Case: Maharaja Sir Pateshwari Prasad Singh Vs. State of Uttar Pradesh

contended on behalf of the respondent State that the word "grant" in the notification meant grant in cash only and for this purpose reference was made to various rules framed by the State Government for the management of charitable dispensaries and hospitals. The her the contention of the respondent or the view expressed by High Court is correct. All that we have here is inspection of the hospitals and dispensaries by the Government medical officers. We have nothing to show for what purpose such inspection was held. The inspection may have rendered no service at all to the hospitals and dispensaries for the purpose for which they exist. It may have been made only for Governments statistical purpose or for seeing that the health regulations prevailing in the state were being observed. We find it impossible to infer from the word "inspection" any idea of a service rendered to the patients in the hospitals or for the charitable object for which the hospitals had been maintained. It has not, therefore, been shown that the inspection by the Governments doctors was granted within the notification. 18. Learned Counsel drew out attention to certain rule made by the court of wards in connection with the hospitals and dispensaries while the Balrampur Estate was in its charge. He said that those rules were being followed in the years with which we are concerned though the estate had then been released from the charge of the court of wards. This point, however, was not raised before the assessing authority nor the High Court and no reference to these rules in made in the assessment orders or the appellant judgment and order or by the High Court. These rules, however, do not advance the matter further. They provide that various appointments in the dispensaries had to be made by the Government civil surgeons. Such appointments do not, in our view, amount to rendering services for the charitable purpose for which the hospitals and dispensaries had been established. 19. Learned Counsel then drew our attention to another part of these rules and a part of the affidavit filed by his clients agent in connection with the application for reference to the question to the High Court. From these it appears that the dispensaries in the district were under the control of the Assistant Surgeon who was posted at the Memorial Hospital, Balrampur. It may be that this Assistant Surgeon was a Government employee but it does not appear what service he has rendering in the hospitals. In any case, this ground had been nowhere relied upon by the appellant as constituting a grant by the State Government within the meaning of the notification under rule 17. We are, therefore, unable to go into this question. We repeat however that it strikes us as extremely strange that the State Government should have taken a legalistic view of the matter and we think that munificence of the appellant deserved more consideration from it. 20. We come now to the remaining two questions which were marked 10 and 11 and were framed as follows :"10. Whether the scholarships paid to students were donations to an institution or fund within the meaning of the rule 17 ? 11. Whether the amount paid to an institution earmarked for scholarships can be treated as donation to the institution within the meaning of rule 17 or can the institution on that ground be treated as an institution aided by the Government within the meaning of rule 17 ?" 21. Question No. 10 was reframed by the High Court and no objection was taken to it. As reframed the question reads as follows :"10. (1) Whether the scholarships paid to students through an institution recognised by the State Government or a local authority were donations within the meaning of rule 17 ? (2) Whether the scholarships paid to students directly would amount to donations to an institution or to a fund within the scope of rule 17 ?"22. It is necessary to refer to another part of the notification under rule 17 to which we have earlier referred. The notification besides approving for the purpose of the rule certain hospitals and clinics as we have earlier stated, also approved of "educational institutions recognised or aided by the State Government or a local authority". The point of the present question really arises under this part of the notification. It is not disputed that the institutions in contemplation were institutions recognised or aided by Government. We feel no doubt that when moneys are paid to such an institution to be distributed as scholarships to its students, this is a donation to the institution for the institution utilises it for its own purpose, namely, helping its students which it may otherwise have done with its own funds. The first part of question No. 10 must, therefore, be answered in the affirmative as the High Court has done. For the same reason the second part of the question No. 10 has also to be answered in The affirmative. As in the first case, here also the institution had the benefit of the payment though indirectly through its students. What we have said disposes of question No. II also. The first part of this question is really the same .as question No. 10(1) and the answer to it must be in the affirmative. The second or the alternative part of this question does not arise because it is admitted in this court that all the institutions to which the donations with which these appeals are concerned were made, are recognised by the State Government. 23. It remains to deal with a point raised by learned counsel for the respondent State and that refers to question No. 4. That question was, whether rule 17 was ultra vires section 8 of the Act ? That question was answered against the respondent but as the respondent did not file any appeal, it is impossible for this court to go into the question.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It does not seem to us that either of these reasons isg the second reason first, it may be stated that it is conceded on behalf of the respondent State that if the words "agriculturalin condition (b) do not includen only persons having an income between Rs. 3,000 and Rs. 3,214 per annum would be benefited. The respondent however says that there is no reason to think that the number of such persons was small not that it was not intended to confine the benefit to themalone. We think that the contentions of the respondent State are of substance. We are unable to conclude from the fact that persons owning estates yielding income between Rs. 3,000 and Rs. 3,214 only would be benefited, that the expression "agriculturalmust be understood to includeso as to enlarge the scope of the benefit. The legislature may have intended to confer the benefit only on persons with a comparatively smaller income. There is nothing to show that it did not doComing now to the first reason, it seems to us that the context requires that the definition of "agriculturalin section 2(2) should not be imported into condition (b). Condition (b) is a condition to which the rates mentioned in Part I of the Schedule are made expressly subject. Those rates are only of agricultural incometax. The obvious intention is that the amount of the agriculturalonly, that is to say, excluding the amount ofthat can be imposed, calculated at the rates specified in Part I of the Schedule, is not in any case to exceed the limit mentioned in condition (b). If it were not so, the words "Those rates are subject to the condition" preceding the two conditions would be insensible. This interpretation brings condition (b) in line with the expression "agriculturalused in condition (a) where plainly it only refers toThat condition says that no agricultural incomeThe question is not very clear but it appears that the object was really to interpret the rule itself. The point at issue will be clearer after we have set out the relevant portion of the rule.It is not in dispute that the appellant spend large sums in charities. He maintained a number of hospitals and dispensaries and donated magnificently by way of scholarships to encourage deserving students. It appears that in the year 1355F his charities to the hospitals and dispensaries amounted to Rs. 1,9 and in the shape of scholarship, Rs. 68,We cannot help regretting that the matter could not be settled out of court and had to be litigated upon involving expense of moneys which could have been utilised for more usefulare not persuaded that this is the correct view to take. Normally the word "and" should be given its ordinary meaning and should be understood in a conjunctive sense. So understood the rule would require not only that the payment should be to an institution or fund established for a charitable purpose but that institution or fund must also be approved by the State Government for the purpose of the rule, that is, as an institution donation to which would entitled the donor to exemption from agriculturalWe think that the intention was that there must be approval of the institution or fund. The reason for that is clear. If such approval was not incumbent, then exemptions would have to be granted also in the case of an institution which was on the face of it for a charitable purpose but where the funds were not utilised for charities. It is not unusual for the legislature to provide that donations to such charities only will be given exemption where the Government has by its approval indicatedIt was also said that if an approval was a condition precedent to the grant of an exemption, then it would be within the power of the Government to prefer one charitable institution to another. We do not think that this is an argument of any force. There is nothing, to prevent the legislature from giving the Government the power to prefer and such power had to be given if protection against the misuse of exemption is necessary, which we think it is. Further, it does not seem to us possible that the rule required approval of the Government only in cases where it was doubtful whether the institution or a fund had a charitable purpose. Either it had such a purpose or it had not. If any dispute arose, the matter had to be decided by the proper authorities, judicial or departmental. It was wholly unnecessary to provide for approval by the Government only in cases where it was doubtful whether the purpose of the institution was charitable or not. We, therefore, think that the answer to the question is that inWe have earlier mentioned that the appellant spent large sums on the maintenance and expenses of the hospitals and several dispensaries. These institutions had no doubt been established for charitable purpose as defined in the Explanation in rule 17. But as we have held that in order to earn exemption under rule 17 the institutions have also to be approved by the Government, the appellant is required to show that the hospitals and dispensaries maintained by the notification mentioned in the question.Under this notification a hospital or a clinic which is in receipt of a grant by the State Government would be an institution for a charitable purpose approved by the Government for the purpose of rule 17.In order, therefore, to earn the exemption the appellant has to establish that the hospitals and dispensaries were in receipt of a grant by the State Government or local body. It is however admitted that neither the State Government nor any local body ever made any cash grants to the hospitals and dispensaries. It appeared however that the State Government deputed doctors employed by it who inspected these hospitals and dispensaries, and paid their salaries and travellingher the contention of the respondent or the view expressed by High Court is correct. All that we have here is inspection of the hospitals and dispensaries by the Government medical officers. We have nothing to show for what purpose such inspection was held. The inspection may have rendered no service at all to the hospitals and dispensaries for the purpose for which they exist. It may have been made only for Governments statistical purpose or for seeing that the health regulations prevailing in the state were being observed. We find it impossible to infer from the word "inspection" any idea of a service rendered to the patients in the hospitals or for the charitable object for which the hospitals had been maintained. It has not, therefore, been shown that the inspection by the Governments doctors was granted within thedrew out attention to certain rule made by the court of wards in connection with the hospitals and dispensaries while the Balrampur Estate was in its charge. He said that those rules were being followed in the years with which we are concerned though the estate had then been released from the charge of the court of wards. This point, however, was not raised before the assessing authority nor the High Court and no reference to these rules in made in the assessment orders or the appellant judgment and order or by the High Court. These rules, however, do not advance the matter further. They provide that various appointments in the dispensaries had to be made by the Government civil surgeons. Such appointments do not, in our view, amount to rendering services for the charitable purpose for which the hospitals and dispensaries had beenthese it appears that the dispensaries in the district were under the control of the Assistant Surgeon who was posted at the Memorial Hospital, Balrampur. It may be that this Assistant Surgeon was a Government employee but it does not appear what service he has rendering in the hospitals. In any case, this ground had been nowhere relied upon by the appellant as constituting a grant by the State Government within the meaning of the notification under rule 17. We are, therefore, unable to go into this question. We repeat however that it strikes us as extremely strange that the State Government should have taken a legalistic view of the matter and we think that munificence of the appellant deserved more consideration from it.It is necessary to refer to another part of the notification under rule 17 to which we have earlier referred. The notification besides approving for the purpose of the rule certain hospitals and clinics as we have earlier stated, also approved of "educational institutions recognised or aided by the State Government or a local authority". The point of the present question really arises under this part of the notification. It is not disputed that the institutions in contemplation were institutions recognised or aided by Government. We feel no doubt that when moneys are paid to such an institution to be distributed as scholarships to its students, this is a donation to the institution for the institution utilises it for its own purpose, namely, helping its students which it may otherwise have done with its own funds. The first part of question No. 10 must, therefore, be answered in the affirmative as the High Court has done. For the same reason the second part of the question No. 10 has also to be answered inremains to deal with a point raised by learned counsel for the respondent State and that refers to question No. 4. That question was, whether rule 17 was ultra vires section 8 of the Act ? That question was answered against the respondent but as the respondent did not file any appeal, it is impossible for this court to go into the question.