Judgements
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Special Leave Petition Nos.
823 24 of 1990.
From the Judgement and Order dated 6.10.1989 of the Karnataka High Court W.A. Nos.
321 & 322 of 1989.
S.R. Bhat for the Petitioners.
R.N. Narasimha Murthy, K.H. Nobin Singh, M. Veerappa and S.N. Bhatt for the Respondents.
The following Order of the Court was delivered: A few facts are necessary for the disposal of these petitions.
The petitioners were the owners of certain lands which were acquired by the respondents under the provisions of Sections 17 and 19 of the Bangalore Development Act, 1976 (hereinafter referred to as "the Bangalore Act").
Under the provisions of Section 36 of the Bangalore Act, where the acquisitions, otherwise than by agreement, it will be regulated by the provisions , as far they are applicable, of the Land Acquisition Act, 1894 (hereinafter referred to as "the Land Acquisition Act").
Section 11 A of the Land Acquisition Act, which section was included in the said Act in 1984 as set out hereinafter, very briefly states, provides that the Collector must make his award within two years from the date of the publication of the declaration and that if no award is made within that period, the entire proceedings for acqui 565 sition of the land shall lapse.
Under the Explanation to the first proviso to Section 11 A,"the period during which any action or proceeding to be taken in pursuance of the said declaration is stayed by an order of a Court shall be excluded".
It was, inter alia contended by the petitioners that as the awards in these cases has not been made within two years of the notification making the declaration under Section 4 of the Land Acquisition Act, the entire acquisition proceedings had lapsed.
That contention was repelled along with certain other contentions in the judgment of the High Court which is sought to be impugned before us.
The relevant dates which have to be borne in mind in this connection, are as follows: The notification making the declaration under Section 4 of the Land Acquisition Act in respect of the lands in question was made on September 20, 1977.
On September 20, 1984 Section 11 A which introduced into the Land, Acquisition Act by the Land Acquisition (Amendment) Act, 1984, was brought into force.
Under the first proviso to Section 11 A it was prescribed that where the said declaration (under Section 4 of the Land Acquisition Act) has been published before the commencement of the Land Acquisition (Amendment) Act, 1984, the award must be made within a period of two years from such commencement.
Thus, the award should have been made within two years from September 20, 1984.
On September 11, 1985, the petitioners obtained an interim order from this Court directing status quo with regard to the possession of the lands in question in Special Leave Petition No. 294 of 1985 preferred against the order of the Karnataka High Court dated August 14, 1984, with which we are not directly concerned here.
The said Special Leave Petition No.294 of 1985 was dismissed on April 29, 1987.
On December 16 17, 1987, two writ petitions were field by the respective petitioners in the Karnataka High Court challenging the acquisition on the ground that the awards were not made within the stipulated time.
In these two writ petitions, the Karnataka High Court granted interim stay of further proceedings in respect of the acquisition of the said lands.
These petitions were dismissed by a learned Single Judge of that High Court on November 29, 1988.
Appeals against the decision of a learned Single Judge were dismissed by the Karnataka High Court on October 6, 1989, by a Division Bench of that High Court.
The petitioners preferred these Special Leave Petitions, namely S.L.P. Nos. 823 and 824 of 1990 against the decision of the Devision Bench of that High Court, and obtained an interim stay of dispossession therein.
Whatever the ultimate effect of the stay orders, in view of the provisions of Section 11 A of the Land Acquisition Act, to which we have already referred 566 earlier, it is beyond dispute that the fact of the stay orders was highly material in the determination of these Special Leave Petitions.
Curiously enough, there is no reference in the Special Leave Petitions to any to the stay orders and we came to know about these orders only when the respondents appeared in response to the notice and filed their counter affidavit.
In our view, the said interim orders have a direct bearing on the question raised and the non disclosure of the same certainly amounts to suppression of material facts.
On this ground alone, the Special Leave Petitions are liable to be rejected.
It is well settled in law that the relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts.
If he fails to do so and suppresses material facts, his application is liable to be dismissed.
We accordingly dismiss the Special Leave Petitions.
There will be no order as to costs of these petitions.
R.P. SLPs dismissed.
| Petitioners ' lands were acquired by the respondents under sections 17 and 19 of the Bangalore Development Act, 1976.
Section 36 of the said Act made applicable the provisions of the Land Acquisition Act, 1894, where acquisition is otherwise than by agreement.
The notification making the declaration under section 4 of the Land Acquisition Act in respect of the lands in question was made on 20.9.1977.
On 20.9.1984s.
11 A was introduced and brought into force by the Land Acquisition (Amendment) Act, 1984 prescribing that where the declaration under section 4 of the Land Acquisition ACt was published before the commencement of the Land Acquistion (Amendment) Act, 1984, the award was to be made within two years from such commencement.
The awards should have thus been made within two years from 20.9.1984.
On 11.9.1985 the petitioners obtained an interim order from this Court directing status quo with regard to the possession of the lands in question in a special leave petition which was dismissed on 29.4.87.
on December 16 17,1987 two writ petitions were filed by the petioners in the High Court Challenging the acquisition, contending that as the awards were not made within two years of the notification making the declaration under section 4 of the Land Acquisition Act, the entire acquisition proceedings had lapsed.
The High Court granted interim stay in respect of the acquisition of the lands.
The petitions were later dismissed.
Appeals therefrom were also dismissed by a Division Bench.
The petitioners preferred these special leave petitions and obtained interim stay of dispossession.
Dismissing the special leave petitions, this Court, 564 HELD: 1.
The relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts.
If he fails to do so and suppresses material facts, his application is liable to be dismissed.[566B C] 2.Whatever the ultimate effect of the stay orders, in view of the provisions of section 11 A of the Land Acquisition ACt, the Fact of the stay orders was highly material in the determination of these special leave petitions.
There was no reference in the special leave petitions to any of the stay orders and the Court could know about these orders only when the respondents appeared in response to the notice and filed their counter affidavit.
The said interim orders had a direct bearing on the question raised and the non disclosure of the same certainly amounts to suppression of material facts.
On this ground alone, the special leave petitions were liable to be rejected.
[565G H; 566A B]
|
ivil Appeal No. 4649 of 1989.
From the Judgment and Order dated 26.7.1988 of the Allahabad High Court in Review Application No. 27(W) of 1988.
Anil Dev Singh and Mrs. section Dikshit for the Appellants.
Yogeshwar Prasad, Vijay Hansaria, Sunil K. Jain, S.K. Jain for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, CJ.
The Respondent, Arun Govil had been granted a permanent commission in the Indian Air Force and was working as a Pilot Officer.
In the year 1972 he was declared unfit by a Medical Board and was, therefore, inval idated from I.A.F. The Government of India issued a scheme for the benefit of ex military officials.
The State of Uttar Pradesh also adopted the same scheme.
Under that scheme the ex military officials were appointed on Contract basis for a fixed term which could be extended from time to time subject to the suitability of the official concerned but not beyond 58 years of age.
Pursuant to the said scheme the State of Uttar Pradesh appointed the respondent as the Secretary, Zila Sainik Board, Unnao on 20th of August, 1979.
Paragraph 2 of the said order of appointment issued on 20th August, 1979 reads thus: "The appointment shah be on contract for a period of one 241 year w.e.f.
the date of assumption if it is not terminated earlier by giving a one month 's notice by the Hon 'ble Gover nor or on paying one month 's salary in lieu thereof or by giving one month 's notice, by the Officer.
" The respondent was required to furnish his acceptance of the terms and conditions contained in the said order includ ing the above term relating to the period of appointment and on his accepting the terms and conditions he was appointed as the Secretary in the District Soldiers Board in the district of Unnao in the State of Uttar Pradesh '.
The said term was extended retrospectively, first upto 20th August, 1982 by an order passed in September, 1981 and it 'was again extended upto 31st March, 1983 by an order made in February, 1983.
Again the term was extended upto 30th of August, 1985 by an order dated 1st June, 1983.
All these orders of exten sion were couched almost in the same language.
The relevant part of the last of such orders, namely, the order dated 1st June, 1983 reads as follows: "Sir, With reference to your letter No. 1020/Sa.
A.D.M./141, Dated 31.3.1982 on the above subject I am directed to say that the terms of the officers mentioned under para 2 who were appointed w.e.f.
the date mentioned in para 4 (has expired).
The Governor is therefore pleased to accord his sanction to extend the period of the contract upto the period mentioned under para 5 subject to the condi tion that their service tenure shall expire on completion of 58 years of age in case the same is completing earlier during the extended period.
No. Name and Date of Date of Recommen place of appoint expiry dation appoint ment of con extend ment tract the contract 1to 12 13 Ex Pilot 21.8.79 31.3.83 1.4.83 Arun Govil, 30.8.85 Unnao 14 to 21 242 2.
During the extended period of the contract conditions of service of officers shall remain same as are mentioned under their Appointment Order.
Letters of accept ance of relevant conditions of service to be obtained from these officers must be submitted to the Government at an early date.
" It is thus seen that the appointment of the respondent was indisputably in the nature of contract and under the last order of appointment refened to above he was entitled to continue in office in the post in question till 30th of August, 1985 and not beyond that date unless there was a further extension.
But on 29.3.1985 the service of the 1st Respondent was terminated by the issue of a notice and payment of one month 's salary.
The order was to be effective from the date of receipt of termination order and no charges were men tioned therein against the 1st respondent.
The respondent aggrieved by the said order of termina tion filed a Writ Petition on the file of the High Court of Allahabad in Writ Petition No. 3 164 of 1985.
A Division Bench of the High Court found that the order of termination that had been served on the respondent was an invalid one since it had been issued on the basis of Vigilance Report and no opportunity had been given to the respondent to show cause why such action should not be taken against him.
It is not necessary to set out all the reasons given by the High Court for setting aside the order of termination.
The High Court, however, held that the termination order could not be sustained and the Writ Petition was liable to be allowed.
The High Court further issued a direction to the effect that the respondent was entitled to salary upto the period he was entitled to remain in service.
In the instant case the respondent was entitled to be in service till 30th of Au guSt, 1985 unless there was a further extention.
In the Penultimate paragraph of the judgment the High Court further stated: "It is open for the opposite parties to con sider the claim of the petitioner for continu ation in service or of fresh appointment and no observations in this regard are being made by this Court.
" The judgment was delivered on 24.3.1988.
243 The respondent who was not satisfied by the order allow ing the Writ Petition as stated above preferred a Review Petition before the High Court contending that he was enti tled to be reinstated in service on the pronouncement of the Judgment on 24.3.
1988 notwithstanding the fact that his term of office had come to an end on 30th of August, 1985 as stated above and no further order of extention had been passed by the Governor.
In support of the Review Petition the respondent relied on an interim order which had been passed by the High Court during the pendency of the Writ Petition on 10th of July, 1986 which reads thus: "The post will be kept vacant and in case the petitioner succeeds in his Petition it would be made available forthwith to the petitioner by way of an appointment.
" The contention of the respondent was that the said interim order entitled him to be reinstated in service irrespective of the fact whether the Governor had extended the period of his appointment beyond 30th of August, 1985.
The High Court allowed the Review PetitiOn on 26.7.1988 and made an order reinstating the Respondent in service which reads as follows: "This is an application for review of our Judgment dated 24.3.1988 by which we allowed the Writ Petition filed by the Petitioner with certain directions.
It seems that when the writ petition was decided, our attention was not drawn towards the interim order dated 10.7.1986 passed by learned single Judge in which it was provided that one post will be kept vacant and in case the petitioner suc ceeds in his petition it would be made avail able forthwith to the petitioner by way of his appointment.
The petitioner has pointed out inaccuracy in the second paragraph of the operative part of the judgment which says that: "It is open for the opposite parties to consider the claim of the petitioner for continuation in service or of fresh appoint ment and no observations in this regard are being made by this Court."" Aggrieved by the above order made on review which di rected the State of Uttar Pradesh, the appellant herein, to reinstate the respondent in service, the State Government has filed this apeal by special leave.
It is not disputed that the scheme under which the respond ent 244 had been appointed provided for an appointment by contract for a specified term which could be extended from time to time and that the term of the respondent had been extended on different occasions after his first appointment and he was not entitled to continue in service beyond 30th August, 1985 unless there was a further extension.
Clauses 6 & 7 of the first order of appointment stated that the respondent was entitled to the leave admissible for temporary employees and for other matters he was to be treated as a temporary Government employee during the tenure of his office.
The appellant government never accepted the position that the respondent was entitled to be treated as a regular employee who had a vested right to continue to hold the post till he attained 58 years of age.
The true position that emerges from the material on record is that the respondent was employed only under a contract which specified the term of his appointment which extended only Upto 30th of August, 1985.
Since it is admitted that no order of 'extension had been sanctioned by the Governor beyond 30th August, 1985, the respondent was entitled to the salary and allowances due to him till 30th of August, 1985 if the order of termination of service served on him on 29.3.
1985 was found to be an invalid one.
It is on this basis that the High court had while setting aside the order of termination by its order dated 24.3.1988 directed that the respondent was entitled to salary upto the period he was entitled to remain in service and further observed that it was open for the opposite parties to consider the claim of the respondent for continu ation in service or of fresh appointment and no observations in this regard were made by the Court.
A reading of the Judgment of the High Court dated 24.3.1988 shows that the respondent had not urged before the High Court that the order of appointment issued in his case was not in the nature of a contract and the subsequent orders extending his period of appointment till 30th of August, 1985 were liable to be ignored and that he should be treated as a person regularly appointed in Government service entitled to con tinue till he completed the age of 58 years.
Even the order passed on Review on 26.7.1988 does not make out that the respondent had put forward at that stage such a case.
His only case was that the interim order that had been passed on 10.7.86 entitled him to be reinstated in service even though there was no order of extension of service.
If the respond ent was really aggrieved by the Judgment dated 24.3.1988 he should have preferred an appeal before this Court and that he did not do but on the other hand he proceeded to file a Review Petition claiming to be reinstated in service on the slender ground that the interim order conferred on him a right to continue in service beyond 30th of August, 1985 even though his service had not been extended by the Gover nor of Uttar Pradesh.
245 In the circumstances, we feel that while the High Court was right in disposing of the Writ Petition on 24.3.
1988 declaring that the respondent was entitled to salary upto the period he was entitled to remain in service, i.e., 30th August, 1985 it was not right in making an order on Review on 26.7.1988 relying upon the interim order dated 10.7.1986 which in the circumstances could not have the effect of controlling the jurisdiction of the High Court to dispose of the Writ Petition on merits as it did on 24.3.1988.
We, therefore, set aside the order dated 26.7.1988 passed by the High Court on review and restore the Judgment dated 24.3.1988 passed in the Writ Petition.
The interim order did not and could not amount to a direction that the respondent was entitled to be reinstated in service irrespective of the merits of the case and the extent of his right.
The order passed on review is wholly unsustainable.
We, however, make it clear that what we have stated above does not affect in any way what the High Court has stated in the penultimate paragraph of the Judgment dated 24.3.1988 which reads thus: "It is open for the opposite parties to con sider the claim of the petitioner for continu ation in service or the fresh appointment and no observations in this regard are being made by this Court.
" The appeal is accordingly allowed.
No costs.
T.N.A. Appeal allowed.
| Pursuant to a scheme enacted for the benefit of ex military officials the appellant State appointed the re spondent on 20.8.1979 as Secretary Zila Sainik Board on contract basis for a specified period which was further extended upto 30.8.1985.
On 29.3.1985 the services of the respondent were terminated.
The respondent filed a writ petition before the High Court challenging the termination order.
By an order dated 24.3.1988 the High Court set aside the termination order holding that the respondent was entitled to salary upto the period he was entitled to remain in service i.e. upto 30.8.1985.
The respondent preferred a Review Petition before the High Court contending that pursuant to the interim order dated 10.7.1986 passed by the High Court he was entitled to be reinstated in service even though there was no order of extension of service.
By an order dated 26.7.1988, the High Court allowed the Review Petition directing the appellant State to reinstate the respondent in service.
Hence this appeal by the State.
Allowing the appeal and setting aside the order passed on Review, this Court, HELD: 1.
In the instant case, the appointment of the respondent was indisputably in the nature of contract and under tile order of appointment he was entitled to continue in office in the post in question till 30th of August, 1985 and not beyond that date unless there was a further exten sion.
Since no order of extension had been sanctioned by 240 the Governor beyond 30th August, 1985 the respondent was entitled to the salary and allowances due to him till 30th of August, 1985 if tile order of termination of service was found to be an invalid one.
[242B; 244C] 1.1 The High Court was right in disposing of the Writ Petition on 24.3.1988 declaring that the respondent was entitled to salary upto the period he was entitled to remain in service, i.e. 30th August, 1985.
But it was not right in making an order on Review on 26.7.1988 relying upon the interim order dated 10.7.1986 which ' in the circumstances could not have the effect of controlling the jurisdiction of the High Court to dispose of the Writ Petition on merits as it did on 24.3.1988.
[245A B] 2.
The interim order passed by the High Court did not and could not amount to a direction that the respondent was entitled to be reinstated in service irrespective of the merits of the case and the extent of his right.
The order passed on review is wholly unsustainable.
[245C]
|
Appeals, Nos. 275 276 of 1963.
Appeals by special leave from the judgment and order dated May 2, 1960 of the Kerala High Court in Income tax Referred case No. 98 of 1955(M).
section T. Desai, C. V. Mahalingam, B. Parthasarathi and J. B. Dadachanji, for the appellant (in both the appeals).
K. N. Rajagopal Sastri and R. N. Sachthey, for the res pondent (in both the appeals).
95 December 20, 1963.
The Judgment of A. K. Sarkar and J. C. Shah, JJ. was delivered by Sarkar, J. M. Hidayatullah, J. delivered a Dissenting opinion.
SARKAR J.
These two appeals arise out of assessments of the appellant to income tax for the years 1948 49 and 1949 50.
The question in these appeals is whether on the facts to be presently stated, the appellant was entitled to relief under section 25(4) of the Income tax Act, 1922.
The appellant claimed relief under section 25(4) contending that it had transferred its business to a limited company with effect either from November 13.
1947 or February 13, 1948, by an instrument executed on February 7, 1948.
The claim was rejected by the Income tax Officer and by the Appellate Assistant Commissioner and also by the Income tax Appellate Tribunal on appeal to it.
The appellant then moved the Tribunal to refer a, certain question to the High Court at Madras under section 66(1) of the Act but that application was rejected.
It then moved the High Court under section 66 (2) of the Act and the High Court directed the Tribunal to refer the following question for determination by it: "Whether, on the facts and in the circumstances of the case, the assessee is not entitled to relief under section 25 (4) of the Indian Income tax Act, and to what extent?" The Tribunal duly drew up a statement of case and referred the question along with it to the High Court.
There were really two references as there were two cases before the Tribunal.
These however were heard together by the High Court and disposed of by one judgment.
The High Court held that the appellant was not entitled to any relief under section 25 (4).
The present appeals are from the judgment of the High Court.
The facts have to be stated at some length but before we do that we think it would be profitable to set out the statutory provisions concerned.
Though we are directly concerned with sub sec.
(4) of section 25, a consideration of subsec.
(3) of that section will throw useful light on the matter 96 in question and so we set both these sub sections out below: section 25 (3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, . . is discontinued, then, unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, pro fits and gains of the period between the end of the previous year and the date of such discontinuance. . (4) Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939 carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession Both these sub sections gave a further right to the assessee but with that right we are not concerned and shall, there fore, make no more reference to it.
Now it will be seen that under sub sec.
(3) the discontinuance of the business gave rise to a relief from taxation in respect of its income provided however that there had not been a succession to the business as mentioned in sub sec.
(4) which, as will later be seen, has to be a succession taking place after April 1, 1939.
The succession contemplated in sub sec.
(4) again must have taken place before the discontinuance for if the business is discontinued it ceases to exist and cannot be succeeded to.
Sub section (4) requires certain conditions to be fulfilled before a claim to relief under it can be made.
As the present appeals relate only to a business carried on by a 97 firm, in discussing these conditions we will omit all refer ences to the professions, vocations and owners of businesses other than firms.
We would like to remind here that a firm is a taxable unit under the Income tax Act and it is a person as that word is used in the Act.
Now the first condition of the applicability of sub sec.
(4) of section 25 is that the business must have been charged to tax under the Indian Income tax Act, 1918.
This Act was in force between 1918 and 1922 in which year it was replaced by the present Act.
So the business must have been in existence sometime between 1918 and 1922.
Under the Act of 1918 tax was assessed, computed and levied on the income of the year of assessment but under the Act of 1922 the scheme of assessment of income and tax was modified.
By that Act tax was assessed on the income of the previous year and the result of the innovation was that the income of the year 1921 22 was assessed twice, once under the Act of 1918 and again under the Act of 1922 and it was because of this that relief was given by sub secs.
(3) and (4) of section 25.
The second condition of the applicability of section 25(4) is that business must have been carried on at the commencement of the Indian Income tax Act (Amendment) Act, 1939, that is, April 1, 1939, by the person claiming the relief.
The third condition is that the person carrying on the business on April 1, 1939 has to be succeeded by another person as the owner carrying on the business.
Obviously, the succession indicated must have been after April 1, 1939, as we have earlier stated, for a person carrying on a business on that date can only be succeeded in that business by another person on a date later than it.
The fourth condition is that the succession was not merely a change in the constitution of the firm.
This condition, of course, is applicable only where, as in the present case, the business was carried on by a firm.
The appellant, who is the assessee in these cases, is a firm.
It contends that it had been carrying on a business on April 1, 1939 from before and on that business tax had been charged under the Act of 1918 and that it was succeeded by a company as owner of the business as a result of a transfer by an instrument executed on February 7, 1948.
The appellant further contends that its constitution has changed 134 159 S.C. 7. 98 from time to time but the firm has never been dissolved so that it has been the same firm continuing and carrying on the same business from before 1918 till the transfer afore said.
It is on this basis that it claimed the benefit of section 25 (4) of the Act.
We now proceed to set out the facts of the case in a chronological order.
It appears that a firm bearing the same name as that of the appellant, that is, Sait (or Shah) Nagjee Purshotham and Company was started in 1902 and was reconstituted by an agreement of partnership dated December 6, 1918.
On the last mentioned date it carried on business in piece goods, yarn, and other articles at Calicut with branches in Madras and Bombay.
It also subsequently started a business of manufacture and sale of umbrellas but the precise date of the commencement of this business does not appear from the record.
Sometime about 1932 it started another business of manufacture and sale of soap.
For practical purposes the firm can be treated as having been constituted by this document of December 6, 1918.
The partnership agreement of December 6, 1918 was between the following six persons, Purushotham, Nagjee, Narayanjee, Krishnajee, Maneklal and Bhagwanjee.
Of these persons the last named was an outsider and the rest were members of a family.
The agreement provided that the withdrawal of a partner for whatever reason, would not dissolve the partnership as between the remaining partners.
Krishnajee died in 1933 and Bhagwanjee retired about that time.
On January 2, 1934, the remaining four partners executed an instrument varying some of the terms of the agreement of December 6, 1918.
The instrument, however, provided that subject to the variations made the agreement of December 6, 1918 was to remain effective.
It is not in dispute that there was no dissolution of the firm by the instrument of January 2, 1934.
Thereafter on April 27, 1934 Purusbotham died and the firm was then left with three partners, namely, Nagjee, Narayanjee and Maneklal.
Then we get two instruments both dated May 30, 1939, each described as an agreement of partnership.
One instrument, which is marked as annexure CI, was between Nagjee, Narayanjee, Maneklal and Hemchand.
The other instrument, which is marked as annexure C II was between 99 Nagjee, Narayanjee and Maneklal.
It will be necessary to set out later some of the terms of these instruments, for on them a large part of the arguments advanced in this case has turned.
Briefly it may be stated here that the appellant contends that these agreements did not really create new partnerships dissolving the existing one.
Its case is that under annexure C I an outsider Hemchand was admitted as partner in some of the businesses of the existing partner ship, namely, the umbrella and soap businesses and by the other instrument, annexure C 11, the other existing businesses of that partnership, e.g., in yarn, piece goods, money lending etc., were, continued by the subsisting partners mentioned above.
The contention of the respondent, on the other hand, is that these two instruments show that the business of the existing firm had been split up into two and transferred to two different owners, namely, two newly constituted firms with different partners, some of whom were no doubt common, and this amounted to a discontinuance of the business of the old firm.
It was contended that after such discontinuance it could not be said that the same business on which tax had been charged under the Act of 1918 was being carried on on April 1, 1939 and no question, therefore, of any subsequent succession to that business to make sub sec.
(4) of section 25 applicable, could arise.
We next have an instrument of October 30, 1943, also "Styled an agreement of partnership, to which Narayanjee, Maneklal, Jayanand, Leeladhar and Prabhulal were parties.
It refers to the two "agreements of partnership of May 30, 1939" and certain retirements of partners and admission of new partners and provides that the parties to the instrument had agreed to carry on "as one single partnership" the busi nesses carried on previously by the two partnerships referred to in the instruments of May 30, 1939.
One of the ,contentions of the respondent is that even if it was not right in its view of the instruments of May 30, 1939, this instrument of October 30, 1943 clearly evidenced a dissolution of the partnership then existing and the creation of an entirely ,new partnership to which the business of the old firm was transferred.
It was said that this was a succession to business within the meaning of sub sec.
(4) of section 25 and, therefore, the later succession, if any, by the transfer of Febru 100 ary 7, 1948 could not provide the basis for relief under section 25 (4).
Whether relief could be granted under the earlier succession, it was said, is irrelevant for such relief had never been claimed.
The last instrument to which we have to refer is the agreement of February 7, 1948 between Maneklal, Jayanand, Leeladhar and Prabhulal as partners of the appellant firm and a limited company formed to take over the business.
of the firm.
By this instrument the parties agreed that the business of the firm would be transferred to the company with effect from November 13, 1947, the transfer to be completed on February 13, 1948 by payment of the consi deration of Rs. 4 lacs by the vendee and delivery of posses sion of the assets of the business by the vendor.
It is on this instrument that the appellant, which is the firm constituted by Maneklal, Jayanand, Leeladhar and Prabhulal, claimed relief under section 25(4) in its assessment for the years 1948 49 and 1949 50.
There is no doubt that as a result of the instrument of February 7, 1948 the Company succeeded to the business that was being carried on by the firm of Nagjee, Purushotham and Company as then constituted as aforesaid, as bankers, piece goods and yarn merchants and as soap and umbrella manufacturers and sellers.
The question, however is, was this firm a firm which had been carrying on a business on April 1, 1939 and which business had been charged to tax under the Act of 1918? The High Court took the view that it was not and we think, that view is correct.
In our opinion, the business was discontinued in 1937 and what was subsequently carried on was not the same business.
We now turn to annexures C 1 and C 11 dated May 30, 1939.
Taking annexure C 1 first, the material portions of this document are as follows: "This agreement of Partnershipbetween (1)Nagjee. (2) Narayanjee(3) Maneklal and (4) Hemchand(hereinafter called the partners) witnesseth asfollows: Whereas Partners 1 to 4 have been carrying on a business as partners from the beginning of Samvat 1994 (=October November 1937) in 101 the manufacture and sale of Soaps under the name of 'The Vegetable Soap Works ' Proprietor Sait Nagjee Purushotham & Co., and in the manufacture and sale of umbrellas in Calicut with branches at Madras and Bombay under the name and style of Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants at Calicut and Madras and in the name of Sha Nagjee Purushotham & Co., at Bombay hereinafter called the Firm; And whereas it is thought advisable to reduce the terms of the said partnership into writing for the proper and better conduct of the business; The Partners have agreed and also hereby agree to the following: (1) The Firm shall continue to be as of old namely Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants.
The Firm shall continue to do business in the manufacture and sale of soaps under the name of the 'Vegetable Soap Works ' and in umbrellas under the name of 'Sait Nagjee Purushotham & Co., S oap and Umbrella Merchants as aforesaid with Head Office at Calicut and branch at Madras under the same name and branch at Bombay under the name of 'Sha Nagjee Purushotham & Co. . . ' (4) The business of the Firm shall consist mainly in the manufacture and sale of soaps and umbrellas and such allied products and such other articles as all the partners or the majority of them may agree.
(8)It is always understood by the Partners herein that the Firm of Sait Nagjee Purushotham 102 & Co., Bankers, Piece goods and Yarn mer chants, Calicut, the partners whereof are the: Partners 1 to 3 herein shall advance as, heretofore all funds that are necessary for the conduct of this Partnership Such advances shall be deemed as loan by the firm of Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn Merchants to the., Firm . . . (9) Until otherwise determined by Partners.
Nos. 1, 2 and 3 in writing the Partnership, shall not borrow any amount from any one other than the Firm Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn merchants referred to in para 8 above.
. . (25) All the Partners hereby agree that Partners.
1 to 3 herein are the Partners of the Firm of Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yam merchants, Calicut.
" We now set out the material portions of annexure C 11. "This agreement of partnership between (1) Nagjee. (2) Narayanjee and Maneklal . hereinafter called the Partners witnesseth as follows: Whereas under the Agreement of Partnership dated the 6th day of December 1918 (1) Purushotham (2) Nagjee. (3) Narayanjee (4) Karsanjee. . (5) Bhagvanjee (6) Maneklal . have carried on a partnership trade in Piecegoods, Banking and other articles in Cali cut with branches at Madras and Bombay, and Whereas (1) Purushotham . (2) Karsanjee. and (3) Bhagvanjee .
ceased to be partners either by retirement or death, and 103 Whereas the remaining partners (1) Nagjee. (2) Narayanjee. and (3) Maneklal. settled the claims in full of the partners who ceased to exist and agreed to carry on and continue and are continuing the existing partnership business under the name and style of 'Sait Nagjee Purushotham & Co. ' Bankers, Piece goods and Yarn Merchants, hereinafter called the 'Firm '; and Whereas it is thought advisable and prudent to reduce into writing the terms and conditions agreed upon orally by them the Partners agree and have agreed to the following terms and regulations stipulated hereunder.
(2) The Agreement of Partnership dated the 6th day of December 1918 is hereby revoked and the affairs of the Firm shall be regulated and governed by the Regulations agreed upon orally and reduced into writing in this Deed and the terms and conditions of the revoked deed shall not in future apply to the 'Firm ' except such as have been repeated in this Deed.
(20) All the partners hereby agree that they in their individual capacity are and shall be Partners also along with Hemchand Veerjee Sait in a Partnership business in Soaps and Umbrellas carried on in Calicut and Madras under the name and style of Sait Nagjee Purushotham and Co., Soap and Umbrella Merchants and in Bombay under the name and style of Shah Nagjee Purushotham & Co., the terms and conditions whereof are embodied in an Agreement of Partnership dated 30 5 1939 signed by all the Partners.
104 It is clear that these two instruments recite events which had happened in 1937.
Annexure C I shows that in Octo ber/November of that year a new partnership was started to do businesses of manufacture and sale of soap and umbrella between Hemraj and the remaining partners of the preexisting firm of the same name, that is, Nagjee, Narayanjee and Manecklal.
This is clear from the terms of the instrument which we have earlier set out.
We think it right especially to draw attention to the terms of cls.
8, 9 and 25 of annexure C I.
These indicate that there were two firms, namely, one, of which the constitution appeared from annexure C I and which carried on umbrella and soap busi nesses and the other, consisting of Nagjee, Narayanjee and Manecklal carrying on other kinds of businesses the constitution of which appeared from annexure C 11.
Clauses (8) and (9) show that one firm was to lend money to the other.
Such an agreement could not of course have been made unless the two firms were separate.
By cl.
(25) all the parties to annexure C I agreed that the firm constituted by Nagjee, Narayanjee and Maneklal was a different firm.
Learned counsel relied on cl.1 of annexure C I and contended that itprovided for the continuance of the old firm, that is, thefirm constituted by the instrument of December 6, 1918 and hence no new firm had been created.
We think that this contention is without foundation.
There is no reference in annexure C I to the firm constituted by the instrument of December 6, 1918.
The word "firm" in annexure C I refers to the partnership brought into existence by it.
Clause 1 says that "The Firm shall continue to be of old".
The word "old" refers to the partnership orally brought into existence in October/November 1937 to which reference is made in the first recital and to put down the terms of which in writing, annexure C I was executed.
Likewise the provision in cl. 1 that "The Firm shall continue to do business" refers to the continuance of the business carried on prior to May 30, 1939 by the firm brought into existence in October/November 1937 by the oral agreement.
The continuance cannot be a continuance of the firm or business of the partnership of 1918 for annexure C I makes no reference to that partnership at all.
It may be 105 that the partnership of 1918 was carried on in the same name as the firm referred to in annexure C I but we are not ,aware that an identity of names establishes that the two firms are same.
It seems to us beyond question that the partnership mentioned in annexure C I is different from the partnership which was brought about by the instrument of December 6, 1918 for the partners in the two firms were not the same.
It has not been shown to us, neither do we think, that where different groups of persons, some of whom are common, carry on different businesses under different agreements, they can form one partnership.
Further, as ,clearly appears from annexure C 11, the firm brought into existence by the 1918 instrument was dissolved and a new firm was started between Nagjee, Narayanjee and Manecklal after the retirement of Purushotham in 1934.
If the 1918 firm was thus dissolved it could not, of course, be continued.
So the firm created by annexure C I could not have been a ,continuation of the 1918 partnership.
Therefore, the firm mentioned in annexure C I is a new firm and not the old 1918 firm reconstituted.
This position is reinforced by the terms of annexure C 11.
First it is called an agreement of partnership, that is, agreement creating a partnership.
The recital provides that the remaining partners of the firm constituted by the instrument of 1918 agreed to carry on and continue the existing partnership business.
Clause (2) states that the deed of December 6, 1918 is revoked and the affairs of the firm would be governed by the terms of annexure C 11 and the conditions of the revoked deed were not to apply.
It is impossible after this to say that the partnership constituted by the instrument of December 6, 1918 was not dissolved.
There is no warrant for the view for which the appellant contended, that only the terms on which the business under the document of December 6, 1918 was carried were revoked and not the head agreement to do business in partnership.
The fact that an express agreement to carry on the business in partnership was made (for which see the third recital in annexure C 11) further indicates that the agreement to that effect in the instrument of December 6, 1918 was no longer subsisting.
In this case the term providing for the continu 106 ance must refer to the continuance of the business and not to the continuance of the partnership agreement because that was expressly revoked.
If this is not the correct view, then cl. 20 would be inexplicable.
That clause states that the partners in their individual capacity would be partners with Hemchand in another business the terms of which partnership appear in another partnership agreement of the same date and which is annexure C 1.
This would show that the old partnership of 1918 had given up doing some of its existing businesses and it was decided to carry them on under a new partnership agreement.
This would support the view that the old partnership was dissolved for it would not have otherwise given up those businesses.
The two instruments annexure C I and C 11, therefore, clearly establish that in October/November 1937 the business that was carried on by the firm of Sait Nagjee Purushotham and Co. till that date, was discontinued and its businesses were split up into two and carried on by two independent partnerships then brought into existence.
When this happens it is impossible to say that the pre existing business was continued.
This view finds support from section N. A. section A. Annamalai Chettiar vs Commissioner of Income tax, Madras(1) where it was held that when a business carried on in one unit is disintegrated and divided into parts, the parts are not the whole even though all the parts taken together constitute the whole.
That was a case of a joint family business which on partition was split up between different members of the family. 'It was held that as a result of this splitting up there was a discontinuance of the original business at the date of the partition and on such discontinuance the family became entitled to relief under section 25(3) It is of some significance to point out that the partners constituting the appellant at the moment of the transfer in 1948 also thought that in 1937 the old firm ceased to exist and its business was carried on thereafter by two independent firms, for the document of October 30, 1943 has referred to annexures C 1 and C 11 as constituting two independent partnerships and proceeded to revoke them both and provided that the parties to the instrument "have (1) 107 agreed to carry on and continue as one single partnership business the existing partnership businesses of Sait Nagjee Purushotham and Co., Bankers, Piece goods and Yarn Mer chants, Sait Nagjee Purushotham and Co., Soap and Umbrella Merchants.
" Now when the business on which tax was charged under the Act of 1918 which, it is not disputed, happened in this case was discontinued in 1937 it could not have been carried on April 1, 1939.
What was then carried on must have been some other business.
So one of the conditions on which relief under section 25(4) of the Act could be claimed was not satisfied and the claim would not be maintainable.
Furthermore, for the reasons earlier stated, it must be held that on April 1, 1939 the business, assuming its identity to have continued in spite of the splitting up, was being carried on by two persons, namely, two firms with different partners.
Now the person who transferred the business which caused the succession in 1948 on which the appellant relies for relief under section 25(4), was a single firm.
This latter firm could not have been brought about by a change in the constitution of an existing firm, for there were two existing firms and they could not become one by simple changes in their constitution.
Indeed the instrument of October 30, 1943 which brought the transferor firm, the appellant before us, into existence, expressly states that "The Agreements of Partnerships dated 30th May 1939. are hereby revoked".
It follows that at the date the succession relied upon can, be said to have taken place, the business was being carried, on by a person different from those who carried it on on April 1, 1939.
So another condition of the applicability of ' section 25(4) of the Act is not satisfied.
The claim for relief under that section must fail on this ground also.
If it were to be said that the partnerships were brought into existence on May 30, 1939 by annexures C I and C II instead of in October/November 1937, then also the appel lant 's claim must fail.
Whenever the new partnerships were brought into existence, the result would, in our view, necessarily be that the business of the old partnership which was 108 taken over by the two new firms must be deemed to have been discontinued.
On the principle stated in Annamalai ' Chettiar 's case,(1) there could not in such a case be a suc cession of the business from one to another.
That being so, there can be no question of the succession to the business carried on at the commencement of the Indian Income tax (Amendment) Act, 1939, that is, April 1, 1939 and on which tax was charged under the Act of 1918 having taken place in 1948 as claimed by the appellant.
What was discontinued could not be succeeded to.
Even if it was held that on May 30, 1939, there was a succession to the business which we do not think is a correct view to take, that also would disentitle the appellant to relief under sub sec: (4) of section 25 in the years 1948 49 and 1949 50, for it should, in such an event, have claimed the relief in the year 1939 40.
In the result we have come to the conclusion that the business which had been subjected to tax in 191.8 had been discontinued in October/November 1937 or on May 30, 1939 and it was not in existence in 1948 so as to permit a succession to it taking place under the instrument of February 7, 1948.
The appeals, therefore, fail and they are accordingly dismissed with costs.
HIDAYATULLAH J. I have had the advantage of reading the judgment just delivered by my learned brother Sarkar J. but I have the misfortune to disagree with him in his conclusion that these appeals must be dismissed.
In my judgment, these appeals must be allowed.
The facts have been set out in detail by my learned brother and I shall content myself with repeating only such facts as are necessary for the elucidation of my point of view.
The appellant is a firm which in 1948 consisted of four partners namely Manecklal Purushotham, Liladhar Narayanjee, Jayanand Nagjee and Prabhulal Naranji.
It was carrying on business mainly in piece goods, yarn, banking and manufacture and sale of umbrellas and soaps. 'Its head office was at Calicut but it had branches at Bombay and Madras.
The history of the firm goes back to the year 1902.
In that year, five members of a family by name Purushotham, Nagjee, Narayanjee, Krishnajee and Premchand along (1) 109 with one stranger Bhagwanjee started the appellant firm Sait Nagjee Purushottam & Co. Thereafter, there were changes in the constitution of the firm caused by the death or by the retirement of partners.
Of the original partners, Premchand retired in 1912 and another member of the family Manecklal was taken in his place.
In 1933 and 1934, two members (Krishnajee and Purushotham) died and Bhagwanjee retired.
In that year, the firm consisted of Nagjee, Narayanjee and Manecklal who were members of the original family.
We have on the record the partnership deed of December 6, 1918 by which the shares of the partners were adjusted after the retirement of Premchand and the admission of Manecklal and a deed of Januarv 1, 1934 after the death of Krishnajee and retirement of Bhagwanjee.
In the deed of 1918, it was stated that this firm carried on business in Calicut, having branches at Madras and Bombay and though Manecklal was included as a new partner, the firm was to carry on and continue the existing partnership business under the same name and style.
By the deed of 1918, the earlier partnership deed of April 4, 1902 was revoked and the affairs of the firm were to be regulated by the new deed.
It was, however, provided that the withdrawal or death of a partner would not cause a dissolution of the partnership.
When the deed of 1934 was entered into, the de Id of 1918 was not revoked but only amended; it was, however, provided that the principal deed of partnership to wit of 1918 would remain in force in so far as it was not inconsistent.
Sometime in the year 1932 or thereabout, the firm had started the manufacture and sale of soaps under the name of "The Vegetable Soap Works" Proprietors Sait Nagjee Purushotham & Co. and perhaps the manufacture and sale of umbrellas in Calicut with branches at Madras and Bombay under the name and style, at Calicut and Madras, of "Sait Nagjee Purushotham & Co. Soap and Umbrella Merchants", and at Bombay of "Sha Nagjee Purushotham & Co.".
It may be pointed out that the words "Sha" and "Sait" mean the same thing, and the names were not different.
In 1937, one Hemchand a stranger to the family was admitted as a working partner.
On May 30, 1939, two 110 deeds were executed.
They are respectively marked C1 and C2.
Cl was executed by Nagjee, Narayanjee, Manecklal and Hemchand.
C2 was executed by Nagjee, Narayanjee and Manecklal.
In Cl the preamble was as follows: "Whereas Partners 1 to 4 have been carrying on a business as Partners from the beginning of Samvat 1994 (Guzarathi Era) in the manufacture and sale of Soaps under the name of "The Vegetable Soap Works" Proprietors Sait Nagjee Purushotham & Co., and in the manufacture and sale of Umbrellas in Calicut with branches at Madras and Bombay under the name and style of Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants at Calicut and Madras and in the name of Sha Nagjee Purushotham & Co. at Bombay hereinafter called the Firm.
" The terms relevant to our purpose were: 1.
The Firm shall continue to be as of old namely Sait Nagjee Purushotham & Co. Soap and Umbrella Merchants.
The Firm shall continue to do business in the manufacture and sale of soaps under the name of the "Vegetable Soap Works" and in umbrellas under the name of "Sait Nagjee Purushotham & Co. Soap and Umbrella Merchants as aforesaid with I lead Office at Calicut and branch at Madras under the same name and branch at Bombay under the name of "Sha Nagjee Purushotham & Co." 2.
"The business of the Firm shall be carried on by Partner No. 4 Hemchand Virjee Sait according to the directions of Partners 1 to 3 and the said Hemchand Virjee Sait is to manage work and assist the business of the firm and he shall be called hereinafter the Workinh Partner;" 14.
"The working Partner Hemchand Virjee Sait may draw on the First of each month the monthly sum of Rs. 400 only from out of the Firm 's account on account of the share of his 111 profits for the current year, but if on taking the annual account it shall appear that the monthly sums drawn out by him exceed his share of profits he shall forthwith refund the excess." 15. "The Profits and Losses shall be divided and apportioned in the following proportion: Partner No. 1 shall have 3 annas 8 pies in the Rupee; Partner No. 2 shall have 3 annas 8 pies in the Rupee; Partner No. 3 shall have 3 annas 8 pies in the Rupee; and Partner No. 4 shall have 5 annas in the Rupee.
On taking the accounts if it is found that the Finn has in curred a loss the aggregate of the monthly sums drawn by the Working Partner shall at once be refunded by the Working Partner to the Firm along with his share of the loss.
"It is hereby agreed that the working Partner should invest a sum of Rs. 15,000 as deposit in the Firm of Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn Merchants, Calicut and such money shall remain in deposit as long as he remains a Partner and such amount shall carry interest at such rates of interest as the Firm of Sait Nagjee Purushotham & Co., Bankers, Piecegoods and Yarn Merchants may agree from time to time.
" In C2, the preamble was: " . . .
Whereas the remaining partners (1) Nagjee Amersee Sait, (2) Narayanji Purushotham Sait and (3) Manecklal Purushotham Sait settled the claims in full of the partners who ceased to exist and agreed to carry on and continue and are continuing the existing partnership business under the name and style of "Sait Nagjee Purushotham & Co." Bankers, Piece goods and Yarn Merchants, hereinafter called the "FIRM" 112 The relevant terms were: "2.
The Agreement of Partnership dated the 6th day of December 1918 is hereby revoked and the affairs of the Firm shall be regulated and governed by the Regulations agreed upon orally and reduced into writing in this Deed and the terms and conditions of the revoked deed shall not in future apply to the "Firm" ' except such as have been repeated in this Deed.
All the partners hereby agree that they in their individual capacity are and shall be Partners also along with Hemchand Veerji Sait in a Partnership business in Soaps and Umbrellas carried on in Calicut and Madras under the name and style of Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants and in Bombay under the name and style of Shah, Nagjee Purushotham & Co. the terms and conditions whereof are embodied in an Agreement of Partnership dated 30 5 1939 signed by all the Partners." ' Both deeds provided again that the partnerships would not be dissolved by the death or retirement of a partner.
Nagjee died in August 1943 and Hemchand retired on October 31, 1943.
On October 30, 1943, a fresh deed of partnership was executed by Narayanjee and Manecklal who were continuing as partners from 1918 and two other members of the family namely Liladhar and Prabhulal and to the benefits of partnership Jayanand Nagjee who was a minor, was admitted.
The preamble was as follows: ". .
And whereas partner No. 4 Hemchand Veerjee Sait: has decided to retire from the said partnership, business as from 31 10 1943. . .
And whereas the remaining partners are willing and have agreed to take as new partners Leeladhar Narayanjee Sait and Prabhulal Narayanjee Sal , sons of Narayanjee Purushotham Sait as from 31 10 1943.
113 And whereas the remaining partners along with the new partners now included in the Deed of Partnership, have agreed to carry on and con tinue as one, single partnership business, the existing partnership businesses of "Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn merchants, "Sait Nagjee Purushotham & Co. Soap and Umbrella merchants".
And whereas it is thought advisable and prudent to reduce into writing the terms and conditions agreed upon orally by them the partners agree and have agreed to the following terms and conditions stipulated hereunder : The operative terms relevant to our purposes were the following: "The Agreements of Partnerships dated 30th May 1939 entered into by (1) Nagjee Amersee Sait, (2) Narayanjee Purushotham Sait (3) Maneck lal Purushotham Sait and (1) Nagjee Amersee Sait (2) Narayanji Purushotham Sait (3) Manecklal Purushotham Sait and (4) Hemchand Veerji Sait and registered as 98 and 97 in the Joint 11 Sub Registrar 's Office, Calicut respectively, are hereby revoked and the affairs of the firm shall be regulated and governed by the regulations agreed upon orally and reduced into writing in this deed of Partnership; and the terms and conditions of the revo ked Deed shall not in future apply to the Firm except such as have been repeated in this Deed.
The firm name shall be "Sait Nagjee Purushotham & Co. Bankers, Piece goods, Yarn, Soap and Umbrella merchants.
" 2.The partners of the firm are (1) Narayanjee Purushotham Sait, (2) Manecklal Purshotham Sait, (3) Jayanand Nagjee Sait (Minor) represented by guardian Manecklal Purushotham Sait (4) Leeladhar Narayanjee Sait and (5) Prabhulal Narayanjee Sait." 134 159 S.C. 8.
114 The rest of the terms followed the same pattern as before.
In 1948, a limited liability company was formed under the name of Sait Nagjee Purushotham & Co., Ltd. and an agreement was made by which Sait Nagjee Purushotham & Co. represented by the then partners Manecklal, Liladhar, Jayanand and Prabhulal sold to the company the goodwill, assets etc.
of the firm.
The question in this case is whether the appellate firm was entitled to the benefits of section 25 (4) of the Income tax Act, and if so, to what extent.
The answer to the question depends on (a) whether the business on which tax was paid under the provisions of the Indian Income tax Act, 1918 had discontinued at any time before 1948 or (b) whether there was a succession by another person for the person who was carrying on business on April 1, 1939.
My learned brethren consider that there was a discontinuance in 1937 39 of the original business by reason of the division of the original business into two divisions and the admission of Hemchand as a partner in one of the divisions.
The Department as respondent contends that there was a succession in 1939 and again in 1943, because in those years a different person succeeded to the person carrying on business on April 1, 1939.
The contention of the Department has so far succeeded and I need not give the details of the decisions of the various Tribunals under the Indian Income tax Act and the High Court, because my learned brother 's judgment gives all such details.
I shall therefore address myself to the questions (a) whether there was a succession in 1948 for the first time when the company succeeded the firm, to entitle the firm to the benefits of section 25 (4): (b) whether there was, prior to 1948, a discontinuance of the business on which tax was charged under the provisions of the Indian Income tax Act and (c) whether there was, prior to 1948, succession by another person to the person who had paid the tax under the provisions of the Income Tax Act, 1918 after April 1, 1939? If the answers to (b) and (c) be in the negative, (a) must be answered in the affirmative, but if the answer to either (b) or (c) be in the affirmative,(a) must be answered in the negative.
It is necessary at this stage to read section 25 which deals with assessment in case of discontinued business.
The first two 115 sub sections deal with cases to which sub section
3 is not applicable.
The first sub section lays down how the business is to be assessed when it is discontinued in any year and sub section 2 provides that any person discontinuing business must give a notice on pain of a penalty.
We are not concerned with these sub sections.
Sub section
(3) and sub section
(4) in so far as it is relevant for our purpose, are as follows: Sub section
(3) "Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918 (VII of 1918), is discontinued, then unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.
" Sub section (4) "Where the person who was at the commencement of the Indian Income tax(Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the 116 first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a ref und shall be given of the difference: Provided. . . .
Sub section
(4) was inserted by the Indian Income tax (Amendment) Act, 1939 (VII of 1939), which also introduced the words underlined in sub section
Sub section
(4) and the amendment to sub section
(3) were to come into force from April 1, 1939 by virtue of notification No. 7 of the Central Government dated March 18, 1939.
Under section 3 of the Indian Income tax Act, 1918, the subject of the tax was not the income of the previous year of assessment, but the income of the assessment year.
By the.
Act of 1922, a change was introduced and the tax was payable on the income of the previous year in the following year which was the year of assessment.
Any business which was in existence and earning profits in the year 1921 and continued in the year 1922 was required to pay tax on its profits of 1921, once under the Act of 1918 and again under the Act of 1922.
In the 1922 Act, a provision was made to give relief to any business which had paid such double tax when it discontinued busi ness.
When the 1939 amendment was made, relief was given by sub section
(4) to a person who had paid tax under the Act of 1918 when he was succeeded in his business by another person.
It will, however, be noticed that the two sub sections were mutually exclusive.
If there was a succession, then, sub section
(4) was applicable.
Sub section
(3) was only applicable when the business was discontinued.
It will further be noticed that the term "succession" was not 117 to include a change in the constitution of a partnership.
In this case, the claim to the benefit of sub section
(4) was made by the company on the basis of a succession either on November 13, 1947 or on February 13, 1948.
The Income tax Officer held that a succession had taken place in 1943 when on the retirement of Hemchand, the two separate businesses formed under exhibit Cl and C2 were amalgamated.
The Appellate Assistant Commissioner agreed with this conclusion.
The Tribunal also held that the business in soap and umbrella was different from the business of banking, piece goods and yarn, and the amalgamation of these two businesses in 1943 amounted to a succession by a newly constituted firm.
The High Court held on reference that the firm constituted under the deed of 1918 was dissolved in 1939 and the firms constituted under the two deeds of 1939 were dissolved in 1943.
The High Court, therefor,, held that succession had taken place in 1939 and again in 1943 and the claim on the basis of the transfer to the limited liability company in 1948 was too late.
In coming to the conclusion that the firm constituted under the deed of 1918 was dissolved, the High Court relied upon cl. 2 of the deed exhibit C2.
The two sub sections which have been quoted apply differently, because in sub section
(3) the emphasis is on the discontinuance of the business which had paid tax under the 1918 Act while the emphasis in sub section
(4) is on succession to a person who, on April J., 1939, was carrying on any business on which tax was at any time charged under the Act of 1918.
The former regards the continuity of the business which had paid tax under the Act of 1918 and the latter the continuance of the person who, on April 1, 1939, was carrying on the business which had paid such tax.
There cannot, therefore, be a case in which both the sub sections apply at the same time, because the intention is obviously to keep them separate and when sub section
(4) was added, sub section
(3) was amended by the addition of the words "unless there has been a succession by virtue of which the provisions of sub section
(4) have been rendered applicable.
" The main idea is the continuance of business unless there has been a succes sion.
The question that arises is whether there was at any time a dissolution of the partnership and if so, whether; it 118 amounted to "discontinuance" of business for the application of sub section
(3) or a succession by the formation of an entirely new firm for the application of sub section
For this purpose, I shall first discuss what is the position of a partnership under the ordinary law of partnership and under the Income tax Act.
At the outset, I must draw attention to a few fundamental facts.
It was pointed out by this Court in Charandas vs Haridas(1) that those whose duty it is to apply the provisions of the Income tax Act must bear in mind that what may be the resulting position under the law of partnership and/or the Hindu Law is not necessarily the resulting position under the Income tax Act.
This case is another example of the difference of approach to the same facts under the law of partnership and the Income tax law.
In Dulichand vs The Commissioner of Income tax, Nagpur (2) , it was pointed out by this Court that commercial men and accountants are apt to look upon a firm in the light in which lawyers look upon a corporation, that is, as a body distinct from the members composing it, and such a separate existence has been recognised under the Scottish law.
But under the English Common Law, a firm is not regarded as a separate entity from the members composing it.
The Indian Partnership Act has accepted the English Common Law though mercantile usages have crept into business accountancy and the Civil Procedure Code allows a firm to sue or be sued in the firm 's name provided the names of the partners are disclosed.
Under the Income tax Act, however, a firm is by section 3 made a unit or assessment, but this personality does not make the firm a person in every sense of the word.
It only makes it an assessable unit.
A firm is not a "person" and cannot enter into partnership with an individual, with another firm or with Hindu Undivided family.
Section 26 recognises the existence of a firm as an asses sable unit and provides for taxation in the event of changes in the constitution of firms.
The first sub section deals with a change in the constitution of the firm or where a firm has been newly constituted and the second sub section where there is a succession to the person (which includes a firm) (1) (2) [1956] section C. R. 154. 119 by another person.
This sub section deals with all cases of succession except those dealt with under sub section (4) of section 25 already set out.
Section 25 provides for discontinu ance of business.
Discontinuance is thus not a mere change in the constitution of the firm nor even succession where, though the business changes hands, the business itself is carried on.
It was recently pointed out by us in Shivram Poddar vs Income tax Officer, Calcutta and another(1) thus: "Under the ordinary law governing partnerships, modification in the constitution of the firm in the absence of a special agreement to the contrary amounts to dissolution of the firm and reconsitution thereof, a firm at common law being a group of individuals who have agreed to share the profits of a business carried on by all or any of them acting for all, and supersession of the agreement brings about an end of the rela tion.
But the Income tax Act recognises a firm for purposes of assessment as a unit independent of the partners constituting it; it invests the firm with a personality which survives reconstitution.
A firm discontinuing its business may be assessed in the manner provided by section 25 (1) in the year of account in which it discontinues its business; it may also be assessed in the year of assessment.
In either case it is the assessment of the income of the firm.
Where the firm is dissolved, but the business is not dis continued, there being change in the constitu tion of the firm, assessment has to be made under section 26 (1), and if there be succession to the business, assessment has to be made under section 26 (2).
" Therefore when in sub section
(4) the word 'person ' is used, it is intended to include not only an individual but also a firm.
This is also clear from the words "not being merely a change in the constitution of a partnership." Since the In come tax Act assesses a partnership as a unit and such units (1) Civil Appeal NO.
455 of 1963 decided on Dec. 13, 1963.
120 must, in the past, have been assessed to tax under the Act of 1918, sub section
(4) allows a partnership to obtain the benefits of sub section
(4) when there is a succession and a partnership does not loose this benefit if there has been a mere change in the constitution of the partnership without there being a succession.
The business, if it continues, obtains a similar benefit when it is discontinued.
In this way all cases of discontinuance of business are treated under the 3rd sub section and all cases of succession under the fourth sub section and all cases of mere change in the constitution of the firm, are neither cases under the third nor under the fourth subsections.
In this case, we have, therefore, to find out firstly what is meant by discontinuance of a business.
Next, we have to find out what is comprehended within the expression "a change in the constitution of a partnership".
It is only if there was a discontinuance of the business before 1948 or a succession not amounting to a mere change in the constitu tion of the partnership between 1939 and 1948 that the appellants can be denied the benefit of section 25.
The expressions, that is to say, "discontinuance" and "succession not amounting to a change of the constitution of a firm" have received exposition in the past.
It is hardly necessary to refer to the large number of cases in which the matter has been discussed, because the leading case on the subject of discontinuance is Commissioner of Income tax, Bombay vs P. E. Polson(1) and on the subject of succession Commissioner of Income tax, West Bengal vs A. W. Figgies & Co. and others 2 It will be sufficient to refer to these two cases.
To begin with, it must be remembered that the soap business commenced in the year 1932 and did not pay tax under the Act of 1918.
Though there is nothing to show when the umbrella business commenced, it is almost certain that it did not pay tax under the Act of 1918.
In any event the burden was on the assessee firm to ?rove this before claiming relief.
These facts are fundamental, because, if the umbrella and soap business were never assessed to tax under the Act of 1918, they are out of the picture and in respect of these businesses, the assessee firm was not at all entit (1) (2) ; 121 led to relief.
Section 25 (3) and (4) do not apply where the business was not in existence before the Act of 1922 came into force.
A clear authority for this proposition is to be found in the decision of the Bombay High Court in Ambalal Himatlal vs Commissioner of Income tax and Excess Profits Tax, Bombay North(1).
In that case, a Hindu Un divided family was carrying on three separate businesses, namely money lending, running a ginning factory and a share business.
This family disrupted in 1943 and divided the business among its members, and claimed the benefit of section 25(4) in respect of all the three businesses.
It was found that only the money lending business had paid tax under the Indian Income tax Act of 1918.
It was held by Chagla C.J. and Tendolkar J. that the assessee was entitled to the bene fit mentioned in section 25 (4) only in respect of the money lending business.
Chief Justice Chagla observed at p. 287 thus: "But before us we have a clear and categorical finding that the three businesses of the assessee were distinct businesses and, therefore, it cannot be stated that the relief which was intended for the money lending business which was carried on by the assessee and which was subjected to tax under t he Act of 1918 should be extended to the business of running the ginning factory and the share business which were not in existence and which were not subjected to tax under the Act of 1918.
The answer, therefore, to the question put to us will be that the assessee is entitled to the benefit mentioned in section 25(4) only in respect of the money lending business." No finding in the present case is necessary, because the clear fact is that the soap business was not even in contemplation, much less in existence before 1922 and the same is true of the umbrella business also.
The relief could therefore be claimed only in respect of the remaining businesses namely in piece goods, yarn and banking which were started in 1902 and which admittedly continued without break till 1948.
Since no claim in respect of the business of umbrellas and soaps could at all be entertained, any dealing with that part (1) 122 of the business by the assessee firm would not affect the questions in this case.
Indeed, the agreement to separate the umbrella and soap business when Hemchand was admitted as a partner in 1939 was in keeping with the continuance of the original business as an entity by itself and emphasised its separate character.
From the record it appears that the old and the new businesses were also separately assessed.
It is only this one entity to which the provisions of section 25 must be applied and in respect of which it must be considered whether there was a discontinuance or a succession at an earlier period.
I shall first examine the question of discontinuance.
The Judicial Committee in Polson 's case considered what was the meaning of the word "discontinuance '.
In that case, Polson who was carrying on business assigned it to a limited com pany on January 1, 1939.
He had paid tax in respect of the business under the Act of 1918.
In the assessment year 1939 40, he claimed that in view of the provisions of section 25 (3) of the Act of 1922, as amended in 1939, his income from the business made during the year 1938 was not taxable.
It was held that he was not entitled to the benefit of section 25 (3) as the business was not discontinued.
The High Court of Bombay upheld the contention of Polson, but the Privy Council reversed the decision approving the decision of the Madras High Court in Meyyappa vs Commissioner of Income tax, Madras(1).
Lord Simonds pointed out that on January 1, 1939, Polson had ceased to be the owner of the business and therefore he was not carrying it on "at the commencement of" the amending Act.
Since those words meant the date when the Act came into force on April 1, 1939, they could not be carried back to a date anterior to April 1, 1939 and on that date Polson ceased to be the owner of the business.
As regards the words "discontinued" and "discontinuance" in section 25, Lord Simonds pointed out that they had been the subject of numerous decisions and that it had been uniformly decided that the words did not cover a mere change of ownership but referred only to complete cessation of the business.
Lord Simonds further observed "Their Lordships entertain no doubt of the correctness of these decisions, which appear to be in accord with the plain (1) ; I.L.R. 123 meaning of the section and to be in line with similar deci sions upon the English Income Tax Acts.
" It would therefore follow that by discontinuance in sub section
(3) is meant complete cessation of the business.
This cannot be said to have taken place in the present case in respect of all the businesses and a fortiori in respect of the business in piece ,goods, yarn and banking.
These businesses might have been managed by persons other than those who had paid the tax under the Act of 1918 a matter to be considered under the fourth sub section but they were not discontinued for the application of sub section
The Judicial Committee was not required to consider the matter from the point of view of succession, because sub section
(4) did not then exist.
The Privy Council case has been approved of by this Court in Figgies 's case to which I shall refer presently.
From this, it follows that there was no discontinuance of the business at any time between 1921 and 1948 or even thereafter.
The next question to consider is whether there has been a succession or a mere change in the constitution of the assessee firm in the years 1939 and 1948.
If we were to go by the original business, excluding the newly started busi ness of manufacture of umbrella and soap, I must say at once that there has been no succession and this case falls squarely within the rule of this Court in Figgies 's case.
But even if one were to include the umbrella and soap business, I am of opinion that this case does not cease to be covered by Figgies 's case.
I shall examine both the aspects of the matters separately.
I shall pass on immediately to the facts of Figgies 's case.
In that case, a partnership was formed in 1918 between Figgies, Mathews and Notley.
In 1924, Mathews retired.
In 1926, one Squire was taken as partner.
In 1932, Figgies retired.
In 1939, one Hillman was taken as a partner.
In 1943, Notley retired.
In 1945, one Gilbert was taken as a partner.
By that time, all the original partners had ceased to be partners and new ones had come in their place.
At every change, new deeds of partnership were executed and the shares were readjusted.
No doubt, the later deeds did not say that the earlier deeds were revoked but a glance at those deeds (which I have seen in the original brief of the 124 case) shows that they could not have existed side by side.
In any case, there was no incorporation of the earlier docu ments by reference and they must be taken to have been superseded.
In this case there is a definite statement that the earlier documents were 'revoked '.
But whether the word ,revoked ' is used or not, the resulting position is the same.
Some partners went out and others came in till the identity of the original partners was completely lost.
The question was whether, in these circumstances, there was a succession within the meaning of sub section
(4) of section 25.
This court observed: "The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change.
It follows from the provisions of the section that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case there is no devolution of the business as a whole." This court pointed out that though under the law of Partner ship a firm has no legal existence apart from its partners and it is merely a name to describe its partners compendiously, it is equally true that under that law also there is ordinarily no dissolution of the firm by the mere incoming or outgoing of partners.
This Court also pointed out that the position is a little different under the Income tax Act where a firm is charged as an assessable entity distinct from its partners who can also be assessed individually.
It was for this reason that sub section
(4) of section 25 expressly mentioned that a case of succession was not to be found where there was a mere change in the constitution of the firm.
In other words, though a firm was to be regarded as an entity for the purpose of the Income tax Act, that entity was not to be taken to be disturbed by the coming in or going out of partners any more than that entity could be disturbed under the law of Partnership.
Applying this test to the present case, it is quite clear that the identity of the entity was never lost and there was never a succession till the year 1948.
It must be remember ed that this was initially a business of a family but not in the 125 sense in which a Hindu Joint Family is said to have a business.
From the very start, certain members of the family alongwith a stranger (Bhagwanjee) carried on the business in piece goods etc.
In 1918, and in 1934 different deeds were executed but the basic deed was that of 1918.
By that time, Bhagwanjee had retired and the business was in the hands of only the members of the family.
Hemehand was then taken on in 1937 and in 1939, the original business was separated from the businesses newly started after 1922.
Hemchand was given a share only in the newly started businesses to which section 25 could not possibly apply.
When Hemchand retired, those businesses were also taken over and merged with the original business.
In other words, the original business continued till 1943 in the hands of Narayanjee and Manecklal who were partners as far back as 1918 and three younger members of the family.
In 1948, Manecklal and those three other members of the family sold this business to the company.
It cannot be said these changes were not covered by the expression "a change in the constitution of the firm" and were comprehended in the term 'succession '.
No question of the dissolution of the firm Sait Nagjee Purushotham & Co. ever arose.
It continued right through; even the newly started businesses were owned by, it and though for a time the newly started businesses and the other business were kept distinct so that the stranger Hemchand could not get the benefit of partnership in the Head Finn, it cannot be said that the old firm had either discontinued or had been succeeded to by another person.
Hemchand was merely taken on as a working partner.
His rights in the firm were extremely ,slender; he had to make a deposit of Rs. 15,000 with the head firm and he was to get a remuneration of Rs. 400 p.m. which was to go up or down according to the profits.
In other words, he was a mere employee though described as a working partner.
As was pointed out by Chagla C.J. in .,Commissioner of Income tax, Bombay City vs Kolhia Hirdagarh Co. Ltd., Bombay(1) and again in Commissioner of Income tax, Bombay City vs Sir Homi Mehta 's Executors (2), such documents must be interpreted not in a legalistic way (1) (2) 126 but on their true business aspect.
Says the learned Chief ' Justice in the former case: "It is open to us not merely to look at the documents themselves, but also to consider the surrounding circumstances so as to arrive at a conclusion as, to what was the real nature of the transaction from the point of view of two businessmen who were carrying out this transaction.
In all taxation matters more emphasis must be placed upon the business aspect of the transaction rather than on the purely legal and technical aspect;. " ' Judged from this standpoint, the entry of Hemchand was not a dissolution of the firm of Sait Nagjee Purushotham and Co. He was brought in merely to do the business at one of the branches and to receive remuneration for doing the work.
No doubt he was described as a working partner, but this, term did not mean much.
The very fact that he was not taken on in the original business also shows that the original business in respect of which alone the benefit of section 25(3) and (4) can be claimed, continued uninterrupted.
The changes, in 1939 and 1943 therefore had no effect upon this claim.
Reliance was placed upon a decision of the Madras High Court in S.N.A.S.A. Annamalai Chettiar vs Commissioner of Income tax, Madras(1) as to the meaning of the word "dis continuance".
In that case, a Hindu Undivided family con sisting of a father and son were carrying on money lending business under different vilasams.
On March 28, 1939, there was a family partition and some vilasams were allotted to the father and the rest to the son, and he was the assessee ' In the assessment year 1939 40, the son claimed that there was a discontinuance of the business within the meaning of section 25(3) of the Income tax Act, 1922 and claimed the benefit of that sub section on the ground that the business of them joint family was taxed under the Act of 1918 and he was not liable to pay tax for the period between April 13, 1938 and March 28, 1939.
It was held by Satyanarayana Rao and Raghava Rao JJ.
that as the joint family was split up, the (1) (1951) 20 I.T.R.38.
127 business no longer continued in existence, but was terminat ed and there was a "discontinuance" within the meaning of section 25(3) and the family was entitled to the benefit of that sub section.
Satyanarayana Rao, J. held that as the unit had disintegrated into its component parts so as to annihilate the unity of the business, each part which was thus divided was not identical with the whole, even though all the parts taken together constituted the whole and that, when the unifying principle of that whole no longer existed, the parts gained their individuality and became separate and distinct.
The learned Judge held that there was discontinuance.
Looked at from the point of view of Hindu Law, all these results may be said to follow.
But, looked at from the point of view of section 25(3), the business could be said to have ceased.
The Income tax Act thinks, not in terms of joint family business, but in terms of business in a business sense, and it is the business which was taxed under the Act of 1918 which must cease to exist before the benefit of section 25(3) can be obtained.
It is possible that the decision might be justified on the ground that the benefit was being claimed by one of the members of the erstwhile family and not by the whole family, though I express no opinion upon it, but even so that would be a case of succession rather than of discontinuance.
The Madras case cannot, however, be made applicable to the present facts, because, as pointed out already by me, there was no cessation of business in so far as the original business of piece goods, yarn and banking was concerned.
That business continued in the hands of the same person who had paid tax under the Act of 1918 though there were changes in the constitution of the partnership in the years that passed.
I may refer here to a case decided by the Rangoon High Court in Commissioner of Income tax Burma vs A.L.V.R.P. Firm(1).
In that case, a Hindu undivided family of Rangoon which consisted of two brothers carried on moneylender business under a single vilasam but with shops at several places including a shop at Rangoon.
The shops at each of these places had separate capital and there were separate agents to manage the shops but there was a central system of accounts at one place showing the financial position of (1) ; 128 the family.
In 1938 1939, the two brothers effected a partition and the Rangoon shop was thereafter conducted by the two brothers in partnership.
On these facts, it was held by a Full Bench of the Rangoon High Court that there was no succession within the meaning of section 26(2) of the In come tax Act.
It was pointed out that the family did not carry on separate businesses at each of the five places but had only a number of branches at these places of the same business and in order that there, might be a succession, it was necessary that the person succeeding should have succeeded his predecessor in carrying on the business as a whole.
The case was under section 26(2) and slightly different considerations govern section 25 (4) which have induced the legislature to keep the two sections separate.
While it is possible that there may be a succession only to the business which had paid tax under the Act of 1918 for purposes of section 25(4), as is the case here, a complete change of ownership of all the businesses is necessary for purposes of section 26(2) before it can be said that there is succession.
In both sections, change does not mean that every one who owned the former business should leave it and go away.
The identity of the person who owned it before and the identity of the person who owned it later must, however, be distinct.
In the present case this has not happened.
All the facts have, perhaps, not come on the record with that clarity with which they should have, but as pointed ,out by Chagla C.J. in Jesingbhai Ujamshi vs Commissioner of Income tax, Bombay Moffusil(1), there is nothing in law to preclude common partners constituting two entirely separate firms in respect of different businesses carried on by them for the purpose of the Indian Income tax Act.
Where they do this, it is mainly a question of fact whether there has been a succession to one of such partnership or not, whether for the purpose of section 26 or for the purpose of section 25 (4).
But it must be remembered that under section 25(4), a mere change in the constitution of the partnership does not count and sections 25 (4) and 26 (2) do not apply at the same time.
I am not prepared to say that in this case in respect of +the original business there was anything more than a mere change in the constitution of the partnership.
The business of (1) 129 umbrella and soap which never paid tax under the Act of 1918 could be dealt with by the partners as they liked without affecting the question of relief under section 25 in respect ,of the head business.
In my judgment, these appeals must be allowed anD the question answered in favour of the assessee firm but only in respect of the business in piece goods, yarn and banking which alone had paid tax under the Income tax Act of 1918.
I would therefore allow the appeals with costs here and in the High Court.
ORDER BY COURT In accordance with the opinion of the majority the appeals are dismissed with costs.
| By section 25 (4) of the Income tax Act, "Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939.
carrying on any business, profession or vocation in which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession." A firm bearing the same name as the appellant firm, had been carrying on business from before 1918 and had paid tax on that business under the Income tax Act, 1918.
The firm did three kinds of businesses, namely, (a) in piece goods, yam as general merchants, 92 (b) in the manufacture and sale of umbrellas and (c) in the manufacture and sale of soaps.
There were various changes in the constitution of the firm between 1918 and 1934.
In May 1939 two, documents were executed, one by the then members of the firm, and a stranger H. being exhibit CI and the other by those members alone,.
being exhibit CII.
It appeared from exhibit CI that the business in the manufacture and sale of umbrellas and soaps was being carried on from October November 1937 by the parties to it as partners while exhibit CII showed that the parties to it had been carrying on the business in yarn piecegoods and as general merchants as partners from the same time as mentioned in exhibit Cl.
On October 30.
1943 a document styled as an agreement of partnership was executed by five persons who were then the persons interested in the businesses carried on under the instrument of May 30, 1939.
This document referred to the two, agreements of partnership of May 30, 1939 and certain subsequent retirements of partners and admissions of new partners and provided that the businesses previously carried on by the two partnerships.
referred to in the instruments of May 30, 1939, would thereafter be carried on by one single partnership constituted by the parties to it.
Thereafter all the businesses aforesaid were carried on by this single partnership.
The firm constituted by the instrument of October 30, 1943 continued with certain changes in its constitution till February 7, 1948 when the then partners of, it entered into an agreement with a company to transfer the business of the firm to the latter, the transfer to be completed by February 13, 1948 and the transfer was in fact made.
The firm constituted by the document of October 30, 1943 claimed relief under section 25(4) in assessment for the years 1948 49 and 1949 50 on the ground that it had been carrying on a business on April 1, 1939 when the Income tax (Amendment) Act, 1939 commenced; to operate on which business tax had been charged under the Act of 1918 and that it was succeeded in that business by a company in February 1948.
Held: (per Sarkar and Shah JJ.).
The assessee was not entitled to the relief.
Cl and CII showed that the business that had been carried on by the firm existing in 1918 was discontinued in October/November 1937 and its businesses were split up into two and from then carried on by two independent partnerships brought into existence by those documents.
The old firm was brought to an end by Exs.
Cl and CII.
When a business carried on in one unit is disintegrated and divided into parts, the parts are not the whole, though all the parts taken together constitute the whole.
In such case there is a discontinuance of the original businesses.
section N. A. section A. Annamalai, Chettiar vs Commissioner of Income tax, Madras, referred to.
93 The business on which tax had been charged under the Act of 1918 was not being carried on April 1, 1939 by the firm which had paid tax under that Act.
The business to which the company succeeded under the agreement ,of February 7, 1948 cannot before the succession be said to have been carried on by a firm which was carrying on business on April 1, 1939, for that firm had been newly formed under the instrument of ,October 30, 1943, which expressly revoked the partnership agreements of May 30, 1939 under which two firms had been brought into brought into existence.
Per, Hidayatullah J. (dissenting) (i) Sub sections
(3) and (4) of section 25 ,of the Act are mutually exclusive . sub section
(3) was only applicable when the business was discontinued and that in the term "succession" was not to be included a change in the constitution of the partnership.
In sub section
(4) the emphasis is on succession to a person who on April 1, 1939 was carrying on any business on which tax was at any time ,charged under the Act 1918.
In sub section
(3) the emphasis is on the discontinuance of the business which had paid tax under the Act 1918.
(ii) There is difference of approach to the same facts under the law of partnership and the Income tax law.
Charandas vs Haridas, (1960)39 and Dulichand vs ,Commissioner of Income tax, Nagpur, [1956] S.C.R. 154, referred to.
(iii) Discontinuance of a firm is not a mere change in the constitution of the firm or even succession where, though the business changes hands, the original business which paid the tax in 1918 is carried on.
Shivram Poddar vs Income tax, Officer, C. A. No. 455 of 1963 dated December 13, 1963, referred to.
(iv) All cases of discontinuance of businesses are treated under sub section
(3) and all cases of succession under sub section
(4) and all cases of mere change in the constitution of the firm are neither cases under sub section
(3) nor under sub section
These sub sections do not apply to cases where the business was not in existence before the Act 1922 came into force.
Ambalal Himatlal vs Commissioner of Income tax and Excess Profits Tax, Bombay North, , referred to.
(v) Since the soap and umbrella businesses were not in existence and no relief could be claimed in respect of these businesses, changes in respect of them were irrelevant.
(vi) by the expression "discontinued" in sub section
(3) is meant complete cessation of business.
In the present case it could be said that this had taken place in respect of the piece goods business; this might 94 have been managed by persons other than those who had paid the tax under the 1918 Act, but the business was not discontinued for the application of sub section
Commissioner of Income tax, Bombay vs P. E. Polson, (1945)13 Commissioner of Income tax, West Bengal vs A. W. Figgies and Co. ; and Mevoppar vs Commissioner of Income tax, Madras, 1.
L. R. referred to.
(vii) In the present case there was no succession and it falls within the rule laid down by this Court in Figgies ' case.
(viii) Though a firm was to be regarded as an entity for the purpose of the Income tax Act, that entity was not to be taken to be disturbed by the coming in or going out of partners.
Applying the test to the present case it was held that the identity of the entity was never lost and there was never a succession till the year 1948.
No question of the dissolution of the old firm in piece goods business ever arose.
It continued right through, even other newly started businesses were owned by it.
It cannot be said that the old firm had either discontinued or had been succeeded by another person.
Hemchand was a mere employee though described as a partner.
The entry of Hemehand did not constitute a dissolution of the old firm.
Commissioner of Income tax, Bombay City vs Kolhia Hirdagarh, Co. Ltd., Bombay, (1949) 17 ; and Commissioner of Income tax, Bombay City vs Sir Homi Metters Executor, , referred to.
(ix) The appellants are entitled to succeed in their claim regarding the business in piece goods yarn and banking which alone had paid tax under the 1918 Act.
|
No. 7338 of 1981.
(Under Article 32 of the Constitution of India).
Ram Jethmalani and Miss Rani Jethmalani for the Petitioner.
G. Ramaswamy, Additional Solicitor General, R.P. Srivastava 634 and Miss. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The petitioner of this application under Article 32 of the Constitution is an engineer who was employed in the Central Public Works Department under the Ministry of Works and Housing in Government of India and was compulsorily retired by order dated 3.8.1976 with effect from 5.11.1976 made under Rule 56(j) of the Fundamental Rules.
He has assailed that order for retirement and has claimed payment of remuneration which he would have been entitled to draw upto the normal date of superannuation.
The short facts are these.
The petitioner was born on 10.2.1922 and secured his first appointment as a Section Officer under the named employer on 22.10.1947.
He was pro moted as officiating Assistant Engineer in class II service with effect from ' 25.5.
1954, and came to be confirmed as Section Officer by an order dated 8.10.1955.
On 3.7.1961, he was further promoted as officiating Executive Engineer in Class I service but on 4.9.1965, he was reverted to the post of Assistant Engineer in officiating position and was con tinuing in that post when he was compulsorily retired.
The vires of Rule 56(j) of the Fundamental Rules as also the power to compulsorily retire a public servant have been upheld by this Court and do not require to be re examined.
The basis of attack to the impugned order is as specified in Ground No. A and is to the following effect: "The impugned order is contrary to the judg ment delivered by this Hon 'ble Court on 26.2.1980, copy at Annexure C hereto.
(Union of India vs K.R. Tahiliani and Anr.) [1980] 1 SLR 847.
According to the said judgment F.R. 56 (j)(i) has no application to officiating government servants, hence can have no appli cation to the petitioner since the petitioner was an officiating government servant.
" The impugned notice ran thus: "No. 32/452/66 EC.
111 Government of India Central Public Works Department New Delhi, the 3.8.76 635 ORDER WHEREAS the Engineer in Chief is of opinion that it is in public interest to do so: NOW, THEREFORE, in exercise of the powers conferred by clause (j) of Rule 56 of the Fundamental Rules, the Engineer in Chief hereby gives notice to Shri A.L. Ahuja, As sistant Engineer (Civil), at present under suspension, that he, having already attained the age of fifty years on 10.2.1972, shall retire from service with effect from the forenoon of 3rd November, 1976, or, from the date of expiry of three months computed from the date of issue of the service of this notice on him, whichever is latter.
Sd/ (V.R .
VAISH) ENGINEER IN CHIEF To Shri A.L. Ahuja, Assistant Engineer (Civil), (Under Suspension), A11/85, Lajpat Nagar, New Delhi 110024.
" It is clear from it that the petitioner attained the age of 50 years on 10.2.1972 and, therefore, on the date of the order he had completed the age of 54 years.
Admittedly, he was holding a class II post when the impugned order was served on him.
Fundamental Rule 56(j) under which notice was given provides: "(j) Notwithstanding anything contained in this rule, the appropriate authority shall, if it is of the opinion that it is in the public interest so to do, have the absolute right to retire any Government servant by giving him notice of not less than three months in writ ing or three months ' pay and allowances in lieu of such notice; (i) if he is in Class I or Class II service or post (and had entered Government service before attaining the age 636 of thirty five years), after he has attained the age of fifty years; (ii) in any other case after he has attained the age of fifty five years; . . . . . . . . . . ." The appropriate authority is entitled to exercise power under clause (j) in the case of a Government servant in Class I or Class II service or post where he entered into service before attaining the age of 35 years after the said servant attained the age of 50 years; and in other cases after he has attained the age of 55 years.
In the instant case, the petitioner was promoted as officiating Assistant Engineer which is a Class II post on 25.5.
1954 and contin ued to hold that post when the order of compulsory retire ment was passed.
By 25.5.1954 the petitioner had not at tained the age of 35 years.
As already indicated above he had crossed the age of 50 years but had not attained the age of 55 years by the date of the impugned order.
Therefore, sub clause (1) was not contravened when the order was made.
It has been argued before us that as the petitioner was holding an officiating appointment in Class 117 he could not have been compulsorily retired under sub clause (i).
Support is claimed from the observations in the Tahilia ni 's case (supra).
The sole question that fell therein for decision before this Court was whether a Government servant officiating in Class I or Class II service or post could be retired compulsorily by exercising the power under Rule 56(j)(i) after he has attained the age of 50 years.
The two Judge Bench which decided the case held: " An officiating hand has no right to the post and is perhaps a fleeting.
bird who may have to go back to the substantive post from which he has been promoted on an officiating basis what is more to the point, a person who has been appointed de novo may begin his service on an officiating basis or on a tempo rary basis and it is obvious that he has no right to the post and cannot be strictly said to be in that service or post as a member of that service.
In short, an officiating Govern ment servant does not really belong to Class I or Class II service until he acquires a right thereon.
Even viewed closely and meticulously, the structure of the clause, namely, "if he is in Class I or Class II 637 service or post", emphasises the nature of the service or post vis a vis the Government servant concerned.
We need not go into the semantic shapes, lexical niceties or linguis tic nuance but only go through the meaning and purpose of the provision.
When a Government servant belonging to a Class I or Class II service or post on regular basis has to be retired compulsorily, Rule 56(j)(i) comes to the rescue of the Government.
But if he is only a temporary hand, he has no right to the post and can always be reverted to the post, if any, on which he has a lien.
Similar is the position of an officiating hand.
Thus we have reached an inevitable conclusion that Rule 56(j) is meant to cover only those who are in a post on a regular basis, i.e. in a substan tive capacity, and not on an officiating basis only.
" Strong reliance was placed by counsel for the petitioner on the reasons extracted above.
It is clear that sub clause (ii) is the general rule applicable to all Government servants and sub clause (i) carves out a class of Government servants into a category and makes a special provision.
We have already indicated that sub clause (ii) did not apply to the facts of this case as the petitioner had not attained the age of 55 years by the date of the order.
The observations made in Tahiliani 's case indisputably support the petitioner.
But the correct ness thereof is disputed by learned Additional Solicitor General appearing for the Union of India and that is why this writ petition was directed to be heard by a larger Bench.
There is no reference to officiating service in sub clause (i).
The relevant words used in sub clause (i) are "if he is in Class I or Class II service or post".
A person can be in Class I or Class II service or post even when he hold a post of either class substantively or temporarily or on officiating basis.
Instances are abundant where officers are promoted to Class I or Class II service or post of such class on officiating basis and such officiation lasts for a number of years.
Officiating promotion certainly does not confer a right to the post and at any time the Government servant may be sent back to his substantive post.
There is, however, no reasons why sub clause (i) should be confined to service or post held on substantive basis.
Learned counsel for the petitioner does not dispute the position that a person who is in Class I or Class II service or post is in such service or post as covered by sub clause (i).
The possibility of such incumbent being sent back to the 638 substantive post is not at all relevant in the matter of exercising powers of compulsory retirement.
If the officia tion is not brought to an end by reverting the Government servant to his substantive post before the power of compul sory retirement is exercised, the Government servant con cerned must be taken to be in Class I or Class II service or post at the relevant time and would come within the ambit of sub clause (i).
There is no warrant for the conclusion that officiating Government servants in Class I or Class II service or post are outside the purview of sub clause (i).
The possibility of a reversion to the substantive post is not germane to the exercise of power contained in F.R. 56.
The purpose of Fundamental Rules 56(j) is to confer power on the appropriate authority to compulsorily retire Government servant in the public interest and the classification of Government servants into two categories covered by sub clauses (i) and (ii) has a purpose behind it.
If the condi tion indicated in sub clause (i) is satisfied, namely, the Government servant is in Class I or Class II service or post and he had entered into service before attaining the age of 35 years, and has attained the age of fifty, the further condition that he must substantively belong to the two classes of service or post cannot be introduced into the scheme.
The purpose of the sub clauses is to classify Gov ernment servants into two categories and sub clause (i) takes within its sweep those Government servants who at the relevant time are in Class I or Class II service or post, whether substantively, temporarily or on officiating basis.
We would accordingly hold that the ratio of the decision in Tahiliani 's case is not correct and sub clause (i) of Rule 56(j) applies to Government servants in Class I or Class II service or post on substantive, temporary or offi ciating basis.
On this conclusion the writ petition is liable to be dismissed.
It has been represented to us by counsel for the petitioner that the similarly placed persons had gone before the Delhi High Court challenging the orders of compulsory retirement and the Delhi High Court relying upon Tahiliani 's case give them relief.
Such judgments have become final and Union of India has given effect to the decisions of the Delhi High Court.
When this was put to learned Additional Solicitor General he agreed that the Union of India will have no objection to treat the petitioner alike and would be prepared to give the same relief to the petitioner.
The petitioner would have superannuated from service on 29.2.1980 if he had not been compulsorily retired with effect from 639 5.11. 1976.
Even if the writ petition is allowed and the order of compulsory retirement is set aside the petitioner cannot go back to service.
But he would be entitled to pecuniary benefit of salary and allowances admissible under the rules.
Accordingly, we allow the.writ petition and direct the respondent to pay to the petitioner the salary and other allowances which would have been payable for the period between 5.11.
1976 and 29.2.
Such payment be made within two months from today.
There will be no order for costs.
WRIT PETITION NOS.
6251 & 8189 OF 1981 Each of the petitioners in these two writ applications under Article 32 of the Constitution was employed in the Central Public Works Department in the Ministry of Works and Housing of Government of India and has been compulsorily retired under Fundamental Rule 56(j).
The facts of each of these applications are more or less similar to those in Writ Petition No. 7338 of 1981 which we have disposed of today.
For the reasons given therein we allow each of the writ petitions and quash the order of compulsory retirement made against each of the petitioners.
By now both the petitioners would have retired from service and, therefore, they cannot be resorted in service.
They would, however, be entitled to salary and other service allowances payable to them from the date of compulsory retirement till the date of their normal superannuation.
There will be no order for costs.
H.L.C. Petition allowed.
| Fundamental Rule 56(j) confers power on the appropriate authority to compulsorily retire a Government servant, if it is in the public interest to do so, by giving 3 months ' notice or 3 months ' pay and allowances in lieu of such notice; while sub cl.
(i) thereof states that a public servant in class I or class II service or post who had entered service before attaining the age of 35 years can be retired after he has attained the age of 50 years, sub cl.
(ii) thereof states that any other public servant can be retired after he has attained the age of 55 years.
In Union of India vs K.R. Tahiliani & Anr., this Court had held that F.R. 56(j) is meant to cover only those who are in a post on a regular basis, i.e., in a substantive capacity, and not on an officiating basis only.
Basing his case on this decision, the petitioner, who had been compulsorily retired while working in a class II post In an officiating capacity, challenged the order of his compulsory retirement.
Overruling the decision in Union of India vs K.R. Tahi liani & Anr., but, allowing the petition on the ground that the Delhi High Court, relying upon that decision, had grant ed relief to persons similarly placed as the petitioner, and, directing payment of his salary and allowances upto the date of his normal superannuation, HELD: Sub clause (1) of r. 56(j) of the Fundamental Rules applies to Government servants in Class I or Class II service or post on substantive, temporary or officiating basis.
[638E F] There is no reference to officiating service in sub cl.
The relevant words used in sub cl.
(i) are "if he is in CIasa I or CIasa II service or post.
" A person can be in Class I or CIasa II service or post even when he holds a post of either ciasa substantively or temporarily or on officiating basis.
Instances are abundant where officers are promoted to CIasa I or Class II service or post of such class on officiating basis and 633 such officiation lasts for a number of years.
Officiating promotion certainly does not confer a right to the post and at any time the Government servant may be sent back to his substantive post.
There is, however, no reason why sub cl.
(i) should be confined to service or post held on substan tive basis.
It is not disputed that a person who is in Class I or Class II service or post is in such service or post as covered by sub cl.
The possibility of such incumbent being sent back to the substantive post is not at all rele vant in the matter of exercising powers of compulsory re tirement.
If the officiation is not brought to an end by reverting the Government servant to his substantive post before the power of compulsory retirement is exercised, the Government servant concerned must be taken to be in Class I or Class II service or post at the relevant time and would come within the ambit of sub cl.
There is no warrant for the conclusion that officiating Government servants in Class I or Class II service or post are outside the purview of sub cl.
The possibility of a reversion to the sub stantive post is not germane to the exercise of power con tained in F.R. 56.
[637F H; 638A C] The purpose of F.R. 56(j) is to confer power on the appropriate authority to compulsorily retire a Government servant in the public interest and the classification of Government servants into two categories covered by sub cls.
(i) and (ii) has a purpose behind it.
If the condition indicated in sub cl.
(i) is satisfied, namely, the Govern ment servant is in Class I or Class II service or post and he had entered into service before attaining the age of 35 years, and has attained the age of fifty, the further condi tion that he must substantively belong to the two classes of service or post cannot be introduced into the scheme.
The purpose of the sub clauses is to classify Government serv ants into two categories and sub cl.
(i) takes within its sweep those Government servants who at the relevant time are in Class I or Class II service or post, whether substantive ly, temporarily or on officiating basis.
[638C E] Union of India vs K.R. Tahiliani & Ant., , over rulled.
|
(C) No. 677 of 1988.
(Under Article 32 of the Constitution of India).
P.N. Duda, N. Safaya, P.K. Choudhary and Ms. Rekha Pandey for the Petitioners.
Kapil Sibal, Additional Solicitor General, Ms. A. Subha shini and K. Swamy for the Respondents.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
In this petition under Article 32 of the Constitution, the petitioners have questioned the con stitutional validity of Section 5 of the (12 of 1919) (hereinafter called 'the Act ').
The grounds on which the vires of the provisions is attacked are that the section gives an unguided, unchanelised and arbitrary power to the State Government to include any substance as poison for the purpose of restriction to be imposed on the posses sion for sale and sale of the same.
It was further contended that the restriction imposed on possession for sale and sale were not reasonable restrictions.
The petitioner 's have also taken the plea that though the Act is a Central enactment it is possible of unjust and unjustified discriminatory appli cation as it is left to each State Government to determine what substance they would include as poison and regulated and the decision in one State to include the substance as poison is not automatically made applicable to the other States.
The object of the enactment is to regulate the posses sion for sale and the sale, whether wholesale or retail of poisons and the importation of the same.
In other words, it is intended to control over the traffic in poisons.
Though the original enactment, the Poisons Act, 1904 was restrict ed, it was applicable to white arsenic, the expanded its provisions and enabled State Government to declare any substance as poison for the purposes of the Act by a notification under the Act or the rules made under the Act.
In exercise of this power by the Notification No. F. 10/44/72 fin.
(G) dated 7.8.1973 the Lt. Governor of Delhi amended the Delhi Poisons Rules, 1926 (hereinafter called the Rules) by including to the list of substances included in the Rules as "Poisons" "the substance commonly known 222 as 'thinner ' containing spirit and other soluble material such as shellac in which the percentage of such soluble material does not exceed 30%" as poison and consequential amendment of rules 12 and 13 of the Rules.
It was the con tention of the petitioners before the authorities that their "unit is manufacturing only those thinners which contain only liquid substance, like as ecotone, ethyl acetate SDS etc.
and not all solubles.
" According to them, therefore, the substance manufactured by them would not come within the amended Rules.
Though in the beginning the petitioners were contending that in substance manufactured by them did not come within Rule 2(x)(2) and there were some correspondence in this regard, when the competent authority held that the substance manufactured by the petitioners would come within the definition of 'thinner ' as contained in Rule 2(x)(2) of the Rules, the petitioners did not question the finding on any material.
Before us also they had not placed any materi al to show that the finding was wrong or that the substance would not come within Rule 2(x)(2).
In fact the learned counsel argued the petition on the basis that the petition ers are a manufacturer of 'thinner ' within Rule 2(x)(2) which has been declared as poison for purposes of the Act.
Originally the Act contained a schedule in which the list of substances declared as poisons were listed.
Later when Delhi Poisons Rules, 1926 were made in exercise of the powers under the Act those list of substances were included in the list enumerated in Rule 2 thereof.
Rule 2 was amended as already stated including 'thinner ' of the description mentioned therein as poison.
Section 5 of the Act the con stitutional validity of which is questioned reads as fol lows: "5.
Presumption as to specified poisons: Any substance specified as a poison in a rule made or notification issued under this Act shall be deemed to be a poison for the purpose of this Act.
" It was a law in force in the territory of India before the commencement of the Constitution and as such continued in force.
The Act is intended to regulate the importation, possession and sale of poisons.
Some substances were includ ed in the Rules made in 1926 as poisons and that is not in dispute.
Section 5 of the Act deals with presumption and states that any substance specified as a poison in a Rule or noti fication issued under the Act shall be deemed to be a 'po ison ' for purposes of the Act.
Rules of 1926 were made in exercise of the rule making power under Section 3 of the Act.
223 That Section enables the State Government to make Rules generally to carry out the purposes and objects of the Act.
Rules were amended in 1973 and duly notified as required by the Act.
Section 2(3) of the , 1/1904 defined poison as: "Any substance which were applied to the body internally or externally, or in any way intro duced into the system, is capable, without acting mechanically, but by its own inherent qualities,.
or destroying life? When this Act 1/1904 was repealed and re enacted as Poison Act 12 of 1919 the definition was omitted and speci fied substances were included in the schedule with a power vested in the State Government to amend the same by Rules including other substances to the list of poisons.
It is not all poisonous substances that are brought within the regula tion under the Act.
It is those substances which the Govern ment consider its possession for sale or sale to be regulat ed in the interest of health and safety of the society.
This limitation is inherent in the scheme of the Act itself.
Of course no comprehensive definition can be given to the word poison.
Under this term would fall anything calcu lated to destroy life.
Substances harmless in themselves might become poison by the time or manner of their adminis tration.
Nothing is a poison unless regard be had to its administration.
A substance may be a deadly poison or a valuable medicine according to how and how much is taken.
If the resultant effect of administering into the system pro duces a violent, morbid or fatal changes or which destroys living tissues, the substance can be safely called poison.
Section 4 of the Act impliedly sets out certain guidelines when the State can notify a substance as poison.
It states that the State Government may by rule regulate the posses sion of any specified poison in any local area in which the use of such poison for the purpose of committing murder or mischief by poisoning cattle appears to it to be of such frequent occurrence as to render restriction on the posses sion thereof desirable.
Any substance which is used for purposes mentioned therein can definitely be declared as poison.
That is what the Government have done in this case.
It has become a notorious fact, which we can even take judicial notice of, that the substance known as 'thinner ' as it is or mixing with some other substances are taken as intoxicating spirits endangering the life.
In many cases deaths have also occurred due to drinking such substance.
If the Government thought in the circumstances that the posses sion or sale of the same is to be regulated it could not be said that they have no power to regulate.
Section 2 224 also enables the Government by Rule to regulate the posses sion for sale and the sale of the specified poison.
It is in exercise of this power Rule 13 was amended by substituting the old Rule by the following Rule: "13 (1) All poisons kept for sale by any licence holder under these rules (except those kept by a chemist, druggist or compounder for the purchase of dispensing or compounding in compliance with the prescription of medical or veterinary practitioner) shall be kept in a box, almirah, room or building (according to the quantity maintained), which shall be secured by lock and key and in which no sub stance shall be placed other than poisons, possessed in accordance with a licence granted under the Act, and each poison shall .be kept within such box, almirah, room or building in a separate closed receptacle of glass, metal or earthenware.
Every such box, almirah, room or building and every receptacle shall be marked with the word 'poison ' in red charac ters both English and vernacular and in the case of receptacles containing separate 'poison ' with the name of such 'poison '.
Provided that above rule shall not apply to 'poison ' mentioned in Clause (x) of Rule 2.
(ii) All 'poisons ' mentioned in clause (x) of rule 2 shall be kept in a room or building (according to quantity maintained) which shall be secured by lock and key in a separate receptacle of glass, metal and earthenware etc.
Every such room building and every such receptacle shall be marked with the word 'poison ' in red character both English and vernacular, with the name of the 'poison '.
" We are not impressed with the argument that any require ment in this Rule is unreasonable or offends the petition ers ' right to carry on any trade or business.
The nature of trade in poison is such that nobody can be considered to have an absolute right to carry on the same.
It is a busi ness which can be termed even as inherently dangerous to health and safety of society in view of the rampant misuse and sale to the poor, weak and helpless as an intoxicant.
A law in such circumstance can regulate the trade.
This posi tion is well settled and it would be pedantic to cite all the authorities of this Court on this point.
It is also not necessary that the same substance should be declared as poison for the entire country.
The notification and its application to any area would depend on the necessity 225 to declare the substance as poison on the particular facts and situation prevailing in that area and the need to regu late the possession and sale in that area.
No question of discrimination can arise in such circumstances.
We are of opinion that the provisions of neither Section 2 nor 5 nor the impugned notification are hit by any consti tutional limitation.
The writ petition accordingly fails and it is dismissed.
Rule nisi is discharged.
No order as to costs.
| The Lt. Governor of Delhi amended the Delhi Poisons Rules, 1926 by the Notification No. F.10/44/72 fin.
(G) dated 7.8.1973 by including to the list of substances in cluded in the Rules as "Poisons", the substance commonly known as "thinner" containing spirit and other soluble material.
The petitioners in this petition under Article 32 of the Constitution questioned the constitutional validity of Section 5 of the on the grounds that the section gives an arbitrary power to the State Government to include any substance as poison for the purpose of restric tion to be imposed on the possession for sale and sale of the same; that the restriction imposed on possession for sale and sale were not reasonable restrictions; that though the Act was a Central enactment, it was possible of unjust and unjustified discriminatory application as it was left to each State Government to determine what substance they would include as poison, and that the substance, 'thinner ', manu factured by the petitioners would not come within the amend ed Rules.
Dismissing the petition, this Court, HELD: 1.
The object of the enactment is to regulate the possession for sale and the sale, whether wholesale or retail of poisons and the importation of the same.
In other words, it is intended to control over the traffic in poi sons.
The enabled State Government to declare any substance as poison for the purposes of the Act by a notification under the Act or the rules made under the Act.
[221 G] 3.
It is not all poisonous substances that are brought within the regulation under the Act.
It is those substances which the Government consider its possession for sale or sale to be regulated in the interest of health and safety of the society.
This limitation is inherent in the scheme of the Act itself.
[223 C D] 4.
No comprehensive definition can be given to the word, "poison".
Under this term would fall anything calculated to destroy life.
Substances harmless in themselves might become poison by the time or manner of their administration.
Noth ing is a poison unless regard be had to its administration.
A substance may be a deadly poison or a valuable medicine according to how and how much is taken.
If the resultant effect of administering into the system produces a violent, morbid or fatal changes or which destroys living tissues, the substance can be safely called poison.
Any substance which is used for purposes mentioned therein section 4 can definitely be declared as poison.
[223 D F] 5.
It has become a notorious fact that the substance known as 'thinner ' as it is or mixing with some other sub stances are taken as intoxicating spirits endangering the life.
In many cases deaths have also occurred due to, drink ing such substance.
If the Government thought in the circum stances that the possession or sale of the same is to be regulated it could not be said that they have no power to regulate.
Section 2 also enables the Government to regulate the possession for sale and the sale of the specified poi son.
[223 G H; 224 A] 6.
The nature of trade in poison is such that nobody can be considered to have an absolute right to carry on the same.
It is a business which can be termed even as inherent ly dangerous to health and safety of society in view of the rampant misuse and sale to the poor, weak and helpless as an intoxicant.
A law in such circumstance can regulate the trade.
It is also not necessary that the same substance should be declared as poison for the entire country.
The notification and its application to any area would depend on the necessity to declare the substance as poison on the particular facts and situation prevailing in that area and the need to 221 regulate the possession and sale in that area.
No question of discrimination can arise in such circumstances.
[224 G H; 225 A]
|
N: Criminal Appeal No. 317 of 1986 From the Judgment and order dated 27.2.1986 of the Patna High Court in C.W.J.C. No. 33 of 1986.
With W.P. (Criminal)No. 316 of 1986.
R.K. Garg and Miss Rani Jethmalani for the Appellant/ Petitioner. D. Goburdhan for the Respondents.
907 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Criminal Appeal No. 317 of 1986 arises out of the judgment and order of the High Court of Patna and the Writ Petition No. 316 is in respect of the same detenu.
Both these challenge the order of detention dated 2nd January, 1986 passed by the respondent no.1.
The District Magistrate Dhanbad in respect of the petitioner under section 3(2) of the , hereinafter called the 'Act ' on the ground that the petitioner 's activities were prejudicial to the maintenance of public order.
Several criminal cases had been filed against the petitioner between 3rd January, 1983 to 18th February, 1985.
On or about 2nd January, 1985 the order of detention was passed on an incident relating to the exchange of fire between two rival groups.
The order states the grounds as follows: 1.
On 24.12.1985, between 10 and 10.30.
A.M. the subject alongwith Ramashish Bangali, Gulam, Rambriksha armed with Rifle, gun etc.
came in Car No. BHG 9372 on Katras Coal Dump and started indiscriminate firing to kill Birendra Pratap Singh a rival of his calendestine business of coal to establish his criminal superiority in full view of the shopkeepers customers and passers by of the area.
Birendra Pratap Singh and his associates who were there also returned the firing in same manner.
As a result of this firing one innocent namely Brahamdeo Mishra was killed.
The exchange of indiscriminate firing in the main market area of Katras created great panic and alarm in the area.
The normal tempo of life was completely disturbed.
The people started running helter and skelter for their lives.
Shopkeepers put down their shutters.
Doors and windows were closed.
The vehicular traffic came to halt.
This refers to Katras P.S. Case No. 331/85 dated 24.12.85 u/s 149/307/32 IPC/27 Arms Act.
Besides the aforesaid ground the following cases are also referred hereunder as background to show the criminality of the subject.
KATRAS P.S. CASE No. 5/83 dated 3.1.83 u/s 147, 341/353/307 I.P.C.
In this case subject and his associates tried to set free 908 the trucks and driver from the police custody by force and when he failed in his attempt he threatened the police officer and CISF Personnel to do away with their lives, C.S.No. 5/83 has already been submitted in this case.
Katras P.S. Case No. 303/83 u/s 147/148/452/323 IPC.
In this case subject and his associates went to the tailoring shop of Saukat Ansari and asked him to keep his cloths ready by 9.10.83 and on his refusal, he assaulted him in presence of customers and others C.S.No.
196/83 has already been submitted in this case.
Jogta P.S. Case No. 22/84 dated 11.3.84 u/s 147/148, 307/326/353/333/324/325 I.P.C./27 Arms Act.
In this case subject and his associates opened fire on police party who went to apprehend Raghunath Singh absconder under NSA.
As a result of this indiscriminate firing by him and his associates one Police officer namely Shri R.K. Verma, received serious head injury and is still incapable to work.
Charge sheet No. 25/84 has already been submitted in this case.
Jogta P.S. Case No. 9/85 dated 18.2.85 u/s 369, 307/323/ 324/ 176/34 I.P.C./27 Arms Act.
In this case Sisir Rajan Das, who was coming in a religious procession on the eve of Shivratri and was dancing in the role of Shiva was compelled by his associates to dance before the marriage party of subject 's sister.
Sri Sisir Rajan Das, however, acceded to their request and started dancing.
When he was dancing some of the members opened fire on him as a result of which he fell down.
The subject and his associates however put his body in his car and fled away.
Neither Shri Das nor his body could be traced out till date.
909 Charge sheet No. 20/85 has already been submitted in this case.
(Emphasis supplied) 5.
Jogta P.S. Case No. 68/85 dated 1.12.85 u/s 341/34 IPC.
In this case subject threatened Sri Krishana Ballav Sahay, General Secretary, Colliery Shramik Sangh, Sijua, to do away with his life if he takes out any procession or oppose him.
It is the case of the detenu that the order of detention was made on one incident relating to exchange of fire between two rival groups.
A criminal case had been registered in relation to the said incident pursuant to which the petitioner was already in custody.
The order of detention though dated 2nd January, 1986 was served on or about 11th January, 1986.
It is the case of the appellant/petitioner that the detenu was not served with all the documents referred to and/or relied on.
The detenu was served with order of approval of the said order of detention by the Government of Bihar.
The petitioner/appellant made representation on 22nd January, 1986 and the petitioner/ appellant was informed that the said representation was rejected.
Thereafter the petitioner 's appellant 's matter was referred to the Advisory Board.
The petitioner/appellant states that he desired that he should be heard in person by the Advisory Board.
The petitioner/appellant submits that he was produced before the Advisory Board but he was not given any hearing.
By letter dated 22nd February, 1986 the petitioner/appellant was informed that the Advisory Board had confirmed the order of detention.
The petitioner/ appellant thereafter filed a writ petition in the High Court of Patna which was dismissed without any speaking order.
The grounds of challenge are all stated in the writ petition as well as special leave petition.
The petitioner/ appellant was in detention when the petitioner/appellant was served with the order of detention.
There were criminal cases against the petitioner.
There was a murder case in respect of Crime No. 331 of 1985.
In the said case investigation was in progress and the defence of the petitioner in the murder case was that he was falsely implicated and was not at all concerned with the murder.
When the order was passed, the petitioner had not surrendered but when the order was served, the petitioner had already surrendered in respect of the criminal charge against him.
At the relevant time the petitioner was undertrial in the said criminal case.
910 It is the contention of the petitioner/appellant that the order of preventive detention could only be justified against a person in detention if the detaining authority was satisfied that his release from detention was imminent and the order of detention was necessary for putting him back in jail.
The service of order of detention on the petitioner while he was in jail was futile and useless since such an order had no application under section 3(2) of the Act.
In the affidavit of the District Magistrate, the detaining authority, it has been stated that the activities of the petitioner 's brother and the petitioner have disturbed the normal tempo of life in Katras and Jogta Police Stations in Dhanbad area.
The series of offences against the detenu and the manner of their perpetuation, which have been noted before, indicate a calculated move to create panic and fear in the mind of the people.
It further appears from the affidavit f f the District Magistrate filed before the High Court of Patna that the petitioner was absconding from the very day of the issuance of the detention order.
There is a statement in the order as follows D "Subject is already in jail.
He is likely to be enlarged on bail.
Hence detention order served in jail.
" According to the District Magistrate when police pressure to apprehend him became heavy, the detenu opted to surrender before the Sub Divisional Judicial Magistrate on 10th January, 1986 in substantive case to frustrate the service of the detention order.
It has been further stated that the service of the detention order had been properly made.
Grounds were all indicated.
All the documents which formed the basis of detention were supplied to the detenu.
His representation, was duly considered and rejected.
The grounds stated that there was indiscriminate firing on 24th December, 1985 on Katras Coal Dump and the petitioner started indiscriminate firing to kill Birendra Pratap Singh a rival of his calendestine business of coal to establish the criminal superiority in full view of the shopkeepers, customers and passers by of the area.
The acts alleged created a terror and not only law and order problem but problem of public order.
In those circumstances it appears that the grounds for forming the satisfaction for the need for the detention were there, and there was rational nexus between the object of the order as contemplated by the Act and the materials on record.
The principles applicable in these types of preventive detention cases have been discussed in the decisions of Suraj Pal Sahu vs State of Maharasthra & Ors., W.P. (crl) No. 2 96/86 with SLP (crl) No. 1265/86 dt.
25.9.86 and Raj Kumar Singh vs The State of Bihar & Ors.
Crl A. 353/86 with W.P. (crl) 27/86 dt.
26.9.86.
Judged on the basis of 911 the said principles there is no ground for interference with the order of detention as passed.
It, however, appears that after the order of detention was passed and before the actual service of the order of detention, the petitioner was taken into custody.
From the affidavit of the District Magistrate it does not appear that either the prospect of immediate release of the detenu or other factors which can justify the detention of a person in detention were properly considered in the light of the principles noted in the aforesaid decision and especially in the decisions, in Rameshwar Shaw vs District Magistrate, Burdwan & Anr., ; and Ramesh Yadav vs District Magistrate Etah and others, though there was a statement to the effect that the petitioner was in jail and was likely to be enlarged on bail.
But on what consideration that opinion was expressed is not indicated especially in view of the fact that the detenu was detained in a murder charge in the background of the facts mentioned before.
His application for bail could have been opposed on cogent materials before the Court of Justice.
In this case there were grounds for the passing of the detention order but after that the detenu has surrendered for whatever reasons, therefore the order of detention though justified when it was passed but at the time of the service of the order there was no proper consideration of the fact that the detenu was in custody of that there was any real danger of his release.
Nor does it appear that before the service there was consideration of this aspect properly.
In the facts and circumstances of this case, therefore, the continued detention of the detenu under the Act is not justified.
It is well settled in our Constitutional framework that the power of directing preventive detention given to the appropriate authorities must be exercised in exceptional cases as contemplated by the various provisions of the different statutes dealing with preventive detention and should be used with great deal of circumspection.
There must be awareness of the facts necessitating preventive custody of a person for social defence.
If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised.
In the instant case when the actual order of detention was served upon the detenu, the detenu was in jail.
There is no indication that this factor or the question that the said detenu might be released or that there was such a possibility of his release, was taken into consideration by the detaining authority properly and seriously before the service of the order.
A bald statement is merely an ipso dixit 912 of the officer.
If there were cogent materials for thinking that the detenu might be released then these should have been made apparent.
Eternal vigilance on the part of the authority charged with both law and order and public order is the price which the democracy in this country extracts from the public officials in order to protect the fundamental freedoms of our citizens.
In the affidavits on behalf of the detaining authority though there are indications that transfer of the detenu from one prison to another was considered but the need to serve the detention order while he was in custody was not properly considered by the detaining authority in the light of the relevant factors.
At least the records of the case do not indicate that.
If that is the position, then however disreputable the antecedents of a person might have been without consideration of all the aforesaid relevant factors, the detenu could not have been put into preventive custody.
Therefore, though the order of preventive detention when it was passed was not invalid and on relevant considerations, the service of the order was not on proper consideration.
It may be mentioned that in the petition it is nowhere stated that the detenu has since been released or that the prospect of his imminent release was properly and with seriousness considered by the detaining authority.
The order of detention, therefore, is set aside.
The writ petition and the appeal are allowed to the extent indicated above.
This, how ever, will not affect detenu 's detention under the criminal cases.
If, however, the detenu is released on bail in the aforesaid criminal cases, the matter of service of the detention order under the Act on the aforesaid materials may be reconsidered by the appropriate authority in accordance with the law.
There is no statement in the petition that the detenu is on bail.
There will, therefore, be no orders for release of the detenu.
M.L.A. Petition and Appeal allowed.
| The respondent passed an order of detention in respect of the appellant under section 3(2) of the , on the ground that the appellant 's activities were prejudicial to the maintenance of public order.
Several criminal cases were pending against the appellant when the aforesaid order was passed.
The appellant had already surrendered in respect of a criminal charge against him before the order was served.
He filed a writ petition in the High Court challenging the detention order, but it was dismissed without any speaking order.
Aggrieved by the order of the High Court, the appellant filed the present criminal appeal by special leave as also a writ petition challenging the aforesaid order of detention on the ground that the order of preventive detention could only be justified against a person in detention if the detaining authority was satisfied that his release from detention was imminent and the order of detention was necessary for putting him back in jail.
The service of order of detention on the appellant/ petitioner while he was in jail was futile and useless since such an order had no application under section 3(2) of the Act.
Allowing the writ petition and the appeal in part, ^ HELD: 1.
The continued detention of the detenu under the Act is not justified.
The order of detention therefore is set aside.
However, this will not affect detenu 's detention under the criminal cases.
If however, the detenu is released on bail in the criminal cases already pending against him, the matter of service of the detention order under the Act may be reconsidered by the appropriate authority in accordance with law.
[912 E F] 906 2.
In our constitutional framework, the power of directing preventive detention given to the appropriate authorities must be exercised in exceptional cases as contemplated by the various provisions of the different statutes dealing with preventive detention and should be used with great deal of circumspection.
There must be awareness of the facts necessitating preventive custody of a person for social defence.
If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised.
[911 F G] In the instant case, when the actual order of detention was served upon the detenu the detenu was in jail.
There is no indication that this factor or the question that the said detenu might be released or that there was such a possibility of his release was taken into consideration by the detaining authority properly and seriously before the service of the order.
If there were cogent materials for thinking that the detenu might be released, then these should have been made apparent.
In the affidavits on behalf of the detaining authority though there are indications that transfer of detenu from one prison to another was considered but the need to serve the detention order while he was in custody was not properly considered by the detaining authority in the light of relevant factors.
If that is the position then however disreputable the antecedents of a person might have been, without consideration of all the aforesaid relevant factors, the detenu could not have been put into preventive custody.
Therefore, though the order of preventive detention when it was passed was not invalid, and on relevant considerations the service of the order was not on proper consideration.
The order of detention is, therefore set aside.
[911 G H; 912 A D] Rameshwar Shaw vs District Magistrate, Burdwan & Anr., ; and Ramesh Yadav vs District Magistrate Etc.
and others, , relied upon.
|
iminal Appeals Nos.
160 to 162 of 1960.
Appeals by special leave from the judgment and order dated January 20, 1960 of the Allahabad High Court in Criminal Government Appeals Nos.
2011 to 2013 of 1958.
B. C. Misra and P. K. Chakravarti, for the appellant.
G. C. Mathur and C. P. Lal, for the respondent.
September 27.
The judgment of the Court was delivered by MUDHOLKAR, J.
These three appeals arise out of three separate trials before the Additional Sessions judge, Bulandshahr, but were argued together as they arise identical questions.
In all these trials, the appellant, who was a postman attached to the Bulandshahr post office was tried for offences under section 52 of the Indian Post Office Act, 1898 (VI of 1898) and in two of ' them, also for offences under sections 467 and 471 of the Indian Penal Code.
Briefly stated the allegations against the appellant were that he either stole or secreted five registered letters and that he fabricated three receipts showing that the registered letters were received by the addressees.
The learned Additional Sessions judge acquitted the appellant of all these offences.
The State then preferred an appeal against his acquittal in these three cases to the High Court of Allahabad but restricted the appeal to the acquittal of the appellant in respect of offences under 410 section 52 of the Indian Post Office Act, 1898 (hereafter referred to as the Act).
The High Court held that the appellant had secreted the five registered letters in question and on this finding set aside his acquittal and convicted him in each of the three appeals for offences under section 52 of the Act and sentenced him to undergo rigorous imprisonment for a period of one year in each case.
The appellant has come up to this Court by special leave.
Briefly stated the prosecution case is that when the house in which the appellant lives along with his father Diwan Singh, a retired Police Head Constable, was searched by the C.I.D. Inspector, S.N. Singh, along with Masood Murtaza, Sub Inspector of Police, Bulandshahr on May 12, 1956, in connection with a case against Messrs Greenwood Publicity, they accidentally discovered a large number of letters and postcards and also the five registered letters in question.
At the time of the search the appellant who happens to be a trade union official, was not in Bulandshahr but was away on leave at Delhi in connection with a postal conference.
These articles were found in an almirah, the key of which was produced by the appellant 's father.
The articles were not listed at the spot but were taken to the Kotwali in a sealed packet and later on listed there.
A number of other articles were also seized at that time but we are not concerned with them as they have no connection with the charges against the appellant.
Briefly, the appellant 's defence in all these cases is that there are two factions in the Bulandshahr post office and that these articles were planted by the opposite party.
According to him, the planting must have occurred in the Kotwali when the Sub Inspector purported to make a list of the articles seized from the house in which the appellant lives.
Further, according to him, neither the house nor the almirah from which the articles are said to have been 411 seized was in his exclusive possession.
He stated and that fact is not denied that the house which consists of two rooms only has been rented in his father 's name, that both of them live in those two rooms and that the almirah was in his father 's possession inasmuch as the key was produced by him.
On behalf of the appellant Mr. B. C. Misra has raised the following six points: (1) That on the findings arrived at by the High Court no offence under section 52 of the Post Office Act has been made out.
(2) That it has not been established that the five registered letters were in the exclusive possession of the appellant.
(3) That the search was illegal inasmuch as it was in contravention of the provisions of sections 103 and 165 of the Code of Criminal Procedure.
(4) That in examining the appellant the Ad ditional Session Judge did not comply with the requirements of section 342 of the Code of Criminal Procedure.
(5) That the High Court has not found that there were compelling reasons for setting aside the appellant 's acquittal .
(6) The sentences in the three cases having been ordered to run consecutively the total sentence is excessive.
We will deal with the last four points first.
So far as the alleged illegality of the search is concerned it is sufficient to say that even assuming that the search was illegal the seizure of the articles is not vitiated.
It may be that where the provisions of ' sections 103 and 165, Code of Criminal Procedure, are 412 contravened the search could be resisted by the person whose premises are sought to be searched.
It may also be that because of the illegality of the search the Court may be inclined to examine carefully the evidence regarding the seizure.
But beyond these two consequences no further consequence ensues.
The High Court has chosen to accept the evidence of the prosecution with regard to the fact of seizure and that being a question to be decided only by the Court of fact, this Court would not re examine the evidence for satisfying itself as to the correctness or otherwise of the conclusions reached by the High Court.
In so far as the contravention of provisions of section 342, Code of Criminal Procedure, are concerned it is sufficient to point out that no grievance was made either before the Court of the Additional Sessions judge or before the High Court that there was such a contravention and the appellant was prejudiced and we cannot allow the point to be raised for the first time here, the reason being that whether there was prejudice is a question of fact and cannot be permitted to be agitated for the first time in an appeal under article 136 of the Constitution.
As regards the fifth point, it is sufficient to say that this Court has held that an appeal from acquittal need not be treated differently from an appeal from conviction and if the High Court finds that the acquittal is not justified by the evidence on record it can set aside the acquittal without coming to the conclusion that there were compelling reasons for doing so.
In so far as the sentence is concerned, bearing in mind the fact that the maximum sentence awarded under section 52 of the Act is seven years it would not be right to say that in ordering the sentences in the three cases to run consecutively the appellant is being very severely punished.
In so far as section 52 of the Act is concerned the argument is that the prosecution having merely shown that the registered letters were recovered from an almirah in the house in which the appellant lives the 413 utmost that could be said is that he was in possession of letters, that is, assuming that he was in the exclusive possession of the house and the almirah.
The mere fact of possession, according to learned counsel, does not suffice to show that the letters were secreted by the appellant.
It is contended that for an officer of the post office to be found guilty for any of the acts specified in section 52 it has further to be shown that he was entrusted with the postal article with respect to which he is alleged to have committed any of those acts.
Section 52 of the Act runs thus : "Penalty for theft, dishonest, misappropriation, secretion, destruction, or throwing away of postal articles.
Whoever, being an officer of the Post Office, commits theft in respect of, or dishonestly misappropriates, or, for any purpose whatsoever, secretes, destroys or throws away, any postal article in course of transmission by post or anything contained therein, shall be punishable with imprisonment for a term which may extend to seven years, and shall also be punishable with fine.
" The first act referred to in this section is theft.
Surely it cannot be contended that any (entrustment ' is necessary with regard to that act.
Indeed, if entrustment were proved and the article entrusted is not found to have been disposed of in the manner permissible under the Act, the offence committed would be not theft but criminal breach of trust.
according to Mr. Misra, the appellant cannot be said to have secreted the letter just because it was found in the almirah which is said to have been in his exclusive possession.
To secrete means, according to the dictionary "to hide".
In connection with a postal article addressed to some person the fact that it is retained in his possession by an officer of the post office in an almirah and that too for an inordinately long period would be tantamount to hiding that 414 article.
Of course, what act amounts to "secreting" would necessarily depend upon the facts of each case and in our opinion in a case like the present, what 'has been established by the prosecution would sustain an inference of secreting.
Further, a perusal of section 55 makes it clear that where the entrustment of an article is made an ingredient of an offence, the legislature has used appropriate words to make the matter clear.
If, therefore, it was the intention of ' the legislature that for an officer of the post office to be punished for secreting, destroying or throwing away a postal article in the oucrse of transmission by post, entrustment of that article to him was essential it would have used language similar to that used by it in section 55.
It seems to us that bearing in mind the ' fact that an officer of the post office having in the course of his duties access to postal articles kept or lying in the post office, the legislature has deliberately enlarged the scope of section 52 so as to encompass secretion, destruction or throwing away of postal articles by an officer of the post office even though they may not have been entrusted to him or even though the are riot articles with which he is required or is competent to deal in the course of his duties.
The object of the provision is to prevent postal articles 'in course of transmission by post ' from being tampered with, and so the secreting, destruction ' etc., of postal articles to which the provision is directed is to such secreting, destruction etc., as would frustrate or tend to frustrate their delivery to the addressees.
Then Mr. Misra contended that it would not be correct to say that the five registered letters recovered from the almirah were in the course of transmission by post because that recovery was made 7 or 8 months after those letters had been despatched and that no complaint had ever been made regarding their nondelivery by the senders or the addressees of those letters.
He further referred to the fact that at least in respect of three of the registered letters 415 acknowledgments purporting to be from the addressee were obtained and were with the post office.
He admitted that the prosecution allegation was that those documents were fabricated but that case having failed before the Court of Sessions and the Government not having appealed against that part of the decision of that court it must be held that at least three of those letters were duly received by the addressees.
The expression "in course of transmission by post" has been defined in section 3 (a) of the Act as follows : .lm15 " a postal article shall be deemed to be in course of transmission by post from the time of its being delivered to a Post Office to the time of its being delivered to the addressee or of its being returned to the sender or otherwise disposed of under Chapter VII.
" The mere fact that there is even a delay of several months in delivering a postal article to the addressee would not mean that the article had ceased to be in course of transmission.
It is common experience that delivery of postal articles is now and again delayed for a considerable length of time may be through accident or through the negligence of the postal employees.
It is probably for this reason that the definition clearly lays down that until an article despatched by post is delivered or can be said to be delivered that it will be deemed to be in course of transmission.
We cannot, therefore, accept the first part of this contention of Mr. Misra.
As regards the other point, that is, based on the fact that there were acknowledgments in respect of three letters in the post office we may point out that the existence of these acknowledgments would no more than raise a presumption that those articles were delivered to the addressees.
The addressees have been examined in this case and they have deposed that the letters in question were not received by them.
Their 416 evidence has been believed by the High Court and therefore, there is an end to the matter.
In the circumstances, therefore, we do not accept Mr. Misra 's contention that the act of an officer of the post office in being in possession of a postal article for an inordinate length of time has no significance and cannot justify the conclusion that he had secreted the article.
The next and in our opinion the most important question to be considered is whether the prosecution has established that the five registered letters in question were recovered from the possession of the appellant.
As already stated, all that the prosecution has been able to prove is this case is that these letters were found in an almirah of the house in which the appellant lives jointly with his father and of which the key was furnished by the father.
Dealing with this question the High Court has observed as follows : "In the first place, the respondent alone had the opportunity and the means to secure such a large number of postal articles.
(2) that at least nine of those postal articles were addressed to the respondent himself (vide exhibit Ka 9, serial No. 66), (3) that Dewan Singh, who, we are informed is a very old man, would not foist the said incriminating articles on his son and thus ruin his career for ever, and (4) that the respondent alone can be said to have had some motive for secreting and concealing the registered letters and other postal articles in question.
" Before the High Court could take into consideration the circumstance that as between himself and his father the appellant had a better opportunity to 417 get at postal articles it had to find affirmatively that the almirah was in the exclusive possession of the appellant.
We have not been able to discover anything in the judgment which directly bears on this question.
As the key was produced by the appellant 's father and there is no evidence that it was ever with the appellant it would not be legitimate to infer that the almirah was even in the appellant 's joint, much less in his exclusive, possession.
Tile circumstance that the almirah contained, apart from the registered letters in question, certain other articles belonging to the appellant cannot sustain an inference that the almirah was in the appellant 's possession exclusively or even jointly with his father.
We may recall that the almirah contained a large number of articles belonging to the father and since he had the key with him it must be he who must be deemed to be in possession of the almirah and consequently of its contents including the registered letters in question.
Apart from that, out of the four reasons given by it, the last, as pointed out by the High Court itself, is a speculative reason and must, therefore, be left out of consideration.
The second 'reason ' is no reason at all because a very large number of articles found in the almirah admittedly belong to the father.
The third reason that the rather would not foist articles to incriminate the son and thus ruin his career assumes that had the father kept the articles he could have done so only if he wanted to incri minate the son.
We cannot understand why the father, if he happened to get possession of the articles from some source may not have kept them in the almirah in the same way in which he had kept the other articles belonging to him.
That leaves, therefore, only the first reason.
We doubt if on the basis of this reason alone the High Court could have held that though the locked almirah was not in the exclusive possession of the appellant, these articles were in his exclusive possession.
If the point to be 418 established was whether the appellant had availed himself of the opportunity to procure the articles it could have been established by showing that he was in their exclusive possession.
But to say that he must be deemed to be in exclusive possession of these articles and not merely in their joint possession along with his father because he had the opportunity to get at the articles and then infer that he must have utilized the opportunity and was therefore in their exclusive possession would be arguing in a circle.
Moreover since entrustment of the articles has not been established, the taking away of the articles by the appellant from the post office (if that is how he came by the articles) would be theft but it has not been found that he committed any theft.
Indeed, had it been so found he could have been convicted under section 52 without the Court having to consider whether he had secreted the articles.
We may mention that Mr. Mathur who appears for the State does not even suggest that the articles were stolen by the appellant.
Therefore, the contention that he had an opportunity to get at the articles loses all significance and can possibly have no bearing on the question as to the nature of possession attributable to the appellant.
In the circumstances we must hold that the prosecution has failed to prove that these letters were in the exclusive possession of the appellant.
No presumption can, therefore, be drawn against him that he had secreted them from the mere fact that they were found in the almirah which, at best, may be regarded as being in the joint possession of himself and his father.
But, as already stated, even an, inference of joint possession would not be legitimate.
For these reasons we allow the three appeals and set aside the conviction and sentences passed against the appellant.
Appeal allowed.
| The appellant, a postman, and I,is father were living in the same house.
Certain undelivered postal articles were re covered from an almirah in the house, the key of which was produced by the father.
The appellant was tried and convicted of an offence under section 52 Post Offices Act for secreting postal articles.
The appellant contended that since it had not been proved that he had been entrusted with these articles the offence under section 52 was not made out and that lie could not be held guilty of secreting as he was not in exclusive possession of these articles.
Held, that entrustment was not an essential ingredient of the offence under section 52.
Where the legislature intended to make entrustment an ingredient of the offence it had used appropriate words to make it clear.
It had used no such words in section 52.
To secrete means to hide.
In a case like the present, the retention of an undelivered postal article in an almirah for an inordinately long period would be tantamount to hiding that article.
Held, further, that the appellant was not in exclusive possession of the postal articles and no inference could be drawn 409 that he had secreted them.
As the key was produced by the appellant 's father it could not be inferred that the appellant was in joint possession of the almirah much less that he was in exclusive possession of it.
No inference could be drawn from the fact that the almirah contained certain other articles belonging to the appellant as it also contained a large number of articles belonging to the father.
|
"Civil Appeals Nos. 2299 and 2300 of 1979.\nAppeal by Special Leave from the Award dated 20 12 1978 (...TRUNCATED) | "Dismissing the appeals by special leave, the Court. ^ HELD: Per Pathak, J. (Krishna Iyer and Chinna(...TRUNCATED) |
"Appeal No. 1951 of 1975.\nAppeal by Special Leave from the Award of the Industrial Tribunal, Gujara(...TRUNCATED) | "The workmen 's demand for grant of sick leave and its accumulation upto a period was rejected by th(...TRUNCATED) |
"iminal Appeal No. 48 of 1954.\n1303 Appeal by Special Leave granted by the Supreme Court by its Ord(...TRUNCATED) | "It is not every offence committed by a public servant that requires sanction for prosecution under (...TRUNCATED) |
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