Prompt:
Appeal No. 1671 of 1966.
Appeal from the judgment and decree dated March 31, 1965 of the Madras High Court in Appeal No. 276 of 1962.
M.K. Ramamurthi, Vineet Kumar, L Ramamurthy and Shyamala Pappu, for the appellant.
A.V. Rangam, for the respondents.
425 The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate from the judgment of the Madras High Court dated March 31, 1965 in A.S. No. 276 of 1962.
The appellant 'brought the suit in O.S. No. 3 of 1961 in the Court of Subordinate Judge, Nagapattinam for setting aside the order dated May 10, 1960 of respondent No. 1 the Commissioner of Hindu Religious and Charitable Endowments, Madras who had affirmed earlier the order of the second respondent, the Deputy Commissioner, holding that the trusteeship of the Kumaran Koil in Manjakollai village was not hereditary.
The appellant was elected as a trustee by the Sengunatha Mudaliars of Manjakollai village at a meeting held on June 27, 1957.
According to the appellant the temple was rounded two hundred years ago by the members of his community and since then the management of the temple and is affairs was always vested in the community of the Sengunatha Mudaliars and no person other than the elected trustee had at any time the right of management and control of the temple.
The appellant said that the temple was declared as an "exempted" temple under the provisions of Madras Act 1 of 1925.
The case of the appellant was that the trusteeship of the temple was "hereditary".
The respondents, however, took a different view and proceeded on the basis that trusteeship of the Kumaran Koil was not hereditary.
The Subordinate Judge held that the appellant was a hereditary trustee and the suit was not barred by limitation.
The respondents took the matter in appeal to the Madras High Court which by its judgment dated March 31, 1965 allowed the appeal and set aside the judgment of the Subordinate Judge Nagapattinam.
Section 6, sub section
(9) of Madras Act 19 of 1951 states: "In this Act, unless there is anything repugnant in the subject or context (9) 'hereditary trustee ' means the trustee of a religious institution succession to whose office devolves by hereditary right or is regulated by usage or is specifically provided for by the founder, so long as such scheme of succession is in force;" This Act has been substituted by Madras Act 22 of 1959 but the definition of the trustee is identical in both the Acts.
The question to be considered in this appeal is whether the appellant is a hereditary trustee Within the meaning of the section.
The definition includes three types of cases: (1) succession to the office of trusteeship devolving by hereditary right; (2) succession 426 to such office being regulated by usage; and (3) succession being specifically provided for by the founder on condition that the scheme of such succession is still in force.
It is not the case of the appellant that the trustees of the temple of the Kumaran Koil are hereditary trustees because their office ' devolves by hereditary right or because succession to that office is specifically provided for by the founder.
The contention on behalf of the appellant is that the succession is "regulated by usage".
It was said that according to the usage of the temple the trustees were elected for a period of one year each at a meeting of the members of the Sangunatha Mudaliar Community and so the appellant must be held to be a trustee within the meaning of section 6(9) of Act 19 of 1951.
In our opinion, there is no warrant for this argument.
The phrase "regulated by usage" in section 6(9) of the Act must be construed along with the phrase "succession to this office" and when so construed that part of the definition would only apply where the ordinary rules of succession under the Hindu law are modified by usage and succession has to be determined in accordance with the modified rules.
The word "succession" in relation to property and rights and interests in property generally implies "passing of an interest from one person to another" (vide in Re: Hindu Women 's Right to Property Act, 1941 (1).
It is now well established that the office of a hereditary trustee is in the nature of property.
This is so whether the trustee has a beneficial interest of some sort or not (see Ganesh Chunder Dhur vs Lal Behary(2) and Bhabatarini vs Ashalata(3).
Ordinarily a shebaitship or the office of dharmakartha is vested in the heirs of the founder unless the ,founder has laid down a special scheme of succession or except when usage or custom to the contrary is proved to exist.
Mukherjea J., in Angurbala Mullick vs Debabrata Mullick(4) delivering the judgment of this Court observed: "Unless therefore, the founder has disposed of the shebaitship in any particular manner and this right of disposition is inherent in the founder or except when usage or custom of a different nature is proved to exist, shebaitship like any other species of heritable property follows the line of inheritance from the founder." In the case of mutts, whose heads are often celibates and sometimes sanyasins, special rules of succession obtain by custom and usage.
In Sital Das vs Sant Ram(5) the law was taken as wellsettled that succession to mahantship of a mutt or religious institution is regulated by custom or usage of the particular institution except where the rule of succession is laid down by the founder himself who created the endowment.
In that case the custom in (1) (2) 63 I. A. 448.
(3) 70 I.A. 57.
(4) ; ,5, (5) A.LR.
1954 S.C. 606.
427 matters of succession to mahantship was that the assembly of bairagis and worshippets of the temple appointed the successor; but the appointment had to be made from the disciples of the deceased mahant if he left any, and failing disciples, any one of his spiritual kindred.
Such a succession was described as not hereditary in the sense that on the death of an existing mahant, his chela does not succeed to the office as a matter of course, because the successor acquires a right only 'by appointment and the authority to appoint is vested in the assembly of the bairagis and the worshippets.
In Sri Mahant Paramanda Das Goswami vs Radhakrishna Das(1) the Madras High Court took the view that where succession to the mahantship is by nomination by the holder in office, it was not a hereditary succession.
In that case Venkatasubba Rao, J. said: "If the successor owes his title to nomination or appointment, that is, his succession depends on the volition of the last incumbent and does not rest upon independent title, I am inclined to the view that the office cannot be said to be hereditary." Krishnan J., stated as follows: "Where succession is by nomination by the holder in office of his successor it seems to be impossible to contend that it is a hereditary succession.
Hereditary succession is succession by the heir to the deceased under the law, the office must be transmitted to the successor according to some definite rules of descent which by their own force designate the person to succeed.
There need be no blood relationship between the deceased and his successor but the right of the latter should not depend upon the choice of any individual.
" It is true that the artificial definition of hereditary trustee in section 6(9) of the Act would include even such cases.
But the election to the office of trustee in the present case is for a fixed period of one year and not for life.
It is, therefore, difficult to hold that the office of the appellant is hereditary within the meaning of section 6(9) of the Act.
It is not possible to say that there is a succession of As office to another when on the efflux of the period for which A was appointed, there is a vacancy and B is elected to that vacancy.
It is quite possible that for that vacancy A himself might be reelected because a retiring trustee is eligible for reelection.
The possibility of A being the successor A himself is not merely an anomaly, it is an impossible legal position.
No man can succeed to his own office.
In Black 's Law Dictionary the word 'succession ' is defined as follows: "The revolution of title to property under the law of descent and distribution.
(1) 428 The right by which one set of men may, by succeeding another set, acquire a property in all the goods, movables, and other chattels of a corporation.
The fact of the transmission of the rights, estate, obligations, and charges of a deceased person to his heir or heirs.
" The view we have taken is borne out by the reasoning of the Madras High Court in State of Madras vs Ramakrishna(1).
For these reasons we hold that this appeal fails and must be dismissed with costs.
V.P.S. Appeal dismissed.

Response:
The appellant was elected as a trustee of a temple for one year.
The temple was rounded two hundred years ago by the members of the community and according to the usage of the temple, the trustees were elected for one year, at a meeting of the members of the community.
On the question whether the appellant has a hereditary trustee, because he was, under section 6(9) of the Madras Hindu Religious and Charitable Endowments Act, 1951, the 'trustee of a religious institution succession to whose office is regulated by usage ', HELD: The phrase 'succession to whose office is regulated by usage ' would only apply when the ordinary rules of succession under the Hindu law are modified by usage, and succession has to be determined in accordance with the modified rules.
The office of a hereditary trustee is in the nature of property.
Succession in relation to property implies passing of an interest from one person to another.
[428 C D] In the present case, the election to the office was for a fixed period of one year.
In such a case, it is not possible to say there is a succession to the office, because: (a) on the efflux of the period for which one trustee is appointed, there is a vacancy and another is elected to that vacancy, and (b) since there is a possibility of the same trustee being reelected, an impossible legal position arises in which a person could be a successor of himself.
[429 F H] In re Hindu Women 's Right to Property Act, 1941 , Ganesh Chunder Dhur vs Lal Behary, 63 I.A. 448, Bhabatarini vs Ashalata, 70 I.A. 57, Angurbala Mullick vs Debabrata Mullick, 1134 and Sital Das vs Sant Ram, A.I.R. 1954 S.C. 606 applied.
Shri Mahant Paramananda Das Goswwami vs Radhakrishna Das. , referred to.
State of Madras vs Ramakrishna, I.L.R. , approved.


Prompt:
N: Criminal Appeal No. 87 of 1967.
721 Appeal by special leave from the judgment and order dated January 24, 1967 of the High Court of Mysore in Criminal Appeal .No.
29 of 1965.
A. section R. Chari and R. V. Pillai, for the appellants.
Shyamala Pappu and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, C.J.
, These are 14 appellants who appeal against their conviction under section 395 of the Indian Penal Code and sentences of 5 years ' rigorous imprisonment and fine of Rs. 1,000/ passed on them.
Originally 20 persons were tried and convicted for the same offence and received a like sentence.
14 alone have appealed to this Court.
The incident which took place on July 28, 1962 was theft by dacoity of certain cotton pieces from two carts within the limits of Lingsugar Police Station at about 11 30 p.m.
The facts are that two traders in cloth sent their wares in carts for sale.
The cartmen halted after the market was over on the way for food.
Thereafter six carts left for Mudgal at about 10 p.m.
When the carts reached a Nala called Heri Halla about three miles from Lingsugur at about 11 30 p.m., 20 persons are said to have approached the carts and pelted stones.
It was a dark night and the assailants were not identified.
It appears that four out of the six carts escaped, but two carts were looted.
The police investigated the case and arrested the 20 persons who were accused in the case as being the culprits involved in this incident.
It is not necessary to go into rest of the case or the evidence on which the case of dacoity was established, because dacoity as such is not challenged before us.
The accused were convicted on the sole evidence of having in their possession pieces of cloth which were later identified to belong to the traders.
Searches took place between July 30, 1962 and August 17, 1962.
In these searches cloth which was undoubtedly stolen at the time of the dacoity was found in their houses.
The High Court, and the Court below drew from this the conclusion that the appellants were themselves the dacoits, and convicted them accordingly under section 395 of the Indian Penal Code and sentenced them to ' 5 years ' rigorous imprisonment and fine of Rs. 100/ .
In this appeal, the only contention raised by Mr. A. section R. Chari is that the presumption that they were dacoits ought not to have been drawn since the circumstances do not admit the drawing of such a presumption in the case, According to Mr. Chari, the presumption to be drawn ought to have been one under section 41 1 722 of Indian Penal Code or at the most tinder section 412 of the Indian Penal Code but not of complicity in the crime of dacoity.
He contends that the circumstances under which the one presumption or the other may be drawn under section 114 of the have not been stated by law and therefore it is necessary always to start with the lesser presumption and draw the higher presumption only when there is some other evidence to show the complicity of the persons in the crime itself.
According to him there is no other evidence in the case which points, to the complicity of the 14 appellants in the crime of dacoity and therefore as they cannot be suspected to be dacoits themselves, the only presumption to be drawn is one of receivers of stolen property or as receivers of property which was stolen in a dacoity.
In our opinion, the law advocated by Mr. Chari is not correct.
If there is other evidence, to connect an accused with the crime itself, however small, the finding of the stolen property with him is a piece of evidence which connects him further with the crime.
There is then no question of presumption.
The evidence strengthens the other evidence already against him.
It is only when the accused cannot be connected with the crime except by reason of possession of the fruits of crime that the presumption may be drawn.
In what circumstances the one presumption or the other may be drawn, it is not necessary to state categorically in this case.
It all depends upon the circumstances under which the discovery of the fruits of crime are made with a particular accused.
It has been stated on more than one occasion that if the gap of time is, too large, the presumption that the accused was concerned with the crime itself gets weakened.
The presumption is stronger when the discovery of the fruits of crime is made immediately after the crime is.
committed.
The reason is obvious.
Disposal of the fruits of crime requires the finding of a person ready to receive them and the shortness of time, the nature of the property which is disposed of, that is to say, its quantity and its character determine whether the person who had the goods in his possession received them from another or was himself the thief or the dacoit.
In some cases there may be other elements which may point to the way as to how the presumption may be drawn.
They need not be stated here for they differ from case to case.(In the present case, the goods stolen were a large quantity of cloth taken for sale to the market.
These goods were not sold and were being taken back to the dealers by the cartmen.) A large number of persons said to be 20 in number pelted stones at the cartmen and looted the, property.
Immediately afterwards a number of searches were made and the goods were found with various persons who were prosecuted as offenders and they have been presumed to be involved in the dacoity itself.
It may be 723 noticed that from each person a large number of goods of the same type such as 20 choli pieces or ten pieces of cloth were found.
(It is, impossible to think that within the short time available, these goods could have been easily disposed of to receivers of stolen property or could be placed in the custody of friends till such time as the original offenders could take them away.) The time gap in some cases is as short as two days and in some others it is not more than five days.
In two cases only the time gap is about 19 days.
Even then we think that the time gap is too short for original offenders to have disposed of the property to these appellants Or to have left the goods in their custody till such time as the original offenders could have taken them away.
We are, therefore, satisfied that the proper inference was drawn in this case.
It must not be forgotton that the offence was committed at night by as many as 20 persons or more.
The houses of 20 persons were searched and large quantities of the stolen goods were found in their houses.
It is impossible to think that these 20 persons were merely receivers of stolen property from some other 20 persons who were the dacoits.
It is legitimate therefore to raise the presumption in this case that the persons with whom the goods were found were the dacoits themselves.
This presumption has been drawn and in our opinion rightly in this case The conviction was therefore correct in 'all the circumstances of the case.
As regards the sentence, the offence no doubt was serious.
But no injury beyond one appears to have been caused.
Therefore we think that a sentence of three years ' rigorous imprisonment will meet the ends of justice in this case.
The sentence is reduced to three years ' rigorous imprisonment.
The sentence of fine will stand.
The appeal is allowed to this extent.
G.C. Appeal partly allowed.

Response:
Two carts loaded with cloth returning alongwith others from a weekly village market were looted by 20 or more persons.
The houses of 20 persons including the 14 appellants were searched and the looted cloth was recovered from their Possession.
They were tried and held guilty Linder section 395 of the Indian Penal Code.
The High Court dismissed their appeals.
In appeal by special leave to this Court their only contention was that in the absence of other evidence connecting them with the dacoity, the presumption to be drawn from the possession of stolen clothes ought to have been one under section 411 of he Indian Penal Code or at the most under section 412 of the Indian Penal Code and not of complicity in the crime of dacoity.
It was urged that since section 114 of the Evidence Act did not lay down definitely the presumption to be drawn in a given set of circumstances it was necessary always to start with the lesser presumption and draw the higher presumption only when there was some other evidence to.
show the complicity of the persons in the crime itself.
HELD : If there is other evidence to connect an accused with the crime itself, however small, the finding of the stolen property with him is a piece of evidence which connects him further with the crime.
There is then no question of presumption.
The evidence strengthens the other evidence already against him.
It is only when the accused cannot be conis stronger than if there is a large gap of time.
Disposal of the fruits of crime that the presumption may be drawn.
In what circumstances the one presumption or the other may be drawn will differ from case to case [722 D] When the discovery of the fruits of crime is made immediately after the commission of the crime the presumption of complicity in the crime nected with the crime except by reason of possession of the fruits of crime requires the finding of a person ready to receive them and the 'shortness of time, the nature of the property which is disposed of, that is to say, its quality and character determine whether the person who had the goods in his possession received them from another or was himself the thief or dacoit, [722 F] In the present case the offence was committed at night by as many as 'IO persons or more.
Shortly after the offence the houses of 20 persons were searched and large quantities of the stolen goods were found in their houses.
It was impossible that these 20 persons were merely 'receivers of stolen property from some other 20 persons who were the decoits.
It was legitimate therefore to raise the presumption in this case that the persons with whom the goods were found were the dacoits themselves.
[723 A B]


Prompt:
Appeal No. 1311 of 1967.
Appeal by special leave from the judgment and order dated January 17, 1967 of the Patna High Court in C.W.J.C. No. 952 of 1966.
M. C. Chagla, N. D. Karkhanis, section P. Chowdhury, Bhuvanesh Kumari, for the appellant.
section C. Manchanda, R. N. Sachthey and B. D. Sharma, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
This is an assessee 's, appeal by special leave against the judgment of the High Court of Patna dismissing in limini its writ petition under Arts 226 and 227 of the Constitution of India.
The assessee is having construction contracts under the Railways as well as the Government.
It is a partnership firm.
For the assessment year 1960 61, relevant to the accounting year 1959 60, after the assessee submitted its income tax return, it was asked by the Income tax Officer during the income tax assessment proceedings to produce before him its books of account and the other relevant papers.
The assessee also produced before him a statement showing various creditors from whom it had borrowed on Hundis during the accounting year in question.
In that statement it gave the lull names and address of the alleged creditors.
After enquiry, the assessee 's total income was assessed at Rs. 69,886/ .
On June 3, 1966, the 1st respondent (Income tax Officer Ward 'A ',, Muzaffarpur) issued to the assessee a notice under section 148 of the Indian Income tax Act, 1961.
The material portion of that notice reads as follows "Notice under section 148 of the Income tax Act, 1961.
Income Tax Officer, Muzaffarpur Dated, the 3 6 1966.
TO M/s. Chugamal Rajpal, Muzaffarpur.
Whereas (1) have reason to believe that your income chargeable the income of 1960 1961 in respect of which you are assessable to tax for the assessment year 19 19 has escaped assessment within the 444 meaning of section 147 of the Income Tax Act, 1961.
I therefore propose to re assess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice a return in the prescribed form of your income The income assessable relevant to the assessment year 1960 61 of in respect of which you are assessable for the said assessment year.
The notice is being issued after obtaining the necessary satisfaction of the Commissioner of IncomeTax, Bihar and Orissa, Patna.
Sd/ section P. Chaliha Income Tax Officer, Ward A, Muzaffarpur.
" The assessee challenged the validity of that notice as well as proceedings taken on the strength of that notice on various grounds.
As we are accepting the contention of the assessee that the impugned notice is invalid inasmuch as it did not comply with the requirements of section 151(2) of the Act, we have not thought it necessary to examine the other contentions advanced on behalf of the assessee.
In this case the notice was issued after four years but before eight years of the date of the original assessment.
Section 151 (2) of the Act reads "No notice shall be issued under Section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income tax Officer that it is a fit case for the issue of such notice." Section 148 prescribes : "(1) Before making the assessment, re assessment or re computation under Section 147, the Income tax Officer shall serve on the assesee a notice containing all or any of the requirements which may be included in a notice under sub section (2) of Section 139 and 445 the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section.
(2) The Income tax Officer shall, before issuing any notice under this section, record his reasons for doing so.
" Section 147 deals with income escaping assessment.
At this stage we need not refer to that section : We shall refer to that provision at a later stage.
Section 139(2) says : "In the case of any person who, in the incometax Officer 's opinion, assessable under this Act, whether on his own total income or, on the total income of any other person during the previous year, the Income tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed." (proviso is not necessary for our present purpose) When this appeal came up for hearing on the last occasion, as we found the affidavit filed by the Income tax Officer to 'be vague and indefinite, we directed the learned Counsel for the Department to produce before us the records of the Incometax Officer to show that the, Income tax Officer had complied with the requirements of section 148 and section 151(2) of the Act.
When the appeal was taken up for hearing on the 18th January 1971, only the report submitted by the Income tax Officer to the Commissioner and the order of the Commissioner was produced.
The order sheet recording the reasons of the Income tax Officer as required by section 148(2) was not produced.
Hereinbelow we have sent out the report of the Income tax Officer as well as the order of the Commissioner: Report in Connection with the starting of proceeding" under Section 147 of the Income tax Act, 1951.
Name of District Ward of Circle A Ward, Muzaffarpur G. I.R. No. 303 C. 1.1.
Name and address of the assessee M/S. Chugamal Rajpal, Muzaffarpur.
R.F. 2.Status 3.
Assessment year for which notice under section 1 48 is proposed to be issued 1960 61.
446 4.
Whether it is a new case or one in which re assessment (or recomputation) has to be made Re assessment 5.
If a case of reassessment (or recomputation) the income (or loss or depreciation allowance) originally assessed/determined.
Rs. 73,604/ 6.
Whether the case falls under cl.
(a) or (b) of section 147 147(a) 7.
Brief reasons for starting proceedings under Kindly see section 147 (indicate the items which are Sd/ section P. Chaliha.
I.T.O. 30 4 66 believed to have escaped assessment) A Ward, Muzaffarpur.
8.Whether the Commissioner is satisfied that Yes it is a fit case for the issue of notice under Sd/ K. Narain section 148.
13 5 66 Commissioner of Income tax, Bihar and Orissa, Patna 9.
Whether the Board is satisfied that it is aSecretary, Board of Revenue.fit case for the issue of notice under section 148.
During the year the assessee hasshown to have taken loans from various parties of Calcutta.
From D.I.s Inv.
No. A/P/ Misc.(5)D.I./63 64/5623 dated 13 8 65, forwarded to this office under C.I.T. Bihar and Orissa, Patna 's letter No. Inv.
(Inv.)15/ 65 66/1953 2017 dated Patna 24 9 65, it appears that these persons are name lenders and the transactions are bogus.
Hence proper investigation regarding these loans is necessary.
The name of some of the persons from whom money is alleged to have taken on loan on Hundis are: 1.
Seth Bhagwan Singh Sricharan.
Lakha Singh Lal Singh.
Radhakissen Shyam Sunder.
The amount of escapement involved amounts to Rs. 100,000/ .
Sd/ section P. Chaliha, 30 4 66.
Income tax Officer, A Ward, Muzaffarpur.
" In his report the Income tax Officer does not set out any reason for coming to the conclusion that this is a fit case to issue notice under section 148.
The material that he had before him for issuing notice under section 148 is not mentioned in the report.
In his report he vaguely refers to certain communications received by him from the C.I.T., Bihar and Orissa.
He does not mention the facts contained in those communications.
All that he says is that from those communications "it appears that these persons (alleged creditors) are name lenders and the transactions are bogus".
He has not even come to a prima facie conclusion 447 that the transactions to which he referred are not genuine transactions.
He appears to have had only a vague feeling that they may be bogus transactions.
Such a conclusion 'does not fulfil the requirements of section 151(2).
What that provision requires is that he must give reasons for issuing a notice under section 148.
In other words he must have some prima facie grounds before him for taking action under section 148.
Further his report mentions : "Hence proper investigation regarding these loans is necessary In other words his conclusion is that there is a case for investigating as to the truth of the alleged transactions.
That is not the same thing as saying that there are reasons to issue, notice under section 148.
Before issuing a notice under section 148, the Income tax Officer must have either reasons to believe that by reason of the omission or failure on the part of these assessee to, make a return under section 139 for any assessment year to the Income tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively not withstanding that there has been no omission or failure as mentioned above on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year.
Unless the requirements of clause (a) or (b) of section 147 are satisfied, the Income tax Officer has no jurisdiction to issue a notice under section 148.
From the report submitted by the Income tax Officer to the Commissioner, it is clear that he could not have had reasons to believe that by reason of the assessee 's omission to disclose fully and truly all material ' facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year; nor could it be said that he as a consequence of information in his possession, had reasons to believe that the income chargeable to tax has escaped assessment for that year.
We are not satisfied that the Income tax Officer had any material before him which could satisfy the requirements of either cl.
(a) or cl.
(b) of section 147.
Therefore he could not have issued a notice under section 148.
Further the report submitted by him under section 151(2) does not mention any reason for coming to the conclusion that it is a fit case for the issue of a notice under section 148.
We are also of the opinion that the Commissioner has mechanically accorded permission.
He did not himself record that he was satisfied that this was a fit case for the issue of a notice under section 148.
To Question No. 8 in the report which reads "Whether the, Commissioner is satisfied that it is a case for the I issue of notice under section 148", he just noted the word "yes" and affixed his signatures thereunder.
We are of the opinion .that if only he had read the report carefully, he could never have 448 come to the conclusion on the material before him that this is a fit case to issue notice under section 148.
The important safeguards provided in sections 147 and 151 were lightly treated by the Income tax Officer as well as by the Commissioner.
Both of them, appear to have taken the duty imposed on them under those provisions as of little importance.
They have substituted the form for the substance.
In the result this appeal is allowed, the order of the High Court is set aside and the impugned notice quashed.
The Respondent No. 2 shall pay the costs of the appellant both in this Court and in the High Court.
G.C. Appeal allowed.

Response:
The appellant, a partnership firm, filed its return of income for the assessment year i960 61 and subsequently produced before the Incometax Officer its relevant books of accounts and papers.
It also produced before him the statement showing various creditors from whom it had borrowed on Hundis during the accounting year in question, giving full names and addresses of the alleged creditors.
After enquiry the Incometax Officer made an assessment.
On June 3, 1966 the Income tax Officer issued to the appellant a notice under section 148 of the Income tax Act, 1961.
The notice was issued after four years but before 8 years of the end of the original assessment year.
The appellant challenged the validity of the notice as well as the proceedings taken on the strength of that notice in a writ petition under articles 226 and 227 of the Constitution.
The High Court dismissed the petition.
By special leave appeal was filed in this Court.
On direction given by the Court the report submitted by the Income tax Officer to the Commissioner and the Commissioner 's order thereon were produced.
In the report it was said that it appeared that the alleged creditors of the appellant were name lenders and transactions were bogus; hence proper investigation regarding those loans was necessary.
Question No. 8 on the report was whether the Commissioner was satisfied that the case was fit for the issue of notice under section 148.
Against this the commissioner had noted 'yes '.
On these facts this Court, HELD : Under section 148 and section 151(2) the Income tax Officer Must record his reasons for issuing the notice under section 148.
There must be prima facie grounds for taking action under section 148 Further before issuing such a notice the provisions of cis.
(a) and (b) of section 147 must be satisfied.
[447 B, E] In this case the Income tax Officer appears to have had a vague feeling that the transactions were bogus and that the alleged creditors were only name lenders.
According to him proper investigation regarding the loans was necessary.
That is not the same thing as saying that there ,are reasons to issue notice under section 148.
[447 A C] In these circumstances it could not be held that the Income tax Officer had any material before him which could satisfy the requirements of either cl.
(a) or cl.
(b) of section 147.
Therefore he could not have issued a notice under section 148.
Further the report submitted by him under section 151(2) did not mention any reason for coming to the conclusion that it was a fit case for the issue of the notice under section 148.
The Commissioner also mechanically accorded permission.
Thus the important safeguards provided in sections 147 and 151 were lightly treated by the income tax Officer as well as by the Commissioner.
[447 F 448 B] The appeal must accordingly be allowed.


Prompt:
Appeal No. 1653 of 1967.
Appeal from the judgment and order dated February 23, 1967 Of the Delhi High Court in C.W. No. 403 D of 1959.
B. Sen, P. L. Juneja, R. N. Sachthey and section P. Nayer, for the appellant.
Sardar Bahadur and Yougindra Khushalani, for the respondent.
The Judgment of the Court was delivered by Sikri, C.J.
The judgment, reproduced below, was drafted by the late Mr. Justice Roy and we all had subscribed to it.
We beard the matter formally again on November 19, 1971.
We adopt the judgment as our own.
448 This is an appeal by the Union of India by way of special leave.
On April 9, 1959, the Central Government directed removal from service of Capt. section K. Rao under r. 14 of the Army Rules, 1954.
The facts leading to his removal are as follows : Rao was a commissioned officer in the Indian Army and was attached to the Army Ordnance Corps Training Centre, Secundrabad.
It was alleged that on April 4, 1958, he committed acts of .gross misconduct.
The allegations were as follows : "Knowing Kumari Prakash as the daughter of a brother Officer, Rao assisted her in going away from her parents protection and planning to run away with a sepoy. " "Rao, by threatening to cause harm to Kumari Prakash 's parents, intimidated her t o visit his house where he took her in his scooter to the unit lines of 51 1 1 Gurkha Rifles where he arranged her meeting with a sepoy of the unit." "He (i.e. Rao) acquiesced in the girl being met by the sepoy later at a tea shop nearby where she received a present of a sari and blouse from the sepoy in his presence." "Rao thus actively abetted in the attempt of brother officer 's daughter elope with a sepoy." "Rao then took Kumari Prakash to a hotel "Saidya Lodge ' in Hyderabad and got a room to themselves by impersonating and giving a false identity as "Mr. & Mrs. Prakash".
An inquiry into the matter was made by Court of Inquiry.
The Chief of the Army Staff, after going through the proceedings of the Court of Inquiry, considered that the conduct of Capt.
Rao was most unbecoming of an officer.
As he was of opinion that trial of the officer by a General Court Martial was inexpedient, he ordered administrative action to be taken under r. 14 of the Army Rules, 1954.
By memorandum dated September 4, 1958, Rao was called upon to submit his explanation by way of defence regarding the allegations against him.
The explanation of Rao was placed before the Central Government.
The Central Government found it to be unsatisfactory, and on April 9, 1959, an order was passed removing the respondent from service.
Rao thereupon filed a petition under article 226 of the Constitution for quashing the order of removal from service on the 449 ground, inter alia, that r. 14 of the Army Rules, 1954, was ultra vires the , and that the action taken thereunder was without any authority.
In the petition Rao gave a somewhat different version of what had happened.
According to him he did not assist Kumari Prakash to go away from her parents ' house.
At the hearing of the petition the only point which was urged was the validity of r. 14 of the Army Rules, 1954.
If this rule was intra vires the , Rao has no case.
The Army Rules, 1954, including r. 14, were framed in exer cise of the powers conferred by section 191 of the .
Rule 14 of the Army Rules, 1954, is as follows: "(1) When after considering the reports on an officer 's misconduct, the Central Gove rnment is satisfied or the C in C is of the opinion, that the trial of the officer by a court martial is inexpedient or impracticable but considers the further retention of the said officer in the service as undesirable, the C in C shall communicate the view of the Central Government or his views, as the case may be, to the officer together with all reports adverse to him and he shall be called upon to submit his explanation and defence.
(2) In the event of the explanation of the officer being considered unsatisfactory by the "C in C, or when so directed by the Central Government, the case shall be submitted to the Central Government with the officer 's defence and the recommendation of the C in C as to whether the officer should be, (a) dismissed from the service; or (b) removed from the service; or (c) called upon to retire; or (d) called upon to resign.
(3) The Central Government, after due consideration of the reports, the officer 's defence, if any, and the recommendation of the C in C, may dismiss or remove the officer with or without pension or call upon him to retire or resign, and on his refusing to do so, the officer may be retired from or gazetted out of the service on pension or gratuity, if any admissible to him." Under the aforesaid r. 14, action can be taken for misconduct against an officer whose further retention in service is not considered desirable.
without the officer being tried by a court martial.
450 Before removal he must, under the rule, be asked to submit his explanation and defence.
If the explanation is found to be unsatisfactory, the Central Government has been given the power to dismiss or remove the officer.
Rules are framed under section 191 of the .
Sub section (1) of section 191 gives power to the Central Government to make rules for the purpose of carrying into effect the provisions of the Act.
Sub section 2(a) provides : "Without prejudice to the generality of the power conferred by sub section (1), the rules made thereunder may provide for (a) the removal, retirement, release or discharge from the service of persons subject to this Act." Sections 18 & 19 which appear in Ch.
IV of the dealing with "Conditions of Service" provide as follows : S.18 "Every person subject to this Act shall hold office during the pleasure of the President.
" section 19 "Subject to the provisions of this Act and the rules and regulations made thereunder the Central Government may dismiss, or remove from the service, any person subject to this Act.
" Offenses under the have been dealt with in sections 34 to 70 in Ch.
VI, of which section 45 is as follows : section 45 "Any officer, junior commissioned officer or warrant officer who behaves in a manner unbecoming his position and the character expected of him shall, on conviction by court martial, if he is an officer, be liable to be cashiered or to suffer such less punishment as is in this Act mentioned; and, if he is a junior commissioned officer or a warrant officer, be liable to be dismissed or to suffer such less punishment as is in this Act mentioned," It was argued by counsel for the respondent Rao that the contained specific provisions for punishment for unbecoming conduct, viz. section 45.
To give power to the Central Government to remove an officer without being tried and convicted by court martial was in derogation of section 45 of the .
Rule 14, therefore, was ultra vires the .
This argument is not correct.
Section 19 itself suggests that there should be rules, and subject to the provisions of the Act and such rules, the Central Government may dismiss or remove from the service any person 451 subject to the .
Section 191 (2) (a) specifically gives.
power to make a rule providing for the removal from the service of persons subject to the Act.
It follows that there may be a valid rule where under, subject to the other provisions of the Act, the Central Government may remove a person from the service.
Rule 14 is such a rule : it is, therefore, not ultra vires.
It was argued that the words "subject to the provisions of this Act" occurring in section 19 makes section 19 subject to section 45, and the Central Government has thus no power to remove a person from the service in derogation of the provisions of section 45.
But the power under section 19 is an independent power.
Although section 19 uses the words "subject to the provisions of this Act", it speaks of removal of a person from the service.
Section 45 provides that on conviction by court martial an officer is liable to be cashiered or to suffer such less punishment as is in this Act mentioned.
For removal from service under section 19 of the read with r. 14 of the Army Rules, 1954, a court martial is not necessary.
The two sections 19 and 45 of the Act are, therefore, mutually exclusive.
The result is that r. 14 of the Army Rules, 1954, is not ultra vires the .
The appeal is, therefore, allowed; but in the circumstances of the case without any order as to costs.
The case will now go back to the High Court for disposal on merits on the other questions raised by the respondent herein in the High Court.
V.P.S. Appeal allowed.

Response:
The respondent, a commissioned officer in the Indian Army, was found to have committed acts of gross misconduct by a Court of Inquiry.
The Chief of the Army Staff was of the opinion that his trial by a General Court Martial was inexpedient, and the respondent was removed from service after following the procedure under r. 14 of the Army Rules, 1954.
On the question whether r. 14, which gives power to the Central Government to remove an officer without being tried and convicted by Court Martial was in derogation of section 45, , which specifically provides for conviction by court martial and punishment for unbecoming conduct, HELD : The rule is not ultra vires.
[451 D] (1) Section 19 of the Act provides that subject to the provisions of the Act and the rules made thereunder the Central Government may remove from service, any person subject to the Act.
Therefore, the section itself suggests that there should be rules regarding removal from service, and section 191 (2) (a) of the Act specifically gives power to make a rule providing for the removal from the service of persons subject to the Act.
[450 H; 451 A B] (2) Although section 19 uses the words "subject to the provisions of this Act", the section is not subject to section 45.
The power under section 19 is independent of the power under section 45, because, while section 19 speaks of removal of a person, section 45 provides that on conviction by Court Martial an officer is liable to be cashiered or to suffer such less punishment as is in the Act mentioned.
[451 B D]


Prompt:
iminal Appeal No. 48 of 1954.
1303 Appeal by Special Leave granted by the Supreme Court by its Order dated the 31st July 1953 from the Judgment and Order dated the 15th May 1953 of the High Court of Judicature for the State of Pepsu at Th, Patiala in Criminal Appeal No. 140 of 1952 arising out of the Judgment and Order dated the 31st March 1952 of the Court of Magistrate 1st Class, Patiala in Challan Case No. 160/102 of 1951.
Jai Gopal Sethi, (Naunit Lal, with him) for the appellant.
N. section Bindra, (Porus A. Mehta and P. G. Gokhale, with him) for the respondent.
February 28.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant was a Sub Divisional Officer in the Public Works Department, Pepsu, and was, at the material dates,, in charge of certain works at a place called Karhali.
It was part of his duties to disburse the wages to the workmen employed in the works, and the procedure usually followed was that be drew the amount required from the treasury, and paid the same to the emplo yees against their signatures or thumb impressions in the monthly acquittance roll.
In the roll for April 1951, one Parma was mentioned as a khalasi (menial servant), and a sum of Rs. 51 shown as paid to him for his wages, the payment being vouched by thumbimpression.
The case of the prosecution was that there was, in fact, no person of the name of Parma, that the thumb impression found in the acquittance roll was that of the appellant himself, that he had included a fictitious name in the acquittance roll, with intent to himself draw the amount, and that by this expedient he had received Rs. 51 and misappropriated the same.
The First Class Magistrate of Patiala, before whom the appellant was put up for trial, framed charges against him under section 465 of the Indian Penal Code for forging the thumb impression of Parma, and under section 409 of the Indian Penal Code for criminal misappropriation of Rs. 51, and after a full trial, 167 1304 acquitted him.
He held on the evidence that "there was a khalasi Parma by name in the service of the accused at Kehrauli", and that though the thumbimpression in the acquittance roll was that of the appellant, the prosecution had not established that the amount drawn by him did not reach the hands of Parma.
Against this judgment, there was an appeal by the State to the High Court of Pepsu, which held that proof that the thumb impression in the acquittance roll was that of the appellant was sufficient, ,.when taken along with other circumstances, to establish his guilt, and accordingly convicted him both under section 465 and section 409 of the Indian Penal Code.
This appeal by special leave is directed against this judgment.
In support of " the appeal it is argued by Mr. Jai Gopal Sethi that the conviction of the appellant is illegal, as sanction had not been obtained under section 197 (1) of the Code of Criminal Procedure for his prosecution, that the evidence on record is insufficient to establish an offence either under section 465 or section 409 of the Indian Penal Code and that there having been an acquittal of the appellant by the trial Magistrate, the materials on record did not justify a reversal of that verdict by the appellate Court.
The question of sanction under section 197 (1) of the Code of Criminal Procedure may be taken up first for consideration, as it goes to the root of the matter.
The facts bearing on this question are that there was an application by the Department for sanction to prosecute the appellant for an offence under section 409, and that, the Chief Secretary, Home Department, sent the communication, Exhibft PX, stating that he had been "directed to convey sanction of the Government to his prosecution".
In view of this, no question was raised before the trial Magistrate or the High Court that the prosecution was bad for want of sanction.
But after the disposal of the appeal by the High Court, it was discovered that, in fact, there was no order of the Government sanctioning the prosecution, and that the Chief Secretary had committed a mistake in sendidg the communication, Exhibit PX.
1305 The position, therefore, is that the prosecution which has resulted in the conviction of the appellant was initiated without any sanction under section 197(1) of the Code of Criminal Procedure and if sanction under that section is necessary, as contended for by Mr. Sethi, then the entire proceedings including the conviction must be quashed.
According to the respondent, however, the main charge against the appellant is under section 409, and no sanction is required for a prosecution under that section.
The point for decision is whether sanction under section 197 (1) of the Code of Criminal Procedure is necessary for prosecuting the appellant under section 409.
There has been considerable divergence of judicial opinion on the scope of section 197(1) of the Code of Criminal Procedure.
The question has latterly been the subject of consideration by the highest Courts in this country, and by the Privy Council, and the position may now be taken to be fairly well settled.
Hori Ram Singh vs Emperor(1) is a decision of the Federal Court on the necessity for sanction under section 270 of the Government of India Act, 1935, which is similar in terms to section 197(1) of the Code of Criminal Procedure.
The facts in that case were that a Sub Assistant Surgeon was charged under section 409 with having dishonestly removed certain medicines from a hospital which was under his charge, to his own residence, and under section 477 A, with having failed to enter them in the stock book.
The sanction of the Government had not been obtained for the prosecution under section 270 of the Government of India Act, and the point for decision was whether it was necessary.
It was held that the charge under section 477 A required sanction, as "the official capacity is involved in the very act complained of as amounting to a crime"; but that no sanction was required for a charge under section 409, because "the official capacity is material only in connection with the 'entrustment ' and does not necessarily enter into the later act of misappropriation or conversion, which is the act complained of".
(1) 1306 In the course of his judgment, Varadachariar, J. discussed the scope of section 197(1) of the Code of Criminal Procedure and after observing that the decisions on that section were not uniform, proceeded to group them under three categories those which had held that sanction was necessary when the act complained of attached to ' the official character of the person doing it, those which had held that it was necessary in all cases in which the official character of the person gave him an opportunity for the commission of the crime, and those which had held it necessary when the offence was committed while the accused was actually engaged in the performance of official duties.
The learned Judge expressed his agreement with the first of the three views.
In H. H. B. Gill vs The King(1), the question arose directly with reference to section 197(1) of the Code of Criminal Procedure.
There, the accused was charged under section 161 with taking bribes, and under section 120 B with conspiracy.
On the question whether sanction was necessary under section 197(1) it was held by the Privy Council that there was no difference in scope between that section and section 270 of the Government of India Act, 1935, and approving the statement of the law by Varadachariar, J. in Hori Ram Singh vs Emperor(2), Lord Simonds observed: "A public servant can only be said to act or to purport to act in the discharge of his official duty, if his act is such as to lie within the scope of his official duty. .
The test may well be whether the public servant, if challenged, can reasonably claim that, what he does, he does in virtue of his office".
It was accordingly held that as the acts with which the accused was charged could not be justified as done by virtue of his office, no sanction was necessary.
The view taken in H. H. B. Gill vs The King(1) was followed by the Privy Council in A16 ert West Meads vs The King( '), and reaffirmed in Phanindra Chandra vs (1) [1948] L.R. 75 I.A. 41.
(2) (3) [1948] L.,R. 70 I.A. 185, 1307 The King(1), and adopted by this Court in R. W. Mathams V. State of We8t Bengal(1).
The result of the authorities may thus be summed up: It is not every offence committed by a public servant that requires sanction for prosecution under section 197(1) of the Code of Criminal Procedure; nor even every act done by him while he is actually engaged in the performance of his official duties; but if the act complained of is directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office, then sanction would be necessary; and that would be so, irrespective of whether it was, in fact, a proper discharge of his duties, because that would really be a matter of defence on the merits, which would have to be in vestigated at the trial, and could not arise at the stage of the grant of sanction, which mu_t precede the institution of the prosecution.
It is conceded for the respondent that on the principle above enunciated, sanction would be required for prosecuting the appellant under section 465, as the charge was in respect of his duty of obtaining signatures or thumb impressions of the employees before wages were paid to them.
But he contends that misappropriation of funds could, under no circumstances, be said to be within the scope of the duties of a public servant, that he could not, when charged with it, claim justification for it by virtue of his office, that therefore no sanction under section 197(1) was necessary, and that the question was concluded by the decisions in Hori Ram Singh vs Emperor(1) and Albert We8t Meads vs The King(1), in both of which the charges were of criminal misappropriation.
We are of opinion that this is too broad a statement of the legal position, and that the two decisions cited lend no support to it.
In our judgment, even when the charge is one of misappropriation by a public servant, whether sanction is required under section 197(1) will depend upon the facts of each case.
If the acts complained of are so integrally connected with the duties attach (1) [1949] L.R. 76 I.A. 10.
(3) (2) [1955] 1 S.O.R. 216.
(4) [1948] L.R. 75 I.A. 180, 1308 ing to the office as to be inseparable from them, then sanction under section 197(1) would be necessary; but if there was no necessary connection between them and the performance of those duties) the official status furnishing only the occasion or opportunity for the acts, then no sanction would be required.
Quite recently, this Court had to consider in Shreekantiah Ramayya Munipalli vs The State of Bombay(1) the necessity for sanction under section 197(1), when the charge was one of misappropriation under section 409.
There, the law was laid down in the following terms: "The section has content and its language must be given meaning.
What it says is 'When any public servant. . is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty. .
We have therefore first to concentrate on the word "offence '.
Now an offence seldom consists of a single act.
It is usually composed of several elements and, as a rule, a whole series of acts must be proved before it can be established.
In the present case, the elements alleged against the second accused are, first, that there was an 'entrustment ' and/or 'dominion '; second, that the entrustment and/or dominion was 'in his capacity as a public servant '; third, that there was a 'disposal '; and fourth, that the disposal was 'dishonest '.
Now it is evident that the entrustment and/or dominion here were in an official capacity, and it is equally evident that there could in this case be no disposal, lawful or otherwise, save by an act done or purporting to be done in an official capacity".
On the facts, it was held in that case that the several acts which were complained of, were official acts, and that the prosecution was bad for want of sanction.
The decisions in Hori Ram Singh vs Emperor(1), and Albert West Meads vs The King(1), when properly examined, do not support the extreme contention (1) (2) (3) [1948] L.R 75 I.A. 185.
1309 urged on behalf of the respondent.
In Hori Ram Singh vs Emperor(1), the medicines had not been entered in the stock book, and were removed by the accused to his residence, and the charge against him was that in so removing them he had committed MISappropriation.
It was no part of the duty of the accused to remove medicines to his house, and he could not claim that he did so by virtue of his office.
He could have made such a claim if he had, let us suppose, entered the medicines in the stock books and shown them as expended in the hospital.
But, on the facts, no official act was involved, and that was why Varadachariar, J. observed that, ". so far as the charge under section 409 was con cerned, the acts in respect of which he was intended to be prosecuted could not be regarded as acts done or purported to be done in execution of his duty".
Reference may also be made to the following observations of Sulaiman, J. in the same case: "The question whether a criminal breach of trust can be committed while purporting to act in execution of his duty is not capable of being answered hypothetically in the abstract, without any reference to the actual facts of the case.
An attempt to answer the question in a generalized way has been responsible for loose language used in some of the cases cited before us.
The question whether the act purported to have been done in execution of duty or not must depend on the special circumstances of each case".
In Albert West Meads vs The King(1), an Army Officer had received two sums of money, and was subsequently unable to produce them.
He was charged with criminal misappropriation, and convicted.
He contended that the conviction was illegal for want of sanction, but the Privy Council, following H. H. B. Gill vs The King(1), rejected this contention.
It is essential to note that the accused did not claim to have spent the amount in the course of his official duties, but stated that the moneys had been con sumed by fire.
It is with reference to these facts that the Privy Council observed: (1) (2) [1948] L.R. 75 I.A. 185.
(3) [1948] L.R. 75 I.A. 41.
1310 of which he was charged ', i.e. acts of fraudulently misapplying money entrusted to his care as a public servant, 'as acts done by him by virtue of the office that he held ' ".
The result then is that whether sanction is necessary to prosecute a public servant on a charge of criminal misappropriation, will depend on whether the acts complained of hinge on his duties as a pubic servant.
If they do, then sanction is requisite.
But if they are unconnected with such duties, then no sanction is necessary.
In this view, we have to examine whether the acts with which the appellant is charged directly bear on the duties which he has got to discharge as a public servant.
The appellant received the sum of Rs. 51 alleged to have been misappropriated, as Subdivisions Officer, and he admits receipt of the same.
Then it was his duty to pay that amount to the khalasi Parma, and take his signature or thumb impression in acknowledgment thereof.
The accused does claim to have paid the amount to Parma, and the acquittance roll records the payment, and there is in acknowledgment thereof a thumb impression as against his name.
If what appears on the face of the roll is true and whether it is true or not is not a matter relevant at the stage of sanction then the acts with which the appellant is charged fall within the scope of his duties, and can be justified by him as done by virtue of his office.
Clearly, therefore, sanction was required under section 197(1) of the Code of Criminal Procedure before the appellant could be prosecuted under section 409, and the absence of such sanc tion is fatal to the maintainability of the prosecution.
The conviction should, therefore, be quashed.
In this view, there is no need to consider whether on the evidence, the offence of criminal misappropriation or forgery has been brought home to the appellant or not.
The appeal is accordingly allowed, and the convictions and sentences passed on the appellant arc set aside.
Fine, if paid, will be refunded.
Appeal allowed.

Response:
It is not every offence committed by a public servant that requires sanction for prosecution under section 197 (1) of the Code of Criminal Procedure nor even every act done by him while he is actually engaged in the performance of his official duties; but if the act complained of is directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office, then sanction would be necessary; and that would be so, irrespective of whether it was, in fact, a proper discharge of his duties, because that would really be a matter of defence on the merits, which would have to be investigated at the trial, and could not arise at the stage of the grant of sanction, which must precede the institution of the prosecution.
Whether sanction is necessary to prosecute a public servant on a charge of criminal misappropriation, will depend on whether the acts complained of hinge on his duties as a public servant.
If they do, then sanction is requisite.
But if they are unconnected with such duties, then no sanction is necessary.
Hori Ram Singh vs Emperor ([1939] F.C.R. 159), H. H. B. Gill vs The King ([1948] L.R. 75 I.A. 41), Albert West Meads vs The King ([1948] L.A. 75 I.A. 185), Phanindra Chandra vs The King ([1949] L.R. 76 I.A. 10), B. W. Mothavzs vs State of West Bengal ([1955] 1 S.C.R. 216) and Shreekantiah Ramayya Munipalli vs The State of Bombay ([1955] 1 S.C.R. 1177), referred to.


Prompt:
N: Criminal Appeal No. 34 of 1970.
Appeal by certificate under Article 134(1)(c) of the Constitution of India from the judgment and order dated 18 3 1969 of the Andhra Pradesh High Court in Criminal Revision Case No. 360 of 1968.
F. section Nariman, Additional Solicitor General of India and A. V. Rangam, for the appellants.
L. N. Sinha, Solicitor General of India and A. V. V. Nair, for the Advocate General Andhra Pradesh.
The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This is an appeal against the judgment of the Full Bench of the Andhra Pradesh High Court reported in A.I.R. (1970) A.P. 70.
It arises out of a complaint filed against the 1st respondent company and its directors for failure to Me with the Registrar of Companies on or before 30 10 1967 the balance sheet and profit and loss account of the company as required under section 220(1) of the , which is punishable under sub section (3) of that section.
Admittedly no general body meeting had been held and, therefore, the balance sheet and profit and loss account had not been laid before a general body meeting nor could it be so laid.
The Full Bench speaking through Jaganmohan Reddy, C.J., as our learned brother then was, held that if no balance sheet is laid before a general body, there can be no question of that balance sheet not being adopted nor of complying with the requirements of section 220 and though wilful omission to call a general body meeting and to lay the balance sheet and profit and loss account before it may expose the person responsible to punishment under other provisions of the Act, it certainly does not make him liable under the provisions of section 134(4) of the Companies Act, 1913 or section 220 of the .
In this the Bench was taking a view contrary to that of most of the High Courts after the decision of this Court in The State of Bombay vs Bandhan Ram Bhandani & Ors.(1) In that case this Court (1) ; , 412 had taken the.
view that a person charged with an offence cannot rely on his default as an answer to the charge and so, if he was responsible for not calling the general meeting, he cannot be heard to say in defence to the charges brought against him that because the general meeting had not been called, the balance sheet and profit and loss account could not be laid before it.
In that case the directors of a company were prosecuted under sections 32(5) and 133(3) of the Companies Act, 1913, for breaches of sections 32 and 131 of that Act for having knowingly and wilfully authorized the failure to file the summary of share capital for the year 1953 and being knowingly and wilfully parties to the failure to lay before the company in general meeting the balance sheet and profit and loss account as at March 31, 1953.
The Bombay High Court, however, following its earlier decision in Imperator vs The Pioneer Clay and Industrial Works Ltd.(1) had upheld the acquittal of the directors by the Presidency Magistrate.
Referring to the decision of the Bombay High Court in that case this Court pointed out that decision turned on section 134 of the Companies Act, 1913 the language of which was to a certain extent different from the language used in sections 32 and 131 and refrained from going into the question whether the difference in language in section 134 on the one hand and sections 32 and 131 on the other made any difference to the decision of the case.
After referring to the decisions in Gibson vs Barlon(2) Edmonds vs Foster(3) and Park vs Lawton(4 )where it was held that a person charged with an offence could not rely on his own default as an answer to the charge, and so, if the person charged was responsible for not calling the general meeting, he cannot be heard to say, in defence to the charge that the general meeting had not been called, and that the company and its officers were bound to perform the condition precedent if they could do that, in order that they might perform their duty, this Court considered that as the correct view to take.
As we have noticed, this Court was not dealing there with the provisions of section 134 of 1913 Act which corresponds to section 220 of the 1956 Act.
That question now directly arises for decision in this case.
As we said earlier, most of the High Courts which have considered this question after the decision of this Court have proceeded on the basis that the decision necessarily led to the conclusion that even in a prosecution under section 134 of the 1913 Act (corresponding to section 220 of the 1956 Act) the company and its directors could not rely upon their failure to call the general body meeting as a defence to the prosecution.
Under this category fall the decisions in Dulal Chandra Bhar vs Slate of West Bengal,(5) and Gopal Khaitan vs State (6) of the Calcutta High Court.
Ramachandra & Sons (P) Ltd. vs State(T) of the Allahabad High Court, State vs T. C. Printers (P) Ltd. (8) of the Rajasthan (1) I.L.R. ; (2) [1875] L. R. 10 Q. B. 329.
(3) (1875) 45 Law J. Rep. M. C. 41.
(4) (5) (6) (7) , J. 92 & (8) A.I.R. 413 High Court, India Nutriments Ltd. vs Registrar of Companies(1) and P.S.N.S.A. Chettiar & Company vs Registrar of Companies(2) of the Madras High Court.
The Orissa High Court had taken a similar view in Registrar of Companies vs Misra (3) but in a latter decision in Vulcan Industries (P) Ltd. vs Registrar of Companies, Orissa(4) it has taken a contrary view and followed the decision of the Andhra Pradesh High Court in the judgment under appeal.
That decision is also pending in appeal before this Court.
The Patna High Court in State vs Linkers Private Ltd.(5) and the Kerala High Court in Registrar of Companies vs Gopala Pillai & Ors.
(6) have also taken a similar view.
We may now refer to some of the earlier decisions on this Point.
The earliest decision is the one in Debendra Nath Das Gupta vs Registrar of Joint Stock Companies.
(?) In that case the principle laid down in Park vs Lawton(8) was applied and it was held that it is not open to the petitioner to plead in answer to a charge under sections 134 his prior default in respect of the calling of the prescribed general meeting and of placing before the company at such meeting a duly prepared and audited balance sheet.
The decision in Ballav Dass vs Mohan Lal Sadhu(9) did not refer to the wording of the section but merely stated that the provisions of section 134 were not complied with.
The same court in Bhagirath vs Emperor(10) took the same view.
In re Varaszmha Rao(11) a learned Single Judge of the Madras High Court took the view that the same persons cannot be charged in respect of the same years with offences punishable both under sections 131 and 134, Companies Act because section 134 clearly contemplates the sending of a copy of the balance sheet only after it has been placed before the company at a general meeting under section 131 and that where in a case there is no such placing of the balance sheet before the company at a general meeting, the offence under section 134 cannot ',be committed.
In re Gangipati Appayya(12) a view contrary to the one taken earlier by a Judge of that High Court was taken.
We may now set out the reasoning which weighed with the Andhra Pradesh High Court in the decision under appeal : "The reference to Section 210 by the use of the word aforesaid" and the emphasis indicated by the words "were so laid" make the filing of copies of those balance sheets and the profit and loss accounts which are laid before the general body meeting an essential prerequisite.
If no general body meeting is held, it is obvious that no copies of the balance sheet (1) (3) A.I.R. 1969 Orissa 234.
(5) A.I.R. 1969 Patna 445 & (1970) 40 C.C. 17.
(6) 1961 K.L.J. 490.
(8) (10) A.I.R. 1948 Calcutta 42.
(12) A.I.R. 1952 Madras 800.
(2) A.T. R. 1966 Madras 415.
(4) I.L.R. 1972 Cuttack 373.
(7) I.L.R. 1918 Calcutta 486.
(9) [1934 35] 39 Calcutta Weekly Notes 1152.
(11) A.I.R. 1937 Madras 341. 414 and profit and loss account can be filed even though the default may be wilful.
Both under section 134 of the Old Companies Act and Section 220 of the Act, the laying of the balance sheet and the profit and loss account before an annual general meeting is a condition precedent to the requirement that copies of such documents so laid should be filed before the Registrar.
The intention is made further clear by the provision under sub section (2) of the respective sections of both the Acts that if the balance sheet is not adopted at the general meeting before which it is laid, a statement of that fact and of the reasons therefore have to be annexed to the balance sheet and to the copies thereof required to be filed with the Registrar.
If no balance sheet is laid before a general body, there can be no question of that balance sheet not being adopted nor of complying with the requirements of the Sub section (2) of Section 134 of the Old Companies Act or Section 220 of the Act as the case may be, while wilful omission to call a general body meeting and omit to lay the balance sheet and profit and loss account before it may expose the person responsible to punishment under other provisions of the Act, it certainly does not make him liable udder aforesaid provisions.
The punishment under these sections is for default in filing copies of the balance sheet or the profit and loss account which are laid before a general body and for not sending a statement of the fact that the balance sheet was not adopted.
It may be that copies of the balance sheet so laid before the general body may have been forwarded under sub section (1) of Section 134 of the Old Companies Act or sub section (1) of section 220 of the Act but nonetheless if the requirements of sub section (2) of the respective sections have not been complied with even then, the persons concerned would be liable for punishment for that default.
In our view, these provisions unmistakably indicate, as we said earlier, that the holding of the annual general meeting and the laying before it of the balance sheet and the profit and loss account is a sine qua non for filing of the copies thereof before the Registrar.
If no general body meeting is held, the persons concerned cannot be said to have committed a default in complying with those provisions.
" In this state of difference of opinion among the various High Courts and the absence of a decision of this Court on section 134 this appeal has been filed.
Though the respondent was not represented before this Court the learned Addl.
Solicitor General who appeared for the State of Andhra Pradesh and the learned Solicitor General who appeared for the Advocate General of Andhra Pradesh fairly placed before this Court all the decisions for and against, which we have already referred to, and also placed before us all the relevant considerations.
It was urged before us that the principle accepted by this Court in The State of Bombay vs Bandhan Ram Bhandani & Ors.
(supra) that a company or its directors in a prosecution under section 32 and section 133 of the 1913 Act could not in defence to such prosecution rely upon their own 415 failure to call the general body meeting, applies with equal force to a prosecution under section 134 of the Act.
But it appears to us that there is a very clear distinction between sections 32 and 133 on the one hand and section 134 on the other.
Section 32 relates to the preparation of a list of members of the company and of persons who have ceased to be members as well as a summary, and also provides that it shall be completed within 21 days after the day of the first or only ordinary general meeting in the year.
It also provides that the company shall forthwith file with the registrar a copy of the list and summary, and any default hi complying with the requirements of the section is made punishable.
Under section 131 the laying of a balance sheet and profit and loss account before the company in the general meeting is made obligatory.
Under section 133 the failure to comply with section 131 is made punishable.
But section 134 lays down that after balance sheet and profit and loss account or the income and expenditure account, as the case may be, have been laid before the company at the general meeting three copies thereof shall be filed with the registrar, and a failure to do so is made punishable under sub section (4) of that section.
The difference in language is very clear and pointed.
The responsibility of sending three copies of the balance sheet and profit and loss account or the income and expenditure account, as the case may be, arises only after they have been laid before the company at the general meeting.
Without so laying copies could not be sent to the Registrar and even if they are sent it would not be a compliance with the provisions of the section.
It is possible to conceive of the law providing that the balance sheet and profit and loss account shall be sent to the registrar even without the necessity of their being laid before the general body meeting of the company.
In that case any failure to do so would be punishable and the question whether a general body meeting had been held and the balance sheet and profit and loss account have been laid before it Will not arise.
Therefore the condition precedent or the essential prerequisite of the balance sheet and the profit and loss account being laid before the general meeting of the company not being fulfilled, the requirement of section 134 cannot be complied with.
While the appeal to a question of principle might be attractive we cannot ignore the clear words of the section.
Where the words of the section are very clear it is unnecessary to consider whether it embodies any principle and whether that principle is consistent with the principle as embodied a certain other sections which are differently worded.
In interpreting a penal provision it is not permissible to give an extended meaning to the plain words of the section on the ground that a principle recognised in respect of certain other provisions of law requires that this section should be interpreted is the same way.
We may also point out that in Park vs Lawton (supra) the principle laid in which has been adopted in this Court ' , decision in The State of Bombay vs Bandhan Ram Bhandani & Ors.
(supra) it is realised that there might be circumstances where the principle laid down in that decision will not apply.
The court there observed : "If it were the case that everything required to be inserted in the list was dependent on the fact of the general meeting having been held, it might perhaps have been contended with 416 some force that it is impossible to calculate a continuing penalty from a day which has never come into existence; but when one sees that section 25 requires a number of most important matters to be included in the list of members which are entirely independent of the holding of a general meeting, this very much weakens the contention that no list need be compiled if, owing to the failure to hold a general meeting, it is impossible to say what day is the fourteenth day thereafter." This observation may provide no defence to a prosecution under section 133 but it might well do so in a prosecution under section 134.
This was what the learned Solicitor General was fair enough to point out with regard to the difficulty of working out the daily penalty under section 162 after the thirtieth day mentioned in section 220(1) of the 1.956 Act.
He pointed out that where no meeting has been held it was not possible to calculate the period of 30 days specified in that section and it would not be possible to give effect to the provisions of that section.
The Bombay High Court pointed out in Emperor vs Pioneer Clay & In dustrial Works(1) that the decision in Park vs Lawton(2) is based on section 36 (it is a mistake for section 26) of the English Act, which in its scheme and terms is entirely different from the section with which they (the Bombay High Court) were concerned, and that the section in the English Act is a composite one which lays down various requirements which are to be complied with by the company under its first four sub clauses and sub cl.
(5) is the penal sub section which penalises the failure to comply with any of the requirements contained in any of the four preceding sub sections.
In our Act various stages have to be gone through before we reach the stage of a copy of the balance sheet and the profit and loss account being filed with the Registrar and the failure to reach any one of the stages within the time prescribed is made penal by the 'Act.
The court pointed out that this is not a case where an accused person relies on his default and pleads his innocence.
What he says is, I may have committed an offence, but the offence that I have committed is not the one with which I am charged.
On the facts proved by the prosecution an offence is not disclosed under section 134(4).
A different offence might have been committed either under section 76(2) or under section 133(3).
It is interesting to note that it was argued in Park vs Lawton(2) that the fact that section 26 makes the offence a continuing one also shows that the obligation to file the list is independent of the holding of a general meeting.
The observations which we have extracted earlier will show that the submission on behalf of the prosecution that provisions (1) I.R.L. : (2) [1911] 1 K.E. 417 of section 26 show that the, obligation to file the list is independent of the holding of the general meeting was accepted.
But under section 134 of the 1913 Act the obligation to send a copy of the balance sheet and profit and loss account is dependent completely on its being laid be, fore a general meeting.
It is clear, therefore, that on principle and authority it should be held that no offence was committed by the directors in this case under section 134.
They might have been guilty of offences under sections 76 and 133 but not under section 134.
We say nothing about section 32 about which this Court has already laid down the law.
The appeal is dismissed.
V.P.S. Appeal dismissed.

Response:
Section 220 of the , which corresponds to section 134 of the 1913 Act, provides that within thirty days after the balance sheet and profit and loss account, as the case may be, have been laid before the company at the general meeting.
three copies thereof shall be filed with the registrar and that failure to do so is punishable.
The respondent company and its directors were prosecuted for failure to file with the Registrar of Companies on or before 30th October 1967, the Balance sheet and profit and loss account of the company.
By 30th September, 1967, admittedly, no general body meeting had been held.
The High Court held that since no general body meeting was held, there could be no question of laying the balance sheet before the general body meeting and complying with the requirements of the section; and that, though the willful omission to call a general body meeting and of laying the balance sheet and profit and loss account before it may expose the persons responsible to punishment under other provisions of the Act, it would not make them liable either under section 134(4) of the 1913 Act or section 220 of the 1956 Act.
Dismissing the appeal to this Court, HELD : On principle and authority it should be held that no offence was committed under section 220 of the .
[417B] (a) The principle accepted by this Court in State of Bombay vs Bandhan Ram Bhandani [1961] 1 S.C.R_ 801, that a company or its directors in a prosecution under sections 32 and 133 of the 1913 Act, could not, in defence to such prosecution, rely upon their own failure to call the general body meeting would not apply to a prosecution under section 134 of the 1913 Act or section 220 of the 1956 Act.
Unlike sections 32 and 133, the responsibility of I sending to the Registrar the copies of the balance sheet and profit and loss account arises only after they have been laid before the company at the general meeting, the obligation to do so being completely dependent on its being laid before a general meeting.
[414H 415E] (b) Where the words in the section are clear it is unnecessary to consider whether it embodies any principle and whether that principle is consistent with the principle as embodied in other sections which are differently worded.
In interpreting a penal provision it is not permissible to give an extended meaning to the plain words of the section on the ground of a principle recognised in certain other provisions.
[415F G] (c) This is not a case where an accused person relies on his default and pleads his innocence.
In the , various stages have to be gone through before we reach the stage of a copy of the balance sheet and the profit and loss account being filed with the Registrar.
The failure to reach any one of the stages within the time prescribed is made penal by the Act.
The respondents may be guilty of any of those offences but not of the offence with which they were charged.
[416E G] (d) Further a daily penalty is provided after the thirtieth day mentioned in section 220 (1) of the 1956 Act.
When no general body meeting was held it is not possible to calculate the period of 30 days and there would be diffi culty in working Cut he daily penalty.
[416C D)] 411 Dulal Chandra Bhar vs State of West Bengal, Gopal Khaitan vs State , Ramachandra & Sons (P) vs State, Ltd., A.I.R. India Nutriments Ltd. vs Registrar of Companies, 1934 34.
Companies Cases 160 P. section N. SAA.
Chettiar & Company vs Registrar of Companies, A.I.R. 1966 Madras 415, Registrar of Companies vs H. Mishra, A.I.R. 1969 Orissa 234, State vs Linkers Private Ltd. A.I.R. 1969 Patna 445 & (1970) 40 C.C. 17, Registrar of Companies vs Gopala Pillai & Ors.
1951 K.L.J. 490 Debendra Nath Das Gupta vs Registrar of Joint Stock Companies, I.L.R. 1918 Calcutta 486, Ballev Dass vs Mohan Lal Sadhu, 1934 35 39 Calcutta Weekly Notes 1152 and Bhagirath vs Emperor, A.I.R. 1948, Calcutta 42 and re Cangipati Appayya, A.I.R. 1952 Madras 800, disapproved.
Imperator vs The Pioneer Clay and Industrial Works Ltd., I.L.R. , Vulcan Industries (P) Ltd. vs Registrar of Companies Orissa, I.L.R. (1972) Cuttack 373 and re Narasimha Rao, A.I.R. (1937) Madras 341, approved.