Datasets:

L-NLProc

/

PredEx_Instruction-Tuning_Prediction

like 0

Dir. Gen. Of Inc.Tax(Inv) Pune Vs. M/S. Spacewood Funishers Pvt. Ltd.

affidavit filed before it were at variance with what was revealed by the satisfaction note(s) placed before the Court. Even if the satisfaction notes alone are to be gone by, the essential details with regard to source of information; the persons who were interrogated and with whom discreet enquiries were made are not disclosed. The necessary information revealed by such interrogation and discreet enquiries with regard to over invoicing, market information etc. are not indicated. Materials like high growth, high profit margins, doubts about international brand and details thereof etc. as mentioned in the satisfaction note(s) are admitted and known facts and therefore could not have induced the requisite belief. The above constitutes the broad basis on which the High Court thought it proper to cause inference with the measures undertaken by the Revenue against the assessee. 21. Before we advert to the specific reasoning of the High Court, one specific aspect of the opinion expressed by the High Court needs to be taken note of inasmuch as the precise position in law in this regard needs to be clarified. The above aspect is highlighted by the following observations of the High Court expressed in paragraph 6 of the impugned order:- “We, however, express that when the satisfaction recorded is justiciable, the documents pertaining to such satisfaction may not be immune and if appropriate prayer is made, the inspection of such documents may be required to be allowed.” 22. In the light of the views expressed by this Court in ITO vs. Seth Brothers (supra) and Pooran Mal (supra), the above opinion expressed by the High Court is plainly incorrect. The necessity of recording of reasons, despite the amendment of Rule 112 (2) with effect from 1st October, 1975, has been repeatedly stressed upon by this Court so as to ensure accountability and responsibility in the decision making process. The necessity of recording of reasons also acts as a cushion in the event of a legal challenge being made to the satisfaction reached. Reasons enable a proper judicial assessment of the decision taken by the Revenue. However, the above, by itself, would not confer in the assessee a right of inspection of the documents or to a communication of the reasons for the belief at the stage of issuing of the authorization. Any such view would be counter productive of the entire exercise contemplated by Section 132 of the Act. It is only at the stage of commencement of the assessment proceedings after completion of the search and seizure, if any, that the requisite material may have to be disclosed to the assessee. 23. At this stage we would like to say that the High Court had committed a serious error in reproducing in great details the contents of the satisfaction note (s) containing the reasons for the satisfaction arrived at by the authorities under the Act. We have already indicated the time and stage at which the reasons recorded may be required to be brought to the notice of the assessee. In the light of the above, we cannot approve of the aforesaid part of the exercise undertaken by the High Court which we will understand to be highly premature; having the potential of conferring an undue advantage to the assessee thereby frustrating the endeavor of the revenue, even if the High Court is eventually not to intervene in favour of the assessee.24. Having clarified the above issue in the manner indicated, we may turn to the reasons assigned by the High Court for its decision. The view expressed by the High Court with regard to the satisfaction note(s); the alleged absence of a final decision to issue the authorization at the level of the Additional Director and the Director; the absence of any satisfaction of the Director General who, according to the High Court took the decision to issue the authorization are all seriously flawed. The different steps in the decision making process is lucidly laid down in the instructions contained in the search and seizure manual published by the department, relevant part of which has been extracted above. The steps delineated have been scrupulously followed. Besides we may take note of the fact that the Additional Director was not one of the competent authorities under Section 132 on 8.6.2009 (date of his note) inasmuch as it is by the Finance Act, 2009 effective from 19th August, 2009 that the Additional Director came to be included amongst the authorized officials though with retrospective effect from 1.10.1998. The reading of the relevant part of the satisfaction note of the Director goes to show that on the basis of materials produced satisfaction was duly recorded by him that authorization for search should be issued. The file was put up before the Director General (Investigation) for accord of administrative approval as required by Notification dated 7.3.2001. In fact, the requirement to obtain administrative approval is prompted by the need to provide an additional safeguard to the tax payer. A careful reading of the order of the Director General would go to show that all that he did was to record the view that the satisfaction of the Director, Income Tax (Investigation) was reasonable and therefore administrative approval should be accorded. The view taken by the High Court, therefore, cannot be sustained.25. The possibility of manipulation of the records as found by the High Court also does not commend to us for acceptance. There is no basis, whatsoever, for coming to any such conclusion. Suspicion ought not to be the basis of any judicial order and this is where the High Court seems to have erred.26. The remaining findings of the High Court with regard to the satisfaction recorded by the authorities appear to be in the nature of an appellate exercise touching upon the sufficiency and adequacy of the reasons and the authenticity and acceptability of the information on which satisfaction had been reached by the authorities. Such an exercise is alien to the jurisdiction under Article 226 of the Constitution.

1[ds]13. In the present case the satisfaction note(s) leading to the issuing of the warrant of authorization against thewere placed before the High Court. As it would appear from the impugned order the contents thereof were exhaustively reproduced by the High Court. The said satisfaction note(s) have also been placed before us. A perusal of the file containing the satisfaction note(s) indicate that on 8.6.2009 the Assistant Director of Income Tax (Investigation), Nagpur had prepared an elaborate note containing several reasons as to why he had considered it reasonable to believe that if summons or notice were issued to the respondent to produce the necessary books of account and documents, the same would not be produced. The Assistant Director also recorded detailed reasons why he entertains reasons to believe that the promoters of thecompany would be found to be in possession of money, bullion, jewellery etc. which represents partly or wholly income which has not been disclosed for the purposes of the Act.The High Court by the impugned order dated 9.12.2011 has taken the view that in the present case there are four satisfaction notes of four different authorities. One of the said authority i.e. Assistant Director is not the competent authority under Section 132 of the Act. The Additional Director and the Director who are competent authorities to issue the warrant of authorization, though had recorded their satisfaction, have not taken the final decision to issue the authorization and each such authority had passed on the file to his immediate superior, namely, the Additional Director to the Director and the Director to the Director General. The High Court further held that it is eventually the Director General who took the decision to issue the search warrant but the said decision was not on the basis of its own satisfaction but on the basis of the satisfaction recorded by the Director of Income Tax (Investigation). Consequently, the High Court held that the satisfaction mandated by Section 132 of the Act was not that of the authority who has issued the search warrant, thereby vitiating the authorization issued.19. The High Court further held that each of the satisfaction notes was in loose sheets of paper and not a part of a single file maintained in proper sequence and order with due pagination. Therefore, according to the High Court, it is possible that the file containing the satisfaction note(s) was manipulated and thus is of doubtful credibility.20. The High Court also held that the materials indicated by the department in the counter affidavit and the additional affidavit filed before it were at variance with what was revealed by the satisfaction note(s) placed before the Court. Even if the satisfaction notes alone are to be gone by, the essential details with regard to source of information; the persons who were interrogated and with whom discreet enquiries were made are not disclosed. The necessary information revealed by such interrogation and discreet enquiries with regard to over invoicing, market information etc. are not indicated. Materials like high growth, high profit margins, doubts about international brand and details thereof etc. as mentioned in the satisfaction note(s) are admitted and known facts and therefore could not have induced the requisite belief. The above constitutes the broad basis on which the High Court thought it proper to cause inference with the measures undertaken by the Revenue against the assessee.assessee.24. Having clarified the above issue in the manner indicated, we may turn to the reasons assigned by the High Court for its decision. The view expressed by the High Court with regard to the satisfaction note(s); the alleged absence of a final decision to issue the authorization at the level of the Additional Director and the Director; the absence of any satisfaction of the Director General who, according to the High Court took the decision to issue the authorization are all seriously flawed. The different steps in the decision making process is lucidly laid down in the instructions contained in the search and seizure manual published by the department, relevant part of which has been extracted above. The steps delineated have been scrupulously followed. Besides we may take note of the fact that the Additional Director was not one of the competent authorities under Section 132 on 8.6.2009 (date of his note) inasmuch as it is by the Finance Act, 2009 effective from 19th August, 2009 that the Additional Director came to be included amongst the authorized officials though with retrospective effect from 1.10.1998. The reading of the relevant part of the satisfaction note of the Director goes to show that on the basis of materials produced satisfaction was duly recorded by him that authorization for search should be issued. The file was put up before the Director General (Investigation) for accord of administrative approval as required by Notification dated 7.3.2001. In fact, the requirement to obtain administrative approval is prompted by the need to provide an additional safeguard to the tax payer. A careful reading of the order of the Director General would go to show that all that he did was to record the view that the satisfaction of the Director, Income Tax (Investigation) was reasonable and therefore administrative approval should be accorded. The view taken by the High Court, therefore, cannot be sustained.25. The possibility of manipulation of the records as found by the High Court also does not commend to us for acceptance. There is no basis, whatsoever, for coming to any such conclusion. Suspicion ought not to be the basis of any judicial order and this is where the High Court seems to have erred.26. The remaining findings of the High Court with regard to the satisfaction recorded by the authorities appear to be in the nature of an appellate exercise touching upon the sufficiency and adequacy of the reasons and the authenticity and acceptability of the information on which satisfaction had been reached by the authorities. Such an exercise is alien to the jurisdiction under Article 226 of the Constitution.

### Instruction: Analyze the legal arguments presented and estimate the likelihood of the court accepting (1) or rejecting (0) the petition. ### Input: affidavit filed before it were at variance with what was revealed by the satisfaction note(s) placed before the Court. Even if the satisfaction notes alone are to be gone by, the essential details with regard to source of information; the persons who were interrogated and with whom discreet enquiries were made are not disclosed. The necessary information revealed by such interrogation and discreet enquiries with regard to over invoicing, market information etc. are not indicated. Materials like high growth, high profit margins, doubts about international brand and details thereof etc. as mentioned in the satisfaction note(s) are admitted and known facts and therefore could not have induced the requisite belief. The above constitutes the broad basis on which the High Court thought it proper to cause inference with the measures undertaken by the Revenue against the assessee. 21. Before we advert to the specific reasoning of the High Court, one specific aspect of the opinion expressed by the High Court needs to be taken note of inasmuch as the precise position in law in this regard needs to be clarified. The above aspect is highlighted by the following observations of the High Court expressed in paragraph 6 of the impugned order:- “We, however, express that when the satisfaction recorded is justiciable, the documents pertaining to such satisfaction may not be immune and if appropriate prayer is made, the inspection of such documents may be required to be allowed.” 22. In the light of the views expressed by this Court in ITO vs. Seth Brothers (supra) and Pooran Mal (supra), the above opinion expressed by the High Court is plainly incorrect. The necessity of recording of reasons, despite the amendment of Rule 112 (2) with effect from 1st October, 1975, has been repeatedly stressed upon by this Court so as to ensure accountability and responsibility in the decision making process. The necessity of recording of reasons also acts as a cushion in the event of a legal challenge being made to the satisfaction reached. Reasons enable a proper judicial assessment of the decision taken by the Revenue. However, the above, by itself, would not confer in the assessee a right of inspection of the documents or to a communication of the reasons for the belief at the stage of issuing of the authorization. Any such view would be counter productive of the entire exercise contemplated by Section 132 of the Act. It is only at the stage of commencement of the assessment proceedings after completion of the search and seizure, if any, that the requisite material may have to be disclosed to the assessee. 23. At this stage we would like to say that the High Court had committed a serious error in reproducing in great details the contents of the satisfaction note (s) containing the reasons for the satisfaction arrived at by the authorities under the Act. We have already indicated the time and stage at which the reasons recorded may be required to be brought to the notice of the assessee. In the light of the above, we cannot approve of the aforesaid part of the exercise undertaken by the High Court which we will understand to be highly premature; having the potential of conferring an undue advantage to the assessee thereby frustrating the endeavor of the revenue, even if the High Court is eventually not to intervene in favour of the assessee.24. Having clarified the above issue in the manner indicated, we may turn to the reasons assigned by the High Court for its decision. The view expressed by the High Court with regard to the satisfaction note(s); the alleged absence of a final decision to issue the authorization at the level of the Additional Director and the Director; the absence of any satisfaction of the Director General who, according to the High Court took the decision to issue the authorization are all seriously flawed. The different steps in the decision making process is lucidly laid down in the instructions contained in the search and seizure manual published by the department, relevant part of which has been extracted above. The steps delineated have been scrupulously followed. Besides we may take note of the fact that the Additional Director was not one of the competent authorities under Section 132 on 8.6.2009 (date of his note) inasmuch as it is by the Finance Act, 2009 effective from 19th August, 2009 that the Additional Director came to be included amongst the authorized officials though with retrospective effect from 1.10.1998. The reading of the relevant part of the satisfaction note of the Director goes to show that on the basis of materials produced satisfaction was duly recorded by him that authorization for search should be issued. The file was put up before the Director General (Investigation) for accord of administrative approval as required by Notification dated 7.3.2001. In fact, the requirement to obtain administrative approval is prompted by the need to provide an additional safeguard to the tax payer. A careful reading of the order of the Director General would go to show that all that he did was to record the view that the satisfaction of the Director, Income Tax (Investigation) was reasonable and therefore administrative approval should be accorded. The view taken by the High Court, therefore, cannot be sustained.25. The possibility of manipulation of the records as found by the High Court also does not commend to us for acceptance. There is no basis, whatsoever, for coming to any such conclusion. Suspicion ought not to be the basis of any judicial order and this is where the High Court seems to have erred.26. The remaining findings of the High Court with regard to the satisfaction recorded by the authorities appear to be in the nature of an appellate exercise touching upon the sufficiency and adequacy of the reasons and the authenticity and acceptability of the information on which satisfaction had been reached by the authorities. Such an exercise is alien to the jurisdiction under Article 226 of the Constitution. ### Response: 1

Tusi and Ors Vs. Divisional Manager, National Insurance Company Ltd. and Ors

1. Leave granted.2. Heard Mr. Hitendra Nath Rath, learned Counsel for the Petitioner and Mr. Rohit K. Sinha, learned Counsel for the Respondent.3. The husband of the Appellant met with an accident and sustained injuries to which he ultimately succumbed. The wife, the minor child and the parents as claimants instituted M.A.C. Case No. 11/2011 before the learned Additional District Judge-cum-4th Motor Accidents Claim Tribunal, Angul (for short "the Tribunal") putting forth a claim for Rs. 15,00,000/- (Rs. fifteen lakhs).4. The Tribunal upon consideration of material brought on record awarded a sum of Rs. 13,97,000/- (Rs. thirteen lakhs and ninety seven thousand) along with interest at the rate of 8% per annum from the date of filing of the claim petition till its realization.5. On an appeal being preferred the High Court noted the amount determined by the Tribunal and opined that the same was in excess and reduced it to, Rs. 9,56,000/- (Rs. nine lakhs and fifty six thousand).6. On a perusal of the order passed by the High Court we find that no reason has been ascribed. In fact, it is an extremely cryptic order. In our considered opinion the learned Single Judge would have been well advised to ascribe some reasons if it was of the view that the amount deserved to be reduced. There has to be a valid and cogent reasons while passing of a judgment or order. When people in distress approach the Tribunal and the amount has been granted on appreciation of certain aspect, the appellate court has to appreciate the evidence and thereafter express any view. It cannot arbitrarily modify the quantum that makes the order totally unsustainable.7. It is submitted by Mr. Hitendra Nath Rath, learned Counsel for the Appellant that the deceased has left behind his wife, minor child and the parents and he was the sole bread winner and was Tyre Mistry in M/s. Tripure Coal Transport Private Ltd. (TCTPL), Bharatpur, MCL, Talcher and the Tribunal had determined the monthly income at Rs. 9000/- after deducting the one-fourth of the amount towards expenditure on himself and applied the multiplier of 17. To the aforesaid, it added the certain amount for loss of consortium and other benefits eventually which came to Rs. 13,97,000/- (Rs. thirteen lakhs and ninety seven thousand).8. In our considered opinion the amount that was determined by the Tribunal was just and reasonable and there was no justification on the part of the High Court to reduce the same.

1[ds]6. On a perusal of the order passed by the High Court we find that no reason has been ascribed. In fact, it is an extremely cryptic order. In our considered opinion the learned Single Judge would have been well advised to ascribe some reasons if it was of the view that the amount deserved to be reduced. There has to be a valid and cogent reasons while passing of a judgment or order. When people in distress approach the Tribunal and the amount has been granted on appreciation of certain aspect, the appellate court has to appreciate the evidence and thereafter express any view. It cannot arbitrarily modify the quantum that makes the order totally unsustainable8. In our considered opinion the amount that was determined by the Tribunal was just and reasonable and there was no justification on the part of the High Court to reduce the same.

### Instruction: From the information provided in the case proceeding, infer whether the court's decision will be positive (1) or negative (0) for the appellant. ### Input: 1. Leave granted.2. Heard Mr. Hitendra Nath Rath, learned Counsel for the Petitioner and Mr. Rohit K. Sinha, learned Counsel for the Respondent.3. The husband of the Appellant met with an accident and sustained injuries to which he ultimately succumbed. The wife, the minor child and the parents as claimants instituted M.A.C. Case No. 11/2011 before the learned Additional District Judge-cum-4th Motor Accidents Claim Tribunal, Angul (for short "the Tribunal") putting forth a claim for Rs. 15,00,000/- (Rs. fifteen lakhs).4. The Tribunal upon consideration of material brought on record awarded a sum of Rs. 13,97,000/- (Rs. thirteen lakhs and ninety seven thousand) along with interest at the rate of 8% per annum from the date of filing of the claim petition till its realization.5. On an appeal being preferred the High Court noted the amount determined by the Tribunal and opined that the same was in excess and reduced it to, Rs. 9,56,000/- (Rs. nine lakhs and fifty six thousand).6. On a perusal of the order passed by the High Court we find that no reason has been ascribed. In fact, it is an extremely cryptic order. In our considered opinion the learned Single Judge would have been well advised to ascribe some reasons if it was of the view that the amount deserved to be reduced. There has to be a valid and cogent reasons while passing of a judgment or order. When people in distress approach the Tribunal and the amount has been granted on appreciation of certain aspect, the appellate court has to appreciate the evidence and thereafter express any view. It cannot arbitrarily modify the quantum that makes the order totally unsustainable.7. It is submitted by Mr. Hitendra Nath Rath, learned Counsel for the Appellant that the deceased has left behind his wife, minor child and the parents and he was the sole bread winner and was Tyre Mistry in M/s. Tripure Coal Transport Private Ltd. (TCTPL), Bharatpur, MCL, Talcher and the Tribunal had determined the monthly income at Rs. 9000/- after deducting the one-fourth of the amount towards expenditure on himself and applied the multiplier of 17. To the aforesaid, it added the certain amount for loss of consortium and other benefits eventually which came to Rs. 13,97,000/- (Rs. thirteen lakhs and ninety seven thousand).8. In our considered opinion the amount that was determined by the Tribunal was just and reasonable and there was no justification on the part of the High Court to reduce the same. ### Response: 1

Commissioner of Income Tax, Kerala Vs. N.A. Mohamed Haneef

HEGDE, J.1. This is an appeal by special leave from the judgment of the High Court of Kerala in Income-tax Referred Case No. 11 of 1967 on its file The facts of the case lie within a narrow compass. The assessee carried on business as tin fabricator and oil miller. For the previous year ending on December 31, 1959, he returned an income of Rs. 52, 280. One Mohideen Kunju was managing the affairs of the assessee. The assessee had obtained key loans and over-drafts from the Canara Bank Ltd. As per the balance-sheets of the assessee as on December 31, 1959, the total amount due to the Canara Bank Ltd. was Rs. 2, 78, 015.72. According to the information supplied by the Canara Bank Ltd. in response to the enquiry made by the Income-tax Officer, the amount due to that bank from the assessee was only Rs. 2, 40, 792.29 as on December 31, 1959. There was thus a difference of Rs. 31, 858.78. The Income-tax Officer called upon the assessee to explain that discrepancy. The assessees representative was not able to reconcile the discrepancy and the assessee wrote to the Income-tax Officer on March 11, 1964, to the effect that Mohideen Kunju who was managing his affairs was in charge of his business ; he made the borrowings ; he was maintaining the accounts ; relationship between himself and Mohideen Kunju had become strained ; hence he is unable to explain the discrepancy. In view of that explanation the Income-tax Officer brought to tax Rs. 31, 858.78 as income from undisclosed sources. About that assessment, there is no dispute. After bringing to tax the said amount, the Income-tax Officer proceeded to levy penalty on the assessee on the ground that he had deliberately submitted a wrong return. The Tribunal accepted the case of the department and upheld the penalty imposed on the assessee. But, on a reference, the High Court set aside the order of the Tribunal. In view of the decision of this court in Commissioner of Income-tax v. Anwar Ali, the decision of the High Court on the facts of the case must be held to be correct.2. There is no basis for coming to a firm conclusion that the assessee deliberately supplied wrong particulars

0[ds]In view of the decision of this court in Commissioner ofv. Anwar Ali, the decision of the High Court on the facts of the case must be held to be correct.There is no basis for coming to a firm conclusion that the assessee deliberately supplied wrong particulars

### Instruction: From the information provided in the case proceeding, infer whether the court's decision will be positive (1) or negative (0) for the appellant. ### Input: HEGDE, J.1. This is an appeal by special leave from the judgment of the High Court of Kerala in Income-tax Referred Case No. 11 of 1967 on its file The facts of the case lie within a narrow compass. The assessee carried on business as tin fabricator and oil miller. For the previous year ending on December 31, 1959, he returned an income of Rs. 52, 280. One Mohideen Kunju was managing the affairs of the assessee. The assessee had obtained key loans and over-drafts from the Canara Bank Ltd. As per the balance-sheets of the assessee as on December 31, 1959, the total amount due to the Canara Bank Ltd. was Rs. 2, 78, 015.72. According to the information supplied by the Canara Bank Ltd. in response to the enquiry made by the Income-tax Officer, the amount due to that bank from the assessee was only Rs. 2, 40, 792.29 as on December 31, 1959. There was thus a difference of Rs. 31, 858.78. The Income-tax Officer called upon the assessee to explain that discrepancy. The assessees representative was not able to reconcile the discrepancy and the assessee wrote to the Income-tax Officer on March 11, 1964, to the effect that Mohideen Kunju who was managing his affairs was in charge of his business ; he made the borrowings ; he was maintaining the accounts ; relationship between himself and Mohideen Kunju had become strained ; hence he is unable to explain the discrepancy. In view of that explanation the Income-tax Officer brought to tax Rs. 31, 858.78 as income from undisclosed sources. About that assessment, there is no dispute. After bringing to tax the said amount, the Income-tax Officer proceeded to levy penalty on the assessee on the ground that he had deliberately submitted a wrong return. The Tribunal accepted the case of the department and upheld the penalty imposed on the assessee. But, on a reference, the High Court set aside the order of the Tribunal. In view of the decision of this court in Commissioner of Income-tax v. Anwar Ali, the decision of the High Court on the facts of the case must be held to be correct.2. There is no basis for coming to a firm conclusion that the assessee deliberately supplied wrong particulars ### Response: 0

State of Karnataka and Ors Vs. Krishna Kumar and Ors

appointed is less, the candidate has to teach Science and Mathematics subjects for 6th and 7th standards, to make up the workload. 6. The learned senior Counsel has further pointed out that since the hybrid category of higher primary schools was created, the matter was strictly not governed by the provisions of the Act of 2007 and the Rules framed thereunder and moreover, in order to implement the Sarva Shiksha Abhiyan, an independent scheme containing the provisions for mutual transfer in Clause 13 of Memo dated 7.4.2010 had been carved out, which is based upon the volition of an incumbent in case he opt for mutual transfer, then it is permissible for him to avail the aforesaid facility. The other service conditions were not to be adversely affected. The salary, as well as the seniority, are not to be adversely affected by mutual transfers in case an incumbent avails the provisions of Clause 13. Office Memorandum dated 07.04.2010 has been issued by the State Government taking care of the exigency of the SSA Scheme, particularly when such higher primary schools were not strictly governed by the provisions of the Act merely on the basis of analogy, the provisions of Clause 13 could not have been struck down by the Tribunal and the same has been illegally affirmed by the High Court. 7. The learned Counsel appearing on behalf of the Respondents has contended that considering the findings recorded by the Tribunal in Paragraphs 17 and 18 of the order, the High Court has found justification with the same and rightly ordered that the transfer of such teachers could have been ordered in accordance with the provisions of the Act and the Rules framed thereunder, and not as per the Office Memorandum, Clause 13 of which has been rightly struck down by the Tribunal. Thus, no case for interference in the order of the Tribunal, as affirmed by the High Court, is made out. The matter of transfer is governed by the provisions of the Act of 2007 and the Rules framed thereunder. It was not permissible to the State Government to issue memo dated 7.4.2010, same cannot hold the field in view of the statutory provisions. 8. After hearing the learned Counsel for the parties, we are of the considered opinion that the SSA Scheme is an independent scheme and considering its imperative, certain primary schools were upgraded to and styled as higher primary schools. The Class 8 was also added in such schools. The hybrid category of primary schools was created to make the education broad-based in rural areas. Considering the aforesaid scheme, the matter was strictly not governed by the provisions of the Act of 2007 and the Rules framed thereunder with respect to higher primary schools. The SSA Scheme was to deal with the primary objective of broad basing education. Clause 13 of the Office Memorandum deals with the mutual transfer. The same is extracted herein below: 13 MUTUAL TRANSFERS: a) If the pre-confirmation service period is declared as satisfactory, mutual transfer requests of such Teachers will be considered. While doing mutual transfer, it should be given effect only when cadre and subjects tally. b) All the mutual transfer at District, Division, and State level to be done at a time. c) Teachers who have computerized information through internet seeking mutual transfer has to be personally present at the Office of the B.E.O. concerned, for the verification of their service details. But for No. 1. Teachers transfer, both of them have to be present before the Transfer Authority for counseling. d) Primary and T.G.T. Teachers appointed under SARVA SHIKSHANA ABHIYAN shall be transferred to Teachers post of the same subject and appointed under the same project. e) S.S.A. and T.G.T. Teachers working under SARVA SHIKSHAN ABHIYAN, YOJANE, submit an application for mutual transfer with Teachers of state zone with the same basic pay or less may be considered for mutual transfer. f) If S.S.A. and T.G.T. Teachers submit an application for transfer to vacant posts it may be considered. 9. Even assuming that the provisions of the Act of 2007 and Rules thereunder are applicable, since there is no provision to the contrary therein, the provision in question providing for mutual transfer could have been carved out by issuing executive instructions contained in Memo dated 7.4.2010. No such provision in the Act and Rules has been pointed out with respect to mutual transfers. Particularly when the provisions of mutual transfer which is made in Office Memorandum of 2010, depends on the volition of an employee, there is no compulsion, it cannot be said to be arbitrary. It is ordered only when two incumbents opt for mutual transfer. Thus, Office Memorandum dated 07.04.2010 could not be said to be in violation of the provisions of the Act of 2007 and rules. The Tribunal and the High Court both have misdirected themselves in this regard. 10. In our considered opinion, the provisions of mutual transfer does not militate against the provisions of the Act and Rules framed thereunder and particularly, when it was with respect to SSA Scheme, it was open to making certain provisions by way of Office Memorandum dated 07.04.2010. Mere reference to the Act and the Rules framed in the same does not mean that the provisions have been adopted for all the purposes. In the same Memo the provisions have been carved out for mutual transfer. In the absence of statutory provision, the executive instructions would have force of law, more so when the SSA is an independent scheme. The SSA Scheme is funded by the Central Government and considering its exigency, independent provisions could have been carved out which is not to be found in the Act of 2007 and the Rules framed thereunder. 11. Thus, we find that there is no violation of the provisions of the Act and the Rules by Clause 13 of Office Memorandum dated 07.04.2010. The Tribunal and the High Court have erred in law in quashing the same.

1[ds]8. After hearing the learned Counsel for the parties, we are of the considered opinion that the SSA Scheme is an independent scheme and considering its imperative, certain primary schools were upgraded to and styled as higher primary schools. The Class 8 was also added in such schools. The hybrid category of primary schools was created to make the education broad-based in rural areas. Considering the aforesaid scheme, the matter was strictly not governed by the provisions of the Act of 2007 and the Rules framed thereunder with respect to higher primary schools. The SSA Scheme was to deal with the primary objective of broad basing education. Clause 13 of the Office Memorandum deals with the mutual transfer9. Even assuming that the provisions of the Act of 2007 and Rules thereunder are applicable, since there is no provision to the contrary therein, the provision in question providing for mutual transfer could have been carved out by issuing executive instructions contained in Memo dated 7.4.2010. No such provision in the Act and Rules has been pointed out with respect to mutual transfers. Particularly when the provisions of mutual transfer which is made in Office Memorandum of 2010, depends on the volition of an employee, there is no compulsion, it cannot be said to be arbitrary. It is ordered only when two incumbents opt for mutual transfer. Thus, Office Memorandum dated 07.04.2010 could not be said to be in violation of the provisions of the Act of 2007 and rules. The Tribunal and the High Court both have misdirected themselves in this regard10. In our considered opinion, the provisions of mutual transfer does not militate against the provisions of the Act and Rules framed thereunder and particularly, when it was with respect to SSA Scheme, it was open to making certain provisions by way of Office Memorandum dated 07.04.2010. Mere reference to the Act and the Rules framed in the same does not mean that the provisions have been adopted for all the purposes. In the same Memo the provisions have been carved out for mutual transfer. In the absence of statutory provision, the executive instructions would have force of law, more so when the SSA is an independent scheme. The SSA Scheme is funded by the Central Government and considering its exigency, independent provisions could have been carved out which is not to be found in the Act of 2007 and the Rules framed thereunder11. Thus, we find that there is no violation of the provisions of the Act and the Rules by Clause 13 of Office Memorandum dated 07.04.2010. The Tribunal and the High Court have erred in law in quashing the same.

### Instruction: Using the case data, forecast whether the court is likely to side with (1) or against (0) the appellant/petitioner. ### Input: appointed is less, the candidate has to teach Science and Mathematics subjects for 6th and 7th standards, to make up the workload. 6. The learned senior Counsel has further pointed out that since the hybrid category of higher primary schools was created, the matter was strictly not governed by the provisions of the Act of 2007 and the Rules framed thereunder and moreover, in order to implement the Sarva Shiksha Abhiyan, an independent scheme containing the provisions for mutual transfer in Clause 13 of Memo dated 7.4.2010 had been carved out, which is based upon the volition of an incumbent in case he opt for mutual transfer, then it is permissible for him to avail the aforesaid facility. The other service conditions were not to be adversely affected. The salary, as well as the seniority, are not to be adversely affected by mutual transfers in case an incumbent avails the provisions of Clause 13. Office Memorandum dated 07.04.2010 has been issued by the State Government taking care of the exigency of the SSA Scheme, particularly when such higher primary schools were not strictly governed by the provisions of the Act merely on the basis of analogy, the provisions of Clause 13 could not have been struck down by the Tribunal and the same has been illegally affirmed by the High Court. 7. The learned Counsel appearing on behalf of the Respondents has contended that considering the findings recorded by the Tribunal in Paragraphs 17 and 18 of the order, the High Court has found justification with the same and rightly ordered that the transfer of such teachers could have been ordered in accordance with the provisions of the Act and the Rules framed thereunder, and not as per the Office Memorandum, Clause 13 of which has been rightly struck down by the Tribunal. Thus, no case for interference in the order of the Tribunal, as affirmed by the High Court, is made out. The matter of transfer is governed by the provisions of the Act of 2007 and the Rules framed thereunder. It was not permissible to the State Government to issue memo dated 7.4.2010, same cannot hold the field in view of the statutory provisions. 8. After hearing the learned Counsel for the parties, we are of the considered opinion that the SSA Scheme is an independent scheme and considering its imperative, certain primary schools were upgraded to and styled as higher primary schools. The Class 8 was also added in such schools. The hybrid category of primary schools was created to make the education broad-based in rural areas. Considering the aforesaid scheme, the matter was strictly not governed by the provisions of the Act of 2007 and the Rules framed thereunder with respect to higher primary schools. The SSA Scheme was to deal with the primary objective of broad basing education. Clause 13 of the Office Memorandum deals with the mutual transfer. The same is extracted herein below: 13 MUTUAL TRANSFERS: a) If the pre-confirmation service period is declared as satisfactory, mutual transfer requests of such Teachers will be considered. While doing mutual transfer, it should be given effect only when cadre and subjects tally. b) All the mutual transfer at District, Division, and State level to be done at a time. c) Teachers who have computerized information through internet seeking mutual transfer has to be personally present at the Office of the B.E.O. concerned, for the verification of their service details. But for No. 1. Teachers transfer, both of them have to be present before the Transfer Authority for counseling. d) Primary and T.G.T. Teachers appointed under SARVA SHIKSHANA ABHIYAN shall be transferred to Teachers post of the same subject and appointed under the same project. e) S.S.A. and T.G.T. Teachers working under SARVA SHIKSHAN ABHIYAN, YOJANE, submit an application for mutual transfer with Teachers of state zone with the same basic pay or less may be considered for mutual transfer. f) If S.S.A. and T.G.T. Teachers submit an application for transfer to vacant posts it may be considered. 9. Even assuming that the provisions of the Act of 2007 and Rules thereunder are applicable, since there is no provision to the contrary therein, the provision in question providing for mutual transfer could have been carved out by issuing executive instructions contained in Memo dated 7.4.2010. No such provision in the Act and Rules has been pointed out with respect to mutual transfers. Particularly when the provisions of mutual transfer which is made in Office Memorandum of 2010, depends on the volition of an employee, there is no compulsion, it cannot be said to be arbitrary. It is ordered only when two incumbents opt for mutual transfer. Thus, Office Memorandum dated 07.04.2010 could not be said to be in violation of the provisions of the Act of 2007 and rules. The Tribunal and the High Court both have misdirected themselves in this regard. 10. In our considered opinion, the provisions of mutual transfer does not militate against the provisions of the Act and Rules framed thereunder and particularly, when it was with respect to SSA Scheme, it was open to making certain provisions by way of Office Memorandum dated 07.04.2010. Mere reference to the Act and the Rules framed in the same does not mean that the provisions have been adopted for all the purposes. In the same Memo the provisions have been carved out for mutual transfer. In the absence of statutory provision, the executive instructions would have force of law, more so when the SSA is an independent scheme. The SSA Scheme is funded by the Central Government and considering its exigency, independent provisions could have been carved out which is not to be found in the Act of 2007 and the Rules framed thereunder. 11. Thus, we find that there is no violation of the provisions of the Act and the Rules by Clause 13 of Office Memorandum dated 07.04.2010. The Tribunal and the High Court have erred in law in quashing the same. ### Response: 1

M/S Kabaini Minerals Pvt. Ltd. Vs. State Of Orissa

grant of lease beyond fifty hectares before commencement of production on confirmation received from the financing institution or the Deputy Director of Mines or the Mining Officer. (iii) a person who is a raiyat of the land;(iv) any other category;Provided that in the case of an applicant under category (iii) or (iv) the lease may be granted by the competent authority on being satisfied that the applicant shall be able to invest or arrange sufficient funds to carry on his quarrying activity in a proper, skilful and workmen- like manner.(7) No quarry lease/permit/auction for road metals including ballas and ordinary boulders shall be granted within the area for which a lease has been granted for quarrying rocks used for decorative, industrial and export purposes including dimension stones." 6. On a reading of the language of Rule 6 it is clear that three types of precedence/priority are embodied in the provision. First is a normal case where the application which has been received earlier is given precedence over the latter application. An exception is carved out in sub-rule (5-a) to the effect that if the State Government is of the opinion that in the interest of mineral department it is necessary to do so it may for reasons to be recorded in writing grant quarry lease in preference to the applications made earlier. Sub-rule (6) deals with another category of priority. In the present case Sub-rule (6) does not have much relevance. Sub-rule (6-a) carves out a category of applicants who have applied for minor minerals of the enumerated categories i.e. all types of rocks used for decorative, industrial or export purpose including dimension stones. The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company. 7. Learned counsel for appellant No.1 submitted that in fact the unit taken over by respondent No.4 was not functional and it had applied for permanent registration certificate which was under process as is evident from the letter of the District Industrial Centre, Mayurbhanj. 8. The question really is whether the unit had been set up and not whether it was running. Undisputedly, prior to its take over by respondent No.4 the industry had been set up and used for processing of decorative stones. Though, it was contended by learned counsel for appellants that by the time the applications were made the respondent No.4 had not taken over the unit yet that really is of consequence. 9. Appellant No.1 had also not set up an industry. It had merely entered into an agreement for purchasing the land and placed orders for the machineries. The expression set up has a definite connotation of its own. 10. The expression "setting up" means, as is defined in the Oxford English Dictionary, to place on foot or to establish, and is contradistinction to commence. The distinction is this that when a business is established and is ready to commence business, and then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. (See Commissioner of Wealth Tax, Madras v. Ramaraju Surgical Cotton Mills Ltd. (1967 (1) SCR 761 ). 11. In the said case, it was further held that the word "set up" is equivalent to the word established but operations for establishment cannot be equated with the establishment of the unit itself of its setting up.12. The question of priority is to be adjudged only at the time of consideration of the applications. Undisputedly, respondent No.4 had taken over the unit on the date the applications were considered. Therefore, the stand of the appellants that at the time the applications were made by respondent No.4 it had not set up an industry is really without substance. As was observed by this Court in Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR 1991 SC 818 ), since the applicant had already set up an industry for processing minor minerals on the date of consideration of the application its claim for priority was to be judged on the basis of the factual position on the date of consideration of the applications. 13. It was submitted by learned counsel for the appellants that no reasons were indicated by the authorities as to why the respondent No.4 was to have priority over the appellants. Reference in this context is made to sub-rule (5-a) of Rule 6. 14. It is to be noted that in a case covered by sub-rule (5-a) the State Government has to objectively assess as to whether in the interest of mineral development preference is given to a person though he made the application later. In such a case the Governments opinion that in the interest of mineral development it is necessary to do so obviously has an objective angle involved and, therefore, there is necessity to record reasons. So far as Sub-rule (6-a) is concerned, there is no requirement indicated to record reasons. The fact that priority is given to a person who has already set up an industry is itself the reason for giving priority. Therefore, the enumeration of the order of priority is itself the reason inbuilt in the process of consideration of the applications. That itself is the foundation and forms the rational for the priority given. It is not the case of the appellant that the order of priority is irrational. That being so, stand of learned counsel for the appellants that reasons were not recorded and, therefore, the action is vitiated is really of no consequence.

0[ds]The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company.Appellant No.1 had also not set up an industry. It had merely entered into an agreement for purchasing the land and placed orders for the machineries. The expression set up has a definite connotation of its own.In the said case, it was further held that the word "set up" is equivalent to the word established but operations for establishment cannot be equated with the establishment of the unit itself of its setting up.12. The question of priority is to be adjudged only at the time of consideration of the applications. Undisputedly, respondent No.4 had taken over the unit on the date the applications were considered. Therefore, the stand of the appellants that at the time the applications were made by respondent No.4 it had not set up an industry is really without substance. As was observed by this Court in Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR 1991 SC 818 ), since the applicant had already set up an industry for processing minor minerals on the date of consideration of the application its claim for priority was to be judged on the basis of the factual position on the date of consideration of the applications.It is to be noted that in a case covered by sub-rule (5-a) the State Government has to objectively assess as to whether in the interest of mineral development preference is given to a person though he made the application later. In such a case the Governments opinion that in the interest of mineral development it is necessary to do so obviously has an objective angle involved and, therefore, there is necessity to record reasons. So far as Sub-rule (6-a) is concerned, there is no requirement indicated to record reasons. The fact that priority is given to a person who has already set up an industry is itself the reason for giving priority. Therefore, the enumeration of the order of priority is itself the reason inbuilt in the process of consideration of the applications. That itself is the foundation and forms the rational for the priority given. It is not the case of the appellant that the order of priority is irrational. That being so, stand of learned counsel for the appellants that reasons were not recorded and, therefore, the action is vitiated is really of no. On a reading of the language of Rule 6 it is clear that three types of precedence/priority are embodied in the provision. First is a normal case where the application which has been received earlier is given precedence over the latter application. An exception is carved out in sub-rule (5-a) to the effect that if the State Government is of the opinion that in the interest of mineral department it is necessary to do so it may for reasons to be recorded in writing grant quarry lease in preference to the applications made earlier. Sub-rule (6) deals with another category of priority. In the present case Sub-rule (6) does not have much relevance. Sub-rule (6-a) carves out a category of applicants who have applied for minor minerals of the enumerated categories i.e. all types of rocks used for decorative, industrial or export purpose including dimension stones.The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company.

### Instruction: From the information provided in the case proceeding, infer whether the court's decision will be positive (1) or negative (0) for the appellant. ### Input: grant of lease beyond fifty hectares before commencement of production on confirmation received from the financing institution or the Deputy Director of Mines or the Mining Officer. (iii) a person who is a raiyat of the land;(iv) any other category;Provided that in the case of an applicant under category (iii) or (iv) the lease may be granted by the competent authority on being satisfied that the applicant shall be able to invest or arrange sufficient funds to carry on his quarrying activity in a proper, skilful and workmen- like manner.(7) No quarry lease/permit/auction for road metals including ballas and ordinary boulders shall be granted within the area for which a lease has been granted for quarrying rocks used for decorative, industrial and export purposes including dimension stones." 6. On a reading of the language of Rule 6 it is clear that three types of precedence/priority are embodied in the provision. First is a normal case where the application which has been received earlier is given precedence over the latter application. An exception is carved out in sub-rule (5-a) to the effect that if the State Government is of the opinion that in the interest of mineral department it is necessary to do so it may for reasons to be recorded in writing grant quarry lease in preference to the applications made earlier. Sub-rule (6) deals with another category of priority. In the present case Sub-rule (6) does not have much relevance. Sub-rule (6-a) carves out a category of applicants who have applied for minor minerals of the enumerated categories i.e. all types of rocks used for decorative, industrial or export purpose including dimension stones. The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company. 7. Learned counsel for appellant No.1 submitted that in fact the unit taken over by respondent No.4 was not functional and it had applied for permanent registration certificate which was under process as is evident from the letter of the District Industrial Centre, Mayurbhanj. 8. The question really is whether the unit had been set up and not whether it was running. Undisputedly, prior to its take over by respondent No.4 the industry had been set up and used for processing of decorative stones. Though, it was contended by learned counsel for appellants that by the time the applications were made the respondent No.4 had not taken over the unit yet that really is of consequence. 9. Appellant No.1 had also not set up an industry. It had merely entered into an agreement for purchasing the land and placed orders for the machineries. The expression set up has a definite connotation of its own. 10. The expression "setting up" means, as is defined in the Oxford English Dictionary, to place on foot or to establish, and is contradistinction to commence. The distinction is this that when a business is established and is ready to commence business, and then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. (See Commissioner of Wealth Tax, Madras v. Ramaraju Surgical Cotton Mills Ltd. (1967 (1) SCR 761 ). 11. In the said case, it was further held that the word "set up" is equivalent to the word established but operations for establishment cannot be equated with the establishment of the unit itself of its setting up.12. The question of priority is to be adjudged only at the time of consideration of the applications. Undisputedly, respondent No.4 had taken over the unit on the date the applications were considered. Therefore, the stand of the appellants that at the time the applications were made by respondent No.4 it had not set up an industry is really without substance. As was observed by this Court in Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR 1991 SC 818 ), since the applicant had already set up an industry for processing minor minerals on the date of consideration of the application its claim for priority was to be judged on the basis of the factual position on the date of consideration of the applications. 13. It was submitted by learned counsel for the appellants that no reasons were indicated by the authorities as to why the respondent No.4 was to have priority over the appellants. Reference in this context is made to sub-rule (5-a) of Rule 6. 14. It is to be noted that in a case covered by sub-rule (5-a) the State Government has to objectively assess as to whether in the interest of mineral development preference is given to a person though he made the application later. In such a case the Governments opinion that in the interest of mineral development it is necessary to do so obviously has an objective angle involved and, therefore, there is necessity to record reasons. So far as Sub-rule (6-a) is concerned, there is no requirement indicated to record reasons. The fact that priority is given to a person who has already set up an industry is itself the reason for giving priority. Therefore, the enumeration of the order of priority is itself the reason inbuilt in the process of consideration of the applications. That itself is the foundation and forms the rational for the priority given. It is not the case of the appellant that the order of priority is irrational. That being so, stand of learned counsel for the appellants that reasons were not recorded and, therefore, the action is vitiated is really of no consequence. ### Response: 0

A. Vishwanath Rao Vs. State of Mysore & Others

contention of the appellants that in the draft scheme the maximum number of vehicles and daily services was specified and not the minimum, but in the final scheme approved under Section 68-D of the Motor Vehicles Act there was specification of the minimum number of vehicles and daily services in respect of the route in question. The approved scheme stated that the maximum number of vehicles was 18 and the minimum was 1. It was also stated that the maximum number of daily services was 10 and the minimum was 3. It was maintained on behalf of the appellants that by prescribing the maximum and minimum number of vehicles and daily services and by permitting such a great disparity between the maximum and minimum number of vehicles and daily services there was a virtual modification of the draft scheme and the procedure prescribed by S 68-E of the Motor Vehicles Act should have been followed. In our opinion, there is no justification for this argument. It is true that in 13 H. Aswathanarayan Singh v. State of Mysore. (1966 1 SCR 87 = (AIR 1965 SC 1848 ),. it was pointed out by this Court that is the proportion which the minimum bears to the maximum is so great. and the gap between the two. is so wide as to make the prescription of the maximum and the minimum amount to a fraud on Sections 68-C and 68-E. the. scheme will stand vitiated.But at the same time it was explained that it was not possible to lay down specifically at what stage the fixing of minimum and maximum would turn into fraud; but it is only when the gap between the minimum and maximum is so great that it amounts to fraud on the Act that it will be open to a court to hold that the scheme is not in compliance with Section 68-C and is hit by Section 68-E. The gap between the minimum and maximum would depend upon a number of factors, particularly on the variation in the demand for transport at different seasons of the year.At page 97 of the Report, Wanchoo, J., as he then was, speaking for the Court, observed as follows :"There is no doubt that though fixing of minimum and maximum number of vehicles and trips with respect to each reuse is permissible under Section 68-C and would not be hit by Section 68-E. the proportion between the minimum and maximum should not be so great as to make the fixing of minimum and maximum a fraud on Sections 68-C and 68-E of the Act. It is not possible to lay down specifically at what stage the fixing of minimum and maximum would turn into fraud: but it is only when the gap between the minimum and maximum is so great that it amounts to fraud on the Act that it will be open to a court to hold that the scheme is not in compliance with Section 68-C and is hit by Section 68-E. The gap between the minimum and maximum would depend upon a number of factors, particularly on the variation in the demand for transport at different seasons of the year. Even so if the approved scheme were to fix minimum and maximum with very wide disparity between the two, it may be possible for the court to hold after examining the facts of the case that such fixation is not in accordance with Sec. 68-C and is a fraud on Section 88-E. But, with respect, it seems to us that a variation in minimum and maximum from 6 to 12 or 5 to 9 can hardly be of such an order as to amount to fraud on the Act. The observations with respect to fixing of minimum and maximum number of vehicles and trips in the scheme made in Rowjees case, (1964) 6 SCR 330 = (AIR l964 SC 962) must therefore be treated as obiter as in that case they did not require determination. In the present case the gap is not of such a wide nature." In the present case, the distance between Yadgir and Narayanapet is a short distance of twenty-eight miles and the order of the Chief Minister shows that there was seasonal variation of traffic density and during marriage and other seasons it was necessary to operate extra services. There was also variation on account of auspicious and inauspicious days. The scheme had to provide for operating extra services during Jathras, Car festivals and other occasions like Dasara fair at Mysore, Ulvi fair at Ulvi, Shivrathri fair at Gokarn etc.It was felt by the Chief Minister that the scheme will have to be sufficiently flexible to enable the State Transport Undertaking to adjust its services and vehicles to cater to Shandy or weekly Bazar traffic to various places. In the context of the particular facts of this case we are of opinion that the gap between the fixation of minimum and the maximum number of vehicles and of daily services is not so great as to amount to a fraud on Sections 68-C and 68-E of the Motor Vehicles Act. We accordingly reject the argument of the appellants on this aspect of the case. 6. Lastly, it was contended that the approved scheme violated Article 14 of the Constitution as there was a complete exclusion of the private operators on the portion of the route located in the Mysore State while permitting those who are plying their vehicles on the portion of the route lying in Andhra Pradesh State. We do not consider there is any substance in this argument. It is manifest that operators plying in the State of Mysore and those plying in the State of Andhra Pradesh constitute two different classes of persons and therefore no question of discrimination can arise if there is complete exclusion of the operators within the State of Mysore and if there is relaxation with regard to those operating in the State of Andhra Pradesh.

0[ds]4. On behalf of the appellants it was contended, in the first place, that the provisions of Section 20 ofthe Road Transport Corporations Act, 1950 were not complied with and the final scheme published by respondent No 1 was ultra vires.We are unable to accept this argument as correct. It is not necessary to examine, in this case, whether there is any inconsistency between the provisions of Section 20 ofthe Road Transport Corporations Act, 1950 and the proviso to Section 68-D of the Motor Vehicles Act. It is also not necessary to express any opinion as to whether the requirements of Section 20 of the Road Transport Corporations Act should be complied with even in the case of a scheme relating to inter-State route to which the Central Government has accorded approval, under the proviso to Section 68-D of the Motor Vehicles Act. We shall assume in favour of the appellants that the requirements of Section 20 of the Road Transport Corporations Act should also be followed in a case where the Central Government has given sanction under Section 68-D of the Motor Vehicles Act. Even upon that assumption we hold that there has been sufficient compliance with the requirements of Section 20 of the Road Transport Corporations Act in the present case. It is not disputed that the concurrence of the State of Andhra Pradesh was secured for the final scheme and the Government of the State of Mysore had also accorded its approval to it. In these circumstances the omission of respondent No. 1 to make the scheme in the precise manner in which Section 20 of the Road Transport Corporations Act directs the preparation of the scheme is a mere irregularity which cannot lead to the nullification of the final scheme publisher on July 16, 19646. Lastly, it was contended that the approved scheme violated Article 14 of the Constitution as there was a complete exclusion of the private operators on the portion of the route located in the Mysore State while permitting those who are plying their vehicles on the portion of the route lying in Andhra Pradesh State. We do not consider there is any substance in this argument. It is manifest that operators plying in the State of Mysore and those plying in the State of Andhra Pradesh constitute two different classes of persons and therefore no question of discrimination can arise if there is complete exclusion of the operators within the State of Mysore and if there is relaxation with regard to those operating in the State of Andhra Pradesh.

### Instruction: Assess the case proceedings and provide a prediction: is the court likely to rule in favor of (1) or against (0) the appellant/petitioner? ### Input: contention of the appellants that in the draft scheme the maximum number of vehicles and daily services was specified and not the minimum, but in the final scheme approved under Section 68-D of the Motor Vehicles Act there was specification of the minimum number of vehicles and daily services in respect of the route in question. The approved scheme stated that the maximum number of vehicles was 18 and the minimum was 1. It was also stated that the maximum number of daily services was 10 and the minimum was 3. It was maintained on behalf of the appellants that by prescribing the maximum and minimum number of vehicles and daily services and by permitting such a great disparity between the maximum and minimum number of vehicles and daily services there was a virtual modification of the draft scheme and the procedure prescribed by S 68-E of the Motor Vehicles Act should have been followed. In our opinion, there is no justification for this argument. It is true that in 13 H. Aswathanarayan Singh v. State of Mysore. (1966 1 SCR 87 = (AIR 1965 SC 1848 ),. it was pointed out by this Court that is the proportion which the minimum bears to the maximum is so great. and the gap between the two. is so wide as to make the prescription of the maximum and the minimum amount to a fraud on Sections 68-C and 68-E. the. scheme will stand vitiated.But at the same time it was explained that it was not possible to lay down specifically at what stage the fixing of minimum and maximum would turn into fraud; but it is only when the gap between the minimum and maximum is so great that it amounts to fraud on the Act that it will be open to a court to hold that the scheme is not in compliance with Section 68-C and is hit by Section 68-E. The gap between the minimum and maximum would depend upon a number of factors, particularly on the variation in the demand for transport at different seasons of the year.At page 97 of the Report, Wanchoo, J., as he then was, speaking for the Court, observed as follows :"There is no doubt that though fixing of minimum and maximum number of vehicles and trips with respect to each reuse is permissible under Section 68-C and would not be hit by Section 68-E. the proportion between the minimum and maximum should not be so great as to make the fixing of minimum and maximum a fraud on Sections 68-C and 68-E of the Act. It is not possible to lay down specifically at what stage the fixing of minimum and maximum would turn into fraud: but it is only when the gap between the minimum and maximum is so great that it amounts to fraud on the Act that it will be open to a court to hold that the scheme is not in compliance with Section 68-C and is hit by Section 68-E. The gap between the minimum and maximum would depend upon a number of factors, particularly on the variation in the demand for transport at different seasons of the year. Even so if the approved scheme were to fix minimum and maximum with very wide disparity between the two, it may be possible for the court to hold after examining the facts of the case that such fixation is not in accordance with Sec. 68-C and is a fraud on Section 88-E. But, with respect, it seems to us that a variation in minimum and maximum from 6 to 12 or 5 to 9 can hardly be of such an order as to amount to fraud on the Act. The observations with respect to fixing of minimum and maximum number of vehicles and trips in the scheme made in Rowjees case, (1964) 6 SCR 330 = (AIR l964 SC 962) must therefore be treated as obiter as in that case they did not require determination. In the present case the gap is not of such a wide nature." In the present case, the distance between Yadgir and Narayanapet is a short distance of twenty-eight miles and the order of the Chief Minister shows that there was seasonal variation of traffic density and during marriage and other seasons it was necessary to operate extra services. There was also variation on account of auspicious and inauspicious days. The scheme had to provide for operating extra services during Jathras, Car festivals and other occasions like Dasara fair at Mysore, Ulvi fair at Ulvi, Shivrathri fair at Gokarn etc.It was felt by the Chief Minister that the scheme will have to be sufficiently flexible to enable the State Transport Undertaking to adjust its services and vehicles to cater to Shandy or weekly Bazar traffic to various places. In the context of the particular facts of this case we are of opinion that the gap between the fixation of minimum and the maximum number of vehicles and of daily services is not so great as to amount to a fraud on Sections 68-C and 68-E of the Motor Vehicles Act. We accordingly reject the argument of the appellants on this aspect of the case. 6. Lastly, it was contended that the approved scheme violated Article 14 of the Constitution as there was a complete exclusion of the private operators on the portion of the route located in the Mysore State while permitting those who are plying their vehicles on the portion of the route lying in Andhra Pradesh State. We do not consider there is any substance in this argument. It is manifest that operators plying in the State of Mysore and those plying in the State of Andhra Pradesh constitute two different classes of persons and therefore no question of discrimination can arise if there is complete exclusion of the operators within the State of Mysore and if there is relaxation with regard to those operating in the State of Andhra Pradesh. ### Response: 0

Anand Swarup Singh Vs. State of Punjab

K.S. Hegde, J. 1. This is a plaintiffs appeal. The plaintiff joined as Naib Tahsildar in Patiala State on June 14, 1930. He was removed from service on January 20, 1949. His representation against his removal was rejected. Thereafter on October 25, 1965, he filed a civil suit for recovery of arrears of pension, said to be due from August 25, 1959, till October 24, 1965. The trial Court decreed the claim as prayed for. 2. The State of Punjab went up in appeal against the decree of the trial Court. In the grounds of appeal it was specifically stated : it is prayed that the judgment and decree of the lower Court to the extent it awards the amount of pension for 6 years be set aside and it be held that the respondent is entitled to recover the said amount for 3 years. From this it is clear that in the appeal the State of Punjab merely disputed the plaintiffs right to claim arrears of pension for six years, but conceded his right to claim pension for three years immediately preceding the suit. But curiously enough at the time of the hearing of the appeal everyone appears to have overlooked the scope of the appeal. The High Court went into the question whether the suit brought by the plaintiff was maintainable. It came to the conclusion that the suit was not maintainable and it accordingly dismissed the suit in its entirety. This conclusion is wholly untenable in view of the scope of the appeal filed by the State of Punjab. It may further be noted that on October 14, 1966, the President of India revoked the order made on January 20, 1949, and restored the plaintiff to Service but by his order dated October 25, 1966, the President declared that the plaintiff must be deemed to have retired on September 28, 1955, when he attained the age of 55 years. In view of this order, which we are told was placed before the High court the High Court was not justified in holding that the plaintiffs suit was not maintainable as the plaintiff had not prayed for a declaration setting aside the order made on January 20, 1949. In this view, it is not necessary to consider the correctness of the High Courts conclusion that the suit as brought by the plaintiff is not maintainable. 3. Now coming to the question whether the plaintiff is entitled to claim arrears of 6 years pension, the question appears to be concluded by the decision of this Court in Shri Madhav Laxman Vaikunthe v. The State of Mysore, (1962) 1 S.C.R. 886, wherein this Court held that in the case of a claim for arrears of salary the period of limitation will be that laid down in Art. 102 of the Indian Limitation Act, 1908. It has not been shown that the ratio of that decision is inapplicable to the present case.

1[ds]From this it is clear that in the appeal the State of Punjab merely disputed the plaintiffs right to claim arrears of pension for six years, but conceded his right to claim pension for three years immediately preceding the suit. But curiously enough at the time of the hearing of the appeal everyone appears to have overlooked the scope of the appeal. The High Court went into the question whether the suit brought by the plaintiff was maintainable. It came to the conclusion that the suit was not maintainable and it accordingly dismissed the suit in its entirety. This conclusion is wholly untenable in view of the scope of the appeal filed by the State of Punjab. It may further be noted that on October 14, 1966, the President of India revoked the order made on January 20, 1949, and restored the plaintiff to Service but by his order dated October 25, 1966, the President declared that the plaintiff must be deemed to have retired on September 28, 1955, when he attained the age of 55 years. In view of this order, which we are told was placed before the High court the High Court was not justified in holding that the plaintiffs suit was not maintainable as the plaintiff had not prayed for a declaration setting aside the order made on January 20, 1949. In this view, it is not necessary to consider the correctness of the High Courts conclusion that the suit as brought by the plaintiff is not maintainablethe question appears to be concluded by the decision of this Court in Shri Madhav Laxman Vaikunthe v. The State of Mysore, (1962) 1 S.C.R. 886, wherein this Court held that in the case of a claim for arrears of salary the period of limitation will be that laid down in Art. 102 of the Indian Limitation Act, 1908. It has not been shown that the ratio of that decision is inapplicable to the present case.

### Instruction: Considering the arguments and evidence in case proceeding, predict the verdict: is it more likely to be in favor (1) or against (0) the appellant? ### Input: K.S. Hegde, J. 1. This is a plaintiffs appeal. The plaintiff joined as Naib Tahsildar in Patiala State on June 14, 1930. He was removed from service on January 20, 1949. His representation against his removal was rejected. Thereafter on October 25, 1965, he filed a civil suit for recovery of arrears of pension, said to be due from August 25, 1959, till October 24, 1965. The trial Court decreed the claim as prayed for. 2. The State of Punjab went up in appeal against the decree of the trial Court. In the grounds of appeal it was specifically stated : it is prayed that the judgment and decree of the lower Court to the extent it awards the amount of pension for 6 years be set aside and it be held that the respondent is entitled to recover the said amount for 3 years. From this it is clear that in the appeal the State of Punjab merely disputed the plaintiffs right to claim arrears of pension for six years, but conceded his right to claim pension for three years immediately preceding the suit. But curiously enough at the time of the hearing of the appeal everyone appears to have overlooked the scope of the appeal. The High Court went into the question whether the suit brought by the plaintiff was maintainable. It came to the conclusion that the suit was not maintainable and it accordingly dismissed the suit in its entirety. This conclusion is wholly untenable in view of the scope of the appeal filed by the State of Punjab. It may further be noted that on October 14, 1966, the President of India revoked the order made on January 20, 1949, and restored the plaintiff to Service but by his order dated October 25, 1966, the President declared that the plaintiff must be deemed to have retired on September 28, 1955, when he attained the age of 55 years. In view of this order, which we are told was placed before the High court the High Court was not justified in holding that the plaintiffs suit was not maintainable as the plaintiff had not prayed for a declaration setting aside the order made on January 20, 1949. In this view, it is not necessary to consider the correctness of the High Courts conclusion that the suit as brought by the plaintiff is not maintainable. 3. Now coming to the question whether the plaintiff is entitled to claim arrears of 6 years pension, the question appears to be concluded by the decision of this Court in Shri Madhav Laxman Vaikunthe v. The State of Mysore, (1962) 1 S.C.R. 886, wherein this Court held that in the case of a claim for arrears of salary the period of limitation will be that laid down in Art. 102 of the Indian Limitation Act, 1908. It has not been shown that the ratio of that decision is inapplicable to the present case. ### Response: 1

Smt. Rukmanibai Gupta Vs. Collector Jabalpur and Others

payment of rent or royalty payable under the lease deed. Therefore, Clause 15 read as a whole provides for referring future disputes to the arbitration of the Governor. Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject-matter of contract such dispute shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement, a passage from RUSSELL ON ARBITRATION, 19th Edn., p. 59, may be referred to with advantageIf it appears from the terms of the agreement by which a matter is submitted to a persons decision that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry and hear the respective case of the parties and decide upon evidence laid before him, then the case is one of an arbitration In the clause under discussion there is a provision for referring the disputes to the lessor and the decision of the lessor is made final. On its true construction it spells out an arbitration agreement 7. A feeble attempt was made to contend that Clause 15 provides a departmental appeal but does not provide for dispute by arbitration. There was no question of providing for an appellate forum by the terms of the lease. On the contrary, the language of Clause 15 leaves no room for doubt that it spell out an arbitration agreement. In this connection reference may be made to Chief Conservator of Forests v. Rattan Singh (1966 Supp SCR 158 : AIR 1967 SC 166 ), where an identical clause in a forest contract entered into between the forest contractor and the governor of Madhya Pradesh came in for consideration. Relevant clause was as under 9. In the event of any doubt or dispute arising between the parties as to the interpretation of any or the conditions of this contract or as to the performance or breach thereof, the matter shall be referred to the Chief Conservator of Forests, Madhya Pradesh, Nagpur, whose decision shall be final and bindings on the parties hereto This Court, interpreting this clause, held that it spells out an arbitration agreement and it confers authority on the Chief Conservator of Forests to adjudicate upon disputes, inter alia, as to the performance or breach of the contract. Apart from this, appellant herself has unreservedly accepted Clause 15 spelling out an arbitration agreement. In para 10 of her submission to respondent 4 it was stated as under 10. That as laid down in Clause 15 of lease deed read with Rule 50(XVI) of the Mining Manual substantial dispute and difference arise touching the construction of these presents of lease deed on the question of payment of royalty. The matter in dispute is, therefore, being referred to State Government for decision We, therefore, need not dilate on this aspect any more and hold in agreement with the High Court that Clause 15 spells out an arbitration agreement 8. There is no dispute between the parties that adequate hearing was giving to the appellant. Appellant was represented before respondent 4, the arbitrator, by her Advocate Shri L. V. Lele and her agent Shri L. P. Choubey. After noting the admission and objection raised on behalf of the appellant by her advocate and agent, fresh calculation were called for by respondent 4 from respondent 6 the officer in charge of royalty accounts. In fact, the dispute was considerably narrowed down because appellant through her advocate in terms admitted that there was no dispute about the calculations of royalty for the period from January 1, 1958 to June 30, 1961, and the dispute was only with regard to the calculations from July 1, 1961 to December 31, 1961. Some attempt was made by the appellant to go back upon the admission recorded in the order made by respondent 4, but the High Court discouraged the attempt. And with regard to the difference in the calculations were called for from the Mining Officer but thereafter a further hearing was given to the appellant and an award was made. Therefore, the arbitrator has acted in accordance with the principles of natural justice 9. If respondent 4 was an arbitrator and his decision an award, the next question is whether such an award can be questioned by way of a writ petition in the High Court 10. Arbitration Act, 11940, is a self-contained and exhaustive code. It provides for filing arbitration agreement to the jurisdiction of court, appointment and removal of arbitrator by court, making award a rule of court, remitting or setting aside an award, it can be questioned under Section 33. Section 32 bars a suit on any ground whatsoever for contesting an award and further provides that no award shall be enforced, set aside, amended, modified or in any way affected otherwise than as provided in the Arbitration Act itself. Thus, Arbitration Act, 1940, is a self-contained exhaustive code. Relief sought by the appellant by involving extraordinary jurisdiction of the High Court under Article 226 could have been obtained by proceeding in accordance with the relevant provisions of the Arbitration Act. In this situation, if the High Court declined to entertain the writ petition, no exception can be taken to it. Further the indenture of lease constitutes a contract between the parties. Right to excavate limestone from leased area and obligation to pay royalty under the relevant Minor Mineral Rules arise from the contract. The contract provided for resolution of dispute arising out of the carrying out of contract. The writ jurisdiction of the High Court under Article 226 of the Constitution is not intended to facilitate avoidance of obligation voluntarily incurred. (See Har Shankar v. Dy. Excise & Taxation Commissioner (1975 3 SCR 254 : 1975 1 SCC 737 : 1975 Tax LR 1569)) 11. The High Court, in our opinion, therefore, rightly declined to entertain the writ petition.

0[ds]A quarry lease is granted under the relevant Minor Mineral Rules by the State Government. The State is thus the lessor and the one who takes the quarry lease is the lessee. As required by Article 299 of the Constitution, all contracts made in exercise of the executive power of the State shall be expressed to be made by the Governor of the State and shall be executed on behalf of the Governor by such accordingly executed. It is thus a contract. This contract incorporates Clause 15 which we have extracted hereinaboveClause 15 provides that any doubt, difference or dispute, arising after the execution of the lease deed touching the construction of the terms of the lease deed or anything therein contained or any matter or things connected with the said lands or the working org thereof or the amount or payment of any rent or royalty reserved or made payable thereunder, the matter in difference shall be decided by the lessor whose decision shall be final. The reference has to be made to the lessor and the lessor is the Governor. His decision declared final by the terms of the contract. His decision has to be in respect of a dispute or difference that may arise either touching the construction of the terms of the lease deed or disputes or difference arising out the working org of the lease or any dispute about the payment of rent or royalty payable under the lease deed. Therefore, Clause 15 read as a whole provides for referring future disputes to the arbitration of the GovernorIn the clause under discussion there is a provision for referring the disputes to the lessor and the decision of the lessor is made final. On its true construction it spells out an arbitration agreementApart from this, appellant herself has unreservedly accepted Clause 15 spelling out an arbitration agreementWe, therefore, need not dilate on this aspect any more and hold in agreement with the High Court that Clause 15 spells out an arbitration agreementIn fact, the dispute was considerably narrowed down because appellant through her advocate in terms admitted that there was no dispute about the calculations of royalty for the period from January 1, 1958 to June 30, 1961, and the dispute was only with regard to the calculations from July 1, 1961 to December 31, 1961. Some attempt was made by the appellant to go back upon the admission recorded in the order made by respondent 4, but the High Court discouraged the attempt. And with regard to the difference in the calculations were called for from the Mining Officer but thereafter a further hearing was given to the appellant and an award was made. Therefore, the arbitrator has acted in accordance with the principles of natural justiceIn fact, the dispute was considerably narrowed down because appellant through her advocate in terms admitted that there was no dispute about the calculations of royalty for the period from January 1, 1958 to June 30, 1961, and the dispute was only with regard to the calculations from July 1, 1961 to December 31, 1961. Some attempt was made by the appellant to go back upon the admission recorded in the order made by respondent 4, but the High Court discouraged the attempt. And with regard to the difference in the calculations were called for from the Mining Officer but thereafter a further hearing was given to the appellant and an award was made. Therefore, the arbitrator has acted in accordance with the principles of natural justice11. The High Court, in our opinion, therefore, rightly declined to entertain the writ petition.

### Instruction: Interpret the case information and speculate on the court's decision: acceptance (1) or rejection (0) of the presented appeal. ### Input: payment of rent or royalty payable under the lease deed. Therefore, Clause 15 read as a whole provides for referring future disputes to the arbitration of the Governor. Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject-matter of contract such dispute shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement, a passage from RUSSELL ON ARBITRATION, 19th Edn., p. 59, may be referred to with advantageIf it appears from the terms of the agreement by which a matter is submitted to a persons decision that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry and hear the respective case of the parties and decide upon evidence laid before him, then the case is one of an arbitration In the clause under discussion there is a provision for referring the disputes to the lessor and the decision of the lessor is made final. On its true construction it spells out an arbitration agreement 7. A feeble attempt was made to contend that Clause 15 provides a departmental appeal but does not provide for dispute by arbitration. There was no question of providing for an appellate forum by the terms of the lease. On the contrary, the language of Clause 15 leaves no room for doubt that it spell out an arbitration agreement. In this connection reference may be made to Chief Conservator of Forests v. Rattan Singh (1966 Supp SCR 158 : AIR 1967 SC 166 ), where an identical clause in a forest contract entered into between the forest contractor and the governor of Madhya Pradesh came in for consideration. Relevant clause was as under 9. In the event of any doubt or dispute arising between the parties as to the interpretation of any or the conditions of this contract or as to the performance or breach thereof, the matter shall be referred to the Chief Conservator of Forests, Madhya Pradesh, Nagpur, whose decision shall be final and bindings on the parties hereto This Court, interpreting this clause, held that it spells out an arbitration agreement and it confers authority on the Chief Conservator of Forests to adjudicate upon disputes, inter alia, as to the performance or breach of the contract. Apart from this, appellant herself has unreservedly accepted Clause 15 spelling out an arbitration agreement. In para 10 of her submission to respondent 4 it was stated as under 10. That as laid down in Clause 15 of lease deed read with Rule 50(XVI) of the Mining Manual substantial dispute and difference arise touching the construction of these presents of lease deed on the question of payment of royalty. The matter in dispute is, therefore, being referred to State Government for decision We, therefore, need not dilate on this aspect any more and hold in agreement with the High Court that Clause 15 spells out an arbitration agreement 8. There is no dispute between the parties that adequate hearing was giving to the appellant. Appellant was represented before respondent 4, the arbitrator, by her Advocate Shri L. V. Lele and her agent Shri L. P. Choubey. After noting the admission and objection raised on behalf of the appellant by her advocate and agent, fresh calculation were called for by respondent 4 from respondent 6 the officer in charge of royalty accounts. In fact, the dispute was considerably narrowed down because appellant through her advocate in terms admitted that there was no dispute about the calculations of royalty for the period from January 1, 1958 to June 30, 1961, and the dispute was only with regard to the calculations from July 1, 1961 to December 31, 1961. Some attempt was made by the appellant to go back upon the admission recorded in the order made by respondent 4, but the High Court discouraged the attempt. And with regard to the difference in the calculations were called for from the Mining Officer but thereafter a further hearing was given to the appellant and an award was made. Therefore, the arbitrator has acted in accordance with the principles of natural justice 9. If respondent 4 was an arbitrator and his decision an award, the next question is whether such an award can be questioned by way of a writ petition in the High Court 10. Arbitration Act, 11940, is a self-contained and exhaustive code. It provides for filing arbitration agreement to the jurisdiction of court, appointment and removal of arbitrator by court, making award a rule of court, remitting or setting aside an award, it can be questioned under Section 33. Section 32 bars a suit on any ground whatsoever for contesting an award and further provides that no award shall be enforced, set aside, amended, modified or in any way affected otherwise than as provided in the Arbitration Act itself. Thus, Arbitration Act, 1940, is a self-contained exhaustive code. Relief sought by the appellant by involving extraordinary jurisdiction of the High Court under Article 226 could have been obtained by proceeding in accordance with the relevant provisions of the Arbitration Act. In this situation, if the High Court declined to entertain the writ petition, no exception can be taken to it. Further the indenture of lease constitutes a contract between the parties. Right to excavate limestone from leased area and obligation to pay royalty under the relevant Minor Mineral Rules arise from the contract. The contract provided for resolution of dispute arising out of the carrying out of contract. The writ jurisdiction of the High Court under Article 226 of the Constitution is not intended to facilitate avoidance of obligation voluntarily incurred. (See Har Shankar v. Dy. Excise & Taxation Commissioner (1975 3 SCR 254 : 1975 1 SCC 737 : 1975 Tax LR 1569)) 11. The High Court, in our opinion, therefore, rightly declined to entertain the writ petition. ### Response: 0

State Bank Of India Vs. Ghamandi Ram (Dead) Through Shri Gurbax Rai

the juristic nature of the Hindu joint family, according to the doctrine of Mitakshara, we are of the opinion that the Hindu joint family firm of Ghamandi Ram Gurbax Rai cannot be treated as an individual within the meaning of the notification of the Pakistan Government dated 19th February, 1952, but the said firm must be treated as a body of individuals whether incorporated or not within the meaning of that notification.8. We proceed to consider the next question arising in this appeal viz., whether the liability of the appellant to the respondent in India be deemed to be extinguished in view of the operation of the Pakistan Evacuee Property Ordinance and in view of our finding that the amount in dispute had become vested in the Custodian of Evacuee Property, Pakistan with effect from March 1,1947 by virtue of the provisions of the Ordinance.It is not disputed that appellant had got garnishable assets in Pakistan out of which the Pakistan Government could realise the amount by attachment of the property of the appellant. The question is: what is the rule of Private International Law in such a case of involuntary assignment of debts. The question has arisen in English Courts with regard to the legislation passed during or after a war by which the contractual rights of the enemies vested in the public authorities such as custodians or administrators of enemy property.It was held in English Courts that in such a case the question whether a given contractual right, e. g. a debt, is transferred under such legislation and whether therefore payment to a custodian or administrator has the effect of discharging the debtor, depends on the situs of that right and not so much on the proper law of the contract from which the right arises.(See Dicey Conflict of Laws, 8th Ed. p. 780), For example in Arab Bank Ltd. v. Barclays Bank .(Dominion, Colonial and Overseas), 1954 AC 495, the appellant Bank had a credit balance on the current account with the respondent banks branch in Jerusalem. The British Mandate over Palestine expired at midnight on May 14, 1948, and thereupon the Provisional Council of State and the Provisional Government of the State of Israel were constituted. War broke out between Israel and the Arab States, which rendered the further performance of the contract of current account impossible. From the date of the termination of the Mandate the appellant Banks premises were situate in Arab-controlled territory and the respondent Banks premises were situated in Israel territory. By legislation the State of Israel vested in an official called the Custodian of the Property of Absentees; the property in the State of Israel belonging to a class of persons and corporations which included the Arab Bank. The respondents paid the appellants credit balances, amounting to some ? 583000 to the Custodian. In 1950 the appellant sued the respondents for this sum. It was held that the right to be paid the credit balance survived the outbreak of war, remaining in existence subject to the suspension of the appellant banks right to recover it. Being locally situate in Israel, it became subject to the legislation of that State and vested in the custodian, and was not recoverable by the appellant bank from the respondent bank.The key to the problem lies in distinguishing between . (1) questions of assignability, which are governed by the proper law of the debt, and (2) question of attachment or garnishment (involuntary assignment) governed by the situs of the debt. If, for example an involuntary assignment occurs after a voluntary assignment has already been made, the lex situs determines whether the rights of the voluntary assignee have been postponed or defeated. If the voluntary assignment occurs first, the lex situs determines what rights, if any, the voluntary assignee has acquired. A question of priorities arose in the case of Re Queensland Mercantile and Agency Co., 1891-1 Ch 536, the fact of which were as follows:"The Union Bank of Australia held debentures issued by the Queensland Company charging the shares in that company that were not fully paid up. The Bank was domiciled in England and the company in Queensland. After the capital had been called up, but before it was paid by the shareholders, who thus became debtors of the company, the X Company domiciled in Scotland, began an action for negligence in Scotland against the Queensland Company, and immediately issued the Scotish process of arrestment against numerous shareholders who were domiciled in Scotland. The effect of this process according to Scottish law was to prevent the shareholders, pending a decision in the action of negligence, from paying the calls to the company".The question that fell to be decided was whether the Union Bank, as debenture- holders, were entitled to be paid first out of the unpaid shares, according to the law of England and of Queensland; or whether the X Company in accordance with the law of Scotland, had , prior right over the shares to the extent of the damages that they might be awarded in the action of negligence. A question of priorities between two assignees was thus raised. The Union Bank contended that the question fell to be decided by the law of Queensland, since the Queens and company was a creditor in respect of the unpaid shares and any assignment by it must be tested by the law of its domicil. North, J., however, applied Scottish law. His reasoning was that since the debtors were resident in Scotland and therefore the unpaid calls which formed the subject-matter of the assignments were situated in that country, the assignments must rank in the order prescribed by Scottish Law. He assimilated choses in action to tangible movables, asserting that an assignment of the latter class of property was governed by the lex situs.In our opinion the same legal position prevails in India and therefore the liability of the appellant in this case to the respondent in India must be deemed to have been extinguished.

1[ds]Having regard to the juristic nature of the Hindu joint family, according to the doctrine of Mitakshara, we are of the opinion that the Hindu joint family firm of Ghamandi Ram Gurbax Rai cannot be treated as an individual within the meaning of the notification of the Pakistan Government dated 19th February, 1952, but the said firm must be treated as a body of individuals whether incorporated or not within the meaning of that notification.According to the Mitakshara School of Hindu Law all the property of a Hindu joint family is held in collective ownership by all the coparceners in a quasicorporate capacity. The textual authority of the Mitakshara lays down in express terms that the joint family property is held in trust for the joint family members then living and thereafter to be born (See Mitakshara, Chapter I, 1-27).The incidents of co-parcenership under the Mitakshara law are: first, the lineal male descendants of a person up to the third generation, acquire on birth ownership in the ancestral properties of such person; secondly that such descendants can at any time work out their rights by asking for partition; thirdly, that till partition each member has got ownership extending over the entire property conjointly with the rest; fourthly, that as a result of such co-ownership the possession and enjoyment of the properties is common; fifthly that no alienation of the property is possible unless it be for necessity, without the concurrence of the coparceners, and sixthly, that the interest of a deceased member lapses on his death to the survivors.A coparcenery under the Mitakshara School is a creature of law and cannot arise by act of parties except in so far that on adoption the adopted son becomes a co-parcener with his adoptive father as regards the ancestral properties of thequestion has arisen in English Courts with regard to the legislation passed during or after a war by which the contractual rights of the enemies vested in the public authorities such as custodians or administrators of enemy property.It was held in English Courts that in such a case the question whether a given contractual right, e. g. a debt, is transferred under such legislation and whether therefore payment to a custodian or administrator has the effect of discharging the debtor, depends on the situs of that right and not so much on the proper law of the contract from which the right arises.(See Dicey Conflict of Laws, 8th Ed. p. 780), For example inArab Bank Ltd. v. Barclays Bank .(Dominion, Colonial and Overseas), 1954 ACthe appellant Bank had a credit balance on the current account with the respondent banks branch in Jerusalem. The British Mandate over Palestine expired at midnight on May 14, 1948, and thereupon the Provisional Council of State and the Provisional Government of the State of Israel were constituted. War broke out between Israel and the Arab States, which rendered the further performance of the contract of current account impossible. From the date of the termination of the Mandate the appellant Banks premises were situate in Arab-controlled territory and the respondent Banks premises were situated in Israel territory. By legislation the State of Israel vested in an official called the Custodian of the Property of Absentees; the property in the State of Israel belonging to a class of persons and corporations which included the Arab Bank. The respondents paid the appellants credit balances, amounting to some ? 583000 to the Custodian. In 1950 the appellant sued the respondents for this sum. It was held that the right to be paid the credit balance survived the outbreak of war, remaining in existence subject to the suspension of the appellant banks right to recover it. Being locally situate in Israel, it became subject to the legislation of that State and vested in the custodian, and was not recoverable by the appellant bank from the respondent bank.The key to the problem lies in distinguishing between . (1) questions of assignability, which are governed by the proper law of the debt, and (2) question of attachment or garnishment (involuntary assignment) governed by the situs of the debt. If, for example an involuntary assignment occurs after a voluntary assignment has already been made, the lex situs determines whether the rights of the voluntary assignee have been postponed or defeated. If the voluntary assignment occurs first, the lex situs determines what rights, if any, the voluntary assignee has acquired. A question of priorities arose in the case of Re Queensland Mercantile and Agency Co., 1891-1 Ch 536, the fact of which were asUnion Bank of Australia held debentures issued by the Queensland Company charging the shares in that company that were not fully paid up. The Bank was domiciled in England and the company in Queensland. After the capital had been called up, but before it was paid by the shareholders, who thus became debtors of the company, the X Company domiciled in Scotland, began an action for negligence in Scotland against the Queensland Company, and immediately issued the Scotish process of arrestment against numerous shareholders who were domiciled in Scotland. The effect of this process according to Scottish law was to prevent the shareholders, pending a decision in the action of negligence, from paying the calls to the company".The question that fell to be decided was whether the Union Bank, as debenture- holders, were entitled to be paid first out of the unpaid shares, according to the law of England and of Queensland; or whether the X Company in accordance with the law of Scotland, had , prior right over the shares to the extent of the damages that they might be awarded in the action of negligence. A question of priorities between two assignees was thus raised. The Union Bank contended that the question fell to be decided by the law of Queensland, since the Queens and company was a creditor in respect of the unpaid shares and any assignment by it must be tested by the law of its domicil. North, J., however, applied Scottish law. His reasoning was that since the debtors were resident in Scotland and therefore the unpaid calls which formed the subject-matter of the assignments were situated in that country, the assignments must rank in the order prescribed by Scottish Law. He assimilated choses in action to tangible movables, asserting that an assignment of the latter class of property was governed by the lex situs.In our opinion the same legal position prevails in India and therefore the liability of the appellant in this case to the respondent in India must be deemed to have been extinguished.

### Instruction: From the information provided in the case proceeding, infer whether the court's decision will be positive (1) or negative (0) for the appellant. ### Input: the juristic nature of the Hindu joint family, according to the doctrine of Mitakshara, we are of the opinion that the Hindu joint family firm of Ghamandi Ram Gurbax Rai cannot be treated as an individual within the meaning of the notification of the Pakistan Government dated 19th February, 1952, but the said firm must be treated as a body of individuals whether incorporated or not within the meaning of that notification.8. We proceed to consider the next question arising in this appeal viz., whether the liability of the appellant to the respondent in India be deemed to be extinguished in view of the operation of the Pakistan Evacuee Property Ordinance and in view of our finding that the amount in dispute had become vested in the Custodian of Evacuee Property, Pakistan with effect from March 1,1947 by virtue of the provisions of the Ordinance.It is not disputed that appellant had got garnishable assets in Pakistan out of which the Pakistan Government could realise the amount by attachment of the property of the appellant. The question is: what is the rule of Private International Law in such a case of involuntary assignment of debts. The question has arisen in English Courts with regard to the legislation passed during or after a war by which the contractual rights of the enemies vested in the public authorities such as custodians or administrators of enemy property.It was held in English Courts that in such a case the question whether a given contractual right, e. g. a debt, is transferred under such legislation and whether therefore payment to a custodian or administrator has the effect of discharging the debtor, depends on the situs of that right and not so much on the proper law of the contract from which the right arises.(See Dicey Conflict of Laws, 8th Ed. p. 780), For example in Arab Bank Ltd. v. Barclays Bank .(Dominion, Colonial and Overseas), 1954 AC 495, the appellant Bank had a credit balance on the current account with the respondent banks branch in Jerusalem. The British Mandate over Palestine expired at midnight on May 14, 1948, and thereupon the Provisional Council of State and the Provisional Government of the State of Israel were constituted. War broke out between Israel and the Arab States, which rendered the further performance of the contract of current account impossible. From the date of the termination of the Mandate the appellant Banks premises were situate in Arab-controlled territory and the respondent Banks premises were situated in Israel territory. By legislation the State of Israel vested in an official called the Custodian of the Property of Absentees; the property in the State of Israel belonging to a class of persons and corporations which included the Arab Bank. The respondents paid the appellants credit balances, amounting to some ? 583000 to the Custodian. In 1950 the appellant sued the respondents for this sum. It was held that the right to be paid the credit balance survived the outbreak of war, remaining in existence subject to the suspension of the appellant banks right to recover it. Being locally situate in Israel, it became subject to the legislation of that State and vested in the custodian, and was not recoverable by the appellant bank from the respondent bank.The key to the problem lies in distinguishing between . (1) questions of assignability, which are governed by the proper law of the debt, and (2) question of attachment or garnishment (involuntary assignment) governed by the situs of the debt. If, for example an involuntary assignment occurs after a voluntary assignment has already been made, the lex situs determines whether the rights of the voluntary assignee have been postponed or defeated. If the voluntary assignment occurs first, the lex situs determines what rights, if any, the voluntary assignee has acquired. A question of priorities arose in the case of Re Queensland Mercantile and Agency Co., 1891-1 Ch 536, the fact of which were as follows:"The Union Bank of Australia held debentures issued by the Queensland Company charging the shares in that company that were not fully paid up. The Bank was domiciled in England and the company in Queensland. After the capital had been called up, but before it was paid by the shareholders, who thus became debtors of the company, the X Company domiciled in Scotland, began an action for negligence in Scotland against the Queensland Company, and immediately issued the Scotish process of arrestment against numerous shareholders who were domiciled in Scotland. The effect of this process according to Scottish law was to prevent the shareholders, pending a decision in the action of negligence, from paying the calls to the company".The question that fell to be decided was whether the Union Bank, as debenture- holders, were entitled to be paid first out of the unpaid shares, according to the law of England and of Queensland; or whether the X Company in accordance with the law of Scotland, had , prior right over the shares to the extent of the damages that they might be awarded in the action of negligence. A question of priorities between two assignees was thus raised. The Union Bank contended that the question fell to be decided by the law of Queensland, since the Queens and company was a creditor in respect of the unpaid shares and any assignment by it must be tested by the law of its domicil. North, J., however, applied Scottish law. His reasoning was that since the debtors were resident in Scotland and therefore the unpaid calls which formed the subject-matter of the assignments were situated in that country, the assignments must rank in the order prescribed by Scottish Law. He assimilated choses in action to tangible movables, asserting that an assignment of the latter class of property was governed by the lex situs.In our opinion the same legal position prevails in India and therefore the liability of the appellant in this case to the respondent in India must be deemed to have been extinguished. ### Response: 1

Union Of India Vs. Central India Machinery Manufacturing Co. Ltd. & Others

property of the company before its delivery to the purchaser. But as pointed out by Lord Halsbury in the above-quoted passage from his renowned work neither the ownership of the materials nor the value of the skill and labour as compared with the value of the materials used in the manufacture is conclusive. Nevertheless, if the bulk of the material used in the construction belongs to the manufacturer who sells the end-product for a price that will be a strong pointer to the conclusion that the contract is in substance one for the sale of goods and not one for work and labour.Be that as it may clause (1) of Standard Condition 15 dispels all doubt with regard to the nature of the contract. This clause stipulates in unmistakable terms that as soon as a vehicle has been completed, the company will get it examined by the Inspecting Officer and submit to the purchaser an "on account" bill for 90 per cent of the value of the vehicle and within 14 days of the receipt of such bill together with a certificate of the Inspecting Officer, the purchaser will pay 90 per cent bill and on such payment, the vehicle in question will become the property of the purchaser. There could be no clearer expression of the intention of the contracting parties than this clause that the contract was, in substance, one for the sale of manufactured wagons by the company for a stipulated price. 15. We would therefore affirms the finding of the High Court on this point. 16. The ratio of Hindustan Aeronautics [[1972] 29 S.T.C. 438 (S.C.); [1972] 2 S.C.R. 927] is not applicable. The present case has some special features which did not figure in Hindustan Aeronautics [[1972] 29 S.T.C. 438 (S.C.); [1972] 2 S.C.R. 927]. In that case, from the terms and conditions of the contract then under consideration and the report of the Commercial Tax Officer, these facts appear to be well-established :"(i) The material used in the construction of coaches before its use was the property of the railways. (ii) There was no possibility of any other material being used excepting which belonged to the President/railways before its use in the construction. This fact was borne out from the report of the Commercial Tax Officer. (iii) Further in the contract in question in that case, there was no term corresponding to clause (1) of Standard Condition 15. This Court therefore found that the difference between the price of a coach and the cost of material could only be the cost of services rendered by the assessee. Such is not the case here. The bulk of the material used in the construction of the wagons, as already discussed above, in the instant case, belongs to the company before its use.State of Gujarat (Commissioner of Sales Tax, Ahmedabad) v. Variety Body Builders [[1976] 38 S.T.C. 176 (S.C.); A.I.R. 1976 S.C. 2108] cited by Shri Mehta, also is clearly distinguishable from the facts of the instant case. There, the bulk of the materials used in the construction of coaches was supplied by the railways. Even labour was supplied by the railways. The contractor mainly contributed his labour and skill to manufacture the end-product, being the railway coaches, under the constant supervision and control of the railways. From the totality of the material terms and conditions in the agreement, in that case, it was not possible to hold that the parties intended that the contractor transferred the property in the coach to the railways after its completion. Reality of the transaction as a whole indicated that the contract was one for work and labour, while in the instant case the coverse is true." 17. The case before us is more in line with the decision of this Court in Patnaik and Company v. State of Orissa [[1965] 16 S.T.C. 364 (S.C.)]. The appellants therein had entered into an agreement with the State of Orissa for the construction of bus bodies on the chassis supplied by the Governor. The agreement provided, inter alia, that the appellants were responsible for the safe custody of the chassis from the date of their receipt from the Governor till their delivery and they had to insure their premises against fire, theft, etc., at their own costs. The appellants had to construct the bus bodies in the most substantial and workmanlike manner, both as regards materials and otherwise in every respect in strict accordance with the specifications. They had to guarantee the durability of the body for two years from the date of delivery. It was also provided that all works under the contract should be open to inspection by the Controller or officers authorised by him and such officers had the right to stop any work which had been executed badly or with materials of inferior quality, and on receipt of a written order the appellants had to dismantle or replace such defective work or material at their own cost. The builders were entitled to 50 per cent of the cost of the body building at the time of delivery and the rest one month thereafter. The question before the Constitution Bench of this Court was whether, on these facts, the contract was one for work or a contract for sale of goods. This Court held (by majority) that the contract as a whole was a contract for sale of goods and, therefore, the appellants were liable to sales tax on the amounts received from the State of Orissa for the construction of the bus bodies. In reaching at this conclusion the Court paid due regard to the fact that under that contract the property in the bus body did not pass to the Government till the chassis with the bus body was delivered at the destination to be named by the Controller. Till the delivery was made the bus body remained the property of the builder. This clinching circumstance prominently figures in Standard Condition 15 in the instant case also. 18.

0[ds]The real intention of the contracting parties is primarily to be sought within the four corners of the documents containing the Standard and Special Conditions of Contract. If such intention is clearly discernible from these documents, it will not be proper to seek external aid from the stereotyped indemnity bond which is not only collateral but also posterior in point of time to the contract. It will bear repetition that there is no conflict or inconsistency between Standard Condition 15 and the special Conditions. The terms and conditions of the contact, read as a whole, indubitably lead to the conclusion that the property in the materials procured or purchased by the company, against the 90 per cent value of which advance is taken from the railways, does not, before their use in the construction of the wagons, pass to the railways. Reasons for arriving at this conclusion are as under :(i) Clause (a) of Special Condition 4 which provides for "on account" payment up to 90 per cent of the value of steel and other raw materials procured by the firm (company) is to be read with clause (b) which makes it clear that such "on account" payment is a part of the "full contract price" "for each completed) Condition 5, while imposing restrictions as to the use and disposal of materials against which advance is taken, further gives a pre-emptive right to the Government to purchase all surplus or unserviceable materials from the company on its "being paid such price as Government may fix with due regard to the condition of the material". If the materials belonged to the Government or the railways, no question of purchasing the same from the company could arise. No one can be a seller and purchaser of the same property at the same time(iii) Special Condition 10 provides in unequivocal terms that "no sales tax on materials including steel or components will be reimbursed by the Railways Board". This condition postulates two things : First, that the company becomes the owner of the materials by purchase and, therefore, in that capacity becomes liable to the charge of sales tax which it cannot, because of this covenant to the contrary, pass on to the President/Railway Board. Second, such steel and components are not the property of the railways. They are not supplied by the President/railways free of charge under Special Condition 6(iv) There is no condition or term in the contract that the material purchased by the company after drawing "on account" payment to the extent of 90 per cent of the value of the material shall become the property of the railways(v) Standard Condition 16 provides that if within twelve months after delivery, any "defect arises from inferiority of material or workmanship" the company shall be liable to remedy the defect, and to deduction of money due to it. This condition also presupposes that the inferior material used was not the property of the railways but of the company(vi) The stipulation in the indemnity bond making the company responsible for safe custody and protection of the "stores and articles" against all risks till they are duly delivered to the railways, or as they may direct, nor the use of the words "of the railways", therein, in our opinion, in the face of clear conditions of the contract, is a ground to hold that the materials purchased by the company for construction of the wagons would become the property of the railways immediately on advance of an amount equal to 90 per cent of their value under Special Condition 4.As rightly pointed out by the High Court the word "of" in the expression "of the railways" used in the indemnity bound in the context of "stores and articles" appears to have been loosely used. Moreover these "stores and articles" might include the wheelsets and articles supplied by the railways free of charge from its stores under Special Condition 6. The expression "of the railways" might have been possibly used in the context of such components belonging to the railways. Furthermore under condition 5, in respect of all surplus material, the railways had been given a right of pre-emption. Even so, much capital cannot be made out of the use of this loose expression in the indemnity bond, when the conditions embodied in the contract documents, read as a whole, clearly show that the property in the materials purchased by the company with the assistance of the railways/Government does not pass to the railwaysThe upshot of the above discussion is that with the exception of wheelsets (with axle-boxes and couplers), substantially all the raw materials required for the construction of the wagons before their use belong to the company and not to the President/Railway Board. In other words, with the exception of a relatively small proportion of the components supplied under Special Condition 6, the entire wagon including the material at the time of its completion for delivery is the property of the company. This means that the general test suggested by Pollock and Chalmers has been substantially, albeit not absolutely, satisfied so as to indicate that the contract in question was one for the sale of wagons for a price, the company being the seller and the President/Railway Board being the buyer. It is true that technically the entire wagon including all the material and components used in its construction cannot be said to be the sole property of the company before its delivery to the purchaser. But as pointed out by Lord Halsbury in the above-quoted passage from his renowned work neither the ownership of the materials nor the value of the skill and labour as compared with the value of the materials used in the manufacture is conclusive. Nevertheless, if the bulk of the material used in the construction belongs to the manufacturer who sells the end-product for a price that will be a strong pointer to the conclusion that the contract is in substance one for the sale of goods and not one for work and labour.Be that as it may clause (1) of Standard Condition 15 dispels all doubt with regard to the nature of the contract. This clause stipulates in unmistakable terms that as soon as a vehicle has been completed, the company will get it examined by the Inspecting Officer and submit to the purchaser an "on account" bill for 90 per cent of the value of the vehicle and within 14 days of the receipt of such bill together with a certificate of the Inspecting Officer, the purchaser will pay 90 per cent bill and on such payment, the vehicle in question will become the property of the purchaser. There could be no clearer expression of the intention of the contracting parties than this clause that the contract was, in substance, one for the sale of manufactured wagons by the company for a stipulated priceWe would therefore affirms the finding of the High Court on this pointThe case before us is more in line with the decision of this Court in Patnaik and Company v. State of Orissa [[1965] 16 S.T.C. 364 (S.C.)]. The appellants therein had entered into an agreement with the State of Orissa for the construction of bus bodies on the chassis supplied by the Governor. The agreement provided, inter alia, that the appellants were responsible for the safe custody of the chassis from the date of their receipt from the Governor till their delivery and they had to insure their premises against fire, theft, etc., at their own costs. The appellants had to construct the bus bodies in the most substantial and workmanlike manner, both as regards materials and otherwise in every respect in strict accordance with the specifications. They had to guarantee the durability of the body for two years from the date of delivery. It was also provided that all works under the contract should be open to inspection by the Controller or officers authorised by him and such officers had the right to stop any work which had been executed badly or with materials of inferior quality, and on receipt of a written order the appellants had to dismantle or replace such defective work or material at their own cost. The builders were entitled to 50 per cent of the cost of the body building at the time of delivery and the rest one month thereafter. The question before the Constitution Bench of this Court was whether, on these facts, the contract was one for work or a contract for sale of goods. This Court held (by majority) that the contract as a whole was a contract for sale of goods and, therefore, the appellants were liable to sales tax on the amounts received from the State of Orissa for the construction of the bus bodies. In reaching at this conclusion the Court paid due regard to the fact that under that contract the property in the bus body did not pass to the Government till the chassis with the bus body was delivered at the destination to be named by the Controller. Till the delivery was made the bus body remained the property of the builder. This clinching circumstance prominently figures in Standard Condition 15 in the instant case also.

### Instruction: Scrutinize the evidence and arguments in the case proceeding to predict the court's decision: will the appeal be granted (1) or denied (0)? ### Input: property of the company before its delivery to the purchaser. But as pointed out by Lord Halsbury in the above-quoted passage from his renowned work neither the ownership of the materials nor the value of the skill and labour as compared with the value of the materials used in the manufacture is conclusive. Nevertheless, if the bulk of the material used in the construction belongs to the manufacturer who sells the end-product for a price that will be a strong pointer to the conclusion that the contract is in substance one for the sale of goods and not one for work and labour.Be that as it may clause (1) of Standard Condition 15 dispels all doubt with regard to the nature of the contract. This clause stipulates in unmistakable terms that as soon as a vehicle has been completed, the company will get it examined by the Inspecting Officer and submit to the purchaser an "on account" bill for 90 per cent of the value of the vehicle and within 14 days of the receipt of such bill together with a certificate of the Inspecting Officer, the purchaser will pay 90 per cent bill and on such payment, the vehicle in question will become the property of the purchaser. There could be no clearer expression of the intention of the contracting parties than this clause that the contract was, in substance, one for the sale of manufactured wagons by the company for a stipulated price. 15. We would therefore affirms the finding of the High Court on this point. 16. The ratio of Hindustan Aeronautics [[1972] 29 S.T.C. 438 (S.C.); [1972] 2 S.C.R. 927] is not applicable. The present case has some special features which did not figure in Hindustan Aeronautics [[1972] 29 S.T.C. 438 (S.C.); [1972] 2 S.C.R. 927]. In that case, from the terms and conditions of the contract then under consideration and the report of the Commercial Tax Officer, these facts appear to be well-established :"(i) The material used in the construction of coaches before its use was the property of the railways. (ii) There was no possibility of any other material being used excepting which belonged to the President/railways before its use in the construction. This fact was borne out from the report of the Commercial Tax Officer. (iii) Further in the contract in question in that case, there was no term corresponding to clause (1) of Standard Condition 15. This Court therefore found that the difference between the price of a coach and the cost of material could only be the cost of services rendered by the assessee. Such is not the case here. The bulk of the material used in the construction of the wagons, as already discussed above, in the instant case, belongs to the company before its use.State of Gujarat (Commissioner of Sales Tax, Ahmedabad) v. Variety Body Builders [[1976] 38 S.T.C. 176 (S.C.); A.I.R. 1976 S.C. 2108] cited by Shri Mehta, also is clearly distinguishable from the facts of the instant case. There, the bulk of the materials used in the construction of coaches was supplied by the railways. Even labour was supplied by the railways. The contractor mainly contributed his labour and skill to manufacture the end-product, being the railway coaches, under the constant supervision and control of the railways. From the totality of the material terms and conditions in the agreement, in that case, it was not possible to hold that the parties intended that the contractor transferred the property in the coach to the railways after its completion. Reality of the transaction as a whole indicated that the contract was one for work and labour, while in the instant case the coverse is true." 17. The case before us is more in line with the decision of this Court in Patnaik and Company v. State of Orissa [[1965] 16 S.T.C. 364 (S.C.)]. The appellants therein had entered into an agreement with the State of Orissa for the construction of bus bodies on the chassis supplied by the Governor. The agreement provided, inter alia, that the appellants were responsible for the safe custody of the chassis from the date of their receipt from the Governor till their delivery and they had to insure their premises against fire, theft, etc., at their own costs. The appellants had to construct the bus bodies in the most substantial and workmanlike manner, both as regards materials and otherwise in every respect in strict accordance with the specifications. They had to guarantee the durability of the body for two years from the date of delivery. It was also provided that all works under the contract should be open to inspection by the Controller or officers authorised by him and such officers had the right to stop any work which had been executed badly or with materials of inferior quality, and on receipt of a written order the appellants had to dismantle or replace such defective work or material at their own cost. The builders were entitled to 50 per cent of the cost of the body building at the time of delivery and the rest one month thereafter. The question before the Constitution Bench of this Court was whether, on these facts, the contract was one for work or a contract for sale of goods. This Court held (by majority) that the contract as a whole was a contract for sale of goods and, therefore, the appellants were liable to sales tax on the amounts received from the State of Orissa for the construction of the bus bodies. In reaching at this conclusion the Court paid due regard to the fact that under that contract the property in the bus body did not pass to the Government till the chassis with the bus body was delivered at the destination to be named by the Controller. Till the delivery was made the bus body remained the property of the builder. This clinching circumstance prominently figures in Standard Condition 15 in the instant case also. 18. ### Response: 0

K.P. Varghese Vs. The Income Tax Officer,Ernakulam, And Another

48 which provides the mode of computation and under which the starting point of computation is the full value of the consideration received or accruing . What in fact never accrued or was never received cannot be computed as capital gains under s.48. Therefore, sub-s. (2) cannot be construed as bringing within the computation of capital gains an amount which, by no stretch of imagination, can be said to have accrued to the assessee or been received by him and it must be confined to cases where the actual consideration received for the transfer is understated and since in such cases it is very difficult, if not impossible, to determine and prove the exact quantum of the suppressed consideration, sub-s. (2) provides the statutory measure for determining the consideration actually received by the assessee and permits the revenue to take the fair market value of the capital asset as the full value of the consideration received in respect of the transfer 20. This construction which we are placing on sub-s. (2) also marches in step with the Gift-tax Act, 1958. If a capital asset is transferred for a consideration below its market value, the difference between the market value and the full value of the consideration received in respect of the transfer would amount to a gift liable to tax under the G.T. Act, 1958, but if the construction of sub-s. (2) contended for on behalf of the revenue were accepted, such difference would also be liable to be added as part of capital gains taxable under the provisions of the I.T. Act, 1961. This would be an anomalous result which could never have been contemplated by the Legislature, since the I.T. Act, 1961, and the G.T. Act, 1958, are parts of an integrated scheme of taxation and the same amount which is chargeable as gift could not be intended to be charged also as capital gains 21. Moreover, if sub-s. (2) is literally construed as applying even to cases where the full value of the consideration in respect of the transfer is correctly declared or disclosed by the assessee and there is no understatement of the consideration, it would result in an amount being taxed which has neither accrued to the assessee nor been received by him and which from no view-point can be rationally considered as capital gains or any other type of income. It is a well settled rule of interpretation that the court should as far as possible avoid that construction which attributes irrationality to the Legislature. Besides, under entry 82 in List I of the Seventh Schedule to the Constitution, which deals with Taxes on income other than agricultural income and under which the I.T. Act, 1961, has been enacted, Parliament cannot choose to tax as income an item which in no rational sense can be regarded as citizens income or even receipt. Sub-section (2) would, therefore, on the construction of the revenue, go outside the legislative power of Parliament and it would not be possible to justify it even as an incidental or ancillary provision or a provision intended to prevent evasion of tax. Sub-section (2) would also be violative of the fundamental right of the assessee under art. 19(1)(f) which fundamental right was in existence at the time when sub-s. (2) came to be enacted-since on the construction canvassed on behalf of the revenue, the effect of sub-s. (2) would be to penalise the assessee for transferring his capital asset for a consideration lesser by 15% or more than the fair market value and that would constitute unreasonable restriction on the fundamental right of the assessee to dispose of his capital asset at the price of his choice. The court must obviously prefer construction which renders the statutory provision constitutionally valid rather than that which makes it void 22. We must, therefore, hold that sub-s. (2) of s. 52 can be invoked only where the consideration for the transfer has been understated by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an understatement or concealment is on the revenue. This burden may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an understatement or concealment of the consideration in respect of the transfer. Sub-section (2) has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of the consideration. We find that in the present case, it was not the contention of the revenue that the property was sold by the assessee to his daughter-in-law and five of his children for consideration which was more than the sum of Rs. 16, 500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the I.T. authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of Rs. 16, 500. Therefore, on the construction placed by us, sub-s. (2) had no application to the present case and the ITO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under s. 148. The order of reassessment made by the ITO pursuant to the notice issued under s. 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it

1[ds]This argument was based on a strictly literal relief s. 52, subs. (2), but we do not think such a construction can be accepted. It ignores several vital considerations which must always be borne in mind when we are interpreting a statutory provision. The task of interpretation of statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It is an attempt to discover the intent of the Legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human thought and, as pointed out by Lord Denning, it would be idle to expect every statutory provision to bedrafted with divine prescience and perfect clarity .e must not adopt a strictly literal interpretation of s. 52, sub-s. (2), but we must construe its language having regard to the object and purpose which the Legislature had in view in enacting that provision and in the context of the setting in which it occurs. We cannot ignore the context and the collocation of the provisions in which s. 52, sub-s. (2), appears, because, as pointed out by judge Learned Hand in the most felicitous language.. ...... the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can ever obviate recourse to the setting in which all appear, and which all collectively create7. The primary objection against the literal construction of s. 52, subs. (2), is that it leads to manifestly unreasonable and absurd. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations Where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement-and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement-the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement.would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carries out such a contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where sells his property to B with a stipulation that after some time which may be a couple of years or more, he shall re-sell the property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of re-sale, if, in the meanwhile, the market price has shot up and exceeds the agreed price by more than 15%. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply s. 52, sub-s. (2), according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of s. 52, sub-s. (2), and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the court may modify the language used by the Legislature or evento it, so as to achieve the obvious intention of the Legislature and produce a rational construction: VideLuke v. IRC [1963] AC 557; [1964] 54 ITR. The court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision. We think that, having regard to this well-recognised rule of interpretation, a fair and reasonable construction of s. 52, sub-s. (2), would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in the case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. There are several important considerations which incline us to accept this construction of s. 52, sub-s. (2)8. The first consideration to which we must refer is the object and purpose of the enactment of s. 52, sub-s. (2).Now, it is necessary to bear in mind that when capital gains are computed by invoking sub-s. (1) it is not any fictional accrual or receipt of income which is brought to tax. Sub-section (1) does not deem income to accrue or to be received which in fact never accrued or was never received. It seeks to bring within the net of taxation only that income which has accrued or is received by the assessee as a result of the transfer of the capital asset. But since the actual consideration received by the assessee is not declared or disclosed and in most of the cases, if not all, it would not be possible for the ITO to determine precisely what is the actual consideration received by the assessee or in other words how much more consideration is received by the assessee than that declared by him, sub-s. (1) provides that the fair market value of the property as on the date of the transfer shall be taken to be the full value of the consideration for the transfer which has accrued to or is received by the assessee. Once it is found that the consideration in respect of the transfer is under-stated and the conditions specified in sub-s. (1) are fulfilled, the ITO will not be called upon to prove the precise extent of the under-valuation or, in other words, the actual extent of the concealment and the full value of the consideration received for the transfer shall be computed in the manner provided in sub-s. (1). The net effect of this provision is as if a statutory best judgment assessment of the actual consideration received by the assessee is made, in the absence of reliable materials9. But the scope of sub-s. (1) of s. 52 is extremely restricted because it applies only where the transferee is a person directly or indirectly connected with the assessee and the object of the under-statement is to avoid or reduce the income-tax liability of the assessee to tax on capital gains. There may be cases where the consideration for the transfer is shown at a lesser figure than that actually received by the assessee but the transferee is not a person directly or indirectly connected with the assessee or the object of under-statement of the consideration is unconnected with tax on capital gains. Such cases would not be within the reach of sub-s. (1) and the assessee, though dishonest, would escape the rigour of the provision enacted in that sub-section. Parliament, therefore, enacted sub-s. (2) with a view to extending the coverage of the provision in sub-s. (1) to other cases of under-statement of consideration.This becomes clear if we have regard to the object and purpose of the introduction of sub-s. (2) as appearing from travaux preparatoire relating to the enactment of that provision. It is a sound rule of construction of a statute firmly established in England as far back as 158410. This rule being a rule of construction has been repeatedly applied in India in interpreting statutory provisions. It would therefore, be legitimate in interpreting sub-s. (2) to consider what was the mischief and defect for which s. 52 as it then stood did not provide and which was sought to be remedied by the enactment of sub-s. (2) or, in other words, what was the object and purpose of enacting that sub-section.. Now, it is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted. This is in accord with the recent trend in juristic thought not only in Western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning everything which is logically relevant should be admissible.Now, in this connection the speech made by the Finance Minister while moving the amendment introducing sub-s, (2) is extremely relevant, as it throws considerable light on the object and purpose of the enactment of sub-s. (2).speech made by the Finance Minister while moving the amendment introducing sub-s. (2) clearly states what were the circumstances in which sub-s. (2) came to be passed, what was the mischief for which s. 52 as it then stood did not provide and which was son lit to be remedied by the enactment of sub-s. (2) and why the enactment of sub-s. (2) was found necessary. It is apparent from the speech of the Finance Minister that sub-s. (2) was enacted for the purpose of reaching those cases where there was under-statement of consideration in respect of the transfer or to put it differently the actual consideration received for the transfer was considerably more than that declared or shown by the assessee, but which were not covered by sub-s. (1) because the transferee was not directly or indirectly connected with the assessee . The object and purpose of sub-s. (2), as explicated from the speech of the Finance Minister, was not to strike at honest and bona fide transactions where the consideration for the transfer was correctly disclosed by the assessee but to bring within the net of taxation those transactions where the consideration in respect of the transfer was shown at a lesser figure than that actually received by the assessee, so that they do not escape the charge of tax on capital gains by understatement of the consideration. This was the real object and purpose of the enactment of sub-s. (2) and the interpretation of this sub-section must fall in line with the advancement of that object and purpose. We must, therefore, accept as the underlying assumption of sub-s. (2) that there is an under-statement of consideration in respect of the transfer and sub-s. (2) applies only where the actual consideration received by the assessee is not disclosed and the consideration declared in respect of the transfer is shown at a lesser figure than that actually received12. This interpretation of sub-s. (2) is strongly supported by the marginal note to s. 52It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it can certainly be relied upon as indicating the drift of the section or, to use the words of Collins M.R. inBushel v. Hammond [1904] 2 KB 563to show what the section is dealing with. It cannot control the interpretation of the words of a section particularly when the language of the section is clear and unambiguous but, being part of the statute, it prima facie furnishes some clue as to the meaning and purpose of the section: vide Bengal Immunity Co. Ltd. v. State of Bihar [1955] 2 SCR 603 ; [1955] 6 STC 446. The marginal note to s. 52, as it now stands, was originally marginal note only to what is presently sub-s. (1), and significantly enough, this marginal note remains unchanged even after the introduction of subs. (2), suggesting clearly that it was meant by Parliament to apply to both sub-sections of s. 52 and it must, therefore, be taken as indicating that, like sub-s. (1), sub-s. (2) is also intended to deal with cases where there is an understatement of the consideration in respect of the transfer13. But apart from these considerations, the placement of sub-s. (2) in s. 52 does indicate in some small measure that Parliament intended that sub-section to apply only to cases where the consideration in respect of the transfer is understated by the assessee. It is not altogether without significance that the provision in sub-s. (2) was enacted by Parliament not as a separate section, but as part of s. 52 which, as it originally stood, dealt only with cases of under-statement of consideration. If Parliament intended sub-s. (2) to cover all cases where the condition of 15% difference is satisfied, irrespective of whether there is understatement of consideration or not, it is reasonable to assume that Parliament would have enacted that provision as a separate section and not pitchforked it into s. 52 with a total stranger under an inappropriate marginal note. Moreover, there is inherent evidence in sub-s. (2) which suggests that the thrust of that subsection is directed against cases of understatement of consideration. The crucial and important words in sub-s. (2) are:the full value of the consideration declared by the assesseeis very eloquent and revealing. It clearly indicates that the focus of sub-s. (2) is on the consideration declared or disclosed by the assessee as distinguished from the consideration actually received by him and it contemplates case where the consideration received by the assessee in respect of the transfer is not truly declared or disclosed by him but is shown at a different figure. This of course is a very small factor and by itself is of little consequence but along with the other factors which we have discussed above, it assumes same significance as throwing light on the true intent of sub-s. (2)There is also one other circumstance which strongly reinforces the view we are taking in regard to the construction of sub-s. (2). Soon after the introduction of sub-s. (2), the CBDT, in exercise of the power conferred under s. 119 of the Act, issued a circular dated 7th July, 1964, explaining the scope and object of sub-s. (2)14. The circular also drew the attention of the I.T. authorities to the assurance given by the Finance Minister in his speech that sub-s. (2) was not aimed at perfectly honest and bona fide transactions where the consideration in respect of the transfer was correctly disclosed or declared by the assessee, but was intended to deal only with cases-where the consideration for the transfer was understated by the assessee and was shown at a lesser figure than that actually received by him. It appears that despite this circular, the I.T. authorities in several cases levied tax by invoking the provision in sub-s. (2) even in cases where the transaction was perfectly honest and bona fide and there was no understatement of the consideration. This was quite contrary to the instructions issued in the circular which was binding on the tax department and the CBDT was, therefore, constrained to issue another circular on 14th January, 1974,These two circulars of the CBDT are, as we shall presently point out, binding on the tax department in administering or executing the provision enacted in sub-s. (2), but quite apart from their binding character, they are clearly in the nature of contemporanea expositio furnishing legitimate aid in the construction of sub-s. (2). The rule of construction by reference to contemporanea expositio is a well-established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguousis clear from these two circulars that the CBDT, which is the highest authority entrusted with the execution of the provisions of the Act, understood sub-s. (2) as limited to cases where the consideration for the transfer has been understated by the assessee and this must be regarded as a strong circumstance supporting the construction which we are placing on that sub-sectionThis rule has been succinctly and felicitously expressed in Crawford on Statutory Construction, 1940 Edn., where it is stated in paragraph 219 that:administrative construction (i.e., contemporaneous construction placed by administrative or executive officers charged with executing a statute) generally should be clearly wrong before it is overturned; such a construction, commonly referred to as practical construction, although non-controlling, is nevertheless entitled to considerable weight, it is highly persuasive.15. But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of the CBDT to which we have just referred are legally binding on the revenue and this binding character attaches to the two circulars even if they be found not in accordance with the correct interpretation of subs. (2) and they depart or deviate from such construction. It is now well settled as a result of two decisions of this court, one in Navnit Lal C. Javeri v. K. K. Sen, AAC [1965] 56 ITR 198 and the other in Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 that circulars issued by the CBDT under s. 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act.16. The two circulars of the CBDT, referred to above, must, therefore, be held to be binding on the revenue in the administration or implementation of sub-s. (2) and this sub-section must be read as applicable only to cases where there is understatement of the consideration in respect of the transfer17. Thus, it is not enough to attract the applicability of sub-s. (2), that the fair market value of the capital asset transferred by the assessee as on the date of the transfer exceeds the full value of the consideration declared in respect of the transfer by not less than 15% of the value so declared, but it is furthermore necessary that the full value of the consideration in respect of the transfer is understated or, in other words, shown at a lesser figure than that actually received by the assessee. Sub-section (2) has no application in the case of an honest and bona fide transaction where the consideration in respect of the transfer has been correctly declared or disclosed by the assessee, even if the condition of 15% difference between the fair market value of the capital asset as on the date of the transfer andthe full value of the consideration declared by the assesseeis satisfied. If, therefore, the revenue seeks to bring a case within sub-s. (2), it must show not only that the fair market value of the capital asset as on the date of the transfer exceedsthe full value of the consideration declared by the assesseeby not less than 15% of the value so declared, but also that the consideration has been understated and the assessee has actually received more than what is declared by him. There are two distinct conditions which have to be satisfied before sub-s. (2) can be invoked by the revenue and the burden of showing that these two conditions are satisfied rests on the revenue. It is for the revenue to show that each of these two conditions is satisfied and the revenue cannot claim to have discharged this burden which lies upon it, by merely establishing that the fair market value of the capital asset as on the date of the transfer exceeds by 15% or more the full value of the consideration declared in respect of the transfer and the first condition is, therefore, satisfied. The revenue must go further and prove that the second condition is also satisfied. Merely by showing that the first condition is satisfied, the revenue cannot ask the court to presume that the second condition too is fulfilled, because even in a case where the first condition of 15% difference is satisfied, the transaction may be a perfectly honest and bona fide transaction and there may be no understatement of the consideration. The fulfilment of the second condition has, therefore, to be established independently of the first condition and merely because the first condition is satisfied, no inference can necessarily follow that the second condition is also fulfilled. Each condition has got to be viewed and established independently before sub-s. (2) can be invoked and the burden of doing so is clearly on the revenue. It is well-settled rule of law that the onus of establishing that the conditions of taxability are fulfilled is always on the revenue and the second condition being as much a condition of taxability as the first, the burden lies on the revenue to show that there is an understatement of the consideration and the second condition is fulfilled. Moreover, to throw the burden of showing that there is no understatement of the consideration, on the assessee would be to cast an almost impossible burden upon him to establish a negative, namely, that he did not receive any consideration beyond that declared by himis a well-known fact borne out by practical experience that the determination of fair market value of a capital asset is generally a matter of estimate based to some extent on guess work and despite the utmost bona fides, the estimate of the fair market value is bound to vary from individual to individual. It is obvious that if the restrictive condition of a difference of 15% or more between the fair market value of the capital asset as on the date of the transfer and the consideration declared in respect of the transfer were not provided in sub-s. (2), many marginal cases would, having regard to the possibility of difference of opinion in subjective assessment of the fair market value, fall within the mischief of that sub-section and the statutory measure enacted in that sub-section for determining the consideration actually received by the assessee would be applicable in all its rigour in such cases. This condition of 15% or more difference is merely intended to be a safeguard against the undue hardship which would be occasioned to the assessee if the inflexible rule of thumb enacted in sub-s. (2) were applied in marginal cases and it has nothing to do with the question of burden of proof, for, the burden of establishing that there is an understatement of the consideration in respect of the transfer always rests on the revenue. The postulate underlying subs. (2) is that the difference between one honest valuation and another may range up to 15% and that constitutes the class of marginal cases which are taken out of the purview of sub-s. (2) in order to avoid hardship to the assessee19. It is, therefore, clear that sub-s. (2) cannot be invoked by the revenue unless there is understatement of the consideration in respect of the transfer and the burden of showing that there is such understatement is on the revenue. Once it is established by the revenue that the consideration for the transfer has been understated or, to put it differently, the consideration actually received by the assessee is more than what is declared or disclosed by him, sub-s. (2) is immediately attracted, subject of course to the fulfilment of the condition of 15% or more difference, and the revenue is then not required to show what is the precise extent of the understatement or in other words, what is the consideration actually received by the assessee. That would in most cases be difficult, if not impossible, to show and hence sub-s. (2) relieves the revenue of all burden of proof regarding the extent of understatement or concealment and provides a statutory measure of the consideration received in respect of the transfer. It does not create any fictional receipt. It does not deem as receipt something which is not in fact received. It merely provides a statutory best judgment assessment of the consideration actually received by the assessee and brings to tax capital gains on the footing that the fair market value of the capital asset represents the actual consideration received by the assessee as against the consideration untruly declared or disclosed by him. This approach in the construction of sub-s. (2) falls in line with the scheme of the provisions relating to tax on capital gains. It may be noted that s. 52 is not a charging section but is a computation section. It has to be read along with s. 48 which provides the mode of computation and under which the starting point of computation isthe full value of the consideration received or accruing . What in fact never accrued or was never received cannot be computed as capital gains under s.48. Therefore, sub-s. (2) cannot be construed as bringing within the computation of capital gains an amount which, by no stretch of imagination, can be said to have accrued to the assessee or been received by him and it must be confined to cases where the actual consideration received for the transfer is understated and since in such cases it is very difficult, if not impossible, to determine and prove the exact quantum of the suppressed consideration, sub-s. (2) provides the statutory measure for determining the consideration actually received by the assessee and permits the revenue to take the fair market value of the capital asset as the full value of the consideration received in respect of the transfer20. This construction which we are placing on sub-s. (2) also marches in step with the Gift-tax Act, 1958. If a capital asset is transferred for a consideration below its market value, the difference between the market value and the full value of the consideration received in respect of the transfer would amount to a gift liable to tax under the G.T. Act, 1958, but if the construction of sub-s. (2) contended for on behalf of the revenue were accepted, such difference would also be liable to be added as part of capital gains taxable under the provisions of the I.T. Act, 1961. This would be an anomalous result which could never have been contemplated by the Legislature, since the I.T. Act, 1961, and the G.T. Act, 1958, are parts of an integrated scheme of taxation and the same amount which is chargeable as gift could not be intended to be charged also as capital gains21. Moreover, if sub-s. (2) is literally construed as applying even to cases where the full value of the consideration in respect of the transfer is correctly declared or disclosed by the assessee and there is no understatement of the consideration, it would result in an amount being taxed which has neither accrued to the assessee nor been received by him and which from no view-point can be rationally considered as capital gains or any other type of income. It is a well settled rule of interpretation that the court should as far as possible avoid that construction which attributes irrationality to the Legislature. Besides, under entry 82 in List I of the Seventh Schedule to the Constitution, which deals with Taxes on income other than agricultural income and under which the I.T. Act, 1961, has been enacted, Parliament cannot choose to tax as income an item which in no rational sense can be regarded as citizens income or even receipt. Sub-section (2) would, therefore, on the construction of the revenue, go outside the legislative power of Parliament and it would not be possible to justify it even as an incidental or ancillary provision or a provision intended to prevent evasion of tax. Sub-section (2) would also be violative of the fundamental right of the assessee under art. 19(1)(f) which fundamental right was in existence at the time when sub-s. (2) came to be enacted-since on the construction canvassed on behalf of the revenue, the effect of sub-s. (2) would be to penalise the assessee for transferring his capital asset for a consideration lesser by 15% or more than the fair market value and that would constitute unreasonable restriction on the fundamental right of the assessee to dispose of his capital asset at the price of his choice. The court must obviously prefer construction which renders the statutory provision constitutionally valid rather than that which makes it voidThe argument of the revenue was, and this argument found favour with the majority judges of the Full Bench, that on a plain and natural construction of the language of s. 52, sub-s. (2), the only condition for attracting the applicability of that provision was that the fair market value of the capital asset transferred by the assessee as on the date of the transfer exceededthe full value of the consideration declared by the assesseein respect of the transfer by an amount of not less than 15% of the value so declared. Once the ITO is satisfied that this condition exists, he can proceed to invoke the provision in s. 52, sub-s. (2), and take the fair market value of the capital asset transferred by the assessee as on the date of the transfer as representing the full value of the consideration for the transfer of the capital asset and compute the capital gains on that basis. No more is necessary to be proved, contended the revenue. To introduce any further condition such as under-statement of consideration in respect of the transfer would be to read into the statutory provision something which is not there; indeed, it would amount to re-writing the section.order of reassessment made by the ITO pursuant to the notice issued under s. 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it22. We must, therefore, hold that sub-s. (2) of s. 52 can be invoked only where the consideration for the transfer has been understated by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an understatement or concealment is on the revenue. This burden may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an understatement or concealment of the consideration in respect of the transfer. Sub-section (2) has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of the consideration. We find that in the present case, it was not the contention of the revenue that the property was sold by the assessee to his daughter-in-law and five of his children for consideration which was more than the sum of Rs. 16, 500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the I.T. authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of Rs. 16, 500. Therefore, on the construction placed by us, sub-s. (2) had no application to the present case and the ITO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under s. 148.

### Instruction: Scrutinize the evidence and arguments in the case proceeding to predict the court's decision: will the appeal be granted (1) or denied (0)? ### Input: 48 which provides the mode of computation and under which the starting point of computation is the full value of the consideration received or accruing . What in fact never accrued or was never received cannot be computed as capital gains under s.48. Therefore, sub-s. (2) cannot be construed as bringing within the computation of capital gains an amount which, by no stretch of imagination, can be said to have accrued to the assessee or been received by him and it must be confined to cases where the actual consideration received for the transfer is understated and since in such cases it is very difficult, if not impossible, to determine and prove the exact quantum of the suppressed consideration, sub-s. (2) provides the statutory measure for determining the consideration actually received by the assessee and permits the revenue to take the fair market value of the capital asset as the full value of the consideration received in respect of the transfer 20. This construction which we are placing on sub-s. (2) also marches in step with the Gift-tax Act, 1958. If a capital asset is transferred for a consideration below its market value, the difference between the market value and the full value of the consideration received in respect of the transfer would amount to a gift liable to tax under the G.T. Act, 1958, but if the construction of sub-s. (2) contended for on behalf of the revenue were accepted, such difference would also be liable to be added as part of capital gains taxable under the provisions of the I.T. Act, 1961. This would be an anomalous result which could never have been contemplated by the Legislature, since the I.T. Act, 1961, and the G.T. Act, 1958, are parts of an integrated scheme of taxation and the same amount which is chargeable as gift could not be intended to be charged also as capital gains 21. Moreover, if sub-s. (2) is literally construed as applying even to cases where the full value of the consideration in respect of the transfer is correctly declared or disclosed by the assessee and there is no understatement of the consideration, it would result in an amount being taxed which has neither accrued to the assessee nor been received by him and which from no view-point can be rationally considered as capital gains or any other type of income. It is a well settled rule of interpretation that the court should as far as possible avoid that construction which attributes irrationality to the Legislature. Besides, under entry 82 in List I of the Seventh Schedule to the Constitution, which deals with Taxes on income other than agricultural income and under which the I.T. Act, 1961, has been enacted, Parliament cannot choose to tax as income an item which in no rational sense can be regarded as citizens income or even receipt. Sub-section (2) would, therefore, on the construction of the revenue, go outside the legislative power of Parliament and it would not be possible to justify it even as an incidental or ancillary provision or a provision intended to prevent evasion of tax. Sub-section (2) would also be violative of the fundamental right of the assessee under art. 19(1)(f) which fundamental right was in existence at the time when sub-s. (2) came to be enacted-since on the construction canvassed on behalf of the revenue, the effect of sub-s. (2) would be to penalise the assessee for transferring his capital asset for a consideration lesser by 15% or more than the fair market value and that would constitute unreasonable restriction on the fundamental right of the assessee to dispose of his capital asset at the price of his choice. The court must obviously prefer construction which renders the statutory provision constitutionally valid rather than that which makes it void 22. We must, therefore, hold that sub-s. (2) of s. 52 can be invoked only where the consideration for the transfer has been understated by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an understatement or concealment is on the revenue. This burden may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an understatement or concealment of the consideration in respect of the transfer. Sub-section (2) has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of the consideration. We find that in the present case, it was not the contention of the revenue that the property was sold by the assessee to his daughter-in-law and five of his children for consideration which was more than the sum of Rs. 16, 500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the I.T. authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of Rs. 16, 500. Therefore, on the construction placed by us, sub-s. (2) had no application to the present case and the ITO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under s. 148. The order of reassessment made by the ITO pursuant to the notice issued under s. 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it ### Response: 1

Municipal Corporation of Delhi Vs. Ram Sarup

Shinghal, J. This appeal by special leave is directed against the judgment of the Delhi High Court dated September 4, 1972, dismissing the appeal of the Municipal Corporation of Delhi against the acquittal of respondent Ram Sarup and upholding his acquittal by the appellate judgment of the Additional Sessions Judge of Delhi for an offence under Section 7 read with Section 16 of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as the Act. It is not disputed that a sample of besan was taken by the Food Inspector from the respondents shop on October 3, 1970 and the Public Analyst reported that it was "very highly insect infested". The trial Magistrate had found him guilty of the offence under Section 7 read with Section 16 of the Act and sentenced him to rigorous imprisonment for six months and a fine of Rs. 1000. 2. The High Court took note of the following standard of quality of besan prescribed in the Prevention of Food Adulteration Rules, 1955, Appendix B, item A. 18.04 : Besan means the product obtained by grinding dehusked Bengal gram (cicer arietinum) and shall not contain any added colouring matter or any other foreign ingredient. It was argued there on behalf of the appellant Corporation that even though it was the requirement of the Rules that besan shall not contain any "foreign ingredient, the report of the Public Analyst showed that it was insect infested and was therefore found to contain a "foreign ingredient". The High Court made a reference to the statement of the Public Analyst that he had use the expression "very highly insect infested" in his report because "there must have been dead or living insects in the instant sample in great number". It also read that part of the statement of the Public Analyst where he had stated that there must have been at least 9 or 10 insects "living" in the whole sample before he declared it insect infested and that by living insect was meant fully grown insects and not larvae. Even so, the High Court upheld the argument that the words "very highly insect infested" were "relative words", and that the report did not state specifically and with scientific precision the "foreign ingredient" in the sample and whether living or dead insects or larvae or eggs were found in it. In taking that view, the High Court made a reference to some decided cases and held that the Public Analysts report suffered from weakness as it did not supply the "data on which a correct conclusion can be reached by the Court". 3. It is true that the report of the Public Analyst did not state the extent of the insect infestation or whether the insects were living or dead, but the High Court failed to take into consideration the fact that he had categorically deposed that there must have been dead or living insects in the sample in "great number", that there were white living insects in the sample, that there were at least 9 or 10 such insects in it, and that they were fully grown live insects and not larvae. As nothing to the contrary was elicited in spite of the lengthy cross-examination on behalf of the respondent, these facts had been amply established by the statement of the Public Analyst and were sufficient to prove that the sample of besan was "adulterated". The High Court did not take into consideration the provision of Section 2(ia)(f) of the Act according to which an article of food is deemed to be adulterated if, inter alia, it is wholly or in part insect infested. So when it had been proved that this was so, the only possible conclusion was that the respondent had committed an offence under Section 7 read with Section 16 of the Act for that reason and there was no occasion to examine the standard of quality of besan specified under Rule 5 of the Rules. 4. In the view we have taken we would have set aside the acquittal of the respondent and restored the judgment of the trial Court, but we are inclined to think that it will not be proper to do so in the facts and circumstances of this case. There is nothing in the three judgments on record, and more particularly in the impugned judgment of the High Court, to show whether the respondent was put on trial for selling an adulterated article of food within the meaning of clause (f) of Section 2(ia) of the Act, or whether he was tried for selling, within the meaning of clause (l) of that section, an article of food of which the quality or purity fell below the standard prescribed by the Rules. The possibility that the respondent was prejudiced in his defence because of the ambiguity cannot therefore be ruled out.

1[ds]4. In the view we have taken we would have set aside the acquittal of the respondent and restored the judgment of the trial Court, but we are inclined to think that it will not be proper to do so in the facts and circumstances of this case. There is nothing in the three judgments on record, and more particularly in the impugned judgment of the High Court, to show whether the respondent was put on trial for selling an adulterated article of food within the meaning of clause (f) of Section 2(ia) of the Act, or whether he was tried for selling, within the meaning of clause (l) of that section, an article of food of which the quality or purity fell below the standard prescribed by the Rules. The possibility that the respondent was prejudiced in his defence because of the ambiguity cannot therefore be ruled out.

### Instruction: Given the specifics of the case proceeding, anticipate the court's ruling: will it favor (1) or oppose (0) the appellant’s request? ### Input: Shinghal, J. This appeal by special leave is directed against the judgment of the Delhi High Court dated September 4, 1972, dismissing the appeal of the Municipal Corporation of Delhi against the acquittal of respondent Ram Sarup and upholding his acquittal by the appellate judgment of the Additional Sessions Judge of Delhi for an offence under Section 7 read with Section 16 of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as the Act. It is not disputed that a sample of besan was taken by the Food Inspector from the respondents shop on October 3, 1970 and the Public Analyst reported that it was "very highly insect infested". The trial Magistrate had found him guilty of the offence under Section 7 read with Section 16 of the Act and sentenced him to rigorous imprisonment for six months and a fine of Rs. 1000. 2. The High Court took note of the following standard of quality of besan prescribed in the Prevention of Food Adulteration Rules, 1955, Appendix B, item A. 18.04 : Besan means the product obtained by grinding dehusked Bengal gram (cicer arietinum) and shall not contain any added colouring matter or any other foreign ingredient. It was argued there on behalf of the appellant Corporation that even though it was the requirement of the Rules that besan shall not contain any "foreign ingredient, the report of the Public Analyst showed that it was insect infested and was therefore found to contain a "foreign ingredient". The High Court made a reference to the statement of the Public Analyst that he had use the expression "very highly insect infested" in his report because "there must have been dead or living insects in the instant sample in great number". It also read that part of the statement of the Public Analyst where he had stated that there must have been at least 9 or 10 insects "living" in the whole sample before he declared it insect infested and that by living insect was meant fully grown insects and not larvae. Even so, the High Court upheld the argument that the words "very highly insect infested" were "relative words", and that the report did not state specifically and with scientific precision the "foreign ingredient" in the sample and whether living or dead insects or larvae or eggs were found in it. In taking that view, the High Court made a reference to some decided cases and held that the Public Analysts report suffered from weakness as it did not supply the "data on which a correct conclusion can be reached by the Court". 3. It is true that the report of the Public Analyst did not state the extent of the insect infestation or whether the insects were living or dead, but the High Court failed to take into consideration the fact that he had categorically deposed that there must have been dead or living insects in the sample in "great number", that there were white living insects in the sample, that there were at least 9 or 10 such insects in it, and that they were fully grown live insects and not larvae. As nothing to the contrary was elicited in spite of the lengthy cross-examination on behalf of the respondent, these facts had been amply established by the statement of the Public Analyst and were sufficient to prove that the sample of besan was "adulterated". The High Court did not take into consideration the provision of Section 2(ia)(f) of the Act according to which an article of food is deemed to be adulterated if, inter alia, it is wholly or in part insect infested. So when it had been proved that this was so, the only possible conclusion was that the respondent had committed an offence under Section 7 read with Section 16 of the Act for that reason and there was no occasion to examine the standard of quality of besan specified under Rule 5 of the Rules. 4. In the view we have taken we would have set aside the acquittal of the respondent and restored the judgment of the trial Court, but we are inclined to think that it will not be proper to do so in the facts and circumstances of this case. There is nothing in the three judgments on record, and more particularly in the impugned judgment of the High Court, to show whether the respondent was put on trial for selling an adulterated article of food within the meaning of clause (f) of Section 2(ia) of the Act, or whether he was tried for selling, within the meaning of clause (l) of that section, an article of food of which the quality or purity fell below the standard prescribed by the Rules. The possibility that the respondent was prejudiced in his defence because of the ambiguity cannot therefore be ruled out. ### Response: 1