Case: Rainbow Steels Ltd. Muzaffarnagar and Vs. C.S.T., U.P. and State of U.P

A Thermal Power Plant a t Rampur comprising seven boilers, five turbines together with its associate auxiliaries components and accessories originally belonged to the U.P. State Electricity Board. The Board, after selling it in working condition to appellant No. 1 on May 29, 1974 for Rs. 41.31 lakhs called upon the latter to pay sales tax thereon which was paid under protest. Appellant No. 1 used it for generating electricity from May 29, 1974 to September 30, 1975. As the power position improved in th e State of U.P. appellant No. 1 discontinued the generation of electricity through this power plant and finding it expedient to realise its investment negotiated a sale thereof in perfect working condition to appellant No. 2. Appellant No. 1 desired to charge sales tax on the said negotiated sale but appellant No. 2 informed appellant No. 1 that it had obtained considered opinion that no sales tax on such a transaction was leviable inasmuch as the sale was not of "old, discarded, unserviceable or obsolete machinery, " falling within Entry No. 15 of the concerned Notification dated May 30, 1975. Both the appellants thereupon referred the question for clarification to the Commissioner of Sales Tax U.P., Lucknow under Section 35 of the U.P. Sales Tax Act 1948. It was contended on their behalf that the word (adjective) "old" occurring in the Entry would take colour from the other words (adjectives) that follow it and the cumulative effect of all the words taken together showed that those words were either synonymous or near synonymous suggesting that the machinery in order to fall within the Entry should become non functional or non usable and that since the power plant in question had not become "old" in that sense and was in perfect working condition it would not fall within the Entry and the sale thereof by appellant No. 1 to appellant No. 2 was not exigible to tax. The Commissioner by his order dated February 19, 1977 negatived the contention holding that the four words "old, discarded unserviceable or obsolete" had been used disjunctively and each adjective had its own meaning and sense and that since the power plant had been used before its sale by appellant No. 1 to appellant No. 2 it was old machinery and the sale thereof was liable to tax under the saidg aggrieved by that order the appellants preferred an appeal to the Allahabad High Court being F.A.F.O. No. 39 of 1977 and a learned single judge of the Lucknow Bench on April 18, 1979 dismissed the appeal and confirmed the Commissioners view that since the concerned power plant had been purchased by appellant No. 1 long ago and had been put to use it was "old machinery" within the meaning of the Entry, observing that "the degree of oldness has to be greater than recently manufactured machinery used only for the some time". The Commissioners view as confirmed by the High Court is challenged by the appellants before us in this appeal2. The short facts giving rise to the question may be stated:

Reasoning: Having given our anxious consideration to the rival contentions urged before us, we are clearly of the view that the principle of noscitur a sociis is clearly applicable to the construction of the expression `old occurring in Entry No. 15, and that expression will have to be give a restricted meaning-a sense analogous to that of the less general words clubbed with itDealing with the Entry in question, in the first place it cannot be disputed that the four adjectives which are susceptible to analogous meaning are clubbed together while qualifying `machinery in the Entry. Secondly, it cannot be disputed that the first adjective `old is clearly more general than the other three a nd as such all the four would take their colour from each other, the meaning of the more general adjective `old being restricted to a sense analogous to that of the less general, namely, "discarded, unserviceable or obsolete". Thirdly, it is true that all the four adjectives which qualify the word `machinery have been used disjunctively but it is precisely for that reason that the adjective `old becomes vague, imprecise and ambiguous, being too general. The adjective `old by itself is certainly vague, imprecise and ambiguous, for there is no indication as to how much old the machinery should be before it could be described as old machinery. A machinery could be one day old, one month old, one year old, five years old o r even ten years old, (the degree of oldness being a relative concept) and which one is intended to be included in the Entry has not been made clear at all. And, lastly, there is nothing in the Entry to indicate that the adjective `old has been deliberately used in a wider sense. In the absence of any indication to that effect and when the expression `old is by itself vague, imprecise, and ambiguous, being too general, the principle of noscitur a sociis will have to be applied i.e. all the associated words will take colour from each other, the meaning of the more general, adjective viz. `old being restricted to a sense analogous to the less general adjectives "discarded, unserviceable or obsolete". In other words in order to fall within the expression `old machinery occurring in the Entry, the machinery must be old machinery in the sense that it has become nonfunctional or non-usable. In our view, therefore, on true construction the sale of the Thermal Power Plant which at the time of sale by appellant No. 1 to appellant No. 2 was in perfect running condition and which was sold as such would not fall within the aforesaid Entry No. 15 of the concerned Notification dated May 30,e English decision of the Court of Appeal in Letang v. Cooper (supra) relied upon by counsel for the respondents is clearly distinguishable inasmuch as it dealt with a statute which referred to "negligence, nuisance or breach of duty (whether the duty exist s by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision), " and when it was argued that because the cause of action in both nuisance and negligence included the infliction of actual damage as an essential element, "breach of duty" should also be understood as confined to causes of action in which actual damage was likewise essential the said contention was rejected by Diplock, L.J., by observing thus:In other words, it was a case of a statute where the parent hetical portion occurring therein expressly indicated the contrary intention-contrary to the contention urged and, therefore, the principle of noscitur a sociis was not applied.