of the Constitution. In either view, article 310 falls outside the scope of article 154 of the Constitution. That power may be analogous to that conferred on the Governor under articles 174, 175 and 176. Doubtless the Governor may have to exercise the said power whenever an occasion arises, in the manner prescribed by the Constitution, but that in itself does not make it a part of the executive power of the State or enable him to delegate his power. Even on the assumption that the power under article 310 is executive power within the meaning of article 154, it does not make any difference in the legal position so far as the present case is concerned. Article 310 of the Constitution says that unless expresssly provided by the Constitution to the contrary, every civil servant holds office during the pleasure of the Governor subject to the limitations prescribed under 699 article 311. Can it be said that article 154(2)(b) expressly provides for a different tenure? Can it be said that the said Article confers on the Parliament or the Legislature a power higher than that conferred on them under article 245 of the Constitution ? It only preserves the power of the Legislature, which it has under the Constitution, to make a law conferring functions on an authority subordinate to the Governor. That power under article 245 is not unlimited, but is subject to the provisions of the Constitution and there fore subject to article 310 thereof. It is then said that if the appellants ' contention were not accepted, it would lead to conflict of jurisdiction: while the Governor has the power under article 310 to dismiss a public servant at his pleasure, a statute may confer a power on a subordinate officer to dismiss a servant only subject to conditions; a subordinate officer functioning under an Act may not be able to dismiss a servant, but the Governor may be able to do so under similar circumstances; a subordi nate officer may dismiss a servant, but the Governor may order his continuance in office. This argument is based upon the misapprehension of the scope of article 309 of the Constitution. A law made by the appropriate Legislature or the rules made by the President or the Governor, as the case may be, under the said Article may confer a power upon a particular authority to remove a public servant from service; but the conferment of such a power does not amount to a delegation of the Governor 's pleasure. Whatever the said authority does is by virtue of express power conferred on it by a statute or rules made by competent authorities and not by virtue of any delegation by the Governor of his power. There cannot be conflict between the exercise of the Governor 's pleasure under article 310 and that of an authority under a statute, for the statutory power would be always subject to the overriding pleasure of the Governor. This conclusion, the argument proceeds, would throw a public servant in India to the mercy of the executive Government while their compeers in England 700 can be protected by legislation against arbitrary actions of the State. This apprehension has no real .basis, for, unlike in England, a member of the public service in India is constitutionally protected at least in two directions: (i) he cannot be dismissed by an authority subordinate to that by which he was appointed; (ii) he cannot be dismissed, 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 to him. A condition similar to the first condition in article 311 found in section 96 B of the Government of India Act, 1919, was hold by the Judicial Committee in R. T. Bangachari vs Secretary of State for India (1) to have a statutory force, and the second condition, which is only a reproduction of that found in sub section (2) of section 240 of the Government of India Act, 1935, was held in High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall (2) as mandatory qualifying the right of the employer recognized in sub section (1) thereof. These two statutory protections to the Government servant are now incorporated in article 311 of the Constitution. This Article imposes two qualifications on the exercise of the pleasure of the President or the Governor and they quite clearly restrict the operation of the rule embodied in article 310(1) vide the observations of Das, C.J., in Dhingra 's case (3). The most important of these two limitations is the provision prescribing that a civil servant shall be given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. As this condition is a limitation on the "tenure at pleasure", a law can certainly be made by Parliament defining the content of "reasonable opportunity" and prescribing the procedure for giving the said opportunity. The appropriate High Court and the Supreme Court can test the validity of such a law on the basis whe ther the provisions prescribed provide for such an opportunity, and, if it is valid, to ascertain whether the reasonable opportunity so prescribed is really given to a particular officer. It may be that the (1) (1936) L.R. 64 I.A. 40. (2) (1948) L.R. 75 1.A. 225. (3) ; , 839. 701 framers of the Constitution, having incorporated in our Constitution the "tenure at pleasure" unhampered by legislative interference, thought that the said limitations and qualifications would reasonably protect the interests of the civil servants against arbitrary actions. The discussion yields the following results: (1) In India every person who is a member of a public service described in article 310 of the Constitution holds office during the pleasure of the President or the Governor, as the case may be, subject to the express provisions therein. (2) The power to dismiss a public servant at pleasure is outside the scope of article 154 and, therefore, cannot be delegated by the Governor to a subordinate officer, and can be exercised by him only in the manner prescribed by the Constitution. (3) This tenure is subject to the limitations or qualifications mentioned in article 311 of the, Constitution. (4) The Parliament or the Legislatures of States cannot make a law abrogating or modifying this tenure so as to impinge upon the overriding power conferred upon the President or the Governor under article 310, as qualified by article 311. (5) The Parliament or the Legislatures of States can make a law regulating the conditions of service of such a member which includes proceedings by way of disciplinary action, without affecting the powers of the President or the Governor under article 310 of the Constitution read with article 311 thereof. (6) The Parliament and the Legislatures also can make a law laying down and regulating the scope and content of the doctrine of "reasonable opportunity" embodied in article 311 of the Constitution; but the said law would be subject to judicial review. (7) If a statute could be made by Legislatures within the foregoing permissible limits, the rules made by an authority in exercise of the power conferred thereunder would likewise be efficacious within the said limits. What then is the effect of the said propositions in their application to the provisions of the and the rules made thereunder? The of 89 702 1861 continues to be good law under the Constitution. Paragraph 477 of the Police Regulations shows that the rules in Chapter XXXII thereof have been framed under section 7 of the . Presumably, they were also made by the Government in exercise of its power under section 46(2) of the . Under para. 479(a) the Governor 's power of punishment with reference to all officers is preserved; that is to say, this provision expressly saves the power of the Governor under article 310 of the Constitution. "Rules made under a statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act, and are to be judicially noticed for all purposes of construction or obligation": see Maxwell "On the Interpretation of Statutes", 10th edn., pp. 5051. The statutory rules cannot be described as, or equated with, administrative directions. If so, the and the rules made thereunder constitute a self contained code providing for ' the appointment. of police officers and prescribing the procedure for their removal. It follows that where the appropriate authority takes disciplinary action under the or the rules made thereunder, it must conform to the provisions of the statute or the rules which have conferred upon it the power to take the said action. If there is any violation of the said provisions, subject to the question which we will presently consider whether the rules are directory or mandatory, the public servant would have a right to challenge the decision of that authority. Learned counsel for the appellants relied upon the following decisions of the Privy Council and this Court in support of his contention that the said rules are administrative directions: R. T. Rangachari vs Secretary of State for India (1), R. Venkata Rao vs Secretary of State for India (2), High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall (3), section A. Venkataraman vs The Union of India(4), and Khem Chand vs The Union of India(5). In Venkata Rao 's (1) (1936) L.R. 64 I.A. 40. (3) (1948) L.R. 75 I.A. 225. (2) (1936) L.R. 64 I.A. 55. (4) ; (5) ; 703 case (1) a reader of the Government Press was dismissed and in the suit filed by him against the Secretary, of State for India he complained, inter alia, that the dismissal was contrary to the statute inasmuch as it was not preceded by any such inquiry as was prescribed by rule XIV of the Civil Services Classification Rules made under section 96B(2) of the Government of India Act. Under section 96B of the said Act, every person in civil service holds office during the pleasure of His Majesty. Sub section (2) of that section empowers the Secretary of State for India to make rules laying down, among others, the conditions of service, and sub section (5) declares that no rules so made shall be construed to limit or abridge the power of the Secretary of State in Council to deal with the case of any person in the civil service of the Crown in India in such manner as may appear to him to be just and equitable. On a construction of these provisions the Judicial Committee held that His Majesty 's pleasure was paramount and could not legally be controlled or limited by the rules. Two reasons were given for the conclusion, namely, (i) section 96B in express terms stated that the office was held during the pleasure and there was no room for the implication of a contractual term that the rules were to be observed; and (ii) sub section (2) of section 96B and the rules made careful provisions for redress of grievances by administrative process and that sub section (5) reaffirmed the superior authority of the Secretary of State in Council over the civil service. It may be noticed that the rules framed in exercise of the power conferred by the Act was to regulate the exercise of His Majesty 's pleasure. The observations were presumably coloured by the doctrine of "tenure at pleasure" obtaining in England, namely, that it could only be modified by statute, influenced by the princi ple that the rules made under a statute shall be consistent with its provisions and, what is more, based upon a construction of the express provisions of the Act. These observations cannot, in our opinion, be taken out of their context and applied to the provisions of our Constitution and the Acts of our Legislatures in derogation of the well settled principles of (1) (1936) L. R. 64 I. A. 55. 704 statutory construction. In Bangachari 's case (1) a police officer was dismissed by an authority subordinate to that by which he had been appointed. The appeal was heard along with that in Venkata Rao 's case (2) and the judgments in both the appeals were delivered on the same day. The Judicial Committee distinguished Venkata Rao 's case (2) with the following observations at p. 53: "It is manifest that the stipulation or proviso as to dismissal is itself of statutory force and stands on a footing quite other than any matters of rule which are of infinite variety and can be changed from time to time. " These observations do not carry the matter further an our remarks made in connection with Venkata Rao 's case (2) would equally apply to this case. I.M. Lall 's case (3) turns upon sub section (3) of section 240 of the Government of India Act, 1935. Again the Judicial Committee made a distinction between the rules and the provisions of the Act and ruled that sub sections (2) and (3) of section 240 indicated a qualification or exception to the antecedent provisions in sub section (1) of section 240. This decision only adopted the reasoning in the earlier decision. The remarks made by us in connection with Venkata Rao 's case (2) would equally apply to this decision. This Court in section A. Venkataraman 's case (4) incidentally noticed the observations of the Judicial Committee in Venkata Rao 's case (2) and observed that the rules, which were not incorporated in a statute, did not impose any legal restriction upon the right of the Crown to dismiss its servants at pleasure. This Court was not laying down any general proposition, but was only stating the gist of the reasoning in Venkata Rao 's case (2). Das, C.J., if we may say so, correctly stated the scope of the rule in Venkata Rao 's case (2) in the decision in Khem Chand 's case (5), when he stated at p. 1091 "The position of the Government servant was, therefore, rather insecure, for his office being held during the pleasure of the Crown under the Government of India Act, 1915, the rules could not override (1) (1936) L.R. 64 I.A. 40. (3) (1948) L.R. 75 I.A. 225. (2) (1936) L.R. 64 I.A. 55. (4) ; (5) ; 705 or derogate from the statute and the protection of the rules could not be enforced by action so as to nullify the statute itself." To state it differently, the Government of India Act, 1915, as amended in 1919, and that of 1935 expressly and clearly laid down that the tenure was at pleasure and therefore the rules framed under that Act must be consistent with the Act and not in derogation of it. These decisions and the observations made therein could not be understood to mark a radical departure from the fundamental principle of construction that rules made under a statute must be treated as exactly as if they were in the Act and are of the same effect as if contained in the Act. There is another principle equally fundamental to the rules of construction, namely, that the rules shall be consistent with the provisions of the Act. The decisions of the Judicial Committee on the provisions of the earlier Constitution Acts can be sustained on the ground that the rules made in exercise of power conferred under the Acts cannot override or modify the tenure at pleasure provided by section 96B or section 240 of the said Acts, as the case may be. Therefore, when the paramountcy of the doctrine was conceded or declared by the statute, there might have been justification for sustaining the rules made under that statute in derogation thereof on the ground that they were only administrative directions, for otherwise the rules would have to be struck down as inconsistent with the Act. In such a situation, if the statute was valid it would be valid in so far as it did not derogate from the provisions of article 310, read with article 311 the rules made thereunder would be as efficacious as the Act itself. So long as the statute and the rules made thereunder do not affect the power of the Governor in the present case the Governor 's pleasure is expressly preserved they should be legally enforceable. In this context the decisions of the different High Courts in India are cited at the Bar. It would not serve any purpose to consider every one of them in detail. It would suffice if their general trend be noticed. They express two divergent views: one line relies upon the observations 706 of the Privy Council in Venkata Rao 's case (1) and lays down that all statutory rules vis a vis the disciplinary proceedings taken against a Government servant are administrative directions, and the other applies the well settled rules of construction and holds that the appropriate authority is bound to comply with the mandatory provisions of the rules in making an inquiry under a particular statute. A close scrutiny of some of the decisions discloses a distinction implied, though not expressed, between statutory rules defining the scope of reasonable opportunity and those governing other procedural steps in the disciplinary process. In our view, subject to the overriding power of the President or the Governor under article 310, as qualified by the provisions of article 311, the rules governing disciplinary proceedings cannot be treated as administrative directions, but shall have the same effect as the provisions of the statute whereunder they are made, in so far a, , they are not inconsistent with the provisions thereof We have already negatived the contention of learned counsel that the Governor exercises his pleasure through the officers specified in section 7 of the , and therefore, it is not possible to equate the Governor 's pleasure with that of the specified officers ' statutory power. If so, it follows that the inquiry under the Act shall be made in accordance with its provisions and the rules made thereunder. Then learned counsel contends that even if the said rules have statutory force, they are only directory and the non compliance with the rules will not invalidate the order of dismissal made by the appropriate authority. Before we consider the principles governing the question whether the rules are mandatory or directory, it would be convenient at this stage to notice broadly the scope and the purpose of the inquiry contemplated by the rules. Section 2 of the constitutes the police establishment; section 7 empowers specified officers to (1) [1936] L.R. 64 I.A. 55. 707 punish specified subordinate officers who are remiss or negligent in discharge of their duties or unfit for the same; section 46 enables the Government to make rules. to regulate the procedure to be followed by the magistrate and police officers in discharge of any duty imposed on them by or under the Act; under section 7, read with section 46 of the , the Police Regulations embodied in chapter XXXII were framed. Paragraph 477 of the Regulations says that the rules in that chapter have been made under section 7 of the and apply only to officers appointed under section 2 of the and that no officer appointed under that section shall be punished by executive order otherwise than in the manner provided in that chapter. Paragraph 478 prescribes the nature of the punishment that can be imposed on the delinquent officers. Paragraph 479 empowers specified officers to punish specified subordinate officers. Paragraph 483 gives the procedure to be followed in the matter of the inquiry against a police officer. It reads: "Subject to the special provision contained in paragraph 500 and to any special orders which may be passed by the Governor in particular cases a proceeding against a police officer will consist of A A magisterial or police inquiry, followed, if this inquiry shows the need for further action, by B A judicial trial, or C A departmental trial, or both, consecutively." Paragraph 484 declares that the nature of the inquiry in any particular case will vary according to the nature of the offence. If the offence is cognizable or non cognizable, the inquiry will be according to Schedule II of the Criminal Procedure Code. If the information is received by the District Magistrate, he may in exercise of his powers under the Criminal Procedure Code either, (1) make or order a magisterial inquiry; or (2) order an investigation by the Police. Paragraph 485 reads: "When a magisterial inquiry is ordered it will be made in accordance with the Criminal Procedure Code and the Superintendent of Police will have no direct 708 concern with it until the conclusion of judicial proceedings or until and unless the case is referred to him for further disposal, but he must give any assistance to the inquiring magistrate that he may legally be called upon to give and he must suspend the accused should this become necessary under paragraph 496." Paragraph 486 says that there can be no magisterial inquiry under the Criminal Procedure Code when the offence alleged against a police officer amounts to an offence only under section 7 of the , and it provides further that in such cases, and in, other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the rules given thereunder. Under rule I thereof, "Every information received by the police relating to the commission of a cognizable offence by a police officer shall be dealt with in the first place under Chapter XIV, Criminal Procedure Code, according to law, a case under the appropriate section being registered in the police station concerned". There are six provisos to that rule. Rule II provides for the inquiry of a non cognizable offence; and rule III prescribes the procedure in regard to an offence only under section 7 of the or a non cognizable offence of which the Superintendent of Police considers unnecessary at that stage to forward a report in writing to the District Magistrate. Paragraph 488 deals with a judicial trial and para. 489 with a departmental trial. Paragraph 489 says: "A police officer may be departmentally tried under section 7 of the (1) after he has been tried judicially; (2) after a magisterial inquiry under the Criminal Procedure Code; (3) after a police investigation under the Criminal Procedure Code or a departmental enquiry under paragraph 486,III above. " There are other provisions dealing with the manner of conducting the inquiries and other connected matters. The rules provide for the magisterial and police inquiry followed, if the inquiry showed the need for further action, by a judicial trial or a departmental 709 trial, or both, consecutively. In the case of cognizable offences the Superintendent of Police is directed to investigate under chapter XIV of the Criminal Pro p, cedure Code and in the case of non cognizable offences in the manner provided in rule II of para. 486, and in the case of an offence only under section 7 of the or a non cognizable offence in the manner provided under rule III of para. After one or other of the relevant procedure is followed, the Superintendent of Police is empowered to try a police officer departmentally. The question is whether rule I of para. 486 is directory. The relevant rule says that the police officer shall be tried in the first place under chapter XIV of the Criminal Procedure Code. The word "shall" in its ordinary import is "obligatory"; but there are many decisions wherein the courts under different situations construed the word to mean "may". This Court in Hari Vishnu Kamath vs Syed Ahmad Ishaque (1) dealt with this problem at p. 1125 thus: "It is well established that an enactment in form mandatory might in substance be directory and that the use of the word "shall" does not conclude the matter. " It is then observed: "They (the rules) are well known, and there is no need to repeat them. But they are all of them only aids for ascertaining the true intention of the legislature which is the determining factor, and that must ultimately depend on the context. " The following quotation from Crawford "On the Construction of Statutes", at p. 516, is also helpful in this connection: "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the (1) ; 90 710 consequences which would follow from construing it the one way or the other. " This passage was approved by this Court in State of U. P. vs Manbodhan Lal Srivastava (1). In Craies on Statute Law, 5th edition, the following passage appears at p. 242: "No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of Justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed. " A valuable guide for ascertaining the intention of the Legislature is found in Maxwell on "The Interpretation of Statutes", 10th edition, at p. 381 and it is: "On the other hand, where the prescriptions of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the duty is imposed, or, in other words, as directory only. The neglect of them may be penal, indeed, but it does not affect the validity of the act done in disregard of them. " This passage was accepted by the Judicial Committee of the Privy Council in the case of Montreal Street Railway Company vs Normandin (2 ) and by this Court in State of U. P. vs Manbodhan Lal Srivastava (1). The relevant rules of interpretation may be briefly stated thus: When a statute uses the word "shall", prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the Legislature the Court may consider, inter alia, the nature and the design of the statute, and the consequences which (1) ; , 545. (2) L.R. [1917] A.C.770. 711 would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non compliance with the provisions, the fact that the non compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. Now what is the object of rule I of para. 486 of the Police Regulations? In our opinion, it is conceived not only to enable the Superintendent of Police to gather information but also to protect the interests of subordinate officers against whom departmental trial is sought to be held. After making the necessary investigation under chapter XIV of the Criminal Procedure Code, the Superintendent of Police may as well come to the conclusion that the officer concerned is innocent, and on that basis drop the entire proceedings. He may also hold that it is a fit case for criminal prosecution, which, under certain circumstances, an honest officer against whom false charges are framed may prefer to face than to submit himself to a departmental trial. Therefore,the rules are conceived in the interest of the department as well as the officer. From the stand point of the department as well as the officer against whom departmental inquiry is sought to be intiated, the preliminary inquiry is very important and it serves a real purpose. Here the setting aside of the order of dismissal will not affect the public in general and the only consequence will be that the officer will have to be proceeded against in the manner prescribed by the rules. What is more, para. 487 and para. 489 make it abundantly clear that the police investigation under the Criminal Procedure Code is a condition precedent for the departmental trial. Paragraph 477 emphasizes that no officer appointed under section 2 of the shall be punished by executive order otherwise than in the manner provided under chapter XXXII of the Police Regulations. This is an imperative injunction prohibiting 712 inquiry in non compliance with the rules. Paragraph 489 only empowers the holding of a departmental trial in regard to a police officer only after a police investigation under the Criminal Procedure Code. When a rule says that a departmental trial can be held only after a police investigation, it is not permissible to hold that it can be held without such investigation. For all the foregoing reasons, we hold that para. 486 is mandatory and that, as the investigation has not been held under chapter XIV of the Criminal Procedure Code, the subsequent inquiry and the order of dismissal are illegal. For the foregoing reasons we hold that, as the respondent was dismissed without complying with the provisions of para. 486(1), the order of dismissal is illegal and that the High Court is right in setting aside the order of dismissal. In the result, the appeal fails and is dismissed with costs. WANCHOO, J. We regret we are unable to agree that the appeal be dismissed. Babu Ram Upadhya (respondent) was a sub inspector of police who was appointed in December, 1948. In 1953, he was posted at Sitapur. On September 6, 1953, he was returning from a village called Madhwapur, when he saw a man who was subsequently found to be Tika Ram coming from the side of a canal and going hurriedly into a field. The movements of Tika Ram roused his suspicion. One Lalji, an ex patwari, was also with the sub inspector. Tika Ram was called and searched, and a bundle containing currencynotes was found on him. The sub inspector took the bundle and counted the notes and handed them over to Lalji. Lalji in his turn handed over the notes to Tika Ram. Thereafter Tika Ram, who is an old man, almost blind, went away. When he reached his house, he found that there was a shortage of Rs. 250. He then made a complaint to the Superintendent of Police on September 9, 1953, in which he gave the above facts. An inquiry was made by the Superintendent of Police and ultimately, departmental proceedings under section 7 of the were taken 713 against the respondent. These proceedings resulted in his dismissal and thereupon the respondent applied to the High Court under article 226 of the Constitution. The main contention of the respondent was that r. 486 of the Police Regulations framed under section 7 of the was not observed and therefore the departmental proceedings taken against him were illegal. The reply of the appellant was two fold: in the first place, it was urged that r. 486 did not apply as there was no report of a cognizable offence against the sub inspector; and in the next place, it was urged that the rules contained in the Police Regulations were only administrative rules and even if there was non compliance with any of them, it would not affect the departmental proceedings taken against the respondent, provided there was no breach of the guarantees contained in article 311 of the Constitution. The High Court held that there was a report of a cognizable offence under section 409 of the Indian Penal Code against the respondent and therefore the procedure provided by r. 486 ought to have been followed. It further held that r. 486 had been framed under section 7 of the and was a statutory provision, which had the force of law. As such, following the earlier view taken by the High Court in two other cases it held that a dismissal as a result of departmental proceedings which took place without complying with r. 486 would be illegal. In consequence, the writ petition was allowed. The appellant then applied for a certificate to enable it to appeal to this Court, which was refused. Thereupon special leave was prayed for from this Court, which was granted; and that is how the matter has come up before us. Mr. C. B. Aggarwala on behalf of the appellant urges the same two points before us. So far as the first point is concerned, we are of opinion that there is no force in it. There is no doubt that in the complaint made by Tika Ram, the name of the respondent was not shown in the heading; but from the facts disclosed in the body of the complaint it is clear that the sub inspector searched the person of Tika Ram and recovered a bundle containing currency notes. He 714 did so obviously under the authority vested in him as a police officer. When therefore he was satisfied that there was no reason to take any further action against Tika Ram, it was his duty to see that the entire amount taken by him from Tika Ram on search was returned to him (Tika Ram). The High Court was right in the view that where property is taken away with the intention that it will continue to be the property of the person from whose possession it has been taken away, there will be an entrustment of the property to the person taking it away, and if. subsequently the person taking it away converts it to his own use or suffers some other person to do so, there will be criminal breach of trust and not merely criminal misappropriation. Thus an offence under section 409 of the Indian Penal Code appears to have been committed prima facie on the facts of this case. As an offence under section 409 is a cognizable offence, r. 486 of the Police Regulations would apply. This brings us to the main point in the present appeal. Sec. 7 of the under which r. 486 has been framed is in these terms: "Subject to such rules as the State Government may from time to time make under this Act, the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendents of Police may at any time dismiss, suspend or reduce any police officer of the subordinate ranks whom they shall think remiss or negligent in the discharge of his duty or unfit for the same; or may award any one or more, of the following punishments to any police officer of the subordinate ranks, who shall discharge his duty in a careless or negligent manner, or who, by any act of his own shall render himself unfit for the discharge thereof, name (a) fine to any amount not exceeding one month 's pay; (b) confinement to quarters for a term not exceeding fifteen days, with or without punishment, drill, extra guard, fatigue or other duty; (c) deprivation of good conduct pay; 715 (d) removal from any office of distinction or special emolument;". It gives power to four grades of police officers to dismiss, suspend or reduce any police officer of the subordinate ranks whom they think remiss or negligent in the discharge of his duty or unfit for the same. It also provides for infliction of four other kinds of punishment by these four grades of officers on any police officer of the subordinate ranks who discharges his duty in a careless or negligent manner or who by any act of his own renders himself unfit for the discharge thereof. In the present case we are concerned with dismissal and what we shall say hereafter should be taken to be confined to a case of dismissal. Sec tion 7 shows that the power of dismissal conferred by it on the four grades of police officers is to be exercised subject to such rules as the State Government may from time to time make under the . The contention on behalf of the respondent is that the power of dismissal has to be exercised subject to rules and therefore, when r. 486 of the Police Regulations (framed under section 7) provided a certain procedure to be followed with respect to cases in which a cognizable offence was involved it was not open to the authority concerned to disregard that procedure. In effect, it is urged that r. 486 is a mandatory provision and non compliance with it would invalidate the departmental proceedings. It is not in dispute in this case that the procedure provided by r. 486 was not followed. That procedural provision is that where a report of a cognizable crime is made against a police officer belonging to the subordinate ranks, it has to be registered as provided in Chapter XIV of the Code of Criminal Procedure and investigated as provided thereunder. Thereafter the authority concerned has to decide whether to send the case for trial before a court of law or to take departmental proceedings. In this case no report was registered as provided under Chapter XIV of the Code of Criminal Procedure and no investigation was made as provided in that Chapter. All that happened was that the Superintendent of Police to whom Tika Ram had complained inquired into the 716 complaint of Tika Ram and thereafter decided to hold a departmental inquiry under section 7 of the against the respondent. The main contention on behalf of the appellant is that the Rules framed under section 7 of the are administrative rules and in any case they are only directory and non compliance with them would not vitiate the subsequent proceedings unless there is a breach of the guarantee contained in article 311 of the Constitution, as all public servants hold their office at the pleasure of the President or the Governor, as the case may be, other than those expressly excepted under the Constitution. Reliance in this connection is placed on the case of R. Venkata Rao vs Secretary of State for India in Council (1). This brings us to a consideration of the tenure on which public servants hold office. The position in England is that all public servants hold office at the pleasure of His Majesty, that is to say, their service was terminable at any time without amuse: (see Shenton vs Smith (2 )). By law, however, it is open to Parliament to prescribe a different tenure and the King being a party to every Act of Parliament is understood to have accepted the change in the tenure when he gives assent to such law: (see Gould vs Stuart (3)). This principle applied in India also before the Government of India Act, 1915, was amended by the addition of section 96 B therein. Section 96 B for the first time provided by statute that every person in the civil service of the Crown held office during His Majesty 's pleasure, subject to the provisions of the Government of India Act and the rules made thereunder and the only protection to a public servant against the exercise of pleasure was that he could not be dismissed by any authority subordinate to that by which he was appointed. It was this section, which came for consideration before the Privy Council in Venkata Rao 's case (1) and the Privy Council held that in spite of the words ".subject to the rules made under the Government of India Act," Venkata Rao 's employment was not of a (1) (1936) L.R. 64 I.A. 55 (2) (3) 717 limited and special kind during pleasure with an added contractual term that the procedure prescribed, by the Rules must be observed; it was by the express terms of section 96 B held "during His Majesty 's pleasure" and no right of action as claimed by Venkata Rao existed. The Privy Council further held that the terms of section 96 B assured that the tenure of office, though at pleasure, would not be subject to capricious or arbitrary action but would be regulated by the rules which were manifold in number, most minute in particularity and all capable of change; but there was no right in the public servant enforceable by action to hold his office in accordance with those rules and he could therefore be dismissed notwithstanding the failure to observe the procedure prescribed by them. The main point which was urged in Venkata Rao 's case (1) was that under r. XIV of the Civil Services Classification Rules no public servant could be dismissed, removed or reduced in rank except after a properly recorded departmental inquiry. In Venkata Rao 's case (1) the departmental inquiry prescribed by the rules was found not to have been held. Even so, the Privy Council held that the words used in section 96 B could not and did not cut down the pleasure of His Majesty by rules though it was observed that the terms of the section contained a statutory and solemn assurance, that the tenure of office, though at pleasure., would not be subject to capricious or arbitrary, action, but would be regulated by rule. It was further added that supreme care should be taken that this assurance is carried out in the letter and in the spirit. The Privy Council further held that in ' the case before it, there had been a serious and complete failure to adhere to important and indeed fundamental rules, and mistakes of a serious kind had been made and wrongs had been done which called for redress; even so; they were of the view that as a matter of law that redress was not obtainable from courts by action. ,. This was the position under the Government of India Act 1915. There was however a material change in the Government of India Act, 1935. So far, there (1) (1936) L.R. 64 I. A. 55. 91 718 was one protection to a public servant, namely, that he could not be dismissed by an authority subordinate to that by which he was appointed. In the Government of India Act, 1935, section 240(1) laid down that " except as expressly provided by this Act, every person who is a member of a civil service of the Crown in India. holds office during His Majesty 's pleasure. " The words of this section are different from those of section 96 B and the tenure of all public servants other than those expressly provided for was to be during His Majesty 's pleasure. There were, however, two safeguards provided by sub sections (2) and (3) of section 240. The first was the same (namely, that no public servant will be dismissed by an officer subordinate to that who appointed him); but a further exception was added to the pleasure tenure, namely, no public servant shall be dismissed until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. This protection came to be considered by the Privy Council in High Commissioner for India and High Commissioner for Pakistan vs 1. M. Lall (1) and it was held that it was a mandatory provision and qualified the pleasure tenure and provided a condition precedent to the exercise of power by His Majesty provided by sub section (1) of section 240. Thus by the Government of India Act, 1935, there were two statutory guarantees to public servants against the exercise of the pleasure of his Majesty; but it is clear from section 240 of the Government of India Act, 1935, that the pleasure of His Majesty to dismiss was not otherwise subject to rules framed under the subsequent provisions of the Government of India Act appearing in Chapter 11 of Part X dealing with public services. This position continued till we come to the Constitution. Article 310(1) of the Constitution provides for what was contained in section 240(1) of the Government of India Act, 1935, and is in these terms: "(1) Except as expressly provided by this Constitution, every person who is a member of a defence (1) (1948) L.R. 75 I.A. 225. 719 service or of a civil service of the Union or of an all India service or holds any post connected with defence, or any civil post under the Union, holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State. " It will be clear therefore that all public servants except as expressly provided by the Constitution hold their office during the pleasure of the President or the Governor, as the case may be. Article 311 then provides for two guarantees and is similar in terms to section 240(2) and (3) of the Government of India Act, 1935 and the two guarantees are the same, (namely, (i) that no person shall be dismissed or removed by an authority subordinate to that by which he was appointed, and (ii) no such person shall be dismissed or removed or reduced in rank until he has been given a reason able opportunity of showing cause against the action proposed to be taken in regard to him). In Parshotam Lal Dhingra vs Union of India (1), this Court held that article 311 was in the nature of a proviso to article 310, that it provides two constitutional guarantees cutting down the pleasure of the President or the Governor, as the case may be, and that it was a mandatory provision which had to be complied with before the pleasure provided in article 310 can be exercised. Mr. Pathak for the respondent urges that in view of the words of article 310 statute or statutory rules can also cut down the nature of the pleasure tenure provided by article 310 in the same way as in England an Act of Parliament cuts down the ambit of His Majesty 's pleasure in the matter of dismissal. He relies on the words "as expressly provided by this Constitution" and urges that it is open to the legisla ture to cut down the pleasure tenure by law or to provide for its being affected by statutory rules. In this connection he relies on article 309 as well as article 154 of the Constitution. Now, article 309 begins with the words "subject to the provisions of this Constitution" land lays down that "Acts of the appropriate Legislature may regulate the recruitment, and conditions of (1) ; 720 service of person appointed, to public services and posts in connection with the affairs of the Union or of any State". The proviso to article 309 lays down that "it shall be competent for the President or the Governor as the case may be to make rules relating to recruitment and conditions of service until provision in that behalf is made by or under an Act of the appropriate Legislature". It will be clear immediately that article 309 is subject to the provisions of the Constitution and therefore subject to article 310 and therefore, any law passed or rules framed under article 309 must be subject to article 310 and cannot in any way affect the pleasure tenure laid down in article 310. The words "except as expressly provided by this Constitution" appearing in article 310 clearly show that the only exceptions to the pleasure tenure are those expressly contained in the Constitution and no more. These exceptions, for example, are contained inter alia in articles 124. 148, 280 and 324 and also in article 310 (2). Therefore, unless there is an express provision in the Constitution cutting down the pleasure tenure, every public servant holds office during the pleasure of the President or the Governor, as the case may be. We cannot accept the argument that a law passed under article 309 prescribing conditions of service would become an express provision of the Constitution and would thus cut down the pleasure tenure contained in article 310. As the Privy Council pointed in Venkata Rao 's case (1), the rules framed under article 309 or the laws passed thereunder amount to a statutory and solemn assurance that the tenure of office though at pleasure will not be subject to capricious or arbitrary action but will be regulated by rule. But if the rules or the law define the content of the guarantee contained in article 311 (2) they may to that extent be mandatory but only because they carry out the guarantee contained in article 311 (2). Excepting this, any law or rule framed under article 309 cannot cut down the pleasure tenure as provided in article 310. The same in our opinion applies to a law passed under article 154 (2)(b) which authorises Parliament or the legislature of a State to confer functions on any (1) (1936) L.R. 64 I.A. 55. 721 authority subordinate to the Governor. If any law is passed conferring on any authority the power to dismiss or remove or reduce in rank, that law cannot cut down the content of the pleasure tenure as contained in article 310; that law would be passed under article 245 and that article also begins with the words "subject to the provisions of this Constitution". Therefore, the law passed under article 154 (2) (b) would also in the same way as the law under article 309 be subject to the pleasure tenure contained in article 310 and cannot cut down the content of that tenure or impose any further fetters on it except those contained in article 311. The position therefore that emerges from the examination of the relevant Articles of the Constitution is that all public servants other than those who are excepted expressly by the provisions of the Constitution hold office during the pleasure of the President or the Governor, as the case may be, and that no law or rule passed or framed under article 309 or article 154 (2) (b) can cut down the content of the pleasure tenure as contained in article 310 subject to article 311. With this basic position in our Constitution, let us turn to the with which we are concerned. Section 7 thereof lays down that four grades of officers will have power to dismiss, suspend or reduce any police officer of the subordinate ranks subject to such rules as the State Government may from time to time make under the . Though the is a pre constitutional law which has continued under article 372 of the Constitution, it cannot in our opinion stand higher than a law passed under article 309 or article 154 (2) (b) and out down the content of the pleasure tenure as contained in article 310. The police officers of the subordinate ranks are not expressly excluded from the operation of the pleasure tenure by any provision of the Constitution; they, therefore, hold office during the pleasure of the Governor and the only protection that they can claim are the two guarantees contained in article 311. It is true that section 7 lays down that the four grades of officers empowered to dismiss will act according to rules framed by the State Government; but that does not in our opinion mean that 722 these rules could introduce any further fetter on the pleasure tenure under which the police officers of the subordinate ranks are in service. It was necessary to provide for the framing of rules because the section envisages conferment of, powers of punishment of various kinds on four grades of officers relating to various cadres of police officers in the subordinate ranks. It was left to the rules to provide which four grades of officers would dismiss police officers of which subordinate rank or would give which punishment to a police officer of which subordinate rank. Such rules would in our opinion be mandatory as they go to the root of the jurisdiction of the four grades of police officers empowered to act under section 7. But further rules may be framed under section 7 to guide these police officers how to act when they proceed to dismiss or inflict any other punishment on police officers of the subordinate ranks. These rules of procedure, however, cannot all be mandatory, for if they were so they would be putting further fetters than those provided in article 311 on the pleasure of the Governor to dismiss a public servant. of course, if any of the rules framed under section 7 carry out the purposes of article 311(2), to that extent they will be mandatory and in that sense their contravention would in substance amount to contravention of article 311 itself. If this were not so, it would be possible to forge further fetters on the pleasure of the Governor to dismiss a public servant and this in the light of what we have said above is clearly not possible in view of the provisions of the Constitution. On the other hand, it will not be possible by means of rules framed under section 7 to take away the guarantee provided by article 311(1), which lays down that no public servant shall be dismissed by an authority subordinate to that by which he was appointed. If any rule under section 7, for example, lays down otherwise it will clearly be ultra vires in view of article 311(1). The rules therefore that are framed under section 7 would thus be of two kinds, namely (1) those which define the jurisdiction of four grades of officers to inflict a particular kind of punishment on a particular police officer of the subordinate rank they will be mandatory 723 for they go to the root of the jurisdiction of the officer exercising the power, but even these rules cannot go against the provisions of article 31 1 (1); and (2) procedural rules, which again may be of two kinds. Some of them may prescribe the manner in which the guarantee contained in article 311 (2) may be carried out and if there are any such rules they will be mandatory. The rest will be merely procedural and can only be directory as otherwise if they are also mandatory further fetters on the power of the Governor to dismiss at his pleasure contained in article 310 would be forged and this is not permissible under the Constitution. It is from this angle that we shall have to consider 486. Before, however, we come to r. 486 itself, we may dispose of another argument, namely, that the four grades of officers who have the power to dismiss under section 7 are exercising the statutory authority vested in them and are not exercising the Governor 's pleasure of dismissal under article 310 and therefore their action in dismissing an officer is subject to all the rules framed for their guidance. We are of opinion that this argument is fallacious. Article 310 defines the pleasure tenure and by necessary implication gives power to the Governor to dismiss at pleasure any public servant subject to the exceptions contained in article 310 and also subject to the guarantees contained in article 311. This power of the Governor to dismiss is executive power of the State and can be exercised under article 154(1) by the Governor himself directly or indirectly through officers subordinate to him. Thus it is open to the Governor to delegate his power of dismissal to officers subordinate to him; but even when those officers exercise the power of dismissal, the Governor is indirectly exercising it through those to whom he has delegated it and it is still the pleasure of the Governor to dismiss, which is being exercised by the subordinate officers to whom it may be delegated. Further though the Governor may delegate his executive power of dismissal at pleasure to subordinate officers he still retains in himself the power to dismiss at pleasure if he thinks fit in a particular case in spite 724 of the delegation. There can be no question that where a delegation is made, the authority making the delegation retains in itself what has been delegated. Therefore, even where a subordinate officer is exercising the power to dismiss he is indirectly exercising the power of the Governor to dismiss at pleasure and so his power of dismissal can only be subject to the same limitations to which the power of the Governor would be subject if he exercised it directly. But it is said that in the present case the power has not been delegated by the Governor under article 154(1) and that it had been conferred on those police officers by law. In our opinion, that makes no difference to the nature of the power, which is being exercised by these four grades of officers under the . As we have already said article 154(2)(b) gives power to Parliament or the legislature of a State by law to confer functions on any authority subordinate to the Governor. When the function of dismissal is conferred by law on any authority subordinate to the Governor it is nothing more than delegation of the Governor 's executive power to dismiss at pleasure by means of law and stands in no better position than a delegation by the Governor himself under article 154(1). Whether it is delegation by the Governor himself or whether it is delegation by law under article 154(2)(b) or by an existing law, which must be treated as analogous to a law under article 154(2)(b), the officer exercising the power of dismissal is only indirectly exercising, the Governor 's power to dismiss at pleasure and his order of dismissal has the same effect as the order of the Governor to dismiss at pleasure. Therefore, his order also is only subject to the two fetters provided in article 311 of the Constitution and cannot be subjected to any more fetters by procedural rules other than those framed for carrying out the object of article 311(2). Therefore, when the four grades of officers proceed to dismiss any police officer of the subordinate rank under section 7 of the , they are merely exercising. the power of the Governor to dismiss at pleasure indirectly; and the only fetters that can be placed on that power are those contained in the Constitution, namely, article 311. 725 We may in this connection refer once again to the case of Venkata Rao (1) where the dismissal was by an, officer subordinate to the Governor of Madras; but ' that dismissal was also held to be an indirect exercise I of His Majesty 's pleasure to dismiss, and that is why it was held that if r. XIV of the Classification Rules was not complied with, a public servant had no right of action against an order dismissing him at His Majesty 's pleasure. Therefore, whenever a subordinate officer exercises the power to dismiss, whether that power is delegated by the Governor, or is delegated under a law made under article 154(2)(b) or under an existing law analogous to that, he is merely exercising indirectly the power of the Governor to dismiss at pleasure and his action is subject only to the two guarantees contained in article 311. The fact therefore that the police officer in this case made the order of dismissal by virtue of section 7 will make no difference and he will be deemed to be exercising the power of the Governor to dismiss at pleasure by delegation to him by law of that power. We may add that even where there is delegation by law of the power of the Governor to dismiss at pleasure, the power of the Governor himself to act directly and dismiss at pleasure cannot be taken away by that law, for that power he derives from article 310 of the Constitution. The present case therefore must be judged on the same basis as any case of dismissal directly by the Governor and would only be subject to the two limitations contained in article 311. We now come to r. 486. This rule, as we have already indicated, provides that if there is any complaint of the commission of any cognizable crime by a police officer, it must be registered in the relevant police station, under Chapter XIV of the Code of Criminal Procedure and investigated in the manner provided by that Chapter. After the investigation is complete, it is open to the authority concerned, be it the Superintendent of Police or the District Magistrate, to decide whether to proceed in a court of law (1) (1936) L.R. 64 I.A. 55. 92 726 or to hold a departmental inquiry or do both, though in the last case the departmental inquiry must take place only after the judicial trial is over. The first question then that arises is whether r. 486 is meant to carry out the purpose of article 311(2). As we read r. 486, we cannot see that it is meant for that purpose; it only provides for a police investigation under Chapter XIV of the Code of Criminal Procedure. The police officer making an investigation under Chapter XIV is not bound to examine the person against whom he is investigating, though there is nothing to prevent him from doing so. Nor is the person against whom an investigation is going on under Chapter XIV bound to make a statement to the police officer. In these circumstances, the purpose of an investigation under Chapter XIV is not relevant under article 311(2) which says that a public servant shall not be dismissed without giving him a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Therefore, r. 486 not being meant for the purpose of carrying out the object of article 311 (2) cannot be mandatory and cannot add a further fetter on the exercise of the power to dismiss or remove at the pleasure of the Governor over and above the guarantees contained in article 311. It appears to us that the object of r. 486 is that the authority concerned should first make a preliminary inquiry to find out if there is a case against the officer complained against either to proceed in a court or to take departmental action. The investigation prescribed by r. 486 is only for this purpose. Incidentally it may be that after such an investigation, the authority concerned may come to the conclusion that there in no case either ' to send the case to court or to hold a departmental inquiry. But that in our opinion is what would happen in any case of complaint against a public servant in any department of Government. No authority entitled to take action against a public servant would straightaway proceed to put the case in court or to hold a departmental inquiry. It seems to us axiomatic if a complaint is received against any public servant of any department, that the authority 727 concerned would first always make some kind of a preliminary inquiry to satisfy itself whether there is any case for taking action at all; but that is in our opinion for the satisfaction of the authority and has nothing to do with the protection afforded to a public servant under article 311. Rule 486 of the Police Regulations also in our opinion is meant for this purpose only and not meant to carry out the object contained in article 311(2). The opportunity envisaged by article 311(2) will be given to the public servant after the the authority has satisfied itself by preliminary inquiry that there is a case for taking action. Therefore, r. 486 which is only meant to gather materials for the satisfaction of the authority concerned, whether to take action or not, even though a statutory rule cannot be considered to be mandatory as that would be forging a further fetter than those contained in article 311 on the power of the Governor to dismiss at pleasure. We are therefore of opinion that r. 486 is only directory and failure to comply with it strictly or otherwise will not vitiate the subsequent proceedings. We may incidentally indicate two further aspects of the matter. In the first place, if the argument is that the Governor must exercise the pleasure himself so that only the two limitations provided in article 311 may come into play; it appears that the Governor has exercised his pleasure in this case inasmuch as he dismissed the revisional application made to him by the respondent. There appears no reason to hold that the Governor exercises his pleasure only when he passes the original order of dismissal but not otherwise. Secondly the fact that r. 486 contains the word "shall" is not decisive on the point that it is mandatory: (see Crawford on Statutory Construction, p. 519, para. 262). In view of what we have said already, the context shows that r. 486 can only be directory. If so, failure to observe it strictly or otherwise will not invalidate the subsequent departmental proceedings. This brings us to the last point which has been urged in this case; and that is whether there was substantial compliance with r. 486. We have already 728 pointed out that there was no strict compliance with r. 486 as no case wag registered on the complaint of Tika Ram and no investigation was made under Chapter XIV of the Code of Criminal Procedure. But there is no doubt in this case that before the Superintendent of Police gave the charge sheet to the respondent in November, 1953, which was the beginning of the departmental proceedings against the respondent, he made a preliminary inquiry into the complaint of Tika Ram and was satisfied that there was a case for proceeding against the respondent departmentally. In these circumstances it appears to us that the spirit of r. 486 was substantially complied with and action was only taken against the respondent when on a preliminary inquiry the Superintendent of Police was satisfied that departmental action was necessary. Even if r. 486 had been strictly complied with, this is all that could have happened. In these circumstances we are of opinion that r. 486 which in our opinion is directory was substantially complied with in spirit and therefore the subsequent departmental proceedings cannot be held to be illegal, simply because there was no strict compliance with r. 486. The High Court therefore in our opinion was wrong in holding that the subsequent departmental inquiry was illegal and its order quashing the order of dismissal on this ground alone cannot be sustained. We would therefore allow the appeal. BY COURT In accordance with the opinion of the majority, this appeal is dismissed with costs.

The respondent was a sub Inspector of Police. A complaint was received by the Superintendent of Police that the com plainant was carrying currency notes of Rs. 650 in a bundle when he was stopped by the respondent and his person was searched, that the respondent opened the bundle of notes and handed over the notes one by one to one Lalji, who was with him and that Lalji returned the notes to him but on reaching home he found the notes short by Rs. 250. Proceedings under section 7 of the Police Act were taken against the respondent on the charge of misappropriation of Rs. 250 and he was dismissed from service by an order of the Deputy Inspector General of Police. The respondent filed a writ petition before the High Court challenging the order of the dismissal on the ground that the authorities had acted in violation of Rule I of Para. 486 of the U. P. Police Regulation. This rule required that every information received by the police relating to the commission of a cognizable offence by a Police Officer shall be dealt with in the first place under Ch. XIV, Code of Criminal Procedure. The High Court held that the provisions of para. 486 of the Police Regulations had not been observed and that the proceedings taken under section 7 of the Police Act were invalid and illegal and accordingly quashed the order of dismissal. The appellant contended (i) that the complaint did not make out any cognizable offence against the respondent and r. I of Para. 486 was not applicable in this case, (ii) that r. III of Para. 486 enabled the authorities to initiate departmental proceedings without complying with the provisions of r. I, (iii) that the Police Regulations made in exercise of the power conferred on the Government under the Police Act delegating the power of the Governor to dismiss at pleasure to a subordinate officer were only administrative directions for the exercise of the pleasure in a reasonable manner and any breach of the regulations did not confer any right or give a cause of action to the public servant, and (iv) that the regulations were only directory and the non compliance with the rules did not invalidate the order of dismissal. 680 Held, (per Sarkar, Subba Rao and Mudholkar, JJ.) that the order of dismissal was illegal as it was based upon an enquiry held in violation of r. I of Para 486 of the Police Regulations. The facts alleged in the complaint made out a cognizable offence under section 405 Indian Penal Code against the respondent, and the provisions of r. I of Para . 486 were applicable to it. A Police Officer making a search of a person was 'entrusted ' with the money handed over by the person searched. Rule III of Para. 486 did not deal with cognizable offences, it dealt with offences falling only under section 7 Police Act and to non cognizable offences. Rule III did not provide an alternative procedure to that prescribed under r. I. The position with regard to the tenure of public servants and to the taking of disciplinary action against them under the present Constitution was as follows: (i) Every person who was a member of a public service described in article 310 of the Constitution held office during the pleasure of the President or the Governor. (ii) The power to dismiss a public servant at pleasure was outside the scope of article I54 and, therefore, could not be delegated by the Governor to a subordinate officer, and could be exercised by him only in the manner prescribed by the Constitution. (iii) This tenure was subject to the limitations or qualifi cations mentioned in article 311. (iv )Parliament or the Legislature of States could not make a law abrogating or modifying this tenure so as to impinge upon the overriding power conferred upon the President or the Governor under article 310, as qualified by article 311. (v) Parliament or the Legislatures of States could make a law regulating the conditions of service of such a member which included proceedings by way of disciplinary action, without affecting the powers of the President or the Governor under article 310 read with article 311. (vi) Parliament and the Legislatures also could makea law laying down and regulating the scope and content of the doctrine of "reasonable opportunity" embodied in article 311 but the said law was subject to judicial review. (vii) If a statute could be made by Legislatures within the foregoing permissible limits, the rules made by an authority in exercise of the power conferred thereunder would likewise be efficacious within the said limits. N. W. F. Province vs Suraj Narain, A.I.R. 1949 P. C. 112, Shenton vs Smith, , Gould vs Stuart, , Reilly vs The King, , Terrell vs Secretary of State, , State of Bihar vs Abdul Majid; , , Parshotam Lal Dhingra vs Union of India, , R. T. Rangachari vs Secretary of State for India, (1936) L.R. 64 I.A. 40 and High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall, (1948) L.R. 75 I.A. 225, referred to. The Police Act and the rules made thereunder constituted a self contained code providing for the appointment of police officers and prescribing the procedure for their removal. Any authority taking action under the Police Act or the rules made thereunder must conform to the provisions thereof and if there was any violation of those provisions the public servant had a right to challenge the order of the authority if the rules were mandatory Paragraph 486 of the Police Regulations was mandatory and not directory. The rules were made in the interests of both the department and the police officers. The word used in para 486 was "shall" and in the context it could not be read as "may". Hari Vishnu Kamath vs Syed Ahmed Ishaque, , State of U. P. vs Manbodhan Lal Srivastava, [1958] S.C.R. 533 and Montreal Street Railway Company v Noymandin, L.R. ; , referred to. Subject to the overriding power of the President or the Governor under article 310, as qualified by article 311, rules governing disciplinary proceeding could not be treated as administrative directions, but had the same effect as the provisions of the statute whereunder they were made, in so far as they were not inconsistent with the provisions thereof. The Governor did not exercise his pleasure through the officers specified in section 7 of the Police Act, and the Governor 's pleasure. could not be equated with the statutory power of the officers specified An inquiry under the Act had to be made in accordance with the provisions of the Act and the rules made thereunder. R. T. Rangachari vs Secretary of State for India, L.R. 64 I.A. 40, High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall, (1948) L.R. 75 I.A. 225, R. Venkata Rao vs Secretary of State for India, (1936) L.R. 64 I.A. 55, section A. Venkataraman V. Union of India, [1954] S.C.R. 1150 and Khem Chand vs The Union of India, [1958] S.C.R. 1080, referred to. Per Gajendragadkar and Wanchoo, JJ. The provisions of para 486 were merely directory and a non compliance therewith did not invalidate the disciplinary action taken against the respondent. All public servants, other than those excepted expressly by the Constitution, held office during the pleasure of the President or the Governor, and no law or rule framed under article 300 or article I54(2)(b) could cut down the content of the pleasure tenure in article 310 subject to article 31i. The Police Act could not stand higher than a law passed under article 309 or article 154(2)(b) and could not cut down the content of the pleasure tenure in article 310 682 The Police officers held office during the pleasure of the Governor and the only protection they could claim was the two guarantees contained in article 311. The rules framed under section 7 Police Act would be of two kinds, namely (1) those which defined the jurisdiction of the four grades of officers specified in section 7 to inflict particular kind of punishment on particular police officers of the subordinate ranks such rules would be mandatory but they could not go against the provisions of article 311, and (2) procedural rules. The procedural rules could be of two kinds: (i) those that prescribed the manner in which the guarantee contained in article 311(2) May be carried out such rules would be mandatory, and (ii) other merely procedural rules they could only be directory. The power of the Governor to dismiss was executive power of the State and could be exercised under article 154(i) by the Governor himself directly or indirectly through officers subordinate to him. The officers specified in section 7 of the Police Act were exercising the powers of the Governor to dismiss at pleasure and their powers were subject to the same limitations to which the Governor was subject. Whether it was delegation by the Governor himself or whether it was delegation by law under article 154(2)(b) or by the existing law, which must be treated as analogous to a law under article 154(2)(b), the officer exercising the power of dismissal was only indirectly exercising the Governor 's power to dismiss at pleasure. His order also was subject to the two fetters under article 311 and could not be subjected to any more fetters by procedural rules other than those framed for carrying out the objects of article 311(2). R. Venkata Rao vs Secretary of State for India in Council, [1936] 64 I.A. 55, referred to. Paragraph 486 was not meant for the purpose of carrying out the object of article 311(2) and could not be mandatory and could not add a further fetter on the exercise of the power to dismiss at the pleasure of the Governor over and above the fetters contained in article 311. This rule was only meant to gather materials for the satisfaction of the authority concerned, whether to take action or not. As such para 486 was merely directory and a failure to comply therewith strictly or otherwise did not vitiate the disciplinary action.

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87 of 1959. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. M. P. Amin, Dara P. Mehta, P. M. Amin; section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra for the petitioners. A. V. Viswanatha Sastri, R. Ganapathy Iyer, P. Kesava Pillai and T. M. Sen, for the respondents. H. N. Sanyal, Additional Solicitor General of India, B. Sen and R. H. Dhebar, for the Intervener. 541 1960. November, 21. The, Judgment of P. B. Gajendragadkar, A. K. Sarkar, K. Subba Rao and J. R. Mudholkar, JJ., was delivered by P. B. Gajendragadkar J., K. N. Wanchoo, J., delivered a separate judgment. GAJENDRAGADKAR, J. This is a petition filed under article 32 of the Constitution in which the validity of the Orissa Mining Areas Development Fund Act,( , 1952 (XXVII of 1952), is challenged. The first petitioner is a public limited company which has its registered office at Bombay. A large majority of its shareholders are citizens of India; some of them are themselves companies incorporated under the Indian Companies Act. Petitioners Nos. 2 to 7 are the Directors of Petitioner No. 1, the second petitioner being the Chairman of its Board of Directors. These petitioners are all citizens of India. At all material times the first petitioner carried on and still carries on the business of producing and selling coal excavated from its collieries at Rampur in the State 'of Orissa. Two leases have been executed in its favour; the first was executed on October 17, 1941, by the Governor of Orissa whereby all that piece or parcel of land in the registration district of Sambalpur admeasuring about 3341.79 acres has been demised for a period of 30 years commencing from September 1, 1939, in consideration of the rent reserved thereby and subject to the covenants and conditions prescribed thereunder; and the second is a surface lease executed in its favour by Mr. Mohan Brijraj Singh Dee on April 19, 1951, in relation to a land admeasuring approximately 211.94 acres for a like period of 30 years commencing from February 4, 1939, in consideration of the rent and subject to the terms and conditions prescribed by it. Pursuant to section 5 of the Orissa Estates Abolition Act, 1951, all the right, title and interest of the Zamindar of Rampur in the lands demised to the first petitioner under the second lease vested in respondents, the State of Orissa. Since then the first petitioner has duly paid the rent reserved by the said lease to the appropriate authorities appointed by respondent 1, 69 542 and has observed and performed all the conditions and covenants of the said lease. In exercise of its rights under the said two leases the first petitioner entered upon the lands demised and has been carrying on the business of excavating and producing coal at its collieries at Rampur. In December, 1952, the Legislature of the State of Orissa passed the impugned Act; and it received the assent of the Governor of Orissa on December 10, 1952. It was, however, not reserved for the consideration of the President of India nor has it received his assent. In pursuance of the rule making power conferred on it by the impugned Act respondent 1 has purported to make rules called the Orissa Mining Areas Development Act Rules, 1955; these rules have been duly notified in the State Gazette on January 25, 1955. Subsequently, the Administrator, respondent 2, appointed under the impugned Act issued a notification on June 24, 1958, whereby the first petitioner 's Rampur colliery has been notified for the purpose of liability for the payment of cess under the impugned Act. The area of this colliery has been determined at 3341.79 acres. In its appeal filed under rule 3 before the Director of Mines the first petitioner objected to the issue of the said notification, inter alia, on the ground that the impugned Act and the rules framed under it were ultra vires and invalid; no action has, however, been taken on the said appeal presumably because the authority concerned could not enter tain or deal with the objections about the vires of the Act and the rules. Thereafter on March 26, 1959, the Assistant Administrative Officer, respondent 3, called upon the first petitioner to submit monthly returns for the assessment of the cess. The first petitioner then represented that it had filed an appeal setting forth its objections against the notification, and added that until the said appeal was disposed of no returns would be filed by it. In spite of this representation respondent 3, by his letter of May 6, 1959, called upon the 543 first petitioner to submit monthly returns in the prescribed form and issued the warning that failing compliance the first petitioner would be prosecuted under section 9 of the impugned Act. A similiar demand was made and a similar warning issued by respondent 3 by his letter dated June 6, 1959. It is under these circumstances that the present petition has been filed. The petitioners contend that the impugned Act and ' the rules made thereunder are ultra vires the powers of the Legislature of the State of Orissa, or in any event they are repugnant to the provisions of an existing law. According to the petition the cess levied under the impugned Act is not a fee but is in reality and in substance a levy in the nature of a duty of excise on the coal produced at the first petitioner 's Rampur colliery, and as such is beyond the legislative competence of the Orissa Legislature. Alternatively it is urged that even if the levy imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II of the Seventh Schedule, it would nevertheless be ultra vires having regard to the provisions of Entry 54 in List I read with Central Act LIII of 1948. The petitioners further allege that even if the said levy is held to be a fee it would be similarly ultra vires having regard to Entry 52 in List I read with Central Act LXV of 1951. According to the petitioners the impugned Act is really relatable to Entry 24 in List III, and since it is repugnant with Central Act XXXII of 1947 relatable to the same Entry and covering the same field the impugned Act is invalid to the extent of the said repugnancy under article 254. On these allegations the petitioners have applied for a writ of mandamus or a writ in the nature of the said writ or any other writ, order or direction prohibiting the respondents from enforcing any of the provisions of the impugned Act against the first petitioner; a similar writ or order is claimed against respondent 3 in respect of the letters addressed by him to the 1st petitioner on March 3, 1959 and June 6, 1959. This petition is resisted by respondent 1 on several grounds. It is urged on its behalf that the levy 544 imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II and its validity is not affected either by Entry 54 read with Act LIII of 1948 or by 'Entry 52 read with Act LXV of 1951. In the alternative it is contended that if the said levy is held to be a tax and not a fee, it would be a tax relatable to Entry 50 in List II, and as such the legislative competence of the State Legislature to impose the same cannot be successfully challenged. Respondent 1 disputes the petitioner 's contention that the impugned Act is relatable to Entry 24 in List III; and so, according to it, no question of repugnancy with the Central Act XXXII of 1947 arises. After this appeal was fully argued before us Mr. Amin suggested and Mr. Sastri did not object that we should hear the learned Attorney General on the question as to whether even if the levy imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II of the Seventh Schedule, it would nevertheless be ultra vires having regard to the provisions of Entry 54 in List I read with Central Act LIII of 1948. Accordingly we directed that a notice on this point should be served on the learned Attorney General and the case should be set down for hearing on that point again. For the learned Attorney General the learned Additional Solicitor General appeared before us in response to this notice and we have had the benefit of hearing his arguments on the point in question. The first question which falls for consideration is whether the levy imposed by the impugned Act amounts to a fee relatable to Entry 23 read with Entry 66 in List II. Before we deal with this question it is necessary to consider the difference between the concept of tax and that of a fee. The neat and terse definition of tax which has been given by Latham, C. J., in Matthews vs Chicory Marketing Board (1) is often cited as a classic on this subject. "A tax", said Latham, C. J., "is a compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered". In bringing out the essential features of a tax this defini (1) ; , 276. 545 tion also assists in distinguishing a tax from a fee. It is true that between a tax and a fee there is no generic difference. Both are compulsory exactions of money. by public authorities; but whereas a tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the consolidated fund which ultimately is utilised for all public purposes, whereas a cess levied by way of fee is not intended to be, and does not become, a part of the consolidated fund. It is earmarked and set apart for the purpose of services for which it is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax payer and the public authority there is no option to the tax payer in the matter of receiving the service determined by public authority. In regard to fees there is, and must always be, co relation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax; and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co relation between the service and the levy, or whether the levy is either not co related with service or is levied to such an 546 excessive extent as to be a presence of a fee and not a fee in reality. In other words, whether or not a particular cess levied by a statute amounts to a fee or tax would always be a question of fact to be determined in the circumstances of each case. The distinction between a tax and a fee is, however, important, and it is recognised by the Constitution. Several Entries in the Three Lists empower the appropriate Legislatures to levy taxes; but apart from the power to levy taxes thus conferred each List specifically refers to the power to levy fees in respect of any of the matters covered in the said List excluding of course the fees taken in any Court. The question about the distinction between a tax and a fee has been considered by this Court in three decisions in 1954. In The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1) the vires of the Madras Hindu Religious and Charitable Endowments Act, 1951 (Madras Act XIX of 195 1), came to be examined. Amongst the sections challenged was section 76(1). Under this section every religious institution had to pay to the Government annual contribution not exceeding 5% of its income for the services rendered to it by the said Government; and the argument was that the contribution thus exacted was not a fee but a tax and as such outside the competence of the State Legislature. In dealing with this argument Mukherjee, J., as he then was, cited the definition of tax given by Latham, C.J., in the case of Matthews (2), and has elaborately considered the distinction between a tax and a fee. The learned judge examined the scheme of the Act and observed that "the material fact which negatives the theory of fees in the present case is that the money raised by the levy of the contribution is not earmarked or specified for defraying the expense that the Government has to incur in performing the services. All the collections go to the consolidated fund of the State and all the expenses have to be met not out of those collections but out of the general revenues by a proper method of appropriation as is done in the (1) ; (2) ; 547 case of other Government expenses". The learned judge no doubt added that the said circumstance was not conclusive and pointed out that in fact there was a total absence of any co relation between the expenses incurred by the Government and the amount raised by contribution. That is why section 76(1) was struck down as ultra vires. The same point arose before this Court in respect of the Orissa Hindu Religious Endowments Act, 1939, as amended by amending Act 11 of 1952 in Mahant Sri Jagannath Ramanuj Das vs The, State of Orissa (1). Mukherjea, J., who again spoke for the Court, upheld the validity of section 49 which imposed the liability to pay the specified contribution on every Mutt or temple having an annual income exceeding Rs. 250 for services rendered by the State Government. The scheme of the impugned Act was examined and it was noticed that the collections made under it 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 a fund which is contemplated by section 50 of the Act, and this fund to which the Provincial Government contributes both by way of loan and grant is specifically set apart for the rendering of services involved in carrying out the provisions of the Act. The same view was taken by this Court in regard to section 58 of the Bombay Public Trust Act, 1950 (Act XXIX of 1950) which imposed a similar contribution for a similar purpose in Ratilal Panachand Gandhi vs The State of Bombay (2). It would thus be seen that the tests which have to be applied in determining the character of any impugned levy have been laid down by this Court in these three decisions; and it is in the light of these tests that we have to consider the merits of the rival contentions raised before us in the present petition. On behalf of the petitioners Mr. Amin has relied on three other decisions which may be briefly considered. In P. P. Kutti Keya vs The State of Madras (3), the Madras High Court was called upon to consider, inter (1) ; (2) [1954] S.C.R. 1055. (3) A.I.R. 1954 Mad. 621. 548 alia, the validity of section 11 of the Madras Commercial Crops Markets Act 20 of 1933 and Rules 28(1) and 28(3) framed thereunder. Section 11(1) levied a fee on the sales of commercial crops within the notified area and section 12 provided that the amounts collected by the Market Committee shall be constituted into a Market Fund which would be utilised for acquiring a site for the market, constructing a building, maintaining the market and meeting the expenses of the Market Committee. The argument that these provisions amounted to services rendered to the notified area and thus made the levy a fee and not a tax was not accepted by the Court. Venkatarama Aiyar, J., took the view that the funds raised from the merchants for a construction of a market in substance amounted to an exaction of a tax. Whether or not the construction of a market amounted to a service to the notified area it is unnecessary for us to consider. Besides, as we have already pointed out we have now three decisions of this Court which have authoritatively dealt with this matter, and it is in the light of the said decisions that the present question has to be considered. In Attorney General for British Columbia vs Esquimalt and Nanaimo Railway Co. (1), the Privy Council had to deal with the validity of forest protection impost levied by the relevant section of the Forest Act R. section B. C. 1936. The lands in question were statutorily exempted from taxation, and it was urged against the validity of the impost that the levy of the said impost was not a service charge but a tax; and since it contravened the exemption from taxation granted to the land it was invalid. This plea was upheld by the Privy Council. The Privy Council did consider two circumstances which were relevant; the first that the levy was on a defined class of interested individuals, and the second that the fund raised did not fall into the general mass of the proceeds of taxation but was applicable for a special and limited purpose. It was conceded that these considerations were relevant but the Privy Council thought that the weight to be attached to them should not be exagge (1) 540 rated. In appreciating the weight of the said relevant circumstances the Privy Council was impressed by the fact that the lands in question formed an important part of the national wealth of the Province and their proper administration, including in particular protection against fire, is a matter of high public concern ' as well as one of particular interest to individuals. In other words, the effect of the impugned provision was, that the expenses of what was the public service of the greatest importance for the Province as a whole had been divided between the general body of tax. payers and those individuals who had a special interest in having their property protected. It would thus appear that this decision proceeded on the basis that what was claimed to be a special service to the lands in question was in reality an item in public service itself, and so the element of quid pro quo was absent. It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from pub lic service, and in essence is directly a part of it, diffe rent considerations may arise. In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy. In Parton. vs Milk Board (Victoria)(1), the validity of the levy imposed on dairymen and owners of milk depots by section 30 of the Milk Board Act of 1933 as amended by subsequent Acts of 1936 1939 was (1) ; 70 550 challenged, and it was held by Dixon, J., that the levy of the said contribution amounted to the imposition of a duty of excise. This decision was substantially based on the ground that the statutory board "performs no particular service for the dairyman or the owner of a milk depot for which his contribution may be considered as a fee or recompense" that is to say the element of quid pro quo was absent qua the persons on whom the levy had been imposed. Therefore none of the decisions on which Mr. Amin has relied can assist his case. Let us now examine the scheme of the impugned Act. As the preamble shows it has been passed because it was thought expedient to constitute mining areas and a Mining Areas Development Fund in the State of Orissa. It consists of 11 sections. Section 3 of the Act provides for the constitution of a mining area whenever it appears to the State Government that it is necessary and expedient to provide amenities like communications, water supply and electricity for the better development of any area in the State of Orissa wherein any mine is situated, or to provide for the welfare of the residents or to workers in any such areas within which persons employed in a mine or a group of mines reside or work. Under this section the State Government has to define the limits of the area. and is given the power to include within such area any local area contiguous to the same or to exclude from such area any local area comprised therein; that is the effect of section 3(1). Section 3(2) empowers the owner or a lessee of a mine or his duly constituted representative in the said area to file objections in respect of any notification issued under section 3(1) within the period specified, and the State Government is required to take the said objection into consideration. After considering objections received the State Government is authorised to issue a notification constituting a mining area under section 3(3). Section 4 deals with the imposition and collection of cess. The rate of the levy authorised shall not exceed 5 per centum of the valuation of the minerals at the pit 's mouth. Section 5 provides for the constitution of the Orissa Mining Areas Development 551 Fund. This fund vests in the State Government and has to be administered by such officer or officers as may be appointed by the State Government in that, behalf Section 5(2) requires that there shall be paid to the credit of the said fund the proceeds of the cess recovered under section 4 for each mining area during the quarter after deducting expenses, if any, for collection and recovery. Section 5(3) contemplates that to the credit of the said fund shall be placed all collections of cess under section 5(2) as well as amounts from State Government and the local authorities and public subscriptions specifically given for any of the purposes of the fund. Section 5(4) deals with the topic of the appli cation of the said fund. The fund has to be utilised to meet expenditure incurred in connection with such measures which in the opinion of the State Government are necessary or expedient for providing amenities like communications, water supply and electricity, for the better development of the mining areas, and to meet the welfare of the labour and other persons residing or working in the mining areas. Section 5(5) lays down that without prejudice to the generality of the foregoing provisions the fund may be utilised to defray any of the purposes specified in cls. (a) to (e). Under section 5(6) the State Government is given the power to decide whether any particular expenditure is or is not debitable to the fund and their decision is made final; and section 5(7) imposes on the State Government an obligation to publish annually in the gazette a report of the activities financed from the fund together with an estimate of receipts and expenditure of the fund and a statement of account. Section 6 prescribes the mode of constituting an advisory committee. It has to consist of such number of members and chosen in such manner as may be prescribed, provided however that each committee shall include representatives of mine owners and workmen employed in mining industry. The names of the members of the committee are required to be published in the gazette. Section 7 deals with the appointment and functions of the statutory authorities to carry out the purpose of the Act, while section 8 confers on the State Government power to 552 make rules. Section 9 prescribes penalties and provides for prosecutions; and section 10 gives protection to the specified authorities or officers in respect of anything done or intended to be done by them in good faith in pursuance of the Act or any rules or order made thereunder. Section 11, which is the last section confers on the State Government the power to do anything which may appear to them to be necessary for 'the purpose of removing difficulties in giving effect to the provisions of the Act. The scheme of the Act thus clearly shows that it has been passed for the purpose of the development of mining areas in the State. The basis for the operation of the Act is the constitution of a mining area, and it is in regard to mining areas thus constituted that the provisions of the Act come into play. It is not difficult to appreciate the intention of the State Legislature evidenced by this Act. Orissa is an underdeveloped State in the Union of India though it has a lot of mineral wealth of great potential value. Un fortunately its mineral wealth is located generally in areas sparsely populated with bad communications. Inevitably the exploitation of the minerals is handicapped by lack of communications, and the difficulty experienced in keeping the labour force sufficiently healthy and in congenial surroundings. The mineral development of the State, therefore, requires that provision should be made for improving the communications by constructing good roads and by providing means of transport such as tramways; supply of water and electricity would also help. It would also be necessary to provide for amenities of sanitation and education to the labour force in order to attract workmen to the area. Before the Act was passed it appears that the mine owners tried to put up small length roads and tramways for their own individual purpose, but that obviously could not be as effective as roads constructed by the State and tramway service provided by it. It is on a consideration of these factors that the State Legislature decided to take an active part in unsystematic development of its mineral areas which would help the mine owners in moving their 553 minerals quickly through the shortest route and would attract labour to assist the excavation of the minerals. Thus there can be no doubt that the primary and the principal object of the Act is to develop ' the mineral areas in the State and to assist more efficient and extended exploitation of its mineral wealth. The constitution of the advisory committee as prescribed by section 4 emphasises the fact that the policy of the Act would be to carry out with the assistance of the mine owners and their workmen. Thus after a mining area is notified an advisory committee is constituted in respect of it, and the task of carrying out the objects of the Act is left to the care of the said advisory committee subject to the provisions of the Act. Even before an area is notified the mine owners are allowed an opportunity to put forward their objections. These features of the Act are also relevant in determining the question as to whether the Act is intended to render service to the specified area and to the class of persons who are subjected to the levy of the cess. Section 5 shows that the cess levied does not become a part of the consolidated fund and is not subject to an appropriation in that behalf; it goes into the special fund earmarked for carrying out the purpose of the Act, and thus its existence establishes a correlation between the cess and the purpose for which it is levied. It was probably felt that some additions should be made to the special fund, and so section 5(3) contemplates that grants from the State Government and local authorities and public subscriptions may be collected for enriching the said fund. Every year a report of the activities financed by the fund has to be published together with an estimate of receipt and expenditure and a statement of accounts. It would thus be clear that the administration of the fund would be subject to public scrutiny and persons who are called upon to pay the levy would have an opportunity to see whether the cess collected from them has been properly utilised for the purposes for which it is intended to be used. It is not alleged by the petitioners 554 that the levy imposed is unduly or unreasonably excessive so as to make the imposition a colourable exercise of legislative power. Indeed the fact that the accounts have to be published from year to year affords an indication to the contrary. Thus the scheme of the Act shows that the cess is levied against the class of persons owning mines in the notified area and it is levied to enable the State Government to render specific services to the said class by developing the notified mineral area. There is an element of quid pro quo in the scheme, the cess collected is constituted into a specific fund and it has not become a part of the consolidated fund, its application is regulated by a statute and is confined to its purposes, and there is a definite co relation between the impost and the purpose of the Act which is to render service to the notified area. These features of the Act impress upon the levy the character of a fee as distinct from a tax. It is, however, urged that the cess levied by section 4(2) is in substance and reality a duty of excise. As we have already noticed section 4(2) provides that the rate of such levy shall not exceed 5 per centum of the valuation of the minerals at the pit 's mouth; in other words it is the value of the minerals produced which is the basis for calculating the cess payable by mine owners, and that precisely is the nature in which duty of excise is levied under Entry 84 in List I. The said Entry empowers Parliament to impose duties of excise, inter alia, on goods manufactured or produced in India. When minerals are produced from mines and a duty of excise is intended to be imposed on them it would be normally imposed at the pit 's mouth, and that is precisely what the impugned Act purports to do. It is also contended that the rate prescribed by section 4(2) indicates that it operates not as a mere fee but as a duty of excise. This argument must be carefully examined before the character of the cess is finally determined. It is not disputed that under Entry 23 in List II read with Entry 66 in the said List the State Legislature can levy a fee in respect of mines and mineral development. Entry 23 reads thus: "Regu lation of Mines and mineral development subject to 555 the provisions of List I with respect to regulation and development under the control of the Union". We will deal with the condition imposed by the latter part of this Entry later. For the present it is enough to state that regulation of mines and mineral development is within the competence of the State Legislature. Entry 66 provides that fees in respect of any of the matters in the said List can be imposed by the State Legislature subject of course to the exception of fees taken in any Court. The argument is that though the State Legislature is competent to levy a fee in respect of mines and mineral development, if the statute passed by a State Legislature in substance and in effect imposes a duty of excise it is travelling outside its jurisdiction and is trespassing on the legislative powers of Parliament. This argument is based on two considerations. The first relates to the form in which the levy is imposed, and the second relates to the extent of the levy authorised. The extent of the levy authorised would always depend upon the nature of the services intended to be rendered and the financial obligations incurred thereby. If the services intended to be rendered to the notified mineral areas require that a fairly large cess should be collected and co relation can be definitely established between the proposed services and the impost levied, then it would be unreasonable to suggest that because the rate of the levy is high it is not a fee but a duty of excise. In the present case, if the development of the mining areas involves con siderable expenditure which necessitates the levy of the prescribed rate it only means that the services being rendered to the mining areas are very valuable and the rate payer in substance is compensating the State for the services rendered by it to him. It is significant that the petitioners do not seriously suggest that the services intended to be rendered are a cloak and not genuine, or that the taxes levied have no relation to the said services, or that they are unreasonable and excessive. Therefore, in our opinion, the extent of the rate allowed to be imposed by section 4(2) cannot by itself alter the character of the levy from a 556 fee into that of a duty of excise. If the co relation between the levy and the services was not genuine or real, or if the levy was disproportionately higher than the requirements of the services intended to be rendered it would have been another matter. Then as to the form in which the impost is levied, it is difficult to appreciate how the method adopted by the Legislature in recovering the impost can alter its character. The character of the levy must be determined in the light of the tests to which we have already referred. The method in which the fee is recovered is a matter of convenience, and by itself it cannot fix upon the levy the character of the duty of excise. This question has often been considered in the past, and it has always been held that though the method in which an impost is levied may be relevant in determining its character its significance and effect cannot be exaggerated. In Balla Ram vs The Province of East Punjab (1) the Federal Court had to consider the character of the tax levied by section 3 of the Punjab Urban Immoveable Property 'tax Act XVII of 1940. Section 3 provided as follows: "There shall be charged, levied and paid an annual to tax on buildings and lands situated in the rating areas shown in the schedule to this Act at such rate not exceeding twenty per centum of the annual value of such buildings and lands as the Provincial Government may by notification in official gazette direct in respect of each such rating area". The argument urged before the Federal Court was that the tax imposed by the said section was in reality a tax on income within the meaning of Item 54 in List I of the Seventh Schedule to the Constitution Act of 1935, and as such it was not covered by Item 42 in List II of the said Schedule. This argument was rejected on the ground that the tax levied by the Act was in pith and substance a tax on lands and buildings covered by Item 42. It would be noticed that the basis of the tax was the annual value of the building which is the basis used in the Indian Income tax Act for determining income from property; and so, the attack against the section was based on (1) 557 the ground that it had adopted the same basis for leaving the impost as the Income tax Act and the said basis determined its character whatever may be the appearance in which the impost was purported to be levied. In repelling this argument Fazl Ali, J. observed that the crucial question to be answered was whether merely because the Income tax Act has adopted the annual value as the standard for determining the income it must necessarily follow that if the same standard is employed as a measure for any other tax that tax becomes a tax on income. The learned judge then proceeded to add that if the answer to this question is to be given in the affirmative then certain taxes which cannot possibly be described as income tax must be held to be so. In other words, the effect of this decision is that the adoption of the standard used in Income tax Act for getting at the income by any other act for levying the tax authorised by it would not be enough to convert the said. tax into an income tax. During the course of this judgment Fazl Ali, J. also noticed with approval a similar view taken by the Bombay High Court in Sir Byramjee Jeejeebhoy vs The Province of Bombay (1). This decision has been expressly approved by the Privy Council in Governor General in Council vs Province of Madras (2). Consistently with the decision of the Federal Court their Lordships expressed the opinion that "a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods and not on sales or the proceeds of the sale of goods. The two taxes, the one levied on the manufacturer in respect of his goods and the other on the vendor in respect of his sales may in one sense overlap, but in law there is no overlapping; the taxes are separate and distinct imposts. If in, fact they overlap that may be because the taxing authority imposing a duty of excise finds it convenient to impose that duty at the moment when the excisable article (1) I.L.R. (2) (1945) L.R. 72 I.A. 91. 71 558 leaves the factory or workshop for the first time on the occasion of its sale". In that case the question was whether the tax authorised by the Madras General Sales Tax Act, 1939, was a tax on the sale of goods or was a duty of excise, and the Privy Council held it was the former and not the latter. Therefore, in our opinion, the mere fact that the levy imposed by the impugned Act has adopted the method of determining the rate of the levy by reference to the minerals produced by the mines would not by itself make the levy a duty of excise. The method thus adopted may be relevant in considering the character of the impost but its effect must be weighed along with and in the light of the other relevant circumstances. In this connection it is always necessary to bear in mind that where an impugned statute passed by a State Legislature is relatable to an Entry in List II it is not permissible to challenge its vires only on the ground that the method adopted by it for the recovery of the impost can be and is generally adopted in levying a duty of excise. Thus considered the conclusion is inevitable that the cess levied by the impugned Act is neither a tax nor a duty of excise but is a fee. The next question which arises is, even if the cess is a fee and as such may be relatable to Entries 23 and 66 in List II its validity is still open to challenge because the legislative competence of the State Legislature under Entry 23 is subject to the provisions of List I with respect to regulation and development under the control of the Union; and that takes us to Entry 54 in List I. This Entry reads thus: "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". The effect of reading the two Entries together is clear. The jurisdiction of the State Legislature under Entry 23 is subject to the limitation imposed by the latter part of the said Entry. If Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union, to 559 the extent of such declaration the jurisdiction of the State Legislature is excluded. In other words, if a Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law. The limitation imposed by the latter part of Entry 23 is a limitation on the legislative competence of (,he State Legislature itself. This position is not in dispute. It is urged by Mr. Amin that the field covered by the impugned Act has already been covered by the Mines and Minerals (Regulation and Development) Act, 1948, (LIII of 1948) and he contends that in view of the declaration made by section 2 of this Act the impugned Act is ultra vires. This Central Act was passed to provide for the regulation of mines and oil fields and for the development of minerals. It may be stated at this stage that by Act LXVII of 1957 which has been subsequently passed by Parliament, Act LIII of 1948 has now been limited only to oil fields. We are, however, concerned with the operation of the said Act in 1952, and at that time it applied to mines as well as oil fields. Section 2 of the Act contains a declaration as to the expediency and control by the Central Government. It reads thus: "It is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of mines and oil fields and the development of minerals to the extent hereinafter provided". It is common ground that at the relevant time this Act applied to coal mines. Section 4 of the Act provides that no mining lease shall be granted after the commencement of this Act otherwise than in accordance with the rules made under this Act. Section 5 empowers the Central Government to make rules by notification for regulating the grant of mining leases or for prohibiting the grant of such leases in respect of any mineral or in any area. Sections 4 and 5 thus 560 purport to prescribe necessary conditions in accordance with which mining leases have to be executed. This part of the Act has no relevance to our present purpose. Section 6 of the Act, however, empowers the Central Government to make rules by notification in the official gazette for the conservation and development of minerals. Section 6(2) lays down several matters in respect of which rules can be framed by the Central Government. This power is, however, without prejudice to the generality of powers conferred on the Central Government by section 6(1). Amongst the matters covered by section 6(2) is the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected. It is true that no rules have in fact been framed by the Central Government in regard to the levy and collection of any fees; but, in our opinion, that would not make any difference. If it is held that this Act contains the declaration referred to in Entry 23 there would be no difficulty in holding that the declaration covers the field of conservation and development of minerals, and the said field is indistinguishable from the field covered by the impugned Act. What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List I with respect to regulation and development under the control of the Union, and Entry 54 in List I requires a declaration by Parliament by law that regulation and development of mines should be under the control of the Union in public interest. Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if it contains the requisite declaration, then it would not be competent to the State Legislature to pass an Act in respect of the subject matter covered by the said declaration. In order that the declaration should be effective it is not necessary that rules should be made or enforced; all that this required is a declaration by Parliament that it is expedient in the public interest to take the regulation and development of mines under the control of the Union. In such a case the test must be whether the legislative declaration covers the field 561 or not. Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act LIII of 1948. It still remains to consider whether section 2 of the said Act amounts in law to a declaration by Parliament as required by article 54. When the said Act was passed in 1948 the legislative powers of the Central and the Provincial Legislatures were governed by the relevant Entries in the Seventh Schedule to the Constitution Act of 1935. Entry 36 in List I corresponds to the present Entry 54 in List I. It reads thus: "Regulation of Mines and Oil Fields and mineral development to the extent to which such regulation and development under Dominion control is declared by Dominion law to be expedient in public interest". It would be notic ed that the declaration required by Entry 36 is a declaration by Dominion law. Reverting then to section 2 of the said Act it is clear that the declaration contained in the said section is put in the passive voice; but in the context there would be no difficulty in holding that the said declaration by necessary implication has been made by Dominion law. It is a declaration contained in a section passed by the Dominion Legislature ' and so it is obvious that it is a declaration by a Dominion law; but the question is: Can this declaration by a Dominion law be regarded constitutionally as declaration by Parliament which is required by Entry 54 in List I. It has been urged before us by the learned Additional Solicitor General and Mr. Amin that in dealing with this question we should bear in mind two general considerations. The Central Act has been continued under article 372(1) of the Constitution as an existing law, and the effect of the said constitutional provision must be that the continuance of the existing law would be as effective and to the same extent after the Constitution came into force as before. It is urged that after the said Act was passed and before the Con stitution came into force no Provincial Legislature could have validly made a law in respect of the field covered by the said Act, and it would be commonsense to assume that the effect of the continuance of the 562 said law under article 372(1) cannot be any different. In other words, if no Provincial Legislature could have trespassed on the field covered by the said Act before the Constitution, the position would and must be the same even after the Constitution came into force. It is also contended that for the purpose of bringing the provision of existing laws into accord with the provisions of the Constitution the President was given power to make by order appropriate adaptations and modifications of such laws, and the object of making such adaptations obviously was to make the continuance of the existing laws fully effective. It is in the light of these two general considerations, so the. argument runs, must the point in question be considered. The relevant clause in the Adaptation of Laws Order, 1950, on which reliance has been placed in support of this argument is el. 16 in the Supplementary Part of the said Order. This clause provides that subject to the provisions of this Order any reference by whatever form of words in any existing law to any authority competent at the date of the passing of that law to exercise any powers or authorities, or to discharge any functions, in any part of India shall, where a corresponding new authority has been constituted by or under the Constitution, have effect until duly repealed or amended as if it were a reference to that new authority. The petitioners contend that as a result of this clause the declaration made by the Dominion Legislature in section 2 of the Central Act must now be held to be the declaration made by Parliament. Is this contention justified on a fair and reasonable construction of the clause? That is the crux of the problem. In considering this question it would be relevant to recall the scheme of the Adaptation of Laws Order, 1950. It consists of Three Parts. Part 1 deals with the adaptation of Central Laws and indicates the adaptation made therein; Part 11 deals with the adaptation of Provincial Laws and follows the same pattern; and Part III is a Supplementary Part which contains provisions in the nature of supplementary provisions. A perusal of the clauses contained in Part 563 I would show that though some adaptation was made in Act LIII of 1948 it was not thought necessary to make an adaptation in section 2 of the said Act whereby the declaration implied in the said section has been expressly adapted into a declaration by Parliament. Now, the effect of el. 16 in substance is to equate an authority competent at the date of the passing of the existing law to exercise any powers or authorities, or to discharge any functions with a corresponding new authority which has been constituted by or under the Constitution. Reference to the authority in the con. text would suggest cases like reference to the Governor General eo nomine, or Central Government which respectively would be equated with the President or the Union Government. Prima facie the reference to authority would not include reference to a Legislature; in this connection it may be relevant to point out that article 372(1) refers to a competent Legislature as distinguished from other competent authorities. That is the first difficulty in holding that el. 16 refers to the Dominion Legislature and purports to equate it with the Parliament. It is clear that for the application of this clause it is necessary that a reference should have been made to the authority by some words whatever may be their form. In other words it is only where the existing law refers expressly to some authority that this clause can be invoked. It is difficult to construe the first part of this clause to include authorities to which no reference is made by any words in terms, but to which such reference may be implied; and quite clearly the Dominion Legislature is not expressly referred to in section 2. In construing the present clause we think it would be straining the language of the clause to hold that an authority to which no reference is made by words in any part of the existing law could claim the benefit of this clause. Besides, there is no doubt that when the clause refers to any authority competent to exercise any powers or authorities, or to discharge any functions, it refers to the powers, authorities or functions attributable to the existing law itself; that is to say, authorities 564 which are competent to exercise powers or to discharge functions under the existing laws are intended to be equated with corresponding new authorities. It is impossible to hold that the Dominion Legislature is an authority which was competent to exercise any power or to discharge any function under the existing law. Competence to exercise power to discharge functions to which the clause refers must inevitably be related to the existing law and not to the Constitution Act of 1935 which would be necessary if Dominion Legislature was to be included as an authority under this clause. The Constitution Act of 1935 had been repealed by the Constitution and it was not, and could not obviously be, the object of the Adaptation of Laws Order to make any adaptation in regard to the said Act. Therefore, the competence of the Dominion Legislature which flowed from the relevant provisions of the Constitution Act of 1935 is wholly outside this clause. We have carefully considered the arguments urged before us by the learned Additional Solicitor General and Mr. Amin but we are unable to hold that cl. 16 can be pressed into service for the purpose of supporting the conclusion that the declaration by the Dominion Legislature implied in section 2 of Act LIII of 1948 can, by virtue of cl. 16, be held to be a declaration by Parliament within the meaning of the relevant Entries in the Constitution. If that be the true position then the alternative challenge to the vires of the Act based on el. 16 of the Adaptation of Laws Order must fail. There is another possible argument which may prima facie lead to the same conclusion. Let us assume that the result of reading article 372 and cl. 16 of the Adaptation of Laws Order is that under section 2 of Act LIII of 1948 there is a declaration by Parliament as suggested by the petitioners and the learned Additional Solicitor General. Would that meet the requirements of Entry 54 in List I of the Seventh Schedule? It is difficult to answer this question in the affirmative because the relevant provisions of the Constitution are prospective and the declaration by Parliament specified by Entry 54 must be declaration made by 565 Parliament subsequent to the date when the Constitution came into force. Unless a declaration is made by Parliament after the Constitution came into force it will not satisfy the requirements of Entry 54, and that inevitably would mean that the impugned Act is validly enacted under Entry 23 in List II of the Seventh Schedule. If that be the true position then it would follow that even on the assumption that el. 16 of the Adaptation of Laws Order and article 372 can be construed as suggested by the petitioners the impugned Act would be valid. Faced with this difficulty, both the learned Additional Solicitor General and Mr. Amin argued that cl. 21 of the said Order may be of some assistance. Clause 21 reads thus: "Any Court, Tribunal, or authority required or empowered to enforce any law in force in the territory of India immediately before the appointed day shall, notwithstanding that this Order makes no provision or insufficient provision for the adaptation of the law for the purpose of bringing it into accord with the provisions of the Constitution, construe the law with all such adaptations as are necessary for the said purpose". Assuming that this clause is valid we do not see how it is relevant in the present case. All that this clause purports to do is to empower the Court to construe the law with such adaptations as may be necessary for the purpose of bringing it in accord with the provisions of the Constitution. There is no occasion to make any adaptation in construing Act LIII of 1948 for bringing it into accord with the provisions of the Constitution at all. The said Act has been continued under article 372(1) and there is no constitutional defect in the said Act for the avoidance of which any adaptation is necessary. In fact what the petitioners seek to do is to read in section 2 of the said Act the declaration by Parliament required by Entry 54 so as to make the impugned Act ultra vires. Quite clearly cl. 21 cannot be pressed into service for such a purpose. Therefore, we reach this position that the field covered by Act LIII of 1948 is substantially the same as the field covered by the 72 566 impugned Act but the declaration made by section 2 of the said Act does not constitutionally amount to the requisite declaration by Parliament, and so the limitation imposed by Entry 54 does not come into operation in the present case. Act LIII of 1948 continues in operation under article 372; with this modification that so far as the State of Orissa is concerned it is the impugned Act that governs and not the Central Act. Article 372(1) in fact provides for the continuance of the existing law until it is altered, repealed or amended by a competent Legislature or other competent authority. In the absence of the requisite parliamentary declaration the legislative competence of the Orissa Legislature under Entry 23 read with Entry 66 is not impaired, and so the said Legislature is competent either to repeal, alter or amend the existing law which is the Central Act LIII of 1948; in effect, after the impugned Act was passed, so far as Orissa is concerned the Central Act must be deemed to be repealed. This position is fully consistent with the provisions of article 372. The result is that the material words used in cls. 16 and 21 being unambiguous and explicit, it is difficult to give effect to the two general considerations on which reliance has been placed by the petitioners. Incidentally the present case discloses that in regard to the requisite parliamentary declaration prescribed by Entry 54 in List I in its application to the pre Constitution Acts under corresponding Entry 36 in List I of the Constitution Act of 1935, there is a lacuna which has not been covered by any clauses of the Adaptation of Laws Order; that, however, is a matter for Parliament to consider. There is one more point which is yet to be considered. Mr. Amin contends that Entry 23 in List II is subject to the provisions in List I with respect to regulation and development under the control of the Union, and according to him Entry 52 in List I is one of such provisions. In this connection he relies on the said Entry which deals with industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest, and Industries (Development and Regulation) Act, 1951 (LXV 567 of 1951). This Act has been passed to provide for the development and regulation of certain industries one of which undoubtedly is coal mining industry. Section 2 of this Act declares that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. This declaration is a declaration made by Parliament, and if the provisions of the Act read with the said declaration covered the same field as is covered by the impugned Act, it would undoubtedly affect the vires of the impugned Act; but in dealing with this question it is important to bear in mind the doctrine of pith and substance. We have already noticed that in pith and substance the impugned Act is concerned with the development of the mining areas notified under it. The Central Act, on the other hand, deals more directly with the control of all industries including of course the industry of coal. Chapter II of this Act provides for the constitution of the Central Advisory Council and Development Councils, chapter III deals with the regulation of scheduled industries, chapter IIIA provides for the direct management or control of industrial undertakings by Central Government in certain cases, and chapter IIIB is concerned with the topic of control of supply, distribution, price, etc, of certain articles. The last chapter deals with miscellaneous incidental matters. The functions of the Development Councils constituted under this Act prescribed by section 6(4) bring out the real purpose and object of the Act. It is to increase the efficiency or productivity in the scheduled industry or group of scheduled industries, to improve or develop the service that such industry or group of industries renders or could render to the community, or to enable such industry or group of industries to render such service more economically. Section 9 authorises the imposition of cess on scheduled industries in certain cases. Section 9(4) provides that the Central Government may hand over the proceeds of the cess to the Development Council there specified and that the Development Council shall utilise the said proceeds to achieve the objects mentioned in cls. (a) to (d). These 568 objects include the promotion of scientific and industrial research, of improvements in design and quality, and the provision for the training of technicians and labour in such industry or group of industries. It would thus be seen that the object of the Act is to regulate the scheduled industries with a view to improvement and development of the service that they may render to the society, and thus assist the solution of the larger problem of national economy. It is difficult to hold that the field covered by the declaration made by section 2 of this Act, considered in the light of its several provisions, is the same as the field covered by the impugned Act. That being so, it cannot be said that as a result of Entry 52 read with Act LXV of 1951 the vires of the impugned Act can be successfully challenged. Our conclusion, therefore, is that the impugned Act is relatable to Entries 23 and 66 in List II of the Seventh Schedule, and its validity is not impaired or affected by Entries 52 and 54 in List I read with Act LXV of 1951 and Act LIII of 1948 respectively. In view of this conclusion it is unnecessary to consider whether the impugned Act can be justified under Entry 50 in List II, or whether it is relatable to Entry 24 in List III and as such suffexs from the vice of repugnancy with the Central Act XXXII of 1947. The result is the petition fails and is dismissed with costs. WANCHOO, J. I have read the judgment just delivered by my learned brother Gajendragadkar J. and regret that I have not been able to persuade myself that the cess levied in this case on all extracted minerals from any mine in any mining area at a rate not exceeding five per centum of the value of the minerals at the pit 's mouth by the Orissa State Legislature under section 4 of the Orissa Mining Areas Development Fund Act, No. XXVII of 1952, (hereinafter called the Act) is a fee properly so called and not a duty of ex cise. The facts are all set out in the judgment just delivered and I need not repeat them. The scheme of the Act, as appears from section 3 thereof is to give power to the State Government, whenever it 569 thinks it necessary and expedient to provide amenities, like communications, water supply and electricity for the better development of any area in the State where , in any mine is situated or to provide for the welfare of residents or workers in any such area within. which persons employed in a mine or a group of mines reside or work, to constitute such an area to be a mining area for the purposes of the Act, to define the limits of the area, to include within such area any local area contiguous to the same and defined in the notification and to exclude from such area any local area comprised therein and defined in the notification. A notification under section 3 is made, after hearing objections from owners or lessees of mines. After such an area is con stituted under section 3, a cess is imposed under section 4 on all extracted minerals from any mine in any such area at the rate not exceeding five per centum of the value of the minerals at the pit 's mouth. The cess so collected is credited to a fund called the Orissa Mining Area Development Fund created under section 5 of the Act, besides other amounts with which we are not concerned in this case. The Fund is to be applied to meet expenditure incurred in connection with such measures, which in the opinion of the State Government, are necessary or expedient for providing amenities like communications, water supply and electricity, for the better development of mining areas and to meet the welfare of labour and other persons residing or working in the mining areas. Then come other provisions for working out the above provisions including section 8, which gives power to the State Government to frame rules to carry. into effect the purposes of the Act. The Rules were framed under the Act in January, 1955. The constitutional competence of the Orissa State Legislature to levy the cess under the Act is attacked on two main grounds. In the first place, it is urged that the cess is in pith and substance a duty of excise under item 84 of List I of the Seventh Schedule and therefore the levy of such a cess is beyond the competence of the Orissa State Legislature. In the second place, it is urged that even if the cess is a fee, in view 570 of the two Acts of the Central Legislature and Parliament, namely, The Mines and Minerals (Regulation and Development) Act, No. LIII of 1948 and The Industries (Development and Regulation) Act, No. LXV of 1951, the Orissa Legislature was not competent to pass the Act. The petition has been opposed on behalf of the State of Orissa and the main contentions urged on its behalf are that the cess is a fee properly so called and not a duty of excise and therefore the Orissa State Legislature was competent to levy it and the two Central Acts do not affect that competence. In the alternative it has been urged that even if the cess is a tax the State Legislature was competent to levy it under item 50 of List If of the Seventh Schedule. The first question therefore that falls for consideration is whether the cess in this ' ease is a tax or a fee. Difference between a tax properly so called and a fee properly so called came up for consideration before this Court in three cases in 1954 and was considered at length. In the first of them, namely, The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt it was pointed out that "though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself". It was also pointed that "the essence of a tax is compulsion, that is to say, it is imposed under statutory power without the taxpayer 's consent and the payment is enforced by law. The second characteristic of a tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when (1) ; 571 collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the tax payer and the public authority. Another feature of taxation is that as it is a part of the common burden, quantum of imposition upon the tax payer depends generally upon his capacity to pay. " As to fees, it was pointed out that "a 'fee ' is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. " Finally, it was pointed out that "the distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege. . . Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives. " The consequence of these principles was that "if, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision be co related to the expenses incurred by Government in rendering the services. . . If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax." Having laid down these principles, that case then considered the vires of section 76 of the Madras Hindu Religious and Charitable Endowments Act, No. XIX of 1951, and it was pointed out that the material fact which negatived the theory of fees in that case was that the money raised by levy of the contribution was not ear marked or specified for defraying the expenses 572 that the Government had to incur in performing the services. All the collections went to the consolidated fund of the State and all the expenses had to be met not out of those collections but out of the general revenues by a proper method of appropriation as was done in the case of other government expenses. That in itself might not be conclusive, but in, that case there was total absence of any co relation between the expenses incurred by the Government and the amount raised by contribution under the provision of section 76 and in those circumstances the theory of return or counter payment or quid pro quo could not have any possible application to that case. Consequently, the contribution levied under section 76 was held to be a tax and not a fee. In the second case of Mahant Sri Jagannath Ramanuj Das vs The State of Orissa (1), a similar imposition by the Orissa Legislature came up for consideration. After referring to the earlier case, it was pointed out that "two elements are thus. essential in order that a payment may be regarded as a fee. In 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 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." The Orissa imposition was held to be a fee because the collections made were not merged in the general public revenue and were meant for the purpose of meeting the expenses of the Commissioner and his office which was the machinery set up for due administration of the affairs of the religious institution. They went to constitute a fund which was contemplated by section 50 of the Orissa Act and this fund was specifically set apart for rendering services involved in carrying out the provisions of the Act. The third case, namely, Ratilal Panachand Gandhi (1) ; 573 vs The State of Bombay (1) came from Bombay. 58 of the Bombay Act, No. XXIX of 1950, provided for an imposition in proportion to the gross annual income of the trust. This imposition was levied for the purpose of due administration of the trust property and for defraying the expenses incurred in connection with the same. After referring to the two earlier cases, the Court went on to say that "taxis a common burden and the only return which the taxpayer gets is 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 the payments are demanded. Thus in fees there is always an element of quid pro quo which is absent in a tax. . But in order that the collections made by the Government can rank as fees, there must be co relation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. " It was then pointed out that the contributions, which were collected under section 58, were to be credited in the Public Trusts Administration Fund as constituted under section 57. This fund was to be applied exclusively for the payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. The imposition therefore was in that case held to be a fee. These decisions clearly bring out the difference between a tax and a fee and generally speaking there is always an element of quid pro quo in a fee and the amount raised through a fee is co related to the expenses necessary for rendering the services which are the basis of quid pro quo. Further, the amount collected as a fee does not go to augment the general revenues of the State and many a time a special fund is created in which fees are credited though this is not absolutely necessary. But as I read these deci sions, they cannot be held to lay down that 'What is in pith and substance a tax can become a fee merely (1) [1954] S.C.R. 1055. 574 because a fund is created in which collections are credited and some services may be rendered to the persons from whom collections are made. If that were so, it will be possible to convert many taxes not otherwise leviable into fees by the device of creating a special fund and attaching some service to be rendered through that fund to the persons from whom collections are made. I am therefore of opinion that one must first look at the pith and substance of the levy, and if in its pith and substance it is not essentially different from a tax it cannot be converted into a fee by creating a special fund in which the collections are credited and attaching some services to be rendered through that fund. Let me then look at the pith and substance of the cess, which has been imposed in this case. The cess consists of a levy not exceeding five per centum of the value of the minerals at the pit 's mouth on all extracted minerals. Prima facie such a levy is nothing more nor less than a duty of excise. Item 84 of List I gives power to levy duties of excise exclusively to the Union and is in these terms : "Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry. " This item gives power to Parliament to impose duties of excise on all goods manufactured. or produced in India with certain exceptions mentioned therein. Taking this particular case, coal is produced from the mine and would clearly be covered by the words " other goods produced in India" and a duty of excise can be levied on it. What then exactly is meant by a duty of excise? Reference in this connection may be made to Governor General in Council vs Province of Madras (1). In that case the point arose whether the sales tax imposed by the Madras Legislature was a duty of excise. The Privy Council pointed out that (1) (1945) L.R. 72 I.A. 91. 575 "in a Federal constitution in which there is a division of legislative powers between Central and Provincial legislatures, it appears to be inevitable that controversy should arise whether one or other legislature is not exceeding its own, and encroaching on the other 's, constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its 'pith and substance ' as it has sometimes been said which must determine into what category it falls. " The Privy Council went on to consider what a duty of excise was and said that "it is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods not on sales or the proceeds of sale of goods. Though sometimes a duty of excise may be imposed on first sales, a duty of excise and a tax on the sale of goods were separate and distinct imposts and in law do not overlap." The Privy Council approved of the decisions of the Federal Court in re The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (1) and The Province of Madras vs Messrs. Boddu Paidanna and Sons (2). It seems to have been urged that because in some cases a duty of excise may be levied on the occasion of the first sale and a sales tax may also be levied on the same occasion, there is really no difference between the two. It is however clear that a duty of excise is primarily a tax on goods manufactured or produced; it is not a tax on the sale of goods, though the taxing authority may as a matter of concession to the producer not charge the tax immediately the goods are produced and may postpone it, to make it easy for the producer to pay the tax, till the first sale is made by him; nevertheless the charge is still on the goods and is therefore a duty of excise. On the other hand, a sales tax can only be levied when a sale is made and there is nothing to prevent its levy on the first sale. The two concepts (1) (2) (1948) F.C.R. go. 576 are however different and, as the Privy Council pointed out, a sales tax and a duty of excise are separate and distinct imposts and in law do not overlap. The pith and substance of a duty of excise is that it is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. Let me therefore see what the Orissa Legislature has done in the present case. It has levied a cess at a rate not exceeding five per centum on the value of minerals at the pit 's mouth on all extracted minerals. All the extracted minerals are nothing other than goods produced and the cess is levied on the goods produced at a rate not exceeding five per centum of the value at the pit 's mouth. The cess therefore in the present case cannot be anything other than a duty of excise. The pith and substance of the cess in this case falls fairly and squarely within entry 84 of List I and is therefore a duty of excise, which cannot be levied by the Orissa State Legislature. I may in this connection refer to the cesses levied by the Central Legislature and Parliament by Act XXXII of 1947 and by the Act No. LXV of of Act XXXII of 1947 lays down that there shall be levied and collected as a cess for the purposes of that Act a duty of excise on all coal and coke dispatched from collieries at such rate not less than four annas and not more than eight annas per ton as may from time to time be fixed by the Central Government by notification in the Official Gazette. This is obviously a tax on the goods produced, the basis of the tax being so much per ton. Again sec. 9 of Act LXV of 1951 lays down that there may be levied and collected as a cess for the purposes of that Act on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by the Central Government by notified order a duty of excise at a rate not exceeding two annas per centum of the value of the goods. This again is clearly a tax on goods produced or manufactured and is in the nature of a duty of excise, the basis of the tax being so much of the value of the goods. If these two taxes are duties of excise, 577 I fail to see any difference in pith and substance between these two taxes and the cess levied under the Act. It is however urged that the method employed in the Act for realising the cess is only a method of quantification of the fee and merely because of this quantification, the pith and substance of the impost does not change from a fee to a duty of excise. Reference in this connection was made to three cases of quantification. In Sir Byramjee Jeejeebhoy vs The Province of Bombay (1), a question arose with respect to a tax imposed on urban immovable property, whether it was a tax on lands and buildings. The challenge to the tax was on the ground that it was tax on income or capital value within items 54 and 55 of List I of the Seventh Schedule of the Government of India Act and could not therefore be imposed by the Bombay Legislature. It was held that the tax was a tax on lands and buildings within the meaning of item 42 of List II of the same Schedule and that the basis of the tax, which was the annual value, would not convert it into a tax on income or capital value. The High Court considered the pith and substance of the said Act and came to the conclusion that every tax on annual value was not necessarily a tax on income and it was held that the mode of assessment of a tax did not determine its character and one has to look to the essential character of the tax to decide whether it was a tax on income or on lands and buildings. Looking to the pith and substance of the tax it was held in that case that it was a tax on lands and buildings. That decision was in the circumstances of that case right because the intention of the legislature was not to tax the income of any one; the essential character of the tax in that case was to tax the lands and buildings and the annual value of the lands and buildings was only taken as a mode of levying the tax. In the present case, however, the very mode of the levy of the cess is nothing other than the levy of a duty of excise and therefore the principle of quantification for purposes of a fee cannot be extended to (1) I.L.R. 578 such an extent as to convert what is in pith and substance a tax into a fee on that basis. The next case to which reference was made is Municipal Corporation, Ahmedabad vs Patel Gordhandas Hargovandas (1). In that case the Ahmedabad Bo. rough Municipality had levied a rate on open lands and the basis of the levy was one per centum of the capital value of the land. It was urged that this amounted to a capital levy within entry 54 of List I; but the court repelled that contention and held that the levy was in pith and substance a tax on lands, which came within entry 42 of List II of the Seventh Schedule to the Government of India Act. A distinction was made between a tax on land which is levied on the basis of its capital value and a tax which is on capital treating it as an asset itself. This decision also, if I may say so with respect, is correct, for the basic idea was to tax lands and some method had to be found for doing so and the method evolved, though it might look like a capital levy, was in pith and substance not so. But the theory of quantification which is the basis of these two cases cannot be stretched so far as to turn levies which are in pith and substance taxes into fees, by the process of attaching certain services and creating a fund. The third case is Ralla Ram vs The Province of East Punjab (2). That was a case of a tax on lands and buildings and annual value was the basis on which the tax was levied. The Federal Court rightly pointed out that the pith and substance of the levy had to be seen and on that view it was not income tax but a tax on lands and buildings and the method adopted was merely a method of quantification. The Federal Court also pointed out that "where there is an apparent conflict between an Act of the Federal Legislature and an Act of the Provincial Legislature, we must try to ascertain the pith and substance or the true nature and character of the conflicting provisions and that before an Act is declared ultra vires, there should be an attempt to reconcile the two conflicting jurisdictions, and, only if such a reconciliation should prove (1) I.L.R. (2) 579 impossible, the impugned Act should be declared invalid. " It may also be pointed out that in all these three cases, one source of income of an individual or one item out of the total capital of an individual was the basis of calculation while income tax or capital levy is generally on the total income or the total capital of a person. That aspect must have gone into the decision that the method employed was merely a mode for imposing a tax on lands and buildings. In the present case, however, I see no difference between the method of imposing a duty of excise and the method employed in the Act for imposing a cess a matter which will be clear from the cesses imposed under the two Central Acts already referred to (No. XXXII of 1947 and No. LXV of 1951). It is not as if there could be no method of imposing a fee properly so called in this case except the one employed. Two methods readily suggest themselves. A lump sum annual fee could be levied on each mine even on a graded scale depending on the size of the mine as evidenced by its share capital. Or a similar graded fee could be levied on each mine depending on its size determined by the number of men employed therein. Where therefore the result of quantification is to bring a particular impost entirely within the ambit of a tax it would not be right to say that such an impost is still a fee, because certain services have to be rendered and a fund has been created in which collections of the impost are credited. If this were permissible many taxes not otherwise leviable would be converted into fees by the simple device of creating a special fund and attaching certain services to be rendered from the amount in that fund. That would in my opinion be a colourable exercise of the power of legislation, as explained in K. C. Gajapati Narayan Deo vs The State of Orissa (1). Let me illustrate how taxes can be turned into fees on the so called basis of quantification with the help of the device of creating a fund and attaching certain services to be rendered out of monies in the fund. Take the case of income tax under item 82 of List I of the Seventh Schedule, which is exclusively reserved (1) ; 580 for the Union. Suppose that some State Legislature wants to impose a tax on income other than agricultural income in the garb of fees. All that it has to do is then to create a special fund out of the amounts collected and to attach rendering of certain services to the fund. All that would be necessary would be to define the services to be rendered so widely that the amount required for the purpose would be practically limitless. In that case there would be no difficulty in levying any amount of tax on income, for the amount collected would always be insufficient for the large number of services to be rendered. What has to be done is to find out a number of items in Lists II and III of the Seventh Schedule in respect of which fees can be levied by the State Legislature. These fees can be levied on a total basis for a large number of services under various entries of Lists II and III. A fund can be created, say, for rendering services of various kinds to residents of one district. In order to meet the expenses of tendering such services, suppose, the legislature imposes a tax on every one in the district at 10 per centum of the net total income (other than agricultural income); the amount so collected is put in a separate fund and ear marked for such special services to be rendered to the residents of that district. Can it be said that such a levy is a fee justified under various entries of Lists II and III, and not a tax on income, on the ground that this is merely a mode of quantification? As an instance, take, item 6 of List II, "Public health and sanitation, hospitals and dispensaries"; item 9, "Relief of the disabled and unemployable"; item II, Education; item 12, Libraries, museums and similar institutions"; item 13, communications, that is to say, roads, bridges and other means of communications; item 17, "Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power"; and item ', 25, "Gas and gas works"; item 23 of List III, "Social security and social insurance, employment and unemployment"; item 24, "Welfare of labour including conditions of work, provident funds, employers ' liability workmen 's compensation, invalidity and old age 581 pensions and maternity benefits"; item 25, "Vocational and technical training of labour"; and item 38, "Electricity". Assume that a fund is created for rendering, these services to the residents of a district. The State Legislature is entitled to impose fees for rendering these services to the residents of the district; the costs of these services would obviously be limitless and in order to meet these costs, the State legislature levies a consolidated fee for all these purposes at 10 per centum of the total net income on the residents of the district (excluding his agricultural income) as a measure of quantification of the fee. Can it be said in the circumstances that such a levy would not be Income tax, simply because a fund is created to be used in the district where collections are made and these services have to be rendered out of the fund so created to the residents of that district and to no others? The answer can only be one, viz., that the nature of the impost is to be seen in its pith and substance; and if in pith and substance it is income tax within item 82 of List I of the Seventh Schedule it will still remain income tax in spite of the creation of a fund and the attaching of certain services to the monies in that fund to be rendered in a particular area. Such an impost can never be justified as a consolidated fee on the ground that it is merely a method of quantification. Compare what has been done in this case. Sec. 3 of the Act which refers to the services to be rendered mentions communications, that is,, roads, bridges and other means of communication (barring those given in List I), water supply and electricity, for the better development of the area. These three items themselves would mean expenditure of such large amounts that anything could be charged as a fee to meet the costs, particularly in an undeveloped State like Orissa. Further, the section goes on to mention provision for the welfare of residents or workers in any such area, which would include such things as social security and social insurance, provident funds, employer 's liability, workmen 's compensation, invalidity and old age pensions and maternity benefits and may be even employment and unemployment. Again large funds would 74 582 be required for these purposes. Therefore, the services enumerated in section 3 being so large and requiring such large sums, any amount can be levied as a fee and in the name of quantification any tax, even though it may be in List I, can be imposed; and that is exactly what has been done, namely, what is really a duty of excise has been imposed as a fee for these purposes which fall under items 13 and 17 of List II and 23, 24 and 38 of List III. There can be no doubt in the circumstances that the levy of a cess as a fee in this case is a colourable piece of legislation. I do not say that the Orissa State Legislature did this deliberately. The motive of the legislature in such cases is irrelevant and it is the effect of the legislation that has to be seen. Looking at that, the cess in this case is in pith and substance nothing other than a duty of excise under item 84 of List I and therefore the State legislature was incompetent to levy it as a fee. The next contention on behalf of the State of Orissa is that if the cess is not justified as a fee, it is a tax under item 50 of List II of the Seventh Schedule. Item 50 provides for taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development. This raises a question as to what are taxes on mineral rights. Obviously, taxes on mineral rights must be different from taxes on goods produced in the nature of duties of excise. If taxes on mineral rights also include taxes on minerals produced, there would be no difference between taxes on mineral rights and duties of excise under item 84 of List I. A comparison of Lists I and II of the Seventh Schedule shows that the same tax is not put in both the Lists. Therefore, taxes on mineral rights must be different from duties of excise which are taxes on minerals produced. The difference can be understood if one sees that before minerals are extracted and become liable to duties of excise somebody has got to work the mines. The usual method of working them is for the owner of the mine to grant mining leases to those who have got the capital to work the mines. There should 583 therefore be no difficulty in holding that taxes on mineral rights are taxes on the right to extract minerals and not taxes on the minerals actually extracted. Thus tax on mineral rights would be confined, for example, to taxes on leases of mineral rights and on premium or royalty for that. Taxes on such premium and royalty would be taxes on mineral rights while taxes on the minerals actually extracted would be duties of excise. It is said that, there may be cases where the owner himself extracts minerals and does not give any right of extraction to somebody else and that in such cases in the absence of mining leases or sub leases there would be no way of levying tax on mineral right, ,. It is enough to say that these cases also, rare though they are, present no difficulty. Take the case of taxes on annual value of buildings. Where there is a lease of the building, the annual value is determined by the lease money; but there are many cases where owners themselves live in buildings. In such cases also taxes on buildings are levied on the annual value worked out according to certain rules. There would be no difficulty where an owner himself works the mine to value the mineral rights on the same principles on which leases of mineral rights are made and then to tax the royalty which, for example, the owner might have got if instead of working the mine himself he had leased it out to somebody else. There can be no doubt therefore that taxes on mineral rights are taxes of this nature and not taxes on minerals actually produced. Therefore the present case is not a tax on mineral rights; it is a tax on the minerals actually produced and can be no different in pith and substance from a tax on goods produced which comes under Item 84 of List I, as duty of excise. The present levy therefore under section 4 of the Act cannot be justified as a tax on mineral rights. In the view I have taken, it is not necessary to consider the other point, raised on behalf of the petitioners, namely, that even if it is a fee, in view of the two Central Acts (mentioned earlier) the, Orissa Legislature was not competent to pass the Act. I would 584 therefore allow the petition, and declare that the Orissa Mining Areas Development Fund Act, 1952, is beyond the constitutional competence of the Orissa Legislature to pass it. The whole Act must be struck down because there will be very little left in the Act if section 4 falls as it must. The legislature would never have passed the Act without section 4. By COURT. In accordance with the majority Judgment of the Court, the Writ Petition is dismissed with costs.

The petitioners challenged the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952, which by section 3 empowered the State Government to constitute mining areas for the purpose of providing them with certain amenities after hearing objections from the lessees, by section 4 to impose and collect a cess not exceeding 5% of the valuation of the minerals at the pit 's mouth and by section 5 created a fund to which the cess was to be credited. The petitioners ' case, inter alia, was that the impugned Act and the rules made thereunder were ultra vires the powers of the State Legislature, the cess levied thereunder was not a fee but a duty of excise on coal within Entry 84 of List I of the Seventh Schedule to the Constitution and repugnant to Coal Mines Labour Welfare Fund Act, 1947 (Act XXXII of 1947), and, alternatively, even supposing it was a fee relatable to Entries 23 and 66 of List II, it was hit by Entry 54 of List I read with the Mines and Minerals (Regulation and Development) Act 1948 (Act LIII of 1948), or by Entry 52 of List I read with the Industries (Development and Regulation) Act, 1951 (Act LXV of 1951). It was urged on behalf of the State, inter alia, that the cess was a fee and not a duty of excise and the competence of the State Legislature to levy it was not affected by the Central Acts. Held (per Gajendragadkar, Sarkar, Subba Rao and Mudholkar, JJ.), that the cess imposed by the Act was a fee relatable to Entries 23 and 66 of List II of the Seventh Schedule to the Constitution and the Constitutional validity of the impugned Act was beyond question. Although there can be no generic difference between a tax and a fee since both are compulsory exactions of money by public authorities, there is this distinction between them that whereas a tax is imposed for public purposes and requires no consideration to support it, a fee is levied essentially for services rendered and there must be an element of quid pro quo between the person 538 who pays it and the public authority that imposes it. While a tax invariably goes into the consolidated fund, a fee is earmarked for the specified services in a fund created for the purpose. Whether a cess is one or the other would naturally depend on the facts of each case. If in the guise of a fee, the Legislature imposes a tax, it is for the Court on a scrutiny of the scheme of the levy, to determine its real character. The distinction is recognised by the Constitution which while empowering the appropriate Legislatures to levy taxes under the Entries in the three lists refers to their power to levy fees in respect of any such matters, except the fees taken in court, and tests have been laid down by this Court for determining the character of an impugned levy. Matthews vs Chicory Marketing Board, ; , The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; , Mahant Sri Jagannath Ramanuj Das & Any. vs The State of Orissa, ; , and Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, referred to. P. P. Kutti Keva & Ors. vs The State of Madras, A.I.R. , Attorney General for British Columbia vs Esquimalt and Nanaimo Railway Co., and Parton & Any. vs Mils Board (Victoria), (1949) 80 C.L.R. 229, considered and held inapplicable. In determining whether a levy is a fee the true test must be whether its primary and essential purpose is to render specific services to a specified area or class, it being of no consequence that the State may ultimately and indirectly be benefited by it. So judged, the scheme of the impugned Act leaves no manner of doubt that the levy authorised by it is a fee and not a tax. The amount of the levy must depend on the extent of the services sought to be rendered and if they are proportionate, it would be unreasonable to say that since the impost is high it must be a duty of excise. The rate specified by section 4(2) of the Act, therefore, cannot by itself alter the character of the levy and constitute a trespass by the State Legislature on the legislative powers of the Parliament under Entry 84 of the List I. Nor can the method prescribed by the Legislature for re covering the levy by itself alter its character. The method is a matter of convenience and, though relevant, has to be tested in the light of other relevant circumstances. It is not permissible to challenge the vires of a statute relatable to an Entry in List II solely on the ground that the method adopted for the recovery of the impost can and generally is adopted in levying a duty of excise. Ralla Ram vs The Province of East Punjab, , Byramjee Jeejeebhoy vs The Province of Bombay & Anr. I.L.R. 539 and Governor General in Council vs Province of Madras, (1945) 'L.R. 72 I.A. 91, considered. The limitation imposed by the latter part of Entry 23 of List II is a limitation on the legislative competence of the State ' Legislature itself and the test whether a statute passed by the State Legislature thereunder was ultra vires would be whether the requisite declaration under Entry 54, List I, has been made by Parliament by law covering the same field or not; it is not necessary in order to make the declaration effective that rules should also be made and enforced. Although by operation of article 372 of the Constitution Act LIII of 1948 was an existing Act substantially covering the same field as covered by the impugned Act, there was no adaptation of section 2 of that Act whereby a declaration implied by it could be said to have been adapted to a declaration by Parliament. Clause 16 of the Adaptation of Laws Order, 1950, properly construed, cannot be held to refer to the Dominion Legislature and equate it with the Parliament. It can be resorted to only where the existing law expressly refers to some authority that can be equated with the corresponding new authorities. Since the Dominion Legislature was not so referred to, its competence under the Constitution Act of 1935, repealed by the Constitution of India, was clearly outside the clause. Nor can Cl. 21 of the order be of any help to the petitioners. Consequently, in the absence of the requisite Parliamentary declaration, the competence of the Orissa State Legislature under Entry 23 read with Entry 66 of the List II was not impaired and the impugned Act must be deemed to have repeal ed the Central Act, so far as that State was concerned. This case incidentally discloses that in regard to the requisite Parliamentary declaration prescribed by Entry 54 in List I in its application to the pre constitution Acts under corresponding Entry 36 in List I of the Constitution Act of 1935, there is a lacuna which has not been covered by any clauses of the Adaptation of Laws Order, 1950. Nor was the impugned Act ultra vires the State Legislature by operation of Entry 52 of List I read with section 2 of the Industries (Development and Regulation) Act, 1951 (LXV of 1951). That Act, in pith and substance, deals more directly with the control of certain specified industries including the coal industry, while the impugned Act is concerned with the development of the mining areas notified under it. The field covered by the two Acts was not, therefore, the same. per Wanchoo, J. In order to determine whether a levy is a tax or a fee, what has to be considered is the pith and sub stance of the levy. Where the levy in pith and substance is not essentially different from a tax, it cannot be converted into a fee by crediting it to a special fund and attaching certain services to it. 540 The Commissioner, Hindu Religious Endowments, Madras, vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; , Mahant Sri Jaannath Ramanuj Das vs The State of Orissa, ; and Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, discussed. A duty of excise in pith and substance is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is different and distinct from a sales tax and in law they do not overlap. Governor General in Council vs Province of Madras, 72 I.A. 91, referred to. What the impugned Act did was to provide for the levying of the cess on the goods produced at a rate not exceeding five per centum of the value at the pit 's mouth. The cess was, therefore, in pith and substance a duty of excise falling within Entry 84 of List I, which the State legislature could not levy. It was not correct to say that the method employed by the impugned Act for realising the cess was a mere method of quantification and did not affect its character which was that of a fee. In the present case the very mode of the levy of the cess is nothing other than the levy of a duty of excise, and, therefore, the principle of quantification for purposes of a fee could not be so extended as to convert what was in pith and substance a tax into a fee. Sri Byramjee Jeejeebhoy vs The Province of Bombay, I.L.R. , Municipal Corporation, Ahmedabad vs Patel Gor dhandas Hargovandas, I.L.R. and Ralla Ram vs The Province of East Punjab, , considered. K. C. Gajapati Narayan Deo vs The State of Orissa, ; , referred to. The cess levied under section 4 of the Act could not be justified as a tax on mineral rights under Entry 50 of List II of the Seventh Schedule and the impugned Act was in effect a colourable piece of legislation.

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Appeal No. 270 of 1959. Appeal by special leave from the judgment and order dated December 23, 1957, of the Allahabad High Court (Lucknow Bench) at Lucknow in Civil Miscellaneous Application (0. J.) No. 86 of 1954. C. B. Aggarwala, G. C. Mathur and C. P. Lal, for the appellants. Achhru Ram, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent. November, 25. The Judgment of Sarkar, Subba Rao and Mudholkar, JJ., was delivered by Subba Rao, J., and that of Gajendragadkar and Wanchoo, JJ., was delivered by Wanchoo, J. SUBBA RAO, J. This is an appeal by special leave against the judgment and order of the High Court of Judicature at Allahabad, Lucknow Bench, allowing the petition filed by the respondent under article 226 of the Constitution. The facts are in a small compass and may be briefly stated. In the year 1933 the respondent was appointed a constable in U. P. Police Force; on December 1, 1945, he was promoted to the rank of head constable and in May, 1952 he was posted as officer incharge of Police Station, Intiathok, District Gonda. Complaints were received by the District Magistrate, Gonda, to the effect that the respondent was receiving bribes in the discharge of his duties. On September 16, 1952, the District Magistrate, Gonda, directed the Sub Divisional Magistrate to make an enquiry in respect of the 674 said complaints. On November 3,1952, the Sub Divisional Magistrate, after making the necessary enquiries, submitted a report to the District Magistrate recommending the transfer of the respondent to some other station. On November 17, 1952, the District Magistrate sent an endorsement to the Superintendent of Police to the effect that the Sub Divisional Magistrate had found substantial complaints against the integrity of the respondent, that he had also received such complaints and that his general reputation for integrity was not good, but that his transfer should, however, come after sometime and that in the meantime his work might be closely watched. On being called upon by the Superintendent of Police to submit an explanation for his conduct, the respondent submitted his explanation on November 29, 1952. On December 17, 1952, the respondent was forced to go on leave for two months. Before the expiry of his leave, he was reverted to his substantive post of head constable and transferred to Sitapur. On February 17, 1953, he was promoted to the rank of officiating Sub Inspector and posted as Station Officer at Sidholi. On February 27, 1953, the Superintendent of Police made the following endorsement in his character roll: "A strong officer with plenty of push in him and met with a strong opposition in this new charge. Crime control was very good but complaints of corruption were received which could not be substantiated. Integrity certified. " Meanwhile on further complaints, the C.I.D. probed the matter further and on July 26, 1953, the Superintendent of Police, Investigation Branch, C.I.D., reported that the respondent was a habitual bribetaker. On July 28, 1953, he was placed under suspension and on August 18, 1953, he was charged under section 7 of the Police Act with remissness in the discharge of his duty and unfitness for the same inasmuch as while posted as a Station Officer, Police Station, Intiathok, he had been guilty of dishonesty, corruption and misbehaviour in that he had on nine occasions, particulars of which were given in the charge, accepted bribes. it may be mentioned that the magisterial inquiry 675 related to seven of the nine charges alleged against the respondent. The trial was conducted by the, Superintendent of Police and the respondent submitted his explanation on September 12, 1953. The Superintendent of Police, who conducted the trial, examined many witnesses and found that seven out of the nine charges had been established. Thereafter he issued a notice to the respondent calling upon him to show cause why he should not be dismissed from the police force. On February 20, 1954, the respondent sub mitted his explanation and the Superintendent of Police, by his order dated February 22, 1954, dismissed the respondent from service with effect from the said date. The appeal preferred by the respondent to the Deputy Inspector General of Police was dismissed by his order dated June 2, 1954. Thereafter the respondent on August 5, 1954, filed a petition under article 226 of the Constitution before the High Court of Judicature at Allahabad, Lucknow Bench, for quashing the order of dismissal. Before the High Court three points were raised, namely, (1) as the petitioner was officiating. as Sub Inspector of Police at the time of the departmental trial the Suprintendent of Police had no power to dismiss him, since an order in such circumstances could only be made by a police officer senior in rank to a Superintendent; (2) the trial was vitiated by a number of serious irregularities; and (3) the specific acts with which the petitioner was charged were cognizable offences and, therefore, the Superintendent of Police had no jurisdiction to proceed with a departmental trial without complying with the provisions of subparagraph (1) of para. 486 of the Police Regulations. The learned Judges of the High Court held that the respondent was charged with committing cognizable offences and therefore sub paragraph (1) of para. 486 governed the situation and that, as no case, as required by the said sub paragraph, was registered against the respondent in the police station, the order of dismissal was invalid. They further held that the case was not covered by the first proviso to sub paragraph (1) of para. 486, as, in their opinion, the information 676 about the commission of the offences was not in the first instance received by the Magistrate and forwarded to the police for inquiry. In view of that finding they found it unnecessary for them to express any opinion upon other arguments which had been advanced on behalf of the respondent. In the result they issued a writ in the nature of certiorari quashing the impugned orders. Hence the appeal. Mr. C. B. Agarwala, learned counsel appearing for the appellants, raised before us the following points: (1) The Governor exercised his pleasure through the Superintendent of Police, and, as the Police Regulations were only administrative directions, the non compliance therewith would not in any way affect the validity of the order of dismissal. (2) If the order of dismissal was held to have been made under the statutory power conferred upon the Superintendent of Police, the regulations providing for investigation in the first place under chapter XIV of the Criminal Procedure Code were only directory in nature, and inasmuch as no prejudice was caused to the respondent the non compliance with the said regulations would not affect the validity of the order of dismissal. (3) The Superintendent of Police was authorized to follow the alternative procedure prescribed by subparagraph (3) of para. 486 and, therefore, the inquiry held without following the procedure prescribed by rule I was not bad. (4) As the magisterial inquiry was held in regard to practically all the charges, the subject matter of the departmental trial, the case is not covered by the provisions of para. 486 of the Police Regulations. In the case of The State of U. P. vs Babu Ram Upadhya (1) in which we have just delivered the judgment, we have considered the first three point; and for the reasons mentioned therein we reject the first three contentions. The appellants must succeed on the fourth contention. From the facts already narrated, the conduct of the respondent, when he was officer incharge of the Police Station, Intiathok, was the subject matter of (1) Civil Appeal No. 119 of 1950; ; 677 magisterial inquiry. The Sub Divisional Magistrate made inquiry in respect of seven of the charges which were the subject matter of the departmental trial and. submitted a report to the District Magistrate. The District Magistrate, in his turn, made an endorsement on the report and communicated the same to the Superintendent of Police recommending the transfer of the respondent and suggesting that in the meanwhile the work of the respondent might be closely watched. Though the Superintendent of Police gave at first a good certificate to the respondent, in respect of the same a further probe was made through the C.I.D. Thereafter the Superintendent of Police conducted a departmental trial in respect of the aforesaid seven charges and two other new charges of the same nature. The inquiry ended in the dismissal of the respondent. In the circumstances it would be hypertechnical to hold that there was no magisterial inquiry in respect of the matter which was the subject matter of the departmental trial. On the said facts we hold that the departmental inquiry was only a further step in respect of the misconduct of the respondent in regard whereto the magisterial inquiry was held at an earlier stage. If so, the question is whether para. 486 would govern the present inquiry or it would fall out side its scope. The relevant provisions of the Police Regulations read: Paragraph 486: "When the offence alleged against a police officer amounts to an offence only under s: 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code. In such cases, and in other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the following rules;" Paragraph 489: "A police officer may be departmentally tried under section 7 of the Police Act (1) after he has been tried judicially; (2) after a magisterial inquiry under the Criminal Procedure Code; 86 678 (3) after a police investigation under the Criminal Procedure Code or a departmental enquiry under paragraph 486 III above." A combined reading of these provisions indicates that para. 86 does not apply to a case where a magisterial inquiry is ordered; and that a police officer can be departmentally tried under section 7 of the Police Act after such a magisterial inquiry. In this case the departmental trial was held subsequent to the completion of the magisterial inquiry and therefore it falls within the express terms of para. 489(2). The fact that in the interregnum the police received further complaints or that the C.I.D. made further enquiries do not affect the question, if substantially the subject matter of the magisterial inquiry and the departmental trial is the same. In this case we have held that it was substantially the same and therefore the departmental trial was validly held. We, therefore, set aside the order made by the High Court. As we have pointed out earlier, the High Court, in the view taken by it, did not express its opinion on the other questions raised and argued before it. In the circumstances, we remand the matter to the High Court for disposal in accordance with law. The costs of this appeal will abide the result. WANCHOO, J. We have read the judgment just delivered by our learned brother Subba Rao J. We agree with the order proposed by him. Our reasons for coming to this conclusion are, however, the same which we have given in C.A. 119 of 1959, The State of Uttar Pradesh vs Babu Ram Upadhya. Appeal allowed. Case remanded.

The respondent was posted as officer incharge of a police station when complaints were received by the District Magis trate that the respondent was receiving bribes. The District Magistrate got an enquiry made by the Sub Divisional Magistrate and forwarded the report toghether with his own endorsement to the Superintendent of Police. The respondent was forced to go on 2 months leave and was reverted to his substantive post of Head Constable, but later he was promoted to the rank of officiating Sub Inspector and posted at another police station. Meanwhile on further complaints an investigation was made and it was reported that the respondent was a habitual bribe taker. He was charged under section 7 Police Act for 9 charges of bribery and after departmental trial was dismissed by the Superintendent of Police. He filed a Writ Petition before the High court challenging the order of dismissal inter alia on the ground that the offences charged being cognizable offences the Superintendent of Police had no jurisdiction to hold the departmental trial without first complying with the provisions of para. 486(1) of the U. P. Police Regulations. The High Court accepted this contention and quashed the order of dismissal. 673 Held (per Sarkar, Subba Rao and Mudholkar, JJ.) that the subject matter of the magisterial enquiry and of the depart mental trial was substantially the same and that the depart 'I mental trial was validly held. The fact that there was an interregnum between the magisterial enquiry and the departmental trial did not affect the question. Paragraph 486 did not apply to a case where a magisterial enquiry was ordered and a police officer could be departmentally tried under section 7 Police Act after such magisterial enquiry. Per Gajendragadkar and Wanchoo, JJ. The provisions of para. 486 were merely directory and even if there was non compliance therewith the order of dismissal was not invalidated.

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Criminal Appeal No. 173/1956. Appeal from the judgment and order dated May 23, 1956, of the Punjab High Court in Criminal Revision No. 1058/1954. K. L. Arora, for the appellant. N. section Bindra and R. H. Dhebar, for the respondent. November 11. The Judgment of the Court was delivered by AYYANGAR J. This appeal on a certificate under articles 132 and 134(1) of the Constitution granted by the High Court of Punjab raises for consideration the constitutionality of section 7(1) of the Punjab Trade Employees Act, 1940. The appellant Manohar Lal has a shop at Ferozepore Cantt. in which business is carried on under the name and style of I Imperial Book Depot '. Section 7 of the Punjab Trade Employees Act, 1940 (hereinafter called the Act), enacts: " 7. (1) Save as otherwise provided by this Act, every shop or commercial establishment shall remain closed on a close day. (2)(i). The choice of a close day shall rest with the occupier of a shop or commercial establishment and shall be intimated to the prescribed authority within two months of the date on which this Act comes into force." to extract the provision relevant to this appeal. The 345 appellant had chosen Friday as " the close day ", i.e., the day of the week on which his shop would remain closed. The Inspector of Shops and Commercial Establishments, Ferozepore Circle, visited the appellant 's shop on Friday, the 29th of January, 1954, and found the shop open and the appellant 's son selling articles. Obviously, if section 7(1) were valid, the appellant was guilty of a contravention of its terms and he was accordingly prosecuted in the Court of the Additional District Magistrate, Ferozepore, for an offence under section 16 of the Act which ran: " Subject to the other provisions of this Act, whoever contravenes any of the provisions of this Act . . . . . . . . shall be liable on conviction to a fine not exceeding twenty five rupees for the first offence and one hundred rupees for every subsequent offence ". The appellant admitted the facts but he pleaded that the Act would not apply to his shop or establishment for the reason that he had engaged no strangers as employees but that the entire work in the shop was being done by himself and by the members of his family, and that to hold that section 7(1) of the Act would apply to his shop would be unconstitutional as violative of the fundamental rights guaranteed by articles 14, 19(1)(f) and (g) of the Constitution. The additional District Magistrate rejected the plea raised by the appellant regarding the constitutionality of section 7(1) in its application to shops where no " employees " were engaged and sentenced him to a fine of Rs. 100 and simple imprisonment in default of payment of the fine (since the appellant had been convicted once before). The appellant applied to the High Court of Punjab to revise this order, but the Revision was dismissed. The learned Judges, however, granted a cer tificate of fitness which has enabled the appellant to file the appeal to this Court. Though the validity of section 7(1) of the Act was challenged in the High Court on various grounds, learned Counsel who appeared before us rested his attack on one point. He urged that the provision violated the 44 346 appellant 's right to carry on his trade or business guaranteed by article 19(1)(g) and that the restriction imposed was not reasonable within article 19(6) because it was not in the interest of the general public. Learned Counsel drew our attention to the long title of the Act reading " An Act to limit the hours of work of Shop Assistants and Commercial Employees and to make certain regulations concerning their holidays, wages and terms of service " and pointed out that the insistence on the appellant to close his shop, in which there were no " employees ", was really outside the purview of the legislation and could not be said to subserve the purposes for which the Act was enacted. In short, the submission of the learned Counsel was that the provision for the compulsory closure of his shop for one day in the week served no interests of the general public and that it was unduly and unnecessarily restrictive of his freedom to carry on a lawful trade or business, otherwise in accordance with law, as he thought best and in a manner or mode most con venient or profitable. We are clearly of the opinion that the submissions of the learned Counsel should be repelled. The long title of the Act extracted earlier and on which learned Counsel placed considerable reliance as a guide for the determination of the scope of the Act and the policy underlying the legislation, no doubt, indicates the main purposes of the enactment but cannot, obviously, control the express operative provisions of the Act, such as for example the terms of section 7(1). Nor is the learned counsel right in his argument that the terms of section 7(1) are irrelevant to secure the purposes or to subserve the underlying policy of the Act. The ratio of the legislation is social interest in the health of the worker who forms an essential part of the com munity and in whose welfare, therefore, the community is vitally interested. It is in the light of this purpose that the provisions of the Act have to be scrutinized. Thus,, section 3 which lays down the restrictions subject to which alone "I young persons ", defined as those under the age of 14, could be employed in any shop or commercial establishment, is obviously with a view to 347 ensuring the health of the rising generation of citizens. Section 4 is concerned with imposing restrictions regarding the hours of work which might be extracted from workers other than " young persons ". Section 4(1) enacts: " Subject to the provisions of this Act, no person shall be employed about the business of a shop or commercial establishment for more than the normal maximum working hours, that is to say, fifty four hours in any one week and ten hours in any one day. bringing the law in India as respects maximum working hours in line with the norms suggested by the International Labour Convention. Sub clauses (4) and (5) of this section are of some relevance to the matter now under consideration: " (4) No person who has to the knowledge of the occupier of a shop or commercial establishment been previously employed on any day in a factory shall be employed on that day about the business of the shop or commercial establishment for a longer period than will, together with the time during which he has been previously employed on that day in the factory, complete the number of hours permitted by this Act. (5) No person shall work about the business of a shop or commercial establishment or two or more shops or commercial establishments or a shop or commercial establishment and a factory in excess of the period during which he may be lawfully employed under this Act. " It will be seen that while under sub cl. (4) employers are injuncted from employing persons who had already worked for the maximum number of permitted hours in another establishment, sub cl. (5) lays an embargo on the worker himself from injuring his health by overwork in an endeavour to earn more. From this it would be apparent that the Act is concerned and properly concerned with the welfare of the worker and seeks to prevent injury to it, not merely from the action of the employer but from his own. In other words, the worker is prevented from attempting to earn more wages by working longer hours than is good 348 for him. If such a condition is necessary or proper in the case of a worker, there does not seem to be anything unreasonable in applying the same or similar principles to the employer who works on his own business. The learned Judges of the High Court have rested their decision on this part of the case on the reasoning that the terms of the impugned section might be justified on the ground that it is designed in the interest of the owner of the shop or establishment himself and that his health and welfare is a matter of interest not only to himself but to the general public The legislation is in effect the exercise of social control over the manner in which business should be carried on regulated in the interests of the health and welfare not merely of those employed in it but of all those engaged in it. A restriction imposed with a view to secure this purpose would, in our opinion, be clearly saved by article 19(6). Apart from this, the constitutionality of the impugned provision might be sustained on another ground also, viz., with a view to avoid evasion of provisions specifically designed for the protection of workmen employed. It may be pointed out that acts innocent in themselves may be prohibited and the restrictions in that regard would be reasonable, if the same were necessary to secure the efficient enforcement of valid provisions. The inclusion of a reasonable margin to ensure effective enforcement will not stamp a law otherwise valid as within legislative competence with the character of unconstitutionality as being unreasonable. The provisions could, therefore, be justified as for securing administrative convenience and for the proper enforcement of it without evasion. As pointed out by this Court in Manohar Lal vs The State (1) (when the appellant challenged the validity of this identical provision but on other grounds): " The legislature may have felt it necessary, in order to reduce the possibilities of evasion to a minimum, to encroach upon the liberties of those who would not otherwise have been affected. . To require a shopkeeper, who employs one or two men, (1) ; , 675. 349 to close and permit his rival, who employs perhaps a dozen members of his family, to remain open, clearly places the former at a grave commercial disadvantage. To permit such a distinction might well engender discontent and in the end react upon the relations between employer and employed. " We have, therefore, no hesitation in repelling the attack on the constitutionality of section 7(1) of the Act. The appeal fails and is dismissed. Appeal dismissed.

The appellant who was a shopkeeper was convicted for the second time by the Additional District Magistrate for contravening the provisions of section 7(1) of the Punjab Trade Employees Act, 1940, under which he was required to keep his shop closed on the day which he had himself chosen as a " close day ". He raised the plea that the Act did not apply to his shop as he did not employ any stranger but that himself alone worked in it and that the application of section 7(1) to his shop would be violative of his fundamental rights under articles 14, 19(1)(f) and (g) of the Constitution and also that the restriction imposed was not reasonable within article 19(6) as it was not in the interest of the general 344 public. The High Court dismissed his application for revision of the Magistrate 's order. On appeal on a certificate of the High Court, Held, that the main object of the Act was the welfare of the employees and to protect their as well as the employers ' health by preventing them from over work. Such a restriction being in the interest of the general public was reasonable within the meaning of article 19(6) of the Constitution. The provisions of section 7(1) were constitutionally valid and were justified as for securing administrative convenience and avoiding evasion of those provisions designed for the protection of the workmen. Manohar Lal vs The State, ; , referred to.

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Appeal No. 221 of 1956. Appeal from the judgment and decree dated August 5,1955, of the Bombay High Court in Appeal No. 128/X of 1954. section N. Andley, J. B. Dadachanji, Rameshwar Nath and ,P. L. Vohra, for the appellants, 654 A V. Viswanatha Sastri and Tarachand Brij mohan Lal. for the respondents. January 31. , J. This appeal which has come to this Court with a certificate issued by the Bombay High Court raises for our decision a short and interesting question about the scope and effect of the provisions contained in section 89 of the Indian Companies Act, 1913, in relation to the law of banking. This question arises in this way. The appellant, the Oriol Industries, Ltd. (hereafter called the company) was incorporated on May 15, 1945, and it appointed as its managing agents M/s. Poddar Chack & Co. Soon after its incorporation the company passed a resolution on May 21, 1945, whereby it decided to open an account with the respondent, the Bombay Mercantile Bank, Ltd. (hereafter called the bank) and in accordance with the said resolution an account was opened with it on May 28, 1945. Twenty eight cheques were drawn on this account aggregating the total amount of Rs. 28,882 13 0 during the period between May 28, 1945 and July, 31, 1945. These cheques were drawn by K. Poddar and M. J. Chacko in pursuance of the authority conferred on them by the company. On September 28, 1948, by its liquidator the company brought the present suit claiming to recover from the bank the said amount of Rs. 28,882 13 0. The case for the company as set out in the plaint was that the payment of the said amount had been made by the bank wrongfully and negligently and the amount drawn under the said cheques had been wrongfully debited to the company in its account kept by the bank. It appears that the resolution for winding up of the company was held by the court to be null and void, and Bo the plaint was subsequently amended whereby the name of the liquidator was struck out and the suit then purported to be one which was instituted by the company itself The plea raised by the company that the cheques in question had been negligently 'and wrongfully honoured by the bank was 655 seriously disputed by the bank in its statement. Mr. Justice Tendolkar, who tried the suit on the Original Side of the Bombay High Court, however, upheld the plea raised by the company and came to the conclusion that the cheques had been wrongfully B, honoured. Even so, Mr. Justice Tendolkar held that out of the total amount in dispute an amount of Rs. 8,882 13 0 had been actually received by the company and so on equitable grounds he rejected the company 's claim in regard to the said amount. The company 's claim was, however, decreed in respect of the balance of Rs. 20,000. The decree thus passed by Tendolkar, J. was challenged by the bank in its appeal, whereas the rejection of the company 's claim in respect of Rs. 8,882 13 0 by the trial judge gave rise to cross objections by the company. The Court of Appeal has reversed the finding of Tendolkar, J., and has held that the bank was not liable to repay any amount to the company since it had accepted and honoured the cheques issued on it in good faith. It may be stated at this stage that the plea of negligence which had been originally urged by the company in its plaint was expressly given up at the trial. Since the Appeal Court accepted the bank 's case on the principal question of law it did not think it necessary to consider the question of limitation or the question about the applicability of the equitable doctrine on which the trial judge had relied. In the result the appeal filed by the bank was allowed, the cross objections preferred by the company were rejected, and the suit filed by the company was dismissed with costs. The company then moved the High Court for a certificate, and on a certificate being granted it has come to this Court; and on its behalf Mr. Andley has urged that in coming to the conclusion that the company 's claim was unsustainable the Appeal Court has misjudged;the effect of the provisions of section 89 of the Indian Companies Act in relation to the conduct of the bank in the present case. That is how the principal question which falls for our decision is about, the scope and effect of the provisions of s, 89 of the Indian Companies Act. 84 656 Before dealing with the said question of law it is necessary to dispose of a minor point raised by Mr. Andley. He contends that the cheques issued by K. Poddar and M. J. Chacko and honoured by the bank had not been issued in the form required by the resolution which gave them authority to operate on the company 's account with the bank. The relevant resolution passed by the company provided that "the banking accounts of the company be opened with the bank and another bank and that the said banks be and hereby authorised to honour cheques, bills of exchange and promissory notes, drawn, accepted or made on behalf of the company by the Managing Agents M/s. Poddar Chacko & Co., by both the Directors of the Managing Agents firm, namely, Mr. Keshavdeo Poddar and Mr. M. J. Chacko and to act on any instructions so given relating to the account whether the same be overdrawn or not or relating to the transactions of the company. " The argument is that two conditions had to be satisfied before the bank could accept a cheque issued under this resolution; the cheque had to be signed by both the Directors of the Managing Agents firm, and it had to be drawn on behalf of the company. In point of fact, all the cheques have been signed by the two individuals without describing themselves as Directors of the Manging Agents firm and without showing that they had drawn them on behalf of the company. These defects, it is urged, made the cheques irregular and inconsistent with the mandatory requirements of the resolution, and the bank was there fore not justified in honouring the said cheques. In our opinion, this argument is unsound. On a fair and reasonable construction of the resolution it is difficult to uphold the contention that the resolution required the drawers of the cheques to specify on each cheque that they were made or drawn on behalf of the company. The object of the resolution as well as its effect merely was to conform to the requirements of a. 89 of the Indian Companies Act to which we will presently refer. It cannot be said that the resolution required that the drawers of the cheques had to comply with the said condition apart from the requirements of section 89 ; and so it would be unreasonable 657 to treat the said requirement as a condition prescribed by the resolution independently of section 89. In this connection the subsequent resolution passed by the company is significant. It appears that on October 22, 1945, a resolution was passed by the, company authorising M. J. Chacko to sign cheques for the company, and when this resolution was communicated to the bank it was told that the cheques on behalf of the company would thereafter be signed as: it For and on behalf of the Oriol Industries Limited, For Poddar Chacko & Co."; in other words, by this communication the bank was told that it is only cheques signed by M. J. Chacko in the manner specified in the communication that the bank should honour. This communication affords an eloquent contrast to the communication made by the company to the bank in regard to the earlier resolution by which M/s. Poddar and Chacko were authorised to issue cheques on its behalf Therefore, in our opinion, the argument that the impugned cheques accepted by the bank were inconsistent with the specific mandatory requirements authorised by the resolution cannot be accepted. That takes us to the principal question of law. In dealing with the said question it is first necessary to refer to section 26 of the (26 of 1881). This section provides that " every person capable of contracting according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsements, delivery and negotiation of a promissory note, bill of exchange or cheque." This section further provides, inter alia, that " nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cages in which, under the law for the time being in force, they are so empowered. " This section does not purport to make any provision of substantive or procedural law. The latter part of the section merely brings out that a company cannot claim authority to issue a cheque under its first part. The law in regard to the company 's power to issue negotiable instruments has to be found in the relevant provisions of the Companies Act 658 itself We must, therefore, turn to section 89 of the said Act. Section 89 provides that " a bill of exchange, hundi or promissory note shall be deemed to have been made, drawn or accepted or endorsed on behalf of a company if made, drawn, accepted or endorsed in the name of, or by or on behalf of, or on account of, the company by any person acting under its authority express or implied. " It is clear that in order that a company may be bound by a negotiable instrument purporting to have been issued on its behalf two conditions must be satisfied; the instrument must be drawn, made, accepted or endorsed in the name of or by or on behalf of or on account of the company, and the person who makes, draws, endorses or accepts the instrument must have the authority given to him by the company on that behalf. This authority may be either express or implied. There is thus no doubt that before a company can be bound by a negotiable instru ment one of the essential conditions is that the instrument on its face must show that it has been drawn, made, accepted or endorsed by the company. This may be done either by showing the name of the company itself on the instrument, or by the statement of the person making the instrument that he is doing so on behalf of the company. In other words, unless the plain tenor of the negotiable instrument on its face satisfies the relevant requirement the instrument cannot be validly treated as an instrument drawn by the company. This position is not disputed. The importance and significance of the said requirement can be illustrated by reference to a decision of the Privy Council which had occasion to consider a similar requirement under section 27 of the . The said section provides that "every person capable of binding himself or of being bound, as mentioned in Section 26, may so bind himself or be bound by a duly authorised agent acting in his name." In Sadasuk Janki Das vs Sir Kishan Pershad (1) the Privy Council held that the name of the person or the firm to be charged upon a negotiable document should be stated clearly on the face or on (1) Cal. 659 the back of the document so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand. It is not sufficient that the name of the principal should be in some way disclosed; it must be disclosed in such a way that, on any fair interpretation of the instrument his name is the real name of the person liable on the bill. " According to the Privy Council " sections 26, 27 and 28 of the contained nothing inconsistent with the principles just set out, and there was nothing to support the contention urged before it that in an action on a bill of exchange or promissory note against a person whose name properly appears as a party to the instrument it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal. " This decision was no doubt given under section 27 of the , but the principles enunciated in it apply with equal force to a negotiable instrument issued under section 89 of the Indian Companies Act. The inevitable consequence of this requirement is that wherever a negotiable instrument is issued without complying with the said requirement it would not bind the company and cannot be enforced against it. In The Bank of Bombay vs H. R. Cormack (1) it was held by the Bombay High Court that in order to make a company liable on a bill or note it must appear on the face of such bill or note that it was intended to be drawn, accepted or made on behalf of the company, and no evidence dehors the bill or note is admissible under section 47 of the Indian Companies Act, X of 1866, equal to section 89 of the present Act. In support of this decision Sargent, C.J., has cited the observations of Lord Justice James in Miles ' Claim (2) " that it is the law of this country, and always has been the law of this country, that nobody is liable upon a bill of exchange, unless his name, or the name of some partnership, or body of persons of which he is one, appears either on the face or the back of the bill. " Thus there can be no doubt that the failure to comply with the essential requirements of section 89 must necessarily mean that the.negotiable instrument in question (1) Bom. (2) 643. 660 defectively issued cannot be enforced against the company. But the question which arises for our decision is whether this principle can be invoked in the present case where the action is not based on a negotiable instrument. The present dispute is between the bank and its constituent the company, and the claim made 'by the latter proceeds on the assumption that in honouring the cheques irregularly drawn the bank has acted improperly and exposed itself to the charge that it has honoured the cheques wrongfully and improperly. In considering this question it may be relevant to recall that both the courts below have found that the bank has acted bona fide and that the charge of negligence levelled against it by the company had been expressly given up. It is also necessary to bear in mind that when the company opened its account with the bank it was furnished with a book of cheques and it is from the said book that the impugned cheques have been issued. Evidence also shows that K. Poddar and M. J. Chacko had no other joint account with the bank so that it is clear that when the impugned cheques were issued the bank was justified in thinking that the said cheques must have been issued by the two drawers on behalf of the only account on which they could operate, and that the bank thought was done in pursuance of the authority conferred on them by the company by its resolution. In such a case, if the bank honours the cheques can it be said that the company on whose behalf the cheques were purported ,to have been issued can contend that the cheques should not have been honoured and that the amount debited to the company by the bank in its accounts has been improperly and wrongfully debited? It would be noticed that the principle underlying section 89 which is a very healthy and salutary principle affords to the companies protection against claims made on negotiable instruments defectively or irregularly drawn; but, when we deal with a dispute between a company and the bank of which it is a constituent it is difficult to extend the said principle. The said principle in terms is applicable only when a claim is made against a company on a negotiable instrument; in other words, 661 it is only in the matter of enforcement of negotiable instrument against a company that the principle comes into play. It is, therefore, difficult to see how the principle enunciated in section 89 can be extended to a claim made by the company against the bank. In our., opinion, therefore, the High Court was right in coming to the conclusion that section 89 cannot be invoked by the company against the bank in making the present claim. The decisions on which the company relied are all decisions in cases where a negotiable instru ment was sought to be enforced against the company and had thus given rise to a cause of action. No case has been cited before us in which section 89 has been extended to a claim like the present. On the other hand, there is authority of the House of Lords in support of the view which the High Court has taken in the present case. In Mahony vs East Holyford Mining Co. (1), a similar point arose for the decision of the House of Lords. One of the two points in that case had reference to eight cheques which had been defectively or irregularly drawn on behalf of the company and honoured by the bank. In reject ing the company 's claim against the bank in respect of the amount covered by the said cbeques Lord Chelmsford observed as follows: " With respect to the objection that the name of the company is not on eight of the cheques paid by the Bank, and therefore by the Companies Act, 1862, they are invalid, and the official liquidator is entitled, at all events, to the amount of these cheques the short answer is, that although the bankers might have perhaps required that these cheques should be made formally correct before they were paid; yet having paid them upon the demand of the only persons whom they knew as representing the company in the operations upon the account, there is not the slightes t pretence for insisting upon the liability of the Bank to repay the amount of these cheques on the ground of an unauthorised payment of them. " The Lord Chancellor Lord Cairns disposed of the point in these words: " The question being merely as (1) (1875) 7 Eng. & Irish Reports, 869, 662 to the authority given to the bankers to make the payment, it appears to me that when those who drew and those who honoured the cheque knew the account on which it was intended to operate, the result was ,the same as if the account had been mentioned on the face of the cheque, and that no distinction is to be made as to the money paid upon these cheques." Lord Penzance agreed with this opinion and observed that " looking at the way in which the cheques were drawn, and understood by those who drew them, and by those who paid them, they stand in no different way from the rest of the cheques in the case. " It would thus be clear that the authority of this decision of the House of Lords is in favour of the view taken by the High Court that the principle enunciated by section 89 of the Indian Companies Act cannot be extended to a claim made by a company against its bank on the ground that the cheque which the bank accepted and honoured was defective in that it did not comply with the requirements of section 89 and could not have been enforced against it. We ought to add that section 47 of the corresponding English Act of 1862 is exactly in the same terms as section 89 of the Indian Act. It also appears that Chalmers has expressed the same opinion for he says, ,So, too, bankers may be justified in paying cheques out of the funds of a company, where clearly, by the form of the cheques the company would not be liable as drawers if they should not be paid " (1). Similarly, Halsbury approves of the same principle in these words: " although documents omitting the name of the company therefore cannot be relied on as against the company, monies paid under them to persons known to represent the company are not on that account payable over again " (2). The result is the appeal fails and is dismissed with costs. Appeal dismissed. (1) Chalmers on " Bills of Exchange ", P. 63. (2) Halsbury 's Laws of England, 3rd Edn., Vol. , paragraph 830.

The Managing Agents of the appellant company withdrew certain sums of money from its a count with the respondent (1) Mad. 871. (2) Lah. (3) (4) I.L.R. (5) (6) Pat. 106 (7) (1953) I.L.R. K. All. 64. (8) Pat. 653 Bank, which the company had by a resolution authorised the Managing Agents to operate on. The Managing Agents had no other account with the said Bank. The company brought the suit, out of which the present appeal arises, against the Bank for recovery of the said amounts on the ground that the cheques issued by the Managing Agents had been wrongfully honoured by the Bank in that they were signed by them without describing themselves as Directors of the Managing Agents firm and on behalf of the company, as required by the resolution. The trial judge decreed the suit except with regard to a part of the claim which he found to have actually been received by the company. The appeal court dismissed the suit holding that the Bank had paid in good faith and that the company was not entitled to rely on section 89 of the Indian Companies Act. Held, that the court of appeal was right in holding that section 89 of the Indian Companies Act could not be invoked by the appellant in the present case. There can be no doubt that before a negotiable instrument can be enforced against a company under section 89 of the Indian Companies Act, it must on the face of it show that it was drawn, made, accepted or endorsed by the company, and this may be done either by showing the name of the company itself on the instrument, or by statement of the person making the instrument that he was doing so on behalf of the company. Sadasuk janki Das vs Sir Kishan Pershad, Cal. 663, applied. The Bank of Bombay vs H. R. Cormack, Born, 275 and Miles ' claim, , referred to. But the said principle is applicable only to the claim made against a company on a negotiable instrument and cannot be extended to a dispute between a bank and its constituent where the claim is not so based and proceeds on the basis that in honouring the cheques wrongfully drawn the bank acted improperly. Mahony vs East Holiford Mining Co., (1875) 7 Eng. & Irish Reports 869, referred to. Held, further, that the object of the resolution as well as its effect was merely to conform to the requirements of section 89 of the Indian Companies Act, 1913, and not to prescribe any condition precedent independently of that section.

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l Appeals Nos. 153 and 154 of 1960. Appeals by special leave from the Award dated February 5,1959, of the Industrial Tribunal, Bombay, in Reference (I.T.) No. 212 of 1958. S.D. Vimadalal, section N. Andley and J. B. Dadachanji, for the appellant in C. A. No. 153/60 and Respondent in C.A. No. 154/60. M.C. Setalvad, Attorney General for India and Janardan Sharma, for the respondents in C.A. No. 153/ 60 and Appellants in C.A. No. 154/60. December 9. The Judgment of the Court was delivered by WANCHOO, J. The only question raised in these two appeals by special leave is about the quantum of bonus to be paid to the workmen (hereinafter called the respondents) by Voltas Limited (hereinafter called the appellant) for the financial year 1956 57. The dispute between the parties was referred to the adjudication of the industrial tribunal Bombay. The appellant, it appears, had already paid 4 1/2 months ' basic wages as bonus for the relevant year but the respondents claimed it at the rate of six months ' basic wages subject to the minimum of Rs. 250 per employee. 169 The tribunal went into the figures and after making the relevant calculations came to the conclusion that the available surplus worked out according to the Full Bench formula justified the grant of bonus equal to five months ' basic salary; it therefore ordered payment of this amount excluding the amount already paid. The appellant in its appeal claims that the tribunal should have allowed nothing more than what the appellant had already paid; the respondents in their appeal on the other hand claim that they should have been allowed six months ' bonus. The principles on which bonus has to be calculated have already been decided by this Court in the Associated Cement Companies Ltd. vs Their Workmen (1) and the only question that arises for our consideration is whether the tribunal in making its calculations has acted in accordance with those principles. This leads us to the consideration of various points raised on behalf of the parties to show that the tribunal had not acted in all particulars in accordance with the decision in the Associated Cement Companies ' case (1). We shall first take the points raised on behalf of the appellant. The first point raised is that the tribunal was wrong in not allowing a sum of rupees one lac paid as contribution to political fund as an item of expense. It is urged that this is a permissible item of expense and therefore the tribunal should not have added it back in arriving at the gross profits. We are of opinion that the tribunal was right in not allowing this amount as expenditure. In effect this payment is no different from any amount given in charity by an employer, and though such payment may be justified in the sense that it may not be against the Articles of Association of a company it is nonetheless an expense which need not be incurred for the business of the company. Besides, though in this particular case the donation considering the circumstances of the case was not much, it is possible that permissible donations may be out of all proportion and may thus result in reducing the available (1) [1059] 2 S.C.R. 925. 22 170 surplus from which low paid workmen are entitled to bonus. We are therefore of opinion that though the law or the rules of the company may permit the appellant to pay such amounts as donations to political funds, this is not a proper expense to be deducted when working out the available surplus in the light of the Full Bench formula. The tribunal 's decision therefore on this point must be upheld. The second contention of the appellant relates to deduction of what it calls extraneous income. This matter has been considered by this Court in The Tata Oil Mills Co. Ltd. vs Ite Workmen and Others (1) and what we have to see is whether in accordance with the decision in that case, the appellant 's claim for deducting certain amounts as extraneous income is correct. Learned counsel for the appellant has pressed four items in this connection. The first item relates to a sum of Rs. 3.47 lacs. It is said that this was not the income of the year and therefore should not have been taken into account in arriving at the gross profits. The exact position with respect to this item is not clear and in any case learned counsel for the appellant appearing before the tribunal conceded that the amount could not be deducted from the profits. In view of that concession we are not prepared to allow the deduction of this amount as extraneous income. The second item is a sum of Rs. 1.76 lacs in respect of the rebate earned on insurance by the appellant with other companies by virtue of its holding principal agency. Obviously this is part of the insurance business of the appellant and the work in this connection is entirely handled by the insurance department of the appellant; as such the tribunal was right in not allowing this amount as extraneous income. The third item is a sum of Rs. 3 33 lacs being gain on foreign exchange transactions. These transactions are carried on in the normal course of business of the appellant. As the tribunal has rightly pointed out, if there had been loss on these transactions it would have certainly gone to reduce the gross profit,%; if there is a profit it has to be taken into account as (1)[1960] 1 S.C.R. 1. 171 it has arisen out of the normal business of the appellant. The tribunal was therefore right in not allowing this amount as extraneous income. The last item is a sum of Rs. 9.78 lacs being commission on transactions by government agencies and other organisations with manufacturers abroad direct. It seems that the appellant is the sole agent in India of certain foreign manufacturers and even when transactions are made direct with the manufacturers the appellant gets com mission on such transactions. The tribunal has held that though the transactions were made direct with the foreign manufacturers, the respondents were entitled to ask that the commission should be taken into account inasmuch as the respondents serviced the goods and did other work which brought such business to the appellant. It seems that there is no direct evidence whether these particular goods on which this commission was earned were also serviced free by the appellant like other goods sold by it in India. We asked learned counsel for the parties as to what the exact position was in the matter of free service to such goods. The learned counsel however could not agree as to what was the exact position. It seems to us that if these goods are also serviced free or for charges but in the same way as other goods sold by the appellant in India, the respondents are entitled to ask that the income from commission on these goods should be taken into account. As however there is no definite evidence on the point we cannot lay down that such commission must always be taken into account. At the same time, so far as this particular year is concerned we have to take this amount into account as the appellant whose duty it was to satisfy the tribunal that this was extraneous income has failed to place proper evidence as to servicing of these goods. A claim of this character must always be proved to the satisfaction of the tribunal. In the circumstances we see no reason to interfere with the order of the tribunal so far as this part of its order is concerned. Two other points have been urged on behalf of the 172 appellant with respect to the interest allowed on capital and on working capital. The tribunal has allowed the usual six per cent on capital and four per cent on working capital. The appellant claimed interest at a higher rate in both cases. We agree with the tribunal that there is no special reason why any higher rate of return should be allowed to the appellant. This brings us to the objections raised on behalf of the respondents. The main objection is to a sum of Rs. 4.4 lacs allowed by the tribunal as income tax, which is said to be with respect to the previous year. It appears that there is a difference between the accounting year of the appellant and the financial year. In the particular year in dispute there was an increase in the rate of tax which resulted in extra payment which had to be paid in this year. In these special circumstances, therefore, the tribunal allowed this amount and we see no reason to disagree. Next it is urged that the tribunal had allowed a sum of Rs. 4.76 lacs for making provision for gratuity as a prior charge. This is obviously incorrect, as this Court has pointed out in the Associated Cement Companies ' case (1) that no fresh items of prior charge can be added to the Full Bench formula, though at the time of distribution of available surplus such matters, as provision for gratuity and debenture redemption fund, might be taken into account. This disposes of the objections relating to the accounts. Two other points have been urged on behalf of the respondents. They are with respect to (1) salesmen and (2) apprentices. The tribunal has excluded these two categories from the award of bonus made by it. The respondents contend that they should also have been included. We are of opinion that the decision of the tribunal in this behalf is correct. So far as salesmen are concerned, the tribunal has examined the relevant decisions of other tribunals and has come to the conclusion that salesmen who are given commission on sales are not treated on par with other workmen in the matter of bonus. It has also been found that the clerical work done by salesmen is small and incidental to their duty as such; salesmen have (1) 173 therefore been held not to be workmen within the meaning of the Industrial Disputes Act. The tribunal has pointed out that the commission on an average works out at about Rs. 1,000 per mensem in the case of salesmen and therefore their total emoluments are quite adequate. Besides, the salesmen being paid commission on sales have already taken a share in the profits of the appellant on a fair basis and therefore there is no justification for granting them further bonus out of the available surplus of profits. As for the apprentices, the tribunal has held that there is a definite term of contract between them and the appellant by which they are excluded from getting bonus. Besides, as the appellant has pointed out, the apprentices are merely learning their jobs and the appellant has to incur expenditure on their training and they hardly contribute to the profits of the appellant. The view of the tribunal therefore with respect to apprentices also is correct. We now turn to calculation of the available surplus according to the decision in the Associated Cement Companies ' case (1). The gross profit found by the tribunal will stand in view of what we have said with respect to various items challenged by either party. The chart of calculation will be as follows: in Lacs Gross profits Rs. 109.97 Less depreciation 3.28 Balance 106.69 Less income tax @ 51.15 per cent. 54.20 Balance 52.49 Less dividend tax, wealth tax etc. 7.50 Balance 44.99 Less return on capital at 6 per cent. 13.20. Balance 31.79 Less return on working capital at 4 per cent. 1.66 Available surplus 30.13. (1) 174 Out of this, the tribunal has allowed five months ' basic wages as bonus to the respondents which works out at Rs. 16.80 lacs. In the circumstances it cannot be said that the award of the tribunal is not justified. We do not think that we would be justified in giving anything more than what the tribunal has awarded, because the appellant has to provide for a fund for gratuity, for it is a new concern which took over the old employees of another concern when it was started and has thus a greater liability towards gratuity than otherwise would be the case. We are therefore of opinion that the tribunal 's award of five months ' basic wages as bonus for the year in dispute should stand. We therefore dismiss both the appeals. In the circumstances we pass no order as to costs. Appeals dismissed.

The question in this appeal was whether the Tribunal was wrong in not allowing the amount paid to a political fund which was permissible as an item of expense and for disallowing the claim for deduction of certain amounts as extraneous income and whether the salesmen and apprentices were entitled to bonus. 168 Held, that though the law or the rules of the company per mitted the employer to pay amounts as donations to political funds, it was not a proper expense to be deducted when working out the available surplus in the light of the Full Bench formula. Held, further, that neither the profits from transactions which were carried out in the normal course of business, nor the commission earned on transactions entered directly with foreign manufacturers, where the workmen had serviced the goods and did other work which brought such business to the employer, could be allowed as extraneous income. Held, also that the salesmen who were given commission on sales had already taken a share in the profits of the company on a fair basis and there was no justification for granting them further bonus out of the available surplus of profits. That the apprentices hardly contributed to the profits of the company. Thus they were not entitled to any bonus. The Associated Cement Companies Ltd. vs Their Workmen, and The Tata Oil Mills Co. Ltd. vs Its Workmen and Ors., ; , applied.

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13 to 24, 42 and 46 to 54 of 1958. Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights. M.C. Setalvad, Attorney General for India, Syed Mahmud, J. B. Dadachanji, section N. Andley, Rameshwar Nath and P. L. Vohra, for the petitioners in petitions Nos. 13 18, and 46 54 of 1958. C.K. Daphtary, Solicitor General of India, Syed Mahmud, J. B. Dadachanji, section N. Andley, Rameshwar Nath and P. L. Vohra, for the petitioners in Petitions Nos. 19 24 of 1958. S.N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra, for the petitioner in petition No. 42 of 1958. K.V. Suryanarayana Iyer, Advocate General of Kerala and Sardar Bahadur, for the respondents. December, 9. The Judgment of Sinha, C.J., Jafer Imam, Subba Rao and Shah, JJ., was delivered 81 by Sinha, C. J. Sarkar, J., delivered a separate Judgment. SINHA, C. J. In this batch of 22 petitions under article 32 of the Constitution, the petitioners impugn the constitutionality of the Travancore Cochin Land Tax Act, XV of 1955, as amended by the Travancore Cochin Land Tax (Amendment) Act, X of 1957, which hereinafter will be referred to as the Act. The Act came into force on June 21, 1955, and the Amending Act on August 6, 1957. The petitioners are owners of forest areas in certain parts of the State of Kerala, which, before the reorganisation of States, formed part of the State of Madras. The respondents to the petitions are: (1) the State of Kerala and (2) the District Collector, Palghat: These petitions are based on allegations, which are, more or less, similar, and the following allegations made in Writ Petition No. 42 of 1958 may be taken as typical and an extreme case, which was placed before us in detail to bring into bold relief the full significance and effect of the legislation impugned in these cases. The petitioner in Petition 42 of 1958 is a citizen of India, who owns forests in certain parts of Palghat Taluk in Palghat District, which was part of the State of Madras before the reorganisation of States. These forests are now in the State of Kerala. Up to the time that these forests were in the State of Madras, as it then was, the Madras Preservation of Private Forests Act, Madras Act XXVII of 1949, governed these forests. Even after these areas were transferred to the State of Kerala, the said Madras Act, XXVII of 1949, continued to apply to these forests. Under the said Madras Act the owners of forests, like the petitioner, could not sell, mortgage, lease or otherwise alienate any portion of their forests without the previous sanction of the District Collector; nor could they, without similar permission, cut trees or do any act likely to denude the forest or diminish its utility, as such. The District Collector, in exercise of the powers under the Act, does not ordinarily permit the cutting of more than a small 82 number of trees in the forest. Thus the petitioner has not the right fully to exploit the forest wealth in his forest area and has to depend upon the previous permission of the Collector. In exercise of the powers given to the Collector under the Madras Act aforesaid, the petitioner 's lessee was given permission to cut certain trees in his forest, which brings to the petitioner by way of income from. the forest, a sum of Rs. 3,100 per year. Under the Act, a tax called land tax at a flat rate of Rs. 2 per acre has been imposed on the petitioner. In pursuance of the provisions of the Act, as amended as aforesaid, the District Collector of Palghat, purporting to act under the provisions of section 5A of the Act, issued a notice to the petitioner provisionally assessing the petitioner 's forest under the said Act to a sum of fifty thousand rupees per annum and informing the petitioner that, if no representation was made within thirty days, the said provisional assessment would be confirmed and a demand notice would be issued. As there has been no survey of the area of forest land in the petitioner 's possession, the District Collector has conjectured the said area to be twenty five thousand acres. The Petitioner had made an application to the District Collector under the Madras Preservation of Private Forests Act for felling trees in an area of one thousand acres, but the Collector was pleased to grant permission to out trees from 450 acres only in the course of five years at the rate of 90 acres a year. The petitioner has leased out that right to another person, who made the highest bid of Rs. 3,100 per year, as the landlord 's fee for the right to cut and remove the trees, and other minor produce. Besides the demand aforesaid, the revenue authorities have levied about four thousand rupees as tax on the surveyed portions of the forest. The petitioner 's forest has large areas of and rocks, rivulets and gorges. The petitioner, in those circumstances, questions the constitutional validity of the Act, the provisions of which will be examined hereinafter. These petitions have been opposed on behalf of the first respondent and the allegations and submissions 83 made in the petitions are sought to be controverted by a counter affidavit sworn to by an Assistant Secretary of the Kerala Gover nment in the Revenue Department. It is in similar terms, as a matter of fact printed in most of these cases. It is contended therein on behalf of the respondent that the petitions are not maintainable in as much as no fundamental rights of the petitioners have been infringed; that the allegations about the income, from the forest lands are not admi tted; and by way of submission, it is added, they are irrelevant for the purposes of these petitions. It is stated that the Act was passed with a view to unifying the system of land tax in the whole of the State of Kerala. It is submitted that the validity of the Act has to be determined in the light of article 265 of the Constitution and that articles 19 and 31 were wholly out of the way. It is denied that the tax imposed was harsh or arbitrary, or has the effect of violating the petitioner 's right of holding property; and it was asserted that the allegations in respect of income from the forests are entirely irrelevant, as the tax was not a tax on income, but was an "impost on land". It is equally irrelevant whether the land is productive or not. It is also contended that, in view of the provisions of article 31(5)(b)(i) of the Constitution, article 31(2) could not be relied upon by the petitioners. The allegation of the petitioners that the Act is a device to confiscate private forests is denied. It is admitted that, except in certain cases, the entire area is unsurveyed and that steps are being taken for surveying those areas. It is also stated that the areas shown in the notices served on the petitioners are based on information available to the Collector of the District; and lastly, it is stated that only notice has been issued calling upon the petitioners to make their representations, if any, to the proposed provisional assessments. The assessments have not yet been made, and, therefore, there is no question of demand of tax being enforced by coercive processes. Finally, it is suggested that the Act has been enacted for the legitimate revenue purposes of the State. Before entering upon a discussion of the points in 84 controversy, it is convenient at this stage to indicate briefly the relevant provisions of the Act which is impugned by the petitioners as ultra vires the State Legislature. The preamble of the Act is in these terms: "Whereas it is deemed necessary to provide for the levy of a low and uniform rate of basic tax on all lands in the State of Travancore Cochin. " Basic tax has been defined as "the tax imposed under the provisions of this Act". Section 3 lays down that the arrangement made under the Act for the levy of the basic tax shall be deemed inter alia to be a general revenue settlement of the State, notwithstanding anything in any statute, grant, deed or other transaction subject to certain provisos not material for our present purposes. The charging section is section 4, which is in these terms: "Subject to the provisions of this Act, there shall be charged and levied in respect of all lands in the State, of whatever description and held under whatever tenure, a uniform rate of tax to be called the basic tax. " Section 5 lays down the rate of the tax which, by the Amendment, has been raised to Rs. 2 per acre (two pies per cent. of land per annum) and the basic tax charged and levied at that rate shall be the tax payable to the Government in lieu of any existing tax in respect of land. Section 6 lays down that any stipulation in any contract or agreement or lease or other transaction to pay land revenue assessment of any land shall be construed as stipulation for the payment of the amount. of basic tax, as charged and levied under the Act. Section 7 is in these terms: "This Act is not applicable to lands held or leased by the Government or any land or class of lands which the Government may, by notification in the Gazette, either wholly or partially exempt from the provisions of this Act." Sections 8 and 9 provide for the continuance of the liability to pay certain dues in respect of existing tenures in addition to the basic tax in respect of lands covered by those tenures. Section 10 abolishes the 85 irrigation assessment charged on certain tank beds and other water reservoirs named and described therein. Section 11 preserves the right of the Government to levy certain irrigation and water cesses and lays down that the Act shall not affect the power of the Government to levy any rate or alter any existing rate of irrigation or water cess on any land, as they deem fit. Cesses, other than those mentioned in section 11, are also abolished by section 12. Section 13 authorises the Government to appoint such officers as they deem necessary for the purpose of the Act. Section 14 lays down the bar of suits against the Government in respect of anything done or any order passed under the Act. Section 15 saves the right of the Government which accrued to it before the Act came into force as also the conditions of any agreement. grant or deed relating to any land, except to the extent indicated in the Act. Section 16 vests the Government with the power to make rules for carrying into effect the provisions of the Act, with particular reference to the power to make rules for the apportionment of the basic tax charged on certain kinds of holdings, for defining the powers and duties of the officers appointed under the Act and for determining the kist instalments and the due date for the payment thereof. These in short are the provisions of the Act. The Act, as indicated above, was amended by Act X of 1957 which substituted the words "State of Kerala" for the words "State of Travancore Cochin" and made certain other consequential changes. The Amending Act introduced section 5A, which has been very much assailed in the course of the argument before us and it is, therefore, necessary to set it out in full. It is in these terms: "section 5A. Provisional assessment of basic tax in the case of unsurveyed land8. (1) It shall be competent for the Government to make a provisional assessment of the basic tax payable by a person in respect of the lands held by him and which have not been surveyed by the Government, and upon such assessment such person shall be liable to pay the amount covered in the provisional assessment. 86 (2)The Government after conducting a survey of the lands referred to in sub section (1) shall make a regular assessment of the basic tax payable in respect of such lands. After a regular assessment has been made, any amount paid towards the provisional assessment made under sub section (1) shall be deemed to have been paid towards the regular assessment and when the amount paid towards the provisional assessment exceeds, the amount payable under the regular assessment, the excess shall be refunded to the person assessed. " By section 9, section 3 of the Madras Revenue Recovery Act, 1864, has been substituted in these terms: "3. Landholder when and to whom to pay kist. Every landholder shall pay to the Collector or other officer empowered by 'him in this behalf the land tax due from him on or before the day fixed for payment under the rules framed under section 16 of the Land Tax Act, 1955. " From a review of the provisions of the Act, as amended as aforesaid, it will be clear that the provisions of the Act lay down in barest outline the policy to impose a uniform and, what is asserted to be, a low rate of land tax on all lands in the State of Kerala. Unlike other taxing statutes, it does not make any provision for issue of notice to the assessee, nor is there any provision for submission of a return by the assessee. By section 5A, it authorises the Government to make a "provisional assessment" in respect of land, which has not been surveyed, and such provisional assessment is made payable by the person made liable under the Act. It does not make any provision for any appeals in cases where the assessee may feel dissatisfied with the assessment. The Act does contemplate the making of "a regular assessment of the basic tax". But it does not indicate as to when the regular assessment would be made, except indicating that it can be made only after a survey has been made in respect of the land assessed. The Act could not have been cast in more general terms and the proceedings under the Act could not have been more summary. It has thus the merit of brevity as also of simplicity, derived 87 from the fact that a tax is levied at a flat rate, irres pective of the quality of the land and consequently of its productive capacity. Under the Act, the charge has to be levied, whether or not any income has been derived from the land. The Legislature was so much in earnest about levying and realising the tax that it could not even wait for a regular survey of the lands to be assessed with a view to determining the extent and character of the land. Such are the provisions and the effect of the Act, which has been assailed on a number of grounds on behalf of the petitioners. It is contended, in the first instance, that inequality is writ large in the provisions of the Act, which is clearly discriminatory in character and effect and thus infringes article 14 of the Constitution. As the Act does not have any regard to the quality of the land or its productive capacity, and a tax at a flat rate of Rs. 2 per acre is proposed to be levied under the Act, it is further contended, it imposes very unreasonable restrictions on the right to hold property and is thus an invasion on the rights guaranteed to the petitioners under article 19(1)(f) of the Constitution. The Act does not lay down any provision calling for a return from the assessee, for any enquiry or investigation of facts before the provisional assessment is made or for any right of appeal to any higher authority from the order of provisional assessment; in fact, there is no provision for hearing the assessee at any stage. The Act is of an arbitrary character and is thus wholly repugnant to the guaranteed rights of the petitioners. Section 7 quoted above gives uncanalised, unlimited and arbitrary power to the Government to pick and choose in the matter of grant of total or partial exemption from the provisions of the Act. It also suffers from the vice of discrimination. It has also been vehemently argued that the Act, though it purports to be a tax on land, is really a law relating to forests in possession of the petitioners and would not come within the purview of entry 18 read by itself or in conjunction with entry 45 of List II, but is law relating to forests under entry 19. If we tear the veil in which the real 88 purpose and effect of the Act has been shrouded, 'it will I appear that the true character and effect of the Act is not to levy a tax on land, but to expropriate the private owners of the forests without payment of any compensation whatsoever. Lastly, it has been urged that the whole Act has been conceived with a view to confiscating private property, there being no question of any compensation being paid to those who may be expropriated as a result of the, working of the Act. This last argument is based on the assertion that the tax proposed to be levied on private property in the State of Kerala has absolutely no relation to the paying capacity of the persons sought to be taxed, with reference to the income they could derive, or actually did derive from the property. On behalf of the State of Kerala, the learned Advocate General has argued that, though in most of the cases, that is to say, except in seven petitions (Petitions 21, 22, 47, 49, 50, 51 and 54) the lands have not been surveyed, the areas mentioned in the notices proposing provisional assessment have been ascertained through the local agencies of the Government. It was further contended that the State had only declared the liability to the payment of the tax at a flat rate of Rs. 2 per acre in respect of land, irrespective of the income to be derived therefrom. Hence there was no necessity for making provision for a detailed enquiry or investigation. The rate of the tax being known, and the area of the land to be taxed having been locally ascertained, even though without any regular survey, what remained was merely quantifying the tax, which was of a purely administrative character. The local agencies estimated the land in possession of particular persons. Those persons were called upon to pay provisionally at the rate fixed by the statute. The State has, by executive action, appointed authorities who are expected to act in accordance with the principle of natural justice. There was, therefore, no need for laying down any elaborate procedure as in other instances of taxing statutes. There is a presumption that the authority appointed by the Government would act bona fide and in a 89 proper manner. If there was any case of unfair dealings, the matter could be brought to the Court. It was greatly emphasised that as a flat rate of taxation had been envisaged by the Act and as ultimately the tax at that rate would be realised from land found to be in possession of particular persons after a regular survey, the regular survey to be ultimately made would automatically determine the amount of tax to be paid and the adjustment of the taxes already paid could be made on that basis. On the legal aspect of the controversy raised on behalf of the petitioners, it was argued that the Act has its justification in article 265 of the Constitution, which was not subject to the provisions of Part III of the Constitution and that, therefore, articles 14, 19, 31 could not be pressed in aid of the petitioners. It was also contended that even if the Act is, in effect, confiscatory, it cannot be questioned, being a taxing statute. Finally, it was urged that the question of the amount of income derived by the petitioners from the property sought to be taxed is wholly irrelevant, because the Act was not a tax on income but it was a tax on the property itself. The most important question that arises for consideration in these cases, in view of the stand taken by the State of Kerala, is whether article 265 of the Constitution is a complete answer to the attack against the constitutionality of the Act. It is, therefore, necessary to consider the scope and effect of that Article. Article 265 imposes a limitation on the taxing power of the State in so far as it provides that the State shall not levy or collect a tax, except by authority of law, that is to say, a tax cannot be levied or collected by a mere executive fiat. It has to be done by authority of law, which must mean valid law. In order that the law may be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing a tax and authorising the collection thereof and, secondly, the tax must be subject to the conditions laid down in article 13 of the Constitution. One of such conditions envisaged by article 13(2) is that the Legislature shall not make any law which 90 takes away or abridges the equality clause in article 14, which enjoins the State not to deny to any person equality before the law or the equal protection of the laws of the country. It cannot be disputed that if the Act infringes the provisions of article 14 of the Constitution, it must be struck down as unconstitutional. For the purpose of these cases, we shall assume that the State Legislature had the necessary competence to enact the law, though the petitioners have seriously challenged such a competence. The guarantee of equal protection of the laws must extend even to taxing statutes. It has not been contended otherwise. It does not mean that every person should be taxed equally. But it does mean that if property of the same character has to be taxed, the taxation must be by the same standard, so that the burden of taxation may fall equally on all persons holding that kind and extent of property. If the taxation, generally speaking, imposes a similar burden on every one with reference to that particular kind and extent of property, on the same basis of taxation, the law shall not be, open to attack on the ground of inequality, even though the result of the taxation may be that the total burden on different persons may be unequal. Hence, if the Legislature has classified persons or properties into different categories, which are subjected to different rates of taxation with reference to income or property, such a classification would not be open to the attack of inequality on the ground that the total burden resulting from such a classification is unequal. Similarly, different kinds of property may be subjected to different rates of taxation, but so long as there is a rational basis for the classification, article 14 will not be in the way of such a classification resulting in unequal burdens on different classes of properties. But if the same class of property similarly situated is subjected to an incidence of taxation, which results in inequality, the law may be struck down as creating an inequality amongst holders of the same kind of property. It must, therefore, be held that a taxing statute is not wholly immune from attack on the ground that it infringes the equality clause ill 91 article 14, though the Courts are not concerned with the policy underlying a taxing statute or whether a particular tax could not have been imposed in a different way or in a way that the Court might think more just and equitable. The Act has, therefore, to be examined with reference to the attack based on article 14 of the Constitution. It is common ground that the tax, assuming that the Act is really a taxing statute and not a confiscatory measure, as contended on behalf of the petitioners, has no reference to income, either actual or potential, from the property sought to be taxed. Hence, it may be rightly remarked that the Act obliges every person who holds land to pay the tax at the flat rate prescribed, whether or not he makes any income out of the property, or whether or not the property is capable of yielding any income. The Act, in terms, claims to be "a general revenue settlement of the State" (section 3). Ordinarily, a tax on land or land revenue is assessed on the actual or the potential productivity of the land sought to be taxed. In other words, the tax has reference to the income actually made, or which could have been made, with due diligence, and, therefore, is levied with due regard to the incidence of the taxation. Under the Act in question we shall take a hypothetical case of a number of persons owning and possessing the same area of land. One makes nothing out of the land, because it is arid desert. The second one does not make any income, but could raise some crop after a disproportionately large investment of labour and capital. A third one, in due course of husbandry, is making the land yield just enough to pay for the incidental expenses and labour charges besides land tax or revenue. The fourth is making large profits, because the land is very fertile and capable of yielding good crops. Under the Act, it is manifest that the fourth category, in our illustration, would easily be able to bear the burden of the tax. The third one may be able to bear the tax. The first and the second one will have to pay from their own pockets, if they could afford the tax. If they cannot afford the tax, the property is 92 liable to be sold, in due process of law, for realisation of the public demand. It is clear, therefore, that inequality is writ large on the Act and is. inherent in the very provisions of the taxing section. It is also clear that there is no attempt at classification in the provisions of the Act. Hence, no more need be said as to what could have been the basis for a valid classification. It is one of those cases where the lack of classification creates inequality. It is,, therefore, clearly hit by the prohibition to deny equality before the law contained in article 14 of the Constitution. Furthermore, sec. 7 of the Act, quoted above, particularly the latter part, which vests the Government with the power wholly or partially to exempt any land from the provisions of the Act, is clearly discriminatory in its effect and, therefore, infringes article 14 of the Constitution. The Act does not lay down any principle or policy for the guidance of the exercise of discretion by the Government in respect of the selection contemplated by a. 7. This Court has examined the cases decided by it with reference to the provisions of article 14 of the Constitution, in the case of Shri Ram Krishna Dalmia vs Shri Justice section B. Tendolkar and others (1). section R. Das, C. J., speaking for the Court has deduced a number of propositions from those decisions. The present case is within the mischief of the third proposition laid down at pages 299 and 300 of the Report, the relevant portion of which is in these terms: "A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the Court will not strike down the law out of hand only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification. 93 After such scrutiny the Court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself" (p. 299 of the Report). The observations quoted above from the unanimous judgment of this Court apply with full force to the provisions of the Act. It has, therefore, to be struck down as unconstitutional. There is no question of severability arising in this case, because both the charging sections, section 4 and section 7, authorising the Government to grant exemptions from the provisions of the Act, are the main provisions of the Statute, which has to be declared unconstitutional. The provisions of the Act are unconstitutional viewed from the angle of the provisions of article 19(1)(f) of the Constitution, also. Apart from the provisions of sections 4 and 7 discussed above, with reference to the test under article 14 of the Constitution, we find that section 5(A) is also equally objectionable because it imposes unreasonable restrictions on the rights to hold property, safeguarded by article 19(1)(f) of the Constitution. Section 5(A) declares that the Government is competent to make a provisional assessment of the basic tax payable by the holder of unsurveyed land. Ordinarily, a taxing statute lays down a regular machinery for making assessment of the tax proposed to be imposed by the statute. It lays down detailed procedure as to notice to the proposed assessee to make a return in respect of property proposed to be taxed, prescribes the authority and the procedure for hearing any objections to the liability for taxation or as to the extent of the tax proposed to be levied, and finally, as to the right to challenge the regularity of assessment made, by recourse to proceedings in a higher Civil Court. The Act merely declares the competence of the Government to make 94 a provisional assessment, and by virtue of section 3 of the Madras Revenue Recovery Act, 1864, the land holders may be liable to pay the tax. The Act being silent as to the machinery and procedure to be followed in making the assessment leaves it to the Executive to evolve the requisite machinery and procedure. The whole thing, from beginning to end, is treated as of a purely administrative character, completely ignoring the legal position that the assessment of a tax on person or property is at least of a quasi judicial character. Again, the Act does not impose an obligation on the Government to undertake survey proceedings within any prescribed or ascertainable period, with the result that a land holder may be subjected to repeated annual provisional assessments on more or less conjectural basis and liable to pay the tax thus assessed. Though the Act was passed about five years ago, we were informed at the Bar that survey proceedings had not even commenced. The Act thus proposes to impose a liability on land holders to pay a tax which is not to be levied on a judicial basis, because (1) the procedure to be adopted does not require a notice to be given to the proposed assessee; (2) there is no procedure for rectification of mistakes committed by the Assessing Authority; (3) there is no procedure prescribed for obtaining the opinion of a superior Civil Court on questions of law, as is generally found in all taxing statutes, and (4) no duty is cast upon the Assessing Authority to act judicially in the matter of assessment proceedings. Nor is there any right of appeal provided to such assessees as may feel aggrieved by the order of assessment. That the provisions aforesaid of the impugned Act are in their effect confiscatory is clear on their face. Taking the extreme case, the facts of which we have stated in the early part of this judgment, it can be illustrated that the provisions of the Act, without proposing to acquire the privately owned forests in the State of Kerala after satisfying the conditions laid down in article 31 of the Constitution, have the effect of eliminating the private owners through the machinery of the Act. The petitioner in petition 42 95 of 1958 has been assumed to own 25 thousand acres of forest land. The liability under the Act would thus amount to Rs. 50,000 a year, as already demanded from the petitioner on the basis of the provisional assessment under the provisions of section 5(A). The petitioner is making an income of Rs. 3,100 per year out of the forests. Besides, the liability of Rs. 50,000 as aforesaid, the petitioner has to pay a levy of Rs. 4,000 on the surveyed portions of the said forest. Hence, his liability for taxation in respect of his forest land amounts to Rs. 54,000 whereas his annual income for the time being is only Rs. 3,100 without making any deductions for expenses of management. Unless the petitioner is very enamoured of the property and of the right to hold it may be assumed that he will not be in a position to pay the deficit of about Rs. 51,000 every year in respect of the forests in his possession. The legal consequences of his making a default in the payment of the aforesaid sum of money will be that the money will be realised by the coercive processes of law. One can, easily imagine that the property may be sold at auction and may not fetch even the amount for the realisation of which it may be proposed to be sold at public auction. In the absence of a bidder forthcoming to bid for the offset amount, the State ordinarily becomes the auction purchaser for the realisation of the outstanding taxes. It is clear, therefore, that apart from being discriminatory and imposing unreasonable restrictions on holding property, the Act is clearly confiscatory in character and effect. It is not even necessary to tear the veil, as was suggested in the course of the argument, to arrive at the conclusion that the Act has that unconstitutional effect. For these reasons, as also for the reasons for which the provisions of sections 4 and 7 have been declared to be unconstitutional, in view of the provisions of article 14 of the Constitution, all these operative sections of the Act, namely 4, 5A and 7, must be held to offend article 19(1)(f) of the Constitution also. The petitions are accordingly allowed with costs against the contesting respondent, the State of Kerala. 96 SARKAR,J. These petitions were filed under Art.32 of the Constitution, challenging the validity of the Travancore Cochin Land Tax Act, 1955, as amended by Act X of 1957. The principal Act was passed by the legislature of the State of Travancore Cochin and the Amending Act, by the legislature of the State of Kerala, in which the State of Travancore Cochin had been merged. The petitioners are owners of lands in the State of Kerala. The Act as amended and hereafter referred to as the Act, levied a certain basic tax on all lands in the State of Kerala. The petitioners say that the levy is illegal and violates their fundamental rights. It appears from the preamble that the Act was passed as it was deemed necessary to provide for the levy of a low and uniform rate of basic tax on all lands in the State. The Act provides that the arrangement made by it for the levy of the basic tax is to be deemed to be a general revenue settlement of the State. Section 4 of the Act is the charging section and it lays down that there shall be charged and levied in respect of all lands in the State, of whatever description and held under whatever tenure, a uniform rate of tax to be called the basic tax. Section 5 fixes the rate of the tax at 2 n. P. per cent which works out at Rs. 2 per acre per annum. This section also provides that the basic tax shall be the tax payable to the Government in lieu of any other existing tax in respect of land. Section 12 abolishes all cesses on land except irrigation cess. The first ground on which the validity of the Act is challenged is that it offends the provision as to the equal protection of the laws contained in article 14 of the Constitution. The Act applies to all lands in the State and it imposes an uniform rate of tax, namely, Rs. 2 per acre. It is said that all lands in the State have not the same productive quality; that some are waste lands and others, lands of varying degrees of fertility. The contention is that the tax weighs more heavily on owners of waste lands than on owners of fertile lands. It is said that it is bound to happen that some owners make no income out of their lands 97 or make a small income and they would have to pay the tax out of their pocket while the owners of better classes of lands yielding larger income would be able to pay the tax out of the income from the lands. It is contended that the Act therefore discriminates between several classes of owners of lands in the State and is void as infringing the equality clause in the Constitution. It may be conceded that all lands in the State are not of the same degree of fertility. I am however unable to see that because of that, the Act can be said to discriminate between the owners of them. What is really said appears to be that the Act makes a classification of the owners of lands according to areas. Assume that the Act does so. The question then is, is such a classification illegal? The equal protection clause in the Constitution does not mean that there shall be no classification for the purpose of any law. It has been said by this Court in Budhan Choudhury vs The State of Bihar(1): "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differential which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differential must have a rational relation to the object. Bought to be achieved by the statute in question". On the argument of the petitioners, the Act makes a classification between owners of lands using as the differentia, the area of the land held by them. The question then, is, is that differentia intelligible and has that differentia a rational relation to the object of the Act? Now it seems to me that both the tests are satisfied in the present case. The tax payers are classified according to the area of lands held by them. That is quite an intelligible basis on which to make a classification; holders of varying areas of land can (1) ; 1049. 13 98 quite understandably be placed in different classes. Next, has such a basis of classification, a rational relation to the object of the Act? The Act is a taxing statute. It is intended to collect revenue for the governmental business of the State. It says that one of its objects is to provide a low and uniform rate of basic tax. Another object mentioned is to replace all other dues payable to the Government in respect of the ownership of the land by a uniform basic tax. Why is it to be said that the use of the area of land held as the basis of classification has no rational relation to these objects. I find no reason. The object is to tax land held in the State for raising revenues. It is the holding of the land in the State that makes the owner liable to pay tax. It would follow that the quantum of the tax can be reasonably linked with the quantum of the holding. Why is it said that the classification on the basis of area is bad? It is only because it imposes unequal burden of the tax on the owners of land; because owners of less productive land would have a larger burden put on them. Now if this argument is right, then tax on land can be imposed only according to its productivity. I have not been shown any authority which goes to this length. I am further unable to see how productivity as the basis of classification could be said to have a more rational relation to the object of a statute collecting revenue by taxing land held in the State. The tax is not levied because the land is productive but because the land is held in the State. Again if the tax which could be imposed on land had to be correlated to its productivity, then the State would have no power to tax unproductive land and the provision in the Constitution that it would have power to tax land would, to that extent, be futile. It seems to me that a contention leading to such a result cannot be accepted. Reliance was placed for the petitioners on Cumberland Coal Company vs Board of Revision on Tax Assessments (1) in support of the contention that a tax on land not based on its productivity, violates article 14. (1) ; 99 I am unable to hold that this case supports the contention. What had happened there was that a certain statute had imposed a tax ad valorem on all coal situated in a certain area and in assessing the tax, the coal of the Cumberland Coal Company had been assessed by the authorities concerned at its full value while the coal of the rest of the class liable to the tax had been assessed at a lower value. Thereupon it was held that "the intentional systematic undervaluation by State Officials of taxable property of the same class belonging to other owners contravenes the con stitutional right of one taxed on the full value of his property. " On this view of the matter the Supreme Court of America directed readjustment of the assessments. The statute with which this case was concerned had levied the tax ad valorem which, it may be, is the same thing as a tax correlated to productivity. The case had therefore nothing to do with the question that a tax on coal otherwise than ad valorem would be unconstitutional. In fact this case did not declare any statute invalid. Then it seems to me that if the contention of the petitioners is right, and land could be taxed only on its productivity, for the same reason, taxes on all other things would have to be correlated to the income to be derived from them. The result would be far reaching. I am not prepared to accept a contention producing such a result and no authority has been cited to lead me to accept it. It may be that as lands are not of equal productivity, some tax payers may be able to pay the tax out of the income of the land taxed while others may have to find the money from another source. To this extent the Act may be more hard on some than on others. But I am unable to see that for that reason it is unconstitutional. All class legislation puts some in a more disadvantageous position than others. If the classification made by the law is good, as I think is the case with the present Act, the resultant hardship alone cannot make it bad. It was said in Magonn vs Illinois Trust and Savings Bank(1), "It is hardly (1) ; , 1043. 100 necessary to say that hardship, impolicy, or injustice of state laws is not necessarily an objection to their constitutional validity. " It is then said that sub sec. (1) of section 5A, which was introduced into the Act by the Amending Act, offends article 14. The impugned provision is in these terms: S.5A. (1) It shall be competent for the Government to make a provisional assessment of the basic tax payable by a person in respect of the lands held by him and which have not been surveyed by the Government, and upon such assessment such person shall be liable to pay the amount covered in the provisional assessment. This section was enacted as at the date of the Act, all lands had not been surveyed and so the areas of all holdings were not known. In the absence of such knowledge the tax which was payable on the basis of the areas of the holdings could not be assessed on unsurveyed lands, so the section provides that pending the survey, the Government will have power to make a provisional assessment on unsurveyed lands. This provision was necessary as the survey was bound to take time. The contention is that a. 5A(1) gives arbitrary power to the Government to make a provisional assessment on any person it chooses, leaving out others from the provisional assessment. I am unable to read the sub section in that way. It may be that it leaves it to the Government to make a provisional assessment if it chooses. This does not result in any illegal classification. The surveyed lands and unsurveyed lands are distinct classes of properties and may be differently treated. Again, all unsurveyed lands would on survey have to pay tax from the beginning. It would follow that the holders of both classes of lands are eventually subjected to the same burden. As to the contention that under this section the Government has the right to levy the provisional assessment at its choice on some and not on all holders of unsurveyed lands, I am unable to agree that this is a proper reading of the section. In my view, the 101 expression "a person" in the section does not lead to that conclusion. That expression should be read as "all persons" and it is easily capable of being so read. The section says, "It shall ' be competent for the ' Government to make a provisional assessment of the basic tax payable by a person". Now the basic tax is payable by all persons holding land. So the provisional assessment, if made, has to be on all persons holding lands whose lands have not been surveyed. The Government cannot, therefore, pick and choose. A statute is intended to be legal and it has therefore to be read in a manner which makes it legal rather than in a manner which makes it illegal. If the Government did not make the provisional assessment in the case of all liable to such assessment, then the Government 's action could be legitimately questioned. It has however not in fact been said in these petitions that in deciding to make the provisional assessment the Government has made any discrimination between the persons liable to such assessment. Section 5A(1) is also attacked on the ground that it is against rules of natural justice in that it does not say that in making the provisional assessment, any hearing would be given to the person sought to be assessed or requiring a return from him or giving him a right of appeal in respect of the provisional assessment made. It is true that the ' section does not expressly provide for a hearing being given. It seems to me however that if according to the rules of natural justice the assessee was entitled to a hearing, an assessment made without giving him such a hearing would be bad. The Act must be read so as to imply a provision requiring compliance with the rules of natural justice. Such a reading is not impossible in the present case as there is nothing in the Act indicating that the rules of natural justice need not be observed. It was said in Spack man vs Plumstead Board of Works (1) where a statute requiring an architect to give a certain certificate which did not provide the procedure as to how the architect was to conduct himself, came up for consideration that, "No doubt, in the (1) 10 A.C. 229, 240. 102 absence of special provisions as to how the person who is to decide is to proceed, the law will imply no more than that the substantial requirements of justice shall not be violated." Again in Maxwell on Statutes (10th ed.) p. 370 it has been said, "In giving judicial powers to affect prejudicially the rights of person or property, a statute is understood as silently implying, when it does not expressly provide, the condition or qualification that the power is to be exercised in accordance with the fundamental rules of judicial procedure, such, for instance, as that which requires that before its exercise, the person sought to be prejudicially affected shall have an opportunity of defend ing himself." In so far as this Act confers a power on the Government to discharge the judicial duty of making a provisional assessment, which the petitioners say, it does, it must imply that the judicial process has to be observed. As regards the return, that seems to me not to be of much consequence. If the assessee is entitled to be heard, the fact that he is not asked to make a return, would not constitute a departure from the rules of natural justice. Likewise, the absence of a right of appeal is not something on which the petitioners can rely. Rules of natural justice do not require that there must always be a right of appeal. Under the Act it is the Government which makes the assess ment and it would not be unreasonable to hold that in view of the high authority of the person assessing, the absence of a right of appeal is not likely to cause any miscarriage of justice. I am therefore unable to hold that in the absence of express provisions laying down the procedure according to which the provisional assessment is to be made, the Act has to be held invalid. It may here be stated that in those instances where, in the present cases, provisional assessments had been made, the, assessees had either themselves supplied the area of the lands held by them or the area had been determined after giving them a hearing. After the area has been determine , the amount of the tax payable is decided by a simple calculation at the rate 103 of Rs. 2 per acre of land held and with regard to this, no hearing is required. Then again sub see. (2) of section 5A provides that the Government after conducting a survey of the lands mentioned in sub sec. (1) under which provisional assessment is to be made, shall make a regular assessment and adjustments would have to be made in regard to tax already paid on the basis of the regular assessment. A point is made that there is no time limit fixed within which the regular assessment is to be made and so the Act leaves it to the arbitrary decision of the Government when to make the regular assessment. I do not think that this contention is correct. Properly read, the section in the absence of any indication as to time, means that regular assessment would have to be made as soon after the survey, as is reasonably possible. It is also said that section 7 of the Act offends article 14. This section gives power to the Government to exempt from the operation of the Act such lands or class of lands as the Government may by notification decide. This section does not indicate on what grounds the exemption is to be granted. It therefore seems to me that it gives arbitrary power to the Government and offends article 14. But the section is clearly severable from the rest of the Act. If the section is taken out of the Act, the operation of the rest of the Act will not in the least be affected. The only effect will then be that the Government will have no power to exempt any land from the tax. That will not in any way affect the other provisions of the Act. The invalidity of this section is therefore no reason for declaring the entire Act illegal. It may be pointed out that it is not alleged in the petitions that the Government has exempted any lands or class of lands from the operation of the Act. It is contended that section 8 of the amending Act also shows the arbitrary nature of the Act. That section provides that if any difficulty arises in giving effect to the provisions of this Act, the Government may by order do anything not inconsistent with such provisions which appears to it to be necessary or expedient 104 for removing the difficulty. This is a common form of provision now found in many Acts. The power given under it cannot be said to be uncontrolled for it must be exercised consistently with the Act and to remove difficulties arising in giving effect to the Act. In any event, this provision is contained in the amending Act only. Even if the section be held to be invalid that would not affect, the rest of the amending Act or any question that arises on these petitions. The validity of the Act is also challenged on the ground that it infringes article 19, cl. (1), sub cls. (f ) & (g). This challenge seems to me to be wholly untenable. Apart from the question whether a taxing statute can become invalid as offending article 19, as to which the position on the authorities does not seem to be very clear, it is plain that article 19 permits reasonable restrictions to be put on the rights mentioned in subcls. (f ) & (g). Now there is no dispute that the rate of tax fixed by the Act is a very low rate. It has not been said that the rate fixed is unreasonable. It clearly is not so. The restrictions on these rights under article 19(1), (f) & (g) put by the Act, if any, are clearly reasonable. These rights cannot therefore be said to have been infringed by the Act. The lands of the petitioners are lands on which stand forests. It is said that under the Madras Preservation of Private Forests Act, (Act XXVII of 1949), which applies to the lands with which we are concerned as they are situated in an area which previously formed part of the State of Madras, the owners of the forests can work them only with the permission of the officer mentioned in that Act. It is said that the control imposed by the officer has been such that the income received from the forest is much less than the tax payable under the Act in respect of the land on which the forest stands. Taking by way of illustration Petition No. 13, it is pointed out that the income from the forest with which that petition is concerned was Rs. 8,477 for the year 1956 57 while the tax payable under the Act for more or less the same period was Rs. 1,51,000. I am unable to hold that because of this the Act offends article 19(1), (f) and (g). 105 It is not stated that the land is not capable of producing any income other than the income from the forest standing on it. There is nothing to show that in all times to come the income from the land including the income from the forest, will be less than the tax imposed on it by the Act. The area of the land concerned in Petition No. 13 is enormous being about 75,500 acres. I am further unable to hold the impugned ' Act to be invalid because of action that may be taken under another Act, namely, the Madras Act XXVII of 1949. The validity of the Act is challenged also on the ground that it offends article 31 of the Constitution. I am unable to see any force in this contention. If the statute is otherwise valid, as I have found the present Act to be, it cannot, even if it deprives any person of property, be said to offend article 31(1). It has been held by this Court in Ramjilal vs Income tax Officer,. Mohindargarh (1) 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." No question of cl. (2) of article 31 being violated arises here for the Act does not deal with any acquisition of property. It is also said that the Act is a colourable piece of legislation, namely, that though in form a taxing statute it, in effect, is intended to expropriate lands, held by the citizens in the State by imposing a tax too heavy for the land to bear. As was said in Raja Bhairebendra Narayan Bhup vs The State of Assam (2) "The doctrine of colourable legislation is relevant only in connection with the question of legislative competency". In the present case, there being in my view, no want of legislative competency in the legislature which passed the Act in question, the Act cannot be assailed as a piece of colourable legislation. I may add that I do not accept the argument that the Act is in its nature expropriatary or that the tax imposed by it is really excessive. (1)[1951] S.C.R. 127, 136. (2) [1956] S.C.R. 303. 14 106 I come now to the last argument advanced by the petitioners. It is said that the Act was beyond the legislature competence of the State Legislature. It is conceded that the State Legislature has power to impose a tax on land under entry 49 of List 2 in the Seventh Schedule to the Constitution, but it is said that land as mentioned in that entry does not include lands on which forests stand. It is contended that the State Legislature has power to legislate about forests under entry 19 of that List and also as to land under entry 18. There is however no power to impose a axon forests while there is power under entry 49 of that list to tax land. Therefore, it is said, that there is no power to impose tax on lands on which forests stand and the Act in so far as it imposes tax on lands covered by forests, which the lands of the petitioners are, is hence incompetent. It is not in dispute that a State Legislature has no power to impose a tax on a matter with regard to which it has the power to legislate but has been given no express power to impose a tax. Therefore, I agree, that a State Legislature cannot impose tax on forests. I am however not convinced that "land" in entry 49 is not intended to include land on which a forest stands. No doubt, a forest must stand on some land. In Shorter Oxford Dictionary, one of the mean ings of "forest" is given as an extensive tract of land covered by trees and undergrowth, sometimes intermingled with pastures. The concepts of forest and land however are entirely different. The principal idea conveyed by the word "forest" is the trees and other growth on the land. Under entry 19 there may no doubt be legislation with regard to land in so far it is necessary for the purpose of the forest growing on it. It is well known that entries in the legislative lists have to be read as widely as possible. It is not necessary to cut down the plain meaning of the word ,"land" in entry 49 to give full effect to the word "forest" in entry 19. In my view, the two entries namely, entry 49 and entry 18 deal with entirely different matters. Therefore, under entry 49 taxation 107 on land on which a forest stands is permissible and legal. For these reasons I would dismiss these petitions. BY COURT: In accordance with the opinion of the majority of the Court, these Petitions are allowed with costs against the contesting Respondent, the State of Kerala. Petitions allowed.

The Travancore Cochin Land Tax Act, 1955 was passed by the legislature of the State of Travancore Cochin and was amended by Act 10 of 057, by the State of Kerala. By section 4 Of the Act all lands in the State of whatever description and held under whatever tenure were to be charged and levied a uniform rate of tax to be called the basic tax. Section 7 gave power to the Government to exempt from the operation of the Act such 78 lands or class of lands which the Government may, by notification, decide. Section 5A which was introduced into the Act by the Amending Act enabled the Government to make a provisional assessment of the basic tax in respect of the lands which had not been surveyed by the Government and provided that the Government after conducting the survey shall make a regular assessment and make the necessary adjustments in respect of the amounts paid already. There was, however, no time fixed for the conduct of the survey. The petitioners who owned forest in the State, challenged the constitutional validity of the Act on the grounds that the provisions of the Act contravened articles 14, 19(i)(f) and 31(1) of the Constitution of India inasmuch as (1) the Act did not have any regard to the quality of the land or its productive capacity and the levy of a tax at a flat rate of RS. 2 per acre imposed very unreasonable restrictions on the right to hold property, (2) the. Act did not lay down any provision calling for a return from the assessee for an enquiry or investigation of facts before the provisional assessment was made or any right of appeal to any higher authority and, in fact, did not make any provision for hearing the assessee at any stage, (3) section 7 gave arbitrary power to the Government to pick and choose in the matter of grant of total or partial exemption from the provisions of the Act, and (4) the tax proposed to be levied had absolutely no relation to the production capacity of the land sought to be taxed or to the income they could derive, and therefore the Act had been conceived with a view to confiscating private property, there being no question of any compensation being paid to those who may be expropriated as a result of the working of the Act. The petitioners also challenged the legislative competence of the legislature of the State to levy a tax on lands on which forests stood. The case on behalf of the State of Kerala, inter alia, was that the Act had its justification in article 265 Of the Constitution of India, which was not subject to the provisions of Part III of the Constitution and that, therefore, articles 14, 19 and 31 could not be pressed in aid of the petitioners. , Held, (Sarkar, J., dissenting), that the Travancore Cochin Land Tax Act, 1955, infringed the provisions of article 14 Of the Constitution of India. The Act obliged every person who held land to pay the tax at the flat rate prescribed, whether or not he made any income out of the property, or whether or not the property was capable of yielding any income. Consequently, there was no attempt at classification in the provisions of the Act and it was one of those cases where the lack of classification created inequality. It was therefore hit by the prohibition to deny equality before the law contained in article 14. Section 5A of the Act which enabled the Government to make a provisional assessment of the basic tax payable by the 79 holder of unsurveyed land imposed unreasonable restrictions on the rights to hold property safeguarded by article 19(1)(f) of the Constitution, inasmuch as (1) the Act did not impose an obligation on the Government to undertake survey proceedings within any prescribed or ascertainable period, with the result that a landholder might be subjected to repeated annual provisional assessments on more or less conjectural basis and liable to pay the tax assessed, and (2) the Act being silent as to the machinery and procedure to be followed in making the assessment left it to the Executive, completely ignoring the legal position that the assessment of a tax on a person or property was at least of a quasijudicial character. Section 7 of the Act which vested the Government with the power wholly or partially to exempt any land from the provi sions of the Act did not lay down any principle or policy for the guidance of the exercise of discretion by the Government in respect of the selection contemplated by the section, and was, therefore, discriminatory in effect and offended article 14. The section was not severable from the rest of the Act as both the charging sections, section 4 and section 7, authorising the Government to grant exemptions from the provisions of the Act were the main provisions of the statute. Shri Ram Krishna Dalmia vs Sri justice section R. Tendolkar; , , relied on. The Act was also confiscatory in character inasmuch as the provisions of the Act had the effect of eliminating the private owners through the machinery of the Act, without proposing to acquire the privately owned forests in the State after satisfying the conditions laid down in article 31 of the Constitution. Per Sinha, C.J., Imam, Subba Rao and Shah, JJ. Article 265 of the Constitution which provided that the State shall not levy or collect a tax except by authority of law referred to a valid law, and in order that the law might be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing a tax and authorising the collection thereof and, secondly, the tax must be subject to the conditions laid down in article 13, by which all laws inconsistent with or in derogation of the fundamental rights in Part III shall be void. Per Sarkar, J. (1) The object of the Act was to tax land in the State for raising revenues by providing for a low and uniform rate of basic tax replacing all other dues payable to the Government and the tax payers were classified according to the area of lands held by them. Such a classification had an intelligible basis and had a rational relation to the object of the Act. As tax was to be levied not because the land was productive but because the land was held in the State, the classification did not offend article 14 Of the Constitution, even though it might impose unequal burden of the tax on the owners of land on account of owners of less productive land being put on a larger burden. 80 (2)Section 5A did not offend article 14 and in the absence of express provisions laying down the procedure according to which the provisional assessment was to be made, the Act could not be held invalid on the ground that it was against the rules of natural justice. (3)Section 7, even if it were considered invalid on the ground that it gave arbitrary power to the Government and offended article 14, was severable from the rest of the Act and would not affect the other provisions of the Act. (4)The Act did not infringe the fundamental rights in article 19(1)(f) as the rate of tax fixed by the Act was a very low rate and the restrictions on those rights were reasonable. (5) The Act was not in its nature expropriatary and did not offend article 31. As there was no want of legislative competence, theAct could not be assailed as a piece of colourable legislation on the ground that though in form a taxing statute it, in effect, was intended to expropriate lands by imposing a tax too heavy for the land to bear. (6)The word "land" in Entry 49 of List II, Sch. 7, of the Constitution, included "land on which a forest stands" and, therefore, under that Entry taxation on land on which forests stood was permissible and legal. The Act, therefore, could not be challenged as being beyond the legislative competence of the State Legislature.

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minal Appeal No. 120 of 1960. Appeal by special leave from the judgment and order dated February 28, 1958, of the Madhya Pradesh High Court (Gwalior Bench), in Criminal Appeal No. 3 of 1957. I. N. Shroff, for the appellant. The respondent did not appear. January 25. The Judgment of the Court was delivered by AYYANGAR, J. This is an appeal by special leave by the State of Madhya Pradesh against the dismissal of an appeal preferred by it to the High Court of Madhya Pradesh (Gwalior Bench) which declined to reverse the order of acquittal passed by the Sessions Judge holding the respondent not guilty of an offence under section 302 of the Indian Penal Code. The ground of acquittal by the Sessions Judge, which was concurred in by the High Court was that the respondent was of unsound mind at the time of the commission of the crime and so was entitled to an acquittal under section 84 of the Indian Penal Code. There is very little dispute about the facts or even about the construction of section 84 of the Code because both the learned Sessions Judge as well as the learned Judges of the High Court on appeal have held that the crucial point of time at which the unsoundness of 585 mind, as defined in that section, has to be established is when the act was committed. It is the application of this principle to the facts established by the evidence that is the ground of complaint by the appellant State before us. Section 84 of the Indian Penal Code which was invoked by the respondent successfully in the Courts below runs in these terms: " 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. " It is not in dispute that the burden of proof that the mental condition of the accused was, at the crucial point of time, such as is described by this section lies on the accused who claims the benefit of this exemption (vide section 105, Indian Evidence Act, Illustration (a)). In order to appreciate the point raised for our decision it is necessary to refer to the findings of the Sessions Judge which were in terms approved by the learned Judges of the High Court. Before we do so, however, we shall narrate a few facts regarding which there is no dispute: The deceased Bismilla was related to the accused respondent as the mother of his wife Jinnat whom he had divorced. The accused nurtured a grievance against his mother in law for matters it is unnecessary to set out. Bismilla went to bed in her own house on the night of September 28, 1954. On the morning of the next day the body of Bismilla was found by her husband lying in a pool of blood on the cot on which she was sleeping with the head missing. The First Information Report was immediately lodged by the son of the deceased. The police were informed that the respondent bad borne ill will towards Bismilla and thereafter the Sub Inspector who was in charge of the investigation sent for the respondent. The respondent admitted having committed the murder and stated that be had put the head of Bismila and the knife with which it had been severed from the body in a cloth bag which he had hid in an underground cell in the furniture shop 586 of his father. The respondent was taken to that shop where he took out the articles in the presence of Panch witnesses. He also took out a torch from the cash box of the shop and handed it over to the police with the statement that the torch had been used by him on the occasion of the murder to locate the deceased in the darkness. The accused further stated the manner in which he managed to scale over the wall of the house of the deceased, how he gained entrance into the room, how he found her asleep on a cot and how he severed the head from the trunk and carried the former away and hid it at the place from which he took it out. The respondent was produced before the District Magistrate before whom he made a confessional statement reciting all the above facts. He was thereafter committed to stand his trial before the Court of Sessions Judge, Gwalior, for the offence under section 302 of the Indian Penal Code. We have only to add that the confession which was substantially corroborated by other evidence was never withdrawn though in his answers to the questions put to him by the committing magistrate and by the Sessions Judge under section 342 of the Criminal Procedure Code he professed ignorance of everything. On behalf of the defence, in support of the plea of unsoundness of mind three witnesses were examined, two of them being medical men. The first witness Mahavir Singh was the District Civil Surgeon and Superintendent of the Mental Hospital. He spoke of having treated the accused in August 1952 as a private patient. His deposition was to the effect that the accused had an epileptic type of insanity, the last time that he saw him being in August 1952, i.e., over two years before the date of the occurrence. His evidence therefore cannot be very material not to say decisive on the question as to whether at the moment when the offence was committed the accused was insane as defined by section 84 of tile Code or not. The other medical witness examined for the defence was the Superintendent of the Mental Hospital who had examined the accused on and after November 18, 1954, i. e., nearly two months after the occurrence. His 587 deposition also was to the effect that the accused was suffering from epileptic insanity. The witness testified, that at the first stage of the attack of a fit the patient becomes spastic, that in the second stage the patient would have convulsions of hands and feet and in the tertiary stage becomes unconscious and at the last stage the patient might do acts like sleep walking. Obviously this was expert evidence about the nature of the disease which the doctor stated the accused was suffering from, and not any evidence relating to the mental condition of the accused at the time of the act. The other witness who spoke about the mental condition of the accused was his father. In his evidence he stated : " The accused was in a disturbed state of mind in the evening of September 28, 1954. He bad not taken food for two days. When I went to the shop on the morning of September 29, 1954, at 7 30 or 7 45 I found the accused was unconscious and that his hands and feet were stiffened. Just then the police came there and took away the accused. " On the basis of this evidence the learned Sessions Judge after correctly stating the law that under section 84 of the Indian Penal Code the crucial point of time at which unsoundness of mind should be established, is the time when the act constituting the offence is committed and that the burden of proving that an accused is entitled to the benefit of this exemption is upon him, summarised the evidence which had been led in the case in these terms: " The next thing therefore to consider is whether the accused was incapable of knowing the nature of the act. The fact that the accused went at night to the house of his mother in law, deliberately cut her head and brought it to his house is too obvious to show that the accused was capable of knowing the nature of the act. To put it differently, the accused while killing Bismilla was not under the impression that he was breaking an earthen jar. Even the learned counsel for the defence laid no stress on this aspect of insanity. He, however, contended that the accused was incapable of knowing that what he was doing was either wrong or contrary to law. " 588 The learned Judge, however, rested his decision to acquit the accused on the following reasoning: "There is the circumstance that soon after the crime the accused was admitted to the mental hospital and the Superintendent of the Hospital at least confirms that the accused suffers from epileptic fits. Now epilepsy is a kind of disease which may cause insanity. This is called epileptic insanity. In this insanity the patient commits brutal murders without knowing what he was doing. The accused who suffered from epilepsy has committed a brutal murder. There is thus ground to believe that he may have committed this murder in a fit of epileptic insanity. . . These. things give rise to the inference that the accused may have committed the crime in a fit of insanity and without knowing that what he was doing was either wrong or contrary to law. 1, therefore, find that the accused Ahmedullah did kill Bismilla by severing her head from the body with a knife but that by reason of unsoundness of mind he was incapable of knowing that what he was doing was wrong or contrary to law and that he is, therefore, Dot guilty of the offence of murder with which he is charged under section 302, Indian Penal Code and I direct that the said accused be acquitted. " The learned Judge had definitely found that the accused knew the nature of the act he was doing, finding which as we shall presently point out, was concurred in by the learned Judges of the High Court. In the face of it we find it rather difficult to sustain the reasoning upon which the last conclusion is rested on the facts of this case. From this order of acquittal by the learned Sessions Judge the State filed an appeal to the High Court. The learned Judges of the High Court also correctly appreciated the legal position that to invoke the benefit of the exemption provided by section 84 of the Indian Penal Code it would be necessary to establish that the accused was, at the moment of the act insane. The learned Judges, on this aspect of the case, said : " About the mental condition immediately before and after the crucial moment, we have the 589 circumstances, the conduct of the respondent on the morning of the 29th and his confession given on that afternoon. By themselves they do not support the theory of mental unsoundness necessary for Section 84, though they are explicable, consistently with epileptic insanity. The murder itself has been committed with extraordinary cunning, and attention to the most minute detail It is certain the respondent knew at that time the physical nature of what he was doing; he did not believe that he was breaking a pot or cutting a cabbage, but was taking the life of a human being which he says within 16 hours, he did for vindicating his honour. In fact, the condition at the time of the confession is one of elation rather than of depression or a black out . . . The learned Sessions Judge has held that the respondent was in a fit of epileptic insanity on the 28th night, when he killed his mother in law; it is not clearly recorded, but it also seems to be his finding that this fit of epileptic insanity continued at least till the time of his confession. This finding is not one without any evidence to support it, or one that can be called perverse; still, it is one that could properly be arrived at, only if it is consistent with the observation made on the respondent immediately after the 29th September, 1954. " They proceeded to point out that there was no observation by medical experts soon after the act to enable an inference to be drawn as to the mental condition of the accused just prior thereto. After detailing the arguments on either side the learned Judges concluded: " Thus we have no evidence pointing to that kind and degree of mental unsoundness at the time of the act as required by section 84 of the I.P.C. ; but on the defective material adduced, it would have been in my opinion, an unsatisfactory conclusion either way In a case like this when the proved facts would otherwise support a conviction for murder it was for the defence to adduce evidence and it should, in principle, reap the consequence of any omissions in this regard," 590 From these observations it would appear as if the learned Judges of the High Court were differing from the learned Sessions Judge in his conclusion as regards the application of section 84 to the facts of the present case. They however, continued: " The Sessions Judge was satisfied that the defence has discharged the onus of proving that at the time of the commission of the offence the accused was mentally so unsound as not to know that the act was wrong and contrary to law. Now it is for the State to establish in appeal that the finding is perverse and that there are compelling reasons why that decision should be reversed." and it is on this ground that the learned Judges dismissed the appeal by the State. We find ourselves wholly unable to concur with this conclusion or with the reasoning on which it is rested. The learned Judges failed to appreciate that the error in the judgment of the Sessions Judge lay not so much in the implicit acceptance of the testimony of the father of the accused because he was obviously an interested witness, and of this the appellant State could certainly and justifiably complain but in proceeding on a basis wherein inferences and probabilities resting on assumptions were permitted to do duty for proved facts, which the statute required to be established before the exemption under the section could be claimed. Refusal to interfere with an acquital in such circumstances could hardly be justified under any rule as to " impelling reasons " for interference even assuming the existence of such a rule. The error in the judgment of the High Court consisted in ignoring the fact that there was nothing on the record on the basis of which it could be said that at the moment of the act, the accused was incapable of knowing that what he was doing was wrong or contrary to law. In this connection we might refer to the decision of the Court of Criminal Appeal in En, gland in Henry Perry(1) where also the defence was that the accused had been prone to have fits of epileptic insanity. During the course of the argument Reading, C.J., observed : (z) 14 Cr. Appeal Rep. 48. 591 " The crux of the whole question is whether this man was suffering from epilepsy at the time he committed the crime. Otherwise it would be a most dangerous doctrine if a man could say, 'I once had an epileptic fit, and everything that happens hereafter must be put down to that '. " In dismissing the appeal the learned Chief Justice said: " Every man is presumed to be sane and to possess a sufficient degree of reason to be responsible for his acts unless the contrary is proved. To establish insanity it must be clearly proved that at the time of committing the act the party is labouring under such defect of reason as not to know the nature and quality of the act which he is committing that is, the physical nature and quality as distinguished from the moral or, if he does know the nature and quality of the act he is committing, that he does not know that he is doing wrong. There is, however, evidence of a medical character before the jury, and there are statements made by the prisoner himself, that he has suffered from epileptic fits. The Court has had further evidence, especially in the prison records, of his having had attacks of epilepsy. But to establish that is only one step; it must be shown that the man was suffering from an epileptic seizure at the time when he committed the murders; and that has not been proved. " We consider that the situation in the present case is very similar and the observations extracted apply with appositeness. We consider that there was no basis in the evidence before the Court for the finding by the Sessions Judge that at the crucial moment when the accused out the throat of his mother in law and severed her head, he was from unsoundness of mind incapable of knowing that what he was doing was wrong. Even the evidence of the father does not support such a finding. In this connection the Courts below have failed to take into account the circumstances in which the killing was compassed. The accused bore illwill to Bismilla and the act was committed at dead of night when he would not be seen, the accused 76 592 taking a torch with him, access to the house of the deceased being obtained by stealth by scaling over a wall. Then again, there was the mood of exaltation which the accused exhibited after he had put her out of her life. It was a crime committed not in a sudden mood of insanity but one that was preceded by careful planning and exhibiting cool calculation in execution and directed against a person who was considered to he the enemy. The appeal is therefore allowed, the order of acquittal passed against the respondent set as de and in its place will be substituted a finding that the respondent is guilty of murder under section 302 of the Indian Penal Code. In the normal course the proper punishment for the heinous and premeditated crime committed with inhuman brutality would have been a sentence of death. But taking into account the fact that the accused has been acquitted by the Sessions Judgean order which has been affirmed by the High Court we consider that the ends of justice would be met if we sentence the accused to rigorous imprisonment for life. It is needless to add that the State Government will take steps to have the accused treated in an asylum until he is cured of his illness, if this still continues. Appeal allowed.

The High Court affirmed an order of acquittal of the respondent on a charge of murder under section 302 of the Indian Penal Code passed by the Sessions judge on the ground that the accused was of unsound mind. The prosecution case was that the accused committed the murder of his mother in law against whom he had borne ill will, by severing her head from her body while she was asleep at dead of night. He made a confession of the crime but a plea of insanity was taken at the trial. On appeal with special leave by the State : Held, that the crucial point of time at which unsoundness of mind should be established is the time when the crime is actually (1) I.L.R. [1938]2 Cal, 337. 75 584 committed, the burden of proving which lies on the accused in order to entitle him to the exemption provided under section 84 of the Indian Penal Code. It is not sufficient only to prove that the accused suffered from an "epileptic type of insanity" before or after the commission of the crime. Henry Perry, 14 Cr. Appeal Rep. 48, followed. There was nothing on the record of the instant case to show that at the moment when the crime was committed the accused was capable of knowing that what he was doing was wrong or contrary to law and as such he was not entitled to an acquittal under section 84 of the Indian Penal Code. Refusal by the High Court to interfere with an acquittal in the proved circumstances of the case could not be justified under any rule as to " impelling reasons ".

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Appeals Nos. 181 to 184 of 1960. Appeals. from the judgment and order dated March 16, 1955, of the Madras High Court in Case Referred No. 43 of 1950. A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellants. Hardayal Hardy and D. Gupta, for the respondent. 1960, December 14. The Judgment of the Court was delivered by SHAH, J. These appeals relate to Excess Profits Tax liability of the appellants in respect of two chargeable accounting periods April 1. 1944, to March 31., 1945, and April 1, 1945, to March 31, 1946. The appellants were under an agreement dated July 11, 1945, appointed managing agents for 20 years of the Coimbatore Spinning and Weaving Co, 273 Ltd. hereinafter referred to as the company. Prior to October 1, 1944, the appellants were the Managing Agents of the Coimbatore Mills Agency Ltd hereinafter referred to as the Agency Company who were the Managing Agents of the company. The year of account of the appellants ended on March 31, of the company on June 30, and of the Agency Company on September 30. Under the agreement by which the appellants were appointed 'managing agents, the following remuneration was provided: 1. Office allowance at Rs. 1,500 per mensem; 2. Commission at 1% on all purchases of cotton and stores and 21/2 on all capital expenditure incurred from time to time; and 3. Commission at 10% on the net profits of the company due and payable yearly immediately after the accounts of the company were closed. For the assessment year 1945 46, the appellants submitted a return of their income inclusive of the following items: 1. Remuneration from the Agency Company Rs. 36,000. Commission at 10% on profits from the Agency Company upto 30 9 1944 Rs. 37,953. Remuneration from company from 1 10 1944 to 31 3 1945 Rs. 9,000. Commission at 1% on cotton and stores purchased during this period Rs. 21,704. This return was accepted by the Additional Income tax Officer, Coimbatore I & II Circles, and the appellants were assessed to income tax. Excess Profits Tax was also worked out on the same basis for the chargeable accounting period ending March 31, 1945. For the assessment year 1946 47, the appellants submitted a return of their income which included the following items: 1. Remuneration from the company for one year from 1 4 1945 Rs. 18,000. Commission at 10% on the profits of the company paid in December 1945 (1 10 1944 to 30 6 1945) Rs. 1,90,889. 35 274 3. Commission at 1% on purchases of cotton and stores from 1 4 1945 to 30 6 1945 Rs. 16,777. Commission at 2 12/ %on capital expenditure from 1 10 1944 to 30 6 1945 Rs. 1,690. The Tax Officer in charge of the assessment directed that the commission on purchases and capital expenditure be taken into account for the year April 1, 1945, to March 31, 1946, and that the receipts be computed accordingly. The amount of Rs. 1,127 attributable out of item 4 was accordingly taken into the account of the previous year after reopening the assessment under section 34 of the Income tax Act, and the commission on the profits of the company was apportioned between the period October 1, 1944, to March 31, 1945, and April 1, 1945, to June 30, 1945, by the application of r. 9 of Sch. 1 of the Excess Profits Tax Act. The Tax Officer also determined the proportionate commission payable under items 3 and 4, for the period ending March 31, 1946, and as a result of the apportionment, the liability of the appel lants, original and revised, for income tax and Excess Profits Tax for the assessment year 1945 46 and chargeable accounting period April 1, 1944, to March 31, 1945, stood as follows: Original assessment of income taxRs. 1,04,654. Excess Profits TaxRs. 45,292. Revised figures Income tax (loss) Rs. 36,182. Excess Profits TaxRs. 1,41,962 11 0. For the assessment year 1946 47 and chargeable accounting period April 1, 1945, to March 31, 1946, tax liability was computed at: Income tax Rs. 1,66,271. Excess Profits Tax Rs. 1,13,163 5 0. The orders of assessmentfor income tax and Excess Profits Tax were confirmed by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal. On the applications of the appellants 275 for reference under section 66(1) of the Income tax Act and section 21 of the Excess Profits Tax Act, the Tribunal drew up a statement of the case and submitted the following four questions to the High Court of Judicature at Madras: 1.Whether on the facts and in the circumstances of the case, the Income tax Officer/Excess Profits Tax Officer was right in taking action under section 34 and 15 of the Income tax and the Excess Profits Tax Act ? 2.Whether on the facts and in the circumstances of this case, the provisions of r. 9, section 1, were properly applied ? 3.Whether on the facts and in the circumstances of the case, the Income tax Officer/Excess Profits Tax Officer was correct in including the proportionate commission income of Rs. 1,127 for income tax assessment 1945 46 and Rs. 1,43,163 plus Rs. 1,127 for Excess Profits Tax assessment Tax for the chargeable accounting period ending 31st March 1945, and 4.Whether on the facts and in the circumstances of the case, the proportionate commission of Rs. 37,129 and Rs. 2,299 were rightly assessed for the assessment year 1946 47 ? The High Court answered all the questions against the appellants and in favour of the Department. Against the order passed by the High Court, these appeals have been preferred with certificate granted under section 66A(2) of the Income Tax Act read with section 21 of the Excess Profits Tax Act. Two questions were canvassed in these appeals: 1.Whether it was open to the Taxing Officer to re open the assessment for 1945 46; and 2.Whether the commission received by the appellants was liable to be apportioned under r. 9 of Sch. 1 of the Excess Profits Tax Act. The appellants maintained their books of account on cash basis and commission received from the company was credited after the accounts of the company were closed. The amounts received by the appellants from the company were included in their return and assessment for the year 1945 46 was completed 276 for the purposes of the Excess Profits Tax by the Tax Officer without apportionment appropriate to the chargeable accounting periods. In so doing, the Tax Officer committed an error. He overlooked the fact that the chargeable accounting period for the as assessment of Excess Profits Tax and the year of account of the company did not tally. Under section 15 of the Excess Profits Tax Act, if the Tax Officer discovers, in consequence of definite information which has come into his possession that profits of any chargeable accounting period chargeable to excess profits tax have escaped assessment, or have been under assessed, he may serve on the person liable to pay such tax a notice containing all or any of the requirements which may be included in a notice under section 13 and may proceed to assess or reassess the profits. The provision is substantially similar to section 34(1) of the Income tax Act before it was amended in the year 1948. It is manifest that by the assessment of income made on the assumption that the chargeable accounting period and the accounting period of the company tallied, there resulted under assessment in the computation of tax liability for Excess Profits Tax, and it was open to the Tax Officer to take action under section 15 of the Excess Profits Tax Act. Determination of the second question depends upon r. 9, Sob. 1, of the Excess Profits Tax Act. By section 2(19) of the Excess Profits Tax Act, the expression " profits " means profits as determined in accordance with Sch. 1. That schedule sets out rules for computation of profits for the purpose of the Excess Profits Tax Act; and by r. 9, it is provided in so far as it is material that: " Where the performance of a contract extends beyond the accounting period, there shall (unless the Excess Profits Tax Officer, owing to any special circumstances, otherwise directs) be attributed to the accounting period such proportion of the entire profits or loss which has resulted, or which it is estimated will result, from the complete performance of the contract as is properly attributable to the 277 accounting period, having regard to the extent to which the contract was performed therein. " The performance of the contract of managing agency extended beyond the period of account of the company which was July 1, 1945, to June 30, 1946: it covered parts of two accounting periods. The Tax Officer was therefore obliged to apportion to the, chargeable accounting periods the entire profits resulting from the complete performance of the contract in proportions properly attributable to the accounting periods and this, he proceeded to do. Counsel for the appellants contends that the contracts contemplated by r. 9 are those of the nature of engineering or works contracts and the like where execution of the contract involves a profit making operation de die in diem and not contracts where remuneration is payable at a certain time for services performed throughout the stipulated period. It is true that remuneration was paid to the appellants after the expiry of the year of account of the company ; but the contract was one the performance of which extended throughout the year of account of the company. The appellants were the managing agents of the company and they had to perform their duties as managing agents for the whole year. It is not disputed that the contract of agency for 20 years is to be regarded for assessment of excess profits tax as an annual contract. The performance of the contract unmistakably cut across the accounting period is also manifest. The remuneration for performance of the contract is not computed at a daily rate, but is computed on a percentage of the commission on the profits of the company for the whole year, but on that account, the contract is not one in which performance does not extend throughout the year of account. Normally in a managing agency contract, the managing agent may not suffer loss, but that does not rule out the application of r. 9 to managing agency contracts. The terms in which r. 9 is enacted are general: the rule is applicable to all contracts which are intended to be operative for a fixed period. If, for the performance of the entire contract, 278 remuneration is payable at rates stipulated, the profit earned out of that remuneration must be apportioned in the manner provided by r. 9 if the performance of the contract extends beyond the accounting period The judgment of this Court in E. D. Sassoon & Co., Ltd. vs The Commissioner of Income Tax, Bombay City(1) on which strong reliance was placed by the appellants has no application to this case. In that case, M/s. E. D. Sassoon & Co., Ltd. who were managing agents of three different companies transferred the managing agencies to three other companies on several dates during the accounting year. A question arose in the computation of income tax payable by M/s. E. D. Sassoon & Co., Ltd. whether the managing agency commission was liable to be apportioned between M/s. E. D. Sassoon & Co., Ltd. and their respective transferees in the proportion of the services rendered as managing agents for the respective periods of the accounting year. It was held by this court (Jagannadhadas, J., dissenting) that on a true interpretation of the managing agency agreements in each case, the contract of service between the companies and the managing agents was entire and indivisible and the remuneration or commission became due by the companies to the managing agents only on completion of definite periods of service and at stated intervals ; that complete perfor mance was a condition precedent to the recovery of wages or salary in respect thereof and the remuneration payable constituted a debt only at the end of each period of service completely performed, no remuneration or commission being payable to the managing agents for broken periods; that no income was earned by or accrued to M/s. E. D. Sassoon & Co., Ltd. and as the transfer of the agencies did not include any income which E. D. Sassoon & Co., Ltd. had earned, they were not liable to be taxed under the Income Tax Act. But that was a case dealing with liability of the assessees who did not receive any income and to whom no income had accrued to pay (1)[1955] 1 S.C. R. 313. 270 income tax on the amounts of remuneration paid to their transferees. The court was not called upon to apply to income received by the assessee the principle of apportionment under r. 9 of Sch. 1 of the Excess Profits Tax Act, or any provision similar thereto. It is r. 9 of Sch. I which attracts the principle of apportionment. The rule enunciated in M/s, E. D. Sassoon & Co. 's case (1) has therefore no application to this case, and the High Court was right in holding that the assessment made by the Excess Profits Tax Officer by apportionment of the commission income between the chargeable accounting periods was correct. The appeals therefore fail and are dismissed with costs. One hearing fee. Appeals dismissed.

Under an agreement dated July 11, 1945, the appellants were appointed managing agents of the Coimbatore Spinning and Weaving Co. Ltd., for 20 years, and certain remuneration was provided for them including 10% commission on the net profits of the company due and payable yearly immediately after the accounts of the company were closed and commissions on purchases and capital expenditure of the company. Prior to October 1, 1944, the appellants were the managing agents of the Coimbatore Mills Agency Ltd., who were the managing agents of the Coimbatore Spinning and Weaving Co. Ltd. The year of account of the appellants ended on March 31, of the company on June 30, and of the Agency Company on September 30. For the assessment year 1945 46 the appellants submitted a return of their income which included the stipulated remuneration and commissions. This return was accepted by the Income tax Officer, and Excess Profits Tax liability for the chargeable accounting period ending March 31, 1945, was also worked out on that basis. A return of income was submitted by the appellants for the assessment year 1946 47 which included commission for the period 1 4 45 to 30 6 45 on purchases of cotton and stores and on capital expenditure. The Tax Officer directed that the commission on purchases and capital expenditure be taken into account 272 for the year April 1, 1945, to March 31, 1946, and that the receipts be computed accordingly. The assessment for 1945 46 was then reopened under section 34 of the Income tax Act under section 15 of the Excess Profits Tax Act and as a result of apportionment made by the application of r. 9 of Sch. 1 of the Excess Profits Tax Act, the liability of the appellants for Income tax and Excess Profits 'fax was revised and fresh assessments were made. The orders of assessment were confirmed by the appellate authorities. Held, that as in the instant case the chargeable accounting period for the assessment of Excess Profits Tax and the year of account of the company did not tally, by the assessment of income made on the assumption that they did tally, there had resulted under assessment and it was open to the Tax Officer to take action under section 15 of the Excess Profits Tax Act. The Excess Profits Tax Officer acted properly in apportioning under r. 9 of Sch. 1 the commission received by the appellants. Rule 9 of Sch. 1 of the Excess Profits Tax Act is enacted in general terms and it is applicable to all contracts which are intended to be operative for fixed periods. If, for the performance of the entire contract, remuneration is payable at certain rates the profits earned out of that remuneration must be apportioned in the manner prescribed by 19 if the performance of the contact extends beyond the accounting period. E. D. Sassoon & Co., Ltd. vs The Commissioner of Income tax, Bombay City; , , distinguished.

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Appeal No. 35 of 1959. Appeal from the judgment and decree dated October 29, 1956, of the Allahabad High Court in Writ Petition No. 327 of 1956. H. N. Sanyal, Additional Solicitor General of India, J. B. Dadachanji, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellants. G. C. Mathur and C. P. Lal, for the respondents. 1960, December 13. The Judgment of Imam, Kapur, Das Gupta and Dayal, JJ. was delivered by Das Gupta, J. Ayyangar, J. delivered a separate judgment. DAS GUPTA, J. This appeal is against an order of the High Court of Judicature at Allahabad rejecting the appellants ' application under article 226 of the Constitution. The first appellant is the Diamond Sugar Mills Ltd., a public limited company owning and operating a sugar factory at Pipraich in the District Gorakhpur, for the manufacture of sugar from 244 sugarcane. The second appellant is the Director of the company. By this application the appellants challenged the imposition of cess on the entry of sugarcane into their factory. On February 24, 1956, when the application was made the U. P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (U. P. XXIV of 1953), was in force. Section 20 of this Act gave to the Governor of U. P. the power to impose by notification "a cess not exceeding 4 annas per maund on the entry of sugarcane into an area specified in such notification for consumption, use or sale therein". This Act it may be mentioned had taken the place of an earlier Act, the U. P. Sugar Factories Control Act, 1938, section 29 of which authorised the Governor of U. P. to impose by a notification after consultation with the Sugar Control Board under the Act "a cess not exceeding 10 per cent of the minimum price, if any, fixed under section 21 or 4 annas per maund whichever was higher on the entry of sugarcane into a local area specified in such notification for consumption, use or sale therein". Notifications were issued under this provision for different crushing seasons starting from 1938 39, the last notification issued thereunder being for the crushing season of 1952 53. These notifications set out a number of factories in a schedule and provided that during 1952 53 crushing season cess at a rate of three annas per maund shall be levied on the entry of all sugarcane into the local areas comprised in factories mentioned in the schedule for consumption, use or sale therein. Act No. XXIV of 1953 repealed the 1938 Act. The first notification under the provisions of section 20 of the 1953 Act was in these terms: "In exercise of the powers conferred by sub section (1) of section 20 of Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953; (U. P. Act No. XXIV of 1953) the Governor is pleased to declare that during the 1954 55 crushing season, a cess at a rate of three annas per maund shall be levied on the entry of all sugar cane into the local areas comprised in the factories mentioned in the Schedule, for the consumption, use or sale therein". 245 Similar notifications were also issued on October 23, 1954, for the crushing season 1954 55 and on November 9, 1955, for the crushing season 1955 56. The appellants ' factory was one of the factories mentioned in the schedule of all these notifications. On the date of the application, i.e., February 24, 1956, a sum. of Rs. 2,59,644 9 0 was due from the first appellant and a further sum of Rs. 2,41,416 3 0 as liability on account of cess up to the end of January, 1956, also remained unpaid. The appellant contended on various grounds that section 20 of Act XXIV of 1953 was unconstitutional and invalid and prayed for the issue of appropriate writs directing the respondents the State of U. P. and the Collector of Gorakhpur not to levy and collect cess on account of the arrears of cess for the crushing season 1954 55 and in respect of the crushing season 1955 56 and successive crushing seasons and to withdraw the notifications dated October 23, 1954, and November 9, 1955 , which have been mentioned above. During the pendency of this application under article 226 before the Allahabad High Court the U. P. Legislature enacted the U. P. Sugarcane Cess Act, 1956 (U. P. XXII of 1956), repealing the 1953 Act. Section 3 of this Act as originally enacted was in these words: "The State Government may by notification in the official gazette impose a cess not exceeding four annas per maund on the entry of the cane into the premises of a factory for use, consumption or sale therein: Provided that the State Government may like. wise remit in whole or in part such cess in respect of cane used or to be used in factory for any limited purpose specified in the notification. Explanation: If the State Government, in the case of any factory situate outside Uttar Pradesh, so declare, any place in Uttar Pradesh set apart for the purchase 'of cane intended or required for use. consumption or sale in such factory shall be deemed to be the premises of the factory. (2) The cess imposed under sub section (1) shall 246 be payable by the owner of the factory and shall be paid on such date and at such place as may be prescribed. (3) Any arrear of cess not paid on the date prescribed under sub section (2) shall carry interest at 6 per cent. per annum from such date to date of payment. " There is a later amendment by which the words "four annas" have been altered to "twenty five naye paise" and the words "Gur, Rab or Khandsari Sugar Manufacturing Unit" have been added after the words "factory" in sub section (1). These amendments are however not relevant for the purpose of this appeal. Section 9 of this Act repealed section 20 of the Sugar Cane (Regulation of Supply and Purchase) Act, 1953. Sub sections 2 and 3 of section 9 are important. They are in these words: "2. Without prejudice to the general application of section 24 of the U.P. General Clauses Act, 1904, every notification imposing cess issued and every assessment made (including the amount of cess collected) under or in pursuance of any such notification, shall be deemed a notification issued, assess ment made and cess collected under this Act as if sections 2, 3 and 5 to 8 had been in force at all material dates. Subject as provided in clause (1) of Article 20 of the Constitution every notification issued cess imposed and act or thing done or omitted between the 26th January, 1950, and the Appointed date in exercise or the purported exercise of a power under section 29 of the U. P. Sugar Factories Control Act, 1938, or of section 20 of the U. P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, which would have been validly and properly issued, imposed, done or omitted if the said sections had been as section 3 of this Act, shall in law be deemed to be and to have been validly and properly imposed and done, any judgment, decree or order, of any court notwithstanding. " The position after the enactment of the U. P. 247 Sugarcane Cess Act, 1956, was that the imposition and assessment of cess that had already been made under the 1953 Act would operate as if made under the 1956 Act. In view of this the first appellant, the Diamond Sugar Mills Ltd., prayed to the High Court for permission to raise the question of constitutionality and validity of the 1956 Act. It also prayed for the issue of a writ in the nature of mandamus directing the respondents not to levy cess upon the petitioners appellants under this new Act, the U. P. Sugarcane Cess Act, 1956. This application was allowed and the High Court considered the question whether section 3 of the U. P. Sugarcane Cess Act, 1956, 'empowering the State Government to impose a cess not exceeding four annas per maund on the entry of the cane into the premises of a factory for the consumption, use or sale therein was a valid law. The principal ground urged in support of the appellants ' case was that the law as enacted in section 3 was invalid and that it was beyond the legislative competence of the State Legislature. Several other grounds including one that the provisions of the section went beyond the permissible limits of delegated legislation were also raised. All the grounds were negatived by the High Court which accordingly rejected the appellants ' petition. The High Court however gave a certificate under Article 132(1) and also under article 133(1)(c) of the Constitution and on the basis of that certificate the present appeal has been filed. Of the several grounds urged before the High Court only two are urged before us in appeal. One is that the law was invalid, being beyond the legislative competence of the State legislature; the other is that in any case the provision giving the Governor power to levy any cess not exceeding 4 annas without providing for any guidance as to the fixation of the particular rate, amounted to excessive delegation, and was accordingly invalid. The answer to the question whether the impugned law was within or beyond the legislative competence of the State legislature depends on whether the law falls under Entry 52 of the State List 248 List II of the Seventh Schedule to the Constitution. It is quite clear that there is no other entry in either the State List or the Concurrent List under which the legislation could have been made. Entry 52 is in these words: "Tax on the entry of goods into a local area for consumption, use or sale therein". Section 3 of the impugned Act which has already been set out provides for imposition of a cess on the entry of sugarcane into the premises of a factory for use, consumption or sale therein. Is the "premises of a factory" a local area within the meaning of the words used in Entry 52? If it is the legislation was clearly within the competence of the State legislature; if it is not, the law was beyond the State legislature 's competence and must be struck down as invalid. In considering the meaning of the words "local area" in entry 52 we have, on the one hand to bear in mind the salutary rule that words conferring the right of legislation should be interpreted liberally and the powers conferred should be given the widest amplitude; on the other hand we have to guard ourselves against extending the meaning of the words beyond their reasonable connotation, in. an anxiety to preserve the power of the legislature. In Re the Central Provinces & Berar Act No. XI V of 1938 (1) Sir Maurice Gwyer, C. J., observed: "I conceive that a broad and liberal spirit should inspire those whose duty it is to interpret it; 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 correcting any supposed errors". Again, in Navinchandra Mafatlal vs The Commissioner of Income Tax, Bombay City (2) Das, J. (as he then was) delivering the judgment of this Court observed: ". . . The cardinal rule of interpretation however, is that words should be read in their ordinary, natural and grammatical meaning subject to this rider that in construing words in a constitutional enactment conferring legislative power the most (1) , 37. (2) [1955] 1 S.C.R. 829. 249 liberal construction should be put upon the words so that the same may have effect in their widest amplitude. " Our task being to ascertain the limits of the powers granted by the Constitution, we cannot extend these limits by way of interpretation. But if there is any difficulty in ascertaining the limits, the difficulty must be resolved so far as possible in favour of the legislative body. The presumption in favour of constitutionality which was stressed by the learned counsel for the respondents does not take us beyond this. On behalf of the appellants it has been urged that the word "local area" in its ordinary grammatical meaning is never used in respect of a single house or a single factory or a single plot of land. It is urged that in ordinary use the words "local area" always mean an area covering a specified region of the country as distinguished from the general area. While it may not be possible to say that the words "local area" have acquired a definite and precise meaning and the phrase may have different connotations in different contexts, it seems correct to say that it is seldom, if ever, used to denote a single house or a single factory. The phrase appears in several statutes, some passed by the Central Legislature and some by the Provincial or State Legislatures; but in many of these the words have been defined. These definitions being for the peculiar purpose of the particular statute cannot be applied to the interpretation of the words "local area" as used in the Constitution. Nor can we derive any assistance from the judicial interpretation of the words "local area" as used in the Code of Criminal Procedure or other Acts like Bengal Tenancy Act as these interpretations were made with reference to the scope of the legislation in which the phrase occurs. Researches into dictionaries and law lexicons are also of 'no avail as none of these give the meaning of the phrase "local area". What they say as regards the meaning of the word "local" offers no guidance except that it is clear that the word "local" has different meanings in different contexts. 32 250 The etymological meaning of the word "local" is "relating to" or "pertaining to" a place. It may be first observed that whether or not the whole of the State can be a "local area", for the purpose of Entry 52, it is clear that to be a "local area" for this purpose must be an area within the State. On behalf of the respondents it is argued that "local area" in Entry 52 should therefore be taken to mean "any part of the State in any place therein". So, the argument runs, a single factory being a part of the State in a place in the State is a "local area". In other words, "local area" mean "any specified area inside the State". The obvious fallacy of this argument is that it draws no distinction between the word "area" standing by itself and the phrase "local area". If the Entry had been " entry of goods into any area of the State. . . some area would be specified for the purpose of the law levying the cess on entry. If the Constitutions were empowering the State Legislatures to levy a cess on entry of goods into any specified area inside the state the proper words to use would have been "entry of goods into any area. . . " it would be meaningless and indeed incorrect to use the words they did use "entry of goods into a local area". The use of the words "local area" instead of the word "area" cannot but be due to the intention of the Constitution makers to make sure that the power to make laws relating to levy on entry of goods would not extend to cases of entry of goods into any and every part of the state from outside that part but only to entry from outside into such portions of the state as satisfied the description of "local area". Something definite was sought to be expressed by the use of the word "local" before the word "area": The question is: what exactly was sought to be expressed? In finding an answer to the question it is legitimate to turn to the previous history of constitutional legislation in the country on this subject of giving power to legislature to levy tax on the entry of goods. In the State of Madras vs Gannon Dunkerley & Co., Ltd.(1) (1) ; 251 this Court referred with approval to the statement of law in Halsbury 's Laws of England, Vol. II, para. 157, p. 93, that the existing state of English law in 1867 is relevant for consideration in determining the meaning of the terms used in the British North America Act in conferring power and the extent of that power. This has necessarily to be so as in the words of Mr. Justice Brewer in South Carolina vs United States (1) "to determine the extent of the grants of power, we must, therefore place ourselves in the position of the men who framed and adopted the Constitution, and inquire what they must have understood to be the meaning and scope of those grants. " Turning now to the previous legislative history we find that in the Government of India Act, 1935, Entry 49 of the Legislative List (List II of the 7th Schedule) was in the same words as Entry 52 of the Constitution except that instead of the words "taxes" as in Entry 52 of List II of the Constitution, Entry 49 List II of the Government of India Act, used the word "cess". In Government of India Act, 1915, the powers of the provincial legislatures were defined in section 80A. 'Under clause (a) of the third sub section of this section the local legislature of any province has with the previous sanction of the Governor General power to make or take into consideration any law imposing or authorising the imposition of any new tax unless the tax was a tax scheduled as exempted from this provision by rules made under the Act. The third of the Rules that were made in this matter under Notification No. 311/8 dated December 18, 1920, provided that the legislative council of a province may without the previous sanction of the Governor General make and take into consideration any law imposing or authorising a local authority to impose for the purpose of such local authority any tax included in Schedule II of the Rules. Schedule II contained 11 items of which items 7 and 8 were in these words: 7. An octroi 8. A terminal tax on goods imported into a local (1) ; 252 area in which an octroi was levied on or before 6th July, 1917. Item 8 was slightly modified in the year 1924 by another notification as a result of which it stood thus: 8. A terminal tax on goods imported into or exported from a local area save where such tax is first imposed in a local area in which an octroi was levied on or before July 6, 1917. Octroi is an old and well known term describing a tax on the entry of goods into a town or a city or a similar area for consumption, sale or use therein. According to the Encyclopedia Britannica octroi is an indirect or consumption tax levied by a local political unit, normally the commune or municipal authority, on certain categories of goods on their entry into its area. The Encyclopedia Britannica describes the octroi tax system in France (abolished in 1949) and states that commodities were prescribed by law and were divided into six classes and for all the separate commodities within these six groups maximum rates of tariff were promulgated by presidential decree, specific rates being fixed for the three separate sorts of octroi area, established on the basis of population, namely, communes having (1) less than 10,000 inhabitants, (2) from 10,000 to 50,000 and (3) more than 50,000. While we are not concerned here with other features of the octroi tax system, it is important to note that the tax was with regard to the entry of goods into the areas of the communes which were local political units. According to the Shorter Oxford English Dictionary "commune" in France is a small territorial division governed by a maire and municipal council and is used to denote any similar division elsewhere. The characteristic feature of an octroi tax then was that it was on the entry of goods into an area administered by a local body. Bearing in mind this characteristic of octroi duty we find on an examination of items 7 and 8 of the Schedule Rules mentioned above that under the Government of India Act, 1919, the local legislature of a Province could without the previous sanction of the Governor General impose a 253 tax octroi for entry of goods into an area administered by a local body, that is, a local government authority and the area in respect of which such tax could be imposed was mentioned in item 8 as local area. It is in the background of this history that we have to examine the use of the word "local area" in item 49 of List II of the Government of India Act, 1935. Here the word "octroi" has given place to the longer phrase "cesses on the entry of goods into a local area for consumption, use or sale therein. " It was with the knowledge of the previous history of the legislation that the Constitution makers set about their task in preparing the lists in the seventh schedule. There can bring title doubt therefore that in using the words "tax on the entry of goods into a local area for consumption, use or sale therein", they wanted to express by the words "local area" primarily area in respect of which an octroi was leviable under item 7 of the schedule tax rules, 1920 that is, the area administered by a local authority such as a municipality, a district Board, a local Board or a Union Board, a Panchayat or some body constituted under the law for the governance of the local affairs of any part of the State. Whether the entire area of the State, as an area administered by the State Government, was also intended to be included in the phrase "local area", we need not consider in the present case. The only other part of the Constitution where the word "local area" appears is in article 277. That Article is in these words: "Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district, or other local area may, notwithstanding that these taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law. " 254 There can be little doubt that "local area" in this Article has been used to indicate an area in respect of which there is an authority administering it. While the scope of Article 277 is different from the scope of entry 52 so that no direct assistance can be obtained in the interpretation of the words "local area" in entry 52 from this meaning of the words in article 277 it is satisfactory to find that the meaning of "local area" in entry 52 which appears reasonable on a consideration of the legislative history of the matter is also appropriate to this phrase in its only other use in the Constitution. Reliance was sought to be placed by the respondents on a decision of the Allahabad High Court in Emperor vs Munnalal (1) where the word "local area" as used in section 29 of the U. P. Sugar Factories Control Act, 1938, fell to be considered. That section, as we have already mentioned, authorised the Governor of U. P. to impose by a notification, after consulting the Sugar Control Board under the Act, a cess on the entry of sugarcane into a local area specified in such notification for consumption, use or sale therein. The notifications which were issued under this provision set out a number of factories for the levy of a cess at the rate of three annas per maund on entry of all sugarcane into the local area comprised in the factories mentioned in the schedule for consumption, use or sale therein. Section 29 was clearly within the words of entry 49 of List 11. The question that arose before the Court was whether the specification of certain factories as local areas was valid law. The learned Judge appears to have proceeded on the basis that the Governor had notified the area comprised in 74 factories as one "local area" and held that once this was 'done the entire area covered by all these factories should be considered as one statutory local area. It appears to us that the learned Judge was not right in thinking that the area comprised in 74 factories was notified as one local area. What appears to have been done was that the area of each factory was being notified as a local area for the purpose of the Act. Proceeding on (1) I.L.R. 1942 All. 302. 255 the basis that the area comprised in the 74 factories was notified as one local area the learned Judge addressed himself to the question whether this entire area was a local area within the meaning of the Act. He appears to have accepted the contention that the word local area was used in the sense of an administrative unit, but, says he, the administration need not be political, it may be industrial and educational or it may take any other form of governmental activity. "I cannot see," the learned Judge observed, "why it is not open to the provincial government or the provincial legislature to make an industrial survey of the province and to divide up the entire province into industrial areas or factory areas or mill areas or in any other kind of areas, and each one of these areas may be notified and be treated as a local area. And once such areas come into existence and remain in operation they can be regarded as local areas within the meaning of entry No. 49 of List II in which a cess may be levied". Even if this view were correct it would be of no assistance to the respondents. It is no authority for the proposition that the area of one single factory is a local area within the meaning of entry 49. We think however that the view taken by the learned Judge is not correct. It is true that when words and phrases previously interpreted by the courts are used by the Legislature in a later enactment replacing the previous statute, there is a presumption that the Legislature intended to convey by their use the same meaning which the courts had already given to them. This presumption can however only be used as an aid to the interpretation of the later Statute and should not be considered to be conclusive. As Mr. Justice Frankfurter observed in Federal Commissioner vs Columbia B. System (1) when considering this doctrine, the persuasion that lies behind the doctrine is merely one factor in the total effort to give fair meaning to language. The presumption will be strong where the words of the previous statute have received a settled meaning by a (1) 311 U.S. 131. 256 series of decisions in the different courts of the country; and particularly strong when such interpretation has been made or affirmed by the highest court in the land. We think it reasonable to say however that the presumption will naturally be much weaker when the interpretation was given in one solitary case and was not tested in appeal. After giving careful consideration ' to the view taken by the learned Judge of the Allahabad High Court in Emperor vs Munnalal (supra) about the meaning of the words "local area" and proper weight to the rule of interpretation mentioned above, we are of opinion that the Constitution makers did not use the words "local area" in the meaning which the learned Judge attached to it. We are of opinion that the proper meaning to be attached to the words "local area" in Entry 52 of the Constitution, (when the area is a part of the State imposing the law) is an area administered by a local body like a municipality, a district board, a local board, a union board, a Panchayat or the like. The premises of a factory is therefore not a "local area". It must therefore be held that section 3 of the U. P. Sugarcane Cess Act, 1956, empowering the Governor to impose a cess on the entry of sugarcane into the premises of a factory did not fall within Entry 52 of the State List. As there is no other Entry in either State List or Concurrent List in which the impugned law could fall there is no escape from the conclusion that this law was beyond the legislative competence of the State Legislature. The law as enacted in section 3 of the U. P. Sugarcane Cess Act, 1956, must therefore be struck down as invalid. It may be mentioned that this is not a case where the law is in two parts and one part can be severed from the other and saved as valid while striking down the other portion which is invalid. Indeed, that was not even suggested by the learned counsel for the respondents. It is unnecessary for us to consider whether if section 3 had instead of authorising levy of cess for entry of sugarcane into the premises of a factory for use, consumption or sale therein had authorised the imposition of a cess on entry of cane into a local area for 257 consumption, sale or use in a factory that would have been within Entry 52. It is sufficient to say that we cannot re write the law for the purpose of saving a portion of it. Nor is it for the Court to offer any suggestion as to how the law should be drafted in order to keep it within the limits of legislative competence. As the law enacted by the Legislature stands there is no escape from the conclusion that this entire law must be struck down as invalid. In view of this conclusion on the first ground raised on behalf of the appellant it is unnecessary to consider the other ground raised in the appeal that section 3 has gone beyond the permissible limits of delegated legislation. As we have held that the impugned legislation was beyond the legislative competence of the State Legislature the appellants are entitled to the relief asked for. We accordingly allow the appeal, set aside the order passed by the High Court and order the issue of a writ directing that the respondents do forbear from levying and collecting cess from the appellants on account of arrears of cess for the crushing season 1954 55 and in respect of the crushing season 1955 56 and successive crushing seasons under the U. P. Sugarcane Cess Act, 1956. The appellants will get their costs here and below. AYYANGAR, J. I have had the privilege of perusing the judgment just now pronounced, but with the utmost respect regret my inability to agree with the order proposed. The learned Judges of the High Court held that the impugned enactment was within the scope of Entry 52 of the State Legislative List in Schedule 7 to the Constitution, by placing reliance on the following passage in the Judgment of Das, J. in Emperor vs Munna Lal (1) where the learned Judge said: "Indeed I cannot see why it is not open to Provincial Government or Provincial Legislature to make an industrial survey of the Province and to divide up the entire province into industrial areas (1) I.L.R. [1942] All. 302, 328. 33 258 or factory areas or mill areas or in any other kind of areas, and each one of these areas may be notified and be treated as a local area. And once such areas come into existence and remain in operation they can be regarded as local areas within the meaning of Entry No. 45 of List II in which a cess may be levied. " In other words, the view which they favoured was to read the expression "local area". practically to mean any "area" entry into which was by the relevant fiscal statute, made the subject of taxation. In my opinion that is not a correct interpretation of the entry and agree with my learned brethren that having regard to the historical material, which has been exhaustively set out and discussed in their judgment, the word "local area" can in the entry designate only a predetermined local unit a unit demarcated by statutes pertaining to local self government and placed under the control and administration of a local authority such as a municipality, a cantonment, a district or a local board, an union or a panchayat etc. and not any region, place or building within the State which might be defined, described or demarcated by the State 's taxing enactment as an area entry into which is made taxable. But there my agreement stops and we diverge. In my opinion, this construction of the expression "local area" in entry 52 does not automatically result in the invalidity of the impugned enactment and of the levy under it, but the extent to which, if any the charging section exceeds the power conferred by the entry would depend on matters which have not been the subject of investigation, and it is this point that I shall elaborate in the rest of this judgment. It is unnecessary for the purposes of this case and possibly even irrelevant, to determine the precise scope, content and incidents of an "octroi" duty except that in the context in which it appeared in the Scheduled Taxes Rules framed tinder the Government of India Act, 1919, the expression signified a tax levied on entry into an area of an unit of local administration. It is unprofitable to canvass the question 259 whether a local authority empowered at that date to levy an 'octroi ' might or might not lawfully confine the levy to entry for consumption alone, to use alone or for sale alone. But when that entry was refashioned and enacted as item 49 of the Provincial Legislative List under the Government of India Act, 1935 (in terms practically identical with Entry 52 in the State Legislative List under the Constitution), the matter was no longer left in doubt. The new item ran: "Cesses on the entry of goods into a local area for consumption, use or sale therein". In connection with the use of the words "for consumption, use or sale therein" in the item three matters deserve notice: (1) Where the entry into the "local area" was not for one of the purposes set out in it, viz., for consumption, use or sale therein, but the entry was, for instance in the course of transit or for warehousing during transit, the power was not available; in other words, a mere entry could not per se be made a taxable event. (2) It was sufficient if the entry was for any one of the three purposes; the use of the disjunctive 'or ' making this clear. (3) The passage of goods from one portion of a local area to another portion in the same local area, would not enable a tax to be levied, but the entry has to be "into the local area", i.e., from outside the local area. It is the second and the third of the above features that call for a more detailed examination in the context of the points requiring decision in the present case. With this background I shall analyse the terms of section 3(1) of the Act (United Provinces Act XXII of 1956) to ascertain where precisely the provision departs from the scope or content of entry 52. I will read that section which runs: "3. The State Government may by notification in the official gazette impose a cess not exceeding four annas per maund on the entry of the cane into the premises of a factory for use, consumption or sale therein: Provided that the State Government may likewise remit in whole or in part such cess in respect 260 of cane used or to be used in factory for any limited purpose specified in the notification. Explanation: If the State Government, in the case of any factory situate outside Uttar Pradesh, so declare, any place in Uttar Pradesh set apart for the purchase of cane intended or required for use, consumption or sale in such factory shall be deemed to be the premises of the factory. " Leaving the Explanation for the present, there are two matters which require advertence: (1) The first was the point emphasised by Mr. Sanyal for the appellant, that entry into the premises of a factory "for the purpose of consumption, use or sale therein" is fastened on as the taxable event treating the factory premises as if that were itself a "local area". (2) Apart from entry into factory premises for use, consumption or sale therein, entry of the cane into other places within the local area, i.e., into "unit for local administration" is not made the subject of tax levy. The second of the above matters cannot invalidate the legislation, because a power to tax is merely enabling, and apart from any question of discrimination under article 14 which does not arise for consideration before us the State is not bound to tax every entry of goods into "a local area". Again, the tax could undoubtedly be confined to entry of goods into a "local area" for consumption or use in particular modes; in other words, there could be no legal objection to the tax levy on the ground that it does not extend to entry of goods into "a local area" for every type of consumption or use. In my judgment the real vice of the charging section 3(1) lies not in that it Confines the levy to cases where the entry is for purposes of consumption etc. in a factory but 'in equating the premises of a factory with "a local area" entry of goods into which, occasions the tax. Another way of expressing this same idea would be to say that whereas under Entry 52 the movement of goods from within the same local. area in which the factory is situated into the premises of the factory, could not be the subject of tax liability, because there 261 would in such cases be no entry of the goods "into a local area" under section 3(1) of the Act, not merely is the movement of goods into the factory from outside the 'local area ' in which the factory is situate made the subject of tax, but the words used are capable of imposing the tax even in those cases where the entry into the factory is from within the same local area. What I have in mind may be thus illustrated: If factory A situated in Panchayat area B gets its supply of cane from outside the Panchayat area, the levy of the tax on the entry of the cane into the Panchayat area would clearly be covered by entry 52. The State is not bound to tax every entry of the cane into the area but might confine the levy to the entry of the cane for the purpose of consumption in a factory. The tax might be levied and collected at the border of the Panchayat area but there is no legal obligation to do so, and the place at which the entry of the goods is checked and the duty realised is a matter of administrative machinery which does not touch on the validity of the tax imposition. It would thus not detract from the validity of the tax if by reason of convenience for effecting collection, the tax was levied at the stage of entry into the premises of a factory. So long, therefore, as the cane which enters a factory for the purpose of consumption therein comes from outside that local unit of administration in which the factory is situated, in my opinion it would be covered by the words of entry 52 and well within the legislative competence of the State Government. The language of section 3, as it stands appears, however, also to extend to cases where the supply of cane to a factory is from within the same local unit of administration; in other words, where there is no entry of the cane into the local area as explained earlier. If this were the true position, the enactment cannot be invalidated as a whole. It would be valid to the extent to which the tax is levied on cane entering a factory for the purpose of consumption etc. therein from outside the local area, within which the factory premises are situated, and only invalid where it out steps this limitation. 262 The next question is whether this is a case where the valid and invalid portions are so inextricably interwoven as to leave the Court no option but to strike down the entire enactment as invalid as beyond the legislative competence of the State, or whether the charging provision could be so read down as to leave the valid portion to operate. In my opinion, what is involved in the case before us is not any problem of severance, but only of reading down. Before taking up this question for discussion two objections to the latter course have to be considered. The first is that this aspect of the matter was not argued before us by learned Counsel for the State as a ground for sustaining the validity of the legislation. In my judgment this is not an objection that should stand in the way of the Court giving effect to a view of the law if that should appear to be the correct one. In making this observation one has necessarily to take into account the fact that legislation in nearly this form, has been in force in the State for over twenty years, and though its vires was once questioned in 1942, that challenge was repelled and the tax levy was held valid and was being collected during all this period. The sugar cane cess has been a prime source of State Revenue for this length of time and this Court should not pronounce such a legislation invalid unless it could not be sustained on any reasonable ground and to any extent. The second ground of objection which has appealed to my learned brethren but with which, I regret, I cannot concur is that it would require a rewriting of the Act to sustain it. Now if the first paragraph of sub section (1) of section 3 bad read: "The State Government may by notification in the official gazette impose a cess not exceeding four annas per maund on the entry of the cane into the premises of a factory (from outside the local area in which the factory premises were situate) for use, consumption or sale therein:" (The words in brackets added by me) 263 the levy would be entirely within entry 52 even according to my learned brethren. The question is whether the implication of these words would be a rewriting of the provision or whether it would be merely reading the existing provision so as to confine it to the powers conferred upon the State Legislature by the relevant legislative entry. In view of the strong opinion entertained by my learned brethren, I have given the matter the utmost consideration, but I feel that the words which I have suggested are a permissible mode of construction of a statute by which wide words of an enactment which would cover an event, contingency or matter within legislative power as well as matters not within it, are read as confined to those which the law making only had authority to enact. In my judgment the opinion of the Federal Court in In re Hindu Women 's Rights to Property Act, 1937 (1), affords a useful analogy to the present case. The enactment there impugned provided for the devolution or succession to "property" in general terms which would have included both agricultural as well as nonagricultural property, whereas the Central Legislature which enacted the law had no power to deal with succession to agricultural property. The contention urged before the Court was that by the use of the expression "property", the legislature had evinced an intention to deal with property of every type and that it would be rewriting the enactment and not carrying out the legislative intent if the reference to "property" in the statute were read as "property other than agricultural property". Dealing with this contention, Sir Maurice Gwyer, delivering the opinion of the Court said: "No doubt if the Act does affect agricultural land in the Governors 'Provinces, it was beyond the competence of the Legislature to enact it: and whether or not it does so must depend upon the meaning which is to be given to the word "property" in the Act. If that word necessarily and inevitably comprises all forms of property, including agricultural land, then clearly the Act went beyond the powers (1) 264 of the Legislature; but when a Legislature with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference 'to that kind of property with respect to which it is competent to legislate and to no other. The question is thus one of construction, and unless the Act is to be regarded as wholly meaningless and ineffec tive, the Court is bound to construe the word "property" as referring only to those forms of property with respect to which the Legislature which enacted the Act was competent to legislate; that is to say, property other than agricultural land. . . The Court does not seek to divide the Act into two parts, viz., the part which the Legislature was competent, and the part it was incompetent, to enact. It holds that, on the true construction of the Act and especially of the word "property" as used in it, no part of the Act was beyond the Legislature 's powers. " The Court accordingly held that the Hindu Women 's Rights to Property Act, 1937, applied to non agricultural property and so was valid. In this connection it might be interesting to refer to the decision in Blackwood vs Queen (1) which Sir Maurice Gwyer, C.J., referred to with approval. That case related to the validity of a duty imposed by the Legislature of Victoria (Australia) on the personal estates of deceased person. The learned Chief Justice observed "The Judicial Committee construed the expression "personal estate" occurring in the statute to refer only to: "such personal estate as the colonial grant of probate conferred jurisdiction on the personal representatives to administer, whatever the domicile of the testator might be, that is to say, personal estate situate within the Colony, in respect of which alone the Supreme Court of Victoria had power to grant probate: Their Lordships thought that "in imposing a duty of this nature the Victorian Legislature also was contemplating the property which was under its own hand, and did not intend to levy a tax in respect of property (1) 265 beyond its jurisdiction". And they held that "the general expressions which import the contrary ought to receive the qualification for which the appellant contends, and that the statement of personal property to be made by the executor under section 7(2) of the Act should be confined to that property which the probate enables him to administer" (1). To confine the tax to the limitations subject to which it could, under the Constitution, be levied is, in my opinion, not an improper method of construing the statute. The manner in which the word "property" was read down by the Federal Court in In re Hindu Women 's Rights to Property Act, 1937 (1) and the word "personal property" construed by the Privy Council in Blackwood vs Queen (2) make in my opinion less change in the text of the impugned provision than the addition of the words I have set out above, which after all are words implicit in the power conferred on the State Legislature. I would, therefore, hold that the charging section would be invalid and beyond the legislative competence of the State of Uttar Pradesh only in so far as it seeks to levy a tax on cane entering a factory from within the same local area in which the factory is situate and that in all other cases the tax is properly levied; and that the impugned section could and ought to be so read down. The matter not having been considered from this aspect at earlier stages, we have necessarily no material before us for adjudicating upon whether tax levied or demanded from the appellant is due and if so to what extent. We have nothing before us to indicate as to how far the cane, the entry of which into the factory of the appellant is the subject of the impugned levy, has moved into the factory from outside the local unit in which the factory is situated or originated from within the same local area. I consider that without these matters being investigated it would not be possible to adjudicate upon the validity of the tax demanded from the appellants. There is one matter to which it is necessary to (1) Per Sir Maurice Gwyer, C. J. , 23, (2) 34 266 advert which I have reserved for later consideration, viz., the validity of the Explanation to section 3(1)of the Act. It would be apparent that the Explanation was necessitated by the terms of sub section (1) of section 3 which equated "factory premises" with "local areas", or rather rendering factory premises the sole local areas entry into which occasioned the tax. So far as the purchasing centres which are dealt with in the Explanation are concerned, the cane that moves into them from outside the "local area" where these centres are would clearly be covered by Entry 52, since the purpose of the movement into the centre is on the terms of the provision for effecting a sale therein. In other words, the same tests which I have discussed earlier in relation to entry into factory premises, would apply mutates mutandis to these purchasing centres and in so far as a tax is levied on the movement of the cane from outside the local area the levy would be legal and in order. I would read down the Explanation in the same manner, as I have read down the main charging provision so as to confine the levy to entry from outside 'that "local area" local area being understood in the sense already explained. I would accordingly allow the appeal, and remand it to the High Court for investigating the material facts which I have mentioned earlier with a direction to pass judgment in accordance with the law as above explained. BY COURT. In accordance with the opinion of the majority the appeal is allowed, the order passed by the High Court is set aside and a writ be issued directing that the respondents do forbear from levying and collecting cess from the appellants on account of arrears of cess for the crushing season 1954 55 and successive crushing seasons under the Uttar Pradesh Sugarcane Cess Act, 1956. The appellants will get their costs here and below. Appeal allowed.

Entry 52 of List II of the Seventh Schedule to the Consti tution empowered State Legislatures to make a law relating to "taxes on the entry of goods into a local area for consumption, use or sale therein". The U. P. Legislature passed the U. P. Sugarcane Cess Act, 1956, which authorised the State Government to impose a cess on the entry of cane into the premises of a factory for use, consumption or sale therein. The appellant contended that the premises of a factory was not a 'local area ' within the meaning of Entry 52 and the Act was beyond the competence of the legislature. 243 Held, (per Imam, Kapur, Das Gupta and Raghubar Dayal, jj.) that the impugned Act was beyond the competence of the legislature and was invalid. The premises of a factory was not a "local area" within the meaning of Entry 52. The proper meaning to be attached to the words "local area" in Entry 52 was an area administered by a local body like a municipality, a district board, a local board, a union board, a Panchayat or the like. In re: the Central Provinces & Beray Act No. XIV of 1938, , Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City, [1955] 1 S.C.R. 829, State of Madras vs Gannon Dunkerley & Co., Ltd., ; and South Carolina vs United States, , referred to. Emperor vs Munnalal, I.L.R. 1942 All. 302, disapproved. Per Ayyangar, J. The Act was invalid only in so far as it sought to levy a tax on cane entering a factory from within the same local area in which the factory was situate and was valid in other cases. It was permissible to read the Act so as to confine the tax to the limitations subject to which it could be constitutionally levied and to strike down that portion which out stepped the limitations. In re Hindu Women 's Rights to Property Act, 1937, and Blackwood vs Queen, , applied.

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Appeal No. 65 of 1952. Appeal from an award dated 17th November, 1951, made by the Labour Appellate Tribunal of India, Calcutta, in Appeal No. 280 of 1951. K. P. Khaitan (Harnam Das, with him) for the appellant. H. B. Asthana for the respondents. Gopalji Mehrotra for the Intervener. December 2. The Judgment of the Court was delivered by BHAGWATI J. This is an appeal by special leave against the decision of the Labour Appellate Tribunal, Calcutta, upholding the award made by the State Industrial Tribunal, Uttar Pradesh, with certain modifications. An industrial dispute arose between the appellant, the Vishwamitra Press Karyalaya, Kanpur, and the respondents, the workers of the Vishwamitra Press as represented by the Kanpur Samachar Patra Karamchari Union, Kanpur, in regard to the alleged victimisation of certain workmen under the guise of 'retrenchment. That industrial dispute was referred to the Industrial Tribunal, by a notification dated the 24th April, 1951. The time for making the award expired on the 9th June, 1951, and on the 9th June. 1951, a further notification was issued extending the time for making the award up to the 30th June, 1951. The 30th June, 1951, was a public holiday and the 1st July was a Sunday. The Industrial Tribunal made its award on the 2nd July, 1951, and pronounced it in open court on that day. It was however thought by the Uttar Pradesh Government that the award was beyond time and invalid and on the 18th July, 1951, a notification was issued extending the period up to the 3rd July, 1951. This award was challenged by the appellant before the Labour Appellate Tribunal. The Labour Appellate. Tribunal negatived the Contentions of the appellant. The appellat applied 274 for special leave which was granted by this Court on the 21st December, 1951, limited to the following grounds: " (1) The Government had no power to extend the time of the making of award after the expiry of the time originally fixed, and the award made by the Adjudicator after such time is illegal, ultra vires, inoperative and void. (2)In any case the State Government I had extended the time for making the award till 30th June, 1951, and the Adjudicator 's award made after that date is void. (3)That the extension of time by the Government on. 21st July, 1951, after even the time extended previously had expired, was ultra vires, and it could not make a void award a valid award. " The industrial dispute which arose between the appellant and the respondents was referred by the Uttar Pradesh Government to the Industrial Tribunal in exercise of the powers conferred by sections 3 and 4 of the Uttar Pradesh . The Uttar Pradesh Government had in exercise of the powers conferred by section 3 (d) of the Act promulgated an order inter alia providing for the adjudication of the industrial disputes referred by it to the Industrial Tribunals. Paragraph 16 of that order ran as under : " The Tribunal or the Adjudicator shall hear the dispute and pronounce its decision within 40 days (excluding holidays observed by courts subordinate to the High Court) from the date of reference made to it by the State Government, and shall thereafter as soon as possible supply a copy of the same to the parties to the dispute, and to such other persons or bodies as the State Government may in writing direct. Provided that the State Government may extend the said period from time to time." Paragraph 9 which prescribed the powers and functions of Tribunals inter alia provided: 275 "(9). The decision shall be in writing, and shall be pronounced in open court and dated and signed by the member or members of the Tribunal, as the case may be, at the time of pronouncing it. " It was not disputed before us that the original period calculated in accordance with paragraph 16 above expired on the 9th June, 1951, and the Uttar Pradesh Government validly extended the period up to the 30th June, 1951. It was however contended that the Industrial Tribunal should have made its award on the 30th June, 1951, and not on the 2nd July, 1951, as it purported to do. It was urged that the provision as to excluding holidays observed by courts subordinate to the High Court which obtained in paragraph 16 above did not apply when the period was extended up to a particular date. It would apply only if the period was extended by a particular number of days when for the purpose of the computation of those days the holidays would have to be excluded in the manner therein mentioned. The Uttar Pradesh Government having extended the period up to the, 30th June, 1951, it was submitted that the award, should have been made by the 30th June, 1951, and, not later and having been made on the 2nd July, 1951, was therefore beyond time and invalid. This argument might well have prevailed but for the provisions of section 10 of the U. P. General Clauses Act, 1904. That section provides: " Where, by any United Provinces Act, any act or proceeding is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the court or office is closed; on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court or office is open. " The Industrial Court was closed on the 30th June, 1951, which was declared a public holiday. The 1st July, 1951, was a Sunday and it was competent to the 'Industrial Court to pronounce its decision on the next 276 afterwards on which the Industrial Court was n, i.e., the 2nd July, 1951. Prima facie therefore award which was pronounced on the 2nd July, 1, was well within time. The only thing which Shri Khaitan counsel for the appellant urged before us therefore was that the Industrial Court was not a court within the meaning of section 10 of the U. P. General Clauses Act, "The court" according to his submission could only be construed mean a court in the hierarchy of the civil courts the State and an Industrial Court did not fall hin that category. We are unable to accept this intention of Shri Khaitan. The Uttar Pradesh industrial Disputes Act, 1947, was an Uttar Pradesh t. The General Order dated the 15th March, 1951, which provided inter alia for the reference of the industrial dispute for adjudication and the manner in which it was to be adjudicated, was promulgated by e U. P. Government in exercise of the powers conferred upon it by section 3 (d) of the Act. Paragraph (9) of the General Order provided for the decision ing pronounced by the Industrial Tribunal in open urt and we fail to understand how it could ever be ged that the Industrial Tribunal was not a court ithin the meaning of section 10 of the U. P. General lauses Act. If the Industrial Tribunal was thus a ourt within the meaning of section 10 of the U. P. General Clauses Act the court was closed on the 30th ane, 1951, as also on the 1st July, 1951, and the decion could be pronounced by the Industrial Court on i.e next day afterwards on which it was open, i.e., on ne 2nd July, 1951. In our opinion therefore the ecision which was pronounced on the 2na July, 951, 'was well within time and was valid and binding ' in the parties. The above decision is determinative of this appeal, and the appeal will therefore stand dismissed with costs. Appeal dismissed. Agent for the respondents and the intervener: C. P. Lal.

The time prescribed for making an award under the U. P. , expired on the 9th June, 1951. The Government extended the period up to 30th June, 1951. The 30th June was a public holiday and 1st July was a Sunday and the Industrial Tribunal pronounced its award on the 2nd July: Held, that an Industrial Tribunal to which a dispute is referred under the U. P. , is a " Court " within the meaning of section 10 of the U.P. General Clauses Act, 1904, and, as the 30th June and 1st July were holidays, the award pronounced on the 2nd July was not invalid on the ground that it was not pronounced within the period fixed. 273

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iminal Appeal No. 16 of 1959. Appeal from the judgment and order dated November 18, 1958, of the Allahabad High Court in Criminal Reference No. 452 of 1956. B. V. section Mani, for the appellants. G. C. Mathur and C. P. Lal, for the respondent. January 20. The Judgment of the Court was delivered by AYYANGAR, J. Having heard the learned Counsel for the appellants in full we did not consider it necessary to call on the respondent since, we were clearly 565 of the opinion that the contentions raised in the appeal possessed no merit. The legality of a prosecution for contravention of the notification fixing the maximum prices at which certain categories of iron & steel could be sold is the subject matter of this appeal. The appellants are two in number, related to each other as husband and wife. The second appellant Sushila Devi is " a Registered Stockholder " and is stated to be the proprietor of the firm " Balwanta Devi Sushila Devi " situated in Sultanpur in Uttar Pradesh and the first appellant Bhagwati Saran, her husband, the manager of the said firm. There has been some previous history before the present prosecution was initiated but it is sufficient for the purposes of this appeal to start with the report to the Judicial Magistrate, Amathi, by the officer incharge of the Police station, Sultanpur, dated August 20,1955. It was headed " Offence Section II B Iron &Steel Control Order, 1941" and set out the following facts: " Bhagwati Saran used to work as a Karinda in the firm of Balwanta Devi Sushila Devi and had all along been doing sales and purchases at the shop, and also issued receipts under his signatures. Shrimati Sushila Devi is the wife of accused Bhagwati Saran and she was the proprietor. Balwanta Devi has died. Hence she alone is the proprietor. In the course of investigation it was also revealed that Bhagwati Saran had from time to time sold some iron bark; on behalf of this firm after receiving price more than the control rate, which he had all along been getting printed, and ' had been getting some other receipts checked fictitiously under the Control Act from the office of the Supply Officer. An information relating to it was given to Shri P. N. Kapoor, the then D. M., Sultanpur by his munim Kalapnath and on it a case was registered at this police station and the investigation was made. . . . On the report of the P.P. the S.P. ordered another charge sheet to be submitted under section 8 of Essential Commodities Ordinance of 1955. Hence this charge sheet under section 11 B 566 (III) Iron and Steel Control of Production and Distribution Order, 1941, read with s ' 8 of Essential Commodities Ordinance of 1955 is sent against both the accused. The accused persons after being arrested were released on bail. It is, therefore, prayed. that the accused persons after being summoned may be punished. " The report further stated that 4 volumes of cash memos, and 5 volumes of register of Permits were deposited in the Malkhana and would be produced in evidence and followed it with a list of 13 prosecution witnesses. The Judicial Magistrate registered the case and issued summons to the accused on September 16, 1955, the case being directed to be called on September 30, 1955. The accused were thereafter examined before the Magistrate under section 364 of the Criminal Procedure Code on March 23, 1956, and on the next day the Magistrate framed a charge against them which read as follows: " That you between 10th January 1952 and 27th February 1952 in Sultanpur sold 11 Cwt. 12 lb. iron bars on 11th January 1952 %ad 3 Cwt. iron bars on 18 2 52 and Cwt. iron bars on 26th February 1952 at the rate of Rs. 21 13 9 per Cwt. though the controlled rate as notified in Government of India Gazette dated 1st July 1952 for the commodity was Rs. 21 2 4 per Cwt. and thus you charged Rs. 1 15 0, Rs. 2 2 3 and Rs. 4 4 6 respectively excess and more than the controlled price and thereby committed an offence punishable under section 7 E. section Temp. P. Act 1946 read with section 1 1 B (iii) of Iron and Steel Control of Production and Distribution Order of 1941 and I hereby direct that you be tried by the said Court on the said charge. " The two appellants thereupon moved the. Court of the Sessions Judge, Sultanpur, to revise the order of the Magistrate dated March 24, 1956, framing charges against them under section 7 of the Essential Supplies (Temporary Powers) Act, 1946 Act XXIV of 1946 (referred to hereafter as the Act). The points urged at that stage were mainly two: (1) That the notification by the Controller under 567 cl. 11 B(1) fixing the maximum prices which were stated to have been contravened not having been filed before the Court, the Magistrate erred in framing a charge, and (2) that the report of the police was not in conformity with the provisions of section 11 of the Act. The learned Sessions Judge upheld the second of the above contentions which was, that the report made by the police officer did not set out " the facts constituting the offence" as required by section II of the Act. He rejected the other point put forward by the appel lants but in view of his conclusion that there was a defect in the report which went to the root of the jurisdiction of the Magistrate to take cognizance of the case, he made a reference to the High Court with a recommendation that the charge framed against the appellants be quashed. This reference was heard by a Single Judge of the High Court, who disagreed with the learned Sessions Judge in his view that the report did not satisfy the requirements of section 11 of the Act. Before the learned Judge, however, a further point was urged, that section 11 B of the Iron & Steel Control of Production and Distribution Order, 1941 (which will be referred to hereafter as the Control Order) was itself ultra vires. This further objection was referred to a Division Bench for decision. The point urged before the learned Judges of the Division Bench was that the power to fix prices vested in the Steel Controller by cl. 11 B of the Control Order was unconstitutional, as violative of the right to carry on business guaranteed by article 19(1) (g) of the Constitution. The learned Judges answered this point against the appellants and the case thereafter came back before the learned Single Judge for final disposal of the reference by the Sessions Judge. The learned Counsel for the appellants once again made a submission to the learned Judge regarding the report of the police officer dated August 20, 1955, not satisfying the requirements of section 11 of the Act and pressed before him the view which found favour with the learned Sessions Judge. In a more detailed judgment, the learned Judge again rejected this contention and dismissed the reference and directed the prosecution to continue. It is this 73 568 order of the High Court. of Allahabad that is the subject matter of appeal now before us. on a certificate granted by that Court. It would be seen that the only two points in controversy before the High Court were: (1) whether the report of the police officer dated August 20, 1955, contained " the facts constituting the offence " with which the appellants were charged, as to satisfy the requirements of section 11 of the Act, and (2) whether el. 11 B of the Control Order, violated the fundamental right to carry on business guaranteed by article 19(1)(g). In the grounds of appeal to this Court and in the statement of case, however, the appellants have raised various other grounds and have also filed a petition for leave to urge these additional grounds, We desire to make it clear that grounds additional to those urged before the High Court would not be permitted to be raised before this Court as a matter of course and that petitions for such purpose would not be granted save in exceptional cases. It has to be noticed that in hearing and dealing with such additional grounds the Court is handicapped in not having the advantage of the opinions of the High Court on the points urged. It is the correctness of the decisions of High Courts that are sought to be challenged in appeals and it is but proper that the correctness of these judgments should, save in exceptional cases like for instance subsequent legislation or questions of fundamental and general importance etc., be assailed only on grounds urged before such Courts. Besides, when among the grounds thus urged as in this case is includ ed a violation of article 14, the handicap is accentuated, since the material facts on which the classification might rest could not be properly, investigated or evaluated on the basis of the affidavits filed in this Court without a careful sifting of the facts which a consideration by the High Court would afford. If in the appeal now before us, we have departed from this rule, and permitted the appellants to urge the additional grounds it was because of the circumstance that the prosecution was pending and learned Counsel submitted that he would seek to sustain his contention 569 regarding the violation of fundamental rights on the materials already on record. The ground regarding the constitutionality of el. 11 B of the Control Order has been the subject of elaborate consideration by this Court in Union of India vs Messrs. Bhana Mal Oulzari Mal (1) and is, therefore, no longer open to argument. Learned Counsel for the appellant therefore did not challenge the correctness of the judgment of the High Court upon this point. Besides the ground based on a non compliance with section 11 of the Act which we shall consider later, learned Counsel urged before us two points with reference to the notification issued by the Steel Controller fixing the maximum prices at which the several categories of iron and steel could be sold by producers and stockholders. These were: (1) that the notification of the Controller dated July 1, 1952, for the contravention of which the appellants were being prosecuted, was ultra vires the rule making power conferred upon him by el. 11 B(1) of the Control Order, (2) if, however, the notification was held to be within his power, the same was unconstitutional in that it was discriminatory and violated article 14 of the Constitution. As we have indicated earlier, these grounds of challenge to the validity of the notification were not made in any of the Courts below including the High Court, but for the reasons indicated we permitted learned Counsel to argue them before us. In order to appreciate the contention presented in the two forms, it is necessary to set out the terms of el. 11 B(1) which conferred power upon the Controller to fix the maximum base prices at which the several varieties of iron and steel could be sold. Clause 11 B(1) runs: " 11 B. Power to fix prices. (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by stockholder including a Controlled Stockholder and (c) by any other person or class of persons. Such price or prices may differ for iron and steel obtainable from (1) ; 570 different sources and may include allowances for contribution to and payment from any equalization fund established by the Controller for equalising freight, the concession rates payable to each producer or class of producers under agreements entered into by the Controller with the producers from time to time, and any other disadvantages. " Clause (2) of the Control Order defines " producer as " a person carrying on the business of manufacturing iron or steel ", and " registered producer " as " a producer who is registered as such by the Controller ". The same clause defines " stockholder " as " a person holding stocks of iron or steel for sale who is registered as a stockholder by Controller " and " Controlled stockholder " as " a stockholder appointed by the Con. troller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time ". The notification of the Controller dated July 1, 1952, impugned in these proceedings runs in these terms, quoting only the material words: " Under Ministry of Commerce and Industry Notification. . the prices of all items of steel under columns 1, 11 and III in the schedule of Base Prices of the attached price circular No. 1 of 1951 have been increased by Rs. 50/ per ton with effect from 1st July, 1952, except item 19(b), i.e., Billets which has been increased by Rs. 45/ per ton. . The other General and Special Conditions of sale mentioned in the attached Price circular remain the 571 The price circular dated July 1, 1951, referred to here consisted of eight columns which ran thus: (Price in rupees per ton) Maximum Base Prices at Calcutta, Bombay and Madras Base Materials Column I Column II Column III Price Item For sales by For sales by For sales by Registered controlled all persons No. Producers. stockholders. other than Registered Producers and controlled stockholders. Untested Untested Untested Untested Untested Te sted Rs. Rs. Rs. Rs. Rs. Rs. A Bars, Structural and plates etc. Bars and Rods 303 333 328 363 348 383 (Rounds and squares below 3" and flats up to and including 5" wide) 2 to 42. . . . . . . This was followed by General Conditions and Special Conditions which inter alia made provision for the purpose of rounding off inequalities in freight caused by places being situated at varying distances from the place of production etc. It was the operation of some of these conditions that was urged as giving rise to the discrimination complained of, but it will, however, be convenient to deal with them later, after disposing of the argument regarding the notification not being within the powers of the Controller under cl. 11 B (1). The 'ground urged in support of the contention that the notification by the Controller was not in conformity 572 with cl. 1 1 B (1) was this: Whereas under cl. 1 1 B (1) the Controller was directed to fix the maximum prices which could be charged by three different classes, viz., (a) Producers, (b) Stockholders including Controlled stockholders, and (c) Other persons, the impugned ,notification departed from this scheme in two respects: (1) The clause contemplated that the notification should apply to all " producers " whereas " producers " other than " Registered producers " were wholly left out by the Controller with the result that no limitation was placed upon the price they could charge, (2) Whereas the clause directed the Controller to include both the types of stockholders" Registered " as well as " Controlled " within the same class and make the same limit of prices applicable to both, the notification had included only " Controlled stockholders " as the second category of dealers and " registered stockholders " had not been specified eo nomine by him. This meant either that "Registered stockholders " were wholly outside the class of dealers governed by the notification or that they were intended to be included in the residuary class in column III. On these premises learned Counsel urged that if " registered stockholders " like the second appellant were not within the notification, the prosecution must fail because the maximum prices chargeable by her had not been fixed. If on the other hand such dealers had been separated from " Controlled stockholders " and included in the residual category, such a classification was not countenanced by cl. 11 B(1) and was therefore ultra vires. We consider that these submissions are wholly without any substance. Before the argument that " producers " other than " registered producers " had not been included in the notification can be accepted, it has to be established that there is any such producer. There is a list of " registered producers " appended to the notification and learned Counsel admitted that he could not say that there were any besides these, who were "Producers" of iron and steel within the meaning of the Control Order. If therefore, every " producer " was registered, there is no scope for the argument that 573 any persons had been left out and permitted to sell at prices of their choice. The other part of learned Counsel 's argument that registered stockholders " were not governed by the notification because they were not included in column II thereof and that dealings by them were not subjected to the maxima of prices fixed by it, has only to be stated to be rejected. The heading of the last column shows that all categories of dealers other than "registered producers.," and " controlled stockholders " were included in the residuary category. The related contention that the Controller acted outside his powers in differentiating between " controlled stockholders " and " registered stockholders " and in fixing different maxima of prices that could be charged by the two categories of dealers, does not deserve serious consideration either. If we understand the classification aright, it is like one between wholesale dealers and retailers and it is on this basis that the maximum price that could be charged by the " Registered Stockholders " who fall under column III is fixed at Rs. 20/ per ton above that permissible to " Controlled Stockholders " in respect of the category of steel which we have extracted earlier. The classification which gives persons in the category of the appellants this advantage is certainly not one regarding which a complaint could be made. Even when this advantage conferred on registered stock holders by the classification by the Controller was pointed out to learned Counsel for the appellant he persisted in his argument that "registered stock. holders". should have been put in column II along with " controlled stockholders " and should have been permitted to sell only at the same maximum prices. This is sufficient to show that the argument regarding the classification was frivolous and could not have been urged with any seriousness. This apart, we consider that even on the terms of cl. 11 B (1), the Controller is not prevented from drawing a distinction within the three classes which are specified in it. The purpose and policy of the enactment is to ensure that an essential commodity like iron and steel is made available, to 574 the consumer at reasonable prices and in the achievement of this objective classification of producers or of other stockholders based upon rational grounds would obviously be within the power of the Controller. Taking for instance the last class (c) " any other person or class of persons," it cannot be that this group could not be sub classified, if there was any reason or necessity to do so. If head (c) is susceptible of this interpretation, as it obviously must, we see no reason why head (b) should not be similarly construed. We have therefore no hesitation in rejecting the contention of learned Counsel, that the notification of the Controller fixing maximum prices is beyond his power, as not warranted by the terms of el. 11 B (1) of the Control Order. The argument next advanced in challenge of the validity of the notification was, that some of the General Conditions appended to the notification were discriminatory of the class of "registered stockholders" as compared with the " controlled stockholders " invoking for this purpose article 14 of the Constitution. Learned Counsel did not challenge the legality of the creation of the equalisation fund by the allowances for what is termed as " place extra ". Learned Counsel, however, urged two matters wherein facilities had been afforded or price increases permitted, to " controlled stockholders" which were denied to " registered stockholders " and that these had been done without any rational basis. These were: (1) The 3rd of the special conditions for sale by " controlled stockholders " read: "The question of credit facilities will be a matter for negotiation between the customers and the controlled stockholders. " (2) Similarly, Condition 5 also relating to " controlled stockholders" read: ,The base prices are. for sizes and length available in Size. Customers requiring material cut to length or size not available in stock will be required to pay cutting and wastage charges agreed between the customers and the stockholders. " Coming now to the special conditions for sale " by persons other than producers and controlled stock holders, " i.e., the conditions which governed sales like those by the second appellant, special condition 1 575 read: " The base rates given in column III above are ex site and apply to sales by all persons other than Producers and Controlled Stockholders. . and are not subject to additional charges for cutting or for credit facilities. " Neither of these points cutting charges or credit facilities could be held to be discriminatory without a full investigation of the facts and circumstances which led to the imposition of these special conditions. Differentiation could never per se be discrimination, nor is there any presumption that the adoption of different rules for groups differently situated is unequal treatment violative of article 14. On the other hand, the presumption is the other way and the party that alleges unjustifiable discrimination should establish it to the satisfaction of the Court. We consider that there is no material on the basis of which an argument could be sustained that the special conditions to which learned Counsel adverted contained any element of unfair or irrational discrimination to attract article 14. There was a slight and subsidiary point raised in regard to the allowance of credit facilities and cutting charges. It was said that these charges were indeterminate and that the Controller having been directed by cl. 11 B (1) to fix definite maximum prices had departed therefrom by permitting increases of undefined amounts. This argument again has no substance. The base price for the commodity having been fixed, there are incidentals which by their very nature were incapable of definite quantification, since they were dependent on each individual case. This contention also we therefore reject. In passing, we might observe that the matter before this Court in Union of India vs Messrs. Bhana Mal Gulzari Mal (1) related to a prosecution for a contravention of a notification of an earlier date, but in terms identical with the present, except as to the prices, wherein the dealers in the commodity were classified in the same manner as has been done in the notification now before us and with the same general and special conditions. The respondent then before this Court was " a registered (1) ; 74 576 stockholder " who was being prosecuted for effecting sales in excess of the maximum prices fixed. The fact that on that occasion no contention was urged challenging the validity of the notification as beyond the powers of the Controller, on the grounds now put forward clearly indicates, that the matters now urged never appeared then, as a possible source of grievance to a party situated similarly as the second appellant. We hold that the notification fixing the prices together with the conditions appended thereto are valid and enforceable. The last point that remains to be dealt with, is the contention that the initiation of the prosecution against the appellants was invalid for non compliance with the requirements of section 11 of the Act. This Section runs : " 11. Cognizance of offences. No Court shall take cognizance of any offence punishable under this Act except on report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code (XLV of 1860). " Learned Counsel for the appellants urged that though two of the conditions specified by the statute, viz., (1) a report in writing, (2) by a public servant were satisfied, the third requisite, viz., that the report should set out the " facts constituting such offence " was lacking and that by reason of this defect the Magistrate could not lawfully take cognizance of the case against the appellants. In elaboration of this point learned Counsel pointed out that the report did not specify: (a) the date when the alleged sales took place, (b) the quantity sold, (c) the person in question who was the buyer and who paid the excess over the controlled price, (d) the class or category of iron and steel which was the subject of the sale by the appellants, (e) the precise maximum price which had been fixed for such variety, (f) the amount which the appellants were alleged to have received in excess. The learned Judge of the High Court rejected this contention and, in our opinion, correctly. In the report which we have already extracted the provision 577 of the law which the appellants were stated to have contravened was set out, and it was there stated that being " registered stockholders " they had sold the goods above the price notified and that they had further, in order to conceal their crime, fabricated evidence. It is to be noticed that the report is required to contain only " a statement of facts constituting the offence " and its function is not to serve as a chargesheet against the accused. The function or purpose of the second of the above three requirements of section 11 is to eliminate private individuals such as rival traders or the general public from initiating a prosecution and for this purpose before cognizance is taken the complaint is required to emanate from " a public servant ". The two further requirements, viz., that the report should be in writing and regarding the contents of the report, are to ensure that there shall be a record that the public servant is satisfied that a contravention of the law has taken place. If the contravention in question is sufficiently designated in the report, and in the present case that cannot be disputed, since besides a reference to the notification stated to have been contravened, the report states that the accused had effected sales above the maximum prices specified in the notification, the requirements of the section are satisfied. The details which would be necessary to be proved to bring home the guilt to the accused and which comprised the several matters enumerated by learned Counsel which we have set out, will be details which would emerge at a later stage, when after notice to the accused a charge is framed against them, and of course at the stage of the trial. They would all be matters of evidence and section 11 does not require the report to be or to contain either the charge sheet or the evidence in support of the charge, its function being merely to afford a basis for enabling the magistrate to take cognizance of the case. In support of his submission regarding the construction of section 11 reliance was placed on two decisions: Dr. N. G. Chatterji vs Emperor (1) and Rachpal Singh vs (1) 578 Rex (1). Both these were cited before the learned Judge and we agree with the manner in which he has dealt with and distinguished them. No doubt, in both these cases it was held that the requirement of r. 130 (1) of the Defence of India Rules (whose language was similar to is. 11 of the Act) as to the Statement of " facts constituting the contravention " was not complied with, but the " reports " dealt with in them, bear no resemblance to the report in the case before us. In the first of these decisions, the recital in the report was that the accused was guilty of a " prejudicial act to the interest of the public " and " had prejudiced the success of financial measures with a view to the efficient prosecution of the war ". These words were held to be absolutely vague, even the particular rule or provision of law which was said to have been contravened, not even being mentioned in the report. The other decision in 50 Criminal Law Journal does not bear any analogy to the present case either. The report there in question ran: "On the statement of the informant an offence under section 81(2), Defence of India Rules, has been committed for which the charge sheet is being submitted." On this it was held that the facts alleged to constitute the contravention were not set out in the report and that the Magistrate had therefore no jurisdiction to take cognizance of the case. Obviously this case could not assist the learned Counsel to sustain a contention that the report in the present case was defective. We consider that the report on which the prosecution was launched satisfied the requirements of section 11 of the Act. In the result the appeal fails and is dismissed. Appeal dismissed.

A police officer made a report under section 11 of the Essential Supplies (Temporary Powers) Act, 1946, regarding a contravention of cl. 11 B(III), Iron and Steel (Control of Production and Distribution) Order, 1941, read with section 8 of the Essential Commodities Ordinance, 1955, to the Magistrate against the appellants who were registered stockholders that they had sold iron bars at prices higher than the controlled rate. After enquiry the Magistrate framed a charge against the appellant under section 7, Essential Supplies (Temporary Powers) Act, 1946, read with cl. 11 B(III) of the Control Order. The appellants contended that the charge ought to be quashed on the grounds, (i) that the notification of the Controller fixing the maximum sale price of the several categories of iron and steel was ultra vires the rule making power in cl. 11 B(i) of the Control Order, (ii) that the notification was discriminatory and violated article 14, and (iii) that the complaint could not be taken cognisance of by the Magistrate because the report of the police officer did not set out the facts constituting the offence as required by section II of the Act. The first two grounds were raised for the first time before the Supreme Court. Held, that the notification fixing the rates was intra vires cl. 11 B(i) of the Control Order. The notification did not omit any class mentioned in cl. 11 B(1) from its purview; it included 564 "registered producers" and it was not shown that there were any "producers " other than " registered producers " enumerated in the notification. The notification governed " registered stockholders " also as they were included in the residuary category of persons other than " registered producers " and " controlled stockholders ". The notification was not discriminatory and did not offend article 14 of the Constitution. The notification no doubt permitted the grant of credit facilities and the right to charge for cutting and wastage in sales to " controlled stockholders " but not to " registered stockholders " in regard to sales by them. Differentiation was not per se discrimination. There was no material to show that there was any unfair or irrational discrimination which could attract article 14. Held, further, that the police report on which the prosecu tion was launched satisfied the requirements of section II of the Act. The purpose of section II was to eliminate private persons from initiating prosecutions and to confine it to public servants. The requirement of the section that the report should be in writing and should set out the facts constituting the offence was to ensure that there was a record that the public servant was satisfied that a contravention of the law had taken place. If the contravention was sufficiently designated in the report the requirements of the section were satisfied. Section II did not require the mention in the report of details which would be necessary to be proved to bring home the guilt to the accused. Dr. N. G. Chatterji vs Emperor and Rachpal Singh vs Rex , not applicable. Additional grounds, other than those urged before the High Court, would not be permitted to be raised before the Supreme Court as a matter of course, but only, in exceptional circumstances like cases of subsequent legislation or where questions of fundamental and general importance were raised.

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87 of 1959. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. M. P. Amin, Dara P. Mehta, P. M. Amin; section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra for the petitioners. A. V. Viswanatha Sastri, R. Ganapathy Iyer, P. Kesava Pillai and T. M. Sen, for the respondents. H. N. Sanyal, Additional Solicitor General of India, B. Sen and R. H. Dhebar, for the Intervener. 541 1960. November, 21. The, Judgment of P. B. Gajendragadkar, A. K. Sarkar, K. Subba Rao and J. R. Mudholkar, JJ., was delivered by P. B. Gajendragadkar J., K. N. Wanchoo, J., delivered a separate judgment. GAJENDRAGADKAR, J. This is a petition filed under article 32 of the Constitution in which the validity of the Orissa Mining Areas Development Fund Act,( , 1952 (XXVII of 1952), is challenged. The first petitioner is a public limited company which has its registered office at Bombay. A large majority of its shareholders are citizens of India; some of them are themselves companies incorporated under the Indian Companies Act. Petitioners Nos. 2 to 7 are the Directors of Petitioner No. 1, the second petitioner being the Chairman of its Board of Directors. These petitioners are all citizens of India. At all material times the first petitioner carried on and still carries on the business of producing and selling coal excavated from its collieries at Rampur in the State 'of Orissa. Two leases have been executed in its favour; the first was executed on October 17, 1941, by the Governor of Orissa whereby all that piece or parcel of land in the registration district of Sambalpur admeasuring about 3341.79 acres has been demised for a period of 30 years commencing from September 1, 1939, in consideration of the rent reserved thereby and subject to the covenants and conditions prescribed thereunder; and the second is a surface lease executed in its favour by Mr. Mohan Brijraj Singh Dee on April 19, 1951, in relation to a land admeasuring approximately 211.94 acres for a like period of 30 years commencing from February 4, 1939, in consideration of the rent and subject to the terms and conditions prescribed by it. Pursuant to section 5 of the Orissa Estates Abolition Act, 1951, all the right, title and interest of the Zamindar of Rampur in the lands demised to the first petitioner under the second lease vested in respondents, the State of Orissa. Since then the first petitioner has duly paid the rent reserved by the said lease to the appropriate authorities appointed by respondent 1, 69 542 and has observed and performed all the conditions and covenants of the said lease. In exercise of its rights under the said two leases the first petitioner entered upon the lands demised and has been carrying on the business of excavating and producing coal at its collieries at Rampur. In December, 1952, the Legislature of the State of Orissa passed the impugned Act; and it received the assent of the Governor of Orissa on December 10, 1952. It was, however, not reserved for the consideration of the President of India nor has it received his assent. In pursuance of the rule making power conferred on it by the impugned Act respondent 1 has purported to make rules called the Orissa Mining Areas Development Act Rules, 1955; these rules have been duly notified in the State Gazette on January 25, 1955. Subsequently, the Administrator, respondent 2, appointed under the impugned Act issued a notification on June 24, 1958, whereby the first petitioner 's Rampur colliery has been notified for the purpose of liability for the payment of cess under the impugned Act. The area of this colliery has been determined at 3341.79 acres. In its appeal filed under rule 3 before the Director of Mines the first petitioner objected to the issue of the said notification, inter alia, on the ground that the impugned Act and the rules framed under it were ultra vires and invalid; no action has, however, been taken on the said appeal presumably because the authority concerned could not enter tain or deal with the objections about the vires of the Act and the rules. Thereafter on March 26, 1959, the Assistant Administrative Officer, respondent 3, called upon the first petitioner to submit monthly returns for the assessment of the cess. The first petitioner then represented that it had filed an appeal setting forth its objections against the notification, and added that until the said appeal was disposed of no returns would be filed by it. In spite of this representation respondent 3, by his letter of May 6, 1959, called upon the 543 first petitioner to submit monthly returns in the prescribed form and issued the warning that failing compliance the first petitioner would be prosecuted under section 9 of the impugned Act. A similiar demand was made and a similar warning issued by respondent 3 by his letter dated June 6, 1959. It is under these circumstances that the present petition has been filed. The petitioners contend that the impugned Act and ' the rules made thereunder are ultra vires the powers of the Legislature of the State of Orissa, or in any event they are repugnant to the provisions of an existing law. According to the petition the cess levied under the impugned Act is not a fee but is in reality and in substance a levy in the nature of a duty of excise on the coal produced at the first petitioner 's Rampur colliery, and as such is beyond the legislative competence of the Orissa Legislature. Alternatively it is urged that even if the levy imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II of the Seventh Schedule, it would nevertheless be ultra vires having regard to the provisions of Entry 54 in List I read with Central Act LIII of 1948. The petitioners further allege that even if the said levy is held to be a fee it would be similarly ultra vires having regard to Entry 52 in List I read with Central Act LXV of 1951. According to the petitioners the impugned Act is really relatable to Entry 24 in List III, and since it is repugnant with Central Act XXXII of 1947 relatable to the same Entry and covering the same field the impugned Act is invalid to the extent of the said repugnancy under article 254. On these allegations the petitioners have applied for a writ of mandamus or a writ in the nature of the said writ or any other writ, order or direction prohibiting the respondents from enforcing any of the provisions of the impugned Act against the first petitioner; a similar writ or order is claimed against respondent 3 in respect of the letters addressed by him to the 1st petitioner on March 3, 1959 and June 6, 1959. This petition is resisted by respondent 1 on several grounds. It is urged on its behalf that the levy 544 imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II and its validity is not affected either by Entry 54 read with Act LIII of 1948 or by 'Entry 52 read with Act LXV of 1951. In the alternative it is contended that if the said levy is held to be a tax and not a fee, it would be a tax relatable to Entry 50 in List II, and as such the legislative competence of the State Legislature to impose the same cannot be successfully challenged. Respondent 1 disputes the petitioner 's contention that the impugned Act is relatable to Entry 24 in List III; and so, according to it, no question of repugnancy with the Central Act XXXII of 1947 arises. After this appeal was fully argued before us Mr. Amin suggested and Mr. Sastri did not object that we should hear the learned Attorney General on the question as to whether even if the levy imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II of the Seventh Schedule, it would nevertheless be ultra vires having regard to the provisions of Entry 54 in List I read with Central Act LIII of 1948. Accordingly we directed that a notice on this point should be served on the learned Attorney General and the case should be set down for hearing on that point again. For the learned Attorney General the learned Additional Solicitor General appeared before us in response to this notice and we have had the benefit of hearing his arguments on the point in question. The first question which falls for consideration is whether the levy imposed by the impugned Act amounts to a fee relatable to Entry 23 read with Entry 66 in List II. Before we deal with this question it is necessary to consider the difference between the concept of tax and that of a fee. The neat and terse definition of tax which has been given by Latham, C. J., in Matthews vs Chicory Marketing Board (1) is often cited as a classic on this subject. "A tax", said Latham, C. J., "is a compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered". In bringing out the essential features of a tax this defini (1) ; , 276. 545 tion also assists in distinguishing a tax from a fee. It is true that between a tax and a fee there is no generic difference. Both are compulsory exactions of money. by public authorities; but whereas a tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the consolidated fund which ultimately is utilised for all public purposes, whereas a cess levied by way of fee is not intended to be, and does not become, a part of the consolidated fund. It is earmarked and set apart for the purpose of services for which it is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax payer and the public authority there is no option to the tax payer in the matter of receiving the service determined by public authority. In regard to fees there is, and must always be, co relation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax; and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co relation between the service and the levy, or whether the levy is either not co related with service or is levied to such an 546 excessive extent as to be a presence of a fee and not a fee in reality. In other words, whether or not a particular cess levied by a statute amounts to a fee or tax would always be a question of fact to be determined in the circumstances of each case. The distinction between a tax and a fee is, however, important, and it is recognised by the Constitution. Several Entries in the Three Lists empower the appropriate Legislatures to levy taxes; but apart from the power to levy taxes thus conferred each List specifically refers to the power to levy fees in respect of any of the matters covered in the said List excluding of course the fees taken in any Court. The question about the distinction between a tax and a fee has been considered by this Court in three decisions in 1954. In The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1) the vires of the Madras Hindu Religious and Charitable Endowments Act, 1951 (Madras Act XIX of 195 1), came to be examined. Amongst the sections challenged was section 76(1). Under this section every religious institution had to pay to the Government annual contribution not exceeding 5% of its income for the services rendered to it by the said Government; and the argument was that the contribution thus exacted was not a fee but a tax and as such outside the competence of the State Legislature. In dealing with this argument Mukherjee, J., as he then was, cited the definition of tax given by Latham, C.J., in the case of Matthews (2), and has elaborately considered the distinction between a tax and a fee. The learned judge examined the scheme of the Act and observed that "the material fact which negatives the theory of fees in the present case is that the money raised by the levy of the contribution is not earmarked or specified for defraying the expense that the Government has to incur in performing the services. All the collections go to the consolidated fund of the State and all the expenses have to be met not out of those collections but out of the general revenues by a proper method of appropriation as is done in the (1) ; (2) ; 547 case of other Government expenses". The learned judge no doubt added that the said circumstance was not conclusive and pointed out that in fact there was a total absence of any co relation between the expenses incurred by the Government and the amount raised by contribution. That is why section 76(1) was struck down as ultra vires. The same point arose before this Court in respect of the Orissa Hindu Religious Endowments Act, 1939, as amended by amending Act 11 of 1952 in Mahant Sri Jagannath Ramanuj Das vs The, State of Orissa (1). Mukherjea, J., who again spoke for the Court, upheld the validity of section 49 which imposed the liability to pay the specified contribution on every Mutt or temple having an annual income exceeding Rs. 250 for services rendered by the State Government. The scheme of the impugned Act was examined and it was noticed that the collections made under it 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 a fund which is contemplated by section 50 of the Act, and this fund to which the Provincial Government contributes both by way of loan and grant is specifically set apart for the rendering of services involved in carrying out the provisions of the Act. The same view was taken by this Court in regard to section 58 of the Bombay Public Trust Act, 1950 (Act XXIX of 1950) which imposed a similar contribution for a similar purpose in Ratilal Panachand Gandhi vs The State of Bombay (2). It would thus be seen that the tests which have to be applied in determining the character of any impugned levy have been laid down by this Court in these three decisions; and it is in the light of these tests that we have to consider the merits of the rival contentions raised before us in the present petition. On behalf of the petitioners Mr. Amin has relied on three other decisions which may be briefly considered. In P. P. Kutti Keya vs The State of Madras (3), the Madras High Court was called upon to consider, inter (1) ; (2) [1954] S.C.R. 1055. (3) A.I.R. 1954 Mad. 621. 548 alia, the validity of section 11 of the Madras Commercial Crops Markets Act 20 of 1933 and Rules 28(1) and 28(3) framed thereunder. Section 11(1) levied a fee on the sales of commercial crops within the notified area and section 12 provided that the amounts collected by the Market Committee shall be constituted into a Market Fund which would be utilised for acquiring a site for the market, constructing a building, maintaining the market and meeting the expenses of the Market Committee. The argument that these provisions amounted to services rendered to the notified area and thus made the levy a fee and not a tax was not accepted by the Court. Venkatarama Aiyar, J., took the view that the funds raised from the merchants for a construction of a market in substance amounted to an exaction of a tax. Whether or not the construction of a market amounted to a service to the notified area it is unnecessary for us to consider. Besides, as we have already pointed out we have now three decisions of this Court which have authoritatively dealt with this matter, and it is in the light of the said decisions that the present question has to be considered. In Attorney General for British Columbia vs Esquimalt and Nanaimo Railway Co. (1), the Privy Council had to deal with the validity of forest protection impost levied by the relevant section of the Forest Act R. section B. C. 1936. The lands in question were statutorily exempted from taxation, and it was urged against the validity of the impost that the levy of the said impost was not a service charge but a tax; and since it contravened the exemption from taxation granted to the land it was invalid. This plea was upheld by the Privy Council. The Privy Council did consider two circumstances which were relevant; the first that the levy was on a defined class of interested individuals, and the second that the fund raised did not fall into the general mass of the proceeds of taxation but was applicable for a special and limited purpose. It was conceded that these considerations were relevant but the Privy Council thought that the weight to be attached to them should not be exagge (1) 540 rated. In appreciating the weight of the said relevant circumstances the Privy Council was impressed by the fact that the lands in question formed an important part of the national wealth of the Province and their proper administration, including in particular protection against fire, is a matter of high public concern ' as well as one of particular interest to individuals. In other words, the effect of the impugned provision was, that the expenses of what was the public service of the greatest importance for the Province as a whole had been divided between the general body of tax. payers and those individuals who had a special interest in having their property protected. It would thus appear that this decision proceeded on the basis that what was claimed to be a special service to the lands in question was in reality an item in public service itself, and so the element of quid pro quo was absent. It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from pub lic service, and in essence is directly a part of it, diffe rent considerations may arise. In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy. In Parton. vs Milk Board (Victoria)(1), the validity of the levy imposed on dairymen and owners of milk depots by section 30 of the Milk Board Act of 1933 as amended by subsequent Acts of 1936 1939 was (1) ; 70 550 challenged, and it was held by Dixon, J., that the levy of the said contribution amounted to the imposition of a duty of excise. This decision was substantially based on the ground that the statutory board "performs no particular service for the dairyman or the owner of a milk depot for which his contribution may be considered as a fee or recompense" that is to say the element of quid pro quo was absent qua the persons on whom the levy had been imposed. Therefore none of the decisions on which Mr. Amin has relied can assist his case. Let us now examine the scheme of the impugned Act. As the preamble shows it has been passed because it was thought expedient to constitute mining areas and a Mining Areas Development Fund in the State of Orissa. It consists of 11 sections. Section 3 of the Act provides for the constitution of a mining area whenever it appears to the State Government that it is necessary and expedient to provide amenities like communications, water supply and electricity for the better development of any area in the State of Orissa wherein any mine is situated, or to provide for the welfare of the residents or to workers in any such areas within which persons employed in a mine or a group of mines reside or work. Under this section the State Government has to define the limits of the area. and is given the power to include within such area any local area contiguous to the same or to exclude from such area any local area comprised therein; that is the effect of section 3(1). Section 3(2) empowers the owner or a lessee of a mine or his duly constituted representative in the said area to file objections in respect of any notification issued under section 3(1) within the period specified, and the State Government is required to take the said objection into consideration. After considering objections received the State Government is authorised to issue a notification constituting a mining area under section 3(3). Section 4 deals with the imposition and collection of cess. The rate of the levy authorised shall not exceed 5 per centum of the valuation of the minerals at the pit 's mouth. Section 5 provides for the constitution of the Orissa Mining Areas Development 551 Fund. This fund vests in the State Government and has to be administered by such officer or officers as may be appointed by the State Government in that, behalf Section 5(2) requires that there shall be paid to the credit of the said fund the proceeds of the cess recovered under section 4 for each mining area during the quarter after deducting expenses, if any, for collection and recovery. Section 5(3) contemplates that to the credit of the said fund shall be placed all collections of cess under section 5(2) as well as amounts from State Government and the local authorities and public subscriptions specifically given for any of the purposes of the fund. Section 5(4) deals with the topic of the appli cation of the said fund. The fund has to be utilised to meet expenditure incurred in connection with such measures which in the opinion of the State Government are necessary or expedient for providing amenities like communications, water supply and electricity, for the better development of the mining areas, and to meet the welfare of the labour and other persons residing or working in the mining areas. Section 5(5) lays down that without prejudice to the generality of the foregoing provisions the fund may be utilised to defray any of the purposes specified in cls. (a) to (e). Under section 5(6) the State Government is given the power to decide whether any particular expenditure is or is not debitable to the fund and their decision is made final; and section 5(7) imposes on the State Government an obligation to publish annually in the gazette a report of the activities financed from the fund together with an estimate of receipts and expenditure of the fund and a statement of account. Section 6 prescribes the mode of constituting an advisory committee. It has to consist of such number of members and chosen in such manner as may be prescribed, provided however that each committee shall include representatives of mine owners and workmen employed in mining industry. The names of the members of the committee are required to be published in the gazette. Section 7 deals with the appointment and functions of the statutory authorities to carry out the purpose of the Act, while section 8 confers on the State Government power to 552 make rules. Section 9 prescribes penalties and provides for prosecutions; and section 10 gives protection to the specified authorities or officers in respect of anything done or intended to be done by them in good faith in pursuance of the Act or any rules or order made thereunder. Section 11, which is the last section confers on the State Government the power to do anything which may appear to them to be necessary for 'the purpose of removing difficulties in giving effect to the provisions of the Act. The scheme of the Act thus clearly shows that it has been passed for the purpose of the development of mining areas in the State. The basis for the operation of the Act is the constitution of a mining area, and it is in regard to mining areas thus constituted that the provisions of the Act come into play. It is not difficult to appreciate the intention of the State Legislature evidenced by this Act. Orissa is an underdeveloped State in the Union of India though it has a lot of mineral wealth of great potential value. Un fortunately its mineral wealth is located generally in areas sparsely populated with bad communications. Inevitably the exploitation of the minerals is handicapped by lack of communications, and the difficulty experienced in keeping the labour force sufficiently healthy and in congenial surroundings. The mineral development of the State, therefore, requires that provision should be made for improving the communications by constructing good roads and by providing means of transport such as tramways; supply of water and electricity would also help. It would also be necessary to provide for amenities of sanitation and education to the labour force in order to attract workmen to the area. Before the Act was passed it appears that the mine owners tried to put up small length roads and tramways for their own individual purpose, but that obviously could not be as effective as roads constructed by the State and tramway service provided by it. It is on a consideration of these factors that the State Legislature decided to take an active part in unsystematic development of its mineral areas which would help the mine owners in moving their 553 minerals quickly through the shortest route and would attract labour to assist the excavation of the minerals. Thus there can be no doubt that the primary and the principal object of the Act is to develop ' the mineral areas in the State and to assist more efficient and extended exploitation of its mineral wealth. The constitution of the advisory committee as prescribed by section 4 emphasises the fact that the policy of the Act would be to carry out with the assistance of the mine owners and their workmen. Thus after a mining area is notified an advisory committee is constituted in respect of it, and the task of carrying out the objects of the Act is left to the care of the said advisory committee subject to the provisions of the Act. Even before an area is notified the mine owners are allowed an opportunity to put forward their objections. These features of the Act are also relevant in determining the question as to whether the Act is intended to render service to the specified area and to the class of persons who are subjected to the levy of the cess. Section 5 shows that the cess levied does not become a part of the consolidated fund and is not subject to an appropriation in that behalf; it goes into the special fund earmarked for carrying out the purpose of the Act, and thus its existence establishes a correlation between the cess and the purpose for which it is levied. It was probably felt that some additions should be made to the special fund, and so section 5(3) contemplates that grants from the State Government and local authorities and public subscriptions may be collected for enriching the said fund. Every year a report of the activities financed by the fund has to be published together with an estimate of receipt and expenditure and a statement of accounts. It would thus be clear that the administration of the fund would be subject to public scrutiny and persons who are called upon to pay the levy would have an opportunity to see whether the cess collected from them has been properly utilised for the purposes for which it is intended to be used. It is not alleged by the petitioners 554 that the levy imposed is unduly or unreasonably excessive so as to make the imposition a colourable exercise of legislative power. Indeed the fact that the accounts have to be published from year to year affords an indication to the contrary. Thus the scheme of the Act shows that the cess is levied against the class of persons owning mines in the notified area and it is levied to enable the State Government to render specific services to the said class by developing the notified mineral area. There is an element of quid pro quo in the scheme, the cess collected is constituted into a specific fund and it has not become a part of the consolidated fund, its application is regulated by a statute and is confined to its purposes, and there is a definite co relation between the impost and the purpose of the Act which is to render service to the notified area. These features of the Act impress upon the levy the character of a fee as distinct from a tax. It is, however, urged that the cess levied by section 4(2) is in substance and reality a duty of excise. As we have already noticed section 4(2) provides that the rate of such levy shall not exceed 5 per centum of the valuation of the minerals at the pit 's mouth; in other words it is the value of the minerals produced which is the basis for calculating the cess payable by mine owners, and that precisely is the nature in which duty of excise is levied under Entry 84 in List I. The said Entry empowers Parliament to impose duties of excise, inter alia, on goods manufactured or produced in India. When minerals are produced from mines and a duty of excise is intended to be imposed on them it would be normally imposed at the pit 's mouth, and that is precisely what the impugned Act purports to do. It is also contended that the rate prescribed by section 4(2) indicates that it operates not as a mere fee but as a duty of excise. This argument must be carefully examined before the character of the cess is finally determined. It is not disputed that under Entry 23 in List II read with Entry 66 in the said List the State Legislature can levy a fee in respect of mines and mineral development. Entry 23 reads thus: "Regu lation of Mines and mineral development subject to 555 the provisions of List I with respect to regulation and development under the control of the Union". We will deal with the condition imposed by the latter part of this Entry later. For the present it is enough to state that regulation of mines and mineral development is within the competence of the State Legislature. Entry 66 provides that fees in respect of any of the matters in the said List can be imposed by the State Legislature subject of course to the exception of fees taken in any Court. The argument is that though the State Legislature is competent to levy a fee in respect of mines and mineral development, if the statute passed by a State Legislature in substance and in effect imposes a duty of excise it is travelling outside its jurisdiction and is trespassing on the legislative powers of Parliament. This argument is based on two considerations. The first relates to the form in which the levy is imposed, and the second relates to the extent of the levy authorised. The extent of the levy authorised would always depend upon the nature of the services intended to be rendered and the financial obligations incurred thereby. If the services intended to be rendered to the notified mineral areas require that a fairly large cess should be collected and co relation can be definitely established between the proposed services and the impost levied, then it would be unreasonable to suggest that because the rate of the levy is high it is not a fee but a duty of excise. In the present case, if the development of the mining areas involves con siderable expenditure which necessitates the levy of the prescribed rate it only means that the services being rendered to the mining areas are very valuable and the rate payer in substance is compensating the State for the services rendered by it to him. It is significant that the petitioners do not seriously suggest that the services intended to be rendered are a cloak and not genuine, or that the taxes levied have no relation to the said services, or that they are unreasonable and excessive. Therefore, in our opinion, the extent of the rate allowed to be imposed by section 4(2) cannot by itself alter the character of the levy from a 556 fee into that of a duty of excise. If the co relation between the levy and the services was not genuine or real, or if the levy was disproportionately higher than the requirements of the services intended to be rendered it would have been another matter. Then as to the form in which the impost is levied, it is difficult to appreciate how the method adopted by the Legislature in recovering the impost can alter its character. The character of the levy must be determined in the light of the tests to which we have already referred. The method in which the fee is recovered is a matter of convenience, and by itself it cannot fix upon the levy the character of the duty of excise. This question has often been considered in the past, and it has always been held that though the method in which an impost is levied may be relevant in determining its character its significance and effect cannot be exaggerated. In Balla Ram vs The Province of East Punjab (1) the Federal Court had to consider the character of the tax levied by section 3 of the Punjab Urban Immoveable Property 'tax Act XVII of 1940. Section 3 provided as follows: "There shall be charged, levied and paid an annual to tax on buildings and lands situated in the rating areas shown in the schedule to this Act at such rate not exceeding twenty per centum of the annual value of such buildings and lands as the Provincial Government may by notification in official gazette direct in respect of each such rating area". The argument urged before the Federal Court was that the tax imposed by the said section was in reality a tax on income within the meaning of Item 54 in List I of the Seventh Schedule to the Constitution Act of 1935, and as such it was not covered by Item 42 in List II of the said Schedule. This argument was rejected on the ground that the tax levied by the Act was in pith and substance a tax on lands and buildings covered by Item 42. It would be noticed that the basis of the tax was the annual value of the building which is the basis used in the Indian Income tax Act for determining income from property; and so, the attack against the section was based on (1) 557 the ground that it had adopted the same basis for leaving the impost as the Income tax Act and the said basis determined its character whatever may be the appearance in which the impost was purported to be levied. In repelling this argument Fazl Ali, J. observed that the crucial question to be answered was whether merely because the Income tax Act has adopted the annual value as the standard for determining the income it must necessarily follow that if the same standard is employed as a measure for any other tax that tax becomes a tax on income. The learned judge then proceeded to add that if the answer to this question is to be given in the affirmative then certain taxes which cannot possibly be described as income tax must be held to be so. In other words, the effect of this decision is that the adoption of the standard used in Income tax Act for getting at the income by any other act for levying the tax authorised by it would not be enough to convert the said. tax into an income tax. During the course of this judgment Fazl Ali, J. also noticed with approval a similar view taken by the Bombay High Court in Sir Byramjee Jeejeebhoy vs The Province of Bombay (1). This decision has been expressly approved by the Privy Council in Governor General in Council vs Province of Madras (2). Consistently with the decision of the Federal Court their Lordships expressed the opinion that "a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods and not on sales or the proceeds of the sale of goods. The two taxes, the one levied on the manufacturer in respect of his goods and the other on the vendor in respect of his sales may in one sense overlap, but in law there is no overlapping; the taxes are separate and distinct imposts. If in, fact they overlap that may be because the taxing authority imposing a duty of excise finds it convenient to impose that duty at the moment when the excisable article (1) I.L.R. (2) (1945) L.R. 72 I.A. 91. 71 558 leaves the factory or workshop for the first time on the occasion of its sale". In that case the question was whether the tax authorised by the Madras General Sales Tax Act, 1939, was a tax on the sale of goods or was a duty of excise, and the Privy Council held it was the former and not the latter. Therefore, in our opinion, the mere fact that the levy imposed by the impugned Act has adopted the method of determining the rate of the levy by reference to the minerals produced by the mines would not by itself make the levy a duty of excise. The method thus adopted may be relevant in considering the character of the impost but its effect must be weighed along with and in the light of the other relevant circumstances. In this connection it is always necessary to bear in mind that where an impugned statute passed by a State Legislature is relatable to an Entry in List II it is not permissible to challenge its vires only on the ground that the method adopted by it for the recovery of the impost can be and is generally adopted in levying a duty of excise. Thus considered the conclusion is inevitable that the cess levied by the impugned Act is neither a tax nor a duty of excise but is a fee. The next question which arises is, even if the cess is a fee and as such may be relatable to Entries 23 and 66 in List II its validity is still open to challenge because the legislative competence of the State Legislature under Entry 23 is subject to the provisions of List I with respect to regulation and development under the control of the Union; and that takes us to Entry 54 in List I. This Entry reads thus: "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". The effect of reading the two Entries together is clear. The jurisdiction of the State Legislature under Entry 23 is subject to the limitation imposed by the latter part of the said Entry. If Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union, to 559 the extent of such declaration the jurisdiction of the State Legislature is excluded. In other words, if a Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law. The limitation imposed by the latter part of Entry 23 is a limitation on the legislative competence of (,he State Legislature itself. This position is not in dispute. It is urged by Mr. Amin that the field covered by the impugned Act has already been covered by the Mines and Minerals (Regulation and Development) Act, 1948, (LIII of 1948) and he contends that in view of the declaration made by section 2 of this Act the impugned Act is ultra vires. This Central Act was passed to provide for the regulation of mines and oil fields and for the development of minerals. It may be stated at this stage that by Act LXVII of 1957 which has been subsequently passed by Parliament, Act LIII of 1948 has now been limited only to oil fields. We are, however, concerned with the operation of the said Act in 1952, and at that time it applied to mines as well as oil fields. Section 2 of the Act contains a declaration as to the expediency and control by the Central Government. It reads thus: "It is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of mines and oil fields and the development of minerals to the extent hereinafter provided". It is common ground that at the relevant time this Act applied to coal mines. Section 4 of the Act provides that no mining lease shall be granted after the commencement of this Act otherwise than in accordance with the rules made under this Act. Section 5 empowers the Central Government to make rules by notification for regulating the grant of mining leases or for prohibiting the grant of such leases in respect of any mineral or in any area. Sections 4 and 5 thus 560 purport to prescribe necessary conditions in accordance with which mining leases have to be executed. This part of the Act has no relevance to our present purpose. Section 6 of the Act, however, empowers the Central Government to make rules by notification in the official gazette for the conservation and development of minerals. Section 6(2) lays down several matters in respect of which rules can be framed by the Central Government. This power is, however, without prejudice to the generality of powers conferred on the Central Government by section 6(1). Amongst the matters covered by section 6(2) is the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected. It is true that no rules have in fact been framed by the Central Government in regard to the levy and collection of any fees; but, in our opinion, that would not make any difference. If it is held that this Act contains the declaration referred to in Entry 23 there would be no difficulty in holding that the declaration covers the field of conservation and development of minerals, and the said field is indistinguishable from the field covered by the impugned Act. What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List I with respect to regulation and development under the control of the Union, and Entry 54 in List I requires a declaration by Parliament by law that regulation and development of mines should be under the control of the Union in public interest. Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if it contains the requisite declaration, then it would not be competent to the State Legislature to pass an Act in respect of the subject matter covered by the said declaration. In order that the declaration should be effective it is not necessary that rules should be made or enforced; all that this required is a declaration by Parliament that it is expedient in the public interest to take the regulation and development of mines under the control of the Union. In such a case the test must be whether the legislative declaration covers the field 561 or not. Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act LIII of 1948. It still remains to consider whether section 2 of the said Act amounts in law to a declaration by Parliament as required by article 54. When the said Act was passed in 1948 the legislative powers of the Central and the Provincial Legislatures were governed by the relevant Entries in the Seventh Schedule to the Constitution Act of 1935. Entry 36 in List I corresponds to the present Entry 54 in List I. It reads thus: "Regulation of Mines and Oil Fields and mineral development to the extent to which such regulation and development under Dominion control is declared by Dominion law to be expedient in public interest". It would be notic ed that the declaration required by Entry 36 is a declaration by Dominion law. Reverting then to section 2 of the said Act it is clear that the declaration contained in the said section is put in the passive voice; but in the context there would be no difficulty in holding that the said declaration by necessary implication has been made by Dominion law. It is a declaration contained in a section passed by the Dominion Legislature ' and so it is obvious that it is a declaration by a Dominion law; but the question is: Can this declaration by a Dominion law be regarded constitutionally as declaration by Parliament which is required by Entry 54 in List I. It has been urged before us by the learned Additional Solicitor General and Mr. Amin that in dealing with this question we should bear in mind two general considerations. The Central Act has been continued under article 372(1) of the Constitution as an existing law, and the effect of the said constitutional provision must be that the continuance of the existing law would be as effective and to the same extent after the Constitution came into force as before. It is urged that after the said Act was passed and before the Con stitution came into force no Provincial Legislature could have validly made a law in respect of the field covered by the said Act, and it would be commonsense to assume that the effect of the continuance of the 562 said law under article 372(1) cannot be any different. In other words, if no Provincial Legislature could have trespassed on the field covered by the said Act before the Constitution, the position would and must be the same even after the Constitution came into force. It is also contended that for the purpose of bringing the provision of existing laws into accord with the provisions of the Constitution the President was given power to make by order appropriate adaptations and modifications of such laws, and the object of making such adaptations obviously was to make the continuance of the existing laws fully effective. It is in the light of these two general considerations, so the. argument runs, must the point in question be considered. The relevant clause in the Adaptation of Laws Order, 1950, on which reliance has been placed in support of this argument is el. 16 in the Supplementary Part of the said Order. This clause provides that subject to the provisions of this Order any reference by whatever form of words in any existing law to any authority competent at the date of the passing of that law to exercise any powers or authorities, or to discharge any functions, in any part of India shall, where a corresponding new authority has been constituted by or under the Constitution, have effect until duly repealed or amended as if it were a reference to that new authority. The petitioners contend that as a result of this clause the declaration made by the Dominion Legislature in section 2 of the Central Act must now be held to be the declaration made by Parliament. Is this contention justified on a fair and reasonable construction of the clause? That is the crux of the problem. In considering this question it would be relevant to recall the scheme of the Adaptation of Laws Order, 1950. It consists of Three Parts. Part 1 deals with the adaptation of Central Laws and indicates the adaptation made therein; Part 11 deals with the adaptation of Provincial Laws and follows the same pattern; and Part III is a Supplementary Part which contains provisions in the nature of supplementary provisions. A perusal of the clauses contained in Part 563 I would show that though some adaptation was made in Act LIII of 1948 it was not thought necessary to make an adaptation in section 2 of the said Act whereby the declaration implied in the said section has been expressly adapted into a declaration by Parliament. Now, the effect of el. 16 in substance is to equate an authority competent at the date of the passing of the existing law to exercise any powers or authorities, or to discharge any functions with a corresponding new authority which has been constituted by or under the Constitution. Reference to the authority in the con. text would suggest cases like reference to the Governor General eo nomine, or Central Government which respectively would be equated with the President or the Union Government. Prima facie the reference to authority would not include reference to a Legislature; in this connection it may be relevant to point out that article 372(1) refers to a competent Legislature as distinguished from other competent authorities. That is the first difficulty in holding that el. 16 refers to the Dominion Legislature and purports to equate it with the Parliament. It is clear that for the application of this clause it is necessary that a reference should have been made to the authority by some words whatever may be their form. In other words it is only where the existing law refers expressly to some authority that this clause can be invoked. It is difficult to construe the first part of this clause to include authorities to which no reference is made by any words in terms, but to which such reference may be implied; and quite clearly the Dominion Legislature is not expressly referred to in section 2. In construing the present clause we think it would be straining the language of the clause to hold that an authority to which no reference is made by words in any part of the existing law could claim the benefit of this clause. Besides, there is no doubt that when the clause refers to any authority competent to exercise any powers or authorities, or to discharge any functions, it refers to the powers, authorities or functions attributable to the existing law itself; that is to say, authorities 564 which are competent to exercise powers or to discharge functions under the existing laws are intended to be equated with corresponding new authorities. It is impossible to hold that the Dominion Legislature is an authority which was competent to exercise any power or to discharge any function under the existing law. Competence to exercise power to discharge functions to which the clause refers must inevitably be related to the existing law and not to the Constitution Act of 1935 which would be necessary if Dominion Legislature was to be included as an authority under this clause. The Constitution Act of 1935 had been repealed by the Constitution and it was not, and could not obviously be, the object of the Adaptation of Laws Order to make any adaptation in regard to the said Act. Therefore, the competence of the Dominion Legislature which flowed from the relevant provisions of the Constitution Act of 1935 is wholly outside this clause. We have carefully considered the arguments urged before us by the learned Additional Solicitor General and Mr. Amin but we are unable to hold that cl. 16 can be pressed into service for the purpose of supporting the conclusion that the declaration by the Dominion Legislature implied in section 2 of Act LIII of 1948 can, by virtue of cl. 16, be held to be a declaration by Parliament within the meaning of the relevant Entries in the Constitution. If that be the true position then the alternative challenge to the vires of the Act based on el. 16 of the Adaptation of Laws Order must fail. There is another possible argument which may prima facie lead to the same conclusion. Let us assume that the result of reading article 372 and cl. 16 of the Adaptation of Laws Order is that under section 2 of Act LIII of 1948 there is a declaration by Parliament as suggested by the petitioners and the learned Additional Solicitor General. Would that meet the requirements of Entry 54 in List I of the Seventh Schedule? It is difficult to answer this question in the affirmative because the relevant provisions of the Constitution are prospective and the declaration by Parliament specified by Entry 54 must be declaration made by 565 Parliament subsequent to the date when the Constitution came into force. Unless a declaration is made by Parliament after the Constitution came into force it will not satisfy the requirements of Entry 54, and that inevitably would mean that the impugned Act is validly enacted under Entry 23 in List II of the Seventh Schedule. If that be the true position then it would follow that even on the assumption that el. 16 of the Adaptation of Laws Order and article 372 can be construed as suggested by the petitioners the impugned Act would be valid. Faced with this difficulty, both the learned Additional Solicitor General and Mr. Amin argued that cl. 21 of the said Order may be of some assistance. Clause 21 reads thus: "Any Court, Tribunal, or authority required or empowered to enforce any law in force in the territory of India immediately before the appointed day shall, notwithstanding that this Order makes no provision or insufficient provision for the adaptation of the law for the purpose of bringing it into accord with the provisions of the Constitution, construe the law with all such adaptations as are necessary for the said purpose". Assuming that this clause is valid we do not see how it is relevant in the present case. All that this clause purports to do is to empower the Court to construe the law with such adaptations as may be necessary for the purpose of bringing it in accord with the provisions of the Constitution. There is no occasion to make any adaptation in construing Act LIII of 1948 for bringing it into accord with the provisions of the Constitution at all. The said Act has been continued under article 372(1) and there is no constitutional defect in the said Act for the avoidance of which any adaptation is necessary. In fact what the petitioners seek to do is to read in section 2 of the said Act the declaration by Parliament required by Entry 54 so as to make the impugned Act ultra vires. Quite clearly cl. 21 cannot be pressed into service for such a purpose. Therefore, we reach this position that the field covered by Act LIII of 1948 is substantially the same as the field covered by the 72 566 impugned Act but the declaration made by section 2 of the said Act does not constitutionally amount to the requisite declaration by Parliament, and so the limitation imposed by Entry 54 does not come into operation in the present case. Act LIII of 1948 continues in operation under article 372; with this modification that so far as the State of Orissa is concerned it is the impugned Act that governs and not the Central Act. Article 372(1) in fact provides for the continuance of the existing law until it is altered, repealed or amended by a competent Legislature or other competent authority. In the absence of the requisite parliamentary declaration the legislative competence of the Orissa Legislature under Entry 23 read with Entry 66 is not impaired, and so the said Legislature is competent either to repeal, alter or amend the existing law which is the Central Act LIII of 1948; in effect, after the impugned Act was passed, so far as Orissa is concerned the Central Act must be deemed to be repealed. This position is fully consistent with the provisions of article 372. The result is that the material words used in cls. 16 and 21 being unambiguous and explicit, it is difficult to give effect to the two general considerations on which reliance has been placed by the petitioners. Incidentally the present case discloses that in regard to the requisite parliamentary declaration prescribed by Entry 54 in List I in its application to the pre Constitution Acts under corresponding Entry 36 in List I of the Constitution Act of 1935, there is a lacuna which has not been covered by any clauses of the Adaptation of Laws Order; that, however, is a matter for Parliament to consider. There is one more point which is yet to be considered. Mr. Amin contends that Entry 23 in List II is subject to the provisions in List I with respect to regulation and development under the control of the Union, and according to him Entry 52 in List I is one of such provisions. In this connection he relies on the said Entry which deals with industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest, and Industries (Development and Regulation) Act, 1951 (LXV 567 of 1951). This Act has been passed to provide for the development and regulation of certain industries one of which undoubtedly is coal mining industry. Section 2 of this Act declares that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. This declaration is a declaration made by Parliament, and if the provisions of the Act read with the said declaration covered the same field as is covered by the impugned Act, it would undoubtedly affect the vires of the impugned Act; but in dealing with this question it is important to bear in mind the doctrine of pith and substance. We have already noticed that in pith and substance the impugned Act is concerned with the development of the mining areas notified under it. The Central Act, on the other hand, deals more directly with the control of all industries including of course the industry of coal. Chapter II of this Act provides for the constitution of the Central Advisory Council and Development Councils, chapter III deals with the regulation of scheduled industries, chapter IIIA provides for the direct management or control of industrial undertakings by Central Government in certain cases, and chapter IIIB is concerned with the topic of control of supply, distribution, price, etc, of certain articles. The last chapter deals with miscellaneous incidental matters. The functions of the Development Councils constituted under this Act prescribed by section 6(4) bring out the real purpose and object of the Act. It is to increase the efficiency or productivity in the scheduled industry or group of scheduled industries, to improve or develop the service that such industry or group of industries renders or could render to the community, or to enable such industry or group of industries to render such service more economically. Section 9 authorises the imposition of cess on scheduled industries in certain cases. Section 9(4) provides that the Central Government may hand over the proceeds of the cess to the Development Council there specified and that the Development Council shall utilise the said proceeds to achieve the objects mentioned in cls. (a) to (d). These 568 objects include the promotion of scientific and industrial research, of improvements in design and quality, and the provision for the training of technicians and labour in such industry or group of industries. It would thus be seen that the object of the Act is to regulate the scheduled industries with a view to improvement and development of the service that they may render to the society, and thus assist the solution of the larger problem of national economy. It is difficult to hold that the field covered by the declaration made by section 2 of this Act, considered in the light of its several provisions, is the same as the field covered by the impugned Act. That being so, it cannot be said that as a result of Entry 52 read with Act LXV of 1951 the vires of the impugned Act can be successfully challenged. Our conclusion, therefore, is that the impugned Act is relatable to Entries 23 and 66 in List II of the Seventh Schedule, and its validity is not impaired or affected by Entries 52 and 54 in List I read with Act LXV of 1951 and Act LIII of 1948 respectively. In view of this conclusion it is unnecessary to consider whether the impugned Act can be justified under Entry 50 in List II, or whether it is relatable to Entry 24 in List III and as such suffexs from the vice of repugnancy with the Central Act XXXII of 1947. The result is the petition fails and is dismissed with costs. WANCHOO, J. I have read the judgment just delivered by my learned brother Gajendragadkar J. and regret that I have not been able to persuade myself that the cess levied in this case on all extracted minerals from any mine in any mining area at a rate not exceeding five per centum of the value of the minerals at the pit 's mouth by the Orissa State Legislature under section 4 of the Orissa Mining Areas Development Fund Act, No. XXVII of 1952, (hereinafter called the Act) is a fee properly so called and not a duty of ex cise. The facts are all set out in the judgment just delivered and I need not repeat them. The scheme of the Act, as appears from section 3 thereof is to give power to the State Government, whenever it 569 thinks it necessary and expedient to provide amenities, like communications, water supply and electricity for the better development of any area in the State where , in any mine is situated or to provide for the welfare of residents or workers in any such area within. which persons employed in a mine or a group of mines reside or work, to constitute such an area to be a mining area for the purposes of the Act, to define the limits of the area, to include within such area any local area contiguous to the same and defined in the notification and to exclude from such area any local area comprised therein and defined in the notification. A notification under section 3 is made, after hearing objections from owners or lessees of mines. After such an area is con stituted under section 3, a cess is imposed under section 4 on all extracted minerals from any mine in any such area at the rate not exceeding five per centum of the value of the minerals at the pit 's mouth. The cess so collected is credited to a fund called the Orissa Mining Area Development Fund created under section 5 of the Act, besides other amounts with which we are not concerned in this case. The Fund is to be applied to meet expenditure incurred in connection with such measures, which in the opinion of the State Government, are necessary or expedient for providing amenities like communications, water supply and electricity, for the better development of mining areas and to meet the welfare of labour and other persons residing or working in the mining areas. Then come other provisions for working out the above provisions including section 8, which gives power to the State Government to frame rules to carry. into effect the purposes of the Act. The Rules were framed under the Act in January, 1955. The constitutional competence of the Orissa State Legislature to levy the cess under the Act is attacked on two main grounds. In the first place, it is urged that the cess is in pith and substance a duty of excise under item 84 of List I of the Seventh Schedule and therefore the levy of such a cess is beyond the competence of the Orissa State Legislature. In the second place, it is urged that even if the cess is a fee, in view 570 of the two Acts of the Central Legislature and Parliament, namely, The Mines and Minerals (Regulation and Development) Act, No. LIII of 1948 and The Industries (Development and Regulation) Act, No. LXV of 1951, the Orissa Legislature was not competent to pass the Act. The petition has been opposed on behalf of the State of Orissa and the main contentions urged on its behalf are that the cess is a fee properly so called and not a duty of excise and therefore the Orissa State Legislature was competent to levy it and the two Central Acts do not affect that competence. In the alternative it has been urged that even if the cess is a tax the State Legislature was competent to levy it under item 50 of List If of the Seventh Schedule. The first question therefore that falls for consideration is whether the cess in this ' ease is a tax or a fee. Difference between a tax properly so called and a fee properly so called came up for consideration before this Court in three cases in 1954 and was considered at length. In the first of them, namely, The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt it was pointed out that "though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself". It was also pointed that "the essence of a tax is compulsion, that is to say, it is imposed under statutory power without the taxpayer 's consent and the payment is enforced by law. The second characteristic of a tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when (1) ; 571 collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the tax payer and the public authority. Another feature of taxation is that as it is a part of the common burden, quantum of imposition upon the tax payer depends generally upon his capacity to pay. " As to fees, it was pointed out that "a 'fee ' is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. " Finally, it was pointed out that "the distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege. . . Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives. " The consequence of these principles was that "if, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision be co related to the expenses incurred by Government in rendering the services. . . If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax." Having laid down these principles, that case then considered the vires of section 76 of the Madras Hindu Religious and Charitable Endowments Act, No. XIX of 1951, and it was pointed out that the material fact which negatived the theory of fees in that case was that the money raised by levy of the contribution was not ear marked or specified for defraying the expenses 572 that the Government had to incur in performing the services. All the collections went to the consolidated fund of the State and all the expenses had to be met not out of those collections but out of the general revenues by a proper method of appropriation as was done in the case of other government expenses. That in itself might not be conclusive, but in, that case there was total absence of any co relation between the expenses incurred by the Government and the amount raised by contribution under the provision of section 76 and in those circumstances the theory of return or counter payment or quid pro quo could not have any possible application to that case. Consequently, the contribution levied under section 76 was held to be a tax and not a fee. In the second case of Mahant Sri Jagannath Ramanuj Das vs The State of Orissa (1), a similar imposition by the Orissa Legislature came up for consideration. After referring to the earlier case, it was pointed out that "two elements are thus. essential in order that a payment may be regarded as a fee. In 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 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." The Orissa imposition was held to be a fee because the collections made were not merged in the general public revenue and were meant for the purpose of meeting the expenses of the Commissioner and his office which was the machinery set up for due administration of the affairs of the religious institution. They went to constitute a fund which was contemplated by section 50 of the Orissa Act and this fund was specifically set apart for rendering services involved in carrying out the provisions of the Act. The third case, namely, Ratilal Panachand Gandhi (1) ; 573 vs The State of Bombay (1) came from Bombay. 58 of the Bombay Act, No. XXIX of 1950, provided for an imposition in proportion to the gross annual income of the trust. This imposition was levied for the purpose of due administration of the trust property and for defraying the expenses incurred in connection with the same. After referring to the two earlier cases, the Court went on to say that "taxis a common burden and the only return which the taxpayer gets is 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 the payments are demanded. Thus in fees there is always an element of quid pro quo which is absent in a tax. . But in order that the collections made by the Government can rank as fees, there must be co relation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. " It was then pointed out that the contributions, which were collected under section 58, were to be credited in the Public Trusts Administration Fund as constituted under section 57. This fund was to be applied exclusively for the payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. The imposition therefore was in that case held to be a fee. These decisions clearly bring out the difference between a tax and a fee and generally speaking there is always an element of quid pro quo in a fee and the amount raised through a fee is co related to the expenses necessary for rendering the services which are the basis of quid pro quo. Further, the amount collected as a fee does not go to augment the general revenues of the State and many a time a special fund is created in which fees are credited though this is not absolutely necessary. But as I read these deci sions, they cannot be held to lay down that 'What is in pith and substance a tax can become a fee merely (1) [1954] S.C.R. 1055. 574 because a fund is created in which collections are credited and some services may be rendered to the persons from whom collections are made. If that were so, it will be possible to convert many taxes not otherwise leviable into fees by the device of creating a special fund and attaching some service to be rendered through that fund to the persons from whom collections are made. I am therefore of opinion that one must first look at the pith and substance of the levy, and if in its pith and substance it is not essentially different from a tax it cannot be converted into a fee by creating a special fund in which the collections are credited and attaching some services to be rendered through that fund. Let me then look at the pith and substance of the cess, which has been imposed in this case. The cess consists of a levy not exceeding five per centum of the value of the minerals at the pit 's mouth on all extracted minerals. Prima facie such a levy is nothing more nor less than a duty of excise. Item 84 of List I gives power to levy duties of excise exclusively to the Union and is in these terms : "Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry. " This item gives power to Parliament to impose duties of excise on all goods manufactured. or produced in India with certain exceptions mentioned therein. Taking this particular case, coal is produced from the mine and would clearly be covered by the words " other goods produced in India" and a duty of excise can be levied on it. What then exactly is meant by a duty of excise? Reference in this connection may be made to Governor General in Council vs Province of Madras (1). In that case the point arose whether the sales tax imposed by the Madras Legislature was a duty of excise. The Privy Council pointed out that (1) (1945) L.R. 72 I.A. 91. 575 "in a Federal constitution in which there is a division of legislative powers between Central and Provincial legislatures, it appears to be inevitable that controversy should arise whether one or other legislature is not exceeding its own, and encroaching on the other 's, constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its 'pith and substance ' as it has sometimes been said which must determine into what category it falls. " The Privy Council went on to consider what a duty of excise was and said that "it is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods not on sales or the proceeds of sale of goods. Though sometimes a duty of excise may be imposed on first sales, a duty of excise and a tax on the sale of goods were separate and distinct imposts and in law do not overlap." The Privy Council approved of the decisions of the Federal Court in re The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (1) and The Province of Madras vs Messrs. Boddu Paidanna and Sons (2). It seems to have been urged that because in some cases a duty of excise may be levied on the occasion of the first sale and a sales tax may also be levied on the same occasion, there is really no difference between the two. It is however clear that a duty of excise is primarily a tax on goods manufactured or produced; it is not a tax on the sale of goods, though the taxing authority may as a matter of concession to the producer not charge the tax immediately the goods are produced and may postpone it, to make it easy for the producer to pay the tax, till the first sale is made by him; nevertheless the charge is still on the goods and is therefore a duty of excise. On the other hand, a sales tax can only be levied when a sale is made and there is nothing to prevent its levy on the first sale. The two concepts (1) (2) (1948) F.C.R. go. 576 are however different and, as the Privy Council pointed out, a sales tax and a duty of excise are separate and distinct imposts and in law do not overlap. The pith and substance of a duty of excise is that it is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. Let me therefore see what the Orissa Legislature has done in the present case. It has levied a cess at a rate not exceeding five per centum on the value of minerals at the pit 's mouth on all extracted minerals. All the extracted minerals are nothing other than goods produced and the cess is levied on the goods produced at a rate not exceeding five per centum of the value at the pit 's mouth. The cess therefore in the present case cannot be anything other than a duty of excise. The pith and substance of the cess in this case falls fairly and squarely within entry 84 of List I and is therefore a duty of excise, which cannot be levied by the Orissa State Legislature. I may in this connection refer to the cesses levied by the Central Legislature and Parliament by Act XXXII of 1947 and by the Act No. LXV of of Act XXXII of 1947 lays down that there shall be levied and collected as a cess for the purposes of that Act a duty of excise on all coal and coke dispatched from collieries at such rate not less than four annas and not more than eight annas per ton as may from time to time be fixed by the Central Government by notification in the Official Gazette. This is obviously a tax on the goods produced, the basis of the tax being so much per ton. Again sec. 9 of Act LXV of 1951 lays down that there may be levied and collected as a cess for the purposes of that Act on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by the Central Government by notified order a duty of excise at a rate not exceeding two annas per centum of the value of the goods. This again is clearly a tax on goods produced or manufactured and is in the nature of a duty of excise, the basis of the tax being so much of the value of the goods. If these two taxes are duties of excise, 577 I fail to see any difference in pith and substance between these two taxes and the cess levied under the Act. It is however urged that the method employed in the Act for realising the cess is only a method of quantification of the fee and merely because of this quantification, the pith and substance of the impost does not change from a fee to a duty of excise. Reference in this connection was made to three cases of quantification. In Sir Byramjee Jeejeebhoy vs The Province of Bombay (1), a question arose with respect to a tax imposed on urban immovable property, whether it was a tax on lands and buildings. The challenge to the tax was on the ground that it was tax on income or capital value within items 54 and 55 of List I of the Seventh Schedule of the Government of India Act and could not therefore be imposed by the Bombay Legislature. It was held that the tax was a tax on lands and buildings within the meaning of item 42 of List II of the same Schedule and that the basis of the tax, which was the annual value, would not convert it into a tax on income or capital value. The High Court considered the pith and substance of the said Act and came to the conclusion that every tax on annual value was not necessarily a tax on income and it was held that the mode of assessment of a tax did not determine its character and one has to look to the essential character of the tax to decide whether it was a tax on income or on lands and buildings. Looking to the pith and substance of the tax it was held in that case that it was a tax on lands and buildings. That decision was in the circumstances of that case right because the intention of the legislature was not to tax the income of any one; the essential character of the tax in that case was to tax the lands and buildings and the annual value of the lands and buildings was only taken as a mode of levying the tax. In the present case, however, the very mode of the levy of the cess is nothing other than the levy of a duty of excise and therefore the principle of quantification for purposes of a fee cannot be extended to (1) I.L.R. 578 such an extent as to convert what is in pith and substance a tax into a fee on that basis. The next case to which reference was made is Municipal Corporation, Ahmedabad vs Patel Gordhandas Hargovandas (1). In that case the Ahmedabad Bo. rough Municipality had levied a rate on open lands and the basis of the levy was one per centum of the capital value of the land. It was urged that this amounted to a capital levy within entry 54 of List I; but the court repelled that contention and held that the levy was in pith and substance a tax on lands, which came within entry 42 of List II of the Seventh Schedule to the Government of India Act. A distinction was made between a tax on land which is levied on the basis of its capital value and a tax which is on capital treating it as an asset itself. This decision also, if I may say so with respect, is correct, for the basic idea was to tax lands and some method had to be found for doing so and the method evolved, though it might look like a capital levy, was in pith and substance not so. But the theory of quantification which is the basis of these two cases cannot be stretched so far as to turn levies which are in pith and substance taxes into fees, by the process of attaching certain services and creating a fund. The third case is Ralla Ram vs The Province of East Punjab (2). That was a case of a tax on lands and buildings and annual value was the basis on which the tax was levied. The Federal Court rightly pointed out that the pith and substance of the levy had to be seen and on that view it was not income tax but a tax on lands and buildings and the method adopted was merely a method of quantification. The Federal Court also pointed out that "where there is an apparent conflict between an Act of the Federal Legislature and an Act of the Provincial Legislature, we must try to ascertain the pith and substance or the true nature and character of the conflicting provisions and that before an Act is declared ultra vires, there should be an attempt to reconcile the two conflicting jurisdictions, and, only if such a reconciliation should prove (1) I.L.R. (2) 579 impossible, the impugned Act should be declared invalid. " It may also be pointed out that in all these three cases, one source of income of an individual or one item out of the total capital of an individual was the basis of calculation while income tax or capital levy is generally on the total income or the total capital of a person. That aspect must have gone into the decision that the method employed was merely a mode for imposing a tax on lands and buildings. In the present case, however, I see no difference between the method of imposing a duty of excise and the method employed in the Act for imposing a cess a matter which will be clear from the cesses imposed under the two Central Acts already referred to (No. XXXII of 1947 and No. LXV of 1951). It is not as if there could be no method of imposing a fee properly so called in this case except the one employed. Two methods readily suggest themselves. A lump sum annual fee could be levied on each mine even on a graded scale depending on the size of the mine as evidenced by its share capital. Or a similar graded fee could be levied on each mine depending on its size determined by the number of men employed therein. Where therefore the result of quantification is to bring a particular impost entirely within the ambit of a tax it would not be right to say that such an impost is still a fee, because certain services have to be rendered and a fund has been created in which collections of the impost are credited. If this were permissible many taxes not otherwise leviable would be converted into fees by the simple device of creating a special fund and attaching certain services to be rendered from the amount in that fund. That would in my opinion be a colourable exercise of the power of legislation, as explained in K. C. Gajapati Narayan Deo vs The State of Orissa (1). Let me illustrate how taxes can be turned into fees on the so called basis of quantification with the help of the device of creating a fund and attaching certain services to be rendered out of monies in the fund. Take the case of income tax under item 82 of List I of the Seventh Schedule, which is exclusively reserved (1) ; 580 for the Union. Suppose that some State Legislature wants to impose a tax on income other than agricultural income in the garb of fees. All that it has to do is then to create a special fund out of the amounts collected and to attach rendering of certain services to the fund. All that would be necessary would be to define the services to be rendered so widely that the amount required for the purpose would be practically limitless. In that case there would be no difficulty in levying any amount of tax on income, for the amount collected would always be insufficient for the large number of services to be rendered. What has to be done is to find out a number of items in Lists II and III of the Seventh Schedule in respect of which fees can be levied by the State Legislature. These fees can be levied on a total basis for a large number of services under various entries of Lists II and III. A fund can be created, say, for rendering services of various kinds to residents of one district. In order to meet the expenses of tendering such services, suppose, the legislature imposes a tax on every one in the district at 10 per centum of the net total income (other than agricultural income); the amount so collected is put in a separate fund and ear marked for such special services to be rendered to the residents of that district. Can it be said that such a levy is a fee justified under various entries of Lists II and III, and not a tax on income, on the ground that this is merely a mode of quantification? As an instance, take, item 6 of List II, "Public health and sanitation, hospitals and dispensaries"; item 9, "Relief of the disabled and unemployable"; item II, Education; item 12, Libraries, museums and similar institutions"; item 13, communications, that is to say, roads, bridges and other means of communications; item 17, "Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power"; and item ', 25, "Gas and gas works"; item 23 of List III, "Social security and social insurance, employment and unemployment"; item 24, "Welfare of labour including conditions of work, provident funds, employers ' liability workmen 's compensation, invalidity and old age 581 pensions and maternity benefits"; item 25, "Vocational and technical training of labour"; and item 38, "Electricity". Assume that a fund is created for rendering, these services to the residents of a district. The State Legislature is entitled to impose fees for rendering these services to the residents of the district; the costs of these services would obviously be limitless and in order to meet these costs, the State legislature levies a consolidated fee for all these purposes at 10 per centum of the total net income on the residents of the district (excluding his agricultural income) as a measure of quantification of the fee. Can it be said in the circumstances that such a levy would not be Income tax, simply because a fund is created to be used in the district where collections are made and these services have to be rendered out of the fund so created to the residents of that district and to no others? The answer can only be one, viz., that the nature of the impost is to be seen in its pith and substance; and if in pith and substance it is income tax within item 82 of List I of the Seventh Schedule it will still remain income tax in spite of the creation of a fund and the attaching of certain services to the monies in that fund to be rendered in a particular area. Such an impost can never be justified as a consolidated fee on the ground that it is merely a method of quantification. Compare what has been done in this case. Sec. 3 of the Act which refers to the services to be rendered mentions communications, that is,, roads, bridges and other means of communication (barring those given in List I), water supply and electricity, for the better development of the area. These three items themselves would mean expenditure of such large amounts that anything could be charged as a fee to meet the costs, particularly in an undeveloped State like Orissa. Further, the section goes on to mention provision for the welfare of residents or workers in any such area, which would include such things as social security and social insurance, provident funds, employer 's liability, workmen 's compensation, invalidity and old age pensions and maternity benefits and may be even employment and unemployment. Again large funds would 74 582 be required for these purposes. Therefore, the services enumerated in section 3 being so large and requiring such large sums, any amount can be levied as a fee and in the name of quantification any tax, even though it may be in List I, can be imposed; and that is exactly what has been done, namely, what is really a duty of excise has been imposed as a fee for these purposes which fall under items 13 and 17 of List II and 23, 24 and 38 of List III. There can be no doubt in the circumstances that the levy of a cess as a fee in this case is a colourable piece of legislation. I do not say that the Orissa State Legislature did this deliberately. The motive of the legislature in such cases is irrelevant and it is the effect of the legislation that has to be seen. Looking at that, the cess in this case is in pith and substance nothing other than a duty of excise under item 84 of List I and therefore the State legislature was incompetent to levy it as a fee. The next contention on behalf of the State of Orissa is that if the cess is not justified as a fee, it is a tax under item 50 of List II of the Seventh Schedule. Item 50 provides for taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development. This raises a question as to what are taxes on mineral rights. Obviously, taxes on mineral rights must be different from taxes on goods produced in the nature of duties of excise. If taxes on mineral rights also include taxes on minerals produced, there would be no difference between taxes on mineral rights and duties of excise under item 84 of List I. A comparison of Lists I and II of the Seventh Schedule shows that the same tax is not put in both the Lists. Therefore, taxes on mineral rights must be different from duties of excise which are taxes on minerals produced. The difference can be understood if one sees that before minerals are extracted and become liable to duties of excise somebody has got to work the mines. The usual method of working them is for the owner of the mine to grant mining leases to those who have got the capital to work the mines. There should 583 therefore be no difficulty in holding that taxes on mineral rights are taxes on the right to extract minerals and not taxes on the minerals actually extracted. Thus tax on mineral rights would be confined, for example, to taxes on leases of mineral rights and on premium or royalty for that. Taxes on such premium and royalty would be taxes on mineral rights while taxes on the minerals actually extracted would be duties of excise. It is said that, there may be cases where the owner himself extracts minerals and does not give any right of extraction to somebody else and that in such cases in the absence of mining leases or sub leases there would be no way of levying tax on mineral right, ,. It is enough to say that these cases also, rare though they are, present no difficulty. Take the case of taxes on annual value of buildings. Where there is a lease of the building, the annual value is determined by the lease money; but there are many cases where owners themselves live in buildings. In such cases also taxes on buildings are levied on the annual value worked out according to certain rules. There would be no difficulty where an owner himself works the mine to value the mineral rights on the same principles on which leases of mineral rights are made and then to tax the royalty which, for example, the owner might have got if instead of working the mine himself he had leased it out to somebody else. There can be no doubt therefore that taxes on mineral rights are taxes of this nature and not taxes on minerals actually produced. Therefore the present case is not a tax on mineral rights; it is a tax on the minerals actually produced and can be no different in pith and substance from a tax on goods produced which comes under Item 84 of List I, as duty of excise. The present levy therefore under section 4 of the Act cannot be justified as a tax on mineral rights. In the view I have taken, it is not necessary to consider the other point, raised on behalf of the petitioners, namely, that even if it is a fee, in view of the two Central Acts (mentioned earlier) the, Orissa Legislature was not competent to pass the Act. I would 584 therefore allow the petition, and declare that the Orissa Mining Areas Development Fund Act, 1952, is beyond the constitutional competence of the Orissa Legislature to pass it. The whole Act must be struck down because there will be very little left in the Act if section 4 falls as it must. The legislature would never have passed the Act without section 4. By COURT. In accordance with the majority Judgment of the Court, the Writ Petition is dismissed with costs.

The petitioners challenged the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952, which by section 3 empowered the State Government to constitute mining areas for the purpose of providing them with certain amenities after hearing objections from the lessees, by section 4 to impose and collect a cess not exceeding 5% of the valuation of the minerals at the pit 's mouth and by section 5 created a fund to which the cess was to be credited. The petitioners ' case, inter alia, was that the impugned Act and the rules made thereunder were ultra vires the powers of the State Legislature, the cess levied thereunder was not a fee but a duty of excise on coal within Entry 84 of List I of the Seventh Schedule to the Constitution and repugnant to Coal Mines Labour Welfare Fund Act, 1947 (Act XXXII of 1947), and, alternatively, even supposing it was a fee relatable to Entries 23 and 66 of List II, it was hit by Entry 54 of List I read with the Mines and Minerals (Regulation and Development) Act 1948 (Act LIII of 1948), or by Entry 52 of List I read with the Industries (Development and Regulation) Act, 1951 (Act LXV of 1951). It was urged on behalf of the State, inter alia, that the cess was a fee and not a duty of excise and the competence of the State Legislature to levy it was not affected by the Central Acts. Held (per Gajendragadkar, Sarkar, Subba Rao and Mudholkar, JJ.), that the cess imposed by the Act was a fee relatable to Entries 23 and 66 of List II of the Seventh Schedule to the Constitution and the Constitutional validity of the impugned Act was beyond question. Although there can be no generic difference between a tax and a fee since both are compulsory exactions of money by public authorities, there is this distinction between them that whereas a tax is imposed for public purposes and requires no consideration to support it, a fee is levied essentially for services rendered and there must be an element of quid pro quo between the person 538 who pays it and the public authority that imposes it. While a tax invariably goes into the consolidated fund, a fee is earmarked for the specified services in a fund created for the purpose. Whether a cess is one or the other would naturally depend on the facts of each case. If in the guise of a fee, the Legislature imposes a tax, it is for the Court on a scrutiny of the scheme of the levy, to determine its real character. The distinction is recognised by the Constitution which while empowering the appropriate Legislatures to levy taxes under the Entries in the three lists refers to their power to levy fees in respect of any such matters, except the fees taken in court, and tests have been laid down by this Court for determining the character of an impugned levy. Matthews vs Chicory Marketing Board, ; , The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; , Mahant Sri Jagannath Ramanuj Das & Any. vs The State of Orissa, ; , and Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, referred to. P. P. Kutti Keva & Ors. vs The State of Madras, A.I.R. , Attorney General for British Columbia vs Esquimalt and Nanaimo Railway Co., and Parton & Any. vs Mils Board (Victoria), (1949) 80 C.L.R. 229, considered and held inapplicable. In determining whether a levy is a fee the true test must be whether its primary and essential purpose is to render specific services to a specified area or class, it being of no consequence that the State may ultimately and indirectly be benefited by it. So judged, the scheme of the impugned Act leaves no manner of doubt that the levy authorised by it is a fee and not a tax. The amount of the levy must depend on the extent of the services sought to be rendered and if they are proportionate, it would be unreasonable to say that since the impost is high it must be a duty of excise. The rate specified by section 4(2) of the Act, therefore, cannot by itself alter the character of the levy and constitute a trespass by the State Legislature on the legislative powers of the Parliament under Entry 84 of the List I. Nor can the method prescribed by the Legislature for re covering the levy by itself alter its character. The method is a matter of convenience and, though relevant, has to be tested in the light of other relevant circumstances. It is not permissible to challenge the vires of a statute relatable to an Entry in List II solely on the ground that the method adopted for the recovery of the impost can and generally is adopted in levying a duty of excise. Ralla Ram vs The Province of East Punjab, , Byramjee Jeejeebhoy vs The Province of Bombay & Anr. I.L.R. 539 and Governor General in Council vs Province of Madras, (1945) 'L.R. 72 I.A. 91, considered. The limitation imposed by the latter part of Entry 23 of List II is a limitation on the legislative competence of the State ' Legislature itself and the test whether a statute passed by the State Legislature thereunder was ultra vires would be whether the requisite declaration under Entry 54, List I, has been made by Parliament by law covering the same field or not; it is not necessary in order to make the declaration effective that rules should also be made and enforced. Although by operation of article 372 of the Constitution Act LIII of 1948 was an existing Act substantially covering the same field as covered by the impugned Act, there was no adaptation of section 2 of that Act whereby a declaration implied by it could be said to have been adapted to a declaration by Parliament. Clause 16 of the Adaptation of Laws Order, 1950, properly construed, cannot be held to refer to the Dominion Legislature and equate it with the Parliament. It can be resorted to only where the existing law expressly refers to some authority that can be equated with the corresponding new authorities. Since the Dominion Legislature was not so referred to, its competence under the Constitution Act of 1935, repealed by the Constitution of India, was clearly outside the clause. Nor can Cl. 21 of the order be of any help to the petitioners. Consequently, in the absence of the requisite Parliamentary declaration, the competence of the Orissa State Legislature under Entry 23 read with Entry 66 of the List II was not impaired and the impugned Act must be deemed to have repeal ed the Central Act, so far as that State was concerned. This case incidentally discloses that in regard to the requisite Parliamentary declaration prescribed by Entry 54 in List I in its application to the pre constitution Acts under corresponding Entry 36 in List I of the Constitution Act of 1935, there is a lacuna which has not been covered by any clauses of the Adaptation of Laws Order, 1950. Nor was the impugned Act ultra vires the State Legislature by operation of Entry 52 of List I read with section 2 of the Industries (Development and Regulation) Act, 1951 (LXV of 1951). That Act, in pith and substance, deals more directly with the control of certain specified industries including the coal industry, while the impugned Act is concerned with the development of the mining areas notified under it. The field covered by the two Acts was not, therefore, the same. per Wanchoo, J. In order to determine whether a levy is a tax or a fee, what has to be considered is the pith and sub stance of the levy. Where the levy in pith and substance is not essentially different from a tax, it cannot be converted into a fee by crediting it to a special fund and attaching certain services to it. 540 The Commissioner, Hindu Religious Endowments, Madras, vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; , Mahant Sri Jaannath Ramanuj Das vs The State of Orissa, ; and Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, discussed. A duty of excise in pith and substance is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is different and distinct from a sales tax and in law they do not overlap. Governor General in Council vs Province of Madras, 72 I.A. 91, referred to. What the impugned Act did was to provide for the levying of the cess on the goods produced at a rate not exceeding five per centum of the value at the pit 's mouth. The cess was, therefore, in pith and substance a duty of excise falling within Entry 84 of List I, which the State legislature could not levy. It was not correct to say that the method employed by the impugned Act for realising the cess was a mere method of quantification and did not affect its character which was that of a fee. In the present case the very mode of the levy of the cess is nothing other than the levy of a duty of excise, and, therefore, the principle of quantification for purposes of a fee could not be so extended as to convert what was in pith and substance a tax into a fee. Sri Byramjee Jeejeebhoy vs The Province of Bombay, I.L.R. , Municipal Corporation, Ahmedabad vs Patel Gor dhandas Hargovandas, I.L.R. and Ralla Ram vs The Province of East Punjab, , considered. K. C. Gajapati Narayan Deo vs The State of Orissa, ; , referred to. The cess levied under section 4 of the Act could not be justified as a tax on mineral rights under Entry 50 of List II of the Seventh Schedule and the impugned Act was in effect a colourable piece of legislation.

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Appeal No. 108/ 56. Appeal by special leave from the Judgment and decree dated May 27, 1953, of the Punjab High Court in Regular Second Appeal No. 176 of 1949, against the judgment and decree dated December 20, 1948, of the District Judge, Ludhiana, arising out of the Judgment and decree dated February 6, 1948, of the Subordinate Judge, 11 Class, Ludhiana, in Suit No. 918 of 1946. Gopal Singh, for the appellants. C. B. Aggarwala and K. P. Gupta, for the respondents. May 6. The Judgment of the Court was delivered by DAS GUPTA, J. The suit out of which this appeal has arisen was instituted by the respondents I and 2 Sher Singh and Labh Singh, for a declaration that a deed of gift executed by the first appellant, Jai Kaur, in respect of 8 (1 10) Bighas of land which she had inherited from her husband, Dev Singh, in favour of her two daughters, the 2nd & 3rd appellants before us, " shall be null and void against the reversionary rights of the plaintiffs ", and defendant Nos. 4 to 6 after the death of defendant No. 1 (i.e., Jai Kaur) and shall not be binding upon them. The plaintiffs ' case was that these lands left by Dev Singh were all ancestral lands qua the plaintiffs and according to the customary law which governs the Jats belonging to Grewal got to which these parties belong daughters do not succeed to property left by sonless fathers and so the gift by Dev Singh 's widow in favour of her daughters would be null and void as against the plaintiffs and others who would be entitled on Jai Kaur 's death to succeed to the estate as reversioners. In the alternative, the plaintiffs contended that even if the land in suit was not ancestral qua the plaintiffs then also the deed of gift would be null and void as against their reversionary interests inasmuch as even as regards nonancestral property daughters do not succeed among the Grewal Jats. The main contention of defendants 1 to 3 (the appellants before us) was that the suit land was not ancestral qua the plaintiffs and defendants 977 Nos. 4 to 6, and that according to the customary law governing the Jats of the Grewal got, daughters exclude collaterals as regards non ancestral property and a widow is competent to make a gift of such property in favour of her daughters. It was pleaded on behalf of the two daughters that they being preferential heirs in respect of the land in suit as against the plaintiffs, the gift is tantamount to acceleration of succession and is valid in every way. The Trial Judge held that 2B 2B,14 B out of the land in suit was ancestral and the gift was invalid to that extent, because as regards ancestral property a daughter does not succeed in the presence of collaterals. As regards the remainder of the suit land which he held was non ancestral, the learned Judge was of opinion that the gift was merely an acceleration of succession as under the customary law governing the parties daughters exclude collaterals as regards succession to non ancestral property. Accordingly he gave the plaintiffs a decree as prayed for as regards 2 B 2B, 14 B out of the land in suit and dismissed it as regards the remaining portion of the land in suit. The plaintiffs appealed to the District Judge, Ludhiana, against this decree and cross objections were filed by the defendants Nos. 1 to 3. The Trial Court 's finding about a portion of the land being ancestral and the rest non ancestral was not disputed before the appeal court. On the question of custom the learned District Judge agreed with the Trial Judge 's view that among the Grewal Jats of Ludhiana the daughter excluded collaterals as regards non ancestral property. He held, therefore, agreeing with the Trial Judge that as regards the non ancestral property the deed of gift was merely an act of acceleration of succession and was, therefore, valid and binding. The appeal was accordingly dismissed and so also were the cross objections which appear not to have been pressed. On second appeal the learned judges of the East Punjab High Court accepted the contention urged on behalf of the plaintiffs that a special custom was proved to be in force among the Grewal Jats under which the daughter does not inherit even as regards 978 non ancestral property. In that view they held that even as regards the non ancestral property the gift by Jai Kaur would be valid only during her lifetime, and allowed the appeal. Against this decree of the High Court defendants Nos. 1 to 3 Jai Kaur and her two daughters, the donees have filed this appeal on the strength of special leave granted by this Court. Two questions arise for consideration in this appeal. The first is whether under the customary law governing the Jats of the Grewal got in Ludhiana to which the parties belong, the daughter or the collaterals are the preferential heirs as regards non ancestral property. If the answer to this question be that daughters have preference over collaterals (the plaintiffs here), the other question which arises is whether this gift is such acceleration of succession in favour of the daughters as is permissible under the law. On the question of custom the appellants rely on the statements in paragraph 23 of Rattigan 's Digest of Customary Law (Thirteenth Edition) that in regard to the acquired property of her father the daughter is preferred to collaterals. It is not disputed that nonancestral property is " acquired property " within the meaning of this statement by Rattigan. Against this the plaintiffs respondents rely on the answers to question No. 43 relating to Hindu Grewal Jats of Ludhiana as appear in the Riwaji am prepared at the revised settlement of 1882. The question and the answer are in these words: Question: " Under what circumstances can daughters inherit ? If there are sons, widows or near collaterals, do they exclude the daughter ? If the collaterals exclude her, is there any fixed limit of relationship or degree within which such Dear kindred must stand Answer: " In our tribe the daughter does not succeed under any circumstances. If a person dies sonless, his collaterals succeed him. There is no fixed limit of relationship for purposes of excluding her. 979 If there are no collaterals of the deceased, the owners of the Thulla or Patti or village would be owners of his property." The authoritative value of Rattigan 's compilation of customary law is now beyond controversy, having been recognised in the judicial decisions of the Punjab courts too numerous to mention, which have also received the approval of the Judicial Committee of the Privy Council. Therefore it is not, and cannot be disputed that under the general customary law of the Punjab daughters exclude collaterals in succession to non ancestral property. The value of entries in the Riwaj i am has, also however, been repeatedly stressed. That they are relevant evidence under section 35 of the Evidence Act is clear and the fact that the entries therein the the result of careful research of persons who might also be considered to have become experts in these matters, after an open and public enquiry has given them a value which should not be lightly underestimated. There is ', therefore, an initial presumption of correctness as regards the entries in the Riwaj i am and when the custom as recorded in the Riwaj i am is in conflict with the general custom as recorded in Rattigan 's Digest or ascertained otherwise, the entries in the Riwaj i am should ordinarily prevail except that as was pointed out by the Judicial Committee of the Privy Council in a recent decision in Mt. Subhani vs Nawab (1), that where, as in the present case, the Riwaj i am affects adversely the rights of females who had no opportunity whatever of appearing before the revenue authorities, the presumption would be weak, and only a few instances would suffice to rebut it. In the present appeal the oral. testimony given on behalf of either party is practically valueless to show an ,, instance in favour of the custom pleaded by them. If, therefore, the Riwaj i am does show as urged by the plaintiffs a custom of daughters being excluded by collaterals in respect of non ancestral property, it is clear that Riwaji i am would prevail. The real controversy in this litigation is, however, on the question whether the entries in the Riwaj i am on which (1) A.I. R. 1941 (P.C.) 21. 980 the plaintiffs rely refer at all to non ancestral property or not. This controversy has 'engaged the attention of the courts in Punjab for a number of years beginning with 1916. In that year in Mst. Raj Kaur vs Talok Singh (1) Sir Donald Johnstone, the Chief Justice held that the Riwaj i am as compiled, did not cover self acquired property and that where the Riwaj i am talked about succession to land without discrimination between ancestral and self acquired, the rule laid down could usually only be taken to apply to ancestral property. A similar view was taken by Shadilal and Wil be force, JJ., in Budhi Prakash vs Chandra Bhan (2 ). The view taken in these cases was followed by other judges of the High Court in Narain vs Mst. Gaindo (3 ) and Fatima Bibi vs Shah Nawaz (4). In Sham Das vs Moolu Bai (5) the learned judges (LeRossignol and Fforde, JJ.) also laid down the same principles, without any reference to the previous decisions, in these words : "It is true in the Riwaj i ain no distinction is made between ancestral and acquired property, but it is a well recognised rule that unless there are clear indications to the contrary, such an entry in a record of custom refers only to the succession to ancestral property. " After this view had been followed in several other decisions a different line was struck in Jatan vs Jiwan Singh (6). That was a case between Grewal Jats and the contest lay between collaterals of the last male holder and his married daughter with respect to his non ancestral property. The learned judges were of opinion that the Question No. 43 in the Riwaj i am related to both ancestral and non ancestral property and so the answer to the question recorded in Riwaj iam proved that as regards the non ancestral property also the daughter was excluded by collaterals. In coming to this conclusion they laid stress on the fact that in two previous decisions, Ishar Kuar vs Raja Singh (7) and Pratap Singh vs Panjabu (8) the questions and answers in the Riwajiam as regards daughter 's (1) A.I.R. 1916 Lah. (3) A.I.R 1918 Lah. 304 (5) A.I.R. 1926; Lah. 210 (7) (2) A.T.R. 19T8 Lah. (4) A.I.R. 1921 Lah. (6) A.I.R. 1933 Lah. (8) 981 right to succession were interpreted as covering nonancestral property also and if it was contemplated that a daughter should succeed to self acquired property, one would have expected that fact to be mentioned in the answer. It was in view of the conflicting views which had thus arisen on the question whether Question No. 43 in the Riwaj i ani in the absence of a clear indication to the contrary related to ancestral property only or to both ancestral and non ancestral property that a reference was made by Mr. Justice Abdur Rahman in Mt. Hurmate vs Hoshiaru 1 to a Full Bench of the High Court. The Full Bench reviewed the numerous decisions of the Punjab courts in this matter and also took into consideration the fact that Mr. Gordon Walker who had prepared the Riwaj i am in 1882 had stated in the preface that no distinction between self acquired and inherited pro perty in land appeared to be recognised and the rules of succession, restriction on alienation, etc., applied to both alike; and after a careful consideration of all the relevant factors recorded their conclusion that " Question No. 43 of the Customary Law of Ludhiana district relates to ancestral property only and can in no circumstances be so interpreted as to cover self acquired property as well. " Mr. Justice Din Mohammad who delivered the leading judgment observed :" The raison d ' entre of those cases which lay down that the manuals of Customary Law were ordinarily concerned with ancestral property only is quite intelligible. Collaterals are, as stated by Addison, J., in 13 Lab. 458, really speaking interested in that property only which descends from their common ancestor and this is the only basis of the agnatic theory. What a male holder acquires himself is really no concern of theirs. It is reasonable, therefore, to assume that when manuals of Customary Law were originally prepared and subsequently revised, the persons questioned, unless specific ally told to the contrary, could normally reply in the light of their own interest alone and that, as stated above, was confined to the ancestral property only. The fact that on some occasions (1) A.I.R. 1944 Lah. 21, 127 982 the questioner had particularly drawn some distinction between ancestral and non ancestral property would not have put them on their guard in every case, considering their lack of education and lack of intelligence in general. Similarly, the use of the terms " in no case " or " under no circumstances " would refer to ancestral property only and not be extended so as to cover self acquired property unless the context favoured that construction. " One would have thought that after this pronouncement by a Full Bench of the High Court the controversy would have been set at rest for at least the Punjab courts. Surprisingly, however, only a few years after the above pronouncement, the question was raised again before a Division Bench of the East Punjab High Court in Mohinder Singh vs Kher Singh(1). The learned judges there chose to consider the matter afresh and in fact disregarded the pronouncement of the Full Bench in a manner which can only be said to be unceremonious. Teja Singh, J., who delivered the leading judgment said that the Full Bench, though noticing the cases of Ishar Kaur vs Raja Singh (2) and Pratap Singh vs Panjabu (3), had not said that those cases had been wrongly decided. It has to be noticed that the Full Bench in no uncertain terms expressed their conclusion that question No. 43 of the Customary Law of the Ludhiana district related to ancestral property only and could in no circumstances be so interpreted as to cover self acquired property as well. In coming to that conclusion they had considered numerous decisions of the Punjab courts in support of the general proposition that unless there are clear indications to the contrary the questions relate to ancestral property, considered the cases in which a contrary view had been taken including the three cases of Jattan vs Jiwan Singh (4), Ishar Kaur vs Raja Singh (2 ) and Pratap Singh vs Panjabu (3) and gave their own reasons why the view that unless there are clear indications to the contrary the manuals of customary law should be taken to refer to ancestral property only, and after considering the (1) A.I.R. 1949. East Punjab 328 (3) (2) (4) A.I.R. 1933 Lah. 983 question and answer in question No. 43 in the case before them as regards the Mohammadan Rajputs, recorded their final conclusion. It is neither correct nor fair to say that the learned judges of the Full Bench did not hold Jattan 's Case, Pratap Singh 's Case and Ishar Kaur 's Case to have been wrongly decided in so far as these decisions held the question No. 43 of the Customary Law of the Ludhiana dis trict to refer both to ancestral and non ancestral property. It is true that they did not say in so many words that these cases were wrongly decided; but when a Full Bench decides a question in a particular way every previous decision which had answered the same question in a different way cannot but he held to have been wrongly decided. We had recently occasion to disapprove of the action of a Division Bench in another High Court in taking it upon themselves to hold that a contrary decision of another Division Bench on a question of law was erroneous and stressed the importance of the well recognised judicial practice that when a Division Bench differs from the decision of a previous decision of another Division Bench the matter should be referred to a larger Bench for final decision. If, as we pointed out there, considerations of judicial decorum and legal propriety require that Division Benches should not themselves pronounce decisions of other Division Benches to be wrong, such considerations should stand even more firmly in the way of Division Benches disagreeing with a previous decision of the Full Bench of the same court. In our opinion, the view taken by the Full Bench in Mt. Hurmate vs Hoshiaru (1) is consonant with reasons and consistent with probability. The fact that the great majority of judges, who brought to bear on the question, an intimate knowledge of the ways and habits of the Punjab peasantry thought that when tribesmen were asked about succession to property, they would ordinarily think that they were being asked about succession to ancestral property, is entitled to great weight. It cannot, we think, be seriously disputed that at least in the early years (1) A.I.R. 1944 Lah 21. 984 when the Riwaj i am was in course of preparation most of the property in the countryside was ancestral property, and " self acquisitions " were few and far between. This fact, it is reasonable to think, had the consequence of concentrating the attention of the tribesmen on the importance of having the tribal custom correctly recorded by the Settlement Officers and their agents, as regards succession to ancestral property, and of attracting little attention, if any, to matters regarding non ancestral property. Unless the questions put to these simple folk, were so framed as to draw pointed attention to the fact that the enquiries were in respect of non ancestral property also, they could not reasonably be expected to understand from the mere fact of user of general words in the questions that these referred to both ancestral and non ancestral property. As Din Mohammad, J., said in his judgment in the Full Bench, even the fact that on some occasions, the questioner had drawn some distinction between ancestral and nonancestral property, could not have put them (i.e. , the persons questioned) on their guard in every case, considering their lack of intelligence in general. Their minds being obsessed with the idea that such enquiries would only refer to ancestral property, they would direct their answers to matters in respect of ancestral property only, and in using forceful terms like " in no case " and " under no circumstances these persons were really saying that " in no case would ancestral property devolve in a particular way and have a particular incidence; and under no " cir cumstances " would ancestral property devolve in a particular way, and have a particular incidence. These considerations, we think, outweigh the statement made by Mr. Gordon Walker that no distinction between self acquired and inherited property in land appeared to be recognised, and the rules of succession, restriction on alienation, etc., applied to both alike. We think, therefore,, that the view taken by the Full Bench, and the many previous cases mentioned in the judgment of the Full Bench, that questions and answers in the Riwaj i am refer ordinarily to 985 ancestral property, unless there is clear indication to the contrary, is correct. Question No. 43 in the Ludhiana district, appears to be the same for all the tribes. There is not the slightest indication there that the questioner wanted information about nonancestral property also. The answer given by the Grewal Jats to this question also gives no reason to think that the persons questioned were thinking in giving the answers of both ancestral and non ancestral property. We have, therefore, come to the conclusion that the entries in the Riwaj i am on which the plaintiffs respondents rely do not refer at all to non ancestral property, and are, therefore, not even relevant evidence to establish the existence of a custom among Grewal Jats of Ludhiana district, entitling collaterals to succession to non ancestral property, in preference to daughters. Reliance was next placed on behalf of these respondents on the fact that the existence of such a custom was recognised in a number of judicial decisions, viz., Jattan vs Jiwan Singh (1), I shar Kaur vs Raja Singh (2) and Pratap Singh vs Panjabu (3). If these decisions in so far as they recognised the existence of such a custom, had been solely or even mainly based on evidence, other than entries in the Riwaji i am, they might have been of some assistance. Examination of these cases, however, shows unmistakably that they were either wholly, or mainly based on the entries in the Riwaj i am on the assumption that these entries referred to both ancestral and non ancestral property. This assumption having been established to be baseless, these decisions are valueless, to show that the custom as alleged by the plaintiffs respondents did exist as regards non ancestral property. Further, the oral evidence produced in the present case is wholly insufficient to prove such a custom. It must, therefore, be held that the customary law among the Grewal Jats of Ludhiana district as regards succession to non ancestral property is the same as recorded generally for the Punjab in Paragraph 23 of Rattigan 's Digest i.e. , the daughter is preferred to (1) A.I.R. 1933 Lah. 553. (2) (3) 986 collaterals, and consequently, the second and the third appellants, were the next reversioners to that portion of Dev Singh 's property which has been found to be non ancestral. This brings us to the question whether the gift of this portion, by the first appellant to these reversioners, gives them a good title, beyond the widow 's lifetime. We have to remember in this connection that as regards the ancestral property, these daughters were not the reversioners, and the further fact that out of the ancestral property, the house was not included in the deed of gift. The position, therefore, is that out of the property in which the first appellant held a widow 's estate, she gave by the deed of gift a portion to the reversioners as regards that portion, a portion to persons who were strangers to the reversion as regards that portion and a portion was retained by her. The doctrine of Hindu law according to which, a limited owner can accelerate the reversion, by surrendering her interest, to the next reversioner, is based on a theory of self effacement of the limited owner. That is why it has been laid down that in order that a surrender by a limited owner to a reversioner, may be effective, the surrender must be of the entire interest of the limited owner in the entire property. The exception made in favour of the retention of a small portion of the property for her maintenance, does not affect the strictness of the requirement that a surren der to be effective, must be of the entire interest in the entire property: Vide Rangasami Gounden vs Nachiappa Gounden (1) and Phool Kaur vs Pem Kaur (2).) In so far as there is gift to a stranger, there is no effacement of the limited owner; nor is there any effacement in respect of the property which is retained. We find it impossible to say, therefore, that there is such effacement of the limited owner in this case, as would accelerate the daughter 's rights by converting the future contingent right into a present vested right. On behalf of the appellants it is argued that there is certainly a total effacement in respect of the nonancestral property, so that the right of the next reversioners the daughters in that property has (1) (1918) L.R. 46 I.A. 72. (2) ; , 987 been accelerated. We do not think we shall be justified in recognising this novel doctrine of the possibility of effacement of the limited owner vis a vis the next reversioner of the non ancestral property when there is no effacement vis a vis the reversioner of the ancestral property, and vice versa. Effacement cannot be broken up into two or more parts in this manner; and however much the limited owner may wish to efface herself only vis a vis those next reversioners whom she wants to benefit, law does not recognise such " partial effacement ". The Hindu Law doctrine of surrender does not, therefore, make the gift of the non ancestral property to the daughters valid beyond the widow 's lifetime. It is not suggested that there is any customary law, by which such surrender can be made. Though, therefore, we have found disagreeing with the learned judges of the High Court that tinder the customary law governing the Grewal got of Jats to which the parties belong, the daughters the second and the third appellants are preferential heirs to the non ancestral portion of the suit land, we hold that their conclusion that this deed of gift in favour of the daughters is not valid even as regards the non ancestral property, beyond the donor 's lifetime is correct and must be maintained. As a last attempt Mr. Gopal Singh, counsel for the appellants, wanted us to hold that under section 14 of the Hindu Succession Act, which became law in 1956, either the mother or the daughters have become full owners of this property, and so the plaintiffs ' suit should be dismissed. As the Hindu Succession Act was not on the statute book, when the written statement was filed or at any time before the suit was disposed of in the courts below, the defence under section 14 of that Act could not be thought of and was not raised. The necessary consequence is that evidence was not adduced, with the facts material for the application of section 14 in view, by either party. Mr. Agarwala has, on behalf of the plaintiffs respondents, contended that as the record stands the mother had ceased to be in possession and could not get the benefit of section 14 of the Hindu Succession Act, and that the 988 daughters in possession, would not become full owners under section 14. We do not think it would be proper to consider these questions in the present suit in this haphazard manner when on the all important question of possession, the appellants themselves do not wish to say whether the mother was in possession actually or constructively, whether the daughters ' possession was merely permissive, or whether the daughters were in independent possession, on their own behalf These and other questions of fact, and the questions of law that have to be considered in deciding a claim by the first appellant or the other two appellants under section 14 of the Hindu Succession Act, should properly be considered in any suit that they may bring in future, if so advised. We express no opinion on any of these questions. For the reasons which have been mentioned earlier, we hold that the High Court rightly decreed the suit in favour of the plaintiffs in respect of the nonancestral property also, and dismiss the appeal. In the circumstances of the case, we order that the parties will bear their own costs throughout. Appeal dismissed.

Under the customary law prevalent amongst the Hindu Jats of Grewal got in Ludhiana, a daughter is a preferential heir to her father in respect of his self acquired property to his collaterals. Rattigan 's Digest of Customary Law, paragraph 23, which records the correct law on the point, is not in conflict with Riwaji am, 1882, Question NO. 43, which refers only to ancestral property and not to self acquired property at all. Mt. Hurmate vs Hoshiaru, A.I.R. 1944 Lah. 21, approved. Mohinder Singh vs Kher Singh, A.I.R. 1949 East Punjab 328, disapproved. Mt. Subhani vs Nawab, A.I.R. 1941 (P.C.) 21, referred to. Case law discussed. The doctrine of surrender in Hindu Law is based on a theory of complete self effacement by the widow in favour of the reversioner and in order that such surrender can accelerate the reversion, it must be of the entire interest in the entire property. The law does not recognise a partial self effacement nor a division between ancestral and non ancestral property. The exception made in respect of a small portion of the property retained for the widow 's maintenance does not detract from the rigour of the rule. Rangaswami Gounden vs Nachiappa Gounden, (1918) L.R. 46 I.A. 72 and Phool Kaur vs Prem Kaur, ; , referred to. Consequently, in a case where a Hindu widow of the Jat Grewal got made a gift only of the self acquired property of her husband to her daughters such gift had not the effect of a surrender in law so as to accelerate the daughters ' succession and the gift could not be valid beyond her lifetime.

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Appeal No. 375 of 1956. Appeal from the judgment and decree dated July 27, 1953, of the Madras High Court, in A. section No. 623 of 1949. A. V. Viswanatha Sastri and section Venkata Krishnan, for the appellants. M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer and G. Gopalakrishnan, for the respondent. February 27. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal on a certificate granted by the Madras High Court. The brief facts necessary for present purposes are these: The present suit was brought by Muthappa Chettiar (hereinafter referred to as the respondent) against K. Thiagarajan Chettiar (hereinafter called the appellant) and the Saroja Mills Ltd. In 1939 these two persons thought of doing business jointly by securing managing agencies of some mills. In that connection they carried on negotiations with two mills, namely, Rajendra Mills Limited, Salem and the Saroja Mills Limited, Coimbatore (hereinafter called the Mills). The managing agency of the Mills was with the Cotton Corporation Limited. On October 4, 1939, the said Corporation transferred and assigned its rights to the appellant and the respondent under the name of Muthappa and Co. On November 15, 1939, the Mills at an extraordinary general meeting of the shareholders accepted Muthappa and Co. as the managing agents and made the necessary changes in the Articles of Association. Later the appellant and the respondent obtained the managing agency of the Rajendra Mills Limited, Salem. The managing agents of this mill were Salem Balasubramaniam and Co. Ltd. Muthappa and Co. purchased all the shares of the Salem Balasubramaniam and Co. and thereafter carried on the business of the managing agency of this mill in the name of Salem Balasubramaniam and Co. Ltd. In November 1940 the appellant and the respondent entered into a written partnership agreement with respect to 1001 the managing agency business of the two mills. We shall consider the terms of this agreement later and all that we need say at this stage is that turns were fixed for the appellant and respondent to look after the actual management of the two mills and the appellant 's turn was the first and he therefore came into actual control of the two mills. Soon after however disputes arose between the appellant and the respondent with respect to the managing agency of the Rajendra Mills Limited, which resulted in various suits being filed between the partners, to which we shall refer later. Eventually on March 4, 1943, the appellant gave notice to the respondent terminating the partnership, considering it as a partnership at will. This was followed by the directors of the Mills terminating the managing agency of Muthappa, and Co. on the ground that company had ceased to exist and also on the ground that quarrels between the partners of the firm were not conducive to good management of the Mills. This was notified to the respondent on March 22, 1943. This action of the directors was approved in a meeting of the shareholders of the Mills on September 29, 1943, and necessary modifications were again made in the Articles of Association. In between on April 17, 1943, the respondent had filed a suit for a declaration that Muthappa and Co. continued to be the managing agents of the Mills and for obtaining possession of the office of managing agents for himself or along with the appellant and also for a permanent injunction restraining the Mills from appointing any other managing agents. This suit was dismissed by the trial court on the ground that it was not maintainable under section 69 of the Indian Partnership Act, No. IX of 1932 (hereinafter called the Act), though the trial court gave findings on other issues also. The respon dent went up in appeal to the Madras High Court against the decree in that suit. This appeal was dismissed on July 8, 1948, as the High Court held that the finding of the subordinate judge that the suit was not maintainable under section 69 of the Act was correct. The High Court however made it clear that it was 1002 expressing no opinion on the correctness 'or otherwise of the other findings recorded by the subordinate Judge. While this appeal was pending the respondent brought the present suit on February 28, 1946. In this suit he prayed for dissolving the firm Muthappa and Co., for accounts and for damages against the appellant and the Mills. The main contention of the respondent in the suit was that the alleged dissolution of partnership by the appellant and the removal of Muthappa; and Co. from the managing agency of the Mills 'were part of a scheme of fraud conceived by the Appellant which was actively connived at by the mills in order to defeat and defraud the respondent of 'his legitimate dues and his right to continue and act as the 'managing agent of the Mills. The damages claimed were estimated at the figure of five lacs of rupees to be recovered from both the appellant and the Mills or from either of them. In the alternative the respondent claimed that even if Muthappa and Co. had been removed validly from the managing agency on September 29, 1943, he was entitled to account from the appellant from November 15, 1939, to September 29, 1943. The suit was resisted by both the appellant and the Mills and their case was that the partnership was one at will and therefore ',Was validly terminated by the appellant by notice. It Was further contended that in any case the Mills were within their rights in terminating the managing :,agency of Muthappa and Co., as that firm had ceased to exist and there were interminable disputes between the partners. Fraud and collusion were denied and it 'was alleged that it was the respondent 's conduct which compelled the appellant to give notice of termination of partnership and the Mills to terminate the managing agency. The Mills took a further plea, namely, that so far as they were concerned, the suit was barred under section 69 of the Act. The trial court held that the firm of Muthappa and Co. *as a partnership at will and therefore was legally dissolved by the appellant by giving notice dated March 4, 1943. It further held that no case of fraud 1003 had proved and that the termination of the managing agency was legal. As to the Mills the trial court held that the suit against them was barred under section 69 of the Act. In consequence the suit against the Mills was dismissed in toto and the prayer for damages was also rejected. The trial court however directed the appellant to account for the profits earned from the inception of the partnership business till March 4, 1943, when the partnership was terminated by the appellant by notice. Thereupon the respondent went up in appeal to the High Court. The High Court held that the suit against the Mills was barred under section 69 of the Act, though it was made clear that if there were assets of the partnership firm in possession of the Mills the respondent would be entitled to recover them. The High Court however ordered the Mills to bear their own costs in both the courts on the ground that the Mills were guilty of fraud. As to the case against the appellant, the High Court held that the partnership was. not a partnership at will and therefore it could not be dissolved by notice by the appellant. It further held that the appellant fraudulently and in collusion with the Mills purported to dissolve the partnership by issuing an illegal notice and to have the managing agency terminated by the Mills, and in consequence the termination of the managing agency was illegal. On the view therefore that the partnership as well as the managing agency continued and on a review of the circumstances, the High Court held that this was a fit case for dissolving the partnership and fixed March 10, 1949, 'which was the date of the decree of the trial court as the date from which the partnership would be dissolved. Consequently it modified the decree of the trial court and passed a preliminary decree for accounts against the appellant in respect of the firm Muthappa and Co. from November 15, 1939, to March 10, 1949. and added that the respondent could also recover any amount found due to him on taking accounts against the partnership assets, if any, in the hands of the Mills. The appellant thou applied for a certificate to 1004 appeal to this Court which was granted; and that is how the matter has come up before us. The first question therefore that arises for our deter mination is whether the partnership in this case is a partnership at will and it is necessary to refer to the terms of the partnership agreement to determine this question. After reciting that the management of the. Mills was being carried on in the name and style of Muthappa and Company and of the Rajendra Mills Limited in the name and style of Salem Balasubramaniam and Co. Limited, the partnership agreement goes on to say that the partners shall get in equal shares the salary, commission, profit, etc. , that may be realised from the aforesaid managing agencies. It provides for carrying on the management in rotation once in four years, the appellant to manage for the first four years and thereafter the respondent to manage for the next four years and in the same way thereafter. It further provides that the partners and their heirs and those getting their 'rights shall carry on the management in rotation. The accounts were to be made once in every year after the closing of the yearly accounts of the two mills. There were then provisions as to borrowing with which we are not con cerned. The agreement further provides that in case either partner thinks of relinquishing his right of management under the agreement it shall be surrendered to the other partner only but shall not be transferred or sold to any other person whatever. Finally it is provided that the two partners shall carry on the affairs of the firm by rotation, once in four years and the income realised thereby shall be divided year after year and the partners and their heirs shall get the same in equal shares and thus carry on the partnership management. The contention on behalf of the appellant is that as this partnership does not fall under section 8 of the Act and is not within the two exceptions under section 7, it is a partnership at will. Section 7 provides that where no provision is made by contract between the partners for the duration of the partnership, or for the determination of the partnership, the partnership is partnership at will. Section 8 provides that a person may 1005 become a partner with another person in particular adventures or undertakings. Section 43 provides that where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. On the other hand if the partnership is not at will, a. 42 applies and is in these terms: "Subject to contract between the partners a firm is dissolved (a) if constituted for a fixed term, by the expiry of that term; (b) if constituted to carry out one or more adventures or undertakings, by the completion thereof; (c) by the death of a partner; and (d) by the adjudication of a partner as an insolvent. " Section 44 provides for dissolution by the court. The High Court was of the view that looking to the terms of the partnership it could not be held to be a partnership at will and that under section 7 it will be a case of a partnership the duration of which as well as the determination of which were fixed. The High Court was further of the view that section 8 of the Act would also apply to the partnership in question as the evidence showed that the partners had entered into partnership in order to carry on the business of managing agency of the two mills and such business was an under taking, As we read the terms of the agreement it seems to us clear that the intention could not be to create a partnership at will. The partners contemplated that the management would be carried on in rotation between them in four yearly periods. It was also contemplated that the heirs of the partners would also carry on the management in rotation. Considering this provision as well as the nature of the business of partnership it could not be contemplated that the partnership could be brought to an end by notice by either partner. The intention obviously was to have a partnership of some duration, though the duration was not expressly fixed in the agreement. Now section 7 contemplates two exceptions to a partnership at will. 1006 The first exception is where there is a provision in the contract for the duration of partnership; the second exception is where there is provision for the determination of the partnership. In either of these cases the partnership is not at will. The duration of a partnership may be expressly provided for in the contract; but even where there is no express provision, courts have held that the partnership will not be at will if the duration can be implied. See Halsbury 's Laws of England, Third Edition, Vol. 28, p. 502, para. 964, where it is said that where there is no express agreement to continue a partnership for a definite period there may be an implied agreement to do so. In Crawshay vs Maule (1) the same principle was laid down in these words at p. 483: " The general rules of partnership are well settled. Where no term is expressly limited for its duration, and there is nothing in the contract to fix it, the partnership may be terminated at a moment 's notice by either party. Without doubt, in the absence of express, there may be an implied, contract as to the duration of a partnership." The same principle in our opinion applies to a case of determination. The contract may expressly contain that the partnership will determine in certain circumstances; but even if there is no such express term, an implied term as to when the partnership will determine may be found in the contract. What we have therefore to see is whether in the present case it is possible to infer from the contract of partnership whether there was an implied term as to its duration or at any rate an implied term as to when it will determine. It is clear from the terms of the contract of partnership that it was entered into for the purpose of carrying on managing agency business. Further the term relating to turns of the two partners in the actual management and the further term that these turns will go on even in the case of their heirs in our opinion clearly suggest that the duration of the partnership would be the same as the duration of the managing agency. We cannot agree that this means that the partnership (1) ; 483. 1007 would become permanent. In any case even if there is some doubt as to whether the terms of this contract implied any duration of the partnership, there can in our opinion be no doubt that the terms do imply a determination of the partnership when the managing agency agreement comes to an end. It is clear that ' the partnership was for the sole business of carrying on the managing agency and therefore by necessary implication it must follow that the partnership would determine when the managing agency determines. Therefore on the terms of the contract in this case, even if there is some doubt whether any duration is implied, there can be no doubt that this contract implies that the partnership will determine when the managing agency terminates. In this view the partnership will not be a partnership at will as section 7 of the Act makes it clear that a partnership in which there is a term as to its determination is not a partnership at will. Our attention was drawn in this connection to a term in the contract which lays down that either partner may withdraw from the partner. ship by relinquishing his right of management to the other partner. That however does not make the partnership a partnership at will, for the essence of a partnership at will is that it is open to either partner to dissolve the partnership by giving notice. Relinquishment of one partner 's interest in favour of the other, which is provided in this contract, is a very different matter. It is true that in this particular case there were only two partners and the partnership will come to an end as soon as one partner relinquishes his right in favour of the other. That however is a fortuitous circumstance; for, if (for example) there had been four partners in this case and one of them relinquished his right in favour of the other partners, the partnership would not come to an end. That clearly shows that a term as to relinquishment of a partner 's interest in favour of another would not make the partnership one at will. We may in this connection refer to Abbott vs Abbott (1). That was a case where there were more than two partners and it was (1) 1008 provided that the retirement of a partner would not terminate the partnership and there was an option for the purchase of the retiring partner 's share by other partners. It was held that in the circumstances the partnership was not at will and it was pointed out that only when all the partners except one retired that the partnership would come to an end because there could not be a partnership with only one partner. We are, therefore, in agreement with the High Court that the contract in this case disclosed a partnership the determination of which is implied, namely, the termination of the managing agency and, therefore, under section 7 of the Act it is not a partnership at will. In the circumstances it is unnecessary to consider whether the case will also come under section 8 of the Act. The next question that arises is whether the managing agency has been terminated legally ; for if that is so the partnership would also be determined. This takes us to the history of the relations between the partners after the partnership came into existence. It seems that disputes arose between the partners some time in 1941 in connection with the Rajendra Mills Limited which was one of the mills included in the managing agency business. The respondent filed a suit on March 4, 1942, against the appellant and Salem Balasubramaniam and Co. Limited with respect to the 'allotment of shares in the managing agency company On March 11, 1942, the respondent filed another suit, this time on the basis of debentures which he hold against the Mills, praying for a decree against the Mills with respect to the debenture amount. , On June 17, 1942, the respondent filed a third suit with respect to the Rajendra Mills Limited for a declaration that the respondent was a partner owning half share in the managing agency of the Rajendra mills Limited ' On the same day the respondent filed a fourth suit against the appellant, his son and Salem Balasubramaniam and Co. Limited with respect to certain actions taken by the managing agency company. On July 15, 1942, the appellant filed a counter suit against the respondent and the managing agency company relating to the Rajendra Mills Limited for a 1009 declaration that the respondent had no interest in the managing agency company and for further reliefs. There is no doubt, therefore, that the relations between the partners were very strained in 1942. The respondent admitted in his statement that from the end of 1941 there was enmity between him and the appellant and there were vital differences between them and litigation was going on, though he said that in spite of the enmity he was willing to co operate with the appellant if the amount of which he had been defrauded were paid to him, on accounting. So far as the litigation with respect to the Rajendra Mills Limited was concerned the respondent lost and it was held that he had withdrawn from the partnership of the managing agency company with respect to that mill. As to the suit on debentures, the money was deposited in court and the dispute was only about costs. That matter also went up to the High Court and finally the High Court refused to allow costs to the respondent. It was in this strained atmosphere between the partners that the appellant gave notice dated March 4, 1943, terminating the partnership with respect to the Mills considering it as a partnership at will. We have however held that the partnership was not a partnership at will and the notice given by the appellant could not, therefore, terminate it legally. But the question still remains whether the managing agency of the Mills was terminated legally ; for if that was so the partnership would also come to an end on the date the managing agency was terminated in view of what we have held above. The High Court has examined the circumstances in this connection and has come to the conclusion that the appellant fraudulently and collusively with the Mills got the managing agency terminated and, therefore, the termination of the managing agency was illegal. We are unable to agree with this view of the High Court. It is, therefore, necessary to examine the circumstances in which the termination came about. The appellant sent a copy of his notice dated March 4, 1943, terminating the partnership to the Mills also. The respondent sent a reply to this notice in which he claimed that the partnership was 1010 not at will and the appellant was not entitled to terminate it, and a copy of this reply was also sent to, the Mills on March 16, 1943. On March 22, 1943, the directors of the Mills held a meeting. In that meeting the directors decided that as the partners of Muthappa and Company were unable to get on in harmony with each other and were involved in litigation and several suits were going on between them and on account of their differences the work of the Mills was suffering and was, likely to suffer and also because Muthappa and Company had ceased to exist and had lost its right of management and was no longer in a position to manage the Mills, it became necessary to appoint other managing agents. Thus by this resolution the managing agency of Muthappa and Company was terminated for two reasons: (1) that there were differences between the partners of the managing agency company and the work of the Mills was suffering and was likely to suffer, and (2) that Muthappa and Company had come to an end and, therefore, had lost its right of management. It appears that before this resolution was passed the appellant had been purchasing shares of the Mills in the market and had acquired a controlling interest therein. The High Court, therefore, thought that the hidden hand of the appellant was visible behind this resolution of the directors of the Mills, the more so as the appellant 's son was nominated by the same resolution to administer the whole affairs of the Mills subject to the control and direction of the board of directors till such time as suitable managing agents were appointed. This action of the board of directors was confirmed at a general meeting of the shareholders on September 29, 1943. The High Court thought that as the appellant had acquired a controlling interest in the Mills he was behind the resolution of the directors of March 22 1943, and the resolution of the general meeting of the shareholders of September 29, 1943. It may be that the appellant having acquired a controlling interest in the Mills had a good deal to do with the resolutions; but that in our opinion would not necessarily make his 1011 conduct fraudulent and the termination of the managing agency agreement illegal. It is not in dispute that there was no agreement between the partners that either of them would not purchase shares of the Mills in open market. We do not therefore see anything improper in the conduct of the appellant when he purchased the shares of the Mills in open market and managed to acquire the controlling interest therein. The appellant obviously had two capacities: in one capacity he was a partner of the respondent in the managing agency business, in the other capacity he was a large shareholder of the Mills and as such shareholder it was certainly his interest to see that the interest of the Mills did not suffer. The crucial question therefore is whether the action taken by the Mills by the two resolutions is such as would be taken by any prudent company when faced with the situation with which the Mills was faced in the present case. There can in our opinion be no doubt that any company when faced with a situation in which the Mills was in this case, and finding that the two partners of its managing agency firm were fighting tooth and nail and there was no love lost between them and also finding that the interest of the Mills was suffering and was likely to suffer because of the bad blood between the two partners of the managing agency, was bound to take steps to protect its own interests. The fact that the major shareholder in the Mills also happened to be a partner in the managing agency would not disentitle him from acting in the interest of the Mills as a major shareholder. We may in this connection refer to Morarji Goculdas and Co. vs Sholapur Spinning and Weaving Co. Ltd. and Others(1). In that case a question arose whether the termination of the managing agency agreement was illegal on the ground of misconduct. It was found in that case that there were quarrels between the partners of the managing agency firm of such a nature and duration as to impair seriously their capacity to discharge their duty to the company as managing agents and to affect prejudicially the interests of the company. It was held that : (1) 129 1012 " In each case the question must be whether the misconduct proved, or reasonably apprehended, has such a direct bearing on the employer 's business or on the discharge by the employee of that part of the employer 's business in which he is employed, as to seriously affect or to threaten to seriously affect the employer 's business or the employee 's efficient discharge of his duty to his employer. " If on the facts and circumstances of the case it was so, the termination of the managing agency would be justified. In the present case there can be no doubt that the quarrels between the two partners of the managing agency firm were so serious and of such duration as to impair their capacity to discharge their duty to the Mills as managing agents and to affect the interests of the Mills prejudicially. Therefore, if the directors of the Mills came to that conclusion it is in our opinion not correct to say that conclusion was arrived at fraudulently, simply because a major shareholder happened to be the appellant. We may in this connection refer to the observations of Younger L.J. in Commissioners of Inland Revenue vs Sansom (1) : " No doubt there are amongst such companies, as amongst any other kind of association, blacksheep; but in my judgment such terms of reproach as I have alluded to should be strictly reserved for those of them and of their directors who are shown to deserve condemnation, and I am quite satisfied that the indiscriminate use of such terms has, not infrequently, led to results which were unfortunate and unjust, and in my judgment this is no case for their use. " These remarks are in our opinion apposite in the present context. It is true that the appellant had a hand as a major shareholder in the two resolutions and this was never hidden; but it is equally true that in the circumstances then existing any prudent board of directors and any body of shareholders interested in a company would act in the manner in which the board of directors and the shareholders of the Mills (1) , 514. 1013 acted in the present case. We cannot therefore agree with the High Court that this is a case where the board of directors and the shareholders acted fraudulently in collusion with the appellant, for we cannot forget that the appellant as a major shareholder of the Mills could legitimately act to protect them and the action taken was such as any board of directors and any body of shareholders would bona fide take. In the circumstances we are of opinion that the resolution of the board of directors terminating the managing agency agreement, confirmed by the general meeting of the shareholders, did legally terminate the managing agency between the Mills and Muthappa and Company. It is true that in these resolutions a second reason was given for the termination, viz., that Muthappa and Co. had come to an end because of the notice of March 4. That legal position is in our view incorrect; but that apart there were otherwise sufficient reasons for the Mills to terminate the managing agency in the circumstances with which it was faced. The next question that arises is as to when the managing agency can be said to have been terminated, i.e., whether on March 22, 1943, or on September 29, 1943. Now under s.87 B(f)of the Indian Companies Act, No. VII of 1913, which was then in force, the appointment of a managing agent, the removal of a managing agent and any variation of a managing agent 's contract of management shall Dot be valid unless approved by the company by a resolution at a general meeting of the company. This provision clearly shows that a managing agent may be appointed and removed by the board of directors, though such appointment and removal is subject to the approval by the company by a resolution at a general meeting of the company. We agree with the High Court that when the company at its general meeting approves of an appointment or of a removal, the approval takes effect from the date of the appointment or removal by the board of directors. On this view therefore, when the general meeting in this case approved the action of the board of directors, the removal became valid and came into effect from March 22, 1943. 1014 Therefore, the managing agency agreement in this case was validly terminated on March 22, 1943. As we have already held that there was an implied term in the contract of partnership that it will determine when the managing agency agreement with the Mills terminates, the partnership in the present case must under the contract be deemed to have determined on March 22, 1943. Therefore, the respondent will be entitled to an account only from November 15, 1939, to March 22, 1943. The learned Attorney General however referred us to sections 9, 10 and 13(f) of the Act and his contention was that. the appellant must account for all the profits made by him out of the managing agency business, even after March 22, 1943. Unders.10 every partner has to indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm and under section 13(f) a partner has to indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm. In the first place, such a case was not made out in the plaint by the respondent; in the second place we are of opinion that sections 10 and 13(f) have no application to the facts of the present case. We therefore reject this contention. That leaves the question of costs. So far as Saroja Mills Limited are concerned, we are of opinion that they are entitled to their costs throughout from the respondent as their action in terminating the managing agency has been held by us to be legal and valid. As to Thiagarajan Chettiar we are of opinion that in the circumstances of this case, the order of the subordinate judge that Muthappa Chettiar (respondent) and Thiagarajan Chettiar (appellant) should bear their own costs is just and we order them to bear their own costs throughout. We therefore allow the appeal in part and order that accounts will be taken from November 15, 1939,. to March 22, 1943, as between Thiagarajan Chettiar and Muthappa Chettiar. The respondent will pay the costs of Saroja Mills Limited throughout; but Muthappa Chettiar and Thiagarajan Chettiar will bear their own costs throughout. Appeal allowed in part.

The appellant and the respondent entered into a written partnership with respect to the managing agency business of two mills, the terms of which were, inter alia, that the management shall be carried on in rotation once in four years, the appellant to manage for the first four years and thereafter the respondent to manage for the next four years and in the same way thereafter. 999 It further provided that the partners and their heirs and those getting their rights shall carry on the management in rotation. Soon after disputes arose between the partners and the appellant gave notice to the respondent terminating the partnership treating it as a partnership at will, and the directors of the mills in their turn terminated the managing agency on the ground that the quarrels between the partners were detrimental to the good management of the mills. Thereafter the respondent brought a suit against the appellant and the mills for dissolution of the partnership firm and damages alleging that dissolution of the partnership by the appellant by notice was fraudulent and connived at by the mills. The trial court held that the partnership was at will and the termination of the managing agency was, legal and disallowed damages. On appeal by the respondent the High Court held that the partnership was not a partnership at will and could not be dissolved by notice by the appellant. The termination of the managing agency was also held to be illegal. appeal by the appellant with a certificate of the High Court: Held, that considering the provision that the management would be carried on in rotation between the partners in four yearly periods and that the heirs of the partners would also carry on the business in rotation the intention was obviously to have a partnership of some duration, though the duration was not expressly fixed in the agreement. The duration of a, partnership may be expressly provided for in the contract but even when there is no express provision, courts have held that the partner. ship will not be at will if the duration can be implied. Grawshay vs Manle, Swans 495; ; , followed. The contract in this case disclosed a partnership the deter mination of which was implied, namely, the termination of the managing agency and, therefore, under section 7 of the Partnership Act it was not a partnership at will and was not legally terminable by the notice given by the appellant. In view of the strained atmosphere between the partners there was sufficient reason for the mill to terminate the managing agency and the resolution of the board of directors terminating the managing agency agreement confirmed by the general meeting of the shareholders, did terminate the managing agency. There was neither any fraud nor collusion by the mills with the appellant. Morarji Gokuldas and Co. vs Sholapur Spinning and Weaving Co. Ltd. and Others, and Commissioners of Inland Revenue vs Sansom, , referred to. The partnership in the present case must be deemed to have determined on the date of the passing of the resolution by the board of directors terminating the managing agency. Sections 10 and 13(f) of the Partnership Act have no application to the facts of the case.

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riminal Ap. peal No. 82 of 1952. Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated June 10, 1952, of the High Court of Judicature for the State of Punjab at Simla (Bbandari and Khosla JJ.) in Criminal Writ No. 144 of 1951. M. C. Setalvad (Attorney General for India) and C. K. Daphtary (Solicitor Genera I for India) (B. Gana pathy, with them) for the appellant. J. B. Dadachanji (amicus curice) for respondent No. 1. 1952. November 10. The Judgment of the Court was delivered by DAS J. This appeal arises out of a habeas corpus petition Bled by one Ajaib Singh in the High Court of Punjab for the production and release of one Musammat Sardaran alias Mukhtiar Kaur, a girl of about 12 years of age. 256 The material facts leading up to the filing of that petition may be shortly stated as follows. On the report made by one Major Babu Singh, Officer Commanding No. 2 Field Company, section M. Faridkot, in his letter dated February 17, 1951, that the petitioner Ajaib Singh had three abducted persons in his possession, the recovery police of Ferozepore, on June 22, 1951, raided his house in village Shersingwalla and took the girl Musammat Sardaran into custody and delivered her to the custody of the Officer in charge of the Muslim Transit Camp at Ferozepore from whence she was later transferred to and lodged in the Recovered Muslim Women 's Camp in Jullundur City. A Sub Inspector of Police named Nibar Dutt Sharma was deputed by the Superintendent of Police, Recovery, Jullundur to make certain enquiries as to the facts of the case. The Sub Inspector as a result of his enquiry made a report on October 5, 1951 to the effect, inter, that the girl had been abducted by the petitioner during the riots of 1947. On November 5, 1951, the petitioner filed the habeas corpus petition and obtained an interim order that the girl should not be removed from Jullundur until the disposal of the petition. The case of the girl was then enquired into by two Deputy Superintendents of Police, one from India and one from Pakistan who, after taking into consideration the report of the Sub Inspector and the statements made before them by the girl, her mother who appeared before them while the enquiry was in progress, and Babu alias Ghulam Rasul the brother of Wazir deceased who was said to be the father of the girl and other materials, came to the conclusion, inter alia, that the girl was a Muslim abducted during the riots of 1947 and was, therefore, an abducted person as defined in section 2(a) (1) of the Abducted Persons (Recovery and Restoration) Act LXV of 1949. By their report made on November 17, 1951, they recommended that she should be sent to Pakistan for restoration to her next of kin but in view of the interim order of the High Court appended a note to the effect that she 257 should not be sent to Pakistan till the final decision of the High Court. The matter then came before a Tribunal said to have been constituted under section 6 of the Act. That Tribunal consisted of two Superintendents of Police, one from India and the other from Pakistan. The Tribunal on the same day, i.e., November 17, 1951, gave its decision agreeing with the findings and recommendation of the two Deputy Superintendents of Police and directed that the girl should be sent to Pakistan and restored to her next of kin there. The habeas corpus petition came up for hearing before Bhandari and Khosla JJ. on November 26, 1951, but in view of the several questions of farreaching importance raised in this and other similar applications, the learned Judges referred the following questions to a Full Bench : 1. Is Central Act No. LXV of 1949 ultra vires the Constitution because its provisions with regard to the detention in refugee camps of persons living in India violate the rights conferred upon Indian citizens under article 19 of the Constitution ? 2. Is this Act ultra vires the Constitution because in terms it violates the provisions of article 22 of the Constitution ? 3. Is the Tribunal constituted under section 6 of the Act a Tribunal subject to the general supervision of the High Court by virtue of article 227 of the Constitution ? At the same time the learned Judges made it clear that the Full Bench would not be obliged to confine itself within the narrow limits of the phraseology of the said questions. On the next day the learned Judges made an order that the girl be released on bail on furnishing security to the satisfaction of the Registrar in a sum of Rs. 5,000 with one surety. It is not clear from the record whether the security was actually furnished. The matter eventually came up before a Full Bench consisting of the same two learned Judges 258 and Harnam Singh J. In course of arguments before the Full Bench the following further questions were added: 4.Does this Act conflict with the provision of article 14 on the ground that the State has denied to abducted persons equality before the law or the equal protection of the laws within the territory of India? 5.Does this Act conflict with the provisions of article 15 on the ground that the State has discriminated against abducted persons who happen to be citizens of India on the ground of religion alone ? 6. Does this Act conflict with article 21 on the ground that abducted persons are deprived of their personal liberty in a manner which is contrary to principles of natural justice ? " There was also a contention that the Tribunal which decided this case was not properly constituted in that its members were not appointed or nominated by the Central Government and, therefore, the order passed by the Tribunal was without jurisdiction. By their judgments delivered on June 10, 1952, Khosla and Harnam Singh JJ. answered question 1 in the negative but Bhandari J. held that the Act was inconsistent with the provisions of article 19(1) (g) of the Constitution. The learned Judges were unanimous in the view that the Act was inconsistent with the provisions of article 2.2 and was void to the extent of such inconsistency. Question 3 was not fully argued but Bhandari and Khosla JJ. expressed the view that the Tribunal was subject to the general supervision of the High Court. The Full Bench unanimously answered questions 4, 5 and 6 in the negative. Bhandari and Khosla JJ. further held that the Tribunal was not properly constituted for reasons mentioned above, but in view of his finding that section 4(1) of the Act was in conflict with article 22(2) Harnam Singh J. did not consider it necessary to express any opinion on the validity of the constitution of the Tribunal. 259 The Full Bench with their aforesaid findings remitted the case back to the Division Bench which had referred the questions of law to the larger Beach. The case was accordingly placed before the Division Bench which thereafter ordered that Musammat Sardaran alias Mukhtiar Kaur be set at liberty. The girl has since been released. The State of Punjab has now come up on appeal before us. As the petitioner respondent Ajaib Singh represented to us that he could not afford to brief an advocate to argue his case, we requested Sri J. B. Dadachanji to take up the case as ambicus curiae which be readily agreed to do. He has put forward the petitioners case with commendable ability and we place on record our appreciation of the valuable assistance rendered by him to the Court. In his opening address the learned Solicitor General frankly admitted that he could not contend that the Tribunal was properly constituted under section 6 of the Act and conceded that in the premises the order of the ' High Court directing the girl to be released could not be questioned. He, however, pressed us to pronounce upon the constitutional questions raised in this case and decided by the High Court so that the Union Government would be in a position to decide whether it would, with or without modification, extend the life of the Act which is due to expire at the end of the current month. We accordingly heard arguments on the constitutional questions on the clear understanding that whatever view we might express oh those questions, so far as this particular case is concerned, the order of the High Court releasing the girl must stand. After hearing arguments we intimated, in view of the urgency of the matter due to the impending expiry of the Act, that our decision was that the Act did not offend against the provisions of the Constitution and that we would give our reasons later on. We now proceed to set forth our reasons for the decision already announced. 34 260 In order to appreciate the rival contentions canvassed before us it is necessary to bear in mind the circumstances which led to the promulgation of an Ordinance which was eventually replaced by Act LXV of 1949 which is impugned before us as unconstitutional. It is now a matter of history that serious riots of virulent intensity broke out in India and Pakistan in the wake of the partition of August, 1947, resulting in a colossal mass exodus of Muslims from India to Pakistan and of Hindus and Sikhs from Pakistan to India. There were heart rending tales of abduction of women and children on both sides of the border which the governments of the two Dominions could not possibly ignore or overlook. As it was not possible to deal with and control the situation by the ordinary laws the two governments had to devise ways and means to check the evil. Accordingly there was a conference of the representatives of the two Dominions at Lahore in December, 1947, and Special Recovery Police Escorts and Social Workers began functioning jointly in both the countries. Eventually on November 11, 1948, an Inter Dominion Agreement between India and Pakistan was arrived at for the recovery of abducted persons on both sides of the border. To implement that agreement was promulgated on January 31, 1949, an Ordinance called the Recovery of Abducted Persons Ordinance,. 1949. This Ordinance was replaced by Act LXV of 1949 which came into force on December 28, 1949. The Act was to remain in force up to October 31, 1951, but it was eventually extended by a year. That the Act is a piece of beneficial legislation and has served a useful purpose cannot be denied, for up to February 29, 1952, 7,981 abducted persons were recovered in Pakistan and 16,168 in India this circumstance, however, can have no bearing on the constitutionality of the Act which will have to be judged on purely legal considerations. The Act is a short one consisting of eleven sections. It will be observed that the purpose of the Act is to implement the agreement between the two countries 261 as recited in the first preamble. The second preamble will show that the respective governments of the States of Punjab, Uttar Pradesh, Patiala and East Punjab States Union, Rajasthan and Delhi gave their consent to the Act being passed by the Constituent Assembly a circumstance indicative of the fact that those governments also felt the necessity for this kind of legislation. By section 1 (2) the Act extends to the several States mentioned above and is to re main in force up to October 31, 1952. The expression "abducted person" is defined by section 2(1) (a) as meaning " a male child under the age of sixteen years or a female of whatever age who is, or immediately before the 1st day of March, 1947, was a Muslim and who, on or after that day and before the 1st day of January, 1949, has become separated from his or her family, and in the latter case includes a child born to any such female after the said date. " Section 4 of the Act, which is important, provides that if any police officer, not below the rank of an Assistant Sub Inspector or any other police officer specially authorised by the State government in that behalf, has reason to believe that an abducted person resides or is to be found in any place, he may, after recording the reasons for his belief, without warrant, enter and take into custody any person found therein who, in his opinion, is an abducted person, and deliver or cause such persons to be delivered to the custody of the officer in charge of the nearest camp with the least possible delay. Section 6 enacts that if any question arises whether a person detained in a camp is or is not an abducted person, or whether such person should be restored to his or her relatives or handed over to any other person or conveyed out of India or allowed to leave the camp, it shall be referred to, and decided by , 'a Tribunal constituted for the purpose by the Central Government. The section makes the decision of the Tribunal final, subject, however, to the power of the Central Government to review or revise any such decision. Section 7 provides for the implementation of the decision of the 262 Tribunal by declaring that any officer or authority to whom the custody of any abducted person 'has been delivered shall be entitled to receive and hold the person in custody and either restore such person to his or her relatives or convey such persons out of India. Section 8 makes the detention of any abducted person in a camp in accordance with the provisions of the Act lawful and saves it from being called in question in any court. Section 9 gives the usual statutory immunity from any suit or proceeding for anything done under the Act in good faith. Section ' 10 empowers the Central Government to make rules to carry out the purposes of the Act. The main contest before us has been on question 2 which was answered unanimously by the Full Bench against the State, namely, whether the Act violates the provisions of article 22. If the recovery of a person as an abducted person and the delivery of such person to the nearest camp can be said to be arrest and detention within the meaning of article 22(1) and (2) then it is quite clear that the pro visions of sections 4 and 7 and article 22(1) and (2) cannot stand together at the same time, for, to use the language of Bhandari J., " it is impossible to obey the directions contained in sections 4 and 7 of the Act of 1949 without disobeying the directions contained in clauses (1) and (2) of article 22." The Constitution commands that every person arrested and detained in custody shall be produced before the nearest Magistrate within 24 hours excluding the time requisite for the journey from the place of arrest to the Court of the Magistrate but section 4 of the Act requires the police officer who takes the abducted person into custody to deliver such person to the custody of the officer in charge of the nearest camp for the reception and detention of abducted persons. These provisions are certainly conflicting and inconsistent. The absence from the Act of the salutary provisions to be found in article 22(1) and (2) as to the right of the arrested person to be informed of the grounds of such arrest and to consult and to be 263 defended by a legal practitioner of his choice is also significant. The learned Solicitor General has not contended before us, as he did before the High Court, that the overriding provisions of article 22(1) and (2) should be read into the Act, for t e o vious reason that whatever may be the effect of the absence from the Act of provisions similar to those of article 22(1), the provisions of article 22(2) which is wholly inconsistent with section 4 cannot possibly, on account of such inconsistency, be read into the Act. The sole point for our consideration then is whether the taking into custody of an abducted person by a police officer under section 4 of the Act and the delivery of such person by him into the custody of the officerin charge of the nearest camp can be regarded as arrest and detention within the meaning of article 22(1) and (2). If they are not, then there can be no complaint that the Act infringes the fundamental right guaranteed by article 22(1) and (2). Sri Dadachanji contends that the Constitution and particularly Part III the ereof should be construed liber ally so that the fundamental rights conferred by it may be of the widest amplitude. He refers us to the various definitions of the word "arrest" given in several wellknown law dictionaries and urges, in the light of such definitions, that any physical restraint imposed upon a person must result in the loss of his personal liberty and must accordingly amount to his arrest. It is wholly immaterial why or with what purpose such arrest is made. The mere imposition of physical restraint, irrespective of its reason, is arrest and as such, attracts the application of the constitutional safeguards guaranteed by article 22 (1) and (2). That the result of placing such a wide definition on the the term "arrest" occurring in article 22 (1) will render many enactments unconstitutional is obvious. To take one example, the arrest of a defendant before judgment under the provisions of Order XXXVIII, rule 1, of the Code of Civil Procedure or the arrest of a judgment debtor in execution of a decree under section 55 of the Code will, on this 264 hypothesis, be unconstitutional inasmuch as the Code provides for the production of the arrested person, not before a Magistrate but before the civil court which made the order. Sri Dadachanji contends that such consideration should not weigh with the court in construing the Constitution. We are in agreement with learned counsel to this extent only that if the language of the article is plain and unambiguous and admits of only one meaning then the duty of the court is to adopt that meaning irrespective of the inconvenience that such a construction may produce. if, however, two constructions are possible, then the court must adopt that which will ensure smooth and harmonious working of the Constitution and eschew the other which will lead to absurdity or give rise to practical inconvenience or make well established provisions of existing law nugatory. We have, therefore, to examine the article in question with care and ascertain the meaning and import of it primarily from its language. Broadly speaking, arrests may be classified into two categories, namely, arrests under warrants issued by a court and arrests otherwise than under such warrants. As to the first category of arrest, sections 76 to 86 collected under sub heading B Warrant of Arrest " in Chapter VI of the Code of Criminal Procedure deal with arrests in execution of warrants issued by a court under that Code. Section 76 prescribes that such a warrant must be in writing signed by the presiding officer, or in the case of a Bench of Magistrates, by any member of such Bench and bear the Beal of the court. Form No. II of Schedule V to the Code is a form of warrant for the arrest of an accused person. The warrant quite clearly has to state that the person to be arrested stands charged with a certain offence. , Form No. VII of that Schedule is used to bring up a witness. The warrant itself recites that the court issuing it has good and sufficient reason to believe that the witness will not attend as a witness unless compelled to do so. The point to be noted is that in either case the 265 warrantex facie sets out the reason for the arrest, namely, that the person to be arrested has committed or is suspected to have committed or is likely to commit some offence. In short, the warrant contains a clear accusation against the person to be arrested. Section 80 requires that the Police Officer or other person executing a warrant must notify the substance thereof to the person to be arrested, and, if so required, shall show him the warrant. It is thus abundantly clear that the person to be arrested is informed of the grounds for his arrest before he is actually arrested. Then comes section 81 which runs thus: " The Police Officer or other person executing a warrant of arrest shall (subject to the provisions of section 76 as to security) without unnecessary delay bring the person arrested before the Court before which he is required by law to produce such person. " Apart from the Code of Criminal Procedure, there are other statutes which provide for arrest in execution of a warrant of arrest issued by a court. To take one example, Order XXXVIII, rule 1, of the Code of Civil Procedure authorises the court to issue a warrant for the arrest of a defendant before judgment in certain circumstances. Form No. 1 in Appendix F sets out the terms of such a warrant. It clearly recites that it has been proved to the satisfaction of the court that there is probable cause for belief that the defendant is about to do one or other of the things mentioned in rule 1. The court may under section 55 read with Order XXI, rule 38, issue,a warrant for the arrest of the judgment debtor in execution of the decree. Form No. 13 sets out the terms of such a warrant. The warrant recites the decree and, the failure of the judgment debtor to pay the decretal amount to the decree holder and directs the bailiff of the court to arrest the defaulting judgment debtor, unless he pays up the decretal amount with costs and to bring him before the court with all convenient speed. The point to be noted is that, as in the case of a warrant of arrest issued by a court under the Code of Criminal Procedure, a warrant of arrest 266 issued by a court under the Code of Civil Procedure quite plainly discloses the reason for the arrest in that it sets out an accusation of default, apprehended or actual, and that the person to be arrested is made acquainted with the reasons for his arrest before lie is actually arrested. The several sections collected under sub heading B Arrest without warrant " in Chapter V of the Code of Criminal Procedure deal with arrests otherwise than under warrants issued by a court under that Code. Section 54 sets out nine several circumstances in which a police officer may, without an order from a Magistrate and without a warrant, arrest a person. Sections 55, 57, 151 and 401 (3) confer similar powers on police officers. Column 3, Schedule II to the Code of Criminal Procedure also specifies; the cases where the police may arrest a person without warrant. Section 56 empowers an officer in charge of a police station or any police officer making an investigation under Chapter XIV to require any officer subordinate to him to arrest without a warrant any person who may lawfully be arrested without a warrant. In such a case, the officer deputing a subordinate officer to make the arrest has to deliver to the latter an order in writing specifying the person to be arrested and the offence or other cause for which the arrest is to be made and the subordinate officer is required, before making the arrest, to notify to the person to be arrested the substance of the order and, if so required by such person, to show him the order. Section 59 authorises even a private person to arrest any person who in his view commits a non bailable and cognisable offence or any proclaimed offender and requires the person making the arrest to make over the arrested person, without unnecessary delay, to a police officer or to take such person in custody to the nearest police station. A perusal of the sections referred to above will at once make it plain that the reason in each case of arrest without a warrant is that the person, arrested is accused of having committed or reasonably suspected to have committed or of 267 being about to commit or of being likely to commit some offence or misconduct. It is also to be noted that there is no provision, except in section 56, for acquainting the person to be arrested without warrant with the grounds for his arrest. Sections 60 and 61 prescribe the procedure to be followed after a person is arrested without warrant. They run thus: " 60. A police officer making an arrest without warrant shall without unnecessary delay and subject to the provisions herein contained as to bail, take or send the person arrested before a Magistrate having jurisdiction in the case, or before the officer in charge of a police station." "61.No police officer shall detain in custody a person arrested without warrant for a longer period than under all the circumstances of the case is reasonable, and such period shall, not, in the absence of a special order of a Magistrate under section 167, exceed twenty four hours, exclusive of the, time necessary for the journey from the place of arrest to the Magistrate 's Court. " Apart from the Code of Criminal Procedure, there are other statutes which authorise the arrest of a person without a warrant issued by any Court. Reference may, byway of example, be made to sections 173 and 174 of the Sea Customs Act (VIII of 1878) and section 64 of the Forest Act (XVI of 1927). In both cases, the reason for the arrest is that the arrested person is reasonably suspected to have been guilty of an offence under the Act and there is provision in both cases for the immediate production of the arrested person before a Magistrate. Two things are to be noted, namely, that, as in the cases of arrest without warrant under the Code of Criminal Procedure, an arrest without warrant under these Acts also proceeds upon an accusation that the person arrested is reasonably suspected of having committed an offence and there is no provision for communicating to the person arrested the grounds for his arrest. 35 268 Turning now to article 22(1) and (2), we have to ascertain whether its protection extends to both categories of arrests mentioned above, and, if not, then which one of them comes within its protection. There can be no manner of doubt that arrests without warrants issued by a court call for greater protection than do arrests under such warrants. The provision that the arrested person should within 24 hours be produced before the nearest Magistrate is particularly desirable in the case of arrest otherwise than under a warrant issued by the court, for it ensures the immediate application of a judicial mind to the legal authority of the person making the arrest and the regularity of the procedure adopted by him. In the case of, arrest under a warrant issued by a court, the judicial mind had already been applied to the case when the warrant was issued and, therefore, there is less reason for making such production in that case a matter of a substantive fundamental right. It is also perfectly plain that the language of article 22(2) has been practically copied from sections 60 and 61 of the Code of Criminal Procedure which admittedly prescribe the procedure to be followed after a person, has been arrested without warrant. The requirement of 'article 22(1) that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest indicates that the clause really contemplates an arrest without a warrant of court, for, as already noted, a person arrested under a, court 's warrant is made acquainted with the grounds of his arrest before the arrest is actually effected. There can be no doubt that the right to consult a legal practitioner of his choice is to enable the arrested person to be advised about the legality or sufficiency of the grounds for his arrest. The right of the arrested person to be defended by a legal practitioner of his choice postulates that there is an accusation against him against which he has to be defended. The language of article 22(1) and (2) indicates that the fundamental right conferred by it gives protection against such 269 arrests as are effected otherwise than under a warrant issued by a court on the allegation or accusation that the arrested person has, or is suspected to have, committed, or is about or likely to commit an act of a criminal or quasi criminal nature or some activity prejudicial to the public or the State interest. In other words, there is indication in the language of article 22(1) and (2) that it was designed to give protection against the act of the executive or other non judicial authority. The Blitz case (Petition No. 75 of 1952), on which Sri Dadachanji relies, proceeds on this very view, for there the arrest was made on a warrant issued, not by a court, but, by the Speaker of & State Legislature and the arrest was made on the distinct accusation of the arrested person being guilty of contempt of the Legislature. It is not, however, our purpose, nor do we consider it desirable, to attempt a precise and meticulous enunciation of the scope and ambit of this fundamental right or to enumerate exhaustively the cases that come within its protection. Whatever else may come within the purview of article 22(1) and (2), suffice it to say for the purposes of this case, that we are satisfied that the physical restraint put upon an abducted person in the process of recovering and taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under section 4 of the impugned Act cannot be regarded as arrest and detention within the meaning of article 22(1) and (2). In our view, the learned Judges of the High Court over simplified the matter while construing the article, possibly because the considerations hereinbefore adverted to were not pointedly brought to their attention. Our attention has been drawn to sections loo (search for persons wrongfully confined) and 552 (power to compel restoration of abducted females) of 270 the Code of Criminal Procedure, and it has been urged that neither of those sections contemplates an accusation against the victim and yet such victim, after recovery, has to be brought before a Magistrate. It is to be observed that neither of the two sections treats the victim as an arrested person for the victim is not produced before a Magistrate under sections 60 and 61 'which require the production of a person arrested without warrant, or under section 81 which directs the production of a person arrested under a warrant issued by a, court. The recovered victim is produced by reason of special provisions of two sections,, namely, sections 100 and 552. These two sections clearly indicate that the recovery and taking into custody of such a victim are, not regarded as arrest at all within the meaning of the Code of Criminal Procedure and, therefore, cannot also come within the protection of article. 22(1) and (2). This circumstance also lends support"to the conclusion we have reached, namely, 'that the taking into custody of an abducted person under the impugned Act is not an arrest within the meaning of article 22(1) and (2). Before the Constitution, came into force it was entirely for the Legislature to consider whether the recovered person should be produced before a Magistrate as is provided by sections 100 and 552 of the Criminal Procedure Code in the case of persons wrongfully confined or abducted. By this Act, the Legislature provided that the recovered Muslim abducted person should be taken straight to the officer in charge of the camp, and the Court could not question the wisdom of the policy of the Legislature. After the Constitution, article 22 being out of the way, the position in this behalf remains the same. Sri Dadachanji also argued that the Act is inconsistent with article 14. The meaning, scope and ambit of that article need not be explained again, for they have already been explained by this Court on more than one occasion. [See Chiranjit Lal Chowdhury vs The Union of India (1), The State of Bombay vs F. N. (1) ; 271 Balsara (1), The State of West Bengal vs Anwar Ali Sarkar (2), and Kathi Raning Rawat vs The State of Saurashtra (3)]. There can be no doubt that Muslim abducted persons constitute a well defined class for the purpose of legislation. The fact that the Act is extended only to the several States mentioned in section 1 (2) does not make any difference, for a classification may well be made on a geographical basis. Indeed, the consent of the several States to the passing of this Act quite clearly indicates, in the opinion of the governments of those States who are the best judges of the welfare of their people, that the Muslim abducted persons to be found in those States form one class having similar interests to protect. ' Therefore the inclusion of all of them ' in the definition of abducted persons cannot be called discriminatory. Finally, there is nothing discriminatory in sections 6 and 7. Section 7 only implements the decision of the Tribunal arrived at under section 6. There are several alternative things that the Tribunal has been authorised to do. Each and everyone of the abducted persons is liable to be treated in one way or another as the Tribunal may determine. It is like all offenders under a particular section being liable to a fine or imprisonment. There is no discrimination if one is fined and the other is imprisoned, for all offenders alike are open to the risk of being treated in one way or another. In our view, the High Court quite correctly decided this question against the petitioner. The learned counsel for the respondent Ajaib Singh contended that the Act was inconsistent with the provisions of article 19(1)(d) and (e) and article 21. This matter is concluded by the majority decision of this court in Gopalan 's case (4) and 'the High Court quite correctly negatived this contention. Sri Dadachanji has not sought to support the views of Bhandari J. regarding the Act being inconsistent with article 19 (1)(g). Nor has learned counsel (1) ; (3) ; (2) ; (4) ; 272 seriously pressed the objection of unconstitutionality based on article 15, which, in our view, was rightly rejected by the High Court. Although we hold that the High Court erred on the construction they Put upon article 22 and the appellant has succeeded on that point before us, this appeal will, nevertheless, have to be dismissed on the ground that the Tribunal was not properly constituted and its order was without jurisdiction, as conceded by the learned Solicitor General. We, therefore, dismiss this appeal on that ground. We make no order as to costs.

The Abducted Persons (Recovery and Restoration) Act (Act LXV of 1949) does Dot infringe article 14, article 16, article 19 (1) (d), (e) and (g), article 21 or article 22 of the Constitution and is not unconstitutional on the ground that it,contravenes any of these provisions. The physical restraint Put upon an abducted person in the process of recovering and, taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under section 4 of the Abducted Persons (Recovery and Restoration) Act (LXV of 1949) is not arrest and detention within the meaning of article 22 (1) and (2) of the Constitution. The said Act does not therefore infringe the fundamental right guaranteed by article 22 of the Constitution. 255 The fundamental right conferred by article 22 gives protection ,against such arrests as are effected otherwise than under a warrant issued by a Court on the allegation or accusation that the arrested person has, or is suspected to have,. committed, or is about or likely to commit, an act of a criminal or quasi criminal nature or some activity prejudicial to the public or the State interest. There is indication in the language of article 22 (1) and (2) that it was designed to give protection against the act of the exe cutive or other non judicial authority. The Blitz Case (Petition No. 75 of 1952) explained. Muslim abducted persons constitute a well defined class for the purpose of legislation and the fact that the Act is extended only to the several States mentioned in section 1 (2) of the Act does not make any difference, for a classification may well be made on a geographical basis. The Act does not therefore contravene article 14 of the Constitution. If the language of an article is plain and unambiguous and admits of only one meaning, then the duty of the Court is to adopt that meaning irrespective of the inconvenience that such a construction may produce. If, however, two constructions are possible then the Court must adopt that which will ensure smooth and harmonious working of the Constitution and, eschew, the other which will lead to absurdity or give rise to practical inconvenience or make well established provisions of existing law nugatory.

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Appeal No. 16 of 1952. Appeal from the Judgment and Order dated February 6, 1951, of the High Court of Judicature at Madras (Rajamannar C. J. and Somasundaram J.) in Civil Miscellaneous Petition No. 11307 of 1950, arising out of Order dated November 10, 1950, made in C. No. 2216 A 3 49 on the file of the Regional Transport Authority, Tanjore. G. R. Jagadisa Iyer for the appellant. V. K. T. Chari, Advocate General of Madras, (V. V. Baghavan, with him) for the respondent. December 5. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal brought by special leave under article 136 (1) of the Constitution is directed against the order dated February 6, 1951, of the High Court of Judicature at Madras, dismissing the petition of the appellant under article 226, praying for the issue of a writ of certiorari to quash the order dated November 10, 1950, passed by the respondent in the following circumstances : The appellant is the lessee of a site in the town of Tanjore in the State of Madras upon which he has a bus stand. The bus stand originally belonged to the Tanjore Municipality and the appellant merely held a licence from that authority. Later on, the title of the Municipality to the site was questioned by a third party and in a civil litigation which ensued the title of the Municipality was negatived. Thereupon the appellant obtained the lease hold right of the site from the true owner and constructed a bus stand conforming to the design approved by the Municipality. Besides sheds for passengers and vehicles it provided other amenities. It was situate near the Railway Station and most of the buses leaving Tanjore for 38 292 out station journeys used this bus stand both as the starting point and as the terminus. It appears that the site was approved as convenient and suitable for the bus stand both by the Municipality and the District authorities for buses plying from and into Tanjore. The appellant held the licence for running the bus stand year after year. In 1939 the Municipality granted him a licence for four months only instead of one year as required by section 270 (c) of the Madras Municipalities Act (V of 1920), and the appellant succeeded in vindicating his right for a whole year 's licence in the Civil Court by obtaining the relief for injunction and an order directing the issue of a licence against the Municipality for 1940 41. The appellant carried on the business without let or hindrance until 1950 when the Municipality refused to renew his licence, whereupon he obtained a mandatory injunction from 'the Civil Court directing the Municipality to grant him a licence for the year 1950 51. This decree was passed on October 7, 1950. On February 21, 1950, however, the Regional Transport Authority, Tanjore, which is the respondent in the present appeal, declared the bus stand as unsuitable with effect from April 1, 1950, and altered the starting and the terminal points from that date. This order resulted in the closing of the appellant 's bus stand. This decision which was given by means of a resolution was confirmed subsequently by another resolution passed on March 31, 1950. The appellant challenged the validity of these resolutions by a petition under article 226 before the Madras High Court on the ground that they were passed without jurisdiction and were contrary to the principles of natural justice as they were passed without notice to the appellant and without giving him an opportunity to defend his right. The resolutions purported to have been passed under section 76 of the , which runs thus: " The Provincial Government or any authority authorized in this behalf by the Provincial GovernMent ' may, in consultation with the local authority 293 having jurisdiction in the area concerned,determine places at which motor vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stop for a longer time than is necessary for the taking up and setting down of passengers." The Division Bench of the Madras High Court consisting of the learned Chief Justice and another learned Judge quashed the two orders as prayed for by the appellant on the grounds that the orders were passed ex parte, and that section 76 did not authorize, the respondent to close the bus stand. In the opinion of the Bench, section 76 deals with provision for parking places and halting stations and has no applica tion to a permanent bus stand which is a sort of a radiating centre of all the bus traffic for the town. It was held therefore that the Regional Transport Authority could not under section 76 fix starting and terminus places for motor buses. Reference was made, in the course of the arguments, to rule 268, Madras Vehicles Rules, 1940, and the learned Judges observed that though the rule does empower the Transport Authority to fix starting places and termini between which public service vehicles other than motor cars shall be permitted to be used, but that this could be done only if starting places and termini had not already been fixed in accordance with the provisions of any statute. In the present case as these had already been fixed in accordance with rule 27 D, Motor Vehicles Rules, 1923, the Transport Authority could not fix new starting places and termini under rule 268 of the Rules passed in 1940. The Bench pointed out that the rule was defective and would lead to an impasse if the starting places and termini already fixed become unsuitable and have to be shifted. Accordingly they suggested that the rule should be amended and a provision introduced conferring on the appropriate 294 authority the requisite power to alter from time to time the starting places and termini. See T. E. Ebrahim Saheb vs The Regional Transport Authority Tanjore(1). It appears that within two months of the decision of the High Court rule 268 was amended by the Government. Before the decision of the High Court was given the bus stand was shifted to a place belonging to the Municipality in another area. Rule 268 as it originally stood ran thus: " In the case of public service vehicles (other than motor cabs) if starting places and termini have not been fixed in accordance with the provisions of any statute, the transport authority may, after consultation with such other authority as it may deem desirable, fix starting places and termini between which such vehicles shall be permitted to be used within its jurisdiction. A list of such places shall be supplied by such authority to every holder of a permit for such vehicles. When such places have been fixed, every such vehicle shall start only from such places. " By the amendment the words " if starting places and termini have not been fixed in accordance with the provisions of any statute " were deleted, and the words " and after notice to the parties affected, fix or alter from time to time for good and proper reasons," were added. As amended, the rule runs thus: " 268. In the cage of public service vehicles (other than motor cabs) the transport authority may after consultation with such other authority as it may consider desirable, and after notice to the parties affected, fix or alter from time to time for good and proper reasons, the starting places and termini between which such vehicles shall be permitted to be used within its jurisdiction. A list of such places shall be supplied by such authority to every holder of a permit for such vehicles at the time of grant of or renewal of permits. (1) A.I.R. 951 Mad. 419. 295 When such places have been fixed every such: vehicle shall start only from such places. " The respondent then issued a notice to the appellant on October 25, 1950, to show cause why the bus stand should not be shifted, the grounds given being that it was not satisfactorily maintained and was situated in a limited space which was inadequate to accommodate all the buses using the stand and that it did not permit of any improvements being carried out. The appellant filed a long written statement objecting to the notice and challenging the grounds, whereupon the respondent issued a fresh notice on November 2, 1950, in which the original grounds were dropped and were substituted by the ground "from ' the point of convenience of the travelling public". After hearing the appellant and the Municipality, the Board passed a resolution on November to, 1950, that for good and proper reasons, namely, the convenience of the travelling public, the Transport Authority had resolved to alter the starting places and termini of all public service vehicles (other than motor cabs) arriving, at and proceeding from Tanjore from the existing bus stand owned by the appellant to the Municipal bus stand in another area of the town. This order led to another petition being filed in the High Court at Madras, praying for a writ of certiorari under article 226. The appellant questioned the jurisdiction of the Transport Authority to pass the order in question. It was contended before the High Court that rule 268 as amended was itself ultra vires, firstly, because it was beyond the rulemaking power conferred by section 68, sub section (r), of the , and secondly because it was repugnant to article 19(1)(g) of the Constitution. Both these contentions were rejected by the High Court and the petition was dismissed. The contentions raised before the High Court have been repeated before us. We are satisfied that there is no good ground for differing from the view taken by the High Court. The contains 10 Chapters. Chapter IV of the Act deals with 296 control of transport vehicles. Section 4 7 (1) lays down that the Regional Transport Authority shall, in deciding whether to grant or refuse a stage carriage permit, have regard to the following matters, namely, (a) the interest of the public generally; (b) to (f). . . . . . . . Section 48 says that the Regional Transport Authority after consideration of the matters set forth in section 47, may attach to a stage carriage permit any prescribed condition or any one or more of the following conditions. Various conditions are set out one of which (v) is material for our purposes. It is to the effect " that within Municipal limits and in such other areas and places as may be prescribed, passengers shall not be taken up or set down at or except at specified points. " The material portion of section 68 may be set out here: "(1) A Provincial Government may make rules for the purpose of carrying into effect the provisions of this Chapter. (2) Without prejudice 'to the generality of the foregoing power, rules under this section may be made with respect to all or any of the following matters, namely: (r) prohibiting the picking up or setting down of passengers by stage or contract carriages at specified places or in specified areas or at places other than duly notified stands or halting places. . . ; " It is obvious from a plain reading of sub section (1) that the Government has got full power to make rules for the purpose of carrying into effect the. provisions contained in Chapter IV relating to the control of transport vehicles and according to subsection (2), without prejudice to this power, the Government has the power to frame rules with respect to matters set out in sub sections (2) (a). to (2) (za). It is significant to note that the Act does not follow the ordinary mode of providing at the end of the Act that the Government is empowered to make rules for the 297 purpose of carrying into effect the provisions of the Act but at the end of each of the Chapters, including Chapter IV, the power has been reserved to the Provincial Government to make rules for the purpose of carrying into effect the provisions of the Chapter. The purpose of Chapter IV is described by the compendious expression "control of transport vehicles" and the Provincial Government is invested with plenary powers to make rules for carrying out that purpose. Keeping in view the purpose underlying the Chapter we are not prepared to hold that the fixing or alteration of bus stands is foreign to, that purpose. It was contended that section 68, sub section 2(r), does not confer the power upon the transport authority to direct the fixing or the alteration of a bus stand and that rule 268 of the rules framed under that section was, therefore, ultra vires. We are not prepared to accede to this contention. Sub section 2(r) clearly contemplates three definite situations. It prohibits the picking up or setting down of passengers (i) at specified places (ii) in specified areas, and (iii) at places other than duly notified stands or halting places. If the power to make rules in regard to these, matters is given to the Government, then it follows that a specified place may be prohibited from being used for picking up or setting down passengers. This will inevitably result in the closing of that specified place for the purpose of picking up or setting down of passengers. Similarly a specified area may be excluded for the same purpose. The expression "duly notified stands" is not defined in the Act, but it is reasonable to presume that a duly notified stand must be one which is notified by the Transport Authority and by none other. There is no warrant for the presumption that it must be notified by the Municipality. ' Reference was Made to section 270(b), 270(c) 298 270(e), 1, 2 & 3 of the Madras District Municipalities Act (V of 1920), and it was argued that the authority which is clothed with a power to fix a stand is the Municipality. Section 270(b) empowers the Municipal Council to construct or provide halting places and cart stands, and the latter according to the Explanation appended to the section includes a stand for motor vehicles as well. Section 270(c) merely says that where a Municipal Council has provided a public landing place, halting place or cartstand, the executive authority may prohibit the use for the same purpose by any person within such distance thereof, as maybe determined by the Municipal Council, of any public place or the sides of any public street. Section 270(e) lays down that no person can open a new private cart stand or continue to keep open a private stand unless he obtains from the Council a licence to do so. These provisions do not affect the power of the Transport Authority to regulate traffic control or impose restrictions upon the licence of any such cart stand. If rule 268 is therefore within the power of the rule making authority, it follows that it cannot be challenged as being void because it is not consistent with some general law. Reliance was placed on a passage at page 299 of, Craies on Statute Law as laying down that a by law must not be_repugnant to the statute or the general law. But by laws and rules made under a rule making power conferred by a statute do not stand on the same footing, as such rules are part and parcel of the statute itself. Section 68, subjection 2(r), involves both s general prohibition. that the stand will cease to exist as well as a particular prohibition, namely that passengers shall not be picked up or set down at a specified point. The order passed by the Transport Authority properly construed falls within the ambit of section 68, sub section 2(r). Rule 268 under which the order impeached was passed is rule framed under the plenary rule making 299 power referred to in section 68, sub section (1). Sub section (2) (za) says that a rule may be made with respect to any other matter which is to be or may be prescribed. This shows the existence of residuary power vested in the rule making authority. It follows therefore that rule 268 is within the scope of the powers conferred under section 68 of the Act. The next contention was that the order is repugnant to article 19 (1) (g) of the Constitution, according to which all citizens must have the right to practise any profession or to carry on any occupation, trade or business. It cannot be denied that the appellant has not been prohibited from carrying on the business of running a bus stand. What has been prohibited is that the bus stand existing on the parti cular site being unsuitable from the point of view of public convenience, it cannot be used for picking up or setting down passengers from that stand for outstations journeys. But there is certainly no prohibition for the bus stand being used otherwise for carrying passengers from the stand into the town, and vice versa. The restriction placed upon the use of the bus stand for the purpose of picking up or setting down passengers to outward journeys cannot be con sidered to be an unreasonable restriction. It may be that the appellant by reason of the shifting of the bus stand has been deprived of the income he used to enjoy when the bus stand was used for outward journeys from Tanjore, but that can be no ground for the contention that there has been an infringement of any fundamental right within the meaning of article 19 (1) (g) of the Constitution. There is no fundamental right in a citizen to carry on business wherever he chooses and his right must be subject to any reasonable restriction imposed by the executive authority in the interest of public convenience. The restriction may have the effect of eliminating the use to which the stand has been put hitherto but the restriction cannot be regarded as being unreasonable if the authority imposing such restriction had the power to do so. Whether the abolition of the stand 39 300 was conducive to public convenience or not is a matter entirely for the transport authority to judge, and it is not open to the court to substitute its own opinion for the opinion of the authority, which is in the beat position, having regard to its knowledge of local conditions to appraise the situation. It was next contended that rule 268, if it is held to be intra vires, was not complied with as the Transport Authority could pass such an order only after consultation with such other authority as it may deem desirable. It is admitted that the Transport Authority;consulted the Municipality before passing the order in question. Rule 268 therefore was fully complied with. But then it is urged that the Municipality was not the proper authority in the circumstances as it was a partisan to the dispute and had been endeavouring to oust the appellant from the bus stand in order to set up its own bus stand. The Municipality is a public body interested in public welfare and if it sought the assistance of the Government or the Transport Authority to shift the busstand, it was actuated only by the demands of public interest. It was possible for the Transport Authority to consult the District Board or the Panchayat as suggested for the appellant, but it was not bound to do so. We do not think that in consulting the Municipality the Transport Authority acted otherwise than within the scope of its powers. Further, according to the language employed the consultation is not obligatory but only discretionary. It was suggested that the act of the Municipality was mala fide and reference was made to paragraphs 18 and 19 of the appellant 's affidavit dated November 20, 1950. They refer merely to the vagueness of the ground of public convenience and to he amendment of the rule not being bona fide. There is, however, no material to support this suggestion. The mere fact that in the first notice certain grounds were mentioned which were not adhered to in the second notice and convenience of the travelling public was alone mentioned as the ground cannot lead to the 301 inference that the order was mala fide. The rule was amended in pursuance of the suggestion of the High Court in order to overcome the difficulty which arose in the absence of requisite power to alter the busstands. It is significant that no allegation about mala fides was made before the High Court and the question was never discussed there. In the petition for special leave to appeal though there is reference to the ground of inconvenience being vague, yet there is no suggestion of mala fides. The question about mala fides appears to have been raised for the first time in paragraph 4 (f) and (g) of the statement of the case. We hold that the plea of mala fides has not It was also urged that the resolution is invalid as the District Collector who presided over the meeting of the Transport Authority which passed this resolution had opened the new Municipal bus stand on April I, 1950. The suggestion is that be did not bring to bear upon the question an impartial and unbiased mind. The District Collector was not acting in the exercise of judicial or quasi judicial functions so that his action can be subjected to the scrutiny which is permissible in the case of a judicial officer. He, was acting purely in his executive capacity and his conduct in presiding over the meeting of the Transport Authority in the exercise of his normal functions and also opening the Municipal stand which he was entitled to do as the head of the District, does not affect the validity or fairness of the order complained against. We do not think there is any merit in this contention. Accordingly we dismiss the appeal with costs. Appeal dismissed.

Rule 268 of the Madras Motor Vehicles Rules, 1940, as it originally stood did not empower the Transport Authority to alter from time to time the starting places and termini for motor vehicles. The rule was amended in 1950 so as to empower the Transport Authority to do so, and after giving notice to the appellant who was the owner of a bus stand in a municipality, which was being used for several years as the starting place and terminus for motor buses plying to and from the municipality, the Transport Authority passed a resolution changing the starting place and terminus for the convenience of the public. The appellant applied for a writ of certiorari contending that r. 268 as amended was ultra vires as it went beyond the rule making powers conferred by section 68 (2) (r) of the and was also repugnant to article 19 (1) (g) of the Constitution: Held, (i) that the fixing and alteration of bus stands was not a purpose foreign to the " control of transport vehicles ", the purpose for which rules could be made under section 68 (1), and the power to make rules prohibiting the picking up or setting down of passengers at specified places mentioned in section 68 (2) (r) necessarily included the power to alter the situation of bus stands, and r. 268 as amended did not therefore go beyond section 68 (2) (r) ; (ii) the restriction placed upon the use of the bus stand for the purpose of picking up or getting down passengers to or from outward journeys cannot be considered to be an unreasonable restriction on the right to carry on any profession, trade or business of the appellant, and r. 268 was not in any way repugnant to article 19 (1) (g) of the Constitution. The expression " duly notified stand " in the Madras means a stand duly notified by the Transport Authority. There is no warrant for the view that it means a stand 291 notified by the municipality. The provisions of section 270 (b), (c) and (e) do not affect the power of the Transport Authority to regulate traffic control or impose restrictions upon the licence of cart stands.

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il Appeals Nos. 194 of 1956 and 353 of 1958. Appeals by special leave from the judgment and orders dated December 26, 1953 and April 30, 1957, of the Custodian General and Deputy Custodian General of Evacuee Property in Revision Nos. 5055R/Judl/ 1953 and. 1161/R/Judl/1954 respectively. Achhru Ram and T. R. V. Sastri, for the appellants. N. section Bindra and D. Gupta, for respondents. March 21. The Judgment of the Court was delivered by 459 DAS, GUPTA, J. Of these two appeals, one (Civil Appeal No. 194 of 1956) is against the order of the Custodian General of India, declining to interfere with ' the order of the Custodian of Evacuee Property, Orissa, in respect of certain properties claimed by the appellant as his; and the other appeal (Civil Appeal No. 353 of 1958) is against the order of the Deputy Custodian General of India, declining to interfere with the order of the Custodian of Evacuee Property, Madras, in respect of properties situate in Madras, claimed by the same appellant as belonging to him. Though most of the considerations that arise in the two appeals are identical, it will be convenient to take them up one after the other so as not to confuse a clear understand ing of the facts on which these considerations which are all based on question of law arise. The appellant Fazal Bhai Dbala and his brother Abdulla Dhala were partners in a business of hides and skins. A deed of partnership was executed on January 1, 1941, and the firm was registered in the Register of Firms, Cuttack, under section 59 of the Indian Partnership Act. On August 10, 1949, Abdulla Bhai Dhala executed a deed of sale in respect of some immovable properties at Jharsuguda in Orissa, and also certain properties, at Madras, in favour of Fazal Bhai Dhala. The consideration in the document was mentioned as Rs. 85,000 of which Rs. 50,000 was mentioned as the value of the Madras properties and Rs. 35,000 as the value of the Orissa properties. The sum of Rs. 85,000 appears to have been paid in the presence of the Registrar by Fazal Bhai to Abdulla Bhai on August 11, 1949. A deed of dissolution of the partnership was also executed on the following day the 12th August, 1949. It was stated therein that the two partners had agreed "that the said partnership shall stand dissolved as and from 2 11 48 and it has further been agreed that as from that day, 2 11 1948, the said business of Fazalbhoy Dhala & Co shall belong to and be continued and carried on by Fazalbhoy Dliala. " It was also stated that in view of the fact that "accounts of the said partnership have not yet been taken or settled and cannot be taken or 460 settled without much delay and trouble it has further been agreed that Fazal Bhai Dhala shall pay to Abdulla Dhala a sum of Rs. 40,000 in full settlement and satisfaction of all the claims, as partner of Abdulla Bhai Dhala against the partnership, its assets, goodwill etc., in respect of his share therein". A receipt of the sum of Rs. 40,000 was also acknowledged in this deed. On receipt of information that Abdulla Dhala had migrated to Pakistan after transferring his properties to his brother Fazal Bhai Dhala, the Assistant Custodian of Evacuee Property, Sambalpur (Orissa), issued a notice under section 7(1) of the Ordinance XXVII of 1949 to Fazal Bhai Dhala on December 30, 1949, in respect of im movable properties at Jharsuguda including the properties covered by the sale deed of August 10, 1949, and the business in hides and skins under the name of Fazalbhoy Dhala & Co., and certain immovable properties standing in the name of that firm. In reply to the notice, Fazal Bhai contended that Abdulla Bhai was not an evacuee; and that in any case, he, Fazal Bhai, had become the sole proprietor of the business, with all assets and liabilities, with effect from November 2, 1948, when the partnership was dissolved and that while some of the immovable properties as mentioned in the notice had been conveyed to him by a deed of sale by Abdulla Bhai, the rest being assets of the firm of Fazal Bhai Dhala, had vested in him after the dissolution of partnership, he prayed that his "title" in the assets of the firm, and in the immovable properties, mentioned in the notice should be confirmed. The Assistant Custodian held after consideration of the evidence that though the transfer of the properties mentioned in the sale deed was for adequate and valuable consideration it was not at all bona fide: as regards the other properties ' and the hides and skins business itself the Assistant Custodian held that Abdulla Bhai had no interest as the partnership had been dissolved on November 2, 1948. Against this decision Fazal Bhai appealed to the Custodian and prayed that the order of the Assistant Custodian as regards the properties mentioned in Schedule "A" (1) and (II) mentioned in the notice under sub section 1 of section 7 of the Government of India Ordinance 461 No. XXVII of 1949 should be sot aside. The Custodian agreed with the Assistant Custodian, in respect of these properties, and held that these had been rightly declared as evacuee properties. He went further and held that there was no justification for the Assistant Custodian taking a different view as regards the other properties. His conclusion was that "in fact, with regard to these properties also the same amount of mala fides was present and as such these should also be included in the list of evacuee properties"; and that "it is but proper that the entire 8 annas share of the properties mentioned in Schedules A and B of the evacuee Abdulla should be treated as evacuee properties". The Custodian finally ordered: "in consequence of my above decision according to section 6 of the Evacuee Interest Separation Act, the entire properties in Schedules A and B should now be treated as evacuee pro perties and revised action should be taken to notify as ,such under section 7(3) of the Administration of Evacuee Property Act and the appellant be directed to get his 8 annas share in the properties separated in the Court of the Competent Officer". Fazal Bhai moved the Custodian General of India for revision of this order of the Custodian, Orissa. The Custodian General, however, refused to interfere. It is proper to mention at the outset that it is no longer disputed that Abdulla Bhai is an evacuee, though the exact date from which he became such an evacuee does not clearly appear from the record, and that all the immovable properties, which are the subject matter of the appeal, were the assets of the firm Fazalbhai Dhala & Co. Four contentions were urged in support of the appeal. The first contention, and the one to which Mr. Achhru Ram devoted a considerable portion of his argument, was that the Custodian General should have held that the Custodian acted without jurisdiction, and at any rate, irregularly in the exercise of his jurisdiction, if he had any, in interfering with the order passed by the Assistant Custodian that the immovable property and the hides business and the properties mentioned in Sell. A III, that is the properties 462 other than those covered by the sale deed, were not evacuee properties and should be released. Mr. Achhru Ram has pointed out that against the Assistant Custodian 's order in respect of these two items of properties the hides business and the immovable properties in Sch. A III mentioned in the notice, the Custodian 's department had not preferred any appeal, so that the Custodian could not interfere with it, in exercise of his appellate jurisdiction. Learned Counsel then contends that the Custodian 's order in respect of these properties the hides business and the Jharsuguda properties in Sch. A III could not have been passed, in exercise of the revisional jurisdiction conferred on him by section 26 of the Administration of Evacuee Property Act (Act No. XXXI of 1950), as no notice of such intention to examine the records in revision, had been issued to Fazal Bhai. While it is true that the order does not clearly mention that in respect of the hides business and the Sch. A III properties it was being made in exercise of revisional jurisdiction, it is clear that the only jurisdiction the Custodian could exercise, in the absence of any appeal against that portion of the Assistant Custodian 's order would be his revisional jurisdiction under section 26. When we find that the Custodian has made the order it is proper and reasonable to hold that he passed it in the exercise of the only jurisdiction he had viz. , the revisional jurisdiction and the fact that this was not clearly stated in the order can be no ground for holding that he was not exercising revisional jurisdiction. It is quite another matter whether in the exercise of that jurisdiction, he proceeded in accordance with law. Mr. Aehhru Ram contended that under the law, the Custodian was required to issue a notice to the parties concerned before exercising his, revisional jurisdiction. Admittedly, no such notice was issued; and this omission to issue a notice was put by the appellant in the forefront of his grievances both in his petition for revision before the Custodian General and in the application for special leave to appeal to this Court. Turning however to section 26 we find that there is no 463 provision for service of any notice. The section runs thus: "26. Powers of review or revision of Custodian etc. (1) The Custodian, Additional Custodian, or( Authorised Deputy Custodian may at any time, either on his own motion or on application made to him in this behalf, call for the record of any proceeding under this Act which is pending before, or has been disposed of by, an officer subordinate to him for the purpose of satisfying himself as to the legality or propriety of any orders passed in the said proceeding, and may pass such order in relation thereto as he thinks fit: Provided that the Custodian, Additional Custodian or Authorised Deputy Custodian shall not pass an order under this sub section revising or modifying any order prejudicial to any person without giving such person a reasonable opportunity of being heard: Provided further that if one of the officers aforesaid takes action under this sub section, it shall not be competent for any other officer to do so. . . The proviso secures the requirements of the principles of natural justice when it says that any order prejudicial to any person shall not be passed without giving such person a reasonable opportunity of being heard. No specific provision for service of notice in order that such a reasonable opportunity of being heard be given has however been made by any rule. It goes without saying that in the large majority of cases, the Custodian "will, in order to give the party concerned a reasonable opportunity of being beard, first give him a notice of his intention to examine the records to satisfy himself as to the legality or the propriety of any order passed by the subordinate officer and require such person to show cause if any why the order should not be revised or modified, and then if and when the party appears before him in response to the notice, the Custodian has also to allow him, either personally or through counsel, a reasonable opportunity of being heard. In suitable cases it may be proper and necessary for the Custodian to allow 464 the party concerned even to adduce evidence. There may be cases however where the party concerned is already before the Custodian, so that all that is necessary for the Custodian to do is to inform such party of his intention to examine the records to satisfy him,self whether a particular order should be revised, and then to give him a reasonable opportunity of being heard. There would be no necessity in such a case to serve a formal notice on the party who is already before the Custodian and the omission to serve the notice can be of no consequence. What the law requires is that the person concerned should be given a reasonable opportunity of being heard before any order prejudicial to him is made in revision. If this reasonable opportunity of being heard cannot be given without the service of the notice the omission to serve the notice would be fatal; where however proper hearing can be given without service of notice, it does not matter at all, and all that has to be seen is whether even though no notice was given a reasonable opportunity of being heard was given. A perusal of the Custodian 's judgment makes it reasonably clear that he informed the counsel who appeared on Fazal Bhai. Dhala 's behalf, that he proposed to consider whether the order made by the Custodian in respect of the hides business and the Sch. A III properties had been rightly made and to revise the same, if necessary, after giving a reasonable opportunity of being heard to Fazal Bhai on this point. It is equally clear that the appellant 's advocate was fully heard in the matter. We have no doubt therefore that the requirements of law as embodied in the proviso to section 26(1) of the Act were fully satisfied. The contention that the Custodian acted without jurisdiction or irregularly exercised his jurisdiction must therefore fail. The next contention raised in the appeal is to use the learned counsel 's own words that in view of section 43 of the Indian Partnership Act the partnership stood dissolved from November 2, 1948 and the Custodian had no jurisdiction to declare the "business" to be an evacuee property. It does not appear to have been 465 disputed either before the Assistant Custodian or the Custodian that the partnership of Fazalbhai Dhala & Co., was a partnership at will. The deed of dissolution ' was dated August 1.2, 1949 and it has been found by the Custodian that the deed of dissolution was purposely concluded to provide a common safeguard for properties to remain in the hands of the brothers. The mention of the date November 2,1948 as the date of dissolution cannot therefore be accepted. The firm must however be held to have been dissolved on August 12, 1949 on which date the deed of dissolution was executed. The argument of the learned counsel appears to be that once the partnership business, was dissolved there could be no question of declaring the dissolved partnership as an evacuee property. Once the fact of dissolution is accepted the declaration as regards the business must necessarily be construed as a declaration that the property that remained in Abdulla Bhai on the dissolution of the firm was an evacuee property. It seems to us clear that that was really what is intended to be meant by the order made by the Custodian. A further contention of the appellant is that the transactions evidenced by the two deeds, viz., the sale deed and the dissolution were merely in furtherance of the winding up of the affairs of the dissolved partnership and therefore in determining the validity or otherwise of the transactions it has to be borne in mind that Fazal Bhai could not resist the claim of the other partners to wind up. The story that the dissolution of partnership had taken place earlier and the two deeds were excited later on has not been accepted by the Custodian and we can see no reason to interfere with his conclusion. The deeds of sale were executed prior to the actual dissolution which was effected by the deed of dissolution there is no scope therefore for saying that the sale deed was in the course of the winching up of the affairs of the dissolution of partnership. As regards the deed of dissolution itself it is wholly beside the point whether Abdulla Bhai could have resisted the claim to wind 59 466 up; for the declaration merely is that Abdulla Bhai 's share in the dissolved partnership as it stood on the date of dissolution is an evacuee property. The validity of the dissolution is not touched. It is hardly necessary to add that the dissolution of the partnership did not by itself mean that Abdulla 's share stood transferred to Fazal Bhai any more than that Fazal Bhai 's share stood transferred to Abdulla Bhai. A purported transfer of Abdulla 's share was made by the deed itself. But this having been held to be without good faith, had in view of section 40 of the Evacuee Property Act, no effect. It has to be made clear that the Custodian would not be bound by the statements made in the deed of dissolution as regards the settlement of the accounts of the firm and that the Custodian, in whom the evacuee properties vest will have in respect of the dissolved business all the rights which Abdulla had under sections 37, 46, 47, 48 and other sections of the Partnership Act. There remains for consideration the appellant 's contention that in any case the Custodian acted illegally in the exercise of his jurisdiction in ordering that "the entire properties in Schs. A and B should now be treated as evacuee properties". It appears that the order by the Custodian was made in these terms even though his conclusion was that "the entire 8 annas share of the properties mentioned in Schs. A and B of the evacuee Abdulla should be treated as evacuee properties", in view of the fact that under the original definition of evacuee property in section 2(f) of the Administration of Evacuee Property Act (Act XXXI of 1950) it meant "any property in which any evacuee has any right or interest". This definition has however since been amended and now evacuee property means "any property of an evacuee" instead of "any property in which an evacuee has any right or interest". The legal position after the amendment therefore is that it is only the 8 annas share of Abdulla set out in the Schedule in the Assistant Custodian 's order dated the 28th January, 1950, which is evacuee property. It is therefore necessary to state in clarification of the position that instead of the 467 entire Schedules A and B properties being treated as evacuee property only 8 annas share of these properties which belonged to the evacuee Abdulla should be treated as evacuee properties. With this clarification of the Custodian 's order the appeal is dismissed. There will be no order as to costs. Pi The other appeal C. A. No. 353 of 1958 is in respect of properties in Madras. Fazal Bhai made an application on July 21, 1950 purporting to be under section 40 of the Administration of Evacuee Property Act (Act XXXI of 1950) in reply to a notice which had been issued on him under section 7 of the Act. His case, as in respect of the Orissa properties mentioned earlier, was that the dissolution of the firm took place in November, 1948 and that the final transaction and settlement of accounts was brought about by a deed of sale dated August 11, 1949 in respect of Orissa and Madras pro perties and a deed of dissolution dated August 12, 1949 for a consideration of Rs. 40,000 making in all the entire amount of Rs. 1,25,000 which in this final settlement had been agreed to be paid to Abdulla. He prayed for a declaration that the properties mentioned in the notice be held to have been legally and properly passed to him, and that the transfer in his favour may be confirmed. The Assistant Custodian of Evacuee Property, Madras, accepted Fazal Bhai 's case that the transfer was only a step in the apportionment of the assets of the firm and not a transfer outside the partition of the assets of the firm. He held that the transfer was bona fide and made an order in these terms: "I therefore accept the dissolution of the firm of Fazalbhai Dhala and Company covered by the dissolution deed dated 12 8 49 and confirm the transfer of the immoveable properties covered by the deed dated 10 8 49 under section 40(5) of the . " When this matter came to the notice of the Custodian General of Evacuee Property in the course of the proceedings before him in respect of the Orissa property, he observed: "As for the Madras properties, I notice that Mr. 468 Rathanam 's order was allowed to go unchallenged by the department and as it is not before me, therefore, I am not called upon to express my opinion. " This was on December 26, 1953. It appears that the Custodian General also made a suggestion to the Custodian, Madras, that he might examine the propriety of the order passed by the Assistant Custodian., Madras. Accordingly, the Custodian, Madras, examined the records and issued notice to interested parties including Fazal Bhai Dhala to show cause why the Assistant Custodian 's order should not be set aside in revision. Cause was shown by Fazal Bhai Dhala and thereafter after hearing arguments on his behalf by his Advocate, Mr. T. section Raghavachari, the Custodian held that "the transactions covered by the sale deed dated August 10, 1949 and the deed of dissolution dated the 12th August, 1949 were not bona, fide". Accordingly, he set aside the order of the Assistant Custodian which confirmed the transfer of properties covered by these two deeds. He directed the Assistant Custodian, Madras, to take steps under the Evacuee Property Act in respect of these evacuee properties consequent on the cancellation of the confirmation of transfer. Fazal Bhai 's application to the Custodian General of Evacuee Property, India, for revision of the Custodian 's order was heard by the Deputy Custodian General of Evacuee Property, India, and was rejected. The only additional ground urged by Mr. Achhru Ram in support of this appeal is that the notice issued on Fazal Bhai to show cause why the Assistant Custodian 's order should not be revised did not say anything as regards the Assistant Custodian 's order in respect of the business and so the Custodian had no jurisdiction to interfere with the Assistant Custodian 's order in so far as that order was in respect of the business ' Turning now to the Assistant Custodian 's order we find that in addition to confirming the transfer of immovable properties covered by the deed of August 10, '1949 he also said: " 'I therefore, accept the dissolution of the firm of Fazal Bhai Dhala & Company., 469 covered by the dissolution deed dated August 12, 1949. The Custodian in his order dated July 5, 1954, has held that the transaction covered by the deed of ' dissolution also was not bona fide. It has to be borne in mind that the purported dissolution of the firm in November, 1948, the settlement of accounts recorded in the deed of August, 1949 and the transfer of properties effected were all integral and indivisible parts of the same transaction. While it is true that the notice issued to Fazal Bhai made no reference to the deed of dissolution, it is clear from Fazal Bhai 's own statement filed in response to this notice that he clearly understood that the revising authority would be considering the question of bona fides in respect of the numerous statements about the settlement of accounts in connection with the dissolution of business made in the deed of dissolution. We are satisfied, therefore., that the appellant Fazal Bhai had reasonable opportunity of being heard as regards the bona fides of the transactions mentioned in the deed of dissolution. As we have already mentioned in connection with the other appeal, the fact that the firm stood dissolved with effect from the date on which the deed of dissolution was executed can no longer be disputed. The effect of the Custodian 's order in regard to the deed of dissolution merely is that the transactions mentioned in that deed on the purported basis of an earlier dissolution has been declared to be not bona fide and confirmation was refused of whatever transfers of properties were purported to have been effected by that deed. This appeal, is, therefore,, dismissed with costs. Appeals dismissed.

F, the appellant, and A his brother, were partners in a business of hides and skins. On August 10, 1949, A executed a deed of sale in respect of some immoveable properties in Orissa and Madras in favour of F. A deed of dissolution of the partnership was also executed on August 12, 1949, wherein it was inter alia stated that the partners bad agreed that the said partnership shall stand dissolved as from November 2, 1948. On receipt of information that A had migrated to Pakistan after transferring his properties to his brother F, the Assistant Custodian of Evacuee Property, issued a notice to F under section 7(1) of the Ordinance 27 of 1949 in respect of immoveable properties in Orissa including the properties covered by the sale deed and the business in hides and skins and certain immoveable properties standing in the name of the firm. In reply F contended that he had become the sole proprietor of the business with all assets and liabilities, with effect from November 2, 1948, when the partnership was dissolved 457 and that while some of the immoveable properties as mentioned in the notice had been conveyed to him by a deed of sale by A, the rest being assets of the firm, had vested in him after the dissolution of partnership. The Assistant Custodian held that though the transfer of the properties mentioned in the sale deed was for adequate and valuable consideration it was not at all bona fide; as regards other properties and the hides and skins business itself, A had no interest as the partnership had been dissolved on November 2, 1948. Against this decision F appealed to the Custodian, who held that these properties were rightly declared as evacuee properties and that as regards the transfer of other properties, the same amount of mala fides was present and as such these should also be included in the list of evacuee properties. The appeal to Custodian General was rejected and the appellant moved the Supreme Court by special leave. Four contentions were urged by the appellant: Firstly, that the Custodian General should have held that the Custodian acted without jurisdiction in interfering with the order passed by the Assistant Custodian that the hides business and the properties mentioned in Sch. A III of the notice were not evacuee properties and should be released. Secondly, that as against the Assistant Custodian 's order in respect of the hides business and the immoveable properties in Sch. A III the Custodian Department had not preferred any appeal, so that the Custodian could not interfere with it, in exercise of his appellate jurisdiction. The Custodian 's order in respect of these properties could not have been passed, in exercise of the revisional jurisdiction conferred on him by section 27 of the Administration of Evacuee Property Act as no notice of such intention to examine the records in revision had been issued to F. Thirdly, once the partnership business was dissolved, there could be no question of declaring the dissolved partnership as an evacuee property, in view of section 43 of the Indian Partnership Act. Fourthly, the transaction evidenced by the two deeds, viz., the sale deed and the dissolution were merely in furtherance of the winding up of the affairs of the dissolved partnership and therefore in determining the validity or otherwise of the transactions, F could not resist the claim of the other partner to wind up. Held, that where the Custodian had made an order against that portion of the order of the Assistant Custodian which was not before him in appeal it must be taken to have been passed in the exercise of the Custodian 's revisional jurisdiction and the mere fact that this was riot expressly stated in the order could 58 458 be no ground for holding that he was not exercising his revisional jurisdiction. It was quite another matter whether in the exercise of the revisional jurisdiction, he proceeded in accordance with law. The Custodian in exercising his revisional jurisdiction must give the party concerned a reasonable opportunity of being heard before any order prejudicial to him is made in revision. If this reasonable opportunity of being heard cannot be given without the service of notice, a notice must be served for otherwise the omission to serve the notice would be fatal, even though section 26 of the Administration of Evacuee Property Act did not specifically provide for service of notice by the Custodian. But in cases where the party affected is before the Custodian and has knowledge of the proceedings before him and is heard, the failure to issue a formal notice is immaterial or does not vitiate the order passed. Once the fact of dissolution is accepted, the declaration as regards the business must necessarily be construed as a declaration that the property that remained in the evacuee on the dissolution of the firm was evacuee property. Held, further, that where a deed of transfer by an 'evacuee ' was without good faith, section 40 of the Administration of Evacuee Property Act would come into operation, making the transfer of no effect and in the case of a firm its property on dissolution would become an evacuee property from the date of the execution of the deed of dissolution of the partnership and vest in the Custodian with all the rights under the provisions of the Partnership Act and the Custodian was not bound by the statements made in the deed of dissolution as regards the settlement of account. In the present case the Custodian did not act without juris diction or exercise his jurisdiction irregularly.

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200 of 1955. 439 Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. section K. Kapoor and Ganpat Rai, for the petitioner. G. C. Kasliwal and D. Gupta, for the respondents. St 1961. March 17. , J. Section 4 of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952 (which will be hereafter referred to as the Rajasthan Act), enacts: "4. All lands liable to pay land revenue. Not withstanding anything contained in any existing jagir law or any other law, all jagir lands shall, as from the commencement of this Act, be liable to payment of land revenue to the Government; and as from such commencement, the liability of (a) all Jagirdars to pay tribute to the Government under any existing Jagir Law shall cease, and The expression 'tribute ', the liability to pay which was thus extinguished from and after the commencement of the Act, was defined in section 2(r) of that Act in the following terms: 'Tribute ' in relation to a jagir, includes rekh, rakam, chatund, chakri or other charge of a similar nature; and" In the absence of the above provision the petitioner would have been under an obligation to pay to the Government 'hukamnama ' under section 190 of the Marwar Land Revenue Act, 1949 (referred to hereafter as the Marwar Act) which codified the earlier law irk that State. The short question that is raised by this petition under article 32 of the Constitution is whether the liability of the petitioner to pay 'hukamnama, the nature of which we shall explain later, has been extinguished by the provision of the Rajasthan Act above extracted which, as would be seen, turns on whether such a payment could be comprehended within the expression 'tribute '. Relying on section 4(a) of the Rajasthan Act, the petitioner resists the demand of he same made by the respondent State and impugns the legality of the claim. 440 It is necessary to set out a few facts and certain provisions of the Marwar Act to appreciate the matter in controversy. Thakur Nathu Singh, the Jagirdar of Ras a "Scheduled Jagir" under the Marwar Act died in July 1946 leaving the petitioner, Thakur Bahadur Singh as his next heir. "Scheduled Jagirs" are, under the Marwar Act, impartable and their line of devolution was prescribed by section 182 thereof which ran: "Succession shall be governed in the case of Scheduled Jagirs by the rule of primogeniture. " The succession, " however, was not automatic but had to be recognised by the Government and a renewal granted in favour of the successor before his title to the jagir was perfected. Sections 183 185 of the Marwar Act which are of relevance in this connection, ran: "section 183. All grants of Scheduled Jagirs are only for the life time of the holder, and no person is entitled to succeed to such jagir until his succession is recognized and the grant is renewed in his favour by His Highness. section 184. Subject always to His Highness pleasure, the grant of a Scheduled Jagir, on the death of the holder, shall be renewed in favour of the person entitled to succeed him in accordance with the provisions of this Act. section 185(1). A Scheduled Jagir, on the death of the holder, and until the renewal of the grant in favour of his successor, shall be resumed by the Government and taken under direct management. Provided that the claimant to succession shall, in the, absence of special orders of His Highness be permitted to retain possession pending orders of His Highness regarding the claim, if he is a direct lineal descendant in the male line of the last holder. (2). . . . (3). . . . (4). . . . The title of the petitioner to succeed to the jagir as the next heir of his father was recognised and a renewal granted in his favour by the Government by an 441 order dated March 18, 1952. Section 190 of the Marwar Act imposes an obligation on a succeeding heir whose title has been recognised and to whom a renewal of the jagir has been granted, to make certain payments. This section runs: "section 190(1). When succession to a Scheduled Jagir is recognised by His Highness and renewal of the grant ordered, the person in whose favour the grant is ordered to be renewed shall execute within one month of the communication to him of the orders, a 'Kabuliyat ' for payment of Hukamnama and other fees payable in accordance with sub sections (2) and (3). (2). . . . . . (3). . . . . . The amount payable by the petitioner, according to the scale of fees prescribed under the Act, came to Rs. 30,000 and the respondent State demanded this sum. Before, however, the date of the order according recognition and granting renewal in favour of the petitioner, the Rajasthan Act of 1952 had been passed and having received the assent of the President on February 13, 1952, came into force on publication in the Gazette on February 16, 1952, and under section 4 of this Act, whose terms have been set out already, the liability on the part of Jagirdars to pay "all tribute" to Government got extinguished. The question debated in this petition is whether the liability to pay 'hukamnama ' or other fees under section 190 of the Marwar Act is a 'tribute ' from the payment of which the Jagirdars are thus relieved. It is common ground, subject to a submission of the learned Advocate General for the respondent State, which we shall refer to a little later, that if the 'hukamnama ' which the petitioner has been required to pay to the Government was a 'tribute ' within section 4 of the Rajasthan Act, it would cease to be exigible and cannot be enforced from and after February 16, 1952, because it is not in dispute that the petitioner is a Jagirdar and 'hukamnama ' regarding which the demand has been made on him "is a demand which 56 442 is due under an existing Jagir law", viz., the Marwar Act. The precise question which now arises for our decision came up before the High Court of Rajasthan in 1955 on facts exactly parallel with the case before us and a Bench of that Court held in a case reported as Thakur Narpat Singh vs The State of Rajasthan (1) that 'hukamnama ' and the fees payable under section 190 of the Marwar Act were not within,%. 4(a) of the Rajasthan Act. Consequently, the arguments on either side before us took the form of either supporting the reasoning contained in that judgment or in disputing its correctness. It therefore becomes necessary for us to examine the reasoning upon which the learned Judges of the Rajasthan High Court reached a conclusion adverse to the contention of the petitioner now before us. Before doing so, however, it is necessary to advert to a point sought to be raised by the learned Advocate General for Rajasthan for the respondent which would cut across all this debate. He sought to urge that section 4 of the Rajasthan Act was not retrospective and that as the recognition of the title of the Petitioner and the renewal of the grant of the jagir in his favour related back to July 1946 when the succession opened, the Rajasthan Act could not be invoked to put an end to the obligation which had accrued years before it came into force notwithstanding that the orders of recognition and renewal were passed only in March 1952. In the circumstances of this case, however, and also regard being had to the point not having been raised in the answer filed by the State to the writ petition, we did not consider it proper to permit the Advocate General to pursue the submission. We will now proceed to consider the correctness or otherwise of the conclusion reached by the learned Judges of the Rajasthan High Court in the case just now referred to. Stated briefly, the ratio of their decision was as follows: Under the law governing jagir grants and the tenure on which they are held in Marwar, a 'hukamnama ' is a levy chargeable for recognition of the succession of a person to a Scheduled Jagir (1) I.L.R. 443 of his deceased ancestor. The specific dues, Rekh and Chakri enumerated in the definition of section 2(r) of the Rajasthan Act are those levied in Marwar, the former being 8 per cent of the gross rental value of an estate and the second the cash equivalent of the obligation to supply horsemen or camelsowars or foot soldier, , by Jagirdars dependent upon the value of the estate. Similar payments are known as 'Rakam ' in the State of Bikaner and 'Chatund ' in the State of Udaipur, these States being the components of the State of Rajasthan. All these dues, Rekh, Rakam, Chatund and Chakri were annual and recurring payments made by Jagirdars. When therefore the definition in section 2(r) concluded with the words other charges of a similar nature ', it must necessarily be held that these general words should be confined to charges which were also recurring. The 'hukamnama ' and other dues payable under section 190 of the Marwar Act, however, were not recurring payments and were in consideration of the ruler exercising his discretion to recognise a succession and grant renewal of the jagir in favour of the next heir. In other words, these were payments due to the ruler in recognition of his sovereign right to the ownership of the land which was statutorily embodied in sections 169 170 of the Marwar Act which ran: "section 169. The ownership of all land vests in His Highness and all jagirs, bhoms, sansans, dolis or similar proprietary interests are held and shall be deemed to be held as grant, from His Highness. and section 170. All grants shall be held by the original grantee or his successors during His Highness ' pleasure. " The payments under section 190 of the Act therefore were not of the same category as the payments enumerated in section 2 (r) of the Rajasthan Act and hence could not be comprehended within the meaning of the expression 'tribute '. The same matter was also put in a slightly different form by saying that whereas the payments enumerated in the definition of 'tribute ' were those made by Jagirdars as such, i.e., after they got into possession, a 'hukamnama ' was a payment made not by a 144 Jagirdar but by a person who was merely a claimant to a jagir and as a condition of his title to it being recognised. The correctness of this reasoning was challenged before us by learned Counsel for the petitioner who urged that the learned Judges of the High Court did not accord sufficient consideration to the fact that the definition in section 2(r) was an 'inclusive ' definition and could, therefore, include others not falling within the enumerated types. In this connection, learned Counsel relied upon the meaning of the word 'tribute ' in Webster 's New International Dictionary and in the Oxford English Dictionary, Volume IT. In the former, one of the meanings given is: "A tax, impost, duty, rental, or the like, paid by a subject vassal to his sovereign or lord". and in the latter: "A tax or impost paid by one prince or state to another in acknowledgement of submission or as the price of peace, security and protection". He therefore urged that the expression 'tribute ' in section 2(r) would include those which fell within the ordinary dictionary meaning of the term , in addition to those specifically enumerated therein. If the word were understood in its ordinary dictionary meaning without any statutory definition, learned Counsel added, the incidence of recurrence would not be a necessary attribute of the concept of a 'tribute '. The submission was that the learned Judges of the Rajasthan High court erred in confining the meaning of 'tribute ' to the enumerated payments and "other charges of a similar nature", without taking into account the fact that this was an inclusive and not an exhaustive or even an illustrative definition. We see force in these submissions and it must also be said that the argument in this form and the construction of section 2(r) from this aspect has not been considered by the learned Judges of the Rajasthan High Court. We have, therefore, to examine whether the submission can be sustained. Our task is, to discover whether the expression 'tribute ', as it occurs in the Rajasthan Act, includes payments of the type now in 445 controversy. Apart from the usual express saving contained in the opening words of section 2 that the definitions set out are to be applied "unless the context otherwise requires", the meaning of the word 'tribute ' has to be ascertained from a consideration of the various provisions of the Act and not merely from section 4(a) of the Act read in the light of the definition. It would be seen that in ultimate analysis the question of construction posed for our decision may be thus set out: The four specific enumerated dues in the definition in section 2(r) are recurring annual payments. "Other charges of a like nature" which follows this enumeration, would obviously partake of that character and they would also have to be similarly annual. and recurring. This was the basis of the decision of the learned Judges of the Rajasthan High Court and the correctness of this view up to this point cannot be and has not, been disputed. The definition, however, being "inclusive" and not "meaning" these, it is said it must "include" something else. It must, however, be added that the possibility cannot be ignored that the definition was made inclusive out of caution and with a view not to exclude any payment which jagirdars were making or were under an obligation to make, to Government, seeing that the Act was to apply to an integrated State composed of several States in which there might have been great diversity of nomenclature in designating these payments, and so as not to exclude any payment which would squarely fall within the category regarding which provision was made in the operative portion of the enactment. Learned Counsel for the petitioner urges that every payment by a Jagirdar to the Government, whatever be the nature of the payment and whatever be the consideration therefore, is included in the expression. If the expression 'tribute ' occurred only in section 4(a) in the operative provisions of the Act, there might be much to be said for the view presented by learned Counsel for the petitioner and for invoking its dictionary meaning to ascertain the content of that word. The Act, however, has used the word 'tribute ' in several other sections and in different contexts and we 446 consider that the precise ambit of this expression of rather indefinite import as contemplated or intended by the framers of this Act has necessarily to be gathered from the entirety of the provisions. The ,word tribute ' was apparently no equivalent in the local languages, so that it was obviously used as a convenient and compendious expression to designate certain imposts which were levied by the rulers of the several States which integrated to form the State of Rajasthan. Further, this circumstance should obviously induce some caution before the dictionary meaning of the English word tribute ' is treated as expressing the intention of the framers of the Rajasthan Act. We shall therefore proceed to set out and consider the other provisions of the enactment in which the word is used to discover the intentions of the framers of the Act as to what they meant by it. Before proceeding further, we should add, that as under section 4(a) of the Rajasthan Act, the payment of Land Revenue computed under it is to be the substitute for the 'tribute ' previously demandable or paid, the manner in which the land revenue under the Act is determined would be relevant as throwing light on for what it is substituted. We have already set out the terms of section 4 of the Rajasthan Act under which in substitution of the payment of 'tribute ' all lands are made liable to the payment of land revenue. The amount of land revenue payable by a Jagirdar is fixed by section 8 and this is based in part on the annual rental income which could be derived from the jagir computed in the manner set out in sections 6 and 7. For our present purpose section 8 is of importance, because the amount of 'tribute ' payable forms one of the factors for determining the amount of 'land revenue payable '. Section 8 enacts: "section 8. Amount of land revenue payable. The land revenue payable by a Jagirdar in respect of his jagir lands shall be (a) for the agricultural year 1951 52, an amount equal to the amount of tribute payable by him to the Government for that year; (b) for the agricultural year 1952 53 and each of the six succeeding agricultural years 447 (i) in the case of jagir lands the annual rental income of which as determined under section 6 or section 7, exceeds five hundred rupees but does not exceed five thousand rupees, one sixteenth of such rental income or the amount of the tribute which was payable by the Jagirdar for the agricultural year 195051, whichever is greater; (ii) in the case of jagir lands the rental income of which as determined under section 6 or section 7 exceeds five thousand rupees, one eighth of such annual rental income or the amount of the tribute which was payable by the Jagirdar for the agricultural year 1950 51, whichever is greater. Explanation. For the purpose of this clause the amount of tribute payable by a Jagirdar to the Government for the agricultural year 1950 51 shall be deemed to be the amount of such tribute less the amount of any tribute payable to such jagirdar by any person to whom the Jagirdar may have granted any of his jagir lands; (c) for the agricultural year 1959 60 and subsequent years, one fourth of the rental income from the jagir lands as determined under sections 6 and 7; Provided that (i) where no tribute was payable by the Jagirdar before the commencement of the Act or where the whole of the tribute has been paid before such commencement, the jagir lands shall be deemed to be exempt from the payment of land revenue for the agricultural year 1951 52; (ii) where the jagirdar has paid a part of the tribute before the commencement of this Acts, the land revenue payable by him for the agricultural year 1951 52 shall be an amount equal 'to the balance of the tribute which would have been payable by him for that year if this Act had not been passed; and (iii) the Government may direct that for the purposes of clauses (b) and (e) of this section, the rental income of any jagir land for all or any of the agricultural year mentioned in those clauses shall be 448 determined or redetermined on the basis of the rental income which actually accrued to the jagirdar from the jagir in such year or years, as the case may be." It will be seen that this section speaks of tribute payable for the, year specified 1951 52 or 1950 51and it is obvious that the tribute here referred to could only be the recurring payments like those enumerated in the definition in section 2(r) to which could be attributed the character of being a payment for a specific year. Besides, it will be, seen that under section 8(b) the land revenue payable for the seven agricultural years 1952 53 to 1959 60 is to be either a fraction of the annual rental income or "the amount of the tribute which would be payable by the Jagirdar for the year 1950 51 whichever is greater". Surely it would be most unreasonable to hold that if during the year 1950 51 a Jagirdar made a payment of 'hukamnama ' this ad hoe payment should be treated as part of the tribute for that year and the Jagirdar made liable to pay sums including 'hukamnama ' for the seven years 1952 53 to 1959 60. The main object of the Rajasthan Act was to effect resumption of jagir lands by eliminating intermediaries and the 'tribute ' payable by the erstwhile Jagirdars enters into the calculation for computing the compensation payable to them on such resumption. The second schedule to the Act sets out the principles governing the compensation payable to Jagirdars. It may broadly be stated that the compensation payable, to Jagirdars is determined on the basis of a multiple of the net income of the basic year as determined under r. 1 of the second schedule. The net income is computed by first determining the gross income of the Jagirdars under various heads including the rental income and deducting therefrom certain outgoing which included the "tribute ' Rule 4 of schedule 2 provides: "4. Net income. The net income of a Jagirdar for the basic year shall be calculated by deducting from his gross income therefore, (i) the amount that the Jagirdar would have 449 been liable to pay to the Government as tribute, and, in the case of grantee from a Jagirdar, to the Jagirdar in respect of such grant, for the basic year if this Act had not been passed; (ii) any sums of recurring nature due to the Government from the Jagirdar, or in the case of grantee from the Jagirdar to the Jagirdar, for the basic year on any account other than land revenue,; and . . . . . . It is impossible to conceive that the framers of the Act would have intended that the payment of a 'hukamnama ' in the basic year should have a permanent effect on the quantum of compensation payable to a Jagirdar under the provisions above extracted. In addition to the compensation for the presumption of the jagir under the provisions of the Rajasthan Act, the Jagirdars are entitled to be paid a rehabilitation grant under Chapter VIII A of the Act. The method of calculation of this amount is set out in Schedule III of the Act and for this purpose Jagirdars are classified on a graduated scale into various categories depending on the gross income from the estate. This is followed by a proviso in these terms: "Provided that for the purpose of calculating the rehabilitation grant payable to a Jagirdar falling in this category such marginal adjustments shall be made as will ensure that a Jagirdar having a higher net income does not get an amount by way of rehabilitation grant which is less than that payable to a Jagirdar having a lower net income. Provided further that, in comparing Jagirdars with different amounts of income for the purpose of the first proviso to this sub clause, (i) Jagirdars who were riot paying tribute shall be compared only with Jagirdars who were not paying tribute, (ii) Jagirdars who were paying tribute shall be compared only with Jagirdars who were paying ' tribute, (iii) Jagirdars who were paying any sums of 57 450 recurring nature referred to in sub clause (ii) of clause 4 of the Second Schedule shall be compared only with Jagirdars Who were paying such sums, and (iv) in respect of Jagirdars who were paying tribute or any sums of recurring nature referred to in sub. clause (ii) of clause 4 of the Second Schedule at different scales, the Government shall prescribe a percentage of the gross income at which the amount of tribute or such sums in respect of each Jagirdar shall be calculated irrespective of whether the amount of tribute or such sums of recurring nature that were being actually paid by him. " What we have said earlier about the construction of the word 'tribute ' in r. 4 of Schedule II would equally apply to the construction of that expression as it occurs in the provision extracted from Schedule III. Notwithstanding therefore that the definition in section 2(r) of the Rajasthan Act is 'inclusive ' it appears to us from an examination of the meaning of the word as used in the operative provisions of the Act, that it could refer only to recurring payments which could be said to be attributable to particular years and not to the type of ad hoc payments of which hukamnamas and patta fees are examples. It might very well be that the words at the end of section 2(r) "other charges of a similar nature" might not exhaust all the payments which a 'tribute ' connotes but still if the rest of the Act indicates unmistakably the intention, that the word 'tribute ' has been used in a special sense taking into account the law and usage obtaining in the locality, these cannot be disregarded in favour of a wider construction based merely upon the dictionary meaning of the expression. We need hardly add that the provision to which we have adverted should suffice to show that the construction put forward by learned Counsel for the petitioner would work to the grave disadvantage of the Jagirdars and would cause them deprivation which could never have been intended. We have thus reached the same conclusion as the learned Judges of the Rajasthan High Court, though on a different line of reasoning. 451 On the construction which we have adopted of the expression 'tribute ' in section 4 of the Rajasthan Act the petitioner can have no legal or legitimate grievance against the enforcement of the payment made against him. The petition fails and is dismissed. There will st, be no order as to costs. Petition dismissed.

The title of the petitioner to succeed to the jagir as the next heir of his father who died in July 1946 was recognised and a renewal granted in his favour by the Government by an order dated March 8, 1952. Section 190 of the Marwar Land Revenue Act, imposed an obligation on the succeeding heir to 1949, execute within one month of the communication to him of the order a kabuliyat for payment of hukammama and other fees according to the scale of fees prescribed under the Act, and the amount payable by the petitioner thereby which came to Rs. 30,000 was demanded by the respondent State. In the meantime, the Rajasthan Land Reforms and Resumption of jagirs Act, 1952, had been passed and came into force on February 16, 1952, and section 4(a) of this Act enacted that "the liability of all jagirdars to pay tribute to the Government under any existing jagir Law shall cease", while "tribute" was defined by section 2(r) in the following terms . "Tribute ' in relation to a jagir, includes rekh, rakam, chatund, chakri or other charge of a similar nature". The petitioner challenged the legality of the demand on the ground that the liability to pay hukamnama was a tribute within the meaning of that word in section 4(a). Held, that notwithstanding that the definition of the ex pression "tribute" in section 2(r) of the Rajasthan Land Reforms and Resumption of jagirs Act, 1952, is inclusive, on an examination of the meaning of the word as used in the operative provisions of the Act, it could refer only to recurring payments which could be said to be attributable to particular years and not to the type of ad hoc payments of which hukamnama was an example. Accordingly, the liability to pay hukamnama is not compre hended within the expression "tribute" under section 4(a), and, consequently, was not extinguished by the provisions of the Rajasthan Act of 1952. Thakur Narpat Sinah vs The State of Rajasthan, I.L.R. , referred to.

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Appeals Nos. 421 to 423 of 1957. Appeals from the judgment and order dated February 18, 1955, of the Allahabad High Court (Lucknow Bench), at Lucknow in F.A.F.O. Nos. 11 to 13 of 1953. J. B. Dadachanji, for the appellant. C. B. Agarwala and C. P. Lal, for the respondent. February 6. The Judgment of the Court was delivered by SHAH, J. These three appeals were filed by the appellants M/s. Jethanand & Sons with certificate of fitness granted under article 133(1) (c) of the Constitution by the High Court of Judicature at Allahabad. The appellants entered into three separate contracts with the Government of the United Provinces (now called the State of Uttar Pradesh) on March 20, 1947, May 27, 1947, and June 28, 1947, for the supply of stone ballast at Shankar Garh, District Allahabad. The contracts which were in identical terms contained the following arbitration clause 97 756 " All disputes between the parties hereto arising out of this contract whether during its continuance or after its rescission or in respect of the construction or meaning of any clause thereof or of the tender, specifications and conditions or any of them or any part thereof respectively or anything arising out of or incident thereto for the decision of which no express provision has hereinbefore been made, shall be referred to the Superintending Engineer of the Circle concerned and his decision shall in all cases and at all times be final, binding and con clusive between the parties." Pursuant to the contracts, the appellants supplied stone ballast. Thereafter, purporting to act under cl. (16) of the agreements, the Executive Engineer, Provincial Division, referred certain disputes between the appellants and the State of Uttar Pradesh, alleged to arise out of the performance of the contracts, to arbitration of the Superintending Engineer of the Circle concerned. The Superintending Engineer required the appellants to appear before him at the time fixed in the notices. The appellants by their letter dated May 31, 1951, declined to submit to the jurisdiction of the Superintending Engineer, and informed him that if he hears and determines the cases ex parte, the " decisions will not be binding " on them. On February 7, 1953, the Superintending Engineer made and published three awards in respect of the disputes arising under the three contracts and filed the same in the court of the Civil Judge, Lucknow. The appellants applied for setting aside the awards alleging that the contracts were fully performed and that the dispute alleged by the State of Uttar Pradesh to have arisen out of the contracts could not arise after the contracts were fully performed and that the State could not refer those alleged disputes to arbitration. They also contended that the awards were not valid in law because on the arbitration agreements action was not taken under section 20 of the Arbitration Act. The Civil Judge, Lucknow, held that the disputes between the parties were properly referred to the Superintending Engineer by the State of Uttar 757 Pradesh and that the awards were validly made. Against the orders passed by the Civil Judge, Lucknow, three appeals were preferred by the appellants to the High Court of Judicature at Allahabad. The High Court set aside the orders passed by the Civil Judge and remanded the cases to the Trial Judge with a direction that he do allow the appellants and if need be, the respondent to amend their pleadings, and frame all issues that arise out of the pleadings and allow the parties an opportunity to place such evidence as they desire and decide the case on such evidence. In the view of the High Court no proper notice of the filing of the awards was served upon the appellants and that they were " seriously handicapped in their reply by the course which had been adopted both by the court and the arbitrator in the conduct of the proceedings in court. " On the applications filed by the appellants, the High Court granted leave to appeal to this court under article 133(1)(c) of the Constitution, certifying that the cases were fit for appeal to this court. Counsel for the respondent has urged that the High Court was incompetent to grant certificate under article 133(1) (c) of the Constitution. The order passed by the High Court was manifestly passed in exercise of the inherent power to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court. Under article 133 of the Constitution, an appeal lies to this court from any judgment, decree original order in a civil proceeding of a High Court if the High Court certifies that : (a). . (b). . or (c)"the case is a fit one for appeal to the Supreme Court. " In our view, the order remanding the cases under section 151 of the Civil Procedure Code is not a judgment, decree or final order within the meaning of article 133 of the Constitution. By its order, the High Court did not decide any question relating to the rights of the parties to the dispute. The High Court merely 758 remanded the cases for retrial holding that there was no proper trial of the petitions filed by the appellants for setting aside the awards. Such an order remanding the cases for retrial is not a final order within the meaning of article 133(1)(c). An order is final if it amounts to a final decision relating to the rights of the parties in dispute in the civil proceeding. If after the order, the civil proceeding still remains to be tried and the rights in dispute between the parties have to be determined, the order is not a final order within the meaning of article 133. The High Court assumed that a certificate of fitness to appeal to this court may be issued under section 109(1)(c) of the Code of Civil Procedure, even if the order is not final, and in support of that view, they relied upon the judgment of the Judicial Committee of the Privy Council in V. M. Abdul Rahman vs D. K. Cassim & Sons (1). But section 109 of the Code is now made expressly subject to Ch. IV, Part V of the Constitution and article 133 (1) (c) which occurs in that chapter authorises the grant of a certificate by the High Court only if the order is a final order. The inconsistency between section 109 Civil Procedure Code and article 133 of the Constitution has now been removed by the Code of Civil Procedure (Amendment) Act 66 of 1955. But even before the amending Act, the power under section 109(1) (c) being expressly made subject to the Constitution, an appeal lay to this Court only against judgments, decrees and final orders. Again, the orders passed by the High Court did not raise any question of great public or private importance. In the view of the High Court, the applications forgetting aside the awards filed by the appellants were not properly tried and therefore the cases deserved to be remanded to the court of first instance for trial de novo. The High Court granted leave to the parties to amend their pleadings; they also directed the Civil Judge to frame " all the issues that arise and allow the parties an opportunity of adducing such evidence as they desired. " It was an order for trial de novo on fresh pleadings and on all issues that may (1)(1933) L.R. 60 I.A. 76. 759 arise on the pleadings. Evidently, any decision given by the High Court in the course of the order would not in that trial de novo be binding and the cases will have to be tried afresh by the Civil Judge. The High Court was of the view that the interpretation of para. 3 of the first schedule of the Indian Arbitration Act raised a substantial question of law. But by the direction of the High Court, this question was also left open to be tried before the Civil Judge. We fail to appreciate how an observation on a question which is directed to be retried can still be regarded as raising a question of law of great public or private importance justifying grant of a certificate under article 133 (1) (c) of the Constitution. We accordingly vacate the certificate granted by the High Court and dismiss these appeals with costs. One hearing fee. Appeals dismissed.

Pursuant to an agreement between the parties a dispute relating to the supply of stone ballast was referred for adjudication to an arbitrator who was appointed under the agreement. The arbitrator 's awards were contested by the appellants but the trial court held that the dispute was properly referred and the awards were validity made. The High Court set aside the orders 755 of the trial court and remanded the case for decision after framing all the issues and giving the parties an opportunity to produce evidence. The High Court then granted a certificate of fitness or appeal to this Court under article 133(1)(c) of the Constitution. Held, that an order remanding a case without deciding any question relating to the rights of the parties is not a judgment, decree or final order within the meaning of article 133 of the Constitution. An order is final if it amounts to a final decision relating to the rights of the parties in dispute in the Civil proceeding. The power under section 109 of the Code of Civil Procedure having been expressly made subject to Ch. IV, Part V of the Constitution an appeal lay under that section to this Court only against judgments, decrees and final orders. V. M. Abdul Rahman and Others vs V. D. K. Cassim and Sons and Another (1933) L.R. 60 I.A. 76, referred to. As the orders passed by the High Court did not raise any question of great public or private importance and even the question of interpretation of Para. 3 of the first schedule of the Indian Arbitration Act was left open to be tried by the Civil Judge, no certificate of fitness to appeal to this Court could be granted under article 133 of the Constitution.

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Appeal No. 112 of 1957. Appeal by special leave from the judgment and decree dated January 28, 1954, of the Bombay High Court in First Appeal No. 69 of 1950. Purshottam Trikamdas and Naunit Lal for the appellants. C. K. Daphtary,Solicitor General of India, section N. Andley, J. B. Dadachanji and P. L. Vohra for respond ents Nos. I and 2. B R. L. Iyengar for respondents Nos. 6 to 9. 1961. February 21. The Judgment of the Court was delivered by SHAH, J. The genealogy which sets out the relationship between some of the principal parties in this litigation is as follows: Mallappa | | | | | Balappa Shivappa Basavanappa Chanamalappa | | Basalingappa | Rachappa | (Parvatewa Balappa deft. 9 | respdt. 12) | | | | | | | Shrishailappa Shivappa | (Plaintiff 1) (plaintiff 2) | | | | | | | | | malappa Chanabasappa Balappa Basavanappa Shrishailppa (deft. 5) (deft.6) (adopted by (deft. 7) (deft. 8) Chanamalappa Mallappa had four sons Balappa, Shivappa, Basavanappa and Chanamalappa. These four sons, formed a joint Hindu family. Chanamalappa separated himself from the joint family sometime in the year 1909 and his other three brothers continued to remain joint. Shivappa was the Manager of the joint family 898 after the death of Mallappa. Shivappa died in 1928. and Rachappa became the Manager of, the family. The joint family possessed lands in seventeen, villages and many houses in Khanapur. The family had also an extensive money lending business. One Bashettappa Neeli hereinafter referred to as Bashettappawas married to the sister of Rachappa. On July 29, 1929, Bashettappa executed a deed of simple mortgage in favour of Rachappa in respect of certain parcels of lands and houses belonging to him to secure repayment of Rs. 1,73,000/ , Rs. 76,700/ out of which were received in cash and the balance represented amounts which Rachappa agreed to pay to Bashettappa 's creditors. To one Gurappa, Bashettappa owed Rs. 8,000/ as an unsecured debt and Rachappa agreed to pay that debt. In Insolvency Application No. 22 of 1929 of the file of the First Class Subordinate Judge, Dharwar, Bashettappa was adjudicated an insolvent and receivers were appointed by the Insolvency Court to administer his estate. The receivers applied for a declaration that the mortgage deed, in favour of Rachappa was in fraud of creditors and was 'accordingly void. The Assistant Judge, Dharwar, in Appeal No. 25 of 1934 from the order of the Insolvency Court held that Rachappa was entitled out of the mortgage amount to recover Rs. 45,700/ as a secured debt and Rs. 31,000/ as unsecured debt. Gurappacreditor of Bashettappa in the meanwhile filed Suit No. 84 of 1932 against Rachappa and other members of his family in the court of the First Class Subordinate Judge, Dharwar, for a decree for Rs. 8,000/claiming that Rachappa had, acting on behalf of the joint family of which he was the manager, undertaken under the deed of mortgage to pay that amount and. that he Gurappa had accepted that undertaking. ; A decree exparte was passed in that suit against Rachappa on February 28,1933, and the claim against the other members of the family was either withdrawn ' or rejected. On July 23, 1939, the three branches of the joint family by mutual agreement severed the joint status and properties movables and immovables beloning to the family were divided. Pursuant to 899 this division, lands and houses which fell to the shares of the three branches were mutated in the Revenue and Municipal records in the names of the managers of the respective branches. Movables were also divided. The mortgage amount recoverable from Bashettappa and a claim against one Desai were ' it is the case of the plaintiff in the suit out of which this appeal Arises, kept joint. Gurappa after making certain infructuous attempts to execute the decree filed dharkhast No. 176 of 1940 to recover Rs. 11,061 6 9 and prayed for an order of attachment and sale of the rights of Rachappa under the mortgage bond dated July 29,1929. One Ganpatrao N. Madiman hereinafter referred to as Madiman offered the highest bid at the court auction and the mortgage bond was sold to him for Rs. 20,000/ An application filed by Rachppa for setting aside the sale pleading that the sale was vitiated by material irregularities and fraud in publishing and conducting the sale was rejected. The mortgage bond was delivered by the executing court to Madiman and orders were issued against Bashettappa and the receivers of his estate prohibiting them from making payments of the dues under the mortgage or any interest thereon, to any person or personal except the purchaser Madiman. In Miscellaneous Application No. 57 of 1944, Madiman applied, to the Insolvency Court to be recognised as an unsecured creditor for Rs. 31,000/., and the application was granted on the footing that the entire interest under the mortgage bond was purchased by him. Receivers appointed by the Insolvency Court thereafter put up for sale. the equity of redemption in the mortgaged properties and the same was purchased for Rs. 15,500/. by Madiman. The sale deed in this behalf was executed by the receivers in favour of Madiman on January 28, 1947. Madiman accordingly became the owner of the equity of redemption and claimed to be entitled to the entire mortgagee right as a purchaser of the right, title and interest of Rachappa. Basalingappa who was the natural brother of Rachappa and was adopted by his uncle Basavanappa died in 1946 leaving him surviving his widow 900 Parvatewa, and two sons Shrishailappa and Shivappa. The sons of Basalingappa who will hereinafter be referred to as the plaintiffs filed Suit No. 253 of 1947 for a decree for Rs. 1,23,400/ by enforcing the mortgage deed executed by Bashettappa claiming that Madiman had at the court auction acquired in the mortgagee right only the right, title and interest of Rachappa which was a third and the plaintiffs and defendants 5 to 8 sons of Shivappa continued to remain owners of the remaining two third share. The plaintiffs prayed for a decree that the amount due under the mortgage be awarded to them and in default of payment the amount be realised by sale of the mortgaged property. To this suit were impleaded Bashettappa as defendant No. 1, receivers of his estate as defendants Nos. 2 and 3,Madiman as defendant No. 4, sons of Shivappa as defendants Nos. 5 to 8 and Rachappa and his son as defendants Nos. 9 and 10. Madiman died after the institution of this suit and his sons were impleaded as defendants Nos. 4A to 4C and his widow as defendant 4D. Madiman 's sons were the principal contesting defendants and the main contentions raised by them were: (1) that the mortgagee right was the separate property of Rachappa and it did not belong at any time to the joint family, of Rachappa defendants 5 to 8 and the plaintiffs, (2) that in any event, at the partition between the three branches the mortgagee right had failed to the share of Rachappa and that it was not kept undivided as alleged by the plaintiffs, and (3) that in Execution Petition No. 176 of 1940, the entire interest of the joint family was sold and it was purchased by Madiman and consequently, the plaintiffs could not enforce the mortgage. The trial court negatived the contentions raised by the sons of Madiman and held that only a third share in the mortgagee right was purchased at the court auction by Madiman. The court accordingly passed a decree against defendants Nos., 4A to 4D for payment of Rs. 60,933 5 4 and proportionate costs ',with future interest at 6% per annum 'on Rs. 30,466,10 8 901 from the date of the suit to the plaintiffs and defendants 5 to 8 within six months and in default of payment for sale of the mortgaged property. Against that decree, defendants 4A to 4C hereinafter referred to as the appellants appealed to the High Court at Bombay. The High Court held that the mortgagee right belonged to the joint family, that the agreement to pay Rs. 8,000/ to Gurappa was not binding upon that family and therefore in execution of the decree passed in favour of Gurappa only the right, title and interest of Rachappa was purchased by Madiman. The High Court further held that there was in 1939 severance of joint family status between the members of the family of Rachappa, plaintiffs and others, but as in the state of the record in the view of the court a finding on the question whether the mortgage debt was kept undivided could not be recorded, they remanded the case for recording a finding on the following issue: " Whether it is proved that the mortgage debt of 29th July, 1929, fell to the share of defendant No. 9 at the family partition of July, 1939, " and directed the trial court to allow both the parties to lead evidence upon this issue and to certify its findings thereon. The trial court recorded a negative finding on that issue. It held that the mortgage claim was kept undivided at the partition. The High Court confirmed this finding and dismissed the appeal filed by the appellants, subject to a slight modification as to the rate of interest awarded by the trial court. With special leave under article 136 of the Constitution, this appeal is preferred. No serious argument was advanced before us on the plea that the amount due under the mortgage from Bashettappa was not the property of the joint family. At the material time when the mortgage deed was executed by Bashettappa, Rachappa was the manager of the joint family. In Suit No. 84 of 1932 filed by Gurappa it was alleged that Rachappa was the manager of the joint family consisting of himself and the branches of Shivappa and Basavanappa and that the mortgage transaction was for the benefit of the joint family and that Raohappa had entered into that 902 transaction for and on behalf of the joint family and in that suit Rachappa alone was declared liable to pay Rs. 8,000/ . Partition of the year 1930 is supported by evidence which has remained unchallenged. Intimation was given to the village and Municipal authorities pursuant to the partition for mutating the names of the different branches to whom the shares were allotted. The evidence of Rachappa and Mallappa that the partition took place also has remained uncontradicted. The question which calls for consideration is whether at the partition, the mortgagee right under the deed executed by Bashettappa was kept undivided. Mallappa defendant No. 5 in his evidence when he was examined after remand stated that " an equal division was made of the lands according to the income and that Rachappa was not given a smaller share in the lands. " He also stated that the houses were divided in equal shares and the outstandings in the money lending business except two bonds the mortgage bond executed by Bashettappa and one Desai were kept undivided. He denied the suggestion that the mortgage debt due from Bashettappa was allotted exclusively to Rachappa. Rachappa in his evidence also stated that the mortgage bond was kept undivided between the three branches and that it was not true that it was allotted to his shares at the partition. Devidas defendant No. 4 A had evidently no personal knowledge about this partition or the terms thereof His statement that Rachappa had told him at the time when Madiman offered his bid at the court auction that the mortgage bond was allotted exclusively to Rachappa 's share could not in the circumstances of the case be true and was rightly "believed by the trial court and the High Court.

The manager of an undivided Hindu family consisting of himself, his brother and their step mother, instituted a suit for recovery of the amount due under a mortgage belonging to the family. The step mother who was interested in the mortgagee right was not made a party to the suit. Though the manager (the first plaintiff) did not describe himself as the manager in the plaint, the allegations in the plaint showed that the suit was filed on behalf of the joint family. No objection as to non joinder was raised in the trial court, but when the appeal was pending in the High Court the step mother was added as a party on her applica tion. The contesting defendants pleaded that as all persons having an interest in the mortgage security were not joined as parties within the period of limitation prescribed for a suit to enforce the mortgage, and the first plaintiff did not, in any case, purport to institute the suit in his capacity as the manager, the suit must fail. Held: (1) that the failure to join a person who is a proper but not a necessary party does not affect the maintainability of the suit nor does it invite the application of section 22 Of the Indian Limitation Act, 1908 ; (2) that the question whether a suit as instituted by the manager of an undivided Hindu family in his personal capacity or as representing the family depends upon the circumstances of each case and that the failure of the plaintiff to describe himself as the manager in the plaint is not decisive of the question. (1) (2) 897 In the resent case, the step mother was not a necessary party, and the facts showed that the suit was instituted by the first plaintiff in his capacity as manager. Accordingly, the suit was maintainable. Guruvayya Gowda and Others vs Dattatraya Anant and Others Bom. 11, referred to.

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Appeal No. 90 of 1956. Appeal by special leave from the judgment and decree dated August 5, 1953, of the Bombay High Court in Appeal from the Appellate Decree No. 915 of 1951. M. section K. Sastri, for the appellant. A. G. Ratnaparkhi, for respondent No. 1. 1961. April 12. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. This appeal, by special leave, is against the judgment and decree of the High Court of Bombay, dismissing the suit of the plaintiff appellant. The plaintiff sued for a declaration that the property in suit which is situate at Mouje Digvale, a village held by khots in the district of Ratnagiri, was owned by him, was under his management and that the defendants had no right or interest therein. He claimed title to the property on the basis of the sale of occupancy rights under the sale deed executed in his favour by Sitabai on February 10, 1945. Sitabai was the widow of Vishram Anna Shirsat, who succeeded Ram Raghu Shirsat, the occupancy tenant of the land in suit. Ram Raghu Shirsat sold the occupancy rights in the land in suit to Laxman Chandba Raut by a deed dated March 8, 1892. By a compromise in a civil suit between the heirs of Laxman Chandba Raut and Tanu Daulat Gavade Sakaram, the heir of Laxman Raut got 3/5ths share and Tanu Daulat got 2/5ths share in these occupancy rights. Dattatraya Bhikaji Khot Kulkarni, a paternal uncle of respondent No. 1, purchased. the shares of these persons by 907 the sale deeds dated December 14,1903, and February 13, 1904. On Kulkarni 's death, respondent No. 1 became the owner of the property. Respondents nos. 2 to 4 are the tenants of respondent No. 1. The land in suit is khoti land as defined in el. (10) of section 3 of the Khoti Settlement Act, 1880 (Bom. Act 1 of 1880), hereinafter called the Act. It is not disputed that Ram Raghu Shirsat was the occupancy tenant of the land in suit and that he could not transfer his tenancy right without the consent of the khot, which, according to cl. (2) of section 3, includes a mortgagee lawfully in possession of khotki and all co sharers in a khotki. It is also admitted that the transferors of the afore mentioned sale deeds of 1892 in favour of the predecesror in interest of respondent No. 1, or of the sale deed of 1945 in favour of the appellant, did not obtain the consent of the khot before executing the deed of transfer. The plaintiff alleged that the sale deed in favour of respondent No. 1 was void and that therefore he had title to the suit land on the basis of the sale deed in his favour. Respondent No. 1 contended that Ram Raghu Shirsat lost his rights in the property in suit after he had executed the sale deed on March 8, 1892, and that, therefore the plaintiff obtained no title on the basis of the sale deed in his favour. The trial Court held the sale deed of 1892 to be good sale deed and binding on the plaintiff and dismissed the suit. On appeal, the Assistant Judge reversed the decree and decreed the suit holding that a transfer of the occupancy rights in the suit lands by Ram Raghu Sirsat in favour of Laxman Raut was void and that the plaintiff obtained good title under the sale deed in his favour in view of the amendment of section 9 of the Act by section 31 of the Bombay Tenancy Act, 1939 (Act XXIX of 1939), by which no consent of the khot was ,necessary for executing the sale deed in 1945. Respondent No. 1 preferred a second appeal to the High Court which set aside the decree of the Assistant Judge and restoring the decree of the trial Court, dismissed the suit. It held that the sale deed in favour 908 of the plaintiff too would be hit by the provisions of s.9 of the Act. It further held that the provisions of s.9 indicate that there was no absolute prohibition against a transfer of the occupancy right. A transfer by an occupancy tenant without the consent of the khot cannot be held to be void for all purposes and it would be invalid only in so far as it would be contrary to the right of the khot and not otherwise. It therefore held the transfer in favour of the respondent No. 1 's predecessor in interest in 1892 not to be void. It is the correctness of this order that is challenged in this appeal. This appeal has no force. Section 31 of the Bombay Tenancy Act, 1939, made amendments to section 9 of ado. the Act and the section after amendment reads: "The rights of khots and privileged occupants shall be heritable and transferable". 'Privileged occupant ' included a permanent tenant under cl. (5) of section 3 of the Act. The Bombay Tenancy Act received assent of the Governor of Bombay on April 2, 1940, but it came into force in April 1946 when the Government issued the necessary notification in exercise of the powers conferred under subs. (3) of section 1 of that Act. It is clear therefore that section 9, as it stood on February 10, 1945, when Sitabai executed the sale deed in favour of the appellant, made the rights of permanent tenants nontransferable without the consent of the khot, and that therefore the sale in favour of the appellant was as much hit adversely by the provisions of section 9 of the Act as the sale of the land in suit in favour of the predecessor in interest of respondent No. 1. It is therefore not necessary to determine the question whether the sale was absolutely void or voidable as held by the Court below, as neither of the two sales has been challenged by the khot whose consent for the transfer was necessary. The plaintiff has no title whether a transfer by a permanent tenant without the consent of the khot be void or voidable. If such a transfer is void, the sale in favour of the appellant did not convey any title to him. If such a sale was merely voidable at the instance of the khot, the first sale in favour of the 909 respondent No. 1 's predecessor in interest was not avoided by the khot, and therefore validly conveyed title to him. Consequently no title passed to the plaintiff under the sale deed in his favour as his transferor had no title. In either case the plaintiff fails to prove his title to the land in suit. The dismissal of his suit is therefore correct. We accordingly dismiss this appeal with costs. Appeal dismissed.

The land in suit was Khoti land land section 9 of the Khoti Settlement Act, 1880, prior to its amendment prohibited the. transfer of the occupancy right without the consent of the Khot. Section 31 of the Bombay Tenancy Act, 1939, which came into force from April 1946, amended section 9 of the Khoti Settlement Act by which no consent of the Khot was necessary for transferring the occupancy rights in the land. In 1892, R sold his occupancy right without the consent of tile Khot to L, the predecessor in interest of respondent No. 1. In 1945, R 's successor again sold the same occupancy right to the appellant also without the consent of the Khot. The appellant 's case was that the sale deed in 1892 in favour of the predecessor in interest of respondent No. 1 was void as the transfer of the occupancy right was made without consent of the Khot; whereas respondent No. 1 contended that R by the sale deed in 1892 had already lost his right to the property in suit and therefore R 's successors had no title to pass in 1945 in favour of the appellant. Held, that the occupancy right in a Khoti land could not be transferred without consent of the Khot prior to April 1946, when the Bombay Tenancy Act, 1939, came into force 114 906 Held, further, that in the present case as both the sales of 1892 and 1945 were without the consent of the Khot, it was not necessary to determine whether such a transfer was void or voidable, If void, the plaintiff had no title. If voidable, the first sale in 1892, validly conveyed title to respondent No 1 's predecessor in interest, and consequently no title passed to the plaintiff under the sale deed in 1945, as the transferor had no title.

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