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15 of 1959, 14 of 1960 and 21 of 1959. Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights. Frank Anthony and J. B. Dadachanji, for the petitioners (In Petns. Nos. 15 and 21 of 1959). 612 H. J. Umrigar, O. P. Rana and A. G. Ratnaparkhi, for the petitioners (In Petn. No. 14 of 1960). L. K. Jha and section P. Varma, for the respondent (In Petn. No. 15 of 1959). C. K. Daphtary, Solicitor General of India, M. Adhikari, Advocate General for the State of Madhya Pradesh and I. N. Shroff, for the respondent (In Petn. No. 14 of 1960). H. N. Sanyal, Additional Solicitor General of India and C. P. Lal, for the respondent (In Petn. No. 21 of 1959). November 23. The Judgment of the Court was delivered by section K. DAS, J. These three writ petitions have been heard together, as they raise common questions of law and fact. They relate, however, to three different enactments made by the Legislatures of three different States Bihar in writ petition No. 15, Uttar Pradesh in writ petition No. 21, and Madhya Pradesh in writ petition No. 14. The petitioners in the several petitions have challenged the 'validity of a number of provisions of the enactments in question and, in some cases, also of the rules made thereunder. The impugned provisions are similar in nature, but are not exactly the same. Therefore, we shall first state in general terms the case of the petitioners and then consider in detail and separately the impugned provisions in each case. But before we do so, it is necessary to refer to some background history of the legislation under consideration in these cases. In the year 1958 this Court had to consider the validity of certain provisions of three Acts: (1) The Bihar Preservation and Improvement of Animals Act, (Bihar Act II of 1956); (2) the Uttar Pradesh Prevention of Cow Slaughter Act, 1955 (U. P. Act 1 of 1956); and (3) the Central Provinces and Berar Animal Preservation Act, 1949 (C. P. and Berar Act LII of 1949). The Bihar Act put a total ban on the slaughter of all 613 categories of animals of the species of bovine cattle. The U. P. Act put a total ban on the slaughter of cows and her progeny which included bulls, bullocks, heifers and calves. The C. P. and Berar Act placed a total ban on the slaughter of cows, male or female calves of cows, bulls, bullocks, and heifers, and the slaughter of buffaloes (male or female, adults or calves) was permitted only under a certificate granted by the proper authorities. These three Acts were enacted in pursuance of the directive principle of State policy contained in article 48 of the Constitution. The petitioners who challenged the various provisions of the aforesaid Acts in 1958 were engaged in the butcher 's trade and its subsidiary undertakings; they challenged the constitutional validity of the Acts on the ground that they infringed their fundamental rights under articles 14, 19(1)(f) and (g) of the Constitution. In the decision which this Court gave in Mohd. Hanif Quareshi vs The State, of Bihar (1), it held (i) that a total ban on the slaughter of cows of all ages and calves of cows and of she buffaloes, male or female, was quite reasonable and valid; (ii) that a total ban on the slaughter of she buffaloes or breeding bulls, or working bullocks (cattle as well as buffaloes) so long as they were capable of being used as milch or draught cattle was also reasonable and valid; and (iii) that a total ban on slaughter of she buffaloes, bulls and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals was not in the interests of the general public and was invalid. In the result this Court directed the respondent States not to enforce their respective Acts in so far as they were declared void by it. This led to some amending or new legislation, and we are concerned in these three cases with the provisions of these amending or new Acts and the rules made thereunder. In Bihar (Writ Petition No. 15 of 1959) the impugned Act is called the Bihar Preservation and Improvement of Animals (1) ; 78 614 (Amendment) Act, 1959 which received the assent of the Governor on January 13, 1959. in Uttar Pradesh (Writ Petition No. 21 of 1959) the impugned Act is called the Uttar Pradesh Prevention of Cow Slaughter (Amendment) Act, 1958 and in Madhya Pradesh (Writ Petition No ' 14 of 1960) a new Act was passed called the Madhya Pradesh Agricultural Cattle Preservation Act, 1959 (Act 18 of 1959) which received the assent of the President on July 24, 1959 and came into force on January 15, 1960. The rules made there under are called the Madhya Pradesh Agricultural Cattle Preservation Rules, 1959. The general case of the petitioners, who are several in number in each of the three cases, is that they are citizens of India and carry on their profession and trade of butchers; they allege that the various provisions of the impugned legislation infringe their fundamental rights in that they, for all practical purposes, have put a total ban on the slaughter of she buffaloes, bulls or bullocks, even after such animals have ceased to be useful, and have virtually put an end to their profession and trade. It is pointed out that the age up to which the animals referred to above cannot be slaughtered (20 or 25 years) has been put so high that the practical effect is that no animals can be slaughtered, and the amending or new legislation has put in other restrictions so arbitrary and unreasonable in nature that in effect they amount to a prohibition or destruction of the petitioner 's right to carry on their trade and profession. The following allegations quoted from one of the petitions (Writ Petition No. 15 of 1959) give a general idea of the nature of the case which the petitioners have put forward: "That there is good professional authority for the view that even in countries where animal husbandry is organised on a highly progressive and scientific basis, cattle seldom live beyond 15 or 16 years. That there is also good authority to the effect that even pedigree breeding bulls are usually discarded at the age of 12 or 14 years. , That in India bulls and bullocks and she buffaloes rarely live even up to the age of 15 years; draught bullocks begin to age after eight years, 615 That the raising of the age limit from 15 to 20 years is arbitrary, unreasonable and against the general public interests and is repugnant to and infringes the, fundamental rights of the, petitioners under Article 19 (1)(f) and (g) of the Constitution. That section 3 of the amending Act is a mala fide, colourable exercise of power, repugnant to the fundamental rights of the petitioners under Article 19 (1)(f) and (g). That this arbitrary raising of the age limit will be against the public interests For the following among ' other reasons: (i) That there will, in fact, be no bulls or bullocks or she buffaloes available for slaughter as few, if any, of such animals survive in India up to the age of 15 years; (ii) that the profession, trade and occupation of millions of Muslims will be permanently and irreparably injured; (iii) that millions of members of the minority communities such as Christians, Scheduled Castes, Scheduled Tribes and Muslims, for whom cattle beef is a staple item of their diet, will be deprived of this diet; (iv) that the menace of the rapidly increasing uneconomic cattle population in such matters as the destruction of crops, being a public nuisance, will be accentuated by this arbitrary age limit, and in effect will ensure that bulls and bullocks cannot be slaughtered; (v) that the menace of the rapidly increasing population of uneconomic cattle to the fodder and other animal food resources of the country will be accentuated. (vi) that the competition between the rapidly increasing cattle population, a large percentage I of which is uneconomic and useless, add the human population for available land will be accentuated; (vii) that this piece of legislation will ensure the steady increase of useless bulls and bullocks and must react disastrously against any attempt to improve milk production, bullock power or animal husbandry generally." 616 Similar allegations have been made in the other two petitions also. The correctness of these allegations has been con. tested on behalf of the respondent States, which through some of their officers have filed affidavits in reply. We shall presently examine at greater length the averments made in these affidavits, but we may indicate here in broad outline what their general effect is. In Bihar the age below which the slaughter of she buffaloes, bulls and bullocks is prohibited is 25 years. The respondent State has taken the plea that the usefulness or longevity of live stock for breeding and other purposes depends to a very great extent on (a) better animal husbandry facilities like feeding and management and (b) control of animal diseases, and as these facilities are now available in a greater measure, the legislature came to the conclusion that a bull or bullock or a she buffalo below 25 years of age continues to remain useful; if a bull, bullock or shebuffalo is permanently incapacitated below that age the impugned provision permits its slaughter and therefore the legislation which is challenged conforms to the decision of this Court and does not violate any fundamental right. In Uttar Pradesh the age is 20 years as respects bulls or bullocks, with a further restriction to be referred to later. The reply of the res pondent State is that bulls or bullocks do not become unfit at the age of 12 or 14 years as alleged by the petitioners; on the contrary, they continue to be useful and at no time they become entirely useless. It is then stated in the affidavit: "As a matter of fact, the age up to which the animals can live and are serviceable depends upon the care and attention they receive and the quality of the grass on which they are grazed. . . . . .According to a high authority the average age of an ox under favourable conditions would be between 15 to 20 years. Even under conditions prevailing in Uttar Pradesh, bulls can live upto 20 years or more as would appear from an analysis of a survey report of the animal husbandry department. " 617 On these averments the respondent State contends that the legislation is valid. In Madhya Pradesh also the age is 20 years. The Under Secretary to the( State Government in the Agricultural Department ' has made the reply affidavit in which it has been stated inter alia that conditions in Madhya Pradesh are different from conditions in other States. The affidavit then states: "The State of Madhya Pradesh has a total area of 107,589,000 acres, out of which total cropped area is 43,572,000 acres. Forest area is 33,443,000 acres, area not available for cultivation is 11,555,000 acres, uncultivated land is 18,405,000 acres and fallow land is 5,834,000 acres. It will thus be seen that this State has a large forest area and plenty of grass land for pasturage. As the forests supply the greater part of the fuel needs of the human population, the dung of animals is largely available as manure. The legislature considered that bulls, bullocks and buffaloes are useful in this State till they are well past twenty years of age and that they should not be slaughtered till they are past that age and are also unfit for work or breeding. The problem of animals dying of slow starvation or of worthless animals depriving useful animals of fodder needs no consideration in this State. The agricultural community in the State benefits by the existence of animals as long as they are useful. " There are also further averments as to the shortage of breeding bulls, working bullocks and she buffaloes in Madhya Pradesh. On these averments the contention of the respondent State is that the cattle in that State are useful up to the age of 20 years. We have indicated above in general terms the case of the petitioners and the reply which the respondent States have given. We proceed now to a detailed consideration of the impugned legislation in each case. (1) We take up first the Bihar Preservation and Improvement of Animals (Amendment) Act, 1959 and the rules made under the main Act of 1955. Section 3 of the Act as amended reads: "section 3.

In Mohd. Hanif Quareshi vs The State of Bihar the Supreme Court held that a total ban on the slaughter of bulls, bullocks and she buffaloes after they had ceased to be useful was not in the interests of the general public and was invalid. Thereafter, the Bihar Legislature passed the Bihar Preservation and Improvement of Animals (Amendment) Act, 1958, the Uttar Pradesh Legislature passed the U. P. Prevention of Cow Slaughter (Amendment) Act, 1958 and the Madhya Pradesh Legislature passed a new Act, the M. P. Agricultural Cattle Preservation Act, 1959. Section 3 of the Bihar Act prohibited the slaughter of a bull, bullock or she buffalo except when it was over 25 years of age and had become useless. Rule 3 of the Bihar Preservation and Improvement of Animals Rules, 1960 prescribed that the certificate for slaughtering an animal could be granted only with the concurrence of the Veterinary Officer and the Chairman or Chief Officer of a District Board, Municipality etc., and if the two differed, then according to the decision of the Sub Divisional Animal Husbandary Officer. Section 3 of the U. P. Act permitted the slaughter of a bull or bullock only if it was over 20 years of age and was permanently unfit. It further provided that the animal could not be slaughtered within 20 days of the grant of 'a certificate that it was fit to be slaughtered and gave a right of appeal to any person aggrieved by the order granting the certificate. Section 4(1)(b) of the Madhya Pradesh Act provided that no bull, bullock or buffallo could be slaughtered except upon a certificate issued by the competent authority and section 4(2)(a) provided that no certificate could be issued unless the animal was over 20 years of age and was unfit for work or breeding. Section 4(3) gave a right of appeal to any person aggrieved by the order of the competent authority. Section 5 provided that no animal 611 shall be slaughtered within 10 days of the date of the issue of the certificate and where an appeal was preferred against the grant of the certificate, till the time such appeal was disposed of. The petitioners, who carried on the profession and trade of butchers, contended that the various provisions of the three Acts set out above infringed their fundamental rights by practically putting a total ban on the slaughter of bulls, bullocks and she buffaloes even after the animal had ceased to be useful and thus virtually put an end to their profession and trade. Held, (i) that the ban on the slaughter of bulls, bullocks and she buffaloes below the age of 20 or 25 years was not a reasonable restriction in the interests of the general public and was void. A bull, bullock or buffalo did not remain useful after 15 years, and whatever little use it may have then was greatly offset by the economic disadvantages of feeding and maintaining unserviceable cattle. The additional condition that the animal must, apart from being above 20 or 25 years of age, also be unfit was a further unreasonable restriction. Section 3 of the Bihar Act, section 3 of the U. P. Act and section 4(2)(a) of the M. P. Act were invalid. (ii) Rule 3 of the Bihar Rules was bad as it imposed dis proportionate restrictions on the rights of the petitioners. The procedure involved such expenditure of money and time as made the obtaining of the certificate not worthwhile. (iii) The provisions in the Uttar Pradesh and Madhya Pradesh Acts providing that the animal shall not be slaughtered within 20 and10 days respectively of the issue of the certificate and that any person aggrieved by the order of the competent authority, may appeal against it, were likely to hold up the slaughter of the animal for a long time and practically put a total ban on slaughter of bulls, bullocks and buffaloes even after they had ceased to be useful. These provisions imposed unreasonable restrictions on the fundamental rights of the petitioners and were void. Mohd. Hanif Quareshi vs The State of Bihar, [1959] S.C.R. 629, State of Madras vs V. G. Row, ; and The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga, , referred to.

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Appeal No. 285 of 1959. Appeal by Special Leave from the Judgment and Decree dated the 13th July, 1956, of the Patna High Court in M. J. C. No. 404 of 1954. M. C. Setalvad, Attorney General for India and section P. Varma, for the Appellants. A. V. Viswanatha Sastri, Suresh Aggarwala and D. P. Singh, for the Respondent. 1960. November 21. The Judgment of the Court was delivered by 524 SINHA, C.J. This appeal, by special leave, is directed against the judgment and order of the High Court of Patna dated July 13, 1956 disposing of a reference under section 25(1) of the Bihar Sales Tax Act, 1947, which hereinafter will be referred to as the Act, made by the Board of Revenue, Bihar. The facts of this case have never been in dispute and may shortly be stated as follows. The appellant is a Corporation incorporated under the Damodar Valley Corporation Act (XIV of 1948) and will hereinafter be referred to as the Corporation. It is a multipurpose Corporation, one of its objects being the construction of a number of dams in Bihar and Bengal with a view to controlling floods and utilising the stored water for purposes of generation of electricity. One of such dams is the Konar Dam in the district of Hazaribagh in Bihar. For the construction of the aforesaid Dam the Corporation entered into an agreement with Messrs Hind Construction Ltd. and Messrs Patel Engineering Co. Ltd. on May 24, 1950, and appointed them contractors for the aforesaid purpose. They will hereinafter be referred to as the Contractors. As a result of a change in the design of the Dam, it became necessary to enter into a supplementary agreement and on March 10, 1951, cl. 8 of Part II of the original agreement was amended and a fresh cl. 8 was substituted. Under the new cl. 8 of the agreement, as amended, the Corporation agreed to make available to the contractors such equipment as was necessary and suitable for the construction aforesaid. The Contractors are charged the actual price paid by the Corporation for the equipment and machinery thus made available, inclusive of freight and customs duty, if any, as also the cost of transport, but excluding sales tax. The equipment thus supplied by the Corporation to the Contractors was classified into two groups, Group A and Group B, as detailed in Schedule No. 2. The machinery in Group A was to be taken over from the Contractors by the Corporation, after the completion of the work at their "residual value" which was to be calculated in the manner set out in the agreement. The machinery in Group B was to become the 525 property of the Contractors after its full price had been paid by them. No more need be said about the machinery in Group B, because there is no dispute about that group, the Contractors having accepted the position that Group B machinery had been sold to them. The controversy now remaining between the parties relates to the machinery in Group A. On August 12, 1952, the Superintendent of Sales Tax, Hazaribagh, assessed the Corporation under section 13(5) of the Act for the period April, 1950 to March, 1952. It is not necessary to set out the details of the tax demand, because the amount is not in controversy. What was contended before the authorities below and in this Court was that the transaction in question did not amount to a "sale" within the meaning of the Act. The Superintendent rejected the contention raised on behalf of the Corporation that it was not liable to pay the tax in respect of the machinery sup plied to the Contractors. The Corporation went up in appeal to the Deputy Commissioner of Sales Tax against the said order of assessment. By his order dated May 5, 1953, the Deputy Commissioner rejected the contention of the appellant as to its liability under the Act, but made certain amendments in the assessment which are not material to the points in controversy before us. The Deputy Commissioner repelling the Corporation 's contentions based on the Act, held inter alia that the supply of equipment in Group A of the agreement aforesaid amounted to a sale and was not a hire ; that the condition in the agreement for the "taking over" of the equipment on conditions laid down in the agreement was in its essence a condition of repurchase and that the Corporation was a "dealer" within the meaning of the Act. The Corporation moved the Board of Revenue, Bihar, in its revisional jurisdiction under section 24 of the Act. The Board of Revenue by its resolution dated October 1, 1953, rejected the revisional application and upheld the order of the authorities below. Thereafter, the Corporation made an application to the Board of Revenue under section 25 of the Act for a reference to refer the following 67 526 questions to the High Court at Patna, namely, (a) whether the assessment under section 13(5) of the Act is maintainable, (b) whether, in the facts and circumstances of the case, it can be held that the property in the goods included in Schedule A did pass to the Contractors and the transaction amounted to a sale, and (c) whether the terms of the agreement amount to sale transactions with the Contractors and taking over by the Corporation amounts to repurchase. This application was made on December 22, 1953, but when the application for making a reference to the High Court came up for hearing before the Board of Revenue on May 20, 1954, and after the parties had been heard, counsel for the Corporation sought leave of the Board to withdraw questions (a) and (c) from the proposed reference and the Board passed the following order: "Leave is sought by the learned advocate for the petitioner to drop questions (a) and (c) from the reference. The leave is granted. There remains only question (b) for reference to the High Court. . " Thus only question (b) set out above was referred to the High Court for its decision. After hearing the parties, a Division Bench of the High Court, Ramaswami, C. J. and Raj Kishore Prasad, J., heard the reference and come to the conclusion by its judgment dated July 13, 1956, that the reference should be answered in the affirmative, namely, that the transaction in question amounted to a sale within the meaning of section 2(g) of the Act. Thereupon the Corporation made an application headed as under article 132(1) of the Constitution and prayed that the High Court "be pleased to grant leave to appeal to the Supreme Court of India and grant the necessary certificate that this case is otherwise a fit case for appeal to the Supreme Court. . " Apart from raising the ground of attack dealt with by the High Court on the reference as aforesaid, the Corporation at the time of the hearing of the applica tion appears to have raised other questions as would appear from the following extract from the judgment and order of the High Court dated January 31, 1957 : 527 "It was conceded by learned counsel for the petitioner that the case does not fulfill the requirements of Article 133(1) of the Constitution; but the argument is that leave may be granted under Article 132 of the Constitution as there is a substantial question of law with regard to the interpretation of the Constitution involved in this case. We are unable to accept this argument as correct. It is not possible for us to hold that there is any substantial question of law as to the interpretation of the Constitution involved in this case. The question at issue was purely a matter of construction of section 2(g) of the Bihar Sales Tax Act and that question was decided by this Court in favour of the State of Bihar and against the petitioner. It is argued now on behalf of the petitioner that the provisions of section 2(g) of the Bihar Sales Tax Act are ultra vires of the Constitution, but no such question was dealt with or decided by the High Court in the reference. We do not, therefore, consider that this case satisfies the requirements of article 132(1) of the Constitution and the petitioner is not entitled to grant of a certificate for leave to appeal to the Supreme Court under this Article. The application is accordingly dismissed. " Having failed to obtain the necessary certificate from the High Court, the Corporation moved this Court and obtained special leave to appeal under article 136 of the Constitution. The leave was granted on March 31, 1958. Though the scope of the decision of the High Court under section 25 of the Act on a reference made to it is limited, the Corporation has raised certain additional points of controversy, which did not form part of the decision of the High Court. Apart from the question whether the transaction in question amounted to a sale within the meaning of the Act, the statement of the case on behalf of the appellant raises the following additional grounds of attack, namely, (1) that the Corporation is not a dealer within the meaning of the Act, (2) that the proviso to section 2(g) of the Act is ultra vires the Bihar Legislature and (3) that the Act itself is ultra vires the Bihar Legislature by reason of the 528 legislation being beyond the scope of entry 48 in List II of Schedule 7 of the Government of India Act, 1935. Hence, a preliminary objection was raised on behalf of the respondent that the additional grounds of attack were not open to the Corporation in this Court. It is, therefore, necessary first to determine whether the additional grounds of attack set out above are open to the Corporation. In our opinion, those additional grounds are not open. They were never raised at any stage of the proceedings before the authorities below, or in the High Court. This Court is sitting in appeal over the decision of the High Court under section 25 of the Act. The High Court in coming to its conclusion was acting only in an advisory capacity. It is well settled that the High Court acting in its advisory capacity under the taxing statute cannot go beyond the questions referred to it, or on a reference called by it. The scope of the appeal to this Court, even by special leave, cannot be extended beyond the scope of the controversy that could have been legally raised before the High Court. It is manifest that the High Court could not have expressed its opinion on any matter other than the question actually before it as a result of the reference made by the Board of Revenue. The preliminary objection must, therefore, be allowed and the appeal limited to the question whether the transaction in question in this case amounted to a sale within the meaning of the Act. It is manifest that this controversy between the parties has to be resolved with reference to the terms of the contract itself. Clause 8 of the agreement as amended is a very complex one as will presently appear from the following extracts, being the relevant portions of that clause : "The Corporation may hire or make available such of its equipment as is suitable for construction for the use of the Contractor. The actual prices paid by the Corporation for the equipment thus made available, inclusive of freight, insurance and custom duties, if any, and the cost of its transport to site but excluding such tax as sales tax whether local, municipal, State or Central, shall be charged to the 529 Contractor and the equipment shall remain the property of the Corporation until the full prices thereof have been realised from the Contractor. Equipment lent for the Contractor 's use, if any, shall be charged to him on terms of hiring to be mutually agreed upon; such terms will cover interest on capital cost and the depreciation of the equipment. The Corporation will supply to the Contractor the machinery mentioned in Schedule No. 2, Group A and Group B below." Then follows a description seriatim of the many items of machinery in Group A with the number of such machinery and the approximate cost thereof. In this Group A, there are fourteen items of which it is only necessary to mention the first one, that is to say, four excavators with accessories approximately valued at Rs. 12,46,390; and No. 14, two excavators of another model, approximately costing Rs. 3,35,000. The total approximate cost of the machinery in Group A is estimated to be Rs. 42,63,305. Then follow the descriptions of machinery in Group B, the approximate cost of which is Rs. 21,84,148. Then follow certain conditions in respect of equipments included in Group A, in these words: "The Corporation will take over from the Contractor item 1 and 14 on the completion of the work at a residual value calculated on the basis of the actual number of hours worked assuming the total life to be 30,000 hours and assuming that the machinery will be properly looked after during the period of its operation. The remaining items of this group will be taken over by the Corporation at their residual value taking into account the actual number of hours worked and the standard life of such machinery for which Schedule F. as last relished, ? of the U. section Bureau of Industrial Revenue, on the probable useful life and depreciation rates allowable for Income Tax purpose (vide Engineering News Record dated March 17, 1949) will serve as a basis, provided that the machinery shall be properly looked after by the Contractor during the period of its operation. Provided further that such residual value of the machinery shall be assessed 530 jointly by representatives of the Corporation and of the Contractor and that in case of difference of opinion between the two parties the matter shall be settled through arbitration by a third party to be agreed to both by the Corporation and the Contractor. The items included in this group will be taken over by the Corporation from the Contractor either on the completion of the work or at an earlier date if the Contractor so wishes, provided that in the latter case the equipments will be taken over by the Corporation only when they are declared surplus at Konar and such declaration is duly certified by the Consulting Engineer, within a period of 15 days of such declaration being received by the Corporation. In respect of the machinery which shall have been delivered to the Contractor on or before the 31st of December 1950, their cost shall be recovered from the Contractor in eighteen equal instalments beginning with January 1951 and in respect of the remaining items included in this group of machinery, their cost will be recovered from the Contractor in eighteen equal instalments beginning with July 1951, provided that these remaining items shall have been delivered to the Contractor prior to the last specified date. Provided (a) that the total actual price for these equipments which has been provisionally estimated at Rs. 42,63,305 will be chargeable to the Contractor as per first para of clause 1 above. (b) that after approximately two thirds of total cost or an amount of Rs. 28,43,000 (Rupees twenty eight lakhs forty three thousand) approximately has been recovered from the Contractor on account of these equipments the Corporation will consider the date or dates when it could take over the equipments still under use by the Contractor, assess the, extent to which they have already been depreciated and thereby arrive at, their residual value; and (c) that the recovery or refund of the amount payable by or to the Contractor on account of these equipments will be decided only if the Corporation is fully satisfied that their residual life at the time of 531 their being finally handed over to the Corporation shall under no circumstances fall below one third of their respective standard life as agreed upon by the Corporation and the Contractor." Then follow terms and conditions in respect of Group 'B ' which are not relevant to our purpose. Thereafter, the following conditions appear: "In respect of equipments whether in Group A or B made available by the Corporation to the Contractor. The following conditions shall apply to all equipments, i.e., those included in Group A and B above and others, if any (a) The Contractor shall continuously maintain proper machine cards separately in respect of each item of equipment, clearly showing therein, day by day, the number of actual hours the machine has worked together with the dates and other relevant particulars. (b) The Contractor shall maintain all such equipments in good running condition and shall regularly and efficiently give service to all plant and machinery, as may be required by the Corporation 's Chief Engineer who shall have the right to inspect, either personally or through his authorised representatives all such plant and equipment and the machine cards maintained in respect thereof at mutually convenient hours. (c) No item of equipment made available by the Corporation on loan or hire shall at any time be removed from the work site under any circumstances until the full cost thereof has been recovered from the Contractor by the Corporation and thereafter only if in the opinion of the Consulting Engineer the removal of such item or items is not likely to impede the satisfactory prosecution of the work. Similarly no item of equipment or material belonging to the Contractor but towards the cost of which money has been advanced by the Corporation shall at any time be removed from the work site under any circumstances until the amount of money so advanced has been recovered from the Contractor by 532 the Corporation and thereafter if in the opinion of the Consulting Engineer the removal of such item or items is not likely to impede the satisfactory prosecution of the work. (d) The Corporation shall supply to the Contractor whatever spares have been procured or ordered for the equipment already supplied or to be supplied by the Corporation to the Contractor under the terms of this Agreement and that thereafter the replenishment of the stock of spares shall be entirely the responsibility of the Contractor who shall therefore take active steps in time to procure fresh spares so as to maintain a sufficient reserve. The spares to be supplied by the Corporation will be issued to the Contractor by the Executive Engineer, Konar as and when required by the Contractor against indent accompanied by a certificate that the spares previously issued to him have been actually used up on the machines for which they were intended. (e) Whenever spares are issued to the Contractor in accordance with this provision, their actual prices inclusive of freight, insurance and customs but excluding storage and handling charges shall be debited against him and recovered from his next fortnightly bill. (f) In order to enable the Contractor to take active steps for planning the procurement of additional spares in advance, the Corporation shall forthwith furnish to him a complete list of all the spares which it has procured or ordered for the equipment to be supplied to the Contractor. " The portions quoted above contain the relevant terms and conditions in respect of the transaction in question, so far as it is necessary to know them for the purpose of this case. It will be noticed that the Corporation made available to the Contractors different kinds of machinery and equipment detailed in Group A of the approximate value of Rs. 42,63,000 odd, for which the price paid by the Corporation inclusive of freight, insurance, customs duty etc. has to be charged to them. But the machinery and the equipment so 533 made available to the Contractors were to remain the property of the Corporation until the, full price thereof had been realised from the Contractors. It is also noteworthy that the agreement makes a distinction between the aforesaid part of the agreement and the equipment lent to the contractors in respect of which the contractors had to be charged in terms of hiring, including interest on capital cost and the depreciation of equipment. Thus clearly the agreement between the parties contemplated two kinds of dealings between them, namely (1) the supply of machinery and equipments by the Corporation to the Contractors and (2) loan on hire of other equipment on terms to be mutually agreed between them in respect of the machinery and equipment supplied by the Corporation to the Contractors. There is a further condition that the Corporation will take over from the contractors items 1 and 14, specifically referred to above, and the other items in Group A at their "residual value" calculated on the basis indicated in the paragraph following the description of the machinery and the equipments. But there is a condition added that the "taking over" is dependent upon the condition that the machinery will be properly looked after during the period of its operation. There is an additional condition to the taking over by the Corporation, namely, the work for which they were meant had been completed, or earlier, at the choice of the Contractors, provided that they are declared surplus for the purposes of the construction of the Konar Dam and so certified by the Consulting Engineer. Hence, it is not an unconditional agreement to take over the machinery and equipment as in Group B. The total approximate price of Rs. 42,63,305 is payable by the Contractors in 18 equal instalments. Out of the total cost thus made realisable from the Contractors two thirds, namely, Rs. 28,42,000 approximately, has to be realised in any case. After the two thirds amount aforesaid has been realised from the contractors on account of supply of the equipments by the Corporation, the Corporation had to consider the date or dates of the "taking over" of the equipment after assessing the extent to which it 534 had depreciated as a result of the working on the project in order to arrive at the "residual value" of the same. The refund of the one third of the price or such other sum as may be determined as the "residual value" would depend upon the further condition that the Corporation was fully satisfied that their "residual life" shall, under no circumstances, fall below one third of their respective standard life as agreed upon by the parties. It would, thus, appear that the "taking over" of such of the equipments as were available to be returned was not an unconditional term. The Corporation was bound to take them over only if it was satisfied that their "residual life" was not less than one third of the standard life fixed by the parties. It is clear from the terms and conditions quoted above that there was no right in the contractors to return any of the machinery and equipments at any time they liked, or found it convenient to do so. The conditions which apply to all equipments, whether in Group A or in Group B, are also relevant to determine the nature of the transaction. The contractors are required to "continuously maintain proper machine cards showing certain relevant particulars". It is their duty to maintain the equipments in good running condition and to regularly and effectively service them. No item of machinery and equipment could be removed by the contractors under any circumstances until the full cost thereof had been recovered from them and even then only if the removal of those items of machinery or equipment was not likely to impede the satisfactory progress of the work. Then follows the most important condition that the Contractors themselves shall have to replenish their stock of spare parts of the machinery made available to them by the Corporation. When spare parts are supplied to the Contractors by the Corporation, they shall be liable for the actual price of those parts inclusive of freight, insurance and customs duty. Those substantially are the terms of the contract between the parties and the sole question for determination in this appeal is whether, in respect of the machinery and equipments admittedly supplied by the Corporation to the Contractors, it was a mere 535 contract of hiring, as contended on behalf of the appellant Corporation, or a sale or a hire purchase, as contended on behalf of the respondent State. The law on the subject is not in doubt, but the difficulty arises in applying that law to the facts and circumstances of a particular case on a proper construction of the document evidencing the transaction between the parties. It is well settled that a mere contract of hiring, without more, is a species of the contract of bailment, which does not create a title in the bailee, but the law of hire purchase has undergone consider able development during the last half a century or more and has introduced a number of variations, thus leading to categories, and it becomes a question of some nicety as to which category a particular contract between the parties comes under. Ordinarily, a contract of hire purchase confers no title on the hirer, but a mere option to purchase on fulfillment of certain conditions. But a contract of hire purchase may also provide for the agreement to purchase the thing hired by deferred payments subject to the condition that title to the thing shall not pass until all the instalments have been paid. There may be other variations of a contract of hire purchase depending upon the terms agreed between the parties. When rights in third parties have been created by acts of parties or by operation of law, the question, which does not arise here, may arise as to what exactly were the rights and obligations of the parties to the original contract. It is equally well settled that for the purpose of determining as to which category a particular contract comes under, the court will look at the substance of the agreement and not at the mere words describing the category. One of the tests to determine the question whether a particular agreement is a contract of mere hiring or whether it is a contract of purchase on a system of deferred payments 'of the purchase price is whether there is any binding obligation on the hirer to purchase the goods. Another useful test to determine such a controversy is whether there is a right reserved to the hirer to return the goods at any time during the subsistence of the contract. If there is such a right reserved, then 536 clearly there is no contract of sale, vide Helby vs Matthews and others (1). Applying these two tests to the transaction in the present case, it becomes clear that it was a case of sale of goods with a condition of repurchase on certain conditions depending upon the satisfaction of the Corporation as to whether the "residual life" of the machinery or the equipment was not less than one third of the standard life in accordance with the terms agreed between the parties. It is clear on those terms that there is no right reserved to the contractors to return the goods at any time that they found it convenient or necessary. On the other hand, they were bound to pay two thirds of the total approximate price fixed by the parties in equal instalments. The Contractors were not bound under the terms to return any of the machinery or the equipments, nor was the Corporation bound to take them back unconditionally. The term in the agreement regarding the "taking over" of the machinery or equipments by the Corporation on payment of the "residual value" is wholly inconsistent with a contract of mere hiring and is more consistent with the property in the goods having passed to the Contractors, subject to the payment of all the instalments of the purchase pride. Furthermore, the stipulation that the Contractors themselves will have to supply the spare parts, as and when needed, for replacements of the worn out parts is also consistent with the case of the respondent that title had passed to the contractors and that they were responsible for the upkeep of the machinery and equipments and for depreciation. If it were a mere contract of hiring, the owner of the goods would have continued to be liable for replacements of worn out parts and for depreciation. Applying those tests to the terms of the agreement between the parties, it is clear that the transaction was a sale on deferred payments with an option to repurchase and not a mere contract of hiring, as contended on behalf of the appellant. It must, therefore, be held that the judgment of the High Court is entirely correct and the appeal must be dismissed with costs. Appeal dismissed.

The appellant Corporation was assessed to sales tax under section 13(5) of the Bihar Sales Tax Act, 1947, on the price of machinery and equipment, amounting approximately to Rs. 42,63,305, supplied to two contractor firms on the basis of an agreement which it entered into with them for the construction of a dam. The agreement provided, inter alia, that the price of the machinery and equipment supplied was to be paid by the contractors and until that was done they were to remain the property of the Corporation. It was further agreed that the Corporation would take them over after the completion of the work at their residual value, to be calculated in the manner set out in the agreement, provided that they were properly looked after during the period of operation; and if the contractors so chose earlier, if they were declared surplus and certified as such by the consulting Engineer. The price was to be paid in 18 equal instalments, two thirds of which was realisable in any case, and thereafter the Corporation was to consider the date or dates of taking them over after assessment of the depreciation in order to arrive at the residual value. The Corporation was not bound to take over if the residual life of the equipment fell below one third of the standard life as fixed by the parties. 523 The contractors were to replenish the stock of spare parts supplied to them at their own cost. The appellant 's case was that the transaction represented by the agreement was not a sale within the meaning of the Act. The Sales Tax authorities held against it and the only question that was ultimately referred to the High Court by the Board of Revenue under section 25 of the Act was whether the property in the equipment and machinery passed to the contractors and the transaction amounted to a sale. The High Court answered the question in the affirmative, holding that the transaction was a sale within the meaning of section 2(g) of the Act. The High Court having refused the necessary certificate, the appellant appealed by special leave granted by this court. Held, that the appeal must be confined to the question debated in the High Court. It is well settled that, while functioning in its advisory capacity under a taxing statute, the High Court cannot go beyond the question referred to it or on a reference called by it. That the appeal was by special leave could make no difference and the scope of the controversy could not be extended beyond what could be legally raised before the High Court. The two fold test to determine whether a particular agree ment is a contract of mere hiring or of purchase on deferred payments is (1) whether the hirer is under an obligation to purchase the goods and (2) whether he has the right to return the goods at any time during the subsistence of the contract. What has to be considered in each case is the substance of the agreement and not the words describing its category. Helby vs Matthews and others, , referred to. So judged, there could be no doubt that on the terms of the agreement between the parties the transaction in the instant case was clearly a sale on deferred payments with an option to repurchase and not a mere contract of hiring.

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iminal Appeal No. 78 of 1959. Appeal by special leave from the judgment and order dated November 25, 1958, of the former Bombay High Court in Criminal Revision Application No. 1393 of 1958 arising out of the judgment and order dated September 18, 1958, of the Presidency Magistrate 11 Class, Mazagaon at Bombay in Case No. 1101/P of 1958. R. H. Dhebar, for the appellant. The respondent did not appear. October 18. The Judgment of the Court was delivered by 28 HIDAYATULLAH J. This is an appeal by the State of Bombay, with the special leave of this Court, against the order of acquittal by the High Court of Bombay of the respondent, Vishnu Ramchandra, who was prosecuted under section 142 of the Bombay Police Act and sentenced to six months ' rigorous im prisonment by the Presidency Magistrate, 2nd Court, Mazagaon, Bombay. On November 16, 1949, Vishnu Ramehandra was convicted under section 380 and 114 of the Indian Penal Code, and sentenced to one month 's rigorous imprisonment. On October 15, 1957, the Deputy 'Commissioner of Police, Bombay, acting under section 57(a) of the Bombay Police Act (22 of 1951), passed an order against Vishnu Ramchandra which was to operate for one year, externing him from the limits of Greater Bombay. At that time, a prosecution under section 411 of the Indian Penal Code was pending against Vishnu Ramchandra, and he was not immediately externed, to enable him to attend the case. This prosecution came to an end on July 10, 1958, and resulted in his acquittal. Immediately afterwards, a constable took him outside the limits of Greater Bombay, and left him there. The prosecution case was that he returned to Greater Bombay, and was arrested at Pydhonie on August 24, 1958. He was prosecuted under section 142 of the Bombay Police Act. His plea that he was forcibly brought back to Pydhonie and arrested was not accepted by the Presidency Magistrate, and he was convicted. He filed a revision application, which was heard by a learned single Judge of the High Court of Bombay. Three contentions were raised before the High Court. The first was that the Deputy Commissioner of Police had not applied his mind to the facts of the case before making the order of externment. The second was that section 57 of the Bombay Police Act was prospective, and could not be made applicable, unless the conviction on which the action of externment was based, took place after the coming into force of that Act. The third was that the belief entertained by the Deputy Commissioner that Vishnu Ramchandra was 29 likely to engage himself in the commission of an offence similar to that for which he was prosecuted was based on the prosecution which was then pending, and that that ground disappeared after his acquittal. The High Court did not consider the first and the third grounds, because it held that the second ground was good. Section 57 of the Bombay Police Act reads as follows: " Removal of persons convicted of certain offences If a person has been convicted (a) of an offence under Chapter XII, XVI or XVII of the Indian Penal Code (XLV of 1860), or (b) twice of an offence under section 9 or 23 of the Bombay Beggars Act, 1945 (Bom. XXIII of 1945,) or under the Bombay Prevention of Prostitution Act, 1923 (Bom. XI of 1923), or (c) thrice of an offence within a period of three years under section 4 or 12A of the Bombay Prevention of Gambling Act, 1887 (Bom. IV of 1887), or under the Bombay Prohibition Act, 1949 (Bom. XXV of 1949) the Commissioner, the District Magistrate or the Sub Divisional Magistrate specially empowered by the State Government in this behalf, if he has reason too believe that such person is likely again to engage himself in the commission of an offence similar to that for which he was convicted, may direct such person to remove himself outside the area within the local limits of his jurisdiction, by such route and within such time as the said officer may prescribe and not to enter or return to the area from which he was directed to remove himself ". In reaching his conclusion the learned single Judge observed that the legislature had used the present participle " has been " and not the past participle in the opening portion of the section, and that this indicated that the section was intended to be used only where a person was convicted subsequent to the coming into force of the Act. He further observed that being a penal section, it had to be interpreted prospectively. He repelled an argument of the Assistant 30 Government Pleader that section 57 merely re enacted the provisions of section 27 of the City of Bombay Police Act, 1902, and that a liability incurred under the older Act was preserved by section 167 of the Bombay Police Act of 1951. Observing further that the Deputy Commissioner of Police at the time of the passing of the order could not be said to have entertained a belief about the activities of Vishnu Ramchandra based upon his conviction in the year 1949, he held that the order of externment must be regarded as invalid for that reason and also on the ground that the conviction was not after the coming into force of the Act. At the hearing before us, the respondent was not represented. We have heard Mr. Dhebar in support of the appeal, and, in our opinion, the High Court was not right in the view it had taken of section 57 of the Act. The question whether an enactment is meant to operate prospectively or retrospectively has to be decided in accordance with well settled principles. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective, but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events. The reason why penal statutes are so construed was stated by Erle, C. J., in Midland Rly. Co. vs Pye (1) in the following words: "Those whose duty it is to administer the law very properly guard against giving to an Act of Parliament a retrospective operation, unless the intention of the legislature that it should be so construed is expressed in clear, plain and unambiguous language; because it manifestly shocks one 's sense of justice that an act, legal at the time of doing it, should be made unlawful by some new enactment ". This principle has now been recognised by our Constitution and established as a Constitutional restriction on legislative power. (1) ; , 191. 31 There are, however, statutes which create Do new punishment, but authorise some action based on past conduct. To such statutes, if expressed in language showing retrospective operation, the principle is not applied. As Lord Coleridge, C. J., observed during the course of arguments in Rex vs Birthwhistle (1): " Scores of Acts are retrospective, and may without express words be taken to be retrospective, since they are passed to supply a cure to an existing evil." Indeed, in that case which arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act was held retrospective without express words. It was said: " It was intended to cure an existing evil and to afford to married women a remedy for desertion, whether such desertion took place before the passing of the Act or not." Another principle which also applies is that an Act designed to protect the public against acts of a harmful character may be construed retrospectively, if the language admits such an interpretation, even though it may equally have a prospective meaning. In Queen vs Vine (2), which dealt with the disqualification of persons selling spirits by retail if convicted of felony, the Act was applied retrospectively to persons who were convicted before the Act came into operation. Cock burn, C. J., observed: "If one could see some reason for thinking that the intention of this enactment was merely to aggravate the punishment for felony by imposing this disqualification in addition, I should feel the force of Mr. Poland 's argument, founded on the rule which has obtained in putting a construction upon statutes that when they are penal in their nature they are not to be construed retrospectively, if the language is capable of having a prospective effect given to it and ' is not necessarily retrospective. But here the object of the enactment is not to punish offenders, but to protect the public against public houses in which spirits are retailed being kept by persons of doubtful character . On looking at the Act, the words used seem (1) (1889) 58 L.J. (N.S.) M.C. 158. (2) 32 to import the intention to protect the public against persons convicted in the past as well as in future; the words are in effect equivalent to 'every convicted felon '. " In the same case, Archibald, J., expressed himself forcefully when he observed: " I quite agree, if it were simply a penal enactment, that we ought not to give it a retrospective operation ; but it is an enactment with regard to public and social order, and infliction of penalties is merely collateral. " Similarly, in Ex Parte Pratt (1), which dealt with the words " a debtor commits an act of bankruptcy " to enable the Court to make a receiving order, Cotton, L. J., gave the words a retrospective operation, observing: " I think that no reliance can be placed on the words I commits ' as showing that only acts of bankruptcy committed after the Act came into operation are intended. " In the same case, the observations of Bowen, L. J., were: " I think that the more the Act is studied the more it will be found that it is framed in a very peculiar way. I do not mean to say that it is inartistically framed. I think it is framed on the idea that a bankruptcy code is being constructed, and when the present tense is used, it is used, not in relation to time, but as the present tense of logic. " Fry, L. J., added : " I entirely agree with Bowen, L. J., as to the meaning of the present tense in the section ; it is used, I think, to express a hypothesis, without regard to time." In Bourke vs Nutt (2), Lord Esher, M. R., speaking of these observations of Bowen and Fry, LL. J., observed : " . the case seems to show that when the present tense is used in this statute (section 32 of the Bankruptcy Act, 1883) the time to be considered is the time at (1) (2) [1894] I Q.B. 725. 33 which the Court has to act, and not the time at which the condition of things on which it has to act came into existence. " Applying the above principles, Lord Esher, M. R., held that the section was not retrospective but prospective, because the important time was that at which it had to be considered whether the person was disqualified and it related to a time after the passing of the Act. He, however, added that " even if it could be said that it is retrospective its enactments are solely for the public benefit, and the rule that restricts the operation of a penal retrospective statute does not apply, because this statute is not penal." These principles, though not unanimously expressed, have been accepted in later cases both in England and in India. In Ganesan vs A. K. Joscelyne (1), Chakravarti, C. J., observed, Sarkar, J. (as he then was), concurring: " I may state, however, that in spite of the ordinary and I might almost say cardinal rule of construction that statutes, particularly statutes creating liabilities, ought not to be so construed as to given them a retrospective operation unless there is a clear provision to that effect or a necessary intendment implied in the provisions, there is another principle on which Courts have sometimes acted. It has been held that where the object of an Act is not to inflict punishment on anyone but to protect the public from undesirable persons, bearing the stigma of a conviction or misconduct on their character, the ordinary rule of construction need not be strictly applied. " In Taher Saifuddin vs Tyebbhai Moosaji (2), the same principles were applied by Chagla, C. J. and Bhagwati, J. (as he then was), and reference was made also to The Queen vs Inhabitants of St. Mary Whitechapel (3) where Lord Denman, C. J., in his judgment observed: " . it was said that the operation of the statute was confined to persons who had become widows after (1) A.1 R. ,38. (2) A.I.R. 1953 Bom. 183, z86, 187. (3) [1848) ; 12 Q.B. 120 (B): 34 the Act passed, and that the presumption against a retrospective statute being intended supported this construction; but we have before shown that the statute is in its direct operation prospective, as it relates to future removals only, and that it is not properly called a retrospective statute because a part of the requisites for its action is drawn from time antecedent to its passing." Now section 57 of the Bombay Police Act, 1951, does not create a new offence nor makes punishable that which was not an offence. It is designed to protect the public from the activities of undesirable persons who have been convicted of offences of a particular kind. The section only enables the authorities to take note of their convictions and to put them outside the area of their activities, so that the public may be protected against a repetition of such activities. As observed by Phillimore, J., in Rex vs Austin (1), "No man has such a vested right in his past crimes and their consequences as would entitle him to insist that in no future legislation shall any regard whatever be had to his previous history. " An offender who has been punished may be restrained in his acts and conduct by some legislation, which takes note of his antecedents; but so long as the action taken against him is after the Act comes into force, the statute cannot be said to be applied retrospectively. The Act in question was thus not applied retrospectively but prospectively. It remains only to consider if the language of the section bars an action based on past actions before the Act was passed. The verb "has been" is in the present perfect tense, and may mean either " shall have been " or " shall be ". Looking, however, to the scheme of the enactment as a whole and particularly the other portions of it, it is manifest that the former meaning is intended. The verb " has been " describes past actions, and, to borrow the language of Fry, L.J., in Ex Parte Pratt (2), " is used to express a hypothesis, without regard to time ". An externment order, however, to satisfy the (1) , 556. (2) [1884] 12 Q.B 334 35 requirements of section 57 of the Bombay Police Act, must be made bona fide, taking into account a conviction which is sufficiently proximate in time. Since no absolute rule can be laid down, each case must depend on its own facts. In the result, we set aside the acquittal, and remit the case to the High Court for disposal on the other points urged before it and in the light of observations made here by us. Appeal allowed.

On November 16, 1949, the respondent was convicted under sections 38o and II4 of the Indian Penal Code. On October 5, 1957, the Deputy Commissioner of Police, Bombay, acting under section 57(1) of the Bombay Police Act passed an order externing him from the limits of Greater Bombay. Later he was prosecuted and convicted under section 142 of the Bombay Police Act by the Presidency Magistrate for returning to the area from which he was externed. On an application for revision the High Court acquitted the respondent upholding his contention that section 57 of the Bombay Police Act was not retrospective and was not applicable unless the conviction on which the externment was based took place after the Act came into force. On appeal by the appellant with the special leave of this Court it was 27 Held, that though statutes must ordinarily be interpreted prospectively unless the language makes them retrospective, either expressly or by necessary implication, and penal statutes creating new offences are always prospective, penal statutes creating disabilities though ordinarily interpreted prospectively are sometimes interpreted retrospectively when the intention is not to punish but to protect the public from undesirable persons whose past conduct is made the basis of future action. Midland Ry. Co. vs Pye, IO C.B. (N.S.) 179, Rex vs Birth whistle, (1889) 58 L.J. (N.S.) M.C. 158, Queen vs Vine, [1875] IO Q.B. 195, Ex Parte Pratt, , Bourke vs Nutt, [1898] I Q.B. 725, Ganesan vs A.K. Joscelyne, A.I.R. 1957 Cal. 33, Taher Saifuddin vs Tyebbhai Moosaji, A.I.R. 1953 Bom. 183, The Queen vs Inhabitants of St. Mary Whitechapel, ; : ; and Rex vs Austin, , considered and applied. Section 57 of the Bombay Police Act did not create a new offence but was designed to protect the public from the activities of undesirable persons convicted of particular offences and enabled the authorities to take note of their activities in order to put them outside the areas of their activities for preventing any repetition of such activities in the future. The verb " has been " as used in section 57 meant " shall have been Legislation which takes note of a convicted offender 's antecedents for restraining him from his acts cannot be said to be applied retrospectively as long as the action taken against him is after the Act comes into force. The Act in question was thus not applied retrospectively but prospectively. An externment order must be bona fide and must relate to a conviction which is sufficiently proximate in time.

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Appeal No. 419 of 1958. Appeal by special leave from the judgment and order dated August 20, 1957, of the Calcutta High a Court in Income tax Reference No. 1 of 1956. Hardyal Hardy and D. Gupta, for the appellant. N. C. Chatterjee, Dipak Choudhri and B. N. Ghosh, for the respondent. November 28. The Judgment of the Court was delivered by KAPUR, J. This is an appeal by special leave against the judgment and order of the High Court of Judicature at Calcutta in a reference made by the Income tax Appellate Tribunal under section 66(1) of the Income tax Act. The following question was referred: "Whether in the facts and circumstances of this case, the Appellate Tribunal was right in holding that Rs. 61,818 spent by the assessee to train Indian boys as jockeys, did not constitute expenses of the business of the assessee allowable under section 10(2)(xv)?" which was answered in favour of the respondent. The Commissioner is the appellant before us and the assessee is the respondent. The respondent is an association of persons whose business is to hold race meetings in Calcutta on a commercial basis. It holds two series of race meetings during the two seasons of the year. The respondent does not own any horses and therefore does not employ jockeys but they are employed by owners and trainers of horses which are run in the races. It is a matter of some importance to the respondent that there should be jockeys available to the owners with sufficient skill and experience because the success of races to a considerable extent depends upon the experience and skill of a jockey who rides a horse in a race. Because it was of the opinion that there was a risk of the jockeys becoming unavailable and that such unavailability would seriously affect its business which might result in its closing 731 down the business, the respondent considered it expedient to remedy that defect. Therefore in 1948, it, established a school for the training of Indian boys as jockeys so that after their training they might be available for purposes of race meetings held under its auspices. The school, however, did not prove a success and after having been in existence for three years it was closed down. During the year ending March 31, 1949, the respondent spent a sum of Rs. 62,818 on the running of its school and claimed that amount as a deduction under section 10(2)(xv) of the Income tax Act and also in the assessment under the Business Profits Tax for the chargeable accounting period ending March 31, 1949. This claim was disallowed by the Income Tax Officer and on appeal by Appellate Assistant Commissioner and also by the Income tax Appellate Tribunal. At the instancc of the respondent the question already quoted was referred to the High Court and was answered in favour of the respondent. This appeal is brought by special leave against that judgment. The decision under the Business Profits Tax Act will be consequential upon the decision of the deduction under the Income tax Act. The Tribunal found that it was not the business of the respondent to provide jockeys to owners and trainers, that the jockeys trained in the respondent 's school were not bound to ride only in the races run by the respondent and that the benefit, if any, which accrued was of an enduring nature. It also found that the respondent had been conducting race meetings since long, that it was not the case of the assessee that if it did not train jockeys they would become unavailable and that the mere policy of producing efficient Indian jockeys was not a sufficient consideration for treating the expenditure as one incurred for the business of the respondent. For these reasons the expenditure was disallowed. Before the Appellate Assistant Commissioner, it was contended by the respondent, that the reason for incurring the expenditure was "to promote efficient Indian jockeys" and it was in the interest of the respondent to see that the races are not abandoned on 732 account of the scarcity of jockeys. In the order of the Tribunal it is stated that this was not the case of the respondent, and therefore when the respondent wanted paragraph 5 of the statement to be substituted by the following: "It was the case of the assessee that unless it trained Indian Jockeys, time may come when there may not be sufficient number of trained jockeys to ride horses in the races conducted by the assessee. " the Tribunal did not agree to do so. Counsel for the appellant raised three points before us; (1) The question as to whether an item of expenditure is wholly and exclusively laid out for the purposes of business or not is a question of fact; (2) the connection between an expenditure and profit earning of the assessee should be direct and substantial and not remote and (3) to be admissible as revenue expenditure it should not be in the nature of a capital expense, i.e., it should not bring into existence an asset of an enduring nature. As to the first question this court has held in Eastern Investments Ltd. vs Commissioner of Income tax, West Bengal (1) that "though the question must be decided on the facts of each case, the final conclusion is one of law". In Commissioner of Income Tax vs Chandulal Keshavlal & Co. (2), this Court said: "Another test is whether the transaction is properly entered into as a part of the assessee 's legitimate commercial undertaking in order to facilitate the carrying on of its business; and it is immaterial that a third party also benefits thereby. (Eastern Investment Ltd. vs Commissioner of Income Tax, (1951) 20 I.T.R. 1). But in every case it is a question of fact whether the expenditure was expended wholly and exclusively for the purpose of trade or business of the assessee. In the present case the finding is that it was laid out for the purpose of the assessee 's business and there is evidence to support this finding." But those observations must be read in the context. In that case the assessee firm was the Managing Agent of a Company and at the request of the Directors of (1) ; , 598. (2) , 610. 733 the latter agreed to accept a lesser commission for the year of account than it was entitled to. It was found, by the Appellate Tribunal there that the amount was expended for reasons of commercial expediency and was not given as a bounty but to strengthen the managed company so that if its financial position became strong the assessee would benefit thereby, and an the evidence the Tribunal came to the conclusion that the amount was wholly and exclusively for the purpose of such business. It was on this evidence that the expense was held to be wholly and exclusively laid out for the purpose of the assessee 's business and this was the finding referred to. In that case the Tribunal had not misdirected itself as to the true scope and meaning of the words "wholly and exclusively laid out for the purpose of the assessee 's business". In the present case the Income tax Appellate Tribunal had misdirected itself as to the true scope and meaning of these words. In our opinion, in the circumstances of this case, it cannot be said that the finding of the Tribunal was one of fact. The question as to whether the expenses of running the school for jockeys is deductible has to be decided taking into consideration the circumstances of this case. The business of the respondent was to run race meetings on a commercial scale for which it is necessary to have races of as high an order as possible. For the popularity of the races run by the respondent and to make its business profitable it was necessary that there were jockeys of requisite skill and experience in sufficient numbers who would be available to the owners and trainers because without such efficient jockeys the running of race meetings would not be commercially profitable. It was for this purpose that the respondent started the school for training Indian jockeys. , If there were not sufficient number of efficient Indian jockeys to ride horses its interest would have suffered, and it might have had to abandon its business if it did not take steps to make jockeys of the necessary calibre available. Therefore any expenditure which was incurred for preventing the extinction 93 734 of the respondent 's business would, in our opinion, be expenditure wholly and exclusively laid out for the purpose of the business of the assessee and would be an allowable deduction. This finds support from decided cases. In Commissioner of Income tax vs Chandulal Keshavlal & Co. (1), this Court held that in order to justify a deduction the disbursement must be for reasons of commercial expediency; it may be voluntary but incurred for the assessee 's business; and if the expense is incurred for the purpose of the business of the assessee it does not matter that the payment also enures to the benefit of a third party. Another test laid down was that if the transaction is properly entered into as a part of the assessee 's legitimate commercial undertaking in order to facilitate the carrying on of its business it is immaterial that a third party also benefits thereby. In British Insulated and Helsby Cables vs Atherton (2), Viscount Cave L. C. held that a Bum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the ground of commercial expediency and in order indirectly to facilitate the carrving on of the business may yet be expended wholly and exclusively for the purpose of the trade. In a case more recently decided Morgan vs Tate & Lyle Ltd. (3) the assessee company was engaged in sugar refining business and it incurred expenses in a propaganda campaign to oppose the threatened nationalisation of the industry. It was held by the House of Lords by a majority that the object of the expenditure being to preserve the assets of the company from seizure and so to enable it to carry on its business and earning profits, the expense was an admissible deduction being wholly and exclusively laid out for the purpose of the company 's trade. Lord Morton of Henryton said: "Looking simply at the words of the rule I would ask:"If money so spent is not spent for the purpose of the company 's trade, for what purpose is it spent?" If the assets are seized, the company can no longer (1) , 610. (2) (3) 735 carry on the trade which has been carried on by the use of these assets. Thus the money is spent to preserve the very existence of the company 's trade". See also Strong & Co. vs Woodifield(1), the observations of Lord Davey; and Smith vs Incorporated Council of Law Reporting (2). Counsel for the appellant relied upon the judgment of the Privy Council in Ward & Co. Ltd. vs Commissioner of Taxes (3 ), but that decision proceeds on a different statute where the words were of a very restrictive character, the words being: ". . . . Expenditure or loss of any kind not exclusively incurred in the production of the assessable income derived from that source. . . This case was distinguished in Morgan vs Tate & Lyle(4) on the ground that the language of the Now Zealand statute was much narrower than the language of r. 3A in England. Reference was also made by the appellant to Boarland vs Kramat Pulai Ltd. (5). In that case Directors of three Companies engaged in tin mining in Malaya incurred expenditure on printing. and circulating to shareholders a pamphlet containing remarks of the Chairman of the Company. The pamphlet was an attack on the policy and acts of the Socialist Government and it was held that the question whether the money was wholly and exclusively laid out or expended for the purpose of trade within the meaning of rules applicable to the question was one of law but on a consideration of the question it was held that the expenditure was not solely incurred with that object. It is not necessary to discuss that case at any length because what was held in that case was that the pamphlet was not wholly and exclusively for the purpose of the company 's trade. Applying the law, as laid down in those cases, to the present case the conclusion is that the amount in dispute was laid out wholly and exclusively for the purpose of the respondent 's business because if the (1) ; (2) [19I4] 3 K.B. 674. (3) [1923] A.C 145. (4) (5) 736 supply of jockeys of efficiency and skill failed the business of the respondent would no longer be possible. Thus the money was spent for the preservation of the respondent 's business. As to the third point there is no substance in the submission that the expenditure was in the nature of a capital expense because no asset of enduring nature was being created by this expense. In our opinion the High Court has rightly held that the expenditure claimed was one which was wholly and exclusively laid out for the purpose of the respondent 's business. It was to prevent the threatened extinction of the business of the respondent. In the result this appeal is dismissed with costs. Appeal dismissed.

The business of the respondent club was to run race meetings on a commercial scale. The club did not own any horse, and therefore did not employ jockeys. it was a matter of some importance to the club that there were jockeys of requisite skill and experience in sufficient numbers who would be available to the owners and trainers because otherwise the running of the race meetings would not be commercially profitable and its interest would suffer and it might have had to abandon its business if it did not take steps to make jockeys of the necessary calibre available. Therefore it established a school for the training of Indian boys as jockeys and claimed the sums spent on the running of the school as deductable amount under section 10 (2)(XV) of the Indian Income Tax Act. The question was whether in the circumstances of the case the expenditure claimed was one which was wholly and exclusively laid out for the purpose of the respondent 's business. Held, that any expenditure which was incurred for preventing the extinction of a business would be expenditure wholly and exclusively laid opt for the purpose of the business of the assessee and would be an allowable deduction. In the instant case the amount in dispute was laid out wholly and exclusively for the purpose of the respondent 's business, because if the supply of jockeys of requisite efficiency and skill failed, the business of the respondent would no longer be possible. Eastern Investments Ltd. vs Commissioner of Income tax, West Bengal, ; and Commissioner of Income tax vs Chandulal Keshavlal & Co., ; relied on, British Insulated and Helsby Cables vs Atherton, [1926] A. C. 205, Morgan vs Tate & Lyle Ltd., and Boarland vs Kramat Pulai Ltd., , discussed. Strong & Co. vs Woodifield, ; and Smith vs Incorporated Council of Law Reporting, , referred to. Ward & Co. Ltd. vs Commissioner of Taxes, [1923] A. C. 145, distinguished.

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Appeal No. 650 of 1957. Appeal from the judgment dated July 13, 1956, of the Patna High Court in Miscellaneous Judicial Case No. 665 of 1954. R. Ganapathy Iyer and R. H. Dhebar, for the appellant. A. V. Viswanatha Sastri and R. C. Prasad, for the respondent. November 29. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal by the Commissioner of Income tax with a certificate against the judgment and order of the High Court at Patna answering two questions of law referred to it under section 66(1) of the Income tax Act by the Tribunal, in the negative. Those questions were: "(1) Whether in the circumstances of the case assessment proceedings were validly initiated under section 34 of the Indian Income tax Act? (2) If so, whether in the circumstances of the case the amount received from interest on arrears of agricultural rent was rightly included in the income of the assessee ?" The assessee, the Maharaja Pratapsingh Bahadur of Gidhaur, had agricultural income from his zamindari for the four assessment years 1944 45 to 1947 48. In assessing his income to income tax, the authorities did not include in his assessable income interest received by him on arrears of rent. This was presumably so in view of the decision of the Patna High Court. When the Privy Council reversed the view of law taken by the Patna High Court in Commissioner of Income tax vs Kamakhya Narayan Singh (1), the Income tax Officer issued notices under section 34 of the (1) 762 Indian Income tax Act for assessing the escaped income. These notices were issued on August 8, 1948. The assessments after the returns were filed, were completed on August 26, 1948. Before the notices were issued, the Income tax Officer had not put the matter before the Commissioner for his approval, as the section then did not require it, and the assessments were completed on those notices. Section 34 was amended by the Income tax and Business Profits Tax (Amendment) Act, 1948 (No. 48 of 1948), which received the assent of the Governor General on Sep tember 8, 1948. The appeals filed by the assessee were disposed of on September 14 and 15, 1951, by the Appellate Assistant Commissioner, before whom no question as regards the validity of the notices under section 34 was raised. The question of the validity of the notices without the approval of the Commissioner appears to have been raised before the Tribunal for the first time. In that appeal, the Accountant Member and the Judicial Member differed, one holding that the notices were invalid and the other, to the contrary. The President agreed with the Accountant 'Member that the notices were invalid, and the assessments were ordered to be set aside. The Tribunal then stated a case and raised and referred the two questions, which have been quoted above. The High Court agreed with the conclusions of the majority, and the present appeal has been filed on a certificate granted by the High Court. Section 34, as it stood prior to the amendment Act No. 48 of 1948, did not lay any duty upon the Income tax Officer to seek the approval of the Commissioner before issuing a notice under section 34. The amending Act by its first section made sections 3 to 12 of the amending Act retrospective by providing "sections 3 to 12 shall be deemed to have come into force on the 30th day of March, 1948. . Section 8 of the amending Act substituted a new section in place of section 34, and in addition to textual changes with which we are not concerned, also added a proviso to the following effect : "Provided that 763 (1) the Income tax Officer shall not issue a notice under this sub section unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice. " The question is whether the notices which were issued were rendered void by the operation of this proviso. ' The Commissioner contends that section 6 of the , particularly cls. (b) and (c) saved the assessments as well as the notices. He relies upon a decision of the Privy Council in Lemm vs Mitchell (1), Eyre vs Wynn Mackenzie (2) and Butcher vs Henderson (3) in support of his proposition. The last two cases have no bearing upon this matter; but strong reliance is placed upon the Privy Council case. In that case, the earlier, action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation, had already ended in favour of the defendant and no appeal therefrom was pending, and it was held that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the same act, unless the statute expressly and by definite words gave him that right. The Privy Council case is thus entirely different. No doubt, under section 6 of the it is provided that where any Act repeals any enactment, then unless a different intention appears, the repeal shall not affect the previous operation of any enactment so repealed or anything duly done thereunder or affect any right, obligation or liability acquired, accrued or incurred under any enactment so repealed. It further provides that any legal proceedings may be continued or enforced as if the repealing Act had not been passed. Now, if the amending Act had repealed the original section 34, and merely enacted a new section in its place, the repeal might not have affected the operation of the original section by virtue of section 6. But the amending Act goes further than this. It (1) ; (2) (3) 764 repeals the original section 34, not from the day on which the Act received the assent of the Governor General but from a stated day, viz., March 30, 1948, and substitutes in its place another section containing the proviso above mentioned. The amending Act provides that the amending section shall be deemed to have come into force on March 30, 1948, and thus by this retrospectivity, indicates a different intention which excludes the application of section 6. It is to be noticed that the notices were all issued on August 8, 1948, when on the statute book must be deemed to be existing an enactment enjoining a duty upon the Income tax Officer to obtain prior approval of the Commissioner, and unless that approval was obstained, the notices could not be issued The notice were thus invalid. , The principle which was applied by this Court in Venkatachalam vs Bombay Dyeing & Mfg. Co. Ltd. (1) is equally applicable here. No question of law was raised before us, as it could not be in view of the decision of this Court in Narayana Chetty vs Income tax Officer (2), that the proviso was not mandatory in character. Indeed, there was time enough for fresh notices to have been issued, and we fail to see why the old notices were not recalled and fresh ones issued. For these reasons, we are in agreement with the High, Court in the answers given, and dismiss this appeal with costs. A appeal dismissed.

The appellant who had agricultural income from his Zamindari was assessed to income tax for the four assessment years, 1944 45, to 1947 48. The income tax authorities did not include in his assessable income, interest received by him on arrears of rent, in view of a decision of the Patna High Court, but subsequently this view of law was reversed by the Privy Council. On August 8, 1948, the Income tax Officer issued notices under section 34of the Indian Income tax Act, 1922, for assessing the escaped income. Before the notices were issued the Income tax Officer had not put the matter before the Commissioner for his approval as the section then did not require it and the assessments were completed on those notices. In the meantime, certain amendments were made to the Indian Income tax Act by Act 48 of 1948, which received the assent of the Governor General on September 8, 1948. The Amending Act substituted a new section in place of section 34, which among other changes, added a proviso to the effect that "the Income tax Officer shall not issue a notice. unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice", and also made it retrospective by providing that the new section "shall be deemed to have come into force on the 30th day of March, 1948". The question was whether the notices issued by the Income tax Officer on August 8, 1948, without the approval of the Commissioner, were rendered void by reason of the operation of the amended section 34. The Commissioner claimed that section 6 of the , saved the assessments as well as the notices. Held, that section 6 of the , was in applicable as the Amending Act of 1948 indicated a different intention within the meaning of that section, inasmuch as the amended section 34 of the Indian Income tax Act, 1922, provided that it shall be deemed to have come into force on March 30, 1948. Lemm vs Mitchell, ; , distinguished, 761 Held, further, that the notices issued by the Income tax Officer on August 8, 1948, and the assessments based on them were invalid. Venkatachalam vs Bombay Dyeing & Mfg. Co., Ltd., ; , applied.

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Appeal No. 31 of 1960. Appeal by special leave from the judgment and order dated March 14, 1957, of the Patna High Court in Miscellaneous Judicial Case No. 165 of 1957. P. K. Chatterjee, for the appellant. section P. Varma, for respondents Nos. 1 and 4. Nooni Coomar Chakravarti and B. P. Maheshwari, for respondent No. 2. 1960. December 12. The Judgment of the Court was delivered by DAS GUPTA, J. This appeal by special leave is against an order of the High Court of Judicature at Patna dismissing summarily an application of the present appellant under article 226 and article 227 of the Constitution. The appellant was a workman employed in the Digha factory of Bata Shoo Company (Private) Limited, since October, 1943. On January 13, 1954, the management of the company served him with a charge sheet alleging that he had been doing anti union activities inside the factory during the working hours and so was guilty under section 12B(1) of the Standing Orders and Rules of the company. On 198 January 14, he submitted a written reply denying the charge and asking to be excused. On January 15, the management made an order terminating his services with effect from January 18, 1954. An industrial dispute was raised on this question of dismissal by the Union and was referred along with a number of other disputes to the Industrial Tribunal, Bihar, by a notification dated April 29, 1955. After written statements were filed by the Union and the management, February 20, 1956, was fixed for hearing at Patna. Thereafter numerous adjournments were given by the Tribunal on the joint petition for time filed by both the parties stating that all the disputes were going to be compromised. On November 16, 1956, the Tribunal made an order fixing December 20, 1956, "for filing compromise or hearing". On December 20, 1956, however a fresh application for time was filed but it was stated that agreement had already been reached on some of the matters and opportunity was asked for to settle the other matters. The case was however adjourned to January 21, 1957, for filing a compromise or hearing. On that date a further petition was again filed and a further extension of time was allowed till February 1, 1957. On January 31, the parties, that is, the management and the Union filed a joint petition of compromise settling all points of disputes out of court. Prior to this, on January 12, 1957, the present appellant had made an application praying that D. N. Ganguli and M. P. Gupta, two of his co workers might be allowed to represent his case before the Tribunal instead of Fateh Singh, the Secretary of the Union and that he did not want his case to be represented by Fateh Singh as he had no faith in him. This application was dismissed by the Tribunal by an order dated February 26, 1957. On March 7, 1957, the appellant filed a fresh petition stating that he had not authorised Fateh Singh to enter into any agreement in his case and praying that the agreement filed in respect of his case should not be accepted and that he and his agents should be heard before the disposal 199 of the case. This prayer was not allowed by the. Tribunal and by an order dated March 11, 1957, an award in terms of the petition of compromise was made. The appellant filed his application to the Patna High Court on March 13, 1957, praying for an issue of an appropriate writ or direction quashing the Tribunal 's order of February 26, 1957, by which the Tribunal had rejected his prayer for representation by a person of his own choice in place of Fateh Singh, the Secretary of the Union. Prayer was made in this petition also for a direction on the Tribunal not to record the compromise in so far as it related to the appellant 's case and to give its award without reference to the settlement and on proper adjudication of the matter. The High Court dismissed this application summarily. It is against that order of dismissal that the present appeal by special leave has been preferred. On behalf of the appellant it is argued that the Tribunal committed a serious error in rejecting his application to be represented by a person of his own choice instead of Fateh Singh, the Secretary of the Union and thereafter in making an award on the basis of the reference. It has to be noticed that on the date the application *as made before the High Court the award had already been made and so there could be no direction as prayed for on the Tribunal not to make the award. If however the appellant 's contention that the Tribunal erred in rejecting his application for separate representation was sound he would have been entitled to an order giving him proper relief on the question of representation as well as regarding the award that had been made. The sole question that arises for our determination therefore is whether the appellant was entitled to separate representation in spite of the fact that the Union which had espoused his cause was being repre. sented by its Secretary, Fateh Singh. The appellant 's contention is that he was a party to the dispute in his own right and so was entitled to representation according to his own liking. The question whether when a dispute concerning an individual workman is taken up by the Union, of which the workman is a member, as 200 a matter affecting workmen in general and on that basis a reference is made under the Industrial Disputes Act the individual workman can claim to be heard independently of the Union is undoubtedly of some importance. The question of representation of a workman who is a party to a dispute is dealt with by section 36 of the Industrial Disputes Act. That section provides that such a workman is entitled to be represented in any proceeding under the Act, by (a) an officer of a registered trade union of which he is a member, (b) an officer of a federation of trade unions to which the trade union of which he is a member is affiliated and (c) where the workman concerned is not a member of any trade union by an officer of any trade union concerned with the industry, or by any other workman employed in that industry. The appellant was the member of a trade union; and he was actually represented in the proceedings before the Tribunal by an officer of that Union, its Secretary, Fateh Singh. The Union through this officer, filed a written statement on his behalf. Upto January 12, 1957, when the appellant filed his application for separate representation, this officer, was in charge of the conduct of the proceedings on behalf of the appellant. Never before that date, the appellant appears to have raised any objection to this representation. The question is, whether, when thereafter he thought his interests were being sacrificed by his representative, he could claim to cancel that representation, and claim to be represen. ted by somebody else. In deciding this question, we have on the one hand to remember the importance of collective bargaining in the settlement of industrial dis putes, and on the other hand, the principle that the party to a dispute should have a fair hearing. In assessing the requirements of this principle, it is necessary and proper to take note also of the fact that when an individual workman becomes a party to a dispute under the Industrial Disputes Act he is a party, not independently of the Union which has espoused his cause. It is now well settled that a dispute between an individual workman and an employer cannot be an 201 industrial dispute as defined in section 2(k) of the Industrial Disputes Act unless it is taken up by a Union of the workmen or by a considerable number of workmen. In Central Provinces Transport Service Ltd. vs Raghunath Gopal Patwardhan (1) Mr. Justice Venkatarama Ayyar speaking for the Court pointed out after considering numerous decisions in this matter that the preponderance of judicial opinion was clearly in favour of the view that a dispute between an employer and a single employee cannot per se be an industrial dispute but it may become one if it is taken up by an Union or a number of workmen. "Notwithstanding that the language of section 2(k) is wide enough to cover disputes, between an employer and a single employee", observed the learned Judge, "the scheme of the Industrial Disputes Act does appear to contemplate that the machinery provided therein should be set in motion to settle only disputes which involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was not intended to be the subject of adjudication under the Act, when the same had not been taken up by the Union or a number of workmen". This view which has been re affirmed by the Court in several later decisions recognises the great importance in modern industrial life of collective bargaining between the workman and the employers. It is well known how before the days of collective bargaining labour was at a great disadvantage in obtaining reasonable terms for contracts of service from his employer. As trade unions developed in the country and collective bargaining became the rule the employers found it necessary and convenient to deal with the representatives of workmen, instead of individual workmen, not only for the making or modification of contracts but in the matter of taking disciplinary action against one or more workmen and as regards all other disputes. The necessary corollary to this is that the individual workman is at no stage a party to the industrial dispute independently of the Union. The Union or those (1)[1954] S.C.R. 956. 26 202 workmen who have by their sponsoring turned the individual dispute into an industrial dispute, can therefore claim to have a say in the conduct of the proceedings before the Tribunal. It is not unreasonable to think that section 36 of the Industrial Disputes Act recognises this position, by providing that the workman who is a party to a dispute shall be entitled to be represented by an officer of a registered trade union of which he is a member. While it will be unwise and indeed impossible to try to lay down a general rule in the matter, the ordinary rule should in our opinion be that such representation by an officer of the trade union should continue throughout the proceedings in the absence of excep tional circumstances which may justify the Tribunal to permit other representation of the workman concerned. We are not satisfied that in the present case, there were any such exceptional circumstances. It has been suggested that the Union 's Secretary Fateh Singh himself had made the complaint against the appellant which resulted in the order of dismissal. it has to be observed however that in spite of everything, the Union did take up this appellant 's case against his dismissal as its own. At that time also, Fateh Singh was the Secretary of the Union. If are Union had not taken up his cause, there would not have been any reference. In view of all the circumstances, we are of opinion, that it cannot be said that the Tribunal committed any error in refusing the appellant 's prayer for representation through representatives of his own choice in preference to Fateh Singh, the Secretary of the Union. As a last resort, learned counsel for the appellant wanted to urge that the Secretary of the Union had no authority to enter into any compromise on behalf of the Union. We find that no such plea was taken either in the appellants application before the Tribunal or in his application under articles 226 and 227 of the Constitution to the High Court. Whether in fact the Secretary had any authority to compromise is a question of fact which cannot be allowed to be raised at this stage. 203 In the application before the High Court a statement was also made that the compromise was collusive and mala fide. The terms of the compromise of the dispute regarding the appellant 's dismissal were that he would not get reemployment, but by way of "humanitarian considerations the company agreed without prejudice to pay an ex gratia amount of Rs. 1,000/ (Rupees one thousand) only" to him. There is no material on the record to justify a conclusion that this compromise was not entered in what was considered to be the best interests of the workman himself In our opinion, there is nothing that would justify us in interfering with the order of the High Court rejecting the appellant 's application for a writ. The appeal is accordingly dismissed. There will be no order as to costs. During the hearing Mr. Chakravarty, learned counsel for the company, made a statement on behalf of the company that in addition to the sum of Rs. 1,000 which the company had agreed to pay to the appellant as a term of settlement the company will pay a further sum of Rs. 500 (Rupees five hundred) only ex gratia and without prejudice. We trust that this statement by the counsel will be honoured by the company.

On the termination of the appellant 's services by his employer an industrial dispute was raised by his union and the question of his dismissal along with a number of other disputes was referred to the Industrial Tribunal. After several adjournments of the case the management and the union filed a joint petition of compromise settling all the points in dispute out of Court. Prior to this the appellant filed an application praying that he might be allowed to be represented by two of his co workers instead of the Secretary of the Union in whom he had no faith and who had no authority to enter into the compromise on his behalf. This prayer was not allowed by the Tribunal which made an award in terms of the compromise. The appellant, thereupon, made an application to the High Court praying for a writ quashing the order of the Tribunal disallowing him to be represented by a person of his own choice and 197 also for a direction to the Tribunal not to record the compromise. The High Court summarily dismissed the Writ Petition. , On appeal by special leave, Held, that the appellant was Dot entitled to separate repre sentation when already being represented by the Secretary of the union which espoused his cause. A dispute between an individual workman and an employer cannot be an industrial dispute as defined in section 2(k) of the Industrial Disputes Act unless it is taken up by a Union of workmen or by a considerable number of workmen. When an individual workman becomes a party to a dispute under the Industrial Disputes Act be is a party, not independently of the Union which has espoused his cause. Central Provinces Transport Service Ltd. vs Raghunath Gopal Palwardhan, , followed. Although no general rule can be laid down in the matter, the ordinary rule should be that representation by an officer of the trade union should continue throughout the proceedings in the absence of exceptional circumstances justifying other representation of the workman concerned.

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Appeal No. 22 of 1956. Appeal by special leave from the judgment and order dated July 4, 1954, of the Custodian General, Evacuee Property, in Revenue Case No. 427/R/ Judl. A. V. Viswanatha Sastri and R. Ganapathy Iyer, for the appellant. H.N. Sanyal,Additional Solicitor General of India, N. S.Bindra and D. Gupta, for the respondent. January 12. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave is directed against the order passed by the respondent, the Custodian General of Evacuee Property, New Delhi, in a revision petition confirming the orders of the subordinate authorities whereby the application made by the appellant for confirmation of the sale transaction in question has been rejected under section 40 (4) (a) of the Administration of Evacuee Property Act, XXXI of 1950. The appellant, Rabia Bai, who is a citizen of India having her residence at Grange, Yercaud, in the Salem District, came to know in 1949 that premises No. 20, Godown Street, G.T., Madras, was for sale. Since the appellant desired to acquire some immoveable property she arranged for 57 450 the purchase of the said premises through her husband. The said premises belonged to one Mohamad Gani Jan Mohamad who had left for Pakistan in 1947 and had settled there. The said Mohamad Gani Jan Mohamad had executed a power of attorney in favour of his nephew, Ahmed Abdul Gani. The said Gani came to Madras in April, 1949, and arranged for the sale, and as a result of negotiations between him and the appellant 's husband the latter entered into a written agreement with the former on April 29, 1949, to purchase the said property for Rs. 2,40,000/ . A substantial part of the consideration to the extent of Rs. 1,50,000 / was paid immediately in the form of cash and bank drafts. Thereafter the sale deed was duly engrossed and sent to Karachi for execution by the vendor. After it was received back duly executed it was presented at the Collector 's Office, Madras, and was duly stamped on June 27, 1949. Income tax clearance certificate had, however, to be obtained before the said document could be registered, and soon after the said certificate was obtained the document was presented for registration and was duly registered on August 11, 1949. The balance of the consideration of Rs. 30,000/ was paid before the registering officer to Mr. M. H. Ganni who also held a power of attorney from the vendor. That is how the appellant obtained title to the property in suit. As we will point out the appellant applied for confirmation of this sale deed and her application has been rejected. Before we refer to the relevant facts in connection with the said proceedings it is material to set out very briefly the history of the application of the evacuee laws to the State of Madras. Within a fortnight after the registration of the sale deed in favour of the appellant Ordinance No. XII of 1949 which had been promulgated on June 13,1949, was extended to Madras on August 23, 1949. Section 25(1) of the Ordinance imposed restrictions on transfers by evacuees. In substance this sub section provided that transfers made by or on behalf of evacuees of any right or interest in their property after such date as may be specified in that behalf with reference to any 451 Province by the Central Government by notification in the official gazette shall not be effective unless they are confirmed by the Custodian. Section 25(2) provided that an application for confirmation of such transfer may be made by the transferor or the transferor or any person claiming under, or lawfully authorised by, either of them to the Custodian within two months from the date of registration of the deed of transfer or within two months from the commence ment of the Ordinance whichever is later. The proviso to the said sub section empowered the Custodian to admit an application even if it was made after the period of limitation prescribed therefor if he was satisfied that there were sufficient reasons for doing so, and it imposed on the Custodian an obligation to record such reasons. Sub section (3) required the Custodian to hold a summary enquiry into the application in the prescribed manner, and authorised him to reject the application for confirmation if he was of opinion that (a) the transaction had not been entered into in good faith or for valuable consideration, or (b) the transaction was prohibited under any law for the time being in force, or (c) the transaction ought not to be confirmed for any other reason. Sub section (4) provides that if the application is not rejected under sub section (3) the Custodian may confirm the transfer either unconditionally or subject to such terms and conditions as he thinks fit to impose. Ordinance No. XII of 1949 was, however, repealed by Ordinance No. XXVII of 1949 which came into force on October 18, 1949. Section 38 of this latter Ordinance corresponds to section 25 of the earlier Ordinance except in one material particular. It provides that no transfer of any right or interest in the property made in any manner whatsoever after the 14th day of August, 1947, by or on behalf of an evacuee as therein specified shall be effective unless it is con firmed by the Custodian., In other words, whereas section 25 of the earlier Ordinance left it to the Central Government to specify the relevant date in reference to any Province by notification in the official gazette, section 38(1) has prescribed the date for all the Provinces 452 where the Ordinance applied. The rest of the relevant provisions of section 38 are the same as those of section 25 of the earlier Ordinance. On April 17, 1950, this Ordinance was in turn ,repealed by Act XXXI of 1950 by section 58. Section 40(1) and (4) are similar to the relevant provisions of sections 25 and 38 of the earlier Ordinances. One of the changes made is in regard to the relevant dates prescribed by section 40(1). Under section 40(1) the transfers which are affected by its provisions are those which are made after the 14th day of August, 1947, but before the 7th day of May, 1954; and in respect of them the said section provides, inter alia, that they shall not confer any rights on the parties thereto, if at any time after the transfer the transferor becomes an evacuee within the meaning of section 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. Section 40(4) deals with an application made under sub section (1) for the confirmation of the transfer. This sub section and its three clauses (a), (b) and (c) correspond to sections 25(3) (a), (b) and (c) and 38(4)(a), (b) and (c) of the two earlier Ordinances. Thus it is clear that the relevant provisions, which conferred power on the Custodian to hold an enquiry on the application made for the confirmation of the transfer and to reject confirmation in certain cases, continued to be the same. The position, therefore, is that Ordinance No. XII of 1949 which was extended to Madras on August 23, 1949, was in operation only until October 18, 1949. Thereafter Ordinance No. XXVII of 1949 took its place, and in turn this Ordinance was repealed by Act XXXI of 1950 on April 17, 1950. The application made by the appellant for confirmation of her purchase has been dealt with under the relevant provisions of the Act, and we would therefore refer to the said provisions hereafter. On December 19, 1949, the appellant applied for confirmation of the sale transaction in her favour. This application was resisted by the tenants who urged several grounds in support of their plea that the 453 transfer should not be confirmed. It appears that on January 11, 1951, the Assistant Custodian of Evacuee Property, Madras City, had declared the property of the vendor to be evacuee property since he was of the opinion that the vendor 's case fell within the four corners of the definition of " an evacuee " under section 2(d)(ii) of the Act. The declaration that the vendor 's property was evacuee property was made under section 7(1) of the Act. The Assistant Custodian considered the appellant 's application for confirmation of the transfer in the light of the declaration already made by him that the vendor was an evacuee and that his property was evacuee property. He referred to the relevant features of the transaction and came to the conclusion that he would not be justified in confirming it. It appears that in reaching this conclusion he relied on the provisions of section 40(4)(c) of the Act. In his opinion the feverish hurry disclosed by the conduct of the vendor attracted the provisions of section 40(4)(c). The order refusing to confirm the transaction was passed on July 31, 1951. The appellant challenged the correctness of this conclusion by preferring an appeal before the Custodian. The Custodian found in favour of the appellant that the sale transaction in question was supported by valuable consideration; even so he proceeded to examine the question as to whether it could be said to have been entered into in good faith. In dealing with this question the appellate authority considered the fact that the vendor had left for Pakistan in June, 1947, evidently on account of civil disturbances or in fear of such disturbances and that it was obvious that he was permanently settled in Pakistan. According to the appellate authority the vendor was desirous of disposing of his properties in India in order to convert them into cash and take them away to Pakistan. In this connection reliance was placed on a letter written by the vendor to Mohideen on July 4, 1949. In this letter the vendor had stated that " if the matter is delayed there would be many sort of new difficulties as you know that the Government are passing new rules every day ". He took the view that this letter 454 clearly disclosed that the vendor 's intention was to dispose of his properties as quickly as possible so as to evade the restrictions of the evacuee laws which he apprehended would be extended to Madras any day. this finding the appellate authority came to the conclusion that the transaction had been entered into otherwise than in good faith, and so it could not be confirmed under section 40(4)(a). The appellate judgment shows that according to the appellate authority the request for confirmation could be rejected also under section 40(4)(c) of the Act. This order was pronounced on February 4,1953. The appellant then moved the respondent, the Custodian General in his revisional jurisdiction. The respondent considered the matter afresh, and agreed with the finding of 'the appellate authority that though the transaction was supported by valuable consideration it could not be said to have been entered into in good faith. In support of this conclusion he relied on the conduct of the vendor, the haste with which the transaction was attempted to be completed and the anxiety disclosed by him in his letter to Mohideen. In substance the respondent came to the conclusion that the vendor wanted to evade the restrictions of the evacuee law which he knew would soon be extended to Madras, and that showed that he was not acting in good faith. It is on this view that the revisional application preferred before him by the appellant was dismissed by him on July 4, 1954. In his opinion the appellant 's case fell under section 40(4)(a) of the Act. He did not, therefore, consider the question about the applicability of section 40(4)(c). It is clear that if a transaction is affected by absence of good faith either in the vendor or the vendee its confirmation may properly be rejected under section 40(4)(a); in other words, good faith is required both in the vendor and the vendee. In that sense the provisions of section 40(4)(a) are more rigorous and stringent than those of section 53(1) of the Transfer of Property Act. Under the latter section which deals with fraudulent transfers the rights of a transferee in good faith and for consideration are expressly protected; that, 455 however, is not the position under section 40(4)(a). Therefore the fact that the appellant paid valuable consideration for the transaction and is not shown to have acted otherwise than in good faith in entering into the transaction would not justify her claim for confirmation of the said transaction if it is shown that the vendor had not acted in good faith in entering into the said transaction. The fact that consideration was paid by the appellant and that she was acting in good faith may perhaps be relevant in determining the character of her conduct in regard to the transaction; but it would not be relevant or material in determining the character of the conduct of the vendor in relation to the transfer. This position is not seriously disputed before us. Mr. Sastri, however, contends that in considering the good faith of the vendor it would be necessary to bear in mind that at the relevant time when negotiations were going on between the parties in respect of the transaction in question evacuee law had not been applied to Madras, and so evacuees like the appellant 's vendor were absolutely free to deal with their properties as they liked. He also attempted to argue that even where the evacuee law applied, the policy adopted by the Government of India was to confirm transfers made by Mohammedan evacuees in favour of Indian nationals unless a certificate signed by the prescribed income tax authority certifying that the transferor had paid all taxes due from him to the income tax department in respect of his property, business or undertaking, or has made satisfactory arrangements for the payment thereof, had not been produced, and unless he had failed to pay any other dues outstanding against him in the Custodian 's register in respect of his own property and third party claims recognised exparte by the Custodian. This argument is based upon a copy of the press note alleged to have been issued by the Government of India in the Ministry of Rehabilitation on May 13, 1949. On the other hand, the learned Additional Solicitor General has relied on a copy of a circular issued by the Government of India on March 9, 1950, where it has been stated that the instructions 456 issued by the Government of India are subject to other requirements of section 38(4) of the Central Ordinance No. XXVII of 1949 ; in other words, whatever may be the nature of the circulars and directions issued by the Government of India, the appropriate authorities administering the provisions of the evacuee law had to deal with the matters brought before them under the relevant provisions of the said law. We do not think we can attach much importance to the argument that even where the evacuee law applied confirmation of sale transactions was intended to be automatic subject to the satisfaction of the two conditions specified in the press note. We are bound to assume that the question about confirming sale transactions was required to be, and was in fact, dealt with by the appropriate authorities under the relevant statutory provisions which were in force at the material time. It is, however, true that no evacuee law had been extended to Madras at the time when the impugned transaction was completed, and that naturally raises the question as to whether if a transaction had been entered into deliberately and consciously with the object of evading the application of evacuee law which it was apprehended would soon be extended to Madras, does that fact attract the provisions of section 40(4)(a) of the Act? As we have already indicated the respondent has answered this question in the affirmative, and Mr. Sastri contends that this conclusion is erroneous in law. Mr. Sastri 's argument is that the expression " good faith " in section 40(4)(a) should be construed in the sense attributed to the said expression by section 3, sub section (22) of the General Clauses Act, X of 1897. The said provision lays down that a thing shall be deemed to be done in good faith where it is in fact done honestly whether it is done negligently or not. The argument is that the vendor could not be said to have acted dishonestly when no evacuee law applied to Madras, and an intention to avoid a law which may be applied to Madras in future cannot be said to introduce an element of dishonesty in his conduct. In our opinion this argument cannot be accepted. In this connection it is necessary to bear in mind that section 3 of the General 457 Clauses Act itself provides that the definitions prescribed by the said section are applicable " unless there is anything repugnant in the subject or context ", and so it would not be unreasonable to hold that the content of the expression " good: faith " would depend,, substantially on the context of the statute which uses it. In determining the denotation of the said expression in section 40(4)(a) it would be essential to take into account the scope and effect of the main provisions of section 40(1). As we have already noticed, this section provides, inter alia, that no transfer made after the 14th day of August, 1947, shall be effective so as to confer any rights in respect of the said transfer on the parties thereto if, at any time after the transfer, the transferor becomes an evacuee within the meaning of section 2, or the property of the transferor is declared or notified to be An evacuee property within the meaning of the Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. It would thus be clear that all transfers made after the 14th day of August, 1947, but before the 7th day of May, 1954, are hit by this section, and that obviously would bring within the mischief of the section a large number of transfers effected at a time when no evacuee law was in force in respect of them. Reading section 40(1) and (4) together it appears that the transfers hit by the former provision would be valid only if they are confirmed under the latter provision. It is possible that a transfer made during the prohibited period may have been entered into in good faith or was for valuable consideration and did not attract any of the provisions contained in cls. (a), (b) and (c) of a. 40(4). In such a case merely because it was affected within the prohibited period it would not become void and the Custodian may have to confirm it; but where such a transfer attracts the provisions of section 40(4)(a) for instance, it would not be affirmed and it would remain inoperative. This shows that the main object of the Act was to preserve the property of persons who had migrated to Pakistan till the Government of India could come to some understanding with the Pakistan Government in regard to adjustment of claims of Indian 58 458 evacuees in respect of the properties left by them in Pakistan. The idea then presumably was that the two Governments should agree on the valuation of the evacuee properties left by evacuees in the two respective countries and the difference in the said valuation should be amicably adjusted between them. After such adjustment was made it was intended to compensate the evacuees in regard to the loss incurred by them in respect of the properties left by them in the two respective countries. That this intention did not succeed is an other matter. There can, however, be no doubt about the policy and object of the Act, and in determining the content of the expression " good faith " in the context of the main provision of section 40(1) this object and policy of the Act must be borne in mind. Section 40(4) refers to three kinds of cases where the transfer may not be confirmed; cl. (a) deals with transactions which are not entered into in good faith or for valuable consideration; cl. (b) deals with transactions which are prohibited under any law for the time being in force; and cl. (c) deals with cases of transactions which are not confirmed for any other reason. It would thus be seen that the scope of the three clauses is very wide. It is not only transactions prohibited under any law that fall within the mischief of section 40(4); but transactions which are not entered into in good faith or for valuable consideration also fall within its mischief Now, if the test prescribed by section 3(22) of the General Clauses Act as interpreted by Mr. Sastri is held to be relevant a large number of transactions may have to be confirmed even though they are shown to have been deliberately entered into with the object of evading the provisions of section 40(1). In our opinion, the fact that the evacuee law had not been extended at the relevant time to Madras would not be decisive in the matter. It was well known that the said law was being extended from Province to Province as it was deemed necessary, and indeed the letter written by the vendor to Mohideen clearly shows that the vendor knew as much. The history of the evacuee laws passed in several States and by the 459 Central Government and Legislature from time to time shows that the Legislatures were attempting to meet with an unprecedented problem, and the laws passed by them in India and Pakistan at the material time made it perfectly clear to the evacuees from both the countries that the two countries were adopting appropriate legislative measures to protect the evacuee properties and prevent their transfers. Therefore, if a vendor sold his property not for any necessity or for any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, that clearly was intended to defeat the provisions of the Act which he knew would soon be extended to Madras, and so it would be difficult to hold that he was acting honestly within the meaning of section 40(4)(a) of the Act. An intention to defeat the provisions of the Act cannot be said to be honest in the context. If despite his intention to defeat the application of the Act a transaction is upheld as entered into in good faith many transactions may escape the application of section 40(1), and that clearly would defeat the purpose of the Act. It is significant that though the provisions of section 40(1) are drastic they have been deliberately made retrospective, and that emphatically brings out the aim and object of the Act; and it would be unreasonable to ignore this aim and object of the Act in construing the expression " good faith " in section 40(4)(a). We would, therefore, hold that having regard to the aim and object of the emergency legislation with which we are concerned in the present case the expression " good faith " used in section 40(4)(a) has been property construed by the respondent when he held that a deliberate intention to defeat the apprehended application of the evacuee law which was responsible for the transfer in question brings the transfer within the ' mischief of section 40(4)(a). The result is the appeal fails and is dismissed with costs. Appeal dismissed.

M who had gone to Pakistan in 1947, sold his property in the State of Madras to the appellant on August II, 1949. At that time there was no legislation with respect to evacuee property in Madras. On August 23, 1949, the Administration of Evacuee Property (Chief Commissioners Provinces) Ordinance, 1949 (XII of 1949), was extended to Madras. The appellant made an application for the confirmation of the sale. Subsequently, M was declared an evacuee and the property as evacuee property. It was found that M had entered into the transaction with the object of evading the evacuee law which it was apprehended, would be extended to Madras. Consequently, confirmation of the sale was refused under section 40(4)(a) of the Administration of Evacuaee 449 Property Act, 950, on the ground that the transaction had not been entered into in good faith. The appellant contended that there was no lack of good faith on the part of M as he could not be said to have acted dishonestly when at the time of the sale no evacuee law had been applied to Madras and that an intention to avoid a future law could not be said to be dishonest. Held, that the vendor had not entered into the transaction in " good faith " and the confirmation of the sale was rightly refused under section 40(4)(a) of the Act. Having regard to the aim and object of the emergency legislation a deliberate intention to defeat the apprehended evacuee law motivating a sale amounted to want of " good faith ". If the vendor sold his property not for any necessity or any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, he intended to defeat the provisions of the evacuee law which he knew was to be extended to Madras soon and he acted dishonestly within the meaning of section 40(4)(a).

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Appeal No. 315/1958. Appeal by special leave from the judgment and order dated February 5, 1957, of the Bombay High Court in I.T.R. No. 34/1956. 372 R. J. Kolah, and I. N. Shorff, for the appellant. A. N. Kripal and D. Gupta, for the respondent. January 6. The Judgment of the court was delivered by KAPUR, J. This is ail appeal against the judgment and order of the High Court of Judicature at Bombay in Income tax Reference No. 34 of 1956. The appellant is a non resident Bank incorporated under the National Bank Act of the United States of America with its head office in that country and with branches all over the world including some branches in India. It was assessed under the Business Profits Tax Act (Act XXI of 1947), hereinafter termed the " Act ", in respect of the chargeable accounting periods: 1 4 1946 to 24 12 1946, 25 12 1946 to 24 12 1947, 25 12 1947 to 23 12 1948, and 24 12 1948 to 31 3 1949 and the sole question for decision in this appeal is the meaning of the word " reserves " in R. 2(1) of Schedule 2 of the Act and how the capital of the appellant during the above mentioned chargeable accounting periods has to be computed for the purpose of allowing the " abatement " under the Act. The appellant contended that in computing the amount for the purpose of abatement it was entitled to include what is termed in the United States " Undivided Profits ", the contention being that this item falls within the word " reserves" in R. 2(1) of Schedule 11 of the Act which provides: "Where the company is one to which rule 3 of Schedule I applies, its capital shall be the sum of the amounts of its paid up share capital and of its reserves in so far as they have not been allowed in computing the profits of the company for the purpose of the Indian Income tax Act, 1922 (XI of 1922), diminished by the cost to it of its investments or other property the income from which is not includable in the profits, so far as that cost exceeds any debt for money borrowed by it. " 373 It is not necessary to give the details of all the years; but it will be sufficient as an illustration if we: were to confine ourselves to the " Undivided Profits " in the Balance Sheet as on December 31, 1946, wherein the relevant entries were as follows : Capital . $ 77,500,000 00 Surplus . $ 152,500,000.00 Undivided Profit . $ 29,534,614.21 The Report of the Directors dated January 14, 1947, was as follows: " At the year end, Capital of the Bank remains at $ 77,500,000 surplus has increased to $ 152,500,000 by the transfer of Rs. 10,000,000 from Undivided Profits. After this transfer, Undivided Profits are $ 29,534,614 an increase of $ 240,376 from a year ago. The Trust Company has Capital of $ 10,000,000 surplus of s 10,000,000 and Undivided Profits of $ 8,097,020. The two institutions thus show total capital funds, that is Capital, Surplus and Undivided Profits of $ 287,631,634 or $ 46 39 per share compared with $ 44.60 per share at the end of 1945. " According to the Balance Sheet of 1948, capital funds since 1939 had increased from $ 169,768 thousands to $ 320,795 thousands in the year 1948 and there had been a progressive increase both in what is called " Surplus " as well as " Undivided Profits ", the former increased from $ 62,500 thousands to $ 182,500 thousands and the latter from $ 19,768 thousands to $ 50,795 thousands. The question in this case is whether this large sum of money shown as " Undivided Profits " is a part of the Reserves or is equivalent to the unallocated amount carried forward at the end of a year of account in the balance of Profit & Loss Account as we know it. It was the sum of $ 29,534,614.21 and similar sums for the other chargeable Accounting Periods which are the subject matter of controversy in this appeal. Both the Income tax Officer and the Appellate Assistant Commissioner excluded these amounts in determining the capital of the Bank under R. 2(1) of Schedule II on the ground that they were not a part of the reserves of the Bank. 374 The appellant took an appeal to the Income tax Appellate Tribunal which was dismissed on the ground that " Undivided Profits " meant nothing more than the " Balance of the profits and loss account" and that no distinction could be drawn merely because in the nomenclature used in the United States, the amount was shown as " Undivided Profits" and not balance of the profit and loss account. At the instance of the appellant the following question of law was referred to the High Court. " Whether on the facts and in the circumstances of the case I Undivided Profits ' of $ 29,534,614.21 shown in the condensed statements of conditions as of December 31, 1946, can be treated as reserves and added to the capital, as required by rule 2(1) of Schedule II to the Business Profits Tax Act for the chargeable accounting period 25 12 1946 to 24 12 1947?" In its order the Tribunal said that the Treasury Rules in United States divided capital account into four different heads, Capital, Reserve, Surplus and the Undivided Profits. The reserves are really reserves for liabilities including the reserves for dividends. " The general reserves as shown by the balance sheet in India is equivalent to the Surplus. The undivided profits is equivalent to the balance of profit and loss account. " In the statement of the Case submitted to the High Court, the Appellate Tribunal stated that the question whether the Undivided Profits meant the same thing as balance of the profit and loss account was a question of fact and it did not matter what name was given to it. But this was the very question which was referred to the High Court. The High Court after referring to the Directors ' Report to the shareholders held that the Undivided Profit of $ 29,534,614.21 did not constitute " reserves " because no direction had been given in regard to it, it had never been transferred to any reserve and had never been earmarked for any particular purpose and that the only act of volition on the part of the Directors of the Bank was the transfer of 10 million 375 dollars to the Surplus. In its judgment the High Court said : "It is true that these large amounts (of Un divided Profits) remain with the Bank, that the Bank uses them, that business is carried on with the help of those funds and that they are as much capital of the Bank as capital in the strict sense of the term. " The High Court however held that they did not satisfy the test laid down by the Supreme Court in Century Spinning & Manufacturing Co. Ltd. vs C.I.T., Bombay (1) as the amount was not transferred to any reserve and there being no act of volition on the part of the Directors this could not be regarded as Reserve. The correctness of this view is challenged before us. The Directors ' report dated January 14, 1947, shows that the surplus increased as a result of the allocation made by the Directors, by 10 million Dollars, which was taken from Undivided Profits and the Undivided Profits themselves increased to $29,534,614.21 which was an increase of $240,376 in the year 1946 and therefore the Capital Funds of the company which included Capital, Surplus and Undivided Profits along with similar items from the Trust Company had increased considerably which was reflected in per share increase, i.e., 44.60 per share at the end of 1945 to 46.39 per share at the end of 1946 thus showing that it was the result of an act of the Directors that Surplus was increased and a particular sum was left in the Undivided Profits. It was contended that no sum could be treated as 'Reserves ' unless the Directors recommended it to be so allocated and it was so adopted by the shareholders. But this argument ignores the evidence placed by the appellant. Under the Treasury Rules of the United States of America containing " Instructions for Preparation of Reports of Condition by National Banking Associations ", certain sums had to be specifically allocated under section 5211 of the revised Statute of the United States (Title Items 25 to 28, according to these instructions, deal (1) ; 376 with Capital Account. Item 26 deals with 'Surplus ' and item 27 with 'Undivided Profits ' and item 28 with ' Reserves ' (and retirement account for preferred stock). The following Reserves come under item 28: (a). Reserve for dividends payable in Common stock. (b) Reserves for other undeclared dividends. (c) Retirement account for,preferred stock. (d) Reserves for contingencies, etc. Item 29 was as follows " Total capital accounts ". This item is the sum of items 25 to 28, inclusive. Along with this the appellant has placed a copy of the letter from the Deputy Controller of Currency, Washington, the relevant portion of which is as follows : " In connection with this matter we wish to assure you that your position as stated is in complete accord with that of the Office of the Comptroller of the Currency. In the United States, the 'Undivided Profits ' as reflected in the accounting of a bank actually represents a part of its capital funds. All of the other bank supervisory agencies in the United States consider the 'Undivided Profits ' of a bank as a part of its capital funds. In any calculation for the purpose of determining the adequacy of capital in a: commercial bank in the United States, the supervisory authorities include 'Undivided Profits ' as an integral part of the capital structure as it would not be possible otherwise to make an accurate computation. When losses occur in banks, it is the usual practice in many banks to charge them against the 'Undivided Profits ' account which by any reasoning would be inappropriate if the account were regarded as ' Undistributed Profits '. In commercial banks in the United States, it is not customary to maintain any account that could be regarded specifically as 'Undistributed Profits ' in the same. sense as applied to similar accounts in the other corporations in India. The term 'Undivided Profits ' simply follows a bank accounting nomenclature used ill the 'United States to 377 designate profits set aside, after provisions for expenses and taxes, dividends and reserves, for continuous future use in the business of the bank ' and it bears a close, if not identical, relationship to the Earned Surplus Account of an industrial corporation. Balance sheets of three other banks of the United States relied on by the appellant show that Capital Fund comprises three kinds of funds, i.e., Capital, Surplus and Undivided Profits. The documents placed on the record show that these three different kinds of funds put together make up what is called " Capital Fund '. The creation and maintenance of the item known as Undivided Profits is a requirement of the Treasury Rules which are made under the Statute and therefore it cannot be said that the amount of Undivided Profits in the Balance Sheet was not allocated as a result of either a resolution of the Directors, accepted by the shareholders or on account of the requirements of the law. The " Undivided Profits " have to be employed in the manner indicated by the letter of the Deputy Controller of Currency. They are set up for expenses, taxes, dividends and reserves for continuous use in the business of the Bank and are a part of the capital funds and an integral part of the capital structure and without it, it would not be possible to make an accurate computation. The reason for the existence of this fund, as shown by that letter is that when there are losses, they can be charged against "Undivid ed Profits " which expression means profits set apart after provision for expenses and taxes etc. for continuous use in the business of the Bank. There is a difference between the system of accounting of Banking Companies in India and the United States; the failure to appreciate this difference has led the Appellate Tribunal as well as the High Court to arrive at an erroneous conclusion. In India at the end of an year of account the unallocated profit or loss is carried forward to the account of the next year and such unallocated amount gets merged in the account of that year, In the system of accounting in the 48 378 U.S. A. each year 's account is self contained and ,nothing is carried forward. If after allocating the profits to diverse heads mentioned above any balance remains, it is credited to the " Undivided Profits " which become part of the capital fund. If in any year as a result of the allocation there is a loss the accumulated undivided profits of the previous years are drawn upon and if that fund is exhausted the Banking Company draws upon the surplus. In its very nature the Undivided Profits are accumulation of amounts of residue on hand at the end of year of successive periods of accounting and these amounts are by the prevailing accounting practice and the Treasury directions regarded as a part of the capital fund of the Banking Company. The nature of " Undivided Profits" was considered by the Supreme Court of America in Fidelity Title and Trust Co. vs United States (1). In that case a suit was brought by the Fedelity Co. to recover the tax assessed on its whole capital and undivided profits under section 2 of the Spanish War Revenue Act. In the Supreme Court it was contended by the company that the terms "Capital", " Surplus " and " Undivided Profits " have a precise and definite meaning in the business of banking and that Undivided Profits are not surplus and cannot therefore be taxed as " Surplus ". The Government on the other hand contended that the undivided profits were taxable as being a part of Capital or Surplus. The Court held that " Undivided Profits ". were taxable as being a part of the Capital employed. Mr. Justice Brandeis delivering the opinion of the Court said at p. 955: " The Act declares that 'in estimating capital surplus shall be included, ' and that the 'annual tax shall in all cases be computed on the basis of the capital and surplus for the preceding fisical year. . . . . . . " As it is the use or employment of capital in banking, not mere possession thereof by the banker, which determines the amount of tax, the fact that a portion of the capital so used or employed is (1) ; ; 379 designated 'undivided profits ' is of no legal signi ficance." As to what the word " Reserves " as used in the Business Profits Tax Act connotes, was considered by this Court in the Commissioner of Income tax vs Century Spinning & Manufacturing Co. Ltd. (1). It was held that the true nature and character of a sum disputed as reserve was to be determined with reference to the substance of the matter. The amount in dispute in that case was the profits after the deduction of depreciation and tax which amount was carried to the Balance Sheet and was later recommended by the Directors to be appropriated mainly to dividends and balance to be carried forward to the next year 's account. Thus on the crucial date, i.e., April 1, 1946, from which the Chargeable Accounting Period began the sum in dispute had not been declared as reserve; on the other hand the Directors had earmarked it for distribution as dividend and it remained as a mass of undistributed profits available for distribution. At page 209 Ghulam Hassan J. said: "The reserve may be a general reserve or a specific reserve, but there must be a clear indication to show whether it was a reserve either of the one or the other kind. The fact that it constituted a mass of undistributed profits on the 1st January ' 1946, cannot automatically make it a reserve . . . . .A reserve in the sense in which it is used in rule 2 can only mean profit earned by a company and not distributed as dividend to the shareholders but kept back by the directors for any purpose to which it may be put in future. . . . " Applying this test to the disputed sum, it cannot be said that the amount is not "Reserve" within the meaning of the Rules. As is shown by the instruction under section 5211 of the Revised Statute of the United States and the letter of the Deputy Controller referred to above, the appellant bank was required to keep a, certain sum of money under the head " Undivided ,Profits " and that is an integral part of the capital (1) ; 380 structure. Under these circumstances it would be erroneous not to treat the amount of " Undivided Profits " as a part of the capital fund. In our opinion therefore the amount designated as Undivided Profits " is a part of the reserves and has to be taken into account when computing the capital and reserves within R. 2(1) of Schedule 11 of the Act. The question which was referred by the Tribunal should have been decided in the affirmative and in favour of the appellant and the amount should have been added to the capital as allowed by R. 2(1) for the Chargeable Accounting Periods. In the result the appeal is allowed. The appellant will have its costs in this Court and in the High Court. Appeal allowed.

The appellant, a non resident Banker incorporated under the National Bank Act of the United States of America with its Head Office in America, was assessed under Business Profits Tax Act, 147. Under the Treasury Rules of the United States of America and Instructions for preparation of reports of conditions by the National Banking Association certain sums had to be specifically allocated under section 5211 of the Revised Statute of the United States, and the appellant bank was required to keep a certain sum of money under the head " undivided profits " and that was an integral part of tile capital structure. The reason for the existence of this fund was that when losses occurred according to the practice they could be charged against " undivided profits ", i.e., profits set apart after provision for expenses and taxes etc. for continuous use in the business of the Bank. The appellant contended that in computing the amount for the purpose of " abatement " it was entitled to include the undivided profits " which fell within the word " reserves ". The question was whether the large sum of money shown as " undivided profits " was a part of the reserves. Held, that the amount designated as " undivided profits was a part of the reserves and had to be taken into account when computing the capital and reserves within Rule 2(1) of Sch. II of the Business Profits Tax Act, 1947.

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Appeal No. 105 of 1950. Appeal from the Judgment and Order dated March 22, 1945, of the Court of the Judicial Commissioner, Ajmer Merwara, Ajmer (Davies J. C.) in Civil First Appeal No. 16 of 1944, arising out of the Judgment and Decree dated March 13, 1944, of the Court of the Judge, Small Causes, Ajmer, and Additional District Judge, Ajmer, in Civil Suit No. 28 of 1942. section section Deedwania for the appellant. M. C. Setalvad, Attorney General for India, (J. N, Sharma, with him) for the respondents, 199 1952. November 10. The Judgment of the Court was delivered by MAHAJAN 'J. This is an appeal by special leave granted by the Privy Council and limited to the question of court fee, viz., whether the memorandum of appeal presented to the High Court court fee was payable under section 7 (iv) (e) or article 17 of Schedule II of the Court Fees Act. The question whether the memorandum of appeal was properly stamped arose in the following circumstances: Edward Mills Co. Ltd. is a joint stock company situate in Beawar, Ajmer Merwara. In accordance with the provisions of the articles of the company one Seth Gadh Mal Lodha and Rai Sahib Moti Lal (respondent No. 2) were its chairman and managing director respectively since 1916. Seth Gadh Mal Lodha represented his family 'firm of Kanwal Nain Hamir Singh, while Rai Sahib Moti Lal represented the joint family firm of Champa Lal Ram Swaroop, 1st July, 1938, Rai Sahib Moti Lal and his firm were adjudged insolvents by the Bombay High Court. The result was that respondent No. 2 had to vacate the office of managing director and the members of his firm also became ineligibleforit. By a resolution of the board of direetors passed 18th July, 1938, Gadh Mal Lodha was appointed to take the place of Rai Sahib Moti Lal as managing director. Gadh Mal Lodha died llth January, 1942, and the board of directors then appointed Seth Sobhagmal Lodha to act as chairman as well as managing director till the, appointment was made by the company. An extraordinary meeting of the company was called for the 8th February, 1945, for the election of the chairman. At this meeting conflict &rose between the two groups represented by Sobhagmal Lodha and Moti Lal. The chairman therefore dissolved the meeting but the supporters of Moti Lal continued to hold it and passed a resolution appointing him as the sole agent and chairman for a period of twenty years a remuneration equal to ten per cent of the profits of the company It is this 200 resolution of the 8th February, 1942, which has led to the present dispute. Seth Sobhagmal in the situation that arose approached the District Judge of Ajmer with the prayer that a general meeting of the company may be held under the supervision of the court. This request was allowed 11th February, 1942, and the court ordered that the meeting be held 12th February, 1942, under the chairmanship of Seth Sobhagmal. Respondent No. 2 being aggrieved by this order, filed an ap plication in revision in the Court of the 'judicial Commissioner impugning the order. The learned Judicial Commissioner allowed the revision and directed that the resolution of the 8th February, 1942, should be acted upon. Having failed to get redress in the summary proceedings, the appellant then filed the suit out of which this appeal arises for quashing the resolution of the 8th February, 1942. In the plaint he asked for the following relies: 1. That it be declared that the appointment of defendant No. 2 is illegal, invalid and ultra vires and that he has no right to act as chairman, managing director etc. of defendant No. 1; 2. That a receiver be appointed to take charge of the management of the company, until a properly qualified chairman managing director etc. are duly appointed as required by the memorandum and articles of the company. The plaint bore a court fee stamp of Rs. 10 only, but the objection of the respondents that court fee was payable relief No. 2 the appellants paid ad valorem fee Rs. 51,000 which was the valuation of the suit for purposes of jurisdiction. The Additional District Judge dismissed the suit the preliminary ground that it was not maintainable as it related to the internal management of the company and that the, appellants had no right to bring it without impleading the directors who were necessary parties to it. 201 Aggrieved by this decision of the trials Judge, the appellants preferred an appeal to the Court of the Judicial Commissioner, Ajmer Merwara, at Ajmer. The memorandum of appeal was Stamped with a courtfee stamp of Rs. 1 0 and it was expressly stated therein that relief No. 2 of the plaint was given up. An objection was raised regarding the amount of courtfee paid the memorandum of appeal. The Judicial Commissioner ordered that proper court fees be paid thereon in a month. In this order no reasons were given for this decision. The additional fee demanded was not paid, and the Judicial Commissioner dismissed the appeal with costs 22nd March, 1945. An application was made for leave to appeal to the Privy Council against this order but, it was refused. In the order refusing leave it was said as follows: " appeal to this court, the memorandum was again stamped with a ten rupee stamp only and the respondents therefore objected. It having been conceded by plaintiffs earlier that the relief for the receivership was consequential to the relief for the declaration, the appellants were directed to pay the same stamp as had been paid in the trial Court. They objected stating that they had expunged from their memorandum of appeal the request that the court should appoint a receiver and that they were not, therefore, liable to pay the same amount this a notice was issued and counsel were beard. It being clearly set out in section 42 of the Specific Relief Act that no court shall grarant a declaration only where the plaintiff being able to seek further relief than a mere declaration of title omits to do so, the appellants were directed to pay as earlier ordered the same amount as bad ultimately been paid the plaint. They had earlier sought a consequential relief and the court 'was, therefore, entirelv unable to hold that the plaintiffs were unable to seek a further relief, they having sought the relief in the lower court and it having been refused to them. The amount of the stamp was not paid and the appeal was therefore dis missed with costs. " 202 The reasons for demanding additional court fee, though not mentioned in the original order, are stated in this order. The question for determination in this appeal is whether the order of the Judicial Commissioner demanding additional court fee can be sustained in law. A memorandum of appeal, as provided in article 1 of Schedule I of the Court Fees Act, has to be stamped according to the value of the subject matter in dispute in appeal; in other words, the relief claimed in the memorandum of appeal determines the value of the appeal for purposes of court fee. The only relief claimed in the memorandum of appeal was the first one mentioned in the plaint. This relief being purely of a declaratory character, the memorandum of appeal was properly stamped under article 17 of Schedule II It is always open to the appellant in appeal to give up a portion of his claim and to restrict it. It is further open to him; unless the relief is of such a nature that it cannot be split up, to relinquish a part of the claim and to bring it within the amount of court fee already paid: Brahnmnandam vs Secretary of State for India(1); Ram Prasad vs Bhiman(2); Karam Chand vs Jullundur Bank Ltd(1); Neelachalam vs Nara singha Das(4); Sah Bamehand vs Pannalal(5); Chuni Lal vs Sheo Charanlat Lalman(1). The plaintiffs in express terms relinquished the second relief,they had claimed in the plaint, in their memorandum of appeal. For the purpose of deciding whether the memorandum of appeal was properly stamped according to the subjectmatter of the appeal, it was not open to the Judicial Commissioner to canvass the question whether the suit with the second prayer eliminated from it fell within the mischief of the proviso to section 42 of the Specific Relief Act. That was a question which related to the merits of the appeal and did not concern its proper institution this ground, therefore, the Judicial Commissioner had no jurisdiction to demand (I) Mad. 48 (2) All. 151. (3) A.I.R. 1927 Leh. 543. (4) A.R. (5) A.I.R. 1929 All. (6) All. 203 additional fee from the plaintiffs and the appeal could not be dismissed for failure to meet it. We are thus of the opinion that the order demanding additional court fee the memorandum of appeal as it stood, ' that is, minus the second prayer, was erroneous and we hold that the memorandum of appeal was properly stamped, as the subject matter of the appeal was purely of a declaratory character. Mr. Setalvad for the respondents contended that the first relief claimed in the plaint, and which was the subject matter of the appeal included within it consequential relief and was not purely declaratory in nature and therefore the Judicial Commissioner was right in demanding additional court fee the value of the consequential relief. It was said that the words that respondent No. 2 "had no right to act as chairman and managing director" amounted to a claim for consequential relief. We are unable to agree. The claim contained in the first relief of the plaint is to the effect that it be declared that defendant No. 2 has no right to act as chairman an managing director because of his appointment being illegal, invalid, and ultra vires. The declaration claimed is in negative form that defendant No. 2 has no right to act as chairman and managing director. No claim for a consequential relief can be read within this prayer. The words "that defendant 2 has no right to act as chairman. . ' ' are mere repetition and reiteration of what is contained in the opening sentence of the paragraph. This contention of Mr. Setalvad, therefore, cannot be sustained. It was next contended that in view of the provisions of section 12 of the Court Fees Act it should be held that the decision of the Judicial Commissioner ' was final, and could not be challenged in appeal. Section 12 of the Court Fees Act enacts as follows: "Every question relating to Situation for the purpose of determining the amount of any fee chargeable under this chapter a plaint or memorandumu 204 of appeal shall be decided by the court in which such plaint or memorandum, as the case may be, is filed, and such decision shall be final as between the parties 'to the suit. " The provisions of this section have to be read and construed keeping in view the provisions of the Code of Civil Procedure. Order VII, Rule 11, Civil Procedure Code, provides as follows: "The plaint shall be rejected (b) where the relief claimed is undervalued and the plaintiff, being required by the court to correct the valuation within a time to be fixed by the court, fails to do so;. (d) where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and the plaintiff, being required by the court to supply the requisite stamp paper within a time to be fixed by the court, fails to do so. " An order rejecting a plaint is a decree as defined in section 2; sub section (ii), and is appealable as such. There is an apparent conflict between the provisions of the Code of Civil Procedure and the provisions of section 12 which make the order relating to valuation final and efforts to reconcile the provisions of the Court Fees Act and the Code have resulted in some divergence of judicial opinion the construction of the section. In a number of decisions the Calcutta High Court took the view that the finality declared by section 12 of the Court Fees Act had been taken away by the relevant provisions of the Code, as the order rejecting a plaint was appealable as a decree, no matter whether the dispute related to the category under which the same falls for purposes of court fee or only to valuation pure and simple under a particular category: Vide In re Omrao Mirza vs Mary Jones(,) and Tara Prasanna Chongdar vs Nrisingha Moorari Pal(1). This extreme view has not been maintained in later decisions and it has been held that the finality declared by section 12 is limited only to the question (2) Cal. 205 of valuation pure and simple and does not relate to the category under which a certain suit falls: Tariman Khatun vs Secretary o State for India in Council(1). The Allahabad High Court in its earlier decisions took the extreme view: Vide Muhammad Sadik vs Muhammad Jan(2). Later that court veered round to the view that the finality declared by section 12 only related to matters of, appraisement. The High Court of Lahore has placed a similar construction the meaning of the expression "valuation" in section 12 and has held that the finality attaches only to a decision which concerns valuation simpliciter and no finality attaches when a court decides a question whether a case falls within one or other category of the cases mentioned in the different sections and schedule of the Court Fees Act: Vide Mahna Singh vs Bahadur Singh(1); Mst. Parmeshri vs PannaLal(1). Thisviewhasconsistentlybeenheldin thatcourt. The Madras High Court took the same view in Lakshmi Amma vs Janamajayam Nambiar(5); Annamalai Chetty V. Cloete(6); and Narasimhalu Chetty vs Bamayya Naidu(7). Mr. Setalvad drew our attention to the recent Full Bench decision of that court in Madana Mohana Naiko vs Krupasindhu Naiko(1). That case, however, concerned the second part of section 12 and was not concerned directly with the construction to be placed the first part of the section. It, however, contains certain observations indicating that in the opinion of the judges there was no ground for this restricted construction of the word " valuation " in section 12 and that the finality declared bysection 12 attached not only to valuation pure and simple but also attached to decisions relating to category under which a suit or appeal falls for purposes of court fee. These obiter observations, however, cannot be said to ,,overrule the earlier Full Beach decision of that court in Lakshmi Amma vs Janamajayam Nambiar(5). In a (1) I.I.R.(1940) (2) (1889) I.L.R. II All. 91, F.B. (3) (4) A I.R. 27 (5) , F.B. (6) Mad. 204. (7) A.I.R. 1942 Mad. (8) A.I.R. 1937 Mad. 81. 206 later decision in Narasimhalu Chetty vs Bamayya Naidu(1), the decision of the Full Bench was explained as not in any way overruling the decision in Lakshmi Amma vs Janamajayam Nambiar(2). All recent decisions of the Bombay High Court have taken the same view: Vide Dada vs Nagesh(3); Krishnaji Bari Dhandhere vs Gopal Narain Dhandhere(4). Mr. Setalvad drew our attention to an earlier decision of the Bombay High Court in Vithal Krishna vs Balakrishna Janardan(5). In that case the court undoubtedly held that no appeal lay and the finality declared by section 12 was comprehensive enough to include all questions whether relating to category or valuation pure and simple. It was, however, held that the High Court could correct an erroneous decision in the exercise of its revisional powers. Thus the finality declared by section 12 was destroyed by the exercise of powers of appeal under the guise of exercising revisional jurisdiction. In Patna and Oudh the game view has been taken as in Lahore. Vide Chandramoni Koer vs Basdeo Narain Singh (6); Gumani vs Banwari(7). It thus appears that the consensus of judicial opinion is against the construction suggested by Mr. Setalvad. We think that the construction given to the language in section 12 in these decisions is right, and our reasons for saying so are these: The difference in the phraseology employed in sections 5 and 12 of the Court Fees Act indicates that the scope of section 12 is narrower than that of section 5. Section 5 which declares decisions questions of court fee whenever they arise in the chartered High Courts as final makes a decision as to the necessity of paying a fee or the amount thereof final. Whereas section 12 makes a decision every question relating to valuation for the purpose of determining the amount of any fee payable under chapter 3 a plaint or memorandum of appeal final. Had section 12 been drafted somewhat as follows (i) A.I.R. 1942 Mad. 502.(5) (1886) I.L.R. lo Bom. 610, F.B, (2) F.B.(6) (3) Bom. 486.(7) (4) A.I.R. 1936 Bom. 207 "If any dispute arises as to the amount of any fee chargeable under this chapter a plaint or memorandum of appeal, it shall be decided by the court in which such plaint or memorandum is filed and such decision shall be final as between the parties$), then the construction contended for by Mr. Setalvad might have been upheld. When the two sections in the same Act relating to the same subject matter have been drafted in different language, it is not unreasonable to infer that they were enacted with a different intention and that in one case the intention was to give finality to all decisions of the taxing officer or the taxing judge, as the case may be, while in the other case it was only intended to give finality to questions of fact that are decided by a court but not to questions of law. Whether a case falls under one particular section of the Act or another is a pure question of law and does not directly determine the valuation of the suit for 'purposes of court fee. The question of determination of valuation or appraisement only arises after it is settled in what class or category it falls. It has been argued in some decisions that it is absolutely necessary to decide the category in which a case falls before assessing its value and therefore the determination of the question of category is necessarily involved in the determination of the valuation of the suit for purposes of courtfee. This argument, though plausible, does not seem sound. The actual assessment of the value depends either arithmetical calculations or upon a valuation by an expert and the evidence led in the case, while the decision of the question of category is one of law and may well be said to be an independent question antecedent but not relating to valuation. The expression " valuation" interpreted in its ordinary meaning Of "appraisement", cannot be said to necessarily include within its ambit the question of category which is a matter of law. The construction placed this section by a long course of decisions is one which 208 reconciles the provisions of the Court Fees Act with that of the Code of Civil Procedure and does not make those provisions nugatory and is therefore more acceptable than the other constructions which would make the provisions of either one or the other of these statutes nugatory. Perhaps it may be possible to reconcile the provisions of the two statutes by holding that the finality declared by section 12 of the Court Fees Act means that the parties cannot impugn such a decision by preferring an appeal but that it does not confer such decisions a complete immunity from examination in a higher court. In other words section 12 when it says that such a decision shall be final between the parties only makes the decision of the court a question of court fee nonap pealable and places it the same footing as other interlocutory nod appealable orders under the Code and it does no more than that. If a decision under section 12 is reached by assuming jurisdiction which the court does not possess or without observing the formalities which are prescribed for reaching such a) decision, the order obviously would be revisable by the High Court in the exercise of revisional powers. Similarly, when a party thinking that a decision under section 12 is palpably wrong takes the risk of his plaint being rejected or suit dismissed and then appeals from the order rejecting the plaint or from the decree dismissing the suit but not from the decision the question of court fee, then it is open to him to challenge the interlocutory order even the question of court fee made in the suit or apppal. The word "finality" construed in the limited sense in which it is often used in statutes means that no appeal lies from an order of this character as such and it means no more than that. Conceding for the sake of argument but not admitting that Mr. Setalvad is right in his contention that section 12 is comprehensive enough to include within its ambit all questions relating to court fee whether they involve a decision as to question of category or as to valuation simpliciter, in the present 209 case the Judicial Commissioner decided none of these questions and: his decision cannot be said to be one falling within the ambit of section 12. All that the Judicial Commissioner decided was that as the suit could not be maintained without asking for relief No. 2, the same fee was payable the memorandum of appeal as the plaint. In substance the court decided an issue regarding the maintainability of the appeal without first deciding whether the appeal had been properly instituted in that court. No finality can attach to such a decision by the provisions of section 12, as in reality it decides no question within, the ambit of section 12 of the Court Fees Act. For the reasons given above the second objection raised by Mr. Setalvad that no appeal lies from the order of the Judicial Commissioner by special leave is without force and is overruled. The result, is, that the appeal is allowed, the decision of the Judicial 'Commissioner dismissing the appeal is set aside and the case remanded to him for decision in accordance with law the basis that the memorandum of appeal presented to him was properly stamped. The appellants ' costs of this appeal will be costs in the appeal in the Court of the Judicial Commissioner. Appeal allowed.

In a plaint the following reliefs were asked for, viz., (i) that it be declared that the appointment of 'defendant No. 2 as chairman of the board of directors of a company is illegal, invalid and ultra vires and that he has no, right to act as chairman, managing director etc., and (ii) that a receiver be appointed to take charge of the management of the company. The 'plaint bore a court fee stamp of Rs. 10 only but, the objection of the defendants, ad valorem fee was paid Rs. 51,000 which was the valuation of the suit. The suit was dismissed and the plaintiff preferred an appeal giving up the second relief and paying a court fee of Rs. 10 only. The appellate Court ordered payment of ad valorem court fee and non compliance rejected the memorandum of appeal, 0n further appeal: ' 198 Held, (i) that it was o pen to the appellant to give up the second relief in appeal and, as the subject matter of the appeal was of & purely declaratory nature, the memorandum of appeal was properly stamped; (ii)that the first relief was of a purely declaratory nature and did not involve any consequential relief ; (iii)that section 12 of the Court Fees Act did not preclude the Court from considering the correctness of the order of the low er appellate court rejecting the appeal the ground that the memorandum of appeal was not properly stamped. The finality imposed by section 12 of the Court Fees Act deci sions relating to court fee attaches only to decisions concerning valuation simpliciter; it does not attach to decisions relating to the category under which a suit or appeal falls for purposed of court fees. Section 12 of the Court Fees Act when it says that such a decision shall be final between the parties only makes the decision of the court a question of court fee non appealable and places it the same footing as other interlocutory non appealable orders under the Code and does no more than that. If a decision under section 12 is reached by assuming jurisdiction which the court does not possess or without observing the formalities which are prescribed for reaching such a decision, the order obviously would be revisable by the High Court in the exercise of revisional powers. Similarly, when a party thinking that a decision under section 12 is palpably wrong takes the risk of his plaint being rejected or suit dismissed and then appeals from the order rejecting the plaint or from the decree dismissing the suit but not from the decision the question of court fee, then it is open to him to challenge the interlocutory order even the question of court fee in the suit or appeal. The word " finality " construed in the limited sense in which it is often used in statutes means that no appeal lies from an order of this character as such and it means no more than that.

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Appeal No. 352 of 1958. Appeal by special leave from the judgment and order dated July 27, 1956, of the Labour Appellate Tribunal of India, Bombay, in Appeal (Bom.) No. 72 of 1956. G. section Pathak, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant. D. section Nargoulkar and K. R. Choudhuri, for the respondent No. 1. B. P. Maheshwari, for the Interveners. December 16. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. The appellant owns two sugar mills. There was a dispute between the appellant and its workmen with respect to the employment of contract labour in the two mills. Consequently, a notice of change under section 42 (2) of the Bombay Industrial Relations Act, No. XI of 1947, (hereinafter called the Act) was given to the appellant by the union re. presenting the workmen. Thereafter the union, which is the respondent in the present appeal, made two references to the industrial court, one with respect to each mill, under section 73A of the Act, and the main demand in the references was that "the system of employing contractors ' labour should be abolished and the strength of the employees of the respective departments should be permanently increased sufficiently 344 and accordingly". The appellant raised two main contentions before the industrial court, namely, (i) that the industrial court had no jurisdiction to decide the dispute as the matter was covered by item (6) of Sch. III of the Act, which is within the exclusive jurisdiction of a labour court; and (ii) that any award directing abolition of contract labour would contravene the fundamental right of the appellant to carry on business under article 19(1)(g) of the Constitution. The industrial court decided both the points against the appellant; on the question of jurisdiction it held that the matter was covered by item (2) of Sch. 11 of the Act and therefore the industrial court would have jurisdiction, and on the second point it held that there was no contravention of the fundamental right conferred on the appellant under article 19(1)(g). It may be mentioned that the second point arose on the stand taken by the appellant that the workmen of the contractors were not the workmen of the appellant. The industrial court then dealt with the merits of the case and passed certain orders, with which we are however not concerned in the present appeal. It may be mentioned that there were cases relating to a number of other sugar mills raising the same points, which were decided at the same time by the industrial court. In consequence, there were a number of appeals to the Labour Appellate Tribunal by the mills and one by one of the unions (though not by the respondent union). All these appeals were heard together by the appellate tribunal, where also the same two points relating to jurisdiction and contra vention of the fundamental right guaranteed by article 19(1)(g) were raised. The Appellate Tribunal did not agree with the industrial court that the references were covered by item (2) of Sch. 11 to the Act. It, however, held that the word "employment" in item (6) of Sch. III to the Act had to be given a restricted meaning. It pointed out that the three Schedules did not exhaust the comprehensive provisions of section 42(2) and the subject matter of dispute, namely, the abolition of contract labour was a question of far reaching and important change which could not have 345 been intended to be dealt with in a summary way by a labour court, which is the lowest in the hierarchy of courts established under the Act. It therefore held that the industrial court had jurisdiction to decide the matter. On the question of contravention of the, fundamental right, the appellate tribunal took the view that the question whether the restriction imposed was reasonable depended upon the facts of each case and therefore was a matter outside its power as a court of appeal It then considered the merits of the matter and came to the conclusion that the approach of the industrial court to the questions raised before it was not correct and therefore it found it difficult to support the award. Eventually it set aside the award and remanded the matter for early hearing in the light of the observations made by it. Further, it decided that in the interest of justice the entire award should be set aside, even though there was no appeal before it by the unions in most of the cases. The appellant then came to this Court and was granted special leave; and that is how the matter has come up before us. Mr. Pathak on behalf of the appellant has raised the same two points before us. We shall first deal with the question of jurisdiction. Reliance in this connection is placed on item (6) of Sch. III of the Act, which is in these terms: "Employment including (i) reinstatement and recruitment; (ii) unemployment of persons previously employed in the industry concerned. " It is not in dispute that matters contained in Sch. III are within the jurisdiction of a labour court and an industrial court has no jurisdiction to decide any matter in a reference under section 73A of the Act which is within the jurisdiction of a labour court. Mr. Pathak contends that item (6) of Sch. III speaks of "employment" and includes in it two matters which might otherwise not have been thought to be included in it. Therefore, according to him, employment as used in item (6) is wider than the two matters included in it 44 346 and the question whether contract labour should be employed or not would be a matter of employment within the meaning of that word in item (6) of Sch. We do not think it necessary for purposes of this appeal to consider what would be the ambit of employment as used in item (6) of Sch. 111. The scheme of the Act shows that under sections 71 and 72 the jurisdiction of a labour court and an industrial court is concurrent with respect to any matters which the State Government may deem fit to refer to them; but under section 73A reference by a registered union which is a representative of employees and which is also an approved union, can only be made to an industrial court, subject to the proviso that no such dispute can be referred to an industrial court where under the provisions of the Act it is required to be referred to the labour court for its decision. 78 of the Act provides for jurisdiction of labour courts and matters specified in Sch. 11 are not within their ordinary jurisdiction. Therefore, when a registered union wishes to refer any matter which is contained in Sch. 11 of the Act such reference can be made by it only to the industrial court. It follows in consequence that whatever may be the ambit of the word "employment" used in item (6) of Sch. III, if any matter is covered by Sch. 11 it can only be referred to the industrial court under section 73A. Now the question whether contract labour should be abolished (on the assumption that contract labour is not in the employ of the mills) immediately raises questions relating to permanent increase in the number of persons employed, their wages including the period and mode of payment, hours of work and rest intervals, which are items (2), (9) and (10) of Sch. Therefore, a question relating to abolition of contract labour is so inextricably mixed up with the question of permanent increase in the number of persons employed, their wages, hours of work and rest intervals that any dispute relating to contract labour would inevitably raise questions covered by Sch. Therefore, a dispute relating to contract labour if it is to be referred under section 73A by a registered union can only be referred to an industrial court as it immediately 347 raises matters contained in items (2), (9) and (10) of Sch. Mr. Pathak urges however that matters relating to permanent increase in the number of persons employed due to the abolition of contract labour, their wages, hours of work and rest intervals were not really disputed at all by the appellant. It appears that in the written statements of the appellant, these points were not raised; but the decision of the appellate tribunal shows that one of the contentions raised before it by the sugar mills was that the workmen concerned were not employees of the sugar mills. Therefore, as soon as this contention is raised a dispute as to permanent increase in the number of persons employed, their wages, hours of work and rest intervals would immediately arise. It must therefore be held that a question relating to the abolition of contract labour inevitably raises a dispute with respect to these three items contained in Sch. In the circumstances we are of opinion that the industrial court had jurisdiction to deal with the matter. In particular, we may point out that in their petitions the unions had raised at least the question as to the permanent increase in the number of persons employed and that would immediately bring in item (2) of Sch. It is true that the question of permanent increase in the number of persons employed, their wages, hours of work and rest intervals would only arise if contract labour is to be abolished; but in our opinion these are matters so inextricably mixed up with the question relating to abolition of contract labour that they must be held to be in dispute as soon as the dis pute is raised about the abolition of contract labour, (assuming always that the employer does not accept contract labour as part of its labour force). The contention about jurisdiction must therefore be rejected. This brings us to the second contention raised by Mr. Pathak. He bases his argument in this behalf on section 3(18), which defines an " industrial matter " as meaning any matter relating to employment, work, wages, hours of work, privileges, rights or duties of employers or employees, or the mode, terms and 348 conditions of employment. Mr. Pathak urges that the definition of " industrial matter " contravenes the fundamental right guaranteed under article 19(1)(g), when it provides that the mode of employment is also included within it. Reference is also made to section 3(17) which defines an "industrial dispute" as any dispute or difference which is connected with any industrial matter. Mr. Pathak therefore urges that reading the two definitions together the industrial court is given the power to decide disputes as to the mode of employment and that contravenes the fundamental right guaranteed under article 19(1)(g), for it enables an industrial court to adjudicate on the mode of employment and thus interfere with the right of the employer to carry on his trade as he likes subject to reasonable restrictions. Now assuming that the mode of employment used in section 3(18) includes such questions as abolition of contract labour, the question would still be whether a provision which enables an industrial court to adjudicate on the question whether con tract labour should or should not be abolished is an unreasonable restriction on the employer 's right to carry on his trade. We cannot see how the fact that power is given to the industrial court, which is a quasi judicial tribunal to decide whether contract labour should be abolished or not would make the definition of "industrial matter" in so far as it refers to the mode of employment, an unreasonable restriction on the fundamental, right of the employer to carry on trade. The matter being entrusted to a quasi judicial tribunal would be decided after giving both parties full opportunity of presenting their case and after considering whether in the circumstances of a particular case the restriction on the mode of employment is a reasonable restriction or not. The tribunal would always go into the reasonableness of the matter and if it comes to the conclusion that the mode of employment desired by labour is not reasonable it will not allow it; it is only when it comes to the conclusion that the mode of employment desired by labour in a particular case is a reasonable restriction 349 that it will insist on that particular mode of employment being used. Take, for example, the case of contract labour itself. The tribunal will have to go into the facts of each case. If it comes to the conclusion that on the facts the employment of contract labour is reasonable and thus doing away with it would be an unreasonable restriction on the right of the employer to carry on trade, it will permit contract labour to be carried on. On the other hand if it comes to the conclusion that employment of contract labour is unreasonable in the circumstances of the case before it it will hold that it should be abolished, the reason being that its abolition would be a reasonable restriction in the circumstances. Therefore the decision whether the mode of employment in a particular case is a reasonable restriction or unreasonable one is in the hands of a quasi judicial tribunal. In the circumstances it cannot be said that by providing in section 3(18) that an "industrial matter" includes also the mode of employment, there is any contravention of the fundamental right of the employer to carry on trade. If the argument on behalf of the appellant were to be accepted it would mean that judicial and quasi judicial decisions could be unreasonable restrictions on fundamental rights and this the Constitution does not envisage at all. We are therefore of opinion that this contention also fails. Finally, Mr. Pathak draws our attention to sections 3(13) and 3(14) of the Act and submits that the appellant never said that contract labour employed in its mills was not in its employment. 3(13) defines the word "employee" and includes in it any person employed by a contractor to do any work for him in the execution of a contract with an employer within the meaning of sub cl. (e) of cl. 3(14) defines the word "employer" in an inclusive manner and in cludes "where the owner of any undertaking in the course of or for the purpose of conducting the undertaking contracts with any person for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the undertaking, the owner of the undertaking". It is urged that in view 350 of these definitions, the employees of the contractors are the employees of the mills and the mills are the employers of these employees of the contractors. Therefore, Mr. Pathak urges that there is no necessity of abolishing contract labour and that the industrial court may, if it so chooses, give the same wages and hours of work and rest intervals and other terms and conditions of employment to the employees of the contractors as are provided for comparable direct employees of the appellant and in such circumstances it would not be necessary to abolish the contract system so long as the employees of contractors are to be in the same position as the direct employees of the appellant as to their terms and conditions of service. This was not however the manner in which the case was contested before the industrial court or the appellate tribunal. All that we need therefore say is that when the matter goes back before the industrial court as directed by the appellate tribunal, the industrial court may take this submission of the appellant into account and may consider whether it is necessary to abolish the contract system, provided the appellant is able to assure the industrial court that employees of the contractors who are deemed to be its employees within the meaning of section 3(13) and section 3(14) would have the full benefit of the same terms and conditions of service as its comparable direct employees. The appeal fails and is hereby dismissed with costs. Appeal dismissed.

A dispute having arisen between the appellant employer and its workmen regarding the employment of contract labour in the appellant 's mills, the union representing the workmen which is the respondent in the present case after serving notice on the appellant under section 42(2) of the Bombay Industrial Relations Act made reference to the Industrial Court under section 73A of the Act demanding the abolition of the system of employing contractors ' labour and the permanent increment of employees in the respective departments. The contention of the appellant, inter alia, was that the Industrial Court had no jurisdiction to decide the dispute which was within the exclusive jurisdiction of a Labour Court under item (6) of Sch. III of the Act, and that any award directing the abolition of contract labour would contravene the appellant 's fundamental right to carry on business under article 19(1)(g) of the Constitution. The Industrial Court decided that the Industrial Court would have jurisdiction as the matter was covered by item (2) of Sch. 11 of the Act and that there was no contravention of the fundamental rights of the appellants. On appeal the Labour Appellate Tribunal, held, that the Industrial Court had jurisdiction to decide the matter although it was not covered by item (2) of Sch. 11 of the Act. As regards the question of contravention of the fundamental right it held that the question whether the restriction imposed was reasonable depended upon the facts of each case and the matter was outside the powers of a court of appeal. Eventually it set aside the entire award on the merits. On appeal 'by the appellant by special leave, Held, that the Industrial Court had jurisdiction to deal with the matter. Whatever might be the ambit of the word "employment" used in item (6) of Sch. III, if a matter was covered by Sch. 11 it could only be referred to the Industrial Court under section 73A. A question relating to the abolition of contract labour inevitably raised a dispute relating to matters contained in items (2), (9) and (10) of Sch. 11, namely, permanent increase in the number of 343 persons employed, the employees ' wages, hours of work and rest intervals and could, therefore, be referred only to an Industrial Court. The power given to the Industrial Court which was a quasi judicial tribunal to decide whether contract labour should be abolished or not would not make the definition of "industrial " matter" in so far as it referred to the mode of employment an section unreasonable restriction on the fundamental right of the employer to carry on his trade and as such there was no contravention of his fundamental right by providing in section 3(18) that an "industrial matter" included also the mode of employment of the employees.

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Appeal No. 512 of 1957. Appeal by special leave from the judgment and decree dated August 29 ' 1952, of the Madras High Court in Second Appeal No. 2349 of 1946. Azizuddin and K. R. Choudhury , for the appellant. Shaukat Hussain and P.C. Agarwala, for respondents Nos. 1 and 2. 1961. February 14. The Judgment of the Court was delivered by SHAH J. There is in the village of Cavelong, District Chiugleput in the State of Madras an ancient Durgah to which is appurtenant a Masjid. The Nawab of Carnatic had granted two villages in inam for the maintenance of the Durgah and the Masjid. Offerings from the devotees who visited the Durgah and the Maajid were also received. The income of the institution after disbursing the expenses of "Sandal", and "Urs" and of feeding the poor has since long been shared by descendants in four families in equal shares. By 'Custom females and persons claiming through females were excluded from receiving a share of the income and the income was distributed amongst the males descended 'in the male fine. In original suit No. 27 of 1940 of the file of the Subordi nate Judge, Chingleput, a scheme was framed for administration of the Durgah and the Masjid and a Board of trustees was appointed for that purpose. By the scheme, provision was. made for distribution of the surplus income amongst the members of the four families. 69 Fakruddin, in the following genealogy, belonged to one of the four families which received the income. Sheik Mohammad Fakir Mohammad Sheik Miran Giasuddin Nismat Ulla Khamruddin Nayeem Uddir Fakir Mohammad Fakruddin=Sulai Niama Ulla Abdul Safi man Bi Wahid Ulla (2nd plaintiff) (1st deft.) Nayeemuddin (died unmarried) Ramat Syed Un Unnissa (2nd nissa (Ist defendant) plaintiff) As a descendant of Sheik Mohammad, Fakruddin received a 1/8th share of. the income. He was also by arrangement with others entitled to perform the "Urs" ceremony once in eight years. Fakruddin died in 1921 leaving him surviving his wife Sulaiman Bi and two daughters Rahmat Unnissa and Syed Unnissa. Sulaiman Bi is plaintiff No. 2 and Rahmat Unnissa and Syed Unnissa are respectively defendant No. 2 and plaintiff No. 1 in suit No. 156 of 1937 out of which this appeal arises. In the year 1926, it was the turn of Fakruddin to perform the "Urs" and it is claimed by the plaintiffs that it was performed on behalf of the widow and daughters of Fakruddin by their deputies. The next turn was in the year 1934, but in the performance of the "Urs", the plaintiffs and defendant No. 2 were obstructed by Abdul Wahid son of Nayeem Uddin belonging to the other branch in Sheik Mohammad 's family. Plaintiffs 1 and 2 then filed suit No. 156 of 70 1937 in the court of the District Munsif at Chingleput .For a declaration that they were entitled to enjoy the properties described in the schedule annexed to the plaint and to manage the Durgah, perform the "Urs" festival and receive all "incomes, endowments and perquisites thereof once in every eight years" since 1934 according to their turn. They also claimed an injunction restraining Abdul Wahib from interfering with their rights in that behalf. Rahmat Unnissa the eldest daughter of Fakruddin was impleaded as defendant No. 2. Abdul Wahid defendant No. 1 died during the pendency of the suit and defendants 4 to 10 who were brought on record on their own application as heirs and legal representatives to the exclusion of the daughter of Abdul Wahid defended the suit. They denied the right of the plaintiffs to a share in the income contending that lay custom in the family, females were excluded from inheritance, that the office of "Peshimam", "Khatib" and "Mujavar" could only be held by males and that females were excluded from those offices, that the plaintiffs ' claim was barred by the law of limitation and that in any event the suit for a mere declaration was not maintainable. The Trial Judge held and the appellate court agreed with him that there was an immemorial custom governing the institutions precluding the plaintiffs from performing services or sharing the income, emoluments and perquisites and therefore the plaintiffs were not entitled to perform those services and enjoy the surplus income, and accordingly they were not entitled to the declaration of an injunction prayed for. In second appeal, the High Court at Madras held that by virtue of the Shariat Act, 1937, the income received from the institution had to be shared according to the per sonal law of the parties and that the plaintiffs ' claim was not barred by the law of limitation nor was the suit open to the objection that it was as framed not maintainable. Against the decree passed by the High Court, this appeal with special leave under article 136 of the Constitution is preferred. In our view, the suit as framed was maintainable. The management of the institution is vested in the 71 trustees. The four families, it is true, are by tradition entitled to perform and officiate at certain ceremonies and also to share in the income. A suit for declaration with a consequential relief for injunction, is not a suit for declaration simpliciter; it is a suit for declaration with further relief. Whether the further relief claimed in a particular case as consequential upon a,declaration is adequate must always depend upon the facts and circumstances of each case. In Kunj Behari Prasadji Purshottam Prasadji vs Keshavlal Hiralal (1), it was held that section 42 of the Specific Relief Act does not empower the court to dismiss a suit for a declaration and injunction and that an injunction is a further relief within the meaning of section 42 of the Specific Relief Act. In that case, the plaintiff had claimed that a certain will was null and void and that being a close relative of the last holder of a gadi, he was entitled to be the Acharya in the place of that last holder and for an injunction restraining the defendants from offering any obstruction to his occupation of the gadi. It was held that such a suit was maintainable. The surplus income .of the institution is distributed by the trustees and the plaintiffs are seeking a declaration of the right to receive the income and also an injunction restraining the defendants from interfering with the exercise of their right. The High Court hold that plaintiff No. 1 was at the date of the suit 19 years of age and was entitled to file a suit for enforcement of her right even if the period of limitation had expired during her minority within three years from the date on which she attained majority by virtue of sections 6 and 8 of the Indian Limitation Act. Apart from this ground which saves the claim of the first plaintiff alone, a suit for a declaration of a right and an injunction restraining the defendants from interfering with the exercise of that right is governed by article 120. of the Limitation Act and in such a suit the right to sue arises when the cause of action accrues. The plaintiffs claiming under Fakruddin sued to obtain a declaration of their rights in the institution which (1) I.L.R. (1904) XXVIII Bom. 72 was and is in the management of the trustees. The trial judge hold that the plaintiffs were not "in enjoyment of the share" of Fakruddin since 1921 and the suit filed by the plaintiffs more than 12 years from the date of Fakruddin 's death must be held barred, but he did not refer to any specific article in the first schedule of the Limitation Act which barred the suit. It is not shown that the trustees have ever denied or are interested to deny the right of the plaintiffs and defendant No. 2; and if the trustees do not deny their rights, in our view, the suit for declaration of the rights of the heirs of Fakruddin will not be barred under article 120 of the Limitation Act merely because the contesting defendant did not recognize that right. The period of six years prescribed by article 120 has to be computed from the date when the right to sue accrues and there could be no right to sue until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right. If the trustees were willing to give a share and on the record of the case it must be assumed that they being trustees appointed under a scheme would be willing to allow the plaintiffs their legitimate rights including a share in the income if under the law they were entitled thereto, mere denial by the defendants of the rights of the plaintiffs and defendant No '. 2 will not set the period of limitation running against them. The trial court as well as the first appellate court held on an exhaustive review of the evidence that there was an immemorial custom governing the institutions whereby the plaintiffs were not entitled to perform service or share the income, emoluments and perquisites. But since the enactment of the Shariat lot 26 of 1937, this custom must be deemed inapplicable to the members of the family. By section 2 of the Act, it was enacted as follows: "Notwitlwtanding any customs or usage to the contrary in all questions (save questions relating to agricultural lands) regarding intestate succession, ,special property of females, including personal property inherited or obtained under contract or gift or 73 any other provision of Personal Law, marriage, dissolution of marriage, including talaq, ila, zihar, lian, khula and mubarrat, maintenance, dower, guardian. ship, gifts, trusts and trust properties, and wakfs (other than charities and charitable institutions and charitable and religious endowments) the rule of decision in cases where the parties are Muslims shall be the Muslim Personal Law (Shariat). " Under the Shariat Act,, 1937, as framed, in questions relating to charities and charitable institutions and charitable and religious endowments, the custom or usage would prevail. But the Act enacted by the Central Legislature was amended by Madras Act 18 of 1949 and a. 2 as amended provides: "Notwithstanding any custom or usage to the contrary, in all questions regarding intestate succession, special property of females including personal property inherited or obtained under contract, or gift or arty other provision of personal law, marriage, dissolution of marriage, including Tallaq, ila, zihar, lian, Khula and Mubarrat, maintenance, dower, guardianship, gifts, trusts and trust proper. ties and wakfs the rule of decision in cases where the parties are Muslims shall be the Muslim Personal Law (Shariat). " Manifestly by this act ' "the rule of decision" in all questions relating to intestate succession and other specified matters including wakfs where the parties to the dispute are Muslims is the Muslim Personal Law. The, terms of the Act as amended are explicit. Normally statute which takes away or impairs vested rights under existing laws is presumed not to have retrospective operation. Where vested rights are affected and the question is not one of procedure, there is a presumption that it was not the intention of the legislature to alter vested rights. But the question is always one of intention of the legislature to be gathered from the language used in the statute. In construing an enactment, the court starts with a presumption against retrospectivity if the enactment seeks to affect vested rights: but such a presumption 74 may be deemed rebutted by the amplitude of the language used by the Legislature. It is expressly enacted in the Shariat Act as amended that in all questions relating to the matters specified, "the rule of decision" in cases where the parties are Muslims shall be the Muslim Personal Law. The injunction is one directed against the court: it is enjoined to apply the Muslim Personal Law in all cases relating to the matters specified notwithstanding any custom or usage to the contrary. The intention of the legislature appears to be clear; the Act applies to all suits and proceedings which were pending on the date when the Act came into operation as well as to suits and proceedings filed after that date. It is true that suits and proceedings which have been finally decided would not be affected by the enactment of the Shariat Act, but if a suit or proceeding be pending even in appeal on the date when the Act was brought into operation, the law applicable for decision would be the Muslim Personal Law if the other conditions prescribed by the Act are fulfilled. In our view, the High Court was right in holding that it was bound to apply the provisions of the Shariat Act as amended by Madras Act 18 of 1949 to the suit filed by the plaintiffs. We are unable to agree with the view of the Lahore High Court in Syed Roshan Ali vs Mt. Behmat Bibi (1) that a right acquired before 1937 (the date on which the Shariat Act was brought into operation) to bring a suit for a declaration that the alienation by the widow of the last holder who had by custom succeeded to the limited estate left by her husband was not binding upon the reversioner, was not taken away by the enactment of the . It may be observed that the court proceeded merely upon the general presumption against retrospectivity and their attention, it appears, was not directed to the phraseology used by the legislature to give section 2 a retrospective operation. The plea raised by counsel for. the contesting defendants that even under the Muslim Personal Law, females are excluded from performing the duties of (1) A.I.R. 1943 Lah. 219. 75 the offices of "Peshimam", "Khatib" and "Mujavar" and that they cannot carry out the duties of those offices even through deputies is one which was not raised before the High Court. The trial court has found that the duties of those offices could be performed through deputies. The first appellate court did not express any opinion on that question and before the High Court, this question was not mooted. We do not think that we would be justified in allowing the contesting defendants to argue this question in this appeal. In any event, if the income was being distributed amongst the four families, the plaintiffs and defendant No. 2 claiming under Fakruddin would, by virtue of the provisions of the Shariat Act, be entitled to receive that income. There is nothing on the record to suggest that the right to receive the income is conditional upon the performance of the duties of the offices of "Peshimam", "Khatib" and "Mujavar". In that view of the case, this appeal fails and is dismissed with costs. Appeal dismissed.

Under a scheme a Board of Trustees was appointed for administration of the Durga and a Masjid for the maintenance of which the Nawab of Carnatic had granted two villages in Inam. The income of the institution after disbursing the expenses had since long been shared by the descendants in four families in equal shares. The scheme also provided that the surplus income was to be distributed amongst the members of the said four families. One of the descendants died leaving him surviving his wife and two daughters who were obstructed in the performance of the "Urs" by the appellant 's father. The said Muslim female members filed a suit for declaration that they were entitled to enjoy the properties and to manage the Durga, perform the "Urs" festival and receive all incomes, endowments and perquisites thereof once in every eight years according to their turn. The right to a share in the income was denied by the appellant contending that by custom in the family, females were excluded from inheritance and that the claim was barred by the law of limitation and that, in any event, the suit for mere declaration was not maintainable. Held, that a suit for declaration of rights with a consequential relief for injunction was not a suit for declaration simpliciter; it was a suit for declaration with further relief and was not barred under article 120 Of the Indian Limitation Act merely because the contesting defendant did not recognise the right. The period of six years prescribed by article 120 is to be computed from the date when the right to sue accrued and there could be no right to sue until there was an accrual of the right asserted in the suit and its infringement or at least a clear and unequi vocal threat to infringe that right. If under the law a person was entitled to any legitimate right, the mere denial of the right will not set the period of limitation running against the person entitled to such right. 68 Held, further, that on the enactment of the Shariat Act 26 Of 1937, as amended by the ' Madras Act r8 Of 1949, the Muslim Personal Law applies in all cases relating to the matters specified notwithstanding any customer usage to the contrary even at the stage of appeals, if other conditions prescribed under the Act are fulfilled. Kunj Behari Prasadji Purshottam Prasadji vs Keshavld Hiralal. 567, discussed. Syed Roshan Ali vs Mt. Rehmat Bibi and Others, A.I.R. 1943 Lah. 219, disapproved.

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Appeal No. 198 of 1954. Appeal from the judgment and order dated October 16, 1952, of the former Nagpur High Court in Misc. ; No. 1231 of 1951. M. section K. Sastri, for the appellant. H. L. Khaskalam, B. K. B. Naidu and I. N. Shroff, for the respondent. 64 502 1960. November 18. The Judgment of the Court was delivered by IMAM, J. This is an appeal from the judgment of the Nagpur High Court dismissing the appellants petition under articles 226 and 227 of the Constitution of India. The High Court certified under article 132(1) of the Constitution that the case involved a substantial question of law as to the interpretation of the Constitution. Hence the present appeal. The appellant was the Ruler of the State of Baster. After the passing of the Indian Independence Act, 1947, the appellant executed an Instrument of Accession to the Dominion of India on August 14, 1947. Thereafter, he entered into an agreement with the Dominion of India popularly known as "The Stand Still Agreement". On December 15, 1947, he entered into an agreement with the Government of India whereby he ceded the State of Baster to the Government of India to be integrated with the Central Provinces and Berar (now the State of Madhya Pradesh) in such manner as the Government of India thought fit. Con sequently the Governments in India came to have exclusive and plenary authority, jurisdiction and powers over the Baster State with effect from January 1, 1948. The Legislature of the State of Madhya Pradesh passed the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (Madhya Pradesh Act 1 of 1951), hereinafter referred to as the Act, which received the assent of the President of India on January 22, 1951. The preamble of the Act stated that it was one to provide for the acquisition of the rights of proprietors in estates, mahals, alienated villages and alienated lands in Madhya Pradesh and to make provisions for other matters connected therewith. Under section 3 of the Act, vesting of proprietary rights in the State Government takes place on certain conditions,, mentioned in that section, being complied with. The definition of 'proprietor ' is stated in section 2 cl. (m) and it is "in relation to 503 (i) the Central Provinces, includes an inferior proprietor, a protected thekadar or other thekadar, or protected headman; (ii) the merged territories, means a maufidar including an ex Ruler of an Indian State merged with Madhya Pradesh, a Zamindar, Ilaquedar, Khorposhdar or Jagirdar within the meaning of wajib ul arz, or any sanad, deed or other instrument, and a gaontia or a thekadar of a village in respect of which by or under the provisions contained in the wajib ul arz applicable to such village the maufidar, the gaontia, or the thekadar, as the case may be, has a right to recover rent or revenue from persons holding land in such village;". The definition of 'mahal ' is stated in section 2(j) and it is "mahal", in relation to merged territories, means any area other than land in possession of a raiyat which has been separately assessed to land revenue, whether such land revenue be payable or has been released, compounded for or redeemed in whole or in part;". Before the High Court the appellant contended that he was still a Sovereign Ruler and absolute owner of the villages specified in Schedules A and B of his petition under articles 226 and 227 of the Constitution. He urged that his rights had been recognized and guaranteed under the agreements entered into by him with the Government of India. The provisions of the Act, therefore, did not apply to him. It was further contended that the provisions of the Act did not apply to a Ruler or to the private property of a Ruler which was not assessed to land revenue. He relied on article 6 of the Instrument of Accession and the first paragraph of article 3 of the Merger Agreement. The High Court held that if the petitioner 's rights under article 6 of the Instrument of Accession and article 3 of the Merger Agreement had been infringed it was clear from the provisions of article 363 of the Constitution that interference by the courts was barred in disputes arising out of these two instruments. The High Court was also of the opinion that article 362 of the Constitu tion was of no assistance to the appellant. 504 After referring to the definition of the word 'proprietor ' in the Act, the High Court was of the opinion that the word 'maufidar ' in section 2(m) of the Act had not been used in any narrow or technical sense. A 'maufidar ' was not only a person to whom a grant of maufi lands had been made but was also one who held land which was exempt from the payment of "rent or tax". It accordingly rejected the contention on behalf of the appellant that the word 'maufidar ' is necessarily confined to a grantee from the State or Ruler and therefore a Ruler could not conceivably be a maufidar. The High Court also rejected the contention on behalf of the appellant that as he was a "Ruler" within the meaning of that expression in article 366(22) of the Constitution he did not come within the expression 'ex Ruler ' as contained in the definition of the word 'proprietor ' in the Act. The expression 'Ruler ' as defined in article 366(22) of the Constitution applied only for interpreting the provisions of the Constitution. The expression 'ex Ruler ' given in the Act must therefore be given the ordinary dictionary meaning. According to Shorter Oxford English Dictionary, 'Ruler ' means "one who, or that which, exercises rule, especially of a supreme or sovereign kind. One who has control, management, or head ship within some limited sphere". The High Court accordingly took the view that although the appellant did exercise such a rule in the past he ceased to exercise it in his former Domain after the agreements of accession and merger had come into operation. Accordingly the appellant must be regarded as an ex Ruler and as he was also a maufidar he fell within the definition of the word 'proprietor ' in the Act. The question whether the villages mentioned in Schedules A and B of the petition under articles 226 and 227 of the Constitution fell in any of the categories, "Estates, Mahals, Alienated lands", was also considered by the High Court. In its opinion they did not fall within the category of Estates or Alienated lands but they did fall within the category of Mahals. According to the definition of 'Mahal ' in section 2(j) of the Act the same must be separately assessed to land 505 revenue. According to the appellant they had not been assessed to land revenue but this was denied on behalf of the State of Madhya Pradesh. The High Court was of the opinion that in these circumstances it was for the appellant to establish that the villages in question had never been assessed to land revenue but no evidence had been led to this effect. On the contrary, according to the High Court, it would appear from the documents on the record that the villages known as 'Bhandar villages ' had been assessed to land revenue. As the rest of the villages in Schedule A and the villages in Schedule B, upto the date of the High Court judgment, had not been recognized as the private property of the appellant by the Government of India as required by the second and third paragraphs of the Merger Agreement, the appellant could not assert his ownership over them. The High Court, accordingly, dismissed his petition under articles 226 and 227 of the Constitution. Two questions in the main were urged before us (1) whether the appellant is a proprietor within the meaning of that expression in the Act and (2) whether the villages in question came within the definition of the word 'mahal ' contained in the Act. On behalf of the appellant it had also been urged that the Act could not defeat the rights of the appellant guaranteed under article 3 of the Merger Agreement. It seems clear to us, however, that in view of the provisions of article 363(1) of the Constitution any dispute arising out of the Merger Agreement or the Instrument of Accession is beyond the competence of the courts to enquire into. The High Court rightly decided this point against the appellant. With reference to the first point we would first consider whether the appellant is an ex Ruler for the purposes of the Act. That he is so factually cannot be denied, since he ceded his State to the Government of India to be integrated with the Central Provinces and Berar (now the State of Madhya Pradesh) in such manner as the Government of India thought fit. He further ceded to the Government ' of India full and exclusive authority, jurisdiction and powers in relation 506 to the governance of his State when he agreed that the administration of that State would be transferred to the Government of India as from January 1, 1948. The question is whether his recognition for the purposes of the Constitution as Ruler by virtue of the provisions of article 366(22) of the Constitution of India continues his status as a Ruler for purposes other than the Constitution. article 366(22) states: " "Ruler" in relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of article 291 was entered into and who for the time being is recognised by the President as the Ruler of the State, and includes any person who for the time being is recognised by the President as the successor of such Ruler". Article 291 refers to the privy purse payable to Rulers. It states: "Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the Consolidated Fund of India; and (b) the sums so paid to any Ruler shall be exempt from all taxes on income. " Article 291 refers to any covenant or agreement entered into by the Ruler of any Indian State before the commencement of the Constitution. The covenant or agreement referred to in this Article certainly includes the Instrument of Accession and the Merger Agreement. The effect of the Merger Agreement is clearly one by which factually a Ruler of an Indian State ceases to be a Ruler but for the purposes of the Constitution and for the purposes of the privy purse guaranteed, he is a Ruler as defined in article 366(22) of the Constitution. There is nothing in the provisions of article 366(22) which requires a court to recognise such a person as a Ruler for purposes outside the Constitution. In our opinion, the High Court rightly held that 507 the appellant was an ex Ruler and that article 366(22) of the Constitution did not make him a Ruler for the purposes of the Act. As the appellant was an 'ex Ruler ', he was within the class of persons who were by name specifically included in the definition of 'proprietor ' and therefore clearly within the scope of the Act. That the appellant was not only an ex Ruler but a maufidar appears to us to be clear. The ordinary dictionary meaning of maufi is "Released, exempted, exempt from the payment of rent or tax, rent free" and maufidar is "A holder of rent free land, a grantee". It was common ground in the High Court that the villages in question were exempt from the payment of rent or tax. In our opinion, the High Court rightly took the view that the expression 'maufidar ' was not necessarily confined to a grantee from a State or a Ruler of a State. A maufidar could be a person who was the holder of land which was exempted from the payment of rent or tax. In our opinion, the appellant certainly came within the expression 'maufidar ' besides being an ex Ruler ' of an Indian State merged with Madhya Pradesh. It is, however, contended on behalf of the appellant that the most important part of the definition was the concluding portion where it was stated that in the case of a maufidar he must be a person who by or under the provisions contained in the wajib ul arz applicable to his village, had the right to recover rent or revenue from persons holding land in such village. It was contended that even if the appellant was a maufidar, there was nothing to show that with reference to any village held by him it was entered in the wajib ul arz, that he had a right to recover rent or revenue from persons holding land in such village. In the petition under articles 226 and 227 of the Constitution, filed by the appellant in the High Court, it was nowhere asserted that even if he was regarded as a maufidar it was not entered in the wajib ul arz with respect to any of his maufi villages that he had a right to recover rent or revenue from persons holding land in such villages. From the judgment of the High 508 Court it would appear that no such argument was advanced before it. In the application for a certificate under article 132(1) of the Constitution we can find no mention of this. In the statement of the case filed in this Court also there is no mention of this fact. There is thus no material on the record to establish that the appellant as a maufidar had no right to recover rent or revenue from persons holding land in his villages. The burden was on the appellant to prove this fact which he never attempted to discharge. It is impossible therefore to accept this contention on behalf of the appellant raised for the first time before us in the course of the submissions made on behalf of the appellant. Regarding the second point arising out of the definition of 'Mahal ', the High Court definitely found that the petitioner had given no evidence to establish that the villages in question were not assessed to land revenue. On the contrary, at least with reference to the Bhandar villages documents on the record showed that these villages had been assessed to land revenue. Since it was a question of fact whether the villages had been assessed to land revenue, which was denied on behalf of the State of Madhya Pradesh, the High Court rightly held that the contention of the appellant in this respect could not be accepted. As for the other villages, in Schedules A and B of the petition of the appellant under articles 226 and 227 of the Constitution the High Court, in our opinion, rightly held that the petition was not maintainable as these villages had not yet been recognised by the Government of India as the private property of the appellant. In our opinion, the appeal accordingly fails and is dismissed with costs. Appeal dismissed.

The appellant was the Ruler of the State of Baster which was later integrated with the State of Madhya Pradesh. He was recognised by the President as a Ruler under article 366(22) of the Constitution. The respondent resumed certain lands belonging to the appellant under the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950. The appellant contended that he was still a Ruler and not an ex Ruler and as such did not come within the definition of "proprietor" given in the Act. Held, that the appellant was an ex Ruler for the purposes of the Act and was within the class of persons who were by name included in the definition of 'proprietor ' and was within the scope of the Act. Factually the appellant was an ex Ruler. He was a Ruler for the purposes of the privy purse guaranteed to him. There was nothing in article 366(22) which required a court to treat such a person as a Ruler for purposes outside the Constitution. Further, the appellant was also a maufidar in respect of the lands acquired which were exempt from the payment of rent or tax. The expression "maufidar" was not necessarily confined to a grantee from a State or a Ruler of a State; he could be the holder of land which was exempted from payment of rent or tax.

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Appeals Nos. 314 316 & 778 of 1957. Appeals from the Judgment and Decree dated September 8, 1954, of the Calcutta High Court in appeal from Original Decree No. 159 of 1951. section Chowdhury, B. Das and P. K. Ray Chaudhury, for the appellants in Civil Appeal No. 314 of 1957. M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for respondent No. 1. section N. Mukherjee, for respondent No. 2. section M. Bose, B. Sen and B. N. Ghosh, for respondents Nos. 3 18, 20 40, 42 and 44 47. B. N. Ghosh, for respondent No.48. N. C. Chatterjee and P. K. Chatterjee, for respondent No. 51. section M. Bose, section Chowdhury, B. Sen and B. N. Ghosh, for the appellants in Civil Appeal No. 315 of 1957. M. C. Setlvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for respondent No. 1. section N. Mukherjee, for respondent No. 2. 823 P. K. Ray Chaudhury, for respondent No. 6. B. Das and P. K. Ray Chaudhury, for respondents Nos. 8 28. P. K. Chatterjee, for respondent No. 30. section Chowdhury and P. K. R. Chaudhury, for the appellant in Civil Appeal No. 316 of 1957. M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for respondent No. 1. section N. Mukherjee, for respondent No. 2. B. Das and B. N. Ghosh, for respondents Nos. 3 18, 20 40, 42, 44, 47 and 49 69. N. C. Chatterjee and P. K. Chatterjee, for respondent No. 71. M. C. Stealvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for the appellant in Civil Appeal No. 778 of 1957. section M. Bose, section Chowdhary, B. Sen and B. N. Ghosh, for respondents Nos. 2 17, 19 39, 41 and 43 46. Sukumar Ghose, for respondent No. 40. section Chowdhury and P. K. Ray Chaudhury, for respondent No. 47. section Chowdhury, B. Das and P. K. Ray Chaudhury, for respondents Nos. 49 69. N. C. Chatterjee and P. K. Chatterjee, for respondent No. 71. February 17. The Judgment of the Court was delivered by WANCHOO, J. These four appeals on certificates granted by the High Court at Calcutta arise out of one judgment and will be dealt with together. The brief facts necessary for present purposes are these: In September 1946 there was food shortage in the country. In order to relieve this shortage, the Government of India entered into an agreement with the President of Argentine Institute for Promotion of Trade by which it undertook to freeze, requisition and take over and sell to the Argentine Institute and ship to Argentine 30,000 tons of hessian and, in return the Institute guaranteed to obtain licences for shipment 824 from Argentine of maize and wheat offals already purchased by the Government of India in Argentine. This agreement was arrived at on September 27, 1946. In anticipation of this agreement, the Government of India on September 20, 1946, addressed letters to the managing agents of various jute mills in Bengal demanding from them information as to stocks of hessian of certain description held by the mills under their managing agencies and prohibiting them from selling, transferring, removing, consuming or otherwise disposing of any article enumerated in Sch. B to the communication. This demand was made under Sub rule (5) of r. 75 A of the Defence of India Rules (hereinafter called the Rules). After the information had been gathered, the Government of India issued an order on September 30, 1946, to the same managing agents requisitioning the hessian specified in the Schedule to the order and directing them and every other person in possession of the said property to deliver it to the Director of Supplies, Calcutta, and in the meantime not to dispose of the property in any manner without the permission of the Central Government. The Schedule to the order in each case indicated the mill from which the requisition was made, the quantity, the description of the hessian and the name of the registered stock holders. These requisition orders were served upon the managing agents of the mills under sub r. (1) of r. 75 A of the Rules on that very day. Thereafter on the same day, that is, September 30, 1946, the Government of India issued a notice under sub r. (2) of r. 75 A to the managing agents communicating that it had been decided to acquire the property under that sub rule. The managing agents were further informed that by virtue of sub r. (3) of r. 75 A the said property would vest in the Central Government at the beginning of the day on which the notice was, served upon them free from any mortgage, pledge, lien or other similar encumbrance. The notices of acquisition were accompanied by schedules similar to the schedules accompanying the requisition orders. This notice of acquisition was also served on the same day on all the 825 managing agents. Further on the same day the Deputy Director of Supplies, Government of India, wrote to the Secretary, Indian Jute Mills Association that shipping instructions would be issued in due course by the Director of Supplies, Calcutta, with respect to hessian requisitioned and acquired under the orders and notices already referred to. The Government then tried to take possession of the hessian requisitioned and acquired but the mills and the holders of delivery orders resisted the Government 's attempt on the ground that the orders of requisition and acquisition were invalid. The Government of India then filed the suit, out of which the present appeals have arisen, on December 11, 1946, for enforcing the orders of requisition and acquisition and also applied for a receiver to be appointed. This application was resisted and it became apparent that it would take some time before it could be disposed of. As ships which were to carry the hessian to Argentine were ready and shipment could not be delayed, the Government on January 7, 1947, promulgated an Ordinance, being Ordinance No. I of 1947, whereby notwithstanding the pendency of the suit the title and possession of the goods requisitioned and acquired were made to vest in the Government. The Government then took possession of the hessian and shipped the same to Argentine. The suit however did not become infructuous or unnecessary after this because section 3 of the Ordinance provided that the suit should be proceeded with in regard to one question involved in it and decision thereon obtained. Under section 3 it was provided that if in the suit it was finally decided that the said goods were not validly requisitioned or acquired by the Central Government on the 30th day of September, 1946, each of the several previous owners of the said goods would be entitled to receive as compensation from the Central Government the market price prevailing on the date of the institution of the aforesaid suit; but if no such decision was made in the suit, the said goods would be deemed to have been validly requisitioned and acquired by the Central Government on the 30th September, 1946, and the 826 amount of compensation to be paid by the Central Government to the several previous owners of the said goods would be determined in accordance with the provisions of law in force on September 30, 1946, relating, to the requisition and acquisition of movable property under the rules made under the Defence of India Act, 1939. It may be mentioned that the Defence of India Act, 1939, and the Rules made thereunder came to an end on September 30,1946. The main question therefore which remained to be decided in the suit was whether the orders of requisition and acquisition were valid and binding on the respective defendants; and the suit was confined to obtaining a declaration to that effect. If a declaration was granted to the Government of India as prayed, the compensation would be determined as on September 30, 1946, in accordance with the provisions of law in force on that day relating to the requisition and acquisition of movable property under the rules made under the Defence of India Act, 1939. On the other hand, if no such declaration was granted, compensation would have to be arrived at in accordance with the market price of hessian prevailing on the date on which the suit was filed, i.e., December 11, 1946. The main questions which arose for determination in the trial court were four, namely (1) Were the alleged orders of requisition dated September 30, 1946, mentioned in the plaint properly and/or validly and/or duly served? (2) Did such alleged orders effect any valid requisition of the goods mentioned in the Schedules to such orders? (3), Were the orders and notices of acquisition mentioned in the plaint properly made or given and/or duly served ? (4) Is there any custom of trade, practice or usage that upon delivery orders being made over to the buyers against payment the property in the goods represented by such delivery orders passed to such buyers ? Sarkar, J., who tried the suit on the original side of the High Court held that the orders of requisition were properly and validly made. He further held that there was no service of the orders on the mills which were in possession of the hessian and which 827 had to be served in order to effect a valid requisition. He therefore held that as there was no proper or due service of the orders there was no valid or binding requisition. Further on the question of acquisition he held that as the goods requisitioned and acquired were subject to pucca delivery orders and in view of the usage that pucca delivery orders were only issued against payment, were passed from hand to hand by endorsement and were sold and dealt with in the market as absolutely representing the goods to which they relate and as the mills were estopped from challenging that the property in the goods had passed (see Anglo India Jute Mills Co. vs Omademall (1)), the Government which was claiming ownership through the mills was also subject to estoppel and as the holders of the delivery orders being the owners of the property were not served on September 30,1946, under r. 75 A (2) of the Rules, the property in the goods therefore did not pass on September 30, 1946. On this view the suit was dismissed. The Union of India then went in appeal. The appeal court reversed the view of Sarkar J. on the question of requisition. It held that the requisition orders did affect and intended to affect individual mills and service on the managing agents of the mills was good service on the mills and therefore the orders of requisition were valid. On the question of acquisition the appeal court posed the question whether the notices of acquisition were served on the owners as required by r. 75 A (2). It did not agree with the view of Sarkar J. that the Government was claiming through the mills and were therefore estopped from challenging the title of the holders of delivery orders. It also held that property in the goods could not pass by estoppel in the face of the provisions of the , III of 1930. Accordingly it held that it was not necessary to serve the holders of the delivery orders with notices of acquisition ; but it further held that the mills which were the owners of the goods requisitioned were not served with the notices of (1) Cal. 127, 828 acquisition, as in its opinion strict compliance with, the provisions of the rules in 0. XXIX of the Code of Civil Procedure were necessary in order that transfer of ownership contemplated under r. 75 A of the Rules, may be effected. Further as there was failure to comply strictly with the provisions of 0. XXIX of the Code of Civil Procedure and as in the view of the appeal court r. 119 (I B) of the Rules did not apply,,, to the case, there was no service of notices of acquisition on the owners as required by r. 75 A (2) of the Rules therefore it held that the acquisition was not valid. In the result the appeal was partly allowed as to the effect of the requisition orders but the view of Sarkar J. was upheld as to the effect of notices of acquisition. This has been followed by four appeals on certificates granted by the High Court. Appeals Nos. 314 to 316 are by the defendants in the suit challenging the view of the appeal court that the orders of requisition were valid and binding. The appellants in these appeals will hereinafter be referred to as the defendants. Appeal No. 778 is by the Union of India challenging the view of the appeal court that the, notices acquisition were not properly served and, therefore there was no acquisition of property: on September 30, 1946, as provided by r. 75 A (3). We shall first deal with the three appeals by the defendants relating to the requisition orders. It is necessary to set out rr. 75.A and 119 of the Rules in this connection, for the validity of the requisition orders depends upon whether the, two rules have been complied ', with. The two rules are as follows: " 75A. (1) If in the opinion of the Central Government or the Provincial Government it is necessary or expedient so to do for securing the defence British India, public safety, the maintenance of public order or the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community, that Government may by order in writing requisition any property, movable or immovable, and may make such further orders as 829 appear to that Government to be necessary or expedient in connection with the requisitioning : Provided that no property used for the purpose of religious worship and no such property as is referred to in rule 66 or in rule 72 shall be requisitioned under this rule. (2) Where the Central Government or the Provincial Government has requisitioned any property under sub rule (1), that Government may use or deal with the property in such manner as may appear to it to be expedient, and may acquire it by serving on the owner thereof, or where the owner is not readily traceable or the ownership is in dispute, by publishing in the Official Gazette, a notice stating that the Central or Provincial Government, as the case may be, has decided to acquire it in pursuance of this rule. (3) Where a notice of acquisition is served on the owner of the property or published i n the official gazette under sub rule (2), then at the beginning of the day on which the notice is so served or published, the property shall vest in Government free from any mortgage, pledge, lien or other similar encum brance and the period of the requisition thereof shall end. (4). . . . . . . " "119. (1) Save as otherwise expressly provided in these Rules, every authority, officer or person who makes any order in writing in pursuance of any of these Rules shall, in the case of an order of a general nature or affecting a class of persons, publish notice of such order in such manner as may, in the opinion of such authority, officer or person, be best adapted for informing persons whom the order concerns, in the case of an order affecting an individual corporation or firm serve or cause the order to be served in the manner provided for the service of a summons in rule 2 of Order XXIX or rule 3 of Order XXX as the case may be in the First Schedule to the Code of Civil Procedure, 1908 (V of 1908), and in the case of an 830 order affecting an individual person (not being a corporation or firm) serve or cause the order to be served on that person (i) personally, by delivering or tendering to him the order, or (ii) by post, or (iii)where the person cannot be found, by leaving an authentic copy of the order with some adult male member of his family or by affixing such copy to some conspicuous, part of the premises in which he is known to have, last resided or carried on business or personally worked for gain. (1 A). Where any of these Rules empowers an authority, officer or person to take action by notified order, the provisions of sub rule (1) shall not apply in relation to such order. (1 B). If in the course of any judicial proceeding, a question arises whether a person was duly informed of an order made in pursuance of these Rules, compliance with sub rule (1), or, in a case to which sub rule (1 A) applies, the notification of the order, ' shall be conclusive proof that he was so informed; but a failure, to comply with sub rule (1) (i) shall not preclude proof by other means that he had information of the order; and (ii) shall not affect the validity of the order. " The scheme of r. 75 A(1) which provides for requisitioning is that the Government has to form an opinion whether it is necessary or expedient to make a requisition for securing the defence of British India, public safety, the maintenance of public order or the efficient prosecution of the war or for maintaining supplies and services essential to the life of the community. After such opinion has been formed, the Government may by order in writing requisition any property, movable or immovable, and make such further orders as appear to it to be necessary ;or expedient in that connection. It has been faintly urged on behalf of the defendants that the orders of requisition were invalid as they did not comply with 831 the first condition indicated above, namely, the necessity or expediency of passing the order. It is enough to say that there is nothing in this contention. The order of September 30, 1946, states in so many words that " in the opinion of the Central Government it is expedient for maintaining supplies and services essential to the life of the community " to make a requisition. It has never been the case of the defend. ants that the orders of requisition were passed mala fide In these circumstances, in the absence of mala fide, the opinion of the Government is final and the purpose indicated by it in the orders for making requisitions is one of the purposes for which an order of requisition can be made under r. 75 A. The main contention of the defendants in their appeals is that r. 75 A contemplates that the order of requisition must be brought to the knowledge of the person whose interests are being affected by it and that this was not done in this case, for neither the holders of delivery orders nor the mills were apprised of the orders of requisition on September 30, Therefore, it is urged that the orders of requisition were not valid and binding. Now sub rule (1) of r. 75 A does not specifically provide for the manner in which an order of requisition is to be served, nor does it provide specifically on whom such an order should be served. So far as the person on whom an order of requisition should be served is concerned, we agree with the appeal court that service of such an order is necessary on the. person who can place the goods in question at the disposal of the requisitioning authority and until that is done there cannot be any valid and effective requisition. This is also clear from the definition of the word " requisition " in r. 2(11) of the Rules, for " requisition " means in relation to any property, to take possession of the property or to require the property to be placed at the disposal of the requisitioning authority. Therefore a requisition of property can be effected either by taking possession of the property or by requiring the property to be placed at the disposal of the requisitioning authority. In the present case we are concerned with 832 the second mode of requisition. In such a case it is necessary that the party which is required to place the goods in question at the disposal of the requisitioning authority should be informed of the order of requisition, so that it may place the property at the disposal of the requisitioning authority as required by the order. Three questions therefore immediately &rise in this connection, namely, (i) who were the proper persons on whom orders of requisition should have been served, (ii) what is the manner in which the orders should have been served, and (iii) whether proper persons have been served in the proper manner in this case. So far as an order of requisition is concerned, we are of opinion that there is no question of any service of the order on the holders of delivery orders, for whatever may be their position as to the ownership of the goods (a matter with which we shall deal later when considering the matter of, acquisition), they were admittedly not in possession of the goods on September 30. Further the goods were admittedly in the possession of the mills and therefore the proper persons to be served with the orders of requisition in this case were the mills. The next question is as to the manner in which the mills which were in possession of the goods had to be served. To that the answer is in our opinion to be found in r. 119 of the Rules. Rule 119 (1) provides that save as otherwise expressly provided in these rules every order in writing in pursuance of any of these rules shall be served in the manner provided therein. Now there is no express provision as to the manner in which an order of requisition in writing issued under r. 75 A has to be served ; therefore it has to be served as provided in r. 119 (1). Further, as orders in this case concerned an individual corporation they had to be served in the manner provided for ' service of summons in r. 2 of 0. XXIX of the Code of Civil Procedure. Rule 2 of 0. XXIX provides that where 'the suit is against a corporation, the summons may be served on the secretary, or on any director, or other principal officer of the corporation, or by leaving 833. it or sending it by post addressed to the corporation as the, registered office or if there is no registered office then at the place where the corporation carries on business. We have therefore to see whether the mills were served with the orders of requisition in the manner provided by r. 2 of 0. XXIX of the Code of Civil Procedure. Further in case there is any irregularity in service it will have to be seen whether the matter comes under sub r. (1 B) of r. 119. Let us therefore first examine the question whether the mills were served as provided in 0. XXIX, r. 2. Now the orders of requisition were sent to the managing agents of the various jute mills. It is true that in the heading of the order, though the name of the managing agency corporation was mentioned, it was not specifically stated there that the order was being addressed to it as the managing agents for such and such mills. But when one reads the schedule attached to each order sent to the managing agents, it becomes immediately clear that the order was intended for the mills mentioned in the schedule and was being served on the managing agents of the mills. As an instance, we may refer to one requisition order addressed to Messrs. Thomas Duff and Co. Ltd. In the, schedule it was clearly stated that the order was with respect to jute bales held by the jute mills under the managing agency of the addressee and the names of the jute mills with respect to; which the order was passed and was being communicated to the managing agents were also mentioned, that is, Titaghur, Victoria, Samnaggur (South) and Samnaggur (North) Jute, Mills. Any one. receiving this order should be therefore able immediately to understand that the order was served on Messrs. Thomas Duff and Co. Ltd., as the managing agents of the four jute mills mentioned above. The defect therefore, in the form of address was in our opinion of no consequence. The order read as a whole along with the schedule leaves no doubt that the order was meant for the jute mills mentioned in the schedule and was addressed to Messrs. Thomas Duff and Co. Ltd. as the managing agents of, those jute mills, It is not in dispute, that 834 orders of requisition with respect to other mills addressed to other managing agents were in the same form and contained similar schedules. There can therefore in our opinion be no doubt that the orders of requisition were meant for the mills and were addressed to them through the managing agents. It is not in dispute that those orders were served on the managing agents on September 30, 1946, and the only question therefore that remains to be considered is whether the service on the managing agents on behalf of the mills is proper service as provided in r. 119 (1) of the Rules read with r. 2 of 0. XXIX of the Code of Civil Procedure. In the matter of service, we are concerned with cl. (a) of O. XXIX, r. 2, which provides that summons may be served on the secretary, or on any director or other principal officer of the corporation ; and what we have to see is whether service on the managing agents was service on "other principal officer" of the corporation. Section 2 (II) of the Indian Companies Act, No. VII of 1913, which was in force at the relevant time, defines an " officer " to include any director, managing agent, manager or secretary. So a managing agent of a corporation is an officer of the corporation. The question then is whether he is,& principal officer, and the answer to our mind is obvious, considering the nature of the duties of a managing agent of a corporation. It is not seriously disputed either that if a managing agent is an officer of the corporation, he would, considering the nature of his duties, be a principal officer. What is, however, contended is that the definition of an officer given in the Companies Act is an artificial definition and is only for the purposes of the Companies Act and not for the Code of Civil Procedure. The appeal court did not accept this contention and was of the opinion that, the definition of an officer given in the Companies Act can also be utilised for the purpose of the Code of Civil Procedure and we think,that that view is correct. Therefore, when the service in this case was effected on the managing agents of the mills it was effected on one of the principal officers of the corporation and 835 would be a good service under O. XXIX, r. 2 But it is contended that the intention behind O. XXIX, r. 2 is that the service must be on a human being and that O. XXIX, r. 2 does not contemplate service on one corporation for the purpose of securing service on another corporation. In this connection reliance is placed on rr. I and 3 of 0. XXIX where it is urged that the same words occur and it is clear that these rules contemplate that the other principal officer mentioned therein must be a human being. This contention was urged before the appeal court and was rejected by it and in our opinion, rightly. It is true that under rr. I and 3, the principal officer envisaged must be a human being, but that conclusion follows from the setting in which these words appear in these two rules. Rule I relates to the signature and verification of a pleading by the secretary, director or other principal officer of the corporation while r. 3 provides that a court may require the personal appearance of the secretary or of any director or other principal officer of the corporation. It is obvious therefore from the setting in which the words "other principal officer" appear in these two rules that he must be a human being, for signature and verification in one case and personal appearance in another can only be by a human being. But rr. I and 3 do not define who a principal officer is. Therefore, even though in these two rules a principal officer must be a human being, it does not follow that in r. 2 also he must be a human being. Rule 2 relates to service and cl. (b) thereof clearly shows that the service to be effected need not necessarily be on a human being connected with the corporation, for under el. (b) the service will be effective if the summons is left or sent by post addressed to the corporation at the registered office or if there is no registered office then at the place where the corporation carries on business. Therefore, for service to be effective it is not necessary that summons must be served on some human being connected with the corporation. Nor do we see anything in 0. XXIX which would militate against our holding that the service on one corporation may be made by serving 836 another corporation which may be the principal officer of the first corporation. Once it is clear in view of the definition of an " officer" ins. 2 (11) of the Companies Act that a managing agent is an officer and when it is obvious considering the nature of the duties of a managing agent of the corporation that it must be held to be a principal officer, service on the managing agent of a corporation would be effective service for the purpose of 0. XXIX, r. 2. We therefore agree with the appeal court that the orders of requisition in this case having been undoubtedly served on the managing agents of the mills as such there has been proper service of the said orders on the mills as required by r. 119 of the Rules. Therefore as the service on the mills through the managing agents was good service within the meaning of r. 119 read with 0. XXIX, r. 2, it is unnecessary to consider the further question whether it is good service within the meaning of r. 119 (1 B). We are therefore in agreement with the appeal court that the orders of requisition were properly and validly and duly served on the mills through the managing agents and therefore these orders effected a valid requisition of the goods mentioned in the schedules attached thereto. In this view Appeals Nos. 314 to 316 fail and are hereby dismissed. Now we turn to the appeal of the Union of India with respect to acquisition. It is not disputed that on the same day (namely, September 30, 1946) notice of the decision to acquire the requisitioned goods was served on the same managing agents. Here again in the heading of the notice only the name of the managing agent was mentioned without specifying in so many words that the communication was being addressed to the managing agents corporation concerned as managing agents of such and such mills. But it is not in dispute that as in the case of orders of requisition so in the case of notices of acquisition there was a schedule attached and that schedule mentioned that acquisition was of goods held by the jute mills under the managing agency of the corporation to which the notice was addressed and the names 837 of the mills whose managing agents the addressed corporation was, were also mentioned in the schedule. It is clear therefore that the notice of the decision to acquire was given to the various managing agents of the various mills in their capacity as managing agents of the mills specified in the schedule and the question is whether the notice was in accordance with r. 75 A (2). Rule 75 A(2) provides that after the property has been requisitioned the Government may acquire it by serving on the owner thereof a notice stating that the Government has decided to acquire it. Further sub r. (3) of r. 75 A lays down that where a notice of acquisition has been served on the owner, then at the beginning of the day on which the notice is so served the property shall vest in Government free from any mortgage, pledge, lien or other similar encumbrance and the period of the requisition thereof shall end. Sub rule (2) therefore requires that there should be a service of the notice of acquisition on the owner of the property requisitioned. Two questions therefore immediately arise in view of the provisions of r. 75 A (2), namely, (1) that there should be a service of the notice on the owner, and (2) that this service should be in accordance with r. 75 A (2). If both these conditions are satisfied, r. 75 A (3) comes into play and the property vests in the Government as provided therein. The first question therefore that arises is whether the notice in this case was served on the owner of the requisitioned goods. The argument on behalf of the defendants is that the requisitioned goods did not belong to the mills and that the real owners were the holders of the pucca delivery orders, and as there was no service of notice on them, there could be no acquisition under r. 75 A (3). Reliance in this connection is placed on Anglo India Jute Mills Co. 's case (1). In that case it was held that " by the usage of the jute trade in Calcutta, pucca delivery orders are issued only on cash payment, are passed from hand to hand by endorsement and are sold and dealt with in the market as absolutely representing the goods to which (1) Cal. 838 they relate." Therefore, it is urged that the owners of the goods were the holders of the pucca delivery orders and not the mills even though the goods were in the possession of the mills at the time when notices Of acquisition were issued. Now it is not in dispute so far as these pucca delivery orders with which we are concerned in these appeals are concerned that though holders thereof pay for the goods specified therein, at no time till actual delivery is given is there any appropriation of the goods either to the contract or the delivery orders. In spite however of the absence of such appropriation, the holders of pucca delivery orders are regarded by the trade as the owners of the goods specified therein and as held in The Anglo India Jute, Mills Co. 's case (1) these pucca delivery orders are passed from hand to hand by endorsement and are sold and dealt with in the market as absolutely representing the goods to which they relate. The question therefore that arises is whether the property in the goods represented by the pucca delivery orders can be said to have passed to the holders thereof, when they receive them. The contention on behalf of the Union of India is that property in the goods cannot pass in law to the holders of the pucca delivery orders till the goods are actually appropriated to the particular order; therefore, as in this case it is not in dispute that no goods were actually appropriated towards the pucca delivery orders concerned, the property in the goods did not pass to the holders thereof but was still in the mills. Reliance in this connection is placed on section 18 of the Indian , go. III of 1930. That section lays down that " where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. " In the present case, as we have already said it is not in dispute that the goods covered by the pucca delivery orders are not ascertained at the time such orders are issued and, ascertainment takes place in the shape of appropriation when the goods are actually delivered in compliance (1) Cal. 839 therewith. Therefore, till appropriation takes place and goods are actually delivered, they are not ascertained. The contract therefore represented by the pucca delivery orders is a contract for the sale of unascertained goods and no property in the goods is transferred to the buyer in view of section 18 of the Indian till the goods are ascertained by appropriation, which in this case takes place at the time only of actual delivery. The appeal court in our opinion was therefore right in holding that the property in the goods included in the pucca delivery orders did not pass to the holders thereof in view of section IS of the in spite of the decision in the case of the Anglo India Jute Mills Co. (1). What that case decided was that in a suit between a holder of a pucca delivery order be he the first holder or a subsequent holder who has purchased the pucca delivery order in the market and the mills, there will be an estoppel and the mill will be estopped from denying that cash had been paid for the goods to, which the delivery order related and that they held the goods for the holder of the pucca delivery order. That case therefore merely lays down the rule of estoppel as between the mill and the holder of the pucca delivery order and in a suit between them the mill will be estopped from denying the title of the holder of pucca delivery orders; but that does not mean that in law the title passed to the holder of the pucca delivery order as soon as it was issued even though it is not disputed that there was no ascertainment of goods at that time and that the ascertainment only takes place when the goods are appropriated to the pucca delivery orders at the time of actual delivery. The appeal court was in our opinion right in holding that the effect of the decision in the case of Anglo India Jute. Mills Co. (1) was not that the property in the goods passed by estoppel and that that case only decided that as between the seller and the holder of the pucca delivery order, the seller will not be heard to say that there was no title in the holder of the delivery order. That case was not dealing with the question of title (1) Cal. 840 at all as was made clear by Jenkins C.J. but was merely concerned with estoppel. In the present case the question whether the Government of India will be estopped is a matter which we shall consider later; but so far as the question of title is concerned there can be no doubt in view of section 18 of the that title in these cases had not passed to the holders of the pucca delivery orders on September 30, 1946, for the goods were not ascertained till then, whatever may be the position of the holders of the pucca delivery orders in a suit between them and the mills to enforce them. The next question then is whether the Government of India is also estopped from challenging that the title passed to the holders of the pucca delivery orders as soon as they got the delivery orders. Sarkar J. seems to have taken the view that as the Government of India was claiming under the mills and had stepped into the place of the mills by acquisition and was claiming ownership through the mills, it would also be estopped from denying the title of the holders of pucca delivery orders in the same way as the mills through whom it was claiming. The appeal court on the other hand held that the Government of India was not claiming through the mills and therefore would not be estopped like the mills from disputing the title of the holders of the pucca delivery orders. We are of opinion that the view of the appeal court is correct. The Government was not acquiring the property through the owners but under the power given to it by the statute, namely, the Defence of India Act and the Rules made thereunder. It did not acquire merely the rights of the owners of the property but the whole property. This is clear from r. 75 A (3) which lays down that "where a notice of acquisition is served on the owner of the property then at the beginning of the day on which the notice is so served, the property shall vest in Government free from any mortgage, pledge, lien or other similar encumbrance. " This shows clearly that what the Government is acquiring under the statute is a kind of paramount title and not any title derived from any owner, for 841 title derived from the owner would not be (for example) free from mortgage, etc. Therefore when Government takes action to acquire the requisitioned property under sub r. (2) of r. 75 A by serving a notice of its decision to do so, it is acquiring the whole property under the statute and is not making any claim to the property through the mills. Thus it is not merely the rights of the owners that the Government acquires; it acquires the whole property free from all kinds of encumbrances. What is thus acquired under the Defence of India Rules is no particular person 's right but the totality of the rights in the property. It cannot therefore be said that. the Government of India when it takes action under r. 75 A (2) is claiming through anybody: it acquires the totality of the rights in the property by virtue of the power vested in it by the statute, eliminating all subsisting private rights. There can in such a case be no estoppel against the Government of India qua the holders of the pucca delivery orders, for the Government of India is not stepping into the shoes of the mills but is acquiring title which is paramount in nature. Therefore even though there may be an estoppel against the mills in view of the decision of The Anglo India Jute Mills Co. (1), there can be no estoppel against the Government of India. Further as in law the property had not passed to the holders of the pucca delivery orders in the circumstances of this case, it was not necessary to serve them with notices under r. 75 A (2), for in law the owners were the mills and it was sufficient if notices were served on them. We may incidentally make it clear that the decision in the case of Anglo India Jute Mills Co. (1) would still be good law in an appropriate case where the question of estoppel can rightly arise. " In view of the foregoing discussion, the conclusion at which we arrive is that on September 30, 1946, the mills were in law the owners of the property which had been requisitioned and with respect to which notices of acquisition were given on the same day. Therefore the notice required under r. 75 A (2) had to be given only to the mills. (1) 842 The question then which arises is whether due notice was given to the mills under r. 75 A (2). The appeal court held that strict compliance with the provisions of the rule by which such transfer of ownership can be effected was necessary. It further held that as notices were not addressed in so many words to the managing agents as managing agents of the various mills, there was no due service as required by r. 75 A (2) and therefore there was no acquisition following on the service of the notices in this case. The first question that arises in this connection is the manner in which notice has to be served under r. 75 A (2). Now all that r. 75 A (2) says ' is that notice of the decision to acquire the property has to be served on the owner thereof (except in certain circumstances with which we are not concerned). The contention of the learned Attorney General on behalf of the Union of India is that. a notice under r. 75 A (2) has also to be served in the manner provided in r. 119 and that therefore the provisions of r. 119 (1 B) would also apply to service of such a notice. On the other hand it has been contended on behalf of the defendants that r. 119 refers to service of orders in writing and r. 75 A(2) does not speak of an order in writing as is the case in r. 75 A(1). We do not think it necessary for purposes of this case to decide whether a notice stating that the Government has decided to acquire the requisitioned property is an order in writing as contemplated under r. 119. Assuming that it is not so, it still remains to be seen how a notice of the kind envisaged in r. 75 A (2) has to be served on a corporation. The appeal court was of the view that as r. 75 A (2) did not provide for the manner of service and as in its opinion r. 119 did not apply, the service of a notice under r. 75 A (2) must be in a reasonable manner. Proceeding on the assumption that r. 119 does not apply, it seems to us that the view of the appeal court that a notice under r. 75 A (2) must be served in a reasonable manner is correct. What then is this reasonable manner of service of notice under r. 75 A(2)? In this connection reference may be made to two provisions in two other Acts. The first 843 is a provision in section 148 of the Indian Companies Act, 1913, which was then in force. That section provides that " a document 'may be served on a company by leaving it at, or sending it by post to, the registered office of the company. " The other provision is 0. XXIX, r. 2 of the Code of Civil Procedure, which we have already considered. We may however read the opening words of this rule for this purpose. They are as follows: " Subject to any statutory provision regulating service of process, where the suit is against a corporation the summons may be served. " It will be seen that r. 2 of 0. XXIX of the Code of Civil Procedure is subject to any statutory provision regulating service of process and where there is any specific statutory provision r. 2 would not be applicable. The only other statutory provision is in section 148 ibid. But that provision, as the words themselves show, is merely an enabling provision and it nowhere lays down that the method mentioned in section 148 is the only method of serving all documents on a company. The section lays down that a document may be served on a company by leaving it or sending it by post at the registered office of the company. But the language shows that that is not the only provision nor is it imperative that service can be effected in the way mentioned in that section, and in no other way. If that were the intention this section of the Companies Act would have been very differently worded. We therefore find that there is one enabling,.provision in section 148 of the Companies Act as to the manner in which documents may be served on a company or a corporation. Order XXIX, r. 2 lays down another method also in addition which courts may employ in effecting service on a corporation. To our mind either of the modes specified in section 148 of the, Indian Companies Act or 0. XXIX, r. 2 of the Code of Civil Procedure is a reasonable mode of effecting service on a company. It is said that 0. XXIX, r. 2 applies to a case of a suit by or against a corporation. That is undoubtedly so. But what is good service in suits would in our opinion 844 be reasonable service for the purpose of r. 75 A (2). Therefore, notices under r. 75 A (2) could be served on the mills either in the manner provided in a. 148 of the Companies Act or in the manner provided in 0. XXIX, r.2 of the Code of Civil Procedure. In this case the manner employed for the service of notices under r. 75 A (2) is that provided in 0. XXIX, r. 2 (a), namely, by effecting service on the principal officer of the mills, namely, the managing agents. We have already considered whether the orders of requisition on the various managing agents were duly served and have held that it was so. We fail to see why what was good service under 0. XXIX, r. 2 in the case of orders of requisition would not be good service or & reasonable way of service in the case of notices of acquisition, for it is not in dispute that the two were served on the same day one after the other and were substantially the same. There was the same defect in the two communications, namely, the heading where the name of the managing agent was mentioned did not contain in so many words that it was being addressed " the managing agent of such and such mill, but the schedule attached made it clear that was addressed as managing agent of those mills both for the purpose of requisition as well as for the purpose of acquisition. The appeal court seems to think that though this kind of service was good for the purpose of requisition it was not good for the purpose of acquisition, because where acquisition was concerned it was necessary that there must be strict compliance with the manner of service, that is, the heading should have also contained that the managing agents were being addressed &a managing agents of particular mills. We are of opinion that this view of the appeal court is not correct and that what was good service in the case of orders of requisition was also good service in the matter of notices of acquisition, for in substance the two services were effected exactly in the same manner on the principal officer of the mills, which 'in one case were in possession of the goods and in other were owners of the goods. We are therefore of opinion that service of the notices of acquisition in this case 845 on the managing agents of the mills was effective service on the mills as owners for the purpose of r. 75 A (2). In consequence r. 75 A (3) would apply and the property in the goods passed to the Government of india on September 30, 1946. The appeal of the Union of India therefore is allowed and a declaration is granted that the goods were validly requisitioned and acquired and that the orders of requisition and notices of acquisition were valid and binding on the respective defendants, and the goods specified therein vested in the Government of India on September 30, 1946. As to costs, it appears that this litigation was due entirely to the defect in the form of address of the requisition orders and the notices of acquisition. In the circumstances we order parties to bear their own costs throughout. Civil Appeals Nos. 314 to 316 of 1957 dismissed. Civil Appeal No. 778 of 1957 allowed.

The Government of India entered into an agreement with the President of Argentine Institute for Promotion of Trade to supply Hessian in return for licences for. shipment to India of food stuff purchased there and with a view to implement that agreement issued orders under r. 75A(i) of the Defence of India Rules, 1939, on the managing agents of certain jute mills on September 30, 1946, requisitioning hessian and directing them and any other person in possession of the said goods to deliver them to the Director of Supplies, Calcutta. Although in the heading of the notices after the names of the managing agents it was not stated that they were being addressed as managing agents of such and such mills, the schedules attached to them made it clear that they were addressed 'as managing agents of such and such mills. On the same day notices of acquisition under r. 75A(2) were served on the said managing agents and they were further informed that under r. 75A(3) the goods would vest in the Government at the beginning of the same day free from any mortgage, pledge, lien and other similar encumbrance. The notices of acquisition were also accompanied by schedules similar to those accompanying the requisition orders. The 821 Government of India tried to take possession of the hessian but was resisted by the mills and the holders of pucca delivery orders and brought the suit, out of which the present appeals arose, for enforcing the said orders of requisition and acquisition. The Defence of India Act, 1939, and the Rules made thereunder, had in the meantime come to an end and the question before the courts below was whether the orders of requisition and acquisition as served were effective in law. The trial judge held that as there were no valid orders of requisition as the mills had not been properly served and since the goods were subject to pucca delivery orders, the mills as well as the Government were estopped from challenging the ownership of the holders of the said delivery orders. The appeal court held that the orders of requisition were valid and binding, that the mills, and not the holders of the delivery orders, were the owners of the goods but that the notices of acquisition had not been served as required by r. 75A(2) Of the Rules and, therefore, there was no valid acquisition under r. 75A(3) Of the Rules. Held, that the requisition of the goods could be effected either by taking possession of them or by requiring them to be placed at the disposal of the requisitioning authority. Since in the present case, the mills and not the holders of the delivery orders were admittedly in possession of the goods on the date of the requisition, the proper persons to be served with the orders were the mills. Since the Rules did not expressly provide as to the manner in which orders of requisition in writing under r. 75A had to be served, r. 119(i) must apply and as the orders in the present case concerned an individual corporation, they had to be served in the, manner prescribed by 0. XXIX, r. 2 of the Code of Civil Procedure. The word "officer" as defined by section 2(ii) Of the Indian Companies Act, 1913, includes a managing agent and such definition can be utilised for the purpose of the Code and regard being ha to the nature of his duties there can be no doubt that a managing agent would be within the expression " other principal officer" in O. XXIX, r. 2(1) of the Code. There was no basis for the contention that service under r.2 must be on some human being or that there could be no effective service on a corporation by serving another corporation which might be its principal officer. The service of the orders of requisition on the managing agents obviously meant for the mills in the instant case, was, therefore, good service under 0. XXIX, r. 3 Of the Code. Since r. 75A(2) itself did not provide for any mode of service of notice under it, either the one or the other of the modes specified in section I48 of the Indian Companies Act, 1913, or 0. XXIX, r. 2 Of the Code would be a reasonable mode of effecting service thereunder. In the instant case the notices of 822 acquisition having been served under 0. XXIX, r. 2(a), as the orders of requisition had also been, such service was good service and the acquisition was effective in law. It was not correct to say that the property in the goods represented by the pucca delivery orders had passed to their holders. The contract involved in such delivery orders is a contract of sale of unascertained goods and in view of section 18 of the Indian , title cannot pass to the buyer till the goods are ascertained by appropriation. Anglo India jute Mills Co. vs Omademull Cal. 127, explained. It was not correct to say that the Government of India in acquiring the requisitioned goods was claiming title through the mills and would be, like them, estopped qua the holders of pucca delivery orders. The power to acquire the property flowed from the Defence of India Act and the Rules made thereunder and covered not merely the rights of the owners but the entire goods. Rule 75A(3) of the said Rules made it quite clear the acquisition thereunder was of a title paramount and of the whole of the property freed from all kinds of encumbrances. No question of serving any notice on the holders of pucca delivery orders, therefore, arose in the present case as the property in the goods had not in law passed to them.

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Appeals Nos. 448 and 449 of 1957. Appeals from the judgment and order dated September 27, 1956, of the Mysore High Court in Writ Petitions Nos. 44 and 45 of 1955. N. C. Chatterjee, D. N. Mukherjee and B. N. Ghose, for the appellant in C. A. No. 448 of 1957. V. L. Narasimhamoorthy, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant in C. A. No. 449 of 1957. G. R. Ethiraiulu Naidu, Advocate General, Mysore,, B. R. G. K. Achar and K. R. Choudhuri, for the respondent. February 3. The Judgment of the Court was delivered by KAPUR, J. These are two appeals brought against two judgments and orders of the High Court of Mysore which arise out of two petitions filed by the appellants under article 226 challenging the legality of the imposition of octroi on wool and cotton under section 98 of the City of Bangalore Municipal Corporation Act (Act LXIX of 1949), which for the sake of convenience, will be termed the " Act ". On March 31, 1954, a resolution was passed purporting to be under section 98(1) of the Act by which it was 700 resolved to levy an octroi on cotton and wool as follows : Name of the Articles Rate of duty 1. Raw cotton and wool (this includes both loose Rs. 1/9/ per and compressed, made in cent. ad valorem India or foreign) 2. . This was notified in the Mysore Gazette on April 3, 1954, and was also published as required by section 98(1) of the Act. Objections were invited and it is admitted that both the appellants filed their objections. Final resolution under section 98(2) was passed on December 21, 1954, and the resolution in regard to octroi came into force as from January 1, 1955. It may be mentioned that the final resolution passed under section 98 (2) of the Act was not published in the Official Gazette but was published in the local newspapers and a notice dated December 23,1954, was also sent to the appellants to the effect that after considering their objections the Municipality had decided to levy an octroi on the goods at the rate already notified. The appellant in C.A. 448/57, filed a petition in the High Court on March 15, 1955, under article 226 challenging the validity of the imposition of the octroi on the grounds: (1) that the tax was in contravention of section 98(2) of the Act in so far as a notice was not published in the Official Gazette; (2) that the tax was in contravention of section 130 of the Act and (3) that there was excessive delegation. The appellant in C. A. 449/57, filed its petition on March 17, 1955, in which besides challenging the validity of the imposition of the tax on grounds above set out, it also challenged the vires of the imposition on the grounds : , 1. that the levy of the octroi was in contravention of article 276(2) of the Constitution by which a tax on trade exceeding Rs. 250/ per annum could not be imposed 701 2. that it was a contravention of article 301 which guaranteed freedom of inter State trade and commerce, and 3. that it was in contravention of article 19(1)(g) of the Constitution. The High Court rejected all these objections and the appellant has come to this court on a certificate of the High Court under article 133(1) of the Constitution. In order to decide the question of the legality of the tax it is necessary to refer to the relevant provisions of the Act. Section 97 enumerates the taxes and duties which the Corporation is empowered to levy under the Act. Section 97(e) provides: " 97. The Corporation may levy (e)an octroi on animals or goods or both brought within the octroi limits for consumption or use therein. " Section 98 which deals with the powers. of control of Government and the procedure for the levying of the Municipal taxes provides: Section 98 (1). " Before the Corporation passes any resolution imposing a tax or duty for the first time it shall direct the Commissioner to publish a notice in the Official Gazette and in the local news. papers of its intention and fix a reasonable period not being less than one month from the date of publication of such notice in the Official Gazette for submission of objections. The Corporation, may, after considering the objections, if any, received within the period specified, determine by resolution to levy the tax or duty. Such resolution shall specify the rate at which, the date from which and the period of levy, if any, for which such tax or duty shall be levied. (2) When the Corporation shall have determined to levy any tax or duty for the first time or at a new rate, the Commissioner shall forthwith publish a notice in the manner laid down in sub section (1) specifying the date from which, the rate at which and the period of levy, if any, for which such tax or duty shall be levied. " 702 It was argued that instead of passing a resolution Imposing the octroi duty, the Corporation should have 'first published its " resolution " to impose the tax and that the Corporation could not at once pass " a resolution " by which it imposed the tax. It published that resolution in the Official Gazette and also in accordance with other provisions of section 98(1) and invited objections which were filed. The only defect, if defect it can be called at all, was that instead of saying that it " intended " to impose a tax, the notice which was published said the tax "had been resolved to be levied. " This is a technicality and is of no substance. The next objection raised was that after the Corporation adopted the resolution imposing the tax which was after considering all the objections the publication was only in local newspapers and there was no publication in the Government Gazette and this, it was submitted, was such a serious defect as to make the imposition illegal and ultra vires. In support counsel for the appellants relied on certain judgments where publication in the Official Gazette was held to be a condition precedent to the legality of the imposition of the tax. These cases are Krishna Jute & Cotton Mills vs The Municipal Council, Vizianagram (1); Municipal Council, Rajamundry vs Nidamarti Jaladurga Prasadarayudu (2). Reference was made also to The Municipal Council, Anantapur vs Sangali Vasudeva Rao (3) ; Manak Chand vs Municipal Council(4) and State of Kerala vs P. J. Joseph (5 ). This question we are not considering as we are referring this case to a larger Bench on certain constitutional points and shall refer this question also in the sequel. The second objection raised was that there was no compliance with section 130 of the Act. That section is as follows : Section 130. " If the corporation by a resolution determines that an octroi should be levied on animals or goods brought within the octroi limits of (1) A.I.R. 1926 Mad. (2) A.I.R. 1926 Mad. (3) Mad. (4) A.I.R. 1951 Raj. (5) A.I.R. 1958 S.C. 296, 299. 703 the city, such octroi shall be levied on such articles or goods specified in Part V Schedule III at such rates not exceeding those laid down in the said ' Part in such manner as may be determined by the corporation. " That is not a charging section but it imposes a limitation on the power of the Municipality as to the rate at which a tax can be imposed. It was further argued that before a resolution under section 98(1) could be passed the goods sought to be taxed had to be specified under section 130 read with Schedule 111, Part V of the Act. Clause 18 of that Schedule provides that octroi on animals and goods shall be levied at the rates not exceeding the following. Classes I to VII specify articles on which octroi can be levied at the maximum rate. Class VIII was as follows: Octroi Maximum rate "Other articles which are not speci fied above and which may be Rs.2 0 0 per cent. approved by the Corporation ad valorem" by an order in this behalf That class empowers the Municipal Council to impose octroi duty on other articles which are not specified but which may be approved by the Corporation. In other words the Corporation can choose other articles upon which tax can be imposed and the respondent Corporation in the present case did resolve to impose tax on raw cotton and wool and also fixed the rate at Rs. 1 9 0 per cent. ad valorem. The submission that as a result of the operation of section 130 first a resolution had to be passed specifying raw cotton and wool as goods on which octroi duty would be levied and then the procedure under section 98(1) and (2) had to be gone through is without substance. What the Corporation did was that it passed a resolution choosing these goods to be goods on which octroi duty was to be levied and by the same resolution it resolved that the goods therein specified be taxed at the rate therein specified. There is no contravention of section 130 even if the contention of the appellants was to be taken most strictly, The goods were specified; the 704 rate of tax to be levied on the goods was also specified; the resolution was passed to that effect and the other procedure laid down in section 98(1) was then followed. In our opinion it is not necessary that first a resolution should be passed specifying the goods and then another resolution should be passed showing the intention of the Municipality to tax those goods. What has been done substantially complies with the provisions of the Act. It was next argued that the words of Class VIII in Part V of Schedule III where the ' words used are " other articles which are not specified above " and which may be approved by the Corporation by order in this behalf meant that the goods must be precisely defined and included by name in the Schedule and that the use of the word in this behalf " meant adding to the list of articles in Schedule III. Reliance was placed on the interpretation of the word " in this behalf " as given by this Court in Bijay Cotton Mills Ltd. vs Their Workmen (1). But that case has no application to the facts of the present case because the resolution was, as a matter of fact, passed for the purpose of imposing an octroi duty on the goods in dispute. The words used in Bijay Cotton Mills Ltd. vs Their Workmen(2) were in another context and ' even there all that was said was that a notification had to issue making the Central Government the appropriate Government. As we have said above in the present case there was a resolution which sought to include these goods in the Schedule for the purpose of imposing the tax. The excessive nature of delegation under Class VIII in Part V of Schedule III was also urged but this was not a question which was raised in the High Court nor is there any substance in the matter. The argument raised was that the power of the Municipal Corporation to specify goods under Class VIII was excessive delegation which was both uncanalised and uncontrolled and reliance was placed on a judgment of this Court in Hamdard Dawakhana vs Union of India("); but that case has no application to the facts (1) ; (2) ; , 705 of the present case. In the present case the Legislature has laid down the powers of the Municipality to tax various goods. It has enumerated certain articles and animals and Class VIII read with section 97(e) of the Act has authorised the Municipality to impose tax on other articles and goods. This power is more in the nature of conditional delegation as was held in Baxter vs Ah Way(1) where it was hold that under a. 52 (g) of the (Australian) Customs Act, 1901, a power given to prohibit by proclamation the importation of certain articles was not a delegation of legislative power but conditional legislation because the prohibition of importation was a legislative abet of Parliament itself and the effect of sub section (g) of section 52 was only to confer upon the Governor General in Council the discretion to determine to which class of goods other than those specified in the section and under what conditions the prohibition shall apply. All that the Legislature has done in the present case is that it has specified certain articles on which octroi duty can be imposed and it has also given to the Municipal Corporation the discretion to determine on what other goods and under what conditions the tax should be levied. That, in our opinion, is not a case which falls under the rule laid down by this Court in Hamdard Dawakhana vs Union of India (2). It was contended in C. A. 449/57 that the imposition of duty on raw cotton could not cover processed cotton that is cotton which had been ginned, combed and pressed. The High Court held that the cotton by being ginned or pressed in bales does not cease to be raw cotton and was to be regarded as raw for the purpose of the Act. The same would apply to wool. The notification levying the tax specifically stated that raw cotton and wool included both loose and compressed, i.e., compressed cotton and wool whether it was Indian cotton or foreign cotton. It will not, in our opinion, be a correct meaning to give to the notification if it were " interpreted to apply only to cotton which had been gathered from the fields and had neither been ginned nor pressed. " We agree with (1) ; (2) ; 706 the High Court that this resolution covers the articles which the appellants in the two cases were importing into the limits of the Corporation of Bangalore. I The learned Advocate General appearing for the respondent also relied on section 38 of the Act which provides : Section 38 (1). " No act done, or proceeding taken under this Act shall be questioned merely on the ground (a) . . . . . . . . (b) of any defect or irregularity in such act or proceeding, not affecting the merit of the case. " This section validates all defects and irregularities in in any act or proceedings which do not affect the merit; of the case. It was submitted that this section is in another chapter, i.e., chapter 2 dealing with provisions common to the Corporation and the Standing Committees. It may be that it is in another chapter but the language of the section is wide and applies to all defects or irregularities in any act or proceeding done not affecting the merits of the case. In our opinion the following points should be heard by the Constitution Bench*: (1) Whether the imposition in the present case offends article 276 or 301 of the Constitution ? (2) Whether the failure to notify the final resolution of the imposition of the tax in the Government Gazette is fatal to the tax ? If the answer to these questions or any of them is in the affirmative the appeal will have to be allowed. But if the two questions are answered against the appellants the appeals will fail as all other points have been decided by us against the appellants. The costs will follow the event unless the Bench hearing the reference makes other order. Referred to Constitution Bench final disposal. *The decision of the Constitution Bench is reported infra.

The City of Bangalore Municipal Corporation resolved to levy octroi on cotton and wool and the resolution was notified in the Official Gazette as required by section 98(1) of the City of Bangalore Municipal Corporation Act. Objections were invited and the appellants filed their objections to the tax. Final resolution in regard to the tax was passed under section 98(2) of the Act which was published in local newspapers but not in the Official Gazette. Notices were also sent to the appellants to the effect that after considering their objections the Municipality had decided to levy octroi on the goods at the rate already notified. The appellants then filed applications in the High Court under article 226 of the Constitution challenging the legality of the levy of octroi but the High Court dismissed the applications. On appeal with a certificate of the High Court: Held, that publication of the resolution in the Official Gazette and invitation of objections under section 98(1) which were filed, were sufficient compliance with the provisions of the Act. The notice stating that the tax had been resolved to be levied instead of stating that it was intended to be levied was at the most only technically defective but all such defects were validated by section 38 of the Act. It was not necessary first to pass a resolution specifying the goods and then another resolution showing the intention of the Municipality to tax those goods. The goods and the rate of tax were specified and the resolution, was passed after following the procedure laid down in section 98(1). This amounted to substantial compliance with the provisions of the Act. The legislature has laid down the powers of the Municipality to tax various goods and enumerated certain goods; Class VIII in Part V of Schedule III read with section 97(e) of the Act authorised the Municipality to impose tax on other articles and goods. In 699 the present case there was a resolution which sought to include the goods in dispute in the Schedule for the purpose of imposing the tax. Bijay Colton Mills Ltd. vs Their Workmen [1960] 2 S.C.R. 982, distinguished. The conferment of power upon the Municipality to specify goods under Class VIII is in the nature of conditional delegation and does not amount to excessive delegation. Baxter vs Ah Way ; , followed. Hamdard Dawakhana vs Union of India ; , held not applicable. The High Court was right in holding that Cotton and Wool do not cease to be raw materials for the purposes of the Act, merely because they are ginned and pressed in bales. The resolution in the present case covered the articles imported by the appellants into the limits of the Corporation of Bangalore.

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Appeal No. 395 of 1959. Appeal by special leave from the Award dated November 25, 1957 of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 24 of 1956. N. C. Chatterjee, D. H. Buch and K. L. Hathi, for the appellants. M. C. Setalvad, Attorney General for India, J. B. Dadachanji and section N. Andley, for the respondent Nos. 1 and 2. M. C. Setalvad, Attorney General for India, Dewan Chaman Lal Pandhi and I. N. Shroff, for the respondent No. 3. 1960. November 30. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. It appears that the appellants were originally in the service of the Scindia Steam Navigation Co. Ltd. (hereinafter called the Scindias). Their services were transferred by way of loan to the Air Services of India Limited (hereinafter referred to as the ASI). The ASI was formed in 1937 and was 813 purchased by the Scindias in 1943 and by 1946 was a full subsidiary of the Scindias. Therefore from 1946 to about 1951, a large number of employees of the, Scindias were transferred to the ASI for indefinite periods. The Scindias had a number of subsidiaries and it was usual for the Scindias to transfer their employees to their subsidiary companies and take them back whenever they found necessary to do so. The ' appellants who were thus transferred to the ASI were to get the same scale of pay as the employees of the Scindias and the same terms and conditions of service (including bonus whenever the Scindias paid it) were to apply. The Scindias retained the right to recall these loaned employees and it is the case of the appellants that they were entitled to go back to the Scindias if they so desired. Thus the terms and conditions of service of these loaned employees of the ASI were different from those employees of the ASI who were recruited by the ASI itself. This state of affairs continued till 1952 when the Government of India contemplated nationalisation of the existing air lines operating in India with effect from June 1953 or thereabouts. When legislation for this purpose was on the anvil the appellants felt perturbed about their status in the ASI which was going to be taken over by the Indian Air Lines Corporation (hereinafter called the Corporation), which was expected to be established after the , No. XXVII of 1953, (hereinafter called the Act) came into force. They therefore addressed a letter to the Scindias on April 6, 1953, requesting that as the Government of India intended to nationalise all the air lines in India with effect from 1 June, 1953, or subsequent thereto, they wanted to be taken back by the Scindias. On April 24, the Scindias sent a reply to this letter in which they pointed out that all persons working in the ASI would be governed by cl. 20 of the Air Corporation Bill of 1953, when the Bill was enacted into law. It was also pointed out that this clause would apply to all those actually working with the ASI on 103 814 the appointed day irrespective of whether they were recruited by the ASI directly or transferred to the ASI from the Scindias or other associated concerns. It was further pointed out that if the loaned employees or others, employed under the 'ASI, did not want to join ,the proposed Corporation they would have the option not to do so under the proviso to cl. 20(1) of the 'Bill; but in case any employee of the ASI whether loaned or otherwise made the option not to join the proposed Corporation, the Scindias would treat them as having resigned from service, as the Scindias could not absorb them. In that case such employees would be entitled only to the usual retirement benefits and would not be entitled to retrenchment compensation. Finally, it was hoped that all those in the employ of the ASI, whether loaned or otherwise, having been guaranteed continuity of employment in the new set up would see that the Scindias would not be burdened with surplus staff, requiring consequential retrenchment of the same or more junior personnel by the Scindias. On April 29, 1953, a reply was sent by the union on behalf of the appellants to the Scindias. It was pointed out that the loaned staff should not be forced to go to the proposed Corporation without any consideration of their claim for re absorption into the Scindias. It was suggested that the matter might be taken up with the Government of India and the persons directly recruited by the ASI who were with other subsidiary companies might be taken by the proposed Corporation in place of the appellants. It seems that this suggestion was taken up with the Government of India but nothing came out of it, particularly because the persons directly recruited by the ASI. who were employed in other subsidiary companies did not want to go back to the ASI. In the meantime, the Scindias issued a circular on May 6,1953, to all the employees under the ASI including the loaned employees, in which they pointed out that all the persons working with the ASI would be governed by cl. 20(1) when the Bill became law and would be absorbed in the proposed Corporation, unless 815 they took advantage of the proviso to cl. 20(1). It was also pointed out that such employees as took advantage of the proviso to el. 20(1) would be treated as having resigned from service and would be entitled to usual retirement benefits as on voluntary retirement, and to nothing more. It was also said that their conditions of service would be the same until duly altered or amended by the proposed Corporation. The circular then dealt with certain matters relating to provident fund with which we are however not concerned. It appears that the Act was passed on May 28, 1953. 20(1) of the Act, with which we are concerned, is in these terms: "(1) Every officer or other employee of an existing air company (except a director, managing agent, manager or any other person entitled to manage the whole or a substantial part of the business and affairs of the company under a special agreement) employed by that company prior to the first day of July, 1952, and still in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in either of the Corporations by virtue of this Act, become as from the appointed date an officer or other employee, as the case may be, of the Corporation in which the undertaking has vested and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same under the existing air company if its undertaking had not vested in the Corporation and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms or conditions are duly altered by the Corporation : Provided nothing contained in this section shall apply to any officer or other employee who has, by notice in writing given to the Corporation concerned prior to such date as may be fixed by the Central Government by notification in the official gazette 816 intimated his intention of not becoming an officer or other employee of the Corporation." After the Act was passed, notice was sent on June 17, 1953, to each employee of all the air companies which were being taken over by the proposed Corporation m and he was asked to inform the officer on special duty by July 10, 1953, if he desired to give the notice contemplated by the proviso to section 20(1). A form was sent in which the notice was to be given and it was ordered that it should reach the Chairman of the Corporation by registered post by July 10. The appellants admittedly did not give this notice as required by the proviso to section 20(1). In the meantime on June 8, 1953, a demand was made on behalf of the appellants in which the Scindias were asked to give an assurance to them that in the event of retrenchment of any loaned staff by the proposed Corporation within the first five years without any fault, the said staff would be taken back by the Scindias. Certain other demands were also made. The Scindias replied to this letter on July 3 and pointed out that they could not agree to give an assurance to take back the loaned staff in case it was retrenched by the proposed Corporation within the next five years. We are not concerned with the other demands and the replies thereto. On July 8, a letter was written on behalf of the appellants to the Scindias in which it was said that the appellants could not accept the contention contained in the circular of May 6, 1953. Though the appellants were carrying on this correspondence with the Scindias, they did not exercise the option which was given to them under the proviso to section 20(1) of the Act,. by July 10, 1953. First of August, 1953, was notified the appointed day under section 16 of the Act and from that date the undertakings of the "existing air companies" vested in the Corporation established under the Act (except the Air India International). So on August:1, 1953, the ASI vested in the Corporation and section 20(1) of the Act came into force. Hence as none of the appellants had exercised the option given to them under the proviso, they would also be governed by the said provision, 817 unless the contention. raised on their behalf that they could in no case be governed by section 20(1), is accepted. The tribunal came to the conclusion that, whatever the position of the appellants as loaned staff from the Scindias to the ASI, as they were informed on May 6, 1953, of the exact position by the Scindias and they did not ask for a reference of an industrial dispute immediately thereafter with the Scindias and as they" ' did not exercise the option given to them by the proviso to section 20(1) before July 10, 1953, they would be governed by section 20(1) of the Act. In consequence, they became the employees. of the Corporation as from August 1, 1953 and would thus have no right there after to claim that they were still the employees of the Scindias and had a right to revert to them. The consequence of all this was that they were held not to be entitled to any of the benefits which they claimed in the alternative according to the order of reference. It is this order of the tribunal rejecting the reference which has been impugned before us in the present appeal. The main contention of Mr. Chatterjee on behalf of the appellants is that they are not governed by section 20 (1) of the Act and in any case the contract of service between the appellants and the Scindias was not assignable and transferable even by law and finally that even if section 20(1) applied, the Scindias were bound to take back the appellants. We are of opinion that there is no force in any of these contentions. 20(1) lays down that every officer or employee of the "existing air companies" employed by them prior to the first day of July, 1952, and still in their employment immediately before the appointed day shall become as I from the appointed day an officer or employee, as the case may be, of the Corporation in which the undertakings are vested. The object of this provision was to ensure continuity of service to the employees of the "existing air companies" which were being taken over by the Corporation and was thus for the benefit of the officers and employees concerned. It is further provided in section 20(1) that the terms of service etc. would be the same until they are duly altered by the Corporation. One should have thought that the employees of the air 818 companies would welcome this provision as it ensured them continuity of service on the same terms till they were duly altered. Further there was no compulsion on the employees or the officers of the "existing air companies" to serve the Corporation if they did not want to do so. The proviso laid down that any officer or other employee who did not want to go into the service of the Corporation could get out of service by notice in writing given to the Corporation before the date fixed, which was in this case July 10, 1953. Therefore, even if the argument of Mr. Chatterjee that the contract of service between the appellants and their employers had been transferred or assigned by this section and that this could not be done,, be correct, it loses all its force, for the proviso made it clear that any one who did not want to join the Corporation, was free not to do so, after giving notice upto a certain date. Mr. Chatterjee in this connection relied on Nokes vs Doncaster Amalgamated Collieries Ltd. where it was observed at p. 1018 "It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result,, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract of service entered into by agreement between A and Y." This observation itself shows that a contract of service may be transferred by a statutory provision; but in the present case, as we have already said, there was no compulsory transfer of the contract of service between the "existing air companies", and their officers and employees to the Corporation for each of them was given the option not to join the Corporation, if he gave notice to that effect. The provision of section 20(1) read with the proviso is a perfectly reasonable provision and, as a matter of fact, in the interest of employees themselves. But, Mr. Chatterjee argues that section 20(1) will only apply to those who were in the employ of the "existing air companies"; it would not (1) , 819 apply to those who might be working for the "existing air companies" on being loaned from some other company. In other words, the argument is that the, appellants were in the employ not of the ASI but of the Scinaias and therefore section 20(1) would not apply to them and they would not become the employees of the Corporation by virtue of that provision when they failed to exercise the option given to them by the proviso. According to him, only those employees of the ASI who were directly recruited by it, would be covered by section 20(1). We are of opinion that this argument is fallacious. It is true that the appellants were not originally recruited by the ASI. They were recruited by the Scindias and were transferred on loan to the ASI on various dates from 1946 to 1951. But for the purposes of section 20(1) we have to see two things: namely, (i) whether the officer or employee was employed by the existing air company on July 1, 1952, and (ii) whether he was still in its employment on the appointed day, (namely, August 1,1953). Now it is not disputed that the appellants were working in fact for the ASI on July 1, 1952, and were also working for it on August 1, 1953. But it is contended that though they were working for the ASI they were still not in its employment in law and were in the employment of the Scindias because at one time they had been loaned by the Scindias to the ASI. Let us examine the exact position of the appellants in order to determine whether they were in the employ of the ASI or not. It is not disputed that they were working for the ASI and were being paid by it; their hours of work as well as control over their work was all by the ASI. From this it would naturally follow that they were the employees of the ASI, even though they might not have been directly recruited by it. It is true that there were certain special features of their employment with the ASI. These special features were that they were on the same terms and conditions of service as were enjoyed by the employees of the Scindias in the matter of remuneration, leave, bonus, etc. It may also be that they could not be, dismissed by the ASI and the Scindias may have had to take action in case it was 820 desired to dismiss them. Further it may be that they could be recalled by the Scindias and it may even be that they might have the option to go back to the Scindias. But these are only three special terms of their employment with the ASI. Subject to these special terms, they would for all purposes be the employees of the ASI and thus would in law be in the employment of the ASI both on July 1, 1952 and on August 1, 1953. The existence of these special terms in the case of these appellants would not in law make them any the less employees of the ASI, for whom they were working and who were paying them, who had power of control and direction over them; who would grant them leave, fix their hours of work and so on. There can in our opinion be no doubt that subject to these special terms the appellants were in the employ of the ASI in law. They would therefore be in the employ of the ASI prior to July 1, 1952 and would still be in its employ immediately before August 1, 1953. Consequently, they would clearly be governed by section 20(1). As they did not exercise the option given to them by the proviso to section 20(1), they became the employees of the Corporation from August 1, 1953, by the terms of the statute. The last point that has been urged is that even if section 20(1) applies, the Scindias are bound to take back the appellants. Suffice it to say that there is no force in this contention either. As soon as the appellants became by force of law the employees of the Corporation, as they did so become on August 1, 1953, in the circumstances of this case, they had no further right against the Scindias and could not; claim to be taken back in their employment on the ground that they were still their employees, in spite of the operation of section 20(1) of the Act. Nor could they claim any of the alternative benefits specified in the order of reference, as from August 1, 1953, they are by operation of law only the employees of the Corporation and can have no rights whatsoever against the Scindias. We are therefore of opinion that the tribunal 's decision is correct. The appeal fails and is thereby dismissed. There will be no order as to costs. Appeal dismissed.

Section 20(1) of the (XXVII of 1953), read with the proviso, is a perfectly reasonable provision and in the interest of the employees and it is not correct to say that it can apply only to the direct recruits of the existing air 812 companies and not at all to loaned employees working under them. The two conditions of its applications are (i) that the officer or employee was employed by the existing air company on July 1, 1952, and (ii) that he was still in its employment on August 1, 1953, the appointed day. In the instant case where the appellants who had been recruited by the Scindia Steam Navigation Co., Ltd., and on purchase by it of the Air Services of India Ltd., loaned to the latter, and were working under its direction and control on and between the said dates and being paid by it, Held, that in law they were the employees of the Air Ser vices of India from the appointed day, notwithstanding the existence of certain special features of their employment, and as such governed by section 20(1) of the Act and since they did not exercise the option given to them under the proviso, they became employees of the Corporation established under the Act and ceased to have any rights against the original employers. Nokes vs Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014, considered.

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Appeal No. 650 of 1957. Appeal from the judgment dated July 13, 1956, of the Patna High Court in Miscellaneous Judicial Case No. 665 of 1954. R. Ganapathy Iyer and R. H. Dhebar, for the appellant. A. V. Viswanatha Sastri and R. C. Prasad, for the respondent. November 29. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal by the Commissioner of Income tax with a certificate against the judgment and order of the High Court at Patna answering two questions of law referred to it under section 66(1) of the Income tax Act by the Tribunal, in the negative. Those questions were: "(1) Whether in the circumstances of the case assessment proceedings were validly initiated under section 34 of the Indian Income tax Act? (2) If so, whether in the circumstances of the case the amount received from interest on arrears of agricultural rent was rightly included in the income of the assessee ?" The assessee, the Maharaja Pratapsingh Bahadur of Gidhaur, had agricultural income from his zamindari for the four assessment years 1944 45 to 1947 48. In assessing his income to income tax, the authorities did not include in his assessable income interest received by him on arrears of rent. This was presumably so in view of the decision of the Patna High Court. When the Privy Council reversed the view of law taken by the Patna High Court in Commissioner of Income tax vs Kamakhya Narayan Singh (1), the Income tax Officer issued notices under section 34 of the (1) 762 Indian Income tax Act for assessing the escaped income. These notices were issued on August 8, 1948. The assessments after the returns were filed, were completed on August 26, 1948. Before the notices were issued, the Income tax Officer had not put the matter before the Commissioner for his approval, as the section then did not require it, and the assessments were completed on those notices. Section 34 was amended by the Income tax and Business Profits Tax (Amendment) Act, 1948 (No. 48 of 1948), which received the assent of the Governor General on Sep tember 8, 1948. The appeals filed by the assessee were disposed of on September 14 and 15, 1951, by the Appellate Assistant Commissioner, before whom no question as regards the validity of the notices under section 34 was raised. The question of the validity of the notices without the approval of the Commissioner appears to have been raised before the Tribunal for the first time. In that appeal, the Accountant Member and the Judicial Member differed, one holding that the notices were invalid and the other, to the contrary. The President agreed with the Accountant 'Member that the notices were invalid, and the assessments were ordered to be set aside. The Tribunal then stated a case and raised and referred the two questions, which have been quoted above. The High Court agreed with the conclusions of the majority, and the present appeal has been filed on a certificate granted by the High Court. Section 34, as it stood prior to the amendment Act No. 48 of 1948, did not lay any duty upon the Income tax Officer to seek the approval of the Commissioner before issuing a notice under section 34. The amending Act by its first section made sections 3 to 12 of the amending Act retrospective by providing "sections 3 to 12 shall be deemed to have come into force on the 30th day of March, 1948. . Section 8 of the amending Act substituted a new section in place of section 34, and in addition to textual changes with which we are not concerned, also added a proviso to the following effect : "Provided that 763 (1) the Income tax Officer shall not issue a notice under this sub section unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice. " The question is whether the notices which were issued were rendered void by the operation of this proviso. ' The Commissioner contends that section 6 of the , particularly cls. (b) and (c) saved the assessments as well as the notices. He relies upon a decision of the Privy Council in Lemm vs Mitchell (1), Eyre vs Wynn Mackenzie (2) and Butcher vs Henderson (3) in support of his proposition. The last two cases have no bearing upon this matter; but strong reliance is placed upon the Privy Council case. In that case, the earlier, action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation, had already ended in favour of the defendant and no appeal therefrom was pending, and it was held that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the same act, unless the statute expressly and by definite words gave him that right. The Privy Council case is thus entirely different. No doubt, under section 6 of the it is provided that where any Act repeals any enactment, then unless a different intention appears, the repeal shall not affect the previous operation of any enactment so repealed or anything duly done thereunder or affect any right, obligation or liability acquired, accrued or incurred under any enactment so repealed. It further provides that any legal proceedings may be continued or enforced as if the repealing Act had not been passed. Now, if the amending Act had repealed the original section 34, and merely enacted a new section in its place, the repeal might not have affected the operation of the original section by virtue of section 6. But the amending Act goes further than this. It (1) ; (2) (3) 764 repeals the original section 34, not from the day on which the Act received the assent of the Governor General but from a stated day, viz., March 30, 1948, and substitutes in its place another section containing the proviso above mentioned. The amending Act provides that the amending section shall be deemed to have come into force on March 30, 1948, and thus by this retrospectivity, indicates a different intention which excludes the application of section 6. It is to be noticed that the notices were all issued on August 8, 1948, when on the statute book must be deemed to be existing an enactment enjoining a duty upon the Income tax Officer to obtain prior approval of the Commissioner, and unless that approval was obstained, the notices could not be issued The notice were thus invalid. , The principle which was applied by this Court in Venkatachalam vs Bombay Dyeing & Mfg. Co. Ltd. (1) is equally applicable here. No question of law was raised before us, as it could not be in view of the decision of this Court in Narayana Chetty vs Income tax Officer (2), that the proviso was not mandatory in character. Indeed, there was time enough for fresh notices to have been issued, and we fail to see why the old notices were not recalled and fresh ones issued. For these reasons, we are in agreement with the High, Court in the answers given, and dismiss this appeal with costs. A appeal dismissed.

The appellant who had agricultural income from his Zamindari was assessed to income tax for the four assessment years, 1944 45, to 1947 48. The income tax authorities did not include in his assessable income, interest received by him on arrears of rent, in view of a decision of the Patna High Court, but subsequently this view of law was reversed by the Privy Council. On August 8, 1948, the Income tax Officer issued notices under section 34of the Indian Income tax Act, 1922, for assessing the escaped income. Before the notices were issued the Income tax Officer had not put the matter before the Commissioner for his approval as the section then did not require it and the assessments were completed on those notices. In the meantime, certain amendments were made to the Indian Income tax Act by Act 48 of 1948, which received the assent of the Governor General on September 8, 1948. The Amending Act substituted a new section in place of section 34, which among other changes, added a proviso to the effect that "the Income tax Officer shall not issue a notice. unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice", and also made it retrospective by providing that the new section "shall be deemed to have come into force on the 30th day of March, 1948". The question was whether the notices issued by the Income tax Officer on August 8, 1948, without the approval of the Commissioner, were rendered void by reason of the operation of the amended section 34. The Commissioner claimed that section 6 of the , saved the assessments as well as the notices. Held, that section 6 of the , was in applicable as the Amending Act of 1948 indicated a different intention within the meaning of that section, inasmuch as the amended section 34 of the Indian Income tax Act, 1922, provided that it shall be deemed to have come into force on March 30, 1948. Lemm vs Mitchell, ; , distinguished, 761 Held, further, that the notices issued by the Income tax Officer on August 8, 1948, and the assessments based on them were invalid. Venkatachalam vs Bombay Dyeing & Mfg. Co., Ltd., ; , applied.

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Appeals Nos. 33 and 34 of 1959. Appeal by special leave from the order dated May 29,1957, of the Central Government Ministry of Finance, New Delhi in Appeal Cases Nos. 24 and 33 of 1957. A. V. Viswanatha Sastri and Ganpat Rai, for the appellants. B. P. Maheshwari, for the respondents. M. C. Setalvad, Attorney General for India, B. B. L. Iyengar and T. M. Sen, for Union of India. April 25. The Judgment of section K. Das, Kapur, Shah and Venkatarama Ayyar, JJ., was delivered by Shah, J. Hidayatullah, J. delivered a separate Judgment. SHAH, J. M/s.Harinagar Sugar Mills Ltd. is a public limited company incorporated under the Indian Companies Act, 1913 (7 of 1913). Article 47B of the Articles of Association of the company invests the 44 342 directors of the company with absolute discretion to refuse to register any transfer of shares. That Article is in the following terms: "The directors may in their absolute discretion and without giving any reason refuse to register any transfer of any shares whether such shares be fully paid or not. If the directors refuse to register the transfer of any shares, they shall within two months, after the date on which the transfer was lodged with the company, send to the transferees and the transferor notice of the refusal. " One Banarasi Prasad Jhunjhunwala is the holder of a block of 9500 fully paid up shares of the company. In January, 1953, he executed transfers in respect of 2500 out of those shares in favour of his son Shyam Sunder and in respect of 2100 shares in favour of his daughter in law Savitadevi and lodged the transfers with the company for registration of the shares in the names of the transferees. The directors of the company by resolution dated August 1, 1953, in purported exercise of the powers under Article 47B of the Articles of Association, declined to register the shares in the names of the transferees. Petitions were then filed by Banarasi Prasad and the transferees in the High Court of Judicature at Bombay for orders under section 38 of the Indian Companies Act, 1913 for rectification of the register of the company maintaining that the refusal by the board of directors to register the transfer of the shares was "mala fide, arbitrary and capricious" and that the directors had acted with improper and ulterior motives. The High Court rejected these petitions holding that in summary proceedings under section 38, controversial questions of law and fact could not be tried and that the proper remedy of the transferees, if so advised, was to file suits for relief in the civil court. Requests were again made by the transferees to the company by letters dated February 29, 1956 to register the transfers made by Banarasi Prasad in 1953. The directors of the company in their meeting of March 15, 1956 reiterated their earlier resolution not to register the shares trans ferred in the names of the transferees. Against this 343 action of the company, appeals were preferred to the Central Government under section 111 el.(3) of the Indian , which had since been brought into operation on April 1, 1956. K. R. P. Ayyangar, Joint Secretary, Ministry of Finance, who heard the appeals declined to order registration of transfers, because in his view, the questions raised in the appeals could, as suggested by the High Court of Bombay, be decided only in a civil suit. Thereafter, Banarasi Prasad transferred a block of 100 shares to his son Shyam Sunder and another block of 100 shares to his daughter in law Savitadevi, and the transferees requested the company by letters dated November 21, 1956, to register the transfers. In the meeting dated January 12, 1957, the directors of the company resolved not to register the transfers and informed the transferees accordingly. Against this resolution, separate appeals were preferred by Shyam Sunder and Savitadevi under section 111 el.(3) of the Indian to the Central Government. It was submitted in para 4 of the petitions of appeal that the refusal to register the transfer of shares was without "any reason, arbitrary and untenable". The company filed representations submitting that the refusal was bona fide and was not "without any reason, arbitrary and untenable" as alleged. Shyam Sunder and Savitadevi filed rejoinders to the representations submitting that they had never alleged that refusal to transfer the shares "was capricious or mala fide" and that all they had alleged was that the "refusal was without any reason, arbitrary and untenable". By separate orders dated May 29, 1957, the Deputy Secretary to the Government of India, Ministry of Finance set aside the resolution passed by the board of directors in exercise of the powers conferred by sub sections(5) and (6) of section Ill of the Indian , and directed that the company do register the transfers. In so directing, the Deputy Secretary gave no reasons. Against the orders passed by the Deputy Secretary, with special leave under article 136 of the Constitution, these two appeals are preferred by the company. Two questions fall to be determined in these appeals, (1) whether the Central Government exercising appellate powers under section 111 of the before its amendment by Act 65 of 1960 is a tribunal exercising judicial functions and is subject to the appellate jurisdiction of this court under article 136 of the Constitution, and (2) whether the Central Government acted in excess of its jurisdiction or otherwise acted illegally in directing the company to register the transfer of shares in favour of Shyam Sunder and Savitadevi. Article 136 of the Constitution, by the first clause provides: "Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India". The Central Government exercising powers under section Ill of the is not a court; that is common ground. The Attorney General intervening on behalf of the Union of India submits that the Central Government merely exercises administrative authority in dealing with an appeal under section 111 of the Indian and is not required to act judicially. He submits that the authority of the directors of the company which is in terms absolute, and is not required to be exercised judicially, when exercised by the Central Government under section 111 does not become judicial, and subject to appeal to this court. But the mere fact that the directors of the company are invested with absolute discretion to refuse to register the shares will not make the jurisdiction of the appellate authority administrative. In a recent case decided by this court Shivji Nathu bhai vs The, Union of India (1), it was held that the Central Government exercising power of review under r. 54 of the Mineral Concession Rules, 1949 against an (1) ; 345 administrative order of the State Government granting a mining lease was subject to the appellate jurisdiction of this court, because the power to review was judicial and not administrative. In that case, the action of the State Government granting the mining lease was undoubtedly an administrative act, but r. 54 of the Mineral Concession Rules, 1949 granted a right of review at the instance of an aggrieved party to the Central Government, and authorised it to cancel the order of the State Government or to revise it in such manner as it deemed just and proper. The exercise of this power was held by this court to be quasi judicial. Before it was amended by section 27 of Act 65 of 1960, section III of the Indian Companies Act, 1956 omitting parts not material provided: (1) Nothing in sections 108, 109 and 110 shall prejudice any power of the company under its articles to refuse to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company. (2) If, in pursuance of any such power, a company refuses to register any such transfer or transmission of right, it shall, within two months from the date on which the instrument or transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be. (3) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may, where the company is a public company or a private company which is a subsidiary of a public company, appeal to the Central Government against any refusal of the company to register the transfer or transmission, or against any failure on its part within the period referred to in sub section (2) either to register the transfer or transmission or to send notice of its refusal to register the same. (4). . . . . . . . . (5) The Central Government shall, after causing reasonable notice to be given to the company and 346 also to the transferor and the transferee or as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representations, if any, in writing by order, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it: and in the former case, the company shall give effect to the decision forthwith. (6) The Central Government may, in its order aforesaid give such incidental and consequential directions as to the payments of costs or otherwise as it thinks fit. (7) All proceedings in appeals under sub section (3) or in relation thereto shall be confidential and no suit, pro secution or other legal proceeding shall lie in respect of any allegation made in such proceedings, whether orally or otherwise. (8) In the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company, is transmitted by a sale thereof held by a court or other public authority, the provisions of sub sections (3) to (7) shall apply as if the company were a public company: Provided that the Central Government may, in lieu of an order under sub section (5) pass an order directing the company to register the transmission of the right unless any member or members of the company specified in the order acquire the right aforesaid within such time as may be allowed for the purpose by the order, on payment to the purchaser of the price paid by him therefor or such other sum as the Central Government may determine to be a reasonable compensation for the right in all the circumstances of the case. Against the refusal by a company to register the transfer or transmission of a right to the shares, an appeal lies to the Central Government. The Government, after giving notice of the appeal and hearing the parties concerned may order that the shares be registered if it thinks that course is in the circumstances proper. The Central Government may 347 by the proviso to sub section (8) in lieu of an order under sub section (5), directing a private company to register,, transmission of shares sold by a court or public authority, order that any member or members of the company specified in the order do acquire the right on payment to the purchaser of the price paid by him, or such other sum as the Central Government determine to be reasonable compensation. In exercise of the powers under section 642, rules called "The Companies (Appeals to the Central Government) Rules, 1957" have been framed by the Central Government. By cl. (3) of the rules, the form of the petition of appeal is prescribed. Clause (4) provides that the memorandum of appeal shall be accompanied by an affidavit and documentary evidence if any in support of the statements made therein including a copy of the letter written by the appellant to the company for the purpose of registration of the shares. Clause (5) pres cribes the mode of service of notice of appeal to the company and el.(6) authorises the Central Government before considering the appeal to require the appellant or the company to produce within a specified period such further documentary or other evidence as it considers necessary. Clause (7) enables the parties to make representations if any in writing accompanied by affidavits and documentary evidence. Clause (8) authorises the Central Government after considering the representations made and after making such further enquiries as it considers necessary to pass such orders as it thinks fit under sub section(5) of section 111 of the Act. By the appendix to the rules, the form in which notice is to be given to the company is prescribed. Paragraph 2 of the form states that the company shall be called upon to make its representations in writing against, the appeal and be informed that if no representation is received, the appeal will be determined according to law. There was no provision similar to section Ill of the Indian , in the Act of 1913, nor is our attention invited to any provision in the English on which our Act is largely based, to a similar provision. Prior to 1956, if transfer of 348 shares was not registered by the directors of a company, action under the of 1913 could only be taken under section 38 of the Indian Companies Act, 1913 by petition for rectification of the share register. As we will presently point out, the power to refuse to register a transfer granted by the Articles of Association, if challenged in a petition for rectification of register was to be presumed to have been exercised reasonably, bona fide and for the benefit of the company, and unless otherwise provided by the Articles, the directors were not obliged to disclose reasons on which they acted. The power had to be exercised for the benefit of the company and bona fide, but a heavy onus lay upon those challenging the resolution of the directors to displace the presumption of bona fide exercise of the power. The discretion to refuse to register transfers was not liable to be controlled unless the directors "acted oppressively, capriciously or corruptly, or in some way mala fide" (Re Bell Brothers Ltd. ex parte Hodgson) (1). Power to refuse to register transfer of shares, without assigning any reasons, or in their absolute and uncontrolled discretion, is often found in the Articles of Association, and exercising jurisdiction under section 38 of the Indian Companies Act, 1913, the court may not draw unfavourable inferences from the refusal to disclose reasons in support of their resolution. The power given to the court under section 38 is now confirmed with slight modification by section 155 of the Indian . Under that section, the court may rectify the register of shareholders if the name of any person is without sufficient cause entered in or omitted from the register of members of a company, or default is made, or unnecessary delay has taken place in entering on the register the fact of any person having ceased to be a member. The court is in exercising this jurisdiction competent to decide any question relating to the title of the person claiming to have his name registered and generally to decide all questions which may be necessary or expedient to decide for the rectification. A person aggrieved by the refusal to (1) 349 register transfer of shares has, since the enactment of the , therefore two remedies for seeking relief under the , (1) to apply to the court for rectification of the register under section 155, and (2) to appeal against the resolution refusing to register the transfers under section 111. It is common ground that in the exercise of the power under section 155, the court has to act judicially: to adjudicate upon the right exercised by the directors in the light of the powers conferred upon them by the Articles of Association. The respondents however submit and they are supported by the Union of India that the authority of the Central Government under section Ill is nevertheless purely administrative. But in an appeal under section 111 el.(3) there is a lis or dispute between the contesting parties relating to their civil rights, and the Central Government is invested with the power to determine that dispute according to law, i.e., it has to consider and decide the proposal and the objections in the light of the evidence, and not on grounds of policy or expediency. The extent of the power which may be exercised by the Central Government is not delimited by express enactment, but the power is not on that account unrestricted. The power in appeal to order registration of transfers has to be exercised subject to the limitations similar to those imposed upon the exercise of the power of the court in a petition for that relief under section 155: the restrictions which inhere the exercise of the power of the court also apply to the exercise of the appellate power by the Central Government, i.e., the Central Government has to decide whether in exercising their power, the directors are acting oppressively, capriciously or corruptly, or in some way mala fide. The decision has manifestly to stand those objective tests, and has not merely to be founded on the subjective satisfaction of the authority deciding the question. The authority cannot proceed to decide the question posed for its determination on grounds of expediency: the statute empowers the Central Government to decide the disputes arising out of the claims made by the transferor or transferee which claim is opposed by the company, 45 350 and by rendering a decision upon the respective con tentions, the rights of the contesting parties are directly affected. Prima facie, the exercise of such authority would be judicial. It is immaterial that the statute which confers the power upon the Central Government does not expressly set out the extent of the power: but the very nature of the jurisdiction requires that it is to be exercised subject to the limitations which apply to the court under section 155. The proviso to sub section(8) of section III clearly indicates that in circumstances specified therein reasonable compensation may be awarded in lieu of the shares. This compensation which is to be reasonable has to be ascertained by the Central Government; and reasonable compensation cannot be ascertained except by the application of some objective standards of what is just having regard to all the circumstances of the case. In The Province of Bombay vs Kusaldas section Advani(1), this court considered the distinction between decisions quasi judicial and administrative or ministerial for the purpose of ascertaining whether they are subject to the jurisdiction to issue a writ of certiorari. Fazl Ali, J. at p. 642 observed: "The word "decision" in common parlance is more or less a neutral expression and it can be used with reference to purely executive acts as well as judicial orders. The mere fact that an executive authority has to decide something does not make the decision judicial. It is the manner in which the decision has to be arrived at which makes the difference, and the real test is: Is there any duty to decide judicially?" The court also approved of the following test suggested in The King vs London County Council (2) by Scrutton L.J.: "It is not necessary that it should be a court in the sense in which this court is a court; it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition; and it is not necessary to be strictly a court; if it is a tribunal which has to (1) T. (2) , 233.351 decide rights after hearing evidence and opposition, it is amenable to the writ of certiorari. " In The Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi (1), the question whether an adjudication by an industrial tribunal functioning under the Industrial Disputes Act was subject to the jurisdiction of this court under article 136 of the Constitution fell to be determined:, Mahajan J. in that case observed: "There can be no doubt that varieties of administrative tribunals and domestic tribunals are known to exist in this country as well as in other countries of the world but the real question to decide in each case is as to the extent of judicial power of the State exercised by them. Tribunals which do not derive authority from the sovereign power cannot fall within the ambit of article 136. The condition precedent for bringing a tribunal within the ambit of article 136 is that it should be constituted by the State. Again a tribunal would be outside the ambit of article 136 if it is not invested with any part of the judicial functions of the State but discharges purely administrative or executive duties. Tribunals however which are found invested with certain functions of a Court of Justice and have some of its trappings also would fall within the ambit of article 136 and would be subject to the appellate control of this Court whenever it is found necessary to exercise that control in the interests of justice. " It was also observed by Fazl Ali J. at p. 463 that a body which is required to act judicially and which exercises judicial power of the State does not cease to be one exercising judicial or quasi judicial functions merely because it is not expressly required to be guided by any recognised substantive law in deciding the disputes which come before it. The authority of the Central Government entertaining an appeal under section 111(3) being an alternative remedy to an aggrieved party to a petition under section 155 the investiture of authority is in the exercise of the judicial power of the State. Clause (7) of section III (1) ; 352 declares the proceedings in appeal to be confidential, but that does not dispense with a judicial approach to the evidence. Under section 54 of the Indian Income tax Act, (which is analogous) all particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of the Act or in any evidence given, or affidavit or deposition made, in the course of any proceedings under the Act are to be treated as confidential; but that does not make the decision of the taxing authorities merely executive. As the dispute between the parties relates to the civil rights and the Act provides for a right of appeal and makes detailed provisions about hearing and disposal according to law, it is impossible to avoid the inference that a duty is imposed upon the Central Government in deciding the appeal to act judicially. The Attorney General contended that even if the Central Government was required by the provisions of the Act and the rules to act judicially, the Central Government still not being a tribunal, this court has no power to entertain an appeal against its order or decision. But the proceedings before the Central Government have all the trappings of a judicial tribunal. Pleadings have to be filed, evidence in support of the case of each party has to be furnished and the disputes have to be decided according to law after con sidering the representations made by the parties. If it be granted that the Central Government exercises judicial power of the State to adjudicate upon rights of the parties in civil matters when there is a lis between the contesting parties, the conclusion is inevitable that it acts as a tribunal and not as an executive body. We therefore over rule the preliminary objection raised on behalf of the Union of India and by the respondents as to the maintainability of the appeals. The Memorandum and Articles of Association of a company when registered bind the company and the members of the company to the same extent as if they respectively had been signed by the company and each member, and contained covenants on its and 353 his part to observe all the provisions of the Memorandum and of the Articles. Clause 47B of the Articles of Association which invests the director with discretion to refuse to register shares is therefore an incident of the contract binding upon the transferor, and registration of transfer or transmission cannot therefore be insisted upon as a matter of right. The conditions subject to which a party can maintain a petition for an order for rectification of the register of shareholders have been settled by a long course of decisions. Two of those may be noticed. In In re Gresham Life Assurance Society Ex parte Penney (1), the deed of settlement of a life insurance company provided that any shareholder shall be at liberty to transfer his shares to any other person who was already a shareholder, or who should be approved by the board of directors, and that no person not being already a shareholder or the executor of a shareholder, should be entitled to become the transferee of any share unless approved by the board. One J. R. De Paiva who was the holder of ten shares of the company sold them to W. J. Penney and lodged the transfer with the shares for registration at the company 's office. The directors in exercise of the powers conferred upon them by the deed of settlement refused to register the shares. In a joint summons taken out by Paiva and Penney under section 35 of the Companies Act, 1862, the Master of the Rolls directed the transfer to be registered, the directors of the company having failed to submit any reasonable ground or objection to the purchaser. In the view of the Master of the Rolls, it was for the court to judge whether the objection was reasonable and that objection must be disclosed to the court. Against this order, the company approached the Court of Appeal. James L. J. in dealing with the contention raised by the appellant observed that the directors were in a fiduciary position both towards the company and towards every shareholder and that it was easy to conceive of cases in which the court may interfere with any violation of the fiduciary duty so (1) (1872) Law Rep. 8 Ch. 354 reposed in the directors. It was observed by James L. J.: "But in order to interfere upon that ground it must be made out that the directors have been acting from some improper motive, or arbitrarily and capriciously. That must be alleged and proved, and the person who has a right to allege and prove it is the shareholder who seeks to be removed from the list of shareholders and to substitute another person for himself . this Court would have jurisdiction to deal with it as a corrupt breach of trust; but if there is no such corrupt or arbitrary conduct as between the directors and the person who is seeking to transfer his shares, it does not appear to me that this court has any jurisdiction whatever to sit as a Court of Appeal from the deliberate decision of the board of directors, to whom, by the constitution of the company, the question of determining the eligibility or non eligibility of new members is committed. If the directors had been minded, and the Court was satisfied that they were minded, whether they expressed it or not, positively to prevent a shareholder from parting with his shares, unless upon complying with some condition which they chose to impose, the Court would probably, in exercise of its duty as between the cestui que trust and the trustees, interfere to redress the mischief, either by compelling the transfer or giving damages, or in some mode or other to redress the mischief which the shareholder would have had a just right to complain of. " It was also observed by James L.J.: " I am of opinion that we cannot sit as a Court of Appeal from the conclusion which the directors have arrived at if we are satisfied that the directors have done that which alone they could be compelled by mandamus to do, to take the matter into their consideration". Mellish L.J. observed: "But it is further contended that in order to secure the existing shareholder against being deprived of the right to sell his shares, the directors are 355 bound to give their reason why they reject the transferee, and if they reject him without giving a reason that is a ground from which the Court ought to infer that they were acting arbitrarily. I cannot agree with that. It appears to me that it is very important that directors should be able to exercise the power in a perfectly uncontrollable manner for the benefit of the shareholders; but it is impossible that they could fairly and properly exercise it if they were compelled to give the reason why they rejected a particular individual. I am therefore of opinion that in order to preserve to the company the right which is given by the articles a shareholder is not to be put upon the register if the board of directors do not assent to him, and it is absolutely necessary that they should not be bound to give their reasons although I perfectly agree that if it can be shown affirmatively that they are exercising their power capriciously and wantonly, that may be a ground for the Court interfering". A similar view was also expressed in In re, Smith and Fawcett Ltd. (1) where the Court of Appeal held that where the directors of the company had uncontrolled and absolute discretion to refuse to register any transfer of shares, while such powers are of a fiduciary nature and must be, exercised in the interest of the company, the petition for registration of transfer should be dismissed unless there is something to show that they had been otherwise exercised. Rectification of the register under section 155 can therefore be granted only if the transferor establishes that the directors had, in refusing to register the shares in the names of a transferee, acted oppressively, capriciously or corruptly, or in some way mala fide and not in the interest of the company. Such a plea has, in a petition for rectification, to be expressly raised and affirmatively proved by evidence. Normally, the court would presume that where the directors have refused to register the transfer of shares when they have been invested with absolute discretion to refuse registration, that the exercise of the power was bona fide. When (1) 356 the new Companies Act was enacted, it was well settled that the discretionary power conferred by the articles of association to refuse to register would be presumed to be properly exercised and it was for the aggrieved transferor to show affirmatively that it had been exercised mala fide and not in the interest of the company. Before the Committee appointed by the Government of India under the Chairmanship of Mr. C. H. Bhabha representation was made by several bodies that this power which was intended to be exercised for the benefit of the company was being misused and the Committee with a view to afford some reasonable safeguards against such misuse of the power recommended that a right of appeal should be provided against refusal to register transfer of shares. The Legislature, it appears, ,accepted this suggestion and provided a right of appeal. But the power to entertain the appeal is not unrestricted: being an alternative to the right to approach the civil court, it must be subject to the same limitations which are implicit in the exercise of the power by the civil court under section 155. The Central Government may therefore exercise the power to order that the transfer which the directors have in their discretion refused, be registered if it is satisfied that the exercise of the discretion is mala fide, arbitrary or capricious and that it is in the interest of the company that the transfer should be registered. Relying upon el.(7) of section 111 which provided that the proceedings in appeals under sub section(3) or in relation thereto shall be confidential, it was urged that the authority hearing the appeal is not obliged to set out reasons in support of its conclusion and it must be assumed that in disposing of the appeal, the authority acted properly and directed registration of shares. But the provision that the proceedings are to be treated as confidential is made with a view to facilitate a free disclosure of evidence before the Central Government which disclosure may not, in the light of publicity which attaches to proceedings in the ordinary courts, be possible in a petition under section 155 of the 357 Companies Act. The mere fact that the proceedings are to be treated as confidential does not dispense with a judicial approach nor does it obviate the disclosure of sufficient grounds and evidence in support of the order. In the present case, the position is somewhat un satisfactory. The directors passed a resolution declining to register the shares and informed the transferor and the transferees of that resolution. The transferees in their petition stated that the refusal to register transfer was without any reason, arbitrary and untenable and in the grounds of appeal they stated that they did not know of any reasons in sup port of the refusal and reserved liberty to reply thereto if any such reasons were given. The company in reply merely asserted that the refusal was not without any reason or arbitrary or untenable. The transferees in their rejoinder made a curious statement of which it is difficult to appreciate the import that they had "nowhere stated in the memoranda of appeals that the refusal to transfer shares was capricious or mala fide" and all that they "had stated was that the refusal was without any reason, arbitrary or untenable". The Deputy Secretary who decided the appeals chose to give no reasons in support of his orders. There is nothing on the record to show that he was satisfied that the action of the directors in refusing to register the shares "was arbitrary and untenable" as alleged. If the Central Government acts as a tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this court under article 136 of the Constitution, we fail to see how the power of this court can be effectively exercised if reasons are not given by the Central Government in support of its order. In the petition under section 38 of the Indian Companies Act, 1913, the Bombay High Court declined to order rectification on a summary proceeding and relegated the parties to a suit and a similar order was passed by the Joint Secretary, Ministry of Finance. These proceedings were brought to the notice of the Deputy Secretary who heard the appeals. Whether 46 358 in spite of the opinion recorded by the High Court and by the Joint Secretary, Ministry of Finance in respect of another block out of shares previously attempted to be transferred, there were adequate grounds for directing registration, is a matter on which we are unable to express any opinion. All the documents which were produced before the Deputy Secretary are not printed in the record before us and we were told at the bar that there were several other documents which the Deputy Secretary took into con sideration. In the absence of anything to show that the Central Government exercised its restricted power in hearing an appeal under section 111(3) and passed the orders under appeal in the light of the restrictions imposed by article 47B of the articles of association and in the interest of the company, we are unable to decide whether the Central Government did not transgress the limits of their power. We are however of the view that there has been no proper trial of the appeals, no reasons having been given in support of the orders by the Deputy Secretary who heard the appeals. In the circumstances, we quash the orders passed by the Central Government and direct that the appeals be re heard and disposed of according to law. Costs of these appeals will be costs in the appeals before the Central Government. HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Shah, J. In view of the strong objection to the competence of the appeals under article 136 by the respondents, to whom liberty was reserved by the order granting special leave, I have found it necessary to express my views. The facts have been stated in detail by my learned brother, and I shall not repeat them in full. Very shortly stated, the facts are that the second respondent, Banarsi Prasad Jhunjhunwala, transferred 2500 shares to his son, and 2100 shares to his daughter in law, in the appellant Company in 1953. The appellant Company declined to register these transfers. Proceedings for rectification of the Register under section 38 of the Indian Companies Act, 1913, followed 359 in the High Court of Bombay, but the High Court referred the disputants to the Civil Court. In the petition before the High Court, the respondents had charged the Directors of the appellant Company with bad faith and arbitrary dealing. The respondents renewed their requests for registration, but they were again declined, and appeals were filed before the Central, Government under section 111(3) of the , which had come into force from April 1, 1956. These appeals were heard by Mr. K. R. P. Aiyengar, Joint Secretary, Ministry of Finance, who dismissed them, holding that only a suit was the appropriate remedy. Banarsidas Prasad then made a fresh transfer of 100 shares each to his son and daughter in law, and requests for registration of these shares were made. The appellant Company again declined to register the shares, but gave no reaons. Under cl. 47 B of the Articles of Association of the appellant Company, it is provided: "The Directors may in their absolute discretion and without giving any reason refuse to register any transfer of any shares whether such shares be fully paid or not. If the Directors refuse to register the transfer of any shares, they shall, within two months after the date on which the transfer was lodged with the company, send to the trans feree and the transferor notice of the refusal. " The appellant Company was prima facie within its rights when it did not state any reasons for declining to register the shares in question. Appeals were again taken to the Central Government under section 111(3). It was alleged that the refusal to register the shares without giving any reasons was "arbitrary and untenable". In accordance with the provisions of the section, representations were filed by the appellant Company and rejoinders by the opposite party. The transferees made it clear that they did not charge the appellant Company with "capricious or mala flee conduct" but only with arbitrary any reasons. The appeals 360 succeeded, and the shares were ordered to be registered. The Deputy Secretary, who heard and decided the appeals, gave no reasons for his decision. Against his order, the present appeals have been filed with special leave. The preliminary objection is that the appeals are incompetent, because the Central Government, which heard them, is not a tribunal muchless a Court, and the action of the Central Government is purely administrative. It is, therefore, submitted that article 136 does not apply, because special leave can only be granted in respect of a determination by a Court or a tribunal, which the Central Government is not. This is not the only provision of law, under which the Central or State Governments have been empowered to hear appeals, revisions or reviews, and it is thus necessary to find out the exact status of the Central Government when it hears and decides appeals, etc., for the application of article 136. Article 136(1) reads as follows: "Notwithstanding anything in this Chapter, the Supreme Court may in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any Court or tribunal in the territory of India. " The orders which the Central Government passes, certainly fall within the words "determination" and "order". The proceeding before the Central Government also falls within the wide words "any cause or matter". The only question is whether the Central Government, when it hears and decides an appeal, can be said to be acting as a Court or tribunal. That the Central Government is not a Court was assumed at the hearing. But to ascertain what falls within the expression "Court or tribunal", one has to begin with "Courts". The word "Court" is not defined in the . It is not defined in the Civil Procedure Code. The definition in the Indian Evidence Act is not exhaustive, and is for the purposes of that Act. In the Now English Dictionary (Vol. II, pp. 1090, 1091), the meaning given is: 361 "an assembly of judges or other persons legally appointed and acting as a tribunal to hear and determine any cause, civil, ecclesiastical, military or naval. " All tribunals are not Courts, though all Courts are tribunals. The word "Courts" is used to designate those tribunals which are set up in an organised State for the administration of justice. By administration of justice is meant the exercise of judicial power of the State to maintain and uphold rights and to punish "wrongs". Whenever there is an infringement of a right or an injury, the Courts are there to restore the vinculum juris, which is disturbed. Judicial power, according to Griffith, C. J. in Huddart, Parker & Co. Proprietary Ltd. vs Moorehead (1) means: "the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action. " When rights are infringed or invaded, the aggrieved party can go and commence a querela before the ordinary Civil Courts. These Courts which are instrumentalities of Government, are invested with the judicial power of the State, and their authority is derived from the Constitution or some Act of legislature constituting them. Their number is ordinarily fixed and they are ordinarily permanent, and can try any suit or cause within their jurisdiction. Their numbers may be increased or decreased, but they are almost always permanent and go under the compendious name of "Courts of Civil Judicature". There can thus be no doubt that the Central Government does not come within this class. With the growth of civilisation and the problems of modern life, a large number of administrative tribunals have come into existence. These tribunals have the authority of law to pronounce upon valuable (1) ; , 357.362 rights; they act in a judicial manner and even on evidence on oath, but they are not part of the ordinary Courts of Civil Judicature. They share the exercise of the judicial power of the State, but they are brought into existence to implement some administrative policy or to determine controversies arising out of some administrative law. They are very similar to Courts, but are not Courts. When the Constitution speaks of 'Courts ' in article 136, 227 or 228 or in Art,% 233 to 237 or in the Lists, it contemplates Courts of Civil Judicature but not tribunals other than such Courts. This is the reason for using both the expressions in articles 136 and 227. By "Courts" is meant Courts of Civil Judicature and by "tribunals", those bodies of men who are appointed to decide controversies arising under certain special laws. Among the powers of the State is included the power to decide such controversies. This is undoubtedly one of the attributes of the State, and is aptly called the judicial power of the State. In the exercise of this power, a clear division is thus noticeable. Broadly speaking, certain special matters go before tribunals, and the residue goes before the ordinary Courts of Civil Judicature. Their procedures may differ, but the functions are not essentially different. What distinguishes them has never been success fully established. Lord Stamp said that the real distinction is that Courts have "an air of detachment". But this is more a matter of age and tradition and is not of the essence. Many tribunals, in recent years, have acquitted themselves so well and with such detachment as to make this test insufficient. Lord Sankey, L.C. in Shell Company of Australia vs Federal Commissioner of Taxation (1) observed: "The authorities are clear to show that there are tribunals with many of the trappings of a Court, which, nevertheless, are not Courts in the strict sense of exercising judicial power. In that connection it may be useful to enumerate some negative propositions on this subject: 1. A tribunal is not necessarily a Court in this strict sense because it gives a final decision. Nor because it hears (1) [1931] A.C.275.363 witnesses on oath. Nor because two or more contending parties appear before it between whom it,, has to decide. Nor because it gives decisions which affect the rights of subjects. Nor because there is an appeal to a Court. Nor because it is a body to which a matter is referred by another body. See Rex vs Electricity Commissioners In my opinion, a Court in 'the strict sense is a tribunal which is a part of the ordinary hierarchy of Courts of Civil Judicature maintained by the State under its constitution to exercise the judicial power of the State. These Courts perform all the judicial functions of the State except those that are excluded by law from their jurisdiction. The word "judicial", be it noted, is itself capable of two meanings. They were admirably stated by Lopes, L.J. in Royal Aquarium and Summer and Winter Garden Society vs Parkinson (2), in these words: "The word 'judicial ' has two meanings. It may refer to the discharge of duties exercisable by a judge or by justices in court, or to administrative duties which need not be performed in court, but in respect of which it is necessary to bring to bear a judicial mind that is, a mind to determine what is fair and just in respect of the matters under con sideration. " That an officer is required to decide matters before him "judicially" in the second sense does not make him a Court or even a tribunal, because that only establishes that he is following a standard of conduct, and is free from bias or interest. Courts and tribunals act "judicially" in both senses, and in the term "Court" are included the ordinary and permanent tribunals and in the term "tribunal" are included all others, which are not so included. Now, the matter would have been simple, if the had designated a person or persons whether by name or by office for the purpose of hearing an appeal under section 111. It would then have been clear that though such person or persons were not "Courts" in the sense explained, they were clearly (1) (2) , 452, 364 "tribunals". The Act says that an appeal shall lie to the Central Government. We are, therefore, faced with the question whether the Central Government can be said to be a tribunal. Reliance is placed upon a recent decision of this Court in Shivji Nathubai vs The Union of India (1), where it was held that the Central Government in exercising power of review under the Mineral Concession Rules, 1949, was subject to the appellate jurisdiction conferred by article 136. In that case which came to this Court on appeal from the High Court 's order under article 226, it was held on the authority of Province of Bombay vs Kushaldas section Advani (1) and Rex vs Electricity Commissioners (3) that the action of the Central Government was quasi judicial and not administrative. It was then observed: "It is in the circumstances apparent that as soon as r. 52 gives a right to an aggrieved party to apply for review a lis is created between him and the party in whose favour the grant has been made. Unless therefore there is anything in the statute to the contrary it will be the duty of the authority to act judicially and its decision would be a quasi judicial act. " This observation only establishes that the decision is a quasi judicial one, but it does not say that the Central Government can be regarded as a tribunal. In my opinion, these are very different matters, and now that the question has been raised, it should be decided. The function that the Central Government performs under the Act and the Rules is to hear an appeal against the action of the Directors. For that purpose, a memorandum of appeal setting out the grounds has to be filed, and the Company, on notice, is required to make representations, if any, and so also the other side, and both sides are allowed to tender evidence to support their representations. The Central Government by its order then directs that the shares be registered or need not be registered. The Central Government is also empowered to include in its orders, directions as to payment of costs or otherwise. The (1) ; (2) ; (3) 365 function of the Central Government is curial and not executive. There is provision for a hearing and a decision on evidence, and that is indubitably a curial function. Now, in its functions Government often reaches decisions, but all decisions of Government cannot be regarded as those of a tribunal. Resolutions of Government may affect rights of parties, and yet, they may not be in the exercise of judicial power. Resolutions of Government may be amenable to writs under articles 32 and 226 in appropriate cases, but may not be subject to a direct appeal under article 136 as the decisions of a tribunal. The position, however, changes when Government embarks upon curial functions, and proceeds to exercise judicial power and decide disputes. In these circumstances, it is legitimate to regard the officer who deals with the matter and even Government itself as a tribunal. The officer who decides, may even be anonymous; but the decision is one of a tribunal, whether expressed in his name or in the name of ' the Central Government. The word "tribunal" is a word of wide import, and the words "Court" and "tribunal" embrace within them the exercise of judicial power in all its forms. The decision of Government thus falls within the powers of this Court under article 136. It is next argued by the learned Attorney General that there is no law to interpret or to apply in these cases. He argues that since there are no legal standards for judging the correctness or otherwise of the order of the Central Government and the decision being purely discretionary, it is neither judicial nor quasi judicial but merely administrative, and that no appeal can arise from the nature of things. Such a line was taken before the Committee on Ministers ' Powers by Lord Hewart, and the argument reminds one of what he then said that such decisions are purely discretionary and the exercise of such arbitrary power is "neither law nor justice or at all". Sir Maurice Gwyer also was of the opinion that an appeal could not be taken to Court against a Minister 's 47 366 decision even on the ground of miscarriage of justice, because that, in his opinion, was "putting a duty on the Court" which was "not the concern of the Court". This argument takes me to the heart of the controversy, and before I give my decision, I wish to say a few preliminary things. Article 47 B gives to the Directors a right to refuse to register shares in their absolute discretion, without giving reasons. In In re Gresham Life Assurance Society, Ex Parte Penney James, L.J. observed: "No doubt the directors are in a fiduciary position both towards the company and towards every shareholder in it. It is very easy to conceive cases such as those cases to which we have been referred, in which this Court would interfere with any violation of the fiduciary duty so reposed in the directors. But in order to interfere upon that ground it must be made out that the directors have been acting from some improper motive, or arbitrarily and capriciously. That must be alleged and proved, and the person who has a right to allege and prove it is the shareholder who seeks to be removed from the list of shareholders and to substitute another person for himself. But if it is said that wherever any shareholder has proposed to transfer his shares to some new member, the Court has a right to say to the directors, 'We will presume that your motives are arbitrary and capricious, or that your conduct is corrupt, unless you choose to tell us what your reasons were, and submit those reasons to our decision ', it would appear to me entirely altering the whole constitution of the company as provided by the articles." That shows that the Directors are presumed to have acted honestly in the interests of the company and a case has to be made out against them. I shall only quote from another case, which summarises the position very aptly. In In re Hannan 's King (Browning) Gold Mining Company (Limited) (2), Lindley, M.R. is reported to have decided the case thus: "Their Lordships did not sit there as a Court of (1) (1872) Law Rep. 8 Ch.(2) , 367 honour; the question was whether the applicants had made out that the transferee was being improperly kept off the register. There was no evidence of that . The Court ought, as a matter of honesty between man to man., to presume that the directors were acting within their powers unless the contrary was proved; but that was not proved by casting unfounded aspersions upon them." Thus, the matter comes to this that the Directors have a presumption in their favour and the opposite party must prove that there was want of good faith. The right of appeal which is given under the , allows the Central Government to judge this issue. For that purpose, parties are required, if they desire, to make representations and to put in evidence. But to enable the parties to have a free say, the proceedings are made confidential by law, and there is protection against action, both civil and criminal. The appeal is disposed of on the basis of the representations and the evidence. A decision of a tribunal on a dispute inter partes, in the light of pleadings and evidence, is essentially a judicial one, and this Court ought to be able, on the same material, to decide in an appeal whether the decision given was correct. If no substantive law is applicable, there are questions of evidence, of burden and adequacy of proof and of the application of the principles of justice, equity and good conscience to guide the Court. Once it is held that the decision is that of a tribunal and subject to appeal, it is manifest that an appeal may lie, unless there be some other reason. The difficulty which arises in these cases is whether it was not the intention of the law that the decision of the Central Government was to be final. The law makes all allegations and counter allegations confidential. If Courts cannot compel disclosure of these allegations and the veil of secrecy drawn by law is not rent, then it appears to me that a further appeal can hardly be efficacious. In this view, in my opinion, this Court should not grant special leave in such cases. The situation which arises is not very different from what arose before the Judicial Committee in Moses vs 368 Parker, Ex Parte Moses (1). The headnote adequately gives the facts, and may be quoted: "By Tasmanian Act No. 10 of 1858, section 5, disputes concerning lands yet ungranted by the Crown are referred to the Supreme Court, whose decision is to be final; and by section 8 the Court is directed to be guided by equity and good conscience only, and by the best evidence procurable, even if not required or admissible in ordinary cases, and not to be bound by strict rules of law or equity or by any legal forms: Held: that the Crown 's prerogative to grant special leave to appeal is inapplicable to a decision so authorised." In dealing with the case, Lord Hobhouse observed at p. 248: "The Supreme Court has rightly observed that Her Majesty 's prerogative is not taken away by the Act of 1858, but intimates a doubt whether it ever came into existence. Their Lordships think that this doubt is well founded. They cannot look upon the decision of the Supreme Court as a judicial decision admitting of appeal. The Court has been substituted for the commissioners to report to the governor. The difference is that their report is to be binding on him. Probably it was thought that the status and training of the judges made them the most proper depositaries of that power. But that does not make their action a judicial action in the sense that it can be tested and altered by appeal. It is no more judicial than was the action of the commissioners and the governor. The Court is to be guided by equity and good conscience and the best evidence. So were the commissioners. So every public officer ought to be. But they are expressly exonerated from all rules of law and equity, and all legal forms. How then can the propriety of their decision be tested on appeal? What are the canons by which this Board is to be guided in advising Her Majesty whether the Supreme Court is right or wrong? It seems almost (1) 369 impossible that decisions can be varied except by reference to some rule; whereas the Court making them is free from rules. If appeals were allowed, the certain result would be to establish some system of rules; and that is the very thing from which the Tasmanian Legislature has desired to leave the Supreme Court free and unfettered in each case. If it were clear that appeals ought to be allowed, such difficulties would doubtless be met somehow. But there are strong arguments to show that the matter is not of an appealable nature." See also The ' berge vs Laudry (1). The exercise of the powers under article 136 is a counterpart of the royal prerogative to hear appeals in any cause or matter decided by Courts or tribunals. But where the Articles of Association of a company give absolute discretion to the Directors and empower them to withhold their reasons, the appeal taken to the Central Government would involve decision on such material, which the parties place before it. If the allegations are made confidential by law and the Central Government in giving its decision cannot make them public, it is manifest that the decision, to borrow Lord Hobhouse 's language, "is not of an appealable nature". Whether the right to hear appeals generally against decisions of the Central Government acting as a tribunal be within article 136, in my opinion and I say it with great respect special leave to appeal should not be granted in such cases, unless this Court is able to rend the veil of secrecy cast by the law without rending the law itself. The argument is that the allegations are confidential only so far as the public are concerned but not confidential where Courts are concerned. The question is not that but one of practice of this Court. This Court should intervene only when practicable, and that can only arise if the parties agree not to treat the allegations as confidential. That, however, does not end the present appeals. Special leave has been granted, and I have held that the appeals are competent, even though such cases (1) 370 often may not be fit for appeal. In this case, there is no claim that any allegation was confidential. In fact, the appellants before the Central Government made it clear that they did not charge the Directors with "capricious or mala fide conduct" but only with arbitrary refusal, without stating any reasons. The appellant Company in its representation set out the history of previous refusals and the decisions of the High Court of Bombay and the Central Government, and made it clear that the action was taken in the interest of the Company. There are indications in the representation to show that on the previous occasion when these claimants were referred by the High Court and by Mr. K. R. P. Aiyengar, Joint Secretary, to the Civil Court, they did not go to Court to establish that the action was mala fide and capricious. Before the Central Government, they dropped that allegation, and confined the case to one of refusal without giving any reasons, and that was the plain issue before the Central Government. There was no evidence for the Central Government to consider, and the Articles of Association give the Directors an absolute discretion to refuse to register shares without giving any reasons, and, on the authorities quoted earlier, the Directors must be presumed to have acted honestly. There was thus no reason for the Central Government to reverse the decision of the Directors, and the fact that no reasons have been given when nothing was confidential, leads to the only inference that there was none to give. In my opinion, these appeals must succeed. I would, therefore, set aside the order of the Central Government, and allow the appeals with costs here and before the Central Government, if an order to that effect was passed by the Central Government. Before parting with the case, I may say that the Report of the Amendment Committee had recommended amendment of section 111, and it has been amended, inter alia, by the addition of sub section (5A), which reads: "Before making an order under sub section (5) on an appeal against any refusal of the company to 371 register any transfer or transmission, the Central Government may require the company to disclose to it the reasons for such refusal, and on the failure or refusal of the company to disclose such reasons, that Government may, notwithstanding anything contained in the articles of the company, presume that the disclosure, if made, would be unfavourable to the company." That would stop the blind man 's buff under the unamended law! By COURT. In view of the majority judgment of the Court, we quash the orders passed by the Central Government and direct that the appeals be reheard and disposed of according to law. Costs of these appeals will be costs in the appeals before the Central Government.

One B who held a large number of shares in the appellant company, transferred two blocks of 100 shares each to his son and daughter in law. The transferees applied to the company to register the transfers. Purporting to act under article 47B of the Articles of Association of the company the directors of the company resolved not to register the transfers. Against this resolution the transferees preferred appeals to the Central Government under section III(3) of the . The Central Government, without giving any reasons for its decision, set aside the resolution of the directors and directed the company to register the transfers. The company obtained special leave to appeal against the decision of the Central Government under article 136 of the Constitution and appealed to the Supreme Court on the ground that the Central Government acted in excess of its jurisdiction or otherwise acted illegally in directing the company to register the transfers. The respondents raised a preliminary objection that the Central Government exercising appellate powers under section III of the Act (before its amendment in 1960) was not a tribunal exercising judicial functions and was not subject to the appellate jurisdiction of the Supreme Court under article 136. Held, that the appeal was competent to the Supreme Court by special leave against the decision of the Central Government under section III (3) Of the . The Central Government, when exercising powers under section III was a tribunal within the meaning of article 136 and was required to act judicially. A person aggrieved by the refusal to register transfer of shares had two remedies under the Act, viz., (1) to apply to the court for rectification of the register under section 155 or (2) to prefer an appeal under section III. The power of the Court under section 155, which has necessarily to be exercised judicially, and the power of the Central Government under section III have to be exercised subject to the same restrictions. In both cases it has to be 340 decided whether the directors have acted oppressively, capriciously corruptly or malafide. The decision has manifestly to stand those objective tests and has not merely to be founded on the subjective satisfaction of the authority. In an appeal under section III(3) there is a lis or dispute between the contesting parties relating to their civil rights, and the Central Government has to determine the dispute according to law in the light of the evidence and not on grounds of policy or expediency. There was thus a duty imposed on the Central Government to act judicially. The proviso to sub section (8) of section III which provided for the award of reasonable compensation in lieu of the shares in certain circumstances also fortifies that view. Shivji Nathubhai vs The Union of India, ; , Re Bell Brothers Ltd. Ex Parte Hodgson, , The Province of Bombay vs Kusaldas section Advani, [1950] S.C.R. 621, The King vs London County Council, and The Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi, ; , referred to. In an appeal under section 111(3) of the Act the Central Govern ment has to determine whether the exercise of the discretion by the directors refusing to register the transfer is malafide, arbitrary or capricious and whether it is in the interest of the company. The decision of the Central Government is subject to appeal to the Supreme Court under article 136; the Supreme Court cannot effectively exercise its power if the Central Government gives no reasons in support of its order. The mere fact that the proceedings before the Central Government are to be treated as confidential does not dispense with a judicial approach, nor does it obviate the disclosure of sufficient grounds and evidence in support of the order. In the present case no reasons have been given in Support of the orders and the appeals have to be remanded to the Central Government for rehearing. In re Gresham Life Assurance Society, Ex Parte Penney, (1 872) Law Rep. 8 Ch. 446 and In re Smith and Fawcett, Ltd., L. R. , referred to. Per Hidayatullah, J. The appeal to the Supreme Court under article 136 was competent. The Act and the Rules showed that the function of the Central Government under section 11(3) was curial and not executive; there was provision for filing a memorandum of appeal setting out the grounds, for the company making representations against the appeal, for tendering evidence and award of costs. There was provision for a hearing and a decision on evidence. The Central Government acted as a tribunal within the meaning of article 136. Huddart, Parker & Co. Pyoprietar Ltd. vs Moorehead, (108) ; , Shell Company of Australia vs Federal Commissioner of Taxation, , Rex vs Electricity Commissioners, Royal Aquarium and Summer and Winter Garden 341 Society vs Parkinson, , Shivji Nathubai vs The Union of India; , and Province of Bombay vs Kushaldas section Advani, ; , referred to. But special leave should not ordinarily be granted in such cases. The directors were not required to give reasons for their decision and there was a presumption that they had acted properly and in the interest of the company. In the appeal under section 111 of the Act all allegations and counter allegations were confidential and the Central Government could not make them public in its decision. An appeal against such a decision could rarely be effective. In the present case the appeal under section III(3) was confined to the ground that the refusal to register was without giving any reasons; there was no question of confidential allegations and there was no evidence to consider. The Articles of Association gave the directors absolute discretion to refuse to register the transfers without giving any reasons and there was a presumption that the directors had acted honestly. There was thus no reason for the Central Government to reverse the decision of the directors. In re Gresham Life Assurance Society; Ex Parte Penney, (1872) Law Rep. 8 Ch. 446, In re Hannan 's King (Browning) Gold Mining Company Limited, and Moses vs Parkar Ex parte Moses, , referred to.

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Appeal No.193 of 1958. Appeal by special leave from the judgment and decree dated October 3, 1955, of the High Court of Judicature, Madhya Bharat, Indore, in Civil First Appeal No. 58 of 1952. C. B. Aggarwala and Bhagwan Das Jain, for the appellant. Radhey Lal Aggarwal and A. G. Ratnaparkhi, for respondent No. 1. 1961. March 29. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave from the judgment of the High Court of Madhya Bharat. A suit was filed by firm Messrs. Harishchandra Dwarkadas (hereinafter called the respondent) against the appellant firm Messrs. Murlidhar Chiranjilal and one Babulal. The case of the respondent was that a contract had been entered into between the appellant and the respondent through Babulal for sale of certain canvas at Re. I per yard. The delivery was to be made through railway receipt for Calcutta f. o. r. Kanpur. The cost of transport from Kanpur to Calcutta and the labour charges in that connection were to be borne by the respondent. It was also agreed that the railway receipt would be delivered on August 5, 1947. The appellant however failed to 655 deliver the railway receipt and informed the respondent on August 8, 1947, that as booking from Kanpur to Calcutta was closed the contract had become impossible of performance; consequently the appellant cancelled the contract and returned the advance that had been received. The respondent did not accept that the contract had become impossible of performance and informed the appellant that it had committed a breach of the contract and was thus liable in damages. After further exchange of notices between the parties, the present suit was filed in November, 1947. Written statements were filed both by the appellant and Babulal. The contention of Babulal was that the contract had become incapable of performance and was therefore rightly rescinded. Further Babulal contended that he was not in any case liable to pay any damages. The appellant on the other hand denied all knowledge of the contract and did not admit that it was liable to pay any damages. Certain other pleas were raised by the appellant with which we are however not concerned in the present appeal. Three main questions arose for determination on the pleadings of the parties. The first was whether Babulal had acted as agent of the appellant in the matter of this contract; the second was whether the contract had become impossible of performance because the booking of goods from Kanpur to Calcutta was stopped; and the last was whether the respondent was entitled to damages at the rate claimed by it. The trial court held that Babulal had acted as the agent of the appellant in the matter of the contract and the appellant was therefore bound by it. It further hold that the contract had become impossible of performance. Lastly it hold that it was the respondent 's duty when the appellant had failed to perform the contract to buy the goods in Kanpur and the respondent had failed to prove the rate prevalent in Kanpur on the date of the breach (namely, August 5, 1947) and therefore was not entitled to any damages. On this view the suit was dismissed. The respondent went in appeal to the High Court 656 and the two main questions that arose there were about the impossibility of the performance of the contract and the liability of the appellant for damages. The High Court held that the contract had not become impossible of performance as it had not been proved that the booking between Kanpur and Calcutta was closed at the relevant time. It further held that the respondent was entitled to damages on the basis of the rate prevalent in Calcutta on the date of breach and after making certain deductions decreed the suit for Rs. 16,946. Thereupon there was an application by the appellant for a certificate to appeal to this Court, which was rejected. This was followed by an application to this Court for special leave which was granted; and that is how the matter has come up before us. The same two questions which were in dispute before the High Court have been raised before us on behalf of the appellant. We think it unnecessary to decide whether the contract had become impossible of performance, as we have come to the conclusion that the appeal must succeed on the other point raised on behalf of the appellant. The necessary facts in that connection are these: The contract was to be performed by delivery of railway receipt f. o. r. Kanpur by the appellant to the respondent on August 5, 1947. This was not done and therefore there was undoubtedly a breach of the contract on that date. The question therefore that arises is whether the respondent has proved the damages which it claims to be entitled to for the breach. The respondent 's evidence on this point was that it proved the rate of coloured canvas in Calcutta on or about the date of the breach. This rate was Rs. 1 8 3 per yard and the respondent claimed that it was therefore entitled to damages at the rate of Re. 0 8 3 per yard, as the contract rate settled between the parties was R.s. 1 per yard, The quantum of damages in a case of this kind has to be determined under section 73 of the Contract Act, No. IX of 1872. The relevant part of it is as follows: 657 "When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. " Explanation In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non performance of the contract must be taken into account. " The contention on behalf of the appellant is that the contract was for delivery f. o. r. Kanpur and the respondent had therefore to prove the rate of plain (not coloured) canvas at Kanpur on or about the date of breach to be entitled to any damages at all. The respondent admittedly has not proved the rate of such canvas prevalent in Kanpur on or about the date of breach and therefore it was not entitled to any damages at all, for there is no measure for arriving at the quantum of damages on the record in this case. Where goods are available in the market, it is the difference between the market price on the date of the breach and the contract price which is the measure of damages. The appellant therefore contends that as it is not the case of the respondent that similar canvas was not available in the market at Kanpur on or about the (late of breach, it was the duty of the respondent to buy the canvas in Kanpur and rail it for Calcutta and if it suffered any damage because of the rise in price over the contract price on that account it would be entitled to such damages. But it has failed to prove the rate of similar canvas in Kanpur on the relevant date. There is thus no way in which it can be found that the respondent suffered any damage by the breach of this contract. The two principles on which damages in such cases are calculated are well settled. The first is that, as far as possible, he who has proved a breach of a bargain . 83 658 to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable step" to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps: (British Westinghouse Electric and Manufacturing Company Limited vs Underground Electric Railways Company of London (1)). These two principles also follow from the law as laid down in section 73 read with the Explanation thereof If therefore the contract was to be performed at Kanpur it was the respondent 's duty to buy the goods in Kanpur and rail them to Calcutta on the date of the breach and if it suffered any damage thereby because of the rise in price on the date of the breach as compared to the contract price, it would be entitled to be reimbursed for the loss. Even if the respondent did not actually buy them in the market at Kanpur on the date of breach it would be entitled to damages on proof of the rate for similar canvas prevalent in Kanpur on the date of breach, if that rate was above the contracted rate resulting in loss to it. Bat the respondent did not make any attempt to prove the rate for similar canvas prevalent in Kanpur on the date of breach. Therefore it would obviously be not entitled to any damages at all, for on this state of the evidence it could not be said that any damage naturally arose in the usual course of things. But the learned counsel for the respondent relies on that part of section 73 which says that dam ages may be measured by what the parties knew when they made the contract to be likely to result from the breach of it. It is contended that the contract clearly showed that the goods were to be transported to and sold in Calcutta and therefore it was the price in Calcutta which would have to be taken into account in arriving at the measure of damages for the parties knew when they made the contract that the goods were to be sold in Calcutta. Reliance in this connection is placed on (1) 689. 659 two cases, the first of which is Re. R. and H. Hall Ltd. and W. H. Pim (Junior) & Co. 's Arbitration (1). In that case it was held that damages recoverable ' by the buyers should not be limited merely to the difference between the contract price and the market price on the date of breach but should include both the buyers ' own loss of profit on the resale and the damages for which they would be liable for their breach of the contract of resale, because such damages must reason ably be supposed to have been in the contemplation of the parties at the time the contract was made since the contract itself expressly provided for are sale before delivery, and because the parties knew that it was not unlikely that such resale would occur. 'That was a case where the seller sold unspecified cargo of Australian wheat at a fixed price. The contract provided that notice of appropriation to the contract of a specific cargo in a specific ship should be given within a specified time and also contained express provisions as to what should be done in various circumstances if the cargo should be resold one or more times before delivery. That was thus a case of a special type in which both buyers and seller knew at the time the contract was made that there was an even chance that the buyers could resell the cargo before delivery and not retain it themselves. The second case on which reliance was placed is Victoria Laundry (Windsor) Ltd. vs Newman Industries Ltd, (2). That was a case of a boiler being sold to a laundry and it was held that damages for loss of profit were recoverable if it was apparent to the defendant as reasonable persons that the delay in delivery was liable to lead to such loss to the plaintiffs. These two cases exemplify that provision of section 73 of the Contract Act, which provides that the measure of damages in certain circumstances may be what the parties knew when they made the contract to be likely to result from the breach of it. But they are cases of a special type; in one case the parties knew that goods purchased were likely to be resold before delivery and therefore any loss by the breach of contract eventually (1) (2) 660 may include loss that may have been suffered by the buyers because of the failure to honour the intermediate contract of resale made by them; in the other the goods were purchased by the party for his own business for a particular purpose which the sellers were expected to know and if any loss resulted from the delay in the supply the sellers would be liable for that loss also, if they had knowledge that such loss was likely to result. The question is whether the present is a case like these two cases at all. It is urged on behalf of the respondent that the seller knew that the goods were to be sent to Calcutta; therefore it should be presumed to know that the goods would be sold in Calcutta and any loss of profit to the buyer resulting from the difference between the rate in Calcutta on the date of the breach and the contract rate would be the measure of damages. Now there is no dispute that the buyer had purchased canvas in this case for resale; but we cannot infer from the mere fact that the goods were to be booked for Calcutta that the seller knew that the goods were for resale in Calcutta only. As a matter of fact it cannot be denied that it was open to the buyer in this case to sell the railway receipt as soon at it was received in Kanpnr and there can be no inference from the mere fact that the goods were to be sent to Calcutta that they were meant only for sale in Calcutta. It was open to the buyer to sell them any where it liked. Therefore this is not a case where it can be said that the parties knew when they made the contract that the goods were meant for sale in Calcutta alone and thus the difference between the price in Calcutta at the date of the breach and the contract price would be the measure of damages as the likely result from the breach. The contract was for delivery for Kanpur and was an ordinary contract in which it was open to the buyer to sell the goods where it liked. We may in this connection refer to the following observations in Chao and others vs British Traders and Shippers Ltd. (1), which are, apposite to the facts of the present case: (1) ,797. 661 "It is true that the defendants knew that the plaintiffs were merchants and, therefore, had bought for resale, but every one who sells to a merchant knows that he has bought for are sale, and it does not, as I understand it, make any difference to the ordinary measure of damages where there is a market. What is contemplated is that the merchant buys for are sale, but, if the goods are not delivered to him, he will go out into the market and buy similar goods and honour his contract in that way. If the market has fallen he has not suffered any damage, if the market has risen the measure of damages is the difference in the market price. " In these circumstances this is not a case where it can be said that the parties when they made the contract knew that the likely result of breach would be that the buyer would not be able to make profit in Calcutta. This is a simple case of purchase of goods for resale anywhere and therefore the measure of damages has to be calculated as they would naturally arise in the usual course of things from such breach. That means that the respondent had to prove the market rate at Kanpur on the date of breach for similar goods and that would fix the amount of damages, in case that rate had gone above the contract rate on the (late of breach. We are therefore of opinion that this is not a case of the special type to which the words "which the parties knew, when they made the contract, to be likely to result from the breach of it" appearing in section 73 of the Contract Act apply. This is ,in ordinary case of contract between traders which is covered by the words "which naturally arose in the usual course of things from such breach" appearing in section 73. As the respondent had failed to prove the rate for similar canvas in Kanpur on the date of breach it is not entitled to any damages in the circumstances. The appeal is therefore allowed, the decree of the High Court set aside and of the trial court restored with costs to the appellant throughout.

The appellant entered into a contract with the respondent for the sale of certain canvas at Re. 1 per yard under which the delivery was to be made through railway receipt for Calcutta for Kanpur. The cost of transport from Kanpur to Calcutta and the labour charges in that connection were to be borne by the respondent and it was agreed that the railway receipt would be delivered on August 5, 1947. The appellant was unable to deliver the railway receipt on the due date because booking from Kanpur to Calcutta was closed, and, therefore, cancelled the contract. The respondent instituted a suit for the recovery of damages for the breach of the contract and claimed that as the seller knew that the goods were to be sent to Calcutta and must therefore be presumed to know that the goods would be sold in Calcutta, any loss of profit to the buyer resulting from the difference between the rate in Calcutta on the date of the breach and the contract rate would be the measure of damages. Held: (1) that it is well settled that the two principles relating to compensation for loss or damage caused by breach of contract as laid down in section 73 Of the , read with the Explanation thereof, are (i) that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed, but (ii) that there is a duty on him of taking all reasonable steps to mitigate the loss consequent on the breach and debars him from claiming any part of the damage which is due to his neglect to take such steps. British Westinghouse Electric and Manufacturing Company, Limited vs Underground Electric Railway Company of London, , relied on. (2) that the contract in the present case was for delivery for. Kanpur in which it was open to the buyer to sell the goods where it liked, and no inference could be drawn from the mere fact that goods were to be booked for Calcutta that the seller knew that the goods were for resale in Calcutta only. The contract was therefore not of the special type to which the words "which the parties knew, when they made the contract, 654 to be likely to result from the breach of it" appearing in section 73 of the , would apply, but an ordinary contract, for which the measure of damages would be such as "naturally arose in the usual course of things from such breach" within the meaning of that section. The damages would be the difference between the market price in Kanpur on the date of breach and the contract price. But as the respondent bad failed to prove the rate for similar canvas in Kanpur on the date of breach, it was not entitled to any damages as there was no measure for arriving at the quantum. Chao and others vs British Traders and Shippers Ltd., , relied on. Re. R and H. Hall Ltd. and W.P. Pim (junior) & Co. 's Arbi tration, and Victoria Laundry (Winsdsor) Ltd.v. Newman Industries Ltd., , distinguished.

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iminal Appeal No. 119 of 1960. Appeal by special leave from the judgment and order dated April 14, 1960, of the Madras High Court in Cr. Petition No. 246 of 1960, D. N. Mukherjee, for the appellant. M. section K. Sastri and T. M. Sen, for respondent. April 19. The Judgment of the Court was delivered by RAGHUBAR DAYAL,, J. This appeal, by special leave, is against the order of the Madras High Court dismissing the application for quashing the commitment of the case against the appellant, to the Court of Session, for trial of offences of criminal conspiracy to cheat under section 120 B read with section 420, Indian Penal Code, and for the offence of forgery committed in pursuance of that conspiracy. The criminal conspiracy is alleged to have been committed at Calcutta. The other offences in pursuance of the conspiracy are alleged to have been committed within the jurisdiction of the Court of Session at Madras. The quashing of. the commitment was sought on the ground that, the Courts at Madras had no jurisdiction to try the offence of conspiracy. The High Court did not accept the contention and dismissed the application. The sole question for consideration in this appeal is whether the offence of conspiracy alleged to have been committed at Calcutta can be tried by the Court of Session at Madras. We have held this day, in Purushottamdas Dalmia vs The State of West Bengal (1) that the Court having (1) [1962] 2S.C.R. 101. 118 jurisdiction to try the offence of criminal conspiracy can also try offences committed in pursuance of that conspiracy even if those offences were committed outside the jurisdiction of that Court, as the provisions of section 239, Criminal Procedure Code, are not controlled by the provisions of section 177, Criminal Procedure Code,which do not create an absolute prohibition against the trial of offences by a Court other than the one within whose jurisdiction the offence is committed. On a parity of reasoning, the Court having jurisdiction to try the offences committed in pursuance of the conspiracy, can try the offence of con, ,piracy even if it was committed outside its jurisdiction. We therefore hold that the order under appeal is correct and, accordingly, dismiss this appeal. Appeal dismissed.

The appellant was committed to the Court of Session at Madras for trial under section 120 B read with section 420 of the Indian Penal Code and for committing the offence of forgery in pursuance of that conspiracy. The Criminal conspiracy was alleged to have been committed at Calcutta, while the other offences in 117 pursuance thereof were committed at Madras. It was urged on behalf of the appellant that the Madras Court had no jurisdiction to try the offence of criminal conspiracy. Held, that the court having the jurisdiction to try the offences committed in pursuance of the conspiracy, has also the jurisdiction to try the offence of criminal conspiracy, even though it was committed. outside its territorial jurisdiction. Purushottamdas Dalmia vs State of wesst Bengal; , , applied.

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Civil Appeal No. 282 of 1955. Appeal by special leave from the judgment and order dated March 20, 1953, of the Bombay High Court in Income tax Reference No. 31 of 1951. A. V. Viswanatha Sastri and I. N. Shroff, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. April 12. The Judgment of the Court was delivered by KAPUR, J. This is an appeal against the judgment and order of the High Court of Bombay in a reference under section 8(5) of the Taxation on Income (Investigation Commission) Act, 1947 (Act XXX of 1947), hereinafter termed the 'Act '. The assessee company was the applicant before the High Court and is the appellant 919 before us and the Commissioner of Income tax, Bombay City, was the respondent in the High Court and is the respondent here also. Being a reference under section 8(5) of the Act, it was heard and decided by three judges of the High Court. The assessee company is a private limited company which was incorporated on May 6, 1943, with a paid up capital of Rs. 20 lacs. It was promoted by two groups of persons who for the sake of convenience may be called the 'Morarka Group ' and the 'Bubna Group '. The Apollo Mills Co., Ltd. of Bombay with a capital of Rs. 50 lacs divided into 25 lacs shares of Rs. 2 each, had as its Managing Agents M/s. E. D. Sassoon & Co. Ltd., who for the sake of brevity, will be referred to in this judgment as the Sassoons '. They held 19,76,000 shares out of the 25 lacs. The promoters of the assessee company entered into an agreement with the Sassoons on April 27, 1943, by which the Sassoons agreed to transfer their Managing Agency in the Mill Co. for Rs. 12 1/2 lacs to the promoters of the assessee company and the whole of their holding of 19,76,000 shares at Rs. 4 4 0 per share, i.e., for Rs. 83,98,000. These shares were to be transferred to the promoters or to the company which they were proposing to float. By clause (3) of this agreement the sale of the Managing Agency and the transfer of the shares was to be simultaneously completed and neither party could require the completion of the one without the other. On November 1, 1943, a tripartite agreement was entered into between the Sassoons as Assignors, the promoters of the company as Confirming Parties and the assessee company as Assignees. By that agreement the Managing Agency rights were for .ally transferred to the assessee company so also the Share Certificates for the whole of holding of the Sassoons in the Mill Co. and the necessary blank transfer deeds went) Before the agreement of April 27, 1943, and during the course of negotiations with the Sassoons the promoters of the assessee company entered into an arrangement with some share brokers for the sale of a large portion of the total holding of 19,76,000 shares 920 of the Mill Co. The price of these shares varied from Rs. 5 8 0 to Rs. 5 13 0. In all 10,00,000 shares out of the total holding of the Mill Co. were sold to these brokers and: they in turn sold these block of shares in smaller lots to a number of purchasers. Some shares were sold later; 1,20,000 shares were transferred to 13 nominees of the Morarka Group at cost price. As a result of sale of all these 13,74,000 shares the assessee company received a sum of Rs. 16,52,600 as excess over the purchase price. The remaining shares the assessee company retained. The assessee company submitted that the profits of the entire holding of the shares had not been worked out and had therefore not been transferred to the profit and loss account. The assessee company was taxed by the Income tax Officer but the sum of Rs. 16,52,600 which was the excess of the sale price over the purchase price of 13,74,000 shares was held not to be profit and therefore not taxable. When the Act came into force the case of the assessee company was referred to the Investigation Commission by the Central Government and the Investigation Commission made its report on November 9, 1949, in Case No. 406A. By this report the Commission directed that appropriate assessment be made under the Indian Income tax Act for the assessment year 1945 46 and the Excess Profits Tax Act for the corresponding chargeable accounting period. At the instance of the assessee company the Commissioner of Income tax, Bombay City, by his order dated May 1, 1951, referred the following question to the High Court: "Whether on the facts found by the Commission the sum of Rs. 16,52,600 being the excess price realised by the sale of 13,74,000 shares of the Mill Company, was 'profit ' and as such taxable or whether it was either of the nature of a capital appreciation or a casual and non recurring receipt and as such exempt from taxation under Section 4(3)(vii) of the Income tax Act." The High Court reformulated the question as follows: 921 "Whether there were materials to justify the finding of the Tribunal that the transaction of purchase and sale of 13,74,000 shares was an adventure in the nature of trade?" and answered the question so formulated in the affirmative and therefore against the assessee company. In its application for reference under section 8(5) of the Act the assessee company wanted some other questions also to be referred but the Investigation Commission only referred the question which has been set out above. The assessee company therefore took out a Notice of Motion on November 8, 1952, which was dismissed by the High Court on the ground that either the questions which were sought to be raised did not arise out of the finding of the Commission or they were included in the question which had been referred and answered by the High Court. Although the High Court did not so hold, the Notice of Motion was barred by time, being filed after more than six months allowed under section 66(2) of the Indian Income tax Act. Against this judgment and order of the High Court the assessee company has come in appeal to this Court by special leave. This appeal is brought against the judgment of the High Court answering the question referred and therefore in its advisory jurisdiction. The jurisdiction which this Court exercises in appeal is of the same character and therefore any question which was not referred to the High Court cannot be allowed to be raised at this stage. Consequently the constitutional question in regard to discrimination under article 14 of the Constitution which is now sought to be raised cannot be raised. The main question which would then survive for decision is the nature of transaction relating to the sale of 13 lacs odd shares and whether or not the sale was an adventure in the nature of trade and therefore the amount of Rs. 16,52,600 the excess of sale price over the purchase price of the share is a Revenue Receipt and therefore taxable profits or is it a Capital Receipt and therefore not liable to tax. The Investigation Commission by their order dated May 1, 1949, found: 922 (1) that a distinction should be made between the 6 lacs shares which the assessee company intended to and did retain and the 13 lacs odd shares which it intended to and did sell; the former was kept in order to enable the assessee company to make their Managing Agency rights effective. (2) During the negotiations between the Sassoons and the promoters of the. assessee company, the promoters of the assessee company had started negotiations with certain brokers for the transfer of 13 lacs odd shares soon after the arrangement between the Sassoons and the assessee company was completed. (3) From the very beginning the intention of the promoters of the assessee company was to sell all the 13 lacs odd shares and in pursuance thereof they were sold. (4) The paid up capital of the assessee company was Rs. 20 lacs only and according to the agreement they had to take the whole block of shares belonging to the Sassoons and pay for the shares as well as for the Managing Agency both of which were separately valued in the agreement. It was therefore necessary and it was intended to sell the 13 lacs odd shares in order to pay off the Sassoons both for the Managing Agency and the shares. The inference drawn from this by the Commission was that a distinction had to be drawn between the 6 lacs shares which the assessee company intended to retain and did in fact retain and the 13 lacs odd shares which they intended to sell and did sell. (5) that the intention to sell which the assessee company entertained from the very outset was a complete answer to the argument that the acquisition was in the nature of an investment. In giving its finding the Commission said: "Aggregating the 121 lakhs paid for the Manag ing Agency right and the full price of 6 lakhs and odd shares at Rs. 4 4 0 per share, the capital investment must amount to 121 lakhs and 251 lakhs, i.e., 38 lacs and odd. By deducting therefrom the profits of Rs. 16,52,600, the Company showed a capital investment of Rs. 21,54,200 and with the addition 923 of a few sundry items, it was brought up to Rs. 22,06,408 (see para 7 supra). " From this finding the inference drawn by the Commission was that the sale of 13 lacs odd shares was an adventure in the nature of trade. The High Court reformulated the question which has already been quoted and it was contended that the High Court was in error in narrowing down the scope of the question referred by the Commission. It is not necessary to adjudicate upon this argument because in our opinion taking the question as referred to be a proper question arising out of the report of the Investigation Commission the answer to the first part thereof would,still be in the affirmative. Inconsidering the question whether the transaction is or is not an adventure in the nature of trade we have to take into consideration the intention of the assessee keeping in view the "legal requirements which are associated with the concept of trade or business". The inference from the facts found by the Investigation Commission, i.e., whether the assessee company 's transaction in purchasing and selling 13 lacs odd shares is or is not an adventure in the nature of trade is a mixed question of law and fact and the legal effect of the facts found by the Investigation Tribunal is a question of law. See M/s. Ramnarain Sons (Pr.) Ltd. vs Commissioner of Income tax, Bombay (1). It was argued on behalf of the assessee company that: (1) that the dominant idea with which the whole transaction was entered into was to obtain the Managing Agency of the Apollo Mills; (2) that the assessee company was forced to buy the whole block of shares, i.e., 19,76,000 shares by the Sassoons because they were not prepared to part with the Managing Agency without the whole of their stock in the mill company; (3) that as the assessee company did not not have sufficient amount of money, their capital being only Rs. 20 lacs, it was to implement the tripartite agreement dated November 1, 1943, that the sale was made; and (1) (1961] 2 S.C.R. 904, 908. 924 (4) that the Memorandum of Association of the assessee company showed that it was a holding company and dealing in shares was not one of its objects. The agreement shows that the Sassoons had separately evaluated the Managing Agency and the shares held in the Apollo Mills Co. As the Investigation Commission has found, it was never the intention of the assessee company to retain the whole block of shares. Before the agreement was entered into they had made arrangement for the sale of the bulk of shares which were to be transferred by the Sassoons and therefore division of the shares into two sets was made by the promoters of the assessee company and the assessee company themselves and was not the result of anything done by the Investigation Commission. In; support of his contention that the amount of Rs. 16,52,600 was in the nature of Capital Receipt, reliance was placed on the judgment of this Court in M/s. Ramnarain 's case (1) but there are certain features and details which distinguish that case from the present case. It was held in that case that the question had to be decided in the light of the intention of the assessee and the assessee in that case bad purchased the shares of the Dawn Mills not as a business transaction. That was clear from the fact that the assessee bad purchased the shares at Rs. 2,321 8 0 per share and the market price was only Rs. 1,610, and the purpose of acquisition of such a large block of shares at a price exceeding the market price by a million rupees was the acquisition of the Managing Agency, which yielded the inference that the intention of purchasing the shares in that case was not to acquire them as a part of the trade of the assessee in shares but for obtaining the Managing Agency of the Mills. There was no separate price paid for the Managing Agency and the shares purchased and the Managing Agency acquired were both assets of a capital nature and the shares did not constitute stock in trade of a trading venture. In the present case the facts as shown were entirely different. (1) ; , 908. 925 Counsel for the assessee company also relied on Kishan Prasad & Co. Ltd. vs Commissioner of Income tax, Punjab (1). In that case the Managing Director of the company which was formed for the purpose of carrying on general business and trade of commercial undertaking and dealing in bills, hundis and other securities, entered into an agreement with a sugar syndicate by which the company was to be given the Managing Agency of a Mill of the sugar syndicate when such mill was erected in lieu of the company subscribing shares worth 3 lacs, and undertaking to sell shares worth 2 lacs. It was further provided that if the mill was not erected the assessee company was to be paid a commission on the amount invested by them. The Managing Director died and the assessee company sold the shares and thus received Rs. 2 lacs more than they had expended. The question was whether Rs. 2 lacs were receipts from business and not a mere appreciation in capital. It was held that that amount was not a result of an adventure in the nature of trade but was merely the result of an investment. It was found as a fact that the object of the company was merely to obtain the Managing Agency of the mill which would have been an asset of an enduring nature bringing profits but there was from the very inception no intention on the part of the company to resell the shares either at profit or otherwise. It appears that it was not contested that the conclusion to be drawn from those facts was that the investment in the purchase of shares in the circumstances of the case of a capital nature, and profits arising therefrom were an accretion to the capital. In that ease the court was trying to find out the intention of the assessee (the company) and taking all the circumstances into consideration it, came to the conclusion that it was a case not of profits arising out of an adventure in the nature of trade but the, intention of the assessee company was to invest its monies and therefore the excess arising out of sale of the shares was an accretion to the capital. That case must be taken to have been decided on its facts as (1) 926 indeed was the decision in M/s. Ramnarain Son 's case (1). Counsel for the assessee company referred to other cases: Tata Hydro Electric Agencies, Bombay vs The Commissioner of Income tax, Bombay Presidency & Aden (2); Commissioner of Income tax, Central and United Provinces, Lucknow vs Messrs. Motiram Nandram (3), Jones vs Leeming (4) and Commissioner of Inland Revenue vs Reinhold (5). It is unnecessary to re view these cases in any detail because they are clearly distinguishable in material respects and were decided on their own special facts. In Tata Hydro Electric Agencies ' case (2) the question for decision was whether 25% of the commission earned which was paid to the two financiers was expenditure deductible under section 10(2)(ix) and it was held that it was not because the obligation to make the payment was in consideration of acquiring the Managing Agency and the right to conduct business and not for the purpose of producing profits in the conduct of business. Similarly in Commissioner of Income tax vs Messrs. Motiram Nandram (3) the expenditure was for securing the agency which was to carry on business. Sir George Rankin said at p. 81: "The question in such a case a,% the present must be "what is the object of the expenditure?" and it must be answered from the standpoint of the assessees at the time they made it that is, when they were embarking upon the business of organizing agents for the company." Jones vs Leeming (4) was a case of an isolated transaction. The finding was that it was not in the nature of trade. Commissioner of Inland Revenue vs Reinhold(5) was ' decided on its own facts. Another case decided by this court upon which counsel for the appellant relied was Saroj Kumar Mazumdar vs Commissioner of Income tax, West Bengal, Calcutta (6) but that case was also decided on its own facts and it was held that there was no clear evidence in support of (1) [1961] 2.C.R. 004, 908 (3) (1939) L. R. 67 I. A. 71 (5) (1953) 34 T C. 389. (2) (1937) L. R. 64 I. A. 215. (4) (6) [1959] SUPP. 2 S C.R. 846. 927 the inference of the Appellate Tribunal that the land was purchased with the sole intention of selling it later at a profit. The English and Scottish cases on which the appellant relied were considered by the House of Lords in Edwards vs Bairstow (1).In that case the assessees who were the respondents embarked on a joint venture to purchase and complete a spinning plant agreeing between themselves not to hold it but to make a quick resale. With that object in view they approached and there were diverse negotiations and the whole plant was sold in about two years ' time at a profit of about pound 18,000 and for that purpose incurred commission for help in effecting sales, for insurance and other expenses. The General Commissioners found that it was not an adventure in the nature of trade to justify an assessment to income tax under Case 1 of Schedule D to the Income tax Act, 1918. It was held that the facts led inevitably to the conclusion that the transaction was an adventure in the nature of trade and that the Commissioner 's inference to the contrary should be set aside. Counsel for the respondent next relied on a Judgment of this Court in G. Venkataswami Naidu & Co. vs The Commissioner of Income tax (2) in which it was held that the presence of all the relevant factors may help the Court to draw the inference that the transaction is in the nature of trade but it is not a matter of counting the number of facts and circumstances for and against. What is important is to consider the distinctive character and it is the total effect of all the relevant factors that determines the character of the transaction. All these cases are illustrative. As was said by Gajendragadkar, J., in the above mentioned case the totality of circumstances of a case and the pros and cons have to be considered and inference drawn from those facts whether a particular transaction was in the nature of trade or was merely an investment and the resulting excess from the transaction was therefore profit which was taxable or was merely an accretion to the capital. In the instant case (1) ; (2) [1959] SUPP. 1 S.C.R. 646. 928 the pi of its from the transaction that consisted of buying the Managing Agency of the Mill Company and the block of shares held by the Sassoons were in our view the profits of an adventure in the nature of trade. The two groups, Morarka and Bubnas, put Rs. 20 lacs into the assessee company which was floated for the acquisition of the Managing Agency and shares of the Mill Company which were beyond the holding capacity of the assessee company. That company never intended to hold the whole block of shares. It or its promoters before even entering into the agreement of purchase and during the course of negotiations for the purchase had entered into arrangements with different brokers for the sale of shares or at least of a bulk of those shares which were subsequently sold at a profit and but for that sale the transact ion could not have been completed by the assessee company. The purchase of shares was not with the intention of holding them, the intention of the assessee was just the contrary and by the sale at a profit of the shares actually sold the assessee company expected to and did finance the completion of the transaction and thus was enabled to secure the Managing Agency and keep 6 lacs shares. This inescapably was a transaction of a commercial nature. It had all the attributes of an adventure in the nature of trade. The contention that dealing in buying and selling of shares was not one of its objects is without substance. The Investigation Commission found that dealing in shares was within the objects of the assessee company and this is one circumstance in the totality of the circumstances which must be considered, though by itself it is not determinative of the question. All the circumstances lead to the inference which was rightly drawn by the Investigation Commission and by the High Court. The answer to the first part of the question referred by the Investigation Commission must therefore be in the affirmative. It was contended that the question should not have been reframed and we have therefore proceeded to answer the question as framed by the Investigation Commission. In our opinion the question even as framed must be answered in the affirmative. 929 The Notice of Motion to raise other questions in the High Court was rightly dismissed. Apart from the fact that the Notice of Motion was barred by time and there was no application for condonation of delay, the questions which were sought to be raised were rightly held either to be covered by the question answered or they did not arise at all. The constitutional question under article 14 of the Constitution cannot be raised in these proceedings because as we have said above this Court is exercising its advisory jurisdiction and its power is confined to the questions which arise in an appeal. This appeal must therefore be dismissed with costs. Appeal dismissed.

The assessee company was promoted with the idea of obtaining the Managing Agency of the Appollo Mills from M/s. Sassoon total of 25 lakhs shares of RS. 2 each. According to the agreement the assessee company bad to take the whole of the block of shares belonging to the Sassoons and pay at Rs. 4 4 0 per share Rs. 12 1/2 lakhs for the managing agency. As the assessee company had only RS. 20 lakhs as its paid up capital, it was necessary to sell 13 lakhs odd shares in order to pay off the Sassoons both for the Managing Agency and the shares. Therefore during the course of negotiations the promoters of the assessee company entered into an agreement with some brokers for the sale of Rs. 19,76,000 shares. As a result of the sale of shares the assessee company received a sum of Rs. 16,52.600 as excess over the purchase price which amount on taxation was held by the Income tax Officer not to be profits and therefore not taxable. The case of the assessee company was referred to the Investigation Commission. The Commission found that it was not the intention of the assessee company to retain the whole block of shares and that the sale of 13 lakhs odd shares was an adventure in the nature of trade, and directed that appropriate assessment be made, under the Indian Income tax Act and Excess Profits Tax Act. At the instance of the assessee company the question was referred to the High Court under section 8(5) of the Taxation on Income (Investigation Commission) Act, 1947, which held that there were materials to justify the finding of the Commission that the purchase and sale of about 13 lakhs odd shares was an adventure in the nature of trade. An appeal was taken to the Supreme Court against this order. Held, that in considering the question whether the transac tion was or was not an adventure in the nature of trade, the court had to take into consideration the intention of the assessee 918 keeping in view the "legal requirements which are associated with the concept of trade or business" In the present case, the transaction that consisted of buy ing the managing agency of the Mill Company and the block of shares held by Sassoons was inescapably one of a commercial nature and had all the attributes of an adventure in the nature If of trade. Held, further, that the jurisdiction which this Court would exercise in appeal was of the same character that a High Court would exercise. Thus the question under article 14 of the Constitution could not be raised in these proceedings because this Court like the High Court was exercising its advisory jurisdiction and its power was confined to the question which arose before the High Court. M/s. Ramnarain Sons (Pr.) Ltd. vs Commissioner of Income tax, Bombay; , , Tata Hydro Electric Agencies, Bombay vs The Commissioner of Income tax, Bombay Presidency & Aden, (1037) L.R. 64 I.A. 215, Commissioner of, Income tax, Central and United Provinces, Lucknow vs M/s. Motiram Nandram, (1939) L.R. 67 I.A. 71, Jones vs Leeming, [1930) A.C. 415, Commissioner of Inland Revenue vs Reinhold, and Saroj Kumar Mazumdar vs Commissioner of Income tax, West Bengal, Calcutta, [1959] SUPP. 2 S.C.R. 846, distinguished. Kishan Prasad & Co. vs Commissioner of Income tax, Punjab, , Edwards vs Bairstow, ; and G. Venkataswami Naidu & Co. vs The Commissioner of Income tax, [1959] SUPP. 1 S.C.R. 646, discussed.

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Appeal No. 356 of 1959. Appeal by special leave from the judgment and order dated the November 18, 1957, of the Punjab 18 High Court at Chandigarh in Civil Miscellaneous Application No. 712 of 1956. B. D. Sharma, for appellant. Hardev Singh and A. G. Ratnaparkhi, for respondent No. 1. Y. Kumar, for respondent No. 2. 1961. April 17. The Judgment of the Court was delivered by SHAH, J. The Singer Sewing Machine Company hereinafter referred to as the company was, since the year 1934, the tenant for business purposes of a shop situate at Gurgaon in the State of Punjab and belonging to Pandit Kishan Lal hereinafter called the appellant. One Ganpat Ram Khosla hereinafter referred to as Khosla was the Sales Manager of the company. The Legislature of the State of East Punjab enacted Act III of 1949 called the East Punjab Urban Rent Restriction Act, 1949, to restrict the increase of rent of certain premises situated within the limits of urban areas and the eviction of tenants therefrom. The Act granted protection to tenants of premises used for residential and non residential purposes. By section 2, el. (1), the expression "tenant" was defined, in so far as the definition is material, as meaning any person by whom or on whose account rent was payable for a building or rented land and included a tenant continuing in possession after the termination of the tenancy in his favour, but did not include a person placed in occupation of a building or rented land by its tenant, unless with the consent of the landlord. By section 13, the right of the landlord to evict a tenant even in execution of a decree was restricted and the landlord could seek to evict his tenant by an application to the Controller in certain specified circumstances set out in that section. On August 30, 1954, the company addressed a letter to the appellant intimating that it desired to close down its office in Gurgaon with effect from September 1, 1954. The relevant part of the letter ran as follows: 19 "Now the Company has closed its agency busi ness at Gurgaon and Mr. Khosla will be carrying on Sewing Machine business in Gurgaon in your shop in his personal capacity and not as a Manager of Singer Company. In order that there may not be any misunderstanding about the payment of rent in future, you are informed that from September, 1954 onwards Mr. Khosla will be personally responsible for the payment of rent of your shop. " The appellant informed the company that unless vacant possession was delivered to him tenancy could not be validly determined, and that the company will be held responsible till such delivery for liability to pay rent and that in the event of possession being transferred to any other person, legal action will be taken against the company. But the company delivered possession of the shop to Khosla and allowed him to occupy the shop in his personal capacity from September 1, 1954. Thereafter, on October 31, 1954, the appellant applied under section 13 of the Act to the Controller for an order against Khosla and the company on three grounds, (1) that the company did not require the premises any longer while the appellant required the same for his own use, (2) that the company had neglected to pay rent since September 1, 1954, and (3) that the company had assigned or sublet the shop to Khosla without the written consent of the appellant. Khosla and the company resisted the application contending that Khosla was the tenant of the appellant and that in any event, on August 28, 1954, the company through its local Supervisor had delivered possession of the shop to the appellant and that the latter agreed to treat Khosla as his tenant with effect from September 1, 1954. The Controller rejected the pleas raised by Khosla and the company and ordered that possession be delivered by the com pany to the appellant. In appeal to the District Court at Rohtak, the order passed by the Controller was confirmed. In a petition under article 227 of the Constitution filed by Khosla in the High Court of Judicature for. Punjab at Chandigarh, the order passed by the District Court was quashed. The High Court was of the view that after August 31, 1954, the 20 company had no interest left in the tenancy and the tenancy being from month to month terminable at the will of the appellant, such tenancy could not be the subject matter of transfer or of sub letting. The High Court therefore held that the order passed was without jurisdiction. In the course of the judgment, the High Court observed that full rent had been paid even after September 1, 1954, and therefore the ground of non payment of rent "was not open to" the appellant. It is accepted at the bar that in making this observation, the High Court was under a mis apprehension. The rent accruing due was not paid to the appellant, but was deposited in court. Against the order passed by the High Court, this appeal is preferred with special leave. The Controller and the District Court found that the tenant of the shop in dispute was not Khosla but the company. These two tribunals also found that possession of the shop was handed over by the company to Khosla without the consent of the appellant. These findings were binding upon the High Court. The only question which fell to be determined by the High Court was whether by unilateral action on its part, the company could require the appellant to treat Khosla as his tenant. In our view, the High Court misconceived the nature of the tenancy. A tenancy except where it is at will, may be terminated only on the expiry of the period of notice of a specified duration under the contract, custom or statute governing the premises in question. A tenant does not absolve himself from the obligations of his tenancy by intimating that as from a particular date be will cease to be in occupation under the landlord and that some one else whom the landlord is not willing to accept will be the tenant. It is one of the obligations of a contract of tenancy that the tenant will, on determination of the tenancy, put the landlord in possession of the property demised (see section 108(q) of the Transfer of Property Act). Unless possession is delivered to the landlord before the expiry of the period of the requisite notice, the tenant continues to hold the premises during the period as tenant. Therefore, by merely assigning the rights, the tenancy of the 21 company did not come to an end. It was observed by this court in W. H. King vs Republic of India (1): "There is a clear distinction between an assignment of a tenancy on the one hand and a relinquishment or surrender on the other. In the case of an assignment, the assignor continues to be liable to the landlord for the performance of his obligations under the tenancy and this liability is contractual, while the assignee becomes liable by reason of privily of estate. The consent of the landlord to an assignment is not necessary, in the absence of a contract or local usage to the contrary. But in the case of relinquishment it cannot be a unilateral transaction; it can only be in favour of the lessor by mutual agreement between them. Relinquishment of possession must be to the lessor or one who holds his interest: and surrender or relinquishment terminates the lessee 's rights and lets in the lessor. " In the present case, the company did not surrender its rights to the appellant; it sought to transfer its rights to Khosla. The company admittedly did not serve the notice as required by law, nor did the appellant agree to accept the unilateral determination of the tenancy by the company. The true position was therefore that the company did not immediately on the service of the notice cease to be a tenant; and Khosla, because he was let into possession became an assignee of the rights of the company as a tenant, and he could not be regarded as a trespasser. The High Court was therefore in our view in error in holding that the proceedings were not maintainable in the court of the Controller for possession. Khosla being an assignee of the tenancy rights of the company was as much liable to be sued in the court of the Controller as the company for an order in ejectment. We therefore allow the appeal, set aside the order passed by the High Court and restore the order passed by the District Court, Rohtak. The appellant will be entitled to his costs in this court as well as in the High Court from Khosla. Appeal allowed.

The Singer Sewing Machine Company, respondent 2 in the appeal, was the tenant in respect of a shop under the appellant and informed him that the company had closed its premises, that respondent I will conduct his business in the shop, and that he will be personally responsible for payment of rent, and in spite of the appellant 's protest and without his consent delivered possession of the said shop room to respondent 1. Thereupon the appellant applied to the Controller under section 13 of the East Punjab Urban Rent Restriction Act, 1949, for eviction of the respondents and the Controller directed the company to deliver possession to the appellant. The District Court confirmed the Controller 's order but the High Court set aside the order, in a petition under article 227 of the Constitution, as having been made without jurisdiction, holding that the company had no interest in the tenancy after August 31, 1954, and nothing had passed to the respondent 1. Held, that the High Court was in error on both the points and its order must be set aside. One of the obligations of a tenant under section 108(q) of Transfer of Property Act, on the determination of the tenancy, is to put the landlord in possession. If the tenant fails to do so before the expiry of the period of notice, his tenancy continues and cannot be terminated by an assignment in favour of another. W. H. King vs Republic of India, , referred C.to. In the instant case, the company had not admittedly served the notice as required by law and, therefore, did not cease to be the tenant and since the respondent I was let into possession as assignee he was not a trespasser and, consequently, the proceeding before the Controller was maintainable against both.

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Appeals Nos. 235 and 236 of 1960. Appeals from the judgment and decree dated January 23, 1959 of the Assam High Court at Gauhati in Civil Rules Nos. 138 and 139 of 1958. N. C. Chatterjee, Amjad Ali and K. R. Chaudhari, for the appellant (in C. A. No. 235 of 1960). D. N. Mukherjee, for the appellant (In C. A. No. 236 of 1960). section M. Lahiri, Advocate General, Assam and Naunit Lal, for the respondents. April 4. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. These two appeals arise out of two writ petitions Nos. 138 and 139 of 1958 filed respectively by the two appellants, Sonapur Tea Co. Ltd., of 15 D Sambhunath Pandi Street, Calcutta 9, and Musst. Mazirunnessa, wife of Abdul Gafur of Village Bhoknamari, District Kamrup, in which they challenged the validity of the Assam Fixation of Ceiling on Land Holdings Act I of 1957 (hereafter called the Act). The said writ petitions have been dismissed by the Assam High Court substantially on ground that since the impugned Act falls within the protection of article 31A the challenge made by the two appellants to the several provisions of the Act under articles 14, 19(1)(f) and 31(2) cannot be entertained Having dismissed the writ petitions principally on this ground the High Court granted certificates to both the appellants to come to this Court in appeal, 726 and so it is with the said certificates that the two appeals have been brought to this Court. It is not necessary to set out the material facts leading to the two writ petitions in any detail. It would be enough to say that under section 5 of the, impugned Act notices had been served on both the appellants by the respondent Deputy Commissioner and Collector of Kamrup calling upon them to submit a return giving the particulars of all their lands in the prescribed form and stating therein the selection of plot or plots of land (not exceeding in the aggregate the limits fixed under section 4) which they desired to retain under the provisions of the Act. The appellants contended before the High Court that the impugned Act under which this notice had been served on them was invalid and ultra vires and so they wanted the notice issued under section 5 to be quashed. That is the only relevant fact which needs to be stated for deciding the present appeals. The Act received the assent of the President on December 7, 1956, and was published in the official State Gazette on January 16, 1957. Subsequently it was amended by the amending Act XVII of 1957 and assent was obtained to the amendment thus made on November 8, 1957. By a notification issued by the State Government on February 7,1958, the amended Act came into force on February 15, 1958. It is relevant to consider briefly the broad features of the Act. It has been passed because the Legislature deemed it necessary to make provision for the imposition of limits on the amount of land that may be held by a person in order to bring about an equitable distribution of land. That being the object of the Act the principal provision of the Act imposes a ceiling on existing holding by s.4. The act extends to the seven Districts specified in section 1(2), and from its operation are excepted the lands specified in cls. (a) to (c) of s.2. These clauses refer to lands belonging to any religious or charitable institution of a public nature, lands held for special cultivation of tea or purposes ancillary thereto and lands exceeding 150 bighas utilised for large scale cultivation of citrus in a compact block by any person before January 1, 1955, lands 727 utilised by efficiently managed farms on which heavy investments or permanent structural improvements have been made and whose break up is likely to lead to a fall in production, and lands held by a sugar factory or a co operative farming society for cultivation of sugarcane for the purpose of such factory. It would thus be noticed that the measure of agrarian reform introduced by the Act has made exceptions in regard to lands which it thought should be left out of the operation of the Act in the interest of the economy of the State. Section 3 is the definition section. It defines land as meaning land which is or may be utilised for agricultural purposes or purposes subservient thereto and includes the sites of buildings appurtenant to such land. Under section 3(g) the word 'landholder ' has the meaning assigned to it in the Assam Land and Revenue Regulation, 1886 (Regulation I of 1886). 'Landlord ' under section 3(h) is a person immediately under whom a tenant holds but does not include the Government; and 'owner ' under section 3(i) includes proprietor, land holder or settlement holder as defined in section 3 of the Assam land and Revenue Regulation I of 1886 but it does not include Government. Section 3(o) defines 'tenant ' as meaning a person who holds land under another person and is, but for a special contract would be, liable to pay rent for that land to the other person, and includes a person who cultivates the land of another person on condition of delivering a share of the produce. These are the only definitions which are relevant for our purpose. Section 4 which is the key section of the Act prescribes ceiling on existing holding. The limit prescribed is 150 bighas in the aggregate subject to its provisos. Section 5 empowers the appropriate authorities to call for submission of returns by persons holding lands in excess of the ceiling. Section 8 empowers the State Government to acquire such excess lands by publishing in the official gazette a notification to the effect that such lands are required for public purpose, and such publication shall be conclusive evidence of the notice of acquisition to the person or persons holding such lands. Acquisition of excess lands prescribed by section 8 is followed by the vesting of the said 728 lands in the State under section 9. On publication of the notification under section 8 all such excess lands shall stand transferred to the State Government from the date of the publication of the said notification free from encumbrances by their original owner or owners. Under section 11 the Collector is authorised to take possession of the said lands. Section 12 prescribes the principles of compensation. and provides the manner in which the said compensation should be apportioned between the owner and the tenant; and s.13 provides for the manner of payment of such compensation. Under section 14 ad interim payment of compensation can be made as specified. These are the relevant provisions in Chapter 11 which deals with ceiling on existing holding and acquisition of excess land. Chapter III deals with the disposal of excess land. Under section 16(l) if there is any cultivating tenant in occupation of the land acquired from an owner then he shall have the option of taking settlement of such land within a prescribed period on the following conditions, namely, (a) that the area of land so settled together with any other lands held by him or any member of his family either as tenant or as owner shall not exceed in the aggregate the limit fixed under section 4, and (b) that he shall pay to the State Government in one or more equal annual installments not exceeding five an amount fixed by it but not exceeding the compensation payable by the State Government for acquisition thereof, provided that he shall have the right to adjust any amount which he is entitled to receive as compensation under the provisions of the Act against an equal amount which he is liable to pay under el. Section 16(2) provides that on payment of full amount under sub section (1) above the land shall be settled with a tenant with the status of a landholder. Under section 18 it is provided that if a tenant in occupation of any land acquired under section 8 does not take settlement of such land he shall acquire no right, title and interest in the land and shall be liable to be ejected. Chapter IV deals with excess land under annual lease and provides for its taking over. Chapter V puts a ceiling on future 729 acquisition, and chapter VI provides for ceiling for resumption of land from tenants for personal cultivation by the landlord. Chapter VII provides for the establishment of a Land Reform Board, and lays down its functions,while chapter VII contains miscellaneous provisions. That briefly is the scheme of the Act. The question which arises for our decision is whether this Act is protected under article 31A of the Constitution. This Article has been construed by this Court on several occasions in dealing with legislative measures of agrarian reforms. The object of such reforms generally is to abolish the intermediaries between the State and the cultivator and to help the actual cultivator by giving him the status of direct relationship between himself and the State. Article 31A(l)(a) provides that, notwithstanding anything contained in article 13, no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by article 14, article 19 or article 31, provided that, where such law is a law made by the Legislature of a State, the provisions of this Article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent. We have already seen that the assent of the President has been obtained both for the Act as it was originally passed and for the amending Act which subsequently modified some of the provisions of the original Act, and so the requirement prescribed by the proviso to article 31A(l)(a) is satisfied. That raises the question as to whether the rights of the appellants which are undoubtedly taken away or abridged constitute rights in relation to an "estate" as defined by article 31A(2)(b). We have already seen the definitions of land, landholder, landlord and tenant prescribed by section 3(f),(g),(h) and (o). It is common ground that the lands sought to be acquired fall within an "estate" as defined by article 31 A(2). Do the rights vesting in the appellants amount 92 730 to rights in relation to an "estate"? For deciding this question it would be necessary to consider the provisions of the existing law relating to tenure in force in Assam at the relevant time. The existing law relating to land tenure is to be found in the provisions of the a Assam Land and Revenue Regulation, 1886 (Regulation I of 1886). Section 3(g) of the said Regulation provides that a 'landholder ' means any person deemed to have acquired the status of a landholder under section 8. No hen we turn to section 8 we find that it provides the manner in which the status of a landholder can be acquired; and section 9 provides for the rights of such landholders. Under section 9 a landholder shall have a, permanent, heritable and transferable right of use and occupancy in is land subject to the payment of revenue, taxes, cesses and rates from time to time legally assessed or imposed in respect of the land. The remaining two clauses of this section need not be considered. It would be noticed that the expression "rights in relation to an estate" is of a very wide amplitude and as such the context requires that it must receive a very liberal interpretation. Thus considered there can be no doubt that the rights of the appellants which have been extinguished undoubtedly constitute "rights in relation to an estate" as defined by article 31A (2) (b). Indeed this position is not seriously disputed by Mr. Chatterjee who fairly conceded that having regard to the decisions of this Court in Thakur Raghubir Singh vs The State of Ajmer (Now Rajasthan) (1), Sri Ram Ram Narain Medhi vs The State of Bombay( ') and Atma Ram vs The State of Punjab (3 ) he would not be able to contend that the view taken by the High Court is erroneous. Faced with this difficulty Mr. Chatterjee attempted to argue that the Act is a colorable piece of legislation and should be struck down as such. His argument is that though ostensibly it purports to be a measure of agrarian reform its principal object and indeed its pith and substance is to acquire the property covered by its provisions and make profit by disposing of the (1) [1959] Supp. 1 S.C.R. 478. (2) [1959] Supp. 1 S.C.R. 489. (3) [1959] Supp. 1 S.C.R. 748. 731 same in the manner provided by Chapter III. Mr. Chatterjee seemed to suggest that the Legislature should not have made it necessary for the tenants to exercise an option for taking settlement under section 16 because the exercise of the said option involves the liability to pay the prescribed amount though in five installments, and that, according to Mr. Chatterjee indicates that the State wanted to make profit out of the bargain. Mr. Chatterjee 's grievance is against the provisions of section 18 also under which a tenant who does not opt for settlement is liable to be evicted. We are not impressed by this argument. The doctrine of colorable legislation really postulates that legislation attempts to do indirectly what it cannot do directly. In other words, though the letter of the law is within the limits of the powers of the Legislature, in substance the law has transgressed those powers and by doing so it has taken the precaution of concealing its real purpose under the cover of apparently legitimate and reasonable provisions (Vide: K. G. Gajapati Narayan Deo vs The State of Orissa) This position is not and can not be disputed. Is Mr. Chatterjee, however, right when he contends that the pith and substance of the Act and indeed its main object is to acquire property and dispose of it at a profit? That is the question which calls for our decision. In our opinion the answer to this question must obviously be against the appellants. The whole object of the Act which is writ large in all its provisions is to abolish the intermediaries and leave the lands either with the tiller or the cultivator. With that object ceiling has been prescribed by section 4, provisions have been made for the acquisition of excess. lands, and disposal of excess lands in favour of the tenants have been provided for. It is significant that in settling the lands upon the tenants it is expressly provided that the payment which the tenant may have to make and that too in one or more easy installments not exceeding five will never exceed the compensation payable by the State Government for acquisition (1) ; 732 thereof. This provision clearly negatives the assumption made by Mr. Chatterjee that any profit is intended to be made in the matter of disposal of excess lands. The State is paying compensation to the persons dispossessed under the principles prescribed by section 12; amongst the persons entitled to such compensation tenants are included, and when the State proceeds to settle lands on tenants it expects them to pay a fair amount of price for the land and puts a ceiling on this price that it shall never exceed the amount of compensation payable in respect of the Paid land. In our opinion this provision is very fair and reasonable and it would be idle to attack it as a piece of colorable legislation. We have already seen that the settlement of land on the tenants would make them landholders and that is the basic idea of the Act. If a tenant does not agree to take settlement it cannot be helped and so the land would then have to be taken from him and given over to somebody else who would be prepared to take settlement. It is thus clear that the object of putting ceiling on existing holding is to take over excess lands and settle them on actual cultivators Or tenants and that is the essential feature of agrarian reform undertaken by several States in the country. The Act conforms to the pattern usually followed in that behalf and the attack against its validity on the around that it is a colorable piece of legislation must therefore fail. In the result we hold that there is no substance in the two appeals. They are accordingly dismissed with costs one set of hearing. Appeals dismissed.

These appeals arose out of. two petitions filed in the High Court under article 226 of the Constitution challenging the constitutional validity of the Assam Fixation of Ceiling on Land Holding Act, 1957. The High Court in dismissing the petitions held that the impugned Act was protected by Art, 31A of the Constitution. The Act was a measure of agrarian reform and imposed limits on land to be held by persons in order to bring about its equitable distribution. The Act as originally passed as also its subsequent amendment received the assent of the President and this satisfied the requirement of the proviso to article 31A(1)(a) of the Constitution. The question, therefore, was whether the rights of the appellants which were taken away or abridged by the impugned Act were "rights" in relation to an estate within the meaning of article 31A(2)(b) of the Constitution. Held, that the expression " 'rights ', in relation to an estate" in article 31A(2)(b) of the Constitution is of a very wide amplitude and construed liberally, as it must be, and considered in the light of the provisions of sections 3(g) and 9 of the Assam Land and Revenue Regulation, 1886, the existing law relating to tenures, and the relevant definitions contained in the impugned Act, there could be no doubt that the rights of the petitioners, which the impugned Act extinguished, fell within the expression. Thakur Raghubir Singh vs The State of Ajmer, [1959] Supp. 1 S.C.R. 478, Sri Ram Reim Narain Medhi vs The State of Bombay, [1959] Supp. 1 S.C.R. 489 and Atma Ram vs The State of Punjab, [1959] Supp. 1 S.C.R. 748, referred to. A colourable legislation is one in which the Legislature transgresses the lawful limits of its legislative powers ,and "conceals its real purpose under the cover of apparently legitimate and reasonable provisions and thus seeks to do indirectly what it cannot do directly. K. G. Gajapathi Narayan Deo vs The State of [1954] S.C.R. 1, referred to. 725 It was not correct to say that the impugned Act was a colourable legislation whose concealed purpose was to make profit by disposing of land in the manner provided by Ch. III or that by pith and substance it was a profit making measure or that sections 16 and 18 of the Act were devices to that end. This is broadly contradicted by the whole object of the Act which is a measure of agrarian reform, writ large on all its provisions and clearly negatived by section 4 Of the Act which provides that in no case can the payment made by the tenant in getting the settlement exceed the amount of compensation payable by the Government in acquiring the land.

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Appeal No. 49 of 1961. Appeal by special leave from the judgment and order dated August 11, 1960, of the Bombay High Court in Civil Revision Application No. 320 of 1959. M.C. Setalvad, Attorney General for India, Ramesh. war Nath, section N. Andley and P. L. Vohra, for the appellants. C.K. Daphtary, Solicitor General of India, Naushir Barucha and K. R. Choudhuri, for the respondent. April 21. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is a tenant 's appeal, with the special leave of this Court, against an order of Naik, J., of the High Court of Bombay in Civil Revision Application No. 320 of 1959, by which he 161 disallowed certain pleas raised by the appellants. The respondent is the landlord. On September 11, 1942, the appellants had executed a rent note, under which they were in occupation of the premises in dispute. The period of the tenancy was 15 years, and it expired by efflux of time on, March 14, 1957. The landlord thereupon filed a suit on April 25, 1957, for possession of the premises, in the Court of the Joint Civil Judge (Junior Division), Erandol. Meanwhile, under section 6 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, (to be called the Act, in this judgment), a notification was issued, applying Part II of the Act to the area where the property is situated. The appellants claimed protection of section 12 in Part 11 of the Act, which deprived the landlord of the right of possession under certain circumstances. The Civil Judge framed three preliminary Issues, which were as follows: "1. Whether this Court has jurisdiction to try the suit? 2.Whether the plaintiff 's suit for possession of the suit property is maintainable in view of the Notification issued by the Government of Bombay on 16th August, 1958, applying Part II of the Bombay Rents, Hotel and Lodging House Rates Control Act? If not, what order should be passed? 3.What order?". These Issues were decided against the appellants. They filed a revision petition before the High Court of Bombay, which was dismissed by the order under appeal. Naik, J., who heard the revision, followed a previous Full Bench ruling of the Bombay High Court reported in Nilkanth Ramachandra vs Rasiktal (1). In that case, Chagla, C. J. (Gajendragadkar and Tendolkar, JJ., concurring) had held that section 12 of the Act was prospective and did not apply to pending cases. Reliance was also placed by Naik, J., on the decision of this Court in Chandrasingh Manibhai vs Surjit Lal Sadhamal Chhabda (2), where the opinion of the Full Bench of the Bombay High Court was approved. (1) (2) ; 21 162 Two Questions have been raised in this appeal, and they are (1) whether by virtue of the first proviso to section 50 of the Act, all the provisions of Part 11 including section 12 were not expressly made applicable to all suits; and (2) whether by virtue of section 12(1) of the Act, which applied independently by the extension of the Act to the area where the property is situate, the suit was not rendered incompetent and the landlord deprived of his remedy of possession. Before we deal with these contentions, it is necessary to see some of the relevant provisions of this Act. The Act was not the first to be passed on the subject of control of houses, etc. Previously, there were two other Acts in force in the State of Bombay, viz., the Bombay Rent Restriction Act, 1939 and the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944. By section 50 of the Act, these Acts were repealed. The first proviso, however, enacted (omitting unnecessary parts): "Provided that all suits and proceedings between a landlord and a tenant relating to the recovery or fixing of rent or possession of any premises to which the provisions of Part 11 apply. . which are pending in any Court, shall be transferred to and continued before the Courts which would have jurisdiction to try such suits or proceedings under this Act or shall be continued in such Courts, as the case may be, and all the provisions of this Act and the rules made thereunder shall apply to all such suits and proceedings. " It is this proviso which, it is claimed, has retrospective effect and section 12 of the Act which is in Part II is said to apply to all pending cases, whenever the Act is extended to fresh areas. Section 12 of the Act reads as follows: "12.(1) A landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of this Act. 163 (2)No suit for recovery of possession shall be instituted by a landlord against a tenant on the ground of non payment of the standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the . (3)(a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the Court may pass a decree for eviction in any such suit for recovery of possession. (b)In any other case, no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court. (4)Pending disposal of any such suit, the Court may out of any amount paid or tendered by the tenant pay to the landlord such amount towards payment of rent or permitted increases due to him as the Court thinks fit. Explanation. In any case where there is a dis pute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub section (2), he makes an application to the Court under sub section (3) of section II and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court. " 164 By sub sections (1) and (2) of the second section, which dealt with the extent of the application of the Act, it was provided that Parts I and IV of the Act shall extend to the pre Reorganisation State of Bombay, excluding transferred territories, and Parts II and III shall extend respectively to the areas specified in Schs. I and II to the Act, and shall continue to extend to any such area, notwithstanding that the area ceased to be of the description therein specified. By sub section (3), the State Government was authorised, by notification in the Official Gazette, to extend to any other area, any or all the provisions of Part II or Part III or of both. It would appear from this that Parts I and IV came into operation throughout the territories of the pre Reorganisation State of Bombay. Part II came to be extended to this area by the notification, and after that extension, Parts 1, 11 and IV of the Act began to apply, while the suit was pending. We are not concerned in this appeal with Part 111. The contention on behalf of the appellants is that by the latter part of the proviso to section 50, relevant portions of which have been quoted earlier, all the provisions of Part II were extended to this area, and that all pending suits and proceedings were governed, no matter when filed. The notification extending Part II of the Act to this area had, it is contended, also the same effect independently of the first proviso to section 50. It is contended, therefore, that sub section (1) of section 12, which prohibits a landlord from recovering possession of any premises so long as the tenant pays or is ready and willing to pay the amount of the standard rent and permitted increases, if any, and is also observing the other conditions of the tenancy in so far as they are not inconsistent with the provisions of the Act, applies to the present case and the tenants are protected. It is also contended that if the first proviso to section 50 was limited to such suits only as were pending on the date of the passing of the Act, section 12(1), on its own terms, is applicable to the present case, and being retrospective in character, leads to the same result. These two contentions were apparently raised in the Court of the Civil Judge and before the High 165 Court. The High Court, however, ruled that section 12 was prospective in character and did not apply to pending suits or proceedings. It is contended by the learned Attorney General what the construction placed by the High Court upon the first proviso to section 50 is erroneous. Though he section concedes that the proviso must be read as qualifying what the substantive part of section 50 enacts, he urges that the proviso goes beyond that purpose and enacts a substantive law of its own. He relies upon the following observations of Lord Loreburn, L. C., in Rhondda Urban Council vs Taff Vale Railway (1), where a pro viso to section 51 of the Railway Clauses Consolidation Act, 1845, was under consideration: "It is true that section 51 is framed as a proviso upon preceding sections. But it is also true that the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and not merely qualifying that which goes before.", and contends that the latter portion of the proviso, in question, being a substantive enactment, comprehends not only those suits which were pending on the date of repeal but also those cases, which came within the language of the latter part of the proviso, whenever the Act was extended to new areas. On behalf of the landlord, the learned Solicitor General argues that the proviso should be read as a proviso only to the substantive enactment, and must be taken to qualify the substantive portion of section 50 only to the extent to which it makes an exception to the repeal and but for the proviso would be governed by the repealed Acts. He relies upon Craies on Statute Law, 5th Edn., pp.201 202, where the following passage occurs: "The effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it and such a proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and (1) , 258.166 properly construed without attributing to it that effect. " He also relies upon the following observations of Lush, J., in Mullins vs Treasurer of Surrey (1): "When one finds a proviso to a section, the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject matter of the proviso." The law with regard to provisos is well settled and well understood. As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, 'a proviso is not interpreted as stating a general rule. But, provisos are often added not as exceptions or qualifications to the main enactment but as savings clauses, in which cases they will not be construed as controlled by the section. The proviso which has been added to section 50 of the Act deals with the effect of repeal. The substantive part of the section repealed two Acts which were in force in the State of Bombay. If nothing more had been said, section 7 of the Bombay General Clauses Act would have applied, and all pending suits and proceedings would have continued under the old law, as if the repealing Act had not been passed. The effect of the proviso was to take the matter out of section 7 of the Bombay General Clauses Act and to provide for a special saving. It cannot be used to decide whether section 12 of the Act is retrospective. It was observed by Wood, V. C., in Fitzgerald vs Champneys(2) that saving clauses are seldom used to construe Acts. These clauses are introduced into Acts which repeal others, to safeguard rights which, but for the savings, would be lost. The proviso here saves pending suits and proceedings, and further enacts that suits and proceedings then pending are to be transferred to the Courts designated in the Act and are to continue under the Act and any or all the provisions of the Act are to apply to them. The learned Solicitor General contends that the savings clause enacted by the proviso, even if treated as substantive law, must be taken to (1) , 173.(2) ; E.R. 958.167 apply only to suits and proceedings pending at the time of the repeal which, but for the proviso, would be governed by the Act repealed. According to the learned Attorney General, the effect of the savings is much wider, and it applies to such cases as come within the words of the proviso, whenever the Act is extended to new areas. These arguments are interesting, and much can be said on both Bides, particularly as the Legislature has by a subsequent amendment changed the proviso. But, in our opinion, they need not be considered in this case, in view of what we have decided on the second point. The second contention urged by the learned Attorney General that section 12(1) applied from the date on which the Act was extended to the area in question is, in our opinion, sound. Section 12(1) enacts a rule of decision, and it says that a landlord is not entitled to possession if the tenant pays or shows his readiness and willingness to pay the standard rent and to observe the other conditions of the tenancy. The word "tenant" is defined in the Act to include not only a tenant, whose tenancy subsists but also any person remaining, after the determination of the lease, in possession with or without the assent of the landlord. The present appellants, as statutory tenants, were within the rule enacted by section 12(1) and entitled to its protection, if the sub section could be held applicable to this suit. Both the Bombay High Court and this Court had, on the previous occasions, observed that section 12 of the Act was prospective. In those cases, the learned Judges were concerned with the interpretation of sub sections (2) and (3) only, which, as the words of those subsections then existing show, were clearly prospective, and were applicable to suits to be instituted after the coming into force of the Act. But a section may be prospective in some parts and retrospective in other parts. While it is the ordinary rule that substantive rights should not be held to be taken away except by express provision or clear implication, many Acts, though prospective in form, 168 have been given retrospective operation, if the intention of the legislature is apparent. This is more so, when Acts are passed to protect the public against some evil or abuse. (See Craies on Statute Law, 5th Edn., p. 365). The sub section says that a landlord Shall not be entitled to the recovery of possession of any premises so long as the tenant pays or is ready and willing to pay the standard rent etc., and observes and performs the other conditions of the tenancy. In other words, no decree can be passed granting possession to the landlord, if the tenant fulfils the conditions above mentioned. The Explanation to section 12 makes it clear that the tenant in case of a dispute may make an application to the Court under sub section(3) of section 11 for fixation of a standard rent and may thereafter pay or tender the amount of rent or permitted increases specified in the order to be made by the Court. The tenants, in the present case, have expressed their readiness and willingness to pay, and it is clear that they fulfil the requirements of sub section(1) of section 12, and the landlord is, therefore, not entitled to the relief of possession. Both the High Court as well as this Court in their previous decisions, referred to above, were not called upon to interpret sub section (1) of the Act. They were dealing with appeals arising out of decrees already passed. The observations that section 12 was prospective were made with reference to sub sections (2) and (3) and not with respect to sub section(1), which did not even find a mention in those judgments. The question then was whether section 12 by itself or read with the proviso to section 50 was applicable retrospectively to appeals. That is not the question which has arisen here. Then again, section 12(1) enacts that the landlord shall not be entitled to recover possession, not "no suit shall be instituted by the landlord to recover possession". The point of time when the sub section will operate is when the decree for recovery of possession would have to be passed. Thus, the language of the sub section applies equally to suits pending when Part 11 comes into force and those to be filed subsequently. The contention of the respondent that the operation of section 12(1) 169 is limited to suits filed after the Act comes into force in a particular area cannot be accepted. The conclusion must follow that the present suit cannot be decreed in favour of the respondent. The decisions of the High Court and the Court of First Instance are thus erroneous, and must be set aside. In the result, the appeal is allowed, and the two preliminary Issues are answered in favour of the appellants. Under the orders of this Court, the judgment of the Civil Judge was stayed. The suit will now be decided in conformity with our judgment. The respondent shall pay the costs of this Court and of the High Court. Appeal allowed.

On the expiry of the appellant 's tenancy for the occupation of the premises indispute, the respondent who was the landlord filed a suit for possession of the premises. Meanwhile under section 6 of the Bombay Rents, Hotel and Lodging House Rates Control , a notification was issued applying Part 11 of the Act to the area where the property was situated. The appellants claimed protection of section 12, Part 11 of the Act, which deprived the landlord of the right of possession under certain circum stances. The Court of first instance decided the suit against the appellant and the High Court ruled that section 12 was prospective in character and did not apply to pending suits or proceedings. On appeal by special leave Held, that the point of time when sub section (1) of section 12 operates is when the decree for recovery of possession has to be passed. The language of the sub section which provides that the landlord is not entitled to recover possession if the tenant pays or shows his willingness to pay the standard rent and to observe the other conditions of the tenancy is such that it applies equally to suits pending when Part It comes into force and those to be filed subsequently and is not limited only to suits filed after the Act comes into force in a particular area. A section may be prospective in one part and retrospective in another part. Sub sections (2) and (3) of section 12 were clearly prospective but the words of the first sub section showed retrospective operation. Nilkanth Ram Chandra vs Rasiklal, and Chandra Singh Manibhai vs Surjitlal Sudhamal Chhabda, ; , distinguished. Rhonda Urban Council vs Taff Vale Railway, , Mullins vs Treasury of Surrey, and Fitzgerald vs Champneys, ; , referred to.

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Appeal No. 294 of 1955. Appeal by special leave from the Judgment and Order dated the 7th September, 1955, of the Nagpur High Court, in Civil Revision No. 833 of 1954. B.B. Tawakley, (K. P. Gupta, with him for the appellant. R. section Dabir and R. A. Govind, for respondent No. 1. 1955. December 2. The Judgment of the Court was delivered by BOSE J. The appellant was a candidate for the office of President of the Municipal Committee of Damoh. The respondents (seven of them) were also candidates. The nominations were made on forms supplied by the Municipal Committee but it turned out that the forms were old ones that had not been brought up to date. Under the old rules candidates were required to give their caste, but on 23 7 1949 this was changed and instead of caste their occupation had to be entered. The only person who kept himself abreast of the law was the first respondent. He struck out the word "caste" in the printed form and wrote in "occupation" instead and then gave his occupation, as the new rule required, and not his 1031 caste. All the other candidates, including the appellant, filled in their forms as they stood and entered their caste and not their occupation. The first respondent raised an objection before the Supervising Officer and contended that all the other nominations were s; invalid and claimed that he should be elected as his was the only valid nomination paper. The objection was overruled and the election proceeded. The appellant secured the highest number of votes and was declared to be elected. The first respondent thereupon filed the election petition out of which this appeal arises. He failed in the trial Court. The learned Judge held that the defect was not substantial and so held that it was curable. This was reversed by the High Court on revision. The learned High Court Judges referred to a decision of this Court in Rattan Anmol Singh vs Atma Ram(1) and held that any failure to comply with any of the provisions set out in the various rules is fatal and that in such cases the nomination paper must be rejected. We do not think that is right and we deprecate this tendency towards technicality; it is the substance that counts and must take precedence over mere form. Some rules are vital and go to the root of the matter: they cannot be broken; others are only directory and a breach of them can be overlooked provided there is substantial compliance with the rules read as whole and provided no prejudice ensues; and when the legislature does not itself state which is which judges must determine the matter and, exercising a nice discrimination, sort out one class from the other along broad based, commonsense lines. This principle was enunciated by Viscount Maugham in Punjab Co operative Bank Ltd., Amritsar vs Incometax Officer, Lahore(2) and was quoted by the learned High Court judges ' "It is a well settled general rule that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially". (1) ; (2) [1940] L.R. 07 I.A. 464, 476, 1032 But apart from that, this is to be found in the Act itself. The learned High Court Judges were of opinion that the directions here about the occupation were mandatory. That, we think, is wrong. The present matter is governed by section 18 of the Central Provinces and Berar Municipalities Act (II) of 1922. Among other things, the section empowers the State Government to "make rules under this Act regulating the mode. . of election of presidents. ." and section 175(1) directs that "all rules for which provision is made in this Act shall be made by the State Government and shall be consistent with this Act", Now one of the provisions of the Act, the one that directly concerns us, is set out in section 23: "Anything done or any proceeding taken under this Act shall not be questioned on account of any defect or irregularity not affecting the merits of the case". The rules have therefore to be construed in the light of that provision. Rule 9 (1)(i) states that " each candidate shall. .deliver to the Supervising Officer a nomination paper completed in the form appended and subscribed by the candidate himself as assenting to the nomination and by two duly qualified electors as proposer and seconder". The amended form requires the candidate to give, among other things, his name, father 's name, age, address and occupation; and rule 9(1)(iii) directs that the Supervising Officer "shall examine the nomination papers and shall decide all objections which may be made to any nomination and may either on such objection or on his own motion, after such summary enquiry, if any, as he thinks necessary, refuse any nomination on any of the following grounds: * * * * 1o33 (C) that there has been any failure to comply with any of the provisions of clause (i). . " It was contended that the word "may" which we have underlined above has the force of "shall" in that context because clause (a) of the rule reads "(a) that the candidate is ineligible for election under section 14 or section 15 of the Act". It was argued that if the candidate 's ineligibility under those sections is established, then the Supervising Officer has no option but to refuse the nomination and it was said that if that is the force of the word "may" in a case under clause (a) it cannot be given a different meaning when clause (c) is attracted. We need not stop to consider whether this argument would be valid if section 23 had not been there because the rules cannot travel beyond the Act and must be read subject to its provisions. Reading rule 9(1) (iii) (c) in the light of section 23, all that we have to see is whether an omission to set out a candidate 's occupation can be said to affect "the merits of the case". We are clear it does not. Take the case of a man who has no occupation. What difference would it make whether be entered the word "nil" there, or struck out the word "occupation" or placed a line against it, or just left it blank? How is the case any different, so far as the merits are concerned, when a man who has a occupation does not disclose it or misnames it, especially as a man 's occupation is not one of the qualifications for the office of President. We are clear that this part of the form is only directory and is part of the description of the candidate;, it does not go to the root of the matter so long as there is enough material in the paper to enable him to be identified beyond doubt. It was also argued that there was a reason for requiring the occupation to be stated, namely, because section 15(k) of the Act disqualified any person who "holds any office of profit" under the Committee. But disclosure of a candidate 's occupation would not necessarily reveal this because the occupation need only be stated in general terms such as "service" or 1034 "agriculture" and need not be particularised; also, in any 'event, section 15 sets out other grounds of dis qualification which are not required to be shown in the form. As regards our earlier decision. That was a case in which the law required the satisfaction of a particular official at a particular time about the identity of an illiterate candidate. That, we held, was the substance and said in effect that if the law states that A must be satisfied about a particular matter, A 's satisfaction cannot be replaced by that of B; still less can it be dispensed with altogether. The law we were dealing with there also required that the satisfaction should be endorsed on the nomination paper. That we indicated was mere form and said at page 488 "If the Returning Officer had omitted the attestation because of some slip on his part and it could be proved that he was satisfied at the proper time, the matter might be different because the element of his satisfaction at the proper time, which is of the substance, would be there, and the omission formally to record the satisfaction could probably, in a case like that, be regarded as an unsubstantial technicality". A number of English cases were cited before us but it will be idle to examine them because we are concerned with the terms of section 23 of our Act and we can derive no assistance from decisions that deal with other laws made in other countries to deal with situations that do not necessarily arise in India. The appeal succeeds and is allowed with costs here and in the High Court. The order of the High Court is set aside and that of the Civil Judge restored.

The appellant was a candidate for the office of President of the Municipal Committee, Damoh. The nomination was made in an old form under the old rules which required a candidate to enter his caste. Under the new rules this was changed and occupation had to be stated instead, which none except the respondent No. I had done. Objection to the validity of the appellant 's nomination paper was overruled by the Supervising Officer. The appellant secured the highest number of votes and was declared elected. The respondent No. 1, thereupon, filed the election petition. He failed in the Election Tribunal which held that the defect was not substantial and was curable. The High Court, however, reversed this decision in revision, holding that failure to comply 'with any of the provisions set out in the rules was fatal and in such cases the nomination paper should be rejected. 1030 Held, that the rule requiring the occupation of the candidate to be stated in the nomination form was directory and not mandatory In character and as the failure to comply with it did not affect the merits of the case as laid down in section 23 of the Act, the election could not be set aside on that ground. Rattan Anmol Singh vs Atma Ram ([1955] 1 S.C.R. 481), dis tinguished. Courts should not go by mere technicalities but look to the substance. Some rules may be vital, while others are merely directory, and a breach of these may be overlooked, provided there is substantial compliance with the rules read as a whole and no prejudice ensues. When the Act does not make a clear distinction, it is the duty of the court to sort out one class from the other along broad based commonsense lines. Punjab Co operative Bank Ltd., Amritsar vs Income Tax Office? , Lahore ([1940] L.R. 67 I.A. 464), referred to.

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Appeal No. 12 of 1958. Appeal by special leave from the judgment and order dated April 6,1953, of the Madras High Court in Appeal against order No. 54 of 1949. section T. Desai and K. R. Choudhri, for the appellant. K. N. Rajagopala Sastri and T. V. B. Tatachari, for respondents Nos. I to 5. April 5. The Judgment of the Court was delivered by MUDHOLKAR, J. In this appeal by special leave from the decision of the High Court of Madras the appellant challenges the validity of an award made by an arbitrator appointed by the Court in a suit for partition and recovery of possession filed by the appellant of his half share in certain properties upon three grounds. The first ground is that the reference to arbitration was itself invalid because the Court failed to comply with the mandatory requirements of section 23, sub section (1) of the (10 of 1940) in the matter of specifying the time within which the award was to be made. The second ground is that the award was filed in Court by the arbitrator after the expiry of the time subsequently granted by the court for filing the award. The third ground is that the arbitrator erred in allotting to the appellant less than half the share in the properties in suit. In our opinion there is no substance in any of these grounds. It is undoubtedly true that sub section (1) of a. 23 requires that an order thereunder referring a dispute to an arbitrator must specify the time within which the award is to be made. What is imperative is the fixation of the time for making the award. But it does not follow that where the Court omits to specify the time in the order of reference but does so elsewhere in the proceedings, the reference is bad. In Raja Har Narain Singh vs Chaadhrain Bhagawant Kuar and another (1) which was a case under the Code of Civil (1) (1981) L.R. 18 I.A. 55. 786 Procedure, 1882, the Privy Council had to consider the provisions of section 508 which correspond to those of section 23(l) of the . While pointing out that the provisions of section 508 are mandatory and imperative they held that though the failure of the Court, to specify the time for making the award in the order of reference was not a strict compliance of the terms of the section still the fact that the Court fixed a date for hearing of the case "might be sufficient. " There also, as here, subsequent to the mak ing of the reference the Court repeatedly made orders enlarging the time and in those orders Axed the time within which the award was to be made. Thus the emphasis laid by the Privy Council was on the fixation of time in some manner and not on the necessity of expressly specifying the time in the order of reference itself. Here the B Form Diary of the court shows that the dispute was referred to arbitration on January 22, 1948. The entry in the diary of that date reads thus: "Subject matter of suit is referred to Arbitration on joint petition. Call on. 24 2 1948". The words "call on" must be interpreted to mean that the arbitrator was required to file his award by the date for which the suit stood adjourned, that is, February 24, 1948. In our opinion this entry should be read along with the order of reference. Reading them together it would follow that time was in fact fixed for filing the award by February 24, 1948. The mere omission to mention this date in the order of reference itself did not vitiate the reference. As regards the failure of the arbitrator to file the award within the time fixed the argument of learned counsel is that though on March 25, 1948, time was fixed for filing the award by June 23, 1948, the award was not actually filed till July 6, 1948. A reference to the B Form Diary discloses that on February 24, 1948, the case was adjourned to March 25, 1948. The Diary contains the remark "call on" and this remark precedes the mention of the adjourned date. The High Court has interpreted this to mean that the time was extended by the Court on February 24, 1948, to March 25, 1948. The entry dated March 25, 1948, contains the following: 787 "Further time wanted. File Award 23 6 1948". Three further entries are relevant and they are as follows: "23 6 1948 Call on . 28 6 1948 28 6 1948 Call on. 6 7 1948 6 7 1948 Award filed. Objections 13 7 1948". It is obvious from these entries that time was extended by the Court to file the award on three occasions. The award was actually ready on June 28, 1948, and was filed in Court on July 6, 1948. Learned counsel for the appellant faintly urged that on July 2, 1948, that is, before the award was actually filed, he had made an application to the Court for superseding the arbitration and that, therefore, the award could not be filed thereafter. A mere application of the kind could not affect the reference. Apart from that, the award had actually been made before that date and, there fore, the attempt to seek the supersession of the arbitration was, in any case, belated. As regards the last point the High Court has come to the conclusion that though the area of the land allotted to the appellant is less than half the total area of the land in suit there is nothing to indicate that the value of that land is less than half that of the entire land in suit. We agree that upon the material on record it would not be possible to say that the appellant has in fact received less than his due share of property. Apart from that, however, we may point out that under section 30 of the Act an award can be set aside only on the following three grounds: (a). that an arbitrator or umpire has misconducted himself or the proceedings; (b). that an award has been made after the Issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid in under section 35; (c). that an award has been improperly procured or is otherwise invalid. Plainly this objection would not fall either under el. (a) or under cl. (b) nor under the first part of cl. 788 The question is whether it could possibly fall within the second part of cl. (c), that is, whether the award is I otherwise invalid". In order to bring the objection within this clause learned counsel contended that the award was bad on its face. It is difficult for us to appreciate bow the award could be said to be bad on its face. When a dispute is referred to arbitration, the arbitrator has to decide it to the best of his judgment, of course acting honestly. Here, in his judgment the arbitrator has allotted to the appellant certain lands the total area of which is less than half that of the entire I and in suit. The appellant 's contention is that he is entitled to half the entire land. This contention was before the arbitrator. In spite of that he has made the award in the terms in which he has made it. There appears to be no suggestion that the arbitrator acted dishonestly. How can it then be said that this award is on its face bad? Agreeing with the High Court we dismiss this appeal with costs to the contesting respondent. Appeal dismissed.

The questions for determination in the appeal were whether the award in question was invalid, (1) by reason of the court failing to comply with the mandatory requirement of section 23(l) Of the , that the time within which the award is to be made, must be specified in the order, and (2) whether the arbitrator was in error in allotting to the appellant less than half share in the properties. Held, that under section 23(l) Of the , it is imperative that the time for making the award must be fixed; but that does not mean that where the court omits to specify the time in the order of reference and does so elsewhere in the proceedings, the reference is invalid. Consequently, in a case where the order sheet of the court read with the order of reference made it clear that the arbitrator was to file his award by the date to which the suit was adjourned, it could not be said that the section had not been complied with. Raja Har Narain Singh vs Chaudbrain Bhagwant Kuar (1891) L.R. 18 I.A. 55, referred to. Held, further, that the award could not be said to be bad on the face of it and "otherwise invalid" merely because the appellant had received less than his due share. The court cannot interfere with the findings of an arbitrator based on the best of his judgment unless it is shown that he has acted dishonestly.

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Appeal No. 104 of 1959. Appeal by special leave from the judgment and decree dated December 19, 1956, of the Patna High Court in Appeal from the Appellate Decree No. 632 of 1949. M. C. Setalvad, Attorney General of India and R. C. Prasad, for the appellants. section P. Varma, for respondent No. 1. N. section Bindra and D. Gupta, for Intervener. April 27. The Judgment of Sinha, C. J., Sarkar and Mudholkar, JJ., was delivered by Sarkar, J. The judgment of Das Gupta and Ayyangar, JJ., was delivered by Ayyangar, J. SARKAR, J. The parties to this litigation are all Hindus but it is not in dispute that the Mohammedan law of preemption is applicable to them by custom, nor that the appellants had a right of preemption. The only question is whether the first demand called talab i mowasibat which has to be made after the completion of the sale in order that the right may be enforced, was made before or after such completion. The making of the demand is not in dispute but the dispute is as to when the sale was completed. The appellants had their residential house contiguous to the house owned by certain persons whom we may call Pandeys. On January 31, 1946, the Pandeys executed a deed of sale in favour of the respondent purchaser in respect of their aforesaid house. The appellants claim a right of are emption on account of this sale. The consideration mentioned in the deed was Rs. 2,000. There was a subsisting mortgage on that house and the deed provided that out of the consideration a sum of Rs. 200 would be left with 476 the respondent purchaser for clearing off that mortgage. The deed also recited that the Pandeys had received Rs. 400 and "the remaining Rs 1,400 (Rupees fourteen hundred) in cash at the time of exchange of equivalents, (that is) at the time of (handing over) of the receipt of this deed. . . On receipt of the whole and entire amount of consideration money we have put the said claimant into possession and occupation of this vended property as absolute owner in place of us, the executants and our heirs and representatives. " The deed further stated, "this sale deed becomes operative from the date when we the executants affixed our signatures thereon. Whatever title, we, the executants and our heirs had. . . with respect to this vended property, has become extinct, inoperative and null and void and the same has now been transferred to and acquired by the claimant. " By the word "claimant", the respondent purchaser was referred to. The deed was presented at the registration office for registration by the Pandeys on the day it was executed and it was left with the Registrar in the Registration Office for the necessary entries and copies being made, a receipt being given to the Pandeys. On February 2, 1946, the appellants on coming to hear of the execution of the deed of sale made the talab imowasibat. On February 7, 1946, the receipt granted by the Registration Office to the Pandeys was made over by them to the respondent purchaser who there upon paid the balance of the price as stipulated in the deed. On February 9, 1946, the documents were copied in the Registrar 's books and thereupon the registration became complete as provided in B. 61 of the . The respondent purchaser thereafter received the deed of sale from the Registrar 's Office on February 13, 1946. The appellants filed their suit for preemption on September 9, 1946. The suit was decreed by the trial court and this decision was maintained by the first Appellate Court. The High Court, however, in second appeal set aside the decisions of the Courts below with the result that the suit stood dismissed and 477 the appellants have now come to this Court in further appeal. The Mohammedan law of preemption is stated in Mulla 's Principles of Mohammedan law in these terms: "The right of preemption arises only out of a valid, complete and bona fide sale. " This statement of the law is accepted by both the parties and there is no question that it is not correct. There is furthermore no dispute that the sale to the respondent purchaser was valid and bona fide. It is also agreed that one of the requisites before the right of pre emption can be exercised is the preliminary demand by the preemptor and that such demand must be made after the completion of the sale. The case has been argued before us on behalf of the appellants on the basis that the sale was governed by the . We will also proceed on that basis. Section 54 of the provides that sale of tangible immovable property of the value of rupees 100 and upwards, which the house with which we are concerned is, can be made only by a registered instrument. Section 3 of this Act defines " registered" as registered under the law for the time being in force regulating the registration of documents. This, in the present case, means the Regis tration Act of 1908. It is not in dispute that the registration under the is not complete till the document to be registered has been, copied out in the records of the Registration Office as provided in section 61 of that Act. It was therefore con. tended in the High Court that when a sale had to be made by a registered instrument it became complete only on the instrument of sale being copied in the books of the Registration Office. The High Court accepted this view and held that the sale in the pre sent case, therefore, became complete on the completion of the registration of the instrument of sale which was done on February 9, 1946 when the instrument was copied out in the books of the Registration Office. In this view of the matter, the High Court 61 478 came to the conclusion that the appellants were not entitled to enforce their right of preemption because they had not made the preliminary demand after the completion of the sale as the law required them to do, but before, that is, on February 2, 1946. In answer to this view of the High Court, the learned Attorney General appearing for the appellants says that the High Court overlooked section 47 of the the effect of which was to make a registered document operate from the time from which it would have commenced to operate if no registration thereof had been required and not from the time of its registration. His contention is that once a document is registered, as the deed of sale in this case was, it begins to operate from the time it would have otherwise operated and therefore, the position in this case is that the sale became operative and hence complete on January 31, 1946. The learned Attorney General further contends that the proper construction of the deed of sale was that it became operative from the day it was executed and that if it was not so, it was not a sale but could only be an agreement to sell in which latter case his clients, though this present suit might fail, would be entitled, if they so desired, to enforce their right of preemption when the sale was completed in pursuance of that agreement. As authority in support of his contention that in view of section 47 of the the sale in the present case must be deemed to have been completed on the day the instrument was executed, the learned Attorney General relied on Bindeshri vs Somnath Bhadry (1) and Gopal Ram vs Lachmi Misir (2). We do not think that the learned Attorney General 's contention is well founded. We will assume that the learned Attorney General 's construction of the instrument of sale that the property was intended to pass under it on the date of the instrument is correct. Section 47 of the does not, however, say when a sale would be deemed to be complete. It only permits a document when registered, to operate (1) A.I.R. (1916) All. 199. (2) A.I.R. (1926) All. 549. 479 from a certain date which may be earlier than the date when it was registered. The object of this section is to decide which of two or more registered instruments in respect of the same property is to have A effect. The section applies to a document only after it has been registered. It has nothing to do with the completion of the registration and therefore nothing to do with the completion of a sale, when the instrument is one of sale. A sale which is admittedly not completed until the registration of the instrument of sale is completed, cannot be said to have been completed earlier because by virtue of section 47 the instrument by which it is effected, after it has been registered, commences to operate from an earlier date. Therefore we do not think that the sale in this case can be said, in view of section 47, to have been completed on January 31, 1946. The view that we have taken of section 47 of the seems to have been taken in Tilakdhari Singh vs Gour Narain (1). We believe that the same view was expressed in Nareshchandra Datta vs Gireeshchandra Das (2) and Gobardhan Bar vs Guna Dhar Bar (3). With regard to the two cases on which the Attorney General has relied, it has to be observed that they were not concerned with a right of pre emption arising on a sale of property. Bindeshri Prasad 's case (4) was concerned with a suit for zar i chaharum. It does not appear from the report what that right was or when it arose. It is not possible therefore to derive much assistance from it. Gopal Ram 's case( ') was concerned with a right of pre emption arising on the grant of a lease and the question was whether the suit for the enforcement of such a right was barred by limitation. It appears that article 120 was applied to that suit and it was held that the cause of action for the excrcise of the right of pre emption arose as soon as the lease was executed and even before it was registered though before the actual registration the suit for pre emption could not have been maintained. (1) A.I.R (1921) Pat, 150. (2) Cal. 979 (3) I.L.R. (1940) II Cal. 270 (4) A.I.R. (1916) All. 199. (5) A.I.R. (1926) All 549. 480 This view was taken in reliance upon section 47 of the . We are not aware whether the law of pre emption applicable to the case required that there should be a completed lease before the right to pre empt could be enforced. If that law did so require, then we do not think that the case was rightly decided. It was said in that case that "When the law has given to a transaction a retrospective effect, it must have that effect. " We do not think that a transaction which when completed has a retros pective operation can be said for that reason to have been completed on the date from which it has that operation. In the view that we have taken, it is not necessary to discuss the question of the construction of the instrument of sale in this case, that is, to decide whether on its proper reading the transfer was intended to take immediate effect on its execution or later on after the balance of the purchase money had been paid. Nor do we think it necessary to pronounce on the other argument of the learned Attorney General that a transfer which does not convey the property immediately can only be an agreement to transfer. We think that for these reasons this appeal must be dismissed and we order accordingly. The appellants will pay the costs of this appeal. AYYANGAR, J. We regret that we are unable to agree to the order dismissing this appeal. The facts have been very fully set out in the judgment of Sarkar, J. and it is therefore unnecessary to repeat them. The following matters are beyond dispute: (1) that the law that is applicable to govern the right of the appellant before us is the law of pre emption as understood in Mohammedan law, (2) that according to the principles of Mohammedan law, the right of pre emption arises and the 2 talabs have to be performed immediately on the completion of a valid, and bona fide sale, and (3) that the two talabs which are required to be performed by a person claiming the right of pre emption have been performed by the appellant. There being further no dispute that a sale did take 481 place, the only point in controversy in the appeal is as to whether the talabs which were performed on February 2,1946 were performed by the appellant after the right of pre emption accrued to her, viz.,, after the sale in favour of the respondent was effected or were they premature. At one time there was a controversy as to whether it was the principle of the Muslim law that would determine the point of time when a sale should be taken to be complete (under which system crucial significance was attached to two of the ingredients of a sale, viz., payment of consideration and delivery of possession) or whether after the enactment of the it was to the statute and to the creteria laid down by it that one has to turn to determine when a sale should be held to have taken place. The former view found favour with the majority of the Full Bench of the Allahabad High Court in Begam vs Muhammad (1), Justice Banerjee dissenting from the majority. This controversy, however, is long past and it has now been decided by this Court in Radha Kishan vs Shri Dhar Ram Chandra (2) that the provisions of the supersede the principles of the. Mohammedan law as to sale and it was to the statute that one should look to find out whether, and if so when, a sale was complete in order to give rise to a right of pre emption. Turning now to the provisions of the , in the case of a sale of immovable property of the value of Rs. 100 or over (as in the case before us) section 54 of the Act enacts that it could be effected only by a registered instrument; sale itself being defined as "transfer of ownership in exchange for a price paid or promised or part paid and part promised". In other words, the essence of a transaction of sale consists in the transfer of ownership and this transfer has to be effected by "a registered instrument". The while prescribing the formalities of writing and Registration, does not itself determine the point of time when a sale becomes complete. "Registered" under the Transfer (1) I.L.R. 16 All. 344. (2) ; 482 of Property Act means: "registered under the law for the time being in force regulating the registration of documents" (section 3). When one turns to the , provision is made, inter alia for the time within which after its execution a document could be presented for registration, the persons who could so present, the office in which the document could validly be presented and registration effected and sub Part B of starting from section 58 deals with the procedure on admitting documents to registration. Section 60(1) enacts: "After such of the provisions of sections 34, 35, 58 and 59 as apply to any document presented for registration have been complied with, the registering officer shall endorse thereon a certificate containing the word registered ', together with the number and page of the book in which the document has been copied." and section 61 which follows makes provision for the copying of documents in Public registers from which the word "registration" is derived and enacts: "61. The endorsements and certificate referred to and mentioned in sections 59 and 60 shall thereupon be copied into the margin of the Register book, and the copy of the map or plan (if any) mentioned in section 21 shall be filed in Book No. 1. (2)The registration of the document shall thereupon be deemed complete, and the document shall then be returned to the person who presented the same for registration, or to such other person (if any) as he has nominated in writing in that behalf on the receipt mentioned in section 52. " Much reliance has been placed by learned Counsel for the respondent and, indeed, in the judgment of the High Court, on the words the "registration of the document shall thereupon be deemed complete" occurring in sub section (2) of section 61. But in the context of the fasciculus of sections in which it appears it is clear that it refers to the fact that the registering officer had completed his duty and had no more to do with the document presented to him, beyond returning the original to the party entitled to receive the same. In 483 our opinion, these words have nothing to do with the time from which the transaction covered by the registered document operates or with reference to the present context, when the sale evidenced by the deed, becomes complete. Specific provision is made for these in section 47 of the which reads: "A registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration. " The principles underlying sections 61(2) and 47 are not divergent. It is not as if, that any delay by the regis tering officer which might take place owing to the pressure of work in his office or for other reason, has any effect on the rights of parties, quod their property or the time from when the deed operates, or as regards the effectiveness of the transaction, or the priority of transactions inter se. It is not as if, documents executed on different dates, the parties intending them to operate at different times, have their intentions modified, if not nullified by the action or inaction of the registering officer, or any delay that might take place in his office. A contention that though the Muslim law of sale is superseded by the and the , but yet the provision contained in section 47 of the is inapplicable to determine when a sale effected by a registered instrument should be complete could not be sustained on any principle or logic, or of course on any rule of interpretation of statutes. In our opinion no distinction is possible to be drawn between a sale which is effective and one which is complete since they are merely different forms of expressing the same concept and for the same reason between the time from when a sale becomes effective and when it should be held to be complete. As under Muslim law the talabs have to be performed only immediately after the preemptor receives information of the sale, the view we take of the applicability of section 47 of the , introduces no element of hardship in the exercise of the option. We are, therefore, clearly of the opinion that the time when the sale becomes complete so as to 484 entitle the preemptor to perform the talabs should be determined by the application of the principle of intention laid down in section 47 of the Which is as much a part of the positive law governing the right of preemption as the provision of section 54 of the which, requires a registered instrument to effect a sale which gives rise to a right of preemption. If, therefore, B. 47 of the should apply to determine the time from which the registered document should have effect or, in other words, the time from which the sale should be held to be complete, the intention of the parties would be the crucial and only test. That has to be gathered by reference to the document itself read in the light of the surrounding circumstances, with however a proviso that if the document were clear and its terms explicit, no evidence to contradict them would be admissible. Paragraph 4 of this document of the sale deed exhibit 'A ' dated January 31, 1946 recites the consideration for the same. This was to consist of Rs. 2,000. Out of this, it states that the vendors had received Rs. 400 in cash at the time of the execution of the document, and that Rs. 200 had been left with the purchaser for payment to a previous possessory mortgagee. In regard to the balance of Rs. 1,400 the recital reads: "and received the remaining sum of Rs. 1,400 in cash at the time of exchange of equivalents, (that is) at the time of handing over of the receipt of this deed. In this manner we have received the entire amount of consideration money for this vended property from the claimant and brought the same to our possession and use. " It is, no doubt, true that the sum of Rs. 1,400 had not been received on January 31, 1946, the date of the execution of the document and that it was agreed that sum would be paid in exchange for the delivery of the receipt obtained from the Registrar in respect of the sale deed presented for registration. But the use of the past tense clearly indicates that the vendor agreed to the promise to pay the balance of Rs. 1,400 as the consideration for the execution of the 485 document on January 31, 1946, as tantamount to an actual payment. In other words, in terms of section 54 of the it was a transaction under which the property in the house was to be transferred in exchange for a price "part paid and part promised". Paragraph 4 and the recital there do not indicate any intention that the title to the property was to be conveyed only on the payment of Rs. 1,400 on the surrender of the registration receipt. If, however, there was any doubt as to what the intention of the parties was, it is made clear by the other stipulations and recitals which follow. Paragraph 5 opens with the words: "On receipt of the whole and entire amount of consideration money we have put the said claimant into possession and occupation of this vended property as absolute owner in place of us the executants and our heirs and representatives. " The reference to the receipt here is obviously based upon treating the entire consideration of Rs. 2,000 as having been received on the day of the execution of the document. In other words, part of the consideration was paid and part promised and the promise was treated as the consideration in respect of the balance unpaid. Besides and as if to reinforce their intention the deed goes on to state after the words of conveyance "I have executed the deed of absolute sale and jointly received Rs. 2,000 as per recitals in the body. " That the title of the vendee was not to be postponed to any date beyond the date of the execution of the document is made clear by the further words in para 5 "It is desired that the said claimant should enter into and remain in possession and occupation of the vended property as an absolute owner" which was to be from and after the date of the execution of the deed. Turning next to paragraph 6, there is an express stipulation as regards when the transfer should be deemed effective. It says: "This sale deed becomes operative from the date when we, the executants affixed our signatures thereon" a recital which is repeated and reinforced by paragraph 7 in which dealing 62 486 with the title of the vendors, it is stated that the said title with respect to the vended property "has become extinct, inoperative and null and void and the same has now been transferred to and acquired by the claimant". In the face of these recitals, covenants and stipulations which clearly express the intention of the parties that the deed should have effect from the date of its execution it seems to us that the argument that it could be postponed to a later date either the date when the registration was complete under the terms of section 61 of the Indian or to February 7, 1947 when on the registration receipt having been handed over to the vendee, the vendor received the balance of Rs. 1,400 is hardly tenable. If this were the true legal effect of the deed and if by virtue of the provisions of the read in conjunction with those of the Indian , the title to the property was transferred to the vendee immediately on the execution of the document on January 31, 1946 the performance of the two talabs by the appellant on February 2, 1946 would be in time, legal, proper and effective to clothe her with a right to demand a conveyance in her favour. It is only necessary to add that learned Counsel for the respondent did not contest the position that if on a proper construction of the sale deed exhibit 'A ' read in the light of its recitals and the relative statutory provisions there was a sale effective on January '31, 1946 the talabs performed by the appellant would not suffice to clothe her with the right which she claimed in the suit out of which this appeal arises. We would accordingly allow the appeal and decree her suit with costs throughout. By COURT. In accordance with the opinion of the majority, the appeal is dismissed with costs.

P executed a sale deed on January 31, 1946, in respect of a house in favour of D and presented it for registration on the same day. On coming to know of the execution of the sale deed, the appellant who had a right of preemption, made the talab i mowasibat on February 2, 1946. The deed was copied out in the Registrar 's books on February 9, 1946, and thereupon the registration became complete as provided in section 61 of the . The appellant filed a suit for preemption. D resisted the suit on the ground that the sale was completed on February 9, 1946, and the talab had been made prematurely. The appellant contended that in view Of section 47 a registered document operated from the time it would have otherwise operated and the sale was completed on the date of its execution. Held (per Sinha, C. J., Sarkar and Mudholkar, jj.) that the sale was completed only on February 9, 1946, when the registration was complete, that the talab was made prematurely and that the suit must fail. Section 47 merely permitted a document when registered to operate from a date which may be earlier than the date on which it was registered, it did not say when the sale would be deemed to be complete. A sale which was required to be registered was not completed until the registration of the deed was completed. Tilakdhari Singh vs Gour Narain, A.I.R. (1921) Pat. 150, Nareshchandra Datta vs Gireeshchandra Das, Cal. 979, and Gobardhan Bar vs Guna Dhar Bar, I.L.R. (1940) II Cal. 270, approved. Bindeshri vs Somnath Bhadry, A.I.R. (1916) All. 199 and Gopal Ram vs Lachmi Himir, A.I.R. (1926) All. 549, distin guished. Per Das Gupta and Ayyangar, jj. The sale was completed on the day of execution and the talab was made at the right time. Section 61 had nothing to do with the time when the sale evidenced by the registered deed became complete; it refers merely to the fact that the registering officer had completed his duty. Section 47 provided when a sale was deemed to be completed. There was no difference between the time when a sale 475 became effective and the time it could be held to be completed. Under section 47 the crucial test for determining the time from which the registered document was to have effect or be deemed to be completed was the intention of the parties. The sale deed shows that the parties intended that the deed should be effective from the date of execution.

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77 of 1958. Petition Under article 32 of the Constitution of India for enforcement of Fandamental Rights. Bhavani Lal and P. C. Agarwala, for the petitioners. C.K. Daphtary, Solicitor General of India, B. Ganapathy Iyer and T. M. Sen, for the respondents. March 14. The Judgment of the Court was delivered by S.K. DAS, J. This is a writ petition under article 32 of the Constitution. The petitioners, Messrs. Nand Lal Raj Kishan, carry on a business of commission agents at Delhi and are liable to pay sales tax in respect of their business under the provisions of the Bengal Finance (Sales Tax) Act, 1941, as in force in Delhi. They filed returns for four quarters of 195455 and claimed exemption in respect of sales of certain goods to the registered dealers under the provi sions of section 5(2)(a)(ii) of the said Act. By his order dated April 11, 1956, the Sales Tax Officer disallowed the exemption claimed by the petitioners mainly on the ground that the alleged sales were made to "those 285 registered dealers whose activities had gone underground." The Sales. Tax Officer issued a demand notice for a sum of Rs. 1,11,890 11 0 on account of sales tax. The petitioners then carried an appeal to the Assistant Commissioner of Sales Tax, Delhi. The Assistant Commissioner set aside the order of the Sales Tax Officer and remanded the case for a fresh decision in the light of certain judgments given by the Chief Commissioner, Delhi, in a number of similar cases. In the meantime the Bengal Finance (Sales Tax) Act, 1941, was amended by the Bengal Finance (Sales Tax) (Delhi Amendment) Act, 1956, being Act No. 17 of 1956. This amending Act which came into force on October 27, 1956, inserted a new section, which is section 8A of the Act. This section reads as follows: "section 8A. Security from certain class of dealers. The Commissioner, if it appears to him to be necessary so to do for the proper realisation of the tax levied under this Act, may impose for reasons to be recorded in writing as a condition of the issue of a registration certificate to a dealer or of the continuance, in effect, of such a certificate issued to any dealer, a requirement that the dealer shall give security up to ail amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under this Act. " On May 17, 1957, the petitioners asked for a fresh registration certificate on the ground that their original certificate had been lost in transit. They further asked for the addition of some more items of goods in the registration certificate, such as cigarettes, bidis and glass of all kinds. Thereupon the Sales Tax Officer made certain enquiries and found that the petitioners had been frequently shifting their places of business and the sales alleged to have been made by them to some registered dealers were not genuine, because those persons could not be traced at the addresses given. On a report being submitted to the Commissioner of Sales Tax, Delhi, the Commissioner asked the Sales Tax Officer to issue a notice to the petitioners. On 286 July 13,1957, such a notice was issued to the petitioners to show cause why they should not be asked to furnish a security of Rs. 10,000 in accordance with the provisions of section 8A. The petitioners then appeared before the Sales Tax Officer and made a statement that they were not prepared to deposit any amount as security. They also filed a written explanation objecting to the demand of security. The matter was then referred to the Commissioner of Sales Tax who con sidered the explanation of the petitioners and the report of the Sales Tax Officer. The Commissioner expressed his finding in the following words: "In view of the reputation that the dealer enjoys in the market, namely, that he being a commission agent has been engaged in the business of selling goods to other commission agents, all sales being effected to unscrupulous registered dealers, frequent changes in the name and place of busines s without giving specific details, late submission of information regarding the changes: in the name and place of business, non submission of returns for the year 1956 57 within the prescribed time, it appears neces sary to demand security under section 8A of the Bengal Finance (Sales Tax) Act, 1941 as in force in Delhi. " Accordingly, on November 27, 1957, he made an order directing the petitioners to furnish security either in cash or by two personal sureties for a Bum of Rs. 5,000 by December 15, 1957. Against the aforesaid order of the Commissioner the petitioners went in revision to the Chief Commissioner of Delhi. The Chief Commissioner heard Counsel for the petitioners and by his order dated April 15, 1958, dismissed the application in revision. The petitioners then filed a writ petition in the Punjab High Court which was summarily dismissed. On the present writ petition the petitioners have impugned the order of the Commissioner dated November 27, 1957 on the ground that section 8A of the Act under which the order was passed is constitutionally invalid. They have challenged the validity of section 8A on three grounds: firstly, it is contended that section 8A 287 gives an undefined, unlimited and unrestricted power to the Commissioner of Sales Tax; secondly, it is contended that no limit is fixed with regard to the amount of security which may be demanded under the section; and thirdly, it is contended that the section imposes an unreasonable restriction on the right of the petitioners to carry on their business inasmuch as it does not provide for any enquiry before the demand for security is made, nor does it provide for an opportunity being given to the person against whom the order is proposed to be passed of being heard before such order is passed. We do not think that these grounds have any substance. Section 8A does not give unlimited or unrestricted power. to the Commissioner of Sales Tax. It states inter alia that the Commissioner may impose for reasons to be recorded in writing as a condition of the issue of registration Certificate to a dealer, or of the continuance of such a certificate, a requirement that the dealer shall give security up to an amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under the Act: this power of the Commissioner is, however, subject to the condition that it must "appear to him to be necessary so to do for the proper realisation of the tax levied under the Act". In other words, the Commissioner may exercise his power of demanding security only when he considers it necessary to do so for the proper realisation of the tax levied under the Act. By no stretch of argument can it be suggested that the power is an unlimited or an unrestricted power. Learned Counsel for the petitioners has referred us to the decision of this Court in Messrs. Duarka Prasad Laxmi Narain vs The State of Uttar Pradesh (1). That was a case in which under cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority was, given absolute power to grant or refuse to grant, renew or refuse to renew suspend, revoke, cancel or modify any licence under the Order. It was pointed out by this Court that there was nothing to regulate or guide the discretion (1)[1954] S.C.R. 803. 288 of the licensing officer and the provision impugned therein committed to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chose. That is not the position here. Section 8A itself gives the necessary guidance when it says that the Commissioner may exercise his power only when it is necessary to do so for the proper realisation of the tax levied under the Act. In a later decision of this Court in Virendra vs The State of Punjab (1) it was pointed out that in Dwarka Prasad 's case (1) the impugned provision prescribed no principles and gave no guidance in the matter of the exercise of the power, but in a case where the exercise of the power is conditioned by the statute itself, the ratio in Dwarka Prasad case (2) does not apply. The same view was reiterated in Kishan Chand Arora vs The Commissioner of Police, Calcutta (3). Section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941, gives the power to the Commissioner to demand reasonable security for the proper payment of tax payable under the Act. This section came in for consideration of the Calcutta High Court in Durga Prasad Khaitan vs Commercial Tax Officer (4) and it was held that the section did not confer unfettered or arbitrary power to the Commissioner. We approve of the view expressed therein that the power to levy a tax includes the power to impose reasonable safeguards in collecting it, and demanding security for the proper payment of the tax payable under the Act is neither an arbitrary nor an unreasonable restriction. As to the contention that there,is no limit to the amount which can be demanded as security, it is only necessary to point out that the amount that can be demanded as security must have relation to the payment of the tax for which the person concerned may be or become liable under the Act. The amount must depend on the nature of the business, its turnover and the amount of tax payable thereon by the person concerned. Furthermore, the order of the Commissioner under section 8A is subject to revision by the Chief (1) ; , 321 (3) ; (2)[1954] S.C.R. 803. (4)[1937] 8 S.T.C. 105. 289 Commissioner and if an arbitrary or unreasonable amount is demanded, the order of the Commissioner will be subject to scrutiny by the Chief Commissioner. We do not think that even in the matter of the amount of security, the power of the Commissioner is unlimited or unrestricted. As to the last contention that the section does not provide for any enquiry or any opportunity being given to the person against whom the order is proposed to be passed of being heard, this point was taken before the Chief Commissioner and the Chief Commissioner rightly pointed out that the principles of natural justice would apply and the person to whose prejudice the order is to be made must be given an opportunity to say whatever he has to say in his defence. In the present case such an opportunity was given to the petitioners. A notice was issued to the petitioners by the Sales Tax Officer. The petitioners appeared before the Sales Tax Officer, submitted a written explanation and also made oral submissions. The Commissioner had before him the report of the Sales Tax Officer, the explanation submitted by the petitioners in reply to the notice issued, and also the statements made by them. It has been contended on behalf of the petitioners that no oral hearing was given to the petitioners by the Commissioner of Sales Tax and learned Counsel for the petitioners has made a grievance that the order of the Commissioner was passed without hearing the petitioners. It may be pointed out here that when the petitioners were heard by the Chief Commissioner in support of their application in revision, they made no grievance on the score that the Commissioner of Sales Tax had not given them a second opportunity of a fresh oral hearing. We do not think that a second opportunity like the one suggested on behalf of the petitioners was either necessary or obligatory. The petitioners had an opportunity of saying what they had to say against the demand of security. They raised their objections which were considered by the Commissioner who, in spite of those objections, came to the conclusion that it was necessary to ask the petitioners 37 290 to furnish security for the proper realisation of the tax levied or leviable under the Act. We agree with the Chief Commissioner that there was no violation of the principles of natural justice in the present case. For the reasons given above we hold that there is no merit in the petition which is accordingly dismissed with costs. Petition dismissed.

The validity of section 8A of the Bengal Finance (Sales Tax (Delhi Amendment) Act, 956, enabling the Commissioner of Sales Tax to demand security from dealers for payment of tax was challenged by the petitioners on the grounds that (i) the section gave undefined, unlimited and unrestricted power to the commissioner, (ii) no limit was fixed for the amount of security, and (iii) the section did not provide for any enquiry before the demand of security, nor did it provide for an opportunity of being heard being given to the person against whom the order was proposed to be passed. Held, that section 8A did not give any unlimited or unrestricted power to the Commissioner of Sales Tax. The power of the Commissioner of Sales Tax was subject to the condition that it (1)[1958] 9 S.T.C. 194. 284 must appear lo him to be necessary to demand security for the proper realisation of the tax. The power to levy a tax includes the power to impose reasonable safeguards for collecting it and demanding security for the proper payment of tax is neither in arbitrary nor an unreasonable restriction. Durga prasad Khaita vs Commercial Tax Officer, [1957] 8 S.T.C. 105, approved. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh, ; , distinguished. Virendra vs The State of Punjab, ; and Kishan Chand Arora vs The Commissioner of police, Calcutta; , , referred to. The power of the Commissioner as regards the amount of security was not unlimited because the order of the Commis sioner was subject to revision and scrutiny by the Chief Commissioner. In the instant case an opportunity having been give to the petitioners for submitting their defence and an explanation having been actually submitted by the petitioners there was no violation of the principles of natural justice. A second opportunity for oral hearing was not obligatory.

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Appeal No. 759 of 1957. Appeal from the judgment and Order dated June 26, 1957, of the Bombay High Court in Appeal No, 92 of 1956. J. C. Bhatt, section N. Andley, J. B. Dadachanji, Rameshuar Nath and. P. L, Vohra, for the appellants. R. Ganapathy Iyer and D. Gupta, for respondent. February 16. The Judgment of Gajendragadkar, Subba Rao, Wanchoo and Mudholkar, JJ., was delivered by Wanchoo, J. Sarkar, J., delivered a separate Judgment. WANCHOO, J. This appeal by certificate granted by the High Court of Bombay raises the constitutionality, of section 114(2) of the Bombay Industrial Relations Act, No. XI of 1947, hereinafter called the Act). The brief facts necessary for present purposes are these. 108 The appellant is a cotton textile mill situate in Bombay. It is said that the appellant had been continuously making losses from 1950 to 1955. References were however made under section 73 A of the Act by the Rashtriya Mill ' Mazdoor Sangh, Bombay, in respect of disputes relating to bonus for the years 1952 and 1953, which are said to be pending before the Industrial Court, Bombay. The ease of the appellant before the Industrial Court was that as it had made losses there was no question of its paying any bonus for the years in dispute. It seems that at the same time there were cases relating to bonus of other mills pending before the Industrial Court and the appellant applied that its case should be dealt with separately, and this prayer was acceded to. It seems that while the references were pending, an agreement was. arrived at between the Mill owners ' Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay, with respect to payment of bonus for the years 1952 to 1957 and the agreement was to come into force with respect to each mill when it was signed by each member mill of the Mill owners ' Association. Clause (6) of that agree ment provided for payment of bonus even where the profit made by a mill was not adequate to provide for all prior charges as per the Full Bench formula evolved by the Labour Appellate Tribunal in The Mill owners ' Association, Bombay vs The Rashtriya Mill Mazdoor Sangh (1) or even where a mill made actual loss, the minimum bonus being in either of these two cases 4 8 per cent. of the basic wages. earned during the year, subject to such mill being entitled to adjust the amount thus paid by it as the minimum bonus against any available surplus in any subsequent year or years under the provisions of the agreement. This agreement was registered and was made enforceable as an award against those mills which were parties thereto. The appellant however did not sign the agreement and therefore it was not enforced as an award by the Industrial Court against the appellant. Thereafter the Rashtriya Mill Mazdoor Sangh wrote to the Government of Bombay requesting that the (1) 109 said award should be enforced against the appellant in exercise of the powers vested in the Government by section 114(2) of the Act. After necessary action under section 114(2), the Government of Bombay issued a notification dated July 31, 1956, directing that the award made by the Industrial Court on March 13, 1956, for payment of bonus for the years 1952 and 1953 and also for the years 1954 to 1957 be enforced against the appellant. This was followed by a writ petition by the appellant in the High Court challenging the constitutionality of section 114(2) and also challenging the power of the State Government to issue such a notification under that provision. The petition was however dismissed on October 9, 1956. There was then an appeal to a Division Bench of the High Court in which also the appellant failed. The appellant then applied for a certificate to enable it to file an appeal to this Court, which was granted and that is how the matter has come up before us. Two main points have been urged on behalf of the appellant before us. In the first place, it is urged that section 114(2) is unconstitutional as it violates the fundamental rights guaranteed under article 19(1)(f) and (g) of the Constitution. In the second place, it is urged that even if section 114(2) is constitutional, the notification has gone beyond the powers conferred on the State Government by that section and therefore the notification is bad. We do not think it necessary for purposes of the present appeal to consider the constitutionality of section 114(2), for we have come to the conclusion that the notification is bad because it goes beyond the powers conferred on the State Government by that section. This brings us immediately to the second point that has been urged before us and in that connection we have to consider the ambit of the power of the State Government under section 114(2). Section. 114(2) reads as follows. "In cases in which a Representative Union is a party to a, registered agreement, or a settlement, submission or award, the State Government may, 110 after giving the parties affected an opportunity of being heard, by notification in the Official Gazette, direct that such agreement, settlement, submission or. award shall be binding upon such other employers and employees in such industry or occupation in that local area as may be specified in the notification: Provided that before giving a direction under this section the State Government may, in such cases as it deems fit, make a reference to the Industrial Court for its opinion. " The words of section 114(2) are very general and may at first blush be open to the interpretation that any agreement, settlement, submission or award may be extended thereunder provided it fulfills its terms. But further consideration shows that there are two obvious limitations on the power of the State. Government in that behalf. The first limitation arises out of the subject matter of the agreement etc., to be extended. Suppose the agreement etc. deal with (lot us say) the wages of a certain type of workmen in a certain mill. Suppose that the agreement etc., are extended to ano ther mill where that type of workmen does not exist. Obviously the agreement cannot be extended in these circumstances and the power of the State Government is thus limited by the subject matter of the agreement etc. The second limitation which again, is obvious arises from the provisions of law. The proviso to section 114(2) shows that before exercising its power under the said section the Government can refer the matter to an Industrial Court and there can be no doubt that an Industrial Court cannot and will not, advise anything against the law. Section 95 A makes the determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court under the regulations made under section 92 binding in all proceedings under the Act. What is done under section 114(2) is also a proceeding under the Act after notice to the parties affected. The State Government is thus bound by any decision on a question of law while proceeding under a. 114(2). The 111 policy of the Act underlying section 95 A therefore lead,,; to the conclusion that the exercise of power conferred by section 114(2) has to be in conformity with the industrial law laid down by the Full Bench of the Industrial Court and also by any decision of this Court. The State Government therefore when it passes an order under section 114(2) must have full regard to the law as laid down by the legislature and by the decisions of this Court and cannot pass an order under section 114(2) which is against such law. Besides, section 114(2) places a registered agreement, a settlement, a submission and an award on the same footing and so if an award has to conform to section 95 A as it must so must the other three mentioned therein. Therefore, when the State Government acts under section 114(2) it can only do as between the parties before it what a labour court, an Industrial Court or a wage board can in law do under the Act. We do not think that section 114(2) authorises the State Government to act against the law as laid down by the legislature or by this Court. Section 114(2) therefore appears to be speedy remedy (dispensing with all appeals provided under the Act) by which the State Government may direct that the terms and conditions of employment in the matter of wages, hours of work and so on may be the same in a particular industry or occupation in a particular area as may have been settled between a representative union and other employers in that area and as could if necessary be enforced through an award in a case to which the representative union was a party. There can be no doubt however that the State Government cannot do under section 114(2) what an adjudicator has 'no power to award under the provisions of the Act. Therefore, as we read a, 114(2) we cannot escape the conclusion that the State Government 's power to make a direction under that section is co terminus with the power of an adjudicator (be it a labour court, an Industrial Court or a wage board under the Act) to make an award thereunder, and the State Government cannot under section 114(2) do what an adjudicator cannot do under the Act. This being the ambit of the State Government 's power in respect of giving a direction under a. 114(2), 112 let us now proceed to see whether the impugned notification is within the ambit of these powers. By this notification the State Government has directed that the award dated March 13, 1956, made by the Industrial Court shall be binding on the appellant and its employees in the matter of payment of bonus for the years 1952 to 1957 (both inclusive). It is not in dispute that the said award was based, on an agreement between the Mill owners ' Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay. The said agreement provided that it would have to be signed by each member mill of the Mill owners ' Association before it would be binding on it and again it is not in dispute that the appellant mill though it is a member of the Mill owners ' Association never signed it. Farther, cl. (6) of the agreement provided for payment of minimum bonus even in cases where there was no adequate profit to provide for all prior charges as per the Full Bench formula and also in cases where a mill had made actual loss on the year 's working, subject to a proviso as to adjustment. Thus by the direction given in the impugned notification the appellant is subjected to payment of bonus even where it has not made adequate profit to provide for all prior charges or has in fact made a loss. The contention on behalf of the appellant is that it would not be open to an Industrial Court to grant bonus when profit was not adequate to meet all prior charges or where there was an actual loss and therefore when the impugned notification made it possible for grant of bonus even in these cases (for prima facie the appellant had made losses upto 1955), it directed something which even an Industrial Court could not do. ' In consequence, it is urged that the notification inasmuch as it makes this possible is beyond the powers conferred on the State Government under section 114(2) because it allows something to be done which even an Industrial Court could not allow. Reliance in this connection is placed on the decision of this Court in The New Manekchowk Spinning. Co. Ltd. and Others vs The Textile Labour Association (1). In that case this Court was considering (1) [1961] 3 S.C.R. 113 a similar agreement relating to Ahmedabad. The Industrial Court had imposed that agreement after its expiry for one year on the mills inspite of their contention that they were not bound to pay any bonus for the years in dispute in view of the law laid down by this Court in The Associated Cement Companies, Limited vs The Workmen (1). After examining the terms of the agreement then in dispute this Court came to the conclusion that in view of the law laid down in The Associated Cement Companies ' case, the Industrial Court had no jurisdiction to impose that agreement on the mills. It further held that an agreement of that kind could only continue by consent of parties. and could not be enforced by industrial adjudication against the will of any of the parties. The agreement in the present case directed to be enforced by the impugned notification is similar in terms and as held New Manekchowk 's case (2) it could not be enforced by industrial adjudication against the will of any of the parties. The power of the State Government under section 114(2) being co terminus with the power of an adjudicator under the Act, such an agreement cannot therefore be directed to be enforced against the will of the appellant even under section 114(2) inasmuch as by doing so the State Government would be going beyond the powers conferred on it by that section. The impugned notification therefore must be held to be bad inasmuch as it goes beyond the powers conferred on the State Government under section 114(2) and must therefore be struggle down. We therefore allow the appeal with costs and setting aside the order of the High Court hold that the notification dated July 31, 1956, is beyond the powers of the State Government under section 114(2) and direct that it will not be enforced. We should however like to make it clear that this decision will not prejudice the trial of any references with respect to bonus which may be pending or which may hereafter be made between the appellant and its employees with respect to years 1952 to 1957 (both (1) (2) ; 114 inclusive). If such references are pending or are hereafter made they will be decided in accordance with the decision of this Court in The Associated Cement Companies ' Case SARKAR, J. This appeal arises but of an application made by the appellants to the High Court at Bombay under article 226 of the Constitution for a writ directing the respondent, the State ' of Bombay, to forbear from acting upon or enforcing a certain notification issued by it under a. 114(2) of the Bombay Industrial Relations Act, 1946. This order was; sought on two grounds. The first ground was that section ll4(2) was ultra vires, illegal and void. The second ground was that if it was not so, the notification had been issued in improper exercise of the powers conferred by that provision. The appellants are a cotton textile mill in Greater Bombay, a local area under the Act, and its directors and shareholders. Their application was dismissed by the High Court and hence the present appeal. It appears that certain references were pending since 1953 and 1954 under the Act in the Industrial Court between various cotton textile mills in Greater Bombay and their employees, in respect of disputes concerning bonus for the years 1952 and 1953. In these references the employees were represented by the Rashtriya Mill Mazdoor Sangh, a Representative Union of workmen in the cotton textile industry as defined in the Act and a union registered under it. The appellant mill was a party to these references. On March 1, 1956, while these references were pending, the Rashtriya Mill Mazdoor Singh entered into an agreement with the Mill Owners Association, Bombay, of which fortyseven cotton textile mills including the appellant mill, were members, regarding the bonus to be paid to the employees of these mills for the years 1952 to 1957. This agreement was subsequently accepted individually by about fortytwo of the mills who were members of the Association and parties to the references, and became binding on these mills. This agreement was later registered under the Act and filed in the pending references and an award was (1) 115 made by the Industrial Court on March 13, 1956, in terms of it, as between the mills who had individually accepted the agreement and their employees. The appellant mill did not accept the agreement and no award was made in the references concerning it and so far as it was concerned, the references remained pending. On July 31, 1956, the respondent made the order which is challenged in these proceedings. That order was in these terms: "Whereas the. Rashtriya Mill Mazdoor Sangh, Bombay. .is a party to an award dated the 13th March 1956 And whereas the Government of Bombay, con siders that the award should be made binding upon the employers specified in column 1 of the schedule hereto annexed and their employees And whereas the said employers and the Rash triya Mill Mazdoor Sangh, Bombay, representing the said employees being the parties affected were heard Now, therefore, in exercise of the powers conferred by sub section (2) of section 114 of the said Act, the Government of Bombay hereby directs that the said award shall be binding on the employers specified in column 1 of the schedule hereto annexed and their employees in the matter of payment of bonus for the years specified against the employers in column 2 of the said schedule. " The appellant mill was one of the employers men. tioned in the schedule to the notification and the schedule further provided that the award would be binding on the appellant mill and its employees for the years 1952 to 1957, both inclusive. As a result of this notification the appellant mill became liable to pay bonus to its employees for the. years mentioned, in terms of the award based on the agreement, to neither of which it was a party. The appellants contend that the appellant mill is not liable to pay bonus in law as laid down by this Courtin Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union (1) and by the Full Bench (1) ; 116 of the Labour Appellate Tribunal, in Mill Owners ' Association, Bombay vs Rashtreeya Mills Mazdoor Sangh (1) as it has not made any profit for the period commencing from June 30, 1950, and ending on June 30,1955. The agreement on which the award was based, adopted a formula for ascertaining the available surplus of the profits of an employer and provided for payment of certain bonus out of it. This bonus, I gather, would have been of a smaller amount than that payable under the formula laid down in the cases mentioned earlier. The appellants have no complaint against this Part of the agreement for, presumably, under it, they would not be liable to pay any bonus at all. What they object to is el. 6 of the ' agreement. This clause in substance provided that when no avai. lable surplus was found to exist according to the for mula or even when a mill had incurred loss in a particular year, it would have to pay its employees "a minimum bonus equivalent to 4.8 per cent of the basic wages earned by them during the year", with a right to recoup the bonus so paid, out of the bonus that would be payable under the agreement in subsequent years and out of the residue of the surplus profits then remaining, it would have to pay bonus in terms of the agreement. The substance of the appellants ' grie vance against the notification is that under it the appellant mill has to pay bonus in terms of cl. 6 of the agreement even though it has been working at a loss. The first question is whether section 114(2) is invalid and illegal. That section so far as is material is in these terms: "section 114 (1). A registered agreement or a settlement, submission or award shall be binding upon all per. sons who are parties thereto: (2) In cases in which a Representative Union is a party to a registered agreement, or a settlement, submission or award, the State Government may, after giving the parties affected an opportunity of (1) 117 being heard, by notification in the Official Gazette, direct that such agreement, settlement, submission or award shall be binding on such other employers or employees in such industry or occupation in that local area as may be specified in the notification. " The appellants first challenge the validity of the .section on the ground that it offends article 14 of the Constitution. It is said that it gives an unguided and arbitrary power to the State Government to discriminate between various sets of employers and employees and make an order on any one set at its pleasure leaving out others. It seems to me that this contention is not well founded. The power given by the provision is not, in my view, uncontrolled. The object of the Act clearly is the settlement of industrial disputes and attainment of industrial peace. Furthermore, under the section the order can be made on employerS and employees in a local area which again is a limitation of the power. Now, a local area is an area notified as such for the purposes of the Act: see section 2(23). The object of this pro vision as to local areas is to divide the State into several areas for better maintenance of industrial peace and to group together for that purpose, the industries in a region. If conditions of labour in any area where a large number of workmen is collected, are uniform, then there is less likely to be disaffection among them whereas if such conditions are not the same, the workmen are likely to become restive. It is well known that regional considerations are closely connected with industrial disputes and are of importance for their settlement. The local area contemplated by section 114(2) is obviously the area in respect of which the Representative Union mentioned in it has been registered. No reference can be found in the section to any other local area. Under section 2(33) a Representative Union means a union registered as such under the Act and under section 13(1) a Representative Union is a union which has a membership of not less than fifteen per cent. of the employees in any industry in any local area and registered for that industry in the area. 118 The agreement, settlement, submission or award mentioned in the section has to be one to which a Representative Union is a party. It follows from this that a substantial body of workmen in an area has come to a decision or become bound by an award as to a question or questions affecting them. Therefore, the power under the section can be exercised only for achieving industrial peace in that area. It is not unlikely when a substantial section of workmen congregated in an area have secured certain rights that the other employees in that area may claim similar rights and this may disturb industrial peace in that area. The power can be exercised only for meeting such disturbance and only in the local area where it occurs. There are therefore two guiding principles. First, the power can be exercised only to prevent breach of industrial peace. Secondly, it can be exercised only in a specified area if there is a threat to industrial peace there. An exercise of the power outside the area and for purposes other than maintenance of industrial peace, would be beyond the scope of the section. Again, once there is occasion for legitimate exercise of the power and it is exercised, it must be exercised in all units of the industry in that local area in which units the threat to the industrial peace exists if that would restore the peace. It would be open to the Courts to correct a discriminatory use of the power or its use outside the scope of the section. Therefore it does not seem to me that the section confers unguided and arbitrary power. is of some interest to state that in the present case there has been no such discriminatory use of the power or any use outside the section. The respondent has made the award binding on all the remaining mills who had not accepted the agreement and there is evidence that there was: threat of breach of industrial peace in these mills. Then also, I find that the section has conferred the power on the highest authority, namely, the Government itself. That would be some guarantee that it would be duly exercised. This is a further reason for 119 holding that the section does not confer absolute and arbitrary Power. The next objection to the section is that it offends article 19(1)(g) in that it puts an unreasonable restriction on a person 's right to carry on business. This contention also is unacceptable to me. There is no doubt that the section puts certain restrictions on a person 's right to carry (in an occupation or business. The real question is whether the restrictions have been put in the interest of the general public and are reasonable. That the restrictions have been put in the interest of the general public seems to me to be unquestionable. The reason why the restrictions have been put is that otherwise, industrial peace would be disturbed. The entire country is interested in industries and, therefore, in industrial peace. This point requires no elaboration. , Then, are the restrictions put, reasonable? It seems to me that they are. The restrictions are that an agreement; settlement, award or submission all of ,Which of course must be concerning industrial disputes to which a person is not a party is made binding on him. By an "agreement", the parties to an industrial dispute settle it themselves. A "settlement" means a settlement of an industrial dispute arrived at with the assistance of a conciliator in the course of conciliation proceedings under the provisions of the Act. A "submission" is a reference of an industrial dispute to arbitration. An "award" is an adjudication on an industrial dispute by the court constituted under the Act. An agreement, a settlement or a submission is the result of the free consent of the parties to the dispute. As earlier stated, the section only applies to an agreement, settlement or submission to which a Representative Union, which is a union representing a substantial number of workmen, is a party. Therefore, the section can apply to an agreement, settlement or submission which a substantial number of workmen and an employer has, of their free choice, accepted. It would follow that such an agreement, settlement or submission has been considered reasonable by parties 120 interested and in the case of a settlement by the con ciliator appointed under the Act also. The restrictions imposed by any of these must therefore be reasonable. An award, on the other hand, is a decision of a court and can, therefore, always be expected to be reasonable. If certain restrictions are reasonable for an employer and his employees, I suppose it would follow that those restrictions would be equally reasonable for other employers and employees and more so, when they are all in the same neighborhood where the conditions are likely to be more or less the same. Therefore, it seems to me that the restrictions imposed by section 114(2) cannot be said to be unreasonable. I have earlier summarised the offending part of the agreement. I do not think that there is anything unreasonable there. The employer pays only 4.8 per cent of the basic wage in the year when he makes no profit with a right to recoup it in a subsequent and more prosperous year. The maximum that he has to pay as bonus in the best year is, I gather, less than what he would have to pay under. the formula regarding bonus laid down by this Court. The agreement extends over 6 years and it would not be unreasonable to suppose that during_ these years profits might be made to wipe off the minimum bonus paid in a lean year. The restrictions put by the present agreement are, therefore,, in my view quite reasonable. It may be that in individual cases, which are not likely to be many, the restrictions may work hardship. But that would not justify a conclusion that section 114(2) itself imposes unreasonable restrictions on a man 's right to carry on his business or occupation. This view was taken by this Court in Bijay Cotton Mills vs The, State, of Ajmer (1), where it was said in respect of the ; "Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the Act but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for the striking down the law itself as unreasonable." (1). [1955] 1 S.C.R. 752, 755 6. 121 Another ground on which the validity of the section was challenged was that it prevented a party from having an industrial dispute decided by an Industrial Court under the Act. But I do not see that there is an inherent right in a party to an industrial dispute to have it decided by an Industrial, Court under the Act. The right to ask for an adjudication by an Industrial Court is itself created by the Act. What the Act has given, it can clearly restrict or take away in any manner it thinks fit. The provisions of the Act must be read together and in cases in which power under section 114(2) has. been exercised, the right to ask for an adjudication by an Industrial Court must be considered either as taken away or unavailing. I thus come to the conclusion that the section is not invalid for any of the reasons mentioned. I also feel no doubt that the section was quite within the legislative competence of the legislature which passed it. I did not understand the learned counsel for the appellants to contend to the contrary. I have mentioned the legislative competence only to dispose of another argument which also, I think, was aimed at the validity of the section. It was said that there is no power anywhere to provide for payment of bonus where in law such bonus is not payable. This argu ment is founded on the decision of this Court in the Muir Mills case (1) where it had been said that no bonus is payable where no profit has been made. Therefore it is said that the section authorises payment of bonus where none is payable in law. This argument seems to me to be misconceived. If the section is legislatively competent and otherwise valid, as I think it is, then it cannot be invalid for the simple reason that it directs payment of bonus where, as held by this Court, as a matter of adjudication, none would be payable in law. The law laid down by this Court is only for application when the question comes up for adjudication by a court bound by that law. It has no relevance, in deciding the validity of an otherwise competent law. The law laid down by any Court cannot take away legislative competence. The (1) ; 122 enactment in question has left the law laid down by this Court quite unaffected; it will still apply in all cases where it is applicable. Now I proceed to consider the validity of the notification. As I understood the learned counsel for the appellants, he put his case on two grounds. He first said that the notification was invalid as it was made while a reference was pending in an Industrial Court. The reasoning is that it is invalid as it takes away the jurisdiction of that Court to decide the pending reference. I think what I have earlier said is a sufficient answer to this contention. The right to have the pending reference proceeded with was given by the Act. There is nothing to prevent that Act or any other, from providing that the pending reference shall be discontinued or become infructuous. If a notification could be made under the section, as the present argument assumes it could be, then as to when it could be made, would certainly depend on the terms of the statute. I find nothing in the Act to show that a notification could not be made while a reference was pending and so as to render it 'abortive. Therefore I think that no exception can be taken to the notification in the present case for the reason that it was issued while the reference was pending. The other challenge to the notification does not appear to have been raised in the High Court. It was based on section 95A of the Act which is in these terms: section .95A. The determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court, constituted under the regulations made under section 92, shall be recognised as binding and shall be followed. in all proceedings under this Act. It is said that the Government in issuing a notification under section 114(2) was, in view of section 95A, bound by the decisions of the Full Bench but in issuing the present notification, it ignored a decision of the Full Bench which provided that no bonus would be payable by an employer where he had made no profits. Therefore it is contended that the notification is invalid. I am unable to accept this argument. I will assume 123 that there is Full Bench decision of the kind mentioned. It is also true that the effect of the notification is to make the appellant mill pay bonus for a year when it had made no profit. All this, however, to my mind makes no difference for, though in issuing a notification under section 114(2) the respondent has to give the parties sought to be affected by it a hearing, there is really no proceeding held within the meaning of section 95 A in connection with the issue of the notification. All that section 95A does is to make "the determination of any question of law" by the Full Bench binding in certain proceedings. In order that determination of a question of law may be binding in another proceeding, that proceeding must raise the same question for, a determination of one question of law cannot be binding on another question. Now what is the question when a notification is intended to be issued under is. 114(2)? The only question is whether it is necessary for preserving industrial peace in a locality that a certain agreement, settlement, submission or award should be made binding on persons who are not parties to it. Such a question would not be a question of law at all; it would not be a question which could ever have arisen before the Full Bench. It would follow that no occasion of being bound by a determination of a question of law by the Full Bench can ever arise when the Government is considering whether a notification under section 114(2) should be issued. It may be that the result of a notification made under section 114(2) is to create a liability, for example, to pay bonus. The question of law as to the liability to pay bonus may have been decided by the Full Bench. That however cannot make the question arising under section 114(2) a question whether in law bonus is payable. The questions remain essentially different. Therefore, it seems to me, that section 114(2) does not contemplate a proceeding of the nature conceived by section 95A. Then I find that section 95A occurs in Chapter XIII of the Act which is concerned with Industrial Courts. It appears from the provisions of this chapter that the Industrial Court is the highest Court contemplated by 124 the Act. Under section 92 it has power to provide by regulations made by it that it will sit in Benches consisting of more than one person. Obviously it is intended that when a question of importance and difficulty arises, the Court will sit in a larger Bench. Section 95A appears, therefore, to have been enacted for the purpose that other courts acting under the Act should follow the decisions of the Full Bench so that there might be uniformity of law. It was not intended to have any application to the issue of a notification under is. 114(2). It also seems to me that if in issuing a notification under section 114(2) the Government were to be bound by the decisions of the Full Bench, then that section would be rendered almost completely infructuous. The question whether in view of section 95A, in issuing a notification under section 114(2) the Government is bound to follow the decisions of the Full Bench can arise only if section 114(2) is valid. If section 114(2) is valid, an interpretation of a. 95A which renders it infructuous cannot be correct. The sections of a statute must be so interpreted as not to affect the operation of one another. Let me take the case of an agreement concerning bonus between employer A and his employees. Now there is nothing in law to prevent an employer and his employees from making any agreement they like as to bonus. They may agree that bonus would he paid at a certain rate even when the employer has not made any profit. That would be a perfectly valid agreement. The agreement that was made in this case was of that kind. It has not been suggested that the agreement was invalid. Indeed, the fact that it was filed in the pending references and an award was made in terms of it would put it beyond doubt that it was unexceptionable for, the award was made in terms of the agreement as required by section 115A and it could not have been so made unless the agreement was in all respects valid. The Act therefore contemplates an agreement of this kind. If the argument of the learned counsel for the appellants is right, this agreement cannot be made 125 binding between B and his employees. Now, first, section 114(2) does not say that the agreement contemplated by it must comply with all decisions of the Full Bench. I find no justification for adding to the word "agreement" in section 114(2) the words "provided it is in compliance with decisions of the Full Bench". Secondly, common experience would show that when; disputants settle their disputes themselves by an agreement, they rarely, if ever, make the agreement strictly in terms of their legal 'rights; they, as it is said, give and take and adjust matters in their own way. So cases would be rare where the parties make ' the agreement strictly in terms of the law laid down ' by the Full Bench. Thus if the contention of the appellants is right, there would practically be no agreement to which section 114(2) would apply. Now, what is the law that can be laid down by the Full Bench regarding right to bonus? It can Only be general principles as to when it is to be payable and if payable, how the amount of it is to be calculated. This is what this Court did in the Muir Mills Case (1) and the subsequent cases regarding bonus. The actual award of bonus by the Full Bench on the facts of the case before it, would of course not be a determination of a question of law. Suppose now that the agreement between A and his employees was in compliance with the Full Bench decision. That agreement must therefore only provide that bonus of a certain amount would be paid in certain years. I do not find it possible to conceive of an agreement concerning bonus made after the Full Bench decision, which does not provide for the amount of the bonus to be paid but ,only lays down the formula for calculating what is to be paid, for, the formula is in the Full Bench decision and does not require to be laid down afresh. That agreement would be an agreement in compliance with the Full Bench decision. Suppose such an agreement provides for payment of a month 's wage,% as bonus. Now this agreement is to be made binding on B and his employees. If the argument that it can be made so binding only if as a result, B is not made to pay (1). [1955] 1 S.C.R. 991. 126 anything more than what he would have to pay under he Full Bench decision itself, is right then, it seems to be that the only case in which the agreement can be made so binding will be that in which the figures for example, of income, expenses, rehabilitation and a host of other things on which according to the Full Bench decision the bonus is to be calculated, are in the case of B absolutely identical with those in the case of A. If the figures were not so identical, then in the case of B, a month 's wages may be too large a bonus according to the Full Bench decision, though it La just right in the case of A. I do not think that such identity would ever exist. I think it right to point out here that under section 114(2) only the agreement as made can be extended to become binding on others. There is no power under it to alter the agreement in any way and then make it binding. What I have said so far concerning agreements would apply equally to settlements. Therefore, again almost all agreements made in terms of the Full Bench decision would also be taken out of the operation of section 114(2). Then I take the case of an award. An award is a decision of a court adjudicating upon an industrial dispute under the Act. I do not consider now an award based on an agreement for such an award would in substance be an agreement and with agreements, I have already dealt. I will, therefore, take an award passed as a matter of adjudication. I should suppose that such an award would be in accordance with the law as decided by the Full Bench for the decision of the Full Bench would be binding on the court passing the award in view of a. 95A. As stated in connection with agreements such an award would only decide how much bonus, assuming the dispute to be concerning bonus, would have to be paid; it would not be laying down any general principle for calculating bonus for, ex hypothesis those principles have already been laid down by the Full Bench. Here again, as in the case of agreements and for the same reason, if the argument for the appellants is right, the award can be made binding on employers not parties to it only when the relevant figures in the case if both the employers, 127 namely, the one who is a party to the award and also the other on whom the award is sought to be made binding, are identical. I conceive, such identity would never exist. As regards submissions, I am unable to see how section 95A can have any application at all. Submissions are defined in section 66 of the Act which, so far as material, provides, that "Any employer and a Representative Union may, by a written agreement, agree to submit any present or future industrial dispute to . . arbitration Such agreement shall be called a submission. " It does not appear to me to be conceivable that the Full Bench could ever have decided whether such a submission shall be made or not. The making of a submission involves no question of law. It can be made only in respect of industrial disputes. Section 66 gives the parties concerned the right to make it. Clearly, when a submission by A and his employees is sought to be made binding on B and his employees, there can be no question of compliance with any Full Bench decision. It would, therefore, appear that section 114(2) would become almost wholly infructuous if a notification under it could be issued only where the effect of that would not be to produce a result which is not in compliance with Full Bench decisions. It also strikes me that if in issuing the notification, the Government had to follow the Full Bench decisions, then the issue of that notification would really become an adjudication, the Government taking the place of the Industrial Court. The very same questions would then arise as would have arisen if the matter had to be decided by an Industrial Court. I am unable to hold that the inten tion was to make the Government itself an Industrial Court. If an adjudication by a court was necessary then the Industrial Court was already there and there was no need to put the duty of adjudication on the Government. For all these reasons I do not think that in issuing a notification under section 114(2) any question of complying with any Full Bench decision arises. In my view, 128 the issue of the notification is not a proceeding as contemplated by section 95A. Lastly, it was contended that the notification under the section had been issued mala fide. The only reason for this contention was that the object of such issue was to get round the decision of this Court in Muir Mills case (1). It is true that one of the reasons why the Rashtriya Mill Mazdoor Sangh wanted the notification to be issued was that it wanted to find a "way out of the situation arising as a result of the decision of the Supreme Court in Muir Mills case (1)". But I am not able to agree that makes the notification mala fide. Apart from the fact that the Sangh felt that the decision had not helped the industry or the workmen, which feeling I have no reason to doubt was perfectly honest, I am unable to see bow, if it is legally permissible under the statute to do a thing the result of which would be to get round a decision of this Court, the doing of it can be said to be mala fide. The Act directly permits and contemplates a notification which would produce a result in variance with a decision of this Court. There has been no misuse of the Act at all. As I have earlier stated, in the case of bonus the effect of a notification under section 114(2) would almost always be to permit something which is not permitted under the rule laid down in the Muir Mills case (1). That being so, a notification duly issued under the section cannot be said to have been issued mala fide. For all these reasons, in my view, the Act is not invalid and the notification of July 31, 1956, is unobjectionable and cannot be set aside. I would, therefore, dismiss the appeal with costs. By COURT: In accordance with the majority judgment, the order of the High Court is set aside and the appeal is allowed with costs. Appeal allowed.

The disputes regarding bonus to be paid to the ' workmen of the appellant mill and other cotton textile mills in Greater Bombay for the year 1952 and 1953 were referred to the Industrial Court under the provisions of the Bombay Industrial Relations Act, 1946, and while the references were pending, an agreement was arrived at between the Mill owners ' Association, Bombay, and the Rashtriya Mills Mazdoor Sangh, a Representative Union of workmen in the cotton textile industry with respect, to payment of bonus for the years 1952 to 1957, providing inter alia for payment of bonus even where a mill made actual loss, the minimum bonus being 4.8 per cent. , of the basic wages earned during the year, subject to such mill being entitled to adjust the amount thus paid by it as the minimum bonus against any available surplus in any subsequent year or years. This agreement was registered and was made enforceable as an award (1) L.L.R. (2) A.I.R. 1937 Mad. 763. 106 against those mills which were parties thereto. The appellant; however, did not sign, the agreement, and its case before the Industrial Court was that it had been continuously making losses from 1950 to 1955. On July 31, 1956, the Government of Bombay issued a notification under section 114(2) Of the Act directing that the award made by the Industrial Court aforesaid, for payment of bonus for the years 1952 and 1953 and also for the years 1954 to 1957 be enforced against the appellant. The appellant challenged the validity of section 114 on the grounds (1) that it offended article 14 Of the Constitution inasmuch as it gave an unguided and arbitrary power to the State Government to discriminate between various sets of employers and employees and make an order on any one set at its pleasure leaving out others, (2) that it offended article 19(i)(g) in that it put an unrea sonable restriction on a person 's right to carry on business, and (3) that it prevented a party from having an industrial dispute decided by an Industrial Court under the Act. In any event, the appellant contended that the notification was bad, because (a) it was made while a reference was pending in an Industrial Court and, therefore, took away the jurisdiction of, that Court to decide the pending references and (b) the notification went beyond the powers conferred on the State Government by section 114 since under that section the Government was bound by the decisions of the Full Bench in view of section 95A, but in the present case it ignored a decision of the Full Bench which provided that no bonus would be payable by an employer where it had made no profits. Held (Sarkar, j., dissenting), that the notification dated July 31, 1956, was beyond the powers conferred on the State Government under section 114(2) Of the Bombay Industrial Relations Act, 1946, and must, therefore, be struck down, There are three limitations on. the power of the State Government when acting under section 114(2): (1) that it is limited by the subject matter of the agreements, or settlement, submission or award sought to be extended, (2) that it has to be in conformity with the industrial law laid down by the Full Bench of the Industrial Court and also by any decision of the Supreme Court, and (3) that the State Government 's power to make a direction under that section is co terminus with the power of an adjudicator and the State cannot do 'what an 'adjudicator cannot do under the Act. Action taken by the State Government under section 114(2) is a proceeding under the Act within the meaning Of section 95A of the Act. The New Maneckchowk Spining Co. Ltd. and others vs The Textile Labouy Association, [1961] 3 S.C.R. I, relied on. Per Sarkar, J. (1) Section 114 of the Bombay Industrial Relations Act, 1946, does not offend article 14 Of the Constitution. The object of the Act is the settlement of industrial disputes and 107 attainment of industrial peace and the section does not confer absolute and arbitrary power. (2) The restrictions imposed by section 114(2) are reasonable and have been put in the interest of the general public. Consequently, the section does not contravene article 19(i)(g). Bijay Cotton Mills Ltd. vs The State of Ajmer, ; , referred to. (3) The provisions of the Act must be read together and in cases in which power under section 114(2): has been exercised, the right to ask for an adjudication by an Industrial Court must be considered either as taken away or unavailing. (4) The issue of a notification under section 114(2) is not a proceeding as contemplated by section 95A and, therefore, any question of complying with any Full Bench decision does not arise. (5) Section 114 directly permits and contemplates a notification which would produce a result in variance with a decision of the Supreme Court and, therefore, a notification duly issued under that section cannot be said to have been issued, mala fide. Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; , referred to. (6) The Act is not invalid and the notification of July 31, 1956, is unobjectionable and cannot be set aside.

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